| |
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|
|
|
Tix Conference Call – August 23rd 2007
TIX CORPORATION Moderator: Mitch Francis
Operator: Statements in this release which are not historical facts are forward-looking and involve risks and uncertainties, including but not limited to the impact of competitive products and pricing, increased investment to support product introduction, market acceptance of products, product transitions by the company and its competitors, currency fluctuations, change sin product sales mix, and other risks described in the company’s registration statement and other Securities and Exchange Commission filings. Good day and welcome to the Tix Corporation Quarterly Status Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Mitch Francis, Chief Executive Officer of Tix Corporation. Please go ahead, sir. Mitch Francis: Good morning, everyone. Thank you for your time and participation in our Second Quarter 2007 Earnings Conference Call. I’d like to present you our information in three sections. First, as we’re new to many of you, I would like to take some time and describe our businesses. Second, I’ll address our performance reflected in our second quarter 10Q report which was filed this Monday. And finally, I’ll describe some of our growth plans, along with some projections of results through next year. Then we’ll open the lines for a question-and-answer session. So first let’s talk about our businesses. Our core business is – the Tix Corporation operates a wholly-owned subsidiary called – I’m sorry, subsidiary called Tix4Tonight, which is our core business. The company’s primarily involved in the selling of discount show tickets in Las Vegas on the same day of the show at 50 percent off the face value of the ticket. We sell some shows at a lesser value – I’m sorry, a lesser discount, under our sold-out show program. We operate four ticket facilities in Las Vegas where we sell more than 2000 tickets every day, and for next year we anticipate selling about a million tickets. The idea is that we sell the leftover seats that the show has not been able to sell, just hours before the show time, and there are thousands of such unsold seats every day because Las Vegas currently has about 85 shows, and we sell 70 shows every day. We open at 11 every morning with lines down the street at all of our locations. It’s actually very exciting to see. For the six months ended June 30 of this year, we at Tix4Tonight did $15.4 million dollars of gross ticket sales, and we would project that into about $32 million dollars for the year because the second half of our year is usually typically better than the first six months. For all of last year, we did $23.2 million dollars in gross ticket sales. That represents a 38 percent growth. We’re working right now on getting a fifth location in Las Vegas, a very major location if we’re able to obtain it, and if we do, we think that for the rest of the year it would add about another $3 million dollars in gross ticket sales so that we’d have about $35 million dollars in gross ticket sales, which would represent about a 51 percent growth factor over last year. Typically our revenues are higher this year than last year, so our revenues, we would think, would go up at an even higher percentage than the 51 percent growth. Please note that when we report to the SEC, we’re only able to report commissions and service fees that we charge because our gross revenue when reporting to the SEC is that we only pay for tickets that we sell, so SEC only lets us report those commissions and service fees, which are typically about 24 percent of our gross ticket sales. We have approximately 3000 people at our booths in Las Vegas every day, and realize that we could be selling them additional complimentary discount products. We developed Tix4Dinner, which offers up to 50 percent off entrees at Vegas restaurants and buffets, and we’re already doing approximately 300 to 500 dinner reservations every day. Typically we send people to a hotel for shows and offer restaurants in those hotels the discounts, so that basically we are able to keep people in those hotels for the whole evening, which obviously increases gambling for those hotels. They love it. That’s actually their mantra to keep people there all day and all night. We also got – we purchased a company that’s standby golf which we call Tix4Golf, offering discount golf tee times for over 35 courses in Las Vegas for both same-day and advanced bookings. It’s a very slow time right now. However, if you know anyone wanting to play golf in 110 degrees in Las Vegas in August, send them our way. The season will begin late September into October again. Tix4AnyEvent sells premium tickets to concerts, theater and sporting events throughout the country. It’s led by the former owner of Any Event, (John Parample), who’s our premium ticket manager. It’s the exact polar opposite business of our discount tickets so that we basically operate at both ends of the spectrum. We sell both the best seats at premium prices to events and the seats that are left over that are unsold just literally hours, or in the case of across the country, days, before the event at half price. We’re about to take on the best seats for the real sold-out shows in Las Vegas as well in the very near future at premium prices. So far, for Tix4AnyEvent, we’ve had entire national concert tours, including Gwen Stefani, Stevie Nicks, Def Leppard, Chicago, Poison, Linkin Park, Beyonce, ZZ Top, we’re currently working on Van Halen and Aerosmith tours. In sports we had a significant portion of the (De LaJolla Meriwether) premium tickets, premium seats that were available at the Las Vegas fight, we have the upcoming (Meriwether Ricky Hatton) fight that we’re going to have, I think, a very substantial number of premium tickets for in early December of this year, and that’s projected to be one of the biggest fights of the last several years. We had Cleveland (Cavaliers), who made it all the way through playoffs and to the finals this