Optical Cable Corporation reports 22.5% revenue decline in FY2020 and 1.9 pp EBITDA Margin decline from -4.8% to -6.7%
12/21/2020 • About Optical Cable Corporation (
$OCC) • By InTwits
Optical Cable Corporation reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Optical Cable Corporation is a company in decline: FY2020 revenue growth was -22.5%, 5 years revenue CAGR was -5.6%
- The company operates at negative EBITDA Margin: -6.7%
- Optical Cable Corporation spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 0.0%. Average EBITDA Margin for the same period was -0.7%
- Optical Cable Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.7%.
- The company has unprofitable business model: ROIC is -16.8%
- It operates with high leverage: Net Debt/EBITDA is 2.1x while industry average is 0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 22.5%. Revenue decline showed acceleration in FY20Q4 - it was 23.9% YoY. During FY2016-FY2020 Revenue growth topped in FY2018 at 37.0% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.1 pp from 27.6% to 28.7% in FY2020.
Gross Margin showed almost no change in FY2020. During the last 5 years Gross Margin topped in FY2017 at 32.4% and was declining since that time. SG&A as a % of Revenue increased slightly on 2.0 pp from 32.9% to 34.8% in FY2020.
Net Income margin decreased on 3.1 pp from -7.9% to -11.1% in FY2020. During the last 5 years Net Income margin topped in FY2018 at 1.2% and was declining since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.22% in FY2020. CAPEX/Revenue decreased slightly on 0.58 pp from 0.79% in FY2017 to 0.22% in FY2020. It's average CAPEX/Revenue for the last three years was 0.56%. CAPEX as a % of Revenue stuck to a declining trend at -0.16 pp per annum in FY2016-FY2020.
Return on investment
The company operates at negative ROIC (-16.8%) and ROE (-33.5%). ROIC decreased slightly on 1.9 pp from -14.9% to -16.8% in FY2020. ROE decreased on 9.9 pp from -23.6% to -33.5% in FY2020.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.1x and Debt / EBITDA is . Net Debt / EBITDA didn't change in FY2020. Debt surged on 42.0% while cash dropped on 73.8%.
Optical Cable Corporation has short term refinancing risk: cash is only 6.2% of short term debt.
Management team
The company's CEO Neil D Wilkin Jr has spent 17 years with the company. Optical Cable Corporation's CFO is Tracy G Smith. Tracy G Smith has 16 years tenure at the company.
Financial and operational results
FY ended 10/31/2020
Optical Cable Corporation ($OCC) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 64.616 | 64.093 | 87.829 | 71.324 | 55.277 | -22.5% |
| Gross Profit | 19.725 | 20.798 | 27.873 | 18.305 | 14.086 | -23.0% |
| SG&A | 20.761 | 21.969 | 26.131 | 23.434 | 19.246 | -17.9% |
| EBITDA | 0.838 | 0.359 | 3.558 | -3.441 | -3.710 | |
| Net Income | -1.779 | -1.739 | 1.069 | -5.669 | -6.121 | |
Balance Sheet
|
|---|
| Cash | 1.879 | 0.891 | 0.177 | 0.537 | 0.141 | -73.8% |
| Short Term Debt | 0.294 | 0.251 | 0.261 | 6.389 | 2.260 | -64.6% |
| Long Term Debt | 11.652 | 12.120 | 9.159 | 5.170 | 14.155 | 173.8% |
Cash flow
|
|---|
| Capex | 0.635 | 0.509 | 0.689 | 0.488 | 0.120 | -75.4% |
Ratios
|
|---|
| Revenue growth | -12.2% | -0.8% | 37.0% | -18.8% | -22.5% | |
| EBITDA growth | -374.5% | -57.2% | 892.4% | -196.7% | 7.8% | |
|
|---|
| Gross Margin | 30.5% | 32.4% | 31.7% | 25.7% | 25.5% | -0.2% |
| EBITDA Margin | 1.3% | 0.6% | 4.1% | -4.8% | -6.7% | -1.9% |
| SG&A, % of revenue | 32.1% | 34.3% | 29.8% | 32.9% | 34.8% | 2.0% |
| Net Income Margin | -2.8% | -2.7% | 1.2% | -7.9% | -11.1% | -3.1% |
| CAPEX, % of revenue | 1.0% | 0.8% | 0.8% | 0.7% | 0.2% | -0.5% |
|
|---|
| ROIC | -3.2% | -3.6% | 4.8% | -14.9% | -16.8% | -1.9% |
| ROE | -6.9% | -7.2% | 4.2% | -23.6% | -33.5% | -9.9% |
| Net Debt/EBITDA | 12.0x | 32.0x | 2.6x | | |
Optical Cable Corporation ($OCC) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 13 | 15 | 14 | 14 | | -23.1% | -21.6% | -21.5% | -23.9% |
| EBITDA | -2 | -1 | -0 | 0 | | - | - | - | - |
| Net Income | -3 | -2 | -1 | -0 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 1 | 4 | 1 | 0 | | 65.9% | 1,282.4% | -9.2% | -73.8% |
| Short Term Debt | 6 | 9 | 3 | 2 | | 2,324.1% | 3,310.6% | -51.6% | -64.6% |
| Long Term Debt | 6 | 9 | 13 | 14 | | -45.0% | -22.3% | 139.2% | 173.8% |
Ratios
|
|---|
| Gross Margin | 18.7% | 26.9% | 25.5% | 30.3% | | -2.6% | -1.1% | -0.4% | 3.3% |
| EBITDA Margin | -15.2% | -7.3% | -1.1% | 1.5% | | 1.4% | -7.0% | 1.9% | 2.1% |
| Net Income Margin | -20.1% | -11.4% | -10.5% | -2.9% | | -0.4% | -8.1% | -4.3% | 0.7% |
Peers in Communications Equipment
Below you can find Optical Cable Corporation benchmarking vs. other companies in Communications Equipment industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.6% | 2.8% | 3.7% | 4.4% |
|---|
| Optical Cable Corporation ($OCC) | - | -0.8% | 37.0% | -18.8% | -22.5% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.9% | 41.7% | 41.2% | 44.3% | 46.8% |
|---|
| Optical Cable Corporation ($OCC) | 30.5% | 32.4% | 31.7% | 25.7% | 25.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (32 companies) | 5.9% | 6.5% | 5.4% | 5.0% | 9.3% |
|---|
| Optical Cable Corporation ($OCC) | 1.3% | 0.6% | 4.1% | -4.8% | -6.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (32 companies) | 2.0% | 1.9% | 1.7% | 2.5% | 2.2% |
|---|
| Optical Cable Corporation ($OCC) | 1.0% | 0.8% | 0.8% | 0.7% | 0.2% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.4% | 2.2% | 0.3% | 1.2% | 2.3% |
|---|
| Optical Cable Corporation ($OCC) | -3.2% | -3.6% | 4.8% | -14.9% | -16.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (25 companies) | -0.9x | -0.8x | -0.3x | -0.3x | -0.4x |
|---|
