Tessco (TESS) 30 Jul 222023 Q1 Earnings call transcript

Hello. And thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2023 TESSCO Technologies Inc. Earnings Conference Call. placed to been noise. any have lines on prevent mute background All the be will remarks, question-and-answer After there a speakers’ session. from [Operator to Instructions] Merrill. Calusdian turn like Sharon the conference I over to would now David go Please sir. ahead,

XXXX thank and joining fiscal everyone, morning, conference you Good call. TESSCO's for QX year

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

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

joining thank headwinds, again that quarter Thank you, of shipments another results. yet had year confirming David. is for first XXXX, backlog. the with continued global and strong our productive Good Strong and solid bookings We fiscal quarter our despite morning, you momentum throughout and resulting sales and us in positive yielding effective everyone, along strategy today. record

EBITDA million to loss million. revenue. to as expense focus ago a million, on our continuing $XXX $X.X of percentage yet up is and from our of compared totaled adjusted increased backlog record the to we positive reduction Furthermore, which million, decline X% At million, $XXX year XX% $XX $X.X shipments last bookings resulted SG&A in Our a year-over-year. We another of reported had time, same the record. quarter of

profitability. in with to see later Aric turnaround our strategy. our call, momentum improvements the format. talk our walk through strong and following products but We growth of I growing the the you business continuation highlights project results are will more in demand outlook to about the we to here another double-digit quarter revenue services will our and and will and continuing for of now continue past the

two software; X% XX% distribution, the commercial; tessco.com. solid a the third, of sequentially. second, performance to carrier and up QX namely Carrier year-over-year and Ventev and customer XX% product and sequentially. our gross was elements quarter up market our Due business, and marked business. First, of profit three our segments, X% for Carrier was revenue more favorable and year-over-year mix, another key

XX% year-over-year Our bookings growth sequentially. and with remained of XX% strong

end year-over-year $XX QX the backlog up over at was million, sequentially. XX% of Our and XX%

strongest growth significantly, within customer, an additional XX% which QX which grew in our Our grew quarter business business, our up this the largest segment XX% sequentially. We tower and significantly started this from with and year-over-year quarter. tower earned came line Carrier

expect steady for new line growth XXXX. business We this throughout fiscal

Additionally, customers continue place to begun our Ventev grow Ventev of some to our with this year. we sales to and have fiscal expect product products tower

largest across begun customers, projects. has contractor relationships developing also general even year with the seen turf of we our share customer that contractors. continue turf with progress Carrier last our supporting and show market contractors, quarter-over-quarter. improve made significant growth Regarding considerable our major spend to AT&T carrier and we have increased them X The stronger Tier Tier to two We've multiple signed X

will increase all and and which now commercial manufacturing the the the success our logistics second, continued partners; outside market to expertise; supply efforts. factors, with wireless capabilities; and to XX% with business sequentially. successful growing customers $XX XX% strong year-over-year was an turn increase and third, several quarter XX% up QX and chain business Carrier and strong million, sequentially. Gross million, proprietary year-over-year sequentially. engineering stems $XX first, year-over-year execution Backlog from finally, record ecosystem. Bookings our and XX% includes very market, relationships revenue, sequentially. quarter ending this and also Our commercial for were at a increase development increased ongoing in strong end, XX% of a XXX% our production infrastructure our profit XX% QX a I hit XX% at and another year-over-year yet

market million Our were last are reasons able EIB, backlog we accessed I or had EIB our segment the customers integrators. be program expect over through our quarter ship scale, a services, on DAS technical that TESSCO. months. the sizable still That $X a shipped why support, for continues personalized that million. AT&T have and the Enhanced quarter coming In-building expertise, hospitals with over totaling and mentioned to over We past Through we case. $X Which to book we this $XX be management customer, rely coverage Program, over value-added account key were to the large to able the that integrators one of million.

other EIB with engaged also integrators. are We

market sequentially. helping business utility Our These include of projects. helping their a around campaign development grid results automated utilities and confirm overall strategy year-over-year our Growth XX% X% strong with automation in initiatives Ventev grew metering modernize market and infrastructure. electric this

grew VAR market year-over-year Our sequentially. and XX% up XX% significantly,

Class XX% for Transportation microwave support XX% projects railroad This Our equipment grew, included sequentially. also and segment X up customers. year-over-year to

second encouraged strong very into carrying momentum are the the by quarter. We we are

business Turning with the to distribution, our business. key software. distribution elements our three of and specifically Ventev Starting now

teams provide largest to persistent and share new mitigate challenges lead we overall TESSCO's forecasting chain to our supply encouraged chain ordering address pull our to we and of times, many last We or chain reviewing and delivery inconsistent completion buffer close projects. utilizing our fiscal dates. partners overcome with the manufacturer supply supply market demand against advanced relationships and in the planning their To growth purchase and lead This to are business affecting materials long on are supply directly captured focused helps in global We relationships with us our strategic increasing help the to to need. timely the diversify and This customers. year our orders suppliers. work constraints blanket in leverage of collaboration has our product help times customers ensure many of they

