UTStarcom (“UT” or “the Company”) (NASDAQ: UTSI), a global
telecommunications infrastructure provider, today reported its
unaudited financial results for the second quarter ended June 30,
2019.
UTStarcom’s Chief Executive Officer Mr. Tim Ti commented,"
Second quarter played out largely as expected. Revenue met
our expectations, and gross margin improved by 10 percentage points
from a year ago, attributable to product and geographic mix.
We continued to make solid operating progress in the last several
months. Laboratory evaluations of our latest 5G optical
backhaul solution by a major China carrier are progressing well.
Test results are exceeding the benchmark, which is
encouraging. Our goBox smart vending machines and modules are
gaining traction, as we continue to see strong interest from China
and multiple international markets. Furthermore, we
introduced a couple of advanced SyncRing products to support the
high end-to-end network time synchronization accuracy
requirement.”
Ti continued, “Innovation is our strength and we are focused on
investing in R&D to develop new products that capitalize on
important new technology trends. Our engineering team is
executing to plan and we are pleased with the progress. As we
look ahead to the remainder of the year, we are excited about our
business opportunities, particularly related to the 5G
transition."
Business Highlights
- Update on 5G Transport Network Opportunity with a Major
Mobile Carrier in China. UTStarcom is collaborating
with a partner to develop critical 5G transport network
technologies to support the 5G migration in China. The
Company is leveraging its expertise in optical backhaul technology
to develop state-of-the-art 5G products. Laboratory
evaluations by a major China carrier are progressing well and the
test results exceeded the required benchmark.
- Product Introduction at SoftBank World
2019. In July 2019, UTStarcom participated in the
SoftBank World 2019 Exhibition and Conference in Tokyo, where the
Company introduced the SyncRing XBC340 and SyncRing XBC341, the
latest additions to its SyncRing family of network synchronization
equipment. UTStarcom’s Senior Vice President of Product &
Technology, Mr. Steven Chen delivered a keynote speech on the topic
of “Packet Network Evolution Strategies for the 5G Era”, discussing
the growing transport network size and complexity driven by the 5G
migration and other networking applications.
- goBox Ramp Continues. UTStarcom
continues to penetrate the “Unattended Retail” market in China with
its goBox smart vending machine and modules. Outside of the
domestic market, the Company is also seeing strong interest for
this latest smart retail product offering in international
markets.
Second Quarter 2019 Financial Results
Summary of Q2 2019 Key
Financials
|
Q2 2019 |
Y/Y Change* |
Q/Q Change* |
Revenue |
$ |
13.9 |
|
-51.3 |
% |
|
-43.6 |
% |
Gross Profit |
$ |
5.0 |
|
-32.7 |
% |
|
-28.0 |
% |
Operating Expenses |
$ |
7.1 |
|
+1.6 |
% |
|
-2.2 |
% |
Operating Loss |
-$ |
2.1 |
-$ |
2.6 |
|
-$ |
1.8 |
|
Net Income |
$ |
1.7 |
+$ |
1.8 |
|
+$ |
1.3 |
|
Basic EPS |
$ |
0.05 |
+$ |
0.05 |
|
+$ |
0.04 |
|
Cash Balance (including Restricted Cash) |
$ |
55.1 |
|
-31.5 |
% |
|
-14.0 |
% |
|
|
|
|
|
|
|
|
|
*Dollar comparisons are used where percentage comparisons are
not meaningful*All the numbers in U.S. Dollars are in million
except EPS
Total Revenues
Q2 2019 total revenues were $13.9 million, compared to $28.5
million in the corresponding period of 2018.
- Q2 2019 net equipment sales were $8.0 million, a decrease of
67% from $24.1 million in the corresponding period in 2018.
The decrease was due to India’s uneven project revenue
pattern.
- Q2 2019 net services sales were $5.9 million, an increase of
35% from $4.4 million in the corresponding period in 2018.
The increase was due to higher product related services revenue in
India.
Gross Profit
Q2 2019 gross profit was $5.0 million, or 36.2% of net sales,
compared to $7.5 million, or 26.2% of net sales, in the
corresponding period in 2018.
- Q2 2019 equipment gross profit was $2.6 million, compared to
$6.2 million in the corresponding period in 2018. Q2 2019
equipment gross margin was 32.5%, compared to 25.6% for the
corresponding period in 2018. The increase in gross margin
was mainly due to favorable product mix.
- Q2 2019 service gross profit was $2.4 million, compared to $1.3
million in the corresponding period in 2018. Q2 2019 service
gross margin was 41.1%, compared to 29.5% for the corresponding
period in 2018. The increased gross margin was mainly
contributed from India.
Operating Expenses
Q2 2019 operating expenses were $7.1 million, compared to $7.0
million in the corresponding period in 2018.
- Q2 2019 selling, general and administrative (“SG&A”)
expenses were $3.1 million, compared to $4.2 million in the
corresponding period in 2018. The decrease was mainly the
result of lower employee benefit expenses.
