Clearfield Reports Fiscal First Quarter 2024 Results
- None.
- 60% decrease in net sales compared to the same quarter in 2023
- 85% decrease in gross profit compared to the same quarter in 2023
- Net loss of $5.3 million for the first quarter of fiscal 2024
Insights
An examination of Clearfield, Inc.'s recent share repurchase reveals a strategic move to bolster investor confidence amidst a significant downturn in financial performance. By buying back $12 million worth of shares, the company is signaling a belief in its undervalued stock, a common tactic to potentially enhance shareholder value and EPS (Earnings Per Share). However, the timing and scale of such repurchases can be critical, as they impact the company's cash reserves and can be viewed as a short-term fix rather than a long-term strategy.
The reported decline in net sales and gross profit, alongside a transition to a net loss position, suggests a challenging market environment. The gross margin contraction points to inefficiencies and potential overcapacity, which the company is addressing through realignment and efficiency initiatives. Investors should monitor how these initiatives might improve margins in future quarters. The forward guidance indicating continued losses, however, may temper investor expectations and could impact the stock price in the near term.
Clearfield's launch of a new product aimed at reducing fiber deployment costs reflects an adaptive approach to market demands. By focusing on efficiency and cost-effectiveness, the company is positioning itself to capture market share when demand normalizes. The claim of full Build America, Buy America (BABA) Act compliance by the end of 2024 could enhance its competitive edge, particularly in domestic markets where compliance is increasingly becoming a prerequisite for public infrastructure projects.
However, the reported decrease in order backlog raises concerns about the short-term demand for the company's products. The industry-wide inventory overhang and the 'lull in demand' suggest that Clearfield, as well as its competitors, may face continued pressure on sales volumes. Long-term growth prospects in the fiber deployment sector remain strong, but stakeholders should weigh the current industry challenges against the company's strategic initiatives and product innovations.
The fiber connectivity sector where Clearfield operates is influenced by macroeconomic factors, such as infrastructure spending and broadband expansion policies. The BABA Act compliance is likely a strategic response to policy shifts favoring domestic production, which could increase the company's eligibility for government contracts. However, the broader economic context, including potential slowdowns or fiscal tightening, could affect public and private sector spending in infrastructure, thus impacting demand for Clearfield's offerings.
Clearfield's financial performance and guidance suggest that the company is navigating through a cyclical downturn, with the potential for a rebound as market conditions improve. The strategic focus on product portfolio enhancement and operational efficiency could position the company favorably for recovery, but this hinges on the broader economic recovery and sector-specific demand resurgence. Stakeholders should consider these macroeconomic trends when assessing the company's long-term growth trajectory and financial health.
- Repurchased approximately
$12 million in shares under Share Repurchase Program, leaving$21 million available for additional repurchases.
- Announced a new product - a smaller vault which is designed to reduce deployment time and lower the cost of total deployment.
- Expects to achieve full Build America, Buy America (BABA) Act compliance by end of calendar 2024.
MINNEAPOLIS, Feb. 01, 2024 (GLOBE NEWSWIRE) -- Clearfield, Inc. (NASDAQ: CLFD), a leader in fiber connectivity, reported results for the fiscal first quarter 2024, ended December 31, 2023.
| Fiscal Q1 2024 Financial Summary | ||||||||||||||||
| (in millions except per share data and percentages) | Q1 2024 | vs. Q1 2023 | Change | Change (%) | ||||||||||||
| Net Sales | $ | 34.2 | $ | 85.9 | $ | (51.7 | ) | -60 | % | |||||||
| Gross Profit ($) | $ | 4.7 | $ | 30.6 | $ | (26.0 | ) | -85 | % | |||||||
| Gross Profit (%) | 13.7 | % | 35.7 | % | -21.9 | % | -62 | % | ||||||||
| Income (Loss) from Operations | $ | (8.2 | ) | $ | 17.9 | $ | (26.1 | ) | -146 | % | ||||||
| Income Tax Expense (Benefit) | $ | (1.0 | ) | $ | 3.7 | $ | (4.6 | ) | -126 | % | ||||||
| Net Income (Loss) | $ | (5.3 | ) | $ | 14.3 | $ | (19.5 | ) | -137 | % | ||||||
| Net Income (Loss) per Diluted Share | $ | (0.35 | ) | $ | 1.00 | $ | (1.35 | ) | -135 | % | ||||||
Management Commentary
“While we expect the next few quarters to remain challenging due to the inventory overhang across the industry, broadband service providers continue to deploy equipment and long-term demand remains as strong as ever. We remain focused on positioning Clearfield to take share when ordering patterns return to a more normalized cadence. To that end, we continue to expand and enhance our product portfolio to reduce the cost of fiber deployment by making the process as efficient as possible,” said Company President and Chief Executive Officer, Cheri Beranek. “Listening to our customers and then delivering to their needs is the foundation upon which our North American business was built. We remain confident that the future growth in fiber deployment is absolute, and the value proposition that Clearfield brings to the market is stronger than ever,” said Beranek.
