What changed in Clearfield, Inc.'s 2024 10-K compared to 2023?

Across the narrative sections we track, Clearfield, Inc. (CLFD) added 208 paragraphs, removed 202, and edited 161 between the 2023 and 2024 10-K filings. The biggest movers are Item 7. Management's Discussion & Analysis (+104/−88), Item 1A. Risk Factors (+44/−45), Item 1. Business (+34/−43).

Did Clearfield, Inc. add new Risk Factors in the 2024 10-K?

Yes — Item 1A Risk Factors shows 44 new/edited paragraphs and 45 removed paragraphs versus the 2023 10-K.

What changed in Clearfield, Inc.'s MD&A (Item 7) in 2024?

Item 7 Management's Discussion & Analysis shows 104 new/edited paragraphs and 88 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Where does this CLFD 10-K diff come from?

The source filings are Clearfield, Inc.'s official 2023 and 2024 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in Clearfield, Inc.'s 10-K — 2023 vs 2024

Paragraph-level year-over-year comparison of Clearfield, Inc.'s 2023 and 2024 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 2024 report.

+208 added−202 removedSource: 10-K (2024-11-15) vs 10-K (2023-11-29)

Top changes in Clearfield, Inc.'s 2024 10-K

208 paragraphs added · 202 removed · 161 edited across 6 sections

Item 7. Management's Discussion & Analysis+104 / −88 · 69 edited
Item 1A. Risk Factors+44 / −45 · 40 edited
Item 1. Business+34 / −43 · 32 edited
Item 2. Properties+14 / −13 · 9 edited
Item 5. Market for Registrant's Common Equity+9 / −10 · 8 edited

Item 1. Business

Business — how the company describes what it does

32 edited+2 added−11 removed49 unchanged

2023 filing

2024 filing

Biggest changeNestor 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. Prior to the acquisition, Nestor Cables had been a supplier to Clearfield for over a decade and that relationship continued following the closing of the acquisition.

Biggest changeNestor 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.

Nestor has two types of production processes, the process of making cable in its Finland 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.

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.

We intend to leverage our Nestor platform to cross sell connectivity products into Europe. 4 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.

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.

We offer a broad portfolio of fiber products that allow service providers to build fiber networks faster, meet service delivery demands, and align build costs with take rates. Clearfield’s products allow its customers to connect twice as many homes in their Fiber to the Home (“FTTH”) builds by using fewer resources in less time.

We offer a broad portfolio of fiber products that allow service providers to build fiber networks faster, meet service delivery demands, and align build costs with take rates. 1 Clearfield’s products allow its customers to connect twice as many homes in their Fiber to the Home (“FTTH”) builds by using fewer resources in less time.

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.

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.

Under this arrangement, we contract with a company to provide certain personnel and other services at the production facilities in Mexico that complete final build and assembly of a significant portion of Clearfield’s products.

Clearfield’s Mexico facility operates under a Maquiladora arrangement. Under this arrangement, we contract with a company to provide certain personnel and other services at the production facilities in Mexico that complete final build and assembly of a significant portion of Clearfield’s products.

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, 2023, three customers accounted for a combined 40% 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. As of September 30, 2024, three customers accounted for a combined 37% of accounts receivable. These customers are all distributors.

Patents and Trademarks As of September 30, 2023, Clearfield has 47 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.

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.

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.

Sales have usually reached a seasonal peak in our third and fourth fiscal quarters. Human Capital Resources As of September 30, 2023, the Company had approximately 400 full-time employees, of which 65% were based in the United States (“U.S.”) and 35% were based outside of the U.S., primarily in Finland and Estonia due to our Nestor Cables operations.

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.

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. 7 Corporate Information Clearfield, Inc. was incorporated under the laws of Minnesota in 1979.

Our supply chain team also manages the critical logistics and transport services for our materials, components and finished products in and out of Mexico to ensure sufficient materials to timely produce products and to ensure timely export of products in order to qualify as duty-free.

We tightly integrate our supply chain management, our product innovation activities, and our manufacturing operations. Our supply chain team also manages the critical logistics and transport services for our materials, components and finished products in and out of Mexico to ensure sufficient materials to timely produce products and to ensure timely export of products in order to qualify as duty-free.

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).

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).

Fiber Assemblies - Clearfield manufactures high quality fiber assemblies with an industry-standard or customer-specified configuration. 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.

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, 2023, the Company had one customer that comprised 16% of net sales. This customer is a distributor.

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.

We also employ seasonal, part-time employees and independent contractors. Subject to customarily local collective bargaining arrangements for employees in Finland and Estonia, none of our employees are covered by any collective bargaining agreement. 6 Our U.S. employees include approximately 165 office personnel and 100 manufacturing personnel as of September 30, 2023.

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.

As a result, our competitors may be able to procure necessary components and labor at much lower prices than we can or may offer competitive products at below market prices, which could prevent us from competing effectively. 4 Sources of Materials and Supply Chain Numerous purchased materials and components and sources of labor are used in the manufacturing of the Company’s products.

Substantially all of the final build and assembly is completed at Clearfield’s plants in Brooklyn Park, Minnesota and Tijuana, Mexico, with manufacturing support from a network of domestic and global manufacturing partners. Clearfield specializes in producing these products on both a quick-turn and scheduled delivery basis.

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. 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.

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.

Purpose-built to support a wide variety of service network designs, the pedestal eliminates the need for multiple, specialty pedestals and can support a passive optical network (PON) option, a splice-only option, or an access terminal option. The FiberFirst Pedestal Access Terminal options provide a cable management and mounting bracket kit that supports the deployment of all Clearfield access terminals.

For the fiscal year ended September 30, 2022, the Company had one customer that comprised 14% of net sales. This customer was a distributor. For the fiscal year ended September 30, 2021, the Company had two customers that comprised a combined 28% of net sales. Both of these customers were distributors.

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.

Our corporate headquarters are located at 7050 Winnetka Avenue North, Suite 100, Brooklyn Park, Minnesota, 55428, and our corporate website is www.seeclearfield.com.

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.

As of September 30, 2022, one customer accounted for 20% of accounts receivable. This customer is a distributor. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported.

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.

