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ADTRAN (ADTN) Q1 Earnings and Revenues Beat, Increase Y/Y

Zacks Equity Research

ADTRAN, Inc. ADTN reported better-than-expected results in first-quarter 2019, wherein both the top line and the bottom line increased year over year.

Net Income

On a GAAP basis, net income for the quarter was $0.8 million or 2 cents per share against a loss of $10.8 million or loss of 22 cents per share in the year-ago quarter. The improvement was primarily driven by top-line growth.

Non-GAAP net income came in at $4.9 million or 10 cents per share against a loss of $15.8 million or loss of 33 cents per share in the prior-year quarter. The Zacks Consensus Estimate for loss was pegged at 5 cents.

ADTRAN, Inc. Price, Consensus and EPS Surprise

ADTRAN, Inc. Price, Consensus and EPS Surprise | ADTRAN, Inc. Quote

Revenues

Quarterly sales were $143.8 million compared with $120.8 million in the prior-year quarter, beating the Zacks Consensus Estimate of $141 million. The improvement reflected strong international revenue growth. While Products’ sales jumped 19.5% year over year to $125.8 million, Services’ sales increased 15.5% to $18 million.

Other Details

Total cost of sales increased from $81.1 million to $83.2 million year over year. Gross profit came in at $60.6 million compared with $39.7 million in the prior-year quarter. Operating loss in the reported quarter was $6.2 million compared with loss of $26.6 million a year ago.

Notably, ADTRAN’s revenues were diverse and well balanced with contributions across Latin America, Europe, the Middle East and Africa, North America, and Pacific Rim regions.  The company’s broad portfolio of next-generation solutions continues to gain market traction with a growing number of customers in an expanding range of market segments.

Cash Flow & Liquidity

During the first quarter, ADTRAN generated $5.5 million of net cash from operating activities compared with $46.2 million in the year-ago period. As of Mar 31, 2019, the networking equipment maker had $109.1 million in cash and equivalents, with $42.7 million of non-current liabilities.

The company announced that its board of directors has declared a quarterly cash dividend of 9 cents per share to shareholders of record as of May 2, payable May 16.

Going Forward

ADTRAN is well positioned to optimize its customer, geographic and product diversity momentum. The company expects to gain from increased customer engagements across its comprehensive portfolio of software-defined access, 10G solutions and G.fast products. Its global strategy of diversification across geographies and markets is laudable.

Zacks Rank & Stocks to Consider

ADTRAN currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include CommScope Holding Company, Inc. COMM, Bandwidth Inc. BAND and Zayo Group Holdings, Inc. ZAYO. While CommScope sports a Zacks Rank #1 (Strong Buy), Bandwidth and Zayo carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CommScope has long-term earnings growth expectation of 4%.

Bandwidth has long-term earnings growth expectation of 10%.

Zayo has long-term earnings growth expectation of 5%.

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