Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Sep. 26, 2021 | Oct. 27, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 26, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-33938 | |
Entity Registrant Name | TESSCO Technologies Incorporated | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 52-0729657 | |
Entity Address, Address Line One | 11126 McCormick Road | |
Entity Address, City or Town | Hunt Valley | |
Entity Address, State or Province | MD | |
Entity Address, Postal Zip Code | 21031 | |
City Area Code | 410 | |
Local Phone Number | 229-1000 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | TESS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 8,966,765 | |
Entity Central Index Key | 0000927355 | |
Current Fiscal Year End Date | --03-27 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 26, 2021 | Mar. 28, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 2,054,700 | $ 1,110,000 |
Trade accounts receivable, net | 77,192,000 | 70,045,700 |
Product inventory, net | 57,410,300 | 53,060,000 |
Income taxes receivable | 6,201,800 | 10,432,500 |
Prepaid expenses and other current assets | 4,465,000 | 3,980,900 |
Current portion of assets held for sale | 76,500 | 1,196,900 |
Total current assets | 147,400,300 | 139,826,000 |
Property and equipment, net | 12,006,900 | 12,571,600 |
Intangible assets, net | 24,563,800 | 19,136,500 |
Lease asset - right of use | 9,928,600 | 11,285,800 |
Other long-term assets | 7,306,500 | 6,258,000 |
Total assets | 201,206,100 | 189,077,900 |
Current liabilities: | ||
Trade accounts payable | 61,166,500 | 59,415,600 |
Payroll, benefits and taxes | 6,095,900 | 6,279,800 |
Income and sales tax liabilities | 866,000 | 803,900 |
Accrued expenses and other current liabilities | 1,419,000 | 2,912,300 |
Lease liability, current | 2,508,400 | 2,573,500 |
Total current liabilities | 72,055,800 | 71,985,100 |
Deferred tax liabilities, net | 26,500 | 26,500 |
Revolving line of credit | 45,682,800 | 30,583,200 |
Non-current lease liability | 7,676,200 | 8,923,500 |
Other non-current liabilities | 777,700 | 809,400 |
Total liabilities | 126,219,000 | 112,327,700 |
Shareholders' equity: | ||
Preferred stock, $0.01 par value per share, 500,000 shares authorized and no shares issued and outstanding | ||
Common stock, $0.01 par value per share, 15,000,000 shares authorized, 8,945,925 shares issued and 8,926,725 shares outstanding as of September 26, 2021, and 8,844,083 shares issued and 8,833,833 shares outstanding as of March 28, 2021 | 105,300 | 104,200 |
Additional paid-in capital | 68,073,900 | 67,227,700 |
Treasury stock, at cost, 19,200 shares as of September 26, 2021 and 10,250 shares as of March 28, 2021 | (129,200) | (62,800) |
Retained earnings | 6,937,100 | 9,481,100 |
Total shareholders' equity | 74,987,100 | 76,750,200 |
Total liabilities and shareholders' equity | $ 201,206,100 | $ 189,077,900 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 26, 2021 | Mar. 28, 2021 |
Shareholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 500,000 | 500,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars shares) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 15,000,000 | 15,000,000 |
Common stock, issued (in shares) | 8,945,925 | 8,844,083 |
Common stock, outstanding (in shares) | 8,926,725 | 8,833,833 |
Treasury stock (in shares) | 19,200 | 10,250 |
Consolidated Statements of (Los
Consolidated Statements of (Loss) Income - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 26, 2021 | Sep. 27, 2020 | Sep. 26, 2021 | Sep. 27, 2020 | |
Consolidated Statements of (Loss) Income | ||||
Revenues | $ 108,536,200 | $ 88,892,400 | $ 213,492,300 | $ 185,370,000 |
Cost of goods sold | 88,740,500 | 71,771,200 | 174,010,300 | 151,796,100 |
Gross profit | 19,795,700 | 17,121,200 | 39,482,000 | 33,573,900 |
Selling, general and administrative expenses | 20,988,000 | 20,787,800 | 42,634,900 | 42,320,300 |
Operating income (loss) | (1,192,300) | (3,666,600) | (3,152,900) | (8,746,400) |
Interest expense, net | 158,700 | 105,900 | 372,400 | 216,600 |
Income (loss) from continuing operations before benefit from income taxes | (1,351,000) | (3,772,500) | (3,525,300) | (8,963,000) |
Provision for (benefit from) income taxes | (75,700) | (824,400) | (37,200) | (1,146,200) |
Net income (loss) from continuing operations | (1,275,300) | (2,948,100) | (3,488,100) | (7,816,800) |
Income (loss) from discontinued operations, net of taxes | 448,600 | 2,681,200 | 944,100 | 2,918,500 |
Net income (loss) | $ (826,700) | $ (266,900) | $ (2,544,000) | $ (4,898,300) |
Basic (loss) income per share | ||||
Continuing operations (in dollars per share) | $ (0.14) | $ (0.34) | $ (0.39) | $ (0.91) |
Discontinued operations (in dollars per share) | 0.05 | 0.31 | 0.11 | 0.34 |
Consolidated operations (in dollars per share) | (0.09) | (0.03) | (0.29) | (0.57) |
Diluted (loss) income per share | ||||
Continuing operations (in dollars per share) | (0.14) | (0.34) | (0.39) | (0.91) |
Discontinued operations (in dollars per share) | 0.05 | 0.31 | 0.11 | 0.34 |
Consolidated operations (in dollars per share) | $ (0.09) | $ (0.03) | $ (0.29) | $ (0.57) |
Basic weighted-average common shares outstanding (in shares) | 8,910,365 | 8,656,877 | 8,889,478 | 8,637,340 |
