• Revenue: Increased 6% to $15.7 million compared to $14.9 million in the same period last year.
• Gross Profit: Increased 24.6% to $4.6 million from $3.7 million in the prior year.
• Gross Profit Margin: Improved to 29.4% from 25% in the first quarter of fiscal 2024.
• SG&A Expenses: Increased to $5.5 million from $5.1 million, representing 34.7% of net sales compared to 34.3% last year.
• Net Loss: Reduced to $1.1 million or $0.14 per share from $1.4 million or $0.18 per share in the previous year.
• Sales Order Backlog: Increased approximately 16% to $6.6 million from $5.7 million as of October 31, 2024.
• International Sales: Increased 21.3% compared to the same period last year.
• Domestic Sales: Increased 2.3% compared to the same period last year.

• Warning! GuruFocus has detected 4 Warning Signs with OCC.

Release Date: March 10, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Optical Cable Corp (NASDAQ:OCC) achieved a 6% increase in net sales for the first quarter of fiscal 2025 compared to the same period last year.
• Gross profit increased by 24.6%, demonstrating significant operating leverage and efficiency improvements.
• Sales order backlog and forward load grew by approximately 16% to $6.6 million, indicating strong future demand.
• Net sales to customers outside the United States increased by 21.3%, showcasing international market strength.
• The company is well-positioned to benefit from trends in increased communication bandwidth demand and potential advantages from US-based manufacturing.

Negative Points

• Optical Cable Corp (NASDAQ:OCC) recorded a net loss of $1.1 million for the first quarter of fiscal 2025, although this was an improvement from the previous year's loss.
• SG&A expenses increased to $5.5 million, representing a higher percentage of net sales compared to the previous year.
• The company continues to face typical seasonality factors, particularly impacting performance in November and December.
• The impact of tariffs remains uncertain, with potential for both positive and negative effects on the company's operations.
• Despite improvements, the company has not changed its outlook since the annual report, indicating cautious optimism amid a dynamic market environment.

Q & A Highlights

Q: How might tariffs impact Optical Cable Corp, and could there be any advantages due to US-based manufacturing? A: Neil Wilkin, CEO, stated that while tariffs might have some impact, they are not expected to be significant. There could be both positive and negative effects, and the company will continue to monitor the situation. Being US-based might offer some advantages, especially with initiatives like Build America, Buy America (BABA), but the company is not relying on these for increased sales.

Q: Has the outlook for the company changed since the annual report, considering recent economic changes? A: Neil Wilkin, CEO, mentioned that the outlook remains unchanged since the annual report. The company is optimistic despite typical seasonality impacts in the first half of the year. The industry downturn that began in fiscal 2023 is easing, and the company is seeing improvements.

Q: Can you discuss the operational leverage and its impact on potential revenue scenarios? A: Neil Wilkin, CEO, explained that OCC has significant operating leverage, particularly in manufacturing operations, which affects gross profit and margin. The companys annual report includes graphs showing the sensitivity of operating leverage to revenue scenarios, highlighting the impact of product mix on gross profit.

Q: Is OCC benefiting from the demand in AI data centers, and is this a significant opportunity? A: Neil Wilkin, CEO, acknowledged that while OCC has some regular business in the data center market, including AI-driven demand, it hasn't been a major part of their business. However, they see opportunities to expand in this area.

Q: Have there been any fundamental changes in the industry that could help OCC surpass its historical revenue mark? A: Neil Wilkin, CEO, believes that the increasing demand for communication bandwidth positively impacts fiber optics and OCC. The company is well-positioned to benefit from this trend and expects continued growth in the communications market.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.