EQS-Adhoc: ADTRAN Holdings, Inc. reports preliminary fourth quarter 2023 financial results

EQS-Ad-hoc: Adtran Holdings, Inc. / Key word(s): Preliminary Results
ADTRAN Holdings, Inc. reports preliminary fourth quarter 2023 financial results

27-Feb-2024 / 05:31 CET/CEST
Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by EQS News - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

ADTRAN Holdings, Inc. reports preliminary fourth quarter 2023 financial results 

Preliminary Q4 revenue at $225.5 million and at mid-point of guidance Sequential improvement in preliminary GAAP and non-GAAP operating expenses in Q4, with a 7.6% reduction in GAAP operating expenses and a 15.1% reduction in non-GAAP operating expenses respectively

 

Huntsville, Alabama, USA. — February 26, 2024 — ADTRAN Holdings, Inc. (NASDAQ: ADTN and FSE: QH9) (“ADTRAN Holdings” or the “Company”) today announced its preliminary unaudited financial results for the fourth quarter of 2023. All results in this release are approximate due to the preliminary nature of the announcement.

 

Preliminary GAAP gross margin for the quarter was 34.8% and improved by 483 bps year-over-year and 754 bps quarter-over-quarter. Besides lower purchasing and transportation costs, the main driver for this improvement were lower acquisition-related expenses, amortizations and adjustments. Additionally, the current quarter was negatively impacted by an inventory write-off of $3.3 million compared to a $21 million inventory write-off in Q3 2023.

 

Preliminary non-GAAP gross margin of 41.9% was positively impacted by a favorable customer and product mix. This compares to 40.3% in Q3 2023 and 39.1% in the year-ago quarter representing an increase of 155 bps sequentially and 277 bps year over year. 

 

Preliminary GAAP operating margin for the fourth quarter was negative 16.7%, and it was negatively impacted by lower revenue and acquisition-related expenses, amortizations and adjustments. The company reduced GAAP operating expenses by 7.6% sequentially and 17.0% year-over-year.

 

Preliminary non-GAAP operating margin for the quarter was negative 1.4%, which was at the upper end of the guidance range of between -7% and 0% of revenues. The Company reduced non-GAAP operating expenses by 15.1% sequentially and 17.7% year-over-year.

 

Preliminary GAAP net loss attributable to the Company for the fourth quarter of 2023 was $109.9 million. Preliminary diluted loss per share attributable to the Company for the fourth quarter was $1.40.

 

Preliminary non-GAAP net loss attributable to the Company for the fourth quarter of 2023 was $85.9 million. Preliminary non-GAAP diluted loss per share attributable to the Company for the fourth quarter was $1.09.

 

ADTRAN Holdings’ Chairman and Chief Executive Officer Tom Stanton stated, "Preliminary Q4 revenue came in as expected with non-GAAP profitability at the upper end of our guidance driven by continued gross margin improvements and lower operating expenses. Although revenues continued to remain challenging due to the macroeconomic environment and elevated customer inventories, we believe the fundamental demand landscape remains unchanged. Service providers continue to pursue the same objectives of expanding their fiber footprint and enhancing bandwidth, necessitating global infrastructure buildouts. With the ongoing implementation of our cost improvement measures, we believe that we are transforming into a more streamlined and efficient company. We expect that this will position us well to excel when spending returns to normal levels."

 

The Company confirmed that it will hold a conference call to discuss its preliminary fourth quarter results on Tuesday, February 27, 2024, at 9:30 a.m. Central Time, or 4:30 p.m. Central European Summer Time. ADTRAN Holdings will webcast this conference call. To listen, simply visit our Investor Relations site at investors.ADTRAN.com approximately 10 minutes prior to the start of the call, click on the event “ADTRAN Holdings Releases 4th Quarter 2023 Financial Results and Earnings Call”, and click on the webcast link.

 

An online replay of the Company’s conference call, as well as the transcript of the Company's conference call, will be available on the Investor Relations site approximately 24 hours following the call and will remain available for at least 12 months. For more information, visit investors.adtran.com or email investor.relations@adtran.com.

