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What changed in Clearfield, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Clearfield, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+204 added−282 removedSource: 10-K (2025-11-25) vs 10-K (2024-11-15)

Top changes in Clearfield, Inc.'s 2025 10-K

204 paragraphs added · 282 removed · 139 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeFor this reason, we offer rigorous training programs for manufacturing and other technical employees to allow them to develop the necessary skillset for their roles and promote career development. To date, our training programs and overall collaborative working environment have allowed us to be successful in attracting and retaining qualified technical personnel for these positions.
Biggest changeWe invest significant management attention, time, and resources to attract, engage, develop, and retain our employees, particularly for positions that require technical knowledge or expertise. For this reason, we offer rigorous training programs for manufacturing and other technical employees to allow them to develop the necessary skillset for their roles and promote career development.
Most of these are available from multiple suppliers. However, some components and third-party contract manufacturing services are purchased from a single or a limited number of suppliers. The loss of access to some components and third-party contract manufacturing services could have an adverse effect on our ability to deliver products on a timely basis and on our financial performance.
Most of these are available from multiple suppliers. However, some components and third-party contract manufacturing services are purchased from a single or limited number of suppliers. The loss of access to some components and third-party contract manufacturing services could have an adverse effect on our ability to deliver products on a timely basis and on our financial performance.
The manufacturing personnel contracted through the Maquiladora are covered by a customary local collective bargaining agreement with the company that provides the personnel and other services to Mexico facility. In our manufacturing operations, we monitor key metrics and goals based on quality, productivity, and ability to meet shipping promise dates.
The manufacturing personnel contracted through the Maquiladora are covered by a customary local collective bargaining agreement with the company that provides the personnel and other services to the Mexico facility. In our manufacturing operations, we monitor key metrics and goals based on quality, productivity, and ability to meet shipping promise dates.
The products are built and tested for harsh environments to meet the strictest industry standards ensuring customers trouble-free performance in extreme outside plant conditions. Active Cabinets using our FiberFlex™ product lines feature either fully integrated, fully engineered cabinets equipped with specific active electronics configurations or universal cabinets ready for mounting other electronic equipment.
The products are built and tested for harsh environments to meet the strictest industry standards ensuring customers trouble-free performance in extreme outside plant conditions. 2 Active Cabinets using our FiberFlex™ product lines feature either fully integrated, fully engineered cabinets equipped with specific active electronics configurations or universal cabinets ready for mounting other electronic equipment.
All types of fiber cable construction can be integrated within the cassette to support all patch only, patch and splice (in-cassette splicing), passive optical component hardware and plug-and-play scenarios. 2 WaveSmart ® optical components are integrated for signal coupling, splitting, termination, multiplexing, demultiplexing and attenuation for a seamless integration within our fiber management platform.
All types of fiber cable construction can be integrated within the cassette to support all patch only, patch and splice (in-cassette splicing), passive optical component hardware and plug-and-play scenarios. WaveSmart ® optical components are integrated for signal coupling, splitting, termination, multiplexing, demultiplexing and attenuation for a seamless integration within our fiber management platform.
Clearfield Operating Segment Clearfield is focused on providing fiber management, fiber protection, and fiber delivery products that accelerate the turn-up of fiber-based networks in residential homes, businesses, and network infrastructure in the wireline and wireless access network.
Clearfield is focused on providing fiber management, fiber protection, and fiber delivery products that accelerate the turn-up of fiber-based networks in residential homes, businesses, and network infrastructure in the wireline and wireless access network.
Competitors to the FieldSmart product lines include, but are not limited to, products offered by Corning Cabling Systems, Inc., OFS (Furukawa Electric North America, Inc.), AFL Telecommunications (a subsidiary of Fujikura Ltd.), Fujikura Ltd., Nokia, Hextronics Group and CommScope, Inc.
Competitors to the FieldSmart product lines include, but are not limited to, products offered by Corning Cabling Systems, Inc., OFS (Furukawa Electric North America, Inc.), AFL Telecommunications (a subsidiary of Fujikura Ltd.), Fujikura Ltd., Nokia, Hexatronics Group, Amphenol and CommScope, Inc.
We believe our products offer broadband service providers a competitive advantage at a crucial time when demand for fiber-based services is increasing to historic levels as providers focus on passing and connecting more homes. We are driven to help broadband service providers reduce the cost - and increase the speed of fiber deployment. Segments We are engaged in global operations.
We believe our products offer broadband service providers a competitive advantage at a crucial time when demand for fiber-based services is increasing to historic levels as providers focus on passing and connecting more homes. We are driven to help broadband service providers reduce the cost - and increase the speed of fiber deployment.
Some of our products currently offered are described below: FieldSmart ® is a series of panels, cabinets, wall boxes and other enclosures that provide a consistent design from the inside plant of the telco’s “central office” or cable television’s head-end, all the way through the outside plant to the access network to within the home or business.
FieldSmart ® is a series of panels, cabinets, wall boxes and other enclosures that provide a consistent design from the inside plant of the telco’s “central office” or cable television’s head-end, all the way through the outside plant to the access network to within the home or business.
With the innovation of forward-thinking products, a 100 percent plug-and-play platform and creative deployment methods, we are fulfilling our mission to enable the lifestyle that better broadband provides.
With the innovation of forward-thinking products, a 100 percent plug-and-play platform and creative deployment methods, we are fulfilling our mission of enabling the lifestyle of better broadband and beyond.
Nestor Cables is subject to Finnish government regulation and Nestor Cables Baltics is subject to Estonian government regulation. Products Our product strategy involves analyzing the broadband communications industry environment and technology, with a particular focus on simplifying our customers’ business, and developing innovative, high-quality products utilizing modular designs wherever possible.
Products Our product strategy involves analyzing the broadband communications industry environment and technology, with a particular focus on simplifying our customers’ business, and developing innovative, high-quality products utilizing modular designs wherever possible.
In addition, Clearfield’s engineering services team works alongside the engineering design departments of our original equipment manufacturer (“OEM”) customers to design and manufacture custom solutions for both in-the-box as well as network connectivity assemblies specific to that customer’s product line.
In addition, Clearfield’s engineering services team works alongside the engineering design departments of our original equipment manufacturer (“OEM”) customers to design and manufacture custom solutions for both in-the-box as well as network connectivity assemblies specific to that customer’s product line. ClearPass ™ Connector Cleaning Dust Cap is a game-changing innovation that simplifies fiber connector cleaning while enhancing network performance.
NesCon Connectivity Products is a product family by Nestor Cables that includes essential installation and connection accessories for fiber optic networks, all of which are compatible with Nestor Cable’s optical fiber cables. 3 Markets and Customers The Company’s products are sold across broadband service providers, which we categorize as National Carrier (wireline/wireless national telco carriers (Tier 1)), Community Broadband (Tier 2 and 3 telco carriers, utilities, municipalities, and alternative carriers), Large Regional Service Providers (ILEC operating a multi-state network with more than 500,000 subscribers), Multiple System Operators (cable television), International (primarily Europe, Central/Latin America and Canada), and Legacy build-to-print copper and fiber assemblies (primarily contract manufacturing).
Markets and Customers The Company’s products are sold across broadband service providers, which we categorize as National Carrier (wireline/wireless national telco carriers (Tier 1)), Community Broadband (Tier 2 and 3 telco carriers, utilities, municipalities, and alternative carriers), Large Regional Service Providers (ILEC operating a multi-state network with more than 500,000 subscribers), Multiple System Operators (cable television), and International (primarily Canada, the Caribbean, Central/South America and Mexico), and Legacy build-to-print copper and fiber assemblies (primarily contract manufacturing).
Nestor’s products are sold to telecommunication wholesalers and telecommunication operators, primarily in Europe. The Company’s products are sold direct to customers through the Company’s sales force as well as through authorized distributors. In addition, the Company uses manufacturing sales representatives and sales agents for customer and geography specific needs.
The Company’s products are sold direct to customers through the Company’s sales force as well as through authorized distributors. In addition, the Company uses manufacturing sales representatives and sales agents for customer and geography specific needs. The Company considers the primary markets for its products to be as follows.
Seasonality We are affected by the seasonal trends in the industries we serve. We typically experience sequentially lower sales in our first and second fiscal year quarters, primarily due to customer budget cycles, deployment schedules of outdoor products, some customer geographical concentrations, as well as standard vacation and holiday calendars.
We typically experience sequentially lower sales in our first and second fiscal year quarters, primarily due to customer budget cycles, deployment schedules of outdoor products, some customer geographical concentrations, as well as standard vacation and holiday calendars. Sales have usually reached a seasonal peak in our third and fourth fiscal quarters.
Over the last several years, we have taken steps to improve our supply chain operations, enhance resiliency, and mitigate risk of disruption. Major Customers and Financial Information about Geographic Areas For the fiscal year ended September 30, 2024, the Company had two customers that comprised 15% and 11% of net sales. These customers are distributors.
Over the last several years, we have taken steps to improve our supply chain operations, enhance resiliency, and mitigate risk of disruption. Major Customers and Financial Information about Geographic Areas For the fiscal year ended September 30, 2025, the Company had two customers, Customer A and Customer B, which accounted for approximately 18% and 13% of net sales, respectively.
This enables the deployment of double-ended, standard cable lengths rather than relying on highly engineered, built to order cable assemblies or multiple field splicing events. Product development for the Company’s product line program has mainly been conducted internally.
This enables the deployment of double-ended, standard cable lengths rather than relying on highly engineered, built-to-order cable assemblies or multiple field splicing events. Product development for the Company’s product line program has mainly been conducted internally. We believe that the communication industry environment is constantly evolving, and our success depends on our ability to anticipate and respond to these changes.
Corporate Information Clearfield, Inc. was incorporated under the laws of Minnesota in 1979. Our corporate headquarters are located at 7050 Winnetka Avenue North, Suite 100, Brooklyn Park, Minnesota, 55428, and our corporate website is www.seeclearfield.com.
Our corporate headquarters are located at 7050 Winnetka Avenue North, Suite 100, Brooklyn Park, Minnesota, 55428, and our corporate website is www.seeclearfield.com.
These major customers, like our other customers, purchase our products from time to time through purchase orders and we do not have any agreements that obligate these major customers to purchase products in the future from us. As of September 30, 2024, three customers accounted for a combined 37% of accounts receivable. These customers are all distributors.
These major customers, like our other customers, purchase our products from time to time through purchase orders and we do not have any agreements that obligate these major customers to purchase products in the future from us.
The substantial majority of these employees work out of our Brooklyn Park, Minnesota headquarters. The Company’s office personnel are comprised of sales, marketing, engineering, and administrative personnel. The manufacturing personnel include both individuals directly involved in the manufacturing of our products, as well as warehouse and operations supervisory personnel. Certain positions within our organization require industry specific technical knowledge.
The manufacturing personnel include both individuals directly involved in the manufacturing of our products, as well as warehouse and operations supervisory personnel. Certain positions within our organization require industry specific technical knowledge. Our manufacturing personnel currently work in one shift as needed at our Brooklyn Park facility.
This metric is important as the Company has taken a strategic approach to be able to offer low industry lead times for our customers. The Company incentivizes certain of its personnel based on these metrics. Climate Change Certain government and regulatory bodies have introduced or are contemplating regulatory changes relating to climate change.
This metric is important as the Company has taken a strategic approach to be able to offer low industry lead times for our customers. The Company incentivizes certain of its personnel based on these metrics. Corporate Information Clearfield, Inc. was incorporated under the laws of Minnesota in 1979.
The YOURx® access terminals also offer flexibility with cable mid-span and internal splicing options. Clearfield access terminals can be deployed in a variety of locations including pedestal, vault, flowerpot, pole-mount, smart-pole, or strand mounted options. FieldShield ® platform is a patented fiber pathway and protection method aimed at reducing the cost of broadband deployment.
Its small size makes it an attractive choice to deliver fiber to cell towers and inside cellular concealment poles. Clearfield access terminals can be deployed in a variety of locations including pedestals, vault, flowerpot, pole-mount, smart-pole, or strand mounted options. FieldShield ® platform is a patented fiber pathway and protection method aimed at reducing the cost of broadband deployment.
As of September 30, 2023, three customers accounted for a combined 40% of accounts receivable. These customers are all distributors. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported.
As of September 30, 2025, the Company had two customers, Customer B and Customer A, which accounted for approximately 17% and 11% of accounts receivable, respectively. As of September 30, 2024, Customer B accounted for 16% of accounts receivable. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported.
Patents and Trademarks As of September 30, 2024, Clearfield has 53 patents granted and multiple patent applications pending both inside and outside the United States. These patents begin to expire in 2028. We have also developed and are using multiple trademarks and logos to market and promote our products.
Sales outside the United States are principally to customers in Canada as well as countries in the Caribbean, Central/South America, and Mexico. Patents and Trademarks As of September 30, 2025, Clearfield has 63 patents granted and multiple patent applications pending both inside and outside the United States. These patents begin to expire in 2028.