“The significance of our share buyback underscores our clear and proactive commitment as we believe in the enduring strength and potential of our company and this market. In the coming quarters, we will continue to make thoughtful and strategic decisions regarding our share repurchases, driven by our strong conviction that our current share price is not reflective of our long-term opportunity,” said Chief Financial Officer Dan Herzog. “Due to limited visibility related to the reasons we’ve discussed over the last several quarters, we will continue to provide quarterly guidance. Currently, we expect our fiscal second quarter 2024 revenue to be in the range of
Financial Results for the Three Months Ended December 31, 2023
Net sales for the first quarter of fiscal 2024 decreased
As of December 31, 2023, order backlog (defined as purchase orders received but not yet fulfilled) was
Gross margin for the first quarter of fiscal 2024 was
Operating expenses for the first quarter of fiscal 2024 increased
Net loss for the first quarter of fiscal 2024 totaled
Outlook
At this time and after considering the current state of the industry, the Company expects net sales for the second quarter of fiscal 2024 to be in the range of
Conference Call
Management will hold a conference call today, February 1, 2024, 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 Chief Executive Officer, Cheri Beranek, and Chief Financial Officer, Dan Herzog, will host the presentation, followed by a question-and-answer period.
U.S. dial-in: 1-877-407-0792
International dial-in: 1-201-689-8263
Conference ID: 13743565
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.
A replay of the call will be available after 8:00 p.m. Eastern Time on the same day through February 15, 2024, while an archived version of the webcast will be available on the Investor Relations website for 90 days.
U.S. replay dial-in: 1-844-512-2921
International replay dial-in: 1-412-317-6671
Replay ID: 13743565
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, and data center 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 Information
Forward-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 Broadband Equity Access and Deployment Program (BEAD), 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: 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; 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; adverse global economic conditions and geopolitical issues could have a negative effect on our business, and results of operations and financial condition; 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, including ransomware, data breaches or computer viruses, could disrupt our business operations, damage our reputation, result in increased expense, and potentially lead to legal proceedings; our business is dependent on interdependent management information systems; natural disasters, extreme weather conditions or other catastrophic events could negatively affect our business, financial condition, and operating results; pandemics and other health crises, including COVID-19, could have a material adverse effect on our business, financial condition, and operating results; 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; expectations relating to environmental, social and governance matters may increase our cost of doing business and expose us to reputational harm and potential liability; our operating results may fluctuate significantly from quarter to quarter, which may make budgeting for expenses difficult and may negatively affect the market price of our common stock; our stock price has been volatile historically and may continue to be volatile - the price of our common stock may fluctuate significantly; anti-takeover provisions in our organizational documents, Minnesota law and other agreements could prevent or delay a change in control of our Company; 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, 2023 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 Group
773-485-7191
clearfield@blueshirtgroup.com
| CLEARFIELD, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (UNAUDITED) | ||||||||
| (IN THOUSANDS, EXCEPT SHARE DATA) | ||||||||
| Three Months Ended | ||||||||
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net sales | $ | 34,230 | $ | 85,942 | ||||
| Cost of sales | 29,533 | 55,293 | ||||||
| Gross profit | 4,696 | 30,649 | ||||||
| Operating expenses | ||||||||
| Selling, general and | ||||||||
| administrative | 12,859 | 12,759 | ||||||
| (Loss) Income from operations | (8,163 | ) | 17,890 | |||||
| Net investment income | 2,069 | 303 | ||||||
| Interest expense | (126 | ) | (243 | ) | ||||
| (Loss) Income before income taxes | (6,219 | ) | 17,950 | |||||
| Income tax (benefit) expense | (951 | ) | 3,695 | |||||
| Net (loss) income | $ | (5,268 | ) | $ | 14,255 | |||
| Net (loss) income per share: | ||||||||
| Basic | $ | (0.35 | ) | $ | 1.01 | |||
| Diluted | $ | (0.35 | ) | $ | 1.00 | |||
| Weighted average shares outstanding: | ||||||||
| Basic | 15,212,945 | 14,165,550 | ||||||
| Diluted | 15,212,945 | 14,284,847 | ||||||
| CLEARFIELD, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (IN THOUSANDS, EXCEPT SHARE DATA) | ||||||||
