Board and Management Actions Position TESSCO to Capture Explosive Industry Growth
Refreshed Board and Strong Leadership Team in Place
Mr. Barnhill’s Distracting Consent Solicitation Is a Self-Serving Attempt to Increase His Influence with the Board
Urges Shareholders to Complete and Return TESSCO’s GREEN Consent Revocation Card
TESSCO Technologies Incorporated (NASDAQ: TESS), a leading value-added distributor and solutions provider for the wireless industry, today provided a presentation to investors concerning its business performance, strategy and governance. The investor presentation also addresses the attempt by Robert B. Barnhill, Jr. to remove and replace a majority of the Board of Directors of TESSCO through a consent solicitation.
TESSCO encourages shareholders to read the investor presentation here: LINK. Additional important information related to the consent solicitation can be found on the Company’s website at ir.tessco.com.
"TESSCO continues to make strong progress on its three-pillar strategy to create shareholder value and return the Company to profitable growth," said John D. Beletic, Chairman of the Board. "Ironically, Mr. Barnhill’s consent solicitation is grounded in complaints and issues that germinated and festered in almost every case during Mr. Barnhill’s own tenure as CEO and Executive Chairman. We are tackling these issues with an excellent strategic plan and an exceptional leadership team, both of which Mr. Barnhill himself supported enthusiastically just months ago."
Mr. Beletic continued, "TESSCO has a substantially refreshed Board of Directors, with five new directors in the last three years – and three of them joining since our new CEO was named. Mr. Barnhill is now seeking to remove and replace a majority of the Board, including the two highly qualified directors appointed today – while taking credit for the strategy developed by our CEO – because Mr. Barnhill apparently continues to believe TESSCO is ‘his’ company. The Board believes it is taking the right actions to ensure a complete transformation of TESSCO, putting behind it the legacy issues that date to Mr. Barnhill’s time as an executive and that have been a major drag on performance."
Highlights from the TESSCO presentation include:
TESSCO is well-positioned to capture explosive industry growth
TESSCO has a leadership position in the wireless industry, supplying value-added resellers, carriers and private network operators with state-of-the-art equipment from hundreds of manufacturers.
Under leadership of its new CEO, Sandip Mukerjee, and his new strategic plan, the Company is poised to execute well on this opportunity.
TESSCO’s transformation is well underway
The Company is executing its three-pillar strategy, focusing on value-added distribution, industrializing its proprietary Ventev products and expanding into software and service solutions.
TESSCO’s new management team is making progress to resolve legacy issues originating from Mr. Barnhill’s leadership tenure, including its antiquated IT infrastructure, inefficient logistics, suboptimal sales force organization and substandard eCommerce website.
After a thorough strategic review, the Board recently took the deliberate step to divest its non-strategic Retail Business segment, which was started and promoted by Mr. Barnhill.
TESSCO has the right leadership team in place to continue executing its profitable growth strategy
Sandip Mukerjee joined TESSCO as CEO in August 2019, with unanimous support from the Board, and has an executive team that has been largely refreshed since 2019.
Beginning in the spring, the Board conducted a thorough search for new directors, adding three directors since July 2020, with two retirements and one pending retirement. The new directors, all of whom are diverse, bring additional industry and functional expertise to support our new CEO.
Mr. Barnhill’s has a weak track record as a leader of TESSCO
During Mr. Barnhill’s tenure as CEO, TESSCO failed to capitalize on unprecedented wireless industry growth and dramatically underperformed its peers and the market.
Mr. Barnhill’s tenure was beset by numerous strategic, compliance and operational issues.
During the last three years of Mr. Barnhill’s tenure as CEO, Mr. Barnhill claimed to be interested in "transforming" TESSCO, but he failed to do so, leaving his successors with a host of issues to resolve.
Mr. Barnhill became frustrated with certain independent directors when he was unable to convince the Board to install his hand-selected candidate, who is one of Mr. Barnhill's current nominees, as CEO in early 2019
After TESSCO hired a different CEO, Mr. Barnhill was initially supportive and was complimentary of TESSCO’s strategy; then Mr. Barnhill tried to buy the Company at the depths of the pandemic-related selloff in March
Mr. Barnhill has been extremely supportive of TESSCO’s new CEO, management’s turnaround efforts and growth strategy, and he also voted in favor of the sale and divestiture of the Retail Business.
