UTStarcom (“UTStarcom” or “the Company”) (NASDAQ:UTSI), a global
telecommunications infrastructure provider, today reported its
unaudited financial results for the six months ended June 30, 2017.
UTStarcom’s Chief Executive Officer Tim Ti stated, “We achieved
strong gross and operating margins in the first half, which was a
result of our continued focus on high-margin product revenues,
operational efficiencies, and overall cost control. Revenue came in
ahead of expectations for the first half, largely due to higher
sales in Japan and India, including our new SyncRing product sales
in Japan. Additionally, we delivered strong cash flow, resulting in
an increase in our cash balance of over 10% when compared to the
end of 2016.”
Tim continued, “While we achieved good operating results in the
first half, we expect our business to slightly moderate in the
third quarter reflecting our normal seasonal sales pattern. More
importantly, we continue to believe we have the right strategy:
investing in research and development and strengthening our product
portfolio with high-value, high-margin product solutions. We are
confident that the diversity in our product solutions and
geographic coverage is a solid foundation for continuing profitable
growth.”
First Half 2017 Key Events
- On March 31, the Company's Board received a preliminary
non-binding proposal letter to acquire all of the outstanding
ordinary shares of the Company for US$2.15 in cash per ordinary
share. The proposal was made by Shah Capital, the Company’s largest
shareholder, Tim Ti, the Company’s CEO and other parties
- The Company successfully shipped its new SyncRing product and
it will continue to explore new sale opportunities for SyncRing as
mobile networks in its key territories upgrade to the LTE-Advanced
standard
- Sales of the Company’s classic PTN product line remained strong
in Japan, driven by the transition from 10G to 100G metro
networks
First Half 2017 Financial Highlights
In addition to disclosing financial measures prepared in
accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”), the Company also provides non-GAAP financial measures.
The Company believes that the public’s understanding of the
Company’s business is enhanced when it has access to the same
information that management uses to analyze and operate the
business. The Company believes that the non-GAAP measures presented
here offer additional insight into the condition and trends of its
business. Further explanation of the use of non-GAAP financial
information, and reconciliation to the corresponding GAAP measures,
can be found at the end of this release.
Summary of 1H 2017 Key Financial
Metrics |
|
|
1H 2017GAAP |
Y/Y Change* |
1H 2017Non-GAAP |
Y/Y Change* |
Revenue |
$ |
54.0 |
|
|
+26.9 |
% |
$ |
54.0 |
|
|
+27.7 |
% |
Gross Margin |
|
33.4 |
% |
-20 bps |
|
|
33.4 |
% |
-40 bps |
|
Operating Expenses |
$ |
12.6 |
|
|
-15.6 |
% |
$ |
12.3 |
|
|
-5.7 |
% |
Operating Income |
$ |
5.4 |
|
+$ |
6.0 |
|
$ |
5.8 |
|
+$ |
4.5 |
|
Net Income |
$ |
8.3 |
|
+$ |
4.6 |
|
$ |
8.7 |
|
+$ |
3.0 |
|
Basic EPS |
$ |
0.24 |
|
+$ |
0.13 |
|
$ |
0.25 |
|
+$ |
0.09 |
|
Operating Cash Flow |
$ |
9.9 |
|
+$ |
7.3 |
|
|
Cash Balance |
$ |
92.3 |
|
+$ |
8.4 |
|
|
* Dollar comparisons are used where percentage comparisons are
not meaningful.*All the numbers in U.S. Dollars are in million
except EPS
Total Revenues
Total revenues for the first half of 2017 were $54.0 million, an
increase of 26.9% from $42.6 million for the corresponding period
of 2016.
Total Non-GAAP revenues for the first half of 2017 were $54.0
million, an increase of 27.7% from $42.3 million for the
corresponding period of 2016.
- Non-GAAP net sales from equipment for the first half of 2017
were $42.8 million, an increase of 32.1% from $32.4 million for the
corresponding period in 2016. The increase was mainly due to the
higher sales in India
- Non-GAAP net sales from services for the first half of 2017
were $11.2 million, an increase of 13.1% from $9.9 million for the
corresponding period in 2016. The increase was mainly due to higher
sales in India
Gross Profit
Gross profit was $18.0 million, or 33.4% of net sales, for the
first half of 2017, compared to $14.3 million, or 33.6% of net
sales, for the corresponding period in 2016.
