TESS - Earnings call transcript Q2 2022 | Tessco Technologies, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q2 2022 TESSCO Technologies Inc. Earnings Conference Call. At this time all participants are in listen-only mode. After the speaker's presentation there will be a question-and-answer session. [Operator instructions] Please be advised that today's conference may be recorded. now today, hand David would to conference I speaker your Calusdian. Instructions] like the to over [Operator Thank you. Please go ahead.

David Calusdian

Good morning, Fiscal Call. QX joining for everyone, and Year thank XXXX you TESSCO's Conference

Executive Mukerjee, Please CFO. that anticipated management's contain President Sandip results the will note are today statements today Aric Spitulnik, me and Joining Chief forward-looking Officer; discussions and and Company's prospects. TESSCO's about future

recent filed call please Exchange such from uncertainties, would a those in disclosures, and Form President several involve to results other XX-K TESSCO's introduction, to statements go that ahead. like found and may and TESSCO's periodic can Sandip, over with risks factors the difference I and CEO. cause that today. be TESSCO's discussed With reports including Sandip Securities differ most Forward-looking the turn Information the concerning Mukerjee, materially may Commission. and public Company's

Sandip Mukerjee

good Thank us. you, Thank David, joining and you for morning, everyone.

further have positive our that success. quarter evidence the performance second while setting we results, initiatives provides strategic even us up work greater Our for implementing long-term compelling are in done yielding

continue with grow X% performance our year-over-year, results we and market XX% include both for in revenues grew as markets. Our another our sequentially record share. gains carrier These to

bookings the tessco.com, At uptick continuing same grew We continue are website, in to we services. market year-over-year, and on growth where increasing ever bookings with and is sequentially time, growing are year-over-year. demand. seeing a XX% we we revenue business, progress both saw bullish. up achieved. year-over-year, the and in our reflecting utilization make Ventev our have highest and for And products our The XX% customers were sales Total robust demand

about do are supply the environment, show we the These signs disruptions, predictability easing availability. with of excited strong challenges not near are the term. also about we and freight global of in While product chain demand cautious

quarter, year the carrier the -- format: in operating past plan. third, this I first three been to will Carrier has longer business, XX% performance we Adjusted highlights Despite revenue. year-over-year. second, revenue. with and this Starting the as than larger on with created market quarter following results of year-over-year freight software; improvements bookings, anything lead challenges, another of you quarter of sequentially strong year-over-year. costs and results. our dollars and the which marked in EBITDA through market XX% commercial; were to a revenue elements record previous our the mentioned, us more X% was we bookings have The us drive our times, line Together able have delays we've bottom our bottom by deliver in markets, $X.X line $X.X our and our tessco.com. margin TESSCO, quarter. our two full converting I improved Carrier our over backlog increasing have means now seen. record revenue growing our second fiscal carrier For positioned and and up architected the these operating to to was well Ventev bookings business walk and to for and first, and million improved allow efficiencies the up million distribution, achieve

and chain to is our initiatives. execution supply engineering strength due development logistics the business management production and and our expertise, continued proprietary Our of capabilities, our successful

achieved We revenues new and carrier X ecosystems, Tier this grew added growth customers with the customers. existing quarter Within XX% year-over-year.

power sales Highlights our C-band year-over-year robust following strong shutdowns. with quarter tower build came in are COVID reopened by designs builds systems continued strong as We anticipate will remain from and performance triple-digit demand sites include the programs launched. driven expect We the that DAS strongest business The being alternative growth. QX. tower this DAS many and business

as projects with these share and their surveillance to sales steel tower market construction. of expect expand additional We through security well our as customers for new

to our third to the Regarding and we new we mentioned seeing wireless last will we carriers fiscal customers orders quarter. quarter, in sales one first current the of new are ship business, the largest

demand expect to grow. the continue from customer this will We

We product space in that demand key continue carrier driver coming company to spend. the the broadband be of grow represents to quarters well. from shipped currently about in largest U.S. have also our expect as continues the XG over to to and XX% market customer this a and

