Hello, this is Cheryl Beranek, President and CEO of Clearfield. Welcome to our Fiscal Third Quarter 2017 FieldReport. Before we begin today, I'd like to provide some important cautions regarding Forward-looking Statements made during today's presentation. Certain important factors could have a material impact on the company's performance, set forth in the slide entitled Important Cautions Regarding Forward Statements as well as the factors set forth in Clearfield's annual report on Form 10-K for the fiscal year ended September 30, 2016. I would also like to add that we'll be answering questions previously submitted by investors and analysts at the conclusion of this FieldReport. The results for this fiscal third quarter are lower than our expectations, driven primarily by volatility within several significant customers. While third quarter revenue is disappointing, we are pleased with the overall progress we're seeing in the business as a whole, especially, at the national carrier level. In a moment, I'll demonstrate the traction we're gaining in our key growth markets, which has been masked by temporary sub-par performance in other markets. However, before I do so, I'd like to spend some time outlining the individual factors that led to our softer results for Q3. Clearfield's traditional business year-to-date has grown 9% compared to the same year-ago period. Much of this underlying business is performing according to plan. However, the market we serve continues to experience a lot of noise. In our last FieldReport, we talked about how this noise manifested itself primarily in the Alternative Carrier, wireless and cable TV markets. Fiber is widely recognized as the highest performing medium within the best long-term ROI metrics. Yet it is also recognized as carrying a significant high first cost of deployment, which can stretch a carrier's CapEx budget. This is especially true with those broadband providers…

Thank you, Cheri. Now looking at our financial results in more detail. Our revenue in the third quarter of fiscal 2017 decreased 9% to $19.6 million from $21.6 million during the same year-ago period. The decrease was driven primarily by lower sales to our Alternative Carrier, wireless and cable TV customers. If you remove the impact from the Alternative Carrier business, our revenue for the quarter is consistent with the same year-ago period. The overall decrease was partially offset by an increase in sales to our domestic and international wireline customers, which was supported by the strong growth in sales to the Tier 1 market. International revenue in fiscal Q3 increased to $1.2 million or 6% of total revenue compared to $1.1 million or 5% of total revenue in the same year-ago period. We continue to see strong international business due to our increased sales efforts and presence in these markets. Gross profit for the fiscal third quarter of 2017 decreased 15% to $7.9 million or 40.5% of total revenue. This compares to $9.3 million or 43.2% of total revenue in the same year-ago period. The decrease in gross profit was primarily due to lower volume. The decrease in gross profit percent was primarily due to a lower percentage of sales associated with optical component solutions, which typically have higher margins. Nevertheless, our gross profit percent for the period was consistent with our 40% to 42% target range for the fiscal year. Earlier this week, we announced that our Mexican operations moved into a new facility, which quadruples our manufacturing capacity in this region, complementing our manufacturing programs in the U.S. and the rest of the world. We are excited about the cost improvements this move offers us, yet we reiterate our 40% to 42% annual target for fiscal 2017,…

Thanks, Dan. Building off my earlier comments, we've experienced a significant amount of traction at the Tier 1 level so far, especially during fiscal 2017. Year-to-date, revenue from this market has tripled to a record $5.2 million from $1.7 million in the same period a year ago, and nearly doubled from $2.7 million in all of fiscal 2016. While it's imprudent to extrapolate these results into future periods, given the stair-step growth pattern our business has historically shown, we believe this early sign of success demonstrates our strategy and execution can, in fact, reap very encouraging results, especially, as we scale this business to operate at an optimal level. As Dan had mentioned, we recently moved into a new manufacturing facility in Mexico, which significantly expands our capacity. Along with pursuing additional certifications and positioning ourselves to respond to larger Tier 1 purchase orders with our best-in-class lead times, cost-reducing our solutions will remain a vital component in ensuring our continued success in this market. However, time and again, we have reiterated that we are not dependent on any single market to drive our future growth. Our core wireline business is continuing to generate solid results with revenue up 11% year-to-date compared to the same year-ago period. Internationally, we've also seen strong results for the fiscal year with revenues up 75% year-to-date. Our international strategy is to continue establishing a reference base with smaller service providers in key, underpenetrated markets outside the U.S., from which, we can expand into larger customers, a strategy not too dissimilar from the one we've successfully employed here in the States. Turning now to some of the developments we see unfolding in the fiber industry. There has been a lot of excitement, speculation and even fear surrounding the arrival of 5G and how it may…

Thank you, Cheri. Our first question is, what does the additional capacity in Mexico mean to Clearfield's overall capacity and can we expect gross margin gains?

Dan, Clearfield's dedicated to establishing a best-cost manufacturing environment as well as the maintenance of our nimble response manufacturing programs. So the Mexican enhancement plus the capacity of Mexico really puts us on par with the U.S. operation. This enhancement is about our long-term strategy, it's not specific to any short-term opportunity as I would think that to be irresponsible. It's really our intention to have the Mexican and U.S. operations provide a primary and the secondary source for all of our parts and that will provide us ultimate flexibility and scalability to each plant. I think in addition to this, to these sites, we also use subcontracting operations, both domestic and globally to augment what we can do ourselves. So our goal with the plant is to allow us to remain competitive in the marketplace. We're reiterating our gross margin goals of 40% to 42% because we think that is really what allows us to be strategic for Tier 1 competitiveness.

Okay. Our next question is what is the status of the patent lawsuit brought by CommScope?

As we stated in the past, Clearfield is defending our product lines as we do not believe that any of our products violate any valid patent owned by CommScope or any other party. Unfortunately, patent litigation is a laborious and lengthy series of steps. And that means there is a lot of time and expense associated with the process. Unfortunately, this could take well over a year to proceed. However, we're confident that we are well represented and we will update our shareholders when there is news to share.

All right. The next question is, how are the certification programs moving forward, and what has been the effect of the NEBS certification?

Certification is meant to allow companies to compete for business on a level playing field. It is does not guarantee the order. But NEBS certification has certainly served as a validation to our quality and our performance capabilities. It served to raise our visibility for that particular product as well as our entire product line as a whole among the national carriers. So shareholders can anticipate additional announcements and certifications in the months ahead. We are dedicated to that process and continue to make significant investments in that regard.

Our last question is, will we be providing guidance for fiscal year '18?

Revenue and profitability guidance is a difficult challenge, especially, when you're pursuing significant opportunities with new customers. Our market is so full of noise, with many of these customers currently going through some strategic issues of their own within their own organizations, mergers, management changes, technology disruptions and the like. We've -- notably, we've experienced some headwinds in fiscal year '17. But Clearfield has always been about building a profitable foundation with the demonstrated ability to scale to big project opportunities when they are presented to us. So our outlook is consistent with some of the analysts' expectations, but probably delayed a year due to the headwinds that we've experienced this past year. I believe shareholders are best served with a revenue projection that is in line with our long-term compounded annual growth rate, which really provides that guidance of about 15% on an annual basis. We, as a management team, and as a Board, are committed to the SG&A investments that are needed to fuel this growth potential. Based upon our run rate growth in our core markets, the prudent estimate on an annual basis with lumpiness quarter-to-quarter would be net income percentage levels consistent with fiscal year '17 with some upside potential as those project opportunities come to fruition. This wraps up today's FieldReport. If your question was not addressed during the Q&A session or you would like to submit another question, please e-mail Clearfield's Investor Relations at CLFD@liolios.com. We will post the most relevant questions and answers in the For Investors section of our website. In closing, we encourage you to review today's earnings release and filings. We welcome any additional questions you may have about our financial performance, operations, products or industry. Thank you, again, for your interest and support. And we look forward to updating you on our progress soon.