Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________________________________________________
FORM 8-K
____________________________________________________
CURRENT REPORT
Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  July 24, 2019
____________________________________________________

Travelzoo
(Exact name of registrant as specified in its charter)
____________________________________________________
Delaware
000-50171
36-4415727
(State or Other
Jurisdiction of
Incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
 
590 Madison Avenue, 37th Floor
New York, New York
10022
(Address of principal executive offices)
(Zip Code)
 
Registrant’s telephone number, including area code (212) 484-4900
(Former Name or Former Address, if Changed Since Last Report)
____________________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

o       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
Emerging growth company    ¨    

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨ 






Item 2.02.         Results of Operations and Financial Condition.
 
On July 24, 2019, Travelzoo (the "Company") reported its second quarter 2019 financial results. A copy of the Company’s press release containing this information is being furnished as Exhibit 99.1 to this report on Form 8-K and is incorporated herein by reference.
 
The information furnished pursuant to Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.
 

Item 9.01.        Financial Statements and Exhibits.
(d)           Exhibits.  See Exhibit Index






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
TRAVELZOO
 
 
 
 
Date:
July 24, 2019
By:
/s/ Lisa Su
 
 
 
Lisa Su
Chief Accounting Officer






EXHIBIT INDEX

Exhibit
Description
 
 
Press Release, dated July 24, 2019.



Exhibit


Exhibit 99.1
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13020215&doc=3
Travelzoo
590 Madison Avenue
37th Floor
New York, NY 10022

Investor Relations:
Lijun Qi
ir@travelzoo.com 


FOR IMMEDIATE RELEASE

Travelzoo Reports Second Quarter 2019 Results

NEW YORK, July 24, 2019 — Travelzoo® (NASDAQ: TZOO):

Revenue of $28.2 million; up 3% year-over-year in constant currencies
Operating profit of $2.4 million, up 125% year-over-year
Earnings per share (EPS) of $0.11

Travelzoo, a global publisher of exclusive offers and experiences for members, today announced financial results for the second quarter ended June 30, 2019, with revenue of $28.2 million and operating profit of $2.4 million. In nominal terms, revenue increased $109,000 year-over-year. In constant currencies, revenue increased by 3% year-over-year. Travelzoo's reported revenue consists of advertising revenues and commissions, derived from or generated in connection with a much larger amount of purchases made by Travelzoo® members. Net income was $1.3 million. EPS was $0.11, up from $0.04 in the prior-year period.

"Our attractive core business in North America and Europe generated an operating profit of $4.2 million, with an operating margin of 16%, of which $1.8 million was re-invested in our Asia Pacific business. We are strongly committed to driving up shareholder value by implementing a successful strategy to achieve profitable growth in Asia Pacific faster," said Holger Bartel, Global CEO of Travelzoo.




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Core Business versus Development Business
Our businesses in Europe and North America (the "Core Business") and our business in Asia Pacific (the "Development Business") are in very different situations. The following table illustrates how the Core Business compares to the Development Business:
 
Core Business
 
Development Business
Q2 2019 Operating profit/loss
+$4.2 million
 
-$1.8 million
Q2 2019 Operating margin
16%
 
N/A
Contribution to Q2 2019 EPS
+$0.25
 
-$0.14
Contribution to six months EPS
+$0.66
 
-$0.30

Europe
Europe business segment revenue increased 2% year-over-year to $8.7 million. In constant currencies, revenue increased 8% year-over-year. Revenue growth was primarily driven by the rollout of Travelzoo’s expanded vacations offering. Operating profit for the second quarter was $584,000, or 7% of revenue, compared to an operating profit of $441,000, or 5% of revenue in the prior-year period.

North America
North America business segment revenue increased 2% year-over-year to $17.9 million. Operating profit for the second quarter was $3.6 million, or 20% of revenue, compared to an operating profit of $2.1 million, or 12% of revenue in the prior-year period.

Asia Pacific
For the Asia Pacific business segment, a new management team was installed during the quarter and Travelzoo has engaged a top management consulting firm in China to conduct a strategic review of its business. Our development business in Asia Pacific, which is currently in transition, saw a decrease in revenue of 23% year-over-year to $1.6 million. In constant currencies, revenue decreased 20% year-over-year. The operating loss in Asia Pacific for the second quarter was $1.8 million, compared to an operating loss of $1.5 million in the prior-year period.

