TESSCO TECHNOLOGIES INCORPORATED (NASDAQ: TESS) today
reported financial results for its fourth quarter and fiscal year
2021, ended March 28, 2021.
Fourth Quarter and Fiscal Year Financial Highlights:
- Fourth quarter fiscal year 2021 revenues of $88.7 million, down
16% compared to the fourth quarter of the prior year
- Fiscal year 2021 revenues of $373.3 million, down 9% from the
prior year
- Sales bookings up 19% in the second half of fiscal 2021 as
compared to the first half of the fiscal year
- Fiscal year-end 2021 sales backlog was higher than at any point
since the pandemic began
“I am proud of the way that our team came together to provide
our customers with superior service in what was a difficult year
for Tessco,” said Sandip Mukerjee, TESSCO’s President and Chief
Executive Officer. “The onset of the pandemic coincided with the
start of our fiscal year, and the resulting decline in wireless
activity was felt by TESSCO immediately. Additionally, during the
summer and fall, TESSCO was engaged in a consent solicitation and
other governance matters that absorbed corporate resources and
expenses. Fortunately, many of the disruptions of the last year
have been resolved or are significantly lessening. Furthermore, in
December we successfully divested our retail division, which now
allows us to focus all of our resources toward the more profitable
Commercial business.
“Our results for the fourth quarter reflect the lingering
effects of the pandemic, along with the more recent impact of
global supply chain disruptions. In spite of that, our second-half
fiscal 2021 sales bookings were much higher than in the first half
of the fiscal year, and our backlog is now higher than at any point
since before the pandemic began. We believe this will translate to
increased revenues as we begin our new fiscal year.
“For fiscal year 2022, we expect to see an improving
macroeconomic environment, combined with continued execution of our
strategy, leading to significant year-over-year growth in revenues
in both of our markets. We will also maintain our focus on cost
controls and expect to achieve significant improvement in our
overall profitability.”
Fourth Quarter and Fiscal Year Financial Results:
As a result of the sale of retail inventory and other related
assets to Voice Comm, LLC in the third quarter of fiscal year 2021,
and the Company’s corresponding exit from the Retail business, the
Company now presents earnings both from continuing and discontinued
operations.
Fourth Quarter FY 2021
Fourth Quarter FY 2020
Third Quarter FY 2021
Fiscal Year 2021
Fiscal Year 2020
Revenue from continuing
operations
$88.7M
$105.8M
$99.2M
$373.3M
$409.0M
Loss from continuing operations
2
($1.7M)
($7.9M)
($5.7M)
($15.2M)
($15.5M)
Loss per share from continuing
operations 2
($0.20)
($0.92)
($0.66)
($1.75)
($1.82)
Adjusted EBITDA from continuing
operations 1, 2
($1.9M)
($2.6M)
($5.1M)
($12.8M)
($7.7M)
Consolidated net loss 2, 3
($2.9M)
($14.1M)
($0.9M)
($8.7M)
($21.6M)
Consolidated loss per share 2,
3
($0.33)
($1.65)
($0.11)
($1.01)
($2.53)
(1)
Adjusted EBITDA from continuing operations
is a Non-GAAP financial measure. Please see the discussion of
Non-GAAP Information below and the reconciliation of Non-GAAP to
GAAP results included as an exhibit to this press release.
(2)
Third quarter and full fiscal year 2021
include $3.0 million in incremental expenses related to a consent
solicitation that concluded in December 2020.
(3)
Third quarter fiscal year 2021 and full year fiscal year 2020
include a $3.0 million gain on the sale of the Company’s Retail
business assets and a $11.7 million charge for a goodwill
impairment, respectively.
Year over Year Q4 FY 2021 vs.
Q4 FY 2020
Sequential Q4 FY 2021 vs. Q3
FY 2021
Continuing Operations:
Public Carrier
(23.8)%
(18.4)%
VAR and Integrator
(10.3)%
(4.6)%
Total
(16.2)%
(10.6)%
For the fiscal 2021 fourth quarter, revenues totaled $88.7
million, compared with $105.8 million for the fourth quarter of
fiscal 2020, as a result of lower sales to both of the Company’s
remaining markets, largely due to the impact of the pandemic. Both
markets were also affected by delays in the global supply chain
that delayed receipt of inventory from vendors and caused delays in
the Company’s ability to ship product to customers.
