Travelzoo Reports First Quarter 2013 Results Business Wire NEW YORK -- April 18, 2013 Travelzoo Inc. (NASDAQ: TZOO): *Revenue of $42.2 million, up 7% year-over-year *Net income of $5.6 million, up 49% year-over-year *Earnings per share of $0.36, compared to $0.23 (GAAP) / $0.42 (non-GAAP) in the prior-year period *Cash flow from operations of $6.5 million Travelzoo Inc., a global Internet media company, today announced financial results for the first quarter ended March 31, 2013, with revenue of $42.2 million, an increase of 7% year-over-year. Operating profit was $8.0 million. Net income was $5.6 million, with earnings per share of $0.36, up from $0.23 in the prior-year period. Non-GAAP earnings per share was $0.36, down from $0.42 in the prior-year period. “We kicked off 2013 with record revenues, driven by strong performance within our travel segments in both North America and Europe,” said Chris Loughlin, chief executive officer. “We accelerated subscriber growth and made significant improvements in audience engagement across email, social media and mobile apps. We continued to develop our new hotel booking platform, which we plan to roll out later this year.” North America North America business segment revenue increased 5% year-over-year to $30.2 million. Operating profit for the first quarter was $5.5 million, or 18% of revenue, down from $7.1 million, or 25% of revenue, in the prior-year period. The decrease in operating profit was a result of increased expenses related to sales force expansion, hotel booking platform development, traffic acquisition and subscriber marketing. Europe Europe business segment revenue increased 14% year-over-year to $12.4 million. In local currency terms, revenue for the first quarter increased 14% year-over-year. Operating profit was $2.5 million, or 21% of revenue, up from an operating profit of $2.4 million, or 23% of revenue in the prior-year period. Subscribers Travelzoo had a total unduplicated number of subscribers in North America and Europe of 22.9 million as of March31, 2013, up 5% from March31, 2012. In North America, total unduplicated number of subscribers was 16.3 million as of March31, 2013, up 3% from March31, 2012. In Europe, total unduplicated number of subscribers was 6.5 million as of March31, 2013, up 9% from March31, 2012. Income Taxes Income tax expense was $2.5 million, compared to $2.9 million in the prior-year period. The non-GAAP effective income tax rate was 31%, up from 30% in the prior-year period. Asset Management During the first quarter 2013, Travelzoo generated $6.5 million of cash from operating activities. Accounts receivable increased by $648,000 over the prior-year period to $15.3 million. Accounts payable increased by $4.5 million over the prior-year period to $26.9 million. Capital expenditures were $900,000, up from $678,000 in the prior-year period. Travelzoo exited the first quarter with $65.1 million in cash and cash equivalents. Non-GAAP Measures To give an enhanced view of the company's operating performance, management has calculated non-GAAP operating income, non-GAAP net income and non-GAAP earnings per share by excluding the $3 million charge related to our unexchanged promotional merger shares in the prior-year period. The company believes these metrics assist investors to assess certain business trends in the same way that these trends are analyzed by management. The discussion of non-GAAP operating income, non-GAAP net income, and non-GAAP earnings share are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. Non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. As the only difference between GAAP and non-GAAP measures is the charge related to our unexchanged promotional merger shares in the prior- year period, today's reporting should not be viewed as the company's intention to report non-GAAP measures in future periods. Refer to the “Reconciliation of GAAP to Non-GAAP Measures” section of this release for a summary of these non-GAAP measures and their reconciliation to the reported GAAP measures. 