Exhibit 99.1
| Press Release |
Contact: | Robert C. Singer |
| TESSCO Technologies |
| Chief Financial Officer |
| (410) 229-1378 |
| singer@tessco.com |
FOR IMMEDIATE RELEASE
TESSCO Achieves 58% Revenue Growth and $0.32 EPS for the First Quarter ended June 27, 2004
First Quarter Revenues Reach a Record $110.6 Million
HUNT VALLEY, MARYLAND, JULY 20, 2004-TESSCO Technologies (Nasdaq: TESS), a leading supplier of integrated product plus supply chain solutions to the wireless communications industry, today reported its financial performance for its first quarter ended June 27, 2004.
Comments from Chairman, President and Chief Executive Officer
Robert Barnhill, Chairman, President and Chief Executive Officer, stated: “Our performance this quarter was solid with earnings per share of $0.32 fueled by a 58% revenue growth over last year’s comparable quarter. Sales from our consumer and affinity market were up by 133% and commercial and government market sales were up 29% for the same period.
In particular I am very pleased to report that the revenues in our commercial and government markets grew 14% sequentially over last quarter, resulting from a 4% growth in buyers and 10% growth in the average purchases by these buyers. Within these markets, sales of our network infrastructure, mobile devices and accessories, and installation, test and maintenance products, increased 30%, 28% and 28% over last year’s comparable quarter, and 15%, 9% and 17% sequentially over the prior quarter, respectively.
We look forward to continuing our recent momentum by continuing to execute our strategies and plans. Thank you for your continued support. “
Financial Results for the First Quarter
Total revenues reached $110.6 million for the first quarter, up 58% compared to $70.0 million for the first quarter of last fiscal year, and up 3% on a sequential basis as compared to the fourth quarter. Gross profit was $22.4 million for the first quarter compared to $17.3 million for the first quarter of last fiscal year and $21.1 million for the fourth quarter of fiscal 2004. Gross profit margin increased to 20.2% for the first quarter compared to 19.6% in the prior quarter as a result of the strong sequential growth of our commercial sales and the reduction in lower margin consumer handset sales. Compared to the prior year quarter, our gross profit margin
declined from 24.7%, driven by the very large year over year growth in lower margin consumer handset sales.
As gross profit increased by 29% compared to the prior year first quarter, selling, general and administrative expenses increased by only 12%. Total selling, general and administrative expenses for the first quarter totaled $19.4 million as compared to $17.4 million in the prior year quarter and $18.1 million in the fourth quarter of fiscal 2004. Also, as previously disclosed, the Company began expensing its existing stock options and the newly issued Performance Share Units during the first quarter.
Net income for the first quarter increased to $1.4 million as compared to a net loss of ($313,300) in the prior year first quarter, and remained flat compared to the fourth quarter of fiscal 2004. Diluted earnings per share were $0.32 for the first quarter compared to a diluted loss per share of ($0.07) in the prior year quarter and diluted earnings per share of $0.32 in the fourth quarter.
We ended the first quarter with cash and cash equivalents totaling $6.4 million and corporate borrowings of only $5.6 million, all of which are facility mortgages.
BUSINESS OUTLOOK
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. Continuing uncertainty in economic conditions make it particularly difficult to forecast product demand and other related matters.
In this current quarter, which ends September 26, we expect revenues within our commercial and government markets to grow sequentially, and consumer-affinity sales to represent a smaller share of our business. Earnings per share are expected to be in the range of $0.28 to $0.33. The Company is not providing business outlook other than for the second quarter of fiscal 2005.
First quarter results will be discussed in a teleconference on July 21, 2004 at 10 a.m. ET. The conference call will be webcast live on the Internet at http://www.tessco.com.
About TESSCO
TESSCO Technologies Incorporated (Nasdaq: TESS), “the vital link to a wirelessworld™.” TESSCO connects wireless system operators, service organizations, and resellers with the product and supply chain solutions required to keep networks and users on the air. TESSCO’s vision is to be Your Total Source(R) supplier for everything needed to design, build, run, maintain or use wireless. TESSCO delivers to its customer what they need, when and where they need it, to the point of use or sale, streamlining the supply chain process and lowering inventories and total costs.
For manufacturers, TESSCO presents, markets, sells, supplies and supports their products as part of a total customer solution, thus providing a cost- effective channel to a broad and diverse customer base.
TESSCO began its “total source” operations in 1982 and completed its public offering (Nasdaq: TESS) in 1994. Today, TESSCO operates 24 hours a day, seven days a week, under ISO 9001:2000 registration. TESSCO’s Global Logistics Center in Maryland and Americas Sales and Logistics Center in Nevada configure orders for complete, on-time delivery throughout the world.
TESSCO delivers best-of-breed, end-to-end solutions from its product offering of 34,000 items from 450 manufacturers. Product solutions fall within the broad categories of network infrastructure, mobile devices and accessories, and installation, test and maintenance products and services.
TESSCO currently serves customers through three distinct sales channels: sell-to, sell-through and affinity channels. TESSCO sells to over 9,400 commercial and government sell-to and sell-through customers per month, including a diversified mix of cellular, PCS and paging carriers; system operators; Internet service providers; infrastructure site owners and contractors; integrators; enterprise, utility and transportation; education and healthcare; state and local government; federal government and military; wireless dealers; value-added resellers; and retailers.
Within the consumer-direct affinity channel, TESSCO sells to over 34,500 subscribers per month through its private and co-branded phone and Web “stores.”
To learn more about TESSCO Technologies Incorporated, we invite you to search our world-class TESSCO.com(R) Web site for information about our company, our value proposition and our commitment to marketing innovation and operational excellence.
