Clearfield, Inc. Aktie

Good afternoon, everyone, and welcome to the Clearfield Fiscal Third Quarter 2026 Conference Call. [Operator Instructions] Please note, this event is being recorded.

At this time, I'd like to turn the floor over to Gregory McNiff, Investor Relations. Sir, please go ahead.

Thank you. Joining me on today's call are Cheri Beranek, Clearfield's President and CEO; and Dan Herzog, Clearfield's CFO.

As a reminder, Clearfield publishes 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 will turn the call over to Cheri. Cheri?

Good afternoon, everyone, and thank you for joining us to discuss Clearfield's results for the third quarter of fiscal 2026. I'll begin with an overview of the quarter and our strategic priorities, and then I'll turn the call over to Dan to review the financial details and outlook.

Third quarter net sales were $43.9 million, gross margin was 31.8% and net income per diluted share from continuing operations was $0.22. Our results reflect continued progress executing on our strategic priorities while reinforcing the strengths that have defined Clearfield. We are increasingly focused on positioning the company for its next phase of growth as a strategic digital infrastructure connectivity provider within the data center marketplace. That progress was highlighted shortly after the close of the third quarter when we received our first significant order to support a hyperscale data center project, accelerating our expansion into the data center connectivity market.

The initial purchase order totals approximately $22 million, which we expect to begin shipments in early fiscal 2027. Equally important with how this opportunity developed, we became involved early in the design process, working collaboratively to develop a connectivity solution tailored to the end user's deployment requirements. That collaboration led to an expansion of our NOVA platform with the addition of a new panel developed in conjunction with the customer, which we intend to standardize and introduce to the broader data center market later this calendar year. This approach reflects the same design principles that have differentiated Clearfield for years in broadband deployments. As demand for high-density fiber infrastructure continues to grow, we believe our expertise in delivering modular labor-efficient connectivity solutions positions us well to actively engage in this expanding market. While it is too early to predict the size or timing of future opportunities, this initial engagement demonstrates that our strategy is resonating with customers and broadening our addressable market. We believe it represents an important step towards creating long-term shareholder value.

Turning to the broadband market. The slow pace of the B program continues to influence customer planning decisions across the broadband industry. while states have made meaningful progress developing deployment plans, continued delays in federal approvals and funding disbursements are affecting both BEAD funded and other commercial projects. These headwinds, combined with higher deployment, labor and material costs as well as the constraint of limited fiber availability have resulted in a slower deployment environment and extended project time lines across much of the industry. The impact of the slower broadband deployment environment is reflected in our bookings for the quarter ended June 30, 2026.

Despite these near-term dynamics, we continue to believe the long-term opportunity for fiber deployment remains intact. While the timing of broadband deployments remains uncertain, we continue to invest in technologies that solve our customers' challenges. As broadband, wireless, data center and edge computing networks continue to expand, customers increasingly look for ways to make deployments faster simpler and more efficient. One example of our new technology offerings is our recently announced fault managed power portfolio, which enables customers to deliver both fiber connectivity and power to difficult-to-reach locations through a single coordinated solution. By bringing fiber and power together, customers can reduce deployment complexity and create a more flexible foundation for future network growth. We believe this offering expands the role Clearfield can play in supporting our customers as their network needs continue to evolve.

With that, I'll turn the call over to Dan to review our financials and outlook in more detail.

Thank you, Cheri, and good afternoon, everyone. As a reminder, in November, we completed the sale of our Nester Cables business. As a result, all financial results presented for fiscal year 2025 and all prior periods reflect the Clearfield segment as continuing operations only, with [indiscernible] results reported under discontinued operations in our statement of earnings and statement of cash flows and reported as assets and liabilities held for sale in our balance sheet.

Third quarter net sales were $43.9 million, an increase of 13% from $38.8 million in the third quarter of fiscal 2025. The increase was driven by higher revenue across the majority of our customer markets. Revenue also increased 28% sequentially, reflecting the seasonal nature of our business. Gross profit margin for the third quarter of fiscal 2026 was 31.8% compared to 35.3% in the third quarter of fiscal 2025 and 32.5% in the second quarter of fiscal 2026. Our gross margin reflected several onetime items during the quarter that on a net basis reduced gross margin by approximately 1.8 percentage points. Operating expenses from continuing operations for the third quarter of fiscal 2026 decreased 6% to $11.4 million or 25.9% of net sales compared to $12.1 million or 31.3% of net sales in the third quarter of fiscal 2025. Operating expenses also decreased 14% or $1.8 million from $13.2 million in the second quarter of fiscal 2026.

Net income in the third quarter of fiscal 2026 was $3 million or $0.22 per diluted share compared to net income of $2.3 million or $0.16 per diluted share in the third quarter of fiscal 2025. This compares to a net loss of $500,000 or $0.04 per diluted share in the second quarter of fiscal 2026. We ended the quarter with approximately $155 million in cash, short-term and long-term investments and no debt. During the quarter, we repurchased approximately 31,000 shares for $897,000 as part of our share buyback program. For the fourth quarter of fiscal 2026, we anticipate net sales from continuing operations in the range of $38 million to $42 million. Total operating expenses to remain relatively consistent with our second quarter and net income per diluted share in the range of breakeven to $0.07.

As Cheri mentioned, industry demand constraints are forcing us to reduce our guidance for the full fiscal year 2026. We expect net sales from continuing operations to be in the range of $151 million to $155 million and net income per share to a range of $0.14 to $0.21.

And with that, we will open the call to your questions.

[Operator Instructions] Your first question comes from Ryan Koontz from Needham.

I wanted to ask about the different customer segments here. Community Broadband had a decent uptick probably a little less than seasonal in -- going from March to June? And can you maybe expand on that, some of the trends you saw? Is it because your customers are holding back capital to wait for be matching? Or is it because they're just in paralysis -- or maybe talk about what's happening in the rural territories.

Right. Ryan, the community broadband marketplace, I think, is principally being affected by 2 different issues. One is BEAD any uncertainty associated with it. And as a result, it's affecting not only the dollars but other dollars that are -- where do they put their capital -- and so there -- because they're waiting for BEAD, they can't put their capital into commercial -- other commercial environments and case speed would come into play. So it's kind of a double-edged sword in that world.

But equally, a result is really the lack of fiber in the U.S. I mean we started the year really strong -- we saw really strong quoting activity. Early in the year, we had a really strong backlog as we came into the bookings over the winter months. And then we saw everything kind of take a, oh, we got our bookings and our quoting from the environment, but the lack of being able to get fiber from U.S.-based manufacturing where most of the customers are waiting because they don't want to have multiple. I want to make sure they've got what's available in their inventory for either direction they might go.

