ADTRAN

Press Release Details

ADTRAN Holdings, Inc. Reports Earnings for the First Quarter of 2023 and Declares Quarterly Cash Dividend

May 8, 2023

ADTRAN Holdings, Inc., (NASDAQ: ADTN and FSE: QH9) (“ADTRAN Holdings” or the “Company”), today announced its financial results for the first quarter of 2023. For the quarter, revenue was $323.9 million. Net loss inclusive of the non-controlling interest for the first quarter of 2023 was $40.5 million. Net loss attributable to the Company for the first quarter of 2023 was $34.5 million and diluted loss per share attributable to the Company was $0.44. Inclusive of non-controlling interest, non-GAAP net loss was $9.5 million. Non-GAAP net loss attributable to the Company was $5.0 million and non-GAAP diluted loss per share attributable to the Company was $0.06. Non-GAAP net (loss) income and non-GAAP diluted (loss) earnings per share exclude acquisition related expenses, amortizations, adjustments (consisting of intangible amortization of backlog, developed technology, customer relationships, and trade names acquired in connection with business combinations and amortization of inventory fair value adjustments), stock-based compensation expense, amortization of pension actuarial losses, deferred compensation adjustments, asset impairments, integration expenses, restructuring expenses, changes in valuation allowance related to our deferred tax assets, and the tax effect of these adjustments to net (loss) income. The reconciliations between the non-GAAP net (loss) income measures presented herein and the respective equivalent GAAP financial measures are set forth in the tables provided below.

ADTRAN Holdings Chairman and Chief Executive Officer Tom Stanton stated, “As mentioned in our pre-release, the results of the quarter were impacted by slowing sales predominately in our Subscriber Solutions category. Although we expect customer inventory management efforts to continue to affect our near-term results, the underlying demand to upgrade and deploy fiber networks is at an unprecedented high and we are ideally positioned to capitalize on this opportunity.”

The Company also announced that its Board of Directors declared a cash dividend for the first quarter of 2023. 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 23, 2023. The ex-dividend date is May 22, 2023, and the payment date will be June 6, 2023.

The Company confirmed that it will hold a conference call to discuss its first quarter results on Tuesday, May 9, 2023, at 9:30 a.m. Central Time, or 4:30 p.m. Central European Time. ADTRAN Holdings will webcast this conference call. To listen, simply visit our Investor Relations site at investors.adtran.com approximately 10 minutes prior to the start of the call, click on the event “ADTRAN Holdings Releases 1st Quarter 2023 Financial Results and Earnings Call”, and click on the webcast link.

An online replay of the Company’s conference call, as well as the transcript 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 investors.adtran.com or email investor.relations@adtran.com.

Cautionary Note Regarding Forward-Looking Statements

Statements contained in this press release which are not historical facts, such as those relating to strategy, outlook and financial guidance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can also generally be identified by the use of words such as “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “may,” “could” and similar expressions. In addition, ADTRAN Holdings, through its senior management, may from time to time make forward-looking public statements concerning the matters described herein. All such projections and other forward-looking information speak only as of the date hereof, and ADTRAN Holdings undertakes no duty to publicly update or revise such forward-looking information, whether as a result of new information, future events, or otherwise, except to the extent as may be required by law. All such forward-looking statements are necessarily estimates and reflect management’s best judgment based upon current information. Actual events or results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors which could cause actual events or results to differ materially from those estimated by ADTRAN Holdings include, but are not limited to: (i) risks and uncertainties related to manufacturing and supply chain constraints, including as a result of the continued impact of the COVID-19 global pandemic; (ii) risks and uncertainties related to the completed business combination between the Company, ADTRAN and ADVA, including risks related to the ability to successfully integrate the ADTRAN’s and ADVA’s businesses, the disruption of management time from ongoing business operations due to integration efforts following the business combination, and the risk that ADTRAN Holdings may be unable to achieve expected synergies or that it may take longer or be more costly than expected to achieve those synergies; (iii) the risk of fluctuations in revenue, including due to lengthy sales and approval processes required by major and other service providers for new products and changes in customer demand; (iv) the risk posed by potential breaches of information systems and cyber-attacks; (v) the risks that ADTRAN may not be able to effectively compete, including through product improvements and development; and (vi) other risks set forth in ADTRAN Holdings’ public filings made with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2022, as well as its Form 10-Q for the quarter ended March 31, 2023 to be filed with the SEC.

