Clearfield Q2 2025 Earnings Report

Clearfield EPS Results

• Actual EPS: $0.09
• Consensus EPS: -$0.19
• Beat/Miss: Beat by +$0.28
• One Year Ago EPS: N/A

Clearfield Revenue Results

• Actual Revenue: $47.17 million
• Expected Revenue: $38.53 million
• Beat/Miss: Beat by +$8.64 million
• YoY Revenue Growth: N/A

Clearfield Announcement Details

• Quarter: Q2 2025
• Date: 5/8/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 4:30PM ET

Clearfield (NASDAQ:CLFD) manufactures and sells various fiber connectivity products in the United States and internationally. The company offers FieldSmart, a series of panels, cabinets, wall boxes, and other enclosures; WaveSmart, an optical components integrated for signal coupling, splitting, termination, multiplexing, demultiplexing, and attenuation for integration within its fiber management platform; and active cabinet products. It also provides CraftSmart FiberFirst pedestals, an access terminal that offers a cable management and mounting bracket kit to support the deployment of access terminals; YOURx, an access terminal that provides flexibility with cable mid-span and internal splicing options; and FieldShield, a fiber pathway and protection method for reducing the cost of broadband deployment. In addition, the company offers fiber assemblies; fiber optic and copper cables, microducts, microduct accessories, and tools; and installation and connection accessories for fiber optic networks. It serves community broadband customers, multiple system operators, large regional service providers, and wireline/wireless national telco carriers. The company was formerly known as APA Enterprises, Inc. and changed its name to Clearfield, Inc. in January 2008. Clearfield, Inc. was incorpoarted in 1979 and is headquartered in Minneapolis, Minnesota.

Clearfield Q2 2025 Earnings Call Transcript

Key Takeaways

• Clearfield delivered a 28% year-over-year increase in Q2 net sales to $47.2 million, with the Clearfield segment up 47% and net income per share of $0.09 both above guidance.
• The company’s supply chain diversification—including dual sourcing across U.S. and Mexico, relocating Nestor cable production to the U.S. and adding global manufacturing sites—has kept product availability stable amid evolving tariffs, which it does not expect to materially impact results.
• Clearfield sees the BEAD program as a long-term growth catalyst, expecting it to drive meaningful revenue in fiscal 2026, while the eACAM program should boost near-term build activity and overall network expansion.
• The FieldSmart FiberFlex 600 active cabinet earned recognition in Lightwave’s 2025 BTR Innovation Reviews (optical category), validating Clearfield’s focus on flexible, scalable fiber solutions.
• Management reiterated its fiscal 2025 guidance of $170 million to $185 million in net sales, expects Clearfield-segment growth to match or exceed industry forecasts, and projects Q3 net sales of $45 million to $50 million with EPS of $0.01 to $0.08.

Presentation

[Operator]

day and welcome to the Clearfield Fiscal Second Quarter twenty twenty five Conference Call. All participants will be in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Greg McNiff, Investor Relations for Clearfield.

[Operator]

Please go ahead.

[Gregory McNiff, Managing Director at The Blueshirt Group]

Thank you. Joining me on today's call are Sherry Baronek, Clearfield's President and CEO and Dan Herzog, Clearfield's CFO. As a reminder, Clearfield publishes a quarterly shareholder letter, which provides an overview of the company's financial results, operational highlights and future outlook. You can find both the shareholder letter and the earnings release on Clearfield's Investor Relations website. After brief prepared remarks, we will open the floor for a question and answer session.

[Gregory McNiff, Managing Director at The Blueshirt Group]

Please note that during this call, management will be making remarks regarding future events and the future financial performance of the company. These remarks constitute forward looking statements for purposes of the Safe Harbor provisions of the Private Securities Litigation Reform Act. These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward looking statements. It is important to also note that the company undertakes no obligation to update such statements, except as required by law. The company cautions you to consider risk factors that could cause actual results to differ materially from those in the forward looking statements contained in today's press release, shareholder letter and on this conference call.

