Optical Cable Q4 Earnings Call Highlights

Optical Cable (NASDAQ:OCC) executives pointed to improving industry conditions, expanding data center initiatives, and a new strategic collaboration as key drivers behind higher fiscal 2025 revenue and significantly improved profitability metrics compared with the prior year.

Fiscal 2025 results show higher sales and stronger gross margin

Management described fiscal 2025 as a “solid year,” saying Optical Cable benefited from a rebound after industry weakness that impacted the second half of fiscal 2023 and most of fiscal 2024. President and CEO Neil Wilkin said the company “captured new opportunities” and delivered consolidated net sales of $73 million, with sales rising in every quarter of fiscal 2025 compared with the same periods a year earlier.

Senior Vice President and CFO Tracy Smith said consolidated net sales for the year increased 9.5% to $73.0 million from $66.7 million in fiscal 2024, with growth in both the enterprise and specialty markets. Smith also reported that the company’s sales order backlog and forward load ended the year at $7.3 million, up from $5.7 million at October 31, 2024.

Optical Cable also cited meaningful improvement in gross profit. Smith reported fiscal 2025 gross profit increased 24.1% to $22.6 million from $18.2 million, while gross margin rose to 30.9% from 27.3% in fiscal 2024. She attributed the margin improvement primarily to higher volumes that spread fixed costs over a larger sales base, while noting quarterly margins can swing based on product mix.

Fourth quarter: modest sales growth, lower year-over-year margin

For the fiscal fourth quarter ended October 31, 2025, Smith reported consolidated net sales increased 1.8% year over year to $19.8 million from $19.5 million, with increases in both the enterprise and specialty markets. Sequentially, net sales were essentially flat, decreasing less than 1% from $19.9 million in the third quarter.

Fourth-quarter gross profit declined to $6.3 million from $6.5 million in the year-ago quarter, and gross margin fell to 31.9% from 33.5%. Smith said there was no significant change in gross profit versus the third quarter, while margin was slightly higher sequentially (31.9% vs. 31.7%).

On the bottom line, the company posted fourth-quarter net income of $49,000, or $0.01 per share, compared with net income of $373,000, or $0.05 per share, in the same quarter of fiscal 2024. For the full year, Optical Cable reported a net loss of $1.5 million, or $0.18 per share, compared with a net loss of $4.2 million, or $0.54 per share, in fiscal 2024. Smith added that the company was profitable during the second half of fiscal 2025.

Operating leverage and cost trends

Wilkin emphasized the company’s operating leverage, describing how manufacturing fixed costs and efficiencies—particularly for fiber optic cable production—can drive disproportionately higher gross profit as sales and production volumes rise. He also said SG&A leverage tends to improve as net sales increase because many costs are relatively fixed, including public company expenses.

Smith reported SG&A expense increased to $23.0 million in fiscal 2025 from $21.5 million in fiscal 2024, but SG&A as a percentage of sales improved to 31.4% from 32.2%.

For the fourth quarter, SG&A expense increased to $6.0 million from $5.9 million, and SG&A as a percentage of sales rose to 30.4% from 30.0%. Smith said the increase in SG&A during the quarter and year was primarily driven by:

• Higher employee and contracted sales personnel-related costs, including compensation and sales incentives
• Higher shipping costs

Lyttera collaboration and investment highlighted as growth catalyst

Wilkin repeatedly pointed to a strategic collaboration with Lyttera, announced in July 2025, as a key growth initiative. He said the collaboration expands Optical Cable’s opportunities by combining portions of both companies’ portfolios into integrated fiber optic and copper cabling and connectivity solutions that will be sold by Optical Cable, with a particular focus on the enterprise and data center sectors.

As part of the collaboration, Wilkin noted that Lyttera invested in Optical Cable by purchasing common stock directly from the company, resulting in Lyttera owning 7.24% of Optical Cable’s outstanding shares.

When asked about timing, Smith said the company does not provide formal sales guidance but is “optimistic” about potential sales increases in fiscal 2026, “particularly during the second half,” based on targeted market opportunities and the expected benefits of the Lyttera collaboration. In response to an analyst follow-up, Wilkin said there is significant work involved in building the collaboration before it impacts sales, adding that efforts are proceeding “well and expeditiously,” but he did not quantify timing or revenue contribution.

Data center focus: Tier 2/3 and multi-tenant sites, not hyperscale

Management said it sees strengthening opportunity in data centers, citing demand tied to cloud computing and artificial intelligence applications. Wilkin said Optical Cable has an existing data center presence and relationships, and is working to expand in the segment. However, he emphasized that the company’s products are best suited for multi-tenant data centers (MTDCs) and enterprise data centers—which he referred to as Tier 2 and Tier 3—rather than Tier 1 hyperscale facilities.

Asked whether the data center opportunity materially influenced fourth-quarter performance, Wilkin said it did not have a significant impact in the quarter but is expected to begin contributing in fiscal 2026.

Executives also discussed other operational considerations for the coming year. Wilkin said the company believes it has sufficient capacity to capture expected fiscal 2026 growth. On hiring, he said he would not characterize recent hiring as significant, noting that open roles—often in manufacturing—are typical, and he does not expect staffing needs to materially increase operating expense.

Finally, management reiterated that Optical Cable typically experiences seasonality in the first half of the fiscal year. During Q&A, Wilkin said fiscal 2025 sales were split 46% in the first half and 54% in the second half, matching the same pattern in fiscal 2024.

About Optical Cable (NASDAQ:OCC)

Optical Cable Corporation (NASDAQ: OCC) is a publicly traded designer and manufacturer of optical fiber and copper communications cable solutions. Headquartered in Roanoke, Virginia, the company develops a broad range of standard and custom cable assemblies, connectors, hardware and accessories. Its product portfolio addresses data transmission requirements in demanding environments, including long-haul telecommunications, industrial automation, defense systems and submersible applications.

The company’s offerings are organized across multiple product lines, encompassing outside-plant fiber optic cable for aerial and underground installations, indoor/outdoor copper connectivity and specialty engineered cable assemblies.