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July 27, 2021, 4:30 p.m. EDT

TESSCO Reports First-Quarter Fiscal 2022 Financial Results

TESSCO TECHNOLOGIES INCORPORATED /zigman2/quotes/201101603/composite TESS +2.67% today reported financial results for its fiscal year 2022 first quarter, ended June 27, 2021.

First Quarter Financial Highlights

  • First-quarter, fiscal-year 2022 revenues of $105.0 million, up 9% compared to first quarter of prior fiscal year

  • Record revenues in the Carrier market

  • Sales bookings for the first quarter up 37% year over year

  • Sales backlog at highest level since onset of pandemic

“We believe this quarter’s results are signs of the post-pandemic recovery and evidence that we are executing well on our turnaround plan, with a 9% year-over-year increase in revenues and a 37% increase in bookings,” said Sandip Mukerjee, TESSCO’s President and Chief Executive Officer. “While industry-wide supply-chain challenges delayed the conversion of bookings to shipments in the first quarter, we are confident that we will be able to ship the vast majority of these open orders later this fiscal year.

“For the remainder of this fiscal year, we expect stronger market demand and the continued execution of our turnaround strategy to lead to significant year-over-year growth in revenues for both our Carrier and Commercial markets,” added Mukerjee. “At the same time, we will be vigilant in controlling costs and expect significant improvement in our overall profitability this fiscal year compared with fiscal 2021, including positive adjusted EBITDA.

“We continue to focus on driving growth and efficiency in our core distribution business, developing our Ventev business into a leading innovator of products to help customers resolve infrastructure construction challenges, and developing proprietary services to support the products our customers deploy in their networks. While the last 18 months have presented considerable challenges, I am more confident than ever in our strategy and our ability to achieve our financial operating plan.”

First Quarter Financial Results

As a result of the sale of the Company’s retail inventory and other related assets to Voice Comm, LLC during the third quarter of fiscal year 2021, and the corresponding retail business exit, the Company now presents earnings both from continuing and discontinued operations. The following financial results relate only to continuing operations.

  First Quarter FY 2022 First Quarter FY 2021
Revenue $105.0M $96.5M
Net loss ($2.2M) ($4.9M)
Loss per share ($0.25) ($0.56)
Adjusted EBITDA [1] ($1.1M) ($3.5M)
(1) Adjusted EBITDA (from Continuing Operations) is a Non-GAAP financial measure. Please see the discussion of Non-GAAP Information below and the reconciliation of Non-GAAP to GAAP results included as an exhibit to this press release.

Revenue by Market

  Year over Year Q1 FY 2022 vs. Q1 FY 2021
Carrier 17.2%
Commercial [1] 3.0%
Total 8.8%
[1] Previously referred to as “VAR and Integrator.”

For the fiscal 2022 first quarter, revenues totaled $105.0 million, compared with $96.5 million for the first quarter of fiscal 2021, as a result of improving macroeconomic conditions and growing market share, particularly in the Carrier market. Additionally, both markets were affected by industry-wide disruptions in the global supply chain that delayed receipt of inventory from vendors and impacted the Company’s ability to ship product to customers.

Gross profit was $19.7 million for the first quarter of fiscal 2022, compared with $16.5 million for the same quarter of fiscal 2021. Gross margin was 18.8% of revenue for the first quarter of fiscal 2021, compared with 17.1% in the first quarter of last year. The year-over-year increase in gross margin was in part a result of increased margins in both markets due to changes in customer and product mix.

First-quarter selling, general and administrative (SG&A) expenses increased 0.5% from the prior-year quarter to $21.6 million, primarily as a result of increased variable expenses associated with a 9% increase in revenues. SG&A expenses as a percent of revenue were 20.9% in the first quarter, down from 22.3% in the prior-year quarter.

First-quarter, fiscal-2022 net loss was $2.2 million compared with a net loss of $4.9 million in the first quarter of fiscal 2021.

Adjusted EBITDA and adjusted EBITDA per diluted share from continuing operations were a loss of $1.1 million and $0.12, respectively, for the first quarter of fiscal 2022. This compares with adjusted EBITDA and adjusted EBITDA per diluted share of a loss of $3.5 million and $0.41, respectively, for the first quarter of fiscal 2021.

As of June 27, 2021, the outstanding balance under the Company’s $75 million line of credit was approximately $39.7 million, and the Company maintained a balance of $2.2 million in cash and cash equivalents.

