Optical Cable Corp (OCC) 2023 Q2 法說會逐字稿

Good morning. My name is Shelby, and I will be your conference operator today. At this time, I would like to welcome you to the Optical Cable Corporation Second Quarter of Fiscal Year 2023 Earnings Conference Call. (Operator Instructions) Mr. Palash, you may begin your conference.

早上好。我叫謝爾比，今天我將擔任你們的會議操作員。現在，我歡迎您參加光纜公司 2023 財年第二季度收益電話會議。 （操作員指示）Palash 先生，您可以開始會議了。

All right. Thank you, Shelby. Good morning, and thank you all for participating on Optical Cable Corporation's Second Quarter of Fiscal Year 2023 Conference Call. By this time, everyone should have a copy of the earnings press release issued earlier today. You can also visit www.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.

好的。謝謝你，謝爾比。早上好，感謝大家參加光纜公司 2023 財年第二季度電話會議。到這個時候，每個人都應該收到今天早些時候發布的收益新聞稿的副本。您還可以訪問 www.occ Fiber.com 獲取副本。今天與我們通話的有 OCC 總裁兼首席執行官 Neil Wilkin；特雷西·史密斯，高級副總裁兼首席財務官。

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 www.occfiber.com as well as today's call.

在開始之前，我想提醒大家，本次電話會議可能包含涉及風險和不確定性的前瞻性陳述。由於多種因素和風險，包括但不限於今天上午新聞稿的前瞻性陳述部分中提到的因素，光纜公司未來的實際業績可能會出現重大差異。這些警告聲明適用於 www.occ Fiber.com 上的互聯網網絡廣播以及今天的電話會議的內容。

With that, I'll turn the call over to Neil Wilkin. Neil, please begin.

這樣，我會將電話轉給尼爾·威爾金。尼爾，請開始。

Thank you, Aaron, 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 3-month and 6-month periods ended April 30, 2023, 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.

謝謝你，亞倫，大家早上好。我將在今天的電話會議上發表幾句開場白。然後，特雷西將審查截至 2023 年 4 月 30 日的 3 個月和 6 個月期間的第二季度業績，並提供一些其他細節。在特雷西發言之後，我們將盡可能回答大家的問題。按照我們的慣例，我們只會在問答環節回答分析師和機構投資者的問題。然而，我們還為其他股東提供在財報電話會議之前提交問題的機會。有關此類提交的說明包含在我們宣布電話會議日期和時間的新聞稿中。

During the second quarter of fiscal 2023, the OCC team continued to build on our positive momentum and successfully execute on our growth strategies. We are pleased to have achieved significant growth by all measures. Net sales, gross profit, gross profit margin as well as income from operations and earnings per share all saw increases compared to the same period in the prior year, both for the second quarter and for the first half of 2023.

2023 財年第二季度，OCC 團隊繼續鞏固我們的積極勢頭，並成功執行我們的增長戰略。我們很高興從所有方面來看都取得了顯著的增長。 2023 年第二季度和上半年的淨銷售額、毛利潤、毛利率以及運營收入和每股收益均較上年同期有所增長。

During the second quarter, net sales grew 14.1% and gross profit increased 34.8%. During the first half of fiscal 2023, net sales grew 19.8% and gross profit grew 46.5% and we achieved a gross profit margin of 35.1%. As we have mentioned before, OCC benefits from our strong operating leverage, which provides opportunities for shareholder value creation.

第二季度淨銷售額增長14.1%，毛利潤增長34.8%。 2023財年上半年，淨銷售額增長19.8%，毛利潤增長46.5%，毛利率達到35.1%。正如我們之前提到的，OCC 受益於我們強大的運營槓桿，這為股東價值創造提供了機會。

Our sales order backlog and forward load continues to remain at higher than typical levels, approximately $8 million at the end of the second quarter of fiscal year 2023 compared to more than $12 million at the end of the fourth quarter of fiscal year 2022.

