Change Language en English Español Clearfield, Fiber To Anywhere About Clearfield About Clearfield For Investors For Investors About Clearfield CEO Letter Corporate Overview Executive Team Board Of Directors Investor Faq News & Events News Releases Events Annual Meetings and Proxy Stock and Financial Information Quotes And Charts Ownership SEC Filings Fiscal Year And Quarterly Earnings Information Analyst Coverage Corporate Governance Corporate Policies Committee Charters Contact Us Quarterly Earnings: FieldReport Request Information Video Introduction Industry-Leading Management Careers Company Values Quality & Certification Distributor and OEM Channel Ecosystem Copper OEM Services Copper OEM Services About Terminations Services Industries Served Engineering Capabilities Value Added Services Supply Chain Management Cable Solutions FiberProducts All Products Fiber ProductCategory All Categories Accessories All Accessories FieldShield Aerial Microduct Attachments FieldShield Airtight Coupler FieldShield Airtight Transition Coupler FieldShield Assist Module FieldShield D-ROP Aerial Microduct Attachment FieldShield Duct Cutter FieldShield End Caps FieldShield Furcation Kits FieldShield Microduct De-Burring Tool FieldShield Microduct Field Repair Kit FieldShield Microduct Pulling Carrots FieldShield Microduct Proofing Mandrel FieldShield Pull Sock FieldShield Rotary Duct Cutter FieldShield Rotary Fiber Tube Cutter FieldSmart DIN Rail Cassette Mounting Bracket FieldSmart Fiber Crossover Distribution System (FxDS) Troughs FieldSmart Fiber Scalability Center (FSC) Cabinet Security Strap FieldSmart Fiber Scalability Center (FSC) Mid-Span Opening Feed-Through Plate Kit FieldSmart Fiber Scalability Center (FSC) Pole Mount Kit FieldSmart FxDS Frame Clamp Kit FieldSmart FxDS Interbay Cable Management Panel High Fiber Ribbon Breakout Kit Box Enclosures All Box Enclosures CraftSmart Fiber Protection Boxes (FPB) Cabinets-Passive All Cabinets-Passive FieldSmart Fiber Distribution 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Point (FDP) Splice Only Pedestal CraftSmart Fiber Protection Pedestals (FPP) Splice-On Connectors All Splice-On Connectors CraftSmart Splice-On Connectors Splitters/WDM's All Splitters/WDM's WaveSmart Splitters WaveSmart Ruggedized Splitters WaveSmart High Density (HD) Splitter WaveSmart Wave Division Multiplexing (WDM) WaveSmart Circulators WaveSmart ½ Wide LGX Modular Optical Components WaveSmart Build-Out Attenuators WaveSmart VOA & Patch Cord Splitters Terminals All Terminals YOURx-Terminal YOURx-Aerial Terminal Test Access Points All Test Access Points CraftSmart Test Access Point (TAP) YOURx-TAP Vaults All Vaults CraftSmart Fiber Protection Vault (FPV) Wall Boxes - Metal All Wall Boxes - Metal FieldSmart Fiber Delivery Point (FDP) Outdoor Wall Mount Panel - 24 and 48 Port FieldSmart Fiber Delivery Point (FDP) Indoor Wall Mount Panel – 36, 96 and 144 Port FieldSmart Fiber Delivery Point (FDP) - KIS Outdoor Enclosure FieldSmart Fiber Entrance Cabinet (FEC) FieldSmart ZoneBox Wall 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Financial Information Quotes And Charts Ownership SEC Filings Fiscal Year And Quarterly Earnings Information Analyst Coverage Corporate Governance Corporate Policies Committee Charters Contact Us Quarterly Earnings: FieldReport Request Information Quarterly Earnings: FieldReport Archived Reports Quarterly Earnings: FieldReport Welcome to the Clearfield FieldReport page. Each quarter, we will prepare an audio presentation with corresponding slides for your review and information. We welcome your questions and encourage you to send these questions to our attention at IR@clfd.net. Our comments to relevant questions will be posted below for the benefit of all current and prospective shareholders. Clearfield Fiscal Q4 and Full Year 2018 Earnings Release Clearfield Fiscal Q4 and Full Year 2018 Live Webcast PDF Clearfield Fiscal Q4 and Full Year 2018 Earnings Call Archived FieldReports 2018 3rd Quarter Earnings Release Webcast Presentation Earnings Presentation Slides 2nd Quarter Earnings Release Webcast Presentation Earnings Presentation Slides What has been the early impact of the acquisition of the power cabinet product line? We continue to integrate the people and products associated with the outdoor powered cabinet acquisition. While we did encounter several supply chain hiccups that slowed shipments in this first quarter, we are confident these issues will be behind us by the end of the fiscal third quarter. Our reduction in outlook for fiscal 2018 is consistent across both organic and acquired product offerings. The headwinds associated with merger-related spending pauses at the Tier 1 level was the primary factor contributing to the reduced outlook. Our engineering and product management groups are actively integrating the powered cabinet solution into our design programs, and we look to roll out an expanded product offering later in the fiscal year. 1st Quarter Earnings Release Webcast Presentation Earnings Presentation Slides Wireless Fiber and 5G are two technological developments that likely begin to roll out over the next two years. Does Clearfield consider these two prospects to be an opportunity or a threat to its current product strategies? Today a cell tower is placed every few miles. A 5G antenna will need to be no further apart than a 1,000 feet. The fiber backhaul and subsequently fiber management requirements are roughly 40x the size of today’s market. We are thrilled with the market dynamics of this opportunity and believe it is a great growth strategy for our platform. In addition, the delivery of this amount of fiber into a community, is a strategic investment in the passing of homes and especially businesses which will require more dedicated wireline support for their increasing bandwidth requirements. The only negative aspect of this market is we believe it is deepening the current pause in capital spending as carriers evaluate how they can most strategically leverage the deployment of their fibers. 2017 4th Quarter Earnings Release Webcast Presentation Earnings Presentation PDF 3rd Quarter Watch Field Report FieldReport PDF Earnings Release Tier 1 sales in F’15 were $1.8 million. Tier 1 sales in the first three quarters of F’17 are $5.2 million. Do any of these expanded F’17 sales represent the standardization or acceptance of CLFD products within a Tier 1 network for ongoing deployment? Our business is project-driven and is not contract based. There can be no assurances that this business will continue or grow. However, we believe this strong positive trend illustrates the success that we are having with our product line and the relationships we are building within this market. Cheri mentioned that the patent infringement law suit may require another year or more for resolution. Does the suit include the full line of CLFD products or a limited number of products? What percentage of CLFD F’16 revenue do products included in the patent infringement filing represent? The majority of the claims within the patent suit are targeted against our outside plant enclosures that house optical splitters. We do not disclose revenue by product information. 