Clearfield Inc

NASDAQ:CLFD

Earnings Call Analysis

Clearfield Q1 2024: Sales Beat Amidst Down Trends

In the first quarter of fiscal 2024, Clearfield exceeded sales expectations with $34.2 million, despite a steep 60% year-over-year drop from $85.9 million. The company's order backlog sharply declined by 68% to $43.5 million, significantly lower than the previous year's $136.3 million. Clearfield's gross profit margin also fell, sitting at 13.7% compared to last year's 35.7%. Despite the downturn, operating expenses remained stable at $12.9 million, aligning closely with the previous year's $12.8 million. The company remains optimistic and continues to launch new products, such as an innovative vault that reduces costs by 67%, anticipating a healthier market and inventory normalization in the near future.

Overview of Financial Results

In the first quarter of fiscal 2024, the company's total net sales were $34.2 million, marking a substantial 60% fall from $85.9 million in the same period of the previous year. This steep decline in revenue was compounded by a turnaround from a net income of $14.3 million a year ago to a net loss of $5.3 million.

Balance Sheet Strength and Future Earnings Guidance

Despite the negative earnings, the company maintains a strong balance sheet with $169 million in cash and short-term investments and only $2 million in debt. However, the company's near-term outlook does not signal immediate recovery, with second-quarter guidance anticipating net sales between $29 million and $33 million and a projected net loss per share ranging from $0.49 to $0.55, attributed to increased inventory reserves from lower demand.

Product Development and Market Position

The company is actively working on product advancements to make fiber deployment more cost-effective and efficient. New product introductions, such as an innovative vault that offers significant cost savings in shipping and storage, align with these objectives. Moreover, compliance with the Buy America, Build America (BABA) standards positions the company favorably to benefit from the $42.5 billion BEAD program rolling out towards the end of the calendar year.

Strategic Planning for Industry Rebound

Although the company faces current demand challenges, management expressed a commitment to their strategic plan named LEAP. This initiative aims to leverage expected upticks in demand to improve capacity utilization and thereby enhance gross margins over time.

Seasonal and Inventory Pressures

Gross margins have suffered due to lower than usual sales volumes and excess inventory reserves, amounting to 5.5% of the margin pressures. Seasonality has also played a role, with early winter impacting international sales negatively, although a rebound is expected in the following quarter.

Operational Focus Amid Varied Industry Conditions

Despite the record high level of homes passed last year, a disconnect remains between the homes connected and the revenue generated. The management is cognizant of this mismatch and is observing an improvement in the inventory situation with large regional providers, which could signify a gradual recovery in operations and revenue generation. Still, the company cautions against reading too much into single-quarter results due to the inherent lumpiness of large orders.

Earnings Call Transcript 2024-Q1

[Operator]

Good day, and welcome to Clearfield's Fiscal First Quarter 2024 Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to Greg McNiff, Investor Relations for Clearfield. Please go ahead.

[Greg McNiff]

Thank you. Joining me on the call today are Cheri Beranek, Clearfield's President and CEO; and Dan Herzog, Clearfield's CFO. As a reminder, the slides in this presentation are controlled by you, the listener. Please advance forward through the presentation as the speaker presents their remarks. Please note that during this call, management will be making remarks regarding future events and the future financial performance of the company. These remarks constitute forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. It is important to also note that the company undertakes no obligation to update such statements, except as required by law.

The company cautions you to consider risk factors that could cause actual results to differ materially from those in the forward-looking statements contained in today's press release, earnings presentation and on this conference call. The Risk Factors section in Clearfield's most recent Form 10-K filing with the Securities and Exchange Commission and its subsequent filings on Form 10-Q provide a description of these risks. They are also summarized on Slide 2 of the earnings presentation. With that, I would like to turn the call over to Clearfield's President and CEO, Cheri Beranek. Cheri?

[Cheryl Beranek, executive]

Good afternoon, everyone, and thank you for joining us today to discuss Clearfield's results for the fiscal first quarter of 2024. We also intend to provide an update on our business and current market trends. Please turn to slide 4. I noted last quarter that while the industry is facing several near-term macroeconomic and seasonal headwinds, broadband service providers continued to deploy equipment and long-term demand remains as strong as ever. In the following slides, I will preview recently released market data that demonstrates this case as well as the basis for our optimism regarding the long-term outlook.

