TESSCO Announces Earnings per Share for First Quarter of $0.51

  TESSCO Announces Earnings per Share for First Quarter of $0.51

  *Total revenues were $144 million.
  *Core revenues, which exclude the transitioned 3PL relationship, grew 18%.
  *EPS matches last year’s first quarter, with no benefit from 3PL revenues
    this quarter.
  *Operating margin increases to 4.8% compared to 3.6% last year.
  *Earnings guidance reaffirmed: $1.75 to $2.05 for FY2014.
  *Quarterly dividend of $0.18 per share date set.

Business Wire

HUNT VALLEY, Md. -- July 24, 2013

TESSCO Technologies Incorporated (NASDAQ: TESS), a leading provider of the
product and value chain solutions required to build, use and maintain wireless
broadband systems, today announced its results for the first quarter of fiscal
year 2014, ended June 30, 2013. For the quarter, revenues totaled $144.1
million and earnings per diluted share were $0.51.

“We started our new fiscal year with strong core revenue growth,” said
Chairman and CEO Robert B. Barnhill, Jr. “Earnings matched last year’s first
quarter without the benefit of the former third-party logistics (3PL)
relationship that contributed $70.0 million in revenue and $5.4 million in
gross profitto our results a year ago. We have fully transitioned out of that
low-margin 3PL relationship, allowing us to focus exclusively on being the
Total Source of the product-solutions to build, use and maintain wireless
systems.

“During the quarter, we were particularly effective in achieving an 87 percent
revenue increase from our public network operator customers. This strong
growth was a result of both the carriers’ aggressive spend to enhance their
systems and our success in expanding our market share. Sales of our Ventev^®
products, which we design and manufacture to fulfill unmet market needs, grew
37 percent over last year’s first quarter. We expect Ventev to be a major
contributor to our revenue and margin growth as we go forward.

“Our business is now strategically stronger, with higher margins and low
customer concentration. As we pursue the many opportunities resulting from the
convergence of wireless and the Internet, our goal is to accelerate the
expansion of our customer base and relationships, the introduction of new
products and solutions, and the enhancement of margins and returns.”

First-Quarter Fiscal 2014 Financial Results

For our fiscal 2014 first quarter, revenues totaled $144.1 million as compared
to last year’s first quarter’s $192.4 million including the 3PL relationship,
and $122.4 million excluding that relationship. Core revenues grew 18 percent
from the prior year period. The public carrier market produced 87 percent
revenue growth; the commercial dealer and reseller market produced 14 percent
growth; and the retailer, independent dealer agent, and carrier market
produced 4 percent growth. Revenues from the private and government system
operator market decreased by 6 percent. Also, sales of our Ventev design and
manufacturing division, which supplies products into all of our markets, grew
37 percent.

First-quarter fiscal 2014 gross profit was $35.4 million compared to $35.5
million in last year’s first quarter, which included a $5.4 million
contribution from the transitioned 3PL business. Largely due to the transition
of the low-margin 3PL business, gross margin increased from 18.4 percent in
last year’s first quarter to 24.6 percent in this year’s first quarter.

Selling general and administrative (SG&A) expenses were $28.5 million,
compared to $28.6 million in last year’s first quarter. Operating margin rose
to 4.8 percent from 3.6 percent in the prior-year quarter.

EBITDA* totaled $8.2 million, or $0.98 per diluted share, in the first quarter
of 2014, as compared to $8.2 million, or $0.99 per diluted share, in the
prior-year quarter.

Net income and diluted earnings per share totaled $4.3 million and $0.51 in
the first quarter of fiscal 2014, respectively, as compared to $4.2 million
and $0.51 in the prior-year quarter, respectively.

Quarterly Cash Dividends

The Board of Directors declared a quarterly cash dividend of $0.18 per common
share payable on August 21, 2013 to holders of record on August 7, 2013.

