Adtran Holdings, Inc. · NASDAQ:ADTN
Adtran — Q4 2023 Earnings Presentation
32 slides from Adtran's earnings presentation, Feb 27, 2024
Slide 1: Adtran Holdings Investor presentation
Adtran Holdings Investor presentation February 27, 2024
Slide 2: Cautionary note regarding forward-looking statements
Cautionary note regarding forward-looking statements Statements contained in this presentation which are not historical facts, such as those relating to expectations regarding earnings, expenses and margin; the ability of ADTRAN Holdings, Inc. (“ADTRAN Holdings”) to reduce expenses in the coming yea
Slide 3: Introduction and business model
Introduction and business model 1
Slide 4: Adtran key facts and differentiators
1,000+ Global technology patents 3,300+ Employees worldwide $1.15B Preliminary 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, ent
Slide 5: 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 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: Adtran is a global vendor with scale and diversity
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 SPs, enterprise
Slide 8: Optical core to customer premise
Optical core to customer premise 5G 10G PON ONT Optical networking Access and aggregation Subscriber solutions Deployment and support services AI-driven orchestration, management and optimization Fiber access & aggregation platforms DCI IoT Subscriber platforms Smart Optical platforms Metro WDM Soft
Slide 9: Our portfolio
Our portfolio Subscriber solutions Open multi-gig PON systems, Carrier Ethernet access, Wi-Fi, IoT, routers, switches and more Access and aggregation solutions Fiber access platforms, 1/10/25/100G Ethernet aggregation, network timing and synchronization Optical networking solutions Optical access an
Slide 10: A unique scaled pure play addressing the converged edge
A unique scaled pure play addressing the converged edge Network focus Converged edge RAN, core / metro Core / Metro Core / Metro Fixed line Metro / Access Customer focus Tier 1, 2, 3 CSPs enterprises Tier 1, 2 CSPs Tier 1 CSPs ICPs Tier 1 CSPs ICPs Tier 2, 3 CSPs Tier 2, 3 CSPs Customer premises (Re
Slide 11: Market trends
Market trends Pandemic has 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 have displa
Slide 12: Fiber networking market forecasts
Fiber networking market forecasts CAGR 2023-2028: 3.2% CAGR 2022-2028: 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 Provider Switching
Slide 13: Significant tailwinds still expected to drive long term growth
Significant tailwinds still 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 First tranche (~20%) of funding to be a
Slide 14: Corporate social responsibility
Corporate social responsibility EcoVadis Adtran, Inc. Adtran Networks CDP B- Climate change 2023 A- Adtran Inc. Adtran SE Environmental Sustainability is integral part of product strategy through process-based product ecodesign and lifecycle assessment (LCA) Involvement of supply chain based on Inte
Slide 15: Adtran SBTi net zero long-term targets submitted Q4 2023
Adtran SBTi net zero long-term targets submitted 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 renewable energy
Slide 16: Why Adtran?
Why Adtran? Differentiated portfolio from optical core to customer premise with a balanced mix of large and regional Service provider, enterprise, and ICP customers Differentiation and diversification The historic demand for fiber is supported by public/private stimulus to deploy fiber-based broadba
Slide 17: Business update
Business update 5
Slide 18: Preliminary Q4 2023 business results
Preliminary Q4 2023 business results Sequential increase in subscriber solutions contribution Optical networking solutions Subscriber solutions Access & aggregation solutions Continued regional diversification Balanced customer diversification with regional SP having the largest revenue share Large
Slide 19: Q4 2023 technology update
Q4 2023 technology update Metro WDM 5G Optical platforms Access and Aggregation platforms Subscriber platforms Optical networking Access and aggregation Subscriber solutions Latest Wi-Fi 6, 6E and 7 platforms driving growth in residential CPE along with launch of Intellifi Added 50 new Mosaic One cu
Slide 20: Preliminary Q4 2023 revenue by segment, category and region
Preliminary Q4 2023 revenue by segment, category and region Category Region $40.8 Q4 2022 $45.1 Q4 2023 $358.3 $225.5 Services & Support Network Solutions Q3 2023 Q4 2023 $272.3 $225.5 Y-o-Y Q-o-Q Q4 2022 Q4 2023 $358.3 $225.5 Access & Aggregation Subscriber Solutions Optical Networking Solutions Q3
Slide 21: Preliminary Q4 2023 financial information
Preliminary Q4 2023 financial information Q4 2022 Q4 2023 225.5 -37% Q4 2022 Q4 2023 39.1% 41.9% +277bps Q4 2022 Q4 2023 -18% Q4 2022 Q4 2023 Q4 2022 Q4 2023 Q3 2023 Q4 2023 -17% Q3 2023 Q4 2023 40.3% 41.9% +155bps Q3 2023 Q4 2023 -15% Q3 2023 Q4 2023 Q3 2023 Q4 2023 Revenue ($m) Non-GAAP gross marg
Slide 22: Preliminary Q4 2023 balance sheet and cash flow highlights
Preliminary Q4 2023 balance sheet and cash flow highlights In $m Q3 23 Q4 23 Trade accounts receivables $229.3 $216.4 Inventories* $374.0 $362.3 Accounts payables $148.9 $162.9 Net working capital $454.4 $415.8 Operating cash flow generated (used) $6.8 ($23.6) Cash $116.1 $87.2 72 Q4 22 69 Q1 23 5
Slide 23: Appendix
Appendix 6
Slide 24: Financial calendar
Financial calendar 13-15 May, 2024 Equity Forum German Spring Conference 2024 Frankfurt 27 Feb, 2024 Fourth quarter 2023 earnings call, conference call
Slide 25: Adtran stock information
Adtran stock information Blackrock Vanguard Egora 5.1% William Blair Other Shareholders 2023 stock price development* Shareholder Structure** *Source: Nasdaq **The percentages shown are derived from the shareholders' Schedule 13G and 13D filings as of February 14, 2024, reflecting ownership as of De
Slide 26: 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) income, net (loss) income inclusive of the non-controlling interest, net (loss) income attributable to the Company, n
Slide 27: Reconciliation of gross profit and gross margin to non-GAAP
Reconciliation of gross profit and gross margin to non-GAAP gross profit and non-GAAP gross margin (1) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations. (2) I
Slide 28: Reconciliation of operating expenses to non-GAAP operating expenses
Reconciliation of operating expenses to non-GAAP operating expenses (1) Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $3.7 million is included in selling, general and administrative expens
Slide 29: Reconciliation of operating loss to non-GAAP operating (loss) income
Reconciliation of operating loss to non-GAAP operating (loss) income (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 impairment charges rel
Slide 30: Reconciliation of other (expense) income to non-GAAP
Reconciliation of other (expense) income to non-GAAP other (expense) income (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 p
Slide 31: Further reconciliations related to net income and earnings per share
Further reconciliations related to net income, net loss, earnings per share, loss per share (1) Represents the non-controlling interest portion of the Company's ownership of Adtran Networks pre-DPLTA and the annual recurring compensation earned by redeemable non-controlling interests and accrued by
Slide 32: Thank you
Thank you