And so while there is fiber activity happening in the market, it's predominantly with the national carriers, that's who's getting in the business or getting the fiber in the U.S. But you saw that even that Corning earlier this week -- or last week, I guess, it was announced that their total carrier business was up only 1%. So you see the lack of fiber is actually not just in the carriers, it's because of the data centers or have got all the fiber. It's a frustrating approach in which the demand is there, but the market availability to get the fiber to make it happen. Just isn't there yet. And so as a result, the early indicators that we saw in the spring didn't materialize in the summer.

Right. So it sounds like the Tier 2 MSOs are a pretty similar story that you just outlined for Community Broadband?

Exactly. I mean they are the same type of customer that they're not issuing $100 million or $1 billion purchase order according there. They're looking for -- and so they're not a strategic account for the big fiber provider. And as a result, they're getting second fiddle. They're getting allocations and those allocations are significantly less than what they started with. We're seeing these projects either being delayed until next year or significantly reduced in size and scope.

Got it. And then maybe lastly on the cancellation or de-commit you got from your customer from backlog. Did you mention what segment that was from?

It's community brand [indiscernible]. It absolutely was our largest customer in community broadband, a long-standing relationship with the customer, and we continue to do business with the customer for other products, but a management change within the customer resulted in the standpoint that they focused much more on not building out the network, but instead use increasing the amount of subscribers on the network that they had. And so as a result, the type of product that they would be -- that they were buying from us significantly changed. Unfortunately, as they looked at their design parameters, they indicated to us that they would not be needing cabinets for a number of quarters up to years moving forward. And accounting regulations require us to be able to make that reversal. We continue to work with our legal team to evaluate what our options are in this scenario. But I think it's important to know -- it was a tester product designed for them. We've worked for 15 years with the customer.

So there's as you saw in the reserve -- the inventory reserve, it did result in about a $2.6 million write-off after we took -- can we put into inventory, what is standard, but there is a write-off associated with product that is customer unique to that individual customer. But we want to emphasize that this is not a trend, that issue is associated with a broader demand line. This is a customer's business model that changed after 15 years of deployment in 1 direction. Because we've worked with this customer since the beginning of Clearfield.

Got it. Great. And then maybe one last one on some good news. The win for your data center business. This is an order you have? And is it in backlog now? Or is it a opportunity...

No, no, no. It is an order in hand, that we wouldn't provide speculation of that type. So order in hand for $22 million. It is the first part of the first stage of the first building on our campus for this hyperscale environment. So we're really excited to be able to be part of of this build and potentially chosen for an ongoing part as they build as they continue to issue RFPs for the build-out of where they're going. As I signaled, I think, last quarter when we talked about the really welcome reception we're receiving in the hyperscale market. I think this order now comes in to validate that strategy. So because of the significance of it, we wouldn't normally discuss the simply an order or an individual customer. But I think the significance of this pivot and our place in the marketplace is something that we wanted to share with our shareholder community.

Yes. Super exciting. It sounds like the use case is still some outside plant in a campus type environment? Or can you give us any...

No, no, this is in the middle of the data center. So we were putting -- given an opportunity to -- we've been part of the central office in the telecom market for 15 years as well. And so our ability to -- what was exciting about this, I think, in a different there's many different things exciting about it, but we had a large group of people visit our Clearfield headquarters associated with this opportunity. And 1 of the things that people will talk about is the broadband marketplace has a lot of expertise and that expertise is being pulled into data center market. And so many, many people in that room had worked with Clearfield before. recognized the scalability and labor savings of our product line the quality, reliability of the products and the people that they work with, that we work with our organization and the customer service and responsiveness that they can expect from us. So I think this is a wonderful example of how we can get started and just the opportunities within the data center to come.

There are no further questions at this time. I'll now hand back to Cheri Beranek any closing remarks.

Good afternoon, everyone. I -- there are a lot of balls in the air right now for us. And while we are disappointed to not meet the guidance for the year within the broadband market, I want to reassure everyone on the call that Clearfield continues to work strongly with our customer base continues to have a very strong presence within the base of broadband, and I am confident that we are maintaining our share of business within the market. I wanted to also reassure you that this is really an exciting time for us, while we can't predict the future of where we're going in the data center market. We are extremely grateful and appreciative of the response that we received thus far and look forward to speaking with you again in November about our progress in 3 months. For now, have a great summer, and we'll talk to you soon.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.

Good afternoon, everyone, and welcome to the Clearfield Fiscal Second Quarter 2026 Conference Call. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Gregory McNiff, Investor Relations. Sir, please go ahead.

Thank you. Joining me on today's call are Cheri Beranek, Clearfield's President and CEO; and Dan Herzog, Clearfield's CFO. As a reminder, Clearfield publishes 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 will turn it over to Cheri. Cheri?

Good afternoon, everyone. Thank you for joining us to discuss Clearfield's results for the second quarter of fiscal 2026. I'll begin with an overview of the quarter and our strategic priorities. And then I'll turn the call over to Dan to review the financial details and outlook. Second quarter net sales were $34.4 million, which came in towards the high end of our guidance range of $32 million to $35 million. Our performance was driven by continued strength in our Community Broadband market with year-to-date revenues up 5% over the same period of last year.

Our net loss per share of $0.04 was within our guidance range. Our backlog rose 39% sequentially from the first fiscal quarter, resulting in a book-to-bill ratio of 1.3 for the quarter, consistent with typical summer seasonality and supportive of our outlook for the second half of the year. We are focused on consistent execution while investing in Clearfield's next phase of growth. To that end, we are building a significant pipeline of opportunities beyond our traditional broadband customer base. While these adjacent markets have yet to contribute meaningful revenue, reflecting their longer sales cycles, they do represent a compelling avenue for future expansion and early indications are encouraging.

In particular, we are seeing increasing engagement linked to data center environments where capacity expansion is driving more consistent infrastructure planning needs. As these opportunities develop, we expect them to contribute meaningfully to revenue, driving a gradual broadening of our revenue base. Recently, Clearfield hosted Fiber to the Future at our headquarters, a program that brought together key thought leaders from across our industry. The event featured demonstrations of our BABA-ready cable extrusion capabilities and optical fiber termination solutions alongside insights from these leaders.

Participants included executives from service providers, our top distributors, industry media, and association leaders gained a Clearview of how Clearfield's innovation and operational excellence position us to meet the growing data infrastructure demands driven by fiber-enabled Artificial Intelligence. As Edge AI takes shape, Clearfield demonstrated throughout the day its innovation and thought leadership. From an industry perspective, the pace of the BEAD funding process continues to be the primary constraint on our core business.

