ADTN ADTRAN Holdings Inc

ADTRAN, Inc. (NASDAQ: ADTN) reported results for the second quarter 2016. For the quarter, sales were $162,701,000 compared to $160,138,000 for the second quarter of 2015. Net income was $10,228,000 compared to $2,544,000 for the second quarter of 2015. Earnings per share, assuming dilution, were $0.21 compared to $0.05 for the second quarter of 2015. Non-GAAP earnings per share were $0.25 compared to $0.10 for the second 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 solid revenue and earnings results for the quarter due to strength in our domestic market and gross margin improvement. Growth in the U.S. market was led by our FTTP and 100 megabit portfolios, along with continued growth in our CAF II and Ethernet solutions. Our Services business also continued its strong growth with a 51% revenue increase year-over-year. Customers around the world are increasingly recognizing the benefits of deploying ultra-high speed broadband and are leveraging ADTRAN’s unique domain leadership and expertise in planning, developing and deploying business and residential services.”

The Company also announced that its Board of Directors declared a cash dividend for the second 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 July 28, 2016. The ex-dividend date is July 26, 2016 and the payment date is August 11, 2016.

The Company confirmed that its second quarter conference call will be held Wednesday, July 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 and Form 10-Q for the quarter ended March 31, 2016. 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)          

June 30, 2016

December 31, 2015

Assets Cash and cash equivalents $ 70,914 $ 84,550 Short-term investments 50,867 34,396 Accounts receivable, net 89,386 71,917 Other receivables 11,676 19,321 Income tax receivable, net 2,405 - Inventory 86,936 91,533 Prepaid expenses and other current assets 13,563 10,145 Deferred tax assets, net   18,488   18,924 Total Current Assets 344,235 330,786   Property, plant and equipment, net 74,115 73,233 Deferred tax assets, net 19,127 18,091 Goodwill 3,492 3,492 Other assets 9,340 9,276 Long-term investments   186,249   198,026   Total Assets $ 636,558 $ 632,904   Liabilities and Stockholders' Equity Accounts payable $ 59,211 $ 48,668 Unearned revenue 15,982 16,615 Accrued expenses 12,126 12,108 Accrued wages and benefits 15,702 12,857 Income tax payable, net   -   2,395 Total Current Liabilities 103,021 92,643   Non-current unearned revenue 6,437 7,965 Other non-current liabilities 25,476 24,236 Bonds payable   27,900   27,900 Total Liabilities 162,834 152,744   Stockholders' Equity   473,724   480,160   Total Liabilities and Stockholders' Equity $ 636,558 $ 632,904     Consolidated Statements of Income (Unaudited) (In thousands, except per share data)           Three Months Ended Six Months Ended June 30, June 30, 2016     2015 2016     2015   Sales Products $ 138,549 $ 144,098 $ 262,432 $ 273,603 Services   24,152     16,040     42,473     29,370     Total Sales 162,701 160,138 304,905 302,973   Cost of Sales Products 67,844 84,210 131,917 155,770 Services   15,902     7,682     28,239     13,394     Total Cost of Sales 83,746 91,892 160,156 169,164   Gross Profit 78,955 68,246 144,749 133,809   Selling, general and administrative expenses 32,866 32,123 63,651 63,187 Research and development expenses   31,277     35,479     60,765     68,015     Operating Income 14,812 644 20,333 2,607   Interest and dividend income 927 908 1,782 1,841 Interest expense (142 ) (149 ) (287 ) (297 ) Net realized investment gain 1,110 3,255 2,838 6,370 Other expense, net   (251 )   (547 )   (132 )   (900 )   Income before provision for income taxes 16,456 4,111 24,534 9,621   Provision for income taxes   (6,228 )   (1,567 )   (9,292 )   (3,760 )   Net Income $ 10,228   $ 2,544   $ 15,242   $ 5,861     Weighted average shares outstanding - basic 48,831 51,822 49,026 52,607 Weighted average shares outstanding - diluted (1) 49,048 51,917 49,218 52,742   Earnings per common share - basic $ 0.21 $ 0.05 $ 0.31 $ 0.11 Earnings per common share - diluted (1) $ 0.21 $ 0.05 $ 0.31 $ 0.11   (1) Assumes exercise of dilutive stock options calculated under the treasury stock method.     Consolidated Statements of Comprehensive Income (Unaudited) (In thousands)           Three Months Ended Six Months Ended June 30, June 30, 2016     2015 2016     2015   Net Income $ 10,228   $ 2,544   $ 15,242   $ 5,861     Other Comprehensive Income (Loss), net of tax:   Unrealized losses on available-for-sale securities (165 ) (1,783 ) (420 ) (2,286 ) Defined benefit plan adjustments 22 72 67 140 Foreign currency translation   (601 )   872     627     (2,446 )   Other Comprehensive Income (Loss), net of tax   (744 )   (839 )   274     (4,592 )   Comprehensive Income, net of tax $ 9,484   $ 1,705   $ 15,516   $ 1,269       Consolidated Statements of Cash Flows (Unaudited) (In thousands)       Six Months Ended June 30, 2016     2015 Cash flows from operating activities: Net income $ 15,242 $ 5,861 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,689 7,256 Amortization of net premium on available-for-sale investments 376 1,578 Net realized gain on long-term investments (2,838 ) (6,370 ) Net loss on disposal of property, plant and equipment 5 160 Stock-based compensation expense 3,109 3,114 Deferred income taxes (354 ) (1,743 ) Tax impact from stock option exercises - (23 ) Excess tax benefits from stock-based compensation arrangements - 38 Change in operating assets and liabilities: Accounts receivable, net (17,192 ) (2,003 ) Other receivables 7,876 (119 ) Inventory 4,938 (14,254 ) Prepaid expenses and other assets (4,263 ) (1,433 ) Accounts payable 10,354 30,938 Accrued expenses and other liabilities 1,474 2,175 Income tax payable/receivable, net   (4,799 )   (3,961 ) Net cash provided by operating activities   20,617     21,214     Cash flows from investing activities: Purchases of property, plant and equipment (6,679 ) (5,392 ) Proceeds from disposals of property, plant and equipment - 8 Proceeds from sales and maturities of available-for-sale investments 109,993 120,422 Purchases of available-for-sale investments   (112,903 )   (62,626 ) Net cash provided by (used in) investing activities   (9,589 )   52,412     Cash flows from financing activities: Proceeds from stock option exercises 541 833 Purchases of treasury stock (16,579 ) (49,307 ) Dividend payments (8,860 ) (9,509 ) Excess tax benefits from stock-based compensation arrangements   -     (38 ) Net cash used in financing activities   (24,898 )   (58,021 )   Net increase (decrease) in cash and cash equivalents (13,870 ) 15,605 Effect of exchange rate changes 234 (1,829 ) Cash and cash equivalents, beginning of period   84,550     73,439     Cash and cash equivalents, end of period $ 70,914   $ 87,215     Supplemental disclosure of non-cash investing activities Purchases of property, plant and equipment included in accounts payable $ 554 $ 270  

