UTStarcom (“UT” or “the Company”) (NASDAQ: UTSI), a global
telecommunications infrastructure provider, today reported its
unaudited financial results for the fourth quarter and full year
ended December 31, 2018.
UTStarcom’s Chief Executive Officer Mr. Tim Ti commented, “We
are pleased with our strong execution in 2018. We achieved
year-over-year revenue growth of 18%, maintained profitability in a
competitive environment, secured key project wins in India and
introduced advanced products that have strengthened our competitive
position. Fourth quarter revenue was within our guidance, and
gross margin increased more than 20 percentage points, driven by
favorable product and geographic mix.”
Ti continued, “We are committed to investing in R&D to
develop new products, enabling network operators to meet the
challenges of growing network traffic generated by new technology
trends such as internet of things and 5G mobile data. We are
especially excited about the 5G opportunity, as network operators
around the globe begin this massive rollout, which will require
wholesale upgrades of network architectures. UTStarcom is
positioned to benefit from 5G. In 2019, we will drive more
product development and marketing effort, which will set us up for
solid growth in 2020 and beyond.”
Recent Business Highlights
- 5G readiness. To meet important 5G
transport network requirements, the Company is developing
solutions based on Segment Routing, FlexE and Software Defined
Network technologies. These solutions offer benefits such
as high bandwidth, network scalability, extremely low latency,
high synchronization accuracy and network slicing capabilities.
Our 5G product line, SkyFlux, is designed to deliver these
solutions and both hardware and software development are on
plan.
- SyncRing Products. The Company announced
its latest SyncRing model, the XGM30 at the International Timing
and Sync Forum (“ITSF”) 2018. The XGM30 is our newest grand
master clock product and is designed to optimize 5G
infrastructure-enabling network capabilities and to support
advanced 5G features and applications. Planning is in
progress for functional testing with a number of potential
customers.
- Project wins in India. In January 2019,
the Company announced two significant Wi-Fi project wins in India
with Bharat Sanchar Nigam Limited (“BSNL”), a large public sector
company that provides a comprehensive range of telecom services in
India. UT will provide Wireless Access Points, Power over
Ethernet (“PoE”) Switches, Wireless Controllers and other related
components and services for the projects.
- Ownership of uSTAR. UTStarcom recently
acquired the remaining 51% equity interest of the joint venture
(“JV”) company Hangzhou uSTAR Technologies Limited (“uSTAR”), from
the JV partner. As a result, UTStarcom now owns 100% of
uSTAR. Established in March 2018, uSTAR develops smart
refrigerators and other comprehensive retail automation solutions
for the fast-growing Chinese smart retail store market.
- goBox Business. goBox is the Company’s
flagship product line in smart retail. This product line is
beginning to penetrate the “Unattended Retail” market in
China. The Company is also exploring and pursuing sales
opportunities of goBox internationally.
Fourth Quarter and Full Year 2018 Financial
Results
Summary of Q4 2018 Key
Financials
|
Q4 2018 |
Y/Y Change* |
Q/Q Change* |
Revenue |
$12.7 |
|
-30.2% |
|
|
-75.6% |
|
Gross Profit |
$5.8 |
|
+26.3% |
|
|
-41.7% |
|
Operating Expenses |
$8.0 |
|
+23.1% |
|
|
+37.7% |
|
Operating Loss |
-$2.2 |
|
-$0.3 |
|
|
-$6.3 |
|
Net Loss |
-$1.0 |
|
+$2.6 |
|
|
-$3.1 |
|
Basic EPS |
-$0.03 |
|
+0.07 |
|
|
-$0.09 |
|
Cash Balance (including Restricted Cash) |
$73.7 |
|
-26.8% |
|
|
+10.4% |
|
Summary of Fiscal Year 2018 Key
Financials
|
2018 |
Y/Y Change * |
Revenue |
$115.9 |
|
+18.0% |
Gross Profit |
$32.3 |
|
-2.6% |
Operating Expenses |
$27.6 |
|
+3.7% |
Operating Income |
$4.6 |
|
-28.7% |
Net Income |
$5.1 |
|
-26.9% |
Basic EPS |
$0.14 |
|
-$0.06 |
Cash Balance (including Restricted Cash) |
$73.7 |
|
-26.8% |
*Dollar comparisons are used where percentage comparisons are
not meaningful.*All the numbers in U.S. Dollars are in millions
except for EPS.
Total Revenues
Three months ended December 31, 2018
Q4 2018 total revenues were $12.7 million, compared to $18.2
million in the corresponding period in 2017.
- Q4 2018 net equipment sales were $8.5 million, a decrease of
33.6% from $12.9 million in the corresponding period in 2017.
The decrease was due to the timing of India project
fulfillments.
