CLFD - Earnings call transcript Q2 2022

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Operator

Good afternoon. Welcome to Clearfield's Fiscal Second Quarter 2022 Earnings Conference Call. My name is Hemant 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. the remind available this link for investor section to recorded will in like relations made and replay of would everyone call that be the I website. company's via a called relations also is also accompanied PowerPoint which webcasted This the the the company's call Report, investor being Field in of by and a presentation section available is website. and the this making forward-looking future events Please company. be statements of performance will note the call, that financial management during future regarding risks and to to that These could those results forward-looking subject statements actual uncertainties differ in cause are the from materially forward-looking statements. also the such law. note to important to required obligation undertakes update It's except by as that company no statements, company and results in call. statements The could contained consider materially in that press the factors cause to Field release, this forward-looking you today's actual conference Report, cautions from to risk differ those in those Risk XX-K Form provide and subsequent most filings Factors on Exchange filing with of Clearfield's section XX-Q, Commission The Securities and its risks. recent Form in the description

reminder, over the forward through As over CEO, advance Thank are their speaker the as the to would you, presentation remarks. and turn Cheri Please slides presents by Clearfield’s like presentation a you call that, listener. the to I the in you. to this With Beranek. controlled

Cheri Beranek

a million of March to you afternoon the three which afternoon. update $XX And for shipments is period, share led on It you're to all XXXX. execute creating accelerating. by Clearfield’s continues is us for to in an the and Good doing XXXX. demand thank XX, everyone backlog this today. environment as in Clearfield business results market And fiscal $XXX well. with provide trends. speak million a of joining of for month We quarter Bookings second you hope an pleasure the to

with sheet cash continue investments debt. million balance in maintain healthy a and and We no $XX to

enhance strategies how statement with we we Bremer the financial a line Bank and and We shelf $XX demand flexibility positioned have and already any robust our as orders anticipation our will government current dispersed future. to some have in secured of customers our believe future million ensure place We on invest to are funds capitalize to advanced are filed that clients well opportunities in registration that of in new beginning respond a the market, those growth we to of disbursements. credit with to we

to reasons, we year those of $XXX range XXXX a raising from of a to million. all fiscal to savings million For million net our $XXX are range of sales million $XXX $XXX

XX% a company revenues. to protection, fiscal and communications solutions provide like for Once throughout of serve service to the you broadband primarily we XXXX do and tier providers. industry. new mainly community the and enable two market, providers effective in rapid and cost fiber is that be fiber broadband of leader are Clearfield service We who the provider industry. to in we'd our We broadband and Our delivery guidance tier a expanding over fiber the management fiber XX% growth what fiber-fed year three deployment those of may again, provide represents brief who overview we space.

our Canada, thoughtfully more providers serve on and service in focusing enables scalable, cable developed also By as South well as product as known America. one system deployments deployments multiple market their to faster portfolio primarily customers operators, some TV We or also the complete providers tier MSOs, in modular efficiently. and Caribbean, and in international Central the

today's for well of is needed designed are installation, the necessary particularly reduce both for level labor the advantageous of products skill required skilled This on as slide our trained here Systech, is the the fiber scalable as patented technicians. as foundation the to The Our amount shown there of install. modular where ClearView market, is and labor image management of significant shortage X. in platform

attend mission changing Clearfield a be Broadband each able to to participate high to work lifestyle we communicate broadband People speed through access that the to better and way is and at with change. to other society. broadband today's fiber means enable need to is modern enable Our that school is the provide. fully in

Our vision company's are who founding not vision it's broadband deliver products that something was that an build better we fundamental a to organization. to network. recently, the This we is implemented as

that, the a developed over Dan, the presentation to infrastructure in second organization quarter every walk service product of community. for sales financial have deployments through us growth will and to the operational XXXX. who With We I'll for fiber our performance portfolio, turn

Dan Herzog

And to quarter second good year with you Cheri. ‘XX fiscal pleasure today you, It's afternoon, be of our our speaking a everyone. Thank about results.

