CLFD - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. Welcome to the Clearfield's Fiscal Second Quarter 2018 Earnings Conference Call. My name is Hector and I will be your operator this afternoon.

Joining us for today's presentation are the company's President and CEO, Cheri Beranek; and CFO, Dan Herzog.

Following their commentary, we will open the call for questions. company's remind for call in replay Relations of to and be the like section available made via the would everyone will this recorded Investor I website. a link webcasted This call called FieldReport, company's Relations is which website. accompanied Investor a available the of PowerPoint the in and also section is presentation by being also the of events Please making forward-looking be call, management and future note the will that during the course the financial performance regarding the future company. of statements subject are actual materially those statements These and cause in risks statements. forward-looking that could to results uncertainties forward-looking to from differ the to that obligation important company to undertakes It's no note also statements. update such the in you conference actual consider materially in differ today's company factors that FieldReport, contained those to and in press results cautions call. release, this to could cause from The statements risk forward-looking Clearfield's factors Securities the those Exchange filing risk in The section recent risks. Form XX-K examples with most Commission of provides and the

slides speaker that, presentation over proceed. not speaker CEO, As like through Clearfield's are the their a as presentation by the the turn to Please Please would forward Cheri to listener. With remarks. rather in the presents but Beranek. reminder advance this the I the by call controlled you

Cheryl Beranek

joining for today. Good thank you afternoon and everyone us

steps During financial to the took quarter and we significant Clearfield's improve market position.

litigation technologies. product to on leading the concentrate patent settled infringement acceptance these and us our which associated market of we with claims put development First behind allows us expenses to of and

Second, platform addressable offerings and total expands we powered management acquired fiber exciting of our an new product portfolio that of market. cabinets

down in wireless, customers. some our customer spending to been at the largest for of continued one of tier we are with slow into disappointing to continuing in our quarter. due review A year the one revenue fiscal that half second has first the wireline, and related international our market However, the tier merger and spending process experience primarily the

for to the revenues wireline, tier resources greater address a efforts. named required one the slowdown. his at XX however our Chief dedicates other wireless, a one whose Recently market Revenue the compensate adds improve tier international not We in are strategy appointment believe customers Officer We we sharpen to and with seeing rate experience to development year and focus and parts market a quarter in were bookings quarter came our review $XX.X our million in the at dynamic. exceeding changing Bookings $X.X succeed grow mentioned in so I this fiscal million. expectations. this pick by did to back high results total minute to up quarter Stepping the while a early as shipments In the in slower two level end. below markets

our core the wireline in the this XX% year-over-year While for momentum overall than quarter, strong business its affected by ongoing more was growing environment. quarter sluggishness by spending continued

pressure to downward on addition deployments In sales ready XG for markets continue put make our efforts. the

million revenue period. we of X% our a to invest compared continue same Our business. $XX.X to Yet growing total decrease the represented year ago in

During we the released two new products. exciting quarter

count which are looking distribution scalability of patented Clearview leverages ROI, for launched our the service fiber small providers new a As hub Cassette. we faster

to negatively These terminal the varied aerial professional expenses income quarter. Legal onetime associated patent fees incurred quarter fees the environments FieldShield distribution. impacted $XXX,XXX suit. rather through the included net our flexibility expense settlement of the brings new our delivery total the to for infringement our than system which a further and overhead addition law In with looking of in of of million $XXX,XXX $X.X deployment fiber cost reduce

full more legal progress and we levels. strategies financial fees Herzog suit us to turn who With the second will presentation overall CFO, Dan about before our expect as future I of year the walk our quarter. the our of will the growth in well law the half through as But outlook performance the normalized over for talk will return settlement the to I our

Daniel Herzog

you Thank Cheri.

