Clearfield Inc. (NASDAQ:CLFD) reported its earnings for the first quarter of fiscal year 2025, revealing a net loss per share that was better than anticipated. The company posted a loss of $0.13 per share, surpassing analysts’ expectations of a $0.24 loss. Revenue came in at $35.5 million, slightly below the forecast of $38.2 million. Despite the earnings beat, the stock saw a decline of 8.49% in aftermarket trading, closing at $33.80. According to InvestingPro data, the company maintains a strong financial position with more cash than debt on its balance sheet, though it currently faces profitability challenges.
Key Takeaways
- Clearfield’s EPS outperformed expectations, with a net loss of $0.13 per share.
- Revenue fell short of forecasts, reaching $35.5 million against the expected $38.2 million.
- The stock dropped 8.49% in aftermarket trading, reflecting investor concerns.
- The company anticipates full-year net sales between $170 million and $185 million.
- New product launches and operational expansions were highlighted during the call.
Company Performance
Clearfield demonstrated resilience in the first quarter of FY2025, with net sales increasing by 4% year-over-year to $35.5 million. The Clearfield segment experienced a 6% growth, contributing $29.7 million, while the Nestor segment saw a decline of 6%, totaling $5.8 million. This performance aligns with the company’s strategic focus on expanding its product line and operational capabilities. InvestingPro analysis reveals a robust current ratio of 9.43, indicating strong short-term financial health, though gross profit margins remain under pressure at 17.33%.
Financial Highlights
- Revenue: $35.5 million, a 4% increase YoY.
- Earnings per share: Loss of $0.13, better than the forecasted loss of $0.24.
- Clearfield segment revenue: $29.7 million, up 6% YoY.
- Nestor segment revenue: $5.8 million, down 6% YoY.
Earnings vs. Forecast
Clearfield’s actual earnings per share of -$0.13 exceeded the forecasted -$0.24, marking a positive surprise of approximately 46%. However, revenue of $35.5 million was below the expected $38.2 million, missing the forecast by about 7%. This mixed result highlights the company’s ability to control costs better than anticipated, despite revenue challenges.
Market Reaction
Following the earnings release, Clearfield’s stock fell by 8.49% in aftermarket trading, closing at $33.80. This decline may reflect investor concerns over the revenue miss and broader market conditions. With a beta of 1.28, the stock shows higher volatility than the market average. Despite recent pressure, the stock has posted a 19.58% gain year-to-date. Analyst price targets range from $44 to $50, suggesting potential upside. For deeper insights into Clearfield’s valuation and growth prospects, consider exploring the comprehensive research available on InvestingPro, which offers exclusive analysis and additional ProTips.
Outlook & Guidance
Looking ahead, Clearfield projects Q2 FY2025 net sales between $37 million and $40 million, with an expected net loss per share ranging from $0.16 to $0.21. The company remains optimistic about its growth potential, anticipating a U-shaped recovery in the market and significant contributions from the EACAM and BEAD programs in the coming years.
Executive Commentary
CEO Sherry Baranek emphasized the evolving landscape of rural broadband deployment and the increasing number of new entrants in the community broadband market. "The most exciting part about community broadband is... the number of new entrants," she stated, highlighting the potential for growth and innovation.
Risks and Challenges
- Revenue shortfall: The company missed revenue expectations, which could impact future performance.
- Market volatility: The significant stock decline suggests investor uncertainty.
- Competitive pressures: Clearfield faces competition in the broadband market, requiring continued innovation.
- Supply chain issues: Potential tariff impacts on manufacturing could affect costs.
- Economic conditions: Broader macroeconomic pressures may influence demand for broadband solutions.
Q&A
During the earnings call, analysts inquired about the dynamics with large regional customers and the strategy for homes passed versus homes connected. Executives provided insights into the potential changes in the BEAD program and addressed concerns regarding tariff impacts on manufacturing operations.
Full transcript - Clearfield Inc (CLFD) Q1 2025:
Conference Operator: welcome to the Clearfield First Quarter twenty twenty five Conference Call. All participants will be in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to Greg McNiff, Investor Relations for Clearfield.
Please go ahead.
Greg McNiff, Investor Relations, Clearfield: Thank you. Joining me on today’s call are Sherry Baronet, Clearfield’s President and CEO and Dan Herzog, Clearfield’s CFO. As a reminder, Clearfield published 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 would like to turn the call over to Clearfield’s President and CEO, Sherry Baranek. Sherry?
