Adtran (ADTN), a manufacturer of networking and communications equipment, has announced a 21.76 percent rise in profit for the quarter ended Mar. 31, 2014, helped by sharp improvement in the operating margins. The company earned $9.61 million or $0.17 a share in the first-quarter, compared with $7.89 million or $0.13 a share a year ago. Analysts on average had predicted net income of $0.16 a share.
Revenue during the first-quarter went up marginally 2.79 percent to $147 million from $143.01 million in the last year period.
Adtran chief executive officer Tom Stanton stated, ''Revenue for the quarter came in at $147 million, up 3% over last year. Lower sales in the US were offset by international sales which grew 56% over the same period last year."
Gross margin expanded by 420 basis points over the last year period to 52.92 percent. Total expenses as a percentage of revenues decreased to 92.31 percent from 95.42 percent in the same period last year. That resulted in improvement of 310 basis points in operating margin to 7.69 percent.
The company reported operating income of $11.30 million, compared with an operating income of $6.56 million in the previous year period.
''Operating income increased 72% buoyed by higher gross margins in both our US and international businesses,'' said Stanton.
Cash flow
Adtran has generated cash of $9.90 million from operating activities during the quarter, down 62.15 percent or $16.26 million when compared with the last year period. It has generated 6.73 cents of operating cash flow in every sales dollar for the quarter, down from 18.29 cents for the same period last year.
The company has generated cash of $13.85 million from investing activities during the quarter, as against cash outgo of $7.92 million in the last year period. It has made net capital expenditure of $2.04 million during the quarter, which was higher by 217.73 percent or $1.40 million from a year ago.
The company's free cash flow accounted for 79.36 percent of operating cash flow for the quarter, compared with 97.54 percent in the last year period.
The company has spent $29.43 million in cash to meet financing activities during the quarter, as against cash outgo of $28.08 million in the last year period.
The company has made net repayment of $16.50 million debt during the quarter. It has spent net of $7.89 million on common stock repurchases. The company's cash dividend payment increased 8.66 percent or $0.48 million to $5.10 million.
As on Mar. 31, 2014, Adtran's cash balance stood at $52.82 million, down 9.93 percent or $5.82 million from Mar. 31, 2013.
Working Capital
Adtran witnessed reduction in the working capital. It stood at $259.02 million as at Mar. 31, 2014, down $88.61 million or 25.49 percent from $347.62 million on Mar. 31, 2013. The company's current ratio decreased to 3.16 as at Mar. 31, 2014 from 4.11 on Mar. 31, 2013.
Debt Position
The company has witnessed a decrease in long-term debt over the last year. As at Mar. 31, 2014, the company's long-term debt stood at $30 million, down 34.78 percent or $16 million from Mar. 31, 2013.
The company's total debt accounts for 3.79 percent of total assets on Mar. 31, 2014, compared with 5.26 percent on Mar. 31, 2013.
The company witnessed a decline in debt to equity ratio to 0.05 on Mar. 31, 2014 when compared with 0.07 on Mar. 31, 2013.
Interest coverage ratio, which determines how easily a company can pay interest expenses on outstanding debt, has improved to 49.77 from 11.30 in the same period last year.
Shares of Adtran fall $2.21 or 8.96 percent to close at $22.46 on Wednesday.
