ADTRAN Holdings, Inc. Reports Preliminary Earnings for the Fourth Quarter of 2022 and Declares Quarterly Cash Dividend

Rhea-AI Summary

ADTRAN Holdings, Inc. announced preliminary financial results for Q4 2022, reporting revenues of $358.3 million and a net income of $35.0 million including non-controlling interests. The diluted earnings per share (EPS) attributable to the Company was $0.49. Despite revenue being on the lower side of guidance, growth in optical networking solutions and improved supply conditions contributed positively to gross margins. The Company plans to pay a quarterly cash dividend of $0.09 per share to stockholders of record as of March 7, 2023.

Final results will be disclosed on March 1, 2023.

Positive

• Preliminary revenue of $358.3 million, indicating strong performance.
• Net income attributable to the Company was $38.9 million.
• Improved supply environment positively affected gross margins.
• Significant growth in the EMEA region, highlighting global presence.

Negative

• Revenue was at the lower end of guidance.
• Delays in new product introductions impacted performance.

HUNTSVILLE, Ala.--(BUSINESS WIRE)-- ADTRAN Holdings, Inc., (NASDAQ: ADTN and FSE: QH9) (“ADTRAN Holdings” or the “Company”), today announced preliminary and unaudited financial results for the fourth quarter of 2022. All figures in this release are approximate due to the preliminary nature of the announcement. For the quarter, preliminary revenue was $358.3 million. Preliminary net income inclusive of the non-controlling interest for the fourth quarter of 2022 was $35.0 million. Preliminary net income attributable to the Company for the fourth quarter of 2022 was $38.9 million and preliminary diluted earnings per share attributable to the Company was $0.49. Inclusive of non-controlling interests, preliminary non-GAAP net income was $15.7 million. Preliminary non-GAAP net income attributable to the Company was $9.9 million and preliminary non-GAAP diluted earnings per share attributable to the Company was $0.12. Non-GAAP net income and non-GAAP earnings per share exclude acquisition related expenses, amortizations, 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), stock-based compensation expense, amortization of pension actuarial losses, deferred compensation adjustments, certain asset impairments, restructuring expenses, changes in valuation allowance related to our deferred tax assets, and the tax effect of these adjustments to net income. The reconciliations between the non-GAAP net income measures presented herein and the respective equivalent GAAP financial measures are set forth in the tables provided below.

ADTRAN Holdings Chairman and Chief Executive Officer Tom Stanton stated, “Fourth quarter revenue was in the lower side of our guidance range at $358.3 million, as strength in optical networking solutions helped to offset delays in new product introductions. The supply environment has improved year-over-year, which had a positive effect on our gross margins. We also expect supply bottlenecks to continue to alleviate during 2023. Our strong growth in the EMEA region underlines our increased global presence with greater customer diversity as we move into an unprecedented network upgrade cycle.”

The Company also announced that its Board of Directors declared a cash dividend for the fourth quarter of 2022. 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 March 7, 2023. The ex-dividend date is March 6, 2023, and the payment date will be March 21, 2023.

The information contained in this press release is preliminary. Final results for the fourth quarter ended December 31, 2022 will be released on March 1, 2023.

The Company confirmed that it will hold a conference call to discuss its preliminary fourth quarter results on Tuesday, February 21, 2023, at 9:30 a.m. Central Time or 4:30 p.m. Central European Time. ADTRAN Holdings 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 4th Quarter 2022 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 investors.adtran.com or email at investor.relations@adtran.com.

About ADTRAN Holdings, Inc.

ADTRAN Holdings, Inc. is the parent company of ADTRAN, Inc., a wholly owned subsidiary and a leading global provider of open, disaggregated networking and communications solutions. ADTRAN Holdings is also the largest shareholder of ADVA, a European headquartered network innovator that empowers operators to deliver the cloud and mobile services that are vital to today’s society.