Any future declaration of dividends, and the establishment of record and
payment dates, is subject to further determinations of the Board of Directors.

Business Outlook

The company is maintaining its previous guidance for fiscal 2014, calling for
diluted earnings per share in the range of $1.75 to $2.05. As TESSCO’s fiscal
year progresses and visibility increases, management may review and update its
financial targets as appropriate.

Forecasting future results is inherently difficult for any business, and
actual results may differ materially from those forecasted. The nature of our
business is that we typically ship products within several days after booking
orders. The lack of an order backlog makes it even more difficult to forecast
future results. The Business Outlook published in this press release reflects
only the company's current best estimate and the company assumes no obligation
to update the information contained in this press release, including the
Business Outlook, at any time.

First-Quarter Fiscal 2014 Conference Call

Management will host a conference call to discuss its first-quarter-2014
results on Thursday, July 25, 2013 at 10:00 a.m. ET. To participate in the
conference call, please call 877-280-4956 (domestic call-in) or 857-244-7313
(international call-in) and reference code #61526983.

A live webcast of the conference call will be available at
http://www.tessco.com/go/pressroom. All participants should call or access the
website approximately 10 minutes before the conference begins.

A telephone replay of the conference call will be available from 12:00 p.m. ET
on July 25, 2013 until 11:59 p.m. ET on August 1, 2013 by calling 888-286-8010
(domestic) or 617-801-6888 (international) and entering confirmation
#46721908. An archived replay of the conference call will also be available on
the company’s website at
http://phx.corporate-ir.net/phoenix.zhtml?c=85842&p=irol-presentations.

*Non-GAAP Information

EBITDA, a measure used by management to evaluate the company’s ongoing
operations and as a general indicator of its 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), is defined as
income from operations, plus interest expense, net of interest income,
provision for income taxes, and depreciation and amortization. Management
believes EBITDA as well as EBITDA per share 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 EBITDA and EBITDA
per share may not be comparable to other similarly titled measures of other
companies. EBITDA is not a recognized term under GAAP and 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. EBITDA per
diluted share is also a non-GAAP calculation defined as EBITDA divided by the
company’s diluted weighted average shares outstanding. Additionally, EBITDA is
not intended to be a measure of free cash flow for management's discretionary
use, as it does not reflect certain cash requirements such as interest
payments, tax payments and debt service requirements. The amounts shown for
EBITDA as presented herein differ from the amounts calculated under the
definition of EBITDA used in the company's loan agreements. The definition of
EBITDA as used in the company's loan agreements is further adjusted for
certain cash and non-cash charges/credits, including stock compensation
expense, and is used to determine compliance with financial covenants and the
ability to engage in certain activities such as incurring additional debt.

A reconciliation of the company's non-GAAP to GAAP results is included as an
exhibit to this release.

About TESSCO

TESSCO Technologies (NASDAQ: TESS) is Your Total Source^® for making wireless
work. The convergence of wireless and the Internet is revolutionizing the way
we live, work and play. New systems and applications are creating
opportunities and challenges at an unprecedented rate. TESSCO is there,
thinking in new ways for exceptional outcomes. TESSCO architects and delivers,
with innovation, productivity and speed, the product and value chain solutions
to organizations responsible for building, using and maintaining wireless
broadband systems.

Forward-Looking Statements

This press release, including the statements of Robert Barnhill and the
discussion under the heading “Business Outlook,” contains forward-looking
statements as to anticipated results and future prospects. These
forward-looking statements are based on current expectations and analysis, and
actual results may differ materially. These forward-looking statements may
generally be identified by the use of the words "may," "will," "expects,"
"anticipates," "believes," "estimates," and similar expressions, but the
absence of these words or phrases does not necessarily mean that a statement
is not forward-looking. Forward-looking statements involve a number of risks
and uncertainties. Our actual results may differ materially 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, 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.

