ADTRAN Holdings, Inc. reports preliminary fourth quarter and full-year 2024 financial results
HUNTSVILLE, Ala.--(BUSINESS WIRE)--February 26, 2025--
ADTRAN Holdings, Inc. (NASDAQ: ADTN and FSE: QH9) ("ADTRAN Holdings" or the "Company") today announced its preliminary unaudited financial results for the fourth quarter and full-year ended December 31, 2024.
--
Revenue: $242.9 million, up 7% sequentially and above the mid-point of
outlook.
--
Gross margin: GAAP gross margin: 37.6%; non-GAAP gross margin: 42.0%.
--
Operating margin: improved sequentially on a GAAP and non-GAAP basis,
above the mid-point of outlook.
--
GAAP diluted loss per share of $0.58; non-GAAP diluted earnings per
share $0.00.
Adtran Holdings' Chairman and Chief Executive Officer Tom Stanton stated, "Market conditions continued to improve during the fourth quarter driven by higher service provider spending, lower customer inventories, a continuing shift away from high-risk vendors, and the secular trend of increased fiber access and optical transport. The progress we made during the fourth quarter, including higher sequential and year-over-year revenue and operating margin, was supported by growth across geographies, most product lines, and the continued expansion of our customer base."
Mr. Stanton added, "We finished 2024 with positive momentum in our business. Based on the current visibility and booking trends, we expect higher revenue in the first quarter of 2025, overcoming typical seasonality."
Business outlook(1)
For the first quarter of 2025, the Company expects revenue to be within a range of $237.5 million to $252.5 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 first 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, 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.
Conference call
The Company will hold a conference call to discuss its preliminary fourth quarter 2024 results on Thursday, February 27, 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/811754399 approximately 10 minutes prior to 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
March 11, 2025: Stifel 2025 NYC Technology One-on-One Conference
March 17, 2025: 37(th) Annual ROTH Conference
April 1, 2025: Optical Fiber Communication (OFC) Conference and Exhibition
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. 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) 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; (iii) 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; (iv) risks and uncertainties relating to our level of indebtedness; (v) risks and uncertainties relating to ongoing material weaknesses in our internal control over financial reporting; (vi) risks posed by potential breaches of information systems and cyber-attacks; (vii) the risk that ADTRAN Holdings may not be able to effectively compete, including through product improvements and development; and (viii) other risks set forth in ADTRAN Holdings' public filings made with the Securities and Exchange Commission ("SEC"), including its most recent Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q or other securities filings, and the risks to be disclosed in its upcoming Annual Report on Form 10-K for the year ended December 31, 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 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 (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 income (loss) inclusive of 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, 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, 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
Condensed Consolidated Balance Sheets
(Preliminary, Unaudited)
(In thousands)
December 31, December 31,
ASSETS 2024 2023
-------------- --------------
Current Assets
Cash and cash equivalents $ 77,567 $ 87,167
Accounts receivable, net 178,030 216,445
Other receivables 9,775 17,450
Income tax receivable 4,355 7,933