Gross profit was $16.8 million for the fourth quarter of fiscal
2021, compared with $19.6 million for the same quarter of fiscal
2020. Gross margin was 19.0% of revenue for the fourth quarter of
fiscal 2021, compared with 18.5% in the fourth quarter of last
year. The year-over-year increase in gross margin was a result of
increased margins in the Carrier market due to changes in customer
mix.
Fourth-quarter selling, general and administrative (SG&A)
expenses decreased 16.8% from the prior-year quarter to $19.6
million, primarily as a result of lower sales and cost-control
initiatives, including reduced compensation, marketing, information
technology and corporate expenses.
Fourth-quarter fiscal 2021 loss from continuing operations
before income taxes was $2.8 million compared with loss from
continuing operations before income taxes of $13.3 million in the
fourth quarter of fiscal 2020. The fourth-quarter fiscal 2020 loss
before income taxes includes a goodwill impairment charge of $9.1
million.
Adjusted EBITDA and Adjusted EBITDA per diluted share from
continuing operations were a loss of $1.9 million and $0.21,
respectively, for the fourth quarter of fiscal 2021. This compares
with Adjusted EBITDA and Adjusted EBITDA per diluted share of a
loss of $2.6 million and $0.30, respectively, for the fourth
quarter of fiscal 2020.
As of March 28, 2021, the outstanding balance under the
Company’s $75 million line of credit was approximately $30.6
million and the Company maintained a balance of $1.1 million in
cash and cash equivalents.
Board Governance
In May, the Company’s Board of Directors elected Mr. Paul
Gaffney to serve as Chair and approved an invitation to Mr. Chris
Barnhill to become an observer to the Board upon the retirement
from the Board later this year of his father, and TESSCO founder,
Mr. Robert Barnhill.
Fourth-Quarter and Fiscal 2021 Conference Call
Management will host a conference call to discuss fourth-quarter
and fiscal-year 2021 results and business outlook on Tuesday, May
11, 2021 at 8:30 a.m. ET. To participate in the conference call,
please call 877-824-7042 (domestic call-in) or 647-689-6625
(international call-in).
A live webcast of the conference call will be available on the
Events & Presentations page of the Company’s website. All
participants should call or access the website approximately 10
minutes before the conference begins. An archived version of the
webcast will be available on the Company's website for one
year.
Non-GAAP Information
EBITDA, Adjusted EBITDA, EBITDA per diluted share and Adjusted
EBITDA per diluted share are measures used by management to
evaluate the Company’s ongoing operations, and to provide a general
indicator of the Company's operating cash flow (in conjunction with
a cash flow statement which also includes among other items,
changes in working capital and the effect of non-cash charges).
EBITDA is defined as income from operations, plus interest expense,
net of interest income, provision for income taxes, and
depreciation and amortization. EBITDA per diluted share is defined
as EBITDA divided by TESSCO’s diluted weighted average shares
outstanding. Adjusted EBITDA is EBITDA as defined above, but also
adds stock-based compensation and goodwill impairments.
Management believes these EBITDA measures are useful to
investors because they are frequently used by securities analysts,
investors and other interested parties in the evaluation of
companies. Because not all companies use identical calculations,
the Company’s presentation of these Non-GAAP measures may not be
comparable to other similarly titled measures of other companies.
EBITDA, EBITDA per diluted share, Adjusted EBITDA and Adjusted
EBITDA per share are not recognized terms under GAAP, and EBITDA
and Adjusted EBITDA does not purport to be an alternative to net
income as a measure of operating performance or to cash flows from
operating activities as a measure of liquidity. Additionally,
EBITDA and EBITDA per diluted share, are intended to be measures of
free cash flow for management's discretionary use, as certain cash
requirements, such as interest payments, tax payments and debt
service requirements, are not reflected.
A reconciliation of Non-GAAP to GAAP results is included as an
exhibit to this release.
About TESSCO Technologies Incorporated (NASDAQ: TESS)
TESSCO Technologies, Inc. (NASDAQ: TESS) is a value-added
technology distributor, manufacturer, and solutions provider
serving commercial customers in the wireless infrastructure
ecosystem. The Company was founded more than 30 years ago with a
commitment to deliver industry-leading products, knowledge,
solutions, and customer service. TESSCO supplies products the
industry’s top manufacturers in mobile communications, Wi-Fi,
Internet of Things (“IoT”), wireless backhaul, and more. Tessco is
a single source for outstanding customer experience, expert
knowledge, and complete end-to-end solutions for the wireless
industry. For more information, visit www.tessco.com.