 

Cautionary Note Regarding Forward-Looking Statements

 

Statements contained in this press release which are not historical facts, such as those relating to expectations regarding earnings, expenses and margin; the ability of ADTRAN Holdings’ to reduce expenses in the coming year and the amount thereof through the implementation of the business efficiency program; and ADTRAN Holdings’ strategy and outlook, outlook and financial guidance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can also generally be identified by the use of words such as “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “may,” “could” and similar expressions. In addition, ADTRAN Holdings, through its senior management, may from time to time make forward-looking public statements concerning the matters described herein. All such projections and other forward-looking information speak only as of the date hereof, and ADTRAN Holdings undertakes no duty to publicly update or revise such forward-looking information, whether as a result of new information, future events, or otherwise, except to the extent as may be required by law. All such forward-looking statements are necessarily estimates and reflect management’s best judgment based upon current information. Actual events or results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors which have caused and may in the future cause actual events or results to differ materially from those estimated by ADTRAN Holdings include, but are not limited to: (i) risks and uncertainties relating to ADTRAN Holdings’ ability to reduce expenditures and the impact of such reductions on its financial results and financial condition; (ii) the risk of fluctuations in revenue due to lengthy sales and approval processes required by major and other service providers for new products, as well as ongoing tighter inventory management of ADTRAN Holdings’ customers; (iii) risks and uncertainties relating to the recent restatements of our previously issued consolidated financial statements and ongoing material weaknesses in our internal control over financial reporting; ; (iv) risks and uncertainties related to the completed business combination between the Company, ADTRAN, Inc. (“ADTRAN”) and ADTRAN Networks SE (“ADTRAN Networks”) and subsequent integration efforts;(v) the risk posed by potential breaches of information systems and cyber-attacks; (vi) the risk that ADTRAN Holdings may not be able to effectively compete, including through product improvements and development; and (vii) other risks set forth in ADTRAN Holdings’ public filings made with the Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K for the year ended December 31, 2022, as amended, and Form 10‑Q for the quarterly period ended September 30, 2023, as well as its Form 10‑K for the year ended December 31, 2023 to be filed with the SEC.

 

Additionally, the financial measures presented herein are preliminary estimates, remain subject to our internal controls and procedures, and are subject to risks and uncertainties, including, among others, changes in connection with quarter-end adjustments. Any variation between the Company’s actual results and the preliminary financial information set forth herein may be material.

 

Explanation of Use of Non-GAAP Financial Measures

 

Set forth in the tables below are reconciliations of gross profit, gross margin, operating expenses, operating loss, other (expense) income, net (loss) income inclusive of the non-controlling interest, net (loss) income attributable to the Company, net income (loss) attributable to the non-controlling interest, and (loss) earnings per share - basic and diluted, attributable to the Company, in each case as reported based on generally accepted accounting principles in the United States (“GAAP”), to non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating (loss) income, non-GAAP other (expense) income, non-GAAP net (loss) income inclusive of the non-controlling interest, non-GAAP net (loss) income attributable to the Company, non-GAAP net  income attributable to the non-controlling interest, and non-GAAP (loss) earnings per share - basic and diluted, attributable to the Company, respectively. Such non-GAAP measures exclude acquisition related expenses, amortization and adjustments (consisting of intangible amortization of backlog, developed technology, customer relationships, and trade names acquired in connection with business combinations and amortization of inventory fair value adjustments), stock-based compensation expense, amortization of pension actuarial losses, deferred compensation adjustments, integration expenses, restructuring expenses, asset and goodwill impairments, and the tax effect of these adjustments to net income. These measures are used by management in our ongoing planning and annual budgeting processes. Additionally, we believe the presentation of these non-GAAP measures when combined with the presentation of the most directly comparable GAAP financial measure, is beneficial to the overall understanding of ongoing operating performance of the Company.

 

These non-GAAP financial measures are not prepared in accordance with, or an alternative for, GAAP and therefore should not be considered in isolation or as a substitution for analysis of our results as reported under GAAP. Additionally, our calculation of non-GAAP measures may not be comparable to similar measures calculated by other companies.