Explanation of Use of Non-GAAP Financial Measures

Set forth in the tables below are reconciliations of gross profit, gross margin, operating expenses, operating loss, other income (expense), net (loss) income inclusive of the non-controlling interest, net (loss) income attributable to the Company, net loss attributable to the non-controlling interest, and (loss) earnings per share - basic and diluted, attributable to the Company, in each case as reported based on generally accepted accounting principles in the United States (“GAAP”), to non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating (loss) income, non-GAAP other (expense) income, non-GAAP net (loss) income inclusive of the non-controlling interest, non-GAAP net (loss) income attributable to the Company, non-GAAP net (loss) income attributable to the non-controlling interest, and non-GAAP (loss) earnings per share - basic and diluted, attributable to the Company, respectively. Such non-GAAP measures exclude acquisition related expenses, amortizations and adjustments (consisting of intangible amortization of backlog, developed technology, customer relationships, and trade names acquired in connection with business combinations and amortization of inventory fair value adjustments), stock-based compensation expense, amortization of pension actuarial losses, deferred compensation adjustments, asset impairments, integration expenses, restructuring expenses, changes in valuation allowance related to our deferred tax assets, and the tax effect of these adjustments to net income. These measures are used by management in our ongoing planning and annual budgeting processes. Additionally, we believe the presentation of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating (loss) income, non-GAAP other (expense) income, non-GAAP net (loss) income inclusive of the non-controlling interest, non-GAAP net (loss) income attributable to the Company, non-GAAP net (loss) income attributable to the non-controlling interest, and non-GAAP (loss) earnings per share - basic and diluted, attributable to the Company, when combined with the presentation of the most directly comparable GAAP financial measure, 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, GAAP and therefore should not be considered in isolation or as a substitution for analysis of our results as reported under GAAP. Additionally, our calculation of non-GAAP measures may not be comparable to similar measures calculated by other companies.

About Adtran

ADTRAN Holdings, Inc. (NASDAQ: ADTN and FSE: QH9) is the parent company of Adtran, Inc., a leading global provider of open, disaggregated networking and communications solutions that enable voice, data, video and internet communications across any network infrastructure. From the cloud edge to the subscriber edge, Adtran empowers communications service providers around the world to manage and scale services that connect people, places and things. Adtran solutions are used by service providers, private enterprises, government organizations and millions of individual users worldwide. ADTRAN Holdings, Inc. is also the largest shareholder of ADVA. Find more at Adtran, LinkedIn and Twitter.

Published by

ADTRAN Holdings, Inc.

www.adtran.com

 

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

 

March 31,

 

 

December 31,

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$

136,457

 

 

$

108,644

 

Short-term investments

 

1,058

 

 

 

340

 

Accounts receivable, net

 

262,043

 

 

 

279,435

 

Other receivables

 

30,938

 

 

 

32,831

 

Inventory, net

 

416,291

 

 

 

427,531

 

Prepaid expenses and other current assets

 

37,021

 

 

 

33,577

 

Total Current Assets

 

883,808

 

 

 

882,358

 

Property, plant and equipment, net

 

111,969

 

 

 

110,699

 

Deferred tax assets

 

81,631

 

 

 

67,839

 

Goodwill

 

385,755

 

 

 

381,724

 

Intangibles, net

 

379,286

 

 

 

401,211

 

Other non-current assets

 

63,152

 

 

 

66,998

 

Long-term investments

 

32,994

 

 

 

32,665

 

Total Assets

$

1,938,595

 

 

$

1,943,494

 

 

 

 

 

 

 

Liabilities, Redeemable Non-Controlling Interest and Equity

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts payable

$

198,596

 

 

$

237,699

 

Revolving credit agreements outstanding

 

190,843

 

 

 

95,936

 

Notes payable

 

 

 

 

24,598

 

Unearned revenue

 

55,611

 

 

 

41,193

 

Accrued expenses and other liabilities

 

27,424

 

 

 

35,235

 

Accrued wages and benefits

 

30,333

 

 

 

44,882

 

Income tax payable, net

 

19,397

 

 

 

9,032

 

Total Current Liabilities

 

522,204

 

 

 

488,575

 

Deferred tax liabilities

 

51,850

 

 

 

61,629

 

Non-current unearned revenue

 

24,907

 

 

 

