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  Title	Adtran Holdings, Inc. ADTRAN Holdings, Inc. Reports Preliminary Third Quarter 2024 Financial Results
  ID	3977710
  External ID	7281198044
  Author	Unknown
  Published Date	Nov. 7, 2024, 12:02 a.m.
  Summary	EQS-News: Adtran Holdings, Inc. / Key word(s): Quarter Results ADTRAN Holdings, Inc. Reports Preliminary Third Quarter 2024 Financial Results 07.11.2024 / 06:55 CET/CEST The issuer is solely respo
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  Content ID	2255190
  Key	afd3f074-2698-4f86-b24b-c47fe1ce4002
  Content	EQS-News: Adtran Holdings, Inc. / Key word(s): Quarter Results ADTRAN Holdings, Inc. Reports Preliminary Third Quarter 2024 Financial Results 07.11.2024 / 06:55 CET/CEST The issuer is solely responsible for the content of this announcement. ADTRAN Holdings, Inc. Reports Preliminary Third Quarter 2024 Financial Results Huntsville , Alabama, USA. — November 06, 2024 — 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. 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%. GAAP 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. For media Gareth Spence For investors Peter Schuman September December Assets Current Assets Cash and cash equivalents Accounts receivable, net Other receivables Income tax receivable Inventory, net Prepaid expenses and other current assets Total Current Assets Property, plant and equipment, net Deferred tax assets Goodwill Intangibles, net Other non-current assets Long-term investments Total Assets Liabilities, Redeemable Non-Controlling Interest and Equity Current Liabilities Accounts payable Unearned revenue Accrued expenses and other liabilities Accrued wages and benefits Income tax payable, net Total Current Liabilities Non-current revolving credit agreement outstanding Deferred tax liabilities Non-current unearned revenue Non-current pension liability Deferred compensation liability Non-current lease obligations Other non-current liabilities Total Liabilities Redeemable Non-Controlling Interest Equity Common stock Additional paid-in capital Accumulated other comprehensive income Retained deficit Treasury stock Total Equity Total Liabilities, Redeemable Non-Controlling Interest and Equity Three Months Ended Nine Months Ended September September Revenue Network Solutions Services & Support Total Revenue Cost of Revenue Network Solutions Network Solutions – other (credits), charges and inventory write-down Services & Support Total Cost of Revenue Gross Profit Selling, general and administrative expenses Research and development expenses Goodwill impairment — Operating Loss Interest and dividend income Interest expense Net investment gain (loss) Other (expense) income, net Loss Before Income Taxes Income tax (expense) benefit Net Loss Less: Net (Loss) Income attributable to non-controlling interest Net Loss attributable to ADTRAN Holdings, Inc. Weighted average shares outstanding – basic Weighted average shares outstanding – diluted Loss per common share attributable to ADTRAN Holdings, Inc. – basic Loss per common share attributable to ADTRAN Holdings, Inc. – diluted Nine Months Ended September Cash flows from operating activities: Net loss Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization Goodwill impairment Amortization of debt issuance cost Gain on investments, net Net loss on disposal of property, plant and equipment — Stock-based compensation expense Deferred income taxes Other, net Inventory write down – business efficiency program Inventory reserves Changes in operating assets and liabilities: Accounts receivable, net Other receivables Income taxes receivable, net — Inventory Prepaid expenses, other current assets and other assets Accounts payable Accrued expenses and other liabilities Income taxes payable, net Net cash provided by (used in) operating activities Cash flows from investing activities: Purchases of property, plant and equipment Proceeds from sales and maturities of available-for-sale investments Purchases of available-for-sale investments Proceeds from beneficial interests in securitized accounts receivable Net cash used in investing activities Cash flows from financing activities: Tax withholdings related to stock-based compensation settlements Proceeds from stock option exercises Dividend payments — Proceeds from receivables purchase agreement — Repayments on receivables purchase agreement — Proceeds from draw on revolving credit agreements — Repayment of revolving credit agreements Payment for redemption of redeemable non-controlling interest Payment for annual recurring compensation to non-controlling interest — Payment of debt issuance cost Repayment of notes payable — Net cash (used in) provided by financing activities Net increase in cash and cash equivalents Effect of exchange rate changes Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Supplemental disclosure of cash financing activities: Cash paid for interest Cash paid for income taxes — Cash used in operating activities related to operating leases Supplemental disclosure of non-cash investing activities: Right-of-use assets obtained in exchange for lease obligations Purchases of property, plant and equipment included in accounts payable 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. Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, September 30, Total Revenue Cost of Revenue Acquisition-related expenses, amortizations and adjustments Stock-based compensation expense Restructuring expenses Integration expenses Non-GAAP Cost of Revenue Gross Profit Non-GAAP Gross Profit Gross Margin Non-GAAP Gross Margin Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, September 30, Operating Expenses Acquisition-related expenses, amortizations and adjustments Stock-based compensation expense Restructuring expenses Integration expenses Deferred compensation adjustments Goodwill impairment — — Non-GAAP Operating Expenses Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, September 30, Operating Loss Acquisition related expenses, amortizations and adjustments Stock-based compensation expense Restructuring expenses Integration expenses Deferred compensation adjustments Goodwill impairment — — Non-GAAP Operating Income (Loss) 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 Interest expense Net investment gain (loss) Other (expense) income, net Total Other Expense Deferred compensation adjustments Pension expense Non-GAAP Other Expense Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, September 30, Net Loss attributable to ADTRAN Holdings, Inc. Plus: Net (Loss) Income attributable to non-controlling interest Net Loss inclusive of non-controlling interest Acquisition related expenses, amortizations and adjustments Stock-based compensation expense Deferred compensation adjustments Pension adjustments Restructuring expenses Integration expenses Goodwill impairment — — Tax effect of adjustments to net loss Non-GAAP Net Loss inclusive of non-controlling interest Less: Non-GAAP Net (Loss) Income attributable to non-controlling interest Non-GAAP Net Loss attributable to ADTRAN Holdings, Inc. GAAP Net Income attributable to non-controlling interest Acquisition related expenses, amortizations and adjustments — — — — Restructuring expenses — — — — Integration expenses — — — — Stock-based compensation expense — — — — Non-GAAP Net Income attributable to non-controlling interest Weighted average shares outstanding – basic Weighted average shares outstanding – diluted Loss per common share attributable to ADTRAN Holdings, Inc. – basic Loss per common share attributable to ADTRAN Holdings, Inc. – diluted Non-GAAP Loss per common share attributable to ADTRAN – basic Non-GAAP Loss per common share attributable to ADTRAN – diluted Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, September 30, Net Cash provided by (used in) operating activities Purchases of property, plant and equipment Free cash flow 07.11.2024 CET/CEST Dissemination of a Corporate News, transmitted by EQS News – a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. 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: Indices: SDAX Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Munich, Stuttgart; Nasdaq EQS News ID: End of News EQS News Service
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