Clearfield, Inc. (NASDAQ: CLFD),
a leader in fiber connectivity, reported results for the fourth
quarter and fiscal year ended September 30, 2023.
Fiscal Q4 2023
Financial Summary |
|
(in millions
except per share data and percentages) |
Q4 2023 |
vs. Q4 2022 |
Change |
Change (%) |
Net Sales |
$ |
49.7 |
|
$ |
95.0 |
|
$ |
(45.3 |
) |
-48 |
% |
|
|
|
|
|
Gross Profit ($) |
$ |
12.0 |
|
$ |
37.5 |
|
$ |
(25.5 |
) |
-68 |
% |
Gross Profit (%) |
|
24.1 |
% |
|
39.5 |
% |
|
-15.3 |
% |
-39 |
% |
|
|
|
|
|
Income from Operations |
$ |
1.7 |
|
$ |
22.3 |
|
$ |
(20.6 |
) |
-92 |
% |
Income Tax Expense |
$ |
0.6 |
|
$ |
5.0 |
|
$ |
(4.4 |
) |
-89 |
% |
|
|
|
|
|
Net Income |
$ |
2.7 |
|
$ |
17.0 |
|
$ |
(14.3 |
) |
-84 |
% |
Net Income per Diluted Share |
$ |
0.17 |
|
$ |
1.22 |
|
$ |
(1.05 |
) |
-86 |
% |
(in millions
except per share data and percentages) |
2023 |
vs. 2022 |
Change |
Change (%) |
Net Sales |
$ |
268.7 |
|
$ |
270.9 |
|
$ |
(2.2 |
) |
-1 |
% |
|
|
|
|
|
Gross Profit ($) |
$ |
85.3 |
|
$ |
112.9 |
|
$ |
(27.6 |
) |
-24 |
% |
Gross Profit (%) |
|
31.7 |
% |
|
41.7 |
% |
|
-9.9 |
% |
-24 |
% |
|
|
|
|
|
Income from Operations |
$ |
37.3 |
|
$ |
63.8 |
|
$ |
(26.5 |
) |
-42 |
% |
Income Tax Expense |
$ |
9.1 |
|
$ |
14.5 |
|
$ |
(5.4 |
) |
-37 |
% |
|
|
|
|
|
Net Income |
$ |
32.5 |
|
$ |
49.4 |
|
$ |
(16.9 |
) |
-34 |
% |
Net Income per Diluted Share |
$ |
2.17 |
|
$ |
3.55 |
|
$ |
(1.38 |
) |
-39 |
% |
|
|
|
|
|
Management Commentary
"The pendulum swings in our market over the last 12 months have
been extreme. We started fiscal year 2023 with record industry-wide
demand as service providers, emerging from the pandemic, tried to
ensure they had the materials necessary to deploy fiber
connectivity as labor constraints eased. Unfortunately, the reality
of building a network is hard, and navigating the numerous
obstacles coming out of the pandemic has been challenging for our
customers and the industry. Our results for the fourth quarter of
fiscal 2023 reflect the current state of the industry and are
consistent with the commentary we have provided throughout the
year. Despite the industry's ongoing challenges, we remain
confident in the long-term demand for fiber broadband and are
focused on a return to revenue growth when industry ordering
patterns normalize,” said Company President and Chief Executive
Officer Cheri Beranek. “I am proud of the execution that Clearfield
has demonstrated since the start of the pandemic. Since our
inception, we have strategically grown the organization while
delivering consistent profitability. We remain confident that the
future growth in fiber is absolute, and Clearfield stands ready to
deliver on that demand as our market returns to its normalized
cadence. To that end and reflecting our conviction that the current
share price is undervalued relative to our long-term opportunity,
our board increased our share buyback authorization to $40
million,” said Beranek.
“Despite the ongoing challenges impacting the industry, we
maintain a solid financial position with a strong balance sheet,
positioning us well to navigate the near-term uncertainty and
capitalize on the rebound in demand we expect when industry
conditions stabilize,” said Chief Financial Officer Dan Herzog.