Forward-Looking Statements
This press release contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements other than statements of historical facts
contained herein, including statements regarding our future results
of operations and financial position, strategy and plans and future
prospects, and our expectations for future operations, are
forward-looking statements. These forward-looking statements are
based on current expectations and analysis, and actual results may
differ materially from those projected. These forward-looking
statements may generally be identified by the use of the words
"may," "will," "expects," "anticipates," “targets,” “goals,”
“projects,” “intends,” “plans,” “seeks,” "believes," "estimates,"
and similar expressions, but the absence of these words or phrases
does not necessarily mean that a statement is not forward-looking.
These forward-looking statements are only predictions and involve a
number of risks, uncertainties and assumptions, many of which are
outside of our control. Our actual results may differ materially
and adversely from those described in or contemplated by any such
forward-looking statement for a variety of reasons, including those
risks identified in our most recent Annual Report on Form 10-K and
other periodic reports filed with the Securities and Exchange
Commission (the “SEC”), under the heading "Risk Factors" and
otherwise. Consequently, the reader is cautioned to consider all
forward-looking statements in light of the risks to which they are
subject. For additional information with respect to risks and other
factors which could occur, see Tessco’s Annual Report on Form 10-K
for the year ended March 29, 2020, including Part I, Item 1A, "Risk
Factors" therein, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K and other securities filings with the SEC that are
available at the SEC's website at www.sec.gov and other securities
regulators.
We are not able to identify or control all circumstances that
could occur in the future that may materially and adversely affect
our business and operating results. Without limiting the risks that
we describe in our periodic reports and elsewhere, among the risks
that could lead to a materially adverse impact on our business or
operating results are the following: the impact and results of any
new or continued activism activities by activist investors;
termination or non-renewal of limited duration agreements or
arrangements with our suppliers and affinity partners, which are
typically terminable by either party upon several months or
otherwise relatively short notice; loss of significant customers or
relationships, including affinity relationships; loss of customers
or suppliers either directly or indirectly as a result of
consolidation among large wireless services carriers and others
within the wireless communications industry; the strength of our
customers', suppliers' and affinity partners' business; negative or
adverse economic conditions, including those adversely affecting
consumer confidence or consumer or business spending or otherwise
adversely impacting our suppliers or customers, including their
access to capital or liquidity, or our customers' demand for, or
ability to fund or pay for, the purchase of our products and
services; our dependence on a relatively small number of suppliers
, which could hamper our ability to maintain appropriate inventory
levels and meet customer demand; changes in customer and product
mix that affect gross margin; effect of “conflict minerals”
regulations on the supply and cost of certain of our products;
failure of our information technology system or distribution
system; our inability to maintain or upgrade our technology or
telecommunication systems without undue cost, incident or delay;
system security or data protection breaches and exposure to
cyber-attacks, and the cost associated with ongoing efforts to
maintain cyber-security measures and to meet applicable compliance
standards; damage or destruction of our distribution or other
facilities; prolonged or otherwise unusual quality or performance
control problems; technology changes in the wireless communications
industry or technological failures, which could lead to significant
inventory obsolescence or devaluation and/or our inability to offer
key products that our customers demand; third-party freight carrier
interruption; increased competition from competitors, including
manufacturers or national and regional distributors of the products
we sell and the absence of significant barriers to entry which
could result in pricing and other pressures on profitability and
market share; our relative bargaining power and inability to
negotiate favorable terms with our suppliers and customers; our
inability to access capital and obtain financing as and when
needed; transitional and other risks associated with acquisitions
of companies that we may undertake in an effort to expand our
business; claims against us for breach of the intellectual property
rights of third parties; product liability claims; our inability to
protect certain intellectual property, including systems and
technologies on which we rely; our inability to hire or retain for
any reason our key professionals, management and staff; health
epidemics or pandemics or other outbreaks or events, or national or
world events or disasters beyond our control; changes in political
and regulatory conditions, including tax and trade policies; and
the possibility that, for unforeseen or other reasons, we may be
delayed in entering into or performing, or may fail to enter into
or perform, anticipated contracts or may otherwise be delayed in
realizing or fail to realize anticipated revenues or anticipated
savings.
