Tessco Technologies (TESS) Misses Q3 EPS by 15c

Tessco Technologies (NASDAQ: TESS) reported Q3 EPS of $0.20, $0.15 worse than the analyst estimate of $0.35. Revenue for the quarter came in at $135.2 million versus the consensus estimate of $147.5 million.

“Our results this quarter were disappointing,” said Robert Barnhill, TESSCO’s Chairman and Chief Executive Officer. “Our lower-than-expected third-quarter revenue was largely the result of the continued decline in 4G and DAS infrastructure builds by cellular carriers. This decline was more significant than we had anticipated, and impacted both our public carrier customers and the commercial reseller customers providing services to the carriers. We understand, however, that the current FCC wireless spectrum auction has already resulted in approximately $45 billion in winning carrier bids, and we expect that those carriers will be building new infrastructure in order to be able to utilize and monetize these licenses.

“We continue to invest in our business while reducing expenses and optimizing our organization and leadership. Our value proposition and balance sheet continue to be strong, and we are well positioned to capitalize on future carrier builds and the overall opportunities being created by the convergence of wireless and the Internet.

“Despite the decline in carrier revenue in the third quarter, we made strong progress on our long-term goal of reducing our dependence on the carrier ecosystem,” Barnhill said. “Our sales to both the Retail and Private System Operator markets were up significantly from a year ago, and we expect growth of our non-carrier markets in total to accelerate in fiscal 2016.

“Our manufacturer partners also are recognizing the value TESSCO provides,” he continued. “Our largest vendor, Commscope, has reduced its wireless distributor base but has named TESSCO as one of its few preferred wireless distributor partners. We expect this to present us with the opportunity to gain share from those distributors who will no longer offer Commscope products. In addition, Samsung has selected TESSCO as its primary partner to streamline the procurement and delivery of accessories to enterprise customers. Beginning in the 2016 fiscal year, these growing relationships are expected to yield longer-term benefits.

“Because our overall third-quarter results fell below our expectations and carriers are not expected to renew spending until early in our 2016 fiscal year, we are accelerating actions to improve overall profitability.”

For earnings history and earnings-related data on Tessco Technologies (TESS) click here.

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