ADTRAN Holdings, Inc. (NASDAQ: ADTN and FSE: QH9) (“ADTRAN
Holdings” or the “Company”) today announced its unaudited financial
results for the second quarter of 2024.
- Revenue: $226.0 million
- Gross margin:
- GAAP gross margin: 36.1%; Non-GAAP gross margin: 41.9%
- Operating margin:
- GAAP operating margin negative 17.0%; Non-GAAP operating margin
positive 0.7%
- Net Income (Loss):
- GAAP net loss attributable to the Company: $49.9 million;
Non-GAAP net loss attributable to the Company: $18.8 million
- Earnings (Loss) per share:
- GAAP diluted loss per share attributable to the Company: $0.63;
Non-GAAP diluted loss per share attributable to the Company:
$0.24.
ADTRAN Holdings’ Chairman and Chief Executive Officer Tom
Stanton stated, "We had a solid second quarter, during which we saw
improvements across all our major operating metrics, including
profitability and working capital. During the quarter, we saw
growth in our customer base across the U.S. and Europe as customers
continue to adopt our latest fiber networking solutions”.
For the third quarter of 2024, the Company expects revenue in a
range of $215million to $235million. Non-GAAP operating margin is
expected in a range of -1% to +3%.
Furthermore, non-GAAP operating margin (which is calculated as
non-GAAP operating loss divided by revenue) is a non-GAAP financial
measure. The Company has provided third quarter guidance with
regard to non-GAAP operating margin. This measure excludes from the
corresponding GAAP financial measure the effect of adjustments as
described below. The Company has not provided a reconciliation of
such non-GAAP guidance to guidance presented on a GAAP basis
because it cannot predict and quantify without unreasonable effort
all of the adjustments that may occur during the period due to the
difficulty of predicting the timing and amounts of various items
within a reasonable range. In particular, non-GAAP operating margin
excludes certain items, including continued restructuring and
integration expenses that will continue to evolve as our business
efficiency program is implemented, that the Company is unable to
quantitatively predict. Depending on the materiality of these
items, they could have a significant impact on the Company's GAAP
financial results.
The Company will hold a conference call to discuss its second
quarter results on Tuesday, August 06, 2024, at 9:30 a.m. Central
Time, or 4:30 p.m. Central European Summer Time. The Company 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 2nd Quarter 2024 Financial Results and Earnings Call”, and
click on the webcast link.
An online replay of the Company’s conference call, as well as
the transcript 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
investor.relations@adtran.com.
Cautionary Note Regarding Forward-Looking Statements
Statements contained in this press release which are not
historical facts, such as those relating to expectations regarding
future revenues; ADTRAN Holdings ability to reduce its inventory
levels; ADTRAN Holdings’ potential funding opportunities; and
ADTRAN Holdings’ strategy and outlook, 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 have caused and may in the future cause actual events
or results to differ materially from those estimated by ADTRAN
Holdings include, but are not limited to: (i) risks and
uncertainties relating to ADTRAN Holdings’ ability to continue to
reduce expenditures and the impact of such reductions on its
financial results and financial condition; (ii) the risk of
fluctuations in revenue due to lengthy sales and approval processes
required by major and other service providers for new products, as
well as ongoing tighter inventory management of ADTRAN Holdings’
customers ; (iii) risks and uncertainties relating to ongoing
material weaknesses in our internal control over financial
reporting; (iv) our ability to comply with the covenants set forth
in our credit facility; (v) risks posed by potential breaches of
information systems and cyber-attacks; (vi) the risk that ADTRAN
Holdings may not be able to effectively compete, including through
product improvements and development; and (vii) other risks set
forth in ADTRAN Holdings’ public filings made with the Securities
and Exchange Commission (“SEC”), including its Annual Report on
Form 10-K for the year ended December 31, 2023, its Quarterly
Report on Form 10-Q for the first quarter ended March 31, 2024, and
risks to be disclosed in its Form 10-Q for the quarterly period
ended March 31, 2024.