2nd Quarter Watch FieldReport FieldReport PDF Earnings Release Questions Received from FieldReport Viewers On April 8, 2017, Verizon announced an agreement with Corning which calls for Corning to provide and Verizon to purchase 20 million km of optical fiber each year from 2018 through 2020, and includes a minimum Verizon purchase commitment of $1.05 billion. On January 4, 2017, AT&T issued a press release detailing their 5G evolution in which they stated that they're marketing a 1 gig connection on their 100% fiber network to nearly 4 million locations across 46 metros nationwide, and that by mid-2019 they plan for their 100% fiber network to reach at least 12.5 million locations across 67 metro areas. Given Verizon's and AT&T's announced significant investments in their fiberoptic networks and CLFD's early-2016 appointment of a national sales director for the Verizon account and its early-2017 hiring of a national account manager for the AT&T account, would we be correct in expecting that tremendous revenue opportunities are on the near-term horizon for sales of CLFD's physical access products to Verizon, AT&T and possibly other Tier 1 service providers? The announcements by Verizon and AT&T illustrate the size and scope of the opportunity with those broadband service providers. Clearfield is targeting revenue growth within the Tier 1 telco wireline networks and is pleased with our progress in positioning Clearfield as a trusted vendor within the Tier 1 markets. We cannot, however, comment on the timing, likelihood or magnitude of Clearfield’s success in that initiative beyond the revenue outlook we have already provided for the Company as a whole. The products contained in the FieldSmart Platform are the core of the CLFD product line. Have the cassettes and any other Clearview products achieved Telecordia Certification? Certification under the Telcordia umbrella pertains to testing to a GR or General Requirements code. There are numerous GR standards with several most relevant to Clearfield's business opportunities within the Tier 1 telco (Wireline), national wireless carrier as well cable (MSO) markets. These are lengthy and expensive tests but we are very pleased with our progress to date. We share our progress with our customers and prospective customers as we proceed as part of our sales and marketing process. While certification is an important milestone and a gate that reduces the barrier to entry within these markets, it does not guarantee success. It will however, position Clearfield among the industry's select few who are able to design and manufacture to these exacting standards. 1st Quarter Watch FieldReport FieldReport PDF Earnings Release Questions Received from FieldReport Viewers Has the patent lawsuit filed by Commscope impacted sales orders to Clearfield from it's customers? If so, which market segment has it impacted? Clearfield respects the intellectual property of other companies and is taking appropriate measures to address this legal action. Clearfield is pursuing our business and market development initiatives as well as operating our company to support customers across all market segments. What percentage of products being field tested for tier 1 providers have achieved Telecordia certification and do you anticipate certification of additional products of interest to tier 1 providers within the next 6 months? What percentage of CLFD annual sales are represented by products in testing for tier 1 providers? We respect and honor the need for transparency with our shareholders. We remain committed to working with Tier 1 service providers and investing in the development and testing required to do so. Questions related to number of products, percentages of sales, progress of field trials or order timing are specific to competitive market conditions, thus we are unable to provide further detail at this time. It appears that fiber optic companies, including Corning, are expecting accelerating revenue and profit growth in 2017. Are you expecting the same? We are expecting the rate of deployment to continue to expand in the U.S. markets. We made significant investment in sales, marketing and engineering resources through FY2016 and now into 2017. We believe this will carry significant benefit to Clearfield as we work to take advantage of these market forces throughout this calendar year. What market forces are driving the accelerated fiber growth anticipated in 2017? In the wireless space, the need for next generation bandwidth and the densification of fiber management sites is generating expanded builds. In the wireline space, including telco and MSO, broadband service providers are looking to increase their average revenue per subscriber as they look to reduce the cost of operating their networks. This is possible through the expansion of broadband speeds. Further, the competition that this spurs is encouraging all broadband service providers to invest in their networks in order to minimize potential churn amongst their customer base. The rate of these deployments is currently being paced by the availability of trained labor and the cap/ex costs associated with it. What independent market studies confirm this accelerating fiber growth? Here is a link to what the industry is saying about fiber growth: Fiber to Meet Growing Traffic Needs 2016 4th Quarter Watch FieldReport FieldReport PDF Questions Received from FieldReport Viewers What can you tell me about the field trials and associated revenues within the Tier 1 Markets? Clearfield products, including FieldSmart OSP Cabinets and ISP Panels, as well as FieldShield pathway products have been trialed and deployed within Tier 1 service providers. While we are still very early in the process, significant headway has been achieved and we believe traction earned. Product sales have been on a purchase order basis and do not represent the standardization or acceptance of our products within a Tier 1 network for ongoing deployment. Product sales do represent the validation of our product lines and their ability to scale to large network