In the release issued earlier today by
Clearfield,
Inc. (NASDAQ: CLFD)
under
the same headline, please note that the
updated press release below now includes the Consolidated Balance
Sheets and omits a duplicate Cashflows table.
- Record international revenues driven by the performance of
Nestor Cables.
- Reiterates revenue guidance and increases net income per share
guidance to $2.05 to $2.15 for fiscal year 2023.
Clearfield, Inc. (NASDAQ:
CLFD), a leader in fiber connectivity, reported results
for the third quarter of fiscal 2023.
Fiscal Q3 2023
Financial Summary |
|
(in millions
except per share data and percentages) |
Q3 2023 |
vs. Q3 2022 |
Change |
Change (%) |
Net Sales |
$ |
61.3 |
|
$ |
71.3 |
|
$ |
(10.0 |
) |
-14 |
% |
|
|
|
|
|
Gross Profit ($) |
$ |
19.1 |
|
$ |
29.3 |
|
$ |
(10.2 |
) |
-35 |
% |
Gross Profit (%) |
|
31.1 |
% |
|
41.1 |
% |
|
-10.0 |
% |
-24 |
% |
|
|
|
|
|
Income from Operations |
$ |
5.6 |
|
$ |
16.6 |
|
$ |
(11.0 |
) |
-66 |
% |
Income Tax Expense |
$ |
1.8 |
|
$ |
3.9 |
|
$ |
(2.0 |
) |
-53 |
% |
|
|
|
|
|
Net
Income |
$ |
5.2 |
|
$ |
12.7 |
|
$ |
(7.5 |
) |
-59 |
% |
Net
Income per Diluted Share |
$ |
0.33 |
|
$ |
0.92 |
|
$ |
(0.59 |
) |
-64 |
% |
|
|
|
|
|
Fiscal Q3 YTD
2023 Financial Summary |
|
(in millions
except per share data and percentages) |
2023 YTD |
vs. 2022 YTD |
Change |
Change (%) |
Net Sales |
$ |
219.0 |
|
$ |
175.9 |
|
$ |
43.2 |
|
25 |
% |
|
|
|
|
|
Gross Profit ($) |
$ |
73.3 |
|
$ |
75.4 |
|
$ |
(2.2 |
) |
-3 |
% |
Gross Profit (%) |
|
33.5 |
% |
|
42.9 |
% |
|
-9.4 |
% |
-22 |
% |
|
|
|
|
|
Income from Operations |
$ |
35.6 |
|
$ |
41.6 |
|
$ |
(6.0 |
) |
-14 |
% |
Income Tax Expense |
$ |
8.5 |
|
$ |
9.5 |
|
$ |
(1.0 |
) |
-10 |
% |
|
|
|
|
|
Net
Income |
$ |
29.8 |
|
$ |
32.4 |
|
$ |
(2.5 |
) |
-8 |
% |
Net
Income per Diluted Share |
$ |
2.00 |
|
$ |
2.33 |
|
$ |
(0.33 |
) |
-14 |
% |
|
|
|
|
|
Management Commentary
“Our third quarter fiscal 2023 results came in relatively
in-line with our expectations,” said Company President and CEO
Cheri Beranek. “Based on conversations with our customers, we
expect service providers to continue working through inventory for
the next several quarters. Additionally, our community broadband
customers are adopting a cautious approach with respect to
deploying capital until they have better visibility into the timing
of government funded deployments. While we expect these dynamics
will impact our near-term performance, likely into fiscal 2024, we
continue to focus on positioning the company for long-term growth,
right-sizing capacity levels, and designing products that address
our customers’ biggest pain points. With government funding
initiatives underway and significant rural broadband builds
expected in the coming years, we anticipate strong demand for our
core products once order patterns return to normalized levels. By
investing in our people, modernizing our systems, and targeting
expansion into new markets like Europe, we are positioning
Clearfield for continued success which we believe will drive
significant shareholder value over the long term."