As the I've quality quarters, and remains consistently backlog, that test in our of prior mentioned strong. stress very we

related and cell, also engagement radio to focus continue of planning critical DAS, in land on support and rate and cellular related site We and supporting safety. testing customer business supplier solutions small solutions. public project to applications mobile forecasting CBRS/LTE DAS, for broadband, communications run needs to while macro

material and Our increases pricing our and teams creative and from freight partners. innovative ways have positively produced despite margins impact delays profit to supplier

are with we a driving positive apart TESSCO customers and experience but focused suppliers remain these global Of by challenges, making for industry-wide on to easier customer course, us. business our and do and both setting it

Turning to Ventev. now

a and world's the market increase a media. Our strategy results. year-over-year, wide company, sequentially while yield performance a customers down Ventev record of in its XX% Ventev the Ventev XX% sequentially. its with continues our Ventev company and largest existing had largest highest on valuable including second range increased share social From revenue, Fortune operations year-over-year growing increase perspective, history, a XX% industrializing from based technology quarter most a bookings of QX. XX% our automaker utility the world's to in world's had XXX

a executed of efforts closure the quarter, Aruba XXXXi single Ventev with doubling to This solutions. an international switching combined for provide protective platform. Our industrial Ventev resulted Aruba system HPE powered, with SKU overseas in sales than agreement more switch will year-over-year. sales ordering and Ventev allow CX This powered past Aruba

fundamental has for standardized environments. implementation have XX% for by allowing use recap, customer universal harsh a recognizing for Ventev efforts, such differentiating and impact. has while or been line resulted to the product strategy in design is our antenna This lines To flexibility solutions. For of a our have and enclosures been without been of fewer the greater configurability while configurations our customer. Cisco product SKUs requirement. able powered revenue we the standardize eliminate Through These our in complete new to as demonstrated for any these that SKUs

monitoring TESSCO software branded software-as-a-service, business, our SaaS, have Regarding or as Observer. we solution our

to has good Observer While revenue this QX. made point, significant in been we not for TESSCO progress

We and solutions HubSpot, capabilities solutions and the support. made with SNMP Modbus onboarding, to ticketing with notification like industry-leading Twilio capabilities our example, using integrations enhancements our have options, platform, several expanding connectivity like including expanding

of also increased We I’ve we numbers. support increased the brands our devices have on the number platform And number supported. distinct model significantly of XXX to over

team been later sales Our several revenue and year. begin to we expect has actively opportunities, Observer working from this fiscal on ramping TESSCO

and you we of know, channels, direct both through sell Lastly, in tessco.com. online as our terms sales

in We to quarter. customers continue tessco.com, revenue of $X.X attract to which this new million resulted over

asked New to of on questions. bot answers features tessco.com commonly addition the resolution quarter this a that customers directs included for

over turn also I on paid We Aric Aric? review. implemented the the to that, now syndication financial for platforms. will call With content have

and good Thank you, Sandip, morning, everyone.

exclude income the activity from reference amounts statement are I operations all reminder, former that from and will the a retail As business. our continuing

First grew global quarter We despite to in $XXX chain. X% revenues achieved the these supply year-over-year disruptions results industry-wide million.

First quarter sales XX%. bookings grew

customer QX last for revenues was backlog, and As due Sandip $XX.X of XX% first was XXX% first Gross fiscal million XXXX. quarter for mentioned, quarter fiscal largely the end of level Ventev strong This the carrier up product mix quarter in and market. $XX.X fiscal commercial the favorable at with of totaling Gross another continued XXXX first up to in $XX million quarter. was compared the compared for our the revenue of record profit and quarter the we in market over of XX.X% ended XX.X% million public of of year-over-year XXXX with our a margin with quarter year. last same and

continued comparable to achieved the reduction last percentage in freight We focused as management. despite margins lower quarter We has segment, year’s quarter. Carrier than remain in from on representing expenses also revenues by last year, a growth trend significant segment. which caused this produced expenses as supply amount chain the the of SG&A last higher cost year’s disruptions. compared XX.X% XX.X% being increase revenue Commercial global higher of this first a the than We in