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”), which we established following our acquisition of Nestor Cables on July 26, 2022. Prior to July 26, 2022, we had a single reportable segment structure.

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.

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.

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. Clearfield’s Mexico facility operates under a Maquiladora arrangement.

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.

The patented SeeChange® terminal and hardened connector system lets the operator push fiber deeper in the neighborhood using a completely plug-and-play approach. 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.

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.

FieldShield starts with a ruggedized microduct designed to support all aerial, direct bury, and inside plant “last mile” needs. FieldShield microduct is strong enough to be placed using traditional methods of boring and plowing, leveraging existing conduit placement equipment, as well as newer, less disruptive technologies such as micro trenching or saw cutting.

FieldShield microduct is strong enough to be placed using traditional methods of boring and plowing, leveraging existing conduit placement equipment, as well as newer, less disruptive technologies such as micro trenching or saw cutting. Fiber Assemblies - Clearfield manufactures high quality fiber assemblies with an industry-standard or customer-specified configuration.

Maquiladora status also allows us to import certain items from the United States into Mexico duty-free, provided that such items, after processing, are exported from Mexico within a stipulated time frame. 5 Our supply chain management team oversees our suppliers to source and procure materials, manufacture and deliver our products to customers from the site of manufacture, whether at Clearfield’s facility in Brooklyn Park, Minnesota or the facility in Tijuana, Mexico that operates as Maquiladoras.

Our supply chain management team oversees our suppliers to source and procure materials, manufacture and deliver our products to customers from the site of manufacture, whether at Clearfield’s facilities in Brooklyn Park, Minnesota or the facility in Tijuana, Mexico that operates as a Maquiladora. Our supply chain management team consists of planning, sourcing, and logistics personnel.

FieldShield ® platform is a patented fiber pathway and protection method aimed at reducing the cost of broadband deployment. Our FieldShield fiber drop cable assemblies are designed to connect the fiber access point (hand hole, pedestal or aerial) to the optical network terminal (ONT), on the home, in a fiber to the home (FTTH) network.

Our FieldShield fiber drop cable assemblies are designed to connect the fiber access point (hand hole, pedestal or aerial) to the optical network terminal (ONT), on the home, in a fiber to the home (FTTH) network. FieldShield starts with a ruggedized microduct designed to support all aerial, direct bury, and inside plant “last mile” needs.

Nestor Cables has approximately 30 office personnel and 105 manufacturing personnel as of September 30, 2023. As of September 30, 2023, we had contracted for approximately 600 personnel in the Mexico facility through a Maquiladora agreement. 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 Mexico facility. In our manufacturing operations, we monitor key metrics and goals based on quality, productivity, and ability to meet shipping promise dates.

The FiberFirst Pedestal Access Terminal options provide a cable management and mounting bracket kit that supports the deployment of all Clearfield access terminals. 3 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.

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.

Removed

Strategy Overview In 2022, we launched a transformative multi-year strategy plan called LEAP. To leap means jumping higher, further and with greater force. The LEAP plan is our roadmap to how we intend to scale as a company to seize the opportunity Clearfield was built to achieve. There are four tenets in our LEAP plan, one for each letter.

Added

Removed

The L is to leverage our decade-long excellence in community broadband. We are a leader in community broadband fiber connectivity and have been focused on serving this market since we were founded. We make decisions by listening to our customers and understanding their evolving needs.

Added

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.

Removed

Building on our decade plus of success in this market, we’ve demonstrated that we can nimbly adapt to a changing marketplace and grow with our customers as they grow. The E is to execute capacity enhancement. This tenet is centered around aligning us closer to market demand by building production capacity that facilitates optimal time to market.

Removed

We are structured to maintain our market leadership position and to gain market share from competitors and grow the business overall, by matching our capacity to address the significant market demand for fiber broadband. 1 The A is to accelerate infrastructure investments.

Removed

This tenet reflects our commitment to continue investing in our organizational infrastructure to support the growing business and effectively manage our expanded capacity. This includes attracting and retaining key personnel, optimizing internal processes, and adding information systems to take advantage of the opportunity to achieve scalable company growth.

Removed

Finally, the P in LEAP stands for position innovation at the forefront of our value proposition. Accelerating our customers’ time to revenue by designing craft-friendly products that require less skilled labor is the foundation of our value proposition.

Removed

We intend to achieve this tenet by emphasizing innovation in our product designs and increasing the cadence of our product expansions with the goal of facilitating our customers’ fiber broadband deployments. Segments We are engaged in global operations.

Removed

Clearfield specializes in producing these products on both a quick-turn and scheduled delivery basis. 2 Nestor Cables Operating Segment As of July 26, 2022, Clearfield, through its newly created Finnish subsidiary, Clearfield Finland Oy, acquired Nestor Cables. Nestor Cables is based in Oulu, Finland, with operations in Estonia through its wholly owned subsidiary, Nestor Cables Baltics OÜ.

Removed

Sources of Materials and Supply Chain Numerous purchased materials and components and sources of labor are used in the manufacturing of the Company’s products. 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.

Removed

Our supply chain management team consists of planning, sourcing, and logistics personnel. We tightly integrate our supply chain management, our product innovation activities, and our manufacturing operations.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

40 edited+4 added−5 removed96 unchanged

2023 filing

2024 filing

Biggest changeThese 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. 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.

Biggest changeWe 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.

For example, programs like the Connect America Fund (CAF), which provides a capital expenditure subsidy for the build-out of the country’s broadband network, the Rural Digital Opportunity Fund (RDOF), which will provide a capital expenditure subsidy for the support of high-speed broadband networks in rural America, and the Broadband Equity, Access and Deployment (BEAD) program, among others, which will provide funding for broadband deployment, mapping and adoption projects in unserved and underserved areas in the United States, its territories, and the District of Columbia, may subsidize or encourage spending by our customers or prospective customers on capital spending projects that utilize our products.

For example, programs like the Connect America Fund (CAF), which provides a capital expenditure subsidy for the build-out of the country’s broadband network, the Rural Digital Opportunity Fund (RDOF), which provides a capital expenditure subsidy for the support of high-speed broadband networks in rural America, and the Broadband Equity, Access and Deployment (BEAD) program, among others, which will provide funding for broadband deployment, mapping and adoption projects in unserved and underserved areas in the United States, its territories, and the District of Columbia, may subsidize or encourage spending by our customers or prospective customers on capital spending projects that utilize our products.

