Clearfield Reports First Quarter Fiscal 2025 Results

Revenue of $35.5 million consistent with expectations and narrower net loss per share of $(0.13), with revenue for the Clearfield segment up 6% year-over-yearGenerated increased revenue from connected homes products, highlighting continued progress toward becoming a comprehensive portfolio supplierExperienced strong quoting activity and initiation of new multi-year projects from customersShare buy-backs totaled $6.2 million with $18.7 million remaining available for future repurchases and cash flow from operations amounted to approximately $7.2 million MINNEAPOLIS, Feb. 06, 2025 (GLOBE NEWSWIRE) -- Clearfield, Inc. (NASDAQ: CLFD), a leader in fiber connectivity, reported results for the fiscal first quarter 2025. Fiscal Q1 2025 Financial Summary (in millions except per share data and percentages)Q1 2025vs. Q1 2024Change Change (%)Net Sales$ 35.5 $34.2 $1.2 4% Gross Profit ($)$ 8.2 $4.7 $3.5 74%Gross Profit (%) 23.1% 13.7% 9.3% 68% Loss from Operations$ (4.0)$(8.2)$4.2 -51%Income Tax Benefit$ (0.4)$(1.0)$0.5 -55% Net Loss$ (1.9)$(5.3)$3.4 -64%Net Loss per Diluted Share$ (0.13)$(0.35)$0.22 -63% Management Commentary “We are pleased with our consistent performance this past quarter as we generated increased revenue from products for connected homes, highlighting our continued progress toward becoming a comprehensive portfolio supplier for our customers,” said Company President and Chief Executive Officer, Cheri Beranek. “We’re encouraged by the strong quoting activity from new and existing customers, as well as the initiation of new multi-year projects beyond connected homes and government-funded initiatives. This underscores that the strength of our business is driven by demand and reflects the success of our ongoing efforts to strengthen customer relationships, along with the deployment efficiencies and labor savings provided by our products.” “Our stronger bottom-line performance and continued gross margin improvements were primarily driven by lower excess inventory reserve costs, resulting from improved utilization and recoveries of previously reserved inventory, and the impact of our cost management efforts that reduced SG&A spend,” said Chief Financial Officer Dan Herzog. “We believe that the inventory overhang within our primary market, Community Broadband, has predominantly cleared. We anticipate Clearfield segment revenue growth to be in line with or above industry forecasts of 12.5% for fiscal 2025. Based upon these trends, we are reiterating our annual revenue outlook and anticipate both year-over-year and sequential improvements in second fiscal quarter revenue and profitability.” Financial Results for the Three Months Ended December 31, 2024 Net sales for the first quarter of fiscal 2025 increased 4% to $35.5 million from $34.2 million in the same year-ago quarter. As of December 31, 2024, order backlog (defined as purchase orders received but not yet fulfilled) was $26.0 million, an increase of $0.9 million, or 3.6%, compared to $25.1 million as of September 30, 2024, and a decrease of $17.4 million, or 40.1%, from December 31, 2023. Gross margin for the first quarter of fiscal 2025 was 23.1%, compared to 13.7% in the first quarter of fiscal 2024. The increase in gross margin from the year ago quarter was mainly due to $2.3 million in lower excess inventory charges due to better utilization in the quarter. Operating expenses for the first quarter of fiscal 2025 decreased 5.5% to $12.2 million, or 34.3% of net sales, from $12.9 million, or 37.6% of net sales, in the same year-ago quarter. Net loss for the first quarter of fiscal 2025 totaled $1.9 million, or ($0.13) per diluted share, compared to net loss of $5.3 million, or ($0.35) per diluted share, in the same year-ago quarter. In the quarter, the Company repurchased approximately $6.2 million in shares under its Share Repurchase Program. There is approximately $18.7 million remaining for future repurchases as of December 31, 2024. OutlookThe Company maintains its annual revenue guidance for fiscal 2025 of $170 million to $185 million. Clearfield expects net sales for the second quarter of fiscal 2025 to be in the range of $37 million to $40 million and net loss per share for the second quarter of fiscal 2025 to be in the range of $(0.16) to $(0.21). This loss per share range is based on the number of shares outstanding at the end of the first quarter and does not reflect potential share repurchases completed in the second quarter. Due to the uncertainty of the evolving tariff situation, the Company’s full-year and second fiscal quarter guidance does not yet account for any potential impact tariffs may have on its business operations. Clearfield’s Mexican and U.S. manufacturing sites were strategically designed to provide redundancy, cost optimization, and dual sourcing capabilities, and its product lines are BABA compliant, offering a Build American/Buy American alternative. While potential tariff-related cost increases cannot be fully eliminated, we believe Clearfield’s experience managing past tariff impacts enables the Company to respond quickly and mitigate cost increases whenever possible. Additionally, our Asian sourcing program, in place for over a decade, is supported by reliable suppliers expanding into non-Chinese locations. The tariff on Chinese goods that went into effect on February 4, 2025, adds to existing tariffs imposed in recent years. Given the fluid and uncertain nature of the situation, our priority remains maintaining the strong partnerships and relationships built with our suppliers and customers and optimizing this supply chain to reduce the impact whenever possible. Conference CallManagement