While we are seeing early-stage planning and design activity across our customer base, the timing of funding disbursements remain uncertain, which is delaying order activity. We continue to expect meaningful BEAD-related revenue to materialize in fiscal 2027 as the program is deployed across the states. In response to the current environment, we have maintained a proactive approach to ensure that we are well positioned as demand materializes. We are deepening engagement with customers as projects progress towards execution and aligning our resources to support anticipated build activity, including the compliance with BABA requirements.

Our focus remains on understanding where customers are in their planning process, and how we can best support them as projects take shape. We believe this approach enables us to allocate resources effectively and to stay closely aligned with customers as their deployments advance. Looking ahead, we are increasingly focused on longer-term opportunities tied to distributed compute and edge infrastructure. Industry trends continue to support a shift toward compute closer to the end user, as low-latency AI applications require faster processing capabilities between compute and storage rather than relying solely on centralized data centers.

This dynamic will drive the build-out of smaller distributed edge locations that function like compact data centers and require high-density fiber connectivity, particularly in markets served by Community Broadband providers. As a result, there is growing demand for solutions that can be deployed quickly, scaled efficiently, and replicated across numerous sites. We are actively positioning the company to participate in this evolution.

Our NOVA Platform announced last quarter, is designed to address this need by enabling the flexibility and scalability required to support the next generation of edge AI infrastructure. The platform has been well received, and we anticipate shipping in the second half of the fiscal year. You can also expect a series of new product launches as we bring proven, hardened, reliable, and scalable outside plant techniques and strategies into this space.

With that, I'll turn the call over to Dan to review our financials and outlook in more detail.

Thank you, Cheri, and good afternoon, everyone. As a reminder, in November, we completed the sale of our Nestor Cables business. As a result, all financial results presented for fiscal year 2025 and all prior periods reflect the Clearfield segment as continuing operations only. With Nestor results reported under discontinued operations in our Statement of Earnings and Statement of Cash Flows, and reported as assets and liabilities held for sale in our Balance Sheet.

With this transaction behind us, our focus and portfolio are now fully centered on the Clearfield business and the execution of our core strategy. Second quarter net sales were $34.4 million, a 15% decrease from $40.6 million in the prior-year second quarter. This decline was partially due to a pull-in by a Large Regional Customer into last year's second quarter from our Fiscal Year 2025, third quarter. Revenue was flat sequentially, primarily due to expected seasonality in the winter months.

Gross profit margin was 32.5%, down from 34.4% in the prior-year second quarter and down slightly from 33.2% in the first quarter of fiscal 2026 mainly due to lower sales volume. Operating expenses for the second quarter of fiscal 2026 were $13.2 million in comparison to $12.3 million in the prior-year second quarter. Primarily due to investments to support future planned growth, including in adjacent markets. Net loss in the second quarter of fiscal 2026 was $500,000, or a net loss of $0.04 per diluted share, compared to net income of $1.3 million, or net income of $0.18 per diluted share, in the prior-year second quarter.

We ended the quarter with approximately $147 million in cash, short-term and long-term investments and no debt. During the quarter, we repurchased 237,000 shares for $7.3 million as part of our share buyback program. For the third fiscal quarter of 2026, we anticipate net sales from continuing operations to be in the range of $42 million to $46 million. Operating expenses to remain relatively consistent with our second quarter and net income per diluted share in the range of $0.17 to $0.21.

The earnings per share ranges are based on the number of shares outstanding at the end of the second quarter of Fiscal 2026 and do not reflect potential additional share repurchases completed. For the full year fiscal 2026, we are reiterating our guidance for net sales from continuing operations in the range of $160 million to $170 million, which represents approximately 10% top-line growth at the midpoint. Operating expenses as a percentage of revenue to remain consistent with Fiscal 2025 and net income per share to be in the range of $0.48 to $0.62 and with that, we will open the call to your questions.

[Operator Instructions] The first question comes from Ryan Koontz with Needham & Company.

I wonder if you could give us a little more color on where BEAD is here. We're hearing from other vendors and just industry press that maybe Operators are starting to see that money in engaging in products. What are you seeing in terms of hard data from Operators that are going to get BEAD [indiscernible]? Are you starting to see forecasts or maybe early orders? Any color there would be great.

Ryan, yes, the BEAD is, unfortunately, I would say, slower than expected. We are expected by the industry, but consistent with our outlook that we believe it is a '27 revenue opportunity for us, starting in late fall, early winter, and moving into next year. We absolutely are seeing customers talking about their planning cycles. We're talking to customers about their network designs and the kind of products that they'll be looking for from us and quoting that activity. I would say that there have been some challenges associated with trying to be able to align the availability of optical fiber from the fiber vendors so that there's a knowledge of when that product -- those materials are going to ship, so they can plan accordingly and to receive their financing.

And so I would say today, it is -- I think the government still has some work to do in order to get material or the program underway. But then we're going to have some obstacles associated with just how that fiber -- excuse me, the project financing, the match gets aligned. And then as I indicated, some of the fiber that needs to be able to come from the domestic providers.

Maybe on the regional service providers, any updates there in terms of puts and takes and how you're thinking about this build season with the regionals broadly...

I would say that that's -- we started with the negative, which is the things we can't control, which are the programs under BEAD. But as it relates to private financing, both in Community Broadband as well as in the Large Regional, we're seeing a strong build season, which is why we're looking at forecasting a 10% increase over last year. After -- for the year after a pretty slow start for the first half of the year. There has been some uncertainty in the Large Regional as they have been acquired by the Tier 1, so that those accounts have a little bit of learning to do.

In regard to where the bathroom is in the new place or how they place their purchase orders, I guess, is a better way to say it. But we also are seeing other Large Regionals start to come into play and start to be more active in their deployments. So I think across the board, the Large Regionals are a nice healthy marketplace that will continue to build both with internal financing and with private financing from other vendors.

[Operator Instructions] Since there are no more questions, this concludes the question-and-answers session. I would like to turn the conference back over to Cheri Beranek for any closing remarks. Please go ahead.

Thank you so much. While it's unfortunate and disappointing that the BEAD programs are going to be delayed into '27 for any meaningful revenue. We are extremely proud and pleased with the work that we've done to stay alongside our customers and to be supporting them in their planning process. We thank our shareholders for continuing to be patience with us as we continue to support our customers, and are very excited about where that will go as we move forward.

Also, want to reiterate the strength of private financing and the work that's being done to allow fiber-to-the-home to continue to expand as we know that fiber-driven networks do provide the best average revenue increase per subscriber for our shareholders or our service provider customers and are pleased and excited about where that will go. Finally, I did want to point out or remind everyone that Clearfield is about a Fiber-to-the-Anywhere opportunity. And our strategic plan very strongly supports our core marketplace and making sure that we protect our core, but we are investing over the course of the last, really, 18 months in adjacent market opportunities.

