Q2 2024 Optical Cable Corp Earnings Call
Angela: Please stand by. Your program is about to begin. If you need assistance during your conference today, please press star zero. Good morning, my name is Angela, and I will be your conference operator today. At this time, I would like to welcome you to Optical Cable Corporation's second quarter of fiscal year 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.
Please standby your program is about to begin if you need assistance during your conference today. Please press Star zero.
Angela: Good morning, My name is Angela and I will be your conference operator today.
Angela: At this time I would like to welcome you to optical cable Corporation second quarter of fiscal year 2024 earnings Conference call.
Speaker Change: All lines have been placed on mute to prevent any background noise.
Angela: After the speaker's remarks, there will be a question and answer period. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, please press star 2. Mr. Hoffman, you may begin your conference.
Speaker Change: After the Speakers' remarks, there will be a question and answer period.
Speaker Change: If you would like to ask a question at that time. Please press star one on your telephone keypad.
Speaker Change: If you wish to remove yourself from the queue. Please press star two.
Speaker Change: Mr. Hoffman you may begin your conference.
Spencer Hoffman: Good morning, and thank you for joining us for Optical Cable Corporation's second quarter of fiscal year 2024 conference call. By this time, everyone should have a copy of the earnings press release issued earlier today. You can also visit www.occfiber.com for a copy.
Spencer Hoffman: Good morning, and thank you for joining us for optical cable Corporation's second quarter fiscal year 2024 conference call.
Speaker Change: By this time, everyone should have a copy of the earnings press release issued earlier today you can also visit www dot OCC fiber dot com for a copy.
Spencer Hoffman: 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 uncertainty. 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 statement section of this morning's press. These cautionary statements apply to the contents of the internet webcast on www.occfibre.com as well as today. With that, I'll turn the call over to Neil Wilkin. Neil, please begin.
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.
Speaker Change: Before we begin I'd like to remind everyone that this call may contain forward looking statements that involve risks and uncertainties.
Speaker Change: Future results of optical cable corporation may differ materially due to a number of doctors and risks, including but not limited to those factors referenced in the forward looking statements section of this morning's press release.
Speaker Change: These cautionary statements apply to the contents of the Internet of the Internet webcast on www Dot OCC fiber dotcom as well as today's call.
Speaker Change: I'll turn the call over to Neil Wilkin deal. Please begin.
Neil D. Wilkin: Thank you, Spencer, and good morning, everyone. I will begin the call today with a few opening remarks. Tracy will then review the second quarter results for the three-month and six-month periods ended April 30, 2024, in some additional detail. After his 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 opportunity to submit questions in advance of our earnings call. Instructions regarding such submissions are included in our press release announcing the date and time of our call.
Neil D. Wilkin: Thank you Spencer and good morning, everyone.
Neil D. Wilkin: I'll begin the call today with a few opening remarks.
Neil D. Wilkin: Tracy will then review the second quarter results for the three month and six month periods ended April 30 of 'twenty 'twenty four and some additional detail.
Neil D. Wilkin: After Tracy's remarks, we will answer as many of your questions as we can.
Tracy: As is our normal practice, we will only take questions from analysts and institutional investors starting the Q&A session. However, we also offer other shareholders the opportunity is.
Speaker Change: Questions in advance of our earnings call instructions regarding such submissions are included in our press release announcing the date and time of our call.
Neil D. Wilkin: I'm proud of the OCC team, which has continued to execute and solidify OCC's position as a leader in our industry, despite the macroeconomic pressures that OCC and other industry participants continue to face. We believe we have delivered solid results in this environment. And while our results are down year over year, when comparing the second quarter of fiscal 2024 to fiscal 2023, as well as the first half of fiscal 2024 to the first half of fiscal 2023, we are facing a tough comparison.
Speaker Change: I'm proud of the OCC team, which is continuing to execute and solidify occ's position as a leader in our industry. Despite the macroeconomic pressures that OCC and other industry participants continue to face.
Speaker Change: We believe we delivered solid results in this environment.
