Q1 2021 TESSCO Technologies Inc Earnings Call
Q1 2021.
So technologies Inc. earnings conference call.
At this time all participants are in listen only mode. After the speakers presentation to be a question and answer session to ask a question. During this session you'll need to press star one on your telephone. Please be advised today's conference is being recorded if you're acquiring any further assistance. Please press star zero I would like to now hand, the conference over to your speaker today David.
We've seen some Sharon Merrill. Please go ahead Sir.
Good morning, everyone and thanks for joining Tesscos Q1, 2021 conference call joining me today, our Sandeep Muthangi Tesscos, President and Chief Executive Officer, and there's been told me the company's CFO.
Please note that management's discussions today will contain forward looking statements about anticipated results and future prospects.
Looking statements involve a number of risks and uncertainties and Tesscos results may differ materially from those discuss today.
Summation 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 without introduction I'd like to turn the call over in a Sandeep Mukherjee, Tesscos, President and CEO Sandy.
Thank you David.
Good morning, and thank you all for joining us I.
I Hope you run your families are things.
The ongoing.
Our number one priority continues to be health and safety off our employees.
And our front line.
That's always in the central business, helping our customers provide Michael Communications Robertson.
Oh telecommunications companies service providers.
He responded law enforcement defense and security personnel and many many more.
We have done this by maintaining the integrity of our operation.
Specifically continued delivery of our products and services.
The inability or possibly.
Our liquidity and our financial flexibility.
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And I'm proud of the commitment determination and resourcefulness our people have shown in rising to the challenges posed by this terrible.
Right.
As our Q1 numbers indicate the financial impact on our business has been significant.
What we are moving ahead in executing our overarching strategy.
Number one.
Our value added distribution business and ensure that we have the easiest company who do business.
Number two.
It's realized our vendor operation scaled our capabilities and be an industry innovator.
And three invest in value added and managed services offering resolve complexity and pain point for our customers.
This strategy is based on its Aro examination of our business and the way we utilize Iraq.
The result has been a reallocation of key assets as we focus on our bar and our carrier business.
Improve our overall value proposition.
This new focus will enable us to capitalize on the incredible changes occurring in the wireless industry.
As we execute our long term strategy, we are focused on for immediate initiatives to improve our performance in fiscal 2021.
Huh.
During the decline of our retail business second you're completing the necessary I do transformation to enable us to security position.
To take advantage of the growth opportunities that lie ahead of time.
We are improving our devco dot com website.
And finally, we are improving our overall profitability through cost reductions and other deficiency.
I will now walk you through our performance in the retail foreign integrator and public cardio markets.
As I do so I will highlight the unique value, we are providing to our customers in each area.
That value with the foundation of our overarching strategy and the reason, we will be able to capitalize on the exciting growth friends in the wireless industry.
Let's start with the retail business.
Our retail segment has historically been a sizeable unprofitable business.
End of 29 in however, the global retail market began contracting rapidly.
And we face the same challenges confronting the global retail ecosystem.
In Q4.
Good morning, 19, one of our largest retail customers was acquired and as a result ethical is no longer that distributor.
This created a ripple effect enriched escos retail inventory levels increased including excess and obsolete inventory.
When I arrived that that's cool in Q3 fiscal 2020, I immediately embarked on a thorough review of our assets and investments I.
As a result of that study we implemented several guard rails and fiscal discipline measures in our retail business.
Then in Q4 fiscal year 20, the global pandemic sit down and retail came to a virtual instances.
In response, we've taken or otherwise accelerate the following measures.
Turning our inventory management and being highly conservative in our purchasing practices by focusing on the highest dining skews.
Significantly reducing excess and obsolete inventory.
Exercising ridden rights with our suppliers renegotiating, many customer contract, reducing outbound freight expenses and lowering overall SGN expenses.
These measures are yielding tangible results.
This quarter, we reduce retail inventory by more than $7 billion.
And direct retail expenses were down by almost 40% on a year over year basis.
These all resulted in a significantly improved operating margin for the segment as compared with the previous two Warner's why do we maintained a keen focus on serving our customers and performing for our suppliers.
Looking at the demand picture, we've started to see an increase in retail segment sales since the beginning of me.
Our recent retail business development strategy has been to focus on grocery stores mass consumer electronics stores and the insurance vertical.
These markets have performed relatively well during the back then.
We have traditionally focused on independent agent channel many of which have remained open through the Brendan.
