UTStarcom Reports Unaudited Financial Results for First Quarter 2018
HONG KONG, May 11, 2018 (GLOBE NEWSWIRE) -- 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.”
- 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*|
|Gross Margin||40.5%||+71 bps||+1545 bps|
|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
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
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
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
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.
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 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.
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) 519-4004
Canada: + 1 (866) 386-1016
Hong Kong: +852-3018-6771
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) 452-5696
Hong Kong: 800-963-117
Other 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.
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.
Ms. Fei Wang, Director of Investor Relations
Ms. Ning Jiang, Investor Relations
In the United States:
The Blueshirt Group
Mr. Ralph Fong
Tel: +1 (415) 489-2195
|UTStarcom Holdings Corp.|
|Unaudited Condensed Consolidated Balance Sheets|
|March 31,||December 31,|
|Cash, cash equivalents||$||75,102||$||79,749|
|Accounts and notes receivable, net||22,142||16,911|
|Inventories and deferred costs||38,892||40,684|
|Short-term restricted cash||15,030||12,099|
|Prepaids and other current assets||20,727||14,227|
|Total current assets||171,914||166,813|
|Property, plant and equipment, net||1,778||1,714|
|Long-term deferred costs||32||277|
|Long-term restricted cash||8,757||8,839|
|Other long-term assets||9,309||9,401|
|Total long-term assets||19,876||20,231|
|LIABILITIES AND EQUITY|
|Other current liabilities||30,721||31,698|
|Total current liabilities||82,861||88,264|
|Long-term deferred revenue and other liabilities||6,140||7,788|
|Total liabilities and equity||$||191,790||$||187,044|
|UTStarcom Holdings Corp.|
|Unaudited Condensed Consolidated Statements of Operations|
|Three months ended March 31,|
|(In thousands, except per share data)|
|Cost of net sales||13,445||13,430|
|Selling, general and administrative||3,895||3,642|
|Research and development||2,943||1,825|
|Total operating expenses||6,838||5,467|
|Interest income, net||474||366|
|Other income (expense), net||(16||)||353|
|Income before income taxes||2,765||4,360|
|Income taxes benefit||1,266||1,539|
|Net Income attributable to UTStarcom Holdings Corp.||4,031||5,899|
|Net Income per share attributable to UTStarcom Holdings Corp.—Basic||$||0.11||$||0.17|
|Weighted average shares outstanding—Basic||35,746||35,389|
|UTStarcom Holdings Corp.|
|Unaudited Condensed Consolidated Statements of Cash Flows|
|Three months ended March 31,
|CASH FLOWS FROM OPERATING ACTIVITIES:|
|Depreciation and amortization||187||163|
|Provision for doubtful accounts||52||(111||)|
|Provision for deferred costs||21||1,678|
|Stock-based compensation expense||201||308|
|Deferred income taxes||(81||)||(50||)|
|Changes in operating assets and liabilities||(9,518||)||541|
|Net cash provided by ( used in) operating activities||(5,107||)||8,428|
|CASH FLOWS FROM INVESTING ACTIVITIES:|
|Additions to property, plant and equipment||(251||)||(50||)|
|Procceds from refund of investment interests||-||479|
|Proceeds from sale of short term investments||3,123||-|
|Net cash provided by investing activities||2,872||429|
|CASH FLOWS FROM FINANCING ACTIVITIES:|
|Repurchase of common stock||-||(140||)|
|Proceeds from exercise of stock options||22||-|
|Net cash provided by (used in) financing activities||22||(140||)|
|Effect of exchange rate changes on cash and cash equivalents||416||2,185|
|Net increase (decrease) in cash and cash equivalents||(1,797||)||10,902|
|Cash,cash equivalents and restricted cash at beginning of period||100,686||98,641|
|Cash,cash equivalents and restricted cash at end of period||$||98,889||$||109,543|