Afternoon, and welcome to the TSS Inc First Quarter 2025 financial results conference call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, James Carbonara. James, the floor is yours. Thank you, Operator, and good afternoon, everyone. Joining me on this call are Darryll Dewan, President and CEO of TSS Inc, and Danny Chism, the company's CFO. As we begin the call, I would like to remind everyone 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 today's conference call. This call will contain time-sensitive information as well as forward-looking statements, which are accurate only as of today, May 15, 2025. TSS expressly disclaims any obligation to update, amend, supplement, or otherwise review any information or forward-looking statements made on this conference call or replayed to reflect events or circumstances that may change or arise after the date indicated, except as otherwise required by applicable law. For a list of the risks and uncertainties that may cause actual results to differ, please refer to the company's periodic filings with the SEC. In addition, we'll be referring to non-GAAP financial measures. A reconciliation of the differences between these measures and most directly comparable financial measures calculated in accordance with US GAAP is included in today's press release. With that, Darryll, I'll turn the call over to you. Thanks, James. Hello, everybody. Thank you again, and good afternoon. Thank you for joining us today for our First Quarter 2025 earnings conference call. Welcome to 2025. We're off to a strong start in the first quarter. Demand for AI rack integration and procurement services business remains robust, and we once again are delivering outstanding financial results driven by strong operational execution and our unwavering commitment to customer service. We are successfully executing our business strategy, delivering substantial growth in revenue, earnings, and cash flow, while scaling our operations and positioning the company to capture a meaningful share of the rapidly growing and complex AI infrastructure market. Importantly, we're dramatically adding to our capacity to perform systems integration services work and have reached an important milestone which I'll cover in a moment. Let me walk through some of the highlights from the quarter. First, we delivered total revenue growth of 523% year- over- year. Believe it or not, I've gotten a couple of texts saying that's not good enough. An extraordinary achievement that underscores the rising demand for our offerings, the strength of our customer relationships, and the attractive market dynamics in which we operate. Diluted earnings per share grew to $0.12, a significant improvement from just over break-even a year ago in the quarter. We also generated positive cash flow from operations for the first three months of the year, further strengthening our financial foundation. This exceptional performance is driven by growth in our two largest service offerings. Breaking down the performance by segment, let me go. First of all, starting with procurement services, where we source third-party hardware, software, and services, revenues grew by more than 600% to more than $90 million in the quarter as our customers ramped up infrastructure investments to support AI workloads. This growth not only highlights our value as a strategic sourcing partner, but it also reflects the strong execution of our operations team and a rapidly scaling environment. As we've noted in the past, while this business can experience quarter-to-quarter fluctuations, the broader trajectory remains positive. We remain very optimistic about its contribution throughout the rest of this year. Our number two segment is systems integration, which includes rack integration, AI rack integration, experienced a tremendous surge in revenue this quarter, driven by the increasing demand for AI-enabled infrastructure. Revenue in this segment grew more than 250%, highlighting the momentum behind AI deployments. We are still in the early stages of the AI infrastructure build-out cycle, and we expect sustained high growth in this area as customers ramp up investments to meet evolving compute demands over the coming quarters and years. In facilities management, our other segment, which primarily includes our modular data center business, or MDCs, as we refer to them, revenue declined 40%. This segment has historically provided stable high-margin revenue despite representing a smaller portion of our overall business, just over 1% of total revenue in the first quarter. The modular market is changing. MDCs are no longer used primarily just to augment traditional data centers. This change, however, in modular is changing to where we are addressing a form of a prefab solution for delivering very dense computing more efficiently. In addition, edge computing, an emerging and growing segment tied to AI, is also likely to become modular. Given the accelerating adoption of AI-driven technologies, we expect MDCs to play an increasingly important role in our growth strategy in 2025 and beyond. To meet rising demand and support a long-term customer agreement, in 2024, we secured a multi-lease agreement on a 213,000 sq ft facility in Georgetown, Texas. The build-out is progressing according to plan. That space, by the way, is twice as big as what we have today in Round Rock, Texas. I'm excited to announce we have begun production in this new facility in early May, with support for a range of programs getting underway. We expect to reach full production capacity in this new facility by June. This is a record achievement based on where we started in this facility to where we're at today. My congrats to our team. Let me take a minute to explain the strategic advantage this building represents. First of all, many of you who follow the data center market and its evolving role in delivering AI know power, the electricity power, is a major issue for data centers. It is a major issue for data center infrastructure production as well. When a rack build is commissioned, the AI equipment and other components that come to our facility that we add to a rack and cable it all together. Sounds simple, does it not? Today, these servers are heavier. Cabling is challenging as each GPU in an AI rack needs to be able to talk to the other GPUs, and the new