Welcome to TESSCO Investor Update. Week of September 22, 2008 Baltimore, Maryland

Transcription

1 Welcome to TESSCO Investor Update Week of September 22, 2008 Baltimore, Maryland

2 Forward-Looking Statements Certain statements made by us during this presentation are forward-looking statements within the meaning of federal securities laws. TESSCO s actual results may differ materially from those discussed in any forwardlooking statement. Additional information concerning factors that may cause such a difference can be found in TESSCO's public disclosure, including TESSCO's most recent report on Form 10-K, as well as prior and subsequently filed reports.

3 TESSCO s GOALS Capitalize on the exploding world of wireless as it converges with the Internet. Leverage, integrate and scale our value proposition, successes and learnings since Create sustainable, enduring value for customers, manufacturers, team members, and shareowners.

4 Press Release: Monday, September 22, 2008 Fiscal Q2 expected to be third consecutive record quarter. EPS expected to exceed previous record of $0.38 in Q1. Fiscal 2009 guidance raised to $ $1.50 EPS. From $1.25 to $1.40 previously provided. Compared to $0.88 actual EPS in FY08. Stock buyback update. Approximately 540,000 shares repurchased during Q2. 470,000 in privately negotiated transaction. Approximately 70,000 in daily open market purchases.

5 The World Is Transitioning From Wired to Wireless Access Lines (Millions) Wired Wireless

6 Wireless and IP Convergence Data and Internet Protocol Voice Communications Music and Video Audio, video, and data all delivered seamlessly to anyone, anywhere

7 Wireless is now the access to the Internet.

8 TESSCO Addresses the Customer s Concerns Expertise Concerns Making the right system design, product selection and inventory decisions. Operational concerns Assuring that the system is built and operating with total reliability on time, and stays operating. Financial Concerns Having the available credit facilities required to operate and grow. Achieving the lowest total supply chain cost.

9 TESSCO s Value Proposition Your Total Source for the builders, operators, maintainers and users of wireless systems. Delivering what you need, when and where you need it! Product + Supply Chain Solutions Anything, Anywhere, Anytime

10 Markets nearly 9,000 monthly buying customers Public Carriers & Network Operators Resellers Users & Governments Cellular & PCS Carriers Broadband Carriers Internet Service Providers Infrastructure Site Owners Program Managers Contractors & Integrators Cellular Carrier Stores Retailers Sales and Installation Centers Value-Added Resellers/Dealers Energy / Utilities / Transportation / Construction Enterprise Federal, State & Local Gov t Agencies Integrators Manufacturers Repair Centers & Technicians

11 8,800 Monthly Buyers by Market FY08 24% 11% 65% PNO Reseller SMU, Gov't

12 Revenue by Market FY 08 8% 12% 26% 36% 2% 16% PNO SMU, Gov't (excl Nokia) AT&T Reseller (excl AT&T) Consumer Nokia

13 Your Total Source for the infrastructure; user devices, appliances and accessories; and installation, test, and maintenance equipment and supplies for the expanding and converging wireless systems: Cellular Two-way dispatch radio Broadband connectivity Point to point Point to multipoint WiMAX Wireless networking WLAN WAN Location and tracking Data acquisition Messaging Voice over Internet Security Video surveillance Delivering what you need, when and where you need it!

14 Products supplying over 25,000 products from approximately 300 manufacturers, including TESSCO proprietary products Network Infrastructure Equipment Mobile Devices & Accessories Installation, Test & Maintenance Antennas & Base Station Systems Transmission Line & Cable Products Broadband Radio Equipment Network Equipment & Hardware Tower & Site Hardware Power Systems WLAN Products Devices Device Accessories Two-Way Radios & Accessories Antennas, Mounts & Amplifiers Asset Tracking & Location Systems Test Equipment & Calibration Bench Equipment Tools Shop Supplies Safety & Apparel Repair Components