In sharp contrast, with the stores owned and operated by the carriers.
Sprint and T mobile closed approximately 80% of their corporate stores.
And it didn't in Verizon shut down most of them as well.
Additionally, the airport segment has remained shut down and we have yet to see any meaningful improvements there.
Encouragingly in our vendor of mobile device accessory business, we Wanna nationwide launch in one of the nations largest membership warehouses and launched nationwide with another one this past four.
Also after a successful trial Ventas has been launched nationwide in home depot stores.
On the international from after widespread shutdown due to the pandemic Europe has begun to reopen with several of the stores. We had sold into reopening in mid June with the remainder expected to be open by the end of this month.
Let me now talk about aren't far an integrator business.
We have previously discussed our plans and improvements with our sales strategy, our reorganization and the progress we are making overall in the segment.
Well covert 19 has had a large impact on this business I'm very pleased with the progress and the discipline, but that's going to impact demonstrating.
Let me talk about that progress first and then come back and give you some color on the types of impact we have seen related to the spend them.
First Tesco Dot com.
One of the biggest driver that success for our bar and integrator business, our improvements we've been making to our Tesco Dot com website.
This is also one of our strategic imperatives for fiscal year 2021.
We're seeing some early results, which are very promising.
Our renewed focus on end user segments are reflected in these projects specifically around targeted landing pages customized to specific industry verticals recommended products and build for materials and other digital supply chain services, enabling a more complete solution for our var and integrate her costs.
So much.
We recently conducted a review of our improvements and Roadmaps with our largest ESCO dot com customer.
Also one of the largest artisan.
Pinion feedback from that review includes our website and significantly improved our website is easier to navigate and more helpful.
We also received positive feedback on road map items related to car design multi user accounts hill maintenance and omni channel 14 capabilities.
Unrelated to the review I'm very pleased to see that the revenues via Tesco Dot com from this large customer are moving in a favorable direction. Both from a volume perspective, and also as a percentage of the overall business, we do with this customer.
Overall, we also see an uptick in registrations to Tesco Dot com now registrations equate to eyeballs with infringed for this part of our business and that is among the leading indicators for both watches and revenue.
Second let me talk about our design services.
Our dry for complete solutions and to enable further value add has resulted in increased discipline in our design services portfolio.
At this time, we provide robust design services for that for power for tower and for broadband.
Our deliverables include RF and other design Act loss analysis power calculations and recommended bill of materials.
That's design services are being linked to the increased interest we see from public safety thing.
This is the result of a diverse set of municipal state and federal regulations for radio coverage related to public safety, we're seeing an uptick in both demand and revenue for these services and these designed deliverables are creating sales pipeline for our sales teams.
Let me now share with you three examples of how these improvements are positively impacting sales and our overall progress.
Oh as a result will be increased focus we have rock to for example, the utilities segment.
But having a large diversified energy company decommissioned there why Max network under a very tight schedule and to avoid penalties, resulting from you actually see regulations.
That's cool help this company develop possible migration alternatives.
Then choose from among those alternatives and finally use our supply chain services to bring the necessary equipment to multiple sites to deploy the new technology on time.
Second working with one of the largest investor owned utilities in the southeast Yeah, that's cool webinars for a customized power and intelligent solutions.
In the past this large utility would do such design work in house.
Now as with many utilities very reducing expenses by outsourcing that one.
Pepsico is in a position to provide the design services that enables them to do more with less.
Now they simply give us the specs after review, but they are powering and we can design a power solution for that including an infusion all designed and manufactured by Ventas.
But.
A large investor owned utility needed to retrofit 1500 vehicles, including the technology and the mounting solutions. They had the appropriate budget allocated report on a tight deadlines.
That's cool fully designed the solution used our supply chain to procure the Whitman keep it the equipment and delivered it as a single grade, allowing their technicians to easily complete the project in time and on budget.
Now, let me tell you about the effects of the pandemic.
I don't think I need to add too much color to tell you that during this quarter our var, an integrator customers did not have access to venues.
Theme parks and many other construction sites.
Projects were confident integrated hospitality industry and hospitals were delayed or reviews.
Oil and gas industry has also been at par.
In addition, our largest national solution provider customized saw a significant reduction in installation.
All of this affected our customers business and therefore hours as well.
