Earnings call transcript Q3 2023

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Operator

[Operator Instructions] Good morning. My name is Angela, and I will be your conference operator today. At this time, I would like to welcome you to the Optical Cable Corporation Third Quarter of Fiscal Year 2023 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

may you your begin Palash, conference. Mr.

Aaron Palash

everyone Angela. joining us you, Fiscal press XXXX this release Good the today. copy Third morning, for all Year time, By Call. you issued thank Conference have for earnings of a of and Quarter Thank should Optical earlier Corporation’s Cable

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

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

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

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

Neil Wilkin

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

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 are opportunity

on homeland. of course, to want September Before was, the yesterday XX quarter, we the discuss I third that the anniversary our of attacks note

OCC to those to hospitals. our responders. essential is support health grateful proud manufacturing first have the and The responders served supplying incredibly country’s honored products we for sacrifices country work of other and facilities freedom. to of and military, responsibility workers, who those who their OCC are to for and of our for trusted and our do We with team continue services the our serve all mission-critical first is armed including our be care and

the fiscal nine third including year-over-year metrics the XXXX, hard operating With XXXX. gross net key of margin, this first months income, during far success our gross executing in sales, to quarter reflect market. and fiscal turning team’s year year the increases income a results profit our now, And year dynamic net work and OCC so strategy in profit,

quarter year our profit enterprise all we certain quarter profit at the this to our our third other the time, our net while at even In continue to consistent our certain fiscal suite with of gross sales even margins also and mission-critical XXXX, demand specialty decreased carrier diversified increased, of are of see XXXX. fiscal markets, products of while year connectivity industry wireless the and gross Looking X.X% X.X%, solutions of robust our trends. third and like and markets, targeted increased markets, cabling compared when for the softening

base revenue we fiscal strengths core continues this XXXX. served, range the and OCC’s to diversified a during our industries with of and quarter markets and of diversification One third is from broad be of benefited

the XXXX by forward had backlog XXXX. of typical compared but year load year fiscal quarter of at the higher quarter levels remains fiscal the second and third to order sales than decreased the of of Our end end

are other our continued showing certain carrier are wireless forward, our of strength. of and showing we believe our including continued markets certain markets signs of signs Looking softness, while markets, of enterprise

impact are risks our business. to trends We monitor potential continuing evolving the and trends, could industry macroeconomic that

committed driving efficiently. operating to initiatives our execute growth, We working are and to and strategic are safely demand capturing continuing

fiscal the serving are we of into for XXXX fourth on value move users focused enhanced the fiscal year beyond, finishing customers and and our shareholders. strong, we as year driving and valued end quarter As ever

who additional to I the over call review will XXXX turn in results. financial with detail will of our And that, Tracy, fiscal third year quarter

Tracy Smith

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

this nine offset market. in but During sales we months first XXXX, in period an experienced was last the the in same net of fiscal decreases specialty partially by compared to third quarter increase enterprise increase our year, and markets our

sales the uncertainties and June by resulting a year our of brief a risks various macroeconomic incident quarter manufacturing were third fiscal as that pressures, operations impacted from XXXX in in Net XXXX. for as cyber shutdown occurred well negatively

indicators signs in other While including our there certain continued of markets, showing and certain of markets. carrier of softening, are our believe we markets our wireless positive are enterprise

returned to functionality being by June the occurred incident have operations manufacturing normal our Additionally, after cyber in that impacted XXXX.

more year XXXX compared remain at the end As continues the typical and quarter end forward approximately fourth at the XXXX. Neil to XXXX, order the million backlog of levels of fiscal $X than than of third of quarter at our year mentioned, end approximately higher second load fiscal sales $XX $X.X million the million quarter the of of to at and fiscal at

increased Turning XXXX $X.X XX.X% year. the of of period net Gross XXXX in million same to as XXXX. XX.X% Gross fiscal profit to third gross profit $X.X compared third the margin, in third gross million increased profit quarter of in fiscal percentage compared quarter profit our to last of for fiscal profit. sales, of the quarter to to gross the a X.X%