environments subject to the ongoing verification of Telcordia certification. Shareholders can look to Clearfield for ongoing announcements of the successful achievement of General Requirements (GR) throughout fiscal 2017. In FY16, Clearfield made significant investments in field and design engineering, sales and product management to get our product concepts in front of the decision makers within the Tier 1 community. In FY17, increasing investments within engineering and design (SGA) will be driven by the escalating investment in these testing programs. As we have stated before, these testing processes are tedious, laborious and expensive – but required to compete at this level. We are pleased with our progress to date, but share the frustration shareholders may feel at how long this process does take. There has been frequent analyst talk about a fiber optic "super cycle" over the next few years due to a convergence of three simultaneous events: 1) demand for cloud services driving network upgrades in data centers; 2) upgrades to U.S. metropolitan networks; and 3) a boom in Chinese demand for fiber optic components. How, if at all, might each of these three events impact the demand for Clearfield's products in 2017 and subsequent years? All three of these factors are related to the demand for bandwidth. Clearfield's products can be sold into the demand for cloud services and Metropolitan networks. We are working to ensure that the Company remains focused on our core opportunities associated with Access Networks for the delivery of bandwidth services as well evaluate these additional markets where our product lines could be deployed. At this time, we have no efforts underway to evaluate nor deploy resources into markets outside of North America. During the course of the fiscal year, CLFD has made investments in marketing and sales staff to set the stage for major growth in international and tier 1 and tier 2 revenues. Though still early, are there some signs of success? We were pleased to include information about the traction we are gaining in the Tier 1 market within our FieldReport. In FY 2016, 4% of our revenues were to Tier 1 carriers, which while small, demonstrates our early penetration into these opportunities and validates the viability of our product lines. We remain optimistic about our opportunity within that market. Recently Google has indicated a possible wait-and-see attitude about major new Google Fiber builds. Should we see this as a potential negative that will reduce the incentive of the incumbents to continue to aggressively expand their network builds? The Google Fiber announcement indicated that the Company was going to take a pause on future cities while continuing to enhance its coverage in its original Google Fiber cities. Our perception is that the competition drives an incumbent to protect its installed base and Google Fiber certainly has challenged the incumbent community. In addition, we are seeing the effect of competition amongst the wireline Telco, wireline Cable and wireless markets which we see as increasing and continuing to drive North America's broadband build out. What are the major demand drivers in 2017 that encourage you to be optimistic about above normal revenue and profit growth rates in 2017? Consumers' insatiable demand for bandwidth is driving the deployment of optical fiber. As we have stated before, optical fiber -- whether deployed as part of a wireline Telco, wireline Cable or wireless build, is the medium upon which data traffic is most effectively carried. Clearfield's Fiber to Anywhere architecture, in which our FieldSmart and FieldShield product lines enable the broadband service provider to cost-effective deploy and operate their networks, is a competitive advantage for Clearfield and a driver for our immediate and longer opportunity. 3rd Quarter Watch FieldReport FieldReport PDF Questions Received from FieldReport Viewers Please provide an update on your efforts to penetrate Tier 1 accounts, especially any successes achieved by your recently hired national account manager as well as your in-house test facility. Selling to the Tier 1 community involves a lengthy sales cycle with a wide variety of opinion leaders and decision makers. As we have reported, we are working through this process and are pleased with our success to-date. Every opportunity has its bumps along the way. Based upon direction from the Tier 1 community, some of the work in our in-house test facility has been re-prioritized to alternative cable types which has in the short-term delayed certifications, but we believe in the long-term, does not interfere with our revenue projections for FY17, but instead, may enhance them. I've read that there are still major constraints on the global production/availability of fiber optic cable. Has this limited the sales of your products? The global supply of optical fiber has not enhanced or delayed our revenues for this fiscal year. In previous presentations you have referred to robust long-term market projections for fiber-to-the-home. Do you feel these projections are still reasonable and likely to be achieved or do you anticipate a delay in the ramp-up? We are strong proponents of the FTTH market – and have marketed Clearfield to be a leading provider of fiber connectivity, optical pathway and fiber management solutions for those environments. Cost parameters and market dynamics, including competitive pressures have been both beneficial and detrimental to the pace of broadband deployment. We believe in the heterogeneous deployment of fiber – it is the only communication pathway that is future-proof. As such, we believe, that in the long-term, all networks will be fiber rich. In the interim and as networks evolve, Clearfield’s unique modular architecture allows us to pursue business wherever fiber is deployed – whether that is directly, all the way to the home, business or antenna, or whether it is interim step in which it is taken to the curb or node for additional deployment of fiber drops at a later time. In the previous quarter it was reported that there was some softness in international revenues due to the strength of the U.S. dollar. Is this softness continuing? While economic conditions are improving, international markets continue to be sluggish. We are continuing to pursue business in these markets with an aggressive and highly talented sales and engineer staff who are continuing to work on both a direct basis and through the distribution channels to position Clearfield as demand improves. Please describe the major reasons why we, as CLFD shareholders, should be optimistic regarding CLFD