Clearfield (CLFD) Q4 2026 Earnings Call Transcript

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DATE

Tuesday, Nov. 10, 2026

CALL PARTICIPANTS

• Investor Relations - Gregory McNiff
• President and Chief Executive Officer - Cheryl Beranek
• Chief Financial Officer - Daniel R. Herzog

TAKEAWAYS

• Net Sales -- $151.9 million for fiscal 2026, representing a 1% increase from $150.1 million in fiscal 2025.
• Q4 Net Sales -- $39.3 million, a 4% decrease from $41.1 million in the prior year quarter due to softness in the MSO market.
• Order Backlog -- $43.3 million as of Sept. 30, 2026, a 75% increase from the prior year driven by a $22 million data center project.
• Fiscal 2027 Revenue Guidance -- $195 million to $205 million, reflecting over 30% growth at the midpoint versus fiscal 2026.
• Q1 Fiscal 2027 Revenue Guidance -- $48 million to $52 million, supported by the initial ramp of data center shipments.
• Fiscal 2027 Net Income Per Diluted Share Guidance -- $0.25 to $0.46, compared to $0.16 in fiscal 2026.
• Q1 Fiscal 2027 Net Income Per Diluted Share Guidance -- a loss of $0.06 to income of $0.03, based on current shares outstanding.
• Gross Profit Margin -- 32.0% for fiscal 2026, down from 33.7% in the prior year reflecting higher costs for optical fiber and sheet metal.
• Q4 Gross Profit Margin -- 30.7%, compared to 34.6% in the same quarter last year.
• Cash and Investments -- $157 million as of Sept. 30, 2026, with the company maintaining a debt-free balance sheet.
• Free Cash Flow -- approximately $41 million in cumulative generation over the past three fiscal years.
• Shareholder Returns -- $65 million returned through share repurchases over the last three years.
• Operating Expenses -- $50.9 million for fiscal 2026, representing 33.5% of net sales.
• Q4 Net Loss -- $73,000 or $0.00 per diluted share, compared to net income of $1.8 million in the year-ago quarter.
• Data Center Revenue Target -- approximately $40 million in revenue shipments expected for fiscal 2027.
• Broadband Growth Target -- mid- to high-single-digit growth anticipated in the broadband market for fiscal 2027.
• Share Repurchase Authorization -- $13.2 million remaining for future repurchases as of the end of the fiscal year.

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RISKS

• Herzog stated, "Gross margin has been negatively affected due to the rising costs of Optical Fiber and the ongoing tariff impacts of Chinese fiber," noting significant pressure on fiscal 2026 performance.
• Beranek warned that broadband market growth is stymied by a lack of supply for US-made cable and the inability of some providers to obtain necessary financing.
• Beranek noted that "data center deployments are project based" and can result in "lumpy revenue opportunities," causing quarterly results to vary from traditional seasonal patterns.

SUMMARY

Clearfield, Inc. (NASDAQ:CLFD) reported a strategic expansion into the data center market to complement its core broadband business. Management identified high-density fiber management for artificial intelligence infrastructure as a primary growth catalyst, following the receipt and initial shipment of a $22 million order for a hyperscale campus. The company is navigating cost pressures from rising fiber prices and labor rates in Mexico through a margin recovery initiative involving pricing adjustments and operational efficiencies. Chief Executive Officer Cheryl Beranek announced her planned retirement for March 2027, as the company enters a phase targeted at achieving revenue above $200 million through combined broadband recovery and data center scaling.

• Management reported that East Central Energy became the first broadband provider in Minnesota to secure an executed BEAD agreement, signaling the start of program disbursements.
• The company introduced the NOVA Velocity panel to address customer demand for high fiber count management in constrained data center environments.
• CEO Beranek stated, "We are really built for that $200 million-plus position," noting that higher revenue levels allow the company to optimize overhead absorption across its expanded manufacturing capacity.
• Operating expenses are projected to rise in fiscal 2027 as the company expands its data center sales team and increases incentive-based compensation.
• The company is evaluating design solutions with several prospective data center customers beyond its initial large project to build a multi-industry pipeline.
• Beranek noted that AT&T has consumed a significant portion of US-made cable supply, causing some rural providers to delay deployments until materials become available.
• CEO Beranek stated, "I look forward to a very smooth transition As following the appointment of my successor, I will continue serving Clearfield as president and CEO Emeritus."