customers existing number efforts customers the Our that of effective, we business market share enhancing have development our been and highly with service. expanding

our continues the supply grow, to key to highly due from segment demand carrier While constrained disruptions. chain several products remain

with closely with our and challenges. working partners are to forecast to vendor our demand customers We mitigate these

quarter to market focus on sector was inventory driven had XX% pandemic the XX% described carrier in and year-over-year continued commercial the posting which impact in for quarter all quarters, infrastructure The Sales availability wireless X% of again our now commercial and the VAR its our bookings growth this includes growth by sales customers, VARs, of these and purchased sequential ecosystem. sector. sequentially XX% prior market, this up up quarters, year-over-year. outside was largest year-over-year. Turning XX% revenue lessening growth. seven and targeted we were This The best business

We top the better to chain supply are demand meet product with given their our current VARs demand, to forecast planning disruptions. especially

we been have times stock our result services, assist customers product purchases. in the have to strong, this reduced on second should lead in growth our half continued the in the with design working and customers' progress our of Bookings area hand. necessary shortened these utilized Many are and them Our which customers year. of with VAR has

advanced now is sales several growing year-over-year, X% in customers for upcoming revenues were technology XX% sequentially. We're strong, also and planning engaged our momentum, sequentially. projects. regaining While with business XX% grew Bookings were utility down

for longer one that network. expect LTE demand to calendar use private them as in reach a a under seeing are we to platform initiatives wireless cycles, We can foundational consolidate and require planning XXXX. These maturity technologies networks utilities

federal, Replicating very relationships government good especially had position, the have created we state the we to the in and with recent new a model upon build governments utilities, supply and us established with announced. a solutions well we local VARs. as as expertise our put government success team Our have line with card we've that

Turning customer software. and of namely Starting and now business, continue elements market share and distribution new we develop the three manufacturer relationships. with our our business, to win distribution, key to Ventev

Our LTE. line market cell, DAS, card and is small for now one in includes, cellular solutions, other the most and products DAS, of the critical site broadband, portfolios macro CBRS/private communications among public safety robust

with several Our including which and We're we challenges. supply expect turnkey projects, value-added IT infrastructure modernization this site for complexities kitting cost customers implemented, reduce end progress largely logistics services, deployment by we to the year. and provide solution design, will development our enhancements. chain efficiencies their for and complete realize fiscal offerings, of our making Once

will Some supply financial streamlined cost these many consolidation, enhancements end business statements. freight improved These delays, chain easier closing backlog. will a ability efficiencies and us make to of do products order with delivery inventory extended streamlined reduced potential challenges meant further have of costs, with. and proactively The and include industry-wide growing provide transfers, order for identify lead to TESSCO times

key these addressing have been on We two fronts. issues

providing our has us resulted in forward-looking First, which demand customers many customers, with our the had of in we they earlier planning past. than with have purchase orders increased

and constrained our help as to opportunities a make headwinds, work customers have business to of for margins. will we throughout address our result, closely our TESSCO's And and vendor with profitability. closely availability ourselves with increases. on our we and very we partners we purchases suppliers pressures growth educated inventory inflationary markets goal to focused customers drive to protect Despite drive worked price remain will create the to Second, the our company. development to our of supply Also, supply and efficiencies with efforts disruptions in while mitigate continuing improved our

in business, this XX% ever year-over-year, custom and are our year-over-year provide solutions supply were XG. we highest chain solutions bookings fiber to to by flat Ventev issues. our sequentially grew bookings Regarding revenues and for purchased enclosures VARs the due aggregation totaling quarter Sales power and achieved. have Included

are deployments. solutions, innovations universities, energy, have these focus enclosures, we on three the embarked this innovations we of months our received help our grow ago and bookings XX future a We nationwide well this the driven carrier the customers federal larger developed will variety power quarter believe and launched new when few. market, for customers productization business business demonstrate, include from a all including as been both warehouse using from Ventev clean the to by carriers, in While name operators pillar results commercial cabinets this commercial verticals, quarters. XG by strategy. revenue And stream a and end our unlocks and Other many agencies,