Diluted weighted-average common shares outstanding (in shares) | 8,910,365 | 8,656,877 | 8,889,478 | 8,637,340 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity - USD ($) | Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Total |
Balance at Mar. 29, 2020 | $ 101,400 | $ 65,318,500 | $ (58,496,200) | $ 76,779,000 | $ 83,702,700 |
Balance (in shares) at Mar. 29, 2020 | 8,577,549 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Proceeds from issuance of stock | $ 200 | 132,500 | 132,700 | ||
Proceeds from issuance of stock (in shares) | 23,676 | ||||
Treasury stock purchases | (58,800) | (58,800) | |||
Treasury stock purchases (in shares) | (12,781) | ||||
Non-cash stock compensation expense | $ 600 | 311,300 | 311,900 | ||
Non-cash stock compensation expense (in shares) | 48,685 | ||||
Net income (loss) | (4,631,400) | (4,631,400) | |||
Balance at Jun. 28, 2020 | $ 102,200 | 65,762,300 | (58,555,000) | 72,147,600 | 79,457,100 |
Balance (in shares) at Jun. 28, 2020 | 8,637,129 | ||||
Balance at Mar. 29, 2020 | $ 101,400 | 65,318,500 | (58,496,200) | 76,779,000 | 83,702,700 |
Balance (in shares) at Mar. 29, 2020 | 8,577,549 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | (4,898,300) | ||||
Balance at Sep. 27, 2020 | $ 102,700 | 66,303,400 | (14,100) | 13,325,700 | 79,717,700 |
Balance (in shares) at Sep. 27, 2020 | 8,690,171 | ||||
Balance at Jun. 28, 2020 | $ 102,200 | 65,762,300 | (58,555,000) | 72,147,600 | 79,457,100 |
Balance (in shares) at Jun. 28, 2020 | 8,637,129 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Proceeds from issuance of stock | $ 400 | 224,500 | 224,900 | ||
Proceeds from issuance of stock (in shares) | 47,792 | ||||
Treasury stock purchases | (14,100) | (14,100) | |||
Treasury stock purchases (in shares) | (2,250) | ||||
Non-cash stock compensation expense | $ 100 | 316,600 | 316,700 | ||
Non-cash stock compensation expense (in shares) | 7,500 | ||||
Retirement of treasury stock | 58,555,000 | (58,555,000) | |||
Net income (loss) | (266,900) | (266,900) | |||
Balance at Sep. 27, 2020 | $ 102,700 | 66,303,400 | (14,100) | 13,325,700 | 79,717,700 |
Balance (in shares) at Sep. 27, 2020 | 8,690,171 | ||||
Balance at Mar. 28, 2021 | $ 104,200 | 67,227,700 | (62,800) | 9,481,100 | $ 76,750,200 |
Balance (in shares) at Mar. 28, 2021 | 8,833,833 | 8,833,833 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Proceeds from issuance of stock | $ 100 | 102,700 | $ 102,800 | ||
Proceeds from issuance of stock (in shares) | 13,782 | ||||
Treasury stock purchases | (28,900) | (28,900) | |||
Treasury stock purchases (in shares) | (3,960) | ||||
Non-cash stock compensation expense | $ 500 | 254,400 | 254,900 | ||
Non-cash stock compensation expense (in shares) | 39,182 | ||||
Exercise of stock options (in dollars) | 10,900 | (13,300) | (2,400) | ||
Exercise of stock options (in shares) | 1,754 | ||||
Net income (loss) | (1,717,300) | (1,717,300) | |||
Balance at Jun. 27, 2021 | $ 104,800 | 67,595,700 | (105,000) | 7,763,800 | 75,359,300 |
Balance (in shares) at Jun. 27, 2021 | 8,884,591 | ||||
Balance at Mar. 28, 2021 | $ 104,200 | 67,227,700 | (62,800) | 9,481,100 | $ 76,750,200 |
Balance (in shares) at Mar. 28, 2021 | 8,833,833 | 8,833,833 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | $ (2,544,000) | ||||
Balance at Sep. 26, 2021 | $ 105,300 | 68,073,900 | (129,200) | 6,937,100 | $ 74,987,100 |
Balance (in shares) at Sep. 26, 2021 | 8,926,725 | 8,926,725 | |||
Balance at Jun. 27, 2021 | $ 104,800 | 67,595,700 | (105,000) | 7,763,800 | $ 75,359,300 |
Balance (in shares) at Jun. 27, 2021 | 8,884,591 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Proceeds from issuance of stock | $ 200 | 110,400 | 110,600 | ||
Proceeds from issuance of stock (in shares) | 16,419 | ||||
Treasury stock purchases | (24,200) | (24,200) | |||
Treasury stock purchases (in shares) | (4,244) | ||||
Non-cash stock compensation expense | $ 300 | 367,800 | 368,100 | ||
Non-cash stock compensation expense (in shares) | 29,959 | ||||
Net income (loss) | (826,700) | (826,700) | |||
Balance at Sep. 26, 2021 | $ 105,300 | $ 68,073,900 | $ (129,200) | $ 6,937,100 | $ 74,987,100 |
Balance (in shares) at Sep. 26, 2021 | 8,926,725 | 8,926,725 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Sep. 26, 2021 | Sep. 27, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Loss | $ (2,544,000) | $ (4,898,300) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 1,245,400 | 2,256,500 |
Non-cash stock-based compensation expense | 623,000 | 628,600 |
Deferred income taxes and other | 1,516,300 | |
Change in trade accounts receivable | (7,146,300) | 8,179,500 |
Change in product inventory | (3,229,900) | 6,783,700 |
Change in prepaid expenses and other current assets | (484,100) | (781,400) |
Change in income taxes receivable | 4,230,700 | (1,893,300) |
Change in other assets and other liabilities | (701,700) | (1,799,500) |
Change in trade accounts payable | (961,900) | (10,550,700) |
Change in payroll, benefits and taxes | (183,900) | 1,805,300 |
Change in income and sales tax liabilities | 62,100 | 134,900 |
Change in accrued expenses and other current liabilities | (1,224,200) | (935,500) |
Net cash provided by (used in) operating activities | (10,314,800) | 446,100 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Acquisition of property and equipment | (264,900) | (379,700) |
