Q2 2021 TESSCO Technologies Inc Earnings Call
The.
Q1, Twentytwenty 110.
TESSCO technologies Inc. earnings conference call.
At this time all participants are in a listen only mode. After the speakers presentation. There will be a question and answer session to ask a question during the session that 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 closed.
And from Sharon Merrill. Please go ahead Sir.
Good morning, everyone and thank you for joining Tesscos Q1, 2021 conference call. Joining me today are Sandy brokerages, Tescos, President and Chief Executive Officer, and Erics Potomac the company's CFO.
Please note that managements discussion today will contain forward looking statements about anticipated results and future prospects.
Forward looking statements involve a number of risks and uncertainties and Tesscos results may differ materially from those discussed today information concerning factors that may cause such a difference can be found in tesscos public disclosures, including the Companys. Most recent form 10-K, and other periodic reports filed with the Securities and Exchange Commission.
With that introduction I'd like to turn the call over to Sandeep, Muthangi, Tescos, President and CEO Sandy.
Thank you David.
Good morning, and thank you all for joining us I.
I Hope you and your families are facing sales during the ongoing pandemic.
Our number one priority continues to be the health and safety of our employees, our customers and our suppliers.
The result of complexity and pain points for our customers.
And public carrier markets.
As I do so I will highlight the unique value, we are providing to our customers in each area.
That value is the foundation of our overarching strategy and the reason, we will be able to capitalize on the exciting growth trends in the wireless industry.
Let's start with the retail business.
Our retail segment has historically been a sizeable and profitable business might.
By the end of 2019, however, the global retail market began contracting rapidly and we face the same challenges confronting the global retail ecosystem.
In Q4 of fiscal 2019, one of our largest retail customers was acquired and as a result that school is no longer that distributor.
This created a ripple effect in which the escos retail inventory levels increased including excess and obsolete inventory.
When I arrived at that school in Q3 of fiscal 2020, I immediately embarked on a thorough review of our assets and investments.
As a result of that study, we implemented several guardrails and fiscal discipline measures in our retail business.
Then in Q4 fiscal year 20, the global pandemic hit us and retail came to a virtual standstill.
In response, we've taken or otherwise accelerated the following measures site.
I think 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 contracts.
Reducing outbound freight expenses and lowering overall SGN expenses.
In our vendor of mobile device accessories business, we want to nationwide launch in one of the nation's largest membership warehouses and launched nationwide with another one this past quarter.
Also after a successful trial Bentem has been launched nationwide in home depot stores.
On the international front after widespread shutdowns 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 our var and integrator business.
We have previously discussed our plan for an improvement with our sales strategy, our reorganization and the progress we are making overall in the segment.
Well COVID-19 has had a large impact on this business I'm very pleased with the progress and the discipline, but that that's going to be inside demonstrating let.
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 this pandemic.
First Tesco Dot com.
One of the biggest drivers of success for our bar and integrator business, our improvements we've been making to our Tesco Dot com website.
This was 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 building materials and other digital supply chain services, enabling a more complete solution for our var and integrator class.
So much.
We recently conducted a review of our improvements and Roadmaps with our largest ESCO dotcom customer who is also one of the largest fires in the country.
Fabian feedback from that review includes our website and significantly improved our website is easier to navigate and more outflow.
We also received positive feedback on road map items related to car design multi use our comp sales of maintenance and omni channel 14 capability.
Unrelated to the review I'm very pleased to see that the revenues you had 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 interest for this part of our business and that is among the leading indicators are both purchase and revenue.
Second let me talk about our design services.
Our drive 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 data for power for power and for brought back.
Our deliverables include Rs and other designs 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 segment.
This is the result of a diverse set of municipal state and federal regulation for radio coverage related to public safety, we're seeing an uptick in both the demand and revenue for these services and B's 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 of the increased focus we have Brock to for example, the utility segment.
But having a large diversified energy company decommission their why Max network under a very tight schedule and to avoid penalties, resulting from new FCC regulations.