Inventory, net 269,337 362,295
Assets held for sale 11,901 --
Prepaid expenses and other
current assets 58,534 45,566
--------- ---------
Total Current Assets 609,499 736,856
Property, plant and equipment,
net 102,942 123,020
Deferred tax assets, net 17,826 25,787
Goodwill 52,918 353,415
Intangibles, net 284,893 327,985
Other non-current assets 78,128 87,706
Long-term investments 32,060 27,743
--------- ---------
Total Assets $ 1,178,266 $ 1,682,512
========= =========
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 170,451 $ 162,922
Unearned revenue 52,701 46,731
Accrued expenses and other
liabilities 35,704 36,204
Accrued wages and benefits 32,853 27,030
Income tax payable, net 830 5,221
--------- ---------
Total Current Liabilities 292,539 278,108
Non-current revolving credit
agreement outstanding 189,576 195,000
Deferred tax liabilities 30,690 35,655
Non-current unearned revenue 22,065 25,109
Non-current pension liability 8,983 12,543
Deferred compensation liability 33,203 29,039
Non-current lease obligations 25,925 31,420
Other non-current liabilities 17,928 28,657
--------- ---------
Total Liabilities 620,909 635,531
Redeemable Non-Controlling Interest 422,943 442,152
Equity
Common stock 795 790
Additional paid-in capital 808,913 795,304
Accumulated other comprehensive
income 10,897 47,465
Retained deficit (680,993) (232,905)
Treasury stock (5,198) (5,825)
--------- ---------
Total Equity 134,414 604,829
--------- ---------
Total Liabilities and Equity $ 1,178,266 $ 1,682,512
========= =========
Condensed Consolidated Statements of Loss
(Preliminary, Unaudited)
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------------- ------------------------------
2024 2023 2024 2023
--------- ---------- ---------- -------------
Revenue
Network Solutions $197,009 $ 180,405 $ 738,964 $ 974,389
Services & Support 45,843 45,074 183,756 174,711
------- -------- -------- ---------
Total Revenue 242,852 225,479 922,720 1,149,100
Cost of Revenue
Network Solutions 134,184 126,248 511,070 722,582
Network Solutions -
charges and
inventory
write-down -- 3,270 8,597 24,313
Services & Support 17,435 17,496 72,739 69,142
------- -------- -------- ---------
Total Cost of
Revenue 151,619 147,014 592,406 816,037
Gross Profit 91,233 78,465 330,314 333,063
Selling, general and
administrative
expenses 57,156 61,262 233,369 258,149
Research and
development
expenses 49,209 54,818 221,463 258,311
Goodwill impairment -- -- 292,583 37,874
------- -------- -------- ---------
Operating Loss (15,132) (37,615) (417,101) (221,271)
Interest and
dividend income 1,631 1,157 3,058 2,340
Interest expense (4,870) (4,441) (22,053) (16,299)
Net investment
(loss) gain (920) 1,683 3,587 2,754
Other income
(expense), net 687 (3,448) 246 1,266
------- -------- -------- ---------
Loss Before
Income Taxes (18,604) (42,664) (432,263) (231,210)
Income tax expense (24,906) (64,632) (8,785) (28,133)
------- -------- -------- ---------
Net Loss $(43,510) $(107,296) $(441,048) $ (259,343)
Net Income
attributable to
non-controlling
interest 2,406 2,566 9,824 6,946
------- -------- -------- ---------
Net Loss
attributable to
ADTRAN Holdings,
Inc. $(45,916) $(109,862) $(450,872) $ (266,289)
======= ======== ======== =========
Weighted average
shares outstanding
-- basic 79,091 78,530 78,928 78,416
Weighted average
shares outstanding
-- diluted 79,091 78,530 78,928 78,416
Loss per common
share attributable
to ADTRAN Holdings,
Inc. -- basic $ (0.58) (1) $ (1.40) $ (5.67) (1) $ (3.39)
Loss per common
share attributable
to ADTRAN Holdings,
Inc. -- diluted $ (0.58) (1) $ (1.40) $ (5.67) (1) $ (3.39)
(1) Loss per common share attributable to ADTRAN Holdings, Inc. - basic and diluted - reflects a $5 thousand effect of redemption for the three months ended December 31, 2024 and $3.0 million effect of redemption of RNCI for the year ended December 31, 2024.
