ADTRAN Holdings, Inc. reports preliminary first quarter 2025 financial results
HUNTSVILLE, Ala.--(BUSINESS WIRE)--May 07, 2025--
ADTRAN Holdings, Inc. (NASDAQ: ADTN and FSE: QH9) ("ADTRAN Holdings" or the "Company") today announced its preliminary unaudited financial results for the first quarter ended March 31, 2025.
-- Revenue: $247.7 million, higher by 10% year-over-year, and above the
mid-point of outlook.
-- Gross margin: GAAP gross margin: 38.5%; non-GAAP gross margin: 42.6%.
-- Operating margin: at the high end of outlook.
-- GAAP diluted loss per share of $0.13; non-GAAP diluted earnings per share
$0.03.
-- Net cash provided by operating activities of $41.6 million.
-- Cash and cash equivalents of $101.3 million, an increase of $23.8 million
sequentially.
Adtran Holdings' Chairman and Chief Executive Officer Tom Stanton stated, "We executed on all fronts during the first quarter. Our strong performance reinforces Adtran's improved operating efficiency and the strength of our business model. We delivered solid results, improving several key operating metrics, including higher revenue, strong gross and operating margins, and robust cash from operations.
Mr. Stanton added, "We are well-positioned to navigate and capitalize on shifts in trade policy due to our globally diverse supply chain, operational flexibility, and strong customer relationships. Based on the current visibility and booking trends, we expect this positive momentum to continue into the second quarter."
The information contained in this press release is preliminary. Investors should refer to our Quarterly Report on Form 10-Q for the period ended March 31, 2025 once it is filed with the Securities and Exchange Commission ("SEC").
Business outlook(1)
For the second quarter of 2025, the Company expects revenue to be within a range of $247.5 million to $262.5 million. Non-GAAP operating margin is expected to be within a range of 0% to 4%.
(1) Non-GAAP operating margin (which is calculated as non-GAAP operating income (loss) divided by revenue) is a non-GAAP financial measure. The Company has provided second quarter 2025 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, such as acquisition related expenses, amortizations and adjustments, stock-based compensation expense, restructuring expenses, integration expenses, deferred compensation adjustments, and goodwill impairment 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.
Conference call
The Company will hold a conference call to discuss its preliminary first quarter 2025 results on Thursday, May 8, 2025, at 9:30 a.m. Central Time, or 4:30 p.m. Central European Time. The Company will webcast this conference call at the events and presentations section of ADTRAN Holdings, Inc. Investor Relations website at https://events.q4inc.com/attendee/184900731 approximately 10 minutes before the start of the call, or you may dial 1-888-330-2391 (Toll-Free US) or 1-240-789-2702, and use Conference ID 8936454.
An online replay of the Company's conference call, as well as the transcript of the call, will be available on the Investor Relations site https://investors.adtran.com/ shortly 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.
Upcoming conference schedule
May 12, 2025: Needham Technology Virtual One-on-One Conference
May 28, 2025: 22(nd) Annual Craig Hallum Institutional Investor Conference
June 25, 2025: Northland Capital Virtual One-on-One Growth Conference
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 majority shareholder of Adtran Networks SE, formerly ADVA Optical Networking SE ("Adtran Networks"). 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 our ability to comply with the covenants set forth in our credit agreement, to satisfy our payment obligations to Adtran Networks' minority shareholders under the Domination and Profit and Loss Transfer Agreement between us and Adtran Networks (the "DPLTA"), and to make payments to Adtran Networks in order to absorb its annual net loss pursuant to the DPLTA; (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 shifting customer spending patterns; (iii) risks and uncertainties related to our inventory practices and ability to match customer demand; (iv) risks and uncertainties relating to our level of indebtedness and our ability to generate cash; (v) risks and uncertainties relating to ongoing material weaknesses in our internal control over financial reporting; (vi) changes in general economic conditions and monetary, fiscal and trade policies, including tariffs; (vii) risks posed by potential breaches of information systems and cyber-attacks; (viii) the risk that we may not be able to effectively compete, including through product improvements and development; and (ix) other risks set forth in our public filings made with the SEC, including our most recent Annual Report on Form 10-K for the year ended December 31, 2024 and risks to be disclosed in our Form 10-Q for the quarterly period ended March 31, 2025 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, net loss inclusive of the non-controlling interest, net income attributable to the non-controlling interest, net loss attributable to the Company, and loss per share - basic and diluted, attributable to the Company, and net cash provided by 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 income (loss) inclusive of the non-controlling interest, non-GAAP net income attributable to the non-controlling interest, non-GAAP net income (loss) attributable to the Company, non-GAAP net earnings (loss) per share - basic and diluted, attributable to the Company, and free cash flow, respectively. Such non-GAAP measures exclude acquisition-related expenses, amortization and adjustments (consisting of intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business
combinations, as well as legal and advisory fees related to a previously contemplated significant transaction, stock-based compensation expense, restructuring expenses, integration expenses, deferred compensation adjustments, goodwill impairments, amortization of pension actuarial losses, 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. 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
Revision of Previously Issued Consolidated Financial Statements
Following the first quarter of 2025, the Company identified errors in its previously issued consolidated financial statements primarily impacting inventory and cost of revenue. 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 description of the errors in the Company's Preliminary Condensed Consolidated Financial Statements for the periods ended December 31, 2023, March 31, 2024, June 30, 2024, September 30, 2024 and December 31, 2024, are as follows:
a) For the year ended December 31, 2023 through the year ended December 31, 2024, the Company understated cost of revenue and overstated inventory in the Company's Adtran Networks subsidiary, due to a system error. In addition, there were adjustments in the Company's U.S and Australian subsidiaries related to inventory reserves that were understated.
As previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, 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. As previously disclosed, the Company 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 description of the errors in the Company's Condensed Consolidated Financial Statements for the period ended March 31, 2024 is as follows:
b) 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 EUR0.52 per share. The Company erroneously accrued this liability every quarter at EUR0.59 per share, overstating the associated accrual, the net income attributable to non-controlling interest and the net loss attributable to ADTRAN Holdings, Inc. for the period ended March 31, 2024.
c) For the period ended March 31, 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.
The Company will be revising its previously issued 2024 interim financial statements and 2024 annual financial statements in connection with its future filings on Form 10-Q for the periods ended March 31, 2025, June 30, 2025 and September 30, 2025 and Form 10-K for the year ended December 31, 2025.
The following tables reflect the expected impact of the revisions to the specific line items presented in the Company's previously reported (i) balance sheets as of March 31, 2024 and as of December 31, 2024, (ii) statements of loss and comprehensive loss for the quarter ended March 31, 2024 and the quarter and year ended December 31, 2024, (iii) the statements of changes in stockholders equity as of March 31, 2024 and December 31, 2024, (iv) statements of cash flows for the quarter ended March 31, 2024 and the year ended December 31, 2024 and (v) the net cash provided by operating activities for the quarter ended December 31, 2024. The preliminary financial information in this press release reflects these revisions.
Revised Line Items in the Condensed Consolidated Balance Sheet as of March 31, 2024 (unaudited):
March 31, 2024
--------------------------------------------
As
Previously
(In thousands) Reported Revision As Revised
----------- -------- -------------
Inventory, net $ 322,147 $(3,460) (a) $ 318,687
Total Current
Assets $ 696,958 $(3,460) $ 693,498
Total Assets $1,327,906 $(3,460) $1,324,446
Accrued Expenses
and Other
Liabilities $ 36,404 $(1,403) (b) $ 35,001
Total Current
Liabilities $ 282,746 $(1,403) $ 281,343
Other non-current
liabilities $ 35,375 $ (350) (b) $ 35,025
Total Liabilities $ 620,488 $(1,753) $ 618,735
Redeemable
Non-Controlling
Interest $ 441,635 $ 511 (c) $ 442,146
Accumulated Other
Comprehensive
Income $ 29,656 $ 19 (a)(b) $ 29,675
(a)(b)
Retained Deficit $ (558,363) $(2,237) (c) $ (560,600)
Total Equity $ 265,783 $(2,218) $ 263,565
Total Liabilities,
Redeemable
Non-Controlling
Interest and
Equity $1,327,906 $(3,460) $1,324,446
Revised Line Items in the Condensed Consolidated Statement of Loss and Condensed Consolidated Statement of Comprehensive Loss for the fiscal quarter ended March 31, 2024 (unaudited):
For the Three Months Ended March 31, 2024
--------------------------------------------
As
Previously As
(In thousands) Reported Revision Revised
----------- ---------- ---------
Cost of Revenue -
Network
Solutions $ 126,326 $ 1,952 (a) $ 128,278
Total Cost of
Revenue $ 153,918 $ 1,952 $ 155,870
Gross Profit $ 72,255 $ (1,952) $ 70,303
Operating Loss $ (339,679) $ (1,952) $(341,631)
Loss before Income
Taxes $ (340,317) $ (1,952) $(342,269)
Net Loss $ (321,670) $ (1,952) $(323,622)
Less: Net Income
attributable to
non-controlling
interest $ 2,880 $ (349) (b) $ 2,531
Net Loss
attributable to
ADTRAN Holdings,
Inc. $ (324,550) $ (1,603) $(326,153)
Loss per common
share
attributable to
ADTRAN Holdings,
Inc. -- basic $ (4.12) $ (0.02) $ (4.14)
Loss per common
share
attributable to
ADTRAN Holdings,
Inc. -- diluted $ (4.12) $ (0.02) $ (4.14)
Net Loss $ (321,670) $ (1,952) $(323,622)
Foreign currency
translation loss $ (17,745) $ 15 (a)(b) $ (17,730)
Other
Comprehensive
Loss, net of tax $ (17,805) $ 15 $ (17,790)
Comprehensive
Loss, net of tax $ (339,475) $ (1,937) $(341,412)
Less:
Comprehensive
Income
attributable to
non-controlling
interest, net of
tax $ 2,880 $ (349) (b) $ 2,531
Comprehensive Loss
attributable to
ADTRAN Holdings,
Inc., net of tax $ (342,355) $ (1,588) $(343,943)