“Clearfield's strong balance sheet and strategic approach with
service providers enable us to pursue growth opportunities and
enhance our product portfolio," said CFO Dan Herzog. “We continue
to invest in capital equipment with faster processing capability to
reduce costs and improve margins. Finally, we are reiterating our
full-year fiscal 2023 revenue guidance and increasing our full year
net income per share guidance.”
Financial Results for the Three Months Ended
June 30, 2023Net sales for the third quarter of
fiscal 2023 decreased 14% to $61.3 million from $71.3 million in
the same year-ago quarter. Organic revenue decreased 33% year over
year to $47.9 million, while Nestor Cables generated revenue of
$13.4 million.
As of June 30, 2023, order backlog (defined as purchase orders
received but not yet fulfilled) was $74.7 million, a decrease of
$32.9 million, or 31% compared to $107.6 million as of March 31,
2023, and a decrease of $82.0 million, or 52%, from June 30, 2022.
The sequential decrease was due to a lull in demand as customers
digest previously purchased products.
Gross margin for the quarter was 31.1%, compared to 41.1% in the
third quarter of fiscal 2022. Gross margin was negatively affected
by excess production capacity as well as Nestor’s inclusion in the
quarter. The Company continues to realign capacity to current
market conditions.
Operating expenses for the quarter increased 6% to $13.4
million, or 22% of net sales, from $12.7 million, or 18% of net
sales in the same year-ago quarter.
Net income for the quarter totaled $5.2 million, or $0.33 per
diluted share, compared to $12.7 million, or $0.92 per diluted
share, in the same year-ago quarter.
OutlookThe Company is reiterating its fiscal
2023 revenue guidance and is raising its net income per share
guidance due to better-than-expected product margin as well as cost
saving initiatives. Clearfield continues to expect its full year
fiscal 2023 net sales to be within a range of $260 to $275 million,
and now expects net income per share to be in the range of $2.05 to
$2.15, up from $1.80 to $2.10 previously.
Conference CallManagement will hold a
conference call today, August 3, 2023, at 5:00 p.m. Eastern Time
(4:00 p.m. Central Time) to discuss these results and provide an
update on business conditions.
Clearfield’s President and CEO Cheri Beranek and CFO Dan Herzog
will host the presentation, followed by a question-and-answer
period.
U.S. dial-in: 1-844-826-3033International dial-in:
1-412-317-5185Conference ID: 8040539
The live webcast of the call can be accessed at the Clearfield
Investor Relations website along with the company's earnings press
release and presentation.
Please see the Earnings Presentation for recharacterized
customer segment revenue.
A replay of the call will be available after 8:00 p.m. Eastern
Time on the same day through August 17, 2023, while an archived
version of the webcast will be available on the Investor Relations
website for 90 days.
U.S. replay dial-in: 1-844-512-2921International replay dial-in:
1-412-317-6671Replay ID: 10177264
About Clearfield, Inc. Clearfield, Inc.
(NASDAQ: CLFD) designs, manufactures, and distributes fiber optic
management, protection, and delivery products for communications
networks. Our “fiber to anywhere” platform serves the unique
requirements of leading incumbent local exchange carriers
(traditional carriers), competitive local exchange carriers
(alternative carriers), and MSO/cable TV companies, while also
catering to the broadband needs of the utility/municipality,
enterprise, data center, and military markets. Headquartered in
Minneapolis, MN, Clearfield deploys more than a million fiber ports
each year. For more information, visit www.SeeClearfield.com.
