Clearfield Reports Fiscal First Quarter 2023 Results

  • Revenue for the First Quarter of Fiscal 2023 Grew 68% Year-over-Year to $86 Million.
  • Net Income for the First Quarter of Fiscal 2023 Totaled $14.3 Million, or $1.00 per Diluted Share, an Improvement of 37% from $10.4 Million, or $0.75 per Diluted Share, in the First Quarter of Fiscal 2022.
  • Ongoing Lead Time Improvements Strengthen the Company’s Position to Serve Robust Long-term Customer Demand.
  • Company Reaffirms Fiscal 2023 Net Sales Guidance Range of $380 to $393 Million, Representing 40% to 45% Growth Over Record Fiscal Year 2022.
  • Company Introduces Fiscal 2023 Net Income Guidance Range of $4.30 to $4.50 a Share.

MINNEAPOLIS, Feb. 02, 2023 (GLOBE NEWSWIRE) --  Clearfield, Inc. (NASDAQ: CLFD), a leader in fiber connectivity, reported results for the fiscal first quarter of 2023.

  Fiscal Q1 2023 Financial Summary  
  (in millions except per share data and percentages) Q1 2023 vs. Q1 2022 Change Change (%)
  Net Sales $ 85.9   $ 51.1   $ 34.8   68 %
  Gross Profit ($) $ 30.6   $ 23.0   $ 7.7   33 %
  Gross Profit (%)   35.7 %   44.9 %   -9.3 % -21 %
  Income from Operations $ 17.9   $ 13.0   $ 4.8   37 %
  Income Tax Expense $ 3.7   $ 2.8   $ 0.9   33 %
  Net Income $ 14.3   $ 10.4   $ 3.9   37 %
  Net Income per Diluted Share $ 1.00   $ 0.75   $ 0.25   33 %

Management Commentary 
“Our strong financial performance in the fiscal first quarter of 2023 reflects our continued execution on our strategic growth plan, as well as the ongoing demand tailwinds for high-speed broadband,” said Company President and CEO Cheri Beranek. “Our net sales increased 68% year-over-year to $86 million, with year-over-year revenue growth across each of our core end markets. As we make further progress on each tenet of our LEAP strategic plan, we aim to strengthen our existing competitive advantages and build the necessary scale to address the long-term demand runway for fiber-fed broadband deployments. Based upon consideration of the expected investments and impact of our progress on our LEAP strategic plan, as well as our ability to manage countervailing headwinds that could develop in customer ordering patterns and component sourcing, we are reiterating our previously stated revenue guidance for fiscal year 2023. In addition, we are introducing fiscal year 2023 net income guidance of $4.30 to $4.50 a share.

“As high-speed broadband access becomes essential for all communities, we have worked to expand our market leadership in underserved rural broadband. In addition to leveraging our craft-friendly products and facilitating efficient, cost-effective customer deployments, we have focused on improving our product delivery lead times, which was a key area of industry leadership for us before the onset of the COVID-19 pandemic. Where pandemic-fueled supply constraints held some product lead times to a range of 10 to 12 months, Clearfield is now targeting lead times in the range of eight to ten weeks. We have already reached this range across most product lines with the exception of active cabinets, which have been negatively impacted by the longer lead times associated with power conditioning subcomponents used in their manufacturing process.

“Our work to optimize lead times comes as customer order cycles return to pre-COVID patterns, but at post-COVID volumes. Over the past three years, our backlog grew as customers placed advance orders to ensure supply availability. By contrast, our customers have moved to staging less equipment in their yards and have now begun ordering according to more normalized, seasonally driven deployment schedules. We believe this trend will continue in 2023 as customers re-adjust their order planning to our improved product lead times and try to match their order timing to their deployment schedules.

Consistent with the return to this traditional ordering and delivery pattern, we anticipate approximately 40% of our expected revenue in the first six months of our fiscal year and 60% in the second half. We believe long-term demand remains exceptionally strong. Nearly all of our customers are indicating an increase in the number of homes they are passing and connecting in comparison to the previous year. In addition, the increasing number of service providers we serve is exciting. We believe our lead time progress will remain a more meaningful measure of our operational performance going forward. Accordingly, we will focus on this metric in lieu of reporting on backlog in future quarters.

“The appetite for high-speed broadband communications has never been greater and shows no sign of subsiding in the years ahead. We remain committed to bolstering our existing infrastructure and market leadership position to address near-term demand, as well as prepare for the gradual, longer-term tailwinds from state and federal funding that have yet to be a meaningful part of revenue. As we progress further into fiscal year 2023, we aim to strengthen our momentum and continue to scale to maximize the ease, speed, and cost efficiency of our customers’ fiber deployments.”

