Q1 2021 Optical Cable Corp Earnings Call

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Good morning, My name is Lori and I'll be your conference operator today.

At this time.

Welcome you to the optical cable Corporation first quarter 2021 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 session if you'd like to ask a question. During this time simply press.

I would like bar and the number one on your telephone keypad.

If your question has been answered and you wish to remove yourself from the queue press the pound key.

Q Mr. Payless, you may begin your conference.

Thank you Laurie good morning, and thank you all for participating and Archie.

The cable Corporation.

The first quarter of fiscal year, 2020 One conference call.

By this time, everyone should have a copy of the earnings press release issued earlier today you can also visit www dot OCC fiber dotcom short coffee on.

On the call with US today are Neil Wilkin, President and Chief Executive Officer of OCC and Tracy.

<unk> Smith, senior Vice President and Chief Financial Officer.

Before we begin I'd like to remind everyone that this call may contain forward looking statements and involve risks and uncertainties. The actual future results of the optical cable corporation may differ materially due to a number of factors and risks, including but not limited to.

These factors referenced in the forward looking statements section of this morning's press release these.

And these cautionary statements apply to the context contents of the Internet webcast on www debt OCC fiber dotcom as well as today's call with that I'll turn the call over to Neil Wilkin Neil Please begin.

Thank you Aaron.

Good morning, everyone.

I will begin the call today with a few opening remarks Tracy will then review the first quarter results for the three months period ended January 31, 2021 and some.

Some additional detail.

After Tracy's remarks, we will answer as many of your questions as we can.

As is our normal.

And then and going with this we will only take questions from analysts and institutional investors during the Q&A session. However, we also offer other shareholders the opportunity and submit questions in advance of our earnings call and instructions regarding such submissions are included in our press release announcing the date and time of our call today.

The year ago, we held our first quarterly earnings and the earliest days of the pandemic.

We had started taking steps to protect grow and protect our employees and ensure their health and safety.

We really could not of fathom the impact the pandemic will have on our country our communities.

<unk> or our business.

A year later.

<unk> is working to control, what we can and a market environment that is still affected by the ongoing COVID-19 pandemic.

Despite the challenging conditions, we've continued our strategic efforts to capture growth opportunities and our targeted.

And markets, while operating efficiently and implementing cost control initiatives.

Our results for the first quarter of 2021 reflect the market environment and the actions we've been taking.

While net sales in both of our enterprise and the specialty markets were down and we reduced our expenses and increased.

Gross profit margin year over year.

Tracy will get into the numbers and a moment.

I'm incredibly proud of the OCC, what the OCC team is accomplishing.

Two of their perseverance.

We are providing our customers with the mission critical products and solutions for which they rely on.

They start to see as.

And as part of these efforts. We are continuing continued we have continued to serving our country's military and those on the frontline against COVID-19.

Looking ahead, we will continue to protect the business and build on our strong market position as we move forward.

All of the past year.

And was challenging and many waves we are optimistic that the end of the pandemic is of a site and the OCC is positioned to capture significant opportunities and create long term shareholder value.

OCC has a strong foundation and as we've proven before a resilient business model.

Further.

And as OCC continues to be uniquely positioned and our industry and we remain focused on operating as efficiently as possible, while continuing to serve our customers.

Yeah.

We are confident that our distinct competitive advantages capabilities and initiatives.

We have.

And we have.

Further they will facilitate future profitable growth further strengthen our market positioning and ultimately enable OCC to successfully compete against our larger competitors, both now and <unk>.

And into and through a post pandemic economic recovery and our markets.

And with that I will turn.

On the well over to Tracy Smith, who will review in additional detail our first quarter of fiscal year 2021 financial results.

Thank you Neil.

Consolidated net sales from the first quarter of fiscal 2021 were $11 9 million and a decrease of seven 8% compared.

The sales of.

The $12 9 million from the first quarter of fiscal 2020.

We believe net sales during the first quarter of fiscal year 2021 were negatively impacted by the kind of the 19 pandemic of.

Certain businesses continued to limit operations and redeemed underlying product personal thing.

