Earnings Labs

Optical Cable Corporation (OCC)

Q2 2018 Earnings Call· Mon, Jun 11, 2018

$9.39

-11.42%

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Transcript

Operator

Operator

Good morning. My name is Laurie, and I will be your conference operator today. At this time, I would like to welcome you to the Optical Cable Corporation Second Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer period. [Operator Instructions] Mr. Palash, you may begin your conference.

Aaron Palash

Analyst

Good morning, and thank you all for participating on Optical Cable Corporation’s second quarter fiscal year 2018 conference call. By this time, everyone should have a copy of the earnings press release issued earlier today. You can also visit www.occfiber.com for a copy. On the call with us today are Neil Wilkin, President and Chief Executive Officer of OCC; and Tracy Smith, Senior Vice President and Chief Financial Officer. Before we begin, I'd like to remind everyone that this call may contain forward-looking statements that involve risks and uncertainties. The actual future results of Optical Cable Corporation may differ materially due to a number of factors and risks including, but not limited to, those factors referenced in the forward-looking statements section of this morning's press release. These cautionary statements apply to the contents of the Internet webcast on www.occfiber.com, as well as today's call. With that, I'll turn the call over to Neil Wilkin. Neil, please begin.

Neil Wilkin

Analyst

Thank you, Aaron and good morning everyone. I will begin the call today with a few opening remarks regarding our second quarter of fiscal year 2018. Tracy will then review the second quarter results for the three months and six months period ended April 30, 2018 and some additional detail. After Tracy's remarks, we will answer as many of your questions as we can. As is our normal practice, we will only take questions from analysts and institutional investors during the Q&A session. However, we also offer other shareholders the opportunity to submit questions in advance of our earnings call. Instructions regarding such submissions are included in our press release announcing the date and time of our call. We are pleased to report that during the second quarter of fiscal year 2018 OCC established a new record for quarterly net sales increasing net sales almost 70% from the same period last year. We also achieved significant increases in gross profit and recorded net income for both, the quarter and year-end -- year-to-date periods for fiscal 2018. We reported consolidated net sales of $26.9 million with net income of $0.18 per share during the second quarter of fiscal 2018. During the second quarter, we continue to see strengthening in our specialty markets, particularly the wireless carrier and military markets; at the same time we have also seen weakness in the enterprise market during this fiscal year, similar to what some others in our industry have seen. We continue to take steps we believe will positively impact net sales in our targeted markets including the enterprise market. You will recall that last quarter we reported that OCC had a $19 million backlog forward load at the end of February 2018 which we believe would positively impact our second quarter results. Looking forward,…

Tracy Smith

Analyst

Thank you, Neil. Consolidated net sales for the second quarter of fiscal 2018 were $26.9 million, an increase of 69.7%, compared to net sales of $15.8 million for the second quarter of fiscal 2017. Consolidated net sales for the first half of fiscal 2018 were $44.4 million, an increase of 45.9% compared to net sales of $30.5 million for the first half of fiscal 2017. We increased net sales in our specialty markets in the second quarter and first half of fiscal 2018 compared to the same period last year, particularly in our wireless carrier and military markets. This increase was partially offset by a decrease in net sales in our enterprise markets. OCC's increase in net sales during the second quarter and the first half of fiscal year 2018 and backlog forward load have been driven by significant orders from one customer with whom OCC has done business for a number of years. As of April 30, 2018, our sales order backlog forward load was $11.8 million or approximately 7 to 8 weeks of net sales on a trailing 12-month basis. By comparison, our sales order backlog forward load was $14.8 million or approximately 11 to 12 week of net sales on a trailing 12-month basis as of the end of our first quarter of fiscal year 2018 and $19 million or approximately 14 to 15 weeks of net sales on a trailing 12-month basis as of the end of February 2018. Our sales order backlog forward load can vary throughout the year but it's generally between approximately 3 to 4 weeks of net sales or approximately $4 million to $5 million. Based on our current backlog forward load, we anticipate the net sales during the third quarter will be higher than net sales during the same period last…

Neil Wilkin

Analyst

Thank you, Tracy. And now if you have any questions, we are happy to answer them. Operator, if you could please indicate the instructions for our participants to call in any questions they may have, I would appreciate it.

Operator

Operator

[Operator Instructions] There are no questions at this time.

Neil Wilkin

Analyst

Okay. Aaron, are there any questions that were submitted by individual investors in advance at the call today?

Aaron Palash

Analyst

Yes. Neil, I do have a question that was submitted advance of the call by non-institutional shareholder. Jeffrey Cohen asked, are you going to play any part in security for the border wall?

Neil Wilkin

Analyst

Okay. We don't comment on any specific projects and my -- not wanting to comment on it shouldn't be taken as an affirmation or a negative -- shouldn't provide any sort of affirmative or negative inference with respect to the project. We do sell into the security market and we also sell into many different markets for both government and private industry, and we'll continue to do that.

Aaron Palash

Analyst

That's all we received.

Neil Wilkin

Analyst

Okay. If there be no other questions, I would like to thank everyone for listening to our second quarter conference call today. As always, we appreciate your time and your interest in OCC. Thank you.

Operator

Operator

Thank you. That does conclude the Optical Cable Corporation's second quarter 2018 earnings conference call. You may now disconnect.