Both bringing our existing product line to new markets as well as to be able to introduce new customers to new product lines. So continue to look forward to telling you about those in the coming months and quarters ahead. With that, we're excited about the Build Season. And unfortunately, well, fortunately, we're looking forward to warmer weather; it's a little chilly here in Minnesota today. Thanks so much. We appreciate your support.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good afternoon, everyone, and welcome to the Clearfield Fiscal First Quarter 2026 Conference Call. [Operator Instructions] Please also note, today's event is being recorded. At this time, I'd like to turn the floor over to Gregory McNiff, Investor Relations. Please go ahead, sir.

Thank you. Joining me on today's call are Cheri Beranek, Clearfield's President and CEO; and Dan Herzog, Clearfield's CFO. As a reminder, Clearfield publishes 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. Additionally, as announced on November 12, 2025, Clearfield sold its Nestor Cables business. Following the divestiture of Nestor, we are reporting only on the Clearfield segment. Clearfield is reflected as continuing operations with Nestor classified as discontinued operations and assets and liabilities held for sale for first fiscal quarter of 2026 and all prior periods on our financials. With that, I would like to turn the call over to Clearfield's President and CEO, Cheri Beranek. Cheri?

Good afternoon, everyone. Thank you for joining us to discuss Clearfield's results for the first quarter of fiscal 2026. I'll begin with an overview of the quarter and our strategic priorities, and then I'll turn the call over to Dan to review the financial details and outlook.

During the quarter, we saw signs of stabilization and an early rebound in community broadband demand, reinforcing confidence in our long-term outlook. Clearfield continues to operate as the leading provider of fiber management solutions for the community broadband market guided by a disciplined strategy anchored in our 3-pillar framework to deliver better broadband and beyond.

This framework remains focused on protecting and strengthening our core business, expanding market share and selectively extending our technology into adjacent markets. Turning to results. First quarter net sales from continuing operations were $34.3 million exceeding our guidance range of $30 million to $33 million. That outperformance reflected a favorable seasonal product mix and a solid demand across key customer segments.

Net loss per share from continuing operations was $0.02. As a reminder, in November, we completed the sale of our Nestor Cables business with this transaction behind us, our focus and portfolio are now fully centered on the Clearfield business and the execution of our core strategy.

Following the end of the quarter, we introduced the NOVA platform, a modular high-density fiber system designed to make building and expanding modern networks simpler. The NOVA platform takes the cassette-based modular design approach that has long defined our success in broadband and it extends it into new environments including AI, data center and edge compute networks in which we expect our broadband service provider customers to play a key role in future build-outs.

This product launch represents an important step in the execution of our Better Broadband and Beyond strategy. As networks continue to grow in size and complexity, customers are looking for solutions that reduce installation time and cost, improve day-to-day operations and scale efficiently as capacity needs increase.

While we expect near-term revenue contribution from NOVA to be modest, the platform is strategically important as we focus on early customer adoption and validation. Over time, we expect the NOVA platform to support new applications and customer opportunities, particularly as demand for higher density fiber solutions expands across regional data centers, edge facilities and enterprise environments.

Alongside this product momentum, execution across our core business -- our core broadband markets remain steady. Community Broadband remains a foundational element of our business, supported by long-standing customer relationships and a portfolio-based approach that emphasizes selling multiple Clearfield solutions across customer deployments.

Large regional service providers and MSOs also remain important growth drivers and reflect the flexibility of our platform. In addition, recent acquisition approvals involving large regional customers create a favorable backdrop for continued opportunity.

As broadband providers look ahead to their next phase of investment, the BEAD program remains a major area of focus across the industry. We are encouraged by the progress that the NTIA has made in advancing the BEAD program and are pleased with the level of planning and network design activity we are seeing from both current and prospective customers.

While we continue to expect BEAD-related revenue contribution in fiscal 2026 to be modest, service providers are actively preparing for deployment. Customers are working through planning, network design and vendor decisions and Clearfield is staying closely engaged to ensure we are ready when funding is released.

To support this effort, we are taking a structured and proactive approach with expected BEAD recipients, focusing on where customers are in their planning process and how we can best support them as these projects take shape. This allows us to allocate resources thoughtfully and to remain aligned with customers as programs move forward.

We believe community broadband providers are likely to move more quickly than Tier 1 operators once funding approvals occur, which aligns well with Clearfield's focus and customer mix. However, supply chain constraints of U.S.-made optical fiber that is required under the BABA, the Build America Buy American Act, could restrain near-term deployment. We are working alongside others in the industry to address the issue. Beyond fiscal 2026, we expect BEAD to become a positive contributor with timing dependent entirely on federal funding releases and supply chain constraints.

And with that, I'll turn the call over to Dan to review our financials and our outlook in more detail.

Thank you, Cheri, and good afternoon, everyone. I will now review our first quarter results, beginning with sales. As noted earlier, all financial results for fiscal 2026 and prior periods are presented on a Clearfield continuing operations-only basis.

First quarter net sales from continuing operations were $34.3 million, exceeding our guidance range of $30 million to $33 million and up 16% from $29.7 million in the prior year period. Gross margin was 33.2% compared to 29.2% in the prior year quarter, driven primarily by improved overhead absorption and better inventory utilization. Operating expenses from continuing operations increased to $13.2 million from $10.7 million year-over-year, reflecting continued investment in technology and customer expansion initiatives.

We had an income tax benefit from continuing operations of $1,000 for the first quarter of fiscal 2026 compared to income tax expense from continuing operations of $53,000 for the year ago quarter. The income tax rate for the first quarter of fiscal 2026 was lower than the statutory rate due to the impact of discrete items and a lower level of pretax book loss. Net loss per share from continuing operations was $0.02 in the first quarter of fiscal 2026 compared to a loss of $0.02 per share in the comparable period last year.

Net loss from discontinued operations for the first quarter of fiscal 2026 was $340,000 or $0.02 per basic and diluted share compared to a net loss from discontinued operations for the first quarter of fiscal 2025 of $1.6 million or $0.11 per basic and diluted share. We ended the quarter with approximately $157 million in cash, short-term and long-term investments and no debt, reflecting continued balance sheet strength and disciplined capital management.

During the quarter, the company invested $5.2 million to repurchase 179,000 shares. In November 2025, our Board of Directors increased our share repurchase authorization from $65 million to $85 million, leaving $23.1 million available for additional repurchases as of December 31, 2025.

For the second fiscal quarter of 2026, we anticipate net sales from continuing operations to be in the range of $32 million to $35 million; operating expenses to be up slightly relative to the first quarter and net loss per diluted share in the range of $0.02 to $0.10. The earnings per share ranges are based on the number of shares outstanding at the end of the first quarter and do not reflect potential additional share repurchases completed.