Condensed Consolidated Statements of Cash Flows
(Preliminary, Unaudited)
(In thousands)
Twelve Months Ended
December 31,
2024 2023
---------- ------------
Cash flows from operating activities:
Net Loss $(441,048) $(259,343)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation and amortization 90,985 112,949
Goodwill impairment 292,583 37,874
Amortization of debt issuance cost 3,950 862
Accretion on available-for-sale
investments, net -- (22)
Gain on investments (5,030) (2,900)
Net loss on disposal of property,
plant and equipment 1,371 458
Stock-based compensation expense 15,342 16,016
Deferred income taxes 2,247 15,558
Inventory write down 4,135 24,313
Inventory reserves 3,980 25,546
Other, net -- (2,942)
Change in operating assets and
liabilities:
Accounts receivable, net 46,108 65,612
Other receivables 10,713 10,315
Income taxes receivable 648 (2,637)
Inventory 75,171 20,537
Prepaid expenses other current
assets and other assets (10,718) (29,883)
Accounts payable 11,784 (91,907)
Accrued expenses and other
liabilities 5,519 17,929
Income taxes payable, net (4,670) (3,939)
-------- --------
Net cash provided by (used in) operating
activities 103,070 (45,604)
-------- --------
Cash flows from investing activities:
Purchases of property, plant and
equipment (32,454) (43,121)
Purchases of intangibles - developed
technology (30,671) --
Proceeds from sales and maturities of
available-for-sale investments 1,240 10,567
Purchases of available-for-sale
investments (268) (868)
(Payments) Proceeds from beneficial
interests in securitized accounts
receivable (55) 1,218
-------- --------
Net cash used in investing activities (62,208) (32,204)
-------- --------
Cash flows from financing activities:
Tax withholdings related to stock-based
compensation settlements (1,143) (6,458)
Proceeds from stock option exercises 824 540
Dividend payments -- (21,237)
Proceeds from receivables purchase
agreement 68,556 14,099
Repayments on receivables purchase
agreement (83,772) --
Proceeds from draw on revolving credit
agreements 26,000 163,733
Repayment of revolving credit
agreements (31,000) (64,987)
Redemption of redeemable
non-controlling interest (17,398) (1,224)
Payment of annual recurring
compensation to non-controlling
interest (10,084) --
Payment of debt issuance cost (1,994) (708)
Repayment of notes payable -- (24,891)
-------- --------
Net cash (used in) provided by financing
activities (50,011) 58,867
-------- --------
Net decrease in cash and cash
equivalents (9,149) (18,941)
Effect of exchange rate changes (451) (2,536)
Cash and cash equivalents, beginning of
year 87,167 108,644
-------- --------
Cash and cash equivalents, end of year $ 77,567 $ 87,167
======== ========
Supplemental disclosure of cash financing
activities
Cash paid for interest $ 20,884 $ 12,596
Cash paid for income taxes $ 10,384 $ 18,552
Cash used in operating activities
related to operating leases $ 9,274 $ 9,682
Supplemental disclosure of non-cash
investing activities
Right-of-use assets obtained in
exchange for lease obligations $ 5,317 $ 17,865
Purchases of property, plant and
equipment included in accounts
payable $ 2,635 $ 1,298
Redemption of redeemable
non-controlling interest $ 2,986 $ 371
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 Twelve Months Ended
---------------------------------------- ----------------------------
December 31, September December 31, December 31, December 31,
2024 30, 2024 2023 2024 2023
------------ ------------ ------------ ------------ --------------
Total Revenue $242,852 $227,704 $225,479 $922,720 $1,149,100
Cost of Revenue $151,619 $142,453 $147,014 $592,406 $ 816,037
Acquisition-related
expenses,
amortization and
adjustments(1) (9,980) (10,276) (10,048) (40,497) (89,602)
Stock-based
compensation
expense (317) (270) (440) (1,142) (1,294)
Restructuring
expenses(2) (538) (7) (5,517) (14,580) (27,223)
Integration
expenses(3) 123 (34) 39 19 (115)
------- ------- ------- ------- ---------
Non-GAAP Cost of
Revenue $140,907 $131,866 $131,048 $536,206 $ 697,803
======= ======= ======= ======= =========
Gross Profit $ 91,233 $ 85,251 $ 78,465 $330,314 $ 333,063
Non-GAAP Gross Profit $101,945 $ 95,838 $ 94,431 $386,514 $ 451,297
Gross Margin 37.6% 37.4% 34.8% 35.8% 29.0%
Non-GAAP Gross Margin 42.0% 42.1% 41.9% 41.9% 39.3%
(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 over time can have a material impact on the equivalent GAAP earnings measure.