15 Ventev Innovations Division of TESSCO Technologies, Inc. Oversees and manages three TESSCOowned brands: TerraWave Solutions (2006 acquisition) Ventev Wireless Solutions FYE 08 revenue contribution reached $44 million 15-20% annual growth rate Created as complement and contingency to expanding product offering via: Supply chain sourcing Lowering total cost to manufacture / acquire Unique products and configured solutions

16 TESSCO Training GigaWave Technologies, Ltd. A Division of TESSCO Technologies, Inc. (acquired in 2006). Instructor-led training courses for wireless local area networking (WLAN). Develops and delivers wireless networking courseware for Cisco Systems. Allows IT professionals to obtain Cisco Wireless Certifications. TESSCO Technical and sales training solutions for the wireless, telecommunications, and networking industries. Hands-on training in areas such as test equipment, fiber optics, IP-based services, WLAN, broadband, retail sales, and nextgeneration wireless. More than 50 standard courses and numerous customized programs.

17 8,800 Monthly Buyers by Line of Business FY 08 15% 34% ` 51% Infra MDA ITM

18 Revenue by Line of Business FY 08 8% 26% 32% 8% Infra ITM (excl Nokia) Nokia 26% MDA (excl AT&T) AT&T

19 Over 75,000 customers Over 300 manufacturers

20 Knowledge The TESSCO High-Tech and High-Touch KCDC System Providing the intelligence for optimum, faster decisions. Configuration Transforming products into solutions for immediate use. Delivery Arriving at the point of use or sale complete, on time, and error free. Control Assuring total management of the total supply chain process and cost.

21 NOWLEDGE Providing the intelligence for optimum, faster decisions TESSCO distills a massive amount of information from many manufacturers into user-friendly knowledge so a customer can make fast, informed purchasing decisions. Available in print and at TESSCO.com. Organization by product type, not manufacturer, for easy comparison. Calculation of total delivered costs before order completion. After-sale technical training and installation support.

22 Educating the industry The Wireless Bulletin (5 versions) Bimonthly printed publications for what s new, needed, and next in accessories, networking, shop supplies, and training. TESSCO.com The most robust online search, comparison, and selection tool in the industry. The Wireless Journal Bimonthly print and online publication of case studies, success stories and product advertorials. Recognized as one of the industry s most read publications. The Wireless Guide The hallmark annual publication in the industry with more than 25,000 products and solutions from 300 manufacturers The Wireless Update (9 versions) Monthly electronic newsletter customized for each business segment.

23 Educating the Industry Artful and Scientific Marketing Award-winning Web site TESSCO.com Award-winning Wireless Guide Nationally ranked and recognized as having one of the best corporate public relations departments in the marketplace. Awarded one of the "Best of the Best" in IT public relations based on the value delivered to the editorial process.* 150,000 active names 75,000 active companies / locations 1,300,000 annual print touches 3,000,000 annual electronic touches 3,500,000 annual Web visits 60,000 Web pages indexed on Google 28,000,000 annual page views * SOURCE: PRSourceCode s Top Tech Communicator s Study

24 ONFIGURATION Transforming products into solutions for immediate use. Bill of materials worksheet Engineering specifications and services and a broad selection of stocked-in-depth items and service capabilities. End-to-end product and service solutions A complete solution with services for site kitting and logistics management. Kitted and configured What you need from an in-depth inventory of broad choices, how you need it, with customized packaging options. Value-added services Readying product for immediate use, installation or resale with tuning, installation, and assembly. Virtual inventory Investing only when you are ready to use materials by buying only what you need, when you need it not in bulk.

25 ELIVERY Everything arriving complete, on time, error free to the point of use or sale. Upfront confirmation Confirm total delivered costs on the phone and online 24 hours a day, 7 days a week. Delivery confirmation Confirm availability of the materials you need and how they will be configured. Where and when you need it Direct anywhere, anytime delivery to depot, store, customer or multiple sites. Speed to market A single delivery for every order with custom packaging and configuration eliminates staging and warehousing. Performance and Delivery Guarantee Complete, on-time, error- and damage-free delivery and product performance guaranteed. Risk-free trial period and warranty information.

