SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
• Revenues from public carriers and network operators showed a 7 percent year-over-year increase and a 6 percent sequential decline. Monthly buyers in this market declined 9 percent year-over-year and remained flat sequentially and purchases per customer grew year-over-year, but declined sequentially.
• Network infrastructure product sales and gross profits increased year-over-year 19 percent and 21 percent, respectively, primarily driven by strong sales in fixed wireless broadband products, antenna systems, and tower site support products.
• Mobile devices and accessories product sales and gross profits in our commercial/government markets increased year-over-year 31 percent and 27 percent, respectively, primarily as a result of increased sales of accessory products to retail customers.
• Installation, test and maintenance product sales and gross profits increased year-over-year 2 percent and 25 percent, respectively. The increase in gross profits and gross profit margin was primarily driven by our expanded major repair components relationship, which, beginning this fiscal year, includes significant sales accounted for on a net basis.
Comparing the first six months of this fiscal year with the same six months of last year:
• Total revenues and gross profit grew 26 percent and 20 percent, respectively.
• Total commercial/government revenues and gross profits increased 16 percent and 19 percent, respectively.
• Consumer sales and gross profits increased 42 percent and 23 percent, respectively.
• Expenses increased 23 percent, exceeding the 20 percent increase in gross profit, largely driven by:
• Increased freight costs;
• Marketing and people costs related to expanded business generation activities and programs; and
• Start-up expenses, primarily incurred during the first quarter of fiscal 2006, related to our new Configuration, Fulfillment and Delivery order processing system.
• Net income declined 4 percent, while diluted earnings per share increased 1 percent.
Mr. Barnhill continued, “TESSCO’s goal is to be Your Total Source® supplier of the product and supply chain solutions required to build, maintain or use wireless systems to a broad base of commercial and government customers. Toward this end, we finalized new programs, which launched October 1st, designed to dramatically increase our base of customers and their monthly purchases. Specifically we:
• Made the customer experience easier and more productive in the field, and on the phone and/or web;
• Streamlined our price and delivery programs;
• &#">CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 24, 2005
Developed a new suite of our print and electronic Solutions Guides, The Wireless Journal®, market focused newsletters, and other knowledge tools;
• Enhanced the feature sets and usability of TESSCO.com®; and
• Launched a series of marketing campaigns to promote these changes across a much wider reach of current and potential customers.
While increasing our base of customer relationships and expanding our product, service and solutions offerings, we are intensely focused on improving our margins and returns. We have key initiatives to:
• Lower product costs and inventories;
• Lower vendor supply chain costs;
• Re-engineer our processes;
• Eliminate defects, errors and waste; and
• Enhance the productivity of our Nevada and Maryland configuration, fulfillment and delivery centers.
Going forward, we are energized and excited that the momentum of Delivering Everything for Wireless® to a broad, diverse and expanding base of customers is accelerating. We will continue to remain very focused on our journey of building shareowner value.”
Stock Buyback Program
On October 20, 2005, our Board of Directors authorized the purchase of an additional 450,000 shares of our outstanding common stock as part of our already existing Stock Buyback Program. The repurchase of an aggregate of 900,000 shares has now been authorized and, as of September 25, 2005, 399,003 shares have been purchased under this program, for $4,113,100, or an average price of $10.31 per share. Accordingly, up
to 500,997 shares remain available for repurchase, including the 450,000 additional shares authorized for repurchase on October 20, 2005. No timetable has been set for the completion of the program. On October 20, 2005, approximately 4,200,000 shares were outstanding.
Mr. Barnhill stated, “We believe that our current per share price of $12-13, which is approximately 85% of our current book value per share of $15, does not accurately reflect the value and future prospects of TESSCO, and that the repurchase of our shares, when appropriate, is an excellent use of funds to enhance shareholder value.”
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.
Considering the progress of the business generation initiatives underway, which were discussed in our Business Outlook last quarter, and assuming that the trends continue, TESSCO now estimates that for the third quarter ending December 25, 2005, earnings per share will be in the range of $0.15 to $0.25.
A conference call will be held on October 25, 2005, at 10 a.m. ET to discuss the financial results for the second quarter of fiscal year 2006. 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® supplier of mobile and fixed-wireless network infrastructure products, mobile 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 TESSCO.com.
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.
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. Included among the risks that could lead to a materially adverse impact on our business or operating results are the termination or non-renewal of limited duration agreements or arrangements with our vendors and affinity partners which are typically terminable by either party upon several months notice; loss of significant customers or relationships, including affinity relationships; loss of customers either directly or indirectly as a result of consolidation among large wireless service carriers and others within the wireless communications industry; the strength of the customers’, vendors’ and affinity partners’ business; economic conditions that may impact customers ability to fund purchase of our products and services; our dependence on a relatively small number of suppliers and vendors, which could hamper our ability to maintain appropriate inventory levels and meet customer demand; failure of our information technology system or distribution system; technology changes in the wireless communications industry, which could lead to significant inventory obsolescence 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; 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; and inability to protect certain intellectual property, including systems and technologies on which we rely.
TESSCO Technologies Incorporated
Consolidated Statements of Income
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Fiscal Quarters Ended |
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Six Months Ended |
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September 25, |
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September 26, |
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June 26, |
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September 25, |
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September 26, |
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(unaudited) |
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(unaudited) |
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(unaudited) |
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(unaudited) |
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(unaudited) |
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TESSCO Technologies Incorporated (Exact name of registrant as specified in its charter)
11126 McCormick Road, Hunt Valley, Maryland 21031 (Address of principal executive offices) (Zip Code)
(410) 229-1000 (Registrant’s telephone number, including area code)
Not Applicable (Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Revenues |
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$ |
137,632,800 |
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$ |
115,689,700 |
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$ |
148,323,300 |
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$ |
285,956,100 |
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$ |
226,294,700 |
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Cost of goods sold |
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109,266,200 |
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92,708,200 |
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122,301,200 |
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231,567,400 |
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180,923,800 |
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Gross profit |
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28,366,600 |
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22,981,500 |
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26,022,100 |
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54,388,700 |
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45,370,900 |
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Selling, general and administrative expenses |
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25,543,500 |
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20,313,000 |
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23,959,800 |
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49,503,300 |
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40,298,600 |
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Income from operations |
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2,823,100 |
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2,668,500 |
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2,062,300 |
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4,885,400 |
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5,072,300 |
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Interest, net |
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29,100 |
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39,200 |
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38,000 |
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67,100 |
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77,400 |
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Income before provision for income taxes |
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2,794,000 |
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2,629,300 |
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2,024,300 |
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On October 24, 2005, the registrant issued a press release announcing its financial results for the second quarter of fiscal 2006. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.
The information in this Item 2.02, including the Exhibit attached hereto, is furnished solely pursuant to Item 2.02 of this Form 8-K. Consequently, pursuant to this Item 2.02, it is not deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section. It may only be incorporated by reference in another filing under the Exchange Act or Securities Act of 1933 if such subsequent filing specifically references this Form 8-K.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
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4,818,300 |
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4,994,900 |
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Provision for income taxes |
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1,089,600 |
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1,025,400 |
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789,500 |
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1,879,100 |
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1,948,000 |
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Net income |
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$ |
1,704,400 |
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$ |
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
3
EXHIBIT INDEX
E-1
TESSCO Technologies Incorporated Consolidated Balance Sheets
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