Optical Cable Corporation

Your program is about to begin. If you require operator assistance during your conference today, please press star zero. Good morning. My name is Madison, and I will be your conference operator today. At this time, I would like to welcome you to Optical Cable Corporation's first quarter of fiscal year 2025 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. Hoffman, you may begin your conference.

Thank you. Good morning. Thank you for joining us for Optical Cable Corporation's first quarter of fiscal year 2025 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 statements section of this morning's press release. These cautionary statements apply to the content of the internet webcast on www.occprepper.com, as well as today's call. With that, I'll turn the call over to Neil Wilkin. Neil, please begin.

Thank you, Spencer, and good morning, everyone. I will begin the call today with a few opening remarks. Tracy will then review the first quarter results for the three-month period ended January 31st, 2025 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 be taking 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 first quarter of 2025, we achieved growth across key metrics, including net sales and gross profit, with sales increasing 6%, and our significant operating leverage resulting in gross profit increasing 24.6% in both cases when compared to the first quarter of last year. You will recall that we mentioned on our fourth quarter call that OCC is beginning to see market improvement as the weakness experienced across our industry generally since fiscal, which began in fiscal 2023, and has begun to subside. I'm pleased to report that we believe this trend is continuing. OCC has seen improvements in both our enterprise and specialty markets, including the military sector. We are confident our focus on executing our growth strategies as well as operating efficiently will drive results this year, including gross profit margin expansion with increased volume as we disproportionately benefit from OCC's significant operating leverage. While the first quarter of 2025 was impacted by what we believe to be our typical seasonality factors, particularly during November and December, our sales backlog and forward load is growing. At the end of the first quarter, our sales order backlog and forward load had increased approximately 16% to $6.6 million when compared to October 31, 2024. We also saw improvement in net cash provided by operating activities during the first quarter of fiscal 2025. I'm proud of the OCC team whose hard work allowed us to deliver a strong start to fiscal year 2025 in a dynamic market environment. We look forward to capitalizing on growth opportunities and driving long-term value for our customers and shareholders. Before I turn the call over to Tracy, I want to take a moment to mention a topic currently being currently garnering significant attention. As are many, we are closely monitoring proposed and enacted tariffs by the US as well as others to determine any impact on our purchases of certain raw materials and on the sales of our products we export into approximately 50 countries each year. OCC's three manufacturing facilities are based in the US and and we currently don't anticipate a significant impact on OCC as a result of new tariffs. However, it is still too early to be certain given the fluid nature of the environment, and we will continue to evaluate potential impacts on OCC and our customers. And with that, I'll turn the call over to Tracy, who will review in additional detail our first quarter of fiscal year 2025 financial results.