Clearfield, Inc. (NASDAQ: CLFD),
the specialist in fiber management and connectivity platforms for
communication service providers, reported results for the fiscal
first quarter ended December 31, 2021.
Fiscal Q1 2022
Financial Summary |
|
(in millions
except per share data and percentages) |
Q1 2022 |
vs. Q1 2021 |
Change |
Change (%) |
Net Sales |
$ |
51.1 |
|
$ |
27.1 |
|
$ |
24.0 |
|
89 |
% |
|
|
|
|
|
Gross Profit ($) |
$ |
23.0 |
|
$ |
11.4 |
|
$ |
11.6 |
|
102 |
% |
Gross Profit (%) |
|
44.9 |
% |
|
42.0 |
% |
|
3.0 |
% |
7 |
% |
|
|
|
|
|
Income from Operations |
$ |
13.0 |
|
$ |
3.7 |
|
$ |
9.3 |
|
251 |
% |
Income Tax Expense |
$ |
2.8 |
|
$ |
0.7 |
|
$ |
2.1 |
|
306 |
% |
|
|
|
|
|
Net
Income |
$ |
10.4 |
|
$ |
3.2 |
|
$ |
7.2 |
|
228 |
% |
Net
Income per Diluted Share |
$ |
0.75 |
|
$ |
0.23 |
|
$ |
0.52 |
|
226 |
% |
|
|
|
|
|
Management Commentary“Clearfield delivered
another record-setting financial performance in the fiscal first
quarter of 2022, in a market that continues to evolve and grow with
each passing quarter.“ said Company President and CEO Cheri
Beranek. “We are well-positioned to continue
benefitting from the growing demand for fiber to the home and fiber
to the business due to our steadfast commitment to best-in-class
customer service, high-quality products, and our ability to swiftly
adapt to the needs of our customers. Our product offerings, which
are designed to reduce the time and skill required for the delivery
of optical cable, are now being recognized by a growing group of
customers, as a means by which to accelerate moving existing
subscribers off copper and adding subscribers due to the bandwidth
and low latency that fiber-fed broadband enables.”
“The demand for our craft-friendly products remains high. Our
order backlog (defined as purchase orders received but not yet
fulfilled) as of December 31, 2021, was $101 million, a 53%
sequential increase from $66 million as of September 30, 2021. This
backlog is composed of a broad set of over 200 customers, including
to several distributors which represent additional customers to
whom our products are sold. A large component of our backlog is
regional broadband service providers within the Community Broadband
market. While the traditional broadband provider focuses mainly on
a single-state area, these regional broadband service providers
address a multi-state market. Because these companies have not
deployed fiber at this scope in the past, we believe this
represents a significant growth opportunity for Clearfield.”
“In order to meet the significant demand for our products,
Clearfield is opening a new distribution center in Minnesota in our
fiscal Q2, which would effectively double the Company’s U.S.
footprint. Furthermore, as we have previously announced, our new
manufacturing center in Mexico will also come online in our Q2,
providing 300,000 square feet of capacity, effectively tripling our
footprint in Mexico from 100,000 square feet. We are investing in
our capacity, including investing in developing and outfitting
these new facilities as well as other supply chain
enhancements.”
“Supply constraints remain challenging. To address, we have
substantially increased our inventory, to be better able to
effectively meet our customers’ current and future needs. We have
made significant investments in supply chain initiatives to ensure
that we can deliver our product on time to our promised ship dates.
Our ability to deliver our products on time to our customers is
crucial so that their deployment schedules are maintained and their
time to revenue can accelerate.”
“We believe the elevated demand in this market is not a
short-term event, and that we are in the middle of a remarkable
investment cycle for broadband deployment that will change the way
people communicate in the future. Clearfield’s founding vision was
to provide the necessary products to build a better broadband
network. This vision is who we are as an organization. We have been
positioned to provide the products for broadband to underserved
communities since the day we started.”
“We remain very optimistic about Clearfield’s growth potential
as the demand for high-speed broadband, especially fiber-led
broadband, continues to be very robust, and we continue to make
meaningful progress on our ‘Now of Age’ plan objectives. With the
current visibility we have into our substantial order backlog as
well as the pipeline behind it, we expect to deliver projected
annual net sales of $176 million to $183 million in fiscal year
2022, representing growth of 25% to 30% over fiscal year 2021
revenues.” Lastly, the Company is reinstating its stock repurchase
program that had been suspended due to Covid uncertainty in April
2020. In addition, the Company’s board of directors increased the
share repurchase program by an additional $10 million to $22
million, from the previous $12 million. The Company has
approximately $15 million remaining authorized in the program as of
January 27, 2022.
