TESSCO Technologies Inc (TESS) 2012 Q4 法說會逐字稿

A very good day to you ladies and gentlemen, and welcome to the Q4 2012 TESSCO Technologies conference call. My name is Nancy and I will be your operator for today. At this time all participants are in listen only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions). As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Harriet Fried from LHA. Thank you.

Good morning everyone, and thank you for joining TESSCO's conference call. With us today from management are Robert Barnhill, Chairman, President and Chief Executive Officer; and David Young, Senior Vice President and Chief Financial Officer.

Management's discussions this morning will contain forward-looking statements about anticipated results and future prospects. Forward-looking statements involve a number of risks and uncertainties and TESSCO's results may differ materially from those discussed today.

Information concerning factors that may cause such a difference can be found in TESSCO's public disclosures, including the Company's most recent Form 10-K and other periodic reports filed with the Securities and Exchange Commission. With that introduction, I would like to turn the call over to Mr. Barnhill. Please go ahead, Bob.

Thank you, Harriet. And good morning to all of you joining us today. As I'm sure you have seen, TESSCO had an excellent year. Not only did we deliver our fourth consecutive record year, but we strengthened our position as Your Total Source for everything to build, use, maintain and/or resell wireless. And we expanded our presence in new markets with new solutions, products, all with new levels of productivity and profitability.

Our results were terrific. Earnings per share grew 60% to $2.03, revenues grew 21% to $733 million. We ended with a record $18 million cash balance. Operating margins grew 42% from 2.6% to 3.7%. And we created the 20% dividend increase now to $0.18 per share. It was a great year.

But this morning I want to talk and discuss our opportunities, our strategic initiatives and why we believe that we can generate $1.80 to $2.15 in earnings per share in fiscal year 2012 and continue growth in fiscal year 2014, even after we transition totally out of the $250 (sic -- see press release) plus in revenues from the 3PL business that will transition by the third quarter.

So let me first explain this transition, what it is and what it means. Over the past seven plus years we have developed an excellent relationship with the major Tier 1 wireless carrier. The relationship evolved considerably over the years, as their business requirements shifted from what we call a merchant model, where we develop, find, sell and supply wireless accessories, to a primarily low-margin 3PL function.

While we performed this function extraordinarily well, working closely with their customer to support their business evolution and share their success, it was recognized that it was not our core competency and could be performed at a lower cost by a company whose business was solely 3PL or third-party logistics.

During and after the transition we look forward to continuing our strong relationship with this customer, supporting their other programs and supplying our proprietary developed and manufactured Ventev products.

As we transition, we will shift the considerable focus that this large volume of business required to our core business, so that our undivided attention, talent and resources will be focused squarely on the exciting opportunities that are developing everyday from the convergence of wireless and the Internet.

These opportunities leverage our Company's exceptional ability to architect and deliver with innovation, productivity and speed the product and value chain solutions that our customers require.

We are very excited about the new clarity of mission and the strong foundation for growth that we have built. Earnings per share guidance for fiscal year 2013 and the increased cash dividend demonstrates our confidence in our higher-margin core business and its -- that its earnings growth can offset the transition of this large 3PL business.

So now let me review the opportunities that are present and how we are capitalizing on the trends and opportunities in the mobile broadband. There are two fundamental areas that are transforming the way we live, work and play, and are driving our opportunities.

First, the continued explosion of smart mobility devices. And the words smart mobility devices is a big word going from the smartphones to the tablets to the other devices that are allowing people to do their business, to work and to play remotely.

And then this explosion of the devices continues to accelerate the enhancement required for the carrier networks to support the devices' insatiable demand for bandwidth. And the explosion of the devices continues to expand the demand for device accessories.

The second area is the new private wireless systems that we are seeing. Historically is the system for primarily driven by the public network operators, but today we are seeing the private systems continuing to grow. And we are there for both of these trends. We are leveraging them, delivering the immediate reliability of everything they need at the lowest quote total cost.

