CLFD - Earnings call transcript Q2 2021

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Operator

Good afternoon. Welcome to Clearfield's Fiscal Second Quarter 2021 Earnings Conference Call. My name is Paul 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 the to reminder, advance Please presentation the like over slides the turn controlled Cheri are CEO, remarks. through forward listener. presentation as you, to this the proceed. present that, by I Please their call With would As Beranek. Clearfield's speakers in the

Cheri Beranek

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

for During Broadband networks expand the broadband across fiber-fed Community demand market. saw we the second quarter,

a increase a robust this demand in can drive you As four, million. slide net to sales $XX.X on XX% record see help

Broadband from markets, led digit increases was and XX% respectively. were in by up growth our the period XX% and again MSO Our which double Community

its of end, March the January to million started meet a products XX XXXX resulting demonstrates, requirements. promise XXX% our $X.X increase highly strongly accelerated service million distribution fiber XXXX. XX growing throughout pathway quarter in March broadband and versus is bookings on strong brand providing in to configurable and backlog executing on provider on As performance Clearfield Sales in $XX.X

backlog as term ship We have orders establish majority expect fiscal a service scheduled begun of quarter plan. and providers receive to during longer longer to three deployment the our

and Our to leverage strong year. and top up line two. profit margin in model dollars solid two income quarter gross $XX.X XX% totaled fiscal record helps performance margins a business Gross produce net from quarter million last

XX.X% percentage of quarter margin our a from two up was As that XX.X% in last year. sales of

last resulting expenses expected, $X.X or $X.X share share. as million We down within in an improvement we we from as Community income programs anticipate $X.XX resources in year. in in diluted and quarters earnings per or year-over-year, Broadband generated additional a modestly QX P&L, increase Moving future invest start expenses as travel This in to business $XXX,XXX net limitations increased the slightly of diluted our decrease. was significant to per our to

our for XX% was first high of in performance XXXX same At generated $XX.X through in net level period year. contributed last quarter from a million we’ve financial two Clearfield. half which robust first record Our the a of up sales to two, quarters fiscal

profit, our period, mix helped year. of efficiency $XX.X with the last Our an to ongoing in million favorable compared in product generate measures XX% gross coupled improvement

year. to $X.X compared $X.XX or compared of first a generated or income to margin million in perspective, a gross half significant XX.X% profit $X.X delivered for in diluted period, share, profitability XX.X% From last also per we diluted million share year. $X.XX improvement the which the We which was per last was net

which of first sales of net sales XX% the this $XX.X Community fiscal XXXX, generated from our second on market last same year. with market, slide core Starting we period at quarter In net the up X. our Broadband was million Looking by to segments market.

the which the up sales million, totaled trailing Community $XX.X XXXX, markets XXst net from ended months comparable XX% March period was Broadband XX For last year.

MSO million realizing fiscal market in the quarter Net trailing XXXX. the a XX% From National our for $X.X on business increase we standpoint last increase we months momentum established was second built XXXX. comprised over months ended sales to March XX to and net XXXX XX two. for several the our down net to a of March XX a XX% growth million XX% Carrier in XX $XX.X Our in year-over-year XX% fiscal sales in sales trailing year-over-year quarter ended of $XX.X quarters, the year-over-year the million

related about the talked home to business National position the for application. demand continuing in I've to previously, fiber As and fiber is our the the Carrier market to

of XXXX As the the solutions COVID second $X.X million. of have into the customers limited access deployment XX% to of fiscal decreased Tier constraints sales to net in network, our XG quarter part year-over-year X the

experienced markets. sales other market the as robust X Although our same our growth yet in have not Tier

shipped presence market the ourselves working X support for stronger National are into to as We as continue both in Carrier products new XG to gain a market in that home them. and the several QX to initiatives. fiber We well Tier foothold business with during

our have we Tier one communicated global stalled the new pandemic introduction technologies the into As and has market. of previously training the

our XX remained year-over-year into optimistic markets deployments and forward. sales months among Tier the for XX the moving quarter, March ended was increase, the market X flat in access to sales year-over-year Net are up trailing second XG increasing International XXXX. we network As net XXX%

levels pandemic to legacy is COVID. part through down the segment. demand. in our of performance XXXX. I'll our business year-over-year QX be to to XX get presentation for highly two Dan, key the related in the for is to year-over-year and slowdown business who upon broadband the will us legacy months. of walk turn dependent normal quarter This the is that, this As customers in due Canada control, business financial fiscal flat resurgence We was and that XX% to sales fluctuating economy in With trailing under the through a our begins in now fiber-fed the Mexico believe Net showing over second

