EQS-News: Adtran Holdings, Inc. Reports Preliminary Earnings for the Fourth Quarter of 2022 and Declares Quarterly Cash Dividend
EQS-News: Adtran Holdings, Inc.
/ Key word(s): Preliminary Results
Adtran Holdings, Inc. Reports Preliminary Earnings for the Fourth Quarter of 2022 and Declares Quarterly Cash Dividend
21.02.2023 / 05:00 CET/CEST
The issuer is solely responsible for the content of this announcement.
ADTRAN Holdings, Inc. Reports Preliminary Earnings for the Fourth Quarter of 2022 and Declares Quarterly Cash Dividend
HUNTSVILLE, Ala. — (February 20, 2023) — ADTRAN Holdings, Inc., (NASDAQ: ADTN and FSE: QH9) (“ADTRAN Holdings” or the “Company”), today announced preliminary and unaudited financial results for the fourth quarter of 2022. All figures in this release are approximate due to the preliminary nature of the announcement. For the quarter, preliminary revenue was $358.3 million. Preliminary net income inclusive of the non-controlling interest for the fourth quarter of 2022 was $35.0 million. Preliminary net income attributable to the Company for the fourth quarter of 2022 was $38.9 million and preliminary diluted earnings per share attributable to the Company was $0.49. Inclusive of non-controlling interests, preliminary non-GAAP net income was $15.7 million. Preliminary non-GAAP net income attributable to the Company was $9.9 million and preliminary non-GAAP diluted earnings per share attributable to the Company was $0.12. Non-GAAP net income and non-GAAP 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, certain asset impairments, restructuring expenses, 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, “Fourth quarter revenue was in the lower side of our guidance range at $358.3 million, as strength in optical networking solutions helped to offset delays in new product introductions. The supply environment has improved year-over-year, which had a positive effect on our gross margins. We also expect supply bottlenecks to continue to alleviate during 2023. Our strong growth in the EMEA region underlines our increased global presence with greater customer diversity as we move into an unprecedented network upgrade cycle.”
The Company also announced that its Board of Directors declared a cash dividend for the fourth 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 March 7, 2023. The ex-dividend date is March 6, 2023, and the payment date will be March 21, 2023.
The information contained in this press release is preliminary. Final results for the fourth quarter ended December 31, 2022 will be released on March 1, 2023.
The Company confirmed that it will hold a conference call to discuss its preliminary fourth quarter results on Tuesday, February 21, 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 4th 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 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 headquartered network innovator that empowers operators to deliver the cloud and mobile services that are vital to today’s society.
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 SARS-CoV-2 coronavirus/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 due to lengthy sales and approval processes required by major and other service providers for new products; (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, 2021 and Form 10‑Q for the quarterly period ended September 30, 2022, as well as its Form 10‑K for the year ended December 31, 2022 to be filed with the SEC.
Additionally, the financial measures presented herein are preliminary estimates and are subject to risks and uncertainties, including, among others, changes in connection with quarter-end adjustments. Any variation between the Company’s actual results and the preliminary financial information set forth herein may be material.
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 income inclusive of the non-controlling interest, net income attributable to the Company, net loss attributable to the no-controlling interest and earnings (loss) 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 income, non-GAAP other income, non-GAAP net income inclusive of the non-controlling interest, non-GAAP net income attributable to the Company, non-GAAP net income attributable to the non-controlling interest, and non-GAAP 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, certain asset impairments, 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 income, non-GAAP other income, non-GAAP net income inclusive of the non-controlling interest, non-GAAP net income attributable to the Company, non-GAAP net income attributable to the non-controlling interest, and non-GAAP 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.