We are winning a larger share of our existing customers' purchases, while we enter new markets, develop new products and solutions, including our own proprietary products.

So as Your Total Source for making wireless broadband work we continue to expand into more organizations that bill, use, maintain or resell. And if you look at these customers, we are in transportation, government, logistics, energy, health care, enterprise, carriers, commercial value-added resellers, wireless retailers, consumers. They're all our customers today.

So if you look at the primary systems we support, they are obviously mobile devices and in-vehicle enhancement, LTE networks, distributed antenna systems, base antenna structures, indoor and outdoor architecture, Wi-Fi, WLAN, remote monitoring and control, smart grid, positive train control, oil and gas monitoring, critical communications, broadband connectivity. Obviously, a big, big mouthful, but it is -- we have the world of wireless covered.

In addition to offering our customers the choice of the product brands from manufacturers throughout the world to build these systems that we support, we are expanding our own innovative design to manufacture Ventev mobile device accessories, powering our propagation systems, antennas and Wi-Fi enclosures.

Today Ventev products are being specified and purchased by leading enterprises, railroads, utilities, oil and gas companies, security and wireless carriers.

Then if you look to serve our customers and attract new customers and drive category share, cross-sell and productivity, our -- what we call our iMarketing, our Internet marketing, and e-business -- electronic business system -- is really second to none in our industry.

Just a week ago we introduced a new TESSCO.com, redeveloped it with our customers in mind. And the site has improved navigation, expanded search capabilities, feature-rich and a faster way -- or content feature-rich and a faster way to build an order, confirm price and availability, purchase and track delivery.

It gives a customer the knowledge they need to make informed decisions, enable them to do business more easily with TESSCO. We like to say internally that we are becoming a high-touch, end-to-end solutions-based Amazon.com.

We are obviously very excited about the opportunity world we are living in, our value proposition and the way we do business. So let me have Dave Young, our CFO, give you the details of the quarter.

Great, thank you, Bob. Good morning. As you can tell by the release and the numbers Barney just mentioned, we had an amazing year in just about every aspect of our business. And I will give you a brief recap of the fourth quarter and the fiscal year.

For the quarter revenues totaled $195 million, that is a 49% increase from last year. Not including the Tier 1 customers, our revenues grew by 8%. Gross profit reached $38 million, a 25% increase. Not including the Tier 1 customers, again, gross profit increased by 15%. So, again, not including the Tier 1 customers, are gross margin was up by about 350 basis points this quarter to 26.7%.

While we continue to see gross margin gains in the core business over the last year, some of the gains this quarter reflected better-than-expected results in our excess and obsolete inventory for the year, which allowed us to reduce some of those reserves.

Our SG&A for the quarter increased by about $4 million, 16%, totaled $32 million, mostly related to higher pay on performance bonus accruals, higher marketing costs for our Tier 1 customers and higher technology and other corporate support expense.

Accordingly, our operating income in the fourth quarter was $6 million; that is up 119%. Our operating margin was 3% compared to last year's 2%. And net income was $3.5 million, $0.43 a share. EBITDA was $7 million, $0.85 a share.

But for the year our consolidated revenues were $733 million; that is a 21% growth. And gross profit was $149 million; that is 12% growth. If we exclude the Tier 1 customers, revenues grew by 6% over last year and gross profit was up by 11%. Our gross margin here increased to 25.7% compared to 24.5% last year.

Our operating margin -- as Bob said again, our operating margin for FY 2012 was 3.7%, up from 2.6% last year. This is really great news. And a lot of work went into this on a lot of different fronts. Our non-Tier 1 gross margin was up nicely, as I just described. It is the result of optimizing prices -- pricing, better buying, lower inventory write-offs. The margin growth in the non-Tier 1 business did a nice job of at least partially offsetting the significant decline in the gross margin from the Tier 1 business.

