EQS-News: Adtran Holdings, Inc. Reports Earnings for the Third Quarter of 2022 and Declares Quarterly Cash Dividend

EQS-News: Adtran Holdings, Inc. / Key word(s): 9 Month figures
Adtran Holdings, Inc. Reports Earnings for the Third Quarter of 2022 and Declares Quarterly Cash Dividend

08.11.2022 / 06:55 CET/CEST
The issuer is solely responsible for the content of this announcement.

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


HUNTSVILLE, Ala. — (November 8, 2022) — ADTRAN Holdings, Inc., (NASDAQ: ADTN and FSE: QH9) (“ADTRAN Holdings” or the “Company”), today announced financial results for the third quarter of 2022. For the quarter, revenue was $340.7 million. Net loss inclusive of the non-controlling interest for the third quarter of 2022 was $44.9 million. Net loss attributable to the Company for the third quarter of 2022 was $41.9 million and loss per share attributable to the Company was $0.57. Net loss and loss per share are inclusive of consolidated financial results, significant purchase accounting adjustments, and certain one-time transaction expenses related to the business combination of the Company, ADTRAN, Inc. (“ADTRAN”), and ADVA Optical Networking SE (“ADVA”). Inclusive of non-controlling interests, non-GAAP net income was $12.2 million. Non-GAAP net income attributable to the Company was $7.7 million and non-GAAP diluted earnings per share attributable to the Company was $0.11. Non-GAAP net income and non-GAAP earnings per share 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, certain asset impairments, changes in valuation allowance related to our deferred tax assets, and the tax effect of these adjustments to net income.  The reconciliations between the non-GAAP net 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, “Our third quarter marked a new era in our history as we closed the business combination agreement with ADVA Optical Networking SE. The combined company’s broader portfolio, paired with a larger, more diversified, and regionally balanced customer base, positions us to capitalize on the global fiber conversion. The Q3 results highlight our increased market presence in optical networking and subscriber solutions, two portfolio categories that complement our continued success in fiber access. This success reinforces the positive outlook we have in our ability to maximize our growth potential in the ongoing global investment cycle in fiber networks.”

 

The Company also announced that its Board of Directors declared a cash dividend for the third 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 November 22, 2022. The ex-dividend date is November 21, 2022, and the payment date will be December 6, 2022.

 

The Company confirmed that it will hold a conference call to discuss its third quarter results on Tuesday, November 8, 2022, 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 adtran.com/investor approximately 10 minutes prior to the start of the call, click on the event “ADTRAN Holdings Releases 3rd 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 at investor.relations@adtran.com. 

 

About ADTRAN Holdings, Inc.  

ADTRAN Holdings, Inc. is the parent company of ADTRAN, Inc., a wholly owned subsidiary and a leading global provider of open, disaggregated networking and communications solutions. ADTRAN Holdings is also the largest shareholder of ADVA, a European telecommunications vendor that provides network equipment for data, storage, voice, and video services.

 

 Cautionary Note Regarding Forward-Looking Statements

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 completed business combination between the Company, ADTRAN and ADVA, including risks related to regulatory or other limitations imposed following the closing of the business combination on July 15, 2022 and the proposed domination and profit and loss transfer agreement between the Company as the controlling entity, and ADVA as the controlled entity; the ability to successfully integrate the ADTRAN and ADVA businesses; risks related to disruption of management time from ongoing business operations due to integration efforts following the business combination; the risk that the business combination could have adverse effects on the market price of ADTRAN Holdings’ common stock or ADVA’s common shares or the ability of the Company, 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 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; the risk of fluctuations in revenue due to lengthy sales and approval processes 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 ADTRAN Holdings may not be able to effectively compete, including through product improvements and development; and (iii) other risks set forth in ADVA’s annual and interim financial reports made publicly available and ADTRAN’s and ADTRAN Holdings’ public filings made with the Securities and Exchange Commission, including ADTRAN’s Annual Report on Form 10-K for the year ended December 31, 2021 and ADTRAN Holdings’ Form 10-Q for the quarterly period ended June 30, 2022. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements included in this press release.