The above list should not be construed as exhaustive and should
be read in conjunction with our other disclosures, including but
not limited to the risk factors described in our most recent Annual
Report on Form 10-K and other periodic reports filed with the
Securities and Exchange Commission (the “SEC”), under the heading
"Risk Factors" and otherwise. Other risks may be described from
time to time in our filings made under the securities laws. New
risks emerge from time to time. It is not possible for our
management to predict all risks.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, level of activity, performance or achievements. In
addition, neither we nor any other person assumes responsibility
for the accuracy and completeness of any of these forward-looking
statements. Any forward-looking statement made by us in this press
release speaks only as of the date on which it is made. We disclaim
any duty to update any of these forward-looking statements after
the date of this press release to confirm these statements to
actual results or revised expectations.
TESSCO Technologies
Incorporated
Consolidated Statements of
Loss (Unaudited)
Fiscal Quarters Ended
Year Ended
March 28, 2021
March 29, 2020
December 27, 2020
March 28, 2021
March 29, 2020
Revenues
$
88,733,100
$
105,839,700
$
99,237,600
$
373,340,700
$
409,014,400
Cost of goods sold
71,907,100
86,251,300
81,921,900
305,625,100
329,372,500
Gross profit
16,826,000
19,588,400
17,315,700
67,715,600
79,641,900
Selling, general and
administrative expenses
19,580,000
23,547,600
23,606,800
85,507,200
92,005,200
Goodwill impairment
—
9,108,600
—
—
9,108,600
Restructuring charge
—
—
—
—
488,000
Operating loss
(2,754,000
)
(13,067,800
)
(6,291,100
)
(17,791,600
)
(21,959,900
)
Interest expense, net
58,500
204,600
151,200
426,300
1,116,300
Loss from continuing operations
before benefit from income tax
(2,812,500
)
(13,272,400
)
(6,442,300
)
(18,217,900
)
(23,076,200
)
Benefit from income taxes
(1,084,400
)
(5,408,300
)
(740,400
)
(2,971,000
)
(7,585,900
)
Net loss from continuing
operations
$
(1,728,100
)
$
(7,864,100
)
$
(5,701,900
)
$
(15,246,900
)
$
(15,490,300
)
(Loss) income from discontinued
operations, net of taxes
(1,202,100
)
(6,212,600
)
4,787,500
6,504,000
(6,078,600
)
Net loss
$
(2,930,200
)
$
(14,076,700
)
$
(914,400
)
$
(8,742,900
)
$
(21,568,900
)
Basic and diluted (loss) income
per share
Continuing operations
$
(0.20
)
$
(0.92
)
$
(0.66
)
$
(1.75
)
$
(1.82
)
Discontinued operations
$
(0.14
)
$
(0.73
)
$
0.55
$
0.75
$
(0.71
)
Consolidated operations
$
(0.33
)
$
(1.65
)
$
(0.11
)
$
(1.01
)
$
(2.53
)
Basic and diluted
weighted-average common shares outstanding
8,814,859
8,554,348
8,699,937
8,697,369
8,526,965
Cash dividends declared per
common share
$
—
$
0.02
$
—
$
—
$
0.62
TESSCO Technologies
Incorporated
Consolidated Balance
Sheets
March 28,
March 29,
2021
2020
(unaudited)
(unaudited, recast)
ASSETS
Current assets:
Cash and cash equivalents
$
1,110,000
$
50,000
Trade accounts receivable,
net
70,045,700
82,868,400
Product inventory, net
53,060,000
50,298,100
Prepaid expenses and other
current assets
14,829,100
11,707,500
Current portion of assets held
for sale
1,196,900
18,849,900
Total current assets
140,241,700
163,773,900
Property and equipment, net
12,571,600
13,433,700
Intangible assets, net
19,136,500
11,157,400
Deferred tax assets
—
3,032,500
Lease asset - right of use
11,285,800
13,949,800
Other long-term assets
5,842,400
3,361,400
Total assets
$
189,078,000
$
208,708,700
