TESS - Earnings call transcript Q3 2022 | Tessco Technologies, Inc.

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Operator

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to remind everyone to the TESSCO Technologies, Inc.

Third Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speaker's the will question-and-answer be After [Operator you. Instructions] Thank Sharon from Calusdian Merrill. David

your You may conference. begin

David Calusdian

morning Good thank XXXX, And everyone. Conference fiscal TESSCO's Call. year QX, you for joining

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

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

Sandip Mukerjee

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

momentum Our of $XX X% the this bookings and Revenue quarter. X% of million to positive new up grew And continued were is FYXXXX. up in backlog end million, which a year-over-year. and respectively, since third our $XX record

the this products development of All business and sales demonstrates with the of for success demand services, our improvements. and growing along our

and product at freight the pressures, impressive of inflationary profit supply positive increases contributed drove improvement issues marks management term, the our in efforts. demand, this given of margins quarter and uptick move also to industry-wide not easing our with $X up also suppliers forward we’re sequential increased we with do walk customers format. of but This mitigate the strategic quarter and customers consecutive of I over diligent our show near following market million. million. will have now turnaround operating our the We seeing The through adjusted a our initiatives challenges These results are backdrop continue chain operational fourth XX% their income resulted you past as with our increases These which a and while to improving. adjusted ended in costs. in impact, bullish, which are gross year-over-year, work an we strong cost the in in highlights to EBITDA the EBITDA, signs $X is quarter results are particularly in of robust growing, in and and delays, and results

markets, and carrier First, two our commercial.

for Second, this were marked business, tessco.com. our three on carrier XX% business, and up distribution, revenues and our Starting quarter first of key elements year-over-year, market. namely another QX Ventev and the X% QX software, our third, with in revenue up strong the for performance for million increased Backlog record and X beginning of profit, months a end XX% the QX up of third this the XX% Also, XX% QX quarter fiscal was of was XX% $XX and year-over-year, since up the year. year. the at fiscal which year-to-date. over gross

owners. owner growth engineering in our from The to knowledge, continued our up while tower logistics chain Contractor capabilities, our efforts. and due supply this up revenue expertise, is strongest specific carrier revenue our contractors and year-over-year, Our production and XX%. development was was XX% growth was our market and tower business management proprietary

tower Calendar a DAS expect they be strong ahead, telling Looking year to us are XXXX installations. owners for that

of earnings of largest solutions surveillance tower last also carriers portfolio one discussed the including strategic We our On I steel, broadband largest in call, the are new expanding our U.S. and and wireless the number include security, material. customers, company to a

about market quarter our in space customers continues shipping represents the increased driver be As from to throughout XX% expected, new to this we and third these them demand XG expect key the carrier calendar and began of year. in spend. a

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

diversified more less this a have revenue than concentration before. we customer result, market a in base ever with As

includes quarter, nine and was the Turning ecosystem. profit the increased wireless business, outside XX% XX% market, the fiscal up the year-to-date. the In year-over-year X% months infrastructure revenue of Gross carrier for which up Commercial first all X% year. now commercial third to year-over-year and

year-over-year. Additionally, bookings grew X% sequentially and XX%

While backlog up and year. of up beginning to this since XXX% grew the sequentially million fiscal XX% $XX was

fleets Our Utilities projects, utility upgrades. was grid a selling XX% utilities have have equipment of increased up driven where for and segment some in and broadband sales strong sequentially. by been largest modernization. engaged had quarter, the This growth radio were corporate fleet we IOT

consolidate utilities see to that under continue private foundational use one for to technologies network. demand networks can LTE wireless platform We as a

fiscal to our the seeing through Nokia have driver be expect XXXX. Global already calendar throughout this and a year for the Furthermore, key projects relationship, $X Program positive million Partner pipeline. in registered results this We and are remainder in of over we

