ROANOKE, Va., Sept. 16, 2019 /PRNewswire/ -- Optical Cable
Corporation (Nasdaq GM: OCC) ("OCC®" or the "Company")
today announced financial results for its third quarter ended
July 31, 2019.
Third Quarter 2019 Financial Results
Consolidated net sales were $17.4
million in the third quarter of fiscal year 2019, a decrease
of 24.9% compared to net sales of $23.1
million in the third quarter of fiscal year 2018. The
year-over-year decrease in net sales reflects a number of large
orders from one customer in the third quarter of fiscal year 2018
that did not recur at the same levels in the third quarter of
fiscal year 2019. Net sales to this customer decreased
$7.2 million in the third quarter of
fiscal 2019, as compared to the prior year period.
Consolidated net sales to all other customers during the third
quarter of fiscal year 2019 increased 9.5% compared to the same
period last year.
OCC reported a 3.9% increase in net sales to customers outside
of the United States in the third
quarter of fiscal year 2019 compared to the same period last
year. The Company experienced a year-over-year decrease in
net sales in its enterprise and wireless carrier markets in the
third quarter of fiscal year 2019, partially offset by increases in
other specialty markets.
Gross profit was $4.5 million in
the third quarter of fiscal year 2019, compared to gross profit of
$7.0 million in the same period last
year. Gross profit margin, or gross profit as a percentage of
net sales, was 25.9% in the third quarter of fiscal year 2019
compared to 30.4% for the same period in fiscal year 2018.
SG&A expenses decreased 14.9% to $5.4
million during the third quarter of fiscal year 2019,
compared to $6.4 million for the
third quarter of fiscal year 2018. The decrease in SG&A
expenses was primarily the result of decreases in employee related
costs including employee incentives and share-based compensation
expense.
For the third quarter of fiscal year 2019, OCC recorded a net
loss of $1.1 million, or $0.15 per basic and diluted share, compared to
net income of $438,000, or
$0.06 per basic and diluted share,
for the third quarter of fiscal year 2018.
Fiscal Year-to-Date 2019 Financial Results
Consolidated net sales for the first nine months of fiscal year
2019 were $53.1 million, a decrease
of 21.4% compared to net sales of $67.6
million for the first nine months of fiscal year 2018.
The year-over-year decrease in net sales is the result of a number
of large orders from one customer in the first nine months of
fiscal year 2018 that did not recur at the same levels in the first
nine months of fiscal year 2019. Net sales to this customer
decreased $17.3 million in the first
nine months of fiscal year 2019. Consolidated net sales to
all other customers during the first nine months of fiscal year
2019 increased 6.5% compared to the same period last year.
The Company experienced a year-over-year decrease in net sales
in its enterprise and wireless carrier markets in the first nine
months of fiscal year 2019, partially offset by increases in other
specialty markets.
OCC reported gross profit of $13.4
million in the first nine months of fiscal year 2019, a
decrease of 37.0% compared to gross profit of $21.2 million in the first nine months of fiscal
year 2018. Gross profit margin was 25.2% in the first nine
months of fiscal year 2019 compared to 31.4% for the same period in
fiscal year 2018.
Beginning in the second quarter of fiscal year 2019, OCC has
focused on cost control and correcting unintended throughput
constraints and inefficiencies at its Roanoke facility that negatively impacted the
Company's financial and operational results in the nine months of
fiscal year 2019, and particularly in the first quarter of fiscal
year 2019. These throughput constraints resulted from the
expansion, training, and restructuring of the Company's
manufacturing workforce and from process changes during fiscal year
2018—initiatives intended to ultimately increase throughput and
efficiency in order to meet increased product demand over the
short- and long-term. Efforts to control costs and enhance
operational efficiency are ongoing, and the Company believes the
benefits of some of the cost reductions and changes that have been
made, and are continuing to be made, will not be fully realized
until after the fourth quarter of fiscal year 2019.
SG&A expenses decreased 7.0% to $18.0
million during the first nine months of fiscal year 2019
from $19.3 million for the first nine
months of fiscal year 2018. The decrease in SG&A expenses
during the first nine months of fiscal year 2019 compared to the
same period last year was primarily the result of decreases in
employee related costs including employee incentives and
commissions, partially offset by increases in compensation costs,
due primarily to new hires, net of terminations.
OCC recorded a net loss of $5.0
million, or $0.68 per basic
and diluted share, for the first nine months of fiscal year 2019,
compared to net income of $1.4
million, or $0.19 per basic
and diluted share, for the first nine months of fiscal year
2018.
Credit Agreement Modified
OCC's Credit Agreement with Pinnacle Bank was modified on
September 11, 2019. As a
result, the Company agreed to (i) reduce the total aggregate amount
of funds available for lending under the Credit Agreement from
$7,000,000 to $6,500,000; (ii) reduce the aggregate outstanding
balance under the Credit Agreement by $500,000 on or before November 29, 2019 by paying $250,000 to reduce the outstanding principal
balance on each of its term loans; and (iii) change the interest
rate on advances under the Revolving Credit Note from LIBOR plus
2.50% to the prime lending rate plus 0.25% effective September 10, 2019. In exchange for the
above stated consideration, the Lender agreed to suspend the
current ratio financial covenant.
