SHENZHEN, China, May 11 /PRNewswire-Asia/ -- Universal Travel Group (NYSE: UTA) ("Universal Travel Group" or the "Company"), a growing travel services provider in China offering package tours, air ticketing, and hotel reservation services online and via customer service representatives, today announced financial results for the first quarter ended March 31, 2010.
First Quarter 2010 Highlights
-- Revenue increased 68.5% year-over-year to $26.1 million
-- Excluding contribution of newly acquired businesses, revenue increased
34.5% year-over-year
-- Gross profit increased 39.5% year-over-year to $8.5 million
-- Gross margin was 32.5%, compared to 39.3% in the prior year period
-- Income from operations was $5.4 million, compared to $4.2 million in
the prior year period
-- Adjusted income from operations, which excludes the effect of non-cash
charges related to stock-based compensation of $0.3 million, was $5.8
million, compared to $4.4 million in the prior year period*
-- GAAP net income from continuing operations was $4.1 million or $0.23
per diluted share, compared to $3.2 million or $0.23 per diluted share
in the prior year period
-- Adjusted net income from continuing operations, which excludes the
effect of the non-cash gain on change in fair value of derivative
liabilities of $0.1 million and the non-cash charge related to stock-
based compensation of $0.3 million, was $4.3 million, or $0.24 per
diluted share, compared to $3.3 million, or $0.24 per diluted share, in
the prior year period*
-- Acquired three travel agencies in China
"Our strong first quarter performance was driven by organic revenue growth and the financial results from our three recent acquisitions," said Ms. Jiangping Jiang, Chairwoman and Chief Executive Officer. "Our organic sales growth was primarily driven by our successful efforts in cross-marketing and cross-selling our travel related products across our three business segments, along with the strong demand for travel as a result of the healthy Chinese economy and the continuing positive impact from the Chinese government's stimulus package. We also benefited from increased brand awareness from both our online presence and from the deployment of our TRIPEASY kiosks."
First Quarter 2010 Financial Results
Revenue for the three months ended March 31, 2010, was $26.1 million compared to $15.5 million for the same period in 2009, an increase of 68.5%. In March 2010, the Company completed the acquisitions of Huangshan Holiday Travel Service Co., Ltd. ("Huangshan Holiday"), Hebei Tianyuan International Travel Agency Co., Ltd. ("Tianyuan"), and Zhengzhou Yulongkang Travel Agency Co., Ltd. ("Yulongkang"). The revenue contribution from these three newly acquired subsidiaries in the first quarter of 2010 was $5.3 million, or 20.2% of the Company's total revenues for the quarter. Excluding the contribution of these newly acquired businesses, revenue for the first quarter of 2010 was $20.8 million, an increase of 34.5% from $15.5 million in the same period last year.
Revenue from air-ticketing was $4.4 million, compared to $2.8 million for the same period last year, an increase of 61.3%. This increase was mainly due to the increased demand for air passenger transportation and sales from the Company's Chongqing subsidiary as consumers across China are traveling more as the domestic economy recovers. In order to capitalize on the opportunities arising from the economic promotion by the Chinese government of the mid and western regions of the PRC, the Company strategically set up Chongqing Universal Travel E-Business Co., Ltd. to strengthen its presence in that region in the second quarter of 2009. The Chongqing subsidiary began generating revenues in the third quarter of 2009.
Revenue generated by the Company's hotel reservation segment was $3.2 million compared to $2.5 million for the same period in 2009, an increase of 25.2%. This increase was also due to healthy market demand and the Company's ability to successfully cross market across its three business segments.
Revenue generated by package tours was $18.5 million compared to $10.2 million for the same period in 2009, an increase of 81.0% from the same period last year. This increase was a result of the three recent acquisitions, the recovery of the domestic economy, the positive impact from the government's stimulus package, and the Company's strong efforts in carrying our various marketing programs and campaigns.
Gross profit was $8.5 million compared to $6.1 million for the same period last year, an increase of 39.5%. Gross profit margin for the first quarter of 2010 was 32.5% compared to 39.3% for the same period last year. The decrease in gross profit margin was primarily because the packaged tour business, which has a lower profit margin due to the way revenues are recognized, constituted a higher percentage of the Company's total revenues than during the prior year period.
