ADTRAN Holdings, Inc 8-K, filed Feb 6, 2020
ADTRAN Holdings, Inc. (ADTN)
About this 8-K
ADTRAN Holdings, Inc filed this 8-K on February 6, 2020, reporting on events of February 5, 2020.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
ADTRAN, Inc.
(Exact name of Registrant as Specified in Its Charter)
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(State or Other Jurisdiction of Incorporation) |
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(IRS Employer Identification No.) |
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(Address of Principal Executive Offices) |
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(Zip Code) |
Registrant’s Telephone Number, Including Area Code: (
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02Results of Operations and Financial Condition.
On February 5, 2020, ADTRAN, Inc. (“ADTRAN”) announced its financial results for the fiscal quarter and twelve months ended December 31, 2019.
ADTRAN also announced that its Board of Directors declared a quarterly cash dividend of $0.09 per common share to be paid to the shareholders of record at the close of business on February 20, 2020. The ex-dividend date is February 19, 2020 and the payment date is March 5, 2020.
A copy of ADTRAN’s press release announcing its financial results and the declaration of the quarterly cash dividend is attached as Exhibit 99.1 hereto and incorporated by reference herein.
Item 9.01Financial Statements and Exhibits.
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Description |
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99.1 |
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104 |
Cover Page Interactive Data File – the cover page iXBRL tags are embedded within the Inline XBRL document |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: February 6, 2020 |
ADTRAN, Inc.
By: /s/ Michael Foliano |
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Chief Financial Officer |
EXHIBIT 99.1
ADTRAN, Inc. Reports Earnings for the Fourth Quarter 2019 and Declares Quarterly Cash Dividend
February 5, 2020
HUNTSVILLE, Ala. — (BUSINESS WIRE) — February 5, 2020 -- ADTRAN, Inc. (NASDAQ:ADTN) (“ADTRAN” or the “Company”) today announced financial results for the fourth quarter 2019. For the quarter, revenue was $115.8 million compared to $140.1 million for the fourth quarter of 2018. Earnings for the fourth quarter of 2019 were a net loss of $12.7 million compared to a net loss of $8.4 million for the fourth quarter of 2018. Earnings per share was a loss of $0.26 per share compared to a loss of $0.18 per share for the fourth quarter of 2018. Non-GAAP earnings were a net loss of $3.2 million compared to a non-GAAP net loss of $5.8 million for the fourth quarter of 2018. Non-GAAP earnings per share was a loss of $0.07 per share compared to a non-GAAP loss of $0.12 per share for the fourth quarter of 2018. Non-GAAP net loss and non-GAAP loss per share exclude stock-based compensation expense, acquisition related amortizations and other expenses, restructuring expenses, amortization of pension actuarial losses, valuation allowance related to our deferred tax assets, asset impairments, gain on bargain purchase of a business and certain other contingencies and the reimbursement from a claim settlement. The reconciliation between GAAP net loss and loss per share to non-GAAP net loss and non-GAAP loss per share is set forth in the table provided below.
ADTRAN Chairman and Chief Executive Officer Tom Stanton stated, “While the U.S. market remains challenging, we saw a solid performance in our international business. We continue to see activity building around our 10G PON and fiber extension solutions across all geographies we serve, most notably in Europe. We believe we are at the beginning of a significant investment cycle for fiber deployment driven by technology advancements, regulatory influences and vendor disruption.”
The Company also announced that its Board of Directors declared a cash dividend for the fourth quarter of 2019. The quarterly cash dividend is $0.09 per common share to be paid to the Company’s stockholders of record as of the close of business on February 20, 2020. The payment date will be March 5, 2020.
The Company confirmed that it will hold a conference call to discuss its fourth quarter results on Thursday, February 6, 2020, at 9:30 a.m. Central Time. ADTRAN will webcast this conference call. To listen, visit the Investor Relations site at www.investors.adtran.com approximately ten minutes prior to the start of the call and click on the conference call link provided.
An online replay of the conference call, as well as the text 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 www.investors.adtran.com or email at investor.relations@adtran.com.
At ADTRAN, we believe amazing things happen when people connect. From the cloud edge to the subscriber edge, we help communications service providers around the world manage and scale services that connect people, places and things to advance human progress. Whether rural or urban, domestic or international, telco or cable, enterprise or residential—ADTRAN solutions optimize existing technology infrastructures and create new, multi-gigabit platforms that leverage cloud economics, data analytics, machine learning and open ecosystems—the future of global networking. Find more at ADTRAN.com, LinkedIn and Twitter.
