Slide 1: Clearfield Earnings Presentation: Fiscal Q2 2023 Earnings Call
Clearfield Earnings Presentation: Fiscal Q2 2023 Earnings Call May 4, 2023 1 1
Slide 2: Important Cautions Regarding Forward-Looking Statements
Important Cautions Regarding Forward - Looking Statements Forward - looking statements contained herein and in any related presentation or in the related Earnings Release are made pursuant to the safe harbor provisions of the Private Litigation Reform Act of 1995. Words such as “may,” “will,” “expec
Slide 3: Introduction & Highlights
3 Introduction & Highlights Good afternoon everyone, and thank you for joining us today to discuss Clearfield’s results for the second quarter of fiscal 2023. We will also provide an update on our business and current market trends. Before I review our performance and current market dynamics, I want
Slide 4: Our Mission and What We Do
OUR MISSION: Enabling the lifestyle better broadband provides WHAT WE DO: Clearfield provides fiber protection, fiber management and fiber delivery solutions that enable rapid and cost - effective fiber - fed deployment throughout the broadband service provider space 4 As we discussed on our previou
Slide 5: Modular and Scalable Products
Modular and Scalable Products x SeeChange Ρ and Clearview® Cassette 5 First, we continue to design our product line to be craft - friendly in the field, reducing both the amount of necessary skilled labor needed for installation and the level of skill required to install our hardware. As illustrated
Slide 6: Why We Win: Optimized Price Performance and Technical Expertise
Providing Optimized Price Performance and Deep Technical Expertise Why We Win x Singularly Focused on Serving the Fiber Market x Attractive Total Cost of Ownership through Reduced Installation Cost and Maintenance Time x Our Testing Shows FastPass TM Approach Cuts Install Time Required for Homes Pas
Slide 7: Fiber Deployment Shift Is Occurring in 2023
Fiber Deployment shift is occurring in 2023 Source: RVA, February 2023 Millions 7 FTTH Homes Marketed U.S. Cumulative 70 60 50 40 30 20 10 0 FY19 FY20 FY21 FY22 FY23 * FY24 * FY25 * FY26 * Tel - ILEC Tier 1 Other Service Providers * Projected Thank you, Cheri. It’s great to be joining all of you thi
Slide 8: Financial Performance
8 Financial Performance Thank you, Kevin, and good afternoon, everyone. Please turn to slide 9 to look at our fiscal second quarter 2023 results in more detail… 8
Slide 9: Quarterly Revenue
$53 $71 $88 $78 $61 $20 $10 $ - $30 $40 $70 $60 $50 $80 $90 $100 FINANCIAL PERFORMANCE Quarterly Revenue 34% Q2 2023 Growth Rate YOY $72M Q2 2023 Revenue 9 $95 $86 $72 Q2 22 Q3 22 Q4 22 * Q1 23 * Q2 23 * Clearfield Organic Nestor Cables *Includes contribution from subsidiary Nestor Cables, which was
Slide 10: Q2 FY23 Net Sales Comparison by Market
Q2 FY23 Net Sales Comparison by Market All dollar figures in millions 1) Based on net sales of $72 million for Clearfield (including an $11M contribution from Nestor Cables within our international market) and Point of Sales (POS) reporting from distributors who resell our product line into these ma
Slide 11: Q2 FY23 Net Sales Comparison by Market
$8 $28 $10 $51 $10 $63 $35 $3 $3 $61 National Carrier FQ2 22 FQ2 23 $7 $1 $15 $2 $2 $10 $13 $1 $1 $12 National Carrier MSO International Legacy Large Regional Q2 FY23 Net Sales Comparison by Market Quarterly Net Sales FQ2 22 FQ2 23 TTM Net Sales MSO International Legacy Large Regional All dollar fig
Slide 12: Quarterly Gross Profit and Margin
Quarterly Gross Profit and Margin $29.3 $37.5 $30.6 $23.6 0% 5% 10% 30% 35% 40% 45% 50% $ - $5.0 $10.0 $15.0 20% 15% $20.0 25% $25.0 $23.2 $30.0 $35.0 $40.0 FINANCIAL PERFORMANCE 12 Gross profit levels have declined due to the unused capacity at our Mexico facility and Nestor Cables as a higher perc