INDUSTRY GLOSSARY

• BEAD: Broadband Equity, Access, and Deployment program, a federal initiative providing funding to expand high-speed internet infrastructure in the United States.
• MSO: Multiple Systems Operator, a company that operates multiple cable television systems.
• FTTP: Fiber-to-the-premises, the installation and use of optical fiber from a central point directly to individual buildings.
• White Space: The area in a data center allocated for IT equipment, including servers, storage, and network gear.
• Hyperscale: Large-scale data centers designed to support massive data processing and storage requirements for major technology providers.
• NOVA Velocity: A Clearfield-specific fiber management panel designed for high-density applications in limited space.

Full Conference Call Transcript

Operator: You are now in talk mode. Good afternoon, everyone, and welcome to the Clearfield Fiscal Fourth Quarter 26 Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press *1 on your touch tone phone. And to withdraw your question, please press *2. Please also note that today's call is being recorded. At this time, I would like to turn the floor over to Mr. Gregory McNiff, Investor Relations. Sir, please go ahead.

Gregory McNiff: Thank you. Joining me on today's call are Cheryl Beranek, Clearfield's President and CEO and Daniel R. Herzog, Clearfield's CFO. As a reminder, Clearfield publishes a quarterly shareholder letter which provides an overview of the company's financial results, operational highlights and future outlook. You can find both the shareholder letter and the earnings release on Clearfield's Investor Relations website. After brief prepared remarks, we will open the floor for a question and answer session. Please note that during this call, management will be making remarks regarding future events and the future financial performance of the company. These remarks constitute forward looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act.

These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward looking statements. It is important to also note that the company undertakes no obligation to update such statements except as required by law. The company cautions you to consider risk factors that could cause actual results to differ materially from those in the forward looking statements contained in today's press release, shareholder letter and on this conference call. The Risk Factors section in Clearfield's most recent Form 10-K filing with the Securities and Exchange Commission and its subsequent filings on Form 10 Q provide a description of these risks.

With that, I will turn the call over to Sherry. Sherry?

Cheryl Beranek: Good afternoon, everyone, and thank you for joining us to discuss Clearfield's Fourth Quarter and Full Year Fiscal 26 Results. I will begin by reviewing our progress over the past year and the strategic priorities shaping our next phase of growth. Before turning the call over to Daniel to discuss our financial results and outlook. Fiscal 26 represented a pivotal transition year for Clearfield. We continued serving our established broadband customers while bringing our fiber management expertise to the AI builder. We remain focused on serving our established broadband customers while applying our fiber management expertise to broader opportunities within digital infrastructure, including the data center, edge computing, and other connectivity markets.

Together, the progress made during the year and our current momentum gives us confidence in this strategy. In addition, over the past 3 years, we have strengthened our financial position through disciplined balance sheet management. Including strong cash generation and thoughtful capital allocation. Specifically, we generated approximately $41 million in cumulative free cash flow and returned $65 million to shareholders through share repurchases while maintaining a debt free balance sheet. This financial strength has enabled us to invest in our business expand our addressable markets, and position Clearfield for its next phase of growth. Looking ahead, we expect a gradual recovery in the broadband demand and view the data center market as a significant catalyst for future growth.

In the broadband market, we continue to see demand for fiber infrastructure and are encouraged by signs of a gradual recovery. Since our third quarter letter, the broadband equity access and deployment or BEAD program has continued to advance toward implementation with several states recently announcing funding disbursements or the commencement of network deployments. Recently, we shared that East Central Energy a Minnesota based electrical cooperative, is expanding their fiber access service across rural Minnesota and Northwestern Wisconsin. East Central Energy, a Clearfield customer, is the first broadband provider in Minnesota to secure an executed bid agreement.

