Q3 2020 Earnings Call
To the Q3 2020 TESSCO technologies.
More freedom earnings conference call.
At this time, all participants are in listen only mode.
After the speakers presentation will be a question and answer session to ask a question during the session I need to press star one on your telephone if you require any further assistance. Please press star Zero I would now like to hand your conference over today to Jamie Bernard from Sharon Merrill Associates. Please go ahead.
Good morning, everyone and thank you for joining Tesscos Q3, 2020 conference call. Joining me today, our Sandeep Muthangi Tesscos, President and Chief Executive Officer and aired sits on that the company CFO .
Please note that management's discussion today will contain forward looking statements about anticipated results and feed your process.
Forward looking statements involve a number of risks and uncertainties and test those results may differ materially from those discussed today.
Amazing concerning factors that may cause such a difference can be found in test goes public disclosures, including the company's most recent Form 10-K and other periodic reports filed with the Securities and Exchange Commission would that introduction I'd like to turn the call over to Sandeep Muthangi, Ted said, President and CEO Cindy.
Thank you Jamie good morning.
Thank you everyone for joining us.
My second earnings call does it feel that school.
Fourth game soon after I started up that's cool and today I like my five month anniversary.
I've not had a chance to experience the rhythm of could business for a full quarter.
During this time, we have also undertaking a deep look at how we utilize all of our assets.
I'd also had the opportunity to spend quality time with many of our customers.
Last quarter I discuss the need for Tesco to focus on the customer experience implement the stronger field discipline.
Move our forecasting and inventory management and invest in our ecommerce website.
During the third quarter, we've made good progress on each of these initiatives.
When I joined in August I believe that that school was uniquely position to capitalize on the exponential growth the technological change and the results in complexity driving our industry.
Today I'm confident that the moves we are making an undertaking will position us to optimize our role in that evolution.
During this call I will share with you our progress on each of these initiatives and the path, we see but that's still going forward.
Metaphor Stark without results. This Walker I'll give you a brief overview and share the progress we've made on our initiative.
Then I'll ask Eric could provide a more detailed look at the financial and finally I will come back after that I talk about competition.
Based on information, we had the time of our second quarter call. We had projected an operating profit for Q3.
Largely because of two items related to our retail business that did not happen.
As we shared in our press release, our loss included a goodwill impairment charge of $2.6 million, which was caused by continued year over year decline in retail sales and profitability.
Additionally, as a result of Flor sales and the discontinuance of several versions of 40 M. devices in the retail channel. We also recorded an expense for excess and obsolete inventory of about $3 million higher than last year starts Walker.
The combination of the impairment charge and the incremental excess and obsolete inventory expense made up for a box majority of our operating loss outside of these two items, we would have experienced a much more modest loss.
Let me not speak about a three markets and our Ventas business.
With retail.
Why not retail sales were up sequentially. This business, that's not compare well with the same business from a year ago. This was primarily due to the large retail customer transition we discussed in Q1.
Now clearly you have work to do in this segment and we are executing on two very disciplined initiatives.
Inventory management, and how we leverage our strategic partnerships.
But in terms of inventory management, we haven't and start team, including appointing a new leadership and have created and analytics driven process.
This we have implemented new discipline to ensure optimum inventory availability, while at the same time improving trends.
Simultaneously, we are using data analytics to assist our customer and focus on delivering them the highest running skews.
These efforts will ensure that our customers that efficiently so well optimizing our overall inventory improving inventory turns and lessening you know risks.
Second we are working closely with ski strategic partners, such as Google, Samsung and Zagg to develop unique an exclusive programs and offerings.
For example, we continue to expand our relationship with Google and now support a much larger base of customers with Google product.
Second we are winning new customers through our strategic partnership with Samsung. This is as a result of consolidation in samsung's distribution channels.
We are now Samsung stocking distributor for mobile enhancements.
And third with Zagg, Zach recently announced an exclusive partnership with Tesco to provide their invisibleshield product, which will enable in store custom film protection on demand.
We believe we can improve overall profitability in our retail segment due to increased business discipline, better inventory management, mitigating stats costs and leveraging our strategic partnerships more effectively.
