OCC - Earnings call transcript Q3 2019 | Optical Cable Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Maria, and I'll be your conference operator today. At this time, I would like to welcome you to the Optical Cable Corporation Third 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. Instructions] [Operator

Palash, your Mr. may you you. conference. begin Thank

Aaron Palash

a all on year release Optical afternoon, should conference and Corporation’s issued participating you thank have everyone time, fiscal Good earlier Cable today. earnings for third By this of copy the call. press XXXX quarter

You visit a www.occfiber.com copy. can also for

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

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

With Neil that, I'll turn please begin. to Neil, Wilkin. the call over

Neil Wilkin

Thank can. XX, good afternoon, we additional regarding will results three-month periods a of today third I you, will your review Aaron, call After fiscal we July as some the and questions few remarks answer quarter third remarks, as the then our ended will quarter and XXXX. begin XXXX with Tracy opening and for the year detail. nine-month everyone. Tracy's many of

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

our date However, opportunity are of regarding such our submissions announcing press time call. in advance we submit Instructions and also call. other earnings of offer shareholders the the our in to included questions release

months significant integrated growth third order the solutions, were strong other reduced X.X% this among drive XXXX, in customer, nine X.X% we ended sales the OCC's to our We While pleased last July specialty our markets. demand growth top particularly XX, continue line and results reflect to are reflects cases, and the the during volumes compared to customers, during periods all we achieve for quarter actions believe same from to year. both in taking a

year negatively year efficiency meet on from Beginning initiatives and the year control toward in operational restructuring Company's that These fiscal in the changes fiscal short fiscal resulted constraints increased Company's correcting workforce of and in the of impacted and of fiscal ultimately second the of the efficiency XXXX. are OCC throughput nine the quarter Efforts throughput and manufacturing our the intended unintended XXXX, demand expansion, XXXX, cost facility training, constraints and over ongoing. long-term. financial results operational product to enhance from year in end order control throughput and has and first months inefficiencies the to Roanoke XXXX, of quarter at focused increase costs process particularly to and

after the we fiscal make and cost to and approximately this changes benefits realized made million. We fourth reductions ultimately that $X made to cost be have of far XXXX. until are by fully of are the not year of So the that expected some have will continuing year, reduce we fiscal changes quarter annual believe

and Looking executing capture on top our ahead, sales and efficiently opportunities growth operating marketing remain initiatives to priorities. our

we shareholder strong, is business are about opportunities to enhanced and see we excited Our the deliver value.

who regarding financial the And Smith, our of will results. third review I quarter over Tracy specifics with that, now turn will some to call the

Tracy Smith

Neil. Thanks,

were net fiscal of quarter levels compared $XX.X of decrease year. for fiscal were one of third of sales compared same in fiscal year-over-year quarter the months million period a at and million, customer XXXX nine for quarter months the fiscal comparing sales for last XX.X%, the from first first the XXXX. of million, nine same fiscal a $XX.X decrease is $XX.X year the of third of sales for first of orders sales of net to first XX.X%, net result of Consolidated net year $XX.X million net of months a in sales third Consolidated to decrease year XXXX of a and recur third the number third year from fiscal the XXXX. not months The quarter XXXX in nine did and nine the large XXXX quarter that

all this customer months all in year, during from respectively Net $XX.X and of decreased net nine fiscal fiscal increased quarter months compared sales in X.X% net sales million, customer increased same to first and and XXXX. third X.X% of first excluding last third quarter from to periods. this $X.X other the customers Consolidated the nine the the period one sales XXXX, to million

to was months XXXX. percentage the nine profit. first in XXXX third profit quarter fiscal margin $XX.X compared the gross of net as in million sales, XX.X% third net sales the of in was in first first to XX.X% profit to XXXX fiscal of margin, the in of $XX.X nine profit XXXX quarter of of of was quarter nine the of $X Gross gross XXXX. of profit profit months Gross fiscal percentage to Gross million a compared XXXX. as XXXX, Gross XX.X% the profit million months quarter in nine fiscal the $X.X fiscal the first months fiscal a to of XX.X% million or gross third fiscal in third compared XXXX. in fiscal Turning was or compared