Revised Line Items in the Condensed Consolidated Statement of Loss for the fiscal quarter ended December 31, 2024 (unaudited):
For the Three Months Ended December 31, 2024
--------------------------------------------
As
Previously
(In thousands) Reported Revision As Revised
----------- ---------- ------------
Cost of Revenue -
Network
Solutions $ 134,184 $ 1,974 (a) $ 136,158
Total Cost of
Revenue $ 151,619 $ 1,974 $ 153,593
Gross Profit $ 91,233 $ (1,974) $ 89,259
Operating Loss $ (15,132) $ (1,974) $ (17,106)
Loss before
Income Taxes $ (18,604) $ (1,974) $ (20,578)
Net Loss $ (43,509) $ (1,974) $ (45,483)
Net Loss
attributable to
ADTRAN Holdings,
Inc. $ (45,916) $ (1,974) $ (47,890)
Loss per common
share
attributable to
ADTRAN Holdings,
Inc. -- basic $ (0.58) $ (0.02) $ (0.61)
Loss per common
share
attributable to
ADTRAN Holdings,
Inc. -- diluted $ (0.58) $ (0.02) $ (0.61)
Revised Line Items in the Consolidated Balance Sheet as of December 31, 2024 (unaudited):
December 31, 2024
------------------------------------------
As
Previously
(In thousands) Reported Revision As Revised
----------- ---------- ----------
Inventory, net $ 269,337 $ (7,683) (a) $ 261,654
Total Current
Assets $ 610,605 $ (7,683) $ 602,922
Total Assets $ 1,179,372 $ (7,683) $1,171,689
Accumulated Other
Comprehensive
Income $ 10,897 $ 322 (a) $ 11,219
Retained Deficit $ (680,993) $ (8,005) (a) $ (688,998)
Total Equity $ 134,414 $ (7,683) $ 126,731
Total Liabilities,
Redeemable
Non-Controlling
Interest and
Equity $ 1,179,372 $ (7,683) $1,171,689
Revised Line Items in the Consolidated Statement of Loss and Consolidated Statement of Comprehensive Loss for the fiscal year ended December 31, 2024 (unaudited):
For the Year Ended December 31, 2024
--------------------------------------------
As
Previously
(In thousands) Reported Revision As Revised
----------- ---------- ------------
Cost of Revenue -
Network
Solutions $ 511,070 $ 6,483 (a) $ 517,553
Total Cost of
Revenue $ 592,406 $ 6,483 $ 598,889
Gross Profit $ 330,314 $ (6,483) $ 323,831
Operating Loss $ (417,101) $ (6,483) $ (423,584)
Loss before
Income Taxes $ (432,263) $ (6,483) $ (438,746)
Net Loss $ (441,048) $ (6,483) $ (447,531)
Net Loss
attributable to
ADTRAN Holdings,
Inc. $ (450,872) $ (6,483) $ (457,355)
Loss per common
share
attributable to
ADTRAN Holdings,
Inc. -- basic $ (5.67) $ (0.08) $ (5.75)
Loss per common
share
attributable to
ADTRAN Holdings,
Inc. -- diluted $ (5.67) $ (0.08) $ (5.75)
Net Loss $ (441,048) $ (6,483) $ (447,531)
Foreign currency
translation
loss $ (38,047) $ 322 (a) $ (37,725)
Other
Comprehensive
Loss, net of
tax $ (36,568) $ 322 $ (36,246)
Comprehensive
Loss, net of
tax $ (477,616) $ (6,161) $ (483,777)
Comprehensive
Loss
attributable to
ADTRAN Holdings,
Inc., net of
tax $ (487,440) $ (8,015) $ (495,455)
Revised Line Items in the Condensed Consolidated Statement of Changes in Stockholders Equity as of March 31, 2024 (unaudited):
Accumulated Other
Retained Deficit Comprehensive Income
--------------------------------------- ---------------------------------------
As As
Previously As Previously As
(In thousands) Reported Revision Revised Reported Revision Revised
----------- -------- --------- ----------- ---------- --------
Balance as of
December 31,
2023 $ (243,908) $ 9,481 (b) $(234,427) $ 47,461 $ 4 (b) $ 47,465
Net loss $ (321,670) $ (1,952) (a) $(323,622) $ - $ - $ -
Annual recurring
compensation
earned $ (2,880) $ 349 (b) $ (2,531) $ - $ - $ -
Other
comprehensive (a)
loss, net of tax $ - $ - $ - $ (17,805) $ 15 (b) $(17,790)
Foreign currency
remeasurement of
redeemable
non-controlling
interest $ 10,115 $(10,115) (c) $ - $ - $ - $ -
Balance as of
March 31, 2024 $ (558,363) $ (2,237) $(560,600) $ 29,656 $ 19 $ 29,675
Revised Line Items in the Consolidated Statement of Changes in Stockholders Equity as of December 31, 2024 (unaudited):
Accumulated Other
Retained Deficit Comprehensive Income
----------------------------------------- ---------------------------------------
As As
Previously As Previously As
(In thousands) Reported Revision Revised Reported Revision Revised
----------- ---------- --------- ----------- ---------- --------
Balance as of
December 31,
2023 $ (232,905) $ (1,522) (a) $(234,427) $ 47,465 $ - $ 47,465
