Clearfield, Inc. · NASDAQ:CLFD
Clearfield — Q3 2017 Earnings Presentation
19 slides from Clearfield's earnings presentation, Jul 27, 2017
Slide 1: Fiscal Third Quarter 2017 FieldReport Welcome
Hello, this is Cheri Beranek, President and CEO of Clearfield. Welcome to our fiscal third quarter 2017 FieldReport. Before we begin today, I’d like to provide some important cautions regarding forward - looking statements made during today’s presentation.
Slide 2: Important Cautions Regarding Forward-Looking Statements
Certain important factors could have a material impact on the Company's performance, including those set forth in the slide entitled “Important Cautions Regarding Forward - Looking Statements,” as well as the factors set forth in Clearfield's Annual Report on Form 10 - K for the fiscal year ended Se
Slide 3: Q3 results below expectations amid customer volatility
The results for this fiscal third quarter are lower than our expectations, driven primarily by volatility within several significant customers. While third quarter revenue is disappointing, we are pleased with the overall progress we’re seeing in the business as a whole, especially at the national c
Slide 4: Traditional business growth and market noise
Clearfield’s traditional business year - to - date has grown 9% compared to the same year - ago period. Much of this underlying business is performing according to plan. However, the market we serve continues to experience a lot of noise. In our last FieldReport, we talked about how this noise manif
Slide 5: Phase 2 growth targeting national carriers
As some of you might know, our initiative to target the national carriers is still a rather new one as it has only been a primary focus of ours for the past two years. Internally, we’ve been referring to this time period as the beginning stages of “Phase 2” in Clearfield’s growth trajectory, with “P
Slide 6: Financial results in more detail
Thank you, Cheri. Now, looking at our financial results in more detail…
Slide 7: Third quarter revenue decreased 9% to $19.6 million
Our revenue in the third quarter of fiscal 2017 decreased 9% to $19.6 million from $21.6 million during the same year - ago period. The decrease was driven primarily by lower sales to our alternative carrier, wireless and cable TV customers. If you remove the impact from the alternative carrier busi
Slide 8: Gross profit decreased 15% to $7.9 million
Gross profit for the fiscal third quarter of 2017 decreased 15% to $7.9 million, or 40.5% of total revenue. This compares to $9.3 million, or 43.2% of total revenue, in the same year - ago period. The decrease in gross profit was primarily due to lower volume. The decrease in gross profit percent wa
Slide 9: Operating expenses of $6.6 million
Our operating expenses for fiscal Q3 were $6.6 million, which was up 13% from the same year - ago quarter. The increase was due in part to additional personnel to support our sales and operational expansion, enhancements to our current product line - up, as well as increased spending on certificatio
Slide 10: Net income of $803,000, or $0.06 per diluted share
Our net income for the fiscal third quarter was $803,000, or $0.06 per diluted share. This compares to $2.4 million, or $0.17 per diluted share in the same year - ago quarter. Turning now to our balance sheet…
Slide 11: Cash and investments of $42.6 million; share repurchases
During the fiscal third quarter, our cash and investments were $42.6 million, which was consistent with the prior quarter. In line with our commitment to allocate capital effectively and in the best interests of our shareholders, we repurchased a total of 164,842 shares during the quarter under our
Slide 12: Operational Update and Outlook
Operational Update and Outlook Kk Cheri Beranel President & CEO Thanks, Dan,
Slide 13: Tier 1 market traction and revenue growth
Building off my earlier comments, we’ve experienced a significant amount of traction at the Tier 1 level so far, especially during fiscal 2017. Year - to - date, revenue from this market has tripled to a record $5.2 million from $1.7 million in the same period a year ago, and nearly doubled from $2.
Slide 14: Fiber industry developments and 5G
Turning now to some of the developments we see unfolding in the fiber industry… There’s been a lot of excitement, speculation, and even fear surrounding the arrival of 5G and how it may impact our business. We’ve mentioned before that wireless broadband, especially 5G, requires significant fiber and
Slide 15: Revised fiscal 2017 revenue guidance
Taking all of this together, we believe we’re in a prime position to take advantage of an industry that is just beginning to flourish. Yet, as our results for the quarter — and even historically — suggest, it’s hardly a perfect straight - line growth trajectory, because of the unpredictable capex -
Slide 16: Transition to Q&A session
And with that, I’d like to transition to the Q&A session of the FieldReport. Over the last couple of weeks, we have received several questions from analysts, investors, and thought leaders in the investment community. Dan and I will now take the time to answer a few of those questions. Dan?
Slide 17: Q&A: Mexico capacity and gross margin
Thank you, Cheri. Our first question is what does the additional capacity in Mexico mean to Clearfield’s overall capacity, and can we expect gross margin gains? You know, Dan, Clearfield’s dedicated to establishing a best - cost manufacturing environment as well as the maintenance of our nimble - re
Slide 18: Q&A: Certification programs and fiscal 2018 guidance
Alright. The next question is how are the certification programs moving forward, and what has been the effect of the NEBS certification? Certification is meant to allow companies to compete for business on a level playing field; it does not guarantee the order, but NEBS certification has certainly s
Slide 19: Closing and investor relations contact
This wraps up today’s FieldReport. If your question was not addressed during the Q&A session or you would like to submit another question, please email Clearfield’s investor relations at CLFD@Liolios.com . We will post the most relevant questions and answers in the ‘For Investors’ section of our web