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  Title	ADTRAN Holdings, Inc. Reports Preliminary Third Quarter 2024 Financial Results
  ID	3977700
  External ID	7281217581
  Author	Unknown
  Published Date	Nov. 7, 2024, 12:09 a.m.
  Summary	HUNTSVILLE, Ala.--( BUSINESS WIRE )--ADTRAN Holdings, Inc. (NASDAQ: ADTN and FSE: QH9) (“ADTRAN Holdings” or the “Company”) today announced its preliminary unaudited financial results for the third qu
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  URL	https://www.businesswire.com/news/home/20241106734785/en/adtran-holdings-inc.-reports-preliminary-third-quarter-2024-financial-results
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  Content ID	2255180
  Key	585059bd-a020-4772-ba72-15fd3f6d0318
  Content	HUNTSVILLE, Ala.--( BUSINESS WIRE )--ADTRAN Holdings, Inc. (NASDAQ: ADTN and FSE: QH9) (“ADTRAN Holdings” or the “Company”) today announced its preliminary unaudited financial results for the third quarter of 2024. “ADTRAN Holdings Releases 3rd Quarter 2024 Financial Results and Earnings Call” Post this Revenue: $227.7 million, up sequentially and above the mid-point of guidance. Gross margin: GAAP gross margin: 37.4%; Non-GAAP gross margin: 42.1%, a sequential increase of 134 and 17 basis points, respectively. Operating margin: GAAP operating margin negative 10.5% up sequentially; Non-GAAP operating margin positive 1.1%, up sequentially and above the mid-point of guidance. GAAP diluted loss per share of $0.36; Non-GAAP diluted loss per share $0.05. ADTRAN Holdings' Chairman and Chief Executive Officer Tom Stanton stated, “We delivered higher sequential revenue and expanded gross and operating margins in the third quarter. Importantly, we are seeing improvements in our key end markets as we continue to grow our customer base. With the gradual recovery in service provider spending, the success we are having in customer acquisition, and encouraging booking trends, we expect sequential revenue growth to continue in the fourth quarter. This outlook, coupled with improving visibility, gives us confidence our end-markets should continue to improve.” “ADTRAN remains well-positioned for sustainable and profitable growth as customer inventory levels normalize,” added Mr. Stanton. “The continued trend to increase fiber access and optical transport, combined with the ongoing transition from higher risk vendors to providers like ADTRAN, serve as durable secular catalysts. As we grow, we are confident we can unlock meaningful operational leverage, driving accelerated profitability and increased cash generation.” Business Outlook For the fourth quarter of 2024, the Company expects revenue to be within a range of $230 million to $245 million. Non-GAAP operating margin is expected to be within a range of 0% to 4%. 1GAAP earnings guidance is not provided. Please see the Explanation of Use of Non-GAAP Financial Measures at the end of this press release for an explanation regarding the Company's omission of both GAAP earnings guidance and the applicable reconciliation table. In addition, please see the Explanation of Use of Non-GAAP Financial Measures and the Supplemental Information Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures at the end of this press release for detailed information on calculating the non-GAAP measures referenced herein. The Company will hold a conference call to discuss its preliminary third quarter results on Thursday, November 07, 2024, at 9:30 a.m. Central Time, or 4:30 p.m. Central European Time. The Company 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 3rd Quarter 2024 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 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 Cautionary Note Regarding Forward-Looking Statements Statements contained in this press release and the accompanying earnings call which are not historical facts, such as those relating to expectations regarding future revenue and future non-GAAP operating margin; future service provider spending; future profitability, and growth, including customer acquisition and booking trends, as well as future end market growth; future market trends and customer inventory levels; future operational leverage and cash generation; 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 continue 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 ongoing material weaknesses in our internal control over financial