Investor Services/Assistance:
Rhonda Lambert/256-963-7450
Investor.relations@adtran.com
Condensed Consolidated Balance Sheets
(Preliminary, Unaudited)
(In thousands)
2022 December 31,
2021 Current Assets Cash and cash equivalents $ 108,644 $ 56,603 Restricted cash — 215 Short-term investments 340 350 Accounts receivable, net 279,436 158,742 Other receivables 32,831 11,228 Inventory, net 427,531 139,891 Prepaid expenses and other current assets 33,577 9,296 Total Current Assets 882,359 376,325 Property, plant and equipment, net 111,493 55,766 Deferred tax assets, net 6,210 9,079 Goodwill 381,724 6,968 Intangibles, net 401,211 19,293 Other non-current assets 66,203 30,971 Long-term investments 32,665 70,615 Total Assets $ 1,881,865 $ 569,017 LIABILITIES AND EQUITY Current Liabilities Accounts payable 237,699 102,489 Revolving credit agreements outstanding 95,936 — Notes payable 24,598 — Unearned revenue 41,193 17,737 Accrued expenses and other liabilities 35,235 13,673 Accrued wages and benefits 44,882 14,900 Income tax payable, net 9,032 6,560 Total Current Liabilities 488,575 155,359 Non-current unearned revenue 19,239 9,271 Pension liability 10,624 11,402 Deferred compensation liability 26,668 31,383 Non-current lease obligations 22,807 3,269 Other non-current liabilities 10,339 1,231 Total Liabilities 578,252 211,915 Equity Common stock 781 797 Additional paid-in capital 895,834 288,946 Accumulated other comprehensive income (loss) 46,713 (11,914 ) Retained earnings 55,338 740,820 Treasury stock (4,125 ) (661,547 ) Non-controlling interest 309,072 — Total Equity 1,303,613 357,102 Total Liabilities and Equity $ 1,881,865 $ 569,017
Condensed Consolidated Statements of Income (Loss)
(Preliminary, Unaudited)
(In thousands, except per share data)
Condensed Consolidated Statements of Cash Flows
(Preliminary, Unaudited)
(In thousands)
December 31, 2022 2021 Cash flows from operating activities: Net (Loss) Income $ (8,888 ) $ (8,635 ) Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 67,553 16,084 Asset impairments 17,433 — Amortization of debt issuance cost 288 — Amortization of net discount on available-for-sale investments 19 108 Loss (gain) on investments 9,826 (5,127 ) Net loss on disposal of property, plant and equipment 85 4 Stock-based compensation expense 28,322 7,480 Deferred income taxes (62,388 ) (1,784 ) Inventory reserves (7,250 ) (5,029 ) Change in operating assets and liabilities: Accounts receivable, net 788 (60,864 ) Other receivables (20,088 ) 9,752 Inventory (68,349 ) (10,638 ) Prepaid expenses other current assets and other assets (6,367 ) (7,146 ) Accounts payable 28,105 53,270 Accrued expenses and other liabilities (20,483 ) 10,063 Income taxes payable (2,151 ) 5,470 Net cash (used in) provided by operating activities (43,545 ) 3,008 Cash flows from investing activities: Purchases of property, plant and equipment (18,453 ) (5,669 ) Proceeds from sales and maturities of available-for-sale investments 51,661 50,466 Purchases of available-for-sale investments (23,899 ) (35,031 ) Proceeds from beneficial interests in securitized accounts receivable 1,126 — Proceeds from disposals of property, plant and equipment 561 — Insurance proceeds received — 500 Acquisition of business, net of cash acquired 44,003 — Net cash provided by investing activities 54,999 10,266 Cash flows from financing activities: Tax withholdings related to stock-based compensation settlements (6,070 ) (1,860 ) Proceeds from stock option exercises 6,904 6,431 Dividend payments (22,885 ) (17,529 ) Proceeds from draw on revolving credit agreements 141,887 10,000 Repayment of revolving credit agreements (48,000 ) (10,000 ) Payment of debt issuance cost (3,015 ) — Excess tax benefits from stock-based compensation arrangements (4,253 ) — Repayment of notes payable (17,702 ) — Net cash provided by (used in) financing activities 46,866 (12,958 ) Net increase (decrease) in cash and cash equivalents 58,320 316 Effect of exchange rate changes (6,494 ) (3,677 ) Cash, cash equivalents and restricted cash, beginning of year 56,818 60,179 Cash, cash equivalents and restricted cash, end of year $ 108,644 $ 56,818 Supplemental disclosure of cash financing activities Cash paid for interest $ 1,728 $ 13 Cash used in operating activities related to operating leases $ 5,229 $ 1,892 Supplemental disclosure of non-cash investing activities Right-of-use assets obtained in exchange for lease obligations $ 3,410 $ 1,875 Purchases of property, plant and equipment included in accounts payable $ 1,165 $ 638 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 Preliminary Gross Profit and Preliminary Gross Margin to Preliminary Non-GAAP Gross Profit and Preliminary Non-GAAP Gross Margin
(Unaudited)
(In thousands)
(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 $31.6 million is included in total cost of revenue, on the condensed consolidated statements of income (loss).