Second.
BARDA and integrator.
During our second quarter call I mentioned that our go to market strategy in this segment needed refinements.
Well, what the last 90 days, we enacted two of these refinements to our strategy by broadening direct sales coverage and renewing focus on end users starting with utility customers.
[noise] went to go to market strategy was modified about two years ago. The focus was on top performing customers and that's simply wasn't enough to drive.
We have no doubled down on the segment and hired additional sales talent.
This has significantly improved direct and assigned account coverage.
That's cool had historically been good at understanding technology trends and needs at the end user level.
And as a result, the company had been able to effectively communicate that knowledge and winning specifications back to our customers.
And the Salesforce words reorganized on a regional basis. This vertical industry knowledge, what's this books and became less effect.
We have no assigned the theme of seasoned sales professionals for the utility sector, which historically was our largest vertical.
This has helped us reclaim a competitive advantage.
As a result of this new approach we saw sell through to the utility sector grow in the third quarter for the first time in Threeq walkers.
We plan to industrialize, this construct and replicate across other verticals.
Moving onto public carriers.
For the first time in three quarters, we experienced a year over year increase in public carrier sales.
This growth predominantly was the result of strong sales to 18, Peter contractors and Verizon contractors, we are either the sole a primary supplier to a number of these customers and they have been winning new awards from both Indian Verizon.
Our overall offered into space is very competitive it blends out OEM partnerships, and our logistics and getting capabilities.
Additionally, our customers are benefiting from software to be eyes, and dashboards, we have created to allow them to better manage their inventory needs and overall spend.
The contract we have in place already will help us improve our market share as these larger carriers to drive more contractor spend towards materials and distribution agreements they already have in place.
Finally, as you all know some of the larger carriers either slowed or halted their construction spend at the end of the calendar year, which by the way was outside fiscal quarter.
These bills to review and we believe we are uniquely positioned to capitalize on this bad.
Let me talk about Ventas.
The effect of infrastructure business posted both year over year and sequential gains.
Inventive infrastructure products have been specked into several projects two of which resulted in Q3 sales with additional demand expected in the next few quarters.
These include an award from one of the largest paper manufacturing in the U.S. with over 170 warehouses.
This project is expected to be completed by the end this calendar year 2020 and includes inventive enclosure with integrated antennas.
We want to bid for a custom antenna for one of the country's largest grocery store chain.
The customer awarded the business to best cool due to our ability to customize an antenna and to meet their specific needs with speed.
This custom antenna will be placed in all store freezers, where the completion date of July 2020 .
Thanks of has also continued its partnership with two of the largest theme parks in the world designing a statically pleasing custom smoke detector mound with quick installation capabilities.
We also outfitted all the wireless networking accessories for one of these theme parks newest exhibits in Japan.
We introduced ceiling tile enclosures for new access points, and then you warehouse and kind of.
We're working with one of our de manufacturing partners to design and integrated custom solution targeted for the oil and gas industry.
We expect to see continued momentum from the ramp of flight Fivesix as major review manufacturers released their products. We will continue see broadening our portfolio to support these devices.
Real drivers in infrastructure products will come from antennas enclosures are systems and cable NVS as you know I, particularly relevant in industrial applications.
Vincent M.D.A. sales, however were affected by the transition of the large retail customer we discussed earlier and the general softness in the retail market at CES incentive mobile introduced a suite of new product with the latest in charging technologies. These products are targeted to meet different consumer.
Or use cases, and retail price points and they include our limitless product line.
We offer magnetic docking wireless charging and multiple device charging solutions.
To summarize in this quarter, we saw good results from our carrier business, our Ventas infrastructure business and good initial results from our refocus on the utility sector.
Also have made steady progress with each of the initiatives, we launched to improve that's caused near term performance.
As I mentioned at the outset of the calls these include focusing on the customer experience implementing stronger sales discipline, improving forecasting and inventory management and investing in our E Commerce website.
Let's look at our progress on each of these initiatives starting with improving the customer experience.
During the quarter, we conducted a review of our customer experience by engaging customers directly.
This has resulted in improvements to our auto processing capability.
And the use of VI techniques and algorithms that improve overall customer responsiveness.
