CLFD - Earnings call 1 2024 | Clearfield, Inc.

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Operator

Good day, and welcome to Clearfield's Fiscal First Quarter 2024 Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn the conference over to Greg McNiff, Investor Relations for Clearfield. Please go ahead.

Greg McNiff

you. Thank

the Dan Cheri Herzog, on and Clearfield's today and CEO; Clearfield's call me Beranek, are President Joining CFO.

safe the purposes the Please As this a note for are and Securities results to future required update making forward-looking forward that forward-looking could listener. will company the call, remarks. and the remarks is those of presentation Reform Litigation except It to by in constitute the statements, of through Private law. advance such actual statements. statements from be are controlled during important financial harbor the presents reminder, by company. the subject you, undertakes Please the provisions their remarks also expressed presentation no of Act. These as forward-looking that as slides in to cause uncertainties regarding These management obligation statements differ events materially speaker this the risks performance future the to that note

Exchange Cheri? the to description CEO, and of and the like presentation. to Form of Securities earnings Beranek. also would you on cautions factors conference section those actual to and on statements to risk company over The release, a Commission turn X this most presentation Factors Clearfield's The XX-K Form call. Slide its the recent with that, cause Clearfield's these provide Cheri and contained from are Risk XX-Q the filings forward-looking earnings on differ in subsequent today's in summarized risks. They call that results filing With press President materially could in I consider

Cheryl Beranek

for Clearfield's XXXX. quarter of fiscal joining us Good afternoon, everyone, first thank and today the to discuss for results you

our and I quarter slides, the continued for optimism released an while trends. the data facing is intend strong update broadband current our remains as last slide will macroeconomic to that as industry service seasonal regarding market ever. case business outlook. to also demonstrates market We several basis following that X. I and as headwinds, long-term demand noted long-term the providers provide equipment and to turn near-term this Please preview the deploy In recently as well on

our with end Total approximately million shares first sales of first quarter for guidance quarter $XX XX, the in of XXX,XXX December for Clearfield its ended our Consistent above net were million, XXXX of repurchased discuss high the for optimism, XXXX. the $XX.X by mix their of higher-than-expected ordering driven support shortly. regional the provider from to complementary current due range, sales needed in large to inventory our quarter more results service our products financial Dan will detail for customers deployment. fiscal their

While product positioning on that expect end, inventory ordering challenging return fiber few cadence. our of enhancing we to normalized making a Clearfield industry, the overhang remain are To to in the to more expanding quarters share by efficient deployment we continue as order across the patterns possible. we portfolio to to due to remain take as next reduce the process when and focused cost overall the

positive. with our goal Both FiberFlex alternative designed is vault and addition towards providing the been an cabinet, XX%. shipping be product FieldSmart also approximately streamline rural deployments. designed storage fiber which step shipping and another cost our customers to our by the has in announced and continue to choices from recently innovative introduced active areas reduce to current are that We portfolio, of installed exceptionally reflect products of Pedestal now FiberFirst recently the CraftSmart our to of Feedback

to BABA, initial this end awards these year. working of the to are and translate offerings are as BEAD America deployments products be to product all we other America, expected will ensure Build peripheral addition, as compliant calendar Buy In with known the near

service one than to XX% in from fiber service more of than the XXXX RVA, slide view household. that million in already on one approximately landscape passed recently provider. for broadband the $X recently each shown confirms the fiber nearly Furthermore, fact X industry addressable the households analyzing industry, data had The before. already provider, had single connection access access market total households households X data published North XXXX, passed fiber the that U.S. and independent in American competitive million that firm is that fiber year As healthy X, is for our broadband this to which an larger million our reported included research total a

] the with As many and underway of award you of [ the for program maths released now is divided the monetary the know, value BEAD $XX.X billion state.