Net loss $ (441,048) $ (6,483) (a) $(447,531) $ - $ - $ -
Other
comprehensive
income, net of
tax $ - $ - $ - $ (36,568) $ 322 (a) $(36,246)
Balance as of
December 31,
2024 $ (680,993) $ (8,005) $(688,998) $ 10,897 $ 322 $ 11,219
Revised Line Items in the Condensed Consolidated Statement of Cash Flows for the quarter ended March 31, 2024 (unaudited):
Three months ended March 31, 2024
--------------------------------------------
As
Previously As
(In thousands) Reported Revision Revised
-------------- ---------- ---------
Net Loss $ (321,670) $ (1,952) (a) $(323,622)
Adjustments to
reconcile net
loss to net
cash provided
by operating
activities
Inventory
reserves $ 1,837 $ 157 (a) $ 1,994
Change in
operating
assets and
liabilities:
Inventory $ 30,426 $ 1,795 (a) $ 32,221
Net Cash Provided
by operating
activities $ 36,598 $ -- $ 36,598
Revised Line Items in the Consolidated Statement of Cash Flows for the year ended December 31, 2024 (unaudited):
Year ended December 31, 2024
--------------------------------------------
As
Previously
(In thousands) Reported Revision As Revised
----------- ---------- ------------
Net Loss $ (441,048) $ (6,483) (a) $ (447,531)
Adjustments to
reconcile net
loss to net
cash provided
by operating
activities
Inventory
reserves $ 3,980 $ 352 (a) $ 4,332
Change in
operating
assets and
liabilities:
Inventory $ 75,171 $ 6,100 (a) $ 81,271
Net Cash Provided
by operating
activities $ 103,070 $ (31) $ 103,039
Effect of
exchange rate
changes $ (451) $ 31 $ (420)
Revised Net Cash Provided by Operating Activities for the quarter ended December 31, 2024 (unaudited):
Three months ended December 31, 2024
-----------------------------------------------
As Previously
(In thousands) Reported Revision As Revised
---------------- ---------- ------------
Net Cash Provided
by operating
activities $ 4,544 $ 12 (a) $ 4,556
For additional information, please refer to our note 1 to the Condensed Consolidated Financial Statement set forth in the Form 10-Q for the quarterly period ended March 31, 2025 to be filed with the SEC.
Condensed Consolidated Balance Sheets
(Preliminary, Unaudited)
(In thousands)
March 31, December 31,
2025 2024
----------- ----------------
Assets
Current Assets
Cash and cash equivalents $ 101,321 $ 77,567
Accounts receivable, net 166,519 178,030
Other receivables 9,613 9,775
Income tax receivable 6,632 5,461
Inventory, net 254,055 261,654
Assets held for sale 11,901 11,901
Prepaid expenses and other current assets 64,456 58,534
--------- ---------
Total Current Assets 614,497 602,922
Property, plant and equipment, net 105,940 102,942
Deferred tax assets 17,826 17,826
Goodwill 55,261 52,918
Intangibles, net 293,064 284,893
Other non-current assets 75,659 78,128
Long-term investments 29,973 32,060
--------- ---------
Total Assets $1,192,220 $ 1,171,689
========= =========
Liabilities, Redeemable Non-Controlling
Interest and Equity
Current Liabilities
Accounts payable $ 170,477 $ 170,451
Unearned revenue 66,459 52,701
Accrued expenses and other liabilities 38,161 35,704
Accrued wages and benefits 25,910 32,853
Income tax payable, net 999 1,936
--------- ---------
Total Current Liabilities 302,006 293,645
Non-current revolving credit agreement
outstanding 190,085 189,576
Deferred tax liabilities 30,768 30,690
Non-current unearned revenue 24,082 22,065
Non-current pension liability 8,886 8,983
Deferred compensation liability 31,283 33,203
Non-current lease obligations 26,369 25,925
Other non-current liabilities 16,531 17,928
--------- ---------
Total Liabilities 630,010 622,015
Redeemable Non-Controlling Interest 422,934 422,943
Equity
Common stock 800 795
Additional paid-in capital 812,071 808,913
Accumulated other comprehensive income 31,601 11,219
Retained deficit (700,088) (688,998)
Treasury stock (5,108) (5,198)
--------- ---------
Total Equity 139,276 126,731
--------- ---------
Total Liabilities, Redeemable
Non-Controlling Interest and Equity $1,192,220 $ 1,171,689
========= =========
Condensed Consolidated Statements of Loss
(Preliminary, Unaudited)
(In thousands, except per share amounts)
Three Months Ended
March 31,
--------------------------
2025 2024
--------- ----------
Revenue
Network Solutions $202,217 $ 181,273
