ROANOKE, Va., Sept. 11, 2024 /PRNewswire/ -- Optical Cable Corporation (Nasdaq GM: OCC) ("OCC®" or the "Company") today announced financial results for its third quarter ended July 31, 2024.
Third Quarter 2024 Financial Results
Consolidated net sales for the third quarter of fiscal year 2024 were $16.2 million, a decrease of 4.2% compared to net sales of $16.9 million for the same period in the prior year. OCC experienced an increase in net sales in its enterprise market in the third quarter of fiscal 2024, compared to the same period last year, which was offset by decreases in net sales in its specialty markets, including the wireless carrier market. OCC believes this is consistent with weakness experienced across the industry generally and in certain of its target markets, which the Company began to experience during the third quarter of fiscal year 2023.
The Company's net sales have increased each quarter since the first quarter of fiscal year 2024. OCC's sales order backlog/forward load has also increased since the beginning of fiscal year 2024. The Company believes this reflects improving opportunities in certain targeted markets as fiscal year 2024 has progressed.
Gross profit was $3.9 million in the third quarter of fiscal year 2024, a decrease of 23.4% compared to gross profit of $5.1 million for the same period in fiscal year 2023, and compared to $4.0 million for the second quarter of fiscal 2024.
Gross profit margin, or gross profit as a percentage of net sales, was 24.2% in the third quarter of fiscal year 2024, compared to 30.2% in the third quarter of fiscal year 2023 and 25.1% for the second quarter of fiscal year 2024.
Gross profit margin for the third quarter of fiscal year 2024, when compared to the same period last year, was impacted by lower production volumes, resulting in fixed charges being spread over lower net sales, as well as decreased plant efficiency as lower production volumes impacted the flow of products through the Company's manufacturing facilities—both effects of operating leverage. The variability of the Company's gross profit margin in any quarter also reflects changes in product mix.
While production volume decreased during the third quarter and first nine months of fiscal year 2024, compared to the same periods last year, the Company has not implemented reductions in production personnel. The Company's restraint in this regard is consistent with its view of expected opportunities in fiscal year 2025, as well as the time required to train new production personnel.
SG&A expenses were $5.2 million in the third quarter of fiscal year 2024, compared to $5.0 million for the third quarter of fiscal year 2023. SG&A expenses as a percentage of net sales were 32.3% in the third quarter of fiscal 2024, compared to 29.3% in the prior year period, as fixed SG&A expenses were spread over lower net sales. By comparison, SG&A expenses as a percentage of net sales were 33.0% during the second quarter of fiscal 2024.
For the third quarter of fiscal year 2024, OCC recorded a net loss of $1.6 million, or $0.20 per basic and diluted share, compared to net income of $101,000, or $0.01 per basic and diluted share, for the third quarter of fiscal year 2023.
Fiscal Year-to-Date 2024 Financial Results
Consolidated net sales for the first nine months of fiscal year 2024 were $47.2 million, a decrease of 14.0%, compared to net sales of $54.8 million for the first nine months of fiscal year 2023, with sales decreases experienced in both the Company's enterprise and specialty markets, including the wireless carrier market.
The Company's net sales during the first nine months of fiscal year 2023 benefited from a higher-than-typical sales order backlog/forward load of more than $12.0 million at the end of fiscal year 2022, whereas sales order backlog/forward load at the end of fiscal year 2023 had returned to more normal levels at approximately $5.4 million. At the end of the first nine months of fiscal year 2024, sales order backlog/forward load increased to $6.5 million when compared to $5.6 million as of April 30, 2024 and $5.0 million as of January 31, 2024.
OCC reported gross profit of $11.7 million in the first nine months of fiscal year 2024, a decrease of 36.6%, compared to gross profit of $18.4 million in the first nine months of fiscal year 2023. Gross profit margin was 24.7% in the first nine months of fiscal year 2024 compared to 33.6% for the same period in fiscal year 2023.
SG&A expenses decreased 2.6% to $15.7 million during the first nine months of fiscal year 2024 from $16.1 million for the first nine months of fiscal year 2023. The decrease in SG&A expenses during the first nine months of fiscal year 2024 compared to the first nine months of fiscal year 2023 was primarily the result of decreases in employee and contracted sales personnel-related costs and shipping costs.
OCC recorded a net loss of $4.6 million, or $0.59 per basic and diluted share, for the first nine months of fiscal year 2024, compared to net income of $3.3 million, or $0.42 per basic and diluted share, for the first nine months of fiscal year 2023.
Management's Comments
Neil Wilkin, President and Chief Executive Officer of OCC, said "Our results through the third quarter of fiscal year 2024 have been impacted by the challenging market environment affecting our industry. As a result of the OCC team's solid execution, we have achieved higher net sales each quarter since the first quarter of fiscal 2024. While our results were not as strong as initially anticipated, we are seeing indications of improving opportunities as we near the end of our fiscal year and look ahead to fiscal year 2025. We will continue to focus on executing our plans to capture the opportunities ahead to grow OCC's net sales, while also taking prudent steps to operate efficiently."
Mr. Wilkin added, "I am immensely appreciative of the work of the OCC team, and their commitment to providing our customers and end-users–including our country's military and first responders–with our suite of mission-critical products. With our strong position in our targeted markets and differentiated core strengths and capabilities, we remain confident that OCC is poised to deliver value to shareholders as macroeconomic conditions improve."
Conference Call Information
As previously announced, OCC will host a conference call today, September 11, 2024, at 10:30 a.m. Eastern Time. Individuals wishing to participate in the conference call should call (800) 245-3047 in the U.S. or (203) 518-9765 internationally, Conference ID: OCCQ324. For interested individuals unable to join the call, a replay will be available through Wednesday, September 18, 2024 by dialing (800) 934-4245 or (402) 220-1173. The call will also be broadcast live over the internet and can be accessed by visiting the investor relations section of the Company's website at