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
(expense) income, net loss inclusive of the non-controlling
interest, net loss attributable to the Company, net income
attributable to the non-controlling interest, and loss per share -
basic and diluted, attributable to the Company, and net cash
provided by (used in) operating activities, 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
(loss), non-GAAP other expense, non-GAAP net loss inclusive of the
non-controlling interest, non-GAAP net loss attributable to the
Company, non-GAAP net income attributable to the non-controlling
interest, non-GAAP loss per share - basic and diluted, attributable
to the Company, respectively, and non-GAAP free cash flow. Such
non-GAAP measures exclude acquisition-related expenses,
amortization 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 as well as legal
and advisory fees related to a potential significant transaction),
stock-based compensation expense, amortization of pension actuarial
losses, deferred compensation adjustments, integration expenses,
restructuring expenses, goodwill impairments, the tax effect of
these adjustments to net loss and purchases of property, plant and
equipment. These measures are used by management in our ongoing
planning and annual budgeting processes. Additionally, we believe
the presentation of these non-GAAP measures 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.
About Adtran
ADTRAN Holdings, Inc. (NASDAQ: ADTN and FSE: QH9) is the parent
company of Adtran, Inc., a leading global provider of open,
disaggregated networking and communications solutions that enable
voice, data, video and internet communications across any network
infrastructure. From the cloud edge to the subscriber edge, Adtran
empowers communications service providers around the world to
manage and scale services that connect people, places and things.
Adtran solutions are used by service providers, private
enterprises, government organizations and millions of individual
users worldwide. ADTRAN Holdings, Inc. is also the largest
shareholder of Adtran Networks SE, formerly ADVA Optical Networking
SE. Find more at Adtran, LinkedIn and Twitter.
Published by
ADTRAN Holdings, Inc. www.adtran.com
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands)
June 30,
December 31,
2024
2023
Assets
Current Assets
Cash and cash equivalents
$
111,185
$
87,167
Accounts receivable, net
186,176
216,445
Other receivables
11,436
17,450
Income tax receivable
13,050
7,933
Inventory, net
287,860
362,295
Prepaid expenses and other current
assets
58,612
45,566
Total Current Assets
668,319
736,856
Property, plant and equipment, net
134,578
123,020
Deferred tax assets
24,931
25,787
Goodwill
54,897
353,415
Intangibles, net
290,793
327,985
Other non-current assets
87,105
87,706
Long-term investments
30,159
27,743
Total Assets
$
1,290,782
$
1,682,512
Liabilities, Redeemable Non-Controlling
Interest and Equity
Current Liabilities
Accounts payable
$
158,550
$
162,922
Unearned revenue
55,107
46,731
Accrued expenses and other liabilities
36,307
37,607
Accrued wages and benefits
37,520
27,030
Income tax payable, net
2,228
5,221
Total Current Liabilities
289,712
279,511
Non-current revolving credit agreement
outstanding
190,273
195,000
Deferred tax liabilities
21,077
35,655
Non-current unearned revenue
26,584
25,109
Non-current pension liability
11,505
12,543
Deferred compensation liability
30,601
29,039
Non-current lease obligations
26,613
31,420
Other non-current liabilities
34,445
28,657
Total Liabilities
630,810
636,934
Redeemable Non-Controlling
Interest
439,743
451,756
Equity
Common stock
791
790
Additional paid-in capital
802,737
795,304
Accumulated other comprehensive income
28,274
47,461
Retained deficit
(606,375
)
(243,908)
Treasury stock
(5,198
)
(5,825)
Total Equity
220,229
593,822
Total Liabilities, Redeemable
Non-Controlling Interest and Equity
$
1,290,782
$
1,682,512
Condensed Consolidated
Statements of Loss
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Revenue
Network Solutions
$
179,194
$
283,002
$
360,467
$
565,420
Services & Support
46,797
44,376
91,697
85,870
Total Revenue
225,991
327,378
452,164
651,290
Cost of Revenue
Network Solutions
124,457
216,960
250,783
436,090
Network Solutions - inventory write-down
and other charges
143
—
8,925
—
Services & Support
19,816
17,865
38,626
34,839
Total Cost of Revenue
144,416
234,825
298,334
470,929
Gross Profit
81,575
92,553
153,830
180,361
Selling, general and administrative
expenses
59,493
66,583
118,593
133,980
Research and development expenses
60,388
70,598
120,639
140,741
Goodwill impairment
—
—
292,583
—
Operating Loss
(38,306
)
(44,628
)
(377,985
)
(94,360
)
Interest and dividend income
366
358
763
662
Interest expense
(6,906
)
(4,064
)
(11,504
)
(7,351
)
Net investment gain
872
1,262
3,125
2,514
Other (expense) income, net
(901
)
2,494
409
2,191
Loss Before Income Taxes
(44,875
)
(44,578
)
(385,192
)
(96,344
)
Income tax (expense) benefit
(2,136
)
8,363
16,511
19,676
Net Loss
$
(47,011
)
$
(36,215
)
$
(368,681
)
$
(76,668
)
Less: Net Income attributable to
non-controlling interest
2,854
2,882
5,734
2,512
Net Loss attributable to ADTRAN
Holdings, Inc.