Access Terminals from Clearfield are designed to ensure every service provider has the freedom of choice to match drop cable configuration and technology with the needs of their environment and first-cost priorities. The patented SeeChange® terminal and hardened connector system lets the operator push fiber deeper in the neighborhood using a completely plug-and-play approach.
Access Terminals from Clearfield are designed to ensure every service provider has the freedom of choice to match drop cable configuration and technology with the needs of their environment and first-cost priorities. The YOURx® access terminals also offer flexibility with cable mid-span and internal splicing options. The TetherSmart Multi-Fiber Terminal is Clearfield’s smallest carrier-grade, plug-and-play access terminal.
The market demand and resulting build rates of fiber optic networks and capital expenditures by telecommunications wholesalers and telecommunications providers, has a large and direct influence on the demand for the Nestor Cables segment products. Many of our competitors have greater resources than we do, including greater sales, product development, marketing, financial, technical, or engineering resources.
Many of our competitors have greater resources than we do, including greater sales, product development, marketing, financial, technical, or engineering resources.
Nestor Cables has approximately 35 office personnel and 120 manufacturing personnel as of September 30, 2024. As of September 30, 2024, we had contracted for approximately 330 personnel in the Mexico facility through a Maquiladora agreement.
To date, our training programs and overall collaborative working environment have allowed us to be successful in attracting and retaining qualified technical personnel for these positions. As of September 30, 2025, we had contracted for approximately 375 personnel in the Mexico facility through a Maquiladora agreement.
We intend to leverage our Nestor platform to cross sell connectivity products into Europe. FTTB Fiber to the Business is principally for Multiple System Operators (cable television) and wireline/wireless national telco carriers (Tier 1) to penetrate the business marketplace. FTT-Cell site Fiber to the Cell site is the trend in which wireless service providers enhance their coverage for bandwidth.
The Company’s sales and marketing efforts have principally been focused on the U.S., with additional efforts in Canada and Central/Latin America. 3 FTTB Fiber to the Business is principally for Multiple System Operators (cable television) and wireline/wireless national telco carriers (Tier 1) to penetrate the business marketplace.
The Company considers the primary markets for its products to be as follows: FTTP Fiber to the Premise (also called Fiber to the Home) is a means of delivering the highest possible level of bandwidth directly to the user. The Company’s sales and marketing efforts have principally been focused on the U.S., with additional efforts in Canada and Central/Latin America.
Commercial Fiber Broadband Connectivity FTTP Fiber to the Premise (also called Fiber to the Home) is a means of delivering the highest possible level of bandwidth directly to the user.
Sales have usually reached a seasonal peak in our third and fourth fiscal quarters. 5 Human Capital Resources As of September 30, 2024, the Company had approximately 400 full-time employees, of which 62% were based in the United States (“U.S.”) and 38% were based outside of the U.S., primarily in Finland and Estonia due to our Nestor Cables operations.
Human Capital Resources As of September 30, 2025, Clearfield had approximately 243 full-time employees, all of which were based in the United States, excluding employees associated with the discontinued operations of the Nestor Cables business. We also employ seasonal, part-time employees and independent contractors.
Competition The market for the fiber management, fiber protection, and fiber delivery products provided by the Clearfield segment is highly competitive.
FTT-Cell site Fiber to the cell site is the trend in which wireless service providers enhance their coverage for bandwidth. Currently, the majority of these cell sites are served by fiber backhaul and fronthaul. Competition The market for the fiber management, fiber protection, and fiber delivery products is highly competitive.
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Our operations currently comprise of two reportable segments: the Clearfield Operating Segment (referred to herein as “Clearfield”), and the Nestor Cables Operating Segment (referred to herein as “Nestor Cables” or “Nestor”).
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Segment Information We are engaged in global operations. Our operations currently comprise one reportable segment. On November 11, 2025, the Company completed the sale of its Nestor Cables business, which was previously reported as the Nestor Cables Operating Segment.
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Nestor Cables Operating Segment Nestor Cables is based in Oulu, Finland, with operations in Estonia through its wholly owned subsidiary, Nestor Cables Baltics OÜ. Nestor Cables manufactures fiber optic and copper telecommunication cables and equipment which it distributes to telecommunication operators, network owners, electric companies, building contractors, and industrial companies.
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In connection with this sale, the historical results of the Nestor Cables business and certain assets and liabilities of the Nestor Cables business are reported in our consolidated financial statements as discontinued operations. Following the sale of the Nestor Cables business, the continuing operations of the Company comprise one operating segment and one reportable segment.
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Nestor has two types of production processes, the process of making cable in its Finland and Estonia facility and the finished assembly portion of its business performed in Estonia. Nestor Cables’ customer base includes telecom operators, network owners, contractors, industries and wholesalers. Products are sold via distributors and directly to end users.
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Research and development are reflected in Selling, General, & Administrative expenses. Some of our products currently offered are described below.
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We believe that the communication industry environment is constantly evolving, and our success depends on our ability to anticipate and respond to these changes. Research and development are reflected in Selling, General, & Administrative expenses.
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With built-in cleaning functionality and 94.5% effectiveness, the ClearPass Dust Cap ensures faster installation, fewer errors and a more reliable broadband experience.
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Fiber Optic Cables manufactured by Nestor Cables include a comprehensive range of optical fiber cables that offer dependable solutions for various installation conditions and special requirements, including direct buried cables, duct cables, microduct cables, indoor/outdoor cables, aerial cables and submarine cable.
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Broadband Service Provider Data Center Infrastructure DC Interconnect/Campus Network Fiber entry pathways supporting carrier access, campus links, and data center interconnection. Meet-Me Room Cross-connect environment where carriers, ISPs and cloud providers interconnect securely. Main Distribution Area Core switching and routing layer distributing connectivity between MMR and data halls. White Space Primary data hall for customer racks, servers and storage infrastructure.
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Copper Cables manufactured by Nestor Cables include copper conducted instrumentation and automation cables as well as central and signaling cables. Nestor also manufactures copper cable for telecommunications networks.
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Wireless Deployments Metro Core Aggregates traffic to and from national/international networks. Backhaul Connects Core to RAN; high-capacity data transport. Indoor/Outdoor DAS Connects centralized baseband units (BBUs) to remote radio heads (RRHs). Small Cells Links centralized or virtualized RAN hubs to small cell radios on poles and rooftops.
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Nestor Optimus product family is a complete solution which includes all needed products - cables, microducts, microduct accessories and tools - for construction of microduct networks which are easily expandable, suitable for changing and growing urban and suburban areas, and enables the use of lighter installation techniques, which reduces construction costs and interference during installation.
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These customers are distributors. For the fiscal year ended September 30, 2024, Customer A and Customer B accounted for approximately 20% and 15% of net sales, respectively. For the fiscal year ended September 30, 2023, Customer A and Customer B accounted for approximately 19% and 10% of net sales, respectively.
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Currently, the majority of these cell sites are served by fiber backhaul and fronthaul. Build to Print In addition to a proprietary product line designed for the broadband service provider marketplace, Clearfield provides contract manufacturing services for original equipment manufacturers requiring copper and fiber cable assemblies built to their specification.
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We have also developed and are using multiple trademarks and logos to market and promote our products. Seasonality We are affected by the seasonal trends in the industries we serve.
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The Nestor Cables segment faces competition from numerous competitors within each of the markets it serves. The Nestor Cables segment competes primarily on the basis of its product performance and its ability to meet its customers’ highly specified design, engineering and delivery needs on a timely basis.
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None of our employees are covered by any collective bargaining agreements. 5 Our employees include approximately 160 office personnel and 83 manufacturing personnel as of September 30, 2025. The substantial majority of these employees work out of our Brooklyn Park, Minnesota headquarters. The Company’s office personnel are comprised of sales, marketing, engineering, and administrative personnel.
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For the fiscal year ended September 30, 2023, the Company had one customer that comprised 16% of net sales. This customer was a distributor. For the fiscal year ended September 30, 2022, the Company had one customer that comprised 14% of net sales. This customer was a distributor.
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Sales outside the United States are principally to customers in Canada as well as countries in the Caribbean, Europe and Central and South America. Since our acquisition of Nestor Cables in July 2022, we experienced an increased concentration of customers based in Europe.
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We also employ seasonal, part-time employees and independent contractors. Except for customary local works council arrangements for employees in Finland and Estonia, none of our employees are covered by any collective bargaining agreement. Our U.S. employees include approximately 160 office personnel and 90 manufacturing personnel as of September 30, 2024.
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Our manufacturing personnel currently work in one shift as needed at our Brooklyn Park facility. We invest significant management attention, time, and resources to attract, engage, develop, and retain our employees, particularly for positions that require technical knowledge or expertise.
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While we do not believe climate-related risks are reasonably likely to have a material impact on our business, results of operations, or financial condition at this time, we are continuing to assess the nature and extent of risk from a changing climate and the potential for increased regulation.
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The majority of our manufacturing operations calls for compiling raw material and other purchased components from suppliers. As part of our operations, we focus on minimizing scrap and other waste and look to recycle and salvage this scrap wherever possible. Any new regulation of emissions may result in additional costs to our suppliers which may be passed on to us.
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In addition, the physical impacts of climate change and other natural events, including adverse weather conditions such as heavy or sustained rainfall, flooding, cold weather and snow, can impact deployment schedules of outdoor products and potentially affect demand for our products.
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Additionally, we may need to take into account an increase in the frequency of extreme weather events in the development of our products.
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An increase in the frequency of extreme weather events, changes in weather patterns, drought, rising ocean and temperature levels, earthquakes and the like may impact our manufacturing operations or the manufacturing operations of suppliers of our critical raw materials or components.
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These types of impacts may also result in transportation-related supply chain challenges and negatively impact the delivery of raw materials, components, or products to or from our facilities.
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These potential physical effects may increase costs, cause delays or shortages in components required to produce our products or cause delays in the shipment of our products to customers. 6 Changes in environmental and climate change laws or regulations, including laws relating to greenhouse gas (“GHG”) emissions, could lead to new or additional investment in the Company’s products or facilities and could increase environmental compliance expenditures.
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Changes in climate change concerns, or in the regulation of such concerns, including GHG emissions, could subject the Company to additional costs and restrictions, including increased energy and raw material costs and other compliance requirements which could negatively impact the Company’s reputation, business, capital expenditures, results of operations, and financial position.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe risks inherent in pursuing or completing an acquisition include: ● diversion of management’s time and attention away from existing business activities; ● difficulties or delays in integrating and assimilating information and financial systems, operations and products of an acquired business or other business venture or in realizing projected efficiencies, growth prospects, cost savings and synergies; ● potential difficulties in managing our expanded operations and, in the case of international acquisitions, potential difficulties in managing non-U.S. subsidiaries, including the burden and cost of complying with a variety of international laws; ● potential loss of key employees, customers and suppliers of the acquired businesses or adverse effects on relationships with existing customers and suppliers; ● adverse impact on overall profitability if the acquired business does not achieve the return on investment projected at the time of acquisition; ● currency translations and fluctuations may adversely affect the financial performance of our consolidated operations; and ● with respect to the acquired assets and liabilities, inaccurate assessment of additional post-acquisition capital investments; undisclosed, contingent, or other liabilities; problems executing backlog of material supply or installation projects; unanticipated costs; and an inability to recover or manage such liabilities and costs. 10 These risks associated with acquisition, integration of acquired businesses and management of our expanded operations may have a material adverse effect on our sales, financial condition, and results of operations.
Biggest changeThe risks inherent in pursuing or completing an acquisition include: ● diversion of management’s time and attention away from existing business activities; ● difficulties or delays in integrating and assimilating information and financial systems, operations and products of an acquired business or other business venture or in realizing projected efficiencies, growth prospects, cost savings and synergies; 9 ● potential difficulties in managing our expanded operations and, in the case of international acquisitions, potential difficulties in managing non-U.S. subsidiaries, including the burden and cost of complying with a variety of international laws; ● potential loss of key employees, customers and suppliers of the acquired businesses or adverse effects on relationships with existing customers and suppliers; ● adverse impact on overall profitability if the acquired business does not achieve the return on investment projected at the time of acquisition; ● currency translations and fluctuations may adversely affect the financial performance of our consolidated operations; and ● with respect to the acquired assets and liabilities, inaccurate assessment of additional post-acquisition capital investments; undisclosed, contingent, or other liabilities; problems executing backlog of material supply or installation projects; unanticipated costs; and an inability to recover or manage such liabilities and costs.
