• Revenue For Fiscal Third Quarter Grew 84% Year-over-Year to a Record $71 Million, Driven by 73% Growth in Community Broadband Revenue Compared to the Same Year-Ago Period
  
  
• Quarter-End Backlog Increased 16% Sequentially to a Record $157 Million at the End of Fiscal Third Quarter 2022, Compared to $136 Million at the End of Fiscal Second Quarter 2022
  
  
• Net Income For Fiscal Third Quarter 2022 Totaled a Record $12.7 Million, or $0.92 per diluted share, an Increase of 109% from $6.1 Million, or $0.44 Per Diluted Share, in Fiscal Third Quarter 2021
  
  
• Acquisition of Nestor Cables, strategic opportunity to integrate FieldShield cabling, closed July 26, 2022
  
  
• Company Increases Fiscal 2022 Net Sales Guidance to a Range of $243 Million to $247 Million, (excluding Nestor Cables) Representing Year-over-Year Growth of 72% to 75%
  

MINNEAPOLIS, July 28, 2022 (GLOBE NEWSWIRE) -- Clearfield, Inc. (NASDAQ: CLFD), the specialist in fiber management and connectivity platforms for communication service providers, reported results for the fiscal third quarter ended June 30, 2022.

Management Commentary
"Our strong financial results for the third quarter reflect the continued execution of our growth strategy and the robust tailwinds in the fiber broadband industry," said Company President and CEO Cheri Beranek. "For the second consecutive quarter, we set new records for quarterly net sales and quarter-end order backlog. We continue to make meaningful progress on our 'Now of Age' strategic plan to expand our capacity and rapidly scale our business to meet the significant market demand for high-speed broadband. With our third quarter performance and current visibility for the rest of this quarter, we are raising our fiscal year 2022 net sales guidance to a range of $243 million to $247 million (excluding Nestor Cables), representing 72% to 75% growth over fiscal year 2021."

"In May 2022, we announced an agreement for the strategic acquisition of Finnish fiber optic cable manufacturer, Nestor Cables Oy, a strategic supplier of our FieldShield product line. Our synergistic relationship with Nestor spans over a decade. The acquisition, which closed July 26, 2022 enables us to vertically integrate the design and supply of FieldShield cable to meet future customer demand. Furthermore, we anticipate leveraging the deep technical expertise of the Nestor team to extend the overall supply of FieldShield cable into the North American market by expanding cable manufacturing at our Mexico facility in early 2023. Given the persistent supply chain challenges in today's market, Nestor further strengthens our ability to meet our customers' needs. Pending closing and standard integration costs, we expect the acquisition to be accretive to earnings in fiscal 2023."

"Clearfield is in the middle of a long-term investment cycle for broadband deployment. The demand for high-speed broadband, especially fiber-led broadband, remains very strong. We have proactively expanded our capacity and effectively managed our supply chain to meet that customer demand. We are effectively executing on our new facility buildouts in Mexico and Minnesota which came online late in our second quarter, which allowed greater capacity and led to our record financial results. Moreover, our expertise in serving the Community Broadband market has us well-positioned to further capitalize on industry tailwinds. Based on our steadfast commitment to customers, operational effectiveness, and innovative, scalable product portfolio, we are confident that we can continue to grow the market leadership that Clearfield was built to achieve."

Fiscal Third Quarter 2022 Financial Results
Net sales for the fiscal third quarter of 2022 increased 84% to $71.3 million from $38.7 million in the same year-ago quarter. The increase in net sales was due to higher sales across our core end markets, particularly in our Community Broadband, Multiple System Operator ("MSO" or Cable TV) and National Carrier markets, consistent with our past quarters of fiscal 2022.

As of June 30, 2022, order backlog (defined as purchase orders received but not yet fulfilled) was $157 million, an increase of 16% compared to $136 million as of March 31, 2022 and an increase of 289% from $40 million as of June 30, 2021.

Gross profit for the fiscal third quarter of 2022 increased 71% to $29.3 million (or 41.1% of net sales) from $17.1 million (or 44.2% of net sales) in the fiscal third quarter of 2021. As expected, overhead costs associated with the first full quarter of our new facilities in Minnesota and Mexico negatively impacted gross margins. Alongside real estate costs, increased shipping costs and inflationary increases in some components negatively affected margins. Our strategic investment in our growing national carrier business will negatively affect margin for the near future. We anticipate margins at these levels for the coming quarters, excluding Nestor Cables.

Operating expenses for the fiscal third quarter of 2022 increased 35% to $12.7 million (or 17.9% of net sales), from $9.4 million (or 24.4% of net sales) in the same year-ago quarter. The increase in operating expenses consisted primarily of higher compensation costs due to increased personnel and higher performance-based compensation as well as increased travel expenses and professional fees mainly associated with the acquisition of Nestor Cables.

