omniture

Universal Travel Group Announces Third Quarter 2010 Results

2010-11-16 20:32 1025

SHENZHEN, China, Nov. 16, 2010 /PRNewswire-Asia-FirstCall/ -- Universal Travel Group (NYSE: UTA) ("Universal Travel Group" or the "Company"), a leading 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 three and nine months ended September 30, 2010.

Third Quarter 2010 Highlights

  • Revenue increased 55.4% year-over-year to $46.3 million
  • Excluding contribution of newly acquired businesses, revenue increased 16.6% year-over-year to $34.7 million  
  • Gross profit increased 37.4% year-over-year to $13.5 million
  • Gross margin was 29.1%, compared to 32.9% in the prior year period and improved from 28.7% in the prior quarter period
  • Income from operations increased 27.8% to $9.5 million
  • Net income from continuing operations was $7.3 million or $0.36 per diluted share, compared to $4.7 million or $0.31 per diluted share in the prior year period, a year over year increase of 55.3%
"We are pleased with our third quarter results," said Ms. Jiangping Jiang, Chairwoman and Chief Executive Officer. "Our packaged tour segment continued to grow and remains our largest business segment as a result of our five recent acquisitions and the efficacy of our various marketing programs.  Our air ticketing revenues benefited from increased sales volume as we sold approximately 250,000 more tickets in the third quarter of 2010 compared to same period last year.  Our hotel business was flat year-over-year due to the temporary disruption in the supply of hotel room inventory available for advance purchase from the Shanghai World Expo.  We expect the growth of our hotel business to resume when market conditions return to normal."

Third Quarter 2010 Financial Results

Revenue for the three months ended September 30, 2010, was $46.3 million compared to $29.8 million for the same period in 2009, an increase of 55.4%.  In March 2010, the Company completed the acquisitions of Huangshan Holiday Travel Service Co., Ltd., Hebei Tianyuan International Travel Agency Co., Ltd., and Zhengzhou Yulongkang Travel Agency Co., Ltd.  In June 2010, the Company completed the acquisitions of Shanxi Jinyang Travel Agency Co., Ltd. and Kunming Business Travel Agency Co., Ltd.  The revenue contribution from these five newly acquired businesses in the third quarter of 2010 was $11.6 million or 25.0% of the Company's total revenues for the quarter.  Excluding the contribution of these newly acquired businesses, revenue for the third quarter of 2010 was $34.7 million, an increase of 16.6% from $29.8 million in the same period last year.  

Revenue from air-ticketing was $6.7 million, compared to $4.9 million for the same period last year, an increase of 37.4%. This increase was mainly driven by the increase in air-ticket sales volume and growth from our Chongqing Travel World E-Business Co., Ltd. subsidiary.

Revenue generated by the Company's hotel reservation segment was $3.8 million, unchanged from the same period in 2009. The stagnant growth in this segment was due to the low available hotel inventory during the Shanghai World Expo, as the Company decided not to take the risk of purchasing hotel inventory in advance. Sales from the hotel reservation segment are expected to resume its normal growth after this one-time event.    

Revenue generated by the Company's packaged tour segment was $35.8 million compared to $21.1 million for the same period in 2009, an increase of 69.7% from the same period last year.  This increase was a result of the growth of the Chinese economy, increased sales from our Shenzhen Universal Travel Agency Co., Ltd subsidiary, and efforts in carrying out various marketing programs in this segment.

Gross profit was $13.5 million compared to $9.8 million for the same period last year, an increase of 37.4%.  Gross profit margin was 29.1% compared to 32.9% for the same period last year, and 28.7% from the prior quarter in 2010.  The decrease in gross profit margin was due to the increasing sales from the packaged tour business as a result of five new acquisitions of packaged tour companies, which have a lower profit margin due to the way revenues are recognized.

Selling, general and administrative ("SG&A") expenses totaled $4.0 million compared to $2.4 million for the same period last year, an increase of 70.3%.  The SG&A expenses were 8.7% of revenue compared to 7.9% for the same period last year.  The increase in SG&A expenses is in connection with the growth in business operations during the three months ended September 30, 2010, as compared to the same period of last year.

Income from operations was $9.5 million compared to $7.4 million in the same period last year, an increase of 27.8%.      

Net income from continuing operations was $7.3 million, or $0.36 per diluted share, compared to $4.7 million, or $0.31 per diluted share, for the same period last year.  