 

Explanation of Use of Non-GAAP Financial Measures

Set forth in the tables below are reconciliations of operating loss, net loss inclusive of the non-controlling interest, net loss attributable to the Company, and loss per share attributable to the Company, in each case as reported based on generally accepted accounting principles in the United States (“GAAP”), to non-GAAP operating income, non-GAAP net income inclusive of the non-controlling interest, non-GAAP net income attributable to the Company, and non-GAAP diluted earnings per share 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, certain asset impairments, 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 operating income, non-GAAP net income inclusive of the non-controlling interest, non-GAAP net income attributable to the Company, and non-GAAP diluted earnings per share 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 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. 

 

Investor Services/Assistance: 

Rhonda Lambert/256-963-7450 

Investor.relations@adtran.com

 

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

  September 30,     December 31,     2022     2021   Assets           Current Assets           Cash and cash equivalents $ 111,099     $ 56,603   Restricted cash   —       215   Short-term investments   803       350   Accounts receivable, net   302,401       158,742   Other receivables   14,350       11,228   Inventory, net   416,163       139,891   Prepaid expenses and other current assets   30,739       9,296   Total Current Assets   875,555       376,325   Property, plant and equipment, net   104,577       55,766   Deferred tax assets, net   —       9,079   Goodwill   357,869       6,968   Intangibles, net   393,575       19,293   Other non-current assets   56,347       30,971   Long-term investments   50,131       70,615   Total Assets $ 1,838,054     $ 569,017               Liabilities and Equity           Current Liabilities           Accounts payable $ 276,026     $ 102,489   Revolving credit agreements outstanding   84,503       —   Notes payable   29,782       —   Unearned revenue   40,993       17,737   Accrued expenses and other liabilities   25,554       13,673   Accrued wages and benefits   41,595       14,900   Income tax payable, net   26,838       6,560   Total Current Liabilities   525,291       155,359   Deferred tax liabilities, net   36,884       —   Non-current unearned revenue   18,269       9,271   Pension liability   16,220       11,402   Deferred compensation liability   25,376       31,383   Non-current lease obligations   21,490       3,269   Other non-current liabilities   9,697       1,231   Total Liabilities   653,227       211,915   Common stock   776       797   Additional paid-in capital   883,210       288,946   Accumulated other comprehensive loss   (40,288 )     (11,914 ) Retained earnings   31,535       740,820   Treasury stock   (4,083 )     (661,547 ) Non-controlling interest   313,677       —   Total Equity   1,184,827       357,102   Total Liabilities and Equity $ 1,838,054     $ 569,017  

 

Condensed Consolidated Statements of Loss

(Unaudited)

(In thousands, except per share data)

 

    Three Months Ended     Nine Months Ended         September 30,     September 30,         2022     2021     2022     2021     Revenue                           Network Solutions   $ 304,940     $ 120,767     $ 599,306     $ 360,025     Services & Support     35,769       17,314       67,959       48,821     Total Revenue     340,709       138,081       667,265       408,846     Cost of Revenue                           Network Solutions     226,635       81,029       417,209       216,044     Services & Support     11,047       9,379       30,207       28,860     Total Cost of Revenue     237,682       90,408       447,416       244,904     Gross Profit     103,027       47,673       219,849       163,942     Selling, general and administrative expenses     74,880       30,972       130,646       89,273     Research and development expenses     59,196       26,759       112,187       82,131     Asset impairment     16,969       —       16,969       —     Operating Loss     (48,018 )     (10,058 )     (39,953 )     (7,462 )   Interest and dividend income     347       344       768       887     Interest expense     (1,303 )     (6 )     (1,427 )     (18 )   Net investment (loss) gain     (2,691 )     (63 )     (10,752 )     2,942     Other income, net     2,494       648       2,949       2,673     Loss Before Income Taxes     (49,171 )     (9,135 )     (48,415 )     (978 )   Income tax benefit (expense)     4,312       (1,292 )     4,572       (3,467 )   Net Loss   $ (44,859 )   $ (10,427 )   $ (43,843 )   $ (4,445 )   Less: Net Loss attributable to non-controlling interest     (2,925 )     —       (2,925 )     —     Net Loss attributable to ADTRAN Holdings, Inc.   $ (41,934 )   $ (10,427 )   $ (40,918 )   $ (4,445 )                               Weighted average shares outstanding – basic     73,036       48,609       57,175       48,470     Weighted average shares outstanding – diluted     73,036       48,609       57,175       48,470                                 Loss per common share attributable to ADTRAN Holdings, Inc. – basic   $ (0.57 )   $ (0.21 )   $ (0.72 )   $ (0.09 )   Loss per common share attributable to ADTRAN Holdings, Inc. – diluted   $ (0.57 )   $ (0.21 )   $ (0.72 )   $ (0.09 )  