That's cool help this company develop possible migration alternatives then.
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 enclosure solution.
In the past this large utility would do such design work in house.
Now as with many utilities, they're reducing expenses by outsourcing network.
That's always in a position to provide the design services that enables them to do more with less.
Now they sent me give us the specs after review and they are powering and we can design a power solution for that including an intelligent 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 with what on a tight deadline.
That's cool fully designed the solution used our supply chain to procure the equipment. It did the equipment and delivered as a single grade, allowing their technicians, who 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 that you that during this quarter, our var and integrator customers did not have access to venues seemed.
He embarks and many other construction sites.
Project for government integrators, the hospitality industry and hospitals were delayed or reviews.
Oil and gas industry has also been a car.
In addition, our largest national solution provider customers saw a significant reduction in installations.
All of this affected our customers business and therefore ours as well.
However, the examples I shared with you earlier illustrate the diverse nature of problems. Our teams are now solving and how your knitting together, our reignited portfolio design services feeding back to market and demonstrating our ability to tackle complex logistics using our supply chains.
Mrs.
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 vars contractors and private systems operators in numerous industries 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.
Well, we did see some miles COVID-19 related impact our carrier segment was up 17% year over year, primarily due to the market share gains in the ATM de <unk> and Verizon ecosystems.
Our ATM de turf business grew more than 12% in Q1, despite indeed capex spending for 2020 projected to be down from 29 team.
The impact of the pandemic on our carrier business was related primarily to restricted access in certain venues 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 moving forward with our software services offering.
One example of our software service offering is our proprietary noises platform.
Which enables us to integrate with our contractor or carrier ERP systems and allows our customers to better manage their inventory approval profit 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 dollar company that would effectively double our business with them.
This award, enabling us to grow 105% year over year this quarter with this customer.
They have indicated that their partnership with Vasco has been a key component in their ability to deliver best in class communication infrastructure.
Exco 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 have 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 is related to Fiveg.
I would note that in June we started shipping Fiveg kits for news site construction in the New York and New England geography.
You will remember that these geographies were highly impacted by the pandemic earlier in the quarter were excited about this development because the multiplier for Fiveg are very large.
I would like to now give you a brief update on the key performance initiatives. We have for fiscal 2021 that I mentioned earlier in the call.
The first is the managed decline of the retail business as we continue to service our customers and support our suppliers as I mentioned in details earlier, we have improved our bottom line results due to these efforts.
The second is completing our IP transformation project this fiscal year, but.
Well, yes, that's cool has been burdened with a 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.
Fiscal 2021, we will complete the deployment of an industry standard proven core technology platform. This will enable us to streamline transactions deliver improved user experience and simplified data flows taken together this new functionality will unlock competitive advantage.
It does and enable us to capitalize on that industry growth trends.
The third is our website Tesco dot com this.
This website supports thousands of customers every month you.
We plan to continue to invest in this asset and make it a best in class B to B website.
Numerous improvements were made to the site during the past quarter I talked about a few of them are there other.
It does include.
A redesigned to make the budgeting process far more intuitive and efficient.
The addition of a 24 by seven jackpot function.
So lets say customer self service.
And enhancements that enable buyers to view more detailed information regarding back order releases and freight carriers.
And lastly, we are improving our profitability runway.
We do so we are one redirecting investments to want more profitable and growing commercial business.
Second we are driving more revenue from our E Commerce site, which is fundamentally more profitable for us so far.
We are reinvigorating our efforts in our proprietary higher margin that the 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 Sandeep and good morning, everyone.
Our overall results reflect the significant impact of the pandemic on the retail and bar markets, but 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 of 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 and gross margin both improved from the sequential fourth quarter. Despite the decline in sales. This was mostly a result of them to return to historical levels of charges related to inventory and returns.
The year over year decline in gross profit and gross margin are a result of a couple items.
First to retail sales were down 27%, primarily result of retail store closures and lower foot traffic due to cope at 19.
And second to the public carrier market represents a larger percentage of overall sales this quarter.
As we continue to grow market share in this sector.