Certain provisions of our articles of incorporation and bylaws, Minnesota law, and other agreements may make it more difficult for a third-party to acquire, or discourage a third-party from attempting to acquire, control of our Company, including: ● the provisions of our bylaws setting forth the advance notice and information requirements for shareholder proposals, including nominees for directors, to be considered properly brought before shareholders; ● the right of our board of directors to establish more than one class or series of shares and to fix the relative rights and preferences of any such different classes or series; ● the provisions of Minnesota law relating to business combinations and control share acquisitions; and ● the provisions of our equity compensation plans allowing for the acceleration of vesting or payments of awards granted under the plans in the event of specified events that result in a “change in control” and provisions of agreements with certain of our executive officers requiring payments if their employment is terminated and there is a “change in control.” These measures could discourage or prevent a takeover of us or changes in our management, even if an acquisition or such changes would be beneficial to our shareholders.
Certain provisions of our articles of incorporation and bylaws, Minnesota law, and other agreements may make it more difficult for a third-party to acquire, or discourage a third-party from attempting to acquire, control of our Company, including: ● the provisions of our bylaws setting forth the advance notice and information requirements for shareholder proposals, including nominees for directors, to be considered properly brought before shareholders; ● the right of our board of directors to establish more than one class or series of shares and to fix the relative rights and preferences of any such different classes or series; ● the provisions of Minnesota law relating to business combinations and control share acquisitions; and ● the provisions of our equity compensation plans allowing for the acceleration of vesting or payments of awards granted under the plans in the event of specified events that result in a “change in control” and provisions of agreements with certain of our executive officers requiring payments if their employment is terminated and there is a “change in control.” 14 These measures could discourage or prevent a takeover of us or changes in our management, even if an acquisition or such changes would be beneficial to our shareholders.
Other factors that may affect our quarterly operating results include: ● the volume and timing of orders from and shipments to our customers, particularly significant customers; ● mergers and acquisitions activity among our customers; ● work stoppages and other developments affecting the operations of our customers; ● the timing of and our ability to obtain required certifications or qualifications to sell products, the timing of and our ability to obtain new customer contracts, and the timing of revenue recognition; ● the timing of new product and service announcements; ● the availability of products and services; ● seasonal trends in the industries we serve; ● market acceptance of new and enhanced versions of our products and services, including the impact of government programs on customers purchasing decisions; ● variations in the mix of products and services we sell; ● the utilization of our production capacity and employees, including foreign operations; ● the availability and cost of key components of our products, including the impact of new or increased tariffs; and ● accounting treatment related to stock-based compensation.
Other factors that may affect our quarterly operating results include: 13 ● the volume and timing of orders from and shipments to our customers, particularly significant customers; ● mergers and acquisitions activity among our customers; ● work stoppages and other developments affecting the operations of our customers; ● the timing of and our ability to obtain required certifications or qualifications to sell products, the timing of and our ability to obtain new customer contracts, and the timing of revenue recognition; ● the timing of new product and service announcements; ● the availability of products and services; ● seasonal trends in the industries we serve; ● market acceptance of new and enhanced versions of our products and services, including the impact of government programs on customers purchasing decisions; ● variations in the mix of products and services we sell; ● the utilization of our production capacity and employees, including foreign operations; ● the availability and cost of key components of our products, including the impact of new or increased tariffs; and ● accounting treatment related to stock-based compensation.
Competition from manufacturers of telecommunications equipment such as ours may result in price reductions, lower gross profit margins, increased discounts to customers, and loss of market share, which could require increased spending by us on research and development, sales and marketing, and customer support. Our success depends upon adequate protection of our patent and other intellectual property rights.
Competition from manufacturers of telecommunications equipment such as ours may result in price reductions, lower gross profit margins, increased discounts to customers, and loss of market share, which could require increased spending by us on research and development, sales and marketing, and customer support. 12 Our success depends upon adequate protection of our patent and other intellectual property rights.
Our inability to attract, develop and retain qualified personnel could have a significant negative effect and thereby materially harm our business and financial condition. Cyber-security incidents, including ransomware, data breaches or computer viruses, could disrupt our business operations, damage our reputation, result in increased expense and potentially lead to legal proceedings.
Our inability to attract, develop and retain qualified personnel could have a significant negative effect and thereby materially harm our business and financial condition. 10 Cyber-security incidents, including ransomware, data breaches or computer viruses, could disrupt our business operations, damage our reputation, result in increased expense and potentially lead to legal proceedings.
Further, we budget our expenses based in part on expectations of future sales. If sales levels in a particular quarter are lower than expected, our operating results will be affected adversely. 15 Because of these factors, our quarterly operating results are difficult to predict and are likely to vary in the future.
Further, we budget our expenses based in part on expectations of future sales. If sales levels in a particular quarter are lower than expected, our operating results will be affected adversely. Because of these factors, our quarterly operating results are difficult to predict and are likely to vary in the future.
In addition, we are subject to the risks inherent in conducting business internationally, including political and economic instability, unexpected changes in diplomatic and trade relationships, and a complex system of commercial and trade laws, regulations, and policies, including those related to data privacy, trade compliance, anti-corruption, and anti-bribery.
In addition, we are subject to the risks inherent in conducting business internationally, including political and economic instability, unexpected changes in diplomatic and trade relationships, and a complex system of commercial and trade laws, regulations, and policies, including those related to tariffs, data privacy, trade compliance, anti-corruption, and anti-bribery.
Natural disasters, extreme weather events and other catastrophic events such as flooding, tornadoes, hurricanes, unusually heavy precipitation, earthquakes, tsunamis, fires, explosions, acts of war, terrorism, civil unrest, or pandemics could increase the cost of doing business or otherwise harm our operations, our suppliers and our customers.
Natural disasters, extreme weather events and other catastrophic events such as flooding, tornadoes, hurricanes, unusually heavy precipitation, earthquakes, tsunamis, fires, explosions, acts of war, terrorism, civil unrest, pandemics or other health crises could increase the cost of doing business or otherwise harm our operations, our suppliers and our customers.
Passing along these increased prices to our customers to offset the impact of higher costs may cause certain customers to cancel, push out, or refrain from purchasing our products, which could negatively impact demand for our products, and therefore also negatively impact our results of operations and future profitability.
Passing along these increased prices to our customers, where possible, to offset the impact of higher costs may cause certain customers to cancel, push out, or refrain from purchasing our products, which could negatively impact demand for our products, and therefore also negatively impact our results of operations and future profitability.
Further, the costs to obtain certain raw materials and supplies, such as fiber and copper cabling, are subject to price fluctuations, which may be substantial, because of global market demands. Many companies utilize the same raw materials and supplies in the production of their products as we use in our products.
Further, the costs to obtain certain raw materials and supplies, such as fiber, are subject to price fluctuations, which may be substantial, because of global market demands. Many companies utilize the same raw materials and supplies in the production of their products as we use in our products.
Any failure of such products to meet BABA domestic content requirements would result in those products being ineligible for purchase and use by certain customers under the BEAD program, and could result in lost sales, lost business opportunity, breach of warranty claims, and damage to our reputation and customer relationships. 11 Our products are often critical to the performance of telecommunications systems.
Any failure of such products to meet BABA domestic content requirements would result in those products being ineligible for purchase and use by certain customers under the BEAD program, and could result in lost sales, lost business opportunity, breach of warranty claims, and damage to our reputation and customer relationships.
We offer customers limited warranty provisions. If the limitations on the product warranties are unenforceable in a particular jurisdiction or if we are exposed to product liability claims that are not covered by insurance, a claim could harm our business. We are dependent on key personnel.
Our products are often critical to the performance of telecommunications systems. We offer customers limited warranty provisions. If the limitations on the product warranties are unenforceable in a particular jurisdiction or if we are exposed to product liability claims that are not covered by insurance, a claim could harm our business. We are dependent on key personnel.
ITEM 1A. RISK FACTORS Risks Relating to Our Operations Our business is dependent on interdependent management information systems. We rely on effective management information systems, including our enterprise resource planning (“ERP”) software, for critical business operations and to support strategic business decisions.
Our business is dependent on interdependent management information systems. We rely on effective management information systems, including our enterprise resource planning (“ERP”) software, for critical business operations and to support strategic business decisions.
The failure of our third-party manufacturers to manufacture the products for us or the failure of our suppliers of components and raw materials to supply us these items consistent with our requirements as to quality, quantity and timeliness could materially harm our business by causing delays, lost sales, increases in costs and lower gross profit margins.
Any delays in delivery of our product to distributors or customers could be extended, and our costs associated with the change in product manufacturing could increase. 7 The failure of our third-party manufacturers to manufacture the products for us or the failure of our suppliers of components and raw materials to supply us these items consistent with our requirements as to quality, quantity and timeliness could materially harm our business by causing delays, lost sales, increases in costs and lower gross profit margins.
If we fail to anticipate or respond in a cost-effective and timely manner to technological developments, changes in industry standards or customer requirements, or if we experience any significant delays in product development or introduction, our business, operating results, and financial condition could be affected adversely.
If these technologies are patented or proprietary to our competitors, we may not be able to access these technologies. 11 If we fail to anticipate or respond in a cost-effective and timely manner to technological developments, changes in industry standards or customer requirements, or if we experience any significant delays in product development or introduction, our business, operating results, and financial condition could be affected adversely.
Increased demand for the Company’s products from its customers may put pressure on the Company’s supply chain, particularly during periods of disruption in the global supply chain and may lead to increases in costs or delays in obtaining the materials and components for our products from our suppliers.
Some manufacturers may also allocate short supply of products among Clearfield and their other customers. 6 Increased demand for the Company’s products from its customers may put pressure on the Company’s supply chain, particularly during periods of disruption in the global supply chain and may lead to increases in costs or delays in obtaining the materials and components for our products from our suppliers.
A significant percentage of our sales in the last three fiscal years have been made to a small number of customers, and the loss of these major customers could adversely affect us. Our customer base includes direct customers, OEMs, and distributors. For fiscal year 2024, the Company had two customers that comprised 26% of net sales.
A significant percentage of our sales in the last three fiscal years have been made to a small number of customers, and the loss of these major customers could adversely affect us. Our customer base includes direct customers, OEMs, and distributors.
Changes in government programs in our industry or uncertainty regarding future changes could adversely impact our customers’ or prospective customers’ decisions regarding timing and amounts of capital spending, which could decrease demand for our products, delay orders or result in pricing pressure from these customers. 13 Intense competition in our industry may result in price reductions, lower gross profits, and loss of market share.
Changes in government programs in our industry or uncertainty regarding future changes could adversely impact our customers’ or prospective customers’ decisions regarding timing and amounts of capital spending, which could decrease demand for our products, delay orders or result in pricing pressure from these customers.
Competition in the telecommunications equipment and services industry is intense. Our competitors may have or could develop or acquire marketing, financial, development and personnel resources that exceed ours.
Intense competition in our industry may result in price reductions, lower gross profits, and loss of market share. Competition in the telecommunications equipment and services industry is intense. Our competitors may have or could develop or acquire marketing, financial, development and personnel resources that exceed ours.
However, there can be no assurance that the loss of a distributor customer would not have an adverse effect on our sales or gross margins in this event. 9 The loss of any one or more of our key customers, the substantial reduction, delay, or cancellation of orders received from any of our customers in our sales backlog or our inability to collect the accounts receivable from these customers, could have a material adverse effect on our business, financial position and results of operations.
The loss of any one or more of our key customers, the substantial reduction, delay, or cancellation of orders received from any of our customers in our sales backlog or our inability to collect the accounts receivable from these customers, could have a material adverse effect on our business, financial position and results of operations.
Increases in the price of raw materials, labor and other components utilized in the production of our products, along with logistics and other related costs, may lead to higher production and shipping costs for our products.
Inflationary price pressures and uncertain availability of components, raw materials, labor and logistics used by us, and our suppliers could negatively impact our profitability. Increases in the price of raw materials, labor and other components utilized in the production of our products, along with logistics and other related costs, may lead to higher production and shipping costs for our products.
The impact of significant mergers and acquisitions among our customers on our business is likely to be unclear until sometime after such transactions are completed, which may take a year or more.
Customers integrating large-scale mergers or acquisitions may also reduce their purchases of equipment during the integration period or postpone or cancel orders. 8 The impact of significant mergers and acquisitions among our customers on our business is likely to be unclear until sometime after such transactions are completed, which may take a year or more.
We rely on our ERP system to support such important business operations as processing sales orders and invoicing, manufacturing, shipping, inventory control, purchasing and supply chain management, human resources, and financial reporting. Some of these systems are made up of multiple software and system providers.
We rely on our ERP system to support such important business operations such as processing sales orders and invoicing, manufacturing, shipping, inventory control, purchasing and supply chain management, human resources, and financial reporting. We also rely on management information systems to produce information for business decision-making and planning.
Acquisitions may result in the recording of goodwill and other intangible assets which are subject to potential impairments in the future that could negatively impact our financial results. If we are unable to complete acquisitions or successfully integrate and develop acquired businesses, our financial results could be materially and adversely affected.
Acquisitions may result in the recording of goodwill and other intangible assets which are subject to potential impairments in the future that could negatively impact our financial results.
