Clearfield Q3 2026 Earnings Results & Report

Clearfield EPS Results

• Actual EPS: $0.22
• Consensus EPS: $0.1925
• Beat/Miss: Beat by +$0.0275
• One Year Ago EPS: N/A
• EPS Beat Rate: 7 of last 8 quarters

Clearfield Revenue Results

• Actual Revenue: $43.86 million
• Expected Revenue: $43.93 million
• Beat/Miss: Missed by -$61.00 thousand
• YoY Revenue Growth: N/A

Clearfield (NASDAQ:CLFD) (NASDAQ: CLFD) develops and manufactures fiber-optic connectivity products used to deploy and manage broadband networks. Its portfolio includes fiber cabinets, terminals, enclosures, splice closures, patch panels, drop products and other components designed to support fiber-to-the-home and other fiber access architectures.

The company’s products are marketed under the Clearfield brand and are intended to simplify network construction, installation and maintenance. Clearfield serves broadband service providers, cable and telecommunications operators, utilities, municipalities, government organizations and other network operators, with a primary focus on fiber infrastructure deployments in North America.

Clearfield traces its roots to 1979 and has evolved from a provider of telecommunications equipment into a specialist in passive fiber connectivity solutions. The company is headquartered in Minneapolis, Minnesota. Cheri Beranek has served as Clearfield’s president and chief executive officer since 2007.

Clearfield Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Data center expansion gained significant traction with a $22 million hyperscale data center order in hand, with shipments expected to begin in early fiscal 2027. Clearfield plans to standardize the customer-developed NOVA panel for the broader market.
• Positive Sentiment: Third-quarter net sales rose 13% year over year to $43.9 million, while diluted EPS increased to $0.22 from $0.16. The company ended the quarter with approximately $155 million in cash and investments and no debt.
• Negative Sentiment: Broadband demand remains constrained by BEAD funding delays, limited U.S. fiber availability, higher deployment costs, and extended project timelines. Management said these pressures reduced bookings and forced it to lower fiscal 2026 revenue guidance to $151 million-$155 million and EPS guidance to $0.14-$0.21.
• Negative Sentiment: A major Community Broadband customer changed its strategy, reducing network construction and canceling or deferring cabinet needs for multiple quarters or years. The change led to a roughly $2.6 million write-off of customer-specific inventory.
• Negative Sentiment: Third-quarter gross margin declined to 31.8% from 35.3% a year earlier, partly due to one-time items that reduced margin by approximately 1.8 percentage points. Fourth-quarter guidance calls for revenue of $38 million-$42 million and diluted EPS between break-even and $0.07.

Presentation

[Operator]

Good afternoon, everyone. Welcome to the Clearfield Fiscal Third Quarter 2026 conference call. All participants will be in listen-only mode. Should you need any assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. At this time, I'd like to turn the floor over to Greg McNiff, Investor Relations. Sir, please go ahead.

[Greg McNiff, Investor Relations at Clearfield]

Thank you. Joining me on today's call are Cheri Beranek, Clearfield's President and CEO, and Dan Herzog, Clearfield 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. 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.

[Greg McNiff, Investor Relations at Clearfield]

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. The Risk Factors section in Clearfield's most recent Form 10-K filing with the Securities and Exchange Commission and its subsequent filings on Form 10-Q provide a description of these risks. With that, I will turn the call over to Cheri. Cheri?

[Cheri Beranek, President and CEO at Clearfield]

Good afternoon, everyone. Thank you for joining us to discuss Clearfield's results for the third quarter of fiscal 2026. I'll begin with an overview of the quarter and our strategic priorities. Then I'll turn the call over to Dan to review the financial details and outlook. Third quarter net sales were $43.9 million, gross margin was 31.8%, and net income per diluted share from continuing operations was $0.22. Our results reflect continued progress executing on our strategic priorities while reinforcing the strengths that have defined Clearfield. We are increasingly focused on positioning the company for its next phase of growth as a strategic digital infrastructure connectivity provider within the data center marketplace. That progress was highlighted shortly after the close of the third quarter when we received our first significant order to support a hyperscale data center project, accelerating our expansion into the data center connectivity market.

