Optical Cable Corporation

Q2 2021 Earnings Conference Call

6/14/2021

spk_0: good morning my name is maria and i'll be a conference operator today at this time i would like to welcome you the optical cable operation second quarter two thousand and twenty one earnings conference call online have been placed on new to prevent any background noise after a speakers remarks there will be a question and answer period to ask a question at that time simply press star than the number one on your telephone be pad it was by your question press the pound be if you should require operator assistance please press start zero thank you must fail us he may begin your conference
spk_1: to educate maria good morning and thank you for participating an optical cable corporations second quarter of fiscal year twenty twenty one conference call
spk_2: i've used car and everyone should have a copy be earning press release issued earlier today you can also visit www dot o c c favour dot com for copy i'm a cold us today or york president chief executive officer both you see and tracy smith senior vice president and chief financial officer
spk_1: before the game i like to remind everyone that this call may contain forward looking statements that involve risks and uncertainties the actual future result of optical cable corporation may differ materially due to a number of factors in risks including but not limited to those factors referenced in the for looking statements section of this morning's press release because nurse statements applied to the contents of the internet webcast i'm debbie davey davey that owes you see fiber dot com as well as today's call with that altering the call over to new york and neil please begin
spk_3: thank you air and and good morning everyone i'll begin the call today with a few opening remarks tracy will then review the second quarter results for the three month and six month period ended april thirtieth twenty twenty one and some additional detail after tracy's marks bill answers many good questions as we can as is our normal practice will i take questions from analysts and institutional investors during the q in a session however we also offer our shareholders the opportunity to make 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 today
spk_4: oh see second quarter results reflected the hard work of art team and the steps we have taken to protect the business build on are strong place in the market and position the companies that to succeed as the effects of the pandemic subside tracy will speak to this in more depth but a high level or net sales in the poor benefited from the lifting of some restrictions and reopening of certain markets that had been negatively impacted by the coven nineteen pandemic and as we moved through the quarter we continue to see positive indicators and many of our markets additionally we have taken steps to control costs and approve efficiencies efforts which are ongoing
spk_3: the school he signed to important agreements to demonstrate our industry leadership and growth trajectory
spk_2: the first is a contract to supply certain pelosi fees proprietary products to a major defense contractor for the us department of defense
spk_3: we expect to begin manufacture products in the and in the fiscal third quarter of twenty twenty one
spk_4: and we now believe that we will continue to be manufacturer these products into next fiscal year
spk_3: oh you he is proud of it's long history of of design and manufacturing products for the us military and we were once again humbled to do our part by applying are innovative technologies and substantial capabilities to supply the board the brave men and women protecting our freedom we are fortunate the count the number of veterans among our dedicated theme and all of us look forward to delivering the products and solutions on which our military allies and for which as you see is no
spk_4: the second related to are valuable intellectual property there's an agreement with com scope the cross license portion of both companies patent portfolio is the cross license agreement relates to certain copper dating communication connectivity patent about those you see income scope in addition to our in building wireless patterns
spk_5: the agreement
spk_4: allows both companies to access and implement the other companies license patent and technologies
spk_3: we're pleased to continue a more than fifteen yep mutually beneficial relationship account scope
spk_4: and are confident that it will deliver benefits and both the short term and long term for customers and users and shareholders
spk_3: this past quarter we continue to benefit from our ongoing sales business development and cost control initiatives enabling as he figured he positioned for future growth to operate more efficiently and control expenses across the organization looking ahead we expect to benefit from continued improvement in our markets in line with a string economic environment
spk_4: we are confident that as you see is poised for a strong second half of our fiscal year as we provide our customers with mission critical products and solutions and execute on our strategies to deliver enhanced value for shareholders and with that outrun the call over to tracy smith war view in additional detail or second quarter of fiscal year twenty twenty one financial results thank you email
spk_6: consolidated net fail for the second quarter of had called twenty twenty one increase five point nine percent and fifteen point seven million dollars compared to that failed the fourteen point nine million dollars and a second quarter and or twenty twenty net sales increase in both our enterprise flt market including the wireless carrier market and the second quarter of fiscal year twenty twenty one who cared that the same period last year we believe that sales during the second quarter of fiscal year twenty twenty one were positively impact and battling think of some restrictions and the reopening of certain markets that had been negatively impacted by the and ninety pandemic net sales to customers in the united states increased four point four percent and that sell customers outside of the united states in faith eleven point eight percent in the second quarter of clear twenty twenty one and the same period last year consolidated that failed for the for path of the company twenty one or twenty seven point six million dollar flight between compared net thousand twenty seven point eight million dollars the same period last year the quintile a net sales increased thirty two point five percent in the second quarter of it clear twenty twenty one compare the net thousand and eleven point nine nine dollars for the first quarter of fiscal year twenty twenty one the turning red carpet great profit was four point eight million dollars in the second quarter a typical twenty twenty one an increase of twenty point six percent compared with one million dollars in the second quarter of fiscal twenty twenty gross profit margin are great prophet of the percentage of net fail increase the thirty point six percent in the second quarter of his applied twenty one compared to twenty six point nine percent and the second quarter of fiscal twenty twenty gross profit was seven point one million dollars in the first half of had put twenty twenty one an increase of eleven point four percent compared to six point four million dollars in the first half of the for twenty twenty by profit margin and treat the twenty five point eight percent and the first half of typical twenty twenty one compared to twenty three point one percent and the first half of typical twenty twenty a great profit margin tend to be higher when the company achieve higher net failed level atherton certain fact manufacturing hub for spreading were higher foul the top leverage which is beneficial at higher self level