First Quarter 2022 Conference Call

Management will host a conference call to discuss first-quarter 2022 results and business outlook on Wednesday, July 28, 2021 at 8:30 a.m. ET. To participate in the conference call, please call 877-824-7042 (domestic call-in) or 647-689-6625 (international call-in).

A live webcast of the conference call will be available on the Events & Presentations page of the Company’s website. All participants should call or access the website approximately 10 minutes before the conference begins. An archived version of the webcast will be available on the Company's website for one year.

Non-GAAP Information

EBITDA, Adjusted EBITDA, EBITDA per diluted share and Adjusted EBITDA per diluted share are measures used by management to evaluate the Company’s ongoing operations, and to provide a general indicator of the Company's operating cash flow (in conjunction with a cash flow statement which also includes among other items, changes in working capital and the effect of non-cash charges). EBITDA is defined as income from operations, plus interest expense, net of interest income, provision for income taxes, and depreciation and amortization. EBITDA per diluted share is defined as EBITDA divided by TESSCO’s diluted weighted average shares outstanding. Adjusted EBITDA is EBITDA as defined above, but also adds stock-based compensation and goodwill impairments.

Management believes these EBITDA measures are useful to investors because they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies. Because not all companies use identical calculations, the Company’s presentation of these Non-GAAP measures may not be comparable to other similarly titled measures of other companies. EBITDA, EBITDA per diluted share, Adjusted EBITDA and Adjusted EBITDA per share are not recognized terms under GAAP, and EBITDA and Adjusted EBITDA does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA and EBITDA per diluted share, are intended to be measures of free cash flow for management's discretionary use, as certain cash requirements, such as interest payments, tax payments and debt service requirements, are not reflected.

A reconciliation of Non-GAAP to GAAP results is included as an exhibit to this release.

About TESSCO Technologies Incorporated /zigman2/quotes/201101603/composite TESS +2.67%

TESSCO Technologies, Inc. /zigman2/quotes/201101603/composite TESS +2.67% is a value-added technology distributor, manufacturer, and solutions provider serving commercial customers in the wireless infrastructure ecosystem. The Company was founded more than 30 years ago with a commitment to deliver industry-leading products, knowledge, solutions, and customer service. TESSCO supplies products the industry’s top manufacturers in mobile communications, Wi-Fi, Internet of Things (“IoT”), wireless backhaul, and more. Tessco is a single source for outstanding customer experience, expert knowledge, and complete end-to-end solutions for the wireless industry. For more information, visit www.tessco.com .

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained herein, including statements regarding our future results of operations and financial position, strategy and plans and future prospects, and our expectations for future operations, are forward-looking statements. These forward-looking statements are based on current expectations and analysis, and actual results may differ materially from those projected. These forward-looking statements may generally be identified by the use of the words "may," "will," "expects," "anticipates," “targets,” “goals,” “projects,” “intends,” “plans,” “seeks,” "believes," "estimates," and similar expressions, but the absence of these words or phrases does not necessarily mean that a statement is not forward-looking. These forward-looking statements are only predictions and involve a number of risks, uncertainties and assumptions, many of which are outside of our control. Our actual results may differ materially and adversely from those described in or contemplated by any such forward-looking statement for a variety of reasons, including those risks identified in our most recent Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission (the “SEC”), under the heading "Risk Factors" and otherwise. Consequently, the reader is cautioned to consider all forward-looking statements in light of the risks to which they are subject. For additional information with respect to risks and other factors which could occur, see Tessco’s Annual Report on Form 10-K for the year ended March 28, 2021, including Part I, Item 1A, "Risk Factors" therein, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other securities filings with the SEC that are available at the SEC's website at www.sec.gov and other securities regulators.