Consistent with our optimism, Clearfield repurchased 436,000 of its shares for approximately $12 million in the first quarter ended December 31, 2023. Total net sales for the first quarter of fiscal 2024 were $34.2 million, above the high end of our guidance range, driven by higher-than-expected sales from our large regional service provider customers due to their ordering of complementary products to support their inventory mix needed for current deployment. Dan will discuss our financial results for the quarter in more detail shortly. While we continue to expect the next few quarters to remain challenging due to the inventory overhang across the industry, we remain focused on positioning Clearfield to take share when ordering patterns return to a more normalized cadence. To that end, we are expanding and enhancing our product portfolio in order to reduce the overall cost of fiber deployment by making the process as efficient as possible.

We recently announced the addition of an innovative vault to our current product portfolio, which is designed to reduce the cost of shipping and storage by approximately 67%. Feedback from our recently introduced CraftSmart FiberFirst Pedestal and also the FieldSmart FiberFlex active cabinet, designed to be installed in rural areas has been exceptionally positive. Both products are now shipping and reflect another step towards our goal of providing our customers with alternative choices that continue to streamline fiber deployments. In addition, we are working to ensure these products and all other peripheral product offerings will be compliant with Buy America, Build America known as BABA, as the BEAD awards are expected to translate to initial deployments near the end of this calendar year.

As shown on slide 5, recently published data from RVA, an independent research firm analyzing data in the North American fiber broadband industry, recently reported that the industry passed 9 million households in 2023, nearly $1 million more than the year before. Furthermore, this total included 3 million households which already had access to one fiber service provider. The fact that approximately 35% of the households passed in 2023 already had access to one fiber provider, confirms our view that the competitive landscape for broadband service is healthy and that our total addressable market is larger than a single fiber connection for each U.S. household. As many of you know, the $42.5 billion BEAD program is now underway with the [ maths ] released and the value of the monetary award divided for state.

Slide 6 illustrates the relationship between the government disbursements and service provider deployment. As you can see, the year is projected to be the largest disbursement year of government funding. However, we expect these funds to translate into deployments and revenue over the next several years.

As illustrated on slide 7, industry forecast from RVA indicate that the next 5-year period will see up to 12 million additional homes passed with fiber because of the federal's funding initiatives. These programs will bring high-speed Internet access to unserved and underserved areas that will boost the forecasted total homes passed in the next 5 years in the U.S. market to over 57 million homes. Coming back to Clearfield's performance, I'd now like to pass the call over to our CFO, Dan Herzog, who will walk us through our financial results for the fiscal first quarter of 2024.

[Daniel Herzog, executive]

Thank you, Cheri, and good afternoon, everyone. Please turn to Slide 9 to look at our fiscal first quarter 2024 results in more detail. Consolidated net sales in the first quarter of fiscal 2024 were $34.2 million, a 60% decrease from $85.9 million in the same year ago period. The year-over-year decrease in total net sales was due to the ongoing industry dynamics that we commented on throughout the past year and that our peers in the marketplace have reported over the last several quarters. We remain focused on reducing costs and improving margins at Nestor by investing in more efficient manufacturing equipment and introducing higher-margin plug-and-play connectivity products. We continue to be focused on labor utilization as well as driving efficiencies for enhanced productivity in order to improve gross margins at all our manufacturing locations.

Order backlog declined 68% to $43.5 million on December 31, 2023, from $57.3 million on September 30, 2023, and $136.3 million on December 31, 2022. As our visibility remains limited, we continue to collaborate with our customers to align their open orders with their deployment schedules. As a reminder, the winter season is typically our lower order booking and revenue quarters. Our lead times are now less than 4 weeks across most product lines. We continue to expect backlog to become less of an indicator for future sales as most orders will be fulfilled within the quarter they are received.

Turning to Slide 10. I will now review net sales by our key markets. Sales for our primary market, Community Broadband comprised 36% of our net sales in the first quarter of fiscal 2024. In Q1, we generated net sales of approximately $12.3 million in Community Broadband, down 67% from the same period last year. Net sales for the first quarter in our large regional service providers market were $7.9 million, comprising 23% of our total net sales and declined by approximately 47% in the first quarter of this fiscal year versus the prior year first quarter. Net sales in our MSO business were $5.2 million and comprised 15% of our net sales in the first quarter. Net sales declined by approximately 75% in the first quarter of this fiscal year versus the prior year first quarter. Net sales in our National Carrier market for the first quarter decreased to $1.3 million, accounting for 4% of total net sales and declined by approximately 48% in the first quarter of this fiscal year versus the prior year this first quarter.

