UTStarcom Holdings Corp reports 31.0% Net Income decline in 2018 while 18.0% Revenue growth
03/15/2019 • About UTStarcom Holdings Corp (
$UTSI) • By InTwits
UTStarcom Holdings Corp reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 4.4% in 2018, 7.3% in 2017, 3.4% in 2016, -2.4% in 2015, -8.8% in 2014
- UTStarcom Holdings Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.9%.
- The company has potentially unprofitable business model: ROIC is 4.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
UTStarcom Holdings Corp's Revenue jumped on 18.0%. Revenue growth showed slowdown in 18Q4 - it was -30.2% YoY. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 2.9 pp from 7.3% to 4.4% in 2018. EBITDA Margin followed a growing trend at 3.6 pp per annum in the last 5 years.
Gross Margin decreased on 5.9 pp from 33.7% to 27.8% in 2018. During 2014-2018 Gross Margin topped in 2017 at 33.7%. SG&A as a % of Revenue decreased on 4.0 pp from 17.1% to 13.1% in 2018.
Net Income margin decreased on 2.9 pp from 7.1% to 4.2% in 2018. Net Income margin grew at 8.5 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
UTStarcom Holdings Corp's CAPEX/Revenue was 0.19% in 2018. The company's CAPEX/Revenue decreased slightly on 0.59 pp from 0.78% in 2015 to 0.19% in 2018. For the last three years the average CAPEX/Revenue was 0.90%.
Return on investment
The company operates at low ROIC (4.1%) and ROE (5.0%). ROIC decreased on 2.6 pp from 6.7% to 4.1% in 2018. ROE decreased on 3.0 pp from 8.0% to 5.0% in 2018. ROIC grew at 3.8 pp per annum in the last 5 years. ROE stuck to a growing trend at 9.1 pp per annum in the last 5 years.
Leverage (Debt)
The company has no debt. Cash dropped on 28.5%.
Valuation and dividends
UTStarcom Holdings Corp's trades at EV/EBITDA 14.8x and P/E 27.4x.
Management team
Ti Tim is a UTStarcom Holdings Corp's CEO. Ti Tim is a founder and has spent 3 years with the company.
Financial and operational results
FY ended 12/31/2018
UTStarcom Holdings Corp ($UTSI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 129.4 | 117.1 | 86.5 | 98.3 | 115.9 | 18.0% |
| Gross Profit | 22.1 | 27.9 | 28.4 | 33.1 | 32.3 | -2.6% |
| SG&A | 24.5 | 21.5 | 18.1 | 16.8 | 15.2 | -9.7% |
| EBITDA | -11.4 | -2.8 | 2.9 | 7.1 | 5.1 | -29.0% |
| Net Income | -30.3 | -27.2 | 0.3 | 7.0 | 4.8 | -31.0% |
Balance Sheet
|
|---|
| Cash | 77.8 | 77.1 | 83.9 | 79.7 | 57.0 | -28.5% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 1.3 | 0.9 | 1.5 | 0.7 | 0.2 | -69.3% |
Ratios
|
|---|
| Revenue growth | -21.3% | -9.5% | -26.1% | 13.6% | 18.0% | |
| EBITDA growth | 16.9% | -75.6% | -204.6% | 145.0% | -29.0% | |
|
|---|
| Gross Margin | 17.1% | 23.8% | 32.8% | 33.7% | 27.8% | -5.9% |
| EBITDA Margin | -8.8% | -2.4% | 3.4% | 7.3% | 4.4% | -2.9% |
| SG&A, % of revenue | 18.9% | 18.4% | 21.0% | 17.1% | 13.1% | -4.0% |
| Net Income Margin | -23.4% | -23.2% | 0.3% | 7.1% | 4.2% | -2.9% |
| CAPEX, % of revenue | 1.0% | 0.8% | 1.8% | 0.7% | 0.2% | -0.6% |
|
|---|
| ROIC | -9.5% | -4.2% | 1.7% | 6.7% | 4.1% | -2.6% |
| ROE | -22.8% | -27.3% | 0.3% | 8.0% | 5.0% | -3.0% |
| Net Debt/EBITDA | | | -28.8x | -11.2x | -11.3x | -0.1x |
UTStarcom Holdings Corp ($UTSI) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 23 | 29 | 52 | 13 | | | | 100.1% | -30.2% |
| EBITDA | 2 | 1 | 4 | -2 | | | | 32.1% | |
| Net Income | 4 | -0 | 2 | -1 | | | | -2.0% | |
Balance Sheet
|
|---|
| Cash | 75 | 64 | 51 | 57 | | | | -44.5% | -28.5% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 40.5% | 26.2% | 19.0% | 45.3% | | | | -21.6% | 20.3% |
| EBITDA Margin | 11.0% | 2.4% | 8.2% | -18.5% | | | | -4.2% | -8.8% |
| Net Income Margin | 17.8% | -0.3% | 4.1% | -10.0% | | | | -4.3% | 9.5% |
Peers in Communications Equipment
Below we provide UTStarcom Holdings Corp benchmarking against other companies in Communications Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | 0.7% | 7.6% | 5.1% | 2.8% |
|---|
| UTStarcom Holdings Corp ($UTSI) | | -9.5% | -26.1% | 13.6% | 18.0% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 42.4% | 44.0% | 43.9% | 41.7% | 41.2% |
|---|
| UTStarcom Holdings Corp ($UTSI) | 17.1% | 23.8% | 32.8% | 33.7% | 27.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.6% | 6.1% | 5.9% | 6.0% | 5.4% |
|---|
| UTStarcom Holdings Corp ($UTSI) | -8.8% | -2.4% | 3.4% | 7.3% | 4.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.3% | 2.3% | 2.0% | 1.9% | 1.7% |
|---|
| UTStarcom Holdings Corp ($UTSI) | 1.0% | 0.8% | 1.8% | 0.7% | 0.2% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 2.1% | 2.3% | 2.4% | 2.1% | 0.3% |
|---|
| UTStarcom Holdings Corp ($UTSI) | -9.5% | -4.2% | 1.7% | 6.7% | 4.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| |
|---|
| Median (45 companies) | -0.7x | -0.7x | -0.8x | -0.6x | 0.2x |
|---|
| UTStarcom Holdings Corp ($UTSI) | | | -28.8x | -11.2x | -11.3x |
