ADTRAN, Inc. (NASDAQ:ADTN) (“ADTRAN” or the “Company”) today
announced financial results for the first quarter of 2020. For the
quarter, revenue was $114.5 million compared to $143.8 million for
the first quarter of 2019. Earnings for the first quarter of 2020
were a net loss of $10.0 million compared to net income of $0.8
million for the first quarter of 2019. Earnings per share was a
loss of $0.21 per share compared to earnings of $0.02 per share,
assuming dilution, for the first quarter of 2019. Non-GAAP earnings
were a net loss of $2.2 million compared to a non-GAAP net income
of $4.9 million for the first quarter of 2019. Non-GAAP earnings
per share was a loss of $0.05 per share compared to a non-GAAP
earnings of $0.10 per share, assuming dilution, for the first
quarter of 2019. Non-GAAP net income (loss) and non-GAAP earnings
(loss) per share exclude stock-based compensation expense,
acquisition related expenses, amortizations and adjustments,
restructuring expenses, amortization of pension actuarial losses,
valuation allowance related to our deferred tax assets, asset
impairments and deferred compensation related adjustments. The
reconciliations between GAAP net income (loss) and earnings (loss)
per share to non-GAAP net income (loss) and non-GAAP earnings
(loss) per share are set forth in the table provided below.
ADTRAN Chairman and Chief Executive Officer Tom Stanton stated,
“While COVID-19 has certainly impacted the way we work and live, it
has also underscored the value and integral role the
telecommunications industry plays in keeping everyone connected.
For ADTRAN, the first quarter came in largely as anticipated. We
experienced solid demand, and even in a challenging supply chain
environment we had solid growth in our domestic regional and
emerging service provider market segments. In addition, several
Tier 1 operators have recently selected ADTRAN as their
software-defined access platform and solution integration partner
for their next generation fiber networks.”
The Company also announced that its Board of Directors declared
a cash dividend for the first quarter of 2020. 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 May 21, 2020.
The payment date will be June 4, 2020.
The Company confirmed that it will hold a conference call to
discuss its first quarter results on Thursday, May 7, 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 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.
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 continued spread and extent of the impact of the
COVID-19 global pandemic, including the speed, depth, geographic
reach and duration of the spread, which could lead to a decrease in
demand for the Company’s products and services, and which has
disrupted, and could lead to further disruptions in, the Company’s
supply chain, adversely impacting the operations and financial
condition of our customers and the Company; actions to be taken by
the Company in response to the pandemic; the legal, regulatory and
administrative developments that occur at the federal, state and
local levels and in foreign jurisdictions in response to the
pandemic; potential disruptions, breaches, or other incidents
affecting the proper operation, availability, or security of the
Company’s or its partners’ information systems; declines in
revenues due to declining customer demand and deteriorating
macroeconomic conditions; potential increased expenses related to
labor or other expenditures; the impact of the COVID-19 pandemic on
our liquidity, as well as risks associated with disruptions in the
financial markets and the business of financial institutions as a
result of the COVID-19 pandemic which could impact us from a
financial perspective, and the exacerbation of other risks detailed
in our Annual Report on Form 10-K for the year ended December 31,
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 income (loss), which has been
reconciled to operating loss, and non-GAAP net income (loss) and
non-GAAP earnings (loss) per share - basic and diluted, which have
been reconciled to net income (loss) and earnings (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 income (loss), non-GAAP net
income (loss) and non-GAAP income (loss) per share - basic and
diluted, when combined with the U.S. GAAP presentation of operating
loss, net income (loss) and net income (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 income (loss), non-GAAP net income (loss) and
non-GAAP earnings (loss) per share - basic and diluted may not be
comparable to similar measures calculated by other companies.
Condensed Consolidated Balance
Sheets (Unaudited) (In thousands)
March 31,
December 31,
2020
2019
Assets
Cash and cash equivalents
$
71,285
$
73,773
Short-term investments
5,984
33,243
Accounts receivable, net
86,465
90,531
Other receivables
23,121
16,566
Inventory, net
99,515
98,305
Prepaid expenses and other current
assets
7,419
7,892
Total Current Assets
293,789
320,310
Property, plant and equipment, net
66,500
68,086
Deferred tax assets, net
7,447
7,561
Goodwill
6,968
6,968
Intangibles, net
26,472
27,821
Other assets
17,958
19,883
Long-term investments
79,136
94,489
Total Assets
$
498,270
$
545,118
Liabilities and Stockholders'
Equity
Accounts payable
$
47,685
$
44,870
Bonds payable
—
24,600
Unearned revenue
12,465
11,963
Accrued expenses and other liabilities
12,748
13,876
Accrued wages and benefits
13,247
13,890
Income tax payable, net
3,273
3,512
Total Current Liabilities
89,418
112,711
Non-current unearned revenue
4,476
6,012
Pension liability
15,546
15,886
Deferred compensation liability
18,321
21,698
Other non-current liabilities
6,794
8,385
Total Liabilities
134,555
164,692
Stockholders' Equity
363,715
380,426
Total Liabilities and Stockholders'
Equity
$
498,270
$
545,118
Condensed Consolidated
Statements of Income (Loss) (Unaudited) (In thousands, except per
share data)
Three Months Ended
March 31,
2020
2019
Sales
Network Solutions
$
97,372
$
125,822
Services & Support
17,151
17,969
Total Sales
114,523
143,791
Cost of Sales
Network Solutions
51,626
70,734
Services & Support
11,297
12,445
Total Cost of Sales
62,923
83,179
Gross Profit
51,600
60,612
Selling, general and administrative
expenses
26,620
35,132
Research and development expenses
29,859
31,647
Asset impairments
65
—
Operating Loss
(4,944
)
(6,167
)
Interest and dividend income
356
591
Interest expense
(1
)
(127
)
Net investment gain (loss)
(10,877
)
5,926
Other income, net
1,129
855
Income (Loss) Before Income
Taxes
(14,337
)
1,078
Income tax (expense) benefit
4,368
(308
)
Net Income (Loss)
$
(9,969
)
$
770
Weighted average shares outstanding –
basic
47,957
47,782
Weighted average shares outstanding –
diluted
47,957
47,853
(1)
Earnings (loss) per common share –
basic
$
(0.21
)
$
0.02
Earnings (loss) per common share –
diluted
$
(0.21
)
$
0.02
(1)
(1) Assumes exercise of dilutive stock
options calculated under the treasury stock method.