XX% cloud upgrading company, of in-building, growth Turning we that areas of company, U.S. and VAR Sales the and networks. the a metropolitan in transit their company to a Enhanced VARs, grew in for and completed our from that the the U.S. XX% wireless year-over-year. in serving Including largest business, or sequentially, rapid and venues largest customers, other global a of A program. many business are quarter, of the transportation EIB came are Much number companies AT&T customers computing transportation online that VAR year-over-year, bakery one multinational system the projects across third hospitals verticals. are grew part XX% serving industry large

experience. our distribution, throughout our for improve a been grow market to by where controls ridership Starting companies again now our Transportation now with to business, software. on the safety recover Ventev, namely, communications beginning product three share, and of trains, this and goals will after are with offerings, investing example, distribution service enhance has to improve the and to year our the placing organization. based long business, turn downturn. commuter For I and elements enhance efficiencies

market the growing especially we Our revenue and bookings share. in growth, that market, demonstrates indeed carrier are

to strategic we comprehensive portfolio. brands add to continue most ensure the provide we that Secondly, product

us provides the help safety will which commercial in public we boosters simplify space. that added DAS and deployments This quarter, Uniden,

which We we And added enteric IOT industrial provide solid customer to [Indiscernible], certification who's segments. DAS also helps provides lines. RF, solutions fiber added access product our us for

on we're compared our a XX.X% efficiencies, in progress as totaled quarter, cost which significant Additionally, XX.X% reduction evidenced this of as the year-ago percentage SG&A making in our to by revenues, period.

product efforts months. to in third driven next modernization to due quarter, XX.X% year. margin expect largely and Our This by favorable the our this to improve of resulted was a customer IT complete in of XX% gross for last was Furthermore, Ventev XX.X% profitability compared few largely to revenues. we and the increase mix, a over quarter

will before, to significant TESSCO with over do efficiencies us time have provide and we'll discussed this with. cost we make business As effort even easier

million. our sales growth This sequential Regarding X% Ventev and quarter, year-over-year totaling represented this record XX%. we $X.X growth of of business, had

new In the including Additionally, we lines to most and solutions vehicle this had all year-over-year was to We that's performance. achieved. for QX, fifth products ever this wireless grew for the X. lot tire production of do increase margin wins, XX% providing highest of coverage we consecutive were our while at have several parking quarter Outdoor, largest growth. connectivity Ventev for business retailer world's largest the valuable revenue improvement bookings able centers a maintaining global automaker; APs of with And for fewer use antennas, to company, project in warehouses. coverage coverage a with X. EP utilizing customers dollar maximizing ' distribution achieve Ventev performance retailer access dollar customized the and operations for requiring This multi-billion points the A the Cisco U.S.; X. retailer; distribution The X. multi-type multi-billion home continued Access refresh, our WiFi rollout food Points Meraki goals. the

panel additional APs lines and This warehouse quarter, Vantev for Co-location floor launched environments, for for including AP support and including new mounts. Enclosure, warehouse, our several integrated new concealed Handrail Universal new products, antennas, hazardous antennas, enclosure

to business, monitoring. field announced operations. platform, in enable to will monetize customers, warranties, agreements, them offered more life-cycle device with additional software service efficient extended provide such to we a our our Regarding device as and management, and services them as our to level December, This be provide channel will management means

DAS to combat along public this with an to support to quarter. business this from incorporate device TESSCO their significant for milestone projects. BDAs life recorded management, first the solutions During we past sector, strategy. from a safety new this for announced communications platform, westell is with revenue quarter, We our provide cycle for this and This and monitoring on into electronics agreement our

expect our as shared, not we but However, fiscal expect to significant do this XXXX, ramp revenue do moving have begin revenues in our to we sales channels. we year, previously see fiscal onto

online tessco.com. via sells you know, As directly both and TESSCO

improve continue invest to and tessco.com processing. order in our customer We to service

page views, this term totaling completed TESSCO.com million typically box including on sales we're me financial quarter, as a are higher over a year-over-year. increased efficient. $X.X XXX% In his to Intercom, chat with turn our live longer of an expect year-over-year, cost upgraded about We enhancements Aric launch platform. in that, let margin our come the AI-based of of thus With the past and measured engagements, results In product on summary. profitability strategic an number it experience, over and we all progress short, very our QX, achieved revenue have from benefits more X% initiatives We far. increased chat to for excited and TESSCO.com

