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, 2019, and provided a business update.
Business Update
- Q4 Revenue Met Expectations. Fourth
quarter revenue of $14.2 million was at the high end of the
Company’s guidance range of $10 to $15 million. The net loss
for the quarter was attributable to foreign currency losses and a
slight operating loss.
- CEO Leave of Absence. As announced on
March 16, 2020, the Company’s Chief Executive Officer (CEO) Mr. Tim
Ti has taken a temporary leave of absence due to health reasons
(unrelated to the COVID-19 virus). The Company’s Board of
Directors appointed UT’s Senior Vice President of Sales and
Business Development for Japan and Korea, Dr. Zhaochen Huang as
acting CEO.
- Impact of the COVID-19
Virus. Due to the mandatory
shutdowns implemented by the Chinese government, some customer
shipments were temporarily interrupted during the first quarter of
2020, but with limited financial impact. As of the date
of this release, production and operations in China have generally
returned to normal. However, as the Coronavirus pandemic is
escalating around the globe, the impact to the Company’s future
operations, revenue and earnings is likely to be significant and
prolonged.
- India Receivable. The Company continues
to collect amounts due from its major customer in India which is in
the process of implementing an India government backed
restructuring plan. Since the Company’s last earnings release
on November 8, 2019, over $12 million has been collected, with $54
million still outstanding. As a result of the recently
announced 21-day national lockdown in India, the timing of future
payments is uncertain.
- Status of Large 5G Network Opportunity in
China. The Company was recently informed that the
vendor team, of which the Company is a member, will not receive
meaningful contract awards to support a large 5G project for a
carrier in China for which its team was competing. The
carrier recently announced that the majority of the business will
be awarded to other local vendors.
- Business Streamlining. The Company has
reassessed its less promising businesses and will discontinue its
goSmart product line and exit the retail automation market.
UTStarcom’s Acting Chief Executive Officer Dr. Huang commented,
“Although the fourth quarter revenue met expectations, the Company
faces significant challenges in 2020. We are dealing with
slower-than-expected collections from our large customer in India,
and the impact from the Coronavirus pandemic, is likely to be
significant. Furthermore, our outlook is more uncertain due
to diminished 5G prospects in China. In light of these
uncertainties, the Company and the Board are evaluating all
strategic alternatives available to the Company. As this
evaluation is in progress, we are suspending our quarterly earnings
conference call until further notice since we will not be able to
comment on deliberations.”
Fourth Quarter and Full Year 2019 Financial
Results
Summary of Q4 2019 Key Financials |
|
Q4 2019 |
Y/Y Change |
Q/Q Change |
Revenue |
$14.2 |
+11.4% |
+8.4% |
Gross Profit |
$5.1 |
-10.7% |
-28.5% |
Operating Expenses |
$6.3 |
-24.1% |
-34.4% |
Operating Loss |
($1.1) |
+$1.4 |
+$1.2 |
Net Loss |
($3.6) |
-$2.3 |
-$1.5 |
Basic EPS |
($0.1) |
-$0.07 |
-$0.04 |
Cash Balance (including Restricted Cash) |
$48.6 |
-34.0% |
+2.2% |
Summary of Full year 2019 Key Financials |
|
2019 |
Y/Y Change |
Revenue |
$65.8 |
-43.2% |
Gross Profit |
$24.4 |
-24.5% |
Operating Expenses |
$30.2 |
+8.2% |
Operating Loss |
($5.8) |
-$10.2 |
Net Loss |
($3.6) |
-$8.4 |
Basic EPS |
($0.1) |
-$0.24 |
Cash Balance (including Restricted Cash) |
$48.6 |
-34.0% |
*Dollar comparisons are used where percentage comparisons are
not meaningful.*All the numbers in U.S. Dollars are in millions
except for Earnings Per Share (EPS).
Total Revenues
Three months ended December 31, 2019
Q4 2019 total revenues were $14.2 million, compared to $12.7
million in the corresponding period in 2018.
- Q4 2019 net equipment sales were $6.3 million, a decrease of
26.2% from $8.5 million in the corresponding period in 2018. The
decrease was mainly from Japan as our customer began transitioning
to the next generation network.
- Q4 2019 net services sales were $7.9 million, an increase of
88.0% from $4.2 million in the corresponding period in 2018.
The increase was mainly from India from several large
projects.
Twelve months ended December 31, 2019
2019 total revenues were $65.8 million, a decrease of 43% from
$115.9 million in 2018.
- 2019 net equipment sales were $43.9 million, a decrease of
55.0% from $97.7 million in 2018. The decrease in equipment
revenue was due to timing of project fulfillment in India, which
contributed significant revenue in the prior year period.