 

About Adtran

ADTRAN Holdings, Inc. (NASDAQ: ADTN and FSE: QH9) is the parent company of ADTRAN, Inc., a leading global provider of open, disaggregated networking and communications solutions that enable voice, data, video and internet communications across any network infrastructure. From the cloud edge to the subscriber edge, ADTRAN empowers communications service providers around the world to manage and scale services that connect people, places and things. ADTRAN solutions are used by service providers, private enterprises, government organizations and millions of individual users worldwide. ADTRAN Holdings, Inc. is also the largest shareholder of ADTRAN Networks SE, formerly ADVA Optical networking SE. Find more at Adtran, LinkedIn and Twitter.

 

Published by

ADTRAN Holdings, Inc.

www.adtran.com

 

For media

Gareth Spence

+44 1904 699 358

public.relations@adtran.com

 

For investors

Steven Williams

+49 89 890 665 918

investor@adtran.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

(Preliminary, Unaudited)

(In thousands)

 

ASSETS   December 31,
2023     December 31,
2022   Current Assets             Cash and cash equivalents   $ 87,167     $ 108,644   Short-term investments     —       340   Accounts receivable, net     216,445       279,435   Other receivables     22,408       32,831   Inventory, net     362,295       427,531   Prepaid expenses and other current assets     45,565       33,577   Total Current Assets     733,880       882,358   Property, plant and equipment, net     123,020       110,699   Deferred tax assets, net     25,787       67,839       353,415       381,724   Intangibles, net     327,985       401,211   Other non-current assets     87,706       66,998   Long-term investments     27,743       32,665   Total Assets   $ 1,679,536     $ 1,943,494   LIABILITIES AND EQUITY             Current Liabilities             Accounts payable   $ 162,922     $ 237,699   Revolving credit agreements outstanding     —       35,936   Notes payable     —       24,598   Unearned revenue     46,731       41,193   Accrued expenses and other liabilities     37,607       35,235   Accrued wages and benefits     27,030       44,882   Income tax payable, net     2,245       9,032   Total Current Liabilities     276,535       428,575   Non-current revolving credit agreement outstanding     195,000       60,000   Deferred tax liabilities     35,655       61,629   Non-current unearned revenue     25,109       19,239   Non-current pension liability     12,543       10,624   Deferred compensation liability     29,039       26,668   Non-current lease obligations     31,420       22,807   Other non-current liabilities     28,657       10,339   Total Liabilities     633,958       639,881   Redeemable Non-Controlling Interest     451,756       —               Common stock     790       781   Additional paid-in capital     774,579       895,834   Accumulated other comprehensive income     68,186       46,713   Retained (deficit) earnings     (243,908 )     55,338   Treasury stock     (5,825 )     (4,125 ) Non-controlling interest     —       309,072   Total Equity     593,822       1,303,613   Total Liabilities and Equity   $ 1,679,536     $ 1,943,494  

 

 

 

 

 

Condensed Consolidated Statements of (Loss) Income

(Preliminary, Unaudited)

(In thousands, except per share amounts)

 

    Three Months Ended     Twelve Months Ended       December 31,     December 31,       2023     2022     2023     2022   Revenue                         Network Solutions   $ 180,405     $ 317,487     $ 974,389     $ 916,793   Services Support     45,074       40,784       174,711       108,743   Total Revenue     225,479       358,271       1,149,100       1,025,536   Cost of Revenue                         Network Solutions     126,248       233,925       722,582       647,105   Network Solutions - Inventory Write Down     3,270       —       24,313       —   Services Support     17,496       16,943       69,142       51,179   Total Cost of Revenue     147,014       250,868       816,037       698,284   Gross Profit     78,465       107,403       333,063       327,252   Selling, general and administrative expenses     61,262       78,243       258,149       208,889   Research and development expenses     54,818       61,570       258,311       173,757   Asset impairment     —       464       —       17,433   Goodwill impairment     —       —       37,874       —   Operating Loss     (37,615 )     (32,874 )     (221,271 )     (72,827 ) Interest and dividend income     1,157       1,355       2,340       2,123   Interest expense     (4,441 )     (2,010 )     (16,299 )     (3,437 ) Net investment gain (loss)     1,683       (587 )     2,754       (11,339 ) Other income, net     (3,448 )     11,568       1,266       14,517   Loss Before Income Taxes     (42,664 )     (22,548 )     (231,210 )     (70,963 ) Income tax (expense) benefit     (64,362 )     57,503       (28,133 )     62,075   Net (Loss) Income   $ (107,026 )   $ 34,955     $ (259,343 )   $ (8,888 ) Net Income (loss) attributable to non-controlling interest     2,919       (3,926 )     8,345       (6,851 ) Net (Loss) Income attributable to ADTRAN Holdings, Inc.   $ (109,945 )   $ 38,881     $ (267,688 )   $ (2,037 )                           Weighted average shares outstanding – basic     78,530       77,659       78,416       62,346   Weighted average shares outstanding – diluted     78,530       79,243       78,416       62,346                             (Loss) Earnings per common share attributable to ADTRAN Holdings, Inc. – basic   $ (1.40 )   $ 0.50     $ (3.41 )   $ (0.03 ) (Loss) Earnings per common share attributable to ADTRAN Holdings, Inc. – diluted   $ (1.40 )   $ 0.49     $ (3.41 )   $ (0.03 )

