ADTN
$21.95
Adtran
$.10
.46%
Earnings Details
3rd Quarter September 2017
Tuesday, October 17, 2017 8:15:00 PM
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Summary

Adtran Beats

Adtran (ADTN) reported 3rd Quarter September 2017 earnings of $0.34 per share on revenue of $185.1 million. The consensus earnings estimate was $0.27 per share on revenue of $185.2 million. The Earnings Whisper number was $0.29 per share. Revenue grew 9.6% 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
$0.34
Earnings Whisper
$0.29
Consensus Estimate
$0.27
Reported Revenue
$185.1 Mil
Revenue Estimate
$185.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

ADTRAN, Inc. Reports 28% Increase in Earnings for the Third Quarter 2017 and Declares Quarterly Cash Dividend

ADTRAN, Inc. (ADTN) reported results for the third quarter 2017. For the quarter, sales were $185.1 million compared to $168.9 million for the third quarter of 2016. Net income was $15.9 million compared to $12.4 million for the third quarter of 2016. Earnings per share, assuming dilution, were $0.33 compared to $0.26 for the third quarter of 2016. Non-GAAP earnings per share were $0.37 compared to $0.26 for the third quarter of 2016, an increase of 42%. 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, "We are very pleased with the company’s performance in the third quarter as we continued to see strong sales in our domestic ultra-broadband solutions and services, which have more than doubled from the same period last year. Total company revenues grew by 10% compared to the same period last year as a result of strength in both our Network Solutions segment and a record performance in our services revenues, which again grew at a double-digit pace. We were also pleased to see growth in our Customer Devices category in the quarter. Our customers are increasingly relying on ADTRAN to help them plan, provision and deploy network assets to the best effect, ensuring the network is prepared for the emergence of exciting applications and mission critical services."

The Company also announced that its Board of Directors declared a cash dividend for the third 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 November 1, 2017. The ex-dividend date is October 31, 2017, and the payment date is November 15, 2017.

The Company confirmed that its third quarter conference call will be held Wednesday, October 18, 2017, at 9:30 a.m. Central Time. ADTRAN will webcast this conference. To listen, simply visit the Investor Relations site at www.investors.adtran.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, as well as the text of the Company’s earnings release, will be available on the Investor Relations site approximately 24 hours following the call and will remain available for at least 12 months.

