Travelzoo Reports Fourth Quarter 2011 Results

Travelzoo Inc. (NASDAQ: TZOO):

Fourth Quarter 2011 Financial Highlights:

  • Revenue of $35.2 million, up 23% year-over-year
  • Operating income of $8.2 million, up 22% year-over-year
  • Net income of $6.4 million, up 70% year-over-year
  • Earnings per share of $0.40, compared to $0.23 in the prior-year period

Travelzoo Inc., a global Internet media company, today announced financial results for the fourth quarter ended December 31, 2011, with revenue of $35.2 million, an increase of 23% year-over-year. Operating income was $8.2 million, up 22% year-over-year. Net income was $6.4 million, with diluted earnings per share (EPS) of $0.40, up from $0.23 in the prior-year period.

"In a typically slower period for travel advertising, Q4 revenues grew faster year-over-year than in any such quarter in the past four years," said Chris Loughlin, chief executive officer of Travelzoo. "We remain positive about our Local Deals business, in which we differentiate from others by focusing on higher quality deals, as well as our ability to run and grow this business profitably. In the past two quarters, we have focused on putting the systems and teams in place that we intend to use in 2012 to continue to scale the business with attractive profitability."

North America

North America business segment revenue for the fourth quarter grew 16% year-over-year to $25.6 million. Operating profit for the fourth quarter was $6.5 million, or 25% of revenue, down from $6.7 million, or 30% of revenue, in the prior-year period.

Europe

Europe business segment revenue for the fourth quarter grew 48% year-over-year to $9.7 million. In local currency terms, revenue for the fourth quarter grew 49% year-over-year. Operating profit for the fourth quarter was $1.7 million, compared to an operating profit of $22,000 in the prior-year period.

Subscribers

Travelzoo had a total unduplicated number of newsletter subscribers in North America and Europe of 21.5 million as of December 31, 2011, up 14% from December 31, 2010. In North America, total unduplicated number of subscribers was 15.7 million as of December 31, 2011, up 10% from December 31, 2010. In Europe, total unduplicated number of subscribers was 5.8 million as of December 31, 2011, up 26% from December 31.

Income Taxes

Income tax expense was $1.9 million, compared to $3.0 million in the prior-year period. The effective income tax rate was 23%, down from 44% in the prior-year period.

Asset Management

During the fourth quarter 2011, Travelzoo generated $7.1 million of cash from operating activities. Accounts receivable remained unchanged at $13.3 million compared to prior-year period. Accounts payable increased by $11.8 million over the prior-year period to $21.7 million. Capital expenditures were $558,000, up from $138,000 in the prior-year period. Travelzoo exited the fourth quarter with $38.7 million in cash and cash equivalents.

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 Inc. is a global Internet media company. With more than 24 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 endedTwelve months ended
December 31,December 31,
2010201120102011
Revenues $ 28,468 $ 35,156 $ 112,784 $ 148,342
Cost of revenues 2,241 3,680 7,253 13,283
Gross profit 26,227 31,476 105,531 135,059
Operating expenses:
Sales and marketing 11,783 13,921 54,454 65,490
General and administrative 7,732 9,380 27,565 34,547
Settlement with State of Delaware - - - 20,000
Total operating expenses 19,515 23,301 82,019 120,037
Operating income 6,712 8,175 23,512 15,022
Other income and expense:
Interest income and other income 34 255 166 383
Loss on foreign currency (8) (58) (197) (81)
Income before income taxes 6,738 8,372 23,481 15,324
Income taxes 2,951 1,944 10,324 12,005
Net income $ 3,787 $ 6,428 $ 13,157 $ 3,319
Net income per share:
Basic $ 0.23 $ 0.40 $ 0.80 $ 0.20
Diluted $ 0.23 $ 0.40 $ 0.80 $ 0.20
Weighted Average Shares:
Basic 16,444 15,962 16,444 16,315
Diluted 16,518 16,026 16,453 16,414
Travelzoo Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
December 31,
20102011

Assets

Current assets:
Cash and cash equivalents $ 41,184 $ 38,744
Accounts receivable, net 13,290 13,340
Income taxes receivable 264 3,625
Deposits 129 278
Prepaid expenses and other current assets 1,489 2,123
Deferred tax assets 1,411 904
Total current assets 57,767 59,014
Deposits, less current portion 279 776
Deferred tax assets, less current portion 349 1,194
Restricted cash 3,124 3,103
Property and equipment, net 3,425 3,557
Intangible assets, net 1,058 704
Total assets $ 66,002 $ 68,348

Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable $ 9,931 $ 21,731
Accrued expenses 6,080 6,311
Deferred revenue 1,325 2,168
Deferred rent 218 114
Income tax payable 650 279
Total current liabilities 18,204 30,603
Long-term tax liabilities 1,449 2,225
Deferred rent, less current portion 460 761
Total liabilities 20,113 33,589
Common stock 164 160
Treasury stock - (15,119)
Additional paid-in capital 6,598 7,656
Accumulated other comprehensive loss (1,038) (1,422)
Retained earnings 40,165 43,484
Total stockholders' equity 45,889 34,759
Total liabilities and stockholders' equity $ 66,002 $ 68,348
Travelzoo Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three months endedTwelve months ended
December 31,December 31,
2010201120102011

Cash flows from operating activities:

Net income $ 3,787 $ 6,428 $ 13,157 $ 3,319

Adjustments to reconcile net income to net cash

provided by operating activities:

Depreciation and amortization 623 671 2,389 2,725
Deferred income taxes (1,340) (546) (1,276) (337)
Stock-based compensation 188 187 750 750
Provision for losses on accounts receivable 93 76 199 52
Tax benefit of stock option exercises - - - (268)
Net foreign currency effects 8 58 197 81
Changes in operating assets and liabilities:
Accounts receivable 659 576 (2,323) (146)
Deposits 129 (99) 20 (667)
Income tax receivable 1,517 (1,061) 5,797 (3,093)
Prepaid expenses and other current assets (134) 188 (413) (584)
Accounts payable 2,638 4,620 3,232 12,074
Accrued expenses 413 (4,737) 1,830 256
Deferred revenue 150 585 498 853
Deferred rent (51) 30 (72) 209
Income tax payable 134 (15) 630 (369)
Other non-current liabilities 14 117 (690) 776
Net cash provided by operating activities 8,828 7,078 23,925 15,631

Cash flows from investing activities:

Purchases of property and equipment (138) (558) (1,279) (2,460)
Purchases of restricted cash (2,248) - (2,248) -
Net cash used in investing activities (2,386) (558) (3,527) (2,460)

Cash flows from financing activities:

Proceeds from exercise of stock options - - - 40
Repurchase of common stock - - - (15,124)
Tax benefit of stock option exercises - - - 268
Proceeds from sale of Asia Pacific business segment - - 1,073 -
Net cash provided by (used in) financing activities - - 1,073 (14,816)
Effect of exchange rate on cash and cash equivalents 25 (209) (63) (795)
Net increase (decrease) in cash and cash equivalents 6,467 6,311 21,408 (2,440)
Cash and cash equivalents at beginning of period 34,717 32,433 19,776 41,184
Cash and cash equivalents at end of period $ 41,184 $ 38,744 $ 41,184 $ 38,744
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net of refunds received 2,593 3,453 5,857 15,025
Travelzoo Inc.
Segment Information
(Unaudited)
(In thousands)
Three months ended December 31, 2011

North

America

EuropeEliminationConsolidated
Revenue from unaffiliated customers $ 25,500 $ 9,656 $ - $ 35,156
Intersegment revenue 124 42 (166) -
Total net revenues 25,624 9,698 (166) 35,156
Operating income $ 6,504 $ 1,671 $ - $ 8,175
Three months ended December 31, 2010

North

America

EuropeEliminationConsolidated
Revenue from unaffiliated customers $ 21,945 $ 6,523 $ - $ 28,468
Intersegment revenue 70 28 (98) -
Total net revenues 22,015 6,551 (98) 28,468
Operating income $ 6,689 $ 22 $ 1 $ 6,712
Twelve months ended December 31, 2011

North

America

EuropeEliminationConsolidated
Revenue from unaffiliated customers $ 108,548 $ 39,793 $ - $ 148,341
Intersegment revenue 466 134 (600) -
Total net revenues 109,014 39,927 (600) 148,341
Operating income (loss) $ 10,110 $ 4,912 $ - $ 15,022
Twelve months ended December 31, 2010

North

America

EuropeEliminationConsolidated
Revenue from unaffiliated customers $ 87,661 $ 25,123 $ - $ 112,784
Intersegment revenue 197 107 (304) -
Total net revenues 87,858 25,230 (304) 112,784
Operating income $ 24,998 $ (1,489) $ 3 $ 23,512

Contacts:

Travelzoo Inc.
Christie McConnell, +1-212-484-4912
cmcconnell@travelzoo.com
Related Stocks:
Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here