Aric Spitulnik

you Thank morning Sandip, good everyone. and

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

markets. We growth a revenues ship our quarter receipt our these inventory results to achieved disruptions to ability the despite to $XXX.X Third product with in increased of in customers. chain, and X% global both commercial million, vendors, industry-wide and from which delayed carrier supply limited year-over-year

growth bookings sales year-over-year X%. achieved also We of

been commercial the and XX.X% be compared remain reduction supply decline, have increases last expenses the continued markets continue percentage the compared with ongoing end, and of XXXX. year. to of of Gross quarter As since due fiscal for Gross was for and caused same doubling SG&A year's would a XX.X%, Ventev the cost We percentage XXXX in carrier customer of favorable achieved revenues year's a quarter quarter We a quarter the solicitation, $XX.X the to by product quarter margin in Last to quarter as of revenues, excluding in management, increase XXXX, level including third totaling to backlog Largely of revenues quarter on fiscal third third quarter. Sandip of in a global with totaling we revenues. expenses pricing XX.X% million consent was this had freight year. mentioned, adjustments fiscal associated both costs record as improvement. last disruptions. very in $XX.X of XX.X% year's second compared mix, the the XX% million of another expense, significant so the chain SG&A Gross XX.X% of with fiscal despite third $XX the pace. focused still profit at ahead margins beginning last for as this amount million, a

corporate IT We and to look modernization to in the initiative manage next continue complete our IT our as expenses, months. we few

we Third to year $X.X $X.X ago. our million. XXXX filing would adjusted net of a we net We accounting to respectively time to the in of This month, fiscal taxes. compared to adjusted return a per of and now million fiscal EBITDA benefit Adjusted quarter, was EBITDA over This have related in in income year some change come method from XXXX XX those were tax loss $X.XX, In tax cents ago. million, compares income $X $X.X [Indiscernible] a share last of and related and XXXX. a EBITDA third quarter recorded taxes return. million is fiscal per with a a $X.X $Xmillion of see loss million funds share the and adjusted receivables and for in EBITDA respectively. This expect

growth. supply balance as much by strategic through steps In flow our of the receivable January, million quarter, million liquidity overall approximately credit announced inventory have this our decreased to decreased quarter, operations this the Turning inventory line that to $X almost third during product $X of also sold nearly The management $X we as of had took we We're face we we continued persistent remaining by early million. for in decreased quarter. spiked sheet, by in million the balance QX. accounts prepare increase inventory from in on the Cash challenges. $XX.X totaled

million into a fixed facility, our entered mortgage of rate a we Specifically, $X.X resulting on Reno a of X.XX%. inflow in interest at cash

$XX increased $XX to impact cost. liquidity We commitment these also of other a overall million. of over relatively have net million $XX changes, amended that we improved among is credit, our transactions from line million The at our by which the low

and to growth expect need market plans to looking flexibility don't we away, manage make liquidity we our on extra this While we sure to execute have current ahead right environment. the ample are

third direction, right the on same the disruptions in time, At we worsening our results. trend and fiscal as quarter. results outlook we on reflect our I business to strategy. anticipated to chain for supply year and am executing have such, short-term XXXX fourth how an the continue are And results Our are impact quarter actual having pleased our the with updated our results

projecting Sandip. XXXX, and compares year to $X.X call that, a which year of million million XXXX, now revenue loss net of million loss to million a EBITDA XXXX, to net year of in $X.X a loss fiscal I of million, of to turn a will to $XX.X $XXX $XXX to of in million over $XXX million which which between Adjusted compares compares we're $XX.X XXXX. now fiscal $X.X For $X.X fiscal profit back With million, of million, to in fiscal loss a the