element of cooling or water distribution for direct liquid cooling is added. Once all of this is complete, the rack needs to be powered up and tested. We have been asked by our largest OEM customers to be prepared to test many racks simultaneously. This drives a significant power demand. We have opened up a new facility with 6 MW of power. However, we have worked with a local municipality to augment the power supply to 15 MW by this summer. We're at 2.7 here in Round Rock. This is 6x the power we have available in our legacy facility. We have discussions about adding more power that significantly improves where we're at in time, and the city is very supportive. Beyond having the power made available by the municipality, we need to be able to distribute that amount of power and water, for that matter, within the building. All in all, this is a building designed from the ground up for AI rack integration, and there are very few buildings like this in the market providing us a significant competitive advantage. From a financial perspective, our total planned investment is between $25 million and $30 million. This investment will scale over time as the complexity and the volume of rack integration increases. We structured the project with a clear path to long-term profitability, and they underscore that. We're very focused on profitable growth, supported by our strong OEM partnership. Based on our current forecast, we anticipate a payback period of approximately two years, representing a highly attractive return on this invested capital. The AI infrastructure market is evolving rapidly, with significant capital flowing into the development of high-performance compute environments. While the hyperscalers have led early adoption, we expect a broader wave of AI deployment for medium and large enterprises supporting applications far beyond large language modeling. We are hereby working closely with our key customers and partners to understand how hyperdense AI compute will be implemented across a wide range of data center environments. This will remain a key area of focus for us in the quarters ahead, and we are excited about the opportunities this presents. After Danny has provided more detail on our financial performance for the quarter, I will be back to address some questions about the market, tariffs, and our perspective on a positive future for the company. Danny? Yeah, thanks, Darryll. It was another record quarter for TSS. Let's take a look at the financial results. Consolidated revenue increased by more than 520% in the first quarter of 2025 to $99 million, up from $15.9 million in the first quarter of 2024. The increase was driven by year-over-year growth in our two largest service lines, including growth of almost 700% in procurement revenues and 253% in our higher-margin systems integration business. Total revenue from the systems integration increased from $2.1 million in the first quarter of last year to $7.5 million in the current quarter, driven primarily by an increase in AI-enabled rack integration. Demand for this business remains robust. Revenue from facilities management totaled $1.3 million, down 40% from $2.1 million in the same quarter last year. This segment, while currently the smallest of our overall business, offers strong strategic potential. We are actively optimizing this business and focusing on high-growth opportunities. Given the fairly consistent visibility into this revenue stream, we anticipate more robust growth over the next 12- 18 months, as Darryll mentioned, particularly as medium and large enterprise clients increasingly adopt modular data centers as a cost-effective solution to leverage AI technologies. When we deploy new modular data centers, we also typically get multi-year maintenance contracts, further enhancing our earnings profile with nice margins. Revenue from procurement services totaled $90.2 million, up 676% compared to $11.6 million in the year-ago quarter. In the first quarter alone, the revenue that we recorded from this segment amounted to 77% of the total recorded procurement revenues for all of 2024, which itself represented significant growth from prior years. As a reminder, revenue in this segment represents a mix of gross and net deals, whose revenue recognition method varies based on contractual terms and whether we modify the product in some way or just act as an agent in the transaction. The gross value of all procurement transactions increased 431% from the prior year quarter to $106 million. Gross profit increased 674% to $7 million. Based on recorded GAAP values, procurement gross margins were 7.8% in both the current and the prior year quarter. When viewed on a non-GAAP gross value of all transactions, which we see as a more apples-to-apples comparison as it strips out whether it's a gross deal or a net deal, gross margins improved from 4.6% in the prior year quarter to 6.6% in the current quarter. As we continue to scale and grow, the mix of our revenues and the mix of gross versus net procurement deals will likely drive quarter-to-quarter fluctuations in our blended gross margins. Procurement revenues have grown dramatically in recent quarters as we expect the general trajectory of this business to remain on an upward curve with some ups and downs in volume from one quarter to another. Much of our procurement business is ultimately related to the federal government buying, which can fluctuate. We're pleased to be getting more and more of this business from our OEM customers, and we see a sufficient pipeline to give us near-term confidence that revenues will remain elevated from historical norms. We're selectively bolstering the team to continue to grow this offering. Our consolidated gross margin was 9.3% this quarter, down compared to 17.1% in the first quarter of 2024. This decrease is primarily due to the mix of revenues with lower-margin procurement services representing a larger portion of the total revenue in the first quarter of 2025 compared to the prior year quarter. We discussed a minute ago the gross margins from the procurement segment. I'd like to take a moment now to provide a bit more color on this quarter's gross margins in our second-largest segment and one that's driving a lot of the improvement in our overall earnings, systems integration. Gross margins in the SI department were 