between the provider government and relationship Slide X disbursements deployment. service illustrates the

disbursement you projected largest year is of to year As can government funding. see, the be the

these we next expect translate into the to and deployments revenue funds years. However, several over

financial market in initiatives. to million the call over first access will for As the who Internet passed now CFO, next the XX industry X pass the to additional and up walk underserved the homes next These bring the period will homes. illustrated of to on performance, from areas Coming fiscal Dan X, like boost forecast slide million indicate passed that XX RVA to in funding see that Herzog, will I'd back total the over quarter us XXXX. with through high-speed fiber U.S. programs results of X-year because will unserved federal's years to forecasted to Clearfield's our homes our

Daniel Herzog

connectivity We year costs Nestor plug-and-play from higher-margin to efficient and we and ago throughout look and more XXXX have that products. in XX% afternoon, commented was the decrease sales fiscal X ongoing were quarters. million that focused total dynamics in results Cheri, last same period. to detail. several everyone. turn quarter over in net sales remain margins at on on first The Consolidated year Slide first year-over-year due by past million, of XXXX net improving marketplace equipment you, Please investing the the peers reducing our to a quarter our decrease and the good $XX.X in at the the industry more fiscal in manufacturing introducing in $XX.X reported Thank

continue improve all labor gross to driving productivity as We at in our utilization on order focused be manufacturing as locations. margins efficiencies to enhanced well for

declined Order $XX.X XXXX, million $XXX.X million to December and from September XXXX. $XX.X XX, on XXXX, XX, XX% million December XX, on backlog on

As our align with our open customers orders we collaborate schedules. to limited, continue with to remains visibility deployment their their

typically As order booking a season reminder, the winter and our is quarters. lower revenue

X Our lead than less times are now lines. product across weeks most

orders We the of to fulfilled received. expect continue future indicator an within less backlog most to quarter be they as sales are for will become

in the quarter. prior the fiscal of declined in net markets. were QX, the fiscal year I Broadband versus net comprised year net sales for year Carrier $XX.X the Net quarter. approximately sales year in Community in first the million net XX% and we approximately this primary down sales of our approximately market XXXX. in first first first Turning in XX. will sales first to sales last in of the regional Sales our now net comprised XX% business the Broadband, declined quarter year. declined in of quarter first year $X.X first net the versus XX% generated our this service Slide providers fiscal accounting XX% quarter first by for for in first In sales sales of our market, sales of our quarter of Net to this decreased fiscal and key the period sales same by quarter. and $X.X million, Community for $X.X our by quarter were total quarter year market million, our the National of Net XX% review prior million approximately XX% sales comprising versus large from the Net of our quarter. total by prior first X% this MSO XX%

fiscal XX% total quarter. in net Net market million sales year and first quarter. were XX% in versus prior XXXX in the comprised decreased the our by Finally, of sales first in net market quarter sales first approximately this $X.X international the of

detailed gross year sales of in XX.X% same Slide profit As margin sales to from of net the the quarter. quarter ago in net first XX.X% on declined XX,

levels current to seasonality. demand due gross be its and Our The production of conditions. by our to demand capacity adjust continues winter facilities and company manufacturing align margin in continues to to overhead unabsorbed market to lower impacted

reserves was from the by in in margin inventory gross demand. excess primarily negatively lull impacted resulting addition, an increase In for

to customers as our margins XXXX in fiscal gross be of first digestion and seasonality. as inventory revenue to continue half normal at the continued well expect impacted We by the

that As should improvement we lead result build season half utilization anticipate an fiscal which increase the demand we XXXX, enter in of in in an margins. the capacity in an gross in to second should uptick

We the also while to relationships. well our of work discipline uphold as long-term continue preservation to customer price ensuring

customers. thoughtful Moving how in forward, with we we remain our address will pricing

million $XX.X position The seen the committed for expenses its and year-over-year which operations. $XX.X to ago consistent Now continued reflects customer were the in year with its were servicing as in first please Operating in company million, quarter the market long-term expense, consistency turn which our our enhancing quarter. Slide investment to remains base by same XX.

