ADTRAN

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ADTRAN, Inc. Reports Earnings for the First Quarter of 2022 and Declares Quarterly Cash Dividend

May 4, 2022

ADTRAN, Inc., (NASDAQ: ADTN) (“ADTRAN” or the “Company”), today announced financial results for the first quarter of 2022. For the quarter, revenue was $154.5 million. Earnings for the first quarter of 2022 was a net loss of $1.1 million and earnings per share was a loss of $0.02. Non-GAAP net income was $9.9 million and non-GAAP earnings per share was $0.20. Non-GAAP net income and non-GAAP earnings per share exclude stock-based compensation expense, acquisition related expenses, amortizations and adjustments, restructuring expenses, amortization of pension actuarial losses, deferred compensation related adjustments, change in valuation allowance related to our deferred tax assets, and the tax effect of these adjustments to net income (loss). The reconciliations between GAAP net income (loss) and earnings (loss) per share to non-GAAP net income and non-GAAP earnings per share are set forth in the table provided below.

ADTRAN Chairman and Chief Executive Officer Tom Stanton stated, “We continue to experience unprecedented demand for our solutions with revenue up 21% year-over-year. We had another quarter with strong order bookings, paired with high growth in our fiber access, connected home and cloud software solutions. Our fiber access platforms led the way with an impressive 61% year-over-year growth rate. Our continued success with fiber footprint capture, customer diversification, and the portfolio synergies offered by the announced ADVA combination provides an optimistic outlook for continued growth.”

The Company also announced that its Board of Directors declared a cash dividend for the first quarter of 2022. The quarterly cash dividend of $0.09 per common share is to be paid to the Company’s stockholders of record as of the close of business on May 19, 2022. The ex-dividend date is May 18, 2022 and the payment date will be June 2, 2022.

The Company confirmed that it will hold a conference call to discuss its first quarter results on Thursday, May 5, 2022, at 9:30 a.m. Central Time. ADTRAN will webcast this conference call. To listen, simply visit ADTRAN’s Investor Relations site at www.adtran.com/investor approximately ten minutes prior to the start of the call, click on the event “ADTRAN Releases 1st Quarter 2022 Financial Results and Earnings Call”, and click on the Webcast link.

An online replay of the Company’s conference call, as well as the text of the Company's conference call, will be available on the Investor Relations site approximately 24 hours following the call and will remain available for at least 12 months. For more information, visit www.investors.adtran.com or email atinvestor.relations@adtran.com.

About ADTRAN

At ADTRAN, we believe amazing things happen when people connect. From the cloud edge to the subscriber edge, we help communications service providers around the world manage and scale services that connect people, places and things to advance human progress. Whether rural or urban, domestic or international, telco or cable, enterprise or residential—ADTRAN solutions optimize existing technology infrastructures and create new, multi-gigabit platforms that leverage cloud economics, data analytics, machine learning and open ecosystems—the future of global networking. Find more at ADTRAN.com, LinkedIn and Twitter.

This press release contains forward-looking statements, generally identified by the use of words such as “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “may,” “could” and similar expressions, which forward-looking statements reflect management’s best judgment based on factors currently known. However, these statements involve risks and uncertainties, including: (i) risks and uncertainties related to the continued impact of the SARS-CoV-2 coronavirus/COVID-19 global pandemic (including variants of the SARS-CoV-2 coronavirus), including with respect to continued manufacturing and supply chain constraints; (ii) risks and uncertainties related to the anticipated business combination between the Company and ADVA Optical Networking SE (“ADVA”), including the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the contemplated business combination that could reduce anticipated benefits or cause the parties to abandon the transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the business combination agreement; the ability to successfully complete the proposed business combination; regulatory or other limitations imposed as a result of the proposed business combination; the success of the business following the proposed business combination; the ability to successfully integrate the ADTRAN and ADVA businesses; the risk that the parties may not be able to satisfy the conditions to closing of the proposed business combination in a timely manner or at all; risks related to disruption of management time from ongoing business operations due to the proposed business combination; the risk that the publicity surrounding or consummation of the proposed business combination could have adverse effects on the market price of ADTRAN’s common stock or ADVA’s common shares or the ability of ADTRAN and ADVA to retain customers, retain or hire key personnel, maintain relationships with their respective suppliers and customers, and on their operating results and businesses generally; the risk that the successor issuer (“Acorn HoldCo”), may be unable to achieve expected synergies or that it may take longer or be more costly than expected to achieve those synergies; the risk of fluctuations in revenue due to lengthy sales and approval process required by major and other service providers for new products; the risk posed by potential breaches of information systems and cyber-attacks; the risks that ADTRAN, ADVA or the post-combination company may not be able to effectively compete, including through product improvements and development, and (iii) the other risks detailed in the Company’s filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2021. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements included in this press release.

