CLFD - Earnings call transcript Q2 2020

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

Operator

Good afternoon. Welcome to Clearfield's Fiscal Second Quarter 2020 Earnings Conference Call. My name is Daryl, 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.

of to made that a available the Relations like be call link now Investor and website. recorded for section would remind this everyone will in I company's the replay via call called FieldReport, Investor presentation Relations also a in the of also the webcasted accompanied which and This by is company's PowerPoint section available is the being website.

except in to cautions by These course events those FieldReport forward-looking and factors It also press statements, that filing risks. will note most to as risk consider make of regarding future recent actual with the contained and Please company risks provides future Form that management the from XX-K and differ this Factors obligation are and could call. note materially forward-looking Securities to forward-looking materially could results statements to statements today's descriptions call, Clearfield's those company. that update subject The that forward-looking undertakes to law. Exchange cause statements. company of this in the of The important in you cause during to the performance the Risk the in from financial conference section release, uncertainties Commission is in those statements the differ actual results required such no

proceed. With that, please Clearfield's I Beranek, would like Cheri to turn to the call CEO, over

Cheri will Clearfield's proceed. CEO, I Please turn I Difficulty]. to by. for And standing standing you [Technical by. Beranek. With that, over Please I CEO, Cheri over you call Thank With to the Please Thank technical apologize. Clearfield's turn standby will proceed. the Beranek. do difficulties. for that, for call

Cheryl Beranek

thank for and today. joining afternoon, us everyone, you, Good

we see, we times our for can do of in this, best a in just you earlier take situation we that things like some can. As when we're granted the

people new remote normal. Clearfield are the normal us. and communications Dan our most due that pleased critical from doing solutions I work becoming the So sticking classified infrastructure, is role supporting Clearfield social been at doing homes were to and We works. the in for sector are thank which own routine the play now perspective distancing, and life both that operations -- you have home as is We're that with our today, critical

We have since continued the of by COVID-XX. and operational caused global to despite business beginning be precedented fully slowdown XXXX, closures

We the both in location. either continue U.S. be plans Mexican at operations have eliminated with in ability operate facilities diminished our established multiple event manufacturing and is and to would contingency production the or

healthy, reported today, we of our cases. no are and COVID-XX have employees As

course, can However, this, of change time. at any

quarter was second any $XX.X million, a the as The our for fiscal which X% Clearfield for in revenue highest company's achieved history QX strong level up of at we was period was National is sequentially XX% respectively. strong our driven from and and our year-over-year. were contribution X% MSO This expectations Carrier with and XX% markets, and year-over-year, which consistent trajectory by up

that we've nearly achievement efficiency, last terms plant. and the the months, across of operational the lines efforts another use success efficiency quarters. reflects the our implemented quarter at realized over reduction level across highest Mexico product the of expanded In initiatives X X in solid profit which manufacturing XX%, of margin is gross This cost of our the the organization we particularly

year sequentially $X.X million. From the the second increase a too which same backlog production quarter, standpoint, from a ago in and healthy XX% to order period our XX% we in saw increased

industry-leading For to the most at book for part, times we products. standard continue lead

and recent discuss Dan CFO, progress. moment call Herzog, before performance I reviewing market more I'd Now our over our operational some to to detail, financial in a the like to our turn updates spend of

in to here did customer not delays we experience any or the deepen began changes March in ordering Although particular patterns. States, XXXX COVID-XX's impact in United ordering

starting last community period million, closely, On same million, from more of Looking period broadband second market was revenue the at a XX, we In which the last market. the our with $XX.X core X% by was quarter, $XX.X year. which ended totaled our consistent year. down revenue community broadband segments revenue trailing with generated market basis XXXX, March XX-month comparable

Our National our growth From on Carrier total of trailing largest was and the QX market, XX% comprising the second momentum business year-over-year to for increase we we've trailing the XX% a the total quarters, realizing XX-month XX% revenue XX% million $X.X several to built over the year-over-year revenue increase $XX.X period. revenue quarter of our period. second a a established in million for last in and XX-month standpoint, in

growth to momentum primary application. the in the validates FieldReport, spoke the from our date demand continued I to As is the including on fiber-to-the-home market, XG QX to market opportunity. strategic carrier We investments national the capitalize made believe this on the fiber-to-the-business factor Tier we've driving the X and

In growth million in addition was another year-over-year. National In we generated or market. XX% fiscal and trailing the million revenue, TV to the in for positive of we quarter double-digit results MSO period, which our XX% year-over-year up $X.X in $X.X was generated we Carrier XX-month realized experienced cable our up QX, market, which

delayed Revenue down basis. to recognize XX% the trailing in orders fiscal that market and a year-over-year was international down XX-month on The decline our primarily due later we was in XX% year. to expect

and for total period. legacy was operate XX-month our $X our at trailing expectations this second for foreseeable the down to $X.X trailing rate approximately consistent over with a was in is in revenue which annual quarter million On run X% future. million, the XX-month business Build-to-Print business down Revenue XX% in basis, the

over will performance the XXXX. of second fiscal quarter presentation financial now who for I'll our Dan, to that, walk through With the us turn

