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

And so, there isn’t really a model by which to judge the spine or didn’t really even compare it to from a trend statement.

Jason Schmidt: Okay, that is helpful and I understand there is a lot of dynamics out there. Just curious, when you did provide that original fiscal 2023 guidance, what had you been thinking the split would be? I mean, now you think it is going to be 40/60, but what were you here, the initial expectations?

Cheri Beranek: I was thinking a little closer to 45/55, so just a little bit of a readjustment, the answer that we would be pushing out second quarter and seeing that more at the tail end of the year. So it is important to look again, that next quarter, we are probably looking at 30%, 35% increase over last year, which again is an amazing level of increase, on an organization from a marketplace is growing, at about 12% to 15%. So, we are just trying to normalize our patterns and put everything together.

Jason Schmidt: Okay, and then just last one, for me, just looking at gross margin, obviously going to kind of remain at these levels for the next several quarters. So does that mean we shouldn’t expect a step up and tells that December quarter timeframe or could you start to see an improvement in September?

Cheri Beranek: I think we are anticipating an improvement in September and as we get back up to levels, similar and beyond last year in that fourth quarter, where everything was clicking, and people were taking their inventory positions for the winter. So yes, absolutely fourth quarter is where we should be shining.

Jason Schmidt: Okay. Thanks a lot guys.

Cheri Beranek: Your are welcome.

Operator: Thank you. Our next question is from Ryan Koontz with Needham & Company. Please proceed with your question.

Ryan Koontz: Hi thanks for the questions. I want to ask about your assumptions in the March quarter and this new customer order pattern and booking behavior. What are your assumptions going into March, do you feel like March was can still be a period where you would expect your backlog to soften a bit and then pick up during the peak construction season or what is your kind of general mindset there? I know you don’t plan to give backlog out but any kind of insights be helpful there. Thanks.

Cheri Beranek: Of course, the backlog went down about 30 million for over the course of the last 90-days. And as we talked about that was anticipated and planned for that we had hit a very high 160 million and I think we are just a little under 130 million at this point. I said at that point that we were aiming to get to a backlog that was consistent with about one times revenue for the quarter and so much backlog will go down a little bit as well as we get to more of this cadence in which we are ordering product or our customers are ordering product in the period in which they are deploying. Well it is in a normalized world that I see that this, you know, reduction in backlog is a bad thing. But in a post COVID world, I really believe this is returned to normal necessity that kind of walks through this bubble during this period of time.