TESSCO Technologies Incorporated

TESSCO reported combined Carrier and Commercial revenue of $114.9 million, up 12% year over year. Gross profit was $23.7 million versus $19.6 million a year ago, and gross margin improved to 20.6% from 19.1%. Adjusted EBITDA was $1.8 million, up from $1.0 million last year, while adjusted EBITDA per share was $0.19 versus $0.11. Net income was $0.4 million compared with $1.2 million in the prior-year quarter, with the prior year helped by a one-time $1 million tax benefit. For fiscal 2023, management said it remains on pace for revenue of $450 million to $475 million, adjusted EBITDA of $4 million to $7 million, and a net loss of $5 million to $2.1 million.

Sandip Mukerjee framed the quarter as another execution win, emphasizing the company’s strategy of serving higher-growth 5G and wireless infrastructure customers with value-added services rather than competing on lowest price. He highlighted margin expansion from product mix, pricing, supplier diversification, and disciplined operations, and said he expects gross margin improvement to continue. He was also upbeat about demand diversity across Carrier, utilities, government, VAR, and Ventev, and described the ERP launch as smooth and a setup for better operating leverage and profitability next year.

Aric Spitulnik focused on the numbers behind the quarter: revenue of $114.9 million, gross profit of $23.7 million, gross margin of 20.6%, SG&A of $22.7 million, and adjusted EBITDA of $1.8 million. He noted inventory was essentially flat at $70.9 million, receivables fell by $5.3 million to $79.5 million, payables declined by almost $10 million, and borrowings increased $8.1 million to $61.6 million after the credit facility was expanded from $80 million to $105 million. He said the company expects inventory to come down in Q4, EBITDA and ERP-related cost benefits to show up next fiscal year, and borrowings to trend lower over the next 12 months, though quarter-to-quarter swings may remain significant.

Analysts pressed on whether Q4 revenue guidance implied unusual seasonality, and management said the strong $84 million backlog and active project pipeline make them optimistic about Q4, while acknowledging the guidance range is wide. Questions also focused on product mix and whether the margin gains are repeatable; Sandip said the company is deliberately steering toward higher-gross-margin products and using supplier diversification to sustain the improvement. On VAR and utility growth, management said the gains come from better customer solutions, stocking positions, logistics support, and a replicable turnkey enclosure offering for automated metering deployments, especially for electric and gas utilities.