Adtran Holdings, Inc. · NASDAQ:ADTN
Adtran — Q1 2024 Earnings Presentation
32 slides from Adtran's earnings presentation, May 7, 2024
Slide 1: Adtran Holdings Investor presentation
Adtran Holdings Investor presentation May 7, 2024
Slide 2: Cautionary note regarding forward-looking statements
Cautionary note regarding forward-looking statements Statements contained in this investor presentation which are not historical facts, such as those relating to expectations regarding operating loss, net loss, expenses and margin; ADTRAN Holdings customer win rate and the ongoing expansion of its M
Slide 3: Introduction and business model
Introduction and business model 1
Slide 4: Our vision
OUR VISION is to enable a fully-connected world, where the power and freedom to communicate is available to everyone, everywhere, in a secure, efficient and sustainable environment.
Slide 5: Adtran at a glance
1,000+ Global technology patents 3,300+ Employees worldwide $1.15B FY23 revenue 50 Key differentiators Open, disaggregated platforms with vendor-neutral capability Extensive global design support and supply orchestration capabilities (supply chain) Customers = NSPs, RSPs, ASPs, SMBs, enterprises, tr
Slide 6: Global presence
Global presence Americas: Canada United States (HQ Global) Brazil APAC: Japan China Hong Kong Singapore India Australia EMEA: Germany (HQ Europe) England Switzerland Poland Finland Sweden France Italy Israel South Africa Saudi Arabia
Slide 7: Business model: global vendor with scale and diversity
Business model Adtran is a global vendor with scale and diversity Portfolio differentiation Customer diversity Geographic diversity Strength in focus markets Optical core to customer premise End-to-end automation & insights Enhanced security and assurance More balanced mix of national SPs, regional
Slide 8: Business model: optical core to customer premise
Business model Optical core to customer premise Metro WDM 5G Optical platforms Access and Aggregation platforms Subscriber platforms Open multi-gig PON systems, Carrier Ethernet access, Wi-Fi, routers, switches and more Fiber access platforms, 1/10/25/100G Ethernet aggregation, network timing and sy
Slide 9: Market trends
Business model Market trends Pandemic accelerated digitalization and capacity demand 5G, work from home and streaming drive multi-gigabit fiber access Deglobalization and consolidation impacts vendor selection Open, disaggregated, sustainable and cloud-centric systems Online meetings and e-commerce
Slide 10: Fiber networking market forecasts
Business model Fiber networking market forecasts CAGR 2023-2028: 3.2% CAGR 2023-2028: 2.4% CAGR 2023-2028: 3.6% Sources: PON OLT+ONT: Dell’Oro 5yr Broadband Access and Home Networking Report (January 2024) Metro WDM: Omdia Optical Network Forecast (November 2023) Carrier Ethernet: Omdia Service Prov
Slide 11: Significant tailwinds expected to drive long term growth
Business model Significant tailwinds expected to drive long term growth BEAD High risk vendor replacement $42.5b in broadband funding to provide service to 7m+ under/unserved homes Expect ~90% to be served with fiber Funds allocated through grant process at state level 4-year implementation timeline
Slide 12: Corporate social responsibility
Business model Corporate social responsibility EcoVadis Adtran, Inc. Adtran Networks SE CDP B- Climate change 2023 A- Adtran, Inc. Adtran Networks SE Environmental Sustainability is integral part of product strategy through process-based product ecodesign and lifecycle assessment (LCA) Involvement o
Slide 13: SBTi net zero long-term targets
Business model Adtran SBTi net zero long-term targets submitted in Q4 2023 Combined scope 1+2: Cars + natural gas + electricity emissions (<3% of total Adtran emissions) Targeting a 90% decrease by 2034 compared to 2016 Actions: Switch to e-mobility, biofuel, district heating where possible Purchase
Slide 14: Business update
Business update 5
Slide 15: Q1 2024 business update highlights