When it does come at lower than historical margins.
<unk> expenses were down 16% from a year ago to 23.7 million, reflecting the success of our aggressive cost reduction initiatives, that's going to be mentioned earlier.
The cost reductions led to lower compensation costs, both in operations and on 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.
In the first quarter of fiscal 2020.
The loss before income taxes was 5 million compare.
Compared with the loss before income taxes of $3.5 million a year ago.
Our tax benefit was also 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 care sales.
We do expect the tax rate to increase for the rest of this fiscal year.
We continue to maintain a healthy balance sheet with 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.
Our teacher curious 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 cobot reserve slightly during the quarter.
We generated cash flow from operations for the second straight quarter.
We will also be falling our fiscal year 2020 tax return shortly which we expect to generate a $4 million to $5 million 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 improvements 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.
And now I'll turn it back to Sandeep to provide additional context on our strategy to capitalize on that opportunity [noise] sandeep.
Thanks, Eric.
Let me share the bases this my optimism for the future of Casco.
There is simply no denying that we are witnessing a once in a generation opportunity in the wireless industry.
So what it 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.
Now it is 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.
This time, however is different as we are seeing not only in the next generation that's being five G. But an unprecedented concurrent rollout of other new technologies like private l. to eat DBRS and Aiotv.
Each of these technologies and solutions are predicted to drive significant growth over the coming years.
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 Tun provides an effective route to market for our suppliers.
As Ive discussed in previous earnings calls, we have begun to implement our three pronged strategy mental help us capitalize on these growth opportunities.
Our value added distribution business. It's core to this end, we are 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 ventev operations focused on scaling our capabilities as an engineering led roadmaps driven industry innovator, particularly around the headaches and environmentally payload enclosures and with quality.
And Todd.
We seek to resolve complexity and pain points for our customers by providing advanced software and services.
Our domain expertise into 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 solution, not a bar and private system customers and our investments in software and services will make these capabilities, even more powerful and expand the value of these relationships. Moreover, this aligns with our determination.
To develop sustain and incremental revenue streams with more attractive margins.
As a result of the successful implementation of this strategy that school 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 standby will be compiled the culinary roster.
Your first question comes from the line of Maggie Nolan from William Blair. Your line is now open.
[noise] sundeep paired with Ted on for Maggie, citing the exciting to hear the started shipping the Fiveg in New York and in New England I'm just curious.
What is your anticipation is for that over in a quarter here and maybe for the remainder of fiscal 2021 do you anticipate that to accelerate and then I guess you mentioned it was 10% to 15% of revenue now where do you think that can get to the end of fiscal 2021.
Hey, good morning, Ted good to hear from you my views on the line good morning to her as well.
So that 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 you know towards later this calendar year.
I'd said earlier to the second half of this calendar year based on the fact that makes 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'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 ven does that dish has made so a lot of this will be either backend loaded in the calendar year or into next year, but we are definitely.
The hopefully I'm pretty excited to do is to see some of our work paying off and we're beginning to see revenue now.
Okay, that's great.
So on the on the carrier business with some of the project delays and it sounds like maybe some slight delay or push outs for the 20 Onest side Gee what areas of spending are you anticipating to drive back continued growth within the the carrier segment.
But first I want to refer you back to the market share growth we focused on.
Achieved and demonstrated you know in the fourth.
Walker, our last fiscal year.
Looking forward.
You know with the bigger carriers and their announced Capex and Fiveg rollout plans, that's an area of growth for us.
Oh.
We're also encouraged by working with some of the radio Oems directly we actually have a booth blame them. That's the source of one off our revenue streams around Fiveg. We are not at Liberty to mention names, but we are helping Oems complete their radio kits with minor materials and ancillary.
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 business 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 ATM D. N horizon ecosystem that we have talked about on this call and prior we are going to focus.
On expanding that and then partnering with other Oems in terms of helping them complete a full game, but they can sell to their best customers. So market share. We have today, we believe will give us a lift going forward I mean, the timing to be determined by the actual fiveg rollouts relative to your.