reporting; (iv) risks and uncertainties relating to our ability to comply with the covenants set forth in our credit facility and to satisfy our payment obligations to Adtran Networks' minority shareholders under the Domination and Profit and Loss Transfer Agreement between us and Adtran Networks; (v) risks 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, 2023, its Quarterly Report on Form 10-Q for the second quarter ended June 30, 2024, and risks to be disclosed in its Form 10-Q for the quarterly period ended September 30, 2024 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 inclusive of the non-controlling interest, net loss attributable to the Company, net income attributable to the non-controlling interest, and loss per share - basic and diluted, attributable to the Company, and net cash provided by (used in) operating activities, 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 income (loss), non-GAAP other expense, non-GAAP net loss inclusive of the non-controlling interest, non-GAAP net loss attributable to the Company, non-GAAP net income attributable to the non-controlling interest, non-GAAP loss per share - basic and diluted, attributable to the Company, respectively, and non-GAAP free cash flow. 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 as well as legal and advisory fees related to a potential significant transaction), stock-based compensation expense, amortization of pension actuarial losses, deferred compensation adjustments, integration expenses, restructuring expenses, goodwill impairments, the tax effect of these adjustments to net loss and purchases of property, plant and equipment. 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. Non-GAAP operating margin (which is calculated as non-GAAP operating loss divided by revenue) is a non-GAAP financial measure. The Company has provided fourth quarter guidance with regard to non-GAAP operating margin. This measure excludes from the corresponding GAAP financial measure the effect of adjustments as described below. The Company has not provided a reconciliation of such non-GAAP guidance to guidance presented on a GAAP basis because it cannot predict and quantify without unreasonable effort all of the adjustments that may occur during the period due to the difficulty of predicting the timing and amounts of various items within a reasonable range. In particular, non-GAAP operating margin excludes certain items, including continued restructuring expenses, that will continue to evolve as our business efficiency program is implemented that the Company is unable to quantitatively predict. Depending on the materiality of these items, they could have a significant impact on the Company's GAAP financial results. 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.. Published by ADTRAN Holdings, Inc. www.adtran.com Condensed Consolidated Balance Sheets (Preliminary, Unaudited) (In thousands) September 30, December 31, 2024 2023 Assets Current Assets Cash and cash equivalents $ 88,456 $ 87,167 Accounts receivable, net 172,025 216,445 Other receivables 12,871 17,450 Income tax receivable 13,466 7,933 Inventory, net 282,926 362,295 Prepaid expenses and other current assets 69,112 45,566 Total Current Assets 638,856 736,856 Property, plant and equipment, net 147,428 123,020 Deferred tax assets 25,697 25,787 Goodwill 56,884 353,415 Intangibles, net 286,098 327,985 Other non-current assets 86,677 87,706 Long-term investments 31,506 27,743 Total Assets $ 1,273,146 $ 1,682,512 Liabilities, Redeemable Non-Controlling Interest and Equity Current Liabilities Accounts payable $ 173,354 $ 162,922 Unearned revenue 54,615 46,731 Accrued expenses and other liabilities 34,482 36,204 Accrued wages and benefits 40,366 27,030 Income tax payable, net 2,007 5,221 Total Current Liabilities 304,824 278,108 Non-current revolving credit agreement outstanding 189,849 195,000 Deferred tax liabilities 21,483 35,655 Non-current unearned revenue 24,901 25,109 Non-current pension liability 12,149 12,543 Deferred compensation liability 32,046 29,039 Non-current lease obligations 25,635 31,420 Other non-current liabilities 26,489 28,657 Total Liabilities 637,376 635,531 Redeemable Non-Controlling Interest 421,776 442,152 Equity Common stock 792 790 Additional paid-in capital 806,187 795,304 Accumulated other comprehensive income 47,377 47,465 Retained deficit (635,164 ) (232,905 ) Treasury stock (5,198 ) (5,825 ) Total Equity 213,994 604,829 Total Liabilities, Redeemable Non-Controlling Interest and Equity $ 1,273,146 $ 1,682,512 Condensed Consolidated Statements of Loss (Preliminary, Unaudited) (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Revenue Network Solutions $ 181,488 $ 228,564 $ 541,955 $ 793,984 Services & Support 46,216 43,767 137,913 129,637 Total Revenue 227,704 272,331 679,868 923,621 Cost of Revenue Network Solutions 126,103 160,244 376,886 596,334 Network Solutions - other (credits), charges and inventory write-down (328 ) 21,043 8,597 21,043 Services & Support 16,678 16,807 55,304 51,646 Total Cost of Revenue 142,453 198,094 440,787 669,023 Gross Profit 85,251 74,237 239,081 254,598 Selling, general and administrative expenses 57,620 62,907 176,214 196,887 Research and development expenses 51,615 62,752 172,253 203,493 Goodwill impairment — 37,874 292,583 37,874 Operating Loss (23,984 ) (89,296 ) (401,969 ) (183,656 ) Interest and dividend income 664 521 1,427 1,183 Interest expense (5,679 ) (4,507 ) (17,183 ) (11,858 ) Net investment gain (loss) 1,382 (1,443 ) 4,507 1,071 Other (expense) income, net (850 ) 2,523 (441 ) 4,714 Loss Before Income Taxes (28,467 ) (92,202 ) (413,659 ) (188,546 ) Income tax (expense) benefit (390 ) 16,553 16,121 36,229 Net Loss $ (28,857 ) $ (75,649 ) $ (397,538 ) $ (152,317 ) Less: Net (Loss) Income attributable to non-controlling interest 2,382 2,561 7,417 4,380 Net Loss attributable to ADTRAN Holdings, Inc. $ (31,239 ) $ (78,210 ) $ (404,955 ) $ (156,697 ) Weighted average shares outstanding – basic 78,952 78,389 78,873 78,378 Weighted average shares outstanding – diluted 78,952 78,389 78,873 78,378 Loss per common share attributable to ADTRAN Holdings, Inc. – basic $ (0.36 ) (1) $ (1.00 ) $ (5.10 ) (1) $ (2.00 ) Loss per common share attributable to ADTRAN Holdings, Inc. – diluted $ (0.36 ) (1) $ (1.00 ) $ (5.10 ) (1) $ (2.00 ) (1) Loss per common share attributable to ADTRAN Holdings, Inc. reflects $3.0 million gain on redemption of redeemable non-controlling interest for the three and nine months ended September 30, 2024. Condensed Consolidated Statements of Cash Flows (Preliminary, Unaudited) (In thousands) Nine Months Ended September 30, 2024 2023 Cash flows from operating activities: Net loss $ (397,538 ) $ (152,317 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 68,421 91,422 Goodwill impairment 292,583 37,874 Amortization of debt issuance cost 1,013 607 Gain on investments, net (4,238 ) (3,316 ) Net loss on disposal of property, plant and equipment 203 — Stock-based compensation expense 11,417 12,229 Deferred income taxes (13,399 ) (45,941 ) Other, net (267 ) 204 Inventory write down - business efficiency program 4,135 21,043 Inventory reserves 6,667 29,836 Changes in operating assets and liabilities: Accounts receivable, net 59,446 47,347 Other receivables 4,875 8,340 Income taxes receivable, net (5,682 ) — Inventory 69,412 536 Prepaid expenses, other current assets and other assets (20,083 ) 1,816 Accounts payable 9,697 (87,903 ) Accrued expenses and other liabilities 15,039 6,476 Income taxes payable, net (3,175 ) 2,433 Net cash provided by (used in) operating activities 98,526 (29,314 ) Cash flows from investing activities: Purchases of property, plant and equipment (48,183 ) (33,674 ) Proceeds from sales and maturities of available-for-sale investments 1,195 10,545 Purchases of available-for-sale investments (195 ) (807 ) Proceeds from beneficial interests in securitized accounts receivable 282 1,178 Net cash used in investing activities (46,901 ) (22,758 ) Cash flows from financing activities: Tax withholdings related to stock-based compensation settlements (189 ) (6,331 ) Proceeds from stock option exercises 219 187 Dividend payments — (21,237 ) Proceeds from receivables purchase agreement 68,556 — Repayments on receivables purchase agreement (83,772 ) — Proceeds from draw on revolving credit agreements — 163,760 Repayment of revolving credit agreements (5,000 ) (49,233 ) Payment for redemption of redeemable non-controlling interest (17,395 ) (1,196 ) Payment for annual recurring compensation to non-controlling interest (10,084 ) — Payment of debt issuance cost (1,994 ) (708 ) Repayment of notes payable — (24,931 ) Net cash (used in) provided by financing activities (49,659 ) 60,311 Net increase in cash and cash equivalents 1,966 8,239 Effect of exchange rate