Company Overview - Clearfield, Inc. (NASDAQ: CLFD) specializes in modular fiber solutions aimed at facilitating rapid and cost-effective broadband deployment, particularly in underserved rural areas [1] Product Portfolio - The company's product offerings include the ClearView Cassette platform, FiberFlex cabinets, and the new TetherSmart solutions, which are designed to enhance fiber expansion capabilities [1]

PART I. FINANCIAL INFORMATION This section provides a comprehensive overview of the company's financial performance and position, including detailed statements and explanatory notes [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the Company's condensed consolidated financial statements, including balance sheets, statements of earnings, comprehensive income, shareholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, financial instrument valuations, and segment-specific financial data [Condensed Consolidated Balance Sheets](index=4&type=page&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity at specific points in time Condensed Consolidated Balance Sheets (in thousands, except share data) | :-------------------------------- | :------------------------ | :------------------- | | **Assets** | | | | Cash and cash equivalents | $ 33,871 | $ 16,167 | | Short-term investments | 83,358 | 114,825 | | Accounts receivables, net | 26,614 | 21,309 | | Inventories, net | 53,753 | 66,766 | | Other current assets | 15,042 | 10,528 | | Total current assets | 212,638 | 229,595 | | Property, plant and equipment, net| 19,742 | 23,953 | | Long-term investments | 40,168 | 24,505 | | Goodwill | 6,740 | 6,627 | | Intangible assets, net | 10,666 | 6,343 | | Right-of-use lease assets | 18,038 | 15,797 | | Deferred tax asset | 6,029 | 6,135 | | Other assets | 689 | 2,320 | | Total Assets | $ 314,710 | $ 315,275 | | **Liabilities and Shareholders' Equity** | | | | Current portion of lease liability| $ 4,108 | $ 3,357 | | Current maturities of long-term debt | 2,358 | - | | Accounts payable | 8,687 | 6,720 | | Accrued compensation | 8,235 | 6,977 | | Accrued expenses | 4,695 | 4,378 | | Bank overdraft | 862 | - | | Factoring liability | 6,943 | 2,920 | | Total current liabilities | 35,888 | 24,352 | | Long-term debt, net of current maturities | - | 2,228 | | Long-term portion of lease liability | 14,346 | 12,771 | | Deferred tax liability | - | 161 | | Total liabilities | 50,234 | 39,512 | | Total shareholders' equity | 264,476 | 275,763 | | Total Liabilities and Shareholders' Equity | $ 314,710 | $ 315,275 | [Condensed Consolidated Statements of Earnings](index=6&type=page&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20EARNINGS) This statement reports the company's revenues, expenses, and net income or loss over specific periods, reflecting operational profitability Condensed Consolidated Statements of Earnings (in thousands, except share data) | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net sales | $ 49,903 | $ 48,793 | $ 132,547 | $ 119,933 | | Cost of sales | 34,669 | 38,101 | 94,940 | 101,712 | | Gross profit | 15,234 | 10,692 | 37,607 | 18,221 | | Selling, general and administrative | 13,738 | 12,998 | 39,823 | 38,430 | | Income (Loss) from operations | 1,496 | (2,306) | (2,216) | (20,209) | | Net investment income | 1,588 | 1,735 | 4,920 | 5,653 | | Interest expense | (106) | (153) | (275) | (381) | | Income (Loss) before income taxes | 2,978 | (724) | 2,429 | (14,937) | | Income tax expense (benefit) | 1,372 | (277) | 1,401 | (3,311) | | Net income (loss) | $ 1,606 | $ (447) | $ 1,028 | $ (11,626) | | Net income (loss) per share Basic | $ 0.11 | $ (0.04) | $ 0.07 | $ (0.79) | | Net income (loss) per share Diluted | $ 0.11 | $ (0.04) | $ 0.07 | $ (0.79) | | Weighted average shares outstanding: Basic | 13,833,748 | 14,249,755 | 14,047,802 | 14,699,278 | | Weighted average shares outstanding: Diluted | 13,833,748 | 14,249,755 | 14,047,802 | 14,699,278 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=page&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20(LOSS)) This statement presents net income alongside other comprehensive income items, providing a complete view of changes in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income (loss) | $ 1,606 | $ (447) | $ 1,028 | $ (11,626) | | Other comprehensive income (loss), net of tax: | | | | | | Unrealized gain (loss) on available-for-sale investments | 9 | 31 | (65) | 275 | | Unrealized gain (loss) on foreign currency translation | 1,126 | (146) | 707 | 283 | | Total other comprehensive income (loss) | 1,135 | (115) | 642 | 559 | | Total comprehensive income (loss) | $ 2,741 | $ (562) | $ 1,670 | $ (11,067) | [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=page&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20SHAREHOLDERS%27%20EQUITY) This statement details changes in each component of shareholders' equity, including common stock, retained earnings, and other comprehensive income For the three months ended June 30, 2025 (in thousands, except share data) | :--------------------------------------- | :----- | :------------------ | :------------------------- | :------------------------------------- | :---------------- | :------------------------- | | Balance at March 31, 2025 | 13,992 | $ 140 | $ 150,789 | $ 586 | $ 114,384 | $ 265,899 | | Stock-based compensation expense | - | - | 1,313 | - | - | 1,313 | | Issuance of common stock under equity compensation plans, net | (4) | - | - | - | - | - | | Issuance of common stock under employee stock purchase plan | 11 | - | 294 | - | - | 294 | | Repurchase of common stock | (200) | (2) | (5,648) | - | - | (5,650) | | Exercise of stock options, net of shares exchanged for payment | 7 | - | (121) | - | - | (121) | | Other comprehensive income | - | - | - | 1,135 | - | 1,135 | | Net income | - | - | - | - | 1,606 | 1,606 | | Balance at June 30, 2025 | 13,806 | $ 138 | $ 146,627 | $ 1,721 | $ 115,990 | $ 264,476 | For the three months ended June 30, 2024 (in thousands, except share data) | :--------------------------------------- | :----- | :------------------ | :------------------------- | :-------------------------------------------- | :---------------- | :------------------------- | | Balance at March 31, 2024 | 14,410 | $ 144 | $ 162,697 | $ 130 | $ 116,237 | $ 279,208 | | Stock-based compensation expense | - | - | 1,152 | - | - | 1,152 | | Issuance of common stock under employee stock purchase plan | 14 | - | 336 | - | - | 336 | | Repurchase of common stock | (185) | (2) | (5,558) | - | - | (5,560) | | Other comprehensive loss | - | - | - | (115) | - | (115) | | Net loss | - | - | - | - | (447) | (447) | | Balance at June 30, 2024 | 14,239 | $ 142 | $ 158,627 | $ 15 | $ 115,790 | $ 274,574 | For the nine months ended June 30, 2025 (in thousands, except share data) | :-------------------------------------- | :----- | :------------------ | :------------------------- | :------------------------------------- | :---------------- | :------------------------- | | Balance as of September 30, 2024 | 14,229 | $ 142 | $ 159,579 | $ 1,079 | $ 114,963 | $ 275,763 | | Stock-based compensation expense | - | - | 3,740 | - | - | 3,740 | | Issuance of common stock under employee stock purchase plan | 23 | - | 595 | - | - | 595 | | Issuance of common stock under equity compensation plans, net | 115 | 1 | (1) | - | - | - | | Repurchase of shares for payment of withholding taxes for vested restricted stock grants | (17) | - | (494) | - | - | (494) | | Exercise of stock options, net of shares exchanged for payment | 7 | - | (133) | - | - | (133) | | Repurchase of common stock | (551) | (6) | (16,659) | - | - | (16,665) | | Other comprehensive income | - | - | - | 642 | - | 642 | | Net income | - | - | - | - | 1,028 | 1,028 | | Balance at June 30, 2025 | 13,806 | $ 138 | $ 146,627 | $ 1,721 | $ 115,990 | $ 264,476 | For the nine months ended June 30, 2024 (in thousands, except share data) | :-------------------------------------- | :----- | :------------------ | :------------------------- | :-------------------------------------------- | :---------------- | :------------------------- | | Balance as of September 30, 2023 | 15,255 | $ 153 | $ 188,218 | $ (544) | $ 127,336 | $ 315,163 | | Stock-based compensation expense | - | - | 3,436 | - | - | 3,436 | | Issuance of common stock under employee stock purchase plan | 24 | - | 586 | - | - | 586 | | Issuance of common stock under equity compensation plans, net | 133 | 1 | (1) | - | - | - | | Repurchase of shares for payment of withholding taxes for