22% this quarter compared to 28% this quarter last year. This quarter is a bit unique, though. Although we've not yet begun paying cash rent at our new production facility, the current quarter results include approximately $760,000 of rent expense on our new Georgetown location recognized on a straight-line basis, while still bearing the majority of the occupancy costs at our existing production facility in Round Rock as it has in prior periods. Excluding the non-cash rent at the new facility, systems integration gross margins improved from 28% in the prior year quarter to 32% in the current quarter, and gross profits improved from $0.6 million to $2.4 million. Since we started production from the new facility last week, we'll also begin paying rent at the new facility this month, and the fixed fee we earn from our customer under our multi-year AI rack integration contract will also increase in lockstep by an amount more than sufficient to cover such incremental occupancy costs. As a result, we expect gross margins in the systems integration segment to improve in the last three fiscal quarters of 2025 compared to the first quarter, even before factoring in any organic growth. SG&A expenses improved to 53% of gross profit in the first quarter of 2025, down from 88% in the year-ago quarter and 59% in the fourth quarter. On a dollar basis, SG&A expenses increased to $4.9 million in the first quarter of 2025, up from $2.4 million in the year-ago quarter as we continue to invest in talent, capacity, and process improvements. Depreciation and amortization expenses increased modestly year-over-year but do not yet reflect the increase expected once we begin depreciating the build-out costs at our new facility. Based on the $25 million-$30 million total estimated CapEx at that facility, once we do begin depreciating those assets, I expect that incremental non-cash depreciation to be between $420,000 and $500,000 per month, depending on whether we're closer to the $25 million or $30 million total investment. Consolidated operating income and margin in the first quarter of 2025 was $4.1 million and 44.7% of gross profit, respectively, up from $253,000 and 9.3% in the prior year quarter. Calculated as a percentage of total revenue, our operating income margin almost tripled to 4.2% in the current quarter compared to 1.6% in the prior year quarter. Interest expense increased from $328,000 in the prior year quarter to $1.5 million in the current quarter, comprised of $1.3 million of factoring costs and $167,000 from our new bank loan. Partially offsetting that interest expense was $383,000 of interest income earned from cash on hand compared to $100,000 of interest income this quarter last year. As a result of the factors mentioned, net income for the first quarter of 2025 was $3 million, exponentially greater than the $15,000 of net income in Q1 of last year. Diluted earnings per share were $0.12 for the first quarter of 2025, up from nil or just above break-even in the prior year quarter. Adjusted EBITDA, which excludes interest, taxes, depreciation, amortization, and stock-based compensation, was $5.2 million, more than tenfold from $475,000 in the year-ago quarter. Turning now to take a quick look at the balance sheet. As of March 31st this year, we had cash and cash equivalents and short-term deposits totaling $27.3 million. This compares favorably to $23.2 million as of December 31st, 2024, or the end of last year. The increase in cash was due primarily to cash generated from operations, which was partially offset by cash used for capital expenditures related to the build-out in the Georgetown facility. Net working capital decreased from $1.3 million at the end of 2024 to a - $11.1 million at the end of the first quarter of 2025. To minimize interest expense in the period, we intentionally used excess cash on hand to fund the $14.9 million of capital expenditures in the current quarter. This temporary use of working capital was replenished shortly after the quarter end when we drew down the remaining $11.3 million on our construction loan last week. The increases in inventory and accounts payable at the end of the period are related to an elevated level of procurement activity ongoing at that point in time, adding to the temporary movement in working capital. For the first three months of 2025, we generated cash flow from operations of $20.6 million, which compares favorably to $2.6 million in the first three months of 2024. The increase was driven by much stronger earnings combined with the timing of cash flow in our procurement activities. All in all, it was another great quarter operationally and financially. With that, I'll turn it back over to Darryll. Thank you, Danny. I really appreciate that. I'm incredibly proud of our team's ability to execute on both our operational commitments and our long-term vision. We operate in a very exciting market shaped by rapid advances in AI and high-performance computing, and our position at the center of this transformation is both unique and compelling. Before we look ahead, I wanted to address in more detail what we are seeing in the market and how we view the future, given some of the uncertainty caused by trade and tariffs, as well as technological advantages. We believe we're in a very secular growth segment of the market, but it does not mean we're immune to macroeconomic changes. The tariff situation is anticipated to increase IT hardware costs and is stretched and complicates buying patterns and supply chains. Orders we are processing in coming months were placed months ago, but lead times are lengthening a bit. If the tariff situation does not stabilize, we and all others in the IT hardware supply chain will possibly see orders taking longer to process. When you add the fluidity of this international trade situation to the rapid advancement of technology, Q1 was like no other in recent history. It is precisely why we focus so intensely on our relationships with key partners and working closely with them on the roadmaps for their vendor partners and to work to ensure that operations are even more prepared to deliver even the most complex solutions and systems. The rapid pace of evolution of data center technologies from chip to power to cooling continues to impact buying patterns. As an example, the transparency of NVIDIA's