Clearfield(CLFD) - 2026 Q1 - Quarterly Report

Financial Performance - Net sales for the three months ended December 31, 2025, were $34,341,000, an increase of approximately 16%, or $4,643,000 from $29,698,000 for the same period in 2024[98] - Gross profit increased by $2,713,000, or 31%, to $11,388,000 for the three months ended December 31, 2025, with a gross profit margin of 33.2% compared to 29.2% in 2024[101] - Net loss from continuing operations for the three months ended December 31, 2025, was $1,824,000, a decrease of approximately 11% from a loss of $2,046,000 in 2024[103] Sales and Revenue - Sales to Broadband Service Providers increased to $16,408,000 in Q1 2025 from $13,213,000 in Q1 2024, with international sales rising to $1,936,000 from $366,000[98] - The order backlog as of December 31, 2025, was $22,763,000, a decrease of 8% from $24,651,000 as of September 30, 2025[100] Expenses - Selling, general and administrative expenses rose by $2,491,000, or 23%, to $13,212,000 for the three months ended December 31, 2025[102] Cash Flow and Investments - Cash and investments totaled $156,726,000 as of December 31, 2025, down from $165,799,000 as of September 30, 2025[108] - The company utilized $5,279,000 for stock repurchases during the three months ended December 31, 2025, compared to $6,275,000 in the same period of 2024[117] - Net cash used in operating activities totaled $1,440,000 for the three months ended December 31, 2025, compared to net cash provided of $8,039,000 in 2024[110] - The Company invests excess cash in bank CDs, Treasuries, and money market funds, with fair value fluctuating based on market interest rates[125] Tax and Accounting - The company recorded an income tax benefit of $1,000 for the three months ended December 31, 2025, with an income tax rate increase to 0.4% from (17.6%) in 2024[105] - Management made no changes to the Company's critical accounting estimates during the three months ended December 31, 2025[121] - Changes in accounting estimates did not have a significant impact on earnings for the three months ended December 31, 2025[122] Market Risks - Rising costs, including wages, logistics, components, and commodity prices, are negatively impacting profitability[127] - The Company does not hedge against foreign currency fluctuations, using the U.S. dollar as its reporting currency[126] - Inflation impacts profitability, including cost of sales and operating expenses, and may materially affect the Company's financial statements[127] - The Company is exposed to market risk from adverse changes in interest rates, foreign currency exchange rates, and commodity prices[124] - A significant percentage of sales in the last three fiscal years have been made to a small number of customers, posing a risk to revenue stability[123] - The Company does not hedge commodity prices, which may lead to increased costs and reduced profitability[127] - Forward-looking statements indicate potential impacts from trade policy changes, supply chain disruptions, and customer ordering patterns[123]