Supplemental InformationRestructuring Expenses(Unaudited)(In thousands)

Restructuring expenses were recorded in the following Consolidated Statements of Income categories for the three and six months ended June 30, 2016 and 2015:

      Three and Six Months Ended June 30, 2016     2015   Restructuring expense included in cost of sales $ - $ 98     Selling, general and administrative expense - 644 Research and development expense   -   1,383     Restructuring expense included in operating expenses   -   2,027     Total restructuring expense - 2,125 Provision for income taxes   -   (829 )   Total restructuring expense, net of tax $ - $ 1,296       Supplemental Information Acquisition Related Expenses, Amortizations and Adjustments (Unaudited) (In thousands)  

On August 4, 2011, we closed on the acquisition of Bluesocket, Inc. and on May 4, 2012, we closed on the acquisition of the Nokia Siemens Networks Broadband Access business (NSN BBA). Acquisition related expenses, amortizations and adjustments for the three and six months ended June 30, 2016 and 2015 for both transactions are as follows:

          Three Months Ended Six Months Ended June 30, June 30, 2016     2015 2016     2015 Bluesocket, Inc. acquisition Amortization of acquired intangible assets and other purchase accounting adjustments $ 173   $ 226   $ 346   $ 452     NSN BBA acquisition Amortization of acquired intangible assets 228 229 455 470 Amortization of other purchase accounting adjustments 44 140 80 294 Acquisition related professional fees, travel and other expenses   -     35     -     41     Subtotal   272     404     535     805     Total acquisition related expenses, amortizations and adjustments 445 630 881 1,257 Provision for income taxes   (152 )   (213 )   (301 )   (426 )   Total acquisition related expenses, amortizations and adjustments, net of tax $ 293   $ 417   $ 580   $ 831      

The acquisition related expenses, amortizations and adjustments above were recorded in the following Consolidated Statements of Income categories for the three and six months ended June 30, 2016 and 2015:

          Three Months Ended Six Months Ended June 30, June 30, 2016     2015 2016     2015   Revenue (adjustments to deferred revenue recognized in the period) $ - $ 64 $ - $ 131 Cost of goods sold   13     33     20     45     Subtotal   13     97     20     176     Selling, general and administrative expenses 4 39 7 51 Research and development expenses   428     494     854     1,030     Subtotal   432     533     861     1,081     Total acquisition related expenses, amortizations and adjustments 445 630 881 1,257 Provision for income taxes   (152 )   (213 )   (301 )   (426 )   Total acquisition related expenses, amortizations and adjustments, net of tax $ 293   $ 417   $ 580   $ 831       Supplemental Information Stock-based Compensation Expense (Unaudited) (In thousands)           Three Months Ended Six Months Ended June 30, June 30, 2016     2015 2016     2015   Stock-based compensation expense included in cost of sales $ 95   $ 53   $ 194   $ 143     Selling, general and administrative expense 788 723 1,557 1,414 Research and development expense   668     699     1,358     1,557     Stock-based compensation expense included in operating expenses   1,456     1,422     2,915     2,971     Total stock-based compensation expense 1,551 1,475 3,109 3,114 Tax benefit for expense associated with non-qualified options   (213 )   (222 )   (425 )   (402 )   Total stock-based compensation expense, net of tax $ 1,338   $ 1,253   $ 2,684   $ 2,712       Reconciliation of GAAP net income per share, diluted, to Non-GAAP net income per share, diluted (Unaudited)           Three Months Ended Six Months Ended June 30, June 30, 2016     2015 2016     2015   GAAP earnings per common share – diluted $ 0.21 $ 0.05 $ 0.31 $ 0.11   Restructuring expense - 0.02 - 0.02 Acquisition related expenses, amortizations and adjustments 0.01 0.01 0.01 0.02 Stock-based compensation expense   0.03   0.02   0.05   0.05   Non-GAAP earnings per common share – diluted $ 0.25 $ 0.10 $ 0.37 $ 0.20  

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ADTRAN, Inc.Roger Shannon, 256-963-8775Senior Vice President & CFOorInvestor Services/Assistance:Gayle Ellis, 256-963-8220Investor Services