In March 2020, during the depths of the pandemic-related selloff, Mr. Barnhill disclosed his desire to take the Company private. The Board formed a Special Committee, which insisted on a conventional process for circumstances such as this. Mr. Barnhill refused to abide by those procedures.
When Mr. Barnhill’s opportunistic attempt to acquire TESSCO failed, he launched a consent solicitation to remove the majority of the independent directors
Frustrated that the Special Committee was insisting upon a fair process, Mr. Barnhill tried to remove a majority of the Board through a withhold vote campaign at the July 2020 annual meeting.
When that failed to deliver the outcome he wanted, Mr. Barnhill launched a costly and distracting consent solicitation to obtain a majority of TESSCO’s Board seats.
Mr. Barnhill has not articulated a plan for the Company that is any different than the plan already approved by the Board (including by Mr. Barnhill) that is currently being implemented
Mr. Barnhill’s "plan" is lifted from the comprehensive strategic plan developed by management that Mr. Barnhill enthusiastically embraced.
Mr. Barnhill’s nominees are not additive to the Board and are not independent of Mr. Barnhill
Mr. Barnhill’s nominees have refused to be interviewed or included in the Company’s ongoing Board refreshment process unless the Board agreed in advance to place them on the Board and accede to Mr. Barnhill’s other settlement demands.
At least one of Mr. Barnhill’s nominees has a relationship with Mr. Barnhill and shared the Company’s material non-public information with outsiders in the past.
TESSCO shareholders are reminded that their vote is important, no matter how many or how few shares they own. TESSCO urges you to support your Company’s Board by signing, dating and returning the enclosed GREEN Consent Revocation Card TODAY. If you receive a White Consent Card from Robert B. Barnhill, Jr., please disregard it.
If you have any questions or need assistance executing your revocation,
please contact TESSCO’s proxy solicitor,
Innisfree M&A Incorporated
Shareholders may call toll-free: (877) 800-5195
Banks and Brokers may call collect: (212) 750-5833
Sidley Austin LLP and Ballard Spahr LLP are serving as legal counsel to the Special Committee of TESSCO’s Board of Directors.
About TESSCO Technologies Incorporated (NASDAQ: TESS)
TESSCO Technologies, Inc. (NASDAQ: TESS) is a value-added technology distributor, manufacturer, and solutions provider serving commercial and retail customers in the wireless infrastructure and mobile device accessories markets. The company was founded more than 30 years ago with a commitment to deliver industry-leading products, knowledge, solutions, and customer service. TESSCO supplies more than 46,000 products from 350 of the industry’s top manufacturers in mobile communications, Wi-Fi, Internet of Things ("IoT"), wireless backhaul, and more. TESSCO is a single source for outstanding customer experience, expert knowledge, and complete end-to-end solutions for the wireless industry. For more information, visit www.tessco.com.
This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained herein, including statements regarding our future results of operations and financial position, strategy and plans and future prospects, and our expectations for future operations, are forward-looking statements. These forward-looking statements are based on current expectations and analysis, and actual results may differ materially from those projected. These forward-looking statements may generally be identified by the use of the words "may," "will," "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "seeks," "believes," "estimates," and similar expressions, but the absence of these words or phrases does not necessarily mean that a statement is not forward-looking. These forward-looking statements are only predictions and involve a number of risks, uncertainties and assumptions, many of which are outside of our control. Our actual results may differ materially and adversely from those described in or contemplated by any such forward-looking statement for a variety of reasons, including those risks identified in our most recent Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission (the "SEC"), under the heading "Risk Factors" and otherwise. Consequently, the reader is cautioned to consider all forward-looking statements in light of the risks to which they are subject. For additional information with respect to risks and other factors which could occur, see Tessco’s Annual Report on Form 10-K for the year ended March 29, 2020, including Part I, Item 1A, "Risk Factors" therein, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other securities filings with the SEC that are available at the SEC’s website at www.sec.gov and other securities regulators.
