GlobeNewswire Inc | Nov 4, 2020 04:05PM EST

November 04, 2020

-- Company Achieves Record Annual Revenue of $93.1 Million, Driven by 48% Growth in MSO(Multiple System Operators) Revenue, 18% Growth in National Carrier Revenue and 10% Growth in Community Broadband Revenue.

-- Continued Execution on Operational Effectiveness Initiatives and Favorable Product Mix Produces 41.2% Quarterly Gross Profit Margin and Quarterly Record Gross Profit Dollars. -- Company Backlog Increased 153% to $10.7 Millionat Year End compared to End of Fiscal 2019. -- Net Income Totaled $7.3 Million, or $0.53 per diluted share, an Improvement from $4.6 Million, or $0.34 per diluted share, in Fiscal 2019.

MINNEAPOLIS, Nov. 04, 2020 (GLOBE NEWSWIRE) -- Clearfield, Inc. (NASDAQCLFD), the specialist in fiber management and connectivity platforms for communication service providers, reported results for the fiscal fourth quarter and fiscal year ended September 30, 2020.

Fiscal Q4 2020 Financial Summary (in millions except per share data Q4 2020 vs. Q4 Change Changeand percentages) 2019 (%)Revenue $ 27.3 $ 24.0 $ 3.3 14 % Gross Profit ($) $ 11.2 $ 9.3 $ 1.9 21 %Gross Profit (%) 41.2 % 38.8 % 2.4 % 6 % Income from Operations $ 3.7 $ 2.2 $ 1.5 69 %Income Tax Expense $ 0.8 $ 0.5 $ 0.3 54 % Net Income $ 3.0 $ 1.9 $ 1.2 62 %Net Income per Diluted Share $ 0.22 $ 0.14 $ 0.08 57 % Fiscal 2020 Financial Summary (in millions except per share data 2020 YTD vs. 2019 Change Changeand percentages) YTD (%)Revenue $ 93.1 $ 85.0 $ 8.0 9 % Gross Profit ($) $ 37.9 $ 32.7 $ 5.2 16 %Gross Profit (%) 40.7 % 38.4 % 2.3 % 6 % Income from Operations $ 8.4 $ 5.2 $ 3.2 62 %Income Tax Expense $ 1.9 $ 1.4 $ 0.5 37 % Net Income $ 7.3 $ 4.6 $ 2.7 60 %Net Income per Diluted Share $ 0.53 $ 0.34 $ 0.19 56 %

Management CommentaryThe fourth quarter of fiscal 2020 capped off a record year for Clearfield, said Company President and CEO Cheri Beranek. The fourth quarter marked the highest quarterly revenue level in our companys history, bringing our total revenue for the fiscal year 2020 to a record $93.1 million. Our record topline results were driven by solid contributions across our core markets, including 48% growth in our MSO (Multiple System Operators) revenue, 18% growth in our National Carrier revenue and 10% growth in our Community Broadband revenue.

As our overall performance in fiscal Q4 and fiscal 2020 indicate, we are realizing demonstrable results from our execution of our Coming of Age Plan, which is designed to strengthen our core business and position our company for disruptive growth opportunities, and from our ability to take advantage of the shifts in demand driven by COVID-19. Fiscal Q4 represented a continuation of our Community Broadband customers accelerating their purchasing decisions and deployments in response to COVID-19. This trend is carrying into fiscal 2021, supported by continued demand for broadband and the government programs such as The CARES Act are helping to fund and accelerate these deployments. Our track record and reputation in the Community Broadband market has positioned us extremely well to take share and further capitalize on the expansion thats currently underway which we believe will accelerate due to pending programs including the Rural Digital Opportunity Fund, or RDOF initiative, which will finance up to $20.4 billion of gigabit speed broadband over the next ten years.

Our successful execution on our operational effectiveness initiatives over the last several quarters are most evident by our increasing gross profit in fiscal Q4. One of the underlying drivers for this improvement is leveraging our core nucleus of U.S.-based operations for value-added integration while weve capitalized on the investments weve made in our operations in Mexico. These investments are starting to yield beneficial results both in improved efficiencies and cost effectiveness.