$
(49,865
)
$
(39,097
)
$
(374,415
)
$
(79,180
)
Weighted average shares outstanding –
basic
78,852
78,366
78,803
78,364
Weighted average shares outstanding –
diluted
78,852
78,366
78,803
78,364
Loss per common share attributable to
ADTRAN Holdings, Inc. – basic
$
(0.63
)
$
(0.50
)
$
(4.75
)
$
(1.01
)
Loss per common share attributable to
ADTRAN Holdings, Inc. – diluted
$
(0.63
)
$
(0.50
)
$
(4.75
)
$
(1.01
)
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended
June 30,
2024
2023
Cash flows from operating
activities:
Net loss
$
(368,681
)
$
(76,668
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
45,156
67,467
Goodwill impairment
292,583
—
Amortization of debt issuance cost
1,013
291
Gain on investments, net
(2,867
)
(4,530
)
Net loss on disposal of property, plant
and equipment
185
—
Stock-based compensation expense
7,793
8,103
Deferred income taxes
(13,684
)
(31,962
)
Other, net
(126
)
130
Inventory write down - business efficiency
program
4,135
—
Inventory reserves
3,722
20,885
Changes in operating assets and
liabilities:
Accounts receivable, net
26,913
40,975
Other receivables
6,279
561
Income taxes receivable, net
(5,653
)
—
Inventory
62,151
(6,920
)
Prepaid expenses, other current assets and
other assets
(14,731
)
7,105
Accounts payable
(3,966
)
(67,923
)
Accrued expenses and other liabilities
19,152
110
Income taxes payable, net
(2,878
)
6,216
Net cash provided by (used in)
operating activities
56,496
(36,160
)
Cash flows from investing
activities:
Purchases of property, plant and
equipment
(29,369
)
(20,118
)
Proceeds from sales and maturities of
available-for-sale investments
956
2,074
Purchases of available-for-sale
investments
(121
)
(580
)
Proceeds from beneficial interests in
securitized accounts receivable
—
1,156
Net cash used in investing
activities
(28,534
)
(17,468
)
Cash flows from financing
activities:
Tax withholdings related to stock-based
compensation settlements
(189
)
(6,315
)
Proceeds from stock option exercises
219
163
Dividend payments
—
(14,156
)
Proceeds from receivables purchase
agreement
68,556
—
Repayments on receivables purchase
agreement
(66,399
)
—
Proceeds from draw on revolving credit
agreements
—
163,729
Repayment of revolving credit
agreements
(5,000
)
(49,155
)
Payment of redemption of redeemable
non-controlling interest
(25
)
(1,202
)
Payment of debt issuance cost
(1,994
)
—
Repayment of notes payable
—
(24,885
)
Net cash (used in) provided by
financing activities
(4,832
)
68,179
Net increase in cash and cash
equivalents
23,130
14,551
Effect of exchange rate changes
888
1,099
Cash and cash equivalents, beginning of
period
87,167
108,644
Cash and cash equivalents, end of
period
$
111,185
$
124,294
Supplemental disclosure of cash financing
activities:
Cash paid for interest
$
6,554
$
4,719
Cash paid for income taxes
$
7,433
$
—
Cash used in operating activities related
to operating leases
$
4,780
$
5,082
Supplemental disclosure of non-cash
investing activities:
Right-of-use assets obtained in exchange
for lease obligations
$
1,999
$
515
Purchases of property, plant and equipment
included in accounts payable
$
1,059
$
2,662
Supplemental
Information
Reconciliation of Gross Profit
and Gross Margin to
Non-GAAP Gross Profit and
Non-GAAP Gross Margin
(Unaudited)
(In thousands)
Three Months Ended
Six Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Total Revenue
$
225,991
$
226,173
$
327,378
$
452,164
$
