Sales Up 7% Year Over Year to $112 Million,
Sales Bookings Reach Quarterly Record $137 Million
Sales Backlog Grows to $99 Million, Up 32%
Sequentially From Q4 2022
Company Reiterates Full-year Fiscal 2023
Guidance, Including 11% Revenue Growth at Midpoint of Range
TESSCO TECHNOLOGIES INCORPORATED (NASDAQ: TESS)
today reported financial results for its fiscal year 2023 first
quarter, ended June 26, 2022.
First-Quarter Financial Highlights (from continuing
operations)
- First-quarter, fiscal-year 2023 revenues of $112.2 million, up
7% year over year
- Record quarterly bookings of $137.3 million with quarterly
record total backlog of $99.1 million, up from $75.2 million as of
the end of Q4 fiscal 2022
- First-quarter FY 2023 net loss of $0.5 million, compared with a
loss of $2.2 million in Q1 FY 2022
- EBITDA* of $0.3 million, compared with a loss of $1.4 million
in Q1 of FY 2022; adjusted EBITDA* of $0.5 million, compared with a
loss of $1.1 million in Q1 of FY 2022
*See explanation of non-GAAP information below.
“The sales momentum we established last year carried over into
our new fiscal year with record quarterly bookings and
year-over-year revenue growth of 7 percent, despite global
headwinds,” said Sandip Mukerjee, TESSCO’s President and Chief
Executive Officer. “Our turnaround strategy has proven to be
effective not only in managing our costs, but also—and more
importantly—in positioning our carrier and commercial businesses
for sustainable, long-term growth. Our Ventev business reported
very strong revenue and bookings, and we are building the pipeline
for our SaaS-based monitoring offering, which we have branded as
Tessco Observer.
“Our continued strength is due to our logistics and supply-chain
management expertise, our proprietary engineering and production
capabilities, and the successful execution of a number of
business-development initiatives. We expect this momentum to
continue through our fiscal year. While we continue to face
industry-wide supply-chain disruptions, bookings have remained
strong, and we have a large and growing backlog that should drive
revenue and EBITDA growth in fiscal 2023. As a result, we continue
to be very optimistic about our business prospects and are
reaffirming our full-year guidance.”
First-Quarter Financial Results
Due to the sale of TESSCO’s retail inventory and other related
assets in the third quarter of fiscal year 2021, and the Company’s
corresponding retail business exit, the Company’s Consolidated
Financial Statements present earnings both from continuing and
discontinued operations. The financial tables and financial results
discussed in this press release relate only to continuing
operations.
First Quarter FY
2023
First Quarter FY
2022
Revenue
$112.2M
$105.0M
Net loss
($0.5M)
($2.2M)
Loss per share
($0.06)
($0.25)
Adjusted EBITDA¹
$0.5M
($1.1M)
¹Adjusted EBITDA 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 Segment
Year over Year Q1 FY
2023 vs. Q1 FY 2022
Carrier
2.3%
Commercial
10.5%
Total
6.9%
Sales Backlog
Carrier
Commercial
Total
Q1 FY23
$45M
$54M
$99M
Q4 FY22
$32M
$43M
$75M
Q3 FY22
$33M
$35M
$68M
Q2 FY22
$30M
$25M
$55M
Q1 FY22
$25M
$22M
$47M
For the fiscal 2023 first quarter, revenues totaled $112.2
million, compared with $105.0 million for the first quarter of
fiscal 2022, as a result of successful business-development
initiatives and growth in each of the Company’s business segments.
Both segments continued to be affected by industry-wide disruptions
in the global supply chain that delayed receipt of some inventory
from vendors and limited the Company’s ability to ship product to
customers.
Gross profit was $22.4 million for the first quarter of fiscal
2023, compared with $19.7 million for the same quarter of fiscal
2022. Gross margin was 19.9% of revenue for the first quarter of
fiscal 2023, compared with 18.8% in the first quarter of the
previous fiscal year. The year-over-year increase in gross margin
was in part a result of increased margins in both segments due to
changes in customer and product mix, including larger revenue
growth in the higher-margin Commercial segment.
First-quarter selling, general and administrative (SG&A)
expenses increased 4.5% from the prior-year quarter to $22.6
million, primarily as a result of increased variable expenses
associated with the 7% increase in revenues. Due to continued
strong expense management, SG&A expenses as a percentage of
revenue were 20.2% in the first quarter, down from 20.6% in the
prior-year quarter.