26 Global Availability System Assuring complete, on-time delivery Americas Sales & Logistics Center Nevada Global Logistics Center Maryland

27 Operational Excellence Complete, On Time, and Error Free 25,000 stocked SKUs 100,000 configured SKUs 95% product availability 1.1 million orders processed annually 99.92% on-time delivery 99.60% order accuracy 24/7/365 emergency response

28 ONTROL Assuring total management of the total supply chain process and cost. Consistent pricing across manufacturers Upfront, consistent pricing organized by product, not manufacturer. Authorization control Central control over multi-site purchasing within your preapproved parameters (select who, how much, and what). Order delivery tracking One PO leads to one delivery, one packing list, and one invoice. Property and usage tracking and history Control your capital with customized accounting, item usage, property records. Reduce your inventory investment Reduce risk of obsolete or excess inventory with a riskfree, 30-day guarantee. Credit, financing and leasing options

29 A Look at Fiscal 2008 Ended March 2008 Difficult first half of the year Declines in revenue and profits Major change in sales organization Strong second half $0.61 EPS 118% increase over the first half Record EPS in Q4 Total Fiscal Year EPS of $0.88

30 A Look at the Past Year Fiscal 2008 Excellent progress: Strengthening strategies and initiatives Commitment to grow Value to customers and manufacturers Market share Diversification Developing leadership and the ability to execute

31 Beginning the New Year Q1 Fiscal 2009 Highlights Record earnings $0.38 per share 2 nd consecutive record quarter 153% increase compared to Q1 last year 19% increase sequentially Trailing 12-month EPS reaches $1.12 Trailing 12-month EBITDA/share reaches $2.74 Operating margin improves to 2.9% 142% increase compared to Q1 last year 45% increase sequentially

32 Q1 Fiscal 2009 Highlights Gross margin reaches 25.4% Improved margin in core business Improved margin in concentrated business 12% increase compared to Q1 last year 9% increase sequentially Business outlook adjusted Low end raised by $0.15 Continued strong momentum expected in Q2

33 Press Release: Monday, September 22, 2008 Fiscal Q2 expected to be third consecutive record quarter. EPS expected to exceed previous record of $0.38 in Q1. Fiscal 2009 guidance raised to $ $1.50 EPS. From $ $1.40 previously provided. Compared to $0.88 actual EPS in FY08. Stock buyback update. Approximately 540,000 shares repurchased during Q2 470,000 in privately negotiated transaction. Approximately 70,000 in daily open market purchases.

34 Diluted Earnings Per Share Dollars 0.38 Record quarter expected Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Expected* * Per September 22, 2008, press release, TESSCO expects Q2 09 to be the third consecutive quarter of record earnings per share. (The first quarter s $0.38 is the current record.)

35 Diluted Earnings Per Share Dollars 1.38 * FY 05 FY 06 FY 07 FY 08 TTM Q2 09 Expected* * Per September 22, 2008, press release, TESSCO expects Q2 09 to be the third consecutive quarter of record earnings per share. (The first quarter s $0.38 is the current record.) The TTM Q2 09 calculation includes a second quarter earnings per share estimate of $0.39 (reflecting a minimum of $0.01 better than the current record).

36 EBITDA per Diluted Share Dollars * FY 05 FY 06 FY 07 FY 08 TTM Q2 09 Expected* * Per September 22, 2008, press release, TESSCO expects Q2 09 to be the third consecutive quarter of record earnings per share. (The first quarter s $0.38 is the current record.) The TTM Q2 09 calculation assumes Q2 09 EBITDA per share will be equal to Q1 09 EBITDA per share. This assumption appears reasonable assuming further that EPS increases and all other factors bearing on EBITDA per share remain consistent. This calculation is for informational purposes only and should not be construed as guidance as to Q2 EBITDA per share or any other factors bearing on EBITDA per share (other than earnings per share).

37 Gross Margin Indexed on Q Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Core Concentrated * * Concentrated includes our tier one carrier and large repair and replacement parts relationship.

