Clearfield, Inc. (NASDAQ:CLFD) Q1 2023 Earnings Call Transcript

Cheri Beranek: Right. I would say, what we try to do from an operational standpoint is set metrics as to where we want to be by the end of each quarter, and so that we can make incremental investments along the way. And so I think we are probably at about $105 million today. And by the year end, we expect to be closer to $130 million, maybe $135 million quarterly, which puts us at about a $500 million of run rate by the end of the year.

Tim Savageaux: Great. And in terms of getting there, I mean, is that more kind of adding people, are you pretty well set from a facility standpoint, as you continue throughout the year, how you kind of address the facility, not expecting a bit if at all?

Cheri Beranek: Right. The facilities are in place, but we need to continue to augment the facilities and the infrastructure surrounding it, for example, bringing in the ability to produce optical cable inside of the facility means, bringing in higher power capabilities. You got to bring in the new lines and we are bringing in water out of the floor, so that we can actually produce the cable and the flushing lines that are necessary for cooling the cable as it comes out of the extruder. So those are the some incremental costs that you perhaps that we don’t think about, but those are what are in place right now. We are also looking at a standpoint of just kind of infrastructure around it, and you wouldn’t think of this as affecting the capacity, but it is the procurement teams and it is the software systems around it, and it is the process development to ensure that, we do this in systematic process based way.

And we have been very successful over the course of the last two-years growing at the rate that we have, but we have to take a step back and look and say, how are we going to make this sustainable and how can we scale this. And I think that is an important element for us to look at from a gross profit standpoint is, this company was designed to scale, but there is still a standpoint of infrastructure that needs to be put in within it. And so it is that strong foundation to ensure quality. And so there will be people, there will be systems, there will be some software within it. And that is so that we can grow long-term. So we have got a little bit of catch-up to do from what we perhaps should have done a year-ago. Just didn’t have the wherewithal because of how quickly we were going to take that step back.

Tim Savageaux: Okay. In terms of the – you seem to be going back, I guess, to maybe your more traditional seasonality, going back several years now where you had, I guess, a quarter in there somewhere that was up 20%, 30% sequential, something like that on a seasonal basis, that is the way we should kind of look at this in context just at a much higher revenue level, obviously.

Cheri Beranek: Exactly, yes. I mean, I think that is how I’m trying to describe it as being pre-COVID conditions at post-COVID levels. And there is always been seasonality to where business is just that it was hidden the last two-years. And so I think, I want to go back to a statement that thing that Jason asked you. How do I have the confidence that the back half of the year is going to follow through and it is really doing this the last 15-years, in that that is the traditional normalized pattern and so the only caveat to that is in a post-COVID world, how quickly will we get back to that normalized pattern?

Tim Savageaux: Got it, thanks very much.

Cheri Beranek: You are welcome.