ADTRAN (ADTN) 8-K Results of Operations and Financial Condition

EXHIBIT 99.1

Final Financial Results for the Fourth Quarter and Twelve Months Ended December 31, 2023

On February 26, 2024, ADTRAN Holdings, Inc. (the “Company”) issued a press release (the “February 26th Press Release”) announcing its preliminary financial results for the fourth quarter and twelve months ended December 31, 2023 (the “Preliminary Financial Results”). The February 26th Press Release and an accompanying investor presentation were attached as Exhibits 99.1 and 99.2, respectively, to the Company’s Current Report on Form 8-K furnished with the Securities and Exchange Commission (the “SEC”) on February 27, 2024. On March 15, 2024, the Company will file its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 containing the Company’s audited consolidated financial statements as of and for the year ended December 31, 2023. Final financial results of the Company for the fourth quarter and twelve months ended December 31, 2023 (the “Final Financial Results”), reflecting certain adjustments to the Preliminary Financial Results, as described in the Current Report on Form 8-K filed on March 15, 2024 are set forth herein (with the adjusted information identified by a “^”).

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

ASSETS	December 31, 2023				December 31, 2022
Current Assets
Cash and cash equivalents	$	87,167			$	108,644
Short-term investments		—				340
Accounts receivable, net		216,445				279,435
Other receivables		17,450		^		32,831
Income tax receivable		7,933		^		—
Inventory, net		362,295				427,531
Prepaid expenses and other current assets		45,566				33,577
Total Current Assets		736,856		^		882,358
Property, plant and equipment, net		123,020				110,699
Deferred tax assets, net		25,787				67,839
Goodwill		353,415				381,724
Intangibles, net		327,985				401,211
Other non-current assets		87,706				66,998
Long-term investments		27,743				32,665
Total Assets	$	1,682,512		^	$	1,943,494
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	162,922			$	237,699
Revolving credit agreements outstanding		—				35,936
Notes payable		—				24,598
Unearned revenue		46,731				41,193
Accrued expenses and other liabilities		37,607				35,235
Accrued wages and benefits		27,030				44,882
Income tax payable, net		5,221		^		9,032
Total Current Liabilities		279,511		^		428,575
Non-current revolving credit agreement outstanding		195,000				60,000
Deferred tax liabilities		35,655				61,629
Non-current unearned revenue		25,109				19,239
Non-current pension liability		12,543				10,624
Deferred compensation liability		29,039				26,668
Non-current lease obligations		31,420				22,807
Other non-current liabilities		28,657				10,339
Total Liabilities		636,934		^		639,881
Redeemable Non-Controlling Interest		451,756				—
Equity
Common stock		790				781
Additional paid-in capital		795,304		^		895,834
Accumulated other comprehensive income		47,461		^		26,126		^
Retained (deficit) earnings		(243,908	)			55,338
Treasury stock		(5,825	)			(4,125	)
Non-controlling interest		—				329,659		^
Total Equity		593,822				1,303,613
Total Liabilities and Equity	$	1,682,512		^	$	1,943,494

Condensed Consolidated Statements of Loss

(Unaudited)

(In thousands)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2023			2022			2023			2022
Revenue
Network Solutions	$	180,405		$	317,487		$	974,389		$	916,793
Services & Support		45,074			40,784			174,711			108,743
Total Revenue		225,479			358,271			1,149,100			1,025,536
Cost of Revenue
Network Solutions		126,248			233,925			722,582			647,105
Network Solutions - Inventory Write Down		3,270			—			24,313			—
Services & Support		17,496			16,943			69,142			51,179
Total Cost of Revenue		147,014			250,868			816,037			698,284
Gross Profit		78,465			107,403			333,063			327,252
Selling, general and administrative expenses		61,262			78,243			258,149			208,889
Research and development expenses		54,818			61,570			258,311			173,757
Asset impairment		—			464			—			17,433
Goodwill impairment		—			—			37,874			—
Operating Loss		(37,615	)		(32,874	)		(221,271	)		(72,827	)
Interest and dividend income		1,157			1,355			2,340			2,123
Interest expense		(4,441	)		(2,010	)		(16,299	)		(3,437	)
Net investment gain (loss)		1,683			(587	)		2,754			(11,339	)
Other income, net		(3,448	)		11,568			1,266			14,517
Loss Before Income Taxes		(42,664	)		(22,548	)		(231,210	)		(70,963	)
Income tax (expense) benefit		(64,362	)		57,503			(28,133	)		62,075
Net (Loss) Income	$	(107,026	)	$	34,955		$	(259,343	)	$	(8,888	)
Net Income (loss) attributable to non-controlling interest		2,919			(3,926	)		8,345			(6,851	)
Net (Loss) Income attributable to ADTRAN Holdings, Inc.	$	(109,945	)	$	38,881		$	(267,688	)	$	(2,037	)
Weighted average shares outstanding – basic		78,530			77,659			78,416			62,346
Weighted average shares outstanding – diluted		78,530			79,243			78,416			62,346
(Loss) Earnings per common share attributable to ADTRAN Holdings, Inc. – basic	$	(1.40	)	$	0.50		$	(3.41	)	$	(0.03	)
(Loss) Earnings per common share attributable to ADTRAN Holdings, Inc. – diluted	$	(1.40	)	$	0.49		$	(3.41	)	$	(0.03	)