- Q4 2018 net services sales were $4.2 million, a decrease of
22.0% from $5.3 million in the corresponding period in 2017.
The decrease was due to lower outsourcing business for the
quarter.
Twelve months ended December 31, 2018
2018 total revenues were $115.9 million, an increase of 18% from
$98.3 million in 2017.
- 2018 net equipment sales were $97.7 million, an increase of
26.4% from $77.3 million in 2017. The increase was due to
rapidly growing sales in India.
- 2018 net services sales were $18.2 million, a decrease of 13.1%
from $21.0 million in 2017. The decrease was mainly due to a
one-time cost reversal related to India maintenance services in
2017.
Gross Profit
Three months ended December 31, 2018
Q4 2018 gross profit was $5.8 million, or 45.3% of net sales,
compared to $4.6 million, or 25.0% of net sales, in the
corresponding period in 2017.
- Q4 2018 equipment gross profit was $5.1 million, compared to
$3.5 million in the corresponding period in 2017. Q4 2018
equipment gross margin was 60.3%, compared to 27.4% for the
corresponding period in 2017. The increase in gross margin
was mainly due to a higher proportion of equipment revenue from
Japan, which have higher gross margins.
- Q4 2018 service gross profit was $0.7 million, compared to $1.1
million in the corresponding period in 2017. Q4 2018 service
gross margin was 14.7%, compared to 19.4% for the corresponding
period in 2017. The decrease in gross margin was mainly due
to lower service margins on maturing products in Japan.
Twelve months ended December 31, 2018
2018 gross profit was $32.3 million, or 27.8% of net sales,
compared to $33.1 million, or 33.7% of net sales, in 2017.
- 2018 equipment gross profit was $25.6 million, compared to
$26.6 million in 2017. 2018 equipment gross margin was 26.2%,
compared to 34.5% in 2017.
- 2018 service gross profit was $6.7 million, compared to $6.5
million in 2017. 2018 service gross margin was 36.5%,
compared to 30.9% in 2017.
Operating Expenses
Three months ended December 31, 2018
Q4 2018 operating expenses were $8.0 million, compared to $6.5
million in the corresponding period in 2017.
- Q4 2018 selling, general and administrative (“SG&A”)
expenses were $3.5 million, compared to $2.9 million in the
corresponding period in 2017. SG&A was higher in fourth
quarter of 2018 due to year end bad debt reserve reversal in Q4
2017.
- Q4 2018 research and development expenses were $4.5 million,
compared to $3.6 million in the corresponding period in 2017.
The increase reflected our continuing investment in 5G technology
and product development.
Twelve months ended December 31, 2018
2018 operating expenses were $27.6 million, compared to $26.6
million in 2017.
- 2018 SG&A expenses were $14.9 million, compared to $16.8
million in 2017. Lower SG&A in 2018 reflected the absence
of one-time expenses related to auditor change and privatization
activities in 2017.
- 2018 research and development expenses were $12.7 million,
compared to $9.9 million in 2017. The increase reflected our
continuing investment in 5G technology and product
development.
Operating Income (Loss)
Q4 2018 operating loss was $2.2 million, compared to $1.9
million in the corresponding period in 2017.
Full year 2018 operating income was $4.6 million, compared to
$6.5 million in 2017.
Interest Income, Net
Q4 2018 net interest income was $0.5 million, compared to $0.3
million in the corresponding period in 2017.
Full year 2018 net interest income was $1.7 million, compared to
$1.1 million in 2017.
Other Income (Expenses), Net
Q4 2018 net other income was $1.5 million, compared to $0.6
million in the corresponding period in 2017. The increase in
other income was due to foreign exchange gains resulting from the
appreciation of Indian Rupee against U.S. dollars during the
quarter.
Full year 2018 net other expenses were $0.6 million, compared to
net other income of $3.0 million in 2017. The change was a
result of the gain on liquidating the Korea subsidiary in 2017 and
foreign exchange gains in 2017.
Net Income (Loss)
Q4 2018 net loss attributable to shareholders was $1.0 million,
compared to net loss of $3.6 million in the corresponding period in
2017. Q4 2018 basic EPS was $(0.03), compared to basic EPS
$(0.10) for the corresponding period in 2017.
Full year 2018 net income attributable to shareholders was $5.1
million, compared to net income of $7.0 million in 2017. 2018
basic EPS was $0.14, compared to basic EPS of $0.20 in 2017.
Cash Flow
During Q4 2018, cash generated from operating activities was
$4.3 million, cash from investing activities was $1.2 million, and
cash used in financing activities was $0.5 million. As of
December 31, 2018, UTStarcom had cash, cash equivalent and
restricted cash of $73.7 million.
