TSS, Inc. (NASDAQ: TSSI) announced Tuesday morning that it has leased about 380,000 square feet of warehouse space in Georgetown, Texas. The company will use the space to support growing demand for its AI and high-performance computing rack integration work. The seven-year lease covers two buildings at Berry Creek Business Park, less than a mile from TSS’s integration factory. Move-in starts this month.

Key Points

• TSS signed a seven-year lease for about 380,000 square feet in two buildings at Berry Creek Business Park in Georgetown, Texas.
• The new space is roughly four times the size of TSS’s current 97,000-square-foot warehouse in Round Rock.
• TSS will occupy the first building in October 2026, and the second will come online when construction finishes in 2027.
• Second-quarter systems integration revenue rose 46% to $13.9 million, and TSS expects faster integration growth in the second half.

TSS (NASDAQ: TSSI) Adds Room for Growing Customer Volumes

The warehouse will handle receiving, staging and managing the materials and components that feed TSS’s rack integration lines. In this business, TSS assembles, configures and tests full server racks before they ship to data centers. Supply chain capacity has become a bottleneck because TSS manages billions of dollars of customer technology each year.

“This additional space gives us the room and flexibility to support growing customer volumes,” said CEO Darryll Dewan. TSS also said the expansion creates opportunities for future incremental revenue and earnings.

Integration Is Now the Growth Engine

The lease builds on a clear shift in TSS’s business mix. In the second quarter, total revenue fell 20% to $35.1 million because lower-margin procurement sales dropped 45%. However, systems integration revenue jumped 46% to $13.9 million and rose to 39% of total revenue, up from 22% a year earlier. Facilities management revenue climbed 84% to $2.7 million.

As a result, profitability improved even as revenue fell. Gross profit rose 11% to $8.0 million, adjusted EBITDA grew 12% to $4.5 million, and net income was $1.4 million, or $0.05 per diluted share.

TSS (NASDAQ: TSSI) Guides to a Stronger Second Half

TSS is spending about $17 million to prepare its facilities for next-generation AI data center technology. Dewan said in August that the company expects “the second half of this year to be stronger than the first half with accelerated growth in Systems Integration.” TSS also expects 2026 adjusted EBITDA at the upper end of its $20 million to $22 million range. It ended June with $67.7 million in cash, which gives it room to fund the expansion.

TSS is a member of the PRISM AI Datacenter and Infrastructure Index. The stock closed Monday at $10.05, giving the company a market value of about $282 million. Shares are up more than 3,300% since the index’s inception on January 2, 2024.

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