For the full year fiscal 2026, we are reiterating our guidance for net sales from continuing operations in the range of $160 million to $170 million. We expect growth to be driven by steady demand for fiber connectivity across our community broadband, large regional and MSO customers with BEAD-related revenue contribution expected to remain modest during fiscal 2026. We expect operating expenses as a percentage of revenue to remain consistent with fiscal 2025 and earnings per share from continuing operations to be in the range of $0.48 to $0.62. And with that, we will open the call to your questions.

[Operator Instructions] The first question will come from Ryan Koontz with Needham & Company.

This is Matt Cavanagh on for Ryan. On the NOVA product line, it would be great to better understand who the target customer type is for these products? And maybe how you're thinking about the revenue opportunity from NOVA over the medium to longer term?.

Great. Yes. Nice to talk to you, Matt. The initial target customer, I think we'll see is existing community broadband customers who are opening data centers for their enhanced revenue base. So this would be customers like South Dakota Network or CoreLogic who understand that the requirements associated with high density and they're looking at how they're going to be able to do that.

Additionally, as we move into adjacent markets, the products are designed in a different way with the concept of modularity, being able to do the same type of thing that we do with today's cassettes, so that every rack unit is optimized for the type of connector or service offering, single-mode, multi-mode or whatever the high-speed ultra small form factor connector might be.

So I think we'll see customers there of a traditional database type environment, but not the big superscale -- hyperscale markets that will require additional innovation and an additional product offering that you'll see from us probably in about a year.

From a revenue perspective, we don't see a significant revenue contribution in '26. So we do see the NOVA platform becoming over the next 2 to 3 years, really the kind of the dominant product offering of the company and that a lot of what we're doing with NOVA will be brought then -- will be brought back into community broadband, so that we'll have a single cassette in a single platform for optimization of all density requirements throughout our customer base.

Great. That sounds really exciting.

Oh. It is.

As a follow-up, you had also mentioned earlier on BEAD, community broadband customers maybe being more likely to move quickly on their projects and their larger counterparts. Could you expand on why this might be the case and how it's affecting Clearfield's outlook for the program over the next several years?

Well, we've seen over the years that community broadband despite definition of being smaller are more nimble players and they'll be able to optimize with their deployments and can switch easier from 1 opportunity to the other? Or can pounce on to the money availability and move forward.

The larger providers absolutely are going to deliver their BEAD initiatives, but they already have the AT&T Charter and they already have their build plans for the year, and we don't see them moving the application from 1 point to the next. So we're optimistic that even with some supply chain challenges that our small providers are going to be in a position to be able to get a little bit of a head start.

We're tracking, there are 319 different broadband service providers who are slated based upon the early tentative awards to be part of the BEAD program. And we are systematically tracking each of those customers based upon our penetration as a customer, where are we at in regard to the sales cycle and really trying to apply the same type of high-level sales and customer support that we've done for the last 15 years to now really put the sauce on [ thick ] within BEAD. So I said we're excited about it, but more to come in coming quarters.

Great. And just 1 more, if I may. But is there any way, as you're talking about the potential fiber shortage to maybe quantify the revenue impact and how that's affecting your fiscal '26 outlook?

Yes, I think it's really difficult to quantify specifically what's going to happen with fiber supply, especially as it relates from a BABA perspective. The current suppliers of BABA compliant fiber -- [indiscernible] extruded fiber are on and lead times of over a year. And that is not consistent with being able to have a good aggressive BEAD program, and I'm sure it is not what the NTIA intended when they said there was enough fiber to go around under the BABA program.

And so we, as an industry, are looking at ways by which that we can offer waivers or alternatives types of means by which to ensure that we can get a head start. And because of uncertainty of all of that, it's 1 of the reasons why there is really no guidance in fiscal year '26 associated with BEAD revenue.

The next question will come from Tim Savageaux with Northland Capital Markets.

A couple I guess call them merger-related questions, not new so much, but customers and competitors. So I'd be interested if you had any observations or thoughts or the early impact of both Verizon's combination with Frontier. Clearly, they're guiding CapEx way down as a combined entity, but seeming to keep the fiber build steady, if not increasing. And also anything out of the CommScope/Amphenol merger that might be driving any opportunities for Clearfield.

Tim, we're looking at the Verizon/Frontier merger as a significant opportunity for Clearfield. We have been a key supplier to Frontier.. I've been pretty open about that over the years and Frontier is as you said, full speed ahead on their program for fiscal year '26 and not looking to make any changes that are going to interfere with the build season. And Verizon has been in strong support of being very visible of saying the reason they acquired Frontier is because of the strength of their fiber network.

So as we move forward and have an opportunity to learn more about the procurement process inside of Verizon, which is one of our large Tier 1 for customers. We're looking to just really be able to optimize that. So we see it as an opportunity and have invested in a broader sales organization by which to support it.

In addition to what we've done in the past to do traditional regional sales managers who live and work in the communities in which fiber is deployed, we've added not only a national sales team calling on corporate, but we call a national turf team, that calls on the field offices of those national offices to introduce their product line and they continue to help support it, for an existing customer in a new market or for new customers as they get introduced to the modularity of our platform.

So if you look at our SG&A investments and you see the $3 million investment for this quarter, higher than a year ago quarter, that's where those dollars are going. We're not going to get that new business. in our core business in Pillar 1 or some of those adjacent markets without those investments and strategies.

But it's really a replication of the strategy that has worked for the last 15 years just for new customers. As it relates to CommScope and Amphenol , it's really too early. There's still a lot of people figuring out who's going to sign their check and is their job going to change, and who am I reporting to. So from that perspective, I think it's an opportunity for Clearfield as we continue to be focused in supporting our customer base.

We also have seen CommScope continue to be open for all markets, of course, but they really have done a nice job in the hyperscale space, and we see them focusing on that under the Amphenol umbrella, which again, I think, could provide an opportunity for Clearfield.

Right. And less focused on carrier and perhaps even more so rural carrier markets.

Correct.

In terms of the results, you saw cable come down pretty sharply. I wondered whether what you expect throughout the balance of the year there maybe in Q2? It looks like you're looking at a flattish overall revenue. Any notable trends from the segments driving the Q2 outlook and what do you expect for cable beyond that?.

Yes. Well, I mean as you see, our Community Broadband was significantly up, and it was the driver across the company. And I think everyone will find that to be very refreshing because we saw last year that community broadband was the ones most severely affected by the delay in the BEAD deployments not only for the BEAD dollars themselves but for the inability to fund and have the time by which to engineer other projects. So I think Community Broadband will continue to lead our growth into future quarters.

The cable was really -- it was down from fourth quarter, but consistent with first quarter of last year. And what we see in the MSO market is because those orders tend to be at a little bit larger scale is a little bit of lumpiness on a quarter-to-quarter basis. So I'm comfortable that the regional MSO, as I've talked about before, the Mid-Continents and the Blue Ridges the Cable Ones are committed to their fiber builds.