vested restricted stock grants | (9) | - | (240) | - | - | (240) | | Exercise of stock options, net of shares exchanged for payment | 1 | - | (9) | - | - | (9) | | Repurchase of common stock | (1,164)| (12) | (33,362) | - | - | (33,374) | | Adoption of new accounting pronouncement| - | - | - | - | 79 | 79 | | Other comprehensive income | - | - | - | 559 | - | 559 | | Net loss | - | - | - | - | (11,626) | (11,626) |\ | Balance at June 30, 2024 | 14,239 | $ 142 | $ 158,627 | $ 15 | $ 115,790 | $ 274,574 | [Condensed Consolidated Statements of Cash Flows](index=10&type=page&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This statement categorizes cash inflows and outflows into operating, investing, and financing activities, showing liquidity and solvency Condensed Consolidated Statements of Cash Flows (in thousands) | :------------------------------------------ | :------------------------------ | :------------------------------ | | **Cash flows from operating activities** | | | | Net income (loss) | $ 1,028 | $ (11,626) | | Depreciation and amortization | 5,766 | 5,481 | | Amortization of premium and discount on investments, net | (1,556) | (3,304) | | Deferred taxes | (157) | (3,523) | | Stock-based compensation | 3,745 | 3,437 | | Accounts receivable | (4,944) | 946 | | Inventories, net | 13,752 | 23,440 | | Other assets | (2,555) | (8,030) | | Accounts payable and accrued expenses | 3,037 | 2,310 | | Net cash provided by operating activities | 18,116 | 9,131 | | **Cash flows from investing activities** | | | | Purchases of property, plant and equipment and intangible assets | (5,221) | (5,608) | | Purchases of investments | (78,697) | (124,137) | | Proceeds from maturities of investments | 95,976 | 142,067 | | Net cash provided by investing activities | 12,058 | 12,322 | | **Cash flows from financing activities** | | | | Issuance of long-term debt | - | 2,142 | | Repayment of long-term debt | - | (2,142) | | Proceeds from issuance of common stock under employee stock purchase plan | 595 | 586 | | Repurchase of shares for payment of withholding taxes for vested restricted stock grants | (494) | (240) | | Withholding related to exercise of stock options | (133) | (9) | | Borrowings and repayments of bank overdrafts, net | 793 | - | | Borrowings and repayments of factoring liability, net | 3,544 | (667) | | Repurchase of common stock | (16,665) | (33,374) | | Net cash used in financing activities | (12,360) | (33,704) | | Effect of exchange rates on cash | (109) | 48 | | Increase (decrease) in cash and cash equivalents | 17,704 | (12,203) | | Cash and cash equivalents, beginning of period | 16,167 | 37,827 | | Cash and cash equivalents, end of period | $ 33,871 | $ 25,624 | [Notes to Condensed Consolidated Financial Statements](index=11&type=page&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [Note 1. Summary of Significant Accounting Policies](index=11&type=page&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements, ensuring transparency and comparability - The Company **adopted** the cumulative expected credit loss model (CECL) on **October 1, 2023**, for accounts receivable, measuring the allowance for credit losses using a lifetime expected credit loss allowance[70](index=70&type=chunk) - A prior period error in the Consolidated Statement of Cash Flows was **corrected**, **reclassifying** net borrowings and repayments of factoring receivables from operating to financing activities, **increasing** both by **$667,000** for the nine months ended **June 30, 2024**[35](index=35&type=chunk) - New accounting pronouncements (ASU 2023-07, ASU 2023-09, ASU 2024-03) are **being evaluated** for future adoption, with ASU 2023-07 applicable for the **2025** annual period, ASU 2023-09 for the annual period starting **October 1, 2025**, and ASU 2024-03 for the annual period starting **October 1, 2027**[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) [Note 2. Net Income (Loss) Per Share](index=12&type=page&id=Note%202.%20Net%20Income%20(Loss)%20Per%20Share) This note details the calculation of basic and diluted net income or loss per share, providing insight into shareholder profitability Net Income (Loss) Per Share (in thousands, except for share data) | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income (loss) | $ 1,606 | $ (447) | $ 1,028 | $ (11,626) | | Weighted average common shares | 13,833,748 | 14,249,755 | 14,047,802 | 14,699,278 | | Dilutive potential common shares | - | - | - | - | | Weighted average dilutive common shares outstanding | 13,833,748 | 14,249,755 | 14,047,802 | 14,699,278 | | Net income (loss) per common share: Basic | $ 0.11 | $ (0.04) | $ 0.07 | $ (0.79) | | Net income (loss) per common share: Diluted | $ 0.11 | $ (0.04) | $ 0.07 | $ (0.79) | - For the three and nine months ended **June 30, 2025**, **379,471** and **395,619** stock options, as well as **76,121** performance stock units, were **not included** in the computation of diluted net income (loss) per share because their effect would have been anti-dilutive[37](index=37&type=chunk) [Note 3. Cash and Cash Equivalents](index=12&type=page&id=Note%203.%20Cash%20and%20Cash%20Equivalents) This note provides a breakdown of the company's cash and cash equivalents, including money market accounts and funds Cash and Cash Equivalents (in thousands) | :------------- | :------------ | :----------------- | | Cash, including money market accounts | $ 9,192 | $ 5,789 | | Money market funds | 24,679 | 10,378 | | Total cash and cash equivalents | $ 33,871 | $ 16,167 | [Note 4. Investments](index=13&type=page&id=Note%204.%20Investments) This note details the company's investment portfolio, including available-for-sale securities and their fair value measurements Available-for-Sale Investments as of June 30, 2025 (in thousands) | :------------- | :------------- | :--------------- | :---------------- | :--------- | | **Short-Term** | | | | | | U.S. Treasury securities | $ 83,411 | $ 87 | $ (140) | $ 83,358 | | Investment securities – short-term | $ 83,411 | $ 87 | $ (140) | $ 83,358 | | **Long-Term** | | | | | | U.S. Treasury securities | $ 39,867 | $ 60 | $ - | $ 39,927 | | Certificates of deposit | 248 | - | (7) | 241 | | Investment securities – long-term | $ 40,115 | $ 60 | $ (7) | $ 40,168 | Available-for-Sale Investments as of September 30, 2024 (in thousands) | :------------- | :------------- | :--------------- | :---------------- | :--------- | | **Short-Term** | | | | | | U.S. Treasury securities | $ 113,987 | $ 382 | $ (45) | $ 114,324 | | Certificates of deposit | 500 | 1 | - | 501 | | Investment securities – short-term | $ 114,487 | $ 383 | $ (45) | $ 114,825 | | **Long-Term** | | | | | | U.S Treasury securities | $ 24,514 | $ - | $ (245) | $ 24,269 | | Certificates of deposit | 248 | - | (12) | 236 | | Investment securities – long-term | $ 24,762 | $ - | $ (257) | $ 24,505 | - As of **June 30, 2025**, five securities were in an unrealized loss position due to higher market interest rates, but none were considered other than temporarily impaired, as the Company intends to hold them until value recovers with limited credit risk[42](index=42&type=chunk) [Note 5. Fair Value Measurements](index=14&type=page&id=Note%205.%20Fair%20Value%20Measurements) This note outlines the fair value hierarchy and measurements for financial assets and liabilities, ensuring transparency in valuation Fair Value Measurements as of June 30, 2025 (in thousands) | :------------- | :-------- | :-------- | :-------- | :-------- | | **Cash equivalents:** | | | | | | Money market funds | $ 24,679 | $ 24,679 | $ - | $ - | | Total cash equivalents | $ 24,679 | $ 24,679 | $ - | $ - | | **Investment securities:** | | | | | | U.S. Treasury securities | $ 123,285 | $ - | $ 123,285 | $ - | | Certificates of deposit | 241 | - | 241 | - | | Total investment securities | $ 123,526 | $ - | $ 123,526 | $ - | Fair Value Measurements as of September 30, 2024 (in thousands) | :------------- | :-------- | :-------- | :-------- | :-------- | | **Cash equivalents:** | | | | | | Money market funds | $ 10,378 | $ 10,378 | $ - | $ - | | Total cash equivalents | $ 10,378 | $ 10,378 | $ - | $ - | | **Investment securities:** | | | | | | U.S. Treasury securities | $ 138,592 | $ - | $ 138,592 | $ - | | Certificates of deposit | 738 | - | 738 | $ - | | Total investment securities | $ 139,330 | $ - | $ 139,330 | $ - | - The Company owned **no Level 3 securities** and experienced **no transfers** within the fair value level hierarchy during the three and nine months ended **June 30, 2025**, and the year ended **September 30, 2024**[48](index=48&type=chunk) [Note 6. Other Comprehensive Income (Loss)](index=15&type=page&id=Note%206.