UTStarcom (“UT” or the “Company”) (NASDAQ: UTSI), a global
telecommunications infrastructure provider, today reported its
unaudited financial results for the six months and full year ended
December 31, 2020, and provided a business update.
Business Update
- 5G Transport Solution
UTStarcom collaborated with a partner to develop a state-of-the-art
5G transport solution, SkyFlux Converged Packet Transport
(CPT) platform and its network management and controller, for one
of the major China mobile operators’ (MNO) 5G migration. UTStarcom
and its partner were recognized as qualified vendors but decided
not to move forward with commercial deployment due to the small
size of awarded business. In September 2020, the Company launched
the solution to the global market, which combines Segment
Routing/MPLS-TP tunneling, TDM-like Ethernet based on FlexE/G.mtn,
highly accurate time synchronization and SDN-based network
intelligence into an efficient future-proof architecture of
5G-ready transport network. The new platform includes two products,
SkyFlux SPN805S & SPN803S, and a network management and
controller “SOO Station R3.2”. The Company gains the market’s
interest to the SkyFlux products and core CPT technologies.
- Development of Disaggregated
Solutions for 5G Transport Networks As announced in
two PRs released in Q4 of 2020, UTStarcom secured a win of a RFP
for joint development of a disaggregated platform for 5G transport
with one of the major telecom operators in China aiming at further
mass deployment with this operator, and completed Phase 1
development and integration of the disaggregated network solution
with the research institute of another major mobile network
operators (MNO) in China. Both operators’ strategy is to build an
open echo-system of solutions based on network disaggregation with
white box router/switch and Network Operating System (NOS) for 5G
transport network and other applications. The cooperation with
UTStarcom is a part of this important strategy. As a sign of
recognition of UTStarcom’s capability and expertise, and following
the positive results achieved in 2020, both operators have decided
to extend their partnership with UTStarcom and have entered into
frame agreements for long-term cooperation on the development of
carrier-grade disaggregated network solutions. Within the scope of
these agreements, UTStarcom will focus on the development of
carrier-grade white box routers and NOS optimized for telecom
applications. The two frame agreements have been signed, and the
Company expects field trials and deployments to start soon.
- India Receivable The
Company continues to collect amounts due from its major customer in
India. This customer in India raised INR8,500 Crore (approximately
USD $1.13 billion) through sovereign guaranteed bonds (issued at
coupon rate of 6.79 per cent per annum for a 10-year period) and
cleared a portion of its payables to vendors, including UTStarcom.
The Company has collected over $21 million in 2020, with $51
million outstanding. As of today, the Company has collected more
than $13 million in 2021. As the customer’s operating status has
had no significant improvement, as well as ongoing payment
processing delays due to the COVID-19 pandemic in India, the timing
of future payments remains uncertain despite of recent positive
progresses.
UTStarcom’s Chief Executive Officer Dr. Zhaochen
Huang commented, “Our results for the second half and full year
2020 were negatively affected by the COVID-19 pandemic. That being
said, our team is focused on developing new products that
capitalize on important technology trends and engaging with network
operators to address and support their requirements. We are pleased
with the launch of our 5G transport solution – SkyFlux CPT and the
partnership with two major carriers in China to build network
disaggregation solutions. Our cooperation with both customers is
gaining momentum, and we believe these customers will benefit from
UTStarcom’s strong expertise in telecom products and solutions, and
will utilize our capabilities as a customization design, system
integration, high quality manufacture and supply powerhouse in the
field of carrier-class disaggregated solutions.”
Second Half and Full Year 2020 Financial
Results
Summary of 2H 2020 Key
Financials
|
2H 2020 |
2H 2019 |
Y/Y Change |
Revenue |
$10.6 |
$27.1 |
-60.8% |
Gross Profit |
$0.9 |
$12.1 |
-92.5% |
Operating Expenses |
$14.9 |
$15.9 |
-6.7% |
Operating Loss |
($14.0) |
($3.8) |
-$10.2 |
Net Loss |
($11.6) |
($6.0) |
-$5.6 |
Basic EPS |
($0.32) |
($0.17) |
-$0.15 |
Cash Balance (including Restricted Cash) |
$48.4 |
$48.6 |
-0.4% |
Summary of Full Year 2020 Key
Financials
|
2020 |
2019 |
Y/Y Change |
Revenue |
$24.3 |
$65.6 |
-63.0% |
Gross Profit |
$3.5 |
$24.2 |
-85.4% |
Operating Expenses |
$26.8 |
$30.3 |
-11.6% |
Operating Loss |
($23.2) |
($6.1) |
-$17.1 |
Net Loss |
($23.7) |
($3.9) |
-$19.8 |
Basic EPS |
($0.66) |
($0.11) |
-$0.55 |
Cash Balance (including Restricted Cash) |
$48.4 |
$48.6 |
-0.4% |
* 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
Six months ended December 31, 2020
Total revenues for the second half of 2020 were
$10.6 million, compared to $27.1 million in the corresponding
period in 2019.