Purchases of internal use software licenses eligible for capitalization | (3,508,800) | (6,620,100) |
Net cash provided by (used in) investing activities | (3,773,700) | (6,999,800) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net borrowings (repayments) from revolving line of credit short term | 6,488,100 | |
Borrowings from revolving line of credit long term | 139,825,300 | |
Repayments to revolving line of credit long term | (124,725,700) | |
Proceeds from issuance of stock | 107,900 | |
Purchase of treasury stock and repurchase of stock from employees and directors for minimum tax withholdings | (66,400) | (72,900) |
Net cash provided by (used in) financing activities | 15,033,200 | 6,523,100 |
Net increase (decrease) in cash and cash equivalents | 944,700 | (30,600) |
CASH AND CASH EQUIVALENTS, beginning of period | 1,110,000 | 50,000 |
CASH AND CASH EQUIVALENTS, end of period | 2,054,700 | 19,400 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Capital expenditures included in accounts payable | $ 3,883,100 | $ 2,769,300 |
Description of Business and Bas
Description of Business and Basis of Presentation | 6 Months Ended |
Sep. 26, 2021 | |
Description of Business and Basis of Presentation | |
Description of Business and Basis of Presentation | Note 1. Description of Business and Basis of Presentation TESSCO Technologies Incorporated, a Delaware corporation (TESSCO, we, or the Company), architects and delivers innovative product and value chain solutions to support wireless systems. The Company provides marketing and sales services, knowledge and supply chain management, product-solution delivery and control systems utilizing extensive internet and information technology. Approximately 97% of the Company’s sales are made to customers in the United States. The Company takes orders in several ways, including phone, fax, online and through electronic data interchange. Almost all of the Company’s sales are made in United States Dollars. In management’s opinion, the accompanying interim Consolidated Financial Statements of the Company include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair presentation of the Company’s financial position for the interim periods presented. These statements are presented in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain information and footnote disclosures normally included in the Company’s annual financial statements have been omitted from these statements, as permitted under the applicable rules and regulations. The results of operations presented in the accompanying interim Consolidated Financial Statements are not necessarily representative of operations for an entire year. The information included in this Form 10-Q should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2021, filed with SEC on June 11, 2021. On October 28, 2020, the Company entered into a definitive Inventory Purchase Agreement (the “Agreement”) which, at a closing held on December 2, 2020, resulted in the Company’s exit from its retail business through the sale to Voice Comm, LLC, a Delaware limited liability company (“Voice Comm”), of most of the Company’s retail inventory, the Ventev brand as it relates to mobile device accessory products, and certain other retail-related assets. The accompanying Consolidated Financial Statements for all periods presented reflect the results of the Retail segment as a discontinued operation. As a result, certain amounts have been reclassified on the consolidated balance sheet and consolidated statement of (loss) income to conform with current period presentation. See Note 9, “Discontinued Operations”, for further information. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 6 Months Ended |
Sep. 26, 2021 | |
Recently Issued Accounting Pronouncements | |
Recently Issued Accounting Pronouncements | Note 2. Recently Issued Accounting Pronouncements Recently issued accounting pronouncements not yet adopted: In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. This ASU is effective for periods beginning after December 15, 2022. The Company is currently evaluating the impact the adoption of this new standard will have on its Consolidated Financial Statements and will adopt the standard on the first day of the Company’s 2024 fiscal year. Recently issued accounting pronouncements adopted: In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, and the methodology for calculating income taxes in an interim period. This ASU is effective for periods beginning after December 15, 2020. The Company adopted this standard on the first day of the 2022 fiscal year on a prospective basis. The standard did not have a material impact on the financial statements. |
Intangible Assets
Intangible Assets | 6 Months Ended |
Sep. 26, 2021 | |
Goodwill and Other Intangible Assets | |
Intangible Assets | Note 3. Intangible Assets Intangible assets, net on our Consolidated Balance Sheets as of September 26, 2021, consists of capitalized software for internal use and indefinite lived intangible assets. Capitalized software for internal use, net of accumulated amortization, was $23,768,400 and $18,341,100 as of September 26, 2021 and March 28, 2021, respectively. Amortization expense of capitalized software for internal use was $198,100 and $502,300 for the three months ended September 26, 2021 and September 27, 2020, respectively. Amortization expense of capitalized software for internal use was $395,200 and $1,150,800 for the six months ended September 26, 2021 and September 27, 2020, respectively. Indefinite lived intangible assets were $795,400 as of September 26, 2021 and March 28, 2021. |
