OPTICAL CABLE CORPORATION REPORTS SECOND QUARTER OF FISCAL YEAR 2024 FINANCIAL RESULTS
Optical Cable (Nasdaq GM: OCC) reported a 17.9% decline in net sales for Q2 FY2024, totaling $16.1 million, compared to $19.6 million in Q2 FY2023. Sequentially, net sales increased by 8.5% from $14.9 million in Q1 FY2024. Gross profit for Q2 FY2024 was $4.0 million, down 40.5% from $6.8 million in Q2 FY2023 but up 8.8% from $3.7 million in Q1 FY2024. Gross profit margin decreased to 25.1% from 34.6% YoY. SG&A expenses declined to $5.3 million from $5.7 million YoY. OCC recorded a net loss of $1.6 million, or $0.21 per share, compared to a net income of $2.4 million, or $0.31 per share, YoY. For the first half of FY2024, net sales were $31.0 million, down 18.3% YoY. Gross profit for the first half was $7.8 million, a 41.7% decrease YoY. SG&A expenses for the first half decreased by 6.3% to $10.4 million. OCC recorded a net loss of $3.0 million, or $0.39 per share, for the first half of FY2024, compared to a net income of $3.2 million, or $0.41 per share, YoY.
- Sequential net sales increase of 8.5% from $14.9 million in Q1 FY2024 to $16.1 million in Q2 FY2024.
- Sequential gross profit increase of 8.8%, from $3.7 million in Q1 FY2024 to $4.0 million in Q2 FY2024.
- SG&A expenses decreased by 6.3% YoY to $5.3 million in Q2 FY2024.
- Net sales decreased by 17.9% YoY to $16.1 million in Q2 FY2024.
- Gross profit margin decreased to 25.1% from 34.6% YoY.
- Gross profit decreased by 40.5% YoY to $4.0 million in Q2 FY2024.
- Net loss of $1.6 million, or $0.21 per share, compared to net income of $2.4 million, or $0.31 per share, YoY.
- For the first half of FY2024, net sales declined by 18.3% YoY to $31.0 million.
- First-half gross profit decreased by 41.7% YoY to $7.8 million.
- SG&A expenses increased to 33.0% of net sales in Q2 FY2024, up from 28.9% YoY.
- Net loss of $3.0 million, or $0.39 per share, for the first half of FY2024, compared to net income of $3.2 million, or $0.41 per share, YoY.
Insights
Optical Cable Corporation's (OCC) Q2 financial results reveal a challenging quarter, marked by a
The net loss of
The decline in OCC’s enterprise and specialty markets, including the wireless carrier market, is reflective of broader industry trends. The reduction in a high sales order backlog from the previous year exacerbates this impact. The
However, the
Second Quarter 2024 Financial Results
Consolidated net sales for the second quarter of fiscal year 2024 were
The Company's net sales during the comparable second quarter of fiscal year 2023 positively benefited from a higher-than-typical sales order backlog/forward load of more than
Sequentially, the Company's net sales increased
Gross profit was
Gross profit margin, or gross profit as a percentage of net sales, was
Gross profit margin for the second quarter of fiscal year 2024, when compared to the same period last year, was impacted by lower sales and production volumes. Fixed charges were spread over lower sales, and plant efficiency was impacted as a result of reduced production flow through the Company's manufacturing facilities—both effects of operating leverage. The variability of the Company's gross profit margin is also subject to changes in product mix each quarter.
While production volume decreased during the second quarter and first half of fiscal year 2024, compared to the same periods last year, the Company has not implemented reductions in production personnel. The Company's planned restraint in this regard is consistent with its view of expected opportunities as it continues fiscal year 2024, as well as considering the time it takes to train new production personnel in certain areas of OCC's production operations.
SG&A expenses were
For the second quarter of fiscal year 2024, OCC recorded a net loss of
Fiscal Year-to-Date 2024 Financial Results
Consolidated net sales for the first half of fiscal year 2024 were
The Company's net sales during the first half of fiscal year 2023 benefited from a higher-than-typical sales order backlog/forward load of more than
OCC reported gross profit of
SG&A expenses decreased
OCC recorded a net loss of
Management's Comments
Neil Wilkin, President and Chief Executive Officer of OCC, said, "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. The OCC team has a competitive advantage and, as market conditions improve, we believe our decision to maintain headcount will serve our company well and position us for outperformance moving forward. Looking to the second half of the fiscal year, we continue to take steps to control what we can, operate efficiently, and optimally position the Company to meet rebounding demand. As always, 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."
Conference Call Information
As previously announced, OCC will host a conference call today, June 10, 2024, at 11:00 a.m. Eastern Time. Individuals wishing to participate in the conference call should call (800) 225-9448 in the
Company Information
Optical Cable Corporation ("OCC®") is a leading manufacturer of a broad range of fiber optic and copper data communication cabling and connectivity solutions primarily for the enterprise market and various harsh environment and specialty markets (collectively, the non-carrier markets) and also the wireless carrier market, offering integrated suites of high-quality products which operate as a system solution or seamlessly integrate with other components.