Cautionary Note Regarding Forward-Looking Statements

Statements contained in this press release which are not historical facts, such as those relating to strategy, 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 could cause actual events or results to differ materially from those estimated by ADTRAN Holdings include, but are not limited to: (i) risks and uncertainties related to manufacturing and supply chain constraints, including as a result of the continued impact of the SARS-CoV-2 coronavirus/COVID-19 global pandemic ; (ii) risks and uncertainties related to the completed business combination between the Company, ADTRAN and ADVA, including risks related to the ability to successfully integrate the ADTRAN’s and ADVA’s businesses, the disruption of management time from ongoing business operations due to integration efforts following the business combination, and the risk that ADTRAN Holdings may be unable to achieve expected synergies or that it may take longer or be more costly than expected to achieve those synergies; (iii) the risk of fluctuations in revenue due to lengthy sales and approval processes required by major and other service providers for new products; (iv) the risk posed by potential breaches of information systems and cyber-attacks; (v) the risks that ADTRAN may not be able to effectively compete, including through product improvements and development; and (vi) other risks set forth in ADTRAN Holdings’ public filings made with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2021 and Form 10‑Q for the quarterly period ended September 30, 2022, as well as its Form 10‑K for the year ended December 31, 2022 to be filed with the SEC.

Additionally, the financial measures presented herein are preliminary estimates and are subject to risks and uncertainties, including, among others, changes in connection with quarter-end adjustments. Any variation between the Company’s actual results and the preliminary financial information set forth herein may be material.

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 income (expense), net income inclusive of the non-controlling interest, net income attributable to the Company, net loss attributable to the no-controlling interest and earnings (loss) per share - basic and diluted, attributable to the Company, 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, non-GAAP other income, non-GAAP net income inclusive of the non-controlling interest, non-GAAP net income attributable to the Company, non-GAAP net income attributable to the non-controlling interest, and non-GAAP earnings per share - basic and diluted, attributable to the Company, respectively. Such non-GAAP measures exclude acquisition related expenses, amortizations 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), stock-based compensation expense, amortization of pension actuarial losses, deferred compensation adjustments, certain asset impairments, restructuring expenses, changes in valuation allowance related to our deferred tax assets, and the tax effect of these adjustments to net income. These measures are used by management in our ongoing planning and annual budgeting processes. Additionally, we believe the presentation of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP other income, non-GAAP net income inclusive of the non-controlling interest, non-GAAP net income attributable to the Company, non-GAAP net income attributable to the non-controlling interest, and non-GAAP earnings per share - basic and diluted, attributable to the Company, 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.

Condensed Consolidated Balance Sheets (Preliminary, Unaudited) (In thousands)
ASSETS		December 31, 2022				December 31, 2021
Current Assets
Cash and cash equivalents		$	108,644			$	56,603
Restricted cash			—				215
Short-term investments			340				350
Accounts receivable, net			279,436				158,742
Other receivables			32,831				11,228
Inventory, net			427,531				139,891
Prepaid expenses and other current assets			33,577				9,296
Total Current Assets			882,359				376,325
Property, plant and equipment, net			111,493				55,766
Deferred tax assets, net			6,210				9,079
Goodwill			381,724				6,968
Intangibles, net			401,211				19,293
Other non-current assets			66,203				30,971
Long-term investments			32,665				70,615
Total Assets		$	1,881,865			$	569,017
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable			237,699				102,489
Revolving credit agreements outstanding			95,936				—
Notes payable			24,598				—
Unearned revenue			41,193				17,737
Accrued expenses and other liabilities			35,235				13,673
Accrued wages and benefits			44,882				14,900
Income tax payable, net			9,032				6,560
Total Current Liabilities			488,575				155,359
Non-current unearned revenue			19,239				9,271
Pension liability			10,624				11,402
Deferred compensation liability			26,668				31,383
Non-current lease obligations			22,807				3,269
Other non-current liabilities			10,339				1,231
Total Liabilities			578,252				211,915
Equity
Common stock			781				797
Additional paid-in capital			895,834				288,946
Accumulated other comprehensive income (loss)			46,713				(11,914	)
Retained earnings			55,338				740,820
Treasury stock			(4,125	)			(661,547	)
Non-controlling interest			309,072				—
Total Equity			1,303,613				357,102
Total Liabilities and Equity		$	1,881,865			$	569,017