%20Other%20Comprehensive%20Income%20(Loss)) This note details the components of other comprehensive income or loss, including unrealized gains and losses on investments and foreign currency translation Changes in Components of Other Comprehensive Income (Loss) (September 30, 2024 to June 30, 2025) (in thousands) | :------------- | :---------------------------- | :--------------------------- | :-------------------------------- | | Balances at September 30, 2024 | $ 66 | $ 1,013 | $ 1,079 | | Other comprehensive (loss) for the three months ended December 31, 2024 | (125) | (971) | (1,096) | | Balances at December 31, 2024 | $ (59) | $ 42 | $ (17) | | Other comprehensive income for the three months ended March 31, 2025 | 51 | 552 | 603 | | Balances at March 31, 2025 | $ (8) | $ 594 | $ 586 | | Other comprehensive income for the three months ended June 30, 2025 | 9 | 1,126 | 1,135 | | Balances at June 30, 2025 | $ 1 | $ 1,720 | $ 1,721 | Components of Other Comprehensive Income (Loss) (Three and Nine Months Ended June 30, 2025) (in thousands) | :------------- | :--------- | :--------- | :---------------- | | **Three Months Ended June 30, 2025** | | | | | Unrealized gain on available-for-sale securities | $ 11 | $ (2) | $ 9 | | Unrealized gain on foreign currency translation | 1,334 | (208) | 1,126 | | Other comprehensive income | $ 1,345 | $ (210) | $ 1,135 | | **Nine Months Ended June 30, 2025** | | | | | Unrealized (loss) on available-for-sale securities | $ (82) | $ 17 | $ (65) | | Unrealized gain on foreign currency translation | 830 | (123) | 707 | | Other comprehensive income | $ 748 | $ (106) | $ 642 | Components of Other Comprehensive Income (Loss) (Three and Nine Months Ended June 30, 2024) (in thousands) | :------------- | :--------- | :--------- | :---------------- | | **Three Months Ended June 30, 2024** | | | | | Unrealized gain on available-for-sale securities | $ 40 | $ (9) | $ 31 | | Unrealized (loss) on foreign currency translation | (170) | 24 | (146) | | Other comprehensive (loss) | $ (130) | $ 15 | $ (115) | | **Nine Months Ended June 30, 2024** | | | | | Unrealized gain on available-for-sale securities | $ 373 | $ (97) | $ 275 | | Unrealized gain on foreign currency translation | 368 | (85) | 283 | | Other comprehensive income | $ 741 | $ (182) | $ 559 | [Note 7. Stock-Based Compensation](index=16&type=page&id=Note%207.%20Stock-Based%20Compensation) This note provides information on stock-based compensation plans, including expense recognition, option activity, and restricted stock transactions Stock-Based Compensation Expense (in thousands) | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total compensation expense | $ 1,313 | $ 1,152 | $ 3,740 | $ 3,437 | | Included in selling, general and administrative expense | 1,250 | 1,099 | 3,568 | 3,280 | | Included in cost of sales | 63 | 53 | 172 | 157 | - As of **June 30, 2025**, **$6,885,000** of total **unrecognized compensation expense** related to non-vested restricted stock awards, performance share units, and stock options is **expected to be recognized** over approximately **2.4 years**[52](index=52&type=chunk) Stock Option Activity (Nine Months Ended June 30, 2025) (in thousands) | :-------------------------------------- | :---------------- | :------------------------------ | | Outstanding as of September 30, 2024 | 366,984 | $ 33.83 | | Granted | 38,198 | 30.90 | | Exercised | (22,749) | 20.29 | | Forfeited or expired | (2,962) | 47.64 | | Outstanding as of June 30, 2025 | 379,471 | $ 34.24 | Restricted Stock Transactions (Nine Months Ended June 30, 2025) (in thousands) | :-------------------------------------------- | :--------------- | :------------------------------------- | | Unvested shares as of September 30, 2024 | 162,207 | $ 34.91 | | Granted | 122,577 | 31.12 | | Vested | (71,691) | 57.35 | | Forfeited | (7,432) | 26.76 | | Unvested as of June 30, 2025 | 205,661 | $ 27.79 | - During the nine months ended **June 30, 2025**, the Company granted **50,747** performance stock units, with **100%** vesting **deemed probable** based on achievement of fiscal year **2025** performance goals[60](index=60&type=chunk)[61](index=61&type=chunk) - In contrast, the fiscal year **2024** performance goal was not achieved, and **47,745** performance stock units were **not earned and forfeited**[62](index=62&type=chunk)[63](index=63&type=chunk) [Note 8. Revenue](index=18&type=page&id=Note%208.%20Revenue) This note details the company's revenue recognition policies and provides a breakdown of net sales by geographic area and market segments - Substantially all revenue is recognized at the point in time when the customer obtains control of the products, as sales contracts typically have a single, short-term performance obligation[66](index=66&type=chunk) Revenues by Geographic Area (in thousands) | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | United States | $ 37,413 | $ 32,300 | $ 106,590 | $ 86,823 | | All other countries | 12,490 | 16,493 | 25,957 | 33,110 | | Total Net Sales | $ 49,903 | $ 48,793 | $ 132,547 | $ 119,933 | Percentages of Sales by Markets (in thousands) | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Broadband service providers | 95% | 94% | 94% | 94% | | Other customers | 5% | 6% | 6% | 6% | | Total Net Sales | 100% | 100% | 100% | 100% | [Note 9. Major Customer Concentration](index=20&type=page&id=Note%209.%20Major%20Customer%20Concentration) This note identifies significant customer concentrations that could impact the company's financial performance and accounts receivable - For the three months ended **June 30, 2025**, one customer **comprised** **15%** of net sales[72](index=72&type=chunk) - For the nine months ended **June 30, 2025**, two customers **comprised** **14%** and **10%** of net sales, respectively, all distributors within the broadband service provider category[72](index=72&type=chunk) - As of **June 30, 2025**, one customer **accounted for** **22%** of accounts receivable, a distributor within the broadband service provider category[74](index=74&type=chunk) [Note 10. Inventories](index=20&type=page&id=Note%2010.%20Inventories) This note provides a detailed breakdown of inventory components, including raw materials, work-in-process, finished goods, and inventory reserves Inventories (in thousands) | :------------- | :------------ | :----------------- | | Raw materials | $ 44,161 | $ 56,842 | | Work-in-process | 3,753 | 1,790 | | Finished goods | 20,629 | 23,389 | | Inventories, gross | 68,543 | 82,021 | | Inventory reserve | (14,790) | (15,255) | | Inventories, net | $ 53,753 | $ 66,766 | [Note 11. Goodwill and Intangible Assets](index=20&type=page&id=Note%2011.%20Goodwill%20and%20Intangible%20Assets) This note details the company's goodwill and finite-life intangible assets, including changes in carrying amounts and estimated amortization expense - **No impairment** of goodwill or intangible assets was indicated as of **September 30, 2024**, and no triggering events occurred during the nine months ended **June 30, 2025**[76](index=76&type=chunk)[78](index=78&type=chunk) - The next annual goodwill impairment test will be performed as of **June 30, 2025**[78](index=78&type=chunk) Changes in Carrying Amount of Goodwill by Reportable Segment (in thousands) | :------------- | :--------------- | :------------ | :---- | | **Nine Months Ended June 30, 2025** | | | | | Balance as of September 30, 2024 | $ 4,709 | $ 1,918 | $ 6,627 | | Currency translation effect on foreign goodwill balances | - | 113 | 113 | | Balance as of June 30, 2025 | $ 4,709 | $ 2,031 | $ 6,740 | | **Nine Months Ended June 30, 2024** | | | | | Balance as of September 30, 2023 | $ 4,709 | $ 1,819 | $ 6,528 | | Currency translation effect on foreign goodwill balances | - | 25 | 25 | | Balance as of June 30, 2024 | $ 4,709 | $ 1,844 | $ 6,553 | Finite Life Intangible Assets (in thousands) | :------------- | :------------------ | :-------------------- | :----------------------- | :-------------------- | | **June 30, 2025** | | | | | | Customer relationships | 15 | $ 4,921 | $ 2,071 | $ 2,850 | | Certifications | 8 | 1,068 | 985 | 83 | | Trademarks | 8-10 | 1,153 | 692 | 461 | | Patents | 20 | 1,416 | 263 | 1,153 | | Developed Technology | 10 | 366 | 106 | 260 | | Other | 5 | 6 | 6 | - | | Software | 1-10 | 9,333 | 3,474 | 5,859 | | Totals | | $ 18,263 | $ 7,597 | $ 10,666 | | **September 30, 2024** | | | | | | Customer relationships | 15 | $ 4,856 | $ 1,815 | $ 3,041 | | Certifications | 8 | 1,068 | 884 | 184 | | Trademarks | 8-10 | 1,120 | 588 | 532 | | Patents | 20 | 1,302 | 219 | 1,083 | | Developed Technology | 10 | 346 | 75 | 271 | | Other | 5 | 6 | 6 | - | | Software | 1-3 | 3,475 | 2,243 | 1,232 | | Totals | | $ 12,173 | $ 5,830 | $ 6,343 | Estimated Future Amortization Expense for Identifiable Intangibles (in thousands) | :------------- | :----------------------------- | | FY 2025 (remaining) | $ 1,475 | | FY 2026 | 1,501 | | FY 2027 | 1,143 | | FY 2028 | 1,050 | | FY 2029 | 930 | | Thereafter | 4,567 | | Total | $ 10,666 | [Note 12. Segment Reporting](index=22&type=page&id=Note%2012.