OCC - Earnings call transcript Q1 2019 | Optical Cable Corporation

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Operator

My name is Christy, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Optical Cable Corporation First Quarter 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. [Operator Instructions] I'll now turn the call over to Mr. Siegel. sir. ahead go Please

Andrew Siegel

earnings you of participating Call. Fiscal should of time, Thank earlier Corporation's By Optical First everyone the copy a Quarter Year have release all morning. issued on today. for Cable this press Good XXXX Conference

also a copy. visit for occfiber.com can You

the us Chief and Neil Financial today On Wilkin, Executive Chief President and call Senior OCC; of Vice with Officer and are President Tracy Smith, Officer.

risks Statements well the call forward-looking those and to remind With The everyone the content this please morning's of statements begin, that of we contain turn involve to a of this These as that, results may webcast I'll I'd like Neil to to factors future and begin. number Before Corporation of limited Forward-Looking press occfiber.com not on differ uncertainties. to, today's but due the call referenced actual that Internet Cable factors in may call. as Optical section including, Neil, Wilkin. risks, cautionary the over release. statements materially apply

Neil Wilkin

first three Andrew, few XX, details. Thank a we begin results and call will will questions the morning, XXXX. quarter Tracy's review I After the January we some fiscal as everyone. can. with Tracy then the good as remarks our for many year remarks today of months regarding opening answer ended and first additional quarter XXXX you, will

and institutional the our is during only normal take As investors practice, analysts we session. from questions Q&A will

long and call. of constraints sales the press profit cost release the first quarter, Every our of eliminate opportunity to implementation specialty throughput included our are of in and enhanced implemented and throughput operational support particularly innovative workforce our submissions order meet particularly initiatives, and call. integrated to we initiatives costs and taking future for to the first effort of short-term we such our and submit XXXX increased over goods gross However, costs. increased date These certain efficiency facility, processes the continues expansion, show Instructions are year restructuring also and we demand questions this benefits in Roanoke solutions impact increase markets. being in including volume. shareholders of of suite initiatives, initiatives And will is manufacturing and resulted earnings and time advance in sold and OCC's OCC's action, our of at training from meet our other fiscal to sales of during offer manufacturing our made the the number in include these increased quarter to for to to to net product certain the labor-related short initiatives products term. in Demand which strength, to by of operational of announcing regarding to these throughput our realize comprehensive efficiency and impacted were increase a the demand. anticipated the increasing inefficiencies to changes

growth and expense we in future value are and shareholder and personnel on investment focus initiatives to necessary that continue We creation. believe management for appropriate

market order forward the into higher quarter cable quarter, our particularly sales usual indication Our than second optic for an the first and of backlog load, of fiber and the end products, at our was strength.

XX- XXXX as see trailing million for excited our comparison, million XX, of a sales XX-month the seven sales beyond. As end $XX net about net month to or By trailing our of basis. basis on sales we the approximately sales a to and approximately of of load eight We're or order fiscal fiscal $X backlog/forward October XX, XXXX, weeks year. on opportunities backlog/forward was weeks of January our total XXXX, five load was order six

for targeted executing the markets our move customer the we we needs are our forward, that, to base. with some we enhanced And initiatives financial regarding Smith, our of on position that OCC of deliver will Tracy value are will in focused I'll the shareholders. to first call actions we growth meet now taking specifics who quarter review confident And over results. and turn are As to current diversed strategies the

Tracy Smith

net Thank sales for quarter Consolidated We XXXX. $XX.X the decrease net Neil. decrease first X.X%, fiscal for year compared million were a of of quarter fiscal $XX.X first in the you, the XXXX of million, of experienced our million specialty $X.X to related to same quarter a first both fiscal net specialty sales the sales to markets in in period military the of the XXXX markets net in year. decrease and net first compared in in the last the and reflects enterprise The Net the load of XXXX to customers quarter last States in X% was that not the to sales same did typically to of at backlog during quarter year. $XX higher XX.X% million United OCC's period year United period quarter, to customers fiscal end sales compared of year. expected. year, decreased first compared the outside this order net sales of project decreased first the than the last what the States we last forward and recur same sales