Condensed Consolidated
Statements of Cash Flows (Unaudited) (In thousands)
Three Months Ended
March 31,
2020
2019
Cash flows from operating
activities:
Net income (loss)
$
(9,969
)
$
770
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
4,365
4,496
Asset impairments
65
—
Amortization of net premium on
available-for-sale investments
61
6
Net (gain) loss on long-term
investments
10,877
(5,926
)
Net (gain) loss on disposal of property,
plant and equipment
52
(6
)
Stock-based compensation expense
1,791
1,859
Deferred income taxes
(63
)
235
Changes in operating assets and
liabilities:
Accounts receivable, net
3,052
170
Other receivables
(6,707
)
2,001
Inventory, net
(1,598
)
5,974
Prepaid expenses and other assets
2,206
2,809
Accounts payable, net
2,712
166
Accrued expenses and other liabilities
(6,680
)
(2,355
)
Income taxes payable
(188
)
(487
)
Net cash provided by (used in)
operating activities
(24
)
9,712
Cash flows from investing
activities:
Purchases of property, plant and
equipment
(1,406
)
(1,872
)
Proceeds from sales and maturities of
available-for-sale investments
46,440
17,039
Purchases of available-for-sale
investments
(16,879
)
(15,318
)
Acquisition of note receivable
(523
)
—
Net cash provided by (used in)
investing activities
27,632
(151
)
Cash flows from financing
activities:
Purchases of treasury stock
—
(184
)
Dividend payments
(4,328
)
(4,301
)
Repayment of bonds payable
(24,600
)
—
Net cash used in financing
activities
(28,928
)
(4,485
)
Net increase (decrease) in cash and cash
equivalents
(1,320
)
5,076
Effect of exchange rate changes
(1,168
)
(1,461
)
Cash and cash equivalents, beginning of
period
73,773
105,504
Cash and cash equivalents, end of
period
$
71,285
$
109,119
Supplemental disclosure of non-cash
investing activities:
Purchases of property, plant and equipment
included in accounts payable
$
302
$
273
Supplemental Information
Reconciliation of Operating Loss to Non-GAAP Operating Income
(Loss) (Unaudited)
Three Months Ended
March 31,
2020
2019
Operating Loss
$
(4,944
)
$
(6,167
)
Acquisition related expenses,
amortizations and adjustments
1,358
(1)
1,497
(6)
Stock-based compensation expense
1,791
(2)
1,859
(7)
Restructuring expenses
553
(3)
2,063
(8)
Deferred compensation adjustments
(3,460
)
(4)
2,124
(4)
Asset impairments
65
(5)
—
Non-GAAP Operating Income
(Loss)
$
(4,637
)
$
1,376
(1) $0.3 million is included in total cost
of sales, $0.6 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) $0.1 million is included in total cost
of sales, $1.1 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).
(3) $0.1 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 income (loss).
(4) Includes a non-cash change in fair
value of equity investments held in deferred compensation plans
offered to certain employees which is included in selling, general
and administrative expenses on the condensed consolidated
statements of income (loss).
(5) Includes abandonment of certain
information technology projects.
(6) $0.5 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 condensed consolidated statements
of income (loss).
(7) $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 condensed consolidated statements
of income (loss).
(8) $0.6 million is included in total cost
of sales, $0.8 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).
Supplemental Information
Reconciliation of Net Income (Loss) and Earnings (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
March 31,
2020
2019
Net Income (Loss)
$
(9,969
)
$
770
Acquisition related expenses,
amortizations and adjustments
1,358
1,497
Stock-based compensation expense
1,791
1,859
Restructuring expenses
553
2,063
Deferred compensation adjustments(1)
(1,787
)
—
Asset impairments
65
—
Pension expense(2)
237
203
Valuation allowance
6,090
—
Tax effect of adjustments to net income
(loss)
(578
)
(1,524
)
Non-GAAP Net Income (Loss)
$
(2,240
)
$
4,868
Weighted average shares outstanding –
basic
47,957
47,782
Weighted average shares outstanding –
diluted
47,957
47,853
Earnings (loss) per common share -
basic
$
(0.21
)
$
0.02
Earnings (loss) per common share -
diluted
$
(0.21
)
$
0.02
Non-GAAP earnings (loss) per common
share - basic
$
(0.05
)
$
0.10
Non-GAAP earnings (loss) per common
share - diluted
$
(0.05
)
$
0.10
(1) Includes a non-cash change in fair
value of equity investments held in deferred compensation plans
offered to certain employees and a net investment gain of $1.5
million related to the out of period remeasurement to historical
cost basis of certain long-term investments held in the Company's
stock as part of one of these deferred compensation plans.
(2) 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/20200506006136/en/
ADTRAN, Inc. Rhonda Lambert, 256-963-7450 Investor Relations
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