Our business, including global supply chain, is affected by global economic conditions and geopolitical issues. Geopolitical issues, such as the Russian invasion of Ukraine and related economic sanctions and tensions between Russia and NATO countries, has resulted in increasing global tensions, rising energy costs and creates uncertainty for our global supply chain.
Our business, including global supply chain, is affected by global economic conditions and geopolitical issues. Geopolitical issues, such as the Russian invasion of Ukraine, the Israel-Hamas war, the U.S.-China rivalry, rising trade protectionism, economic sanctions and other global conflicts, have resulted in increasing global tensions, rising energy costs and creates uncertainty for our global supply chain.
To the extent that any disruptions, cyber-attack or other security breach results in a loss or damage to our data, or inappropriate disclosure of confidential information, it could harm our business.
To the extent that any disruptions, cyber-attack or other security breach results in a loss or damage to our data, or inappropriate use or disclosure of confidential information, it could harm our business. In addition, we may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.
In connection with this merger and acquisition activity, our customers may postpone or cancel orders for our product based on revised plans for technology or network expansion pending consolidation activity. Customers integrating large-scale mergers or acquisitions may also reduce their purchases of equipment during the integration period or postpone or cancel orders.
In connection with this merger and acquisition activity, our customers may postpone or cancel orders for our product based on revised plans for technology or network expansion pending consolidation activity.
Risks Relating to Our Common Stock Our operating results may fluctuate significantly from quarter to quarter, which may make budgeting for expenses difficult and may negatively affect the market price of our common stock.
These risks associated with international operations may have a material adverse effect on our revenue from or costs associated with international operations or sales. Risks Relating to Our Common Stock Our operating results may fluctuate significantly from quarter to quarter, which may make budgeting for expenses difficult and may negatively affect the market price of our common stock.
For fiscal year 2023, the Company had one customer that comprised 16% of net sales, and for fiscal year 2022 the Company had one customer that comprised 14%, of net sales. These customers are all distributors. These customers, like our other customers, purchase our products from time to time through purchase orders.
For fiscal year 2025, the Company had two customers, Customer A and Customer B, which accounted for approximately 18% and 13% of net sales, respectively. Both of these customers are distributors. These customers, like our other customers, purchase our products from time to time through purchase orders.
Failure to comply with these regulations or other disruptions within the program could adversely affect the Company’s financial position, results of operations, and cash flows. 8 We depend on the availability of sufficient supply of certain materials. Global disruptions in the supply chain for these materials could prevent us from meeting customer demand for our products.
ITEM 1A. RISK FACTORS Risks Relating to Our Operations We depend on the availability of sufficient supply of certain materials. Global disruptions in the supply chain for these materials could prevent us from meeting customer demand for our products.
The introduction of products using new technologies, or the adoption of new industry standards can make our existing products, or products under development, obsolete or unmarketable.
The telecommunications equipment industry is characterized by rapid technological changes, evolving industry standards, changing market conditions and frequent new product and service introductions and enhancements. The introduction of products using new technologies, or the adoption of new industry standards can make our existing products, or products under development, obsolete or unmarketable.
These factors, which are variable and generally outside of our control, could materially impact our results of operations, anticipated future results, financial position, and cash flows. Adverse global economic conditions and geopolitical issues could have a negative effect on our business, and results of operations and financial condition.
These risks associated with acquisition, integration of acquired businesses and management of our expanded operations may have a material adverse effect on our sales, financial condition, and results of operations. Adverse global economic conditions and geopolitical issues could have a negative effect on our business, and results of operations and financial condition.
Such events could reduce demand for our products or make it difficult or impossible for us to receive raw materials from suppliers and deliver products to our customers. Pandemics and other health crises could have a material adverse effect on our business, financial condition, and operating results.
Such events could reduce demand for our products or make it difficult or impossible for us to receive raw materials from suppliers and deliver products to our customers. Risks Relating to Our Markets and Industry To compete effectively, we must continually improve existing products and introduce new products that achieve market acceptance.
Removed
The interdependence of these solutions and systems is a risk, and the failure of any one system could have a material adverse effect on our overall information technology infrastructure. We are in the process of consolidating several of these solutions and systems into one integrated ERP system for our North American operations.
Added
Failure to comply with these regulations or other disruptions within the program could adversely affect the Company’s financial position, results of operations, and cash flows. Changes in trade policy in the U.S. and other countries may adversely affect our business and results of operations.
Removed
Failure to successfully consolidate and integrate these solutions and systems could result in disruptions to our operations and adversely impact our business.
Added
Changes in trade policy, including the imposition of new, increased, or retaliatory tariffs by the U.S. or foreign governments, may increase the cost of raw materials and components imported from other countries, leading to higher production costs and product pricing to the extent those increased costs are offset through price increases to our customers (which may result in declines in sales); disrupt established supply chains, forcing the Company to find new suppliers or relocate production, which could be time-consuming and costly; limit the attractiveness of certain geographic markets for our products and, in turn, result in reduced sales; lower profitability; result in uncertainty related to planning long-term investments and strategies; and have other competitive effects.
Removed
Failure or abandonment of all or any part of the ERP system consolidation and integration project could result in a write-off of all or part of the costs that have been capitalized in connection with the project, which may negatively impact our financial results. We also rely on management information systems to produce information for business decision-making and planning.
Added
While the changes in trade policy and tariffs introduced by the U.S. and foreign governments in 2025 did not materially adversely impact our fiscal year 2025 results, the extent to which new, increased, or retaliatory tariffs may adversely affect our business and results of operations is uncertain, difficult to predict and dependent on a number of factors, including the extent and duration of the tariffs, any reversal or suspension of the tariffs, changes in the scope and rates of the tariffs, the availability of exemptions from the tariffs, and our ability to successfully implement measures to mitigate the impact of the tariffs.
Removed
In addition, we may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future. 7 Inflationary price pressures and uncertain availability of components, raw materials, labor and logistics used by us, and our suppliers could negatively impact our profitability.
Added
However, there can be no assurance that the loss of a distributor customer would not have an adverse effect on our sales or gross margins in this event.
Removed
Any delays in delivery of our product to distributors or customers could be extended, and our costs associated with the change in product manufacturing could increase.
Added
For the year ended September 30, 2025, we recorded an impairment charge of $2,022,000 related to the impairment of goodwill and $13,078,000 related to the impairment of the long-lived assets of the Nestor Cables business, which we acquired in July 2022 and disposed of on November 11, 2025.
Removed
Some manufacturers may also allocate short supply of products among Clearfield and their other customers.
Added
The total impairment charge, inclusive of estimated transaction costs, is reflected within Loss from impairment of discontinued operations before income taxes in the consolidated statements of earnings for the year ended September 30, 2025.
Removed
We have exposure to movements in foreign currency exchange rates. Nestor Cables’ functional currency is the Euro, which is translated to the Company’s reporting currency of the U.S. dollar. Fluctuations in exchange rates between the Euro and U.S. dollar may impact our results of operations, financial position and cashflows.
Added
If we are unable to complete acquisitions or successfully integrate and develop acquired businesses, or if acquired businesses do not perform as anticipated, our financial results could be materially and adversely affected.
Removed
The Company expects to continue to experience fluctuations in the value of the U.S. dollar against the Euro and other currencies if it is not possible, cost-effective or should we not elect to hedge certain currency exposure.
Added
Our business is dependent upon capital spending by broadband service providers, and any delay, reduction or cancellation in capital spending by broadband service providers could adversely affect our business.
Removed
Growth may strain our business infrastructure, which could adversely affect our operations and financial condition. As we grow, we will face the risk that our existing resources and systems, including management resources, enterprise technology and operating systems, may be inadequate to support our growth.
Added
Our business is dependent upon capital spending by broadband service providers for constructing, expanding, upgrading, rebuilding, and maintaining fiber-based networks for residential homes, businesses, and network infrastructure in the wireline and wireless access network.
Removed
There can be no assurance that we will be able to retain the personnel or make the changes in our systems that may be required to support our growth. Failure to secure these resources and implement these systems on a timely basis could have a material adverse effect on our operating results.
Added
Capital spending in the broadband communications industry is cyclical, sporadic among individual broadband service providers, and can be delayed, reduced or cancelled on short notice, giving us limited visibility into changes in spending behavior in any particular period.
Removed
In addition, hiring additional personnel and implementing changes and enhancements to our systems will require capital expenditures and other increased costs that could also have a material adverse impact on our operating results.
Added
We have experienced significant reductions in capital spending by broadband service providers in the past, which negatively impacted our results of operations, and we may experience significant fluctuations in capital spending by broadband service providers in the future.
Removed
Pandemics and other health crises, and governmental, business, and societal responses to pandemics or other health crises, have had, and in the future may have, an adverse effect on our operations, work force, supply chains, distribution channels, and customers.
Added
The timing and amount of capital spending in the broadband communications industry may be affected by a variety of factors, including but not limited to general economic and market conditions, customer-specific financial conditions or budget allocation decisions, seasonality of outdoor deployments, access to and timing of government funding programs, changes in consumer spending, the timing and adoption of new technologies, consumer and commercial demand for broadband services, competing technologies, competitive pressures, government regulations, industry consolidation, and changes in customer preferences or requirements.
Removed
Constraints and limits imposed on our operations due to pandemics or other health crises may slow or diminish our sales and marketing programs, product development activities and qualification activities with our customers. Restrictions on our manufacturing, support operations or workforce, or similar limitations for our suppliers, could limit our ability to meet customer demand.
Added
Unfavorable changes in economic conditions, including recession, inflation, lack of access to capital, lack of consumer confidence or other changes have resulted and may continue to result in lower spending among our customers and target customers in the broadband service provider industry.
Removed
Restrictions or disruptions of transportation, such as reduced availability of air transport, port closures and increased border controls or closures, resulting in higher costs and delays, could harm our profitability, make our products less competitive, or cause our customers to seek alternative suppliers.
Added
Within the broadband service provider industry, our customer segments may be more or less affected by these factors in any given period. Our ability to maintain or increase revenues in the future will depend on the financial health and continued growth of the broadband communications industry.
Removed
Employee health, availability, productivity, and efficiency may be adversely impacted. 12 Risks Relating to Our Markets and Industry To compete effectively, we must continually improve existing products and introduce new products that achieve market acceptance. The telecommunications equipment industry is characterized by rapid technological changes, evolving industry standards, changing market conditions and frequent new product and service introductions and enhancements.
Added
If the broadband service providers do not maintain or increase spending or do not select our products for their fiber-based deployments, the market for our products may not grow or may grow more slowly than we expect, either of which would significantly adversely affect our business, results of operations, or financial condition.
Removed
If these technologies are patented or proprietary to our competitors, we may not be able to access these technologies.
Added
Additionally, these government programs may be subject to significant timing, funding and other uncertainties, which also may change with different state and federal administrations, that make it challenging for us to accurately forecast the subsidies or other supports to our customers or the degree to which customers may undertake capital spending on projects that utilize our products.
Removed
These risks associated with international operations may have a material adverse effect on our revenue from or costs associated with international operations or sales. 14 Expectations relating to environmental, social and governance matters may increase our cost of doing business and expose us to reputational harm and potential liability.
Removed
Many regulators, investors, employees, vendors, customers, community members and other stakeholders are increasingly focused on environmental, social and governance matters relating to businesses, including climate change, greenhouse gas emissions, human capital, civil rights, and diversity, equity, and inclusion.
Removed
We may make public statements about various environmental, social and governance matters and initiatives from time to time through our website, press releases and other communications.
Removed
Addressing stakeholder expectations relating to environmental, social and governance matters requires an investment of time, money and other resources, and depends in part on third-party performance or data that is outside of our control, any or all of which may increase our cost of doing business.
Removed
In addition, as investor and other stakeholder expectations relating to environmental, social and governance matters change and evolve over time, any failure or perceived failure by us to adequately address those expectations may damage our reputation and adversely affect our business and results of operations.
Removed
Similarly, public statements we make about environmental, social and governance matters and initiatives may result in increased scrutiny by our stakeholders and require additional attention relating to these issues. Federal, state or international government bodies or agencies have in the past adopted, and may in the future adopt, laws and regulations relating to environmental, social or governance matters.
Removed
These laws or regulations could require us to modify our business practices to comply and could result in increased costs. Additionally, any failure to comply with federal, state, or international environmental, social and governance laws and regulations, could adversely affect our business and results of operations.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeKey elements of our cybersecurity risk management program include, among others: ● Ongoing cybersecurity training and testing for our employees; ● Regular patching, vulnerability scanning, penetration testing, and network monitoring; ● Robust IT infrastructure to help reduce opportunities for adverse exploitation; ● Operational processes that reinforce cybersecurity policies and IT controls; ● Regular audits to assess our cybersecurity posture, maturity, and progress; ● A cybersecurity incident response plan operationalized in a governance, risk, and compliance (“GRC”) platform; and ● A third-party risk management process for vendors that includes annual assessments and Service Organization Control Type 2 (SOC 2) reviews While we have experienced cybersecurity incidents and expect to continue to be subject to such incidents, to date we have not experienced any cybersecurity incidents that have materially affected our business strategy, financial condition, or results of operations.