We are not able to identify or control all circumstances that could occur in the future that may materially and adversely affect our business and operating results. Without limiting the risks that we describe in our periodic reports and elsewhere, among the risks that could lead to a materially adverse impact on our business or operating results are the following: the impact and results of the consent solicitation and other activism activities by Robert B. Barnhill, Jr. and certain other participants in his consent solicitation and/or other activist investors, termination or non-renewal of limited duration agreements or arrangements with our vendors and affinity partners that are typically terminable by either party upon several months or otherwise relatively short notice; loss of significant customers or relationships, including affinity relationships; loss of customers either directly or indirectly as a result of consolidation among large wireless services carriers and others within the wireless communications industry; the strength of our customers’, vendors’ and affinity partners’ business; negative or adverse economic conditions, including those adversely affecting consumer confidence or consumer or business spending or otherwise adversely impacting our vendors or customers, including their access to capital or liquidity, or our customers’ demand for, or ability to fund or pay for, the purchase of our products and services; our dependence on a relatively small number of suppliers and vendors, which could hamper our ability to maintain appropriate inventory levels and meet customer demand; changes in customer and product mix that affect gross margin; effect of "conflict minerals" regulations on the supply and cost of certain of our products; failure of our information technology system or distribution system; system security or data protection breaches; technology changes in the wireless communications industry or technological failures, which could lead to significant inventory obsolescence and/or our inability to offer key products that our customers demand; third-party freight carrier interruption; increased competition from competitors, including manufacturers or national and regional distributors of the products we sell and the absence of significant barriers to entry which could result in pricing and other pressures on profitability and market share; our relative bargaining power and inability to negotiate favorable terms with our vendors and customers; our inability to access capital and obtain financing as and when needed; transitional and other risks associated with acquisitions of companies that we may undertake in an effort to expand our business; claims against us for breach of the intellectual property rights of third parties; product liability claims; our inability to protect certain intellectual property, including systems and technologies on which we rely; our inability to hire or retain for any reason our key professionals, management and staff; health epidemics or pandemics or other outbreaks or events, or national or world events or disasters beyond our control; and the possibility that, for unforeseen or other reasons, we may be delayed in entering into or performing, or may fail to enter into or perform, anticipated contracts or may otherwise be delayed in realizing or fail to realize anticipated revenues or anticipated savings.
The above list should not be construed as exhaustive and should be read in conjunction with our other disclosures, including but not limited to the risk factors described in our most recent Annual Report on Form 10-K and other periodic reports filed with the SEC, under the heading "Risk Factors" and otherwise. Other risks may be described from time to time in our filings made under the securities laws. New risks emerge from time to time. It is not possible for our management to predict all risks.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Any forward-looking statement made by us in this press release speaks only as of the date on which it is made. We disclaim any duty to update any of these forward-looking statements after the date of this press release to confirm these statements to actual results or revised expectations.
Important Additional Information and Where to Find It
In connection with the consent solicitation initiated by Robert B. Barnhill, Jr. and certain other participants, TESSCO Technologies Incorporated (the "Company") has filed a consent revocation statement and accompanying GREEN consent revocation card and other relevant documents with the Securities and Exchange Commission (the "SEC"). SHAREHOLDERS ARE STRONGLY ENCOURAGED TO CAREFULLY READ THE COMPANY’S CONSENT REVOCATION STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO), ACCOMPANYING GREEN CONSENT REVOCATION CARD AND ALL OTHER DOCUMENTS FILED WITH THE SEC IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION. Shareholders may obtain a free copy of the consent revocation statement, any amendments or supplements to the consent revocation statement and other documents that the Company files with the SEC at the SEC’s website at www.sec.gov or the Company’s website at https://ir.tessco.com as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC.
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Cindy King, TESSCO
+1 410 229 1161 or firstname.lastname@example.org
Jeff Kauth / Aiden Woglom
Joele Frank Wilkinson Brimmer Katcher
Larry Miller / Gabrielle Wolf
Innisfree M&A Incorporated
Phone: (212) 750-5833