Condensed Consolidated Statements of Income (Loss) (Preliminary, Unaudited) (In thousands, except per share data)
		Three Months Ended									Twelve Months Ended
		December 31,									December 31,
		2022				2021					2022				2021
Revenue
Network Solutions		$	317,487			$	138,809				$	916,793			$	498,834
Services & Support			40,784				15,349					108,743				64,170
Total Revenue			358,271				154,158					1,025,536				563,004
Cost of Revenue
Network Solutions			233,925				91,797					647,105				307,841
Services & Support			16,943				7,926					51,179				36,786
Total Cost of Revenue			250,868				99,723					698,284				344,627
Gross Profit			107,403				54,435					327,252				218,377
Selling, general and administrative expenses			78,243				35,141					208,889				124,414
Research and development expenses			61,570				26,532					173,757				108,663
Asset impairment			464				—					17,433				—
Operating Loss			(32,874	)			(7,238	)				(72,827	)			(14,700	)
Interest and dividend income			1,355				1,957					2,123				2,844
Interest expense			(2,010	)			(16	)				(3,437	)			(34	)
Net investment (loss) gain			(587	)			(1,181	)				(11,339	)			1,761
Other income, net			11,568				1,151					14,517				3,824
Loss Before Income Taxes			(22,548	)			(5,327	)				(70,963	)			(6,305	)
Income tax benefit (expense)			57,503				1,137					62,075				(2,330	)
Net Income (Loss)		$	34,955			$	(4,190	)			$	(8,888	)		$	(8,635	)
Less: Net Loss attributable to non-controlling interest			(3,926	)			—					(6,851	)			—
Net Income (Loss) attributable to ADTRAN Holdings, Inc.		$	38,881			$	(4,190	)			$	(2,037	)		$	(8,635	)
Weighted average shares outstanding – basic			77,659				48,914					62,346				48,582
Weighted average shares outstanding – diluted			79,243				48,914		(1)			62,346				48,582
Earnings (Loss) per common share attributable to ADTRAN Holdings, Inc. – basic		$	0.50			$	(0.09	)			$	(0.03	)		$	(0.18	)
Earnings (Loss) per common share attributable to ADTRAN Holdings, Inc. – diluted		$	0.49			$	(0.09	)	(1)		$	(0.03	)		$	(0.18	)

Condensed Consolidated Statements of Cash Flows (Preliminary, Unaudited) (In thousands)
		Twelve Months Ended December 31,
		2022				2021
Cash flows from operating activities:
Net (Loss) Income		$	(8,888	)		$	(8,635	)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization			67,553				16,084
Asset impairments			17,433				—
Amortization of debt issuance cost			288				—
Amortization of net discount on available-for-sale investments			19				108
Loss (gain) on investments			9,826				(5,127	)
Net loss on disposal of property, plant and equipment			85				4
Stock-based compensation expense			28,322				7,480
Deferred income taxes			(62,388	)			(1,784	)
Inventory reserves			(7,250	)			(5,029	)
Change in operating assets and liabilities:
Accounts receivable, net			788				(60,864	)
Other receivables			(20,088	)			9,752
Inventory			(68,349	)			(10,638	)
Prepaid expenses other current assets and other assets			(6,367	)			(7,146	)
Accounts payable			28,105				53,270
Accrued expenses and other liabilities			(20,483	)			10,063
Income taxes payable			(2,151	)			5,470
Net cash (used in) provided by operating activities			(43,545	)			3,008
Cash flows from investing activities:
Purchases of property, plant and equipment			(18,453	)			(5,669	)
Proceeds from sales and maturities of available-for-sale investments			51,661				50,466
Purchases of available-for-sale investments			(23,899	)			(35,031	)
Proceeds from beneficial interests in securitized accounts receivable			1,126				—
Proceeds from disposals of property, plant and equipment			561				—
Insurance proceeds received			—				500
Acquisition of business, net of cash acquired			44,003				—
Net cash provided by investing activities			54,999				10,266
Cash flows from financing activities:
Tax withholdings related to stock-based compensation settlements			(6,070	)			(1,860	)
Proceeds from stock option exercises			6,904				6,431
Dividend payments			(22,885	)			(17,529	)
Proceeds from draw on revolving credit agreements			141,887				10,000
Repayment of revolving credit agreements			(48,000	)			(10,000	)
Payment of debt issuance cost			(3,015	)			—
Excess tax benefits from stock-based compensation arrangements			(4,253	)			—
Repayment of notes payable			(17,702	)			—
Net cash provided by (used in) financing activities			46,866				(12,958	)
Net increase (decrease) in cash and cash equivalents			58,320				316
Effect of exchange rate changes			(6,494	)			(3,677	)
Cash, cash equivalents and restricted cash, beginning of year			56,818				60,179
Cash, cash equivalents and restricted cash, end of year		$	108,644			$	56,818
Supplemental disclosure of cash financing activities
Cash paid for interest		$	1,728			$	13
Cash used in operating activities related to operating leases		$	5,229			$	1,892
Supplemental disclosure of non-cash investing activities
Right-of-use assets obtained in exchange for lease obligations		$	3,410			$	1,875
Purchases of property, plant and equipment included in accounts payable		$	1,165			$	638
ADVA common shares exchanged in acquisition		$	565,491			$	—
ADVA options assumed in acquisition		$	12,769			$	—
Non-controlling interest related to ADVA		$	316,415			$	—

