ADTRAN, Inc. (NASDAQ:ADTN) reported results for the second
quarter 2017. For the quarter, sales were $184.7 million compared
to $162.7 million for the second quarter of 2016. Net income was
$12.4 million compared to $10.2 million for the second quarter of
2016. Earnings per share, assuming dilution, were $0.26 compared to
$0.21 for the second quarter of 2016. Non-GAAP earnings per share
were $0.30 compared to $0.25 for the second quarter of 2016. The
reconciliation between GAAP earnings per share, diluted, and
non-GAAP earnings per share, diluted, is in the table provided.
ADTRAN Chairman and Chief Executive Officer Tom Stanton stated,
“The company’s performance continues on pace with record sales for
the second quarter and the first half of 2017. Our record revenue
was driven by increasing momentum with our ultra-broadband
solutions, where we saw significant year-over-year growth both in
the US and Europe. We continue to be at the forefront of several
inflection points of innovation in the market, including next
generation optical access, services transformation and Software
Defined Access (SD-Access). Our services combined with market
leading access and software solutions have enabled us to expand our
range and reach into new opportunities that show promise for both
short and long-term growth. We are pleased with our progress and
the market reception to ADTRAN Mosaic and our SD-Access portfolio
as Tier 1 operators around the world prepare for the transition to
SDN. With our focus on software innovation and domain expertise,
ADTRAN is uniquely positioned to enable internet service providers
of all types to meet increasing customer demand and decrease their
time to market for next generation services.”
The Company also announced that its Board of Directors declared
a cash dividend for the second quarter of 2017. The quarterly cash
dividend is $0.09 per common share to be paid to holders of record
at the close of business on August 3, 2017. The ex-dividend date is
August 1, 2017, and the payment date is August 17, 2017.
The Company confirmed that its second quarter conference call
will be held Wednesday, July 19, 2017, at 9:30 a.m. Central Time.
This conference call will be web cast live through the Q4 Inc.
webcasting service. To listen, simply visit the Investor Relations
site at www.adtran.com/investor 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, as well as the text of
the Company's earnings release, will be available on the Investor
Relations site 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, 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,
December 31, 2017 2016 Assets
Cash and cash equivalents $ 88,798 $ 79,895 Short-term investments
47,331 43,188 Accounts receivable, net 79,891 92,346 Other
receivables 14,561 15,137 Income tax receivable, net — 760
Inventory, net 113,995 105,117 Prepaid expenses and other current
assets 23,556 16,459
Total Current Assets
368,132 352,902 Property, plant and equipment,
net 84,122 84,469 Deferred tax assets, net 40,296 38,036 Goodwill
3,492 3,492 Other assets 13,305 12,234 Long-term investments
159,634 176,102
Total Assets $ 668,981
$ 667,235 Liabilities and Stockholders'
Equity Accounts payable $ 66,161 $ 77,342 Unearned revenue
15,449 16,326 Accrued expenses 13,433 12,434 Accrued wages and
benefits 16,303 20,433 Income tax payable, net 9,594
—
Total Current Liabilities 120,940 126,535
Non-current unearned revenue 5,351 6,333 Other non-current
liabilities 32,527 28,050 Bonds payable 26,800 26,800
Total Liabilities 185,618 187,718
Stockholders' Equity 483,363
479,517 Total Liabilities and Stockholders'
Equity $ 668,981 $ 667,235
Consolidated Statements of Income
(Unaudited) (In thousands, except per share data)
Three Months Ended Six Months Ended June
30, June 30, 2017 2016 2017
2016 Sales Products $ 155,543 $ 138,549 $
299,140 $ 262,432 Services 29,130 24,152
55,812 42,473
Total Sales 184,673
162,701 354,952 304,905 Cost of
Sales Products 79,658 67,844 156,317 131,917 Services
20,383 15,902 40,288 28,239
Total Cost of
Sales 100,041 83,746 196,605
160,156 Gross Profit 84,632
78,955 158,347 144,749 Selling, general
and administrative expenses 34,683 32,866 69,450 63,651 Research
and development expenses 33,501 31,277 65,417
60,765
Operating Income 16,448
14,812 23,480 20,333 Interest and
dividend income 972 927 1,905 1,782 Interest expense (137 ) (142 )
(278 ) (287 ) Net realized investment gain 1,390 1,110 1,860 2,838
Other expense, net (804 ) (251 ) (753 )
(132 )
Income before provision for income taxes
17,869 16,456 26,214 24,534
Provision for income taxes (5,468 ) (6,228 )
(7,162 ) (9,292 )
Net Income $
12,401 $ 10,228 $ 19,052
$ 15,242 Weighted average shares outstanding -
basic 48,036 48,831 48,232 49,026 Weighted average shares
outstanding - diluted (1) 48,413 49,048 48,675 49,218
Earnings per common share - basic $ 0.26 $ 0.21 $ 0.40 $ 0.31
Earnings per common share - diluted (1) $ 0.26 $ 0.21 $ 0.39 $ 0.31
(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, 2017 2016 2017
2016 Net Income $ 12,401 $ 10,228 $ 19,052 $ 15,242
Other
Comprehensive Income (Loss), net of tax: Net unrealized gains
(losses) on available-for-sale securities 373 (165 ) 1,708 (420 )
Net unrealized losses on cash flow hedges (417 ) — (338 ) — Defined
benefit plan adjustments 86 22 141 67 Foreign currency translation