 

 

Condensed Consolidated Statements of Cash Flows

(Preliminary, Unaudited)

(In thousands)

    Twelve Months Ended
December 31,       2023     2022   Cash flows from operating activities:             Net Loss   $ (259,343 )   $ (8,888 ) Adjustments to reconcile net loss to net cash used in operating activities:             Depreciation and amortization     112,949       67,553   Asset impairment     —       17,433   Goodwill impairment     37,874       —   Amortization of debt issuance cost     862       288   (Accretion) amortization on available-for-sale investments, net     (22 )     19   (Gain) loss on investments     (2,900 )     9,826   Net loss on disposal of property, plant and equipment     458       152   Stock-based compensation expense     16,016       28,322   Deferred income taxes     15,558       (62,388 ) Inventory write down     24,313       —   Inventory reserves     25,546       (2,363 ) Other, net     (2,942 )     —   Change in operating assets and liabilities:             Accounts receivable, net     58,283       788   Other receivables     10,560       (20,088 ) Inventory     20,537       (73,237 ) Prepaid expenses other current assets and other assets     (29,883 )     (7,116 ) Accounts payable     (91,907 )     28,105   Accrued expenses and other liabilities     17,929       (20,483 ) Income taxes payable, net     (6,820 )     (2,151 ) Net cash used in operating activities     (52,932 )     (44,228 ) Cash flows from investing activities:             Purchases of property, plant and equipment     (43,121 )     (17,072 ) Proceeds from sales and maturities of available-for-sale investments     10,567       51,661   Purchases of available-for-sale investments     (868 )     (23,899 ) Proceeds from beneficial interests in securitized accounts receivable     8,547       1,126   Proceeds from disposals of property, plant and equipment     —       12   Insurance proceeds received     —       —   Acquisition of business, net of cash acquired     —       44,003   Net cash (used in) provided by investing activities     (24,875 )     55,831   Cash flows from financing activities:             Tax withholdings related to stock-based compensation settlements     (6,459 )     (4,253 ) Proceeds from stock option exercises     540       6,904   Dividend payments     (21,237 )     (22,885 ) Proceeds from receivables purchase agreement     14,099       —   Proceeds from draw on revolving credit agreements     163,733       141,887   Repayment of revolving credit agreements     (64,987 )     (48,000 ) Redemption of redeemable non-controlling interest     (1,224 )     —   Payment of debt issuance cost     (708 )     (3,015 ) Repayment of notes payable     (24,891 )     (17,702 ) Net cash provided by financing activities     58,866       52,936   Net (decrease) increase in cash and cash equivalents     (18,941 )     64,539   Effect of exchange rate changes     (2,536 )     (12,713 ) Cash and cash equivalents, beginning of year     108,644       56,818   Cash and cash equivalents, end of year   $ 87,167     $ 108,644                 Supplemental disclosure of cash financing activities             Cash paid for interest   $ 12,596     $ 1,728   Cash paid for income taxes   $ 18,552     $ 3,832   Cash used in operating activities related to operating leases   $ 9,682     $ 5,229   Supplemental disclosure of non-cash investing activities             Right-of-use assets obtained in exchange for lease obligations   $ 17,865     $ 3,410   Purchases of property, plant and equipment included in accounts payable   $ 1,298     $ 1,165   Adtran Networks common shares exchanged in acquisition   $ —     $ 565,491   Adtran Networks options assumed in acquisition   $ —     $ 12,769   Non-controlling interest related to Adtran Networks   $ —     $ 316,415  

