|TESSCO Announces Record Year Fiscal Year Earnings Per Share Grew 114% on Revenues of $513 Million|
HUNT VALLEY, Md., April 27, 2005 /PRNewswire-FirstCall via COMTEX/ -- TESSCO Technologies
Incorporated (Nasdaq: TESS), Your Total Source(R) supplier for everything
needed to design, build, run, maintain or use wireless mobile, fixed and
in-building systems, today reported its financial performance for the fiscal
year and fourth quarter ended March 27, 2005.
Sales for fiscal year 2005 totaled $513.0 million, a 45% increase over
sales of $352.7 million in fiscal year 2004. For the fourth quarter of fiscal
year 2005, sales totaled $150.9 million, up 40% year-over-year.
Net income for fiscal year 2005 was $6.1 million, or $1.39 per diluted
share, an increase of 110% and 114%, respectively, over fiscal year 2004 net
income of $2.9 million and diluted earnings per share of $0.65. Fourth
quarter net income was $1.3 million, or $0.31 per diluted share, compared to
$1.5 million and $0.32 per diluted share for last year's fourth quarter.
At the request of T-Mobile, on April 25, 2005 we agreed to continue to
operate our e-commerce, marketing, sales and fulfillment system on their
behalf, for one additional month, now through the end of August 2005. Under
this extension, TESSCO will provide standby services in August for a fee,
which we believe will provide a net profit contribution comparable to prior
months, before profits generated by sales, if any.
"TESSCO had a great year, delivering record revenue and earnings," said
Robert B. Barnhill, chairman, president, and chief executive officer. "I am
pleased that we successfully continued our diversification into new emerging
product solutions and markets. Our focus has been, and continues to be, the
aggressive diversification from the still difficult public carrier network
infrastructure market, and from the soon to be transitioned relationship with
our largest affinity program. Our product solutions for wireless broadband
and in-building applications, retailing and private branded accessories,
replacement and component parts, and other test and maintenance products have
led to strong year-over-year revenue and gross profit growth in all of our
lines of business and across each of our markets."
Highlights for fiscal year 2005:
* Total sales to our commercial and government customers grew 20%. Within
this market, self-maintained user, government and reseller sales grew
26%, while public carrier and network operator sales grew 7%. Gross
margin for the commercial and government market was consistent at
approximately 25% for both fiscal years.
* Affinity consumer direct sales increased 91% from fiscal year 2004.
Gross margin for these sales was 11.1%, down from 16.0% in fiscal 2004,
pulling total corporate gross margin down to 18.5%.
* Sales of network infrastructure products increased 13% in fiscal 2005 as
compared to fiscal 2004, while gross profit in this line of business
increased 6%. The decrease in gross margin from 25.1% to 23.5% was
primarily due to product mix.
* Sales of mobile devices and accessory products to our commercial and
government market increased 27% in fiscal 2005 as compared to fiscal
2004, while gross profits in this business increased 33%.
* Sales of installation, test and maintenance products increased 25% in
fiscal 2005 as compared to fiscal 2004, while gross profits increased
* Operating income for fiscal year 2005 was $10.1 million, up 103% from
the prior year. Earnings per share reached a record of $1.39, up 114%
over last year.
* Cash flow from operations for the fiscal year was $4.3 million resulting
in a cash balance of $3.9 million and total borrowings of only $5.4
million at year end, all relating to facility mortgages.
Highlights for the fourth quarter:
* Total commercial and government sales grew 20% over the prior year
fourth quarter; self-maintained user, government and reseller sales grew
24%, while public carrier and network operator sales grew 11%. Gross
margin in these markets was down slightly as a result of product mix, to
25.6% in the fourth quarter, as compared to 26.1% in fiscal 2004.
* Affinity consumer direct sales and gross profit increased 64% and 21%,
respectively, over the fourth quarter of fiscal year 2004.
* Sales of network infrastructure products increased 7% in the fourth
quarter of fiscal 2005 as compared to fiscal 2004, but gross profit
declined 3%. Gross margin declined from 26.1% to 23.9% primarily due to
* Sales of mobile devices and accessory products to the commercial and
government market increased 37% in the fourth quarter of fiscal 2005 as
compared to fiscal 2004, while gross profit in this business increased
* Sales of installation, test and maintenance products increased 27% in
the fourth quarter of fiscal 2005 as compared to fiscal 2004, while
gross profits increased 35%.
