Optical Cable Corporation (NASDAQ:OCC)

Optical Cable Corporation (NASDAQ:OCC), a leading manufacturer of a comprehensive range of top-tier fiber optic and copper communication cabling and connectivity products and solutions, announced Q2 2023 results:

• Sales of $19.6 million vs $17.2 million in the prior year
• Non GAAP EPS of $0.10 vs a loss of $0.03 in the prior year

“The OCC team continued to build on our positive momentum and successfully executed our strategy during the second quarter and first half of fiscal year 2023, delivering strong financial and operational performance. We are pleased to have achieved significant growth by all measures—net sales, gross profit and gross profit margin, as well as income from operations and earnings per share, compared to the same periods in the prior year. Looking ahead, we plan to continue executing our strategic initiatives to drive growth, work efficiently and safely, and drive enhanced shareholder value." 

For more color on the recent resurgence in the company's sales growth and profitability, you can review our Weekly Wrap Up titled, When Operating Leverage Is Considered A Multibagger Catalyst. 

Optical Cable Corporation (NASDAQ:OCC) ($3.00; marked up ~25% pre market; $22.9M market cap), a leading manufacturer of a comprehensive range of top-tier fiber optic and copper communication cabling and connectivity products and solutions announced Q2 2018 results:

• Sales of $26.9 million vs $15.8 million in the prior year

• EPS of $0.18 vs loss of $0.04 in the prior year

Quotes from management:

OCC's increase in net sales during the second quarter and the first half of fiscal year 2018 were driven by significant orders from a large customer.  The Company continues to fulfill these orders, which will likely have a positive impact on net sales in the third quarter of fiscal 2018 compared to the same period last year.  However, based on current backlog/forward load, the Company anticipates that net sales during the third quarter will be less than net sales during the second quarter of 2018.

"Our strategic focus is on sales and marketing initiatives in targeted markets to drive sales, as well as increasing operational efficiency.  We are optimistic that our success in both of these areas will positively impact our bottom line and enable us to deliver enhanced shareholder value."

Dear Shareholders of Optical Cable Corporation:

Navigating Through a Difficult Environment.
 
Optical Cable Corporation (OCC®) demonstrated strong operational and financial performance in the enterprise market in fiscal year 2015: our consolidated net sales in this market increased by more than 9% to $38.0 million1, as we continued to execute on key initiatives that we believe will support future growth. Our development of new and updated product families for the enterprise market over the last two years—particularly our enterprise connectivity products—contributed to our increase in sales in this market.
 
Despite our strength in the enterprise market, our financial results were impacted by weakness in certain harsh environment and specialty markets, including the mining, oil & gas, and military markets, as well as by volatility in the wireless carrier market. The strong U.S. dollar also impacted our sales outside of the U.S.
 
Unusually slow sales activity in the United States toward the end of calendar year 2015 was suprising, and impacted OCC’s fourth quarter. While weakness in the U.S. will impact OCC’s sales in our first quarter of fiscal 2016, we are optimistic about the remainder of the year.
 
Importantly, the OCC team is nimble and able to adjust to market challenges, and we will continue to take the actions necessary to ensure OCC’s success. We are confident that we have built a solid foundation that will support continued growth and shareholder value creation in 2016 and beyond.

Financial Overview and Key Financial Performance Metrics.
 
OCC’s key financial performance metrics for fiscal year 2015 included:
      

• Consolidated net sales of $73.6 million, a decrease of $9.4 million or 11.3% compared to net sales of $83.0 million for fiscal year 2014. A single customer in the wireless carrier market accounted for $6.0 million of the total decrease, as certain wireless carriers slowed their purchases—particularly toward the end of the year.   
• Gross profit of $21.8 million, compared to $28.5 million for fiscal year 2014. Gross profit was impacted by lower net sales in certain specialty markets that tend to have higher gross profit margins—including the military, oil & gas, and mining markets. The wireless carrier market also impacted OCC’s gross profit, due to pricing pressures and higher volumes of lower margin hybrid cables.
•  OCC reduced selling, general and administrative expenses during fiscal year 2015 by 10.9% compared to fiscal year 2014. 
• Net loss attributable to OCC (including the non-cash valuation allowance against net deferred tax assets) was $4.3 million, or $0.69 per share, compared to net income attributable to OCC of $684,000, or $0.10 per share, during fiscal year 2014. A non-cash charge of $2.4 million, or $0.39 per share, in connection with a valuation allowance offsetting OCC’s net deferred tax assets, significantly impacted OCC’s net loss for the fiscal year (see Income Tax Expense in our Management’s Discussion and Analysis in this annual report).
• OCC generated annual positive cash flow from operating activities again this year. Net cash provided by operating activities was $1.2 million in fiscal year 2015.
•  OCC returned nearly a million dollars to shareholders by declaring dividends and repurchasing and retiring common shares of OCC during the year.
  • OCC declared quarterly cash dividends totaling $0.08 per share during fiscal year 2015, or $560,000, continuing the return of capital to shareholders initiated when our first quarterly dividend was declared in October 2010.
  • OCC repurchased and retired 80,636 shares of common stock during fiscal year 2015, returning $380,000 to shareholders.