Management's Comments
Neil Wilkin, President and Chief
Executive Officer of OCC, said, "While our results reflect reduced
order volumes from a significant customer, we were pleased to
achieve sales growth among all other customers—9.5% during
the third quarter and 6.5% during the nine months ended
July 31, 2019, compared to the same
periods last year. We believe this reflects the actions we
are taking to drive top line growth and strong demand for OCC's
integrated solutions—particularly in our specialty markets.
During the quarter, we also continued our efforts to control costs
and increase operational throughput and efficiency."
Mr. Wilkin concluded, "For the remainder of the fiscal year we
will continue to focus on executing on our strategies to capture
growth opportunities and working with urgency to operate even more
efficiently in order to best position OCC for the
future."
Conference Call Information
As previously announced, OCC will host a conference call today,
September 16, 2019, at 12:00 p.m. Eastern Time. Individuals wishing to
participate in the conference call should call (866) 610-1072 in
the U.S. or (973) 935-2840 internationally, passcode 8499614. For
interested individuals unable to join the call, a replay will be
available through Monday, September 23,
2019 by dialing (800) 585-8367 or (404) 537-3406, passcode
8499614. The call will also be broadcast live over the
internet and can be accessed by visiting the investor relations
section of the Company's website at www.occfiber.com.
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 providers' offerings.
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 Roanoke, Virginia with offices, manufacturing
and warehouse facilities located in Roanoke, Virginia, near Asheville, North Carolina and near
Dallas, Texas. OCC's
facilities are ISO 9001:2015 registered and its Roanoke and Dallas facilities are MIL-STD-790G
certified.
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
http://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
|
|
Nine Months
Ended
|
|
July 31,
|
|
July 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Net sales
|
$
17,367
|
|
$
23,117
|
|
$
53,075
|
|
$
67,555
|
Cost of goods
sold
|
12,876
|
|
16,090
|
|
39,712
|
|
46,343
|
|
|
|
|
|
|
|
|
Gross
profit
|
4,491
|
|
7,027
|
|
13,363
|
|
21,212
|
|
|
|
|
|
|
|
|
SG&A
expenses
|
5,418
|
|
6,370
|
|
17,969
|
|
19,329
|
Royalty income,
net
|
─
|
|
(12)
|
|
(1)
|
|
(30)
|
Amortization of
intangible assets
|
10
|
|
9
|
|
28
|
|
26
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
(937)
|
|
660
|
|
(4,633)
|
|
1,887
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(135)
|
|
(194)
|
|
(382)
|
|
(475)
|
Other, net
|
─
|
|
(10)
|
|
(7)
|
|
1
|
Other expense,
net
|
(135)
|
|
(204)
|
|
(389)
|
|
(474)
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
(1,072)
|
|
456
|
|
(5,022)
|
|
1,413
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
13
|
|
18
|
|
(9)
|
|
(6)
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
(1,085)
|
|
$
438
|
|
$
(5,013)
|
|
$
1,149
|
|
|
|
|
|
|
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
|
Basic and diluted
|
$
(0.15)
|
|
$
0.06
|
|
$
(0.68)
|
|
$
0.19
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic and diluted
|
7,319
|
|
7,696
|
|
7,409
|
|
7,559
|
OPTICAL CABLE
CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEET DATA
(thousands)
(unaudited)
|
|
|
|
July
31,
|
|
October
31,
|
|
2019
|
|
2018
|
Cash
|
$
1,100
|
|
$
177
|
Trade accounts
receivable, net
|
9,965
|
|
12,833
|
Inventories
|
18,813
|
|
17,475
|
Other current
assets
|
473
|
|
562
|
Total current
assets
|
30,351
|
|
31,047
|
Non-current
assets
|
11,167
|
|
12,051
|
Total assets
|
$
41,518
|
|
$
43,098
|
|
|
|
|
Current
liabilities
|
$
14,136
|
|
$
7,028
|
Non-current
liabilities
|
5,526
|
|
9,259
|
Total liabilities
|
19,662
|
|
16,287
|
Total shareholders'
equity
|
21,856
|
|
26,811
|
Total liabilities and
shareholders' equity
|
$
41,518
|
|
$
43,098
|
AT THE
COMPANY:
|
|
|
Neil
Wilkin
|
Tracy
Smith
|
Chairman, President
& CEO
|
Senior Vice President
& CFO
|
(540)
265-0690
|
(540)
265-0690
|
investorrelations@occfiber.com
|
investorrelations@occfiber.com
|
|
|
AT JOELE FRANK,
WILKINSON BRIMMER KATCHER:
|
|
|
Andrew
Siegel
|
Aaron
Palash
|
(212) 355-4449 ext.
8627
|
(212) 355-4449 ext.
8603
|
occ-jfwbk@joelefrank.com
|
occ-jfwbk@joelefrank.com
|
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SOURCE Optical Cable Corporation