Q3 2021 TESSCO Technologies Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Q3 'twenty 'twenty, One ESCO Technologies, Inc earnings Conference call.
And this time all participants are in listen only mode.
After the Speakers' presentation and Gary.
It will be a question and answer session.
Ask a question during the session you will need to press star one on your California.
If you require for assistance Please press star zero.
It is now my pleasure to turn to cultivate your speaker today, Mr. David for lithium.
Please go ahead.
Good morning, everyone and thank you for joining <unk> Q3, 2021 conference call. Joining me today are Sandeep Leukergy, Tesco as President and Chief Executive Officer, and Eric Potomac. The company's CFO. Please note that managements discussions today will contain forward looking statements about anticipated results and future.
Prospects forward looking statements involve a number of risks and uncertainties and test those results may differ materially from those discussed today information concerning factors that may cause such a difference can be found and test goes 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, <unk>, <unk>, President and CEO Sandeep.
Thank you David and good morning, everyone.
Thank you all for joining us and I Hope you and your families are continuing to stay safe during this ongoing pandemic.
Our task force team continues to show great dedication and tireless effort and navigating this public health crisis to provide customers with communications solutions to meet critical needs.
We are still seeing significant pandemic related project delays and the ongoing vaccine rollout provides us with some optimism.
As you know at the beginning of our fiscal year, we embarked on a three pillar strategy for dry.
<unk> growth and improve profitability.
And this strategy includes for us simplifying and growing our value added distribution business.
Second industrializing, our vantiv operations, while scaling our capabilities as an industry innovation and.
And third investing in value added and managed services offerings and the results complexity and pain points for our customers.
And the third quarter, we continued to make substantive progress on all aspects of the strategy, while significantly improving our euro for your bottom line performance.
During the quarter, we completed the sale and subsequent exit from our retail business and important step in our turnaround.
We continue to capture share in our carrier ecosystem business we.
We grew sucking var, and integrator market verticals sequentially, such as utilities mining and oil and gas and created new relationships with community wireless and industrial Iot partners. However, the overall market remained sluggish due to the pandemic.
We advanced product innovation, and our rental business and have announced additional patents.
And finally, we made progress on our value added and managed services offering as we entered the customer beta testing.
As a result of the retail sales and the completed consent solicitation. This quarter includes two unique significant amounts that essentially offset each other.
The seamless retail resulted in a 3 million dollar gain which is included in income from discontinued operations.
And this exit allows exco to focus solely on the higher margin faster growing wireless infrastructure construction on the street and doing so we are deploying all our assets to capitalize on the widely recognized unprecedented rollout of new technologies, including five G private.
T E C B R S and Iot.
As a result of the consent solicitation, which wrapped up in December we incurred $3 billion worth of expense, which is included in continuing operations.
For consent solicitation was a long and difficult process and unfortunately, approximately one <unk>.
However, the resulting board is now unified and optimism about the future and we are executing on the strategy to capitalize on task force exciting growth opportunities.
Before I speak further regarding our progress and our strategy during the third quarter I will walk you through our Q3 performance and each of our reported market let.
Let me start with our var and integrator business.
Our vibrant integrator business includes all wireless infrastructure business outside the caviar ecosystem.
This market continues to be significantly impacted by the pandemic and our business was uneven and some vertical experienced a return to growth while others have yet to be bought.
Many of our key var customers have temporarily reduced their workforces in light of the challenges caused by delayed projects limited access to key venues and government approval delays.
It is difficult to predict exactly when these issues will be resolved, but our team is aggressively working with customers to continue providing them with exceptional service.
On the positive side, we're also seeing some very encouraging drivers that we believe will lead the post pandemic rebuttal.
A few.
The utility segment continues to rebound driven by both the distribution automation and grid modernization initiatives as well as adoption of distributed energy resources and the drive for clean energy and the United States, We leverage our vertically focused sales force to drive a sequential growth of 48.
Per cent per <unk>.
Utility wins this quarter include a variety of products and solutions, such as providing both vantiv and other key brands for modems power and antenna solutions and closures and mounting hardware.
Several mobile fleet solutions, where we are outfitting fleet with mobile data mounting products.
And base station infrastructure products, such as custom photos and base station antennas for land mobile radio installation.
