Financial Data and Key Metrics Changes - The company reported net sales of $47.2 million for the second quarter of fiscal 2025, representing a 28% increase compared to $36.9 million in the same period last year, and exceeding the guidance range of $37 million to $40 million [5][12] - Net income per share was $0.09, which was above the guidance range and showed significant improvement from the previous year [6][12] - The Clearfield segment net sales increased by 47% year over year to $40.6 million, while the NESTER segment net sales decreased by 30% year over year to $6.6 million [12] Business Line Data and Key Metrics Changes - The Clearfield segment experienced strong customer demand across all end markets, leading to faster conversion of quoting activity into revenue [12] - The NESTER segment is focusing on improving its cost structure and prioritizing higher gross margin solutions, particularly with the production of Microduct at the new facility in Estonia [12][13] Market Data and Key Metrics Changes - The company anticipates that the BEAD program will contribute materially to revenue in fiscal 2026, despite current administrative delays and regulatory uncertainties [9] - The Enhanced Alternative Connect America Cost Model (eACAM) is expected to contribute meaningfully in the upcoming build season, allowing providers to leverage both BEAD and eACAM funding across different areas of their networks [9] Company Strategy and Development Direction - The company is focused on diversifying its supply chain to maintain stable product availability amid fluctuating trade policies, with a proactive approach to sourcing and manufacturing [7][8] - The company aims to capitalize on current opportunities and is focused on identifying the next catalyst for growth, particularly in the connected home market [10][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to benefit from government funding programs and a return to a more normal ordering pattern in the industry [9][10] - The management highlighted a U-shaped recovery in the market, particularly within the Clearfield segment, with strong demand anticipated for connected home products [25] Other Important Information - The FieldSmart FiberFlex 600 active cabinet received recognition as one of the best in the industry, validating the company's approach to providing flexible and scalable solutions [10] - The company reiterated its fiscal 2025 outlook for net sales in the range of $170 million to $185 million, with expectations for annual revenue growth in the Clearfield segment to align with or exceed industry forecasts [13] Q&A Session Summary Question: Can you comment on the product mix and subscriber adds? - Management noted strong continuation in products for connecting homes and a resurgence in sales of cabinets, with expectations for increased home connections using Clearfield equipment [16] Question: How is traction coming along on new connected home products? - Management expressed excitement about the hybrid home deployment kits, which streamline the installation process and reduce labor requirements [17] Question: How is diversification within the regional customer category? - Management indicated that a large regional customer contributed approximately $3 million in business this quarter, with one large regional customer becoming a 10% customer [18] Question: Can you elaborate on the gross margin and E&O reserve? - Management clarified that there was a reduction in the excess and obsolete inventory reserve compared to the previous year, contributing to improved gross margins [19] Question: What are the cost reduction approaches for the NESTER segment? - Management discussed the focus on expanding the product mix and producing higher gross margin solutions primarily from the Estonia facility [20]

Financial Data and Key Metrics Changes - The company reported net sales of $47.2 million for the second quarter of fiscal 2025, representing a 28% increase compared to $36.9 million in the same period last year, and exceeding the guidance range of $37 million to $40 million [4][12] - Net income per share was $0.09, which was above the guidance range and showed significant improvement from the previous year [5][12] - The Clearfield segment net sales increased by 47% year over year to $40.6 million, while the NESTER segment net sales decreased by 30% year over year to $6.6 million [12] Business Line Data and Key Metrics Changes - The Clearfield segment experienced strong customer demand across all end markets, leading to a faster conversion of quoting activity into revenue [12] - The NESTER segment is focusing on improving its cost structure and prioritizing higher gross margin solutions, particularly with the production of Microduct at the new facility in Estonia [12][13] Market Data and Key Metrics Changes - The company anticipates that the BEAD program will contribute materially to revenue in fiscal 2026, despite current administrative delays and regulatory uncertainties [9] - The Enhanced Alternative Connect America Cost Model (eACAM) program