TESSCO Technologies, Inc. (TESS)’s Q3 2015 Earnings Conference Call Transcript

Eric: Yeah one clarification I think I misread 20 to 30 % Its 3 to 5 % [laughter]I think that to answer question that 3 to 5% is on fixed expenses which is not all expenses.  We got certain variable expenses around compensations and some other things and so its around 90 million dollars give or take base of this years expenses if you pull those out.

Matt: If you pull after you pull that 3-5% out or before you pull 3-5% out ?

Eric: The base of fixed expenses is about 90 million so if you take 3-5% out.

Matt: Okay, alright. That makes sense. And then touching on the margins, as you see the carriers spending return in 2016, how should we look at gross margins moving throughout the fiscal year?

Eric: The carriers begin to pick up which we think we will probably see a ramp but not a huge ramp. The carriers are definitely a lower margin business for us, same time the private systems which is really where we are attacking even harder, that is a higher margin business for us. So we can see the two of those offset, as it usually does [inaudible] product next.  Private systems was a little bit lower than it has been because they were buying test equipment. Just happened to be that some of their bigger deals were this quarter.  It can change from quarter to quarter. We always see so significant fluctuation just based on product [inaudible].  In general I would think we are looking at private systems increasing decline margin if the carriers increase.

Eric: It is also important that this year a lot of our sales have been lower margin.  The LTE has slowed and really pulled back so LTE comes in first as the margin is higher then it is for [?] but [?] business is quite good.  $5 is the margin.

Matt: That’s all the questions I have. Thanks for answering them.

Operator: Question now from David Kerdell of Brahman Capital.

David Kerdell – Brahman Capital: When did you become comScore preferred supplier? And when did that begin to take effect for you guys and the criteria used to select the supplier list?