Supplemental Information Reconciliation of Preliminary Gross Profit and Preliminary Gross Margin to Preliminary Non-GAAP Gross Profit and Preliminary Non-GAAP Gross Margin (Unaudited) (In thousands)
	Three Months Ended															Twelve Months Ended
	December 31, 2022					September 30, 2022					December 31, 2021					December 31, 2022					December 31, 2021
Net Income (loss) attributable to ADTRAN Holdings, Inc.	$	358,271				$	340,709				$	154,158				$	1,025,536				$	563,004
Cost of Revenue	$	250,868				$	237,682				$	99,723				$	698,284				$	344,627
Acquisition-related expenses, amortizations and adjustments		(31,577	)	(1)			(25,530	)	(3)			—					(57,108	)	(5)			(12	)
Stock-based compensation expense		(1,287	)	(2)			(1,269	)	(4)			(154	)				(2,876	)	(6)			(543	)
Pension adjustments		144					(59	)				—					85					—
Restructuring expenses		(8	)				—					—					(8	)				(15	)
Non-GAAP Cost of Revenue	$	218,140				$	210,824				$	99,569				$	638,377				$	344,057
Gross Profit	$	107,403				$	103,027				$	54,435				$	327,252				$	218,377
Non-GAAP Gross Profit	$	140,131				$	129,885				$	54,589				$	387,159				$	218,947
Gross Margin		30.0	%				30.2	%				35.3	%				31.9	%				38.8	%
Non-GAAP Gross Margin		39.1	%				38.1	%				35.4	%				37.8	%				38.9	%
(1) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, and certain one-time transaction expenses of which $31.6 million is included in total cost of revenue, on the condensed consolidated statements of income (loss).
(2) Includes $1.0 million of cost of revenue expenses incremental stock-based award modification expense related to the business combination on the condensed consolidated statements of income (loss).
(3) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, and certain one-time transaction expenses of which $25.5 million is included in total cost of revenue, on the condensed consolidated statements of income (loss).
(4) Includes $1.0 million of cost of revenue expenses incremental stock-based award modification expense related to the business combination on the condensed consolidated statements of income (loss).
(5) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, and certain one-time transaction expenses of which $57.1 million is included in total cost of revenue, on the condensed consolidated statements of income (loss).
(6) Includes $2.0 million of cost of revenue expenses incremental stock-based award modification expense related to the business combination on the condensed consolidated statements of income (loss).

