UTStarcom (“UTStarcom” or “the Company”) (NASDAQ:UTSI), a global
telecommunications infrastructure provider, today reported its
unaudited financial results for the first quarter ended March 31,
2018.
UTStarcom’s Chief Executive Officer Tim Ti commented, “First
quarter results reinforce our confidence in the long-term outlook
for UT. Financial results were solid, with revenue at the
higher end of expectations and gross margin over 40%, resulting in
a return to profitability. We increased our investment in
R&D when compared to last year while maintaining a strong
balance sheet.”
Tim continued, “Our commitment to R&D is starting to show
promising results. We generated meaningful revenue in
Taiwan. Orders are flowing in from India, and we expect
substantial revenue from there for the balance of the year.
We are also strengthening our product portfolio with
high-performance, high value products such as the newly introduced
SRv6 router. Finally, we see a multitude of opportunities in
new applications like retail automation, and are pursuing those
with key partnerships such as the recently announce uSTAR joint
venture.”
Business Highlights
- In April 2018, the Company announced a ‘POC-ready’ release of
its newest break-through platform: the SkyFlux UAR series of
routers, which are based on Segment Routing over IPv6 data plane
(“SRv6”) technology tightly integrated with the Company’s SDN
platform SOO Network
- In April 2018, the Company participated in the MPLS + SDN + NFV
World Congress 2018 interoperability showcase in Paris, organized
by the European Advanced Networking Test Center (EANTC).
During the showcase, UTStarcom participated in live multi-vendor
demonstrations of the latest SRv6 technology
- The Company joined a range of interoperability tests with a
number of vendors during a hot staging lab testing event organized
by EANTC that took place in Berlin from March 5 to 16
- In March 2018, the Company formed a joint venture, Hangzhou
uSTAR Technologies Limited with a leading Zhejiang-based
manufacturer of refrigerators to develop a “smart refrigerator”
utilizing the Company’s advanced communication technologies.
In addition to the development of smart refrigerators, the new
joint venture Hangzhou uSTAR Technologies Limited will
provide a comprehensive retail automation solution for the
fast-growing Chinese smart retail store market
- The Company’s business in India continued to gain traction,
including important customer wins and outsourcing of product
manufacturing to a local manufacturer
First Quarter 2018 Financial Results
Summary of Q1 2018 Key
Financials
|
Q1 2018 |
Y/Y Change* |
Q/Q Change* |
Revenue |
$22.6 |
+0.2% |
+23.9% |
Gross Margin |
40.5% |
+71 bps |
+1545 bps |
Operating Expenses |
$6.8 |
+25.1% |
+5.3% |
Operating Income |
$2.3 |
-$1.3 |
+$4.2 |
Net Income |
$4.0 |
-$1.9 |
+$7.6 |
Basic EPS |
$0.11 |
-$0.06 |
+$0.21 |
Cash Balance (including Restricted Cash) |
$98.9 |
-9.7% |
-1.8% |
* Dollar comparisons are used where percentage comparisons are
not meaningful.*All the numbers in U.S. Dollars are in million
except EPS
Total Revenues
Q1 2018 total revenues were $22.6 million, essentially flat when
compared to the corresponding period of 2017.
- Q1 2018 net equipment sales were $18.7 million, an increase of
5.5% from $17.7 million for the corresponding period in 2017.
The increased sales were mainly from Packet Transport Network
(“PTN”) product in Japan region
- Q1 2018 net services sales were $3.9 million, a decrease of
19.2% from $4.8 million for the corresponding period in 2017.
The decreased sales were mainly due to the expiration of an annual
service contract in India
Gross Profit
Q1 2018 gross profit was $9.1 million, or 40.5% of net sales,
compared to $9.1 million, or 40.4% of net sales, for the
corresponding period in 2017.
