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TESSCO Technologies Inc. (TESS) filed Quarterly Report for the period ended 2011-08-05.
Tessco Technologies Inc. has a market cap of $110.5 million; its shares were traded at around $14.25 with a P/E ratio of 8.9 and P/S ratio of 0.2. The dividend yield of Tessco Technologies Inc. stocks is 2.8%. Tessco Technologies Inc. had an annual average earning growth of 15.8% over the past 10 years. GuruFocus rated Tessco Technologies Inc. the business predictability rank of 2-star.
This is the annual revenues and earnings per share of TESS over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of TESS.
Highlight of Business Operations:
Our first quarter revenues increased by 15.2% compared to the first quarter of fiscal year 2011. This increase was driven by growth in all our commercial lines of business. In both the first quarters of fiscal year 2012 and 2011, AT&T Mobility (“AT&T”), our largest customer, accounted for 28% of total revenues. No other customer accounted for more than 6% of total consolidated revenues during the first quarter of fiscal year 2012. Our first quarter gross profits increased by 15.0% compared to the first quarter of the prior fiscal year, driven by growth in our network infrastructure and mobile devices and accessories commercial and consumer lines of business, partially offset by a decline in our installation, test and maintenance commercial line of business. Selling, general and administrative expenses increased by 2.6% over the prior year quarter, primarily related to a significant increase in our pay for performance reward accruals as a result of very strong first quarter results during the fiscal year 2012, offset by decreases in compensation and benefits, and freight out expenses. Consequently, net income increased by 121.0% and diluted earnings per share grew by 119.2% over the prior-year quarter.
Revenues. Revenues for the first quarter of fiscal year 2012 increased 15.2% as compared with the first quarter of fiscal year 2011, primarily due to a 15.8% increase in commercial revenues, partially offset by a 6.7% decrease in consumer revenues. Revenues increased in all three of our lines of business.
Revenues in the mobile devices and accessories line of business increased 23.5% in the first quarter of fiscal year 2012, as compared with the same period last year. The increase was due to a 25.0% increase in commercial revenues, partially offset by a 6.7% decrease in consumer revenues. The increase in commercial revenues for mobile devices and accessories, which are sold primarily to resellers, was due to increased sales to smaller resellers and users, and by a 18.6% increase in sales to our large national tier-one carrier, AT&T. Sales of mobile devices and accessories to public carriers and network operators and resellers also increased, but were partially offset by a decline in sales to SMUs and government agencies.
Gross Profit. Gross profit for the first quarter of fiscal year 2012 increased 15.0% as compared with the first quarter of fiscal year 2011. Total commercial gross profit increased 15.2%, and consumer gross profit increased 10.0%. Gross profit margin remained flat compared to same period last year. Gross profit margin in our network infrastructure segment increased from 25.8% in the first quarter of fiscal year 2011 to 29.6% in the first quarter of fiscal year 2012. This increase in gross profit margin was largely a result of changes in product and customer mix, including a larger portion of proprietary sales during this quarter. Gross profit margin in our mobile devices and accessories segment decreased to 18.4% in the first quarter of this fiscal year from 20.1% in the first quarter of last fiscal year. This decrease was primarily attributable to the commercial gross profit margin in our mobile devices and accessories line of business, which decreased to 17.6% in the first quarter of fiscal year 2012 from 19.3% for the first quarter of fiscal year 2011, principally due to product mix and pricing pressures from our large tier-one carrier, AT&T, as previously discussed, but also due to higher sales to larger customers. Consumer gross profit margin in our mobile devices and accessories line of business increased to 40.7% in the first quarter of this fiscal year from 34.5% for the first quarter of last fiscal year. Gross profit margin in our installation, test and maintenance line of business decreased from 27.3% in the first quarter of fiscal year 2011 to 24.2% in the first quarter of fiscal year 2012, primarily due to changes in product mix. Generally, our gross margins by product within these segments have been sustained, except as noted above, and these variations are related to sales mix within the segment product offerings. We account for inventory at the lower of cost or market, and as a result, write-offs/write-downs occur due to damage, deterioration, obsolescence, changes in prices and other causes.
Selling, General and Administrative Expenses. Total selling, general and administrative expenses increased by 2.6% in the first quarter of fiscal year 2012 as compared with the first quarter of fiscal year 2011. Selling, general and administrative expenses as a percentage of revenues decreased to 18.1% in the first quarter of fiscal year 2012 from 20.4% in the first quarter of fiscal year 2011 primarily as a result of a significant increase in revenues offset by a less significant increase in selling, general and administrative expenses. The largest factors contributing to the overall increase in total selling, general and administrative expenses were increased pay for performance reward accruals due to very strong results in the first quarter of fiscal year 2012, partially offset by decreased compensation expenses and a decrease in freight costs.
Income Taxes, Net Income and Diluted Earnings per Share. The effective tax rate remained flat at 38.4% in the first quarter of fiscal year 2012 as compared to the first quarter of fiscal year 2011. As a result of the factors discussed above, net income for the first quarter of fiscal year 2012 increased 121.0% and diluted earnings per share increased 119.2% compared to the corresponding prior-year quarter.
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