We are not able to identify or control all circumstances that could occur in
the future that may 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: termination or
non-renewal of limited duration agreements or arrangements with our vendors
and affinity partners that 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 as a result of consolidation among the wireless communications
industry; the strength of our customers’, vendors’ and affinity partners’
business; economic conditions that may impact customers’ ability to fund or
pay for our products and services; failure of our information technology
system or distribution system; technology changes in the wireless
communications industry; third-party freight carrier interruption; increased
competition; our inability to access capital and obtain financing as and when
needed; and the possibility that, for unforeseen 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.


TESSCO Technologies Incorporated
Consolidated Statements of Income (Unaudited)
                              
                                Fiscal Quarters Ended
                                June 30, 2013  March 31, 2013  July 1, 2012
                                                                 
Revenues                        $ 144,108,800   $  158,449,800   $ 192,418,200
Cost of goods sold               108,670,900     124,498,600    156,925,000
Gross profit                      35,437,900       33,951,200      35,493,200
Selling, general and             28,474,100      29,144,900     28,562,400
administrative expenses
Income from operations            6,963,800        4,806,300       6,930,800
Interest, net                    54,600          141,100        57,400
Income before provision for       6,909,200        4,665,200       6,873,400
income taxes
Provision for income taxes       2,617,000       1,745,400      2,666,900
Net income                      $ 4,292,200     $  2,919,800     $ 4,206,500
                                                                 
Basic earnings per share        $ 0.53          $  0.36          $ 0.53
Diluted earnings per share      $ 0.51          $  0.35          $ 0.51
                                                                   


TESSCO Technologies Incorporated
Consolidated Balance Sheets
                                                            
                                             June 30, 2013     March 31, 2013
                                             (unaudited)       (audited)
                                                               
ASSETS
Current Assets:
Cash and cash equivalents                    $ 377,700         $ 4,468,000
Trade accounts receivable, net                 80,843,600        82,177,600
Product inventory                              66,462,300        60,913,600
Deferred tax assets                            6,206,800         6,227,300
Prepaid expenses and other current assets     3,292,700       3,482,300   
Total current assets                           157,183,100       157,268,800
                                                               
Property and equipment, net                    22,903,800        23,202,000
Goodwill, net                                  11,684,700        11,684,700
Other long-term assets                        2,132,200       2,144,500   
Total assets                                 $ 193,903,800    $ 194,300,000 
                                                               
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable                       $ 59,368,500      $ 65,209,300
Payroll, benefits and taxes                    5,410,000         11,678,500
Income and sales tax liabilities               2,193,300         2,530,700
Accrued expenses and other current             1,089,100         1,048,900
liabilities
Revolving line of credit                       9,145,000         --
Current portion of long-term debt             249,800         249,700     
Total current liabilities                      77,455,700        80,717,100
                                                               
Deferred tax liabilities                       3,951,800         3,951,800
Long-term debt, net of current portion         2,395,800         2,458,300
Other long-term liabilities                   4,194,700       4,370,200   
Total liabilities                             87,998,000      91,497,400  
                                                               
Shareholders’ Equity:
Preferred stock                                --                --
Common stock                                   93,700            91,500
Additional paid-in capital                     52,146,500        50,481,600
Treasury stock, at cost                        (49,816,400 )     (48,438,300 )
Retained earnings                             103,482,000     100,667,800 
Total shareholders’ equity                    105,905,800     102,802,600 
                                                               
Total liabilities and shareholders' equity   $ 193,903,800    $ 194,300,000 
                                                                             


TESSCO Technologies Incorporated
Reconciliation of Net Income to Earnings Before Interest, Taxes and
Depreciation and
Amortization (EBITDA) (Unaudited)
                           
