OCC - Earnings call transcript Q3 2022 | Optical Cable Corporation

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Operator

Good morning. My name is Katie and I will be your conference operator today. At this time, I would like to welcome you to the Optical Cable Corporation Third Quarter 2022 Earnings Conference Call. [Operator Instructions] Mr. Palash, you may begin your conference.

Aaron Palash

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

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

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

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

Neil Wilkin

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

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

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

service results people to thank executing X/XX. and solutions, The OCC, suite of to in mission-critical and Demand note that our honor and in and of With and our our mission-critical our connectivity essential market. that our the continues saw for of reflects sacrifices. these we quarter are And reflect country’s uninterrupted is for and and the responders we we hospitals. in of demand increase their I and during cabling It be robust supply team’s yesterday anniversary the all a products be to net the responders. we typical OCC’s first success dynamic the quarter service our strong. healthcare end for at other products into our load, do their work including successful strategies. forward million increased. to This created ensure levels course demand large providing $XX our third proud move that, which execution growth our strong of if has support military, the quarter armed first a sales wanted I to workers, sales even the than order Before facilities at exceeded third higher very continuing was of to At have services the of of quarter, sales backlog results, the

at with During this up constraints to production are team have we increase the pleased the employees. fully as And our focused of the train our speed given as members a curve is nature our and issue third ongoing year we new our We there Labor we made production as quarter, capacity. getting front. been soon our an progress this new learning team have the we on on possible. in made products, production progress scaling

demand can growth expand expected opportunities. meet also we and We team that additional work and continue to capture to so product strong our growing

inflationary chain constraints At new drive going and employee our same from to forward. growth was our affected the by recruitment benefit to ability supply net expect pressures. sales We further time,

pressures. quarter, mitigate During efficiently of we operate to strategies the and successfully the impacts and to continued execute designed these

have we believe we ahead, Looking momentum. strong

large which of the into remainder sales quarter and fiscal we ended bodes well the with year. mentioned, year the As a for next backlog, order I

operating strategies, continue meet the we quarter, our to needs We drive production growth fourth customers, production opportunity will by installers, labor forward the the constraints our evolving capacity into call specifiers head to and unique challenges. supply turn increasing end With we we appreciate and year our quarter focus executing chain efficiently and value plans review fiscal financial As and to managing of to Tracy results. the additional I XXXX that, our shareholders. for we And users. over in look who executing will third detail on

Tracy Smith

of million period increase for Consolidated $XX $XX.X for the for year. net Thank third the Consolidated net last to months fiscal million compared the increased XXXX net an of X to sales the were net of XXXX sales period for same last first XX.X% million, you, sales compared fiscal same quarter XX.X% to of sales million Neil. $XX.X year. of $XX.X

volumes see periods We and production same to to last increased product demand, the sales compared year. continue

and the sales order end and chain Xx be million supply remaining higher $XX backlog forward production the however during to than fiscal believe We result. the exceeded benefit constraints fiscal quarter a improvement Our typical and future at load will recruitment impact same as third third as the experience labor year time, At the approximately sales of continued XXXX company of production quarter XXXX to we volumes, in Xx costs. labor demand to did product and continues robust. the of in levels

costs employees are production capacity. at production new employees trained of training the operating those volumes fully labor impacts until expected, and As and

Turning to gross profit.

$XX.X X XX.X% of increase increased million an first XX.X% the fiscal in compared compared first XX.X% in in million to in to same months profit for profit as Gross fiscal profit profit of the X compared in of to fiscal months last XXXX of X of X fiscal year. to $X.X margin or quarter of the months the XXXX XXXX XXXX, the first profit profit XX.X% period Gross first months third fiscal net fiscal compared $XX.X to in in gross gross increased the XX.X% of XXXX. a percentage margin quarter third gross the was million XX.X% quarter $X.X sales of of of the Gross XXXX. third XXXX. Our fiscal was million to

of production These training. third were margins price XXXX, company’s sales in increases During expense on offset costs, were of increases impacted for fiscal partially labor and prospective quarter production material profit the and products. employees increases gross of by new orders the necessary including the by many new

sales in last SG&A material XXXX. the and cost increased But gross net fiscal expenses of to fiscal Additionally, higher during in during months fiscal profit This fiscal of accepted raw million compared million a were percentage XXXX third months as expenses of to of the X X increasing percentage of for XX.X% in XXXX The first sales $X.XX which X increases. share quarter diluted as third compared $X.X profit increase the quarter in to XXXX. XXXX. sales increased was as diluted leverage, personnel-related to as net SG&A margins the contracted company year. by the compared inflation partially beneficial and $X.XX raw XXXX income to created a million higher XX% to million loss SG&A costs, net for SG&A occurring share or a by compared same the first for expenses XX.X% year. per recorded year net for basic the fiscal for of of X fiscal period months XX% XXXX fiscal expected, and months SG&A and the sales $X.XX third was the orders were tend expenses fiscal sales result the rapidly recorded when quarter last first quarter months per increases fiscal third diluted first to offset fiscal XXXX net prior to as positively fiscal net of XXXX. compared first last months the or $X period of of a at $X.X quarter in the or the quarter of costs million in sales to quarter first or during year to cost X impact the $XX.X loss months compared X and same OCC million share our XXXX have first of diluted $X.XX $XXX,XXX net net the of primarily period and basic basic in same of $XX.X expenses for X employee materials of to third increased. fiscal $X.X levels, of gross share third XXXX. operating net of sales. for of third XXXX per income be fixed per achieved spread million levels higher $X.X higher the compared our manufacturing certain of OCC impacted margins the basic the are of of over is and sales

will back $X.X turn During the fiscal million XXXX, over the year quarter third that, receivable. employee received With we call the I Neil. remaining to retention tax credit of

Neil Wilkin

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

Operator

you. will Jones with WCM question Michael come Global Our from Thank Instructions] [Operator first Wealth.