product roadmap and the magnitude of processing advancement causes customers to debate the timing of purchases. Couple this with the political and macroeconomic environment, it's the recipe for uncertainty. That said, the order pipeline of our OEM customers remains extremely robust, and we're seeing orders closing kicking off lead times. In summary, this historic investment in AI capacity continues. Our success the last two years has been due to our ability to look ahead and to be in the best position to support our partners' need for capacity with the expertise and infrastructure to support growing levels of complexity. That focus has us exceptionally well positioned for the future, no matter what the trade and tariff world looks like. Looking ahead, we can expect continued strong performance for the year in 2025. Specifically, we anticipate total revenue in the first half of this year will exceed revenue in the second half of last year, reflecting sustained customer demand and ongoing execution across our business lines. Additionally, as stated in an earlier call, we expect and maintain a full year 2025 adjusted EBITDA to be at least 50% higher than all of last year, driven by higher volume, improved operational leverage, and strategic investments made over the past year. While we may experience quarter-to-quarter fluctuations, we remain confident in the overall growth trajectory and long-term value creation for our shareholders. Thank you. Can we open this up now to Q&A? Thank you. The floor is now open for questions. If you wish to join the queue to ask a question at this time, please press star one on your telephone keypad. We do ask if listening on speakerphone today that you pick up your handset while asking your question to provide optimal sound quality. Once again, please press star one on your telephone keypad at this time. If you wish to join queue to ask a question, please hold a moment while we pull for questions. We have a question from Kris Tuttle from Blue Caterpillar. Kris, your line is live. Please go ahead. Hi. Thanks very much for taking my question. First of all, I think it has to be said that to pull this quarter off in the midst of a major historic infrastructure move to a totally new facility, all knowing how many moving parts are involved in that, I mean, it has to be acknowledged for what it is, which is very impressive. Just terrific job. I know that a big team was involved there, but a lot of people would have blamed the move, but you guys really executed. Hey, Kris, thanks. On behalf of the team, we appreciate your comments. It's not easy. A lot of commitment, a lot of focus, a lot of good work by this team, the leadership team, and the team we have in the company. It's rare that in our role, we get anybody saying anything nice. Thank you for saying something nice. I'll buy the bill. Yeah. We'll get there. I wanted a couple of questions that I get a lot from people when I talk to them about the company and the stock is, other than being concerned about the transition, which I think you've proved you're going to navigate, they read a lot about AI integrated racks and what NVIDIA is doing and what Dell is doing. Of course, you and I have spoken to those people, and we know what that's all about. I think the people that I talk to and field questions from could use some color around how, as Dell and NVIDIA and other people work to make the integration easier, they worry that, well, maybe it will obviate the need for some of the integration services and value add that TSS provides. I think that it would be helpful to give them some color and maybe some case studies around why that might not be true and how that you have a durable role in the industry as an integrator. Good question, and it's something that we think about 24/ 7. We do operate, we use an internal phrase called operate with your high beams on. We are very focused on anticipating and trying to anticipate what's going to happen in the industry so we don't become obsolete. As you know, we have multiple lines of business. We have the integration business. We have the modular data center business, procurement business, and they all kind of interact. On the rack integration business, especially around AI, let me take that on. NVIDIA produces a reference architecture that OEMs like Dell will build a solution off of. That's NVIDIA's game. I've been asked a little bit about what's NVIDIA going to do. Are they going to get in our business? I was kind of joking about how NVIDIA is coming after TSS. That'll be an interesting play. I don't think that's what the game plan is. As we see the technology transition, I remember two and a half years ago, joining the company, we were building racks that had like 55 kW of power. Now they're well over 100 kW, and they're forecast to go over 300 to a megawatt a rack. We have the latest and greatest in the factory right now being integrated, and it's a sight to be seen. It is amazing architecture and a transition from even a couple of years ago and how it's all put together, the size of the servers, the weight of the servers, the power, the direct liquid cooling, the complexity. What do we do? We try to do the best we can to add value to integrate those solutions faster and with more value and quality than anybody else in the market. Where we see it going, it's going to get more complex, we're told, because we have a very strong relationship with our key customer that it's going to get more complex. The technology is going to continue to evolve. We're out in front of that. On our rack integration business, we expect continued growth. Could this ever change? Anything could change, but we don't see it anytime soon, and we're full speed ahead. Reference point, the direct liquid capability is increasing. The percentage of our business that's moving to DLC is bigger than it's ever been, and we expect it to continue. The power needed, as we've talked about, has increased exponentially. I'm trying to put things in the perspective of 25, 30, 35 years ago in technology. I can't do it. The mainframe today is standing in front of you. We're out in front of it. We're doing the best we can to stay relevant and to become a continued partner to our customer. Hey, I would add, Darryll, to your point about the DLC becoming more and more important or more prevalent