Finally, net sales in our international market were $6.7 million and comprised 19% of total net sales in the first quarter. Net sales in this market decreased by approximately 35% in the first quarter of fiscal 2024 versus the prior year first quarter. As detailed on Slide 11, gross profit margin in the first quarter declined to 13.7% of net sales from 35.7% of net sales in the same year ago quarter. Our gross margin continues to be impacted by unabsorbed overhead in our manufacturing facilities due to lower levels of demand and winter seasonality. The company continues to adjust its production capacity to align to current demand and market conditions. In addition, gross margin was negatively impacted by an increase in reserves for excess inventory primarily resulting from the lull in demand.

We continue to expect revenue and gross margins in the first half of fiscal 2024 to be impacted by the continued inventory digestion at our customers as well as normal seasonality. As we enter the build season in the second half of fiscal 2024, we anticipate an uptick in demand which should lead to an increase in capacity utilization that should result in an improvement in gross margins. We continue to work to uphold price discipline as well while also ensuring the preservation of our long-term customer relationships. Moving forward, we will remain thoughtful in how we address pricing with our customers.

Now please turn to Slide 12. Operating expenses for the first quarter were $12.9 million, which were consistent with $12.8 million in the same year ago quarter. The company remains committed to servicing its customer base and enhancing its long-term market position as seen by the consistency in year-over-year expense, which reflects our continued investment in our operations. As a percentage of net sales, operating expenses for the first quarter were 37.6%, up from 14.8% in the same year ago period due to lower sales volumes.

Turning to Slide 13. Net loss in the first quarter was $5.3 million compared to net income of $14.3 million in the same year ago period and net income of $2.7 million in the fourth quarter of fiscal 2023. Our net income is heavily affected by our reduced volume levels which in turn results in lower gross profit percentage.

As illustrated on Slide 14, our balance sheet remains strong with $169 million of cash, short-term and long-term investments and just $2 million of debt. We had $2.4 million in capital expenditures in the quarter, mainly to support our manufacturing operations. Our inventory balance decreased from $98.1 million at fiscal 2023 year-end to $94.6 million in the first quarter of fiscal 2024. Our cash, short-term and long-term investments reflect the reduction of just $5 million from September 30, even though $12 million was used for the repurchase of shares in the first quarter. We recorded a cash flow from operations of positive $7.8 million in the quarter. Our strong balance sheet ensures that we are well positioned to effectively compete for larger customer opportunities and to pursue strategic opportunities to enhance our market and product portfolio. Likewise, our strong cash balance positions us to manage the business for the long term and through our share repurchase program, reinvest for the long term.

Please turn to Slide 15. Due to limited visibility related to the reasons we've discussed over the last several quarters we will continue to provide quarterly guidance. We anticipate the second quarter of fiscal 2024 net sales to be in the range of $29 million to $33 million. We expect to generate a net loss per share in the range of $0.49 to $0.55. This increased loss over the prior quarter is due to increased inventory reserves for excess inventory, primarily resulting from the lull in demand. This loss per share range is based on the number of shares outstanding at the end of the first quarter and does not reflect share repurchases in the second quarter. As I indicated earlier, we repurchased $12 million in stock as part of our share buyback program in the first quarter which represented 436,000 shares at an average price of $27.69, leaving approximately $21 million available for additional repurchases.

The significance of our buyback underscores our clear and proactive commitment as we believe in the enduring strength and potential of our company and this market. In the coming quarters, we will continue to make thoughtful and strategic decisions regarding share repurchases driven by our strong conviction that our current share price is not reflective of our long-term opportunity. That concludes my prepared remarks for our fiscal first quarter 2024. We appreciate the support of our investors as we continue to work to drive shareholder value. I will now turn the call back over to Cheri.