We believe this company is the first of many providers to move forward with their broadband deployments that were delayed as providers awaited greater clarity on funding and investment decisions. Progress on BEAD may also help unlocking financing for non-BEAD projects. Supporting a broader recovery in broadband investment. As BEAD projects advance and investment across the broader broadband market begins to recover, we anticipate a return to mid to high single digit growth in this market in fiscal 27. We are particularly pleased with our progress in the data market. Following the approximate $22 million initial purchase order announced in July, we began shipping products during the fourth quarter at the customer's request to support its deployment.

We continue to work closely with this customer to meet its delivery requirements and to support the next phases of its expansion. As described in our third quarter letter, our involvement began early in the design process when we worked with the customer to develop a solution tailored to its needs. That collaboration has continued through production and delivery, and we believe it provides a strong foundation for future work as the customer's projects advance. Beyond this initial relationship, we are working with the engineering teams of several prospective customers to evaluate designs for future data center deployments. We are encouraged by the level of interest.

It gives us the opportunity to apply our long experience in fiber management to a market where fiber density, limited space, and installation speed are becoming critical constraints. Listening to these customers and understanding their needs led to the recent introduction of our NOVA Velocity panel. Designed to simplify the installation and management of high fiber counts in limited space. We have long taken pride in developing products that simplify the deployment and management of fiber networks. That principle continues to shape how we bring new technologies to market, and find additional ways to serve our customers.

While the timing and size of future projects remain uncertain, this early interest supports our belief that we will build a meaningful business in this market. Alongside our product and market expansion, we are focused on improving gross margin and strengthening our manufacturing operations. After absorbing higher costs for optical fiber and other components over the past year, we are responding through improved sourcing, greater manufacturing efficiency, better overhead absorption, and selective pricing adjustments. We also see opportunities to bring more outsourced production in house and make better use of our existing capacity, which could lower costs and improve delivery times.

The initial ramp in data center production will carry additional costs, which may limit gross margin improvement in the first quarter of fiscal 27. We anticipate sequential improvement beginning in the second quarter as production volumes increase manufacturing efficiencies improve and overhead absorption strengthens. We currently expect fiscal 27 annual revenue in the range of 195 million to $205 million equating to a 30% year-over-year growth at the midpoint supported by a gradual recovery in broadband demand and the ramp up of our data center business. Because data center deployments are project based, and can result in lumpy revenue opportunities, The timing of customer orders and shipments may cause quarterly revenue to fluctuate and vary from our traditional seasonality.

With that, I will turn the call over to Daniel R. Herzog, who will review our fourth quarter and full year results and provide our outlook for fiscal 27.

Daniel R. Herzog: Thank you, Sherry, and good afternoon, everyone. As a reminder, in November 2025, we completed the sale of our Nestor cables business. As a result, all financial results presented for fiscal year 26 and all prior periods reflect the Clearfield segment as continuing operations only with Nestor results reported under discontinued operations in our statement of earnings and statement of cash flows and reported as assets and liabilities held for sale in our balance sheet. I will now review our fourth quarter results beginning with sales. Net sales from continuing operations in the fourth quarter of fiscal 26 were $39.3 million a 4% decrease from $41.1 million in the prior year fourth quarter.

Net sales from continuing operations for fiscal 26 were $151.9 million a 1% increase from $150.1 million in fiscal 25. Performance for the quarter and full year reflected growth in the large regional market, partly offset by softness in the MSO market. Gross profit margin from continuing operations in the fourth quarter was 30.7%, compared with 34.6% in the prior year quarter and 31.8% in the third quarter. For fiscal 26, gross profit margin from continuing operations was 32% compared to 33.7% in fiscal 25. Gross profit margin for the fourth quarter and full year was affected by higher material costs compared to prior periods, particularly in the latter part of the fiscal year.