“However, given the current murkiness in service provider capital
spending and the economic environment that is affecting our
customers’ spending plans, alongside the remaining inventory
drawdown, we are limited in the ability to provide guidance beyond
the upcoming fiscal quarter. At this time, we expect our fiscal
first quarter 2024 revenue to be in the range of $28 to $32 million
and our net loss per share to be in the range of $0.36 and $0.44.
This range does not reflect the potential impact of any share
repurchases that may be completed in the quarter.”
Financial Results for the Three Months Ended
September 30, 2023
Net sales for the fourth quarter of fiscal 2023 decreased 47.7%
to $49.7 million from $95.0 million in the same year-ago quarter.
Organic revenue decreased 55.6% year-over-year to $39.1 million,
while Nestor Cables generated revenue of $10.6 million in the
fourth quarter of fiscal 2023.
As of September 30, 2023, order backlog (defined as purchase
orders received but not yet fulfilled) was $57.3 million, a
decrease of $17.4 million, or 23.3% compared to $74.7 million as of
June 30, 2023, and a decrease of $107.6 million, or 65.3%, from
September 30, 2022. The sequential decrease was due to a lull in
demand as customers digest previously purchased products.
Gross margin for the fourth quarter of fiscal 2023 was 24.1%,
compared to 39.5% in the fourth 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 fourth quarter of fiscal 2023
decreased 32.6% to $10.3 million, or 20.7% of net sales, from $15.3
million, or 16.1% of net sales, in the same year-ago quarter.
Net income for the fourth quarter of fiscal 2023 totaled $2.7
million, or $0.17 per diluted share, compared to $17.0 million, or
$1.22 per diluted share, in the same year-ago quarter.
Financial Results for the Fiscal Year Ended
September 30, 2023
Net sales for fiscal 2023 decreased 0.8% to $268.7 million from
$270.9 million in fiscal 2022. Organic revenue decreased 14.4%
year-over-year to $225.7 million, while Nestor Cables generated
revenue of $43.0 million in fiscal year 2023. Nestor Cables was
acquired during the fourth quarter of fiscal year 2022.
Gross margin for the year ended September 30, 2023 was 31.7%,
compared to 41.7% in fiscal year 2022. Gross margin was negatively
affected by excess production capacity as well as Nestor’s
inclusion in the full year results.
Operating expenses for the year ended September 30, 2023
decreased 2.4% to $48 million, or 17.9% of net sales, from $49.1
million, or 18.1% of net sales, in fiscal year 2022.
Net income for the year ended September 30, 2023 totaled $32.5
million, or $2.17 per diluted share, compared to $49.4 million, or
$3.55 per diluted share, in fiscal year 2022.
OutlookAt this time and after considering the
current state of the industry, the Company expects net sales for
the first quarter of fiscal 2024 to be in the range of $28 million
to $32 million and net loss per share to be in the range of $0.36
to $0.44. This range does not reflect any share repurchases that
may be completed through the quarter.
Conference CallManagement will hold a
conference call today, November 9, 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 Chief Executive Officer, Cheri
Beranek, Chief Financial Officer, Dan Herzog, and Chief Marketing
Officer, Kevin Morgan, will host the presentation, followed by a
question-and-answer period.