[Cheryl Beranek, executive]

Thanks for the financial update, Dan. Turning to Slide 17. I would now like to provide a brief update on our multiyear strategic plan, which we have labeled LEAP. LEAP is our road map for how we intend to capitalize on the significant opportunities ahead when industry demand returns to a more normalized cadence. Over the last 12 months, Clearfield's performance has been negatively affected by a misalignment between our capacity and market needs. We view this mismatch between supply and demand as a temporary challenge that we have addressed through reductions in variable costs, yet we must and will continue to execute at the highest level. [indiscernible] in our DNA and the reason we are the leading provider to this customer segment. As I highlighted earlier, we're not sitting still, rather, we continue to develop new labor-saving products and align our sales and support staff to the markets where fiber is being deployed. We expect more product announcements to come, highlighting these attributes.

Listening to our customers and then delivering to their needs is the foundation upon which our North American business was built. Recently, we hired an executive with significant connectivity experience for our European operations, who will work alongside our existing European team to lead our initiatives to cross-sell extensions of Clearfield's connectivity products. We have also recently hired a senior level operations executive to lead our North American manufacturing and procurement programs as part of our ongoing operational initiatives to drive cost reductions, align capacity to near-term demand and to convert inventory to cash. In addition of this edge strength to Clearfield's management team is an investment that will accelerate our ability to deliver strong earnings as market dynamics return to a more normalized pattern. While the near-term industry dynamics remain challenging, we also remain confident that the future growth in fiber is absolute and the value proposition that Clearfield brings to the market is as strong as ever. And with that, we will open the call to your questions.

[Operator]

Thank you. Ladies and gentlemen, at this time we will be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from the line of Scott Searle with ROTH.

[Scott Searle, analyst]

Cheri, maybe just to dive in in terms of some of the government funding earlier in the week which Calix was indicating that there had been some delays in deployments as customers were evaluating the BEAD programs. I'm wondering if you could comment on that, if you're seeing a similar type of slowdown with your customers? And then also more specifically in some of the BEAD programs funding and award themselves, I appreciate the detail in the slides But when do you expect to see awards to start to happen? And when would you expect those to materialize in orders benefiting Clearfield? Is that still on track for the first calendar quarter of '25 Or is there the potential for some of this to slip?

[Cheryl Beranek, executive]

Yes. Scott, listening to the Calix world, I mean, that's really consistent with our world and really probably consistent with what we've been saying for a couple of quarters now that as people put together their plans and their engineering directives and how it relates to what's coming with BEAD there needs to be a choice and so there has been less revenue -- less activity than one might expect. There are only so many engineering companies to go around and so they're engineering for potential BEAD awards and not necessarily for deployments this year. And we have also talked about that -- the balance sheet needs to be in a good place for when they go after the BEAD funding because they're competing with others and there is a level of financial match that's necessary as well. It really doesn't change our outlook that the BEAD initiatives will start to see being rolled out now in late '24 and consistent with what we've said in the past and what Calix has said, is that's meaningful in '25 and for the next 3 to 5 years as those programs are put into place.

The one thing that I want to make sure that we talk through though as well is when we look at one of the slides earlier in the presentation is that the number of homes passed in the next 5 years, even without BEAD, it's going to be close to 35% higher than it was in the previous 5 years. It's just really a timing of the quarters and how we can put this all together. So I'm not anticipating that BEAD is going to slip as much as I think it is a disciplined manner of getting everyone's kind of act together.

[Scott Searle, analyst]

Okay. Very helpful. And if I could for a follow-up, looking into your guidance into the March quarter, a couple of items, I'm wondering if you could quantify the inventory charge. It looks like it's probably somewhere in the $2-plus million range, just wanted to get a handle on that. And in terms of March sales outlook, are you comfortable that this is marking the bottom or we should see sequential improvement through the course of this year? And I know it's a little bit early, but I'm wondering, what's the time line that you would expect kind of "normalization" of your revenue stream where demand is -- your shipments are more in line with end market demand?

[Cheryl Beranek, executive]

Right. I'll take the second half, and I'll have Dan talk to the inventory reserves. Yes, as we look at the quarter in March, that's -- it's still the winter seasonality and so beyond the BEAD program and beyond the issues associated with inventory overhang. We are going through winter -- winter issues, although it doesn't look like it here in Minnesota. It was 50 degrees today and not any snow so we're actually hopeful that we might get -- with so much warm weather across the country that we might get an early spring and an early build.