| (Unaudited) | ||||||||
| December 31, | September 30, | |||||||
| 2023 | 2023 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 34,484 | $ | 37,827 | ||||
| Short-term investments | 128,352 | 130,286 | ||||||
| Accounts receivable, net | 17,363 | 28,392 | ||||||
| Inventories, net | 94,613 | 98,055 | ||||||
| Other current assets | 1,806 | 1,695 | ||||||
| Total current assets | 276,618 | 296,255 | ||||||
| Property, plant and equipment, net | 22,870 | 21,527 | ||||||
| Other Assets | ||||||||
| Long-term investments | 6,505 | 6,343 | ||||||
| Goodwill | 6,615 | 6,528 | ||||||
| Intangible assets, net | 5,982 | 6,092 | ||||||
| Right of use lease assets | 13,297 | 13,861 | ||||||
| Deferred tax asset | 2,754 | 3,039 | ||||||
| Other | 988 | 1,872 | ||||||
| Total other assets | 36,141 | 37,735 | ||||||
| Total Assets | $ | 335,629 | $ | 355,517 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Current portion of lease liability | $ | 3,811 | $ | 3,737 | ||||
| Current maturities of long-term debt | 2,214 | 2,112 | ||||||
| Accounts payable | 7,368 | 8,891 | ||||||
| Accrued compensation | 5,279 | 5,571 | ||||||
| Accrued expenses | 2,750 | 2,404 | ||||||
| Factoring liability | 3,532 | 6,289 | ||||||
| Total current liabilities | 24,954 | 29,004 | ||||||
| Other Liabilities | ||||||||
| Long-term portion of lease liability | 9,973 | 10,629 | ||||||
| Deferred tax liability | 607 | 721 | ||||||
| Total Liabilities | 35,534 | 40,354 | ||||||
| Shareholders’ Equity | ||||||||
| Common stock | 149 | 153 | ||||||
| Additional paid-in capital | 177,322 | 188,218 | ||||||
| Accumulated other comprehensive loss | 476 | (544 | ) | |||||
| Retained earnings | 122,148 | 127,336 | ||||||
| Total Shareholders’ Equity | 300,095 | 315,163 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 335,629 | $ | 355,517 | ||||
| Clearfield, Inc. | ||||||||||
| Consolidated Statement of Cashflows | ||||||||||
| (Unaudited) | ||||||||||
| (In Thousands) | ||||||||||
| Three Months Ended | Three Months Ended | |||||||||
| December 31, | December 31, | |||||||||
| 2023 | 2022 | |||||||||
| Cash flows from operating activities | ||||||||||
| Net (loss) income | $ | (5,268 | ) | $ | 14,255 | |||||
| Adjustments to reconcile net income to cash provided | ||||||||||
| by (used in) operating activities: | ||||||||||
| Depreciation and amortization | 1,695 | 1,353 | ||||||||
| Gain on sale of property, plant, and equipment | (44 | ) | - | |||||||
| Amortization of discount on investments | (1,160 | ) | (218 | ) | ||||||
| Deferred income taxes | (320 | ) | (80 | ) | ||||||
| Stock-based compensation expense | 1,271 | 660 | ||||||||
| Changes in operating assets and liabilities | ||||||||||
| Accounts receivable,net | 11,750 | (549 | ) | |||||||
| Inventories, net | 4,169 | (6,505 | ) | |||||||
| Other assets | 815 | (176 | ) | |||||||
| Accounts payable and accrued expenses | (5,081 | ) | (7,637 | ) | ||||||
| Net cash provided by operating activities | 7,827 | 1,103 | ||||||||
| Cash flows from investing activities: | ||||||||||
| Purchases of property, plant and equipment and | ||||||||||
| intangible assets | (2,412 | ) | (2,213 | ) | ||||||
| Purchase of investments | (47,748 | ) | (98,881 | ) | ||||||
| Proceeds from maturities of investments | 51,068 | - | ||||||||
| Net cash provided by (used in) investing activities | 908 | (101,094 | ) | |||||||
| Cash flows from financing activities: | ||||||||||
| Repayment of long-term debt | - | (16,700 | ) | |||||||
| Proceeds from issuance of common stock under | 250 | 299 | ||||||||
| employee stock purchase plan | ||||||||||
| Repurchase of shares for payment of withholding taxes | (236 | ) | (954 | ) | ||||||
| for stock grants | ||||||||||
| Tax withholding and proceeds related to exercise of stock options | - | (342 | ) | |||||||
| Issuance of stock under equity compensation plans | - | 954 | ||||||||
| Net proceeds from issuance of common stock | - | 130,262 | ||||||||
| Repurchase of common stock | (12,185 | ) | - | |||||||
| Net cash (used in) provided by financing activities | (12,171 | ) | 113,519 | |||||||
| Effect of exchange rates on cash | 93 | 135 | ||||||||
| (Decrease) increase in cash and cash equivalents | (3,343 | ) | 13,663 | |||||||
| Cash and cash equivalents, beginning of period | 37,827 | 16,650 | ||||||||
| Cash and cash equivalents, end of period | $ | 34,484 | $ | 30,313 | ||||||
| Supplemental disclosures for cash flow information | ||||||||||
| Cash paid during the year for income taxes | $ | 61 | $ | - | ||||||
| Cash paid for interest | $ | 86 | $ | 205 | ||||||
| Non-cash financing activities | ||||||||||
| Cashless exercise of stock options | $ | - | $ | 431 | ||||||
FAQ
What is the ticker symbol for Clearfield, Inc.?
What was the change in net sales for Clearfield, Inc. in the fiscal first quarter of 2024 compared to the same quarter in 2023?
What was the change in gross profit for Clearfield, Inc. in the fiscal first quarter of 2024 compared to the same quarter in 2023?
What is the new product announced by Clearfield, Inc.?
What is the expected achievement of Clearfield, Inc. by the end of calendar 2024?
