GlobeNewswire Inc | Aug 13, 2021 06:00AM EDT

August 13, 2021

HANGZHOU, China, Aug. 13, 2021 (GLOBE NEWSWIRE) -- UTStarcom (UT or the Company) (NASDAQ: UTSI), a global telecommunications infrastructure provider, today reported its unaudited financial results for the six months ended June 30, 2021, and provided a business update.

Business Update

-- Development of a Disaggregated Hardware Platform for 5G Transport Networks. In November 2020, UTStarcom announced that it secured a win of a RFP for joint development of a disaggregated platform for 5G transport with one of the major telecom operators in China. UTStarcom also completed hardware development and delivered first batch of test units to the customer for software integration and testing. Subsequently, the Company signed a strategic long-term cooperation agreement with the research institute of this operator, and expects to receive an initial order for a volume shipment of these products in the remainder of 2021.

-- Progress in the development of Network Operating System (NOS) Software. In December 2020, UTStarcom announced that it achieved an important milestone in its cooperation with the research institute of one of the major mobile network operators (MNO) in China. The Company completed Phase 1 development and integration of the disaggregated network solution and successfully passed the acceptance testing with the customer. In the beginning of 2021, the Company entered into a strategic cooperation framework agreement with the research institute and a switching chip supplier. At present, the Company is diligently developing extended NOS features for the customer.

-- Update on Cooperation with a Mobile Operator in Europe. In January 2021, UTStarcom announced that it expanded its cooperation with a mobile operator in Europe to supply an advanced networking platform in support of the operators 5G deployment requirements. In connection with the deployment, the Company also announced the release of the NetRing TN704E metro access platform, the newest member of its SDN-enabled packet optical transport network product family. The NetRing TN704E platform is a key component of the mobile backhaul network expansion project with the mobile operator in Europe. The Company received an order for an initial batch of TN704E products as well as for network expansion based on other types of products including TN705E.

-- India Receivable.The Company continues to collect amounts due from its major customer in India.During the first half of 2021, the Company collected a total of $17.8 million from BSNL with $37.1 million outstanding.

UTStarcoms Chief Executive Officer Mr. Hua Li commented, Despite a challenging business environment, we are pleased with our overall financial results for the first half of 2021. While revenue declined 37% year-over-year, the Company returned to profitability and generated solid cash flow of $14 million. Our team is sharpening our focus on developing new products that capitalize on important technology trends and engaging with network operators to address and support their requirements. Furthermore, our cooperation with the two major carriers in China continues to build momentum, and we believe these customers will benefit from UTStarcoms expertise and capabilities in carrier-class disaggregated solutions.

First Half 2021 Financial Results

Summary of 1H 2021 Key Financials

1H 2021 1H 2020 Y/Y ChangeRevenue $8.7 $13.7 -36.6%Gross Profit $2.2 $2.6 -16.7%Operating Expenses $1.3 $11.9 -89.1%Operating Income (Loss) $0.9 ($9.3) N/ANet Income (Loss) $0.3 ($12.0) N/ABasic EPS $0.01 ($0.34) +$0.34Cash Balance (including Restricted Cash) $61.9 $48.6 +27.3%

* 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

Total revenues for the first half of 2021 were $8.7 million, compared to $13.7 million in the corresponding period in 2020.

-- Net equipment sales for the first half of 2021 were $0.9 million, a decrease of 90.7% from $9.3 million in the corresponding period in 2020. The decrease was due to decreased revenue from major customers in Japan and India. -- Net services sales for the first half of 2021 were $7.8 million, an increase of 76.0% from $4.4 million in the corresponding period in 2020. The increase was mainly from certain new maintenance projects in India.

Gross Profit

Gross profit was $2.2 million, or 25.0% of net sales, for the first half of 2021, compared to $2.6 million, or 19.1% of net sales, in the corresponding period in 2020.

-- Equipment gross profit for the first half of 2021 was ($1.0) million, compared to $3.2 million in the corresponding period in 2020. Equipment gross margin for the first half of 2021 was (119.1%), compared to 34.3% for the corresponding period in 2020. The decrease in gross margin was due to fixed overhead cost with lower revenue. -- Service gross margin for the first half of 2021 was $3.2 million, compared to ($0.6) million in the corresponding period in 2020. Service gross margin for the first half of 2021 was 40.8%, compared to (12.7%) for the corresponding period in 2020. The negative in gross margin in the first half of 2020 was mainly due to a one-time expense that occurred in India.

Operating Expenses

Operating expenses for the first half of 2021 were $1.3 million, compared to $11.9 million in the corresponding period in 2020.

-- Selling, general and administrative (SG&A) expenses for the first half of 2021 were ($2.0) million, compared to $7.5 million in the corresponding period in 2020. SG&A was much lower in the first half of 2021 was mainly attributable to $ 5.0 million allowance of credit losses reversal as the result of the India collection in this period and decreased personnel cost as the result of the Companys cost reductions. -- Research and development (R&D) expenses for the first half of 2021 were $3.3 million, compared to $4.4 million in the corresponding period in 2020. The decrease was mainly due to decreased personnel cost as the result of the Companys cost reductions.