Supplemental Information Reconciliation of Preliminary Operating Expenses to Preliminary Non-GAAP Operating Expenses (Unaudited) (In thousands)
	Three Months Ended																Twelve Months Ended
	December 31, 2022					September 30, 2022					December 31, 2021						December 31, 2022					December 31, 2021
Operating Expenses	$	139,813				$	134,076				$	61,673					$	382,646				$	233,077
Acquisition-related expenses, amortizations and adjustments		(8,328	)	(1)			(14,780	)	(6)			(6,529	)	(9)				(27,561	)	(12)			(15,988	)	(16)
Stock-based compensation expense		(11,095	)	(2)			(10,862	)	(7)			(1,869	)	(10)				(25,418	)	(13)			(6,937	)	(17)
Restructuring expenses		(1,618	)	(3)			—					(102	)	(11)				(1,620	)	(14)			(395	)	(18)
Pension adjustments		43		(4)			(185	)	(8)			—						(142	)	(15)			—
Deferred compensation adjustments		(168	)	(5)			740		(5)			2		(5)				7,005		(5)			(2,089	)	(5)
Non-GAAP Operating Expenses	$	118,647				$	108,989				$	53,175					$	334,910				$	207,668
(1) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, and certain one-time transaction expenses of which $7.8 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) $9.4 million is included in selling, general and administrative expenses and $1.7 million is included in research and development expenses on the condensed consolidated statements of income (loss). Includes $7.3 million in selling, general and administrative expenses and $0.6 million is included in research and development expenses incremental stock-based award modification expense related to the business combination.
(3) $0.1 is included in selling, general and administrative expenses and $1.5 million is included in research and development expenses on the condensed consolidated statements of income (loss).
(4) $0.2 million is included in selling, general and administrative expenses and ($0.3) million is included in research and development expenses on the condensed consolidated statements of income (loss).
(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 income (loss).
(6) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, and certain one-time transaction expenses of which $14.3 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) $9.2 million is included in selling, general and administrative expenses and $1.7 million is included in research and development expenses on the condensed consolidated statements of income (loss). Includes $7.3 million in selling, general and administrative expenses and $0.6 million is included in research and development expenses incremental stock-based award modification expense related to the business combination.
(8) Less than $0.1 million is included in selling, general and administrative expenses and $0.1 million is included in research and development expenses on the condensed consolidated statements of income (loss).
(9) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, and certain one-time transaction expenses of which $6.0 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).
(10) $1.3 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).
(11) Less than $0.1 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 income (loss).
(12) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, and certain one-time transaction expenses of which $25.6 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 income (loss).
(13) $20.8 million is included in selling, general and administrative expenses and $4.6 million is included in research and development expenses on the condensed consolidated statements of income (loss). Includes $14.6 million in selling, general and administrative expenses and $1.2 million is included in research and development expenses incremental stock-based award modification expense related to the business combination.
(14) $0.1 is included in selling, general and administrative expenses and $1.5 million is included in research and development expenses on the condensed consolidated statements of income (loss).
(15) $0.3 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).
(16) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, and certain one-time transaction expenses of which $14.1 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 income (loss).
(17) $4.6 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 income (loss).
(18) $0.2 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).

Supplemental Information Reconciliation of Preliminary Operating Loss to Preliminary Non-GAAP Operating Income (Unaudited) (In thousands)
	Three Months Ended													Twelve Months Ended
	December 31, 2022				September 30, 2022				December 31, 2021					December 31, 2022				December 31, 2021
Operating Loss	$	(32,874	)		$	(48,018	)		$	(7,238	)			$	(72,827	)		$	(14,700	)
Acquisition related expenses, amortizations and adjustments		39,904				40,310				6,529					84,667				15,999
Asset impairments		463				16,969				—					17,432				—
Stock-based compensation expense		12,383				12,131				2,023					28,295				7,480
Pension adjustments		(187	)			244				—					57				—
Restructuring expenses		1,627				—				102					1,629				411
Deferred compensation adjustments (1)		168				(740	)			(2	)				(7,005	)			2,089
Non-GAAP Operating Income	$	21,484			$	20,896			$	1,414				$	52,248			$	11,279
(1) 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 income (loss).