The cares act funding and other digital initiatives and driving projects with community wireless coverage for K through 12 education community and bringing broadband to underserved geographies.
Venture portfolio OEM partnerships, and our recently announced partnership with Federated wireless is helping peso gain relevance and being solutions.
And upcoming quarters, we expect to see strong customer spend and public safety and das installations.
Public safety that is a federal mandate reinforced by increased regulations and a growing number of states.
This combination of growth and increasing complexity presents the ideal opportunity for Pepsico, who bring a truly differentiated value to building owners and construction companies and value added resellers.
We're working with the top vast farms to provide the solutions that will meet and strict guidelines.
We anticipate demand for remote monitoring projects, many of which will include Vantiv and closures.
Demand for both distribution automation and remote monitoring solutions will continue to be strong and Tesco will play a key role.
Turning to the public carrier market.
The public carrier ecosystem has not been as impacted as the var and integrator market.
And I'm pleased to say that Tesco has consistently capturing share in this part of our business.
Our sales grew 14% year over year, and 4% year to date this quarter. Despite some pandemic delays.
And while this market will continue to be subject to significant quarterly fluctuations or market share gains and long term growth opportunity and the market are exciting.
Our strength and the carrier and ecosystem is due to a recognized and logistics and supply chain management expertise our.
Our proprietary engineering and production capability, which address needs that are unmet by our competitors and the outstanding relationships. We have developed with companies engaged in the construction of the nature and wireless infrastructure.
Our share growth with AT&T turf vendors. This quarter included a new two year contract with one of the largest turf vendors and.
New prominent position with a top tier AT&T turf vendor.
And increased share with another top tier vendor.
We also successfully maintained our share with others stopped us vendor.
This quarter, we saw increased opportunity directly with Oems by providing five G installation kits and expect continued demand for these kits over the next few years.
We continue to make good progress with our tower customers. During this quarter, we provided lighting solutions for the tops of towers prototype Vantiv and closures for on site monitoring and prototype Vantiv and closures integrated with OEM equipment for sites available.
We're also gaining market share among rural carriers working closely with our top manufacturer partners.
We have long discussed the opportunity that we see from the adoption of new technologies and we are excited to see five day spending continuing to increase in fact, we estimate that approximately 20% of our third quarter carrier revenues relate to five G project.
With our improving market share and ongoing investments by carriers and five G. We expect that number to increase.
Regarding our retail business as I mentioned earlier and as announced last month in December we closed the sale of most of the companies retail inventory and the Vantiv brand as it relates for mobile device accessory products.
After that we executed very well on the managed decline of our retail business, which we have discussed in prior quarters.
You should note that we will continue to own and operate the vantiv brand outside of retail.
Eric will give you more color on the retail results neighbor and the call.
We have previously stated that we are undergoing and I T transformation, consisting of enhancing and modernizing our core systems and.
And enhancing our digital platform.
Our work on enhancing and modernizing our core systems is progressing well and we expect to launch many elements shortly after the M from fiscal year.
The updated system will ultimately allow us to streamline our procedures and produce efficiencies and many parts of our back end operations. We also expect benefits and improve customer service.
We have made several improvements to our digital platforms. For example, we created three new landing pages and related to the vertical industry initiatives I referenced earlier.
As part of our content expansion effort, we have published new market and solution specific guidance, we piloted several marketing campaigns to a select group of small and inactive customers and this effort resulted in significant sales gains with those customers.
We continue to conduct customer interviews to gain greater insight into what our customers require and how they want our website to best service their needs.
This input has been invaluable as we refine and enhance our website.
Regarding our three pillar strategy, we continue to progress on each area.
The first pillar relates to our core distribution business as I have discussed we are seeing strong market share gains and the carrier business and we believe we also expect the progress to impact our results once the var market rebounds.
The second pillar of our strategy is to industrialize, our vantiv operation scaling our capabilities and driving innovation.
Recent progress includes our Vantiv roadmap now contains modular flexible and agile product design.
Inventive product has been utilized and a large number of Wi Fi deployment, many related to community wireless projects driven by the cares Act funding.
We launched the undersea Reg enclosure and have sold this and numerous sports facilities, including professional football and soccer stadiums.