up As a the same first sales operating XX.X% lower expenses XX.X%, to of from due percentage for ago were net quarter in the year sales, period volumes.

year $XX.X XX. million in in same Net XXXX. Slide ago first in loss period net to the net $X.X quarter million $X.X income the fourth to and fiscal of Turning million income compared of of the was quarter

lower affected which our Our in net results is reduced percentage. volume heavily levels by turn income in profit gross

short-term cash, balance long-term our mainly capital sheet illustrated and in and operations. million remains debt. quarter, the just strong As support with expenditures of investments $X.X XX, our manufacturing We million of on $X $XXX million in had Slide to

XXXX Our at quarter inventory fiscal XXXX. the balance million fiscal $XX.X first to million from decreased $XX.X year-end of in

We the Our was shares the from operations positive of $X cash, of a even September million used million short-term the quarter. recorded in in quarter. the cash though just investments $X.X of XX, first repurchase reflect for from and long-term million flow reduction $XX

strong long effectively our for Our market are pursue opportunities the customer business and product portfolio. our to sheet larger strong term to through for us our term. positions compete and enhance to we repurchase share that strategic manage positioned for to long cash balance and balance the program, the Likewise, well opportunities ensures reinvest

to to Due fiscal to to last quarter we've to the limited visibility continue we guidance. XX. We anticipate million. of the second net to be sales reasons the will of related quarters million XXXX Slide provide range Please in discussed $XX over several the $XX turn quarterly

is demand. loss share range share excess reflect range This $X.XX. in the loss from a on inventory, in generate end loss is quarter the not the does to quarter. first of share lull shares inventory per in and reserves of primarily the expect prior to increased increased quarter the This to repurchases number $X.XX over due net the of second resulting We per based at for the outstanding

represented which XXX,XXX earlier, share in at approximately price buyback $XX indicated leaving we in I available an first repurchases. repurchased average million shares our $XX.XX, million As of $XX part for program quarter of additional as the stock

reflective of continue our The investors concludes potential share conviction significance and enduring price current to opportunity. In quarter our over turn market. our drive back the will believe I fiscal our prepared appreciate by strategic and underscores to share make call and for first to will company not as as of of my strong the Cheri. proactive we That regarding our work our of driven our support XXXX. our remarks to commitment We shareholder long-term this value. now clear is continue and the decisions coming buyback the we thoughtful quarters, we repurchases in strength that

Cheryl Beranek

financial the Dan. for update, Thanks

multiyear a provide returns Turning strategic on to to intend when is industry labeled demand to would our how ahead Slide opportunities I brief map a our we plan, for update which like more road the we XX. cadence. capitalize to LEAP significant have on normalized LEAP. now

performance and variable execute must in continue customer highest will between our to we costs, challenge Clearfield's been through and segment. provider misalignment leading a are have by the affected this the in at has we reductions months, supply needs. XX and as level. last the addressed that the yet a capacity [indiscernible] reason market DNA mismatch between demand negatively and view this our Over We temporary we to

to and the continue markets new align is we're staff I to sitting being we where our develop earlier, sales support highlighted labor-saving still, fiber As and deployed. not products rather,

We to announcements expect come, more these highlighting attributes. product

cross-sell the experience significant executive to will existing our customers foundation Listening work is European Clearfield's our then their hired connectivity alongside lead who Recently, extensions our we our upon was North American an and team to business delivering which European for connectivity to with of needs operations, our built. products. initiatives to

demand cost recently to hired a to to and drive manufacturing North of have We to to reductions, cash. and operations lead initiatives operational level senior also programs procurement our convert ongoing as capacity American executive near-term align part our inventory

a to this market will accelerate pattern. strength ability dynamics team an deliver earnings In addition that normalized edge investment return our of to Clearfield's management strong to as is more

While growth also to will we the is as market to future that brings strong that, your near-term fiber absolute challenging, the the we as the industry in dynamics value confident remain remain questions. Clearfield ever. with open proposition that and the call And is