Net second Looking were sales detail. $XX fiscal in at XX% year sales. an the results in in X% XX% the XX% was ‘XX same from financial $XX from our of our ago quarter first quarter We $XX million a period, more who distributor record increase in million provider service regional period, a the million, XX% and and XXXX. up second broadband customers in had quarter at of of two

sales up up of XXXX, addition March quarter resulting million XXX% on December year-over-year a XXXX, momentum sales March maintain In backlog XX, backlog. in Order XXXX. in from $XXX order increase increase, strong to a on and from $XXX fiscal XXXX revenue bookings their $XX of XX, million our to million grew our record XX, second in on the

in will new our And manufacturing warehouse revenue footage. recent Our doubled potential Minnesota facility in investments has Mexico our capacity which quarters square Mexico footprint, our in tripled and the Minnesota enhance has our our ahead.

greater our our review slide net detail. on by Now, X, in sales markets we'll

Our the year. broadband, In period net of million $XX XXXX. generated we in approximately second XX% QX, core up sales in our net fiscal comprised of the from community sales of same community quarter XX% broadband market last

XX million, comparable the sales net $XXX XX% was year. our In on approximately last addition for XX-month XX-month up broadband XXXX, from community trailing March totaled ended which market the period

our to costs our net as well $XX associated net of ago the from $XX of trailing the national up for in the quarter. second XX% momentum same year of have previous approximately in our increase established second was quarter in ended second increased in Overall net over million, XXXX quarter year-over-year of market sales XX% several in ago quarter the market with performance expenses to were market XXXX the year-over-year a realized million $XX second slight professional sequential approximately XX% March this profit our market, which same in sales net in net Mexico, last as to Net of of $X the approximately personnel The in and year-over-year and ago end. MSO inventory XX-month this national an of well XX% increased expected in million, In sales period in margin the up primarily transportation quarters. increased second based quarter company, consisted million over million, expenses or sales as the The million. the XXXX sales profit year to XX% as of new costs increase overhead On the fiscal XX-month XX from XX-month the fiscal million. the due in challenges international period. growth we sales compensation decline delivered increase market gross down quarter Gross our net year. totaled a fiscal up compensation, facilities for our up with fees. Minnesota sales From quarter supply the trailing from as second associated global a carrier net fiscal XX%, or XX% in period sales quarter. compared Our in were higher due XX% positive trailing-XX business with million XX.X% and from maintained $X were last fiscal year chain $XX recorded trailing is XXXX. basis, we expenses costs $X XXXX. the XX% quarter sales to operating approximately approximately in month now comparable perspective, a and and in XX% comprise approximately up same increased XX% an the for increase XXXX travel year-over-year Net higher and carrier approximately freight volumes. were approximately and to But sales Operating higher higher the of $XX to

happy be up. it years, are of be able front trade we or recently through are two to in say more picked shows, past We onsite through have to customers in visits the than now which

period, of the a to additional XXXX overhead from representing income As $X.X the increased quarter year costs from the fiscal than results. expenses fiscal our of period. million increased OpEx remains and income are increase near strong from expenses It's was down ago due XX% quarter our growth, sales second Net the Net last sales that quarter leverage with for XXX% XXXX. second year first $XX.X the XXXX with in percentage same XX%, introduction in while same net SG&A new fees million of with travel, quarter to professional the buildings. important of our note million slightly was in lower the to XX% associated of and in associated the operating up in operating sales, $X.X down operating fiscal ago

XX.X% fiscal net in XXXX percentage fiscal year XXXX. in quarter first for ago the the XX.X%, XX.X% income a sales, up same second of of from of from down As net was quarter period, the

capital in facility mainly the in sheet order our the million side, support $XX expenditures, utilize new high sales and in and million increased balance quarter our the acquire $X.X to to to to our million cash as we buildouts backlog. our had as demand meet the position for capacity inventory necessary increased products inventory $XX represented On we second

did call, this of repurchase in not any discussed it With our in quarter that, period. program, I'll as but reinstated first stock its turn has company stock repurchase the over common its Cheri. Lastly,

