TSSI Factory Visit
A Deep Dive into Operations, Future Growth, and a Glimpse Behind the Scenes
Fellow Breakout Investor Chris Forte and I completed an on-site visit to Total Site Solutions (TSSI) Round Rock, Texas headquarters and factory on Thursday January 30, 2025.
My recent visit to the TSSI factory wasn't just a tour; it was an immersion into a company that's not only on the cusp of significant growth but also operating with impressive efficiency and a clear strategic vision. Discussions with key executives, including CEO Darryll Dewan, CFO Danny Chism, and COO Todd Marrott, provided a fascinating glimpse into the inner workings of TSSI and their plans for the future.
Decoding Q4 and Beyond: Quiet Confidence
While the official Q4 results are still under wraps, the atmosphere during my visit was one of quiet confidence. There wasn't any chest-thumping bravado, but rather a sense that the team knew they had delivered a solid performance. This is a company that seems to have adopted a strategy of under-promising and over-delivering each quarter, a refreshing change from the hype often seen in the tech world.
Strategic Expansion: The 8x Capacity Leap
TSSI's new facility isn't just a bigger space; it's a strategic move designed to dramatically scale their operations. The potential to increase capacity up to eight times its current levels is staggering. The company also recognizes that power is a key factor in their expansion, and they are planning to scale up power access over the next few years as needed..... The future of the current facility is still being considered, with possibilities including subleasing, using it for storage or order fulfillment. The idea of using both facilities to work with different clients at the same time is an interesting possibility and could be key to expanding their business.
Operational Excellence: Todd Marrott's Impact
One of the most impressive aspects of my visit was witnessing the changes that COO Todd Marrott has implemented on the factory floor. He has significantly improved the efficiency of operations, streamlining and simplifying what was previously a complicated and cumbersome process....The factory floor is now well-defined with clear markings and training guides for the technicians.
TSSI is now capable of significantly scaling the # of racks completed per day and can even sometimes complete racks in as little as 24 hours, compared to two + weeks previously. The speed and efficiency with which they are producing these complex racks is remarkable, with a single completed rack potentially worth “multiple millions”. Marrott is clearly an exceptional asset to the company and CEO Darryll and CFO Danny are very proud of his work.
The Key Customer Dynamic:
TSSI's relationship with its strategic customer is complex, however, the company has clearly thought through how to navigate this, and it appears this customer is willing to support TSS financially and operationally. TSSI seems to be taking a pragmatic approach, balancing its commitments to this strategic customer with a keen interest in expanding its client base.
Key Takeaways and a Look Ahead:
• TSSI is strategically positioned for significant growth, driven by operational efficiency, capacity expansion, and a clear understanding of the market.
• The company's operational efficiency is a key strength, thanks to COO Todd Marrott’s improvements.
• The management team is a vital asset.
• TSSI is cautiously optimistic about Q4 results and the upcoming year, and they are already looking ahead to how they will beat 2025's record earnings in 2026.
• The company is focused on balancing its relationship with its strategic customer while also exploring other opportunities.
• TSSI has navigated the recent market uncertainty with a focus on steady growth.
• Power is a critical factor, and their move to a location with ample supply is likely a game changer.
• The current stock price correction due to DeepSeek turmoil may present a buying opportunity.
In conclusion, my visit to TSSI was more than just informative; it was inspiring. The combination of efficient operations, strategic expansion plans, a strong management team, and a focus on steady, sustainable growth has positioned them for continued success. The team is clearly focused on delivering consistent performance and building strong relationships, which I believe is a recipe for long-term success. The shift from aiming for a single "high five" moment to a strategy of achieving a series of smaller wins and increased order flow seems to be working for them.
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Author’s Disclosure: I have a beneficial long position in the shares of TSSI either through stock ownership, options, or other derivatives, and I may buy or sell the stock when you are reading this. I wrote this post myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. I am not a licensed securities dealer, broker or US investment adviser or investment bank.
Breakout Investors’ Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Breakout Investors as a whole. Breakout Investors is not a licensed securities dealer, broker or US investment adviser or investment bank.
This report inspires confidence, mainly when the management team works towards long-term execution. Thank you.