Daniel Herzog

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

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

can see $XX.X quarter in in markets. record was sales seven, and due International decreases higher by fiscal increased our in from period. Carrier of to our our to you partially the in $XX.X XXXX National Broadband, million in on net same a markets Community year second offset net As the XX% million increase slide MSO sales The ago primarily sales

of to for the product quarter. same product increased Mexico higher to net The or at sales was of mix to in a increase associated lines due volumes. The across Turning well in slide increased gross realized sales year community profit XX% production markets the broadband to efforts profit second sales net million, margin gross gross sales net or the our increase in of volume. ago $XX.X XX.X% $X.X due plants XXXX with including efficiencies million XX.X% increased in eight, fiscal sales quarter reduction dollars profit our and our manufacturing higher as favorable was as cost from from

ago second can million, expenses $X.X see in XXXX from for the were were quarter which on fiscal same As of million quarter. slide up year our the $X.X nine, operating you

increase XXXX higher offset costs. As XX.X%, of was a dollar stock costs the second and in same accruals expenses from primarily percentage and headcount compensation lower fiscal due XX.X% expenses quarter basis to down a of compensation net operating were operating for additional period. to and year the in expense on sales, increased travel compensation The ago by related entertainment

an $XXX,XXX million quarter tax the the million effective was slide the $X.XX $XXX,XXX measures to improvement $X.X year increased $XXX,XXX Income XX.X%. $X.XX our had an profitability per of which of $X.X quarter diluted ago year or same same XX.X%, Income XXXX, in Net in diluted fiscal to of operations income from second of an $XXX,XXX quarter. approximately second $X.X up share XX. the rate or on in tax which quarter. in in to from million, with rate over tax per the ago of XXXX, second quarter total XXXX, Turning effective the fiscal expense compares share,

am and Cheri, like hold update of it our we majority the reflected both the slide navigate how environment, continuing and over customers video to effectively turn The a that I effectively on took working protect since personnel connected. provide to and COVID-XX our our measures operational employees report back to to I are to support the Before Clearfield operational. are on current we've encouraged pandemic taken XX. non-production remotely I'd brief conferencing to remain business, tools fully stay to and collaboration continues using

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

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

redundancies do points source we failure cover know, risks. reduce to of components potential provide As and of many you to of purposeful most multiple our

the decision has at product also the can dramatically demand. three the availability product COVID, all Thankfully, the built location supply to have chain the with portfolio. While across we the will our be we of pandemic have manufacture partnerships COVID-XX all to that by made plants created to maximize At is crucial. broadband broad globally our outset it suppliers boosted challenges and lines fulfill of of demand, ensuring each continue strong that

necessary able our optimistic for are growth will be ahead. We we to components the procure that

of fiber concludes shortages, resins now Cheri. Clearfield's the supply disruptions That chain and However, call its In back to can manufacturing of blocking the the by the by over particular, the have the be. Cheri? Canal, for increased other pressure container demand optical prepared remarks. on the materials pandemic, and harsh necessary cable chain supply product like logistical requires the I and fragile winter how will fiber chain line. shown management turn global my issues Texas supply Suez raw caused supplies

Cheri Beranek

Thanks, Dan.

Now focus in XXXX operational XX. and initiatives slide our highlighted on fiscal looking at

edge. Our enable initiative this strategic for Clearfield come of plan multiyear to to

is of awareness objectives broadband, first increase This wireless Clearfield for build standing one expand reach. reduce community organization into has expertise. to our to our our long at and costs, wire that designed and have measurable specific a innovations alongside while brand and partnership our providers we new line me our our really line, it integration building the to move and leveraging leverages better pillar; a and top markets. grown networks as relationships new time, brings to customer success Key the Our us loyalty to

to has high communities. was pervasive unserved enablement never within Clearfield the broadband if Community of Broadband built been mentioned, Clearfield's I speed and position facilitate to As underserved better. the market

record has reputation well. extremely track positioned and Our us

market in last meaningful increased a our among expansion of we and competitive underway. fulfilling would existing drop-cable grab potential to timely the We the demand to were and providers, existing the on committed times began rates lead to has continue increase investing early further smaller to Clearfield take because This as subscribers to We fall superior networks. facilities, country. offer anticipated remains compared capitalize share be that's as across production investment providers to advantage, the we continue proven added currently competition.