is, as we built up the new factory, we knew that was where the technology was heading, and we built out multiple times the capacity to do DLC as well as doing air-cooled in that facility. We have really set ourselves up for continued future growth. Kris, let me add one more thing. When you think about AI, AI is—how do you even describe it? I do not even know what the word is, but it is going to change everything that we do. This is not a new phenomenon. Chat accelerated things. The power of technology and the price points are accelerating. The technology is powerful. When you think about the impact of going from what is happening today, if you will, from modeling to inferencing and how the enterprise is going to adopt and how other companies are going to adopt, I think the future is pretty darn exciting. You think about the application capability of AI in healthcare and defense and government and in commercial applications, entertainment, you pick it. It is amazing what is happening. In fact, we use it here internally for certain things, and we're able to do things a lot faster to help us get to where we want to go. We are optimistic, but I appreciate the question. All right. Hey, thanks a lot, guys. I will drop all these numbers in, refresh the model, and then I'll circle back with you guys on the minutia. Great. Thanks, Kris. Thank you. As a reminder, the floor remains open for questions. If you wish to join the queue at this time, please press star one on your telephone keypad. Once again, please press star one on your keypad at this time if you wish to join the queue to ask a question. Please hold a moment while we repoll for questions. Our next question is coming from Dave Sheridan. Dave, your line is live. Please go ahead. Gentlemen, great quarter. Appreciate you holding the conference call for us as well. My question is regarding the old facility. Are you continuing carrying costs for that old facility, or are you continuing to look for opportunities to lease that facility out, or will you be using that first facility for your own demand in the future? All the above. First and foremost, we are planning, and we've built it into our business model, the cost of carrying this facility where we're at right now in Round Rock. A very good question, by the way. That's number one. Number two is we have a couple of options on what we can do in this facility. There are ways that we could expand our business here, specifically in configuration services or in rack integration if we so elect to go down a certain path. Right now, we're planning for that. We also have the ability to sublease this facility. We renegotiated the lease a couple of years ago, and we've got very favorable rates compared to what the market holds today. The downside, if you will, we always look at what's the downside in some cases. The downside is we're good to sublease, but we'd like to turn it into a revenue opportunity versus just the cost coverage. All right. Perfect. My second question, because I tuned in late, did you guys touch upon, okay, what your revenues could be at full capacity at the new facility at all? That's a nice way of asking a good question. I have to give you credit for asking it that way like you came in late. The answer is no. No, the guidance we did put out was more around bottom line that we expect next year's adjusted EBITDA to be at least 50% up from what we saw last year. So more looking at it from a bottom line standpoint. We do know we built out the capacity in the new Georgetown facility that would be beyond what the current demand is. So we definitely think there's some upside potential, but we did not put a number on it. Steve, let me give you another cheeky answer. Dave. Dave? I'm sorry. It's Dave. Dave, I'm less than 24 hours away from an elective eye surgery, so I can't see too well about anything down the street right at the moment. We are very focused on profitable growth. I appreciate your question. Obviously, there are things we can say, and there are things we can't say, but we're trying to give you as much guidance as we can for the year. Hopefully, that gives you some insight to what's going on. Don't worry. We're not letting them walk anywhere near the racks right now while they can't see well. Thank you very much, guys, and I appreciate it. Thank you. Your next question is coming from Bradley Stevenson. Bradley, your line is live. Please go ahead. Hi, guys. Darryll, this quarter was just not good enough, I just wanted to tell you. No, I'm just kidding. Hey, Bradley. It's been really nice talking to you. Glad to see you. We'll get back to the drawing board. No, really good time. I just had a—most of my questions were actually already asked, but I did a couple of questions. One, as I know there's a little bit of a concern out there with some, not saying myself, but asking for a friend, that margin pressures, there might be some margin pressure on you as volumes start to go up. However, Danny, I heard you say really what I think was just the opposite of that. Is that over the next two or three quarters, seeing integration margins go up? Do you see that even looking further out as volumes go up? I do. Yeah, some of what I was trying to point out in this call, not to try to go down too much of an accounting geek rabbit hole, but unfortunately, that's kind of where I am. Accounting rules stipulate that we had to start recognizing rent expense on the new facility, even though we're not paying rent. Basically, you take all your rent payments over the entire period and start straightlining it. So we were expensing about $253,000 per month starting in December, and we have been continuing to expense that. So it was about $760,000 of expense that hit the SI department this quarter that's non-cash. Our arrangement with our partner, they're cognizant of the fact that we're going to incur additional costs as we move to that factory. We have structured our agreement with them such that essentially we are more than made whole for that incremental cost that we will incur as we are doing that to enable the ability to serve them better. Yes, I anticipate those margins will go up. The other that I pointed out was even though if you look at the GAAP recorded margins in that SI department, it shows it was down this quarter. When you strip out that non-cash rent, we are actually