TRAVELZOO - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - October 26, 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 Third Quarter 2017 Results

NEW YORK, October 26, 2017—Travelzoo® (NASDAQ: TZOO):

•
Revenue of $24.7 million, down 9% year-over-year in constant currencies
•
Operating profit of $18,000
•
Earnings (loss) per share of $(0.05)
•
Cash flow from operations of $122,000

Travelzoo, a global publisher of exclusive deals for members, today announced financial results for the third quarter ended September 30, 2017, with revenue of $24.7 million and operating profit of $18,000. In nominal terms, revenue decreased by 8% year-over-year. In constant currencies, revenue decreased by 9% year-over-year. Net loss was $576,000, with earnings (loss) per share of $(0.05).

"Revenues were impacted by the two large hurricanes hitting the Caribbean and parts of the U.S. during the quarter," said Dr. Holger Bartel, Global CEO of Travelzoo. "We intend to leverage Travelzoo's global reach and trusted brand to improve earnings in future periods."

Asia Pacific
Asia Pacific business segment revenue decreased 31% year-over-year to $1.8 million. In constant currencies, revenue decreased 28% year-over-year. Operating loss for the third quarter was $1.7 million, compared to an operating loss of $798,000 in the prior-year period.



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Europe
Europe business segment revenue decreased 6% year-over-year to $7.9 million. In constant currencies, revenue decreased 9% year-over-year. Operating profit for the third quarter was $309,000, or 4% of revenue, compared to operating income of $1.4 million, or 17% of revenue in the prior-year period.

North America
North America business segment revenue decreased 5% year-over-year to $15.0 million. Operating profit for the third quarter was $1.4 million, or 9% of revenue, compared to operating income of $1.3 million, or 8% of revenue in the prior-year period.

Members
As of September 30, 2017, Travelzoo had a worldwide unduplicated number of members of 29.5 million. In Asia Pacific, unduplicated number of members was 3.6 million as of September 30, 2017, up 1% from September 30, 2016. In Europe, unduplicated number of members was 8.5 million as of September 30, 2017, up 4% from September 30, 2016. In North America, unduplicated number of members remained at 17.4 million as of September 30, 2017.

Income Taxes
Income tax expense was $680,000, compared to a $748,000 income tax expense in the prior-year period.

Asset Management
During the third quarter of 2017, Travelzoo generated $122,000 of cash for operating activities. Accounts receivable decreased by $5.3 million over the prior-year period to $11.4 million. Accounts payable decreased by $2.6 million over the prior-year period to $16.0 million. Capital expenditures were $180,000, up from $155,000 in the prior-year period. As of September 30, 2017, cash and cash equivalents were $18.8 million.

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Conference Call
Travelzoo will host a conference call to discuss third 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
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
 
 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Revenues
$
24,687

 
$
26,823

 
$
79,527

 
$
87,450

Cost of revenues
3,018

 
3,270

 
9,447

 
10,593

Gross profit
21,669

 
23,553

 
70,080

 
76,857

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
13,973

 
14,075

 
43,542

 
45,060

Product development
2,315

 
2,230

 
7,016

 
7,019

General and administrative
5,363

 
5,373

 
16,056

 
16,620

Total operating expenses
21,651

 
21,678

 
66,614

 
68,699

Income from continuing operations
18

 
1,875

 
3,466

 
8,158

Other income (expense), net
86

 
251

 
111

 
293

Income from continuing operations before income taxes
104

 
2,126

 
3,577

 
8,451

Income tax expense
680

 
748

 
2,660

 
3,450

Income (loss) from continuing operations
$
(576
)
 
$
1,378

 
$
917

 
$
5,001

Income from discontinued operations, net of income taxes
—

 
241

 
1,938

 
687

Net income (loss)
$
(576
)
 
$
1,619

 
$
2,855

 
$
5,688

 
 
 
 
 
 
 
 
Income (loss) per share—basic:
 
 
 
 
 
 
 
Continuing operations
$
(0.05
)
 
$
0.10

 
$
0.07

 
$
0.35

Discontinued operations
0.00

 
0.02

 
0.15

 
0.05

Net income (loss) per share—basic
$
(0.05
)
 
$
0.12

 
$
0.22

 
$
0.40

 
 
 
 
 
 
 
 
Income (loss) per share—diluted:
 
 
 
 
 
 
 
Continuing operations
$
(0.05
)
 
$
0.10

 
$
0.07

 
$
0.35

Discontinued operations
0.00

 
0.02

 
0.15

 
0.05

Net income (loss) per share—diluted
$
(0.05
)

$
0.12

 
$
0.22

 
$
0.40

 
 
 
 
 
 
 
 
Weighted average shares:
 
 
 
 
 
 
 
Basic
12,628

 
13,839

 
13,023

 
14,109

Diluted
12,628

 
13,867

 
13,040

 
14,119



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Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
 
