Optical Cable Q3 2026 Earnings Results & Report

Optical Cable EPS Results

• Actual EPS: $0.21
• Consensus EPS: $0.20
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

Optical Cable Revenue Results

• Actual Revenue: $24.30 million
• Expected Revenue: $24.50 million
• Beat/Miss: Missed by -$202.98 thousand
• YoY Revenue Growth: N/A

Optical Cable (NASDAQ:OCC) (OCC) designs and manufactures fiber-optic and copper communications cabling and connectivity products. Its offerings include cables, cable assemblies, connectors, patch cords, and related network infrastructure equipment.

OCC’s products support enterprise networks, data centers, broadcast and audiovisual systems, military and government applications, and industrial environments. The company serves customers in the United States and international markets.

Founded in 1983 and headquartered in Roanoke, Virginia, Optical Cable has expanded its business from cable manufacturing to a broader range of connectivity and infrastructure solutions.

Optical Cable Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q3 financial results strengthened significantly: net sales rose 22% year over year to $24.3 million, gross profit increased 43.9% to $9.1 million, and net income reached $1.9 million, or $0.21 per diluted share, compared with $302,000 a year earlier.
• Positive Sentiment: Demand remained strong in the enterprise, data center, and specialty markets, with backlog and forward load rising to $13.5 million from $7.3 million at the end of fiscal 2025. Management continues to expect a strong second half of fiscal 2026 and said it sees no near-term indication of weakening demand.
• Positive Sentiment: Higher production volumes are generating manufacturing operating leverage, helping gross margin expand to 37.4% from 31.7% a year ago. The company is also evaluating additional equipment and hiring across its facilities to increase capacity, while beginning to record sales from its Lightera partnership.
• Negative Sentiment: Optical-fiber shortages, longer raw-material lead times, and other manufacturing bottlenecks continue to constrain shipments and could pressure future margins, which may also vary with product mix. Management provided no formal fiscal 2027 outlook and cautioned that seasonal softness could occur in the first quarter.
• Neutral Sentiment: Working capital improved to $19.2 million, and management believes its cash flow and credit revolver are sufficient for near-term needs; however, cash is swept daily to repay the revolver, and executives did not rule out future financing needs as the business expands.

Presentation

[Operator]

Good morning, everyone. My name is Bo, and I will be your conference operator today. At this time, I would like to welcome you to Optical Cable Corporation's third quarter of fiscal year 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer period. If you would like to ask a question over the phone at that time, please press star one on your telephone. If you would like to remove yourself from the queue, please press star two. With that, Ms. Felix, you may begin your conference.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Good morning, and thank you for joining us for Optical Cable Corporation's third quarter of fiscal year 2026 conference call. 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 OCC, and Tracy Smith, Executive Vice President and Chief Financial Officer. Before we begin, I'd 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 on www.occfiber.com, as well as today's call.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

With that, I'll turn the call over to Neil Wilkin. Neil, please begin.

[Neil Wilkin, President and CEO at Optical Cable Corporation]

Thank you, Caroline, and good morning, everyone. I will begin the call today with a few opening remarks. Tracy will then review the third quarter results for the three-month and nine-month periods ended July 31st, 2026, in some additional detail. After Tracy's remarks, we will answer as many of your questions as we can. As is our normal practice, we will only take live 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. I will say that today we got more questions than we typically would get on a quarter from individual investors.

[Neil Wilkin, President and CEO at Optical Cable Corporation]

We'll answer as many of those as we can. When we get to the Q&A for institutional investors, please limit your questions to things that were not addressed by the questions from the individual shareholders. We'll be limiting the questions we'll take from institutional investors to one question per person. With that, we'll begin. Following a solid start to the year, we continued to build on OCC's strong growth and momentum during the third quarter of fiscal year 2026, delivering year-over-year increases of net sales, gross profit and net income. Net sales increased 22% to $24.3 million, and gross profit increased 43.9% to $9.1 million during the third quarter. Our net sales increase was largely driven by strong demand in OCC's enterprise, data center, and specialty markets.