Speaker Change: And while our results are down year over year, when comparing the second quarter of fiscal 2024th at fiscal 2023 as well as the first half of fiscal 2024 to the first half of fiscal 2023.
Speaker Change: We are facing a tough comparison.
Speaker Change: Okay.
Neil D. Wilkin: As Tracy will get into in a moment, last year our net sales for the second quarter and first half of fiscal 2023 were boosted by higher than typical sales order backlog and forward load, which we believe normalized this year. Yet, sequentially, we achieved top-line improvement with OCC's net sales increasing 8.5% during the second quarter of fiscal year 2024 compared to net sales for the first quarter of fiscal year 2024. This growth reflects sequential increases in both OCC's enterprise and specialty markets during the second quarter of fiscal year 2024 when compared to the first quarter. We believe this improvement is better than what many of our competitors are experiencing. OCC's gross profit also sequentially increased 8.8% during the second quarter of fiscal 2024 when compared to the first quarter of fiscal 2024.
Tracy: Thanks, Tracy will get to.
Tracy: Get into in a moment last year, our net sales for the second quarter and first half of fiscal 2023 were boosted by higher than typical sales order backlog and forward load, which we believe normalized this year.
Yes sequentially, we achieved topline improve that with Occ's net sales increasing eight 5% during the second quarter of fiscal year 2024, compared to net sales for the first quarter of fiscal year 2024.
Speaker Change: This growth reflects sequential increases in both Occ's enterprise and specialty markets during the second quarter.
Speaker Change: Fiscal year, 'twenty 'twenty, four when compared to the first quarter.
Speaker Change: We believe this improvement.
Speaker Change: It's better than what many of our competitors are experiencing.
Occ's gross profit also sequentially increased eight 8% during the second quarter of fiscal 2024, when compared to the first quarter of fiscal 2024.
Speaker Change: Okay.
Neil D. Wilkin: Looking ahead, the team has created a competitive advantage. As market conditions improve, we believe our decision to maintain headcount will serve our company well and position us to outperform moving forward. As we move forward, we continue to take steps to control what we can, operate efficiently, and optimally position OCC to meet rebounding demand. We remain committed to capturing profitable growth opportunities, meeting and exceeding the needs of our valued customers and end users, and advancing our strategy to enhance shareholder value. And with that, I'll turn the call over to Tracy, who will review in additional detail our second quarter of fiscal year 2024 financial results.
Speaker Change: Looking ahead the team.
Speaker Change: As created a competitive advantage.
Speaker Change: As market conditions improve we believe our decision to maintain head count will serve our company well and position us.
To outperform moving forward.
Speaker Change: As we move forward, we continue to take steps to control, what we can operate efficiently and optimally position OCC to meet rebounding demand, we remain committed to capturing profitable growth opportunities meeting and exceeding the names and the needs of our valued customers and end users.
Speaker Change: And advancing our strategy to enhance shareholder value.
Speaker Change: And with that I'll turn the call over to Tracy, who all of you and additional detail our second quarter of fiscal year 'twenty 'twenty four financial results.
Tracy: Thank you Neil.
Tracy G. Smith: Consolidated net sales for the second quarter of fiscal 2024 were $16.1 million, a decrease of 17.9% compared to net sales of $19.6 million for the same period last year. Consolidated net sales for the first half of fiscal 2024 were $31 million, a decrease of 18.3% compared to net sales of $37.9 million for the first half of fiscal 2023. sequentially, net sales increased 8.5% during the second quarter of fiscal year 2024, compared to net sales of $14.9 million for the first quarter of fiscal 2024. OCC experienced sequential increases in both its enterprise and specialty markets during the second quarter compared to the first quarter of fiscal 2024.
Tracy: Consolidated net sales for the second quarter of fiscal 2024 were $16 $1 million a decrease of 17, 9% compared to net sales of $19 $6 million for the same period last year.
Tracy: Consolidated net sales for the first half of fiscal 2024 were $31 million a decrease of 18, 3% compared to net sales of $37 $9 million for the first half of fiscal 2023.
Sequentially net sales increased eight 5% during the second quarter of fiscal year 2024, compared to net sales of $14 $9 million for the first quarter of fiscal 'twenty 'twenty four.