Services & Support 45,527 44,900
------- --------
Total Revenue 247,744 226,173
Cost of Revenue
Network Solutions 133,925 128,278
Network Solutions - charges and
inventory write-down -- 8,782
Services & Support 18,327 18,810
------- --------
Total Cost of Revenue 152,252 155,870
Gross Profit 95,492 70,303
Selling, general and administrative
expenses 50,285 59,100
Research and development expenses 48,859 60,251
Goodwill impairment -- 292,583
------- --------
Operating Loss (3,652) (341,631)
Interest and dividend income 126 397
Interest expense (4,761) (4,598)
Net investment (loss) gain (1,686) 2,253
Other income, net 944 1,310
------- --------
Loss Before Income Taxes (9,029) (342,269)
Income tax benefit 715 18,647
------- --------
Net Loss $ (8,314) $(323,622)
Less: Net Income attributable to
non-controlling interest (1) 2,319 2,531
------- --------
Net Loss attributable to ADTRAN
Holdings, Inc. $(10,633) $(326,153)
======= ========
Weighted average shares outstanding --
basic 79,534 78,814
Weighted average shares outstanding --
diluted 79,534 78,814
Loss per common share attributable to
ADTRAN Holdings, Inc. -- basic $ (0.13) (2) $ (4.14)
Loss per common share attributable to
ADTRAN Holdings, Inc. -- diluted $ (0.13) (2) $ (4.14)
(1) For the three months ended March 31, 2025, we accrued $2.4
million net income attributable to non-controlling interest,
representing the recurring cash compensation earned by
non-controlling interest shareholders post-DPLTA. For the three
months ended March 31, 2024, we recognized $2.5 million of net gain
attributable to non-controlling interest, representing the recurring
cash compensation earned by non-controlling interest shareholders
post DPTLA. (2) Loss per common share attributable to ADTRAN
Holdings, Inc. - basic and diluted - reflects a $(3) thousand effect
of redemption of RNCI for the three months ended March 31, 2025.
Condensed Consolidated Statements of Cash Flows
(Preliminary, Unaudited)
(In thousands)
March 31,
-----------------------
2025 2024
--------- ------------
Cash flows from operating activities:
Net loss $ (8,314) $(323,622)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization 21,596 22,528
Goodwill impairment -- 292,583
Amortization of debt issuance cost 320 1,013
Loss (Gain) on investments, net 1,631 (2,621)
Net loss on disposal of property,
plant and equipment 13 150
Stock-based compensation expense 3,210 3,957
Deferred income taxes (475) (19,738)
Other, net -- 545
Inventory write down - business
efficiency program -- 3,992
Inventory reserves 3,339 1,994
Changes in operating assets and
liabilities:
Accounts receivable, net 16,019 26,002
Other receivables (1,731) 5,605
Income taxes receivable, net (100) (1,296)
Inventory 10,030 32,221
Prepaid expenses, other current
assets and other assets 1,504 (15,882)
Accounts payable (4,222) 553
Accrued expenses and other
liabilities (1,196) 7,459
Income taxes payable, net 18 1,155
------- --------
Net cash provided by operating activities 41,642 36,598
------- --------
Cash flows from investing activities:
Purchases of property, plant and
equipment (7,399) (12,180)
Purchases of intangibles - developed
technology (11,296) (1,194)
Proceeds from sales and maturities of
available-for-sale investments 660 873
Purchases of available-for-sale
investments (170) (44)
Payments for beneficial interests in
securitized accounts receivable (133) --
------- --------
Net cash used in investing activities (18,338) (12,545)
------- --------
Cash flows from financing activities:
Tax withholdings related to
stock-based compensation
settlements (420) (176)
Proceeds from stock option exercises 756 219
Proceeds from receivables purchase
agreement -- 30,231
Repayments on receivables purchase
agreement -- (32,437)
Payment for redemption of redeemable
non-controlling interest (12) (5)
Payment of debt issuance cost -- (1,994)
------- --------
Net cash provided by (used in) financing
activities 324 (4,162)
------- --------
Net increase in cash and cash
equivalents 23,628 19,891
Effect of exchange rate changes 126 (301)
Cash and cash equivalents, beginning of
period 77,567 87,167
------- --------
Cash and cash equivalents, end of period $101,321 $ 106,757
======= ========