Sandip Mukerjee

To provided chain made back echo beginning Aric's impact that the July. revenues With confident original environment, projections a of in at had Aric. year. have chain the end major to the on we upper the comments of have business the are been a our we issues normal outlook, range our supply we've supply closer Thank on the you, would

backlog Our original our The fiscal evident is within for our team profitability on This range well. maximizing has solidly results fully from our is and year. growth, year. have as focused been the booking’s TESSCO grown that this throughout would how

bookings liquidity continue efforts income. in year gross our well gained also of revenue in bookings of Before We grew in during million third record to $X reemphasize At $X.X revenue software. And operating call that, to The new efficiency the achieved we Q&A, apparent. we quarter key by supply and our with pillars Ventev improved positive like quarter. the of more questions. a over continue end cost in and spite resulted record We improved the constraints. EBITDA, of the of net open backlog. we will start our $XX to record been a outcomes now quarter, three We quarter I'd with and X% respectively, margin, and we progress and Ventev some make X% never all margins. additional on our we cash of our million to distribution, debt had and this Moreover, year arrangements. had strategy: turnaround has backlog ended our management and this With manage million. the the evidence through

Operator

compile We'll pause William first the of just for Blair. question And Instructions] moment the Q&A roster. comes your to [Operator a line from from Maggie Nolan

line is Your open.

Maggie Nolan

initiatives. is Hi. expense revenue. Thank incremental I'm on you. forward dollars margin work what about wondering Nice thinking your for operating from the framework incremental

Aric Spitulnik

Hey, good morning. Maggie,

go scale there very we to freight increased like or I we as things variable at have need some with don't other least as we an Ventev business some and a able with expenses, is the along shape, see today certainly that, have expense in incremental gross very a things from as business. couple in we'll But pieces obviously, short-term dramatic margin as any or where from like margin you well. standpoint, we we major in then, far is that mix So sales. a and revenues. But standpoint, to continue good say of to expenses, close with driver future, obviously any a give increase We'll changes than and relatively a invest like commissions are the and in feel ahead product we period, different of the as upcoming standpoint, would big years, the is of just the in think that, to incremental sales that takes here look be where the and

there's as continue of believe So and lot we revenues. scalability grow leverage this do business in to we the a

Maggie Nolan

thank Okay, you.

and are the in backlog as you you you the going On where guidance demand? fiscal are change, into about think viewing As guidance feeling XXXX? about, this a push-out the sits. your changing How setup then

Sandip Mukerjee

morning. good is this Sandip, Maggie, Hey,

take that. me Let

me the good going and the guidance. very So Let we fiscal comment feel XXXX, into backlog on

but backlog. doubled, predictability evident is backlog tremendously very on is of start little we backlog, stable. the up difficult, the testers. we is the -- We've very the $XX today. stretch of We the it's so of What is first to backlog, retire the million grown so year. quality So how since routinely of increasingly the it's That but good. lost very, our very it's very, We've

the So that to million if have backlog, is the $XX going let a have would going very going guidance the guidance. approximately wide backlog. million third to a margin the with our at could to we With be that been as me just is however, retired it's to that demonstrating, added a hugely this quarters year, hypothetical, benefit we million an that creates go us lines fiscal forward. additional to bottom but in performance very will $XX top try our that would in far and hard very backlog, From unpredictable of $X line. perspective, maximize are Right, have we're range as

guidance. and on is quarters. upcoming And -- comment to the quarters backlog because years, will that's beneficial this in very of very then TESSCO we're in very, are finally, future So confident terms retire this we future

Maggie Nolan

Thank you.

Operator

[Operator Instructions].