First Quarter of Fiscal 2023 Financial Results
Net sales for the first quarter of fiscal 2023 increased 68% to $86 million from $51 million in the same year-ago quarter. Clearfield organic revenue grew to $78 million, representing an increase of 53%, while Nestor Cables generated $8 million in revenue. The increase in organic net sales was due to higher demand for the Company’s products across its core end markets, particularly in Community Broadband, Multiple System Operator (“MSO” or Cable TV) and National Carrier markets, consistent with the Company’s past quarters of fiscal 2022.

As of December 31, 2022, order backlog (defined as purchase orders received but not yet fulfilled) was $136 million, a decrease of 17% compared to $165 million as of September 30, 2022 and an increase of $35 million or 34% over December 31, 2021. The sequential decrease was due to the Company’s ability to fulfill the customers’ orders more quickly and the return of seasonal ordering patterns by our customers.

Gross profit for the first quarter of fiscal 2023 was $31 million, or 35.7% of net sales, compared to $23 million, or 44.9% of net sales in the first quarter of fiscal 2022. Our gross profit was affected by our investments to increase capacity for additional growth in the coming quarters and years. These investments include the increased facility costs associated with the addition of the Company’s new Minnesota and Mexico facilities that came on board late in the second quarter of fiscal 2022, and the continued expansion to outfit these facilities. The Company continues its investment in cable manufacturing at its Mexico facility in conjunction with the Nestor Cables acquisition, which is expected to be operational in our second fiscal quarter. Gross profit was also affected by a full quarter of lower gross profit realized in our Nestor Cables cable manufacturing business. The Company expects to operate at these gross profit percentage levels for several quarters with improving margins as revenue levels increase later this calendar year.

Operating expenses for the first quarter of fiscal 2023 increased 29% to $13 million, or 15% of net sales, from $10 million, or 19% of net sales in the same year-ago quarter. The increase in operating expenses reflects the first full quarter of Nestor Cables operating expenses, as well as higher compensation costs, travel and entertainment, stock compensation and professional fees.

Income tax expense for the first quarter of fiscal 2023 increased 33% to $3.7 million due to higher taxable income, with an effective tax rate of 20.6%, as compared to $2.8 million, with an effective tax rate of 21.1%.

Net income for the first quarter of fiscal 2023 totaled $14.3 million, or $1.00 per diluted share, compared to $10.4 million, or $0.75 per diluted share, in the same year-ago quarter. The increase in net income per diluted share was due to the higher net income for the first quarter of fiscal 2023, partially offset by the higher number of diluted shares for the first quarter of fiscal 2023 of 14,284,847 as compared to 13,897,787 for the first quarter of fiscal 2022.

Conference Call
Clearfield management will hold a conference call today, February 2, 2023, 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 CEO Cheri Beranek and CFO Dan Herzog will host the presentation, followed by a question-and-answer period.

U.S. dial-in: 1-877-407-0792
International dial-in: 1-201-689-8263
Conference ID: 13735394

The conference call will be webcast live and available for replay here.

Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at 1-949-574-3860.

A replay of the call will be available after 8:00 p.m. Eastern time on the same day through February 16, 2023.

U.S. replay dial-in: 1-844-512-2921
International replay dial-in: 1-412-317-6671
Replay ID: 13735394

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, data center, and military markets. Headquartered in Minneapolis, MN, Clearfield deploys more than a million fiber ports each year. For more information, visit

Cautionary Statement Regarding Forward-Looking Information
Forward-looking statements contained herein and in any related presentation or in the related 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, anticipated shipping on backlog and future lead times, future availability of components and materials from the Company’s supply chain, future availability of labor impacting our customers’ network builds, the impact of the 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 add capacity to meet expected future demand, 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: adverse global economic conditions and geopolitical issues could have a negative effect on our business, and results of operations and financial condition; our planned growth may strain our business infrastructure, which could adversely affect our operations and financial condition; the acquisition of Nestor Cables and integration activities could adversely affect our operating results; the COVID-19 pandemic has significantly impacted worldwide economic conditions and could have a material adverse effect on our business, financial condition and operating results; we rely on single-source suppliers, which could cause delays, increase costs or prevent us from completing customer orders; fluctuations in product and labor costs which may not be able to be passed on to customers that could decrease margins; we depend on the availability of sufficient supply of certain materials, such as fiber optic cable and resins for plastics, and global disruptions in the supply chain for these materials could prevent us from meeting customer demand for our products; we rely on our manufacturing operations to produce product to ship to customers and manufacturing constraints and disruptions could result in decreased future revenue; a significant percentage of our sales in the last three fiscal years have been made to a small number of customers; 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; 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 on our information technology systems, including ransomware, data breaches or computer viruses, could disrupt our business operations, damage our reputation, and potentially lead to litigation; our business is dependent on interdependent management information systems; to compete effectively, we must continually improve existing products and introduce new products that achieve market acceptance; changes in 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; if the telecommunications market does not expand as we expect, our business may not grow as fast as we expect; we face risks associated with expanding our sales outside of the United States; 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, 2022 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:
Matt Glover and Jackie Keshner
Gateway Group, Inc.