Supplemental Information Reconciliation of Preliminary Other Income (Expense) to Preliminary Non-GAAP Other Income (Unaudited) (In thousands)
	Three Months Ended													Twelve Months Ended
	December 31, 2022				September 30, 2022				December 31, 2021					December 31, 2022				December 31, 2021
Interest and dividend income	$	1,355			$	347			$	1,957				$	2,123			$	2,844
Interest expense		(2,010	)			(1,303	)			(16	)				(3,437	)			(34	)
Net investment (loss) gain		(587	)			(2,691	)			(1,181	)				(11,339	)			1,761
Other income (expense), net		11,568				2,494				1,151					14,517				3,824
Total Other Income (Expense)	$	10,326			$	(1,153	)		$	1,911				$	1,864			$	8,395
Deferred compensation adjustments (1)		(349	)			1,124				673					6,211				(864	)
Pension expense (2)		77				81				263					333				1,088
Non-GAAP Other Income	$	10,054			$	52			$	2,847				$	8,408			$	8,619
(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 Preliminary Net Income (Loss) inclusive of Non-Controlling Interest to Preliminary Non-GAAP Net Income (Loss) inclusive of Non-Controlling Interest (Unaudited)   and   Reconciliation of Preliminary Net Loss attributable to Non-Controlling Interest to Preliminary Non-GAAP Net Income attributable to Non-Controlling Interest (Unaudited)   and   Reconciliation of Preliminary Net Income (Loss) attributable to ADTRAN Holdings, Inc. and Preliminary Earnings (Loss) per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted to Preliminary Non-GAAP Net Income attributable to ADTRAN Holdings, Inc. and Preliminary Non-GAAP Earnings per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted (Unaudited)   (In thousands, except per share amounts)
		Three Months Ended													Twelve Months Ended
		December 31, 2022				September 30, 2022				December 31, 2021					December 31, 2022				December 31, 2021
Net Income (loss) attributable to ADTRAN Holdings, Inc.		$	38,881			$	(41,934	)		$	(4,190	)			$	(2,037	)		$	(8,635	)
Plus: Net Loss attributable to non-controlling interest (1)			(3,926	)			(2,925	)			—					(6,851	)			—
Net Income (loss) inclusive of non-controlling interest		$	34,955			$	(44,859	)		$	(4,190	)			$	(8,888	)		$	(8,635	)
Acquisition related expenses, amortizations and adjustments			39,904				40,310				6,529					84,667				15,999
Asset impairments			463				16,969				—					17,432				—
Stock-based compensation expense			12,383				12,131				2,023					28,295				7,480
Valuation allowance			(60,908	)			3,182				333					(45,358	)			4,746
Deferred compensation adjustments(2)			(182	)			383				673					(794	)			1,225
Pension adjustments(3)			(109	)			325				263					390				1,088
Restructuring expenses			1,627				—				102					1,629				411
Tax effect of adjustments to net income (loss)			(12,463	)			(16,245	)			(1,016	)				(29,892	)			(3,947	)
Non-GAAP Net Income inclusive of non-controlling interest		$	15,670			$	12,196			$	4,717				$	47,481			$	18,367
Less: Non-GAAP Net Income attributable to non-controlling interest (1)			5,769				4,486				—					10,255				—
Non-GAAP Net Income attributable to ADTRAN Holdings, Inc.		$	9,901			$	7,710			$	4,717				$	37,226			$	18,367
GAAP Net Loss attributable to non-controlling interest (1)		$	(3,926	)		$	(2,925	)		$	—				$	(6,851	)		$	—
Acquisition related expenses, amortizations and adjustments			9,039				7,120				—					16,159				—
Restructuring expenses			402				—				—					402				—
Stock-based compensation expense			300				231				—					531				—
Pension adjustments (3)			(46	)			60				—					14				—
Non-GAAP Net Income attributable to non-controlling interest (1)		$	5,769			$	4,486			$	—				$	10,255			$	—
Weighted average shares outstanding – basic			77,659				73,036				48,914					62,346				48,582
Weighted average shares outstanding – diluted			79,243				73,036				48,914					62,346				48,582
Earnings (loss) per common share attributable to ADTRAN Holdings, Inc. - basic		$	0.50			$	(0.57	)		$	(0.09	)			$	(0.03	)		$	(0.18	)
Earnings (loss) per common share attributable to ADTRAN Holdings, Inc. - diluted		$	0.49			$	(0.57	)		$	(0.09	)			$	(0.03	)		$	(0.18	)
Non-GAAP Earnings per common share attributable to ADTRAN Holdings, Inc. - basic		$	0.13			$	0.11			$	0.10				$	0.60			$	0.38
Non-GAAP Earnings per common share attributable to ADTRAN Holdings, Inc. - diluted		$	0.12			$	0.11			$	0.10				$	0.60			$	0.38
(1) Includes non-cash change in fair value of equity investments held in deferred compensation plans offered to certain employees.
(2) Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countries.
(3) Represents the non-controlling interest portion of the Company's ownership of ADVA.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230220005359/en/

Investor Services/Assistance:

Rhonda Lambert/256-963-7450

Investor.relations@adtran.com

Source: ADTRAN Holdings, Inc.

FAQ

What were ADTRAN's preliminary financial results for Q4 2022?

ADTRAN reported preliminary revenues of $358.3 million, with a net income of $35.0 million and diluted EPS of $0.49.

When will ADTRAN release final results for Q4 2022?

Final results will be released on March 1, 2023.

What is the cash dividend declared by ADTRAN for Q4 2022?

ADTRAN declared a cash dividend of $0.09 per common share for Q4 2022.

What contributed to ADTRAN's gross margins in Q4 2022?

Improved supply conditions year-over-year positively affected ADTRAN's gross margins.

What challenges did ADTRAN face during Q4 2022?

ADTRAN faced delays in new product introductions, which impacted revenue performance.