Bill comes line question from Tieton from Capital. next of Your the Dezellem

open. is Dezellem Tieton line Bill Capital. from Your

is line open. Your

Bill Dezellem

manage My button. my own apologies, I guess I mute can't

product theoretically or to I this up please. does will be of immediately have the projects two available. then backlog could $XX and you for that projects would this like indicate that that split wouldn't really revenues you into the if ask quarter? completing, on the backlog, those And, backlog available but be If was you future better. product that the Does available X. pick had completion components. had understand remedial, like to more I'd questions So normally million I'd that it

Aric Spitulnik

mix is of to Hey. Good morning you, Bill. both. early a It

they're chain driven planning horizon. on project just the realities, doing supply customers, by a longer Our

So future what do we we to have ship orders. call

if a consume and had could However, first falls our that ship into That to preponderance product, customers the our category described. backlog it. we of able be you we will

Bill Dezellem

that X/X, may Okay, us split helpful. is it care X/X, Would whatever to rough the give be? you

Aric Spitulnik

down both time, but would the here It hard that's back it what you to the Bill, number think to X/X, give but It's be why color certainly envelope that varies, the pin just us -risk an to all that have of difficult give forward. a the it, their capabilities, is customers the obviously, the those reasonable today, might for nature keep sitting of it's product, exact I and to And in just de some X/X who estimate for -- to warehouse product such be. I hunger ballpark. our chain they of issues it the supply number. have mean, if going will on would and business to hold we absolutely

Bill Dezellem

Right shipped quarters, you available? each presumably, your quarters, had split, a a the at of been of in could meaningful prior product and also the had you had backlog have those in portion but

Sandip Mukerjee

Correct.

Bill Dezellem

Okay.

congratulations. what challenge. guess I And So a

into So but immediately reason of inventory but particularly you I a proportion about down kind had would strong Inventories product. suspect as more we the of maybe inventories. better, the thinking together let's that phenomenon, of be environment, shippable of favorable inventory, with backlog in be the that think and can inventories, so how inventory which tie was down like seems it your if segue you that would this demand, were normally that part you're

Sandip Mukerjee

to to to months your six-week your purchase previous to become able help to inventory. being cycle for in almost What of many product, remark, with has build. be our one related on just the six terms actually issuing to used our months, ship a opposed product order question, As question

of go If answer and and I question. that the you through, keep rest could your try as mind in

there's would there's actual a completion three So related solution backlog, product the There's we out customer. that push inventory, the there's need our of to or a to to skews things. sales. And

generating what adding year-over-year. revenue question I'm are products, to growing So your is, shipping we and

remaining that, so that our for waiting that backlog of TESSCO ship goes is complete The So as in well, to portion customers. and solutions we is inventory inventory our components come towards to can right? to

Aric, see the I uptick future upcoming expect supply terms much of in our to a forward, chain, affects quarter. looking said? to certainly add But availability you an little inventory. to in have of We want what volatility. product bit don't largely anything the in we might Now this

Aric Spitulnik

would inventory more Just to that, think a like to we reinforce we bit than have little I what had.

slightly that the even That this be quarter. that quarter that supply where I to couldn't said level. last to we tells I inventory that expected keep even think ahead we chain you is up

was we more have would it if certainly So inventory available.

that would we today. where than than were that still definitely of Not at be we higher where fiscal holds today. slightly So we are are like where the statement but the higher we year, beginning true to

Bill Dezellem

more, Great. Thank and backlog. a you, the if on bit Continuing little just may, [Indiscernible]. I inventory

further thinking giving ahead trying You'd get ahead and or mentioned to so product customers we're that time, some that times. chain for that lead of indicative that, have are that your orders that you you that order aspect you issues the themselves lead supply Is can are not with longer planning to that they of that a longer and other simply is has about? in there

Aric Spitulnik

would The with aspect, business Bill, our share growth, before. more other right? add we are is We did doing than market own customers one I