- Net equipment sales for the second
half of 2020 were $3.1 million, a decrease of 78.8% from $14.8
million in the corresponding period in 2019. The decline was mainly
due to decreased revenue from major customers in Japan and
India.
- Net services sales for the second
half of 2020 were $7.5 million, a decrease of 39.2% from $12.3
million in the corresponding period in 2019. The decrease was
mainly due to the completion of current projects and no new major
projects in India.
Twelve months ended December 31, 2020
2020 total revenues were $24.3 million, a decrease
of 63% from $65.6 million in 2019.
- 2020 net equipment sales were $12.4
million, a decrease of 71.7% from $43.7 million in 2019. The
decline was mainly due to decreased revenue from major customers in
Japan and India.
- 2020 net services sales were $11.9
million, a decrease of 45.5% from $21.9 million in 2019. The
decrease was mainly due to the increased service costs in
India.
Gross Profit
Six months ended December 31, 2020
Gross profit was $0.9 million, or 8.6% of net
sales, for the second half of 2020, compared to $12.1 million, or
44.9% of net sales, in the corresponding period in 2019.
- Negative equipment gross profit for
the second half of 2020 was $0.5 million, compared to positive $6.6
million in the corresponding period in 2019. Negative equipment
gross margin for the second half of 2020 was 16.9%, compared to
positive 44.8% for the corresponding period in 2019. The decrease
in gross margin was attributed to high fixed cost with lower
equipment revenue and one-time inventory reserve.
- Service gross profit for the second
half of 2020 was $1.4 million, compared to $5.5 million in the
corresponding period in 2019. Service gross margin for the second
half of 2020 was 19.3%, compared to 45.0% for the corresponding
period in 2019. The decrease in gross margin was mainly due to the
increased service costs in India.
Twelve months ended December 31, 2020
2020 gross profit was $3.5 million, or 14.5% of net
sales, compared to $24.2 million, or 36.8% of net sales, in
2019.
- 2020 equipment gross profit was
$2.6 million, compared to $15.5 million in 2019. 2020 equipment
gross margin was 21.4%, compared to 35.5% in 2019. The decrease in
gross margin was attributed to high fixed cost with lower equipment
revenue and one-time inventory reserve.
- 2020 service gross profit was $0.9
million, compared to $8.7 million in 2019. 2020 service gross
margin was 7.4%, compared to 39.5% in 2019. The decrease in gross
margin was mainly due to the increased service costs in India.
Operating Expenses
Six months ended December 31, 2020
Operating expenses for the second half of 2020 were
$14.9 million, compared to $15.9 million in the corresponding
period in 2019.
- Selling, general and administrative
(“SG&A”) expenses for the second half of 2020 were $11.1
million, compared to $8.8 million in the corresponding period in
2019. SG&A was higher in the second half of 2020 due to higher
allowance for credit loss associated with aged receivables from our
India customer, which was partially offset by the decreased
expenses from continued tight cost control.
- Research and development
(“R&D”) expenses for the second half of 2020 were $3.7 million,
compared to $7.1 million in the corresponding period in 2019. The
decrease reflected the Company’s different stages in 5G product
R&D process.
Twelve months ended December 31, 2020
2020 operating expenses were $26.8 million,
compared to $30.3 million in 2019.
- 2020 SG&A expenses were $18.7
million, compared to $15.8 million in 2019. The increase was mainly
attributable to higher allowance for credit loss associated with
aged receivables from our India customer, partially offset by
decreased expenses from continued tight cost controls.
- 2020 research and development
expenses were $8.1 million, compared to $14.5 million in 2019. The
decrease reflected the Company’s different stages in 5G product
R&D process.
Operating Loss
Operating loss for the second half of 2020 was
$14.0 million, compared to $3.8 million in the corresponding period
in 2019.
Full year 2020 operating loss was $23.2 million,
compared to $6.1 million in 2019.
Interest Income, Net
Net interest income for the second half of 2020 was
$0.5 million, compared to $0.7 million in the corresponding period
in 2019.
Full year 2020 net interest income was $1.0
million, compared to $1.3 million in 2019.
Other Income (Expenses), Net
Net other income for the second half of 2020 was
$0.9 million, compared to net other expenses of $3.9 million in the
corresponding period in 2019. Other income for the second half of
2020 was mainly due to foreign exchange gain resulting from
appreciation of the RMB against USD and INR against USD.
