OPTICAL CABLE CORP

Previous wording

The OCC team seeks to provide top-tier communication solutions by bundling all of our fiber optic and copper data communication product offerings into systems that are best suited for individual data communication needs and application requirements of our customers and the end-users of our systems.

Current wording

The OCC team strives to provide top-tier communication solutions that are well suited for the specific needs and application requirements of our customers and the end-users of our systems—leveraging our technical expertise and broad fiber optic and copper data communication product offerings.

Previous wording

Summary of Company Performance for First Quarter of Fiscal Year 2025

Current wording

Summary of Company Performance for Second Quarter of Fiscal Year 2025

Previous wording

Consolidated net sales for the first quarter of fiscal year 2025 increased 6.0% to $15.7 million, compared to net sales of $14.9 million for the same period last year. We experienced an increase in net sales in both our enterprise markets and specialty markets, including the wireless carrier market, during the first quarter of fiscal year 2025, compared to the same period last year, as we continue to see general market improvements in our industry and strength in our military markets.

Current wording

Consolidated net sales for the second quarter of fiscal year 2025 increased 8.9% to $17.5 million, compared to net sales of $16.1 million for the same period last year, and increased 11.5% compared to net sales of $15.7 million during the first quarter of fiscal year 2025. We experienced an increase in net sales in our specialty markets during the second quarter of fiscal year 2025, compared to the same period last year, while our enterprise markets were relatively stable. We continue to see general market improvements in our industry and strength in our military markets.

Previous wording

Net sales to customers outside of the United States increased 21.3% and net sales to customers in the United States increased 2.3% in the first quarter of fiscal year 2025, compared to the same period last year. We can experience fluctuations in sales from quarter to quarter in the various markets (both industries and geographies) in which we operate for various reasons.

Current wording

Net sales to customers outside of the United States increased 27.1% and net sales to customers in the United States increased 4.6% in the second quarter of fiscal year 2025, compared to the same period last year. We can experience fluctuations in sales from quarter to quarter in the various markets (both industries and geographies) in which we operate for various reasons.

Previous wording

At the end of the first quarter of fiscal year 2025, our sales order backlog/forward load has increased to $6.6 million when compared to $5.7 million as of October 31, 2024.

Current wording

At the end of the second quarter of fiscal year 2025, our sales order backlog/forward load increased to $7.2 million when compared to $6.6 million as of January 31, 2025, and $5.7 million as of October 31, 2024.

Previous wording

Our gross profit increased 24.6%, or $913,000, to $4.6 million in the first quarter of fiscal year 2025, compared to gross profit of $3.7 million in the first quarter of fiscal year 2024. Gross profit margin, or gross profit as a percentage of net sales, increased to 29.4% in the first quarter of fiscal year 2025, compared to 25.0% in the first quarter of fiscal year 2024, as we benefited from our operating leverage.

Current wording

Gross profit margin, or gross profit as a percentage of net sales, increased to 30.4% in the second quarter of fiscal year 2025, compared to 25.1% in the second quarter of fiscal year 2024, and compared to 29.4% for the first quarter of fiscal year 2025, as we benefited from our operating leverage.

Previous wording

Gross profit margin for the first quarter of fiscal 2025, when compared to the same period last year, was positively impacted by higher volumes, as fixed charges were spread over higher sales—the impact of operating leverage. Additionally, our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may vary based on changes in product mix.

Current wording

Gross profit margin for the second quarter of fiscal 2025, when compared to the same period last year, was positively impacted by higher volumes, as fixed charges were spread over higher sales—the impact of operating leverage. Additionally, our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may vary based on changes in product mix.

Previous wording

SG&A expenses increased to $5.5 million, or 7.2%, during the first quarter of fiscal year 2025, when compared to $5.1 million during the first quarter of fiscal year 2024. SG&A expenses as a percentage of net sales were 34.7% in the first quarter of fiscal year 2025, compared to 34.3% in the first quarter of fiscal year 2024.

Current wording

SG&A expenses increased to $5.7 million, or 8.0%, during the second quarter of fiscal year 2025, when compared to $5.3 million during the second quarter of fiscal year 2024. SG&A expenses as a percentage of net sales were 32.7% in the second quarter of fiscal year 2025, compared to 33.0% in the second quarter of fiscal year 2024. By comparison, SG&A expenses as a percentage of net sales were 34.7% during the first quarter of fiscal year 2025.