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.” 17 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.” 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; 16 ● 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: ● 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.

If the factors described above were to occur and cause the demand for fiber broadband capabilities or access to slow, stop or reverse, our business, financial condition and operating results would be negatively affected. 14 Changes in U.S. government funding programs may cause our customers and prospective customers to delay, reduce, or accelerate purchases, leading to unpredictable and irregular purchase cycles.

If the factors described above were to occur and cause the demand for fiber broadband capabilities or access to slow, stop or reverse, our business, financial condition and operating results would be negatively affected. Changes in U.S. government funding programs may cause our customers and prospective customers to delay, reduce, or accelerate purchases, leading to unpredictable and irregular purchase cycles.

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. 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.

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.

Our inability to attract, develop and retain qualified personnel could have a significant negative effect and thereby materially harm our business and financial condition. 12 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. 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.

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. 10 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. If we are unable to complete acquisitions or successfully integrate and develop acquired businesses, our financial results could be materially and adversely affected.

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.

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.

These risks associated with international operations may have a material adverse effect on our revenue from or costs associated with international operations or sales. Expectations relating to environmental, social and governance matters may increase our cost of doing business and expose us to reputational harm and potential liability.

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.

The occurrence of litigation or the effect of any settlement or an adverse determination in litigation could have a material adverse effect on our business, financial condition, and results of operations. 15 We face risks associated with expanding our sales outside of the United States.

The occurrence of litigation or the effect of any settlement or an adverse determination in litigation could have a material adverse effect on our business, financial condition, and results of operations. We face risks associated with expanding our sales outside of the United States.

We purchase critical components for our products, including injected molded parts, various cabling, optical components, components for active cabinets, and connectors from third parties, some of whom are single- or limited-source suppliers. We depend on the ability of these third-party suppliers to secure a sufficient supply of raw materials and maintain sufficient manufacturing and shipping capacity.

We purchase critical components for our products, including injected molded parts, various cabling, optical components, components for active cabinets, and connectors from third parties, some of which are single- or limited-source suppliers. We depend on the ability of these third-party suppliers to secure a sufficient supply of raw materials and maintain sufficient manufacturing and shipping capacity.

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, including COVID-19, 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. Pandemics and other health crises could have a material adverse effect on our business, financial condition, and operating results.

The 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.

Pandemics and other health crises, including COVID-19, 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.

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.

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 2023, the Company had one customer that comprised 16% 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. For fiscal year 2024, the Company had two customers that comprised 26% of net sales.

In addition, other universal service and inter-carrier compensation reforms scheduled to begin in the coming years will eliminate subsidies that carriers have traditionally relied upon to support service in high-cost, rural areas.

In addition, other universal service reforms scheduled to begin in the coming years will eliminate subsidies that carriers have traditionally relied upon to support service in high-cost, rural areas.

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.

Further, tariffs may be imposed by the U.S. on imports from other countries that are the single- or limited-source of our materials and components. Tariffs increase the cost of the materials and components that go into making our products, but we are generally unable to pass most of these increased costs on to our customers.

Further, new or increased tariffs may be imposed by governments on imports from other countries that are the single- or limited-source of our materials and components. Tariffs increase the cost of the materials and components that go into making our products, but we are generally unable to pass some or all of these increased costs to our customers.

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.

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.

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. Employee health, availability, productivity, and efficiency may be adversely impacted.

For fiscal year 2022, the Company had one customer that comprised 14% of net sales, and for fiscal year 2021 the Company had two customers that comprised a combined 28%, 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 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.

Failure to secure these resources and implement these systems on a timely basis could have a material adverse effect on our operating results. 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.

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.

An increasing number of products manufactured by the Company are produced outside the U.S., including in our Mexico facilities. The Company’s manufacturing facilities in Mexico are authorized to operate as Maquiladoras by the Ministry of Economy of Mexico.

A number of products manufactured by the Company are produced outside the U.S., including in our Mexico facility. The Company’s manufacturing facility in Mexico is authorized to operate as a Maquiladora by the Ministry of Economy of Mexico.

Fluctuations in exchange rates between the Euro and U.S. dollar may impact our results of operations, financial position and cashflows. 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.

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.

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.

As a result, certain component inventory purchases may become excess or obsolete, which could have an adverse effect on our financial condition and results of operations. 9 The reduction of available production capacity among our suppliers, their failures to meet production deadlines or increases to us in their manufacturing or shipping costs may impact our ability to deliver quality products to our customers on a timely basis, make our products less competitive due to extended delivery times or increased price, negatively impact our customer or distributor relationships, and result in lower net sales and profit.

The reduction of available production capacity among our suppliers, their failures to meet production deadlines or increases to us in their manufacturing or shipping costs may impact our ability to deliver quality products to our customers on a timely basis, make our products less competitive due to extended delivery times or increased price, negatively impact our customer or distributor relationships, and result in lower net sales and profit.

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.

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.

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.

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.

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. In addition, we may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.

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.

Furthermore, due to general economic conditions in the U.S. and globally, our suppliers may experience financial difficulties, which could result in increased delays, additional costs, or loss of a supplier. 8 The termination or interruption of any of these relationships, or the failure of these manufacturers or suppliers to supply components or raw materials to us on a timely basis or in sufficient quantities, likely would cause us to be unable to meet orders for our products and harm our reputation and our business.

The termination or interruption of any of these relationships, or the failure of these manufacturers or suppliers to supply components or raw materials to us on a timely basis or in sufficient quantities, likely would cause us to be unable to meet orders for our products and harm our reputation and our business.

We rely on effective management information systems, including our enterprise resource planning (“ERP”) software, for critical business operations and to support strategic business decisions. 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.

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.

Some of these systems are made up of multiple software and system providers. 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.

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.

These factors could negatively affect the cost and supply of components needed for our products, our ability to ship products to customers and ultimately impact our business, financial condition, and result of operations. 11 Growth may strain our business infrastructure, which could adversely affect our operations and financial condition.