Operator

Thank and time conducting at will Instructions]. a Ladies [Operator gentlemen, we question-and-answer session. you. this be

from ROTH. the comes Searle with question first Our of line Scott

Scott Searle

also award specifically But happen? as to type and Is to the comment expect in maybe you're to see terms start government you this some for first you would on you on Or the when more is some that Calix And dive calendar in BEAD themselves, Cheri, evaluating appreciate do your of potential still were wondering some with the materialize to earlier that, some Clearfield? programs of in to was had of customers slowdown orders I'm the delays of funding the indicating the which customers? a the of then in for there quarter there just in week 'XX when could in in I track expect deployments those of to that slides funding similar programs. benefiting seeing slip? been if detail awards And BEAD the if

Cheryl Beranek

only coming with how with as world, needs to good have that been this as to to might that together. of late listening timing we expect. is consistent being revenue the really and years, their doesn't now funding deployments years. because in world and of close less one for there said and the their I for couple BEAD financial sheet our be it we for through Calix about a that's all in necessary said, activity level consistent we well. there of number needs not Calix for saying for also rolled a start there that than that many slides -- And they're can one in in it it's years a BEAD, BEAD put with to others engineering well to with awards be around the the and with as into is companies put potential what XX% though so balance see Scott, presentation in outlook that's really what's just make consistent It out going when I look the It's was want engineering of now quarters to and Yes. probably to really as the higher engineering in been so quarters to previous mean, the meaningful are when BEAD how they 'XX a the together than directives competing and the are next at that be X and the those we've There and go our necessarily -- past we've so really this X BEAD and of to year. the earlier plans passed has what people relates choice X in talked talk a has without change after place and go put homes sure is less that's match programs initiatives they're 'XX will and next thing even place. The we what the X is one to that

is I of act anticipating of manner much So together. everyone's is getting as to going disciplined I'm that slip think it BEAD a not as kind

Scott Searle

of a of improvement sequential I'm couple the you it's items, I a little we of if quantify or where million $X-plus are wanted demand? wondering bit the into early, And could the wondering, Very time that a sales terms this with of is -- more like just should in marking stream of Okay. charge. looks March And expect are market March your know in your line And you for your course a in into get that. follow-up, shipments that comfortable I range, looking demand It bottom probably kind I'm the the "normalization" what's quarter, guidance this is would it's on see revenue handle if you inventory outlook, could line helpful. somewhere to year? but end through the

Cheryl Beranek

and that's with Right. half, to I'll second seasonality look -- the overhang. Yes, winter talk the the so the as beyond take the beyond the and issues in have still associated I'll March, inventory BEAD Dan quarter program inventory and reserves. we at it's

Minnesota. like going -- country degrees an might through we we're today weather look build. We with so it might doesn't any actually get winter warm was although much we issues, snow not in here across spring that that winter early it so It XX and an the and hopeful are -- get early

And forecast we to do get increase. point Dan, don't a we're at kind closer now our want X:X as this right into down just level. famous but the We what see we of the -- revenues that, I that winter and -- we're months I that will going backlog that think, it it has March would be And to part be a it pattern talked U. normalized of the the closer see and factors going -- -- of see more a I previously I've is will bottom to expectation think summer to of still to in one U-shaped that we're we'll this we my we're quarter you of expect pulling -- book-to-bill that a our to to have a inventory? normalized for recovery. think this start about we world ratio to address

Daniel Herzog

Right.