An integral part of our success has been our employees unwavering commitment to providing best-in-class products and customer support, and none of this could have been accomplished without their dedication to our mission.

Our strong financial and operational performance in fiscal 2020 speaks to the resiliency of our business as well as our strategic positioning within our customer base and industry. Our success in fiscal Q4 specifically has given us significant momentum starting our fiscal year Q1, giving us a bullish outlook for fiscal 2021. The business case for optical fiber markets for 5G and Access Networks deployment couldnt be more evident. Based on our strong backlog, ongoing robust bookings and pipeline of business, we currently anticipate a strong first quarter of fiscal 2021 compared to the same year-ago period. Longer term, the traction we are getting with our Coming of Age Plan and the success of our operational improvements positions Clearfield for even greater success in the years ahead.

Financial Results for the Year Ended September 30, 2020Revenues increased 9% to $93.1 million for the year ended September 30, 2020 from $85.0 million in fiscal 2019. The increase in revenues was primarily due to higher sales in the Companys National Carrier, MSO and Community Broadband markets, partially offset by lower sales in the Companys international and contract manufacturing markets. We anticipate the momentum will continue into FY 2021 Q1 in that order backlog (defined as purchase orders received but not yet fulfilled) as of September 30, 2020 increased 26% to $10.7 million from $8.5 million at June 30, 2020 and increased 153% to $10.7 million from $4.2 million as of September 30, 2019.

Gross profit was $37.9 million, or 40.7% of revenue, for the year ended September 30, 2020, an increase of 16% from $32.7 million, or 38.4% of revenue, in fiscal 2019. The increase in gross profit dollars was due to increased sales volume. The increase in gross profit percent was due to a favorable product mix and cost reduction efforts across the Companys product lines, including increased production at its Mexico manufacturing plants and efficiencies realized from supply chain programs, and lower tariff costs.

Operating expenses increased 7% to $29.5 million for the year ended September 30, 2020 from $27.5 million during the same period in fiscal 2019. The increase in operating expenses was primarily due to the higher compensation and performance incentive expenses and external sales commissions and agent fees, offset by lower stock-based compensation expense and travel, entertainment and marketing costs due to COVID-19 restrictions.

Income from operations totaled $8.4 million for the year ended September 30, 2020 compared to $5.2 million in fiscal 2019.

Income tax expense was $1.9 million for the year ended September 30, 2020 as compared to $1.4 million during the same period in fiscal 2019 due to higher taxable income. Net income totaled $7.3 million, or $0.53 per diluted share, for the year ended September 30, 2020, an improvement from $4.6 million, or $0.34 per diluted share, in fiscal 2019.

As of September 30, 2020, cash, cash equivalents and investments totaled $52.2 million, which compares to $47.5 million as of September 30, 2019.

Financial Results for the Quarter Ended September 30, 2020

Revenue for the fourth quarter of fiscal 2020 increased 14% to $27.3 million from $24.0 million in the same year-ago quarter. The increase in revenues was primarily due to higher sales in the Companys Community Broadband and MSO markets, partially offset by decreases in national carrier revenue due to ordering cycles and our international market.

Gross profit for the fourth quarter of fiscal 2020 increased 21% to $11.2 million, or 41.2% of revenue, from $9.3 million, or 38.8% of revenue, in the fourth quarter of fiscal 2019. The increase in gross profit dollars was due to increased sales volume. The increase in gross profit percent was due to a favorable product mix and cost reduction efforts across the Companys product lines, including increased production at its Mexico manufacturing plants, and efficiencies realized from supply chain programs and lower tariff costs.

Operating expenses for the fourth quarter of fiscal 2020 totaled $7.6 million, which compares to $7.1 million in the same year-ago quarter. The increase in operating expenses consisted primarily of higher compensation costs related to performance compensation accruals.