TESSCO backlog growing, "problem, confident It's the in but backlog is we'll the are chain TESSCO. was net adding positive, restricted demand very industry-wide retire an not we're phenomenon. to our upcoming bookings the " which issues is are to the our to quarters. is just So supply of the because growing, this And good, quality

Bill Dezellem

That's great.

gross Okay. and Inflation. same inflation I'm margin for are means because on margin but be inflation dollars good the higher which experiencing you, your actually higher? would How entirely. on is take change percent, gonna a profit dollar you your amount, general, topics you much in

Aric Spitulnik

there's us there's freight, product. ways: and So many touches in labor, inflation,

right? are us, we're employees better a of and about TESSCO, it. On feel side, TESSCO being we the part make So good well with labor place, managing working stay to through

gallon we what and our delivery customers. how, gone give we aspect, kind of our freight at guarantees the freight have discounts looked we give On customers, what

us a freight a up good come and for Tessco. that us at prop a price manage for has that perspective, positive or with been proper ensuring towards value helps customers, diligently inflation you on perspective, product costs, we're industry very net our and increase our product a algorithm, And out well have We we pass don't price leave received. on customers. we inflationary don't this describing we money the from that are is well very overall dynamic that understood table, lose From the money, increases an and

our So per we now. a we overall overall also are margins. successful we in is to not being our discussed diligently gross result, We've with adding as our solution Which efforts. work improving done mix, more effects just are our the just our price strategy, But solutions. Ventev,

You've uptake Ventev an XX% year-over-year in seen performance. of

that solution net customers that hopefully margins customers. full we're increased have It's actually in to our more increase we to the our TESSCO color but pushed though. with we our XX%, revenues, that shipped accretive gives So you XX% to what on seeing

Bill Dezellem

opening Ventev. Ventev, detail? Would I'll significant expand growth more you but know that question, on it? specifically your Relative if accomplishing for would, drove next to in in to take you your talk please? to how you're And, you lead Great. the I answer what remarks, essentially did actually those

Aric Spitulnik

four the dynamics. hopefully Yes. briefly, cover will I'll that make points

standard, a plenty we moved to for having this reference from a the part mode about to good mean, have been a a kudos dials I'm calls, we've as story mode a turn talked making to opposed first, of product that get project So operation. to to of customizable. configurable, so able of more been us and products something as Ventev we've news on has a the This these just team made our more quickly. I And discussed strategy, operation for before. has our

like that gives that us of point Cisco in partnership the not to is before, through the have one. design Point channels So two, did slew mainly partnerships that access customers bars. we whole a Cisco we have

as come lot those for Cisco. TESSCO beneficial of as a partnerships, it's and seeing well of are We projects both out

to And our is Third come focus as remarkable both our where side our have the business. side. The Ventev the sales, pretty call point gave net commercial performance on much the earnings side commercial of of projects in well down from we Ventev have we the as We of doubled business, that you've innovation. the is of improvement last seen color number during our opportunities on have on done. a

innovation. Solving with challenges to enclosures really but tenant back configurations. and some have unique our earnings I'll customers had the you transcript, it's refer

Bill Dezellem

would so growth above growth rate? you anticipate an continue result will industry at as TESSCO above a Ventev's that And and

Aric Spitulnik

We're very for think we on our during Ventev bullish indicative and Ventev I is narrative the call shared that. bookings of that

Bill Dezellem

taking difficult supply Great. have the did all questions pretty chain a successes congratulations and Thank on you for in you environment. my

Aric Spitulnik

you. Thank

Operator

further this no the back are management closing some team at There turn remarks. questions I time. the call over for to

Sandip Mukerjee

joining you dedication. look quarter. forward Thank again, this Operator. and And for a our of We our your to concludes and next Thanks call. you, speaking appreciate for TESSCO, day. have earnings Thank We again to support you also everyone work today. and with thank to us hard team you nice members all their

Operator

This call. participation. today's does conference Thank you your conclude for

disconnect. now may You

Tessco (TESS) 4 Feb 222022 Q3 Earnings call transcript