Cautionary Statement Regarding Forward-Looking
InformationForward-looking statements contained herein and
in any related presentation or in the related Earnings Presentation
are made pursuant to the safe harbor provisions of the Private
Litigation Reform Act of 1995. Words such as “may,” “will,”
“expect,” “believe,” “anticipate,” “estimate,” “outlook,” or
“continue” or comparable terminology are intended to identify
forward-looking statements. Such forward looking statements
include, for example, statements about the Company’s future revenue
and operating performance, expected customer ordering patterns,
anticipated shipping on backlog and future lead times, future
availability of components and materials from the Company’s supply
chain, future availability of labor impacting our customers’
network builds, the impact of the Rural Digital Opportunity Fund
(RDOF) or other government programs on the demand for the Company’s
products or timing of customer orders, the Company’s ability to
match capacity to meet demand, expansion into new markets and
trends in and growth of the FTTx markets, market segments or
customer purchases and other statements that are not historical
facts. These statements are based upon the Company's current
expectations and judgments about future developments in the
Company's business. Certain important factors could have a material
impact on the Company's performance, including, without limitation:
the COVID-19 pandemic has significantly impacted worldwide economic
conditions and could have a material adverse effect on our
business, financial condition and operating results; inflationary
price pressures and uncertain availability of components, raw
materials, labor and logistics used by us and our suppliers could
negatively impact our profitability; we rely on single-source
suppliers, which could cause delays, increase costs or prevent us
from completing customer orders; we depend on the availability of
sufficient supply of certain materials and global disruptions in
the supply chain for these materials could prevent us from meeting
customer demand for our products; we rely on our manufacturing
operations to produce product to ship to customers and
manufacturing constraints and disruptions could result in decreased
future revenue; a significant percentage of our sales in the last
three fiscal years have been made to a small number of customers,
and the loss of these major customers could adversely affect us;
further consolidation among our customers may result in the loss of
some customers and may reduce sales during the pendency of business
combinations and related integration activities; we may be subject
to risks associated with acquisitions, and the risks could
adversely affect future operating results; we have exposure to
movements in foreign currency exchange rates; if we are unable to
integrate acquired businesses, our financial results could be
materially and adversely affected; adverse global economic
conditions and geopolitical issues could have a negative effect on
our business, and results of operations and financial condition;
our planned growth may strain our business infrastructure, which
could adversely affect our operations and financial condition;
product defects or the failure of our products to meet
specifications could cause us to lose customers and sales or to
incur unexpected expenses; we are dependent on key personnel;
cyber-security incidents on our information technology systems,
including ransomware, data breaches or computer viruses, could
disrupt our business operations, damage our reputation, and
potentially lead to litigation; our business is dependent on
interdependent management information systems; to compete
effectively, we must continually improve existing products and
introduce new products that achieve market acceptance; if the
telecommunications market does not continue to expand, our business
may not grow as fast as we expect, which could adversely impact our
business, financial condition and operating results; changes in
U.S. government funding programs may cause our customers and
prospective customers to delay, reduce, or accelerate purchases,
leading to unpredictable and irregular purchase cycles; intense
competition in our industry may result in price reductions, lower
gross profits and loss of market share; our success depends upon
adequate protection of our patent and intellectual property rights;
we face risks associated with expanding our sales outside of the
United States; and other factors set forth in Part I, Item IA. Risk
Factors of Clearfield's Annual Report on Form 10-K for the year
ended September 30, 2022 as well as other filings with the
Securities and Exchange Commission. The Company undertakes no
obligation to update these statements to reflect actual events
unless required by law.
