Optical Cable (OCC) Q1 2026 Earnings Transcript

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DATE

Tuesday, March 10, 2026 at 11 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Neil Wilkin
• Senior Vice President and Chief Financial Officer — Tracy Smith
• Director of Investor Relations — Caroline Felix

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TAKEAWAYS

• Net Sales -- $16.4 million, up 4.4%, attributed to increased demand across enterprise and specialty markets.
• Gross Profit -- $5.4 million, increasing 16.1%, resulting in a gross profit margin of 32.7% versus 29.4% a year ago.
• Sales Order Backlog and Forward Load -- $10.4 million, up over 50% compared to the prior-year first quarter, and increasing from $7.3 million at fiscal 2025 year-end.
• Net Loss -- $398,000, or $0.05 per basic and diluted share—narrower than the $1.1 million, or $0.14 per share, net loss last year.
• International Sales -- Net sales to customers outside the U.S. rose 18%, while domestic sales showed a slight increase.
• SG&A Expenses -- $5.6 million, a modest increase from $5.5 million, with employee, contracted sales personnel, and shipping costs cited as drivers; as a percentage of sales, SG&A declined to 33.8% from 34.7%.
• Data Center Market Activity -- Leaders indicated "significant and growing activity in customer requests for quotes in the data center sector, particularly in January, and that activity is continuing and growing."
• Lytera Collaboration -- Management stated the partnership with Lytera is generating new commercial opportunities, and Lytera products, such as rollable ribbon fiber optic cable and InvisiLight, are now included in the company's solution set.
• Hiring Trends -- Increased hiring in operations, including night-shift positions, is intended to meet anticipated personnel needs and accommodate the expected higher volumes.

SUMMARY

Executives highlighted continued momentum based on expanding sales order backlog and increased quote activity, especially for data center solutions, as key drivers for projected revenue growth in the remainder of the year. The Lytera collaboration is expanding the product portfolio in both cabling and connectivity, enhancing the company’s market reach and pipeline. Strict cost control and operating leverage were cited as contributors to margin improvements despite a modest absolute increase in SG&A. Management reaffirmed their expectation for stronger performance in the second half of the fiscal year, supported by backlog growth, new market demand signals, and ongoing product innovation.

• Management referenced "seasonality impact" typically affecting the first half, but noted this period is seeing momentum in targeted markets, particularly data centers.
• When asked about project delays, Wilkin responded, "Right now, I cannot think of anything offhand that is being delayed at the moment, but that always can happen in any quarter. We do not expect that to be impacting our results this year."
• Smith noted, "we are not giving revenue guidance for fiscal year 2026," but emphasized a growing sales order backlog as a positive signal.
• Executives stated the sales cycle for the data center market, "particularly Tier 2," is longer than typical cycles, which may affect recognition of new opportunities.

INDUSTRY GLOSSARY

• Sales Order Backlog and Forward Load: The combined total value of unfulfilled customer orders and committed future deliveries, tracked as an indicator of revenue visibility.
• Tier 2 Data Center: Refers to mid-size data centers serving regional or specialized needs, typically with moderate redundancy and a smaller footprint than hyperscale facilities.
• InvisiLight: A Lytera-branded fiber optic solution designed for minimally invasive installations, particularly suited for buildings where conventional passive optical LAN installations are challenging.
• Rollable Ribbon Fiber Optic Cable: A high-density cable structure permitting flexible installation and increased fiber counts, especially beneficial in data center environments.

Full Conference Call Transcript

Caroline Felix: 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 Optical Cable Corporation, and Tracy Smith, Senior Vice President and Chief Financial Officer. Before we begin, I would 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 at www.occfiber.com as well as today’s call. With that, I will turn the call over to Neil Wilkin. Neil, please begin.

Neil Wilkin: Thank you, Caroline, and good morning, everyone. I will begin the call today with a few opening remarks. Tracy will then review the first quarter results for the three-month period ended January 31, 2026, in additional detail. After Tracy’s remarks, we will answer as many 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. Optical Cable Corporation is off to a strong start in fiscal year 2026.

