ADTN
$20.55
Adtran
($.05)
(.24%)
Earnings Details
3rd Quarter September 2016
Tuesday, October 18, 2016 8:05:00 PM
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Summary

Adtran Beats

Adtran (ADTN) reported 3rd Quarter September 2016 earnings of $0.26 per share on revenue of $168.9 million. The consensus earnings estimate was $0.20 per share on revenue of $162.4 million. The Earnings Whisper number was $0.23 per share. Revenue grew 6.8% on a year-over-year basis.

The company said during its conference call it expects fourth quarter revenue of approximately $152.0 million. The current consensus revenue estimate is $148.7 million for the quarter ending December 31, 2016.

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
$0.26
Earnings Whisper
$0.23
Consensus Estimate
$0.20
Reported Revenue
$168.9 Mil
Revenue Estimate
$162.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

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

ADTRAN, Inc. (ADTN) reported results for the third quarter 2016. For the quarter, sales were $168,890,000 compared to $158,078,000 for the third quarter of 2015. Net income was $12,415,000 compared to $7,067,000 for the third quarter of 2015. Earnings per share, assuming dilution, were $0.26 compared to $0.14 for the third quarter of 2015. Non-GAAP earnings per share were $0.26 compared to $0.19 for the third 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 performance for the quarter exceeded expectations with total revenue increasing 7% over the same period last year. I am particularly pleased to see our international business grow 42 percent over the previous quarter and 7 percent year-over-year, driven by stronger broadband access sales in Europe. I am also pleased with the continued growth in our services business which increased 35 percent over the previous quarter and grew 63 percent year-over-year as we execute on our leading market position in CAF II and vectoring solutions and services. We continue to believe that ADTRAN’s ability to help service providers grow revenue, reduce costs, accelerate buildout and transition to a software-defined access network is proving to be a catalyst for change within the industry."

The Company also announced that its Board of Directors declared a cash dividend for the third 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 November 3, 2016. The ex-dividend date is November 1, 2016, and the payment date is November 17, 2016.