However, the examples I shared with you earlier illustrate the diverse nature of problems. Our teams are now solving and how we are knitting together, our reignited portfolio of design services, creating baxter market and demonstrating our ability to tackle complex logistics using our supply chain. So.
Yeah.
Well there is still uncertainty in Nevada, and integrator market due to the pandemic. We're encouraged by growth in the transportation channel near term opportunities in education and in providing critical communications equipment to help and overhead recovery efforts.
Our ability to provide a full complement of services to var contracted and private systems operators in numerous industry is what differentiates us.
I'm confident that we're on the right track to drive market share and revenue growth in this segment for the long term.
Turning to our carrier ecosystem.
Why do we did see some mild to covert 19 related impact our carrier segment was up 17% year over year, primarily due to the market share gains in the PMT and Verizon ecosystems.
Our ATM de Dup business grew more than 12% in Q1, despite it indeed capex spending for twentytwenty projected to be down from 29 team.
The impact of the pandemic on our carrier business was related primarily to restricted access in second values for das installations and delays due to the closure of government and municipal permitting offices.
We've sharpened our overall carrier offer not simply in terms of sufficiently moving inventory, but through our supply chain services, our program management expertise and by leaning forward with our software services offerings.
One example of our software service offering is our proprietary voices platform.
Which enables us to integrate with our contractor or carrier ERP systems and allows our customers to better manage their inventory approval process, and then to control and direct inventory placement and to create and manage those of material.
Our operational capabilities and software services, when combined with our proprietary offerings and strong vendor relationships creates a superior offer and clearly distinguishes us from our competition.
I mentioned in previous quarters that we won an award with a large tower company that would effectively doubled our business with them.
This award enabled us to grow 105% year over year this quarter with this customer.
They have indicated that their partnership with Tesco has been a key component in their ability to deliver best in class communication infrastructure.
Cool has provided them with a reliable supply chain engineering support.
Bill of materials enhancement and product guidance.
Each of these contribute to their lower total cost of operations and provide labor savings.
We've also enabled them to optimize inventory investment by minimizing excess and obsolete inventory risk and by managing the demand planning process.
Our relationship with this customer needs back over a decade and has continued to evolve as they expand into new areas of wireless infrastructure construction and when you project.
Finally, I, just 10% to 15% of our overall revenue in this segment was related to Fiveg.
Should note that in June we started shipping Fiveg kids for new site construction in the New York and New England geography.
You will remember that these geographies, we're highly impacted by the pandemic earlier in the water. We're excited about this development because the multiply this for Fiveg are very large.
I would like to now gives you a brief update on the key performance initiatives. We have for fiscal 2021 that I mentioned earlier in the ball.
The first is the manage decline of the retail business as we continue to service our customers and support our suppliers as I mentioned in detailed earlier, we have improved our bottom line results due to these efforts.
The second is completing our IP transformation project this fiscal year.
Well, yes, Tesco has been burdened with the legacy and largely home grown technology platform.
We have embarked on an enterprise transformation journey that started with technology infrastructure and customer facing digital platforms in fiscal 2021, we will complete the deployment of an industry standard proven core technology platform. This will enable us to streamline transactions deliver.
Our improved user experience and simplify data from.
Taken together this new functionality will unlock competitive advantages and enable us to capitalize on near term industry growth trends.
The third is our website Tesco dotcom.
This website support thousands of customers every month.
And to continue to invest in this asset and make it a best in class B to B website.
Generous improvements were made to the site during the past quarter I talked about a few of them are there.
Other than glued.
A redesigned to make the budgeting process far more intuitive and efficient.
The addition of 24 by seven jackpot function to facilitate the customer self service.
And enhancement that enable buyers to view more detailed information regarding backorder releases and freight carriers.
And lastly, we are improving our profitability runway.
To do so we are one redirecting investments do on more profitable and growing commercial business.
Second we are driving more revenue from our ecommerce site, which is fundamentally more profitable for us.
We have reinvigorating our efforts in our proprietary higher margin business and finally, we are improving the profitability of the retail segment.
These key performance initiatives will enable us to improve our balance sheet reduce debt and also create a much better structural operational and financial foundation for us as we head into the next fiscal year.
I'll now turn it over to Eric for a discussion on our financial performance.
Thank you Sandy been good morning, everyone.
Our overall results reflect a significant impact of dependent on the retail and bar markets.
Digging deeper into the numbers you can see the success of our near term initiatives to improve our cost structure and operating performance.
