OCC earnings analysis
What we found in OCC's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
OCC delivered a strong Q3, with revenue up 22.0% year over year, gross margin expanding to 37.4%, operating margin reaching approximately 8.7%, and diluted EPS increasing to $0.21 from $0.04. Enterprise, data center, and specialty markets supported growth, while backlog increased to $13.5 million. However, cash conversion remains weak as nine-month operating cash flow fell to $147,635 amid higher inventory and receivables, and liquidity depends materially on a $6.3 million Revolver with a July 24, 2027 maturity.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue Accelerated
- Q3 net sales increased 22.0% year over year to $24,297,022 from $19,916,919 and rose 9.4% sequentially from $22.2 million. Management cited increased sales in enterprise, data center, and specialty markets.
- Gross Margin Expanded
- Gross profit rose 43.9% year over year to $9,094,708, while gross margin expanded to 37.4% from 31.7% a year ago and 34.2% in Q2. Management attributed the improvement primarily to higher volumes and manufacturing operating leverage.
- Operating Leverage Improved
- Operating income increased to $2,111,632 from $562,474, lifting operating margin to approximately 8.7% from 2.8% in the prior-year quarter and 5.9% in Q2. The $2.8 million gross-profit increase more than offset the $1.2 million increase in SG&A.
- EPS More Than Doubled
- Net income increased to $1,858,117, or $0.21 per diluted share, from $301,886, or $0.04 per share, in Q3 2025 and $0.12 per share in Q2 2026.
- Backlog Remains Elevated
- Sales order backlog/forward load reached $13.5 million at July 31, 2026, up from $13.3 million at April 30, 2026 and $7.3 million at October 31, 2025.
- Year-to-Date Profitability Turned
- Nine-month revenue increased 18.3% to $62,941,623, while operating income improved to $3,207,203 from an operating loss of $719,080. Nine-month gross margin rose to 35.0% from 30.6%.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Working Capital Absorbs Cash
- Operating cash flow weakened to $147,635 for the first nine months from $616,745 a year earlier despite $2,515,405 of net income. Inventory increased to $22,938,467 from $19,801,754 and trade receivables increased to $11,842,621 from $10,280,616, consuming working capital.
- Refinancing and Liquidity Risk
- The Company had $6.3 million outstanding on its Revolver and $6.6 million of available credit at July 31, 2026, with the facility maturing July 24, 2027. The Revolver contains a subjective acceleration clause allowing the lender to declare a default upon a material adverse change, and cash balances were only $297,193.
- Redeemable Stock Obligation
- The redemption value of 642,199 redeemable restricted shares increased to $9.5 million from $5.1 million at October 31, 2025, reducing retained earnings by $4.5 million. Lightera's Put Option becomes exercisable on July 7, 2027, subject to specified conditions, and the Company may be required to repurchase shares or assist with their disposition.
- Customer Concentration
- Customer concentration remains material: one distributor represented 12.3% of Q3 sales and 14.8% of nine-month sales, while another distributor represented 10.7% of Q3 sales. Results also remain exposed to timing of large orders and purchases by key customers.
- Debt and Interest Expense
- Interest-bearing borrowings remained significant, including $6,329,173 on the Revolver and $2,639,815 on the Term Loan at July 31, 2026. The Revolver rate was 8.25%, while the Term Loan carries a fixed 6.5% rate for 60 months.
- Cost and Supply-Chain Exposure
- Management identified ongoing exposure to raw-material and labor costs, supply-chain constraints, tariffs, transportation costs, higher interest rates, and technology or competitive changes. The filing states that fiscal-year 2026 capital expenditures were budgeted at $1.0 million, with expenditures funded through working capital, operating cash flow, or Revolver borrowings.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.21
- Gross margin
- 37.4%
- Operating margin
- 8.7%
- Segment
- Single reportable segment: fiber optic and copper data communication cabling and connectivity solutions; Q3 net sales $24,297,022, including United States $19,187,791 and outside the United States $5,109,231.
What they said about what is next.
No explicit numeric revenue or EPS guidance was provided. Management said it continues to see market growth opportunities, particularly in enterprise, data center, and specialty markets; sales order backlog/forward load was $13.5 million at July 31, 2026. Management expects future operating cash flow, cash on hand, and the Revolver or refinanced Revolver to fund operations for at least the next twelve months. Fiscal 2026 capital expenditure budgeting included $1.0 million.
The filing reads better than the one before it.
What came before.
- 10-Q · June 8, 2026
- Optical Cable Corporation (OCC) reported significant improvements in its financial performance for Q2 FY2026, with revenue increasing 26.6% year-over-year to $22.2 million. The company achieved a net income of $1.1…
- 10-Q · March 10, 2026
- OCC reported revenue of $16.43M in Q1 FY2026, up $0.69M (4.4%) versus Q1 FY2025, with gross margin expanding to 32.7% and operating loss narrowing to $0.21M. GAAP diluted loss per share improved to $(0.05) from $(0.14)…
- 10-K · December 18, 2025
- Optical Cable Corporation (OCC) positions itself as a vertically integrated supplier of fiber optic and copper cabling and connectivity solutions for enterprise, data center and harsh-environment markets, and on July 7,…
- 10-K · December 23, 2024
- OCC positions itself as a diversified, U.S.-based manufacturer of fiber optic and copper cabling and connectivity solutions for enterprise, harsh-environment/specialty and wireless carrier markets, with ISO-certified…
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