Clearfield - Earnings Call - Q1 2025

Executive Summary

• Q1 FY25 revenue was $35.5M (+4% YoY) with gross margin improving to 23.1%; net loss narrowed to $(1.9)M or $(0.13) per share, better than company’s prior EPS loss guidance for Q1 (guided $(0.28)-$(0.35)).
• Company reiterated FY25 revenue guidance of $170–$185M and introduced Q2 FY25 revenue guidance of $37–$40M and EPS loss of $(0.16)-$(0.21); Q2 margin expected to normalize lower versus Q1 due to absence of some cost tailwinds.
• Clearfield segment grew 6% YoY to $29.7M while Nestor declined 6% YoY to $5.8M; management believes community broadband inventory overhang has “predominantly cleared,” supporting sequential improvement in Q2.
• Backlog increased sequentially to $26.0M (+3.6% vs 9/30/24) though down 40.1% YoY; strong quoting and initiation of new multi‑year projects cited as demand indicators.
• Potential tariff changes (China tariffs effective Feb 4, 2025; possible Mexico tariffs) are not reflected in guidance; company highlighted redundancy (U.S./Mexico manufacturing), BABA compliance, and supplier diversification as mitigants.

What Went Well and What Went Wrong

What Went Well

• Gross margin expanded to 23.1% (from 13.7% YoY) driven primarily by ~$2.3M lower excess inventory reserve charges from improved utilization; operating loss halved YoY to $(4.0)M.
• Mix and portfolio progress: increased revenue from connected homes products supports strategy to be a comprehensive portfolio supplier; CEO cited progress and strong quoting/new multi‑year projects beyond connected homes and government-funded initiatives.
• Management asserts community broadband inventory overhang has “predominantly cleared”; reiterates FY25 outlook and expects sequential improvement in Q2 revenue and profitability.

What Went Wrong

• Sequential revenue decline vs Q4 (seasonal and expected): $35.5M (Q1) vs $46.8M (Q4); operating loss persisted and is expected to have lower margin in Q2 vs Q1 as one‑time benefits fade.
• International/Nestor softness: Nestor segment revenue fell 6% YoY in Q1; for FY25, management anticipates flat Nestor revenue given European macro and geopolitical headwinds.
• Backlog still materially below prior year (down 40.1% YoY to $26.0M) despite sequential uptick; indicates broader demand still normalizing vs last year.

Transcript

Operator (participant)

Welcome to the Clearfield fiscal first quarter 2025 conference call. All participants will be in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to Greg McNiff, Investor Relations for Clearfield. Please go ahead.

Greg McNiff (Head of Investor Relations)

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 published 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.

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 factor 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 would like to turn the call over to Clearfield's President and CEO, Cheri Beranek. Cheri.

Cheri Beranek (President and CEO)

Good afternoon, everyone. Thank you for joining us today to discuss Clearfield's results for the first quarter of fiscal 2025. I will start by highlighting some key themes 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 are pleased to share that we reported first quarter fiscal 2025 net sales of $35.5 million in line with our guidance range, while the net loss per share of $0.13 was smaller than our guidance range. Net sales for our Clearfield segment increased 6% year-over-year. Our quarterly revenue performance aligns closely with our expectations, reflecting our steady progress towards normalized growth. I would like to briefly discuss some high-level industry trends, which we address in more detail in our shareholder letter.

As the rural broadband deployment model evolves, Clearfield continues to adapt to industry dynamics with new products. Our goal is to establish Clearfield as the one-stop shop for active cabinet deployments, similar to our success with passive cabinet lines. To that end, our FiberFlex cabinet line addresses a shift of electronics from the central office closer to the end user. Additionally, our recently announced StreetSmart Ready Connect terminal addresses key operator needs such as space constraints, ease of installation, and long-term reliability. We've also observed that many operators are initiating new multi-year projects. We view this dynamic as a strong positive signal, as it demonstrates a level of demand and commitment independent of government funding and reflects the success of our ongoing efforts to strengthen customer relationships and consistently deliver exceptional customer service.