changes (677 ) (791 ) Cash and cash equivalents, beginning of period 87,167 108,644 Cash and cash equivalents, end of period $ 88,456 $ 116,092 Supplemental disclosure of cash financing activities: Cash paid for interest $ 18,225 $ 8,540 Cash paid for income taxes $ 9,122 $ — Cash used in operating activities related to operating leases $ 7,380 $ 7,378 Supplemental disclosure of non-cash investing activities: Right-of-use assets obtained in exchange for lease obligations $ 2,122 $ 8,490 Purchases of property, plant and equipment included in accounts payable $ 952 $ 2,508 Revision of Previously Issued Condensed Consolidated Financial Statements Following the third quarter of 2024, the Company identified errors primarily impacting the carrying values of the redeemable non-controlling interest, retained deficit, the net income attributable to the non-controlling interest and the net loss attributable to the Company and, as a consequence, of the loss per common share attributable to the Company. The Company has evaluated the errors and determined that the related impacts were not material to the previously issued consolidated financial statements for any prior period. A summary of the corrections to the Company's Condensed Consolidated Financial Statements for the periods ended March 31, 2023, June 30, 2023, September 30, 2023, December 31, 2023, March 31, 2024 and June 30, 2024, is as follows: Pursuant to the terms of the DPLTA, each Adtran Networks shareholder (other than the Company) is entitled to receive from us an Annual Recurring Compensation payment of €0.52 per share. The Company erroneously accrued this liability every quarter at €0.59 per share, overstating the associated accrual, the net income attributable to non-controlling interest and the net loss attributable to ADTRAN Holdings, Inc. for fiscal periods beginning with the quarter ended March 31, 2023 through the quarter ended June 30, 2024. For the periods beginning with the quarter ended March 31, 2023 through the quarter ended June 30, 2024 the Company remeasured the redeemable non-controlling interest each quarter-end at the current exchange rate of Euros to U.S. Dollar. The Company treated the redeemable non-controlling interest as a monetary mezzanine equity instrument but should have treated it as a non-monetary mezzanine equity instrument not subject to remeasurement. For additional information, please see our Note 1 to the Condensed Consolidated Financial Statements set forth in the Form 10-Q for the quarterly period ended September 30, 2024 to be filed with the SEC. Supplemental Information Reconciliation of Preliminary Gross Profit and Preliminary Gross Margin to Preliminary Non-GAAP Gross Profit and Preliminary Non-GAAP Gross Margin (Preliminary, Unaudited) (In thousands) Three Months Ended Nine Months Ended September 30, 2024 June 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Total Revenue $ 227,704 $ 225,991 $ 272,331 $ 679,868 $ 923,621 Cost of Revenue $ 142,453 $ 144,416 $ 198,094 $ 440,787 $ 669,023 Acquisition-related expenses, amortizations and adjustments(1) (10,276 ) (10,064 ) (13,537 ) (30,517 ) (79,554 ) Stock-based compensation expense (270 ) (280 ) (279 ) (825 ) (854 ) Restructuring expenses(2) (7 ) (2,788 ) (21,630 ) (14,042 ) (21,706 ) Integration expenses(3) (34 ) (35 ) (154 ) (104 ) (154 ) Non-GAAP Cost of Revenue $ 131,866 $ 131,249 $ 162,494 $ 395,299 $ 566,755 Gross Profit $ 85,251 $ 81,575 $ 74,237 $ 239,081 $ 254,598 Non-GAAP Gross Profit $ 95,838 $ 94,742 $ 109,837 $ 284,569 $ 356,866 Gross Margin 37.4 % 36.1 % 27.3 % 35.2 % 27.6 % Non-GAAP Gross Margin 42.1 % 41.9 % 40.3 % 41.9 % 38.6 % (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. These expenses include inventory write down and other charges of $8.6 million for the nine months ended September 30, 2024, incurred as a result of a strategy shift which included discontinuance of certain product lines in connection with the Business Efficiency Program. The restructuring program commenced upon the closing of the business combination with Adtran Networks and is expected to be substantially completed in late 2024. Additionally, as part of the Business Efficiency Program, management determined to close a facility in Greifswald, Germany. These expenses include restructuring wage charges of $4.9 million for the nine months ended September 30, 2024. The closure of the facility is expected to be