We introduced and outdoor broadband antenna supporting LTE for G. Five G and CBR at spectrum.
We provided antennas and Mount for the U S headquarters of one of the world's largest logistics company.
Our warehouse antenna is one of the finest finalist nominated for the product of the year my wife higher ones.
And we're gaining traction with our Cisco design and program with the greatest impact coming from community wireless and industrial Iot project.
This progress was obscured by some project delays that resulted in lower year over and your rental revenue this quarter, which impacted the gross margin in the var market. However, our pipeline is very strong and we expect a rebound inventive and revenues in the fourth quarter.
Our third pillar is that the development of value added and managed service offering the results complexity and pinpoint for our customers.
We're building out an array of services that will ultimately generate high margin and recurring revenue.
And so expanding our focus on broader utilization of our industry, leading design services and this has resulted in a number of high profile wins, such as highly reliable and resilient network design.
<unk> two way communication between Countywide fire agencies and their dispatch central.
Innovators power solution for a das system, and a large football stadium and.
And August designed for large enterprises.
With that I will turn the call over to Eric for the financial review.
Yeah.
Thank you Sandeep and good morning, everyone.
And as you have seen our reporting this quarter it looks very different than in previous quarters.
The retail business exit requires that we report any activity from retail and this and any comparable period shown as discontinued operations. The expenses charged to discontinued operations represent only direct expenses and no allocations of any support for corporate expenses.
I will begin by discussing the retail activity.
Retail revenues were $27 million this quarter compared with $38 7 million last quarter.
Since we closed on the retail channel and December 2nd and this was about two thirds of a normal quarter.
Gross profit was $4 9 million and SG&A charge to discontinued operations was $3 2 million. Additionally, the sales from retail generated a gain of $3 million.
Therefore pretax income from discontinued operations was $4 7 million and the net income was $4 8 million.
Going forward, we will have some revenue from retail as we sell through the remaining retail related inventory that was not part of the sales, but we do not expect that to be material.
We will account for any additional retail transaction ins and outs as discontinued operations as well.
For the most part that will represent a customer returns and payments due from voice com on inventory and inventor.
Sell through.
Turning to the continuing operations of the business.
Revenue from continuing operations total of $99 $2 million this quarter compared with $100 8 million and the third quarter of fiscal 2020.
Strong growth from the public carrier market was offset by continued pandemic related challenges and Navarre and integrator market.
Gross profit for the quarter was $17 3 million compared with $19 6 million and the prior year quarter.
Gross margin was 17, 4% for the third quarter of fiscal 2021.
Paired with 19, 5% and the third quarter of last year.
The decrease was due to product and customer mix.
Lower margin carrier revenue represented a larger portion of overall revenues.
Gross margins and the bar market were down due to lower rent to sales.
<unk> sales were down due to project timing and delays, but we expect to see a rebound in the fourth quarter.
SG&A expenses were $23 6 million compared to $22 million from a year ago.
As we mentioned and the release this quarter did include $3 million of incremental consent solicitation cost.
Excluding those costs SG&A was down 6%.
And the third quarter of fiscal 'twenty and 'twenty one the loss before income taxes was $6 4 million compared with a loss before income taxes of $2 3 million a year ago.
The vast majority of this increase losses related to the consent costs.
The remainder can be attributed to the lower gross profit I discussed earlier.
Net and the retail and discontinued operations with the continuing operations. The net loss per share was <unk> 11, this quarter compared with 59.
Last year.
We continue to maintain a healthy balance sheet.
Inventory is down significantly due to the sale of retail.
Accounts receivable was up slightly as we saw a $12 million of retail accounts receivable to collect.
We expect the majority of that to happen during the fourth quarter.
Excluding the line of credit current liabilities are also up slightly.
We had about $5 million from retail related liabilities at the end of the quarter that will mostly be paid in Q4.
We ended the quarter with a balance on our line of credit of $26 million down from $32 million last quarter.
We also expect to receive a $4 million cash refund this quarter related to our fiscal year 2020 and tax return.
And closing this was a critical quarter for us with respect to our strategic roadmap exiting and monetize and retail was a key step and we are now fully focused on the commercial business.
Our goal now is to improve our sales run rate and overall profitability.
