Home Business Wire ADTRAN Holdings, Inc. Reports Second Quarter 2023 Results

ADTRAN Holdings, Inc. Reports Second Quarter 2023 Results

HUNTSVILLE, Ala.–(BUSINESS WIRE)–#Adtran–ADTRAN Holdings, Inc. (NASDAQ: ADTN and FSE: QH9) (“ADTRAN Holdings” or the “Company”) today announced its financial results for the second quarter of 2023. For the quarter, revenue was $327.4 million, up 90% year-over-year and 1% quarter-over-quarter. Net loss attributable to the Company for the second quarter of 2023 was $33.3 million, down 1,655% year-over-year and up 3% quarter-over-quarter. Consequently, diluted loss per share attributable to the Company for the quarter was $0.43, down by 1,175% year-over-year and up 2% quarter-over-quarter. Non-GAAP net income attributable to the Company was $0.1 million, down 99% year-over-year and up 102% quarter-over-quarter. Consequently, non-GAAP diluted earnings per share attributable to the Company was $0.00, down 99% year-over-year and up 102% quarter-over-quarter. Non-GAAP net loss and non-GAAP diluted loss per share exclude acquisition related expenses, amortization, 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), stock-based compensation expense, amortization of pension actuarial losses, deferred compensation adjustments, integration expenses, restructuring expenses, changes in valuation allowance related to our deferred tax assets, and the tax effect of these adjustments to net (loss) income. The reconciliations between the non-GAAP net loss measures presented herein and the respective equivalent GAAP financial measures are set forth in the tables provided below.

ADTRAN Holdings Chairman and Chief Executive Officer Tom Stanton stated, “Our Q2 2023 results were in line with our expectations. Although new customer acquisitions remain near an all-time high, we anticipate the second half of 2023 will continue to present challenges due to customers optimizing inventory and the macroeconomic environment. Nevertheless, we continue to believe that we are in the early stage of an unprecedented investment cycle and ADTRAN Holdings is well positioned to be one of the largest beneficiaries.”

The Company also announced that its Board of Directors declared a cash dividend for the second quarter of 2023. The quarterly cash dividend of $0.09 per common share is to be paid to the Company’s stockholders of record as of the close of business on August 21, 2023. The ex-dividend date is August 20, 2023, and the payment date will be September 5, 2023.

The Company confirmed that it will hold a conference call to discuss its second quarter results on Tuesday, August 8, 2023, at 9:30 a.m. Central Time, or 4:30 p.m. Central European Summer Time. ADTRAN Holdings will webcast this conference call. To listen, simply visit our Investor Relations site at investors.adtran.com approximately 10 minutes prior to the start of the call, click on the event “ADTRAN Holdings Releases 2nd Quarter 2023 Financial Results and Earnings Call”, and click on the webcast link.

An online replay of the Company’s conference call, as well as the transcript of the Company’s conference call, will be available on the Investor Relations site approximately 24 hours following the call and will remain available for at least 12 months. For more information, visit investors.adtran.com or email investor.relations@adtran.com.

Cautionary Note Regarding Forward-Looking Statements

Statements contained in this press release which are not historical facts, such as those relating to strategy, 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 could cause actual events or results to differ materially from those estimated by ADTRAN Holdings include, but are not limited to: (i) risks and uncertainties related to manufacturing and supply chain constraints; (ii) risks and uncertainties related to the completed business combination between the Company, ADTRAN, Inc. (“ADTRAN”) and Adtran Networks SE (“Adtran Networks”), formerly ADVA Optical Networks SE, including risks related to the ability to successfully integrate ADTRAN’s and Adtran Networks’ businesses, the disruption of management time from ongoing business operations due to integration efforts following the business combination, and the risk that ADTRAN Holdings may be unable to achieve expected synergies or that it may take longer or be more costly than expected to achieve those synergies; (iii) the risk of fluctuations in revenue, including due to lengthy sales and approval processes required by major and other service providers for new products and changes in customer demand, as well as tighter inventory management of ADTRAN Holdings’ customers; (iv) the risk posed by potential breaches of information systems and cyber-attacks; (v) the risk that ADTRAN Holdings may not be able to effectively compete, including through product improvements and development; (vi) risks related to ongoing patent litigation; and (vii) other risks set forth in ADTRAN Holdings’ public filings made with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2022, as well as its Form 10-Q for the quarter ended March 31, 2023 filed with the SEC.