 

 

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

    Nine Months Ended       September 30,       2022     2021   Cash flows from operating activities:             Net loss   $ (43,843 )   $ (4,445 ) Adjustments to reconcile net income to net cash (used in) provided by operating activities:             Depreciation and amortization     34,783       12,246   Asset impairment     16,969       —   Amortization of debt issuance cost     200       —   Loss (gain) on investments     10,395       (3,320 ) Stock-based compensation expense     15,912       5,457   Deferred income taxes     (26,366 )     437   Other, net     32       89   Inventory reserves     (6,681 )     (4,789 ) Changes in operating assets and liabilities:             Accounts receivable, net     (34,535 )     (26,346 ) Other receivables     (2,154 )     11,152   Inventory     (76,293 )     2,120   Prepaid expenses, other current assets and other assets     610       (8,514 ) Accounts payable     70,381       29,614   Accrued expenses and other liabilities     (23,005 )     10,392   Income taxes payable, net     20,862       4,798   Net cash (used in) provided by operating activities     (42,733 )     28,891                 Cash flows from investing activities:             Purchases of property, plant and equipment     (10,141 )     (3,572 ) Proceeds from sales and maturities of available-for-sale investments     30,474       28,305   Purchases of available-for-sale investments     (22,215 )     (28,853 ) Proceeds from beneficial interests in securitized accounts receivable     1,294       —   Proceeds from disposals of property, plant and equipment     12       —   Insurance proceeds received     —       500   Acquisition of business, net of cash acquired     43,957       —   Net cash provided by (used in) investing activities     43,381       (3,620 )               Cash flows from financing activities:             Tax withholdings related to stock-based compensation settlements     (515 )     (113 ) Proceeds from stock option exercises     5,434       6,111   Dividend payments     (15,859 )     (13,124 ) Proceeds from draw on revolving credit agreement     133,141       —   Repayment of revolving credit agreement     (48,000 )     —   Payment of debt issuance cost     (3,015 )     —   Repayment of notes payable     (10,057 )     —   Net cash provided by (used in) financing activities     61,129       (7,126 )               Net increase in cash, cash equivalents and restricted cash     61,777       18,145   Effect of exchange rate changes     (7,496 )     (2,719 ) Cash, cash equivalents and restricted cash, beginning of period     56,818       60,179                 Cash, cash equivalents and restricted cash, end of period   $ 111,099     $ 75,605                 Supplemental disclosure of cash financing activities:             Cash paid for interest   $ 633     $ —   Supplemental disclosure of non-cash investing activities             Right-of-use assets obtained in exchange for lease obligations   $ 904     $ 1,833   Purchases of property, plant and equipment included in accounts payable   $ 1,037     $ 100   ADVA common shares exchanged in acquisition   $ 565,491     $ —   ADVA options assumed in acquisition   $ 12,769     $ —   Non-controlling interest related to ADVA   $ 316,415     $ —                

 

 

Supplemental Information

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

(Unaudited)

(In thousands)

 

  Three Months Ended
September 30,       Nine Months ended
September 30,       2022     2021       2022     2021     Operating Loss $ (48,018 )   $ (10,058 )     $ (39,953 )   $ (7,462 )   Acquisition related expenses, amortizations and adjustments   40,310     (1)   6,041    (6)     44,763     (8)   9,470    (11) Asset impairments   16,969     (2)   —         16,969     (2)   —     Stock-based compensation expense   12,131     (3)   1,842    (7)     15,912     (9)   5,457    (12) Pension adjustments   244     (4)   —         244     (4)   —     Restructuring expenses   —       —         2    (10)   309    (13) Deferred compensation adjustments   (740 )   (5)   (459 )  (5)     (7,173 )   (5)   2,091     (5) Non-GAAP Operating Income (Loss) $ 20,896     $ (2,634 )     $ 30,764     $ 9,865    

 

(1) 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 $25.5 million is included in total cost of revenue, $14.3 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 income (loss).