Sherry Baranek, President and CEO, Clearfield: Good afternoon, everyone. Thank you for joining us today to discuss Clearfield’s results for the first quarter of fiscal twenty twenty five. I will start by highlighting some key themes and then turn it over to Dan for a summary of our performance and outlook. For more detailed information, please refer to our shareholder letter posted on the IR section of our website. We are pleased to share that we reported first quarter fiscal twenty twenty five net sales of $35,500,000 in line with our guidance range, while the net loss per share of $0.13 was smaller than our guidance range.
Net sales for our Clearfield segment increased 6% year over year. Our quarterly revenue performance aligns closely with our expectations, reflecting our steady progress towards normalized growth. I would like to briefly discuss some high level industry trends, which we address in more detail in our shareholder letter. As the rural broadband deployment model evolves, Clearfield continues to adapt to industry dynamics with new products. Our goal is to establish Clearfield as the one stop shop for active cabinet deployments similar to our success with passive cabinet lines.
To that end, our FiberFlex cabinet line addresses the shift of electronics from the central office closer to the end user. Additionally, our recently announced Street Smart Ready Connect terminal addresses key operator needs such as space constraints, ease of installation, and long term reliability. We’ve also observed that many operators are initiating new multi year projects. We view this dynamic as a strong positive signal as it demonstrates a level of demand and commitment independent of government funding and reflects the success of our ongoing efforts to strengthen customer relationships and consistently deliver exceptional customer service. To ensure we are able to address this trend, we continue to work with our customers to establish programs that provide better mutual visibility going forward and ensure we’re well positioned to meet our customers’ needs.
Turning to the Broadband Equity Access and Deployment or BEED program, we continue to expect that it will contribute more meaningfully to revenue starting in fiscal twenty twenty six. While we acknowledge near term uncertainties due to the change in The U. S. Administration and associated delays, we are pleased with the program’s initial progress and remain optimistic about its long term potential. Specifically, the NTIA has approved the final proposals for Louisiana, Nevada and Delaware.
Moreover, the majority of these awards went to local fiber providers. In the near term, we expect the improved outlook driven by the ongoing reduction in inventory coupled with the shift to the second phase of the enhanced alternative connect American cost model or EACAM program to serve as the growth catalyst for fiscal twenty twenty five. I’d also like to address the subject of the possible introduction of tariffs on Mexican goods. Our Mexican and U. S.
Manufacturing sites were strategically designed to provide redundancy, cost optimization and dual sourcing capabilities. In addition, our product lines are BABA compliant, which provides the option for a Build America Buy American alternative. While we cannot eliminate the potential cost increases of this tariff, our long term experience managing past tariff impacts enables us to respond quickly and to mitigate any potential cost increases wherever possible. Additionally, our agent sourcing program has been in place for over a decade, supported by a strong network of proven suppliers who have consistently partnered with us to optimize our quality and who have been expanding their manufacturing footprints in non Chinese locations. The tariffs imposed on Chinese goods that went into effect on 02/04/2025 as to the existing tariffs that have been placed upon Chinese products entering The U.
S. Over the recent years. Given the fluid and uncertain nature of the situation, our priority remains maintaining the strong partnerships and relationships built with our suppliers and customers and optimizing the supply chain to reduce the impact whenever possible. I’d now like to pass the call over to our CFO, Dan Herzog, who will provide an overview of our financial results for the fiscal quarter twenty twenty five as well as to share our outlook.
Dan Herzog, CFO, Clearfield: Thank you, Sherry, and good afternoon, everyone. I will now review our first quarter results beginning with sales. Consolidated net sales in the first quarter of fiscal twenty twenty five were $35,500,000 a 4% increase from $34,200,000 in the prior year first quarter and within our guidance range of $33,000,000 to $38,000,000 This figure includes $29,700,000 of Clearfield segment net sales, up 6% year over year and $5,800,000 of Nestor segment net sales, down 6% year over year. Net sales met our expectations as we generated increased revenue from Connected Homes, highlighting our continued progress towards becoming a comprehensive portfolio supplier for our customers. We anticipate this trend will continue moving towards a two:one ratio of connected homes to past homes as operators prioritize cash flow generation over deployments while awaiting government funding.