19,239

 

Pension liability

 

10,698

 

 

 

10,624

 

Deferred compensation liability

 

28,674

 

 

 

26,668

 

Non-current lease obligations

 

21,446

 

 

 

22,807

 

Other non-current liabilities

 

15,986

 

 

 

10,339

 

Total Liabilities

 

675,765

 

 

 

639,881

 

Redeemable Non-Controlling Interest

 

442,668

 

 

 

 

Equity

 

 

 

 

 

Common stock

 

787

 

 

 

781

 

Additional paid-in capital

 

762,035

 

 

 

895,834

 

Accumulated other comprehensive income

 

55,251

 

 

 

46,713

 

Retained earnings

 

8,006

 

 

 

55,338

 

Treasury stock

 

(5,917

)

 

 

(4,125

)

Non-controlling interest

 

 

 

 

309,072

 

Total Equity

 

820,162

 

 

 

1,303,613

 

Total Liabilities, Redeemable Non-Controlling Interest and Equity

$

1,938,595

 

 

$

1,943,494

 

 

Condensed Consolidated Statements of Loss

(Unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2023

 

 

2022

 

Revenue

 

 

 

 

 

 

Network Solutions

 

$

282,418

 

 

$

138,374

 

Services & Support

 

 

41,494

 

 

 

16,144

 

Total Revenue

 

 

323,912

 

 

 

154,518

 

Cost of Revenue

 

 

 

 

 

 

Network Solutions

 

 

219,130

 

 

 

90,653

 

Services & Support

 

 

16,974

 

 

 

9,549

 

Total Cost of Revenue

 

 

236,104

 

 

 

100,202

 

Gross Profit

 

 

87,808

 

 

 

54,316

 

Selling, general and administrative expenses

 

 

67,397

 

 

 

27,893

 

Research and development expenses

 

 

70,143

 

 

 

26,491

 

Operating Loss

 

 

(49,732

)

 

 

(68

)

Interest and dividend income

 

 

304

 

 

 

204

 

Interest expense

 

 

(3,287

)

 

 

(30

)

Net investment gain (loss)

 

 

1,252

 

 

 

(3,415

)

Other expense, net

 

 

(303

)

 

 

(226

)

Loss Before Income Taxes

 

 

(51,766

)

 

 

(3,535

)

Income tax benefit

 

 

11,313

 

 

 

2,408

 

Net Loss

 

$

(40,453

)

 

$

(1,127

)

Less: Net Loss attributable to non-controlling interest(1)

 

 

(5,989

)

 

 

 

Net Loss attributable to ADTRAN Holdings, Inc.

 

$

(34,464

)

 

$

(1,127

)

 

 

 

 

 

 

 

Weighted average shares outstanding – basic

 

 

78,358

 

 

 

49,113

 

Weighted average shares outstanding – diluted

 

 

78,358

 

 

 

49,113

 

 

 

 

 

 

 

 

Loss per common share attributable to ADTRAN Holdings, Inc. – basic

 

$

(0.44

)

 

$

(0.02

)

Loss per common share attributable to ADTRAN Holdings, Inc. – diluted

 

$

(0.44

)

 

$

(0.02

)

(1) Includes $3.2 million of net loss attributable to non-controlling interests pre-DPLTA and $2.8 million of annual recurring compensation earned by redeemable non-controlling interests and accrued by the Company post-DPLTA.

 

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(40,453

)

 

$

(1,127

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

33,402

 

 

 

3,661

 

Amortization of debt issuance cost

 

 

146

 

 

 

 

(Gain) loss on investments

 

 

(3,154

)

 

 

3,304

 

Stock-based compensation expense

 

 

3,812

 

 

 

1,893

 

Deferred income taxes

 

 

(24,019

)

 

 

 

Other, net

 

 

(1

)

 

 

(62

)

Inventory reserves

 

 

16,051

 

 

 

(1,754

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

17,658

 

 

 

8,697

 

Other receivables

 

 

1,980

 

 

 

(6,205

)

Inventory

 

 

(2,764

)

 

 

(29,685

)

Prepaid expenses, other current assets and other assets

 

 

1,118

 

 

 

(1,170

)

Accounts payable

 

 

(40,367

)

 

 

24,818

 

Accrued expenses and other liabilities

 

 

6,349

 

 

 

3,803

 

Income taxes payable, net

 

 

10,316

 