is expected to contribute meaningfully in the upcoming build season, allowing providers to leverage both BEAD and eACAM funding across different areas of their networks [9] Company Strategy and Development Direction - The company is focused on diversifying its supply chain to maintain stable product availability amid fluctuating trade policies, with a proactive approach to sourcing and manufacturing [6][7] - The company aims to capitalize on current opportunities and is focused on identifying the next catalyst for growth, particularly in the connected home market [10][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market recovery, particularly within the Clearfield segment, and highlighted the demand for connected home products [26] - The evolving tariff situation is not expected to materially affect operating results, and the company is implementing tactics to address potential cost increases [7][13] Other Important Information - The FieldSmart FiberFlex 600 active cabinet received recognition as one of the best in the industry, validating the company's approach to providing flexible and scalable solutions [10] - The company reiterated its fiscal 2025 outlook of net sales in the range of $170 million to $185 million, with expectations for annual revenue growth in the Clearfield segment to align with or exceed industry forecasts [13] Q&A Session Summary Question: Can you comment on the product mix and subscriber adds? - Management noted strong sales of products for connecting homes and a resumption of cabinet sales, with expectations for increased home connections during the summer [16] Question: How is traction coming along on new connected home products? - Management expressed excitement about the hybrid home deployment kits, which streamline the installation process and reduce labor requirements [17] Question: How is diversification within the regional customer category? - Management indicated that a large regional customer contributed approximately $3 million in business this quarter, with one large regional customer becoming a 10% customer [18] Question: Can you clarify the gross margin improvements related to excess inventory reserves? - Management explained that there was a reduction in the excess inventory reserve compared to the previous year, contributing to improved gross margins [19] Question: What are the cost reduction approaches for the NESTER segment? - Management discussed expanding the product mix and focusing on higher gross margin solutions produced in Estonia, optimizing for flexibility and quicker shipping to the European market [21]

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Clearfield achieved a significant turnaround in Q2 2025, with net sales up 28% to $47.2 million and a return to profitability Fiscal Q2 2025 Financial Summary (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $47.2M | $36.9M | $10.3M | 28% | | Gross Profit ($) | $14.2M | $2.8M | $11.4M | 401% | | Gross Profit (%) | 30.1% | 7.7% | 22.4% | 292% | | Net Income (Loss) | $1.3M | $(5.9)M | $7.2M | 122% | | Net Income (Loss) per Diluted Share | $0.09 | $(0.40) | $0.49 | 123% | Fiscal YTD 2025 Financial Summary (vs. YTD 2024) | Metric | YTD 2025 | YTD 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $82.6M | $71.1M | $11.5M | 16% | | Gross Profit ($) | $22.4M | $7.5M | $14.8M | 197% | | Gross Profit (%) | 27.1% | 10.6% | 16.5% | 156% | | Net Loss | $(0.6)M | $(11.2)M | $10.6M | -95% | | Net Loss per Diluted Share | $(0.04) | $(0.75) | $0.71 | -95% | - The company successfully returned to profitability in Q2 2025, generating a net income per diluted share of **$0.09**[6](index=6&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management attributes strong Q2 performance to robust demand and execution, confident in market share gains and minimal tariff impact - CEO Cheri Beranek stated that the net sales outperformance was driven by strong customer demand and solid execution, with faster and higher conversion of quoting activity into revenue[5](index=5&type=chunk) - CFO Dan Herzog credited the strong bottom-line performance and gross margin improvements to lower excess inventory reserve costs and increased production volumes[7](index=7&type=chunk) - Despite macroeconomic uncertainty, management remains confident in its ability to gain market share as demand and ordering patterns normalize[7](index=7&type=chunk) - The company does not believe the tariffs in their present form will materially affect its operating results[7](index=7&type=chunk) [Detailed Financial Analysis](index=2&type=section&id=Detailed%20Financial%20Analysis) This section details quarterly operational results, drivers of gross margin expansion, return to profitability, and financial outlook [Q2 Fiscal 2025 Performance](index=2&type=section&id=Q2%20Fiscal%202025%20Performance) Q2 fiscal 2025 saw net sales grow 28% to $47.2 million, gross margin surge to 30.1%, and a net income of $1.3 million Sales and Backlog Performance (as of March 31, 2025) | Metric | Q2 2025 | Change vs. Q2 2024 | Change