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Wednesday, 9 August 2017

DASAN Zhone Solutions Reports Second Quarter 2017 Financial Results

     

DASAN Zhone Solutions Reports Second Quarter 2017 Financial Results

Contacts

 

DASAN Zhone Investor Relations:

DASAN Zhone Public Relations:

Tel: +1 510.777.7013

Tel: +1 760.814.8194

Fax: +1 510.777.7001

E: carla.vallone@portavocepr.com

E: investor-relations@dasanzhone.com

 

 

 

Oakland, CA - August 9, 2017 - DASAN Zhone Solutions, Inc. (NASDAQ: DZSI), a global leader in fiber access transformation for enterprise and service provider networks, today reported its financial results for the quarter ended June 30, 2017.  Revenue for the second quarter of 2017 was $60.1 million, compared to $53.1 million for the first quarter of 2017 and $34.8 million for the second quarter of 2016.  "With the successful integration of our businesses, we are seeing improved financial performance led by stronger than expected revenue growth," stated Jim Norrod, Co-CEO of DASAN Zhone Solutions.

 

Net loss attributable to DASAN Zhone Solutions, Inc. for the second quarter of 2017, calculated in accordance with generally accepted accounting principles ("GAAP"), was $0.9 million or $0.05 per share compared with net loss attributable to DASAN Zhone Solutions, Inc. of $3.5 million or $0.21 per share for the first quarter of 2017 and net loss attributable to DASAN Zhone Solutions, Inc. of $0.5 million or $0.05 per share for the second quarter of 2016.  Adjusted earnings before stock-based compensation, interest income (expense), net, income tax provision (benefit), and depreciation and amortization ("adjusted EBITDA") was an adjusted EBITDA income of $0.8 million for the second quarter of 2017, compared to an adjusted EBITDA loss of $1.1 million for the first quarter of 2017 and an adjusted EBITDA income of $0.1 million for the second quarter of 2016.  "The merger has also created significant value for our customers and investors," said Yung Kim, Co-CEO of DASAN Zhone Solutions.  "Our financial results are already reflecting that value and we expect that the momentum will continue to accelerate through the remainder of the year."

 

Cash and cash equivalents at June 30, 2017 were $9.9 million compared to $17.9 million at December 31, 2016.

 

DASAN Zhone Solutions will conduct a conference call and audio webcast today, August 9, 2017, at approximately 2:00 p.m. PT / 5:00 p.m. ET to review its second quarter 2017 results.  This call is open to the public by dialing +1 (888) 306-9369 for U.S. callers and +1 (503) 406-4059 for international callers, and then providing conference ID 46042204. The audio webcast will be simultaneously available on the Investor Relations section of DASAN Zhone Solution's website at http://dasanzhone.com/about/investor-relations/investor-events/.

 

A replay of the conference call will be available after the original call by dialing +1 (855) 859-2056 for U.S. callers and +1 (404) 537-3406 for international callers, and then providing passcode 46042204. An audio webcast replay will also be available online at http://dasanzhone.com/about/investor-relations/investor-events/ for approximately one week following the original call.

 

Non-GAAP Financial Measures

To supplement DASAN Zhone's consolidated financial statements presented in accordance with GAAP, DASAN Zhone uses adjusted EBITDA, a non-GAAP measure DASAN Zhone believes is appropriate to enhance an overall understanding of DASAN Zhone's past financial performance and prospects for the future. These adjustments to GAAP results are made with the intent of providing greater transparency to supplemental information used by management in its financial and operational decision-making. These non-GAAP results are among the primary indicators that management uses as a basis for making operating decisions because they provide meaningful supplemental information regarding the Company's operational performance, including the Company's ability to provide cash flows to invest in research and development, and to fund capital expenditures. In addition, these non-GAAP financial measures facilitate management's internal comparisons to the Company's historical operating results and comparisons to competitors' operating results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation between net income (loss) calculated on a GAAP basis and adjusted EBITDA on a non-GAAP basis is provided in a table immediately following the Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss).

 

About DASAN Zhone Solutions

DASAN Zhone Solutions, Inc. (NASDAQ: DZSI) is a global leader in broad-based network access solutions. The company provides solutions in five major product areas including broadband access, Ethernet switching, mobile backhaul, passive optical LAN (POL) and software defined networks (SDN). More than 750 of the world's most innovative network operators, service providers and enterprises turn to DASAN Zhone Solutions for fiber access transformation. The IP Zhone is the only solution that enables service providers to build the network of the future today, supporting end-to-end voice, data, entertainment, social media, business, mobile backhaul and mobility service.  DASAN Zhone Solutions is committed to building the fastest and highest quality All IP Multi-Service solution for its customers. DASAN Zhone is headquartered in Oakland, California.