[Neil Wilkin, President and CEO at Optical Cable Corporation]

Our strong gross profit results during the third quarter and also fiscal year to date continue to demonstrate the benefit of OCC's manufacturing operating leverage. As our production volumes increase, our fixed manufacturing costs are spread over higher sales volumes, and manufacturing efficiencies also tend to increase. As of the end of the third quarter, our sales order backlog and forward load stood at $13.5 million. We are now in the last quarter of our fiscal year, and we are confident in OCC's ability to build on our momentum and capitalize on the opportunities ahead. At the same time, we continue to explore opportunities to further strengthen OCC's capabilities and support long-term growth. As always, we remain focused on delivering exceptional service to our customers and end users and driving sustainable value creation for our shareholders.

[Neil Wilkin, President and CEO at Optical Cable Corporation]

With that, I'll turn the call over to Tracy, who will review in additional detail our third quarter of fiscal year 2026 financial results.

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

Thank you, Neil. Consolidated net sales for the third quarter of fiscal 2026 increased 22% to $24.3 million compared to $19.9 million for the same period last year. Consolidated net sales for the first nine months of fiscal 2026 were $62.9 million, an increase of 18.3% compared to net sales of $53.2 million for the same period last year. During the third quarter and first nine months of fiscal 2026, we experienced an increase in net sales in our enterprise, data center, and specialty markets compared to the same periods last year as we continued to see general market growth opportunities in our industry, both domestically and internationally, with strength specifically in our enterprise, data center, and specialty markets.

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

As Neil mentioned, our sales order backlog and forward load increased to $13.5 million at the end of the third quarter of fiscal 2026 compared to $13.3 million as of April 30th, 2026, $10.4 million as of January 31st, 2026, and $7.3 million as of October 31st, 2025. Turning to gross profit. Our gross profit increased 43.9% to $9.1 million in the third quarter of fiscal 2026, compared to $6.3 million in the third quarter of fiscal 2025. Gross profit margin, our gross profit as a percentage of net sales, increased to 37.4% in the third quarter of fiscal 2026, compared to 31.7% in the third quarter of the prior year. Gross profit increased 35.5% to $22.1 million in the first nine months of fiscal 2026, compared to $16.3 million in the first nine months of fiscal 2025.

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

Gross profit margin increased to 35% in the first nine months of fiscal 2026, compared to 30.6% for the same period last year. Gross profit margin for the third quarter and first nine months of fiscal 2026 was positively impacted by higher volumes and the resulting positive impact of our strong 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. SG&A expenses increased to $7 million in the third quarter of fiscal year 2026 compared to $5.7 million for the same period last year. SG&A expenses as a percentage of net sales were 28.7% in the third quarter of fiscal 2026 compared to 28.8% in the third quarter of fiscal 2025.

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

SG&A expenses increased to $18.8 million in the first nine months of fiscal year 2026 compared to $16.9 million for the same period last year. SG&A expenses as a percentage of net sales were 29.9% in the first nine months of fiscal 2026 compared to 31.8% in the first nine months of fiscal 2025. The increase in SG&A expenses during the third quarter and first nine months of fiscal 2026 compared to the same periods last year was primarily the result of increases in employee costs, contracted sales personnel-related costs and shipping costs. Included in employee costs and contracted sales personnel-related costs are compensation costs and sales incentives.

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

OCC recorded net income of $1.9 million, or $0.21 per basic and diluted share for the third quarter of fiscal 2026 compared to net income of $302,000, or $0.04 per basic and diluted share for the third quarter of fiscal 2025. OCC recorded net income of $2.5 million, or $0.28 per basic and diluted share for the first nine months of fiscal 2026 compared to a net loss of $1.5 million, or $0.19 per basic and diluted share for the first nine months of fiscal 2025. With that, I'll turn the call back over to you, Neil.