Biggest changeKey elements of our cybersecurity risk management program include, among others: ● Ongoing cybersecurity training and testing for all employees; ● Regular patching, vulnerability scanning, penetration testing, and network monitoring; ● Robust IT infrastructure to help reduce opportunities for adverse exploitation; ● Operational processes that reinforce cybersecurity policies and IT controls; ● Regular audits to assess our cybersecurity posture, maturity, and progress; ● A cybersecurity incident response plan operationalized in a governance, risk, and compliance (“GRC”) platform; and ● A third-party risk management process for enterprise software vendors that includes reviewing System and Organization Control 1 and 2 (SOC 1 and SOC 2) reports and onboarding and maintenance processes for suppliers that include cybersecurity assessments.
The cybersecurity threat landscape continues to evolve and escalate. We are subject to ongoing risks from cybersecurity threats that could materially affect our business strategy, financial condition, or results of operations, as further described in Part I, Item 1A, “Risk Factors” of this Annual Report on Form 10-K.
We are subject to ongoing risks from cybersecurity threats that could materially affect our business strategy, financial condition, or results of operations, as further described in Part I, Item 1A, “Risk Factors” of this Annual Report on Form 10-K.
Our GRC platform is designed to provide reliability in identifying, tracking, and mitigating cybersecurity risks. We also engage third party assessors, consultants, and auditors to extend internal team capabilities and support our cybersecurity program, including engaging a cybersecurity service provider that provides 24/7 continuous managed detection and response services.
We also engage third party assessors, consultants, and auditors to extend internal team capabilities and support our cybersecurity program, including engaging a cybersecurity service provider that provides 24/7 continuous managed detection and response services.
This does not imply that we meet any particular technical standards, specifications, or requirements - only that we use the ISO/IEC 27001:2022 standard as a guide in designing and implementing our cybersecurity program. We believe designing and building our cybersecurity program around best practices and principles helps support robust business continuity.
We operationalize our cybersecurity program through an information security management system based on the ISO/IEC 27001:2022 standard. This does not imply that we meet any particular technical standards, specifications, or requirements - only that we use the ISO/IEC 27001:2022 standard as a guide in designing and implementing our cybersecurity program.
A cybersecurity incidence response team comprised of key function heads and personnel, including IT, Finance, Legal, and Human Resources, provides operational support for clarifying and acting on cybersecurity issues, including decision-making around materiality, escalation and disclosure. Our cybersecurity program is principally managed by our Chief Information Officer and our Information Security Manager.
In addition, our Chief Information Officer updates the Board and the Audit Committee, as appropriate, regarding significant cybersecurity incidents should they occur. 15 A cybersecurity incidence response team comprised of key function heads and personnel, including IT, Finance, Legal, and Human Resources, provides operational support for clarifying and acting on cybersecurity issues, including decision-making around materiality, escalation and disclosure.
Together, they have over 50 years of experience in IT, including developing, implementing, and operating IT controls. Our Chief Information Officer and our Information Security Manager manage cybersecurity risks by continually working to reduce risks, respond appropriately to incidents, and invest in hardening our attack surface to improve our cybersecurity posture.
Our cybersecurity program is principally managed by our Information Security Manager, who reports to our Chief Information Officer. Together, our Information Security Manager and our Chief Information Officer have over 50 years of experience in IT, including developing, implementing, and operating IT controls.
We are committed to developing, implementing and maintaining cybersecurity measures and processes that are designed to safeguard our information systems, data and operations, and to assess, identify and manage cybersecurity threats that may impact our business. 16 We operationalize our cybersecurity program through an information security management system based on the ISO/IEC 27001:2022 standard.
ITEM 1C. CYBERSECURITY Risk Management and Strategy We believe cybersecurity plays a strategic role in ensuring smooth business operations. We are committed to developing, implementing and maintaining cybersecurity measures and processes that are designed to safeguard our information systems, data and operations, and to assess, identify and manage cybersecurity threats that may impact our business.
Management provides the Board and the Audit Committee regular reports and assessments on our cybersecurity program and material cybersecurity risks. In addition, management updates the Board and the Audit Committee, as appropriate, regarding significant cybersecurity incidents should they occur.
Our Chief Information Officer, who reports to our Chief Executive Officer, provides the Board and the Audit Committee regular reports and assessments on our cybersecurity program and material cybersecurity risks.
Our cybersecurity program is integrated into our overall risk management system and processes.
We believe designing and building our cybersecurity program around best practices and principles helps support robust business continuity. Our cybersecurity program is integrated into our overall risk management processes.
Removed
ITEM 1C. CYBERSECURITY Risk Management and Strategy We believe cybersecurity plays a strategic role in ensuring smooth business operations.
Added
While we have experienced cybersecurity incidents and expect to continue to be subject to such incidents, to date we have not experienced any cybersecurity incidents that have materially affected our business strategy, financial condition, or results of operations. The cybersecurity threat landscape continues to evolve and escalate.
Added
Our Chief Information Officer and our Information Security Manager manage cybersecurity risks by continually working to reduce risks, respond appropriately to incidents, and invest in hardening our attack surface to improve our cybersecurity posture. Our GRC platform is designed to provide reliability in identifying, tracking, and mitigating cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Clearfield leases an 85,000 square foot facility at 7050 Winnetka Avenue North, Brooklyn Park, Minnesota, consisting of corporate offices, manufacturing, and warehouse space. The original lease term was ten years and two months, ending on February 29, 2025, and was renewable.
Biggest changeITEM 2. PROPERTIES Clearfield leases an 85,000 square foot facility at 7050 Winnetka Avenue North, Brooklyn Park, Minnesota, consisting of corporate offices, manufacturing, and warehouse space. The Company indirectly leases an approximately 318,000 square foot office, manufacturing and warehouse facility in Tijuana, Mexico that operates as a Maquiladora.
Removed
In April 2024, the Company exercised the renewal option, which extended the lease term three additional years to end on February 29, 2028.
Added
Clearfield leases a 105,000 square foot warehouse and manufacturing facility in Brooklyn Park, Minnesota. We believe our facilities are in satisfactory condition, suitable for their respective uses, and generally adequate to meet current needs. Please see Note 9. Leases in the consolidated financial statements for further details regarding the terms of our leases.
Removed
The exercise of the renewal option added a right of use asset and corresponding lease liability of $1,337,000 upon lease commencement. 17 The Company indirectly leases an approximately 318,000 square foot manufacturing facility in Tijuana, Mexico that operates as a Maquiladora.
Removed
In April 2024, the Company terminated the lease for this manufacturing facility and signed a new lease for the same facility. The new lease has a term of seven years, of which five years are mandatory. The lease contains two options to extend the term of the lease for additional periods of five years each.
Removed
The lease calls for monthly base rental payments of approximately $169,000, increasing 2% annually. The renewal options have not been included within the lease term because it is not reasonably certain that the Company will exercise either option.
Removed
The termination of the original facility lease resulted in a decreased right of use asset and corresponding lease liability of $5,610,000, offset by the addition of the right of use asset and lease liability of the new facility lease for $8,637,000 upon lease termination and commencement, respectively.
Removed
Clearfield leases a 105,000 square foot warehouse and manufacturing facility in Brooklyn Park, Minnesota. The lease term is five years ending on February 28, 2027, with rent payments increasing annually. The lease includes an option to extend the lease for an additional five years.
Removed
The renewal option has not been included within the lease term because it is not reasonably certain that the Company will exercise the option. Nestor leases an approximately 25,000 square foot manufacturing facility in Oulu, Finland, which is utilized for the operations of Nestor Cables.
Removed
The original lease term ended on October 31, 2022, but auto renewed and continues to renew indefinitely until terminated with two years written notice. It is not reasonably certain that the Company will not exercise the termination option. The lease calls for monthly rental payments of approximately €40,000.
Removed
Rent is increased each year on January 1st based upon the cost-of-living index published by the Finnish government. Nestor Cables leases an approximately 49,000 square foot manufacturing facility in Tabasalu, Estonia, which is utilized for the operations of Nestor Cables Baltics.
Removed
Additionally, the lease grants Nestor Cables the option to lease an expansion facility that is to be constructed no later than December 2024. The expansion facility will be constructed on the same premises as the existing facility.
Removed
Nestor exercised the option to lease the expansion facility and the lease term of the existing facility will be 10 years commencing December 2024. The lease called for monthly rental payments of approximately €20,400 until April 2024 and calls for monthly rental payments of €25,000 afterwards.
Removed
Rent is increased each year on May 1st based upon the cost-of-living index published by the Estonian government and is capped at 5%.
Removed
Right-of-use lease assets and lease liabilities are recognized as of the commencement date based on the present value of the remaining lease payments over the lease term which includes renewal periods the Company is reasonably certain to exercise. The Company’s leases do not contain any material residual value guarantees or material restrictive covenants.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStock Performance Graph The following graph shows a comparison of the 5-year cumulative total return on Clearfield, Inc.’s common stock relative to the Standard & Poor’s 500 Stock Index (S&P500 Index), which the Company has selected as a broad market index, and The Standard & Poor’s 1500 Communications Equipment Index (S&P 1500 Communications Equipment Index), which the Company has selected as a published industry index.
Biggest changeWe currently intend to retain any earnings for use in our operations, continued organic growth, and potential future strategic transactions, as well as execution of the repurchase program described below, and do not intend in the foreseeable future to pay cash dividends on our common stock. 16 Stock Performance Graph The following graph shows a comparison of the 5-year cumulative total return on Clearfield, Inc.’s common stock relative to the Standard & Poor’s 500 Stock Index (S&P500 Index), which the Company has selected as a broad market index, and The Standard & Poor’s 1500 Communications Equipment Index (S&P 1500 Communications Equipment Index), which the Company has selected as a published industry index.
Equity compensation plans information is incorporated by reference from Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” of this Annual Report, and should be considered an integral part of Item 5. 21 ITEM 6. [RESERVED]
Equity compensation plans information is incorporated by reference from Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” of this Annual Report, and should be considered an integral part of Item 5. ITEM 6. [RESERVED]
The graph assumes an investment of $100 (with reinvestment of all dividends) is made in the Company’s common stock and in each index on September 30, 2019, and its relative performance is tracked through September 30, 2024.
The graph assumes an investment of $100 (with reinvestment of all dividends) is made in the Company’s common stock and in each index on September 30, 2020, and its relative performance is tracked through September 30, 2025.
MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Nasdaq Global Market under the symbol “CLFD.” Number of Holders of Common Stock There were 290 holders of record of our common stock as of September 30, 2024. 18 Dividends We have never paid cash dividends on our common stock.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Nasdaq Global Market under the symbol “CLFD.” Number of Holders of Common Stock There were 284 holders of record of our common stock as of September 30, 2025.
The following table presents the total number of shares repurchased during the fourth quarter of fiscal 2024 by month and the average price paid per share: ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) July 1-31, 2024 - $ - - $ 24,923,000 August 1-31, 2024 6,736 37.58 - 24,923,000 September1-30, 2024 - - - 24,923,000 Total 6,736 $ 37.58 - $ 24,923,000 (1) Amount remaining from the aggregate $65,000,000 repurchase authorizations approved by the Company’s board of directors effective on April 30, 2024.
The following table presents the total number of shares repurchased during the fourth quarter of fiscal 2025 by month and the average price paid per share: ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) July 1-31, 2025 - $ - - $ 8,393,000 August 1-31, 2025 - - - 8,393,000 September 1-30, 2025 - - - 8,393,000 Total - $ - - $ 8,393,000 (1) On April 30, 2024, the Company’s board of directors increased the share repurchase program to an aggregate of $65 million from the prior $40 million commencing May 7, 2024.
During the year ended September 30, 2024, the Company repurchased 1,164,190 shares for approximately $33,058,000. As of September 30, 2024, we have repurchased an aggregate of 1,729,780 shares for approximately $40,077,000 leaving approximately $24,923,000 available within our $65,000,000 stock repurchase program. The repurchase program does not obligate Clearfield to repurchase any particular amount of common stock during any period.
During the year ended September 30, 2025, the Company repurchased 550,766 shares for approximately $16,530,000. As of September 30, 2025, we have repurchased an aggregate of 2,280,546 shares for approximately $56,607,000 leaving approximately $8,393,000 available within our $65,000,000 stock repurchase program. The repurchase program does not obligate Clearfield to repurchase any particular amount of common stock during any period.
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We currently intend to retain any earnings for use in our operations, continued organic growth, and potential future strategic transactions, as well as execution of the repurchase program described below, and do not intend in the foreseeable future to pay cash dividends on our common stock.
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Dividends We have never paid cash dividends on our common stock.