Q1 2024 business update Highlights Q1 2024 Increased Operating Cash Flow by $52.9m QoQ, resulting in $23.2m Free Cash Flow in Q1 Cash up by 22% QoQ Positive Free Cash Flow Working Capital improved, down by $65m (-16%) QoQ Net inventory decreased by $40.2m QoQ Significantly reduced Working Capital A
Slide 16: Technology update
Q1 2024 business update Technology update Subscriber solutions Launch of latest Wi-Fi 6, 6E and 7 platforms driving growth opportunities Dozens of customer have adopted Intellifi, our SaaS application for cloud-managed Wi-Fi Access and aggregation solutions Continued to scale SDX 6330 deployments ac
Slide 17: Well diversified across technology, markets and customer base
Q1 2024 business update Well diversified across technology, markets and customer base Categories Optical networking solutions Subscriber solutions Access & aggregation solutions Market Customers Large Regionals Enterprise / ICP / OEM Domestic International
Slide 18: Revenue by segment, category and region
Q1 2024 business update Revenue by segment, category and region Category Region $41.5 Q1 2023 Q1 2024 $323.9 $226.2 Services & Support Network Solutions Q4 2023 Q1 2024 $225.5 $226.2 Y-o-Y Q-o-Q Q1 2023 Q1 2024 $323.9 $226.2 Access & Aggregation Subscriber Solutions Optical Networking Solutions Q4 2
Slide 19: Financial information
Q1 2024 business update Financial Information Q1 2023 Q1 2024 -30% Q1 2023 Q1 2024 37.3% 41.6% +429bps Q1 2023 Q1 2024 -18% Q1 2023 Q1 2024 Q1 2023 Q4 2023 Q4 2023 Q1 2024 0% Q4 2023 Q1 2024 41.9% 41.6% -33bps Q4 2023 Q1 2024 +5% Q4 2023 Q1 2024 Q4 2023 Q1 2024 Revenue ($m) Non-GAAP gross margin Non
Slide 20: Balance sheet and cash flow highlights
Q1 2024 business update Balance sheet and cash flow highlights In $m Q4 23 Q1 24 Trade accounts receivables $216.4 $187.6 Inventories* $362.3 $322.1 Accounts payables $162.9 $159.1 Net working capital $415.8 $350.6 Operating cash flow generated (used) ($16.3) $36.6 Non-GAAP Free cash flow * ($25.7)
Slide 21: GAAP to Non GAAP Reconciliation
GAAP to Non GAAP Reconciliation 6
Slide 22: Explanation of Use of Non-GAAP Financial Measures
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, other expense, net loss inclusive of the non-controlling interest, net loss attributable to the Company, net income (loss) attributab
Slide 23: Cost of revenue, gross profit and gross margin reconciliation
Cost of Revenue, gross profit and gross margin reconciliation (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 pr
Slide 24: Operating expense reconciliation
Operating expense reconciliation (1) Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $4.4 million is included in selling, general and administrative expenses and $0.5 million is included in
Slide 25: Operating loss reconciliation
Operating loss reconciliation (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 a
Slide 26: Other expense reconciliation
Other expense reconciliation (1) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for Employees. (2) Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countries.
Slide 27: Net loss and loss per share reconciliation
Net loss and loss per share reconciliation (1) Represents the non-controlling interest portion of the Company's ownership of Adtran Networks SE pre-DPLTA and the annual recurring compensation earned by redeemable non-controlling interests and accrued by the Company post-DPLTA. (2) Includes non-cash
Slide 28: Free cash flow reconciliation
Free cash flow reconciliation
Slide 29: Appendix
Appendix 6
Slide 30: 2024 Financial calendar
2024 Financial calendar First quarter 2024 earnings call, conference call - Virtual May 7 Equity Forum German Spring Conference 2024 - Frankfurt May 13 - 15 19th Annual Needham Technology, Media, & Consumer Conference - Virtual May 16 Rosenblatt Age of Al - Virtual June 13 Rosenblatt Age of Al - Vir
Slide 31: Adtran stock information
Adtran stock information 4.7% 5.8% Blackrock Vanguard Egora William Blair Goldman Sachs Other Shareholders YTD stock price development* Shareholder Structure** *Source: Nasdaq ** Release according to Article 40, Section 1 of the WpHG .
Slide 32: Thank you
Thank you