This press release contains forward-looking statements, generally identified by the use of words such as “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “may,” “could” and similar expressions, which forward-looking statements reflect management’s best judgment based on factors currently known. However, these statements involve risks and uncertainties, including the successful development and market acceptance of new products, the degree of competition in the market for such products, the product and channel mix, component costs, manufacturing efficiencies, and other risks detailed in our annual report on Form 10-K and Form 10-K/A for the year ended December 31, 2018 and our quarterly reports on Form 10-Q for the quarters ended March 31, 2019, June 30, 2019, and September 30, 2019. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements included in this press release.
To provide additional transparency, we have disclosed in the table below non-GAAP operating loss, which has been reconciled to operating loss, and non-GAAP net loss and non-GAAP earnings (loss) per share - basic and diluted, which have been reconciled to net loss and loss per share - basic and diluted, in each case as reported based on Generally Accepted Accounting Principles in the United States (U.S. GAAP). These non-GAAP financial measures exclude certain items which management believes are not reflective of the ongoing operating performance of the business. We believe this information is useful in providing period-to-period comparisons of the results of our ongoing operations. Additionally, these measures are used by management in our ongoing planning and annual budgeting processes. The presentation of non-GAAP operating loss, non-GAAP net loss and non-GAAP loss per share – basic and diluted, when combined with the U.S. GAAP presentation of operating loss, net loss, and net loss per share – basic and diluted, 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, U.S. GAAP and therefore should not be considered in isolation or as a substitution for analysis of our results as reported under U.S. GAAP. Additionally, our calculation of non-GAAP operating loss, non-GAAP net loss and non-GAAP loss per share - basic and diluted may not be comparable to similar measures calculated by other companies.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
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December 31, |
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December 31, |
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2019 |
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2018 |
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Assets |
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Cash and cash equivalents |
$ |
76,215 |
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$ |
105,504 |
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Short-term investments |
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30,801 |
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3,246 |
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Accounts receivable, net |
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90,531 |
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99,385 |
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Other receivables |
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16,566 |
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36,699 |
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Inventory, net |
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97,987 |
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99,848 |
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Prepaid expenses and other current assets |
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7,892 |
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10,744 |
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Total Current Assets |
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319,992 |
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355,426 |
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Property, plant and equipment, net |
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73,708 |
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80,635 |
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Deferred tax assets, net |
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7,561 |
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37,187 |
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Goodwill |
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6,968 |
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7,106 |
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Intangibles, net |
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27,821 |
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33,183 |
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Other non-current assets |
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14,261 |
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5,668 |
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Long-term investments |
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94,489 |
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108,822 |
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Total Assets |
$ |
544,800 |
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$ |
628,027 |
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Liabilities and Stockholders' Equity |
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Accounts payable |
$ |
44,552 |
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$ |
60,054 |
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Bonds payable |
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24,600 |
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1,000 |
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Unearned revenue |
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11,963 |
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17,940 |
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Accrued expenses |
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13,876 |
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11,746 |
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Accrued wages and benefits |
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14,929 |
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14,752 |
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Income tax payable, net |
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3,512 |
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12,518 |
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Total Current Liabilities |
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113,432 |
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118,010 |
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Non-current unearned revenue |
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6,012 |
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5,296 |
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Other non-current liabilities |
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45,969 |
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33,842 |
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Bonds payable |
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— |
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24,600 |
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Total Liabilities |
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165,413 |
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181,748 |
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Stockholders' Equity |
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379,387 |
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446,279 |
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Total Liabilities and Stockholders' Equity |
$ |
544,800 |
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$ |
628,027 |
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Consolidated Statements of Loss
(Unaudited)
(In thousands, except per share data)
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Three Months Ended |
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Twelve Months Ended |
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December 31, |
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December 31, |
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2019 |
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2018 |
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2019 |
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2018 |
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Sales |
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Products |
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$ |
96,219 |
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$ |
116,873 |
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$ |
455,226 |
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$ |
458,232 |
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Services |
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19,568 |
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23,215 |
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74,835 |
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71,045 |
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Total Sales |