- 2019 net services sales were $21.9 million, an increase of
19.9% from $18.2 million in 2018. The increase was mainly
from India as several large projects were being implemented.
Gross Profit
Three months ended December 31, 2019
Q4 2019 gross profit was $5.1 million, or 36.3% of net sales,
compared to $5.8 million, or 45.3% of net sales, in the
corresponding period in 2018.
- Q4 2019 equipment gross profit was $1.0 million, compared to
$5.1 million in the corresponding period in 2018. Q4 2019
equipment gross margin was 15.6%, compared to 60.3% for the
corresponding period in 2018. The decrease in gross margin
was mainly due to one-time inventory reserve for
overstock.
- Q4 2019 service gross profit was $4.1 million, compared to $0.7
million in the corresponding period in 2018. Q4 2019 service
gross margin was 52.8%, compared to 14.7% for the corresponding
period in 2018. The increased gross margin was mainly
contributed from India.
Twelve months ended December 31, 2019
2019 gross profit was $24.4 million, or 37.0% of net sales,
compared to $32.3 million, or 27.8% of net sales, in 2018.
- 2019 equipment gross profit was $15.8 million, compared to
$25.6 million in 2018. 2019 equipment gross margin was 35.8%,
compared to 26.2% in 2018 primarily due to product and geographical
mix.
- 2019 service gross profit was $8.6 million, compared to $6.7
million in 2018. 2019 service gross margin was 39.5%,
compared to 36.5% in 2018.
Operating Expenses
Q4 2019 operating expenses were $6.3 million, compared to $8.3
million in the corresponding period in 2018.
- Q4 2019 selling, general and administrative (“SG&A”)
expenses were $2.5 million, compared to $3.8 million in the
corresponding period in 2018. SG&A was lower in fourth
quarter of 2019 due to continued tight cost controls.
- Q4 2019 research and development expenses were $3.8 million,
compared to $4.5 million in the corresponding period in
2018.
Twelve months ended December 31, 2019
2019 operating expenses were $30.2 million, compared to $27.9
million in 2018.
- 2019 SG&A expenses were $15.7 million, compared to $15.2
million in 2018. The increase was mainly attributable to a
higher accounts receivable allowance provided during the period for
our India customer, partially offset by decreased expenses from
continued tight cost controls.
- 2019 research and development expenses were $14.5 million,
compared to $12.7 million in 2018. The increase reflected our
continued investment in 5G technology and product development in
2019.
Operating Income (loss)
Q4 2019 operating loss was $1.1 million, compared to operating
loss of $2.5 million in the corresponding period in 2018.
Full year 2019 operating loss was $5.8 million, compared to
operating income of $4.4 million in 2018.
Interest Income, Net
Q4 2019 net interest income was $0.3 million, compared to $0.5
million in the corresponding period in 2018.
Full year 2019 net interest income was $1.2 million, compared to
$1.7 million in 2018.
Other Income (Expenses), Net
Q4 2019 net other expense was $3.7 million, compared to net
other income of $1.2 million in the corresponding period in
2018. Other expense in Q4 2019 was mainly due to foreign
exchange losses resulting from the devaluation of Indian Rupee and
Chinese Yuan against the U.S. dollar.
Full year 2019 net other income was $0.9 million, compared to
net other expense of $1.0 million in 2018.
Net Loss
Q4 2019 net loss attributable to shareholders was $3.6 million,
compared to net loss of $1.3 million in the corresponding period in
2018. Q4 2019 basic net loss per share was $0.10, compared to
basic net loss per share of $0.04 for the corresponding period in
2018.
Full year 2019 net loss attributable to shareholders was $3.6
million, compared to net income of $4.8 million in 2018. 2019
basic net loss per share was $0.10, compared to basic net income
per share of $0.14 in 2018.
Cash Flow
During Q4 2019, cash generated from operating activities was
$3.3 million, cash used in investing activities was $6,088, and
cash used in financing activities was $4.6 million. As of
December 31, 2019, UTStarcom had cash, cash equivalent and
restricted cash of $48.6 million.
Outlook
For the first quarter of 2020, the Company expects revenue in
the range of $8 to $12 million.
Fourth Quarter 2019 Conference Call
Cancelled
Since the Board is considering strategic alternatives and cannot
comment on those deliberations, the Company will not conduct a
conference call to discuss these results.