U.S. dial-in: 1-877-407-0792International dial-in:
1-201-689-8263Conference ID: 13741002
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 November 23, 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: 13741002
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 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: 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 |
|
|
|
|
|
|
|
|
|
(IN THOUSANDS, EXCEPT
SHARE DATA) |
|
(Unaudited) |
|
|
|
|
|
|
|
Three Months
Ended |
|
Year Ended |
|
September 30, |
|
September 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
49,685 |
|
|
$ |
95,029 |
|
|
$ |
268,720 |
|
|
$ |
270,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
37,692 |
|
|
|
57,524 |
|
|
|
183,441 |
|
|
|
157,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
11,993 |
|
|
|
37,505 |
|
|
|
85,279 |
|
|
|
112,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
10,277 |
|
|
|
15,254 |
|
|
|
47,992 |
|
|
|
49,130 |
|
Income from operations |
|
1,716 |
|
|
|
22,251 |
|
|
|
37,287 |
|
|
|
63,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
1,878 |
|
|
|
44 |
|
|
|
5,206 |
|
|
|
328 |
|
Interest expense |
|
(330 |
) |
|
|
(311 |
) |
|
|
(881 |
) |
|
|
(311 |
) |
Income before income taxes |
|
3,264 |
|
|
|
21,984 |
|
|
|
41,612 |
|
|
|
63,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
568 |
|
|
|
4,993 |
|
|
|
9,079 |
|
|
|
14,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
2,696 |
|
|
$ |
16,991 |
|
|
$ |
32,533 |
|
|
$ |
49,362 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.16 |
|
|
$ |
1.22 |
|
|
$ |
2.17 |
|
|
$ |
3.58 |
|
Diluted |
$ |
0.17 |
|
|
$ |
1.22 |
|
|
$ |
2.17 |
|
|
$ |
3.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
15,258,782 |
|
|
|
13,803,462 |
|
|
|
14,975,972 |
|
|
|
13,771,665 |
|
Diluted |
|
15,258,782 |
|
|
|
13,923,531 |
|
|
|
15,012,527 |
|
|
|
13,905,984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CLEARFIELD, INC. |
CONSOLIDATED BALANCE SHEETS |
(IN
THOUSANDS, EXCEPT SHARE DATA) |
|
|
|
|
September 30, |
|
September 30, |
|
2023 |
|
2022 |
Assets |
|
|
|
|
|
Current Assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
37,827 |
|
|
$ |
16,650 |
|
Short-term investments |
|
130,286 |
|
|
|
5,802 |
|
Accounts receivable, net |
|
28,392 |
|
|
|
53,704 |
|
Inventories, net |
|
98,055 |
|
|
|
82,208 |
|
Other current assets |
|
1,695 |
|
|
|
1,758 |
|
Total current assets |
|
296,255 |
|
|
|
160,122 |
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
21,527 |
|
|
|
18,229 |
|
|
|
|
|
|
|
Other Assets |
|
|
|
|
|
Long-term investments |
|
6,343 |
|
|
|
22,747 |
|
Goodwill |
|
6,528 |
|
|
|
6,402 |
|
Intangible assets, net |
|
6,092 |
|
|
|
6,376 |
|
Right-of-use lease assets |
|
13,861 |
|
|
|
13,256 |
|
Deferred tax asset |
|
3,039 |
|
|
|
1,414 |
|
Other |
|
1,872 |
|
|
|
582 |
|
Total other assets |
|
37,735 |
|
|
|
50,777 |
|
Total Assets |
$ |
355,517 |
|
|
$ |
229,128 |
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
Current portion of lease liability |
$ |
3,737 |
|
|
$ |
3,385 |
|
Current maturities of long-term debt |
|
2,112 |
|
|
|
- |
|
Accounts payable |
|
8,891 |
|
|
|
24,118 |
|
Accrued compensation |
|
5,571 |
|
|
|
13,619 |
|
Accrued expenses |
|
2,404 |
|
|
|
6,181 |
|
Factoring liability |
|
6,289 |
|
|
|
4,391 |
|
Total current liabilities |
|
29,004 |
|
|
|
51,694 |
|
|
|
|
|
|
|
Other Liabilities |
|
|
|
|
|
Long-term debt, net of current maturities |
|