[Cheri Beranek, President and CEO at Clearfield]

The initial purchase order totals approximately $22 million, which we expect to begin shipments in early fiscal 2027. Equally important was how this opportunity developed. We became involved early in the design process, working collaboratively to develop a connectivity solution tailored to the end user's deployment requirements. That collaboration led to an expansion of our NOVA platform with the addition of a new panel developed in conjunction with the customer, which we intend to standardize and introduce to the broader data center market later this calendar year. This approach reflects the same design principles that have differentiated Clearfield for years in broadband deployments. As demand for high-density fiber infrastructure continues to grow, we believe our expertise in delivering modular, labor-efficient connectivity solutions positions us well to actively engage in this expanding market.

[Cheri Beranek, President and CEO at Clearfield]

While it is too early to predict the size or timing of future opportunities, this initial engagement demonstrates that our strategy is resonating with customers and broadening our addressable market. We believe it represents an important step toward creating long-term shareholder value. Turning to the broadband market, the slow pace of the BEAD program continues to influence customer planning decisions across the broadband industry. While states have made meaningful progress developing deployment plans, continued delays in federal approvals and funding disbursements are affecting both BEAD-funded and other commercial projects. These headwinds, combined with higher deployment, labor, and material costs, as well as the constraint of limited fiber availability, have resulted in a slower deployment environment and extended project timelines across much of the industry. The impact of the slower broadband deployment environment is reflected in our bookings for the quarter ended June 30, 2026.

[Cheri Beranek, President and CEO at Clearfield]

Despite these near-term dynamics, we continue to believe the long-term opportunity for fiber deployment remains intact. While the timing of broadband deployments remains uncertain, we continue to invest in technologies that solve our customers' challenges. As broadband, wireless, data center, and edge computing networks continue to expand, customers increasingly look for ways to make deployments faster, simpler, and more efficient. One example of our new technology offerings is our recently announced Fault Managed Power portfolio, which enables customers to deliver both fiber connectivity and power to difficult-to-reach locations through a single, coordinated solution. By bringing fiber and power together, customers can reduce deployment complexity and create a more flexible foundation for future network growth. We believe this offering expands the role Clearfield can play in supporting our customers as their network needs continue to evolve.

[Cheri Beranek, President and CEO at Clearfield]

With that, I'll turn the call over to Dan to review our financials and outlook in more detail.

[Dan Herzog, CFO at Clearfield]

Thank you, Cheri, and good afternoon, everyone. As a reminder, in November, we completed the sale of our Nestor Cables business. As a result, all financial results presented for fiscal year 2025 and all prior periods reflect the Clearfield segment as continuing operations only, with Nestor results reported under discontinued operations in our statement of earnings and statement of cash flows, and reported as assets and liabilities held for sale in our balance sheet. Third quarter net sales were $43.9 million, an increase of 13% from $38.8 million in the third quarter of fiscal 2025. The increase was driven by higher revenue across the majority of our customer markets. Revenue also increased 28% sequentially, reflecting the seasonal nature of our business.

[Dan Herzog, CFO at Clearfield]

Gross profit margin for the third quarter of fiscal 2026 was 31.8%, compared to 35.3% in the third quarter of fiscal 2025 and 32.5% in the second quarter of fiscal 2026. Our gross margin reflected several one-time items during the quarter that, on a net basis, reduced gross margin by approximately 1.8 percentage points. Operating expenses from continuing operations for the third quarter of fiscal 2026 decreased 6% to $11.4 million, or 25.9% of net sales, compared to $12.1 million, or 31.3% of net sales in the third quarter of fiscal 2025. Operating expenses also decreased 14%, or $1.8 million from $13.2 million in the second quarter of fiscal 2026. Net income in the third quarter of fiscal 2026 was $3 million, or $0.22 per diluted share, compared to net income of $2.3 million or $0.16 per diluted share in the third quarter of fiscal 2025.

[Dan Herzog, CFO at Clearfield]

This compares to a net loss of $500,000 or $0.04 per diluted share in the second quarter of fiscal 2026. We ended the quarter with approximately $155 million in cash, short-term and long-term investments, and no debt. During the quarter, we repurchased approximately 31,000 shares for $897,000 as part of our share buyback program. For the fourth quarter of fiscal 2026, we anticipate net sales from continuing operations in the range of $38 million-$42 million, total operating expenses to remain relatively consistent with our second quarter, and net income per diluted share in the range of break even to $0.07. As Cheri mentioned, industry demand constraints are forcing us to reduce our guidance for the full fiscal year 2026.