up about 400 basis points from 28% to 32%. I do anticipate margins going up in the remainder of the year. The one caveat I would give there, because the margins are lower in the procurement business, to the extent that the growth in procurement may outsize the growth in other segments, when you look year- over- year, the overall blended margin may come down. Even looking at that, if you recall, looking at it on a gross basis, regardless of whether we record those procurement deals at net or gross, we actually improved those margins also on the non-GAAP gross basis from, what, 460 basis points to 660 basis points this quarter. All those signs are pointing in the right direction. Sorry, long answer from my accounting geek world to a very short question. I love the accounting geek stuff, so feel free to do that. That's actually where I live. So procurement services, I mean, is this the new norm the last three quarters, $60 million, $40 million, $90 million, or is this a temporary situation? We're optimistic about the procurement business. We've made some investments in resources to further penetrate opportunity, go find additional opportunity. It's a little difficult sometimes to predict, but we're optimistic on the top line growth. The question is just when is it going to fall? The trick, in our opinion, is to go find multi-year large situations that we can earn the right to win the second tranche or the third tranche of a deal and continue to deliver. That's the challenge that we have. And frankly, we're building out the team a little bit to scale, and we're optimistic about this year. The question is when's it going to pop? As we just reported, we had a very strong Q1. I think we're optimistic about the next quarter, and we're working on the back half of the year to make it equally exciting. Yeah. We've been relatively clear in the past, and I would still stand by this too, but that's going to go up and down a bit from quarter to quarter. Some of those are discrete projects, right, where you may have a $10 million or $20 million or $30 million project in one quarter that may not repeat the next. Frankly, I was pleasantly surprised with the volume that we saw in Q1. Initially, I expected a little bit more seasonality around the federal buying season with the federal government ending September 30th. I expected at the end of Q3, that would have been some of the lift we saw there. Again, when departments got their new budget in Q1, I was pleasantly surprised to see that that did not fall off in Q1, but I wouldn't necessarily expect every quarter to be at a $90 million level. We're going to put Danny in a sales job. Facilities management, is it—I don't know how to say that. It's down sequentially and year- over- year. You talked a little bit about that in your comments, but could you add a little more color to what's going on there? Yes. We remain optimistic about that segment, primarily because it's a vehicle that I think is transitioning from the old to the new. The old was data center expansion, power in a remote location closer to the need, hydroelectric capability, closeness. It's transitioning to become more of an alternative compute, if you will, module for AI. The long pole in that tent is getting the components, getting the power units, getting the container built, and frankly, selling it to an executive in an enterprise or a business as to why they should do this versus go to a colo, go to a hyperscaler, or extend their existing data center and make sure that they've got the ability to capture direct liquid capability and take advantage of the latest and greatest technology. It's a time-to-value equation. We're working very closely within that ecosystem of people who deliver pieces of that solution who actually are trying to sell it as well. Our partnership with our key customers is on point doing that. We're assisting. There are people in the ecosystem of suppliers, so to speak, like Schneider, Vertiv, Motivare, who are all in that game that we are working closely with to try and provide an IT solution in a modular unit. We also believe there's a play with a different kind of technology approach that we really can't talk about here, but that's a possibility in how we deliver a container and what does it look like, especially even at the edge. We don't have to have a 40-foot container every time we show up. We're working on it. We have resized our existing team to take advantage of the existing contracts we have to maintain the profit margin without getting out in front of our headlights on growing resources without the demand signal. We are very focused on making sure we add and we contract as needed. TBD on how it all plays out, but we remain optimistic that there is a play. I'm sorry. The other color I would add there, Bradley, is that about half of the decrease that you saw year- over- year this quarter was really discrete projects that were in the first quarter of last year. Those pop up from time to time. I'd expect some later in this year and in later quarters as well. Those are not necessarily comparable year- over- year. Think about battery replacements or media filter changes, renovations of MDCs. That's one that I wouldn't necessarily expect to be there every quarter. Do you have any or can you comment on what kind of potential you see in that segment and maybe a timeline on that? It can move significantly with a couple of new deals. We have got a couple in sight. If we can get to a volume business, a little bit higher volume, it makes a big difference in our bottom line because of the margin involved. That is all I think I could say right at the moment without giving up any competitive advantage that we think we have. Okay. Then the last one I had was around enterprise AI infrastructure. Core Weave talked a little bit in their earnings call, I think it was earlier this week, about seeing that demand increase. Are you seeing any of that yet? Yes. I'm talking from a sales experience when I tell you this. Pipeline is all relative. I like to see dollars and cents on deals closed. You do not get paid on pipeline. You get paid on producing results, but you need a pipeline. We're told that, and we're working very closely with people that are telling us the pipeline has never been as big. Okay. Great. Let's move it to revenue. We're starting to see