TSR, Inc. Reports Results for the Third Quarter Ended February 29, 2024

Rhea-AI Summary

TSR, Inc. (TSRI) reported financial results for Q3 ending February 29, 2024. Revenue decreased by 18.8% to $19.7 million, with net income of $411,000. The company maintained a strong balance sheet with $15.2 million in net working capital. CEO Thomas Salerno highlighted cost control measures and optimism for improved revenue and income in the second half of 2024.

Positive

• None.

Negative

• Revenue decreased by 18.8% compared to the same quarter last year.
• Despite cost control measures, selling, general, and administrative expenses were reduced by $401,000 from the previous year.
• The company experienced mandatory furloughs of contractors during the holiday season, impacting revenue.
• The uncertain macro-economic environment poses challenges for TSR, Inc.

Insights

Financial Analyst

The reported reduction in revenue by 18.8% for TSR, Inc. is a significant figure that investors will eye critically. It's a clear indicator of decreased demand for the company's services, likely reflecting broader market trends. However, the increase in net income to $411,000, up from $80,000, despite the revenue drop, suggests effective cost management, which can be viewed favorably. Investors should consider the company's seasonally weak quarter in their analysis, noting that the holiday season and associated payroll tax expenses can skew results. The improved earnings per share should be weighed against the decrease in top-line sales to determine the sustainability of such profitability.

Market Research Analyst

While TSR's strong balance sheet and $15.2 million in net working capital provide a cushion, the underlying cause of the decline in clerical and administrative contractors is important to understand. The shift could suggest an industry-wide transition or be symptomatic of a weakening economy. The macro-economic environment, as referred to by the CEO, will have a substantial impact on the company's ability to rebound in the second half of the calendar year. Current and potential investors should monitor industry trends and economic indicators closely for signs of improvement or further decline that could affect TSR’s business.

Risk Management Expert

From a risk perspective, the mention of mandatory furloughs and the reliance on reversing advances from customers (which contributed to 'Other Income') could be seen as red flags. These are not sustainable strategies for long-term profitability and could lead to volatility in future earnings. Stakeholders should appreciate the proactive measures to control costs, but also remain aware of the potential for these actions to affect the company’s operational capabilities and customer service standards, which could hinder future revenue growth.

HAUPPAUGE, N.Y.--(BUSINESS WIRE)-- TSR, Inc. (Nasdaq: TSRI) (“TSR” or “the Company”), a provider of information technology consulting and recruiting services, today announced financial results for the third quarter ended February 29, 2024.

For the quarter ended February 29, 2024, revenue decreased 18.8% from the same quarter last year to $19.7 million. Net income attributable to TSR for the current quarter was $411,000, or $0.19 per diluted share, as compared to net income of $80,000, or $0.04 per share, in the prior year quarter. The Company ended the quarter with a strong balance sheet with $15.2 million in net working capital or approximately $7.03 per share.

Thomas Salerno, our CEO, stated: “Primarily as the result of decreases in the number of clerical and administrative contractors on billing with customers, revenue decreased 18.8% from the prior year quarter. Our fiscal third quarter is traditionally the most challenging of the year. Workdays are reduced due to the holiday season and payroll tax expenses are at their highest at the beginning of the calendar year. This year was particularly hard hit with mandatory furloughs of contractors during the holiday season. As always, we continue to focus on controlling costs, which has helped our profitability while customers are reducing their spending. In the current quarter, selling, general and administrative expenses were reduced by $401,000 from last year’s comparable quarter, despite an additional $136,000 spent in the current quarter on professional fees associated with the review of strategic alternatives. The current quarter benefited from “Other Income” of $547,000 resulting from the reversal of advances from customers.

We continue to navigate an uncertain macro-economic environment, but we are optimistic that revenue and income will be stronger in the second half of calendar 2024. The team continues to make progress with new customers and I am proud of their effort to offer our legacy customers some of the best service in the business. We believe that TSR is well-positioned in the industry and has a strong balance sheet.”

The Company will file its Form 10-Q for the quarter ended February 29, 2024 today with further details at www.sec.gov.