Previous wording

We recognized royalty expense, net of royalty income, totaling $7,000 during the first quarter of fiscal years 2025 and 2024. Royalty expense and/or income may fluctuate based on sales of related licensed products and estimates of amounts for non-licensed product sales, if any.

Current wording

We recognized royalty expense, net of royalty income, totaling $7,000 during the second quarter of fiscal years 2025 and 2024. Royalty expense and/or income may fluctuate based on sales of related licensed products and estimates of amounts for non-licensed product sales, if any.

Previous wording

We recognized $14,000 of amortization expense, associated with intangible assets, during the first quarter of fiscal years 2025 and 2024.

Current wording

We recognized $14,000 of amortization expense, associated with intangible assets, during the second quarter of fiscal years 2025 and 2024.

Previous wording

We reported a loss before income taxes of $1.1 million for the first quarter of fiscal year 2025, compared to $1.4 million for the first quarter of fiscal year 2024. The improvement was primarily due to the increase in gross profit of $913,000, partially offset by the increase in SG&A expenses of $366,000 and the decrease in gain on insurance proceeds for damage to property and equipment of $235,000.

Current wording

We reported a loss from operations of $429,000 for the second quarter of fiscal year 2025, compared to $1.3 million for the second quarter of fiscal year 2024. The improvement was primarily due to the increase in gross profit of $1.3 million, partially offset by the increase in SG&A expenses of $424,000.

Previous wording

Income tax expense totaled $12,000 in the first quarter of fiscal year 2025, compared to $7,000 in the first quarter of fiscal year 2024. Our effective tax rate was negative 1.1% for the first quarter of fiscal year 2025 and less than negative one percent for the first quarter of fiscal year 2024.

Current wording

Income tax expense totaled $15,000 in the second quarter of fiscal year 2025, compared to $7,000 in the second quarter of fiscal year 2024. Our effective tax rate was negative 2.2% for the second quarter of fiscal year 2025 and less than negative one percent for the second quarter of fiscal year 2024.

Previous wording

The increase in SG&A expenses during the first quarter of fiscal year 2025, compared to the same period last year, was primarily the result of increases in employee and contracted sales personnel-related costs totaling $177,000. Included in employee and contracted sales personnel-related costs are compensation costs and sales incentives. Compensation costs increased due to new hires, net of terminations, and certain rate increases. The increase in sales incentives was due to increased sales during the first quarter of fiscal year 2025.

Current wording

The increase in SG&A expenses during the first half of fiscal year 2025 compared to the same period last year was primarily the result of increases in employee and contracted sales personnel-related costs totaling $339,000 and shipping costs totaling $168,000. Included in employee and contracted sales personnel-related costs are compensation costs and sales incentives. Compensation costs increased due to new hires, net of terminations, and certain rate increases. Sales incentives and shipping costs increased primarily due to increases in net sales.

Previous wording

We recognized other expense, net in the first quarter of fiscal year 2025 of $243,000, compared to $19,000 in the first quarter of fiscal year 2024. Other expense, net for the first quarter of fiscal year 2025 is comprised primarily of interest expense and other miscellaneous items. The increase in other expense, net during the first quarter of fiscal year 2025 compared to the same period last year was primarily due to gain on insurance proceeds of $235,000 received in the first quarter of fiscal year 2024 that did not recur in the first quarter of fiscal year 2025.

Current wording

We recognized other expense, net in the first half of fiscal year 2025 of $497,000, compared to $311,000 in the first half of fiscal year 2024. Other expense, net for the first half of fiscal year 2025 is comprised of interest expense and other miscellaneous items. Other expense, net for the first half of fiscal year 2024 is comprised of interest expense and other miscellaneous items, partially offset by gain on insurance proceeds totaling $219,000.

Previous wording

Net loss for the first quarter of fiscal year 2025 was $1.1 million, or $0.14 per share, compared to $1.4 million, or $0.18 per share, for the first quarter of fiscal year 2024. This improvement was primarily due to the decrease in loss before income taxes of $323,000.