to costs sales be manufacturing higher levels Our we higher certain as achieve margins when sales. higher fixed tend spread net over are gross profit

to our quarter of third factor basis, fiscal year Additionally, our percentages dependent profit margin continue in we the this gross first and pressure on third as constraints working fiscal heavily to and the the inefficiencies, profit of by Neil unintended first and XXXX gross been upon year. impacted quarterly which profit And on months gross margin margin negatively noted, be a are XXXX. downward putting nine to during product quarter have continue year throughput mix nine months be a which correct

of $X.X $X.X of million to year XXXX second the compared compared SG&A expenses same fiscal when for during third decreased XXXX. fiscal quarter period the XXXX million during during year the decreased expenses SG&A year. XX.X% to fiscal Sequentially, the to $X.X of last third quarter million X.X% quarter

fiscal of during third share-based quarter in attributed periods sales decreased expenses same year and first was to incentives, related and the costs, million nine employee period results of our first XXXX be nine to SG&A the net primarily including to in million same third SG&A year. result fiscal the X% decreases This of compared compensation $XX.X first commissions. nine last of can during XXXX decrease The financial decreased fiscal the last for to quarter employee months in compared the and XXXX. during $XX expenses the months months

the net third quarter of OCC or fiscal net million recorded XXXX. of fiscal share the of diluted share of a loss income and for compared $XXX,XXX basic to diluted $X.XX third per quarter $X.X or per and $X.XX XXXX basic for

recorded XXXX. OCC XXXX net fiscal of loss diluted income $X.XX to basic of million first $X.X million per net share share months per a months $X.XX diluted or for or of first basic fiscal the and the compared nine $X nine for for and

rate X.XX% current total $X or revolver to XXXX, consideration, for each plus to financial million under on amount the by the aggregate a lender outstanding of under before reduce rate an end, the lending by was XXXX. by to principal of Subsequent loans fiscal our November for ratio the under term aggregate available loan exchange entered $X.X fiscal July covenant effective XX, the reducing agreement and Pursuant the prime our of XX, our of the million; to with quarter agreement on XXXX. reduce into $XXX,XXX agreement. suspended credit ended outstanding the agreement, modify this credit we funds agreement interest balances $XXX,XXX; to OCC from balance advances our XX, In lending agreed quarter modification our September on for credit

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

We also million term loan $X.X balances had outstanding estate our loans. under real of

back I'll Neil. over the call that, With to turn

Neil Wilkin

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

Operator

questions Instructions] sir. back at turn for or this additional to any closing showing no time, it I'd Mr. remarks. And like to Wilkin I'm [Operator

Neil Wilkin

we Before [Technical today. having we Aaron, any provide questions questions any if by closing seem have answering submitted we're shareholders to technical ask some or other remarks, I difficulties. like would be to to Difficulty] going be We

with to having offline one line. them, we correct bear Difficulty] you’ll [Technical trouble for speakers. if is into if because the his Neil, Operator, can conference a redialing us Aaron call, is this of moment. call the see, he's with Let's Aaron

Operator

sir. sir. Certainly, you live, are And

Aaron Palash

that to back Great. Neil. Hi, we go I'm Should sorry. question? Thanks. first

Neil Wilkin

I The over Yes. was was -- you. to we turn was call heard, last discernible the what it that

Aaron Palash

Perfect.

So, first, shareholder receive did we questions.

the for discuss calculate, the basis? is the stock one First ongoing purpose debate buybacks. Company's Company an value on Does of and

Neil Wilkin

more Our enhanced includes the enhanced other efficiently. That well believe to of capital At have the particularly management products we Directors drive we're potentially actions does top specialty as use shareholders seeing, returning periodically the capital the our the shareholders. is evaluate we demand of -- and allocating options. time, growth our that and with markets, is and for Board taking goal capital create focus for team create returns continue we're on capture of highest returns the investing the for return line shareholders to to operating as among achieving this to that to in best

