Trunkbow Announces Third Quarter 2013 Unaudited Financial Results

BEIJING, Nov. 14, 2013 /PRNewswire-FirstCall/ -- 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 unaudited financial results for the third quarter ended September 30, 2013.

Third Quarter 2013Financial Highlights

• Gross revenues were $6.2 million, compared with $9.0 million in the third quarter of 2012.
  • MPS gross revenues for the quarter were $0.7 million, compared with $0.6 million in the third quarter of 2012.
  • MVAS gross revenues were $5.5 million, compared with $8.5 million a year ago.
• Gross profit was $5.4 million, compared with $7.0 million in the third quarter of 2012.
• Gross margin was 88.5%, compared with 78.6% in the third quarter of 2012.
• Net income was $4.1 million, or $0.11 per basic and diluted share, compared with $3.2 million, or $0.09 per basic and diluted share in the third quarter of 2012.  

Third Quarter 2013 and Recent Business Highlights

• Trunkbow's total merchant installed base was over 5,400 as of quarter-end, including approximately 180 merchants who are implementing Trunkbow's mobile applet solution.
• The Company estimates approximately 20 mobile apps incorporating this technology are currently available to iOS and Android smartphone users, with approximately 160 others in development.
• Entered final stage of construction for cloud data center in Guangzhou. The Company expects to launch its e-cloud business through this data center in early 2014.
• Continued the construction of a second cloud data center. The Shanghai-based center is expected to be fully operational in 2014.

To date, no decisions have been made with respect to the Company's response to the going-private proposal previously announced on November 2, 2012. 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.

Third Quarter 2013 Results

Gross revenue in the third quarter of 2013 was $6.2 million, compared with gross revenue of $9.0 million in the same period a year ago. The decline in gross revenue was primarily attributable to a decrease in systems integration revenue from the Company's MVAS platforms. Revenue from MVAS declined to $5.5 million, from $8.5 million for the third quarter of 2012, primarily as a result of the reduction in MVAS software sales related to SMS/phone-call management and mobile business card offerings. Revenue from the Company's MPS offerings totaled $0.7 million, compared with $0.6 million in the third quarter of 2012. The increase in MPS revenue was due to increased MPS software sales.

Cost of revenues in the third quarter of 2013 was $0.7 million, compared with $1.9 million in the same period of 2012. The decrease in cost of revenues was primarily attributable to a reduction in sales of MVAS integration and the associated decrease in equipment costs.

Gross profit in the third quarter of 2013 totaled $5.4 million, compared with $7.0 million in the third quarter of 2012. As a percentage of net revenue, gross margin was 88.5% in the third quarter of 2013, compared with 78.6% in the year-ago period. The increase in gross margin was attributable to the decrease in system integration revenues, which carry higher hardware costs.

Operating expenses in the third quarter of 2013 were $0.7 million, compared with $3.3 million in the third quarter of 2012. The decrease in operating expenses was primarily attributable to a reversal of $1.0 million in allowance for doubtful debt and lower advertising and promotion expenses, as well as continued implementation of well as cost control measures.

Operating income was $4.7 million and $3.7 million for the third quarter of 2013 and 2012, respectively.

Net income attributable to Trunkbow was $4.1 million in the third quarter of 2013, compared with $3.2 million in the same period of 2012. Earnings per basic and diluted share was $0.11 in the third quarter of 2013, compared with $0.09 in the same period of 2012, both based on 36.8 million basic and diluted shares outstanding.

Balance Sheet and Cash Flow

As of September 30, 2013, the Company had $1.9 million in cash and cash equivalents, compared with $0.8 million as of December 31, 2012. As of September 30, 2013, the Company had working capital of approximately $57.2 million and total stockholders' equity of $99.3 million. Accounts receivable on September 30, 2013 totaled approximately $50.8 million. As of November 14, 2013, the Company had collected approximately $10.3 million of these outstanding receivables.

Nasdaq Notice of Compliance

On June 28, 2013, the Company received a letter from the Nasdaq Stock Market LLC ("Nasdaq"), which stated that, based upon the closing bid price for the last 30 consecutive business days, the Company no longer meets the requirement set forth in Nasdaq Rule 5550(a)(2), which requires listed securities to maintain a minimum bid price of $1 per share. On October 3, 2013, the Company received a letter from the Nasdaq, which stated that, for the last 10 consecutive business days, from September 29, 2013 through October 2, 2013, the closing bid price of the Company's common stock has been at $1.00 per share or greater. Accordingly, the Company regained compliance with Listing Rule 5450(a)(1).

Conference Call

The Company will host a conference call to discuss financial results for the third quarter ended September 30, 2013 on November 15, 2013 at 8:00 a.m. EST. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1 (866) 586-2813. International callers should dial +61 2 8524 6650. The passcode required is 10585190.

If you are unable to participate in the call at this time, a replay will be available for 14 days starting on November 15, 2013. To access the replay, please dial +1 (855) 452-5696, international callers dial +61 2 8199 0299, and enter the passcode 10585190.

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, status of its pending "go-private" transaction, 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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