OCC: OCC experienced sequential increases in both enterprise and specialty markets during the second quarter compared to the first quarter of fiscal year 2024.
Tracy G. Smith: During the second quarter and first half of fiscal 2024, we experienced decreases in net sales in both our enterprise and specialty markets, including the wireless carrier market, compared to the same period last year. We believe this is consistent with current weakness across our industry and uncertainty about our target market. Our net sales during the comparable periods of fiscal year 2023 positively benefited from a higher than typical sales order backlog and forward load of more than $12 million at the beginning of fiscal year 2023, while sales order backlog and forward load at the beginning of fiscal year 2024 had returned to more normal levels.
Speaker Change: During the second quarter and first half of fiscal 'twenty 'twenty four we experienced decreases in net sales in both our enterprise and specialty market, including the wireless carrier market compared to the same period last year.
We believe this is consistent with current weakness across our industry and in certain of our target market.
Speaker Change: Our net sales during the comparable periods of fiscal year 2023 positively benefited from a higher than typical sales order backlog in port line of more than $12 million at the beginning of fiscal year 2023, while sales order backlog in port right at the beginning I think we are.
Speaker Change: 2024 have returned to more normal levels.
Tracy G. Smith: At the end of the second quarter of fiscal year 2024, sales order backlog and forward load remained at a more typical level of approximately $5.6 million. Additionally, net sales for the second quarter and first half of fiscal year 2024 were negatively impacted by various macroeconomic pressures, risks, and uncertainties in our industry, which we believe is consistent with weakness being experienced in our industry generally. While certain of our markets continue to show signs of softness, including our enterprise and wireless carrier markets, we believe there are positive indicators in certain of our other markets.
Speaker Change: At the end of the second quarter of fiscal year, 'twenty 'twenty four sales order backlog and Ford remained at a more typical level of approximately $5 million.
Speaker Change: Additionally, net sales for the second quarter and first half of fiscal year 'twenty 'twenty four were negatively impacted by various macro economic pressures risks and uncertainties in our industry, which we believe is consistent with the weakness being experienced in our industry generally.
Speaker Change: While certain of our markets continue to show signs of softness, including our enterprise and wireless carrier market. We believe there are positive indicators in certain of our other markets.
Tracy G. Smith: Overall, we expect our net sales to begin to grow compared to the first half of fiscal year 2024. Turning to gross profit, Our gross profit was $4 million in the second quarter of fiscal 2024 compared to $6.8 million for the same period last year and $3.7 million for the first quarter of fiscal 2024. Gross profit margin, or gross profit as a percentage of net sales, was 25.1% in the second quarter of fiscal 2024, compared to 34.6% in the second quarter of fiscal 2023, and compared to 25% for the first quarter of fiscal 2024. Gross profit was $7.8 million in the first half of fiscal 2024, a decrease of 41.7% compared to $13.3 million in the first half of fiscal 2023.
Speaker Change: While we expect our net sales to begin to grow compared to the first half of fiscal year 2024.
Speaker Change: Turning to gross profit our gross profit was $4 million in the second quarter of fiscal 2024 compared to gross profit of $6 $8 million for the same period last year and gross profit of $3 $7 million for the first quarter of fiscal 2024.
Speaker Change: Gross profit margin or gross profit as a percentage of net sales was 25, 1% in the second quarter of fiscal 2024 compared to 34, 6% in the second quarter of fiscal 2023, and compared to 25% for the first quarter of fiscal 2024.
Speaker Change: Gross profit was $7 $8 million in the first half of fiscal 2024, a decrease of 41, 7% compared to $13 $3 million in the first half of fiscal 2023.
Tracy G. Smith: Gross profit margin was 25% in the first half of fiscal 2024 compared to 35.1% in the first half of fiscal 2023. Sequentially, gross profit increased 8.8% during the second quarter of fiscal 2024 compared to $3.7 million for the first quarter of fiscal 2024. Gross profit margin for the second quarter and first half of fiscal 2024 was negatively impacted by lower volumes as fixed charges were spread over lower sales as well as reduced plant efficiency as fewer sales and lower backlogs impacted the flow of products through our manufacturing facility, the impact of operating. Additionally, our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may vary based on changes in product mix.