market providers with In their anticipate the We multi planning fiber, we addition, networks stages this broadband Tier demand moving forward. the government state or now based will networks Opportunity increasing under as Digital Rural is community. overbuilding continue Fund key building for are driver presence market providers. programs financed within with is in are RDOF that the X the A developing currently an or

unexpanded is ahead. Biden In debated are for addition, in a requests sustainable has Congress. broadband while opportunities in years infrastructure the reflection announced the high speed House within American Plan billion in being White still possible positive funding bill recently we $XXX believe is for The fiber the Jobs

capital is pillar, of XX environments, second of introduction operating and for The fiber smart building true began and protection, the reliable alongside fiber the Clearview footprint networks. well element estate portfolio. in diversity. and ensures fiber central is of density management multiple one block physical and overall the fiber without it flexibility, route management handle compromising is the and Cassette industry, providers the their the and real the most the access Delivering scalable of design of it core product in volume, foundation the Clearfield platform and with inside as the within plant protection plant, innovation Cassettes. manufactured radius Our critical elements equipment every deployment service element outside rates. deployment. fiber grow This path subscriber development delivering improves designed take then is performance as provides Reducing in costs investments bend block of the Clearfield designed as still to This reduces configurations building toughest access, one

Our pillar a operational third for scaling experience. superior involves excellence customer

enhance To customers. a advantages production effectiveness, Mexico Our to Mexico have and deliver provide facilities our produce have both to cost but our product facilities allowed us Clearfield our to also customers to meaningful our in overall growing basis. products. maintain they can't for competition production match. in Not and added continue competitive only we'll to capabilities, advantages, are an we evaluate over simply have that capacity meet ongoing for months last our timeframe the continue we to these seeing several on our And the systematically needs demand

Looking to have for fiscal of and and Clearfield. balance over market XX made established we rural growth their ahead the remains investments the strategic ripe XXXX, beneficial presence years will be broadband for the the last we've

the of represents our the While to confidence near chain million term, the sales backlog, potentially million $XXX of midpoint. pipeline growing $XXX XX% XXXX, growth volatility fiscal as which in market supply the to is this expanding building in the year-over-year poses in of our demand net and challenges realize ability

we and grow class reemerges, anticipate general administrative moderately. selling will travel As our

making positions programs base. in customer to our in In service we for customer will addition, maintain facing be customer our additional expanding strategic order leading investments

by target We quarters For years of with robust XG broadband XXXX, your to to and we questions. advantage demonstrates fiber-fed Clearfield's performance and summary, for consistent sale. durability fiscal positive of demand fiscal our continued we're and anticipate business in Operator. with XXXX. In net term established presence the in highlighted the of range remain access continue profitability us financial of from XX broadband for or and enhanced Clearfield fiber-fed an our confident key open within And Comes remaining the income take will be fiber of for net environments. growth growth plan or flow ready and to years cash Longer benefit our continues percent XX% a tailwinds, of positions the Clearfield's ahead. through Age success markets. for as a the call that, of industry above at

Operator

proceed Instructions] Jaeson question with your with first Our from Please [Operator question. comes Lake Street Schmidt Capital Markets.

Jaeson Schmidt

expecting my questions. on early guys, in results. business? also meaningful any impressive Obviously which for Hey, Community nice Carrier here in National outlook, Want growth this and some with Does assume largely Or was momentum taking thanks start to the And pickup QX QX. Broadband strong. just congrats segment? the is the in this really continued

Cheri Beranek

one the to establish in based upon absolutely Broadband strength seen would world. The Community markets, we've that and I area. It's Broadband Community MSO the say, momentum and that we've today yet mature within true

growth that or initiative outlook. not growth is So of the part

Jaeson Schmidt

at Okay. looks there when looking nice demand? And pull XXXX, then at fiscal in here just some really sit has are some you growth mean, that concerned you back did. been today, all forward I

Cheri Beranek

is I and is maybe because pull continually say a ongoing momentum. this initiatives what chain little I'd have a people for to and supply not, get viable. of being orders, perception general, or little concerns. be there their in I of the it not This place ongoing general might bit in say have buying our spike. forward wouldn't about stuff, bit some It's I panic Jaeson, a a there been a certainly absolutely would concern no is availability get But -- trend call

Jaeson Schmidt

And constraints last Were Okay, quarter? then for by the and queue, all to some one that's you of back the your me, want I'll helpful. into in chain. impacted jump comments clarify just supply at the on just

Cheri Beranek

in on unload. products products then to airs, their got, waiting as been has boats think doing you’ve an bringing sitting in or through about coming I get your at I spinning group this standpoint kind would to And between procurement walk our in point, issues the with it's we me that group coming product. job. in call it Not think plates, of boat amazing just we've on

put able together a it ability challenge. Just be trying to that our little bit to impact not of all a been has to But did products. provide

call, in it have in started notes, to extremely as preliminary the a having anticipate of when in in And in call alluding the general January we we we in on escalate backlog that backlog talked would you're strong. that the If the to we I as we and our providing we had basis. indicated three. strong were the and place level shipping about And came to from majority viability same that March ongoing of be quarter last there backlog, continued January, just were

Jaeson Schmidt

Okay. Thanks guys. a lot,

Cheri Beranek

You're welcome. Thanks again, Jaeson.

