ADTRAN, Inc. (NASDAQ:ADTN) (“ADTRAN” or the “Company”) today
announced financial results for the fourth quarter 2019. For the
quarter, revenue was $115.8 million compared to $140.1 million for
the fourth quarter of 2018. Earnings for the fourth quarter of 2019
were a net loss of $12.7 million compared to a net loss of $8.4
million for the fourth quarter of 2018. Earnings per share was a
loss of $0.26 per share compared to a loss of $0.18 per share for
the fourth quarter of 2018. Non-GAAP earnings were a net loss of
$3.2 million compared to a non-GAAP net loss of $5.8 million for
the fourth quarter of 2018. Non-GAAP earnings per share was a loss
of $0.07 per share compared to a non-GAAP loss of $0.12 per share
for the fourth quarter of 2018. Non-GAAP net loss and non-GAAP loss
per share exclude stock-based compensation expense, acquisition
related amortizations and other expenses, restructuring expenses,
amortization of pension actuarial losses, valuation allowance
related to our deferred tax assets, asset impairments, gain on
bargain purchase of a business and certain other contingencies and
the reimbursement from a claim settlement. The reconciliation
between GAAP net loss and loss per share to non-GAAP net loss and
non-GAAP loss per share is set forth in the table provided
below.
ADTRAN Chairman and Chief Executive Officer Tom Stanton stated,
“While the U.S. market remains challenging, we saw a solid
performance in our international business. We continue to see
activity building around our 10G PON and fiber extension solutions
across all geographies we serve, most notably in Europe. We believe
we are at the beginning of a significant investment cycle for fiber
deployment driven by technology advancements, regulatory influences
and vendor disruption.”
The Company also announced that its Board of Directors declared
a cash dividend for the fourth quarter of 2019. The quarterly cash
dividend is $0.09 per common share to be paid to the Company’s
stockholders of record as of the close of business on February 20,
2020. The payment date will be March 5, 2020.
The Company confirmed that it will hold a conference call to
discuss its fourth quarter results on Thursday, February 6, 2020,
at 9:30 a.m. Central Time. ADTRAN will webcast this conference
call. To listen, visit the Investor Relations site at
www.investors.adtran.com approximately ten minutes prior to the
start of the call and click on the conference call link
provided.
An online replay of the 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.
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 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 and Form 10-K/A for the year ended December 31,
2018 and our quarterly reports on Form 10-Q for the quarters ended
March 31, 2019, June 30, 2019, and September 30, 2019. 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
table below non-GAAP operating loss, which has been reconciled to
operating loss, and non-GAAP net loss and non-GAAP earnings (loss)
per share - basic and diluted, which have been reconciled to net
loss and loss 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. The presentation of non-GAAP operating
loss, non-GAAP net loss and non-GAAP loss per share – basic and
diluted, when combined with the U.S. GAAP presentation of operating
loss, net loss, and net loss 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 loss, non-GAAP net loss and non-GAAP loss per
share - basic and diluted may not be comparable to similar measures
calculated by other companies.
Condensed Consolidated Balance
Sheets (Unaudited) (In thousands)
December 31,
December 31,
2019
2018
Assets
Cash and cash equivalents
$
76,215
$
105,504
Short-term investments
30,801
3,246
Accounts receivable, net
90,531
99,385
Other receivables
16,566
36,699
Inventory, net
97,987
99,848
Prepaid expenses and other current
assets
7,892
10,744
Total Current Assets
319,992
355,426
Property, plant and equipment, net
73,708
80,635
Deferred tax assets, net
7,561
37,187
Goodwill
6,968
7,106
Intangibles, net
27,821
33,183
Other non-current assets
14,261
5,668
Long-term investments
94,489
108,822
Total Assets
$
544,800
$
628,027
Liabilities and Stockholders'
Equity
Accounts payable
$
44,552
$
60,054
Bonds payable
24,600
1,000
Unearned revenue
11,963
17,940
Accrued expenses
13,876
11,746
Accrued wages and benefits
14,929
14,752
Income tax payable, net
3,512
12,518
Total Current Liabilities
113,432
118,010
Non-current unearned revenue
6,012
5,296
Other non-current liabilities
45,969
33,842
Bonds payable
—
24,600
Total Liabilities
165,413
181,748
Stockholders' Equity
379,387
446,279
Total Liabilities and Stockholders'
Equity
$
544,800
$
628,027
Consolidated Statements of
