TRAVELZOO - FORM 8-K - EX-99.1 - EXHIBIT 99.1 6.30.16 - July 28, 2016

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Exhibit 99.1
 
Travelzoo
590 Madison Avenue
37th Floor
New York, NY 10022

Investor Relations:
Molly Yu
ir@travelzoo.com 


FOR IMMEDIATE RELEASE

Travelzoo Reports Second Quarter 2016 Results

NEW YORK, July 28, 2016 — Travelzoo Inc. (NASDAQ: TZOO):

•
Revenue of $34.0 million, down 6% year-over-year in constant currencies
•
Operating profit of $3.8 million
•
Earnings per share of $0.14, compared to $0.06 in the prior-year period
•
Cash flow from operations of $2.5 million

Travelzoo, a global media commerce company, today announced financial results for the second quarter ended June 30, 2016, with revenue of $34.0 million and operating income of $3.8 million. In nominal terms, revenue decreased by 7% year-over-year. In constant currencies, revenue decreased by 6% year-over-year. Net income was $2.0 million, up 140% year-over-year. Diluted earnings per share (EPS) were $0.14, up from $0.06 in the prior-year period.

“Our strategy of publishing high-quality deals, combined with efficient execution, has led to increased operating profits in Europe and North America” said Holger Bartel, Chairman and Global CEO. “We intend to leverage Travelzoo’s global reach and trusted brand to grow revenue and increase profitability in future periods.”






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Asia Pacific
Asia Pacific business segment revenue decreased 10% year-over-year to $2.4 million. In constant currencies, revenue decreased 10% year-over-year. Operating loss for the second quarter was $1.2 million, compared to an operating loss of $268,000 in the prior-year period.

Europe
Europe business segment revenue decreased 5% year-over-year to $9.7 million. In constant currencies, revenue decreased 2% year-over-year. Operating income for the second quarter was $1.8 million, or 18% of revenue, up from $47,000, or 0.5% of revenue in the prior-year period.

North America
North America business segment revenue decreased 8% year-over-year to $21.9 million. Operating income for the second quarter was $3.2 million, or 15% of revenue, up from $2.5 million or 11% of revenue in the prior-year period.

Members
As of June 30, 2016, Travelzoo had a worldwide unduplicated number of members of 28.9 million. In Asia Pacific, unduplicated number of members was 3.6 million as of June 30, 2016, up 5% from June 30, 2015. In Europe, unduplicated number of members was 8.1 million as of June 30, 2016, up 8% from June 30, 2015. In North America, unduplicated number of members was 17.4 million as of June 30, 2016, up 1% from June 30, 2015.

Income Taxes
Income tax expense was $1.7 million, compared to a $1.3 million income tax expense in the prior-year period. The effective income tax rate was 45%, down from 60% in the prior-year period, driven primarily by the geographic mix of taxable income.

Asset Management
During the second quarter of 2016, Travelzoo generated $2.6 million of cash from operating activities. Accounts receivable decreased by $407,000 over the prior-year period to $18.4 million. Accounts payable decreased by $7.6 million over the prior-year period to $20.8 million. Capital expenditures were $503,000, down from $564,000 in the prior-year period. As of June 30, 2016, cash and cash equivalents were $27.6 million.


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Other Information
Travelzoo Inc.'s financial results have been adjusted to include the financial results of Asia Pacific for the current and prior periods. In addition, certain prior period statement of operations amounts have been reclassified to conform to current period presentation primarily due to the allocation of facilities costs and separate disclosure of product development costs. Management presents year-over-year revenue percentage rates of change in constant currencies, calculated using prior-year period foreign currency rates on current-year period non-US revenue, as it believes this is a useful metric that facilitates comparison to historical performance.

Conference Call
Travelzoo will host a conference call to discuss second 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 is a global media commerce company. With more than 28 million members in Asia Pacific, Europe, and North America and 25 offices worldwide, Travelzoo® publishes offers from more than 2,000 travel, entertainment and local companies. Travelzoo’s deal experts review offers to find the best deals and confirm their true value.

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
 
Six months ended
 
 June 30,
 
 June 30,
 
2016
 
2015
 
2016
 
2015
Revenues
$
34,046

 
$
36,792

 
$
68,850

 
$
75,937

Cost of revenues
3,612

 
5,208

 
7,621

 
9,754

Gross profit
30,434

 
31,584

 
61,229

 
66,183

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
19,135

 
20,715

 
38,094

 
42,792

Product development
2,089

 
3,206

 
4,964

 
6,295

General and administrative
5,434

 
5,335

 
11,247

 
11,786

Total operating expenses
26,658

 
29,256

 
54,305

 
60,873

Income from operations
3,776

 
2,328

 
6,924

 
5,310

Other income (loss)
(91
)
 
(218
)
 
42

 
(664
)
Income before income taxes
3,685

 
2,110

 
6,966

 
4,646

Income taxes
1,665

 
1,268

 
2,897

 
3,074

Net income
$
2,020

 
$
842

 
$
4,069

 
$
1,572

Net income per share:
 
 
 
 
 
 
 
Basic
$
0.14

 
$
0.06

 
$
0.29

 
$
0.11

Diluted
$
0.14

 
$
0.06

 
$
0.29

 
$
0.11

Weighted average shares:
 
 
 
 
 
 
 
Basic
14,066

 
14,730

 
14,246

 
14,730

Diluted
14,066

 
14,730

 
14,246

 
14,730



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Travelzoo Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
 