 

 

(1,304

)

Net cash (used in) provided by operating activities

 

 

(19,926

)

 

 

4,869

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(8,439

)

 

 

(1,461

)

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

 

 

930

 

 

 

10,265

 

Purchases of available-for-sale investments

 

 

(516

)

 

 

(11,504

)

Proceeds from beneficial interests in securitized accounts receivable

 

 

1,231

 

 

 

 

Net cash used in investing activities

 

 

(6,794

)

 

 

(2,700

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Tax withholdings related to stock-based compensation settlements

 

 

(6,258

)

 

 

(54

)

Proceeds from stock option exercises

 

 

58

 

 

 

568

 

Dividend payments

 

 

(7,076

)

 

 

(4,438

)

Proceeds from draw on revolving credit agreements

 

 

138,236

 

 

 

8,000

 

Repayment of revolving credit agreements

 

 

(43,464

)

 

 

(8,000

)

Non-controlling interest put option buyback

 

 

(1,176

)

 

 

 

Repayment of notes payable

 

 

(24,692

)

 

 

 

Net cash provided by (used in) financing activities

 

 

55,628

 

 

 

(3,924

)

 

 

 

 

 

 

 

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

 

 

28,908

 

 

 

(1,755

)

Effect of exchange rate changes

 

 

(1,095

)

 

 

(1,032

)

Cash and cash equivalents, beginning of period

 

 

108,644

 

 

 

56,818

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

136,457

 

 

$

54,031

 

 

 

 

 

 

 

 

Supplemental disclosure of cash financing activities:

 

 

 

 

 

 

Cash paid for interest

 

$

1,610

 

 

$

30

 

Cash used in operating activities related to operating leases

 

$

4,057

 

 

$

482

 

Supplemental disclosure of non-cash investing activities:

 

 

 

 

 

 

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

 

$

486

 

 

$

332

 

Purchases of property, plant and equipment included in accounts payable

 

$

4,354

 

 

$

392

 

 

 

 

 

 

 

 

 

Supplemental Information

Reconciliation of Gross Profit and Gross Margin to

Non-GAAP Gross Profit and Non-GAAP Gross Margin

(Unaudited)

(In thousands)

 

 

Three Months Ended

 

 

March 31,
2023

 

 

December 31, 2022

 

 

March 31,
2022

 

Total Revenue

$

323,912

 

 

$

358,271

 

 

$

154,518

 

 

 

 

 

 

 

 

 

 

Cost of Revenue

$

236,104

 

 

$

250,868

 

 

$

100,202

 

Acquisition-related expenses, amortizations and adjustments

 

(32,578

)

(1)

 

(31,577

)

(3)

 

 

Stock-based compensation expense

 

(240

)

(2)

 

(1,287

)

(4)

 

(159

)

Pension adjustments

 

 

 

 

144

 

 

 

 

Restructuring expenses

 

(76

)

 

 

(8

)

 

 

 

Non-GAAP Cost of Revenue

$

203,210

 

 

$

218,140

 

 

$

100,043

 

 

 

 

 

 

 

 

 

 

Gross Profit

$

87,808

 

 

$

107,403

 

 

$

54,316

 

Non-GAAP Gross Profit

$

120,702

 

 

$

140,131

 

 

$

54,475

 

 

 

 

 

 

 

 

 

 

Gross Margin

 

27.1

%

 

 

30.0

%

 

 

35.2

%

Non-GAAP Gross Margin

 

37.3

%

 

 

39.1

%

 

 

35.3

%

(1) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $32.6 million is included in total cost of revenue, on the condensed consolidated statements of loss.

(2) Includes $0.2 million in cost of revenue expenses incremental stock-based award modification expense related to the business combination on the condensed consolidated statements of loss.

(3) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, and certain one-time transaction expenses of which $31.6 million is included in total cost of revenue, on the condensed consolidated statements of loss.

(4) Includes $1.3 million in cost of revenue expenses incremental stock-based award modification expense related to the business combination on the condensed consolidated statements of loss.