[Gregory McNiff, Managing Director at The Blueshirt Group]

The Risk Factors section in Clearfield's most recent Form 10 ks filing with the Securities and Exchange Commission and its subsequent filings on Form 10 Q provide a description of these risks. With that, I would like to turn the call over to Clearfield's President and CEO, Sherri Baranek. Sherri?

[Cheri Beranek, President & CEO at Clearfield]

Good afternoon, everyone, and thank you for joining us today to discuss Clearfield's second quarter results. We are happy to report a profitable second quarter of fiscal twenty twenty five. I will start by discussing the macro outlook followed by some commentary on the industry and then turn it over to Dan for a summary of our performance and outlook. For more detailed information, please refer to our shareholder letter posted on the IR section of our website. We reported second quarter fiscal twenty twenty five net sales of $47,200,000 an increase of 28% over last year and above our guidance range, highlighted by net sales in our Clearfield segment, which increased 47% year over year.

[Cheri Beranek, President & CEO at Clearfield]

Likewise, our net income per share of $09 was above our guidance range and significantly improved from a year ago period. Consistent with previous quarters, we view our second quarter performance as another step closer to returning to a normalized level of growth for Clearfield. I now want to address the evolving tariff dynamic. As we've highlighted previously, all of Clearfield's products manufactured in Mexico are exempt from current tariffs as they are covered under The United States Mexico Canada agreement. We purposely designed our U.

[Cheri Beranek, President & CEO at Clearfield]

S. And Mexican manufacturing facilities to support dual sourcing, cost optimization and supply chain resilience, and our Nestor business has enabled us to relocate our cable production from Europe to The U. S. As well. Additionally, we are shifting the production of our affected components to multiple manufacturing sites across the globe.

[Cheri Beranek, President & CEO at Clearfield]

Our proactive diversification of our supply chain has allowed us to maintain stable product availability even as trade policies fluctuate. Regarding Asian sourced products in particular, we maintain strong supplier relationships across Asia and have additional sources in place globally to ensure continued product availability. However, while we do anticipate increased costs as a result of the recent tariff policies, we continue to implement tactics to address these impacts and to understand how potential increases in selling prices could impact demand from our customers. We do not believe the evolving tariff situation as currently known will materially affect our operating results. Turning to the industry, we continue to view the Bead program as a meaningful long term growth catalyst, particularly for community broadband and tier three service providers.

[Cheri Beranek, President & CEO at Clearfield]

Although funding has faced administrative delays and regulatory uncertainty, we remain confident in the program's direction. Despite political shifts and increased discussion around technology neutrality, we believe the majority of Bead funding will ultimately support fiber based infrastructure. As such, we expect that Bead will begin to contribute materially to Clearfield's revenue in fiscal twenty twenty six. As for near term growth catalysts, we expect the Enhanced Alternative Connect America Cost Model or eACAM program to contribute meaningfully in the upcoming build season. While EACAM and Bead funding cannot be applied to the same service addresses, providers can leverage both programs across different areas of their networks, enabling broader and more efficient network expansion.

[Cheri Beranek, President & CEO at Clearfield]

Because the Bead and EACAM government programs combined with a return to a more normal ordering pattern for the overall industry, we believe Clearfield is well positioned to benefit from these opportunities. Finally, I'd like to highlight an important achievement in the quarter. Our FieldSmart FiberFlex 600 active cabinet has been recognized among the best in the industry by the twenty twenty five LiteDrive BTR innovation reviews in the optical category. This award further validates our approach to providing flexible, scalable solutions that empower our customers to deploy networks efficiently and effectively. As we continue positioning the company to capitalize on current opportunities, we remain focused on identifying the next catalyst for growth.