Investor Relations Contact:Greg McNiff The
Blueshirt Group773-485-7191clearfield@blueshirtgroup.com
|
|
|
|
|
|
|
|
|
|
|
|
CLEARFIELD, INC. |
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
|
|
|
|
|
|
|
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
(IN
THOUSANDS, EXCEPT SHARE DATA) |
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
Three Months
Ended |
|
Nine Months
Ended |
|
June 30, |
|
June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
61,284 |
|
|
$ |
71,250 |
|
$ |
219,035 |
|
|
$ |
175,854 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales |
|
42,210 |
|
|
|
41,943 |
|
|
145,750 |
|
|
|
100,411 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
19,074 |
|
|
|
29,307 |
|
|
73,285 |
|
|
|
75,443 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and |
|
|
|
|
|
|
|
|
|
|
|
administrative |
|
13,449 |
|
|
|
12,721 |
|
|
37,714 |
|
|
|
33,877 |
Income from
operations |
|
5,625 |
|
|
|
16,586 |
|
|
35,571 |
|
|
|
41,566 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
1,630 |
|
|
|
43 |
|
|
3,328 |
|
|
|
284 |
Interest
expense |
|
(195 |
) |
|
|
- |
|
|
(551 |
) |
|
|
- |
Income
before income taxes |
|
7,060 |
|
|
|
16,629 |
|
|
38,348 |
|
|
|
41,850 |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
1,842 |
|
|
|
3,884 |
|
|
8,511 |
|
|
|
9,480 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
$ |
5,218 |
|
|
$ |
12,745 |
|
$ |
29,837 |
|
|
$ |
32,370 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income
per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.33 |
|
|
$ |
0.93 |
|
$ |
2.01 |
|
|
$ |
2.35 |
Diluted |
$ |
0.33 |
|
|
$ |
0.92 |
|
$ |
2.00 |
|
|
$ |
2.33 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
15,254,341 |
|
|
|
13,772,269 |
|
|
14,880,666 |
|
|
|
13,760,950 |
Diluted |
|
15,254,341 |
|
|
|
13,899,698 |
|
|
14,929,405 |
|
|
|
13,900,019 |
|
|
|
|
|
|
|
|
|
|
|
|
CLEARFIELD, INC. |
|
|
|
|
|
CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
(IN
THOUSANDS, EXCEPT SHARE DATA) |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
June 30, |
|
|
September 30, |
|
|
2023 |
|
|
|
2022 |
|
Assets |
|
|
|
|
|
Current Assets |
|
|
|
|
|
Cash and
cash equivalents |
$ |
31,385 |
|
|
$ |
16,650 |
|
Short-term
investments |
|
130,726 |
|
|
|
5,802 |
|
Accounts
receivable, net |
|
31,944 |
|
|
|
53,704 |
|
Inventories,
net |
|
105,003 |
|
|
|
82,208 |
|
Other
current assets |
|
4,084 |
|
|
|
1,758 |
|
Total
current assets |
|
303,142 |
|
|
|
160,122 |
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
21,318 |
|
|
|
18,229 |
|
|
|
|
|
|
|
Other Assets |
|
|
|
|
|
Long-term
investments |
|
6,556 |
|
|
|
22,747 |
|
Goodwill |
|
6,581 |
|
|
|
6,402 |
|
Intangible
assets, net |
|
6,344 |
|
|
|
6,376 |
|
Right-of-use
lease assets |
|
14,773 |
|
|
|
13,256 |
|
Deferred tax
asset |
|
998 |
|
|
|
1,414 |
|
Other |
|
1,489 |
|
|
|
582 |
|
Total other
assets |
|
36,741 |
|
|
|
50,777 |
|
Total
Assets |
$ |
361,201 |
|
|
$ |
229,128 |
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
Current
portion of lease liability |
$ |
3,722 |
|
|
$ |
3,385 |
|
Debt |
|
2,174 |
|
|
|
- |
|
Accounts
payable |
|
11,641 |
|
|
|
24,118 |
|
Accrued
compensation |
|
7,319 |
|
|
|
13,619 |
|
Accrued
expenses |
|
3,335 |
|
|
|
6,181 |
|
Factoring
liability |
|
8,722 |
|
|
|
4,391 |
|
Total
current liabilities |
|
36,913 |
|
|
|
51,694 |
|
|
|
|
|
|
|
Other Liabilities |
|
|
|
|
|
Long-term
debt |
|
- |
|
|
|
18,666 |