that. Our relationship with our key customer is very healthy. We're very optimistic that the pipeline will convert. We're still working on larger deals. If you look at Meta, OpenAI, AWS, Microsoft, Oracle, Google, everybody is talking about what their investments are in AI infrastructure. We're talking in billions. We're not talking rounding a couple hundred thousand dollars. This is a big-time deal. That's translating to people who are scrambling to get their hands on the technology. We're glad to be right in the middle of it with the kind of skills that we have, and we expect it to continue. All right, guys. Thank you so much. Great quarter. I was just kidding you when I said it was not good enough, so. Actually, it's kind of like we're happy, but we're not satisfied. We look to avoid any situation that makes us, if you will, we do not deliver based on what we say we're going to do. We want to make sure we deliver when we say we're going to deliver. Thank you for that. Appreciate it. Thanks. Thank you. Your next question is coming from Jordan Marcus. Jordan, your line is live. Please go ahead. Hey, guys. Can you hear me? Yeah, we got you, Jordan. Darryll, Danny, Jordan Marcus, longtime investor and supporter. I'm going to start this call by using a very technical Harvard Business School term to describe the operational efficiency in which you guys have performed over the past quarter. And that is, let's fucking go. Incredible. I just want to compliment you like everybody else. It is easy to talk the talk. It is hard to walk the walk. You guys continue to excel in that capacity. Thank you for you and everyone on your team in continuing to perform. Gary, you made my day. Mike. Thank you. Darryll, man, I love you, dude. I know we got to be formal on these calls, but I got to get in touch with Maj. We got to get a call on the books, but you are my favorite company by far. And that's just not because of the earnings. I think you guys got a long way to go, and you're just getting started, so. Thank you. The next question is coming from Wayne. Yeah. Thanks. Wayne Van Orden. Wayne, your line is live. Please go ahead. Hey, good afternoon, gentlemen. I'm just a small retail investor, but I found you because I've been in the IT industry since 1972. I remember the 8088 chips. If you remember them, anybody there, we should have a nerd conversation. My history in the industry, I've found frequently when new technologies appeared, there was always a difficulty in getting the pipeline for the team. I'm wondering how you're addressing recruiting and stabilizing your needs based on the different levels of engagement you have with your clients. Is that proving to be more difficult, or is that something that you're learning how to master? That's the whole question I have just on creating the team. Yeah, Wayne, thanks. You and I are probably in the same age level. I'm sure I'm older, but when you talk about technology change since 1972, we can go toe to toe on that one. To answer your question, we fundamentally believe that people are the center of everything we do. We have an amazing Chief People Officer who has done a phenomenal job of automating a lot of what we do today so that we can take advantage of promoting open opportunities online, working through ADP as an example, and sourcing and finding people, number one. Number two is I'm proud to be a part of a team that has exceptional leaders. You're listening to Danny here alongside. We have a Chief Operating Officer, Todd Merritt, who basically is 24/ 7. Todd does an incredible job of running this operation and getting us ready for Georgetown. We're blessed. We're also blessed, number three, in a market that is pro-business, that has a talent pool that wants to work, that wants to come and do something. We've done, I think, a great job, and we continue to work on trying to make this worthwhile to our people. Todd has implemented an incentive system to make sure that we do not have any bad quality. We turned both, which is a customer dissatisfaction. People are recognized for their good work. We always have a way to improve in that area, but we did not go from 80 to a couple hundred people overnight without making some mistakes and learning from those mistakes. When we used to spend $600,000 and $700,000 a year for temporary employment agency fees, and we have knocked that almost out, that is a result of the good work that both Janet and Todd have done to make sure that we have got the right foundation to continue to grow. We are anticipating growth again, and we are out in front of it. If all things work out right, we will do it properly and more smartly than we did the last runaround. We learned from that. Thank you for that. Glad you are a small investor. We love you for that. Thanks for your investment. I love Texas, so can you tell me when the company picnic is arranged? I might come over from Daytona to visit. Not over any time. We'd love to have you. Thanks a lot. Bye-bye. Appreciate it, Wayne. Thank you. Your next question is coming from John Weinberg. John, your line is live. Please go ahead. Hi, good afternoon. Can you guys hear me? We got you. Great. Another small investor, but not too small. Pretty decent-sized retail investor. And I've been with you for a long time. Really appreciate all the hard work. Hearing you talking about the team is a fantastic testament to the results that you showed today and hopefully keep continuing to show. A couple of questions. One is about capacity and AI demand durability. Now that production has started at the new facility, what level of committed demand or visibility do you have from AI clients to support full utilization? What assumptions are you making about the durability of AI infrastructure spend into 2026? Thanks. Okay. I want to make sure I understand your question right. So you're asking on our capacity. Explain it just a little bit further. Yeah. I'm just saying what level of committed demand or visibility do you have from AI clients to support your full utilization for the new plants? What assumptions are you making about the durability of AI infrastructure spend into 2026? Okay. Our demand and visibility with our key customer around rack integration fluctuates. Basically, over the last couple of years, we've worked very closely together to build a better, if you will, window