completed by December 31, 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. Supplemental Information Reconciliation of Preliminary Operating Expenses to Preliminary Non-GAAP Operating Expenses (Unaudited) (In thousands) Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2024 2024 2023 2024 2023 Operating Expenses $ 109,235 $ 119,881 $ 163,533 $ 641,050 $ 438,254 Acquisition-related expenses, amortizations and adjustments (5,054 ) (1) (7,233 ) (6) (4,534 ) (10) (17,168 ) (14) (13,516 ) (19) Stock-based compensation expense (3,126 ) (2) (3,321 ) (7) (3,251 ) (11) (9,894 ) (15) (10,683 ) (20) Restructuring expenses (5,930 ) (3) (14,742 ) (8) (3,242 ) (12) (26,534 ) (16) (11,471 ) (21) Integration expenses (333 ) (4) (531 ) (9) (1,485 ) (13) (1,344 ) (17) (2,897 ) (22) Deferred compensation adjustments(5) (1,471 ) (848 ) 1,801 (4,259 ) 1,714 Goodwill impairment(18) — — (37,874 ) (292,583 ) (37,874 ) Non-GAAP Operating Expenses $ 93,321 $ 93,206 $ 114,948 $ 289,268 $ 363,527 (1) Includes $4.0M of intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations and $0.6 million of legal and advisory fees related to a potential strategic transaction which are both 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) $2.2 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) $2.7 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. Includes expenses of $3.2 million of wage related and other charges due to the Greifswald facility closure of which $0.8 million is included in selling, general and administrative and $2.4 million is included in research and development expenses on the condensed consolidated statements of loss. (4) $0.3 million is included in selling, general and administrative expenses on the condensed consolidated statements of loss, and is primarily 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. (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 $3.9M of intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations and $2.8 million of legal and advisory fees related to a contemplated strategic transaction which are both 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 $0.9 million is included in research and development expenses on the condensed consolidated statements of loss. (8) $3.5 million is included in selling, general and administrative expenses and $11.3 million is included in research and development expenses on the condensed consolidated statements of loss. Includes expenses of $13.5 million of wage related and other charges due to the Greifswald facility closure of which $2.6 million is included in selling, general and administrative and $10.9 million is included in research and development expenses on the condensed consolidated statements of loss. (9) $0.5 million is included in selling, general and administrative expenses on the condensed consolidated statements of loss, and is primarily 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. (10) 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. (11) $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. (12) $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. (13) $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 of which $0.5 million is stock compensation expense for the program. (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 $1.4 million is included in research and development expenses on the condensed consolidated statements of loss. (15) $7.1 million is included in selling, general and administrative expenses and $2.8 million is included in research and development expenses on the condensed consolidated statements of loss. (16) $8.0 million is included in selling, general and administrative expenses and $18.6 million is included in research and development expenses on the condensed consolidated statements of loss. Includes expenses of $16.5 million of wage related and other charges due to the Greifswald facility closure of which $3.2 million is included in selling, general and administrative and $13.3 million is included in research and development expenses on the condensed consolidated statements of loss. (17) $1.3 million is included in selling, general and administrative 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 of which $0.7 million is stock compensation expense for the program. (18) Non-cash impairment of goodwill in our Network Solutions reporting unit, necessitated by factors such as a decrease in the