Hello, ladies and gentlemen, thank you for standing by for UTStarcom's First Quarter 2019 Earnings Conference Call. Please note that we are recording today's conference call. I will now turn over the call to Mr. Gary Dvorchak, Managing Director of The Blueshirt Group Asia. Please go ahead, Mr. Dvorchak.

Hey, thank you, operator. Hello, everyone, and welcome to UTStarcom's first quarter 2019 earnings conference call. Earlier today, we distributed our earnings press release. You can find a copy of it at our website at www.utstar.com. In addition, we have posted a presentation on our website, which you can download and use to follow along with today's call. On today's call, we have Mr. Tim Ti, Chief Executive Officer; and Mr. Eric Lam, Vice President of Finance. Before we get started, let me refer you to the company's Safe Harbor statement on Page 2 of the slide deck. This call will include forward-looking statements relating to the company's business and strategic initiatives. Those statements are forward-looking in nature and are subject to risks and uncertainties that may cause actual results to differ materially and adversely from the company's current expectations. The risks and uncertainties include factors identified in the company's latest Annual Report on Form 20-F and the current reports on Form 6-K that are filed with the Securities and Exchange Commission. All forward-looking statements included in this call are based on information available to the company as of the date of this call. That information may change. If so, the company assumes no obligation to update any such forward-looking statements. Also please note that unless otherwise stated, all figures mentioned during this call are in U.S. dollars. I'll now hand the call over to UTStarcom's CEO, Mr. Tim Ti. Tim?