And then our SG&A was up only by 4% this year, and that is, again, on a 21% revenue growth. This SG&A growth is -- really it is completely attributable to the higher marketing expenses for the Tier 1 business -- those are completely variable with revenue -- and higher pay on performance bonus accruals. And besides those two areas, almost every one of our expense lines showed nice declines this year.

So a lot of areas contributed to this, a lot of productivity initiatives that we achieved, and we consequently saw those benefits on the operating line.

Our net income totaled $16.4 million, $2.03 a share. That is up 64% on the income line and 60% on EPS line. EBITDA reached $32 million, $3.93 per share. That is up 56% and 52%, respectively.

So I will talk a little bit now about the segments for the quarter. The commercial segment for the quarter revenues were $83 million, that is up 13% compared to last year. And our gross profit was up 17%.

Our revenues in the private system operator and government market were up 23%. Gross profits were up 22%. This continues to be a very strong growth area for us. A lot of vertical markets here that we are selling to -- manufacturers, utilities, government, transportation, education, health care, energy, the litany that Bob read just a minute ago.

These entities are all using wireless networks to gain efficiencies across their business. There is a lot of growth opportunity here, and we think the way that we have segmentized our market sales force that we are really well-positioned -- better positioned than anybody to capture the opportunities here.

And in the commercial dealer and reseller market our revenues and gross profits increased 13% and 20% respectively here. There is obviously some overlap with the enterprise and the private system market that I just talked about. Our commercial resellers are helping end-users do a lot of the same types of projects that we just talked about, so we feel really good about the growth opportunity here.

In our public carrier contractor and program manager market revenues declined 3%, but gross profits increased 1% compared to last year's quarter. The build plans of the carriers, they have obviously been delayed now for some time. But we think there is a chance to see some movement in this market in the coming year. We are more deeply penetrating the Tier 1 carriers and their program managers. And we have also got a big focus on indoor distributed antenna systems. And we expect to see some really nice results there are in the coming year.

So our commercial segment expenses, the directly allocatable expenses for the fourth quarter, were approximately $11 million. That is down about 5% compared to last year, mostly related to lower marketing and people cost. Continued strong productivity gains in this segment. And consequently our net profit contribution in this segment totaled $12 million for the quarter. That is about up about 46%. And for the year the commercial segment net profit contribution grew by 39% -- just really strong results here.

In the retail segment our revenues for the quarter were $112 million -- that is up 97% from the prior year -- and gross profit was $15 million, an increase of 40%. In our retailer, dealer agent and Tier 2, Tier 3 carrier market our revenues were down by about 4%, as we saw slower post-holiday sales this year after what was probably a little better-than-expected holiday season.

Our gross profit increased by 11% in this market, though, despite the revenue decline. That is largely due to a reduction in the excess and obsolete inventory that -- accruals that I mentioned earlier.

Our revenue growth in the Tier 1 carrier market was 209%. Gross profits were up 81%. Both of these were primarily a result of the expansion of the business relationship with our largest customer that, as we have discussed, will be transitioning out during 2013.

For the quarter revenues from our largest customer accounted for 41% of total sales. That is compared to only 18% in last year's fourth quarter.

Direct expenses in this segment were up 12% as a result of higher market development funds paid to the Tier 1 customer, completely -- again, completely variable to revenue. The retail segment net profit contribution was $8 million, an 89% increase. For the year the retail segment net profit contribution grew by 45%.

So when we get under the segment profit contribution line, our corporate support expenses grew by 43%. That is primarily due to the higher fan performance value share accruals, as well as other technology and customer support expenses.

So to the balance sheet, our inventory, AP and AR are all down compared to December, mostly a result of the sequentially lower sales to our Tier 1 customer.

We generated just over $7 million in cash from operations for the quarter. We ended the quarter with $18.2 million in cash. No outstanding balance on the revolving credit facility.