Speaker Change: Gross profit margin was 25% in the first half of fiscal 2024 compared to 35, 1% in the first half of fiscal 2023.
Speaker Change: Sequentially gross profit increased eight 8% during the second quarter of fiscal 2024 compared to $3 $7 million for the first quarter of fiscal 'twenty 'twenty four.
Gross profit margin for the second quarter and first half of fiscal 2024 was negatively impacted by lower volumes of fixed charges were spread over lower sales as well as reduce plant efficiency at 4000, lower backlog impacted the flow of products to our manufacturing facility.
Speaker Change: The impact of operating leverage.
Speaker Change: Additionally, our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may vary based on changes in product mix.
Tracy G. Smith: SG&A expenses decreased to $5.3 million in the second quarter of fiscal year 2024 compared to $5.7 million for the same period last year. SG&A expenses are a percentage of net sales, with 33% in the second quarter of fiscal 2024 compared to 28.9% in the second quarter of fiscal 2023, which reflects our operating leverage relative to net sales. By comparison, SG&A expenses as a percentage of net sales were 34.3% in the first quarter of fiscal 2024.
Speaker Change: SG&A expenses decreased to $5 $3 million in the second quarter of fiscal year 2024, compared to $5 $7 million for the same period last year.
Speaker Change: SG&A expenses as a percentage of net sales were 33% from the second quarter of fiscal 2024 compared to 28, 9% from the second quarter of fiscal 2023.
Speaker Change: Which reflects our operating leverage relative to net sales.
Speaker Change: By comparison SG&A expenses as a percentage of net sales were 34, 3% in the first quarter of fiscal 2024.
Tracy G. Smith: SG&A expenses decreased 6.3% to $10.4 million during the first half of fiscal year 2024 from $11.1 million for the first half of fiscal year 2023. SG&A expenses as a percentage of net sales were 33.6% in the first half of fiscal 2024 compared to 29.3% in the first half of fiscal 2023. The decrease in SG&A expenses during the second quarter and first half of fiscal year 2024 compared to the same period last year was primarily the result of decreases in employee and contracted sales personnel related costs.
Speaker Change: SG&A expenses decreased six 3% to $10 $4 million during the first half of fiscal year 2024 from $11 $1 million for the first half of fiscal year 2023.
Speaker Change: SG&A expenses as a percentage of net sales were 33, 6% in the first half of fiscal 2024 compared to 29, 3% in the first half of fiscal 2023.
Speaker Change: The decrease in SG&A expenses during the second quarter and first half of fiscal year 2024, compared to the same case last year.
Speaker Change: Primarily the result of decreases in employee and contracted sales personnel and other costs.
Tracy G. Smith: Included in employee and contracted sales personnel related costs are employee incentives and commissions, which decreased due to decreased net sales and the financial results during the second quarter and first half of fiscal 2024. OCC recorded a net loss of $1.6 million, or 21 cents per basic and diluted share, for the second quarter of fiscal 2024 compared to a net income of $2.4 million, or 31 cents per basic and diluted share, for the second quarter of fiscal 2023.
Speaker Change: Included in employee and contractor costs personnel related costs and claims kind of commissions, which decreased due to decreased net sales and the financial results during the second quarter and first half of fiscal 'twenty 'twenty four.
Speaker Change: OCC recorded a net loss of $1 $6 million or 21 cents per basic and diluted share for the second quarter of fiscal 2024 compared to net income of $2 $4 million or 31 cents per basic and diluted share for the second quarter.
Speaker Change: 'twenty three.
Tracy G. Smith: OCC recorded a net loss of $3 million, or $0.39 per basic and diluted share, for the first half of fiscal year 2024 compared to a net income of $3.2 million, or $0.41 per basic and diluted share, for the first half of fiscal year 2023.
OCC recorded a net loss of $3 million or 39 cents per basic and diluted share for the first half of fiscal year 2024.