fiscal was XXXX of loss loss $X.X positive ago. a million a $X.X down with loss QX. first Adjusted first The XXXX adjusted of of million the was net year from in compares million of $X.X This EBITDA quarter million. EBITDA quarter $X.X significantly fiscal

even remain inventory $X.X chain in management sheet. is overall in million quarter. to quarter receipts reflective is the ended $X.X The million. We $X.X the with by this of quarter million balance strategic income on We was in persistent quarter. million supply payments dependent these support approximately through timing of the our increased by line IRS. in to of inventory managing $X.X backloaded Accounts that of due was balance of The supply of supply the our receivables sales on receivable challenges. the chain disruptions. quarter. challenges. more credit tax first pronounced increased by the the Turning This largely of the increased in This Product face first

at did we $X tax of refunds QX, receive outstanding year-end. million During the

million year-over-year so and $X we year is sales macro-level more with will Our are our to revenue With XXXX; in $XXX our pleased the that business, QX X% encouraged a guidance fiscal year; and see continued compares to and net XXXX. million last will the $X.X strategy. back I’m results. reaffirming of of compares year our impacting XXXX. very of turn improvements saw are and over strong we I from fiscal the even XXXX, $X reflect call of during loss bookings executing which FY of net results that, between by to in to Despite we a would which growth the XX% are and for record loss to in to which how million continue backlog million, Sandip. on $XXX we million EBITDA million, as improvement $X.X $X million, adjusted we record $X.X to follows: Accordingly, believe our million year fiscal headwinds which

you, Aric. Thank

the we of questions, sales a led Before I to reiterate call record Strong want this some the to record to backlog. momentum from quarter. and highlights open bookings

result before first the a business, million. $X.X sales positive features percentage including of adjusted sale as growing in reported that we devices our to continued year add $X.X achieved loss $XX pipeline of and to will ago, quarter, total million retail have a retail decline a two EBITDA compared the years to continued revenue. were and to of revenue And We Ventev expenses ago next several Observer to bookings. the in opportunities million million. TESSCO platform, quarters. and strong of we over of the from last begin our bookings, lastly, $XXX believe Our

following along results. in with million. that retail in Now we the after fiscal the cost key this bookings sign XXXX the of year growth out our back a sales lower is laid quarter, yielding topped strategy basis divestiture significantly a divestiture retail, $XXX This is

questions. now call open to the will We

our Jesse Please We Instructions] [Operator Blair. first ahead. will with question of the go William line take Wilson from

Congrats on guys. Hi, the quarter.

TESSCO You that mentioned this over do multi-year a to can ramp revenue terms line? in Observer year. sit expected later time Where you from revenue is of think

thanks Good morning, your and for Jesse, thank you, question.

haven’t multi-year guidance we answer We that wait yet, given will question. a so to

to Jesse, call For expect that as on the we the be, ramp for said is this that revenue year, earlier, this expect in though, and I do we year. as we provided guidance revenue to and included we have said

We Instructions] a follow-up take Blair. from the Wilson William will line question Jesse with [Operator of

from Just me. a question follow-up

this guidance your So expectations? how can decision you talk quarter And versus about internal that performed your informs reiterate in how to quarter? the you

start want you do Aric, up. I’ll follow and to

Jesse. Thanks, Yes.

fairly guidance expecting. I strong same, were keeping of we’re indicative bookings, the a quarter would obviously, since obviously, this The very think where was we it So quarter. be

funnel we the that to year. of So half the expect second

as where is with it with and is, we’re leaving we And that. I of as guidance And very indicative the that so obviously, provided. it where backlog being it that think in bookings high is confident is,

thanks question. Thanks, for again Aric. Jesse, the

Jesse, bookings it’s encouraged. very mean, momentum, us has our I that So really

of We have backlog are that quarter’s in. worth almost a pretty confident we now

business And on of and that that, on this per have focus improving our plan. going are on all call terms fundamentals in of Ventev those some outlined industrialization, margins we

confident reiterated So and have pretty our we’re therefore, guidance.

our taking for you Thank Understood. questions.

Thank you, Jesse.

to questions the Sandip back for further I’ll remarks. hand this conference no time. concluding any over have We Mukerjee Instructions] [Operator at

your you dedication. Thank you, and appreciate thank everyone thanks of today. again And members for also operator, team joining We and support all for our to TESSCO. hard us to work their

a We earnings are forward concludes next speaking look have Thank yielding again nice everyone, our results. and you, call. day. Your with quarter. efforts to positive you This

joining. this call. for Thank and concludes today’s Ladies gentlemen, you all

now may disconnect. You