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

Rhea-AI Summary

ADTRAN, Inc. (NASDAQ:ADTN) reported its third quarter 2021 results, posting revenues of $138.1 million but a net loss of $10.4 million, translating to a loss per share of $0.21. Non-GAAP metrics showed a net loss of $0.8 million and a loss per share of $0.02. The company noted record Q3 bookings, up 43% year-over-year, with a 61% growth rate in SaaS customers. Additionally, it announced a quarterly dividend of $0.09 per share, payable on November 30, 2021.

Positive

• Record Q3 bookings increased by 43% year-over-year.
• 61% growth rate in customers deploying SaaS applications.
• Declared cash dividend of $0.09 per share.

Negative

• Net loss of $10.4 million for Q3 2021.
• Earnings per share loss of $0.21.

HUNTSVILLE, Ala.--(BUSINESS WIRE)-- ADTRAN, Inc., (NASDAQ:ADTN) (“ADTRAN” or the “Company”), today announced financial results for the third quarter of 2021. For the quarter, revenue was $138.1 million. Earnings for the third quarter of 2021 were a net loss of $10.4 million and earnings per share was a loss of $0.21. Non-GAAP net loss was $0.8 million and non-GAAP earnings per share was a loss of $0.02. Non-GAAP net income (loss) and non-GAAP earnings (loss) per share exclude stock-based compensation expense, acquisition related expenses, amortizations and adjustments, restructuring expenses, amortization of pension actuarial losses, asset impairments, deferred compensation related adjustments, change in valuation allowance related to our deferred tax assets, and the tax effect of these adjustments to net income (loss). 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, “We are experiencing unprecedented demand, highlighted by our record-setting Q3 bookings – up 43% year-over-year. We continue to add new customers, including now three new Tier 1 operators since the beginning of the third quarter. An additional highlight was our 61% year-over-year growth rate in customers deploying our SaaS applications. Finally, we remain extremely excited about our announced proposed combination with ADVA and the synergies we believe it will bring in terms of customer base and product portfolio to further accelerate our growth.”

The Company also announced that its Board of Directors declared a cash dividend for the third 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 November 16, 2021. The payment date will be November 30, 2021.

The Company confirmed that it will hold a conference call to discuss its third quarter results on Tuesday, November 2, 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 Releases 3rd 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 June 30, 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)
	September 30,				December 31,
	2021				2020
Assets
Current Assets
Cash and cash equivalents	$	75,503			$	60,161
Restricted cash		102				18
Short-term investments		2,610				3,131
Accounts receivable, net		124,146				98,827
Other receivables		9,867				21,531
Inventory, net		127,241				125,457
Prepaid expenses and other current assets		10,061				8,293
Total Current Assets		349,530				317,418
Property, plant and equipment, net		56,556				62,399
Deferred tax assets, net		8,957				9,869
Goodwill		6,968				6,968
Intangibles, net		20,291				23,470
Other assets		31,675				25,425
Long-term investments		83,935				80,130
Total Assets	$	557,912			$	525,679
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	79,074			$	49,929
Unearned revenue		16,394				14,092
Accrued expenses and other liabilities		15,392				13,609
Accrued wages and benefits		17,270				15,262
Income tax payable, net		5,914				1,301
Total Current Liabilities		134,044				94,193
Non-current unearned revenue		7,426				6,888
Pension liability		16,988				18,664
Deferred compensation liability		28,336				25,866
Other non-current liabilities		7,365				7,124
Total Liabilities		194,159				152,735
Stockholders' Equity		363,753				372,944
Total Liabilities and Stockholders' Equity	$	557,912			$	525,679

