SHENZHEN, China, May 21, 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.
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