 

Supplemental Information

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses

(Unaudited)

(In thousands)

 

 

Three Months Ended

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

 

2023

 

 

2022

 

 

2022

 

 

Operating Expenses

$

137,540

 

 

$

139,813

 

 

$

54,384

 

 

Acquisition-related expenses, amortizations and adjustments

 

(4,584

)

(1)

 

(8,328

)

(6)

 

(2,330

)

(10)

Stock-based compensation expense

 

(3,458

)

(2)

 

(11,095

)

(7)

 

(1,734

)

(11)

Restructuring expenses

 

(2,361

)

(3)

 

(1,618

)

(8)

 

(2

)

(12)

Integration expenses

 

(849

)

(4)

 

 

 

 

 

 

Pension adjustments

 

 

 

 

43

 

(9)

 

 

 

Deferred compensation adjustments

 

(394

)

(5)

 

(168

)

(5)

 

2,696

 

(5)

Non-GAAP Operating Expenses

$

125,894

 

 

$

118,647

 

 

$

53,014

 

 

(1) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $4.1 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.

(2) $2.5 million is included in selling, general and administrative expenses and $1.0 million is included in research and development expenses on the condensed consolidated statements of loss.

(3) $2.2 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.

(4) $0.8 million is included in selling, general and administrative expenses on the condensed consolidated statements of loss. Includes fees relating to the expansion of internal controls at ADVA and the implementation of the DPLTA.

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

(6) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, and certain one-time transaction expenses of which $7.8 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.

(7) $9.4 million is included in selling, general and administrative expenses and $1.7 million is included in research and development expenses on the condensed consolidated statements of loss. Includes $7.3 million of in selling, general and administrative expenses and $0.6 million is included in research and development expenses incremental stock-based award modification expense related to the business combination.

(8) $0.1 is included in selling, general and administrative expenses and $1.5 million is included in research and development expenses on the condensed consolidated statements of loss.

(9) $0.2 million is included in selling, general and administrative expenses and ($0.3) million is included in research and development expenses on the condensed consolidated statements of loss.

(10) $0.5 million is included in selling, general and administrative expenses and $1.8 million is included in research and development expenses on the condensed consolidated statements of loss .

(11) $0.6 million is included in selling, general and administrative expenses and $1.1 million is included in research and development expenses on the condensed consolidated statements of loss.

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

 

Supplemental Information

Reconciliation of Operating Loss to Non-GAAP Operating (Loss) Income

(Unaudited)

(In thousands)

 

 

Three Months Ended

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

2023

 

 

2022

 

 

2022

 

Operating Loss

$

(49,732

)

 

$

(32,874

)

 

$

(68

)

Acquisition related expenses, amortizations and adjustments

 

37,162

 

 

 

39,904

 

 

 

2,330

 

Asset impairments

 

 

 

 

463

 

 

 

 

Stock-based compensation expense

 

3,698

 

 

 

12,383

 

 

 

1,893

 

Pension adjustments

 

 

 

 

(187

)

 

 

 

Restructuring expenses

 

2,437

 

 

 

1,627

 

 

 

2

 

Integration expenses

 

849

 

 

 

 

 

 

 

Deferred compensation adjustments(1)

 

394

 

 

 

168

 

 

 

(2,696

)

Non-GAAP Operating (Loss) Income

$

(5,192

)

 

$

21,484

 

 

$

1,461

 

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

 

Supplemental Information

Reconciliation of Other (Expense) Income to Non-GAAP Other (Expense) Income

(Unaudited)

(In thousands)

 

 

Three Months Ended

 

 

March 31, 2023

 

 

December 31, 2022

 

 

March 31, 2022

 

Interest and dividend income

$

304

 

 

$

1,355

 

 

$

204

 

Interest expense

 

(3,287

)

 

 

(2,010

)

 

 

(30

)

Net investment gain (loss)

 

1,252

 

 

 

(587

)

 

 

(3,415

)

Other (expense) income, net

 

(303

)

 

 

11,568

 

 

 

(226

)

Total Other (Expense) Income

$

(2,034

)

 

$

10,326

 

 

$

(3,467

)

Deferred compensation adjustments (1)

 

(1,250

)

 

 

(349

)

 

 

1,841

 

Pension expense (2)

 

7

 

 

 

77

 

 

 

89

 

Non-GAAP Other (Expense) Income

$

(3,277

)

 

$

10,054

 

 

$

(1,537

)

(1) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for Employees.

