omniture

Universal Travel Group Announces Third Quarter 2011 Results

2011-11-15 20:06 1434

SHENZHEN, China, November 15, 2011 /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, 2011.

Third Quarter 2011 Highlights

  • Revenues decreased 8.1% year-over-year to $41.8 million.
  • Gross profit decreased 12.0% year-over-year to $10.1 million.
  • Gross margin was 24.2%, compared to 25.2% in the prior year same period.
  • Income from operations decreased 17.3% to $7.9 million.
  • Net income was $5.9 million or $0.30 per basic and diluted share, compared to $7.3 million or $0.37 per basic share and $0.36 per diluted share in the prior year same period, a year over year decrease of 18.9%.
  • Foreign currency translation adjustments were $1.3 million, compared to $0.9 million in the prior year same period, a year over year increase of 43.1%.
  • Total comprehensive income, including foreign currency translation adjustments, was $7.2 million, compared to $8.2 million in the prior year same period, a year over year decrease of 12.1%.

Business in third quarter, compared to third quarter 2010 was impacted by a few factors. First, revenues in the third quarter 2010 were elevated, boosted by the Shanghai World Expo which fueled substantial growth in tourism. With no similar event this year, tourism demand was softer this quarter. Second, the Company shifted its hotel reservation business strategy to concentrate on direct sales and exit all hotel room wholesale operations as the former is substantially more profitable. Lastly, the Company tightened its credit risk management and terminated its business relationships with customers with deteriorating credit quality in both air ticketing and packaged tours. The Company is confident that these measures will deliver healthier and more sustainable growth in the future as the prospects for China's tourism industry remain very strong.

Third Quarter 2011 Financial Results

Revenues for the three months ended September 30, 2011, were $41.8 million compared to $45.5 million for the same period in 2010, a decrease of 8.1%. This slight decrease was due to a higher than normal sales for the same period in 2010 contributed by large exhibitions in the PRC, including the Shanghai World Expo.

Revenues from the air-ticketing segment were $5.5 million, compared to $5.7 million for the same period last year, a decrease of 4.5%. This slight decrease was due to lower air-ticket sales volume in the third quarter of 2011 than in the same quarter last year, when the Shanghai World Expo contributed significantly to higher air-ticket sales.

Revenues from the hotel reservation segment were $2.9 million, compared to $4.4 million for the same period last year, a decrease of 33.2%. The decrease is associated with the transition of the Company's strategy in this segment. The Company ceased all hotel room wholesale operations, which were previously conducted through the China Booking Association platform. Instead, the Company focused its strategy on the more profitable direct sales of packaged hotel products. As a result, revenue fell during this transition period.

Revenues from the packaged tour segment were $33.4 million compared to $35.4 million for the same period in 2010, a decrease of 5.6% from the same period last year. The slight decrease was a result of the Company's efforts to reduce its business with customers with bad credit in order to control the amount of uncollectable accounts receivables and reduce the balance of bad debt allowance.

Gross profit was $10.1 million compared to $11.5 million for the same period last year, a decrease of 12.0%. This decrease was a result of decreased revenues in the third quarter this year than the same period last year when Company had higher revenues during the Shanghai World Expo. Gross profit margin was 24.2% compared to 25.2% for the same period last year. The stability in gross margin was mainly due to integration among segments and the Company's strategy to focus more on online development.

Selling, general and administrative ("SG&A") expenses totaled $2.3 million compared to $2.0 million for the same period last year, an increase of 14.7%. The SG&A expenses were 5.6% of revenue compared to 4.5% for the same period last year. This increase was mainly due to extra professional fees and higher stock based compensation expenses related to options granted under the 2010 incentive stock plan issued in December 2010.

Income from operations was $7.9 million compared to $9.5 million in the same period last year, a decrease of 17.3%.

Net income from continuing operations was $5.9 million, or $0.30 per basic and diluted share, compared to $7.3 million, or $0.37 per basic share and $0.36 per diluted share, for the same period last year, a decrease of 18.9%. The decrease in net income was mostly associated with decreased sales in the third quarter this year compared to the same quarter last year, which benefited from the Shanghai World Expo.

Nine Months Results

Revenues for the nine months ended September 30, 2011, were $108.5 million compared to $97.8 million for the same period in 2010, an increase of 10.9%. This increase was driven by business expansion, especially in the packaged tour segment, along with the strong demand for travel as a result of the recovery of the PRC economy, and the continuing effect of the PRC government's stimulus package, benefiting the whole industry.

Revenues from the air-ticketing segment were $15.8 million, compared to $14.4 million for the same period last year, an increase of 9.1%. This increase was due to the increase in air-ticket sales volume and higher air-ticket prices. The Company attributed the higher air ticket sales to the booming tourism, and general inflation in the PRC economy, as well as reduced competition among airlines.

Revenues from the hotel reservation segment were $9.3 million, compared to $10.9 million for the same period prior year, a decrease of 14.1%. The decrease was due to the Company's shift in strategy to focus on more profitable direct sales of packaged hotel products, resulting in a decrease in revenue but a slight increase in gross profit because of substantially reduced costs of services during this transition period.

