ADTN
$22.40
Adtran
($.10)
(.44%)
Earnings Details
2nd Quarter June 2017
Tuesday, July 18, 2017 8:30:00 PM
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Summary

Adtran Beats

Adtran (ADTN) reported 2nd Quarter June 2017 earnings of $0.27 per share on revenue of $184.7 million. The consensus earnings estimate was $0.22 per share on revenue of $183.1 million. The Earnings Whisper number was $0.24 per share. Revenue grew 13.5% 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
$0.27
Earnings Whisper
$0.24
Consensus Estimate
$0.22
Reported Revenue
$184.7 Mil
Revenue Estimate
$183.1 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

ADTRAN, Inc. Reports Record Results for the Second Quarter 2017 and Declares Quarterly Cash Dividend

ADTRAN, Inc. (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
$
454
$
554
payable

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 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
936
445
2,074
881
adjustments
Provision for income taxes
(354 )
(152 )
(779 )
(301 )
Total acquisition related expenses, amortizations and
$
582
$
293
$ 1,295
$
580
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 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
905
432
1,993
861
adjustments included in operating expenses
Total acquisition related expenses, amortizations and
936
445
2,074
881
adjustments
Provision for income taxes
(354 )
(152 )
(779 )
(301 )
Total acquisition related expenses, amortizations and
$
582
$
293
$
1,295
$
580
adjustments, net of tax
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,
(433 )
(213 )
(813 )
(425 )
PSUs, RSUs and restricted stock
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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SOURCE: ADTRAN, Inc.

ADTRAN, Inc.
Investor Services/Assistance:
Gloria Brown, 256-963-8220
investor@adtran.com