And our long term strategy to drive growth and profitability from our commercial segment.
Starting with the top line revenues totaled $119.8 million compared with 130.8 million in the first quarter fiscal 2020.
And 128.2 million in the sequential fourth quarter.
Almost all of the year over year decline was related to the retail segment.
Gross profit for the quarter was 18.8 million compared with 25.3 million for the same quarter of fiscal 2020.
Gross margin was 15.7% in the first quarter compared with 19.3% a year ago.
Gross profit in gross margin both improved from the sequential fourth quarter. Despite the decline in sales. This was mostly a result from the return to historical levels of charges related to inventory in returns.
Year over year decline in gross profit in gross margin are result of a couple of items.
First to retail sales were down 27%, primarily result of retail store closures and lower foot traffic due to covert 19th.
And second to the public carrier market represents a larger percentage of overall sales this quarter.
As we continue to grow market share in the sector.
But it does come lower than historical margins.
SGN, a expenses were down 16% from year ago to 23.7 million, reflecting the success of our aggressive cost reduction initiatives.
Sandeep mentioned earlier.
The cost reductions led to lower compensation costs, both in operations and non operations areas as well as lower freight costs.
Finally, marketing and travel costs are down significantly due to cobot related cancellations of both corporate and industry events.
The first quarter fiscal 2020.
The loss before income taxes was 5 million.
Compared with the loss before income taxes of 3.5 90 year ago.
Our tax benefit was also a much lower this quarter, which had a significant impact on our EPS.
This reduction resulted from several discrete items, including changes associated with the state adjustments related to the cares.
We do expect the tax rate increase for the rest of this fiscal year.
We continue to maintain healthy balance sheet the balance on our line of credit of 25.3 million down slightly from 25.6 million at the end of the fiscal year.
Well overall inventory was essentially flat from year end. This does not reflect our continued efforts to reduce retail inventory, which did go down by approximately $7 million this quarter.
That decline was offset in investments we made in our commercial segment to build inventory and strategic areas to support our tier one carrier customers and bars.
We also reduced accounts receivable by $9 million.
We did not see any significant increases in customer payment issues associated with Covance and in fact, we reduced our covered reserve slightly during the quarter.
We generated cash flow from operations for the second straight quarter.
We will also be following our fiscal year 2020 tax return shortly which we expect to generate a four to 5 million dollar cash refund later this fiscal year.
As I mentioned at the outset, we are executing on our near term performance initiatives well at the same time investing in our long term strategy and this is reflected in some initial improvement in the operating performance of our retail business and on the balance sheet.
Looking beyond fiscal 2021, the majority of opportunities for tesscos growth and profitability or on the commercial side of the business.
We will continue to invest to take advantage of those well also managing the retail business very tightly.
Now I'll turn it back to city to provide additional context on our strategy to capitalize on that opportunity.
Thanks, Eric.
Let me share the bases as my optimism for the future of Tesco.
There is simply no denying that we are witnessing a once in a generation opportunity in the wireless industry.
So one is on the verge of being able to knit together innovations in cloud computing Silicon Mimo and other technologies to realize the advantages of wireless everywhere.
Hi, it's fair to say that we have seen technology refreshes in this industry a few times before what's duty Threeg and Fourg being most recent examples.
This time, however is different.
As we are seeing not only the next generation that being fiveg.
But an unprecedented concurrent rollout of other new technologies like private LTV CBR as an Io d.
Each of these technologies and solutions are predicted to drive significant growth over the coming years.
And they all require the implementation of small cells mobile edge computing and RF distribution capabilities to realize the promised lower latency and higher speeds.
That's cool sits at the Nexus of these opportunities as we possess the subject matter expertise operational capabilities technology provider partnerships and customer reach.
The examples I have provided you offer a glimpse into the breadth of what we are able to do for our customers and then ton provides an effective route to market for our supplies.
As I've discussed in previous earnings calls, we have begun to implement our three pronged strategy meant to help us capitalize on these growth opportunities.
Our value added distribution business is core to theirs, and we're reallocating capital to maximize our ability to succeed.
An important factor is ensuring that we are the easiest company to do business with for both our suppliers and our customers.
The second component of our strategy is to industrialize, our inventive operations focused on scaling our capabilities as an engineering led roadmap driven industry innovator, particularly around the Fedex and environmentally tailored inclusions and with quality.
And third we seek to resolve complexity and pain point for our customers by providing advanced software and services.