Nine Months Results

Revenue for the nine months ended September 30, 2010, was $109.2 million compared to $63.7 million for the same period in 2009, an increase of 71.4%.  The revenue contribution from the Company's five newly acquired businesses in the first nine months of 2010 was $28.5 million, or 26.1% of the Company's total revenues.  Excluding the contribution of these newly acquired businesses, revenue for the first nine months of 2010 was $80.7 million, an increase of 26.7% from $63.7 million in the same period last year.  

Revenue from air-ticketing segment was $17.1 million, compared to $10.9 million for the same period last year, an increase of 57.0%.  Revenue generated by the Company's hotel reservation segment was $10.0 million compared to $9.1 million for the same period in 2009, an increase of 10.4%.  Revenue generated by package tours was $82.0 million compared to $43.7 million for the same period in 2009, an increase of 87.6% from the same period last year.  

Gross profit was $32.5 million compared to $21.8 million for the same period last year, an increase of 49.0%.  Gross profit margin was 29.8% compared to 34.3% for the same period last year.  

Selling, general and administrative ("SG&A") expenses totaled $10.6 million compared to $5.2 million for the same period last year, an increase of 103.7%.  The SG&A expenses were 9.7% of revenue compared to 8.1% for the same period last year.  

Income from operations was $22.0 million compared to $16.6 million in the same period last year, an increase of 32.4%.      

Net income from continuing operations was $17.4 million, or $0.93 per diluted share, compared to $5.5 million, or $0.37 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 $1.3 million, the non-cash charge related to stock-based compensation of $1.0 million and the $0.07 million one-time, non-cash gain on disposal of fixed assets, the Company's adjusted net income from continuing operations was $17.1 million, or $0.91 per diluted share, compared to $12.9 million, or $0.86 per diluted share, in the first nine months of 2009, a year-over-year growth of 34.9%. *

* See table at the end of this press release for a reconciliation of operating income, net income and EPS to exclude the non-cash gain on change in fair value of derivative liabilities, non-cash charges related to stock-based compensation and the one-time, non-cash gain related to the disposal of fixed assets.

Financial Condition

Cash and cash equivalents were $56.7 million as of September 30, 2010. Current assets and current liabilities as of September 30, 2010, were $101.6 million and $12.0 million, respectively, yielding working capital of $89.7 million. The Company has no long-term debt.  For the nine months ended September 30, 2010, net cash provided by operating activities was $17.1 million.

Business Outlook

Ms. Jiang commented, “We continue to focus on improving our sales and profitability by encouraging cross selling across our three businesses and implementing operating efficiencies as we move forward with the integration process for our newly acquired businesses.  We remain optimistic about our business prospects given the strength of the travel market in China, our expanded geographic reach, and the comprehensive travel platform we offer our customers.”  

As previously announced, for full year 2010, the Company expects to achieve between $145.0 million and $155.0 million in revenue, $27.0 million and $28.0 million in net income, and $1.35 and $1.40 in diluted EPS, excluding the effect of non-cash charges related to the change in fair value of derivative liabilities and stock-based compensation and assuming no further dilutive effect from financings or acquisitions.

Use of Adjusted Financial Measures

GAAP results for the nine months ended September 30, 2010 and 2009 include non-cash gains and losses related to the change in fair value of derivative liabilities, non-cash charges related to stock-based compensation and a one-time non-cash gain associated with the disposal of fixed assets.  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, November 16, 2010, to discuss the Company's financial results for the third quarter of 2010. To participate in the call, please dial (877) 779-7834 five minutes prior to the start time and reference conference ID number 24164128. International callers should dial +1 (706) 902-2087.

A replay of the call will be available for 14 days beginning Tuesday, November 16, 2010, at 11:00 a.m. Eastern Time. To listen to the replay, dial (800) 642-1687 and enter the conference ID number 24164128. 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, founded in 1998, is a leading travel services provider in China.  The Company primarily focuses on the leisure travel market and offers its customers package tours, air ticketing, and hotel reservation services.  The Company has multiple sales channels including two 24-hour call centers; an online sales portal at www.cnutg.com; Company-owned and franchised sales offices, and wholesaler relationships. The Company's headquarters and main base of operations is 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