Outlook
For the first quarter of 2019, the Company expects to generate
revenue in the range of $20 to $25 million. The Company’s
quarterly revenue pattern is typically uneven due to the timing of
project fulfillments.
Fourth 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, March 15, 2019 (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 passcode is 1598797.
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 April
15, 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 1598797.
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 |
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
2018 |
|
2017 |
|
ASSETS |
|
(In thousands) |
|
Current assets: |
|
|
|
|
|
Cash,
cash equivalents |
|
$ |
57,049 |
|
$ |
79,749 |
|
Short-term investments |
|
|
- |
|
|
3,143 |
|
Accounts
and notes receivable, net |
|
|
60,946 |
|
|
16,911 |
|
Inventories and deferred costs |
|
|
26,818 |
|
|
40,684 |
|
Short-term restricted cash |
|
|
8,827 |
|
|
12,099 |
|
Prepaids
and other current assets |
|
|
4,793 |
|
|
14,227 |
|
Total
current assets |
|
|
158,433 |
|
|
166,813 |
|
Long-term assets: |
|
|
|
|
|
Property,
plant and equipment, net |
|
|
1,258 |
|
|
1,714 |
|
Long-term
deferred costs |
|
|
19 |
|
|
277 |
|
Long-term
restricted cash |
|
|
7,824 |
|
|
8,839 |
|
Other
long-term assets |
|
|
8,197 |
|
|
9,401 |
|
Total
long-term assets |
|
|
17,298 |
|
|
20,231 |
|
Total
assets |
|
$ |
175,731 |
|
$ |
187,044 |
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
|
$ |
50,757 |
|
$ |
27,452 |
|
Customer
advances |
|
|
561 |
|
|
21,828 |
|
Deferred
revenue |
|
|
968 |
|
|
7,286 |
|
Other
current liabilities |
|
|
15,523 |
|
|
31,698 |
|
Total
current liabilities |
|
|
67,809 |
|
|
88,264 |
|
Long-term
liabilities: |
|
|
|
|
|
Long-term
deferred revenue and other liabilities |
|
|
5,476 |
|
|
7,788 |
|
Total
liabilities |
|
|
73,285 |
|
|
96,052 |
|
|
|
|
|
|
|
Total equity |
|
|
102,446 |
|
|
90,992 |
|
Total
liabilities and equity |
|
$ |
175,731 |
|
$ |
187,044 |
|
UTStarcom Holdings Corp. |
|
Unaudited Condensed Consolidated Statements of
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
Twelve months ended December 31, |
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
(In thousands, except per share
data) |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
12,726 |
|
|
$ |
18,235 |
|
|
$ |
115,944 |
|
|
$ |
98,292 |
|
|
Cost of net sales |
|
|
6,963 |
|
|
|
13,672 |
|
|
|
83,676 |
|
|
|
65,146 |
|
|
Gross profit |
|
|
5,763 |
|
|
|
4,563 |
|
|
|
32,268 |
|
|
|
33,146 |
|
|
|
|
|
45.3 |
% |
|
|
25.0 |
% |
|
|
27.8 |
% |
|
|
33.7 |
% |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
Selling,
general and administrative |
|
|
3,521 |
|
|
|
2,938 |
|
|
|
14,875 |
|
|
|
16,777 |
|
|
Research
and development |
|
|
4,472 |
|
|
|
3,557 |
|
|
|
12,746 |
|
|
|
9,853 |
|
|
Total operating
expenses |
|
|
7,993 |
|
|
|
6,495 |
|
|
|
27,621 |
|
|
|
26,630 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(loss) |
|
|
(2,230 |
) |
|
|
(1,932 |
) |
|
|
4,647 |
|
|
|
6,516 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income,
net |
|
|
486 |
|
|
|
335 |
|
|
|
1,702 |
|
|
|
1,129 |
|
|
Other income (expense),
net |
|
|
1,529 |
|
|
|
581 |
|
|
|
(644 |
) |
|
|
2,976 |
|
|
Equity pick up of
losses of an associate |
|
|
(351 |
) |
|
|
(397 |
) |
|
|
(613 |
) |
|
|
(687 |
) |
|
Investment
impairment |
|
|
(370 |
) |
|
|
(382 |
) |
|
|
(370 |
) |
|
|
(1,690 |
) |
|
Income (loss) before
income taxes |
|
|
(936 |
) |
|
|
(1,795 |
) |
|
|
4,722 |
|
|
|
8,244 |
|
|
Income taxes benefit
(expenses) |
|
|
(55 |
) |
|
|
(1,758 |
) |
|
|
378 |
|
|
|
(1,263 |
) |
|
Net Income (loss)
attributable to UTStarcom Holdings Corp. |