To provide additional transparency, we have disclosed in the tables below non-GAAP operating income, which has been reconciled to operating (loss), and non-GAAP net income and non-GAAP earnings per share - basic and diluted, which have been reconciled to net (loss) income and (loss) earnings per share - basic and diluted, in each case as reported based on Generally Accepted Accounting Principles in the United States (“U.S. GAAP”). These non-GAAP financial measures exclude certain items which management believes are not reflective of the ongoing operating performance of the business. We believe this information is useful in providing period-to-period comparisons of the results of our ongoing operations. Additionally, these measures are used by management in our ongoing planning and annual budgeting processes. We believe the presentation of non-GAAP operating income, non-GAAP net income and non-GAAP earnings per share - basic and diluted, when combined with the U.S. GAAP presentation of operating (loss), net (loss) income and (loss) earnings per share - basic and diluted, is beneficial to the overall understanding of ongoing operating performance of the Company.

These non-GAAP financial measures are not prepared in accordance with, or an alternative for, U.S. GAAP and therefore should not be considered in isolation or as a substitution for analysis of our results as reported under U.S. GAAP. Additionally, our calculation of non-GAAP operating income, non-GAAP net income and non-GAAP earnings per share - basic and diluted, may not be comparable to similar measures calculated by other companies.

 

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

 

March 31,

 

 

December 31,

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$

53,979

 

 

$

56,603

 

Restricted cash

 

52

 

 

 

215

 

Short-term investments

 

429

 

 

 

350

 

Accounts receivable, net

 

150,111

 

 

 

158,742

 

Other receivables

 

17,373

 

 

 

11,228

 

Inventory, net

 

171,121

 

 

 

139,891

 

Prepaid expenses and other current assets

 

9,076

 

 

 

9,296

 

Total Current Assets

 

402,141

 

 

 

376,325

 

Property, plant and equipment, net

 

54,384

 

 

 

55,766

 

Deferred tax assets, net

 

8,939

 

 

 

9,079

 

Goodwill

 

6,968

 

 

 

6,968

 

Intangibles, net

 

18,405

 

 

 

19,293

 

Other non-current assets

 

30,542

 

 

 

30,971

 

Long-term investments

 

67,713

 

 

 

70,615

 

Total Assets

$

589,092

 

 

$

569,017

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts payable

$

127,111

 

 

$

102,489

 

Unearned revenue

 

19,454

 

 

 

17,737

 

Accrued expenses and other liabilities

 

18,736

 

 

 

13,673

 

Accrued wages and benefits

 

13,953

 

 

 

14,900

 

Income tax payable, net

 

3,519

 

 

 

6,560

 

Total Current Liabilities

 

182,773

 

 

 

155,359

 

Non-current unearned revenue

 

9,381

 

 

 

9,271

 

Pension liability

 

10,667

 

 

 

11,402

 

Deferred compensation liability

 

29,691

 

 

 

31,383

 

Other non-current liabilities

 

4,264

 

 

 

4,500

 

Total Liabilities

 

236,776

 

 

 

211,915

 

Stockholders' Equity

 

352,316

 

 

 

357,102

 

Total Liabilities and Stockholders' Equity

$

589,092

 

 

$

569,017

 

 

Condensed Consolidated Statements of (Loss) Income

(Unaudited)

(In thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

 

 

March 31,

 

 

 

 

 

2022

 

 

2021

 

 

 

Revenue

 

 

 

 

 

 

 

 

Network Solutions

 

$

138,374

 

 

