UTStarcom (“UT” or “the Company”) (NASDAQ: UTSI), a global
telecommunications infrastructure provider, today reported its
unaudited financial results for the third quarter ended September
30, 2018.
UTStarcom’s Chief Executive Officer Mr. Tim Ti commented, “Third
quarter revenue of $52 million far exceeded expectations, as we
continued our penetration of the India market. Our customer
relationships are strong and in particular this quarter we were
fulfilling a large order for a top customer building out a major
project. Gross profit of $10 million was up sequentially,
reflecting increased revenue from India. We exercised
disciplined expense control, resulting in significant operating
income growth.”
Ti continued, “Innovation is our core competency and we remain
committed to technology leadership through continuing investments
in our R&D capabilities. We are excited about the
opportunity presented by the worldwide transition to 5G. Our
steadily expanding product portfolio positions us well to capture
market share and drive growth in the quarters ahead.”
Recent Business Highlights
- The Company formed a strategic partnership with Tongding
Internet Information Co., Ltd. (TD) to jointly market and
distribute the respective companies’ products and services in China
and international markets. Upon the formation of this
strategic partnership, UTStarcom and TD intend to focus on
developing their optical fiber cable businesses in India as well as
marketing and selling UTStarcom’s flagship PTN and SyncRing
products in China
- The Company introduced the SyncRing XGM30, the latest product
offering in its SyncRing family of network synchronization
equipment. Designed as a robust IP65-compliant compact
outdoor device, the XGM30 uses the GNSS satellite signal as a
primary time reference. It supports PTP IEEE 1588-2008
(1588V2) and Sync technologies to deliver highly accurate frequency
and time synchronization. Additionally, the XGM30 enables
mobile network operators to cost-effectively meet the stringent
time synchronization requirements of LTE/LTE-A and 5G networks
- The Company participated in the International Timing & Sync
Forum (ITSF) in Bucharest, Romania, where the Company showcased the
SyncRing XGM30 product. ITSF is the largest specialist time
and synchronization conference in the world, covering a number of
emerging applications across various industry sectors including
telecommunication, finance, energy, transport, broadcast and
defense. In addition, the Company delivered a keynote
address, “Sync over Packet for the 5G Era”, highlighting the
challenges related to the cost-effectiveness of highly accurate
synchronization in mobile networks
Third Quarter 2018 Financial Results
Summary of Q3 2018 Key Financials |
|
|
Q3 2018 |
Y/Y Change* |
Q/Q Change* |
Revenue |
|
$52.1 |
|
+100.1% |
|
|
+82.5% |
|
Gross Profit |
|
$9.9 |
|
-6.4% |
|
|
+32.2% |
|
Operating Expenses |
|
$5.8 |
|
-22.5% |
|
|
-16.9% |
|
Operating Income |
|
$4.1 |
|
+33.1% |
|
|
+728.9% |
|
Net Income |
|
$2.1 |
|
-$0.0 |
|
|
+$2.2 |
|
Basic EPS |
|
$0.06 |
|
-- |
|
|
+$0.06 |
|
Cash Balance (including Restricted Cash) |
|
$66.8 |
|
-39.0% |
|
|
-17.0% |
|
*Dollar comparisons are used where percentage comparisons are
not meaningful.*All the numbers in U.S. Dollars are in millions
except for Earnings Per Share (EPS)
Total Revenues
Q3 2018 total revenues were $52.1 million, compared to $26.0
million in the corresponding period in 2017.
- Q3 2018 net equipment sales were $46.3 million, an increase of
126.0% from $20.5 million in the corresponding period in
2017. The increase was due to rapidly growing sales in
India
- Q3 2018 net services sales were $5.8 million, an increase of
4.7% from $5.5 million in the corresponding period in 2017.
The slight increase was due to higher India annual maintenance
services
Gross Profit
Q3 2018 gross profit was $9.9 million, or 19.0% of net sales,
compared to $10.6 million, or 40.5% of net sales, in the
corresponding period in 2017.
- Q3 2018 equipment gross profit was $6.4 million, compared to
$8.2 million in the corresponding period in 2017. Q3 2018
equipment gross margin was 13.8%, compared to 39.9% for the
corresponding period in 2017. The decreased gross margin was
mainly due to the higher proportion of equipment revenue from India
which typically commands a lower gross margin in this competitive
market
- Q3 2018 service gross profit was $3.5 million, compared to $2.4
million in the corresponding period in 2017. Q3 2018 service
gross margin was 60.2%, compared to 42.6% for the corresponding
period in 2017. The increased gross margin was mainly due to
higher India annual maintenance services
Operating Expenses
Q3 2018 operating expenses were $5.8 million, compared to $7.5
million in the corresponding period in 2017.