Selling, general and administrative ("SG&A") expenses totaled $3.1 million compared to $1.9 million for the same period last year, an increase of 65.1%. The SG&A expenses were 11.7% of revenue for the three months ended March 31, 2010, compared to 12.0% for the same period last year. General increase in selling, general and administrative expenses are in tandem with the growth in business operations during the three months ended March 31, 2010, as compared to the same period of last year. During the first quarter of 2010, the Company incurred extra professional fees and consolidation expenses for the three acquisitions. In addition, the slight increase in percentage was also due to the issuance of stock based compensation in early 2009 and the amortization of such stock based compensation, whereas the stock based compensation is less significant during the same period last year.
Income from operations was $5.4 million compared to $4.2 million in the same period last year. The Company incurred non-cash charges related to stock-based compensation of $0.3 million in the first quarter of 2010 compared to $0.2 million in the prior year period. Excluding these non-cash charges, the Company's adjusted income from operations was $5.8 million for the first quarter of 2010, compared to $4.4 million in the prior year period. Adjusted operating margin was 22.1%.*
Net income from continuing operations was $4.1 million, or $0.23 per diluted share, compared to $3.4 million, or $0.23 per diluted share, for the same period last year. Excluding the effect of the non-cash gain on change in fair value of derivative liabilities of $0.1 million and the non-cash charge related to stock-based compensation of $0.3 million, the Company's adjusted net income from continuing operations was $4.3 million, or $0.24 per diluted share, compared to $3.3 million, or $0.24 per diluted share, in the first quarter of 2009.*
* See Table 1 for a reconciliation of operating income, net income and EPS
to exclude the non-cash gain on change in fair value of derivative
liabilities and the non-cash charge related to stock-based compensation.
Financial Condition
Cash and cash equivalents were $37.8 million as of March 31, 2010. Current assets and current liabilities as of March 31, 2010, were $69.8 million and $11.0 million, respectively, yielding working capital of $58.8 million. The Company has no long-term debt. For the quarter ended March 31, 2010, net cash provided by operating activities was $6.5 million.
Recent Developments
-- In March 2010, the Company acquired the following three travel agencies
in China: (i) Huangshan Holiday for approximately $2.9 million, of
which 80% was in cash and 20% in stock; (ii) Tianyuan for approximately
$4.4 million, of which 80% was in cash and 20% in stock; and (iii)
Yulongkang for approximately $5.7 million, of which 90% was in cash and
10% in stock.
-- In April 2010, the Company entered into letters of intent to acquire
the following four travel agencies in China for a total purchase
consideration of $19.5 million: (i) Tianjin Hongxun Aviation Agency
Co., Ltd.; (ii) Shanxi Jinyang Travel Agency Co., Ltd.; (iii) Kunming
Business Travel Agency Co., Ltd.; and (iv) Shandong Century Aviation
Development Co., Ltd. The combined unaudited 2009 revenue and net
income for the four travel agencies were $23.0 million and $3.0
million, respectively.
Business Outlook
Ms. Jiang commented, "We are optimistic about our business prospects. Our main base of operations in Shenzhen in the Pearl River Delta region of China continues to perform well and the expansion of our business into Western China, through our second home base in the Chongqing Delta region is ramping up nicely. We are very pleased with our recently completed acquisitions as they were made at attractive valuations and enable Universal Travel Group to expand into additional under-penetrated domestic travel markets.
"Our three newly acquired businesses are traditional travel agencies with a minimal online presence and the bulk of their business comes from selling package tours. As such, we see many opportunities to improve sales and profitability by expanding their online bookings and air ticketing and hotel reservation sales as we integrate these businesses and their customers into our wider travel platform over the coming weeks and months. We expect this initiative not only to increase sales, but also to help improve overall margin performance given that online bookings, air ticketing and hotel reservations all have higher margins than sales via customer service representatives and, given the way revenues are recognized, sales of package tours. We expect to see the results of our efforts as the year progresses and expect stronger overall margin performance in the second half of 2010 as a result of these initiatives, but also because the package tour business is seasonal and the third and fourth quarters typically outperform the first two quarters of the year.
"We recently announced our intent to acquire an additional four travel agencies in China. These companies have a greater focus on air ticketing and hotel reservations versus package tours. Following the closing of these acquisitions, our geographic coverage will have expanded to ten provinces in mainland China and we are confident that these acquisitions will have a positive impact on our top and bottom line performance for the year and beyond."
For full year 2010, the Company reiterates its previously issued guidance of achieving a growth rate range of between 45% and 55% in both revenues and net income, excluding the effect of non-cash charges related to the change in fair value of derivative liabilities and stock-based compensation. This guidance does not include any impact from the four companies the Company has announced it is in the process of acquiring.