Speaker Change: Net income of $3 $2 million.
Speaker Change: <unk> <unk> per basic and diluted share for the first half of fiscal year 2023.
Neil D. Wilkin: And with that, I'll turn the call back over to Neal.
Speaker Change: And with that I'll turn the call back over to Neil.
Tracy: Thank you Tracy.
Neil D. Wilkin: And now, if any analysts or institutional investors have questions, we are happy to answer them. Angela, if you could please indicate the instructions for our participants to call in any questions they may have, I'd appreciate it. Again, we're only taking live questions from analysts and institutional investors.
Neil D. Wilkin: And notwithstanding any analysts or institutional investors have questions. We are happy to answer them.
Neil D. Wilkin: Angela if you could please indicate the instructions for our participants to call in any questions. They may have I'd. Appreciate it again, we're only taking live questions from analysts and institutional investors.
Angela: At this time, if you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2.
Angela: At this time, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: You may remove yourself from the queue at any time by pressing star two.
Angela: Once again, that is star number one to ask a question. We will pause for a moment to allow questions to queue. As a reminder, that is star number one if you'd like to ask a question. It appears we have no questions at this time. I will now turn the program back over to our presenters for any additional remarks.
Speaker Change: Once again that is star one to ask a question we.
Speaker Change: We will pause for a moment to allow questions to queue.
Speaker Change: As a reminder, that is star one if you'd like to ask a question.
Speaker Change: It appears we have no questions at this time I will now turn the program back over to our presenters for any additional remarks.
Neil D. Wilkin: Thank you, Angela. Spencer, I know that we have some questions that were submitted by individual investors. If you could ask those questions, and Tracy, I'll respond to those.
Speaker Change: Thank you Angela Parr Spencer I know that we have some questions that were submitted by individual investors if you could.
Tracy: Asked those questions and Tracy I'll respond to those.
Spencer Hoffman: Absolutely. The first question. In your annual report in the 10K, you refer to data centers as one of your markets. Could you please comment a bit more on your attempts to penetrate this market? And if so, in what niches can we look forward to more business? And can we look forward to more business from this burgeoning market in the future?
Tracy G. Smith: Absolutely the first question.
Speaker Change: In your annual report and 10-K.
Speaker Change: Centers I was one of your markets could you comment a bit more on your attempts to penetrate this market and if so what niches and what can we look forward to more business and can we look forward to more business from this burgeoning market in the future.
Neil D. Wilkin: Well, OCC does offer products that are used in the data center market, some products, and we do have some participation in that market. The data center market, as I'm sure folks understand, has a number of tiers, from hyper-scale data centers to smaller private data centers. Some of the most recent is talking about growth, and Data Centers is focused on the Hyperscale Data Center. And as you see, his product offering does not specifically include products that are designed for that hyperscale data center market. It is a market that we're watching and will look at periodically to see how we can benefit from it.
Well, obviously, she does offer products that are.
Speaker Change: Our use of the data center market some products and we do have some participation in that market.
Speaker Change: On the data center market as I'm sure folks understand has the number of tiers from Hyperscale data centers, the smaller private data centers.
Speaker Change: Some of administration is talking about the growth.
Speaker Change: Data centers is focused on the Hyperscale data centers.
Speaker Change: And as you see us product offering does not specifically include products that are designed for that hyperscale.
Speaker Change: Data center market.
Speaker Change: It is a market that we're watching and.
Speaker Change: And looked at periodically to see how we can benefit from it.
Neil D. Wilkin: Thank you, Neil. Next question. What is the status of the water-damaged office building in Asheville?
Speaker Change: Next question.
Speaker Change: What is the status of the water damage the office building in Nashville.
Tracy G. Smith: Tracy's going to take this one.
Speaker Change: She's got to take this one.
Speaker Change: Sure.
Tracy G. Smith: We're still evaluating our options with regard to the office building in Asheville. As indicated previously, this was an administrative building, and the water damage didn't have an impact on our production processes. So we feel we can spend some time analyzing the options and making a decision that best suits our business.
