ADTRAN, Inc. Reports Earnings for the Second Quarter of 2021 and Declares Quarterly Cash Dividend

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HUNTSVILLE, Ala., August 05, 2021--(BUSINESS WIRE)--ADTRAN, Inc., (NASDAQ:ADTN) ("ADTRAN" or the "Company"), today announced financial results for the second quarter of 2021. For the quarter, revenue was $143.2 million. Net income for the second quarter of 2021 was $5.1 million and earnings per share, assuming dilution, was $0.10 per share. Non-GAAP net income was $8.1 million and non-GAAP earnings per share, assuming dilution, was $0.16 per share. Non-GAAP net income and non-GAAP earnings per share exclude acquisition-related expenses, amortizations and adjustments, stock-based compensation expense, restructuring expenses, amortization of pension actuarial losses, non-cash deferred compensation, change in valuation allowance related to our deferred tax assets, asset impairments and the tax effect of these adjustments to net income. 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, "Strong demand for fiber access continued to drive multiple segments of our business including infrastructure, in-home premises equipment and our SaaS platforms. Tier 3 regional operators, both in the U.S and Europe, showed exceptional strength with growth over 50% on a year-over-year basis. Demand continues to be strong and we believe we are in the early phases of this growth cycle."

The Company also announced that its Board of Directors declared a cash dividend for the second quarter of 2021. 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 August 19, 2021. The payment date will be September 2, 2021.

The Company confirmed that it will hold a conference call to discuss its second quarter results on Thursday, August 5, 2021, at 9:30 a.m. Central Time. ADTRAN will webcast this conference call. To listen, simply visit ADTRAN’s Investor Relations site at www.adtran.com/investor approximately ten minutes prior to the start of the call, click on the event "ADTRAN to Release 2nd Quarter 2021 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

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: (i) risks and uncertainties related to the continued impact of the SARS-CoV-2 coronavirus/COVID-19 global pandemic (or variants of the SARS-CoV-2 coronavirus, including the Delta variant), including the severity and duration of the pandemic and the delivery, acceptance and effectiveness of vaccines, 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 the Company and its customers; actions that have been taken and that may be taken by the Company, its customers, suppliers and counterparties in response to the pandemic, including the implementation of alternative work arrangements for employees, which may delay the timing of some orders and expected deliveries and which may impact the Company’s ability to mitigate inefficiencies, delays and additional costs in the Company’s product development, sales, marketing and customer service efforts; the legal, regulatory and administrative developments that have occurred and may continue to occur at the federal, state and local levels and in foreign jurisdictions in response to the pandemic, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns; potential disruptions, breaches, or other incidents affecting the proper operation, availability or security of the Company’s or its partners’ information systems; potential declines in revenues due to declining customer demand and deteriorating macroeconomic conditions; increased expenses related to labor, raw materials, freight or other expenditures; the impact of the COVID-19 pandemic on the Company’s 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 the Company from a financial perspective; the pace of recovery in our markets when the COVID-19 pandemic subsides, which could affect demand for our products; and (ii) the other risks detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2021. 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 income (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 earnings (loss) per share - basic and diluted, when combined with the U.S. GAAP presentation of operating income (loss), net income (loss) and earnings (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)