Full year 2020 net other expenses were $2.2
million, compared to net other income of $0.9 million in 2019.
Other expenses for 2020 were mainly due to foreign exchange loss
resulting from depreciation of INR against USD which was partially
offset by a gain from appreciation of the RMB against USD and
realized gain from the Aceland investment which was sold in first
half of year.
Net Loss
Net loss attributable to shareholders for the
second half of 2020 was $11.6 million, compared to $6.0 million in
the corresponding period in 2019. Basic net loss per share for the
second half of 2020 was $0.32, compared to $0.17 for the
corresponding period in 2019.
Full year 2020 net loss attributable to
shareholders was $23.7 million, compared to $3.9 million in 2019.
2020 basic net loss per share was $0.66, compared to $0.11 in
2019.
Cash Flow
Cash used in operating activities in the second
half of 2020 was $2.6 million, cash used in investing activities
was $0.03 million, and cash used in financing activities was
$0.2 million. As of December 31, 2020, UTStarcom had cash, cash
equivalent and restricted cash of $48.4 million.
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 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: +86 571 8192 8888Ms.
Ning Jiang, Investor RelationsEmail:
utsi-ir@utstar.com / 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
|
December 31, |
|
|
December 31, |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
(In thousands) |
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
34,221 |
|
|
$ |
34,966 |
|
Short-term investments |
|
2,100 |
|
|
|
2,095 |
|
Notes receivable, net |
|
58 |
|
|
|
— |
|
Accounts receivable, net |
|
49,623 |
|
|
|
77,831 |
|
Inventories and deferred costs |
|
6,706 |
|
|
|
6,655 |
|
Short-term restricted cash |
|
12,088 |
|
|
|
10,007 |
|
Prepaid and other current assets |
|
5,109 |
|
|
|
5,524 |
|
Total current assets |
|
109,905 |
|
|
|
137,078 |
|
Long-term assets: |
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
620 |
|
|
|
1,092 |
|
Operating lease right-of-use assets, net |
|
1,182 |
|
|
|
2,860 |
|
Long-term restricted cash |
|
2,079 |
|
|
|
3,634 |
|
Other long-term assets |
|
4,938 |
|
|
|
6,639 |
|
Total long-term assets |
|
8,819 |
|
|
|
14,225 |
|
Total assets |
$ |
118,724 |
|
|
$ |
151,303 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
25,120 |
|
|
$ |
30,875 |
|
Customer advances |
|
391 |
|
|
|
160 |
|
Deferred revenue |
|
410 |
|
|
|
1,320 |
|
Income tax payable |
|
5,935 |
|
|
|
7,480 |
|
Operating lease liabilities, current |
|
1,217 |
|
|
|
1,595 |
|
Other current liabilities |
|
6,969 |
|
|
|
7,603 |
|
Total current liabilities |
|
40,042 |
|
|
|
49,033 |
|
Long-term liabilities: |
|
|
|
|
|
|
|
Operating Lease liabilities, non-current |
|
256 |
|
|
|
1,364 |
|
Long-term deferred revenue and other liabilities |
|
1,025 |
|
|
|
1,718 |
|
Total liabilities |
|
41,323 |
|
|
|
52,115 |
|
|
|
|
|
|
|
|
|
Total equity |
|
77,401 |
|
|
|
99,188 |
|
Total liabilities and equity |
$ |
118,724 |
|
|
$ |
151,303 |
|
|
|
|
|
|
|
|
|
UTStarcom Holdings
Corp.Unaudited Condensed Consolidated Statements
of Operations
|
Six months ended December 31, |
|
|
Twelve months ended December 31, |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
(In thousands, except per share data) |
|
Net sales |
$ |
10,602 |
|
|
$ |
27,061 |
|
|
$ |
24,310 |
|
|
$ |
65,623 |
|
Cost of net sales |
|
9,687 |
|
|
|
14,918 |
|
|
|
20,781 |
|
|
|
41,466 |
|
Gross profit |
|
915 |
|
|
|
12,143 |
|
|
|
3,529 |
|
|
|
24,157 |
|
|
|
8.6 |
% |
|
|
44.9 |
% |
|
|
14.5 |
% |
|
|
36.8 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
11,139 |
|
|
|
8,844 |
|
|
|
18,689 |
|
|
|
15,827 |
|
Research and development |
|
3,730 |
|
|
|
7,099 |
|
|
|
8,083 |
|
|
|
14,467 |
|
Total operating expenses |