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 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 StatementsThis 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: +86 571 8192 8888
Ms. 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
Sheet |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
|
(In thousands) |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
34,966 |
|
|
$ |
57,049 |
|
Short-term investments |
|
|
2,095 |
|
|
|
— |
|
Accounts and notes receivable, net |
|
|
78,031 |
|
|
|
60,666 |
|
Inventories and deferred costs |
|
|
6,646 |
|
|
|
26,837 |
|
Short-term restricted cash |
|
|
10,007 |
|
|
|
8,827 |
|
Prepaid and other current assets |
|
|
5,815 |
|
|
|
6,776 |
|
Total current assets |
|
|
137,560 |
|
|
|
160,155 |
|
Long-term assets: |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
1,092 |
|
|
|
1,258 |
|
Operating lease right-of-use assets, net |
|
|
2,339 |
|
|
|
— |
|
Long-term restricted cash |
|
|
3,634 |
|
|
|
7,823 |
|
Other long-term assets |
|
|
6,205 |
|
|
|
8,199 |
|
Total long-term assets |
|
|
13,270 |
|
|
|
17,280 |
|
Total assets |
|
$ |
150,830 |
|
|
$ |
177,435 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
30,875 |
|
|
$ |
50,757 |
|
Customer advances |
|
|
160 |
|
|
|
561 |
|
Deferred revenue |
|
|
1,320 |
|
|
|
968 |
|
Operating lease liabilities, current |
|
|
1,342 |
|
|
|
— |
|
Other current liabilities |
|
|
14,945 |
|
|
|
17,507 |
|
Total current liabilities |
|
|
48,642 |
|
|
|
69,793 |
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
Operating Lease liabilities, non-current |
|
|
954 |
|
|
|
— |
|
Long-term deferred revenue and other liabilities |
|
|
1,718 |
|
|
|
5,476 |
|
Total liabilities |
|
|
51,314 |
|
|
|
75,269 |
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
99,516 |
|
|
|
102,166 |
|
Total liabilities and equity |
|
$ |
150,830 |
|
|
$ |
177,435 |
|
|
|
|
|
|
|
|
|
|
|
UTStarcom
Holdings Corp. |
Unaudited
Condensed Consolidated Statements of Operations |
|
|
|
Three months ended December
31, |
|
|
Twelve Months ended December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
thousands, except per share data) |
|
Net sales |
|
$ |
14,183 |
|
|
$ |
12,726 |
|
|
$ |
65,823 |
|
|
$ |
115,944 |
|
Cost of net
sales |
|
|
9,037 |
|
|
|
6,963 |
|
|
|
41,466 |
|
|
|
83,676 |
|
Gross
profit |
|
|
5,146 |
|
|
|
5,763 |
|
|
|
24,357 |
|
|
|
32,268 |
|
|
|
|
36.3 |
% |
|
|
45.3 |
% |
|
|
37.0 |
% |
|
|
27.8 |
% |
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative |
|
|
2,501 |
|
|
|
3,801 |
|
|
|
15,727 |
|
|
|
15,156 |
|
Research and
development |
|
|
3,777 |
|
|
|
4,471 |
|
|
|
14,465 |
|
|
|
12,745 |
|
Total
operating expenses |
|
|
6,278 |
|
|
|
8,272 |
|
|
|
30,192 |
|
|
|
27,901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income (loss) |
|
|
(1,132 |
) |
|
|
(2,509 |
) |
|
|
(5,835 |
) |
|
|
4,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income, net |
|
|
261 |
|
|
|
486 |
|
|
|
1,227 |
|
|
|
1,702 |
|
Other income
(expense), net |
|
|
(3,722 |
) |
|
|
1,159 |
|
|
|
870 |
|
|
|
(1,014 |
) |
Equity pick
up of losses of an associate |
|
|
— |
|
|
|
(351 |
) |
|
|
— |
|
|
|
(613 |
) |
Income
(loss) before income taxes |
|
|
(4,593 |
) |
|
|
(1,215 |
) |
|
|
(3,738 |
) |
|
|
4,442 |
|
Income tax
benefit (expense) |
|
|
975 |
|
|
|
(55 |
) |
|
|
153 |
|
|
|
378 |
|
Net Income
(loss) attributable to UTStarcom |
|
$ |
(3,618 |
) |
|
$ |
(1,270 |
) |
|
$ |
(3,585 |
) |
|
$ |
4,820 |
|
Holdings Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(loss) per share attributable to |
|
