Q3 2024 Optical Cable Corp Earnings Call
and John Palash, Unknown Attendee, Aaron Palash, Unknown Attendee, Aaron Palash, Unknown Attendee, Aaron Palash, Unknown Attendee,
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Speaker Change: Please stand by your conferences about to begin. Should you require operator assistance simply press star and zero?
Jim: Good morning everyone. My name is Jim and I'll be your conference operator today. At this time, I would like to welcome you to optical cable corporations third quarter in fiscal year 2024 earnings conference calls.
Jim: All lines have been placed on mute to prevent any background noise 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 and one on your telephone keypad. If you wish to remove yourself from the queue, simply press star and two.
Jim: Mr. Hoffman, you may begin your conference, sir.
Mr. Hoffman: Thank you, and good morning, and thank you for joining us for obstacle cable corporations, third quarter of fiscal year 2024 conference call.
Speaker Change: By this time, everyone should have a copy of the earnings press for these issues earlier today. You can also visit www.oscfiber.com for a copy.
Speaker Change: On the call with us today, our 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 four looking statements that involve risks and uncertainties.
Speaker Change: 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 release.
Speaker Change: These cautionary statements apply to the contents of the Internet webcast on www.occfiber.com as well as today's call. With that, I'll turn the call over to Neil Wilkin, Neil, please begin.
Neil Wilkin: Thank you, Spencer, and good morning everyone.
Neil Wilkin: Before we begin our conference called today, I'd like to pause for a moment of silence to honor those who perished in the Terras attack on our country 23 years ago today in New York, Pennsylvania and Virginia.
Neil Wilkin: and to honor those men and women who have served and are serving our country around the world to protect our freedom and liberty.
Neil Wilkin: Hello, I'm John Palash, and I'm the one who's here.
Neil Wilkin: Hello, I'm John Palash, and I'm the one who's here to talk to you about this.
Speaker Change: Thank you.
Speaker Change: I will begin the call today with a few opening remarks.
Speaker Change: Tracy will then review the third quarter results for the three-month and nine-month period ended July 31, 2024, and some additional detail.
Speaker Change: After Tracy's remarks, we will answer as many of your questions as we can.
Speaker Change: 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.
Speaker Change: Instructions regarding such submissions are included in our press release announcing the date and time of our call.
Speaker Change: Turning now to our results for the third quarter of fiscal year 2024.
Speaker Change: Like many in our industry, we are continuing to be affected by a challenging market environment impacting our top line and customer demand in certain of our targeted markets during fiscal year 2024.
Speaker Change: Despite these dynamics, the OCC executed well.
Speaker Change: We've achieved higher net sales each quarter since the first quarter of fiscal 2024 and our sales order backlog and forward load has also increased since the beginning of fiscal year 2024.
Speaker Change: We are seeing other indications of improving opportunities as we hear the end of our fiscal year and looking ahead to fiscal year 2025.
Speaker Change: We will continue to focus on executing our plans and capture opportunities ahead to grow net sales while also taking prudent steps to operate efficiently.
Speaker Change: I'm very appreciative of the work the OCC team.
Speaker Change: and also their commitment to provide you our customers and end users, including our country's military and first responders with our suite of mission-critical products and solutions.
Speaker Change: As we look to the end
Speaker Change: A fiscal year, and in the 2020-25, with our strong position in our target markets and differentiated core strengths and capabilities.
Speaker Change: We are main confident that OCC is poised to deliver value to shareholders as macroeconomic conditions improve.
Speaker Change: 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.
Speaker Change: and with that, I'll turn the call over to Tracy who will review in additional detail our third quarter of fiscal year 2024 financial results. Thank you, Neil.
Tracy Smith: Consolidated net sales for the third quarter of fiscal 2024, we're $16.2 million. The decrease of $4.2 per cent compared to net sales of $16.9 million for the same period last year.
Tracy Smith: Consolidated Net Sales for the first nine months, specifically 2024, were $47.2 million, a decrease of 14% compared to Net Sales of $54.8 million for the first nine months of fiscal 2023.
Tracy Smith: As Neil mentioned, our net sales has sequentially increased each quarter since the first quarter of this year, 2024, although the growth has not been quite as strong as we initially anticipated.
Neil Wilkin: During the third quarter of fiscal 2024, we experienced an increase in net sales in our enterprise market, compared to the same period last year, which was offset by decreases in net sales in our specialty markets, including the wireless carrier market.
