(TSRI) research, news, and more from GeoInvesting

Company description

Tue, 13 Jun 2017 16:22:40 GMT

TSR, Inc. provides contract computer programming services in the New York metropolitan area, New England, and the Mid-Atlantic region. It offers technical computer personnel to supplement the in-house information technology capabilities of its customers in the areas of mainframe and mid-range computer operations, personal computers and client-server support, Internet and e-commerce operations, and help desk support, as well as voice and data communications, including local and wide area networks. The company primarily serves vendor management companies, as well as customers in the financial services business. TSR, Inc. was founded in 1969 and is based in Hauppauge, New York.

Research

Thu, 16 May 2024 18:38:40 GMT

Tsr, Inc. (NASDAQ:TSRI) ($7.74; $16.7M Market Cap) a provider of information technology consulting and recruiting services, was acquired for $13.40 per share, representing a 73.8% premium to the May 14 closing price.

TSRI was one of the 3 staffing stocks we highlighted in our April 2022 article, “IT Staffing Trio - RCM Technologies, Inc., TSR, Inc., Mastech Digital, Inc. - The Trend Is Your Friend”.

Research

Tue, 10 Jan 2023 18:58:19 GMT

Tsr, Inc. (NASDAQ:TSRI) ($7.17; $15.3M Market Cap) a provider of information technology consulting and recruiting services, announced Q2 2023 results:

Sales of $26.0 million vs $23.8 million in the prior year
EPS of $0.30 vs EPS of $0.12 in the prior year

“Revenue grew by 9.1% over the prior year quarter due to a combination of more high end IT consulting engagements and our successful emphasis on the higher profit margin permanent placement space. This drove net income, which was also enhanced by our executive team’s focus on controlling selling, general and administrative expenses.

In early 2020, we created a multiyear road map that started with increasing top line growth, investing in our technology infrastructure, improving brand recognition, and revitalizing our corporate culture. We anticipated that this plan would increase profitability and shareholder equity and we are happy to report these positive results..

As we navigate a challenging economic environment, we are optimistic that revenue and income will continue to grow. We firmly believe that TSR is well positioned in the industry and has a strong balance sheet. We recently adopted a share buy-back program as a demonstration of our long-term confidence in the Company’s future.”

With trailing 12 month non-GAAP EPS of $0.65, the stock is trading at a trailing P/E of 11.0.

On April 11, 2022, we highlighted TSRI in a research update that included a summary of our interview with the CEO and CFO.

TSRI is one of three IT Staffing stocks we are watching as the industry demand remains robust. The other two are Rcm Technologies, Inc. (NASDAQ:RCMT) and Mastech Digital, Inc (NYSE:MHH).

Research

Wed, 12 Oct 2022 04:00:00 GMT

Tsr, Inc. (NASDAQ:TSRI) ($7.74; $16.6M Market Cap) a provider of information technology consulting and recruiting services, announced Q1 2023 results: (results were yesterday pre market)

Sales of $26.2 million vs $22.8 million in the prior year
EPS of $0.22 vs EPS of $0.12 in the prior year

“The demand for staffing services remained strong during the quarter...If our current trends continue, we expect operating income to continue to grow on an annual basis as we leverage selling, general and administrative expenses.

TSR is firmly committed to exceeding the expectations of our customers. Double digit organic growth is a good validation that we are providing a high level of customer satisfaction. As we have been saying, we have made significant commitments to streamlining our processes to provide top quality candidates to our valuable customers on a cost competitive basis. It is very exciting to see these efforts starting to positively affect our bottom line. We believe that we are well positioned in the industry and have adopted a share buy-back program as a demonstration of our long-term confidence.”

On April 11, 2022, we highlighted TSRI in a research update that included a summary of our interview with the CEO and CFO. We had some Fireside chats lined up that they kept canceling. We are going to try again to get one scheduled.

TSRI is one of three IT Staffing stocks we are watching as the industry demand remains robust. The other two are Rcm Technologies, Inc. (NASDAQ:RCMT) and Mastech Digital, Inc (NYSE:MHH).