vs. Q1 2025 | | :--- | :--- | :--- | :--- | | Net Sales | $47.2M | +28% | N/A | | Order Backlog | $34.1M | -28% | +31% | - The increase in gross margin to **30.1%** was driven by higher volumes in the Clearfield segment, leading to better manufacturing overhead utilization, and a **$4.5 million** reduction in excess inventory charges compared to the prior year[9](index=9&type=chunk) - The company repurchased approximately **$4.7 million** in shares during the quarter, with about **$14 million** remaining for future repurchases as of March 31, 2025[11](index=11&type=chunk) [Fiscal 2025 Outlook](index=2&type=section&id=Fiscal%202025%20Outlook) Clearfield reiterates fiscal 2025 annual revenue guidance of $170M-$185M and projects Q3 net sales of $45M-$50M Fiscal 2025 Guidance | Period | Metric | Guidance Range | | :--- | :--- | :--- | | **Full Year 2025** | Net Sales | $170M - $185M | | **Q3 2025** | Net Sales | $45M - $50M | | **Q3 2025** | Net Income per Share | $0.01 - $0.08 | - The provided guidance incorporates the company's current understanding of the tariff situation, which is not expected to have a material effect on operating results[12](index=12&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section presents Clearfield's unaudited condensed consolidated financial statements for periods ended March 31, 2025 [Condensed Consolidated Statements of Earnings](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) Clearfield reported Q2 2025 net sales of $47.2 million and a net income of $1.3 million, a significant improvement year-over-year Condensed Consolidated Statements of Earnings (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $47,168 | $36,910 | $82,644 | $71,140 | | Gross profit | $14,192 | $2,832 | $22,374 | $7,529 | | Income (Loss) from operations | $262 | $(9,741) | $(3,713) | $(17,903) | | Net income (loss) | $1,327 | $(5,911) | $(579) | $(11,179) | | Net income (loss) per share Diluted | $0.09 | $(0.40) | $(0.04) | $(0.75) | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, Clearfield's balance sheet shows total assets of $310.9 million, with increased cash and decreased inventories Selected Balance Sheet Items (in thousands) | | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $28,848 | $16,167 | | Inventories, net | $56,084 | $66,766 | | Total current assets | $206,268 | $229,595 | | Total Assets | $310,857 | $315,275 | | Total liabilities | $44,958 | $39,512 | | Total shareholders' equity | $265,899 | $275,763 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended March 31, 2025, Clearfield generated $10.2 million in operating cash flow, with cash increasing by $12.7 million Summary of Cash Flows (Six Months Ended March 31, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $10,198 | $5,094 | | Net cash provided by investing activities | $11,220 | $1,156 | | Net cash used in financing activities | $(8,755) | $(28,310) | | **Increase (decrease) in cash** | **$12,681** | **$(22,009)** | - The primary use of cash in financing activities was the repurchase of common stock, amounting to **$11.0 million** for the six-month period[24](index=24&type=chunk) [Other Information](index=2&type=section&id=Other%20Information) This section provides supplementary company details, including conference call logistics, corporate overview, and forward-looking statement cautions [Conference Call Information](index=2&type=section&id=Conference%20Call%20Information) Clearfield management will host a conference call on May 8, 2025, at 4:30 p.m. ET to discuss quarterly results, with replay available - A conference call hosted by CEO Cheri Beranek and CFO Dan Herzog is scheduled for May 8, 2025, at 4:30 p.m. Eastern Time[13](index=13&type=chunk) - Replay information is available for those unable to attend the live call, accessible through May 22, 2025[14](index=14&type=chunk) [About Clearfield, Inc.](index=3&type=section&id=About%20Clearfield%2C%20Inc.) Clearfield, Inc. designs, manufactures, and distributes fiber optic products for various communication network markets - Clearfield designs, manufactures, and distributes fiber optic products for communications networks[15](index=15&type=chunk) - The company's key markets include incumbent and competitive local exchange carriers, MSO/cable TV companies, utilities, enterprises, and data centers[15](index=15&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section cautions on forward-looking statements, outlining key risks including supply chain, customer concentration, competition, and macroeconomic conditions - The document contains forward-looking statements regarding future performance, market trends, and the impact of trade policies, which are subject to risks and uncertainties[16](index=16&type=chunk) - Key risk factors include reliance on single-source suppliers, customer concentration, intense competition, potential impact of government programs (BEAD, RDOF), and global economic conditions[16](index=16&type=chunk)