%20Segment%20Reporting) This note provides financial information for the company's reportable segments, including revenue, net income, and assets Segment Financial Summary (Three and Nine Months Ended June 30, 2025) (in thousands) | :------------- | :------------------- | :---------------------- | :--------------------- | :--------------------- | :------------------- | :---------------------- | :--------------------- | :--------------------- | | Revenue from external customers | $ 38,755 | $ 11,148 | $ - | $ 49,903 | $ 109,074 | $ 23,473 | $ - | $ 132,547 | | Revenue from internal customers (Clearfield, Inc.) | - | 262 | (262) | - | - | 1,226 | (1,226) | - | | Net investment income | 1,646 | - | (58) | 1,588 | 5,099 | - | (179) | 4,920 | | Interest expense | - | 164 | (58) | 106 | - | 454 | (179) | 275 | | Depreciation and amortization | 1,581 | 336 | - | 1,917 | 4,763 | 1,003 | - | 5,766 | | Stock based compensation | 1,196 | 117 | - | 1,313 | 3,417 | 323 | - | 3,740 | | Income tax expense (benefit) | 787 | 585 | - | 1,372 | 1,562 | (161) | - | 1,401 | | Net income (loss) | 2,219 | (709) | 96 | 1,606 | 4,064 | (3,335) | 299 | 1,028 | | Capital expenditures | 406 | 1 | - | 407 | 2,796 | 1,684 | - | 4,480 | Segment Financial Summary (Three and Nine Months Ended June 30, 2024) (in thousands) | :------------- | :------------------- | :---------------------- | :--------------------- | :--------------------- | :------------------- | :---------------------- | :--------------------- | :--------------------- | | Revenue from external customers | $ 33,670 | $ 15,123 | $ - | $ 48,793 | $ 89,371 | $ 30,562 | $ - | $ 119,933 | | Revenue from internal customers (Clearfield, Inc.) | - | 389 | (389) | - | - | 1,490 | (1,490) | - | | Net investment income | 1,799 | - | (64) | 1,735 | 5,832 | - | (179) | 5,653 | | Interest expense | - | 213 | (60) | 153 | - | 558 | (177) | 381 | | Depreciation and amortization | 1,535 | 375 | - | 1,910 | 4,383 | 1,098 | - | 5,481 | | Stock based compensation | 1,080 | 72 | - | 1,152 | 3,242 | 195 | - | 3,437 | | Income tax benefit | (249) | (28) | - | (277) | (2,657) | (654) | - | (3,311) | | Net income (loss) | (478) | (164) | 195 | (447) | (8,862) | (2,836) | 72 | (11,626) | | Capital expenditures | 1,115 | 106 | - | 1,221 | 4,207 | 1,401 | - | 5,608 | Segment Assets (in thousands) | :------------- | :------------------------- | :---------------------------- | :--------------------------- | :--------------------------- | :-------------------------------- | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Goodwill | $ 4,709 | $ 2,031 | $ - | $ 6,740 | $ 4,709 | $ 1,918 | $ - | $ 6,627 | | Total assets | $ 292,178 | $ 46,204 | $ (23,672) | $ 314,710 | $ 300,472 | $ 38,773 | $ (23,970) | $ 315,275 | [Note 13. Financing Receivables](index=23&type=page&id=Note%2013.%20Financing%20Receivables) This note details the company's factoring liability, including outstanding balances and associated interest rates - Nestor Cables has a total factoring liability of **$6,943,000** as of **June 30, 2025**, **accounted for** as secured borrowing due to recourse provisions[84](index=84&type=chunk) - The average interest rate was **3.19%** for the three months and **5.59%** for the nine months ended **June 30, 2025**[84](index=84&type=chunk) [Note 14. Income Taxes](index=24&type=page&id=Note%2014.%20Income%20Taxes) This note provides a breakdown of income tax expense or benefit and the effective tax rates, explaining significant adjustments Income Tax Expense (Benefit) and Effective Tax Rates (in thousands) | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Income tax expense (benefit) | $ 1,372 | $ (277) | $ 1,401 | $ (3,311) | | Effective tax rate | 46.1% | 38.2% | 57.7% | 22.1% | - A **$780,000 valuation allowance was recorded** against the deferred tax assets of the Nestor Cables segment as of **June 30, 2025**, which **significantly impacted** the effective tax rate for the three and nine months ended **June 30, 2025**[85](index=85&type=chunk)[87](index=87&type=chunk) [Note 15. Leases](index=24&type=page&id=Note%2015.%20Leases) This note describes the company's lease arrangements, including leased facilities, lease expense, and future lease liabilities - The Company leases various facilities, including an **85,000 sq ft** corporate/manufacturing facility in Brooklyn Park, MN, a **318,000 sq ft** manufacturing facility in Tijuana, Mexico, a **105,000 sq ft** warehouse in Brooklyn Park, MN, and manufacturing facilities in Oulu, Finland (**25,000 sq ft**) and Tabasalu, Estonia (expanded to **115,000 sq ft**)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[95](index=95&type=chunk) Operating Lease Expense (in thousands) | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Cost of sales | $ 1,192 | $ 1,081 | $ 3,474 | $ 3,193 | | Selling, general and administrative | 143 | 80 | 376 | 229 | | Total lease expense | $ 1,335 | $ 1,161 | $ 3,850 | $ 3,422 | Future Maturities of Lease Liabilities as of June 30, 2025 (in thousands) | :----------------- | :------ | | FY2025 (Remaining) | $ 1,690 | | FY2026 | 5,081 | | FY2027 | 4,099 | | FY2028 | 3,508 | | FY2029 | 2,188 | | Thereafter | 5,450 | | Total lease payments | 22,016 | | Less: Interest | (3,562) | | Present value of lease liabilities | $ 18,454 | - The weighted average lease term and weighted average discount rate for the Company's leases as of **June 30, 2025**, were **5.64 years** and **6.38%**, respectively[96](index=96&type=chunk) [Note 16. Debt](index=26&type=page&id=Note%2016.%20Debt) This note outlines the company's debt obligations, including revolving lines of credit, senior loans, and bank overdrafts - The Company has a **$40,000,000** revolving line of credit, extended to **April 25, 2026**, with **no outstanding balance** as of **June 30, 2025**, and was **in compliance** with debt covenants[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - Nestor Cables has a **€2,000,000** senior loan, due **March 31, 2026**, **fully secured** by a Finnish government guarantee, with an outstanding balance of **$2,358,000** as of **June 30, 2025**[101](index=101&type=chunk) - Nestor Cables **utilized** bank overdrafts **totaling $862,000** as of **June 30, 2025**, **accruing interest at** the **3-month Euribor rate plus 1.15%**[102](index=102&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=27&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the Company's financial condition, results of operations, and liquidity for the three and nine months ended June 30, 2025, compared to the prior year, discussing key drivers of performance, segment results, and future outlook [OVERVIEW](index=27&type=page&id=OVERVIEW) This section provides a general introduction to the company's business, operational segments, and recent trade policy impacts [General](index=27&type=page&id=General) This subsection introduces Clearfield, Inc.'s core business of fiber solutions and its two primary operating segments - Clearfield, Inc. designs, manufactures, and distributes fiber protection, management, and delivery solutions to broadband service providers, primarily across North America[104](index=104&type=chunk) - The Company operates two reportable segments: the Clearfield Operating Segment and the Nestor Cables Operating Segment, established after the acquisition of Nestor Cables on **July 26, 2022**[105](index=105&type=chunk) [Clearfield Operating Segment](index=27&type=page&id=Clearfield%20Operating%20Segment) This subsection details the Clearfield segment's focus on fiber management products for broadband service providers and its manufacturing operations - The Clearfield segment focuses on providing fiber management, protection, and delivery products to accelerate the deployment of fiber-based networks in residential homes, businesses, and network