ADTRAN, Inc. revenue decreased on 4.4% while EBITDA Margin increased on 5.3 pp from -3.5% to 1.9%
02/03/2021 • About ADTRAN, Inc. (
$ADTN) • By InTwits
ADTRAN, Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- ADTRAN, Inc. is a company in decline: 2020 revenue growth was -4.4%, 5 years revenue CAGR was -3.3%
- EBITDA Margin is quite volatile: 1.9% in 2020, -3.5% in 2019, -5.6% in 2018, 8.0% in 2017, 7.7% in 2016
- ADTRAN, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.0%. At the same time it's in pair with industry average of 14.0%
- CAPEX is quite volatile: $6m in 2020, $9m in 2019, $8m in 2018, $15m in 2017, $21m in 2016
- The company has unprofitable business model: ROIC is -2.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
ADTRAN, Inc.'s Revenue decreased on 4.4%. Annual revenue decline showed slowdown in 20Q4 - revenue surged on 12.4%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 5.3 pp from -3.5% to 1.9% in 2020.
Gross Margin increased slightly on 1.6 pp from 41.3% to 43.0% in 2020. During 2016-2020 Gross Margin bottomed in 2018 at 38.5% and was growing since that time. SG&A as a % of Revenue decreased on 2.1 pp from 24.6% to 22.5% in 2020.
Net Income margin surged on 10.5 pp from -10.0% to 0.47% in 2020. During 2016-2020 Net Income margin bottomed in 2019 at -10.0%.
Investments (CAPEX, working capital and M&A)
ADTRAN, Inc.'s CAPEX/Revenue was 1.3% in 2020. ADTRAN, Inc. showed small CAPEX/Revenue decline of 0.94 pp from 2.2% in 2017 to 1.3% in 2020. For the last three years the average CAPEX/Revenue was 1.5%. The company invested a big chunk of EBITDA (68.2%) to CAPEX which didn't stop revenue from falling. CAPEX as a % of Revenue stuck to a declining trend at -0.46 pp per annum in the last 5 years.
Return on investment
The company operates at negative ROIC (-2.4%) and low but positive ROE (0.6%). ROIC increased on 6.8 pp from -9.2% to -2.4% in 2020. ROE surged on 13.4 pp from -12.8% to 0.63% in 2020. During the last 5 years ROE bottomed in 2019 at -12.8%.
Leverage (Debt)
Company's Net Debt / EBITDA is -5.8x and Debt / EBITDA is 0.6x. Debt dropped on 83.7% while cash dropped on 18.5%.
ADTRAN, Inc. has no short term refinancing risk: cash is higher than short term debt (3,331.2%).
Valuation and dividends
ADTRAN, Inc.'s trades at EV/EBITDA 76.1x and P/E 323.7x.
Management team
The company's CEO Thomas R Stanton "Tom" has spent 15 years with the company. Michael K Foliano is a ADTRAN, Inc.'s CFO. Michael K Foliano has spent 2 years at the company.