The Company confirmed that its third quarter conference call will be held Wednesday, October 19, 2016, 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)
September 30,
December 31,
2016
2015
Assets
Cash and cash equivalents
$
66,292
$
84,550
Short-term investments
55,516
34,396
Accounts receivable, net
101,822
71,917
Other receivables
12,159
19,321
Income tax receivable, net
540
-
Inventory
96,034
91,533
Prepaid expenses and other current assets
14,477
10,145
Deferred tax assets, net
17,963
18,924
Total Current Assets
364,803
330,786
Property, plant and equipment, net
78,078
73,233
Deferred tax assets, net
17,263
18,091
Goodwill
3,492
3,492
Other assets
13,548
9,276
Long-term investments
178,379
198,026
Total Assets
$ 655,563
$
632,904
Liabilities and Stockholders’ Equity
Accounts payable
$
67,399
$
48,668
Unearned revenue
15,744
16,615
Accrued expenses
16,010
12,108
Accrued wages and benefits
16,468
12,857
Income tax payable, net
-
2,395
Total Current Liabilities
115,621
92,643
Non-current unearned revenue
7,105
7,965
Other non-current liabilities
26,740
24,236
Bonds payable
27,900
27,900
Total Liabilities
177,366
152,744
Stockholders’ Equity
478,197
480,160
Total Liabilities and Stockholders’ Equity
$ 655,563
$
632,904
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
Sales
Products
$ 136,277
$ 138,120
$ 398,709
$ 411,723
Services
32,613
19,958
75,086
49,328
Total Sales
168,890
158,078
473,795
461,051
Cost of Sales
Products
70,988
75,969
202,905
231,739
Services
22,094
11,460
50,333
24,854
Total Cost of Sales
93,082
87,429
253,238
256,593
Gross Profit
75,808
70,649
220,557
204,458
Selling, general and administrative expenses
33,716
30,016
97,367
93,203
Research and development expenses
31,962
32,561
92,727
100,576
Operating Income
10,130
8,072
30,463
10,679
Interest and dividend income
910
839
2,692
2,680
Interest expense
(143 )
(151 )
(430 )
(448 )
Net realized investment gain
1,316
2,060
4,154
8,430
Other income (expense), net
(246 )
52
(378 )
(848 )
Gain on bargain purchase of a business
3,550
-
3,550
-
Income before provision for income taxes
15,517
10,872
40,051
20,493
Provision for income taxes
(3,102 )
(3,805 )
(12,394 )
(7,565 )
Net Income
$
12,415
$
7,067
$
27,657
$
12,928
Weighted average shares outstanding - basic
48,470
49,862
48,839
51,682
Weighted average shares outstanding - diluted (1)
48,678
49,927
49,036
51,792
Earnings per common share - basic
$
0.26
$
0.14
$
0.57
$
0.25
Earnings per common share - diluted (1)
$
0.26
$
0.14
$
0.56
$
0.25
(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,
2016
2015
2016
2015
Net Income
$ 12,415
$
7,067
$ 27,657
$
12,928
Other Comprehensive Income (Loss), net of tax:
Unrealized gains (losses) on available-for-sale securities
258
(4,291 )
(162 )
(6,577 )
Defined benefit plan adjustments
36
71
103
211
Foreign currency translation
575
(1,351 )
1,202
(3,797 )
Other Comprehensive Income (Loss), net of tax
869
(5,571 )
1,143
(10,163 )
Comprehensive Income, net of tax
$ 13,284
$
1,496
$ 28,800
$
2,765
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended
September 30,
2016
2015
Cash flows from operating activities:
Net income
$
27,657
$
12,928
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
10,260
10,765
Amortization of net premium on available-for-sale investments
489
2,085
Net realized gain on long-term investments
(4,154 )
(8,430 )
Net loss on disposal of property, plant and equipment
21
189
Gain on bargain purchase of a business
(3,550 )
-
Stock-based compensation expense
4,601
4,788
Deferred income taxes
(447 )
(2,332 )
Tax impact from stock option exercises
(16 )
(40 )
Excess tax benefits from stock-based compensation arrangements
-
(3 )
Change in operating assets and liabilities:
Accounts receivable, net
(29,370 )
843
Other receivables
7,475
10,532
Inventory
(683 )
(14,945 )
Prepaid expenses and other assets
(5,180 )
(1,665 )
Accounts payable
16,363
13,687
Accrued expenses and other liabilities
7,307
(3,996 )
Income tax payable/receivable, net
(2,941 )
(1,137 )
Net cash provided by operating activities
27,832
23,269
Cash flows from investing activities:
Purchases of property, plant and equipment
(12,684 )
(7,843 )
Proceeds from disposals of property, plant and equipment
-
122
Proceeds from sales and maturities of available-for-sale investments
141,103
189,728
Purchases of available-for-sale investments
(139,181 )
(113,227 )
Acquisition of business
(943 )
-
Net cash provided by (used in) investing activities
(11,705 )
68,780
Cash flows from financing activities:
Proceeds from stock option exercises
1,076
907
Purchases of treasury stock
(22,917 )
(65,808 )
Dividend payments
(13,230 )
(13,989 )
Excess tax benefits from stock-based compensation arrangements
-
3
Net cash used in financing activities
(35,071 )
(78,887 )
Net increase (decrease) in cash and cash equivalents
(18,944 )
13,162
Effect of exchange rate changes
686
(2,914 )
Cash and cash equivalents, beginning of period
84,550
73,439
Cash and cash equivalents, end of period
$
66,292
$
83,687
Supplemental disclosure of non-cash investing activities
Purchases of property, plant and equipment included in accounts
$
1,174
$
1,303
payable
Supplemental Information
Restructuring Expenses
(Unaudited)
(In thousands)
Restructuring expenses were recorded in the following Consolidated
Statements of Income categories for the three and nine months
ended September 30, 2016 and 2015:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
Restructuring expense included in cost of sales
$ 1,307
$
9
$ 1,307
$
107
Selling, general and administrative expense
637
194
637
838
Research and development expense
-
712
-
2,095
Restructuring expense included in operating expenses
637
906
637
2,933
Total restructuring expense
1,944
915
1,944
3,040
Provision for income taxes
(603 )
(357 )
(603 )
(1,186 )
Total restructuring expense, net of tax
$ 1,341
$
558
$ 1,341
$
1,854
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, 2016 and 2015 for all three transactions are as
follows:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets
$
158
$
191
$
504
$
643
NSN BBA acquisition
Amortization of acquired intangible assets
225
231
680
701
Amortization of other purchase accounting adjustments
114
101
194
395
Acquisition related professional fees, travel and other expenses
-
20
-
61
Subtotal NSN BBA acquisition
339
352
874
1,157
CommScope acquisition
Amortization of acquired intangible assets
112
-
112
-
Amortization of other purchase accounting adjustments
84
i-
-
84
-
Acquisition related professional fees, travel and other expenses
45
-
45
-
Subtotal CommScope acquisition
241
-
241
-
Total acquisition related expenses, amortizations and adjustments
738
543
1,619
1,800
Provision for income taxes
(261 )
(183 )
(562 )
(609 )
Total acquisition related expenses, amortizations and
$
477
$
360
$ 1,057
$
1,191
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, 2016 and 2015:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
Revenue (adjustments to deferred revenue recognized in the period)
$
-
$
65
$
-
$
196
Cost of goods sold
169
7
189
52
Subtotal
169
72
189
248
Selling, general and administrative expenses
54
23
61
74
Research and development expenses
515
448
1,369
1,478
Subtotal
569
471
1,430
1,552
Total acquisition related expenses, amortizations and adjustments
738
543
1,619
1,800
Provision for income taxes
(261 )
(183 )
(562 )
(609 )
Total acquisition related expenses, amortizations and
$
477
$
360
$ 1,057
$
1,191
adjustments, net of tax
Supplemental Information
Stock-based Compensation Expense
(Unaudited)
(In thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
Stock-based compensation expense included in cost of sales
$
88
$
59
$
282
$
202
Selling, general and administrative expense
765
812
2,322
2,226
Research and development expense
639
803
1,997
2,360
Stock-based compensation expense included in operating expenses
1,404
1,615
4,319
4,586
Total stock-based compensation expense
1,492
1,674
4,601
4,788
Tax benefit for expense associated with non-qualified options
(218 )
(218 )
(643 )
(620 )
Total stock-based compensation expense, net of tax
$ 1,274
$ 1,456
$ 3,958
$
4,168
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,
2016
2015
2016
2015
GAAP earnings per common share - diluted
$
0.26
$ 0.14
$
0.56
$
0.25
Restructuring expense
0.03
0.01
0.03
0.04
Acquisition related expenses, amortizations and adjustments
0.01
0.01
0.02
0.02
Stock-based compensation expense
0.03
0.03
0.08
0.08
Gain on bargain purchase of a business
(0.07 )
-
(0.07 )
-
Non-GAAP earnings per common share - diluted
$
0.26
$ 0.19
$
0.62
$
0.39

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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
Investor Services