They're seeing that fiber does not have the risk that you're going to see from a DOCSIS standpoint, it's a better long-term play. And especially as the telcos get aggressive in the deployment of fiber as Verizon and AT&T continue to build out the MSO market, especially the regionals are ready to respond. So I'm confident that you're going to see growth in that space as well.

This concludes our question-and-answer session. I would like to turn the conference back over to Cheri Beranek for any closing remarks.

Thank you all. I hope everyone that is listening stays warm and is finding ways to enjoy this winter weather. Clearfield has, of course, been a Minnesota-based company from the beginning, and it's been a struggle for our winter for a variety of different ways, but I want to commend everyone in the U.S. who is working to be each other's neighbor and look out for each other.

We are looking out for you and all of broadband and we do not take your support for granted, and we'll continue to be able to earn it as we move forward. I look forward to seeing you next quarter.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Clearfield Fiscal Fourth Quarter 2025 Conference Call. [Operator Instructions]. Please note this event is being recorded. At this time, I'd like to turn the floor over to Gregory McNiff, Investor Relations. Sir, please go ahead.

Thank you. Joining me on today's call are Cheri Beranek, Clearfield's President and CEO; and Dan Herzog, Clearfield's CFO.

As a reminder, Clearfield publishes 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.

Additionally, as announced on November 12, 2025, Clearfield has sold its Nestor Cables business. Following the divestiture of Nestor, we are reporting only on Clearfield segment, beginning with this release Clearfield is reflected as continuing operations with Nestor classified as discontinued operations and held for sale for fiscal 2025 and all prior periods on our financials.

With that, I'd like to turn the call over to Clearfield's President and CEO, Cheri Beranek. Cheri?

Good morning, everyone, and thank you for joining us to discuss Clearfield's Fourth Quarter and Full Year Fiscal 2025 results. I'll begin with a brief overview of the quarter, discuss our decision to divest the Nestor business, share updates on our long-term strategy and then turn the call over to Dan for a summary of our financial performance and outlook for fiscal 2026.

Fourth quarter net sales from Clearfield's continuing operations of $41.1 million were up 13% year-over-year. For the full year, Clearfield's continuing operations net sales grew 20% to $150 million demonstrating solid execution as we continue to focus on growing faster than the industry and driving market share gains.

After a thorough and comprehensive review of the Nestor segment, we made a decision to divest the business. This move allows us to redeploy resources towards our core North American operations and higher return opportunities. Our acquisition of Nestor was focused on gaining access to a key technology, namely the ability to manufacture our own line of FieldShield cable, and we [indiscernible] our objective. We strengthened our vertical integration and Build America Buy America compliance through the successful transfer of Cable Manufacturing Technology into our U.S. and Mexico facilities. However, expanding Nestor's business beyond Finland into the European market proved to be a lower-margin opportunity despite our efforts to improve margins through process improvements and new product introductions, resulting in a suboptimal use of capital.

The transaction resulted in a $10.4 million noncash write-down in the fourth quarter with minimal cash impact. Importantly, the operational benefits for Nestor's integration remain embedded in our manufacturing platform. This divestiture sharpens our focus, improves our long-term margin profile and better aligns resources with Clearfield's strategic priorities.

Looking ahead, our focus remains on protecting what defines Clearfield. Craftsmanship, reliability and service, while leveraging our core strengths and expanding into areas where we can create the most value. We continue to execute on our Better Broadband and Beyond strategy through three core pillars: Protecting our core Community Broadband business by ensuring that the broadband service providers who have long relied on Clearfield continue to have the products, service and support they need to succeed.

Leveraging our market position into new applications and environments where fiber connectivity plays a growing role, including next-generation wireless networks from the metro core to the South side. Expanding into adjacent markets by utilizing our core competencies to allow us to reach new customers and to strengthen our leadership in broadband fiber infrastructure. As hyperscalers rely on smaller ISPs to push part of their compute workloads closer to the edge, Clearfield's position with regional providers opens up a new growth vehicle to the [indiscernible]. This disciplined approach positions Clearfield for measured growth as the market continues to recover.

As part of this next phase, Clearfield will introduce 2 significant new product lines. In the first quarter of calendar 2026, we will launch a complete line of splice cases, expanding our offering and deepening engagement with customers who operate in environments that require slicing. After extensive review and month of successful field demonstration, we believe this new solution represents the best-in-class.

Following that product introduction, we will release a next-generation Fiber Management Cassette, optimized for non-hyperscale data centers, a fast-growing market where Clearfield's modular design and innovation provide a unique advantage. These launches mark start of a new generation of innovation as we extend our reach within and beyond traditional broadband markets.

Another important element of our strategy is investing in sales development and expanding our distribution channels. We have enhanced our leadership team to support the new phase of growth. Anis Khemakhem, our new Chief Commercial Officer, is integrating sales and marketing to align go-to-market strategy with product innovation. Mike Ward who recently joined as our new Vice Presidents of Broadband Sales and Mark Temple, who joined as Vice President of Distribution Channel and Strategic Alliances, bring deep industry experience and will strengthen our Tier 1 and channel sales capabilities. Together, these leaders bring renewed focus, operational rigor and energy to the organization, positioning Clearfield for the next chapter of growth.

With respect to our distribution channels, our long-standing partners remain essential contributors to our success, connecting Clearfield solutions to broadband service providers. Building on that strong foundation we recently added WireMasters as a distribution partner who has begun to distribute Clearfield's Fiber Optic Connectivity and Management products globally with an emphasis on the defense and aerospace markets, and we plan to add a wireless-focused distributor early in fiscal 2026, opening new opportunities in cellular backhaul and emerging edge applications. These efforts strengthen our access to new customer groups while maintaining close collaboration with new existing partners who continue to be key to our growth.

I want to briefly comment on the BEAD program. We are pleased that 18 of the 52 submitted proposals have been approved by the NTIA. Fiber remains the overwhelming medium to deliver in broadband on the proposal submitted. We intend to vigorously pursue this opportunity, and we'll keep you updated as we approach the deployment stage.

Fiscal year '25 was a transformational year for Clearfield, one defined by strategic focus, leadership investment and a return to growth and profitability. As we enter fiscal 2026, we are executing with confidence on our Better Broadband and Beyond strategy, driving innovation across our core markets while expanding into adjacent opportunities that enhance long-term shareholder value. With that, I'll turn the call over to Dan Herzog, who will review our fourth quarter and full year results and provide our outlook for fiscal 2026.