We have enhanced our business intelligence tools to support stronger sales discipline.
These include improved pipeline visibility dashboards to quickly evaluate and address issues and continuous improvements of processes and procedures to modernize all aspects of our sales cycle.
To address the need to improve our forecasting and inventory management.
We are reviewing and refining velocity codes for several of our skews, we have enhanced our demand planning team and restructure our purchasing and vendor managed inventory organization. We are conducting an audit of all our processes and are making Swiss changes to those we determined to be sub optimal.
And finally, we are making good progress with Stefano dotcom.
We created a theme of website experts, who once again engage customers directly to identify areas of improvement we have a project plan for web site improvements and have deploys tools that improve our ability to capture and frac online customer behavior.
This analysis, we've determined that a number of such as that came through our website from outside search engines has decreased significantly.
We have engage search engine optimization exports and I've already seeing improved and more positive results. During the past few months. Our search results have returned to the levels, but we have not seen.
Over a year.
After Eric reviews, our financial results for the quarter I'll return to discuss our vision for the long term.
Eric.
Thank you Sundeep and good morning, everyone.
That's a need mentioned, while our third quarter results were affected by softness in the retail market.
And the resulting goodwill impairments in inventory write offs, we made progress in several areas of the business.
Let me give you the financial overview of the third quarter.
Revenues totaled 139.6 million compared with 152.3 million in the prior year quarter, and 141.8 million in the sequential second quarter.
Gross profit for the quarter. It was 23.1 million compared with 31 million in the prior year quarter due to lower sales volumes and higher cost of goods sold related to excess and obsolete inventory.
As a result gross margin was 16.5% of revenues for the third quarter compared with 20.4% last year.
Our incremental tariff costs to date, this year, which primarily related to Ventas mobile accessory products have been approximately one point sixmillion.
With about 200000 of that in Q3.
As we expected the tariff issue was largely mitigated by the end of Q3, we believe over 90% evolve into power products. We manufacture in the current fourth fiscal quarter will not be subject to tariffs.
She and expenses were down 3.7% from the prior year quarter due to lower sales on our cost reduction efforts.
The loss before income taxes was 6.3 million compared with earnings before income taxes, a 3.2 million a year ago.
The 6.3 million loss was primarily driven by two factors.
He 2.6 million goodwill impairment in a 3.2 million year over year increase in cost of goods sold relating to excess and obsolete inventory.
Most of these items are primarily related to our retail segment.
I want to spend a few minutes discussing the incremental excess and obsolete inventory.
The retail business has always been subject to periods of higher and lower you know as the business ebbs and flows this year has been more difficult than in years past.
The inventory purchases, we made in the past year do not accurately take into effect the significant downward trend in retail sales we've experienced this year.
Additionally, the discontinuance of several phone models has caused more inventory obsolescence abnormal this year.
As Steve mentioned, we have taken several measures to attempt to mitigate this problem going forward.
Net loss and loss per share, a 5 million and 59 cents, respectively for the third quarter fiscal 2020.
This compares with net income of 2.7 million and diluted earnings per share of 32 cents for the prior year third quarter.
We did see improvement on our balance sheet.
Inventory balance decreased by approximately 13 million from the end of Q2 and 31 million since the end of Q1 as a result of our company wide initiatives to reduce inventory will not impacting our offer availability to our customers.
Our line of credit balance decreased $6 million this quarter to 29 million.
While the project base business will naturally lead to fluctuations on the balance sheet remain focused on improvements in working capital and cash flows.
As we noted in our release our board of directors determined it was appropriate to Reprioritize, our capital allocation strategy to enable us to make the necessary technology and talent investments to drive profitable long term growth.
Accordingly, the board reduce the company's dividend to two cents per share, which will be payable on February 26, with a record date of February 12.
That's an equal described momentarily these investments in the successful execution of our strategies.
Will enable us to capitalize some exciting growth opportunities, we're well positioned in our industry.
We look forward to further enhancing our offer and the value and experience for provides our customers importantly, our lower cost structure will enable us to drive improved profitability as we grow sales.
Ill now turn this over to Sandeep to discuss our strategy to drive test because growth over the long term sandeep.