Our strong bottom line performance and continued gross margin improvements were primarily driven by lower excess inventory reserve costs driven by improved utilization and recoveries of previously reserved inventory. We recently opened a new facility in Estonia accelerating micro duct production from near zero to a projected $7,000,000 for the current fiscal year. This growth aligns with our strategy to enhance European operations by focusing on higher margin solutions. We believe that the inventory overhang within our primary market, community broadband, has predominantly cleared. Based upon these trends, we are reiterating our fiscal twenty twenty five outlook of net sales in the range of $170,000,000 to $185,000,000 We anticipate Clearfield segment annual revenue growth to be in line with or above industry forecasts of 12.5% for fiscal twenty twenty five.
While Europe continues to face economic challenges and geopolitical tensions, we are anticipating improved margins but flat annual revenue in our Nestor segment for fiscal year twenty twenty five. In line with the strong quoting activity for the build season we’ve observed, we anticipate second quarter fiscal twenty twenty five net sales in the range of $37,000,000 to $40,000,000 Due to some unexpected cost savings in the first quarter fiscal twenty twenty five, we anticipate second quarter gross margins to be more closely aligned with our original first quarter assumptions. We expect to generate a net loss per share in the range of $0.16 to $0.21 in the second quarter of fiscal twenty twenty five. As Sherry noted, we are actively monitoring the evolving tariff situation and diligently developing contingency plans. However, due to the uncertainty of the tariff situation, our full year 2025 and second fiscal quarter guidance does not yet account for any potential impact they may have on our business operations.
And with that, we will open the call to your questions.
Sherry Baranek, President and CEO, Clearfield: Thank
Conference Operator: And our first question comes from Ryan Coons with Needham. Please state your question.
Matt Kavanaugh, Analyst, Needham: Hi there. This is Matt Kavanaugh on for Ryan. You saw strength in large regional this quarter. Could you please expand on how many customers were material in that segment? And whether they’re buying connected products, passing products or a mix of both?
Sherry Baranek, President and CEO, Clearfield: Hi, Matt. Our large regionals, that’s a multiple number of providers, so it’s more than one. But it’s about a handful. The, it’s, I would say, is more I’d look at that more as kind of project and lumpy business within it and that you saw that we had large regionals were down last quarter, so they’re up this quarter. They tend to take off of their purchase orders bigger numbers at one period of time to consolidate shipping costs and the like.
So I would look at that less as a trend and more as a continuation of our opportunities to work with those providers. And the product lines are predominantly still on passing homes. So we still have room to grow there in regard to working with those portfolio customers or those customers to create them into portfolio customers. So they take a broader range of our product line.
Matt Kavanaugh, Analyst, Needham: Great. Thank you.
Sherry Baranek, President and CEO, Clearfield: So, yeah. Good stuff.
Dan Herzog, CFO, Clearfield: Go ahead.
Sherry Baranek, President and CEO, Clearfield: I was going to say it’s probably in the neighborhood of three that are over $1,000,000 in sales. So it’s not, and then like I said, half a dozen or more total. So I wouldn’t like I said, it is trend from the fact that it’s not a single customer, but I’d be careful to identify it as being too big of a jump at this point.
Matt Kavanaugh, Analyst, Needham: Great. Thanks. That’s really helpful. And to follow-up, I understand you’re not guiding for the full year, but what kind of visibility do you have going into the rest of the fiscal year as it relates to customer forecasts, new designs, orders and lead times going forward?
Sherry Baranek, President and CEO, Clearfield: Yes. We’re really pleased right now under the level of quoting activity that we saw at the tail end of last year or the quarter, November and December and now in the January period. Just a level of people getting reengaged, quoting for the summer acknowledging that they no longer have the inventory that they had last year. So that’s just a really exciting period for us. I think that’s part of the visibility and that we don’t because of our lead time, which is about on average about four weeks for most products.
The customers aren’t in a position of really looking at providing long term purchase agreements or purchase contracts. What we’re looking to do is putting together kind of supply agreements rather than necessarily long term purchase orders. But we are seeing some better trends of them talking to us about their needs for the year, long term orientation and then getting, like I talked about some of the projects and there are multi year projects. And so we’re seeing some because of that visibility into not only this year, but next year as well, which is really we need to give it a little bit of time to see all of the other external factors, how that influences next year. But right now, definitely seeing positive indicators.
Matt Kavanaugh, Analyst, Needham: Great. Thanks, Sherry. That’s it for me.
