Supply chain constraints took a bite out of 3Q21 gross margin, profits: ADTRAN
ADTRAN Inc. (ADTN) last Thursday revealed that supply chain constraints are expected to have shrunk its gross margin and increased its operating loss during its fiscal third quarter, which ended September 30, 2021. The revelation that the company experienced approximately $9 million in expenses related to supply chain issues was made as the company pre-announced preliminary financial results for the quarter, noting that the figures are approximate and preliminary.
For the quarter, ADTRAN executives expect to report GAAP gross margin of 34.5% and non-GAAP gross margin of 34.6%. Meanwhile, GAAP operating loss is expected to be $10.1 million and non-GAAP operating loss is expected to be $2.6 million. Without the $9 million in charges related to the supply chain problems, gross margin would fall within the range described in its third quarter guidance, the company alleged.
Meanwhile, the company said it expects to have seen $138 million during the quarter, right at the lower edge of the $138 million to $158 million forecasted during the second quarter earnings call. However, a lack of demand for its products isn’t the reason revenues weren’t higher, according to ADTRAN Chairman and CEO Tom Stanton. “We are experiencing record demand for our solutions with Q3 setting an all-time high for bookings in a quarter. This increased demand comes from a diverse mix of global Tier 1 and regional service providers planning to deploy our fiber access platforms, in-home service delivery platforms and SaaS applications. We expect this growth to accelerate,” he stated. “During the third quarter we secured two additional Tier 1 fiber customers, and previously announced Tier 1 fiber customers significantly increased their bookings for our fiber access platforms. Although our revenue growth and profitability in the near-term are impacted by the supply chain issues, our long-term outlook continues to strengthen given the record demand and the supply outlook.”
ADTRAN said it “is working closely with our suppliers and customers to address the near-term supply chain challenges facing the industry.” The company said the issues should peak in the current half of this year and begin to “normalize” by the middle of next year. “Importantly, we expect the impact on ADTRAN’s results to be largely transitory,” the company said. “We are encouraged by the continuation of strong demand and expect to convert today’s bookings to revenue as supply-related pressures ease.”
ADTRAN will hold a conference call to discuss its third quarter and outlook for the fourth quarter on October 15, 2021, at 9:00 a.m. Central Time.
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Stephen Hardy | Editorial Director and Associate Publisher, Lightwave
Stephen Hardy is editorial director and associate publisher of Lightwave and Broadband Technology Report, part of the Lighting & Technology Group at Endeavor Business Media. Stephen is responsible for establishing and executing editorial strategy across the both brands’ websites, email newsletters, events, and other information products. He has covered the fiber-optics space for more than 20 years, and communications and technology for more than 35 years. During his tenure, Lightwave has received awards from Folio: and the American Society of Business Press Editors (ASBPE) for editorial excellence. Prior to joining Lightwave in 1997, Stephen worked for Telecommunications magazine and the Journal of Electronic Defense.
Stephen has moderated panels at numerous events, including the Optica Executive Forum, ECOC, and SCTE Cable-Tec Expo. He also is program director for the Lightwave Innovation Reviews and the Diamond Technology Reviews.
He has written numerous articles in all aspects of optical communications and fiber-optic networks, including fiber to the home (FTTH), PON, optical components, DWDM, fiber cables, packet optical transport, optical transceivers, lasers, fiber optic testing, and more.
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