(2) Includes impairment charges related to the abandonment of certain information technology projects due to the business combination.

(3) $1.3 million is included in total cost of revenue, $9.1 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 income (loss).  Includes $8.9 million of incremental stock-based award modification expense related to the business combination.

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

(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 income (loss).

(6) $5.5 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 income (loss).

(7) $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 consolidated statements of income (loss).

(8) 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 $25.5 million is included in total cost of revenue, $17.8 million 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 income (loss).

(9) $1.6 million is included in total cost of revenue, $11.4 million is included in selling, general and administrative expenses and $2.9 million is included in research and development expenses on the condensed consolidated statements of income (loss).  Includes $8.9 million of incremental stock-based award modification expense related to the business combination.

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

(11) $8.0 million 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 income (loss).

(12) $0.4 million is included in total cost of revenue, $3.3 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 income (loss).

(13) $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 income (loss).                                                                                                                   

 

 

Supplemental Information

 

Reconciliation of Net Loss inclusive of Non-Controlling Interest to

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

(Unaudited)

 

and

 

Reconciliation of Net Loss attributable to ADTRAN Holdings, Inc. and Loss per Common Share attributable to

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

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

(Unaudited)

 

(In thousands, except per share amounts)

 

    Three Months Ended
September 30,     Nine Months ended
September 30,         2022     2021     2022     2021     Net Loss attributable to ADTRAN Holdings, Inc.   $ (41,934 )   $ (10,427 )   $ (40,918 )   $ (4,445 )   Plus: Net Loss attributable to non-controlling interest     (2,925 )     —       (2,925 )     —     Net Loss inclusive of non-controlling interest   $ (44,859 )   $ (10,427 )   $ (43,843 )   $ (4,445 )   Acquisition related expenses, amortizations and adjustments     40,310       6,041       44,763       9,470     Asset impairments     16,969       —       16,969       —     Stock-based compensation expense     12,131       1,842       15,912       5,457     Valuation allowance     3,182       2,455       15,550       4,413     Deferred compensation adjustments (1)     383       (262 )     (612 )     552     Pension adjustments (2)     325       272       499       825     Restructuring expenses     —       —       2       309     Tax effect of adjustments to net income (loss)     (16,245 )     (736 )     (17,430 )     (2,931 )   Non-GAAP Net Income (Loss) inclusive of non-controlling interest   $ 12,196     $ (815 )   $ 31,810     $ 13,650     Less: Non-GAAP Net Income attributable to non-controlling interest     4,486       —       4,486       —     Non-GAAP Net Income (Loss) attributable to ADTRAN Holdings, Inc.   $ 7,710     $ (815 )   $ 27,324     $ 13,650                                 Weighted average shares outstanding – basic     73,036       48,609       57,175       48,470     Weighted average shares outstanding – diluted     73,036       48,609       57,175       48,470                                 Loss per common share attributable to ADTRAN Holdings, Inc. - basic   $ (0.57 )   $ (0.21 )   $ (0.72 )   $ (0.09 )   Loss per common share attributable to ADTRAN Holdings, Inc. - diluted   $ (0.57 )   $ (0.21 )   $ (0.72 )   $ (0.09 )                               Non-GAAP earnings (loss) per common share attributable to ADTRAN Holdings, Inc. - basic   $ 0.11     $ (0.02 )   $ 0.48     $ 0.28     Non-GAAP earnings (loss) per common share attributable to ADTRAN Holdings, Inc. - diluted   $ 0.11     $ (0.02 )   $ 0.48     $ 0.28    

 

(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.                                                                                                                                                  


08.11.2022 CET/CEST Dissemination of a Corporate News, transmitted by EQS News - a service of EQS Group AG.
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Language: English Company: Adtran Holdings, Inc. 901 Explorer Boulevard 35806 Huntsville United States Internet: www.adtran.com ISIN: US00486H1059 WKN: 892015 Indices: MDAX, TecDAX Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Munich, Stuttgart; Nasdaq EQS News ID: 1481241
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1481241  08.11.2022 CET/CEST