ADTN
$19.80
Adtran
$.15
.76%
Earnings Details
1st Quarter March 2017
Tuesday, April 18, 2017 8:10:00 PM
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Summary

Adtran Beats but Guides Lower

Adtran (ADTN) reported 1st Quarter March 2017 earnings of $0.15 per share on revenue of $170.3 million. The consensus earnings estimate was $0.13 per share on revenue of $167.9 million. The Earnings Whisper number was $0.14 per share. Revenue grew 19.7% on a year-over-year basis.

The company said during its conference call it expects second quarter revenue to be up in the mid to high single-digit range, or revenue of approximately $169.0 million to $177.0 million. The current consensus revenue estimate is $182.8 million for the quarter ending June 30, 2017.

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
$0.15
Earnings Whisper
$0.14
Consensus Estimate
$0.13
Reported Revenue
$170.3 Mil
Revenue Estimate
$167.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

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

ADTRAN, Inc. (ADTN) reported results for the first quarter 2017. For the quarter, sales were $170.3 million compared to $142.2 million for the first quarter of 2016. Net income was $6.7 million compared to $5 million for the first quarter of 2016. Earnings per share, assuming dilution, were $0.14 compared to $0.10 for the first quarter of 2016. Non-GAAP earnings per share were $0.18 compared to $0.14 for the first 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, "We started 2017 setting a company record for first quarter revenue, driven by increasing momentum in our ultra-broadband product sales and continuing strength in our services area. Most notably, we had very strong performances in our fiber to the premises and vectoring products in both our domestic and international markets. ADTRAN continues to be at the forefront of enabling 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 first 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 May 4, 2017. The ex-dividend date is May 2, 2017, and the payment date is May 18, 2017.