which and Our and attachment with improve products small customer margins focus satisfaction. LMR/two-way, solutions, both ensure to Ventev strategy and of public DAS safety is cell

now milestone using platform, a this quarter, our last available business, our now their alerting production. and in as met have discussions We as scale go-to-market own GA them this we monitoring Regarding capability strategies. mentioned commercial is generally customers of part or include service we in to software help device are and of and and number

industry to as sign a well. own as device acknowledgment, OEMs have showcase of their we Additionally, our capabilities using monitoring products

in revenues initial XXXX. expect have we said before, we revenues will these While fiscal fiscal ramp this year, as

channels, terms TESSCO through in directly tessco.com. and our sales sells of Lastly, both online

margins page year-over-year, on this have measured Aric tessco.com focus me quarter. buying and increased more over are for repeat number million. come process. financial Engagements, quarter. seen turn the very totaling the size cost XXX% We're in of have that, product summary and by and to the the at in an on With our views, customers and let progress generally XX% Our tessco.com revenue past resulted achieved. by year-over-year. In higher we we continued orders sequentially $XX customers, Sales for excited number his increase results XX% of efficient of about increased QX, this past it to

Aric Spitulnik

everyone. Thank you I'll walk and Sandip, financial good you, through morning, results. now our

retail As the all a continuing activity statement our from and operations reminder, diminished from are former significantly amounts income business. the exclude

demand increased revenues our across $XXX.X to strong and XX% to million markets. carrier commercial quarter year-over-year Second due

but XX.X% and profit compared highest were second achieved another of last of with second quarter XXXX, past compared said, Sandip last the Gross same the the were of and some margin commercial we QX based lower due year quarter customer to the XX.X% $XX.X larger that normal of million in contraction second the some in revenue quarter we for was million to $XX.X projects on but second margins year's Gross half the expect remain fiscal margins, market of We this high be two product margins seven Gross was Commercial in in the they than mix. management. ahead pace, fiscal the carrier revenues still the margins the quarters As for were year. the at total first margins market expect revenues would be XXXX. in focused we were of XXXX, second were of cost quarter of the commercial Overall, quarter approximate on better expect in the the carrier with continue year. to half. where record quarters. in to for remaining fiscal lower fiscal half

from SG&A this achieved fact, We year-over-year. In overall percentage lowered reduction despite freight increase XXX as of XX.X% in we expenses. to XX.X% revenues significant basis a points a

continue the corporate IT major to manage later IT initiative we complete our and to look as We expenses year. this

and expenses realize of in We over associated with platform. IT the a efficiencies support depreciation expect realize expenses we outside this time reduction new benefits and as to

a million, Second of million $X.X of Adjusted a $XXX,XXX a loss was year EBITDA a ago. with loss compared loss compared million $X.X quarter net with ago. XXXX of was year net $X.X loss a

sheet. Turning balance to the

tax expected, in extra issues expect more lead we've had would increased quarter. for We million decreased also credit but quarterly million. worked through from million inventory spike spikes receivable by third experienced an chain volatile supply inventory during quarter. refunds quarters, supply in first chain was approximately quarter. during did this million in our the This $X some receive by normal The $X Accounts first that our coming the in temporary million due that to we balance inventory year nearly the quarter. in of $XX We increase was QX. QX. during The second inventory. on We may fluctuations IRS caused still to line paid $X.X inventory As the this increased product the the part in by the quarter $XX of

payables not by that be another receivables of FY million or majority XXXX but the expenses until are still our $XX exceeded At in and received do We FY XXXX. refunds, the early million. in owed into approximately of $X later accrued to end QX, tax expect our

half Our the million. year. second receivables now on and nearly of exceed a payables in flows positive have This by operating cash $X fiscal accruals the effect should

well us one, two, million breakeven we include: year third, full to that number between adjusted to operating net full July. in achieving has achieving $XXX of and revenue; million; to Our loss in $X.X our targets first half positioned year year $X.X performance million $X.X $XXX plan achieve EBITDA between fiscal These XXXX between full provided a million. and of number

sequentially to both will over continue excited about very we're With improve results that, and call year-over-year, heading I our back We turn Sandip. the the and I in. direction am to

