The following discussion and analysis of the Company’s financial condition and results of operations as of and for the three and nine months ended June 30, 2026, and 2025 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, 2025. OVERVIEW General Clearfield designs, manufactures, and distributes fiber optic management, protection, and delivery products for communications networks. Its “fiber to the anywhere” platform serves the unique requirements of leading broadband service providers in the United States, which include Community Broadband, Large Regional Service Providers, National Carriers, and Multiple System Operators (“MSOs” or “cable TV”), while also serving the broadband needs of the International markets, primarily in Canada, the Caribbean, Central/South America and Mexico. These customers are collectively included in the category of Broadband Service Providers. The Company’s sales channels include direct to customer and through distribution partners. The Company’s products are sold by its sales employees and independent sales representatives. 23 Segment Information We are engaged in global operations. On November 11, 2025, the Company completed the sale of its Nestor Cables business, which was previously reported as the Nestor Cables Operating Segment. In connection with this sale, the historical results of the Nestor Cables business and certain assets and liabilities of the Nestor Cables business are reported in our consolidated financial statements as discontinued operations. Following the sale of the Nestor Cables business, the continuing operations of the Company comprise one operating segment and one reportable segment. Unless otherwise stated below, all references in results of operations are to the Company’s continuing operations and not the discontinued operations. Clearfield is focused on providing fiber management, fiber protection, and fiber delivery products that accelerate the turn-up of fiber-based networks in residential homes, businesses, and network infrastructure in the wireline and wireless access network. We offer a broad portfolio of fiber products that allow service providers to build fiber networks faster, meet service delivery demands, and align build costs with take rates. Clearfield’s products allow its customers to connect more homes in their Fiber to the Home (“FTTH”) builds by using fewer resources in less time. Our products speed up the time to revenue for our service provider customers in Multiple Dwelling Units (“MDUs”) and Multiple Tenant Units (“MTUs”) by reducing the amount of labor and materials needed to provide gigabit broadband service. Our products help make our customers’ business services more profitable through faster building access, easier reconfiguration, and quicker services turn-up. Finally, Clearfield is removing barriers to wireless 4G/5G deployments in backhaul from the tower to the cloud and fiber fronthaul from the tower to the antenna at the cell site through better fiber management, test access, and fiber protection. Substantially all of the final build and assembly is completed at Clearfield’s plants in Brooklyn Park, Minnesota and Tijuana, Mexico, with manufacturing support from a network of domestic and global manufacturing partners. Clearfield specializes in producing these products on both a quick-turn and scheduled delivery basis. RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 2026 VS. THREE MONTHS ENDED JUNE 30, 2025 Net sales for the three months ended June 30, 2026, all of which were to Broadband Service Providers, were $43,864,000, an increase of approximately 13%, or $5,109,000 from net sales of $38,755,000 for the three months ended June 30, 2025. The Company recorded $999,000 in international sales for the three months ended June 30, 2026 versus $1,341,000 for the three months ended June 30, 2025. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. International sales represented 2% and 3% of total net sales for the three months ended June 30, 2026 and 2025, respectively. Net sales to Legacy customers were $0 in the three months ended June 30, 2026 versus $570,000 in the three months ended June 30, 2025. The increase in net sales for the three months ended June 30, 2026, of $5,109,000 compared to the three months ended June 30, 2025, was primarily driven by increased sales to Large Regional Service Provider customers of $4,025,000, up 58%, Community Broadband customers of $2,379,000, up 13%, and National Carrier customers of $1,157,000, up 54%, partially offset by decreased sales to MSO customers of $1,540,000, down 17%, Legacy customers of $570,000, down 100%, and International customers of $343,000, down 26%. The increase in sales in the Large Regional, Community Broadband, and National Carrier customer markets for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, is due to increased demand in the quarter to customers in these segments. The decrease in sales to Legacy customers is due to the divestiture of the Company’s former build-to-print copper cable assemblies business in September 2025. 