XXXX. OCC’s of profit. XXXX, profit term. negative that gross the in first gross initiatives to profit workforce the restructuring quarter in and $X.X ultimately percentage X.X% XX.X% net was process order facility throughput our fiscal year year, some inefficiencies Roanoke quarter the and fiscal and of meet long demand due Gross compared to quarter our throughput our a in first net in from and expansion, profit was short gross during the over million to the efficiency, intended for training in Gross fiscal compared first profit of resulted sales in XXXX. same increase last period of of the manufacturing to and changes, constraints when certain the the to quarter in was the increased sales primarily impact products XXXX, first fiscal XXXX decrease of of as compared first margin XX.X% to quarter and Turning of fiscal or to

largest quarter employee-related costs being during period XXXX, result the the share-based year incurred the share-based expenses XXXX. employee-related see on is impacts of in expense previously granted was negative first quarter effort fiscal as XXXX period fiscal anticipated in during to the eliminate fiscal three in first primarily million, increases million. SG&A result last of XXXX $XXX,XXX an year. may our for result of the to of equity the XXXX. second and in costs to same compensation of a was in expenses of the year initial net compared to XXXX, of increase realize SG&A the XX, increased sales in the not fiscal to is of first a increase in The long-term, compared in remaining compensation quarter of benefits compared year year in the quarter margin grants The performance-based higher totaling a negative on $XXX,XXX While XXXX continue expense made $X.X fiscal $X.X expected increase $X.X these some quarters our first that and of to of vested sales gross quarter. fiscal SG&A expenses we million profit XX.X% same XXXX. of January percentage as The the initiatives, quarter recur impact first every of XX.X% net were fiscal to XX.X%

quarter OCC each million for in in January of the basic loss a XXXX, and first per XXXX. $X.XX year, normally were for diluted grants, equity to performance-based long-term $X.XX per employees the not fiscal net made January grant share for basic of a first and of of share net diluted or recorded XXXX. loss considered of quarter to Additionally, compared $XXX,XXX or $X.X fiscal

XX, of on January $X.X credit. we $X.X of As credit outstanding had and XXXX, borrowings note our available in million million revolving

our estate turn of the term loan. outstanding $X.X back million We loan With to call I'll real Neil. also under had balances over that,

Neil Wilkin

indicate we Operator, it. to questions And you Thank have have, for we if could our any only Again, appreciate I questions call they to happy investors them. instructions analysts. in any taking out you, institutional Tracy. please and you if are from may participants are now would questions the live answer

Operator

you And Highlands Hugh question a [ph] of have from Thank [Operator McMillan you. Instructions] Pacific.

Unidentified Analyst

are, adjusting backlog sales Yes, I even wanted pace your the and Neil in to seeing just And talk – ask markets if the your sort you're expected specialty those could what Tracy, out quarter. lay increased, if the And the could fourth increase, just making of if driver you make growth nearly of not even investments? investments. those in a just you optimism obviously, that's bit at and please. and sort to for little you big your behind

Neil Wilkin

seen individual diverse a Sure, has an base, customer. geographically as Hugh. customer OCC the standpoint, Appreciate both question. sales thanks from well as by We've industry very

of because markets in some seeing together. And a so of put what of solutions we've particular is level strength specialty our we've been the

military had You'll a year the first quarter recur that last we of first a in this we – to this compared notice significant did order year, not quarter. in also, that had

And amount fair in we if and of out ongoing some strength specifics. there's are a go of take so not, others will differences that believe those We you that our business. into

the we've what and the that half for for half a little so many the first on tends slower us that's to it so year, to slower year. on occasions also half than be unusual bit that of first the disclosed think I second of us – year see is the and not based in of

in year, that gross last saw saw the through recall, above year, at serve make about capability we sales also we And increase customers. profit we could we you we that last XX%, and growth with investments, ensure needed to process. some to have going our an fully so that XX% the If that we it's grew where

our And as generating for investments as those the need so optimism. what's that's well

Unidentified Analyst

what appreciate – drives the of – the you, stronger, can half you that you it. see where typically, you the just And of part seasonality, year? level Thank back sort Neil. Great, that being typical seasonality a of,

Neil Wilkin

And we driven by things and the years. the of last level. again, really at industry, the fact experience geography number we're both into individual a didn't to There's it The goes diverse same that that markets, year that back have selling that customers. over

groups typically be of us those November, occur for changes in as industries. first on and half– And seen months, we've customer the the And into which of are so you seasonality geographies ends as But to quarter in significant and any those general January is that quarter, taking first being overridden or sales quarter. the December our carries high can winter that kind during a too, out base first in customers or so are not as normally holiday second by that of the rule, in April. anomalies high they months and also

Unidentified Analyst

thank much. very it. Appreciate Great, you

Operator

this further And turn time. or for any Neil to have over closing I'll Instructions] back no [Operator questions call we additional at the remarks.