 

Supplemental Information

Reconciliation of Preliminary Gross Profit and Preliminary Gross Margin to

Preliminary Non-GAAP Gross Profit and Preliminary Non-GAAP Gross Margin

(Unaudited)

(In thousands)

 

    Three Months Ended       Twelve Months Ended       December 31, 2023     September 30, 2023     December 31, 2022       December 31, 2023     December 31, 2022   Total Revenue   $ 225,479     $ 272,331     $ 358,271       $ 1,149,100     $ 1,025,536                                     Cost of Revenue   $ 147,014     $ 198,094     $ 250,868       $ 816,037     $ 698,284   Acquisition-related expenses, amortization and adjustments(1)     (10,048 )     (13,537 )     (31,577 )       (89,602 )     (57,108 ) Stock-based compensation expense     (440 )     (279 )     (1,287 )       (1,294 )     (2,876 ) Pension adjustments     —       —       144         —       85   Restructuring expenses(2)     (5,517 )     (21,630 )     (8 )       (27,223 )     (8 ) Integration expenses(3)     39       (154 )     —         (115 )     —   Non-GAAP Cost of Revenue   $ 131,048     $ 162,494     $ 218,140       $ 697,803     $ 638,377                                     Gross Profit   $ 78,465     $ 74,237     $ 107,403       $ 333,063     $ 327,252   Non-GAAP Gross Profit   $ 94,431     $ 109,837     $ 140,131       $ 451,297     $ 387,159                                     Gross Margin     34.8 %     27.3 %     30.0 %       29.0 %     31.9 % Non-GAAP Gross Margin     41.9 %     40.3 %     39.1 %       39.3 %     37.8 %

 

(1)  Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations.

(2)  Includes expenses for restructuring program designed to optimize the assets and business processes following the business combination with Adtran Networks SE. The restructuring program commenced upon the closing of the business combination with Adtran Networks SE and is expected to be completed in late 2024.

(3) Includes expenses related to the Company's one-time integration bonus program in connection with synergy targets as a result of the business combination with Adtran Networks SE of which $(73) thousand is stock compensation expense for the program.

Supplemental Information

Reconciliation of Preliminary Operating Expenses to Preliminary Non-GAAP Operating Expenses

(Unaudited)

(In thousands)

 

  Three Months Ended     Twelve Months Ended       December 31, 2023     September 30, 2023     December 31, 2022     December 31, 2023     December 31, 2022     Operating Expenses $ 116,080     $ 125,659     $ 139,813     $ 516,460     $ 382,646     Acquisition-related expenses, amortization and adjustments   (4,150 ) (1)   (4,534 ) (6)   (8,328 ) (10)   (17,666 ) (14)   (27,561 ) (18) Stock-based compensation expense   (3,181 ) (2)   (3,251 ) (7)   (11,095 ) (11)   (13,864 ) (15)   (25,418 ) (19) Restructuring expenses   (7,859 ) (3)   (3,243 ) (8)   (1,618 ) (12)   (19,331 ) (16)   (1,620 ) (20) Integration expenses   (1,928 ) (4)   (1,485 ) (9)   —       (4,825 ) (17)       Pension adjustments   —       —       43   (13)   —       (142 ) (21) Deferred compensation adjustments(5)   (1,324 )     1,801       (168 )     390       7,005     Non-GAAP Operating Expenses $ 97,638     $ 114,947     $ 118,647     $ 461,164     $ 334,910    

 

(1)  Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $3.7 million is included in selling, general and administrative expenses and $0.5 million is included in research and development expenses on the condensed consolidated statements of loss.

(2) $2.3 million is included in selling, general and administrative expenses and $0.9 million is included in research and development expenses on the condensed consolidated statements of loss. 

(3) $4.6 million is included in selling, general and administrative expenses and $3.2 million is included in research and development expenses on the condensed consolidated statements of loss.