- |
|
|
|
18,666 |
|
Long-term portion of lease liability |
|
10,629 |
|
|
|
10,412 |
|
Deferred tax liability |
|
721 |
|
|
|
774 |
|
Total Liabilities |
|
40,354 |
|
|
|
81,546 |
|
|
|
|
|
|
|
Shareholders’ Equity |
|
|
|
|
|
Common stock |
|
153 |
|
|
|
138 |
|
Additional paid-in capital |
|
188,218 |
|
|
|
54,539 |
|
Accumulated other comprehensive loss |
|
(544 |
) |
|
|
(1,898 |
) |
Retained earnings |
|
127,336 |
|
|
|
94,803 |
|
Total Shareholders’ Equity |
|
315,163 |
|
|
|
147,582 |
|
Total Liabilities and Shareholders’ Equity |
$ |
355,517 |
|
|
$ |
229,128 |
|
|
|
|
|
|
|
Clearfield, Inc. |
|
|
|
|
|
Consolidated Statement of
Cashflows |
|
|
|
|
|
|
|
|
Year Ended |
|
|
Year Ended |
|
|
September 30, |
|
|
September 30, |
|
|
2023 |
|
|
2022 |
Cash flows from operating activities |
|
|
|
|
|
Net income |
$ |
32,533 |
|
|
$ |
49,362 |
|
Adjustments to reconcile net income to cash provided by operating
activities: |
|
|
|
|
|
Depreciation and amortization |
|
6,054 |
|
|
|
3,426 |
|
Amortization of discount on investments |
|
(3,512 |
) |
|
|
(42 |
) |
Deferred income taxes |
|
(2,114 |
) |
|
|
(326 |
) |
Stock-based compensation expense |
|
3,578 |
|
|
|
2,339 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
Accounts receivable |
|
26,277 |
|
|
|
(24,234 |
) |
Inventories, net |
|
(15,083 |
) |
|
|
(43,744 |
) |
Other assets |
|
(1,466 |
) |
|
|
(282 |
) |
Accounts payable and accrued expenses |
|
(26,257 |
) |
|
|
14,502 |
|
Net cash provided by operating activities |
|
20,010 |
|
|
|
1,001 |
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
Purchases of property, plant and equipment and intangible
assets |
|
(8,384 |
) |
|
|
(9,148 |
) |
Purchase of investments |
|
(210,923 |
) |
|
|
(248 |
) |
Proceeds from sales and maturities of investments |
|
107,060 |
|
|
|
17,386 |
|
Business acquisition, net of cash |
|
- |
|
|
|
(16,187 |
) |
Net cash used in investing activities |
|
(112,247 |
) |
|
|
(8,197 |
) |
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
Issuance (Repayment) of long-term debt |
|
(16,700 |
) |
|
|
16,700 |
|
Proceeds from issuance of common stock under employee stock
purchase plan |
|
611 |
|
|
|
544 |
|
Repurchase of shares for payment of withholding taxes for
vested restricted stock grants |
|
(1,220 |
) |
|
|
(1,406 |
) |
Tax withholding and proceeds related to exercise of stock
options |
|
(491 |
) |
|
|
(5,183 |
) |
Issuance of stock under equity compensation plans |
|
954 |
|
|
|
- |
|
Net proceeds from issuance of common stock |
|
130,262 |
|
|
|
- |
|
Net cash provided by financing activities |
|
113,416 |
|
|
|
10,655 |
|
|
|
|
|
|
|
Effect of exchange rates on cash |
|
(2 |
) |
|
|
(24 |
) |
Increase in cash and cash equivalents |
|
21,177 |
|
|
|
3,434 |
|
Cash and cash equivalents, beginning of period |
|
16,650 |
|
|
|
13,216 |
|
Cash and cash equivalents, end of period |
$ |
37,827 |
|
|
$ |
16,650 |
|
|
|
|
|
|
|
Supplemental disclosures for cash flow information |
|
|
|
|
|
Cash paid during the year for income taxes |
$ |
12,967 |
|
|
$ |
13,744 |
|
Cash paid for interest |
$ |
463 |
|
|
$ |
119 |
|
|
|
|
|
|
|
Non-cash financing activities |
|
|
|
|
|
Cashless exercise of stock options |
$ |
566 |
|
|
$ |
1,624 |
|
Clearfield (NASDAQ:CLFD)
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From Jun 2024 to Jul 2024
Clearfield (NASDAQ:CLFD)
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From Jul 2023 to Jul 2024