Current wording

Net loss for the first half of fiscal year 2025 was $1.8 million, or $0.23 per share, compared to $3.0 million, or $0.39 per share, for the first half of fiscal year 2024. This improvement was primarily due to the decrease in loss before income taxes of $1.2 million.

Previous wording

Total assets decreased $2.5 million, or 6.3%, to $37.8 million at January 31, 2025, from $40.4 million at October 31, 2024. This decrease was primarily due to a $2.7 million decrease in trade accounts receivable, net, largely the result of the decrease in net sales in the first quarter of fiscal year 2025 when compared to the fourth quarter of fiscal year 2024.

Current wording

Total assets decreased $1.3 million, or 3.2%, to $39.1 million at April 30, 2025, from $40.4 million at October 31, 2024. This decrease was primarily due to a $1.8 million decrease in trade accounts receivable, net, largely the result of the decrease in net sales in the second quarter of fiscal year 2025 when compared to the fourth quarter of fiscal year 2024.

Previous wording

Total liabilities decreased $1.4 million, or 7.4%, to $18.1 million at January 31, 2025, from $19.5 million at October 31, 2024. The decrease in total liabilities was primarily due to a decrease in note payable, revolver - current totaling $2.7 million, resulting from net repayments on our Revolver, partially offset by increases in accounts payable and accrued expenses totaling $1.1 million, resulting from the timing of certain vendor payments.

Current wording

Total liabilities increased $442,000, or 2.3%, to $20.0 million at April 30, 2025, from $19.5 million at October 31, 2024. The increase in total liabilities was primarily due to increases in accounts payable and accrued expenses totaling $2.1 million, resulting from the timing of certain vendor payments, partially offset by a decrease in note payable, revolver - current totaling $1.8 million, resulting from net repayments on our Revolver.

Previous wording

Total shareholders’ equity at January 31, 2025 decreased $1.1 million in the first quarter of fiscal year 2025 resulting primarily from a net loss of $1.1 million.

Current wording

Total shareholders’ equity at April 30, 2025 decreased $1.7 million in the first half of fiscal year 2025 resulting primarily from a net loss of $1.8 million, partially offset by share-based compensation, net of $79,000.

Previous wording

Our cash totaled $128,000 as of January 31, 2025, a decrease of $116,000 compared to $244,000 as of October 31, 2024. The decrease in cash for the three months ended January 31, 2025 primarily resulted from net cash used in financing activities of $2.7 million, resulting primarily from net repayments on our Revolver, and capital expenditures of $72,000, partially offset by cash provided by operating activities of $2.7 million.

Current wording

Our cash totaled $894,000 as of April 30, 2025, an increase of $650,000 compared to $244,000 as of October 31, 2024. The increase in cash for the six months ended April 30, 2025 primarily resulted from net cash provided by operating activities of $2.8 million, partially offset by net cash used in financing activities of $2.0 million, resulting primarily from net repayments on our Revolver, and capital expenditures of $140,000.

Previous wording

On January 31, 2025, we had working capital of $14.4 million compared to $15.5 million on October 31, 2024. The ratio of current assets to current liabilities as of January 31, 2025 was 2.1 to 1.0, compared to 2.0 to 1.0 as of October 31, 2024. The decrease in working capital was primarily due to the decrease in trade accounts receivable, net of $2.7 million and the increase in accounts payable and accrued expenses totaling $1.1 million, partially offset by the decrease in note payable, revolver – current totaling $2.7 million. The increase in the current ratio was primarily due to the fact that current assets decreased 8.4%, while current liabilities decreased 10.0%.

Current wording

On April 30, 2025, we had working capital of $13.9 million compared to $15.5 million on October 31, 2024. The ratio of current assets to current liabilities as of April 30, 2025 was 1.9 to 1.0, compared to 2.0 to 1.0 as of October 31, 2024. The decrease in working capital and in the current ratio was primarily due to the decrease in trade accounts receivable, net of $1.8 million and the increase in accounts payable and accrued expenses totaling $2.1 million, partially offset by the decrease in note payable, revolver – current totaling $1.8 million.