Slide 13: Quarterly Operating Expenses
$11.2 $12.7 $12.8 $11.5 0% 5% 10% 15% 20% $2.0 $0.0 $6.0 $4.0 $10.0 $8.0 $12.0 $14.0 $18.0 25% $16.0 $15.3 FINANCIAL PERFORMANCE 5 Percentage Points YOY Decrease in Operating Expenses as a percent of Net Sales 13 Quarterly Operating Expenses Q2 22 Q3 22 Q4 22 * Q1 23 * Q2 23 * Operating Expenses in
Slide 14: Quarterly Net Income
$9.2 $12.7 $17.0 $14.3 5% 10% 15% 25% 30% $2.0 $4.0 $8.0 $6.0 $10.0 $12.0 20% $10.4 $14.0 $16.0 $18.0 Net Income $ Q1 23 * Q2 23 * Net Margin (%) $ - 0% Q2 22 Q3 22 Q4 22 * $10.4M Q2 2023 Net Income 14% Q2 2023 Percent of Net Sales 14 FINANCIAL PERFORMANCE Quarterly Net Income *Includes contribution
Slide 15: Balance Sheet
FINANCIAL PERFORMANCE Balance Sheet x $166 million of cash, short - term and long - term investments x $2 million of debt x Raised $130 million in net proceeds in December 2022 secondary offering for working capital and general corporate purposes 15 15 As illustrated on slide 15, our balance sheet r
Slide 16: Business Update & Outlook
16 Business Update & Outlook As Cheri noted, we now expect revenue for the full year to be in the range of $260 to $275 million. Additionally, we now expect net income per diluted share to be in the range of $1.80 to $2.10 per share. With the capital raise we undertook last year, we plan to continue
Slide 17: LEAP Multiyear Strategic Plan Update
x Launched SeeChange Ρ • Reduces customer deployment times and labor costs x Rightsizing capacity • Optimizes cost structure to navigate current market dynamics x Strengthening supply chain • Reduces lead times x Pursuing cross - selling opportunities with Nestor Cables • Increases revenue potential
Slide 18: Tremendous Market Across Rural Broadband
$12.5B+ Estimated US FTTH Market ~$200B Cumulative 5G Cycle Spend by 2035 ~55M Committed Fiber Homes Passed By 2030 Allocated For Broadband Under Biden Infrastructure Package $100B Annual Broadband Infrastructure Subsidies Over Next 3 Years $10B+ Target Broadband Coverage By 2030 Under Biden Adminis
Slide 19: Long-term Catalysts
Long - term Catalysts x Government Funding for unserved and underserved communities x European Expansion x 5G: Wireless and Wireline Integration x Cloud, Edge and IoT Architecture 19 In addition to the significant demand generated by the government funding outlays, we are preparing for several large
Slide 20: Financial Outlook
FY19 Actual FY20 Actual FY21 Actual FY22 Actual FY23 Forecast $85 $93 $141 $271 $260 to $275 FY 2023 net sales guidance issued and effective as of May 4, 2023. Growth rate is based on midpoint of net sales guidance range and includes contribution from subsidiary Nestor Cables . FY 2023 net income pe
Slide 21: Q&A
Cheri Beranek PRESIDENT & CEO Dan Herzog CHIEF FINANCIAL OFFICER Q&A 21 Kevin Morgan CHIEF MARKETING OFFICER Thank you. We will now begin the question - and - answer session. Our first question comes from Ryan Koontz with Needham. Please go ahead. Ryan Koontz Needham & Company, LLC Hi, thanks for th
Slide 22: Q&A
Cheri Beranek PRESIDENT & CEO Q&A 22 Dan Herzog Kevin Morgan CHIEF FINANCIAL OFFICER CHIEF MARKETING OFFICER Cheri Beranek President and CEO The EMEA with Community Broadband and comparison to the Regional Service Providers, is a little less inventory intense. There's some pockets out there, but mos
Slide 23: Q&A
Cheri Beranek PRESIDENT & CEO Dan Herzog CHIEF FINANCIAL OFFICER Q&A 23 Kevin Morgan CHIEF MARKETING OFFICER Operator Our next question comes from Jaeson Schmidt with Lake Street please go ahead. Max Michaelis Lake Street Capital Markets,LLC Hey guys, this is Max on for Jaeson. Just in terms of the
Slide 24: Q&A
Cheri Beranek PRESIDENT & CEO Dan Herzog CHIEF FINANCIAL OFFICER Q&A 24 Kevin Morgan CHIEF MARKETING OFFICER Operator Our next question comes from Tim Savageaux with Northland Capital Markets. Please go ahead. Tim Savageaux Northland Capital Markets Hi, good afternoon. A couple of questions. As you