(4) $1.9 million is included in selling, general and administrative expenses and $0.02 million is included in research and development expenses on the condensed consolidated statements of loss. Includes legal and advisory fees totaling $1.2 million related to a contemplated capital raise transaction that are recorded in selling, general and administrative expenses. Includes expenses totaling $0.4 million related to the Company's one-time integration bonus program in connection with synergy targets as a result of the business combination with Adtran Networks SE of which $0.4 million are included in selling, general and administrative expenses and $0.02 million are included in research and development expenses. The integration bonus expense of $0.4 million includes $0.2 million of stock compensation expense. Additionally, includes fees relating to the expansion of internal controls at Adtran Networks and the implementation of the DPLTA.

(5) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for Employees, all of which is included in selling, general and administrative expenses on the condensed consolidated statement of loss.

(6)   Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $4.0 million is included in selling, general and administrative expenses and $0.5 million is included in research and development expenses on the condensed consolidated statements of loss.

(7) $2.4 million is included in selling, general and administrative expenses and $0.8 million is included in research and development expenses on the condensed consolidated statements of loss. 

(8) $3.4 million is included in selling, general and administrative expenses and $(0.2) million is included in research and development expenses on the condensed consolidated statements of loss.

(9) $1.4 million is included in selling, general and administrative expenses and $0.1 million is included in research and development expenses on the condensed consolidated statements of loss. Includes fees relating to the expansion of internal controls at Adtran Networks and the implementation of the DPLTA. Additionally, includes expenses related to the Company's one-time integration bonus program in connection with synergy targets as a result of the business combination with Adtran Networks SE of which $0.5 million is stock compensation expense for the program.

(10)  Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $7.8 million is included in selling, general and administrative expenses and $0.5 million is included in research and development expenses on the condensed consolidated statements of loss.

(11) $9.4 million is included in selling, general and administrative expenses and $1.7 million is included in research and development expenses on the condensed consolidated statements of loss. Includes $7.3 million in selling, general and administrative expenses and $0.6 million in research and development expenses for incremental stock-based award modification expense related to the business combination.

(12) $0.1 million is included in selling, general and administrative expenses and $1.5 million is included in research and development expenses on the condensed consolidated statements of loss. 

(13) $0.2 million is included in selling, general and administrative expenses and ($0.3) million is included in research and development expenses on the condensed consolidated statements of loss.  Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countries.

(14)  Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $15.8 million is included in selling, general and administrative expenses and $1.9 million is included in research and development expenses on the condensed consolidated statements of loss.

(15) $9.8 million is included in selling, general and administrative expenses and $4.0 million is included in research and development expenses on the condensed consolidated statements of loss.

(16) $11.6 million is included in selling, general and administrative expenses and $7.7 million is included in research and development expenses on the condensed consolidated statements of loss.

(17)  $4.8 million is included in selling, general and administrative expenses and $0.1 million is included in research and development expenses on the condensed consolidated statements of loss. Includes expenses related to the integration bonus program and fees relating to the expansion of internal controls at Adtran Networks and the implementation of the DPLTA. Additionally, includes legal and advisory fees totaling $1.2 million related to a contemplated capital raise transaction that are recorded in selling, general and administrative expenses.

(18) Includes intangible amortization of  developed technology, customer relationships, and trade names acquired in connection with business combinations, and certain one-time transaction expenses of which $25.6 million is included in selling, general and administrative expenses and $1.9 million is included in research and development expenses on the condensed consolidated statements of loss.

(19) $20.8 million is included in selling, general and administrative expenses and $4.6 million is included in research and development expenses on the condensed consolidated statements of loss. Includes $14.6 million in selling, general and administrative expenses and $1.2 million is included in research and development expenses for incremental stock-based award modification expense related to the business combination.

(20)  $0.1 million is included in selling, general and administrative expenses and $1.5 million is included in research and development expenses on the condensed consolidated statements of loss.

(21)   $0.3 million is included in selling, general and administrative expenses and ($0.2) million is included in research and development expenses on the condensed consolidated statements of loss..