As noted in our third quarter shareholder letter, we initiated a gross margin recovery initiative focused on improving gross margin through a combination of pricing discipline, product mix optimization, sourcing improvements, and operational efficiencies. We expect these efforts to support margin improvement beginning in the second quarter fiscal 27. Operating expenses from continuing operations for the fourth quarter of fiscal 26 were relatively unchanged at $13.1 million compared to $13.3 million in the prior year quarter, As a percentage of net sales, operating expenses from continuing operations for the fourth quarter increased to 33.3% from 32.3% in the prior year fourth quarter.

Operating expenses from continuing operations for fiscal 26 were $50.9 million up 5% from $48.4 million in fiscal year 25. As a percentage of net sales, operating expenses increased to 33.5% from 32.3% in fiscal 25. The increase was mainly due to higher personnel and IT costs. Net loss from continuing operations in the fourth quarter of fiscal 26 was approximately $100,000 or breakeven per diluted share a decrease from net income of $1.8 million or $0.13 per diluted share in the prior year fourth quarter. Net income from continuing operations for fiscal 26 was $2.1 million down from $6.3 million in fiscal 25.

Earnings per diluted share from continuing operations decreased to $0.16 in fiscal 26 from $0.45 per diluted share in fiscal 25, reflecting higher material costs and increased operating expenses. For the first quarter of fiscal 27, we expect net sales in the range of $48 million to $52 million operating expenses as a percentage of net sales to remain consistent with the fourth quarter of fiscal 26 and net income and loss per share in the range of a loss of $0.06 per share to income of $0.03 per share.

For fiscal 27, we expect net sales to be in the range of $195 million to $205 million operating expenses as a percentage of net sales to remain consistent with fiscal 26 and net income per diluted share in the range of $0.25 to $0.46 This guidance reflects an increase in operating expenses driven by investments in additional personnel related to our growth strategy and higher incentive based compensation. Additionally, gross margin has been negatively affected due to the rising costs of Optical Fiber and the ongoing tariff impacts of Chinese fiber.

The company's procurement organization has identified potential relationships that could free up sources of global optical fiber which could improve this guidance as agreements are finalized and the materials are delivered to our North American manufacturing sites. The net income and loss per share ranges are based on the number of shares outstanding at the end of the fourth quarter of fiscal 26 and do not reflect potential share repurchases completed in fiscal 27. Our guidance also reflects our current expectations regarding the potential supply chain constraints for optical fiber, cable, and connectors as discussed in our previous fiscal 26 quarterly letters to shareholders as well as our current understanding of the impact of the evolving tariff situation.

These factors could contribute to uncertainty in our business and in the macroeconomic environment. And with that, we will open the call to your questions. Thank you.

Operator: We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before please. Please press *2. And at this time, we will pause momentarily to assemble our roster. And the first question for today will come from Ryan Koontz with Needham. Please go ahead.

Jeff Hopson: Hi. This is, Jeff Hopson on for Ryan Koontz. Thank you for the question. Maybe if you could just provide a little more info on the gross margin progression and then Q1 and then throughout the year. Just maybe trying to level-set of, you know, what is specifically related to the ramp of the data center project versus the other headwinds that are seen just in part of the rest of the business? Thank you.

Daniel R. Herzog: Jeff, thanks for your call. Question. Are you talking fiscal year 26? 2027 in Q1. Moving forward. Oh, moving forward. Yeah. So we see that being, you know, relatively consistent with where we finished. Certainly, an opportunity to potentially increase that, but as of right now, we are going to conservatively call that, maybe a slight increase over where we finished this last or a little increase over where we finished in Q4, a little bit closer to where we were probably in Q2. But, yeah, we are. Again, some of those margin improvement things that we are signaled that we are doing, some of those things kind of began in the beginning of October here.

Some of them are going to take a little while with notices to customers. Some of them are operational things that we have been implemented that will see a little bit more material change to in the second quarter onward. Yeah.