 

DASAN Zhone Solutions, the DASAN Zhone Solutions logo, and al DASAN Zhone product names are trademarks of DASAN Zhone Solutions, Inc. Other brand and product names are trademarks of their respective holders.  Specifications, products, and/or products names are all subject to change without notice.

 

Forward-Looking Statements

This press release contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934.  Words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "goal," "intend," "may," "plan," "project," "seek," "should," "target," "will," "would," variations of such words, and similar expressions are intended to identify forward-looking statements. In addition, forward-looking statements include, among others, statements that refer to financial estimates; projections of revenue, margins, expenses or other financial items. Readers are cautioned that actual results could differ materially from those expressed in or contemplated by the forward-looking statements. Factors that could cause actual results to differ include, but are not limited to, commercial acceptance of the Company's products; intense competition in the communications equipment market; the Company's ability to execute on its strategy and operating plans; and economic conditions specific to the communications, networking, internet and related industries. In addition, please refer to the risk factors contained in the Company's SEC filings available at www.sec.gov, including without limitation, the Company's annual report on Forms 10-K, 10-Q and 8-K. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update or revise any forward-looking statements for any reason.

 

 


DASAN ZHONE SOLUTIONS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands, except per share data)

 

 

Three Months Ended

 

Six Months Ended

 

June 30, 2017

 

March 31, 2017

 

June 30, 2016

 

June 30, 2017

 

June 30, 2016

Net revenue:

 

 

 

 

 

 

 

 

 

Net revenue

$

55,220

 

 

$

45,769

 

 

$

30,585

 

 

$

100,989

 

 

$

53,733

 

Net revenue - related parties

4,893

 

 

7,305

 

 

4,206

 

 

12,198

 

 

6,851

 

Total net revenue

60,113

 

 

53,074

 

 

34,791

 

 

113,187

 

 

60,584

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

Products and services

36,931

 

 

28,941

 

 

21,841

 

 

65,872

 

 

40,131

 

Products and services - related parties

3,662

 

 

5,627

 

 

3,746

 

 

9,289

 

 

6,173

 

Amortization of intangible assets

153

 

 

153

 

 

-

 

 

306

 

 

-

 

Total cost of revenue

40,746

 

 

34,721

 

 

25,587

 

 

75,467

 

 

46,304

 

Gross profit

19,367

 

 

18,353

 

 

9,204

 

 

37,720

 

 

14,280

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and product development (1)

8,996

 

 

9,229

 

 

5,019

 

 

18,225

 

 

9,697

 

Selling, general and administrative (1)

10,636

 

 

10,709

 

 

4,284

 

 

21,345

 

 

8,693

 

Amortization of intangible assets

544

 

 

493

 

 

-

 

 

1,037

 

 

8

 

Total operating expenses

20,176

 

 

20,431

 

 

9,303

 

 

40,607

 

 

18,398

 

Operating loss

(809

)

 

(2,078

)

 

(99

)

 

(2,887

)

 

(4,118

)

Interest income

20

 

 

26

 

 

58

 

 

46

 

 

107

 

Interest expense

(256

)

 

(274

)

 

(202

)

 

(530

)

 

(397

)

Other expense, net

206

 

 

(498

)

 

(20

)

 

(292

)

 

65

 

Loss before income taxes

(839

)

 

(2,824

)

 

(263

)

 

(3,663

)

 

(4,343

)

Income tax provision (benefit)

99

 

 

440

 

 

196

 

 

539

 

 

(431

)

Net loss

(938

)

 

(3,264

)

 

(459

)

 

(4,202

)

 

(3,912

)

Net income (loss) attributable to non-controlling interest

(65

)

 

249

 

 

33

 

 

184

 

 

39

 

Net loss attributable to DASAN Zhone Solutions, Inc.

$

(873

)

 

$

(3,513

)

 

$

(492

)

 

$

(4,386

)

 

$

(3,951

)

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

(761

)

 

2,993

 

 

(116

)

 

2,232

 

 

401

 

Comprehensive loss

(1,699

)

 

(271

)

 

(575

)

 

(1,970

)

 

(3,511

)

Comprehensive income (loss) attributable to non-controlling interest

(65

)

 

270

 

 

88

 

 

205

 

 

102

 

Comprehensive loss attributable to DASAN Zhone Solutions, Inc.