or portal into that demand. I'd say we're pretty good on 90 days to five months. It ebbs and flows depending on what happens in the market. It's a fluctuating situation, but I think we're pretty tied off on what's coming our way and what we're going to need to do on people resources to meet the demand. It fluctuates a little bit, but we're good. Another way to look at it is our capability to scale year- over- year on our rack integration business at our new facility is significant. We will do a lot better this year than we did last year. We have more to go. The growth capability is, I would hate to give you a number, but it's exciting in terms of what we can do. Now, on your cost question about AI, I'm not sure I really understood that. Maybe Danny, you took it and. Yeah. He was asking about durability of the AI infrastructure spend in 2026. I guess my question there, John, are you asking more about how long our investment in the new facility will service or how long you think before customers need to start replacing the technology they're buying today? Yeah. Thank you. It's the latter, actually. Yeah. This is not scientific. This is me reading tea leaves. As I see it, enterprise, medium, and large enterprises, they're probably going to make these investments for a five to six-year time horizon. My guess is hyperscalers will likely need to replace it more quickly because if they don't, they'll be obsoleted pretty quickly. A lot of the dollars being spent today, again, this is me seeing this, not necessarily a scientific study, but I think a lot of that's probably going to have to be replaced within the next three to four years, maybe as short as two, just to remain competitive and remain up to speed with the advancements in technology. John, another way we look at it is we work closely with a couple of research companies, and we monitor the data center integration spend, total addressable market. You can always tweak that depending on what result you're looking for. The numbers are staggering. Who knows for how long and what's going to be in a couple of years from now? I think anybody on this call could tell me or us what this industry is going to look like two, three years from now. Bring it on. Well, exactly. When Wayne was talking earlier about being a small investor and since 1972, he's been watching the industry, it was not too long ago that, well, it was long ago, that I remember going from an 80-column card to a 96-column card. That was a massive shift. You think about what we're doing today and what you have in your hand on a cell phone versus what a mainframe used to look like. It's incredible. We are in a great industry. It's ever-changing. We are embracing it. We are doing everything we can to stay out in front of it. Thank you. That's very helpful. My last question is, if you can speak to how your customer base is evolving, particularly in terms of the concentration, and to what extent is the growth in AI rack integration expanding your exposure beyond legacy customers like Dell? Of course, it's great to have Dell, but I wanted to just ask that question. I've been public in my comments about growing and looking for sources of revenue that would not betray or violate any trusted relationship we have with our existing customer. That is foremost. That does not mean that we could not find some ways that would maybe be seen as competitive, but we want to make sure we do this in a very appropriate way. The last thing we want to do is violate any of our trusted connections. There is a big market out there. We have looked at how rack integration is performed by competitors in the industry. You go down the list. You have HPE, Supermicro, Lenovo, UPIC. There are opportunities to do some of our work in a customer facility. There are opportunities to do it in a way that would disrupt what we are doing with our current customer. We do not want to do that. We're looking at opportunity to expand our service capabilities that's, if you will, net incremental. That could be by acquisition. It could be by partnering. There's a way to do that in a channel. There's a way to do that in the software world to build appliances, so to speak. We're looking at all of that in a way that even complements our existing relationship but doesn't show up on our books as Dell or our existing strategic customer revenue, if that makes any sense. Yeah. Makes a lot of sense. I appreciate that answer and your candor. You made a lot of shorts very unhappy today, and the longs, us, very, very happy. Appreciate that. Hopefully, we'll continue. Have a great afternoon. Thank you. Appreciate it, John. Thank you. I'd now like to pass the floor to James Carbonara for another question. Hey, guys. We had a question come in from the airport, the investor. It's a little noisy in the background, so I just want to read what he texted in. He said, "Back to NVIDIA, I want to take the glass half-full approach. Given that they have a manufacturing presence in Texas near you, can we envision them as a customer at some point? They do outsource direct to companies like Foxconn for integration. As a U.S. company, could that be an advantage? All the facts are friendly. Possibly. Okay. No follow-up from that investor on text. Thank you, Darryll. Operator, back to you. Sure. Thank you. And this does now conclude the question-and-answer session. I would now like to pass the floor back to Darryll Dewan for closing remarks. Thank you. I'm reminded of the phrase, "Success breeds complacency." We appreciate the kind words. There's been a lot of work. We're not done. The last thing we want to do is become complacent and stop looking at the little things that have separated us to get here. We are very focused, and I'm very pleased to have a heck of a team leading this company that I get to work with. I'm optimistic about what's going on. It's an exciting time for us. We are in a dynamic part of the industry. We are going to do everything we can to remain relevant and step ahead. For all of you that have been on this call, I want to say thank you for putting up with us and being an investor. We value your time and your money. All I can say is wish us luck. Thank you. Thank you. This does conclude today's conference call. You may disconnect at this time and have a wonderful day. Thank you once again for your participation.