STUDIO CITY, Calif., Nov. 15, 2016 (GLOBE NEWSWIRE) -- Tix Corporation (the “Company” or “Tix”) (OTCQX:TIXC), a leading provider of discount ticketing services, today reported results for the third quarter and first nine months ended September 30, 2016.
Mitch Francis, Chief Executive Officer of the Company, stated, “Las Vegas continues to reinvent itself as it has historically. This year we are experiencing a unusual and significant number of actual and planned permanent show closures including popular shows such as Cirque du Soleil’s “Zarkana” at Aria, “ShowStoppers” at Wynn, “Raiding the Rock Vault” at Tropicana, “Frankie Moreno” at Planet Hollywood, “Matt Goss” at Caesars Palace, "Jubilee" at Bally’s, and many others. These show closings underscore a shift in Las Vegas entertainment as witnessed by the recent opening on the Strip of the 20,000 seat T-Mobile Arena, the addition of an NHL expansion team and the current plans for its first ever NFL team, which are all serving the changing consumer interests and demographics.
As part of our strategy to expand our reach to additional Las Vegas customers and in conjunction with our recently announced agreement with Expedia Local Expert, we anticipate implementing the following new initiatives during the fourth quarter of this year.
- Through our joint Las Vegas Local Expert brand, we will be offering Expedia and its other brands’ customers the ability to purchase online discounted show and dining packages in advance of their arrival to Las Vegas. This marks the first time in the Company’s history we will be selling Las Vegas show tickets online.
- Our subsidiary, Tix4Tonight, executed an agreement with Expedia which allows Tix4Tonight to offer our customers the option to book Expedia hotel room inventory on our Tix4Tonight.com website. Another first in the Company’s history.
Many producers are reporting to the Company that the overall market for show tickets is down this year versus last year. This decline has led to increased aggressive marketing to Las Vegas tourists from online ticket brokers, show producers and hotel properties. With the agreement we recently announced with Expedia Local Expert, as well as our new initiatives listed above, we believe we have the right strategy in place to position ourselves within our changing market,” concluded Mr. Francis.
Third Quarter 2016 Results
Third quarter 2016 revenues were $5,290,000 compared with $6,042,000 for the same period a year ago. Revenues were negatively impacted by decreased consumer demand for show tickets in the Las Vegas marketplace, the recent permanent closure of a Cirque du Soleil show for which we had significant sales in the prior year, and increased aggressive marketing from online ticket brokers, show producers and hotel properties. Our revenues were also negatively impacted by higher consumer demand for lower priced shows and attractions, which carried lower commissions and fees, as compared to the same period a year ago.
Third quarter 2016 direct operating expenses, which includes payroll costs, rents, third party commissions and fees, and utilities, increased to $2,644,000 compared with $2,353,000 for the same period a year ago. The increase in direct operating expenses was due to increased locations in operation, increased headcount and increased hourly payroll costs as compared to the same period a year ago. The Company recently increased its hiring activities in anticipation of increased activity relating to the Expedia Local Expert opportunities.
Third quarter 2016 selling, general and administrative expenses decreased slightly to $1,865,000 compared with $1,884,000 for the same period a year ago.
Third quarter 2016 provision for income taxes was $234,000, as compared to $74,000 reported for the same period a year ago. In December 2015, the Company recorded a deferred tax asset in the amount of $11,531,000 and began recording a provision for income taxes in calendar year 2016 using a federal income tax rate of 34% which reduced the Company’s deferred tax asset balance accordingly. The amount of provision for income taxes during the third quarter 2016 that is in excess of the Company’s estimated corporate alternative minimum taxes (AMT), is non-cash and reflects the reduction in the Company’s deferred tax asset balance over the previous period. During the same period of the prior year, the Company’s provision for income taxes included only estimated AMT under the federal tax code.
Third quarter 2016 net income was $455,000, or $0.03 per diluted common share, as compared to net income of $1,585,000, or $0.09 per diluted common share reported for the same period a year ago. Excluding the impact of our provision for income taxes discussed above, net income was approximately $658,000, or $0.04 per diluted share, as compared to net income of $1,585,000, or $0.09 per diluted share, reported for the same period a year ago. Adjusted EBITDA (as defined and explained below) for the third quarter 2016, was $884,000, or $0.05 per diluted common share, as compared to Adjusted EBITDA of $1,896,000, or $0.11 per diluted common share, reported for the same period a year ago.
First Nine Months 2016 Results
First nine months 2016 revenues were $16,019,000 compared with $17,481,000 for the same period a year ago. Revenues were negatively impacted by decreased consumer demand for show tickets in the Las Vegas marketplace, the recent permanent closure of a Cirque du Soleil show for which we had significant sales in the prior year, and increased aggressive marking from online ticket brokers, show producers and hotel properties. Our revenues were also negatively impacted by consumer demand for lower priced shows and attractions, which carried lower commissions and fees, as compared to the same period a year ago.