Sustained or worsening global economic conditions and geopolitical issues may disrupt or increase our cost of doing business and otherwise disrupt and delay our supply chain operations. These factors could negatively affect the cost and supply of components needed for our products, our ability to ship products to customers and ultimately impact our business, financial condition, and result of operations.

We are in the process of consolidating several of these solutions and systems into one integrated ERP system for our North American operations. Failure to successfully consolidate and integrate these solutions and systems could result in disruptions to our operations and adversely impact our business.

Failure to successfully consolidate and integrate these solutions and systems could result in disruptions to our operations and adversely impact our business.

Additionally, as cybersecurity threats continue to evolve, we may be required to devote additional resources to continue to enhance our information security measures and controls to mitigate these new and emerging threats. Our business is dependent on interdependent management information systems.

Additionally, as cybersecurity threats continue to evolve, we may be required to devote additional resources to continue to enhance our information security measures and controls to mitigate these new and emerging threats. Natural disasters, extreme weather conditions or other catastrophic events could negatively affect our business, financial condition, and operating results.

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. 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.

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.

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.

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.

ITEM 1A. RISK FACTORS Risks Relating to Our Operations Inflationary price pressures and uncertain availability of components, raw materials, labor and logistics used by us, and our suppliers could negatively impact our profitability.

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.

Accordingly, these increased costs adversely impact the gross margin that we earn on our products.

Accordingly, these increased costs adversely impact the gross margin that we earn on our products. Furthermore, due to general economic conditions in the U.S. and globally, our suppliers may experience financial difficulties, which could result in increased delays, additional costs, or loss of a supplier.

Removed

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.

Added

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.

Removed

Sustained or worsening global economic conditions and geopolitical issues may disrupt or increase our cost of doing business and otherwise disrupt and delay our supply chain operations.

Added

As a result, certain component inventory purchases may become excess or obsolete, which could have an adverse effect on our financial condition and results of operations.

Removed

Natural disasters, extreme weather conditions or other catastrophic events could negatively affect our business, financial condition, and operating results.

Added

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.

Removed

The degree to which pandemics and other health crises impact our results will depend on numerous factors and future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the pandemic and address its impact, and how quickly and to what extent normal economic and operating conditions can resume. 13 Risks Relating to Our Markets and Industry To compete effectively, we must continually improve existing products and introduce new products that achieve market acceptance.

Added

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.

Removed

Moreover, disruptions at U.S. government agencies responsible for implementing broadband programs and subsidies, including as a result of government shutdowns or pandemics like COVID-19, may also delay the availability of subsidies or implementation of programs affecting our customers, which may adversely affect our business.

Item 2. Properties

Properties — owned and leased real estate

9 edited+5 added−4 removed0 unchanged

2023 filing

2024 filing

Biggest changeThe lease commenced in the second quarter of fiscal 2022. Nestor leases an approximately 25,000 square foot manufacturing facility in Oulu, Finland, which is utilized for the operations of Nestor Cables. The original lease term ends on October 31, 2022, but auto renews indefinitely until terminated with two years written notice.

Biggest changeThe 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.

Additionally, the lease grants to Nestor Cables the option to lease an expansion facility that is to be constructed no later than August 31, 2024. The expansion facility will be constructed on the same premises as the existing facility.

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.

ITEM 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 lease term is ten years and two months, ending on February 28, 2025, and is renewable.

ITEM 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.

Rent is increased each year on May 1 st based upon the cost-of-living index published by the Estonian government and capped at 5%. 18

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%.

Once the expansion option is exercised and the expansion facility is made available for use, the lease term of the existing facility will become a minimum of 60 months. The lease calls for monthly rental payments of approximately €20,400 until April 2024 and €25,000 afterwards.

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.

The renewal options have not been included within the lease term because it is not reasonably certain that the Company will exercise either option. In July 2021, Clearfield entered into an indirect lease arrangement for an approximately 318,000 square foot manufacturing facility in Tijuana, Mexico.

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.

The lease term is five years commencing March 2022 and ending on February 28, 2027, with rent payments increasing annually. The lease includes an option to extend the lease for an additional five years. The renewal option has not been included within the lease term because it is not reasonably certain that the Company will exercise the option.

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.

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. Rent is increased each year on January 1st based upon the cost-of-living index published by the Finnish government.

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.

The renewal options have not been included within the lease term because it is not reasonably certain that the Company will exercise either option. Clearfield’s Mexico facility operates under a Maquiladora arrangement pursuant to which we contract with a company to provide certain personnel and other services at the Tijuana, Mexico facility.

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 lease term is for 7 years of which 5 years are mandatory, commencing March 2022. The lease contains written options to renew for two additional consecutive periods of 5 years each. The lease calls for monthly rental payments of $162,000, increasing 2% annually.

Added

In April 2024, the Company exercised the renewal option, which extended the lease term three additional years to end on February 29, 2028.

Removed

Maquiladora status allows us to import certain items from the United States into Mexico duty-free, provided that such items, after processing, are exported from Mexico within a stipulated time frame.

Added

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

Maquiladora status, which is renewed with the Ministry of the Economy of Mexico periodically, is subject to various restrictions and requirements, including compliance with the terms of the Maquiladora program and other local regulations, which have become stricter in recent years. On November 19, 2021, Clearfield signed a lease for a 105,000 square foot warehouse in Brooklyn Park, Minnesota.

Added

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

On May 11, 2023, Nestor Cables signed a lease for an approximately 49,000 square foot manufacturing facility in Tabasalu, Estonia, to be utilized for the operations of Nestor Cables Baltics. The lease is without a fixed term and requires two years’ written notice to terminate the lease.

Added

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.

Added

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

8 edited+1 added−2 removed1 unchanged

2023 filing

2024 filing

Biggest changeThese 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.

Dividends We have never paid cash dividends on our common stock. 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.

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.

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] Not applicable.

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, 2018, and its relative performance is tracked through September 30, 2023.

