omniture

Universal Travel Group Announces Unaudited Fourth Quarter and Full Year 2011 Results

2012-05-22 04:30 1271

SHENZHEN, China, May 22, 2012 /PRNewswire-Asia-FirstCall/ -- Universal Travel Group ("Universal Travel Group" or the "Company") (OTC Pink: UTRA ), a leading travel services provider in China, offering packaged tours, air ticketing, and hotel reservation services online and via customer service representatives, today announced unaudited financial results for the fourth quarter and full year ended December 31, 2011.

Strategic shift in the hotel reservation segment, tighter risk management and goodwill impairments position the Company for sustainable business performance.

Fourth Quarter 2011 Highlights

  • Revenue decreased 15.4% year-over-year to $47.0 million
  • Gross profit decreased 1.2% year-over-year to $14.5 million
  • Gross margin was 30.8%, compared to 26.4% in the same period of 2010
  • GAAP income from operations increased 3.8% year-over-year to $8.9 million
  • GAAP net income increased 9.7% to $6.0 million or $0.30 per diluted share

Full Year 2011 Highlights

  • Revenue increased 1.37% year-over-year to $155.4 million
  • Gross profit increased 2.63% year-over-year to $42.2 million
  • Gross margin was 27.1%, compared to 26.8% in the same period of 2010
  • GAAP income from operations decreased 2.1% year-over-year to $28.8 million
  • GAAP net income decreased 5.5% to $20.8 million or $1.03 per diluted share, compared to $22.0 million or $1.14 per diluted share last year

Fourth Quarter 2011 Financial Results

Revenue for the three months ended December 31, 2011, was $47.0 million compared to $55.5 million for the same period in 2010, a decrease of approximately 15.4%. The decrease in revenue was associated with decreased revenue in air ticketing and packaged tour segments compared to the same period of 2010.

Revenue from air-ticketing was $7.9 million, compared to $9.8 million for the same period last year, a decrease of 19.2%. This decrease was mainly due to lower air-ticket sales in 2011 compared to the previous year, when Shanghai World Expo contributed significantly to higher air-ticket sales. In view of China's continued economic prosperity and strong growth in China's civil aviation transportation volume we believe that our revenue from the air-ticketing segment will grow in the foreseeable future.

Revenue generated by the Company's hotel reservation segment was $4.1 million compared to $3.4 million for the same period in 2010, an increase of 19.8%. The segment benefited from the new strategy implemented in the second quarter of 2011 when the Company discontinued all hotel room wholesale operations previously conducted through the China Booking Association platform. Since then, the Company has focused on the more profitable direct sales of packaged hotel products. After transitioning in the second and third quarters of 2011, revenue in the fourth quarter of 2011 increased compared to the same period in 2010.

Revenue generated by packaged tours was $34.9 million compared to $42.3 million for the same period in 2010, a decrease of 17.4%. Revenues in 2010 benefited significantly from higher business volumes related to the Shanghai World Expo.

Gross profit was $14.5 million for the three months ended December 31, 2011 compared to $14.6 million for the three months ended December 31, 2010, a slightly decrease of 1.2%. Gross profit margin for the fourth quarter of 2011 was 30.8% compared to 26.4% for the same period the previous year. The increase in gross profit margin was mostly due to the growth in revenue generated by the Company's strategic shift to direct sales in its hotel reservation segment.

Selling, general and administrative ("SG&A") expenses totaled $2.8 million compared to $6.1 million for the same period last year, a decrease of 54.1%. The SG&A expenses were 5.9% of revenue for the three months ended December 31, 2010, compared to 11.0% for the same period last year. The decrease in percentage was mainly associated with higher stock based compensation of 2009 incentive stock option plan with accelerated vesting period from six years to three years after the Company reportedafter tax Net Income of $14,000,000, $18,000,000, and $22,000,000 in its Annual Report on Form 10-K filed with the SEC for its fiscal years 2008, 2009, and 2010, respectively.