38 Margins 15% 10% 5% 0% FY 05 FY 06 FY 07 FY 08 3 Mos. FY 09 Operating income % of GP After tax income % of GP

39 Returns 15% 10% 5% 0% FY 05 FY 06 FY 07 FY 08 3 Mos. FY 09 return on avg assets return on avg equity

40 Cash Balance Sheet Highlights $5.0 million balance Debt As of June, 2008 No outstanding balance on $50 million credit facility $4.1 million facility mortgage FY08 cash flows $8.1 million provided by operations Cap ex $0.4 million Inventory $50.0 million 7.4 turns

41 TESSCO Stock Buyback We believe that the repurchase of shares, when appropriate, is an excellent use of funds Enhances long-term shareholder value Potentially provides increased liquidity to shareowners. 2.6M shares bought back since plan inception in May 2003 Average price per share of $ ,000 shares recently repurchased in a privately negotiated transaction Approximately 70,000 shares repurchased in daily open market trades during Q2

42 TESSCO Stock Ownership 4.8M shares outstanding Insider holdings 32% Robert Barnhill, Jr. 25% All other insiders 7% Institutional holdings 53% Discovery Group, LLC 13% Renaissance Technologies, LLC 7% Dimensional Fund Advisors, Inc. 5% AXA Rosenberg Investment Management 4% Numeric Investors 3% Retail holdings 15%

43 Valuation $70M Market Cap 4.7x EBITDA (trailing 12 months Q1 09) 4.1x EBITDA (trailing 12 months Q2 09*) 12.9x EPS (trailing 12 months Q1 09) 10.4x EPS (trailing 12 months Q2 09*) 1.1 Price / book value * Per September 22, 2008, press release, TESSCO expects Q2 09 to be the third consecutive quarter of record earnings per share. (The first quarter s $0.38 is the current record.) The TTM Q2 09 EBITDA calculation assumes Q2 09 EBITDA per share will be equal to Q1 09 EBITDA per share. This assumption appears reasonable assuming further that EPS increases and all other factors bearing on EBITDA per share remain consistent. This calculation is for informational purposes only and should not be construed as guidance as to Q2 EBITDA per share or any other factors bearing on EBITDA per share (other than earnings per share). The TTM Q2 09 EPS calculation includes a second quarter earnings per share estimate of $0.39 (reflecting a minimum of $0.01 better than the current record).

44 Looking to Fiscal 2009 Strong start in Q1 Record earnings of $0.38 per share Improved margins and returns Trend continues in Q2 Initiatives well underway to achieve: Vast number of loyal customer relationships Robust product and solution offering Unmatched customer experience Superior productivity

45 Our Goal Creating Superior Enduring Value for Customers, Manufacturers, Team Members and Shareowners Wireless applications are exploding. Foundation is in place. Productive, scalable operating platform with capacity. Outstanding leadership and team member talent. Financial strength. Execution is key.

46 5 Fundamental Goals to Drive Shareowner Value 1. Increase quality revenues selling more commercial and government customers, more product categories, more often. 2. Increase diversification, reduce concentration risk reducing the dependence on any one customer, supplier, facility and / or individual. 3. Grow margins by executing with high productivity. 4. Improve returns through gains in margins and asset turnover. 5. Recruit, retain, and develop exceptional leaders and contributors to assure the capacity, commitment and capability of achieving our goals, today and tomorrow.