Condensed Consolidated Statements of Income (Loss) (Unaudited) (In thousands, except per share data)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2021				2020				2021				2020
Revenue
Network Solutions		$	120,767			$	115,229			$	360,025			$	323,924
Services & Support			17,314				17,914				48,821				52,457
Total Revenue			138,081				133,143				408,846				376,381
Cost of Revenue
Network Solutions			81,029				62,795				216,044				178,492
Services & Support			9,379				11,386				28,860				33,855
Total Cost of Revenue			90,408				74,181				244,904				212,347
Gross Profit			47,673				58,962				163,942				164,034
Selling, general and administrative expenses			30,972				27,205				89,273				84,624
Research and development expenses			26,759				27,223				82,131				85,794
Asset impairments			—				—				—				65
Operating Income (Loss)			(10,058	)			4,534				(7,462	)			(6,449	)
Interest and dividend income			344				344				887				1,031
Interest expense			(6	)			—				(18	)			(1	)
Net investment gain (loss)			(63	)			2,844				2,942				1,819
Other income (expense), net			648				(1,679	)			2,673				(2,307	)
Income (Loss) Before Income Taxes			(9,135	)			6,043				(978	)			(5,907	)
Income tax (expense) benefit			(1,292	)			(562	)			(3,467	)			2,171
Net Income (Loss)		$	(10,427	)		$	5,481			$	(4,445	)		$	(3,736	)
Weighted average shares outstanding – basic			48,609				47,957				48,470				47,957
Weighted average shares outstanding – diluted			48,609				48,424		(1)		48,470				47,957
Earnings (loss) per common share – basic		$	(0.21	)		$	0.11			$	(0.09	)		$	(0.08	)
Earnings (loss) per common share – diluted		$	(0.21	)		$	0.11		(1)	$	(0.09	)		$	(0.08	)

(1)

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

Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands)
		Nine Months Ended
		September 30,
		2021				2020
Cash flows from operating activities:
Net loss		$	(4,445	)		$	(3,736	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			12,246				12,525
Gain on investments			(3,320	)			(1,819	)
Stock-based compensation expense			5,457				5,056
Deferred income taxes			437				(1	)
Other			89				195
Asset impairments			—				65
Changes in operating assets and liabilities:
Accounts receivable, net			(26,346	)			(9,131	)
Other receivables			11,152				(6,224	)
Inventory, net			(2,669	)			(21,170	)
Prepaid expenses, other current assets and other assets			(8,514	)			(672	)
Accounts payable			29,614				14,204
Accrued expenses and other liabilities			10,392				5,618
Income taxes payable, net			4,798				(227	)
Net cash provided by (used in) operating activities			28,891				(5,317	)
Cash flows from investing activities:
Purchases of property, plant and equipment			(3,572	)			(5,082	)
Proceeds from sales and maturities of available-for-sale investments			28,305				86,145
Purchases of available-for-sale investments			(28,853	)			(42,641	)
Insurance proceeds received			500				—
Acquisition of note receivable			—				(523	)
Net cash provided by (used in) investing activities			(3,620	)			37,899
Cash flows from financing activities:
Proceeds from stock option exercises			6,111				—
Tax withholdings related to stock-based compensation settlements			(113	)			—
Dividend payments			(13,124	)			(12,993	)
Repayment of bonds payable			—				(24,600	)
Net cash used in financing activities			(7,126	)			(37,593	)
Net increase (decrease) in cash, cash equivalents and restricted cash			18,145				(5,011	)
Effect of exchange rate changes			(2,719	)			2,641
Cash, cash equivalents and restricted cash, beginning of period			60,179				73,773
Cash, cash equivalents and restricted cash, end of period		$	75,605			$	71,403
Supplemental disclosure of non-cash investing activities:
Right-of-use assets obtained in exchange for lease obligations		$	1,833			$	231
Purchases of property, plant and equipment included in accounts payable		$	100			$	442