Members
As of June 30, 2019, Travelzoo had a worldwide unduplicated number of members of 30.2 million. In Asia Pacific, unduplicated number of members was 3.6 million as of June 30, 2019, consistent with June 30, 2018. In Europe, unduplicated number of members was 9.1 million as of June 30, 2019, up 4% from June 30, 2018. In North America, unduplicated number of members was 17.6 million as of June 30, 2019, consistent with June 30, 2018.


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Income Taxes
Income tax expense was $953,000, compared to a $631,000 income tax expense in the prior-year period.

Asset Management
During the second quarter of 2019, Travelzoo used $1.8 million of cash in operating activities. Accounts receivable increased by $2.8 million over the prior-year period to $15.3 million. Accounts payable increased by $168,000 over the prior-year period to $14.4 million. Cash used in investing activities was $743,000, down from $3.5 million in the prior-year period. As of June 30, 2019, cash and cash equivalents were $14.1 million.

Share Repurchase Program
During the second quarter of 2019, the company repurchased 250,000 shares of its common stock. In May 2019, the company’s board of directors had authorized the repurchase of up to 1,000,000 shares of its outstanding common stock. 750,000 shares of common stock remain that are authorized to be repurchased.

Conference Call
Travelzoo will host a conference call to discuss second quarter results today at 11:00 a.m. ET. Please visit http://ir.travelzoo.com/events-presentations to
download the management presentation (PDF format) to be discussed in the conference call;
access the webcast.


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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 give Travelzoo members access to irresistible 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.





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Travelzoo
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
 
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
Revenues
$
28,184

 
$
28,075

 
$
59,009

 
$
58,959

Cost of revenues
2,757

 
3,016

 
5,703

 
6,401

Gross profit
25,427

 
25,059

 
53,306

 
52,558

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
15,357

 
15,628

 
30,963

 
31,170

Product development
1,799

 
2,386

 
3,502

 
4,897

General and administrative
5,847

 
5,967

 
11,446

 
11,756

Total operating expenses
23,003

 
23,981

 
45,911

 
47,823

Income from operations

2,424

 
1,078

 
7,395

 
4,735

Other income (loss), net
(143
)
 
30

 
(242
)
 
191

Income before income taxes
2,281

 
1,108

 
7,153

 
4,926

Income tax expense
953

 
631

 
2,705

 
1,947

Net income
$
1,328

 
$
477

 
$
4,448

 
$
2,979

 
 
 
 
 
 
 
 
Basic income per share
$
0.11

 
$
0.04

 
$
0.37

 
$
0.24

Diluted income per share
$
0.11

 
$
0.04

 
0.36

 
0.24

 
 
 
 
 
 
 
 
Weighted average shares:
 
 
 
 
 
 
 
Basic
12,003

 
12,462

 
11,959

 
12,462

Diluted
12,278

 
12,780

 
12,251

 
12,622



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Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
 
 
June 30,
2019
 
December 31,
2018
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
14,113

 
$
18,017

Accounts receivable, net
15,323

 
12,646

Income taxes receivable
817

 
389

Deposits
84

 
167

Prepaid expenses and other
1,739

 
1,947

Total current assets
32,076

 
33,166

Deposits and other
744

 
685

Deferred tax assets
1,359

 
1,645

Restricted cash
1,331

 
1,444

Investment in WeekenGO
2,958

 
2,694

Operating lease right-of-use assets
14,110

 

Property and equipment, net
3,346

 
3,790

Total assets
$
55,924

 
$
43,424

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
14,419

 
$
17,129

Accrued expenses and other
8,720

 
7,853

Deferred revenue
1,165

 
1,339

Operating lease liabilities
5,693

 

Income tax payable
395

 
489

Total current liabilities
30,392

 
26,810

Long-term tax liabilities
434

 
418

Long-term operating lease liabilities
10,788

 

Other long-term liabilities
83

 
2,137

Total liabilities
41,697

 
29,365

Common stock
119

 
120

Additional paid-in capital

 

Accumulated other comprehensive loss
(4,229
)
 