(2) Includes expenses for restructuring program designed to optimize the assets and business processes following the business combination with Adtran Networks SE. These expenses include inventory write down and other charges of $8.6 million and other expenses of $0.6 million for the twelve months ended December 31, 2024, incurred as a result of a strategy shift which included discontinuance of certain product lines in connection with the Business Efficiency Program. The restructuring program commenced upon the closing of the business combination with Adtran Networks SE and was substantially completed in late 2024. Additionally, as part of the Business Efficiency Program, management determined to close a facility in Greifswald, Germany which occurred in December 2024. These expenses include restructuring wage charges of $5.4 million for the twelve months ended 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 SE.
Supplemental Information
Reconciliation of Preliminary Operating Expenses to Preliminary Non-GAAP Operating Expenses
(Unaudited)
(In thousands)
Three Months Ended Twelve Months Ended
------------------------------------------ ---------------------------
December September December December December
31, 2024 30, 2024 31, 2023 31, 2024 31, 2023
--------- --------- --------- ---------- ---------
Operating Expenses $106,365 $109,235 $116,080 $ 747,415 $554,334
Acquisition-related
expenses,
amortization and
adjustments (1) (5,294) (2) (5,054) (7) (4,150) (11) (22,462) (15) (17,666) (20)
Stock-based
compensation
expense (3,351) (3) (3,126) (8) (3,181) (12) (13,245) (16) (13,864) (21)
Restructuring
expenses (3,567) (4) (5,930) (9) (7,859) (13) (30,101) (17) (19,331) (22)
Integration expenses (587) (5) (333) (10) (1,928) (14) (1,930) (18) (4,825) (23)
Deferred
compensation
adjustments(6) 451 (1,471) (1,324) (3,808) 390
Goodwill impairment -- -- -- (292,583) (19) (37,874) (24)
------- ------- ------- -------- -------
Non-GAAP Operating
Expenses $ 94,017 $ 93,321 $ 97,638 $ 383,286 $461,164
======= ======= ======= ======== =======
(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 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 over time can have a material impact on the equivalent GAAP earnings measure.
(2) 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 potential strategic transaction which are included in selling, general and administrative expenses on the condensed consolidated statements of loss.
(3) $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.
(4) $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 restructuring program designed to optimize the assets and business processes following the business combination with Adtran Networks SE. The restructuring program commenced upon the closing of the business combination with Adtran Networks SE and was substantially completed in late 2024. Additionally, as part of the Business Efficiency Program, management determined to close a facility in Greifswald, Germany which occurred in December 2024.
(5) $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 SE.
(6) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for Employees, all of which is included in selling, general and administrative expenses on the condensed consolidated statement of loss.
(7) Includes $4.0M of intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations and $0.6 million of legal and advisory fees related to a potential strategic transaction which are both included in selling, general and administrative expenses and $0.5 million is included in research and development expenses on the condensed consolidated statements of loss.
(8) $2.2 million is included in selling, general and administrative expenses and $0.9 million is included in research and development expenses on the condensed consolidated statements of loss.
(9) $2.7 million is included in selling, general and administrative expenses and $3.2 million is included in research and development expenses on the condensed consolidated statements of loss. Includes expenses of $3.2 million of wage related and other charges due to the Greifswald facility closure of which $0.8 million is included in selling, general and administrative and $2.4 million is included in research and development expenses on the condensed consolidated statements of loss. Includes expenses for restructuring program designed to optimize the assets and business processes following the business combination with Adtran Networks SE. The restructuring program commenced upon the closing of the business combination with Adtran Networks SE and was substantially completed in late 2024. Additionally, as part of the Business Efficiency Program, management determined to close a facility in Greifswald, Germany which occurred in December 2024.
(10) $0.3 million is included in selling, general and administrative expenses on the condensed consolidated statements of loss, and is primarily related to the Company's one-time integration bonus program in connection with synergy targets as a result of the business combination with Adtran Networks SE.
(11) Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $3.7 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) $2.3 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.
(13) $4.6 million is included in selling, general and administrative expenses and $3.2 million is included in research and development expenses on the condensed consolidated statements of loss. Includes expenses for restructuring program designed to optimize the assets and business processes following the business combination with Adtran Networks SE. The restructuring program commenced upon the closing of the business combination with Adtran Networks SE and was substantially completed in late 2024. Additionally, as part of the Business Efficiency Program, management determined to close a facility in Greifswald, Germany which occurred in December 2024.