Financial and operational results
FY ended 12/31/2020
ADTRAN, Inc. ($ADTN) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 636.8 | 666.9 | 529.3 | 530.1 | 506.5 | -4.4% |
| Gross Profit | 291.3 | 303.6 | 203.6 | 219.2 | 217.6 | -0.7% |
| SG&A | 131.8 | 135.6 | 124.4 | 130.3 | 114.0 | -12.5% |
| EBITDA | 49.1 | 53.1 | -29.5 | -18.3 | 9.4 | |
| Net Income | 35.2 | 23.8 | -19.3 | -53.0 | 2.4 | |
Balance Sheet
|
|---|
| Cash | 79.9 | 86.4 | 105.5 | 73.8 | 60.2 | -18.5% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 27.3 | 1.8 | -93.4% |
| Long Term Debt | 26.8 | 25.6 | 24.6 | 5.8 | 3.6 | -38.6% |
Cash flow
|
|---|
| Capex | 21.4 | 14.7 | 8.1 | 9.5 | 6.4 | -32.5% |
Ratios
|
|---|
| Revenue growth | 6.1% | 4.7% | -20.6% | 0.1% | -4.4% | |
| EBITDA growth | 77.3% | 8.0% | -155.6% | -38.0% | -151.3% | |
|
|---|
| Gross Margin | 45.8% | 45.5% | 38.5% | 41.3% | 43.0% | 1.6% |
| EBITDA Margin | 7.7% | 8.0% | -5.6% | -3.5% | 1.9% | 5.3% |
| SG&A, % of revenue | 20.7% | 20.3% | 23.5% | 24.6% | 22.5% | -2.1% |
| Net Income Margin | 5.5% | 3.6% | -3.7% | -10.0% | 0.5% | 10.5% |
| CAPEX, % of revenue | 3.4% | 2.2% | 1.5% | 1.8% | 1.3% | -0.5% |
|
|---|
| ROIC | 7.3% | 7.6% | -9.4% | -9.2% | -2.4% | 6.8% |
| ROE | 7.3% | 4.9% | -4.1% | -12.8% | 0.6% | 13.4% |
| Net Debt/EBITDA | -1.1x | -1.1x | | | -5.8x |
ADTRAN, Inc. ($ADTN) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 115 | 129 | 133 | 130 | | -20.4% | -17.7% | 16.7% | 12.4% |
| EBITDA | 0 | -1 | 9 | 1 | | - | -125.1% | - | - |
| Net Income | -10 | 1 | 5 | 6 | | -1,394.7% | -81.2% | - | - |
Balance Sheet
|
|---|
| Cash | 71 | 69 | 71 | 60 | | -34.7% | -35.3% | -26.3% | -18.5% |
| Short Term Debt | 3 | 2 | 2 | 2 | | -7.8% | -26.3% | -43.5% | -93.4% |
| Long Term Debt | 5 | 4 | 4 | 4 | | -26.3% | -34.9% | -75.8% | -38.6% |
Ratios
|
|---|
| Gross Margin | 45.1% | 41.5% | 44.3% | 41.1% | | 2.9% | -0.0% | 3.7% | 0.4% |
| EBITDA Margin | 0.2% | -1.1% | 7.0% | 1.0% | | 0.8% | -4.8% | 19.9% | 8.4% |
| Net Income Margin | -8.7% | 0.6% | 4.1% | 4.7% | | -9.2% | -2.0% | 44.5% | 14.7% |
Peers in Communications Equipment
Below we provide ADTRAN, Inc. benchmarking against other companies in Communications Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.6% | 3.5% | 3.7% | 4.4% |
|---|
| ADTRAN, Inc. ($ADTN) | - | 4.7% | -20.6% | 0.1% | -4.4% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.7% | 41.0% | 41.2% | 44.3% | 46.8% |
|---|
| ADTRAN, Inc. ($ADTN) | 45.8% | 45.5% | 38.5% | 41.3% | 43.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (32 companies) | 5.5% | 6.0% | 5.4% | 5.0% | 9.3% |
|---|
| ADTRAN, Inc. ($ADTN) | 7.7% | 8.0% | -5.6% | -3.5% | 1.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (32 companies) | 1.9% | 1.8% | 1.7% | 2.5% | 2.2% |
|---|
| ADTRAN, Inc. ($ADTN) | 3.4% | 2.2% | 1.5% | 1.8% | 1.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.2% | 2.1% | 0.7% | 1.2% | 2.3% |
|---|
| ADTRAN, Inc. ($ADTN) | 7.3% | 7.6% | -9.4% | -9.2% | -2.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (24 companies) | -0.8x | -0.6x | -0.1x | -0.3x | -0.3x |
|---|
| ADTRAN, Inc. ($ADTN) | -1.1x | -1.1x | - | - | -5.8x |
