TESSCO Technologies Inc (TESS) 2023 Q3 法說會逐字稿

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the TESSCO Technologies Incorporated Third Quarter 2023 Earnings Conference Call. (Operator Instructions) I would now like to turn the conference over to David Calusdian from Sharon Merrill. Please go ahead.

您好，感謝您的收聽。我叫 Regina，今天將擔任您的電話會議主持人。現在，我歡迎大家參加 TESSCO Technologies Incorporated 2023 年第三季業績電話會議。 （接線生指示）現在，我想將電話會議交給 Sharon Merrill 的 David Calusdian。請開始。

Good morning, everyone, and thank you for joining TESSCO's Q3 fiscal year 2023 conference call. Joining me today are Sandip Mukerjee, TESSCO's President and Chief Executive Officer; and Aric Spitulnik, Company's CFO.

大家早安，感謝大家參加TESSCO 2023財年第三季電話會議。今天與我一同出席的還有TESSCO總裁兼執行長Sandip Mukerjee和公司財務長Aric Spitulnik。

Please note that the management discussion today will contain forward-looking statements about the 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. Please note that the company will be referencing slides available through the webcast link, on the Events and Presentations page of the company's Investor Relations website.

請注意，今天的管理層討論將包含關於預期業績和未來前景的前瞻性陳述。前瞻性陳述包含許多風險和不確定性，TESSCO 的表現可能與今天討論的績效有重大差異。有關可能導致此類差異的因素的信息，請參閱 TESSCO 的公開披露文件，包括公司最新的 10-K 表格以及提交給美國證券交易委員會的其他定期報告。請注意，本公司將參考公司投資者關係網站「活動和簡報」頁面上的網路直播連結提供的幻燈片。

With that introduction, I'd like to turn the call over to Sandip Mukerjee, TESSCO's President and CEO. Sandip, please go ahead.

介紹完畢，我想把電話轉給TESSCO總裁兼執行長Sandip Mukerjee。請Sandip發言。

Thank you, David. Good morning, everyone, and thank you for joining us today. Q3 was another excellent quarter for TESSCO, as we continue to execute successfully on our strategy. Before we get to the specifics of Q3, let me start by recapping that strategy, which I have shared with you throughout this fiscal year.

謝謝，David。大家早安，感謝大家今天加入我們。第三季度對TESSCO來說又是一個出色的季度，我們繼續成功執行我們的策略。在討論第三季的具體情況之前，我先回顧一下我在整個財年中一直與大家分享的策略。

Our goals have been to drive revenue by delivering excellent service and value, focus revenue opportunities on higher growth 5G and wireless infrastructure, improve gross margins by adding differentiated value through product mix, vendors, TESSCO observer, and operating discipline, launch a modern ERP, improving our operating efficiencies, and utilize TESSCO's operating leverage to grow EBITDA faster than revenue.

我們的目標是透過提供卓越的服務和價值來推動收入成長，將收入機會集中在更高成長的 5G 和無線基礎設施上，透過產品組合、供應商、TESSCO 觀察員和營運紀律增加差異化價值來提高毛利率，推出現代 ERP，提高我們的營運效率，並利用 TESSCO 的營運槓桿成長速度快於收入成長速度。

We do not seek to be the lowest cost distributor. Our customers achieved full savings from the efficiencies gained through our optimized logistics, procurement, and project management expertise. Moreover, we leverage these value-added services and enhanced support resources to generate customer loyalty through improved execution, which has led to real partnerships with our customers.

我們並非追求成為成本最低的經銷商。我們透過優化物流、採購和專案管理專業知識，提升了效率，幫助客戶實現了最大程度的節省。此外，我們利用這些加值服務和增強的支援資源，透過提升執行力來贏得客戶忠誠度，最終與客戶建立了真正的合作關係。

Our Q3 demonstrate the successful execution of our strategy. We achieved double-digit year-over-year improvements in revenue, gross profit, and adjusted EBITDA. Both of our business segments, Carrier and Commercial contributed to a year-over-year increase in revenue of 12%. Our margins continue to improve as a result of pricing strategies, diversification of our supplier base, and focus on higher-margin business opportunities that have been central to our strategy.