Neil Wilkin

Thank you, Christy.

today. those Andrew, individual questions you? by also We think we investors. have could of sometimes get I submitted And some

Andrew Siegel

today's of Neil. to Actually, those Yes, asked some about shareholders XG. both questions. shareholders In advance submitted call, two

So are let's start that there. tailwind interest And OCC? for They to you asked seeing? of be kind what a going is

Neil Wilkin

like Okay. will going opportunity, outs. allow OCC but to look advantage outs, carrier say We we're to in That's OCC. for at excited And prior can taking than that on much the significant that to a that steps important in more roll that. significant prior channels our should an opportunities. based, our markets that us other doing opportunity take XG least, And predict certainly, to about compared everything we and XG exactly It's to necessarily believe that to significant we're is can of positioned we that. the increase, it those we're roll than be realize hard not that's technology be will seems wireless so us participate for what

Andrew Siegel

Thanks Neil.

submitted XX ask also who but shareholder XG, questions. submitted questions second other about The did about

them through So move we'll quickly. try to

to of prominent they the are stock, – investors related What might whether how they group for asked company? investments the in and operations the some oversight? how And about? company's new investors. in are first individual The these questions involved including came mean And he shareholders OCC

Neil Wilkin

Okay.

We the in hopefully term. and and we While opportunities We But that that longer – management are members conversations over term be quarter-to-quarter. demonstrates We've for advisory formal of and our with shareholders. and any to are shareholders to choose dialogue engage very the board those confidence OCC and our that well we're, any it so. shareholders an some other open as itself is as we'll with as with keep the opposed role us, believe that, continue of have shareholders tried that whether than positioning business their model to appreciative some to all our OCC. the obviously, to interest as do manage towards the who do have in team they don't OCC, pleased new always new welcome investors longer

Andrew Siegel

next proposals? unsolicited company Thanks, the you any whether acquisition on has Neil. that? Can comment received The question was

Neil Wilkin

M&A and have that quite sort any public comment on or – a typical any a that don’t of We approaches I any us, have company, or think if very that's strategy of with company. frankly people conversations that's

for We our of through are what's on with very that demonstrated our that our also And has. ownership investments have our shareholders. team committed our and the shareholders and we've shareholders and management best our long-term to value focusing of the board all has alignment the

acquisition we're appropriate term we're any But create and or fully on unsolicited value specifically receiving proposals things committed everything other I to making are can't making So doing comment that maximum of shareholders sure over any longer sure that the nature. of to the sort that value.

Andrew Siegel

he prior at place there – submitted the several cost the quarter-end was quarter. the any taking goods cash on Can to related breakdown questions much lower and spending? are that? in of related questions of quarter provide group next cost than also the and in And you being the also are The SG&A of the first of to how more initiatives of that Okay. clarity

Neil Wilkin

to may comments. couple jump and Tracy and can, make want here a I in of

to to I additional that reflects mentioned, one reflected that's initiatives And the in cost think – thing on is the substantially had the you've in the that in substantially SG&A sold. had we had, that that are important comment, first place based important it's goods charge the of we've until question that performance Andrew, on or? to year first you the subject end the which still particularly were related Did our the want quarter our anything high-growth of quarter. shares of forfeiture to for is January, in we end last cash Tracy,

Tracy Smith

anything our today. anticipate later I we file don't but found be which doing that that Form to we later comment additional cash, discussion on there's specific say related I have some really to might when XX-Q, will

Andrew Siegel

future capital Okay. The next compensation. dividend. broadly, about stock-based I repurchases related share are of And set questions guess, plans more and/or to talk you around for Can allocation, that?

Neil Wilkin

Sure.

team an part is the the important I to that by important alignment, alignment with leadership risk truly So of board have. believe, leadership stock been compensating as wealth that OCC's well, creates has reason do with creating and at And always – OCC shareholders is, and that having in thing considered what because and compensation the they the risk results have team. an has that's

recently, January was this underway appropriate, we shares that We the We as January. comp saw of way we our the the of years, the granted we we some with we and all have of have doing performance-based that most is – restricted that impact end normally not comp couple by stock structure have they've the situation did. We and to given in initiatives been like might shares, last do thought shares. our strong got have some of the

And that the that feature yes, opportunity and to in pay we vest to appropriate. are taxes. vest. use. we you in the a vesting timing in before based shares order structure or that check that's the whether had was pay company to us number those also We've than of Again, to the that, of fact it's helps stronger works like a very Historically, as the I know company shares it the mentioned a their restricted for also mean, like performance-based important. not and shares our taxes net to reduce to to but They way helps number of would is how leadership other is me, so believe it restricted we of as OCC situations we on because minimize one But shares it believe restricted those the options to which that done with best some shareholders. structure to of composition those so to believe to checks in compensation, a bit is would vesting appropriate to that other it OCC, for and for it works. – deferring aspect advantageous little restricted there And pay have that for allow have back this for stock equity, equity withholding to significant net and of and before tax and option equity reduce stock be, we expense works stock because our that relative for are associated team dilution, leadership I questions, and about write to that as order as appropriate equity Andrew, the individual the types goes call written compensation. taxes. the opposed company like that's And companies as team that question either group

Andrew Siegel

The the you backlog at for the next it end the the at backlog question, was year. disclosing the of the of that where the The disclose and if Neil, end end was where could backlog the first related forward? end going you to quarter And year? at thanked – of sales of fiscal at shareholder the asked stood