Daniel Herzog

Cheri, afternoon, and you, everyone. good Thank

financial in results more detail. Now looking second at our quarter

totaled cost $X.X and revenue. mentioned. million XXXX X fiscal Tier Gross fiscal XXXX X% or was lower dollars in increased profit the due total in ago by to an international was increase of revenue revenue profit as XXXX. in volume, increased million XX.X% to higher while XX.X% or fiscal million in quarter the quarter of was million $XX.X our same improvement in increase the quarter increase offset programs. including sales due of our in revenue second from gross of expanded lines, profit Mexico $XX.X plant gross was $X realized sales, the The second from period. our Our chain manufacturing from supply due to to year total use The of across second markets, reduction of in sales the efforts primarily for efficiencies our percent MSO and product This Cheri

for were expenses million, operating fiscal ago quarter. of the from the year were same up quarter $X.X Our in which $X.X million second XXXX

in period. for The increase compared year expenses operating costs ago total As to the same with a expenses operating were certification. revenue, percentage XX.X% costs of XX.X% X primarily compensation product in due required Tier in the was testing associated and QX to increased

totaled per the same fiscal $XXX,XXX in which the was diluted expense quarter. XXXX the Income $XX,XXX quarter increased an quarter XXXX net from of second Income $X.XX fiscal fiscal diluted income of the to year second quarter in or from $XXX,XXX $XXX,XXX quarter operations year second ago of $XXX,XXX share, per of share or tax second in In quarter. from $XXX,XXX XXXX, comparison in to same the $X.XX in in ago the XXXX. is improvement

working XX, XX.X Treasury by sufficient and and U.S. believe and next and During $XX.X investment which capital million to cash the our investments operations, Securities increased backed cash cash XXXX. accounts, our the worth months. from is FDIC, second CDs money to invested $XX.X equivalents We secure highly $X.X investments, excess along million that quarter, our meet our It's are -- cash is and in ended mainly prior with market liquid. in million for existing noting the from cash, requirements beyond the December short-term flow XX quarter

of an $XXX,XXX. stock of During our value the XX,XXX quarter, approximately aggregate repurchased we shares common for

stability and we Board deploy we our repurchase suspended during returns further generate continue how ensure our To will to our management team Our these for times, uncertain share capital shareholders. our have the plan. evaluate highest to financial

prepared concludes back Cheri. over I turn That call Cheri? will my to remarks. now the

Cheryl Beranek

Dan. Thanks,

last plan company business which our of two our XG. and our executing disruptive been Age to year strengthen core years, Coming our specifically we've for around Over opportunities, strategic position designed on plan, growth is three the

our spend plan. the of we're on within As a update initiatives brief in performance results now starting and now major providing this demonstrated, it. moment financial QX three operational I'll a our to realize

benefit first which we In grow in our in providers initiative, government. successful the with and community funding core opportunities share modular expect our expanding our programs business, expanded to sponsored terms of emerging Further, will the our in expect utilities, from opportunities with by broadband we help unique be for architecture deployment working on will broadband we seeing these who federal this service are capitalize us market.

gross XX% success our was quarter. progress in by our area In the realized profit demonstrated terms effectiveness, our most enhancing margin of in the clearly this we operational

across the improve to Dan we chain the to product lines efforts ways our and capabilities addition cost for supply In manufacturing from benefiting continually as mentioned, efficiencies. looking reduction are

During from initiatives and manufacturing current associated The the X other coming doubled we planned from we in shipped commence delays this the operations facility facility shipping of by our lease assessment, shipping enclosures. begin to level for Based dedicating impact and establish which believe COVID-XX in lean square on to a in a significantly caused we splicing the the QX, has but in our manufacturing Mexico, us Mexico second allows the signed did products with to facility ability quarter. connectivity footage to temporary impact not weeks. revenue can facility, the our

which competitive our time of home fiber-to-the-home ease recently the reduce home. XX position, deployment kits, of per are introduced and minutes we deployment install task to by approximately terms In designed

be homeowner installation. products free for structure, the contact can directly In their these providing addition, a own installed by within

separation Fiber XG Box all The introduced and point small wireline the network secure a wireless involves quarter, national class as the markets XG StreetSmart between management and creates the third wireline on fiber portfolio support backhaul wireless the capitalizing of cell mobile operator, second fiber of within initiative demarcation StreetSmart markets. the the plan between we fiber opportunities In products Serving the carriers connections. carrier Hand-Off our our to and of densification. provider the

participants and this conversations XG industry COVID-XX our vantage several are some despite even builds with year From X other Tier increase seen uncertainties. the committed XG-related budget including last still point, weeks, CapEx we've the for their over and players customers

that intact. instituted safety multiple I'm -- to report remains our working there adapt In also able that to and are new and multiple normal capacity their to has response to landscape, the in production and the viability All excuse are Clearfield our remotely have ensure federal jobs to long-term operations no -- policies instituted global adhering state layoffs. protect by at the been encouraged me Clearfield to while to of the employees guidelines. changing to trends the employees workforce has COVID-XX do created government pandemic, nonproduction

employees nonproduction our all quarter, third working fiscal the are through move remotely. we As

actively We videoconferencing product are through promoting other demonstrating methods. and solutions and our