To ensure we are able to address this trend, we continue to work with our customers to establish programs that provide better mutual visibility going forward and ensure we're well-positioned to meet our customers' needs. Turning to the Broadband Equity, Access, and Deployment, or BEAD, program, we continue to expect that it will contribute more meaningfully to revenue starting in fiscal 2026. While we acknowledge near-term uncertainties due to the change in the U.S. administration and associated delays, we are pleased with the program's initial progress and remain optimistic about its long-term potential. Specifically, the NTIA has approved the final proposals for Louisiana, Nevada, and Delaware. Moreover, the majority of these awards went to local fiber providers.

In the near term, we expect the improved outlook driven by the ongoing reduction in inventory, coupled with the shift to the second phase of the Enhanced Alternative Connect America Cost Model, or E-ACAM, program to serve as the growth catalyst for fiscal 2025. I'd also like to address the subject of the possible introduction of tariffs on Mexican goods. Our Mexican and U.S. manufacturing sites were strategically designed to provide redundancy, cost optimization, and dual sourcing capabilities. In addition, our product lines are BABA compliant. which provides the option for a Build America, Buy America alternative. While we cannot eliminate the potential cost increases of this tariff, our long-term experience managing past tariff impacts enables us to respond quickly and to mitigate any potential cost increases wherever possible.

Additionally, our Asian sourcing program has been in place for over a decade, supported by a strong network of proven suppliers who have consistently partnered with us to optimize our quality and who have been expanding their manufacturing footprints in non-Chinese locations. The tariff imposed on Chinese goods that went into effect on February 4th, 2025, adds to the existing tariffs that have been placed upon Chinese products entering the U.S. over the recent years. Given the fluid and uncertain nature of the situation, our priority remains maintaining the strong partnerships and relationships built with our suppliers and customers and optimizing this supply chain to reduce the impact whenever possible. I'd now like to pass the call over to our CFO, Dan Herzog, who will provide an overview of our financial results for the fiscal quarter 2025, as well as to share our outlook.

Dan Herzog (CFO)

Thank you, Cheri, and good afternoon, everyone. I will now review our first quarter results, beginning with sales. Consolidated net sales in the first quarter of fiscal 2025 were $35.5 million, a 4% increase from $34.2 million in the prior year first quarter and within our guidance range of $33 million-$38 million. This figure includes $29.7 million of Clearfield segment net sales, up 6% year-over-year, and $5.8 million of Nestor segment net sales, down 6% year-over-year. Net sales met our expectations as we generated increased revenue from connected homes, highlighting our continued progress towards becoming a comprehensive portfolio supplier for our customers. We anticipate this trend will continue, moving towards a two-to-one ratio of connected homes to passed homes as operators prioritize cash flow generation over deployments while awaiting government funding.

Our strong bottom-line performance and continued gross margin improvements were primarily driven by lower excess inventory reserve costs driven by improved utilization and recoveries of previously reserved inventory. We recently opened a new facility in Estonia, accelerating microduct production from near zero to a projected $7 million for the current fiscal year. This growth aligns with our strategy to enhance European operations by focusing on higher margin solutions. We believe that the inventory overhang within our primary market, community broadband, has predominantly cleared. Based upon these trends, we are reiterating our fiscal 2025 outlook of net sales in the range of $170 million-$185 million. We anticipate Clearfield segment annual revenue growth to be in line with or above industry forecasts of 12.5% for fiscal 2025.

While Europe continues to face economic challenges and geopolitical tensions, we are anticipating improved margins but flat annual revenue in our Nestor segment for fiscal year 2025. In line with the strong quoting activity for the build season we've observed, we anticipate second quarter fiscal 2025 net sales in the range of $37 million-$40 million. Due to some unexpected cost savings in the first quarter fiscal 2025, we anticipate second quarter gross margins to be more closely aligned with our original first quarter assumptions. We expect to generate a net loss per share in the range of $0.16-$0.21 in the second quarter of fiscal 2025. As Cheri noted, we are actively monitoring the evolving tariff situation and diligently developing contingency plans.

However, due to the uncertainty of the tariff situation, our full year 2025 and second fiscal quarter guidance does not yet account for any potential impact they may have on our business operations. And with that, we will open the call to your questions.