Thanks, Eric.
Let me use the remaining minutes to share with you the highlights of our strategy and the path forward for Tesco.
First regarding retail.
Clearly, we must stabilized this part of our business, which has solid underpinnings, but it is not the same business that it was a year ago.
With the steps, we have taken and the once we have announced today I believe we have started down that path.
Second as I mentioned earlier, we're very pleased with the progress we have made and the positions we have attained in identive and carrier businesses.
The early indications from the Vod and integrator market are also promising.
More importantly, all of these assets and channels are well positioned in an industry that is expected to grow and grow significantly.
This will be driven by technological changes from Fiveg CBR rest auctions private LTV and the evolution of fly Fi.
However, what is more relevant for Tesco is that these technologies will have to be deployed and supported in different and more challenging morphologies inside buildings insights stadiums manufacturing locations warehouses et cetera.
And all of this will require small cells. It would require improved aesthetics and enclosures innovative keeping the support unique backhaul in front called requirements.
Furthermore, these dynamics will put a strain on the industry's existing abilities to manage and maintain all of the above.
We have already seeing changes in business models.
Neutral host value added resellers and others are solving some of the real estate power and other complex issues in very new and innovative ways.
Tesco has deep relationships with all of these innovators where our customers.
Based on our work over the past few months I'm confident that weekend ridden Tesco to a differentiated place in the industry through implementation of a three pronged strategy.
Our three strategic pillars will include.
First by regaining our competitive advantage in the quarter distribution business. We are redoubling, our focus on being the easiest company to do business with for both suppliers and customers.
Second by Industrializing, our inventive operations around the Fedex environmentally tailored and closures and quality, we already do much of this as part of our existing business our transformation will be around scaling our capabilities to be engineering led roadmaps, driven and to become an industry leader.
And third we will invest in providing value added and managed services with a mandate to resolve complexity and pain points for our customers like reaching beyond the boundaries of where Tesco has traditionally focused.
Our domain expertise and how wireless networks are constructed and our existing customer relationships will be our differentiator.
This business will be focused on developing a sustainable an incremental revenue streams with more attractive margins.
With the successful implementation of this strategy I believe Tesco can become a disruptive force in the wireless industry.
And by executing well on both our performance improvement initiative and our long term growth strategy, we will drive long term value for our shareholders.
Now with that I will turn the call over to the operator for questions operator.
At this time I'd like to remind everyone in order to ask a question. Please press star and the number one on your telephone keypad, we'll pause for just a moment to compile documentary roster.
Your first question comes from the line of Bill It does elements from a tighter your line is open.
Thank you I have a agrees with questions first of all.
Would you discuss the public character markets carrier market and the sales growth that you saw and.
And kind of tie that in if you would with it with your comments that carrier spending slowed.
With a couple that carriers. So that this you're seeing in contrast, and favorable to add to what you all we're doing.
Hi, Good morning, Bill. Thanks for the question Oh, I will take a.
Stab at answering the three things you asked I think and Eric you can jump in but any details I leave out so first build from.
Public carrier market I mean, the end users spend is driven by the likes of 18 D var eyes and.
PMO bio et cetera, our customers are people, who construct networks for them. It's the mastecs the American tower's crown castle's after a while much of the spend is still in Fourg, we saw some.
Evidence that Fiveg was beginning to pick up but all of that growth is ahead of us we have announced and I shared on this call today that we have contracts in place agreements in place.
In the PMP Duff ecosystem. So these are people who build netbooks were 80 MP, we have similar contracts in place for the Verizon ecosystem and we certainly did very well in those two segments.
Not going to go into specifics.
Around which customers out the door slowed.
Programs, a point you to do that larger industry I think that there's been met many public comments around that.
It was a fourth quarter fourth calendar quarter phenomenon typically happens if you followed this industry over the overtime I expect the boost to pick up and as a result, we're pretty optimistic about improving our position and market share.
So that's one set of points to answer I think two of your questions and you can tell me if I'm answering your questions. The the third point is around our overall offer you know what I'm, particularly impressed with and actually proud off is it's not just our OEM relationships.
