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Clearfield, Inc. (CLFD)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue of $46.8M and diluted EPS of $(0.06) both exceeded company guidance; gross margin improved sequentially to 22.8% amid lower excess inventory charges .
  • Mix continues to shift toward “homes connected,” with growing contribution from active cabinet solutions; management reiterated BEAD revenue is likely late 2025 with significant demand ramp in 2026 .
  • FY2025 revenue guidance initiated at $170–$185M, with Q1 FY2025 guided to $33–$38M revenue and $(0.28)–$(0.35) EPS given conservatism in capex and a slow start to the year .
  • BABA self-certification recognized by NTIA, positioning CLFD for BEAD-funded opportunities; backlog fell to $25.1M as customers normalize orders and shorten lead times .

What Went Well and What Went Wrong

What Went Well

  • Exceeded Q4 guidance: Net sales $46.8M vs guided $40–$43M and diluted EPS $(0.06) vs guided $(0.17)–$(0.22) on improving MSO and large regional demand as inventories worked down .
  • Sequential margin improvement: Gross margin rose to 22.8% vs 21.9% in Q3, driven by lower excess inventory charges and better capacity utilization; cash from operations ~$12.9M in Q4 aided by inventory reduction .
  • Strategic positioning: Management emphasized growth in “homes connected” products and positive response to active cabinets; achieved BABA recognition to enable BEAD participation (“We are excited about the opportunities… Our recent NTIA recognition for self-certification… further prepares us…”) .

What Went Wrong

  • Year-over-year declines: Q4 revenue down 6% YoY and gross margin down 130 bps YoY; FY2024 revenue fell 38% with FY gross margin at 17.3% as industry inventory digestion persisted .
  • Elevated OpEx as % of sales: Q4 operating expenses rose to $13.7M (29.3% of sales) on higher variable comp and professional fees, pressuring operating income to $(3.0)M .
  • International moderation: International revenue expected to be minimal growth in FY2025 as focus shifts to gross profit improvements; Q3 strength (seasonal peak) gave way to expected sequential declines in Q4 .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$36.910 $48.793 $46.772
Diluted EPS ($USD)$(0.40) $(0.04) $(0.06)
Gross Margin (%)7.7% 21.9% 22.8%
Operating Income ($USD Millions)$(9.741) $(2.306) $(3.013)
Net Income ($USD Millions)$(5.911) $(0.447) $(0.827)

Actuals vs Company Guidance and Consensus

MetricPeriodCompany GuidanceActualConsensus
Revenue ($USD Millions)Q4 2024$40–$43 $46.8 Unavailable (S&P Global request limits)
Diluted EPS ($USD)Q4 2024$(0.17)–$(0.22) $(0.06) Unavailable (S&P Global request limits)

Segment and Geography

  • Q4 Geography: | Region | Q4 2024 Revenue ($USD Millions) | |---|---| | North America | $35.7 | | International | $11.1 |

  • Market segments (where disclosed): | Segment | Q2 2024 ($M) | Q3 2024 ($M) | |---|---|---| | Community Broadband | ~$16.1 | $19.6 | | MSO | $5.0 | $5.8 | | Large Regional | $3.2 | $3.8 | | National Carrier | $2.1 | $2.3 | | International | $9.9 | $16.5 |