Revenues from the packaged tour segment were $83.4 million, compared to $72.5 million for the same quarter last year, an increase of 15.0%. This increase was associated with the Company's expansion in this segment. Subsidiaries acquired in 2010 in this segment contributed approximately $32.0 million for the nine months ended September 30, 2011, compared to $18.2 million for the same period prior year, when the revenues of the newly acquired subsidiaries before the acquisition were not included in the revenues for the nine months ended September 30, 2010.

Gross profit was $27.7 million, compared to $26.5 million for the same period last year, an increase of 4.8%. Gross profit margin was 25.6%, compared to 27.1% for the same period last year.

Selling, general and administrative ("SG&A") expenses totaled $7.9 million, compared to $5.7 million for the same period last year, an increase of 38.7%. The SG&A expenses were 7.3% of revenue compared to 5.8% for the same period last year.

Income from operations was $19.9 million, compared to $20.8 million in the same period last year, a decrease of 4.5%.

Net income from continuing operations was $14.8 million, or $0.74 per basic share and $0.73 per diluted share, compared to $16.6 million, or $0.92 per basic share and $0.88 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 $0.5 million, the non-cash charge related to stock-based compensation of $2.4 million and the $0.7 million one-time, non-cash gain on disposal of fixed assets, the Company's adjusted net income from continuing operations was $16.6 million, or $0.84 per basic share and $0.82 per diluted share, compared to $16.2 million, or $0.90 per basic share and $0.86 per diluted share, in the first nine months of 2010, a year-over-year growth of 2.5%.

Financial Condition

Cash and cash equivalents were $53.0 million as of September 30, 2011, compared to $39.6 million as of December 31, 2010. Current assets and current liabilities as of September 30, 2011, were $132.9 million and $11.7 million, respectively, yielding working capital of $121.3 million. The Company has no long-term debt. For the nine months ended September 30, 2011, net cash provided by operating activities was $20.6 million.

Use of Adjusted Financial Measures

GAAP results for the nine months ended September 30, 2011 and 2010 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.

About Universal Travel Group

Universal Travel Group Inc. (NYSE: UTA) is a leading China-based travel services provider, focusing on the domestic tourism market for leisure and corporate travel and offering packaged tours, air ticketing, and hotel reservation services. The Company targets geographic expansion in underpenetrated travel markets in central and western China; and it has established a second operation base in Chongqing. With the Chinese disposal income continuing to rise driving demand for domestic leisure services, the Company continues to benefit and dominate packaged tour businesses. The Company operates multi-channels sales with 24 hour call centers, online website, owned and franchised sales offices and various wholesale channels. For more information, please visit Universal Travel Group's website at 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.

For investor and media inquiries, please contact:

Mr. Jing XIE, Secretary of Board & Interim Chief Financial Officer
Universal Travel Group Inc.
Tel: 86-755-86319549,
Fax: 86-755-86319348,
06@cnutg.com
Website: us.cnutg.com

Christensen
Kimberly Minarovich
Tel: +1 212 618 1978
Kminarovich@ChristensenIR.com

Jenny Wu
Tel: +852 2232 3907
Jwu@ChristensenIR.com


UNIVERSAL TRAVEL GROUP

CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2011 AND DECEMBER 31, 2010










September 30,


December 31,



2011


2010



Unaudited




ASSETS







Cash and cash equivalents


$

53,007,049


$

39,618,988

Restricted Cash



1,186,507



307,027

Short term investments



31,306,253



19,681,308

Accounts receivable, net



36,052,088



38,658,011

Other receivables and deposits, net



957,639



780,400

Trade deposit



8,513,958



8,173,426

Prepayments



1,924,736



1,216,857

Note receivable



-



2,314,259

Total Current Assets



132,948,230



110,750,276








Property & equipment, net



1,551,522



1,692,595

Intangible assets, net



2,582,847



3,110,882

Goodwill



24,508,909



24,508,909

Total Noncurrent Assets



28,643,278



29,312,386

Total Assets


$

161,591,508


$

140,062,662








LIABILITIES AND STOCKHOLDERS' EQUITY







Current Liabilities







Accounts payable and accrued expenses


$

6,590,661


$

5,045,674

Customer deposits



2,654,645



2,203,487

Income tax payable



2,413,347



3,189,965

Total Current Liabilities



11,658,653



10,439,126








Warrants - derivative liability



318,011



810,929

Deferred tax liability



477,397



477,397

Long-term income tax payable



30,804



30,804

Total Liabilities



12,484,865



11,758,256








Stockholders' Equity







Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively



-




Common stock, $.001 par value, 70,000,000 shares authorized, 19,898,235 issued and outstanding at September 30, 2011 and December 31, 2010, respectively