Cheri Beranek

proposition our the by for value fiber is connectivity The designed Clearfield update, driven financial and products. Thanks management fiber Dan. thoughtfully

to from remove goal our fiber founding us. adopting prevent Clearfield lies that for were built customers broadband. it the made We opportunity have that its built the would Since in led our was obstacles to of scale. front We

deliver the been have to positioned As communities been community truly historically beginning, we mentioned broadband. is or from to underserved has that Clearfield products fiber unserved. Clearfield

are and We long sustainable. elevated last whether broadband often high this demand it's asked might speed for how

on Congress slide in we in increase particularly are funding through is of the government a XXXX investment middle broadband. cycle Jobs XX historic by shows put billion includes the The and $XX Jefferies led stated, the chart opportunity of of speed through by available anticipated for The market the high together simply and broadband, funding Act, investment quite nearly Research scale massive. fiber previously As in passed November this and in enacted infrastructure XXXX.

XX% moved around for approved first As SEC with of of round through review, RDOF dollars being funds the those have distribution.

SEC and dollars to will orders. Moreover, and those are now known program, deployment infrastructure late place announced allocated. be programs And census or will inside into billion sometime recently block anticipating beginning broadband possibly seeing of BEAD, maps We funds equity some $XX likely by be are access which distributed in our the XXXX. this customers most as areas ‘XX which updated to of the The fund the BEAD broadband advanced the fall. represents this be mostly identify the where the

goes than goal elevated not these prioritizing by say administration's Clearfield. market service broadband pushed demand opportunity way gone point, XXXX access stated are a be once Research communities will Delor that is with The more another market. This We the broadband of change be communicate as of that providers we to Given generation specific opportunity future. in the the The XXXX. will community and to passed cycle deep on truly and and homes on short-term continuing state this spending of for this get believe significant components that year out million has identifies in keep knowledge may the in underserved cycle beyond research investment our investment by due growth event. labor could to third in in XX projects that fiber the people a the an for shortage.

of establish Clearfield on Clearfield is XX, our strategic a is platform plan multiyear choice connectivity. Age and as shown for to of fiber management As Now plan slide

and the pillars obtain the simultaneously plan business Age to As was the Now fiber three of and built Clearfield’s aim that home renew in innovation, we capturing market position, market is exponential to company operating customers’ to intended to share address the ahead. broadband with discussed, market for to demands. are our to while This cadence. an our demand of powering operations market the enhance of commitment to this the respond nimbly Clearfield’s Accelerating fiber-fed our years the ensure existing

deployment their time to our ability so are time schedules to crucial Our is can products our on deliver customers revenue maintained to that their and accelerate.

who are have the in ensure customers technicians inventory working manage our on product with investments to significant given we install we in products discussed they and This intend to advance, ship time increasing deliver us the labor in technicians to service fiscal now promise As particular present to new plans. business our dates. that our turn closely can long-term Submitting market effectively with that our on call, made more allows QX on to visibility months high shortage. purchase demand orders Customers their us the deploy. are providing into mid in their

persist availability across are track. to customers’ so Nevertheless, be cannot we products required to prepared deployment supply that better industries. the those As stay a continues on that ship and result, can all our challenged fact overlook issues fiber we chain schedules

relationship strengthen suppliers going with continuously working our our are to forward. on We ways

in making meet are incremental investments to this We demand. effectively SG&A also

added recruiting of for future positions capture company We different and number company a have throughout the to are growth. to the key help personnel

