Trunkbow Announces Third Quarter 2012 Financial Results

           Trunkbow Announces Third Quarter 2012 Financial Results

PR Newswire

BEIJING, Nov. 14, 2012

BEIJING, Nov. 14, 2012 /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 financial results for its third quarter
ended September 30, 2012.

Third Quarter and Recent Financial and Business Highlights

  oGross revenue was $9.0 million, compared with $5.8 million in the third
    quarter of 2011.

       oMPS gross revenue for the quarter was $0.6 million, compared with
         $2.1 million in the third quarter of 2011.
       oMVAS gross revenue increased to $8.5 million, compared with $3.7
         million a year ago.

  oGross profit for the quarter was $7.0 million, compared with $4.3 million
    in the third quarter of 2011; quarterly gross margin improved to 78.6%,
    compared with 77.2% in the third quarter of 2011.
  oNet income totaled $3.2 million, or $0.09 per diluted share, compared with
    $0.8 million, or $0.02 per diluted share in the third quarter of 2011.
  oAs of September 30, 2012, cash and cash equivalents totaled $0.3 million.
  oCollected approximately $4.1 million of outstanding accounts receivable as
    of November 12, 2012.
  oReaffirmed full-year 2012 net income guidance of approximately $17
  oAnnounced that the Company's board of directors has received a preliminary
    non-binding "going-private" transaction proposal letter, dated November 2,
  oSigned 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. New system will be designed to
    simplify mobile and Internet payments for 10 million CMBC credit

"Our results for the third quarter of 2012 were driven largely by the strong
performance in our MVAS business, partially offset by weakness in the MPS
segment due to a reduction in system integration, software and maintenance
sales. We continue to execute on our MPS strategy, transitioning from one-time
platform centric sales to a recurring model based on revenue sharing and
transaction processing," said Mr. Qiang Li, Chief Executive Officer of
Trunkbow. "We had over 5,000 MPS merchant partners at the end of September,
and are working to further grow this number to expand our recurring revenue

"In addition to merchant and subscriber acquisition in our MPS segment, we are
also implementing our data center projects in Shanghai and Guangzhou. We have
invested approximately US$12.2 million in these projects to-date. We are
making substantial investments to advance our existing business and develop
new services to strengthen the foundation for sustainable long-term growth and
improved earnings performance." 

Third Quarter 2012 Results

Gross revenue in the third quarter of 2012 was $9.0 million, an increase of
57.0% year-over-year, compared with gross revenue of $5.8 million in the same
period a year ago. The increase in gross revenue was primarily attributable to
the significant increase of the software sales. Revenue from MVAS increased
$4.8 million, or 131.3%, to $8.5 million for the third quarter of 2012,
compared with $3.66 million in the same period of 2011. The increase in MVAS
revenue was primarily attributed to growth in MVAS software sales. Revenue
from the Company's MPS offerings decreased 72.2% to $0.6 million for the third
quarter of 2012, compared with $2.1 million in the same period of 2011. The
decrease in MPS revenue was attributable to a reduction of MPS system
integration and software sales.

Cost of revenue in the third quarter of 2012 was $1.9 million, compared with
$1.3 million in the same period of 2011. The increase in cost of revenue was
in line with the increase in revenue.

Gross profit in the third quarter of 2012 totaled $7.0 million, compared with
$4.3 million in the third quarter of 2011. As a percentage of net revenue,
gross margin was 78.6% in the third quarter of 2012, compared with 77.2% in
the year-ago period. The year-over-year improvement in gross margin was
attributable to the decrease of revenues from system integration, which
involves significantly higher hardware costs.

Operating expenses in the third quarter of 2012 were $3.3 million, an increase
of 2.1% year-over-year. The increase in operating expenses was primarily
related to a bad debt provision of $0.5 million provided to accounts
receivable over one year old, partially offset by lower advertisement and
promotion expenses and a decrease in general and administrative expenses. 

Operating income in the third quarter of 2012 was $3.7 million, compared with
$1.1 million reported in the same period last year. The increase in operating
profit for the quarter was in line with the increase in revenue.