Use of Adjusted Financial Measures
GAAP results for the three months ended March 31, 2010 include a non-cash gain on change in fair value of derivative liabilities and a non-cash charge related to stock-based compensation. To supplement the Company's condensed consolidated financial statements presented on a GAAP basis, the Company has provided adjusted financial information excluding the impact of these items in this release. It is a departure of U.S. GAAP; however, the Company's management believes that this adjusted measure provides investors with a better understanding of how the results relate to the Company's historical performance. A reconciliation of the adjustments to GAAP results appears in the table accompanying this press release. This additional adjusted information is not meant to be considered in isolation or as a substitute for GAAP financials. The adjusted financial information that the Company provides also may differ from the adjusted information provided by other companies.
Conference Call Information
The Company will host a conference call at 9:00 a.m. ET on Tuesday, May 11, 2010, to discuss the Company's financial results for the first quarter. To participate in the call, please dial +1 (877) 779-7834 five minutes prior to the start time (to allow time for registration) and reference conference ID number 72758960. International callers should dial +1 (706) 902-2087.
A replay of the call will be available for 14 days beginning Tuesday, May 11, 2010, at 12:00 p.m. Eastern Time. To listen to the replay, dial +1 (800) 642-1687 and enter the conference ID number 72758960. International callers should dial +1 (706) 645-9291. An audio recording will also be available on the Company's website at http://us.cnutg.com .
About Universal Travel Group
Universal Travel Group is a leading travel service provider in China offering packaged tours, air ticketing, and hotel reservation services via the Internet and customer service representatives. The Company also operates TRIPEASY Kiosks, which are placed in shopping malls, office buildings, residential apartment buildings, and tourist sites. These kiosks are designed for travel booking with credit and bank cards, and serve as an advertising platform for Universal Travel Group. The Company's headquarters and main base of operations is located in Shenzhen in the Pearl River Delta region of China. More recently, Universal Travel Group has expanded its business into Western China, opening a second home base in the Chongqing Delta region, and other attractive, under-penetrated tier-two travel markets throughout the country. For more information on the Company, please visit http://us.cnutg.com .
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release contains certain statements that may include "forward-looking statements" within the meaning of federal securities laws. All statements, other than statements of historical facts, included herein are "forward-looking statements". Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the Company's ability to successfully expand its market presence and those discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
Financial tables to follow
* Table 1
UNIVERSAL TRAVEL GROUP
RECONCILIATION OF ADJUSTED NET INCOME AND DILUTED EPS FROM CONTINUING
OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
Three Months Ended Three Months Ended
March 31, 2010 March 31, 2009
Net Income Diluted Net Income Diluted
EPS EPS
Adjusted Amount $4,317,022 $0.24 $3,301,584 $0.24
Stock-based compensation $336,632 $0.02 $165,001 $0.01
Gain on change in fair value of
derivative liabilities $109,451 $0.01 $113,265 $0.01
GAAP amount per consolidated
statement of income $4,089,841 $0.23 $3,249,848 $0.23
Weighted average number of
shares - diluted 18,019,257 13,885,772
RECONCILIATION OF ADJUSTED INCOME FROM OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
Three Months Ended Three Months Ended
March 31, 2010 March 31, 2009
Operating Income Operating Income
Adjusted Amount $5,774,965 $4,404,013
Stock-based compensation $336,632 $165,001
GAAP amount per consolidated
statement of income $5,438,333 $4,239,012
UNIVERSAL TRAVEL GROUP
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2010 AND DECEMBER 31, 2009
3/31/2010 12/31/2009
ASSETS Restated
Cash and cash equivalents $ 37,833,072 $ 36,677,422
Accounts receivable, net 18,832,395 17,321,174
Other receivables and deposits, net 1,839,624 257,907
Trade deposit 10,024,096 9,775,735
Advances 439,504 440,063
Prepaid expenses 49,076 216,727
Note receivable 738,457 1,711,392
Acquisition Deposits 4,077,921
Total Current Assets 69,756,224 70,478,341
Property, plant & equipment, net 5,711,196 4,992,677
Intangible assets 2,235,259 339,240
Goodwill 19,155,866 9,896,270