Logistics supply chain of materials.
But it's also about how we are engaging some of our customers through software assets that basically help us expose our overall operations through application programming interfaces and dashboards that our customers skins can use to drive bad luck.
Just sticks their overall asset management fee consumption analysis et cetera, and that makes us much more sticky to some of our customers and be distinctly add value. So it's all of the above that makes us optimistic about the overall public carrier ecosystem, Eric do you want to add anything to what I.
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Just to reinforce the first point you made Cindy the.
What seems to be a neil the carrier slowing down, but our business growing is I think an indication of the market share gains we've seen.
It's not one or two customers. It's we're seeing more significant revenues from more customers as we continue to do well and bringing new customers into the fold. So I think thats. The reason why your we're seeing.
Increased revenues in a period, where the carriers are necessarily spending a lot.
Thank you I hope we answered your question.
Yes.
Experiment, let me then build on that if I may.
You said this fourg anyway, you said the vast majority of the spending I think last call. You mentioned that you thought the middle of the year is when fiveg spending would pick up.
But what are your updated thoughts on on Fiveg spending and and how quickly that ramps.
So I'm still optimistic about.
If I view spending specifically that it's ahead of us Oh, we see several carriers.
Announce fiveg build and availability of that as we just described Eric and I am the taxonomy replay and you know boils down to our customers and then in two hours at this point I'm Gonna say roughly.
Then maybe 15% of our overall business and this particular segment is being driven by Fiveg. So I expect that to that to increase overtime.
And is the middle of the calendar year still when you're anticipating that that ramp to began in March moneris.
Yes, I mean, the indicate as we look to the.
The industry looks too right below our availability of devices, Fiveg devices, which will drive utilization and therefore drive.
The need for increased capacity or if you look at all of those you know maybe mid next year is mid calendar next year is what the industry talks about.
Actually 2020 calendar year strain.
Great. Thank you and then an additional question in the bar integrator segment.
You you'd mentioned that you were seeing some favorable.
It's too early favorable developments and I'm, hoping that you will.
Provide us with some more and I guess more examples or indication of green shoots. It if you would in that second place.
We certainly want to your as we make progress in this segment. It will provide you with color the one and use our vertical that we talked about specifically on this call is the utility segment. That's still one we have doubled down on so happy to provide color.
More from an anecdotal perspective as we go forward, we will certainly do that we are we are tracking. It then we'll certainly share more with you when we get back with you next quarter and our overall strategy is to industrialize as I said to construct the go to market.
Shape, we're giving ourselves in this particular vertical and we industrialize that and replicated across other verticals. That's that's the path we are going down.
Relative to Q E. Twod commentary that you had in your opening remarks you were.
Adding additional ever efforts beyond your talk.
Our and integrators, which you said that it's just part.
The largest just simply weren't enough to two glad to drive the business.
Talk in more detail that what you're doing.
Site that group and are you putting any additional effort to.
So a couple of more questions there.
So three points. So first to the 200 larger customers right focus dedication assignment of accounts and improvement in our overall offer that's the strategy Thats 0.1, 0.2, the two things I mentioned during the call I think every closer to accentuate.
We have increased our sales coverage and I'm not going to go into specific numbers. We have increased our sales coverage to the large volume of ours, who have historically been.
Very loyal to Tesco. So Thats 0.1, 0.24, it's basic business discipline build its things like looking at drop off accounts, it's items like people you well done business with us in the past that we need to get closer to identification of those accounts.
Outreach in simple words, its assignment of accounts additional accounts to the increased bandwidth we have provided in the sales community.
And what metrics do you have to provide us more detail around that.
Eric I'm sure will you know, we'll be spending more time with the overall investment community Bill I mean over the coming months in terms, so far sharing with you specifics on our overall strategy and we can use that opportunity to dig deeper.
In a in areas that we can dig deeper on.
So we'll be happy to follow up and actually looking forward to that follow with.
You know with key stakeholders.
Thank you I'll turn it over to the next person.
Thank you Bill.
Your next question comes from the line of Tim call from Capital Management. Your line is open.
Yes.
With the.
Dividend freeing up cash will some of that go toward debt pay down and what do you see as the future trends for interest expense.