Operator (participant)

Thank you. And at this time, we will be conducting our question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in a question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, to ask a question, press star one on your telephone keypad. And our first question comes from Ryan Koontz with Needham. Please state your question.

Matt Cavanagh (VP of Equity Research)

Hi there. This is Matt Cavanagh on for Ryan. You saw strengths in large regionals this quarter. Could you please expand on how many customers were material in that segment and whether they're buying connected products, passing products, or a mix of both?

Cheri Beranek (President and CEO)

Hi Matt. You know, our large regionals, that's a multiple number of providers, so it's more than one. But it's about a handful. It's more. I'd look at that more as kind of project and lumpy business, you know, within it. And you saw that we had large regionals were down last quarter, so they're up this quarter. They tend to take off of their purchase orders bigger numbers at one period of time to consolidate shipping costs and the like. So I would look at that less as a trend and more as a continuation of our opportunities to work with those providers.

And the product lines are predominantly still on homes passed, so we still have room to grow there in regard to working with those portfolio customers or those customers to create them into portfolio customers so they take a broader range of our product line. Yeah.

Matt Cavanagh (VP of Equity Research)

Great. Thank you.

Cheri Beranek (President and CEO)

Yeah. Good stuff.

Matt Cavanagh (VP of Equity Research)

Go ahead.

Cheri Beranek (President and CEO)

I was going to say it's probably, you know, in the neighborhood of three that are over $1 million in sales, so it's not, and then, like I said, half a dozen or more total. So I wouldn't, like I said, it's a trend from the fact that it's not a single customer, but I'd be careful to identify it as being too big of a jump at this point.

Matt Cavanagh (VP of Equity Research)

Great. Thanks. That's really helpful. And to follow up, I understand you're not guiding for the full year, but what kind of visibility do you have going into the rest of the fiscal year as it relates to customer forecasts, new designs, orders, and lead times going forward?

Cheri Beranek (President and CEO)

Mm-hmm. Yeah, well, we're really pleased right now with the level of quoting activity that we saw, you know, at the tail end of last year or the quarter, you know, November and December, and now, you know, in the January period, just to a level of people getting re-engaged quoting for the summer, you know, acknowledging that, you know, that they, you know, no longer have the inventory that they had last year. So that's just a really exciting, you know, period for us. I think that's part of the visibility in that we don't, because of our lead time, which is about, you know, on average about four weeks for most products. The customers aren't in a position of really looking at providing long-term purchase agreements or purchase contracts.

What we're looking to do is putting together kind of supply agreements, rather than necessarily, you know, long-term purchase orders. But we are seeing some better trends of them talking to us about their needs for the year, long-term orientation, and then getting, like I talked about, some of the projects in there are multi-year projects. And so, you know, we're seeing some, because of that visibility into not only this year but next year as well, which is really, you know, we need to give it a little bit of time to see all of the, you know, other external factors how that influences next year. But right now, you know, definitely seeing positive indicators.

Matt Cavanagh (VP of Equity Research)

Great. Thanks, Cheri. That's it for me.

Cheri Beranek (President and CEO)

You're welcome. All right. Bye now.

Operator (participant)

Thank you. And our next question comes from Tim Savageaux with Northland Capital Markets. Please state your question. Tim Savageaux, Northland Capital Markets. Your line is open. You may be muted. Go ahead.

Tim Savageaux (Managing Director and Senior Research Analyst)

Yep. Sorry about that. Good afternoon, and you know, congrats on some solid, solid-looking results.

Cheri Beranek (President and CEO)

Thank you.

Tim Savageaux (Managing Director and Senior Research Analyst)

I just answered my own. You're welcome. I just answered my own question here. But when you talk about growth for the, you're basically separating out Nestor when you're talking about your overall guidance range and then Clearfield segment growth of 12.5. Am I looking at that the right way?

Cheri Beranek (President and CEO)

Right. Right. I think the, you know, we really have such two different businesses and two different markets that we felt it was appropriate at this point to provide some more visibility to our shareholders than what we had been providing previously. The U.S. market is in a better position than the European market, and certainly our position in the U.S. market is far more developed than anything that we have in Europe. We're very optimistic about our position in community broadband and leveraging our position in community broadband. And we have grown, you know, with and in the advance of the market in the U.S. and see every reason that we would continue in that fashion.