651,290
Cost of Revenue
$
144,416
$
153,918
$
234,825
$
298,334
$
470,929
Acquisition-related expenses,
amortizations and adjustments(1)
(10,064
)
(10,177
)
(33,439
)
(20,241
)
(66,017
)
Stock-based compensation expense
(280
)
(275
)
(335
)
(555
)
(575
)
Restructuring expenses(2)
(2,788
)
(11,247
)
—
(14,035
)
(76
)
Integration expenses(3)
(35
)
(35
)
—
(70
)
—
Non-GAAP Cost of Revenue
$
131,249
$
132,184
$
201,051
$
263,433
$
404,261
Gross Profit
$
81,575
$
72,255
$
92,553
$
153,830
$
180,361
Non-GAAP Gross Profit
$
94,742
$
93,989
$
126,327
$
188,731
$
247,029
Gross Margin
36.1
%
31.9
%
28.3
%
34.0
%
27.7
%
Non-GAAP Gross Margin
41.9
%
41.6
%
38.6
%
41.7
%
37.9
%
(1) Includes intangible amortization of
backlog, inventory fair value adjustments, developed technology,
customer relationships, and trade names acquired in connection with
business combinations.
(2) Includes expenses for restructuring
program designed to optimize the assets and business processes
following the business combination with Adtran Networks SE. These
expenses include inventory write down and other charges of $8.9
million for the six months ended June 30, 2024, incurred as a
result of a strategy shift which included discontinuance of certain
product lines in connection with the Business Efficiency Program.
The restructuring program commenced upon the closing of the
business combination with Adtran Networks SE and is expected to be
substantially completed in late 2024. Additionally, as part of the
Business Efficiency Program, management determined to close a
facility in Greifswald, Germany. These expenses include
restructuring wage charges of $2.3 million for the three and six
months ended June 30, 2024, respectively. The closure of the
facility is expected to be completed by December 31, 2024.
(3) Includes expenses related to the
Company's one-time integration bonus program in connection with
synergy targets as a result of the business combination with Adtran
Networks SE. Includes fees incurred for the expansion of internal
controls at Adtran Networks SE and the implementation of the
DPTLA.
Supplemental
Information
Reconciliation of Operating
Expenses to Non-GAAP Operating Expenses
(Unaudited)
(In thousands)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2024
2024
2023
2024
2023
Operating Expenses
$
119,881
$
411,934
$
137,181
$
531,815
$
274,721
Acquisition-related expenses,
amortizations and adjustments
(7,233
)
(1)
(4,881
)
(6)
(4,398
)
(11)
(12,114
)
(15)
(8,982
)
(19)
Stock-based compensation expense
(3,321
)
(2)
(3,447
)
(7)
(3,974
)
(12)
(6,768
)
(16)
(7,432
)
(20)
Restructuring expenses
(14,742
)
(3)
(5,862
)
(8)
(5,868
)
(13)
(20,604
)
(17)
(8,229
)
(21)
Integration expenses
(531
)
(4)
(480
)
(9)
(563
)
(14)
(1,011
)
(18)
(1,412
)
(22)
Deferred compensation adjustments(5)
(848
)
(1,940
)
307
(2,788
)
(87
)
Goodwill impairment
—
(292,583
)
(10)
—
(292,583
)
(10)
—
Non-GAAP Operating Expenses
$
93,206
$
102,741
$
122,685
$
195,947
$
248,579
(1) Includes $3.9M of intangible
amortization of developed technology, customer relationships, and
trade names acquired in connection with business combinations and
$2.8 million of legal and advisory fees related to a potential
strategic transaction which are both included in selling, general
and administrative expenses and $0.5 million is included in
research and development expenses on the condensed consolidated
statements of loss.