So yes, Scott.

to to $X.X million the for it's tried area quarter. hard about in and like estimate the somewhere Those upcoming are So estimate. we've conservatively of

and the got relieves market. so those going in what of are get the quarter see to that's through right kind to now. Clearly, prevalent an estimation be the in quarter, things You

talking you're this as their that reducing and up but else we see people more. are but stocked more everybody You'll about have inventories, this probably hear longer-term pause demand, probably people to to get going for through

So it's to those people's -- when are of happen. revenue can kind at you numbers, you look anticipate their things going to can inventory

or to The we on important that not dumpster. much up go of subassemblies looks and returns the eventually we markets helps pretty finished and meaning noncash it's that around are stock So lot it's we're aren't much make. inventory, things charge recoveries at kind will to in these we those that finished But we're -- actually a these it's we're return you don't things that goods. used are note we're demand point goods, have of its your this just to will be on what reserves. expect like time components back in We putting that get that we not that a us improve too and it obsoleting, and excess words when those reserves on using that doing

as this thing. timing a at looking So

Scott Searle

in send Great. and back warm queue the please I'll East. that get weather Cheri,

Operator

with the Koontz question of & Company. from next comes Needham line Our Ryan

Ryan Koontz

us of results December March, and On what impact a wonder your customer Is if really it segments the plan there, to in I -- least you would what about at there, thought here definitely helpful. with be parsed Is the conservation forward for in out pre-pandemic. help resources thought the BEAD? you Broadband, it's you into it And inventory? had Community step if in can capital dominantly that Community the and low Broadband? multiyear you is dominantly headwind down specifically -- If

Cheryl Beranek

Yes.

being the providers. position. did Community inventory of mean, of combination a of Is held at mostly the I have it's regional above. higher all large think I not level The inventory strong a Broadband

mix, with actually of providers their sign a to those that's so starting And work now kind really positive for us. regional through

earlier are very our said think relative Scott the the others consistent. week, industry to the in I very Calix's Community as our this Broadband it's -- from as what announcement numbers ROTH, as --

in they the they their right the back, have have holding be place don't. is where to their funding and Broadband to funding going to going making Community what they're engineers where and get sure for evaluating they right able they're do,

mean, for frustrating market time back also in So been I fabulous in is a probably know have us those funding chunk got long put the is our no but different. because X of a so probably time that it and money this we who to it that is this XXXX, when for government market, close a lull into months, previous got of we this in business

a we're their reflection will come evaluating So options. of it confident back. is just people It

Ryan Koontz

like little seeing the it more regionals, a regionals from pull. there, at the in situation correct? you're comment Great. and Is inventory that And some sounds your improvement the

Cheryl Beranek

Right.

I think used. I've the it's standpoint the of analogy

the forks how more I knives. think forks They've got it's and they need that they all they know finding very need descriptive out, knives. of they're

sign starting that need And kind in it's going estimates to out so what regards that's they're and they're itself they a really what to the that estimates in they to of good to upon going of made work need. made mix

-- definitely think to a a number passed the in last high year. of improve is and did starting high homes it I we that it's record to So record important have note

this is so the number shown homes connected of and moment. between the a the at disconnect And dollar signs number of mismatch the actually manufacturers being by the

your really I or the think of answer reflection that's question. to best

Operator

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

Timothy Savageaux

-- market? you there fiscal little you I out, don't at see is I'll your -- note broader little reason that sequentially you least up from but And And that bit, And I to seeing diverge have I amongst larger And a would expect that, look from there. what from as Community what QX know afternoon. forward do any you're from Broadband follow think or Good even further what here do regional this might your I cohort? guide guess, for touched a guess the for your I on players. you uptick did

Cheryl Beranek

but large think the we pandemic in time help the been Community by it that Clearfield very in to that hard seeing labor. I inventory took call is emerging presence ensure reduce share that I them the diverge. and as has partnering during wouldn't we're is deployment their a their out help mean to now them regional Broadband that relationship, we're I the of in to of strong doing cost for providers what decade period, taking stickiness manage we're during working the a

it think be you an of increasing will it So large business of provider order out because be dwarf I from lumpy of get a could but maybe part other an business that our put perspective. and the can regional some it

So single time at I underway see. a wouldn't and we're read think us this point that the of in I all starting good it's quarter activity But to into level for you of for -- the to pull-through see

Timothy Savageaux

you And Okay. that stabilize? will seasonal you Great. imagine continue obviously, -- or international saw I I the do on and QX think to into decline side. to -- I a mean, that downturn expect

Cheryl Beranek

seasonal. colder well. Tim. early in started than it's a as interrupting, Very very -- winter for And -- the Europe, cold so [ and even started apologize lots normal very I year, of Northern ] and

to a is down So seasonal sales quarter number the next be expect international that in and first better very fully I quarter.