During the first quarter, we delivered net sales and gross profit growth, largely driven by increased demand across our enterprise and specialty markets and the positive impact of our operating leverage. During the first quarter of 2026, net sales increased 4.4% and gross profit increased 16.1% compared to the same period last fiscal year, and gross profit margin increased to 32.7%. Additionally, our sales order backlog and forward load increased more than 50% to $10,400,000 as of the end of the first quarter when compared to the same prior fiscal year period, and we expect to continue to build on this momentum.

While seasonality typically impacts the first half of our fiscal year, during our second quarter, we are seeing growing momentum in our targeted markets and, in particular, in our data center market. We are confident that Optical Cable Corporation is well positioned for growth during fiscal year 2026. As always, we remain focused on disciplined execution to drive value for our customers and shareholders. With that, I will turn the call over to Tracy, who will provide additional detail on our 2026 financial results.

Tracy Smith: Thank you, Neil. Consolidated net sales for the first quarter of 2026 increased 4.4% to $16,400,000 compared to $15,700,000 for the same period last year. During the first quarter of 2026, we experienced an increase in net sales in both our enterprise and specialty markets compared to the same period last year, as we continue to see general market improvements in our markets and strength in our severe-duty market. Net sales to customers outside of the United States increased 18%, and net sales to our customers in the United States increased slightly in the first quarter of 2026 compared to the same period last year.

As Neil referenced, our sales order backlog and forward load increased to $10,400,000 compared to $6,000,000 as of the end of our first quarter of 2025. Our sales order backlog and forward load also increased when compared to $7,300,000 as of our 2025 fiscal year-end. Turning to gross profit, our gross profit increased 16.1% to $5,400,000 in the first quarter of 2026 compared to $4,600,000 for the same period last year. Gross profit margin, or gross profit as a percentage of net sales, increased to 32.7% compared to 29.4% in the same prior-year period. Gross profit margin for the first quarter of 2026 was positively impacted by higher volumes and the resulting positive impact of our strong operating leverage.

Our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may vary based on changes in product mix. SG&A expenses increased to $5,600,000 in the first quarter of 2026 compared to $5,500,000 for the same period last year, primarily as a result of increases in employee and contracted sales personnel-related costs and shipping costs. SG&A expenses as a percentage of net sales were 33.8% in the first quarter of 2026 compared to 34.7% in the first quarter of 2025.

Optical Cable Corporation recorded a net loss of $398,000, or $0.05 per basic and diluted share, for the first quarter of 2026 compared to a net loss of $1,100,000, or $0.14 per basic and diluted share, for the first quarter of 2025. With that, I will turn the call back over to you, Neil.

Neil Wilkin: Thank you, Tracy. As is our normal practice, we are going to first answer questions from individual investors that have been submitted in advance of today’s call. Caroline, could you go through the questions with us, and we will respond?

Caroline Felix: Yes. Thanks, Neil. We will get started. The first question is, 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? Any major changes or updates?

Neil Wilkin: We continue to be optimistic about the data center opportunities, particularly in the multi-tenant data center and enterprise data center sectors. Optical Cable Corporation 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 fiscal year 2026. We believe this momentum will continue and result in increased sales in our targeted sectors of the data center market as fiscal year 2026 progresses.

Caroline Felix: Thanks, Neil. Next question is, in terms of outlook into 2026 in general, do you feel more or less optimistic now than in Q4?

Neil Wilkin: I would like to say that we continue to be very optimistic about potential sales growth this year. As you all know, we typically see seasonality impact our results during the first half of a given fiscal year, particularly during the first quarter. However, based on the fact that our sales order backlog and forward load has increased more than 50% to $10,400,000 as of the end of the first fiscal quarter of 2026, when compared to the same period last year, and that the activity and request for quotes we are seeing in our targeted market sectors, including the data center market sector, have been increasing, we continue to expect sales growth during fiscal year 2026.

Caroline Felix: Thanks, Neil. Next question. In the past, you have been commenting on improvements in Optical Cable Corporation end markets. Have these improvements continued? Can you comment on new and emerging trends or risks?

