ADTN
$21.65
Adtran
$.20
.93%
Earnings Details
4th Quarter December 2016
Tuesday, January 17, 2017 8:40:00 PM
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Summary

Adtran Beats

Adtran (ADTN) reported 4th Quarter December 2016 earnings of $0.20 per share on revenue of $163.0 million. The consensus earnings estimate was $0.14 per share on revenue of $152.0 million. The Earnings Whisper number was $0.16 per share. Revenue grew 17.2% on a year-over-year basis.

Adtran Inc provides networking and communications equipment. Its solutions enable voice, data, video and Internet communications across a variety of network infrastructures.

Results
Reported Earnings
$0.20
Earnings Whisper
$0.16
Consensus Estimate
$0.14
Reported Revenue
$163.0 Mil
Revenue Estimate
$152.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

ADTRAN, Inc. Reports Results for the Fourth Quarter 2016 and Declares Quarterly Cash Dividend

ADTRAN, Inc. (ADTN) reported results for the fourth quarter 2016. For the quarter, sales were $162,986,000 compared to $139,013,000 for the fourth quarter of 2015. Net income was $7,572,000 compared to $5,718,000 for the fourth quarter of 2015. Earnings per share, assuming dilution, were $0.16 compared to $0.12 for the fourth quarter of 2015. Non-GAAP earnings per share were $0.21 compared to $0.16 for the fourth 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, "Our revenue and EPS performance for the quarter exceeded expectations with total revenue increasing 17% over the same period last year. The solid fourth quarter and full year performance was a result of strong growth in our domestic business, driven by our leading market positions in CAF II and ultra-broadband solutions, continued growth in our services business, and the rebound of our international business. Our services and international businesses grew 55% and 46% respectively over the same period last year. Global demand for broadband continued to grow as we bolstered our market positions in the U.S and Europe. We continue to be encouraged by the positive momentum we are experiencing as service providers seek transformation to grow revenue, reduce costs, and accelerate service delivery and deployment."

The Company also announced that its Board of Directors declared a cash dividend for the fourth 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 February 2, 2017. The ex-dividend date is January 31, 2017, and the payment date is February 16, 2017.