 

Supplemental Information

Reconciliation of Preliminary Operating Loss to Preliminary Non-GAAP Operating (Loss) Income

(Unaudited)

(In thousands)

 

  Three Months Ended     Twelve Months Ended       December 31, 2023     September 30, 2023     December 31, 2022     December 31, 2023     December 31, 2022     Operating Loss $ (37,615 )   $ (89,296 )   $ (32,874 )   $ (221,271 )   $ (72,827 )   Acquisition related expenses, amortizations and adjustments(1)   14,198       18,070       39,904       107,267       84,667     Asset impairments(2)   —       —       463       —       17,432     Stock-based compensation expense   3,621       3,530       12,383       15,158       28,295     Pension adjustments   —       —       (187 )     —       57     Restructuring expenses(3)   13,376       24,873       1,627       46,554       1,629     Integration expenses(4)   1,890       1,639       —       4,941       —     Deferred compensation adjustments(5)   1,324       (1,801 )     168       (390 )     (7,005 )   Goodwill impairment(6)   —       37,874       —       37,874       —     Non-GAAP Operating (Loss) Income $ (3,206 )   $ (5,111 )   $ 21,484     $ (9,867 )   $ 52,248    

 

(1)  Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations.

(2)  Includes impairment charges related to the abandonment of certain information technology projects due to the business combination.

(3)  Includes expenses for restructuring program designed to optimize the assets and business processes following the business combination with Adtran Networks SE. These expenses include inventory write down charges totaling approximately $24.3M incurred as a result of the exit from certain product lines in connection with the restructuring program. The restructuring program commenced upon the closing of the business combination with Adtran Networks SE and is expected to be completed in late 2024.

(4) Includes expenses related to the Company's one-time integration bonus program in connection with synergy targets as a result of the business combination with Adtran Networks SE. Additionally, includes legal and advisory fees relating to a contemplated capital raise transactions as part of the integration. Includes fees incurred for the expansion of internal controls at Adtran Networks SE and the implementation of the DPTLA.

(5) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for Employees, all of which is included in selling, general and administrative expenses on the condensed consolidated statement of loss.

(6) Includes non-cash goodwill impairment charge related to our Services and Support reporting unit. The impairment primarily resulted from a decrease in projected revenue growth rates and EBITDA margins.

 

 

Supplemental Information

Reconciliation of Preliminary Other (Expense) Income to Preliminary Non-GAAP Other (Expense) Income

(Unaudited)

(In thousands)

 

    Three Months Ended       Twelve Months Ended       December 31, 2023     September 30, 2023     December 31, 2022       December 31, 2023     December 31, 2022   Interest and dividend income   $ 1,157     $ 521     $ 1,355       $ 2,340     $ 2,123   Interest expense     (4,441 )     (4,507 )     (2,010 )       (16,299 )     (3,437 ) Net investment gain (loss)     1,683       (1,443 )     (587 )       2,754       (11,339 ) Other (expense) income, net     (3,448 )     2,523       11,568         1,266       14,517   Total Other (Expense) Income   $ (5,049 )   $ (2,906 )   $ 10,326       $ (9,939 )   $ 1,864   Deferred compensation adjustments (1)     (1,590 )     1,117       (349 )       (2,977 )     6,211   Pension expense (2)     6       7       77         26       333   Non-GAAP Other (Expense) Income   $ (6,633 )   $ (1,782 )   $ 10,054       $ (12,890 )   $ 8,408  

 

(1) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for Employees.

(2) Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countries.

 


 

Supplemental Information

 

Reconciliation of Preliminary Net (Loss) Income inclusive of Non-Controlling Interest to

Preliminary Non-GAAP Net (Loss) Income inclusive of Non-Controlling Interest

(Unaudited)

 

and

 

Reconciliation of Preliminary Net Income (Loss) attributable to Non-Controlling Interest to

Preliminary Non-GAAP Net Income attributable to Non-Controlling Interest

(Unaudited)

 

and

 

Reconciliation of Preliminary Net (Loss) Income attributable to ADTRAN Holdings, Inc. and

Preliminary (Loss) Earnings per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted to

Preliminary Non-GAAP Net (Loss) Income attributable to ADTRAN Holdings, Inc. and

Preliminary Non-GAAP (Loss) Earnings per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted

(Unaudited)

(In thousands, except per share amounts)

 