                              Fiscal Quarters Ended
                              June 30, 2013    March 31, 2013   July 1, 2012
Net income                    $   4,292,200     $   2,919,800     $  4,206,500
Add:
Provision for income taxes        2,617,000         1,745,400        2,666,900
Interest, net                     54,600            141,100          57,400
Depreciation and                 1,212,900        1,259,900       1,247,800
amortization
EBITDA                        $   8,176,700     $   6,066,200     $  8,178,600
EBITDA per diluted share      $   0.98          $   0.73          $  0.99
                                                                     


TESSCO Technologies Incorporated
Supplemental Results Summary (in thousands) (Unaudited)
                                                
                                                  Three months ended
                                                  June 30, 2013
                                                  Total
Market Revenues
Public Carriers, Contractors & Program Managers   $    37,383
Private & Government System Operators                  27,893
Commercial Dealers & Resellers                         36,044
Retailer, Independent Dealer Agents & Carriers        42,789    
Revenue, excluding Major 3PL relationship              144,109
Major 3PL relationship                                --        
Total revenues                                        144,109   
                                                  
Gross Profit
Public Carriers, Contractors & Program Managers        7,894
Private & Government System Operators                  7,801
Commercial Dealers & Resellers                         10,247
Retailer, Independent Dealer Agents & Carriers        9,496     
Gross profit, excluding Major 3PL relationship         35,438
% of revenues                                          24.6      %
Major 3PL relationship                                --        
Total gross profit                                    35,438    
% of revenues                                          24.6      %
                                                  
Direct expenses                                       17,615    
Segment net profit contribution                        17,823
% of revenues                                          12.4      %
Corporate support expenses*                           10,914    
Income before provision for income taxes          $    6,909     
% of revenues                                          4.8       %
                                                  
Growth Rates Compared to Prior Year Period:
Revenues
Public Carriers, Contractors & Program Managers        86.7      %
Private & Government System Operators                  -5.8      %
Commercial Dealers & Resellers                         14.0      %
Retailer, Independent Dealer Agents & Carriers        3.9       %
Revenue, excluding Major 3PL relationship              17.7      %
Major 3PL relationship                                -100.0    %
Total revenues                                        -25.1     %
                                                  
Gross Profit
Public Carriers, Contractors & Program Managers        77.1      %
Private & Government System Operators                  -4.3      %
Commercial Dealers & Resellers                         16.5      %
Retailer, Independent Dealer Agents & Carriers        9.3       %
Gross profit, excluding Major 3PL relationship         17.8      %
Major 3PL relationship                                -100      %
Total gross profit                                     -0.2      %
                                                  
Direct expenses                                       2.1       %
Segment net profit contribution                        -2.3      %
Corporate support expenses*                           -4.0      %
Income before provision for income taxes              0.5       %


* Includes corporate overhead, facilities expense, depreciation, interest and
company-wide pay-for-performance bonus expense



TESSCO Technologies Incorporated
Supplemental Results Summary (in thousands)
                                   
                                     Three months ended
                                     June 30, 2013
Revenues
Base station infrastructure          $    69,541
Network systems                           19,063
Installation, test and maintenance        9,762
Mobile device accessories                45,743    
Total revenues                            144,109
                                     
Gross Profit
Base station infrastructure               18,889
Network systems                           3,818
Installation, test and maintenance        2,350
Mobile device accessories                10,381    
Total gross profit                   $    35,438
% of revenues                             24.6      %
                                     

Growth Rates Compared to Prior Year Period
                                     
Revenues
Base station infrastructure               41.5      %
Network systems                           7.5       %
Installation, test and maintenance        -8.3      %
Mobile device accessories                -60.2     %
Total revenues                            -25.1     %
                                     
Gross Profit
Base station infrastructure               31.1      %
Network systems                           4.4       %
Installation, test and maintenance        -7.5      %
Mobile device accessories                -30.3     %
Total gross profit                        -0.2      %

Contact:

TESSCO Technologies Incorporated
Aric Spitulnik, 410-229-1419
Vice President and Controller
spitulnik@tessco.com
or
LHA
Harriet Fried,212-838-3777
hfried@lhai.com
 
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