TESSCO: 4Q EPS Beats, FY10 Guidance In-Line

| About: TESSCO Technologies (TESS)

Tessco Technologies (NASDAQ:TESS) reported its 4Q and full-year results for the 2009 fiscal year after the market close Thursday, which included record EPS of $1.26 ($6.3M net income) for FY09 compared to $0.88 ($4.8M net income) for 2008. Revenue for FY09 was $483M versus $521M for the year-ago period. Gross profit came in at 25.2% of revenue ($121.9M) versus 22.5% of revenue ($117M) in 2008.

TESS will hold a conference call on Friday 5/1 at 10am ET to discuss the results with a dial-in number of 888.713.4215 (ID #37195531). Click here for my previous article on the company ahead of the earnings release Thursday evening. TESS provided FY10 (ending in March) EPS guidance of $1.00-$1.40 with the wide range reflecting the possibility of improving market conditions as well as quicker results from the Company's productivity and growth initiates.
Other goals for 2010 include growing the average number of monthly buying customers by at least 5% from FY09 average (12,100 per month), increasing the average number of product categories which are purchased by each customer (current average is three purchased out of 27 categories), reducing revenue concentration, and generating cash by maintaining a free cash flow to net income ratio of greater than 1:1.
During 4Q09, TESS repurchased 29,631 shares of its common stock with up to 84,439 shares remaining under the existing buyback program. Other highlights from the results included
  1. 4Q09 and FY09 operating cash flow increases of 79% and 264%, respectively
  2. A 29% decrease in inventory since December
  3. No outstanding balance on the Company's revolving credit facility
  4. 4Q09 and FY09 gross margin increased 460 and 270 basis points, respectively
  5. FY09 EBITDA growth of 29% to $3.06 per share
The 4Q09 EPS of $0.16 was well ahead of the lone analyst estimate for EPS of $0.03 while revenue of $98.2M was below the estimate of $116M. FY10 guidance for EPS was in-line with the lone analyst estimate of $1.35 per share.
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