Welcome to the TSS Second Quarter 2020 Earnings Call. My name is Darrell, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that, this conference is being recorded. I will now turn the call over to John Penver. John, you may begin.

Thank you, Darrell. Good afternoon, everybody, and thank you for joining us on TSS' conference call to discuss our second quarter 2020 financial results. I'm John Penver, the Chief Financial Officer for TSS, and joining me today on the call is Anthony Angelini, the President and Chief Executive Officer of TSS. As we begin the call, I would like to remind everybody to take note of the cautionary language regarding forward-looking statements contained in the press release we issued today. That same language applies to comments and statements made on this conference call. This call will contain time sensitive information as well as forward-looking statements, which are only accurate as of today, August 17, 2020. TSS expressly disclaims any obligations 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, except as 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. A reconciliation of the differences between those measures with the most directly comparable financial measures calculated in accordance with GAAP is also included in today's press release. So I’ll begin the call with a review of our second quarter 2020 results and then turn the call over to Anthony for his comments on the business and the changes we see coming. Earlier today, we released a press release announcing our financial results for the second quarter of 2020, and a copy of that release is available on our website at www.tssiusa.com. Our second quarter was a continuation of the mixed performance of TSS that we've…

All right. Thank you, John. As John explained and recorded in our press release, our second quarter was impacted by business factors that are attributable to the COVID-19 pandemic that affected customer deliveries and deployments. We continue to see field deployments of MDCs be delayed as travel and other customer specific site restrictions resulted in delays of deployment projects. And therefore deployment revenues were down compared to the first half of 2019. Fortunately, beginning in July, we had seen most of these restrictions get sorted out with appropriate safety measures, and we have begun to do more deployments. This will result in an improvement in our third quarter facilities revenue for both the facilities portion of the business and integration. We also experienced supply chain challenges that prevented us from recording about $8 million in reseller revenues in the second quarter. These transactions have now occurred in July, and as a result, we'll see substantial improvement in reseller as well as core services revenues in the third quarter. Assuming that we can deliver what we expect in the third quarter, our revenue could approach $20 million and results in adjusted EBITDA near $1 million excluding any benefit from the PPP loan forgiveness that John mentioned. As we look beyond Q3, we are hesitant to provide guidance until we better understand the effects of the pandemic and further reopening of the economy. That being said, there are a number of opportunities in the pipeline that could significantly diversify our customer base. We continue to work to develop these new opportunities as soon as possible. But the current environment with the virus has greater delayed timing as many new customers were focused on adapting to the virus and involved deeply in their own internal challenges. As most businesses have adapted, we're beginning to see progress accelerate. While we caution on the limited visibility we have, we are seeing and believe that the delivery of technology infrastructure will continue to be in strong demand for the foreseeable future. We believe the services solutions we provide continue to resonate in the market. The infrastructure we have can continue to be scaled within our existing customers as well as new customer opportunities. We are seeing a number of OEMs come to us to deliver solutions as data centers are attempting to move people and service work outside their facilities. It only strengthens and accelerates our opportunities for further growth as we present a compelling model for OEM delivery. I think John has covered the rest in some detail. Therefore, Darrell will now open call up for questions.

[Operator Instructions] And we have a question from Edward Gilmore from [indiscernible]. Go ahead Edward.

Just a quick question for you. I was wondering if you could talk about your efforts to focus more on the maintenance and integration services versus some of the lower margin project management and design projects that you've been doing?

Yes, I wouldn't characterize some of those as lower margin or mixed margin. Our maintenance business is a good margin business. Our deployment of solutions tends to be at higher dollars, but little bit lower margin. We end up with a strong mix between deployments and services and ongoing maintenance. So, on the front end, as you mentioned, a lot of what we do on the front end in regard to kind of project management and kind of consultative services on working on new deals, that tends to come as part of a sales process. Generally we tried to get compensated for most of that as we move through, but there are a number of things with existing customers that we provide them as they have potential deals on the table that we work with them to solve. So in a sense, it's sort of the cost of customer acquisition that we and project and program acquisition that we work on. So, as we look forward, I think that we're going to continue to see that overall mix and I think the biggest push for us is not only to continue to harvest within our largest OEM, but also add other OEMs some of which can be as significant as the current largest OEM that we have. So those are the opportunities we're playing out to try to hit the back half of 2020, as well as into 2021 and beyond.

Okay, thanks, Anthony. And just one more question if I could. In light of all the pandemic and some businesses doing more virtual services, are there any kind of services or solutions that you think might be coming up for TSI to be able to provide virtually to some of the customers?

Yes, so there is several things in that area. One is that we believe that the push to remove some of the - I'll call it integration work and services that were happening in the field into a second touch factory have been on our radar screen and what we've been pushing for the greater part of a year or so. What has happened is the pandemic has only accelerated that. So and what I mean by that is that - the most businesses and most data centers et cetera want to get the work out of the data center and into a second facility, which will do all of the validation configuration, et cetera. So it's a very limited time of third parties arriving at the data center and plugging in additional capabilities. So we've seen a great acceleration in the theme that we were already working on anyway because we believed it was more efficient delivery mechanism. The second part of your question is we're also looking at how do we use some of the tools out there in the way, I won't completely use artificial intelligence, but in a way where we can take personnel that are used in the servicing of equipment and limit the amount of travel they have by using tools where they have - the on-site person instead of being supplemented by one or two or three other people can do some of that virtually. So again, on a theme of limiting the number of people in the data centers, limiting the number of people in the field, but being able to sort of have a cockpit that can see everything they're doing and help direct them. And so we're in the initial stages of implementing some of those things, which we believe ultimately will put us in a good position going forward as to how to more efficiently deliver the same service level without having people get on airplanes and travel to locations, so which will ultimately be much more efficient. And I think most of us are experiencing some level of benefit, albeit at some detriment within the current environment and that we're finding like Zoom meetings or Microsoft team meetings or Google meetings, in less travel being somewhat more efficient in a number of areas, obviously, there is nothing like the human touch. But at the same time, the scalability opportunities that are in front of us, as everybody embraces the new, what I call the new normal of we're not going to have as many people on planes, and as many people going to specific locations to actually deliver the service, but we need to be more virtual and how we can facilitate that. So again, that's an area that we're in the process of developing tools and things for our employees to be able to use that will enhance our overall capabilities, and I think position us much better in the near marketplace as we move forward.

[Operator Instructions]

Okay, Darryl we'll give it a few minutes and see if anybody else has a question.

[Operator Instructions]

Okay, it appears we did a fairly good job of explaining the situation. So I appreciate that all of you joining the call and if there is further questions you think afterwards, certainly reach out to John and myself. And we look forward to a strong third quarter and talking to late fall. Thank you.

And thank you ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.