- Q3 2018 selling, general and administrative (“SG&A”)
expenses were $3.2 million, compared to $5.3 million in the
corresponding period in 2017. SG&A was lower in third
quarter of 2018 due to the absence of non-recurring expenses
related to privatization and change of auditors in 2017
- Q3 2018 research and development expenses were $2.6 million,
compared to $2.2 million in the corresponding period in 2017.
The increase reflected our continuing investment in new technology
and product development
Operating Income
Q3 2018 operating income was $4.1 million, compared to $3.1
million in the corresponding period in 2017.
Interest Income, Net
Q3 2018 net interest income was $0.4 million, compared to $0.2
million in the corresponding period in 2017.
Other Expenses, Net
Q3 2018 net other expenses were $1.8 million, compared to net
other expenses of $3,000 in the corresponding period in 2017.
The increase in other expenses were due to foreign exchange losses
resulting from the devaluation of Indian Rupee against U.S.
dollars.
Net Income
Q3 2018 net income attributable to shareholders was $2.1
million, compared to net income of $2.2 million in the
corresponding period in 2017. Q3 2018 basic net income per
share was $0.06, compared to basic net income per share of $0.06
for the corresponding period in 2017.
Cash Flow
During Q3 2018, cash used in operating activities was $11.6
million, cash used in investing and financing activities (stock
repurchases) were $1.0 million. As of September 30, 2018,
UTStarcom had cash, cash equivalent and restricted cash of $66.8
million.
Outlook
For the fourth quarter, the Company expects to generate revenue
in the range of $10 million to $15 million. The Company’s
quarterly revenue pattern is naturally uneven due to the timing of
large project fulfillment.
Third Quarter 2018 Conference Call Details
The Company’s management will host an earnings conference call
at 8:00 a.m. U.S. Eastern Time on Friday, November 9, 2018 (9:00
p.m. Hong Kong/Beijing Time).
The conference call dial-in numbers are as follows:
United States: +1 (866) 519-4004Canada: + 1 (866) 386-1016Hong
Kong:
+852-3018-6771
China: 4006-208-038 Other International: +65 6713-5090
The attendee passcode is 2958189.
A replay of the call will be available two hours after the end
of the conference call until 9:59 a.m. U.S. Eastern Time on
December 10, 2018.
The conference call replay numbers are as follows:
United States: +1 (855) 452-5696Hong Kong: 800-963-117China:
4006-022-065Other International: +61-2-8199-0299
The replay passcode for accessing the recording is 2958189.
Investors will also have the opportunity to listen to the live
conference call and the replay over the Internet through the
investor relations section of UTStarcom’s web site at:
http://www.utstar.com.
About UTStarcom Holdings Corp.
UTStarcom is committed to helping network operators offer their
customers the most innovative, reliable, and cost-effective
communication services. UTStarcom offers high performance
advanced equipment optimized for the most rapidly growing network
functions, such as mobile backhaul, metro aggregation and broadband
access. UTStarcom is further leveraging its technology
expertise to bring smart networked products to new applications,
such as its goBox automated refrigerated dispenser for retail
stores. UTStarcom has operating entities in Hong Kong,
Taipei, Tokyo (Japan), San Jose (USA), New Delhi, Bangalore, Mumbai
and Kolkata (India), Hangzhou and Chengdu (China). UTStarcom
was founded in 1991 and listed its shares on the Nasdaq Market in
2000 (symbol: UTSI). For more information about UTStarcom,
please visit http://www.utstar.com.
Forward-Looking Statements
This press release includes forward-looking statements,
including statements regarding the Company’s strategic initiatives
and the Company’s business outlook. These statements are
forward-looking in nature and subject to risks and uncertainties
that may cause actual results to differ materially and adversely
from the Company’s current expectations. These include risks
and uncertainties related to, among other things, changes in the
financial condition and cash position of the Company, changes in
the composition of the Company’s management and their effect on the
Company, the Company’s ability to realize anticipated results of
operational improvements and benefits of the divestiture
transaction, the ability to successfully identify and acquire
appropriate technologies and businesses for inorganic growth and to
integrate such acquisitions, the ability to internally innovate and
develop new products, assumptions the Company makes regarding the
growth of the market and the success of the Company’s offerings in
the market and the Company’s ability to execute its business plan
and manage regulatory matters. The risks and uncertainties
also include the risk factors identified in the Company’s latest
annual report on Form 20-F and current reports on
Form 6-K as filed with the Securities and Exchange Commission.