And as Bob mentioned, we announced last week a 20% increase in the dividend. It is now $0.18 per common share, and that will be paid on May 23.

So to the earnings guidance. As Barney mentioned, our earnings per share guidance is $1.80 to $2.15. That is essentially a flat year despite this transition business. There are a few important things to note about this guidance range. First is that this Tier 1 3PL business is expected to continue for about half our fiscal year, with run rates though slightly lower than the current levels, toward the end of the first half of the year.

This obviously could change, it could get extended out. But based on our current expectation, which is based on the indications we received from the customer, we expect it to be here for about half the year.

Second, about one-quarter of the total Tier 1 gross profit dollars relate to businesses that we are expecting to continue through FY 2013, both business with this large customer that isn't expected to transition in fiscal 2013, plus business that we have with other tier 1 carriers. It is not nearly one-quarter of the revenue -- the Tier 1 revenue, it is much less than that. But because the business that we are going to keep is higher-margin, it is about one-quarter of the total gross profit dollars in the Tier 1 market.

And third we will be able to redeploy and eliminate expenses associated with this transition business. And plus, if we do in fact hit this guidance range, we will have what amounts to basically a flat year. And if that happens, our pay on performance bonus plan would obviously result in considerably less incentive compensation expense as compared to the recently completed FY 2012, a year in which EPS grew by about 60%.

So all this considered, we believe that we can achieve the guidance range with relatively modest growth in the commercial and non-Tier 1 retail segment.

Now Barney just talked about some of the really exciting market opportunities that we are looking to capitalize on. We believe that we are very well-ositioned to capture these opportunities, and we are attacking them very strongly. We think we are going to have really great results there. But the guidance range that we set forth doesn't necessarily require those levels of breakthrough growth on the core level.

So by all accounts a really great year for us. While the news about this large customer transition somewhat disappointing, we are so energized by the success that we had in fiscal 2012, and we're just really excited about fiscal 2013. So that is the end of our compared remarks. And, operator, we will open it up for questions.

(Operator Instructions). Anil Doradla, William Blair.

It is Brian Nugent for Anil. A couple questions on the Tier 1 first. So is there any sense on cost savings? I know you give directionally what could happen there, but are there any specifics on how much those indirect expenses are, or perhaps some sense of what kind of decline you are baking them for OpEx in your guidance?

Yes, there is -- we don't break out those directly allocatable expenses in the retail market. We don't break them out between Tier 1 and non-Tier 1. I think that there are considerable expenses there. There are the market development funds, again, that we talked about a little bit. They are completely variable width revenue, so they will go away. And then there are some operating expenses.

Most of our -- most of the operating expenses are up in the margin line there. So there will be some down below, but a lot of those are variable costs. So we don't really disclose exactly what that is. But it will be a considerable decline once that business transitions out.

On the revenue side, so you did give some helpful commentary on the gross profits here that we can expect. But is there any sense on what the revenue run rate could be in the fourth quarter on the Tier 1 segment?

Yes, we talked about the -- it is probably -- if it is essentially 25% of the gross profit, it is probably less than 10% of the total revenues. Maybe it is right around 10%, maybe a little bit more than that.

All right, thanks. And then in terms of the non-core business, I know your comments were largely based on the year-over-year comparison, but I did notice each of the segments was up sequentially as well. Did you have a lot of favorability in terms of the mix? I know you mentioned some inventory, or is there some sense of how much that helped you out during the quarter?

Yes, it really didn't have that much impact at all on the commercial side. The inventory write-offs there are pretty low and pretty consistent. It would have impacted the non-Tier 1 retail business -- is really where the benefit of that is. And there you saw that revenues were down a little bit, but gross profit was up.

So you have seen -- our pricing is better. Our margin structure is better based on mix and other things, but wouldn't have been enough without that inventory -- the inventory reserve change to shift the gross margin that far north.