First question Bad 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 on you gave great color on the on the some of the levers we have available within the retail segment I'm 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.
And within the carrier segment I'm really is the gross margin there and maybe just in terms of assets DNA levers going forward for that business as well.
[laughter], Ted it's Eric on the carrier side of the.
Largely that's a function of customer mix.
So some of the good news Oh, some of the new customers coming in and growing or their market share with us are up slightly lower than the historical margins.
I think we're getting close to the factory so to that bottoming out of that and we should start to see that leveling off a fairly soon.
And this quarter was a little bit lower than previous quarters because of some.
Newer deals that are.
We're we're at some lower margins.
Were incremental to what we've done in the past. So yeah. We think that this quarter was it was definitely a little bit lower you know, we hope, we'll see a little bit of growth there.
There's no.
Not much we can do to improve the margins there a carrier business with these larger customers.
Is is what it is there's there's limited potential for us to get better than to this space. So we're working on that our new inventive leader is putting resources in place to try to get some spec into somebody's carrier deals most of the larger ones and the mid and smaller tier I suppose.
I can help us down the road so that's a focus for us as well.
And then on the M&A side as you know right now you know we had a 60% decline this quarter industry M&A. So we're we're certainly managing that are 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 you know Sandeep I know a lot of things in his presentation around opportunities about the bar in the carrier space and we don't want to lose those opportunities. So we want to make sure that our team has is well staffed.
Today, I guess revenue would you tie to Tesco dot com and just kind of origination there and what's the the general Margaret profile of that look like compared to some of the other sales channels.
And we don't disclose so not able to break out for Ya.
Exactly the volume.
We do through desktop Dot com.
Pondoland Soffit is reported as part of our foreign integrator.
Segment, because that's where much of the intensity lies.
Its self service it provides <unk> 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 the.
List of things I talked about but we don't break out the revenue.
To your beliefs.
Believes the thrust of your question.
So not able to answer that directly.
No worries I appreciate the color Sandy thank you.
Your next question comes from the line of Bill does that <unk> capital. Your line is now open.
Thank you I'd actually like to follow up on what is your last answers now you made reference to then.
Then kids and having an opportunity to to create enclosure like details, but then you said beyond that.
There might be an opportunity or you see an opportunity to bring software and service into your offering would you. Please talk about that further than what it is that you would be doing and if that's if that would be something brand new for the industry or if you would be reported someone else who has already.
Supplying nose software and service offerings that you're referencing.
Good morning, both thank you for the question.
I'll go back to an example, I used during the presentation, we talked about our voices software offering.
We've had this offer in place for a few years now, but we are more aggressively linking it to our overall distribution system.
Let me give you an illustration of how one of our customers use. This this this particular customer has a hierarchy of construction companies in construction crew that both order equipment.
<unk>.
Other other things on.
On their behalf so two things from an approval perspective.
Hierarchy of controls.
That people can use using our software so that people are more disciplined that they're compliant financial compliance et cetera are followed that's one benefit.
Benefit in standardizing bullets materials across abroad, geography, and when you have a broad geography that is in a wide variety and companies and prove that can do the construction. So standardization is a benefit and then part from an inventory.
Overall spend management perspective.
When do you think of an overall program around tight construction as many complexities around getting apartment getting the right crew and plays getting the right side clearance and the inventory. So there are normal delays and challenges insight construction, what we allowed through our software is allow the customer.
Redirect.
The equipment to where it's most likely to be used and sooners. So they don't have inventory sitting around and having inventory sitting around us.
Their capital in 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 Oasis, we're linking it much more two hour offers going forward and we will I mean like all software suites, we plan to continue to build value.
And both features and capabilities on a roadmap going forward.
Of that help them give your color.
And thank you very much so we should not think of software as as one offering services a separate offering it's ultimately that the software.
Is allowing.
Enhanced service capability for your customers would that be a correct assessment.