June 30,

December 31,

2021

2020

Assets

Current Assets

Cash and cash equivalents

$

69,927

$

60,161

Restricted cash

54

18

Short-term investments

2,818

3,131

Accounts receivable, net

122,669

98,827

Other receivables

20,187

21,531

Inventory, net

119,012

125,457

Prepaid expenses and other current assets

9,830

8,293

Total Current Assets

344,497

317,418

Property, plant and equipment, net

58,270

62,399

Deferred tax assets, net

9,165

9,869

Goodwill

6,968

6,968

Intangibles, net

21,354

23,470

Other assets

28,394

25,425

Long-term investments

82,778

80,130

Total Assets

$

551,426

$

525,679

Liabilities and Stockholders' Equity

Accounts payable

$

66,499

$

49,929

Unearned revenue

15,889

14,092

Accrued expenses and other liabilities

15,655

13,609

Accrued wages and benefits

15,681

15,262

Income tax payable, net

2,345

1,301

Total Current Liabilities

116,069

94,193

Non-current unearned revenue

7,030

6,888

Pension liability

17,566

18,664

Deferred compensation liability

28,769

25,866

Other non-current liabilities

6,477

7,124

Total Liabilities

175,911

152,735

Stockholders' Equity

375,515

372,944

Total Liabilities and Stockholders' Equity

$

551,426

$

525,679

Condensed Consolidated Statements of Income (Loss)

(Unaudited)

(In thousands, except per share data)

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Revenue

Network Solutions

$

125,449

$

111,323

$

239,258

$

208,695

Services & Support

17,783

17,392

31,507

34,543

Total Revenue

143,232

128,715

270,765

243,238

Cost of Revenue

Network Solutions

70,014

64,071

135,015

115,697

Services & Support

10,550

11,172

19,481

22,469

Total Cost of Revenue

80,564

75,243

154,496

138,166

Gross Profit

62,668

53,472

116,269

105,072

Selling, general and administrative expenses

30,866

30,799

58,301

57,419

Research and development expenses

27,871

28,712

55,372

58,571

Asset impairments

65

Operating Income (Loss)

3,931

(6,039

)

2,596

(10,983

)

Interest and dividend income

253

331

543

687

Interest expense

(6

)

(12

)

(1

)

Net investment gain (loss)

2,009

9,852

3,005

(1,025

)

Other income (expense), net

26

(1,757

)

2,025

(628

)

Income (Loss) Before Income Taxes

6,213

2,387

8,157

(11,950

)

Income tax (expense) benefit

(1,127

)

(1,635

)

(2,175

)

2,733

Net Income (Loss)

$

5,086

$

752

$

5,982

$

(9,217

)

Weighted average shares outstanding – basic

48,449

47,958

48,393

47,957

Weighted average shares outstanding – diluted

49,426

(1)

48,254

(1)

49,225

(1)

47,957

Earnings (loss) per common share – basic

$

0.10

$

0.02

$

0.12

$

(0.19

)

Earnings (loss) per common share – diluted

$

0.10

(1)

$

0.02

(1)

$

0.12

(1)

$

(0.19

)

(1) Assumes exercise of dilutive stock awards calculated under the treasury stock method.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Six Months Ended

June 30,

2021

2020

Cash flows from operating activities:

Net income (loss)

$

5,982

$

(9,217

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

8,232

8,404

(Gain) loss on investments

(3,255

)

1,025

Stock-based compensation expense

3,615

3,446

Deferred income taxes

441

(5

)

Other

53

138

Asset impairments

65

Changes in operating assets and liabilities:

Accounts receivable, net

(24,322

)

(4,727

)

Other receivables

1,412

(9,468

)

Inventory, net

5,940

(7,878

)

Prepaid expenses, other current assets and other assets

(4,767

)

1,444

Accounts payable

16,814

17,389

Accrued expenses and other liabilities

6,999

2,097

Income taxes payable, net

1,069

(1,032

)

Net cash provided by operating activities

18,213

1,681

Cash flows from investing activities:

Purchases of property, plant and equipment

(2,210

)

(3,148

)

Proceeds from sales and maturities of available-for-sale investments

20,597

63,318

Purchases of available-for-sale investments

(20,121

)

(31,897

)

Acquisition of note receivable

(523

)

Net cash provided by (used in) investing activities

(1,734

)

27,750

Cash flows from financing activities:

Proceeds from stock option exercises

3,552

Tax withholdings related to stock-based compensation settlements

(113

)

Dividend payments

(8,735

)

(8,665

)

Repayment of bonds payable

(24,600

)

Net cash used in financing activities

(5,296

)

(33,265

)

Net increase (decrease) in cash, cash equivalents and restricted cash

11,183

(3,834

)

