TRAVELZOO - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 16, 2015

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Exhibit 99.1

Travelzoo Inc.
590 Madison Avenue
37th Floor
New York, NY 10022

Investor Relations Contact:
Glen Ceremony
Chief Financial Officer Travelzoo Inc.
+1 (212) 484-4998
ir@travelzoo.com 


FOR IMMEDIATE RELEASE

Travelzoo Reports First Quarter 2015 Results

NEW YORK, April 16, 2015 - Travelzoo Inc. (NASDAQ: TZOO):

•
Revenue of $36.5 million, down 9% year-over-year
•
Operating profit of $3.8 million
•
Earnings per share of $0.13, compared to $0.31 in the prior-year period
•
Cash flow provided by operations was $2.4 million

Travelzoo Inc., a global Internet media company, today announced financial results for the first quarter ended March 31, 2015, with revenue of $36.5 million, a decrease of 9% year-over-year. Net income was $1.9 million, with diluted earnings per share of $0.13, down from $0.31 in the prior-year period.

"In spite of the strong dollar we achieved a sequential 16% increase in revenue over the previous quarter," said Chris Loughlin, chief executive officer. "Travelzoo added more new members than in any other quarter over the past three years."






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North America
North America business segment revenue decreased 6% year-over-year to $24.7 million. Operating income for the first quarter was $2.1 million, or 8% of revenue, down from $4.6 million, or 17% of revenue, in the prior-year period.

Europe
Europe business segment revenue decreased 15% year-over-year to $11.8 million. In local currency terms, revenue decreased 7% year-over-year. Operating profit for the first quarter was $1.7 million, or 15% of revenue, down from $2.4 million, or 17% of revenue in the prior-year period.

Members
Travelzoo had a total unduplicated number of members in North America and Europe of 24.5 million as of March 31, 2015, up 1% from December 31, 2014. In North America, total unduplicated number of members was 17.2 million as of March 31, 2015, up 1% from December 31, 2014. In Europe, total unduplicated number of members was 7.5 million as of March 31, 2015, up 2% from December 31, 2014.

Income Taxes
Income tax expense was $1.8 million, compared to $2.5 million income tax expense in the prior-year period. The effective income tax rate was 49%, up from 35% in the prior-year period, driven by certain state tax reserves recorded in the current period.

Asset Management
During the first quarter of 2015, Travelzoo generated $2.4 million of cash from operating activities. Accounts receivable increased by $619,000 over the prior-year period to $16.0 million. Accounts payable decreased by $6.5 million over the prior-year period to $22.5 million. Capital expenditures were $184,000, down from $1.0 million in the prior-year period. As of March 31, 2015, cash and cash equivalents were $54.0 million.

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Conference Call
Travelzoo will host a conference call to discuss first quarter results at 11:00 a.m. ET today. Please visit http://www.travelzoo.com/earnings to
•
download the management presentation (PDF format) to be discussed in the conference call;
•
access the webcast.

About Travelzoo
Travelzoo Inc. is a global Internet media company. With more than 27 million members in North America, Europe, and Asia Pacific and 25 offices worldwide, Travelzoo® publishes deals from more than 2,000 travel and entertainment companies. Travelzoo’s deal experts review offers to find the best deals and confirm their true value. In Asia Pacific, Travelzoo is independently owned and operated by Travelzoo (Asia) Ltd. and Travelzoo Japan K.K. under a license agreement with Travelzoo Inc.


Certain statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include, but are not limited to, statements about our plans, objectives, expectations, prospects and intentions, markets in which we participate and other statements contained in this press release that are not historical facts. When used in this press release, the words “expect”, “predict”, “project”, “anticipate”, “believe”, “estimate”, “intend”, “plan”, “seek” and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including changes in our plans, objectives, expectations, prospects and intentions and other factors discussed in our filings with the SEC. We cannot guarantee any future levels of activity, performance or achievements. Travelzoo undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release. Travelzoo and Top 20 are registered trademarks of Travelzoo. All other names are trademarks and/or registered trademarks of their respective owners.