[Neil Wilkin, President and CEO at Optical Cable Corporation]

Thank you, Tracy. As I previously mentioned, we received a large number of questions in advance of today's call, some of which came in just before the call. We believe that some of these questions that have been submitted will be of interest to most participants. We are going to go through those questions first, and then we will address any remaining questions live from analysts or institutional investors. As we have stated before, we would like to take one question from each institutional investor because I think we are going to be covering a lot of the questions you may have through the previously submitted questions. Caroline, if you would please begin by reading the questions we have received that we were provided in advance of the call, and we will proceed to respond.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Neil. The first question is, "Can you please go into more detail about how backlog and quarterly revenue have been changing in this new demand cycle, and how it is different from prior instances where backlog has bumped to above $10 million? You had said in prior calls that you expected the second half of 2026 to be very strong. Is this reflected in current and future expected backlog? Is that assumption still valid, or is the second half of 2026 looking different at all, positive or negative? How long do you expect this higher backlog to sustain?

[Neil Wilkin, President and CEO at Optical Cable Corporation]

There is a lot of questions in that first statement. As you can see from our press release earlier this morning, our results during the third quarter of fiscal year 2026 support our previous expectation that the second half of 2026 would be very strong. We continue to believe that that is going to be the case. We continue to have a robust backlog and forward load that are increasing. At the same time, sales are increasing.

[Neil Wilkin, President and CEO at Optical Cable Corporation]

We cannot specifically comment on how long we expect our higher backlog to continue. However, as we have seen in the past, the backlog, when it increases to a certain level, certainly is indicative of what we believe we are going to see in the following quarter or so. But a lower backlog does not necessarily mean that that is going to generate a lower sales number, and we have talked about that previously.

[Neil Wilkin, President and CEO at Optical Cable Corporation]

It is not a data point we have always described. We have only been disclosing it to folks through our press releases and 10-Qs when we believe that that number has some significant value. I think I can also say that even though we do not know what the backlog will do, we still do believe that the industry in general is seeing high levels of demand, and there does not appear to be any indication that demand is weakening, at least as far as we can see at the moment.

[Neil Wilkin, President and CEO at Optical Cable Corporation]

This does not necessarily mean that we will not see any seasonality. Our first quarter has many holidays in it, including Thanksgiving, Christmas, other December holidays, as well as New Year's. So, at this point, we are not really sure what we will see in the first quarter, but we are seeing a significant amount of demand across the board in all of our markets.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Neil. Next question is, can you touch on performance of OCC traditional markets, including defense?

[Neil Wilkin, President and CEO at Optical Cable Corporation]

Yes. As we noted in our press release this morning, our enterprise data center and specialty market sectors are all increasing during this quarter and during our year-to-date periods through the third quarter of 2026. Our specialty markets include market sectors such as the military market sector.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Neil. Next question. Can you comment on OCC's working capital position and if you feel you have enough working capital to sustain the planned growth?

[Neil Wilkin, President and CEO at Optical Cable Corporation]

Tracy will take this one.

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

Sure. Our working capital is strong at $19.2 million at the end of the third quarter and improved compared to $13.9 million at the end of fiscal year 2025. We do believe that our working capital and credit revolver are sufficient to support and sustain our working capital needs.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Tracy. The next question is, can you provide some color on the growth rates for new versus existing customers?

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

I will take that one as well. As we have noted previously, most of our sales are made through distributor channels, so we do not always have a clear picture of the customer purchasing our products through distribution or the end users of our products. However, we believe that our growth is being driven by both our existing customers and new customers and end users.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Tracy. Next question. On the last earnings call, Neil, you had said that the sales cycle is longer for data center. Could you elaborate on that? Is the pre-backlog sales process/pipeline longer because of customer qualifications?

