TRAVELZOO - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - October 25, 2018

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Exhibit 99.1
 
travellogo11062017a02.jpg
Travelzoo
590 Madison Avenue
37th Floor
New York, NY 10022

Investor Relations:
Lijun Qi
ir@travelzoo.com 


FOR IMMEDIATE RELEASE

Travelzoo Reports Third Quarter 2018 Results

NEW YORK, October 24, 2018 — Travelzoo® (NASDAQ: TZOO):

•
Revenue of $25.3 million, up 3% year-over-year in constant currencies
•
Operating profit of $714,000
•
Earnings per share (EPS) of $0.01

Travelzoo, a global publisher of exclusive offers and experiences for members, today announced financial results for the third quarter ended September 30, 2018, with revenue of $25.3 million and operating profit of $714,000. In nominal terms, revenue increased by 2% year-over-year. In constant currencies, revenue increased by 3% year-over-year. Net income was $118,000, with EPS from continuing operations of $0.01, up from $(0.05) in the prior-year period.

"Our attractive core business in North America and Europe generated an operating profit of $2.3 million, with an operating margin of 10%, of which $1.6 million was re-invested in our Asia Pacific business which grew at a rate of 12%. Our goal is to achieve profitability in Asia Pacific by 2020," said Holger Bartel, Global CEO of Travelzoo.







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Asia Pacific
Asia Pacific business segment revenue increased 12% year-over-year to $2.0 million. In constant currencies, revenue increased 15% year-over-year. Operating loss for the third quarter was $1.6 million, compared to an operating loss of $1.7 million in the prior-year period.

Europe
Europe business segment revenue increased 5% year-over-year to $8.4 million. In constant currencies, revenue increased 6% year-over-year. Operating profit for the third quarter was $940,000, or 11% of revenue, compared to an operating profit of $309,000, or 4% of revenue in the prior-year period.

North America
North America business segment revenue for the third quarter was $14.9 million, consistent with the prior-year period. Operating profit for the third quarter was $1.4 million, or 9% of revenue, consistent with the prior-year period.

Members
As of September 30, 2018, Travelzoo had a worldwide unduplicated number of members of 29.8 million. In Asia Pacific, unduplicated number of members was 3.6 million as of September 30, 2018, consistent with September 30, 2017. In Europe, unduplicated number of members was 8.8 million as of September 30, 2018, up 3% from September 30, 2017. In North America, unduplicated number of members was 17.5 million as of September 30, 2018, consistent with September 30, 2017.

Income Taxes
Income tax expense was $499,000, compared to a $680,000 income tax expense in the prior-year period.

Asset Management
During the third quarter of 2018, Travelzoo used $744,000 of cash for operating activities. Accounts receivable increased by $861,000 over the prior-year period to $12.3 million. Accounts payable decreased by $2.2 million over the prior-year period to $13.8 million. Cash used in investing activities was $9,000, down from $180,000 primarily due to the $150,000 proceeds from sale of fixed assets. As of September 30, 2018, cash and cash equivalents were $15.8 million.

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Conference Call
Travelzoo will host a conference call to discuss third quarter results today at 11:00 a.m. ET. Please visit http://ir.travelzoo.com/events-presentations 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 finger on the pulse of 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 give Travelzoo members 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.





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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,
 
2018
 
2017
 
2018
 
2017
Revenues
$
25,301

 
$
24,687

 
$
84,260

 
$
79,527

Cost of revenues
2,987

 
3,018

 
9,388

 
9,447

Gross profit
22,314

 
21,669

 
74,872

 
70,080

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
13,375

 
13,973

 
44,545

 
43,542

Product development
2,297

 
2,315

 
7,194

 
7,016

General and administrative
5,928

 
5,363

 
17,684

 
16,056

Total operating expenses
21,600

 
21,651

 
69,423

 
66,614

Operating income from continuing operations
714

 
18

 
5,449

 
3,466

Other income (loss), net
(91
)
 
86

 
100

 
111

Income from continuing operations before income taxes
623

 
104

 
5,549

 
3,577

Income tax expense
505

 
680

 
2,452

 
2,660

Income (loss) from continuing operations
$
118

 
$
(576
)
 
$
3,097

 
$
917

Income from discontinued operations including gain on sale of Fly.com domain name, net of income taxes
—

 
—

 
—

 
1,938

Net income (loss)
$
118

 
$
(576
)
 
$
3,097

 
$
2,855

 
 
 
 
 
 
 
 
Income (loss) per share—basic:
 
 
 
 
 
 
 
Continuing operations
$
0.01

 
$
(0.05
)
 
$
0.25

 
$
0.07

Discontinued operations
—

 
—

 
—

 
0.15

Net income (loss) per share—basic
$
0.01


$
(0.05
)
 
$
0.25

 
$
0.22

 
 
 
 
 
 
 
 
Income (loss) per share—diluted:
 
 
 
 
 
 
 
Continuing operations
$
0.01

 
$
(0.05
)
 
$
0.25

 
$
0.07

Discontinued operations
—

 
—

 
—

 
0.15

Net income (loss) per share—diluted
$
0.01


$
(0.05
)
 
$
0.25

 
$
0.22

 
 
 
 
 
 
 
 
