ROANOKE, Va. -- Optical Cable Corporation (NASDAQ: OCCF) announced financial results for its fiscal third quarter ended July 31, 2010. The company reported that it has achieved significant increases in net sales and gross profit for both the quarter and year-to-date periods compared to the same periods in fiscal 2009, and returned to profitability in the third quarter of fiscal 2010.
Net sales of OCC's fiber optic cable and enterprise connectivity products increased 14.9% and 28.7%, respectively, during the third quarter of fiscal 2010, compared to the same period last year. Net sales of OCC's applied interconnect system products (added to OCC's product offering following the Company's acquisition of AOS) improved during the third quarter of fiscal 2010 compared to the first and second quarters of fiscal 2010.
Third Quarter 2010 Financial Results
Net sales during the third quarter of fiscal year 2010 were the highest in OCC's history -- exceeding the quarterly net sales that OCC achieved in the fourth quarter of fiscal year 2008.
Consolidated net sales for the third quarter of fiscal year 2010 increased 32.2% to $18.8 million compared to consolidated net sales of $14.2 million for the comparable period last year. Net sales growth during the third quarter was achieved over a broad customer base and product mix, with notable increases in both commercial and specialty markets, despite the difficult economic environment. The acquisition of Applied Optical Systems, Inc. ("AOS") by OCC on October 31, 2009 also contributed to the net sales growth achieved by the Company for the third quarter of fiscal year 2010.
Geographically, OCC achieved consolidated net sales growth both in international markets and within the United States during the third quarter of fiscal year 2010. Net sales to customers located outside of the United States increased 83.6% in the third quarter of fiscal 2010 compared to the same period last year, and net sales to customers located in the United States increased 17.3% as compared to the same period last year.
Gross profit increased 51.8% to $6.8 million in the third quarter of fiscal 2010, compared to $4.5 million in the third quarter of fiscal 2009. Gross profit margin, or gross profit as a percentage of net sales, increased to 36.2% in the third quarter of fiscal 2010 from 31.6% in the third quarter of fiscal year 2009.
OCC recorded net income attributable to the Company of $575,000, or $0.09 per basic and diluted share, for the third quarter of fiscal year 2010, compared to a net loss of $1.1 million, or $0.19 per basic and diluted share, for the same period last year.
Fiscal Year-to-Date 2010 Financial Results
Consolidated net sales for the first nine months of fiscal 2010 increased 10.2% to $49.0 million compared to net sales of $44.5 million for the same period in fiscal 2009. Net sales in both the Company's commercial markets and its specialty markets increased during the first nine months of fiscal year 2010 compared to the same period last year. The acquisition of AOS by OCC on October 31, 2009 also contributed to the net sales growth achieved by the Company for the first nine months of fiscal year 2010.
Based on year-to-date results, OCC expects that net sales for the fiscal year ending October 31, 2010 will be the highest in the Company's 27 year history.
Gross profit increased 10.7% to $16.6 million in the first nine months of fiscal 2010, compared to $15.0 million for the same period last year. Gross profit margin, or gross profit as a percentage of net sales, increased slightly to 33.8% in the first nine months of fiscal 2010 compared to 33.7% for the first nine months of fiscal 2009.
For the first nine months of fiscal 2010, OCC recorded a net loss attributable to the Company of $7.2 million, or $1.21 per basic and diluted share, compared to a net loss of $1.8 million, or $0.33 per basic and diluted share, for the first nine months of fiscal 2009. Significantly contributing to the net loss for the first nine months of fiscal 2010 was a non-recurring, non-cash impairment charge of $6.2 million recorded in the second fiscal quarter to write-off the carrying value of the goodwill associated with the acquisition of AOS.
Excluding the non-recurring, non-cash goodwill impairment charge, the Company would have reported a net loss attributable to OCC of $960,000, or $0.16 per share, for the first nine months of fiscal 2010(1).
Management's Comments
Neil Wilkin, President and Chief Executive Officer of OCC, said, "Over the past year, OCC has taken steps to grow both organically and through strategic acquisitions in order to offer a comprehensive suite of products to meet the full range of our customers' needs. We are pleased to report that these strategic investments are already bearing fruit, as evidenced by the fact that OCC returned to profitability in our third quarter and generated the highest quarterly net sales in the Company's history. At the same time, and while maintaining our customer focus, we have significantly improved our cost structure and enhanced our financial flexibility."
Mr. Wilkin added, "Importantly, we believe our results in the third quarter underscore the strong operating leverage OCC has in its business model--providing OCC with the ability to substantially increase earnings as net sales grow. Further, we believe we are now beginning to realize product line synergies from our strategic acquisitions. As a result of our strategic initiatives, we believe OCC is exceptionally well-positioned in our target markets with a full suite of high quality products that provide our customers with unrivaled integrated solutions. We look forward to continuing to build on OCC's strong momentum by meeting and exceeding the needs of customers with the goal of creating long-term value for the Company's shareholders."
Founded in 1983, OCC is headquartered in Roanoke, Virginia with offices, manufacturing and warehouse facilities located in each of Roanoke, Virginia, near Asheville, North Carolina and near Dallas, Texas. OCC primarily manufactures its fiber optic cables at its Roanoke facility which is ISO 9001:2008 registered and MIL-STD-790F certified, its enterprise connectivity products at its Asheville facility which is ISO 9001:2008 registered, and its military and harsh environment connectivity products and systems at its Dallas facility which is MIL-STD-790F certified.
Further information about OCC is available on the Internet at www.occfiber.com.
(1) This proforma net loss and net loss per share attributable to OCC are calculated by adding the impairment charge of $6.2 million to the Company's net loss attributable to OCC as reported for the nine months ended July 31, 2010. There is no tax benefit associated with the impairment charge, as it is considered a non-deductible permanent item for tax purposes, so there is no change to the tax benefit as reported for the period in determining the proforma net loss and net loss per share attributable to OCC.