TechFaith Reports First Quarter 2015 Financial Results; Announces Management Succession
BEIJING, May 26, 2015 /PRNewswire/ -- China TechFaith Wireless Communication Technology Limited (NASDAQ: CNTF) ("TechFaith" or the "Company") today announced its unaudited financial results for the first quarter ended March 31, 2015. Separately, the Company announced a planned management succession.
For the first quarter of 2015, TechFaith reported total net revenues of US$24.7 million compared to US$26.7 million in the fourth quarter of 2014 and US$26.8 million in the first quarter of 2014. Gross profit for the first quarter of 2015 was US$2.2 million compared to US$3.5 million in the fourth quarter of 2014 and US$2.3 million in the first quarter of 2014, which reflects the adverse impact of the Company's lower revenues in the first quarter of 2015 and a less favorable business mix as compared to the same period last year. Gross margin for the first quarter of 2015 was 9.0% compared to 12.9% in the fourth quarter of 2014 and 8.6% in the first quarter of 2014.
Net loss attributed to TechFaith for the first quarter of 2015 was US$3.1 million or US$0.06 net loss per basic and diluted weighted average outstanding ADS, compared to a net loss of US$3.9 million or US$0.07 net loss per basic and diluted weighted average outstanding ADS in the fourth quarter of 2014, and net loss of US$2.9 million or US$0.05 net loss per basic and diluted weighted average outstanding ADS in the first quarter of 2014.
Miss Ouyang Yuping, TechFaith's Chief Financial Officer, said, "Revenues during the first quarter of 2015 were at the midpoint of our guidance. Growth in our brand name phone business, along with rental income from our real estate portfolio, helped offset seasonal weakness due to the Chinese New Year and softness in our original developed product, or ODP, business. We were able to reduce our net loss as compared to the prior quarter, by achieving operational efficiencies which lowered our operating expenses. Specifically, we lowered our operating expenses by 40.9% to US$5.2 million, as compared to US$8.7 million in the fourth quarter of 2014. We ended the first quarter of 2015 with a balance of cash and cash equivalents of US$165.2 million, or approximately US$3.1 per ADS in cash and cash equivalents, and our net book value was approximately US$6.1 per ADS. Our focus remains on expanding higher margin opportunities in our brand name phone business, while at the same time further developing our real estate portfolio."
Management Succession
The Company today announced that effective as of today, its Founder, Mr. Defu Dong, will serve solely as Chairman of the Board of Directors. The Company's President and Chief Operating Officer, Mr. Deyou Dong, will also serve as the Chief Executive Officer of TechFaith. Mr. Deyou Dong has been an executive with the Company since 2007, and has served as Chief Operating Officer since 2009 and President since 2011.
Mr. Defu Dong, Chairman of TechFaith, said, "It is with great pride that I am transitioning the role of CEO to Mr. Deyou Dong. Since founding the Company 13 years ago, we have worked hard to establish a global brand. Deyou has been working by my side the majority of this time, helping to develop and execute our business strategy. Now that we have gained critical scale with our real estate portfolio it is a logical decision to split the Company's executive roles as part of a planned transition. We will greatly benefit from having Deyou, a proven and trusted executive, serve in the day-to-day role of CEO to both motivate our employees to achieve greater results and infuse our corporation with powerful new ideas."
Mr. Deyou Dong, Chief Executive Officer of TechFaith, said, "I would like to thank Mr. Defu Dong for his leadership, commitment to the Company and its shareholders, and his confidence in me. I am excited about the opportunity to serve as TechFaith's CEO. This is a formal recognition of much of the work I have been doing, which will help smooth and accelerate the transition into my new role. We have added confidence in the Company's future, given the increasing strength of our diversified business model. We are working hard to capitalize on opportunities in our mobile business, particularly in those areas where we have an identified advantage and expertise, such as with our ruggedized handset models. In addition, we have developed a roadmap of 4G launches and expect to capture additional demand as a result of our tailored offerings to customers in the enterprise market, and from our entry into the wearables market. Finally, we will continue to develop our real estate portfolio, as evidenced by the rental income we recognized in the first quarter of 2015 and the contract we entered into for the sale of one floor in one of our buildings in Beijing at the end of 2014. We also started the process at the end of 2014 to secure contracts for the sale of another three floors in the same building."
Second Quarter of 2015 Outlook
TechFaith currently expects its total revenues for the second quarter of 2015 to be in the range of US$23.0 million to US$27.0 million. The forecast represents TechFaith's current and preliminary view, which is subject to change.
Investor Conference Call / Webcast Details
TechFaith will hold a conference call on Tuesday, May 26, 2015 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Tuesday , May 26, 2015 in Beijing) using the following dial-in numbers: +1-857-244-7316 or +1-877-280-4959. The conference call passcode is: 79884430. A live webcast of the conference call will also be available on TechFaith's website at www.techfaithwireless.com.
A replay of the call will be available approximately 2 hours after the conclusion of the live call by telephone at +1-617-801-6888, using the following passcode: 63121941. A webcast replay will also be available at www.techfaithwireless.com.