Our domain expertise and the construction and deployment of wireless networks, along with our existing customer relationships differentiates us in this market.
I provided a few examples of how we enable the implementation of wireless solutions in our bar and private system customers and our investments in software and services wouldn't make these capabilities, even more powerful and expand the value of these relationships. Moreover, this aligns with our determination.
To develop sustain an incremental revenue streams with more attractive margins.
As a result of the successful implementation of this strategy Tesco will become a disruptive force in the wireless industry and drive long term value for our shareholders.
With that Eric and I will be very happy to take your questions.
[noise] as a reminder to ask a question you will need to press star one on your telephone to withdraw your question. Please press the pound or hash key please stand by only compiled the culinary roster.
Your first question comes from line of Maggie Nolan from William Blair. Your line is now open.
Hey, Sundeep payer to Ted on for Maggie.
Citing the exciting this year the started shipping the Fiveg in New York and in New England I'm just curious.
What your anticipation is for that.
Over the quarter here and maybe for the remainder of fiscal 2021, do you anticipate that to accelerate.
Then I guess you mentioned it was 10% to 15% of revenue now.
Where do you think that can get to end of fiscal 2021.
Hey, good morning, Ted good to hear from your Maggie is on the line good morning to her as well.
But as we said on the call.
We think this is just the beginning.
Second you know we've talked previously about the intensity of Fiveg not really picking up.
Towards later this calendar year.
We had said earlier to the second part of this calendar year based on the pandemic that may have shifted out by a quarter, but in general we still believe that it'll be later this calendar year, where we will see intensity around around fiveg.
From a from a overall market perspective.
I mean, I'm sure you're seeing the carriers line up in terms of their own organization. There M&A work. One has been completed there's been announcements around vendors that dish has made so a lot of this will be either backend loaded in the calendar together or into next year, but we are investing.
Hopefully I'm pretty excited to see some of our work being off and we are beginning to see revenue now.
That's that's great. So on the on the carrier business with some of the project delays and it sounds like maybe some slight delay push outs for then we won't know side G.
Areas of spending are you anticipating to drive that continued growth within the carrier segment.
So first I want to refer you back to the market share growth, we focused on achieved and demonstrated.
The fourth quarter of our last fiscal year.
Looking forward.
The bigger carriers and their announced Capex and Fiveg rollout plans, that's an area of growth for us.
We're also encouraged by working with some of the radio Oems directly we actually have a proof point that that's the source of one off our revenue streams around fiveg, we're not at Liberty to mention names, but we are hoping Oems complete their radio kits with minor materials and.
Larry equipment, so that they can ship a complete kit to their carrier customers.
We will focus down on this segment and put in place more Biz Dev efforts. So in terms of the overall market economy, then other carrier plans itself, which will give us a boost second our existing play in the TNT and Verizon ecosystem that we have talked about under.
This call and prior we are going to focus on expanding that and then partnering with other Oems in terms of helping them complete AFFO kick that they can sell to there that customers. The market share. We have today, we believe will give us a let's going forward I mean, the timing to be there.
And by the actual Fiveg rollouts relative to your first question that so we are focusing on both market share growth going forward as well as volume growth from existing market share.
Okay. Thanks, that's helpful.
Maybe switching gears here to the margin signs you gave great color on the on some of the levers we have available within the retail segment.
Curious within public carrier gross margins that are about 9.5%. This quarter can you maybe talk about some of the levers that you have available within the carrier segment I'm related to gross margin there and maybe just in terms of SGN, a levers going forward for that business as well.
For.
The tense Eric.
On the carrier side.
The largely that's a function of customer mix.
So some of the good news or something of a new customers coming in and growing their their market share with us RF slightly lower than the historical margins.
I think we're getting close to the fact, so to that bottoming out of that and we should start to see that leveling off fairly soon.
And this quarter was a little bit lower than previous quarters because of some.
Newer deals that.
We're at some lower margins.
We are incremental to what we've done in the past. So we think that this quarter, while it was definitely a little bit lower we hope, we'll see a little bit of growth there.
There's not.
Not much we can do to improve margins there that carrier business. These larger customers is what it is there's there's limited.
Central for us to give entered into this space. So we're working on that our new Ventoux leader is putting resources in place to try to get some steps back into some of these carrier deals most of the larger ones and then the mid smaller tier.
So that can help us down the road.