(2) $2.4 million is included in selling,
general and administrative expenses and $0.9 million is included in
research and development expenses on the condensed consolidated
statements of loss.
(3) $3.5 million is included in selling,
general and administrative expenses and $11.3 million is included
in research and development expenses on the condensed consolidated
statements of loss. Includes expenses of $13.5 million of wage
related and other charges due to the Greifswald facility closure of
which $2.6 million is included in selling, general and
administrative and $10.9 million is included in research and
development expenses on the condensed consolidated statements of
loss.
(4) $0.5 million is included in selling,
general and administrative expenses on the condensed consolidated
statements of loss, and is primarily related to the Company's
one-time integration bonus program in connection with synergy
targets as a result of the business combination with Adtran
Networks SE.
(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 loss.
(6) Includes intangible amortization of
developed technology, customer relationships, and trade names
acquired in connection with business combinations, of which $4.4
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 loss.
(7) $2.5 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 loss.
(8) $1.8 million is included in selling,
general and administrative expenses and $4.1 million is included in
research and development expenses on the condensed consolidated
statements of loss.
(9) $0.5 million is included in selling,
general and administrative expenses and $0.02 million is included
in research and development expenses on the condensed consolidated
statements of loss, and is primarily related to the Company's
one-time integration bonus program in connection with synergy
targets as a result of the business combination with Adtran
Networks SE.
(10) Non-cash impairment of goodwill in
our Network Solutions reporting unit, necessitated by factors such
as a decrease in the Company's market capitalization, cautious
service provider spending due to economic uncertainty and continued
elevated customer inventory adjustments.
(11) Includes intangible amortization of
developed technology, customer relationships, and trade names
acquired in connection with business combinations, of which $3.9
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 loss.
(12) $2.7 million is included in selling,
general and administrative expenses and $1.3 million is included in
research and development expenses on the condensed consolidated
statements of loss.
(13) $1.4 million is included in selling,
general and administrative expenses and $4.5 million is included in
research and development expenses on the condensed consolidated
statements of loss.
(14) $0.6 million is included in selling,
general and administrative expenses on the condensed consolidated
statements of loss. Includes fees relating to the expansion of
internal controls at Adtran Networks SE and the implementation of
the DPLTA.
(15) Includes intangible amortization of
developed technology, customer relationships, and trade names
acquired in connection with business combinations, of which $11.2
million is included in selling, general and administrative expenses
and $0.9 million is included in research and development expenses
on the condensed consolidated statements of loss.
(16) $4.9 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 loss.
(17) $5.3 million is included in selling,
general and administrative expenses and $15.3 million is included
in research and development expenses on the condensed consolidated
statements of loss. Includes expenses of $13.5 million of wage
related and other charges due to the Greifswald facility closure of
which $2.6 million is included in selling, general and
administrative and $10.9 million is included in research and
development expenses on the condensed consolidated statements of
loss.
(18) $1.0 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 loss, and is primarily related to the
Company's one-time integration bonus program in connection with
synergy targets as a result of the business combination with Adtran
Networks SE.
(19) Includes intangible amortization of
developed technology, customer relationships, and trade names
acquired in connection with business combinations, of which $8.0
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 loss.
(20) $5.1 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 loss.
(21) $3.5 million is included in selling,
general and administrative expenses and $4.7 million is included in
research and development expenses on the condensed consolidated
statements of loss.