Cheryl Beranek: And I guess I would add to that I think the. If you look at our last 2 quarters, the. You can really see the impact. it is about a 2% decline in quarter 3 and then an additional 2% decline in quarter 4. While our revenues were pretty flat, or level set during that period. So you can really see the impact of increased cost on sheet metal, optical fiber, all the things that are happening right now due to the data center explosion. And so we had made.

We, as a company, do not, historically pass on those costs to our customers, and we were trying to take that same position over the last months, but it seems that simply is not going to be possible. The. So as Daniel said, 1 part of our margin recovery initiative is to be able to provide a revised price adjustment to our customers that went out the October 1. Most of our customers have 30, 60, and 90 day notice periods. So that is why Daniel said you will see a an impact of that more in the second quarter than in first.

But in addition to that, I wanted to point out that, you know, a big part of our world is being able to get back to the capacity position so that we can absorb our overhead. And our magic period kind of happens when we hit $200 million. If you look back into 2021 and 2022 and when we got to $200 million gross margin was really strong in the high 30s. And we were able to bring down a significant amount of that revenue down into operating income. Really a factor that. Of our increase in capacity, tripling our capacity in Mexico and doubling it in the US at the time.

So we are really built for that $200 million-plus position. Now over the course of the last few years, employment costs in Mexico have significantly increased as you look at, you know, 25% increases in labor rates as well as increases in other inflationary costs. So that $200 million kind of magic point is, you know, inching upwards a little bit. But we are confident that we can get back to, you know, probably mid-30s once we get a little bit past the $200 million price point. Or revenue point. And then in addition to that, I wanted to bring out. I wanted to address your question as it relates to data centers.

And that as you can see in our revenue forecast for the year, single digit percentage growth in the broadband market, but a significant, $50 million to $60 million win in the data center market really positioning our entry in a marketplace that was relatively new to us. You know, when we as we are entering that marketplace, our costs are a little higher because our business is been built as a low volume, high mix manufacturing environment.

And we are making investments now as we see this business go from just a first purchase order to now a $50 million to $60 million plan, that we are going to be able to make the investments in CapEx, and other equipment to ensure that we have a well run high volume, low mix, high velocity manufacturing environment. That does not happen overnight. So, which is 1 of the reasons why you are not gonna see some of the significant improvements in quarter 1 that we. that you may be for as an organization.

But rest assured, we are absolutely building an organization that can get us back to those mid- to high 30s from a gross profit standpoint or gross margin standpoint. And I think we have the programs in place by which to get there.

Jeff Hopson: Perfect. that is very helpful. And I guess related to that, you guided a little bit up on OpEx I assume then that is kind of related to these investments in the data center. Is that correct? And is there a little bit of a different sales motion or different incentives that you are doing from a selling standpoint?

Cheryl Beranek: Right. Yeah. I mean, our broadband programs have a very mature sales channel and a significant amount of people that have been brought on to broadband, and that is a very, as I said, high mix, low volume, high touch model in which an individual salesperson might carry a $5 million to $6 million quota. Yeah. Now that is in comparison to our data center business where we currently have a team of 4 going after $60 million. And that is not sustainable. We believe that as we get the next proof of.

You know, as we bring to market that this is not a single purchase order, but it is a long standing building program that will achieve $50 million to $60 million for this year that we should bring on additional investments to assure that growth strategy can continue. And we move that from being a relationship from, 1 salesperson to 1 account to really being a true key account program for some of these large accounts that we are moving from what I would call business development to a true key account sales program. So that is some of the investments that you see coming in Q2 and Q3.

But as Clearfield has always demonstrated, we have been very fiscally conservative and prudent and have not placed those investments into our sales to our organization until after we have validated that this business is real. And so I want our shareholders to recognize the prudency, and the conservative nature of how we have run the business over the last few years. To ensure that we were consistent with the strategies that we brought to market. You know, we said that we would be. We would be sure to protect and strengthen our core business in community broadband and in the broadband business and telco in general. In that, we are absolutely confident that business will regain its health.