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 following table presents the total number of shares repurchased during the fourth quarter of fiscal 2023 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, 2023 - $ - - $ 14,980,671 August 1-31, 2023 7,084 37.50 - 14,980,671 September1-30, 2023 - - - 14,980,671 Total 7,084 $ 37.50 - $ 14,980,671 (1) Amount remaining from the aggregate $22,000,000 repurchase authorizations approved by the Company’s board of directors on January 27, 2022.

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 repurchase program does not obligate Clearfield to repurchase any particular amount of common stock during any period. 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.

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 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDERMATTERS 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, 2023.

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.

The returns shown are based on historical results and are not intended to suggest future performance. 19 Company/Index September 30, 2018 September 30, 2019 September 30, 2020 September 30, 2021 September 30, 2022 September 30, 2023 Clearfield, Inc. $ 100.00 $ 87.13 $ 148.31 $ 324.63 $ 769.41 $ 212.72 S&P 500 Index 100.00 117.95 133.49 170.98 142.32 170.20 S&P 1500 Communications Equipment Index 100.00 138.73 114.40 160.72 130.81 171.24 20 Issuer Repurchases The Company repurchased a total of 7,084 shares of our common stock during the fourth quarter of fiscal year 2023 in connection with payment of taxes upon the vesting of restricted stock previously issued to employees.

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.

Removed

In addition, effective January 27, 2022, the Company’s board of directors increased the share repurchase program by an additional $10 million to an aggregate of $22 million, from the previous $12 million. As of September 30, 2023, we have repurchased an aggregate of 565,590 shares for approximately $7,019,000, leaving approximately $14,981,000 available within our $22,000,000 stock repurchase program.

Added

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.

Removed

Item 7. Management's Discussion & Analysis

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

69 edited+35 added−19 removed50 unchanged

2023 filing

2024 filing

Biggest changeNestor Cables Segment The following table provides net sales and net income for the Nestor Cables segment for the fiscal year ended: (In thousands) September 30, 2023 September 30, 2022 September 30, 2021 Segment net sales $ 42,998 $ 7,061 $ - Segment net loss $ (301 ) $ (409 ) $ - Net sales in the Nestor Cables segment increased 509% or $35,937,000 for the fiscal year ended September 30, 2023, due to a full year of operations in fiscal 2023 after being acquired in the fourth quarter of fiscal 2022. 25 Net loss in the Nestor Cables segment for the fiscal year ended September 30, 2023 decreased 26% or $108,000 from the fiscal year ended September 30, 2022, driven by non-recurring acquisition related expenses in the prior year.

Biggest changeNestor Cables Segment The following table provides net sales and net loss for the Nestor Cables segment for the fiscal year ended: (In thousands) September 30, 2024 September 30, 2023 September 30, 2022 Segment net external sales $ 41,137 $ 42,998 $ 7,061 Segment net loss $ (3,939 ) $ (301 ) $ (409 ) 25 Net sales in the Nestor Cables segment decreased 4%, or $1,861,000, for the fiscal year ended September 30, 2024, as compared to the fiscal year ended September 30, 2023, excluding sales to the Clearfield segment.

Sales to the Community Broadband market decreased 12% or $15,312,000 from $127,478,000 in fiscal year 2022 to $112,166,000 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.

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.

We believe that there are several accounting policies that are critical to an understanding of our historical and future performance, as these policies affect the reported amounts of sales, expenses and significant estimates and judgments applied by management.

We believe there are several accounting policies that are critical to an understanding of our historical and future performance, as these policies affect the reported amounts of sales, expenses and significant estimates and judgments applied by management.

While there are a number of accounting policies, methods and estimates affecting our financial statements, areas that are particularly significant include: ● 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: 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.

The Company generally develops these forecasts based on recent sales data for existing products, planned timing of new product launches or acquisitions, and estimated future growth of the FTTP market. 29 Goodwill represents the excess purchase price over the fair value of tangible net assets acquired in acquisitions after amounts have been allocated to intangible assets.

The Company generally develops these forecasts based on recent sales data for existing products, planned timing of new product launches or acquisitions, and estimated future growth of the FTTP market. Goodwill represents the excess purchase price over the fair value of tangible net assets acquired in acquisitions after amounts have been allocated to intangible assets.

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 2023 was $183,441,000, an increase of $25,505,000, or 16%, from the $157,936,000 in fiscal year 2022.

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. Cost of sales for fiscal year 2023 was $183,441,000, an increase of $25,505,000, or 16%, from the $157,936,000 in fiscal year 2022.

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 Clearfield’s core markets.

If the valuation allowance is reduced, the Company would record an income tax benefit in the period in which that determination is made. If the valuation allowance is increased, the Company would record additional income tax expense. The Company files income tax returns in the U.S. Federal jurisdiction and various state and foreign jurisdictions.

If the valuation allowance is reduced, the Company would record an income tax benefit in the period in which that determination is made. If the valuation allowance is increased, the Company would record additional income tax expense. 29 The Company files income tax returns in the U.S. Federal jurisdiction and various state and foreign jurisdictions.

Net investment income in fiscal year 2023 was $5,206,000 compared to $328,000 for fiscal year 2022. The increase in interest income is due to a higher average investments balance and higher interest rates earned for the year ended September 30, 2023.

Net investment income in fiscal year 2023 was $5,206,000 compared to $328,000 for fiscal year 2022. The increase in interest income was due to a higher average investments balance and higher interest rates earned for the year ended September 30, 2023.

The loan agreement and the security agreement contains customary affirmative and negative covenants and requirements relating to the Company and its operations, including a requirement that the Company maintain a debt service coverage ratio of not less than 1.20 to 1 as of the end of each fiscal year for the fiscal year then ended and maintain a debt to cash flow ratio of not greater than 2 to 1 measured as of the end of each of the Company’s fiscal quarters for the trailing twelve (12) month period.

The loan agreement and the security agreement contained customary affirmative and negative covenants and requirements relating to the Company and its operations, including a requirement that the Company maintain a debt service coverage ratio of not less than 1.20 to 1 as of the end of each fiscal year for the fiscal year then ended and maintain a debt to cash flow ratio of not greater than 2 to 1 measured as of the end of each of the Company’s fiscal quarters for the trailing twelve (12) month period.

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 $6,043,000, 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 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.

Results of Operations 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.

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.

Investing Activities 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.