Income from operations increased 3.8% to $8.9 million from $8.5 million in the same period last year. The Company incurred non-cash charges related to stock-based compensation in the fourth quarter of $0.7 million and impairment loss of goodwill $2.5 million. Excluding this non-cash charge, the Company's adjusted income from operations would be $12.1 million for the fourth quarter of 2011, a decrease of 2.7% from the same period last year. Adjusted operating margin was 25.8%.*

Net income was $6.0 million compared to $5.5 million for the same period last year. The Company incurred non-cash charges related to the change in fair value of derivative liabilities of $0.05 million, stock-based compensation of $0.7 million, and impairment loss of goodwill of $2.5 million in the fourth quarter. Excluding these non-cash charges, the Company's adjusted net income from continuing operations would be $9.2 million, or $0.46 per fully diluted share, a slight decrease of 4.4% compared to $9.6 million, or $0.50 per fully diluted share, in the fourth quarter of 2010.*

Full Year 2011 Financial Results

Revenue for full year 2011 was $155.4 million compared to $153.3 million for the same period in 2010, an increase of 1.4%. Revenue from air-ticketing was $23.6 million compared to $24.2 million last year, a decrease of 2.3%. Revenue generated by the hotel reservation segment was $13.5 million compared to $14.3 million in 2010, a decrease of 6.0%. Revenue generated by package tours was $118.3 million compared to $114.8 million in 2009, an increase of 3.1%.

Gross profit was $42.2 million compared to $41.1 million for full year 2010, an increase of 2.6%. Gross profit margin for the full year of 2011 was 27.1% compared to 26.8% last year.

SG&A expenses totaled $10.7 million compared to $11.8 million for the same period last year, a decrease of 9.4%. SG&A expenses were 6.9% of revenue compared to 7.7% for the same period last year.

Income from operations decreased 2.1% to $28.8 million from $29.4 million in the full year 2010. The Company incurred non-cash charges related to stock-based compensation in the full year 2011 of $3.1 million compared to $4.9 million in the year earlier period. In addition, the Company recognized the impairment of its goodwill in the amount of $1.54 million, $0.63 million, and $0.35 million in its subsidiary Shanghai Lanbao Travel Service Co., Ltd. and affiliated entities, Huangshan Holiday Travel Service Co. and Hebei Tianyuan Travel Agency Co., Ltd., respectively, for the year ended December 31, 2011.

Excluding this non-cash charge, the Company's adjusted income from operations would be $34.4 million for the full year 2011, similar to 2010 Adjusted operating margin was 22.1%.*

Net income was $20.8 million compared to $22.0 million for the same period last year. The Company incurred non-cash charges related to the change in fair value of derivative liabilities of $0.5 million, stock-based compensation of $3.1 million, and impairment loss of goodwill of $2.5 million in the full year 2011.

Excluding these non-cash charges, adjusted net income would be $25.9 million, or $1.29 per fully diluted share, no change from $25.9 million, or $1.34 per fully diluted share, in the full year 2010.*

* See Table 1 for a reconciliation of operating income, net income and EPS to exclude non-cash charges related to the change in fair value of derivative liabilities and stock-based compensation.

Financial Condition

Cash and cash equivalents were $10.0 million as of December 31, 2011. Current assets and current liabilities as of December 31, 2011, were $142.7 million and $11.5 million, respectively, yielding working capital of $131.2 million. The Company has no long-term debt. For the twelve months ended December 31, 2010, net cash provided by operating activities was approximately $18.0 million.

Use of Adjusted Financial Measures

GAAP results for the three months ended December 31, 2011 include non-cash charges related to the change in fair value of derivative liabilities, stock-based compensation, and goodwill impairment loss. To supplement the Company's unaudited 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 from US 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.

Safe Harbor Statement

This news release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "going forward," "outlook" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control, which may cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.

About Universal Travel Group

Universal Travel Group ( OTC Pink: UTRA) 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.

For investor and media inquiries, please contact:

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

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

Christensen Beijing
Christian Arnell
Tel: +86 10-5826-4939
Carnell@ChristensenIR.com

Financial tables to follow:

UNIVERSAL TRAVEL GROUP

RECONCILIATION OF ADJUSTED NET INCOME AND DILUTED EPS

FOR THE THREE MONTHS AND TWELVE MONTHS ENDED DECEMBER 31, 2011 AND 2010














Three Months Ended


Three Months Ended


December 31, 2011


December 31, 2010


Net Income


Diluted EPS


Net Income


Diluted EPS

Adjusted Amount

$

9,225,140


$

0.46


$

9,647,502


$

0.50

Stock-based compensation

$

728,156


$

0.04


$

3,910,376


$

0.20

(Gain)/Loss in fair value of derivative liabilities

$

(47,701)


$

(0.00)


