EX-99.1 2 ex-99112x31x20178xk.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
 
travelzoologo11302017a03.jpg
Travelzoo
590 Madison Avenue
37th Floor
New York, NY 10022

Investor Relations:
Lijun Qi
ir@travelzoo.com 


FOR IMMEDIATE RELEASE

Travelzoo Reports Fourth Quarter 2017 Results

NEW YORK, February 8, 2018—Travelzoo® (NASDAQ: TZOO):

•
Revenue of $27.0 million, up 1% year-over-year
•
Operating profit of $1.1 million
•
Earnings per share of $0.05
•
Cash flow from operations of $4.0 million

Travelzoo, a global publisher of exclusive offers and experiences for members, today announced financial results for the fourth quarter ended December 31, 2017, with revenue of $27.0 million and operating profit of $1.1 million. In nominal terms, revenue increased by 1% year-over-year. In constant currencies, revenue decreased by 2% year-over-year. Net income was $675,000, with earnings per share (EPS) of $0.05.

Travelzoo's Global CEO, Dr. Holger Bartel, commented: "We will continue leveraging Travelzoo's trusted brand and worldwide relationships with top suppliers to negotiate more exclusive offers for Travelzoo members. High quality of every offer remains our top priority. We only present to our members offers which have passed a rigorous review and test booking."

Asia Pacific
Asia Pacific business segment revenue decreased 19% year-over-year to $2.0 million. Operating loss for the fourth quarter was $1.6 million, compared to an operating loss of $810,000 in the prior-year

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period. The fourth quarter 2017 operating loss was impacted by the cost of a severance payment to an executive in Asia Pacific.

Europe
Europe business segment revenue increased 4% year-over-year to $8.8 million. In constant currencies, revenue decreased 4% year-over-year. Operating profit for the fourth quarter was $764,000, or 9% of revenue, compared to operating income of $582,000, or 7% of revenue in the prior-year period.

North America
North America business segment revenue increased 2% year-over-year to $16.2 million. In constant currencies, revenue increased 1% year-over-year. Operating profit for the fourth quarter was $1.9 million, or 12% of revenue, compared to operating income of $2.3 million, or 14% of revenue in the prior-year period.

Members
As of December 31, 2017, Travelzoo had a worldwide unduplicated number of members of 29.4 million. In Asia Pacific, unduplicated number of members was 3.6 million as of December 31, 2017, up 1% from December 31, 2016. In Europe, unduplicated number of members was 8.5 million as of December 31, 2017, up 5% from December 31, 2016. In North America, unduplicated number of members was 17.4 million as of December 31, 2017, up 1% from December 31, 2016.

Income Taxes
Income tax expense was $466,000, compared to $542,000 in the prior-year period. The fourth quarter 2017 income tax expense includes a $505,000 one-time net tax benefit as a result of a tax reserve release related to the completion of an IRS tax audit offset by the estimated impact of the new U.S. tax law. Beginning with the first quarter of 2018, Travelzoo's earnings are expected to benefit from the new reduced U.S. federal tax rate because the largest portion of the company's taxable income is in the U.S.

Asset Management
During the fourth quarter of 2017, Travelzoo generated $4.0 million of cash from operating activities. Accounts receivable decreased by $2.6 million over the prior-year period to $11.8 million. Accounts payable decreased by $609,000 over the prior-year period to $19.1 million. Capital expenditures were $252,000, up from $107,000 in the prior-year period. As of December 31, 2017, cash and cash equivalents were $22.6 million.

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Conference Call
Travelzoo will host a conference call to discuss fourth 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 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 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
 
Twelve months ended
 
December 31,
 
December 31,
 
2017
 
2016
 
2017
 
2016
Revenues
$
26,997

 
$
26,813

 
$
106,524

 
$
114,263

Cost of revenues
3,462

 
3,262

 
12,909

 
13,855

Gross profit
23,535

 
23,551

 
93,615

 
100,408

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
13,746

 
13,369

 
57,288

 
58,429

Product development
2,208

 
2,077

 
9,224

 
9,096

General and administrative
6,502

 
6,077

 
22,558

 
22,697

Total operating expenses
22,456

 
21,523

 
89,070

 
90,222

Income from continuing operations
1,079

 
2,028

 
4,545

 
10,186

Other income (expense), net
62

 
(480
)
 
173

 
(187
)
Income from continuing operations before income taxes
1,141

 
1,548

 
4,718

 
9,999

Income tax expense
466

 
542

 
3,126

 
3,992

Income from continuing operations
$
675

 
$
1,006

 
$
1,592

 
$
6,007

Income (loss) from discontinued operations, net of income taxes
—

 
(63
)
 
1,938

 
624

Net income
$
675

 
$
943

 
$
3,530

 
$
6,631

 
 
 
 
 
 
 
 
Income per share—basic:
 
 
 
 
 
 
 
Continuing operations
$
0.05

 
$
0.07

 
$
0.12

 
$
0.43

Discontinued operations
0.00

 
0.00

 
0.15

 
0.04

Net income per share—basic
$
0.05

 
$
0.07

 
$
0.27

 
$
0.47

 
 
 
 
 
 
 
 
Income per share—diluted:
 
 
 
 
 
 
 
Continuing operations
$
0.05

 
$
0.07

 
$
0.12

 
$
0.43

Discontinued operations
0.00

 
0.00

 
0.15

 
0.04

Net income per share—diluted
$
0.05


$
0.07

 
$
0.27

 
$
0.47

 
 