Operating Income (Loss)

Operating income for the first half of 2021 was $0.9 million, compared to operating loss of $9.3 million in the corresponding period in 2020.

Interest Income, Net

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

Other Income (Expenses), Net

Net other income for the first half of 2021 was $1.1 million, compared to net other expense of $3.1 million in the corresponding period in 2020. Other income for the first half of 2021 was mainly due to foreign exchange gain resulting from the appreciation of the U.S. dollar against the Japanese Yen which was partially offset by the devaluation of Indian Rupee against the U.S. dollar.

Net Income (Loss)

Net income attributable to shareholders for the first half of 2021 was $0.3 million, compared to net loss of $12.0 million in the corresponding period in 2020. Basic net income per share for the first half of 2021 was $0.01, compared to basic net loss per share of $0.34 for the corresponding period in 2020.

Cash Flow

Cash generated from operating activities in the first half of 2021 was $13.9 million, cash generated from investing activities was $2.0 million, and cash used in financing activities was nil. As of June 30, 2021, UTStarcom had cash, cash equivalent and restricted cash of $61.9 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, India and China. 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 Companys strategic initiatives and the Companys 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 Companys current expectations. These include risks and uncertainties related to, among other things, the effect of the COVID-19 pandemic on the Companys business, changes in the financial condition and cash position of the Company, changes in the composition of the Companys management and their effect on the Company, the Companys 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 Companys offerings in the market and the Companys ability to execute its business plan and manage regulatory matters.The risks and uncertainties also include the risk factors identified in the Companys latest annual report on Form20-F and current reports on Form6-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 8888Ms. Ning Jiang, Investor RelationsEmail: utsi-ir@utstar.com/njiang@utstar.com /

Inthe United States:The Blueshirt Group Mr. Ralph FongTel: +1 (415) 489-2195Email: ralph@blueshirtgroup.com

UTStarcom Holdings Corp.Unaudited Condensed Consolidated Balance Sheets

June 30, December31, 2021 2020 (In thousands) ASSETS Current assets: Cash and cash equivalents $ 49,518 $ 34,221 Short-term investments ? 2,100 Accounts and notes receivable, net 37,384 49,681 Inventories and deferred costs 6,188 6,707 Short-term restricted cash 8,938 12,088 Prepaid and other current assets 4,718 5,108 Total current assets 106,746 109,905 Long-term assets: Property, plant and equipment, net 523 620 Operating lease right-of-use assets, net 5,025 1,183 Long-term restricted cash 3,493 2,079 Other long-term assets 4,851 4,937 Total long-term assets 13,892 8,819 Total assets $ 120,638 $ 118,724 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 23,615 $ 25,120 Customer advances 544 391 Deferred revenue 106 410 Income tax payable 8,707 5,934 Operating lease liabilities, current 1,264 1,217 Other current liabilities 6,046 6,970 Total current liabilities 40,282 40,042 Long-term liabilities: Operating lease liabilities, non-current 3,830 256 Long-term deferred revenue and other liabilities 890 1,025 Total liabilities 45,002 41,323 Total equity 75,636 77,401 Total liabilities and equity $ 120,638 $ 118,724

UTStarcom Holdings Corp.Unaudited Condensed Consolidated Statements of Operations

SixmonthsendedJune 30, 2021 2020 (In thousands, except per share data)Net sales $ 8,692 $ 13,708 Cost of net sales 6,515 11,094 Gross profit 2,177 2,614 25.0 % 19.1 %Operating expenses: Selling, general and administrative (1,961 ) 7,549 Research and development 3,263 4,355 Total operating expenses 1,302 11,904 Operating income (loss) 875 (9,290 ) Interest income, net 468 493 Other income (expense), net 1,104 (3,103 )Income (loss) before income taxes 2,447 (11,900 )Income tax expense (2,195 ) (142 )Net income (loss) attributable to UTStarcom $ 252 $ (12,042 )Holdings Corp. Net income (loss) per share attributable to $ 0.01 $ (0.34 )UTStarcom Holdings Corp.?BasicWeighted average shares outstanding?Basic 36,001 35,692

UTStarcom Holdings Corp.Unaudited Condensed Consolidated Statements of Cash Flows

SixmonthsendedJune 30, 2021 2020 (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (loss) $ 252 $ (12,042 )Depreciation 239 295 Provision for doubtful accounts (5,015 ) 2,477 Stock-based compensation expense 261 497 Net gain on disposal of assets (7 ) ? Gain on release of tax liability due to expiration of (134 ) ? the statute of limitationsDeferred income taxes ? 116 Changes in operating assets and liabilities 18,278 7,826 Net cash provided by (used in) operating 13,874 (831 )activities CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (140 ) (85 )Proceeds from short-term investments 2,100 2,095 Net cash provided by investing activities 1,960 2,010 CASH FLOWS FROM FINANCING ACTIVITIES: Repurchase of ordinary share ? (157 ) Net cash used in financing activities ? (157 )Effect of exchange rate changes on cash and cash (2,273 ) (984 )equivalents Net increase (decrease) in cash and cash equivalents 13,561 38 Cash, cash equivalents and restricted cash at beginning 48,388 48,607 of periodCash, cash equivalents and restricted cash at end of $ 61,949 $ 48,645 period