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 Outlook¹

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 [email protected].

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.

¹Non-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

For media

Gareth Spence

+44 1904 699 358

[email protected]

For investors

Peter Schuman

+1 650 743 7948

[email protected]

Condensed Consolidated Balance Sheets

(Preliminary, Unaudited)

(In thousands)

Condensed Consolidated Statements of Loss

(Preliminary, Unaudited)

(In thousands, except per share amounts)

 
^{(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			—	< Die wichtigsten Finanzdaten auf einen Blick   2017 2018 2019 2020 2021 2022 2023 Umsatzerlöse1 556,66 462,36 406,45 356,57 440,45 960,49 960,49 EBITDA1,2 44,30 -25,80 -19,81 5,58 1,22 -4,94 -98,13 EBITDA-Marge3 7,96 -5,58 -4,87 1,56 0,28 -0,51 EBIT1,4 31,21 -39,68 -35,68 -7,95 -12,98 -68,21 -200,46 EBIT-Marge5 5,61 -8,58 -8,78 -2,23 -2,95 -7,10 -20,87 Jahresüberschuss1 19,90 -16,98 -47,31 1,94 -7,62 -8,32 -234,95 Netto-Marge6 3,57 -3,67 -11,64 0,54 -1,73 -0,87 -24,46 Cashflow1,7 -35,37 48,44 -2,21 -13,45 2,67 -41,42 -41,31 Ergebnis je Aktie8 0,49 -0,40 -0,99 0,04 -0,16 -0,03 -3,09 Dividende8 0,26 0,31 0,35 0,35 0,35 0,33 0,34 Quelle: boersengefluester.de und Firmenangaben   Geschäftsbericht 2023 - Kostenfrei herunterladen.   1 in Mio. Euro; 2 EBITDA = Ergebnis vor Zinsen, Steuern und Abschreibungen; 3 EBITDA in Relation zum Umsatz; 4 EBIT = Ergebnis vor Zinsen und Steuern; 5 EBIT in Relation zum Umsatz; 6 Jahresüberschuss (-fehlbetrag) in Relation zum Umsatz; 7 Cashflow aus der gewöhnlichen Geschäftstätigkeit; 8 in Euro; Quelle: boersengefluester.de Wirtschaftsprüfer: PricewaterhouseCoopers INVESTOR-INFORMATIONEN ©boersengefluester.de Adtran Holdings WKN Kurs in € Einschätzung Börsenwert in Mio. € A3C7M6 7,864 623,21 KGV 2025e KGV 10Y-Ø BGFL-Ratio Shiller-KGV 52,43 36,78 1,35 -25,70 KBV KCV KUV EV/EBITDA 1,16 - 0,60 -7,35 Dividende '22 in € Dividende '23 in € Div.-Rendite '23 in % Hauptversammlung 0,33 0,00 0,00 08.05.2024 Q1-Zahlen Q2-Zahlen Q3-Zahlen Bilanz-PK 09.08.2024 06.11.2024 15.03.2024 Abstand 60Tage-Linie Abstand 200Tage-Linie Performance YtD Performance 52 Wochen 40,83% 51,71% 15,58% 57,53%

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