24 Order backlog as of June 30, 2026, was $20,988,000, a decrease of 34% compared to $31,647,000 as of March 31, 2026, and a decrease of $9,747,000, or 32%, from June 30, 2025. The decrease in backlog is due to slower demand during the quarter, as well as the exclusion of the remaining portion of a previously booked customer order in the amount of $4,624,000 which we no longer believe will be fulfilled. Cost of sales for the three months ended June 30, 2026, was $29,920,000, an increase of $4,841,000, or 19%, from $25,079,000, for the three months ended June 30, 2025. Gross profit percent was 31.8% of net sales for the three months ended June 30, 2026, a decrease from 35.3% of net sales for the three months ended June 30, 2025. Gross profit increased $268,000, or 2%, to $13,944,000 for the three months ended June 30, 2026, from $13,676,000 for the three months ended June 30, 2025. Gross margin as a percentage of net sales decreased compared to the prior period, driven by product mix, as well as higher excess and obsolete inventory charges specifically driven by $2,560,000 in charges related to the remaining finished good portion of a customer order which we no longer believe will be fulfilled. This was offset by recoveries on sales of previously reserved inventory of $1,407,000 as well as $655,000 in tariff refunds related to previously paid tariffs that have been refunded following a change in tariff regulations. Selling, general and administrative expenses for the three months ended June 30, 2026, were $11,373,000 in comparison to $12,149,000 for the three months ended June 30, 2025, a decrease of $776,000, or 6%. The decrease is due to a reduction of $1,710,000 of performance-based compensation accruals during the quarter, reflecting lower projected expense under the Company's incentive compensation programs. This was partially offset by higher wages and benefit related expense of $755,000. Income from continuing operations for the three months ended June 30, 2026, was $2,571,000 compared to income from continuing operations of $1,527,000 for the three months ended June 30, 2025, an increase of approximately 68%. The increase in income from continuing operations is the result of increased gross profit and decreased selling, general and administrative expenses as explained above. Net investment income for the three months ended June 30, 2026, was $1,363,000 compared to $1,588,000 for the three months ended June 30, 2025. The decrease in net investment income is due to decreased interest income driven by lower interest rates earned on investments during the quarter. The Company recorded an income tax expense of $934,000 and $787,000 for the three months ended June 30, 2026, and 2025, respectively. We record our quarterly provision for income taxes based on our estimated annual effective tax rate for the year. The income tax rate for the three months ended June 30, 2026, was 23.7% compared to 25.3% for the three months ended June 30, 2025. The income tax rate for the three months ended June 30, 2026, approximated the Company's estimated annual effective tax rate, reflecting state income taxes and the nondeductibility of certain executive compensation under Section 162(m) of the Internal Revenue Code being partially offset by the impact of research and development tax credits. The income tax rate for the three months ended June 30, 2025, was higher than the statutory rate primarily due to the nondeductibility of certain executive compensation under Section 162(m) of the Internal Revenue Code and discrete tax items, including excess tax shortfall from the vesting of restricted stock. The Company’s net income from continuing operations for the three months ended June 30, 2026, was $3,000,000, or $0.22 per basic and diluted share compared to net income from continuing operations for the three months ended June 30, 2025, of $2,328,000, or $0.16 per basic and diluted share. The Company’s net loss from discontinued operations for the three months ended June 30, 2026, was $0, or $0.00 per basic and diluted share compared to net loss from discontinued operations for the three months ended June 30, 2025, of $722,000, or $(0.05) per basic and diluted share. The decrease in net loss from discontinued operations is due to the sale of the Nestor Cables business in the first quarter of fiscal 2026. NINE MONTHS ENDED JUNE 30, 2026 VS. NINE MONTHS ENDED JUNE 30, 2025 Net sales for the nine months ended June 30, 2026, all of which were to Broadband Service Providers, were $112,596,000, an increase of approximately 3%, or $3,522,000, from net sales of $109,074,000 for the nine months ended June 30, 2025. The Company recorded $3,435,000 in international sales for the nine months ended June 30, 2026 versus $2,484,000 for the nine months ended June 30, 2025. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. Accordingly, international sales represented 3% and 2% of total net sales for the nine months ended June 30, 2026 and June 30, 2025, respectively. Net sales to Legacy customers were $0 in the nine months ended June 30, 2026 versus $1,769,000 in the nine months ended June 30, 2025. 25 The increase in net sales for the nine months ended June 30, 2026, of $3,522,000 compared to the nine months ended June 30, 2025, was primarily driven by increased sales to Community Broadband customers of $4,034,000, up 8%, Large Regional Service Provider customers of $3,361,000, up 13%, International customers of $950,000, up 38%, and National Carrier customers of $728,000, up 10%, partially offset by decreased sales to MSO customers of $3,783,000, down 17%, and Legacy customers of $1,769,000, down 100%. The increase in sales to Community Broadband, Large Regional, International, and National Carrier customer markets for the nine months ended June 30, 2026, as compared to the nine months ended June 30, 2025, was due to increased demand to customers in these segments. In addition, the decrease in sales to Legacy customers is due to the divestiture of the Company’s former build-to-print copper cable assemblies business in September 2025. Cost of sales for the nine months ended June 30, 2026, was $76,103,000, an increase of $3,341,000, or 5%, from $72,762,000 for the nine months ended June 30, 2025. Gross profit percent decreased slightly at 32.4% of net sales for the nine months ended June 30, 2026, when compared to 33.3% of net sales for the nine months ended June 30, 2025. Gross profit increased $181,000, or 0.5%, to $36,493,000 for the nine months ended June 30, 2026, from $36,312,000 for the nine months ended June 30, 2025. Gross margin as a percentage of net sales decreased compared to the prior period, driven by product mix, as well as higher excess and obsolete inventory charges specifically driven by $2,560,000 in charges related to the remaining finished good portion of a customer order which we no longer believe will be fulfilled. This was offset by recoveries on sales of previously reserved inventory of $2,781,000 as well as $1,002,000 in tariff refunds related to previously paid tariffs that have been refunded following a change in tariff regulations. Selling, general and administrative expenses increased $2,667,000, or 8%, to $37,815,000 for the nine months ended June 30, 2026, from $35,148,000 for the nine months ended June 30, 2025. The increase is due to higher wages and benefit related expense of $2,151,000, increased IT maintenance and services of $558,000, increased employee travel related expense of $359,000, and increased stock-based compensation of $227,000, partially offset by lower performance-based compensation accruals of $1,204,000. The lower performance-based compensation accruals reflect lower projected expense under the Company's incentive compensation programs. Loss from continuing operations for the nine months ended June 30, 2026 was $1,322,000 compared to income from continuing operations of $1,164,000 for the nine months ended June 30, 2025, a decrease of approximately 214%. The decrease is the result of decreased gross profit margin and increased selling, general and administrative expenses as explained above. Net investment income for the nine months ended June 30, 2026, was $4,274,000 compared to $4,920,000 for the nine months ended June 30, 2025. The decrease in interest income is due to lower interest rates on investments during the nine months ended June 30, 2026. The Company recorded an income tax expense of $757,000 and $1,562, 000 for the nine months ended June 30, 2026, and 2025, 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 $805,000 for the nine months ended June 30, 2026, compared to nine months ended June 30, 2025, is primarily due to lower pre-tax income from continuing operations. The income tax rate for the nine months ended June 30, 2026, was 25.6% compared to 25.7% for the nine months ended June 30, 2025. The income tax rate for the nine months ended June 30, 2026, was higher than the statutory rate primarily due to state income taxes and the nondeductibility of certain executive compensation under Section 162(m) of the Internal Revenue Code, both of which increased the effective tax rate, partially offset by the impact of research and development tax credits, which decreased the income tax expense recognized during the period. The income tax rate for the nine months ended June 30, 2025, was higher than the statutory rate primarily due to discrete tax items, including excess tax shortfall from the vesting of restricted stock. The Company’s net income from continuing operations for the nine months ended June 30, 2026, was $2,195,000 or $0.16 per basic share and diluted share. The Company’s net income from continuing operations for the nine months ended June 30, 2025, was $4,522,000, or $0.32 per basic share and diluted share. The lower basic and diluted income per share for the nine months ended June 30, 2026, as compared to the nine months ended June 30, 2025, was due to decreased gross profit margin, decreased investment income, and increased selling, general and administrative expenses as detailed above. 