The Company confirmed that its first quarter conference call will be held Wednesday, April 19, 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, 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)
March 31,
December 31,
2017
2016
Assets
Cash and cash equivalents
$
72,558
$
79,895
Short-term investments
52,458
43,188
Accounts receivable, net
85,396
92,346
Other receivables
13,398
15,137
Income tax receivable, net
--
760
Inventory
112,774
105,117
Prepaid expenses and other current assets
17,816
16,459
Total Current Assets
354,400
352,902
Property, plant and equipment, net
83,514
84,469
Deferred tax assets, net
39,085
38,036
Goodwill
3,492
3,492
Other assets
12,274
12,234
Long-term investments
174,413
176,102
Total Assets
$
667,178
$
667,235
Liabilities and Stockholders’ Equity
Accounts payable
$
74,300
$
77,342
Unearned revenue
16,969
16,326
Accrued expenses
15,035
12,434
Accrued wages and benefits
12,199
20,433
Income tax payable, net
3,126
--
Total Current Liabilities
121,629
126,535
Non-current unearned revenue
5,675
6,333
Other non-current liabilities
30,861
28,050
Bonds payable
26,800
26,800
Total Liabilities
184,965
187,718
Stockholders’ Equity
482,213
479,517
Total Liabilities and Stockholders’ Equity
$
667,178
$
667,235
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
Three Months Ended
March 31,
2017
2016
Sales
Products
$ 143,597
$ 123,883
Services
26,682
18,321
Total Sales
170,279
142,204
Cost of Sales
Products
76,659
64,073
Services
19,905
12,337
Total Cost of Sales
96,564
76,410
Gross Profit
73,715
65,794
Selling, general and administrative expenses
34,767
30,785
Research and development expenses
31,916
29,488
Operating Income
7,032
5,521
Interest and dividend income
933
855
Interest expense
(141 )
(145 )
Net realized investment gain
470
1,728
Other income, net
51
119
Income before provision for income taxes
8,345
8,078
Provision for income taxes
(1,694 )
(3,064 )
Net Income
$
6,651
$
5,014
Weighted average shares outstanding - basic
48,430
49,220
Weighted average shares outstanding - diluted (1)
48,939
49,389
Earnings per common share - basic
$
0.14
$
0.10
Earnings per common share - diluted (1)
$
0.14
$
0.10
(1) Assumes exercise of dilutive stock options calculated
under the treasury stock method.
Consolidated Statements of Comprehensive Income
(Unaudited)
(In thousands)
Three Months Ended
March 31,
2017
2016
Net Income
$ 6,651
$
5,014
Other Comprehensive Income, net of tax:
Unrealized gains (losses) on available-for-sale securities
1,335
(255 )
Unrealized gains on cash flow hedges
79
--
Defined benefit plan adjustments
55
45
Foreign currency translation
1,242
1,228
Other Comprehensive Income, net of tax
2,711
1,018
Comprehensive Income, net of tax
$ 9,362
$
6,032
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended
March 31,
2017
2016
Cash flows from operating activities:
Net income
$
6,651
$
5,014
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
4,323
3,347
Amortization of net premium on available-for-sale investments
124
220
Net realized gain on long-term investments
(470 )
(1,728 )
Net (gain) loss on disposal of property, plant and equipment
(16 )
3
Stock-based compensation expense
1,883
1,558
Deferred income taxes
(1,947 )
435
Change in operating assets and liabilities:
Accounts receivable, net
7,247
4,752
Other receivables
1,884
10,200
Inventory
(7,399 )
163
Prepaid expenses and other assets
(2,413 )
(3,083 )
Accounts payable
(1,713 )
(6,520 )
Accrued expenses and other liabilities
(3,166 )
902
Income tax payable/receivable, net
4,049
413
Net cash provided by operating activities
9,037
15,676
Cash flows from investing activities:
Purchases of property, plant and equipment
(3,872 )
(3,166 )
Proceeds from disposals of property, plant and equipment
16
--
Proceeds from sales and maturities of available-for-sale investments
24,471
60,586
Purchases of available-for-sale investments
(29,517 )
(52,053 )
Net cash provided by (used in) investing activities
(8,902 )
5,367
Cash flows from financing activities:
Proceeds from stock option exercises
1,377
247
Purchases of treasury stock
(5,559 )
(11,003 )
Dividend payments
(4,369 )
(4,453 )
Net cash used in financing activities
(8,551 )
(15,209 )
Net increase (decrease) in cash and cash equivalents
(8,416 )
5,834
Effect of exchange rate changes
1,079
1,225
Cash and cash equivalents, beginning of period
79,895
84,550
Cash and cash equivalents, end of period
$
72,558
$
91,609
Supplemental disclosure of non-cash investing activities
Purchases of property, plant and equipment included in accounts
$
509
$
485
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 months ended March 31,
2017 and 2016 for all three transactions are as follows:
Three Months Ended
March 31,
2017
2016
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets
$
158
$
173
NSN BBA acquisition
Amortization of acquired intangible assets
208
227
Amortization of other purchase accounting adjustments
28
36
Subtotal NSN BBA acquisition
236
263
CommScope acquisition
Amortization of acquired intangible assets
686
--
Amortization of other purchase accounting adjustments
50
--
Acquisition related professional fees, travel and other expenses
8
--
Subtotal CommScope acquisition
744
--
Total acquisition related expenses, amortizations and
1,138
436
adjustments
Provision for income taxes
(425 )
(149 )
Total acquisition related expenses, amortizations and
$
713
$
287
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 months ended March 31, 2017 and
2016:
Three Months Ended
March 31,
2017
2016
Cost of goods sold
$
50
$
7
Selling, general and administrative expenses
62
3
Research and development expenses
1,026
426
Total acquisition related expenses, amortizations and
1,088
429
adjustments included in operating expenses
Total acquisition related expenses, amortizations and adjustments
1,138
436
Provision for income taxes
(425 )
(149 )
Total acquisition related expenses, amortizations and
$
713
$
287
adjustments, net of tax
Supplemental Information
Stock-based Compensation Expense
(Unaudited)
(In thousands)
Three Months Ended
March 31,
2017
2016
Stock-based compensation expense included in cost of sales
$
91
$
99
Selling, general and administrative expense
1,016
769
Research and development expense
776
690
Stock-based compensation expense included in operating expenses
1,792
1,459
Total stock-based compensation expense
1,883
1,558
Tax benefit for expense associated with non-qualified options,
(380 )
(212 )
restricted
stock units and restricted stock
Total stock-based compensation expense, net of tax
$ 1,503
$
1,346
Reconciliation of GAAP net income per share, diluted, to
Non-GAAP net income per share, diluted
(Unaudited)
Three Months Ended
March 31,
2017
2016
GAAP earnings per common share - diluted
$
0.14
$
0.10
Acquisition related expenses, amortizations and adjustments
0.01
0.01
Stock-based compensation expense
0.03
0.03
Non-GAAP earnings per common share - diluted
$
0.18
$
0.14

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SOURCE: ADTRAN, Inc.

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