First-quarter, fiscal-2023 net loss was $0.5 million compared
with a net loss of $2.2 million in the first quarter of fiscal
2022. Adjusted EBITDA and adjusted EBITDA per diluted share were
$0.5 million and $0.06, respectively, for the first quarter of
fiscal 2023. This compares with adjusted EBITDA and adjusted EBITDA
per diluted share of a loss of $1.1 million and a loss of $0.12,
respectively, for the first quarter of fiscal 2022.
As of June 26, 2022, the outstanding balance under the Company’s
$80 million line of credit was approximately $41.7 million, and the
Company maintained a balance of $3.0 million in cash and cash
equivalents.
Business Outlook
Tessco’s Business Outlook for full-year fiscal 2023 remains
unchanged and is summarized below, compared to fiscal 2022 actual
results (all amounts related to continuing operations only):
FY 2023 Guidance
FY 2022 Actuals
Revenue
$450.0M - $475.0M
$417.5M
Net loss
($5.0M) – ($2.1M)
($3.3M)
Adjusted EBITDA*
$4.0M - $7.0M
$0.3M
*Adjusted EBITDA is a non-GAAP financial measure. Please see the
discussion of non-GAAP information below and the reconciliation of
non-GAAP to GAAP results.
Forecasting future results or trends is inherently difficult for
any business, and actual results or trends may differ materially
from those forecasted. The Business Outlook published in this press
release reflects only the Company’s current best estimate and the
Company assumes no obligation to update the information contained
in this press release, including the Business Outlook, at any
time.
First Quarter 2023 Conference Call
Management will host a conference call to discuss these results
Wednesday, July 27 at 8:30 a.m. ET. To participate in the
conference call, please dial 888-210-2975 (domestic call-in) or
646-960-0497 (international call-in). The conference ID is
4111132.
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 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 (benefit from) 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 do 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 actual Non-GAAP to GAAP results is included
as an exhibit to this release.
A reconciliation of Non-GAAP to GAAP measures pertaining to the
Business Outlook is as follows:
Low
High
Net loss per business outlook
($5.0M)
($2.1M)
Add: provision for income taxes
0.2M
0.3M
Add: depreciation
6.3M
6.3M
Add: interest
1.5M
1.5M
Add: stock compensation
1.0M
1.0M
Adjusted EBITDA per Business Outlook
$4.0M
$7.0M
About TESSCO Technologies Incorporated (NASDAQ: TESS)
TESSCO Technologies, Inc. (NASDAQ: TESS) 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 to 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 27, 2022, 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, which are typically terminable by
either party upon several months or otherwise relatively short
notice; loss of significant customers, suppliers or other
relationships, or reduction of customer business or product
availability; loss of customers or suppliers either directly or
indirectly as a result of consolidation among large wireless
service carriers and others within the wireless communications
industry; deterioration in the strength of our customers' or
suppliers' 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 or retain 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
Consolidated Statements of
Income (Loss) (Unaudited)
Fiscal Quarters Ended
June 26,
June 27,
March 27,
2022
2021
2022
Revenues
$
112,161,200
$
104,956,100
$
101,590,100
Cost of goods sold
89,797,800
85,269,900
82,655,900
Gross profit
22,363,400
19,686,200
18,934,200
Selling, general and
administrative expenses
22,611,400
21,646,800
19,504,800
Operating income (loss)
(248,000
)
(1,960,600
)
(570,600
)
Interest expense, net
259,400
213,700
373,500
Income (loss) from continuing
operations before provision for (benefit from) income taxes
(507,400
)
(2,174,300
)
(944,100
)
Provision for (benefit from)
income taxes
10,000
38,500
94,900
Net income (loss) from continuing