financial our more at results looking detail. Now in

wireless, to Cheri XX.X sales decreased our the primarily of XXXX fiscal was million XX.X by The quarter from as mentioned decrease revenue million to second driven year tier in Our lower in X% to ago the period. same customers. international The one to decline network increase and base XX% more by these wireline, a offset was three in and customers sales municipal in customers. sales core wireline our than tier partially of

revenue as by government's the international million programs. to X% period. same the at lower for or XXX,XXX business, Looking XX.X% XX% America X.X second quarter was gross driven XX%. of percent the than profit but the in This Gross to orders of Canadian and the of decrease Latin from anticipated last delay profit Calix year region as quarter target the delays to innovate of our well ago revenue, from in decreased X.X Central was million. At decreased fiscal year same our the range within to XX% connect funding XXXX [ph] total

are powered we we acquired margins slightly the half as line anticipating processes. second manufacturing the into cabinet For lower assimilate fiscal XXXX our of

with fiscal expenses XX% powered cabinet XX,XXX year the contributed this the fiscal end to around percentage acquisition Professional the lower ago will of were rest were million Our amount. XXXX may quarter. for the from expenses While quarter-to-quarter to the previously gross target operating we our QX mentioned, due margins up hover X.X line of believe of from which same fluctuate this throughout factors associated range the

was expenses the settlement the However onetime lawsuit primarily included $XXX,XXX. which increase the infringement incurred X.X patent to the through of a of due in defense million

loss one diluted with of second quarter our income The diluted the $X.XX net and a net expect ago XXX,XXX levels and revenue. for return in or between share we forward period settlement year normalized to Net litigation the result Moving operating to XXXX XXX,XXX time $X.XX fiscal quarter. per expenses fiscal share was was lawsuit. expenses will this for XX% same of in compared associated expenses per the or loss of range the direct for legal XX% will

sheet. balance our to now Turning

second ended from December decrease our detail. quarter the prior cabinet The in investments XXXX. was will powered primarily which cash to XX.X go more investments Cheri our XX.X Calix and fiscal of million XX, cash, to and decreased acquisition line million equivalents, million in cash into the the due from quarter During XX.X

also XXX,XXX total in a XX,XXX utilizing cash. We repurchased shares of

As for X.X XX, have program. repurchase an we March X.X shares million the within XXXX XXX,XXX approximately million leaving program approximately under XX stock of of repurchased aggregate available our million

as Now operations fiscal back into with and the as that call to outlook XXXX. fiscal initiatives her for for our quarter I for remainder turn the to insights would like of over well our strategic Cheri. Cheri the

Cheryl Beranek

disappointing. Thanks Dan. revenue Top has been line

cabinet and Rosa and comes line Revenue table Rosa X her a with will Clearfield's lot Officer. from of top as to enhance Chief strategy the international market through and Marketing Chief cable part distribution our to total needs bring enhancement. TV leading we expansion as campus welcome second XM our our This experience. fleet we and such that wireless to efforts line the diversify our As Tier are Burns the quarter. and enhanced providers. market and model. that powered continues has products up of our the than marketplaces. Revenues to She programs to the execution this will X our the to of more Clearfield It's technology and serve the client of wireline the serves not from X to the in Clearfield needs municipal our online channel bring also Tier available the note of smaller Officer Morgan, but completed Kevin Phase focus, important segment of Calix. service with of only expands the presence strategy, XX% acquisition of hundreds launch were excited marketing market College College. in been expands Clearfield Consistent our

and immediate to the The powered multi-year new product to profitability lawsuit also behind cabinet wireless design patent expansion Revenue line Johnny wireline while the that and extending into focus us X improve and strengthens distraction and markets. are cabinet our With acquisition lead, position and us line in The our to infrastructure cycle marketplace the sales will our helps integration help us position on investments Operating Officer portfolio extending the powered market. be the to core for Officer new will focus our will the involved in of believe XG. Chief of earlier this and of We product the growth and Tier acquisition our methodologies the Chief the accelerate prepare Hill opportunities. long-term

While our revenue acquisition on facilities. line further SG&A in QX help acquisition and this mix product to product revenue due we our had the into forecast, solution incremental a short and spend. of scale integration annualized top major fiscal minimal manufacturing $XX contribution expected effect step will low incremental products strategy. the our believe the growth million are the a our Phase actively profitability represents of X With to integrating drive to In line we

possible in for quarter XXXX product type business the interoperability Nimble in continues people be it position next been adapt and pleased making of the this to I Internet-of-Things, ultimate XG architecture for to has with gateway industry's growth this a this XG only fiber. deployments. is our to of strategy. communications. line product new is Our formulate innovation cornerstone investments cars driverless a is modular and the and XG the and we're will for Clearfield am But focus the of generation to beyond.

