Good afternoon, and welcome to the TSS First Quarter 2024 Earnings Call. Please note that this call is being recorded. [Operator Instructions]. I will now turn the call over to Mr. John Penver, Chief Financial Officer. Please go ahead.

Thank you, Brianna. Good afternoon, everyone, and thank you for joining us on TSS' conference call to discuss our first quarter 2024 financial results. I'm John Penver, Chief Financial Officer of TSS. And joining me today on the call is Darryll Dewan, President and Chief Executive Officer for TSS. As we begin the call, I'd like to remind everyone to take note of the cautionary language regarding forward-looking statements that's contained in the press release we issued today. That same language applies to comments and statements made on today's conference call. This call will contain time-sensitive information as well as forward-looking statements, which are accurate as of today, May 14, 2024. TSS expressly disclaims any obligation to update, amend, supplement, or otherwise review any information or forward-looking statements made on this conference call or the replay to reflect events or circumstances that may arise after the date indicated, unless otherwise required by applicable law. For a list of the risks and uncertainties, which may affect future performance, please refer to the company's periodic filings with the Securities and Exchange Commission. In addition, we will be referring to non-GAAP financial measures and a reconciliation of the differences between these measures with the most directly comparable financial measures calculated in accordance with GAAP is included in today's press release. So, Darryll will kick the call off with an overview and commentary about the first quarter's performance. I'll provide some more financial detail and hand the call back to Darryll to recap with our strategy and direction. Darryll?

Yes. Thank you, John. Coming off our most successful fourth quarter in history, I'm excited to report that we continue the momentum around our core business objectives in the first quarter of '24. We continue to focus attention to operational excellence, built and strengthened our team, improved our go-to-market efforts and business execution, and increased our focus on developing and expanding partner relationships. Those efforts resulted in strong revenue growth and improvement in gross and operating profits, and improved adjusted EBITDA compared to the prior year. Some of the key highlights for the first quarter of '24 include first quarter overall revenue of $15.9 million compared to $6.6 million in the first quarter of '23. Procurement revenues were $11.6 million in the first quarter of $24 million compared to $1.7 million in the first quarter of 2023. Increased gross profits by $1 million or 61% compared to the first quarter of '23, improved operating income by $918,000 to income of $253,000 in the first quarter of '24, and compared to an operating loss of $665,000 in the first quarter of '23. Net income of $15,000 or $0 per share in the first quarter of 2024 compared to a net loss of $786,000 or $0.04 negative per share in the first quarter of '23. And finally, adjusted EBITDA of $475,000 in the first quarter of '24 compared favorably to an adjusted EBITDA loss of $436,000 in the first quarter of '23. Our strong Q1 revenue growth and improvement in gross and operating profits and adjusted EBITDA compared to Q1 of the prior year were driven by the strength in our procurement business. And in the short-term, we've benefited in the procurement business from overall increased data center demand and beneath the financial coverage that changes are extremely positive. The fundamental changes…

Thanks, Darryll. Our first quarter revenue was $15.9 million. This represents growth of 142% compared to the $6.6 million of revenue we had in the first quarter of 2023. In this quarter, our revenue was made up of $11.6 million from procurement services, $2.1 million from our facilities business, and $2.1 million from our systems integration business. Our procurement business revenues grew by $9.9 million compared to the first quarter of 2023. Our facilities revenue were down by $0.1 million, and our systems integration revenues were down by $0.5 million compared to the first quarter of last year. The gross value of transactions processed in the procurement business was $20 million. This included 61 transactions. In the first quarter of 2023, we'd process $6.7 million in transactions made up of 31 different transactions. Our systems integration revenue, as I said, of $2.1 million were down by $0.5 million. Now the facilities business was up by 47% or $0.7 million compared to the fourth quarter of '23 as we delivered an on-site assessment service, delivered a new modular data center deployment project, and completed some refresh of modular data centers in several locations. The revenues were down compared to the prior year as we had a large deployment project occurring during the first quarter of 2023. Our gross profit margin of 17% during the first quarter of 2024 was down from 26% in the first quarter of 2023, but it was actually up from 13% that we had in the fourth quarter of 2023. Our gross profit margin is significantly influenced by our revenue mix and the accounting treatment of transactions in the procurement business. Overall, the gross profit of $2.7 million was an increase of 61% or $1 million compared to the first quarter of 2023. Our selling, general and…

Yes. Thank you, John. I want to highlight our ability to deliver high complex AI solutions at high volume places us in a unique position in OEM and customer ecosystem. We are building our momentum and capabilities to support the unprecedented growth in the industry driven by AI, and the growing demand for more traditional rack integration driven by cloud computing and more advanced IT systems. We are very well positioned for continued growth. The turnaround executed last year is bearing fruit. The success in Q1 on the strength of our procurement business and the prospects for our systems integration business, in particular, are very exciting for the rest of '24. The impacts of the changes we've made and talked about over the last few quarters will become increasingly more evident. This is an exciting time for the team at TSS, and we appreciate the continued support of our shareholders. We are focused on delivering value to our customers, to our team and employees, and to you, our shareholders. So, with that, we'll take any questions you might have.

We will now open the line for questions. [Operator Instructions]. Seeing no questions at this time. I will turn the call back over to Mr. Darryll Dewan for any closing remarks.

Thank you. I've talked to many of you, and it's refreshing to hear the comments about the investors' view of where we've been, where we're going, and long-term perspective. And we appreciate that. The AI demand is real. The growth for on-prem technology is real. Our rack integration capacity as a result of the plan built 15, 18 months ago is now bearing fruit. So, we've got a plan, a multiyear plan to continue execute, to do more with our existing customer and to grow outside of our existing customer. Both can happen in concert. I'd say we only have just begun. And I appreciate everybody's support and time. And if you have any questions at another time, please let me know. Thank you.

This will conclude today's conference call. Thank you for your participation, and you may now disconnect.