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The returns shown are based on historical results and are not intended to suggest future performance. 19 20 Company/Index September 30, 2019 September 30, 2020 September 30, 2021 September 30, 2022 September 30, 2023 September 30, 2024 Clearfield, Inc. $ 100.00 $ 170.21 $ 372.57 $ 883.04 $ 244.14 $ 328.78 S&P 500 Index 100.00 112.98 144.71 120.45 144.05 193.58 S&P 1500 Communications Equipment Index 100.00 82.46 115.85 94.29 123.44 139.17 Issuer Repurchases The Company repurchased a total of 6,736 shares of our common stock during the fourth quarter of fiscal year 2024 in connection with payment of taxes upon the vesting of restricted stock previously issued to employees.
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The returns shown are based on historical results and are not intended to suggest future performance. 17 Company/Index September 30, 2020 September 30, 2021 September 30, 2022 September 30, 2023 September 30, 2024 September 30, 2025 Clearfield, Inc. $ 100.00 $ 218.89 $ 518.79 $ 143.43 $ 193.16 $ 170.45 S&P 500 Index 100.00 128.09 106.62 127.51 171.35 198.88 S&P 1500 Communications Equipment Index 100.00 140.49 114.35 149.69 168.77 243.06 Issuer Repurchases On April 30, 2024, the Company’s board of directors increased the Company’s share repurchase program from $40,000,000 to $65,000,000 commencing May 7, 2024, and continuing for an indefinite period or until terminated by the board of directors.
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These repurchases are unrelated to the stock repurchase program. Effective January 27, 2022, the Company reinstated its stock repurchase program that had been suspended due to COVID uncertainty in April 2020. The Company’s board of directors increased the share repurchase program to $18,000,000 effective November 7, 2023, and an additional $25,000,000 effective April 30, 2024, to an aggregate of $65,000,000.
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The repurchases will be funded by cash on hand.
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The repurchase will be funded by cash on hand. During the year ended September 30, 2023, the Company did not repurchase any shares under the stock repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe Company invests its excess cash primarily in Federal Deposit Insurance Company (“FDIC”) backed bank certificates of deposit, United States (“U.S.”) treasury securities, and money market funds and accounts. We expect interest income to remain at these levels through fiscal year 2025, subject to changes in market interest rates and changes in the average investments balance.
Biggest changeThe decrease in interest income is due to lower interest rates earned, partially offset by a higher average investments balance for the year ended September 30, 2025. The Company invests its excess cash primarily in Federal Deposit Insurance Company (“FDIC”) backed bank certificates of deposit, United States (“U.S.”) treasury securities, and money market funds and accounts.
The risks and uncertainties that could cause actual results to differ materially and adversely from those expressed or implied by the forward-looking statements include those risks described in Part I, Item 1A “Risk Factors.” Overview of Business: The Clearfield operating segment designs, manufactures, and distributes fiber optic management, protection, and delivery products for communications networks.
The risks and uncertainties that could cause actual results to differ materially and adversely from those expressed or implied by the forward-looking statements include those risks described in Part I, Item 1A “Risk Factors.” 18 Overview of Business: Clearfield designs, manufactures, and distributes fiber optic management, protection, and delivery products for communications networks.
Its “fiber to the anywhere” platform serves the unique requirements of leading broadband service providers in the United States, which include Community Broadband, Large Regional Service Providers, National Carriers, and Multiple System Operators (“MSOs” or “cable TV”), while also serving the broadband needs of the International markets, primarily in Europe, the Caribbean, Canada, and Mexico.
Its “fiber to the anywhere” platform serves the unique requirements of leading broadband service providers in the United States, which include Community Broadband, Large Regional Service Providers, National Carriers, and Multiple System Operators (“MSOs” or “cable TV”), while also serving the broadband needs of the International markets, primarily in Canada, the Caribbean, Central/South America and Mexico.
For the fiscal year ended September 30, 2024, the Company received proceeds from maturities of investments of $162,064,000 and used cash to purchase $159,393,000 of investments in certificates of deposit below FDIC insured levels and U.S. Treasuries. The Company used $9,567,000 in cash to purchase fixed and intangible assets.
For the fiscal year ended September 30, 2024, the Company received proceeds from maturities of investments of $162,064,000 and used cash to purchase $159,393,000 of investments in certificates of deposit below FDIC insured levels and U.S. Treasuries. The Company used $7,985,000 in cash to purchase fixed and intangible assets.
The decrease in tax expense of $12,882,000 from the year ended September 30, 2023, is primarily due to the decrease in pretax book income for fiscal year 2024.
The decrease in tax expense of $12,131,000 from the year ended September 30, 2023, is due to the decrease in pretax book income for fiscal year 2024.
Operating Leases We have entered into various non-cancelable operating lease agreements for office equipment at our office and manufacturing spaces in Minnesota, Mexico, Finland, and Estonia expiring at various dates through August 2034. Certain of these leases have escalating rent payment provisions. We recognize rent expense under such leases on a straight-line basis over the term of the lease.
Operating Leases We have entered into various non-cancelable operating lease agreements for office equipment at our office and manufacturing spaces in Minnesota and Mexico expiring at various dates through April 2029. Certain of these leases have escalating rent payment provisions. We recognize rent expense under such leases on a straight-line basis over the term of the lease.
As a result, the net cash used for financing activities during fiscal year 2024 was $36,907,000. For the fiscal year ended September 30, 2023, the Company received $130,262,000 of net proceeds through the issuance of common stock in the first quarter of fiscal 2023.
As a result, the net cash used for financing activities during fiscal year 2024 was $33,289,000. 22 For the fiscal year ended September 30, 2023, the Company received $130,262,000 of net proceeds through the issuance of common stock in the first quarter of fiscal 2023.
Inventory reserves are primarily due to excess inventory due to the lull in demand in the Clearfield Segment while customers draw down their existing products previously purchased during the period of long lead time supply chain created by the pandemic.
Inventory write-downs are primarily due to excess inventory due to the lull in demand while customers draw down their existing products previously purchased during the period of long lead time supply chain created by the pandemic.
The decrease in inventory is due to lower inventory purchases during fiscal year 2024 as the Company utilized inventory on hand to fulfill customer orders to support sales demand, as well as higher excess inventory charges taken in fiscal year 2024.
The decrease in inventory is due to lower inventory purchases during fiscal year 2024 as the Company utilized inventory on hand to fulfill customer orders to support sales demand, as well as higher excess inventory charges taken in fiscal year 2024. The decrease in accounts receivable is due to lower net sales in fiscal 2024 compared to the prior year.
The decrease is attributable to lower sales and gross profit due to excess supply of fiber products in the Clearfield segment as described above and also higher unabsorbed overhead related to expanded manufacturing capacities in the Clearfield segment. Net investment income in fiscal year 2024 was $7,472,000 compared to $5,206,000 for fiscal year 2023.
The decrease is attributable to lower sales and gross profit due to excess supply of fiber products and also higher unabsorbed overhead related to expanded manufacturing capacities. Net investment income in fiscal year 2024 was $7,472,000 compared to $5,199,000 for fiscal year 2023.
Changes in operating assets and liabilities using cash include an increase in net inventories of $15,083,000 and a decrease in accounts payable and accrued expenses of $27,843,000.
Changes in operating assets and liabilities using cash include an increase in net inventories of $11,145,000 and a decrease in accounts payable and accrued expenses of $27,425,000.
Cash provided by operations included net income of $32,533,000 for the fiscal year ended September 30, 2023, non-cash expenses for depreciation and amortization of $6,054,000, stock-based compensation of $3,578,000, amortization of discount on investments of $3,512,000, in addition to changes in operating assets and liabilities using cash.
Cash provided by operations included net income from continuing operations of $33,723,000 for the fiscal year ended September 30, 2023, non-cash expenses for depreciation and amortization of $4,595,000, stock-based compensation of $3,578,000, amortization of discount on investments of $3,512,000, in addition to changes in operating assets and liabilities using and providing cash.
The words “believes,” “expects,” “anticipates,” “seeks,” “may,” “will,” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.
The words “believes,” “expects,” “anticipates,” “seeks,” “may,” “will,” “plan,” “aim,” “project,” “target,” “intend,” “estimate,” “should,” “could,” “outlook,” “continue,” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.
Treasury securities, money market funds, and bank certificates of deposit in denominations across numerous banks. We believe we obtain a competitive rate of return given the economic climate and relative risk profile of these investments.
Investing Activities We invest our excess cash in money market accounts, U.S. Treasury securities, money market funds, and bank certificates of deposit in denominations across numerous banks. We believe we obtain a competitive rate of return given the economic climate and relative risk profile of these investments.
The increase in the income tax expense rate to 23.4% for fiscal year 2024 from 21.8% for fiscal year 2023 is primarily due to changes in state tax, foreign tax and decreased excess tax benefits from stock option exercises and restricted stock vesting, resulting in a shortfall in the current period. decreased excess tax benefits related to stock option exercises and restricted stock vesting, resulting in a shortfall in the current period.
The increase in the income tax expense rate to 27.6% for fiscal year 2024 from 20.9% for fiscal year 2023 is due to changes in state tax, foreign tax and decreased excess tax benefits from stock option exercises and restricted stock vesting, resulting in a shortfall in the current period.
We received $586,000 from employees’ purchase of stock through our Employee Stock Purchase Plan (“ESPP”) The Company also used cash of $3,617,000 on repayments on factored accounts receivables, net of borrowings and $493,000 to pay for taxes as a result of employees’ vesting of restricted shares using share withholding.
We received $586,000 from employees’ purchase of stock through our Employee Stock Purchase Plan (“ESPP”). The Company also used cash of $493,000 to pay for taxes as a result of employees’ vesting of restricted shares using share withholding.
Cash provided by operations included net loss of $12,453,000 for the fiscal year ended September 30, 2024, non-cash income and expenses for depreciation and amortization of $7,411,000, stock-based compensation of $4,641,000, amortization of discount on investments of $4,406,000, in addition to changes in operating assets and liabilities using cash.
Cash provided by operations included net loss from continuing operations of $8,514,000 for the fiscal year ended September 30, 2024, non-cash income and expenses for depreciation and amortization of $5,924,000, stock-based compensation of $4,375,000, amortization of discount on investments of $4,406,000, in addition to changes in operating assets and liabilities using cash.
For the fiscal year ended September 30, 2023, the Company received proceeds from maturities of investments of $107,060,000 and used cash to purchase $210,923,000 of investments in certificates of deposit below FDIC insured levels and U.S. Treasuries. The Company used $8,384,000 in cash to purchase fixed and intangible assets.
The result is cash used in investing activities of $5,269,000 in fiscal year 2024. For the fiscal year ended September 30, 2023, the Company received proceeds from maturities of investments of $107,060,000 and used cash to purchase $210,923,000 of investments in certificates of deposit below FDIC insured levels and U.S. Treasuries.
The Company expects to operate at gross profit percentage levels at or below these levels for several quarters until revenue levels increase, which is expected to bring improved margins. Selling, general and administrative expense for fiscal year 2024 was $52,111,000, an increase of $4,119,000, or 9%, compared to $47,992,000 for fiscal year 2023.
The Company expects to operate at gross profit percentage levels at or below these levels for several quarters until revenue levels increase, which is expected to bring improved margins. Selling, general and administrative expense for fiscal year 2024 was $45,081,000, an increase of $2,801,000, or 7%, compared to $42,280,000 for fiscal year 2023.
Also, changes in operating assets and liabilities providing cash include a decrease in accounts receivable of $26,277,000, due to lower net sales in the Company’s fourth quarter of fiscal 2023 compared to the prior year. DSO remained consistent as it increased 1 day from 52 to 53 from September 30, 2022, to September 30, 2023.
Also, changes in operating assets and liabilities providing cash include a decrease in accounts receivable of $27,090,000, due to lower net sales in the Company’s fourth quarter of fiscal 2023 compared to the prior year. DSO remained consistent as it decreased two days from 49 to 47 from September 30, 2022, to September 30, 2023.
We believe the combined balances of short-term cash and investments, along with long-term investments and available bank lines of credit, provide a more accurate indication of our available liquidity. 26 We believe our existing cash equivalents and short-term investments, along with cash flow from operations and line of credit, will be sufficient to meet our working capital and investment requirements beyond the next 12 months.
We believe our existing cash equivalents and short-term investments, along with cash flow from operations and line of credit, will be sufficient to meet our working capital and investment requirements beyond the next 12 months.
Gross profit margin was negatively affected by unabsorbed overhead in our manufacturing facilities due to lower levels of demand. The Company’s gross profit was also negatively impacted by an increase in inventory reserves of $9,841,000 during the fiscal year ended September 30, 2024.
Gross profit percent was 20.6% in fiscal year 2024 compared to 35.4% for fiscal year 2023. Gross profit margin was negatively affected by unabsorbed overhead in our manufacturing facilities due to lower levels of demand. The Company’s gross profit was also negatively impacted by an increase in inventory write-downs of $4,748,000 during the fiscal year ended September 30, 2024.
