Q1 2022 Optical Cable Corp Earnings Call
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Good morning, My name is read and I will be your conference operator today.
At this time I would like to welcome you to the optical cable Corporation first quarter 2022 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.
You may queue to ask a question at any time by pressing star and one on your Touchtone phone. Please note today's call may be recorded I will be standing by if you should need any assistance. Mr. Payless you may begin your conference.
Perfect. Thank you.
Good morning, and thank you all for participating on optical cable Corporation's first quarter of fiscal year 2022 conference call.
At this time, everyone should have a copy of the earnings press release issued earlier today you can also visit www dot occ's fiber dot com for a copy.
On the call with US today are Neil Wilkin, President and Chief Executive Officer of OCC, and Tracy 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 that involve risks and uncertainties. The actual future results of optical cable corporation may differ materially due to a number of factors and risks, including but not limited to those factors referenced in the forward looking statements section of this morning's press release these.
These cautionary statements apply to the contents of the Internet webcast on www Dot 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 and good morning, everyone.
Yes.
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, 2022, and some additional detail.
After Tracy's remarks, we will answer as many of your questions as we can.
As is our normal practice, we will only take questions from analysts and institutional investors during the Q&A session.
However, we also offer other shareholders the opportunities to make questions in advance of our earnings call.
Instructions regarding such submissions are included in our press release announcing the date and time call today.
Yes.
Our first quarter results reflect the occ's team's solid execution.
Market environment that is still directly and indirectly affected by COVID-19, including significant supply chain constraints.
Yeah.
During the quarter net sales were up 21, 6%.
And gross profit of 75, 2%.
In each case compared to the same period last year.
We are pleased to continue seeing strong demand for our full suite of mission critical cabling and connectivity products and solutions reinforcing our confidence in the strength of our offerings gross strategies and competitive position in the market.
It's worth reiterating that thanks to the hard work of our team OCC remains uniquely positioned in our industry.
And we appreciate the opportunity to meet the evolving needs of our customers installers specifies a specifier and end users.
And as you've seen we've differentiated core strengths and capabilities and.
That not only enable us to offer top tier solutions products applications and technical expertise, but also to successfully compete against much larger competitors.
Moreover, our enviable market position brand recognition and loyalty of our customers and end users helps us distribute to abroad.
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Neil you still there.
I'm still here.
Okay.
So what was the last thing we heard.
Yeah.
I believe that your distributor a broad diverse geographic footprint.
Okay.
Thank you.
So I'll start I'll start with a little bit earlier than that so we see the jacket completely here, but.
Moreover, our enviable market position brand recognition and the loyalty of our customers and end users helps us distribute to a broad diverse geographic footprint with OCC selling into approximately 50 countries each year.
OCC continues to experience.
The effects of supply chain constraints and the team is working diligently to minimize the impact of these challenges to the extent possible.
As we look ahead.
OCC will continue to control, what we can including driving growth in our targeted markets and focusing on operating efficiently.
As the various direct and indirect effects of the pandemic recede LTC is poised to capture the opportunities ahead.
We remain committed to leveraging our core strengths and capabilities and executing our strategies and our initiatives to create long term value for shareholders.
And with that Sue me, who are still on I will turn the call over to Tracy, who will review and additional detail our first quarter of fiscal year 2020 financial results.
Thank you Neil Yes that 2022 financial results.
Consolidated net sales for the first quarter of fiscal 2022 increased 21, 6% to $14 $4 million compared to net sales of $11 9 million same period last year.
During the first quarter of fiscal 2022, we experienced an increase in net sales in both the enterprise and specialty markets, including the wireless carrier market compared to the same period last year.
Net sales to customers in the United States increased 25, 2% of net sales to customers outside of the United States increased five 7% in the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021.
Sure.
Our sales order backlog and pork lag continues to increase due to strong product demand while that demand continued to increase during the first quarter of fiscal year 2022, our net sales were impacted by the continuing direct and indirect effects of COVID-19, including supply chain and labor constraints and predict particularly.
That are affecting production volumes.