Weighted average shares:
 
 
 
 
 
 
 
Basic
12,314

 
12,628

 
12,412

 
13,023

Diluted
12,663

 
12,628

 
12,630

 
13,040



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Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
 
 
September 30,
2018
 
December 31,
2017
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
15,779

 
$
22,553

Accounts receivable, net
12,295

 
11,769

Income taxes receivable
868

 
517

Deposits
131

 
259

Prepaid expenses and other
1,744

 
2,141

Total current assets
30,817

 
37,239

Deposits and other
622

 
548

Deferred tax assets
1,423

 
1,516

Restricted cash
1,453

 
1,448

Investment
2,866

 
—

Property and equipment, net
4,121

 
4,921

Total assets
$
41,302

 
$
45,672

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
13,795

 
$
19,105

Accrued expenses and other
8,106

 
8,702

Deferred revenue
888

 
825

Income tax payable
843

 
961

Total current liabilities
23,632

 
29,593

Long-term tax liabilities
396

 
373

Long-term deferred rent and other
2,275

 
2,628

Total liabilities
26,303

 
32,594

Common stock
122

 
125

Additional paid-in capital
—

 
—

Accumulated other comprehensive loss
(3,977
)
 
(3,597
)
Retained earnings
18,854

 
16,550

Total stockholders’ equity
14,999

 
13,078

Total liabilities and stockholders’ equity
$
41,302

 
$
45,672



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Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) 
 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2018
 
2017
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
 
 
 
Net income (loss)
$
118

 
$
(576
)
 
$
3,097

 
$
2,855

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
400

 
504

 
1,227

 
1,605

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

 
—

 
—

 
(2,890
)
Deferred income tax
53

 
97

 
(96
)
 
28

Stock-based compensation
241

 
206

 
763

 
686

Losses (gains) from sale and impairment of long-lived assets
20

 
—

 
20

 
—

Other
205

 
(7
)
 
162

 
(34
)
Net foreign currency effects
59

 
(69
)
 
(77
)
 
(293
)
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
(189
)
 
1,301

 
(1,086
)
 
3,388

Income tax receivable
(73
)
 
(903
)
 
(350
)
 
(868
)
Prepaid expenses and other
2

 
(199
)
 
420

 
(417
)
Accounts payable
(400
)
 
1,359

 
(3,600
)
 
(4,695
)
Accrued expenses and other
(973
)
 
(1,450
)
 
(248
)
 
(1,009
)
Income tax payable
(234
)
 
(70
)
 
(65
)
 
109

Other non-current liabilities
27

 
(71
)
 
(131
)
 
(349
)
Net cash provided by (used in) operating activities
(744
)
 
122

 
36

 
(1,884
)
Cash flows from investing activities:
 
 
 
 
 
 
 
Proceeds from sale of Fly.com domain name
—

 
—

 
—

 
2,890

Proceeds from sale of property and equipment
150

 
—

 
150

 
 
Investment in WeekenGO
—

 
—

 
(3,083
)
 
—

Purchases of property and equipment
(159
)
 
(180
)
 
(666
)
 
(486
)
Net cash provided by (used in) investing activities
(9
)
 
(180
)
 
(3,599
)
 
2,404

Cash flows from financing activities:
 
 
 
 
 
 
 
Repurchase of common stock, net
(2,873
)
 
(2,732
)
 
(2,873
)
 
(9,556
)
Net cash used in financing activities
(2,873
)
 
(2,732
)
 
(2,873
)
 
(9,556
)
Effect of exchange rate on cash, cash equivalents and restricted cash
(9
)
 
306

 
(333
)
 
1,060

Net decrease in cash, cash equivalents and restricted cash
(3,635
)
 
(2,484
)
 
(6,769
)
 
(7,976
)
Cash, cash equivalents and restricted cash at beginning of period
20,867

 
22,744

 
24,001

 
28,236

Cash, cash equivalents and restricted cash at end of period
$
17,232

 
$
20,260

 
$
17,232

 
$
20,260

Supplemental disclosure of cash flow information:
 
 
 
 
 
 
 
Cash paid for income taxes, net
$
767

 
$
1,628

 
$
2,963

 
$
4,858


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Travelzoo
Segment Information
(Unaudited)
(In thousands)
 
Three months ended September 30, 2018
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
1,977

 
$
8,396

 
$
14,928

 
$
25,301

Intersegment revenue
10

 
(18
)
 
8

 
—

Total net revenues
1,987

 
8,378

 
14,936

 
25,301

Operating income (loss)
$
(1,600
)
 
$
940

 
$
1,374

 
$
714

 
 
 
 
 
 
 
 
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 income (loss)
$
(1,679
)
 
$
309

 
$
1,388

 
$
18


Nine months ended September 30, 2018
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
6,092

 
$
27,255

 
$
50,913

 
$
84,260

Intersegment revenue
(19
)
 
(97
)
 
116

 
—

Total net revenues
6,073

 
27,158

 
51,029

 
84,260

Operating income (loss)
$
(4,812
)
 
$
3,347

 
$
6,914

 
$
5,449

 
 
 
 
 
 
 
 
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 income (loss)
$
(4,385
)
 
$
1,526

 
$
6,325

 
$
3,466





                                                                    

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