The Company confirmed that its fourth quarter conference call will be held Wednesday, January 18, 2017, 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)
December 31,
December 31,
2016
2015
Assets
Cash and cash equivalents
$
79,895
$
84,550
Short-term investments
43,188
34,396
Accounts receivable, net
92,346
71,917
Other receivables
15,137
19,321
Income tax receivable, net
760
-
Inventory
105,117
91,533
Prepaid expenses and other current assets
16,459
10,145
Total Current Assets
352,902
311,862
Property, plant and equipment, net
84,469
73,233
Deferred tax assets, net
38,036
37,015
Goodwill
3,492
3,492
Other assets
12,234
9,276
Long-term investments
176,102
198,026
Total Assets
$ 667,235
$
632,904
Liabilities and Stockholders’ Equity
Accounts payable
$
77,342
$
48,668
Unearned revenue
16,326
16,615
Accrued expenses
12,434
12,108
Accrued wages and benefits
20,433
12,857
Income tax payable, net
-
2,395
Total Current Liabilities
126,535
92,643
Non-current unearned revenue
6,333
7,965
Other non-current liabilities
28,050
24,236
Bonds payable
26,800
27,900
Total Liabilities
187,718
152,744
Stockholders’ Equity
479,517
480,160
Total Liabilities and Stockholders’ Equity
$ 667,235
$
632,904
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2016
2015
2016
2015
Sales
Products
$ 126,793
$ 115,699
$ 525,502
$ 527,422
Services
36,193
23,314
111,279
72,642
Total Sales
162,986
139,013
636,781
600,064
Cost of Sales
Products
67,790
62,104
270,695
293,843
Services
24,409
14,470
74,742
39,324
Total Cost of Sales
92,199
76,574
345,437
333,167
Gross Profit
70,787
62,439
291,344
266,897
Selling, general and administrative expenses
34,438
30,339
131,805
123,542
Research and development expenses
32,077
29,300
124,804
129,876
Operating Income
4,272
2,800
34,735
13,479
Interest and dividend income
1,226
1,273
3,918
3,953
Interest expense
(142 )
(148 )
(572 )
(596 )
Net realized investment gain
1,769
1,907
5,923
10,337
Other expense, net
(273 )
(617 )
(651 )
(1,465 )
Gain on bargain purchase of a business
(8 )
-
3,542
-
Income before provision for income taxes
6,844
5,215
46,895
25,708
Provision for income taxes
728
503
(11,666 )
(7,062 )
Net Income
$
7,572
$
5,718
$
35,229
$
18,646
Weighted average shares outstanding - basic
48,383
49,552
48,724
51,145
Weighted average shares outstanding - diluted (1)
48,757
49,643
48,949
51,267
Earnings per common share - basic
$
0.16
$
0.12
$
0.72
$
0.36
Earnings per common share - diluted (1)
$
0.16
$
0.12
$
0.72
$
0.36
(1) Assumes exercise of dilutive stock options calculated
under the treasury stock method.
Consolidated Statements of Comprehensive Income
(Unaudited)
(In thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2016
2015
2016
2015
Net Income
$
7,572
$ 5,718
$ 35,229
$ 18,646
Other Comprehensive Income (Loss), net of tax:
Unrealized losses on available-for-sale securities
(1,366 )
(455 )
(1,528 )
(7,032 )
Defined benefit plan adjustments
(1,225 )
1,651
(1,122 )
1,862
Foreign currency translation
(1,771 )
73
(569 )
(3,724 )
Other Comprehensive Income (Loss), net of tax
(4,362 )
1,269
(3,219 )
(8,894 )
Comprehensive Income, net of tax
$
3,210
$ 6,987
$ 32,010
$
9,752
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Twelve Months Ended
December 31,
2016
2015
Cash flows from operating activities:
Net income
$
35,229
$
18,646
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
14,407
14,245
Amortization of net premium on available-for-sale investments
643
2,402
Net realized gain on long-term investments
(5,923 )
(10,337 )
Net loss on disposal of property, plant and equipment
22
644
Gain on bargain purchase of a business
(3,542 )
-
Stock-based compensation expense
6,695
6,712
Deferred income taxes
(2,685 )
(692 )
Tax impact from stock option exercises
-
(40 )
Excess tax benefits from stock-based compensation arrangements
(2 )
(3 )
Change in operating assets and liabilities:
Accounts receivable, net
(21,302 )
14,918
Other receivables
4,101
11,704
Inventory
(10,887 )
(6,877 )
Prepaid expenses and other assets
(7,108 )
(5,070 )
Accounts payable
26,722
(5,826 )
Accrued expenses and other liabilities
8,792
(10,289 )
Income tax payable/receivable, net
(3,162 )
(11,590 )
Net cash provided by operating activities
42,000
18,547
Cash flows from investing activities:
Purchases of property, plant and equipment
(21,441 )
(11,753 )
Proceeds from disposals of property, plant and equipment
-
183
Proceeds from sales and maturities of available-for-sale investments
225,075
280,435
Purchases of available-for-sale investments
(209,172 )
(188,921 )
Acquisition of business
(943 )
-
Net cash provided by (used in) investing activities
(6,481 )
79,944
Cash flows from financing activities:
Proceeds from stock option exercises
4,717
961
Purchases of treasury stock
(25,817 )
(66,160 )
Dividend payments
(17,583 )
(18,449 )
Payments on long-term debt
(1,100 )
(1,100 )
Excess tax benefits from stock-based compensation arrangements
2
3
Net cash used in financing activities
(39,781 )
(84,745 )
Net increase (decrease) in cash and cash equivalents
(4,262 )
13,746
Effect of exchange rate changes
(393 )
(2,635 )
Cash and cash equivalents, beginning of period
84,550
73,439
Cash and cash equivalents, end of period
$
79,895
$
84,550
Supplemental disclosure of non-cash investing activities
Purchases of property, plant and equipment included in accounts
$
2,103
$
598
payable