Supplemental disclosure of cash financing
activities:
Cash paid for interest $ 4,129 $ 5,243
Cash paid for income taxes $ 1,849 $ 2,315
Cash used in operating activities
related to operating leases $ 2,696 $ 2,384
Supplemental disclosure of non-cash
investing activities:
Redemption of redeemable
non-controlling interest $ (3) $ --
Right-of-use assets obtained in
exchange for lease obligations $ 1,893 $ 842
Purchases of property, plant and
equipment included in accounts
payable $ 1,162 $ 1,689
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
--------------------------------------------
March 31, December 31, March 31,
2025 2024 2024
------------ ---------------- ------------
Total Revenue $247,744 $ 242,852 $226,173
Cost of Revenue 152,252 153,593 155,870
Acquisition-related
expenses,
amortizations and
adjustments (1) (9,831) (9,980) (10,177)
Stock-based
compensation expense (267) (317) (275)
Restructuring expenses
(2) -- (538) (11,247)
Integration expenses
(3) -- 123 (35)
------- -------- -------
Non-GAAP Cost of
Revenue $142,154 $ 142,881 $134,136
======= ======== =======
Gross Profit $ 95,492 $ 89,259 $ 70,303
Non-GAAP Gross Profit $105,590 $ 99,971 $ 92,037
Gross Margin 38.5% 36.8% 31.1%
Non-GAAP Gross Margin 42.6% 41.2% 40.7%
(1) Includes intangible amortization of backlog, inventory fair
value adjustments, developed technology, customer relationships, and
trade names acquired in connection with business combinations. We
incur charges relating to the amortization of intangible assets and
exclude these charges for purposes of calculating our non-GAAP
measures. Such charges are significantly impacted by the timing and
magnitude of our acquisitions. We exclude these charges for the
purpose of calculating our non-GAAP measures, primarily because they
are noncash expenses and our internal benchmarking analyses evidence
that many industry participants and peers present non-GAAP financial
measures excluding intangible asset amortization. Although this does
not directly affect our cash position, the loss in value of
intangible assets overtime can have a material impact on the
equivalent GAAP earnings measure. (2) Includes expenses for a
Business Efficiency Program designed to optimize the assets and
business processes following the business combination with Adtran
Networks. Other than the Company's aim of selling its headquarters,
the Business Efficiency Program was completed as of 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 which was
completed as of December 31, 2024.
Supplemental Information Reconciliation of Preliminary Operating
Expenses to Preliminary Non-GAAP Operating Expenses (Unaudited) (In
thousands)
Three Months Ended
------------------------------------------
March December
31, 31, March 31,
2025 2024 2024
------- --------- ---------
Operating Expenses $99,144 $ 106,365 $ 411,934
Acquisition-related
expenses,
amortizations and
adjustments (1) (2,249) (2) (5,294) (7) (4,881) (11)
Stock-based
compensation
expense (2,943) (3) (3,351) (8) (3,447) (12)
Restructuring
expenses -- (4) (3,567) (9) (5,862) (13)
Integration expenses -- (5) (586) (10) (480) (14)
Deferred compensation
adjustments (6) 1,547 451 (1,940)
Goodwill impairment -- -- (292,583) (15)
------ -------- --------
Non-GAAP Operating
Expenses $95,499 $ 94,018 $ 102,741
====== ======== ========
(1) We incur charges relating to the amortization of intangible assets
and exclude these charges for purposes of calculating our non-GAAP
measures. Such charges are significantly impacted by the timing and
magnitude of our acquisitions. We exclude these charges for the purpose
of calculating our non-GAAP measures, primarily because they are
non-cash expenses and our internal benchmarking analyses evidence that
many industry participants and peers present non-GAAP financial measures
excluding intangible asset amortization. Although this does not directly
affect our cash position, the loss in value of intangible assets over
time can have a material impact on the equivalent GAAP earnings measure.
(2) Includes $2.2M of intangible amortization of developed technology,
customer relationships, and trade names acquired in connection with
business combinations. (3) $2.0 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.