Borrowings Under Revolving Cred
Borrowings Under Revolving Credit Facility | 6 Months Ended |
Sep. 26, 2021 | |
Borrowings Under Revolving Credit Facility | |
Borrowings Under Revolving Credit Facility | Note 4. Borrowings Under Revolving Credit Facility On October 29, 2020, the Company entered into a Credit Agreement (the “Credit Agreement”) among the Company, the Company’s primary operating subsidiaries as co-borrowers, the Lender(s) party thereto from time to time, and Wells Fargo Bank, National Association (“Wells”), as Administrative Agent, swingline lender and an issuing bank. Terms used, but not defined, in this and the following ten (10) paragraphs have the meanings set forth in the Credit Agreement or the related Guaranty and Security Agreement. This new facility replaced a previously existing credit facility among the Company and certain subsidiaries, the lenders party thereto (which included Wells) and Truist Bank (successor by merger to SunTrust Bank), as administrative agent. The Credit Agreement provides for a senior secured asset based revolving credit facility of up to $75 million (the “2020 Revolving Credit Facility”), which matures on April 29, 2024. The 2020 Revolving Credit Facility includes a $5.0 million letter of credit sublimit and provides for the issuance of Swingline Loans. The applicable Credit Agreement also includes a provision permitting the Company, subject to certain conditions, to increase the aggregate amount of the commitments under the 2020 Revolving Credit Facility to an aggregate commitment amount of up to $125 million with optional additional commitments from then existing Lenders or new commitments from additional lenders, although no Lender is obligated to increase its commitment. Availability is determined in accordance with the Borrowing Base, which is generally 85% of Eligible Accounts minus plus plus minus Borrowings initially accrue (or accrued) interest from the applicable borrowing date: (A) if a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin of 2.25% until the March 31, 2021 financial statements were delivered and thereafter (i) if the Fixed Charge Coverage Ratio is less than 1.10 :1.00, then the LIBOR Rate plus 2.25% or (ii) if the Fixed Charge Coverage Ratio is greater than or equal to 1.10 :1.00, then the LIBOR Rate plus 2.00% ; (B) if a Base Rate Loan, at a per annum rate equal to the Base Rate plus the Base Rate Margin of 1.25% per annum until the March 31, 2021 financial statements were delivered and thereafter (i) if the Fixed Charge Coverage Ratio is less than 1.10 :1.00, then the Base Rate of 1.25% or (ii) if the Fixed Charge Coverage Ratio is greater than or equal to 1.10 :1.00, then the Base Rate plus 1.00% . The Credit Agreement contains a LIBOR floor of 0.25% so that if the LIBOR Rate is below 0.25% , then the LIBOR Rate will be deemed to be equal to 0.25% for purposes of the Credit Agreement. The Company is required to pay a monthly Unused Line Fee on the average daily unused portion of the 2020 Revolving Credit Facility, at a per annum rate equal to 0.25% . Pursuant to Amendment No. 1 to Credit Agreement dated July 12, 2021 (the “Amendment”), between Tessco and Wells, Wells agreed to a 25 basis point reduction in certain otherwise applicable rates and fees over an agreed period, as set forth in the Amendment. The Amendment also included certain changes related to the transition away from the use of LIBOR as a rate option, and is expected to simplify day-to-day management of the 2020 Revolving Credit Facility. It is anticipated that, so long as no event of default occurs, the interest rate applicable to borrowings under the 2020 Revolving Credit Facility will be lower than it otherwise would have been, going forward, until the end of the agreed period. On September 26, 2021, the interest rate applicable to borrowings under the secured 2020 Revolving Credit Facility was 2.09% , which includes the 25 basis point reduction included in the Amendment as discussed above . Following an Event of Default, the Lenders’ may at their option increase the applicable per annum rate to a rate equal to two percentage points above the otherwise applicable rate and with certain events of default, such increase is automatic. In addition, the 25 basis point reduction, insofar as then otherwise available under the Amendment, will terminate, and at the written election of the Agent or the Required Lenders at any time while an Event of Default exists, the Company will no longer have the option to request that revolving loans be based on the LIBOR Rate. The Credit Agreement contains one financial covenant, a Fixed Charge Coverage Ratio, which is tested only if Excess Availability (generally, borrowing availability less the aggregate of trade payables and book overdrafts, each in excess of historical amounts) is less than the greater of (a) 16.7% of the maximum amount of the Credit Facility (at