Optical Cable Corporation (OCC) reported third-quarter fiscal 2026 results that topped sales estimates but could not hold onto investor momentum, with shares falling in premarket trading after the earnings release.
The company posted net sales of $24.3 million for the three months ended July 31, up 22% from $19.9 million a year earlier. Net income rose to $1.9 million, or $0.21 per diluted share, compared with $302,000, or $0.04 per share, in the year-ago period.
Gross profit increased 43.9% to $9.1 million, supported by a gross margin expansion to 37.4% from 31.7% — a rise of 570 basis points. Management attributed the improvement to stronger volumes, manufacturing operating leverage as fixed costs spread over higher output, and a favorable product mix across enterprise, data center, and specialty markets including military and defense.
Selling, general and administrative expenses rose to $7.0 million from $5.7 million but remained roughly flat as a percentage of sales at 28.7%.
For the first nine months of fiscal 2026, net sales reached $62.9 million, up 18.3% from $53.2 million. The company swung to a $2.5 million net profit, or $0.28 per share, from a $1.5 million loss, or $0.19 per share, in the same period last year. Gross margin for the nine-month stretch was 35.0%, up from 30.6%.
Backlog grew to $13.5 million at end-Q3 from $13.3 million at April 30 and $10.4 million at January 31, following a rapid build from $7.3 million at the end of fiscal 2025.
Chief Executive Neil Wilkin said the company continued building on strong growth momentum into the third quarter, noting that manufacturing efficiencies improve as production volumes increase and fixed costs are distributed across greater sales.
Supply-chain constraints remain a factor. Optical fiber shortages driven by high data-center demand and longer raw-material lead times are the main bottlenecks, Wilkin said. OCC is increasing staffing and equipment at several facilities, with the largest expansions at its fiber-optic cable manufacturing plant in Roanoke and its connectivity and termination facility near Dallas. Capabilities in Asheville are also being scaled.
On the strategic front, OCC disclosed a collaboration and supply relationship with Lightera, a company owned by Furukawa, which adds products to the firm's lineup and has begun generating early sales. The development prompted a language update in the company's most recent 10-Q filing.
Management said its data-center focus remains on multi-tenant and enterprise customers, whose longer qualification cycles continue to shape sales timing. OCC is also monitoring a planned Google data-center campus project located near its Roanoke facility.
Working capital came in at $19.2 million at quarter-end, an improvement from $13.9 million at the end of fiscal 2025, according to Chief Financial Officer Tracy Smith.
In premarket trading, OCC shares fell 4.6%, or 63 cents, to $13.07 from a prior close of $13.70. The stock has traded between $4.02 and $27.98 over the past 52 weeks.