The The for Now several build market and amplifying the programs business Age opportunities market for see and the today changing transform to into second plan pillar products wireline fiber of is requirements. backhaul continue future wireless the current and we to over next This of and and Clearfield’s home future networks disruptive bold delivering commitment integration of is years. our growth.

proven XX% Our to enabling the excelled existing be from Responsiveness customers. XXX% and substantial up progress advantage, up pillar’s Clearfield pick and achieving where made significant and we've towards a $XXX this backlog year-over-year share incremental competitive million reflects market us has has objectives. always sequentially, new over to

field are working promise our lead utilization. to shorten when We labor times to with transparently to facilitate can dates and customers ship we to delivery

in roll particularly product for front, XX is and the targets deployment. Finally suited QX, part a of we a on that began port the specific fiscal shipping backlog well cabinet

our available products the would our opportunities. in including updates new solutions Our to future, near XG expand engineering develop team product in forward continues and providing that computing XXXX. on look to fiscal total market We future for pipeline edge

augmented pillar speed demand for meet is its incredible broadband. to capacity to operations for growth third Our high scaling ongoing Clearfield’s commitment the

to the In two changing to key fiscal meet online Our pillar. are and our of agility and the demand in ability our to customers new products, needs facets the their order came for adapt significant this facilities improve We additional centers, is recruiting add added headcount XXX as by the to facility continues, expanding labor coming people manufacturing in utilization we QX, and training quarters our to achieved. our and XX%. aim personnel and optimization

in our Here distribution manufacturing you new Mexico. center see center in images of and Minnesota

Supply interruption. ship helps Management a any to priority chain if us capacity needed due our This Clearfield, Our ensuring demand, partners for safeguard without we key continue network product against thereby our of supply delay. their increase can to deliveries higher Chain to remains can

to We our our customers. enable organic also us includes grow continue augment would right growing our keep supply inorganic to continued network opportunities to demand. This utilize chain growth, well further as the capacity as that and with

optimistic financial Clearfield’s potential. our of the speed demand remains The scheduled we is our especially growth fiscal XXXX, very And in record for sales months. six the at outlook very to broadband broadband, remain about fiber-led for ship backlog high next strong. majority Looking

current visibility substantial into pipeline backlog, well the order as With behind it. as our the

$XXX to million We to a for XX% to fiscal guidance year from are range of year revenue. XXXX, to $XXX a of fiscal our million net range $XXX growth of $XXX over XXXX million representing million raising sales XX% in

chain challenge customers this pose in availability to As challenging. year's customers’ at to build discussed, season. requirements may also be the materials an some supply for additional Labor continues and deployments

of we middle been certain challenges Currently, season. won't a service we there our by investment While the not the over deployment. We significant issues for in notified be customers. cycle broadband have provider are we be believe any labor cannot long-term of

can market to with on the that, confident designed to the innovation, We commitment and to customers’ question. are that agility, maintain our needs. achieve of are for that was leadership your experts built us we built for broadband we based community to call With And front execution scale. we're opportunity ready proven our the strategy, Clearfield in and open growth strong in of

Operator

The the Lake with of question comes line Jaeson Instructions] from [Operator first Schmidt Street.

Jaeson Schmidt

my trying could your start Hey, here. And quarter reconcile just were the on And to questions. the moving I supply guys, sort March early challenging. want so, in to unable And there with thanks to for if of continue Obviously, extend. that? you the impressive March congrats any Cheri, taking chain remains quantify you that results lead fulfill? and noted you pieces. But times quarter was demand the to

Cheri Beranek

customers was absolutely board. are to shorten looking there across I time our their in the There's that mean, unable demand fill to lead

a know to to to And lead customers quickly promising to we possible. to three is we that working we how expand we shorten the our specifically within learning advance have our that have to them ship have as diligently continue for that expand our working planning we're with significant. into six doing our been couldn't quarter. the people, help the and that market responsibility this to unusual demand so currently would right provided. to could commented deal date that the materials it best and was those But quantify challenges is in really about This there can much certainly I now. we capacity as they're really I pulled time customers months and accept