And that, I think, is one of the factors that I think we're going to see the March quarter would be my expectation that it will part of that -- it will be -- it has a bottom of our U. I've talked previously about a U-shaped recovery. And I think we're going to start to see more of a normalized world and a normalized pattern closer to this -- we're still in this winter pulling down the backlog right now but we'll see closer to that 1:1 book-to-bill ratio that we kind of -- we -- we're famous for as we get into the summer months and we expect our revenues to increase. We just don't have a forecast at this point to what level. Dan, do you want to address inventory?

[Daniel Herzog, executive]

Right. So yes, Scott. So we've tried to conservatively estimate and it's somewhere in the area of like about $5.5 million for the upcoming quarter. Those are hard to estimate. You kind of got to get through the quarter and see what relieves in the quarter, so that's an estimation right now. Clearly, those things are going to be prevalent in the market. You'll probably hear more people talking about that but as people are stocked up for longer-term demand, but we have to get through this pause and everybody else reducing their inventories, you're going to probably see this more.

So it's -- when you can look at people's inventory to their revenue numbers, you can kind of anticipate those things are going to happen. So it's important to note that these aren't things that we're obsoleting, these are not things that we're putting in the dumpster. The words that we're using around its reserves and it's on excess inventory, meaning we just have too much of what we make. We don't stock up a lot on finished goods, we're pretty much doing components or subassemblies that will eventually go to those finished goods. But we are not -- this to us looks it's kind of like a noncash charge that we expect that when markets return and demand returns will be used and at that point in time you get recoveries back on those and it actually helps improve your reserves. So looking at this as a timing thing.

[Scott Searle, analyst]

Great. I'll get back in the queue and Cheri, please send that warm weather East.

[Operator]

Our next question comes from the line of Ryan Koontz with Needham & Company.

[Ryan Koontz, analyst]

On your customer segments here with the step down in Community Broadband, it's definitely a multiyear low pre-pandemic. And I wonder if you thought about -- if you parsed out the results you had in December and thought forward at least into March, what the impact -- what the headwind is there, specifically in Community Broadband? Is it dominantly inventory? Is it dominantly conservation of capital and resources to plan for BEAD? If you can help us there, that would be really helpful.

[Cheryl Beranek, executive]

Yes. I think it's a combination of all of the above. I mean, mostly Community Broadband did not have a strong inventory position. The higher level of inventory being held Is at the large regional providers. And so with those regional providers now starting to kind of work through their mix, that's actually a really positive sign for us. I think the Community Broadband numbers are very relative to what others in the industry as our -- as our -- as Scott said from ROTH, the Calix's announcement earlier this week, it's very consistent.

Community Broadband is holding back, evaluating what they're going to do, making sure they have the right funding and they're going to be able to have their engineers in the right place for where they get their funding and where they don't. So I mean, those of us who have been in this market for a long time know that government funding is fabulous but it also is frustrating because back in 2008, when we probably got the previous time that we got a chunk of money into this market, it put a lull in our business for probably close to 9 months, and so this is no different. So we're confident it will come back. It is just a reflection of people evaluating their options.

[Ryan Koontz, analyst]

Great. And it sounds like from your comment there, the regionals, you're seeing some improvement in the inventory situation at the regionals and a little more pull. Is that correct?

[Cheryl Beranek, executive]

Right. I think it's the standpoint of the analogy I've used. I think it's very descriptive of forks and knives. They've got all the forks they need that they know how they're finding out, they need more knives. And so that's a really good sign that it's starting to kind of work itself out in that they made estimates upon what they're going to need and they made estimates in regards to the mix of what they're going to need. So it is definitely starting to improve and I think it's important to note that we did have a record high -- a record high in the number of homes passed last year. And so this disconnect between the number of homes actually connected and the number of the dollar signs being shown by the manufacturers is a mismatch at the moment. I think that's really the best reflection of or answer to your question.

[Operator]

Our next question comes from the line of Tim Savageaux with Northland Capital Markets.

[Timothy Savageaux, analyst]

Good afternoon. And I think you might have touched on this a little bit, but I did note a little uptick at least sequentially amongst the larger regional players. And I guess as you look forward here for your -- I don't know your guide for fiscal Q2 or even further out, what do you -- I guess, what do you expect to see from that cohort? And is there any reason that, that would diverge from what you're seeing from your broader Community Broadband market? And I'll follow up from there.