Sandip Mukerjee

another share Aric. quarter our and customers. we you, had revenue XXXX. since record of in market business and In closing, We're our revenue Thank carrier the fiscal commercial in new adding market gaining highest QX year

profitability, contributed has quarterly our metrics adjusted a the year-over-year backlog, improvement tessco.com including revenue evidenced our Our at with all the these million improvement three historically And have is significant achieved improved website in years. as in high $X.X Ventev, levels. highest the in by EBITDA. And to across board of

We progress focused slowdown, year. to last turnaround with Operator, growth strategy XXXX. fiscal please on our open of markets continue with becoming With remain evidence pandemic-related And assets go from will is apparent. the that, significant the beginning overall in the We make launched we improvement control our for with expect our year the ahead. call profitability to fiscal emerge and questions. this compared very we cost

Operator

from of Maggie with [Operator comes William Instructions] first Blair. line the Your question Nolan

Ted Starck-King

on Maggie. Ted is results. This for Great

the happen of visibility full range? midpoint upper Just needs level range And the wanted does the the to to conversely, to what the guidance of guidance? represent? end I what get of your kind guidance guess And see what end low the to is to year of of

Aric Spitulnik

good question. a It's

I close of side, higher into revenues. lot our revenue half the being to visibility that We've talked On think our have upper we bookings very a mid the range. than about to being

of a the we backlog second significant the half So have for year.

think good get product changes what been be the ranges. low we low at into we're harder in the think a to to to to be end of of in From good to too all least a not going we're side, shape. profitability that mix we little that's we're at much but on. On in happen forecast exactly needs side, have position going But to the with those expense high, an

Sandip Mukerjee

Just to and reaffirm Ted, the -- and thanks question. morning, for good

meet continue are heard that bookings perspective, guidance. far The we very Aric and are From well, both said we revenue we on call, both and navigate. well As positioned I to more the a the on call, and issues, supply believe bullish. you we the us that to navigating will as chain team is

think well So to be in we very we're positioned that zone.

Ted Starck-King

All It's supply of the kind My Great. second is there. helpful. regarding question right. chain

that behavior clients that you stated conversations supply Sandip, you having guys. -- orders purchase change and the How mentioned chain with So doing that has clients? this changed clients' earlier sales supply with is are

Sandip Mukerjee

industry forced available been get or to been the products has simply, it we for simple are the to first is Yes. to more than to. being And in line planning people forward wanting To when have get put Ted, in become do be to to it. everybody used sentence, a much used

driving So is that behavior.

customer The For like that I means one us, a intimacy. things. few is

we our thing. their So always supply working very to future are customers their projects and current needs. closely good understand projects, That's a with their

we that we the pricing some We're some very intelligence, bring that. able So mix. to have of intelligence supplier the of to suppliers are the in embedded from

The have out than that's a people of orders into the helpful the are quarters overall we otherwise not but too everybody. are placed. So into future, years to far would couple getting future

Ted Starck-King

and several quick Are helpful. quarters? the All over size How kind maybe change you of any size of orders? average there. And projects in the last follow-up evolved scope of That's has the seeing sort just a right. Great. of

Sandip Mukerjee

come let different this Well, three me at from points. data

before. builds on Projects So the are said the Order the same. carrier lumpy, are about sizes intensifying. side, XG as are we've

with and On business progress seeing the the very very demand. we we're robust as bookings side, positive commercial And are really cadence. year-over-year our pleased shows,

are before. are tessco.com, than seeing bigger from we bigger we seen finally And seeing much orders So there. then we have orders

on people board more improvements it a across you I thing all So It's to the as the flavor but a to opposed market of for asking. the question gives think TESSCO made are of used we've issue, you're tessco.com. and progress getting internal a

Operator

comes Your line with the question [Operator Bill Tieton Instructions] next Dezellem from of Capital.

