Optical Cable Corporation

Please stand by. Your program is about to begin. If you need assistance during your conference today, please press star zero. Good morning. My name is Shelby, and I will be your conference operator today. At this time, I would like to welcome you to the Optical Cable Corporation's second quarter of fiscal year 2023 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. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, please press star 2. Mr. Paylash, you may begin your conference.

All right. Thank you, Shelby. Good morning, and thank you all for participating on Obstacle Cable Corporation's second quarter of fiscal year 2023 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 Obstacle 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 statement 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.

Thank you, Aaron, and good morning, everyone. I will begin the call today with a few opening remarks. Tracy will then review the second quarter results for the three-month and six-month periods ended April 30, 2023, in 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. 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. During the second quarter of fiscal 2023, the OCC team continued to build on our positive momentum and successfully execute on our growth strategies. We are pleased to have achieved significant growth by all measures. Net sales, gross profit, gross profit margin, as well as income from operations and earnings per share all saw increases compared to the same periods in the prior year, both for the second quarter and for the first half of 2023. During the second quarter, net sales grew 14.1%. and gross profit increased 34.8%. During the first half of fiscal 2023, net sales grew 19.8% and gross profit grew 46.5%. And we achieved a gross profit margin of 35.1%. As we have mentioned before, OCC benefits from our strong operating leverage which provides opportunities for shareholder value creation. Our sales order backlog and forward load continues to remain at higher than typical levels, approximately $8 million at the end of the second quarter of fiscal year 2023, compared to more than $12 million at the end of the fourth quarter of fiscal year 2022. As you would expect, We are monitoring the evolving macroeconomic trends and potential risks that could impact our business. Certain of our markets are showing signs of softening. At the same time, we see positive indicators in certain of our other markets. We will continue to monitor these macroeconomic trends and other indicators and work to make appropriate business adjustments as necessary as 2023 continues to unfold. The availability of skilled labor for our manufacturing facilities has improved. This is a trend that we began to see in the latter part of last year. In addition, we have benefited this year from new members joining our manufacturing team and completing their training. Our supply chains have improved this fiscal year as well. We have also adjusted our raw material inventory levels in an effort to help accommodate unexpected fluctuations in materials availability. These efforts have helped but not eliminated availability challenges of certain materials from time to time. Importantly, we have also been replenishing our finished goods inventory levels this year. This has enabled us to lower lead times and significantly increase our responsiveness to our customers for stocked products. Looking ahead, we are continuing to execute our strategic initiatives to drive growth, work efficiently and safely, and drive enhanced shareholder value. And with that, I'll turn the call over to Tracy, who will review in additional detail our second quarter fiscal year 2023 financial results.