26 The Company’s net loss from discontinued operations for the nine months ended June 30, 2026, was $337,000, or $(0.02) per basic and diluted share compared to net loss from discontinued operations for the nine months ended June 30, 2025, of $3,494,000, or $(0.25) per basic and diluted share. The decrease in net loss from discontinued operations is due to the sale of the Nestor Cables business in the first quarter of fiscal 2026. Liquidity and Capital Resources As of June 30, 2026, our principal source of liquidity was our cash, cash equivalents, short-term investments and long-term investments. These sources total $155,119,000 as of June 30, 2026, compared to $165,799,000 as of September 30, 2025. Additionally, we have a line of credit for $40 million that has no outstanding borrowing as of June 30, 2026. The line of credit is secured by certain of the Company’s assets and matures November 21, 2026. We are in compliance with the debt covenants related to the line of credit. Our excess cash is invested mainly in CDs backed by the FDIC, Treasuries, and money market funds. We believe the combined balances of short-term cash and investments, along with long-term investments and available bank lines of credit, provide a more accurate indication of our available liquidity. We believe our existing cash equivalents, short-term investments, and line of credit facility along with cash flow from operations will be sufficient to meet our working capital and investment requirements beyond the next 12 months. The Company intends on utilizing its available cash and assets primarily for its continued organic growth, potential future strategic transactions, and the Company’s share repurchase program. Operating Activities Net cash provided by operating activities totaled $7,345,000 for the nine months ended June 30, 2026. This consisted of net income from continuing operations of $2,195,000, non-cash expenses for depreciation and amortization of $4,743,000, stock-based compensation of $3,616,000, amortization of premium and discounts on investments of $334,000, and decreased deferred income taxes of $398,000, in addition to changes in operating assets and liabilities providing and using cash. Changes in operating assets and liabilities providing cash include a decrease in inventories of $8,640,000. The decrease in inventory is due to the Company utilizing existing inventory on hand to fulfill customer orders to support sales demand. Changes in operating assets and liabilities using cash include an increase in accounts receivable of $4,064,000, other assets of $2,910,000, and a decrease in accounts payable and accrued expenses of $4,939,000, due to timing of payments and the payment of fiscal year 2025 incentive compensation accruals during the nine months ended June 30, 2026. The increase in accounts receivable is due to the timing of sales, which were concentrated near the end of the reporting period during the nine months ended June 30, 2026. The increase in other assets is due to income tax payments and increase in prepaid expenses. Days sales outstanding, which measures how quickly receivables are collected, increased seven days from 37 to 44 from June 30, 2025 to June 30, 2026. Net cash provided by operating activities totaled $22,423,000 for the nine months ended June 30, 2025. This consisted of net income from continuing operations of $4,522,000, non-cash expenses for depreciation and amortization of $4,763,000, stock-based compensation of $3,417,000 and amortization of premium and discounts on investments of $1,556,000, in addition to changes in operating assets and liabilities providing and using cash. The change in operating assets and liabilities providing cash include a decrease in inventory of $15,070,000 and an increase in accounts payable and accrued expenses of $2,493,000 due to timing of payments. The decrease in inventory was due to decreased inventory purchases during the nine months ending June 30, 2025, as the Company utilized inventory on hand to fulfill customer orders and achieve lower stocking levels. The change in operating assets and liabilities using cash was due to an increase in accounts receivable of $2,501,000 and other assets of $3,785,000. The increase in accounts receivable is due to the timing of sales, which were concentrated near the end of the reporting period during the nine months ended June 30, 2025. The increase in other assets is due to the recognition of a deferred tax asset and increase in prepaid expenses. Days sales outstanding decreased one day from 38 to 37 from June 30, 2024 to June 30, 2025. Net cash provided by operating activities of discontinued operations for the nine months ended June 30, 2026, totaled $1,380,000. Cash provided by operations included net loss from discontinued operations of $337,000 and non-cash expenses for depreciation and amortization of $136,000, in addition to changes in operating assets and liabilities providing cash of $1,580,000. 