$

113,809

 

 

 

Services & Support

 

 

16,144

 

 

 

13,724

 

 

 

Total Revenue

 

 

154,518

 

 

 

127,533

 

 

 

Cost of Revenue

 

 

 

 

 

 

 

 

Network Solutions

 

 

90,653

 

 

 

65,001

 

 

 

Services & Support

 

 

9,549

 

 

 

8,931

 

 

 

Total Cost of Revenue

 

 

100,202

 

 

 

73,932

 

 

 

Gross Profit

 

 

54,316

 

 

 

53,601

 

 

 

Selling, general and administrative expenses

 

 

27,893

 

 

 

27,435

 

 

 

Research and development expenses

 

 

26,491

 

 

 

27,501

 

 

 

Operating Loss

 

 

(68

)

 

 

(1,335

)

 

 

Interest and dividend income

 

 

204

 

 

 

290

 

 

 

Interest expense

 

 

(30

)

 

 

(6

)

 

 

Net investment (loss) gain

 

 

(3,415

)

 

 

996

 

 

 

Other (expense) income, net

 

 

(226

)

 

 

1,999

 

 

 

(Loss) Income Before Income Taxes

 

 

(3,535

)

 

 

1,944

 

 

 

Income tax benefit (expense)

 

 

2,408

 

 

 

(1,048

)

 

 

Net (Loss) Income

 

$

(1,127

)

 

$

896

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – basic

 

 

49,113

 

 

 

48,336

 

 

 

Weighted average shares outstanding – diluted

 

 

49,113

 

 

 

49,004

 

(1

)

 

 

 

 

 

 

 

 

 

 

(Loss) earnings per common share – basic

 

$

(0.02

)

 

$

0.02

 

 

 

(Loss) earnings per common share – diluted

 

$

(0.02

)

 

$

0.02

 

(1

)

 

(1) Assumes exercise of dilutive stock options calculated under the treasury stock method.

 

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net (loss) income

 

$

(1,127

)

 

$

896

 

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

3,661

 

 

 

4,122

 

Loss (gain) on investments

 

 

3,304

 

 

 

(1,161

)

Stock-based compensation expense

 

 

1,893

 

 

 

1,807

 

Other, net

 

 

(62

)

 

 

84

 

Inventory reserves

 

 

(1,754

)

 

 

(2,131

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

8,697

 

 

 

(4,762

)

Other receivables

 

 

(6,205

)

 

 

(1,220

)

Inventory

 

 

(29,685

)

 

 

4,024

 

Prepaid expenses, other current assets and other assets

 

 

(1,170

)

 

 

(417

)

Accounts payable

 

 

24,818

 

 

 

5,629

 

Accrued expenses and other liabilities

 

 

3,803

 

 

 

3,317

 

Income taxes payable, net

 

 

(1,304

)

 

 

497

 

Net cash provided by operating activities

 

 

4,869

 

 

 

10,685

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(1,461

)

 

 

(741

)

Proceeds from sales and maturities of available-for-sale investments

 

 

10,265

 

 

 

10,087

 

Purchases of available-for-sale investments

 

 

(11,504

)

 

 

(11,350

)

Net cash used in investing activities

 

 

(2,700

)

 

 

(2,004

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Tax withholdings related to stock-based compensation settlements

 

 

(54

)

 

 

(113

)

Proceeds from stock option exercises

 

 

568

 

 

 

1,244

 

Dividend payments

 

 

(4,438

)

 

 

(4,361

)

Proceeds from draw on line of credit

 

 

8,000

 

 

 

 

Repayment of line of credit

 

 

(8,000

)

 

 

 

Net cash used in financing activities

 

 

(3,924

)

 

 

(3,230

)

 

 

 

 

 

 

 

Net (decrease) increase in cash, cash equivalents and restricted cash

 

 

(1,755

)

 

 

5,451

 

Effect of exchange rate changes

 

 

(1,032

)

 

 

(1,734

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

56,818

 

 

 

60,179

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash, end of period

 

$

54,031

 

 

$

63,896

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing activities:

 

 

 

 

 

 

Right-of-use assets obtained in exchange for lease obligations

 

$

332

 