But today, the BEAD program. Up until the now recent launch of BEAD, that business has been stymied by the inability of providers to obtain financing, and we will have some additional needs in regard to breakout before it can get some of the optical fiber that has been consumed by AT T in the big data center spaces. But we have been committed to ensuring that we have protected that business, maintained our investment, in our sales staff, and ensured that we have had steady state revenue to ensure that while we are building the data center business, while broadband comes back, that you know, we are using our balance sheet effectively.

So I guess I would I would an. Kind of summarize, you know, to where we are at is you know, broadband is strong. Our position in broadband is growing for the national accounts where business is moving. But that business cannot grow until supply has been improved. And that is why it is not the lack of demand. But it is that lack of supply that has our growth rate there. In the mid to single high digits. We get a significant win at, a large regional, and we could see that grow, which I think is very possible. But you guys know me and Daniel.

We are pretty conservative in the in the way that we look at you know, our guidance. And with that, I would say, in the data center space, I think we are pretty conservative there as well even at $50 million to $60 million, it is just amazing as to what is available to us. And what it. What the potential is for us to be able to uncover.

Jeff Hopson: Perfect. That was, that was very helpful. Thank you very much for the questions.

Cheryl Beranek: You are very welcome.

Operator: The next question will come from Scott Searle with ROTH Capital. Please go ahead.

Scott Searle: Cheryl, I want to wish you all the best in your retirement. it is been a pleasure working with you over the last several years.

Cheryl Beranek: Oh, thank you very much.

Scott Searle: Hey. So to follow-up quickly on the data center front, I just wanted clarify a couple of things. I think you said $50 million to $60 million. The quick back of the napkin math for fiscal 2027, I think, you got mid single digit growth would be more like $40 million-ish. Just wondering what the difference is there. And in terms of the ramp up, how you are seeing that over the next couple of quarters? When do you start to get to double digit revenue? And in terms of some of the customer engagements, are you actually within working on custom solutions for each individual customer?

I am just kind of wondering how that. that is functioning because it seems like there is a high level of engagement, but just understanding how that translates in terms of timeline and cost. As it relates to those customers.

Cheryl Beranek: Right. Great. Thanks. I apologize that I was tracking bookings rather than revenue shipments in regard to what we are anticipating. So you caught me in those numbers. So we anticipate that our bookings will out strap shipments just a little bit. So, you know, a $160 million or so for the single digit growth rates for broadband. And then the $40 million that you would see in the data center space. You know, with some, you know, wiggle room back and forth. The engagement has been fantastic.

Most of the revenue that we see in data center is related to data cable assemblies that are relatively standard in regard to their termination, but their lengths are absolutely all over the map, and we can have, you know, thousands of different, SKUs for any 1 build based upon the different custom lengths that are being ordered. As it relates to the cable. The.

Our custom work, our custom work tends to be in the actual panel that is being provided, and the panel is going to be really what might come in at the or it might come in as it enters the white space. it is more of a meet me point as to where the panel comes into play, and that is where the custom build is being provided. At this point, it is not a huge engineering drain. For us in regard to the custom development. I would say we are spending more time than we are designing.

And that listening is what provides us really, I think, the potential for the future in that we are not looking to 1 offs case by case. We are truly looking to design a platform that we can bring to a much broader group, you know, of customers that have broad applicability to all of the developments that are in play. You know, we. You know, it is it is no secret that the data center market has been beat up over the last 6 months. And in the last week, you know, some of the words that came back and the voting that came back in the data center world, were not the most positive.

But, you know, I take that as being, you know, data centers and the need to manage all of this data that we are processing for the future of communication, that is not going to go away. Yeah. But what will change is that these megadata center hyperscale environments are going to stop being bullies to the communities in which they are engaging, but instead being the community partners that we all want them to be. And that is the culture and the people that we have seen in dealing, you know, with these organizations. And I think that is the area that we have gravitated toward.

