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UTStarcom Reports Unaudited Financial Results for Second Half and Full Year 2021

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UTStarcom (NASDAQ: UTSI) reported its financial results for 2021, showing a 34.6% decline in revenue to $15.9 million and a net loss of $6.3 million. The company faced challenges due to the ongoing COVID-19 pandemic, impacting investments and revenue from major customers in Japan and India. Gross profit turned negative at ($1.1 million), with a loss in equipment sales of 81.2%. Despite these setbacks, the cash balance increased by 37% to $66.3 million. The company is pursuing business growth opportunities while managing existing receivables from India.

Positive
  • Cash balance increased by 37% to $66.3 million
  • Service gross profit improved to $6.2 million, up from $2.3 million in 2020
  • Operating loss decreased from $23.2 million in 2020 to $5.2 million in 2021
Negative
  • Revenue decreased by 34.6% year-over-year to $15.9 million
  • Net loss of $6.3 million compared to $23.7 million in 2020
  • Gross profit turned negative at ($1.1 million)

HANGZHOU, China, March 24, 2022 (GLOBE NEWSWIRE) -- UTStarcom (“UT” or the “Company”) (NASDAQ: UTSI), a global telecommunications infrastructure provider, today reported its unaudited financial results for the six months and full year ended December 31, 2021, and provided a business update.

Business Update

  • Progress in the development of Network Operating System (NOS) Software. In H2 2021, UTStarcom continued working with its customer China Unicom Research Institute on the cooperative development and field testing of a disaggregated networking solution for 5G transport networks. China Unicom Research Institute is a wholly owned subsidiary of China Unicom, one of the major mobile network operators (“MNO”) in China. The Company successfully finished interoperability testing with several 3rd party vendors and passed field trials on the customer’s network in Guangdong Province, China. The Company also focused on Phase 2 development, which covers many new features critical for the intended use of the solution on China Unicom’s 5G network.
  • Update on Collaboration with European Mobile Operator. During H2 2021, UTStarcom continued to ship TN704E products to its European mobile operator customer. The NetRing® TN704E metro access platform announced earlier in 2021 is a key component of this customer’s mobile backhaul network expansion project, which supports the operator’s 5G deployment requirements. The Company also received an order for network expansion based on the NetRing® TN705E product.
  • India Receivables. The Company continues to collect amounts due from its major customer in India. The Company collected over $35 million in 2021, with about $25 million outstanding as of the year end, and collection continues in 2022. Because the customer’s operating status has not improved, as well as ongoing payment processing delays due to the COVID-19 pandemic in India, the timing of future payments is uncertain despite significant collections in 2021.

UTStarcom’s Chief Executive Officer Mr. Li Hua commented, “Our results for the second half and full year 2021 did not improve due to the ongoing COVID-19 pandemic, which slowed telecom industry investments globally. We are still working with two major carriers in China to build network disaggregation solutions. Meanwhile, we are also seeking other opportunities to grow our business and reward shareholders.”

Second Half and Full Year 2021 Financial Results (Unaudited)

Summary of 2H 2021 Key Financials (Unaudited)

 2H 20212H 2020Y/Y Change
Revenue$7.2 $10.6 -32.1%
Gross Profit($3.3)$0.9 -466.7%
Operating Expenses$2.8 $14.9 -81.2%
Operating Loss($6.1)($14.0)$7.9 
Net Loss($6.5)($11.6)$5.1 
Basic EPS($0.18)($0.32)$0.14 
Cash Balance (including Restricted Cash)$66.3 $48.4 37.0%

Summary of Full Year 2021 Key Financials (Unaudited)

 2021 2020 Y/Y Change
Revenue$15.9 $24.3 -34.6%
Gross Profit($1.1)$3.5 -131.4%
Operating Expenses$4.1 $26.8 -84.7%
Operating Loss($5.2)($23.2)$18.0 
Net Loss($6.3)($23.7)$17.4 
Basic EPS($0.17)($0.66)$0.49 
Cash Balance (including Restricted Cash)$66.3 $48.4 37.0%

* 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

Six months ended December 31, 2021

Total revenues for the second half of 2021 were $7.2 million, compared to $10.6 million in the corresponding period in 2020.

  • Net equipment sales for the second half of 2021 were $1.5 million, a decrease of 53.2% from $3.1 million in the corresponding period in 2020. The decline was mainly due to decreased revenue from major customers in Japan and India.
  • Net services sales for the second half of 2021 were $5.7 million, a decrease of 22.9% from $7.5 million in the corresponding period in 2020. The decrease was mainly due to the completion of current projects and no new major projects in India.

Twelve months ended December 31, 2021

2021 total revenues were $15.9 million, a decrease of 34.5% from $24.3 million in 2020.

  • 2021 net equipment sales were $2.3 million, a decrease of 81.2% from $12.4 million in 2020. The decline was mainly due to decreased revenue from major customers in Japan and India.
     
  • 2021 net services sales were $13.6 million, an increase of 14% from $11.9 million in 2020. The increase was mainly from India as current projects were being implemented.