(4) Other than the Company's aim of selling its headquarters, the
Business Efficiency Program was completed as of December 31, 2024. (5)
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 and which was completed as of December
31, 2024. (6) Includes non-cash change in fair value of equity
investments held in the ADTRAN Holdings, Inc. Deferred Compensation
Program for certain employees, all of which is included in selling,
general and administrative expenses on the condensed consolidated
statement of loss. (7) Includes $4.3M of intangible amortization of
developed technology, customer relationships, and trade names acquired
in connection with business combinations and $1.0 million of legal and
advisory fees related to a previously contemplated significant
transaction which are included in selling, general and administrative
expenses on the condensed consolidated statements of loss. (8) $2.4
million is included in selling, general and administrative expenses and
$1.0 million is included in research and development expenses on the
condensed consolidated statements of loss. (9) $1.2 million is included
in selling, general and administrative expenses and $2.4 million is
included in research and development expenses on the condensed
consolidated statements of loss. Includes expenses for a Business
Efficiency Program designed to optimize the assets and business
processes following the business combination with Adtran Networks. Other
than the Company's aim of selling its headquarters, the Business
Efficiency Program was completed as of December 31, 2024. (10) $0.6
million is included in selling, general and administrative expenses and
less than $0.1 million is included in research and development 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. (11) Includes intangible amortization of developed
technology, customer relationships, and trade names acquired in
connection with business combinations, of which $4.4 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. (12) $2.5 million is included in
selling, general and administrative expenses and $1.0 million is
included in research and development expenses on the condensed
consolidated statements of loss. (13) $1.8 million is included in
selling, general and administrative expenses and $4.1 million is
included in research and development expenses on the condensed
consolidated statements of loss. Includes expenses for a Business
Efficiency Program designed to optimize the assets and business
processes following the business combination with Adtran Networks. Other
than the Company's aim of selling its headquarters, the Business
Efficiency Program was completed as of December 31, 2024. (14) $0.5
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 $0.1 million related primarily to the DPLTA proceedings
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 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
transformation bonus expense of $0.4 million includes $0.2 million of
stock compensation expense. (15) 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.
Supplemental Information Reconciliation of Preliminary Operating
Loss to Preliminary Non-GAAP Operating Income (Loss) (Unaudited)
(In thousands)
Three Months Ended
-----------------------------------------
March 31, December 31, March 31,
2025 2024 2024
----------- -------------- ------------
Operating Loss $ (3,652) $ (17,106) $(341,631)
Acquisition related
expenses,
amortizations and
adjustments (1) 12,080 15,274 15,058
Stock-based
compensation expense 3,210 3,668 3,722
Restructuring expenses
(2) -- 4,105 17,110
Integration expenses
(3) -- 464 514
Deferred compensation
adjustments (4) (1,547) (451) 1,940
Goodwill impairment (5) -- -- 292,583
------ --------- --------
Non-GAAP Operating
Income (Loss) $ 10,091 $ 5,954 $ (10,704)
====== ========= ========
(1) Includes intangible amortization of backlog, inventory fair
value adjustments, developed technology, customer relationships,
and trade names acquired in connection with business combinations.
We incur charges relating to the amortization of intangible assets
and exclude these charges for purposes of calculating our non-GAAP
measures. Such charges are significantly impacted by the timing
and magnitude of our acquisitions. We exclude these charges for
the purpose of calculating our non-GAAP measures, primarily
because they are non-cash expenses and our internal benchmarking
analyses evidence that many industry participants and peers
present non-GAAP financial measures excluding intangible asset
amortization. Although this does not directly affect our cash
position, the loss in value of intangible assets overtime can have
a material impact on the equivalent GAAP earnings measure. (2)
Includes expenses for a Business Efficiency Program designed to
optimize the assets and business processes following the business
combination with Adtran Networks. Other than the Company's aim of
selling its headquarters, the Business Efficiency Program was
completed as of December 31, 2024. (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. (4) Includes non-cash change in fair value of
equity investments held in the ADTRAN Holdings, Inc. Deferred
Compensation Program for certain 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 elevated customer inventory
adjustments.