KPIs and Operating Metrics

KPIQ2 2024Q3 2024Q4 2024
Order Backlog ($USD Millions)$47.2 $32.6 $25.1
Inventories ($USD Millions)$83.985 $74.869 $66.766
Cash from Operations ($USD Millions)$(3.2) (use of cash) ~$3.9 ~$12.9
Operating Expenses ($USD Millions)$12.573 $12.998 $13.681
Gross Margin (%)7.7% 21.9% 22.8%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($M)Q4 FY2024$40–$43 Actual: $46.8 Raised vs guide (beat)
Diluted EPS ($)Q4 FY2024$(0.17)–$(0.22) Actual: $(0.06) Raised vs guide (beat)
Net Sales ($M)Q1 FY2025N/A$33–$38 New
Diluted EPS ($)Q1 FY2025N/A$(0.28)–$(0.35) New
Net Sales ($M)FY2025N/A$170–$185 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
BEAD timing and rampSignificant BEAD revenue not until calendar 2025; early awards and quoting activity; BABA compliance by FY-end Late 2025 initial revenue; significant BEAD-driven demand in 2026; NTIA BABA self-cert achieved Pushout to later start, stronger 2026 ramp; compliance achieved
Inventory digestionElevated customer inventories, excess inventory reserves $5.2M in Q2; sequential margin recovery in Q3 as reserves fell to ~$1.7M Gross margin improved to 22.8% on lower excess inventory charges; backlog down as orders normalize Improving utilization and margins; backlog normalizing
Mix shift to “homes connected”Customers focusing on connecting vs passing; new Tier-3/utility customers Revenue from homes connected continues to grow; active cabinet adoption positive Sustained pivot to connection revenue
International operationsLate spring in Northern Europe; Q3 peak and expected Q4 decline; investments in Estonia/Finland to improve margins FY2025 minimal revenue growth internationally; focus on gross profit improvement Manage for profitability, moderated top-line
EA-CAM programACAM funds supporting orders pre-BEAD Shift to phase 2 focused on deployment; catalyst for late 2025 Near-term bridge before BEAD ramp
Share repurchases/Capital allocationQ2 repurchases $15.5M; authorization raised to $65M; Q3 repurchases $5.5M Q4 references exclude potential repurchases when guiding EPS Ongoing buybacks; EPS guidance caveat

Management Commentary

  • CEO framing the opportunity: “Our revenue from products for homes connected continues to grow… We are excited about the opportunities from both public and private funding for rural broadband expansion.”
  • BEAD/BABA positioning: “Our recent NTIA recognition for self-certification to the Build America Buy America (‘BABA’) requirements further prepares us for the significant BEAD Program opportunity ahead, with initial revenue expected in late 2025.”
  • CFO on Q4 performance and cash flow: “Consolidated net sales… were $46.8 million… above our guidance… [and] the company generated positive cash flow from operations of approximately $12.9 million… mainly due to a reduction in net inventory of approximately $8.1 million.”
  • FY2025 outlook: “We are guiding to revenues of $170 million to $185 million for fiscal year 2025… anticipate a somewhat slow start to the year, with our first quarter net sales in the range of $33 million to $38 million… net loss per share in the range of $0.28 to $0.35.”

Q&A Highlights

  • The Q4 transcript available in-source emphasized prepared remarks and outlook, with management indicating Q&A would follow; key areas of investor focus likely centered on inventory normalization, BEAD/BABA readiness, and Q1 FY2025 guidance conservatism .
  • Cross-quarter themes from prior calls included BEAD timing realism (“more likely than not… quite late in the year”), international seasonal dynamics, and margin recovery as excess inventory reserves declined .

Estimates Context

  • Wall Street consensus from S&P Global (EPS and revenue) was unavailable due to request limits. As a result, comparisons vs estimates could not be provided. We instead benchmark actuals versus company guidance ranges disclosed in 8-Ks.
  • Expect analysts to revise near-term estimates to reflect Q1 FY2025 cautious start and FY2025 revenue guide of $170–$185M .

Key Takeaways for Investors

  • Q4 performance demonstrated operational progress: sequential margin improvement and a beat vs company guidance, supported by two markets (MSO and large regional) showing inventory normalization .
  • Mix is structurally shifting toward “homes connected” and active cabinets, which should support margins and cash generation ahead of BEAD; backlog decline reflects shorter lead times and more in-quarter fulfillment .
  • Near-term setup is cautious: Q1 FY2025 guide implies a slower start amid conservative capex, but FY2025 guide suggests stabilization with U.S.-led growth; watch international gross profit improvement initiatives .
  • Policy tailwinds: BABA self-certification and EA-CAM phase 2 deployment could catalyze orders pre-BEAD; significant BEAD demand expected in 2026 .
  • Capital allocation: Prior quarters’ repurchases and strong investment income provide flexibility; monitor any buybacks’ impact on share count relative to EPS guidance caveats .
  • Trading implications: Near term, the beat vs guidance and FY guide may support sentiment; medium term, follow-through on margin trajectory and order normalization, plus clarity on BEAD timing, will drive thesis.

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