Clearfield Reports Fiscal First Quarter 2016 Results Download as PDF January 28, 2016 8:00am EST Related Documents FieldReport - Earnings Presentation Slides PDF 10-Q Filing PDF HTML XBRL ZIP XLS HTML MINNEAPOLIS, Jan. 28, 2016 (GLOBE NEWSWIRE) -- Clearfield, Inc. (NASDAQ:CLFD), the specialist in fiber management and connectivity platforms for communications providers, reported results for the fiscal first quarter ended December 31, 2015. Fiscal Q1 2016 Financial Summary (in millions except per share data and percentages) Q1 2016 vs. Q1 2015 Change Change (%) Revenue $ 15.7 $ 14.0 $ 1.7 12 % Gross Profit $ 6.7 $ 5.7 $ 1.0 16 % Gross Margin 42.6 % 41.1 % 1.5 % 4 % Pre-Tax Income $ 2.0 $ 1.6 $ 0.4 23 % Income Tax Expense $ 0.6 $ 0.6 $ 0.0 10 % Net Income $ 1.4 $ 1.1 $ 0.3 29 % Net Income per Diluted Share $ 0.10 $ 0.08 $ 0.02 25 % Fiscal Q1 2016 Financial ResultsRevenue for the first quarter of fiscal 2016 increased 12% to $15.7 million from $14.0 million in the same year-ago quarter. The improvement was primarily due to increased deployments by the Company’s incumbent local exchange carrier (ILEC) and competitive local exchange carrier (CLEC) customers. The revenue increase was partially offset by temporary project delays impacting customers outside the U.S. Gross profit increased 16% to $6.7 million (42.6% of revenue) from $5.7 million (41.1% of revenue) in the first fiscal quarter of 2015. Operating expenses were $4.7 million, an increase of 14% compared to $4.1 million in the same year-ago quarter. Pre-tax income increased 23% to $2.0 million from $1.6 million in the same year-ago quarter. Net income increased 29% to $1.4 million or $0.10 per diluted share from $1.1 million or $0.08 per diluted share in the same year-ago quarter. During the quarter ended December 31, 2015, cash, cash equivalents and investments increased 6% to $36.2 million from $34.3 million at the end of the prior quarter. The Company had no debt at quarter end. Order backlog (defined as purchase orders received but not yet fulfilled) at December 31, 2015 decreased 5% to $3.4 million from $3.5 million at September 30, 2015, and increased 37% from $2.5 million compared to December 31, 2014. Management Commentary“Our strong financial performance was evident in our Q1 results, which demonstrated another quarter of growth and profitability,” said Clearfield CEO, Cheri Beranek. “Revenue, gross profit and net income saw solid growth on a year-over-year basis, as we continued to penetrate the ILEC market and make steady progress on our key initiatives for fiscal 2016. “To further these initiatives, we are judiciously increasing our capital expenditures to invest in our IT infrastructure and enterprise resource planning systems. We are also making investments to obtain necessary certifications that allow us the ‘right to hunt’ in the Tier 1 space. Additionally, we continue to strengthen our sales and marketing teams, in both executive and field positions, in order to broaden our customer outreach and increase our visibility in the marketplace, including in Tier 1, 2 and 3 ILEC communities, and with wireless service providers, cable operators and competitive carriers (CLECs). The strength of our competitive product offerings, which can reduce the total cost of ownership for a service provider by as much as 50%, gives us confidence in the future success of these efforts. “The effect of the government broadband subsidy program, Connect America Fund Phase II, is also slowly starting to take shape throughout the industry. It has created an opportunity for Clearfield to capitalize on a major, industry-wide wave of fiber deployments, especially as service providers strive to remain technologically relevant. While the actual timing of fiber roll-outs could be delayed by factors outside of our control, we are positioning the Company for an anticipated major roll-out during the second half of our fiscal year. “Given our fiscal Q1 results and progress on key initiatives, Clearfield remains on track for at least 10% revenue growth in fiscal 2016, with revenue growth accelerating in fiscal 2017 and beyond, and operating income growing in step with revenue.” FieldReportClearfield issued its FieldReport for fiscal Q1 2016, which is available in the investor relations section of the Company’s website or by clicking here. Comprised of presentation slides with audio and video, the report provides additional insight into Clearfield’s financial and operational performance. About Clearfield, Inc. Clearfield, Inc. (NASDAQ:CLFD) designs, manufactures and distributes fiber optic management products for the communications networks of leading ILECS, CLECs, MSO/cable TV companies and mobile broadband providers. The Company helps service providers solve the Fiber Puzzle, which is how to reduce the high costs associated with deploying, managing, protecting and scaling a fiber optic network to deliver the mobile, residential and business services customers want. Based on the patented Clearview™ Cassette, Clearfield’s unique single-architected, modular fiber management platform is designed to lower the cost of broadband deployment and maintenance by consolidating, protecting and distributing incoming and outgoing fiber circuits, and enabling its customers to scale their operations as their subscriber revenues increase. 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 the FieldReport are made pursuant to the safe harbor provisions of the Private Litigation Reform Act of 1995. Words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “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, growth of the FTTH market, effectiveness of the Company’s sales and marketing strategies and organization, utilization of manufacturing capacity, and the development and marketing of products. 