 
September 30,
2017
 
December 31,
2016
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
18,822

 
$
26,838

Accounts receivable, net
11,434

 
14,415

Income taxes receivable
1,540

 
542

Deposits
396

 
105

Prepaid expenses and other
1,961

 
1,773

Deferred tax assets
—

 
793

Total current assets
34,153

 
44,466

Deposits and other
508

 
702

Deferred tax assets
1,800

 
1,052

Restricted cash
1,438

 
1,152

Property and equipment, net
5,265

 
6,158

Total assets
$
43,164

 
$
53,530

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
15,966

 
$
19,714

Accrued expenses and other
7,932

 
8,699

Deferred revenue
897

 
719

Income tax payable
936

 
691

Total current liabilities
25,731

 
29,823

Long-term tax liabilities
2,563

 
2,879

Long-term deferred rent and other
2,721

 
2,764

Total liabilities
31,015

 
35,466

Common stock
125

 
135

Additional paid-in capital
—

 
—

Accumulated other comprehensive loss
(3,556
)
 
(3,787
)
Retained earnings
15,580

 
21,716

Total stockholders’ equity
12,149

 
18,064

Total liabilities and stockholders’ equity
$
43,164

 
$
53,530



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Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) 
 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
 
 
 
Net income (loss)
$
(576
)
 
$
1,619

 
$
2,855

 
$
5,688

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
504

 
606

 
1,605

 
1,856

Discontinued operations gain on sale of Fly.com domain name
—

 
—

 
(2,890
)
 
—

Deferred income taxes
97

 
(13
)
 
28

 
(224
)
Stock-based compensation
206

 
251

 
686

 
692

Provision for losses on accounts receivable
(7
)
 
(28
)
 
(34
)
 
17

Net foreign currency effects
(69
)
 
(71
)
 
(293
)
 
(308
)
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
1,301

 
1,715

 
3,388

 
(547
)
Income tax receivable
(903
)
 
(823
)
 
(868
)
 
(299
)
Prepaid expenses and other
(199
)
 
(538
)
 
(417
)
 
(387
)
Accounts payable
1,359

 
(2,177
)
 
(4,695
)
 
(4,391
)
Accrued expenses and other
(1,450
)
 
(2,628
)
 
(1,009
)
 
(2,074
)
Income tax payable
(70
)
 
504

 
109

 
1,772

Other non-current liabilities
(71
)
 
69

 
(349
)
 
121

Net cash provided by (used in) operating activities
122

 
(1,514
)
 
(1,884
)
 
1,916

Cash flows from investing activities:
 
 
 
 
 
 
 
Proceeds from sale of Fly.com domain name
—

 
—

 
2,890

 
—

Purchases of property and equipment
(180
)
 
(155
)
 
(486
)
 
(802
)
Net cash provided by (used in) investing activities
(180
)
 
(155
)
 
2,404

 
(802
)
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
(2,732
)
 
(771
)
 
(9,556
)
 
(5,727
)
Net cash used in financing activities
(2,732
)
 
(771
)
 
(9,556
)
 
(11,327
)
Effect of exchange rate on cash and cash equivalents
281

 
(281
)
 
1,020

 
(76
)
Net decrease in cash and cash equivalents
(2,509
)
 
(2,721
)
 
(8,016
)
 
(10,289
)
Cash and cash equivalents at beginning of period
21,331

 
27,560

 
26,838

 
35,128

Cash and cash equivalents at end of period
$
18,822

 
$
24,839

 
$
18,822

 
$
24,839

Supplemental disclosure of cash flow information:
 
 
 
 
 
 
 
Cash paid for income taxes, net
$
1,628

 
$
1,126

 
$
4,858

 
$
2,198

Cash paid for interest on related party loan
$
—

 
$
—

 
$
—

 
$
110


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Travelzoo
Segment Information
(Unaudited)
(In thousands)
 
Three months ended September 30, 2017
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
1,767

 
$
8,008

 
$
14,912

 
$
24,687

Intersegment revenue
6

 
(62
)
 
56

 
—

Total net revenues
1,773

 
7,946

 
14,968

 
24,687

Operating profit (loss)
$
(1,679
)
 
$
309

 
$
1,388

 
$
18

Three months ended September 30, 2016
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
2,521

 
$
8,614

 
$
15,688

 
$
26,823

Intersegment revenue
36

 
(140
)
 
104

 
—

Total net revenues
2,557

 
8,474

 
15,792

 
26,823

Operating profit (loss)
$
(798
)
 
$
1,412

 
$
1,261

 
$
1,875


Nine months ended September 30, 2017
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
5,574

 
$
25,231

 
$
48,722

 
$
79,527

Intersegment revenue
(38
)
 
(317
)
 
355

 
—

Total net revenues
5,536

 
24,914

 
49,077

 
79,527

Operating profit (loss)
$
(4,385
)
 
$
1,526

 
$
6,325

 
$
3,466

Nine months ended September 30, 2016
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
7,173

 
$
28,893

 
$
51,384

 
$
87,450

Intersegment revenue
78

 
(403
)
 
325

 
—

Total net revenues
7,251

 
28,490

 
51,709

 
87,450

Operating profit (loss)
$
(3,080
)
 
$
5,022

 
$
6,216

 
$
8,158




                                                                    

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