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) income, other income (expense), net (loss) income inclusive of the non-controlling interest, net (loss) income attributable to the Company, net loss attributable to the non-controlling interest, and (loss) earnings per share – basic and diluted, attributable to the Company, 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) income, non-GAAP net (loss) income inclusive of the non-controlling interest, non-GAAP net income (loss) attributable to the Company, non-GAAP net loss attributable to the non-controlling interest, and non-GAAP earnings (loss) per share – basic and diluted, attributable to the Company, 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), stock-based compensation expense, amortization of pension actuarial losses, deferred compensation adjustments, integration expenses, restructuring expenses, asset impairments, changes in valuation allowance related to our deferred tax assets, and the tax effect of these adjustments to net income. 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.

About Adtran

ADTRAN Holdings, Inc. (NASDAQ: ADTN and FSE: QH9) is the parent company of Adtran, Inc., a leading global provider of open, disaggregated networking and communications solutions that enable voice, data, video and internet communications across any network infrastructure. From the cloud edge to the subscriber edge, Adtran empowers communications service providers around the world to manage and scale services that connect people, places and things. Adtran solutions are used by service providers, private enterprises, government organizations and millions of individual users worldwide. ADTRAN Holdings, Inc. is also the largest shareholder of Adtran Networks SE, formerly ADVA Optical Networking SE. Find more at Adtran, LinkedIn and Twitter.

Published by

ADTRAN Holdings, Inc.

www.adtran.com

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

 

June 30,

 

 

December 31,

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$

124,294

 

 

$

108,644

 

Short-term investments

 

3,089

 

 

 

340

 

Accounts receivable, net

 

239,565

 

 

 

279,435

 

Other receivables

 

32,394

 

 

 

32,831

 

Inventory, net

 

416,802

 

 

 

427,531

 

Prepaid expenses and other current assets

 

33,880

 

 

 

33,577

 

Total Current Assets

 

850,024

 

 

 

882,358

 

Property, plant and equipment, net

 

115,719

 

 

 

110,699

 

Deferred tax assets

 

82,076

 

 

 

67,839

 

Goodwill

 

388,163

 

 

 

381,724

 

Intangibles, net

 

355,084

 

 

 

401,211

 

Other non-current assets

 

60,634

 

 

 

66,998

 

Long-term investments

 

31,238

 

 

 

32,665

 

Total Assets

$

1,882,938

 

 

$

1,943,494

 

 

 

 

 

 

 

Liabilities, Redeemable Non-Controlling Interest and Equity

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts payable

$

171,735

 

 

$

237,699

 

Revolving credit agreements outstanding

 

210,912

 

 

 

95,936

 

Notes payable

 

 

 

 

24,598

 

Unearned revenue

 

48,030

 

 

 

41,193

 

Accrued expenses and other liabilities

 

26,807

 

 

 

35,235

 

Accrued wages and benefits

 

36,843

 

 

 

44,882

 

Income tax payable, net

 

15,314

 

 

 

9,032

 

Total Current Liabilities

 

509,641

 

 

 

488,575

 

Deferred tax liabilities

 

44,614

 

 

 

61,629

 

Non-current unearned revenue

 

24,111

 

 

 

19,239

 

Pension liability

 

10,883

 

 

 

10,624

 

Deferred compensation liability

 

28,522

 

 

 

26,668

 

Non-current lease obligations

 

20,834

 

 

 

22,807

 

Other non-current liabilities

 

16,401

 

 

 

10,339

 

Total Liabilities

 

655,006

 

 

 

639,881

 

Redeemable Non-Controlling Interest

 

445,462

 

 

 

 

Equity

 

 

 

 

 

Common stock

 

787

 

 

 

781

 

Additional paid-in capital

 

766,428

 

 

 

895,834

 

Accumulated other comprehensive income

 

62,208

 

 

 

46,713

 

Retained (deficit) earnings

 

(41,010

)

 

 

55,338

 

Treasury stock

 

(5,943

)

 

 

(4,125

)

Non-controlling interest

 

 

 

 

309,072

 

Total Equity

 

782,470

 

 

 

1,303,613

 

Total Liabilities, Redeemable Non-Controlling Interest and Equity

$

1,882,938

 

 

$

1,943,494

 

Condensed Consolidated Statements of (Loss) Income

(Unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Network Solutions

 

$

283,002

 