infrastructure[106](index=106&type=chunk) - Products are designed to reduce labor and materials for Fiber to the Home (FTTH) builds, improve business services profitability, and support wireless 4G/5G deployments[107](index=107&type=chunk) - Final build and assembly are completed at Clearfield's plants in Brooklyn Park, Minnesota, and Tijuana, Mexico, with manufacturing support from domestic and global partners[108](index=108&type=chunk) [Nestor Cables Operating Segment](index=27&type=page&id=Nestor%20Cables%20Operating%20Segment) This subsection describes Nestor Cables' operations in manufacturing fiber optic and copper telecommunication cables for various European markets - Nestor Cables, based in Oulu, Finland, with operations in Estonia, manufactures fiber optic and copper telecommunication cables and equipment[109](index=109&type=chunk) - Products are distributed to telecommunication operators, network owners, electric companies, building contractors, and industrial companies, sold via distributors and directly to end users[109](index=109&type=chunk) [Trade and Tariffs Update](index=27&type=page&id=Trade%20and%20Tariffs%20Update) This subsection discusses the impact of U.S. trade policy changes and tariffs on the company's production costs and profitability - U.S. trade policy changes **increased** import tariffs across various trading partners, with exemptions for USMCA compliant goods from Mexico, while components from China remain subject to tariffs[110](index=110&type=chunk)[111](index=111&type=chunk) - Tariffs are **anticipated to negatively impact** future financial results by **increasing** production costs, disrupting supply chains, limiting market attractiveness, and lowering profitability[111](index=111&type=chunk)[112](index=112&type=chunk) [RESULTS OF OPERATIONS](index=29&type=page&id=RESULTS%20OF%20OPERATIONS) This section analyzes the company's financial performance for the current reporting periods, highlighting key revenue and profitability trends [THREE MONTHS ENDED JUNE 30, 2025 VS. THREE MONTHS ENDED JUNE 30, 2024](index=29&type=page&id=THREE%20MONTHS%20ENDED%20JUNE%2030%2C%202025%20VS.%20THREE%20MONTHS%20ENDED%20JUNE%2030%2C%202024) This subsection compares the company's financial results for the three-month periods, focusing on sales, gross profit, and net income changes Key Financial Performance (Three Months Ended June 30, 2025 vs. 2024) (in thousands, except share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Net sales | $ 49,903,000 | $ 48,793,000 | $ 1,110,000 | 2% | | Gross profit | $ 15,234,000 | $ 10,692,000 | $ 4,542,000 | 42% | | Gross profit percent | 30.5% | 21.9% | 8.6 pp | | | Income (Loss) from operations | $ 1,496,000 | $ (2,307,000) | $ 3,803,000 | 165% | | Net income (loss) | $ 1,606,000 | $ (447,000) | $ 2,053,000 | 459% | | Net income (loss) per share Basic | $ 0.11 | $ (0.04) | $ 0.15 | | - Net sales **increased by 2%** to **$49,903,000**, primarily driven by **increased** sales to Large Regional Service Provider customers (**up 82%**) and MSO customers (**up 59%**), partially offset by a **24% decrease** in International sales due to lower demand in Nestor's European market[113](index=113&type=chunk)[114](index=114&type=chunk) - Gross profit percentage **improved significantly** to **30.5%** from **21.9%**, primarily due to **increased** volumes within the Clearfield segment, improved utilization of manufacturing overhead, and lower excess inventory charges[117](index=117&type=chunk) [NINE MONTHS ENDED JUNE 30, 2025 VS. NINE MONTHS ENDED JUNE 30, 2024](index=30&type=page&id=NINE%20MONTHS%20ENDED%20JUNE%2030%2C%202025%20VS.%20NINE%20MONTHS%20ENDED%20JUNE%2030%2C%202024) This subsection compares the company's financial results for the nine-month periods, highlighting significant changes in sales and profitability Key Financial Performance (Nine Months Ended June 30, 2025 vs. 2024) (in thousands, except share data) | Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------------------------ | :------------------------------ | :--------- | :--------- | | Net sales | $ 132,547,000 | $ 119,933,000 | $ 12,614,000 | 11% | | Gross profit | $ 37,608,000 | $ 18,221,000 | $ 19,387,000 | 106% | | Gross profit percent | 28.4% | 15.2% | 13.2 pp | | | Loss from operations | $ (2,217,000) | $ (20,210,000) | $ 17,993,000 | 89% | | Net income (loss) | $ 1,028,000 | $ (11,626,000) | $ 12,654,000 | 109% | | Net income (loss) per share Basic | $ 0.07 | $ (0.79) | $ 0.86 | | - Net sales **increased by 11%** to **$132,547,000**, driven by strong growth in Large Regional Service Provider (**up 71%**), Community Broadband (**up 4%**), MSO (**up 40%**), and National Carrier (**up 23%**) markets, partially offset by a **22% decrease** in International sales[124](index=124&type=chunk)[125](index=125&type=chunk) - Gross profit percentage **more than doubled** to **28.4%** from **15.2%**, attributed to **increased** Clearfield segment volumes, improved manufacturing overhead utilization, and lower excess inventory charges of **$9,319,000**[126](index=126&type=chunk) [Reportable Segments](index=32&type=page&id=Reportable%20Segments) This section provides a detailed financial analysis of the performance of each of the company's operating segments [Clearfield Segment](index=32&type=page&id=Clearfield%20Segment) This subsection analyzes the Clearfield segment's sales growth and net income improvement, driven by increased product line sales Clearfield Segment Net Sales and Net Income (in thousands) | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Segment net external sales | $ 38,755 | $ 33,670 | $ 109,074 | $ 89,371 | | Segment net (loss) income | $ 2,328 | $ (196) | $ 4,522 | $ (8,464) | - Clearfield segment net sales **increased by 15%** for the three months and **22%** for the nine months ended **June 30, 2025**, primarily due to higher sales of additional product lines to Large Regional Service Provider and MSO markets[133](index=133&type=chunk) - Net income for the Clearfield segment **significantly improved**, **increasing by 1288%** for the three months and **153%** for the nine months, driven by **increased** sales volume and improved gross profit margin from **decreased** provision for excess inventory reserves[134](index=134&type=chunk) [Nestor Cables Segment](index=32&type=page&id=Nestor%20Cables%20Segment) This subsection examines the Nestor Cables segment's sales decline and increased net loss due to lower European market demand Nestor Cables Segment Net Sales and Net Loss (in thousands) | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Segment net external sales | $ 11,148 | $ 15,123 | $ 23,473 | $ 30,562 | | Segment net (loss) | $ (722) | $ (252) | $ (3,494) | $ (3,162) | - Nestor Cables segment net sales **decreased by 26%** for the three months and **23%** for the nine months ended **June 30, 2025**, primarily due to lower demand in their European market[137](index=137&type=chunk) - Net loss for the Nestor Cables segment **increased by 186%** for the three months and **10%** for the nine months, driven by lower sales and the tax **valuation allowance was recorded** in the third quarter of fiscal **2025**[138](index=138&type=chunk) [Liquidity and Capital Resources](index=33&type=page&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to generate and manage cash, covering operating, investing, and financing activities [Operating Activities](index=33&type=page&id=Operating%20Activities) This subsection details cash flows generated from the company's primary business operations, including changes in working capital - Net cash provided by operating activities **totaled $18,116,000** for the nine months ended **June 30, 2025**, an **increase** from **$9,131,000** in the prior year[141](index=141&type=chunk)[142](index=142&type=chunk) - Key drivers for the **increase** in operating cash flow include net income of **$1,028,000**, a **decrease** in inventory of **$13,752,000**, and an **increase** in accounts payable and accrued expenses of **$3,037,000**

Clearfield (CLFD 0.46%), a maker of modular fiber optics management and delivery solutions, reported its results for Q3 FY2025 on August 6, 2025. The highlight of the release was an earnings beat and higher-than- expected revenue, as GAAP EPS of $0.11 and GAAP revenue of $49.9 million both exceeded analyst estimates, both supported by improved profit margins and steady demand from large regional service providers and cable operators. The company delivered GAAP earnings per share (EPS) of $0.11, above the $0 ...