will hold a conference call today, February 6, 2025, at 5:00 p.m. Eastern Time (4:00 p.m. Central Time) to discuss these results and provide an update on business conditions. Clearfield’s President and Chief Executive Officer, Cheri Beranek, and Chief Financial Officer, Dan Herzog, will host the presentation, followed by a question-and-answer period. U.S. dial-in: 1-877-407-0792International dial-in: 1-201-689-8263Conference ID: 13751115 The live webcast of the call can be accessed at the Clearfield Investor Relations website along with the company's earnings press release and presentation. A replay of the call will be available after 8:00 p.m. Eastern Time on the same day through February 20, 2025, while an archived version of the webcast will be available on the Investor Relations website for 90 days. U.S. replay dial-in: 1-844-512-2921International replay dial-in: 1-412-317-6671Replay ID: 13751115 About Clearfield, Inc. Clearfield, Inc. (NASDAQ: CLFD) designs, manufactures, and distributes fiber optic management, protection, and delivery products for communications networks. Our “fiber to anywhere” platform serves the unique requirements of leading incumbent local exchange carriers (traditional carriers), competitive local exchange carriers (alternative carriers), and MSO/cable TV companies, while also catering to the broadband needs of the utility/municipality, enterprise, and data center markets. Headquartered in Minneapolis, MN, Clearfield deploys more than a million fiber ports each year. For more information, visit www.SeeClearfield.com. Cautionary Statement Regarding Forward-Looking InformationForward-looking statements contained herein and in any related presentation or in the related Earnings Presentation are made pursuant to the safe harbor provisions of the Private Litigation Reform Act of 1995. Words such as “may,” “plan,” “expect,” “aim,” “believe,” “project,” “target,” “anticipate,” “intend,” “estimate,” “will,” “should,” “could,” “outlook,” or “continue” or comparable terminology are intended to identify forward-looking statements. Such forward looking statements include, for example, statements about the Company’s future revenue and operating performance, expected customer ordering patterns and future supply agreements with customers, anticipated shipping on backlog and future lead times, future availability of components and materials from the Company’s supply chain, compliance with Build America Buy America (BABA) Act requirements, future availability of labor impacting our customers’ network builds, the impact of the Broadband Equity, Access, and Deployment (BEAD) Program, Rural Digital Opportunity Fund (RDOF) or other government programs on the demand for the Company’s products or timing of customer orders, the Company’s ability to match capacity to meet demand, expansion into new markets and trends in and growth of the FTTx markets, market segments or customer purchases and other statements that are not historical facts. These statements are based upon the Company's current expectations and judgments about future developments in the Company's business. Certain important factors could have a material impact on the Company's performance, including, without limitation: our business is dependent on interdependent management information systems; inflationary price pressures and uncertain availability of components, raw materials, labor and logistics used by us and our suppliers could negatively impact our profitability; we rely on single-source suppliers, which could cause delays, increase costs or prevent us from completing customer orders; we depend on the availability of sufficient supply of certain materials and global disruptions in the supply chain for these materials could prevent us from meeting customer demand for our products; a significant percentage of our sales in the last three fiscal years have been made to a small number of customers, and the loss of these major customers could adversely affect us; further consolidation among our customers may result in the loss of some customers and may reduce sales during the pendency of business combinations and related integration activities; we may be subject to risks associated with acquisitions, and the risks could adversely affect future operating results; we have exposure to movements in foreign currency exchange rates; adverse global economic conditions and geopolitical issues could have a negative effect on our business, and results of operations and financial condition; growth may strain our business infrastructure, which could adversely affect our operations and financial condition; product defects or the failure of our products to meet specifications could cause us to lose customers and sales or to incur unexpected expenses; we are dependent on key personnel; cyber-security incidents, including ransomware, data breaches or computer viruses, could disrupt our business operations, damage our reputation, result in increased expense, and potentially lead to legal proceedings; natural disasters, extreme weather conditions or other catastrophic events could negatively affect our business, financial condition, and operating results; pandemics and other health crises could have a material adverse effect on our business, financial condition, and operating results; to compete effectively, we must continually improve existing products and introduce new products that achieve market acceptance; if the telecommunications market does not continue to expand, our business may not grow as fast as we expect, which could adversely impact our business, financial condition and operating results; changes in U.S. government funding programs may cause our customers