Clearfield Inc

Previous wording

The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are“forward-looking statements”* within the meaning of the Private Securities Litigation Reform Act of 1995.* * Forward-looking statements relate to future events and typically address the Company*’s expected future business and financial performance. Words such as “plan,”* “expect,” “aim,” “believe,” “project,” “target,” “anticipate,” “intend,” “estimate,” “will,” “should,” “could” and other words and terms of similar meaning, typically identify these forward-looking statements.* * Forward-looking statements are based on certain assumptions and expectations of future events and trends that are subject to risks and uncertainties.* * Actual results could differ from those projected in any forward-looking statements because of the factors identified in and incorporated by reference from Part* I, Item 1A,“Risk Factors,”* of our Annual Report on Form 10-K for the year ended September 30, 2023 and Part II, Item 1A.“Risk Factors” of this Quarterly Report on Form 10-Q, as well as in other filings we make with the Securities and Exchange Commission, which should be considered an integral part of Part* I, Item 2,“Management’s Discussion and Analysis of Financial Condition and Results of Operations.”* All forward-looking statements included herein are made as the date of this Quarterly Report on Form 10-Q and we assume no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.*

Current wording

The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are“forward-looking statements”* within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events and typically address the Company*’s expected future business and financial performance. Words such as “may,”* “plan,” “expect,” “aim,” “believe,” “project,” “target,” “anticipate,” “intend,” “estimate,” “will,” “should,” “could,” “outlook,” “continue” and other words and terms of similar meaning, typically identify these forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events and trends that are subject to risks and uncertainties. Actual results could differ from those projected in any forward-looking statements because of the factors identified in and incorporated by reference from Part* I, Item 1A,“Risk Factors,”* of our Annual Report on Form 10-K for the year ended September 30, 2023 and Part II, Item 1A.“Risk Factors” of this Quarterly Report on Form 10-Q, as well as in other filings we make with the Securities and Exchange Commission, which should be considered an integral part of Part* I, Item 2,“Management’s Discussion and Analysis of Financial Condition and Results of Operations.”* All forward-looking statements included herein are made as the date of this Quarterly Report on Form 10-Q and we assume no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.*

Previous wording

The following discussion and analysis of the Company’s financial condition and results of operations as of and for the three months ended December 31, 2023, and 2022 should be read in conjunction with the financial statements and related notes in Item 1 of this report and our Annual Report on Form 10-K for the year ended September 30, 2023.

Current wording

The following discussion and analysis of the Company’s financial condition and results of operations as of and for the three and six months ended March 31, 2024, and 2023 should be read in conjunction with the financial statements and related notes in Item 1 of this report and our Annual Report on Form 10-K for the year ended September 30, 2023.

Previous wording

Net sales for the first quarter of fiscal 2024 ended December 31, 2023, were $34,230,000, a decrease of approximately 60%, or $51,712,000, from net sales of $85,942,000 for the first quarter of fiscal 2023. Net sales to Broadband Service Providers were $31,915,000 in the first quarter of fiscal 2024 versus $83,626,000 in the same period of fiscal 2023. Net sales to other customers were $2,376,000 in the first quarter of 2024 versus $2,315,000 in the same period of fiscal 2023. In addition, the Company recorded $6,669,000 in international sales for the first quarter of 2024 versus $10,204,000 in the same period of fiscal 2023. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. International sales represented 19% and 12% of total net sales for the first quarter of 2024 and 2023, respectively.

Current wording

Net sales for the second quarter of fiscal 2024 ended March 31, 2024, were $36,910,000, a decrease of approximately 49%, or $34,890,000, from net sales of $71,809,000 for the second quarter of fiscal 2023. Net sales to Broadband Service Providers were $34,363,000 in the second quarter of fiscal 2024 versus $68,906,000 in the same period of fiscal 2023. Net sales to Legacy customers were $645,000 in the second quarter of 2024 versus $592,000 in the same period of fiscal 2023. In addition, the Company recorded $9,947,000 in international sales for the second quarter of 2024 versus $13,137,000 in the same period of fiscal 2023. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. International sales represented 27% and 18% of total net sales for the second quarter of 2024 and 2023, respectively.