19,898



19,898

Additional paid in capital



66,553,890



64,171,555

Statutory reserve



1,062,741



1,062,741

Retained earnings



74,422,024



59,624,186

Accumulated other comprehensive income



7,048,090



3,426,026

Total Stockholders' Equity



149,106,643



128,304,406

Total Liabilities and Stockholders' Equity


$

161,591,508


$

140,062,662





UNIVERSAL TRAVEL GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
















For the nine months ended


For the three months ended



September 30,


September 30,



2011


2010


2011


2010






Restated





Restated

Revenues













Air ticketing, net


$

15,759,318


$

14,439,187


$

5,478,545


$

5,736,699

Hotel reservation, net



9,330,719



10,862,393



2,940,988



4,400,270

Packaged tours, gross



83,374,997



72,507,188



33,388,230



35,379,897




108,465,034



97,808,768



41,807,763



45,516,866

Cost of services













Air ticketing, net



5,973,132



4,913,895



2,139,745



2,080,605

Hotel reservation, net



1,714,886



3,533,764



177,190



1,554,191

Packaged tours, gross



73,115,397



62,902,349



29,394,177



30,410,425




80,744,015



71,350,008



31,711,112



34,045,221














Gross profit



27,721,019



26,458,760



10,096,651



11,471,645














Selling, general, and administrative expenses



(7,881,889)



(5,681,325)



(2,310,377)



(2,038,141)

Gain on disposal of fixed assets



66,511



65,853



66,511



65,853

Income from operations



19,905,641



20,843,288



7,852,785



9,499,357














Other income (expense)













Other income (expense)



(18,040)



6,900



(538)



(17)

Gain on change of fair value of derivative liabilities



492,918



1,253,181



47,702



304,177

Interest income



537,192



56,434



302,371



17,723

Total other income



1,012,070



1,316,515



349,535



321,883














Income before income taxes



20,917,711



22,159,803



8,202,320



9,821,240














Provision for income taxes



6,119,873



5,608,744



2,301,785



2,547,194

Net income


$

14,797,838


$

16,551,059


$

5,900,535


$

7,274,046














Comprehensive income













Net income


$

14,797,838


$

16,551,059


$

5,900,535


$

7,274,046

Foreign currency translation adjustments



3,622,064



442,984



1,283,504



897,063

Total comprehensive income


$

18,419,902


$

16,994,043


$

7,184,039


$

8,171,109














Net income per common share













Basic


$

0.74


$

0.92


$

0.30


$

0.37

Diluted


$

0.73


$

0.88


$

0.30


$

0.36














Weighted average common shares outstanding













Basic



19,898,235



18,020,554



19,898,235



19,898,235

Diluted



20,214,140



18,792,520



19,981,063



20,373,536





UNIVERSAL TRAVEL GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30,










2011


2010

CASH FLOWS FROM OPERATING ACTIVITIES







Net income


$

14,797,838


$

16,551,059

Add:







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







Depreciation and amortization



925,383



1,254,187

Provision for doubtful accounts



-



59,578

Stock based compensation



2,382,335



990,846

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



(492,918)



(1,253,181)

(Gain)/Loss on sales of fixed assets



(66,511)



(65,853)

(Increase)/ decrease in assets:







Restricted cash



(855,372)



(73,488)

Accounts receivable



3,896,226



(7,730,724)

Other receivable



(147,652)



924,561

Due from related parties



-



(995,798)

Advances



-



440,115

Prepayments



(655,102)



(792,128)

Trade deposits



(53,998)



2,118,139

Increase/ (decrease) in current liabilities:







Accounts payable and accrued expenses



1,347,551



3,605,152

Customer deposits



368,378



308,915

Income tax payable



(874,444)



658,821

Net cash provided by operating activities



20,571,714



16,000,201








CASH FLOWS FROM INVESTING ACTIVITIES







Purchase of property & equipment



(208,273)



(2,779,988)

Purchase of intangibles



-



(51,359)

Proceeds from sale of fixed assets



171,108



5,599,590

(Increase)/Decrease in short term investments



(10,768,621)



-

(Increase)/Decrease in notes receivable



2,358,273



(3,028,571)

Acquisition deposits



-



497,330

Cash paid for acquisition - net of cash acquired



-



(15,782,799)

Net cash (used in) investing activities



(8,447,513)



(15,545,797)








CASH FLOWS FROM FINANCING ACTIVITIES







Proceeds of equity financing



-



18,768,054

Net cash provided by financing activities



-



18,768,054








Effect of exchange rate changes on cash and cash equivalents



1,263,860



690,945








Net change in cash and cash equivalents



13,388,061



19,913,403

Cash and cash equivalents, beginning balance



39,618,988



36,574,741

Cash and cash equivalents, ending balance



53,007,049



56,488,144








SUPPLEMENTAL DISCLOSURES:







Cash paid during the period for:







Interest payments


$

-


$

-

Income taxes


$

6,896,491


$

4,271,081








Purchased goodwill


$

-


$

(14,612,639)

Purchased intangible assets



-



(3,236,376)

Fair value of assets purchased less cash acquired



-



(767,602)

Acquisition financed with stock issuance



-



2,833,818

Acquisition paid for with cash - net of acquired


$

-


$

(15,782,799)




Source: Universal Travel Group
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