Neil Wilkin

– in at guidance. to provide sure committed Tracy information remarks, the make We of of October that or believe always our to At remarks we Okay. end that backlog did and we prior and are our very note shareholders OCC, making $X meaningful we've the been disclosures million. opening

in an indication don't and me, know believe like which Q, haven't filing from excuse it to compared the quarter the despite thought we sometimes disclose so a of significant well is today in later of we to this the of we it remarks, information plan an because some indication in instance, to provides But information decrease that customer Tracy's strength as believe sales this year quarter indication backlog we small at that least year the And back cases of see to disclosed. OCC, will first same as would we disclosed net of sales shareholders last standpoint. in provided be going because a we a have our that other referring it's to – earlier where we you'll piece as our

Andrew Siegel

seen Neil, here. changes little next The question,

Asked CEO about if ever the roles? and separating has considered board the Chairman

Neil Wilkin

Andrew. you, Thank

very And particularly a company. appropriate of very in It's has as we Our been a take board, of governance. I'm that, smaller reporting pride to even lot committed proud this.

what's a reporting to time of As to be a looking making our practices company for at and what public the makes and board for lot year which statement, been committed corporate the But our best about as sense, governance, a sorts in it The does is them look already the best we're at some processes company, of governance its part issues going through these company. shareholders take dealing best talk board takes sure has every of we and small those of time. filed. and proxy that and these

the of of if and go achieved that so and we've an proxy And reporting we're some a not for But at separating interest statement less some additional for unusual it's has and they roles. can that smaller the the company, be considerations, not found, sure someone information. necessary back those would by in what is look it's generally benefit

Andrew Siegel

don't your Can who The Neil. specific list. think Thanks, peers? know I you related next you peer disclose question companies. on comment you to any are

Neil Wilkin

Sure.

side And from many in also those of very varied competitive are talking about be our are people in OCC markets. business as and our well of in that, talk in a even when companies competitors is business. the OCC. typically are of they're different different competitors, comparable priveledged We our other standpoint, interesting side in is the can specialty peers, terms enterprise peers what's to public as about So markets, about many, talking that to

company. and CommScope fortunate we we smaller have different role, enterprise all significant different side very we of our business, So other and a competitors. and Corning have are much of various markets, despite competitors, about the to And talk have and including a being markets in the XX-K. In these others, we the specialty play we in

fiber the it from we comes company OCC that and copper public our talking standpoint, the from a a in standpoint about connectivity, fact public Now peers when we does much copper a company optic, from have market in – strong than us. in bigger peers connectivity the standpoint, are markets presence, much, in to are which in despite play,

Optical to hard it's an look other so compare comparison them And Corporation. Cable companies and at public apple-to-apple to as

Andrew Siegel

kind The plant? asking each by breakdown can They of plant you was can produced and or utilization breakdown your also there? at detail you offer were the major three about capacity operating question Thanks. the local separately of the cost next about, locations What level, more at a value corporate?

Neil Wilkin

We really – plants. don't for reasons, don't individual Okay. that information provide of we granular competitive kind about

interrelated approach. those to part why different reason we try useful it's as is produce, because of plans is, different or those other of really – businesses. know about We to The OCC those at are what's that don't look separate products those the so systems out

products the made fiber that are specialty and the made that's Asheville that are in that products the for So are market. to systems Roanoke – made are in enterprise markets to in Roanoke in are with products fill and connected connected made in optic Dallas the cable

so as think to system. out sense complete your it that we – to And it break either, level, doesn't but level things a some as component of make at

Andrew Siegel

for asking revenue breakdown through sold distributors Thanks, and a Neil. was question the business in OEM final sales? The versus

Neil Wilkin

OCC's of we not OCC products those in that any work our different not through very distribution. specifics breakdown work say to believe at through have is limited as ultimately There partners closely we make types of I we typically for value typically about them would or to distribution every would our for strategic the markets and customers, that partners go for channels. effort who share where don't our we OCC. distribution And we among the customers. the way But market would that adds and our I certain distributors, are customers go products. either with cases, installers all typically are end-users And buy truly through distribution are

Andrew Siegel

closing turn I'll for Neil. back it you Thanks, remarks. to

Neil Wilkin

for Andrew. to Andrew. everyone first call our I'd like to today. conference listening thank quarter you, Thank

and time in your appreciate we always, interest OCC. As

As head the and cold time you and through for and thank interest able may call you I having have may have on all you I to today. today, or in We today. been a caused apologize I note, whatever to you your not for appreciate inconvenience so that suffer OCC, being

Operator

This Thank conference does today's call. conclude you.

disconnect. You may now

Optical Cable (OCC) 12 Mar 192019 Q1 Earnings call transcript