The Company is in a period of strategic transition and the
conduct of its business is exposed to additional risks as a result.
All forward-looking statements included in this press release
are based upon information available to the Company as of the date
of this press release, which may change and the Company assumes no
obligation to update any such forward-looking statements.
For investor and media inquiries, please
contact:
UTStarcom Holdings Corp.
Tel: +852-3951-9757Ms. Fei Wang, Director of Investor Relations
Email: fei.wang@utstar.com
Ms. Ning Jiang, Investor RelationsEmail: njiang@utstar.com
In the United States:
The Blueshirt Group Mr. Ralph FongTel: +1 (415) 489-2195Email:
ralph@blueshirtgroup.com
UTStarcom Holdings Corp. |
|
Unaudited Condensed Consolidated Balance
Sheets |
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
(In thousands) |
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
50,610 |
|
$ |
79,749 |
|
Short-term investments |
|
- |
|
3,143 |
|
Accounts
and notes receivable, net |
|
98,547 |
|
16,911 |
|
Inventories and deferred costs |
|
20,705 |
|
40,684 |
|
Short-term restricted cash |
|
8,596 |
|
12,099 |
|
Prepaid
and other current assets |
|
13,541 |
|
14,227 |
|
Total
current assets |
|
191,999 |
|
166,813 |
|
Long-term assets: |
|
|
|
|
|
Property,
plant and equipment, net |
|
1,364 |
|
1,714 |
|
Long-term
deferred costs |
|
21 |
|
277 |
|
Long-term
restricted cash |
|
7,579 |
|
8,839 |
|
Other
long-term assets |
|
11,034 |
|
9,401 |
|
Total
long-term assets |
|
19,998 |
|
20,231 |
|
Total
assets |
|
$ |
211,997 |
|
$ |
187,044 |
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
|
$ |
75,395 |
|
$ |
27,452 |
|
Customer
advances |
|
4,701 |
|
21,828 |
|
Deferred
revenue |
|
1,762 |
|
7,286 |
|
Other
current liabilities |
|
23,919 |
|
31,698 |
|
Total
current liabilities |
|
105,777 |
|
88,264 |
|
Long-term
liabilities: |
|
|
|
|
|
Long-term
deferred revenue and other liabilities |
|
5,589 |
|
7,788 |
|
Total
liabilities |
|
111,366 |
|
96,052 |
|
|
|
|
|
|
|
Total equity |
|
100,631 |
|
90,992 |
|
Total
liabilities and equity |
|
$ |
211,997 |
|
$ |
187,044 |
|
|
|
|
|
|
|
|
|
UTStarcom Holdings Corp. |
Unaudited Condensed Consolidated Statements of
Operations |
|
|
|
Three months ended September
30, |
|
|
Nine months ended September 30, |
|
|
|
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands,
except per share data) |
|
Net sales |
|
$ |
52,092 |
|
$ |
26,034 |
|
|
103,218 |
|
$ |
80,057 |
|
|
Cost of net sales |
|
42,209 |
|
15,479 |
|
|
76,713 |
|
51,474 |
|
|
Gross profit |
|
9,883 |
|
10,555 |
|
|
26,505 |
|
28,583 |
|
|
|
|
19.0 |
% |
40.5 |
% |
|
25.7 |
% |
35.7 |
% |
|
Operating
expenses: |
|
3,234 |
|
|
|
|
|
|
|
Selling, general and
administrative |
|
3,234 |
|
5,284 |
|
|
11,354 |
|
13,839 |
|
|
Research and
development |
|
2,571 |
|
2,207 |
|
|
8,272 |
|
6,296 |
|
|
Total operating
expenses |
|
5,805 |
|
7,491 |
|
|
19,626 |
|
20,135 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
4,078 |
|
3,064 |
|
|
6,879 |
|
8,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income,
net |
|
418 |
|
214 |
|
|
1,215 |
|
794 |
|
|
Other income (expense),
net |
|
(1,842 |
) |
(3 |
) |
|
(2,174 |
) |
2,395 |
|
|
Equity pick up of
losses of an associate |
|
(114 |
) |
(290 |
) |
|
(262 |
) |
(290 |
) |
|
Investment
Impairment |
|
— |
|
— |
|
|
— |
|
(1,308 |
) |
|
Income before income