management's ability to create shareholder value. Clearfield’s product line is uniquely architected to provide the broadband service provider the ability to scale their cap/ex investments in their networks alongside their subscriber take-rates. The Company’s dedication to reducing the skill-level and time required for the deployment of fiber significantly reduces the op/ex costs at time of deployment and through the restoration benefits of FieldShield, reduces the total cost of ownership by more than 70%. Clearfield has built a scalable, manufacturing model that has allowed the organization to meet the needs of the Tier 2 and 3 service provider while pursuing business at the Tier 1 wireline as well as wireless and cable television markets. This value proposition has allowed the Company to grow at a rate in excess of 17% CAGR over the last 5 years while reporting growing profitability in each year of its operation. A number of years ago Clearfield established a relationship with Channell Commercial Corporation whereby Clearfield purchased their outside plant enclosures, loaded them with Clearfield fiber management gear and resold them. Has this relationship ended? If so, why? Is Clearfield now competing directly with Channell? How is Clearfield doing in that market segment? Clearfield provides our customers a choice of pedestal and vault enclosures based upon the needs of their networks. We work alongside a number of these vendors and are pleased to provide our customers product configurations that best suit their requirements. Some time ago Clearfield announced a relationship with Zhone. Is it bearing fruit? How might the relationship be impacted by the recent M&A agreement announced by Zhone? Clearfield maintains an active relationship with Zhone as well as other manufacturers of electronics gear. Zhone’s focus is principally on growing their POLAN business which is a small but interesting part of Clearfield current business growth opportunities. Zhone’s M&A agreement does not influence or affect Clearfield’s potential in this market. 2nd Quarter Watch FieldReport FieldReport PDF Questions Received from FieldReport Viewers Based on Clearfield’s announced SG&A investments, it is crystal clear that Clearfield is now actively seeking to win major contracts from one or more Tier 1 and Tier 2 customers. If successful, isn't it likely that contracts from one of these customers alone could result in awards that total as much as $10 - $25 million of revenue per year? That would seem to be in excess of the 15% annual revenue growth rate already expected in 2016 and 2017? Clearfield’s product design methodology scales from the smallest to some of the largest broadband networks in the country. We are pleased with the success that we have had in active deployments as well as the pilot evaluations that are underway. Due to the potential size of Tier 1 and 2 networks, significant opportunities are possible for Clearfield but we are not speculating beyond the 15% outlook for revenue growth previously guided for FY16 and FY17. I expect that Tier 1 and Tier 2 companies would not place an order with Clearfield unless they felt comfortable that Clearfield could execute the orders. Could you please describe your ability to ramp up capacity to meet a potential surge in demand? We are executing a business plan designed for scale. The expansion of facilities in Minnesota and Mexico have been instrumental in our growth to date and is continuing. We continue to add to staff in all facilities with both seasonal as well as full-time personnel. We are proud of building a global supply chain that expands employment opportunities for U.S. workers as well as workers in lower labor-rate environments. In addition to our in-house operations, we have an extensive supply chain that is managed by our operations group with emphasis on scalable procurement, quick-turn manufacturing and world-class quality. In the FieldReport you indicated that a Tier 1 group recently invited Clearfield to build an in-house test facility that would allow the company to internally test with independent audit by Telecordia. Will this facility be located at the CLFD headquarters facility? When will the test facility be operational? When does CLFD expect to commence testing for the Tier 1 group? The test facility is at Clearfield’s headquarters and is currently operational. A test engineer has been hired and a project manager will be joining the Company later this month. Additional investments for test equipment will be ongoing as the Company deepens our commitment to a broader suite of General Requirements testing plans. A recent article posted on Bloomberg News stated that Comcast was testing cable based gigabit internet service in Atlanta with plans to roll out to other markets this year. The article also stated that CenturyLink is offering gigabit service in 19 states and that AT&T will be expanding gigabit service to 36 additional cities this year. The article did not comment on whether CenturyLink and AT&T were using fiber to deliver their service. Can any of these tier 1 providers deliver gigabit internet service to the home without using FTTH? If so, how will that affect the growth potential for FTTH and Clearfield? To enhance speeds, network operators may invest in deepening their fiber penetration but may not offer the last mile drop directly to the home. These non-FTTH wireline or cable network upgrades can boost performance to near Gigabit speeds, but would be hard pressed to deliver Gigabit bandwidth to a broad number of concurrent users. We view these strategies to be a migratory path to a complete optical fiber deployment through the Access Network. As user demands increase and applications are developed to take advantage of the Gigabit speeds available, a FTTH network is the only future-proof topology. We remain confident in Clearfield’s growth potential as this market develops. 