Supplemental Information Reconciliation of Operating Income (Loss) to Non-GAAP Operating Income (Loss) (Unaudited)
	Three Months Ended September 30,									Nine Months ended September 30,
	2021				2020					2021				2020
Operating Income (Loss)	$	(10,058	)		$	4,534				$	(7,462	)		$	(6,449	)
Acquisition-related expenses, amortizations and adjustments		6,041		(1)		1,042		(4)			9,470		(8)		3,499		(11)
Stock-based compensation expense		1,842		(2)		1,610		(5)			5,457		(9)		5,056		(12)
Restructuring expenses		—				1,903		(6)			309		(10)		3,648		(13)
Deferred compensation adjustments		(459	)	(3)		791		(3)			2,091		(3)		765		(3)
Asset impairments		—				—					—				65		(14)
Settlement income		—				(28	)	(7)			—				(28	)	(7)
Non-GAAP Operating Income (Loss)	$	(2,634	)		$	9,852				$	9,865			$	6,556

(1)		$5.6 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).
(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)		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).
(4)		$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).
(5)		$0.1 million is included in total cost of revenue, $0.9 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).
(6)		$0.2 million is included in total cost of revenue, $1.1 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)		Includes income related to certain freight forwarder claim settlements, all of which is included in total cost of sales on the condensed consolidated statements of income.
(8)		$8.0 million 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).
(9)		$0.4 million is included in total cost of revenue, $3.3 million is included in selling, general and administrative expenses and $1.8 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, $1.7 million 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).
(12)		$0.3 million is included in total cost of revenue, $3.0 million is included in selling, general and administrative expenses and $1.8 million is included in research and development expenses on the condensed consolidated statements of income (loss).
(13)		$0.3 million is included in total cost of revenue, $1.6 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).
(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 September 30,									Nine Months ended September 30,
		2021				2020					2021				2020
Net Income (Loss)		$	(10,427	)		$	5,481				$	(4,445	)		$	(3,736	)
Acquisition-related expenses, amortizations and adjustments			6,041				1,042					9,470				3,499
Stock-based compensation expense			1,842				1,610					5,457				5,056
Restructuring expenses			—				1,903					309				3,648
Pension expense(1)			272				248					825				720
Deferred compensation adjustments(2)			(262	)			(90	)				552				(1,432	)	(3)
Valuation allowance related to deferred tax assets			2,455				(956	)				4,413				2,622
Asset impairments			—				—					—				65
Settlement income			—				(28	)				—				(28	)
Tax effect of adjustments to net income (loss)			(736	)			(1,279	)				(2,931	)			(3,089	)
Non-GAAP Net Income (Loss)		$	(815	)		$	7,931				$	13,650			$	7,325
Weighted average shares outstanding – basic			48,609				47,957					48,470				47,957
Weighted average shares outstanding – diluted			48,609				48,424					48,470				47,957
Earnings (loss) per common share - basic		$	(0.21	)		$	0.11				$	(0.09	)		$	(0.08	)
Earnings (loss) per common share - diluted		$	(0.21	)		$	0.11				$	(0.09	)		$	(0.08	)
Non-GAAP earnings (loss) per common share - basic		$	(0.02	)		$	0.17				$	0.28			$	0.15
Non-GAAP earnings (loss) per common share - diluted		$	(0.02	)		$	0.16				$	0.28			$	0.15

(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/20211101006017/en/

Investor Services/Assistance:

Rhonda Lambert/256-963-7450

investor@adtran.com

Source: ADTRAN, Inc.

FAQ

What were ADTRAN's Q3 2021 financial results?

ADTRAN reported revenues of $138.1 million but a net loss of $10.4 million for Q3 2021.

What is the earnings per share for ADTRAN in Q3 2021?

ADTRAN reported a loss per share of $0.21 for Q3 2021.

What is the planned cash dividend for ADTRAN in Q3 2021?

ADTRAN declared a quarterly cash dividend of $0.09 per share for Q3 2021.

How much did ADTRAN's bookings increase in Q3 2021?

ADTRAN's bookings increased by 43% year-over-year in Q3 2021.

What growth did ADTRAN observe in its SaaS applications?

ADTRAN saw a 61% year-over-year growth in customers deploying its SaaS applications.