Net income attributable to Trunkbow was $3.2 million in the third quarter of
2012, compared with $0.8 million in the third quarter of 2011. Earnings per
basic and diluted share in the third quarter of 2012 were $0.09 each, based on
basic and diluted shares outstanding of 36.81 million. This compares with
$0.02 per basic and diluted share, respectively, based on basic and diluted
shares outstanding of 36.6 million and 37.7 million, respectively, in the
year-ago period.

Balance Sheet and Cash Flow

As of September 30, 2012, the Company had $0.3 million in cash and cash
equivalents, compared with $6.1 million as of December 31, 2011. As of
September 30, 2012, the Company had working capital of $46.3 million and total
shareholders' equity of $90.2 million.Accounts receivable on September 30,
2012 totaled approximately $45.2 million. As of November 12, 2012, the Company
had collected approximately $4.1 million of these outstanding receivables.

Business Outlook

Trunkbow reaffirmed its 2012 financial guidance, which calls for approximately
$17 million in net income.

Mr. Li concluded, "We are pleased with the ongoing shift from platform
installations to recurring revenue from shared services and transaction
processing. We continue to pursue the development of our hosted services
offering, which we believe can become a long-term growth driver for our
businesses. We are confident that we can continue the transformation of our
businesses and achieve our strategic objectives."

Conference Call

The Company will host a conference call to discuss financial results for the
third quarter 2012 on November 14, 2012 at 8:00 p.m. ET. 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 63838568.

If you are unable to participate in the call at this time, a replay will be
available for 14 days starting on November 14, 2012. To access the replay,
please dial +1 (646) 254-3697, international callers dial +61 (2) 8199-0299,
and enter the passcode 63838568.

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

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. You should understand that
the Company's actual future results may be materially different from and worse
than what the Company expects. 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.

Contact Information
In China:                               In the U.S.
Trunkbow International Holdings Limited The Piacente Group
Ms Alice Ye, Chief Financial Officer    Brandi Floberg/Lee Roth
Phone: +86 (10) 8571-2518 (Beijing)     Phone: + (1) 212-481-2050 (New York)
Email:                  E-mail:


                                                   September30,  December31,
                                                   2012           2011
Current assets
Cash and cash equivalents                          $ 339,139      $ 6,139,589
Accounts receivable, net                             45,219,905     41,147,767
Advances to suppliers                                6,825,876      9,783,454
Prepayment                                           1,627,935      316,258
Other current assets                                 7,767,163      4,040,152
Due from directors                                   48,859         758,033
Inventories                                          6,345,902      5,569,624
Deferred tax asset                                   294,397        117,952
Total current assets                                 68,469,176     67,872,829
Property and equipment, net                          38,758,514     20,775,594
Land use right, net                                  5,845,219      5,905,583
Intangible assets, net                               274,576        33,958
Long-term prepayment                                 524,315        2,733,363
TOTAL ASSETS                                       $ 113,871,800  $ 97,321,327
Current liabilities
Accounts payable                                   $ 2,232,026    $ 2,238,179
Accrued expenses and other current liabilities       2,613,266      2,216,128
Short-term loan                                      13,751,679     6,460,945
Due to directors                                     9,772          11,959
Taxes payable                                        3,521,343      4,209,907
Total current liabilities                            22,128,086     15,137,118
Deferred revenue                                     1,501,620      0
Total liabilities                                    23,629,706     15,137,118
Stockholders' equity
Preferred Stock: par value $0.001, authorized
10,000,000 shares, none issued and outstanding at    0              0
September 30, 2012 and December 31, 2011,
Common Stock: par value $0.001, authorized
190,000,000 shares, 36,807,075 shares issued and     36,807         36,807
outstanding at September 30, 2012 and December
31, 2011, respectively
Additional paid-in capital                           39,671,966     39,671,966
Appropriated retained earnings                       4,504,667      4,504,667
Unappropriated retained earnings                     42,687,053     34,989,429
Accumulated other comprehensive income               3,341,601      2,981,340
Total stockholders' equity                           90,242,094     82,184,209
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $ 113,871,800  $ 97,321,327