1st Quarter Watch FieldReport FieldReport PDF Questions Received from FieldReport Viewers Your new Corporate Presentation dated January 2016 notes that Mexico has the "capacity available to grow 400%." I've also read that your facility in Minneapolis has capacity to grow production by much more than 100%. Given your ability and preparedness to rapidly expand production as well as the industry projections for strong growth in the number of North American homes with fiber access that appear elsewhere in your presentation, there seems to be a disconnect between production capacity/industry projections and your CLFD revenue projections. Why are your projected CLFD revenue growth rates only 10%+ in FY2016 and 15%+ in FY2017? The financial outlook provided by Clearfield carefully analyzes opportunities we are currently tracking against backlog and then we perform calculated budgetary analysis of win/loss projections for specific opportunities in our sales funnel. Financial guidance is by definition an estimate and with all of our business being based on a build to purchase order basis, it would be irresponsible for the company to forecast future revenues that are outside of that scope. Our capacities were built upon the foundation of scalability. We are currently exploring and gaining visibility into significant opportunities with Tier 1 ILECs, major cable operators, competitive carriers and wireless infrastructure providers. Over the past year, we have built and moved into manufacturing capacities that are minimal in incremental overhead while providing us the capability to attract significant opportunities from carriers currently outside of our established customer base. We believe this is the most responsible way to build our business while maintaining the highest levels of transparency possible within a highly competitive and volatile marketplace. Do your CLFD revenue growth rate projections exclude any potential major contract wins at companies such as Google, AT&T, Verizon and other Tier 1 ILECs? As our current business is based on a built-to-purchase order model, a major contract win would re-define the manner in which we could provide financial guidance to our shareholder community. My understanding is that although the company has approved funds for share repurchase, no funds have ever been purchased and retired. What is the status of the share repurchase funds for the last three years (meaning how much money has been approved and spend on share repurchase) and what is the purpoise of approving funds if there is apparently no intent to actually reduce shares outstanding? Your understanding is not accurate. The Company announced its share repurchase program in November, 2014. Since then, it has reported its share repurchase amounts and values on its quarterly SEC reports of 10-Q and 10-K, as well as in its quarterly FieldReport release in conjunction with its quarterly earnings report. Through December 31, 2015, the Company has repurchased a total of 92,969 shares for approximately $1.1 million under the program, leaving $6.9 million remaining for future repurchases. For the quarter ended December 31, 2015, the Company repurchased 20,880 shares. 2015 4th Quarter Watch FieldReport FieldReport PDF Questions Received from FieldReport Viewers You have previously written about your desire to sell CLFD products to Tier 1 providers and that the majority of your connectors have passed rigid Telcordia testing. Could you please give us an update on CLFD's ability to sell its entire product line to Tier 1's? Might you begin selling to them in volume in 2016 or are we still a couple years away from material revenue opportunities? Where does Clearfield stand on Telcordia certification relating to Makwa? Testing and certification to Telcordia and other standards bodies is a core element in determining which fiber network connectivity solution a Tier 1 service provider ultimately chooses. It is a lengthy, expensive and ongoing process. Testing for Clearfield’s products has been completed on multiple connector types, with full testing and expected certification anticipated to be completed before the Spring build-out season. In addition, at the request of a Tier 1 Service Provider, we are expanding our on-site test suite to work toward certification on broader elements of our product line. As we stated in the FieldReport, the sales process to the Tier 1 community is lengthy, but provides significant reward when completed successfully. As a new entrant into the Tier 1 and Tier 2 space, Clearfield is progressing toward several field trials that will better position the company for increasing sales volume in the quarters ahead. Our FieldSmart Makwa is the industry’s first fiber distribution hub designed for below grade deployment. This is a new category of product not previously available to the market. We are working with service providers throughout the industry to identify the appropriate certifications that will be necessary, while we assess internal waterproof sealing capabilities and other appropriate test parameters. We are pursuing field trials in tandem with this evaluation. A couple years ago it was noted that you were not able to sell to Tier 1 providers given that you wouldn't be able to handle the potential volumes that such customers might order since your manufacturing capabilities would be overwhelmed. Is this still a problem or do you now have sufficient manufacturing capacity to respond to sizable demand from such customers? We are highly confident that we have the manufacturing infrastructure to respond to demand from the Tier 1 and Tier 2 communities while continuing to support the demand of the Tier 3 service provider. Our expanded capabilities at our Minneapolis facility, coupled with our ongoing expansion of our Mexican manufacturing environment, is designed to scale our operations to meet increased levels of demand. Further, our manufacturing partnerships between contract firms in China and our on-site Clearfield personnel, provides a supply chain that is ready to respond to new and emerging opportunities. For more information on how we leverage our manufacturing capacity to deliver to our customers, please see the video about Clearfield’s “Built to Scale” message in the investor section of our website. I noticed on the Google Fiber website that they designate each of Salt Lake City, Nashville, Atlanta, Charlotte, and Raleigh-Durham as an "upcoming fiber city," not as a "potential fiber city". Is that a positive development for CLFD in the sense that it might spur Google's purchase of CLFD products and/or the purchase of CLFD products by Google competitors who want to be able to compete directly with Google, OR is this still marketing spin that might not come to fruition? Google has not announced the product lines or suppliers that are used in any of its builds. Clearfield, as well, does not make a practice of announcing its customers. The Google Fiber announcements that you reference are good for the entire industry. Competition is the strongest driver to spur the significant capital investment necessary for a fiber to the home build. The rate of deployment for the Google Fiber builds has been disappointing for many in the industry. However, it is our outlook that the announcements by Google Fiber—and other broadband service providers throughout the industry—indicate