* Operating income for the quarter was $2.2 million, down 12% from the
prior year quarter.
* We implemented a state-of-the-art new order Configuration, Fulfillment
and Delivery technology system, which was designed to improve customer
service and drive productivity. The implementation was a success;
however, start-up issues led to increased costs in the quarter of
approximately $1.0 million, primarily due to increased expenses in
premium freight, overtime and temporary labor to meet our customer
promise of complete, on-time and error-free delivery. The new system
provides vastly greater scalability to our fulfillment operations and we
expect it to drive strong productivity improvements throughout this new
Mr. Barnhill continued, "At this time I want to recognize our team
members, whose commitment, talent and contribution led to our record results
this year, and will strive to accelerate our diversification and transition in
our new fiscal year. We are looking forward to our new year, leveraging our
strong foundation to pursue the many opportunities in the wireless industry.
Thank you for your support."
The following statements and the statements above made by Robert Barnhill
as to anticipated results, are based on current expectations. These
statements are forward-looking, and actual results may differ materially.
Due the current uncertainty of sales volumes related to the T-Mobile
relationship, as well as potential continued start-up costs associated with
the new Configuration, Fulfillment and Delivery technology system, the Company
estimates that earnings per share for the first quarter are expected to be in
the range of $0.25 to $0.30. As a result of these uncertainties, as well as
general economic conditions, the Company is able to provide only quarter-by-
quarter, and not fiscal year, business outlook at this time.
TESSCO will conduct a conference call on April 28, 2005 at 10 a.m. ET to
discuss the financial results for the fourth quarter of fiscal year 2005. The
conference call will be webcast live on the Internet at http://www.tessco.com.
TESSCO expects that its corporate representatives will meet privately
during the quarter with investors, the media, investment analysts and others.
At these meetings, TESSCO may reiterate the Business Outlook published in this
press release. At the same time, TESSCO will keep this press release and
Business Outlook publicly available on its Web site (www.tessco.com).
However, 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.
TESSCO Technologies Incorporated is a value-added supplier of the product
solutions needed to design, build, run, maintain or use wireless systems.
TESSCO is committed to delivering, fast and complete, the product needs of
wireless system operators, program managers, contractors, resellers, and
self- maintained utility, transportation, enterprise and government
organizations. As Your Total Source(R) supplier of mobile and fixed-wireless
network infrastructure products, mobility devices and accessories, and
installation, test and maintenance equipment and supplies, TESSCO assures
customers of on-time availability, while streamlining their supply chain
process and lowering inventories and total costs. To learn more, please visit
This press release may contain forward-looking statements. These forward-
looking statements may generally be identified by the use of the words "may,"
"will," "expects," "anticipates," "believes," "estimates," and similar
expressions and involve a number of risks and uncertainties. For a variety of
reasons, actual results may differ materially from those described in or
contemplated by any such forward-looking statement. Consequently, the reader
is cautioned to consider all forward-looking statements in light of the risks
to which they are subject. In addition to any factors discussed elsewhere in
this press release, other factors could cause actual results to differ
materially. Such factors include, but are not limited to, the following: the
Company's dependence on a relatively small number of suppliers and vendors,
which could hamper the Company's ability to maintain appropriate inventory
levels and meet customer demand; the effect that the loss of certain customers
or vendors could have on the Company's net profits; economic conditions that
may impact customers' ability to fund purchases of our products and services;
the possibility that unforeseen events could impair the Company's ability to
service its customers promptly and efficiently, if at all; the possibility
that, for unforeseen reasons, the Company 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; existing competition from national and regional
distributors and the absence of significant barriers to entry which could
result in pricing and other pressures on profitability and market share; and
continuing changes in the wireless communications industry, including risks
associated with conflicting technologies, changes in technologies, inventory
obsolescence and evolving Internet business models and the resulting
competition. Consequently, the reader is cautioned to consider all forward-
looking statements in light of the risks to which they are subject.