Speaker Change: Still evaluating our options with regard to the office building in Nashville as indicated previously this wasn't administrative building in the water damage didn't have an impact on our production processes. So we feel we can spend some time analyzing the options and making a decision the best thing for our business.
Tracy G. Smith: Thank you, Tracy. The next question: could you comment on the purchasing patterns in the carrier industry? Are your customers building large inventories they work through over time?
Speaker Change: Thank you Tracy and the next question.
Speaker Change: Could you comment on the purchasing patterns in the carrier.
Speaker Change: Are your customers building large inventory has been worked through over time.
Neil D. Wilkin: Yes, I'll answer that. So OCC has seen a slowdown in sales in the wireless carrier market, as we've disclosed, and as our shareholders are aware of. We believe this is consistent with what a number of other manufacturers have experienced and is happening for a number of reasons. I think one of those reasons is that we do believe there's been some excess inventory in the sales channels for the wireless carrier market, and that has resulted in lower sales for OCC in that market. However, we do still have capabilities to service that market. And we do believe that the wireless carrier market will improve in the future.
Speaker Change: Yeah, So I'll answer that.
OCC representative: So OCC has seen a slowdown in sales in the wireless carrier market as we've disclosed.
Speaker Change: And has our shareholders are aware off.
Speaker Change: We believe this is consistent with what a number of other manufacturers have experience.
Speaker Change: This is happening for a number of reasons.
Speaker Change: One of those reasons is that we do believe there's been some excess inventory in the sales channels for the wireless carrier market and that has resulted in lower sales for OCC in that market.
Speaker Change: We do.
Still have capabilities to service that market and we do believe that the wireless carrier market will improve in.
Speaker Change: In the future.
Speaker Change: Thank you next question.
Neil D. Wilkin: Thank you, Neil. Next question. In 2015 to 2016, the oil rig count fell significantly due in part to the implementation of new technology. Some of your competitors saw their sales to oil and gas customers fall more than 50% over that period, because horizontal drilling slash increased rig productivity impact demand for your product.
In 2015 to 2016 oil rig counts fell.
Speaker Change: Due in part to the implementation of new technologies.
Speaker Change: Some of your competitors saw their sales to oil and gas customers fall more than 50% over that period.
Speaker Change: Two horizontal drilling Inc.
Speaker Change: These rig productivity impact demand for your product Similarly back then.
Neil D. Wilkin: So OCC does offer certain products that are sold into the oil and gas market. As you would expect, we have seen variation in sales into that market based on a number of factors, including oil and gas prices, which impact production volumes. Our product offerings are diverse, and for that reason, we benefit from that diversity in helping to mitigate some of the volatility. I can't specifically comment on oil and gas in 2015 to 2016, but we do participate in that market with certain certain products and have been active in that market over many years.
Speaker Change: So OCC does offer certain products that are sold into the oil and gas markets.
Speaker Change: As you would expect we will see variation in sales into that market based on a number of factors, including the oil and gas prices.
Speaker Change: Which impact our production volumes.
Speaker Change: Our product offerings are diverse and for that reason that we benefit from that diversity.
Speaker Change: Helping to mitigate some of that volatility.
Can't specifically comment on oil and gas in 'twenty and 2015 2015 to 26 two.
Speaker Change:
Speaker Change: We do we do participate in that market with certain certain products in the bedroom.
Speaker Change: From that market over many years.
Neil D. Wilkin: Thank you, Neil. The next question. Could you give us a rough understanding of how your sales split between end markets in 2023 or what sales growth was like in the specialty market and enterprise market?
Danielle: Hey, Danielle next question.
Speaker Change: Could you give us a rough understanding of how your sales split between end market in 2023 or what sales growth was like in the specialty market in the enterprise market.
Speaker Change:
Neil D. Wilkin: Thank you, Spencer. So OCC operates in many diverse markets, both geographically as well as by targeted market application. Geographically, each year, we sell into about 50 countries or so. And by targeted market, we have various different markets that are included in specialties and also different applications in the enterprise portion of the markets we speak to generally. The diversification is a strength of SEC, and it helps mute the significant volatility that can occur in our markets.
Danielle: Thanks Spencer so.