So that's a focus for us as well.
And then on the M&A side right now 60% decline this quarter NSG M&A. So we're we're certainly managing that.
Very well we think.
We don't want to overreact and reduce our ability to grow this business down. The road later this year as Cindy panel a lot of things in his presentation around opportunities and about the bar in the carrier space and we don't want to add to lose those opportunities. So we want to make sure that are teams as well.
After the end.
Ready to take on all of these new opportunities.
Eric if I mean and debt if I may add some color to a couple of things Eric said just want to amplify a couple of points. So first on the carrier margins I go a lot of what we are distributing today a lot of what we're providing is based standardized.
Therefore has.
Lower margins than the other parts of our business and I want to point to our longer term strategy right off two things the inventive industrialization and growth. If you link that said you know to the millimeter wave deployments that carriers have announced the small cells that that have also been.
As announced these will all required and closures. So we have an opportunity to do similar things that we do in arvada, an integrator space around enclosures power.
Federico aesthetics, and environmentally payload antennas et cetera. So we will definitely and we are hunkering down in that that's part of our rent of industrialization strategy and second when you have more cells that are more pain points and more complexity that our customers will face and.
Overall construction so from a mix perspective that is the third Brahma fast strategy to insert some software and services capabilities. So that we create a mix of Ventev software.
The products that we distribute today, so essentially help us improve our margins and I run rate.
That's great. That's really helpful. If I can just slip in one more question here.
So it is great to hear a lot of the color around Tesco Dot com.
Serious how much it a business today I guess for revenue would you tie to Tesco Dr., Tom and just kind of origination there and what does the general margin profile of that looked like it to somebody other sales channels. Thanks.
Yeah, and we don't disclose so not able to breakout for you.
Exactly the volume.
We do through desk go dot com, a preponderance off it is reported as part of far far an integrator.
Segment, because that's where much of the intensity lies.
It's self service it provides that spoke with an opportunity to customize.
Bombs, two industries, where we are linking that with our refocus in terms of the end user segments. So we can be very customized based specific to industry verticals and dealer landing pages and get more stickiness that way. So those are the things we are doing along with.
List of things I've talked about but we don't break out the revenue through to your whose I believe the thrust for if your question so not able to answer that directly.
No worries I appreciate the color sandeep. Thank you.
Your next question comes from the line of Bill Dezellem Tecogen capital. Your line is now open.
Thank you I'd actually like to follow up on why if you're at last answers you made reference to.
Then kit and having an opportunity to to create enclosure spread of five details.
But then you said beyond that.
There might be an opportunity are you see an opportunity to bring software and service into your offering would you. Please talk about that further and what it is that you would be doing any assets if that would be something brand new for the industry or if you would be repeated someone else who is already.
Supplying knows the software bearing in service offerings that you're referencing.
Good morning, both thank you for the question Oh go back to an example, I used during the presentation, we talked about our voices software offerings.
We've had this offer in place for a few years now, but we are more aggressively linking it to our overall distribution system.
And let me give you an illustration of how one off our customized uses this I mean, this particular customer has a hierarchy of construction companies on construction crew that book order equipment.
Product.
Other other things on on their behalf. So two things from an approval perspective, there's a hierarchy of controlled.
That people can use using our software so that people are more disciplined that the compliance financial compliance et cetera are followed that's one benefit second benefit in standardizing bill of materials across a broad geography, and when you have a broad geography there is.
You know a wide variety and companies and prove that can do the construction. So standardized nation is a benefit and then part you know from an inventory overall spend management perspective, you know when you think off an overall program around pipe construction.
Many complexities around getting a permit getting the right crew in place getting the right sites clearance and the inventory so that our normal delays in challenges in site construction, what we allowed through our software is a lot of the customer to redirect.
The equipment to where it's most likely to be used and soonest. So they don't have inventory sitting around and having inventory sitting around as you know having their capital and cash being held hostage to a particular program. So if you can think of that taxonomy that I. Just described I mean that is what we do with always says.
We are linking it much more to our offers going forward and we will I mean like followed software suites, we plan to continue to build value and both features and capabilities on a roadmap going forward.
I hope that help them give you color.
And thank you very much so we should not think of software as as one offering service as a separate offering it's it's ultimately that the software.
That is allowing.
Enhance service capability for your customers is that correct just assessment.
Enhancing and enabling other too so I would use so the ambition.
