Release Date: September 11, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- OCC achieved higher net sales each quarter since the first quarter of fiscal 2024.
- Sales order backlog and forward load increased since the beginning of fiscal year 2024.
- OCC is seeing indications of improving opportunities as they near the end of fiscal year 2024 and look ahead to fiscal year 2025.
- The company remains confident in its strong position in targeted markets and differentiated core strengths and capabilities.
- OCC is committed to capturing profitable growth opportunities and advancing its strategy to enhance shareholder value.
Negative Points
- Consolidated net sales for the third quarter of fiscal 2024 decreased by 4.2% compared to the same period last year.
- Net sales for the first nine months of fiscal 2024 decreased by 14% compared to the first nine months of fiscal 2023.
- Gross profit for the third quarter of fiscal 2024 was $3.9 million, down from $5.1 million for the same period last year.
- Gross profit margin decreased to 24.2% in the third quarter of fiscal 2024 from 30.2% in the third quarter of fiscal 2023.
- OCC recorded a net loss of $1.6 million for the third quarter of fiscal 2024, compared to net income of $101,000 for the same period last year.
Q & A Highlights
Q: 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?
A: Neil Wilkin, Chairman of the Board, President, Chief Executive Officer: The cost associated with being a public company has substantially increased over the years. While we have not publicly disclosed the precise number, it is significantly higher than it was in 2005.
Q: On the Q4 2018 earnings call, you stated that management's long-term commitment has been to set up the company so that we can grow much bigger than we are. Could you please go a bit deeper on your thought process on that and where you see the general opportunity set for OCC going forward?
A: Neil Wilkin, Chairman of the Board, President, Chief Executive Officer: Over the years, OCC has expanded its product and solution offerings significantly. We acquired SMP Data Communications in 2008 and Applied Optical Systems in 2009, adding technologies and capabilities in both fiber optic and copper connectivity products. We have also made significant investments in equipment for manufacturing fiber optic and hybrid cables, particularly for the wireless carrier market. We continue to add new products and solutions to better serve our customers and see opportunities for growth in our targeted markets.
Q: Can you provide more details on the financial performance for the third quarter of fiscal 2024?
A: Tracy Smith, Chief Financial Officer, Senior Vice President: Consolidated net sales for the third quarter were $16.2 million, a decrease of 4.2% compared to the same period last year. Gross profit was $3.9 million, down from $5.1 million last year. SG&A expenses were $5.2 million, slightly up from $5 million last year. We recorded a net loss of $1.6 million, or $0.20 per share, compared to net income of $101,000, or $0.01 per share, for the same period last year.
Q: What are the main factors impacting your gross profit margin?
A: Tracy Smith, Chief Financial Officer, Senior Vice President: The gross profit margin was impacted by lower production volumes, which resulted in fixed charges being spread over lower net sales and decreased plant efficiency. The variability in gross profit margin also reflects changes in product mix.
Q: How has the sales order backlog and forward load changed over the fiscal year?
A: Tracy Smith, Chief Financial Officer, Senior Vice President: At the end of the first nine months of fiscal 2024, the sales order backlog and forward load increased to $6.5 million, compared to $5.6 million as of April 30, 2024, and $5 million as of January 31, 2024.
Q: What are the trends in your targeted markets, particularly the wireless carrier market?
A: Neil Wilkin, Chairman of the Board, President, Chief Executive Officer: We experienced an increase in net sales in our enterprise market during the third quarter, offset by decreases in our specialty markets, including the wireless carrier market. However, we are beginning to see signs of improvement in the wireless carrier market, which is encouraging.
Q: How have SG&A expenses trended, and what are the main drivers?
A: Tracy Smith, Chief Financial Officer, Senior Vice President: SG&A expenses were $5.2 million in the third quarter, up from $5 million last year. For the first nine months, SG&A expenses decreased by 2.6% to $15.7 million. The decrease was primarily due to lower employee and contracted sales personnel-related costs, including incentives and commissions.
Q: What is the outlook for OCC as you approach the end of fiscal year 2024 and look ahead to 2025?
A: Neil Wilkin, Chairman of the Board, President, Chief Executive Officer: We are seeing indications of improving opportunities as we near the end of fiscal year 2024 and look ahead to 2025. We remain focused on executing our plans to grow net sales and operate efficiently. We are confident that OCC is poised to deliver value to shareholders as macroeconomic conditions improve.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