Thank you, Gary, and thank you, everyone for joining our call today. We appreciate your interest in UTStarcom. As Gary mentioned, you can download the presentation from the Investors section of our website. Now let me quickly recap our Q1 result on Page 3. We had a strong start to 2019 and I'm pleased with our first quarter results. We executed well across our business and the reported solid top-line performance. Revenue grew to nearly $25 million which was at the higher end of our guidance range. This is really encouraging. Our top-line performance again demonstrated our ability to develop and monetize strong customer relationships. On a bottom-line, we returned to profitability in Q1. Eric will get into the detailed financials in his remarks shortly. Now let’s turn our attention to three key operating achievements. First, we are pursuing an opportunity for other than 5G transport network technology. We are collaborating with the partner to deliver key equivalent for 5G networks. We are focusing on optical backhaul solution thus fully leverage our technical expertise in the area. Although we cannot provide much detail to-date, we can say that we are making excellent progress. We have achieved good results in laboratory test by major Chinese carrier. 5G is creating the need for significant new investments by network operations. Its newest vendor requires greater network capacity, super-strong efficiency, and higher data throughput in the network architecture. Due to this small sale deployment and the heavy traffic, our 5G backhaul network needs to support hundreds of gigabits of traffic from the core network. As such, we believe, we can acquire our expertise in optical backhaul to sort this challenge, both for the immediate opportunities in China, and for other 5G deployment around the world. The worldwide transition to 5G wireless is a significant opportunity for which we are well-positioned. The 5G migration is gaining momentum in leading markets such as the U.S., Korea, and Japan. In China, all the major carriers are aggressively pursuing 5G upgrades. With the market situation as the backdrop, let me review our expanding product portfolio which we believe positions us to capture this emerging 5G opportunity. As you see on Page 5, our advanced product solutions are designed to support challenging new applications, such as Internet of Things, machine-to-machine, vehicle-to-everything, autonomous driving, augmented reality, and more. From technology standpoint, Segment Routing, FlexE, and a Software Defined Network are critical technologies for 5G. They are focus area for us. These breakthrough technologies offer greater scalability, flexibility, agility, and automation, while simplifying network management. The benefits of the Segment Routing, FlexE, and SDN are well recognized, and adoption is underway. Our segment router family, SkyFlux UAR, shown on Page 6, not only delivers all the benefits of SDN, but also mitigates network complexity and optimize operation and maintenance. We are confident that SR for 5G will resonate well in the market, and will be major growth driver for UT in the coming years. In addition, another important product that addresses 5G infrastructure is our SyncRing product line shown on Page 7. SyncRing enables the extreme timing precision that is needed for maximum network performance. To further support 5G migration, we launched SyncRing XGM30 last November. This latest addition to the SyncRing product line-up enables mobile network operators to meet the stringent time synchronization requirements of LTE, LTE-A, and the 5G network in a cost-effective manner. The 5G rollout is at an inflection point that will present opportunities for us to drive future revenue. As a result, we continue to put substantial R&D and the marketing resources in 5G to prepare for this rollout. We are confident we can drive growth as well capture these new opportunities. Our second achievement is the rent of goBox, one of our smart retail offers. During the quarter, we released our first 5G goBox smart vending machine in China. As we show on Page 8, the goBox smart vending machine is a model application both utilize 5G mobile data networks and AI to create a compelling retail experience for consumers. We are confident that retail store automation is significant and sustainable long-term opportunity as you can see on Page 10. Growing number of transitional retail store recognize the need to upgrade layer infrastructure. In an effort to offer more innovative service, smart retail solution are comparing new ways to inherit the customer experience and assist operating costs. Our new goBox smart vending machine is already penetrating the unattended retail market in China. We are very encouraged by the early progress. Further showing this initial market interest, Hangzhou China Mobile is using the goBox, in its own retail outlets. To showcase 5G enabled retail automation, we are excited by this opportunity to what was the prestigious customer to promote new goBox application. This demonstrates how 5G mobile data and artificial intelligence can be integrated to create the comparing retail experience for consumers. We are also pursuing goBox sales opportunities internationally. We are seeing strong interest in U.S., Japan, Taiwan, India, and Korea. In response, we are now establishing supporting in key markets for the goBox smart retail initiative. In sum, the goBox smart vending machine is seen solid traction in the market; we are extremely excited about a potential long-term revenue opportunity. The third achievement was establishing cross-selling activity with our strategic partner TongDing. Please see Page 11, as you recall we formed a strategic partnership with the TongDing last September to jointly market and distribute each company's product and services in China and the international markets. TongDing specialize in R&D, manufacturing, sales, and distribution of communication cable and optical fibers. TD's co-product line includes optical fibers, urban communication cables, optical cables, radio frequency cables, optical instruments, electro mechanical communication equipments, and the more. In addition, TongDing is involved in mobile internet and Internet of Things applications. We are focused on developing TongDing optical fiber cable business in India and have started marketing and selling new fiber cable products there. Meanwhile we are supporting TongDing's technical sales teams in selling our flagship PTN and SyncRing products in China. TD's initial focus will be on enterprise customer such as oil and gas, mining, and other relative verticals. When we look at the entire product and service offerings from both companies with the significant synergy, importantly the product and the services of each company are level to the broadband infrastructure business. As I mentioned on our last call, the fundamental demand drivers for our broadband business are strong. As I show on Page 12, our target markets such as Japan, India, and Asia-Pacific have the low broadband penetration rates and the strong consumer demand for new services. India is a great example and our business layer is robust. In January, we announced two significant Wi-Fi project wins with BSNL. Additionally we are participating in a new project with the focus on the infrastructure build-out which we view as incremental opportunity to leverage UTs and TongDing's product portfolio. We are very excited to pursuing opportunities around the world in partnership with TongDing. The partnership is still young, but we believe it enables both of us to fully leverage our combined sales channels, market presence, customer base, and extended portfolio of products. As the partnership matures, we anticipate meaningful revenue in 2020. We look forward to building a long and productive relationship with TongDing. Before I turn the call over to Eric, I want to emphasize our long-term commitment to invest in growth. While we are driving growth through the innovation that results from meaningful investments in research. As you see on Page 13, we are proud to deliver in important technologies such as segment routing, we continue to invest heavily in R&D to maintain and extend our lead. To set up our investment in 5G, smart retail, and other industry trends, we are spending to attract the top engineering talents in our industry. As our pipeline of opportunity grows, we are confident that our world class engineering team can develop the new product and technologies that will enable us to capture new business. With that, I will now turn the call over to Eric for comments on our financial performance. Eric?