我們的銷售訂單積壓和遠期負荷繼續保持在高於典型水平，2023 財年第二季度末約為 800 萬美元，而 2022 財年第四季度末則超過 1200 萬美元。

As you would expect, we are monitoring the evolving macroeconomic trends and potential risks that could impact our business. Certain of our markets are showing signs of softening. At the same time, we see positive indicators in certain of our other markets.

正如您所期望的，我們正在監控不斷變化的宏觀經濟趨勢以及可能影響我們業務的潛在風險。我們的某些市場正顯示出疲軟的跡象。與此同時，我們在某些​​其他市場看到了積極的跡象。

We continue -- we will continue to monitor these macroeconomic trends and other indicators and work to make appropriate business adjustments as necessary as 2023 continues to unfold. The availability of skilled labor for our manufacturing facility has improved. This is a trend that we began to see in the latter part of last year. In addition, we have benefited this year from new members joining our manufacturing team and completing their training.

我們將繼續監測這些宏觀經濟趨勢和其他指標，並努力在 2023 年繼續進行必要時做出適當的業務調整。我們的製造工廠的熟練勞動力的可用性有所改善。這是我們去年下半年開始看到的一個趨勢。此外，今年我們還受益於新成員加入我們的製造團隊並完成培訓。

Our supply chains have improved this fiscal year as well. We have also adjusted our raw material inventory levels in an effort to help accommodate unexpected fluctuations in materials availability. These efforts have helped but not eliminated availability challenges of certain materials from time to time. Importantly, we have also been replenishing our finished goods inventory levels this year. This has enabled us to lower lead times and significantly increase our responsiveness to our customers for stocked products.

我們的供應鏈在本財年也得到了改善。我們還調整了原材料庫存水平，以幫助適應材料供應的意外波動。這些努力有所幫助，但並沒有消除某些材料不時出現的可用性挑戰。重要的是，我們今年還一直在補充成品庫存水平。這使我們能夠縮短交貨時間，並顯著提高我們對客戶庫存產品的響應能力。

Looking ahead, we are continuing to execute our strategic initiatives to drive growth, work efficiently and safely and drive enhanced shareholder value.

展望未來，我們將繼續執行戰略舉措，以推動增長、高效、安全地工作並提高股東價值。

And with that, I will turn the call over to Tracy, who will review in additional detail, our second quarter fiscal year 2023 financial results.

接下來，我將把電話轉給 Tracy，她將更詳細地審查我們 2023 財年第二季度的財務業績。

Thank you, Neil. Consolidated net sales for the second quarter of fiscal 2023 increased 14.1% to $19.6 million compared to net sales of $17.2 million for the same period last year. Consolidated net sales for the first half of fiscal 2023 were $37.9 million, an increase of 19.8% compared to net sales of $31.6 million for the same period last year.

謝謝你，尼爾。 2023 財年第二季度合併淨銷售額增長 14.1%，達到 1960 萬美元，而去年同期淨銷售額為 1720 萬美元。 2023財年上半年綜合淨銷售額為3790萬美元，較去年同期淨銷售額3160萬美元增長19.8%。

During the second quarter and first half of fiscal 2023, we experienced an increase in net sales in our specialty markets compared to the same periods last year, but this increase was partially offset by decreases in our enterprise market.

在 2023 財年第二季度和上半年，我們的專業市場的淨銷售額與去年同期相比有所增長，但這種增長被企業市場的下降部分抵消。

We believe our net sales benefited from increased production throughput during the second quarter and first half of fiscal year 2023 compared to the same period last year as well as our higher than typical levels of sales order backlog and forward load. Additionally, improved product pricing increased to cover certain inflationary costs began to take effect for new orders received during the latter half of fiscal year 2022.

我們認為，我們的淨銷售額受益於 2023 財年第二季度和上半年生產量較去年同期增加，以及銷售訂單積壓和遠期負荷高於典型水平。此外，為彌補某些通脹成本而提高的產品定價開始對 2022 財年下半年收到的新訂單生效。

As Neil mentioned, our sales order backlog and forward load continues to remain at higher than typical levels at approximately $8 million at the end of the second quarter of fiscal year 2023, compared to more than $12 million at the end of the fourth quarter of fiscal year 2022.

