Market Overview

Tix Corporation Reports Fourth Quarter and Full Year 2017 Results

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STUDIO CITY, CA, March 29, 2018 (GLOBE NEWSWIRE) -- Tix Corporation (the "Company") (OTCQX:TIXC), a leading provider of discount ticketing services, today reported results for the fourth quarter and full year ended December 31, 2017.  

The Company's fourth quarter and full year 2017 operating results were lower than such periods in the prior year and the Company believes it was adversely impacted by the following external factors, several of which were previously reported:

  1. Increased aggressive competition from online ticket sellers, show producers, and hotel properties. 
  2. MGM opened for the first time, five of their own discount ticket booths on their properties in Las Vegas.
  3. MGM withdrew tickets of four of their Cirque du Soleil ("Cirque") shows from Tix4Tonight booths on October 9, 2017.  Cirque's Mystère (owned by Treasure Island and Cirque), the Company's best-selling Cirque show, continues to be offered at the Company's booths. 
  4. Increase in rooms reserved for Las Vegas conventions, whose participants, the Company believes, attend fewer shows than casual tourists.
  5. Las Vegas tourism in general experienced a significant and sustained decline in its business since the October 1, 2017, Las Vegas Strip mass shooting.  Public data confirms that visitation and tourism fell materially and that revenue on the Las Vegas strip and casinos fell significantly since the shooting.

The Company has been diligently focused on addressing the changing landscape, by implementing various growth and cost saving initiatives, including but not limited to the following:

  1. The Company launched its first ever full-service Las Vegas ticketing website, Tix4.com, offering discount show tickets, attractions, tours, and dining.  The site opened in late 2017 and accordingly, has had a limited impact on the Company's revenue in 2017.  While the Company had planned to create an online presence for some time, some major shows and hotels in Las Vegas had previously prohibited the Company from selling their tickets online and restricted sales only to our booths.  Only recently have certain shows agreed to provide the Company with an online inventory of tickets for their shows, including MGM's Cirque du Soleil shows.  The Company is encouraged by the potential revenue growth within the online space and is working to add additional offerings.
  2. The Company redesigned its discount Las Vegas dining program and relaunched it in mid-2017 as the Vegas Dining Card with approximately 60 discounted restaurant offerings. Dining revenue has increased in excess of 40% since the relaunch.
  3. The Company developed a new discount Las Vegas shopping program, launched in the fourth quarter of 2017, called the Vegas Savings Card.  So far, there are approximately 140 discount store offerings and the card is used primarily for promotional purposes, not revenue producing growth.
  4. The Company has developed an online Vegas Local Expert Planning Guide.  It is an online magazine, where Las Vegas tourists can easily navigate to their specific interests to view all categories of shows, tours, attractions and dining.  They will be able to see more information on any show including a detailed description, reviews, pictures, videos, and ultimately, book their tickets at very competitive prices.  In keeping with the Company's relationship as the Las Vegas Guest Services Partner for Expedia, Expedia will distribute the Vegas Local Expert Planning Guide to many of its customers who have booked travel to Las Vegas.  The Company currently anticipates that the Vegas Local Expert Planning Guide will be launched in mid-2018.   
  5. Lastly, the Company implemented significant expense reductions in late 2017.  The expense reductions include reductions in workforce, voluntary reductions in executive compensation, voluntary elimination of executive bonuses, elimination of staff bonuses and various other operating expense reductions. 

The Company believes that it is well positioned to improve performance in 2018, mainly as a result of the measures taken, including growth initiatives and cost reduction efforts.  The Company believes that the customers lost as a result of the Las Vegas Strip shooting and the downturn in general tourism since the event will return in 2018. Regardless of the macro factors out of the Company's control, the Company will continue its proactive efforts and focus on innovative measures to counter the negative developments outlined above towards stabilization of its business.

Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. For the three months and full year ended December 31, 2016, a reclassification has been made to the Consolidated Statements of Operations to reclassify merchant credit card processing fees of approximately $362,000 and $1.5 million, respectively, from selling, general and administrative expenses to direct cost of revenues. This change in classification does not affect previously reported cash flows from operating activities in the Consolidated Statements of Cash Flows.

Fourth Quarter 2017 Results

Fourth quarter 2017 revenues were $3,556,000 as compared with $5,335,000 in the same period a year ago.  Revenues were negatively impacted by the events discussed above.

Fourth quarter 2017 direct costs of revenues, which include payroll costs, rents, merchant credit card processing fees, utilities, and third party commission and fees, decreased to $2,250,000 as compared with $2,718,000 for the same period a year ago.  The decrease in direct costs of revenues was due to decreased locations in operation, decreased headcount, decreased merchant credit card processing fees, and expense reduction efforts mentioned above, as compared to the same period a year ago.   

Fourth quarter 2017 selling, general and administrative expenses decreased to $1,413,000 as compared with $1,738,000 for the same period a year ago.  Selling, general and administrative expenses included an increase in advertising expense of $71,000, which was required to promote the Company's new offerings and to counter increased competition as discussed above, offset by reductions in expense of $396,000, which included the expense reduction efforts discussed above.    