$

248,791


$

0.01

Impairment loss of goodwill

$

2,524,705


$

0.13


$

-


$

-

GAAP amount per consolidated statement of income

$

6,019,980


$

0.30


$

5,488,335


$

0.28

Weighted average number of shares - diluted

19,981,063






19,387,818

















Twelve Months Ended


Twelve Months Ended


December 31, 2011


December 31, 2010


Net Income


Diluted EPS


Net Income


Diluted EPS

Adjusted Amount

$

25,912,395


$

1.29


$

25,936,226


$

1.34

Stock-based compensation

$

3,110,491


$

0.15


$

4,901,222


$

0.25

(Gain)/Loss in fair value of derivative liabilities

$

(540,619)


$

(0.03)


$

(1,004,390)


$

(0.05)

Impairment loss of goodwill

$

2,524,705


$

0.13


$

-


$

-

GAAP amount per consolidated statement of income

$

20,817,818


$

1.03


$

22,039,394


$

1.14

Weighted average number of shares - diluted

20,162,979






19,387,818




























RECONCILIATION OF ADJUSTED INCOME FROM OPERATIONS

FOR THE THREE MONTHS AND TWELVE MONTHS ENDED DECEMBER 31, 2011 AND 2010














Three Months Ended


Three Months Ended


December 31, 2011


December 31, 2010



Operating Income



Operating Income

Adjusted Amount

$

12,104,496


$

12,439,216

Stock-based compensation

$

728,156


$

3,910,376

Impairment loss of goodwill

$

2,524,705


$

-

GAAP amount per consolidated statement of income

$

8,851,635


$

8,528,840














Twelve Months Ended


Twelve Months Ended


December 31, 2010


December 31, 2009



Operating Income



Operating Income

Adjusted Amount

$

34,392,472


$

34,273,350

Stock-based compensation

$

3,110,491


$

4,901,222

Impairment loss of goodwill

$

2,524,705


$

-

GAAP amount per consolidated statement of income

$

28,757,276


$

29,372,128

UNIVERSAL TRAVEL GROUP

CONSOLIDATED BALANCE SHEETS





December 31,



December 31,




2011

Unaudited



2010

ASSETS







Cash and cash equivalents



$

9,967,525



$

39,618,988

Restricted Cash




1,149,432




307,027

Short term investments




71,375,722




19,681,308

Accounts receivable, net




49,371,404




38,658,011

Other receivables and deposits, net




616,134




780,400

Trade deposit




8,831,828




8,173,426

Prepayments




1,360,625




1,216,857

Note receivable




-




2,314,259

Total Current Assets




142,672,670




110,750,276










Property & equipment, net




1,667,868




1,692,595

Intangible assets, net




2,397,196




3,110,882

Goodwill




21,984,204




24,508,909

Total Noncurrent Assets




26,049,268




29,312,386

Total Assets



$

168,721,938



$

140,062,662










LIABILITIES AND STOCKHOLDERS' EQUITY









Current liabilities









Accounts payable and accrued expenses



$

5,893,985



$

5,045,674

Customer deposits




2,045,121




2,203,487

Income tax payable




3,527,867




3,189,965

Total Current Liabilities




11,466,973




10,439,126










Warrants - derivative liability




270,310




810,929

Deferred tax liability




259,540




477,397

Long-term income tax payable




98,476




30,804

Total Liabilities




12,095,299




11,758,256










STOCKHOLDERS' EQUITY









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




-




-

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




19,898




19,898

Additional paid in capital




67,282,046




64,171,555

Statutory reserve




1,062,741




1,062,741

Retained earnings




80,442,004




59,624,186

Accumulated other comprehensive income




7,819,950




3,426,026

Total Stockholders' Equity




156,626,639




128,304,406

Total Liabilities and Stockholders' Equity



$

168,721,938



$

140,062,662

UNIVERSAL TRAVEL GROUP

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31,



2011

Unaudited


2010

Revenues






Air ticketing, net

$

23,639,051


$

24,189,452

Hotel reservation, net


13,452,721



14,303,080

Packaged tours, gross


118,332,077



114,826,414



155,423,849



153,318,946

Cost of services






Air ticketing, net


8,296,788



8,838,496

Hotel reservation, net


1,742,781



4,659,667

Packaged tours, gross


103,204,918



98,724,258



113,244,487



112,222,421







Gross Profit


42,179,362



41,096,525







Selling, general and administrative expenses


(10,686,344)



(11,790,250)

Gains/(Losses) on disposal of fixed assets


(211,037)



65,853

Impairment loss of goodwill


(2,524,705)