Thank you, Cheri, and good morning, everyone. I will now review our fourth quarter results, beginning with sales. This quarter marks the first period in which Nestor's results are classified under discontinued operations on our income statement. As a result, the Clearfield segment now reflect our continuing operations and all quarter, full year and period comparisons are now provided on a Clearfield continuing operations-only basis to ensure clarity.

Fourth quarter net sales from Clearfield's continuing operations were $41.1 million, up 13% over the same period from $36.2 million in the prior year. Gross margin improved from 26.6% to 34.6%, which was driven by better manufacturing efficiencies and overhead absorbed with higher volume. Net income per share from continuing operations was $0.13 in the fourth quarter of fiscal '25 versus a loss of $0.01 per share in the comparable period last year. For the full fiscal year, net sales from continuing operations were $150.1 million, up 20% from $125.6 million in fiscal year 2024.

Gross margin expanded from 20.6% to 33.7%, mainly as a result of better overhead absorption with higher volume, lower inventory reserve charges as a result of improved inventory utilization along with increases in production efficiency from our continued improvement programs. While we reported an overall loss per share for fiscal 2025 of $0.58. Nestor's discontinued operations and our impairment write-down of that business contributed a net loss of $1.03 per share. This was offset by net income per share of $0.45 from Clearfield's continuing operations, which compares to a net loss per share of $0.58 in the comparable period in fiscal 2024. These results underscore the strength of our continuing operations moving forward which continued to demonstrate solid execution and share gains.

We ended the quarter with approximately $166 million in cash and investments, up from $153 million in the prior year, reflecting continued strength in our balance sheet and disciplined operational execution. This financial position enables us to invest in innovation, product development and market expand programs that will drive long-term value creation. The company also invested $16.5 million in repurchasing 551,000 shares during the fiscal year. In addition, our Board of Directors has increased our share buyback authorization from $65 million to $85 million, providing us with $28.4 million available for additional repurchases when added to the $8.4 million repurchase amount remaining on September 30, 2025.

For the full year fiscal 2025, we expect net sales from continuing operations in the range of $160 million to $170 million. We expect growth to be driven by steady demand for Fiber Connectivity with continued strength across our Large Regional and MSO customers. We expect the late start to the BEAD program and the recent government shutdown to pressure investments, both from private funding as well as government programs in our Community Broadband market early in the year. We expect operating expenses as a percentage of revenue to remain consistent with fiscal 2025 and earnings per share from continuing operations in the range of $0.48 to $0.62. For the first fiscal quarter of 2026, we anticipate net sales from continuing operations in the range of $30 million to $33 million. Total operating expenses remained consistent with the fiscal fourth quarter of 2025 and net loss per share in the range of $0.08 to breakeven.

The earnings per share ranges are based on the number of shares outstanding at the end of the fourth quarter and do not reflect potential share repurchases completed. And with that, we will open the call to your questions.

[Operator Instructions] The first question today comes from Ryan Koontz with Needham & Co.

I wanted to ask about your comments about the shutdown. Obviously, it may be some impacts on BEAD here, but were there other programs, subsidy programs or customer behavior you could point to, that might have impacted either revenue or bookings or your outlook for Q4 -- your fiscal Q1?

Right. Ryan we saw it in everything, kind of across the board, probably ACAM probably the most effective not that it's going to diminish the amount of money available, but it did affect bookings in the fourth quarter that would then both because of our short lead times, both ship in fourth quarter and lead into first. So it's an unfortunate circumstance in one of those things that, I guess, we all don't even realize how much government funding and government operation affect us.

And Cheri, do you have a kind of a time line when you expect that to catch up to normal, I would think maybe over the next few quarters? Or is it just a...

Yes, we'll be back to normal by second quarter as it relates to the government shutdown. So the government shutdown did affect bookings and our forecast for a soft first quarter, into next year. But I don't expect it to affect the total year. So second quarter, we should be normalized.

Got it. And specifically there, then within your reported fourth quarter Community Broadband looked a little soft. That's what you're pointing to there in...

Yes. Right. The Community Broadband was soft. I mean, in the fourth quarter is actually kind of flat over last year, which is really unusual, even down a little bit over last year. Community Broadband was partly the government shutdown, but I would say more affected over the course of the year by the delay in BEAD. Certainly, the smaller the service provider, the more the delay in BEAD has affected both the deployments and their planning, their engineering dollars and their engineering availability and then financing setting aside money to deal with BEAD.

We even saw it in private investment as well kind of in that smaller space because Community Broadband is more than just the Tier 3 operator, its some of the private equity money that is being used at the smaller level, and we just saw money being set -- kind of sitting on the sidelines waiting for to figure out where it's going to be deployed -- because we don't sometimes think about that where the BEAD dollars go affects, where the private investment, the timing of private investment because you want to leverage the money that -- or the fiber that's going into a BEAD network can be leveraged for middle-mile and other work elsewhere. So it does have a follow-on or a kind of a waterfall effect. So we're anxious to get the BEAD awards out. And while it won't the '26 -- I think we're going to see '26 have BEAD, but the biggest impact of it is going to be private money coming back because BEAD is now actually finally figured out.

Helpful. And Dan, on the gross margin outlook there relative to where you are in continuing operations, how do you think about broadly margins going forward? Is it purely a matter of scale at this point and you expect some modest improvements in gross margin going forward with higher revenues?

Yes. That's exactly how to read that, Ryan. Obviously, volume dependent. So first quarter would be looking a little bit lighter, but -- and scaling with revenue increases from there.

Got it. And Cheri, any thoughts about industry fibers line right now? Is that coming up much of a concern. Have you heard that from your customers at all in terms of [indiscernible]?

Unfortunately, over and over and in every customer regardless of size. So the data center -- of utilization of fiber is affecting Corning's allocation, and then it affects according to allocation to other service providers, which in turn will affect broadband deployments. So we're aggressively -- both for our own sake as well as for our customers' sake sourcing all and identifying equivalent equivalent fibers that can be approved in those networks.

Next question comes from Scott Searle with ROTH Capital.

Maybe just a couple of quick calibration questions. Dan, I'm just wondering what Nestor was in September quarter just to kind of look at our published numbers, apples-to-apples. And then looking into the December quarter, could you give us a little bit of color in terms of the sequential outlook by the different customer classifications? It sounds like Community Broadband will be under a little bit of given BEAD and government shutdowns, but I'd love to have a little bit of color on that front. And what you need in terms of turns to get to the lower end of the range and what the visibility is in the immediate outlook? And then I had a follow-up.

Yes, I'll take the first one there. Nestor finished their fourth quarter was $9.4 million in revenue, with the Clearfield being $41.1 million. So that would have put us at 5.4% exactly.

That's helpful. And then in terms of the December outlook.