I will now turn this over to Sandeep for further commentary.
Thank you Eric.
Visibility regarding the pace of a macroeconomic recovery continues to be a challenge.
However, we expect a continued gradual easing of project delays and anticipate additional growth coming from five gene and calendar year 2021.
We continue to make progress with respect to each pillar of our three pillar strategy and the team is doing a good job and managing our near term performance under market conditions that no one would have imagined a year ago.
At the same time, we're setting first co op to capitalize on the technological advances and the exponential growth, but will drive our industry and the years ahead.
Looking ahead to fiscal year 'twenty 'twenty, two we expect growth with respect to all three pillars of our strategy distribution Ventas and services.
I am confident that we have the right strategy in place to seize this opportunity and look forward to reporting and our continued progress to you.
With that we will open the call for questions. Operator. Please go ahead.
Okay.
As a reminder to ask a question and please press star one on your telephone keypad again that star one to ask a question.
Please stand by them and while we compile the Q&A roster.
Your first question comes from Maggie Nolan from William Blair.
Children.
Thank you and thanks for the update.
And so.
You say youre, capturing share and the carrier ecosystem and business and what do you think it takes to continue that momentum and and capture additional share.
Hey, Maggie and good morning, Thanks for joining and thanks for the question, we're pleased with our efforts so far.
And we've largely focused for obvious reasons over the last few quarters and you know.
Gary I was back and so I don't spend going and we'll build.
Build out underway I'm sure you're all aware of other consolidation and that has happened in the carrier market.
And opportunity for us and some new entrants, but also not to just speak.
And this discussion to the top carriers, there's a large number of rural and regional carriers, So and dumps up opportunity. It is it is exciting Maggie we have created what I believe and what we've been told is a very competitive offer including our supply chain logistics.
And our program management are the completeness of our bill of materials.
And our distribution system. So I'm confident we will we will continue down this path.
Thanks, and then baran invar and integrator and interest.
There have been some projects that had been on hold for a while and do you have a sense for what the level of backlog of projects is.
We don't provide specific numbers Maggie for backlog as you know, but I'll give you a qualitative color and it's not that it's.
And it's not that specific projects had been on hold for many many months, it's just that the pace of funding.
And the availability to sites those are challenged so progress is slow but there is progress. So that's 0.1 0.2 as I outlined on the call and in some sectors and we're actually seeing some positive rebound right utility given by some of the dynamics in that industry.
And.
And grid modernization and drive for clean energy and bringing alternate sources of power to the grid that is unblocking a lot of projects. So we are seeing progress there.
And progress and mining.
Oil and gas is beginning to rebound so there are positive signs right.
From a broader perspective, this is still sluggish compared to where the market used to be a year ago and.
And we're optimistic that this base it may be slow, but it will definitely seeing positive signs.
Okay. Thank you and then now that you've exited the retail business.
And as a kind of longer term vision for and the percentage of the business that comes from carrier versus foreign and temporary here.
We expect growth and book Maggie I mean to be candid with you the exit from retail simplifies our company.
And not just from a focus.
Attention perspective, but it's uncomplicated a lot of our IP investment it simplifies how we apply capital how we improve our processes. So that we will have a thrust for us going forward from a bar and integrator perspective, as well as the let me talk about each.
Market segment on its own.
Just being able to cut the cord.
Drive wireless into business processes drive wireless adoption and business practices, we see that across the board and every industry vertical that we participate and so I'm confident we will see growth there and it's not just started distribution business, but it's also our vantiv.
Dietary products mounds and closures for our supplies that makes some of this deployment much much simpler and then to be able to manage all of this construction and manage all of these devices sports construction is where we see opportunity for our software and software driven services business. So that's.
That's the growth qualitatively Maggie from Avago, and and the Street's perspective from a five day perspective from Academy and perspective.
<unk> is just beginning right I should say, we are still seeing spend and for G. But beginning to see very optimistically request demand for for two five G conversion kits and <unk> standalone kits and as you and others on the call know.
And five G deployment evolution will be a decade long project and as for Gwas and three G. Before it so I'm very positive for barcode these markets.
Very good and so does that positivity and that growth narrative is that the kind of preliminary expectations for fiscal 'twenty and 'twenty two.