正如 Neil 提到的，我們的銷售訂單積壓和遠期負荷繼續保持在高於典型水平的水平，截至 2023 財年第二季度末約為 800 萬美元，而 2023 財年第四季度末超過 1200 萬美元。 2022 年。

Turning to gross profit. Gross profit increased 34.8% to $6.8 million in the second quarter of fiscal 2023, compared to gross profit of $5 million for the same period last year. Gross profit margin, or gross profit as a percentage of net sales increased to 34.6% in the second quarter of fiscal 2023 compared to 29.3% in the second quarter of fiscal 2022.

轉向毛利潤。 2023財年第二季度毛利潤增長34.8%，達到680萬美元，而去年同期毛利潤為500萬美元。 2023 財年第二季度的毛利率（或毛利潤占淨銷售額的百分比）增至 34.6%，而 2022 財年第二季度為 29.3%。

Gross profit was $13.3 million in the first half of fiscal 2023, an increase of 46.5% compared to $9.1 million in the first half of fiscal 2022. Gross profit margin increased to 35.1% in the first half of fiscal 2023 compared to 28.7% in the first half of fiscal 2022.

2023 財年上半年毛利潤為 1,330 萬美元，較 2022 財年上半年的 910 萬美元增長 46.5%。2023 財年上半年毛利率增至 35.1%，而 2023 財年上半年為 28.7%。 2022 財年上半年。

The increased gross profit margin reflects our strong operating leverage as higher net sales levels are achieved, fixed manufacturing costs are spread over higher sales. This operating leverage positively impacted our gross profit margin during both the second quarter and first half of fiscal year 2023 when compared to the same periods last year.

毛利率的增加反映了我們強大的經營槓桿，因為實現了更高的淨銷售額水平，固定製造成本分攤在更高的銷售額上。與去年同期相比，這種運營槓桿對我們 2023 財年第二季度和上半年的毛利率產生了積極影響。

SG&A expenses increased to $5.7 million during the second quarter of fiscal 2023 compared to $5 million for the same period last year. SG&A expenses as a percentage of net sales were 28.9% in the second quarter of fiscal 2023 compared to 29.3% in the second quarter of fiscal 2022.

2023 財年第二季度的銷售、行政管理費用增加至 570 萬美元，而去年同期為 500 萬美元。 2023 財年第二季度的 SG&A 費用占淨銷售額的百分比為 28.9%，而 2022 財年第二季度為 29.3%。

SG&A expenses increased 13.3% to $11.1 million during the first half of fiscal year 2023 from $9.8 million for the first half of fiscal year 2022. The increase in SG&A expenses during the second quarter and first half of fiscal year 2023 compared to the same periods last year was primarily the result of increases in employee and contracted sales personnel-related costs.

2023 財年上半年的 SG&A 費用從 2022 財年上半年的 980 萬美元增加到 1110 萬美元，增長了 13.3%。 與去年同期相比，2023 財年第二季度和上半年的 SG&A 費用增加這主要是由於員工和合同銷售人員相關成本的增加。

Included in employee and contracted sales personnel-related costs for employee incentives and commissions, which increased due to increased net sales and the improved financial results during the second quarter and first half of fiscal 2023.

包括在員工和合同銷售人員相關的員工激勵和佣金成本中，該成本因 2023 財年第二季度和上半年淨銷售額增加以及財務業績改善而增加。

OCC recorded net income of $2.4 million or $0.31 per basic and diluted share for the second quarter of fiscal 2023 compared to a net loss of $228,000 or $0.03 per basic and diluted share for the second quarter of fiscal 2022.

OCC 2023 財年第二季度的淨利潤為 240 萬美元，即每股基本股和稀釋股 0.31 美元，而 2022 財年第二季度的淨虧損為 228,000 美元，即每股基本股和稀釋股 0.03 美元。

OCC recorded net income of $3.2 million or $0.41 per basic and diluted share for the first half of fiscal year 2023 compared to a net loss of $1.2 million or $0.16 per basic and diluted share for the first half of fiscal year 2022.