Supplemental Information Restructuring Expenses (Unaudited) (In thousands)

Restructuring expenses were recorded in the following Consolidated Statements of Income categories for the three and twelve months ended December 31, 2016 and 2015:

Three Months Ended
Twelve Months Ended
December 31,
December 31,
2016
2015
2016
2015
Restructuring expense included in cost of sales
$ 14
$
5
$ 1,321
$
112
Selling, general and administrative expense
-
8
637
846
Research and development expense
-
13
-
2,108
Restructuring expense included in operating expenses
-
21
637
2,954
Total restructuring expense
14
26
1,958
3,066
Provision for income taxes
(4 )
(10 )
(607 )
(1,196 )
Total restructuring expense, net of tax
$ 10
$
16
$ 1,351
$
1,870

Supplemental Information Acquisition 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 twelve months ended December 31, 2016 and 2015 for all three transactions are as follows:

Three Months Ended
Twelve Months Ended
December 31,
December 31,
2016
2015
2016
2015
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets
$
158
$
174
$
662
$
817
NSN BBA acquisition
Amortization of acquired intangible assets
221
227
901
928
Amortization of other purchase accounting adjustments
30
48
224
443
Acquisition related professional fees, travel and other expenses
-
14
-
75
Subtotal NSN BBA acquisition
251
289
1,125
1,446
CommScope acquisition
Amortization of acquired intangible assets
673
-
785
-
Amortization of other purchase accounting adjustments
42
-
126
-
Acquisition related professional fees, travel and other expenses
29
-
74
-
Subtotal CommScope acquisition
744
-
985
-
Total acquisition related expenses, amortizations and adjustments
1,153
463
2,772
2,263
Provision for income taxes
(429 )
(158 )
(991 )
(767 )
Total acquisition related expenses, amortizations and
$
724
$
305
$ 1,781
$
1,496
adjustments, net of tax

The acquisition related expenses, amortizations and adjustments above were recorded in the following Consolidated Statements of Income categories for the three and twelve months ended December 31, 2016 and 2015:

Three Months Ended
Twelve Months Ended
December 31,
December 31,
2016
2015
2016
2015
Revenue (adjustments to deferred revenue recognized in the period)
$
-
$
16
$
-
$
212
Cost of goods sold
43
3
232
55
Subtotal
43
19
232
267
Selling, general and administrative expenses
70
18
131
92
Research and development expenses
1,040
426
2,409
1,904
Subtotal
1,110
444
2,540
1,996
Total acquisition related expenses, amortizations and adjustments
1,153
463
2,772
2,263
Provision for income taxes
(429 )
(158 )
(991 )
(767 )
Total acquisition related expenses, amortizations and
$
724
$
305
$ 1,781
$
1,496
adjustments, net of tax
Supplemental Information
Stock-based Compensation Expense
(Unaudited)
(In thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2016
2015
2016
2015
Stock-based compensation expense included in cost of sales
$
107
$
78
$
389
$
280
Selling, general and administrative expense
1,019
1,035
3,341
3,261
Research and development expense
968
811
2,965
3,171
Stock-based compensation expense included in operating expenses
1,987
1,846
6,306
6,432
Total stock-based compensation expense
2,094
1,924
6,695
6,712
Tax benefit for expense associated with non-qualified options
(320 )
(242 )
(963 )
(862 )
Total stock-based compensation expense, net of tax
$ 1,774
$ 1,682
$ 5,732
$
5,850
Reconciliation of GAAP net income per share, diluted, to
Non-GAAP net income per share, diluted
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2016
2015
2016
2015
GAAP earnings per common share - diluted
$ 0.16
$ 0.12
$
0.72
$
0.36
Restructuring expense
-
-
0.03
0.04
Acquisition related expenses, amortizations and adjustments
0.01
0.01
0.04
0.03
Stock-based compensation expense
0.04
0.03
0.12
0.11
Gain on bargain purchase of a business
-
-
(0.07 )
-
Non-GAAP earnings per common share - diluted
$ 0.21
$ 0.16
$
0.84
$
0.54

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SOURCE: ADTRAN, Inc.

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