From a Nestor standpoint, we're really proud of the work that is being done to reinvent Nestor into a higher value-added solution provider. They've always had a very strong quality program for their cable, and it's just the lack of demand for cable right now against some of the Asian dumping that's happening in Europe that we've really had them focus on new products and new product designs that are higher gross margin. We're really proud of the microduct world, you know, and looking strategically at the right kind of products. As an example, microduct is a higher margin product because you can't ship microduct cost-effectively. It's like shipping air. So you don't have the, you know, the price competition from the Asians that you do if you're providing cable.

So it's a much better long-term solution. So yes, you can look at the forecast as being Nestor as flat revenues and then looking at the Clearfield segment as growing at market or above market rates.

Tim Savageaux (Managing Director and Senior Research Analyst)

Got it. That's super helpful. Make sure I got that. I wanted to come back to the part of the commentary around many operators initiating new multi-year projects. I wonder if you can give us some more color there. I don't know if that over-stepped with the regional question that you were just discussing or whether this is a large number of smaller carriers, but can you give us, you know, a couple, you know, an example or two or just a feel for what you're seeing there, and the breadth of that?

Cheri Beranek (President and CEO)

Right. It's more community broadband, so not in, I mean, large regionals have always had some really nice, multi-year projects. We're seeing some of the smaller emerging, regionals talk working with us on multi-year agreements. I mean, I think it's, you know, as an example, TDS is in a really good place to start their builds. The smaller, they're regional, but, you know, not a big one, but haven't been involved in the fiber market yet. And we are, have been actively working with them for a couple of years now on their fiber plans and have been a provider for them for, you know, historical builds, you know, non-big fiber to the home, you know, for, you know, over a decade. So that's an exciting one that we're working on.

In community broadband, what we're seeing on the multi-year builds are really some of them are new municipal and/or utility who haven't been involved previously, and then seeing kind of the emergence of venture funding and VC capital in some of these spaces where they're looking to Clearfield because of our cost savings and have a more pragmatic look because of the multi-year build. There are certainly some in the space who are building to flip their networks, and they tend to have a much more cost-centered approach rather than a long-term operating approach. So we certainly are facing some of those headwinds, but we know who our core customer group is, and who they will be as they start emerging into this space.

The fact that there are more providers today than there were a year ago, I think, is one of the most exciting parts about community broadband because it's not only growing with the market, but it's the number of new entrants who need the support of a company like Clearfield who has feet on the street to support them.

Tim Savageaux (Managing Director and Senior Research Analyst)

Great. And one more from me. And that is, on the sort of dynamic versus homes passed versus homes connected that you've been called out in a release or shareholder letter or both. And I guess I wanted to see, you know, obviously you've said in the past you know, generate more revenue from homes connected, but you know, where are we in the process of the homes connected metric building and what sort of implications does that have for the business? Things like positive for the top line or anything on margins, etc.

Cheri Beranek (President and CEO)

Right. You know, we've built Clearfield really on, with a reputation of being a strong cabinet supplier, you know, and that our passive cabinets are, you know, really world class and can compete against the biggest companies in the world. I mean, it goes back to the days where the cabinet line was chosen by Google, and so we can see our history of quality in passing homes. Historically, you know, we weren't cost-effective in connecting a home because we had to buy product from Corning or CommScope or one of our competitors in order to manufacture drop cables. And that's a reason, and then we had to buy connectors from them as well. And so we really couldn't compete historically unless it was a special run, a special distance, or quick turn.

Now, with our own cable manufacturing line and the development of our own connectors, as well as some of the emergence now of OptiTap compatible solutions that are available on the marketplace, you know, we can certainly be cost-effective and we can continue to be able to provide custom lengths and quick turn and all the things that we did historically as well. So, we have approached kind of a 50/50 split between the revenue associated with homes connected and passed currently. That's kind of the threshold that, you know, we're at today. You know, with the amount of revenue per home available at a 40% take rate, you know, we should be closer to a two-to-one ratio if we had a broader number of customers who are also using our product lines to connect.