And from that we are beginning to see from positive indicators of future strengthening and some of our market and are hopeful we will begin to benefit from improvement and our market during the second half of fiscal year 2021.

However, we cannot fully predict the duration of our scope of the COVID-19, pandemic and we cannot fully anticipate our reasonably estimate.

Continuing impact of dependent on having growth market and customers.

Turning to the gross profit gross profit was $2 $3 million and the first quarter of fiscal year 2021, compared to $2 4 million and the first quarter of fiscal 2020.

Gross profit margin or gross.

The COVID-19 as a percentage of net sales increased from 19, 4% and the first quarter of fiscal 2021 compared to 18, 7% and the first quarter of fiscal 2020.

Gross profit margins tend to be higher when the company achieved higher net sales levels and certain fixed manufacturing costs are spread over.

The profit now.

The operating leverage which is beneficial and higher sales level was the primary factor of putting downward pressure on gross profit margin during the first quarter of fiscal year 2021 and 2020.

Actions that we took and fiscal year 2020, and 2019 positively impacted our growth profit margin.

Of our highest quarter of fiscal year 2021.

<unk> and a slightly improved gross profit margin when compared to the first quarter of fiscal year 2020.

Even considering a decrease and sales of approximately $1 million when comparing the two periods and resulting fixed costs being spread over fewer sales dollar.

And the profit margin percentages are often heavily dependent upon product mix on a quarterly basis and may vary.

And based on changes and product mix from quarter to quarter.

SG&A expenses decreased 10, 7% to $4 $3 million during the first quarter of fiscal 2021 compared to $4 eight.

The growth dollars for the same period last year.

<unk> expenses as a percentage of net sales were 36, 3% and the first quarter of fiscal 2021 compared to 37, 4% and the first quarter of fiscal 2020.

The decrease in SG&A expenses during the first quarter.

8 million from 2021 compared to the same period last year was primarily.

Maryland, and the result of decreases and employee related costs and certain of our cost impacted by the kind of the 19 pandemic such as travel expenses as well as the other initiatives to control costs.

The SEC recorded a net loss of.

And $1 million or 29 cents per basic and diluted share for the first quarter of fiscal 2021 compared to the net loss of $2 $6 million or <unk> 35 per basic and diluted share for the first quarter of fiscal 2020.

During fiscal year 2020, OCC closed on a 5 million.

The two small business administration payroll protection program loans that made methods.

One of them made necessary by the significant negative impact of the kind of the 19 pandemic on the company's sales and operations.

As a result of this line and we were able to maintain employee head count level and was somewhat lower than the prior.

The 19 pandemic and maintain our ability to serve service critical infrastructure customers, while avoiding the need to significantly curtail our operational readiness.

Under the Coronavirus aid relief and economic Security Act and the Paycheck Protection program flexibility Act of 2020 all.

And to the cash portion of this line may be forgiven and certain requirements and that we believe we have met those requirements and apply for forgiveness of the entire principal balance and accrued interest of the line on February 22021.

As of January 31, 2021, we had outstanding borrowings of $4 $9 million on our revolver.

All of our and $1 $2 million and available credit.

We also had outstanding loan balances of $5 $1 million under our real estate term loans and $5 million on our PPP loans.

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

Thank you Tracy.

And now if you have any questions.

And to answer them Lori if you could please indicate the instructions for our participants the call and any questions. They may have I'd. Appreciate it again, we are only taking live questions from analysts and institutional investors.

As a reminder, if you'd like to ask a question. Please press Star then the number one on.

And we're happy with phone keypad again that is star one to ask a question.

Yeah.

Yeah.

I am showing no questions at this time I will now return the call to Neil Wilkin.

Thank you Laurie.

And are there any questions that were submitted by the individual investors and advance of today's call.

Neil There were no questions submitted in advance of the call.

Okay.

Well I would like to thank everyone for listening to our first quarter conference call today as always we appreciate your time and your interest and optical cable Corporation.

And hope you all will continue to stay safe and we appreciate your time. Thank you.

Thank you for participating and the optical cable Corporation first quarter 2021 earnings Conference call. You May now disconnect your lines and have a wonderful day.

And our.

Operations.

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