ROANOKE, Va., March 16, 2020 /PRNewswire/ -- Optical Cable
Corporation (Nasdaq GM: OCC) ("OCC®" or the "Company")
today announced financial results for its first quarter ended
January 31, 2020.
First Quarter 2020 Financial Results
Consolidated net sales were $12.9
million in the first quarter of fiscal year 2020, compared
to net sales of $16.8 million in the
first quarter of fiscal year 2019. The year-over-year
decrease in net sales was mostly due to a number of large orders
from one customer in the wireless carrier market in the first
quarter of fiscal year 2019 that did not recur at the same levels
in the first quarter of fiscal year 2020. Net sales to this
customer decreased $2.3 million in
the first quarter of fiscal 2020, as compared to the first quarter
of fiscal 2019. Historically, net sales to this customer have
been volatile from quarter to quarter and from year to year.
Gross profit was $2.4 million in
the first quarter of fiscal year 2020 compared to gross profit of
$3.6 million in the same period last
year, a decrease of 32.5%. Gross profit margin, or gross
profit as a percentage of net sales, was 18.7% in the first quarter
of fiscal year 2020 compared to 21.3% for the same period in fiscal
year 2019. The lower gross profit margin in the first quarter
of fiscal year 2020 was substantially impacted by fixed production
costs being spread over lower total sales when compared to the
first quarter of fiscal 2019, offsetting cost reductions and
significant production throughput and efficiency improvements
achieved principally in the Company's Roanoke production facility.
SG&A expenses decreased 28.8% to $4.8
million during the first quarter of fiscal year 2020,
compared to $6.8 million for the
first quarter of fiscal year 2019. The decrease in SG&A
expenses was primarily the result of decreases in employee related
costs, but was also positively impacted by other cost reduction
initiatives.
For the first quarter of fiscal year 2020, OCC recorded a net
loss of $2.6 million, or $0.35 per basic and diluted share, compared to a
net loss of $3.3 million, or
$0.44 per basic and diluted share,
for the first quarter of fiscal year 2019.
During the first quarter of fiscal year 2020, OCC achieved net
cash provided by operating activities of $544,000, while reducing accounts payable and
accrued expenses, including accrued compensation and payroll taxes,
by $1.5 million, ending the first
quarter with a current ratio of 2.1 to 1.0.
Credit Agreement Modified
OCC's Credit Agreement with Pinnacle Bank was amended on
March 10, 2020, subsequent to the
Company's fiscal quarter end. OCC's credit facilities under
the Credit Agreement consist of a $6.5
million Revolver and real estate term loans. The purpose of
the amendment was to (i) remove the current ratio financial
covenant for the fiscal quarters ended January 31, 2020 and ending April 30, 2020 and (ii) remove the total
liabilities to tangible net worth ratio for the fiscal quarters
ended January 31, 2020 and ending
April 30, 2020. OCC also
reaffirmed it would reduce the aggregate outstanding balance under
the Credit Agreement by $200,000 on
or before April 15, 2020 by reducing
the outstanding principal balances on the real estate term
loans. OCC also affirmed that it would continue to engage in
good faith to negotiate a letter of intent or similar expression of
interest to refinance the Revolver by March
31, 2020 and enter into a financing commitment letter,
similar equity commitment or combination thereof relating to the
financing by May 1, 2020 with a
closing planned on or before June 30,
2020.
Management's Comments
Neil Wilkin, President and Chief
Executive Officer of OCC, said, "Despite the volatility of the
markets, our results for the first quarter reflect stability in
certain of our core markets. During the quarter, we made
progress on cost reduction initiatives and achieved increased
production throughput and efficiency improvements at our
Roanoke production facility. While
our fixed costs and operating leverage offset these efforts during
the quarter, we expect to realize the benefits of these initiatives
as sales increase. Looking ahead, we are seeing increases in
sales activity in certain of our markets so far, and we are
continuing to execute on our strategies to aggressively drive sales
and increase operational efficiency."
Mr. Wilkin continued, "Our markets remain challenging and, like
others around the world, we are closely monitoring the impact of
the global coronavirus pandemic. That said, we are focused on what
we can control, which includes continuing to innovate and provide
comprehensive solutions that meet the evolving needs of our broad
and diverse customer base. We remain committed to enhancing
operational excellence to deliver enhanced value to
shareholders."
Conference Call Information
As previously announced, OCC will host a conference call today,
March 16, 2020, at 10:00 a.m. Eastern Time. Individuals wishing to
participate in the conference call should call (866) 610-1072 in
the U.S. or (973) 935-2840 internationally, passcode 7564144. For
interested individuals unable to join the call, a replay will be
available through Monday, March 30,
2020 by dialing (800) 585-8367 or (404) 537-3406, passcode
7564144. 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 www.occfiber.com.
Company Information
Optical Cable Corporation ("OCC®") is a leading
manufacturer of a broad range of fiber optic and copper data
communication cabling and connectivity solutions primarily for the
enterprise market and various harsh environment and specialty
markets (collectively, the non-carrier markets) and also the
wireless carrier market, offering integrated suites of high quality
products which operate as a system solution or seamlessly integrate
with other providers' offerings.
OCC® is internationally recognized for pioneering
innovative fiber optic and copper communications technologies,
including fiber optic cable designs for the most demanding
environments and applications, copper connectivity designs to meet
the highest data communication industry standards, as well as a
broad product offering built on the evolution of these fundamental
technologies.
