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ADTRAN (ADTN) Q2 Earnings & Revenues Top Estimates, Up Y/Y

Zacks Equity Research

ADTRAN, Inc. ADTN reported solid second-quarter 2019 preliminary financial results, wherein the bottom and top lines, both beat the respective Zacks Consensus Estimate.

It should be noted that the company’s results for the reported quarter and the year-to-date period, ended Jun 30 are preliminary due to its ongoing assessment of the reasonableness of the current and previously-reported excess and obsolete inventory reserves.

Net Income

On a GAAP basis, net income for the quarter was $5.1 million or 11 cents per share against net loss of $7.7 million or loss of 16 cents per share reported in the year-ago quarter. This improvement was primarily driven by top-line growth.

Non-GAAP net income came in at $6.9 million or 14 cents per share against net loss of $4.6 million or loss of 9 cents per share posted in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 8 cents.

ADTRAN, Inc. Price, Consensus and EPS Surprise

ADTRAN, Inc. Price, Consensus and EPS Surprise

ADTRAN, Inc. price-consensus-eps-surprise-chart | ADTRAN, Inc. Quote

Revenues

Quarterly revenues were $156.4 million compared with $128 million in the year-earlier quarter, marginally surpassing the consensus estimate of $156 million. The upside reflected strong international revenue growth. While Products’ sales jumped 20.9% year over year to $139.2 million, Services’ sales increased 32.6% to $17.2 million.

Other Details

Total cost of sales flared up from $78.1 million to $90.1 million year over year. Gross profit came in at $66.3 million compared with $50 million in the prior-year quarter. Operating income in the reported quarter was $1.8 million against operating loss of $12.8 million posted a year ago.

ADTRAN’s revenues were diverse and well balanced, with contributions across North America, LATAM, EMEA 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 six months of 2019, ADTRAN generated $12 million of net cash from operating activities compared with $52.9 million in the year-ago period. As of Jun 30, 2019, the networking equipment maker had $106.8 million in cash and equivalents, with $44.2 million of non-current liabilities.

Concurrent with the results, the company stated that its board of directors has announced a quarterly cash dividend of 9 cents per share to shareholders of record as of Aug 1, payable on Aug 15.

Going Forward

ADTRAN continues to optimize its customer, geographic and product diversity momentum as communications service providers scale their network capabilities. The company is poised to benefit from growing customer engagements across its comprehensive portfolio of software-defined access, 10G solutions and G.fast products. This apart, its global strategy of diversification across geographies and markets instill optimism.

Zacks Rank & Other Stocks to Consider

ADTRAN currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the broader industry are Comtech Telecommunications Corp. CMTL, Viasat, Inc. VSAT and PCTEL, Inc. PCTI. While Comtech sports a Zacks Rank #1 (Strong Buy), Viasat and PCTEL carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Comtech surpassed earnings estimates in each of the trailing four quarters, the average positive surprise being 216.7%.

Viasat surpassed earnings estimates in each of the trailing four quarters, the average positive surprise being 201.1%.

PCTEL surpassed earnings estimates twice in the trailing four quarters, the average positive surprise being 100%.

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