我們的第三季業績證明了我們策略的成功執行。我們的營收、毛利和調整後息稅折舊攤提前利潤（EBITDA）均實現了兩位數的年增長。我們的兩個業務部門——營運商和商業——都貢獻了12%的年成長。由於定價策略、供應商基礎的多元化以及對高利潤率業務機會的關注，我們的利潤率持續提升，而這些一直是我們策略的核心。

This quarter, our gross margin was 20.6%, and up 1.5 percentage points year-over-year. Our adjusted EBITDA was $1.8 million, up $800,000 year-over-year. Furthermore, we see continued improvements in the global supply chain. This has improved product lead times and has resulted in bookings returning to more normal levels. We still ended the quarter with a strong sales backlog of $84 million. I will now walk you through the results and highlights of the past quarter, starting with our Carrier market.

本季度，我們的毛利率為20.6%，年增1.5個百分點。調整後EBITDA為180萬美元，較去年成長80萬美元。此外，我們看到全球供應鏈持續改善，縮短了產品交付週期，並使訂單量恢復到更正常的水平。本季結束時，我們仍保持著8,400萬美元的強勁銷售待售訂單。現在，我將從運營商市場開始，為您介紹上一季的業績和亮點。

In Q3, our Carrier revenue was up 12% year-over-year, and our gross profit increased 16%. Year-to-date revenues are up 8%, and gross profit is up 19%. We ended the quarter with a sales backlog of $41 million. Margin improvements are a result of what I had said earlier, our strategy to consistently add value for our customers. This quarter, we introduced new warehousing solutions that allow our customers to manage their general contractors more effectively. We recorded two significant wins this quarter, both related to 5G builds and upgrades.

第三季度，我們的營運商營收年增12%，毛利成長16%。年初至今營收成長8%，毛利成長19%。本季末，我們的銷售訂單積壓額為4,100萬美元。利潤率的提升源自於我之前提到的我們持續為客戶增值的策略。本季度，我們推出了新的倉儲解決方案，使客戶能夠更有效地管理其總承包商。本季度，我們取得了兩項重大進展，均與5G建設和升級有關。

The first is a project with our largest tower owner customer, and the second is a new relationship with one of the largest AT&T turf contractors. Together, these opportunities exceed $40 million, and will primarily be recognized in fiscal year 2024.

第一個項目是我們與最大的塔樓業主客戶合作的項目，第二個項目是與AT&T最大的草坪承包商之一建立的新合作關係。這些項目總計超過4000萬美元，主要將在2024財年實現。

I will now turn to the commercial market which includes all wireless infrastructure business outside the Carrier ecosystem. In Q3, our commercial revenue was up 12% year-over-year, and our gross profit increased 23%. Year-to-date revenues are up 11%, and our gross profit is up 19%. We ended the quarter with a sales backlog of $43 million. Our scale, technical expertise, value-added services, program management support, and personalized account coverage continue to be the reasons why customers rely on TESSCO. Ventev and TESSCO Observer helped differentiate our offering, and enhanced our margin performance.

現在，我將轉向商業市場，其中包括運營商生態系統之外的所有無線基礎設施業務。第三季度，我們的商業收入年增12%，毛利成長23%。年初至今，營收成長11%，毛利成長19%。本季末，我們的銷售訂單積壓金額為4,300萬美元。我們的規模、技術專長、增值服務、專案管理支援以及個人化的客戶覆蓋仍然是客戶信賴TESSCO的原因。 Ventev和TESSCO Observer幫助我們實現了產品差異化，並提升了我們的利潤率。

We continue to refocus on our end-user customers. As a result, our utility market grew 38% year-over-year. These strong results confirm our strategy of helping electric utilities modernize and assist with their overall grid automation projects. Our Q3 growth initiatives in this market included a Ventev business development campaign around automated metering infrastructure, which has already resulted in shipments across multiple investor-owned utilities. We continue to see strong demand in test equipment, and are positioning our Ventev universal broadband enclosure as a simple turnkey solution for utilities that are deploying wireless.