Neil Wilkin: As you all know, during fiscal year 2025, net sales increased 9.5% and gross profits increased 24.1% compared to the prior fiscal year, which we believe reflects the improvements we saw in many of our targeted markets last year, particularly during the second half of fiscal year 2025. So far, we continue to see growth opportunities in many of our targeted market sectors, including, in particular, the data center market during fiscal year 2026. We believe this will continue to be the case, and this will positively impact Optical Cable Corporation’s revenue growth in fiscal year 2026.

Caroline Felix: Thanks, Neil. Next question. Can you please provide an update on progress of the Lytera collaboration?

Neil Wilkin: Sure. As we have mentioned before, Optical Cable Corporation has worked with Lytera, formerly known as OFS, for decades. The strategic collaboration with Lytera announced last year was built on that long-standing relationship and the respect each team has for the other. The Optical Cable Corporation and Lytera teams work well together and complement each other, enabling both companies to benefit from this important relationship, and we believe we are seeing the benefit of that as we move into fiscal year 2026.

Caroline Felix: Thanks, Neil. Next question. 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?

Neil Wilkin: Optical Cable Corporation and Lytera have assembled product sets that we believe provide exceptional solutions to meet our customer needs, both on the cabling side and on the connectivity side. Speaking of Lytera products, they have a number of industry-leading product designs that are now included in Optical Cable Corporation’s product solutions offering. A couple of examples include Lytera’s rollable ribbon fiber optic cable, which is particularly well suited for data center applications. Additionally, Lytera’s InvisiLight product solutions are particularly well suited for installations of passive optical LAN technology in existing buildings where traditional passive optical LAN installations are more challenging.

Of course, Lytera and Optical Cable Corporation are both known for innovative product solutions and the development of new product solutions, which I would expect to continue to be the case.

Caroline Felix: Thanks, Neil. Next question is, 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?

Tracy Smith: Optical Cable Corporation generally does not provide specifics regarding Optical Cable Corporation’s individual targeted market sectors. That said, during the first quarter, Optical Cable Corporation saw increases in quotes and customer orders in the data center market sector, particularly in January. We believe this activity will continue to grow this year and will result in greater data center market sector revenues during the remainder of fiscal year 2026.

Caroline Felix: Thanks, Tracy. Next question is, have you seen any interest regarding a potential acquisition of Optical Cable Corporation by larger players, given that many of the larger players urgently need increased capacity?

Neil Wilkin: Caroline, as you might expect, we are unable to comment on whether or not there has been any such interest.

Caroline Felix: Thanks, Neil. Next question. Will you ever have an Analyst Day, perhaps with an investor deck?

Tracy Smith: Optical Cable Corporation has given presentations to analysts in the past. However, as a small micro-cap company, Optical Cable Corporation does not have any analyst coverage at the moment.

Caroline Felix: Thanks, Tracy. Next question. I have 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?

Tracy Smith: Optical Cable Corporation currently is hiring in our operations. We have been hiring to meet what we believe will be our personnel needs this fiscal year and recognizing the time it takes to train new manufacturing personnel. Optical Cable Corporation is fortunate to have skilled long-term employees. Of course, Optical Cable Corporation does have some personnel turnover as well that results in open positions. However, we are proud that Optical Cable Corporation tends to have lower personnel turnover than other companies.

Caroline Felix: Thanks, Tracy. Next question. When do you think it is possible to start generating more revenue from the Lytera collaboration? Can you give us an idea on how this might change current revenue rate?

Tracy Smith: Working with Lytera has already begun to generate more opportunities, and we believe this will continue and contribute to revenue growth in fiscal year 2026 and beyond.

Caroline Felix: Thank you. Next question is, can you give more color on the Lytera collaboration and how you ended up at 7% for a share purchase? Do they want to buy more?

Neil Wilkin: It would not be appropriate for me to comment more on the Lytera collaboration beyond what Optical Cable Corporation and Lytera have already disclosed. I would like to say that we think very highly of Lytera and the Lytera team, and we believe their investment in Optical Cable Corporation reflects Lytera’s confidence in our business and our strong collaboration with them. I will also say that I believe that the Lytera–Optical Cable Corporation collaboration is benefiting both companies and will continue to do so.