Timothy Savageaux

be And and any that front great. in would one have have want specifics bottom the guide, share if for you're But me, if QX, Okay. apologies pressure more you this, did. given on the gross line you but there, a you looking may touched I'm little for assuming on to margin you last

Daniel Herzog

we Yes, of it's up so our that. QX in going where we're revenue not consistent kind finished on forecasting with

the of taking. to that kind inventory it's it related provided, noncash And slightly you're reserves -- then there. that we that's lower, predominantly seeing range we'd so you'd be the So see

higher like Obviously, let's like given So to on that, going the is to be on puts our so that mentioned a Scott, say, any pressure X.X% there, lower time I us. quarters. that we're, that's volume below revenue just

the given. and change is margin what a down. reserves that's pushes the that's big But to inventory related excess So the

Operator

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

Jaeson Schmidt

on questions few Nestor. a Just

there ramp I think summer the still in to expectation for $XX months, that the able possible? to business that Nestor previously, the to was million Is range be

Cheryl Beranek

out. that providing We're not far guidance

to in is an company -- opportunity building able the that, a building I'd there And be that so that. and capacity to say we're to address we're address

you enhancements to the that And and that amount is also connectivity over it the increases last of course a expansion early margin, able year sales, precursor so provide. that of the revenue the gives the an of future Microduct that is only Microduct is we're the the One indicator. about made we've increases exciting not but what's it of to

addition lumpiness -- a and say from us. of don't a again, it's the more of fact I million there and the the -- the the trend not pull us There the months, who because and seasonality, for solutions forecast there, [ a types rockiness So in specific summer are strong the help or line that target but think, for connectivity, background for rather of that certainly their than of nuances connectivity I ] through. $XX possible, and is of a -- someone has connectivity understands resources us necessary will the of differences that get

Jaeson Schmidt

fair. manufacture the where update being time the then Nestor able That's line on facility? you in can And you're to at Okay. on from line the us product Mexico

Cheryl Beranek

doing We're that. already

what we are Nestor commodity line. fully level be the to product types. we're U.S. manufacturing important the though, So only is we and a count availability materials intending not -- have Mostly so for I with that Mexico in there we're product is think PVDF tends issue to the -- of that fiber market, the manufacture is high what

Mexico Nestor's our into with able facilities, and able of Minnesota And do lines and for investment previously Clearfield manufacturing we'll the the were make made we're the expansion in as be Park do so all that of facility, we'll capital the the the Brooklyn one be products we our new do all aren't equipment putting that. in able But of cable that certainly, for going of lines well. to to Nestor to equipment to supplied

Operator

I'd There closing to remarks. for are in the no hand like management to back queue. questions the further call

Cheryl Beranek

opportunity. the for long-term period time help a investment insight opportunity Thanks you I really of spend with all provide, some to to some think, and behind to at this time

the very on build opportunity in to of of hopefully, -- Clearfield. one. for time some It the and We remains going is a -- presents want the brink are I this participate fiber to that proposition see us opportunity that and that becoming a the that to now was right Clearfield's exactly economy the amazing of a it provide for The fiber-rich will here in at welcome me certainly same. and as and shareholder the our the benefit being value recognizing that and and in join for time country the strong an then U.S. market opportunities really that a you is built you is

Operator

this Ladies participation. you for today's and Thank gentlemen, does teleconference. conclude your

this may time, at wonderful your You disconnect have a and day. lines

Clearfield (CLFD) 1 Feb 242024 Q1 Earnings call transcript