Income from operations increased 69% to $3.7 million for the fourth quarter of fiscal 2020 from $2.2 million in the same year-ago quarter.

Income tax expense increased 54% to $786,000 for the fourth quarter of fiscal 2020 from $511,000 in the same year-ago quarter due to higher taxable income. Net income was $3.0 million for the fourth quarter of fiscal 2020, or $0.22 per diluted share, from $1.9 million, or $0.14 per diluted share in the same year-ago quarter.

Conference CallClearfield management will hold a conference call today, November 4, 2020 at 5:00 p.m. Eastern Standard Time (4:00 p.m. Central Standard Time) to discuss these results and provide an update on business conditions.

Clearfields President and CEO Cheri Beranek and CFO Dan Herzog will host the presentation, followed by a question and answer period.

U.S. dial-in: 1-800-771-6883International dial-in: 1-212-231-2915Conference ID: 21971085

The conference call will be webcast live and available for replay here: http://public.viavid.com/index.php?id=142048.

Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.

A replay of the call will be available after 8:00 p.m. Eastern time on the same day through November 18, 2020.

U.S. replay dial-in: 1-844-512-2921International replay dial-in: 1-412-317-6671Replay ID: 21971085

About Clearfield, Inc.Clearfield, Inc. (NASDAQ: CLFD) designs, manufactures and distributes fiber optic management, protection and delivery products for communications networks. Our fiber to anywhere platform serves the unique requirements of leading incumbent local exchange carriers (traditional carriers), competitive local exchange carriers (alternative carriers), and MSO/cable TV companies, while also catering to the broadband needs of the utility/municipality, enterprise, data center and military markets. 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 InformationForward-looking statements contained herein and in any related presentation or in therelated 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 expectedimpact of COVID-19 and related economic uncertainty, the Companys future revenue and operating performance,the impact of the CARES Act or other government programs on the demand for the Companys products or timing of customer orders, and trends in and growth of the FTTxmarkets, market segments or customer purchases and other statements that are not historical facts. 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: the as yet-unknown impact of COVID-19 and related economic uncertainty; to compete effectively, we must continually improve existing products and introduce new products that achieve market acceptance; our expected growth is based upon the expansion of the telecommunications market; 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; our success depends upon adequate protection of our patent and intellectual property rights; intense competition in our industry may result in price reductions, lower gross profits and loss of market share; 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; 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 or significant decline in business with these major customers would adversely affect us; 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 may be subject to risks associated with acquisitions that could adversely affect future operating results; product defects or the failure of our products to meet specifications could cause us to lose customers and sales or to incur unexpected expenses; we are dependent upon key personnel; we face risks associated with expanding our sales outside of the United States; our business is dependent on effective management information systems and information technology infrastructure; our results of operations could be adversely affected by economic conditions and the effects of these conditions on our customers businesses; changes in government funding programs may cause our customers and prospective customers to delay or reduce purchases; 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, 2020 as well as other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update these statements to reflect actual events unless required by law.

Investor Relations Contact:Matt Glover and Tom ColtonGateway Investor Relations1-949-574-3860CLFD@gatewayir.com

CLEARFIELD, INC. STATEMENTS OF EARNINGS (Unaudited) Three Months Ended Year Ended September 30, September 30, 2020 2019 2020 2019 Revenues $ 27,317,969 $ 23,968,423 $ 93,074,514 $ 85,034,182 Cost of sales 16,072,909 14,663,868 55,160,316 52,345,059 Gross profit 11,245,060 9,304,555 37,914,198 32,689,123 Operating expenses Selling, general andadministrative 7,565,160 7,126,376 29,530,198 27,500,989 Income from operations 3,679,900 2,178,179 8,384,000 5,188,134 Interest income 155,427 220,985 770,950 738,459 Income before income taxes 3,835,327 2,399,164 9,154,950 5,926,593 Income tax expense 785,884 511,437 1,861,884 1,360,437 Net income $ 3,049,443 $ 1,887,727 $ 7,293,066 $ 4,566,156 Net income per share: Basic $ 0.22 $ 0.14 $ 0.53 $ 0.34 Diluted $ 0.22 $ 0.14 $ 0.53 $ 0.34 Weighted average shares outstanding: Basic 13,650,316 13,502,178 13,643,355 13,442,871 Diluted 13,650,316 13,502,178 13,643,355 13,451,214