Core Viewpoint - Clearfield, Inc. reported significant financial improvements in fiscal Q2 2025, including a return to profitability and strong revenue growth driven by customer demand across all segments [4][5][10]. Financial Performance - Net sales for Q2 2025 reached $47.2 million, a 28% increase from $36.9 million in Q2 2024 [2][7]. - Gross profit surged to $14.2 million, up 401% from $2.8 million year-over-year, resulting in a gross margin of 30.1%, compared to 7.7% in Q2 2024 [2][8]. - The company achieved net income of $1.3 million, or $0.09 per diluted share, compared to a net loss of $5.9 million, or ($0.40) per diluted share, in the same quarter last year [2][10]. Year-to-Date Performance - For the first half of fiscal 2025, net sales totaled $82.6 million, a 16% increase from $71.1 million in the same period of 2024 [3]. - Year-to-date gross profit was $22.4 million, reflecting a 197% increase from $7.5 million in 2024 [3]. - The company reported a reduced net loss of $0.6 million for the year-to-date period, significantly improved from a loss of $11.2 million in the prior year [3]. Operational Insights - The increase in gross margin was attributed to higher production volumes and reduced excess inventory reserve costs [6][8]. - The order backlog as of March 31, 2025, was $34.1 million, a 31% increase from $26.0 million at the end of 2024 [7]. Management Commentary - Management expressed confidence in capturing market share despite macroeconomic uncertainties, citing strong customer demand and effective execution [4][5]. - The company plans to maintain its fiscal 2025 net sales guidance in the range of $170 million to $185 million, anticipating Q3 net sales between $45 million and $50 million [5][11]. Shareholder Actions - Clearfield repurchased approximately $4.7 million in shares under its share repurchase program, with about $14 million remaining for future repurchases [10].

Core Viewpoint - Clearfield, Inc. will announce its financial results for the second quarter of fiscal 2025 on May 8, 2025, after market close, and will host a conference call to discuss these results with the investment community [1][2]. Company Overview - Clearfield, Inc. (NASDAQ: CLFD) specializes in designing, manufacturing, and distributing fiber optic management, protection, and delivery products for communications networks [3]. - The company operates a "fiber to anywhere" platform that meets the needs of various market segments, including traditional and alternative carriers, cable TV companies, utilities, municipalities, enterprises, data centers, and military markets [3]. - Clearfield is headquartered in Minneapolis, MN, and deploys over one million fiber ports annually [3].

Company Overview - Breezeline is the eighth-largest cable operator in the United States, providing Internet, TV, and Phone services across 13 states, including Pennsylvania [5] - The company is a subsidiary of Cogeco Communications, which also operates in Canada under the Cogeco Connexion name [5] Fiber Deployment - Breezeline will soon deploy fiber-to-the-home (FTTH) internet services in several Pennsylvania counties, including Johnstown, Altoona, Uniontown, and Clearfield [1] - The fiber activation aims to enhance internet connectivity for both homes and businesses in these areas [1] Technological Investment - The company is continuously investing in advanced technologies to accommodate the growing demand for internet data usage, aiming to deliver faster speeds and improved reliability [2] - High-speed internet is expected to provide significant economic benefits to local communities by attracting employers, fostering business innovation, and enhancing job growth and productivity [2] Community Impact - Breezeline's FTTH technology will offer ultrafast and reliable connectivity, which is essential for online learning, telemedicine, remote work, and cloud computing [2][3] - Current customers will have the opportunity to transition to the new fiber platform with free installation [3] Industry Recognition - The Broadband Communications Association of Pennsylvania commended Breezeline for its investment in state-of-the-art internet connectivity, highlighting the importance of fiber for future scalability [3]

Financial Performance - Net sales for the three months ended December 31, 2024, were $35,476,000, an increase of approximately 4%, or $1,246,000, from $34,230,000 for the same period in 2023[105] - Net sales to Broadband Service Providers increased to $33,440,000, up from $31,915,000, while sales to Legacy customers decreased to $2,036,000 from $2,376,000[105] - The Clearfield segment net sales increased by 6%, or $1,597,000, to $29,698,000 for the three months ended December 31, 2024, driven by increased demand from National Carrier and Community Broadband customers[120] - The Nestor Cables segment net sales decreased by 6%, or $351,000, to $5,778,000 for the three months ended December 31, 2024, due to decreased demand[122] Cost and Expenses - Cost of sales decreased by $2,239,000, or 8%, to $27,294,000 for the three months ended December 31, 2024, resulting in a gross profit increase of $3,486,000, or 