[Dan Herzog, CFO at Clearfield]

We expect net sales from continuing operations to be in the range of $151 million-$155 million, and net income per share to a range of $0.14-$0.21. With that, we will open the call to your questions.

[Operator]

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Your first question comes from Ryan Koontz from Needham. Please go ahead.

[Ryan Koontz, Senior Research Analyst at Needham]

Great. Thanks. Hi, guys. Wanted to ask about the different customer segments here. Community Broadband had a decent uptick, probably a little less than seasonal in going from March to June. Can you maybe expand on that, some of the trends you saw? Is it because your customers are holding back capital to wait for BEAD matching, or is it because they're just in paralysis, or can we maybe talk about what's happening in the rural territories?

[Cheri Beranek, President and CEO at Clearfield]

Right. Hi, Ryan. Yeah, the Community Broadband marketplace, I think, is principally being affected by two different issues. One is BEAD, and the uncertainty associated with it. As a result, it's affecting not only the BEAD dollars, but other dollars that are-- where do they put their capital? Because they're waiting for BEAD, they can't put their capital into other commercial environments in case BEAD would come into play. It's kind of a double-edged sword in that world. Equally a result is really the lack of fiber in the U.S. We started the year really strong. We saw really strong, excuse me, quoting activity early in the year. We had a really strong backlog as we came into the bookings over the winter months. Then we saw everything kind of take a, "Oh." We got our bookings and our quotings from the environment.

[Cheri Beranek, President and CEO at Clearfield]

The lack of being able to get fiber from U.S.-based manufacturing, where most of the customers are waiting because they want to make sure they've got what's available in their inventory for either direction they might go. While there is fiber activity happening in the market, it's predominantly with the national carriers. That's who's getting the business or getting the fiber in the U.S. You saw that even that, Corning earlier this week, or last week, I guess it was, announced that their total carrier business was up only 1%. You see the lack of fiber.

[Ryan Koontz, Senior Research Analyst at Needham]

Right

[Cheri Beranek, President and CEO at Clearfield]

Is actually not just in the carriers, it's because of the data centers have got all the fiber. It's a frustrating approach in which the demand is there, the market availability to get the fiber to make it happen, just isn't there yet. As a result, the early indicators that we saw in the spring didn't materialize in the summer.

[Ryan Koontz, Senior Research Analyst at Needham]

Right. It sounds like the tier 2 MSOs are a pretty similar story to what you just outlined for Community Broadband?

[Cheri Beranek, President and CEO at Clearfield]

Exactly. They're the same type of customer.

[Ryan Koontz, Senior Research Analyst at Needham]

Yeah

[Cheri Beranek, President and CEO at Clearfield]

They're not issuing $100 million or $1 billion purchase order to Corning. They're looking for $50,000, they're not a strategic account for the big fiber provider. As a result, they're getting second fiddle. They're getting allocations, and those allocations are significantly less than what they started with. We're seeing these projects either being delayed until next year or significantly reduced in size and scope.

[Ryan Koontz, Senior Research Analyst at Needham]

Got it. maybe lastly on the cancellation or decommit you got

[Ryan Koontz, Senior Research Analyst at Needham]

from your customer from backlog, did you mention what segment that was from?

[Cheri Beranek, President and CEO at Clearfield]

It's Community Broadband.

[Ryan Koontz, Senior Research Analyst at Needham]

Letter?

[Cheri Beranek, President and CEO at Clearfield]

Yeah.

[Ryan Koontz, Senior Research Analyst at Needham]

It is Community.

[Cheri Beranek, President and CEO at Clearfield]

It is community.

[Ryan Koontz, Senior Research Analyst at Needham]

A pretty large customer, then.

[Cheri Beranek, President and CEO at Clearfield]

It absolutely was our largest customer in Community Broadband, a long-standing relationship with the customer, and we continue to do business with the customer for other products. A management change within the customer resulted in the standpoint that they focused much more on not building out the network, but instead increasing the amount of subscribers on the network that they had. As a result, the type of product that they were buying from us significantly changed. Unfortunately, as they looked at their design parameters, they indicated to us that they would not be needing cabinets for a number of quarters, up to years, moving forward. Accounting-

[Ryan Koontz, Senior Research Analyst at Needham]

Right

[Cheri Beranek, President and CEO at Clearfield]

regulations require us to be able to make that reversal. We continue to work with our legal team to evaluate what our options are in this scenario.