Sherry Baranek, President and CEO, Clearfield: You’re welcome. All right. Bye now.
Conference Operator: Thank you. And our next question comes from Tim Savageaux with Northland Capital Capital Markets. Please state your question. Tim Savageaux, Northland Capital Markets, your line is open. You may be muted.
Go ahead.
Tim Savageaux, Analyst, Northland Capital Markets: Sorry about that. Good afternoon and congrats on some solid looking results.
Sherry Baranek, President and CEO, Clearfield: Thank you.
Tim Savageaux, Analyst, Northland Capital Markets: You guys just answered my own you’re welcome. You guys answered my own question here. But when you talk about growth for the you’re basically separating out Nestor when you’re talking about your overall guidance range and then Clearfield segment growth of 12.5%. Am I looking at that the right way?
Sherry Baranek, President and CEO, Clearfield: Right, right. I think we really have such two different businesses and two different markets that we felt it was appropriate at this point to provide some more visibility to our shareholders than what we have been providing previously. The U. S. Market is in a better position than the European market and certainly, our position in The U.
S. Market is far more developed than anything that we have in Europe. We’re very optimistic about our position in community broadband and leveraging our position in community broadband. And we have grown with and in advance of the market in The U. S.
And see every reason that we would continue in that fashion. From a Nestor standpoint, we’re really proud of the work that is being done to reinvent Nestor into a higher value added solution provider. They’ve always had a very strong quality program for their cable, and it’s just the lack of demand for cable right now against some of the Asian dumping that’s happening in Europe that we’ve really had them focused on new products and new product designs that are higher gross margin. Really proud of the MicroDuct world and looking strategically at the right kind of products. As an example, MicroDuct is a higher margin product because you can’t ship MicroDuct cost effectively.
It’s like shipping air. So you don’t have the price competition from the agents that you do, if you’re providing cable. So it’s a much better long term solution. So yes, you can look at the forecast as being Nestor as flat revenues and then looking at the Clearfield segment is growing at market or above market
Tim Savageaux, Analyst, Northland Capital Markets: rates. Got it. That’s super helpful. I’m not sure I got that. I wanted to come back to the part of the commentary around many operators initiating new multiyear projects.
I wonder if you can give us some more color there. I don’t know if that overstucks with the regional question that you were just discussing or whether this is a large number of smaller carriers, but can you give us an example or two or just a feel for what you’re seeing there and the breadth of that?
Sherry Baranek, President and CEO, Clearfield: Right. It’s more community broadband, so not in I mean, large regionals have always had some really nice multi year project. We’re seeing some of the smaller emerging regionals working with us on multiyear agreements. I mean, I think it’s, as an example, TDS is in a really good place to start their bills. They are smaller, they are regional, but not a big one, but haven’t been involved in the fiber market yet.
And we are have been actively working with them for a couple of years now on their fiber plans and have been a provider for them for historical builds, non big fiber to the home for over a decade. So that’s an exciting one that we’re working on. In community broadband, what we’re seeing on the multi year builds are and VC capital in some of these spaces where they’re looking to Clearfield because of our cost savings and have a more pragmatic look because of the multi year build. There are certainly some in the space who are building to flip their networks, and they tend to have a much more cost centered approach rather than a long term operating approach. And so we certainly are facing some of those headwinds, but we know who our core customer group is and who they will be as they start emerging into this space.
And the fact that there are more providers today than there were a year ago, I think is one of the most exciting parts about community broadband because it’s not only growing with the market, but it’s the number of new entrants and who need the support of a company like Clearfield who has feet on the street to support them.
Tim Savageaux, Analyst, Northland Capital Markets: Great. And one more for me. And that is on the sort of dynamic versus homes passed versus homes connected that you’ve been called out in the release or shareholder letter or both. And I guess I wanted to see obviously, you’ve said in the past, you generate more revenue from a home connected, but where are we in the process of that homes connected metric building and what sort of implications does that have for the business? Things like positive for the top line or anything on margins, etcetera.
Sherry Baranek, President and CEO, Clearfield: Right. We’ve built Clearfields early on with a reputation of being a strong cabinet supplier and that our passive cabinets are really are world class and can compete against the biggest companies in the world. It goes back to the days where the cabinet line was chosen by Google (NASDAQ:GOOGL). And so we can see our history of quality in passing homes. Historically, we weren’t cost effective in connecting a home because we had to buy product from Corning (NYSE:GLW) or Conoco or one of our competitors in order to manufacture drop cables.