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 investor.relations@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)
September 30,
December 31,
2017
2016
Assets
Cash and cash equivalents
$
128,253
$
79,895
Short-term investments
31,385
43,188
Accounts receivable, net
101,613
92,346
Other receivables
18,541
15,137
Income tax receivable, net
--
760
Inventory, net
116,230
105,117
Prepaid expenses and other current assets
23,127
16,459
Total Current Assets
419,149
352,902
Property, plant and equipment, net
85,665
84,469
Deferred tax assets, net
37,130
38,036
Goodwill
3,492
3,492
Other assets
13,135
12,234
Long-term investments
136,987
176,102
Total Assets
$
695,558
$
667,235
Liabilities and Stockholders’ Equity
Accounts payable
$
73,127
$
77,342
Unearned revenue
13,651
16,326
Accrued expenses
15,099
12,434
Accrued wages and benefits
15,345
20,433
Income tax payable, net
7,696
--
Total Current Liabilities
124,918
126,535
Non-current unearned revenue
4,918
6,333
Other non-current liabilities
34,756
28,050
Bonds payable
26,800
26,800
Total Liabilities
191,392
187,718
Stockholders’ Equity
504,166
479,517
Total Liabilities and Stockholders’ Equity
$
695,558
$
667,235
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Sales
Products
$
145,467
$ 136,277
$
444,607
$ 398,709
Services
39,645
32,613
95,457
75,086
Total Sales
185,112
168,890
540,064
473,795
Cost of sales
Products
73,528
70,988
229,845
202,905
Services
25,086
22,094
65,374
50,333
Total Cost of Sales
98,614
93,082
295,219
253,238
Gross Profit
86,498
75,808
244,845
220,557
Selling, general and administrative expenses
34,652
33,716
104,102
97,367
Research and development expenses
33,528
31,962
98,945
92,727
Operating Income
18,318
10,130
41,798
30,463
Interest and dividend income
952
910
2,857
2,692
Interest expense
(139 )
(143 )
(417 )
(430 )
Net realized investment gain
1,009
1,316
2,869
4,154
Other expense, net
(933 )
(246 )
(1,686 )
(378 )
Gain on bargain purchase of a business
--
3,550
--
3,550
Income before provision for income taxes
19,207
15,517
45,421
40,051
Provision for income taxes
(3,309 )
(3,102 )
(10,471 )
(12,394 )
Net Income
$
15,898
$
12,415
$
34,950
$
27,657
Weighted average shares outstanding - basic
47,870
48,470
48,110
48,839
Weighted average shares outstanding - diluted
48,531
48,678
48,618
49,036
Earnings per common share - basic
$
0.33
$
0.26
$
0.73
$
0.57
Earnings per common share - diluted
$
0.33
$
0.26
$
0.72
$
0.56
(1)
Assumes exercise of dilutive stock options
calculated under the treasury stock method.
Consolidated Statements of Comprehensive Income
(Unaudited)
(In thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Net Income
$ 15,898
$
12,415
$ 34,950
$
27,657
Other Comprehensive Income, net of tax
Net unrealized gains (losses) on available-for-sale securities
804
258
2,512
(162 )
Net unrealized gains (losses) on cash flow hedges
142
--
(196 )
--
Defined benefit plan adjustments
73
36
214
103
Foreign currency translation
1,541
575
5,402
1,202
Other Comprehensive Income, net of tax
2,560
869
7,932
1,143
Comprehensive Income, net of tax
$ 18,458
$
13,284
$ 42,882
$
28,800
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended
September 30,
2017
2016
Cash flows from operating activities:
Net income
$
34,950
$
27,657
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
12,034
10,260
Amortization of net premium on available-for-sale investments
352
489
Net realized gain on long-term investments
(2,869 )
(4,154 )
Net (gain) loss on disposal of property, plant and equipment
(10 )
21
Gain on bargain purchase of a business
--
(3,550 )
Stock-based compensation expense
5,573
4,601
Deferred income taxes
--
(463 )
Changes in operating assets and liabilities:
Accounts receivable, net
(6,975 )
(29,370 )
Other receivables
(2,924 )
7,475
Inventory
(9,483 )
(683 )
Prepaid expenses and other assets
(9,647 )
(5,180 )
Accounts payable
(4,727 )
16,363
Accrued expenses and other liabilities
(2,820 )
7,307
Income tax payable/receivable, net
8,571
(2,941 )
Net cash provided by operating activities
22,025
27,832
Cash flows from investing activities:
Purchases of property, plant and equipment
(12,304 )
(12,684 )
Proceeds from disposals of property, plant and equipment
16
--
Proceeds from sales and maturities of available-for-sale investments
137,272
141,103
Purchases of available-for-sale investments
(79,713 )
(139,181 )
Acquisition of business
--
(943 )
Net cash provided by (used in) investing activities
45,271
(11,705 )
Cash flows from financing activities:
Proceeds from stock option exercises
6,606
1,076
Purchases of treasury stock
(17,348 )
(22,917 )
Dividend payments
(13,031 )
(13,230 )
Net cash used in financing activities
(23,773 )
(35,071 )
Net increase (decrease) in cash and cash equivalents
43,523
(18,944 )
Effect of exchange rate changes
4,835
686
Cash and cash equivalents, beginning of period
79,895
84,550
Cash and cash equivalents, end of period
$
128,253
$
66,292
Supplemental disclosure of non-cash investing activities:
Purchases of property, plant and equipment included in accounts
$
272
$
1,174
payable
Supplemental Information
Restructuring Expenses
(Unaudited)
(In thousands)
Restructuring expense was recorded in the following Consolidated
Statements of Income categories for the three and nine months
ended September 30, 2017 and 2016:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Restructuring expense included in cost of sales
$ --
$
1,307
$ --
$
1,307
Selling, general and administrative expense
93
637
93
637
Research and development expense
122
--
122
--
Restructuring expense included in operating expenses
215
637
215
637
Total restructuring expense
215
1,944
215
1,944
Provision for income taxes
(84 )
(603 )
(84 )
(603 )
Total restructuring expense, net of tax
$
131
$
1,341
$
131
$
1,341
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 nine months ended
September 30, 2017 and 2016 for all three transactions are as
follows:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets
$
158
$
158
$
474
$
504
NSN BBA acquisition
Amortization of acquired intangible assets
95
225
432
680
Amortization of other purchase accounting adjustments
1
114
39
194
Subtotal - NSN BBA acquisition
96
339
471
874
CommScope acquisition
Amortization of acquired intangible assets
219
112
1,513
112
Amortization of other purchase accounting adjustments
4
84
85
84
Acquisition related professional fees, travel and other expenses
--
45
8
45
Subtotal - CommScope acquisition
223
241
1,606
241
Total acquisition related expenses, amortizations and
477
738
2,551
1,619
adjustments
Provision for income taxes
(178 )
(261 )
(957 )
(562 )
Total acquisition related expenses, amortizations and
$
299
$
477
$ 1,594
$ 1,057
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 nine months ended September
30, 2017 and 2016:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Cost of goods sold
$
5
$
169
$
86
$
189
Selling, general and administrative expenses
50
54
164
61
Research and development expenses
422
515
2,301
1,369
Total acquisition related expenses, amortizations and
472
569
2,465
1,430
adjustments included in operating expenses
Total acquisition related expenses, amortizations and
477
738
2,551
1,619
adjustments
Provision for income taxes
(178 )
(261 )
(957 )
(562 )
Total acquisition related expenses, amortizations and
$
299
$
477
$ 1,594
$ 1,057
adjustments, net of tax
Supplemental Information
Stock-based Compensation Expense
(Unaudited)
(In thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Stock-based compensation expense included in cost of sales
$
97
$
88
$
281
$
282
Selling, general and administrative expense
994
765
3,018
2,322
Research and development expense
743
639
2,274
1,997
Stock-based compensation expense included in operating expenses
1,737
1,404
5,292
4,319
Total stock-based compensation expense
1,834
1,492
5,573
4,601
Tax benefit for expense associated with non-qualified options,
(402 )
(218 )
(1,215 )
(643 )
PSUs, RSUs and restricted stock
Total stock-based compensation expense, net of tax
$ 1,432
$ 1,274
$
4,358
$ 3,958
Reconciliation of GAAP net income per share, diluted, to
Non-GAAP net income per share, diluted
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
GAAP earnings per common share - diluted
$
0.33
$
0.26
$
0.72
$
0.56
Restructuring expense
--
0.03
--
0.03
0.01
0.01
0.03
0.02
Acquisition related expenses, amortizations and adjustments
Stock-based compensation expense
0.03
0.03
0.09
0.08
Gain on bargain purchase of a business
--
(0.07 )
--
(0.07 )
Non-GAAP earnings per common share - diluted
$
0.37
$
0.26
$
0.84
$
0.62

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SOURCE: ADTRAN, Inc.

ADTRAN, Inc.
Gloria Brown, 256-963-8020
investor.relations@adtran.com