that it’s not a question of “IF” fiber to the home, but rather “WHEN.” I heard the recent interview of Ms. Beranek in a Youtube video by Liolios in which she expressed her optimism for CLFD's future performance when she said that “we believe the market is very early in delivering fiber so we’re positioning ourselves in an SG&A investment position to expand our 17% CAGR to a number even larger than that position.” What are the factors that fuel such optimism? Do those factors include the possibility of receiving sizable orders from companies such as Google, AT&T and/or Verizon? We are very optimistic. Revenue to our core ILEC customer base grew 21% in fiscal 2015—during a timeframe when our competitor’s rate of growth was significantly lower. We believe we are taking market share, and will be in a position with our ongoing significant investments in sales and marketing personnel to capture revenues in other ILEC opportunities within the Tier 2 and Tier 1 space. The introduction of the CAFII program, as well, provides the financial investment to expand deployment in the year ahead. We believe the biggest obstacle to deployment is the cost and availability of skilled labor. Clearfield’s product lines are the only products designed for the “New Generation” of fiber to the home. Our architecture was designed for 21st century FTTP – an environment in which we need to align capital equipment expenditure with subscriber take-rates. We are excited that a Tier 1 service provider asked us to expand our on-site test suite and is working with us on the certification process that will position us for revenue growth in this space. Further, we have made significant investments in the MSO markets. While the proposed consolidation of cable operators has slowed their investment in fiber, Clearfield has been active in acquiring the material codes that position us for deployment opportunities once their business environment stabilizes. Finally, the return of growth among our CLEC group in the second half of this year is a very positive sign that fiscal 2016 will see ongoing investments within that marketplace as well. Yet, we provided conservative guidance of 10% revenue growth in fiscal 2016, because of the announcements by the service providers throughout the industry that cap/ex spends will be limited in the tail-end of this calendar year and early 2016 calendar year. This, coupled with the currency challenges for growth outside of the U.S., may introduce some delays early in the year, but we are confident in our ability to take market share once these investments are underway. Why do you feel the fiber optic infrastructure market is a growth market that is just beginning to explode? What specific evidence can you provide in this regard? Optical fiber is the only medium that will provide the infrastructure for broadband connectivity growth. As referenced in our FieldReport, the FTTH Council, through studies conducted by Render Vanderslice, is forecasting increasing deployments in the coming years. Studies indicate that the ROI is significant–revenues increase by more than 30% per subscriber, and operating costs are reduced by more than 20%. However, this is an extensive capital outlay by the provider, which is the gating factor for this development. The introduction of competition spurs investment, as all service providers must work to reduce “churn” among their subscriber base. Our internal studies indicate that Clearfield’s “Labor-Lite” approach not only allows the service provider to manage their up-front labor-costs but also provides the service provider, over a seven-year period, a total cost of ownership that is 70% less than that of our competition. During the quarter, CLFD fell to as low as $12.77/share and the company did not buy back any stock. I’m confused by this. You have a short interest in excess of 1.6 million shares, don’t you think that sends a strong message that if the company didn’t see value there then why would the stock trade higher? In my opinion that’s one of the reasons the stock is now below that level. I sincerely hope you use this line to buy at these depressed levels otherwise the shorts will take control. The Share-Buy Back authorization is an important element of our program to optimize Shareholder Return. The Board has and will continue to monitor the program, and will evaluate what it sees as the appropriate time and price to engage this initiative. If I’m not mistaken, you had made some upbeat comments last quarter about future visibility, did things change that much in this past quarter? As we indicated in the FieldReport, we anticipated revenue from our international markets in the fourth quarter, which did not materialize during that timeframe due to circumstances outside of the normal sales process. These builds are yet to be fulfilled, and we are continuing to work with those service providers and look to respond to their product needs as the economic environment improves. On Pat Goepel, one of the items you highlighted was his M&A capabilities, is that talent for possible future acquisitions or to help against an unwanted takeover? Expanding the skill sets of the Clearfield Board of Directors is a prudent investment in the ongoing development of our organization. Mr. Goepel provides a diverse background, including a broad range of M&A experience. Clearfield has made no announcement of our intentions in this area; however, it is our ongoing responsibility to shareholders to consider all opportunities that will optimize shareholder value. Dan Herzog stated in his comments that CLEC revenue for FY 2015 was down substantially from prior year. He further stated that second half volume increased significantly over first half and the CLEC segment was positioned for growth in FY 2016. On September 24, 2014, a CLFD press release stated that "Clearfield's FieldShield microduct and optical fiber cable was recently approved by AT&T for use in its fiber to the cell tower application." I assume AT&T approved the content of this press release. Did this approval and CLFD's focus on developing CLEC business result in AT&T revenue for CLFD in the following 12 months of fiscal 2015? If not, why not? Does CLFD expect significant revenue from AT&T during FY 2016. Clearfield does not breakout individual customer activity or revenue. However, we do report revenue by customer type, which to date, consists of revenue derived from ILEC and CLEC customers. As noted on page 13 of the FieldReport, a CLEC is a competitive carrier while an ILEC is an incumbent carrier. For example, AT&T is considered an incumbent, so any revenue earned by Clearfield would be reported in the ILEC classification. 