Enhancing and enabling other too so I would use so the ambition just going back and reiterating our strategy long term strategy going forward and bill rooftop both on this call and and Pryor earnings call. It's about a three pronged strategy.
These three things we don't see a standalone place. We see is these being combined plays enhancing our overall value proposition all built around our value added.
Gore distribution model. So we continue to distribute products to the entities. We serve we want to continue to enhance that with things like design services that I mentioned on the call today. So vantiv industrialization helps us help our customers be more and.
Environmentally friendly price Morris headaches, and this will be needed more and more based on the types of sales being small sales being.
Being more in building.
To get closer to the user so that will be needed. So it helps us with our quarter distribution business as well and then ton. When you think of all of this in the overall intensity displaces on construction of these types of networks you will need these types of software capabilities. These types of program manager.
<unk> inventory management asset management capabilities to be linked with overall distribution in construction. So we see the three pillars working in tandem giving us.
Uniqueness more stickiness with our customers.
Thank you and then.
Last quarter of you spoke about an important wins in the carrier market.
<unk> those wins, Oregon, what helped you drive the revenues this quarter or.
Or those still to come in future quarters.
We see we saw revenue bill from the market share expansion.
That we embarked on and demonstrated and our last fiscal quarter.
And where those market share expansion wins.
Entirely.
What's the word I'm looking for and not utilized but entirely realized this quarter or is there still more growth to come from them.
Yeah.
So the short answer would be yes, but let me let me elaborate.
So bill as as we discussed.
This quarter and you would have picked up from our narrative I mean.
This growth expansion was essentially the AT&T and Verizon ecosystems.
Some of the construction companies.
That operate in those ecosystems also do work for other ecosystems right. So we expect volume growth to come as they expand their business beyond that we are also focus as Eric mentioned, you're investing in very surgical ways.
To expand our market share beyond where we played today.
Great. Thank you.
Are you starting now to see in Navarre, an integrator segment the delays lessening.
Here in July and maybe even June for that matter or.
Are those delays continually at the pace that they were previously.
We are seeing <unk>.
Improvements in spots and when I say spots Bill we think of the on both ends geography.
Instance, New York State and most of the Vars in New York State we're.
Unable to conduct any business.
For much of the first part of the quarter, we see that being lifted so from a geography perspective I gave you. The example of New York State.
Similar narrative across the whole country. So that's 1.2.
In terms of access to places like venues right. So you will have heard us talk about and prior quarters.
About preventive projects, we've done at the theme parks those theme parks. We're closed for the early part of the pandemic. These are slowly opening up but geography by geography, so slow recovery like everything else.
Outside our industry that we're veering off but we'll see seeing things open up very difficult to predict however.
How this will turn out an overall.
How how the country will open up.
Not anything particular.
Particular to our industry on our business.
I'm, just repeating general commentary, but hope that gives you. The colors you were looking for.
It does and I would like to ask one more question before I turn it over.
In the.
<unk> integrator.
Segment of the of the press release.
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 billed for the transportation industry.
Around process improvement being able to utilize the.
The particular industry in particular plans in the industry their own asset.
You could think of it as Iot applications.
For their own operating benefits an improvement.
V as much as I can say at this point in time.
Theater of railroads trucking companies should be companies correct. Thank you Eric.
I'm, assuming you want that though Eric just say.
And from an education.
Spector, we see a lot of educational institutions.
Upgrading wireless infrastructure are frankly, deploying wireless infrastructure as people and continue to cut the car if you will.
Great. Thank you both.
Thanks Bro.
Thank you both.
Again, if you would like to ask a question. Please press Darwin on your telephone. Your next question comes from the line of Steve call for mangrove. Your line is now open.
Good morning, guys and thank you for a kitchen.
Question.
A couple of phone on one of US turned back to Lavar integration channel for a second I know you've had to leadership. Besides you saw some benches.
New leadership bar with Eddie I'm.
I'm carrying some areas when they have been here.
Two months.
But I'm wondering if you could measure.
What some of those early Uncipher What'd you say.
<unk> dovetailing in with like the Signup today I'm just curious.
