UTStarcom Reports Unaudited Financial Results For The Third Quarter Of 2016

HONG KONG, Nov. 08, 2016 (GLOBE NEWSWIRE) -- UTStarcom ("UTStarcom" or "the Company") (NASDAQ:UTSI), a global telecommunications infrastructure provider, today reported its unaudited financial results for the third quarter ended September 30, 2016.

UTStarcom's Chief Executive Officer Tim Ti stated, "The third quarter was transitional for us, as we progress from the strong demand environment in the first half of the year, to the ramp of exciting new growth opportunities in 2017. During the quarter we introduced our newest SyncRing product, which provides critical functionality for next generation mobile backhaul networks. Our PTN product line is poised to benefit next year from a rollout of 100G metro networks in our prime geographies, such as Japan. We believe that our new strategy is the right one, with a tight focus on a small set of markets in which we can add the most value for our customers. We are seeing the payoff from this strategy, with stable revenue and higher margins."

Third Quarter 2016 Operating Highlights
  • Relocated the global R&D and Operations Center to a new building in Hangzhou, which resulted in a meaningful reduction in operating expenses. 
  • Participated in the SoftBank World 2016 Exhibition and Conference in Tokyo on July 21-22, at which the Company showcased the latest developments in its broadband and optical network infrastructure technology. The Company announced the newest SyncRing product family, and presented its view on the development of the mobile backhaul transport infrastructure in view of current and emerging market trends. 
  • Subsequent to the quarter, the Board approved a two year extension of the $40 million share repurchase program previously announced in November 2014. The new expiration date of the share repurchase program is now November 11, 2018. During the third quarter, the Company repurchased 351,814 shares at a cost of $720,908. Since inception of the repurchase program through November 7, 2016, the Company has bought back approximately 3.5 million shares at a total cost of $7.8 million.  
  • Subsequent to the quarter, the Company announced that its Chief Financial Officer Min Xu resigned for personal reasons. Mr. Xu will continue as CFO until November 11, 2016 and has agreed to serve as an advisor to the company until May 2017. The Company appointed Mr. Eric Lam as Vice President of Finance to lead the finance function. 
  • Subsequent to the quarter, the Company announced that Mr. Guoping Gu resigned from the Company's Board of Directors and the Board appointed Mr. Tim Ti, the Company's Chief Executive Officer, to replace Mr. Gu effective immediately.

Third Quarter 2016 Financial Highlights

In addition to disclosing financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), the Company also provides non-GAAP financial measures. The Company believes that the public's understanding of the Company's business is enhanced when it has access to the same information that management uses to analyze and operate the business. The Company believes that the non-GAAP measures presented here offer additional insight into the condition and trends of its business. Further explanation of the use of non-GAAP financial information, and reconciliation to the corresponding GAAP measures, can be found at the end of this release.
  • Third quarter 2016 GAAP revenues were $16.4 million, a decrease of 40.0% from $27.3 million for the corresponding period of 2015. Third quarter 2016 Non-GAAP revenues were $16.4 million, a decrease of 38.9% from $26.8 million for the corresponding period of 2015. 
  • Third quarter 2016 GAAP gross margin was 24.3%, compared to 22.3% for the corresponding period of 2015.Third quarter 2016 Non-GAAP gross margin was 24.4%, compared to 22.8% for the corresponding period of 2015. 
  • Third quarter 2016 GAAP operating expenses were $5.4 million, compared to $7.0 million for the corresponding period in 2015.Third quarter 2016 Non-GAAP operating expenses were $5.1 million, a decrease of 24.4% from $6.7 million for the corresponding period in 2015. 
  • Third quarter 2016 GAAP operating loss was $1.4 million, compared to operating loss of $1.0 million for the corresponding period of 2015. Third quarter 2016 Non-GAAP operating loss was $1.1 million, compared to operating loss of $0.6 million for the corresponding period of 2015. 
  • Third quarter 2016 GAAP net loss attributable to UTStarcom's shareholders was $1.8 million, compared to net loss of $5.1 million for the corresponding period of 2015. Third quarter 2016 Non-GAAP net loss attributable to UTStarcom's shareholders was $1.5 million, compared to net loss of $4.8 million for the corresponding period of 2015. 
  • Third quarter 2016 GAAP basic loss per share was $0.05, compared to basic net loss per share of $0.14 for the corresponding period of 2015. Third quarter 2016 Non-GAAP basic net loss per share was $0.04, compared to basic net loss per share of $0.13 for the corresponding period of 2015.  
  • As of September 30, 2016, cash and cash equivalents were $81.1 million.

                                                                               Summary of Q3 2016 Key Financials
  Q3 2016 GAAP Y/Y Change * Q3 2016 Non-GAAP Y/Y Change *
Revenue $ 16.4     -40.0 % $ 16.4     -38.9 %
Gross Margin   24.3 %   +200 bps   24.4 %   +160 bps
Operating Expenses $ 5.4     -23.2 % $ 5.1     -24.4 %
Operating Income ($ 1.4 ) -$ 0.4   ($ 1.1 ) -$ 0.5  
Net Income ($ 1.8 ) +$ 3.3   ($ 1.5 ) +$ 3.3  
EPS ($ 0.05 ) +$ 0.09   ($ 0.04 ) +$ 0.09  
Operating Cash Flow $ 1.6   +$ 6.2      
Cash Balance $ 81.1     +9.5 %    

*Dollar comparisons are used where percentage comparisons are not meaningful. *All the numbers in U.S. Dollars are in million except EPS

Mr. Min Xu, UTStarcom's Chief Financial Officer, commented, "Although financial results were not as robust as in the first half of the year, we remain on track to realize the financial benefits of the new strategic plan we initiated last year. Revenue was within our guidance range, which reflected our anticipation of slower demand in the second half of the year. Gross margin improved from last year, due to our focus on our higher-value, higher margin products. We continue to demonstrate outstanding expense discipline, bringing down our operating expenses by almost $1 million from the second quarter level. This effort resulted in meaningful operating cash flow improvement, enabling us to repurchase shares while maintaining our balance sheet strength."

If you liked this article you might like

UTStarcom Looks Ready to Launch

UTStarcom Looks Ready to Launch

3 Telecommunications Stocks Pushing The Industry Higher

Top Insider Trades: AYR OPK UTSI

UTStarcom Holdings Corp Stock Downgraded (UTSI)

UTStarcom's CEO Discusses Q2 2012 Results - Earnings Call Transcript