closing, $12,525,000 ) and (b) $12,500,000 . In addition, the Credit Agreement contains provisions that could limit our ability to engage in specified transactions or activities, including (but not limited to) investments and acquisitions, sales of assets, payment of dividends, issuance of additional debt and other matters. Borrowings under the 2020 Revolving Credit Facility were initially used to pay all indebtedness outstanding under the previously existing credit facility among the Company and certain subsidiaries, the lenders party thereto and Truist Bank (successor by merger to SunTrust Bank), as administrative agent, and may be used for working capital and other general corporate purposes, and as further provided in, and subject to the applicable terms of, the Credit Agreement. As of September 26, 2021, borrowings under the secured 2020 Revolving Credit Facility totaled $45.7 million and, therefore, the Company had $29.3 million available for borrowing as of September 26, 2021, subject to the Borrowing Base limitation and compliance with the other applicable terms referenced above. The Company is required to make certain prepayments under the 2020 Revolving Credit Facility under certain circumstances, including from net cash proceeds from certain asset dispositions in excess of certain thresholds. The Credit Agreement contains representations, warranties and affirmative covenants. The Credit Agreement also contains negative covenants and restrictions on, among other things: (i) Indebtedness, (ii) liens, (iii) fundamental changes, (iv) disposition of assets, (v) restricted payments (including certain restrictions on redemptions and dividends), (vi) investments and (vii) transactions with affiliates. The Credit Agreement also contains events of default, such as payment defaults, cross-defaults to other material indebtedness, misrepresentations, bankruptcy and insolvency, the occurrence of a Change of Control and the failure to observe the negative covenants and other covenants contained in the Credit Agreement and the other loan documents. Pursuant to a related Guaranty and Security Agreement, by and among the Company, the other borrowers under the Credit Agreement and other operating subsidiaries of the Company (collectively, the “Loan Parties”), and Wells, as Administrative Agent, the Obligations, which include the obligations under the Credit Agreement, are guaranteed by the Loan Parties, and secured by continuing first priority security interests in the Company’s and the other Loan Parties’ (including both borrowers and guarantors) Accounts, Books, Chattel Paper, Deposit Accounts, General Intangibles, Inventory, Negotiable Collateral, Supporting Obligations, Money, Cash Equivalents or other assets that come into the possession, custody or control of the Agent or any Lender, and related assets, and the proceeds and products of any of the foregoing (the “Collateral”). The security interests in the Collateral are in favor of the Administrative Agent, for the benefit of the Lenders party to the Credit Agreement from time to time and any other holders of the Obligations. The Obligations secured also include certain other obligations of the Loan Parties to the Lenders and their affiliates arising from time to time, relating to swaps, hedges and cash management and other bank products. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Sep. 26, 2021 | |
Earnings Per Share | |
Earnings Per Share | Note 5. Earnings Per Share The Company presents the computation of earnings per share (“EPS”) on a basic and diluted basis. Basic EPS is computed by dividing net income by the weighted average number of shares outstanding during the reported period. Diluted EPS is computed similarly to basic EPS, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential additional common shares that were dilutive had been issued. Common shares are excluded from the calculation if they are determined to be anti-dilutive. Diluted EPS was equal to basic EPS for the three and six month periods ended September 26, 2021 because the Company operated at a loss. The number of diluted weighted-average common shares would have been 8,954,118 for the three months ended September 26, 2021, and 8,950,863 for the six months ended September 26, 2021, if the Company was in a positive earning position. At September 26, 2021, stock options with respect to 973,458 shares of common stock were outstanding, of which 843,458 were anti-dilutive. There were no anti-dilutive PSUs or RSUs outstanding |
Business Segment
Business Segment | 6 Months Ended |
Sep. 26, 2021 | |
Operating Segments | |
Business Segment | Note 6. Business Segment After exiting our Retail business, the Company operates as one business segment. The Company will continue to present revenue and gross profit by the following customer markets: (1) public carriers, which are generally responsible for building and maintaining the infrastructure system and provide airtime service to individual subscribers; and (2) commercial, formerly value-added resellers and integrators, which includes value-added resellers, the government channel and private system operator markets. Market activity for the second quarter and first six months of fiscal years 2022 and 2021 are as follows (in thousands): Three Months Ended Six Months Ended September 26, 2021 September 27, 2020 September 26, 2021 September 27, 2020 Revenues Public carrier $ 46,918 $ 32,632 $ 92,938 $ 71,887 Commercial 61,618 56,260 120,554 113,483 Total revenues $ 108,536 $ 88,892 $ 213,492 $ 185,370 Gross Profit Public carrier $ 5,560 $ 3,570 $ 10,881 $ 7,298 Commercial 14,236 13,551 28,601 26,276 Total gross profit $ 19,796 $ 17,121 $ 39,482 $ 33,574 |