We are not able to identify or control all circumstances that could occur in the future that may materially and adversely affect our business and operating results. Without limiting the risks that we describe in our periodic reports and elsewhere, among the risks that could lead to a materially adverse impact on our business or operating results are the following: the impact and results of any new or continued activism activities by activist investors; termination or non-renewal of limited duration agreements or arrangements with our suppliers and affinity partners, which are typically terminable by either party upon several months or otherwise relatively short notice; loss of significant customers or relationships, including affinity relationships; loss of customers or suppliers either directly or indirectly as a result of consolidation among large wireless services carriers and others within the wireless communications industry; the strength of our customers', suppliers' and affinity partners' business; negative or adverse economic conditions, including those adversely affecting consumer confidence or consumer or business spending or otherwise adversely impacting our suppliers or customers, including their access to capital or liquidity, or our customers' demand for, or ability to fund or pay for, the purchase of our products and services; our dependence on a relatively small number of suppliers , which could hamper our ability to maintain appropriate inventory levels and meet customer demand; changes in customer and product mix that affect gross margin; effect of “conflict minerals” regulations on the supply and cost of certain of our products; failure of our information technology system or distribution system; our inability to maintain or upgrade our technology or telecommunication systems without undue cost, incident or delay; system security or data protection breaches and exposure to cyber-attacks, and the cost associated with ongoing efforts to maintain cyber-security measures and to meet applicable compliance standards; damage or destruction of our distribution or other facilities; prolonged or otherwise unusual quality or performance control problems; technology changes in the wireless communications industry or technological failures, which could lead to significant inventory obsolescence or devaluation and/or our inability to offer key products that our customers demand; third-party freight carrier interruption; increased competition from competitors, including manufacturers or national and regional distributors of the products we sell and the absence of significant barriers to entry which could result in pricing and other pressures on profitability and market share; our relative bargaining power and inability to negotiate favorable terms with our suppliers and customers; our inability to access capital and obtain financing as and when needed; transitional and other risks associated with acquisitions of companies that we may undertake in an effort to expand our business; claims against us for breach of the intellectual property rights of third parties; product liability claims; our inability to protect certain intellectual property, including systems and technologies on which we rely; our inability to hire or retain for any reason our key professionals, management and staff; health epidemics or pandemics or other outbreaks or events, or national or world events or disasters beyond our control; changes in political and regulatory conditions, including tax and trade policies; and the possibility that, for unforeseen or other reasons, we may be delayed in entering into or performing, or may fail to enter into or perform, anticipated contracts or may otherwise be delayed in realizing or fail to realize anticipated revenues or anticipated savings.

The above list should not be construed as exhaustive and should be read in conjunction with our other disclosures, including but not limited to the risk factors described in our most recent Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission (the “SEC”), under the heading "Risk Factors" and otherwise. Other risks may be described from time to time in our filings made under the securities laws. New risks emerge from time to time. It is not possible for our management to predict all risks.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Any forward-looking statement made by us in this press release speaks only as of the date on which it is made. We disclaim any duty to update any of these forward-looking statements after the date of this press release to confirm these statements to actual results or revised expectations.

TESSCO Technologies Incorporated
                     
    Fiscal Quarters Ended
    June 27, 2021   June 28, 2020   March 28, 2021  
                     
Revenues   $ 104,956,100     $ 96,477,600     $ 88,733,100    
Cost of goods sold     85,269,900       80,024,900       71,907,100    
Gross profit     19,686,200       16,452,700       16,826,000    
Selling, general and administrative expenses     21,646,800       21,532,500       19,580,000    
Operating loss     (1,960,600 )     (5,079,800 )     (2,754,000 )  
Interest expense, net     213,700       110,700       58,500    
Loss from continuing operations before benefit from income tax     (2,174,300 )     (5,190,500 )     (2,812,500 )  
Provision for (benefit from) income taxes     38,500       (321,800 )     (1,958,000 )  
Net loss from continuing operations   $ (2,212,800 )   $ (4,868,700 )   $ (854,500 )  
(Loss) income from discontinued operations, net of taxes     495,500       237,300       (2,075,700 )  
Net loss   $ (1,717,300 )   $ (4,631,400 )   $ (2,930,200 )  
Basic and diluted (loss) income per share                    
Continuing operations   $ (0.25 )   $ (0.56 )   $ (0.10 )  
Discontinued operations   $ 0.06     $ 0.03     $ (0.24 )  
Consolidated operations   $ (0.19 )   $ (0.54 )   $ (0.33 )  
Basic and diluted weighted-average common shares outstanding     8,864,704       8,617,803       8,814,859    
TESSCO Technologies Incorporated
               
    June 27,   March 28,  
    2021   2021  
    (unaudited)     (unaudited)  
ASSETS              
Current assets:              
Cash and cash equivalents   $ 2,207,500     $ 1,110,000    
Trade accounts receivable, net     71,251,900       70,045,700    
Product inventory, net     69,017,500       53,060,000    
Income taxes receivable     10,462,700       10,432,500    
Prepaid expenses and other current assets     5,410,900       3,980,900    
Current portion of assets held for sale     1,042,600       1,196,900    
Total current assets     159,393,100       139,826,000    
               