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 results of operations could be adversely affected now that the stimulus funds of the American Recovery and Reinvestment Act are fully allocated and projections are nearing completion; National Broadband Plan’s transitioning from the USF to the CAF program may cause our customers and prospective customers to delay or reduce purchases; 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 would adversely affect us; intense competition in our industry may result in price reductions, lower gross profits and loss of market share; our results of operations could be adversely affected by economic conditions and the effects of these conditions on our customers’ businesses; 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; to compete effectively, we must continually improve existing products and introduce new products that achieve market acceptance; we may face circumstances in the future that will result in impairment charges, including, but not limited to, significant goodwill impairment charges; we rely on single-source suppliers, which could cause delays, increases in costs or prevent us from completing customer orders, all of which could materially harm our business; we face risks associated with expanding our sales outside of the United States; our success depends upon adequate protection of our patent and intellectual property rights; 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 are dependent on key personnel; product defects or the failure of our products to meet specifications could cause us to lose customers and sales or to incur unexpected expenses; 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, 2015 as well as other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update these statements to reflect actual events. CLEARFIELD, INC. CONDENSED STATEMENTS OF OPERATIONS UNAUDITED Three Months Ended December 31 2015 2014 Revenues $ 15,689,715 $ 13,986,620 Cost of sales 9,012,919 8,244,106 Gross profit 6,676,796 5,742,514 Operating expenses Selling, general and administrative 4,697,015 4,125,997 Income from operations 1,979,781 1,616,517 Interest income 33,539 25,856 Income before income taxes 2,013,320 1,642,373 Income tax expense 630,000 573,000 Net income $ 1,383,320 $ 1,069,373 Net income per share: Basic $ 0.10 $ 0.08 Diluted $ 0.10 $ 0.08 Weighted average shares outstanding: Basic 13,288,679 13,222,180 Diluted 13,575,162 13,581,434 CLEARFIELD, INC. CONDENSED BALANCED SHEETS (Unaudited)December 31, 2015 (Audited)September 30, 2015 Assets Current Assets Cash and cash equivalents $ 20,699,033 $ 18,071,210 Short-term investments 8,746,000 7,925,000 Accounts receivable, net 5,019,660 6,010,900 Inventories 6,943,519 7,182,854 Other current assets 556,127 1,563,665 Total current assets 41,964,339 40,753,629 Property, plant and equipment, net 5,551,700 5,689,673 Other Assets Long-term investments 6,767,000 8,290,000 Goodwill 2,570,511 2,570,511 Other 345,481 323,804 Total other assets 9,682,992 11,184,315 Total Assets $ 57,199,031 $ 57,627,617 Liabilities and Shareholders’ Equity Current Liabilities Accounts payable $ 2,183,253 $ 2,357,791 Accrued compensation 1,394,342 2,598,661 Accrued expenses 103,387 80,803 Total current liabilities 3,680,982 5,037,255 Other Liabilities Deferred taxes – long-term 152,988 1,082,887 Deferred rent 233,474 228,345 Total other liabilities 386,462 1,311,232 Total Liabilities 4,067,444 6,348,487 Commitment and contingencies Shareholders’ Equity Common stock 137,062 137,057 Additional paid-in capital 56,356,982 55,887,850 Accumulated deficit (3,362,457 ) (4,745,777 ) Total Shareholders’ Equity 53,131,587 51,279,130 Total Liabilities and Shareholders’ Equity $ 57,199,031 $ 57,627,617 CLEARFIELD, INC. CONDENSED STATEMENT OF CASH FLOWS UNAUDITED Three MonthsEndedDecember 31, Three MonthsEndedDecember 31, 2015 2014 Cash flows from operating activities: Net income $ 1,383,320 $ 1,069,373 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 348,749 229,900 Deferred income taxes 217,000 529,000 Loss on disposal of assets 1,390 - Stock-based compensation expense 226,767 283,627 Tax benefit from stock-based awards (348,000 ) - Changes in operating assets and liabilities: Accounts receivable, net 991,240 372,879 Inventories 239,335 31,187 Other current assets (146,494 ) (222,800 ) Accounts payable and accrued expenses (1,003,144 ) (1,219,481 ) Net cash provided by operating activities 1,910,163 1,073,685 Cash flows from investing activities: Purchases of property, plant and equipment and intangible assets (226,710 ) (1,764,875 ) Purchase of investments (1,184,000 ) (1,638,000 ) Sale of investments 1,886,000 1,375,000 Net cash provided by (used in) investing activities 475,290 (2,027,875 ) Cash flows from financing activities: Tax benefit from stock-based awards 348,000 - Repurchase of common stock (257,242 ) (170,170 ) Proceeds from issuance of common stock under employee stock purchase plan 118,013 105,615 Proceeds from issuance of common stock 34,990 1,276 Tax withholding related to vesting of restricted stock grants (1,391 ) - Net cash provided by (used in) financing activities 242,370 (63,279 ) Increase (decrease) in cash and cash equivalents 2,627,823 (1,017,469 ) Cash and cash equivalents at beginning of period 18,071,210 18,191,493 Cash and cash equivalents at end of period $ 20,699,033 $ 17,174,024 Supplemental cash flow information Cash paid during the year for income taxes $ 15,884 $ - Non-cash financing activities Cashless exercise of stock options $ 15,890 $ 3,220 Investor Relations Contact: Matt Glover and Najim Mostamand Liolios Group, Inc. 949-574-3860 CLFD@liolios.com Source: Clearfield, Inc. Released January 28, 2016