First nine months 2016 direct operating expenses, which includes payroll costs, rents, third party commissions and fees, and utilities, increased to $7,791,000 compared with $6,930,000 for the same period a year ago. The increase in direct operating expenses was due to increased locations in operation, increased headcount and increased hourly payroll costs as compared to the same period a year ago. The Company recently increased its hiring activities in anticipation of increased activity relating to the Expedia Local Expert opportunities.
First nine months 2016 selling, general and administrative expenses decreased to $5,643,000 compared with $5,721,000 for the same period a year ago.
First nine months 2016 provision for income taxes was $759,000, as compared to $235,000 reported for the same period a year ago. In December 2015, the Company recorded a deferred tax asset in the amount of $11,531,000 and began recording a provision for income taxes in calendar year 2016 using a federal income tax rate of 34% which reduced the Company’s deferred tax asset balance accordingly. The amount of provision for income taxes during the first nine months 2016 that is in excess of the Company’s estimated corporate alternative minimum taxes (AMT), is non-cash and reflects the reduction in the Company’s deferred tax asset balance this year. During the same period of the prior year, the Company’s provision for income taxes included only estimated AMT under the federal tax code.
First nine months 2016 net income was $1,473,000, or $0.08 per diluted common share, as compared to net income of $4,130,000, or $0.23 per diluted common share reported for the same period a year ago. Excluding the impact of our provision for income taxes discussed above, net income was approximately $2,112,000, or $0.12 per diluted share, as compared to net income of $4,130,000, or $0.23 per diluted share, reported for the same period a year ago. Adjusted EBITDA (as defined and explained below) for the first nine months of 2016, was $2,883,000, or $0.16 per diluted common share, as compared to Adjusted EBITDA of $5,109,000, or $0.29 per diluted common share, reported for the same period a year ago.
Non-GAAP Financial Measure
Included in this press release is a “non-GAAP financial measure,” which is a measure of the Company’s historical or future performance that is different from measures calculated and presented in accordance with GAAP but that the Company believes is useful to investors. The Company defines Adjusted EBITDA as net income plus (a) provision for income taxes, (b) other expense, net, (c) depreciation and amortization expense, and (d) stock based compensation expense. The Company believes that Adjusted EBITDA is a useful measure of the Company’s operating performance because a significant portion of its assets consists of goodwill and intangible assets and property and equipment that are amortized and depreciated as non-cash items over their remaining useful lives in accordance with GAAP. The Company’s presentation of Adjusted EBITDA may help investors assess the Company’s performance before the effect of various items that do not directly affect the Company’s ongoing operating performance. The Company also believes that measures similar to the Company’s measurement of Adjusted EBITDA are widely used in similar entertainment companies to measure operating performance, although Adjusted EBITDA as calculated by the Company is not necessarily comparable to similarly titled measures by such other companies. Adjusted EBITDA (a) does not represent net income or cash flows from operations as defined by GAAP, (b) is not necessarily indicative of cash available to fund the Company’s cash flow needs, and (c) should not be considered as an alternative to net income, operating income, cash flows from operating activities or the Company’s other financial information as determined under GAAP.
About Tix Corporation
Tix Corporation (OTCQX:TIXC) provides discount ticketing services. It currently operates 10 discount ticket stores in Las Vegas under its Tix4Tonight marquee, which offers up to a 50 percent discount for same-day shows, concerts, attractions and sporting events, as well as discount reservations for dining.
Stockholder Rights Agreement
On January 2, 2014, the Company announced that its Board of Directors adopted an amendment of the Company's Stockholder Rights Agreement (the “Rights Agreement”) to protect the interests of all Company stockholders by lowering the beneficial ownership threshold to a level that could help preserve the value of the Federal Net Operating Loss Carry Forwards (“NOLs”). The Company’s ability to use the NOLs would be substantially limited if there were an “ownership change” as defined under Section 382 of the U.S. Internal Revenue Code and related U.S. Treasury regulations (“Section 382”). In general, an “ownership change” would occur under Section 382 if the Company’s “5-percent shareholders,” as defined under Section 382, collectively increase their ownership in the Company by more than 50 percentage points over a rolling three-year period.
Under the terms of the amended and restated Rights Agreement, subject to certain exceptions, in the event a person or group, without Board approval, acquires beneficial ownership of 4.95% or more of the outstanding Common Stock or announces a tender or exchange offer which would result in such person or group's beneficial ownership of 4.95% or more of the outstanding Common Stock (a “Triggering Stockholder”), then all stockholders of the Company (other than the Triggering Stockholder) will be entitled to acquire shares of Common Stock at a 50% discount (a “Dilution Event”).