- Q1 2018 equipment gross profit was $7.9 million, compared to
$7.4 million for the corresponding period in 2017. Q1 2018
equipment gross margin was 42.1%, compared to 42.0% for the
corresponding period in 2017
- Q1 2018 service gross profit was $1.2 million, compared to $1.7
million for the corresponding period in 2017. Q1 2018 service
gross margin was 32.6%, compared to 34.6% for the corresponding
period in 2017. The slight decrease in Q1 2018 was primarily
due to the expiration of an annual service contract in India
Operating Expenses
Q1 2018 operating expenses were $6.8 million, compared to $5.5
million for the corresponding period in 2017.
- Q1 2018 selling, general and administrative (“SG&A”)
expenses were $3.9 million, compared to $3.6 million for the
corresponding period in 2017. The lower 2017 SG&A was as
a result of a one-time bad debt recovery from a delinquent
account
- Q1 2018 research and development expenses were $2.9 million,
compared to $1.8 million for the corresponding period in 2017.
The increase was mainly due to continuing investment in
research and development and a one-time expense related to the
transfer of personnel to uSTAR
Operating Income
Q1 2018 operating income was $2.3 million, compared to $3.6
million for the corresponding period of 2017.
Interest Income, Net
Q1 2018 net interest income was $0.5 million, compared to $0.4
million for the corresponding period in 2017.
Other Income (Expense), Net
Q1 2018 net other expenses were $0.02 million, compared to net
other income of $0.4 million for the corresponding period in
2017.
Net Income
Q1 2018 net income attributable to UTStarcom’s shareholder was
$4.0 million, compared to $5.9 million for the corresponding period
in 2017. Q1 2018 basic net income per share was $0.11,
compared to $0.17 for the corresponding period of 2017.
Cash Flow
Cash used in operating activities was $5.1 million in the first
quarter of 2018.
Cash provided by investing activities was $2.9 million in the
first quarter of 2018.
As of March 31, 2018, UTStarcom had cash, cash equivalents and
restricted cash of $98.9 million.
Outlook
For the second quarter of 2018, the Company expects to generate
revenue in the range of $23 million to $28 million.
First 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, May 11, 2018 (8:00 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: +852-3018-6771China: 4006-208-038 Other International: +65
6713-5090
The attendee pass code is 3438736.
A replay of the call will be available two hours after the end
of the conference call until 11:59a.m. U.S. Eastern Time on June
11, 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 3438736.
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 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 and
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 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: +852-3951-9757
Ms. Fei Wang, Director of Investor Relations Email:
fei.wang@utstar.com
Ms. 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 |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2018 |
|
2017 |
ASSETS |
|
(In thousands) |
Current assets: |
|
|
|
|
Cash,
cash equivalents |
|
$ |
75,102 |
|
$ |
79,749 |
Short-term investments |
|
21 |
|
3,143 |
Accounts
and notes receivable, net |
|
22,142 |
|
16,911 |
Inventories and deferred costs |
|
38,892 |
|
40,684 |
Short-term restricted cash |
|
15,030 |
|
12,099 |
Prepaids
and other current assets |
|
20,727 |
|
14,227 |
Total
current assets |
|
171,914 |
|
166,813 |
Long-term assets: |
|
|
|
|
Property,
plant and equipment, net |
|
1,778 |
|
1,714 |
Long-term
deferred costs |
|