Shares Withheld
Shares Withheld | 6 Months Ended |
Sep. 26, 2021 | |
Shares Withheld | |
Shares Withheld | Note 7. Shares Withheld The Company withholds shares of common stock from its employees and directors at their request, equal to the minimum federal and state tax withholdings or proceeds due to the Company related to vested PSUs, stock option exercises and vested RSUs. For the six months ended September 26, 2021 and September 27, 2020, the aggregate value of the shares withheld totaled $66,400 and $72,900 , respectively. |
Concentration of Risk
Concentration of Risk | 6 Months Ended |
Sep. 26, 2021 | |
Concentration of Risk Related to Continuing Operations | |
Concentration of Risk | Note 8. Concentration of Risk The Company’s future results could be negatively impacted by the loss of certain customer and/or vendor relationships. No customer accounted for more than 10% of revenue for the three and six months ended September 26, 2021 and September 27, 2020. For the three months ended September 26, 2021 and September 27, 2020, sales of products purchased from the Company’s largest supplier accounted for 29.0% and 26.5% of revenue from continuing operations, respectively. No other suppliers accounted for more than 10% of consolidated revenue. For the six months ended September 26, 2021 and September 27, 2020, sales of products purchased from the Company’s largest supplier accounted for 31.1% and 26.7% of revenue from continuing operations, respectively. No other suppliers accounted for more than 10% of consolidated revenue. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Sep. 26, 2021 | |
Discontinued Operations | |
Discontinued Operations | Note 9. Discontinued Operations At a closing on December 2, 2020, the Company sold most of its retail inventory, the Ventev brand as it relates to mobile device accessory products, and certain other retail-related assets to Voice Comm, LLC (Voice Comm). Cash proceeds of $9.5 million were received at closing, which occurred during the third quarter of fiscal 2021. As part of the sale agreement, the Company is entitled to royalty payments of up to $3.0 million in the aggregate on the sale of Ventev branded products by Voice Comm over a four-year period after the closing. Additionally, future customer returns to the Company may be resold to Voice Comm over a two-year period after the closing. As a result of the disposal described above, the operating results of the former Retail segment has been included in Income (loss) from discontinued operations, net of taxes, in the Consolidated Statements of (Loss) Income for all periods presented. The accompanying Consolidated Financial Statements for all periods presented reflect the results of the Retail segment as a discontinued operation. The following table presents the financial results of the Retail segment for the three and six months ended September 26, 2021 and September 27, 2020: Three Months Ended Six Months Ended September 26, 2021 September 27, 2020 September 26, 2021 September 27, 2020 Revenues $ 1,110,100 $ 30,763,000 $ 2,608,900 $ 54,098,900 Cost of goods sold 698,000 25,212,000 1,122,900 46,174,900 Gross profit 412,100 5,551,000 1,486,000 7,924,000 Selling, general and administrative expenses (31,200) 2,024,400 553,200 4,226,300 Income (loss) from operations before benefit from income taxes 443,300 3,526,600 932,800 3,697,700 Provision for (benefit from) income taxes (5,300) 845,400 (11,300) 779,200 Net income (loss) attributable to discontinued operations $ 448,600 $ 2,681,200 $ 944,100 $ 2,918,500 The financial results reflected above may not fully represent our former Retail segment stand-alone operating net profit, as the results reported within Income (loss) from discontinued operations, net of taxes, include only certain costs that are directly attributable to this former segment and exclude certain corporate overhead and operational costs that may have been previously allocated for each period. The following table summarizes the major classes of assets attributable to discontinued operations that are included in the Current portion of assets held for sale in the Company’s Consolidated Balance Sheets as of September 26, 2021 and March 28, 2021: September 26, March 28, 2021 2021 ASSETS Product inventory, net $ 76,500 $ 1,196,900 Current portion of assets held for sale $ 76,500 $ 1,196,900 Management intends to sell through this inventory in the near term in alignment with the plan to exit the Retail business. In our Consolidated Statements of Cash Flows, the cash flows from discontinued operations are not separately classified. Cash provided by operating activities from discontinued operations for the six months ended September 26, 2021 and September 27, 2020 was $4.6 million and $9.4 million, respectively. |
Recently Issued Accounting Pr_2
Recently Issued Accounting Pronouncements (Policies) | 6 Months Ended |