2,619 (601 ) 3,861 627
Other
Comprehensive Income (Loss), net of tax 2,661
(744 ) 5,372 274
Comprehensive Income, net of tax $ 15,062
$ 9,484 $ 24,424 $ 15,516
Consolidated Statements of Cash Flows
(Unaudited) (In thousands) Six Months
Ended June 30, 2017 2016 Cash
flows from operating activities: Net income $ 19,052 $ 15,242
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 5,156 6,689
Amortization of net premium on available-for-sale investments 238
376 Net realized gain on long-term investments (1,860 ) (2,838 )
Net (gain) loss on disposal of property, plant and equipment (11 )
5 Stock-based compensation expense 3,739 3,109 Deferred income
taxes (2,772 ) (354 ) Changes in operating assets and liabilities:
Accounts receivable, net 13,911 (17,192 ) Other receivables 571
7,876 Inventory (7,547 ) 4,938 Prepaid expenses and other assets
(6,632 ) (4,263 ) Accounts payable (10,910 ) 10,354 Accrued
expenses and other liabilities (2,629 ) 1,474 Income tax
payable/receivable, net 10,273 (4,799 )
Net cash
provided by operating activities 20,579 20,617
Cash flows from investing activities: Purchases of
property, plant and equipment (7,509 ) (6,679 ) Proceeds from
disposals of property, plant and equipment 16 — Proceeds from sales
and maturities of available-for-sale investments 81,891 109,993
Purchases of available-for-sale investments (65,140 )
(112,903 )
Net cash provided by (used in) investing
activities 9,258 (9,589 ) Cash
flows from financing activities: Proceeds from stock option
exercises 1,722 541 Purchases of treasury stock (17,311 ) (16,579 )
Dividend payments (8,719 ) (8,860 )
Net cash used
in financing activities (24,308 ) (24,898
) Net increase (decrease) in cash and cash
equivalents 5,529 (13,870 ) Effect of
exchange rate changes 3,374 234
Cash and cash equivalents,
beginning of period 79,895 84,550
Cash and cash equivalents, end of period $
88,798 $ 70,914 Supplemental disclosure
of non-cash investing activities: Purchases of property, plant and
equipment included in accounts payable $ 454 $ 554
Supplemental InformationAcquisition
Related Expenses, Amortizations and
Adjustments(Unaudited)(In thousands)
On August 4, 2011, we closed on the acquisition of Bluesocket,
Inc., on May 4, 2012, we closed on the acquisition of the Nokia
Siemens Networks Broadband Access business (NSN BBA), and on
September 13, 2016, we closed on the acquisition of CommScope’s
active fiber business (CommScope). Acquisition related expenses,
amortizations and adjustments for the three and six months ended
June 30, 2017 and 2016 for all three transactions are as
follows:
Three Months Ended Six Months Ended June
30, June 30, 2017 2016 2017
2016 Bluesocket, Inc. acquisition Amortization of acquired
intangible assets $ 158 $ 173 $ 316 $ 346 NSN BBA
acquisition Amortization of acquired intangible assets 129 228 337
455
Amortization of other purchase accounting
adjustments
10 44 38 80
Subtotal - NSN BBA
acquisition 139 272 375 535
CommScope acquisition Amortization of acquired intangible assets
608 — 1,294 —
Amortization of other purchase accounting
adjustments
31 — 81 —
Acquisition related professional fees,
travel and other expenses
— — 8 —
Subtotal - CommScope
acquisition
639 —
1,383 —
Total acquisition related expenses,
amortizations and adjustments
936 445 2,074 881 Provision for income
taxes (354 ) (152 ) (779 ) (301 )
Total acquisition related expenses,
amortizations and adjustments, net of tax
$ 582 $ 293 $ 1,295
$ 580
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, 2017 and 2016:
Three Months Ended Six Months Ended June
30, June 30, 2017 2016 2017
2016 Cost of goods sold $ 31 $
13
$
81
$
20 Selling, general and administrative expenses 52 4
114 7 Research and development expenses 853 428
1,879 854
Total acquisition related expenses,
amortizations and adjustments included in operating
expenses
905 432 1,993 861
Total acquisition related expenses,
amortizations and adjustments
936 445 2,074 881 Provision for income
taxes (354 ) (152
)
(779 ) (301 )
Total acquisition related expenses,
amortizations and adjustments, net of tax
$ 582 $ 293
$
1,295
$
580 Supplemental Information
Stock-based Compensation Expense (Unaudited) (In
thousands) Three Months Ended Six Months
Ended June 30, June 30, 2017
2016 2017 2016 Stock-based
compensation expense included in cost of sales $
93 $ 95 $ 184 $
194 Selling, general and administrative expense 1,008
788 2,024 1,557 Research and development expense 755
668 1,531 1,358
Stock-based compensation expense
included in operating expenses 1,763
1,456 3,555 2,915
Total stock-based compensation expense 1,856
1,551 3,739 3,109
Tax benefit for expense associated with
non-qualified options, PSUs, RSUs and restricted stock
(433 ) (213 ) (813 ) (425 )
Total stock-based compensation expense, net of tax $
1,423 $ 1,338 $ 2,926 $
2,684 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,
2017 2016 2017
2016 GAAP earnings per common share - diluted
$ 0.26 $ 0.21 $
0.39 $ 0.31 Acquisition related
expenses, amortizations and adjustments 0.01 0.01 0.03 0.01
Stock-based compensation expense 0.03 0.03
0.06 0.05
Non-GAAP earnings per common share -
diluted $ 0.30 $ 0.25 $
0.48 $ 0.37
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ADTRAN, Inc.Investor Services/Assistance:Gloria Brown,
256-963-8220investor@adtran.com
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