ROANOKE, Va., June 11, 2019 /PRNewswire/ -- Optical Cable
Corporation (Nasdaq GM: OCC) ("OCC®" or the "Company")
today announced financial results for its second quarter ended
April 30, 2019.
OCC reported net sales growth and significant progress in the
Company's efforts to enhance throughput and operational efficiency
since the first quarter of fiscal year 2019. While OCC did not
reach the record-breaking performance achieved in the second
quarter of last year, the Company grew net sales in international
markets and in many specialty markets during the second quarter of
fiscal year 2019.
Second Quarter 2019 Financial Results
Consolidated net sales were $19.0
million in the second quarter of fiscal year 2019, a
decrease of 29.5% compared to the record net sales of $26.9 million in the second quarter of fiscal
year 2018. The year-over-year decrease in net sales reflects
a number of large orders from one customer in the second quarter of
fiscal year 2018 that did not recur at the same levels in the
second quarter of fiscal year 2019. Net sales to this
customer decreased $9.1 million in
the second quarter of fiscal 2019.
OCC reported increased net sales to customers outside of
the United States of 16.0% in the
second 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
second quarter of fiscal year 2019, partially offset by increases
in other specialty markets.
Net sales increased 13.2% in the second quarter of fiscal year
2019, compared to net sales of $16.8
million for the first quarter of fiscal year 2019, with
increases in both the enterprise markets and specialty markets,
including the wireless carrier market. The improvement in
sequential net sales was primarily the result of significant
progress in the Company's efforts to enhance throughput and
operational efficiency.
Gross profit was $5.3 million in
the second quarter of fiscal year 2019, compared to gross profit of
$9.0 million in the same period last
year. Gross profit margin, or gross profit as a percentage of
net sales, was 28.0% in the second quarter of fiscal year 2019
compared to 33.3% for the same period in fiscal year 2018.
Gross profit increased 49.0% in the second quarter of fiscal
year 2019, compared to the first quarter of fiscal year 2019.
This sequential increase was driven by a focus on operational
efficiency and cost control during the second quarter of fiscal
2019, including by addressing throughput constraints and
inefficiencies experienced in the Company's Roanoke facility that occurred during the
first quarter of fiscal year 2019.
SG&A expenses decreased 21.9% to $5.8
million during the second quarter of fiscal year 2019,
compared to $7.4 million for the
second 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.
SG&A expenses sequentially decreased $977,000, or 14.7%, during the second quarter of
fiscal 2019 compared to the first quarter of fiscal year 2019.
For the second quarter of fiscal year 2019, OCC recorded a net
loss of $617,000, or $0.08 per basic and diluted share, compared to
net income of $1.4 million, or
$0.18 per basic and diluted share,
for the second quarter of fiscal year 2018.
Fiscal Year-to-Date 2019 Financial Results
Consolidated net sales for the first half of fiscal year 2019
decreased 19.6% to $35.7 million,
compared to net sales of $44.4
million for the first half 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 half of fiscal year
2018 that did not recur at the same levels in the first half of
fiscal year 2019. Net sales to this customer decreased
$10.1 million in the first half of
fiscal year 2019.
Net sales to customers outside of the
United States decreased less than one percent in the first
half of fiscal year 2019 compared to the same period last
year. The Company also experienced a year-over-year decrease
in net sales in its enterprise and wireless carrier markets in the
first half of fiscal year 2019, partially offset by increases in
other specialty markets.
OCC reported gross profit of $8.9
million in the first half of fiscal year 2019, a decrease of
37.5% compared to gross profit of $14.2
million in the first half of fiscal year 2018. Gross
profit margin was 24.8% in the first half of fiscal year 2019
compared to 31.9% for the same period in fiscal year
2018.
OCC's gross profit margin percentages are heavily dependent upon
product mix on a quarterly basis, which continued to be a factor
putting downward pressure on the Company's gross profit margin
during the second quarter and first half of fiscal year 2019.
Additionally, despite the progress made improving manufacturing
throughput and efficiency in the second quarter of fiscal 2019,
gross profit margin in the second quarter and first half of fiscal
year 2019 was impacted by throughput constraints and inefficiencies
at the Company's Roanoke facility.
These constraints and inefficiencies resulted from the expansion,
training, and restructuring of its manufacturing workforce and from
process changes and initiatives
intended to increase throughput and efficiency in order to meet
increased product demand over the short- and long-term.