47 Your Total Source for Everything Wireless Expertise providing access to the most comprehensive information, products and solutions in the wireless industry. Operations providing access to a supply chain that assures complete, configured products when and where they are needed. Finance providing an assortment of payment options. TESSCO Technologies Incorporated McCormick Road Hunt Valley, Maryland USA TESSCO.com

48 APPENDIX

49 TESSCO Technologies Incorporated Reconciliation of Net Income to Earning Before Interest, Taxes and Depreciation and Amortization (EBITDA) Fiscal Quarters Ended Jun 25, 2006 Sep 24, 2006 Dec 24, 2006 Apr 1, 2007 Jul 1, 2007 Sep 30, 2007 Dec 30, 2007 Mar 30, 2008 Jun 29, 2008 Net Income $ 1,853 $ 1,856 $ 1,765 $ 1,568 $ 866 $ 716 $ 1,534 $ 1,702 $ 2,063 Add: Provisions for income taxes 1,109 1,138 1, ,319 Interest, net Depreciation and amortization 1,138 1,182 1,205 1,238 1,230 1,203 1,204 1,177 1,099 EBITDA $ 4,255 $ 4,356 $ 4,353 $ 4,001 $ 2,722 $ 2,544 $ 3,876 $ 3,784 $ 4,618 EBITDA per diluted share $ 0.66 $ 0.69 $ 0.77 $ 0.70 $ 0.48 $ 0.46 $ 0.72 $ 0.70 $ 0.86 Diluted weighed average shares outstanding 6,414 6,338 5,629 5,683 5,694 5,539 5,374 5,374 5,390 EBITDA and EBITDA per diluted share are not recognized terms under GAAP and does not purport to be alternatives to net income or earnings per share as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Management believes EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies.

50 TESSCO Technologies Incorporated Quarterly Segment Information July 1, 2007 September 30, 2007 Fiscal Quarter Ended December 30, 2007 March 30, 2008 June 29, 2008 Commercial Revenues Network Infrastructure: Public Carriers and Network Operators $ 11,425 $ 11,471 $ 13,778 $ 10,303 $ 11,542 Resellers 17,567 18,289 17,084 16,899 18,550 SMUs and Governments 10,943 12,494 13,719 12,244 12,856 Total Network Infrastructure 39,935 42,254 44,581 39,446 42,948 Mobile Devices and Accessories: Public Carriers and Network Operators Resellers 57,048 60,878 62,975 62,648 50,794 SMUs and Governments 3,243 3,520 3,325 3,658 3,812 Total Mobile Devices and Accessories 60,872 64,966 66,827 66,823 55,290 Installation, Test and Maintenance: Public Carriers and Network Operators 2,606 3,420 3,705 3,468 3,660 Resellers 2,383 2,281 2,318 2,566 2,718 SMUs and Governments 16,439 16,626 15,856 13,613 14,787 Total Installation, Test and Maintenance 21,428 22,327 21,879 19,647 21,165 Total Commerical Revenues 122, , , , ,403 Consumer Revenues - Mobile Devices and Accessories 2,195 2,971 2,445 2,372 2,665 Total Revenues $ 124,430 $ 132,518 $ 135,732 $ 128,288 $ 122,068

51 TESSCO Technologies Incorporated Quarterly Segment Information Continued July 1, 2007 September 30, 2007 Fiscal Quarter Ended December 30, 2007 March 30, 2008 June 29, 2008 Commercial Gross Profit Network Infrastructure: Public Carriers and Network Operators $ 2,677 $ 2,801 $ 3,247 $ 2,662 $ 3,060 Resellers 4,205 4,513 4,946 4,457 4,986 SMUs and Governments 2,820 3,214 3,315 3,429 3,635 Total Network Infrastructure 9,702 10,528 11,508 10,548 11,681 Mobile Devices and Accessories: Public Carriers and Network Operators Resellers 11,409 11,040 12,116 12,414 12,112 SMUs and Governments 1,061 1, ,182 1,275 Total Mobile Devices and Accessories 12,634 12,303 13,236 13,758 13,593 Installation, Test and Maintenance: Public Carriers and Network Operators Resellers SMUs and Governments 3,475 3,313 3,260 2,750 3,089 Total Installation, Test and Maintenance 4,952 4,810 4,760 4,554 4,741 Total Commerical Gross Profit 27,288 27,641 29,504 28,860 30,015 Consumer Gross Profit - Mobile Devices and Accessories 873 1, Total Gross Profit 28,161 28,681 30,402 29,745 31,013