and prospective customers to delay, reduce, or accelerate purchases, leading to unpredictable and irregular purchase cycles; intense competition in our industry may result in price reductions, lower gross profits and loss of market share; our success depends upon adequate protection of our patent and intellectual property rights; we face risks associated with expanding our sales outside of the United States; expectations relating to environmental, social and governance matters may increase our cost of doing business and expose us to reputational harm and potential liability; our operating results may fluctuate significantly from quarter to quarter, which may make budgeting for expenses difficult and may negatively affect the market price of our common stock; our stock price has been volatile historically and may continue to be volatile - the price of our common stock may fluctuate significantly; anti-takeover provisions in our organizational documents, Minnesota law and other agreements could prevent or delay a change in control of our Company; and other factors set forth in Part I, Item IA. Risk Factors of Clearfield's Annual Report on Form 10-K for the year ended September 30, 2024 as well as other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update these statements to reflect actual events unless required by law. Investor Relations Contact:Greg McNiff The Blueshirt Group773-485-7191clearfield@blueshirtgroup.com CLEARFIELD, INC.CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS(UNAUDITED)(IN THOUSANDS, EXCEPT SHARE DATA) Three Months Ended Three Months Ended December 31, December 31, 2024 2023 Net sales$35,476 $34,230 Cost of sales 27,294 29,533 Gross profit 8,182 4,697 Operating expenses Selling, general and administrative 12,158 12,859 Loss from operations (3,976) (8,162) Net investment income 1,744 2,069 Interest expense (100) (126) Loss before income taxes (2,332) (6,219) Income tax benefit (426) (951)Net loss$(1,906) $(5,268) Net loss per share Basic$(0.13) $(0.35)Net loss per share Diluted$(0.13) $(0.35) Weighted average shares outstanding: Basic 14,213,025 15,212,945 Diluted 14,213,025 15,212,945 CLEARFIELD, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(IN THOUSANDS, EXCEPT SHARE DATA) December 31, 2024 (Unaudited) September 30, 2024Assets Current Assets Cash and cash equivalents$30,453 $16,167 Short-term investments 82,561 114,825 Accounts receivables, net 14,064 21,309 Inventories, net 59,224 66,766 Other current assets 11,609 10,528 Total current assets 197,911 229,595 Property, plant and equipment, net 23,717 23,953 Other Assets Long-term investments 41,916 24,505 Goodwill 6,493 6,627 Intangible assets, net 6,103 6,343 Right-of-use lease assets 18,276 15,797 Deferred tax asset 6,622 6,135 Other 2,192 2,320 Total other assets 81,602 61,727 Total Assets$303,230 $315,275 Liabilities and Shareholders’ Equity Current Liabilities Current portion of lease liability$3,651 $3,357 Accounts payable 4,325 6,720 Accrued compensation 5,400 6,977 Accrued expenses 2,562 4,378 Factoring liability 2,790 2,920 Total current liabilities 18,728 24,352 Other Liabilities Long-term debt, net of current maturities 2,072 2,228 Long-term portion of lease liability 14,995 12,771 Deferred tax liability - 161 Total liabilities 35,795 39,512 Shareholders’ Equity Preferred stock, $.01 par value; 500,000 shares; no shares issued or outstanding - - Common stock, authorized 50,000,000, $.01 par value; 14,131,537 and 14,229,107 shares issued and outstanding as of December 31, 2024 and September 30, 2024, respectively 141 142 Additional paid-in capital 154,254 159,579 Accumulated other comprehensive (loss) income (17) 1,079 Retained earnings 113,057 114,963 Total shareholders’ equity 267,435 275,763 Total Liabilities and Shareholders’ Equity$303,230 $315,275 CLEARFIELD, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)(IN THOUSANDS) Three Months Ended Three Months Ended December 31, December 31, 2024 2023 Cash flows from operating activities Net loss$(1,906) $(5,268)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,838 1,651 Amortization of discount on investments (766) (1,160)Deferred taxes (544) (320)Stock-based compensation 1,139 1,271 Changes in operating assets and liabilities, net of acquired amounts: Accounts receivable 6,873 11,750 Inventories, net 6,871 4,169 Other assets (1,027) 815 Accounts payable and accrued expenses (5,328) (2,108)Net cash provided by operating activities 7,150 10,800 Cash flows from investing activities Purchases of property, plant and equipment and intangible assets (2,069) (2,412)Purchases of investments (39,015) (47,748)Proceeds from sales and maturities of investments 54,476 51,068 Net cash provided by investing activities 13,392 908 Cash flows from financing activities Proceeds from issuance of common stock under employee stock purchase plan 301 250 Repurchase of shares for payment of withholding taxes for vested restricted stock grants (491) (236)Net borrowings and repayments of factoring liability 77 (2,972)Repurchase of common stock (6,275) (12,184)Net cash used in financing activities (6,388) (15,142) Effect of exchange rates on cash 132 91 Increase (decrease) in cash and cash equivalents 14,286 (3,343)Cash and cash equivalents, beginning of year 16,167 37,827 Cash and cash equivalents, end of year$30,453 $34,484 Supplemental disclosures for cash flow information Cash paid during the year for income taxes$405 $61 Cash paid for interest$58 $86 Right of use assets obtained through lease liabilities$3,663 $- Non-cash financing activities Cashless exercise of stock options$9 $-

Clearfield Reports First Quarter Fiscal 2025 Results

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