Trunkbow Announces Preliminary Fourth Quarter and Full Year 2012 Financial Results

BEIJING, April 16, 2013 /PRNewswire/ -- Trunkbow International Holdings Limited (NASDAQ: TBOW) ("Trunkbow" or the "Company"), a leading provider of Mobile Payment Solutions ("MPS") and Mobile Value Added Services ("MVAS") in the PRC, today announced preliminary, unaudited financial results for its fourth quarter and full year ended December 31, 2012.

Full Year 2012 Financial Highlights

• Gross revenue was $35.5 million, compared with $29.7 million in 2011.
  • MVAS gross revenue increased to $21.6 million, compared with $17.4 million in 2011.   
  • MPS gross revenue in 2012 was $13.9 million, compared with $12.3 million in 2011.
• Gross profit in 2012 was $29.7 million, compared with $22.9 million in 2011; gross margin improved to 85.3%, compared with 78.9% in 2011.
• Net income totaled $12.7 million, or $0.34 per diluted share, compared with $16.9 million, or $0.46 per diluted share in 2011.
• As of December 31, 2012, cash and cash equivalents totaled $0.8 million.
• Collected approximately $3.9 million of outstanding accounts receivable as of December 31, 2012.

Fourth Quarter 2012 Financial Highlights

• Gross revenue was $13.6 million, compared with $9.7 million in the fourth quarter of 2011.
  • MPS gross revenue for the quarter was $7.7 million, compared with $8.2 million in the fourth quarter of 2011.
  • MVAS gross revenue increased to $6.0 million, compared with $1.5 million a year ago.
• Gross profit for the quarter was $12.2 million, compared with $8.3 million in the fourth quarter of 2011.
• Gross margin improved to 91.5%, compared with 86.7% in the fourth quarter of 2011.

2012 and Recent Business Highlights

• Announced that the Company's board of directors received a preliminary non-binding "going-private" transaction proposal letter, dated November 2, 2012.
• Extended cooperation with China Unicom through the deployment of a new terminal-based MPS platform in Sichuan and Heilongjiang Province.
• Signed approximately 140 merchants for implementation of Trunkbow-UnionPay mobile applet system. Mobile apps containing this payment functionality were introduced in the second half of 2012.
• Began development of cloud-based MPS services through partnership with experienced operators to offer hosted mobile payment services for small- and medium-sized businesses.
• Signed an agreement to develop and implement a new electronic payment system for China Minsheng Banking Corp., Ltd. ("CMBC"), China's first national joint-stock commercial bank, serving non state-owned enterprises, small businesses and high-end consumers. The new system will be designed to simplify mobile and Internet payments for 10 million CMBC credit cardholders.
• Continued the construction and began management and operation of the cloud data center through partnership with experienced operators to offer managed hosting services.

To date, no decisions have been made with respect to the Company's response to the going-private proposal. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated. The Company will provide relevant updates with respect to the going private transaction or any other transaction as appropriate. 

Fourth Quarter 2012 Results

Gross revenue in the fourth quarter of 2012 was $13.6 million, an increase of 40.2% year-over-year, compared with gross revenue of $9.7 million in the same period a year ago. The increase in gross revenue was primarily attributable to the growth of software sales.  Revenue from MVAS increased $4.5 million, or 302.1%, to $6.0 million for the fourth quarter of 2012, compared with $1.5 million in the same period of 2011. The increase in MVAS revenue was primarily  driven by the growth on MVAS software sales related to phone call and SMS management, mobile business card, color numbering and number change notification. Revenue from the Company's MPS offerings decreased 6.9% to $7.7 million for the fourth quarter of 2012, compared with $8.2 million in the same period of 2011. The decrease in MPS revenue was attributable to reduction of the MPS software sales.

Cost of revenue in the fourth quarter of 2012 was $1.1 million, compared with $1.3 million in the same period of 2011. The decrease in cost of revenue was primarily attributed to reduction in the system integration, which consumed significant hardware costs.

Gross profit in the fourth quarter of 2012 totaled $12.2 million, compared with $8.3 million in the fourth quarter of 2011. As a percentage of net revenue, gross margin was 91.5% in the fourth quarter of 2012, compared with 86.7% in the year-ago period. The year-over-year improvement in gross margin was attributable to the increase of software sales and decrease of revenues from system integration, which involves significantly higher hardware costs.

Operating expenses in the fourth quarter of 2012 were $6.5 million, an increase of 48.3% year-over-year. The increase in operating expenses was primarily related to an increase in allowance for doubtful accounts, provided for customers' receivables and advances to suppliers that are older than one year. The allowances provided for accounts receivable and advance to suppliers were $2.1 million and $2.5 million, respectively.

Operating income in the fourth quarter of 2012 was $5.7 million, compared with $3.9 million reported in the same period last year. The increase in operating income for the quarter was in line with the increase in revenue.

Net income attributable to Trunkbow was $5.0 million in the fourth quarter of 2012, compared with $4.8 million in the fourth quarter of 2011. Earnings per basic and diluted share in the fourth quarter of 2012 were $0.14 each, based on basic and diluted shares outstanding of 36.8 million. This compares with $0.13 per basic and diluted share based on basic and diluted shares outstanding of 36.8 million and 37.0 million, respectively, in the year-ago period.

Balance Sheet and Cash Flow

As of December 31, 2012, the Company had $0.8 million in cash and cash equivalents, compared with $6.1 million as of December 31, 2011. As of December 31, 2012, the Company had working capital of $50.5 million and total shareholders' equity of $95.4 million. Accounts receivable on December 31, 2012 totaled approximately $46.9 million. As December 31, 2012, the Company had collected approximately $3.9 million of these outstanding receivables.

Conference Call

The Company will host a conference call to discuss financial results for the fourth quarter and 2012 full year on April 16, 2013 at 8:00 a.m. EDT. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1 (718) 354-1231. International callers should dial +65 6723-9381. The passcode required is 35510300.

If you are unable to participate in the call at this time, a replay will be available for 14 days starting on April 16, 2013. To access the replay, please dial +1 (646) 254-3697, international callers dial +61 (2) 8199-0299, and enter the passcode 35510300.

About Trunkbow

Trunkbow International Holdings (NASDAQ: TBOW) is a leading provider of Mobile Payment Solutions ("MPS") and Mobile Value Added Solutions ("MVAS") in PRC. Trunkbow's solutions enable the telecom operators to offer their subscribers access to unique mobile applications, innovative tools, value-added services that create a superior mobile experience, and as a result generate higher average revenue per user and reduce subscriber churn. Since its inception in 2001, Trunkbow has established a proven track record of innovation, and has developed a significant market presence in both the Mobile Value Added and Mobile Payment solutions markets. Trunkbow supplies its mobile payment solutions to all three Chinese mobile telecom operators, as well as re-sellers, in several provinces of China. For more information, please visit www.trunkbow.com.

Safe Harbor Statement

This press release contains forward-looking statements that reflect the Company's current expectations and views of future events that involve known and unknown risks, uncertainties and other factors that may cause its actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such forward looking statements involve known and unknown risks and uncertainties, including but not limited to uncertainties relating to the Company's relationship with China's major telecom carriers and its resellers, competition from domestic and international companies, changes in technology, contributions from revenue sharing plans and general economic conditions. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. The results the Company is providing today are preliminary and unaudited and are subject to the conclusion of the audit of our financial statements, and could differ materially from the results disclosed today.  Information regarding these risks, uncertainties and other factors is included in the Company's annual report on Form 10-K and other filings with the SEC.

- FINANCIAL TABLES FOLLOW -

SOURCE Trunkbow International Holdings Limited

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