(22) $1.4 million is included in selling,
general and administrative expenses on the condensed consolidated
statements of loss. Includes fees relating to the expansion of
internal controls at Adtran Networks SE and the implementation of
the DPLTA.
Supplemental
Information
Reconciliation of Operating
Loss to Non-GAAP Operating Income (Loss)
(Unaudited)
(In thousands)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30
June 30
2024
2024
2023
2024
2023
Operating Loss
$
(38,306
)
$
(339,679
)
$
(44,628
)
$
(377,985
)
$
(94,360
)
Acquisition related expenses,
amortizations and adjustments(1)
17,297
15,058
37,837
32,355
74,999
Stock-based compensation expense
3,601
3,722
4,309
7,323
8,007
Restructuring expenses(2)
17,530
17,110
5,868
34,640
8,305
Integration expenses(3)
566
514
563
1,080
1,412
Deferred compensation adjustments(4)
848
1,940
(307
)
2,788
87
Goodwill impairment(5)
—
292,583
—
292,583
—
Non-GAAP Operating Income
(Loss)
$
1,536
$
(8,752
)
$
3,642
$
(7,216
)
$
(1,550
)
(1) Includes intangible
amortization of backlog, inventory fair value adjustments,
developed technology, customer relationships, and trade names
acquired in connection with business combinations.
(2) Includes expenses for
restructuring program designed to optimize the assets and business
processes following the business combination with Adtran Networks
SE. These expenses include inventory write down and other charges
incurred as a result of a strategic shift in certain product lines
in connection with the restructuring program. Additionally,
includes expenses related to the closure of the Greifswald
facility.
(3) Includes expenses related to
the Company's one-time integration bonus program in connection with
synergy targets as a results of the business combination with
Adtran Networks SE. Includes fees incurred for the expansion of
internal controls at Adtran Networks SE and the implementation of
the DPTLA.
(4) 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 loss.
(5) Non-cash impairment of
goodwill in our Network Solutions reporting unit, necessitated by
factors such as a decrease in the Company’s market capitalization,
cautious service provider spending due to economic uncertainty and
continued customer inventory adjustments.
Supplemental
Information
Reconciliation of Other
Expense to Non-GAAP Other Expense
(Unaudited)
(In thousands)
Three Months Ended
Six Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Interest and dividend income
$
366
$
397
$
358
$
763
$
662
Interest expense
(6,906
)
(4,598
)
(4,064
)
(11,504
)
(7,351
)
Net investment gain
872
2,253
1,262
3,125
2,514
Other (expense) income, net
(901
)
1,310
2,494
409
2,191
Total Other (Expense) Income
$
(6,569
)
$
(638
)
$
50
$
(7,207
)
$
(1,984
)
Deferred compensation adjustments (1)
(896
)
(2,439
)
(1,254
)
(3,335
)
(2,504
)
Pension expense (2)
7
7
6
14
13
Non-GAAP Other Expense
$
(7,458
)
$
(3,070
)
$
(1,198
)
$
(10,528
)
$
(4,475
)
(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 Net Loss
inclusive of Non-Controlling Interest to
Non-GAAP Net (Loss) Income
inclusive of Non-Controlling Interest
(Unaudited)
and
Reconciliation of Net Income
attributable to Non-Controlling Interest to
Non-GAAP Net Income
attributable to Non-Controlling Interest
(Unaudited)
and
Reconciliation of Net Loss
attributable to ADTRAN Holdings, Inc. and
Loss per Common Share
attributable to ADTRAN Holdings, Inc. – Basic and Diluted
to
Non-GAAP Net Loss attributable
to ADTRAN Holdings, Inc. and
Non-GAAP Loss per Common Share
attributable to ADTRAN Holdings, Inc. – Basic and Diluted
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended
Six Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Net Loss attributable to ADTRAN
Holdings, Inc.