32 |
|
277 |
Long-term
restricted cash |
|
8,757 |
|
8,839 |
Other
long-term assets |
|
9,309 |
|
9,401 |
Total
long-term assets |
|
19,876 |
|
20,231 |
Total
assets |
|
$ |
191,790 |
|
$ |
187,044 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
37,655 |
|
$ |
27,452 |
Customer
advances |
|
10,502 |
|
21,828 |
Deferred
revenue |
|
3,983 |
|
7,286 |
Other
current liabilities |
|
30,721 |
|
31,698 |
Total
current liabilities |
|
82,861 |
|
88,264 |
Long-term
liabilities: |
|
|
|
|
Long-term
deferred revenue and other liabilities |
|
6,140 |
|
7,788 |
Total
liabilities |
|
89,001 |
|
96,052 |
|
|
|
|
|
Total equity |
|
102,789 |
|
90,992 |
Total
liabilities and equity |
|
$ |
191,790 |
|
$ |
187,044 |
|
|
|
|
|
UTStarcom Holdings Corp. |
Unaudited Condensed Consolidated Statements of
Operations |
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, |
|
|
|
|
2018 |
|
2017 |
|
|
|
(In thousands, except per share
data) |
|
|
|
|
|
|
|
|
Net sales |
|
$ |
22,590 |
|
|
$ |
22,538 |
|
|
Cost of net sales |
|
13,445 |
|
|
13,430 |
|
|
Gross profit |
|
9,145 |
|
|
9,108 |
|
|
|
|
40.5 |
% |
|
40.4 |
% |
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling,
general and administrative |
|
3,895 |
|
|
3,642 |
|
|
Research
and development |
|
2,943 |
|
|
1,825 |
|
|
Total operating
expenses |
|
6,838 |
|
|
5,467 |
|
|
|
|
|
|
|
|
|
|
Operating
Income |
|
2,307 |
|
|
3,641 |
|
|
|
|
|
|
|
|
|
|
Interest income,
net |
|
474 |
|
|
366 |
|
|
Other income (expense),
net |
|
(16 |
) |
|
353 |
|
|
Income before income
taxes |
|
2,765 |
|
|
4,360 |
|
|
Income taxes
benefit |
|
1,266 |
|
|
1,539 |
|
|
Net Income attributable
to UTStarcom Holdings Corp. |
|
4,031 |
|
|
5,899 |
|
|
|
|
|
|
|
|
|
|
Net
Income per share attributable to UTStarcom Holdings
Corp.—Basic |
|
$ |
0.11 |
|
|
$ |
0.17 |
|
|
Weighted
average shares outstanding—Basic |
|
35,746 |
|
|
35,389 |
|
|
|
|
|
|
|
|
|
|
|
UTStarcom Holdings Corp. |
Unaudited Condensed Consolidated Statements of
Cash Flows |
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, |
|
|
|
2018 |
|
2017 |
|
|
|
(In thousands) |
|
CASH FLOWS
FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net
Income |
|
$ |
4,031 |
|
|
$ |
5,899 |
|
|
Depreciation and amortization |
|
187 |
|
|
163 |
|
|
Provision
for doubtful accounts |
|
52 |
|
|
(111 |
) |
|
Provision
for deferred costs |
|
21 |
|
|
1,678 |
|
|
Stock-based compensation expense |
|
201 |
|
|
308 |
|
|
Deferred
income taxes |
|
(81 |
) |
|
(50 |
) |
|
Changes
in operating assets and liabilities |
|
(9,518 |
) |
|
541 |
|
|
Net cash
provided by ( used in) operating activities |
|
(5,107 |
) |
|
8,428 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Additions
to property, plant and equipment |
|
(251 |
) |
|
(50 |
) |
|
Procceds
from refund of investment interests |
|
- |
|
|
479 |
|
|
Proceeds
from sale of short term investments |
|
3,123 |
|
|
- |
|
|
Net cash
provided by investing activities |
|
2,872 |
|
|
429 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Repurchase of common stock |
|
- |
|
|
(140 |
) |
|
Proceeds
from exercise of stock options |
|
22 |
|
|
- |
|
|
Net cash
provided by (used in) financing activities |
|
22 |
|
|
(140 |
) |
|
Effect of
exchange rate changes on cash and cash equivalents |
|
416 |
|
|
2,185 |
|
|
Net
increase (decrease) in cash and cash equivalents |
|
(1,797 |
) |
|
10,902 |
|
|
Cash,cash
equivalents and restricted cash at beginning of period |
|
100,686 |
|
|
98,641 |
|
|
Cash,cash
equivalents and restricted cash at end of period |
|
$ |
98,889 |
|
|
$ |
109,543 |
|
|
|
|
|
|
|
|
|
|
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