Good morning. My name is James, and I will be your conference operator today. At this time, I would like to welcome you to the Optical Cable Corporation's Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. [Operator Instructions] Mr. Hoffman, you may begin your conference.

Thank you, James. Good morning, everyone, and thank you all for joining us for Optical Cable Corporation's Fourth Quarter and Fiscal Year 2023 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 today with us -- on the call with us today are Neil Wilkin, President and Chief Executive Officer of OCC; and Tracy Smith, Senior 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. With that, I'll turn the call over to Neil Wilkin. Neil, please begin.

Thank you, Spencer, and good morning, everyone. I will begin the call today with a few opening remarks. Tracy will then review the fourth quarter and full-year results for the 3-month and 12-month periods ended October 31, 2023 and 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 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. During fiscal year 2023, we demonstrated the strength of OCC's market position, the efficiencies generated by our operating leverage and our ability to navigate and successfully execute our growth strategies in volatile markets. We started off the year strong, building on our momentum and delivering strong financial and operational performance. Like many others in our industry, however, we experienced significant volatility and a softening of demand in certain markets as fiscal year 2023 progressed, particularly in the enterprise and wireless carrier markets. Thanks to our diversified markets and product offerings, we finished fiscal year 2023 having achieved growth by all measures compared to the prior year. This includes net sales, gross profit, gross profit margin as well as income from operations and earnings per share. Net sales for fiscal year 2023 increased 4.5% to $72.2 million. This followed net sales growth of 18.8% in fiscal year 2022 compared to fiscal year 2021. Our market diversification and our best of product offerings enabled us to achieve net sales growth during fiscal year 2023 despite the volatility in certain markets, with OCC achieving sales growth in our specialty markets partially offset by…

Thank you, Neil. Consolidated net sales for fiscal year 2023 were $72.2 million, an increase of 4.5% compared to net sales of $69.1 million for fiscal year 2022. Consolidated net sales for the fourth quarter of fiscal 2023 decreased 13.6% to $17.3 million compared to net sales of $20.1 million for the same period last year. We believe that our net sales benefited from increased production throughput during fiscal year 2023, specifically in the first half of the fiscal year, as well as our higher-than-typical levels of sales order backlog and forward load as we began fiscal year 2023. Additionally, improved product pricing increased to cover certain inflationary costs began to take effect. Our sales order backlog and forward load has returned to more typical levels at approximately $5.4 million at the end of fiscal year 2023 compared to more than $12 million at the end of fiscal year 2022. During fiscal year 2023, we experienced increases in net sales in our specialty markets compared to last year, but the increases were partially offset by decreases in our enterprise and wireless carrier markets. We believe there continue to be indicators of strength in certain of our markets, particularly our specialty markets, as we end fiscal year 2023. While OCC has benefited from market and product diversification like others in our industry, our net sales during fiscal year 2023 were impacted by various macroeconomic pressures, risks and uncertainties, in addition to the softening of certain of our targeted markets. Turning to gross profit. Gross profit increased 8.7% to $22.3 million in fiscal 2023 compared to $20.5 million in fiscal 2022. Gross profit margin or gross profit as a percentage of net sales increased to 30.9% in fiscal 2023 compared to 29.7% in fiscal 2022. Gross profit decreased 41.5% to $3.9 million…

Thank you, Tracy. Let me conclude by saying that OCC remains committed to leveraging our core strengths and capabilities, identifying growth opportunities and executing our strategies and initiatives to create long-term value for our shareholders. And now, if any analysts or institutional investors have questions, we are happy to answer them. James, if you could please indicate the instructions for our applicants to call in any questions they may have, I'd appreciate it. Again, we are only taking questions from analysts and institutional investors.

[Operator Instructions] There are no questions in the queue at this time. I will now turn the conference over to Mr. Wilkin.

Thanks, James. Spencer, are there any questions? I think, in fact, I know there were some questions submitted by individual investors in advance of the call. If you don't mind reading the questions, we will address those.

Yes, we do have a few questions submitted in advance. The first question, was any thought given to repurchasing shares in the prior quarter instead of paying off the North Carolina real estate loan?

Tracy is going to take this, this first question.

Sure. As we reported in our previous filings, the cash in question that was used to pay off the North Carolina real estate loan was restricted cash as it was insurance proceeds related to a building on which our lender was the [ lean ] holder. As a result, any use of this cash for anything other than restoring the building or paying down the loans would have been a quite unusual use for that restricted cash.

The next question, are there any plans to repurchase shares in the future?

Well, we regularly evaluate our capital allocation priorities to ensure that we optimize the use of our shareholders' capital, so we'll look at that in the future.

The next question, it is my understanding that OCC usually holds a good amount of inventory and prides itself in having short delivery times. Did that have an effect on how much excess inventory your customers built up?

Spencer, I'll take that question. Like others in our industry, some of our customers had excess inventory during the past year. The extent of any excess inventory has been different, depending on the market and the individual customer. We do hold a good amount of inventory, and we do pride ourselves in using that to provide short delivery times and lead times. While we had some customers with excess inventory during the year, we believe OCC has been less impacted by this than some of our other competitors. We believe the inventory we have been maintaining as we ended fiscal year 2023 is at an appropriate level to service our customers' expected needs, and it is something that we watch and periodically adjust based on customer needs and market conditions.

Thanks, Neil. The next question, could you comment on customer inventories in the carrier market? Has the demand from this market started to pick up again?

We don't tend to talk a lot about individual markets, but I will make a couple of comments in response. It did seem like to us that the wireless carrier market had some excess inventory during fiscal year 2023, and that seemed to impact demand. We do believe the demand will begin to pick up again, but at this time, we cannot exactly say when and to what extent that will be the case.

Could you comment on trends you are seeing in the oil and gas and military markets?

Well, this past year, as we've already said, we've seen market strength in most of our specialty markets. And this is what helped offset what the weakness at OCC and others in our industry experienced in the enterprise market as well as in certain other markets. Both oil and gas and military are included in our specialty markets, as we discussed those in our filings. And during fiscal year 2023, we saw both of those increase.

Thank you, Neil. And the final question, could you talk about the process of innovation at OCC?

That's a good question, and there could be a long answer. I'm going to give a short version of the answer rather than trying to describe what our process is specifically. I would say that OCC -- at OCC, we're very proud of the innovation and expertise of our engineers as an application specialists that enable our product innovation. And then importantly, I think the best way to describe OCC is that our approach to innovation tends to focus on developing solutions tailored to the needs of end users and market trends rather than a build-it-and-they-will-come approach, and we have benefited from that approach over many years.

Thanks, Neil. That concludes the Q&A.

Okay. Well, thank you. Well, we appreciate everyone's participation on the call today, and thank you for listening to our fourth quarter and fiscal year 2023 conference call. As always, we appreciate your time and investment in Optical Cable. We sincerely hope that everyone has a safe and happy holiday season, and appreciate your interest in Optical Cable Corporation. Thank you.

This does conclude today's program. Thank you for your participation. You may now disconnect.