Sep. 26, 2021 | |
Recently Issued Accounting Pronouncements | |
Recently Issued Accounting Pronouncements | Recently issued accounting pronouncements not yet adopted: In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. This ASU is effective for periods beginning after December 15, 2022. The Company is currently evaluating the impact the adoption of this new standard will have on its Consolidated Financial Statements and will adopt the standard on the first day of the Company’s 2024 fiscal year. Recently issued accounting pronouncements adopted: In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, and the methodology for calculating income taxes in an interim period. This ASU is effective for periods beginning after December 15, 2020. The Company adopted this standard on the first day of the 2022 fiscal year on a prospective basis. The standard did not have a material impact on the financial statements. |
Business Segment (Tables)
Business Segment (Tables) | 6 Months Ended |
Sep. 26, 2021 | |
Operating Segments | |
Schedule of Revenue and Gross Profit by Market | Market activity for the second quarter and first six months of fiscal years 2022 and 2021 are as follows (in thousands): Three Months Ended Six Months Ended September 26, 2021 September 27, 2020 September 26, 2021 September 27, 2020 Revenues Public carrier $ 46,918 $ 32,632 $ 92,938 $ 71,887 Commercial 61,618 56,260 120,554 113,483 Total revenues $ 108,536 $ 88,892 $ 213,492 $ 185,370 Gross Profit Public carrier $ 5,560 $ 3,570 $ 10,881 $ 7,298 Commercial 14,236 13,551 28,601 26,276 Total gross profit $ 19,796 $ 17,121 $ 39,482 $ 33,574 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Sep. 26, 2021 | |
Discontinued Operations | |
Summary of financial results of the retail segment discontinued operations | Three Months Ended Six Months Ended September 26, 2021 September 27, 2020 September 26, 2021 September 27, 2020 Revenues $ 1,110,100 $ 30,763,000 $ 2,608,900 $ 54,098,900 Cost of goods sold 698,000 25,212,000 1,122,900 46,174,900 Gross profit 412,100 5,551,000 1,486,000 7,924,000 Selling, general and administrative expenses (31,200) 2,024,400 553,200 4,226,300 Income (loss) from operations before benefit from income taxes 443,300 3,526,600 932,800 3,697,700 Provision for (benefit from) income taxes (5,300) 845,400 (11,300) 779,200 Net income (loss) attributable to discontinued operations $ 448,600 $ 2,681,200 $ 944,100 $ 2,918,500 September 26, March 28, 2021 2021 ASSETS Product inventory, net $ 76,500 $ 1,196,900 Current portion of assets held for sale $ 76,500 $ 1,196,900 |
Description of Business and B_2
Description of Business and Basis of Presentation (Details) | 6 Months Ended |
Sep. 26, 2021 | |
US | Geographic Concentration Risk | Revenue | |
Concentration Risk | |
Concentration risk (as a percent) | 97.00% |
Intangible Assets - (Details)
Intangible Assets - (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Sep. 26, 2021 | Sep. 27, 2020 | Sep. 26, 2021 | Sep. 27, 2020 | Mar. 28, 2021 | |
Goodwill and Other Intangible Assets | |||||
Capitalized computer software | $ 23,768,400 | $ 23,768,400 | $ 18,341,100 | ||
Indefinite lived intangible assets | 795,400 | 795,400 | $ 795,400 | ||
Internally developed computer software | |||||
Goodwill and Other Intangible Assets | |||||
Amortization expense | $ 198,100 | $ 502,300 | $ 395,200 | $ 1,150,800 |
Borrowings Under Revolving Cr_2
Borrowings Under Revolving Credit Facility - Credit Agreements (Details) - 2020 Revolving Credit Facility | Jul. 12, 2021 | Oct. 29, 2020USD ($)item | Sep. 26, 2021USD ($) |
Credit Facility | |||
Maximum borrowing capacity | $ 75,000,000 | ||
Maximum aggregate commitment amount | $ 125,000,000 | ||
Borrowing base as a percent of eligible accounts | 85.00% | ||
Interest rate (as a percent) | 2.09% | ||
Increase of applicable rate upon event of default (as a percent) | 2.00% | ||
Fee on unused portion of revolving credit facility (as a percent) | 0.25% | ||
Number of financial covenants | item | 1 | ||
Percentage of maximum amount of credit facility | 16.70% | ||
Debt instrument, excess availability amount | $ 12,525,000 | ||
Debt instrument, excess availability, amount threshold | $ 12,500,000 | ||
Outstanding balance | $ 45,700,000 | ||
Available borrowing capacity | $ 29,300,000 | ||
Reduction in applicable rates and fees | 0.0025 | ||
Minimum | |||
Credit Facility | |||
Inventory age | 180 days | ||
Maximum | |||
Credit Facility | |||
Inventory age | 181 days | ||
Amount included in formula to determine borrowing base | $ 4,000,000 | ||
LIBOR | |||
Credit Facility | |||
Interest rate spread on variable rate basis (as a percent) | 2.25% | ||
Floor percentage | 0.25% | ||
LIBOR | Debt Instrument Covenant, If Fixed Coverage Ratio is Less Than 1.10 | |||
Credit Facility | |||
Fixed charge coverage ratio | 1.10 | ||
Interest rate spread on variable rate basis (as a percent) | 2.25% | ||
LIBOR | Debt Instrument Covenant, If Fixed Coverage Ratio is Greater Than Or Equal To 1.10 | |||
Credit Facility | |||
Fixed charge coverage ratio | 1.10 | ||
Interest rate spread on variable rate basis (as a percent) | 2.00% | ||
Base rate | |||
Credit Facility | |||
Interest rate spread on variable rate basis (as a percent) | 1.25% | ||