Previous wording

The decrease in net sales for the quarter ended December 31, 2023, of $51,712,000 compared to the quarter ended December 31, 2022, was primarily driven by decreased sales to Community Broadband Service Providers of $24,589,000 or 67%, MSO customers of $15,581,000 or 75%, Large Regional customers of $6,873,000 or 47%, and International customers of $3,535,000 or 35%. The decrease in sales across these markets for the quarter ended December 31, 2023, as compared to the quarter ended December 31, 2022, is due to a lull in demand as customers digest previously purchased products.

Current wording

The decrease in net sales for the quarter ended March 31, 2024, of $34,890,000 compared to the quarter ended March 31, 2023, was primarily driven by decreased sales to Community Broadband Service Providers of $17,123,000 or 52%, MSO customers of $5,072,000 or 52%, Large Regional customers of $9,550,000 or 75%, and International customers of $3,190,000 or 24%. The decrease in sales across these markets for the quarter ended March 31, 2024, as compared to the quarter ended March 31, 2023, is due to a lull in demand as customers digest existing products previously purchased during the period of long lead time supply chain created by the pandemic.

Previous wording

Order backlog for the first quarter of 2024 was $43,451,000, a decrease of 24% compared to $57,285,000 as of September 30, 2023, and a decrease of $92,818,000, or 68%, from December 31, 2022. The sequential decrease was also due to the lull in demand as customers digest previously purchased products as well as winter seasonality.

Current wording

Order backlog for the second quarter of 2024 was $47,179,000, an increase of 9% compared to $43,451,000 as of December 31, 2023, and a decrease of $60,407,000, or 56%, from March 31, 2023. The year-over-year decrease was also due to the lull in demand as customers digest previously purchased products.

Previous wording

Revenue from customers is obtained from purchase orders submitted from time to time, with a limited number of customers recently issuing purchase orders for longer time frames. The Company’s ability to predict orders in future periods or trends affecting orders in future periods is limited. The Company’s ability to predict revenue is further limited by customer deployment schedules and factors affecting customer ordering patterns. The Company’s ability to recognize revenue in the future for customer orders will depend on the Company’s ability to manufacture and deliver products to the customers and fulfill its other contractual obligations.

Current wording

Revenue from customers is obtained from purchase orders submitted from time to time, with a limited number of customers issuing purchase orders for longer time frames. The Company’s ability to predict orders in future periods or trends affecting orders in future periods is limited. The Company’s ability to predict revenue is further limited by customer deployment schedules and factors affecting customer ordering patterns. The Company’s ability to recognize revenue in the future for customer orders will depend on the Company’s ability to manufacture and deliver products to the customers and fulfill its other contractual obligations.

Previous wording

Cost of sales for the first quarter of 2024 was $29,533,000, a decrease of $25,760,000, or 47%, from $55,293,000 in the comparable period of fiscal 2023. Gross profit percent was 13.7% of net sales in the first quarter of 2024, a decrease from 35.7% of net sales for the first quarter of 2023. Gross profit decreased $25,952,000 or 84.7%, to $4,696,000 for the three months ended December 31, 2023, from $30,649,000 in the comparable period in fiscal 2023. The Company continues to realign capacity to current market conditions. Gross profit margin was negatively affected by unabsorbed overhead in our manufacturing facilities due to lower levels of demand and winter seasonality. The Company’s gross profit was also negatively impacted by an increase in inventory reserves of $3,376,000 during the first quarter of fiscal 2024. Inventory reserves are primarily due to excess inventory due to the lull in demand while customers draw down their existing products previously purchased during the period of long lead time supply chain created by the pandemic. The Company expects to operate at these gross profit percentage levels for several quarters with improving margins realized as revenue levels increase, and ongoing cost reduction measures are realized.

Current wording

Cost of sales for the second quarter of 2024 was $34,078,000, a decrease of $14,168,000, or 29%, from $48,246,000 in the comparable period of fiscal 2023. Gross profit percent was 7.7% of net sales in the second quarter of 2024, a decrease from 32.8% of net sales for the second quarter of 2023. Gross profit decreased $20,731,000 or 88%, to $2,832,000 for the three months ended March 31, 2024, from $23,563,000 in the comparable period in fiscal 2023. Gross profit margin was negatively affected by unabsorbed overhead in our manufacturing facilities due to lower levels of demand. The Company’s gross profit was also negatively impacted by an increase in inventory reserves of $4,624,000 during the second quarter of fiscal 2024. Inventory reserves are primarily due to excess inventory due to the lull in demand while customers draw down their existing products previously purchased during the period of long lead time supply chain created by the pandemic. The Company expects to operate at these gross profit percentage levels for several quarters with improving margins realized as revenue levels increase, and ongoing cost reduction measures are realized.