Neil Wilkin: We believe this is consistent with current weakness across our industry, generally, and in certain of our target markets, which we began to experience during the third quarter of fiscal year 2023.
Neil Wilkin: So the year-to-date period, we experienced the decrease in that sales and both our enterprise and specialty markets, including the wireless carrier market.
Neil Wilkin: Our net sales during the first nine months of fiscal year 2023 positively benefited from a higher than typical sales order backlog and forward-load of more than $12 million at the end of fiscal year 2022.
Neil Wilkin: Where a cell's order back log and forward-light at the end of this clear 2023 had returned to more normal levels.
Neil Wilkin: At the end of the first nine months of fiscal 2024, sales order backlog and Ford led increase to $6.5 million when compared to $5.6 million as a maple 30 of 2024 and $5 million as a January 31, 2024.
Neil Wilkin: Turning to Grace Profit, our Grace Profit was $3.9 million in the third quarter of fiscal 2024 compared to Grace Profit, a 5.1 million dollars for the same period last year.
Neil Wilkin: and Gross Profit of $4 million for the second quarter of fiscal 2024.
Neil Wilkin: Grace Profit Margin, or Grace Profit as a percentage of net sales was 24.2% in the third quarter of fiscal 2024 compared to 30.2% in the third quarter of fiscal 2023 and compared to 25.1% for the second quarter of fiscal 2024
Neil Wilkin: Grace Profit was $11.7 million in the first nine months of fiscal 2024, a decrease of 36.6% compared to $18.4 million in the first nine months of fiscal 2023.
Neil Wilkin: Grace Prophet margin was 24.7% and the first nine months of fiscal 2024 compared to 33.6% in the first nine months of fiscal 2023.
Speaker Change: Blur's prop at margins for the third quarter and first nine months of fiscal 2024 was impacted by lower production volumes resulting in fixed charges being spread over lower net sales, as well as decrease plant efficiency as lower production volumes impacted the flow of products through our manufacturing facilities.
Speaker Change: those effects of operating leverage.
Speaker Change: The variability of our gross profit margin in any quarter also reflects changes in product mix.
Speaker Change: SG&A expenses were $5.2 million in the third quarter of fiscal year 2024 compared to $5 million for the same period last year.
Speaker Change: Extension A expenses as a percentage of net sales, or 32.3% in the third quarter of fiscal 2024 compared to 29.3% in the third quarter of fiscal 2023, which reflects our operating leverage relative to net sales.
Speaker Change: Back in Paris, an S.T.N.A expenses as a percentage of net sales were 33% in the second quarter of fiscal 2024.
Speaker Change: S.June expenses decrease to 0.6% to 15.7 million dollars during the first nine months of fiscal year 2024 from $16.1 million for the first nine months of fiscal year 2023.
Speaker Change: S.G.A., expenses as a percentage of net sales, or 33.2% in the first nine months of fiscal 2024 compared to 29.3% in the first nine months of fiscal 2023.
Speaker Change: The decrease in SG&A expenses during the first nine months of fiscal year 2024 compared to the same period last year was primarily the result of decreases in employee and contractent failed personnel related costs.
Speaker Change: Included in employee and contracted sales personnel related costs are employee incentives and commissions, which decreased due to decreased net sales from the financial results during the third quarter in first nine months of fiscal 2024.
Speaker Change: OECC recorded in at loss of $1.6 million or 20 cents per basic and diluted chair for the third quarter of fiscal 2024 compared to that income of $101,000 or 1 cents per basic and diluted chairs for the third quarter of fiscal 2023.
Speaker Change: WCC recorded in that loss of $4.6 million, or 15 nonsense, for basic included share for the first nine months of this year, 2024. Compared to that income of $3.3 million, or $4.2 for basic and deleted share for the first nine months of this year, 2023.
Speaker Change: with that, I'll turn the call back over to you, Neil.
Neil Wilkin: Thank you for watching.
Speaker Change: And now, if any analysts or institutional investors have questions, we are happy to answer them. Jim, if you could please indicate the instructions for our participants to call in any questions they have, I'd appreciate it. Again, we are only taking a lot of questions from analysts and institutional investors.
Jim: I'd be happy to Mr. Wilkin. Thank you. And to our phone audience at this time, if you would like to ask a question once again that it's Star and One on your telephone keypad. If your question has been answered and you'd like to remove yourself from the queue, it is simply Star and Two.