About TechFaith
TechFaith (NASDAQ: CNTF) is a leading global mobile solutions provider for the global mobile handsets market (previously called the ODP (Original Developed Product) business)). The Company is a leading developer of ruggedized mobile phones and other devices for differentiated market segments, including the rapidly growing smartphone market targeting wireless mobile phone network operators, end users and sports enthusiasts. For more information, please visit www.techfaithwireless.com.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident," "outlook" and similar statements. Among other things, the business outlook and strategic and operational plans of TechFaith and management quotations contain forward-looking statements. TechFaith may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on Forms 20-F and 6-K, among others, and in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about TechFaith's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, those risks outlined in TechFaith's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. TechFaith does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
| CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED |
|||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) |
|||
| (In Thousands of U.S. Dollars, except share and per share/ADS data) |
|||
| Three Months Ended |
Three Months Ended |
||
| March 31 |
December 31 |
||
| 2015 |
2014 |
2014 |
|
| Revenues: |
|||
| ODP |
$19,287 |
$23,455 |
$23,045 |
| Brand name phone sales |
4,656 |
2,712 |
2,896 |
| Rental |
766 |
612 |
752 |
| Total net revenues |
$24,709 |
$26,779 |
$26,693 |
| Cost of revenues: |
|||
| ODP |
$17,794 |
$21,745 |
$19,604 |
| Brand name phone sales |
4,472 |
2,492 |
3,367 |
| Rental |
212 |
239 |
272 |
| Total cost of revenues |
$22,478 |
$24,476 |
$23,243 |
| Gross Profit |
$2,231 |
$2,303 |
$3,450 |
| Operating expenses: |
|||
| General and administrative |
$2,949 |
$1,865 |
$1,861 |
| Research and development |
1,810 |
1,799 |
1,627 |
| Selling and marketing |
396 |
2,420 |
2,323 |
| Impairment of long-lived assets |
- |
- |
2,910 |
| Total operating expenses |
$5,155 |
$6,084 |
$8,721 |
| Government subsidy income |
1 |
- |
666 |
| Other operating income |
- |
- |
2 |
| Loss from operations |
$(2,923) |
$(3,781) |
$(4,603) |
| Interest expenses |
(217) |
(130) |
(107) |
| Interest income |
161 |
443 |
382 |
| Other expense |
- |
(1) |
- |
| Change in fair value of put option |
(30) |
(60) |
(60) |
| Loss before income taxes |
$(3,009) |
$(3,529) |
$(4,388) |
| Income tax expenses |
- |
(32) |
(296) |
| Net loss |
$(3,009) |
$(3,561) |
$(4,684) |
| Less: net income (loss) |
140 |
(668) |
(820) |
| Net loss attributable to TechFaith |
$(3,149) |
$(2,893) |
$(3,864) |
| Net loss attributable to TechFaith per share |
|||
| Basic |
$(0.00) |
$(0.00) |
$(0.01) |
| Diluted |
$(0.00) |
$(0.00) |
$(0.01) |
| Net loss attribute to TechFaith per ADS |
|||
| Basic |
$(0.06) |
$(0.05) |
$(0.07) |
| Diluted |
$(0.06) |
$(0.05) |
$(0.07) |
| Net loss |
$(3,009) |
$(3,561) |
$(4,684) |
| Other comprehensive income |
|||
| Foreign currency translation |
223 |
(9,529) |
(3,589) |
| Comprehensive loss |
(2,786) |
(13,090) |
(8,273) |
| Less: Comprehensive income |
139 |
(1,545) |
(1,199) |
| Comprehensive loss attributable |
$(2,925) |
$(11,545) |
$(7,074) |
| Weighted average shares |
|||
| Basic |
794,003,193 |
794,003,193 |
794,003,193 |
| Diluted |
794,003,193 |
794,003,193 |
794,003,193 |
| CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED |
||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
| (In Thousands of U.S. Dollars) |
||||
| March 31, |
December 31, |
|||
| Assets |
||||
| Current assets: |
||||
| Cash and cash equivalents |
$165,209 |
$170,960 |
||
| Restricted cash |
4,839 |
4,835 |
||
| Accounts receivable, net of allowances of |
14,781 |
10,004 |
||
| Notes receivable, net |
- |
429 |
||
| Inventories, net |
16,946 |
10,096 |
||
| Prepaid expenses and other current |
20,245 |
28,151 |
||
| Assets held for sale |
11,960 |
11,949 |
||
| Total current assets |
$233,980 |
$236,424 |
||
| Property, plant and equipment, net |
151,361 |
$143,661 |
||
| Land use rights, net |
10,201 |
10,247 |
||
| Acquired intangible assets, net |
6,656 |
5,529 |
||
| Other non-current assets |
21,659 |
21,639 |
||
| Total assets |
$423,857 |
$417,500 |
||
| Liabilities and equity |
||||
| Current liabilities: |
||||
| Accounts payable (including accounts |
10,198 |
15,377 |
||
| Notes payable (including notes payable of |
9,679 |
9,670 |
||
| Amount due to a related party (including |
310 |
178 |
||
| Short-term loans (including short-term |
24,292 |
14,734 |
||
| Accrued expenses and other current |
28,075 |
24,199 |
||
| Advance from customers (including |
10,140 |
8,602 |
||
| Deferred revenue (including deferred |
9,683 |
9,685 |
||
| Income tax payable (including income tax |
436 |
452 |
||
| Put option liability (including a put option |
2,070 |
2,040 |
||
| Total current liabilities |
$94,883 |
$84,937 |
||
| Long-term loans (including long-term |
3,516 |
4,319 |
||
| Total liabilities |
$98,399 |
$89,256 |
||
| Equity |
||||
| Ordinary shares ($0.00002 par value; |
$16 |
$16 |
||
| Additional paid-in capital |
144,836 |
144,836 |
||
| Accumulated other comprehensive |
48,292 |
48,068 |
||
| Statutory reserves |
23,755 |
23,755 |
||
| Retained earnings |
73,804 |
76,953 |
||
| Total Techfaith shareholders' equity |
$290,703 |
$293,628 |
||
| Noncontrolling interest |
$34,755 |
$34,616 |
||
| Total equity |
$325,458 |
$328,244 |
||
| Total liabilities and equity |
$423,857 |
$417,500 |
||
SOURCE China TechFaith Wireless Technology Limited
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