Loss (Unaudited) (In thousands, except per share data)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2019
2018
2019
2018
Sales
Products
$
96,219
$
116,873
$
455,226
$
458,232
Services
19,568
23,215
74,835
71,045
Total Sales
115,787
140,088
530,061
529,277
Cost of sales
Products
56,481
70,745
263,834
278,929
Services
12,260
13,955
47,223
46,783
Total Cost of Sales
68,741
84,700
311,057
325,712
Gross Profit
47,046
55,388
219,004
203,565
Selling, general and administrative
expenses
30,934
28,079
130,597
124,440
Research and development expenses
31,221
31,092
126,767
124,547
Asset impairments
—
—
3,872
—
Gain on contingency
—
—
(1,230
)
—
Operating Loss
(15,109
)
(3,783
)
(41,002
)
(45,422
)
Interest and dividend income
872
1,422
2,765
4,026
Interest expense
(129
)
(135
)
(511
)
(533
)
Net investment gain (loss)
3,239
(9,450
)
11,434
(4,050
)
Other income (expense), net
(768
)
1,359
1,498
1,286
Gain on bargain purchase of a business
—
—
—
11,322
Loss Before Income Taxes
(11,895
)
(10,587
)
(25,816
)
(33,371
)
Income tax (expense) benefit
(768
)
2,140
(28,205
)
14,029
Net Loss
$
(12,663
)
$
(8,447
)
$
(54,021
)
$
(19,342
)
Weighted average shares outstanding –
basic
47,936
47,730
47,836
47,880
Weighted average shares outstanding –
diluted
47,936
47,730
47,836
47,880
Loss per common share – basic
$
(0.26
)
$
(0.18
)
$
(1.13
)
$
(0.40
)
Loss per common share – diluted
$
(0.26
)
$
(0.18
)
$
(1.13
)
$
(0.40
)
Consolidated Statements of
Cash Flows
(Unaudited)
(In thousands)
Twelve Months Ended
December 31,
2019
2018
Cash flows from operating
activities:
Net loss
$
(54,021
)
$
(19,342
)
Adjustments to reconcile net income to net
cash provided by operating
activities:
Depreciation and amortization
17,771
15,891
Asset impairments
3,872
—
Amortization of net discount on
available-for-sale investments
(100
)
(50
)
Net (gain) loss on long-term
investments
(11,434
)
4,050
Net (gain) loss on disposal of property,
plant and equipment
67
67
Gain on bargain purchase of a business
—
(11,322
)
Gain on contingency payment
(1,230
)
—
Gain on life insurance proceeds
(1,000
)
—
Stock-based compensation expense
6,962
7,155
Deferred income taxes
30,070
(17,257
)
Change in operating assets and
liabilities:
Accounts receivable, net
8,282
49,200
Other receivables
20,046
(8,522
)
Inventory, net
1,571
24,192
Prepaid expenses and other assets
5,180
10,727
Accounts payable, net
(13,813
)
(3,799
)
Accrued expenses and other liabilities
(3,559
)
(3,226
)
Income taxes payable
(8,705
)
7,690
Net cash provided by (used in)
operating activities
(41
)
55,454
Cash flows from investing
activities:
Purchases of property, plant and
equipment
(9,494
)
(8,110
)
Proceeds from sales and maturities of
available-for-sale investments
47,268
153,649
Purchases of available-for-sale
investments
(48,578
)
(123,209
)
Life insurance proceeds received
1,000
—
Acquisition of business, net of cash
acquired
13
(22,045
)
Net cash provided by (used in)
investing activities
(9,791
)
285
Cash flows from financing
activities:
Proceeds from stock option exercises
526
1,483
Purchases of treasury stock
(184
)
(15,532
)
Dividend payments
(17,212
)
(17,267
)
Payments on long-term debt
(1,000
)
(1,100
)
Net cash used in financing
activities
(17,870
)
(32,416
)
Net increase (decrease) in cash and cash
equivalents
(27,702
)
23,323
Effect of exchange rate changes
(1,587
)
(4,252
)
Cash and cash equivalents, beginning of
year
105,504
86,433
Cash and cash equivalents, end of
year
$
76,215
$
105,504
Supplemental disclosure of cash flow
information
Cash paid during the year for interest
$
512
$
534
Cash paid during the year for income
taxes
$
9,357
$
4,104
Supplemental disclosure of non-cash
investing activities
Purchases of property, plant and equipment
included in accounts payable
$
90
$
62
Contingent payment
$
—
$
1,230
Supplemental
Information
Reconciliation of Operating
Loss to Non-GAAP Operating Loss
(Unaudited)
Three Months ended
December 31,
Twelve Months ended
December 31,
2019
2018
2019
2018
Operating Loss
$
(15,109
)
$
(3,783
)
$
(41,002
)
$
(45,422
)
Acquisition related expenses,
amortizations and adjustments
1,357
(1)
1,433
(5
)
5,703
(8)
4,084
(14
)
Stock-based compensation expense
1,778
(2)
1,912
(6
)
6,962
(9)
7,155
(15
)
Restructuring expenses
1,356
(3)
25
(7
)
6,014
(10
)
7,261
(16
)
Deferred compensation income (expense)
536
(4)
(3,739
)
(4
)
2,767
(4)
(3,119
)
(4)
Asset impairments
—
—
3,872
(11
)
—
Gain on contingency
—
—
(1,230
)
(12
)
—
Settlement income
—
—
(746
)
(13
)
—
Non-GAAP Operating Loss
$
(10,082
)
$
(4,152
)
$
(17,660
)
$
(30,041
)
(1) $0.4 million is included in total cost
of sales, $0.5 million is included in selling, general and
administrative expenses and $0.5 million is included in research
and development expenses on the consolidated statements of
income.