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.

Additionally, we have a line of credit for $40 million that has no outstanding borrowing as of September 30, 2023. Our excess cash is invested mainly in certificates of deposit backed by the FDIC, U.S. Treasury securities, and money market funds.

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 decrease in tax expense of $5,393,000 from the year ended September 30, 2022 is 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 is due to decreased permanent addback items including nondeductible compensation and transaction costs.

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.

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 several quarters.

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.

The increase is primarily due to incurring a full year of interest expense on the factoring liability held by Nestor Cables which was acquired in July 2022. Income tax expense for fiscal year 2023 was $9,079,000 compared to $14,472,000 for fiscal year 2022.

Interest expense in fiscal year 2023 was $881,000 compared to $311,000 for fiscal year 2022. The increase was primarily due to incurring a full year of interest expense on the factoring liability held by Nestor Cables which was acquired in July 2022. Income tax expense for fiscal year 2023 was $9,079,000 compared to $14,472,000 for fiscal year 2022.

During the years ended September 30, 2023, 2022, and 2021, there were no triggering events that indicated goodwill or intangible assets may be impaired.

During the years ended September 30, 2024, 2023, and 2022, there were no triggering events that indicated goodwill or intangible assets may be impaired.

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 due to lower net sales and lower gross profit margin in fiscal year 2023. Gross profit percent was 31.7% in fiscal year 2023 compared to 41.7% for fiscal year 2022.

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.

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 $10,655,000.

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.

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.

The line of credit matures on April 27, 2025, and borrowed amounts will bear interest at a variable rate of the CME Group one-month term Secured Overnight Financing Rate (“SOFR”) plus 1.85%, but not less than 1.80% per annum. As of September 30, 2023, the interest rate was 7.18%.

Based on its evaluation, the Company has concluded that it has no significant unrecognized tax benefits. The Company is generally subject to U.S. federal examination for all tax years after 2018. The Company is subject to state examinations for all tax years after 2013 due to unexpired research and development credit carryforwards still open under statute.

Based on its evaluation, the Company has concluded that it has no significant unrecognized tax benefits. The Company is generally subject to U.S. federal examination for all tax years after 2019. The Company is subject to state examinations for all tax years after 2014 due to unexpired research and development credit carryforwards still open under statute.

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 $3,413,000, stock-based compensation of $2,339,000, in addition to changes in operating assets and liabilities using cash.

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.

Nestor is generally subject to Finland examination for all tax years after 2019 and Estonia examination for all tax years after 2019. Impairment of Long-Lived Assets, Intangible Assets and Goodwill The Company’s long-lived assets as of September 30, 2023, consisted primarily of property, plant and equipment, right of use lease assets, patents, intangibles, and goodwill.

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.

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 Provider, National Carriers, and Multiple System Operators (“ MSOs ” or “cable TV”), while also serving the broadband needs of the International markets, primarily in the European, Caribbean Markets , 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 Europe, the Caribbean, Canada, and Mexico.

We believe that the Nestor Cables segment generally experiences the same seasonality as the Clearfield segment. Liquidity and Capital Resources As of September 30, 2023, the Company had combined consolidated balances of cash, cash equivalents, short-term and long-term investments of $174,456,000 compared to $45,199,000 as of September 30, 2022.

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.

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 $26,257,000.

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.

As of September 30, 2023, and 2022, the Company had no U.S. federal, state, or Estonia net operating loss (“NOL”) carry-forwards. As of September 30, 2023, and 2022 there is a Finnish NOL of $1,000 and $4,000, respectively.

As of September 30, 2024, and 2023, the Company had no U.S. federal or Estonia net operating loss (“NOL”) carry-forwards. As of September 30, 2024, there is a state NOL of $64,000. There was no state NOL as of September 30, 2023 As of September 30, 2024, and 2023, there is a Finnish NOL of $1,851,000 and $1,000, respectively.

For fiscal year 2023, net sales from the Clearfiled segment comprised 84% of the Company’s total net sales. ● Nestor Cables Segment - The Nestor Cables segment designs, manufactures, and sells fiber optic and copper telecommunication cables and equipment. For fiscal year 2023, net sales from the Nestor Cables segment comprised 16% of the Company’s total net sales.

For fiscal year 2024 and 2023, net sales from the Clearfield segment comprised 75% and 84% of the Company’s total net sales, respectively. ● Nestor Cables Segment – The Nestor Cables segment designs, manufactures, and sells fiber optic and copper telecommunication cables and equipment.

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 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.

Net income for fiscal year 2022 was $49,362,000 or $3.58 per basic and $3.55 per diluted share compared to $20,327,000 or $1.48 per basic and $1.47 per diluted share for the fiscal year 2021. 24 Reportable Segments The Company’s reportable segments are based on the Company’s method of internal reporting.

Net income for fiscal year 2023 was $32,533,000, or $2.17 per basic and diluted share, compared to $49,362,000, or $3.58 per basic and $3.55 per diluted share, for fiscal year 2022. 24 Reportable Segments The Company’s reportable segments are based on the Company’s method of internal reporting.

The Company’s products are sold by its sales employees and independent sales representatives. 21 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.

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.

The decrease is attributable to lower gross profit as a result of higher unabsorbed overhead related to expanded manufacturing capacities in the Clearfield segment, as well as a full year of Nestor Cables, which has a lower gross profit profile related to its bulk cable and duct product offerings. Nestor Cables was acquired in July 2022.

The decrease is attributable to lower sales and gross profit due to excess supply of fiber products in the Clearfield segment as described above, higher unabsorbed overhead related to expanded manufacturing capacities in the Clearfield segment, as well as a full year of Nestor Cables, which has a lower gross profit profile related to its bulk cable and duct product offerings.

The higher investments balance is a result of the Company’s capital raise of approximately $130,000,000 completed in the first fiscal quarter of 2023. 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 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 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 2023 was $47,992,000, a decrease of $1,155,000, or 2%, compared to $49,130,000 for fiscal year 2022.

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.

As a result, the net cash provided by financing activities during fiscal year 2023 was $113,416,000. 27 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. The Company received $544,000 from employees’ purchase of stock through our ESPP.

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.

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 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.