[Cheryl Beranek, executive]

I wouldn't call it diverge. I mean I think what we're seeing is Clearfield has been strong for a decade in Community Broadband but is emerging as a presence in the large regional providers in that we took share during the pandemic period, we're working very hard during that time and now to ensure the stickiness of that relationship, the partnering that we're doing to help them manage their inventory to help them reduce the cost of their deployment by taking out labor. So I think it will be an increasing part of our business but it could be lumpy because you get an order from a large regional provider that can dwarf some of the other business and maybe put it out of perspective. So I wouldn't read into a single quarter at this point in time But I think it's good for you -- for all of us to see the level of activity underway and the pull-through that we're starting to see.

[Timothy Savageaux, analyst]

Okay. Great. And obviously, I think you saw a seasonal downturn on the international side. I imagine that will -- I mean, do you expect that to continue to decline into Q2 or -- and stabilize?

[Cheryl Beranek, executive]

I apologize for interrupting, Tim. Very seasonal. And it's very cold in Northern Europe, even colder than a normal year, so [ lots ] of -- and started -- and the winter started very early as well. So the first quarter down in international sales is very seasonal and I fully expect that to be a better number next quarter.

[Timothy Savageaux, analyst]

Okay. And last one for me, and you may have touched on this, apologies if you did. But given the bottom line guide, I'm assuming you're looking for a little more pressure on the gross margin front in Q2, but if you have any specifics you want to share there, that would be great.

[Daniel Herzog, executive]

Yes, it's kind of consistent with where we finished our Q1 in revenue so we're not forecasting going up on that. So you'd see -- you're kind of seeing it slightly lower, the range that we provided, so that's there. And then it's predominantly related to the noncash inventory reserves that we'd be taking. So like I mentioned to Scott, like 5.5% on that, so that puts pressure on us. Obviously, the lower volume is there, that's just going to be a given any time that we're, let's say, below our higher revenue quarters. So that's a given. But the big change is related to the excess inventory reserves and that's what pushes the margin down.

[Operator]

[Operator Instructions] Our next question comes from the line of Jaeson Schmidt with Lake Street.

[Jaeson Schmidt, analyst]

Just a few questions on Nestor. I think previously, there was the expectation for the Nestor business to be able to ramp to that $15 million range in the summer months, Is that still possible?

[Cheryl Beranek, executive]

We're not providing guidance that far out. And so the -- I'd say there is an opportunity in that we're building a company to be able to address that, and we're building capacity to address that. One of the enhancements that we've made over the course of the last year is the expansion of the amount of Microduct that we're able to provide. And what's exciting about Microduct is not only that it increases the revenue and increases the margin, but it also is a precursor to future connectivity sales, so that gives you an early indicator. So the -- and the addition of resources there for connectivity, someone who has a strong background in connectivity and understands the differences and nuances of the types of connectivity solutions that are necessary certainly will help us pull that through. There -- I say don't get -- again, it's more of a trend line there, I think, for us rather than a specific target for the summer months, and because of the fact that the rockiness or the lumpiness of their seasonality, [ $15 ] million is possible, but not a forecast from us.

[Jaeson Schmidt, analyst]

Okay. That's fair. And then can you update us on the time line on where you're at from being able to manufacture the Nestor product line in the Mexico facility?

[Cheryl Beranek, executive]

We're already doing that. So the only issue we have is the availability of PVDF materials and so we are fully manufacturing in Mexico with the Nestor product types. Mostly what we're -- what I think is important though, there is -- that we're not intending to manufacture high count fiber for the U.S. market, that tends to be a commodity level product line. And so we aren't going to make the capital equipment investment for that. But certainly, all of the products that Nestor made for Clearfield were able to do in the Mexico facility, and we'll be able to do with the expansion of our manufacturing lines and the new cable lines that we're putting into one of our Brooklyn Park facilities, we'll be able to do all of the previously Nestor's supplied equipment in Minnesota as well.

[Operator]

There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

[Cheryl Beranek, executive]

Thanks for the opportunity to spend some time with you all at this period of time and to really help to provide, I think, some insight behind a long-term investment opportunity. We are at an amazing time right now in the U.S. market and then on the brink of really becoming a fiber-rich country and the opportunities that that presents for us and the economy that it will build is certainly a strong one. The Clearfield's opportunity here remains the same. It was a very -- our value proposition is exactly built for this time and I welcome the opportunity for you to join me in recognizing some of the -- the benefit that fiber is going to provide and hopefully, you see that and want to participate in that as being a shareholder of Clearfield.

[Operator]

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.