Our provision for income taxes includes current U.S. federal, state and foreign current and deferred tax expense. Net loss for fiscal year 2024 was $12,453,000 or $(0.85) per basic and diluted share compared to net income of $32,533,000 or $2.17 per basic and diluted share for fiscal year 2023.
Our provision for income taxes includes current U.S. federal, state and foreign current and deferred tax expense. Net loss from continuing operations for fiscal year 2024 was $8,514,000 or $(0.58) per basic and diluted share compared to net income of $33,723,000 or $2.25 per basic and diluted share for fiscal year 2023.
The increase was primarily due to increased performance-based compensation of $1,307,000, increased stock-based compensation of $1,034,000, and increased professional fees of $1,970,000. Loss from operations for fiscal year 2024 was $23,222,000 compared to income from operations of $37,286,000 for fiscal year 2023.
The increase was due to increased performance-based compensation of $1,395,000, increased stock-based compensation of $819,000, and increased professional fees of $1,086,000. Loss from continuing operations for fiscal year 2024 was $19,234,000 compared to income from continuing operations of $37,577,000 for fiscal year 2023.
The Company used $16,700,000 to pay down in full the then-outstanding principal on our line of credit, which was originally drawn in the fourth quarter of fiscal 2022 to fund the acquisition of Nestor Cables.
The Company also received $611,000 from employees’ purchase of stock through our ESPP and $954,000 related to issuance of stock as payment for incentive compensation. The Company used $16,700,000 to pay down in full the then-outstanding principal on our line of credit, which was originally drawn in the fourth quarter of fiscal 2022 to fund the acquisition of Nestor Cables.
While there are a number of accounting policies, methods and estimates affecting our financial statements, areas that are particularly significant include: 28 ● Accounting for stock-based compensation ● Income taxes ● Valuation of inventory, long-lived assets, finite lived intangible assets and goodwill ● Valuation in business combinations Stock-Based Compensation We measure and recognize compensation expense for all stock-based awards at fair value over the requisite service period.
While there are a number of accounting policies, methods and estimates affecting our financial statements, areas that are particularly significant include: ● Stock-based compensation ● Impairment of long-lived assets, intangible assets and goodwill ● Valuation of inventory Stock-Based Compensation We measure stock-based compensation expense for all share-based payment awards granted to employees and directors based on the fair value of those awards on the grant date.
Sales to the Community Broadband market decreased 41%, or $45,703,000, from $111,708,000 in fiscal year 2023 to $66,005,000 in fiscal year 2024. Sales to Clearfield’s MSO/Cable TV market decreased 49%, or $22,182,000, from $45,669,000 in fiscal year 2023 to $23,487,000 in fiscal year 2024.
Sales to Clearfield’s MSO/Cable TV market decreased 49%, or $22,182,000, from $45,669,000 in fiscal year 2023 to $23,487,000 in fiscal year 2024. Sales to the Large Regional market decreased 57% or $28,596,000, to $21,293,000 in fiscal 2024 from $49,889,000 in fiscal 2023.
In connection with the stock repurchase, the Company accrued $316,000 of U.S. Federal excise taxes to be paid during fiscal year 2025.
For the fiscal year ended September 30, 2024, the Company used cash to repurchase $33,374,000 of our common stock on the open market under our stock repurchase program. In connection with the stock repurchase, the Company accrued $316,000 of U.S. Federal excise taxes to be paid during fiscal year 2025.
Net cash provided by operations for the fiscal year ended September 30, 2023, totaled $18,423,000.
Net cash provided by operating activities of discontinued operations for the fiscal year ended September 30, 2025, totaled $2,897,000.
No impairment of goodwill or intangible assets has occurred during the years ended September 30, 2024, 2023, and 2022, respectively. 30 Valuation of Inventory The Company maintains a material amount of inventory to support its manufacturing operations and customer demand. This inventory is stated at average cost, subject to the lower of cost or net realizable value.
Refer to Note 11 for discussion of the discontinued operations and impairment of assets held for sale of the Nestor Cables business. Valuation of Inventory The Company maintains a material amount of inventory to support its manufacturing operations and customer demand. This inventory is stated at average cost, subject to the lower of cost or net realizable value.
An impairment loss would be based on significant estimates and judgments, and if the facts and circumstances change, a potential impairment could have a material impact on the Company’s financial statements.
An impairment loss would be based on significant estimates and judgments, and if the facts and circumstances change, a potential impairment could have a material impact on the Company’s financial statements. No impairment of the goodwill or intangible assets related to continuing operations has occurred during the years ended September 30, 2025, 2024, and 2023, respectively.
Net cash provided by operations for the fiscal year ended September 30, 2022, totaled $2,258,000. Cash provided by operations included net income of $49,362,000 for the fiscal year ended September 30, 2022, non-cash expenses for depreciation and amortization of $3,426,000, stock-based compensation of $2,339,000, in addition to changes in operating assets and liabilities using cash.
Cash provided by operations included net income from continuing operations of $6,310,000 for the fiscal year ended September 30, 2025, non-cash income and expenses for depreciation and amortization of $6,121,000, stock-based compensation of $4,597,000, increase of $4,244,000 in deferred tax assets, amortization of discount on investments of $1,777,000 in addition to changes in operating assets and liabilities providing and using cash.
The decrease in accounts receivable is due to lower net sales in the fiscal 2024 compared to the prior year. Days sales outstanding (“DSO”), which measures how quickly receivables are collected, decreased 11 days from 53 to 42 from September 30, 2023, to September 30, 2024.
The increase in accounts receivable is due to higher net sales in fiscal 2025 compared to the prior year. Days sales outstanding (“DSO”), which measures how quickly receivables are collected, increased five days from 35 to 40 from September 30, 2024, to September 30, 2025. Net cash provided by operations for the fiscal year ended September 30, 2024, totaled $17,770,000.
Forfeitures for both option and restricted stock grants are estimated at the time of the grant and revised in subsequent periods if actual forfeitures differ from estimates.
Forfeitures for both option and restricted stock grants are estimated at the time of the grant and revised in subsequent periods if actual forfeitures differ from estimates. Changes in any of the above assumptions could materially affect the amount of stock-based compensation expense recorded in future periods. We periodically review our valuation assumptions and update them as necessary.
Year ended September 30, 2023, compared to year ended September 30, 2022 The Company’s net sales for fiscal year 2023 decreased 1%, or $2,163,000, to $268,720,000 from net sales of $270,883,000 in fiscal year 2022. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported.
The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. Accordingly, international sales represented 2% and 3% of net sales for the years ended September 30, 2024, and 2023, respectively.
The result is cash used in investing activities of $6,896,000 in fiscal year 2024. In fiscal year 2025, the Company intends to continue investing in the necessary information technology, manufacturing equipment, and facility needs.
The Company received proceeds from the sale of inventory and property, plant and equipment of $900,000 related to the Company’s former build-to-print copper cable assemblies business. The result is cash used in investing activities of $7,048,000 in fiscal year 2025. In fiscal year 2026, the Company intends to continue investing in necessary information technology, manufacturing equipment, and facility needs.
The Company used $5,183,000 related to share withholding for exercise and taxes associated with the issuance of common stock upon cashless exercise of stock options and used $1,406,000 to pay for taxes as a result of employees’ vesting of restricted shares using share withholding. As a result, the net cash provided by financing activities during fiscal year 2022 was $9,397,000.
The Company also used cash of $494,000 to pay for taxes as a result of employees’ vesting of restricted shares using share withholding. As a result, the net cash used for financing activities during fiscal year 2025 was $17,241,000.
During the year ended September 30, 2023, the Company did not repurchase any shares under the stock repurchase program. Operating Activities Net cash provided by operations for the fiscal year ended September 30, 2024, totaled $22,223,000.
Net cash provided by operating activities of discontinued operations for the fiscal year ended September 30, 2024, totaled $4,453,000.
Changes in operating assets and liabilities using cash include a decrease in net inventories of $31,990,000 and a decrease in accounts receivable of $7,799,000.
Changes in operating assets and liabilities providing cash include a decrease in net inventories of $26,458,000, a decrease in accounts receivable of $6,473,000, and an increase in accounts payable and accrued expenses of $264,000.
Additionally, the Company used $16,187,000 in cash to acquire Nestor Cables in July 2022. The result was cash used in investing activities of $8,197,000 in fiscal year 2022. Financing Activities For the fiscal year ended September 30, 2024, the Company used cash to repurchase $33,058,000 of our common stock on the open market under our stock repurchase program.
Financing Activities For the fiscal year ended September 30, 2025, the Company used cash to repurchase $16,530,000 of our common stock on the open market under our stock repurchase program. In connection with the stock repurchase, the Company paid $123,000 of U.S. Federal excise taxes during fiscal year 2025.
These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The expected terms of the options are based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S.
The use of this model requires the input of subjective assumptions such as, expected volatility, expected term, risk-free interest rate, and expected dividend yield. The expected terms of the options are based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S.
The Company intends on utilizing its available cash and assets primarily for its continued organic growth and potential future strategic transactions, as well as execution of the share repurchase program adopted by our board of directors. Effective January 27, 2022, the Company reinstated its stock repurchase program that had been suspended due to COVID uncertainty in April 2020.
The Company intends on utilizing its available cash and assets primarily for its continued organic growth and potential future strategic transactions, as well as execution of the share repurchase program adopted by our board of directors, as detailed above. Operating Activities Net cash provided by operations for the fiscal year ended September 30, 2025, totaled $26,553,000.
Results of Operations Year ended September 30, 2024, compared to year ended September 30, 2023 The Company’s net sales for fiscal year 2024 decreased 38%, or $102,015,000, to $166,705,000 from net sales of $268,720,000 in fiscal year 2023. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported.
The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. Accordingly, international sales represented 3% and 2% of net sales for the years ended September 30, 2025, and 2024, respectively.
We believe that the Nestor Cables segment generally experiences the same seasonality as the Clearfield segment. Liquidity and Capital Resources As of September 30, 2024, the Company had combined consolidated balances of cash, cash equivalents, short-term and long-term investments of $155,497,000 compared to $174,456,000 as of September 30, 2023.
Liquidity and Capital Resources As of September 30, 2025, the Company had combined consolidated balances of cash, cash equivalents, short-term and long-term investments of $165,799,000 compared to $153,478,000 as of September 30, 2024. Additionally, we have a line of credit for $40 million that has no outstanding borrowing as of September 30, 2025.
Additionally, we have a line of credit for $40 million that has no outstanding borrowing as of September 30, 2024. Our excess cash is invested mainly in certificates of deposit backed by the FDIC, U.S. Treasury securities, and money market funds.
The line of credit is secured by certain of the Company’s U.S. assets and matures April 25, 2026. We are in compliance with the debt covenants related to the line of credit. Our excess cash is invested mainly in certificates of deposit backed by the FDIC, U.S. Treasury securities, and money market funds.
The Company’s sales channels include direct to customer, through distribution partners, and to original equipment suppliers who private label its products. The Company’s products are sold by its sales employees and independent sales representatives.
These customers are collectively included in the category of Broadband Service Providers. The Company’s sales channels include direct to customer and through distribution partners. The Company’s products are sold by its sales employees and independent sales representatives. Results of Operations The Company’s reportable segment is based on the Company’s method of internal reporting.
As a result, the net cash provided by financing activities during fiscal year 2023 was $115,002,000. For the fiscal year ended September 30, 2022, the Company borrowed $16,700,000 on its line of credit to fund the July acquisition of Nestor Cables.
As a result, the net cash provided by financing activities during fiscal year 2023 was $113,416,000. Net cash provided by financing activities of discontinued operations for the fiscal year ended September 30, 2025, totaled $3,000,000, driven by net borrowings and repayments from the factoring liability held by Nestor Cables.
The result is cash used in investing activities of $112,247,000 in fiscal year 2023. For the fiscal year ended September 30, 2022, the Company had $17,386,000 of FDIC-backed certificates of deposit and U.S. Treasuries mature or be sold. The Company used $9,148,000 in cash to purchase fixed and intangible assets.
For the fiscal year ended September 30, 2025, the Company received proceeds from maturities of investments of $115,866,000 and used cash to purchase $119,074,000 of investments in certificates of deposit below FDIC insured levels and U.S. Treasuries. The Company used $4,743,000 in cash to purchase fixed and intangible assets.
Accordingly, international sales represented 27% and 19% of net sales for the years ended September 30, 2024, and 2023, respectively. The decrease in net sales for fiscal year 2024 of $102,015,000 compared to fiscal year 2023 is attributable to decreased demand across the Clearfield segment’s core markets.
The decrease in net sales for fiscal year 2024 of $100,154,000 compared to fiscal year 2023 is attributable to decreased demand across the Company’s core markets. Sales to the Community Broadband market decreased 41%, or $45,703,000, from $111,708,000 in fiscal year 2023 to $66,005,000 in fiscal year 2024.