Non-GAAP gross profit was $18.0 million, or 33.4% of net sales,
for the first half of 2017, compared to $14.3 million or 33.8% of
net sales, for the corresponding period in 2016.
- Non-GAAP gross profit from equipment sales for the first half
of 2017 was $15.0 million, compared to $12.3 million, an increase
of 22.0% from the corresponding period in 2016
- Non-GAAP gross profit from services for the first half of 2017
was $3.0 million, compared to $2.0 million, an increase of 33.3%
from the corresponding period in 2016
Operating Expenses
Operating expenses for the first half of 2017 were $12.6
million, a decrease of 15.6% from $15.0 million for the
corresponding period in 2016.
Non-GAAP operating expenses for the first half of 2017 were
$12.3 million, a decrease of 5.7% from $13.0 million for the
corresponding period in 2016.
- Non-GAAP selling, general and administrative (SG&A)
expenses in the first half of 2017 were $8.2 million, compared to
$8.1 million for the corresponding period in 2016
- Non-GAAP research and development expenses in the first half of
2017 were $4.1million, compared to $4.9 million for the
corresponding period in 2016. The decrease was mainly due to
facility saving and reclassification of VGL to SG&A to properly
reflect the nature of these expense
Operating Income (Loss)
Operating income for the first half of 2017 was $5.4 million,
compared to operating loss of $0.7 million for the corresponding
period of 2016.
Non-GAAP operating income for the first half of 2017 was $5.8
million, compared to non-GAAP operating income of $1.3 million for
the corresponding period of 2016.
Other Income (Expense), Net
Net other income for the first half of 2017 was $2.4 million,
compared to net other income of $1.9 million for the corresponding
period in 2016. Net other income in first half of 2017 primarily
consisted of $1.7 million gain from Korea Cumulative Translation
Adjustment (“CTA”) written off due to liquidation and $0.4 million
foreign exchange gain. Net other income in the first half of 2016
primarily consisted of $0.7 million of foreign exchange gain, which
was mainly due to the appreciation of the Japanese Yen against the
U.S. dollar, $0.8 million Korea tax accrual reversal due to the
expiration of the statute of limitation and $0.1 million realized
gain from Cortina investment during the first half of 2016.
Investment Impairment
Investment impairment for the first half of 2017 was $1.3
million, compared to nil in the corresponding period in 2016. The
$1.3 million investment impairment in the first half of 2017 was
from AioTV.
Net Income (Loss)
Net income attributable to UTStarcom’s shareholders for the
first half of 2017 was $8.3 million, compared to $3.8 million for
the corresponding period in 2016. Basic income per share for the
first half of 2017 was $0.24, compared to $0.10 for the
corresponding period of 2016.
Non-GAAP net income attributable to UTStarcom’s shareholders for
the first half of 2017 was $8.7 million, compared to $5.7 million
for the corresponding period in 2016. Non-GAAP basic net income per
share for the first half of 2017 was $0.25, compared to $0.16 for
the corresponding period of 2016.
Cash Flow
Cash provided by operating activities was $9.9 million in the
first half of 2017.
Cash used in investing activities was $3.4 million in the first
half of 2017, mainly due to restricted cash change.
Cash used in financing activities was $0.1 million in the first
half of 2017 due to the share repurchases.
As of June 30, 2017, UTStarcom had cash and cash equivalents of
$92.3 million.
Outlook
For the third quarter of 2017, the Company expects to generate
non-GAAP revenue in the range of $23 million to $25 million. The
sequential slight decline follows the Company’s normal seasonal
pattern.
About UTStarcom Holdings Corp.