(2) Includes $1.0 million of cost of revenue expenses incremental stock-based award modification expense related to the business combination on the condensed consolidated statements of income (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 $25.5 million is included in total cost of revenue, on the condensed consolidated statements of income (loss).
(4) Includes $1.0 million of cost of revenue expenses incremental stock-based award modification expense related to the business combination on the condensed consolidated statements of income (loss).
(5) 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 $57.1 million is included in total cost of revenue, on the condensed consolidated statements of income (loss).
(6) Includes $2.0 million of cost of revenue expenses incremental stock-based award modification expense related to the business combination on the condensed consolidated statements of income (loss).
Supplemental Information
Reconciliation of Preliminary Operating Expenses to Preliminary Non-GAAP Operating Expenses
(Unaudited)
(In thousands)
(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 $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 income (loss).
(2) $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 income (loss). Includes $7.3 million 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.
(3) $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 income (loss).
(4) $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 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) 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 $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).
(7) $9.2 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 $7.3 million 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) Less than $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).
(9) 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 $6.0 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).
(10) $1.3 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 income (loss).
(11) Less than $0.1 million is included in selling, general and administrative expenses and less than $0.1 million is included in research and development expenses on the condensed consolidated statements of income (loss).
(12) 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 $25.6 million is included in selling, general and administrative expenses and $1.9 million is included in research and development expenses on the condensed consolidated statements of income (loss).
(13) $20.8 million is included in selling, general and administrative expenses and $4.6 million is included in research and development expenses on the condensed consolidated statements of income (loss). Includes $14.6 million in selling, general and administrative expenses and $1.2 million is included in research and development expenses incremental stock-based award modification expense related to the business combination.
(14) $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 income (loss).
(15) $0.3 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).
(16) 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 $14.1 million is included in selling, general and administrative expenses and $1.9 million is included in research and development expenses on the condensed consolidated statements of income (loss).
(17) $4.6 million is included in selling, general and administrative expenses and $2.3 million is included in research and development expenses on the condensed consolidated statements of income (loss).
(18) $0.2 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 Preliminary Operating Loss to Preliminary Non-GAAP Operating Income
(Unaudited)
(In thousands)
(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 income (loss).
Supplemental Information
Reconciliation of Preliminary Other Income (Expense) to Preliminary Non-GAAP Other Income
(Unaudited)
(In thousands)
(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 Preliminary Net Income (Loss) inclusive of Non-Controlling Interest to
Preliminary Non-GAAP Net Income (Loss) inclusive of Non-Controlling Interest
(Unaudited)
and
Reconciliation of Preliminary Net Loss attributable to Non-Controlling Interest to
Preliminary Non-GAAP Net Income attributable to Non-Controlling Interest
(Unaudited)
and
Reconciliation of Preliminary Net Income (Loss) attributable to ADTRAN Holdings, Inc. and
Preliminary Earnings (Loss) per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted to
Preliminary Non-GAAP Net Income attributable to ADTRAN Holdings, Inc. and
Preliminary Non-GAAP Earnings per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted
(Unaudited)
(In thousands, except per share amounts)
(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.
(3) Represents the non-controlling interest portion of the Company's ownership of ADVA.
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