Hotel Reservations Network Reports Record Results for the Second Quarter of 2000 - Over 1,000,000 Hotel Rooms Sold Year to Date; HRN Generates Over $55,000,000 In Operating Cash Flow Year to Date
KEY QUARTERLY RESULTS (Second Quarter of 2000 compared to Second Quarter of 1999) - Revenues increase 107% to $78.1 million - EBITDA increases 123% to $12.9 million - Adjusted Earnings Per Share increases to $0.16 from $0.07 - Ending Cash Balance and Investments of $151.3 million - Hotel Room Nights Sold Increases 102% to 586,721
DALLAS, July 25 /Hotel Reservations Network (HRN)
HRN posted a 107% year-over-year increase in second quarter revenues, driven by strong demand across the company's multiple distribution channels including HRN's websites, more than 2500 affiliate websites, premier search engine alliances and HRN's 24-hour call center. During the quarter, HRN significantly expanded its web presence and international footprint through new affiliate and hotel supplier relationships, as well as new destinations. Leveraging its profitable business model, HRN reported second quarter EBITDA of $12.9 million, a 123% year-over-year increase. In addition, the company reported adjusted net income, excluding the effects of certain non-cash expense, of $9.0 million for the second quarter of 2000, an increase of 126% over adjusted net income of $4.0 million for the second quarter of 1999.
The financial highlights for 2000 and pro forma financial highlights for
1999, which follow, are in thousands (except per share data):
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
(Pro forma) (Pro forma)
Net revenue $78,082 $37,798 $133,345 $60,719
Gross profit (1) 24,032 10,883 40,792 18,166
EBITDA (2) 12,921 5,803 21,096 9,217
Adjusted Net Income (3) 9,045 4,012 14,601 6,221
Adjusted Earnings
per share, diluted (3) $0.16 $0.07 $0.29 $0.12
Weighted average shares
outstanding,
diluted (4) 55,882 55,882 50,746 50,746
(1) Reflects reclassification of performance based affiliate fees from
cost of sales to selling, general and administrative expenses,
resulting in an increase to gross profit of $0.5 million for the
second quarter of 1999 and $0.8 million for the six months ended
June 30, 1999.
(2) EBITDA is defined as earnings before interest, taxes, depreciation
and amortization of goodwill, and non-cash marketing expense
(warrant costs related to affiliation arrangement). For the three
and the six months ended June 30, 1999, it also excludes
non-recurring acquisition related costs of $20,257.
(3) Adjusted Net Income and Adjusted EPS exclude acquisition related
goodwill amortization and warrant amortization and non-recurring
acquisition related costs of $20,257 incurred in the second
quarter of 1999.
(4) Weighted average shares outstanding for the calculation of
earnings per share for the six months ending June 30, 2000 assumed
the 38,999 shares of the Class B Common Stock was outstanding for
the entire period and the 16,210 shares of Class A Common Stock
and the diluted effects of options and warrants issued at the time
of the initial public offering are weighted for the period from
February 25, 2000 to June 30, 2000. 1999 shares outstanding is
shown on a pro-forma basis for the same number of shares as 2000
for comparison purposes.
Commenting on the results, Bob Diener, Hotel Reservations Network's President, said, "Our robust top and bottom line results reflect our success in leveraging our industry leadership position to capitalize on the dramatic growth of the online lodging market. The HRN open business model continues to fuel our expansion across the web as we build upon our network of affiliate web sites, while adding new destinations and extensive hotel supply relationships."
"The tangible value we provide to our room suppliers, distribution partners and customers has created a compounding business engine that benefits all parties. We have consistently increased the occupancy rates of our diversified base of hotels, provided the lowest room rates for our customers and created additional revenue opportunities for our distribution partners. As a result, we have built deep distribution channels that are generating unprecedented demand for our product as travel booked online grows rapidly across the web."
"Our fundamental outlook is exceptionally strong. We have created a highly efficient and scaleable business engine that generates strong sales with exceptionally low marketing and operating costs. Our growth is not reliant on acquisitions or high capital expenditures and we have no debt. As a result, we are one of the few Internet companies that is generating substantial cash, rather than consuming it. As we strengthen our first-to-market leadership position, we remain well-positioned to create shareholder value as more and more businesses and consumers transition their travel needs to the Internet."
Metric Highlights:
- During the second quarter, HRN increased its cities served to 60, representing a 62% increase over the 1999 second quarter and a 50% increase over the 1999 year-end total. Eleven new markets were added during the second quarter including Albuquerque/Santa Fe, New Mexico; Biloxi, Mississippi; Daytona Beach, Florida; Memphis, Tennessee; Jacksonville, Florida; Minneapolis, Minnesota; Pittsburgh, Pennsylvania; Richmond, Virginia; Tucson, Arizona; Williamsburg, Virginia; and Milwaukee, Wisconsin.
- The company's affiliate web base reached 2500 during the second quarter, an increase of over 500 key affiliates from the first quarter and an increase of 900 from December 31, 1999. The affiliates cover a broad spectrum from travel sites to city information sites to visitor bureaus and e-commerce sites.
- The growth of HRN's city and affiliate base coupled with strong organic growth in online hotel bookings drove hotel room nights sold during the quarter to 586,721, a 102% increase over the second quarter of 1999.