UTStarcom (NASDAQ:UTSI) is a global telecom infrastructure
provider dedicated to developing technology that will serve the
rapidly growing demand for bandwidth from cloud-based services,
mobile, streaming, and other applications. We work with carriers
globally, from Asia to the Americas, to meet this demand through a
range of innovative broadband packet optical transport and
wireless/fixed-line access products and solutions. The Company’s
end-to-end broadband product portfolio, enhanced through in-house
Software Defined Networking (SDN)-based orchestration, enables
mobile and fixed-line network operators and enterprises worldwide
to build highly efficient and resilient future-proof networks for a
range of applications, including mobile backhaul, metro
aggregation, broadband access and Wi-Fi data offload. Our strategic
investments in media operational support service providers expand
UTStarcom’s capabilities in the field of next generation video
platforms. UTStarcom was founded in 1991, started trading on NASDAQ
in 2000, and has operating entities in Hong Kong; Tokyo, Japan; San
Jose, USA; Delhi and Bangalore, India; Hangzhou, China. 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 2015
annual report on Form 20-F and current reports on
Form 6-K as filed with the Securities and Exchange Commission.
The filing of the 2016 Form 20-F is in progress pending the
conclusion of the 2016 audit. 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: +852-3951-9757
Fei Wang, IR Director Email: fei.wang@utstar.com
Ning Jiang, Investor Relations Email: 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, |
|
|
2017 |
|
2016 |
ASSETS |
|
(In thousands) |
Current assets: |
|
|
|
|
Cash,
cash equivalents |
|
$ |
92,311 |
|
$ |
83,922 |
Short-term investments |
|
|
- |
|
|
479 |
Accounts
and notes receivable, net |
|
|
12,025 |
|
|
18,329 |
Inventories and deferred costs |
|
|
33,602 |
|
|
38,962 |
Prepaids
and other current assets |
|
|
20,072 |
|
|
18,392 |
Total
current assets |
|
|
158,010 |
|
|
160,084 |
Long-term assets: |
|
|
|
|
Property,
plant and equipment, net |
|
|
1,474 |
|
|
1,610 |
Long-term
deferred costs |
|
|
274 |
|
|
276 |
Other
long-term assets |
|
|
20,366 |
|
|
19,542 |
Total
long-term assets |
|
|
22,114 |
|
|
21,428 |
Total
assets |
|
$ |
180,124 |
|
$ |
181,512 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
20,824 |
|
$ |
22,480 |
Customer
advances |
|
|
24,248 |
|
|
29,046 |
Deferred
revenue |
|
|
11,208 |
|
|
10,779 |
Other
current liabilities |
|
|
19,152 |
|
|
21,035 |
Total
current liabilities |
|
|
75,432 |
|
|
83,340 |
Long-term
liabilities: |
|
|
|
|
Long-term
deferred revenue and other liabilities |
|
|
6,374 |
|
|
8,794 |
Total
liabilities |
|
|
81,806 |
|
|
92,134 |
|
|
|
|
|
Total equity |
|
|
98,318 |
|
|
89,378 |
Total
liabilities and equity |
|
$ |
180,124 |
|
$ |
181,512 |
|
|
|
|
|
|
|
UTStarcom Holdings Corp. |
|
Unaudited Condensed Consolidated Statements of
Operations |
|
|
|
|
|
Six months ended June 30, |
|
|
|
2017 |
|
2016 |
|
|
|
(In thousands, except per share
data) |
|
|
|
|
|
|
|
Net sales |
|
$ |
54,023 |
|
|
$ |
42,577 |
|
|
Cost of net sales |
|
|
35,996 |
|
|
|
28,270 |
|
|
Gross profit |
|
|
18,027 |
|
|
|
14,307 |
|
|
|
|
|
33.4 |
% |
|
|
33.6 |
% |
|
Operating
expenses: |
|
|
|
|
|
Selling,
general and administrative |
|
|
8,556 |
|
|
|
10,051 |
|
|
Research
and development |
|