我們持續將重點放在終端用戶客戶身上。因此，我們的公用事業市場年增了38%。這些強勁的業績印證了我們幫助電力公司現代化並協助其進行整體電網自動化專案的策略。我們在該市場第三季的成長舉措包括圍繞自動計量基礎設施開展的Ventev業務拓展活動，該活動已向多家投資者擁有的公用事業公司交付產品。我們持續看到測試設備需求強勁，並將Ventev通用寬頻機櫃定位為部署無線網路的公用事業公司提供的簡單易用的交鑰匙解決方案。

In the government market, we have signed new state and local contracts. This market grew 19% year-over-year, and is now up 3% year-to-date. Our VAR market grew 13% year-over-year. We had a number of significant wins this past quarter, including a VAR that moved all of its microwave business to us, a large national service provider that awarded us several large projects for major theme parks, and another sizable win for a VAR to support automation for a large mining company. Furthermore, we continue to win public safety and cellular DAS opportunities due to our inventory stocking position and our technical and logistical expertise.

在政府市場，我們簽署了新的州和地方合約。該市場年增19%，年初至今成長了3%。我們的增值轉售商市場年增13%。上個季度，我們贏得了多項重要訂單，包括一家增值轉售商將其所有微波業務轉移給我們，一家大型全國性服務提供商將幾個大型主題公園的大型項目授予我們，以及另一家增值轉售商為一家大型礦業公司提供自動化支持，這筆訂單意義重大。此外，憑藉我們充足的庫存以及技術和物流專長，我們繼續贏得公共安全和蜂窩DAS（分散式天線系統）的商機。

Turning now to Ventev, in Q3, our Ventev revenue was up 13% year-over-year. Year-to-date, revenues are up 19%. Ventev is growing faster than our distribution business. We have improved our Ventev margins and have a 30% year-over-year increase in sales backlog. Ventev's increased market share with a wide range of existing and new customers, including a pioneer in inpatient tower health, providing them with antennas to enable Wi-Fi monitors in hospital rooms, a solution for an NFL stadium, cable assemblies for a VAR that is installing DAS into a subway system, antennas for a large cruise line, antennas to upgrade the Wi-Fi in scientific laboratories, and an innovative solution for a vineyard through the Cisco Design-In Program.

現在談談 Ventev。在第三季度，我們的 Ventev 營收年增了 13%。年初至今，營收成長了 19%。 Ventev 的成長速度超過了我們的分銷業務。我們提高了 Ventev 的利潤率，銷售訂單年增了 30%。 Ventev 的市佔率不斷擴大，現有客戶和新客戶範圍廣泛，其中包括一家住院醫療塔領域的先驅企業。 Ventev 為他們提供天線，用於在病房內安裝 Wi-Fi 監視器；為 NFL 體育場提供解決方案；為一家正在地鐵系統中安裝 DAS 的增值轉售商提供電纜組件；為一家大型郵輪公司提供天線；為科學實驗室升級 Wi-Fi 提供天線；以及通過思科設計項目為一家葡萄園提供創新解決方案。

Regarding our sales channels, we continue to sell both direct and online through tessco.com and, in Q3, achieved quarterly revenue of $9.9 million, up 6% year-over-year. As a part of our ERP transformation, TESSCO launched a new tessco.com which provides many new features and capabilities for our customers. And as we announced last month, we formally launched our new ERP system. This project has been much more complex, and has taken longer than initially planned. But all our foundational capabilities are now in place, and the launch has been very, very smooth. We're now in Hypercare, which will continue through Q4, along with higher non-depreciation expenses.

就我們的銷售管道而言，我們繼續透過 tessco.com 進行直銷和線上銷售，第三季營收達 990 萬美元，年增 6%。作為 ERP 轉型的一部分，TESSCO 推出了全新的 tessco.com 網站，為客戶提供了許多新功能和新能力。正如我們上個月宣布的那樣，我們正式啟動了新的 ERP 系統。這個項目比最初計劃的要複雜得多，耗時也更長。但我們所有的基礎功能都已到位，啟動過程非常順利。我們目前處於 Hypercare 階段，這將持續到第四季度，同時非折舊費用也會增加。

We're expecting incremental depreciation of approximately $1.5 million in the fourth quarter, which will impact net income but not EBITDA. Expenses associated with ERP will significantly reduce in our next fiscal year, starting April. The new ERP system will provide us with considerable operating efficiencies over our legacy systems, including improved inventory management and freight capabilities. We expect to begin to achieve a strong return on our investment in our upcoming fiscal year, and a positive effect on EBITDA. With that, I will turn the call over to Aric for the financial review. Aric?