And so that has been a big initiative for us last year and one that we continue, and I think we're going to see an even bigger opportunity there as people, you know, work down their inventory levels, and while Clearfield's revenues are down, our inventory levels are down, one of our obstacles still remains, competitors' inventory levels that some of our existing customers or prospective customers are holding. So long-term, from a margin standpoint, connected home products and passed home products are very similar. So it doesn't influence our gross profit that way, but it does influence gross profit because connected home products have a high labor count. And so the higher the labor count, the more utilization of our U.S. and Mexican factories, and the better our overhead is absorbed.

So we look to that to be one of the good ways for us to be able to utilize the capacity and resources that we've built over the years.

Tim Savageaux (Managing Director and Senior Research Analyst)

Great. Thanks very much.

Cheri Beranek (President and CEO)

You're welcome.

Operator (participant)

Thank you. And our next question comes from Scott Searle with Roth Capital Partners. Please state your question.

Scott Searle (Managing Director and Senior Research Analyst)

Hey, good afternoon. Thanks for taking the questions. Cheri, Dan, nice to see. Looks like putting the bottom from a revenue standpoint here in building going forward. Maybe just to dig in on the community broadband opportunity, you know, down sequentially in December, which is consistent with, I think, what other vendors saw during the quarter, but I'm wondering now, as you start to engage and look out over the course of calendar 2025, are you seeing that start to build back up being driven by E-ACAM? Are these BEAD potential BEAD customers that are building out in non-BEAD markets? You know, what, what's kind of the profile right now that's starting to come back in terms of those build cycles? Because it's still sort of a pre-BEAD environment right now.

Cheri Beranek (President and CEO)

Mm-hmm. Yeah, definitely pre-BEAD. You know, we're seeing, you know, requests for BABA pricing. So there's a lot of people doing planning and quoting, and getting involved in the BEAD program as we've moved, you know, you know, as each of the different states move to the next level. So quoting activity for BEAD is up from a BABA orientation, but it's certainly not business yet. But the quoting activity that I referred to earlier isn't just about the BABA compliant. It's really across the board. It does include E-ACAM business, but it includes a number of non-government funded initiatives. So we said more venture funded or privately backed within the company itself. And I think that's the part of the business that has always been the most exciting for me.

Even though BEAD is big money, what's exciting to me is the fact that, you know, when you're using your own money and you're investing in your own networks and you find that fiber is the best return on investment, that naturalized supply and demand is the most healthy way to build a business. And I think that's the long-term viability of our organization. Yeah, all, you know, I think really exciting in that way. The community broadband initiative, I'd say that one of the things that surprised us a little bit right now is how good it feels in regard to how early in the year people are getting ready for the build season, their commitment to it, and being able to want to make sure that they know what they're going to order and how they're going to order it.

I'm anticipating that we're going to have a really good booking quarter. Probably, you know, our last quarter was, you know, like a one-to-one booking ratio, approximately. I think our backlog went up about $1 million. I'm anticipating, you know, I guess I'm getting a little bit out of my skis here, but I'll go for it. I think we'll have a backlog bigger than what it is today when we go into next quarter, you know, getting ready for build season and making sure that we have the materials in place that people are needing.

Scott Searle (Managing Director and Senior Research Analyst)

That's great. Very helpful. And Cheri, just to clarify though, so for community broadband, you would expect sequential growth then going forward over the next couple of quarters, absent BEAD, right? For BEAD for you, you've been consistent on this front.

Cheri Beranek (President and CEO)

Yes. Yeah.

Scott Searle (Managing Director and Senior Research Analyst)

Fiscal 2026. Okay.

Cheri Beranek (President and CEO)

Yeah.

Scott Searle (Managing Director and Senior Research Analyst)

Maybe if I could. I know this has been sort of murky out there from a market standpoint, but the BEAD process, right? We've got three states that have actually been approved by the NTIA. There are expected to be some changes within the organization. Does the BEAD process continue? What are you hearing back from the states in terms of how the process is going to evolve, change, you know, going forward?