                 ThreeMonthsEndedSeptember  NineMonthsEndedSeptember30,
                 2012            2011          2012             2011
                 (Unaudited)     (Unaudited)   (Unaudited)      (Unaudited)
Revenues         $  9,048,886    $ 5,765,327   $  21,817,127    $  19,984,170
Less: Business
tax and             168,007        169,089        406,000          472,644
Net revenues        8,880,879      5,596,238      21,411,127       19,511,526
Cost of             1,898,626      1,273,984      3,968,955        4,858,522
Gross profit        6,982,253      4,322,254      17,442,172       14,653,004
Selling and
distribution        662,343        700,242        2,535,720        1,668,383
General and
administrative      2,087,644      2,109,943      5,898,692        4,617,500
Research and
development         517,891        390,834        1,576,808        1,026,913
                    3,267,878      3,201,019      10,011,220       7,312,796
Income from         3,714,375      1,121,235      7,430,952        7,340,208
Other income
Interest income     58,734         29,533         174,305          102,274
Interest            (297,059)      (334)          (733,193)        (51,230)
Refund of           6,597          0              1,549,765        1,307,836
value-added tax
Government          178,478        0              300,427          4,740,134
Other income        37,160         40,009         92,710           79,837
Other expenses      0              (56,794)       (12,391)         (130,959)
                    (16,090)       12,414         1,371,623        6,047,892
Income before
income tax          3,698,285      1,133,649      8,802,575        13,388,100
Income tax          516,246        302,582        1,104,951        1,241,572
Net income          3,182,039      831,067        7,697,624        12,146,528
currency            (163,043)      670,848        360,261          1,784,893
Comprehensive    $  3,018,996    $ 1,501,915   $  8,057,885     $  13,931,421
average number
of common
Basic               36,807,075     36,649,466     36,807,075       36,080,866
Diluted             36,807,075     37,733,261     36,813,912       37,283,765
Earnings per
Basic            $  0.09         $ 0.02        $  0.21          $  0.34
Diluted          $  0.09         $ 0.02        $  0.21          $  0.33

                                               Nine Months Ended September 30,
                                               2012             2011
                                               (Unaudited)      (Unaudited)
Net income                                     $  7,697,624     $ 12,146,528
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization                     739,581         220,807
Provision for doubtful debts                      1,908,674       0
Deferred taxes                                    (175,335)       0
Share-based compensation expenses                 0               262,500
Changes in operating assets and liabilities:
Accounts receivable                               (5,778,091)     (9,923,613)
Advance to suppliers                              3,017,886       2,927,681
Prepayment                                        (1,311,965)     0
Other current assets                              (2,920,921)     (1,029,348)
Due from directors                                713,968         (599,968)
Inventories                                       (728,629)       3,611,360
Long-term prepayment                              2,225,864       (2,285,550)
Accounts payable                                  (17,497)        (277,580)
Accrued expenses and other current liabilities    386,447         1,231,409
Amounts due to directors                          (2,251)         0
Taxes payable                                     (710,814)       (539,393)
Deferred revenue                                  1,503,640       0
Net cash flowsprovided byoperating              6,548,181       5,744,833
Cash flows from investing activities
Acquisition of property and equipment and         (18,819,394)    (20,059,801)
intangible assets
Collection (Payment on) loans to third parties    (791,390)       2,870,023
Acquisition of land use right                     0               (5,847,835)
Acquisition of Delixunda Company (net of cash     0               (38,173)
Net cash flows used ininvesting activities       (19,610,784)    (23,075,786)
Cash flows from financing activities
Proceeds from issuance of common stock (net of    0               17,332,251
finance costs)
Proceeds from (repayment of ) bank loan           7,267,819       (1,846,949)
Restricted deposit collected from bank            0               369,390
Proceeds from exercise of warrants                0               610,000
Net cash flows provided by financing              7,267,819       16,464,692
Effect of exchange rate fluctuation on cash       (5,666)         124,652
and cash equivalents
Net increase in cash and cash equivalents         (5,800,450)     (741,609)
Cash and cash equivalents–beginning of the      6,139,589       10,259,750
Cash and cash equivalents–end of the period  $  339,139       $ 9,518,141
Supplemental disclosure of cash flow
Cash paid for interest                         $  733,193       $ 51,230
Cash paid for income taxes                     $  1,619,878     $ 304,623
Supplemental disclosure of noncash financing
Issuance of 30,000 common shares at $5.00 each $  0             $ 150,000
for the legal fee

SOURCE Trunkbow International Holdings Limited

Press spacebar to pause and continue. Press esc to stop.