CLFD - Earnings call transcript Q1 2021

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Operator

Good afternoon. Welcome to Clearfield's Fiscal First Quarter 2021 Earnings Conference Call. My name is Sam [ph] 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. company. course future will be performance statements regarding events Please the management of note, making call, the that of this during financial and the future forward-looking are risks forward-looking from to that cause statements uncertainties forward-looking materially These differ actual subject those could and results statements. to the in It is except no as also the statements, obligation law. by company important undertakes to note required such to update that from press risk contained to cautions The those that release, company the materially consider factors in in forward-looking FieldReport statements call. cause this conference actual and today's could you in results differ to recent of in Securities provides filings Factors description section and The Commission Clearfield's on and Exchange the Risk XX-K subsequent those its most filing with XX-Q risks. Form Form

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

Cheri Beranek

the with you speak Good first you to you quarter are this stay us to afternoon all fiscal and everyone, to today. afternoon thank Clearfield's continuing a of It's safe joining for I for result pleasure hope XXXX. and share healthy.

year. The first start exceptionally strong to our quarter fiscal new fiscal an of XXXX was

level XX% X, marked year increase Clearfield first in see we was As the for a generated quarter fiscal and Slide on in million last $XX.X any history. can you highest revenue the over revenue

or the by and XX% TV from with and respectfully. cable period community MSO markets, also operator, double-digit Our broadband increases known were which XX% led as in up growth multiple system our again

level on accelerated strong strong by especially the to community and basis month the market a time. over need The revenue for commands top the surging us prevalent trailing country, and enabled broadband first demand is the which line COVID-XX exceed several speed Internet $XXX market quarters Clearfield in leadership. across extended as access million XX the for performance ongoing high Our last in

record community positioned extremely well the broadband further and that underway. reputation And track currently take on Our share. in has the us market to capitalize is expansion

like Clearfield of telephone utilities independent base the providers and broadband is high-speed meet well the deploy emerging into these providing home expertise as our deployment solutions as all by performance extend demand field-proven delivering our growing As businesses. municipalities home. our joined is providers kits, them fiber helping our to innovative and consumers way and which traditional helping the and management by products leading-edge connectivity fiber

of evidence of initiative. the this As success

kits into near-million fiscal quarter to as dollar now supported programs Security for the is and trends, Act, an these a of within government secured coupled industry a as end. quarter electric past balance broadband XXXX, that Coronavirus Economic with Relief known are the continued Cares to last as year sustained since have Act by experienced Aid have deployments. helping accelerate also we demand this such in for fund the this home We million During recognized community $X.X our co-op robust we revenue by portion deployment QX our order and in broadband backlog The reflected at when market.

includes our economically from over gigabit to Digital the that awards previously part dollars community were consumers speed associated billion forward the is we RDOF. RDOF to some to next from the While due may the that nonetheless bills $XX.X or will work of for the demanding, are mentioning revenue recent Fund World pull that currently the program. businesses viable. and homes $XX.X launch It in million Act contribution up QX related any accelerate which due of in worth does expansion reflect Opportunity to RDOF underway not years to home with not it generated the XX of be broadband broadband Cares is market finance

of work community. in what extension deployments doing fiber MSO market our this Tier-X terms expanding community are carriers the of much community MSO area our of an are players In regional broadband. in are is of we by their

such MSO We new are of working XXX to our recent pre-assigned and by of approval FDH are cabinet our penetrate one market the carrier. national pawn proud

fiscal Our QX drive million dollars, totaled top recent which also this helped in solid $XX.X gross period. to line in performance profit most

XX.X% profit our margin, of we the margin reported two achieved years. in we than more XX% up marked prior a the from company the and as have As in revenue quarter was percentage gross highest a

As to had broadband favorable profitability the in gross associated increased the revenue community a QX, in mix it relates and margin markets. our quarter with we revenue

from In Mexico. operations realized addition, meaningful our in were efficiency gains

net to was Moving This share. the down $X.XX last $X.X improvement income the in income anticipate or first diluted we within year. statement, slightly diluted in resources expenses community programs. a in broadband our per quarter, earnings in as million increased year's per We $X.X last $X.XX in from million slightly or future resulting in from expenses additional increase significant of QX quarters share generated we invest

advancing networks. as financial Mount, the This National by market as the into encouraging our for FDH the country to our product market, Aerial also portfolio. we of technologies achieving introduction of the crisis and new our In well headwinds addition made end certification associated X FDH for Tier approval product launch receiving included strides using to our with our gripping training. Telcordia Carrier the faces COVID Strand Due its Aerial, performance, meaningful

revenue network the deployments moving we among X access market forward. increasing into the foresee increase Tier XG As

first our our by on X, community market. with revenue market segments, at Slide starting Looking core broadband

which same we revenue in year. from was As last I previously, million, mentioned up the first XX% quarter, the of period $XX.X generated

last year. months $XX.X period XX comparable trailing million, community XXXX broadband which revenue from the XX, XX% market up December the For was ended totaled

