ADTRAN Holdings, Inc. Reports Preliminary First Quarter 2025 Financial Results

As previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, following the third quarter of 2024, the Company identified errors primarily impacting the carrying values of the redeemable non-controlling interest, retained deficit, the net income attributable to the non-controlling interest and the net loss attributable to the Company and, as a consequence, of the loss per common share attributable to the Company. As previously disclosed, the Company evaluated the errors and determined that the related impacts were not material to the previously issued consolidated financial statements for any prior period. A summary description of the errors in the Company's Condensed Consolidated Financial Statements for the period ended March 31, 2024 is as follows:

The Company will be revising its previously issued 2024 interim financial statements and 2024 annual financial statements in connection with its future filings on Form 10-Q for the periods ended March 31, 2025, June 30, 2025 and September 30, 2025 and Form 10-K for the year ended December 31, 2025.

The following tables reflect the expected impact of the revisions to the specific line items presented in the Company's previously reported (i) balance sheets as of March 31, 2024 and as of December 31, 2024, (ii) statements of loss and comprehensive loss for the quarter ended March 31, 2024 and the quarter and year ended December 31, 2024, (iii) the statements of changes in stockholders equity as of March 31, 2024 and December 31, 2024, (iv) statements of cash flows for the quarter ended March 31, 2024 and the year ended December 31, 2024 and (v) the net cash provided by operating activities for the quarter ended December 31, 2024. The preliminary financial information in this press release reflects these revisions.

Revised Line Items in the Condensed Consolidated Balance Sheet as of March 31, 2024 (unaudited):

Revised Line Items in the Condensed Consolidated Statement of Loss and Condensed Consolidated Statement of Comprehensive Loss for the fiscal quarter ended March 31, 2024 (unaudited):

Revised Line Items in the Condensed Consolidated Statement of Loss for the fiscal quarter ended December 31, 2024 (unaudited):

Revised Line Items in the Consolidated Balance Sheet as of December 31, 2024 (unaudited):

Revised Line Items in the Consolidated Statement of Loss and Consolidated Statement of Comprehensive Loss for the fiscal year ended December 31, 2024 (unaudited):

Revised Line Items in the Condensed Consolidated Statement of Changes in Stockholders Equity as of March 31, 2024 (unaudited):

Revised Line Items in the Consolidated Statement of Changes in Stockholders Equity as of December 31, 2024 (unaudited):

Revised Line Items in the Condensed Consolidated Statement of Cash Flows for the quarter ended March 31, 2024 (unaudited):

Revised Line Items in the Consolidated Statement of Cash Flows for the year ended December 31, 2024 (unaudited):

Revised Net Cash Provided by Operating Activities for the quarter ended December 31, 2024 (unaudited):

For additional information, please refer to our note 1 to the Condensed Consolidated Financial Statement set forth in the Form 10-Q for the quarterly period ended March 31, 2025 to be filed with the SEC.

Condensed Consolidated Balance Sheets

(Preliminary, Unaudited)

(In thousands)

Condensed Consolidated Statements of Loss

(Preliminary, Unaudited)

(In thousands, except per share amounts)

^{(1) For the three months ended March 31, 2025, we accrued $2.4 million net income attributable to non-controlling interest, representing the recurring cash compensation earned by non-controlling interest shareholders post-DPLTA. For the three months ended March 31, 2024, we recognized $2.5 million of net gain attributable to non-controlling interest, representing the recurring cash compensation earned by non-controlling interest shareholders post DPTLA.}

^{(2) Loss per common share attributable to ADTRAN Holdings, Inc. - basic and diluted - reflects a $(3) thousand effect of redemption of RNCI for the three months ended March 31, 2025.}

Condensed Consolidated Statements of Cash Flows

(Preliminary, Unaudited)

(In thousands)

Supplemental Information

Reconciliation of Preliminary Gross Profit and Preliminary Gross Margin to

Preliminary Non-GAAP Gross Profit and Preliminary Non-GAAP Gross Margin

(Unaudited)

(In thousands)

^{(1) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations. We incur charges relating to the amortization of intangible assets and exclude these charges for purposes of calculating our non-GAAP measures. Such charges are significantly impacted by the timing and magnitude of our acquisitions. We exclude these charges for the purpose of calculating our non-GAAP measures, primarily because they are noncash expenses and our internal benchmarking analyses evidence that many industry participants and peers present non-GAAP financial measures excluding intangible asset amortization. Although this does not directly affect our cash position, the loss in value of intangible assets overtime can have a material impact on the equivalent GAAP earnings measure.}

