Optical Cable Corporation

Good morning and thank you for joining us for Optical Cable Corporation's second 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 .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 .occfiber.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 second quarter results for the three-month and six-month period ended April 30, 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 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. During the second quarter, the OCC team delivered sales, net sales growth, and gross profit growth on both a -over-year and a sequential basis. Strong execution by the OCC team coupled with our significant operating leverage also enabled us to deliver improved gross profit margins as we realized improved manufacturing efficiencies over higher production volumes. We continue to see positive industry trends from which we believe OCC will continue to benefit as the year progresses. At the end of our second quarter of fiscal 2025, our sales backlog and forward load had increased to $7.2 million compared to $6.6 million as of January 31, 2025, and $5.7 million as of October 31, 2024. We are confident our focus on executing our growth strategies and capitalizing on operating efficiencies will drive positive results this year including opportunities for gross profit margin expansion with increased production volume as we benefit from OCC significant operating leverage. I'm proud of the OCC team whose hard work allowed us to deliver a strong start to the first half of fiscal 2025 in a dynamic market environment. As we look ahead to the second half of the year, we remain focused on disciplined execution and capitalizing on growth opportunities to drive shareholder value. And with that, I'll turn the call over to Tracy who will review in additional detail our second quarter of fiscal year 2025 financial results.

Thank you, Neil. Consolidated net sales for the second quarter of fiscal 2025 increased .9% to $17.5 million compared to net sales of $16.1 million for the same period last year resulting from increases in net sales in our specialty markets while our enterprise markets were relatively stable. Sequentially, net sales increased .5% during the second quarter of fiscal year 2025 compared to net sales of $15.7 million for the first quarter of fiscal 2025. We experienced sequential increases in both our enterprise and specialty markets during the second quarter compared to the first quarter of fiscal year 2025. Consolidated net sales for the first half of fiscal 2025 were $33.3 million, an increase of .5% as compared to net sales of $31 million for the first half of fiscal 2024 with sales increases in both our enterprise and specialty markets. As Neil mentioned, at the end of our second fiscal quarter of 2025, our sales order backlog and forward load increased to $7.2 million compared to $6.6 million as of January 31, 2025, and $5.7 million as of October 31, 2024. Turning to gross profit, our gross profit increased .1% or $1.3 million to $5.3 million in the second quarter of fiscal 2025 compared to $4 million for the same period last year. Gross profit margin or gross profit as a percentage of net sales increased to .4% in the second quarter of fiscal 2025, up from .1% in the second quarter of fiscal 2024 and .4% for the first quarter of fiscal year 2025. Gross profit was $10 million in the first half of fiscal 2025, an increase of .5% compared to $7.8 million in the first half of fiscal 2024. Gross profit margin was .9% in the first half of fiscal 2025 compared to 25% in the first half of fiscal 2024. Gross profit margin for the second quarter and first half of fiscal 2025 was positively impacted by production efficiencies created by higher volumes and the resulting positive impact of our operating leverage. Additionally, our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may vary based on changes in product mix. SG&A expenses increased to $5.7 million in the second quarter of fiscal year 2025 compared to $5.3 million for the same period last year. SG&A expenses as a percentage of net sales were .7% in the second quarter of fiscal 2025 compared to 33% in the prior year period. By comparison, SG&A expenses as a percentage of net sales were .7% during the first quarter of fiscal year 2025. The increase in SG&A expenses during the second quarter and first half of fiscal year 2025 compared to the same periods last year was primarily the result of increases in employee and contracted sales personnel related costs and shipping costs. Included in employee and contracted sales personnel related costs are compensation costs and sales incentives. OCC recorded a net loss of $698,000 or 9 cents per basic and diluted share for the second quarter of fiscal 2025 compared to a net loss of $1.6 million or 21 cents per basic and diluted share for the second quarter of fiscal 2024. OCC recorded a net loss of $1.8 million or 23 cents per basic and diluted share for the first half of fiscal year 2025 compared to $3 million or 39 cents per basic and diluted share for the first half of fiscal year 2024. With that, I'll turn the call back over to you, Neil.