Clearfield reported earnings of $0.22 per share for the third quarter of fiscal 2026, beating Wall Street expectations of $0.19, but its stock fell 17.23% in after-hours trading to $27.95 after the company lowered its full-year forecast.
Sales growth and declining gross margin
Clearfield's net sales rose to $43.9 million from $38.8 million in the same period a year earlier, up 13% year over year and 28% from the previous quarter. Revenue came in about $30,000, or 0.07%, below analysts' estimate of $43.93 million.
Net income was $3.0 million, or $0.22 per diluted share, compared with $2.3 million, or $0.16 per share, a year earlier, following a net loss of $500,000, or $0.04 per share, in the previous quarter. The earnings surprise was $0.03 per share, or 15.79%.
Gross margin fell to 31.8% from 35.3% a year earlier and 32.5% in the previous quarter, with management saying that about 1.8 percentage points of the decline were attributable to nonrecurring items. Operating expenses fell 6% year over year to $11.4 million, equivalent to 25.9% of sales, and were down 14% from $13.2 million in the previous quarter.
Weaker outlook and cancellation of a major customer order
Clearfield lowered its full-year fiscal 2026 forecast to continuing-operations revenue of between $151 million and $155 million, and earnings per share of between $0.14 and $0.21. For the fourth quarter, it forecast revenue of between $38 million and $42 million, with earnings per share ranging from break-even to $0.07.
Management attributed the lower outlook to delays in spending related to the BEAD program, shortages of fiber-optic supplies, slower customer decision-making and the cancellation of a backlog order from a major community broadband customer. The cancellation of the custom order resulted in a $2.6 million inventory write-down.
The stock ended the regular trading session at $33.77, up 0.09% from the previous close of $33.74, before falling $5.82 to $27.95 after the results were released. The stock's 52-week trading range is between $23.76 and $52.73.
$22 million data-center order
Clearfield announced that it had received an initial order worth about $22 million from a hyperscale data center, with shipments set to begin at the start of fiscal 2027. The company said its NOVA platform, developed in collaboration with the customer, will be introduced to the broader data-center market later in 2026.
“The demand is there, but the market availability of the fiber needed to deliver on it has not yet materialized.”
Chief Financial Officer Dan Herzog said the company ended the quarter with about $155 million in cash and short- and long-term investments, with no debt. The company also repurchased about 31,000 shares for $897,000.