Previous wording

As of January 31, 2025 and October 31, 2024, we had outstanding loan balances under our Revolver totaling $5.7 million and $8.3 million, respectively. As of January 31, 2025 and October 31, 2024, we had other outstanding bank loan balances, excluding our Revolver, totaling $2.6 million.

Current wording

As of April 30, 2025 and October 31, 2024, we had outstanding loan balances under our Revolver totaling $6.5 million and $8.3 million, respectively. As of April 30, 2025 and October 31, 2024, we had other outstanding bank loan balances, excluding our Revolver, totaling $2.6 million.

Previous wording

Net cash provided by operating activities was $2.7 million in the first quarter of fiscal year 2025, compared to net cash used in operating activities of $261,000 for the first quarter of fiscal year 2024. Net cash provided by operating activities during the first quarter of fiscal year 2025 primarily resulted from certain adjustments to reconcile a net loss of $1.1 million to net cash provided by operating activities including depreciation and amortization of $212,000 and share-based compensation expense of $114,000. Additionally, the cash flow impact of decreases in trade accounts receivable, net of $2.8 million and the cash flow impact of increases in accounts payable and accrued expenses of $918,000 further contributed to net cash provided by operating activities. All of the aforementioned factors positively affecting cash provided by operating activities were partially offset by increases in inventories totaling $373,000.

Current wording

Net cash provided by operating activities was $2.8 million in the first half of fiscal year 2025, compared to $113,000 for the first half of fiscal year 2024. Net cash provided by operating activities during the first half of fiscal year 2025 primarily resulted from certain adjustments to reconcile a net loss of $1.8 million to net cash provided by operating activities including depreciation and amortization of $424,000 and share-based compensation expense of $186,000. Additionally, the cash flow impact of decreases in trade accounts receivable, net of $1.9 million and the cash flow impact of increases in accounts payable and accrued expenses of $2.1 million further contributed to net cash provided by operating activities. All of the aforementioned factors positively affecting cash provided by operating activities were partially offset by increases in inventories totaling $332,000.

Previous wording

Net cash used in operating activities during the first quarter of fiscal year 2024 primarily resulted from the cash flow impact of decreases in accounts payable and accrued expenses, including accrued compensation and payroll taxes, totaling $1.2 million and adjustments to reconcile a net loss of $1.4 million to net cash used in operating activities for the gain on insurance proceeds totaling $235,000, partially offset by decreases in the cash flow impact of trade accounts receivable, net totaling $1.3 million, decreases in inventories totaling $744,000 and certain other adjustments to reconcile a net loss of $1.4 million to net cash used in operating activities including depreciation and amortization of $213,000 and share-based compensation expense of $159,000.

Current wording

Net cash provided by operating activities during the first half of fiscal year 2024 primarily resulted from certain adjustments to reconcile a net loss of $3.0 million to net cash provided by operating activities including depreciation and amortization of $431,000 and share-based compensation expense of $251,000. Additionally, the cash flow impact of decreases in accounts receivable, net of $447,000 and decreases in inventories of $2.3 million further contributed to net cash provided by operating activities. All of the aforementioned factors positively affecting cash provided by operating activities were partially offset by the cash flow impact of decreases in accounts payable and accrued expenses, including accrued compensation and payroll taxes, of $639,000 and an adjustment to reconcile a net loss of $3.0 million to net cash provided by operating activities for gain on insurance proceeds, net totaling $219,000.

Previous wording

Net cash used in investing activities totaled $75,000 in the first quarter of fiscal year 2025, compared to $80,000 in the first quarter of fiscal year 2024. Net cash used in investing activities during the first quarter of fiscal years 2025 and 2024 resulted primarily from purchases of property and equipment and deposits for the purchase of property and equipment.

Current wording

Net cash used in investing activities totaled $143,000 in the first half of fiscal year 2025, compared to $17,000 in the first half of fiscal year 2024. Net cash used in investing activities during the first half of fiscal years 2025 resulted primarily from purchases of property and equipment and deposits for the purchase of property and equipment. Net cash used in investing activities during the first half of fiscal year 2024 resulted primarily from purchases of property and equipment and deposits for the purchase of property and equipment totaling $236,000, partially offset by net insurance proceeds of $219,000.