- Internet generated revenues represented 92% of second quarter revenues, as compared to 81% in the second quarter of 1999 and 81% for all of 1999.
- Affiliate generated revenues represented 52% of second quarter revenues, as compared to 41% for the second quarter of 1999 and 41% for all of 1999.
- $55.7 million of operating cash flow generated year to date.
Hotel Reservations Network, Inc.
This news release contains "forward-looking statements" within the meaning of section 21E of the Securities Exchange Act of 1934, as amended. The company has based these forward-looking statements on its current expectations and projections about future events, based on the information currently available to it. The forward-looking statements include among other things, statements relating to the company's anticipated financial performance, business prospects, new developments, new strategies and similar matters. These forward-looking statements, are subject to risks, uncertainties and assumptions that may affect the operations, performance, development and results of the company's business and include, but are not limited to, the risk factors described under the section "Risk Factors" in the company's prospectus filed with the SEC on February 25, 2000 (which is available upon request from the company or on the company's websites,
Hotel Reservations Network, Inc.
Condensed Statement of Operations
(Unaudited)
(in thousands, except for per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Pro Forma (1) Pro Forma (1)
Revenues $78,082 $37,798 $133,345 $60,719
Cost of revenues (2) 54,050 26,915 92,553 42,553
Gross profit 24,032 10,883 40,792 18,166
Operating expenses:
Selling, general &
administrative
(2) & (3) 11,285 5,189 20,041 9,123
Amortization of
non-cash marketing
and distribution
expenses 1,271 -- 1,721
Amortization of
goodwill 10,591 10,591 17,280 17,280
Total operating
expenses 23,147 15,780 39,042 26,403
Income (loss) from
operations 885 (4,897) 1,750 (8,237)
Interest & other
income, net 1,961 829 2,990 1,072
Income (loss)
before income tax 2,846 (4,068) 4,740 (7,165)
Provision for
income tax 1,096 -- 1,825
Net Income (loss) $1,750 ($4,068) $2,915 ($7,165)
Net income (loss)
per share (basic &
diluted) $0.03 ($0.07) $0.06 ($0.14)
Weighted average
shares outstanding
(basic) (4) 55,209 55,209 50,310 50,310
Weighted average
shares outstanding
(diluted) (4) 55,882 55,209 50,746 50,310
EBITDA (5) $12,921 $5,803 $21,096 $9,217
Adjusted Income
excluding certain
Non-Cash charges (6):
Income before
income tax $2,846 ($4,068) $4,740 ($7,165)
Adjustment for
non-cash and
non-recurring
expenses:
Amortization of
goodwill 10,591 10,591 17,280 17,280
Amortization of
non-cash marketing
and distribution
expenses 1,271 -- 1,721
Total non-cash
expenses 11,862 10,591 19,001 17,280
Adjusted pre-tax
Income before
non-cash expense 14,708 6,523 23,741 10,115
Provision for
income tax 5,663 2,512 9,140 3,894
Adjusted net
Income (6) $9,045 $4,012 $14,601 $6,221
Adjusted EPS Excluding
Certain Non-Cash
Charges
(basic & diluted) (6) $0.16 $0.07 $0.29 $0.12
Weighted average
shares outstanding
(basic) (4) 55,209 55,209 50,310 50,310
Weighted average
shares outstanding
(diluted) (4) 55,882 55,882 50,746 50,746
Notes:
(1) The pro forma operating statement for the quarter and six months
ended June 30, 1999 gives effect to the acquisition, of the company's
predecessor business as if it had occurred on January 1, 1999.
(2) Reflects reclassification of performance based affiliate fees from
cost of sales to selling, general and administrative (SG&A) expenses
resulting in a reduction of cost of sales and increase of SG&A
expenses of $0.5 million for the second quarter of 1999 and
$0.8 million for the six months ended June 30, 1999.
(3) Selling, general & administration costs for the quarter and six month
ended June 30, 1999 exclude non-recurring acquisition related costs
of $20,257.
(4) Weighted average shares outstanding for the calculation of earnings
per share for the six months ended June 30, 2000 assumed the 38,999
shares of the Class B Common Stock was outstanding for the entire
period and the 16,210 shares of Class A Common Stock and the
dilutive effect of options and warrants issued at the time of the
initial public offering are weighted for the period from February 25,
2000 to June 30, 2000. 1999 shares outstanding is shown for the same
number of shares as 2000 for comparison purposes.
(5) EBITDA is defined as earnings before interest, taxes, depreciation
and amortization. For the three and the six months ended June 30,
1999, it also excludes non-recurring acquisition related costs of
$20,257.
(6) Adjusted Net Income and Adjusted EPS information is presented for
informational purposes only and should not be considered as a
substitute for the historical financial information presented in
accordance with generally accepted accounting principles.
Hotel Reservations Network, Inc.
Selected Balance Sheet Data
(Unaudited)
(in thousands)
June 30, December 31,
2000 1999
Cash and cash equivalents $113,119 $6,257
Short-term investments held for sale 38,228 4,906
Fixed assets, net 2,166 1,988
Accounts payable 28,391 16,252
Deferred Revenue 38,553 16,447