Your open. now line is

Michael Jones

down also in question. taking if to you cost could Hi, have goods copper affected that and done last the regard and about that thanks bit expect within the my going I and with affect wondered break for your results it to of specifically. of quarter call little more the forward you results sold and may a elements copper how hedging how

Neil Wilkin

I Michael. question, while sell hasn’t copper significantly mean the results copper your pricing other. one for we you thank or impacted way So products, our

costs cables products – that the to where the in that prices we to essentially a the able we’re category match those way able price for We’re sold. for sell,

sold, cost and fact, in impacting products. to been include fiber copper in goods But cable antenna goods We our some big sold. also of hasn’t fluctuations in a of factor again, and hybrid for cost other copper already the

Michael Jones

just lower of passed that work you could it’s of through immediately order in in inventory enough cost the to either sold goods with the you part contract as you cost line? off have a may stockpiled buyers keep of or So or have it

Neil Wilkin

all up It’s a it up going practical essentially mainly the for of without pass-through. details manage ends into being purposes of that, we but pass-through – essentially, ends being, how

have some small that copper we’ve wouldn’t certain say I to prices material benefit products, it’s seen on results. As increased, our but

Michael Jones

Okay, thank you.

Operator

Thank like we turn remarks. to the to time. now further questions closing I you. or It additional back program this management any for would no appears at over have

Neil Wilkin

questions mind address shareholders. don’t from to some those questions. I those, individual have you. Aaron, any believe reading happy of you if we we are Thank

Aaron Palash

couple that submitted. Sure. were I do have a questions of

will one, products benefit spending opportunity rural from And to digital fiber-to-the-home the billion does fund subsidies? the be able broadband $X is sell to government on first The market? OCC OCC the

Neil Wilkin

high different market. fiber-to-the-antenna are mean, – OCC’s primarily products are they outside or for markets the we count for market from fiber-to-the-home – growth specialty enterprise markets products see that plant excuse specifications the telco long-haul markets and for market called the these as OSP cables. And do our to are OCC’s not That the the the me, FTTA Products Aaron. the or are manufacture primary or, equipment and broadband opportunities. fiber industry, We market I are a and target continue Thanks strength that’s in with production and market which focus. fiber-to-the-home market.

We the the some in products growth – future. fiber-to-the-home growth products, also that as in we the And for manufacture also those certain see see would for would continue market. manufacturing broadband expect, products to we or you benefit opportunities from

on from And extensively some the so of but it be some benefit fiber see will the cables. we believe won’t as subsidies, RDOF significant OSP competitors indirectly, focus who as we more the

Aaron Palash

Last Terrific. when to do the become you question, expect company profitable?

Neil Wilkin

transition We started into to the move Fiscal from like to for a you, back XXXX – others, COVID Thank more pre-COVID economy, a period. really year year towards moved economy the been has impacted Aaron. normal economy a OCC.

in of As products, in have and as of year. for markets the our we seen products we doing executing as well our our strategies a for seen increased result strength have this demand that, been have growth during result what particular we our

we the chain and have next we even We to supply have in expect constraints growth with us sales same returning as XXXX, inflation sales. labor grow into that cost. impacting seen profitability At labor markets, been new And that and tight to challenges year. though time, continue to material growing, will contribute

managing have challenges, specifically. particularly the We been labor supply these and chain constraints

to able certain for been increased given also prices have products increase costs. We prospectively

enable products will OCC us from currently meet as is profitability. increase what’s we So, to ease, to labor our this chain supply our to constraints for see. demand strong sales perspective, believe we And return the that and to going

of and As mentioned the million well our end it before, it and backlog ability mentioned do I we a for $XX as further exceeds sales. Tracy previously to forward believe quarter. substantial have our load, well comments, increase And as mentioned or in that sales of we we order have and bodes that, the

are return the as so. possible, do to we taking profitability will Was to anything necessary continue believe all are and further, quickly actions We Aaron? as to we there

Aaron Palash

No. of End was question. last That Q&A the

Neil Wilkin

that, with thank XXXX year everyone listening fiscal would of Well, today. Okay. I to quarter for to like conference third our call

time servicemen service to our appreciate would Cable that, their and and And As your And their safe. always, for thank responders and with the again, Optical and first in freedom, your protecting their we we our thank in thank like communities liberty to for you. Corporation. and women efforts interest keep our service

Operator

Thank event. today’s Ladies and you. gentlemen, this concludes

disconnect. You now may

Optical Cable (OCC) 12 Sep 222022 Q3 Earnings call transcript