Gross profit decreased 25%, or $27,669,000, from $112,947,000 for fiscal year 2022 to $85,278,000 for fiscal year 2023. The decrease in gross profit was primarily due to lower net sales and lower gross profit margin in fiscal year 2023 in the Clearfield segment. Gross profit percent was 31.7% in fiscal year 2023 compared to 41.7% in fiscal year 2022.
Cost of sales for fiscal year 2024 was $99,721,000, a decrease of $46,144,000, or 32%, from $145,865,000 in fiscal year 2023. Gross profit decreased 68%, or $54,010,000, from $79,857,000 for fiscal year 2023 to $25,847,000 for fiscal year 2024. The decrease in gross profit was due to lower net sales and lower gross profit margin in fiscal year 2024.
Changes in operating assets and liabilities using cash include an increase in net inventories of $43,744,000 and accounts receivables of $24,234,000.
Changes in operating assets and liabilities providing cash include a decrease in net inventories of $13,643,000, a decrease in other assets of $173,000, and an increase in accounts payable and accrued expenses of $5,562,000, due to timing of payments.
Changes in operating assets and liabilities using cash include an increase in other assets of $9,225,000 and receiving cash due to an increase in accounts payable and accrued expenses of $544,000. The increase in other assets is related to prepaid expenses including value added taxes related to cross border inventory transfers.
The increase in other assets is related to prepaid expenses including value added taxes related to cross border inventory transfers. 21 Net cash provided by operations for the fiscal year ended September 30, 2023, totaled $24,596,000.
The higher investments balance was a result of the Company’s capital raise of approximately $130,000,000 completed in the first fiscal quarter of 2023. The Company invested its excess cash primarily in FDIC backed bank certificates of deposit, U.S. treasury securities, and money market funds and accounts.
The Company invests its excess cash primarily in Federal Deposit Insurance Company (“FDIC”) backed bank certificates of deposit, United States (“U.S.”) treasury securities, and money market funds and accounts. 20 Income tax benefit for fiscal year 2024 was $3,248,000 compared to income tax expense of $8,883,000 for fiscal year 2023.
Interest expense in fiscal year 2024 was $506,000 compared to $881,000 for fiscal year 2023. The decrease is primarily due to the decrease in the average factoring liability held by Nestor Cables during fiscal year 2024. Income tax benefit for fiscal year 2024 was $3,803,000 compared to income tax expense of $9,079,000 for fiscal year 2023.
We expect interest income to decrease slightly in fiscal year 2026 due to lower expected market interest rates. Income tax expense for fiscal year 2025 was $2,357,000 compared to income tax benefit of $3,248,000 for fiscal year 2024.
Nestor is generally subject to Finland examination for all tax years after 2020 and Estonia examination for all tax years after 2020. Impairment of Long-Lived Assets, Intangible Assets and Goodwill The Company’s long-lived assets as of September 30, 2024, consisted primarily of property, plant and equipment, right of use lease assets, patents, intangibles, and goodwill.
If actual results differ significantly from our estimates or if we modify the underlying assumptions, the amount of stock-based compensation expense could differ materially from the amounts currently recognized or disclosed. 23 Impairment of Long-Lived Assets, Intangible Assets and Goodwill The Company’s long-lived assets as of September 30, 2025, consisted primarily of property, plant and equipment, right of use lease assets, patents, intangibles, and goodwill.
The decrease in tax expense of $5,393,000 from the year ended September 30, 2022, was primarily due to the decrease in taxable income for fiscal year 2023. The decrease in the income tax expense rate to 21.8% for fiscal year 2023 from 22.7% for fiscal year 2022 was due to decreased permanent addback items including nondeductible compensation and transaction costs.
The increase in tax expense of $5,605,000 from the year ended September 30, 2024, is due to the increase in pretax book income for fiscal year 2025. The income tax expense rate decreased to 27.2% for fiscal year 2025 from 27.6% for fiscal year 2024 due to changes in state tax, foreign tax and increased section 162(m) deduction.
Removed
These customers are collectively included in the category of Broadband Service Providers. The Clearfield operating segment also provides contract manufacturing services to its Legacy customers for build-to-print services which include OEM requiring copper and fiber cable assemblies built to their specifications.
Added
The internal reporting of the operating segment is defined based, in part, on the reporting and review process used by the Company’s Chief Executive Officer, also known as the Chief Operating Decision Maker (“CODM”). The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources and evaluating financial performance.
Removed
The Nestor Cables operating segment manufactures fiber optic and copper telecommunication cables and equipment which it distributes to telecommunication operators, network owners, electric companies, building contractors, and industrial companies. Nestor Cables has been a supplier to Clearfield for over a decade.
Added
As such, the Company has determined that it operates as one reportable segment. On November 11, 2025, the Company completed the sale of its Nestor Cables business, which was previously reported as the Nestor Cables Operating Segment.
Removed
Nestor has two types of production processes, the process of manufacturing cable in its Finland facility and the finished assembly portion of its business performed in Estonia. Nestor Cables sells its products predominantly to customers in Europe.
Added
In connection with this sale, the historical results of the Nestor Cables business and certain assets and liabilities of the Nestor Cables business are reported in our consolidated financial statements as discontinued operations. Following the sale of the Nestor Cables business, the continuing operations of the Company comprise one operating segment and one reportable segment.
Removed
Revenue from customers is obtained from purchase orders submitted from time to time, with a limited number of customers recently issuing purchase orders for longer time frames. The Company’s ability to predict orders in future periods or trends affecting orders in future periods is limited.
Added
Reported below are the results of operations for the Company’s continuing operations unless otherwise stated. Year ended September 30, 2025, compared to year ended September 30, 2024 The Company’s net sales for fiscal year 2025 increased 20%, or $24,566,000, to $150,134,000 from net sales of $125,568,000 in fiscal year 2024.
Removed
The Company’s ability to predict revenue can be further limited by global supply chain issues and customer deployment schedules and factors affecting customer ordering patterns, which may result in changes in customer ordering trends in a relatively short period of time.
Added
The increase in net sales for fiscal year 2025 of $24,566,000 compared to fiscal year 2024 is attributable to increased demand across the Company’s core markets. Sales to the Community Broadband market increased 1%, or $767,000, from $66,005,000 in fiscal year 2024 to $66,772,000 in fiscal year 2025.
Removed
The Company’s ability to recognize revenue in the future for customer orders will depend on the Company’s ability to manufacture and deliver products to the customers and fulfill its other contractual obligations. 22 Cost of sales for fiscal year 2024 was $137,816,000, a decrease of $45,625,000, or 25%, from $183,441,000 in fiscal year 2023.
Added
Sales to Clearfield’s MSO/Cable TV market increased 38%, or $8,864,000 from $23,487,000 in fiscal year 2024 to $32,351,000 in fiscal year 2025. Sales to the Large Regional market increased 58% to $33,706,000 from $21,293,000 in fiscal year 2024. Sales to National Carriers increased 11%, or $976,000, from $8,767,000 in fiscal year 2024 to $9,743,000 in fiscal year 2025.
Removed
Gross profit decreased 66%, or $56,389,000, from $85,278,000 for fiscal year 2023 to $28,889,000 for fiscal year 2024. The decrease in gross profit was primarily due to lower net sales and lower gross profit margin in fiscal year 2024 in the Clearfield segment. Gross profit percent was 17.3% in fiscal year 2024 compared to 31.7% for fiscal year 2023.
Added
Cost of sales for fiscal year 2025 was $99,597,000 compared to $99,721,000 in fiscal year 2024. Gross profit increased 96%, or $24,690,000, from $25,847,000 for fiscal year 2024 to $50,537,000 for fiscal year 2025. Gross profit percent was 33.7% in fiscal year 2025 compared to 20.6% for fiscal year 2024.
Removed
Accordingly, international sales represented 19% and 6% of net sales for the years ended September 30, 2023, and 2022, respectively. The decrease in net sales for fiscal year 2023 of $2,163,000 compared to fiscal year 2022 is attributable to decreased demand across the Clearfield’s segment core markets.
Added
The improvement in gross margin was due to increased volumes resulting in improved absorption of manufacturing overhead, as well as lower excess inventory charges of $10,074,000 in fiscal year 2025, reflecting improved inventory utilization and beneficial recoveries from inventory previously written down.
Removed
Sales to the Community Broadband market decreased 12%, or $15,312,000, from $127,478,000 in fiscal year 2022 to $112,166,000 in fiscal year 2023. Sales to Clearfield’s MSO/Cable TV market decreased 5%, or $2,252,000, from $47,921,000 in fiscal year 2022 to $45,669,000 in fiscal year 2023.
Added
Selling, general and administrative expenses for fiscal year 2025 was $48,419,000, an increase of $3,338,000, or 7%, compared to $45,081,000 for fiscal year 2024. The increase was due to higher wages and performance-based compensation of $3,164,000. Income from continuing operations for fiscal year 2025 was $2,118,000 compared to a loss from continuing operations of $19,234,000 for fiscal year 2024.
Removed
Sales to National Carriers decreased 17%, or $1,817,000, from $10,772,000 in fiscal year 2022 to $8,954,000 in fiscal year 2023. The decrease in sales to these customers was due to a lull in demand for fiber connectivity products as customers digest their larger than normal inventory levels built up during the pandemic which were purchased over the previous years.
Added
The increase in income is attributable to increased sales and gross profit from higher customer demand and improved gross profit margin, partially offset by higher selling, general and administrative expenses as described above. 19 Net investment income in fiscal year 2025 was $6,549,000 compared to $7,472,000 for fiscal year 2024.
Removed
Net sales to International customers increased 226% or $34,570,000 from $15,316,000 in fiscal year 2022 to $49,885,000 in fiscal year 2023, primarily driven by the Company’s acquisition of Nestor Cables in July 2022. 23 Revenue from customers is obtained from purchase orders submitted from time to time, with a limited number of customers recently issuing purchase orders for longer time frames.
Added
Our provision for income taxes includes current U.S. federal and state current and deferred tax expense. Net income from continuing operations for fiscal year 2025 was $6,310,000 or $0.45 per basic and diluted share compared to net loss of $8,514,000 or $(0.58) per basic and diluted share for fiscal year 2024.
Removed
The Company’s ability to predict orders in future periods or trends affecting orders in future periods is limited. The Company’s ability to predict revenue is further limited by global supply chain issues, customer deployment schedules and factors affecting customer ordering patterns, which may result in changes in customer ordering trends in a relatively short period of time.
Added
Net loss from discontinued operations for fiscal year 2025 was $3,947,000 or $(1.03) per basic and diluted share compared to net loss of $3,939,000 or $(0.27) per basic and diluted share for fiscal year 2024. Net loss from impairment of discontinued operations for fiscal year 2025 was $10,413,000.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−2 removed1 unchanged
Biggest changeInflation Rising costs, including wages, logistics, components, and commodity prices are negatively impacting our profitability. We are subject to market risk from fluctuating market prices of certain purchased commodities and raw materials which has outpaced our ability to reduce the cost structure and manufacturability. We do not hedge commodity prices.
Biggest changeWe do not hedge against foreign currency fluctuations. Inflation Rising costs, including wages, logistics, components, and commodity prices are negatively impacting our profitability. We are subject to market risk from fluctuating market prices of certain purchased commodities and raw materials which has outpaced our ability to reduce the cost structure and manufacturability. We do not hedge commodity prices.
Accordingly, inflation impacts our profitability, including cost of sales and operating expenses, and may have a material impact on the Company’s financial statements. 32
Accordingly, inflation impacts our profitability, including cost of sales and operating expenses, and may have a material impact on the Company’s financial statements. 25
The fair value of these investments fluctuates subject to changes in market interest rates. As of September 30, 2024, and 2023, the Company had combined consolidated balances of cash, cash equivalents, short term, and long-term investments of $155,497,000 and $174,456,000, respectively. Foreign Exchange Rates The Company uses the U.S. dollar as its reporting currency.
The fair value of these investments fluctuates subject to changes in market interest rates. As of September 30, 2025, and 2024, the Company had combined consolidated balances of cash, cash equivalents, short term, and long-term investments of $165,799,000 and $153,478,000, respectively. Foreign Exchange Rates The Company uses the U.S. dollar as its reporting currency.
Removed
The functional currency of Nestor Cables is the Euro. The changing relationships of the U.S. dollar to the Euro could have a material impact on our financial results. Fluctuations in the Euro to U.S. dollar exchange rate impacts our consolidated balance sheets, as well as sales, cost of sales, and net income.
Removed
If the Euro had appreciated or depreciated by 10%, relative to the U.S. Dollar, our operating expenses for fiscal year 2024 would have increased or decreased by approximately $700,000 or approximately 1%. We do not hedge against foreign currency fluctuations. As such, fluctuations in foreign currency exchange rates could have a material impact on the Company’s financial statements.

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