|
Long-term
portion of lease liability |
|
11,572 |
|
|
|
10,412 |
|
Deferred tax
liability |
|
782 |
|
|
|
774 |
|
Total
Liabilities |
|
49,267 |
|
|
|
81,546 |
|
|
|
|
|
|
|
Shareholders' Equity |
|
|
|
|
|
Common
stock |
|
153 |
|
|
|
138 |
|
Additional
paid-in capital |
|
187,409 |
|
|
|
54,539 |
|
Accumulated
other comprehensive loss |
|
(268 |
) |
|
|
(1,898 |
) |
Retained
earnings |
|
124,640 |
|
|
|
94,803 |
|
Total
Shareholders' Equity |
|
311,934 |
|
|
|
147,582 |
|
Total
Liabilities and Shareholders' Equity |
$ |
361,201 |
|
|
$ |
229,128 |
|
|
|
|
|
|
|
Clearfield, Inc. |
|
|
|
|
|
|
Consolidated Statement of Cashflows |
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
Nine Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
2023 |
|
2022 |
|
Cash flows from operating
activities |
|
|
|
|
|
|
|
Net income |
|
$ |
29,837 |
|
|
$ |
32,370 |
|
|
Adjustments to reconcile net income to cash provided |
|
|
|
|
|
|
|
by (used in) operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
4,411 |
|
|
|
2,205 |
|
|
Amortization of discount on investments |
|
|
(2,429 |
) |
|
|
(31 |
) |
|
Stock-based compensation |
|
|
2,504 |
|
|
|
1,647 |
|
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
Accounts receivable |
|
|
24,519 |
|
|
|
(12,156 |
) |
|
Inventories, net |
|
|
(21,510 |
) |
|
|
(41,816 |
) |
|
Other assets |
|
|
(3,525 |
) |
|
|
(185 |
) |
|
Accounts payable and accrued expenses |
|
|
(20,326 |
) |
|
|
8,677 |
|
|
Net cash provided by (used in)
operating activities |
|
|
13,481 |
|
|
|
(9,289 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
Purchases of property, plant and equipment and |
|
|
|
|
|
|
|
intangible assets |
|
|
(6,529 |
) |
|
|
(6,764 |
) |
|
Purchase of investments |
|
|
(210,923 |
) |
|
|
(248 |
) |
|
Proceeds from sales and maturities of investments |
|
|
105,077 |
|
|
|
17,386 |
|
|
Net cash (used in) provided by
investing activities |
|
|
(112,375 |
) |
|
|
10,374 |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities: |
|
|
|
|
|
|
|
Repayment of long-term
debt |
|
|
(16,700 |
) |
|
|
- |
|
|
Proceeds from issuance of common stock under |
|
|
612 |
|
|
|
544 |
|
|
employee stock purchase plan |
|
|
|
|
|
|
|
Repurchase of shares for payment of withholding taxes |
|
|
(954 |
) |
|
|
(274 |
) |
|
for vested restricted stock grants |
|
|
|
|
|
|
|
Tax withholding and proceeds related to exercise of stock
options |
|
(493 |
) |
|
|
(379 |
) |
|
Issuance of stock under equity compensation plans |
|
|
954 |
|
|
|
- |
|
|
Net proceeds from issuance of common stock |
|
|
130,262 |
|
|
|
- |
|
|
Net cash provided by (used in)
financing activities |
|
|
113,681 |
|
|
|
(109 |
) |
|
|
|
|
|
|
|
|
|
Effect of exchange rates on
cash |
|
|
(52 |
) |
|
|
- |
|
|
Increase in cash and cash
equivalents |
|
|
14,735 |
|
|
|
976 |
|
|
Cash and cash equivalents,
beginning of period |
|
|
16,650 |
|
|
|
13,216 |
|
|
Cash and cash equivalents, end
of period |
|
$ |
31,385 |
|
|
$ |
14,192 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures for
cash flow information |
|
|
|
|
|
|
|
Cash paid for income
taxes |
|
$ |
12,589 |
|
|
$ |
9,913 |
|
|
Cash paid for interest |
|
$ |
360 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Non-cash financing
activities |
|
|
|
|
|
|
|
Cashless exercise of stock
options |
|
$ |
566 |
|
|
$ |
276 |
|
|
|
|
|
|
|
|
|
Clearfield (NASDAQ:CLFD)
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