|
4,088 |
|
|
|
4,922 |
|
|
Total operating
expenses |
|
|
12,644 |
|
|
|
14,973 |
|
|
|
|
|
|
|
|
Operating Income
(loss) |
|
|
5,383 |
|
|
|
(666 |
) |
|
|
|
|
|
|
|
Interest income,
net |
|
|
580 |
|
|
|
333 |
|
|
Other income (expense),
net |
|
|
2,398 |
|
|
|
1,868 |
|
|
Equity pick up of
losses of an associate |
|
|
- |
|
|
|
- |
|
|
Investment
Impairment |
|
|
(1,308 |
) |
|
|
- |
|
|
Income (loss) before
income taxes |
|
|
7,053 |
|
|
|
1,535 |
|
|
Income taxes
benefit |
|
|
1,291 |
|
|
|
2,218 |
|
|
Net Income (loss) |
|
|
8,344 |
|
|
|
3,753 |
|
|
Net loss attributable
to noncontrolling interests |
|
|
- |
|
|
|
- |
|
|
Net Income (loss)
attributable to UTStarcom Holdings Corp. |
|
$ |
8,344 |
|
|
$ |
3,753 |
|
|
|
|
|
|
|
|
Net
Income (loss) per share attributable to UTStarcom Holdings
Corp.—Basic |
|
$ |
0.24 |
|
|
$ |
0.10 |
|
|
Weighted
average shares outstanding—Basic |
|
|
35,421 |
|
|
|
36,160 |
|
|
|
|
|
|
|
|
UTStarcom Holdings Corp. |
|
Unaudited Condensed Consolidated Statements of Cash
Flows |
|
|
|
|
|
Six months ended Jun 30, |
|
|
|
2017 |
|
2016 |
|
|
|
(In thousands) |
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
Net Income |
|
$ |
8,344 |
|
|
$ |
3,753 |
|
|
Depreciation and amortization |
|
|
321 |
|
|
|
794 |
|
|
Provision
for doubtful accounts |
|
|
(106 |
) |
|
|
614 |
|
|
Provision
for (recovery of) deferred costs |
|
|
3,420 |
|
|
|
(2,698 |
) |
|
Stock-based compensation expense |
|
|
390 |
|
|
|
1,979 |
|
|
Net loss
on disposal of assets |
|
|
- |
|
|
|
(91 |
) |
|
Gain on
release of tax liability due to expiration of the statute of
limitations |
|
|
(1,478 |
) |
|
|
(807 |
) |
|
Deferred
income taxes |
|
|
231 |
|
|
|
49 |
|
|
Other-than-temporary impairment of equity investments |
|
|
1,308 |
|
|
|
- |
|
|
Gain on
CTA recognition from liquidation subsidiaries |
|
|
(1,703 |
) |
|
|
(46 |
) |
|
Gain on
sale of short-term investment |
|
|
- |
|
|
|
(140 |
) |
|
Changes
in operating assets and liabilities |
|
|
(790 |
) |
|
|
(817 |
) |
|
Net cash
provided by operating activities |
|
|
9,937 |
|
|
|
2,590 |
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
Additions
to property, plant and equipment |
|
|
(145 |
) |
|
|
(616 |
) |
|
Proceeds
from sale of property, plant and equipment |
|
|
- |
|
|
|
86 |
|
|
Change in
restricted cash |
|
|
(3,684 |
) |
|
|
1,251 |
|
|
Purchase
of an investment interest |
|
|
(100 |
) |
|
|
- |
|
|
Proceeds
from refund of investment interests |
|
|
496 |
|
|
|
418 |
|
|
Net cash
provided by (used in) investing activities |
|
|
(3,433 |
) |
|
|
1,139 |
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
Repurchase of ordinary share |
|
|
(140 |
) |
|
|
(2,900 |
) |
|
Net cash
used in financing activities |
|
|
(140 |
) |
|
|
(2,900 |
) |
|
Effect of exchange rate
changes on cash and cash equivalents |
|
|
2,025 |
|
|
|
3,578 |
|
|
Net
increase in cash and cash equivalents |
|
|
8,389 |
|
|
|
4,407 |
|
|
Cash and cash
equivalents at beginning of period |
|
|
83,922 |
|
|
|
77,050 |
|
|
Cash and cash
equivalents at end of period |
|
$ |
92,311 |
|
|
$ |
81,457 |
|
|
|
|
|
|
|
|
UTStarcom Holdings Corp. |
|
Unaudited Condensed Consolidated Statements of
Operations |
|
|
|
To supplement our unaudited condensed consolidated
financial statements presented on a GAAP basis, UTStarcom uses
certain non-GAAP measures which are adjusted to present those