Gross Profit

Six months ended December 31, 2021

Gross loss was $3.3 million, or 45.2% of net sales, for the second half of 2021, compared to positive $0.9 million, or positive 8.6% of net sales, in the corresponding period in 2020.

  • Equipment gross loss for the second half of 2021 was $5.6 million, compared to $1.4 million in the corresponding period in 2020. Negative equipment gross margin for the second half of 2021 was 384%, compared to 44.5% for the corresponding period in 2020. The decrease in gross margin was attributed to high fixed cost with lower equipment revenue and a one-time inventory reserve.
  • Service gross profit for the second half of 2021 was $2.4 million, compared to $2.3 million in the corresponding period in 2020. Service gross margin for the second half of 2021 was 41.0%, compared to 30.9% for the corresponding period in 2020. The increase in gross margin was mainly due to decreased service costs in India.

Twelve months ended December 31, 2021

2021 gross loss was $1.1 million, or 6.8% of net sales, compared to positive $3.5 million, or positive 14.5% of net sales, in 2020.

  • 2021 equipment gross loss was $7.3 million, compared to positive $1.2 million in 2020. 2021 negative equipment gross margin was 312.7%, compared to positive 10.0% in 2020. The decrease in gross margin was attributed to high fixed cost with lower equipment revenue and a one-time inventory reserve.
     
  • 2021 service gross profit was $6.2 million, compared to $2.3 million in 2020. 2021 service gross margin was 45.4%, compared to 19.2% in 2020. The increase in gross margin was mainly due to the decreased service costs in India.

Operating Expenses

Six months ended December 31, 2021

Operating expenses for the second half of 2021 were $2.8 million, compared to $14.9 million in the corresponding period in 2020.

  • Selling, general and administrative (“SG&A”) expenses for the second half of 2021 were negative $0.8 million, compared to positive $11.1 million in the corresponding period in 2020. SG&A was lower in the second half of 2021 due to reversal of higher allowances for credit loss associated with aged receivables from our India customer, and decreased expenses from continued tight cost control.
     
  • Research and development (“R&D”) expenses for the second half of 2021 were $3.6 million, compared to $3.7 million in the corresponding period in 2020. The decrease reflected the different stages of 5G product development.

Twelve months ended December 31, 2021

2021 operating expenses were $4.1 million, compared to $26.8 million in 2020.

  • 2021 SG&A expenses were negative $2.7 million, compared to positive $18.7 million in 2020. The decrease was mainly attributable to reversal of higher allowances for credit loss associated with aged receivables from our India customer, and decreased expenses from continued tight cost controls.
     
  • 2021 research and development expenses were $6.8 million, compared to $8.1 million in 2020. The decrease reflected the different stages of 5G product development.

Operating Loss

Operating loss for the second half of 2021 was $6.1 million, compared to $14.0 million in the corresponding period in 2020.

Full year 2021 operating loss was $5.2 million, compared to $23.2 million in 2020.

Interest Income, Net

Net interest income for the second half of 2021 was $0.7 million, compared to $0.5 million in the corresponding period in 2020.

Full year 2021 net interest income was $1.1 million, compared to $1.0 million in 2020.

Other Income (Expenses), Net

Net other income for the second half of 2021 was $0.5 million, compared $0.9 million in the corresponding period in 2020. Other income for the second half of 2021 was mainly due to a foreign exchange gain resulting from depreciation of the JPY against USD.

Full year 2021 net other income was $1.6 million, compared to net other expenses of $2.2 million in 2020. Other income for 2021 were mainly due to a foreign exchange gain resulting from depreciation of the JPY against USD and partially offset by a foreign exchange loss resulting from depreciation of INR against USD.

Net Loss

Net loss attributable to shareholders for the second half of 2021 was $6.5 million, compared to $11.6 million in the corresponding period in 2020. Basic net loss per share for the second half of 2021 was $0.18, compared to $0.32 for the corresponding period in 2020.

Full year 2021 net loss attributable to shareholders was $6.3 million, compared to $23.7 million in 2020. 2021 basic net loss per share was $0.17, compared to $0.66 in 2020.

Cash Flow

Cash provided by operating activities in the second half of 2021 was $5.3 million, cash used in investing activities was $0.3 million, and cash used in financing activities was nil. As of December 31, 2021, UTStarcom had cash, cash equivalents and restricted cash of $66.3 million.

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 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: +86 571 8192 8888
Ms. Shelley Jiang, Investor Relations
Email: utsi-ir@utstar.com / Shelleyjiang@utstar.com /

In the United States:
The Blueshirt Group
Mr. Gary Dvorchak
Email: gary@blueshirtgroup.com 

 
UTStarcom Holdings Corp.
Unaudited Condensed Consolidated Balance Sheets
 
  December 31,  December 31, 
  2021  2020 
         
  (In thousands) 
ASSETS      
Current assets:      
Cash and cash equivalents $53,797  $34,221 
Short-term investments     2,100 
Notes receivable, net  108   58 
Accounts receivable, net  27,445   49,623 
Inventories and deferred costs  1,556   6,707 
Short-term restricted cash  10,076   12,088 
Prepaid and other current assets  4,794   5,108 
Total current assets  97,776   109,905 
Long-term assets:      
Property, plant and equipment, net  602   620 
Operating lease right-of-use assets, net  4,734   1,183 
Long-term restricted cash  2,402   2,079 
Other long-term assets  2,705   4,937 
Total long-term assets  10,443   8,819 
Total assets $108,219  $118,724 
       