 

$

155,992

 

 

$

565,420

 

 

$

294,366

 

Services & Support

 

 

44,376

 

 

 

16,046

 

 

 

85,870

 

 

 

32,190

 

Total Revenue

 

 

327,378

 

 

 

172,038

 

 

 

651,290

 

 

 

326,556

 

Cost of Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Network Solutions

 

 

216,960

 

 

 

99,921

 

 

 

436,090

 

 

 

190,575

 

Services & Support

 

 

17,865

 

 

 

9,611

 

 

 

34,839

 

 

 

19,159

 

Total Cost of Revenue

 

 

234,825

 

 

 

109,532

 

 

 

470,929

 

 

 

209,734

 

Gross Profit

 

 

92,553

 

 

 

62,506

 

 

 

180,361

 

 

 

116,822

 

Selling, general and administrative expenses

 

 

66,583

 

 

 

27,873

 

 

 

133,980

 

 

 

55,766

 

Research and development expenses

 

 

70,598

 

 

 

26,500

 

 

 

140,741

 

 

 

52,991

 

Operating (Loss) Income

 

 

(44,628

)

 

 

8,133

 

 

 

(94,360

)

 

 

8,065

 

Interest and dividend income

 

 

358

 

 

 

217

 

 

 

662

 

 

 

421

 

Interest expense

 

 

(4,064

)

 

 

(94

)

 

 

(7,351

)

 

 

(124

)

Net investment gain (loss)

 

 

1,262

 

 

 

(4,646

)

 

 

2,514

 

 

 

(8,061

)

Other income, net

 

 

2,494

 

 

 

681

 

 

 

2,191

 

 

 

455

 

(Loss) Income Before Income Taxes

 

 

(44,578

)

 

 

4,291

 

 

 

(96,344

)

 

 

756

 

Income tax benefit (expense)

 

 

8,363

 

 

 

(2,148

)

 

 

19,676

 

 

 

260

 

Net (Loss) Income

 

$

(36,215

)

 

$

2,143

 

 

$

(76,668

)

 

$

1,016

 

Less: Net Loss attributable to non-controlling interest(1)

 

 

(2,881

)

 

 

 

 

 

(8,870

)

 

 

 

Net (Loss) Income attributable to ADTRAN Holdings, Inc.

 

$

(33,334

)

 

$

2,143

 

 

$

(67,798

)

 

$

1,016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – basic

 

 

78,366

 

 

 

49,123

 

 

 

78,364

 

 

 

49,110

 

Weighted average shares outstanding – diluted

 

 

78,366

 

 

 

49,809

 

 

 

78,364

 

 

 

49,813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings per common share attributable to ADTRAN Holdings, Inc. – basic

 

$

(0.43

)

 

$

0.04

 

 

$

(0.87

)

 

$

0.02

 

(Loss) earnings per common share attributable to ADTRAN Holdings, Inc. – diluted

 

$

(0.43

)

 

$

0.04

 

 

$

(0.87

)

 

$

0.02

 

 

(1) For the three and six months ended June 30, 2023, we have recognized $2.9 million and $5.7 million, respectively, representing the recurring cash compensation earned by non-controlling interest shareholders post-DPLTA and an incremental $3.2 million net loss attributable to non-controlling interests pre-DPLTA for the six months ended June 30, 2023.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net (loss) income

 

$

(76,668

)

 

$

1,016

 

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

67,467

 

 

 

7,235

 

Amortization of debt issuance cost

 

 

291

 

 

 

 

(Gain) loss on investments

 

 

(4,530

)

 

 

7,882

 

Stock-based compensation expense

 

 

8,103

 

 

 

3,781

 

Deferred income taxes

 

 

(31,962

)

 

 

(93

)

Other, net

 

 

130

 

 

 

27

 

Inventory reserves

 

 

20,885

 

 

 

(4,296

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

40,975

 

 

 

(14,315

)

Other receivables

 

 

561

 

 

 

2,606

 

Inventory

 

 

(6,920

)

 

 

(53,982

)

Prepaid expenses, other current assets and other assets

 

 

7,105

 

 

 

671

 

Accounts payable

 

 

(67,923

)

 

 

42,968

 

Accrued expenses and other liabilities

 

 

110

 

 

 

2,179

 

Income taxes payable, net

 

 

6,216

 

 

 

(1,597

)

Net cash used in by operating activities

 

