Clearfield(CLFD) - 2025 Q3 - Quarterly Results

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 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 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 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] - 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] - The company increased its full year fiscal 2025 revenue guidance to a range of $180 million to $184 million[5] - Share buybacks totaled $5.6 million in Q3, with approximately $8.4 million remaining available for repurchases as of June 30, 2025[5][10] 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 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 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] - 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] 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] - 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] 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] 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] - Third quarter net income includes a one-time valuation charge against deferred tax assets of Nestor Cables of $780,000[10] 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 This section outlines Clearfield's financial projections and expectations for the remainder of fiscal year 2025 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] 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] - 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] - Tariffs currently in place are not expected to materially affect the Company's operating results[11] 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 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] - The call was hosted by President and CEO Cheri Beranek and CFO Dan Herzog[12] - A replay of the call was available through August 20, 2025, and an archived webcast for 90 days on the Investor Relations website[13] About Clearfield, Inc. This section provides an overview of Clearfield, Inc., highlighting its core business, product offerings, and market focus 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] - 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] - Headquartered in Minneapolis, MN, Clearfield deploys more than a million fiber ports each year[14] 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 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] - 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] - 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] 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 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 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 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 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 This section provides contact information for investor relations inquiries Contact Information Contact details for investor relations inquiries are provided for interested parties - Investor Relations Contact: Greg McNiff, The Blueshirt Group[16] - Phone: 773-485-7191[16] - Email: clearfield@blueshirtgroup.com[16]