[Neil Wilkin, President and CEO at Optical Cable Corporation]

I'll take that one. Yes, the sales cycle for certain portions of the data center market sector do tend to be longer. That can include qualification requirements as a new supplier for certain new products being supplied. However, as we're going through those qualification processes where they exist or indications or periods where the sales cycle is longer, those hopefully potential sales do not show up in our backlog. Our forward load and backlog is really items where we've either received an order, or where we expect that that order is non-cancelable and that we will be delivering it at some point in the future. Sometimes that's a short time period, sometimes that's a longer time period because we do have some customers that stage the deliveries over time.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Neil. Next question. Does the flattish backlog versus the last quarter reflect a potential normalization in demand? Should we expect backlog to normalize further in Q4 given that Q1 is the softest quarter in terms of seasonality?

[Neil Wilkin, President and CEO at Optical Cable Corporation]

I don't think that the backlog increasing a slight amount indicates that demand is flattening in any way. We continue to see significant growth opportunities, and we have seen our backlog and sales forward load continue to grow this past month. This does not mean we may not experience some typical seasonality, as I mentioned before, in the first quarter. But for now, we continue to see a continued strength in demand for our products, even if it's not reflected in a small change in the backlog forward load as of the end of the quarter.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Neil. The next question is, SG&A rose to $7 million above where the operating leverage story would predict. Was the Q2 to Q3 increase in employee and contracted sales personnel a one-time capacity step that now levels off, or should we model continued SG&A growth as revenue scales? Put differently, where does SG&A settle as a percentage of sales at a $100 million+ run rate?

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

I'll take that one. We don't generally provide guidance related to future or theoretical sales levels. However, certain sales compensation costs included in SG&A, as well as other costs such as shipping costs, generally tend to fluctuate with sales levels. However, this does not mean we will not see future benefits of SG&A operating leverage as sales continue to grow.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Tracy. Next question is, on funding and dilution, with working capital rising alongside growth and cash still thin, how are you funding the ramp, and at what revenue level would you need to raise equity or expand the credit facility? Should shareholders anticipate a capital raise to support fiscal year 2027 growth?

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

As we believe we've described previously, our cash is swept daily to repay the balance on our credit revolver. So our cash balance at any point in time will generally not be very high. At the current time, we believe we have sufficient availability on our credit revolver and from cash generated from operations to meet our needs for the near term.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Tracy. Next question. Can you give some color on deliveries expected in Q4 and how you see margins progressing throughout fiscal year 2027?

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

Again, we don't provide forward guidance, so I won't comment on how we expect margins to progress throughout fiscal year 2027. But I will say that we have continued to see strong sales and demand in August, but it is too early to comment on September.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks. The next question is: Can you comment on the increased demand cycle you are experiencing and how long it could last?

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

Sure. As previously noted, we can't forecast specifically on how long we expect the increased demand cycle to continue. However, I can say that the industry, in general, is seeing high levels of demand, and there doesn't appear to be an indication of demand weakening in the near term.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Tracy. Next question. Can you provide any sort of future outlook regarding customer demand signals?

[Neil Wilkin, President and CEO at Optical Cable Corporation]

Caroline, you know, we're having a little bit of trouble hearing you. If Bo could confirm that he's able to hear you okay. We're hearing your question, and we'll continue to answer them, but your signal's breaking up just a little bit.

[Operator]

Mr. Wilkin, are you having any problem hearing Caroline? Mr. Wilkin, I can hear her loud and clear at this time, sir.

[Neil Wilkin, President and CEO at Optical Cable Corporation]

Okay. Okay. Maybe on our end then. Hopefully you can hear us. Please let us know if you're having any trouble hearing us.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Yep, we can hear you okay.

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

Okay. Other than what we have already disclosed, we cannot really provide any additional future customer demand outlook.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Tracy. The next question is: Are you seeing any new or emerging risks?

[Neil Wilkin, President and CEO at Optical Cable Corporation]

We are not seeing any new or unusual market risks at this time. As we've described during our second quarter earnings call, we have been seeing some industry-wide delays as a result of high product demand and certain fiber optic, optical fiber shortages. Additionally, we've seen some longer lead times for certain raw materials, as one would expect, given the current high demand for products. We expect these challenges will continue, but we also believe we're taking appropriate action to navigate those challenges.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Neil. The next question is: Can you provide an update on OCC's plans to increase capacity? What level of capacity expansion are we talking about, and what is the plan?