Previous wording

Loss from operations for the quarter ended December 31, 2023, was $8,162,000 compared to income from operations of $17,890,000 for the comparable quarter of fiscal 2023, a decrease of approximately 146%. The decrease is the result of decreased net sales and gross profit margin.

Current wording

Loss from operations for the quarter ended March 31, 2024, was $9,741,000 compared to income from operations of $12,055,000 for the comparable quarter of fiscal 2023, a decrease of approximately 181%. The decrease is the result of decreased net sales and gross profit margin as explained above and increased selling, general and administrative expenses.

Previous wording

Net investment income for the quarter ended December 31, 2023, was $2,069,000 compared to $303,000 for the comparable quarter for fiscal 2023. The increase in interest income is due to a higher average investments balance and higher interest rates earned. The higher investments balance is a result of the Company’s capital raise of approximately $130,000,000 completed in the first fiscal quarter of 2023.

Current wording

Net investment income for the quarter ended March 31, 2024, was $1,849,000 compared to $1,395,000 for the comparable quarter for fiscal 2023. The increase in interest income is due to a higher average investments balance and higher interest rates earned. The higher investments balance is a result of the Company’s capital raise of approximately $130,000,000 completed late in the first fiscal quarter of 2023.

Previous wording

We recorded an income tax benefit of $951,000 and an income tax expense of $3,695,000 for the three months ended December 31, 2023, and 2022, respectively. We record our quarterly provision for income taxes based on our estimated annual effective tax rate for the year. The decrease in tax expense of $4,646,000 in the first quarter of fiscal 2024 from the first quarter of fiscal 2023 is primarily due to decreased income from operations. The income tax expense rate for the first quarter of fiscal 2024 decreased to 15.3% from 20.6% recorded in the first quarter of fiscal 2023 due to decreased pretax book income and increased permanent nondeductible items and discrete events during the quarter, including excess tax shortfall from vesting of restricted stock, and research and development credits.

Current wording

The Company recorded an income tax benefit of $2,083,000 and an income tax expense of $2,974,000 for the three months ended March 31, 2024, and 2023, respectively. We record our quarterly provision for income taxes based on our estimated annual effective tax rate for the year. The decrease in tax expense of $5,057,000 in the second quarter of fiscal 2024 from the second quarter of fiscal 2023 is primarily due to decreased income from operations. The income tax expense rate for the second quarter of fiscal 2024 increased to 26.1% from 22.3% recorded in the second quarter of fiscal 2023 due to decreased pretax book income and discrete events during the quarter, including excess tax shortfall from vesting of restricted stock.

Previous wording

The Company’s net loss for the three months ended December 31, 2023, was $5,268,000, or $0.35 per basic and diluted share. The Company’s net income for the three months ended December 31, 2022, was $14,255,000, or $1.01 per basic share or $1.00 per diluted share. The decrease in basic and diluted earnings per share for the three months ended December 31, 2023, as compared to December 31, 2022, was due to lower net income, partially offset by the higher number of diluted shares for the first quarter of fiscal 2024 of 15,212,945 as compared to 14,284,847 for the first quarter of fiscal 2023.

Current wording

The Company’s net loss for the three months ended March 31, 2024, was $5,911,000, or $0.40 per basic and diluted share. The Company’s net income for the three months ended March 31, 2023, was $10,364,000, or $0.67 per basic and diluted share. The decrease in basic and diluted earnings per share for the three months ended March 31, 2024, as compared to March 31, 2023, was due to lower net income.

Previous wording

Interest expense for the quarter ended December 31, 2023, was $126,000, compared to $243,000 for the comparable period of fiscal 2023. The decrease was due to repayment of the Company’s line of credit which was drawn on for the acquisition of Nestor Cables in the prior period, following the Company’s secondary offering.