You know, we are seeking the regional Even though they are at the hyperscale level, they are many decisions are being made at the regional basis. And so we are mimicking many of the same lessons that we learned in community broadband, working with the construction teams, the engineers, the people in the field who are digging in the trenches, who are dealing with meeting their timelines, and. Or the inefficiency of meeting their timelines. And that is why I am just really confident that this company is at the right place and time, you know, for growth.

And as you mentioned, when you opened your comments, I am retiring in the spring, and I think this is just the best time to be able to hand off the company to someone else. Because it is really positioned for growth. This is a really pretty baby that we have grown and someone who has perhaps a broader background in the data center market can take this to a bigger potential than I may be.

Scott Searle: Very helpful. And if I could just to follow-up, your comments about BEAD are nice to start to see that thawing a little bit, maybe freeing up some additional financing opportunities. But I am wondering from a macro level, Starlink, given that many of your customers are tier twos, tier threes in less dense populated markets. And so what is the competitive response that you are seeing from them? Is it doubling down within the existing footprint to drive penetration? Are they looking for a competitive response? Just to get some high level thoughts on that front. Thanks.

Cheryl Beranek: Mhmm. Yeah. Oh, I mean, we think Starlink is a phenomenal opportunity for an interim solution to be able to expand broadband access. And we are very thankful for the investments that have been made by, you know, by Musk and what he is doing with Starlink to be able to improve, you know, access to connectivity. But at the same time, we also believe that rural connectivity and the means by which for these rural markets to be able to compete does not happen unless they have the same speeds that are available to other parts of the market. And these consumers are gonna demand having that access which will allow our service.

Our community service providers and large regionals and national accounts by which to fulfill that. So I think we will see an increase in satellite take rates. You know, over the course of the next year or so. Because right now, bluntly, AT&T has consumed all of the supply of US-made cable in the US along the data centers, and many of our customers have built their networks on US cable, and they are gonna wait until US cable is available. So that is why we are not anticipating a. You know, this huge increase because bead is finally available. And I am sorry to disappoint, our customer.

Our shareholders that now that BEAD's available, we are not going to see this hockey stick. And that is, you know, that is frustrating for all of us, but it is the nature of how over the course of the last 5 years, since we started this, how much the market has changed and so our. I think the opportunity to reach these, you know, you know, these millions of homes will come. It will come over the next 5 years. Because that is the length of the program. I do not see the satellites getting BEAD money beyond what is. They were already awarded.

But I think the satellites will get take rates until fiber is built in these rural markets.

Scott Searle: Great. Thanks so much. I will get back in the queue.

Operator: The next question will come from Timothy Paul Savageaux with Northland Capital Markets. Please go ahead.

Timothy Paul Savageaux: Hey. Good afternoon. And congrats on both the data center traction. And your upcoming retirement, Sherry. it is been over 11 years. Yeah. So I really, really enjoyed working with you. Thank you. I am gonna try and try and dig in a little bit more Clearly, you are looking for traction here in data center beyond the $22 million order that looks like you know, it was reflected in your backlog increase in Q4. And just in characterizing that, and we may have discussed in the past, I would characterize this as you know, increased penetration in different facilities within the same campus?

Would all this be with the same initial customer, or do you contemplate the bookings target that you mentioned coming from additional customers, or would you characterize this relative to the total size of the opportunity that you are seeing? What you are talking about from a bookings perspective? Thanks.

Cheryl Beranek: Right. So the initial order is for, you know, 1 building on a very significant campus. And so the opportunity for us to grow with this customer for additional buildings on this campus, you know, is really right in front of us. And, you know, we have a direct relationship you know, with the end user and a very active working relationship and training the contractors that are building this platform. And so we believe not only do we have an opportunity to scale with this customer, but to use the validation that this customer provides that Clearfield is a fiber management player for data centers and not a broadband player trying to enter the data center market.

