Optical Cable Corporation Q1 FY2026 earnings call

Neil Wilkin mentioned OCC started fiscal year 2026 strongly with net sales and gross profit growth driven by increased demand in enterprise and specialty markets and operating leverage. Tracy Smith detailed financial results including net sales, gross profit, gross profit margin, SG&A expenses, and net loss.管理层表示对数据中心市场机会乐观，OCC与LITERRA的合作带来机会，公司正在招聘以满足人员需求

Consolidated net sales for the first quarter of fiscal 2026 increased 4.4% to $16.4 million compared to $15.7 million for the same period last year. Gross profit increased 16.1% to $5.4 million, and gross profit margin rose to 32.7% from 29.4%. Net sales in both enterprise and specialty markets increased. Net sales to customers outside the United States increased 18%, and net sales to U.S. customers saw a slight increase. Sales order backlog and forward load increased more than 50% to $10.4 million as of the end of the first quarter compared to the same prior fiscal year period.

Management is optimistic about sales growth in 2026. Sales order backlog and forward load increased more than 50% to $10.4 million as of the end of the first quarter of 2026 compared to the same period last year. Activity and quote requests in targeted market sectors, including data center market, are increasing, and they expect growth to continue during fiscal year 2026.

Mentioned that in the past, there were project delays, but currently, no significant delays are expected to impact results this year. However, project delays could potentially occur in any quarter

Q: Can you update us on the data center opportunity in general, how you feel about it, and if the opportunity has strengthened or not during the quarter?

A: We continue to be optimistic about the data center opportunities, particularly in the multi-tenant data center and enterprise data center sectors. OCC saw and is seeing significant and growing activity in customer requests for quotes in the data center sector, particularly in January, and that activity is continuing and growing as we enter the second quarter of fiscal 2026.

Q: In terms of outlook into 2026, in general, do you feel more or less optimistic now than in Q4?

A: We continue to be very optimistic about potential sales growth this year. Based on the sales order backlog and forward load increase and activity in targeted market sectors, we expect growth during fiscal year 2026.

Q: In the past, you have been commenting on improvements in OCC end markets. Have these improvements continued? Can you comment on new and emerging trends or risks?

A: During fiscal year 2025, net sales and gross profits increased, reflecting improvements in targeted markets. We continue to see growth opportunities in many targeted market sectors, including the data center market, during fiscal year 2026.

Q: Can you please provide an update on progress of the LITERRA collaboration?

A: OCC has worked with LITERRA for decades. The strategic collaboration announced last year is built on that long-standing relationship, and the teams work well together, enabling both companies to benefit.

Q: Could you comment on the type of products you expect to sell alongside Lytera? Will they be on the margin accretive connectivity side or more on the basic cabling side?

A: OCC and Lytera have product sets that provide solutions for customer needs, including on the cabling and connectivity sides. Examples like Lytera's rollable ribbon fiber optic cable for data centers and Invisalight product solutions for passive optical land technology installations.

Q: Can you explain if data center revenue had an impact in Q1 and what to expect for the rest of the year in terms of revenues?

A: OCC generally doesn't provide specifics on individual targeted market sectors, but during the first quarter, there were increases in quotes and customer orders in the data center market sector, and this activity is expected to continue and result in greater data center market sector revenues during the remainder of fiscal year 2026.

Q: Have you seen any interest regarding a potential acquisition of OCC by larger players, given that many of the larger players urgently need increased capacity?

A: We are unable to comment on whether or not there's been any such interest.

Q: Will you ever have an analyst day, perhaps with an investor deck?

A: OCC has given presentations to analysts in the past, but as a small microcap company, it doesn't have analyst coverage at the moment.

Q: I've noticed increasing job activity including night shift jobs appearing on the job section of your website. Can we assume this is in anticipation of increased activity for the second half of 2026?

A: OCC is hiring in manufacturing operations to meet personnel needs this fiscal year, recognizing the time to train new manufacturing personnel. OCC has skilled long-term employees and lower personnel turnover.

Q: When do you think it's possible to start generating more revenue from the LITERRA collaboration? Can you give us an idea on how this might change current revenue rate?

A: Working with LITERRA has already begun to generate more opportunities and will continue to contribute to revenue growth in fiscal year 2026 and beyond.

Q: Can you give more color on the Litera collaboration and how you ended up at 7% for a share purchase? Did they want to buy more?

A: It's not appropriate to comment more on the Litera collaboration beyond what's already disclosed. We think highly of the Litera team and believe their investment reflects confidence in our business.

Q: Can you comment on demand signals or expand on backlog and the tier two data center sales cycle? Can you give an idea on the typical sales cycle as it might pertain to the Litera collaboration activity and new revenue streams?

A: The SEC team stays close to customers to see demand signals. The data center cycle for Tier 2 is longer than OCC's typical sales cycle. The strategic collaboration is benefiting in generating additional opportunities.

Q: In the past, you had mentioned you expect the second half to be stronger than the first half. Is this still the case?

A: Yes, we expect the remainder of fiscal 2026 to show further growth, including the second half.

Q: At what point do you expect the growth to inflect in 2026?

A: While we're not giving revenue guidance, we have seen a growing sales order backlog and forward load, which was $10.4 million at the end of the first quarter of 2026, an increase of more than 50% compared to the same period last year.

Q: Hey, guys. Thanks for taking our questions. Can you update us about project delays?

A: In the last quarter, there were some project delays mentioned, but currently, no delays are impacting results this year.

Q: During the fiscal year 25, the backlog was growing about 20%. but we didn't see that translating into revenue growth. Why is that?

A: The backlog is a measurement at a point in time. Last year, we had increased sales 9.5% in total, with significant strong sales in the third and fourth quarter, which is consistent with backlog growth.