Core Insights - Clearfield (CLFD) reported quarterly earnings of $0.11 per share, exceeding the Zacks Consensus Estimate of $0.05 per share, compared to a loss of $0.04 per share a year ago, representing an earnings surprise of +120.00% [1] - The company achieved revenues of $49.9 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 4.84% and showing an increase from $48.79 million year-over-year [2] - Clearfield has outperformed the S&P 500, with shares increasing approximately 41.7% since the beginning of the year, compared to the S&P 500's gain of 7.1% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.18 on revenues of $53.4 million, and for the current fiscal year, it is $0.19 on revenues of $183.65 million [7] - The estimate revisions trend for Clearfield was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Wireless Equipment industry, to which Clearfield belongs, is currently ranked in the top 41% of over 250 Zacks industries, suggesting that companies in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8] - Another company in the same industry, AST SpaceMobile, Inc. (ASTS), is expected to report a quarterly loss of $0.19 per share, with revenues projected to be $5.15 million, reflecting a significant year-over-year increase of 472.2% [9]

Financial Data and Key Metrics Changes - Third quarter net sales were $49.9 million, up 2% year over year, with Clearfield segment net sales increasing by 15% [4][13] - Gross margin improved from 21.9% to 30.5%, driven by better overhead absorption and inventory recoveries [13] - Net income per share was $0.11, exceeding guidance and showing significant improvement from the previous year [13][15] Business Line Data and Key Metrics Changes - The Clearfield segment showed strong performance with a 15% year-over-year increase, while the Nestor segment faced challenges leading to lower revenue [14][19] - Home deployment kits are gaining traction, providing significant labor-saving opportunities and expected to contribute to future revenue growth [6][21] Market Data and Key Metrics Changes - The fiber industry is projected to grow at a 12% compound annual growth rate over the next five years, with increasing demand for fiber deployments driven by AI and cloud computing [10][11] - Community broadband providers are expected to diversify their funding sources, which may lead to more balanced growth in the future [45] Company Strategy and Development Direction - The company focuses on three strategic pillars: protecting core customers, leveraging market position for new opportunities, and targeting adjacent markets for growth [7][9] - The company aims to drive revenue growth and operational excellence to enhance long-term shareholder value [10] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term growth despite macro uncertainties, emphasizing the importance of adapting to industry changes [5][11] - The company anticipates continued revenue growth in the Clearfield segment, while the Nestor segment is expected to see slight declines as it focuses on improving margins [14][46] Other Important Information - The company is considering alternative suppliers to address supply chain challenges, particularly related to battery backups and rectifiers [27][31] - The evolving tariff situation is not expected to materially affect operating results [15] Q&A Session Summary Question: Product mix and connected home performance - Management noted a return to a more normalized product mix, with increased cabinet sales and connected home revenue [18][19] Question: Impact of CommScope acquisition on the industry - Management viewed the acquisition positively for the fiber industry, noting that it does not directly impact Clearfield's focus [22][23] Question: Gross margin and inventory impacts - Management indicated that inventory recoveries positively affected gross margin, contributing approximately 1.7% to the margin [24][25] Question: Supply chain tightness - Management highlighted ongoing challenges with battery backup and rectifiers due to tariffs, but noted improvements in lead times for most products [27][28] Question: Data center market impact on P&L - Management expects gradual revenue growth from data center opportunities, with more significant contributions anticipated in fiscal 2027 [34][35] Question: Operating expenses outlook - Management projected a slight increase in operating expenses for the fourth quarter due to trade shows and year-end audits [36][37] Question: Smaller carrier market dynamics - Management observed that smaller carriers are impacted by uncertainty related to funding, leading to delayed revenue rather than loss [43][44] Question: Growth expectations for fiscal 2026 - Management is comfortable with growth expectations aligning with industry norms, aiming to grow as fast or faster than the industry [45][46]

[Fiscal Third Quarter 2025 Results Overview](index=1&type=section&id=Fiscal_Third_Quarter_2025_Results_Overview) This section provides a high-level overview of Clearfield's financial performance for the fiscal third quarter and year-to-date 2025 [Q3 2025 Financial Summary](index=1&type=section&id=Q3_2025_Financial_Summary) Clearfield reported a strong fiscal third quarter 2025, with net sales increasing by 2% year-over-year, significant gross profit growth, and a return to net income Q3 2025 Financial Highlights (in millions, except per share data and percentages) | Metric | Q3 2025 | vs. Q3 2024 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $49.9 | $48.8 | $1.1 | 2% | | Gross Profit ($) | $15.2 | $10.7 | $4.5 | 42% | | Gross Profit (%) | 30.5% | 21.9% | 8.6% | 39% | | Income (Loss) from Operations | $1.5 | $(2.3) | $3.8 | 165% | | Income Tax Expense (Benefit) | $1.4 | $(0.3) | $1.6 | 595% | | Net Income (Loss) | $1.6 | $(0.4) | $2.1 | 459% | | Net Income (Loss) per Diluted Share | $0.11 | $(0.04) | $0.15 | 375% | [YTD 2025 Financial Summary](index=1&type=section&id=YTD_2025_Financial_Summary) For the nine months ended June 30, 2025, Clearfield achieved an 11% increase in net sales, significantly improved gross profit, and moved from a net loss to a net income position YTD Fiscal 2025 Financial Highlights (in millions, except per share data and percentages) | Metric | Q3 2025 YTD | vs. Q3 2024 YTD | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $132.5 | $119.9 | $12.6 | 11% | | Gross Profit ($) | $37.6 | $18.2 | $19.4 | 107% | | Gross Profit (%) | 28.4% | 15.2% | 13.2% | 87% | | Loss from Operations | $(2.2) | $(20.2) | $18.0 | 89% | | Income Tax Expense (Benefit) | $1.4 | $(3.3) | $4.7 | 142% | | Net Income (Loss) | $1.0 | $(11.6) | $12.6 | 109% | | Net Income (Loss) per Diluted Share | $0.07 | $(0.79) | $0.86 | 109% | [Management Commentary](index=1&type=section&id=Management_Commentary) Management highlighted strong net sales outperformance driven by customer demand and improved profitability due to operational efficiencies and increased full-year revenue guidance - Net sales outperformance in Q3 was driven by strong customer demand in the Large Regional Service Provider and MSO end markets within the Clearfield segment[5](index=5&type=chunk) - Solid top and bottom-line performance was primarily driven by improvements in overhead absorption, recoveries of previously reserved excess inventory, and optimized capacity at North American facilities[6](index=6&type=chunk) - The company increased its full year fiscal 2025 revenue guidance to a range of **$180 million to $184 million**[5](index=5&type=chunk) - Share buybacks totaled **$5.6 million** in Q3, with approximately **$8.4 million** remaining available for repurchases as of June 30, 2025[5](index=5&type=chunk)[10](index=10&type=chunk) [Detailed Financial Performance](index=2&type=section&id=Detailed_Financial_Performance) This section provides an in-depth analysis of Clearfield's financial results for the three and nine months ended June 30, 2025 [Three Months Ended June 30, 2025](index=2&type=section&id=Three_Months_Ended_June_30_2025) Clearfield's Q3 fiscal 2025 saw a modest increase in net sales, significant gross margin expansion driven by operational efficiencies, and a return to net income despite a rise in operating expenses [Net Sales and Order Backlog](index=2&type=section&id=Net_Sales_and_Order_Backlog) Net sales for Q3 fiscal 2025 increased by 2% year-over-year, while order backlog also saw an increase compared to both the prior quarter and prior year - Net sales for Q3 fiscal 2025 increased **2% to $49.9 million** from $48.8 million in the same year-ago quarter[7](index=7&type=chunk) - Order backlog as of June 30, 2025, was **$36.1 million**, an increase of **6%** compared to March 31, 2025, and an **11%** increase from June 30, 2024[7](index=7&type=chunk) [Gross Profit and Margin](index=2&type=section&id=Gross_Profit_and_Margin) Gross margin for Q3 fiscal 2025 significantly improved due to increased volumes, better overhead utilization, cost reduction initiatives, and reduced inventory charges - Gross margin for Q3 fiscal 2025 was **30.5%**, up from 21.9% in Q3 fiscal 2024, an **8.6 percentage