Caroline Felix: Thanks, Neil. Next question. Can you comment on demand signals or expand on backlog and the Tier 2 data center sales cycle? Can you give an idea on the sales cycle as it might pertain to the Lytera collaboration activity and new revenue stream?

Neil Wilkin: First, the Optical Cable Corporation team stays close to customers and others that impact opportunities on a daily basis, and that allows us to see what demand signals are happening in the marketplace and provides us insight and a good sense of market dynamics. Also, the sales cycle tends to be longer for data center markets, particularly Tier 2, than the sales cycle for Optical Cable Corporation’s typical sales. We also believe that the strategic collaboration is benefiting Optical Cable Corporation and Lytera and generating additional opportunities, which we believe will continue to grow this fiscal year.

Caroline Felix: Thank you. Next question is, in the past, you had mentioned you expect the second half to be stronger than the first half. Is this still the case?

Tracy Smith: Yes. As we have mentioned earlier on this call, we do expect the remainder of fiscal 2026 to show further growth, including the second half of the fiscal year.

Caroline Felix: Our last presubmitted question this morning is, at what point do you expect the growth to inflect in 2026?

Tracy Smith: While we are not giving revenue guidance for fiscal year 2026, either for the year or by quarter, I would point out that we have seen a growing sales order backlog and forward load. Our sales order backlog and forward load was $10,400,000 at the end of the first quarter of 2026, an increase of more than 50% when compared to the same period last year.

Caroline Felix: Thanks, both. That was the last presubmitted question.

Neil Wilkin: Thank you, Caroline. And now, Angela, we will take any questions from analysts and institutional investors that may have questions. We ask that you please limit yourself to one question and one follow-up. Angela, if you could please indicate the instructions for our participants to call in any questions they may have, I would appreciate it. And, again, we are only taking live questions from analysts and institutional investors.

Tracy Smith: Thank you.

Operator: Press star one on your keypad. To leave the queue at any time, press two. We do ask that you limit yourself to one question and one follow-up. Once again, that is star one to ask a question. We will take our first question from Sergio Mascaro with Eden Discovery. Your line is now open.

Sergio Mascaro: Hey, guys. Thanks for taking our questions. Can you hear me well?

Neil Wilkin: Yes.

Sergio Mascaro: Okay, perfect. So the last call, you talked about some project delays. Can you update us about that?

Neil Wilkin: Yes. We had, I think, in the last quarter, maybe the quarter before that, mentioned that we had seen in the marketplace some projects that were being delayed, but that we did not believe that was affecting our overall results. Right now, I cannot think of anything offhand that is being delayed at the moment, but that always can happen in any quarter. We do not expect that to be impacting our results this year.

Sergio Mascaro: Okay, that is perfect. And my second and last question is that during the fiscal year 2025, the backlog was growing about 20%, but we did not see that translating into a revenue growth. Why is that?

Neil Wilkin: Well, the backlog is a measurement at any point in time. I think what we did see as it was growing last year was that we had increased sales 9.5% in total, and we saw significant strong sales in the third and fourth quarter of last year, and so I think that is consistent with that backlog growth. I think the fact that we have mentioned that we are seeing a larger sales order backlog at the end of the first quarter, and the fact that we are seeing more activity in quote requests in our markets, we believe that is a good signal for the rest of fiscal year 2026.

Operator: Thank you. And once again, if you would like to ask a question, please press star one on your keypad now. At this time, there are no further questions in queue. I will turn the meeting back to Neil Wilkin.

Neil Wilkin: Thank you, Angela. I would like to thank everyone for listening to our first quarter fiscal year 2026 conference call today. As always, we appreciate your time and your investment in Optical Cable Corporation. That is most appreciated. I also want to thank the members of the U.S. Armed Forces and be with them and think of them during this period of time. Thank you all.

Sergio Mascaro: Thank you.

Operator: This brings us to the end of today’s meeting. We appreciate your time and participation.

Tracy Smith: You may now disconnect.

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