UTSI [UTSTARCOM] 6-K: UTStarcom Reports Unaudited Financial Results for Fourth Quarter

Ticker: UTSI, Company: UTSTARCOM HOLDINGS CORP., Type: 6-K, Date: 2019-03-15
Original SEC Filing: Click here


Webplus: UTSI/20190315/6-K/2_EX-99.1/000.htm SEC Original: utsi-ex991_6.htm
UTStarcom Reports Unaudited Financial Results for Fourth Quarter and Full Year 2018 Hong Kong, March 15, 2019— 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



s:69383:" EX-99.1 2 utsi-ex991_6.htm EX-99.1

                                                                                                                                                             Exhibit 99.1

UTStarcom Reports Unaudited Financial Results for Fourth Quarter and Full Year 2018

Hong Kong, March 15, 2019— 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.

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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.

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2018 net equipment sales were $97.7million, 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

3


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.

4


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) 519-4004

Canada: + 1 (866) 386-1016

Hong Kong: +852-3018-6771

China: 4006-208-038

Other International: +65 6713-5090

The attendee passcode is1598797.

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) 452-5696

Hong Kong: 800-963-117

China: 4006-022-065

Other 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

5


India.  UTStarcom was founded in 1991 and listed its shares on the Nasdaq Market in 2000 (symbol: UTSI).  For more information about UTStarcom, please visithttp://www.utstar.com.

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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 Fong

Tel: +1 (415) 489-2195

Email:ralph@blueshirtgroup.com

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UTStarcom Holdings Corp.

Unaudited Condensed Consolidated Balance Sheets

December 31,

December 31,

2018

2017

(In thousands)

ASSETS

Current assets:

Cash and  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

Prepaid 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

8


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 tax benefit (expense)

(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

9


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

161

162

702

628

Provision for doubtful accounts

13

(711

)

532

4

Provision for (recovery of) 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 Cumulative Transfer Adjustment 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 investment interests

(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:

Proceeds from exercise of stock options

30

113

101

113

Repurchase of ordinary share

(506

)

(2,525

)

(140

)

Net cash 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

10

";


Webplus: UTSI/20190315/6-K/1/000.htm SEC Original: utsi-6k_20190315.htm
UTSTARCOM HOLDINGS CORP. No. Description 99.1 Press Release regarding UTStarcom Reports Unaudited Financial Results for the Fourth Quarter and Full Year of 2018 1 6-K 1 utsi-6k_20190315.htm PRESS RELEASE REGARDING UTSTARCOM REPORTS UNAUDITED FINANCIAL RESULTS FOR THE FOURTH QUARTER AND FULL YEAR OF 2018



s:2109:" 6-K 1 utsi-6k_20190315.htm PRESS RELEASE REGARDING UTSTARCOM REPORTS UNAUDITED FINANCIAL RESULTS FOR THE FOURTH QUARTER AND FULL YEAR OF 2018


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

UTSTARCOM HOLDINGS CORP.

Date: March 15, 2019

By:

/s/ Eric Lam

Name:  Eric Lam

Title:   Vice President, Finance


EXHIBIT INDEX

1

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Company Info:

Ticker: UTSI, Company: UTSTARCOM HOLDINGS CORP., Type: 6-K, Date: 2019-03-15CIK: 0001030471, Location: K3, SIC: 3669, SIC Desc: COMMUNICATIONS EQUIPMENT, NEC
Business Phone & Address:
6TH FLOOR, 28 HENNESSY ROAD, ADMIRALTY
HONG KONG, K3 NA

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