 

(36,160

)

 

 

(5,918

)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(20,118

)

 

 

(3,285

)

Proceeds from sales and maturities of available-for-sale investments

 

 

2,074

 

 

 

25,071

 

Purchases of available-for-sale investments

 

 

(580

)

 

 

(17,002

)

Proceeds from beneficial interests in securitized accounts receivable

 

 

1,156

 

 

 

 

Net cash (used in) provided by investing activities

 

 

(17,468

)

 

 

4,784

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Tax withholdings related to stock-based compensation settlements

 

 

(6,315

)

 

 

(333

)

Proceeds from stock option exercises

 

 

163

 

 

 

636

 

Dividend payments

 

 

(14,156

)

 

 

(8,877

)

Proceeds from draw on revolving credit agreements

 

 

163,729

 

 

 

28,000

 

Repayment of revolving credit agreements

 

 

(49,155

)

 

 

(28,000

)

Non-controlling interest put option buyback

 

 

(1,202

)

 

 

 

Repayment of notes payable

 

 

(24,885

)

 

 

 

Net cash provided by (used in) financing activities

 

 

68,179

 

 

 

(8,574

)

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

14,551

 

 

 

(9,708

)

Effect of exchange rate changes

 

 

1,099

 

 

 

(3,742

)

Cash and cash equivalents, beginning of period

 

 

108,644

 

 

 

56,818

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

124,294

 

 

$

43,368

 

 

 

 

 

 

 

 

Supplemental disclosure of cash financing activities:

 

 

 

 

 

 

Cash paid for interest

 

$

4,719

 

 

$

124

 

Cash used in operating activities related to operating leases

 

$

4,502

 

 

$

915

 

Supplemental disclosure of non-cash investing activities:

 

 

 

 

 

 

Right-of-use assets obtained in exchange for lease obligations

 

$

515

 

 

$

552

 

Purchases of property, plant and equipment included in accounts payable

 

$

2,662

 

 

$

818

 

 

 

 

 

 

 

 

Supplemental Information

Reconciliation of Gross Profit and Gross Margin to

Non-GAAP Gross Profit and Non-GAAP Gross Margin

(Unaudited)

(In thousands)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2023

 

 

March 31,

2023

 

 

June 30,

2022

 

 

June 30,

2023

 

 

June 30,

2022

 

Total Revenue

$

327,378

 

 

$

323,912

 

 

$

172,038

 

 

$

651,290

 

 

$

326,556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Revenue

$

234,825

 

 

$

236,104

 

 

$

109,532

 

 

$

470,929

 

 

$

209,734

 

Acquisition-related expenses, amortization and adjustments(1)

 

(33,439

)

 

 

(32,578

)

 

 

 

 

 

(66,017

)

 

 

 

Stock-based compensation expense

 

(335

)

 

 

(240

)

 

 

(162

)

 

 

(575

)

 

 

(321

)

Restructuring expenses(2)

 

 

 

 

(76

)

 

 

 

 

 

(76

)

 

 

 

Non-GAAP Cost of Revenue

$

201,051

 

 

$

203,210

 

 

$

109,370

 

 

$

404,261

 

 

$

209,413

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

$

92,553

 

 

$

87,808

 

 

$

62,506

 

 

$

180,361

 

 

$

116,822

 

Non-GAAP Gross Profit

$

126,327

 

 

$

120,702

 

 

$

62,668

 

 

$

247,029

 

 

$

117,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin

 

28.3

%

 

 

27.1

%

 

 

36.3

%

 

 

27.7

%

 

 

35.8

%

Non-GAAP Gross Margin

 

38.6

%

 

 

37.3

%

 

 

36.4

%

 

 

37.9

%

 

 

35.9

%

 

(1) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations.

(2) Includes expenses for restructuring program designed to optimize the assets and business processes following the business combination with Adtran Networks.