 
Ability to Adjust. Actions Taken.
 
The OCC team has a demonstrated ability to adjust course in challenging operating environments in order to position the Company for future success. The OCC team has taken and is taking the following steps:
     

• Sales and marketing initiatives are underway both to drive increased sales in markets with the greatest growth opportunities and to maintain sales in weaker markets.
• Cost reductions were implemented near the end of fiscal year 2015 and during the first quarter of 2016, including workforce reductions expected to save approximately $1.0 million annually beginning in fiscal year 2016 and other cost reductions expected to save approximately $575,000 later in fiscal year 2016.
• Modifications to the capital allocation program have been made to enhance OCC’s financial profile, including the suspension of quarterly dividends beginning January 2016, and the suspension of purchases and retirement of OCC shares under our share repurchase plan. We believe these suspensions are temporary. The Board of Directors will regularly evaluate our dividend policy and share repurchase plan to determine the appropriate time to resume the programs. Our existing share repurchase plan, adopted on July 14, 2015, allows for the purchase of up to 400,000 of our common shares. We continue to believe the purchases will be made over a 24- to 36-month period.

 
These proactive steps were taken after careful and thorough consideration, and will position OCC for future opportunities.
 
We are committed to enhancing shareholder value, and the OCC team continues to look for additional opportunities to increase sales, realize manufacturing efficiencies, and reduce costs.

Looking Forward to Fiscal Year 2016.
 
The global macroeconomic environment remains challenging as we enter 2016. The slowing Chinese economy, crude oil prices at 12-year lows, weakness in the stock markets, and downsizing at a number of leading manufacturing companies are headline news.
 
OCC continues to have a strong market position despite the macroeconomic and market headwinds, and we are confident that OCC is well-positioned for continued growth and success.
 
We have created a broad and growing suite of top-tier integrated connectivity and cabling solutions through product line expansions and innovative product designs. We are confident that these products and solutions, coupled with our investments in manufacturing, will continue to result in new opportunities for value creation at OCC.
 
We are also fortunate to have a strong team and a committed base of employees. On behalf of the Board and leadership team, we thank them for their hard work, dedication, and service, which enables OCC to maintain safe and productive operations.
 
Importantly, OCC’s leadership team remains committed to executing our strategy to create substantial long-term value for shareholders. Current employees and members of the Board of Directors own more than 36% of the outstanding shares of OCC as of October 31, 2015—squarely aligning the team’s interests with those of our shareholders.
 
All of us at OCC are working hard to ensure OCC’s success, and we are confident that we have the right team and the right plan in place to meet the needs of our customers and create value for all OCC shareholders.
 
Thank you for your investment in OCC and the privilege of allowing us to lead your company.
 
     
/s/ Neil D. Wilkin, Jr.
 
Neil D. Wilkin, Jr.
     
Chairman of the Board,
     
President and Chief Executive Officer
 
January 25, 2016

Third Quarter 2012 Results

• OCC's consolidated net sales increased 17.2% to $22.0 million for the third quarter of fiscal 2012, compared to consolidated net sales of $18.8 million for the same period last year.
• OCC recorded net income attributable to the Company of $1.2 million, or $0.18 per basic and diluted share, for the third quarter of fiscal 2012, compared to $118,000, or $0.02 per basic and diluted share, for the third quarter of fiscal 2011.

Second Quarter 2012 Results

• Consolidated net sales for the second quarter of fiscal 2012 increased 28.3% to $22.1 million, compared to consolidated net sales of $17.2 million for the same period last year.
• OCC recorded net income attributable to the Company of $949,000, or $0.15 per basic and diluted share, for the second quarter of fiscal 2012, compared to a net loss attributable to the Company of $90,000, or $0.02 per basic and diluted share, for the second quarter of fiscal 2011.

Management's Comments

Neil Wilkin, President and Chief Executive Officer of OCC, said, "We are pleased to have established a new record for net sales in our second quarter. Our record results reflect OCC's success winning new business. We particularly are encouraged by increased demand for our fiber optic cable products, which at this time we expect will continue in the second half of fiscal 2012."

Mr. Wilkin added, "Our balance sheet is strong and we continue to return capital to shareholders through the regular quarterly dividend, which the Board increased during the first quarter of this year. We expect the remainder of fiscal 2012 to continue to be characterized by sales and earnings growth for OCC when compared to the same periods in fiscal 2011, as we continue executing our growth strategy and working to improve operations and efficiencies, to create value for shareholders."