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115,787 |
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140,088 |
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530,061 |
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529,277 |
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Cost of sales |
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Products |
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56,481 |
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70,745 |
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263,834 |
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278,929 |
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Services |
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12,260 |
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13,955 |
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47,223 |
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46,783 |
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Total Cost of Sales |
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68,741 |
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84,700 |
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311,057 |
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325,712 |
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Gross Profit |
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47,046 |
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55,388 |
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219,004 |
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203,565 |
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Selling, general and administrative expenses |
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30,934 |
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28,079 |
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130,597 |
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124,440 |
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Research and development expenses |
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31,221 |
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31,092 |
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126,767 |
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124,547 |
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Asset impairments |
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— |
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— |
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3,872 |
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— |
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Gain on contingency |
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— |
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— |
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(1,230 |
) |
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— |
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Operating Loss |
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(15,109 |
) |
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(3,783 |
) |
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(41,002 |
) |
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(45,422 |
) |
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Interest and dividend income |
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872 |
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1,422 |
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2,765 |
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4,026 |
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Interest expense |
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(129 |
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(135 |
) |
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(511 |
) |
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(533 |
) |
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Net investment gain (loss) |
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3,239 |
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(9,450 |
) |
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11,434 |
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(4,050 |
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Other income (expense), net |
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(768 |
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1,359 |
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1,498 |
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1,286 |
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Gain on bargain purchase of a business |
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— |
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— |
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— |
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11,322 |
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Loss Before Income Taxes |
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(11,895 |
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(10,587 |
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(25,816 |
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(33,371 |
) |
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Income tax (expense) benefit |
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(768 |
) |
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2,140 |
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(28,205 |
) |
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14,029 |
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Net Loss |
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$ |
(12,663 |
) |
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$ |
(8,447 |
) |
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$ |
(54,021 |
) |
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$ |
(19,342 |
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Weighted average shares outstanding – basic |
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47,936 |
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47,730 |
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47,836 |
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47,880 |
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Weighted average shares outstanding – diluted |
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47,936 |
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47,730 |
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47,836 |
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47,880 |
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Loss per common share – basic |
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$ |
(0.26 |
) |
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$ |
(0.18 |
) |
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$ |
(1.13 |
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$ |
(0.40 |
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Loss per common share – diluted |
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$ |
(0.26 |
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$ |
(0.18 |
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$ |
(1.13 |
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$ |
(0.40 |
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Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
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Twelve Months Ended |
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December 31, |
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2019 |
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2018 |
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Cash flows from operating activities: |
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Net loss |
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$ |
(54,021 |
) |
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$ |
(19,342 |
) |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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17,771 |
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15,891 |
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Asset impairments |
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3,872 |
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— |
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Amortization of net discount on available-for-sale investments |
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(100 |
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(50 |
) |
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Net (gain) loss on long-term investments |
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(11,434 |
) |
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4,050 |
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Net (gain) loss on disposal of property, plant and equipment |
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67 |
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67 |
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Gain on bargain purchase of a business |
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— |
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(11,322 |
) |
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Gain on contingency payment |
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(1,230 |
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— |
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Gain on life insurance proceeds |