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 Inc. is a global Internet media company. With more than 26million 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 Section27A of the Securities Act of 1933 and Section21E 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 March 31, 2013 2012 Revenues $ 42,177 $ 39,333 Cost of revenues 3,985 4,054 Gross profit 38,192 35,279 Operating expenses: Sales and marketing 19,659 16,265 General and administrative 10,497 9,444 Unexchanged promotional merger shares — 3,000 Total operating expenses 30,156 28,709 Income from operations 8,036 6,570 Other income 31 99 Income before income taxes 8,067 6,669 Income taxes 2,472 2,922 Net income $ 5,595 $ 3,747 Net income per share: Basic $ 0.36 $ 0.23 Diluted $ 0.36 $ 0.23 Weighted Average Shares: Basic 15,362 15,962 Diluted 15,371 16,019 Travelzoo Inc. Condensed Consolidated Balance Sheets (Unaudited) (In thousands) March 31, December 31, 2013 2012 Assets Current assets: Cash and cash equivalents $ 65,107 $ 61,169 Accounts receivable, net 15,303 13,626 Income taxes receivable 5,117 6,682 Deposits 398 389 Prepaid expenses and other current assets 2,187 2,260 Deferred tax assets 2,426 2,194 Total current assets 90,538 86,320 Deposits, less current portion 1,208 1,107 Deferred tax assets, less current portion 1,240 1,710 Restricted cash 3,252 3,396 Property and equipment, net 5,316 4,314 Intangible assets, net 796 986 Total assets $ 102,350 $ 97,833 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 26,909 $ 28,695 Accrued expenses 12,796 11,993 Deferred revenue 2,158 2,698 Deferred rent 262 280 Income tax payable 559 — Total current liabilities 42,684 43,666 Long-term tax liabilities 10,133 10,030 Deferred rent, less current portion 1,510 798 Total liabilities 54,327 54,494 Common stock 163 163 Treasury stock (7,898 ) (7,898 ) Additional paid-in capital 9,169 8,863 Accumulated other comprehensive loss (1,954 ) (737 ) Retained earnings 48,543 42,948 Total stockholders’ equity 48,023 43,339 Total liabilities and stockholders’ equity $ 102,350 $ 97,833 Travelzoo Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) Three months ended March 31, 2013 2012 Cash flows from operating activities: Net income $ 5,595 $ 3,747 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 716 627 Deferred income taxes 193 — Stock-based compensation 307 287 Provision for losses on accounts receivable 95 108 Net foreign currency effects 94 (35 ) Changes in operating assets and liabilities: Accounts receivable (2,036 ) (1,271 ) Deposits (155 ) (132 ) Income tax receivable 1,564 845 Prepaid expenses and other current assets 350 (295 ) Accounts payable (549 ) 460 Accrued expenses 850 5,619 Deferred revenue (517 ) 134 Deferred rent (110 ) (75 ) Income tax payable — (284 ) Other non-current liabilities 103 52 Net cash provided by operating activities 6,500 9,787 Cash flows from investing activities: Purchases of property and equipment (900 ) (678 ) Net cash provided by (used in) investing (900 ) (678 ) activities Cash flows from financing activities: Net cash used in financing activities — — Effect of exchange rate on cash and cash (1,662 ) 706 equivalents Net increase in cash and cash equivalents 3,938 9,815 Cash and cash equivalents at beginning of 61,169 38,744 period Cash and cash equivalents at end of period $ 65,107 $ 48,559 Supplemental disclosure of cash flow information: Cash paid for income taxes, net $ 328 $ 2,309 Travelzoo Inc. Segment Information (Unaudited) (In thousands) Three months North ended March Europe Elimination Consolidated 31, 2013 America Revenue from unaffiliated $ 29,911 $ 12,266 $ — $ 42,177 customers Intersegment 262 108 (370 ) — revenue Total net 30,173 12,374 (370 ) 42,177 revenues Operating $ 5,484 $ 2,552 $ — $ 8,036 income Three months North Elimination ended March Europe Consolidated 31, 2012 America and Other (a) Revenue from unaffiliated $ 28,556 $ 10,777 $ — $ 39,333 customers Intersegment 79 10 (89 ) — revenue Total net 28,635 10,787 (89 ) 39,333 revenues Operating $ 7,142 $ 2,428 $ (3,000 ) $ 6,570 income (a) Includes a charge related to unexchanged promotional merger shares for the three months ended March 31, 2012. Travelzoo Inc. Reconciliation of GAAP to Non-GAAP Measures (Unaudited) (In thousands, except per share and percentage amounts) Three months ended March 31, 2013 2012 GAAP operating income $ 8,036 $ 6,570 Unexchanged promotional merger shares (a) — 3,000 Non-GAAP operating income $ 8,036 $ 9,570 GAAP net income $ 5,595 $ 3,747 Unexchanged promotional merger shares (a) — 3,000 Non-GAAP net income $ 5,595 $ 6,747 Diluted net income per share $ 0.36 $ 0.23 Unexchanged promotional merger shares (a) — 0.19 Non-GAAP diluted net income per share $ 0.36 $ 0.42 GAAP operating margin 19.1 % 16.7 % Unexchanged merger shares (a) — 7.6 % Non-GAAP operating margin 19.1 % 24.3 % GAAP effective tax rate 30.6 % 43.8 % Unexchanged merger shares (a) — -13.6 % Non-GAAP effective tax rate 30.6 % 30.2 % (a) Includes a charge related to unexchanged promotional merger shares of $3.0 million for the three months ended March 31, 2012. Contact: Media: Travelzoo, North America Christie McConnell, +1 212-484-4912 email@example.com
Travelzoo Reports First Quarter 2013 Results
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