我們預計第四季度的增量折舊約為150萬美元，這將影響淨收入，但不會影響EBITDA。從4月開始的下一個財年，與ERP相關的費用將大幅減少。新的ERP系統將比我們的舊系統顯著提高營運效率，包括改善庫存管理和貨運能力。我們預計在即將到來的財年將開始實現強勁的投資回報，並對EBITDA產生正面的影響。接下來，我將把電話轉給Aric進行財務回顧。 Aric？

Thank you, Sandip, and good morning, everyone. At the onset, please note that as the impact of our discontinued Retail segment is not significant for fiscal 2023, our current year results now include activity from our former retail business. For prior years, the retail business is still disclosed as discontinued operations. As Sandip mentioned, we had another strong revenue quarter for our combined Carrier and Commercial segments, totaling $114.9 million, up 12% year-over-year. Sales backlog at the end of the third quarter totaled $84 million, well higher than historical levels.

謝謝Sandip，大家早安。首先，請注意，由於我們已終止的零售業務對2023財年的影響並不顯著，因此我們本年度的業績現在包含了我們先前零售業務的活動。在前幾年，零售業務仍然被揭露為已終止的業務。正如Sandip所提到的，我們的營運商和商業業務合併後又迎來了強勁的季度收入，總計1.149億美元，年增12%。第三季末的銷售積壓訂單總額為8,400萬美元，遠高於歷史水準。

Sales bookings declined this quarter in both segments due to improvements in the supply chain, which means that customers no longer have to book orders as far in advance as they had over the last year. However, we continue to maintain a very large backlog that, for the most part, to expect to ship in the current fourth quarter, with a solid percentage of that business being Ventev. Moreover, our pipeline and customer activity remain strong. Gross profit was $23.7 million for the third quarter of fiscal 2023, compared with $19.6 million for the same quarter in fiscal 2022.

由於供應鏈的改善，兩個部門的銷售訂單量在本季均有所下降，這意味著客戶不再像去年那樣需要提前很久下單。然而，我們仍然保持著大量的積壓訂單，大部分預計將在第四季度發貨，其中很大一部分來自Ventev。此外，我們的產品線和客戶活動依然強勁。 2023財年第三季毛利為2,370萬美元，而2022財年同期為1,960萬美元。

Gross margin was 20.6% of revenues for the third quarter of fiscal 2023, compared to 19.1% in the third quarter of the prior year. The improvements we have driven in gross margin throughout this entire fiscal year have been critical to our success. The gross margin gains are related to many strategic actions, including growth in Ventev sales, increased pricing to keep up with inflation, better customer mix driven by our focus on higher-margin opportunities, and vendor diversification efforts to focus on selling higher-margin alternatives. We have taken these actions while continuing to provide our customers with excellent customer service.

2023財年第三季的毛利率為營收的20.6%，去年同期為19.1%。我們在整個財年推動的毛利率提升對我們的成功至關重要。毛利率的成長源自於多項策略性舉措，包括Ventev銷售量的成長、為因應通膨而提高的價格、專注於高利潤機會而優化的客戶結構，以及為專注於銷售高利潤替代品而進行的供應商多元化努力。在採取這些措施的同時，我們始終致力於為客戶提供卓越的客戶服務。

Third quarter fiscal '23 selling, general, and administrative expenses increased 17% to $22.7 million. This increase is primarily due to a lower-than-normal amount of expenses in the prior-year quarter. This quarter's SG&A is essentially flat from Q2. This overall SG&A expense as a percentage of revenue was 19.8% in the third quarter of fiscal '23, compared to 18.9% in the prior-year quarter. This quarter's variable SG&A as a percentage of revenue was up from 6.1% in last year's third quarter to 6.4% this quarter as we continue to see freight charges from carriers increase, largely due to fuel surcharges and other accessorial charges.

2023財年第三季度，銷售、一般及行政費用成長17%，至2,270萬美元。這一增長主要歸因於去年同期費用低於正常水平。本季的銷售、一般及行政費用與第二季基本持平。 2023財年第三季度，銷售、一般及行政費用佔營收的19.8%，去年同期為18.9%。本季可變銷售、一般及行政費用佔收入的6.4%，從去年第三季的6.1%上升至6.4%，這主要歸因於我們持續看到承運商的運費上漲，這主要是由於燃油附加費和其他附加費用的上漲。

Variable expenses consist of roughly 50% in freight-out expenses and the remaining 50% primarily in distribution center labor and sales commissions. Our operational and pricing discipline has enabled us to pass on the rising freight costs, which are a factor in the improved gross margins I mentioned early. Non-variable SG&A as a percentage of revenue is up from 12.8% to 13.3%. This increase is primarily due to full staffing of Ventev and IT teams, which had significant openings during last year's third quarter.