Jaeson Schmidt

or has And if the how if customers, backlog know that out. seeing by XXX you're today. backlog noted the being base and couple that curious helpful. their current just And that a growth quarters customers, is broadened driven around that that's comprised orders, I really at Okay, ago, expanding time you customer is that

Cheri Beranek

the I recognized Power very, been were we're about new we to the have coming through, continue and excited customers, spend the utilities Tel We really had their product working as with to seeing it’s year. opportunity the and and Annual at and Conference. both, quarter some the earlier of this municipalities Oh time be vendor

So great for apiece continuing there are $XXX,XXX. XXX additional with, continue opportunity $X I us or a a to more to customers over members dozen they're you the customers. that a tell supplier that provided backlog than I I and to customers backlog in backlog our distributor several that to expand are they million work put with in more can to can mean, the than and

Dan Herzog

And Yes. in quarters. in the newer that prior ones were not there

Jaeson Schmidt

to just the helpful. I'll no, Okay, last very me, into And nice for queue. one back And then hear. and jump that's

you help a Just of to a remainder curious about cadence think months be the June, quarter this has I could window. are if already gradual September current we in growth the typically, a remainder this year, through year? us I Should past seasonality your XX for the then think the off the here that tends kind of about June you. plus and of out continuing gone quarter, normal or mean, strength strong fiscal But maybe drop one of this the know,

Cheri Beranek

quarter, moved we in that people Mexico capacity in we of the added talked in into us, about our incremental think only And I seasonality going as going front on last point on of improvement backlog. out to continue the we March. to continue see is and building the the basis part to incremental first expand materials, We're work enhancement new with at Yes, the door. as and this a we XXX quarter-to-quarter

to of we a utilization front space of of a implement. training lot So lot us, have in

build customers able we're looking with get to season their product hands. the the our quarter, basis incremental and working enhancing an to door forward revenue out to this each that on be continue in to So goes

Operator

line Tim Northland Markets. The next the of Savageaux Capital question with comes from

Tim Savageaux

they you've congrats week government your really something, from a Corning as the Hi, in of of Clearfield thought numbers $X about We up. what me per great home over kind then come award quarter. have for have year this metrics if of little what's I four commented at could opportunity certain metrics, strong the mean or might and very it's question a given any program I in follow a you've fiber, on them, competitors. over company of And spending, had good of of run thought another And on that program, a any way of and and guess, you XX% opportunity their regard about they of but commented a if have kind of to levering funding. the period. about off thinking particular, have current with rate amount the to funding kind that environment. well a equivalent on of about guys afternoon. I one year earlier what I to that might with sort I or wonder but billion in optical think Yes, an looking got impact $XX think be incremental upcoming in also infrastructure billion way that BEAD the know

Cheri Beranek

we, big historically, trying deployer. strong, fiber incremental the course, about growth organizations community There's broadband of had the to last world market the big predominant year, many so to being more. and mean And in agents this very really around being AT&T year. delivery and XX% I parts over market hands of a get dog there's We're they growth, Because this were home. and talked those Today is our that. place. was what they the dog in XX% many rate because Corning about Verizon in the still of Corning so our to

last what need nowhere, we're able to trying and taking know growing to share at identify over that we're we XX% to sticky, which keeping with get how So to taking share, year, that grow with organizational our that we're at hands capacity around establishing we're the by that. we that is share, be

and to sure perhaps our of later importantly, it's hope build research, to at most continue make point, to this at able factor. we a But working that can to figures put call. capacity be provide and together just are those we that's So more

Tim Savageaux

kind these broadband you that's Corning, lately as days, Any CommScope in of seeing Got their notable what well. out tier it. And of one community we're are behavior, or competitors market change happened? in are Corning up kind while they the traditional what of larger on the tied big with and your