|
$ |
(991 |
) |
|
$ |
(3,553 |
) |
|
$ |
5,100 |
|
|
$ |
6,981 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income (loss) per share attributable to UTStarcom Holdings
Corp.—Basic |
|
$ |
(0.03 |
) |
|
$ |
(0.10 |
) |
|
$ |
0.14 |
|
|
$ |
0.20 |
|
|
Weighted
average shares outstanding—Basic |
|
|
35,458 |
|
|
|
35,535 |
|
|
|
35,642 |
|
|
|
35,467 |
|
|
|
|
|
|
|
|
|
|
|
|
UTStarcom Holdings Corp. |
Unaudited Condensed Consolidated Statements of
Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
Twelve months ended December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
(In thousands) |
CASH FLOWS
FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net Income (loss) |
|
$ |
(991 |
) |
|
$ |
(3,553 |
) |
|
$ |
5,100 |
|
|
$ |
6,981 |
|
Depreciation and amortization |
|
|
161 |
|
|
|
162 |
|
|
|
702 |
|
|
|
628 |
|
Provision
for doubtful accounts |
|
|
13 |
|
|
|
(711 |
) |
|
|
532 |
|
|
|
4 |
|
Provision
for deferred costs |
|
|
(1,760 |
) |
|
|
(20 |
) |
|
|
(5,125 |
) |
|
|
4,159 |
|
Stock-based compensation expense |
|
|
404 |
|
|
|
211 |
|
|
|
1,097 |
|
|
|
866 |
|
Net gain
on disposal of assets |
|
|
- |
|
|
|
- |
|
|
|
(21 |
) |
|
|
- |
|
Gain on
release of tax liability due to expiration of the statute of
limitations |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,409 |
) |
Deferred
income taxes |
|
|
660 |
|
|
|
(1,320 |
) |
|
|
705 |
|
|
|
(1,092 |
) |
Loss from
equity investments, net |
|
|
351 |
|
|
|
397 |
|
|
|
613 |
|
|
|
687 |
|
Other-than-temporary impairment of equity investments |
|
370 |
|
|
|
382 |
|
|
|
370 |
|
|
|
1,690 |
|
Gain on CTA recognition from liquidation subsidiaries |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,703 |
) |
Changes
in operating assets and liabilities |
|
|
5,058 |
|
|
|
(5,183 |
) |
|
|
(30,079 |
) |
|
|
(6,973 |
) |
Net cash provided by (used in) operating activities |
|
4,266 |
|
|
|
(9,635 |
) |
|
|
(26,106 |
) |
|
|
3,838 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
Additions to property, plant and equipment |
|
(4 |
) |
|
|
(405 |
) |
|
|
(225 |
) |
|
|
(732 |
) |
Purchase
of an investment interest |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(481 |
) |
Purchase
of short-term investments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,164 |
) |
Proceeds
from sale of investments |
|
|
- |
|
|
|
229 |
|
|
|
- |
|
|
|
500 |
|
Proceeds
from short-term investments |
|
|
- |
|
|
|
- |
|
|
|
3,143 |
|
|
|
- |
|
Acquisition of uSTAR, net of cash acquired |
|
1,174 |
|
|
|
- |
|
|
|
(673 |
) |
|
|
- |
|
Net cash provided by (used in) investing activities |
|
1,170 |
|
|
|
(176 |
) |
|
|
2,245 |
|
|
|
(3,877 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
Repurchase of common stock |
|
|
(506 |
) |
|
|
- |
|
|
|
(2,525 |
) |
|
|
(140 |
) |
Proceeds
from exercise of stock options |
|
|
30 |
|
|
|
113 |
|
|
|
101 |
|
|
|
113 |
|
Net cash provided by (used in) financing activities |
|
(476 |
) |
|
|
113 |
|
|
|
(2,424 |
) |
|
|
(27 |
) |
Effect of
exchange rate changes on cash and cash equivalents |
|
1,955 |
|
|
|
859 |
|
|
|
(701 |
) |
|
|
2,112 |
|
Net increase (decrease) in cash and cash equivalents |
|
6,915 |
|
|
|
(8,839 |
) |
|
|
(26,986 |
) |
|
|
2,046 |
|
Cash, cash
equivalents and restricted cash at beginning of period |
|
66,785 |
|
|
|
109,526 |
|
|
|
100,686 |
|
|
|
98,641 |
|
Cash, cash
equivalents and restricted cash at end of period |
$ |
73,700 |
|
|
$ |
100,687 |
|
|
$ |
73,700 |
|
|
$ |
100,687 |
|
UTStarcom (NASDAQ:UTSI)
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From Mar 2024 to Apr 2024
UTStarcom (NASDAQ:UTSI)
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From Apr 2023 to Apr 2024