TRAVELZOO - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 27, 2017

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

Investor Relations:
Lijun Qi
ir@travelzoo.com 


FOR IMMEDIATE RELEASE

Travelzoo Reports First Quarter 2017 Results

NEW YORK, April 27, 2017 — Travelzoo Inc. (NASDAQ: TZOO):

•
Revenue of $28.4 million, down 5% in constant currencies
•
Operating profit of $2.1 million
•
Earnings per share (EPS) from continuing operations of $0.07
•
Cash flow from operations of $555,000

Travelzoo, a global publisher of travel and entertainment offers, today announced financial results for the first quarter ended March 31, 2017, with revenue of $28.4 million and operating profit of $2.1 million. In nominal terms, revenue decreased by 8% year-over-year. In constant currencies, revenue decreased by 5% year-over-year. Net income was $2.7 million, with EPS of $0.21, which includes income from discontinued operations of $1.9 million. EPS from continuing operations was $0.07. Following the Company's strategic decision to focus on its global Travelzoo® brand, Fly.com and SuperSearch were discontinued. Financial results presented in this press release exclude revenue and expense from discontinued operations. Financial results in the current and prior periods have been adjusted.

"We will continue our strategy of leveraging Travelzoo’s global reach, trusted brand, and worldwide relationships with top travel suppliers to negotiate more exclusive offers for Travelzoo members,” said Holger Bartel, Chairman and Global CEO. "With more than 25 offices worldwide we have our pulse on outstanding travel, entertainment, and lifestyle experiences."


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Asia Pacific
Asia Pacific business segment revenue decreased 20% year-over-year to $1.8 million. In constant currencies, revenue decreased 19% year-over-year. Operating loss for the first quarter was $1.5 million, compared to an operating loss of $1.0 million in the prior-year period. The financial results of Asia Pacific for the first quarter were impacted by operational problems which we do not expect to be recurring.

Europe
Europe business segment revenue decreased 14% year-over-year to $9.1 million. In constant currencies, revenue decreased 5% year-over-year. Operating income for the first quarter was $949,000, or 10% of revenue, compared to operating income of $1.9 million, or 18% of revenue in the prior-year period.

North America
North America business segment revenue decreased 3% year-over-year to $17.5 million. Operating income for the first quarter was $2.7 million, or 15% of revenue, compared to operating income of $2.0 million, or 11% of revenue in the prior-year period.

Members
As of March 31, 2017, Travelzoo had a worldwide unduplicated number of members of 29.1 million. In Asia Pacific, unduplicated number of members was 3.6 million as of March 31, 2017, up 2% from March 31, 2016. In Europe, unduplicated number of members was 8.3 million as of March 31, 2017, up 3% from March 31, 2016. In North America, unduplicated number of members was 17.3 million as of March 31, 2017, consistent with March 31, 2016.

Income Taxes
Income tax expense was $1.2 million, compared to a $1.2 million income tax expense in the prior-year period.

Asset Management
During the first quarter of 2017, Travelzoo generated $555,000 of cash from operating activities. Accounts receivable decreased by $3.2 million over the prior-year period to $14.2 million. Accounts payable decreased by $5.5 million over the prior-year period to $16.6 million. Capital expenditures were $120,000, down from $145,000 in the prior-year period. As of March 31, 2017, cash and cash equivalents were $28.6 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® provides our 28 million members insider deals and one of a kind experiences personally reviewed by one of our deal experts around the globe. With more than 25 offices worldwide we have our pulse on outstanding travel, entertainment, and lifestyle experiences. For over 15 years we have worked in partnership with more than 2,000 top travel suppliers—our long-standing relationships allow us access to the very best deals.

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,
 
2017
 
2016
Net revenues
$
28,429

 
$
30,828

Cost of net revenues
3,207

 
3,851

Gross profit
25,222

 
26,977

Operating expenses:
 
 
 
Sales and marketing
15,356

 
15,530

Product development
2,357

 
2,788

General and administrative
5,447

 
5,813

Total operating expenses
23,160

 
24,131

Income from continuing operations
2,062

 
2,846

Other income, net
7

 
133

Income from continuing operations before income taxes
2,069

 
2,979

Income tax expense
1,209

 
1,154

Income from continuing operations
$
860

 
$
1,825

Income from discontinued operations, net of income taxes
1,884

 
224

Net income
$
2,744

 
$
2,049

 
 
 
 
Income per share—basic:
 
 
 