Research

Tue, 12 Apr 2022 13:55:40 GMT

Tsr, Inc. (NASDAQ:TSRI) ($11.76; $23.0M Market Cap) a provider of information technology consulting and recruiting services, announced Q3 2022 results:

Sales of $24.4 million vs $17.2 million in the prior year
Loss per share of $0.02 vs loss per share of $0.16 in the prior year

“The demand for staffing services remained robust in the quarter. Our revenue increased 42.1% for the third quarter due to organic growth from new and existing customers. Operating loss for the current quarter was $37,000 as compared to an operating loss of $339,000 in the prior year quarter. Traditionally, our third quarter is the lowest in terms of profitability, as the combination of reduced billable workdays for our consultants due to the holiday season and the restarting of payroll taxes based on the calendar year reduces revenue and increases costs. If our current trends continue, we expect annual operating income to continue to grow as we leverage selling, general and administrative expenses.”

While revenues were actually up sequentially from Q2 ($23.9 million) the company was not able to maintain profitability.

We recently highlighted TSRI as one of our IT Staffing Trio stocks we are watching as the industry demand remains robust. The research update included a summary of our recent interview with the CEO and CFO, in preparation for a Fireside Chat with management that we will be hosting on Geoinvesting this month.

As we mentioned, we thought the stock’s valuation was rich based on the annual EPS run-rate, using Q2 financials as a guide.

One thing we mentioned is that we wanted to gain some more color from management on the maintainability of Q2 EPS. Obviously, the numbers are telling us that there is some seasonality in the business that we need to better understand.

Since the stock had risen sharply ahead of the Q3 release , we are hoping shares will trade down aggressively to a better valuation as we continue to conduct our due diligence on the company. It’s going to be very interesting how the management teams of TSRI and the two other staffing microcap stocks we’re looking at, Rcm Technologies, Inc. (NASDAQ:RCMT) and Mastech Digital, Inc (AMEX:MHH), address the subject of seasonality.

PodClips

Tue, 12 Apr 2022 13:51:27 GMT

TSR, Inc. (TSRI) Q3 Cliff Notes

Interviews

Mon, 11 Apr 2022 18:40:46 GMT

TSRI CEO and CFO Interview Cliff Notes

TSRI History

Legacy management had a robust client list to work with, but was content with:
- Not seeking to aggressively add to the client list
- Not seeking how to gain more wallet share from current customers
- Not spending capital to aggressively hire recruiters in-house and grow past the company’s status quo capacity. Recruiters are the life and blood of staffing companies. They are responsible for finding employee candidates for clients, prospecting for new clients and building strong face to face relationships with clients..
This conservative and risk averse management style led to a slow growth rate since the 1980

Were far behind in technology with stale front office to backend system
Never utilized offshore recruiting
Stale corp culture

New CEO

Activist investor Zeff Capital began becoming openly critical of the company, starting in May 2017.
Continued pressure by Zeff resulted in Thomas Salerno being appointed CEO in Jan 2020, but had actually been with the company for 10 years.
Prior to joining TSRI, Thomas spent about 25 years working at various companies in IT or human resources capacities.
Zeff is very supportive of new direction

Thomas’s Plan

Injected new ideas
Changed mgmt structure (I need to circle back on this)
Put a remote working environment in place, even before COVID to help attract more recruits (a symptom of a gig economy). Learned in a month how to run the business remotely.
Wallet Share Opportunities
- Realized that the company had stability and a rich history of happy clients
- Saw the potential for incredible growth opportunities just from doing more business with current clients
Shift from targeting high volume low margin work to lower volume higher margin work
Recruitment
- Aggressively spend capital to hire recruiters
- Start hiring recruiters offshore
- Currently have about 40 to 50 offshore and 70 to 80 onshore recruiters that work full-time for TSRI
Margins and Efficiency
- Hiring offshore recruiters should help to expand margins since their salary will be less than onshore (I still need more color on this).
- Modernized front office to backend systems making them fully automated - from the job posting, searching for candidates after a job is posted and placing a posting.
- Operating leverage - Modernization efforts make it possible for each recruiter to handle several accounts and close accounts faster. For example, instead of sending a text one by one to clients, recruiters can now send mass texts (UCaaS).
Exploring to expand outside core IT computer programming focus (I need to circle back on this)
Make at least one acquisition per year (more on this in following sections)