for $XX to rate, the $XX This if growth the half associated has revenue original market, outlook issued year-over-year for $XX are reform The outlook our fiscal causes year. annual to represents the be at to to least growth full for Given we gross the than at the expects in our spending million. and between to to XXXX between profit a tax resulting million the The beginning Clearfield the six are of for percentage X%. X% and lowered The and for $XX as second X% to period net X% XX%. the margins in continuing updating is expenses developments and which year. be guidance revenue guidance experiencing we the XX% revenue update corporate legislation month outlook million is fiscal to the million and tax of year guidance operating be flat to revenue income XX% XX% of period. lower Due the year financial

strategic lead on in and entire disappointing enhancement team put we've our this this continuing the the of ability behind while the enhance Clearfield's the track focus of While XXXX will us Moreover our the management remained market a pressures development record market to share and product market and expanded revenue always lawsuit Revenue process negative and line. Throughout product dedicated of patent innovation. available market new the goals our same. was profitability. long with acquisition our is have beyond of and expansions total

call -- Operator. to we're Now for your question. the with that open open ready

Operator

Instructions]. [Operator

Capital comes Northland first question. Please Savageaux proceed Our with Markets. with of question Tim your from the line

Tim Savageaux

Hi, good afternoon, couple questions.

cabinet the from what business reiterated know are acquired. or off, assumptions First kind I to regard follow to of of guidance the annualized wonder you for in and there? you I'll acquisition with you factoring second I million mentioned up half XX specifically forecast contribution sort

Cheryl Beranek

upon acquired in didn't a later that the had late starting chain help program the they in slow It quarter $XX us and late with have did start of us moving issues. product shipments product the really logistical that we in owned We have me, built work company start million to forecast a the placed we supply spring Calix is that not is in of and vision seasonality the based significance the done until bit of into than and certainly the forward. of February the anticipated. little some the some the program. that line cabinet with Excuse product any before the There did line level cabinet any powered in outside shipping line that is plant had as had We the regard in we powered March. that

Tim Savageaux

kind I know start little Tier Tier for sort with that that you to well implying year, although core mentioned is those the what X run organic for a the business because in half expectations I stronger growth last performance an seeing a of access XX% are year pretty of [ph] driving and the mean core overall kind year rate wanted kind of will there annualized trends base? the of normalized to second as along or that funding talk kind X of for for to that I you're about of what X, of you'll what you're bit slowish that lines that and guess like of Tier is the year, your growth, forward take business revenue comes off weak Okay, eye really heading of that the that fiscal kind you're seeing I more government targeting be whether uptick customer or dynamics growth in sort below

Cheryl Beranek

into and certainly they to that those able little the we're the opportunities some national Yeah, Tier as to Tier X what be are some see organizations Tier space increases X more gains see they in of starting to not to we footprint. for in to significant X bit starting environment huge us for put regards are while a are us have we

Tier very in We has have as large because needs, take large an to are our space share X, much just very organization it the gone X environments. couple a I continued Tier unappreciated meeting believe focused on very of the the X competitors who from

customer deployment next -- the home is have to really infrastructure had next are communities and environments our their and municipal Tier that be outs are and build space across their build opportunity of initiative. and with taking billing our a municipal to utility to take countries community Tier worked position in and that being the community arrangement Our fiber as right X has some part and initiative type X country as there which across the a city to big that in experience arrangement, that with to those away in generation service distributors the we doing see forerunner Clearfield of growth their

those the small a I see don’t up -- cabinet a an an did to not just growth expansion in Tier being to business a of by some X our provide we slow powered Tier more smaller in while field. communities nice that backlog broader back business the be a it see existing to is percentage X considered -- and what by in Tim as had our to it's represent met for is organic we've clarifications space of that's XX% much But we we of products or X. quarter are Tier place anomaly now of which XX% the you having growth that So, our the and that backlog as put in second have that got is we initiative needs want still ramp backlog. processes of do to regard broadband in their the rate who

gone a those I think more in times We're us there's through few that the product lines improve we're to going be used able be to been to out opportunities to a in than performance for that being to to. eight of still past and that to lead lengthy some able ten bit get the have used days. product have door little the

processes longer build the those product of have more some lines And they're for because been outsourced.