Fiscal First Quarter 2022 Financial ResultsNet
sales for the first quarter of fiscal 2022 increased 89% to $51.1
million from $27.1 million in the same year-ago quarter. The
increase in net sales was due to higher sales across our core end
markets, most notably our Community Broadband and MSO markets.
As of December 31, 2021, order backlog (defined as purchase
orders received but not yet fulfilled) was $101 million, an
increase of 53% compared to $66 million as of September 30, 2021
and an increase of 1,036% from $8.9 million as of December 31,
2020.
Gross profit for the fiscal first quarter of 2022 increased 102%
to $23.0 million (or 44.9% of net sales) from $11.4 million (or
42.0% of net sales) in the fiscal first quarter of 2021. The
increase in gross profit margin was due to a favorable product mix
associated with higher net sales in the Company’s Community
Broadband market, as well as improved manufacturing efficiencies
realized with higher sales volumes, offset by higher freight and
transportation costs.
Operating expenses for the fiscal first quarter of 2022 totaled
$9.9 million, compared to $7.7 million in the same year-ago
quarter. The increase in operating expenses consisted primarily of
higher compensation costs due to increased personnel and higher
performance-based compensation as well as increased travel
expenses.
Income from operations for the first quarter of fiscal 2022
increased 251% to $13.0 million from $3.7 million in the same
year-ago quarter.
Income tax expense for the first quarter of fiscal 2022
increased 306% to $2.8 million from $684,000 in the same year-ago
quarter due to higher taxable income.
Net income for the first quarter of fiscal 2022 totaled $10.4
million, or $0.75 per diluted share, compared to $3.2 million, or
$0.23 per diluted share, in the same year-ago quarter.
Conference CallClearfield management will hold
a conference call today, January 27, 2022 at 5:00 p.m. Eastern Time
(4:00 p.m. Central Time) to discuss these results and provide an
update on business conditions.
Clearfield’s President and CEO Cheri Beranek and CFO Dan Herzog
will host the presentation, followed by a question-and-answer
period.
U.S. dial-in: 1-877-407-0792International dial-in:
1-201-689-8263Conference ID: 13726051
The conference call will be webcast live and available for
replay here:
https://viavid.webcasts.com/starthere.jsp?ei=1522366&tp_key=bbaeda6b73.
Please call the conference telephone number 10 minutes prior to
the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Gateway Investor Relations at
1-949-574-3860.
A replay of the call will be available after 8:00 p.m. Eastern
time on the same day through February 10, 2022.
U.S. replay dial-in: 1-844-512-2921International replay dial-in:
1-412-317-6671Replay ID: 13726051
About Clearfield, Inc. Clearfield, Inc.
(NASDAQ: CLFD) designs, manufactures, and distributes fiber optic
management, protection, and delivery products for communications
networks. Our “fiber to anywhere” platform serves the unique
requirements of leading incumbent local exchange carriers
(traditional carriers), competitive local exchange carriers
(alternative carriers), and MSO/cable TV companies, while also
catering to the broadband needs of the utility/municipality,
enterprise, data center and military markets. Headquartered in
Minneapolis, MN, Clearfield deploys more than a million fiber ports
each year. For more information, visit www.SeeClearfield.com.