Supplemental Information

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses

(Unaudited)

(In thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

 

June 30,

 

 

March 31,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

 

 

2023

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

Operating Expenses

 

$

137,181

 

 

$

137,540

 

 

$

54,373

 

 

$

274,721

 

 

$

108,757

 

 

Acquisition-related expenses, amortization and adjustments

 

 

(4,398

)

(1)

 

(4,584

)

(6)

 

(2,123

)

(10)

 

(8,982

)

(12)

 

(4,453

)

(16)

Stock-based compensation expense

 

 

(3,974

)

(2)

 

(3,458

)

(7)

 

(1,726

)

(11)

 

(7,432

)

(13)

 

(3,460

)

(17)

Restructuring expenses

 

 

(5,868

)

(3)

 

(2,361

)

(8)

 

 

 

 

(8,229

)

(14)

 

(2

)

 

Pension adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Integration expenses

 

 

(563

)

(4)

 

(849

)

(9)

 

 

 

 

(1,412

)

(15)

 

 

 

Deferred compensation adjustments(5)

 

 

307

 

 

 

(394

)

 

 

3,737

 

 

 

(87

)

 

 

6,433

 

 

Non-GAAP Operating Expenses

 

$

122,685

 

 

$

125,894

 

 

$

54,261

 

 

$

248,579

 

 

$

107,275

 

 

 

(1) Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $3.9 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) income.

(2) $2.7 million is included in selling, general and administrative expenses and $1.3 million is included in research and development expenses on the condensed consolidated statements of (loss) income.

(3) $1.4 million is included in selling, general and administrative expenses and $4.5 million is included in research and development expenses on the condensed consolidated statements of (loss) income.

(4) $0.6 million is included in selling, general and administrative expenses on the condensed consolidated statements of (loss) income. Includes fees relating to the expansion of internal controls at Adtran Networks and the implementation of the DPLTA.

(5) 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) income.

(6) Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $4.1 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) income.

(7) $2.5 million is included in selling, general and administrative expenses and $1.0 million is included in research and development expenses on the condensed consolidated statements of (loss) income.

(8) $2.2 million is included in selling, general and administrative expenses and $0.2 million is included in research and development expenses on the condensed consolidated statements of (loss) income.

(9) $0.8 million is included in selling, general and administrative expenses on the condensed consolidated statements of (loss) income. Includes fees relating to the expansion of internal controls at Adtran Networks and the implementation of the DPLTA.

(10) $1.6 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) income.

(11) $1.1 million is included in selling, general and administrative expenses and $0.6 million is included in research and development expenses on the condensed consolidated statements of (loss) income.

(12) Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $8.0 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) income.

(13) $5.1 million is included in selling, general and administrative expenses and $2.3 million is included in research and development expenses on the condensed consolidated statements of (loss) income.

(14) $3.5 million is included in selling, general and administrative expenses and $4.7 million is included in research and development expenses on the condensed consolidated statements of (loss) income.

(15) $1.4 million is included in selling, general and administrative expenses on the condensed consolidated statements of (loss) income. Includes fees relating to the expansion of internal controls at Adtran Networks and the implementation of the DPLTA.

(16) Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $3.4 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) income.

(17) $2.3 million is included in selling, general and administrative expenses and $1.2 million is included in research and development expenses on the condensed consolidated statements of (loss) income.

Supplemental Information

Reconciliation of Operating (Loss) Income to Non-GAAP Operating Income (Loss)

(Unaudited)

(In thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

March,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

 

2023

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating (Loss) Income

 

$

(44,628

)

 

$

(49,732

)

 

$

8,133

 

 

$

(94,360

)

 

$

8,065

 

Acquisition related expenses, amortization and adjustments(1)

 

 

37,837

 

 

 

37,162

 

 

 

2,123

 

 

 

74,999

 

 

 

4,453

 

Stock-based compensation expense

 

 

4,309

 

 

 

3,698

 

 

 

1,888

 

 

 

8,007

 

 

 

3,781

 

Pension adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring expenses(2)

 

 

5,868

 

 

 

2,437

 

 

 

 

 

 

8,305

 

 

 

2

 

Integration expenses

 

 

563

 

 

 

849

 

 

 

 

 

 

1,412

 

 

 

 

Deferred compensation adjustments(3)

 

 

(307

)

 

 

394

 

 

 

(3,737

)

 

 

87

 

 

 

(6,433

)

Non-GAAP Operating Income (Loss)

 

$

3,642

 

 

$

(5,192

)

 

$

8,407

 

 

$

(1,550

)

 

$

9,868

 

 

(1) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations.

(2) Includes expenses for restructuring program designed to optimize the assets and business processes following the business combination with Adtran Networks.

(3) 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) income.

Contacts

For media

Gareth Spence

+44 1904 699 358

public-relations@adva.com

For investors

Steven Williams

+49 89 890 665 918

investor.relations@adtran.com

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