LIABILITIES AND EQUITY      
Current liabilities:      
Accounts payable $18,988  $25,120 
Customer advances  231   391 
Deferred revenue  34   410 
Income tax payable  8,749   5,934 
Operating lease liabilities, current  1,219   1,217 
Other current liabilities  5,906   6,970 
Total current liabilities  35,127   40,042 
Long-term liabilities:      
Operating Lease liabilities, non-current  3,689   256 
Long-term deferred revenue and other liabilities  1,004   1,025 
Total liabilities  39,820   41,323 
       
Total equity  68,399   77,401 
Total liabilities and equity $108,219  $118,724 
         

UTStarcom Holdings Corp.
Unaudited Condensed Consolidated Statements of Operations

  Six months ended December 31,  Twelve months ended December 31, 
  2021  2020  2021  2020 
                 
  (In thousands, except per share data) 
Net sales $7,229  $10,602  $15,921  $24,310 
Cost of net sales  10,493   9,687   17,008   20,781 
Gross profit  (3,264)  915   (1,087)  3,529 
   (45.2)%  8.6%  (6.8)%  14.5%
Operating expenses:            
Selling, general and administrative  (782)  11,139   (2,743)  18,689 
Research and development  3,622   3,730   6,886   8,083 
Total operating expenses  2,840   14,869   4,143   26,772 
             
Operating loss  (6,104)  (13,954)  (5,230)  (23,243)
             
Interest income, net  668   488   1,136   980 
Other income (expense), net  526   938   1,630   (2,166)
Investment impairment     (1,029)     (1,029)
Loss before income taxes  (4,910)  (13,557)  (2,464)  (25,458)
Income tax expense  (1,592)  1,924   (3,787)  1,782 
Net loss attributable to UTStarcom Holdings Corp. $(6,502) $(11,633) $(6,251) $(23,676)
             
Net loss per share attributable to UTStarcom Holdings Corp.—Basic $(0.18) $(0.32) $(0.17) $(0.66)
Weighted average shares outstanding—Basic  36,186   35,971   36,027   35,881 
                 


UTStarcom Holdings Corp.
Unaudited Condensed Consolidated Statements of Cash Flows
 
  Six months ended December
31,
  Twelve months ended
December 31,
 
  2021  2020  2021  2020 
  (In thousands) 
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net loss $(6,503) $(11,633) $(6,251) $(23,676)
Depreciation  132   277   371   572 
Allowance for credit losses  (4,143)  6,964   (9,158)  9,441 
Provision for deferred costs  (27)     (222)   
Stock-based compensation expense  243   206   504   703 
Net loss on disposal of assets        (33)   
Investments impairment     1,029      1,029 
Gain on release of tax liability due to expiration of the statute of limitations        (42)   
Gain on write-off long-term account payable due to expiration of the statute of limitations            
Deferred income taxes  2,139   (1,615)  2,139   (1,499)
Gain on liquidation of a subsidiary   (184)     (383)   
Changes in operating assets and liabilities  13,674   2,203   32,055   10,030 
Net cash used in (provided by) operating activities  5,331   (2,569)  18,980   (3,400)
             
CASH FLOWS FROM INVESTING ACTIVITIES:            
Additions to property, plant and equipment  (348)  (30)  (348)  (115)
Purchase of short-term investment            
Proceeds from short-term investments        2,100   2,095 
Net cash provided by (used in) investing activities  (348)  (30)  1,752   1,980 
             
CASH FLOWS FROM FINANCING ACTIVITIES:            
Proceeds from exercise of stock options            
Repurchase of ordinary share     (217)     (374)
Short-term borrowing            
Pay off the short-term borrowing            
Net cash used in financing activities     (217)     (374)
Effect of exchange rate changes on cash and cash equivalents  (656)  2,559   (2,844)  1,575 
Net increase (decrease) in cash and cash equivalents  4,327   (257)  17,888   (219)
Cash, cash equivalents and restricted cash at beginning of period  61,949   48,645   48,388   48,607 
Cash, cash equivalents and restricted cash at end of period $66,276  $48,388  $66,276  $48,388 


FAQ

What were UTStarcom's total revenues for 2021?

UTStarcom's total revenues for 2021 were $15.9 million, a decline of 34.6% from 2020.

What was the net loss for UTStarcom in 2021?

The net loss for UTStarcom in 2021 was $6.3 million.

How did UTStarcom's cash balance change in 2021?

UTStarcom's cash balance increased by 37% to $66.3 million in 2021.

What impact did COVID-19 have on UTStarcom's business?

COVID-19 impacted UTStarcom's business by slowing down telecom investments globally, resulting in decreased revenues.

How did UTStarcom perform in terms of gross profit for 2021?

UTStarcom reported a gross loss of $1.1 million for 2021, compared to a gross profit of $3.5 million in 2020.

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