Clearfield, Inc. (NASDAQ:CLFD) Q3 2019 Earnings Conference Call - Final Transcript
Nov 07, 2019 • 05:00 pm ET
[Operator Instructions] The first question comes from Jaeson Schmidt with Lake Street.
Hey guys, thanks for taking my questions. I just want to start with the traction you're seeing at your Tier one accounts. I know it's always been a situation where, just given the size of these accounts, it was always going to take a while to break in and gain steam there. But can you just talk a little bit about why you're seeing so much success currently and why you're feeling so bullish on that market in 2020?
What we're seeing to date in regard to momentum, as I outlined in the material, was that we've got FieldShield success in two separate carriers and FieldShield being used in both fiber-to-the-home and fiber-to-the-business and growing within each of those carriers really independently of each other. And that shows FieldShield has a unique architecture. It's a patent to Clearfield design, so it's really recognizing that there's a difference -- different way of being able to do things. So it's -- it was a technology that needed to be proven out.
And now that it's proven out, I think the momentum that's behind it will help us grow with that product line as well as the product line that FieldShield brings to market. And Fieldshield is the drop cable associated with that deployment and it connects them to all of our different enclosures. So we're not only excited about what FieldShield has done with us to date, but the disruptive technology that it allows us to build for new designs that will be more 5G-based.
Okay. That's helpful. And then looking at the planned investment for this year, is that primarily going to headcount or is some of that earmarked for additional certifications?
You got them both. The -- so it is absolutely that. It's headcount and certification specifically targeted for Tier one revenue requirements, in that, rather -- a lot of the certification work that we did previously was the make-ready work that you had to do in order to be considered. So as an example, it was the GR testing for LC or SC termination capability. Now the certifications that we're doing are the tests like 1409 are specific requirements for unique enclosures. And so once the enclosure certifications are complete, then we've got an open runway to accept those orders. And then the people counts, the headcounts for that are the engineers, the product managers, the capacity managers that -- not the salespeople because that's what we did last year, but it's the product managers, capacity planners and supply chain in order for us to deliver that effectively throughout the year. So that's why you're going to see a heavier -- a buildup in the first half of the year. They are going to be about that capacity management, and then we'll be able to take advantage of it later in the year. And I think that's what I wanted to be sure to point out is that