Income from operations for the fiscal third quarter of 2022 increased 115% to $16.6 million from $7.7 million in the same year-ago quarter.

Income tax expense for the fiscal third quarter of 2022 increased 125% to $3.9 million, with an effective tax rate of 23.4%, as compared to $1.7 million, with an effective tax rate of 22.1% in the same year-ago quarter due to higher taxable income. Increase in rate is due to increased permanent addback items including nondeductible compensation and transaction costs.

Net income for the fiscal third quarter of 2022 totaled $12.7 million, or $0.92 per diluted share, compared to $6.1 million, or $0.44 per diluted share, in the same year-ago quarter.

Financial Results for the Nine Months Ended June 30, 2022
Net sales increased 84% to $175.9 million for the nine months ended June 30, 2022 from $95.5 million during the same period in fiscal 2021. The increase in net sales was due to higher sales across our core end markets, most notably our Community Broadband, MSO/Cable TV and National Carrier markets.

Gross profit was $75.4 million (or 42.9% of net sales) for the nine months ended June 30, 2022, an increase of 82% from $41.4 million (or 43.4% of net sales) in the same period in fiscal 2021. The decrease in gross profit margin was due to increased overhead costs associated with our new facilities in Minnesota and Mexico and higher freight and transportation costs, offset by favorable product mix as well as improved manufacturing efficiencies realized with higher sales volumes.

Operating expenses increased 32% to $33.9 million (or 19.3% of net sales) for the nine months ended June 30, 2022 from $25.6 million (or 26.8% of net sales) during the same period in fiscal 2021. The increase in operating expenses consisted primarily of higher compensation costs due to increased personnel and higher performance-based compensation as well as increased travel expenses and professional fees.

Income from operations increased 162% to $41.6 million for the nine months ended June 30, 2022 from $15.9 million during the same period in fiscal 2021.

Income tax expense increased 183% to $9.5 million, with an effective tax rate of 22.7%, for the nine months ended June 30, 2022 as compared to $3.3 million, with an effective tax rate of 20.6% during the same period in fiscal 2021 due to higher taxable income.

Net income totaled $32.4 million, or $2.33 per diluted share, for the nine months ended June 30, 2022, an increase of 151% from $12.9 million, or $0.94 per diluted share, during the same period in fiscal 2021.

Conference Call
Clearfield management will hold a conference call today, July 28, 2022 at 5:00 p.m. Eastern Time (4:00 p.m. Central Time) to discuss these results and provide an update on business conditions.

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

U.S. dial-in: 1-877-407-0792
International dial-in: 1-201-689-8263
Conference ID: 13731557

The conference call will be webcast live and available for replay here.

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 August 11, 2022.

U.S. replay dial-in: 1-844-512-2921
International replay dial-in: 1-412-317-6671
Replay ID: 13731557

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 Information
Forward-looking statements contained herein and in any related presentation or in the related 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, anticipated shipping on backlog and future lead times, future availability of components and materials from the Company's supply chain, the impact of the Rural Digital Opportunity Fund (RDOF) or other government programs on the demand for the Company's products or timing of customer orders, the Company's ability to add capacity to meet expected future demand, and trends in and growth of the FTTx markets, 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: adverse global economic conditions and geopolitical issues could have a negative effect on our business, and results of operations and financial condition; our planned growth may strain our business infrastructure, which could adversely affect our operations and financial condition; the acquisition of Nestor Cables and integration activities could adversely affect our operating results; the COVID-19 pandemic has significantly impacted worldwide economic conditions and could have a material adverse effect on our business, financial condition and operating results; we rely on single-source suppliers, which could cause delays, increase costs or prevent us from completing customer orders; fluctuations in product and labor costs which may not be able to be passed on to customers that could decrease margins; we depend on the availability of sufficient supply of certain materials, such as fiber optic cable and resins for plastics, and global disruptions in the supply chain for these materials could prevent us from meeting customer demand for our products; we rely on our manufacturing operations to produce product to ship to customers and manufacturing constraints and disruptions could result in decreased future revenue; a significant percentage of our sales in the last three fiscal years have been made to a small number of customers; 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; 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 on key personnel; cyber-security incidents on our information technology systems, including ransomware, data breaches or computer viruses, could disrupt our business operations, damage our reputation, and potentially lead to litigation; our business is dependent on interdependent management information systems; to compete effectively, we must continually improve existing products and introduce new products that achieve market acceptance; changes in government funding programs may cause our customers and prospective customers to delay, reduce, or accelerate purchases, leading to unpredictable and irregular purchase cycles; intense competition in our industry may result in price reductions, lower gross profits and loss of market share; our success depends upon adequate protection of our patent and intellectual property rights; if the telecommunications market does not expand as we expect, our business may not grow as fast as we expect; we face risks associated with expanding our sales outside of the United States; 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, 2021 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 Sophie Pearson
Gateway Group, Inc.
1-949-574-3860
CLFD@gatewayir.com

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