This validation that we really are a data center solution provider for this customer will play out, you know, for additional customers that we currently have in our pipeline. And so the work that we have done over the course of the last year is moving from a small 3-person business development group to now adding a sales development and key account group to be able to work more closely and deeper into this account to ensure we are really managing the account and not just selling into the contractor but to also leverage, you know, the business development organization that is proven to be so effective to go after customer number 2, 3, and 4.

So it is a multipronged, you know, effect. And I think that, as I mentioned earlier, our product development while it is being driven by the. By listening to these customers, it is not unique to 1 platform. 1 customer or 1 building. It will scale to multiple solutions across the space. The. And the NOVA cassette will eventually be brought into the broadband platform to allow our broadband sales service providers to sell data center solutions you know, in their community environments. So it is a very long-term platform development process, and really the reinvention of Clearfield 2.0, which is why I thought it was the right time for me to hand over the reins.

You know, 20 years ago, I had a vision that we could compete against the biggest companies in the world. And we could provide. We could become the No. 1 provider in the network that we chose to do business in. You know? And that was the small community provider, and we have proven over the last you know, couple of years that we can move from the small provider to some of the larger networks in the country, you know, large regionals and some of the national carriers. I think we have built an environment, and I intend to hand over an organization with a you know, with a nice backlog position for my predecessor.

To just grow on top of that and move forward with additional opportunity from there.

Timothy Paul Savageaux: Great. Makes sense. As you think about the ramp throughout the year, I know you mentioned it can be lumpy. But Q1, I guess, fiscal Q1, you know, you are normally, seasonally weaker in broadband. Do you expect that trend to continue in the growth that you are forecasting be driven by an initial data center ramp? And how do you see that kind of ramp throughout the year?

Cheryl Beranek: Right. Yes. Absolutely. Yeah. Sorry. Sorry. My apologies. I should not have cut you off. You know, we had said that this initial. You know, $2.02 billion dollar order would be shipped over the first 6 months of the year. And, we are thrilled that we are already shipping. And believe we can get, you know, a significant part of that order actually in the hands of the customer before the end of the calendar year or the end of our first fiscal year. So it is a, it is a it is a big lump going out the door.

I think it is really it is a wonderful validation that we can build to the customer's demand in advance because they said, you know, we will take it as fast as you can deliver it, but no later than x. And so we are we are pleased to have it shipping out the door, and I think that gives us credence to be able to go after our next order, and to be able to build as they scale this campus. And also talking and relating to the recent election.

You know, this is a campus that has all permitting already or approved, so we are not in a position of being concerned that there will be a delay on this particular campus. I think the. Across the country, we are gonna see, you know, some noise, and I think rightfully so. But I think we are in a position to. There is more demand than there is supply right now for the permitted solutions. So we anticipate you know, the pipeline that we have in front of us to just grow rather than to be challenged.

Timothy Paul Savageaux: Okay. Thanks very much.

Cheryl Beranek: Yeah. You are welcome.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Ms. Cheryl Beranek, for any closing remarks. Please go ahead.

Cheryl Beranek: Yes. Thank you so very much. Yes. As several of our analysts have mentioned, the. I have announced my retirement my planned retirement from Clearfield, which will, at this point, is scheduled for the end of March 27. I will remain in my current role until my successor is appointed, Then I look forward to a very smooth transition As following the appointment of my successor, I will continue serving Clearfield as president and CEO Emeritus. Since cofounding Clearfield in 2008. I have had the unique privilege to help build a company alongside a very dedicated team. This organization and this team, we have grown up together.

You know, many of us have worked together at not only this company, but other companies, and we have gone from being single to being married to having children to now raising our grandchildren and have built this beautiful company, you know, along the way. But I believe now is the right time to ensure Clearfield has the next generation of leadership to guide it through its next phase of growth. I am so very, very proud of what we have accomplished and I am confident in the company's future and grateful to our new employees as they continue the task and their continued dedication. Thank you again to all of our employees, our customers, our partners, and our shareholders.

For your continued support, and we look forward to updating you on our progress next quarter.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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