$ |
(0.10 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.10 |
) |
|
$ |
0.14 |
|
UTStarcom Holdings Corp.—Basic |
Weighted
average shares outstanding—Basic |
|
|
35,596 |
|
|
|
35,458 |
|
|
|
35,556 |
|
|
|
35,642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UTStarcom
Holdings Corp. |
Unaudited
Condensed Consolidated Statements of Cash Flows |
|
|
|
Three months ended December
31, |
|
|
Twelve Months ended December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
thousands) |
|
|
(In
thousands) |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss) |
|
$ |
(3,618 |
) |
|
$ |
(1,270 |
) |
|
$ |
(3,585 |
) |
|
$ |
4,820 |
|
Depreciation |
|
|
157 |
|
|
|
160 |
|
|
|
644 |
|
|
|
702 |
|
Provision for doubtful accounts |
|
|
(424 |
) |
|
|
293 |
|
|
|
4,396 |
|
|
|
812 |
|
Provision for deferred costs |
|
|
1,559 |
|
|
|
(1,760 |
) |
|
|
1,559 |
|
|
|
(5,125 |
) |
Stock-based compensation expense |
|
|
335 |
|
|
|
404 |
|
|
|
1,399 |
|
|
|
1,097 |
|
Net loss (gain) on disposal of assets |
|
|
— |
|
|
|
— |
|
|
|
5 |
|
|
|
(21 |
) |
Gain on release of tax liability due to expiration |
|
|
— |
|
|
|
(2,462 |
) |
|
|
(1,182 |
) |
|
|
(2,462 |
) |
of the statute of limitations |
Gain on written-off long-term Account Payable due to expiration of
the statute of limitations |
|
|
— |
|
|
|
— |
|
|
|
(3,161 |
) |
|
|
— |
|
Deferred income taxes |
|
|
(300 |
) |
|
|
660 |
|
|
|
(303 |
) |
|
|
705 |
|
Loss from equity investments, net |
|
|
— |
|
|
|
351 |
|
|
|
— |
|
|
|
613 |
|
Other-than-temporary impairment of equity |
|
|
— |
|
|
|
370 |
|
|
|
— |
|
|
|
370 |
|
investments |
Gain on CTA recognition from liquidation subsidiaries |
|
|
— |
|
|
|
(909 |
) |
|
|
— |
|
|
|
(909 |
) |
Changes in operating assets and liabilities |
|
|
5,600 |
|
|
|
8,427 |
|
|
|
(23,919 |
) |
|
|
(26,708 |
) |
Net cash provided by (used in) operating |
|
|
3,309 |
|
|
|
4,264 |
|
|
|
(24,147 |
) |
|
|
(26,106 |
) |
activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
|
(6 |
) |
|
|
(4 |
) |
|
|
(507 |
) |
|
|
(225 |
) |
Acquisition of uSTAR, net of cash acquired |
|
|
— |
|
|
|
1,174 |
|
|
|
— |
|
|
|
(673 |
) |
Purchase of short-term investment |
|
|
— |
|
|
|
— |
|
|
|
(41 |
) |
|
|
— |
|
Proceeds from short-term investments |
|
|
— |
|
|
|
— |
|
|
|
41 |
|
|
|
3,143 |
|
Net cash provided by (used in) investing |
|
|
(6 |
) |
|
|
1,170 |
|
|
|
(507 |
) |
|
|
2,245 |
|
activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options |
|
|
— |
|
|
|
30 |
|
|
|
56 |
|
|
|
101 |
|
Repurchase of common stock |
|
|
— |
|
|
|
(506 |
) |
|
|
(1,049 |
) |
|
|
(2,525 |
) |
Short-term borrowing |
|
|
— |
|
|
|
— |
|
|
|
4,625 |
|
|
|
— |
|
Pay off the short-term borrowing |
|
|
(4,625 |
) |
|
|
— |
|
|
|
(4,625 |
) |
|
|
— |
|
Net cash used in financing activities |
|
|
(4,625 |
) |
|
|
(476 |
) |
|
|
(993 |
) |
|
|
(2,424 |
) |
Effect of
exchange rate changes on cash and cash |
|
|
2,346 |
|
|
|
1,956 |
|
|
|
555 |
|
|
|
(702 |
) |
equivalents |
Net increase (decrease) in cash and cash |
|
|
1,024 |
|
|
|
6,914 |
|
|
|
(25,092 |
) |
|
|
(26,987 |
) |
equivalents |
Cash, cash
equivalents and restricted cash at |
|
|
47,583 |
|
|
|
66,785 |
|
|
|
73,699 |
|
|
|
100,686 |
|
beginning of period |
Cash, cash
equivalents and restricted cash at end of |
|
$ |
48,607 |
|
|
$ |
73,699 |
|
|
$ |
48,607 |
|
|
$ |
73,699 |
|
period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UTStarcom (NASDAQ:UTSI)
Historical Stock Chart
From Apr 2024 to May 2024
UTStarcom (NASDAQ:UTSI)
Historical Stock Chart
From May 2023 to May 2024