Net income in the Clearfield segment for the fiscal year ended September 30, 2023, decreased 34% or $16,937,000 from the fiscal year ended September 30, 2022, driven by the changes in sales outlined above, as well as lower gross profit margin which was negatively affected by the buildup in capacity that was not utilized.

Net loss in the Clearfield segment for the fiscal year ended September 30, 2024 increased 128%, or $41,348,000, from net income of $32,834,000 for the fiscal year ended September 30, 2023, driven by the changes in sales outlined above, as well as lower gross profit margin which was negatively affected by the buildup in capacity that was not utilized, as well as reserves for inventory.

The result is cash used in investing activities of $112,247,000 in fiscal year 2023. In fiscal year 2024, the Company intends to continue investing in the necessary information technology, manufacturing equipment and facility needs. 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 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.

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.

Our provision for income taxes includes current U.S. federal tax expense and state tax expense, Finland taxes and deferred tax expense. Net income for fiscal year 2023 was $32,533,000 or $2.17 per basic and diluted share compared to $49,362,000 or $3.58 per basic and $3.55 per diluted share for fiscal year 2022.

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.

Clearfield Segment The following table provides net sales and net income for the Clearfield segment for the fiscal years ended: (In thousands) September 30, 2023 September 30, 2022 September 30, 2021 Segment net sales $ 225,722 $ 263,822 $ 140,755 Segment net income $ 32,834 $ 49,771 $ 20,327 Net sales in the Clearfield segment decreased 14% or $38,100,000 for the fiscal year ended September 30, 2023, resulting from decreased sales to its Community Broadband, MSO/Cable TV, and Large Regional customers as these customers work to digest inventory that was purchased previously.

Clearfield Segment The following table provides net sales and net (loss) income for the Clearfield segment for the fiscal years ended: (In thousands) September 30, 2024 September 30, 2023 September 30, 2022 Segment net external sales $ 125,568 $ 225,722 $ 263,822 Segment net (loss) income $ (8,514 ) $ 32,834 $ 49,771 Net sales in the Clearfield segment decreased 44%, or $100,154,000, for the fiscal year ended September 30, 2024, resulting from decreased sales to its Community Broadband, MSO/Cable TV, and Large Regional customers as these customers work to digest inventory that was purchased previously during the period of long lead time supply chain created by the pandemic.

Valuation of Inventory The Company maintains a material amount of inventory to support its manufacturing operations and customer demand. This inventory is stated average cost, subject to the lower of cost or net realizable value.

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.

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.

As a result, the net cash used in financing activities during fiscal year 2021 was $536,000. Operating Leases We have entered into various non-cancelable operating lease agreements for office equipment and 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.

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.

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 goodwill or intangible assets has occurred during the years ended September 30, 2023, 2022, and 2021, respectively.

If factors change and we employ different assumptions in the determination of the fair value of grants in future periods, the related compensation expense that we record may differ significantly from what we have recorded in the current periods. 28 Income Taxes We account for income taxes in accordance with ASC 740, Income Taxes , under which deferred income taxes are recognized based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted tax laws.

Income Taxes We account for income taxes in accordance with ASC 740, Income Taxes , under which deferred income taxes are recognized based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted tax laws.

The decrease in backlog was primarily 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 several quarters. As of September 30, 2023, most of the Company’s backlog orders are scheduled to ship within the next nine months.

The Company had a backlog of $25,133,000 and $57,285,000 as of September 30, 2024, and 2023, respectively. The decrease in backlog was primarily due to a lull in demand for fiber connectivity products at our Clearfield segment as customers digest their larger than normal inventory levels built up during the pandemic which were purchased over the previous years.

Year ended September 30, 2022, compared to year ended September 30, 2021 The Company’s net sales for fiscal year 2022 increased 92%, or $130,128,000, to $270,883,000 from net sales of $140,755,000 in fiscal year 2021. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported.

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.

Gross profit was also affected by lower gross profit realized in our Nestor Cables cable manufacturing business which was acquired in July 2022 and was not included in the comparable period of fiscal 2022. Selling, general and administrative expense for fiscal year 2023 was $47,992,000, a decrease of $1,155,000, or 2%, compared to $49,130,000 for fiscal year 2022.

Cash provided by operations included net income of $20,327,000 for the fiscal year ended September 30, 2021, non-cash expenses for depreciation and amortization of $2,302,000, stock-based compensation of $1,280,000, and decrease in allowance for doubtful accounts of $210,000, in addition to changes in operating assets and liabilities using cash.

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.

Accordingly, international sales represented 6% and 7% of net sales for the years ended September 30, 2022, and 2021, respectively. The increase in net sales for fiscal year 2022 of $130,128,000 compared to fiscal year 2021 was attributable to increased demand across Clearfield’s core markets.

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.

Also, changes in operating assets and liabilities providing cash include an increase in accounts payable and accrued expenses of $14,502,000, due to timing of accounts payable and $8,738,000 in fiscal year 2022 incentive compensation accruals to be paid after year end. Net cash provided by operations for the fiscal year ended September 30, 2021, totaled $10,903,000.

Also, changes in operating assets and liabilities providing cash include an increase in accounts payable and accrued expenses of $15,760,000, due to timing of accounts payable and $8,738,000 in fiscal year 2022 incentive compensation accruals to be paid after year end. 27 Investing Activities We invest our excess cash in money market accounts, U.S.

We allocate any excess purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed to goodwill. 30 New Accounting Pronouncements: In June 2016, the Financial Accounting Standards Board (“FASB”) issued the Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments .

We allocate any excess purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed to goodwill.

Financing Activities 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. The Company also received $611,000 from employees’ purchase of stock through our Employee Stock Purchase Plan (“ESPP”) and $954,000 related to issuance of stock as payment for incentive compensation.

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.

Changes in operating assets and liabilities using cash include an increase in net inventories of $13,116,000 and accounts receivables of $9,151,000.

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.

The Company used $9,148,000 in cash to purchase fixed and intangible assets. Additionally, the Company used $16,187,000 in cash to acquire Nestor Cables on July 26, 2022. The result was cash used in investing activities of $8,197,000 in fiscal year 2022. For the fiscal year ended September 30, 2021, we purchased $24,809,000 of FDIC-backed certificates of deposit and U.S.