OCC 2023 財年上半年的淨利潤為 320 萬美元，即每股基本股和稀釋股 0.41 美元，而 2022 財年上半年的淨虧損為 120 萬美元，即每股基本股和稀釋股 0.16 美元。

In addition to improved sales and gross profit, the company's results for the second quarter and first half of fiscal 2023 benefited from the gain on insurance proceeds received for damage to property and equipment totaling $1.7 million, which was recorded as other income net on the company's statement of operations during the second quarter and first half of fiscal year 2023.

除了銷售額和毛利潤的改善外，該公司 2023 財年第二季度和上半年的業績還受益於因財產和設備損壞而收到的保險收益收益，總計 170 萬美元，該收益被記錄為該公司的其他收入淨額2023 財年第二季度和上半年的運營報表。

During the second quarter of fiscal year 2023, OCC received insurance proceeds in connection with the office building and its content at our Asheville facilities that sustained water damage from the burst pipe at the end of December 2022.

在 2023 財年第二季度，OCC 收到了與我們阿什維爾設施中的辦公樓及其內容相關的保險收益，這些設施於 2022 年 12 月底因管道爆裂而遭受水災。

The office building damage is separate from our manufacturing building, which houses the Asheville manufacturing operations and certain offices at the same location. There was no significant impact to our operations as a result of this event.

受損的辦公樓與我們的製造大樓是分開的，製造大樓內設有阿什維爾製造工廠和位於同一地點的某些辦公室。此次事件並未對我們的運營造成重大影響。

Insurance proceeds received in excess of expenses incurred through April 30, 2023, a net total of $1.7 million is included in other income expense net as a gain on insurance proceeds received for damage to property and equipment on our condensed consolidated statement of operations. To the extent we incur expenses in future periods to restore, repair or replace damaged assets, we may recognize offsetting losses in those future periods. At this time, we do not expect future restoration and repair costs to exceed any insurance proceeds.

截至 2023 年 4 月 30 日，收到的保險收益超過發生的費用的淨額為 170 萬美元，計入其他收入支出淨額，作為我們的簡明合併運營報表中因財產和設備損壞而收到的保險收益的收益。如果我們在未來期間發生恢復、修理或更換受損資產的費用，我們可能會在未來期間確認抵消損失。目前，我們預計未來的恢復和維修費用不會超過任何保險收益。

As of April 30, 2023, we had outstanding borrowings of $8 million on our revolver and $5 million in available credit. We also had outstanding loan balances of $4.4 million under our real estate term loans.

截至 2023 年 4 月 30 日，我們的左輪手槍未償還借款為 800 萬美元，可用信貸為 500 萬美元。我們的房地產定期貸款項下還有 440 萬美元的未償還貸款餘額。

Now with that, I'll turn the call back over to Neil.

現在，我將把電話轉回給尼爾。

Thank you, Tracy. And now if any analysts or institutional investors have questions, we are happy to answer them. Shelby, if you could please indicate the instructions for our participants to call in any questions they may have, I would appreciate it. Again, we are only taking live questions from analysts and institutional investors.

謝謝你，特雷西。現在，如果任何分析師或機構投資者有疑問，我們很樂意回答。謝爾比，如果您能指出我們的參與者提出任何問題的說明，我將不勝感激。再次強調，我們只接受分析師和機構投資者的現場提問。

(Operator Instructions) And it appears that we have no questions at this time. I will now turn the program back over to Neil Wilkin.

（操作員說明）目前看來我們沒有任何問題。我現在將把這個程序轉回給尼爾·威爾金。

Thank you, Shelby. Aaron, are there any questions that have been submitted by individual investors in advance of today's call?

謝謝你，謝爾比。亞倫，個人投資者在今天的電話會議之前是否提出了任何問題？

Yes, Neil, I do have a few questions submitted in advance of the call by noninstitutional shareholders. The first -- go ahead.