Competitive Advantages

Contracts are longer term, providing some visibility
Willing to take smaller job requests that no one else wants
Database of 5 million resumes, plus has an external spider searching the web for employee candidates
Now, willing to pay up for great recruiters
Robust front and back office systems
Understands that the recruitment business is still very dependant on face to face relationships, not just tech

Areas og Focus

Insurance , pharma , financial / banking
Computer programming

Ideal Acquisition Target

Revenue of $20 million
Or 2 or 3 smaller ones
EBITDA Of $1.0M to $2.0M
Ineffective or no back office.
- Target company can quickly experience margin expansion, 20% to 30% bump in EBITDA, and quicker contract closes as target integrates into TSRI’s back office infrastructure
- Target has seasoned recruiters (recruiters can be as much as 40% of the acquisition price) that will flourish in TSRI’s efficient environment
Acquired firm last year - had a great client base that the target was leaving so much on the table

Why Cheap Acquisition Opportunities Can Exist

Lots of uninformed sellers
No backoffice in place
Smaller comps can’t afford or don’t want to hire recruiters

Risk

Inability to hire great recruiters
Harder to find qualified employment candidates

Liquidity

Don’t have to raise money
Have line of credit in place

Research

Fri, 16 Jun 2017 14:49:46 GMT

Closed Our Swing Trade in TSRI

Yesterday via premium tweet we stated:

On June 14, 2017 we stated we nibbled at shares of TSRI for swing trade based on the recent activist investor activity. After a brief spike, shares pulled back sharply.

On May 18, 2017 microcap activist, Zeff Capital, had made an offer to acquire all the shares of the Company ($5.15 dividend adjusted) which the Company rejected. On June 12, 2107, Zeff filed a 13D/A filing stating that it was withdrawing its bid due to the sharp increase in TSRI shares, above its takeover bid. However, the 13D/A included verbiage stating that Zeff was aware of several third parties who had interest in acquiring the Company. It was our belief that another offer would come. Yesterday during the day, another 13D/A filing from Zeff Capital was filed disclosing that they hold sold about one third of their position.

While this does not mean a second buyout offer is not in the cards, we would also not be surprised to see another filing from Zeff showing they have closed the entire position. The stock could remain volatile as investors speculate on whether or not future takeover proposals will surface.

Research

Wed, 14 Jun 2017 15:03:58 GMT

Small Swing Trade in $TSRI

In yesterday’s morning email we highlighted recent activity in TSRI, as activist investor Zeff Capital made an offer to acquire all the shares of the Company. You can see our full research note here.

Shortly after the open, via tweet, we stated we had nibbled a position in TSRI as a swing trade.

Shares opened at $10.35 and reached a high of $11.10 before pulling back sharply to close at $9.05. We are still holding our swing trade for now.

TSRI provides contract computer programming services.

Research

Tue, 13 Jun 2017 16:21:40 GMT

TSRI ($10.05) - Watching TSRI due to 13D activity from Zeff Capital. On May 18, 2017, when the stock was trading $5.00 per share, Zeff filed a 13D disclosing a 7.2% stake and offering to acquire all the shares of the Company for $6.15 per share. The company rejected the Zeff offer, stating it would not pursue the deal and believes it is in the best interest of shareholders to remain independent. The Company announced a $1.00 special dividend on May 25, 2017, seemingly to show that they are open to unlocking value for shareholders in alternate ways.

Yesterday, Zeff filed a 13D/A stating they have pulled their offer but that they believe the Company should engage an investment bank to explore selling itself and/or strategic alternatives to enhance shareholder value. Zeff mentioned that it is aware of several third parties that have interest in acquiring the Company.

The stock hit a new 52 week highs of $10.25 late in the trading day yesterday (the 13D/A was filed at 2pm EST). With the 13D/A being filed late in the day, there could be carry over into today’s trading session as investors continue to digest the news.