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ADTRAN, Inc. Reports Results for the Second Quarter 2015 and Declares Quarterly Cash Dividend

July 14, 2015 8:30 PM EDT

HUNTSVILLE, Ala.--(BUSINESS WIRE)-- ADTRAN, Inc. (NASDAQ:ADTN) reported results for the second quarter 2015. For the quarter, sales were $160,138,000 compared to $176,129,000 for the second quarter of 2014. Net income was $2,544,000 compared to $14,395,000 for the second quarter of 2014. Earnings per share, assuming dilution, were $0.05 compared to $0.26 for the second quarter of 2014. Non-GAAP earnings per share were $0.10 compared to $0.30 for the second quarter of 2014. The reconciliation between GAAP earnings per share, diluted, and non-GAAP earnings per share, diluted, is in the table provided.

ADTRAN Chief Executive Officer Tom Stanton stated, “Revenue for the quarter came in higher than expected, driven by the timing of CAF-related orders in our domestic business. EPS on a GAAP basis was reduced due to one-time restructuring charges as we continue to focus our company on the opportunities that are ahead. During the quarter, we saw an increase in broadband infrastructure activity in our domestic markets as carriers seek to position themselves competitively and utilize CAF funding to accelerate their deployment plans.”

The Company also announced that its Board of Directors declared a cash dividend for the second quarter of 2015. The quarterly cash dividend is $0.09 per common share to be paid to holders of record at the close of business on July 30, 2015. The ex-dividend date is July 28, 2015 and the payment date is August 13, 2015.

The Company confirmed that its second quarter conference call will be held Wednesday, July 15, 2015 at 9:30 a.m. Central Time. This conference call will be web cast live through StreetEvents.com. To listen, simply visit the Investor Relations site at www.adtran.com or www.streetevents.com approximately 10 minutes prior to the start of the call and click on the conference call link provided.

An online replay of the conference call will be available for seven days at www.streetevents.com. In addition, an online replay of the conference call, as well as the text of the Company's earnings release, will be available on the Investor Relations site at www.adtran.com for at least 12 months following the call.

ADTRAN, Inc. is a leading global provider of networking and communications equipment. ADTRAN’s products enable voice, data, video and Internet communications across a variety of network infrastructures. ADTRAN solutions are currently in use by service providers, private enterprises, government organizations, and millions of individual users worldwide. For more information, please visit www.adtran.com.

For more information, contact the company at 800 9ADTRAN (800 923-8726) or via email at [email protected]. On the Web, visit www.adtran.com.

This press release contains forward-looking statements which 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 for the year ended December 31, 2014 and on Form 10-Q for the quarter ended March 31, 2015. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements included in this press release.

 
Condensed Consolidated Balance Sheet

(Unaudited)

(In thousands)

         
 

June 30, 2015

December 31,2014

Assets
Cash and cash equivalents $ 87,215 $ 73,439
Short-term investments 54,127 46,919
Accounts receivable, net 89,088 88,502
Other receivables 31,442 33,295
Inventory 100,048 86,710
Prepaid expenses 5,817 5,129
Deferred tax assets, net   17,038   17,095
Total Current Assets 384,775 351,089
 
Property, plant and equipment, net 73,347 74,828
Deferred tax assets, net 20,473 17,694
Goodwill 3,492 3,492
Other assets 10,236 10,942
Long-term investments   216,665   280,649
 
Total Assets $ 708,988 $ 738,694
 
Liabilities and Stockholders' Equity
Accounts payable $ 85,456 $ 56,414
Unearned revenue 17,495 22,762
Accrued expenses 15,538 11,077
Accrued wages and benefits 15,515 13,855
Income tax payable, net   10,072   14,901
Total Current Liabilities 144,076 119,009
 
Non-current unearned revenue 9,444 10,948
Other non-current liabilities 31,268 30,924
Bonds payable   28,800   28,800
Total Liabilities 213,588 189,681
 
Stockholders' Equity   495,400   549,013
 
Total Liabilities and Stockholders' Equity $ 708,988 $ 738,694
 
 
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
         
 
Three Months Ended Six Months Ended
June 30, June 30,
2015     2014 2015     2014
 
Sales $ 160,138 $ 176,129 $ 302,973 $ 323,133
Cost of sales   91,892     89,332     169,164     158,546  
 