是的，尼爾，我確實有一些非機構股東在電話會議之前提交的問題。第一個——繼續。

I was going to say if you go ahead and read them, we will answer those questions as best we can.

我想說的是，如果您繼續閱讀它們，我們將盡力回答這些問題。

Wonderful. As a provider of integrated fiber connectivity solutions, how would you characterize the competitive environment you find yourself in? And how has that environment changed over the past few years?

精彩的。作為集成光纖連接解決方案的提供商，您如何描述自己所處的競爭環境？過去幾年環境發生了怎樣的變化？

Well, the fiber optic and also copper cabling and connectivity industry has always been competitive. And we do focus on adjusting to changes in our markets. We have been able to successfully compete with much larger competitors in our markets -- in the markets we target, and we believe that continues to be the case.

嗯，光纖以及銅纜佈線和連接行業一直具有競爭力。我們確實專注於適應市場的變化。我們已經能夠在我們的市場上——在我們的目標市場上——與更大的競爭對手成功競爭，而且我們相信這種情況將持續下去。

And so we haven't been seeing a change there. We have done this for years by offering top-tier fiber optic and copper cable and connectivity solutions. This has enabled us to drive sales growth and coupled with our strong operating leverage enables us also to achieve strong margins.

所以我們沒有看到那裡有任何變化。多年來，我們通過提供頂級光纖和銅纜及連接解決方案來做到這一點。這使我們能夠推動銷售增長，再加上我們強大的運營槓桿，使我們能夠實現強勁的利潤率。

Could you comment on demand from infrastructure end markets such as water treatment and wastewater plants as well as the energy sector?

您能否評論一下水處理和污水處理廠以及能源行業等基礎設施終端市場的需求？

While we don't like to comment on specific markets, we target for competitive reasons, but OCC is seeing additional infrastructure and market opportunities. Many of the infrastructure end markets are directly in our wheelhouse and OCC has solutions specifically designed to benefit our customers as well as installers and end users.

雖然我們不想評論特定市場，但我們的目標是出於競爭原因，但 OCC 看到了更多的基礎設施和市場機會。許多基礎設施終端市場都直接在我們的掌控之中，OCC 擁有專門設計的解決方案，旨在使我們的客戶以及安裝人員和最終用戶受益。

On your website, you show that OCC will soon offer manufacturing and substantial industrial solutions. Could you clarify whether OCC currently provides its customers with such systems?

在您的網站上，您表明 OCC 將很快提供製造和實質性工業解決方案。您能否澄清一下 OCC 目前是否向其客戶提供此類系統？

Sure. I'm a little unclear as to whether or not it's -- the question is talking about different market segments or not, but -- we do offer a wide range of specialty in harsh environment solutions, including for manufacturing, industrial and also substation applications.

當然。我有點不清楚是否——問題是在談論不同的細分市場，但是——我們確實提供了惡劣環境解決方案的廣泛專業知識，包括製造、工業和變電站應用。

Okay. Last question, could you provide an update on the availability of skilled labor?

好的。最後一個問題，您能否提供有關熟練勞動力可用性的最新信息？

Yes. So as I had mentioned earlier, the availability of skilled labor has improved for us. This is a trend we began to see in the latter part of last year. And we have benefited this year from the new members who have joined our team, particularly our manufacturing team, who have also completed their training.

是的。正如我之前提到的，我們的熟練勞動力的可用性有所改善。這是我們去年下半年開始看到的趨勢。今年我們受益於加入我們團隊的新成員，特別是我們的製造團隊，他們也完成了培訓。

Great. That was the last question.

偉大的。這是最後一個問題。

Okay. Thank you, Aaron. I would like to thank everyone for listening to our second quarter of fiscal year 2023 conference call today. As always, we appreciate your time and your interest in Optical Cable Corporation. Thank you.

好的。謝謝你，亞倫。我要感謝大家今天收聽我們 2023 財年第二季度的電話會議。一如既往，我們感謝您的寶貴時間以及您對 Optical Cable Corporation 的興趣。謝謝。

That concludes today's teleconference. Thank you for your participation. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。