$

(1,634

)

 

$

(541

)

 

$

(663

)

 

$

(2,175

)

 

$

(3,613

)

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to DASAN Zhone Solutions, Inc.:

 

 

 

 

 

 

 

 

 

Basic and diluted

$

(0.05

)

 

$

(0.21

)

 

$

(0.05

)

 

$

(0.27

)

 

$

(0.42

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic and diluted

16,380

 

 

16,379

 

 

9,493

 

 

16,380

 

 

9,493

 

___________________________________________________

 

 

 

 

 

 

 

 

 

(1) Amounts include stock-based compensation costs as follows:

 

 

 

 

 

 

 

 

 

Research and product development

$

16

 

 

$

14

 

 

$

-

 

 

$

30

 

 

$

-

 

Selling, general and administrative

204

 

 

241

 

 

-

 

 

445

 

 

-

 

 

$

220

 

 

$

255

 

 

$

-

 

 

$

475

 

 

$

-

 

Reconciliation of Net loss to Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

Net loss

$

(938

)

 

$

(3,264

)

 

$

(459

)

 

$

(4,202

)

 

$

(3,912

)

Stock-based compensation

220

 

 

255

 

 

-

 

 

475

 

 

-

 

Interest income (expense), net

236

 

 

248

 

 

144

 

 

484

 

 

290

 

Income tax provision (benefit)

99

 

 

440

 

 

196

 

 

539

 

 

(431

)

Depreciation and amortization

1,171

 

 

1,180

 

 

195

 

 

2,351

 

 

463

 

Adjusted EBITDA

$

788

 

 

$

(1,141

)

 

$

76

 

 

$

(353

)

 

$

(3,590

)

 

DASAN ZHONE SOLUTIONS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(In thousands)

 

 

 

June 30,

 2017

 

December 31, 2016

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

9,902

 

 

$

17,893

 

Restricted cash

 

8,340

 

 

6,650

 

Short-term investments

 

-

 

 

993

 

Accounts receivable, net:

 

 

 

 

Trade receivables

 

35,543

 

 

37,692

 

Related parties

 

25,839

 

 

13,261

 

Other receivables:

 

 

 

 

Others

 

14,234

 

 

12,068

 

Related parties

 

-

 

 

171

 

Inventories

 

35,138

 

 

31,463

 

Prepaid expenses and other current assets

 

3,817

 

 

4,131

 

Total current assets

 

132,813

 

 

124,322

 

Property and equipment, net

 

6,079

 

 

6,288

 

Goodwill

 

4,134

 

 

4,134

 

Intangible assets, net

 

7,447

 

 

8,767

 

Other assets

 

1,797

 

 

1,844

 

Total assets

 

$

152,270

 

 

$

145,355

 

Liabilities, Stockholders' Equity and Non-controlling Interest

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

33,052

 

 

$

31,111

 

Short-term debt:

 

 

 

 

Others

 

20,196

 

 

17,599

 

Related parties

 

1,800

 

 

-

 

Other payables:

 

 

 

 

Others

 

1,438

 

 

7,033

 

Related parties

 

8,939

 

 

1,947

 

Deferred revenue

 

2,845

 

 

1,901

 

Accrued and other liabilities

 

9,631

 

 

8,526

 

Total current liabilities

 

77,901

 

 

68,117

 

Long-term debt

 

5,000

 

 

6,800

 

Deferred revenue

 

1,947

 

 

1,674

 

Other long-term liabilities

 

2,534

 

 

2,352

 

Total liabilities

 

87,382

 

 

78,943

 

Stockholders' equity and non-controlling interest:

 

 

 

 

Common stock

 

16

 

 

16

 

Additional paid-in capital

 

89,981

 

 

89,504

 

Other comprehensive income (loss)

 

(668

)

 

(2,848

)

Accumulated deficit

 

(24,732

)

 

(20,346

)

Total stockholders' equity

 

64,597

 

 

66,326

 

Non-controlling interest

 

291

 

 

86

 

Total stockholders' equity and non-controlling interest

 

64,888

 

 

66,412

 

Total liabilities, stockholders' equity and non-controlling interest

 

$

152,270

 

 

$

145,355

 

 






This announcement is distributed by Nasdaq Corporate Solutions (One Liberty Plaza, 165 Broadway, New York, NY 10006. Tel: +1 212 401 8700. www.nasdaqomx.com) on behalf of NASDAQ OMX Corporate Solutions clients. Source: DASAN Zhone Solutions, Inc., 7001 Oakport Street, Oakland, California 94621, US
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