So yes, I mean, the first part of the dividend reduction will certainly go towards towards debt, but we also you talked a lot today about investments that when you want to make into the business in the event of area into the core distribution business as well as into the.
The services offerings, the Sandeep spoke about towards the end of the call today.
From a future period.
Where we are today is probably a reasonable baseline we would expect it probably to come down a little bit.
Over the next couple of quarters, but I wouldn't say, it's significantly can be different than than where it is today, because we will be investing some of that money back into the business.
In some growth opportunities. Thank you Eric good morning, Tim if I could just elaborate.
On what Eric just said, you'll remember last quarter. Soon after I came on board one of the items. We had agreed with our board was to look at overall strategic allocation of all of our assets. You know the dividend is certainly one of those and given the growth opportunities.
We see in front of US I mean, we are making a concerted effort to give ourselves the bandwidth and the capital to actually follow through and execute specific programs specific product lines specific developments to capture those growth opportunities. So this is a one in a theory.
These are things that we're doing too to give ourselves that bandwidth and that capacity.
Great and then with the retail segment.
Could you elaborate or you.
Still achieving account wins.
New retail channels wholesale consumer electronics airports.
Others is that.
Going well or in progressing.
Yes, I think it as we've seen some you talk about Google today, we talked about Samsung today, a lot of new wins are being generated from those areas. The zagg opportunity that Cindy mentioned.
We will open some some new opportunities for us as well we are doing well in the airport channel as you mentioned and we're doing well in the department store channel as well. Unfortunately, those those wins are being masked mostly by the large customer that transitioned earlier in the air and some of the general softness in the more traditional.
In store channels.
But we're very very strong business development team that that's very aggressive and going out in winning some new opportunities for us.
And that customer loss should annual laws and March is that right.
That's right next quarter over the last quarter that we have that year over year comparison.
Great. Thank you so much.
Thanks.
Again, just a question please press star and the number one on your telephone keypad. Your next question comes some line of Megi Nolan from William Blair. Your line is open.
Good morning, Thank you.
Hi, I'm curious how receptive do you anticipate your existing client base will be to some of the value add and managed service offerings.
My name is to rollout here and then how are you thinking about it internally in terms of what it could do it in a way of bringing on additional clients or expanding your addressable market.
Hey, good morning, Maggie this is sandeep out of state. The first shot that your question. She is a good good question and we'll ask Eric the jump in if he has anything additional so first Maggie one other things.
That.
Ben.
True in this overall market is that when you look at customers. They don't deploy just one vendors products. It's typically a multi vendor solution you know that they said they deploy and somebody like FESCO given everything we distribute you know we are by nature multi vendor we're vendors.
Agnostic and we are for the most part technology agnostic. So when you think about providing value added services, we can provide value to everybody.
So that's that's 0.1 0.2 some of the the examples that I gave earlier in terms of us being able to.
No brings software capability and calculate our overall, you know program and exposing the eyes and we want to build on top of that to be able to sort of additional pain points.
Additional pain points as follows so the first area is as you think of Fiveg CBR as just beyond those changes in physics and protocols. It's really a lot more active electronics software enabled devices that you will see being deployed from all different types of vendors and with that they will.
Maybe you know a larger need to manage monitor.
Grade manage warranty around a set of set of topics. We have identified with our customers that require more focus. So if we are able to provide in a multi vendor vendor agnostic way value added services that is much needed in the marketplace. So we have you know we have come to believe that.
And that's one area, we wanted to focus on beyond that as I described as you get to small cells to provide capacity and coverage in areas that.
Okay that do have not been tackled.
The overall pain points around how these networks get constructed requires automation and expertise, which we believe we have at Tesco given what we have been doing for over 30 years suicide domain expertise the customer pain points and the intimacy, we have with our customers that we need to exploit to deliver these services.
So in short you know software and services have always been in this industry about being multi vendor you will see this play out in the carrier space. You will also see this play out in the vertical industries, and we think that school is well positioned due to exploit that you know we will move forward it.
Relatively very focused and.
You know drive one success upon on another that's our strategy.