[Neil Wilkin, President and CEO at Optical Cable Corporation]

We are regularly considering the need for investment in machinery and equipment and/or human resources to expand our capacity in general, and also for specific opportunities. We are seeing some opportunities to increase our capacity currently. We do not generally comment publicly on the specific capacity expansion plans for various reasons, including for competitive reasons. I think that answers the question.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Neil. The next question is: Can you provide an update on fiber shortages and potential challenges of higher fiber pricing on OCC's margins?

[Neil Wilkin, President and CEO at Optical Cable Corporation]

Yes. Currently, the industry continues to experience optical fiber shortages due to excessive product demand for data centers as well as certain other product applications. We believe OCC is successfully managing these industry dynamics as we've demonstrated during the first nine months of this fiscal year. We do not believe these industry challenges will prevent us from continuing to report strong top-line revenue growth during the remainder of fiscal year 2026. Notably, we work to limit potential impacts on our customers and our gross profits that these industry factors may have. Of course, as we noted in the past, OCC's profit margins can also be impacted by product mix and other factors, which can be difficult to predict.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Neil. Next question. Can you share an update on any potential bottlenecks at ramping up manufacturing, including labor availability and cost?

[Neil Wilkin, President and CEO at Optical Cable Corporation]

We are seeing various different effects that are limiting our product shipments at some level, and so those are bottlenecks. Those are primarily impediments to ramping up manufacturing. The primary impediments are ramping up manufacturing at the current time is really optical fiber shortages, as we previously described. But as you can also see in our results, we've been able to generate increased sales despite those impediments.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Neil. Next question. Can you provide some color on inventory levels at OCC customers and dealers, and if this is above or below average?

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

As you might expect, we're not able to specifically comment on inventory levels of our products at our customers. That said, given current market conditions, we believe it would be unusual for companies to be carrying inventory in excess of current expected demand.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Tracy. Next question. What is the typical duration of your backlog, and is this currently changing, or does the data center related business have different characteristics?

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

Various factors determine the duration of our sales order backlog and forward load, which are specific to each customer. Our backlog and forward load generally represents what we consider to be non-cancelable orders. However, in some cases, customers may schedule out future deliveries, while others are expected to ship as soon as we can complete manufacturing. As a result, I would not say there is a typical duration. However, I would say that most of our sales order backlog and forward load is expected to be shipped within two to three quarters.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Tracy. The next question is: can you help us understand what level of capacity OCC is currently operating at? On the last earnings call, Tracy, you had mentioned that OCC is looking into expanding capacity. Could you provide some additional color on which products or end markets you may focus on?

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

OCC has different levels of capacity for different product families at each of our manufacturing facilities. Yes, we are looking into expanding capacity for certain products at certain facilities. This includes additional hires as well as additional equipment.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Tracy. Next question: Does OCC have opportunities in the grid, battery, energy, and storage systems verticals?

[Neil Wilkin, President and CEO at Optical Cable Corporation]

Yes. OCC has some fiber optic cable and connectivity opportunities in grid and energy vertical market sectors.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Neil. The next question is: Google Data is projected to build a large campus of data centers very close to OCC's site in Roanoke. Does this present an opportunity for you?

[Neil Wilkin, President and CEO at Optical Cable Corporation]

OCC's primary focus in the data center market sector is multi-tenant data centers and enterprise data centers. However, we are following the Google data center project near us, and as you'd expect, we will explore potential opportunities on that project. Of course, we're very excited that they're going to be setting this data center up so close to our Roanoke facility.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Neil. The next question is: this summer, Furukawa announced a significant capacity expansion through Lightera. Is this an opportunity for OCC?