[Cheri Beranek, President & CEO at Clearfield]

I look forward to updating you on these opportunities later in the year. I'd now like to turn the call over to our CFO, Dan Herzog, who will provide an overview of our financial results for the second quarter fiscal twenty twenty five as well as to share our outlook for the remainder of the fiscal year.

[Daniel Herzog, Chief Financial Officer at Clearfield]

Thank you, Sherry, and good afternoon, everyone. I will now review our second quarter results, beginning with sales. Consolidated net sales in the first quarter of fiscal twenty twenty five were $47,200,000 a 28% increase from $36,900,000 in the prior year second quarter and above our guidance range of $37,000,000 to $40,000,000 This figure includes $40,600,000 of Clearfield segment net sales, up 47% year over year and $6,600,000 of NESTER segment net sales, down 30% year over year. Our outperformance this quarter was driven by strong customer demand across all our Clearfield segment end markets and solid execution as we converted quoting activity into revenue at a faster pace and higher rate than anticipated. Once again, our strong bottom line performance and continued gross margin improvements were primarily driven by lower year over year excess inventory reserve costs led by improved utilization as well as increased overhead absorption due to increased volumes at our Clearfield facilities.

[Daniel Herzog, Chief Financial Officer at Clearfield]

We are pleased with the progress our Nester segment is making with the production of Microduct at our new facility in Estonia as we continue to rightsize the cost structure for the business. We remain focused on improving our European operations by prioritizing higher gross margin solutions. Based upon these trends, we are reiterating our fiscal twenty twenty five outlook of net sales in the range of $170,000,000 to $185,000,000 As Sherry noted, we anticipate annual revenue growth for the Clearfield segment to be in line or above industry forecasts, while we expect annual revenue from our Nestor segment for fiscal twenty twenty five to fall slightly year over year as we focus on improving margins. For our third fiscal quarter of twenty twenty five, we anticipate net sales in the range of $45,000,000 to $50,000,000 and net income per share in the range of $01 to $08 The net income per share range is based on the number of shares outstanding at the end of the second quarter and does not reflect potential share repurchases completed in the third quarter. Our guidance reflects the evolving tariff situation as currently known, which we do not believe will materially affect our operating results.

[Daniel Herzog, Chief Financial Officer at Clearfield]

And with that, we will open the call to your questions.

[Operator]

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue.

[Operator]

For participants using speaker equipment, Our first question comes from Ryan Koons with Needham and Company. Please proceed with your question.

[Ryan Koontz, Senior Analyst at Needham & Company]

Great. Thanks for the questions. Congrats on a great quarter there. Sherry, on the product mix, can you comment on that? I know you've been very, very strong in the last several quarters on subscriber adds.

[Ryan Koontz, Senior Analyst at Needham & Company]

Can you update us on how new passings were in your first quarter and how maybe they are off to your start of your, the June?

[Cheri Beranek, President & CEO at Clearfield]

Right. Well, I mean, quarter now ending in March, we had a really, a strong continuation of products being purchased for the connection of homes and then expanding upon that reignited growth in products for connecting homes. There had been previously some level of surplus fiber distribution hubs or cabinets you know in the marketplace, those are gone and now our sales of cabinets are you know are resuming. I think moving forward what we're going to see now especially over the course of the summer when there is more focus on the connected home which is more labor intensive, that we'll continue to see an increase in the number of homes connected using clear field equipment.

[Ryan Koontz, Senior Analyst at Needham & Company]

Got it. And how is traction, coming along on your new connected home, products there?

[Cheri Beranek, President & CEO at Clearfield]

Really thrilled with where we're at with the hybrid, with the home deployment kits. You know, one of the things that we do is really always a focus on labor, always a focus on craft friendly solutions and the home deployment kits take all of the equipment that is necessary for turning up the home, put it in one package and then which is different from anyone else in the marketplace and then we use those solutions to very which take one, you know, a whole person out of the equation. We can pull up a house with one person rather than two. So you'll see a lot of highlight about the home distribution kits in the summer trade shows and the like, you'll see a lot of it on our trucks that are coming across the country to demo our products And you'll see a lot of that equipment in our customers' trucks that are out there connecting homes.