Was there a shift in proprietary products as a percentage of the sales during the quarter? Or -- I am also just curious going forward with the mix away from Tier 1, that is obviously going to help you out --

Yes.

Profitability-wise. But is there some sense of how we can expand margins in the other product categories relative to where you were this year?

Yes, that is really all the penetration of -- well, it is not all, but it is a large portion of that is the penetration of the Ventev proprietary products. It didn't change -- the percentage of total revenues didn't change much this quarter. It was about the same as it has been. But I think that is where -- the amount of proprietary products that we are selling into the Tier 1 channel is lower than what we are selling into the other channels. And so when that business transitions out, that percentage of total sales from the Ventev product should increase now -- without really growing the number.

So we are keenly focused on getting that number growing substantially faster than the rest of the business. So I think -- and so that is one thing. The other big initiative that we have got that I think can really drive some nice margin improvements is our pricing initiatives. We have gotten some new software. We have got some new people here that are really focused on optimizing our pricing, and I think that there is tremendous opportunity there as well.

All right. And then just higher level, is there a way we should think about growth in 2012 in the other business -- or 2013 in the Other businesses, maybe ranking them? It sounds like private systems are is where you're the most bullish on 2013. Are there other areas or more specifics in the private systems that -- or you think you can really drive growth in 2013?

The private systems is obviously a big word. For an example, we are seeing an acceleration of positive train control pilot systems. We have been talking about that now for going on two years, but we are starting to see more placements. We are getting more systems into the -- into oil and gas and security.

And then this whole distributed antenna system, which is basically bringing a signal -- cellular signal indoors, if you will, or expanding it in a sports stadium is where you just give enhanced coverage, is just really getting very exciting. And we are one of the leaders with the full solution where we have a choice of active component and obviously a choice of the network infrastructure.

So those are the major areas that we see in the private arena. And then there is the LTE enhancements as we go into this year. And there is going to be a lot of LTE enhancements to support this bandwidth for the smart devices.

The other initiative that we have that is very exciting is mobile device accessories, historically the percentage of sales has been through resale -- retailers. And we are seeing the opportunity in the commercial markets, whether they be health care, whether they be schools, for the support accessories for the devices that they're using inside of their businesses.

I think you have seen a lot of the government contracts that have been recently won. The one -- the [Awisco] award is very exciting as we are going to be developing a -- not only to sell the Western Alliance of government agencies, the accessories that they consume, but also putting together their employee-based purchases as well.

So it is -- as you scan our opportunities, they go all the way across. And recognizing that our whole salesforce is segmentized, so we have separate people that are focused on these initiatives. And then if you look at the new TESSCO.com, we are very focused on particular customer segments as well as these systems that we support.

So it is an exciting -- it is all -- we have been talking about it, but we see this past year as really coming together and these areas are really starting to build.

That is very helpful. Thank you. And then the last thing is just some comments on the macro environment and specifically on service provider CapEx. I think your -- I don't know, your tone is slightly better than last quarter. Are you seeing some loosening up there?

They are certainly doing a lot of new talking, and there is a lot of new things, there are RFPs and things that are coming down, and with the recognition that they have got to expand this bandwidth. I think we all know from using our devices it is becoming more and more difficult to make a call or receive the data that we need.

I think from the macroeconomic -- I mean, we continue to be very guarded in terms of what is happening in this economic environment. I think that it is -- this whole taxation thing -- maybe it is not a thing -- this trend is making companies very, very guarded.

Now the good news is that it plays very well into our value proposition of delivering what they need when they need it. And we are their back-up inventory. But it is also pushing the -- everything is a hurry up and wait and requires us to be more and more nimble as it relates to inventory and availability to serve these customers.

But it is going to continue to be very difficult. And I would say that we certainly don't have -- the wind behind our back is due to the new systems being developed, but it is all wind ahead of us in terms of any one area that is really developing. And what is giving us the growth opportunities is the expansion into new markets and new systems.