Cheri Beranek (President and CEO)

Right. I mean, the program, I mean, it's been very clear that the program is going to change, but I don't think the process necessarily is going to change. You know, the parts of the program that have been very deliberately, I mean, I guess I was going to use the word attacked, but reviewed, are some of the incremental overhead costs that were added, you know, the costs associated with administration, the environmental reviews, you know, certainly the diversity and equity issues are certainly going to be removed. So more of the funding will be used for direct build and less for some of the, what the current administration calls, you know, the socialized social program aspect of it.

So, you know, all of our service providers are believing that that will change, and most of them are supporting those changes, because it streamlines their process and puts more money in their potential pocket. I would, as it relates to some of the BEAD review and the words that are coming out from the new NTIA administrator that, you know, she's not necessarily, you know, fiber friendly as the people in the past. You know, I think the past administration was fiber advocates, but I don't think they were fiber at all costs. We've always believed and supported that the BEAD program was a heterogeneous program that we use the right technology for the right space.

Some homes cannot be economically reached by fiber, and we knew that from the beginning and are expecting that those awards will be mixed. But I hope that, you know, the administration will look at this as being an infrastructure build for long-term enhancements, you know, and not a quick turn, I want to make somebody happy program. We can absolutely go to a satellite program, turn it on today and improve a lot of people's performance for a short period of time, but it won't work long-term because we don't have the density, you know, the satellites don't have the density to offer it, and it's not building infrastructure. Five years from now, those satellites have to be replaced and then, you know, there'll be more money put into it.

So we're hoping that cool heads will prevail, and the right decisions will be made that will be most cost-effective long-term.

Scott Searle (Managing Director and Senior Research Analyst)

Very helpful. And if I could just finish up on gross margins, Dan, you know, this quarter down a little bit sequentially, it sounds like, some one-time benefits are not there, but, you know, implied in the back half of the fiscal year guidance is an uptick in revenues. Could you give us an idea of what we should be expecting from a gross margin standpoint? And then just to clarify the earlier BABA compliant comments, under the Mexican facility, under the Maquiladora arrangement, does that make you BABA compliant so that, you know, there would not be any necessarily implications to manufacturing in that current facility if in fact there were Mexican tariffs? Thanks.

Dan Herzog (CFO)

Yeah. Hi, Scott. The fact that it's Maquiladora doesn't change, you know, it's still across the border. And so you're still going to be considered, you know, manufactured in Mexico, and there's certainly rules around sometimes it's the country of origin, how much comes from the U.S. that is in, and labor, the labor is done in Mexico, so there's some rules around that that we navigate, but it doesn't change the fact that we still have to go through to hit the 55% or whatever the rules are for the BABA things. As far as the margins, you know, they're going to be a little bit volume dependent. We did have some nice absorption, nice labor-heavy products this quarter, some one-time things that helped us out.

We'll probably be a little bit more consistent with what our first quarter guide was, which, you know, I think what your analysts estimates were pretty correct. But so we won't be significantly higher here or in the second quarter. However, as the volume goes up, as we head towards our guidance level, then you'll be getting into the lower 20s to the mid-20s. Certainly by the fourth quarter, that's the goal.

Scott Searle (Managing Director and Senior Research Analyst)

Great. Thanks so much.

Dan Herzog (CFO)

Mm-hmm.

Operator (participant)

Thank you. And there are no further questions at this time. I'll now turn the call back over to Cheri Beranek for closing remarks.

Cheri Beranek (President and CEO)

Thank you. We are pleased to be in a position to be delivering on the, you know, the forecast that we had originally provided and the guide, the overall market trends that we indicated, you know, nearly a year ago. We are in the U-shaped recovery that we anticipated. We see that U-shaped recovery being part of our build season and are looking forward to seeing the uptick of that U in third and fourth quarter as the build season commences. Then as we move forward into next year, knowing that this year our build season will come on top of an E-ACAM program, and then next year the BEAD program will be layered in on top. So this U-shaped recovery that we saw a year ago or anticipated a year ago is here.

We're excited to be a major player within it, and we look to our shareholders to stay patient with us just a little bit longer as the market corrects itself. And I look forward to speaking with you again in the next quarter.

Operator (participant)

Thank you. And that concludes today's conference. All parties may disconnect. Have a good day. Thank you.