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

 

Supplemental Information

Reconciliation of Net (Loss) Income inclusive of Non-Controlling Interest to

Non-GAAP Net (Loss) Income inclusive of Non-Controlling Interest

(Unaudited)

and

Reconciliation of Net Loss attributable to Non-Controlling Interest to

Non-GAAP Net (Loss) Income attributable to Non-Controlling Interest

(Unaudited)

and

Reconciliation of Net (Loss) Income attributable to ADTRAN Holdings, Inc. and

(Loss) Earnings per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted to

Non-GAAP Net (Loss) Income attributable to ADTRAN Holdings, Inc. and

Non-GAAP (Loss) Earnings per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted

(Unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

 

March 31,
2023

 

 

December 31,
2022

 

 

March 31,
2022

 

Net (Loss) Income attributable to ADTRAN Holdings, Inc.

 

$

(34,464

)

 

$

38,881

 

 

$

(1,127

)

Plus: Net Loss attributable to non-controlling interest (1)

 

 

(5,989

)

 

 

(3,926

)

 

 

 

Net (Loss) Income inclusive of non-controlling interest

 

$

(40,453

)

 

$

34,955

 

 

$

(1,127

)

Acquisition related expenses, amortizations and adjustments

 

 

37,162

 

 

 

39,904

 

 

 

2,330

 

Asset impairments

 

 

 

 

 

463

 

 

 

 

Stock-based compensation expense

 

 

3,698

 

 

 

12,383

 

 

 

1,893

 

Valuation allowance

 

 

 

 

 

(60,908

)

 

 

8,079

 

Deferred compensation adjustments (2)

 

 

(856

)

 

 

(182

)

 

 

(855

)

Pension adjustments (3)

 

 

7

 

 

 

(109

)

 

 

89

 

Restructuring expenses

 

 

2,437

 

 

 

1,627

 

 

 

2

 

Integration expenses

 

 

849

 

 

 

 

 

 

 

Tax effect of adjustments to net income (loss)

 

 

(12,307

)

 

 

(12,463

)

 

 

(505

)

Non-GAAP Net (Loss) Income inclusive of non-controlling interest

 

$

(9,463

)

 

$

15,670

 

 

$

9,906

 

Less: Non-GAAP Net (Loss) Income attributable to non-controlling interest (1)

 

 

(4,460

)

 

 

5,769

 

 

 

 

Non-GAAP Net (Loss) Income attributable to ADTRAN Holdings, Inc.

 

$

(5,003

)

 

$

9,901

 

 

$

9,906

 

 

 

 

 

 

 

 

 

 

 

GAAP Net Loss attributable to non-controlling interest (1)

 

$

(5,989

)

 

$

(3,926

)

 

$

 

Acquisition related expenses, amortizations and adjustments

 

 

1,457

 

 

 

9,039

 

 

 

 

Restructuring expenses

 

 

29

 

 

 

402

 

 

 

 

Integration expenses

 

 

6

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

37

 

 

 

300

 

 

 

 

Pension adjustments (3)

 

 

 

 

 

(46

)

 

 

 

Non-GAAP Net (Loss) Income attributable to non-controlling interest (1)

 

$

(4,460

)

 

$

5,769

 

 

$

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – basic

 

 

78,358

 

 

 

77,659

 

 

 

49,113

 

Weighted average shares outstanding – diluted

 

 

78,358

 

 

 

79,243

 

 

 

49,113

 

 

 

 

 

 

 

 

 

 

 

(Loss) Earnings per common share attributable to ADTRAN Holdings, Inc. – basic

 

$

(0.44

)

 

$

0.50

 

 

$

(0.02

)

(Loss) Earnings per common share attributable to ADTRAN Holdings, Inc. – diluted

 

$

(0.44

)

 

$

0.49

 

 

$

(0.02

)

 

 

 

 

 

 

 

 

 

 

Non-GAAP (Loss) Earnings per common share attributable to ADTRAN – basic

 

$

(0.06

)

 

$

0.13

 

 

$

0.20

 

Non-GAAP (Loss) Earnings per common share attributable to ADTRAN – diluted

 

$

(0.06

)

 

$

0.12

 

 

$

0.20

 

(1) Represents the non-controlling interest portion of the Company's ownership of ADVA pre-DPLTA and the annual recurring compensation earned by redeemable non-controlling interests and accrued by the Company post-DPLTA.

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

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

 

For media
Gareth Spence
+44 1904 699 358
public-relations@adva.com

For investors
Steven Williams
+49 89 890 665 918
investor.relations@adtran.com

Source: ADTRAN Holdings, Inc.