All right, thank you very much guys.

Steve Shaw, Sidoti.

In terms of transition, do you guys have an idea of how far the margin can widen? Is there a ceiling where you could say the gross margin might hit this number potentially?

Well, I think in the non-Tier 1 business the gross margin was just north of 25%, I think. And so I think that number -- we certainly think that is sustainable and maybe even some potential growth on top of that once there is none of that Tier 1 business.

Okay.

I also think from the operating margin point of view, we increased the margin 42% from the 2.6% to 3.7%, with the major increase in the low-margin 3PL business.

Yes.

So you can do the arithmetic is when that low-margin 3PL business transitions out it is really going to drive that bottom-line margin.

Right. Okay, thanks.

Bentley Offutt.

I am very excited about what the Company is doing. I know it was disappointing that these revenues are going to disappear over the next six months. But if you look into the year -- fiscal year 2014, how do you see your business -- the degree of your business changing? And by that I mean your recent announcements in the cooperatives and the stability -- a greater stability in your business and a higher profit margin in your business, and from, what I gather, the increased activity on infrastructure spending. It seems to me that TESSCO is making a major transformation into a much more profitable company for investors to hold. Can you comment, looking further into the future?

Absolutely. The transformation -- I mean, when you -- when the 3PL business goes away is that our concentration is no one customer is --.

They won't be more than 2% or 3% of the total.

So it will be a very, very diverse customer base. And the guidance that we are giving, as David said, is modest growth from the quote core business. And, obviously, is the things we are looking at doing is -- that we look towards expanding our expectations in terms of really driving rapid growth as we look across these entire areas.

So you're going to see -- looking at new customers, looking at this category share, this cross-sell, as we continue to expand the products, the systems, the available market is going to be so much bigger. And with the initiatives on marketing and sales that we are doing is that our share of that should be. So as we move into this year and move into 2014, we are looking to really accelerating topline growth with the same level of productivity, or even a growing level of productivity and profitability that we achieved this past year.

So you're right, it is a -- and the other thing is that from the transformation is all of this was -- that we have been talking about is under the surface. But as we said, there has been a lot of focus on to this transformation or this transition from the merchant to a 3PL with this large customer. And we were talking earlier about what do we do with expenses? We have just got some extremely talented people that have been working on the 3PL that are going to be now working on these other new exciting areas that we have.

So it is like bringing in the real -- new talent into what we are trying to do in what you call this transformation, which I totally agree with.

Thank you. The public safety organization, I guess this is communications equipment to the fire service industry -- fireman, policeman, etc., how big a market are these? Do you have any idea?

It is a huge market. And now we are looking at selling these -- the mounts for their iPads. So it is a transitioning market as well, but we are into the local state municipalities, public safety, national defense. And the spending has been cut because of all this austerity measures that we are doing, but there is still a very large market out there. And these contracts that we recently announced are a license to hunt. We need to get in there and earn the business, but at least the door is open for us.

Are you the only factor in this? For instance, the Western Alliance, are you the only one that is basically involved in that particular category of accessories, etc.?

Yes, there are other entities that sell accessories, but nobody that has got close to the offering that we have got. So we will have by far the biggest, broadest offering, hopefully the best prices, and we should compete very favorably with whoever else is in there.

Okay, and can you -- through the nature of your Internet marketing system can you reduce your sales cost through these contracts?

Absolutely. That is a major driver, and especially when we look at this with the [Awisco] award, where we are selling into their employees, that will be 100% Web-based, and also will be at higher prices, which would be higher margins.

The margins will be around a 28% level for that government business overall, is that what you're thinking about?

I think overall the margin will be probably lower than that, but a lot of it depends on this employee-based level of sales, because that (multiple speakers).

Last but not least, Ventev, is that -- that is part of the TerraWave proprietary business, if I am -- it for the exterior inside of the commercial infrastructure, is that correct?.