And then we had to buy connectors from them as well. And so we really couldn’t compete historically unless it was a special run, a special distance or quick turn. Now with our own cable manufacturing line and the development of our own connectors, as well as some of the emergence now of OPTITAP compatible solutions that are available on the marketplace. We can certainly be cost effective and we can continue to be able to provide custom links and quick turn in all things that we did historically as well. And so, we have approached kind of a fiftyfifty split between the revenue associated with homes connected in the past currently.
That’s kind of the threshold that we’re at today. There’s to know with the amount of revenue per home available at a 40% take rate, we should be closer to a two:one ratio if we had a broader number of customers who are also using our product lines to connect. And so that has been a big initiative for us last year and one that we continue. And I think we’re going to see an even a bigger opportunity there as people work down their inventory levels. And while Clearfield’s revenues are down, our inventory levels are down, one of our obstacles still remains competitors’ inventory levels that are either some of our existing customers or prospective customers are holding.
So long term from a margin standpoint, connected home products and past home products are very similar. So it doesn’t influence our gross profit that way, but it does influence gross profit because connected home products have a high labor count. And so the higher the labor count, the more utilization of our U. S. And Mexican factories and the better our overhead is absorbed.
So we look to that to be one of the good ways for us to be able to utilize the capacity and resources that we’ve built over the years.
Dan Herzog, CFO, Clearfield: Great.
Tim Savageaux, Analyst, Northland Capital Markets: Thanks very much.
Sherry Baranek, President and CEO, Clearfield: You’re welcome.
Conference Operator: Thank you. And our next question comes from Scott Searle with ROTH Capital Partners (WA:CPAP). Please state your question.
Scott Searle, Analyst, ROTH Capital Partners: Hey, good afternoon. Thanks for taking the questions. Sherry, Dan, nice to see, looks like putting the bottom from a revenue standpoint here in building going forward. Maybe just to dig in on the community broadband opportunity, down sequentially in December, which is consistent with I think what other vendors saw during the quarter. But I’m wondering now as you start to engage and look out over the course of calendar twenty twenty five, are you seeing that start to build back up being driven by EACAM?
Are these potential bead customers that are building out in non bead markets? What’s kind of the profile right now that’s starting to come back in terms of those build cycles because it’s still sort of a pre bead environment right now?
Sherry Baranek, President and CEO, Clearfield: Yes, definitely pre bead. We’re seeing requests for BABA pricing. So there’s a lot of people doing planning and quoting and getting involved in the Bead program as we’ve moved as each of the different states move to the next level. So quoting activity for BEED is up from a BABA orientation, but certainly not business yet. But the quoting activity that I referred to earlier isn’t just about the BABA compliant, it’s really across the board.
It does include ECAM business, but it includes a number of non government funded initiatives. So we said more venture funded or privately backed within the company itself. And I think that’s the part of the business that has always been the most exciting for me. Even though beat is big money, what’s exciting to me is the fact that when you’re using your own money and you’re investing in your own networks and you find that fiber is the best return on investment, that naturalized supply and demand is the most healthy way to build a business. And I think that’s the long term viability of our organization.
So, yeah, I think really exciting in that way. The Community Broadband Initiative, I’d say that one of the things that surprised us a little bit right now is how good it feels in regard to how early in the year people are getting ready for the build season, their commitment to it, and being able to want to make sure that they know what they’re going to order and how they’re going to order it. So I’m anticipating that we’re going to have a really good booking quarter. The probably our quarter this last quarter was like a one to one booking ratio. Approximately, our backlog went up about $1,000,000 I’m anticipating, I guess I’m getting a little bit out of my skis here, but I’ll go for it.
Conference Operator: I think we’ll have
Sherry Baranek, President and CEO, Clearfield: a backlog bigger than what it is today when we go into next quarter, getting ready for build season and making sure that we have the materials in place that people are needing.
Scott Searle, Analyst, ROTH Capital Partners: That’s great, very helpful. And Sherry, just to clarify though, so for community broadband, you would expect sequential growth then going forward over the next couple of quarters absent BEED, right? For BEED for you, you’ve been consistent on this one. Yes. Yes.