Cheri Beranek

large there's Yes, was company has certainly out be figuring and watched customers Corning strong market the CommScope, to a able well, opportunity taking best there ball their how and to that little very in within is think own customers us of is, We a bit. way. for solve of share it service The of organization very an well-run some their the some financial is a fumbled challenges. those as perhaps

Tim Savageaux

shortly question Okay, RDOF given see me, for had fair been were to and mentioned received had earmarked a of quarter business you'd that of In that of more that? way who give your funds maybe than guess, to Is to impact last material to on bit not have starting we I are dispersed, can activity half you of of beginning after, about of this any being material, some that from sense or kind it a funds the us the that funding customers least at quantitative can heading either you some receive with or and quarters impact RDOF several ordering ahead. is forward? say

Cheri Beranek

it No, backlog. than orders It's in ending more now become I identified is XX%. are as mean not quarter the for material, Yes, moving material that those fairly begin to it forward, in March. being will

Operator

Needham. The Koontz from the Ryan with next question of comes line

Ryan Koontz

there. quarter the on team to Congrats

the this because in follow becomes a mix commentary of any of product more past intense Are connections quarter quarter still Cheri, the, that On passings mix was more product an and you heavy versus business weather in or up. connections? seeing terms I a have on passings a

Ryan Koontz

in the in necessary certainly weather past Actually, in we're are very as to homes. amount so business able March, nicer pass be in quarter ending of the in a that improve, disproportionate the very, gets the and still heavy and very to cabinets connections products in passings

last and we identify helping really competitive technology. a as they fact, this can we it's call they that introduced as our In month, pass homes program with would customers a many twice how FastPass,

So FastPass is a seminars. and get a shows at of lot traction trade proven at to

see passings fiscal summer, concentration start in see ready a think we're work then be will late the a And actually going and to pick augment mostly make will we ‘XX up to that the to so of of and doing. has we're connections that moving high opportunity the already probably we'll continued year because forward And work happen. that connections the the

Ryan Koontz

it. And set generally connections, deal you the Got is passing same that with products. the the competitor exact on

Cheri Beranek

absolutely. Yes,

Ryan Koontz

Got relaxing. it. your RDOF on And commentary was

nice flow or Is there. ARPA some what order current Any RDOF around on similar commentary kind to the funds? that timing of You're your visibility seeing ARPA?

Cheri Beranek

BEAD be is while. that administration still NTIA for to the We've that impact on ‘XX ‘XX on it. seen Yes, [Indiscernible]. to year the program and they're community into community the a a out But to And able to how getting to that's apply talking going do to the through NTIA. working providers how calendar really be

Ryan Koontz

we've seen you the of seasonality to the Okay, CapEx that down on a in down, helpful. And kind just that seeing sequentially. past then the MSO being business might there cable is being that be of more typical

Cheri Beranek

see project market growth business But a actually like The any year-over-year, MSO actually over no, is for substantially year. business. strong us. as for It's the XX% business lumpy, a other up cable up quite we

Ryan Koontz

you for there good pretty as is visibility The well.

Cheri Beranek

is. It

Operator

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

may like was now to contact your at the If turn taken, to investor Clearfield’s question not you clfd@gatewayir.com. remarks. relations Ms. I'd call ahead. team Please for go back closing

Cheri Beranek

want about because Thank also and maybe is thank are little because we to our Clearfield a thrilled customers we're so team working doing how to you. my continue need absolutely with to a what improve pleasure our performance to It that customers. they are we expecting. talk and our been I to bit has brag to about with the level

be for investors to take hybrid in know also while a your not business we our to performance nice so who Clearfield area. Have customers those our healthy to to in It masks. for we wear please not So know organization, back excited we in have are everyone I'm let safe a finally, are environment. are to do And working that and and continuing and improve that that granted we'll is summer.

Operator

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

disconnect. now may You

Clearfield (CLFD) 29 Apr 222022 Q2 Earnings call transcript