Going back and reiterating our strategy long term strategy going forward and Bill we've talked a lot on this call and in in prior earnings calls about a three pronged strategy.
These three things we don't see a standalone plays we see as these being combined plays enhancing our overall value proposition all built around our value added core core distribution model. So we continue to distribute products to the entities. We so we.
I want to continue to enhance that with things like design services that I mentioned on the call today the event of industrialization outside help our customers be more environmentally friendly dr. Morris headaches, and this will be needed more and more based on the types of say.
Else being small cells, you know being more in building a trying to get closer to the users. So that will be needed. So it helps us without core distribution business as well I didn't done when you think of all of this on the overall intensity displaces on construction.
These types of networks, you will need these types of software capabilities. These types of program management inventory management asset management capabilities to be linked with overall distribution and construction. So we see that retailers working in tandem, giving US you know uniqueness more.
Speaking this with our customers.
Thank you.
Last quarter, you spoke about some important wins in the carrier market.
Where are those wins part of what helped to drive the revenues this quarter or.
Or are those still to come in future quarters.
We see we saw revenue build from the market share expansion.
That we embarked on and demonstrated in our last fiscal quarter.
And where those market share expansion wins.
Entirely.
What's the word on looking for it and not utilized but entirely realized this quarter or is there still more growth to come from them.
Yep.
So the short answer would be yes, but let me let me elaborate.
So bill as as we discussed you know this quarter and you would have picked up from on narrative I mean this growth expansion was in essentially the ATM D and Verizon ecosystems.
Some other construction companies.
That operate in those ecosystems also who work for other ecosystems right. So we expect you know volume growth to come as they expand their business beyond that we are also focused as Eric mentioned, you know, we are investing and very surgical ways.
As we expand our market share beyond where we make today.
Great. Thanks, Nick.
Are you starting now to see in their borrowing integrator segment that delays lessening here in July and maybe even June for that matter or.
Those delays continue playing at the patient they were previously.
We are seeing.
Improvements in spots and when I say spots Bill you know, we think of the world both as geography.
For instance, New York State and most of ours in New York States were unable to conduct.
Any business you know for much of the first part of the quarter. We see that you know being lifted so from a geography perspective I gave you. The example of New York State you know there similar narrative across the whole country. So thats 0.1 0.2.
In terms of access to places like venues right. So you will on Florida talk about in prior quarters.
About preventive projects, we've done at the theme parks, whose team parks workflows.
For the only part of the fact that make these are slowly opening up but geography by geography, So it's a slower recovery like everything else.
Outside our industry that we are hearing off we're actually seeing things open up very difficult to predict. However, you know how this worked on out an overall you know how how the country will open up not not anything that's particular to our industry on our business you know I'm just repeating general commentary.
I hope that gives you the colors you when looking at.
That does and I would like to ask one more question before I turn it over.
In the Oh, sorry integrator.
Segment the of the press release there in the commentary there was a reference to the transportation market.
And the education channels and the opportunities.
That you see there.
Would you please expand on on what it is that you see in those two industries.
It's around build for the transportation industry.
It's around process improvement being able to utilize you know the particular industry in particular players in the industry their own assets, you could think effect as Io d. applications for their own operating benefits that improvements, it's probably as much as I can say.
At this point in time.
These are railroads and trucking companies from shipping companies correct. Thank you Eric.
If you, but I'm, assuming you're about that though what Eric just say hey, thanks.
Right and from an education, you know perspective, we see a lot of educational institutions.
Creating wireless infrastructure or frankly, deploying wireless infrastructure as people continue to cut the car if you will.
Great. Thank you both.
Thanks Bill.
Thank you Bill.
Again, if you would like to ask your question. Please press star one on your telephone. Your next question comes in line of Steve calls from men growth. Your line is now open.
Good morning, guys on thank you for taking my question.
That's helpful. It's fine as long as us turned back to above our integration channel Satcom I know you've had true leadership decide you saw from this is all your leadership there was that a sound I'm curious if somebody has only been here.
Two months.
But wondering if you can measure expand on what some of his early I'm sites are.
And what are you, saying them.
Well as adopt selling them with what you're taking up today I'm. Just curious the is pretty much targeting sort of on markets like educational transportation, maybe just alluded to.
What does he bring incrementally.
I will start perspective, so it might be helpful.
Hey, good morning, Senior I mean first delighted to have any you know I'm pad onboard.
Bring new in energy new insights.
