Clearfield Reports Fiscal Second Quarter 2016 Results

MINNEAPOLIS, April 28, 2016 (GLOBE NEWSWIRE) -- Clearfield, Inc. (NASDAQ:CLFD), the specialist in fiber management and connectivity platforms for communication service providers, reported results for the fiscal second quarter ended March 31, 2016.

Fiscal Q2 2016 Financial Results

Revenue for the second quarter of fiscal 2016 increased 37% to $16.9 million from $12.4 million in the same year-ago quarter. The improvement was primarily due to increased deployments by the company’s wireless, wireline and cable TV customers. The revenue increase was also due to new business generated from expanded sales distribution channels, which was partially offset by lower international sales.

Gross profit increased 53% to $7.3 million, or 43.0% of revenue, from $4.8 million, or 38.4% of revenue, in the second fiscal quarter of 2015. The increase in gross profit and gross margin for the quarter was due to increased volume over the prior quarter, as well as a higher percentage of sales associated with optical component technologies, which typically have higher margins.

Operating expenses were $5.1 million, an increase of 20% compared to $4.3 million in the same year-ago quarter. The increase was due to additional personnel supporting sales and operational expansion.

Pre-tax income increased 347% to $2.2 million from $0.5 million in the same year-ago quarter. 

Net income increased 398% to $1.4 million or $0.11 per diluted share from $0.3 million or $0.02 per diluted share in the same year-ago quarter.

During the quarter ended March 31, 2016, cash, cash equivalents and investments increased 1% to $36.7 million from $36.2 million at the end of the prior quarter. The Company had no debt at quarter end. 

Order backlog (defined as purchase orders received but not yet fulfilled) at March 31, 2016 increased 143% to $8.2 million from $3.4 million at December 31, 2015, and increased 156% from $3.2 million compared to March 31, 2015.

Fiscal Six Month 2016 Financial Results
Revenue increased 24% to $32.6 million for the six month period ending March 31, 2016 from $26.4 million during the same period in fiscal 2015.

Gross profit was $14.0 million, or 42.8% of revenue, for the six month period ending March 31, 2016, an increase of 33% from $10.5 million, 39.8% of revenue, during the same period in fiscal 2015.

Operating expenses increased 17% to $9.8 million for the six month period ending March 31, 2016 from $8.4 during the same period in fiscal 2015.

Pre-tax income totaled $4.2 million for the six month period ending March 31, 2016 compared to $2.1 million during the same period in fiscal 2015.

Net income totaled $2.8 million or $0.21 per diluted share for the six month period ending March 31, 2016, an increase of 108% from $1.4 million or $0.10 per diluted share during the same period in fiscal 2015.

Management Commentary
“Building on the strong momentum we established in the fiscal first quarter, Q2 marked another pivotal period in our company’s history,” said Clearfield CEO, Cheri Beranek. “Apart from our continued success in solidifying our market share in the wireline fiber-to-the-home community, sales and backlog booked demonstrate our penetration of the wireless and cable (MSO) markets.

“Over the last six months, we have taken significant strides toward achieving the key growth initiatives we laid out in the beginning of fiscal 2016. We have bolstered our presence at large service providers through the expansion of our management team and testing investments. Concurrent with our standard third-party Telcordia testing, which we have discussed previously, we were invited by a Tier 1 group to build an in-house test facility. This investment, while under the supervision of Telcordia, will allow us to rapidly respond to customer test requests on a broader product suite. In addition, we recently hired a regional sales manager for the Mexican market, enriching our international sales resources with a focus on expanding our customer base and orders pipeline.

“These achievements have largely translated into the positive financial results we generated during the quarter and first half of fiscal 2016. Revenue and gross profit both saw a healthy increase from where they were a year ago, demonstrating how our unique business model is built to scale. Gross margins, as well, were better than we anticipated, indicating the growing demand for our optical components packaging business. We believe this key area of our business will enable us to retain existing customers, as well as secure new ones who rely on Clearfield’s expertise in packaging and pre-connecting these optical components for demanding environments.

“At this time, we believe it is appropriate to raise our previous revenue guidance of 10%+ to a 15%+ growth rate for the full year. As we demonstrate Clearfield’s reach as a “Fiber Anywhere” provider, we believe that our success in the wireline, wireless, and cable TV market will enable us to achieve an approximate growth rate of 15% for the second half of 2016. Due to the project nature of our business as well as industry catalysts beyond our control, we are maintaining our current guidance for fiscal 2017 revenue growth of 15%+, but will continue to monitor our long-term opportunities.

“Overall, we are encouraged by our financial performance and operational progress thus far, but by no means are we resting on our laurels. Significant opportunities to enhance our business are constantly on the rise and we are taking proactive steps to best take advantage of them.”

FieldReport
Clearfield issued its FieldReport for fiscal Q2 2016, which is available in the investor relations section of the Company’s website or by clicking here. Comprised of presentation slides with audio and video, the report provides additional insight into Clearfield’s financial and operational performance.

About Clearfield, Inc.
Clearfield, Inc. (NASDAQ:CLFD) designs, manufactures and distributes fiber optic management products for the communications networks of leading ILECS, CLECs, MSO/cable TV companies and mobile broadband providers. The Company helps service providers solve the Fiber Puzzle, which is how to reduce the high costs associated with deploying, managing, protecting and scaling a fiber optic network to deliver the mobile, residential and business services customers want. Based on the patented Clearview™ Cassette, Clearfield’s unique single-architected, modular fiber management platform is designed to lower the cost of broadband deployment and maintenance by consolidating, protecting and distributing incoming and outgoing fiber circuits, and enabling its customers to scale their operations as their subscriber revenues increase. 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 Information
Forward-looking statements contained herein and in the 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, growth of the FTTH market, effectiveness of the Company’s sales and marketing strategies and organization, utilization of manufacturing capacity, and the development and marketing of products. 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: our results of operations could be adversely affected now that the stimulus funds of the American Recovery and Reinvestment Act are fully allocated and projections are nearing completion; National Broadband Plan’s transitioning from the USF to the CAF program may cause our customers and prospective customers to delay or reduce purchases; a significant percentage of our sales in the last three fiscal years have been made to a small number of customers, and the loss of these major customers would adversely affect us; intense competition in our industry may result in price reductions, lower gross profits and loss of market share; our results of operations could be adversely affected by economic conditions and the effects of these conditions on our customers’ businesses; our operating results may fluctuate significantly from quarter to quarter, which may make budgeting for expenses difficult and may negatively affect the market price of our common stock; to compete effectively, we must continually improve existing products and introduce new products that achieve market acceptance; we may face circumstances in the future that will result in impairment charges, including, but not limited to, significant goodwill impairment charges; we rely on single-source suppliers, which could cause delays, increases in costs or prevent us from completing customer orders, all of which could materially harm our business; we face risks associated with expanding our sales outside of the United States; our success depends upon adequate protection of our patent and intellectual property rights; 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 are dependent on key personnel; product defects or the failure of our products to meet specifications could cause us to lose customers and sales or to incur unexpected expenses; 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, 2015 as well as other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update these statements to reflect actual events.