- Q2 2019 research and development expenses were $4.0 million,
compared to $2.8 million in the corresponding period in 2018.
The increase reflected our continuing investment in 5G technologies
and product development.
Operating Income (Loss)
Q2 2019 operating loss was $2.1 million, compared to operating
income of $0.5 million in the corresponding period in 2018.
Interest Income, Net
Q2 2019 net interest income was $0.2 million, compared to $0.3
million in the corresponding period in 2018.
Other Income (Expense), Net
Q2 2019 net other income was $3.7 million, compared to net other
expense of $0.3 million in the corresponding period in 2018.
The increase in other income was from an aged account payable
write-off and a tax reserve adjustment exceeding statute of
limitation, partially offset by a foreign exchange loss resulting
from the depreciation of Renminbi against the U.S. dollar during
the quarter.
Net Income (Loss)
Q2 2019 net income attributable to shareholders was $1.7
million, compared to net loss of $87,000 in the corresponding
period in 2018. Q2 2019 basic net income per share was $0.05,
compared to $0.00 for the corresponding period in 2018.
Cash Flow
During Q2 2019, cash used in operating activities was $9.7
million, and cash used in financing activities was $0.6
million. As of June 30, 2019, UTStarcom had cash, cash
equivalent and restricted cash of $55.1 million.
Outlook
For the third quarter of 2019, the Company expects to generate
revenue in the range of $13 to $17 million. The Company’s
quarterly revenue pattern is typically uneven due to the timing of
large project fulfillment.
Second Quarter 2019 Conference Call Details
The Company’s management will host an earnings conference call
at 5:00 p.m. U.S. Eastern Time on Tuesday, August 13, 2019 (5:00
a.m. Hong Kong/Beijing Time on Wednesday, August 14, 2019).
The conference call dial-in numbers are as follows:
United States: +1 (866) 519-4004Canada: +1 (866) 386-1016Hong
Kong: +852-3018-6771China: 4006-208-038 Other International: +65
6713-5090
The attendee passcode is 3974939.
A replay of the call will be available approximately two hours
after the conclusion and will remain available until September 13,
2019.
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
3974939.
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 operations and customers around the
world, with a special focus on Japan and India. 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
|
June 30, |
|
|
December 31, |
|
|
2019 |
|
|
2018 |
|
|
(In thousands) |
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
39,932 |
|
|
$ |
57,049 |
|
Short-term investments |
|
41 |
|
|
|
— |
|
Accounts and notes receivable, net |
|
85,266 |
|
|
|
60,666 |
|
Inventories and deferred costs |
|
8,895 |
|
|
|
26,837 |
|
Short-term restricted cash |
|
10,774 |
|
|
|
8,827 |
|
Prepaid and other current assets |
|
21,436 |
|
|
|
6,776 |
|
Total current assets |
|
166,344 |
|
|
|
160,155 |
|
Long-term assets: |
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
1,200 |
|
|
|
1,258 |
|
Operating lease right-of-use assets, net |
|
2,086 |
|
|
|
— |
|
Long-term restricted cash |
|
4,390 |
|
|
|
7,823 |
|
Other long-term assets |
|
8,210 |
|
|
|
8,199 |
|
Total long-term assets |
|
15,886 |
|
|
|
17,280 |
|
Total assets |
$ |
182,230 |
|
|
$ |
177,435 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
54,478 |
|
|
$ |
50,757 |
|
Customer advances |
|
1,177 |
|
|
|
561 |
|
Deferred revenue |
|
1,125 |
|
|
|
968 |
|
Other current liabilities |
|
14,399 |
|
|
|
17,507 |
|
Operating lease liabilities, current |
|
910 |
|
|
|
— |
|
Total current liabilities |
|
72,089 |
|
|
|
69,793 |
|
Long-term liabilities: |
|
|
|
|
|
|
|
Long-term deferred revenue and other liabilities |
|
4,062 |
|
|
|
5,476 |
|
Operating Lease liabilities, non-current |
|
1,200 |
|
|
|
— |
|
Total liabilities |
|
77,351 |
|
|
|
75,269 |
|
|
|
|
|
|
|
|
|
Total equity |
|
104,879 |
|
|
|
102,166 |
|
Total liabilities and equity |
$ |
182,230 |
|
|
$ |
177,435 |
|
|
|
|
|
|
|
|
|
UTStarcom Holdings