(14) $1.9 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 $1.2 million related to a contemplated capital raise transaction 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 SE 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 integration bonus expense of $0.4 million includes $0.2 million of stock compensation expense. Additionally, includes fees relating to the expansion of internal controls at Adtran Networks and the implementation of the DPLTA.
(15) Includes $17.6M of intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations and $4.9 million of legal and advisory fees related to a potential strategic transaction which are included in selling, general and administrative expenses on the condensed consolidated statements of loss.
(16) $9.4 million is included in selling, general and administrative expenses and $3.8 million is included in research and development expenses on the condensed consolidated statements of loss.
(17) $9.1 million is included in selling, general and administrative expenses and $21.0 million is included in research and development expenses on the condensed consolidated statements of loss. Includes expenses for restructuring program designed to optimize the assets and business processes following the business combination with Adtran Networks SE. The restructuring program commenced upon the closing of the business combination with Adtran Networks SE and was substantially completed in late 2024. Additionally, as part of the Business Efficiency Program, management determined to close a facility in Greifswald, Germany which occurred in December 2024.
(18) $1.8 million is included in selling, general and administrative expenses and $0.1 million is included in research and development expenses on the condensed consolidated statements of loss, 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 SE.
(19) 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.
(20) Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $15.8 million is included in selling, general and administrative expenses and $1.9 million is included in research and development expenses on the condensed consolidated statements of loss.
(21) $9.8 million is included in selling, general and administrative expenses and $4.0 million is included in research and development expenses on the condensed consolidated statements of loss.
(22) $11.6 million is included in selling, general and administrative expenses and $7.7 million is included in research and development expenses on the condensed consolidated statements of loss. Includes expenses for restructuring program designed to optimize the assets and business processes following the business combination with Adtran Networks SE. The restructuring program commenced upon the closing of the business combination with Adtran Networks SE and was substantially completed in late 2024. Additionally, as part of the Business Efficiency Program, management determined to close a facility in Greifswald, Germany which occurred in December 2024.
(23) $4.8 million is included in selling, general and administrative expenses and $0.1 million is included in research and development expenses on the condensed consolidated statements of loss. Includes expenses related to the integration bonus program and fees relating to the expansion of internal controls at Adtran Networks and the implementation of the DPLTA. Additionally, includes legal and advisory fees totaling $1.2 million related to a contemplated capital raise transaction that are recorded in selling, general and administrative expenses.
(24) Includes non-cash goodwill impairment charge related to our Services and Support reporting unit. The impairment primarily resulted from a decrease in projected revenue growth rates and EBITDA margins.
Supplemental Information Reconciliation of Preliminary Operating Loss to Preliminary
Non-GAAP Operating Income (Loss) (Unaudited) (In thousands)
Three Months Ended Twelve Months Ended
---------------------------------- ---------------------------
December September December December December
31, 2024 30, 2024 31, 2023 31, 2024 31, 2023
--------- ------------ --------- ---------- ----------
Operating Loss $(15,132) $(23,984) $(37,615) $(417,101) $(221,271)
Acquisition
related
expenses,
amortizations
and
adjustments(1) 15,274 15,330 14,198 62,959 107,267
Stock-based
compensation
expense 3,668 3,396 3,621 14,387 15,158
Restructuring
expenses(2) 4,105 5,936 13,376 44,681 46,554
Integration
expenses(3) 464 367 1,890 1,911 4,941
Deferred
compensation
adjustments(4) (451) 1,471 1,324 3,808 (390)
Goodwill
impairment -- -- -- 292,583 (5) 37,874 (6)
------- ------- ------- -------- --------
Non-GAAP
Operating
Income (Loss) $ 7,928 $ 2,516 $ (3,206) $ 3,228 $ (9,867)
======= ======= ======= ======== ========
(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 over time can have a material impact on the equivalent GAAP earnings measure.