Yeah.
We expect growth as I said earlier and Maggie from all three of our strategic.
Strategic initiatives distribution Vantiv, we're excited about where we are from a services perspective, we.
Expect to see that contribute to the business and fiscal year 'twenty, two and from a market segment perspective, I, just shared where how I feel about the varner and industries and the carrier market.
Yeah, and you expect fiscal 'twenty, two with a little bit of help from the vaccine rollout and easing of specials and the macro economy.
It could be very different and what this year has been.
Alright, well, thank you for taking my questions.
Thanks Maggie.
Your next question comes from Bill gasoline from Titan Capital. Your line is open.
Thank you.
I'll start my questions with Vantiv.
You discussed and the press release your wins with Cisco could you. Please go into more detail about those and just how significant that market could be.
Hey, good morning, Bill Thanks for joining and thanks for the question.
And I will take you back to and announcement, we made two quarters ago with the Cisco design and program. This is a program that is run by Cisco and they've selected vendors to be one of the partners Inc.
And as part of their overall solution to address needs in the Iot World.
Most bar and integrator.
And <unk>.
Places that we play this.
And this was built and announcement, we did two quarters ago, you will remember last quarter.
And then I was very pleased at how quickly.
These initial announcements were translated into purchase orders.
And this quarter, we're actually reporting revenue.
So from a pace and progress with this partnership.
I think you see the quarter over quarter progress and why we are optimistic. So that's 0.1 0.2 from where we are seeing demand today and it's essentially two segments one segment being the community wireless applications, we're not announcing or giving color to specific.
Project, but think of underserved geographies from a digitization from Internet access perspective, where we're seeing a lot of demand and the second is from an industrial Iot, so driving automation and warehouses and large enterprises.
Where they need routing wireless and aesthetic and closure and environmentally friendly and closure.
Perspective, that's where we are seeing a lot of demand and we think this is just the beginning.
Bill and I hope that answers for you.
Your question.
Right. It does to to what degree do you want to scale. How large you you believe that market could be for you.
Yeah, we are not giving guidance bill from a revenue and timing of revenue perspective.
But I expect this adoption to continue not just and not just be contained within the verticals, where we are achieving success and but but beyond that.
Great. Thank you, let me switch if I may to the.
And.
For the utility market.
How big and into that market, because what you're describing net with your opening remarks, it sounds like that could be.
It could be quite large.
Yes.
We believe we believe stroke. So we're certainly excited about it.
The underlying dynamics here are.
And grid modernization.
Being for the large independent.
Independent and regulated utility carriers to be able to adopt alternate sources of energy and.
And part of the grid modernization and therefore, it includes overlay and wireless networks to be able to quickly detect folks to be able to reroute how energy flows through the grid and.
And to be able and could provide just from time to response to their customers. So the grid as you might imagine and the United States is fairly large.
A lot of this is infrastructure that is going through upgrades and so the opportunity in front of US we're excited about.
Is this one that you are you believe will be lumpy.
Or is it something that has a almost a continuous flow of business and we should we should be thinking about just day continuing.
Solid growth each and each quarter going forward.
And so two remarks bill for us from a business opportunity perspective, we see this could be a continuum right and if the grid is just getting started.
About the Iot.
Iot overlay to manage the grid there our mobile fleet.
And dispatch solutions that are also part of this industry. So from a business perspective, this will be a continuum.
The second point I would make is I mean life all construction project I mean, these projects tend to cross water boundaries. So if that is what you mean by lumpy, yes, no revenue and project completion would be completed not based on our fiscal quarter boundaries by whereby the demands and needs.
For the customers.
And I need to underscore the first point that I see continuity and this business.
Great. Thank you and and then also and the press release you referenced your design service strategy.
Would you talk more to that what you are doing are in in that bucket.
And.
I guess the remedial question is is how do we make money.
And with our with that strategy.
So there are two discrete items, we referenced in the press release and during the call earlier.
So the first effort from our side is too.
We innovate and create software based services that our customers can either consume or reselling to their customers and we're going through beta testing.
And what that means is we are getting customer feedback having real utilization.
