Clearfield, Inc.

I'd like to remind everyone that this call will be recorded and made available for replay via link in the investor relations section of the company's website. This call is also being webcasted and accompanied by a PowerPoint presentation called the Field Report, which is available in the investor relations section of the company's website. Please note that during this call, management will be making forward-looking statements regarding future events and the future financial performance of the company. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. It's important to note also 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, field report, and in this conference call. The risk factors section in Clearfield's most recent Form 10-Q filing with the Securities and Exchange Commission and its subsequent filings on Form 10-Q provides descriptions of those risks. As a reminder, the slides in this presentation are controlled by you, the listener. Please advance forward through the presentation as the speakers present their remarks. With that, I would like to turn the call over to Clearfield's President and CEO, Sherry Berenick. Sherry?

Sherry Berenick Thanks. Good afternoon, everyone, and thank you for joining us today. It is a pleasure to speak with you this afternoon and to share Clearfield's results for the fiscal fourth quarter and full year 2022. and to provide an update on current business conditions and market trends. Clearfield delivered another phenomenal quarter of financial results in the fourth quarter, continuing our trend of record-setting financial performance. Total net sales for the fourth quarter were $95 million, which includes a $7 million contribution from Nestor Cables acquired on July 26, 2022. We also set a new record for annual results in full fiscal year 2022, with total net sales of $271 million. We are very proud of these results. It reflects the strong execution and tenacity of our team through a challenging macroeconomic environment and industry labor shortage. The significant double-digit growth in organic Clearfield's quarterly results was driven by a 91% year-over-year increase in community broadband revenues. Clearfield is a major player in delivering high-speed broadband to underserved and unserved communities across the United States. After successfully completing our now-of-age strategic plan in fiscal year 2022, we recently launched its successor, our new LEAP plan, to step up our ability to expand capacity and to rapidly scale our business. The rising demand for our scalable, craft-friendly high-speed broadband solutions is evident when looking at the backlog for organic clearfields, which increased 142% at fiscal year end to $160 million. Currently, approximately two-thirds of our backlog is expected to ship within the first two quarters of the fiscal year. With our focus on continuing strong execution, broadband industry tailwinds that include robust federal subsidies and our current visibility into our backlog and the pipeline behind it, we are guiding to estimated revenue of $380 to $393 million, representing 40% to 45% growth over fiscal year 2022. For those of you who may be new to Clearfield and our industry, I'd like to provide a brief introduction of who we are and what we do. Clearfield is a leader in the expanding cyber broadband industry. We provide fiber protection, fiber management, and fiber delivery solutions that enable the rapid and cost-effective fiber-fed deployment throughout the broadband service provider space. Our primary end market is community broadband, which is predominantly comprised of Tier 2 and Tier 3 incumbent local exchange carriers and an increasing number of municipalities, utilities, co-ops, and wireless carriers. We also serve service providers in the Tier 1 national carrier market and multiple system cable TV operators, or MSOs, as well as some international service providers in Canada, the Caribbean, Central and South America. Our goal and underlying value proposition is to enable the lifestyle that better broadband provides. The image on the right of slide four is our patented Clearview cassette, the foundation of our scalable and modular fiber management platform that is used to pass homes and businesses. Also shown here is FieldShield, the core to how we bring fiber into our neighborhoods in order to physically connect homes and businesses. Our entire product line, including the Clearview cassette and FieldShield technology, was thoughtfully designed to be craft-friendly in the field, reducing both the amount of necessary skilled labor needed for installation and the level of skill required to install. This enables our customers to complete their deployments faster and more efficiently. accelerating their time to revenue. Given that skilled cyber technician shortages continue to persist, our connectivity products are particularly advantageous as carriers look for ways to overcome deployment challenges. We are moving forward and on schedule to vertically integrate the supply of our fiber optic cables to meet future customer demand for FieldShield. Given the current supply chain challenges, Our ability to ensure our supply of fiber optic cable is critically important so that our deliveries are maintained and our customers can proceed with their planned deployment schedules. Another potential benefit of the Nestor acquisition is evaluating the opportunity to introduce our cassette-based fiber management solutions and field shield technologies into the European market, whose fiber deployment lags behind the U.S. We are exploring options in Finland to increase capacity as we strongly believe Nestor will extend our market leadership and strengthen our position to service the growth in cyber deployment for every community. With that, I'll now turn the presentation over to Dan, who will walk us through our financial performance for the fiscal fourth quarter and full year 2022.