變動支出約50%為運費，其餘50%主要為配送中心人工費及銷售佣金。我們嚴謹的營運和定價策略使我們能夠轉嫁不斷上漲的運費，這也是我之前提到的毛利率提升的因素。非變動性銷售、一般及行政費用佔收入的比例從12.8%上升至13.3%。這一成長主要得益於Ventev和IT團隊的滿員，這兩個團隊在去年第三季有大量職缺。

Additionally, last year we adjusted our bonus accrual down based on the year-to-date results for the time. As a result, our bonus expense for this quarter is $1.1 million higher than the prior year quarter. We will continue to focus on fixed expense reductions. And the launch of the new ERP will enable us to do even more in fiscal '24.

此外，去年我們根據年初至今的業績下調了獎金累積額。因此，本季的獎金支出比去年同期增加了110萬美元。我們將繼續專注於削減固定支出。新ERP系統的推出將使我們在2024財年取得更大的成就。

Third quarter fiscal '23 net income was $0.4 million compared with $1.2 million in the third quarter of fiscal year 2022. Higher Q3 FY22 net income was impacted by a time $1 million income tax benefit. Adjusted EBITDA and adjusted EBITDA per share were $1.8 million and $0.19 respectively for the third quarter of fiscal '23. This compares with adjusted EBITDA and adjusted EBITDA per share of $1 million and $0.11 respectively for the third quarter of last year.

2023財年第三季淨利為40萬美元，而2022財年第三季為120萬美元。 2022財年第三季淨利的增加受到100萬美元所得稅優惠的影響。 2023財年第三季調整後EBITDA和調整後每股EBITDA分別為180萬美元和0.19美元。相較之下，去年第三季調整後EBITDA和調整後每股EBITDA分別為100萬美元和0.11美元。

Turning to the balance sheet, product inventory was essentially flat from the second quarter at $70.9 million. While we remained strategic in our inventory management, we are working on reducing our overall inventory levels. And expect to see a reduction in Q4. Accounts receivables decreased by $5.3 million in the third quarter to $79.5 million. Accounts payable decreased by almost $10 million as we paid down the amount related to the increase in inventory we saw in the second quarter.

資產負債表方面，產品庫存與第二季基本持平，為7,090萬美元。雖然我們仍然保持策略性庫存管理，但我們正在努力降低整體庫存水準。預計第四季度庫存水準將有所下降。第三季應收帳款減少了530萬美元，至7,950萬美元。應付帳款減少了近1000萬美元，因為我們償還了第二季庫存增加帶來的款項。

We ended the quarter with an income tax receivable of $3.7 million. All of the associated tax returns have been filed. And the timing of receipts of these payments is dependent on the IRS in the State of Maryland. In December, we amended our credit agreement increasing it from $80 million to $105 million to support our sales growth and to address supply chain variability.

本季末，我們的所得稅應收款為370萬美元。所有相關報稅單均已提交。這些款項的到帳時間取決於馬裡蘭州國稅局的規定。 12月，我們修改了信貸協議，將應收款金額從8,000萬美元提高到1.05億美元，以支持我們的銷售成長並應對供應鏈的波動性。

As a result of the working capital factors I just discussed as well as ERP implementation cost, the outstanding borrowings under our line of credit increased $8.1 million to $61.6 million at the end of Q3. We expect annualized improvements in our overall EBITDA performance along with reductions in ERP related cost to begin next fiscal year. Therefore, we expect our borrowings to trend down over the next 12 months.

由於我剛才討論的營運資金因素以及ERP實施成本，我們信用額度下的未償還借款在第三季末增加了810萬美元，達到6,160萬美元。我們預計從下一個財政年度開始，我們的整體EBITDA業績將實現年度化改善，同時ERP相關成本也將下降。因此，我們預計未來12個月我們的借款將呈現下降趨勢。

However, due to continued variability in the supply chain, we expect significant fluctuations from quarter to quarter. I am very pleased with how we are executing on our strategy and the results we have achieved. We are encouraged by our year-to-date results, strong sales, and sales backlog. For the full fiscal '23 year, we are on pace to meet our guidance ranges, specifically revenue of $450 million to $475 million which would represent a growth of 8% to 14%; adjusted EBITDA of between $4 million to $7 million which compares to a $0.3 million in fiscal year 2022, and a net loss of $5 million to $2.1 million which compares to a net loss of $3.3 million in fiscal year '22. With that, I will turn the call back over to Sandip.