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(1,000 |
) |
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— |
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Stock-based compensation expense |
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6,962 |
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7,155 |
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Deferred income taxes |
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30,070 |
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(17,257 |
) |
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Change in operating assets and liabilities: |
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Accounts receivable, net |
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8,282 |
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|
49,200 |
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Other receivables |
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20,046 |
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(8,522 |
) |
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Inventory, net |
|
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1,571 |
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|
24,192 |
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Prepaid expenses and other assets |
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5,180 |
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|
10,727 |
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Accounts payable, net |
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(13,813 |
) |
|
|
(3,799 |
) |
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Accrued expenses and other liabilities |
|
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(3,559 |
) |
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(3,226 |
) |
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Income taxes payable |
|
|
(8,705 |
) |
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|
7,690 |
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Net cash provided by (used in) operating activities |
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(41 |
) |
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55,454 |
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Cash flows from investing activities: |
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Purchases of property, plant and equipment |
|
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(9,494 |
) |
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(8,110 |
) |
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Proceeds from sales and maturities of available-for-sale investments |
|
|
47,268 |
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|
153,649 |
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Purchases of available-for-sale investments |
|
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(48,578 |
) |
|
|
(123,209 |
) |
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Life insurance proceeds received |
|
|
1,000 |
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|
|
— |
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Acquisition of business, net of cash acquired |
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|
13 |
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|
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(22,045 |
) |
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Net cash provided by (used in) investing activities |
|
|
(9,791 |
) |
|
|
285 |
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|
|
|
|
|
|
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Cash flows from financing activities: |
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Proceeds from stock option exercises |
|
|
526 |
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|
|
1,483 |
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Purchases of treasury stock |
|
|
(184 |
) |
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|
(15,532 |
) |
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Dividend payments |
|
|
(17,212 |
) |
|
|
(17,267 |
) |
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Payments on long-term debt |
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(1,000 |
) |
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|
(1,100 |
) |
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Net cash used in financing activities |
|
|
(17,870 |
) |
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(32,416 |
) |
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Net increase (decrease) in cash and cash equivalents |
|
|
(27,702 |
) |
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|
23,323 |
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Effect of exchange rate changes |
|
|
(1,587 |
) |
|
|
(4,252 |
) |
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Cash and cash equivalents, beginning of year |
|
|
105,504 |
|
|
|
86,433 |
|
|
|
|
|
|
|
|
|
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Cash and cash equivalents, end of year |
|
$ |
76,215 |
|
|
$ |
105,504 |
|
|
|
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Supplemental disclosure of cash flow information |
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Cash paid during the year for interest |
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$ |
512 |
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|
$ |
534 |
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Cash paid during the year for income taxes |
|
$ |
9,357 |
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|
$ |
4,104 |
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Supplemental disclosure of non-cash investing activities |
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|
|
|
|
|
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Purchases of property, plant and equipment included in accounts payable |
|
$ |
90 |
|
|
$ |
62 |
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Contingent payment |
|
$ |
— |
|
|
$ |
1,230 |
|
Reconciliation of Operating Loss to Non-GAAP Operating Loss
(Unaudited)
|
|
|
Three Months ended December 31, |
|
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|
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Twelve Months ended December 31, |
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2019 |
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2018 |
|
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2019 |
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2018 |
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||||
|
Operating Loss |
|
$ |
(15,109 |
) |
|
|
|
$ |
(3,783 |
) |
|
|
|
$ |
(41,002 |
) |
|
|
|
$ |
(45,422 |
) |
|
|
|
|
Acquisition related expenses, amortizations and adjustments |
|
|
1,357 |
|
|
(1 |
) |
|
1,433 |
|
|
(5 |
) |
|
5,703 |
|
|
(8) |
|
|
4,084 |
|
|
(14) |
|
|
Stock-based compensation expense |
|
|
1,778 |
|
|
(2 |
) |
|
1,912 |
|
|
(6 |
) |
|
6,962 |
|
|
(9) |
|
|
7,155 |
|
|
(15) |
|
|
Restructuring expenses |
|
|
1,356 |
|
|
(3 |
) |
|
25 |
|
|
(7 |
) |
|
6,014 |
|
|
(10 |
) |
|
7,261 |
|
|
(16) |
|
|
Deferred compensation income (expense) |
|
|
536 |
|
|
(4 |
) |
|
(3,739 |
) |
|
(4 |
) |
|
2,767 |
|
|
(4) |
|
|
(3,119 |
) |
|
(4) |
|
|
Asset impairments |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
3,872 |
|
|
(11 |
) |
|
— |
|
|
|
|
|
Gain on contingency |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
(1,230 |
) |
|
(12 |
) |
|
— |
|
|
|
|
|
Settlement income |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
(746 |
) |
|
(13 |
) |
|
— |
|
|
|
|
|
Non-GAAP Operating Loss |
|
$ |
(10,082 |
) |
|
|
|
$ |
(4,152 |
) |
|
|
|
$ |
(17,660 |
) |
|
|
|
$ |
(30,041 |
) |
|
|
|
(1) $0.4 million is included in total cost of sales, $0.5 million is included in selling, general and administrative expenses and $0.5 million is included in research and development expenses on the consolidated statements of income.
(2) $0.1 million is included in total cost of sales, $1.0 million is included in selling, general and administrative expenses and $0.7 million is included in research and development expenses on the consolidated statements of income.
(3) $0.3 million is included in selling, general and administrative expenses and $1.1 million is included in research and development expenses on the consolidated statements of income.
(4) Includes non-cash change in fair value of equity investments held in the ADTRAN, Inc. Deferred Compensation Program for Employees (as amended and restated as of June 1, 2010) per ASU 2016-01, all of which is included in selling, general and administrative expenses on the consolidated statement of income.
(5) $0.5 million is included in total cost of sales, $0.6 million is included in selling, general and administrative expenses and $0.3 million is included in research and development expenses on the consolidated statements of income.
(6) $0.1 million is included in total cost of sales, $1.1 million is included in selling, general and administrative expenses and $0.7 million is included in research and development expenses on the consolidated statements of income.
(7) $0.1 million is included in selling, general and administrative expenses on the consolidated statements of income.
(8) $1.7 million is included in total cost of sales, $2.1 million is included in selling, general and administrative expenses and $1.9 million is included in research and development expenses on the consolidated statements of income.
