CEO: Tessco Technologies' initiatives powering earnings growth
Tessco Technologies, Inc. (Nasdaq:TESS) CEO Bob Barnhill Jr. said corporate initiatives are lowering costs while simultaneously increasing profit. Barnhill made the comments during a morning conference call.
The Hunt Valley, Md.-based company, a provider of supply chain solutions, expects the weak market to continue, the chief executive said.
“However, we plan to grow earnings independent of revenue growth through continued intense focus on margins and productivity,” Barnhill said.
He said major productivity increases have occurred at Tessco’s assembly, packaging and fulfillment plants. Leveraging the East and West Coast logistic centers have lowered production costs, the CEO said. A new packaging center has improved product flow and productivity, CFO David Young said.
Before Wednesday’s opening, Tessco reported fiscal fourth-quarter net income of $1.7 million, or $0.32 per share, versus $1.6 million, or $0.28 per share, a year earlier. The results significantly beat Wall Street’s expectation of earning $0.10 per share.
“I’m very pleased that we delivered record earnings on low revenue growth in a soft marketplace,” Barnhill said. “Throughout the third and fourth quarters, the speed of execution on our initiatives resulted in large earnings improvements, allowing us to significantly exceed our fourth-quarter plan and guidance.”
Tessco hopes to continue its trend of quarter-to-quarter earnings improvement, Barnhill said.
Quarterly revenue for the three months ended March 30 increased to $128.3 million, from $127 million a year ago, when the quarter ended on April 1. Wall Street analysts anticipated $139.9 million in revenue.
“This quarter’s results were well ahead of our plan,” Young said. “The initiatives came together more than we anticipated.”
The firm did not buy back any shares during the quarter, Young said.
Going forward, Tessco expects fiscal 2009 earnings in the range of $1.10 to $1.40 per share.
“The wide range of this guidance reflects the possibility of improving market conditions and the accelerated execution on our initiatives,” Barnhill said.
In midday trading, TESS shares are up 13.06%, or $1.55, to $13.42.