Unreal infrastructure by our customers to finalize our data models, our business flows dashboards et cetera. We expect this part of the project to complete by the end of this fiscal year, and then be able to roll out these services and fiscal year 'twenty. Two so that is one aspect the second aspect.
And is attached design services attach meaning attached to the products. We distribute so if you are trying to light up.
Warehouse you typically require RF design services and these are capabilities that Tesco had previously that we have.
Shed the light on and we're getting much more aggressive about getting those to market and attaching those to our to.
And do our products and I'm, just giving you. An example of and RF design services service, but we also have you know our design services our tower design services. So these are confer.
Configurations, helping customers create a bomb helping customers create and RF design, we're doing all of the above and from a revenue perspective, they contribute positively to and are attached to the products we sell.
And then you are paid separately for that for.
And that service or is is that something that just.
Gives customers a reason to come to Tesco to buy the Dubai and products.
Both are definitely differentiate our distribution capability distribution of products and how we add value to certain products, which were also paid for these services. This decision is made on a deal by deal basis.
Customer by customer basis are our objective is to monetize this portfolio.
Great. Thank you I know I've asked a few questions I have a few more would you like me to continue or step back in queue.
Oh, I don't have visibility into the queue builds I mean your questions are always interesting and.
And I hope shed light into our business sales.
And we'll ask the operator to.
I'll pass here.
And currently we have two question on for Keith.
I'll step back into the queue then.
Thank you bill thank.
Thank you.
Your next question comes from deemed call from capital Management Corporation and children.
Congratulations on the successful board reorganization and the retail divestiture.
Thank you Tim Thanks for joining the call and the previous three calendar years Theres, a normal sequential revenue decline and both public carrier and var and integrator.
Having a sequential growth and revenue and both of these divisions. This year reflects the unusual strength do you think this is from the earliest stages of five G cycle or market share gains.
Or just the expanding and new markets and.
And adding new products.
Well first I'm gonna.
Take your question and then take the opportunity to that and think that that's a low teen.
And the focus for staying with it and helping turn this business around.
Never underestimate the power of for team, which I believe and and.
I'm proud of the team we have so that's 0.12nd and is market opportunity right, the increasing and emphasis and the increasing attractiveness for larger businesses enterprises industries for.
For adoption of wireless Iot technologies, a number of things have have come together availability of spectrum of technologies from Wi Fi six now can fly Wi Fi six E that are being adopted and on the carrier side I mean, the advent of for new.
New technology like five G brings and new business models and new construction.
And in this case as we've discussed earlier on these calls and.
And this would be a different type of construction with small cells and far more intense than than what we have seen with for tea and <unk>.
<unk> prior so I think it's.
And that's a mix of all three it's our focus for <unk>.
Listen to you for our strategy I believe we have a differentiated offer.
And market opportunity from all the things you alluded to and I highlighted.
Well, it's terrific to see sequential growth before we even get the.
Pandemic recovery and.
And and vaccine recovering in full swing.
With the divestiture of retail.
Sure.
SG&A should.
Should moderate it should go down.
Absolutely.
Our growth and the other areas.
How much should we expect SG&A to go down because of retail being divested.
I think we've broken this out and the discontinued operations of Tim I'm going to ask Eric to help me shed more color into your question Eric.
Yes, the SG&A that you see and the financial statements. We presented yesterday is without the direct expenses related to retail.
So there is about $3 million of SG&A for retail that's and the discontinued operation for them.
So that's already been been pulled out and the number that being said ongoing and as the business gets simpler and more streamlined.
And we gain more efficiencies, we do expect to continue to.
To chip away at that SG&A number and for <unk>.
Other areas that we can streamline the company and reduce our expenses going forward.
Sure.
Current run rate standpoint.
Well congrats.
Congratulations again.
And many other companies that can go through our board reorganization and a major divestiture and show.
So the sequential growth when they when they usually don't and the December quarter that was just amazing and.
And hopefully that portends.
Alright, and even stronger future as we.
We exited this pandemic. Thank you.
Thank you for attending and for your question.
Your next question comes from Steve Kohl from mangrove and children.
Yes, good morning, guys and thanks for taking my question.
And I had a couple of I'm curious if you could speak a little bit.
If you look over the last year.
From the really the additions.
Couple of key people that you've added on the.