Base rate | Debt Instrument Covenant, If Fixed Coverage Ratio is Less Than 1.10 | |||
Credit Facility | |||
Fixed charge coverage ratio | 1.10 | ||
Interest rate spread on variable rate basis (as a percent) | 1.25% | ||
Base rate | Debt Instrument Covenant, If Fixed Coverage Ratio is Greater Than Or Equal To 1.10 | |||
Credit Facility | |||
Fixed charge coverage ratio | 1.10 | ||
Interest rate spread on variable rate basis (as a percent) | 1.00% | ||
Letter of Credit | |||
Credit Facility | |||
Maximum borrowing capacity | $ 5,000,000 |
Earnings Per Share (Details)
Earnings Per Share (Details) | 3 Months Ended | 6 Months Ended |
Sep. 26, 2021shares | Sep. 26, 2021shares | |
Antidilutive Securities | ||
Diluted weighted average common shares, at positive earning position | 8,954,118 | 8,950,863 |
Options outstanding (in shares) | 973,458 | 973,458 |
Stock Options | ||
Antidilutive Securities | ||
Anti-dilutive equity awards (in shares) | 843,458 | |
Performance Stock Units [Member] | ||
Antidilutive Securities | ||
Anti-dilutive equity awards (in shares) | 0 | |
RSUs | ||
Antidilutive Securities | ||
Anti-dilutive equity awards (in shares) | 0 |
Business Segment - Segment Acti
Business Segment - Segment Activity (Details) | 3 Months Ended | 6 Months Ended | ||
Sep. 26, 2021USD ($) | Sep. 27, 2020USD ($) | Sep. 26, 2021USD ($)segment | Sep. 27, 2020USD ($) | |
Business Segment | ||||
Number of reportable segment | segment | 1 | |||
Market unit activity | ||||
Revenues | $ 108,536,200 | $ 88,892,400 | $ 213,492,300 | $ 185,370,000 |
Gross Profit | 19,795,700 | 17,121,200 | 39,482,000 | 33,573,900 |
Gross Profit | 19,796,000 | 17,121,000 | 39,482,000 | 33,574,000 |
Public carrier | ||||
Market unit activity | ||||
Revenues | 46,918,000 | 32,632,000 | 92,938,000 | 71,887,000 |
Gross Profit | 5,560,000 | 3,570,000 | 10,881,000 | 7,298,000 |
Commercial | ||||
Market unit activity | ||||
Revenues | 61,618,000 | 56,260,000 | 120,554,000 | 113,483,000 |
Gross Profit | $ 14,236,000 | $ 13,551,000 | $ 28,601,000 | $ 26,276,000 |
Shares Withheld (Details)
Shares Withheld (Details) - USD ($) | 6 Months Ended | |
Sep. 26, 2021 | Sep. 27, 2020 | |
Shares Withheld | ||
Tax withholding for share based compensation | $ 66,400 | $ 72,900 |
Concentration of Risk (Details)
Concentration of Risk (Details) | 3 Months Ended | 6 Months Ended | ||
Sep. 26, 2021 | Sep. 27, 2020 | Sep. 26, 2021 | Sep. 27, 2020 | |
Revenue | Supplier Concentration Risk - Otter Products LLC [Member] | Largest Supplier | Continuing Operations | ||||
Concentration Risk | ||||
Concentration risk (as a percent) | 29.00% | 26.50% | 31.10% | 26.70% |
Discontinued Operations - Gener
Discontinued Operations - General (Details) - Discontinued Operations, Disposed of by Sale - Ventev brand and other retail-related assets $ in Millions | Dec. 02, 2020USD ($) |
Discontinued Operations | |
Cash consideration | $ 9.5 |
Maximum royalty payments receivable | $ 3 |
Royalty payment period | 4 years |
Customer returns resale period | 2 years |
Discontinued Operations - Finan
Discontinued Operations - Financial Results of Retail Segment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Sep. 26, 2021 | Sep. 27, 2020 | Sep. 26, 2021 | Sep. 27, 2020 | Mar. 28, 2021 | |
Discontinued Operations Income Statement Disclosures | |||||
Net income (loss) attributable to discontinued operations | $ 448,600 | $ 2,681,200 | $ 944,100 | $ 2,918,500 | |
ASSETS | |||||
Current portion of assets held for sale | 76,500 | 76,500 | $ 1,196,900 | ||
Discontinued Operations, Disposed of by Sale | Ventev brand and other retail-related assets | |||||
Discontinued Operations Income Statement Disclosures | |||||
Revenues | 1,110,100 | 2,608,900 | |||
Cost of goods sold | 698,000 | 1,122,900 | |||
Gross profit | 412,100 | 1,486,000 | |||
Selling, general and administrative expenses | (31,200) | 553,200 | |||
Income (loss) from operations before benefit from income taxes | 443,300 | 932,800 | |||
Provision for (benefit from) income taxes | (5,300) | (11,300) | |||
Net income (loss) attributable to discontinued operations | $ 448,600 | $ 944,100 | |||
ASSETS | |||||
Discontinued Operation, Name of Segment | tess:RetailMarketSegmentMember | tess:RetailMarketSegmentMember | |||
Cash provided by operating activities from discontinued operations | $ 4,600,000 | ||||
Discontinued Operations, Held-for-sale | Ventev brand and other retail-related assets | |||||
Discontinued Operations Income Statement Disclosures | |||||
Revenues | 30,763,000 | 54,098,900 | |||
Cost of goods sold | 25,212,000 | 46,174,900 | |||
Gross profit | 5,551,000 | 7,924,000 | |||
Selling, general and administrative expenses | 2,024,400 | 4,226,300 | |||
Income (loss) from operations before benefit from income taxes | 3,526,600 | 3,697,700 | |||
Provision for (benefit from) income taxes | 845,400 | 779,200 | |||
Net income (loss) attributable to discontinued operations | $ 2,681,200 | $ 2,918,500 | |||
ASSETS | |||||
Product inventory, net | $ 76,500 | 76,500 | 1,196,900 | ||
Current portion of assets held for sale | $ 76,500 | $ 76,500 | $ 1,196,900 | ||
Discontinued Operation, Name of Segment | tess:RetailMarketSegmentMember | tess:RetailMarketSegmentMember | tess:RetailMarketSegmentMember | ||
Cash provided by operating activities from discontinued operations | $ 9,400,000 |