Cautionary Statement Regarding Forward-Looking
InformationForward-looking statements contained herein and
in any related presentation or in the related FieldReport are made
pursuant to the safe harbor provisions of the Private Litigation
Reform Act of 1995. Words such as “may,” “will,” “expect,”
“believe,” “anticipate,” “estimate,” “outlook,” or “continue” or
comparable terminology are intended to identify forward-looking
statements. Such forward looking statements include, for example,
statements about the Company’s future revenue and operating
performance, anticipated shipping on backlog and future lead times,
future availability of components and materials from the Company’s
supply chain, the impact of the Rural Digital Opportunity Fund
(RDOF) or other government programs on the demand for the Company’s
products or timing of customer orders, the Company’s ability to add
capacity to meet expected future demand, and trends in and growth
of the FTTx markets, market segments or customer purchases and
other statements that are not historical facts. These statements
are based upon the Company's current expectations and judgments
about future developments in the Company's business. Certain
important factors could have a material impact on the Company's
performance, including, without limitation: the COVID-19 pandemic
has significantly impacted worldwide economic conditions and could
have a material adverse effect on our business, financial condition
and operating results; we rely on single-source suppliers, which
could cause delays, increase costs or prevent us from completing
customer orders; fluctuations in product and labor costs which may
not be able to be passed on to customers that could decrease
margins; we depend on the availability of sufficient supply of
certain materials, such as fiber optic cable and resins for
plastics, and global disruptions in the supply chain for these
materials could prevent us from meeting customer demand for our
products; we rely on our manufacturing operations to produce
product to ship to customers and manufacturing constraints and
disruptions could result in decreased future revenue; a significant
percentage of our sales in the last three fiscal years have been
made to a small number of customers; further consolidation among
our customers may result in the loss of some customers and may
reduce sales during the pendency of business combinations and
related integration activities; we may be subject to risks
associated with acquisitions; product defects or the failure of our
products to meet specifications could cause us to lose customers
and sales or to incur unexpected expenses; we are dependent on key
personnel; cyber-security incidents on our information technology
systems, including ransomware, data breaches or computer viruses,
could disrupt our business operations, damage our reputation, and
potentially lead to litigation; our business is dependent on
interdependent management information systems; to compete
effectively, we must continually improve existing products and
introduce new products that achieve market acceptance; changes in
government funding programs may cause our customers and prospective
customers to delay, reduce, or accelerate purchases, leading to
unpredictable and irregular purchase cycles; intense competition in
our industry may result in price reductions, lower gross profits
and loss of market share; our success depends upon adequate
protection of our patent and intellectual property rights; if the
telecommunications market does not expand as we expect, our
business may not grow as fast as we expect; we face risks
associated with expanding our sales outside of the United States;
and other factors set forth in Part I, Item IA. Risk Factors of
Clearfield's Annual Report on Form 10-K for the year ended
September 30, 2021 as well as other filings with the Securities and
Exchange Commission. The Company undertakes no obligation to update
these statements to reflect actual events unless required by
law.
Investor Relations Contact:Matt Glover
and Sophie PearsonGateway Group, Inc.
1-949-574-3860CLFD@gatewayir.com
CLEARFIELD, INC.STATEMENTS OF
EARNINGS(UNAUDITED)(IN THOUSANDS,
EXCEPT SHARE DATA)
|
Three Months
Ended |
|
December 31, |
|
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
Net
sales |
$ |
|
51,109 |
|
$ |
27,092 |
|
|
|
|
|
|
Cost of
sales |
|
|
28,137 |
|
|
15,723 |
|
|
|
|
|
|
Gross
profit |
|
|
22,971 |
|
|
11,369 |
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
Selling, general and |
|
|
|
|
|
administrative |
|
|
9,922 |
|
|
7,656 |
Income from