Property and equipment, net     12,245,300       12,571,600    
Intangible assets, net     21,285,700       19,136,500    
Deferred tax assets              
Lease asset - right of use     10,634,500       11,285,800    
Other long-term assets     6,722,500       6,258,000    
Total assets   $ 210,281,100     $ 189,077,900    
               
LIABILITIES AND SHAREHOLDERS’ EQUITY              
Current liabilities:              
Trade accounts payable   $ 74,297,900     $ 59,415,600    
Payroll, benefits and taxes     7,004,200       6,279,800    
Income and sales tax liabilities     752,900       803,900    
Accrued expenses and other current liabilities     1,448,300       2,912,300    
Lease liability, current     2,547,600       2,573,500    
Total current liabilities     86,050,900       71,985,100    
               
Deferred tax liabilities     26,500       26,500    
Revolving line of credit     39,729,100       30,583,200    
Non-current lease liability     8,321,800       8,923,500    
Other non-current liabilities     793,500       809,400    
Total liabilities     134,921,800       112,327,700    
               
Shareholders’ equity:              
Preferred stock              
Common stock     104,800       104,200    
Additional paid-in capital     67,595,700       67,227,700    
Treasury stock     (105,000 )     (62,800 )  
Retained earnings     7,763,800       9,481,100    
Total shareholders’ equity     75,359,300       76,750,200    
Total liabilities and shareholders’ equity   $ 210,281,100     $ 189,077,900    
TESSCO Technologies Incorporated
                     
    Fiscal Quarters Ended  
    June 27, 2021   June 28, 2020   March 28, 2021  
                     
Net loss from continuing operations   $ (2,212,800 )   $ (4,868,700 )   $ (854,500 )  
Add:                    
Provision for (benefit from) income taxes     38,500       (321,800 )     (1,958,000 )  
Interest expense, net     213,700       110,700       58,500    
Depreciation and amortization     607,700       1,228,000       609,400    
EBITDA   $ (1,352,900 )   $ (3,851,800 )   $ (2,144,600 )  
Add:                    
Stock based compensation     254,900       311,900       251,400    
Adjusted EBITDA   $ (1,098,000 )   $ (3,539,900 )   $ (1,893,200 )  
                     
EBITDA per diluted share   $ (0.15 )   $ (0.45 )   $ (0.24 )  
Adjusted EBITDA per diluted share   $ (0.12 )   $ (0.41 )   $ (0.21 )  
TESSCO Technologies Incorporated
 
    Three Months Ended     Growth Rates Compared to  
    June 27, 2021   June 28, 2020   March 28, 2021     Prior Year Period     Prior Period  
Market Revenues                                    
Public carrier   $ 46,020     $ 39,255     $ 35,015       17.2 %     31.4 %  
Commercial *     58,936       57,223       53,718       3.0 %     9.7 %  
Total revenues   $ 104,956     $ 96,478     $ 88,733       8.8 %     18.3 %  
                                     
Market Gross Profit                                    
Public carrier   $ 5,322     $ 3,728     $ 4,507       42.8 %     18.1 %  
Commercial *     14,365       12,725       12,319       12.9 %     16.6 %  
Total gross profit   $ 19,687     $ 16,453     $ 16,826       19.7 %     17.0 %  
% of revenues     18.8 %     17.1 %     19.0 %                  
  Formerly referred to as VAR & Integrator

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210727006112/en/

SOURCE: TESSCO Technologies Incorporated

TESSCO Technologies Incorporated
Aric Spitulnik
Chief Financial Officer
410-229-1419
spitulnik@tessco.com
David Calusdian
Sharon Merrill Associates, Inc.
617-542-5300
TESS@investorrelations.com

COMTEX_390521873/2456/2021-07-27T16:30:25

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/zigman2/quotes/201101603/composite
US : U.S.: Nasdaq
$ 5.38
+0.14 +2.67%
Volume: 9,245
Oct. 20, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$46.62 million
Rev. per Employee
$633,855
loading...
/zigman2/quotes/201101603/composite
US : U.S.: Nasdaq
$ 5.38
+0.14 +2.67%
Volume: 9,245
Oct. 20, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$46.62 million
Rev. per Employee
$633,855
loading...
/zigman2/quotes/201101603/composite
US : U.S.: Nasdaq
$ 5.38
+0.14 +2.67%
Volume: 9,245
Oct. 20, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$46.62 million
Rev. per Employee
$633,855
loading...

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