74%, to $8,182,000[109] - Selling, general and administrative expenses decreased by $701,000, or 6%, to $12,158,000 due to cost management efforts[110] Loss and Net Income - Loss from operations decreased by approximately 51% to $3,975,000 for the three months ended December 31, 2024, compared to a loss of $8,162,000 for the same period in 2023[111] - Net loss for the three months ended December 31, 2024, was $1,906,000, or $0.13 per share, down from a net loss of $5,268,000, or $0.35 per share, for the same period in 2023[115] - The income tax benefit decreased to $426,000 for the three months ended December 31, 2024, from $951,000 for the same period in 2023, primarily due to decreased loss from operations[114] Cash Flow and Investments - As of December 31, 2024, the company's cash, cash equivalents, and short-term investments totaled $113,014,000, a decrease from $130,992,000 as of September 30, 2024[124] - The company reported net cash provided by operating activities of $7,150,000 for the three months ended December 31, 2024, compared to $10,800,000 for the same period in 2023[126][127] - The decrease in inventory was $6,871,000 for the three months ended December 31, 2024, attributed to reduced inventory purchases as the company utilized existing stock[126] - The company received proceeds from the maturity of investment securities of $54,476,000 during the three months ended December 31, 2024, compared to $51,068,000 in the same period of 2023[128][129] - Cash used for stock repurchases was $6,275,000 for the three months ended December 31, 2024, down from $12,184,000 in the same period of 2023[130][132] - The company invested $39,015,000 in investment securities during the three months ended December 31, 2024, compared to $47,748,000 in the same period of 2023[128][129] Operational Metrics - Order backlog as of December 31, 2024, was $26,028,000, an increase of 3.6% from $25,133,000 as of September 30, 2024, but a decrease of 40% from $43,451,000 as of December 31, 2023[107] - Days sales outstanding decreased by 11 days to 36 days as of December 31, 2024, compared to 47 days as of December 31, 2023[126] Market Risks - The company is exposed to market risks from fluctuations in foreign currency exchange rates, with a potential impact of approximately $144,000 on operating expenses if the Euro fluctuated by 10% against the U.S. Dollar[138]

Financial Data and Key Metrics Changes - The company reported first quarter fiscal 2025 net sales of $35.5 million, a 4% increase from $34.2 million in the prior year [17] - The net loss per share was $0.13, which was smaller than the guidance range [8] - The Clearfield segment net sales increased by 6% year over year, while the Nestor segment net sales decreased by 6% [18] Business Line Data and Key Metrics Changes - Clearfield segment net sales were $29.7 million, up 6% year over year, while Nestor segment net sales were $5.8 million, down 6% year over year [18] - The company anticipates a two-to-one ratio of connected homes to past homes as operators prioritize cash flow generation [18] Market Data and Key Metrics Changes - The company noted that many operators are initiating new multiyear projects, indicating strong demand independent of government funding [12] - The broadband equity access and deployment (BEAD) program is expected to contribute more meaningfully to revenue starting in fiscal 2026 [12] Company Strategy and Development Direction - Clearfield aims to establish itself as a one-stop shop for active cabinet deployments, adapting to industry dynamics with new products [10] - The company is focusing on enhancing European operations by accelerating MicroDuct production and targeting higher-margin solutions [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term potential of the BEAD program despite near-term uncertainties due to changes in the US administration [13] - The company is actively monitoring the evolving tariff situation and developing contingency plans to mitigate potential cost increases [16] Other Important Information - The company opened a new facility in Estonia, which is projected to generate $7 million in MicroDuct production for the current fiscal year [19] - The company reiterated its fiscal 2025 outlook of net sales in the range of $170 million to $185 million, with Clearfield segment annual revenue growth expected to be in line with or above industry forecasts of 12.5% [20] Q&A Session Summary Question: Strength in large regional customers - Management indicated that there are multiple large regional providers contributing to sales, with a focus on passing products [25][30] Question: Visibility into customer forecasts and orders - Management noted increased quoting activity and positive indicators for long-term projects, although long-term purchase agreements are not yet in place [32][34] Question: Growth separation between Clearfield and Nestor segments - Management confirmed that Clearfield is expected to grow at or above market rates, while Nestor is anticipated to have flat revenues [42][47] Question: Community broadband opportunities - Management highlighted that community broadband initiatives are seeing increased engagement and planning, with expectations for sequential growth [66][70] Question: Gross margins outlook - Management indicated that gross margins are expected to be volume-dependent, with a goal of reaching the lower to mid-twenties by the fourth quarter [81][86]