 

$

248

 

Purchases of property, plant and equipment included in accounts payable

 

$

392

 

 

$

199

 

 

 

 

 

 

 

 

 

Supplemental Information

Reconciliation of Operating Loss to Non-GAAP Operating Income

(Unaudited)

(Amounts in table in thousands)

 

 

Three Months Ended
March 31,

 

 

 

2022

 

 

2021

 

 

Operating Loss

$

(68

)

 

$

(1,335

)

 

Acquisition-related expenses, amortizations and adjustments

 

2,330

 

(1)

 

1,045

 

(5)

Stock-based compensation expense

 

1,893

 

(2)

 

1,807

 

(6)

Restructuring expenses

 

2

 

(3)

 

301

 

(7)

Deferred compensation adjustments

 

(2,696

)

(4)

 

556

 

(4)

Non-GAAP Operating Income

$

1,461

 

 

$

2,374

 

 

(1) $1.8 million is included in selling, general and administrative expenses and $0.5 million is included in research and development expenses on the condensed consolidated statements of (loss) income.

 

(2) $0.2 million is included in total cost of revenue, $1.1 million is included in selling, general and administrative expenses and $0.6 million is included in research and development expenses on the condensed consolidated statements of (loss) income.

 

(3) Less than $0.1 million is included in selling, general and administrative expenses on the condensed consolidated statements of (loss) income.

 

(4) Includes non-cash change in fair value of equity investments held in the ADTRAN, Inc. Deferred Compensation Program for Employees, all of which is included in selling, general and administrative expenses on the condensed consolidated statement of (loss) income.

 

(5) $0.6 million is included in selling, general and administrative expenses and $0.5 million is included in research and development expenses on the condensed consolidated statements of (loss) income.

 

(6) $0.1 million is included in total cost of revenue, $1.1 million is included in selling, general and administrative expenses and $0.6 million is included in research and development expenses on the condensed consolidated statements of (loss) income.

 

(7) $0.1 million is included in selling, general and administrative expenses and $0.2 million is included in research and development expenses on the condensed consolidated statements of (loss) income.

 

 

Supplemental Information

Reconciliation of Net (Loss) Income and (Loss) Earnings per Common Share – Basic and Diluted

to Non-GAAP Net Income and Non-GAAP Earnings per Common Share – Basic and Diluted

(Unaudited)

(Amounts in table in thousands, except per share amounts)

 

 

 

Three Months Ended
March 31,

 

 

 

 

2022

 

 

2021

 

 

Net (Loss) Income

 

$

(1,127

)

 

$

896

 

 

Acquisition-related expenses, amortizations and adjustments

 

 

2,330

 

 

 

1,045

 

 

Stock-based compensation expense

 

 

1,893

 

 

 

1,807

 

 

Restructuring expenses

 

 

2

 

 

 

301

 

 

Deferred compensation adjustments(1)

 

 

(855

)

 

 

268

 

 

Pension expense(2)

 

 

89

 

 

 

278

 

 

Valuation allowance related to deferred tax assets

 

 

8,079

 

 

 

2,685

 

 

Tax effect of adjustments to net (loss) income

 

 

(505

)

 

 

(952

)

 

Non-GAAP Net Income

 

$

9,906

 

 

$

6,328

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – basic

 

 

49,113

 

 

 

48,336

 

 

Weighted average shares outstanding – diluted

 

 

49,113

 

 

 

49,004

 

 

 

 

 

 

 

 

 

 

(Loss) earnings per common share - basic

 

$

(0.02

)

 

$

0.02

 

 

(Loss) earnings per common share - diluted

 

$

(0.02

)

 

$

0.02

 

 

 

 

 

 

 

 

 

 

Non-GAAP earnings per common share - basic

 

$

0.20

 

 

$

0.13

 

 

Non-GAAP earnings per common share - diluted

 

$

0.20

 

 

$

0.13

 

 

(1) Includes non-cash change in fair value of equity investments held in deferred compensation plans offered to certain employees.

(2) Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countries.

 

Investor Services/Assistance:
Rhonda Lambert/256-963-7450
investor@adtran.com  

Source: ADTRAN, Inc.
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