Fiscal twenty six. Okay. And maybe if I could, and this I know this has been sort of murky out there from a market standpoint, but the bead process, right? We’ve got three states that have actually been approved by the NTIA. There are expected to be some changes within the organization.
Does the bead process continue? What are you hearing back from the states in terms of of how the process is going to evolve change going forward?
Sherry Baranek, President and CEO, Clearfield: The program I mean it’s been very clear that the program is going to change, but I don’t think the process necessarily is going to change. The parts of the program that have been very deliberately, I guess I was going to use the word attacked, but reviewed, are some of the incremental overhead costs that were added, the costs associated with administration, the environmental reviews, certainly the diversity and equity issues are certainly going to be removed. So more of the funding will be used for direct build and less for some of the current administration calls, you know, the socialized the social program aspect of it. So, you know, all of our service providers are believing that that will change and most of them are supporting those changes because it streamlines their process and puts more money in their potential pocket. I would, as it relates to some of the BED review and the words that are coming out from the new NTIA administrator that she’s not as necessarily fiber friendly as the people in the past.
I think the past administration was fiber advocates, but I don’t think they were fiber at all costs. We’ve always believed and supported that the Bead program was a heterogeneous program that we use the right technology for the right space. Some homes cannot be economically reached by fiber, and we knew that from the beginning and are expecting that those awards will be mixed. But I hope that the administration will look at this as being an infrastructure build for long term enhancements and not a quick turn, I want to make somebody happy program. We can absolutely go to a satellite program, turn it on today, and improve a lot of people’s performance for a short period of time.
But it won’t work long term because we don’t have the density. You know, the satellites don’t have the density to offer it. The, and it’s not building infrastructure five years from now, those satellites have to be replaced and then there’ll be more money put into it. So we’re hoping that full heads will prevail and the right decisions will be made that will be most cost effective long term.
Scott Searle, Analyst, ROTH Capital Partners: Very helpful. And if I could just finish up on gross margins. Dan, this quarter down a little bit sequentially, it sounds like some one time benefits are not there, but implied in the back half of the fiscal year guidance is an uptick in revenues. Could you give us an idea of what we should be expecting from a gross margin standpoint? And then just to clarify the earlier Baba compliant comments, under the Mexican facility under the Maculodora arrangement, does that make you BABA compliant so that there would not be any necessarily implications to manufacturing in that current facility if in fact there were Mexican tariffs?
Thanks.
Dan Herzog, CFO, Clearfield: Yes. Hi, Scott. The fact that it’s, Maquiladora doesn’t change, it’s still across the border. And so you’re still going to be considered for manufacturing in Mexico and there’s certainly rules around. Sometimes it’s the country of origin, how much comes from The U.
S. That is in and labor, the labor is done in Mexico. So there’s some rules around that that we navigate, but it doesn’t change the fact that we still have to go through to hit the 55% or whatever the rules are for the BABA things. As far as the margins, they’re going to be a little bit volume dependent. We did have some nice absorption, nice labor heavy products this quarter, some one time things that helped us out.
We’ll probably be a little bit more consistent with what our first quarter guide was, which I think what your analyst estimates were pretty correct. But so we won’t be significantly higher here in the second quarter. However, as the volume goes up as we head towards our guidance level, then you’ll be getting into the lower 20s to the mid 20s. Certainly by the fourth quarter, that’s the goal.
Scott Searle, Analyst, ROTH Capital Partners: Great. Thanks so much.
Conference Operator: Thank you. And there are no further questions at this time. I’ll now turn the call back over to Sherry Berenik for closing remarks.
Sherry Baranek, President and CEO, Clearfield: Thank you. We are pleased to be in a position to be delivering on the forecast that we had originally provided and the guide the overall market trends that we indicated nearly a year ago. We are in the U shaped recovery that we anticipated. We see that U shaped recovery being part of our build season and are looking forward to seeing the uptick of that U in third and fourth quarter as the build season commences and then as we move forward into next year. Knowing that this year, our build season will come on top of an ECAM program and then next year, the B program will be layered in on top.
So this U shaped recovery that we saw a year ago or anticipated a year ago is here. We’re excited to be a major player within it and we look to our shareholders to stay patient with us just a little bit longer as the market corrects itself. Excuse me, and I look forward to speaking with you again in the next quarter.
Conference Operator: Thank you. And that concludes today’s conference. All parties may disconnect. Have a good day. Thank you.
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