A person or group that owns 4.95% or more of the outstanding Common Stock at the time of the adoption of the amended and restated Rights Agreement (an “Existing Major Stockholder”) will not trigger a Dilution Event. However, a Dilution Event will be triggered if an Existing Major Stockholder, without Board approval, acquires any additional shares of Common Stock.
The 4.95% beneficial ownership threshold under the amended and restated Rights Agreement will remain applicable until March 31, 2021, or earlier, if the Board determines that the reduced threshold is no longer necessary for the preservation of the NOLs.
The foregoing description of the amended and restated Rights Agreement is qualified in its entirety by reference to the full text of the amended and restated Rights Agreement, a copy of which is available on the Company's website.
Safe Harbor Statement
Except for the historical information contained herein, certain matters discussed in this press release are forward-looking statements which involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements about our future revenues and financial position. These forward-looking statements are based on expectations and assumptions as of the date of this press release and are subject to numerous risks and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties are discussed in the Company's filings with the OTCQX. The Company assumes no obligation to update these forward-looking statements. A copy of the Company’s reports for the twelve months ended December 31, 2015 can be found on the Company website at www.tixcorp.com or at www.otcqx.com.
| TIX CORPORATION AND SUBSIDIARY | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| September 30, 2016 | December 31, 2015 | ||||||||||
| (Unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash | $ | 7,029,000 | $ | 7,921,000 | |||||||
| Accounts receivable | 42,000 | 47,000 | |||||||||
| Prepaid expenses and other current assets | 159,000 | 122,000 | |||||||||
| Total current assets | 7,230,000 | 8,090,000 | |||||||||
| Property and equipment, net | 288,000 | 579,000 | |||||||||
| Other assets: | |||||||||||
| Intangible assets: | |||||||||||
| Goodwill | 3,120,000 | 3,120,000 | |||||||||
| Intangibles, net | - | 17,000 | |||||||||
| Total intangible assets | 3,120,000 | 3,137,000 | |||||||||
| Deferred tax asset | 10,868,000 | 11,531,000 | |||||||||
| Deposits and other assets | 61,000 | 66,000 | |||||||||
| Total other assets | 14,049,000 | 14,734,000 | |||||||||
| Total assets | $ | 21,567,000 | $ | 23,403,000 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable – shows and events | $ | 985,000 | $ | 1,140,000 | |||||||
| Accounts payable and accrued expenses | 880,000 | 1,390,000 | |||||||||
| Deferred revenue | 63,000 | 25,000 | |||||||||
| Note payable – short term and net of discount | 176,000 | 176,000 | |||||||||
| Total current liabilities | 2,104,000 | 2,731,000 | |||||||||
| Deferred rent obligations | 32,000 | 58,000 | |||||||||
| Note payable – net of current portion and discount | 194,000 | 376,000 | |||||||||
| Total liabilities | 2,330,000 | 3,165,000 | |||||||||
| Stockholders’ equity: | |||||||||||
| Preferred stock, $.01 par value; 500,000 shares authorized; none issued | - | ||||||||||
| Common stock, $.08 par value; 100,000,000 shares authorized; 17,349,583 shares net of 16,637,406 treasury shares, and 17,280,009 shares net of 16,619,953 treasury shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 2,720,000 | 2,713,000 | |||||||||
| Additional paid-in capital | 94,549,000 | 94,216,000 | |||||||||
| Cost of stock held in treasury | (28,154,000 | ) | (28,115,000 | ) | |||||||
| Accumulated deficit | (49,878,000 | ) | (48,576,000 | ) | |||||||
| Total stockholders’ equity | 19,237,000 | 20,238,000 | |||||||||
| Total liabilities and stockholders’ equity | $ | 21,567,000 | $ | 23,403,000 | |||||||
| TIX CORPORATION AND SUBSIDIARY | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||
| Three Months Ended September 30, | ||||
| 2016 | 2015 | |||
| (Unaudited) | (Unaudited) | |||
| Revenues | $ | 5,290,000 | $ | 6,042,000 |
| Operating expenses: | ||||
| Direct costs of revenues | 2,644,000 | 2,353,000 | ||
| Selling, general and administrative expenses | 1,865,000 | 1,884,000 | ||
| Depreciation and amortization | 87,000 | 140,000 | ||
| Total operating expenses | 4,596,000 | 4,377,000 | ||