Company Performance - Clearfield reported a quarterly loss of $0.13 per share, outperforming the Zacks Consensus Estimate of a loss of $0.31, and showing improvement from a loss of $0.35 per share a year ago, resulting in an earnings surprise of 58.06% [1] - The company posted revenues of $35.48 million for the quarter ended December 2024, slightly missing the Zacks Consensus Estimate by 0.49%, but showing an increase from year-ago revenues of $34.23 million [2] - Clearfield has surpassed consensus EPS estimates in all four of the last quarters and has topped consensus revenue estimates three times during the same period [2] Stock Outlook - Clearfield shares have increased approximately 19.6% since the beginning of the year, significantly outperforming the S&P 500's gain of 3.1% [3] - The company's earnings outlook will be crucial for determining future stock movements, with current consensus EPS estimates at -$0.22 for the coming quarter and -$0.33 for the current fiscal year [4][7] - The current estimate revisions trend for Clearfield is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Wireless Equipment industry, to which Clearfield belongs, is currently ranked in the top 30% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - The company reported first quarter fiscal 2025 net sales of $35.5 million, a 4% increase from $34.2 million in the prior year [4][12] - The net loss per share was $0.13, which was smaller than the guidance range [4] - Consolidated net sales included $29.7 million from the Clearfield segment, up 6% year over year, and $5.8 million from the Nestor segment, down 6% year over year [12] Business Line Data and Key Metrics Changes - The Clearfield segment's net sales increased by 6% year over year, reflecting steady progress towards normalized growth [5][12] - The Nestor segment experienced a decline in net sales by 6% year over year, with expectations of flat annual revenue for fiscal year 2025 [12][14] Market Data and Key Metrics Changes - The company anticipates that the Broadband Equity Access and Deployment (BEAD) program will contribute more meaningfully to revenue starting in fiscal 2026, despite near-term uncertainties [8] - The company noted an increase in quoting activity for BEAD and other non-government funded initiatives, indicating a positive outlook for community broadband [50][52] Company Strategy and Development Direction - The company aims to establish itself as a one-stop shop for active cabinet deployments, adapting to industry dynamics with new products [5][6] - The strategy includes enhancing European operations by focusing on higher margin solutions, such as the recently opened facility in Estonia [13] - The company is actively monitoring the evolving tariff situation and developing contingency plans to mitigate potential cost increases [10][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing demand for multi-year projects, indicating a strong commitment from operators independent of government funding [7] - The company is experiencing a U-shaped recovery, with expectations for an uptick in sales during the third and fourth quarters as the build season commences [63][64] Other Important Information - The company has observed a significant reduction in inventory levels, which is expected to drive growth in fiscal 2025 [13] - Management highlighted the importance of maintaining strong partnerships with suppliers and customers to optimize the supply chain [10] Q&A Session Summary Question: Strength in large regional customers - Management indicated that there are multiple large regional providers contributing to sales, with a focus on passing homes products [18][19] Question: Visibility into customer forecasts and orders - Management noted increased quoting activity and engagement from customers, indicating positive trends for the upcoming fiscal year [25] Question: Growth expectations for Clearfield and Nestor segments - Management confirmed that the Clearfield segment is expected to grow at or above market rates, while Nestor is anticipated to have flat revenues [35] Question: Community broadband opportunities - Management highlighted the emergence of smaller regional providers engaging in multi-year agreements, indicating a positive trend in community broadband [37][39] Question: Implications of homes connected versus homes passed - Management explained that the company is working towards a better ratio of connected homes, which is crucial for revenue growth [42][45] Question: Gross margins outlook - Management indicated that gross margins are expected to improve as sales volume increases, aiming for lower to mid-20s percentage by the fourth quarter [60]