Previous wording

Net cash used in financing activities totaled $2.7 million for the first quarter of fiscal year 2025, compared to $906,000 in the first quarter of fiscal year 2024. Net cash used in financing activities in the first quarter of fiscal year 2025 resulted primarily from net repayments on our revolving line of credit totaling $2.7 million. Net cash used in financing activities in the first quarter of fiscal year 2024 resulted primarily from net repayments on our revolving line of credit totaling $864,000.

Current wording

Net cash used in financing activities totaled $2.0 million for the first half of fiscal year 2025, compared to $474,000 in the first half of fiscal year 2024. Net cash used in financing activities in the first half of fiscal years 2025 and 2024 resulted primarily from net repayments on our revolving line of credit totaling $1.8 million and $278,000, respectively.

Previous wording

The Virginia Real Estate Loan is with Northeast Bank and is payable in monthly installments of principal and interest. Principal is calculated using the unpaid balance of the loan and a two hundred forty (240) month amortization schedule. Interest is computed on the aggregate principal balance outstanding at a rate equal to the Prime Rate, adjusted monthly on the fifth day of each calendar month in accordance with changes to the Prime Rate, provided, however, that the interest rate is never less than 8.5% per annum on the basis of a 360-day year times the actual number of days elapsed. The Prime Rate was 7.5% per annum at January 31, 2025 and 8.0% at October 31, 2024. The maturity date of the Virginia Real Estate Loan is May 5, 2026.

Current wording

The Virginia Real Estate Loan is with Northeast Bank and is payable in monthly installments of principal and interest. Principal is calculated using the unpaid balance of the loan and a two hundred forty (240) month amortization schedule. Interest is computed on the aggregate principal balance outstanding at a rate equal to the Prime Rate, adjusted monthly on the fifth day of each calendar month in accordance with changes to the Prime Rate, provided, however, that the interest rate is never less than 8.5% per annum on the basis of a 360-day year times the actual number of days elapsed. The Prime Rate was 7.5% per annum at April 30, 2025 and 8.0% at October 31, 2024. The maturity date of the Virginia Real Estate Loan is May 5, 2026. We intend to refinance the obligation prior to maturity.

Previous wording

The Company had an outstanding balance on its Virginia Real Estate Loan of $2.6 million as of January 31, 2025 and October 31, 2024.

Current wording

As of April 30, 2025 and October 31, 2024, the Company had an outstanding balance on its Virginia Real Estate Loan of $2.6 million.

Previous wording

The Revolver requires a lockbox arrangement, which provides for all cash receipts to be swept daily to reduce the balance outstanding. This arrangement, combined with the existence of a “subjective acceleration clause” (as defined by U.S. generally accepted accounting principles) in the Revolver, requires the balance on the Revolver to be classified as a current liability. The “subjective acceleration clause” allows SLR to declare an event of default if there is a material adverse change in our business or financial condition. Upon the occurrence of an event of default, SLR may, among other things, declare all obligations payable in full. We believe that no such material adverse change has occurred. In addition, at January 31, 2025 and through the date of this report, SLR has not informed us that any such event of default has occurred. The Revolver has a maturity date of July 24, 2027 and we believe that we will continue to be able to borrow on the Revolver to fund our operations over the remaining term.

Current wording

The Revolver requires a lockbox arrangement, which provides for all cash receipts to be swept daily to reduce the balance outstanding. This arrangement, combined with the existence of a “subjective acceleration clause” (as defined by U.S. generally accepted accounting principles) in the Revolver, requires the balance on the Revolver to be classified as a current liability. The “subjective acceleration clause” allows SLR to declare an event of default if there is a material adverse change in our business or financial condition. Upon the occurrence of an event of default, SLR may, among other things, declare all obligations payable in full. We believe that no such material adverse change has occurred. In addition, at April 30, 2025 and through the date of this report, SLR has not informed us that any such event of default has occurred.

Previous wording

As of January 31, 2025, we had $5.7 million of outstanding borrowings on our Revolver and $3.4 million in available credit.

Current wording

As of April 30, 2025, we had $6.5 million of outstanding borrowings on our Revolver and $2.6 million in available credit.