Total Noncurrent Assets 27,102,321 15,228,187
Total Assets $ 96,858,545 $ 85,706,528
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 8,187,468 $ 2,615,730
Customer deposits 1,555,445 2,000,117
Income tax payable 1,299,373 1,654,475
Total Current Liabilities 11,042,286 6,270,322
Derivative liability 1,705,868 1,815,319
Total Liabilities 12,748,154 8,085,641
Stockholders' Equity
Common stock, $.001 par value,
70,000,000 shares authorized,
16,822,339 and 16,714,457 issued
and outstanding at December 31,
2009 and 2008, respectively 16,929 16,714
Additional paid in capital 40,043,651 37,671,645
Other comprehensive income 1,474,390 1,645,133
Statutory reserve 570,329 372,144
Retained earnings 42,005,092 37,915,251
Total Stockholders' Equity 84,110,391 77,620,887
Total Liabilities and
Stockholders' Equity $ 96,858,545 $ 85,706,528
UNIVERSAL TRAVEL GROUP
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTH ENDED MARCH 31,
2010 2009
Restated
Gross revenues $ 26,130,007 $ 15,510,679
Cost of services 17,628,033 9,416,596
Gross Profit 8,501,974 6,094,083
Selling, general and administrative
expenses 3,063,641 1,855,071
Income from operations 5,438,333 4,239,012
Other income (expense)
Other income 3,554 3,828
Gain on change in fair value of
derivative liabilities 109,451 113,265
Interest income 23,631 10,939
Total other income (expense) 136,636 128,032
Income before income taxes -
continuing operation 5,574,969 4,367,044
Provision for income taxes 1,485,128 1,117,196
Net income - continuing operation 4,089,841 3,249,848
Income from discontinued operations -- 131,693
Net income (loss) from discontinued
operation -- 131,693
Net Income $ 4,089,841 $ 3,381,541
Net income per common share -
continuing operations
Basic $ 0.24 $ 0.23
Diluted $ 0.23 $ 0.23
Net income per common share -
discontinued operations
Basic $ -- $ 0.01
Diluted $ -- $ 0.01
Weighted average common shares
outstanding
Basic 16,930,221 13,873,969
Diluted 18,019,257 13,885,722
Net income $ 4,089,841 $ 3,249,848
Translation (170,743) 34,707
Comprehensive income $ 3,919,098 $ 3,284,555
UNIVERSAL TRAVEL GROUP
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH ENDED MARCH 31,
2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,089,841 $ 3,249,850
Add (deduct):
Net income (loss) from discontinued
operations -- 131,693
Income from continuing operations 4,089,841 3,381,543
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 166,134 87,283
Provision for doubtful accounts 24,931 9,205
Stock based compensation 336,632 165,000
Gain on change in fair value of
derivative liabilities (109,451) (113,265)
(Increase) / decrease in assets:
Accounts receivable (1,132,812) (2,279,625)
Other receivable (751,763) (176,658)
Advances 559 (513)
Prepaid expenses 213,586 123,111
Trade deposits (248,361) 2,003,342
Escrow deposits -- 600,499
Increase / (decrease) in current
liabilities:
Accounts payable and accrued
expenses 5,238,163 718,269
Customer deposits (444,672) 366,025
Income tax payable (869,498) (784,295)
6,513,289 4,099,921
Net cash provided by discontinued
operations -- 92,516
Net cash provided by operating
activities 6,513,289 4,192,437
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property & equipment (619,616) (1,260,398)
Purchase of intangibles (29,298) --
Proceeds from collection of notes 972,935 --
Acquisition deposits 4,077,921 --
Paid for acquisition - net of cash
acquired (9,588,838) --
Net cash (used in) provided by
continuing operations (5,186,896) (1,260,398)
Net cash (used in) provided by
discontinued operations -- --
Net cash (used in) provided by
investing activities (5,186,896) (1,260,398)
Effect of exchange rate changes on
cash and cash equivalents (170,743) 34,707
Net change in cash and cash
equivalents 1,155,650 2,966,746
Cash and cash equivalents,
beginning balance 36,677,422 16,204,531
Cash and cash equivalents,
ending balance $ 37,833,072 $ 19,171,277
SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Interest payments $ -- $ --
Income taxes $ 1,840,230 $ 1,929,630
Other non-cash transactions
Purchased goodwill $ (9,259,596) --
Purchased intangible assets (1,982,354) --
Fair value of assets purchased
less cash acquired (382,477) --
Acquisition financed with stock
issuance 2,035,589 --
Acquisition paid for with cash
- net of acquired $ (9,588,838) $ --
For more information, please contact:
Company Contact:
Mr. Jing Xie
Secretary of Board and Vice President
Universal Travel Group
Tel: +86-755-8366-8489
Email: 06@cnutg.cn
us.cnutg.com
Investor Relations Contact:
CCG Investor Relations
Mr. Athan Dounis, Account Manager
Tel: +1-646-213-1916
Email: athan.dounis@ccgir.com
Mr. Crocker Coulson, President
Tel: +1-646-213-1915
Email: crocker.coulson@ccgir.com
Web: http://www.ccgirasia.com