Bill Dezellem

questions. A group of

it start else insightful? something et say with first cetera? decline I'd out to there of a on the chain inventory In function supply that to is like Or issues, inventory. that's ask The decline. the that's would simply one bookings, more to I what times $XX is the is led But large in going there demand and million the normal fair that

Aric Spitulnik

That's of a up tighter chain were, the that the issues issues see and good QX, probably is also the of inventory job done We've the those supply given get to a down that we attacked answer QX. in volatility. significantly and about we bit supply in managing the that XX% spiked we chain little than

there do third and in nearly As small first we saw expect the be but will And I here ups a quarter. some in the downs. not what we said, increase quarter,

going there's issues, should to the be think So chain the rest year. to in tightly of managing still of it but some good supply inventory be lumpiness and the for because shape I we're very the

Bill Dezellem

have had I'm revenues the short, still you have on still of then able inventory what what supply revenues you short? been your fully have want now, could you was that are or would Do with been kind -- by customers? are of And if do that carrying thought. kind you And to desired you been or what you

Sandip Mukerjee

early So, you, to very Bill. morning good

a it bit. unpeel question, that little a asked in let's You few things one so

do seeing we we is is why which the products of need. So our entirely, question in very, the around quickly. turn grown. a And backlogs have very we inventory was, are have lot that what come Not first and part of your

So nature business. that's the of the

in, constrained. constraints, like goes customers electronics. cable the soon cable, don't hand. out So chipsets, constrained resin, other mainly inventory give the that we power comes things And the to Anything it on requires along those or is power electronics. sometimes are the those And we some are inventory products with that as have with want, that relies and on are as and color, with you inventory or

part that So think of the is first your I question.

much how if backlog correctly. second to been, of revenues had understood deal part The question your your had and with question more I

answer are placing a customers with So the into discussed because -- orders one as question. are that's last Bill, difficult purchased the our to future, we

So when little would it's question a bit mark. they a product, be ready to receive of

However, I million Historically, $XX will our following has give bit color. to between backlog you $XX million. the been of

Over it's than of half first the more this year, doubled.

If you not revenue, the we have full every the half in additional that, an $XX have we color giving million-plus you half. that gives shipped for quarter. Hopefully of looking have would I'm color that first been you assume for were but you that what done might would for.

Bill Dezellem

then And the that is but of why indicator, we is early a hear of indicator to a leading you translate recognize the missed that's How helpful. that views activity? more me equal revenues, but future? as up that with I that page have And did views correctly referenced, shift this talk may you your don't are that is we morning let And to do is or real-time case? somehow would the if page this case, to I That than tessco.com. that XXX%? more the

Sandip Mukerjee

the the you are on leading the with overall. have stat, website, you internally, to And can over we tessco.com. views did and you indicator numbers in quarter eyeballs and shared would that's just of with last not website. couple a that through over seen, our more correct. We we Page I And the conduct think excitement I are share but little $XX last revenues million that we've have commerce quarters. and

million This and $XX quarter, little we more. did a

have perspective content yes, in page catalog, a and made So views a tells we both the perspective. are improvements presentation from those exciting. us It product from significant

effort from much you is earnings on of us a what exciting an our I customers. move for that's question, to it's more So Thank because Bill. as And efficient online, cost call, making we're for the our business perspective. process to more that said

Operator

the management for will I over now turn to remarks. call back closing

Sandip Mukerjee

appreciate Thank day. you, of for you you hard and And Have support also, for joining a TESSCO. today. work our quarter. their speaking us wonderful look next operator. everyone, And dedication. to members We We with forward thanks team all your again, to thank

Operator

Thank conference today's you Thank you. call. This participating. concludes for

disconnect. now may You

Tessco (TESS) 29 Oct 212022 Q2 Earnings call transcript