27 Net cash used in operating activities of discontinued operations for the nine months ended June 30, 2025, totaled $4,307,000. Cash used in operations included net loss from discontinued operations of $3,494,000, non-cash income and expenses for depreciation and amortization of $1,003,000, deferred tax assets of $157,000, and stock-based compensation of $328,000, in addition to changes in operating assets and liabilities using cash of $1,987,000. Investing Activities We invest our excess cash in money market accounts, Treasuries, money market funds, and bank CDs. We believe we obtain a competitive rate of return given the economic climate and relative risk profile of these investments. During the nine months ended June 30, 2026, we received proceeds from the maturity of investment securities of $79,710,000 and used cash to purchase $70,241,000 of investment securities. Purchases of property, plant, and equipment, mainly related to manufacturing equipment and intangible assets, consumed $2,917,000 of cash during the nine months ended June 30, 2026. Cash used of $1,012,000 during the nine months ended June 30, 2026, was attributable to the disposition of the Nestor Cables business and reflects cash paid for transaction-related costs directly associated with the sale. During the nine months ended June 30, 2025, we received proceeds from the maturity of investment securities of $95,976,000 and used cash to purchase $78,697,000 of investment securities. Purchases of property, plant, and equipment, mainly related to manufacturing equipment and intangible assets, consumed $3,529,000 of cash during the nine months ended June 30, 2025. Net cash for investing activities of discontinued operations was zero for the nine months ended June 30, 2026. Net cash used in investing activities of discontinued operations for the nine months ended June 30, 2025, totaled $1,692,000, driven by cash used to purchase fixed and intangible assets. Financing Activities For the nine months ended June 30, 2026, we used cash to repurchase $13,494,000 of our common stock on the open market under our stock repurchase program, which includes U.S. Federal excise taxes. We received $513,000 from employees’ participation and purchase of stock through our ESPP and used $1,019,000 for payment of withholding taxes for vesting of restricted stock grants. The Company used $142,000 related to payment of taxes associated with the issuance of common stock upon cashless exercise of stock options. For the nine months ended June 30, 2025, we used cash to repurchase $16,665,000 of our common stock on the open market under our stock repurchase program, which includes U.S. Federal excise taxes. We received $595,000 from employees’ participation and purchase of stock through our ESPP and used $494,000 for payment of withholding taxes for vesting of restricted stock grants. The Company used $133,000 related to payment of taxes associated with the issuance of common stock upon cashless exercise of stock options. Net cash used in financing activities of discontinued operations for the nine months ended June 30, 2026, totaled $1,196,000, driven by net borrowings and repayments from the factoring liability held by Nestor Cables. Net cash provided by financing activities of discontinued operations for the nine months ended June 30, 2025, totaled $4,337,000, driven by net borrowings and repayments from the factoring liability held by Nestor Cables. CRITICAL ACCOUNTING ESTIMATES Management utilizes its technical knowledge, cumulative business experience, judgment and other factors in the selection and application of the Company’s accounting estimates. The accounting estimates considered by management to be the most critical to the presentation of the financial statements because they require the most difficult, subjective, and complex judgments include stock-based compensation, impairment of long-lived assets, intangible assets and goodwill, and valuation of inventory. 28 These accounting estimates are described in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the year ended September 30, 2025. Management made no changes to the Company’s critical accounting estimates during the three and nine months ended June 30, 2026. In applying its critical accounting estimates, management reassesses its estimates each reporting period based on available information. Changes in these estimates did not have a significant impact on earnings for the three and nine months ended June 30, 2026. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION 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,” or “continue” or comparable terminology are intended to identify forward-looking statements. Such forward looking statements include, for example, statements about the Company’s future revenue and operating performance, the impact of recent trade policy changes, including new and increased tariffs, retaliatory tariffs, trade disputes, and market and economic reactions to such changes, expected customer ordering patterns and future supply agreements with customers, expectations regarding the impact on our business of M&A activity among our customers, anticipated shipping on backlog and future lead times, future availability of components and materials from the Company’s supply chain, compliance with Build America Buy America (BABA) Act requirements, future availability of labor impacting our customers’ network builds, the impact of the Broadband Equity, Access, and Deployment (BEAD) Program, Rural Digital Opportunity Fund (RDOF) or other government programs on the demand for the Company’s products or timing of customer orders, the Company’s ability to match capacity to meet demand, expansion into new markets and trends in and growth of the FTTx markets, market segments or customer purchases, future goodwill analysis and other statements that are not historical facts. These statements are based upon the Company's current expectations and judgments about future developments in the Company's business. Certain important factors could have a material impact on the Company's performance, including, without limitation: we depend on the availability of sufficient supply of certain materials and global disruptions in the supply chain for these materials could prevent us from meeting customer demand for our products; we rely on single-source suppliers, which could cause delays, increase costs or prevent us from completing customer orders; changes in trade policy in the U.S. and other countries may adversely affect our business and results of operations; inflationary price pressures and uncertain availability of components, raw materials, labor and logistics used by us and our suppliers could negatively impact our profitability; a significant percentage of our sales in the last three fiscal years have been made to a small number of customers, and the loss of these major customers could adversely affect us; further consolidation among our customers may result in the loss of some customers and may reduce sales during the pendency of business combinations and related integration activities; our business is dependent on interdependent management information systems; we may be subject to risks associated with acquisitions, and the risks could adversely affect future operating results; adverse global economic conditions and geopolitical issues could have a negative effect on our business, and results of operations and financial condition; product defects or the failure of our products to meet specifications could cause us to lose customers and sales or to incur unexpected expenses; we are dependent on key personnel; cyber-security incidents, including ransomware, data breaches or computer viruses, could disrupt our business operations, damage our reputation, result in increased expense, and potentially lead to legal proceedings; natural disasters, extreme weather conditions or other catastrophic events could negatively affect our business, financial condition, and operating results; to compete effectively, we must continually improve existing products and introduce new products that achieve market acceptance; our business is dependent upon capital spending by broadband service providers, and any delay, reduction or cancellation in capital spending by broadband service providers could adversely affect our business; if the telecommunications market does not continue to expand, our business may not grow as fast as we expect, which could adversely impact our business, financial condition and operating results; changes in U.S. government funding programs may cause our customers and prospective customers to delay, reduce, or accelerate purchases, leading to unpredictable and irregular purchase cycles; intense competition in our industry may result in price reductions, lower gross profits and loss of market share; our success depends upon adequate protection of our patent and intellectual property rights; we face risks associated with expanding our sales outside of the United States; our operating results may fluctuate significantly from quarter to quarter, which may make budgeting for expenses difficult and may negatively affect the market price of our common stock; our stock price has been volatile historically and may continue to be volatile - the price of our common stock may fluctuate significantly; anti-takeover provisions in our organizational documents, Minnesota law and other agreements could prevent or delay a change in control of our Company; and other factors set forth in Part I, Item IA. “Risk Factors” of Clearfield's Annual Report on Form 10-K for the year ended September 30, 2025, Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, as well as other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update these statements to reflect actual events unless required by law. 29