[Neil Wilkin, President and CEO at Optical Cable Corporation]

Well, as you'd expect, we don't speak for Furukawa or Lightera. However, from OCC's perspective, Lightera is not only a strategic collaboration partner with OCC, but they are also an important supplier to OCC. The strategic collaboration with Lightera does add certain products to OCC's product offering.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Neil. The next question is: in June, the company significantly stepped up its manufacturing-related hiring in Plano. Is this in relation to the Lightera partnership? Am I correctly recalling that OCC does a lot of its data center-related connectivity work in Plano?

[Neil Wilkin, President and CEO at Optical Cable Corporation]

Well, we're actually currently increasing staffing at each of our facilities, with the largest increases at our fiber optic cable manufacturing facility in Roanoke and our connectivity and termination facility near Dallas. OCC has capabilities related to our targeted data center market sectors in each of our manufacturing facilities, including Roanoke, Dallas, as well as some in Asheville as well.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Neil. The last question for today is: your last 10-Q changed its language around the Lightera partnership related to Lightera products being offered and sold by the company. Does this mean that OCC has started to realize the first sales related to the Lightera partnership in Q2? Could you give us an update for Q3?

[Tracy Smith, EVP and CFO at Optical Cable Corporation]

As you would expect, we are beginning to see some sales of some Lightera products, thus the change in the language in the 10-Q.

[Caroline Felix, Director of Investor Relations at Optical Cable Corporation]

Thanks, Tracy and Neil. We have no other questions that were provided in advance of the call today at this time.

[Neil Wilkin, President and CEO at Optical Cable Corporation]

Well, thank you, Caroline. Now, we will answer any additional questions that analysts or institutional investors may have. We ask that you please limit yourself to one question. Bo, if you could please indicate the instructions to our participants to call in any questions they have, I'd appreciate it. Additionally, if you'd please mute individuals following their one question so that we can take as many of the questions from analysts and institutional investors that wish to ask.

[Operator]

Certainly, Mr. Wilkin. My pleasure. Ladies and gentlemen, at this time, any questions over the phone, please press star one. If you do find that your question has been addressed, you may remove yourself from the queue by pressing star two. So once again, star one for any questions. We'll go first this morning to Sergi Mascaro with Eden Discovery.

[Sergi Mascaro, Analyst at Eden Discovery]

Good morning, Tracy and Neil. Thanks for taking our questions. The gross margin was very impressive this quarter, and I am wondering if this improvement is just related to higher volumes, or there are other factors or other one-offs impacting the gross margin?

[Neil Wilkin, President and CEO at Optical Cable Corporation]

Well, our gross margin can vary based on manufacturing, operating leverage, and other efficiencies, also product mix. We're pleased that we've been able to show an increase in our gross profit margin percentage over the last couple of quarters, and we're hoping that we'll continue to maintain higher margins at the production levels we're currently at.

[Operator]

Thank you. Just a quick reminder, ladies and gentlemen, any further questions this morning, please press star one, and we'll pause for just one moment. Mr. Wilkin, it appears we have no further questions over the phone at this time. Sir, I'd like to turn the conference back to you for any closing comments.

[Neil Wilkin, President and CEO at Optical Cable Corporation]

Okay. Well, thank you. I would like to thank everyone for listening to our third quarter of fiscal year 2026 conference call today. As always, we appreciate your time and your investment in Optical Cable Corporation. Additionally, I would like to note that this Friday marks the 25th anniversary of the terrible attack on the United States on 9/11, 2001. We are so grateful for our company's first responders and those that serve and support the U.S. military for protecting us, protecting our freedom, and protecting our way of life. Thank you all. Have a good day.

[Operator]

Thank you very much, Mr. Wilkin, and thank you, Ms. Smith. Again, ladies and gentlemen, this brings us to the end of today's meeting. We do appreciate your time and participation. You may now disconnect.

Participants

Executives

• Caroline Felix, Director of Investor Relations
• Neil Wilkin, President and CEO
• Tracy Smith, EVP and CFO

Analysts

• Sergi Mascaro, Analyst at Eden Discovery