Pretty much targeting certain markets like educational transportation that you're just a little.
What is he bringing incrementally.
I'm an outside perspective, so it might be helpful.
Okay. Good morning.
I mean first delighted to have any.
Had on board.
Bring you in energy and you inside.
Help us and.
Very excited about what they will contribute to Tesco going forward.
In terms of the Viron integrator segment, there are a lot of what we have talked about.
Is becoming real I mean, the pandemic has been unfortunate in terms of being able to demonstrate.
Autumn line the results of that by what Eddie brings to us as.
Very deep understanding and fast houses industry operates.
Particular chemistry between bars and end users.
Frankly to take what the team had already done to.
To help them industrialized much much more so the side of things we have talked about I will re amplify and this is what Eddie as deep into.
And amplifying today, so overall of talent and leadership I mean these are some changes we had I had begun to make since I came in and it has continued on that.
He is doing great work, along with the rest of Nevada and integrator leadership.
In terms of organization.
Helen.
We have greatly simplified our sales support structure, which has gotten complex overtime I mean that is worth behind us.
Doing things in terms of inventory inventory things like skew setup times. This as a result of the simplification we have done 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.
This year, we did we've had some great things with the details in terms of tightening up our operations are focused in our inventory management will reduce quarter over quarter, the retail inventory by 7 million.
And a quarter with a top line wasn't that great and we didn't have that much access and obsolete inventory.
We took.
Redeployed.
To essentially our bar segment.
So far segment is very responsive we need to be very responsive to what our customers that are looking for to reduce the time.
Mmm.
Much.
Do that and then finally, the focus on the App users and bringing overall improvement from a Tesco dot com from design services.
We're asking other services and improving our overall.
Hope that gives you some color scheme.
No does 111 quick follow up to that.
Sure enough when we look long term over 21, 22 and beyond the margin profile that you're looking for a a total company and the importance of taking the car and integrated channel and for more specialized areas does that really.
Cost somewhat more time to do it here because that doesn't similar saccharic I'm gonna carriers are battologize, otherwise syndrome for nine and a half.
But just so if I'm looking at the numbers on where the growth is gonna come from our.
Since we're going to have to say about so far in a good Americans uptime on more value out of those earlier than killing specialized targeting a in those changes on the patio, that's more or less what we're doing or <unk>.
No ma'am.
We want to get volume growth right in modern integrator and I believe that will come. So that's fine once I mean, the margin 70 enjoyed today with the water and integrator segments are.
Are are attractive much more attractive than what we see in carrier with the chemistry and mix.
Of our of our overall off are going forward. I believe you are correct. We will see margin improvement so margin improvement in overall volume improvement using a more favorable product mix right and more more volume from an overall industry distributions perspective on what.
We've done with utilities, what we have.
Talking about doing with transportation and education, there are many many industry verticals.
Need 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 term value proposition.
Thank you guys very much I appreciate it.
Thanksgiving.
There are no further questions at this time I will turn the call back over to management.
Thank you very much.
Operator, and thank you everybody for joining the call I'd like to make five points.
Closing.
First needless to say this has been a tough quarter not just for us, but the industry as a whole and also the overall country.
Second even though the pandemic has greatly impacted our results. We are very encouraged and repeating a few things that we said in the Q&A session. We're very encouraged by the orders and shipments. We are we are seeing related too early five G deployments and our overall progress.
And Nevada and integrator segment.
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 reduced the negative impact of retail to our bottom line when compared to the previous two quarters very happy about that.
Number four I believe we have the right focus both in terms of our near term Kpis in Vietnam performance indicators that I talked about earlier in the fall and the longer term growth objective that Eric and I spoke about on.
On the call and we're making progress we've made progress on both fronts under these difficult circumstances.
And the number five last but not the least I want to thank all of you for attending this fall I want to thank our customers and our suppliers for the aircraft spend partnership and finally I want it that think that Tesco team.
For your spirit your determination.
Please be healthy everybody. Please stay safe and we'll talk to you next quarter. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.