OCC uses its expertise to deliver cabling and connectivity
products and integrated solutions that are best suited to the
performance requirements of each end-user's application. And,
OCC's solutions offerings cover a broad range of applications—from
commercial, enterprise network, datacenter, residential and campus
installations to customized products for specialty applications and
harsh environments, including military, industrial, mining,
petrochemical and broadcast applications, as well as for the
wireless carrier market.
Founded in 1983, OCC is headquartered in Roanoke, Virginia with offices, manufacturing
and warehouse facilities located in Roanoke, Virginia, near Asheville, North Carolina and near
Dallas, Texas. OCC's
facilities are ISO 9001:2015 registered and its Roanoke and Dallas facilities are MIL-STD-790G
certified.
Optical Cable Corporation™, OCC®,
Procyon®, Superior Modular Products™, SMP Data
Communications™, Applied Optical Systems™, and associated logos are
trademarks of Optical Cable Corporation.
Further information about OCC® is available at
www.occfiber.com.
FORWARD-LOOKING INFORMATION
This news release by Optical Cable Corporation and its
subsidiaries (collectively, the "Company" or "OCC") may contain
certain forward-looking information within the meaning of the
federal securities laws. The forward-looking information may
include, among other information, (i) statements concerning our
outlook for the future, (ii) statements of belief, anticipation or
expectation, (iii) future plans, strategies or anticipated events,
and (iv) similar information and statements concerning matters that
are not historical facts. Such forward-looking information is
subject to known and unknown variables, uncertainties,
contingencies and risks that may cause actual events or results to
differ materially from our expectations, and such known and unknown
variables, uncertainties, contingencies and risks may also
adversely affect Optical Cable Corporation and its subsidiaries,
the Company's future results of operations and future financial
condition, and/or the future equity value of the Company. A
partial list of such variables, uncertainties, contingencies and
risks that could cause or contribute to such differences from our
expectations or that could otherwise adversely affect Optical Cable
Corporation and its subsidiaries is set forth in Optical Cable
Corporation's quarterly and annual reports filed with the
Securities and Exchange Commission ("SEC") under the heading
"Forward-Looking Information." OCC's quarterly and annual
reports are available to the public on the SEC's website at
http://www.sec.gov. In providing forward-looking information,
the Company expressly disclaims any obligation to update this
information, whether as a result of new information, future events
or otherwise except as required by applicable laws and
regulations.
(Financial Tables Follow)
OPTICAL CABLE
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(thousands, except
per share data)
|
(unaudited)
|
|
|
Three Months
Ended
January 31,
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
Net sales
|
$
12,887
|
|
$
16,751
|
|
Cost of goods
sold
|
10,483
|
|
13,188
|
|
|
|
|
|
|
Gross
profit
|
2,404
|
|
3,563
|
|
|
|
|
|
|
SG&A
expenses
|
4,824
|
|
6,774
|
|
Royalty expense,
net
|
18
|
|
─
|
|
Amortization of
intangible assets
|
10
|
|
10
|
|
|
|
|
|
|
Loss from
operations
|
(2,448)
|
|
(3,221)
|
|
|
|
|
|
|
Interest expense,
net
|
(137)
|
|
(116)
|
|
Other, net
|
(2)
|
|
─
|
|
Other expense,
net
|
(139)
|
|
(116)
|
|
|
|
|
|
|
Loss before income
taxes
|
(2,587)
|
|
(3,337)
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
5
|
|
(27)
|
|
|
|
|
|
|
Net loss
|
$
(2,592)
|
|
$
(3,310)
|
|
|
|
|
|
|
Net loss per
share:
|
|
|
|
|
Basic and diluted
|
$
(0.35)
|
|
$
(0.44)
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
Basic and diluted
|
7,322
|
|
7,537
|
|
OPTICAL CABLE
CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEET DATA
|
(thousands)
|
(unaudited)
|
|
|
January 31,
2020
|
|
October 31,
2019
|
Cash
|
$
694
|
|
$
537
|
Trade accounts
receivable, net
|
6,799
|
|
10,348
|
Inventories
|
17,180
|
|
18,096
|
Other current
assets
|
426
|
|
399
|
Total current
assets
|
25,099
|
|
29,380
|
Non-current
assets
|
11,566
|
|
10,727
|
Total assets
|
$
36,665
|
|
$
40,107
|
|
|
|
|
Current
liabilities
|
$
11,918
|
|
$
13,627
|
Non-current
liabilities
|
6,066
|
|
5,241
|
Total liabilities
|
17,984
|
|
18,868
|
Total shareholders'
equity
|
18,681
|
|
21,239
|
Total liabilities and
shareholders' equity
|
$
36,665
|
|
$
40,107
|
AT THE
COMPANY:
|
|
|
Neil
Wilkin
|
Tracy
Smith
|
Chairman, President
& CEO
|
Senior Vice President
& CFO
|
(540)
265-0690
|
(540)
265-0690
|
investorrelations@occfiber.com
|
investorrelations@occfiber.com
|
|
AT JOELE FRANK,
WILKINSON BRIMMER KATCHER:
|
|
|
Andrew
Siegel
|
Aaron
Palash
|
(212) 355-4449 ext.
8627
|
(212) 355-4449 ext.
8603
|
occ-jfwbk@joelefrank.com
|
occ-jfwbk@joelefrank.com
|
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SOURCE Optical Cable Corporation