$
(49,865
)
$
(324,550
)
$
(39,097
)
$
(374,415
)
$
(79,180
)
Plus: Net Income attributable to
non-controlling interest (1)
2,854
2,880
2,882
5,734
2,512
Net Loss inclusive of non-controlling
interest
$
(47,011
)
$
(321,670
)
$
(36,215
)
$
(368,681
)
$
(76,668
)
Acquisition related expenses,
amortizations and adjustments
17,297
15,058
37,837
32,355
74,999
Stock-based compensation expense
3,601
3,722
4,309
7,323
8,007
Deferred compensation adjustments (2)
(48
)
(499
)
(1,561
)
(547
)
(2,417
)
Pension adjustments (3)
7
7
6
14
13
Restructuring expenses
17,530
17,110
5,868
34,640
8,305
Integration expenses
566
514
563
1,080
1,412
Goodwill impairment
—
292,583
—
292,583
—
Tax effect of adjustments to net loss
(7,880
)
(5,614
)
(13,426
)
(13,494
)
(25,733
)
Non-GAAP Net (Loss) Income inclusive of
non-controlling interest
$
(15,938
)
$
1,211
$
(2,619
)
$
(14,727
)
$
(12,082
)
Less: Non-GAAP Net Income attributable
to non-controlling interest (1)
2,854
2,880
2,882
5,734
4,041
Non-GAAP Net Loss attributable to
ADTRAN Holdings, Inc.
$
(18,792
)
$
(1,669
)
$
(5,501
)
$
(20,461
)
$
(16,123
)
GAAP Net Income attributable to
non-controlling interest (1)
$
2,854
$
2,880
$
2,882
$
5,734
$
2,512
Acquisition related expenses,
amortizations and adjustments
—
—
—
—
1,457
Restructuring expenses
—
—
—
—
29
Integration expenses
—
—
—
—
6
Stock-based compensation expense
—
—
—
—
37
Non-GAAP Net Income attributable to
non-controlling interest (1)
$
2,854
$
2,880
$
2,882
$
5,734
$
4,041
Weighted average shares outstanding –
basic
78,852
78,814
78,366
78,803
78,364
Weighted average shares outstanding –
diluted
78,852
78,814
78,366
78,803
78,364
Loss per common share attributable to
ADTRAN Holdings, Inc. – basic
$
(0.63
)
$
(4.12
)
$
(0.50
)
$
(4.75
)
$
(1.01
)
Loss per common share attributable to
ADTRAN Holdings, Inc. – diluted
$
(0.63
)
$
(4.12
)
$
(0.50
)
$
(4.75
)
$
(1.01
)
Non-GAAP Loss per common share
attributable to ADTRAN – basic
$
(0.24
)
$
(0.02
)
$
(0.07
)
$
(0.26
)
$
(0.21
)
Non-GAAP Loss per common share
attributable to ADTRAN – diluted
$
(0.24
)
$
(0.02
)
$
(0.07
)
$
(0.26
)
$
(0.21
)
(1) Represents the
non-controlling interest portion of the Company's ownership of
Adtran Networks SE pre-DPLTA and the annual recurring compensation
earned by redeemable non-controlling interests and accrued by the
Company post-DPLTA.
(2) Includes non-cash change in
fair value of equity investments held in deferred compensation
plans offered to certain employees.
(3) Includes amortization of
actuarial losses related to the Company's pension plan for
employees in certain foreign countries.
Supplemental
Information
Reconciliation of Net Cash
Provided By (Used In) Operating Activities to Free Cash
Flow
(Unaudited)
(In thousands)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2024
2024
2023
2024
2023
Net Cash provided by (used in)
operating activities
$
19,898
$
36,598
$
(16,234
)
$
56,496
$
(36,160
)
Purchases of property, plant and
equipment
(15,995
)
(13,374
)
(11,679
)
(29,369
)
(20,118
)
Free cash flow
$
3,903
$
23,224
$
(27,913
)
$
27,127
$
(56,278
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240805856566/en/
For media Gareth Spence +44 1904 699 358
public.relations@adtran.com
For investors Rhonda Lambert investor@adtran.com
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