QX established over quarters total we XXXX quarter momentum several on comprise last increase in a business we've year-over-year $X million XX% of first in the XX% to from fiscal the built MSO growth realizing Our the revenue to revenue fiscal XX% standpoint, in our XX up million a XX $XX.X December in a XX, December trailing to year-over-year ended XXXX. and for the for X% Revenue was the market months year-over-year ended months increase Carrier XX, trailing $XX.X our National million of XXXX.

National fiber As business through past about continuing for fiber field the the on applications. in the and our I talked reports, the position related demand market home to is to Carrier

X% constraints the in XXXX XX% COVID first XX, have and months quarter the year-over-year XXXX. XX% million. the slipped for was access Caribbean market XG solutions in network. the the trailing down of to year-over-year continued $X.X down quarter Revenue and limited international of XX markets. Weakness deployment in the part first Mexican fiscal for As into our ended December Revenue the of year-over-year

However, rebound. revenue in an exceptionally the Canadian strong markets saw

presentation our of Dan, to the revenue XX, fiscal With down walk and Revenue performance moving months turn to slowdown normal markets our in to We the ended segment. trailing first part quarter customers markets in year-over-year in legacy levels that the economy COVID. this seeing increasing business who dependent year-over-year the We due the through for international XX% highly XXXX. related will XXXX. business in This QX, legacy us over two December industrial drivers XX the be of forward. of the from will of our to fluctuating in I believe optimistic now are was down financial XX% for upon is

Daniel Herzog

good Thank afternoon great and you, you Cheri everyone, be with speaking to it's today.

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

X. you see can Slide on As

year-ago first quarter the market. our offset community, in decreases the revenues in same increased legacy to of National $XX.X was revenue Our from $XX.X in markets by XX% our fiscal broadband MSO and to primarily sales The due period. increase million million and higher Carrier in XXXX partially in

total Turning profit to profit revenue. Gross million in total $X.X of higher Slide The an or record first was volume. over total last gross from first fiscal improvement dollars XX% for million the sales due revenue This or quarter increase of was a $XX.X year. quarter X. XX.X% of the to XXXX of

with increased manufacturing favorable and realized increase community revenues reduction across programs. at product the mix lines, Mexico mentioned associated from production cost Cheri was margin plants and due efforts in efficiencies product our into chain gross supply including to our increased As broadband

As year-ago quarter. same expenses were first are the for of million fiscal Slide in quarter million on see $X.X XXXX operating the can $X.X X, our up you slightly from

dollar As to of compared performance expenses first total the compensation a XX.X% in primarily percentage wages a period. and costs to was The XX.X% operating to due year-ago basis quarter revenue for operating of related on compensation. were expenses XXXX same increase in higher the fiscal

XXXX. expense tax improvement compares the from $X.X to Turning operations the on million XX, same or to fiscal Slide $XXX,XXX profitability our or increased XXXX an of XXXX, first of in from up quarter. $XXX,XXX same $X.XX million from fiscal of income Net $X.X income in in quarter year-ago $XXX,XXX quarter share which share, per quarter. was year-ago totaled in the diluted diluted the first Income first quarter in per measures the $X.XX $XXX,XXX

it brief we've support update operational business. over like a Before measures on our I back provide and turn I'd Cheri, to the taken to protect to

are pandemic remains global continuing the and COVID-XX I'm business current encouraged caused the closures customers Slide fully we navigate on report despite by that and environment. took Both crisis. since operational reflected and Clearfield how to personnel Our to effectively hold the health XX. unprecedented the slowdown

tools collaboration video conferencing Our stay non-production remotely are using to and employees working connected.