Operator

Tim Our with next with from [Operator question proceed Northland comes Savageaux Instructions] Markets. Capital Please your question.

Tim Savageaux

beyond least good focus extending Hi, a and what's congratulations normally the you some on visibility I my as afternoon, results. commentary about of the at well business to your for pretty guys. on short cycle wanted beginnings

the visibility I little increase, maybe from significant orders the scheduled on whether quarter and Broadband. future. a to that you also how out that dated more could And perhaps extend. relative us is, some color demand if give saw that wonder And backlog longer you the into coming farther that's how might meaningful in far Community

Cheri Beranek

a the Tim, broadband what people take for of customers we high. rates in to initiatives at rates, year. legacy is we're identify see look they're this it course because multi-year the homes, seeing I'd say, was build is and of this, based. tick so past years, building strategy build Whereas success What that through our today, the projected their the think success space us, we're because having over now and is, out would kind passing and this majority committed was their working what of happening an many of last orientation that from I are in a five of a more entire ensured, a out is is the of, standpoint, networks, anticipating to commitment this would

so And those there's commitment to term longer bills. a

that a that our in our stage not get equipment Z so looking backlog, getting were at could in were long, And or bills put little coming products can ourselves that's but were March, orders our for to the March, production we're Y some larger helping June, in others. they and us need, want giving to working some might of that get the a staged customers bills where that schedule. all see that April, a and customers And were and we of from in X As customers saying of orders us into suppliers long-term, at stockpiling expense I position to ensure that the that position not deployment. it that our in they relates in is

So collaboratively really so they can help ensure of all we're we with trying the get really our need. that customers, that work to products they

Tim Savageaux

And of being RDOF thanks. kind have in see of Okay, awards kind of advance been mentioned dynamic your in is of you are separate made. of distinct From core funds, or kind these in perhaps your receipt current you of obviously Broadband occurring now, any base. community and a lot there potential from what the customer might spending or or planning projects actual in stages, around kind dynamic planning perspective of or

Cheri Beranek

we see where now I There's really the we engineering before. but markets on current This going mean, to-date revenues revenue their been principally. drawings, our related pockets Yes, What RDOF their in of involved putting backlog. -- in our plans see has is do or business, they our world haven't in funds RDOF out together, is people getting some into isolated. not very loss

the of been to calendar in years. So three starting more quarter see and in three, quarter we meaningful we very that's revenue in to have and four. XX% have the allocated of then going opportunities end first for is the to believe basis hoping that happen a But a see funds we're feds basically, that in and tail what for start that asked XXXX those year can

well. opportunity for So that and XXXX think I XXXX, as really significant shows

Tim Savageaux

seen fast various we the Tier to side Great. carriers one the pretty with the business, on start Thanks Over and for the of year. of some that. one getting a Tier dynamics have early

we've always level and at numbers Now, kind us match But what near and C-band understanding not stuff of can the least to high like seen just more you’re little Tier some from you be AT&T the Horizon. a business the carriers guys that larger give your extent it's the that home around spending to doesn't term Tier some X your driving base of with color strength maybe customer of or one might that doing? on deployments, dynamics the fiber up

Cheri Beranek

based a money especially be going deployment of the C-band And they work lot fortune small a to tower, at is the principally it's C-band cell. going being for spectrum. C-band, carriers, on as work by that not wireless to based it at spent the There's be relates the where spent to

incumbent mean you its consumer and reason there. coming. that for It doesn't to that get same as good think want based kind latency a to they'll shown been revenue the But the Tier that's well has that is means XG if has those means be to true The base regard that because that It in means true still it we that the we and low it has faster. our their and that one isn't the small that in be see not that get growth to opportunity it. up of service the cell going going high because challenge delayed on XG seen a performance towers of good has the lack of as have into So not, into is speed the for provider next been year cell is, for XG, which potentially phones that year. I

Tim Savageaux

very I'll Thanks again. it. Got it pass and once congrats on much.

Cheri Beranek

Thank You're you. welcome.

Operator

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

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

Cheri Beranek

you soon. forward us Thank all look you and for talk to We today. on Paul. our joining Happy And again updating you you, you, thank spring soon to progress. of

Operator

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

disconnect. You may now

Clearfield (CLFD) 22 Apr 212021 Q2 Earnings call transcript