Eric anything you want to add no I think you did a good job answering the question. Thank you Maggie Hope we gave you insight into what you were asking.
We have another question from Megi Nolan from William Blair. Your line is open.
Yes, thanks that helps.
And then given the investments that you've talked about and that the considering the strength and weakness in other segments.
Outlined today.
How are you thinking about the next year are you expecting to see positive earnings in fiscal 2021.
Hi, Matt you, obviously today, we didn't give any kind of guidance I would say, we're very optimistic about 2021, and fiveg and the other technology investments that are going to drive drive growth for us.
But since we're not giving guidance for in for next year right now.
Not going on.
Comment on any kind of EPS figures for next year at this point.
But the long John .
Yeah long term general directions would be helpful. If you can share any of that.
Yeah long term Maggie you know.
Long term, we are very optimistic about the.
But the company.
For the specific reasons, we outline and the approach we are going to take is no longer term shareholder value as opposed to.
Quarterly cadence I think the company has talked a lot about.
One of the project into in densities that drive things from quarter to quarter. You know we have talked about pipeline.
Focus from a sales perspective, I mean, all of these things take you to the long to and that's where we want to focus on right as we deepened and sharpen our strategy.
Understood and then as you think about.
All the things that you talked about including in particular the.
The retail piece of business you sound optimistic that you're under way in terms of stabilizing that business.
And that there's some good initiatives behind that.
Is there any sensor on timing your expectations for when we really start to see some about showing up.
On the piano.
Yes, I think it Eric alluded to this when he answered the previous question Maggie I mean this year. This fiscal year, we suffer when we do year over year comparisons right. If you go back a year ago. There was a different customer mix very dominated by one large customer that we.
Talk about every quarter and we suffer from a year over year comparison, because it's a fundamentally different business today just from a top line perspective. So thats 0.1 0.2, given that this is a much smaller topline business. When you look at it on an annualized basis, the basic business disciplines.
Associated with a business. This size is what we're bringing to the table you have to be much more focused on what inventory you buy you have to be much more focused on what skews you build up and you have to be much more focused on turns at the same time. The nature of this business is around vendor managed inventory so you need to.
Out of inventory on the shelf if you will so it's a difficult balancing act, but given the focus we have brought the tools the processes and the analytics that we have brought to play I'm confident we will get us into the shape that it needs to be.
Okay. Good luck color in terms of specifics we are things we're doing.
Absolutely. Thank you last one for me.
What's your Paul on the the culture internally Tesco right now given that there are changes going on.
How are the the employees responding and.
To the various changes that they're seeing across the business. Thank you.
I'm very pleased right with a fashion I talked about you know during the last call that the test for being brings to the plate.
I think in general what is happening in the industry is good for us of everybody's cutting the cord and we have Oh, we have carved a niche for ourselves to focus on wireless we don't want to be everything to everybody Weve. The focus is is well received.
In terms of the discipline the process.
Change will be a continuum right and I'm confident that with the you know right focus right leadership balance with new wins.
The team will remain excited.
Thank you very much.
There are no further questions at this time I turn the call back over to the presenters.
Thank you operator.
I want to leave you with a couple of thoughts you know first.
We are very focused in terms of improving the basic business desk disciplines around inventory our E. Commerce site and we are embracing modern tools modern technologies to drive us forward.
Second we will continue to refine and build upon the progress, we're making and arvada an industry segment. It is the most profitable segment for us so as we make progress.
It is back in multiple ways and I'm confident that a as Tesco, we will be able to reclaim the differentiation. We once had in this segment.
We're excited about the opportunities ahead of us some of which we.
Explained during our call others came out when we talked about when we went through the queuing Essex section and frankly I'm excited about the decisions we've been able to me as a company to bring focus and to create capacity for us to invest in these growth opportunities.
Finally, I'm also very pleased and excited about the position. The team has established gained with ventas infrastructure business and our overall position in the carrier segment.
I wanted to end by thanking our customers our partners Oems, our investors and above all the Tesco team for your continued support and to the Tesco team for the fashion they bring to the table every day. Thank you for joining us on the call today and I look forward to speaking with you next quarter.
This concludes today's conference call you may now disconnect.
Okay.