|
14,869 |
|
|
|
15,943 |
|
|
|
26,772 |
|
|
|
30,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
(13,954 |
) |
|
|
(3,800 |
) |
|
|
(23,243 |
) |
|
|
(6,137 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
488 |
|
|
|
734 |
|
|
|
980 |
|
|
|
1,321 |
|
Other income (expense), net |
|
938 |
|
|
|
(3,882 |
) |
|
|
(2,166 |
) |
|
|
872 |
|
Investment impairment |
|
(1,029 |
) |
|
|
— |
|
|
|
(1,029 |
) |
|
|
— |
|
Loss before income taxes |
|
(13,557 |
) |
|
|
(6,948 |
) |
|
|
(25,458 |
) |
|
|
(3,944 |
) |
Income tax expense |
|
1,924 |
|
|
|
911 |
|
|
|
1,782 |
|
|
|
31 |
|
Net loss attributable to UTStarcom Holdings Corp. |
$ |
(11,633 |
) |
|
$ |
(6,037 |
) |
|
$ |
(23,676 |
) |
|
$ |
(3,913 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to UTStarcom Holdings
Corp.—Basic |
$ |
(0.32 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.66 |
) |
|
$ |
(0.11 |
) |
Weighted average shares outstanding—Basic |
|
35,971 |
|
|
|
35,596 |
|
|
|
35,881 |
|
|
|
35,556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UTStarcom Holdings
Corp.Unaudited Condensed Consolidated Statements
of Cash Flows
|
Six months ended December 31, |
|
|
Twelve months ended December 31, |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
(In thousands) |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(11,633 |
) |
|
$ |
(6,037 |
) |
|
$ |
(23,676 |
) |
|
$ |
(3,913 |
) |
Depreciation |
|
277 |
|
|
|
317 |
|
|
|
572 |
|
|
|
644 |
|
Allowance for credit losses |
|
6,964 |
|
|
|
3,136 |
|
|
|
9,441 |
|
|
|
4,396 |
|
Stock-based compensation expense |
|
206 |
|
|
|
642 |
|
|
|
703 |
|
|
|
1,399 |
|
Net loss on disposal of assets |
|
— |
|
|
|
10 |
|
|
|
— |
|
|
|
5 |
|
Investments impairment |
|
1,029 |
|
|
|
— |
|
|
|
1,029 |
|
|
|
— |
|
Gain on release of tax liability due to expiration of the statute
of limitations |
|
— |
|
|
|
(54 |
) |
|
|
— |
|
|
|
(1,182 |
) |
Deferred income taxes |
|
(1,615 |
) |
|
|
(469 |
) |
|
|
(1,499 |
) |
|
|
(465 |
) |
Gain on write-off long-term account payable due to expiration of
the statute of limitations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,161 |
) |
Changes in operating assets and liabilities |
|
2,203 |
|
|
|
(3,562 |
) |
|
|
10,030 |
|
|
|
(21,870 |
) |
Net cash used in operating activities |
|
(2,569 |
) |
|
|
(6,017 |
) |
|
|
(3,400 |
) |
|
|
(24,147 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
(30 |
) |
|
|
(211 |
) |
|
|
(115 |
) |
|
|
(507 |
) |
Purchase of short-term investment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(41 |
) |
Proceeds from short-term investments |
|
— |
|
|
|
41 |
|
|
|
2,095 |
|
|
|
41 |
|
Net cash provided by (used in) investing activities |
|
(30 |
) |
|
|
(170 |
) |
|
|
1,980 |
|
|
|
(507 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
56 |
|
Repurchase of ordinary share |
|
(217 |
) |
|
|
(199 |
) |
|
|
(374 |
) |
|
|
(1,049 |
) |
Short-term borrowing |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,625 |
|
Pay off the short-term borrowing |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,625 |
) |
Net cash used in financing activities |
|
(217 |
) |
|
|
(199 |
) |
|
|
(374 |
) |
|
|
(993 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
2,559 |
|
|
|
(103 |
) |
|
|
1,575 |
|
|
|
555 |
|
Net decrease in cash and cash equivalents |
|
(257 |
) |
|
|
(6,489 |
) |
|
|
(219 |
) |
|
|
(25,092 |
) |
Cash, cash equivalents and restricted cash at beginning of
period |
|
48,645 |
|
|
|
55,096 |
|
|
|
48,607 |
|
|
|
73,699 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
48,388 |
|
|
$ |
48,607 |
|
|
$ |
48,388 |
|
|
$ |
48,607 |
|
UTStarcom (NASDAQ:UTSI)
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UTStarcom (NASDAQ:UTSI)
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From Sep 2023 to Sep 2024