CLEARFIELD, INC. BALANCE SHEETS September 30, September 30, 2020 2019Assets Current Assets Cash and cash equivalents $ 16,449,636 $ 10,081,721Short-term investments 10,582,527 13,524,270Accounts receivable, net 10,496,672 9,118,639Inventories, net 14,408,538 9,012,980Other current assets 585,436 769,161Total current assets 52,522,809 42,506,771 Property, plant and equipment, net 5,109,988 5,413,241 Other Assets Long-term investments 25,143,000 23,902,000Goodwill 4,708,511 4,708,511Intangible assets, net 4,829,047 5,147,135Right of use lease assets 2,539,100 -Deferred tax asset 178,118 -Other 266,857 210,905Total other assets 37,664,633 33,968,551Total Assets $ 95,297,430 $ 81,888,563 Liabilities and Shareholders' Equity Current Liabilities Current portion of lease liability $ 665,584 $ -Accounts payable 3,689,587 3,173,599Accrued compensation 4,856,885 3,224,860Accrued expenses 1,202,753 208,603Total current liabilities 10,414,809 6,607,062 Other Liabilities Long-term portion of lease liability 2,129,343 -Deferred tax liability - 101,690Deferred rent - 246,424Total other liabilities 2,129,343 348,114Total Liabilities 12,544,152 6,955,176 Shareholders' Equity Common stock 136,500 136,418Additional paid-in capital 57,502,905 56,976,162Retained earnings 25,113,873 17,820,807Total Shareholders' Equity 82,753,278 74,933,387Total Liabilities and Shareholders' Equity $ 95,297,430 $ 81,888,563

Year Ended Year Ended September 30, September 30, 2020 2019Cash flows from operating activities:Net income $ 7,293,066 $ 4,566,156 Adjustments to reconcile net income to cash providedby (used in) operating activities: Depreciation and amortization 2,421,754 2,178,409 Change in allowance for doubtful - 210,000 accountsAmortization of discount on (64,327 ) (71,652 )investmentsDeferred income taxes (279,808 ) (3,245 )Loss on disposal of assets 5,785 - Stock-based compensation expense 773,555 1,729,025 Changes in operating assets and liabilities;Accounts receivable (1,378,033 ) 3,492,619 Inventories (5,395,558 ) 1,037,155 Other current assets 127,773 (10,469 )Accounts payable, accrued expenses anddeferred rent 3,151,566 1,604,655 Net cash provided by operating 6,655,773 14,732,653 activities Cash flows from investing activities:Purchases of property, plant and equipment andintangible assets (1,806,198 ) (2,511,646 )Purchase of investments (34,056,930 ) (20,311,393 )Proceeds from maturities of 35,822,000 9,861,000 investmentsNet cash used in investing (41,128 ) (12,962,039 )activities Cash flows from financing activities:Repurchases of common stock (428,654 ) - Proceeds from issuance of common 348,776 313,891 stock underemployee stock purchase plan Proceeds from issuance of common 9,564 2,604 stockemployee stock purchase plan Tax withholding related to vesting of restricted stockgrants and exercise of stock (176,416 ) (553,165 )optionsNet cash used in financing (246,730 ) (236,670 )activitiesIncrease in cash and cash 6,367,915 1,533,944 equivalentsCash and cash equivalents at 10,081,721 8,547,777 beginning of yearCash and cash equivalents at end $ 16,449,636 $ 10,081,721 of year Supplemental disclosures for cash flow informationCash paid during the year for $ 1,442,079 $ 1,683,113 income taxes Non-cash financing activities Cashless exercise of stock options $ 97,811 $ 17,390