Current wording

Interest expense for the six months ended March 31, 2024, was $228,000 compared to $356,000 for the comparable quarter of fiscal 2024. The decrease was due to repayment of the Company’s line of credit in December 2022, which had been previously drawn on for the acquisition of Nestor Cables, following the Company’s secondary offering completed in December 2023.

Previous wording

The following table provides net sales and net income for the Clearfield segment for the three months ended:

Current wording

The following table provides net sales and net income for the Clearfield segment for the three and six months ended:

Previous wording

Net sales in the Clearfield segment decreased 64%, or $50,254,000, for the quarter ended December 31, 2023, as compared to the quarter ended December 31, 2022, resulting from decreased sales to its Community Broadband, MSO/Cable TV, and Large Regional customers as these customers work to digest inventory that was purchased previously.

Current wording

Net sales in the Clearfield segment decreased 54%, or $32,851,000, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. Net sales in the Clearfield segment decreased 60%, or $83,106,000, for the six months ended March 31, 2024 as compared to the six months ended March 31, 2023, resulting from decreased sales to its Community Broadband, MSO/Cable TV, and Large Regional customers as these customers work to digest inventory that was purchased previously during the period of long lead time supply chain created by the pandemic.

Previous wording

Net income in the Clearfield segment for the quarter ended December 31, 2023, decreased 123%, or $18,101,000, as compared to the quarter ended December 31, 2022, driven by the changes in sales outlined above, as well as lower gross profit margin which was negatively affected by the buildup in capacity that was not utilized.

Current wording

Net income (loss) in the Clearfield segment for the three months ended March 31, 2024, decreased 148%, or $15,370,000, as compared to the three months ended March 31, 2023. Net income (loss) in the Clearfield segment for the six months ended March 31, 2024, decreased 133%, or $33,382,000, as compared to the six months ended March 31, 2023, driven by the changes in sales outlined above, as well as lower gross profit margin which was negatively affected by the buildup in capacity that was not utilized and increased reserves for excess inventory.

Previous wording

The following table provides net sales and net income for the Nestor Cables segment for the three months:

Current wording

The following table provides net sales and net income for the Nestor Cables segment for the three and six months ended:

Previous wording

Net sales in the Nestor Cables segment decreased 19%, or $1,458,000, for the quarter ended December 31, 2023, as compared to the quarter ended December 31, 2022, excluding sales to the Clearfield Segment.

Current wording

Net sales in the Nestor Cables segment decreased 18%, or $2,048,000, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, excluding sales to the Clearfield Segment. Net sales in the Nestor Cables segment decreased 19%, or $3,506,000, for the six months ended March 31, 2024, as compared to the six months ended March 31, 2023, excluding sales to the Clearfield Segment.

Previous wording

Net loss in the Nestor Cables segment for the quarter ended December 31, 2023, increased 537%, or $1,665,000, as compared to the quarter ended December 31, 2022.

Current wording

Net loss in the Nestor Cables segment for the three months ended March 31, 2024, increased 2,919%, or $905,000, as compared to the three months ended March 31, 2023. Net loss in the Nestor Cables segment for the six months ended March 31, 2024, increased 489%, or $2,416,000, as compared to the six months ended March 31, 2023.

Previous wording

As of December 31, 2023, our principal source of liquidity was our cash, cash equivalents, and short-term investments. Those sources total $162,836,000 as of December 31, 2023, compared to $168,113,000 as of September 30, 2023. Additionally, we have a line of credit for $40 million that has no outstanding borrowing as of December 31, 2023. Our excess cash is invested mainly in certificates of deposit backed by the FDIC, U.S. Treasury securities, and money market funds. Investments considered long-term were $6,505,000 as of December 31, 2023, compared to $6,343,000 as of September 30, 2023. We believe the combined balances of short-term cash and investments, long-term investments, along with our line of credit provide a more accurate indication of our available liquidity. As of December 31, 2023, our cash, cash equivalents, and short-term and long-term investments totaled $169,342,000, compared to $174,456,000 as of September 30, 2023.