Thank you, Sherry, and good afternoon, everyone. It's a pleasure to be speaking with you today about our fiscal fourth quarter and full year 2022 results. Looking at our fiscal fourth quarter and full year 2022 results in more detail. Consolidated net sales in the fourth quarter of fiscal 2022 were a record $95 million, a 110% increase from $45 million in the same year goal period and up 33% from $71 million in our third quarter of 2022. This figure includes $88 million from organic Clearfield and a $7 million contribution from the two-month period that we own Nestor Cables, which we acquired on July 26th. The increase in net sales was due to higher demand across our core end markets, particularly in our community broadband, multiple system operator, and national carrier markets. consistent with our past quarters of fiscal 2022. Strong momentum in sales bookings continued into the fourth quarter of fiscal 2022, resulting in a 148% year-over-year increase in our sales order backlog. Order backlog grew to a record $165 million on September 30, 2022, up from $157 million on June 30, 2022, and up from $66 million on September 30, 2021. As we have previously discussed, we expect the expanded capacity at our Mexico and U.S.-based facilities will enable us to capitalize on the significant revenue opportunities we expect for the quarters ahead. I'll now review net sales by our key markets. Sales to our primary market, Community Broadband, comprised 61% of our net sales in the fourth quarter of fiscal 2022, consistent with prior quarters in fiscal 2022. In Q4, we generated net sales of approximately $58 million in community broadband, up 91% from the same period last year. In addition, for the trailing 12 months ended on September 30, 2022, our community broadband market net sales totaled approximately $181 million, which was up 84% from the comparable period last year. Our MSO business comprised 22% of our net sales in the fourth quarter of fiscal 2022. Momentum in the MSO market continues to be strong with net sales growing 204% year-over-year and we're up 164% for the trailing 12-month period. Net sales in our national carrier market for the fourth quarter fiscal 2022 increased 69% year over year. On a trailing 12 month basis, net sales in our national carrier market were up 96% from the comparable year ago period. The national carrier market seems to be staging their material to have product on hand before deployment in the spring, resulting in more product in the field than we have traditionally seen. Net sales in our international market increased 166% year-over-year in the fourth quarter compared to the same period last year and up 61% year-over-year on a trailing 12-month basis due to the acquisition of Nestor Cables. Consolidated net sales for fiscal 2022 increased 92% to a record $271 million from $141 million in fiscal 2021 Revenue for standalone Clearfield was $264 million, up 87% year-over-year. The increase in net sales was due to higher demand across our core end markets, most notably our community broadband, MSO, cable TV, national carrier, and international markets. Gross profit in the fourth quarter of fiscal 2022 increased 90% to $37.5 million or 39.5% of net sales from approximately $20 million or 43.6% of net sales in the same year-ago quarter. As expected, overhead costs associated with our new facilities in Minnesota and Mexico negatively impacted gross margins. Alongside real estate costs, increased shipping costs and inflationary increases in some components negatively affected margins. Nestor Cables experienced one-time acquisition costs reducing gross profit by approximately $400,000 in the fiscal fourth quarter. Gross profit for fiscal 2022 increased 85% to $113 million or 41.7% of net sales. from $61 million or 43.5% of net sales in fiscal 2021. Operating expenses for the fourth quarter of fiscal 2022 were $15 million, which were up from approximately $10 million in the same year-ago quarter. The increase in operating expenses consisted primarily of higher compensation costs due to increased personnel and higher performance-based compensation increased travel expenses, as well as professional fees mainly associated with the acquisition of Nestor Cables, which were approximately $900,000. Our higher personnel costs are consistent with the company's strategic investment in sales, product management, and engineering personnel to establish a firm organizational infrastructure to support the growing business. As a percentage of net sales, operating expenses for the fourth quarter of fiscal 2022 was 16.1%, down 6.8% from 22.9% in the same year-ago period. Our current OpEx at less than 17% of sales continues to reflect strong operating leverage. Operating expenses for fiscal 2022 were $49 million, which were up from $36 million in fiscal 2021. As a percentage of net sales, operating expenses for fiscal 2022 was 18.1%, down from 25.5% in fiscal 2021. The increase in operating expenses consisted primarily of higher compensation costs due to increased personnel and higher performance-based compensation, increased travel expenses, as well as acquisition-related professional fees of approximately $1.6 million. Net income in the fourth quarter of fiscal 2022 increased 129% to $17 million from approximately $7 million in the same year-ago period and up from approximately $13 million in the third quarter of fiscal 2022. Net income increased as a result of higher revenues. As a percentage of net sales, net income for the fourth quarter of fiscal 2022 was 17.9%, up from 16.4% in the same year-ago period and up from 17.9% in the third quarter of fiscal 2022. In terms of our balance sheet, we had $2.4 million in capital expenditures in the quarter to support increased capacity and new facility build-outs, and our inventory balance increased from $69 million to $82 million in the fourth quarter due to the acquisition of Nestor. The company did utilize approximately $16.7 million of its line of credit in July 2022 to fund the Nester acquisition. Since that time, Clearfield has not drawn on the line of credit. Net income for fiscal 2022 increased 143% to a record $49 million from $20 million in fiscal 2021. As a percentage of net sales, net income for fiscal 2022 was 18.2%, up from 14.4% in fiscal 2021. That concludes my prepared remarks for our fourth quarter of fiscal 2022. I will now turn the call back over to Sherry. Sherry?