OCC® is internationally recognized for pioneering innovative fiber optic and copper communications technologies, including fiber optic cable designs for the most demanding environments and applications, copper connectivity designs to meet the highest data communication industry standards, as well as a broad product offering built on the evolution of these fundamental technologies.
OCC uses its expertise to deliver cabling and connectivity products and integrated solutions that are best suited to the performance requirements of each end-user's application. And OCC's solutions offerings cover a broad range of applications—from commercial, enterprise network, datacenter, residential and campus installations to customized products for specialty applications and harsh environments, including military, industrial, mining, petrochemical and broadcast applications, as well as for the wireless carrier market.
Founded in 1983, OCC is headquartered in
Optical Cable Corporation™, OCC®, Procyon®, Superior Modular Products™, SMP Data Communications™, Applied Optical Systems™, and associated logos are trademarks of Optical Cable Corporation.
Further information about OCC® is available at www.occfiber.com.
FORWARD-LOOKING INFORMATION
This news release by Optical Cable Corporation and its subsidiaries (collectively, the "Company" or "OCC") may contain certain forward-looking information within the meaning of the federal securities laws. The forward-looking information may include, among other information, (i) statements concerning our outlook for the future, (ii) statements of belief, anticipation or expectation, (iii) future plans, strategies or anticipated events, and (iv) similar information and statements concerning matters that are not historical facts. Such forward-looking information is subject to known and unknown variables, uncertainties, contingencies and risks that may cause actual events or results to differ materially from our expectations, and such known and unknown variables, uncertainties, contingencies and risks may also adversely affect Optical Cable Corporation and its subsidiaries, the Company's future results of operations and future financial condition, and/or the future equity value of the Company. A partial list of such variables, uncertainties, contingencies and risks that could cause or contribute to such differences from our expectations or that could otherwise adversely affect Optical Cable Corporation and its subsidiaries is set forth in Optical Cable Corporation's quarterly and annual reports filed with the Securities and Exchange Commission ("SEC") under the heading "Forward-Looking Information." OCC's quarterly and annual reports are available to the public on the SEC's website at www.sec.gov. In providing forward-looking information, the Company expressly disclaims any obligation to update this information, whether as a result of new information, future events or otherwise except as required by applicable laws and regulations.
(Financial Tables Follow)
OPTICAL CABLE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (thousands, except per share data) (unaudited) | |||||||
Three Months Ended April 30, | Six Months Ended April 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Net sales | $ 16,112 | $ 19,620 | $ 30,967 | $ 37,903 | |||
Cost of goods sold | 12,073 | 12,837 | 23,215 | 24,599 | |||
Gross profit | 4,039 | 6,783 | 7,752 | 13,304 | |||
SG&A expenses | 5,319 | 5,662 | 10,413 | 11,118 | |||
Royalty expense, net | 7 | 7 | 13 | 13 | |||
Amortization of intangible assets | 14 | 14 | 27 | 27 | |||
Income (loss) from operations | (1,301) | 1,100 | (2,701) | 2,146 | |||
Interest expense, net | (281) | (286) | (579) | (557) | |||
Gain on insurance proceeds, net | ⸺ | 1,696 | 219 | 1,696 | |||
Other, net | (12) | (12) | 49 | 55 | |||
Other income (expense), net | (293) | 1,398 | (311) | 1,194 | |||
Income (loss) before income taxes | (1,594) | 2,498 | (3,012) | 3,340 | |||
Income tax expense | 7 | 75 | 15 | 107 | |||
Net income (loss) | $ (1,601) | $ 2,423 | $ (3,027) | $ 3,233 | |||
Net income (loss) per share: | |||||||
Basic and diluted | $ (0.21) | $ 0.31 | $ (0.39) | $ 0.41 | |||
Weighted average shares outstanding: | |||||||
Basic and diluted | 7,711 | 7,868 | 7,732 | 7,881 | |||
OPTICAL CABLE CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET DATA (thousands) (unaudited)
| |||
April 30, | October 31, | ||
Cash | $ 1,090 | $ 1,469 | |
Trade accounts receivable, net | 8,298 | 8,728 | |
Inventories | 21,486 | 23,766 | |
Other current assets | 579 | 1,075 | |
Total current assets | 31,453 | 35,038 | |
Non-current assets | 8,432 | 8,841 | |
Total assets | $ 39,885 | $ 43,879 | |
Current liabilities | $ 7,134 | $ 7,768 | |
Non-current liabilities | 10,913 | 11,389 | |
Total liabilities | 18,047 | 19,157 | |
Total shareholders' equity | 21,838 | 24,722 | |
Total liabilities and shareholders' equity | $ 39,885 | $ 43,879 | |
AT THE COMPANY: | |
Neil Wilkin | Tracy Smith |
Chairman, President & CEO | Senior Vice President & CFO |
(540) 265-0690 | (540) 265-0690 |
AT JOELE FRANK, WILKINSON BRIMMER KATCHER: | |
Aaron Palash | Spencer |
(212) 355-4449 ext. 8603 | (212) 355-4449 ext. 8928 |
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SOURCE Optical Cable Corporation
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