We are continuing to see some positive indicators of future strengthening in some of our markets and believe we will continue to benefit from improvement in our markets. During the remaining nine months of fiscal year 2022.
However, we cannot fully anticipate a reasonably estimate the continuing impacts of the pandemic on our various markets and customers, including impacts from emerging variants of COVID-19 in our various market.
Okay.
Turning to gross profit our gross profit increased 75, 2% to $4 million in the first quarter of fiscal 2022 compared to gross profit of $2 $3 million in the first quarter of fiscal 2021.
Gross profit margin or gross profit as a percentage of net sales increased to 28% in the first quarter of fiscal 2022 compared to 19, 4% for the same period last year.
Our gross profit margins tend to be higher when the company achieves higher net sales levels as certain fixed manufacturing costs are spread over higher sales.
This operating leverage which is beneficial at higher sales levels positively impacted our gross profit margins in the first quarter of fiscal year 2022.
Additionally, we believe actions that we took and operational improvements we made in fiscal years 2020. In 2019 continued to have a positive impact on our gross profit margin.
Gross profit margin percentages are also heavily dependent upon product mix on a quarterly basis and may vary based on changes in product mix from quarter to quarter.
SG&A expenses increased to $4 $8 million during the first quarter of fiscal 2022 compared to $4 $3 million for the same period last year.
SG&A expenses as a percentage of net sales were 33, 1% in the first quarter of fiscal 2022 compared to 36, 3% in the first quarter of fiscal 2021.
The increase in SG&A expenses was primarily the result of net increases in employee and contracted sales personnel related cost.
Included in employee and contracted sales personnel related costs, our compensation cost payroll taxes commissions and share share based compensation expense.
OCC recorded a net loss of $936000 or 12 per basic and diluted share for the first quarter of fiscal 2022 compared to a net loss of $2 $1 million or 29 cents per basic and diluted share for the first quarter of fiscal 2021.
As of January 31, 2022, we have a two point million dollar receivable for the employee retention tax credit still to be refunded.
As of January 31, 2022, we had outstanding borrowings of $5 $5 million on our revolver and $2 $9 million in available credit.
We also had outstanding loan balances of $4 $8 million under our real estate term loans.
And with that I'll turn the call back over to Neil.
Thank you Tracy.
And now.
If any analyst and institutional investors have any questions, we're happy to answer them.
Reed I think youre still our operator, if you could please indicate the instructions for participants to call in any questions. They may have I'd. Appreciate it again, we are only taking live questions from analysts and institutional investors.
If you'd like to ask a question. Please press star and one on your Touchtone phone you may remove yourself from the question queue by pressing the pound key again that is star Antoine and will pause to allow any questions to queue.
Okay.
And there appear to be no questions at this time.
Okay. Thank you Reed.
Aaron I know that we've gotten a couple of questions from individual shareholders.
You've read the question we will respond.
Sure.
Sure.
Can you provide a rough breakdown of your employees and to sales manufacturing administration or similar groups.
Yeah.
For competitive reasons, we don't provide breakdowns of our employee groups.
Uh huh.
And I think the reason one of the questions being asked is.
You all should know our commitment to operating as efficiently and as lean as possible.
Youll recall that we reduced SG&A expenses by $1 million or five 2% in fiscal year 2021 compared to fiscal year 2020.
And that was after we had reduced SG&A expenses in fiscal year, 2020 by $4 2 million or 17, 9% compared to the prior year.
Great and then last question here can you give us an update on the progress on the manufacturing and substation solutions.
Okay.
Thanks Aaron.
Again for competitive reasons, we don't comment on specific products or projects.
But what we can say is that we are moving forward with a comprehensive suite of solutions. We're excited by the demand we're seeing and believe me we are well positioned to continue to drive growth across our markets.
Great just a final question.
Okay.
Thank you I appreciate that.
I would also like to thank everyone for listening to our first quarter of fiscal year 2022.
The conference call today as always we appreciate your time and your interest in optical cable Corporation. Thank you.
Okay.
Operator that concludes today's call.
And this does conclude today's program. We appreciate your participation and you may now disconnect.
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