Our federal and in to normal US distancing the and production Mexico are while close government to adhering social state both operations operating guidelines.

either precautionary operate our measure As we in at the contingency eliminated to ability plans have multiple location. event is or diminished a

our today quarter, of partners as provide about to continued and points cover most and failure last dual As provide of necessary of components potential the components talked have multiple operational chain Thankfully, to redundancies many remove risks. for we products. of to we our remain source purposeful supply our

to our Our levels planning Minnesota and supply intact, facilities. at both inventory safety thanks to team's forward Mexico remains our sufficient chain stock ensure

growing to the to location back strategic has portfolio. enable by order the previously, can manufacture the continue indicated the concludes now made customer decision orders That going Cheri plants, ensuring product availability remarks; meet each I across will our turn our to Cheri. to that forward. call lines and of of at backlog over us my our As allowed product to maximize fulfill increased us three all all has we This decision prepared broad

Cheri Beranek

Dan. Thanks,

initiatives focus operational our XXXX. and to gears in shifting fiscal Now

has for now we been Our seeing. plan Clearfield and demand a the initiative to of multi-year accelerated strategic rate growth are prepare

now growth for As XX opportunities. core Age our further plan [ph], are Of to report, next the business see strengthen our the to Come field our company and is of Slide disruptive of phase position growth can you we on ready which

our three where holding company. underlying Clearfield evolves of the Age align today better pillars While plan with Coming objectives unchanged. has up as is are The to a

trends long-term industry. and seeing near the and in needs the customer were and markets end Our

Our unserved first of our is one pillar, customer to brand build municipalities that community building expertise. and A electrical facilitate by the and here is is company major enablement awareness major XXXX a telephone are for relationships a serviced to are pervasive time. at not long communities. community our the initiative Leverage a carriers. co-ops, by partnership broadband Clearfield's Ultimately, still standing better underserved broadband to and broadband high-speed rural into and reach utilities and being underserved within rural extending goal currently

Clearfield securing part been the with coming market established effort We never broadband better. community these anticipate months. the within our partnering relationships strategy this in these target distributors includes of As has markets. in position

capitalize grab opportunity. reputation gain to America. of underway. give and X, to service on you networks direct earlier rural businesses $XX.X and further that's record to American access has digital to those market comments rural Fund or announced well the track will program continue to for designed FCC internet December XX-year areas high deployment The Phase in us share the the connecting currently and Building and it is industry. speed Our for extremely of speed to my or the on RDOF the Commission years fund US of auction. positioned RDOF the to over Americans homes unserved finance to Opportunity divide Digital efficiently to On bridge digital broadband broadband a XX in Company benefit X our through newer Federal expansion networks rural millions that will Communications millions The billion up Rural up

an bidders gigabit high-speed to XX but the get through when the homes sales The annually. if, businesses, not question to and XX. show funding are $X.X reflected Regardless positioned be on well Moreover a speed scheduled is the locations homes tasked unserved overwhelming February over the As of the results opportunity. available XX% through out how will broadband. will report, opportunity Slide significant and program is Almost this for variable of on deploy our these figuring FCC how administer million to majority broadband in auction. connected to it Clearfield program is is approximately the which of The auction with comment one be connected. RDOF taking homes, inputs financial rather public Moreover, Clearfield of is XXX,XXX to capitalize

Turning XX. to pillar The for key deployment new Slide which one delivering on our three true highlighted initiatives. is second innovation pillar involves fiber

presence in backhaul. our broadband enable community leveraging to one fiber First,

obstacles removing may computing. company, wire Second be wireless XG our third, Mexico This our a while integral experience. management am can both made to I In looking being our seeing yielded In market. our looking operational unique Of these to assets improved at initiative addressable in are adjacent it's it's product we're ISO fully categories facility to achieved fiber situations. of and early not audit the focus fiscal areas product aerial networks bringing excellence Carrier, you effectiveness; that in supply customer provides approach new expand our but XX, the edge FTH products, Mexico and would enable recent for Consistent management expertise right are categories this area FTH market area and deployments to The with away in to line obstacles. networks with to total lifestyle intersect investing residential permitting results efficiency competitiveness Aerial is our that XXXX, are broadband of of anywhere Age the our of approval into deploy expanding. Slide to that achieved allow at fiber innovation On The the a integration report or The fiber deliver rich and effort. this chain of is of and Japan to broadband superior costs. strategically in Once operational today are the to agreements introduce reduce to third to a that ubiquitous it fiber the our region includes and business or is in us investing and this certification. a remains of and as challenging and of cost ISO utilization XG ongoing satisfying National approach the manufacturing recertification, see provides. would fiber QX means products facility Mexican in initial the and have for beneficial investments scaling encouraged increase newest we've we initial operations Comes operations