-

Income from operations


28,757,276



29,372,128







Other income (expense)






Other income (expense)


(122,406)



(28,183)

Gain on change of fair value of derivative liabilities


540,619



1,004,390

Interest income


1,050,514



143,102

Total other income


1,468,727



1,119,309







Income before income taxes


30,226,003



30,491,437







Provision for income taxes


9,408,185



8,452,043

Net Income

$

20,817,818


$

22,039,394







Comprehensive Income






Net income

$

20,817,818


$

22,039,394

Foreign currency translation adjustments


4,393,924



1,780,893

Total Comprehensive income

$

25,211,742


$

23,820,287







Net income per common share






Basic

$

1.05


$

1.19

Diluted

$

1.03


$

1.14







Weighted average common shares outstanding






Basic


19,898,235



18,493,832

Diluted


20,162,979



19,387,818

UNIVERSAL TRAVEL GROUP

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010



















Accumulated












Additional


Statutory


Retained


Other


Total




Common Stock


Paid In




Comprehensive


Stockholders'



Shares


Amount


Capital


Reserve


Earnings


Income


Equity























Balance December 31, 2009


16,714,457



16,714



37,671,645



372,144



37,915,251



1,645,133



77,620,887


Stock based compensation


-



-



4,901,222



-



-



-



4,901,222


Stock issued for acquisitions


326,635



327



2,833,491



360,138



-



-



3,193,956


Transfer to statutory reserves











330,459



(330,459)






-


Stock issued for cash net of offering costs


2,857,143



2,857



18,765,197



-



-



-



18,768,054


Net income


-



-



-



-



22,039,394



-



22,039,394


Foreign currency translation adjustments


-



-



-



-



-



1,780,893



1,780,893

Balance December 31, 2010


19,898,235


$

19,898


$

64,171,555


$

1,062,741


$

59,624,186


$

3,426,026


$

128,304,406


Stock based compensation


-



-



3,110,491



-



-



-



3,110,491


Net income


-



-



-



-



20,817,818



-



20,817,818


Foreign currency translation adjustments


-



-



-



-



-



4,393,924



4,393,924

Balance December 31, 2011 (Unaudited)


19,898,235


$

19,898


$

67,282,046


$

1,062,741


$

80,442,004


$

7,819,950


$

156,626,639

UNIVERSAL TRAVEL GROUP

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,



2011

Unaudited


2010

CASH FLOWS FROM OPERATING ACTIVITIES






Net income

$

20,817,818


$

22,039,394

Add:






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






Depreciation and amortization


1,247,001



1,557,483

Provision for doubtful accounts


239,512



474,443

Stock based compensation


3,110,491



4,901,222

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


(540,619)



(1,004,390)

(Gain)/Loss on disposal of fixed assets


211,037



(65,853)

Goodwill impairment loss


2,524,705



-

(Increase) / decrease in assets:






Restricted cash


(816,735)



(196,201)

Accounts receivable


(8,989,672)



(20,491,520)

Other receivable


193,044



514,636

Advances


-



442,559

Prepayments


(92,570)



(471,352)

Trade deposits


(319,373)



1,867,318

Increase / (decrease) in current liabilities:






Accounts payable and accrued expenses


632,030



1,754,490

Customer deposits


(244,452)



121,133

Income tax payable


204,304



1,086,884

Deferred tax liabilities


(217,857)



465,639

Long-term tax payable


67,672



30,045

Net cash provided by operating activities


18,026,336



13,025,930







CASH FLOWS FROM INVESTING ACTIVITIES






Purchase of property & equipment


(742,773)



(3,125,147)

Purchase of intangibles


-



(51,359)

Proceeds from disposal of fixed assets


80,565



5,698,488

(Increase)/Decrease in short term investments


(50,085,387)



(19,196,588)

(Increase)/Decrease in notes receivable


2,370,696



(536,163)

Acquisition deposits


-



4,101,052

Cash paid for acquisition - net of cash acquired


-



(15,782,799)

Net cash (used in) investing activities


(48,376,900)



(28,892,516)







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


699,101



142,779







Net change in cash and cash equivalents


(29,651,463)



3,044,247

Cash and cash equivalents, beginning balance


39,618,988



36,574,741

Cash and cash equivalents, ending balance

$

9,967,525


$

39,618,988







SUPPLEMENTAL DISCLOSURES:






Cash paid during the year for:






Interest payments

$

-


$

-

Income taxes

$

9,070,283


$

6,916,553







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
collection