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Twelve Months Ended December 31,
	2023				2022
Cash flows from operating activities:
Net Loss	$	(259,343	)		$	(8,888	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		112,949				67,553
Asset impairment		—				17,433
Goodwill impairment		37,874				—
Amortization of debt issuance cost		862				288
(Accretion) amortization on available-for-sale investments, net		(22	)			19
(Gain) loss on investments		(2,900	)			9,826
Net loss on disposal of property, plant and equipment		458				152
Stock-based compensation expense		16,016				28,322
Deferred income taxes		15,558				(62,388	)
Inventory write down		24,313				—
Inventory reserves		25,546				(2,363	)
Other, net		(2,942	)			—
Change in operating assets and liabilities:
Accounts receivable, net		65,612		^		788
Other receivables		10,315		^		(20,088	)
Income taxes receivable		(2,637	)	^		—
Inventory		20,537				(73,237	)
Prepaid expenses other current assets and other assets		(29,883	)			(7,116	)
Accounts payable		(91,907	)			28,105
Accrued expenses and other liabilities		17,929				(20,483	)
Income taxes payable, net		(3,939	)	^		(2,151	)
Net cash used in operating activities		(45,604	)	^		(44,228	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(43,121	)			(17,072	)
Proceeds from sales and maturities of available-for-sale investments		10,567				51,661
Purchases of available-for-sale investments		(868	)			(23,899	)
Proceeds from beneficial interests in securitized accounts receivable		1,218		^		1,126
Proceeds from disposals of property, plant and equipment		—				12
Insurance proceeds received		—				—
Acquisition of business, net of cash acquired		—				44,003
Net cash (used in) provided by investing activities		(32,204	)	^		55,831
Cash flows from financing activities:
Tax withholdings related to stock-based compensation settlements		(6,458	)			(4,253	)
Proceeds from stock option exercises		540				6,904
Dividend payments		(21,237	)			(22,885	)
Proceeds from receivables purchase agreement		14,099				—
Proceeds from draw on revolving credit agreements		163,733				141,887
Repayment of revolving credit agreements		(64,987	)			(48,000	)
Redemption of redeemable non-controlling interest		(1,224	)			—
Payment of debt issuance cost		(708	)			(3,015	)
Repayment of notes payable		(24,891	)			(17,702	)
Net cash provided by financing activities		58,867				52,936
Net (decrease) increase in cash and cash equivalents		(18,941	)			64,539
Effect of exchange rate changes		(2,536	)			(12,713	)
Cash and cash equivalents, beginning of year		108,644				56,818
Cash and cash equivalents, end of year	$	87,167			$	108,644
Supplemental disclosure of cash financing activities
Cash paid for interest	$	12,596			$	1,728
Cash paid for income taxes	$	18,552			$	3,832
Cash used in operating activities related to operating leases	$	9,682			$	5,229
Supplemental disclosure of non-cash investing activities
Right-of-use assets obtained in exchange for lease obligations	$	17,865			$	3,410
Purchases of property, plant and equipment included in accounts payable	$	1,298			$	1,165
Adtran Networks common shares exchanged in acquisition	$	—			$	565,491
Adtran Networks options assumed in acquisition	$	—			$	12,769
Non-controlling interest related to Adtran Networks	$	—			$	316,415