然而，由於供應鏈的持續波動，我們預期季度間會出現顯著波動。我對我們執行策略的方式和所取得的成果感到非常滿意。年初至今的業績、強勁的銷售和銷售積壓令我們感到鼓舞。在整個23財年，我們預計將實現預期目標，具體而言，營收為4.5億美元至4.75億美元，增幅為8%至14%；調整後息稅折舊攤銷前利潤（EBITDA）為400萬至700萬美元，而2022財年為30萬美元；淨財年虧損為1320萬美元的淨財年為淨20萬美元；說完，我將把電話轉回給桑迪普。

Thank you, Aric. Before we open the call to questions, I want to reiterate some of the highlights from this quarter. Our Q3 revenues were up 12% year-over-year. Our customer demand and revenue is strong. And we are carrying a sales backlog of $84 million. We successfully improved our gross margins. And we are live with our new ERP system. We expect this new ERP will further improve our operating leverage, which in turn will result in improved profitability. With that, we will now open the call to questions.

謝謝，Aric。在開始問答環節之前，我想重申本季的一些亮點。我們第三季的營收年增了12%。我們的客戶需求和收入都表現強勁。我們的銷售訂單積壓金額高達8400萬美元。我們成功提升了毛利率。新的ERP系統也已上線。我們預期新的ERP系統將進一步提升我們的營運槓桿，從而提高獲利能力。至此，我們現在開始問答環節。

(Operator Instructions) Our first question will come from the line of Maggie Nolan with William Blair.

（操作員指示）我們的第一個問題來自 William Blair 的 Maggie Nolan。

Could you elaborate on the impact of product mix on margin this quarter? And then, how you expect that to look in the coming quarters?

能否詳細說明本季產品組合對利潤率的影響？您預計未來幾季的情況會如何？

Where we have flexibility, we are using -- and products are spec'd in, we are using products that give us the most gross margin; a simple way to say what we are doing. And we are engineering that and preparing for that by supplier diversification, so not just single sourcing, giving ourselves more flexibility, and introducing new vendors, new products to customers. We expect to continue that. So, I expect this gross margin improvement that we have seen to continue.

只要我們擁有靈活性，我們就會利用——而且產品規格符合要求，我們就會使用那些能帶來最高毛利率的產品；用一種簡單的方式來表達我們的業務。我們正在為此進行規劃，並透過供應商多元化來做好準備，而不僅僅是單一採購，這賦予我們更大的靈活性，並向客戶推出新的供應商和新產品。我們希望繼續這樣做。因此，我預計我們已經看到的毛利率改善趨勢將會持續下去。

Very good. And then on the backlog, could you give a little bit more detail of the composition of the backlog?

非常好。那麼關於待辦事項，能否更詳細地介紹待辦事項的組成呢？

So, we broke out, during the call, how much of it was Carrier and how much of it was Commercial. So, total backlog is $84 million, $41 million of that is for our Carrier ecosystem, and $43 million is with the Commercial. Let me stop there; see if I answered your question?

我們在電話會議中詳細討論了營運商和商業部門的訂單量。總訂單量為8,400萬美元，其中4,100萬美元來自營運商生態系統，4,300萬美元來自商業部門。我就此打住，看看我是否回答了你的問題？

Yes. And then, okay, so for a third question, could you talk about what's going right in the VAR segment? And then is this level of performance that you've seen in that segment going to be repeatable for the segment going forward?

是的。那麼，好的，第三個問題，您能談談VAR部分目前進展如何嗎？您之前看到的這種水準在未來的VAR部分能否維持下去？

Very, very pleased with our sales performance and focus. And it's a result of all the improvements that we have put in place over the last several quarters; we're seeing the benefits of that; that's one. Second, from a value proposition perspective, being able to provide the complete solution, helping our VARs develop a BOM, bill of materials, that they can do on TESSCO's Web site or working with our sales people, having better stocking position, right, so it's not just the sales people driving, it's also our supply chain people doing correct demand forecast with customers and having inventory available. And then, this might seem simple and mundane, but the whole benefit of helping our customers with program management with logistics, with being able to ship at -- to the points they want at the time they want, that entire value proposition is playing very well with VAR. I am bullish about what our team has done, and I expect this trend to continue.