RECONCILIATION OF ADJUSTED NET INCOME


FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009









Nine Months Ended September 30, 2010

Nine Months Ended September 30, 2009



Net Income

Diluted EPS

Net Income

Diluted EPS


Adjusted Amount

$17,079,897

$0.91

$12,865,548

$0.86


Stock-based compensation

$990,846

$0.05

$802,157

$0.05


Change in fair value of derivative liabilities

-$1,253,181

-$0.07

$6,553,971

$0.44


Gain on disposal of fixed assets

-$65,853

$0.00

$0

$0.00


GAAP amount per consolidated statement of income

$17,408,085

$0.93

$5,509,420

$0.37


Weighted average number of shares - diluted

18,792,520


14,890,318











UNIVERSAL TRAVEL GROUP

CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2010 AND DECEMBER 31, 2009





September 30, 2010


December 31, 2009




Unaudited




ASSETS








Cash and cash equivalents


$

56,664,313


$

36,677,422


Accounts receivable, net



25,665,637



17,321,174


Other receivables and deposits, net



483,257



257,907


Due from related party



1,013,386



-


Trade deposit



7,802,370



9,775,735


Advances



-



440,063


Prepayments



1,531,433



216,727


Note receivable



4,823,883



1,711,392


Acquisition Deposits



3,644,317



4,077,921


Total Current Assets



101,628,596



70,478,341










Property & equipment, net



1,464,823



4,992,677


Intangible assets, net



3,134,972



339,240


Goodwill



24,812,040



9,896,270


Total Noncurrent Assets 



29,411,835



15,228,187


Total Assets


$

131,040,431


$

85,706,528










 LIABILITIES AND STOCKHOLDERS' EQUITY








Current Liabilities








Accounts payable and accrued expenses


$

6,873,874


$

2,615,730


Customer deposits



2,366,875



2,000,117


Income tax payable



2,719,351



1,654,475


Total Current Liabilities



11,960,100



6,270,322


Derivative liability



562,139



1,815,319


Total  Liabilities



12,522,239



8,085,641










Stockholders' Equity








Common stock, $.001 par value, 70,000,000 shares authorized, 19,898,235 and 16,714,457 issued and outstanding at September 30, 2010 and December 31,  2009, respectively



19,898



16,714


Additional paid in capital



60,261,179



37,671,645


Accumulated other comprehensive income



2,181,497



1,645,133


Statutory reserve



732,282



372,144


Retained earnings



55,323,336



37,915,251


Total Stockholders' Equity



118,518,192



77,620,887


Total Liabilities and Stockholders' Equity


$

131,040,431


$

85,706,528














UNIVERSAL TRAVEL GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME




For The Nine Months Ended


For The Three Months Ended



September 30,


September 30,




2010



2009



2010



2009


Revenues

$

109,161,750


$

63,701,070


$

46,290,131


$

29,784,918


Cost of services


76,643,966



41,882,670



32,827,460



19,985,549


Gross profit


32,517,784



21,818,400



13,462,671



9,799,369















Selling, general and administrative expenses


10,553,846



5,181,280



4,029,167



2,366,035


Gain on disposal of fixed assets


65,853



-



65,853





Income from operations


22,029,791



16,637,120



9,499,357



7,433,334














Other income (expense)












Other income (expense)


6,900



8,879



(17)



2,459















Gain/(Loss) on change in fair value of derivative liabilities


1,253,181



(6,553,971)



304,177



(847,754)


Interest income


58,435



39,206



17,723



15,909


Total other income (expense)


1,318,516



(6,505,886)



321,883



(829,386)


Income before income taxes –continuing operations


23,348,307



10,131,234



9,821,240



6,603,948














Provision for income taxes


5,940,222



4,029,194



2,547,194



1,891,043


Income from continuing operations

$

17,408,085


$

6,102,040



7,274,046



4,712,905















Income from discontinued operations

$

-


$

177,975


$

-


$

-


Loss on disposition of discontinued operations


-



(770,595)



-



-


Loss from discontinued operation

$

-


$

(592,620)


$

-


$

-















Net Income

$

17,408,085


$

5,509,420


$

7,274,046


$

4,712,905














Comprehensive Income












Net Income

$

17,408,085


$

5,509,420


$

7,274,046


$

4,712,905


Foreign currency translation adjustments


536,364



64,144



897,063



15,557


Total Comprehensive income

$

17,944,449


$

5,573,564


$

8,171,109


$

4,728,462














Income per common share from continuing operations












Basic

$

0.97


$

0.44


$

0.37


$

0.34


Diluted

$

0.93


$

0.41


$

0.36


$

0.31


Loss per common share from discontinued operations












Basic

$

-


$

(0.04)


