ADTN ADTRAN Holdings Inc

ADTRAN, Inc. (NASDAQ:ADTN) reported results for the first quarter 2016. For the quarter, sales were $142,204,000 compared to $142,835,000 for the first quarter of 2015. Net income was $5,014,000 compared to $3,317,000 for the first quarter of 2015. Earnings per share, assuming dilution, were $0.10 compared to $0.06 for the first quarter of 2015. Non-GAAP earnings per share were $0.14 compared to $0.10 for the first quarter of 2015. The reconciliation between GAAP earnings per share, diluted, and non-GAAP earnings per share, diluted, is in the table provided.

ADTRAN Chief Executive Officer Tom Stanton stated, “ADTRAN delivered a solid performance this quarter resulting in earnings coming in ahead of initial expectations. Compared to the same period last year, Q1 domestic revenue was up over 39% with increases in both our products and services businesses. Improved gross margins and lower operating expenses helped us increase operating income over 181% versus Q1 of 2015. Longer term, we expect further improvement in the carrier environment as customers accelerate investments in upgrading their network infrastructure to meet customer demand.”

The Company also announced that its Board of Directors declared a cash dividend for the first quarter of 2016. The quarterly cash dividend is $0.09 per common share to be paid to holders of record at the close of business on April 28, 2016. The ex-dividend date is April 26, 2016 and the payment date is May 12, 2016.

As was previously announced, ADTRAN has changed its financial reporting segments as of the quarter ended March 31, 2016. The Company will now report its financial performance based on two new reportable segments – Network Solutions and Services & Support. ADTRAN will post supplemental information regarding revenues by operating segment and category under its new and former reporting structure for the fiscal quarter ended March 31, 2016, and recast financial segment information for the four quarters and full year for fiscal years 2014 and 2015, as if reported under the new operating reporting structure, on the Investor Relations page of its website at www.adtran.com.

The Company confirmed that its first quarter conference call will be held Wednesday, April 13, 2016 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, 2015. 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 31,2016

December 31,2015

Assets Cash and cash equivalents $ 91,609 $ 84,550 Short-term investments 29,303 34,396 Accounts receivable, net 67,492 71,917 Other receivables 9,199 19,321 Inventory 92,107 91,533 Prepaid expenses and other current assets 13,096 10,145 Deferred tax assets, net   17,967   18,924 Total Current Assets 320,773 330,786   Property, plant and equipment, net 73,511 73,233 Deferred tax assets, net 18,878 18,091 Goodwill 3,492 3,492 Other assets 9,157 9,276 Long-term investments   195,683   198,026   Total Assets $ 621,494 $ 632,904   Liabilities and Stockholders' Equity Accounts payable $ 42,635 $ 48,668 Unearned revenue 18,683 16,615 Accrued expenses 13,513 12,108 Accrued wages and benefits 11,064 12,857 Income tax payable, net   2,739   2,395 Total Current Liabilities 88,634 92,643   Non-current unearned revenue 7,288 7,965 Other non-current liabilities 25,283 24,236 Bonds payable   27,900   27,900 Total Liabilities 149,105 152,744   Stockholders' Equity   472,389   480,160   Total Liabilities and Stockholders' Equity $ 621,494 $ 632,904      

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

  Three Months Ended March 31, 2016     2015   Sales Products $ 123,883 $ 129,505 Services   18,321     13,330     Total sales 142,204 142,835   Cost of sales Products 64,073 71,560 Services   12,337     5,712     Total cost of sales 76,410 77,272   Gross Profit 65,794 65,563   Selling, general and administrative expenses 30,785 31,064 Research and development expenses   29,488     32,536     Operating Income 5,521 1,963   Interest and dividend income 855 933 Interest expense (145 ) (148 ) Net realized investment gain 1,728 3,115 Other income (expense), net   119     (353 )   Income before provision for income taxes 8,078 5,510   Provision for income taxes   (3,064 )   (2,193 )   Net Income $ 5,014   $ 3,317     Weighted average shares outstanding - basic 49,220 53,399 Weighted average shares outstanding - diluted (1) 49,389 53,634   Earnings per common share - basic $ 0.10 $ 0.06 Earnings per common share - diluted (1) $ 0.10 $ 0.06  

(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, 2016   2015   Net Income $ 5,014   $ 3,317     Other Comprehensive Income (Loss), net of tax:   Unrealized losses on available-for-sale securities (255 ) (503 ) Defined benefit plan adjustments 45 68 Foreign currency translation   1,228     (3,318 )   Other Comprehensive Income (Loss), net of tax   1,018     (3,753 )   Comprehensive Income (Loss), net of tax $ 6,032   $ (436 )      

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

  Three Months Ended March 31, 2016   2015 Cash flows from operating activities: Net income $ 5,014 $ 3,317 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,347 3,728 Amortization of net premium on available-for-sale investments 220 910 Net realized gain on long-term investments (1,728 ) (3,115 ) Net loss on disposal of property, plant and equipment 3 8 Stock-based compensation expense 1,558 1,639 Deferred income taxes 435 (692 ) Tax benefit from stock option exercises - 8 Excess tax benefits from stock-based compensation arrangements - (9 ) Change in operating assets and liabilities: Accounts receivable, net 4,752 (4,571 ) Other receivables 10,200 511 Inventory 163 (7,261 ) Prepaid expenses and other assets (3,083 ) (736 ) Accounts payable (6,520 ) 20,084 Accrued expenses and other liabilities 902 (282 ) Income tax payable, net   413     (524 ) Net cash provided by operating activities   15,676     13,015     Cash flows from investing activities: Purchases of property, plant and equipment (3,166 ) (2,442 ) Proceeds from sales and maturities of available-for-sale investments 60,586 58,075 Purchases of available-for-sale investments   (52,053 )   (44,584 ) Net cash provided by investing activities   5,367     11,049     Cash flows from financing activities: Proceeds from stock option exercises 247 280 Purchases of treasury stock (11,003 ) (3,035 ) Dividend payments (4,453 ) (4,811 ) Excess tax benefits from stock-based compensation arrangements   -     9   Net cash used in financing activities   (15,209 )   (7,557 )   Net increase in cash and cash equivalents 5,834 16,507 Effect of exchange rate changes 1,225 (2,937 ) Cash and cash equivalents, beginning of period   84,550     73,439     Cash and cash equivalents, end of period $ 91,609   $ 87,009     Supplemental disclosure of non-cash investing activities Purchases of property, plant and equipment included in accounts payable $ 485 $ 784      

Supplemental Information

Stock-based Compensation Expense

(Unaudited)

(In thousands)

  Three Months Ended March 31, 2016   2015   Stock-based compensation expense included in cost of sales $ 91   $ 90     Selling, general and administrative expense 810 691 Research and development expense   657     858     Stock-based compensation expense included in operating expenses   1,467     1,549     Total stock-based compensation expense 1,558 1,639 Tax benefit for expense associated with non-qualified options   (212 )   (180 )   Total stock-based compensation expense, net of tax $ 1,346   $ 1,459        

Reconciliation of GAAP net income per share, diluted, to

Non-GAAP net income per share, diluted

(Unaudited)

  Three Months Ended March 31, 2016   2015   GAAP earnings per common share – diluted $ 0 .10 $ 0 .06   Amortization of acquired intangible assets 0 .01 0 .01 Stock-based compensation expense   0 .03   0 .03   Non-GAAP earnings per common share – diluted $ 0 .14 $ 0 .10  

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ADTRAN, Inc.Roger Shannon, 256-963-8775Senior Vice President & CFOorGayle Ellis, 256-963-8220Investor Services