TESSCO Technologies, Inc. (TESS)’s Q3 2015 Earnings Conference Call Transcript

Our value propositional strategies are sound and we’re well-positioned to capitalize in the future carrier bills and the overall opportunity despite being created by the convergence wireless Internet. Now let me explain more of what’s happening and what are we doing to regain profitable growth. I will discuss three areas that continue to climb for purposes from our cellular carrier customers, the growth of our private system operator and retail customers and our strategic growth initiatives and organizational changes. Erick will then discuss the gross profit and operational margin decline reducing fixed expenses, Tessco’s financial strength and her outlook.

The first area is critical what is happening to our carrier organization customers— sales to our carrier power owner contractor customers experienced 44% sequential decline this quarter and sales to our commercial reseller customers doing work for the carriers experienced 16% sequentially decline, the slowdown in carrier spending on 4G LTE and that infrastructure builds with even more significant than we anticipated with believe that the carrier spending had come close to bottoming out after the end of our fiscal second quarter but it did not.

We believe that carriers have been prioritizing their capital budgets that they spent $45 billion for frequency in the fourth quarter FCC auctions.  They will return to aggressively building new infrastructure in order to utilize and monetize their licenses delivering coverage and bandwidth to their customers.  Competitively all the carriers have a very strong incentive to accelerate their deployment while not projecting any significant acceleration of our carriers sales in our 4^th quarter we do believe that they’re spending specifically around upgrading self sites, will pick up as we begin our new fiscal year in April.  That is more uncertain and that we don’t currently expect to see a rebound in carrier dash spending until after midyear. To regain our growth in carrier space and to enhance our position to capitalize on rebound we automated our leadership team and add an experienced business development executives and realigned the organization to build deeper relationships and more effective products and supply chain solution.