TRAVELZOO - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - CURRENT REPORT ON FORM 8-K - TRAVELZOO	d382398d8k.htm

Exhibit 99.1

Travelzoo

590 Madison Avenue

37th Floor

New York, NY 10022

Media Contact:

Christie McConnell

+1 (212) 484-4912

cmcconnell@travelzoo.com

FOR IMMEDIATE RELEASE

Travelzoo Reports Second Quarter 2012 Results

NEW YORK, July 19, 2012 — Travelzoo Inc. (NASDAQ: TZOO):

Second Quarter 2012 Financial Highlights:

•

Revenue of $39.4 million, up 5% year-over-year

•

Operating Income of $10.4 million, up 36% year-over-year

•

Net income of $7.3 million, up 48% year-over-year

•

Earnings per share of $0.45, compared to $0.30 in the prior-year period

•

Cash flow from operations of $7.1 million

Travelzoo Inc., a global Internet media company, today announced financial results for the second quarter ended June 30, 2012, with revenue of $39.4 million, an increase of 5% year-over-year. Operating income was $10.4 million, up 36% year-over-year. Net income was $7.3 million, with earnings per share of $0.45, up from $0.30 in the prior-year period.

“Our strategy of publishing high-quality deals, combined with efficient execution, has led to record operating profits in Europe and North America and an overall operating margin of 26%, the highest since 2007,” said Chris Loughlin, chief executive officer of Travelzoo. “We now intend to reaccelerate growth by investing more significantly into growing our audience, expanding our mobile offerings, and continuing our sales force ramp.”

North America

North America business segment revenue grew 4% year-over-year to $28.7 million. Operating income for the second quarter was $7.8 million, or 27% of revenue, up from $6.5 million, or 24% of revenue, in the prior-year period.

Europe

Europe business segment revenue grew 7% year-over-year to $10.6 million. In local currency terms, revenue for the second quarter grew 10% year-over-year. Operating income for the second quarter was $2.5 million, compared to an operating profit of $1.1 million in the prior-year period.

Subscribers

Travelzoo had a total unduplicated number of subscribers in North America and Europe of 22.1 million as of June 30, 2012, up 6% from June 30, 2011. In North America, total unduplicated number of subscribers was 15.9 million as of June 30, 2012, up 4% from June 30, 2011. In Europe, total unduplicated number of subscribers was 6.1 million as of June 30, 2012, up 12% from June 30, 2011.

Income Taxes

Income tax expense was $3.1 million, compared to $2.8 million in the prior-year period. The effective income tax rate was 30%, down from 36% in the prior-year period.

Asset Management

During the second quarter 2012, Travelzoo generated $7.1 million of cash from operating activities. Accounts receivable decreased by $700,000 over the prior-year period to $15.2 million. Accounts payable increased by $6.5 million over the prior-year period to $22.1 million. Capital expenditures were $595,000, up from $356,000 in the prior-year period. Travelzoo exited the second quarter with $54.2 million in cash and cash equivalents.

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;

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access the webcast.

About Travelzoo

Travelzoo Inc. is a global Internet media company. With more than 25 million subscribers 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 Inc. All other company and product names mentioned are trademarks of their respective owners.

Travelzoo Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)


	Three months ended					Six months ended
	June 30,					June 30,
	2012			2011		2012		2011

Revenues	$	39,360		$	37,565	$	78,693	$	74,525
Cost of revenues		3,630			2,940		7,683		5,382

Gross profit		35,730			34,625		71,010		69,143


Operating expenses:
Sales and marketing		16,061			18,702		32,326		34,833
General and administrative		9,303			8,295		18,747		16,689
Unexchanged merger shares		—			—		3,000		20,000

Total operating expenses		25,364			26,997		54,073		71,522


Operating income (loss)		10,366			7,628		16,937		(2,379	)

Other income (expense)		(16	)		42		83		104

Income (loss) before income taxes		10,350			7,670		17,020		(2,275	)

Income taxes		3,090			2,752		6,012		6,762

Net income (loss)	$	7,260		$	4,918	$	11,008	$	(9,037	)


Net income (loss) per share:

Basic	$	0.45		$	0.30	$	0.69	$	(0.55	)

Diluted	$	0.45		$	0.30	$	0.69	$	(0.55	)


Weighted Average Shares:
Basic		15,962			16,462		15,962		16,456
Diluted		16,006			16,585		16,012		16,456

Travelzoo Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)


	June 30, 2012			December 31, 2011

Assets
Current assets:
Cash and cash equivalents	$	54,161		$	38,744
Accounts receivable, net		15,236			13,340
Income taxes receivable		2,493			3,625
Deposits		376			278
Prepaid expenses and other current assets		2,601			2,123
Deferred tax assets		1,755			1,754