Corp.Unaudited Condensed Consolidated Statements
of Operations
|
Three months ended June 30, |
|
Six months ended June 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
(In thousands,
except per share data) |
|
Net sales |
$ |
13,908 |
|
$ |
28,536 |
|
38,562 |
|
$ |
51,126 |
|
Cost of net sales |
8,877 |
|
21,059 |
|
26,548 |
|
34,503 |
|
Gross profit |
5,031 |
|
7,477 |
|
12,014 |
|
16,623 |
|
|
36.2 |
% |
26.2 |
% |
31.2 |
% |
32.5 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and
administrative |
3,087 |
|
4,225 |
|
6,983 |
|
8,120 |
|
Research and development |
4,008 |
|
2,760 |
|
7,368 |
|
5,703 |
|
Total operating expenses |
7,095 |
|
6,985 |
|
14,351 |
|
13,823 |
|
|
|
|
|
|
|
|
|
|
Operating Income (loss) |
(2,064 |
) |
492 |
|
(2,337 |
) |
2,800 |
|
|
|
|
|
|
|
|
|
|
Interest income, net |
231 |
|
324 |
|
587 |
|
798 |
|
Other income (expense), net |
3,724 |
|
(315 |
) |
4,754 |
|
(332 |
) |
Equity pick up of losses of an
associate |
— |
|
(148 |
) |
— |
|
(148 |
) |
Income before income taxes |
1,891 |
|
353 |
|
3,004 |
|
3,118 |
|
Income taxes benefit
(expenses) |
(169 |
) |
(440 |
) |
(880 |
) |
826 |
|
Net Income (Loss) attributable to UTStarcom Holdings Corp. |
$ |
1,722 |
|
$ |
(87 |
) |
$ |
2,124 |
|
$ |
3,944 |
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) per share
attributable to UTStarcom Holdings Corp.—Basic |
$ |
0.05 |
|
$ |
(0.00 |
) |
$ |
0.06 |
|
$ |
0.11 |
|
Weighted average shares
outstanding—Basic |
35,558 |
|
35,740 |
|
35,530 |
|
35,744 |
|
|
|
|
|
|
|
|
|
|
UTStarcom Holdings
Corp.Unaudited Condensed Consolidated Statements
of Cash Flows
|
Three months ended June 30, |
|
Six months ended June 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
(In thousands) |
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Net Income (Loss) |
$ |
1,722 |
|
$ |
(87 |
) |
$ |
2,124 |
|
$ |
3,944 |
|
Depreciation |
187 |
|
184 |
|
327 |
|
372 |
|
Provision for doubtful accounts |
234 |
|
491 |
|
1,260 |
|
543 |
|
Recovery of deferred costs |
— |
|
(1,775 |
) |
— |
|
(1,754 |
) |
Stock-based compensation expense |
378 |
|
198 |
|
757 |
|
400 |
|
Net gain on disposal of assets |
(5 |
) |
(31 |
) |
(5 |
) |
(31 |
) |
Gain on release of tax liability due to expiration of the statute
of limitations |
(1,128 |
) |
— |
|
(1,128 |
) |
— |
|
Deferred income taxes |
(16 |
) |
105 |
|
4 |
|
24 |
|
Loss from equity investments, net |
— |
|
148 |
|
— |
|
148 |
|
Gain on write-off long-term account payable due to expiration of
the statute of limitations |
(3,161 |
) |
— |
|
(3,161 |
) |
— |
|
Changes in operating assets and liabilities |
(7,879 |
) |
(12,892 |
) |
(18,308 |
) |
(22,412 |
) |
Net cash used in operating activities |
(9,668 |
) |
(13,659 |
) |
(18,130 |
) |
(18,766 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
— |
|
— |
|
(296 |
) |
(221 |
) |
Purchase of investment interests |
— |
|
(1,771 |
) |
— |
|
(1,771 |
) |
Purchase of short-term investments |
(20 |
) |
— |
|
(41 |
) |
— |
|
Proceeds from sale of short term investment |
— |
|
— |
|
— |
|
3,143 |
|
Net cash provided by (used in) investing activities |
(20 |
) |
(1,771 |
) |
(337 |
) |
1,151 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options |
56 |
|
48 |
|
56 |
|
71 |
|
Repurchase of ordinary share |
(642 |
) |
(1,135 |
) |
(850 |
) |
(1,135 |
) |
Net cash used in financing activities |
(586 |
) |
(1,087 |
) |
(794 |
) |
(1,064 |
) |
Effect of exchange rate changes
on cash and cash equivalents |
1,282 |
|
(1,891 |
) |
658 |
|
(1,527 |
) |
Net decrease in cash and cash equivalents |
(8,992 |
) |
(18,408 |
) |
(18,603 |
) |
(20,206 |
) |
Cash, cash equivalents and
restricted cash at beginning of period |
64,088 |
|
98,888 |
|
73,699 |
|
100,686 |
|
Cash, cash equivalents and
restricted cash at end of period |
$ |
55,096 |
|
$ |
80,480 |
|
$ |
55,096 |
|
$ |
80,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UTStarcom (NASDAQ:UTSI)
Historical Stock Chart
From Aug 2024 to Sep 2024
UTStarcom (NASDAQ:UTSI)
Historical Stock Chart
From Sep 2023 to Sep 2024