3rd Quarter Watch FieldReport FieldReport PDF Questions Received from FieldReport Viewers The press release says “We believe the revenue rate of growth experienced this quarter as compared to the prior year third quarter will climb in the fourth quarter” but the FieldReport says “We believe the rate of growth experienced this period, in quarter over quarter revenues, will climb in fourth quarter”. We apologize for any confusion regarding the rate of growth expected in our upcoming fourth quarter. Due to the seasonality of our business, the most meaningful data is to compare one like quarter against the other – in this case, fourth quarter of FY15 in comparison to fourth quarter of FY14. As the company experienced a 27% growth in FY15 compared to FY14 for the third quarter, Clearfield expects fourth quarter FY15 to be at least 27% greater than the revenues achieved in fourth quarter of FY14. 2nd Quarter Watch FieldReport FieldReport PDF Questions Received from FieldReport Viewers Can you explain to me the difference between an incumbent provider and a competitive provider? The broadband service provider market consists of many Incumbent Local Exchange Carriers (ILECs), some Competitive Local Exchange Carriers (CLECs), numerous Cable Multi-service Operators (MSOs), as well as various U.S.-based independent operating companies, utilities, municipalities and wireless service providers. An ILEC is a broadband provider using wireline-based (telephone) technology. They have a long-standing position in the community and will typically own or control the poles or right-of-way to deploy service. A CLEC is a similar broadband providing using wireline-based technology but they are new to an area and are looking to take marketshare from the incumbent. They have the disadvantage of not having control of the right-of-way. A MSO is a cable operator who has the franchise rights, granted by the city, to bring in service. They typically have some of the same advantages of a wire-line ILEC as they have their own right-of-way and may even share poles with the wire-line ILEC. Clearfield considers a MSO as a ILEC in the revenue numbers reported in today’s announcement. What’s the status of your product certification testing and what will that mean for future revenue? Testing of our product line to certify its conformance to the Telcordia General Requirements’ (GR) 326 standard is nearing completion. The Company anticipates that Clearfield’s fiber termination process will be certified compliant on all connector types by the end this summer. Achieving Certification will allow Clearfield to formally compete for business at the Tier 1 and 2 levels of the ILEC market (the national carriers). Larger service providers often require GR certifications when they issue an RFI or RFQ as a third-party means by which to ensure documented integrity of their network plant. While achieving GR certification does not ensure Clearfield will achieve larger revenues among the national carriers, it is an important step as it removes significant barriers. It is our understanding that only a few Companies in the industry will have achieved GR-326 certification across all connector types. Shareholders should note that there are many GR tests and Clearfield will need to continue to invest in these testing platforms to broaden our potential reach. When will the Company start hosting quarterly Conference Calls? We believe Conference calls are a some-what rigid and potentially out-dated means of shareholder communication. We believe the FieldReport, in web-format, provides an easy to access presentation that shareholders can view at their convenience. When I speak to shareholders about their request for a conference call, typically they are looking for Q&A access. Clearfield guarantees an answer to a submitted question on the FieldReport within 24 hours of receiving the request. In addition, shareholders may schedule a personal phone call or visit to our facility by going through our IR contact, accessible by IR@clfd.net or 763 476 6866. At the end of FY15, we will again evaluate our IR programming and determine how we can continue to provide broader access to our shareholder community. Rather than having to wait until July's earnings release, in the interim period of the next three months, should you observe an improving environment that resurrects your confidence, will you release a statement indicating a follow-up expectation of growth for the fiscal year? In this quarter’s 8K release, Clearfield did not reduce our Outlook for the Year as much as attempt to provide our Shareholders with a better understanding of our revenue run-rate as well as the challenges and opportunities associated with second quarter growth. We stated: “The increase in backlog as of 3/31/15 as well as recent bookings and forecasts...supports Clearfield’s outlook of a strong second half. However, due to uncertainty of the market dynamics . .. Annual revenue growth may or may not reach levels expected at the start of the year.” While I remain confident in Clearfield’s strategy, the Book & Ship nature of our business, the project orientation of the applications we serve and the variability of ordering patterns from service providers make it very difficult to predict or update revenues in a particular month or quarter with 100% confidence. Recently there have been seminars jointly sponsored by Clearfield and Duraline. Has this created new opportunities for the Company with Tier 1 accounts? Clearfield is very excited to be working with Duraline. While we do compete with Duraline in some environments, our new cooperative efforts are designed to allow both organizations to gain a larger part of the drop cable market. We are very early in our relationship, but are very pleased with the direction and early reaction from the market regarding our joint efforts. 1st Quarter Watch FieldReport FieldReport PDF Questions Received from FieldReport Viewers With the recent purchase of part of TE Connectivity by Commscope, how do you see that altering the competitive landscape with respect to CLFD? TE and Commscope are both formidable and respected competitors -- however, big companies getting even bigger will most likely only slow them down. One of Clearfield's competitive advantages is our nimbleness, and we believe that strength will prove to be an even greater asset moving forward. 