Travelzoo Reports Second Quarter 2013 Results

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Travelzoo Reports Second Quarter 2013 Results

NEW YORK--(BUSINESS WIRE)-- Travelzoo Inc. (NAS: TZOO) :

  • Revenue of $41.3 million, up 5% year-over-year
  • Net income of $5.2 million, down 28% year-over-year
  • Earnings per share of $0.34, compared to $0.45 in the prior-year period
  • Cash flow from operations of $10.0 million

Travelzoo Inc., a global Internet media company, today announced financial results for the second quarter ended June 30, 2013, with revenue of $41.3 million, an increase of 5% year-over-year. Operating profit was $7.8 million. Net income was $5.2 million, with earnings per share of $0.34, down from $0.45 in the prior-year period.


"Continued growth in our Travel businesses in North America and Europe drove a solid quarter," said Chris Loughlin, chief executive officer. "Audience engagement reached record levels and we made good progress in social media and mobile. Our earnings were still impacted by our investments into a hotel booking platform, aimed at simplifying our user experience on web and mobile. We plan to introduce the platform later this year."

North America

North America business segment revenue increased 5% year-over-year to $30.2 million. Operating profit for the second quarter was $5.9 million, or 20% of revenue, down from $7.8 million, or 27% 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 and traffic acquisition.

Europe

Europe business segment revenue increased 4% year-over-year to $11.1 million. In local currency terms, revenue for the second quarter increased 7% year-over-year. Operating profit was $1.9 million, or 17% of revenue, down from an operating profit of $2.5 million, or 24% of revenue in the prior-year period.

Subscribers

Travelzoo had a total unduplicated number of subscribers in North America and Europe of 23.0 million as of June 30, 2013, up 4% from June 30, 2012. In North America, total unduplicated number of subscribers was 16.4 million as of June 30, 2013, up 3% from June 30, 2012. In Europe, total unduplicated number of subscribers was 6.6 million as of June 30, 2013, up 8% from June 30, 2012.

Income Taxes

Income tax expense was $2.7 million, compared to $3.1 million in the prior-year period. The effective income tax rate was 34%, up from 30% in the prior-year period.

Asset Management

During the second quarter 2013, Travelzoo generated $10.0 million of cash from operating activities. Accounts receivable increased by $227,000 over the prior-year period to $15.5 million. Accounts payable increased by $6.8 million over the prior-year period to $29.0 million. Capital expenditures were $1.2 million, up from $595,000 in the prior-year period. Travelzoo exited the second quarter with $73.4 million in cash and cash equivalents.

Conference Call

Travelzoo will host a conference call to discuss second 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 26 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. All other names are trademarks and/or registered trademarks of their respective owners.

   

Travelzoo Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)

 
Three months endedSix months ended
June 30,June 30,
2013 20122013 2012
Revenues$ 41,327$ 39,360$ 83,504$ 78,693
Cost of revenues4,425 3,630 8,411 7,683
Gross profit36,902 35,730 75,093 71,010
Operating expenses:
Sales and marketing19,45716,06139,11532,326
General and administrative9,6519,30320,14918,747
Unexchanged promotional merger shares   3,000
Total operating expenses29,108 25,364 59,264 54,073
Income from operations7,79410,36615,82916,937
Other income (expense)112 (16)144 83
Income before income taxes7,90610,35015,97317,020
Income taxes2,706 3,090 5,178 6,012
Net income$ 5,200 $ 7,260 $ 10,795 $ 11,008
Net income per share:    
Basic$ 0.34 $ 0.45 $ 0.70 $ 0.69
Diluted$ 0.34 $ 0.45 $ 0.70 $ 0.69
Weighted Average Shares:
Basic15,36215,96215,36215,962
Diluted15,45716,00615,42716,012
 
   

Travelzoo Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)

 

June 30,
2013

December 31,
2012

Assets
Current assets:
Cash and cash equivalents$ 73,381$ 61,169
Accounts receivable, net15,46313,626
Income taxes receivable3,1916,682
Deposits473389
Prepaid expenses and other current assets3,4002,260
Deferred tax assets2,214 2,194 
Total current assets98,12286,320
Deposits, less current portion9431,107
Deferred tax assets, less current portion1,2711,710
Restricted cash3,5173,396
Property and equipment, net5,8114,314
Intangible assets, net655 986 
Total assets$ 110,319 $ 97,833 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$28,962$28,695
Accrued expenses13,20011,993
Deferred revenue1,8282,698
Deferred rent262280
Income tax payable1,022  
Total current liabilities45,27443,666
Long-term tax liabilities10,23910,030
Deferred rent, less current portion1,437 798 
Total liabilities56,950 54,494 
Common stock163163
Treasury stock(7,898)(7,898)
Additional paid-in capital9,4768,863
Accumulated other comprehensive loss(2,115)(737)
Retained earnings53,743 42,948 
Total stockholders' equity53,369 43,339 
Total liabilities and stockholders' equity$ 110,319 $ 97,833 
 
   

Travelzoo Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

 
Three months endedSix months ended
June 30,June 30,
2013 20122013 2012
Cash flows from operating activities:
Net income$ 5,200$ 7,260$ 10,795$ 11,008

Adjustments to reconcile net income to net cash provided by
operating activities:

Depreciation and amortization7605991,4761,225
Deferred income taxes207400
Stock-based compensation307307613593
Provision for losses on accounts receivable(45)9150199
Net foreign currency effects197511240
Changes in operating assets and liabilities:
Accounts receivable(91)(851)(2,127)(2,122)
Deposits175(232)20(364)
Income tax receivable2,0292853,5931,130
Prepaid expenses and other current assets(1,382)215(1,032)(79)
Accounts payable1,96548845508
Accrued expenses371(317)1,2215,302
Deferred revenue(329)(194)(847)(60)
Deferred rent22141111(34)
Income tax payable46711,038(283)
Other non-current liabilities107 (276)210 (224)
Net cash provided by operating activities9,981 7,052 16,478 16,839 
Cash flows from investing activities:
Purchases of restricted cash(263)(263)
Purchases of property and equipment(1,209)(595)(2,109)(1,272)
Net cash used in investing activities(1,472)(595)(2,372)(1,272)
Cash flows from financing activities:
Net cash provided by (used in) financing activities    
Effect of exchange rate on cash and cash equivalents(235)(855)(1,894)(150)
Net increase in cash and cash equivalents8,2745,60212,21215,417
Cash and cash equivalents at beginning of period65,10748,55961,16938,744
Cash and cash equivalents at end of period$ 73,381 $ 54,161 $ 73,381 $ 54,161 
Supplemental disclosure of cash flow information: Read Full Story

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