 
 
 
 
 
 
Weighted average shares:
 
 
 
 
 
 
 
Basic
12,462

 
13,665

 
12,882

 
13,997

Diluted
12,462

 
13,714

 
12,894

 
13,997



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Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
 
 
December 31,
2017
 
December 31,
2016
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
22,553

 
$
26,838

Accounts receivable, net
11,769

 
14,415

Income taxes receivable
517

 
542

Deposits
259

 
105

Prepaid expenses and other
2,141

 
1,773

Deferred tax assets
—

 
793

Total current assets
37,239

 
44,466

Deposits and other
548

 
702

Deferred tax assets
1,516

 
1,052

Restricted cash
1,448

 
1,152

Property and equipment, net
4,921

 
6,158

Total assets
$
45,672

 
$
53,530

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
19,105

 
$
19,714

Accrued expenses and other
8,702

 
8,699

Deferred revenue
825

 
719

Income tax payable
961

 
691

Total current liabilities
29,593

 
29,823

Long-term tax liabilities
373

 
2,879

Long-term deferred rent and other
2,628

 
2,764

Total liabilities
32,594

 
35,466

Common stock
125

 
135

Additional paid-in capital
—

 
—

Accumulated other comprehensive loss
(3,597
)
 
(3,787
)
Retained earnings
16,550

 
21,716

Total stockholders’ equity
13,078

 
18,064

Total liabilities and stockholders’ equity
$
45,672

 
$
53,530



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Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) 
 
Three months ended
 
Twelve months ended
 
December 31,
 
December 31,
 
2017
 
2016
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
 
 
 
Net income
$
675

 
$
943

 
$
3,530

 
$
6,631

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
470

 
674

 
2,075

 
2,530

Discontinued operations gain on sale of Fly.com


 
—

 
(2,890
)
 
—

Deferred income taxes
281

 
25

 
309

 
(199
)
Stock-based compensation
321

 
241

 
1,007

 
933

Provision for losses on accounts receivable
152

 
83

 
118

 
100

Net foreign currency effects
(61
)
 
(7
)
 
(354
)
 
(315
)
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
(323
)
 
1,860

 
3,065

 
1,313

Income tax receivable
896

 
1,115

 
28

 
816

Prepaid expenses and other
(70
)
 
1,344

 
(487
)
 
957

Accounts payable
3,105

 
1,928

 
(1,590
)
 
(2,463
)
Accrued expenses and other
534

 
327

 
(475
)
 
(1,747
)
Income tax payable
152

 
(1,485
)
 
261

 
287

Other non-current liabilities
(2,173
)
 
(242
)
 
(2,522
)
 
(121
)
Net cash provided by operating activities
3,959

 
6,806

 
2,075

 
8,722

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

 
—

 
2,890

 
—

Purchases of property and equipment
(252
)
 
(107
)
 
(738
)
 
(909
)
Net cash provided by (used in) investing activities
(252
)
 
(107
)
 
2,152

 
(909
)
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
(155
)
 
(3,936
)
 
(9,711
)
 
(9,662
)
Net cash used in financing activities
(155
)
 
(3,936
)
 
(9,711
)
 
(15,262
)
Effect of exchange rate on cash and cash equivalents
179

 
(764
)
 
1,199

 
(841
)
Net increase (decrease) in cash and cash equivalents
3,731

 
1,999

 
(4,285
)
 
(8,290
)
Cash and cash equivalents at beginning of period
18,822

 
24,839

 
26,838

 
35,128

Cash and cash equivalents at end of period
$
22,553

 
$
26,838

 
$
22,553

 
$
26,838

Supplemental disclosure of cash flow information:
 
 
 
 
 
 
 
Cash paid for income taxes, net
$
1,343

 
$
1,111

 
$
6,201

 
$
3,309

Cash paid for interest on related party loan
$
—

 
$
—

 
$
—

 
$
88


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Travelzoo
Segment Information
(Unaudited)
(In thousands)
 
Three months ended December 31, 2017
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
1,979

 
$
8,803

 
$
16,215

 
$
26,997

Intersegment revenue
4

 
(36
)
 
32

 
—

Total net revenues
1,983

 
8,767

 
16,247

 
26,997

Operating profit (loss)
$
(1,582
)
 
$
764

 
$
1,897

 
$
1,079

Three months ended December 31, 2016
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
2,452

 
$
8,609

 
$
15,752

 
$
26,813

Intersegment revenue
(5
)
 
(192
)
 
197

 
—

Total net revenues
2,447

 
8,417

 
15,949

 
26,813

Operating profit (loss)
$
(810
)
 
$
582

 
$
2,256

 
$
2,028


Twelve months ended December 31, 2017
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
7,553

 
$
34,034

 
$
64,937

 
$
106,524

Intersegment revenue
(34
)
 
(353
)
 
387

 
—

Total net revenues
7,519

 
33,681

 
65,324

 
106,524

Operating profit (loss)
$
(5,967
)
 
$
2,290

 
$
8,222

 
$
4,545

Twelve months ended December 31, 2016
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
9,625

 
$
37,502

 
$
67,136

 
$
114,263

Intersegment revenue
73

 
(595
)
 
522

 
—

Total net revenues
9,698

 
36,907

 
67,658

 
114,263

Operating profit (loss)
$
(3,890
)
 
$
5,604

 
$
8,472

 
$
10,186




                                                                    

###


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