^{(2) Includes expenses for a Business Efficiency Program designed to optimize the assets and business processes following the business combination with Adtran Networks. Other than the Company's aim of selling its headquarters, the Business Efficiency Program was completed as of December 31, 2024.}

^{(3) Includes expenses related to the Company's one-time integration bonus program in connection with synergy targets as a result of the business combination with Adtran Networks which was completed as of December 31, 2024.}

Supplemental Information

Reconciliation of Preliminary Operating Expenses to Preliminary Non-GAAP Operating Expenses

(Unaudited)

(In thousands)

^{(1) We incur charges relating to the amortization of intangible assets and exclude these charges for purposes of calculating our non-GAAP measures. Such charges are significantly impacted by the timing and magnitude of our acquisitions. We exclude these charges for the purpose of calculating our non-GAAP measures, primarily because they are non-cash expenses and our internal benchmarking analyses evidence that many industry participants and peers present non-GAAP financial measures excluding intangible asset amortization. Although this does not directly affect our cash position, the loss in value of intangible assets over time can have a material impact on the equivalent GAAP earnings measure.}

^{(2) Includes $2.2M of intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations.}

^{(3) $2.0 million is included in selling, general and administrative expenses and $0.9 million is included in research and development expenses on the condensed consolidated statements of loss.}

^{(4) Other than the Company's aim of selling its headquarters, the Business Efficiency Program was completed as of December 31, 2024.}

^{(5) Includes expenses related to the Company's one-time integration bonus program in connection with synergy targets as a result of the business combination with Adtran Networks and which was completed as of December 31, 2024.}

^{(6) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for certain employees, all of which is included in selling, general and administrative expenses on the condensed consolidated statement of loss.}

^{(7) Includes $4.3M of intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations and $1.0 million of legal and advisory fees related to a previously contemplated significant transaction which are included in selling, general and administrative expenses on the condensed consolidated statements of loss.}

^{(8) $2.4 million is included in selling, general and administrative expenses and $1.0 million is included in research and development expenses on the condensed consolidated statements of loss.}

^{(9) $1.2 million is included in selling, general and administrative expenses and $2.4 million is included in research and development expenses on the condensed consolidated statements of loss. Includes expenses for a Business Efficiency Program designed to optimize the assets and business processes following the business combination with Adtran Networks. Other than the Company's aim of selling its headquarters, the Business Efficiency Program was completed as of December 31, 2024.}

^{(10) $0.6 million is included in selling, general and administrative expenses and less than $0.1 million is included in research and development expenses on the condensed consolidated statements of loss, and is primarily related to the Company's one-time integration bonus program in connection with synergy targets as a result of the business combination with Adtran Networks.}

^{(11) 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 research and development expenses on the condensed consolidated statements of loss.}

^{(12) $2.5 million is included in selling, general and administrative expenses and $1.0 million is included in research and development expenses on the condensed consolidated statements of loss.}

^{(13) $1.8 million is included in selling, general and administrative expenses and $4.1 million is included in research and development expenses on the condensed consolidated statements of loss. Includes expenses for a Business Efficiency Program designed to optimize the assets and business processes following the business combination with Adtran Networks. Other than the Company's aim of selling its headquarters, the Business Efficiency Program was completed as of December 31, 2024.}

^{(14) $0.5 million is included in selling, general and administrative expenses and $0.02 million is included in research and development expenses on the condensed consolidated statements of loss. Includes legal and advisory fees totaling $0.1 million related primarily to the DPLTA proceedings that are recorded in selling, general and administrative expenses. Includes expenses totaling $0.4 million related to the Company's one-time integration bonus program in connection with synergy targets as a result of the business combination with Adtran Networks of which $0.4 million are included in selling, general and administrative expenses and $0.02 million are included in research and development expenses. The transformation bonus expense of $0.4 million includes $0.2 million of stock compensation expense.}

^{(15) Non-cash impairment of goodwill in our Network Solutions reporting unit, necessitated by factors such as a decrease in the Company's market capitalization, cautious service provider spending due to economic uncertainty and continued elevated customer inventory adjustments.}

Supplemental Information

Reconciliation of Preliminary Operating Loss to Preliminary Non-GAAP Operating Income (Loss)

(Unaudited)

(In thousands)