Aaron Palash

David Great. playing What role is at OCC? Goode

Neil Wilkin

think, earnings -- David playing Mr. we've with OCC. previous And, before. mentioned is any I calls, believe discussed we as So, role we've active this on matter I not

Company. Although believe investor we the an financial important he's do in

Aaron Palash

third release disclose prior XXXX a change, Okay, that can QX fiscal in quarter to to Rather to the the customer? question. than terms year. expressing Today's customer in next of you net sales in sales decrease to of disclosed that as compared sales customer the press

Neil Wilkin

sales never typically any customer. specific Yes. numbers of We’ve disclosed

doing we it so, on not at And planning this time. are

believe what's disclosures information going on with We have tried and provide particular have about that filings to in included enough we our customer. this SEC include

Aaron Palash

available Does been revolver total agreement Okay, of language the the $X from the amount funds to mean next under question. has million your lending credit reduce for $X,XXX,XXX aggregate reduced?

Neil Wilkin

Tracy I'm going to about let the question revolver. answer

Tracy Smith

the today, accurate. later plan be yes, will XX-Q in There to file additional that we but Yes. information that’s

Aaron Palash

question. Next

current For how long ratio? the Pinnacle is suspending Bank

Tracy Smith

for suspended not ratio we're I'll [ph] the one. to third [was] covenant current take going that, beyond The speculate. quarter, that

Aaron Palash

compliance all current financial Okay. Other the Did credit the you other waived, of covenants ratio financial waivers than you which and loans? term Bank revolver was on of agreement, in Pinnacle ratio are any current to covenant, covenant? the addition in with receive

Tracy Smith

third the total we which current are quarter, for In covenants in is are the which be the the was suspended required ratio liabilities, worth for is One the there met. ratio compliance; net quarter. the financial two to third second tangible

Aaron Palash

expect end end expect or OCC any covenants of covenants compliance year XXXX? with take Company fiscal show in to Pinnacle What Does of at Bank remain at the compliant the the violations any the being to will year? the of actions

Tracy Smith

We do hypotheticals. not speculate on

sheet recent the in balance loan And compliance. are is Our currently strong. modification, with we

Aaron Palash

the calculations all July Pinnacle XX, of as of covenants Bank What are XXXX?

Tracy Smith

in available later be is filed information and will that filings, That today. both our filed SEC currently

Aaron Palash

you have date OCC Does Do in expiration revolver of the expect that XXXX? event the expiration extend beyond Pinnacle revolver’s Bank to Bank extend the that contingency decides will the not plans Pinnacle June date? XX,

Tracy Smith

speculate Again, won't we on hypotheticals.

to we regularly evaluate is options our all with sheet balance regard strong and of Our financing.

Aaron Palash

as the current revolver the will in extension June in XXXX, revolvers decrease and the in provided current in expire date? is balance at non-current the that future other classified sheet, Does liabilities in release, press a liability? XX, In an now absent words, the increase suggest a liabilities

Tracy Smith

XXXX. That reported because as is revolver out. maturity date sheet current non-current, revolver Yes. as quarter, OCC's was year the classified previously. date expiration of balance June we as is XX, current, than classify previously the more And was revolver this the a

Aaron Palash

exact Great. to the language with Pinnacle worth covenant liabilities total XXXX, net not the yet which And has then, last Bank’s question. of SEC? What April tangible XX, waiver for is filed been

for the waiver the net quarter of SEC of XX, total language ended Pinnacle tangible an April ratio liabilities the Bank to covenant XXXX. non-compliance worth filing the in released of We

Tracy Smith

and All regarding the relevant waiver quarter last the in the revolver SEC filings. disclosed our information was

Aaron Palash

Great. question. last That was the

Neil Wilkin

appreciate like Thank to OCC. Okay. you, would Aaron. for as always, I everyone in we And interest you your and Thank all third time listening to today. submitting And your our thank for conference you. thank call quarter your questions.

Operator

and Thank does conclude call. today's This you, gentlemen. ladies

now may You disconnect.

Optical Cable (OCC) 16 Sep 192019 Q3 Earnings call transcript