(2) Includes expenses for restructuring program designed to optimize the assets and business processes following the business combination with Adtran Networks SE. The restructuring program commenced upon the closing of the business combination with Adtran Networks SE and was substantially completed in late 2024. Additionally, as part of the Business Efficiency Program, management determined to close a facility in Greifswald, Germany which occurred in December 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 SE. Includes fees incurred for the expansion of internal controls at Adtran Networks SE and the implementation of the DPTLA.
(4) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for Employees, all of which is included in selling, general and administrative expenses on the condensed consolidated statement of loss.
(5) Non-cash impairment of goodwill in our Network Solutions reporting unit, necessitated by factors such as a decrease in the Company's market capitalization, cautious service provider spending due to economic uncertainty and continued elevated customer inventory adjustments.
(6) Non-cash goodwill impairment charge related to our Services and Support reporting unit. The impairment primarily resulted from a decrease in projected revenue growth rates and EBITDA margins.
Supplemental Information Reconciliation of Preliminary Other Expense to
Preliminary Non-GAAP Other Expense (Unaudited) (In thousands)
Three Months Ended Twelve Months Ended
------------------------------- ----------------------
December December
31, September 31, December December
2024 30, 2024 2023 31, 2024 31, 2023
-------- ----------- -------- --------- -----------
Interest and
dividend
income $ 1,631 $ 664 $ 1,157 $ 3,058 $ 2,340
Interest
expense (4,870) (5,679) (4,441) (22,053) (16,299)
Net investment
(loss) gain (920) 1,382 1,683 3,587 2,754
Other income
(expense),
net 687 (850) (3,448) 246 1,266
------ ------ ------ ------- -------
Total Other
Expense $(3,472) $ (4,483) $(5,049) $(15,162) $ (9,939)
Deferred
compensation
adjustments
(1) 1,090 (1,294) (1,590) (3,539) (2,977)
Pension
expense (2) 7 7 6 28 26
------ ------ ------ ------- -------
Non-GAAP Other
Expense $(2,375) $ (5,770) $(6,633) $(18,673) $(12,890)
(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 Income attributable to Non-Controlling Interest to
Preliminary Non-GAAP Net Income attributable to Non-Controlling Interest
(Unaudited) and Reconciliation of Preliminary Net Loss attributable to ADTRAN
Holdings, Inc. and Preliminary Loss per Common Share attributable to ADTRAN
Holdings, Inc. -- Basic and Diluted to Preliminary Non-GAAP Net 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 Twelve Months Ended
-------------------------------- ----------------------
December September December December December
31, 2024 30, 2024 31, 2023 31, 2024 31, 2023
--------- --------- ---------- ---------- ----------
Net Loss
attributable to
ADTRAN Holdings,
Inc. common
stockholders $(45,911) $(28,263) $(109,592) $(447,886) $(266,289)
Effect of
redemption of
RNCI(1) (5) (2,976) -- (2,986) --
------- ------- -------- -------- --------
Net Loss
attributable to
ADTRAN Holdings,
Inc. $(45,916) $(31,239) $(109,592) $(450,872) $(266,289)
Net Income
attributable to
non-controlling
interest(2) 2,407 2,382 2,566 9,824 6,946
------- ------- -------- -------- --------
Net Loss
inclusive of
non-controlling
interest $(43,509) $(28,857) $(107,026) $(441,048) $(259,343)
Acquisition
related
expenses,
amortization and
adjustments (3) 15,274 15,330 14,198 62,959 107,267
Stock-based
compensation
expense 3,668 3,396 3,621 14,387 15,158
Deferred
compensation
adjustments(4) 639 177 (267) 269 (3,368)
Pension
adjustments(5) 7 7 6 28 26
Restructuring
expenses(6) 4,105 5,936 13,376 44,681 46,554
Integration
expenses(7) 464 367 1,890 1,911 4,941
Goodwill
impairment -- -- -- 292,583 37,874
Tax effect of
adjustments to
net loss(8) 21,804 (712) 62,221 2,782 12,076
------- ------- -------- -------- --------
Non-GAAP Net