About TSR, Inc.

Founded in 1969, TSR, Inc. is a leading staffing company focused on recruiting information technology professionals for short- and long-term assignments, permanent placements, and project work. For over 50 years, TSR has successfully served clients in banking, asset management, pharmaceuticals, insurance, health care, public utility, publishing, and other industries. We provide candidate screening, timely placement, and a real understanding of the right skill sets required by our clients. To learn more, please visit our website at www.tsrconsulting.com.

Certain statements contained herein, including statements as to the Company’s plans, future prospects, and future cash flow requirements are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those set forth in the forward-looking statements due to known and unknown risks and uncertainties, including but not limited to the following: the statements concerning the success of the Company’s plan for growth, both internally and through the previously announced pursuit of suitable acquisition candidates; the successful integration of announced and completed acquisitions and any related benefits therefrom; the impact of adverse economic conditions on client spending which have a negative impact on the Company’s business; risks relating to the competitive nature of the markets for contract computer programming services; the extent to which market conditions for the Company’s contract computer programming services will continue to adversely affect the Company’s business; the concentration of the Company’s business with certain customers; uncertainty as to the Company’s ability to maintain its relations with existing customers and expand its business; the impact of changes in the industry such as the use of vendor management companies in connection with the consultant procurement process; the increase in customers moving IT operations offshore; the Company’s ability to adapt to changing market conditions; the risks, uncertainties, and expense of the legal proceedings to which the Company is a party; and other risks and uncertainties described in the Company’s filings under the Securities Exchange Act of 1934, as amended. The Company is under no obligation to publicly update or revise forward-looking statements.

	Three Months Ending								Nine Months Ending
	February 29,				February 28,				February 29,			February 28,
	2024 Unaudited				2023 Unaudited				2024 Unaudited			2023 Unaudited
Revenue, net	$	19,703,000			$	24,257,000			$	63,874,000		$	76,487,000
Cost of sales		16,372,000				20,267,000				52,699,000			63,434,000
Selling, general and administrative expenses		3,368,000				3,768,000				9,805,000			11,072,000
		19,740,000				24,036,000				62,504,000			74,506,000
Income (loss) from operations		(37,000	)			221,000				1,370,000			1,981,000
Other income (expense), net		574,000				(13,000	)			609,000			(60,000	)
Pre-tax income		537,000				208,000				1,979,000			1,921,000
Income tax provision		110,000				110,000				494,000			629,000
Consolidated net income		427,000				98,000				1,485,000			1,292,000
Less: Net income attributable to noncontrolling interest		16,000				18,000				67,000			44,000
Net income attributable to TSR, Inc.	$	411,000			$	80,000			$	1,418,000		$	1,248,000
Basic net income per TSR, Inc. common share	$	0.19			$	0.04			$	0.66		$	0.58
Diluted net income per TSR, Inc. common share	$	0.19			$	0.04			$	0.66		$	0.56
Basic weighted average common shares outstanding		2,152,323				2,134,660				2,146,551			2,140,344
Diluted weighted average common shares outstanding		2,152,323				2,234,600				2,146,551			2,235,173

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240415196964/en/

Thomas Salerno

631-231-0333

Source: TSR, Inc.

FAQ

What was TSR, Inc.'s revenue for the third quarter ending February 29, 2024?

TSR, Inc. reported revenue of $19.7 million for the third quarter ending February 29, 2024.

What was TSR, Inc.'s net income for the third quarter ending February 29, 2024?

TSR, Inc. reported a net income of $411,000 for the third quarter ending February 29, 2024.

Who is the CEO of TSR, Inc.?

Thomas Salerno is the CEO of TSR, Inc.

What was the percentage decrease in revenue for TSR, Inc. compared to the same quarter last year?

TSR, Inc. experienced an 18.8% decrease in revenue compared to the same quarter last year.

What was the net working capital of TSR, Inc. at the end of the third quarter ending February 29, 2024?

TSR, Inc. had a net working capital of $15.2 million at the end of the third quarter ending February 29, 2024.