SG&A expenses decreased 3.1% to $12.6
million during the first half of fiscal year 2019 from
$13.0 million for the first half of
fiscal year 2018. The decrease in SG&A expenses during
the first half of fiscal year 2019 compared to the first half of
fiscal year 2018 was primarily the result of decreases in employee
related costs including decreases in employee incentives and
commissions, partially offset by increases in compensation costs,
due primarily to new hires, net of terminations, in the
Roanoke
facility.
OCC recorded a net loss of $3.9
million, or $0.53 per basic
and diluted share, for the first half of fiscal year 2019, compared
to net income of $981,000, or
$0.13 per basic and diluted share,
for the first half of fiscal year 2018.
Management's Comments
Neil Wilkin, President and Chief
Executive Officer of OCC, said, "We are pleased by the continued
demand for OCC's comprehensive suite of innovative and integrated
solutions. While our results reflect the reduction of orders from a
significant customer, we continued to drive sales growth across our
markets—particularly in certain specialty markets. During the
second quarter we also made progress in our efforts to improve
throughput and efficiency, addressing challenges that occurred
early this fiscal year."
Mr. Wilkin concluded, "Looking ahead in 2019, operating
efficiently and executing our marketing initiatives to capture
growth opportunities remain our top priorities. Our business is
strong and we are excited about the opportunities we see to deliver
enhanced shareholder value."
Conference Call Information
As previously announced, OCC will host a conference call today,
June 11, 2019, at 10:00 a.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 4883302. For
interested individuals unable to join the call, a replay will be
available through Tuesday, June 18,
2019 by dialing (800) 585-8367 or (404) 537-3406, passcode
4883302. 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
|
|
Six Months
Ended
|
|
April
30,
|
|
April 30,
|
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Net sales
|
$
18,957
|
|
$
26,887
|
|
$
35,708
|
|
$
44,439
|
Cost of goods
sold
|
13,648
|
|
17,931
|
|
26,836
|
|
30,254
|
|
|
|
|
|
|
|
|
Gross
profit
|
5,309
|
|
8,956
|
|
8,872
|
|
14,185
|
|
|
|
|
|
|
|
|
SG&A
expenses
|
5,777
|
|
7,401
|
|
12,550
|
|
12,959
|
Royalty income,
net
|
(2)
|
|
(12)
|
|
(1)
|
|
(17)
|
Amortization of
intangible assets
|
9
|
|
9
|
|
19
|
|
16
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
(475)
|
|
1,558
|
|
(3,696)
|
|
1,227
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(129)
|
|
(152)
|
|
(246)
|
|
(281)
|
Other, net
|
(8)
|
|
1
|
|
(8)
|
|
11
|
Other expense,
net
|
(137)
|
|
(151)
|
|
(254)
|
|
(270)
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
(612)
|
|
1,407
|
|
(3,950)
|
|
957
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
5
|
|
16
|
|
(23)
|
|
(24)
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
(617)
|
|
$
1,391
|
|
$
(3,927)
|
|
$
981
|
|
|
|
|
|
|
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
|
Basic and diluted
|
$
(0.08)
|
|
$
0.18
|
|
$
(0.53)
|
|
$
0.13
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic and diluted
|
7,318
|
|
7,675
|
|
7,450
|
|
7,490
|
OPTICAL CABLE
CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEET DATA
|
(thousands)
|
(unaudited)
|
|
|
|
|
|
|
April
30,
|
|
October
31,
|
|
2019
|
|
2018
|
Cash
|
$
311
|
|
$
177
|
Trade accounts
receivable, net
|
11,717
|
|
12,833
|
Inventories
|
20,243
|
|
17,475
|
Other current
assets
|
483
|
|
562
|
Total current
assets
|
32,754
|
|
31,047
|
Non-current
assets
|
11,587
|
|
12,051
|
Total assets
|
$
44,341
|
|
$
43,098
|
|
|
|
|
Current
liabilities
|
$
10,192
|
|
$
7,028
|
Non-current
liabilities
|
11,244
|
|
9,259
|
Total liabilities
|
21,436
|
|
16,287
|
Total shareholders'
equity
|
22,905
|
|
26,811
|
Total liabilities and
shareholders' equity
|
$
44,341
|
|
$
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