This press release contains forward-looking statements. These forward- looking statements may generally be identified by the use of the words “may,” “will,” “expects,” “anticipates,” “believes,” “estimates,” and similar expressions and involve a number of risks and uncertainties. For a variety of reasons, actual results may differ materially from those described in any such forward-looking statement. Consequently, the reader is cautioned to consider all forward-looking statements in light of the risks to which they are subject. In addition to factors discussed above, other factors could cause actual results to differ materially. Such factors include, but are not limited to, the following: the Company’s dependence on a relatively small number of suppliers and vendors, which could hamper the Company’s ability to maintain appropriate inventory levels and meet customer demand; the effect that the loss of certain customers or vendors could have on the Company’s net profits; economic conditions that may impact customers’ ability to fund purchases of our products and services; the possibility that unforeseen events could impair the Company’s ability to service its customers promptly and efficiently, if at all; the possibility that, for unforeseen reasons, the Company 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; existing competition from national and regional distributors and the absence of significant barriers to entry which could result in pricing and other pressures on profitability and market share; and continuing changes in the wireless communications industry, including risks associated with conflicting technologies, changes in technologies, inventory obsolescence and evolving Internet business models and the resulting competition. Consequently, the reader is cautioned to consider all forward-looking statements in light of the risks to which they are subject.
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TESSCO Technologies Incorporated
Consolidated Statements of Income
| | Fiscal Quarters Ended | |
| | June 27, 2004 | | March 28, 2004 | | June 29, 2003 | |
| | (unaudited) | | (unaudited) | | (unaudited) | |
| | | | | | | |
Revenues | | $ | 110,605,000 | | $ | 107,623,000 | | $ | 69,991,100 | |
Cost of goods sold | | 88,215,600 | | 86,492,900 | | 52,685,400 | |
| | | | | | | |
Gross profit | | 22,389,400 | | 21,130,100 | | 17,305,700 | |
| | | | | | | |
Selling, general and administrative expenses | | 19,389,100 | | 18,100,300 | | 17,371,400 | |
| | | | | | | |
Income (loss) from operations | | 3,000,300 | | 3,029,800 | | (65,700 | ) |
| | | | | | | |
Interest, fees and other expense, net | | 634,600 | | 576,300 | | 448,000 | |
| | | | | | | |
Income (loss) before provision for (benefit from) income taxes | | 2,365,700 | | 2,453,500 | | (513,700 | ) |
| | | | | | | |
Provision for (benefit from) income taxes | | 922,600 | | 994,600 | | (200,400 | ) |
| | | | | | | |
Net income (loss) | | $ | 1,443,100 | | $ | 1,458,900 | | $ | (313,300 | ) |
| | | | | | | |
Basic earnings (loss) per share | | $ | 0.33 | | $ | 0.33 | | $ | (0.07 | ) |
| | | | | | | |
Diluted earnings (loss) per share | | $ | 0.32 | | $ | 0.32 | | $ | (0.07 | ) |
| | | | | | | |
Basic weighted average shares outstanding | | 4,435,000 | | 4,422,400 | | 4,470,200 | |
| | | | | | | |
Diluted weighted average shares outstanding | | 4,544,600 | | 4,509,300 | | 4,470,200 | |
TESSCO Technologies Incorporated
Consolidated Balance Sheets
| | June 27,
2004 | | March 28,
2004 | |
| | (unaudited) | | (audited) | |
ASSETS | | | | | |
| | | | | |
CURRENT ASSETS: | | | | | |
Cash and cash equivalents | | $ | 6,359,100 | | $ | 6,765,600 | |
Trade accounts receivable, net | | 39,877,100 | | 47,124,600 | |
Product inventory | | 37,361,200 | | 40,987,100 | |
Deferred tax asset | | 2,079,000 | | 2,079,000 | |
Prepaid expenses and other current assets | | 2,455,100 | | 2,494,300 | |
Total current assets | | 88,131,500 | | 99,450,600 | |
| | | | | |
PROPERTY AND EQUIPMENT, net | | 25,623,700 | | 25,944,700 | |
GOODWILL, net | | 2,452,200 | | 2,452,200 | |
OTHER LONG-TERM ASSETS | | 1,259,100 | | 1,281,200 | |
Total assets | | $ | 117,466,500 | | $ | 129,128,700 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
| | | | | |
CURRENT LIABILITIES: | | | | | |
Trade accounts payable | | $ | 43,032,300 | | $ | 55,250,000 | |
Accrued expenses and other current liabilities | | 5,154,000 | | 6,588,500 | |
Revolving line of credit | | — | | — | |
Current portion of long-term debt | | 359,400 | | 282,000 | |
Total current liabilities | | 48,545,700 | | 62,120,500 | |
| | | | | |
DEFERRED TAX LIABILITY | | 3,419,100 | | 3,419,100 | |
LONG-TERM DEBT, net of current portion | | 5,208,300 | | 5,354,700 | |
OTHER LONG-TERM LIABILITIES | | 1,851,100 | | 1,900,900 | |
Total liabilities | | 59,024,200 | | 72,795,200 | |
| | | | | |
COMMITMENTS AND CONTINGENCIES | | | | | |
| | | | | |
SHAREHOLDERS’ EQUITY: | | | | | |
Preferred stock | | — | | — | |
Common stock | | 48,700 | | 48,500 | |
Additional paid-in capital | | 22,915,700 | | 22,250,200 | |
Treasury stock, at cost | | (4,547,000 | ) | (4,547,000 | ) |
Retained earnings | | 40,024,900 | | 38,581,800 | |
Total shareholders’ equity | | 58,442,300 | | 56,333,500 | |
Total liabilities and shareholders’ equity | | $ | 117,466,500 | | $ | 129,128,700 | |
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