Gross Profit 68,246 86,797 133,809 164,587
 
Selling, general and administrative expenses 32,123 33,788 63,187 67,727
Research and development expenses   35,479     33,670     68,015     66,223  
 
Operating Income 644 19,339 2,607 30,637
 
Interest and dividend income 908 1,054 1,841 2,348
Interest expense (149 ) (148 ) (297 ) (375 )
Net realized investment gain 3,255 2,340 6,370 4,532
Other income (expense), net   (547 )   (774 )   (900 )   (652 )
 
Income before provision for income taxes 4,111 21,811 9,621 36,490
 
Provision for income taxes   (1,567 )   (7,416 )   (3,760 )   (12,488 )
 
Net Income $ 2,544   $ 14,395   $ 5,861   $ 24,002  
 
Weighted average shares outstanding - basic 51,822 55,409 52,607 56,077
Weighted average shares outstanding - diluted (1) 51,917 55,729 52,742 56,559
 
Earnings per common share - basic $ 0.05 $ 0.26 $ 0.11 $ 0.43
Earnings per common share - diluted (1) $ 0.05 $ 0.26 $ 0.11 $ 0.42
 
(1) Assumes exercise of dilutive stock options calculated under the treasury stock method.
 
 
Consolidated Statements of Comprehensive Income
(Unaudited)
(In thousands)
         
 
Three Months Ended Six Months Ended
June 30, June 30,
2015     2014 2015     2014
 
Net Income $ 2,544   $ 14,395 $ 5,861   $ 24,002
 
Other Comprehensive Income (Loss), net of tax:
 
Unrealized gains (losses) on available-for-sale securities (1,783 ) 1,219 (2,286 ) 298
Defined benefit plan adjustments 72 - 140 -
Foreign currency translation   872     134   (2,446 )   386
 
Other Comprehensive Income (Loss), net of tax   (839 )   1,353   (4,592 )   684
 
Comprehensive Income, net of tax $ 1,705   $ 15,748 $ 1,269   $ 24,686
 
 
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
     
 
Six Months Ended
June 30,
2015     2014
Cash flows from operating activities:
Net income $ 5,861 $ 24,002
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 7,256 7,467
Amortization of net premium on available-for-sale investments 1,578 2,272
Net realized gain on long-term investments (6,370 ) (4,532 )
Net loss on disposal of property, plant and equipment 160 37
Stock-based compensation expense 3,114 4,149
Deferred income taxes (1,743 ) 377
Tax benefit from stock option exercises (23 ) 67
Excess tax benefits from stock-based compensation arrangements 38 (58 )
Change in operating assets and liabilities:
Accounts receivable, net (2,003 ) (31,583 )
Other receivables (119 ) (4,072 )
Inventory (14,254 ) 841
Prepaid expenses and other assets (1,433 ) (3,103 )
Accounts payable 30,938 14,425
Accrued expenses and other liabilities 2,175 8,248
Income tax payable, net   (3,961 )   4,442  
Net cash provided by operating activities   21,214     22,979  
 
Cash flows from investing activities:
Purchases of property, plant and equipment (5,392 ) (4,919 )
Proceeds from disposals of property, plant and equipment 8 1
Proceeds from sales and maturities of available-for-sale investments 120,422 166,518
Purchases of available-for-sale investments   (62,626 )   (106,406 )
Net cash provided by investing activities   52,412     55,194  
 
Cash flows from financing activities:
Proceeds from stock option exercises 833 1,781
Purchases of treasury stock (49,307 ) (53,091 )
Dividend payments (9,509 ) (10,137 )
Payments on long-term debt - (16,500 )
Excess tax benefits from stock-based compensation arrangements   (38 )   58  
Net cash used in financing activities   (58,021 )   (77,889 )
 
Net increase in cash and cash equivalents 15,605 284
Effect of exchange rate changes (1,829 ) 321
Cash and cash equivalents, beginning of period   73,439     58,298  
 
Cash and cash equivalents, end of period $ 87,215   $ 58,903  
 
Supplemental disclosure of non-cash investing activities
Purchases of property, plant and equipment included in accounts payable $ 270 $ 423
 

Supplemental InformationRestructuring Expenses(Unaudited)(In thousands)

Restructuring expenses were recorded in the following Consolidated Statements of Income categories for the three and six months ended June 30, 2015 and 2014:

     
Three and Six Months Ended
June 30,
2015     2014
 
Restructuring expense included in cost of sales $ 98   $ -
 
Selling, general and administrative expense 644 -
Research and development expense   1,383     -
 
Restructuring expense included in operating expenses   2,027     -
 
Total restructuring expense 2,125 -
Provision for income taxes   (829 )   -
 
Total restructuring expense, net of tax $ 1,296   $ -
 

Supplemental InformationAcquisition Related Expenses, Amortizations and Adjustments(Unaudited)(In thousands)

On August 4, 2011, we closed on the acquisition of Bluesocket, Inc. and on May 4, 2012, we closed on the acquisition of the Nokia Siemens Networks Broadband Access business (NSN BBA). Acquisition related expenses, amortizations and adjustments for the three and six months ended June 30, 2015 and 2014 for both transactions are as follows:

         
Three Months Ended Six Months Ended
June 30, June 30,
2015     2014 2015     2014
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets and other purchase accounting adjustments $ 226   $ 226   $ 452   $ 472  
 

NSN BBA acquisition

Amortization of acquired intangible assets 229 295 470 597
Amortization of other purchase accounting adjustments 140 294 294 655
Acquisition related professional fees, travel and other expenses   35     17     41     65  
 
Subtotal   404     606     805     1,317  
 
Total acquisition related expenses, amortizations and adjustments 630 832 1,257 1,789
Provision for income taxes   (213 )   (276 )   (426 )   (592 )
 
Total acquisition related expenses, amortizations and adjustments, net of tax $ 417   $ 556   $ 831   $ 1,197  
 

The acquisition related expenses, amortizations and adjustments above were recorded in the following Consolidated Statements of Income categories for the three and six months ended June 30, 2015 and 2014:

         
Three Months Ended Six Months Ended
June 30, June 30,
2015     2014 2015     2014
 
Revenue (adjustments to deferred revenue recognized in the period) $ 64 $ 180 $ 131 $ 423
Cost of goods sold   33     23     45     57  
 
Subtotal   97     203     176     480  
 
Selling, general and administrative expenses 39 24 51 79
Research and development expenses   494     605     1,030     1,230  
 
Subtotal   533     629     1,081     1,309  
 
Total acquisition related expenses, amortizations and adjustments 630 832 1,257 1,789
Provision for income taxes   (213 )   (276 )   (426 )   (592 )
 
Total acquisition related expenses, amortizations and adjustments, net of tax $ 417   $ 556   $ 831   $ 1,197  
 
 
Supplemental Information
Stock-based Compensation Expense
(Unaudited)
(In thousands)
         
 
Three Months Ended Six Months Ended
June 30, June 30,
2015     2014 2015     2014
 
Stock-based compensation expense included in cost of sales $ 53   $ 119   $ 143   $ 235  
 
Selling, general and administrative expense 723 1,015 1,414 2,041
Research and development expense   699     958     1,557     1,873  
 
Stock-based compensation expense included in operating expenses   1,422     1,973     2,971     3,914  
 
Total stock-based compensation expense 1,475 2,092 3,114 4,149
Tax benefit for expense associated with non-qualified options   (222 )   (296 )   (402 )   (580 )
 
Total stock-based compensation expense, net of tax $ 1,253   $ 1,796   $ 2,712   $ 3,569  
 
 
Reconciliation of GAAP net income per share, diluted, to
Non-GAAP net income per share, diluted
(Unaudited)
         
 
Three Months Ended Six Months Ended
June 30, June 30,
2015     2014 2015     2014
 
GAAP earnings per common share – diluted $ 0.05 $ 0.26 $ 0.11 $ 0.42
 
Restructuring expense 0.02 - 0.02 -
Acquisition related expenses, amortizations and adjustments 0.01 0.01 0.02 0.02
Stock-based compensation expense   0.02   0.03   0.05   0.06
 
Non-GAAP earnings per common share – diluted $ 0.10 $ 0.30 $ 0.20 $ 0.50
 

ADTRAN, Inc.
Michael Foliano, 256-963-8885
Senior Vice President & Interim CFO
or
INVESTOR SERVICES/ASSISTANCE:
Gayle Ellis, 256-963-8220
Investor Services

Source: ADTRAN, Inc.



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