TESSCO Technologies Inc. (NASDAQ:TESS) Q4 2019 Earnings Conference Call Transcript

May 07, 2019 • 08:30 am ET

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TESSCO Technologies Inc. (NASDAQ:TESS) Q4 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, my name is Lisa, and I'll be your conference operator today. At this time, I would like to welcome everyone to the TESSCO Technologies Inc. Q4 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions)

Thank you. Jamie Bernard, you may begin your conference.

Executive
Jamie Bernard

Good morning, everyone, and thank you for joining TESSCO's Q4 2019 conference call. Joining me today are Murray Wright, TESSCO's President and Chief Executive Officer; and Aric Spitulnik, the Company's CFO.

Please note that management's discussions today will contain forward-looking statements about anticipated results and future prospects. Forward-looking statements involve a number of risks and uncertainties, and TESSCO's results may differ materially from those discussed today. Information concerning factors that may cause such a difference can be found in TESSCO's public disclosures, including the Company's most recent Form 10-K and other periodic reports filed with the Securities and Exchange Commission.

With that introduction, I'd like to turn the call over to Murray Wright, TESSCO's President and CEO. Murray?

Executive
Murray Wright

Thank you, Jamie, and good morning, everyone. Thanks for joining us on the call today. We ended our fiscal year with results in line with the targets we outlined on our third quarter call. We achieved full year revenue and earnings growth, as well as positive earnings in the fourth quarter, our seasonally most challenging quarter. This marks the second consecutive year we delivered fourth quarter profitability after three years of fourth quarter losses. Our results demonstrate that our strategy, execution and strong customer focus are setting us up for long-term success and continued growth.

Before reviewing our fourth quarter performance by segment, I would like to briefly highlight a few of our achievements during the past year. First, on a financial perspective, we achieved annual revenue growth of 5%, primarily fueled by growth of 36% in the Public Carrier ecosystem. Our cost management initiatives have been effective, reducing SG&A expense as a percentage of sales by nearly 1%. And as the year progressed, we improved our balance sheet through deliberate measures to reduce DSO and inventory. And consequently, we delivered cash from operations of $5 million in the fourth quarter, up from a negative $1.9 million last year. We are confident in our ability to grow the business, both in revenues and in profitability over the long term. Due to the nature of our project-based business, our results are likely to continue, to be subject to quarter-to-quarter fluctuations.

Here are a few additional highlights for the year. First, we completed the implementation of our revised go-to-market strategy in our commercial business. This began with the regionalization of our sales force, which enabled us to consolidate our private system operator and government channels, with our VAR and Integrator customers. This is crucial to providing stronger engagement with our customers, better alignment with our supplier partners and greater efficiency and scalability for our sales teams. Secondly, we've recently created