Company's market capitalization, cautious service provider spending due to economic uncertainty and continued elevated customer inventory adjustments. (19) Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $12.0 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. (20) $7.6 million is included in selling, general and administrative expenses and $3.1 million is included in research and development expenses on the condensed consolidated statements of loss. (21) $7.0 million is included in selling, general and administrative expenses and $4.5 million is included in research and development expenses on the condensed consolidated statements of loss. (22) $2.8 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 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 of which $0.5 million is stock compensation expense for the program. Supplemental Information Reconciliation of Preliminary Operating Loss to Preliminary Non-GAAP Operating Income (Loss) (Unaudited) (In thousands) Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2024 2024 2023 2024 2023 Operating Loss $ (23,984 ) $ (38,306 ) $ (89,296 ) $ (401,969 ) $ (183,656 ) Acquisition related expenses, amortizations and adjustments(1) 15,330 17,297 18,070 47,685 93,069 Stock-based compensation expense 3,396 3,601 3,530 10,719 11,537 Restructuring expenses(2) 5,936 17,530 24,873 40,576 33,178 Integration expenses(3) 367 566 1,639 1,447 3,051 Deferred compensation adjustments(4) 1,471 848 (1,801 ) 4,259 (1,714 ) Goodwill impairment(5) — — 37,874 292,583 37,874 Non-GAAP Operating Income (Loss) $ 2,516 $ 1,536 $ (5,111 ) $ (4,700 ) $ (6,661 ) (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. These expenses include inventory write down and other charges incurred as a result of a strategic shift in certain product lines in connection with the restructuring program. Additionally, includes expenses related to the closure of the Greifswald facility. (3) Includes expenses related to the Company's one-time integration bonus program in connection with synergy targets as a results of the business combination with Adtran Networks. Includes fees incurred for the expansion of internal controls at Adtran Networks and the implementation of the DPTLA. (4) 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. (5) Non-cash impairment of goodwill in our Network Solutions reporting unit, necessitated by factors such as a decrease in the Company's market capitalization, cautious service provider spending due to economic uncertainty and continued customer inventory adjustments. Supplemental Information Reconciliation of Preliminary Other Expense to Preliminary Non-GAAP Other Expense (Unaudited) (In thousands) Three Months Ended Nine Months Ended September 30, 2024 June 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Interest and dividend income $ 664 $ 366 $ 521 $ 1,427 $ 1,183 Interest expense (5,679 ) (6,906 ) (4,507 ) (17,183 ) (11,858 ) Net investment gain (loss) 1,382 872 (1,443 ) 4,507 1,071 Other (expense) income, net (850 ) (901 ) 2,523 (441 ) 4,714 Total Other Expense $ (4,483 ) $ (6,569 ) $ (2,906 ) $ (11,690 ) $ (4,890 ) Deferred compensation adjustments (1) (1,294 ) (896 ) 1,117 (4,629 ) (1,387 ) Pension expense (2) 7 7 7 21 20 Non-GAAP Other Expense $ (5,770 ) $ (7,458 ) $ (1,782 ) $ (16,298 ) $ (6,257 ) (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 inclusive of Non-Controlling Interest to Preliminary Non-GAAP Net (Loss) Income inclusive of Non-Controlling Interest (Unaudited) and Reconciliation of Preliminary Net Income attributable to Non-Controlling Interest to Preliminary Non-GAAP Net Income attributable to Non-Controlling Interest (Unaudited) and Reconciliation of Preliminary Net Loss attributable to ADTRAN Holdings, Inc. and Preliminary Loss per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted to Preliminary Non-GAAP Net Loss attributable to ADTRAN Holdings, Inc. and Preliminary Non-GAAP Loss per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted (Unaudited) (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, 2024 June 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Net Loss attributable to ADTRAN Holdings, Inc. (31,239 ) $ (49,515 ) $ (78,210 ) $ (404,955 ) $ (156,697 ) Plus: Net (Loss) Income attributable to non-controlling interest (1) 2,382 2,504 2,561 7,417 4,380 Net Loss inclusive of non-controlling interest $ (28,857 ) $ (47,011 ) $ (75,649 ) $ (397,538 ) $ (152,317 ) Acquisition related expenses, amortizations and adjustments 15,330 17,297 18,070 47,685 93,069 Stock-based compensation expense 3,396 3,601 3,530 10,719 11,537 Deferred compensation adjustments (2) 177 (48 ) (684 ) (370 ) (3,101 ) Pension adjustments (3) 7 7 7 21 20 Restructuring expenses 5,936 17,530 24,873 40,576 33,178 Integration expenses 367 566 1,639 1,447 3,051 Goodwill impairment — — 37,874 292,583 37,874 Tax effect of adjustments to net loss (4) (712 ) 755 (21,024 ) (19,022 ) (50,146 ) Non-GAAP Net Loss inclusive of non-controlling interest $ (4,356 ) $ (7,303 ) $ (11,364 ) $ (23,899 ) $ (26,835 ) Less: Non-GAAP Net (Loss) Income attributable to non-controlling interest (1) 2,382 2,504 2,561 7,417 5,909 Non-GAAP Net Loss attributable to ADTRAN Holdings, Inc. $ (6,738 ) $ (9,807 ) $ (13,925 ) $ (31,316 ) $ (32,744 ) GAAP Net Income attributable to non-controlling interest (1) $ 2,382 $ 2,504 $ 2,561 $ 7,417 $ 4,380 Acquisition related expenses, amortizations and adjustments — — — — 1,457 Restructuring expenses — — — — 29 Integration expenses — — — — 6 Stock-based compensation expense — — — — 37 Non-GAAP Net Income attributable to non-controlling interest (1) $ 2,382 $ 2,504 $ 2,561 $ 7,417 $ 5,909 Weighted average shares outstanding – basic 78,952 78,852 78,389 78,873 78,378 Weighted average shares outstanding – diluted 78,952 78,852 78,389 78,873 78,378 Loss per common share attributable to ADTRAN Holdings, Inc. – basic $ (0.36 ) (5) $ (0.63 ) $ (1.00 ) $ (5.10 ) (5) $ (2.00 ) Loss per common share attributable to ADTRAN Holdings, Inc. – diluted $ (0.36 ) (5) $ (0.63 ) $ (1.00 ) $ (5.10 ) (5) $ (2.00 ) Non-GAAP Loss per common share attributable to ADTRAN – basic $ (0.05 ) (5) $ (0.12 ) $ (0.18 ) $ (0.36 ) (5) $ (0.42 ) Non-GAAP Loss per common share attributable to ADTRAN – diluted $ (0.05 ) (5) $ (0.12 ) $ (0.18 ) $ (0.36 ) (5) $ (0.42 ) (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. (4) Represents the tax effect of non-GAAP adjustments. Beginning in period ending September 30, 2024, the Company changed its method of calculating non-GAAP income taxes by applying blended statutory tax rates to non-GAAP losses before income taxes in order to include current and deferred income tax expenses that are commensurate with the non-GAAP measure of profitability. The blended statutory tax rate is calculated using 0%, resulting in no tax benefits net of impact of valuation allowance, for the loss jurisdiction's non-GAAP losses before income taxes and 30% for all remaining jurisdictions' non-GAAP income before income taxes. Prior periods have been adjusted to reflect the application of blended statutory tax rates, net of impact of valuation allowance, to non-GAAP losses before income taxes as opposed to the previous application of blended statutory and effective tax rates to separate non-GAAP adjustments. We previously reported the tax effect of the adjustment to non-GAAP net loss under the prior method of $7.9 million, $49.1 million and $21.0 million for the three and nine months ended September 30, 2023 and for the three months ended June 30, 2024, respectively. (5) Loss per common share attributable to ADTRAN Holdings, Inc. and Non-GAAP Loss per common share attributable to ADTRAN Holdings, Inc reflects $3.0 million of gain on redemption of redeemable non-controlling interest for the three and nine months ended September 30, 2024. Supplemental Information Reconciliation of Preliminary Net Cash Provided By (Used In) Operating Activities to Preliminary Free Cash Flow (Unaudited) (In thousands) Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2024 2024 2023 2024 2023 Net Cash provided by (used in) operating activities $ 42,030 $ 19,898 $ 6,846 $ 98,526 $ (29,314 ) Purchases of property, plant and equipment(1) (18,814 ) (15,995 ) (13,556 ) (48,183 ) (33,674 ) Free cash flow $ 23,216 $ 3,903 $ (6,710 ) $ 50,343 $ (62,988 ) (1) Purchases related to capital expenditures.
  Content Reference URL	None

• Publisher

  Publisher Name	Business Wire
  Publisher URL	http://www.businesswire.com
  Description	None
  Trust Flow Score	67
  Citation Flow Score	52

• Data Source

  Data Source Name	Quantexa News
  Data Source Type	news
  Data Source URL	https://app.aylien.com/dashboard
  Description	Welcome to Quantexa News API — the most powerful way to aggregate, filter, and integrate global news data into your apps and models.
  Weight	10