我們對我們的銷售業績和專注度非常非常滿意。這得益於我們過去幾季實施的所有改進措施；我們正在見證這些改進帶來的益處；這只是其中之一。其次，從價值主張的角度來看，我們能夠提供完整的解決方案，幫助我們的增值經銷商（VAR）開發物料清單（BOM），他們可以在TESSCO網站上進行開發，也可以與我們的銷售人員合作，從而擁有更好的庫存狀況。所以，這不僅僅是銷售人員在推動，我們的供應鏈人員也與客戶進行正確的需求預測，並確保庫存充足。此外，這看起來可能簡單而平凡，但有助於客戶進行物流專案管理，並能夠在他們希望的時間將產品運送到他們想要的地點，所有這些好處都與增值經銷商（VAR）息息相關。我對我們團隊的成果充滿信心，並期待這種趨勢能持續下去。

(Operator Instructions) Your next question will come from the line of Bill Dezellem with Tieton Capital.

（操作員指示）您的下一個問題來自 Tieton Capital 的 Bill Dezellem。

Looking at your revenue guidance, the midpoint of that guidance would lead to flat revenues in the fourth quarter versus the quarter you just reported. And seasonally, if we look back over history, the fourth quarter is normally down from Q3. Should we be reading into that, that you are seeing stronger-than-normal seasonality or is that just happens to be the way the math works, and I'm picking one point within the guidance range?

從您的收入預期來看，該預期的中間值將導致第四季度收入與您剛剛公佈的季度持平。從季節性角度來看，回顧歷史，第四季的收入通常會低於第三季。我們是否應該解讀為，您看到的季節性因素比正常情況更強，還是這只是數學計算的結果，而我只是在預期範圍內選擇一個點？

Bill, this is Aric. It's a good question. I think as far as the revenues that we're seeing right now, as we sit here today with a strong backlog of $84 million, a lot of projects in the works here that will be shipping this quarter, we're very optimistic about our fourth quarter revenue number. So, I would say it's a combination of we do believe we'll be in a better situation than we were last quarter, but there's a fairly large range. And you are somewhat arbitrarily picking the midpoint, but I think we've very confident and optimistic about the fourth quarter revenues.

比爾，我是阿里克。這個問題問得好。我認為就我們目前的收入來看，我們今天坐在這裡，手裡有8400萬美元的積壓訂單，很多正在進行的項目將在本季度交付，我們對第四季度的收入數字非常樂觀。所以，我想說，這既包括我們確實相信我們的狀況會比上一季更好，也包括相當大的區間。你選的中間值有點武斷，但我認為我們對第四季的收入非常有信心，也非常樂觀。

So, you see the possibility of better-than-seasonal revenue in the fourth quarter, in part given the backlog that you have?

那麼，您認為第四季的營收有可能比季節性，部分原因是考慮到您有積壓訂單？

That's right.

這是正確的。

And if we were to remove -- I'm going to actually dive into that slightly more. If we were to remove that, the benefit from the backlog, which is a bit unfair, I recognize, but the -- are you seeing better than normal strength out there? And maybe part of the question is that there is so many crosscurrents relative to the economy right now, just I'm trying to use this question as just one more data point as to what's happening out there. So, are you feeling like the underlying activity level is normal? Is seasonally stronger than normal? And trying to pull out the backlog components? What can you do to help us there?

如果我們要剔除──我其實會更深入地探討這個問題。如果我們要剔除積壓訂單帶來的好處，我承認這有點不公平，但是—您是否看到市場表現比正常水平更好？或許部分原因在於，目前經濟存在許多逆流，我只是想用這個問題作為另一個數據點，來了解市場正在發生的事情。那麼，您是否覺得基礎經濟活動水準正常？季節性因素是否比正常水準更強？您是否試圖剔除積壓訂單的組成部分？您能做些什麼來幫助我們？

So, Bill we used, we thought carefully about what examples to provide and what color to provide. So, I will point you back to sort of things I said, when we talked about VARs, when we talked about Ventev, when we talked about Carrier, the diversity of customers and the diversity of projects, right. So, if you think of our commercial business, examples we gave were projects in scientific laboratories, projects in telehealth, projects with theme parks, projects on cruise lines, so the diversity of projects is what is helping us here, the net-net of all of that is our demand is strong. So, we are very happy with customer demand. And we are not dependent on any one sector or any one segment, we are continuing to expand. That was the commentary behind utilities and government and diversifying away from big revenue pools that have -- that can fluctuate quarter-to-quarter to have a more stable business performance.