Fourth quarter 2017 provision for income tax expense was $5.1 million as compared with $369,000 for the same period a year ago.  On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJ Act") was enacted into law. The TCJ Act provides for significant changes to the U.S. Internal Revenue Code of 1986, as amended (the "Code"), that impact corporate taxation requirements, such as the reduction of the federal tax rate for corporations from 35% to 21% and changes or limitations to certain tax deductions beginning in fiscal year 2018.  The reduction in the corporate tax rate under the TCJ Act also required a one-time revaluation of certain tax-related assets to reflect their value at the lower corporate tax rate of 21%. As such, the Company recorded a reduction in the value of these assets of approximately $5.3 million, which primarily relate to the Company's net deferred tax assets, and recorded a corresponding increase to the provision for income taxes for the period ended December 31, 2017. 

Fourth quarter 2017 net loss was $(5,202,000), or $(0.30) per diluted common share, as compared with a net income of $430,000, or $0.02 per diluted common share reported for the same period a year ago.  Adjusted EBITDA (as defined and explained below) for the fourth quarter 2017 was $(79,000), or $(0.00) per diluted common share, as compared with Adjusted EBITDA of $985,000, or $0.06 per diluted common share, reported for the same period a year ago.

Full Year 2017 Results

Full year 2017 revenues were $17,395,000 as compared with $21,354,000 in the same period a year ago.  Revenues were negatively impacted by the events discussed above.

Full year 2017 direct costs of revenues, which include payroll costs, rents, merchant credit card processing fees, utilities, and third party commission and fees, decreased to $10,361,000 as compared with $11,610,000 for the same period a year ago.  The decrease in direct costs of revenues was due to decreased locations in operation, decreased headcount, decreased merchant credit card processing fees, and expense reduction efforts, as compared to the same period a year ago.   

Full year 2017 selling, general and administrative expenses decreased to $6,220,000 as compared with $6,280,000 for the same period a year ago.  Selling, general and administrative expenses included an increase in advertising expense of $397,000, which was required to promote the Company's new offerings and to counter increased competition as discussed above, offset by reductions in expense of $457,000, which included the expense reduction efforts discussed above.    

Full year 2017 provision for income tax expense was $5.3 million as compared with $1.1 million for the same period a year ago.  On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJ Act") was enacted into law. The TCJ Act provides for significant changes to the U.S. Internal Revenue Code of 1986, as amended (the "Code"), that impact corporate taxation requirements, such as the reduction of the federal tax rate for corporations from 35% to 21% and changes or limitations to certain tax deductions beginning in fiscal year 2018.  The reduction in the corporate tax rate under the TCJ Act also required a one-time revaluation of certain tax-related assets to reflect their value at the lower corporate tax rate of 21%. As such, the Company recorded a reduction in the value of these assets of approximately $5.3 million, which primarily relate to the Company's net deferred tax assets, and recorded a corresponding increase to the provision for income taxes for the period ended December 31, 2017. 

Full year 2017 net loss was $(4,687,000), or $(0.27) per diluted common share, as compared with a net income of $1,903,000, or $0.11 per diluted common share reported for the same period a year ago.  Adjusted EBITDA (as defined and explained below) for full year 2017 was $1,162,000, or $0.07 per diluted common share, as compared with Adjusted EBITDA of $3,868,000, or $0.21 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 (loss) plus (a) provision for income tax expense (benefit) (b) other expenses, net, (c) depreciation and amortization charges, 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 nine discount ticket stores in Las Vegas under its Tix4Tonight marquee and two online properties www.tix4tonight.com and www.tix4.com, which offers up to a 50 percent discount for shows, concerts, attractions and tours, as well as discount dining and shopping offers.  Tix4Tonight also serves as the Official Las Vegas Guest Services Partner for Expedia and its other brands. The co-branded Expedia Local Expert service provides both pre-arrival concierge-type services and in-market concierge-type desk services and related customer service support at physical locations in Las Vegas and online, featuring Tix4Tonight's inventory of discount show and attraction tickets, along with discount dining deals.

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, 2017 can be found on the Company website at www.tixcorp.com or www.otcmarkets.com.

Investor Contacts:    

Steve Handy, CFO, (818)761-1002


TIX CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
          December 31, 2017     December 31, 2016
Assets
             
Current assets:          
  Cash   $ 5,129,000     $ 7,336,000  
  Accounts receivable   -       36,000  
  Prepaid expenses and other current assets   289,000       131,000  
    Total current assets   5,418,000       7,503,000  
           
Property and equipment, net   268,000       264,000  
           
Other assets:          
  Goodwill   3,120,000       3,120,000  
  Deferred tax asset   5,048,000       10,508,000  
  Deposits and other assets   215,000       61,000  
    Total other assets   8,383,000       13,689,000  
      Total assets $ 14,069,000     $ 21,456,000  
                 
Liabilities and Stockholders' Equity
             
Current liabilities:          
  Accounts payable – shows and events $ 711,000     $ 1,097,000  
  Accounts payable and accrued expenses   520,000       1,090,000  
  Deferred revenue   23,000       44,000  
  Notes payable – short term and net of discount   200,000       200,000  
    Total current liabilities   1,454,000       2,431,000  
                 
Deferred rent obligations   49,000       28,000
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