Or help us and.
Very excited about what they will contribute to Tesco going forward.
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In terms of the Varden integrators segment.
A lot of what we have talked about you know, it's becoming real I mean, the pandemic has an unfortunate in terms of being able to demonstrate you know bottom line results of fat, but what Eddie brings to US is you know very deep understanding given his background. How this industry operates the.
Particular chemistry between bars and end users and frankly to take what's the team had already done.
To help them industrialize, you know much much more so the set of things we have talked about I'll re amplify and this is what Eddie is deep into.
And amplifying today, so overall of talent and leadership I mean these are some changes you know we had I had begun to make since I came in and as we've had some videos on that.
He is doing great work, along with the rest of the bar an integrator leadership in terms of organization, but disciplined.
We have greatly simplified our sales support structure.
Custom complex overtime, I mean that his work behind us.
Doing things in terms of inventor in inventory things like skews set up times. This as a result, just the simplification. We have done you know with our sales support structure more to come with our IP transformation project.
That Eric and I talked about earlier, we are redeploying capital I mean, I'll repeat what Eddie said I mean this year, we did we that sums ratings with retailers income some tightening up our operations, our full service and our inventory management will produce quarter over quarter, the retail inventory by 7 million.
I mean enough.
Border with a topline wasn't that create that we didn't have that much excess and obsolete inventory management.
[laughter] I'll be too.
We redeployed Steve you know to essentially our bar segment right. So far segment is very responsive you know we need to be very responsive to what our customers are looking for to reduce the guys. We try not [laughter], maybe how much of that.
With that and then finally, the focus on that users and bringing overall improvement from a Tesco dot com from design. So.
Right.
Vincent and improving our overall along.
Hope that gives you some color space [laughter] does when one one quick follow ups about Sam there, but I'm just curious.
Long term over 21 point, it's true up beyond the margin profile, but youre sort of a total cost sorry, I'm some important.
Taking a far integrated channel and put more specialized areas.
Not really.
Crux of what you're trying to do it here because it doesn't seem like the character many carriers orbit solar got better I presume phenomena Hal.
Just a somewhat into the numbers, where the growth you saw some from don't wait.
Thanks for getting close to save US final good margins up.
More value added as you're alluding to in specialized targeting of almost cable a hobby is up more or less from we're doing our mission.
Okay.
We wanted to get volume growth right and modern integrator.
Let me check will Tom So Thats 0.1, I mean, the margins that we enjoyed today, which a lot and integration segments are.
Our our attractive much more attractive than what we see in carrier with the chemistry and mix you know how far off our overall offer going forward. I believe you are correct, we will see margin improvement so margin improvement than overall volume of.
Using a more favorable product mix right and more more volume from an overall industry distribution perspective on what we've done with utilities, what we have what we are talking about drilling with transportation and education.
The many industry verticals that means the kind of solutions that we provide so global sales expansion.
Improved product mix will give us the volume and margin, we will need and that that is our long gun value proposition.
Hi, Thank you guys very much appreciate the so Paulo.
Thanks.
There are no further questions at this time I want to turn the call back over to management.
Thank you very much you know operator, and thank you everybody for joining the call I'd like to make five points you know in closing.
First needless to say you know this has been a tough quarter you know not just for us, but the industry as a whole and also the overall country.
Second you know, even though the pandemic has greatly impacted our results, we're very encouraged and I'm repeating a few things like we said in the queue in a session. We're very encouraged by the orders and shipments. We are really we are seeing related to early fiveg deployments and our overall probably.
Yes in Nevada, and integrator segment.
Third I want to thank the retail team I'm very pleased with how our team is managing the overall decline of the retail offer we have significantly reduce the negative impact of retail to our bottom line when compared to the previous two quarters very happy about that number for I believe we have the right focus.
In terms of our near term Kipp you guys. Then you have done performance indicators that I talked about earlier in the fall and the longer term growth objective that Eric and I spoke about.
On the call and we're making progress we've made progress on both fronts under these difficult circumstances.
And then number five last but not the least I want to thank all a few for attending this ball I want to thank our customers and our suppliers for the aircraft spend partnership and finally I want to it that thank the Tesco team you know for your spirit your determination.
Please be healthy everybody, please stay safe and well talk to you in next quarter. Thank you.
[noise], ladies and gentlemen, this completes today's conference call. Thank you participating you may now disconnect.
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Oh.
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