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.

As of September 30, 2024, we have repurchased an aggregate of 1,729,780 shares for $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. The repurchases will be funded by cash on hand.

Income tax expense for fiscal year 2022 was $14,472,000 compared to $5,407,000 for fiscal year 2021. The increase in tax expense of $9,065,000 from the year ended September 30, 2021, was primarily due to the increase in taxable income for fiscal year 2022.

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.

As of September 30, 2023, the Company had no borrowings against this line of credit. As of September 30, 2023, the Company was in compliance with all covenants. We had no long-term debt obligations as of September 30, 2023, and $18,666,000 as of September 30, 2022.

As of the date of the amendment, there was not an outstanding principal balance on the Company’s revolving credit promissory note with the lender. As of September 30, 2024, the Company had no borrowings against this line of credit and was in compliance with all applicable covenants.

In November 2018, the FASB issued update ASU 2018-19 that clarifies the scope of the standard in the amendments in ASU 2016-13. This guidance introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses.

This guidance introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses (CECL). The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost.

For the fiscal year ended September 30, 2021, the Company received $384,000 from employees’ purchase of stock through our ESPP. The Company used $462,000 to pay for taxes related to employees’ exercises of stock options and $458,000 to pay for taxes related to 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 $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.

Sales Backlog Sales backlog reflects purchase order commitments for our products received from customers that have yet to be fulfilled. The Company had a backlog of $57,285,000 and $164,914,000 as of September 30, 2023, and 2022, respectively.

Net loss in the Nestor Cables segment for the fiscal year ended September 30, 2024, increased 112%, or $3,638,000, from the fiscal year ended September 30, 2023, driven by lower gross profit margin as well as increased operating expenses. Sales Backlog Sales backlog reflects purchase order commitments for our products received from customers that have yet to be fulfilled.

The increase in the income tax expense rate to 22.7% for fiscal year 2022 from 21.0% for fiscal year 2021 was due to increased permanent addback items including nondeductible compensation and transaction costs. Our provision for income taxes included current U.S. federal tax expense and state tax expense, Finland taxes and deferred tax expense.

Our provision for income taxes included current U.S. federal tax expense and state tax expense, Finland taxes and deferred tax expense.

Days sales outstanding (“DSO”), which measures how quickly receivables are collected, remained relatively consistent as it increased 1 day from 52 to 53 from September 30, 2022, to September 30, 2023. 26 Net cash provided by operations for the fiscal year ended September 30, 2022, totaled $1,001,000.

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.

We expect interest income to remain at these levels through fiscal year 2024, subject to changes in market interest rates and changes in the average investments balance. Interest expense in fiscal year 2023 was $881,000 compared to $311,000 for fiscal year 2022.

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. 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.

On November 7, 2023, the Company’s board of directors increased the share repurchase program to an aggregate of $40 million from the previous $22 million, leaving approximately $32,980,671 available for repurchase. Operating Activities Net cash provided by operations for the fiscal year ended September 30, 2023, totaled $20,010,000.

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.

The Company’s board of directors increased the share repurchase program $18,000,000 effective November 7, 2023, and an additional $25,000,000 effective April 30, 2024, to an aggregate of $65,000,000. During the year ended September 30, 2024, the Company repurchased 1,164,190 shares for approximately $33,058,000.

Removed

Sales to the Community Broadband market increased 84% or $82,651,000 from $97,978,000 in fiscal year 2021 to $180,629,000 fiscal year 2022. Sales to Clearfield’s MSO/Cable TV market increased 164% or $30,379,000 from $18,490,000 in fiscal year 2021 to $48,868,000 in fiscal year 2022.

Added

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.

Removed

Sales to National Carriers increased 96% or $11,499,000 from $11,956,000 in fiscal year 2021 to $23,456,000 in fiscal year 2022.

Added

Sales to National Carriers decreased 2%, or $187,000, from $8,954,000 in fiscal year 2023 to $8,767,000 in fiscal year 2024. 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.

Removed

The increase in sales to these customers was due to continuing increased demand for fiber connectivity products in response to COVID-19 driven by customers accelerating their purchasing decisions and deployment schedules of our fiber optic solutions and the need for high-speed broadband required in the work from anywhere environment.

Added

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.

Removed

Net sales to International customers increased 62% or $5,846,000 from $9,470,000 in fiscal year 2021 to $15,276,000 in fiscal year 2022, partially driven by the Company’s acquisition of Nestor Cables on July 26, 2022. 23 Cost of sales for fiscal year 2022 was $157,936,000, an increase of $78,358,000, or 98%, from the $79,578,000 in fiscal year 2021.

Added

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.

Removed

Gross profit increased 85%, or $51,770,000 from $61,177,000 for fiscal year 2021 to $112,947,000 for fiscal year 2022. Gross profit percent was 41.7% in fiscal year 2022 compared to 43.5% for fiscal year 2021.

Added

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.

Removed

The decrease in gross profit margin for the period was primarily due to component cost increases absorbed by the Company due to the inflationary economic environment, increased facility costs from our expanded Mexico manufacturing and Minnesota distribution center operations, and increased freight and transportation costs.

… 43 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed3 unchanged

2023 filing

2024 filing

Biggest changeThe fair value of these investments fluctuates subject to changes in market interest rates. As of September 30, 2023, and 2022, the Company had combined consolidated balances of cash, cash equivalents, short term, and long-term investments of $174,456,000 and $45,199,000, respectively. Foreign Exchange Rates: The Company uses the U.S. dollar as its reporting currency.

Biggest changeThe 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.

If the Euro had appreciated or depreciated by 10%, relative to the U.S. Dollar, our operating expenses for fiscal year 2023 would have increased or decreased by approximately $570,000 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.

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.

Accordingly, inflation impacts our profitability, including cost of sales and operating expenses, and may have a material impact on the Company’s financial statements. 31

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

Top changes in Clearfield, Inc.'s 2024 10-K

Item 1. Business

Item 1A. Risk Factors

Item 2. Properties

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Other CLFD 10-K year-over-year comparisons