The business different parts of your business and I'm curious how that's translated into.
You're building out kind of the sales engine and these businesses and how it's different today than what it might have looked like a year or two ago and.
What that might also look like for the future.
Okay.
Yeah.
And Steve good morning or is it.
Good evening, good evening evening here.
Good evening, Hey, Phil you know thanks.
Thanks for staying up to it and our call and I appreciate your support.
So I believe the two people you are referring to are two of our Vice Presidents' day, we brought on and around April Mi of calendar, 'twenty, and 'twenty, Eddie Franklin, who needs and our sales team and Tad low.
Who heads up Ventas and has taken on and some additional responsibilities. Let me let me take you through.
You asked about sales.
And those are strategies and sales.
<unk> sales.
And as progress so let me address that first and I'll broaden.
The the the remarks to include Vantiv and our overall solutions as well so first from a sales perspective.
You will remember the company had gone down a path of regionalization and focus on resellers and vars.
And not as much focus on direct end user and the private system operators and self maintained users et cetera.
About a year ago, we talk on these calls about reversing that strategy, bringing focus to the end users directly so we have and early lens on.
On project, we have a chance to drive specifications, we have a chance to build you know early inventory and have more complete bombs, whether we sell directly to the end user.
Through our partners with bars.
So we have embarked on that particular strategy with Eddie coming onboard we have doubled down and it's unfortunate that you know all of these things from a timing perspective lined up very nicely with a once in a century pandemic. So their results I believe are ahead of us but from a progress.
Perspective, I mean that is the critical thing we have changed.
Second thing is we brought on a lot more focus to business development.
Just in terms of the makeup in terms of and we've allocated resources.
And governance, you know within the company.
Winning new logos breaking into spaces that Tesco has not been in the past and those are important for us and we've given it you know all the wright attention and bandwidth and resources.
Broadening you know and and.
And by the way for them.
Steve This is not just for var and integrator for the carrier segment as well for.
From a rental perspective, our strategy is.
We outlined a few quarters ago is to focus on product taxation.
And so that when we go out and sell you know and and closure of our system.
We're building on top of existing capability as opposed to driving things by project for a pad low has been instrumental in driving that strategy. You know as we discussed on the call. We now have a road map pretty age out and roadmap of industry, leading products and get very good feedback from our.
Customers in terms of the makeup of that you know of that portfolio.
And increasingly under pads leadership, we are driving to what we call and full solutions. Our end to end solutions, which means it's it's vantiv and value add from an enclosure power supply and then our cable perspective together with products from third parties that we.
Distribute.
And that bring differentiation and stickiness from a customer relationship perspective, and overtime, we want to augment that stickiness with other value add from a services software and design capability. So these two gentlemen, together with the rest of the leadership team and its always a team effort.
You know we are fundamentally reshaping how we go to market and what can we go to market with Steve I hope that and it helped.
No that's excellent for Gary.
Comprehensive and throw it back here.
Let me just add one more.
You've spoken to some of the areas that you're seeing growth.
And I called out oil and gas and mining and.
And now Youre, looking and Iot and some other things and I'm just curious.
Of the teams have looked at these different industry verticals are there some things that you're seeing.
And let's say, even a narrow body and intermediate to longer term, the tuscan might be pushing into where there was greater growth potential or how are you looking up.
The and market stratification goodbye.
Yes.
Hello.
For the short answer I will give you you know and this call Steve.
Steve is we're going to be.
You know into every vertical industry.
And on this call the way, we discussed as water and integrator.
And one large segment and carrier as our second market.
Within the var, and integrator and market them and every vertical as I think youre pointing out you know oil and gas mining utilities.
Federal government government.
Each has its own unique requirements and characteristics. So I alluded to during the call vertical focus from a sales perspective and from an engineering perspective, that's what we're bringing to the table and we'll continue to sharpen and deepen.
Focus to capture the uniqueness.
And domain knowledge on a per industry basis.
I mean, that's the essence of our strategy of going back to the end user.
A directly to be focused on the ultimate consumers of these solutions and technologies.
It helps us understand better and build more complete solutions.
Correct. Thank you very very much appreciate it for sure. Thanks. Thank you for the question and thank you for standing up Steve.