Slide 25: Q&A
Cheri Beranek PRESIDENT & CEO Dan Herzog CHIEF FINANCIAL OFFICER Q&A 25 Kevin Morgan CHIEF MARKETING OFFICER Cheri Beranek President and CEO I mean if we look at the course of Community Broadband as an aggregate, and in second quarter in comparison to the last 12 months. So second quarter is up high
Slide 26: Q&A
Cheri Beranek PRESIDENT & CEO Dan Herzog CHIEF FINANCIAL OFFICER Q&A 26 Kevin Morgan CHIEF MARKETING OFFICER Cheri Beranek President and CEO Yeah, we did mention that it was going to be among the clients were within Regional Service Providers as well as to the more limited basis within the MSOs. So
Slide 27: Q&A
Cheri Beranek PRESIDENT & CEO Dan Herzog CHIEF FINANCIAL OFFICER Q&A 27 Kevin Morgan CHIEF MARKETING OFFICER Tim Savageaux Northland Capital Markets Okay, thanks very much. Last question from me. I mean, historically, kind of pre the big pandemic - driven surge, you had talked about kind of sustaina
Slide 28: Q&A
Cheri Beranek PRESIDENT & CEO Dan Herzog CHIEF FINANCIAL OFFICER Q&A 28 Kevin Morgan CHIEF MARKETING OFFICER Operator Our next question comes from Scott Searle with ROTH. Please go ahead. Scott Searle ROTH Capital Partners, LLC Hey, good afternoon. Thanks for taking my questions. Cheri maybe, just l
Slide 29: Q&A
Cheri Beranek PRESIDENT & CEO Dan Herzog CHIEF FINANCIAL OFFICER Q&A 29 Kevin Morgan CHIEF MARKETING OFFICER Scott Searle ROTH Capital Partners, LLC Right, very helpful. And maybe to follow up. I know, we talked a lot about excess inventory and kind of hitting the pause button and a number of the di
Slide 30: Q&A
Cheri Beranek PRESIDENT & CEO Dan Herzog CHIEF FINANCIAL OFFICER Q&A 30 Kevin Morgan CHIEF MARKETING OFFICER Scott Searle ROTH Capital Partners, LLC Great, very helpful. And lastly, if I could on the gross margin font. Certainly you're going through some absorption issues over the next couple of qua
Slide 31: Q&A
Cheri Beranek PRESIDENT & CEO Dan Herzog CHIEF FINANCIAL OFFICER Q&A 31 Kevin Morgan CHIEF MARKETING OFFICER Cheri Beranek President and CEO So you're right, we have capacity allocations that are being --- overhead allocations that have not been absorbed. We have, on some of the variable costs, we h
Slide 32: Q&A
Cheri Beranek PRESIDENT & CEO Dan Herzog CHIEF FINANCIAL OFFICER Q&A 32 Kevin Morgan CHIEF MARKETING OFFICER Operator Our next question comes from Greg Mesniaeff. Please go ahead. Greg Mesniaeff WestPark Capital Yes, thank you. When you look at the order intake softness across your various customer
Slide 33: Q&A
Cheri Beranek PRESIDENT & CEO Dan Herzog CHIEF FINANCIAL OFFICER Q&A 33 Kevin Morgan CHIEF MARKETING OFFICER Greg Mesniaeff WestPark Capital Okay. And second part of the question is as you as your customer base, moves further upstream to the larger carriers, what kind of if any competitive landscape
Slide 34: Q&A
Cheri Beranek PRESIDENT & CEO Dan Herzog CHIEF FINANCIAL OFFICER Q&A 34 Kevin Morgan CHIEF MARKETING OFFICER Cheri Beranek President and CEO We were very fortunate to be in a position to raise money last winter. And our balance sheet being very strong and has given us that the opportunity to really
Slide 35: Appendix: Net Sales by Market, Trailing 8 Quarters
35 Appendix Q4 22 Q3 22 Q2 22 Q1 22 Q4 21 Q3 21 Net Sales by Market Trailing 8 Quarters Through March 31, 2023 (in thousands) Q2 23 Q1 23 Market 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 $2,929 $3,542 $1,994 $1,462 $2,515 $9,345 $10,204 $13,138 International 6
Slide 36: Contact Us
36 Contact Us COMPANY CONTACT: Cheri Beranek President & CEO Clearfield, Inc. IR@seeclearfield.com INVESTOR RELATIONS: The Blueshirt Group Greg McNiff T: 773 - 485 - 7191 clearfield@blueshirtgroup.com 36