[Ryan Koontz, Senior Analyst at Needham & Company]

Great. Thanks. And really strong bounce back from your regionals there in the quarter. Nice to see. Roughly, how is that diversification within that category?

[Ryan Koontz, Senior Analyst at Needham & Company]

Or, you know, roughly how many customers are contributing materially to that number in in regionals?

[Cheri Beranek, President & CEO at Clearfield]

Large regionals, there's a there's a half a dozen of companies that are involved but there was one customer that did pull forward about $3,000,000 worth of business into this quarter. And so always thrilled to be able to do ongoing business with the large regionals and being in a good place for their builds. But you will see in the queue when it's filed that there will, that we have one large region will become a 10% customer.

[Ryan Koontz, Senior Analyst at Needham & Company]

Okay, great. And Dan on the gross margin there, you talked about lower E and O reserve. Did you end up crediting back some of that E and O reserve in the quarter or you're just saying it was less of a reserve?

[Daniel Herzog, Chief Financial Officer at Clearfield]

It was less of a reserve. I think last year's quarter we had about close to $5,000,000 or $4,900,000 This year we ended up with, or this quarter we ended up with roughly around $400 and of but we did reverse about $500,000 of tailwinds of recovery. So continue to see strong that's what we talk about when we say utilization. It's kind of like prepaid inventory and it works really well for us, reducing that with the higher demand.

[Ryan Koontz, Senior Analyst at Needham & Company]

Sure. Great. And then lastly, you talked about Nestor, maybe making some changes there. Can you unpack a little bit in terms of your cost reduction approach or what you're thinking for that business?

[Cheri Beranek, President & CEO at Clearfield]

We're continuing to expand the product mix and the new products that are being produced there are predominantly being produced in Estonia. So we'll continue the business that we're doing in Finland and the development of cables, but our higher gross margin solutions are predominantly coming out of the Estonia plant and that plant you know was just finished you know building that plant it's really optimized for diversification, really optimized for flexibility of product mix and so you know being able to bring new products to market that are in that higher margin category will really help us and get the products closer to the European continent because we could ship them out of Estonia, more quickly than we can out of Finland.

[Ryan Koontz, Senior Analyst at Needham & Company]

Yeah, super. I'll pass it on. Thank you.

[Cheri Beranek, President & CEO at Clearfield]

Thank you so much.

[Operator]

There are no further questions at this time. At this point, I'd like to turn the call back over to Sherry Baronek for closing comments.

[Cheri Beranek, President & CEO at Clearfield]

Thanks so much. Unfortunately, for those of you who may be on the call, we've identified that there are a lot of calls from a lot of public companies going on at this point in time. So unfortunately the rest of our analyst community was not able to join us today. But know that we will be speaking to each of our analysts later this evening when they are available so that they can put their reports out tomorrow morning. So for those of you who receive your reports from the analysts, know that we will have a chance to speak with each of them this evening.

[Cheri Beranek, President & CEO at Clearfield]

We are thrilled with where we see the market recovering. Our especially within the Clearfield segment is one in which demand is there, we're seeing it both in our connected home and in our past home and excited about new trade shows and new products that you're going to see launched moving forward. We believe that the U shaped recovery is underway and we look forward to a lot of great business moving forward. Until next quarter, please be careful, be nice to each other and we'll talk soon.

[Operator]

Thanks. This concludes today's conference. You may disconnect your lines at this time and we thank you for your participation.

Participants

Executives

• Cheri Beranek, President & CEO
• Daniel Herzog, Chief Financial Officer

Analysts

• Gregory McNiff, Managing Director at The Blueshirt Group
• Ryan Koontz, Senior Analyst at Needham & Company