所以，比爾，我們仔細考慮了要提供哪些範例以及用什麼顏色來呈現。所以，我會提醒大家回顧我之前談到增值轉售商 (VAR)、Ventev 和開利 (Carrier) 時提到的內容，客戶的多樣性和專案的多樣性，對吧。所以，如果你考慮我們的商業業務，我們給的例子包括科學實驗室計畫、遠距醫療計畫、主題樂園計畫、郵輪計畫。專案的多樣性對我們很有幫助，所有這些的最終結果是我們的需求強勁。因此，我們對客戶需求非常滿意。我們不依賴任何一個產業或任何一個細分市場，我們正在持續擴張。這是對公用事業和政府業務的評論，我們正努力實現業務多元化，擺脫季度波動較大的大型收入池，從而實現更穩定的業務表現。

Let me actually jump on the utility component of that, you mentioned automated meters, how replicable is the solution that you are providing there. And kind of with that, just the sort of thing where we could see you doing a lot more in the meter business and in the coming quarters?

我來談談其中的實用部分，您提到了自動化電錶，您提供的解決方案的可複製性如何？因此，我們預計您在未來幾季將在電錶業務方面取得更多進展。

So, we won't get ahead of what we said, but we think the solution we have with Ventev enclosures, it offers a turnkey solution. We've done that with a few utilities. We think it's replicable. But we are working on many sales, business development efforts that I'd like to give the team time to work before I get ahead of things.

所以，我們不會提前說，但我們認為 Ventev 機櫃的解決方案是一個交鑰匙解決方案。我們已經在一些公用事業公司實施了這項技術。我們認為它可以複製。但我們正在進行許多銷售和業務拓展工作，我希望在開始之前給團隊一些時間。

And those enclosures, are they for electric, gas, or water meters?

這些外殼是用於電錶、瓦斯表還是水錶的？

Primarily electric and gas at this point.

目前主要使用電力和天然氣。

And then, one expense question, once your old -- old system goes down and the new ERP system is at a normal, a normal expense level, what will be the expense, excuse me the expense reduction in the June quarter and beyond?

然後，一個費用問題，一旦您的舊系統崩潰並且新的 ERP 系統處於正常費用水平，那麼費用是多少，請問六月季度及以後的費用減少是多少？

Yes, so you've got two different pieces of that, you have the depreciation that Sandip mentioned, which will be approximately $1.5 million a quarter. So, that will be a negative to SG&A and to net income, but no impact to EBITDA. And then, the offset to that is the benefits that we're expecting to achieve both from lower costs related to the old system, as well as efficiencies and freight charges and other more better ways that we're managing the business. We're not specifically calling that number out, but last quarter, we did say it would be several million dollars over the course of the next year.

是的，所以這裡面有兩個不同的部分。桑迪普提到的折舊，大約每季150萬美元。所以，這將對銷售、行政及行政費用（SG&A）和淨收入產生負面影響，但不會影響息稅折舊攤提前利潤（EBITDA）。然後，我們預計將從降低舊系統相關成本、提高效率、降低運費以及其他更有效率的業務管理方式中獲得收益，從而抵消這部分損失。我們沒有具體透露這個數字，但上個季度我們確實說過，明年的折舊成本將達到數百萬美元。

We have no further questions. At this time, I'll hand the conference back over to management.

我們沒有其他問題了。現在，我將會議交還給管理階層。

Thank you, Regina. Thank you everyone for joining the call today. We look forward to discussing our year-end results with you in May. Have a great day.

謝謝，Regina。感謝大家今天參加電話會議。我們期待在五月與大家討論我們的年終業績。祝大家擁有美好的一天。

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

女士們，先生們，今天的電話會議到此結束。感謝各位的參與。現在可以掛斷電話了。