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Trade accounts payable
$
59,415,700
$
75,512,600
Payroll, benefits and taxes
6,279,800
4,258,300
Income and sales tax
liabilities
803,900
450,800
Accrued expenses and other
current liabilities
2,912,300
4,244,400
Revolving line of credit
—
25,563,900
Lease liability, current
2,573,500
2,579,200
Total current liabilities
71,985,200
112,609,200
Deferred tax liabilities
26,500
—
Revolving line of credit
30,583,200
—
Non-current lease liability
8,923,500
11,481,100
Other non-current liabilities
809,400
915,700
Total liabilities
112,327,800
125,006,000
Shareholders’ equity:
Preferred stock
—
—
Common stock
104,200
101,400
Additional paid-in capital
67,227,700
65,318,500
Treasury stock
(62,800
)
(58,496,200
)
Retained earnings
9,481,100
76,779,000
Total shareholders’ equity
76,750,200
83,702,700
Total liabilities and
shareholders’ equity
$
189,078,000
$
208,708,700
TESSCO Technologies
Incorporated
Reconciliation of Net Loss to
Earnings Before Interest, Taxes and Depreciation and Amortization
(EBITDA) (Unaudited)
Fiscal Quarters Ended
Year Ended
March 28, 2021
March 29, 2020
December 27, 2020
March 28, 2021
March 29, 2020
Net loss from continuing
operations
$
(1,728,100
)
$
(7,864,100
)
$
(5,701,900
)
$
(15,246,900
)
$
(15,490,300
)
Add:
Benefit from income taxes
(1,084,400
)
(5,408,300
)
(740,400
)
(2,971,000
)
(7,585,900
)
Interest expense, net
58,500
204,600
151,200
426,300
1,116,300
Depreciation and amortization
609,400
1,155,900
878,600
3,744,500
4,026,100
EBITDA
$
(2,144,600
)
$
(11,911,900
)
$
(5,412,500
)
$
(14,047,100
)
$
(17,933,800
)
Add:
Stock based compensation
251,400
231,200
331,000
1,211,000
1,174,600
Goodwill impairment
—
9,108,600
—
—
9,108,600
Adjusted EBITDA
$
(1,893,200
)
$
(2,572,100
)
$
(5,081,500
)
$
(12,836,100
)
$
(7,650,600
)
EBITDA per diluted
share
$
(0.24
)
$
(1.39
)
$
(0.62
)
$
(1.62
)
$
(2.10
)
Adjusted EBITDA per diluted
share
$
(0.21
)
$
(0.30
)
$
(0.58
)
$
(1.48
)
$
(0.90
)
TESSCO Technologies
Incorporated
Supplemental Results Summary
(in thousands) (Unaudited)
Three Months Ended
Growth Rates Compared
to
March 28, 2021
March 29, 2020
December 27, 2020
Prior Year Period
Prior Period
Market Revenues
Public carrier
$
35,015
$
45,948
$
42,923
(23.8)
%
(18.4)
%
VAR and integrators
53,718
59,892
56,315
(10.3)
%
(4.6)
%
Total revenues
$
88,733
$
105,840
$
99,238
(16.2)
%
(10.6)
%
Market Gross Profit
Public carrier
$
4,507
$
5,077
$
4,780
(11.2)
%
(5.7)
%
VAR and integrators
12,319
14,511
12,536
(15.1)
%
(1.7)
%
Total gross profit
$
16,826
$
19,588
$
17,316
(14.1)
%
(2.8)
%
% of revenues
19.0%
18.5%
17.4%
TESSCO Technologies
Incorporated
Supplemental Results Summary
(in thousands) (Unaudited)
Year Ended
Growth Rates
March 28, 2021
March 29, 2020
Compared to Prior Year
Period
Market Revenues
Public carrier
$
149,825
$
156,396
(4.2)
%
VAR and integrators
223,516
252,619
(11.5)
%
Total revenues
$
373,341
$
409,015
(8.7)
%
Market Gross Profit
Public carrier
$
16,585
$
18,699
(11.3)
%
VAR and integrators
51,131
60,943
(16.1)
%
Total gross profit
$
67,716
$
79,642
(15.0)
%
% of revenues
18.1%
19.5%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210510005991/en/
TESSCO Technologies Incorporated Aric Spitulnik Chief Financial
Officer 410-229-1419 spitulnik@tessco.com
David Calusdian Sharon Merrill Associates 617-542-5300
TESS@investorrelations.com
TESSCO Technologies (NASDAQ:TESS)
Historical Stock Chart
From Aug 2024 to Sep 2024
TESSCO Technologies (NASDAQ:TESS)
Historical Stock Chart
From Sep 2023 to Sep 2024