Current wording

As of March 31, 2024, our principal source of liquidity was our cash, cash equivalents, and short-term investments. These sources total $142,907,000 as of March 31, 2024, compared to $168,113,000 as of September 30, 2023. Additionally, we have a line of credit for $40 million that has no outstanding borrowing as of March 31, 2024. Our excess cash is invested mainly in certificates of deposit backed by the FDIC, U.S. Treasury securities, and money market funds. Investments considered long-term were $6,523,000 as of March 31, 2024, compared to $6,343,000 as of September 30, 2023. We believe the combined balances of short-term cash and investments, long-term investments, along with our line of credit provide a more accurate indication of our available liquidity. As March 31, 2024, our cash, cash equivalents, and short-term and long-term investments totaled $149,430,000, compared to $174,456,000 as of September 30, 2023.

Previous wording

Net cash provided by operating activities totaled $7,827,000 for the three months ended December 31, 2023. This consisted of a net loss of $5,268,000, non-cash expenses for depreciation and amortization of $1,695,000, stock-based compensation of $1,271,000 and amortization of discounts on investments of $1,160,000, in addition to changes in operating assets and liabilities providing and using cash. The primary change in operating assets and liabilities providing cash was a decrease in accounts receivable of $11,750,000, and a decrease in inventory of $4,169,000. The decrease in accounts receivable is due to the decrease in sales volume in the first quarter of fiscal 2024. Days sales outstanding, which measures how quickly receivables are collected, decreased 6 days to 47 days as of December 31, 2023, compared to 53 days from September 30, 2023. The decrease in inventory is due to decreased inventory purchases in the first quarter for fiscal 2024 as the Company utilizes inventory on hand to fulfill customer orders and achieve lower stocking levels to support the decreased sales order backlog, as well as higher excess inventory reserves. The primary change in operating assets and liabilities using cash was a decrease in accounts payable and accrued expenses of $5,081,000, due to the timing of payments to vendors and lower inventory purchases in the first quarter for fiscal 2024.

Current wording

Net cash provided by operating activities totaled $4,597,000 for the six months ended March 31, 2024. This consisted of a net loss of $11,179,000, non-cash expenses for depreciation and amortization of $3,572,000, stock-based compensation of $2,284,000 and amortization of discounts on investments of $2,196,000, in addition to changes in operating assets and liabilities providing and using cash. The primary change in operating assets and liabilities providing cash was a decrease in inventory of $14,414,000 and a decrease in accounts receivable of $6,600,000. The decrease in inventory is due to decreased inventory purchases during the six months ending March 31, 2024 as the Company utilizes inventory on hand to fulfill customer orders and achieve lower stocking levels to support the decreased sales order backlog, as well as higher excess inventory reserves. The decrease in accounts receivable is due to the decrease in sales volume during the second quarter of fiscal 2024. Days sales outstanding, which measures how quickly receivables are collected, increased 2 days to 55 days as of March 31, 2024, compared to 53 days from September 30, 2023. The primary change in operating assets and liabilities using cash was a decrease in accounts payable and accrued expenses of $2,752,000 and an increase in other assets of $5,591,000. The accounts payable and accrued expenses decreased due to the timing of payments to vendors and lower inventory purchases during the six months ending March 31, 2024. Other assets increased due to increases in prepaid taxes and prepaid expenses.

Previous wording

Net cash provided by operating activities totaled $1,103,000 for the three months ended December 31, 2022. This was primarily due to net income of $14,255,000, non-cash expenses for depreciation and amortization of $1,353,000, and stock-based compensation of $660,000 in addition to changes in operating assets and liabilities providing and using cash. The primary change in operating assets and liabilities using cash was a decrease in accounts payable and accrued expenses of $7,637,000 and an increase in inventory of $6,505,000. The decrease in accounts payable and accrued expenses is due to the timing of payments to vendors. The Company increased stocking levels of inventory during the quarter ending December 31, 2022, to support the Company’s sales order backlog, as well as provide for safety stock for anticipated demand considering current long lead times for components and transportation within the global supply chain. Days sales outstanding, which measures how quickly receivables are collected, increased 7 days to 59 days as of December 31, 2022, compared to 52 days from September 30, 2022.