2014 4th Quarter Watch FieldReport FieldReport PDF Questions Received from FieldReport Viewers Your backlog is a lot less than on 9/30 of last year – should I be concerned? Backlog is one of many factors that influence future orders. The higher backlogs that were prevalent at the end of FY13 and early in FY14 were associated with fulfilling significant orders from our largest customer. I have always cautioned shareholders to not place too much significance on these backlog numbers – due to Clearfield’s scalable manufacturing capacity and world-class supply chain, we have been able to maintain an 8-day lead time for customers requesting rapid delivery. We aim to continue this rapid delivery program into FY15. Historically your revenues were heaviest in your Q3 and Q4, but FY14 doesn’t follow that pattern – what can I expect moving forward? As I stated in the year-end press release, revenues from our largest customer were $12 million in both FY13 and FY14, consistent with the industry rate of homes connected for the year. However, due to the uneven ordering patterns that can result from projects of considerable scale, Clearfield’s revenues were higher than the historical average in the first six months of FY14. I have referred to this as “lumpy” business. However, the long-term trends of higher revenues in the traditional “build season” of March through October is anticipated to resume moving forward. Congrats on the huge increase in international sales – do you see that continuing? Clearfield is actively working to extend our success in U.S. markets to carriers in other markets that have similar qualities to our existing customers. Rather than a traditional company that may have invested in significant overhead by opening up a sales office in an English-speaking European country to expand international revenues, we sought to extend the successes we already had in place. Our efforts in the Caribbean, Central and South America allow us to replicate the success we experience in listening to the needs of our prospective customer and delivering a solution that he/she asked for. In 2013 we hired our first dedicated sales resource for this market. We added additional resources in 2014 and will continue to add more in 2015. In addition, the launch of our Mexico based manufacturing operations not only reduce our cost structure, but also enable us to deliver rapid response engineering and manufacturing programs to new customers in that region. AT&T has announced plans to expand their 1 Gig service to both residential and small business markets. Does your product line allow you to participate in these segments? Where do you see the business market compared to the fiber to the home market? What role does Telecordia certification play in this process? Many of the national carriers have announced Gigabit Broadband programs. These programs are aimed to pass homes and businesses with optical fiber and then connect these homes and businesses to their fiber lines. Clearfield’s FieldSmart fiber management platform and our FieldShield optical fiber drop cable offerings are well suited for all of these programs as we have designed all of our products to be highly scalable. It’s this scalability that allows our customers to align their capital equipment expenditures alongside their subscriber take rates. Recently there have been some additional announcements regarding AT&T and their position on Net Neutrality and how it impacts their fiber deployment programs. The political and economic factors associated with these decisions are outside Clearfield’s influence. Our belief is the optical fiber is the only medium that can deliver the speeds called for in Gigabit broadband and the competitive nature of the broadband market will drive the deployment of fiber on a market by market basis. Telcordia certification is just one element of working with carriers such as AT&T. Our GR-326 certification is moving along as planned and additional certifications are being evaluated. What are your sales at the national carriers? Who is your largest customer? Clearfield enjoys significant market share among the U.S. Tier 3 operators and Caribbean counterparts. However, we are just beginning to gain market acceptance at the national incumbent and competitive carriers. While our product line is highly scalable – we sell the identical products to service providers with 800 homes or 800,000, there are many additional “hurdles” or “gates” to pass before we can have significant sales at the national carrier level. We have made considerable investments in these areas – testing at the Telcordia-approved labs for certification, additional sales and sales engineering resources for that market, etc. However, because we are a smaller company in comparison to our larger competitors, it would be a competitive disadvantage to announce who our customers are, the level of their sales and the product mix. Why did you announce a Share Buy-Back? While our FY14 results were lower than historical compounded annual growth rate due to lower Q4 numbers in comparison to last year’s Q4 numbers, Clearfield is very pleased with our FY14 performance. As we reported in our year-end press release, revenues from customers other than our largest customer for the year were up nearly 20% in the fourth quarter of FY 14. As a Board of Directors, we were concerned that some shareholders would react only to the top-line numbers for the fourth quarter and not invest the time to gauge the strong overall health of the Company. We felt that the Company, which has independently funded its cash flow requirements since its inception, has the current and anticipated cash flow position to fund a Share Buy Back. Further, we feel our stock is a good overall investment at these levels. At the same time, we want to reiterate to shareholders, that Clearfield is a growth driven company and it is our intention to continue to pursue rapid growth and ensure that we have the cash position by which to fund future needs when and if they become apparent. As such, we did not feel that a Cash Dividend program would be appropriate. Isn’t a Share Buy-Back just a way for insiders to sell off their shares? There is no alignment between the Share Buy-Back and any insider activity. Clearfield management and members of our board have accumulated a considerable stake in the company and our holdings are public knowledge. To date, the only shares sold by company executives or board members have been related to funding taxes due as a result of exercising options. Clearfield, Inc. 7050 Winnetka Avenue N,Minneapolis, MN 55428 Phone: (763) 476-6866 Toll Free: (800) 422-2537 Facebook Twitter LinkedIn YouTube News Feed Privacy Policy Clearfield Warranty Terms & Conditions Conflict Minerals Sitemap FTTx Pedestals Cassettes Cabinets Jumpers Microducts DAS Connectors © Copyright 2019 Clearfield, Inc.