^{(1) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations. We incur charges relating to the amortization of intangible assets and exclude these charges for purposes of calculating our non-GAAP measures. Such charges are significantly impacted by the timing and magnitude of our acquisitions. We exclude these charges for the purpose of calculating our non-GAAP measures, primarily because they are non-cash expenses and our internal benchmarking analyses evidence that many industry participants and peers present non-GAAP financial measures excluding intangible asset amortization. Although this does not directly affect our cash position, the loss in value of intangible assets overtime can have a material impact on the equivalent GAAP earnings measure.}

^{(2) Includes expenses for a Business Efficiency Program designed to optimize the assets and business processes following the business combination with Adtran Networks. Other than the Company's aim of selling its headquarters, the Business Efficiency Program was completed as of December 31, 2024.}

^{(3) Includes expenses related to the Company's one-time integration bonus program in connection with synergy targets as a results of the business combination with Adtran Networks.}

^{(4) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for certain employees, all of which is included in selling, general and administrative expenses on the condensed consolidated statement of loss.}

^{(5) Non-cash impairment of goodwill in our Network Solutions reporting unit, necessitated by factors such as a decrease in the Company's market capitalization, cautious service provider spending due to economic uncertainty and continued elevated customer inventory adjustments.}

Supplemental Information

Reconciliation of Preliminary Other Expense to Preliminary Non-GAAP Other Expense

(Unaudited)

(In thousands)

^{(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.}

Supplemental Information

Reconciliation of Preliminary Net Loss inclusive of Non-Controlling Interest to

Preliminary Non-GAAP Net Income (Loss) inclusive of Non-Controlling Interest

(Unaudited)

and

Reconciliation of Preliminary Net Loss attributable to ADTRAN Holdings, Inc. and

Preliminary Loss per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted to

Preliminary Non-GAAP Net Income (Loss) attributable to ADTRAN Holdings, Inc. and

Preliminary Non-GAAP Earnings (Loss) per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted

(Unaudited)

(In thousands, except per share amounts)

^{((1) Loss per common share attributable to ADTRAN Holdings, Inc. - basic and diluted - reflects a $3 thousand and $5 thousand effect of redemption for the three months ended March 31, 2025 and December 31, 2024 respectively.}

^{(2) 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 the Company post-DPLTA.}

^{(3) We incur charges relating to the amortization of intangible assets and exclude these charges for purposes of calculating our non-GAAP measures. Such charges are significantly impacted by the timing and magnitude of our acquisitions. We exclude these charges for the purpose of calculating our non-GAAP measures, primarily because they are non-cash expenses and our internal benchmarking analyses evidence that many industry participants and peers present non-GAAP financial measures excluding intangible asset amortization. Although this does not directly affect our cash position, the loss in value of intangible assets over time can have a material impact on the equivalent GAAP earnings measure.}

^{(4) Includes non-cash change in fair value of equity investments held in deferred compensation plans offered to certain employees.}

^{(5) Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countries.}

^{(6) Includes expenses for a Business Efficiency Program designed to optimize the assets and business processes following the business combination with Adtran Networks. Other than the Company's aim of selling its headquarters, the Business Efficiency Program was completed as of December 31, 2024.}

^{(7) Includes expenses related to the Company's one-time integration bonus program in connection with synergy targets as a results of the business combination with Adtran Networks. Includes fees incurred for the expansion of internal controls at Adtran Networks and the implementation of the DPTLA which was completed as of December 31, 2024.}

^{(8) Represents the tax effect of non-GAAP adjustments. Beginning in the period ended September 30, 2024, the Company changed its method of calculating non-GAAP income taxes by applying blended statutory tax rates to non-GAAP losses before income taxes in order to include current and deferred income tax expenses that are commensurate with the non-GAAP measure of profitability. The blended statutory tax rate is calculated using 0%, resulting in no tax benefits net of impact of valuation allowance, for the loss jurisdiction's non-GAAP losses before income taxes and 30% for all remaining jurisdictions' non-GAAP income before income taxes. Prior periods have been adjusted to reflect the application of blended statutory tax rates, net of impact of valuation allowance, to non-GAAP losses before income taxes as opposed to the previous application of blended statutory and effective tax rates to separate non-GAAP adjustments. We previously reported the tax effect of the adjustment to non-GAAP net loss under the prior method of $5.6 million for the three months ended March 31, 2024.}

Supplemental Information

Reconciliation of Preliminary Net Cash Provided By Operating Activities to Preliminary Free Cash Flow

(Unaudited)

(In thousands)

^{(1) Purchases related to capital expenditures and developed technologies.}

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