taxes |
|
2,540 |
|
2,985 |
|
|
5,658 |
|
10,039 |
|
|
Income tax benefit
(expense) |
|
(393 |
) |
(795 |
) |
|
433 |
|
495 |
|
|
Net Income attributable
to UTStarcom Holdings Corp. |
|
$ |
2,147 |
|
$ |
2,190 |
|
|
$ |
6,091 |
|
$ |
10,534 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income per share
attributable to UTStarcom Holdings Corp.—Basic |
|
$ |
0.06 |
|
$ |
0.06 |
|
|
$ |
0.17 |
|
$ |
0.30 |
|
|
Weighted average shares
outstanding—Basic |
|
35,626 |
|
35,484 |
|
|
35,642 |
|
35,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UTStarcom Holdings Corp. |
Unaudited Condensed Consolidated Statements of
Cash Flows |
|
|
|
Three months ended September
30, |
|
|
|
Nine months ended September 30, |
|
|
|
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net Income |
|
$ |
2,147 |
|
$ |
2,190 |
|
|
|
$ |
6,091 |
|
$ |
10,534 |
|
|
Depreciation |
|
170 |
|
|
151 |
|
|
542 |
|
466 |
|
|
Provision
for doubtful accounts |
|
(24 |
) |
|
844 |
|
|
519 |
|
715 |
|
|
Provision
for (recovery of) deferred costs |
|
(1,611 |
) |
|
652 |
|
|
(3,365 |
) |
4,179 |
|
|
Stock-based compensation expense |
|
293 |
|
|
265 |
|
|
693 |
|
655 |
|
|
Net loss
(gain) on disposal of assets |
|
10 |
|
|
— |
|
|
(21 |
) |
— |
|
|
Gain on
release of tax liability due to expiration of the statute of
limitations |
|
— |
|
|
— |
|
|
— |
|
(1,478 |
) |
|
Deferred
income taxes |
|
21 |
|
|
(3 |
) |
|
45 |
|
228 |
|
|
Loss from
equity investments, net |
|
114 |
|
|
290 |
|
|
262 |
|
290 |
|
|
Other-than-temporary impairment of equity investments |
|
— |
|
|
— |
|
|
— |
|
1,308 |
|
|
Gain on
Cumulative Transfer Adjustment recognition from liquidation
subsidiaries |
|
— |
|
|
— |
|
|
— |
|
(1,703 |
) |
|
Changes
in operating assets and liabilities |
|
(12,723 |
) |
|
(1,793 |
) |
|
(35,136 |
) |
(1,721 |
) |
|
Net cash
provided by (used in) operating activities |
|
(11,603 |
) |
|
2,596 |
|
|
(30,370 |
) |
13,473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Additions
to property, plant and equipment |
|
— |
|
|
(147 |
) |
|
(221 |
) |
(348 |
) |
|
Purchase
of investment interests |
|
(76 |
) |
|
(381 |
) |
|
(1,847 |
) |
(481 |
) |
|
Purchase
of short term investment |
|
— |
|
|
(3,373 |
) |
|
— |
|
(3,373 |
) |
|
Proceeds
from refund of investment interest |
|
— |
|
|
— |
|
|
— |
|
479 |
|
|
Proceeds
from sale of short term investment |
|
— |
|
|
— |
|
|
3,143 |
|
— |
|
|
Net cash
provided by (used in) investing activities |
|
(76 |
) |
|
(3,901 |
) |
|
1,075 |
|
(3,701 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Proceeds
from exercise of stock options |
|
— |
|
|
— |
|
|
71 |
|
— |
|
|
Repurchase of ordinary share |
|
(885 |
) |
|
— |
|
|
(2,019 |
) |
(140 |
) |
|
Net cash
used in financing activities |
|
(885 |
) |
|
— |
|
|
(1,948 |
) |
(140 |
) |
|
Effect of exchange rate
changes on cash and cash equivalents |
|
(1,130 |
) |
|
(519 |
) |
|
(2,658 |
) |
1,253 |
|
|
Net
increase (decrease) in cash and cash equivalents |
|
(13,694 |
) |
|
(1,824 |
) |
|
(33,901 |
) |
10,885 |
|
|
Cash, cash equivalents
and restricted cash at beginning of period |
|
80,479 |
|
|
111,350 |
|
|
100,686 |
|
98,641 |
|
|
Cash, cash equivalents
and restricted cash at end of period |
|
$ |
66,785 |
|
|
$ |
109,526 |
|
|
$ |
66,785 |
|
$ |
109,526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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