Income (Loss)
inclusive of
non-controlling
interest $ 2,451 $ (4,356) $ (11,981) $ (21,448) $ (38,815)
Net Income
attributable to
non-controlling
interest(2) 2,407 2,382 2,566 9,824 8,475
------- ------- -------- -------- --------
Non-GAAP Net
Income (Loss)
attributable to
ADTRAN Holdings,
Inc. $ 45 $ (6,738) $ (14,547) $ (31,272) $ (47,290)
======= ======= ======== ======== ========
Effect of
redemption of
RNCI (1) 5 2,976 -- 2,986 --
------- ------- -------- -------- --------
Non-GAAP Net
Income (Loss)
attributable to
ADTRAN Holdings,
Inc. common
stockholders $ 50 $ (3,762) $ (14,547) $ (28,286) $ (47,290)
======= ======= ======== ======== ========
GAAP Net Income
attributable to
non-controlling
interest (2) $ 2,407 $ 2,382 $ 2,566 $ 9,824 $ 6,946
Acquisition
related
expenses,
amortizations
and
adjustments(3) -- -- -- -- 1,457
Restructuring
expenses(6) -- -- -- -- 29
Integration
expenses(7) -- -- -- -- 6
Stock-based
compensation
expense -- -- -- -- 37
Pension
adjustments(5) -- -- -- -- --
------- ------- -------- -------- --------
Non-GAAP Net
Income
attributable to
non-controlling
interest (2) $ 2,407 $ 2,382 $ 2,566 $ 9,824 $ 8,475
======= ======= ======== ======== ========
Weighted average
shares
outstanding --
basic 79,091 78,952 78,530 78,928 78,416
Weighted average
shares
outstanding --
diluted 79,091 78,952 78,530 78,928 78,416
Loss per common
share
attributable to
ADTRAN Holdings,
Inc. - basic $ (0.58) $ (0.36) $ (1.40) $ (5.67) $ (3.39)
Loss per common
share
attributable to
ADTRAN Holdings,
Inc. - diluted $ (0.58) $ (0.36) $ (1.40) $ (5.67) $ (3.39)
Non-GAAP Earnings
(Loss) per
common share
attributable to
ADTRAN Holdings,
Inc. - basic $ 0.00 $ (0.05) $ (0.19) $ (0.36) $ (0.60)
Non-GAAP Earnings
(Loss) per
common share
attributable to
ADTRAN Holdings,
Inc. - diluted $ 0.00 $ (0.05) $ (0.19) $ (0.36) $ (0.60)
(1) Loss per common share attributable to ADTRAN Holdings, Inc. - basic and diluted - reflects a $5 thousand and $3.0 million effect of redemption for the three months ended December 31, 2024 and September 30, 2024 respectively and $3.0 million effect of redemption of RNCI for the year ended December 31, 2024.
(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 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 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 restructuring program designed to optimize the assets and business processes following the business combination with Adtran Networks SE. The restructuring program commenced upon the closing of the business combination with Adtran Networks SE and was substantially completed in late 2024. Additionally, as part of the Business Efficiency Program, management determined to close a facility in Greifswald, Germany which occurred in December 2024.
(7) 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 SE.
(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 $8.7 million and $57.8 million for the three and twelve months ended December 31, 2023.
Supplemental Information Reconciliation of Preliminary Net Cash Provided
By (Used In) Operating Activities to Preliminary Free Cash Flow
(Unaudited) (In thousands)
Three Months Ended Twelve Months Ended
------------------------------- ----------------------
December September December December December
31, 30, 31, 31, 31,
2024 2024 2023 2024 2023
--------- --------- --------- --------- -----------
Net Cash provided
by (used in)
operating
activities $ 4,544 $ 42,030 $(16,290) $103,070 $(45,604)
Purchases of
property, plant
and equipment
and developed
technologies(1) (14,942) (18,814) (9,447) (63,125) (43,121)
------- ------- ------- ------- -------
Free cash flow $(10,398) $ 23,216 $(25,737) $ 39,945 $(88,725)
======= ======= ======= ======= =======
(1) Purchases related to capital expenditures and developed technologies.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250226015068/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
February 26, 2025 23:00 ET (04:00 GMT)
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