positively impacted our great profit margin particularly beginning and the second that of for additionally regime and creek manufacturing efficiently during the second quarter of for your twenty twenty one a manufacturing improvement initiative i like profit margin person that has off and heavily dependent upon product next on a quarterly basis and may vary based on change and the product mix some quoted quarter as dna expenses the creep at seventeen point three percent to four point eight million dollars during the second quarter of fiscal twenty twenty one compared to five point five million dollars and thing carried last year as soon as expensive as a percentage and net sales or twenty nine point three percent and the second quarter of fiscal twenty twenty one compared to thirty seven point three percent and the second quarter of fiscal twenty twenty and soon expensive decreased fourteen point you prefer to a point nine million dollars during our half of it for twenty twenty one compared to ten point four million dollars in the same period last year at seen a benefit as a percentage of that sale for thirty two point two percent in the path of had fined twenty one compared to thirty seven point four percent and the first half of the of twenty twenty a decrease in neptune expensive during the second quarter and first half of his or twenty twenty one compared to the same period last year with primarily the result of decreases is employee related car athletic than and certain other car impacted by the cabin nineteen pandemic the reduction and employee related cause another car out there were positively impacted by our ongoing half control initiative el pp recorded net income of three point four million dollars or forty five cents for basic and diluted share for the second quarter of fiscal twenty twenty one compared to a net loss at one point seven million dollars or twenty three cents per share for and diluted share for the second quarter of the full twenty twenty i think he recorded net income of one point two million dollars or seventy cents for basic and diluted share the first half of it got twenty twenty one compared to a net loss of four point three million dollars or fifty eight and for basic and diluted share of for the first half of the of twenty twenty during the second quarter of fiscal year twenty twenty one okay be determined that a qualified for refundable payroll tax credit totaling three point four million dollars the company expect to receive additional credit for the remainder of the second calendar porter of twenty twenty one peddling the fact my nine hundred thousand dollar which will be reflected on a the third fiscal quarter of twenty twenty one resolve
spk_7: the refundable payroll tax credit and part of the employee retention tax credit rt t created by the care that and then subsequently amended that a consolidated appropriation act and twenty twenty one and the american rescue plan act of twenty twenty one for qualified businesses that are keeping employs on their pay well during the cave and nineteen
spk_6: pandemic
spk_4: as of april thirtieth twenty twenty one we had outstanding borrowings the five point nine million dollars on a revolver and three point five million dollars and available credit we also had outstanding land balances the five million dollars under our real estate come lions and five million dollars on our ppp one with that also found a call back average me thank you tracy and now you have any questions for happy to answer them mario repeated please indicate the instructions worked as as to pollinate questions in have
spk_0: i would appreciate it and as again that again as we'd have ah said before we're only taking like questions from analyst and institutional investors again ladies and gentlemen in order to ask a question simply press star than the number one on your telephone keypad again that a star one
spk_8: and again ladies and gentlemen in order to ask a question simply pass starve one
spk_9: and i'm sure we have no some questions at this time
spk_10: aaron on
spk_4: could you are
spk_2: go over any questions that of insulated by us individual shareholders part of copies
spk_1: this the idea of a few questions they were submitted in advance by now i'm situational shareholders
spk_3: the first could you articulate where your see eg series hybrid cable products one has been used to store ugly and where the product line is headed is suitable for ftp a applications
spk_4: i'm sure thank you oh she see as a number of the fiber optic cable offerings including it a series or cables
spk_3: our hybrid cables include copper conductors and optical fibers are using various applications
spk_4: such as pathological lands and also security industrial applications and also favour the antenna applications i'm i am at it goes he sees benefiting from having those offerings believe it's been an an important part of have some of our more recent developments are typically despite way defamation informational yeah we do not include our ftp a product offerings on our website says these are products of tend to be custom design
spk_1: for our customers
spk_2: however we do have significant capabilities and expertise in the product used in this are targeted market
spk_11: great thanks next next question wait with added disclosure in the fiscal year twenty ten katie appears to been an increase in jobless teach from the company skewed towards roanoke manufacture can you address the challenges that the companies
spk_3: seen in the labor market and the steps being taken to address them
spk_4: sure
spk_3: a lot of companies as the pandemic began
spk_4: oshie see made every effort to preserve as many jobs as possible but
spk_3: we get have start have some normal attrition likely would i have any any year
spk_4: during this past year and we do not always hire new employees to fill those vacancies as we were looking for efficiencies to offset the impact the pandemic on sale damn production volumes
spk_3: we haven't seen a proven in our markets and accordingly as if he has increased the number of job offerings particularly in manufacturing wow as you can see people see in the news there is no it hadn't been publicly easy and it's been a challenging time to recruit new employees but as she she believes in a strong position to do so
spk_4: we offer competitive wages and benefits we operate in states that are supportive of workforce development efforts to show or lc see continues to have a stronghold of skill than capable workers and we haven't enjoyed working environment where we think of each other as part of the fcc family
spk_3: an integrated part of our family pulling together was demonstrated during this last more than a year during the pandemic just so proud of the as you feed theme
spk_4: they demonstrated strength and resilience during incredible difficult times incredibly difficult times
spk_2: and that's because of that strength and resilience that as you see is so well positioned as we begin to see them of the effects of the pandemic begin the wane
spk_3: so longer term we don't see a problem and been able to recruit capable employees that certainly we're not immune to some of the short term challenges that others are experiencing although i believe a little bit better position
spk_4: great final question does the company plan on adopting a new stockholder protection right agreement at the end of the fourth quarter
spk_2: i'm like yan
spk_12: i'm at this time i don't think get the appropriate for a speculator get ahead of the board of directors on this issue
spk_4: but of course the board will address whether to renew as he sees shareholder i'm protection rights plan at the appropriate time terrific that know the final question
spk_0: okay
Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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