Effect of exchange rate changes

(1,381

)

306

Cash, cash equivalents and restricted cash, beginning of period

60,179

73,773

Cash, cash equivalents and restricted cash, end of period

$

69,981

$

70,245

Supplemental disclosure of non-cash investing activities:

Right-of-use assets obtained in exchange for lease obligations

$

275

$

93

Purchases of property, plant and equipment included in accounts payable

$

144

$

198

Supplemental Information

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

(Unaudited)

Three Months Ended

June 30,

Six Months ended

June 30,

2021

2020

2021

2020

Operating Income (Loss)

$

3,931

$

(6,039

)

$

2,596

$

(10,983

)

Acquisition-related expenses, amortizations and adjustments

2,384

(1)

1,100

(5)

3,429

(8)

2,457

(11)

Stock-based compensation expense

1,808

(2)

1,655

(6)

3,615

(9)

3,446

(12)

Restructuring expenses

8

(3)

1,192

(7)

309

(10)

1,745

(13)

Deferred compensation adjustments

1,994

(4)

3,433

(4)

2,550

(4)

(26)

(4)

Asset impairments

65

(14)

Non-GAAP Operating Income (Loss)

$

10,125

$

1,341

$

12,499

$

(3,296)

(1) $1.9 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 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 condensed consolidated statements of income (loss).

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

(4) Includes non-cash change in fair value of equity investments held in the ADTRAN, 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).

(5) $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).

(6) $0.1 million is included in total cost of revenue, $1.0 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).

(7) $0.5 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) $2.4 million is included in selling, general and administrative expenses and $1.0 million is included in research and development expenses on the condensed consolidated statements of income (loss).

(9) $0.2 million is included in total cost of revenue, $2.2 million is included in selling, general and administrative expenses and $1.2 million is included in research and development expenses on the condensed consolidated statements of income (loss).

(10) $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).

(11) $0.3 million is included in total cost of revenue, $1.2 million is included in selling, general and administrative expenses and $1.0 million is included in research and development expenses on the consolidated statements of income (loss).

(12) $0.2 million is included in total cost of revenue, $2.0 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 (loss).

(13) $0.1 million is included in total cost of revenue, $0.5 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 (loss).

(14) Includes abandonment of certain information technology projects.

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

June 30,

Six Months ended

June 30,

2021

2020

2021

2020

Net Income (Loss)

$

5,086

$

752

$

5,982

$

(9,217

)

Acquisition-related expenses, amortizations and adjustments

2,384

1,100

3,429

2,457

Stock-based compensation expense

1,808

1,655

3,615

3,446

Restructuring expenses

8

1,192

309

1,745

Pension expense(1)

275

235

553

472

Deferred compensation adjustments(2)

546

445

814

(1,342)

(3)

Valuation allowance related to deferred tax assets

(727

)

(2,512

)

1,958

3,578

Asset impairments

65

Tax effect of adjustments to net income (loss)

(1,243

)

(1,233

)

(2,195

)

(1,810)

Non-GAAP Net Income (Loss)

$

8,137

$

1,634

$

14,465

$

(606)

Weighted average shares outstanding – basic

48,449

47,958

48,393

47,957

Weighted average shares outstanding – diluted

49,426

48,254

49,225

47,957

Earnings (loss) per common share - basic

$

0.10

$

0.02

$

0.12

$

(0.19

)

Earnings (loss) per common share - diluted

$

0.10

$

0.02

$

0.12

$

(0.19

)

Non-GAAP earnings (loss) per common share - basic

$

0.17

$

0.04

$

0.30

$

(0.01

)

Non-GAAP earnings (loss) per common share - diluted

$

0.16

$

0.04

$

0.29

$

(0.01

)

(1) Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countries.

(2) Includes a non-cash change in fair value of equity investments held in deferred compensation plans offered to certain employees.

(3) Includes 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 the Company’s deferred compensation plans.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210804006164/en/

Contacts

Rhonda Lambert
256-963-7450

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