    Three Months Ended       Twelve Months Ended         December 31, 2023     September 30, 2023
(Revised)     December 31, 2022       December 31, 2023     December 31, 2022     Net (Loss) income attributable to ADTRAN Holdings, Inc.   $ (109,945 )   $ (78,563 )   $ 38,881       $ (267,688 )   $ (2,037 )   Net Income (loss) attributable to non-controlling interest(1)     2,919       2,914       (3,926 )       8,345       (6,851 )   Net (Loss) income inclusive of non-controlling interest   $ (107,026 )   $ (75,649 )   $ 34,955       $ (259,343 )   $ (8,888 )   Acquisition related expenses, amortization and adjustments     14,198       18,070       39,904         107,267       84,667     Asset impairments     —       —       463         —       17,432     Stock-based compensation expense     3,621       3,530       12,383         15,158       28,295     Deferred compensation adjustments (2)     (267 )     (684 )     (182 )       (3,368 )     (794 )   Pension adjustments (3)     6       7       (109 )       26       390     Restructuring expenses     13,376       24,873       1,627         46,554       1,629     Integration expenses     1,890       1,639       —         4,941       —     Goodwill impairment     —       37,874       —         37,874       —     Tax effect of adjustments to net (loss) income     (8,735 )     (23,366 )     (12,463 )       (57,834 )     (29,892 )   Non-GAAP Net (Loss) income inclusive of non-controlling interest   $ (82,937 )   $ (13,706 )   $ 76,578       $ (108,725 )   $ 92,839     Net Income attributable to non-controlling interest(1)     2,919       2,914       5,769         9,874       10,255     Non-GAAP Net (Loss) income attributable to ADTRAN Holdings, Inc.   $ (85,856 )   $ (16,620 )   $ 70,809       $ (118,599 )   $ 82,584                                         GAAP Net Income (loss) attributable to non-controlling interest (1)   $ 2,919     $ 2,914     $ (3,926 )     $ 8,345     $ (6,851 )   Acquisition related expenses, amortizations and adjustments     —       —       9,039         1,457       16,159     Restructuring expenses     —       —       402         29       402     Integration expenses     —       —       —         6       —     Stock-based compensation expense     —       —       300         37       531     Pension adjustments(3)     —       —       (46 )       —       14     Non-GAAP Net Income attributable to non-controlling interest (1)   $ 2,919     $ 2,914     $ 5,769       $ 9,874     $ 10,255                                         Weighted average shares outstanding – basic     78,530       78,389       77,659         78,416       62,346     Weighted average shares outstanding – diluted     78,530       78,389       79,243         78,416       62,346                                         (Loss) earnings per common share attributable to ADTRAN Holdings, Inc. - basic   $ (1.40 )   $ (1.00 )   $ 0.50       $ (3.41 )   $ (0.03 )   (Loss) earnings per common share attributable to ADTRAN Holdings, Inc. - diluted   $ (1.40 )   $ (1.00 )   $ 0.49       $ (3.41 )   $ (0.03 )                                       Non-GAAP (Loss) earnings per common share attributable to ADTRAN Holdings, Inc. - basic   $ (1.09 )   $ (0.21 )   $ 0.91       $ (1.51 )   $ 1.32     Non-GAAP (Loss) earnings per common share attributable to ADTRAN Holdings, Inc. - diluted   $ (1.09 )   $ (0.21 )   $ 0.89       $ (1.51 )   $ 1.32    

 

 

(1) Represents the non-controlling interest portion of the Company's ownership of Adtran Networks pre-DPLTA and the annual recurring compensation earned by redeemable non-controlling interests and accrued by the Company post-DPLTA.

(2) Includes non-cash change in fair value of equity investments held in deferred compensation plans offered to certain employees.

(3) Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countries..



End of Inside Information

27-Feb-2024 CET/CEST The EQS Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
Archive at www.eqs-news.com

Language: English Company: Adtran Holdings, Inc. 901 Explorer Boulevard 35806 Huntsville United States Internet: www.adtran.com ISIN: US00486H1059 WKN: 892015 Indices: SDAX, TecDAX Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Munich, Stuttgart; Nasdaq EQS News ID: 1845579
  End of Announcement EQS News Service

1845579  27-Feb-2024 CET/CEST