  Three Months Ended
  December 31,
    2022       2021
Net sales $ 85,942     $ 51,109
Cost of sales   55,293       28,137
Gross profit   30,649       22,972
Operating expenses          
Selling, general and          
administrative   12,759       9,923
Income from operations   17,890       13,049
Net investment income   303       120
Interest expense   (243 )     -
Income before income taxes   17,950       13,169
Income tax expense   3,695       2,780
Net income $ 14,255     $ 10,389
Net income per share:          
Basic $ 1.01     $ 0.76
Diluted $ 1.00     $ 0.75
Weighted average shares outstanding:          
Basic   14,165,550       13,743,503
Diluted   14,284,847       13,897,787


    December 31,     September 30,
    2022       2022  
Current Assets          
Cash and cash equivalents $ 30,313     $ 16,650  
Short-term investments   117,538       5,802  
Accounts receivable, net   55,139       53,704  
Inventories, net   89,705       82,208  
Other current assets   1,450       1,758  
Total current assets   294,145       160,122  
Property, plant and equipment, net   19,730       18,229  
Other Assets          
Long-term investments   10,293       22,747  
Goodwill   6,545       6,402  
Intangible assets, net   6,488       6,376  
Right of use lease assets   12,638       13,256  
Deferred tax asset   1,090       1,414  
Other   867       582  
Total other assets   37,921       50,777  
Total Assets $ 351,797     $ 229,128  
Liabilities and Shareholders’ Equity          
Current Liabilities          
Current portion of lease liability $ 3,475     $ 3,385  
Accounts payable   18,366       24,118  
Accrued compensation   6,867       13,619  
Accrued expenses   12,436       6,181  
Factoring liability   4,178       4,391  
Total current liabilities   45,322       51,694  
Other Liabilities          
Long-term debt   2,132       18,666  
Long-term portion of lease liability   9,706       10,412  
Deferred tax liability   756       774  
Total Liabilities   57,914       81,546  
Shareholders’ Equity          
Common stock   152       138  
Additional paid-in capital   185,404       54,539  
Accumulated other comprehensive loss   (733 )     (1,898 )
Retained earnings   109,058       94,803  
Total Shareholders’ Equity   293,881       147,582  
Total Liabilities and Shareholders’ Equity $ 351,797     $ 229,128  


        Three Months Ended     Three Months Ended  
        December 31,     December 31,  
        2022       2021    
Cash flows from operating activities                
Net income     $ 14,255     $ 10,389    
Adjustments to reconcile net income to cash provided                
by (used in) operating activities:                
Depreciation and amortization       1,353       639    
Amortization of discount on investments       (218 )     (11 )  
Deferred income taxes       (80 )     -    
Stock-based compensation expense       660       440    
Changes in operating assets and liabilities                
Accounts receivable       (549 )     3,108    
Inventories, net       (6,505 )     (16,049 )  
Other assets       (176 )     (300 )  
Accounts payable and accrued expenses       (7,637 )     1,750    
Net cash provided by (used in) operating activities       1,103       (34 )  
Cash flows from investing activities:                
Purchases of property, plant and equipment and                
intangible assets       (2,213 )     (2,051 )  
Purchase of investments       (98,881 )     (248 )  
Proceeds from sales and maturities of investments       -       1,980    
Net cash used in investing activities       (101,094 )     (319 )  
Cash flows from financing activities:                
Repayment of long-term debt       (16,700 )     -    
Proceeds from issuance of common stock under       299       249    
employee stock purchase plan                
Repurchase of shares for payment of withholding taxes       (954 )     (274 )  
for stock grants                
Tax withholding and proceeds related to exercise of stock options   (342 )     (156 )  
Issuance of stock under equity compensation plans       954       -    
Net proceeds from issuance of common stock       130,262       -    
Net cash provided by (used in) financing activities       113,519       (181 )  
Effect of exchange rates on cash       135       -    
Increase (Decrease) in cash and cash equivalents       13,663       (534 )  
Cash and cash equivalents, beginning of period       16,650       13,216    
Cash and cash equivalents, end of period     $ 30,313     $ 12,682    
Supplemental disclosures for cash flow information                
Cash paid during the year for income taxes     $ -     $ -    
Cash paid for interest     $ 205     $ -    
Non-cash financing activities                
Cashless exercise of stock options     $ 431     $ 93    

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Source: Clearfield, Inc.