TESSCO Technologies Incorporated
Consolidated Statements of Income
Fiscal Quarters Ended Fiscal Years Ended
March 27, December 26, March 28, March 27, March 28,
2005 2004 2004 2005 2004
(unaudited) (unaudited) (unaudited) (unaudited) (audited)
Revenues $150,907,500 $135,825,100 $107,623,000 $513,027,300 $352,674,300
sold 125,836,300 111,420,400 86,492,900 418,180,500 275,028,200
profit 25,071,200 24,404,700 21,130,100 94,846,800 77,646,100
expenses 22,879,500 21,569,300 18,630,000 84,747,400 73,444,300
charges -- -- -- -- 2,285,700
proceeds -- -- -- -- (3,054,000)
22,879,500 21,569,300 18,630,000 84,747,400 72,676,000
tions 2,191,700 2,835,400 2,500,100 10,099,400 4,970,100
net 51,800 37,100 46,600 166,200 167,700
taxes 2,139,900 2,798,300 2,453,500 9,933,200 4,802,400
taxes 826,600 1,091,400 994,600 3,866,000 1,910,600
income $1,313,300 $1,706,900 $1,458,900 $6,067,200 $2,891,800
per share $0.31 $0.41 $0.33 $1.41 $0.65
per share $0.31 $0.40 $0.32 $1.39 $0.65
standing 4,209,400 4,211,000 4,422,400 4,308,000 4,432,400
standing 4,276,500 4,233,700 4,509,300 4,373,900 4,469,000
TESSCO Technologies Incorporated
Consolidated Balance Sheets
March 27, 2005 March 28, 2004
Cash and cash equivalents $3,880,800 $6,765,600
Trade accounts receivable, net 60,907,400 47,124,600
Product inventory 60,832,600 40,987,100
Deferred tax asset 2,170,000 2,079,000
Prepaid expenses and other current asset 2,828,400 2,494,300
Total current assets 130,619,200 99,450,600
Property and equipment, net 26,193,000 25,944,700
Goodwill, net 2,452,200 2,452,200
Other long-term assets 1,292,800 1,281,200
Total assets $160,557,200 $129,128,700
LIABILITIES AND SHAREHOLDERS' EQUITY
Trade accounts payable $82,618,000 $55,250,000
Accrued expenses and other current
liabilities 6,591,600 6,588,500
Revolving line of credit -- --
Current portion of long-term debt 362,600 282,000
Total current liabilities 89,572,200 62,120,500
Deferred tax liability 3,561,300 3,419,100
Long-term debt, net of current portion 5,000,700 5,354,700
Other long-term liabilities 1,600,900 1,900,900
Total liabilities 99,735,100 72,795,200
Preferred stock -- --
Common stock 48,900 48,500
Additional paid-in capital 23,578,600 22,250,200
Treasury stock, at cost (7,454,400) (4,547,000)
Retained earnings 44,649,000 38,581,800
Total shareholders' equity 60,822,100 56,333,500
Total liabilities and shareholders'
equity $160,557,200 $129,128,700
TESSCO Technologies Incorporated
Supplemental Revenue and Gross Profit Results Summary
(Amounts in Mobile Installation,
Thousands) Network Devices and Test and
Infrastructure Accessories Maintenance Total
Fiscal Year Ended March 27, 2005:
Revenue $129,826 $75,252 $64,396 $269,474
Gross profit $30,534 $20,184 $17,072 $67,790
Gross margin 23.5% 26.8% 26.5% 25.2%
Revenue $-- $243,553 $-- $243,553
Gross profit $-- $27,057 $-- $27,057
Gross margin -- 11.1% -- 11.1%
Revenue $129,826 $ 318,805 $64,396 $513,027
Gross profit $30,534 $47,241 $17,072 $94,847
Gross margin 23.5% 14.8% 26.5% 18.5%
Fiscal Year Ended March 28, 2004:
Revenue $114,401 $59,200 $51,500 $225,101
Gross profit $28,689 $15,221 $13,347 $57,257
Gross margin 25.1% 25.7% 25.9% 25.4%
Revenue $-- $127,573 $-- $127,573
Gross profit $-- $20,389 $-- $20,389
Gross margin -- 16.0% -- 16.0%
Revenue $114,401 $ 186,773 $51,500 $352,674
Gross profit $28,689 $35,610 $13,347 $77,646
Gross margin 25.1% 19.1% 25.9% 22.0%
SOURCE TESSCO Technologies Incorporated
David Young, Acting Chief Financial Officer of TESSCO Technologies Incorporated,
+1-410-229-1380, or firstname.lastname@example.org