Right. Right now Ventev -- V-e-n-t-e-v -- is our -- let's call it our mother brand. And under that we have the legacy brands of wireless solutions, and then TerraWave was the company that we acquired four plus years ago.

And so today it is a combination of the network infrastructure products, which includes some power stations, the RF propagation stations, the product that we developed with GE for the positive train control, and then enclosures -- enclosures for wireless access points, everything from hospital to outdoor enclosures to antennas, cable and then accessories -- power accessories, as well as some of the carry cases.

And in all cases we are looking at going beyond in terms of what is not available in the marketplace, and that is where we develop these innovative products.

Do you have any sales right now in Ventev or is that -- I am talking about relative to the positive train control and your new product that you introduced relating to theft of copper, etc. Do you have sales in that group now?

Oh, yes, the Ventev family of brands, which includes wireless solutions and TerraWave is now what --?

It is 7% or 8% of total sales. But, yes, within that it is good, strong growing sales of TerraWave. But Ventev also in the power supply side and the enclosures and other things that we are doing on the outdoor network infrastructure there is some sales there.

Yes. But we -- I think we announced two quarters ago that this big project sales that we received from a big-box retailer, that was all Ventev product.

That is the interior antenna?

The interior antenna and the enclosures, the Omni --

In the positive train control, the opportunity is so huge right there are you having any success on your GE product?

Absolutely, and we are going in -- a lot of railroads now are putting up the pilot programs. I think as we discussed, is a lot of this had been delayed by the government, but now they're putting in these pilot programs and proving concept and getting ready for the required build that the government is going to require.

Yes, what we are seeing now is we are selling a lot of locomotive antennas and the ancillary products that will eventually connect to this big positive train control network. So the deployment of the network itself has been delayed and may be a 2014 range, but the railroads are certainly getting ready for it.

They have to have them completed -- at least that is my understanding by 2015. And I thought they had to have their model programs completed by the end of 2012. Is that not -- they have delayed that?

They keep playing with it. I think right now is the pilot programs are accelerating.

Right.

An earlier question is the railroads are a very important market to us. And on two sides is, side number one is the building of the new systems. And then obviously they have got a huge maintenance component in terms of replacing their signaling, as well as their communications infrastructure.

And these power systems, the antennas, the actual mounts -- this mount that we developed, what we call this articulating power, is very exciting. And the railroads -- and then that is carrying over into the security industry like ADT is looking at these remote power stations for remote video surveillance cameras and secure systems. So the railroads are an important target market for us.

Okay, great. Thank you very much.

At this moment we don't seem to have any further questions. I would now like to turn the call over to management for closing remarks.

Okay, thank you. I appreciate the insightful questions. It is always great to be able to answer your specific questions. And as I was preparing for today's call I reviewed my notes from last year. And in my closing remarks I looked at it and I said, you know what, this is -- I would just like to repeat what I said last year because it is probably more -- even more powerful today.

And that is that as we enter this new fiscal year, hopefully we have been able to communicate the level of energy we have to achieve our goals. And we are living in this time of unprecedented change in our world and then as in our business, with this transition as well as the iMarketing and eBusiness.

And we at TESSCO are very committed to thinking in new ways to change the way business is done. And we are responding to the challenges and realizing the rewards from the exciting new opportunities that are being presented to us.

As I tried to communicate, we are really raising our expectation and using our unparalleled knowledge of wireless to expand into new markets and architect total solutions for our customers.

I would like to take this opportunity to thank our customers that trust us to satisfy their requirements, our manufacturers that provide us with the products to build our solutions, and an incredible team at TESSCO for their commitment and contribution. And, obviously, to our shareowners for their support.

So thank you all for helping us deliver this fourth consecutive extraordinary fiscal year. We look forward to talking to you in July and telling you about our progress in quarter one and how the remaining year looks. So, again, thank you very much.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.

Thank you.