$

-


$

-


Diluted

$

-


$

(0.04)


$

-


$

-


Net income per common share












Basic

$

0.97


$

0.40


$

0.37


$

0.34


Dilute

$

0.93


$

0.37


$

0.36


$

0.31


Weighted average common shares outstanding












Basic


18,020,554



13,828,739



19,898,235



13,739,880


Diluted


18,792,520



14,890,318



20,373,536



15,445,350

















UNIVERSAL TRAVEL GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30,





2010



2009


CASH FLOWS FROM OPERATING ACTIVITIES





(Restated)


Net income

$

17,408,085


$

5,509,420


Add:







Net loss from discontinued operations


-



592,620


Income from operations


17,408,085



6,102,040


Adjustments to reconcile net income to net cash provided by operating activities:







Depreciation and amortization


1,442,882



422,628


Provision for doubtful accounts


59,578



13,957


Stock based compensation


990,846



802,157


(Gain)/Loss on change in fair value of derivative liabilities


(1,253,181)



6,553,971


(Gain)Loss on sales of fixed assets


(65,853)



-


(Increase) / decrease in assets:







Accounts receivable


(7,491,629)



(6,131,089)


Other receivable


1,151,103



(51,134)


Due from related party


(995,798)



-


Advances


440,115



-


Prepayments


(991,909)



127,532


Trade deposits


2,109,924



597,479


Escrow deposits


-



764,330


Increase / (decrease) in current liabilities:







Accounts payable and accrued expenses


3,554,277



2,036,948


Customer deposits


325,446



390,814


Income tax payable


385,391



(564,060)


Net cash provided by continuing operations


17,069,277



11,065,573


Net cash provided by discontinued operations


-



435,259


Net cash provided by operating activities


17,069,277



11,500,832









CASH FLOWS FROM INVESTING ACTIVITIES







Purchase of property & equipment


(2,779,988)



(3,627,267)


Purchase of  intangibles


(51,359)



(187,810)


(Increase)/Decrease in notes receivable


(3,028,571)



599,788


Proceeds from sale of fixed assets


5,599,590



-


Acquisition deposits


497,330



-


Paid for acquisition – net of cash acquired        


(16,085,930)



-


Net cash (used in) continuing operations


(15,848,928)



(3,215,289)


Net cash (used in) discontinued operations


-



(1,035,125)


Net cash (used in) by investing activities


(15,848,928)



(4,250,414)









CASH FLOWS FROM FINANCING ACTIVITIES







Proceeds of equity financing


18,768,054



-


Proceeds from warrants exercise


-



9,570


Net cash provided by financing activities


18,768,054



9,570









Effect of exchange rate changes on cash and cash equivalents


(1,512)



511,945









Net change in cash and cash equivalents


19,986,891



7,771,933


Cash and cash equivalents, beginning balance


36,677,422



15,720,182


Cash and cash equivalents, ending balance

$

56,664,313


$

23,492,115









SUPPLEMENTAL DISCLOSURES:







Cash paid during the period for:







Income taxes

$

4,875,346


$

4,164,214









Other non-cash transactions







Net assets sold of discontinued operations

$

-


$

1,659,292


Goodwill attributable to sold discontinued operations


-



3,630,539


Note received on disposition


-



(2,773,411)


Fair value of treasury stock received


-



(2,780,950)


Loss on disposition


-



(770,595)


Net cash of discontinued operations

$

-


$

(1,035,125)









Purchased goodwill

$

(14,915,770)


$

-


Purchased intangible assets


(3,236,376)



-


Fair value of assets purchased less cash acquired


(767,601)



-


Acquisition financed with stock issuance


2,833,817



-


Acquisition paid for with cash - net of acquired

$

(16,085,930)


$

-













Company Contact:

Investor Relations Contact:


Mr. Jing Xie

CCG Investor Relations


Interim Chief Financial Officer        

Mr. Crocker Coulson, President


Universal Travel Group

Phone: +1-646-213-1915


Phone: +86-755-8366-8489

Email: crocker.coulson@ccgir.com


Email: 06@cnutg.cn

Website: www.ccgirasia.com  


us.cnutg.com





Source: Universal Travel Group
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