We our dual And majority necessary of the provide and most have products. of now, operational our supply source chain to components the for remain components. our as of continued partners

We have stocking increased plant in our ensure dual manufacturing position sites. to each

invested other, should We the both in production equipment have X on we have our X breakout to and capacity or of in additional or personnel provide sites. illness location manufacturing alternative an

bonuses social have for allow We and are productivity to our providing relaid and hazard out distancing. pay plant floor

In a addition, health task production all COVID workforce have being to among addressed. force are needs established the ensure we

create However, these are circumstances times, undoubtedly will and pandemic control. immediate beyond uncertain our highly the

period economic be -- sufficient $X.X these a and Coronavirus within uncertainties, significant under uncertainty. of PPP Act. The Payroll rate meets potentially of a fixed bears that the result the Relief of or at and Protection under the team with Economic financial increase protection employ demand may customer The all loan interest to Clearfield in layer our significant certain in loan plans throughout Program meet X% could be a this Security Aid, members an CARES not if million and additional received of we conditions. manufacturing forgiven Due provides contingency costs. continuing will Our us to loan to of

disruptive to navigate with remains operational. and nearly As these ensure million remain solutions term we We currently these we confident long both our place factors stable the in backed the industry-leading foundation near opportunities we waters cash have on third $XX as fiscal move in the team. term and and well. and a by believe the plan successfully within quarter, strong, production will our right and business fiber investments, through enable uncharted optics world-class the in us We capitalize growth to industry,

team. I'm of very our proud

that of to business a is industry. adapted to challenging seamlessly environment. as our We've has as resilient needs working built regardless in during time customers QX team supporting by businesses, Our today's highly evidenced strong our continue as of critical dynamic results for our a the well ability many

quarter XXXX in remains fiscal third outpacing the of As the of realized today, Clearfield XXXX. the fiscal in second quarter levels bookings business with strong of

Clearfield's lack customer potentially markets as the global as supply the could of Clearfield broader ordering the uncertainty the However, disrupt its is patterns such well pre-COVID-XX it for team intensifying Recognizing leadership fiscal Board overall prudent visibility until demand the to levels. withdraw and to time temporarily and in demand Directors reduce products chain and necessary and visibility returns in this reality, term. near guidance believe financial that of XXXX company's

And Operator, you. we're I call ready the with for that, questions. to open to turn it your

Operator

Instructions]. [Operator

questions first Capital the from of Markets. of Tim line Savageaux Our Northland come

Unidentified Analyst

the could in any Tim. wondering backlog. if is for increase on give was This actually you Steven I what on us drove color

Cheryl Beranek

bit quarter a lot across didn't The second what -- the came in the have late as in long-term plant didn't in it Couple company the to we're the the carrier some allow of in up team in because of our backlog as little a is driven dedicated community doing it's COVID tail to increase broadband, plant well and of consistent in a construction that's MSO in project. with associated and We of was March. overall the federal that the and the things. some a orders, was us of backlog that virus business. end Mexico business. it month more the was open called more The quite lot got But Mexican to March

Unidentified Analyst

-- traffic increases to there due just positively Okay. know, out? are it those impacting is let Or is And us then business? your the pandemic, pushing can the anything That's you great.

Cheryl Beranek

traffic, say you When broadband traffic?

Unidentified Analyst

Yes. Correct.

Cheryl Beranek

Right.

I better is how high connectivity now -- drives just it certainly demonstrate much our service a customers, level and interest broadband service right lives. their are whose asking no think time And there's seeing we're of from for our I customers turn-ups. day-to-day provider crucial to how think

second think of take and and it not we're that it. of We're little providers seeing need because in they're I quarter, lot, a haven't but people of us. uptick level kind previously front demonstrating bit in still service our a a of seeing that's rates seen through see they

us So long-term for recognition -- in short-term it's those a what I the and -- of both of opportunity think the that delivers. that of success because

Operator

comments. Cheri I'd [Operator Instructions]. like her for to back CEO, now Beranek, turn call the closing to

Cheryl Beranek

from a appreciate today. joining you, Thank traditionally our everyone. company, analysts. you covering us I as We, take questions

an not you Bye is to our cberanek@clfd.com not IRR social now. addressed and is is been very today's free which distancing a ask to in have out I please a much. myself to If choice, that feel has safe, or requirement. firm, you it's to stay reach information, question hands to e-mail us which a by for personally, Thanks sending your ir@gateway.com. wash

Daniel Herzog

bye. Good

Operator

Call. us joining Second Fiscal for XXXX Earnings for you Thank today Clearfield's Conference Quarter

may You now disconnect.

Clearfield (CLFD) 23 Apr 202020 Q2 Earnings call transcript