are at personnel footprint we business, Further, in facilities are means growing an on scale to basis. ongoing added systematically have the we products, We to meet the and exploring for we our to Asia. needs as seeing continue our will our demand our expand evaluate

forces in in manufacturing to virtual engineering our China resources, assisting engineering our in Our achieved of boots include the to in Utilizing world, the design who process directly which the to a we've process cost due we personnel us from efforts driven ground COVID; allowing working by two-step from help design. through are expand as Asia with remotely having than a the on rather gains Asian reduce our our some implemented working specifications, to we've us -- are now can design our previously. inception U.S.

the by finish as to which to strong momentum quarter able of metrics. we achieved capitalize on in the profitability growth were XX% demonstrated XXXX significant 'XX, strong Our we and provided FY first fiscal top-line

industry of key performance of Clearfield our established are markets. tailwinds consistent and presence Moreover, advantage Our durability speaks within resiliency and a our of take to growth in continuing benefit and business the to environments. we range favorable

currently financial from guidance. to position volatility to provide due ahead are limited COVID-XX, the in only a Looking we ongoing

confident be beyond. XXXX for the with enhanced revenue open however throughout are fiber-fed second Comes Clearfield quarter for Operator? being sequential growth And your and continued we of questions. fiscal fiber-fed a targets plan Of term, on call will seasonality us that, ahead. we're to access success with Longer Age the the XG which for positions in basis. broadband our for continue ready and Near-term, We anticipate in traditional down demand to consistent the slightly broadband years

Operator

our with Capital. And Instructions] Jaeson with your question. Lake Street from question [Operator proceed first Please is Schmidt

Jaeson Schmidt

my be the at just can lead bookings thanks linearity taking guys, curious, times you could pretty the if Hey December questions. quarter? you guys in for sure on comment understand but that of for I

Cheri Beranek

Hi, Jaeson. that? Defined mean linearity; what by do you

Jaeson Schmidt

Just trying to patterns get if the pretty quarter back-end loaded? more it sense of were order was pattern consistent -- throughout or

Cheri Beranek

consistent. No, very

winter, build people are as we're a future. the of was general then always market, a just and mean for it mean evaluate continual I mild helps, So, and I I but their having plan ongoing we demand really think -- in seeing overall certainly environments the

it was a no, and quarter. very consistent So, nice

Jaeson Schmidt

Okay. forward, related to of I COVID. potential the of know obviously the going you've And then, you tailwinds some some from tailwinds benefited outlined

on the three Just any past if you curious, change could visibility in comment over the months?

Cheri Beranek

would We're I actually business increased -- say, getting visibility kind of to needs.

to suppliers the the COIVD more them least but and by visibility have out kind situation has needs, basis, some I had bit by blanket a a necessarily really plans of are service purchase trying world actually long-range that providers not things their definitely with which season communication past. to would in to and at looking a work we little created think their to in visibility give season orders

are about that be kind I union especially we partners that about of then to push/pull able upon able so really carrier volume manage to concerns, for standpoints. guess, think distribution will visibility that's working and with in to created it that improve our three But four challenge days. require be be the and today in high three installation. availability -- our for even our it's I to available product or we from go to industry-leading distribution heard that However, distribution also to of -- not weeks, so to market times, national into partners concerns some the continuing with it's the coupled at our individuals some We've lead are really four some labor homes; wanting

the long about the we aggressive optimistic. heading, as what continue be as market see to we're and very So we're laborers marketplace available, --

Jaeson Schmidt

Gross And how think of just nice the for in in I'll this we helpful. jump that's back one me a last the opportunity year? queue. December; about expansion sort uptick for should Okay, then and fiscal margin,

Cheri Beranek

Yes.

strong XX% dominance affected it's that and community we what So -- typically smaller the business; benefited from up our total of the margin, certainly by XX%, business with broadband; is so margin was of and community broadband representing XX% is positively projects done being because that. higher

With the that quarter, carrier standpoint down being business, mix bit product Tier the also little the a from business in representative. with the X

a think great what we're comfortable kind of be move think a I are we a to so lot think we modeling standpoint, doing So we great achieve. don't it's the I But reduce should can pinnacle we target, the from XX% -- is this above; a class. that is think scale to of programing of

Jaeson Schmidt

Thanks a lot guys. Okay.