Thank you, Tim, and thank you everyone for joining the call today. As I review our financial performance, please keep in mind that all figures refer to the first quarter of 2019 unless I say otherwise. Also all comparisons are with the same period last year, unless I specify differently. Okay, starting from Page 14. First quarter revenue was nearly $25 million, up 9%. Revenue was at the higher end of our guidance range reflecting a substantial contribution from India and Japan. Japan was driven by PTN product sales which were seasonally strong as they close the fiscal year. As shown on Page 15, gross profit was nearly $7 million compared to $9 million last year and $6 million last quarter. Gross margin was 28% down from 40% last year. Margin was lower due to product and geographical mix. Now let's look at operating expenses and income on Page 16. OpEx was a little bit over $7 million compared to $6.8 million last year, a slight increase is primarily due to our continuing investment in R&D to support new product developments. R&D increased 14% as we add more engineers. Meanwhile, SG&A was flat and we continue to streamline those support functions. For the quarter, we have a slight operating loss of $0.3 million as compared with an operating income of $2.3 million last year. Turning to Page 17, the net income for the quarter was $0.4 million or $0.01 per share down from $4 million or $0.11 per share last year in Q1. We benefit from the foreign exchange gains as the RMB and the India Rupee appreciated against the U.S. dollar. Page 18 summarizes our cash flow. We ended the quarter with $64 million in cash equivalents a decrease of $10 million from last quarter. Net cash used in operations was $8.5 million, cash used in investing activities was $0.3 million. With that, let me turn to our Q2 revenue guidance as shown on Page 19. Although before I discuss numbers, I would like to point our few risk factors. First of all, we have a level of uncertainty with a major customer in Japan due to the transition to the next-generation 5G networks. We remain optimistic and cautious about the amount of revenue we can expect from them in the next few quarters. Second, while we continue to expand in India, it remains a highly competitive and price sensitive market also the Indian Rupee is volatile. As such we continue to face margin pressure and currency risks in this region. Last but not least, we will remain mindful of the uncertainty and dynamics inherent in the early stages of market developments such as the 5G migration. We are fully aware of the time required for significant technology migration. Now having said that we see many growth opportunities in new technology trends, new geographies, new products, and new applications. We are excited and confident about our long-term prospects. So for specific guidance, we expect second quarter revenue to be in a range of $13 million to $17 million. Now quarterly fluctuation reflect the normal unevenness in our business as we recognize revenue based on project fulfillment. We have confidence in our ability to capture new customers and grow over time. However, with just a few large customers and sizable projects, our quarterly revenue pattern is slightly to be uneven. With that, Tim and I would like to take your questions. Operator, please open the lines for Q&A.

Sure. Ladies and gentlemen, we will now begin question-and-answer session. [Operator Instructions]. Our first question comes from the line of Tim Savageaux from Northland Capital. Please ask your question.

Hi, good morning and good evening. A couple of questions. Wanted to start focusing on the 5G optical transport opportunity, you mentioned developing in China and I guess question number one it sounds like this is the case that this is a partner other than TongDing that is -- kind of brought you into this I would be interested if that's the case or not, and whether you could provide any more color as to the timing and potential size of the opportunity? Thanks.

The partner, yes, I think TongDing will be definitely our partner. And yes, so, yes, the 5G partner, we have one potential, another one -- another partner unfortunately we cannot disclose them right now, yes. But definitely the big projects, yes, shooting for the 5G backhaul for the major China carriers.

So hi Tim. This is Eric. At this stage, we're still in the testing phase and it's difficult for us to predict or to comment on the size of the opportunities and the timing of it. We are progressing well so far. So we do, we are hopeful that we can realize, we can actually make shipments and realize revenue as soon as we can but we really cannot comment on it at this stage.

Well perhaps you can comment or excuse me more generally, I know you haven't been involved in China on the transport side, historically, but as you assess these opportunities what sort of demand environment are you seeing in China in terms of either current deployment or future opportunities as you kind of begin to enter that market?

Okay. So Tim, I think one thing from a technology perspective, we believe we have the right technology to support the 5G migration in China particularly for I guess for certain carrier, we really cannot mention anything more than that -- more specific than that. So we believe we're in a very good position from technology perspective to develop the type of product and solution that will be very helpful for them to continue this 5G migration. So I think Tim you can comment.

Yes. For the market size definitely in the China is carrier you really have fair bigger project front, yes, deployed. And they also have 5G service probably announced by end of this year. So that reason but again this is vary on a test stage, so we haven't seen their potential forecast deployment in these two years, okay so we feel interesting, yes.

But typically China market as you’re well aware is a huge market and demand for equipment, for the solutions relatively very significant. So we are very hopeful and very excited about the opportunities but again it is too early in the -- in this process for us to have anything more definitive to report at this stage.

Understood and thanks for that. With regard to the results and outlook that you mentioned, I think a solid contribution from India in the first quarter, and you were able to put up pretty solid gross margins as a result and I also cited project variability in commenting on the Q2 guide, can we infer from that India -- is that volatility in India that's driving that guidance overall also drive gross margins or you also made reference to its volatility in Softbank. So as you look at that the decline in Q2 guide, I guess the question is, is it Japan or India that's driving that?

Well as you're aware India we have -- we are engaging number of large projects and as a result that the -- we are quite active in that particular market. So we hope that that will continue and we continue to see opportunities in India, so we're working there very, very diligently. As far as Japan is concerned, Japan is migrating to 5G, and at this time, this is a lot of uncertainty from a revenue perspective, so that we are banking on India to helping out during this transition period as we solidified our position with the Japan market. Now as far as Q1 is concerned that is really a -- fairly even mix between India and Japan sales. But moving forward at least in the short run, we believe that India will be more dominating at least for in the short run.

[Operator Instructions]. Our next question comes from the line of Ryan Watson [ph] from Fidelium Advisors. Please ask the question.

So Tim, deployment and contract signing aside, when do you anticipate that the 5G trial testing will be complete?