(2) $0.1 million is included in total cost
of sales, $1.0 million is included in selling, general and
administrative expenses and $0.7 million is included in research
and development expenses on the consolidated statements of
income.
(3) $0.3 million is included in selling,
general and administrative expenses and $1.1 million is included in
research and development expenses on the consolidated statements of
income.
(4) Includes non-cash change in fair value
of equity investments held in the ADTRAN, Inc. Deferred
Compensation Program for Employees (as amended and restated as of
June 1, 2010) per ASU 2016-01, all of which is included in selling,
general and administrative expenses on the consolidated statement
of income.
(5) $0.5 million is included in total cost
of sales, $0.6 million is included in selling, general and
administrative expenses and $0.3 million is included in research
and development expenses on the consolidated statements of
income.
(6) $0.1 million is included in total cost
of sales, $1.1 million is included in selling, general and
administrative expenses and $0.7 million is included in research
and development expenses on the consolidated statements of
income.
(7) $0.1 million is included in selling,
general and administrative expenses on the consolidated statements
of income.
(8) $1.7 million is included in total cost
of sales, $2.1 million is included in selling, general and
administrative expenses and $1.9 million is included in research
and development expenses on the consolidated statements of
income.
(9) $0.4 million is included in total cost
of sales, $3.9 million is included in selling, general and
administrative expenses and $2.7 million is included in research
and development expenses on the consolidated statements of
income.
(10) $0.8 million is included in total
cost of sales, $2.3 million is included in selling, general and
administrative expenses and $2.9 million is included in research
and development expenses on the consolidated statements of
income.
(11) Includes abandonment of certain
information technology projects.
(12) Includes gain related to unearned
contingent liabilities recognized upon the acquisition of a
business in November 2018.
(13) Includes income related to certain
freight forwarder claim settlements which were received during the
three months ended June 30, 2019, all of which is included in total
cost of sales on the consolidated statements of income.
(14) $1.4 million is included in total
cost of sales, $1.5 million is included in selling, general and
administrative expenses and $1.2 million is included in research
and development expenses on the consolidated statements of
income.
(15) $0.4 million is included in total
cost of sales, $4.0 million is included in selling, general and
administrative expenses and $2.8 million is included in research
and development expenses on the consolidated statements of
income.
(16) $2.8 million is included in
total cost of sales, $2.7 million is included in selling, general
and administrative expenses and $1.8 million is included in
research and development expenses on the consolidated statements of
income.
Supplemental
Information
Reconciliation of Net Loss and
Loss per Common Share – Basic and Diluted to Non-GAAP
Net Income (Loss) and Non-GAAP
Earnings (Loss) per Common Share – Basic and Diluted
(Unaudited)
Three Months ended
December 31,
Twelve Months ended
December 31,
2019
2018
2019
2018
Net Loss
$
(12,663
)
$
(8,447
)
$
(54,021
)
$
(19,342
)
Acquisition related expenses,
amortizations and adjustments
1,357
1,433
5,703
4,084
Stock-based compensation expense
1,778
1,912
6,962
7,155
Restructuring expenses
1,356
25
6,014
7,261
Pension expense(1)
195
59
795
247
Valuation allowance
5,993
—
43,048
—
Asset impairments
—
—
3,872
—
Gain on contingency
—
—
(1,230
)
—
Settlement income
—
—
(746
)
—
Gain on bargain purchase of a business
—
—
—
(11,322
)
Tax effect of adjustments to net income
(loss)
(1,252
)
(818
)
(5,674
)
(4,476
)
Non-GAAP Net Income (Loss)
$
(3,236
)
$
(5,836
)
$
4,723
$
(16,393
)
Weighted average shares outstanding –
basic
47,936
47,730
47,836
47,880
Weighted average shares outstanding –
diluted
47,936
47,730
47,836
47,880
Loss per common share - basic
$
(0.26
)
$
(0.18
)
$
(1.13
)
$
(0.40
)
Loss per common share - diluted
$
(0.26
)
$
(0.18
)
$
(1.13
)
$
(0.40
)
Non-GAAP earnings (loss) per common
share - basic
$
(0.07
)
$
(0.12
)
$
0.10
$
(0.34
)
Non-GAAP earnings (loss) per common
share - diluted
$
(0.07
)
$
(0.12
)
$
0.10
$
(0.34
)
(1) Includes amortization of actuarial
losses related to the Company's pension plan for employees in
certain foreign countries.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200205005904/en/
ADTRAN, Inc. Rhonda Lambert, 256-963-7450 Investor Relations
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