| Operating income | 694,000 | 1,665,000 | ||
| Other expense, net | 5,000 | 6,000 | ||
| Income before provision for income taxes | 689,000 | 1,659,000 | ||
| Provision for income taxes | 234,000 | 74,000 | ||
| Net income | $ | 455,000 | $ | 1,585,000 |
| Net income per common share | ||||
| Net income per common share – basic | $ | 0.03 | $ | 0.09 |
| Net income per common share – diluted | $ | 0.03 | $ | 0.09 |
| Weighted average common shares outstanding – basic | 17,349,583 | 17,023,522 | ||
| Weighted average common shares outstanding – diluted | 18,041,036 | 17,740,924 | ||
| TIX CORPORATION AND SUBSIDIARY | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||
| Nine Months Ended September 30, | ||||
| 2016 | 2015 | |||
| (Unaudited) | (Unaudited) | |||
| Revenues | $ | 16,019,000 | $ | 17,481,000 |
| Operating expenses: | ||||
| Direct costs of revenues | 7,791,000 | 6,930,000 | ||
| Selling, general and administrative expenses | 5,643,000 | 5,721,000 | ||
| Depreciation and amortization | 337,000 | 455,000 | ||
| Total operating expenses | 13,771,000 | 13,106,000 | ||
| Operating income | 2,248,000 | 4,375,000 | ||
| Other expense, net | 16,000 | 10,000 | ||
| Income before provision for income taxes | 2,232,000 | 4,365,000 | ||
| Provision for income taxes | 759,000 | 235,000 | ||
| Net income | $ | 1,473,000 | $ | 4,130,000 |
| Net income per common share | ||||
| Net income per common share – basic | $ | 0.09 | $ | 0.24 |
| Net income per common share – diluted | $ | 0.08 | $ | 0.23 |
| Weighted average common shares outstanding – basic | 17,327,516 | 17,172,699 | ||
| Weighted average common shares outstanding – diluted | 18,111,752 | 17,643,741 | ||
| TIX CORPORATION AND SUBSIDIARY | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2016 | 2015 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 1,473,000 | $ | 4,130,000 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Imputed interest | 18,000 | 18,000 | ||||||
| Depreciation | 320,000 | 344,000 | ||||||
| Amortization of intangible assets | 17,000 | 111,000 | ||||||
| Stock based compensation | 298,000 | 279,000 | ||||||
| Gain on sale of property and equipment | - | 4,000 | ||||||
| Deferred tax asset | 663,000 | - | ||||||
| (Increase) decrease in: | ||||||||
| Accounts receivable | 5,000 | 9,000 | ||||||
| Prepaid expenses and other assets | (32,000 | ) | 2,000 | |||||
| Increase (decrease) in: | ||||||||
| Accounts payable – shows and events | (155,000 | ) | 1,538,000 | |||||
| Accounts payable and accrued expenses | (510,000 | ) | 186,000 | |||||
| Deferred revenue | 38,000 | 29,000 | ||||||
| Deferred rent obligations | (26,000 | ) | (67,000 | ) | ||||
| Net cash provided by operating activities | 2,109,000 | 6,583,000 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (29,000 | ) | (120,000 | ) | ||||
| Net cash used in investing activities | (29,000 | ) | (120,000 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of stock options | 42,000 | 25,000 | ||||||
| Dividends paid | (2,775,000 | ) | (1,694,000 | ) | ||||
| Payment on note payable | (200,000 | ) | (200,000 | ) | ||||
| Cost of treasury stock | (39,000 | ) | (495,000 | ) | ||||
| Obligation for share purchases | - | (159,000 | ) | |||||
| Net cash used in financing activities | (2,972,000 | ) | (2,523,000 | ) | ||||
| Net (decrease) increase | (892,000 | ) | 3,940,000 | |||||
| Balance at beginning of period | 7,921,000 | 4,866,000 | ||||||
| Balance at end of period | $ | 7,029,000 | $ | 8,806,000 | ||||
| TIX CORPORATION AND SUBSIDIARY | |||||||||||||||||||
| RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (UNAUDITED) | |||||||||||||||||||
| The following is a reconciliation of net income to Adjusted EBITDA for the three and nine months ended September 30, 2016 and 2015, respectively: | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| Net income | $ | 455,000 | $ | 1,585,000 | $ | 1,473,000 | $ | 4,130,000 | |||||||||||
| Provision for income taxes | 234,000 | 74,000 | 759,000 | 235,000 | |||||||||||||||
| Other expense, net | 5,000 | 6,000 | 16,000 | 10,000 | |||||||||||||||
| Depreciation and amortization | 87,000 | 140,000 | 337,000 | 455,000 | |||||||||||||||
| Stock based compensation expense | 103,000 | 91,000 | 298,000 | 279,000 | |||||||||||||||
| Adjusted EBITDA | $ | 884,000 | $ | 1,896,000 | $ | 2,883,000 | $ | 5,109,000 | |||||||||||