Supplemental Information Reconciliation of Preliminary Other Expense
to Preliminary Non-GAAP Other Expense (Unaudited) (In thousands)
Three Months Ended
---------------------------------------------
March 31, December 31, March 31,
2025 2024 2024
---------------- -------------- -----------
Interest and dividend
income $ 126 $ 1,631 $ 397
Interest expense (4,761) (4,870) (4,598)
Net investment (loss)
gain (1,686) (920) 2,253
Other income, net 944 687 1,310
-------- --- -------- -------
Total Other Expense $ (5,377) $ (3,472) $ (638)
Deferred compensation
adjustments (1) 1,649 1,090 (2,439)
Pension expense (2) 11 7 7
-------- --- -------- -------
Non-GAAP Other
Expense $ (3,717) $ (2,375) $ (3,070)
======== === ======== =======
(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 Income (Loss) inclusive of 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 Income (Loss) attributable
to ADTRAN Holdings, Inc. and Preliminary Non-GAAP Earnings
(Loss) per Common Share attributable to ADTRAN Holdings, Inc. --
Basic and Diluted (Unaudited) (In thousands, except per share
amounts)
Three Months Ended
---------------------------------------
March 31, December 31, March 31,
2025 2024 2024
--------- -------------- ------------
Net Loss attributable
to ADTRAN Holdings,
Inc. common
shareholders $(10,636) $ (47,885) $(326,153)
Effect of redemption of
RNCI (1) 3 (5) --
------- --------- --------
Net Loss attributable
to ADTRAN Holdings,
Inc. $(10,633) $ (47,890) $(326,153)
Net Income attributable
to non-controlling
interest (2) 2,319 2,407 2,531
------- --------- --------
Net Loss inclusive of
non-controlling
interest $ (8,314) $ (45,483) $(323,622)
Acquisition related
expenses,
amortizations and
adjustments (3) 12,080 15,274 15,058
Stock-based
compensation expense 3,210 3,668 3,722
Deferred compensation
adjustments (4) 102 639 (499)
Pension adjustments (5) 11 7 7
Restructuring expenses
(6) -- 4,105 17,110
Integration expenses
(7) -- 464 514
Goodwill impairment -- -- 292,583
Tax effect of
adjustments to net
loss (8) (2,393) 22,071 (18,481)
------- --------- --------
Non-GAAP Net Income
(Loss) inclusive of
non-controlling
interest $ 4,696 $ 745 $ (13,608)
Net Income attributable
to non-controlling
interest (2) 2,319 2,407 2,531
------- --------- --------
Non-GAAP Net Income
(Loss) attributable to
ADTRAN Holdings, Inc. $ 2,377 $ (1,662) $ (16,139)
------- --------- --------
Effect of redemption of
RNCI (1) (3) 5 -
------- --------- --------
Non-GAAP Net Income
(Loss) attributable to
ADTRAN Holdings, Inc.
common shareholders $ 2,374 $ (1,657) $ (16,139)
======= ========= ========
Weighted average shares
outstanding -- basic 79,534 79,091 78,814
Weighted average shares
outstanding --
diluted 79,534 79,091 78,814
Loss per common share
attributable to ADTRAN
Holdings, Inc. --
basic $ (0.13) $ (0.61) $ (4.14)
Loss per common share
attributable to ADTRAN
Holdings, Inc. --
diluted $ (0.13) $ (0.61) $ (4.14)
Non-GAAP Earnings
(Loss) per common
share attributable to
ADTRAN -- basic $ 0.03 $ (0.02) $ (0.20)
Non-GAAP Earnings
(Loss) per common
share attributable to
ADTRAN -- diluted $ 0.03 $ (0.02) $ (0.20)
(1) Loss per common share attributable to ADTRAN Holdings, Inc.
- basic and diluted - reflects a $3 thousand and $5 thousand
effect of redemption for the three months ended March 31, 2025
and December 31, 2024 respectively. (2) 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. (3) We incur charges relating to the
amortization of intangible assets and exclude these charges for
purposes of calculating our non-GAAP measures. Such charges are
significantly impacted by the timing and magnitude of our
acquisitions. We exclude these charges for the purpose of
calculating our non-GAAP measures, primarily because they are
non-cash expenses and our internal benchmarking analyses
evidence that many industry participants and peers present
non-GAAP financial measures excluding intangible asset
amortization. Although this does not directly affect our cash
position, the loss in value of intangible assets over time can
have a material impact on the equivalent GAAP earnings measure.
(4) Includes non-cash change in fair value of equity investments
held in deferred compensation plans offered to certain
employees. (5) Includes amortization of actuarial losses related
to the Company's pension plan for employees in certain foreign
countries. (6) Includes expenses for a Business Efficiency
Program designed to optimize the assets and business processes
following the business combination with Adtran Networks. Other
than the Company's aim of selling its headquarters, the Business
Efficiency Program was completed as of December 31, 2024. (7)
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 which was completed
as of December 31, 2024. (8) Represents the tax effect of
non-GAAP adjustments. Beginning in the period ended 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 $5.6 million for the three months ended March 31,
2024.
Supplemental Information Reconciliation of Preliminary Net Cash
Provided By Operating Activities to Preliminary Free Cash Flow
(Unaudited) (In thousands)
Three Months Ended
--------------------------------------
March 31, December 31, March 31,
2025 2024 2024
--------- -------------- -----------
Net Cash provided by
operating activities $ 41,642 $ 4,556 $ 36,598
Purchases of property,
plant and equipment and
developed technologies
(1) (18,695) (14,942) (13,374)
------- --------- -------
Free cash flow
(Non-GAAP) $ 22,947 $ (10,386) $ 23,224
======= ========= =======
(1) Purchases related to capital expenditures and developed
technologies.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250507467289/en/
CONTACT: For media
Gareth Spence
+44 1904 699 358
public.relations@adtran.com
For investors
Peter Schuman, IRC
+1 256 963 6305
investor.relations@adtran.com
(END) Dow Jones Newswires
May 07, 2025 23:00 ET (03:00 GMT)