Yes. Community Broadband is definitely a bit pressured, as I indicated, both from BEAD, the government shutdown and and the private money that goes around it. We continue to be extremely pleased with our work in the Large Regional group as well as in the Regional MSO markets. They now comprise about close to 40% of our business. And that really is a means of leveraging our existing sales channel in that with the large regional and the regional cable operator, typically -- they will have deployments in the same neighborhoods as the Community Broadband team. And so our work, our reputation and our sales channel -- in Community Broadband is what we're able to leverage for that MSO and Large Regional markets.

Any one of those are larger customers than the Community Broadband team is. And it means we get some larger orders and some opportunity to scale with it. So with Community Broadband coming back, in fact, look through for a second. I mean -- the MSOs up for the year, close to 40%, Large Regionals for the year were up close to 60%. So with that momentum and with Community Broadband, hopefully, we anticipate [indiscernible] back in second quarter, we could have a really strong build season for next year.

I just wanted to go back a little bit to the lack of fiber question that Ryan brought out earlier. And that's one of the reasons that we're -- if people look at our long-term our annual forecast. Our annual forecast is guided by what we can see, that's part of our reputation as a company, is to be I wouldn't say conservative, but I would say deliberate about our our forecast. And with the lack of fiber being outside of our control, that could be one of the contributing factors of our long-term members.

Great. And Cheri, if I could, just to follow in terms of the annual outlook, starting the year slow, but it sounds like you start to see normalization in the second quarter. The math on the $160 million to $170 million range implies kind of mid-40s through the rest of the year. So I assume that's kind of ramping. But I'm wondering what your factoring into that forecast? Is it just normalization of the existing customer base and spending patterns. How much are you factoring in for BEAD? And then you've got some new products that seem like they're kind of intriguing in terms of your next-gen splicing and data center. I'm wondering how they fit into the equation as well?

We are not identifying a significant amount of revenue for new product introduction. It's only a few million dollars because typically you need a full -- especially for outside plant products, you need a full year for them to go through an outside weather cycle before you have a long-term commitment from high-end revenue. We see -- the new product introductions for splice case and really excited about the next-gen cassette line as being more significant revenue in '27.

Very good. And just in terms of how you're thinking about BEAD and that number in that $160 million to $170 million?

Yes, I would say we're looking at probably less than $10 million in that -- that's going to be. Remember, they got to build first with [indiscernible] with kind of middle-mile stuff and the actual construction of placing cabinets is probably going to be in our fourth quarter, and that's one of the things that we have to remember for our numbers is that since our numbers end in September of next year, we tend to miss some of the fall numbers in the bill season. So next year's fourth quarter and [ first ] quarter will be significantly stronger than what we're seeing here.

Great. And last, if I could, new products, what does that do to your addressable market? cassettes, I'm sure it's just extending your existing position. But what does the data center do [indiscernible].

Actually, the next-generation cassette line is all about new customers as well as being eventually, there will be transformational back to our existing customers. As we talked about -- to go after the non-hyperscale data center is I use the word disciplined approach because we could go after hyperscalers, and we would lose because that's a high volume, low-mix solution. That's not the way Clearfield is designed. It's not the way our manufacturing lines are set up. We compete aggressively in a low-volume, high-mix world. And so data centers at the edge that push to the edge where we're going to see our customers as smaller data centers picking up the compute power requirements from the big guys as they move out. That's where we're really going to have a significant opportunity because it's our space. It's a space in which that high-value manufactured, it doesn't work. You've got to be able to do a lot more push and pull. And so the the new data -- the new data center cassettes is going to allow a lot of unique configurations inside of a particular 19-inch panel and so that you can design by cassette. So you can expect to see that launched around Dixie in January, and it will be fully debuted and on display in that January show.

[Operator Instructions] The next question comes from Tim Savageaux with Northland Capital Markets.

I want to stay on the BEAD theme here. And with a couple of questions. First, we've seen some of your peers in the access systems space talk about receipt of initial orders for BEAD, I think historically, maybe you have some correlation there on the cabinet side. But it sounds like you're talking about an overall uptick in activity with these approvals with maybe some delay from shutdown. But can you talk to when you expect initial orders? Or have you seen them yet for BEAD?

Right. Because of our short lead time, what we're seeing is quoting activity but not necessarily shipping activity associated with it. We know pretty much what customers have been identified as anticipating to be receiving money, and that's freed up some planning dollars. I would expect we'll see -- but I don't think we'll see significant revenue until the summer construction season, so third and fourth quarter.

Yes, it makes sense. And just to get a sense of the magnitude of that opportunity, we had a recent big round of approvals, I think that was maybe $9 billion in the aggregate. And I think the total is beyond that. I think you mentioned it earlier. And -- in terms of opportunity for Clearfield, I think we used to talk about maybe 4% to 5% of that total award value as addressable by the company. Does that remain the case? And because just on that recent round of approvals that gets you close to $500 million, which is pretty interesting relative to what you're doing now. So are there tricks we can still think about?

They absolutely are. So 4% to 5% of the the cost of deployment our products that we offer. We increasingly are working to become that portfolio supplier so that we would get the solutions of both being able to pass and to connect the home. The full line and next generation of splice cases is a part of that strategy, keeping our portfolio customers out away from our competition and being able to give those customers who are using our competition splice case, is the reason to be able to come back to our generation and fully being integrated into our world.

Every time we place a patch-only cabinet, somebody else's splice case was being used in that -- and then previously somebody else's vault. So completing out our product line is really a defensive, more aggressive move in order to put that together. Our competition likes to -- [indiscernible] said, they're going to get 25% of the BEAD market. [indiscernible] put numbers out there with big numbers. We could -- we could tout $500 million, and that's accurate. But remember, this is a 4- to 5-year build. So we want to make sure that we don't get everybody's -- their eyes bigger than their stomach. We think we're going to get a big part of that share, but it would be irresponsible to give you a particular number.

This concludes our question-and-answer session. I would like to turn the conference back over for any closing remarks.

Yes. Well, thank you so much for the opportunity to speak with you this morning, our apologies that are our numbers were delayed by a week, but you can understand with the divestiture of Nestor that we had a few numbers to be able to tie out and put together. We wish our friends at Nestor, well. We think the opportunity to focus having been able to bring that infrastructure into our world to be able to transform Clearfield into a vertically integrated supply chain is really exciting for our potential gross margin and our ability to be that portfolio supplier is exciting.

Like I said, we wish Nestor well. We think the transformation of Clearfield into being a bigger, broader supplier with a fully integrated line as we move forward, will be opportunistic for our world and '26 will be transformational [indiscernible] for that long-term strategy plan of Better Broadband and Beyond. Thank you for our world. I'm grateful to you now at Thanksgiving time, and I wish you the best and the most joyous of Thanksgiving holidays. Enjoy your families.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.