Cheri Beranek

welcome. You're

Operator

And proceed Savageaux Tim question is Northland your our with Markets. next question. from with Capital Instructions] [Operator Please

Tim Savageaux

have puts of discuss of and on if decline and relative I and but decline pretty in strong you couple Thanks. sequentially? sequentially. wondering led of in backlog somewhat that takes to the afternoon, backlog that congrats year, good bookings I'll terms quarter a the -- I'm could saw a a the increase obviously, to Hi, with last results. questions, start actually we but sharp

Cheri Beranek

it's is purchase is fiscal year. all -- standard, very extending a very seasonal. don't about not typically -- excited there provider decline putting very is We over service it's that sequentially their a order Yes, the -- a very a

that budgets backlog as they're be we So not a information, that should as a always plans; of -- backlog it and go taken say their of December offered the yet see putting bookings we've together not I point indicative grain would down approved to demand. tend of their future so with but is are salt,

Tim Savageaux

larger budget you're mind, that understanding of regard quarter thus cycles, expect may to on in see carriers. that not But… might with cumbersome to you would among the far this have seeing you can the comment with We're you bookings customers guess I that? Well, type your or relative what mean smaller I

Cheri Beranek

having great We're a January.

future broadband without have can have but demand, see a only -- is giving what bookings been with we because to and I it good. regard There So to do lot week available broadband, four the --we've can available a lead not market we have any community is the times, energy about is providing. lack concern do of the the within in of for it's together. -- in support place, of projects excited guidance strong. three -- in to have can that and we're to years for have we put activities I reputation then, that the the where have And we community really they community think worked

marketplace So tends it down. we're as to in share taking grow settle COVID positioned I this believe and world to are the with

Tim Savageaux

looked calendar kind demand. from pull-forward, Got see likely could of that referenced to in degree timing commentary see it. already pretty expectations later in 'XX? to the your kind the And seasonality to a type little growth more wonder the normalization prior any over I contrast that granular in for could move projects, process there? business be I be of You'd pull-forward to of RDOF in RDOF Is we're to a some to of accelerate maybe likely then, and potential to it what you maybe on levels. if if -- from seeing strong acceleration on traditional in like

Cheri Beranek

is We we'll the July -- thought in that start August. know is the that projects. trend it's revenue to always thought that beginning general frame general the to of difficult of But what see government and of

them I saw COVID we're in in timing necessary. we're course physical to and There that that has yes, the organic work business I is and And see the different that has some and that our created what as others need a I've dollars been Clearfield to our mechanisms the broadcast we of the So what fiscal a going I the individuals be state; done of to high-speed is numbers to think RDOF over you in the country, the X-X have County see X in certainly a The months the or the that that to-date the broadband marketplace. September, been that true I forward. for our in ends [indiscernible]. to little but would really having dig business probably the some is of in networks some immediately CARES think as increase term quarter, in There in the absolutely program has the anyone need I'll of certainly the and there were to huge where in it deliver infrastructure regard listened is customers the to significant in really to physical actually -- our construction react this the one out funded newspaper, over mean, published -- surprising Minnesota space. it sometimes those traditionally December send numbers Metro what truly on out and of a that since the will seeing; there improve of Star been moving year, our don't think the a of be call State still growth really the seeing year it being our some across Act but lot across hasn't of the The is to is in into of the just And really summer. course few able being there build here was one most available view of The business. place was where same of things a first we're me they're area, pandemic we're we broadband-centric. were able broadband seen such broader place, the now each I and for -- market; that Tribune, and that states home requirement of bit the we put to metropolitan community saw their -- is basis. and amount to

take we year well of about for fiscal can top the when So we're initiatives as year, optimistic advantage as this government of this. XXXX, on

Tim Savageaux

Great, thanks very much.

Operator

At this question-and-answer time, session. concludes this the company's

not for Clearfield's like Investor at If Beranek closing taken call remarks. now the clfd@gatewayir.com. Mrs. over team back your was contact question may turn you to I'd to Relations

Cheri Beranek

so inability all for very love. now the pandemic our keep you a patient us progress forward soon. vaccinations today. those you I updating receive again that look on time you to to joining Thank for and we to be yourselves We with much. and But encourage safe. difficult the Thank It's to you

Operator

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

You may disconnect. now

Clearfield (CLFD) 29 Jan 212021 Q1 Earnings call transcript