So part availability manufacturing the out integrate improve more to into quarter our and be our rapid chain basis. those able third of the in to initiative of supply product getting door is a our process

Tim Savageaux

and fairly of seasonal your typical and of for starting you're QX on Okay, fair the stronger interpret to would like [ph] up the kind it just kind particular, Tier be of a second strong sort looking a X, continuation follow that a you basis, a Tier on quarter-to-quarter how into summer guidance X, you to looks on on that in say kind in would the activity half of the or of in months? pattern historical Ilec of side see uptick

Cheryl Beranek

building little have that bit force. can the million positioning place our a they into third half continue rated to at Absolutely for higher the they labor second of assuming quarter XX but to is -- are also XX not make we we're year. products their only Typically looking sure million and they're

Tim Savageaux

guess than the that's the Adtran, following Tier question last longer timeline thoughts up happening to Tier kind of and wonder in peers front, softness and updated in side X is lower and be X in access particular first necessarily review on then quarter as any expected where degree on I Tier expected. from side a obviously is wireless market there activity wireless come across I by we've your maybe you have in more of on [indiscernible] connected and you if see taking possible fronts well, some might the the does cable the I X from that there you than of okay, that little seem not but on heard a Right, life on AT&T is and across the know get thing to particular? it September there resumption relief

Cheryl Beranek

it it. is there visibility our the and lower know is The you they're of in for our we there the peers confidence year point that is that space as no Yeah, reason and and that level this doing to well that are just we marketplace that in defined. pretty right the didn't in now have outlook isn't at Tier what challenges X it the

prudent number are rate the per and quarter their spend and not spend I put they subscribers turn their that they increase of was up our up it And that a to -- the to it an labor hard low account and that that within But our there lot awful those as visibility to is the guidance the outlay a that we more existing enough going to numbers level stuff opportunity what talk about. think together. deepen markets of place to technology and labor as without so line the There strong that's they there because within is use don’t cable so use is some within into we make case. to fun FieldShield we're fiber, reduces be to footprint. line in certainly accelerating those work product happening amount to use could work able disruptive very target be opportunity an environments put we in return to and technologies really that of the thought FieldShield and they well the turning of of but that can reduce amount can the have because homes

I'm fun and So to some fourth about in the fourth bullish present numbers some TV hopeful that. quarter cable be I'm to got activities in in We've pretty quarter able third the you and place that marketplace. represent to

Tim Savageaux

on fair improvement for absolute just X% that of out even front sort the you the to Okay, of taken on that, Tier it is assume the but or improvement basis not revenue sort throughout kind say X no have from current basically an no the kind of of year year? really

Cheryl Beranek

can one X seen Yeah, have you uptick we we Tier of X stage but broader cycles be business so significantly simply can the one be stage said been with those activity. of an do rather the business taken the have our number and stage carriers do at and Tier the as the product that That basically the with back were with trial than -- long the deployment majority sales a of care line is point we that but anticipating. pilot customers to this other know than more we has that put

Tim Savageaux

Got much. I it, on. thanks pass very will it

Cheryl Beranek

bye you, Thank now.

Operator

concludes question-and-answer This Instructions]. session. our [Operator

Clearfield your questions closing will of now like her the you call for If Clearfield's was The to section post not question I'd taken relevant in Relations CEO may and most website. back to company Beranek four investor team the Investor at answers contact clfd@liolios.com. Cheri turn the comments.

Cheryl Beranek

to us to growth. of want next the call have supported thank evolution employees, company's to like for this look everybody just their first forward shareholders who thank you soon. updating on I our continued to I partners also would our With to to support. that and on our we for I progress you thank our wanted phase today's joining

Operator

Clearfield's quarter joining for second you us Thank earnings conference call. fiscal today XXXX for

now You disconnect. may

Clearfield (CLFD) 26 Apr 182018 Q2 Earnings call transcript