Current wording

Net cash provided by operating activities totaled $10,141,000 for the six months ended March 31, 2023. This was primarily due to net income of $24,619,000, non-cash expenses for depreciation and amortization of $2,822,000, stock-based compensation of $1,444,000, and non-cash income related to amortization of discounts on investments of $1,139,000, in addition to changes in operating assets and liabilities providing and using cash. The primary change in operating assets and liabilities using cash was a decrease in accounts payable and accrued expenses of $14,273,000 and an increase in inventory of $17,243,000. The decrease in accounts payable and accrued expenses is due to the timing of payments to vendors. The Company increased stocking levels of inventory during the quarter ending March 31, 2023 to support previously anticipated demand. Days sales outstanding, which measures how quickly receivables are collected, decreased 3 days to 49 days as of March 31, 2023, compared to 52 days from September 30, 2022.

Previous wording

We invest our excess cash in money market accounts, U.S. Treasury securities, money market funds, and bank certificates of deposit in denominations across numerous banks. We believe we obtain a competitive rate of return given the economic climate and relative risk profile of these investments. During the three months ended December 31, 2023, we received proceeds from the maturity of investment securities of $51,068,000 and used cash to purchase $47,748,000 of investment securities. Purchases of property, plant, and equipment, mainly related to manufacturing equipment and intangible assets, consumed $2,412,000 of cash during the three months ended December 31, 2023.

Current wording

We invest our excess cash in money market accounts, U.S. Treasury securities, money market funds, and bank certificates of deposit in denominations across numerous banks. We believe we obtain a competitive rate of return given the economic climate and relative risk profile of these investments. During the six months ended March 31, 2024, we received proceeds from the maturity of investment securities of $53,293,000 and used cash to purchase $47,748,000 of investment securities. Purchases of property, plant, and equipment, mainly related to manufacturing equipment and intangible assets, mainly patent related, consumed $4,389,000 of cash during the six months ended March 31, 2024.

Previous wording

During the three months ended December 31, 2022, we used cash to purchase $98,881,000 of investment securities. Purchases of property, plant and equipment, mainly related to manufacturing equipment and intangible assets, consumed $2,213,000 of cash during the three months ended December 31, 2022.

Current wording

During the six months ended March 31, 2023, we received proceeds from maturities of investments of $100,743,000 and used cash to purchase $99,126,000 of investment securities. Purchases of property, plant and equipment, mainly related to manufacturing equipment and intangible assets, mainly patent related, consumed $4,798,000 of cash during the six months ended March 31, 2023.

Previous wording

For the three months ended December 31, 2023, we used cash to repurchase $12,185,000 of our common stock on the open market under our stock repurchase program. We received $250,000 from employees’ participation and purchase of stock through our ESPP and used $236,000 for payment of withholding taxes for vesting of restricted stock grants.

Current wording

For the six months ended March 31, 2024, we used cash to repurchase $27,814,000 of our common stock on the open market under our stock repurchase program. We received $250,000 from employees’ participation and purchase of stock through our ESPP, used $240,000 for payment of withholding taxes for vesting of restricted stock grants, and used $9,000 related to share withholding for the exercise price and taxes associated with the issuance of common stock upon cashless exercises of stock options

Previous wording

For the three months ended December 31, 2022, we received $130,262,000 of net proceeds through the issuance of common stock. We used $16,700,000 to pay down the principal on our line of credit, which was originally drawn in the fourth quarter of fiscal 2022 to fund the acquisition of Nestor Cables. We received $299,000 from employees’ participation and purchase of stock through our ESPP, we received $954,000 related to issuance of stock as payment for incentive compensation previously earned, we used $342,000 related to share withholding for exercise and taxes associated with the issuance of common stock upon cashless exercise of stock options and used $954,000 for payment of withholding taxes for stock grants. We did not repurchase common stock under our share repurchase program in the three months ended December 31, 2022.

Current wording

For the six months ended March 31, 2023, we received $130,262,000 of net proceeds through the issuance of common stock. We used $16,700,000 to pay down the principal on our line of credit, which was originally drawn in the fourth quarter of fiscal 2022 to fund the acquisition of Nestor Cables. We received $299,000 from employees’ participation and purchase of stock through our ESPP, we received $954,000 related to the issuance of stock as payment for incentive compensation previously earned, we used $471,000 related to share withholding for the exercise price and taxes associated with the issuance of common stock upon cashless exercises of stock options and used $954,000 for payment of withholding taxes for stock grants. We did not repurchase common stock under our share repurchase program in the six months ended March 31, 2023.