operations |
|
|
13,050 |
|
|
3,714 |
|
|
|
|
|
|
Interest income |
|
|
120 |
|
|
134 |
Income
before income taxes |
|
|
13,169 |
|
|
3,847 |
|
|
|
|
|
|
Income tax
expense |
|
|
2,780 |
|
|
684 |
|
|
|
|
|
|
Net
income |
$ |
|
10,389 |
|
$ |
3,163 |
|
|
|
|
|
|
Net income
per share: |
|
|
|
|
|
Basic |
$ |
|
0.76 |
|
$ |
0.23 |
Diluted |
$ |
|
0.75 |
|
$ |
0.23 |
|
|
|
|
|
|
Weighted
average shares outstanding: |
|
|
|
|
|
Basic |
|
|
13,743,503 |
|
|
13,692,533 |
Diluted |
|
|
13,897,787 |
|
|
13,696,815 |
|
|
|
|
|
|
CLEARFIELD, INC.BALANCE
SHEETS(IN THOUSANDS)
|
|
(Unaudited) |
|
|
|
|
|
December
31, |
|
|
September
30, |
|
|
2021 |
|
|
2021 |
Assets |
|
|
|
|
|
Current
Assets |
|
|
|
|
|
Cash and
cash equivalents |
$ |
12,682 |
|
$ |
13,216 |
Short-term
investments |
|
10,373 |
|
|
10,374 |
Accounts
receivable, net |
|
16,330 |
|
|
19,438 |
Inventories,
net |
|
43,574 |
|
|
27,524 |
Other
current assets |
|
1,085 |
|
|
954 |
Total
current assets |
|
84,044 |
|
|
71,506 |
|
|
|
|
|
|
Property,
plant and equipment, net |
|
6,574 |
|
|
4,998 |
|
|
|
|
|
|
Other
Assets |
|
|
|
|
|
Long-term
investments |
|
35,192 |
|
|
36,913 |
Goodwill |
|
4,709 |
|
|
4,709 |
Intangible
assets, net |
|
4,547 |
|
|
4,696 |
Right of use
lease assets |
|
1,761 |
|
|
2,305 |
Deferred tax
asset |
|
365 |
|
|
365 |
Other |
|
573 |
|
|
419 |
Total other
assets |
|
47,147 |
|
|
49,407 |
Total
Assets |
$ |
137,765 |
|
$ |
125,911 |
|
|
|
|
|
|
Liabilities
and Shareholders' Equity |
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
Current
portion of lease liability |
$ |
702 |
|
$ |
915 |
Accounts
payable |
|
12,367 |
|
|
9,215 |
Accrued
compensation |
|
4,137 |
|
|
8,729 |
Accrued
expenses |
|
4,872 |
|
|
1,613 |
Total
current liabilities |
|
22,078 |
|
|
20,471 |
|
|
|
|
|
|
Other
Liabilities |
|
|
|
|
|
Long-term
portion of lease liability |
|
1,214 |
|
|
1,615 |
Total
Liabilities |
|
23,292 |
|
|
22,087 |
|
|
|
|
|
|
Shareholders' Equity |
|
|
|
|
|
Common
stock |
|
138 |
|
|
137 |
Additional
paid-in capital |
|
58,505 |
|
|
58,246 |
Retained
earnings |
|
55,831 |
|
|
45,441 |
Total
Shareholders' Equity |
|
114,473 |
|
|
103,824 |
Total
Liabilities and Shareholders' Equity |
$ |
137,765 |
|
$ |
125,911 |
|
|
|
|
|
|
CLEARFIELD, INC.STATEMENTS OF CASH
FLOWS(UNAUDITED)(IN
THOUSANDS)
|
|
|
|
Three Months
Ended |
|
|
Three Months
Ended |
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
2021 |
|
|
2020 |
Cash flows
from operating activities |
|
|
|
|
|
|
|
Net income |
|
|
$ |
10,389 |
|
|
$ |
3,163 |
|
Adjustments to reconcile net income to cash provided |
|
|
|
|
|
|
|
by (used in) operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
639 |
|
|
|
568 |
|
Amortization of discount on investments |
|
|
|
(11 |
) |
|
|
- |
|
Stock-based compensation expense |
|
|
|
440 |
|
|
|
289 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
Accounts receivable |
|
|
|
3,108 |
|
|
|
699 |
|
Inventories, net |
|
|
|
(16,049 |
) |
|
|
721 |
|
Other assets |
|
|
|
(300 |
) |
|
|
136 |
|
Accounts payable and accrued expenses |
|
|
|
1,750 |
|
|
|
(2,860 |
) |
Net cash
(used in) provided by operating activities |
|
|
|
(34 |
) |
|
|
2,717 |
|
|
|
|
|
|
|
|
|
Cash flows
from investing activities: |
|
|
|
|
|
|
|
Purchases of property, plant and equipment and |
|
|
|
|
|
|
|
intangible assets |
|
|
|
(2,051 |
) |
|
|
(379 |
) |
Purchase of investments |
|
|
|
(248 |
) |
|
|
(3,968 |
) |
Proceeds from maturities of investments |
|
|
|
1,980 |
|
|
|
4,426 |
|
Net cash
(used in) provided by investing activities |
|
|
|
(319 |
) |
|
|
79 |
|
|
|
|
|
|
|
|
|
Cash flows
from financing activities |
|
|
|
|
|
|
|
Proceeds from issuance of common stock under |
|
|
|
249 |
|
|
|
179 |
|
employee stock purchase plan |
|
|
|
|
|
|
|
Tax withholding related to vesting of restricted stock grants |
|
(274 |
) |
|
|
(11 |
) |
Withholding related to exercise of stock options |
|
|
|
(156 |
) |
|
|
(262 |
) |
Net cash
(used in) financing activities |
|
|
|
(181 |
) |
|
|
168 |
|
(Decrease)
Increase in cash and cash equivalents |
|
|
|
(534 |
) |
|
|
2,701 |
|
Cash and
cash equivalents, beginning of period |
|
|
|
13,216 |
|
|
|
16,450 |
|
Cash and
cash equivalents, end of period |
|
|
$ |
12,682 |
|
|
$ |
19,151 |
|
|
|
|
|
|
|
|
|
Supplemental
disclosures for cash flow information |
|
|
|
|
|
|
|
Cash paid
during the year for income taxes |
|
|
$ |
- |
|
|
$ |
17 |
|
|
|
|
|
|
|
|
|
Non-cash
financing activities |
|
|
|
|
|
|
|
Cashless
exercise of stock options |
|
|
$ |
93 |
|
|
$ |
996 |
|
|
|
|
|
|
|
|
|
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