metrics as if stock compensation expenses and China IPTV- related
deferred revenue amortization had been excluded in prior years
comparatives. We believe this enables year over year comparisons to
our recent financial results. These adjustments to our GAAP results
are made with the intent of providing both management and investors
a more complete understanding of UTStarcom’s underlying results and
trends. In addition, these adjusted non-GAAP results are among the
information management uses as a basis for our planning and
forecasting of future periods. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for results prepared in accordance with generally
accepted accounting principles in the United States. |
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, |
|
|
2017 |
|
2016 |
|
|
(In thousands) |
|
Non-GAAP Revenue |
$ |
54,007 |
|
|
$ |
42,301 |
|
|
Non-GAAP Gross
profit |
|
18,027 |
|
|
|
14,308 |
|
|
Non-GAAP Gross Margin
% |
|
33.4 |
% |
|
|
33.8 |
% |
|
Non-GAAP Operating
Income (loss) |
|
5,773 |
|
|
|
1,313 |
|
|
Non-GAAP Net
Income (loss) attributable to UTStarcom |
$ |
8,734 |
|
|
$ |
5,732 |
|
|
Non-GAAP
Net Income (loss) per share attributable to UTStarcom Holdings
Corp.—Basic |
$ |
0.25 |
|
|
$ |
0.16 |
|
|
Weighted
average shares outstanding—Basic |
|
35,421 |
|
|
|
36,160 |
|
|
|
|
|
|
|
UTStarcom Holdings Corp. |
|
Unaudited GAAP to unaudited Non-GAAP
Reconciliation |
|
|
|
To supplement our unaudited condensed consolidated
financial statements presented on a GAAP basis, UTStarcom uses
certain non-GAAP measures which are adjusted to present those
metrics as if stock compensation expenses and China IPTV- related
deferred revenue amortization had been excluded in prior years
comparatives. We believe this enables year over year comparisons to
our recent financial results. These adjustments to our GAAP results
are made with the intent of providing both management and investors
a more complete understanding of UTStarcom’s underlying results and
trends. In addition, these adjusted non-GAAP results are among the
information management uses as a basis for our planning and
forecasting of future periods. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for results prepared in accordance with generally
accepted accounting principles in the United States. |
|
|
|
|
|
|
|
|
|
|
|
Six months Ended June 30, |
|
|
2017 |
|
2016 |
|
|
(In thousands) |
|
Reconciliation
of Revenue |
|
|
|
|
GAAP Net
revenue |
$ |
54,023 |
|
$ |
42,577 |
|
|
Less:
China IPTV revenue |
|
16 |
|
|
276 |
|
|
Non-GAAP Net
revenue |
$ |
54,007 |
|
$ |
42,301 |
|
|
|
|
|
|
|
GAAP Gross
Margin |
|
|
|
|
US. GAAP as
reported |
$ |
18,027 |
|
$ |
14,307 |
|
|
Add:
Stock based compensation - COGS |
|
- |
|
|
1 |
|
|
Non-GAAP Gross
Margin |
$ |
18,027 |
|
$ |
14,308 |
|
|
|
|
|
|
|
Reconciliation
of Operation Income(loss) |
|
|
|
|
GAAP Operation
Income(loss) |
$ |
5,383 |
|
$ |
(666 |
) |
|
Add:
Stock based compensation |
|
390 |
|
|
1,979 |
|
|
Non-GAAP
Operation Income(loss) |
$ |
5,773 |
|
$ |
1,313 |
|
|
|
|
|
|
|
Reconciliation
of Net Income(loss) |
|
|
|
|
GAAP Net
Income(loss) |
$ |
8,344 |
|
$ |
3,753 |
|
|
Add:
Stock based compensation |
|
390 |
|
|
1,979 |
|
|
Non-GAAP
Net Income(loss) |
$ |
8,734 |
|
$ |
5,732 |
|
|
UTStarcom (NASDAQ:UTSI)
Historical Stock Chart
From Aug 2024 to Sep 2024
UTStarcom (NASDAQ:UTSI)
Historical Stock Chart
From Sep 2023 to Sep 2024