[Ryan Koontz, Senior Research Analyst at Needham]

Mm-hmm. Got you.

[Cheri Beranek, President and CEO at Clearfield]

I think it's important to note that this

[Ryan Koontz, Senior Research Analyst at Needham]

Sounds like a fairly custom product for them?

[Cheri Beranek, President and CEO at Clearfield]

It was a custom product designed for them. We've worked for 15 years with the customer, so there's, as you saw in the inventory reserve, it did result in about a $2.6 million write-off after we've put into inventory what is standard, but there is a write-off associated with product that is custom or unique to that individual customer. We want to emphasize that this is not a trend, not issues associated with a broader demand line. This is a customer's business model that changed after 15 years of deployment in one direction. We've worked with this customer since the beginning of Clearfield.

[Ryan Koontz, Senior Research Analyst at Needham]

Got it. Great. Then, maybe one last one on some good news. The win for your data center business.

[Cheri Beranek, President and CEO at Clearfield]

Yeah.

[Ryan Koontz, Senior Research Analyst at Needham]

Is this an order you have? Is it in backlog now, or is it an opportunity? Would you describe where you are with this one?

[Cheri Beranek, President and CEO at Clearfield]

No, no, it is an order in hand, in that we wouldn't provide speculation of that type. Order in hand for $22 million. It is part of the first stage of the first building on a campus, for this hyperscale environment. We're really excited to be able to be part of this build and potentially, chosen for an ongoing part of the build as they continue to issue RFPs for the build-out of where they're going. As I signaled, I think last quarter when we talked about the really welcome reception we were receiving in the hyperscale market, I think this order now comes in to validate that strategy. Because of the significance of it, we wouldn't normally discuss simply an order or an individual customer.

[Cheri Beranek, President and CEO at Clearfield]

I think the significance of this pivot and our place in the marketplace is something that we wanted to share with our shareholder community.

[Ryan Koontz, Senior Research Analyst at Needham]

Yeah. Super exciting. It sounds like the use case is still some outside plant in a campus type environment, or can you give us any idea on the use case there?

[Cheri Beranek, President and CEO at Clearfield]

Oh, no. This is in the middle of the data center.

[Ryan Koontz, Senior Research Analyst at Needham]

Okay.

[Cheri Beranek, President and CEO at Clearfield]

We've been part of the central office in the telecom market for 15 years as well. Our ability to What was exciting about this, I think, there's many different things exciting about it, we had a large group of people visit our Clearfield headquarters associated with this opportunity. One of the things that people don't talk about is the Broadband marketplace has a lot of expertise, and that expertise is being pulled into the data center market. So many people in that room had worked with Clearfield before, recognized the scalability and labor savings of our product line, the quality, reliability of the products and the people that we work with, our organization and the customer service and responsiveness that they can expect from us.

[Cheri Beranek, President and CEO at Clearfield]

I think this is a wonderful example of how we can get started and just the opportunities within the data center to come.

[Ryan Koontz, Senior Research Analyst at Needham]

Super. I'll get back in the queue. Nice to hear.

[Cheri Beranek, President and CEO at Clearfield]

Thank you.

[Operator]

Thank you. There are no further questions at this time. I'll now hand back to Cheri Beranek for any closing remarks.

[Cheri Beranek, President and CEO at Clearfield]

Good afternoon, everyone. There are a lot of balls in the air right now for us. While we are disappointed to not meet the guidance for the year within the broadband market, I want to reassure everyone on the call that Clearfield continues to work strongly with our customer base, continues to have a very strong presence within the base of broadband, and I am confident that we are maintaining our share of business within the market. I wanted to also reassure you that this is really an exciting time for us. While we can't predict the future of where we're going in the data center market, we are extremely grateful and appreciative of the response that we received thus far and look forward to speaking with you again in November about our progress in three months. For now, have a great summer, and we'll talk to you soon.

[Operator]

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.

Participants

Executives

• Greg McNiff, Investor Relations
• Cheri Beranek, President and CEO
• Dan Herzog, CFO

Analysts

• Ryan Koontz, Senior Research Analyst at Needham