(9) $0.4 million is included in total cost of sales, $3.9 million is included in selling, general and administrative expenses and $2.7 million is included in research and development expenses on the consolidated statements of income.
(10) $0.8 million is included in total cost of sales, $2.3 million is included in selling, general and administrative expenses and $2.9 million is included in research and development expenses on the consolidated statements of income.
(11) Includes abandonment of certain information technology projects.
(12) Includes gain related to unearned contingent liabilities recognized upon the acquisition of a business in November 2018.
(13) Includes income related to certain freight forwarder claim settlements which were received during the three months ended June 30, 2019, all of which is included in total cost of sales on the consolidated statements of income.
(14) $1.4 million is included in total cost of sales, $1.5 million is included in selling, general and administrative expenses and $1.2 million is included in research and development expenses on the consolidated statements of income.
(15) $0.4 million is included in total cost of sales, $4.0 million is included in selling, general and administrative expenses and $2.8 million is included in research and development expenses on the consolidated statements of income.
(16) $2.8 million is included in total cost of sales, $2.7 million is included in selling, general and administrative expenses and $1.8 million is included in research and development expenses on the consolidated statements of income.
Reconciliation of Net Loss and Loss per Common Share – Basic and Diluted to Non-GAAP
Net Income (Loss) and Non-GAAP Earnings (Loss) per Common Share – Basic and Diluted
(Unaudited)
|
|
|
Three Months ended December 31, |
|
|
|
Twelve Months ended December 31, |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
|
2019 |
|
|
2018 |
|
||||
|
Net Loss |
|
$ |
(12,663 |
) |
|
$ |
(8,447 |
) |
|
|
$ |
(54,021 |
) |
|
$ |
(19,342 |
) |
|
Acquisition related expenses, amortizations and adjustments |
|
|
1,357 |
|
|
|
1,433 |
|
|
|
|
5,703 |
|
|
|
4,084 |
|
|
Stock-based compensation expense |
|
|
1,778 |
|
|
|
1,912 |
|
|
|
|
6,962 |
|
|
|
7,155 |
|
|
Restructuring expenses |
|
|
1,356 |
|
|
|
25 |
|
|
|
|
6,014 |
|
|
|
7,261 |
|
|
Pension expense(1) |
|
|
195 |
|
|
|
59 |
|
|
|
|
795 |
|
|
|
247 |
|
|
Valuation allowance |
|
|
5,993 |
|
|
|
— |
|
|
|
|
43,048 |
|
|
|
— |
|
|
Asset impairments |
|
|
— |
|
|
|
— |
|
|
|
|
3,872 |
|
|
|
— |
|
|
Gain on contingency |
|
|
— |
|
|
|
— |
|
|
|
|
(1,230 |
) |
|
|
— |
|
|
Settlement income |
|
|
— |
|
|
|
— |
|
|
|
|
(746 |
) |
|
|
— |
|
|
Gain on bargain purchase of a business |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
(11,322 |
) |
|
Tax effect of adjustments to net income (loss) |
|
|
(1,252 |
) |
|
|
(818 |
) |
|
|
|
(5,674 |
) |
|
|
(4,476 |
) |
|
Non-GAAP Net Income (Loss) |
|
$ |
(3,236 |
) |
|
$ |
(5,836 |
) |
|
|
$ |
4,723 |
|
|
$ |
(16,393 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding – basic |
|
|
47,936 |
|
|
|
47,730 |
|
|
|
|
47,836 |
|
|
|
47,880 |
|
|
Weighted average shares outstanding – diluted |
|
|
47,936 |
|
|
|
47,730 |
|
|
|
|
47,836 |
|
|
|
47,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share - basic |
|
$ |
(0.26 |
) |
|
$ |
(0.18 |
) |
|
|
$ |
(1.13 |
) |
|
$ |
(0.40 |
) |
|
Loss per common share - diluted |
|
$ |
(0.26 |
) |
|
$ |
(0.18 |
) |
|
|
$ |
(1.13 |
) |
|
$ |
(0.40 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP earnings (loss) per common share - basic |
|
$ |
(0.07 |
) |
|
$ |
(0.12 |
) |
|
|
$ |
0.10 |
|
|
$ |
(0.34 |
) |
|
Non-GAAP earnings (loss) per common share - diluted |
|
$ |
(0.07 |
) |
|
$ |
(0.12 |
) |
|
|
$ |
0.10 |
|
|
$ |
(0.34 |
) |
(1) Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countries.