operations
$
(517,400
)
$
(2,212,800
)
$
(1,039,000
)
Income (loss) from discontinued
operations, net of taxes
242,300
495,500
(576,600
)
Net income (loss)
$
(275,100
)
$
(1,717,300
)
$
(1,615,600
)
Basic earnings (loss) per
share
Continuing operations
$
(0.06
)
$
(0.25
)
$
(0.12
)
Discontinued operations
$
0.03
$
0.06
$
(0.06
)
Consolidated operations
$
(0.03
)
$
(0.19
)
$
(0.18
)
Diluted earnings (loss) per
share
Continuing operations
$
(0.06
)
$
(0.25
)
$
(0.12
)
Discontinued operations
$
0.03
$
0.06
$
(0.06
)
Consolidated operations
$
(0.03
)
$
(0.19
)
$
(0.18
)
Basic weighted-average common
shares outstanding
9,064,481
8,864,704
8,978,777
Effect of dilutive options and
other equity instruments
—
—
—
Diluted weighted-average common
shares outstanding
9,064,481
8,864,704
8,978,777
TESSCO Technologies
Incorporated
Consolidated Balance Sheets
(Unaudited)
June 26,
March 27,
2022
2022
ASSETS
Current assets:
Cash and cash equivalents
$
3,005,900
$
1,754,000
Trade accounts receivable,
net
80,029,700
75,546,300
Product inventory, net
59,785,800
55,945,300
Income taxes receivable
529,900
4,293,400
Prepaid expenses and other
current assets
4,449,900
2,961,700
Total current assets
147,801,200
140,500,700
Property and equipment, net
10,658,100
10,835,900
Intangible assets, net
33,447,700
30,595,600
Income taxes receivable,
non-current
3,118,600
3,118,600
Lease asset - right of use
8,317,100
8,910,400
Other long-term assets
8,675,000
8,552,100
Total assets
$
212,017,700
$
202,513,300
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Trade accounts payable
$
71,089,000
$
65,254,900
Payroll, benefits and taxes
5,471,900
5,230,500
Income and sales tax
liabilities
714,900
1,188,100
Accrued expenses and other
current liabilities
1,463,300
1,455,500
Lease liability, current
2,592,500
2,566,300
Current portion of long-term
debt
340,900
340,300
Total current liabilities
81,672,500
76,035,600
Deferred tax liabilities
145,600
145,600
Revolving line of credit
41,675,000
36,914,600
Non-current lease liability
5,921,900
6,586,200
Long-term debt
6,036,400
6,155,000
Other non-current liabilities
737,400
753,200
Total liabilities
136,188,800
126,590,200
Shareholders’ equity:
Preferred stock
—
—
Common stock
107,100
105,900
Additional paid-in capital
69,482,900
69,166,100
Treasury stock
(266,300
)
(129,200
)
Retained earnings
6,505,200
6,780,300
Total shareholders’ equity
75,828,900
75,923,100
Total liabilities and
shareholders’ equity
$
212,017,700
$
202,513,300
TESSCO Technologies
Incorporated
Reconciliation of Net Income
(Loss) to Earnings Before Interest, Taxes and Depreciation and
Amortization (EBITDA) from Continuing Operations
(Unaudited)
Fiscal Quarters Ended
June 26,
June 27,
March 27,
2022
2021
2022
Net income (loss) from continuing
operations
$
(517,400
)
$
(2,212,800
)
$
(1,039,000
)
Add:
Provision for (benefit from)
income taxes
10,000
38,500
94,900
Interest expense, net
259,400
213,700
373,500
Depreciation and amortization
537,600
607,700
606,500
EBITDA
$
289,600
$
(1,352,900
)
$
35,900
Add:
Stock-based compensation
222,800
254,900
614,200
Adjusted EBITDA
$
512,400
$
(1,098,000
)
$
650,100
EBITDA per diluted
share
$
0.03
$
(0.15
)
$
0.00
Adjusted EBITDA per diluted
share
$
0.06
$
(0.12
)
$
0.07
TESSCO Technologies
Incorporated
Supplemental Results Summary
(in thousands) (Unaudited)
Three Months Ended
June 26,
June 27,
March 27,
Growth Rates Compared
to
2022
2021
2022
Prior Year Period
Prior Period
Market Revenues
Carrier
$
47,065
$
46,020
$
44,393
2.3
%
6.0
%
Commercial
65,096
58,936
57,197
10.5
%
13.8
%
Total revenues
$
112,161
$
104,956
$
101,590
6.9
%
10.4
%
Market Gross Profit
Carrier
$
6,265
$
5,321
$
4,620
17.7
%
35.6
%
Commercial
16,098
14,365
14,314
12.1
%
12.5
%
Total gross profit
$
22,363
$
19,686
$
18,934
13.6
%
18.1
%
% of revenues
19.9%
18.8%
18.6%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220726005870/en/
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
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