ADTN ADTRAN Holdings Inc

ADTRAN, Inc. (NASDAQ:ADTN) reported results for the first quarter 2017. For the quarter, sales were $170.3 million compared to $142.2 million for the first quarter of 2016. Net income was $6.7 million compared to $5 million for the first quarter of 2016. Earnings per share, assuming dilution, were $0.14 compared to $0.10 for the first quarter of 2016. Non-GAAP earnings per share were $0.18 compared to $0.14 for the first quarter of 2016. The reconciliation between GAAP earnings per share, diluted, and non-GAAP earnings per share, diluted, is in the table provided.

ADTRAN Chairman and Chief Executive Officer Tom Stanton stated, “We started 2017 setting a company record for first quarter revenue, driven by increasing momentum in our ultra-broadband product sales and continuing strength in our services area. Most notably, we had very strong performances in our fiber to the premises and vectoring products in both our domestic and international markets. ADTRAN continues to be at the forefront of enabling internet service providers of all types to meet increasing customer demand and decrease their time to market for next generation services.”

The Company also announced that its Board of Directors declared a cash dividend for the first quarter of 2017. The quarterly cash dividend is $0.09 per common share to be paid to holders of record at the close of business on May 4, 2017. The ex-dividend date is May 2, 2017, and the payment date is May 18, 2017.

The Company confirmed that its first quarter conference call will be held Wednesday, April 19, 2017, at 9:30 a.m. Central Time. This conference call will be web cast live through StreetEvents.com. To listen, simply visit the Investor Relations site at www.adtran.com or www.streetevents.com approximately 10 minutes prior to the start of the call and click on the conference call link provided.

An online replay of the conference call will be available for seven days at www.streetevents.com. In addition, an online replay of the conference call, as well as the text of the Company's earnings release, will be available on the Investor Relations site at www.adtran.com for at least 12 months following the call.

ADTRAN, Inc. is a leading global provider of networking and communications equipment. ADTRAN’s products enable voice, data, video and Internet communications across a variety of network infrastructures. ADTRAN solutions are currently in use by service providers, private enterprises, government organizations, and millions of individual users worldwide. For more information, please visit www.adtran.com.

For more information, contact the company at 800 9ADTRAN (800 923-8726) or via email at info@adtran.com. On the Web, visit www.adtran.com.

This press release contains forward-looking statements which reflect management’s best judgment based on factors currently known. However, these statements involve risks and uncertainties, including the successful development and market acceptance of new products, the degree of competition in the market for such products, the product and channel mix, component costs, manufacturing efficiencies, and other risks detailed in our annual report on Form 10-K for the year ended December 31, 2016. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements included in this press release.

       

Condensed Consolidated Balance Sheet

(Unaudited)

(In thousands)

   

March 31,2017

December 31,2016

Assets Cash and cash equivalents $ 72,558 $ 79,895 Short-term investments 52,458 43,188 Accounts receivable, net 85,396 92,346 Other receivables 13,398 15,137 Income tax receivable, net — 760 Inventory 112,774 105,117 Prepaid expenses and other current assets   17,816   16,459 Total Current Assets 354,400 352,902   Property, plant and equipment, net 83,514 84,469 Deferred tax assets, net 39,085 38,036 Goodwill 3,492 3,492 Other assets 12,274 12,234 Long-term investments   174,413   176,102   Total Assets $ 667,178 $ 667,235   Liabilities and Stockholders' Equity Accounts payable $ 74,300 $ 77,342 Unearned revenue 16,969 16,326 Accrued expenses 15,035 12,434 Accrued wages and benefits 12,199 20,433 Income tax payable, net   3,126   — Total Current Liabilities 121,629 126,535   Non-current unearned revenue 5,675 6,333 Other non-current liabilities 30,861 28,050 Bonds payable   26,800   26,800 Total Liabilities 184,965 187,718   Stockholders' Equity   482,213   479,517   Total Liabilities and Stockholders' Equity $ 667,178 $ 667,235      

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

    Three Months Ended March 31,     2017     2016   Sales Products $ 143,597 $ 123,883 Services   26,682     18,321     Total Sales 170,279 142,204   Cost of Sales Products 76,659 64,073 Services   19,905     12,337     Total Cost of Sales 96,564 76,410   Gross Profit 73,715 65,794   Selling, general and administrative expenses 34,767 30,785 Research and development expenses   31,916     29,488     Operating Income 7,032 5,521   Interest and dividend income 933 855 Interest expense (141 ) (145 ) Net realized investment gain 470 1,728 Other income, net   51     119     Income before provision for income taxes 8,345 8,078   Provision for income taxes   (1,694 )   (3,064 )   Net Income $ 6,651   $ 5,014     Weighted average shares outstanding - basic 48,430 49,220 Weighted average shares outstanding - diluted (1) 48,939 49,389   Earnings per common share - basic $ 0.14 $ 0.10 Earnings per common share - diluted (1) $ 0.14 $ 0.10   (1) Assumes exercise of dilutive stock options calculated under the treasury stock method.      

Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)

    Three Months Ended March 31,     2017     2016   Net Income $ 6,651 $ 5,014     Other Comprehensive Income, net of tax:   Unrealized gains (losses) on available-for-sale securities 1,335 (255 ) Unrealized gains on cash flow hedges 79 — Defined benefit plan adjustments 55 45 Foreign currency translation   1,242   1,228     Other Comprehensive Income, net of tax   2,711   1,018     Comprehensive Income, net of tax $ 9,362 $ 6,032        

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

    Three Months Ended March 31, 2017     2016 Cash flows from operating activities: Net income $ 6,651 $ 5,014 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,323 3,347 Amortization of net premium on available-for-sale investments 124 220 Net realized gain on long-term investments (470 ) (1,728 ) Net (gain) loss on disposal of property, plant and equipment (16 ) 3 Stock-based compensation expense 1,883 1,558 Deferred income taxes (1,947 ) 435 Change in operating assets and liabilities: Accounts receivable, net 7,247 4,752 Other receivables 1,884 10,200 Inventory (7,399 ) 163 Prepaid expenses and other assets (2,413 ) (3,083 ) Accounts payable (1,713 ) (6,520 ) Accrued expenses and other liabilities (3,166 ) 902 Income tax payable/receivable, net   4,049     413   Net cash provided by operating activities   9,037     15,676     Cash flows from investing activities: Purchases of property, plant and equipment (3,872 ) (3,166 ) Proceeds from disposals of property, plant and equipment 16 — Proceeds from sales and maturities of available-for-sale investments 24,471 60,586 Purchases of available-for-sale investments   (29,517 )   (52,053 ) Net cash provided by (used in) investing activities   (8,902 )   5,367     Cash flows from financing activities: Proceeds from stock option exercises 1,377 247 Purchases of treasury stock (5,559 ) (11,003 ) Dividend payments   (4,369 )   (4,453 ) Net cash used in financing activities   (8,551 )   (15,209 )   Net increase (decrease) in cash and cash equivalents (8,416 ) 5,834 Effect of exchange rate changes 1,079 1,225 Cash and cash equivalents, beginning of period   79,895     84,550     Cash and cash equivalents, end of period $ 72,558   $ 91,609     Supplemental disclosure of non-cash investing activities Purchases of property, plant and equipment included in accounts payable $ 509 $ 485        

Supplemental Information

Acquisition Related Expenses, Amortizations and Adjustments

(Unaudited)

(In thousands)

 

On August 4, 2011, we closed on the acquisition of Bluesocket, Inc., on May 4, 2012, we closed on the acquisition of the Nokia Siemens Networks Broadband Access business (NSN BBA), and on September 13, 2016, we closed on the acquisition of CommScope’s active fiber business (CommScope). Acquisition related expenses, amortizations and adjustments for the three months ended March 31, 2017 and 2016 for all three transactions are as follows:

  Three Months Ended March 31, 2017     2016 Bluesocket, Inc. acquisition Amortization of acquired intangible assets $ 158   $ 173     NSN BBA acquisition Amortization of acquired intangible assets 208 227 Amortization of other purchase accounting adjustments   28     36   Subtotal NSN BBA acquisition   236     263     CommScope acquisition Amortization of acquired intangible assets 686 — Amortization of other purchase accounting adjustments

 

50 — Acquisition related professional fees, travel and other expenses   8     —   Subtotal CommScope acquisition   744     —    

Total acquisition related expenses, amortizations and adjustments

1,138 436 Provision for income taxes   (425 )   (149 )   Total acquisition related expenses, amortizations and adjustments, net of tax $ 713   $ 287    

The acquisition related expenses, amortizations and adjustments above were recorded in the following Consolidated Statements of Income categories for the three months ended March 31, 2017 and 2016:

  Three Months Ended March 31, 2017 2016   Cost of goods sold $ 50   $ 7     Selling, general and administrative expenses 62 3 Research and development expenses   1,026     426  

Total acquisition related expenses, amortizations and adjustments included in operating expenses

  1,088     429     Total acquisition related expenses, amortizations and adjustments 1,138 436 Provision for income taxes   (425 )   (149 )   Total acquisition related expenses, amortizations and adjustments, net of tax $ 713   $ 287        

Supplemental Information

Stock-based Compensation Expense

(Unaudited)

(In thousands)

    Three Months Ended March 31,     2017   2016   Stock-based compensation expense included in cost of sales $ 91   $ 99     Selling, general and administrative expense 1,016 769 Research and development expense   776     690     Stock-based compensation expense included in operating expenses   1,792     1,459     Total stock-based compensation expense 1,883 1,558

Tax benefit for expense associated with non-qualified options,restricted stock units and restricted stock

  (380 )   (212 )   Total stock-based compensation expense, net of tax $ 1,503   $ 1,346        

Reconciliation of GAAP net income per share, diluted, to

Non-GAAP net income per share, diluted

(Unaudited)

    Three Months Ended March 31,     2017   2016   GAAP earnings per common share – diluted $ 0.14 $ 0.10   Acquisition related expenses, amortizations and adjustments 0.01 0.01 Stock-based compensation expense   0.03   0.03   Non-GAAP earnings per common share – diluted $ 0.18 $ 0.14  

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ADTRAN, Inc.Investor Services/Assistance:Gloria Brown, 256-963-8220investor@adtran.com