 
June 30,
2016
 
December 31,
2015
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
27,560

 
$
35,128

Accounts receivable, net
18,400

 
16,398

Income taxes receivable
833

 
1,356

Deposits
488

 
782

Prepaid expenses and other
1,828

 
2,167

Deferred tax assets
1,129

 
1,230

Total current assets
50,238

 
57,061

Deposits
719

 
501

Deferred tax assets
570

 
1,769

Restricted cash
1,398

 
1,328

Property and equipment, net
7,228

 
7,905

Other assets
—

 
15

Total assets
$
60,153

 
$
68,579

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
20,843

 
$
23,655

Accrued expenses and other
10,982

 
10,140

Deferred revenue
1,040

 
1,085

Income tax payable
1,639

 
477

Note payable to related party
—

 
5,658

Total current liabilities
34,504

 
41,015

Long-term tax liabilities
3,053

 
3,000

Long-term deferred rent and other
2,906

 
3,177

Total liabilities
40,463

 
47,192

Common stock
144

 
150

Additional paid-in capital
1,716

 
7,759

Accumulated other comprehensive loss
(3,625
)
 
(3,908
)
Retained earnings
21,455

 
17,386

Total stockholders’ equity
19,690

 
21,387

Total liabilities and stockholders’ equity
$
60,153

 
$
68,579



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Travelzoo Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) 
 
Three months ended
 
Six months ended
 
 June 30,
 
 June 30,
 
2016
 
2015
 
2016
 
2015
Cash flows from operating activities:
 
 
 
 
 
 
 
Net income
$
2,020

 
$
842

 
$
4,069

 
$
1,572

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
608

 
687

 
1,250

 
1,510

Deferred income taxes
233

 
(20
)
 
(211
)
 
(242
)
Stock-based compensation
230

 
148

 
442

 
296

Provision for losses on accounts receivable
36

 
25

 
44

 
52

Net foreign currency effects
(23
)
 
(54
)
 
236

 
(165
)
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
(1,241
)
 
(996
)
 
(2,265
)
 
(2,876
)
Deposits
(25
)
 
91

 
38

 
73

Income tax receivable
(397
)
 
830

 
525

 
1,681

Prepaid expenses and other
147

 
140

 
182

 
635

Accounts payable
(740
)
 
(1,732
)
 
(2,210
)
 
(1,236
)
Accrued expenses and other
937

 
(421
)
 
484

 
143

Income tax payable
665

 
(121
)
 
1,268

 
23

Reserve for unexchanged promotional shares
—

 
—

 
—

 
(1,393
)
Other non-current liabilities
46

 
123

 
53

 
795

Net cash provided by (used in) operating activities
2,496

 
(458
)
 
3,905

 
868

Cash flows from investing activities:
 
 
 
 
 
 
 
Release of restricted cash
—

 
—

 
—

 
57

Purchases of property and equipment
(503
)
 
(564
)
 
(648
)
 
(753
)
Net cash used in investing activities
(503
)
 
(564
)
 
(648
)
 
(696
)
Cash flows from financing activities:
 
 
 
 
 
 
 
Payment for Asia Pacific business
—

 
—

 
58

 
—

Payment of loan to related party
 
 
—

 
(5,658
)
 
—

Proceeds from related party loan
—

 
1,500

 
—

 
2,250

Decrease in bank overdraft
—

 
(281
)
 
—

 
(237
)
Repurchase of common stock, net
(3,048
)
 
—

 
(4,956
)
 


Net cash provided by (used in) financing activities
(3,048
)
 
1,219

 
(10,556
)
 
2,013

Effect of exchange rate on cash and cash equivalents
(192
)
 
1,698

 
(269
)
 
(1,125
)
Net increase (decrease) in cash and cash equivalents
(1,247
)
 
1,895

 
(7,568
)
 
1,060

Cash and cash equivalents at beginning of period
28,807

 
54,582

 
35,128

 
55,417

Cash and cash equivalents at end of period
$
27,560

 
$
56,477

 
$
27,560

 
$
56,477

Supplemental disclosure of cash flow information:
 
 
 
 
 
 
 
Cash paid for income taxes, net
$
1,022

 
$
372

 
$
1,072

 
$
733

Cash paid for interest on related party loan
$
—

 
$
—

 
$
110

 
$
—


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Travelzoo Inc.
Segment Information
(Unaudited)
(In thousands)
 
Three months ended June 30, 2016
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
2,412

 
$
9,946

 
$
21,688

 
$
34,046

Intersegment revenue
35

 
(247
)
 
212

 
—

Total net revenues
2,447

 
9,699

 
21,900

 
34,046

Operating income (loss)
$
(1,224
)
 
$
1,791

 
$
3,209

 
$
3,776

Three months ended June 30, 2015
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
2,728

 
10,337

 
23,727

 
36,792

Intersegment revenue
(15
)
 
(78
)
 
93

 
—

Total net revenues
2,713

 
10,259

 
23,820

 
36,792

Operating income (loss)
$
(268
)
 
$
47

 
$
2,549

 
$
2,328

 
 
 
 
 
 
 
 
Six months ended June 30, 2016
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
4,671

 
$
20,912

 
$
43,267

 
$
68,850

Intersegment revenue
36

 
(321
)
 
285

 
—

Total net revenues
4,707

 
20,591

 
43,552

 
68,850

Operating income (loss)
$
(2,268
)
 
$
3,885

 
$
5,307

 
$
6,924

Six months ended June 30, 2015
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
5,381

 
$
22,116

 
$
48,440

 
$
75,937

Intersegment revenue
(20
)
 
(295
)
 
315

 
—

Total net revenues
5,361

 
21,821

 
48,755

 
75,937

Operating income (loss)
$
(1,101
)
 
$
1,776

 
$
4,635

 
$
5,310

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  ###
 
 
 
 
 
 
 


                                                                   

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