We compared efficiency decrease OCC as to to gross gains this a third in profit XXXX year margin a impact despite the margins of well production workforce. realized attribute quarter in of levels. improved fiscal net fully-trained as sales the comparable more improvement

nine months fiscal first Gross of XXXX. the of nine first in increased $XX.X margin in first nine months Gross profit fiscal XXXX. first XXXX compared the the in to XXXX to fiscal million the $XX.X months XX.X% million to months profit of increased nine XX.X% of compared fiscal XX.X% in to

margins Our to in we as of nine operating the months a this We spread increased, leverage positive higher efficiencies same attribute impact be sales to to fixed sales. levels improved operating XXXX leverage workforce. higher of well of profit due in more year margins costs levels over gross certain fiscal our higher gross to as the XXXX. We the gains when comparing first experienced period impact are as our improvement production as sales tend manufacturing achieve net the when profit fully-trained

profit upon in mix based product quarterly product a also basis dependent are and may Our heavily on margin vary mix. percentages gross on changes

first XXXX. the and of $X SG&A sales XXXX XXXX year compared to $XX.X SG&A a were for months same the nine quarter nine of XXXX. increased XX.X% fiscal XXXX. period quarters the $XX.X expenses first year XX.X% million third percentage the fiscal sales of XX.X% fiscal for net expenses of net year SG&A of third expenses compared as XX.X% the were XXXX of XXXX, as In of were in in the fiscal percentage a in year to from third fiscal both of months to SG&A during first quarter fiscal the fiscal XXXX. months expenses million million of year nine

last year in compared results improved sales including the financial net to due XXXX during and employee and personnel-related fiscal was in SG&A result our the to first commissions, contracted expenses employee sales, period primarily costs, fiscal months and of and nine contracted costs nine of incentives of first increase personnel year during same sales the employee increased related the months The the increased increases which XXXX. the

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

the In during totaling the received million. benefited as fiscal gross property equipment, $X other for of results months to damage addition and profit, insurance income operations on first the recorded gain was to improved of statement proceeds This sales company’s from company’s net and nine XXXX. the on year

our fiscal sprinkler totaling system with during its on end During pipe in the a of XXXX. the insurance and at sustaining December a recognized we building content quarters equipment fiscal the year of facilities proceeds water and Asheville $X with insurance XXXX, to million. nine connection proceeds year this second property damage months XXXX, event, third the at In our gain received in first we burst received for damage of office and connection from

to assets, we not or repair To to the insurance this exceed extent replace future offsetting expect recognize we time, incur expenses any future proceeds. periods restore, restoration we At future damaged in repair do costs periods. losses those and may in

of of had on As July XXXX, $X.X million revolver $X.X and million borrowings credit. in we XX, outstanding our available

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

the turn I that, back you, with call And to over will Neil.

Neil Wilkin

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

Operator

will there appears to this our program questions back additional are presenters I It now at for no time. remarks. over the Instructions] [Operator turn

Neil Wilkin

Aaron, individual investors. Angela. by been you, that some have have Thank know I we questions submitted

those, If it. through you can walk us appreciate I’d

Aaron Palash

Sure.

recent OCC’s There might building U.S.A. the in this broadband of Wall the to beneficiary of areas the OCC of the advantage a Here’s any be rural increasing the way? And Journal types in Street all in first. article tension China build-out? to work Might also, with a out about was

Neil Wilkin

not however, of the the used broadband-related part have broadband number markets does products developments has the for we and been following markets. of the potential X applications. are First OCC question, Generally, the a broadband market that targeted reasons, are in in OCC’s opportunities of

of to part believe you us sure, manufacturer, as manufacturing a the question, of more U.S., second and as for U.S. trend with provides – opportunities. onshoring we as been this the in With additional listeners know, there’s all respect the

Aaron Palash

does to cash this the in Next any And throughout Is question. the cause issues always balance regards low low end. company? running quarter? The quarter at it is

Neil Wilkin

I’m to question, going that ask answer Aaron. Tracy to

Tracy Smith

our payments our our revolver balance Higher basis, receivable meet on Sure. The way reflects believe unusual, business the on down daily is we to provides advances revolver accounts not collections sufficient capital cash and needs. so our a pay revolver on work. which

from of even the cash with our end X:X the sheet As OCC strong a a balance restricted third you at benefits excluding know, of ratio quarter, current when balance.

Aaron Palash

deadline. That was the the question Okay. last supported before

Neil Wilkin

thank to our third today. for conference like We’d Aaron. call you, Thank everyone listening you. year XXXX Thank Okay. quarter fiscal to

always, you. we investment your time Corporation. Thank Cable As appreciate your and in Optical

Operator

This conclude your today’s program. does for Thank participation. you

disconnect at any You may time.

Optical Cable (OCC) 12 Sep 232023 Q3 Earnings call transcript