Total current assets		76,622			59,864
Deposits, less current portion		1,038			776
Deferred tax assets, less current portion		344			344
Restricted cash		3,045			3,103
Property and equipment, net		3,711			3,557
Intangible assets, net		528			704

Total assets	$	85,288		$	68,348


Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	22,129		$	21,731
Accrued expenses		11,606			6,311
Deferred revenue		2,108			2,168
Deferred rent		217			114
Income tax payable		—			279

Total current liabilities		36,060			30,603
Long-term tax liabilities		2,001			2,225
Deferred rent, less current portion		929			761

Total liabilities		38,990			33,589

Common stock		164			164
Treasury stock		—			(15,123	)
Additional paid-in capital		8,249			7,656
Accumulated other comprehensive loss		(1,484	)		(1,422	)
Retained earnings		39,369			43,484

Total stockholders’ equity		46,298			34,759

Total liabilities and stockholders’ equity	$	85,288		$	68,348

Travelzoo Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Three months ended						Six months ended
	June 30,						June 30,
	2012			2011			2012			2011
Cash flows from operating activities:
Net income (loss)	$	7,260		$	4,918		$	11,008		$	(9,037	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		599			666			1,225			1,309
Deferred income taxes		—			74			—			160
Stock-based compensation		307			187			593			375
Provision for losses on accounts receivable		91			24			199			43
Tax benefit from exercise of stock options		—			—			—			(268	)
Net foreign currency effects		75			1			40			(29	)
Changes in operating assets and liabilities:
Accounts receivable		(851	)		462			(2,122	)		(2,456	)
Deposits		(232	)		(99	)		(364	)		(660	)
Income tax receivable		285			(2,654	)		1,130			(2,390	)
Prepaid expenses and other current assets		215			(309	)		(79	)		(117	)
Accounts payable		48			2,164			508			5,600
Accrued expenses		(317	)		(16,248	)		5,302			7,185
Deferred revenue		(194	)		78			(60	)		98
Deferred rent		41			82			(34	)		95
Income tax payable		1			(607	)		(283	)		(519	)
Other non-current liabilities		(276	)		14			(224	)		29

Net cash provided by (used in) operating activities		7,052			(11,247	)		16,839			(582	)


Cash flows from investing activities:
Purchases of property and equipment		(595	)		(356	)		(1,272	)		(1,056	)

Net cash used in investing activities		(595	)		(356	)		(1,272	)		(1,056	)


Cash flows from financing activities:
Proceeds from exercise of stock options		—			—			—			40
Tax benefit of stock option exercises		—			—			—			268

Net cash provided by financing activities		—			—			—			308


Effect of exchange rate on cash and cash equivalents		(855	)		(9	)		(150	)		232

Net increase (decrease) in cash and cash equivalents		5,602			(11,612	)		15,417			(1,098	)
Cash and cash equivalents at beginning of period		48,559			51,698			38,744			41,184

Cash and cash equivalents at end of period	$	54,161		$	40,086		$	54,161		$	40,086


Supplemental disclosure of cash flow information:
Cash paid for income taxes, net		3,082			5,918			5,391			9,476

Travelzoo Inc.

Segment Information

(Unaudited)

(In thousands)


Three months ended June 30, 2012	North America		Europe		Elimination			Consolidated

Revenue from unaffiliated customers	$	28,712	$	10,648	$	—		$	39,360
Intersegment revenue		205		21		(226	)		—

Total net revenues		28,917		10,669		(226	)		39,360

Operating income	$	7,831	$	2,535	$	—		$	10,366


Three months ended June 30, 2011	North America		Europe		Elimination			Consolidated

Revenue from unaffiliated customers	$	27,588	$	9,977	$	—		$	37,565
Intersegment revenue		112		57		(169	)		—

Total net revenues		27,700		10,034		(169	)		37,565

Operating income	$	6,543	$	1,086	$	—		$	7,629


Six months ended June 30, 2012	North America		Europe		Elimination and Other (a)			Consolidated

Revenue from unaffiliated customers	$	57,268	$	21,425	$	—		$	78,693
Intersegment revenue		470		31		(501	)		—

Total net revenues		57,738		21,456		(501	)		78,693

Operating income	$	14,972	$	4,965	$	(3,000	)	$	16,937


Six months ended June 30, 2011	North America		Europe		Elimination and Other (a)			Consolidated

Revenue from unaffiliated customers	$	55,105	$	19,420	$	—		$	74,525
Intersegment revenue		213		61		(274	)		—

Total net revenues		55,318		19,481		(274	)		74,525

Operating income (loss)	$	15,794	$	1,827	$	(20,000	)	$	(2,379	)

(a)	Includes a charge related to unexchanged shares for the six months ended June 30, 2012 and June 30, 2011.

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