###


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Travelzoo Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
 
 
Three months ended
 
 March 31,
 
2015
 
2014
Revenues
$
36,492

 
$
40,195

Cost of revenues
4,234

 
4,777

Gross profit
32,258

 
35,418

Operating expenses:
 
 
 
Sales and marketing
17,996

 
17,843

General and administrative
10,460

 
10,578

Total operating expenses
28,456

 
28,421

Income from operations
3,802

 
6,997

Other income (loss)
(87
)
 
122

Income before income taxes
3,715

 
7,119

Income taxes
1,806

 
2,481

Net income
$
1,909

 
$
4,638

Net income per share:
 
 
 
Basic
$
0.13

 
$
0.31

Diluted
$
0.13

 
$
0.31

Weighted average shares:
 
 
 
Basic
14,730

 
14,880

Diluted
14,730

 
14,970



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Travelzoo Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
 
 
March 31,
2015
 
December 31,
2014
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
53,975

 
$
54,812

Accounts receivable, net
15,974

 
14,608

Income taxes receivable
2,885

 
3,756

Deposits
598

 
74

Prepaid expenses and other
2,530

 
2,802

Deferred tax assets
1,482

 
1,311

Total current assets
77,444

 
77,363

Deposits
559

 
1,087

Deferred tax assets
1,482

 
1,460

Restricted cash
1,325

 
1,393

Property and equipment, net
8,693

 
9,022

Intangible assets, net
104

 
163

Total assets
$
89,607

 
$
90,488

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
22,526

 
$
23,008

Accrued expenses and other
10,518

 
10,135

Deferred revenue
1,470

 
1,192

Income tax payable
689

 
574

Reserve for unexchanged promotional shares
—

 
1,393

Total current liabilities
35,203

 
36,302

Long-term tax liabilities
11,608

 
10,936

Long-term deferred rent and other
3,194

 
3,436

Total liabilities
50,005

 
50,674

Common stock
163

 
163

Treasury stock
(21,517
)
 
(21,517
)
Additional paid-in capital
11,191

 
11,043

Accumulated other comprehensive loss
(5,266
)
 
(2,997
)
Retained earnings
55,031

 
53,122

Total stockholders’ equity
39,602

 
39,814

Total liabilities and stockholders’ equity
$
89,607

 
$
90,488



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Travelzoo Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) 
 
Three months ended
 
 March 31,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Net income
$
1,909

 
$
4,638

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
771

 
701

Deferred income taxes
(222
)
 
76

Stock-based compensation
148

 
395

Provision for losses on accounts receivable
25

 
(52
)
Net foreign currency effects
111

 
(9
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(1,764
)
 
(1,288
)
Deposits
(37
)
 
133

Income tax receivable
851

 
1,266

Prepaid expenses and other
281

 
447

Accounts payable
201

 
(2,984
)
Accrued expenses and other
729

 
(1,179
)
Income tax payable
144

 
722

Reserve for unexchanged promotional shares
(1,393
)
 
(1,226
)
Other non-current liabilities
672

 
111

Net cash provided by operating activities
2,426

 
1,751

Cash flows from investing activities:
 
 
 
Release of restricted cash
—

 
200

Purchases of property and equipment
(184
)
 
(1,019
)
Net cash used in investing activities
(184
)
 
(819
)
Cash flows from financing activities:
 
 
 
Repurchase of common stock
—

 
(5,569
)
Reverse/forward stock split, including transaction costs
—

 
(479
)
Net cash used in financing activities
—

 
(6,048
)
Effect of exchange rate on cash and cash equivalents
(3,079
)
 
(72
)
Net decrease in cash and cash equivalents
(837
)
 
(5,188
)
Cash and cash equivalents at beginning of period
54,812

 
66,223

Cash and cash equivalents at end of period
$
53,975

 
$
61,035

Supplemental disclosure of cash flow information:
 
 
 
Cash paid for income taxes, net
$
361

 
$
335



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Travelzoo Inc.
Segment Information
(Unaudited)
(In thousands)
 
Three months ended March 31, 2015
North
America
 
Europe
 
Elimination
 
Consolidated
Revenue from unaffiliated customers
$
24,713

 
$
11,779

 
$
—

 
$
36,492

Intersegment revenue
257

 
38

 
(295
)
 
—

Total net revenues
24,970

 
11,817

 
(295
)
 
36,492

Operating income
$
2,080

 
$
1,722

 
$
—

 
$
3,802

Three months ended March 31, 2014
North
America
 
Europe
 
Elimination
 
Consolidated
Revenue from unaffiliated customers
$
26,353

 
$
13,842

 
$
—

 
$
40,195

Intersegment revenue
221

 
12

 
(233
)
 
—

Total net revenues
26,574

 
13,854

 
(233
)
 
40,195

Operating income
$
4,604

 
$
2,393

 
$
—

 
$
6,997

 
 
 
 
 
 
 
 

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