Speaker Change: We do obviously she operates in many diverse markets.
Speaker Change: Both geographically as well as by targeted market application.
Speaker Change:
Speaker Change: Geographically weeks.
Speaker Change: Each year, we sell into about 50 countries or so.
Speaker Change: And by targeted market, we have various different markets that are included in specialties and also different applications in the enterprise portion of the market as we speak to you generally.
Speaker Change: The diversification is a strength for us to see and it helps mute significant volatility that can occur at our markets.
Speaker Change:
Neil D. Wilkin: In general, I will say that generally OCC's enterprise markets and specialty markets, excluding the wireless carrier market, each comprise about half of OCC's sales. That varies by quarter, and it varies year to year. For competitive reasons, we don't talk about or disclose specific details about individual markets. But hopefully, that provides the information that's being asked.
Speaker Change: Generally I will say that generally occ's enterprise markets and specialty markets, excluding the wireless carrier market.
Speaker Change: Each congress comprise about half of OCC sales that varies by quarter.
Speaker Change: Varies year to year for competitive reasons, we don't talk about or disclose specific details on individual markets.
Speaker Change: But hopefully that provides the information that's being asked.
Neil D. Wilkin: Thank you, Neil. And now, the final question. In the fourth quarter of 2023, your gross margin came in lower than margins previously achieved at similar sales levels during other past quarters. Can you please comment on what impacted gross margins in the fourth quarter of 2023?
Speaker Change: Thank you Neil and now now the final question.
Speaker Change: In the fourth quarter of 2023 gross margin came in lower than margins previously achieved at similar sales level during other quarters.
Neil D. Wilkin: Could you please comment on what impacted gross margin in the fourth quarter of 2023.
Tracy G. Smith: Tracy's going to address that question in the fourth quarter of 2023.
Neil D. Wilkin: Tracy is going to address that question okay.
Tracy G. Smith: In the fourth quarter of 2023, our gross profit margins were impacted by lower sales volumes and product mix. Comparing older periods can be difficult for many reasons, including changes that occur in cost structure over time and the impact that product mix has on our gross profit margin from quarter to quarter. So if you're looking at prior years and quarters, particularly significantly older quarters, when we have something that is more unusual that we can point to, such as production process issues that we have had in the past, we definitely try to highlight those as well. But at the end of the day, operating leverage and product mix are the primary drivers for fluctuations in our gross profit margin from quarter to quarter.
Neil D. Wilkin: In the fourth quarter of 2023.
Tracy G. Smith: Margins were impacted by lower sales volumes and product mix.
Tracy G. Smith: Comparing older periods can be difficult for many reasons, including changes that occur in cost structure over time and the impact of product mix has on our gross profit margin from quarter to quarter. After looking at prior year's quarters.
Can you really significantly older quarters when.
Speaker Change: When we have something that is more unusual that we can point to such as the production process issues that we had in the past we definitely try to highlight those as well, but at the end of the day operating leverage and product mix are primary drivers for fluctuations in our gross profit margin from quarter to quarter.
Spencer Hoffman: And Spencer, you said that was the last question. We don't have any more. Yeah.
Speaker Change: And especially you said that was the last question, we don't have anymore.
Spencer Hoffman: Yeah, you know, that was the last question. Okay.
Speaker Change: That was the last question.
Speaker Change: Okay.
Neil D. Wilkin: That being the case, I would like to thank everyone for listening to our second quarter of fiscal year 2024 conference call today. As always, we appreciate your time and your investment in Optical Cable Corporation. Thank you very much. This does conclude today's program. Thank you for your participation.
Speaker Change: That being the case I would like to thank everyone for listening to our second quarter of fiscal year 2024 conference call today as always we appreciate your time and your investments in optical cable Corporation.
Speaker Change: Thank you very much.
Speaker Change: Okay.
Unknown Attendee: This does conclude today's program. Thank you for your participation. You may disconnect at any time. Transcribed by https://otter.ai
Speaker Change: This does conclude today's program. Thank you for your participation you may disconnect at any time.
Unknown Attendee: [inaudible]
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