OPTICAL CABLE CORP

Letter from the CEO

Dear Shareholders of Optical Cable Corporation (OCC®):

Challenges Encountered and Challenges Overcome

When I wrote to you one year ago, OCC’s net sales were challenged by industry-wide macroeconomic pressures which began toward the end of fiscal year 2023 and became more persistent during fiscal year 2024—impacting many of our targeted markets, particularly our enterprise markets and certain of our specialty markets, including the wireless carrier market.

I am pleased to share that, as we end fiscal 2024 and look ahead to 2025 and beyond, the sun is starting to peek through. While OCC net sales for fiscal year 2024 decreased 7.6% to $66.7 million, compared to 2023,**weakness across our industry has begun to subside.Thanks **to strong execution of our growth strategies and our deeply entrenched market position, OCC has experienced a relatively low decline in revenues during this period compared to some of our peers.

Importantly, at the same time, we believe we have also been able to position OCC to capitalize on the opportunities ahead—ready and able to hit the ground running. Preparation poised to meet opportunity.

Returning to Growth

OCC achieved growth by all measures during the fourth quarter of fiscal year 2024—net sales, gross profit and gross profit margin (gross profit as a percentage of net sales), as well as income from operations, and earnings per share all increased when compared to the fourth quarter of fiscal year 2023.

Weincreased net sales 12.4% during the fourth quarter of fiscal year 2024, compared to the same period in fiscal 2023, and sequentially increased net sales 20.1%, compared to the third quarter of fiscal 2024. Additionally, during fiscal year 2024, we grew net sales on a sequential basis since the first quarter of fiscal 2024.

OCC Net Sales by Quarter

fiscal years 2021-2024 (in 000s)

OCC’s increase in net sales and positive earnings during the fourth quarter of fiscal 2024 demonstrate the disproportionallypositive impact of OCC’s significant operating leverage on profitability as production volumes increase. As OCC’s net sales grow, our gross profit, gross profit margin and profitability also tend to increase at faster rates than net sales.

Well-Positioned to Benefit from Strong Operating Leverage

Operating Leverage—Manufacturing

During fiscal year 2024, gross profit was $18.2 million, a decrease of 18.3% compared to fiscal 2023, while net sales decreased 7.6% in fiscal 2024 compared to fiscal 2023.

During the fourth quarter of fiscal year 2024, OCC achieved a 33.5% gross profit margin and a disproportionateincrease of 68.6% in gross profit as net sales increased 12.4% in both cases compared to the same period in fiscal year 2023.

OCC Manufacturing Operating Leverage by Quarter

**Gross Profit Margin % and Net Sales dollars (**fiscal years 2023-2024)

While gross profit and gross profit margins are also impacted by product mix, as OCC’s net sales and production volumes increase, substantial fixed manufacturing costs are spread over higher sales volumes, and, importantly, manufacturing efficiencies also tend to increase—particularly for fiber optic cable production.

A key differentiator between OCC and our peers was our decision to forego implementing reductions in production personnel during the periods of lower production volumes. In taking this disciplined approach, we considered our expectations of our future growth opportunities along with the time and resources necessary to train new personnel to the level we, and our customers, expect. In staying loyal to our principles and our people in the leaner periods, OCC is ideally positioned to hit the ground running and capture the opportunities ahead. This bore true in the fourth quarter of 2024 when we** benefited from this disciplined and forward-thinking approach**—** something from which we expect to continue benefitting from in fiscal year 2025 and beyond.**

Operating Leverage—Selling, General & Administrative Expenses

SG&A expenses increased 1.3% to $21.5 million during fiscal 2024, compared to $21.2 million during fiscal 2023. SG&A expenses as a percentage of net sales were 32.2% in fiscal 2024, and 29.4% in fiscal 2023.

OCC SG&A Operating Leverage by Quarter

SG&A Expenses as % of Net Sales dollars (fiscal years 2023-2024)

OCC incurs significant SG&A expenses to maintain and build our competitive strengths, capabilities, and presence in our targeted markets. We also incur significant public company costs included in SG&A. Many of these expenses are relatively fixed costs rather than varying with net sales—with OCC benefiting from our SG&A expense operating leverage as net sales increase.

We diligently continue to focus on operating as efficiently as possible and controlling expenses, including SG&A expenses, while recognizing the impact of SG&A expense operating leverage on our results.

Looking Forward to Fiscal Year 2025

**Looking ahead to fiscal year 2025, we see indications of growing strength in our targeted markets and among our customer base.**We also see potential opportunities to expand our product offerings.

Moving forward, we are focused on driving growth, operating efficiently, and identifying and capturing additional opportunities to ensure we are executing for our customers and end-users.

As we drive net sales, we are confident our significant operating leverage—with respect to manufacturing and SG&A costs—enables us to generate increased profitability and long-term value for our shareholders.

OCC’s core strengths and capabilities enable us to offer top-tier products and application solutions and to compete successfully against much larger competitors. OCC is committed to leveraging our core strengths and capabilities, which include:

I am proud of the OCC team’s accomplishment this past year and grateful for their hard work—particularly given the macroeconomic weakness impacting our industry.

We remain committed to identifying growth opportunities and executing our strategies and initiatives to grow and create long-term value for our shareholders.

Thank you for your continued support.

Sincerely,

Neil D. Wilkin, Jr.

Chairman of the Board, President and Chief Executive Officer

December 23, 2024