That's clearly a sophisticated testing. So just that the testing -- official testing just started. So usually the recurrence they see probably in the Q3 sometime and we will see some result by Q3, yes.

Thanks, that's helpful. May I ask you another question about so to-date there has been no evidence of TongDing support, can you give us any specific example that led to a single contract win?

Couple contracts actually we work out. First one in India, okay, we -- as I mentioned in my -- I just reported, we have starting to help work together to selling TongDing's optical fiber okay to India customers. So actually the sales are growing is very strong. So we do see multiple optical fiber orders, okay that's using our sales channel in India. And in China, as I mentioned they're starting to sale in PTN and also the SyncRing and this order carrier cost product, so they already have a dedicated team to start it. So we have a couple customer already starting to engage. Again it's not just -- it's not consumer product, always the optical transport product well it's affluent [ph] cycle a little longer. So actually we hopefully can get some deal by second half.

Yes. I guess what I was looking at is to the best of my knowledge it looks like all of those relationships were existing UTSI relationships. I was looking for situation where TongDing added value to UTSI or was bring on new partnerships for UTSI's benefit?

Well, they are actively engaged in or standing up to sell out our products but in the China market. So -- but that takes time as Tim mentioned because it is primarily selling to the carrier and not a consumer type of product. So and at the same time, we are actively engaging to help them to market their product outside of China and particularly in India in the vicinity in Southeast Asia. So but then again is early stage, other than the cable optical fiber cable sales that we are directly engaged and the other business opportunities are still in the development stage.

Okay. Well, let me switch gears for a moment. Eric, you're forecasting Q2 revenue of $17 million, Q4 of last year it was $12.7 million, if you go back to 2017 and you talked about the outliers, there is a trend right now that shows that total revenues actually decreasing, can you give us any revenue guidance for all of 2019 what you expect that to come in at?

No. We typically only provide the next quarter guidance because in our market it is very volatile. As I kept on repeating we engage in project sales. So our revenue stream is not very even because it's all depending on the project fulfillment or timing of the project fulfillment. So on a quarter-to-quarter basis, the comparison maybe not as meaningful as in the past. Don't forget that we are now -- the -- our company practice is different under the new accounting rules, we recognize revenue based on shipment. So and the project we complete the project shipment, then we recognize the revenue. So which is a little bit different than before so that the revenue pattern is not as may not be as consistent as in the past, so it is difficult to read into you really -- our suggestion is don’t read into the quarterly fluctuation too much because it is project-based, so it's very difficult. We have to comply with the accounting rules and we cannot manipulate the numbers just to smooth it out, so we have to just report it as it happened.

Sure.

And again, we cannot give out, we don’t normally give out annual guidance on the revenue side.

Sure, I appreciate that. I've got two last questions around the stock price. So 18 months ago, the stock price was near six, today it’s potentially half that, it's basically trading at near the same price as it was in 2014, so that's no growth in the last five years. Let me ask you this, what portion of executive compensation is tied to earnings growth or shareholder return?

That is I'll guess our compensation through the four to decide and I will say us over 50% is performance basis aligned with our company revenue and projects, so that's usually our compensating committee to decide it. So its board decision and it's all based on our company probability and linked with the effective performance, yes.

Okay. And I guess the reason I’m asking this question is the stock price has gone down year-after-year, so for long-term shareholders when you see management is continuing to give bonuses, it is little perplexing because a lot of other companies that routinely underperform often executive pay will get cut withhold bonuses, if the share price remains depressed for multiple years, so I think what a lot of long-term shareholders would like to see is some sort of commitment from the UTSI board to free its bonuses at least until there is some sort of share price growth, milestones that are met and that's it from me?

Hi Ryan, the new company I was the position starting from 2016, and you can look into all the company annual results starting through 2016 we're starting to make a progress. We have already constructed two, three year's probability, okay. So you [indiscernible] effect to before 2016, so that's the previous executive. So my executive team starting to do well in 2016. Yes compared with last year, it’s a pick of $6 but for the company on total results, you can see the contribution from the executive team. Okay. Of course you're getting to have stock price goals getting better, so it's our target together, again as a market it's going to transition to 5G, so from the previous technology to this new technology, the 5G technology, we believe this will move to help companies to get in step-up give it to another state, so just give us more time, we will show you our results.

Thank you. [Operator Instructions]. There are no further questions. I will hand the call to today's presenter, Tim, please continue.

Thank you, operator. We are optimistic about our future. We are very confident of our technological direction and our leading-edge product and service offerings. We believe we are positioned to benefit on emerging trends in 5G migration, IoT, end-to-end and more. We look forward to update you on our business progress in few months. Thank you.

That does conclude today's conference call. Thank you for your participation. You may now disconnect.