Optical Cable Corporation Q3 FY2025 earnings call

• Neil Wilkin noted strong third quarter net sales growth and gross profit expansion, driven by operating leverage. - OCC entered a strategic collaboration with Lightera in July, with Lightera investing in OCC and combining product portfolios for enterprise and data center solutions. - Tracy Smith detailed financial results, including net sales, gross profit, SG&A expenses, and net income figures for the third quarter and 9-month periods.

Consolidated net sales for the third quarter of fiscal 2025 increased 22.8% to $19.9 million compared to $16.2 million in the same period last year. For the first 9 months of fiscal 2025, net sales were $53.2 million, up 12.8% from $47.2 million in the same period last year. Gross profit in the third quarter of fiscal 2025 was $6.3 million, a 61.2% increase from $3.9 million in the prior year, with a gross profit margin of 31.7%. For the first 9 months, gross profit was $16.3 million, up 39.5% from $11.7 million, and the margin was 30.6%. SG&A expenses in the third quarter of fiscal 2025 were $5.7 million, and $16.9 million for the first 9 months. Net income in the third quarter of fiscal 2025 was $302,000, while the first 9 months resulted in a net loss of $1.5 million.

• Focus on disciplined execution and capitalizing on growth opportunities to drive shareholder value. - Optimism due to industry recovery, data center growth, and the strategic collaboration with Lightera.

• Forward-looking statements involve risks and uncertainties, including factors in the press release. - Potential impact from market changes, product mix variations, and interest rate fluctuations.

Q: Can you comment on what you're seeing in your traditional markets and how it has evolved through the year?

A: Yes. We are generally seeing strength in our targeted markets this year, and that's been the case with others in the industry as well. We believe we're benefiting from our strong market position, and that's been reflected in our top line results this year, including in the third quarter of 2025.

Q: Can you comment as to what you're seeing in terms of AI impact?

A: As folks know, AI is growing and positively impacting our industry, especially hyperscale data centers. OCC's products are more suited for Tier 2 and Tier 3 data centers, but we expect positive impact from AI and data center growth.

Q: CommScope recently sold the vertical that is competing with you on Amphenol. Do you expect any impact from that?

A: As our listeners may expect, we are following these developments, but at this time, we do not believe this will have an impact on OCC.

Q: The backlog is down versus Q2, but Q4 is usually the strongest quarter. Does this decline in backlog mean that the seasonality is not expected to be what we'd normally expect from Q4?

A: I would describe the decrease in backlog and forward load of approximately $100,000 as more of a leveling cost rather than a decrease, certainly not a significant decrease. And possibly more related to timing of shipments and order entry than indicative of demand.