point increase**[8](index=8&type=chunk) - The increase was driven by increased volumes, improved utilization of manufacturing overhead, targeted productivity programs, general cost reduction initiatives, and a **$2.6 million decrease** in non-cash excess inventory charges[8](index=8&type=chunk) [Operating Expenses](index=2&type=section&id=Operating_Expenses) Operating expenses for Q3 fiscal 2025 increased by 6% and represented a slightly higher percentage of net sales compared to the prior year quarter - Operating expenses for Q3 fiscal 2025 increased **6% to $13.7 million** (**27.5% of net sales**) from $13.0 million (**26.6% of net sales**) in the prior year quarter[9](index=9&type=chunk) [Net Income and EPS](index=2&type=section&id=Net_Income_and_EPS) Clearfield returned to net income in Q3 fiscal 2025, reporting $1.6 million, or $0.11 per diluted share, despite a one-time valuation charge - Net income for Q3 fiscal 2025 totaled **$1.6 million**, or **$0.11 per diluted share**, a significant improvement from a net loss of **($0.4) million**, or **($0.04) per diluted share**, in the same year-ago quarter[10](index=10&type=chunk) - Third quarter net income includes a one-time valuation charge against deferred tax assets of Nestor Cables of **$780,000**[10](index=10&type=chunk) [Nine Months Ended June 30, 2025](index=1&type=section&id=Nine_Months_Ended_June_30_2025) For the first nine months of fiscal 2025, Clearfield demonstrated strong financial recovery, with double-digit net sales growth, a more than doubling of gross profit, and a shift from a significant net loss to a positive net income Nine Months Ended June 30, 2025 vs. 2024 (in thousands) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $132,547 | $119,933 | 11% | | Gross profit | $37,607 | $18,221 | 107% | | Loss from operations | $(2,216) | $(20,209) | 89% (reduction) | | Net income (loss) | $1,028 | $(11,626) | 109% (improvement) | | Net income (loss) per diluted share | $0.07 | $(0.79) | 109% (improvement) | [Outlook](index=2&type=section&id=Outlook) This section outlines Clearfield's financial projections and expectations for the remainder of fiscal year 2025 [Fiscal Year 2025 Revenue Guidance](index=2&type=section&id=Fiscal_Year_2025_Revenue_Guidance) Clearfield has increased its annual revenue guidance for fiscal year 2025, reflecting positive momentum and expectations for continued growth - The Company is increasing its annual revenue guidance for fiscal 2025 to a range of **$180 million to $184 million**[11](index=11&type=chunk) [Fiscal Fourth Quarter 2025 Expectations](index=2&type=section&id=Fiscal_Fourth_Quarter_2025_Expectations) For the upcoming fourth quarter of fiscal 2025, Clearfield anticipates net sales within a specific range and provided guidance for net income per share, excluding potential share repurchases - Clearfield expects net sales for the fourth quarter of fiscal 2025 to be in the range of **$47 million to $51 million**[11](index=11&type=chunk) - Net income per share for Q4 fiscal 2025 is expected to be in the range of **$0.03 to $0.11**, based on shares outstanding at the end of Q3 and not reflecting potential Q4 share repurchases[11](index=11&type=chunk) - Tariffs currently in place are not expected to materially affect the Company's operating results[11](index=11&type=chunk) [Conference Call Information](index=2&type=section&id=Conference_Call_Information) This section provides details regarding the conference call held to discuss Clearfield's fiscal Q3 2025 results and business updates [Conference Call Details](index=2&type=section&id=Conference_Call_Details) Clearfield held a conference call on August 6, 2025, to discuss its fiscal Q3 2025 results and provide a business update, with replay options available - Management held a conference call on August 6, 2025, at 5:00 p.m. Eastern Time to discuss results and provide a business update[12](index=12&type=chunk) - The call was hosted by President and CEO Cheri Beranek and CFO Dan Herzog[12](index=12&type=chunk) - A replay of the call was available through August 20, 2025, and an archived webcast for 90 days on the Investor Relations website[13](index=13&type=chunk) [About Clearfield, Inc.](index=3&type=section&id=About_Clearfield_Inc) This section provides an overview of Clearfield, Inc., highlighting its core business, product offerings, and market focus [Company Overview](index=3&type=section&id=Company_Overview) Clearfield, Inc. is a Minneapolis-based leader in fiber connectivity, specializing in the design, manufacture, and distribution of fiber optic management products for diverse communication networks - Clearfield, Inc. designs, manufactures, and distributes fiber optic management, protection, and delivery products for communications networks[14](index=14&type=chunk) - Its 'fiber to anywhere' platform serves incumbent local exchange carriers, competitive local exchange carriers, MSO/cable TV companies, utility/municipality, enterprise, and data center markets[14](index=14&type=chunk) - Headquartered in Minneapolis, MN, Clearfield deploys more than a million fiber ports each year[14](index=14&type=chunk) [Cautionary Statement Regarding Forward-Looking Information](index=3&type=section&id=Cautionary_Statement_Regarding_Forward-Looking_Information) This section identifies forward-looking statements and outlines various important factors that could materially impact Clearfield's performance, including economic conditions, supply chain disruptions, and regulatory changes [Forward-Looking Statements and Risk Factors](index=3&type=section&id=Forward-Looking_Statements_and_Risk_Factors) This section identifies forward-looking statements and outlines various important factors that could materially impact Clearfield's performance, including economic conditions, supply chain disruptions, customer concentration, competition, and regulatory changes - Forward-looking statements are identified by terminology such as 'may,' 'plan,' 'expect,' 'believe,' 'project,' 'target,' 'anticipate,' 'intend,' 'estimate,' 'will,' 'should,' 'could,' 'outlook,' or 'continue'[15](index=15&type=chunk) - Important factors that could impact performance include dependence on interdependent management information systems, inflationary price pressures, uncertain availability of components/materials/labor, reliance on single-source suppliers, customer concentration, risks associated with acquisitions, foreign currency exchange rate movements, adverse global economic conditions, and geopolitical issues[15](index=15&type=chunk) - Other risks include strain on business infrastructure from growth, product defects, dependence on key personnel, cyber-security incidents, natural disasters, health crises, competition, intellectual property protection, international sales risks, ESG matters, and stock price volatility[15](index=15&type=chunk) [Condensed Consolidated Financial Statements](index=4&type=section&id=Condensed_Consolidated_Financial_Statements) This section presents Clearfield's unaudited condensed consolidated financial statements, including statements of earnings, balance sheets, and cash flows [Statements of Earnings](index=4&type=section&id=Statements_of_Earnings) The unaudited condensed consolidated statements of earnings provide a detailed breakdown of Clearfield's revenues, costs, and profitability for the three and nine months ended June 30, 2025, and 2024 Statements of Earnings (in thousands, except share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $49,903 | $48,793 | $132,547 | $119,933 | | Cost of sales | $34,669 | $38,101 | $94,940 | $101,712 | | Gross profit | $15,234 | $10,692 | $37,607 | $18,221 | | Income (Loss) from operations | $1,496 | $(2,306) | $(2,216) | $(20,209) | | Net income (loss) | $1,606 | $(447) | $1,028 | $(11,626) | | Net income (loss) per share Diluted | $0.11 | $(0.04) | $0.07 | $(0.79) | [Balance Sheets](index=4&type=section&id=Balance_Sheets) The unaudited condensed consolidated balance sheets present Clearfield's financial position, including assets, liabilities, and shareholders' equity, as of June 30, 2025, and September 30, 2024 Balance Sheets (in thousands, except share data) | Metric | June 30, 2025 (Unaudited) | September 30, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $33,871 | $16,167 | | Total current assets | $212,638 | $229,595 | | Total Assets | $314,710 | $315,275 | | **Liabilities and Shareholders' Equity** | | | | Total current liabilities | $35,888 | $24,352 | | Total liabilities | $50,234 | $39,512 | | Total shareholders' equity | $264,476 | $275,763 | | Total Liabilities and Shareholders' Equity | $314,710 | $315,275 | [Statements of Cash Flows](index=6&type=section&id=Statements_of_Cash_Flows) The unaudited condensed consolidated statements of cash flows detail the cash inflows and outflows from operating, investing, and financing activities for the nine months ended June 30, 2025, and 2024 Statements of Cash Flows (in thousands) | Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $18,116 | $9,131 | | Net cash provided by investing activities | $12,058 | $12,322 | | Net cash used in financing activities | $(12,360) | $(33,704) | | Increase (decrease) in cash and cash equivalents | $17,704 | $(12,203) | | Cash and cash equivalents, end of period | $33,871 | $25,624 | [Supplemental Disclosures for Cash Flow Information](index=7&type=section&id=Supplemental_Disclosures_for_Cash_Flow_Information) This section provides additional details on cash flow activities, including cash paid for income taxes and interest, and non-cash financing activities Supplemental Disclosures for Cash Flow Information (in thousands) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Cash paid for income taxes | $1,237 | $165 | | Cash paid for interest | $193 | $302 | | Right of use assets obtained through lease liabilities | $3,895 | $4,614 | | Cashless exercise of stock options | $462 | $19 | [Investor Relations Contact](index=4&type=section&id=Investor_Relations_Contact) This section provides contact information for investor relations inquiries [Contact Information](index=4&type=section&id=Contact_Information) Contact details for investor relations inquiries are provided for interested parties - Investor Relations Contact: Greg McNiff, The Blueshirt Group[16](index=16&type=chunk) - Phone: **773-485-7191**[16](index=16&type=chunk) - Email: clearfield@blueshirtgroup.com[16](index=16&type=chunk)