And not at all.
We have time for one last question that will be from gasoline and jet.
And shortly.
Thank you I'd like to like to circle back to Tesco Dot com in previous calls you've provided an update there.
Did you do the same this quarter and and in terms of.
What you are doing to enhance Tesco dot com and the results for that is leading to.
Yeah last quarter and Bill we.
You know we actually shed.
And some extra bits about our quarterly revenue.
And Tesco Dot com. It was a one time thing we wanted to give some illustration for the progress we don't intend to do that every quarter, but I absolutely will take your question and address some of the things we've done to cash flow Dot com.
So just as a reference and we talked during the earlier part of the call about investments and progress, we're making with our digital platforms. So we've made significant progress with our overall catalog.
And the underlying infrastructure that we use to distort the catalog will be further improved once we have our I T transformation project completed.
And we talked earlier and the call about modifications and business processes, we've wrapped around our card and just the overall you know and user experience and then in terms of being able to follow up.
And more intimately with customers to understand their.
They are buying behavior their concerns and to better attach Tesco dot com to our customers' business processes is where we are headed so I'm capturing at a high level and then in terms of details for the team has made substantive progress and we're excited about you know what this recovery turnaround.
Also means for for Tesco right, it's like another like and you frankly and says it's like another member of the sales team that continues to sell and we're giving it that appropriate and due attention.
Thank you.
Last quarter carrier.
And I was a bit slow this quarter and carrier was up 32% sequentially.
Would you please discuss that AR and AR that growth this quarter and and.
How it may or may not relate to what you experienced last quarter.
So few remarks, bill so I'm very proud and I think that should have come through and the earlier commentary of what we've been able to do in terms of market share growth. We continue to push that battle, if you will and so that's one remark.
Second thing I think I said this in response to a question from either the call or Maggie Nolan and earlier I mean these construction projects are always lumpy right I mean, our customers get you know a particular construction project exercise we participate in one part of it and then they get.
Did you know.
And the project is complete and that is.
Based on our larger schedule that the carriers themselves and maintain that really.
Arent tied to our financial quarters. So this will always be lumpy, but as we grow our share you know we will try to minimize the lumpiness just based on the number of projects, we will participate and so quarter over quarter and it's not the best harbinger, but and this particular quarter you are seeing.
Improved results.
And as Eric said, you know improved margins and not like var, and integrator, but there's going to be better than historical and Thompson of what we are achieving and and the carrier segment.
And that sequential growth is that specifically tied to the traditional lumpiness or is it also a function of some of the market share gains that you did.
And that you've referenced throughout this call.
It is both of them.
Great. Thank you and and then you'd mentioned that fight G is roughly 20% of revenues this quarter.
Just looking at the Roadmaps and whats your speculation as to when <unk> will be greater than or at 50% as of the day carrier segment revenues.
Okay.
Difficult to predict a bill I mean, I can tell you what you know I haven't seen today and what the company is seeing and and I.
Just I'm being told that this should be the last question. So let me address this.
And a complete way for today within the carrier segment.
Are definitively seeing a continuation of for <unk> related revenues. So that construction has not gone down dramatically.
The thing we are seeing and this is business with Oems correctly.
With the carrier and construction ecosystem of projects related to for G. Two five G. Upgrades I mean, these are sites, where carriers are sharing sites between four and five G and upgrading.
My and radios distribution systems et cetera, and then third there is the five G. Only site I mean these are smaller sites made up of small cells, which I think over time, we'll have you know.
A larger density.
Larger construction intensity.
And this will continue as I've said for the next decade right I've been through as you know bill for.
<unk> cycles and these are decade long projects, so difficult to predict when one technology becomes more dominant than the others, but based on what we see today.
We're excited and we're excited about her.
How much of our revenue comes from newer technologies, which has the largest growth CAGR and a few months.
Great. Thank you for the time.
Thank you.
Operator, and if I'm, assuming there are no questions and I'm also looking at the clock, so I'm going to head.
And towards concluding this call first I want to thank all of you, especially those of you and a chance to ask questions I wanted to thank the Tesco team for them for the focus and the progress we're making overall as a company and I look forward to speaking with all of you soon next quarter. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating.
You may now disconnect.
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And.