Jim: Once again ladies and gentlemen that is Star and One on your telephone keypad if you would like to ask a question and we'll pause for just a moment to give everyone the opportunity to signal.
Jim: The New Year's Day,
Jim: i
Jim: and just another moment ladies and gentlemen with star n1 if you would like to ask a question.
Jim: We have no questions from our phone audience today. Mr. Wilkin, I'm happy to turn it back to you for any additional or closing remarks that you have sir.
Spencer: Thank you, Jim, appreciate it. Spencer, I know we've had a couple of questions submitted ahead of today's solve if you could read those, we will respond to those questions.
Spencer: Thanks, Neil. Yes, we do have two questions. The first.
Speaker Change: on the Q4 2005 earnings call. Neil, you stated that OCC's cost of being a public company is approximately $1 million per year. Is that still the case?
Speaker Change: So at this point in time, the cost associated for any public company have substantially increased over the years.
Speaker Change: So, as you would expect those species cost to be a public company, are substantially higher today than they were back in 2005. We have not publicly talked about the precise number, but it is substantial.
Speaker Change: and this is the last question. On the Q4 2018 earnings call, you say that management's long-term commitment has been to set up the company so that we can grow much bigger than we are.
Speaker Change: Can you please go a bit deeper on your thought process on that and where you see the general opportunity set for OCC going forward.
Speaker Change: Yeah, so I appreciate this question.
Speaker Change: Over the years, OCC has been taking a number of major steps to expand our product and solution offerings to better serve the needs of our customers and end end users.
Speaker Change: We strategically expanded well beyond the initial five-rothed cable product offering to the solutions.
Speaker Change: on which OCC was founded more than 40 years ago. And I'll mention a few examples.
Speaker Change: OCC acquired S&B data communications near ash for the North Carolina 2008.
Speaker Change: This acquisition added technologies, manufacturing capabilities, and expertise in both fiber optic and copper connectivity data communications, products and solutions.
Speaker Change: Building on OECC's existing fiber optic cable presence in the Enterprise Market.
Speaker Change: See you next to that. We added a line of copper data come category, cable products as well.
Speaker Change: As a result, as you see now provides full end to end fiber optic and copper cable and connectivity solutions for the enterprise market.
Speaker Change: Building on OCC's longstanding position as among the top four manufacturers of fiber optic cable in the U.S. structured cabling market and this is as reported by at least one market analyst firm.
Speaker Change: FCC acquired optical systems in Dallas, Texas in 2009.
Speaker Change: This acquisition added technologies and capabilities in fiber optic connectivity products for specialty and harsh environments including for military, industrial, broad task, and other specialty applications and markets.
Speaker Change: and this was this built on OCC's long standing top tier position in those markets where they are existing fiber out the cable products and solutions.
Speaker Change: As a result, OCC now provides full-end and fiber-optic and connectivity products and solutions for harsh environment and especially market and applications.
Speaker Change: with a strong pop to your presence in our targeted markets.
Speaker Change: Before 2018 and after 2018 as well, OCC made significant long-term investments in equipment to enable OCC to manufacture fiber optic and hybrid cables.
Speaker Change: and other words, cables with fiber and copper.
Speaker Change: for the wireless carrier market, which was a new targeted market for OCC.
Speaker Change: This equipment had the added benefit of expanding OCC's fiber off the cable production for other existing and new products as well.
Speaker Change: and interestingly, we see opportunities in the wireless carry-a-market, which have trailed off over the past few years, beginning to show signs of improvement and of course we're encouraged by that.
Speaker Change: Additionally, over many years, continuing to this day, OCC has and continues to add various new products and solutions of all types to better serve our customers and end users needs in our targeted markets and expand our existing product products.
Speaker Change: and we see that continuing as I've said.
Speaker Change: and we said we had two questions, Spencer, so that's it, there's nothing else.
Neil Wilkin: I'm correct, Neil
Neil Wilkin: Okay.
Speaker Change: Well, I would like to thank everyone for listening to our third quarter fiscal year 2024 conference call today. As always, we appreciate your time and your investment and interest in optical cable corporation.
Speaker Change: Again, I'd like to thank those men and women who have served the end of our serving our country, around the world to protect our freedom and liberty.
Speaker Change: and with that, I hope everyone has a good and safe day.
Speaker Change: Thank you.
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