Industry Overview - The Zacks Wireless Equipment industry is experiencing healthy demand trends due to rapid 5G deployment and upgrades to cloud and fiber network infrastructure [1] - The industry includes companies providing networking solutions, wireless telecom products, and related services for voice and data communications [3] - Key products include integrated circuit devices, system software, two-way radios, satellite telecommunications, and security products [3] Future Trends - Network convergence is a significant trend, with operators combining voice, video, and data communications into a single network, which is expected to reduce service delivery costs and enhance broadband competition [4] - The industry is focused on supporting high user volumes and minimizing performance degradation through scalable solutions [4] Profitability Challenges - Short-term profitability is at risk due to high costs associated with first-generation 5G products, geopolitical tensions, and supply chain disruptions [5] - Elevated customer inventory levels and macroeconomic challenges are additional headwinds affecting profitability [5] Growth Drivers - The demand for advanced wireless products and services is driven by the need for network optimization and the rapid pace of 5G deployment [6] - The expansion of fiber optic networks and the growth of cloud networking solutions are acting as tailwinds for the industry [6] Market Performance - The Zacks Wireless Equipment industry has outperformed the S&P 500 and the broader Zacks Computer and Technology sector, with a growth of 34.9% over the past year compared to 17.2% and 22.8% respectively [10] - The industry currently has a Zacks Industry Rank of 96, placing it in the top 39% of over 250 Zacks industries, indicating positive prospects [8] Valuation Metrics - The industry is trading at a trailing 12-month EV/EBITDA of 25.07X, higher than the S&P 500's 17.85X and the sector's 18.23X [13] Notable Companies - **Ubiquiti Inc. (UI)**: Gained 160.3% over the past year, with strong growth opportunities in both emerging and developed economies [16][20] - **InterDigital Inc. (IDCC)**: Achieved an 87.6% increase in stock price, with a long-term earnings growth expectation of 15% [19][20] - **Clearfield, Inc. (CLFD)**: Gained 12.1% over the past year, benefiting from strong demand in fiber optic products and regional service provider verticals [23]

Company Announcement - Clearfield, Inc. will release its financial results for the third quarter of fiscal 2025 on August 6, 2025, after market close [1] - A conference call to discuss the financial results will be held at 5:00 p.m. Eastern time on the same day [2] Financial Information - Financial results will be accessible on the Investor Relations section of the company's website along with a shareholder letter [2] - An audio replay of the conference call will be available after 8:00 p.m. Eastern time on August 6, 2025, and will remain accessible until August 20, 2025 [2] Company Overview - Clearfield, Inc. specializes in designing, manufacturing, and distributing fiber optic management, protection, and delivery products for communications networks [3] - The company serves various markets, including traditional and alternative carriers, cable TV companies, utilities, municipalities, enterprises, data centers, and military sectors [3] - Clearfield deploys over one million fiber ports annually [3]

Core Insights - Clearfield, Inc. (CLFD) reported a significant 28% year-over-year revenue increase to $47.2 million in Q2 2025, driven by strong performance in various end markets [1][8] - The company is benefiting from early orders for fiber network construction and a proactive supply chain diversification strategy [2] - Clearfield is expected to leverage regulatory programs like E-ACAM and BEAD to enhance broadband access and drive growth in the Community Broadband market [3][8] Financial Performance - In the Community Broadband market, Clearfield achieved net sales of $18 million, reflecting a 12% year-over-year growth [1] - The Large Regional Service Provider market saw an impressive 255% year-over-year revenue growth, reaching $11.3 million [1] - The Multiple System Operators market, which includes cable TV companies, recorded a 53% year-over-year growth [2] Market Position and Competitors - The fiber industry is projected to grow at a compound annual growth rate of 12.5%, positioning Clearfield favorably to capitalize on this trend [4] - Competitors such as CommScope and Corning are also experiencing growth, with CommScope's Connectivity and Cable Solutions segment reporting a 19.7% revenue increase [5] and Corning expected to generate $5.86 billion from its optical communication business, up from $4.65 billion [6] Valuation and Estimates - Clearfield's shares have increased by 8.7% over the past year, compared to a 37.8% growth in the Wireless Equipment industry [7] - The company's price/book ratio is currently at 2.23, lower than the industry's 5.21 but above its historical mean of 1.88 [9] - Earnings estimates for 2025 have improved significantly, rising to 19 cents from a previous loss of 29 cents per share [11]

Industry Overview - The fiber broadband industry in the United States is rapidly expanding, driven by increased usage of high bandwidth applications and government initiatives to bridge the digital divide in rural areas. The U.S. broadband market is projected to grow at a 7.5% compound annual growth rate from 2023 to 2030 [2]. Clearfield, Inc. (CLFD) - Clearfield is a leader in fiber management and deployment solutions, benefiting from strong demand in its operating segment, particularly for its connected home offerings like home deployment kits, which enhance deployment efficiency [3][4]. - The company is expected to see revenue growth from the BEAD funding program in 2026 and has established manufacturing in the U.S. and Mexico to achieve tariff exemptions [4]. - Clearfield's FieldSmart FiberFlex 600 active cabinet is gaining industry recognition, and the company maintains a strong current ratio of 6.76, indicating good short-term financial health [5]. - The Zacks Consensus Estimate for Clearfield's 2025 sales and EPS implies year-over-year growth of 10.16% and 122.35%, respectively, with positive trends in EPS estimates over the past 60 days [14]. CommScope Holding Company Inc. (COMM) - CommScope's Connectivity and Cable Solutions are improving, particularly in its Enterprise Business, with a focus on innovation exemplified by the new CommScope XPND fiber termination panel platform [7][10]. - The company has a current ratio of 2.19 and a cash ratio of 0.47, indicating reasonable liquidity [11]. - The Zacks Consensus Estimate for CommScope's 2025 sales indicates growth of 3.46% year-over-year, with EPS projected to be 90 cents compared to a loss of 3 cents a year ago [15]. - CommScope's shares trade at a price/sales ratio of 0.25, which is lower than Clearfield's 2.72, making it more attractive from a valuation standpoint [18]. Competitive Landscape - Both Clearfield and CommScope face competition from major players like Nokia, Corning, and Amphenol, as well as smaller regional companies [6][12]. - Clearfield's focus on niche markets and strong liquidity metrics provide a competitive edge, while CommScope's extensive patent portfolio and global salesforce enhance its market position [11][24]. Investment Outlook - Clearfield is currently rated as a Zacks Rank 1 (Strong Buy), indicating strong investor confidence, while CommScope holds a Zacks Rank 3 (Hold) [20][21]. - Clearfield's innovative solutions for fiber deployment in underserved regions and its focus on cost optimization position it as a favorable investment option [24].