Continuing operations
$
0.07

 
$
0.13

Discontinued operations
0.14

 
0.01

Net income per share—basic
$
0.21


$
0.14

 
 
 
 
Income per share—diluted:
 
 
 
Continuing operations
$
0.07

 
$
0.13

Discontinued operations
0.14

 
0.01

Net income per share—diluted
$
0.21


$
0.14

 
 
 
 
Weighted average shares:
 
 
 
Basic
13,288

 
14,425

Diluted
13,288

 
14,425



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Travelzoo Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
 
 
March 31,
2017
 
December 31,
2016
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
28,594

 
$
26,838

Accounts receivable, net
14,189

 
14,415

Income taxes receivable
—

 
542

Deposits
144

 
105

Prepaid expenses and other
1,704

 
1,773

Deferred tax assets
—

 
793

Total current assets
44,631

 
44,466

Deposits and other
613

 
702

Deferred tax assets
1,818

 
1,052

Restricted cash
1,376

 
1,152

Property and equipment, net
5,731

 
6,158

Total assets
$
54,169

 
$
53,530

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
16,611

 
$
19,714

Accrued expenses and other
9,507

 
8,699

Deferred revenue
1,214

 
719

Income tax payable
2,171

 
691

Total current liabilities
29,503

 
29,823

Long-term tax liabilities
2,941

 
2,879

Long-term deferred rent and other
2,728

 
2,764

Total liabilities
35,172

 
35,466

Common stock
132

 
135

Additional paid-in capital
—

 
—

Accumulated other comprehensive loss
(3,820
)
 
(3,787
)
Retained earnings
22,685

 
21,716

Total stockholders’ equity
18,997

 
18,064

Total liabilities and stockholders’ equity
$
54,169

 
$
53,530



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Travelzoo Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) 
 
Three months ended
 
 March 31,
 
2017
 
2016
Cash flows from operating activities:
 
 
 
Net income
$
2,744

 
$
2,049

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
579

 
642

Discontinued operations gain on sale of Fly.com domain name
(2,890
)
 
—

Deferred income taxes
(36
)
 
(443
)
Stock-based compensation
240

 
212

Provision for losses on accounts receivable
7

 
8

Net foreign currency effects
(89
)
 
259

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
287

 
(1,025
)
Income tax receivable
544

 
921

Prepaid expenses and other
(86
)
 
102

Accounts payable
(3,263
)
 
(1,470
)
Accrued expenses and other
990

 
(451
)
Income tax payable
1,466

 
603

Other non-current liabilities
62

 
7

Net cash provided by operating activities
555

 
1,414

Cash flows from investing activities:
 
 
 
Proceeds from sale of Fly.com domain name
2,890

 
—

Purchase of restricted cash
—

 
(5
)
Purchases of property and equipment
(120
)
 
(145
)
Net cash provided by (used in) investing activities
2,770

 
(150
)
Cash flows from financing activities:
 
 
 
Acquisition of the Asia Pacific business
—

 
58

Payment of loan to related party
—

 
(5,658
)
Repurchase of common stock, net
(1,762
)
 
(1,908
)
Net cash used in financing activities
(1,762
)
 
(7,508
)
Effect of exchange rate on cash and cash equivalents
193

 
(77
)
Net increase (decrease) in cash and cash equivalents
1,756

 
(6,321
)
Cash and cash equivalents at beginning of period
26,838

 
35,128

Cash and cash equivalents at end of period
$
28,594

 
$
28,807

Supplemental disclosure of cash flow information:
 
 
 
Cash paid for income taxes, net
$
310

 
$
50

Cash paid for interest on related party loan
$
—

 
$
110


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Travelzoo Inc.
Segment Information
(Unaudited)
(In thousands)
 
Three months ended March 31, 2017
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
1,844

 
$
9,218

 
$
17,367

 
$
28,429

Intersegment revenue
(31
)
 
(147
)
 
178

 
—

Total net revenues
1,813

 
9,071

 
17,545

 
28,429

Operating income (loss)
$
(1,541
)
 
$
949

 
$
2,654

 
$
2,062

Three months ended March 31, 2016
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
2,249

 
10,641

 
17,938

 
30,828

Intersegment revenue
5

 
(82
)
 
77

 
—

Total net revenues
2,254

 
10,559

 
18,015

 
30,828

Operating income (loss)
$
(1,049
)
 
$
1,907

 
$
1,988

 
$
2,846

 
 
 
 
 
 
 
 





                                                                    

###


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