(4,214
)
Retained earnings
18,337

 
18,153

Total stockholders’ equity
14,227

 
14,059

Total liabilities and stockholders’ equity
$
55,924

 
$
43,424



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Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) 
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
Cash flows from operating activities:
 
 
 
 
 
 
 
Net income
$
1,328

 
$
477

 
$
4,448

 
$
2,979

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
333

 
443

 
663

 
827

Stock-based compensation
319

 
349

 
482

 
522

Deferred income tax
4

 
(39
)
 
345

 
(149
)
Loss on equity investment in WeekenGO
238

 

 
397

 

Net foreign currency effects
(5
)
 
35

 
(26
)
 
(136
)
Other
(51
)
 
40

 
26

 
(43
)
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
201

 
100

 
(2,779
)
 
(897
)
Income tax receivable
(816
)
 
(705
)
 
(428
)
 
(277
)
Prepaid expenses and other
(186
)
 
428

 
239

 
418

Accounts payable
(1,688
)
 
(15
)
 
(2,788
)
 
(3,200
)
Accrued expenses and other
(296
)
 
(299
)
 
1,291

 
725

Income tax payable
(1,084
)
 
(48
)
 
(96
)
 
169

Other liabilities
(103
)
 
(165
)
 
(174
)
 
(158
)
Net cash provided by (used in) operating activities
(1,806
)
 
601

 
1,600

 
780

Cash flows from investing activities:
 
 
 
 
 
 
 
Investment in WeekenGO
(673
)
 
(3,083
)
 
(673
)
 
(3,083
)
Purchases of property and equipment
(70
)
 
(442
)
 
(201
)
 
(507
)
Net cash used in investing activities
(743
)
 
(3,525
)
 
(874
)
 
(3,590
)
Cash flows from financing activities:
 
 
 
 
 
 
 
Repurchase of common stock
(4,869
)
 

 
(6,460
)
 

Exercise of stock options and taxes paid for net share settlement of equity awards
1,738

 

 
1,712

 

Net cash used in financing activities
(3,131
)
 

 
(4,748
)
 

Effect of exchange rate on cash, cash equivalents and restricted cash
(147
)
 
(780
)
 
5

 
(324
)
Net decrease in cash, cash equivalents and restricted cash
(5,827
)
 
(3,704
)
 
(4,017
)
 
(3,134
)
Cash, cash equivalents and restricted cash at beginning of period
21,271

 
24,571

 
19,461

 
24,001

Cash, cash equivalents and restricted cash at end of period
$
15,444

 
$
20,867

 
$
15,444

 
$
20,867

Supplemental disclosure of cash flow information:
 
 
 
 
 
 
 
Cash paid for income taxes, net
$
2,919

 
$
1,417

 
$
2,859

 
$
2,196


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Travelzoo
Segment Information
(Unaudited)
(In thousands)
 
Three months ended June 30, 2019
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
1,557

 
$
9,133

 
$
17,494

 
$
28,184

Intersegment revenue
23

 
(451
)
 
428

 

Total net revenues
1,580

 
8,682

 
17,922

 
28,184

Operating income (loss)
$
(1,783
)
 
$
584

 
$
3,623

 
$
2,424

 
 
 
 
 
 
 
 
Three months ended June 30, 2018
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
2,073

 
$
8,527

 
$
17,475

 
$
28,075

Intersegment revenue
(9
)
 
(27
)
 
36

 

Total net revenues
2,064

 
8,500

 
17,511

 
28,075

Operating income (loss)
$
(1,472
)
 
$
441

 
$
2,109

 
$
1,078


Six months ended June 30, 2019
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
3,192

 
$
20,187

 
$
35,630

 
$
59,009

Intersegment revenue
53

 
(932
)
 
879

 

Total net revenues
3,245

 
19,255

 
36,509

 
59,009

Operating income (loss)
$
(3,418
)
 
$
2,721

 
$
8,092

 
$
7,395

 
 
 
 
 
 
 
 
Six months ended June 30, 2018
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
4,115

 
$
18,859

 
$
35,985

 
$
58,959

Intersegment revenue
(29
)
 
(79
)
 
108

 

Total net revenues
4,086

 
18,780

 
36,093

 
58,959

Operating income (loss)
$
(3,212
)
 
$
2,407

 
$
5,540

 
$
4,735



                                                                    

###


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