year, we have the Los Angeles Dodgers and the New York Mets all under our – all that’s on our premium ticket business. Tix Corp. purchased Exhibit Merchandising a couple of weeks ago on August 8th for $11,450,000 in cash, and 5 million shares of the company’s restricted common stock. Exhibit Merchandising’s in the business of branded product merchandise development and sales for the – for museum exhibits, particularly the King Tut exhibit that’s been touring the United States, and they also had the Real Pirates exhibit tour. The company sells themed souvenir posters, memorabilia, collector’s items in specialty stores that are set up and operate during the whole duration of the tour’s presence at particular museums, and the company also operates those stores. We felt that this was a terrific acquisition for the company and had several synergies. One, the company produces significant net income. We are projecting having very significant net income production over the next several years, which we would consider a great synergy for any company. Additionally, we have very, very strong relationships with many of the producers of Las Vegas shows that we deal with literally every day, and we’re getting very good relationships with producers of the concert tours and shows around the country. Most of these major shows use branded merchandise of their own, and we feel that the company could develop the exhibit merchandise business and capitalize on its capability of producing branded merchandise at very good prices, mostly done in China, and be able to expand that business with these shows. And finally, a synergy would be that as we develop more relationships with the producers of the museum exhibits and also the museums itself, we think that it might be possible for us to take on selling tickets for those exhibits and museums. The – we call the Tut – we call King Tut, Tut One, it’s actually called Tutankhamen and the Golden Age of the Pharaohs, is in Philadelphia right now, and it goes to London in November. Interestingly, (Curt Bechtel), our Vice President of Operations for Exhibit Merchandising, was just in London working on setting up the exhibit, again which will open in November, and worked on pricing for the merchandise, and the people from the museum suggested that he simply change the dollar sign on the pricing to the pound sign, and that was, I think, very illustrative of the difference of our currency exchange right now, and uniquely for us, in the United States, being able to benefit, so I think we’re going to be able to do very, very well in Europe where we have Tut going for 10 months, Tut One going for 10 months later on this year, so I think we probably will actually exceed numbers that we were hoping to attain. Tut Two is called Tutankhamen and the Pharaohs of Egypt. That is scheduled to open in Vienna, Austria in April next year, so we’ll be operating two different Tut museum exhibits at that point. Real Pirates exhibit opened this summer in Cincinnati and goes to Atlanta in February of next year. OK, here’s the really exciting stuff. I’ll report to you the highlights of our results from operations for the three months and six months ended June 30 of ’07. For the three months ended June 30, revenues increased by $3.4 million dollars or 265 percent to $4.7 million dollars. The increase in revenues of ’07 as compared to ’06 was generated primarily from increased revenues in our discount ticket business in Las Vegas, which increased $906,000 for the three months, as well as $2.4 million dollars of revenue from the company’s premium event ticket operations that we acquired just this year in March of ’07. During the three months ended June 30th, direct cost of revenues increased by $2.4 million dollars to $2.9 million dollars, and selling and marketing expenses increased by 162,000 to 305,000 in ’07. General administrative expenses increased by $7.1 million dollars to $7.66 million dollars in ’07, primarily due to an increase in cash and stock-based consulting and advisory fees, included in general administrative expenses for ’07 are consulting fees of 6.44 million relating to two business development consulting agreements entered into in the period consisting of stock based compensation of $4.77 million dollars and cash fees of $1.66 million dollars. The company expects to receive benefit from these agreements in the future, although the timing and amount is uncertain and can’t be predicted. Other stock based compensation was $340,000 in ’07. The net loss for the three months ended in June 30 was $6.2 million dollars as compared to net income of $40,000 in ’06. Excluding the aforementioned consulting fees and other stock based compensation along with $120,000 of depreciation and amortization that was included in selling and marketing expenses, net income would have been – sorry, $708,000 for the three months ended June 30 ’07. For the six months ended June 30, revenues increased by $4.1 million dollars, or 177 percent, to $6,458,000. The increase in revenue in ’07 as compared to ’06 was generated primarily by increase again in our discount ticket business operations of $1.46 million dollars as well as revenues of $2.45 million dollars from our Tix4AnyEvent business. Reflecting a change in the sales mix during the six months ended June 30, direct cost of revenues increased by 2.6 million to 3.6 million in ’07, and selling and marketing expenses increased by $286,000 to 560,000 in ’07. General administrative expenses increased by $7.6 million dollars to 8.7 million in ’07 as compared to $1,119,000 in ’06, again primarily due to cash and stock based consulting fees. Included in the general administrative expenses for ’07 are consulting fees of 6.44 million related to two business development consulting fees entered into the period consisting of stock based compensation of 4.77 million and cash fees of 1,666,000. Other stock based compensation of 835,000 was in 27 – 2007. Excluding such consulting fees and other stock based compensation, general and administrative expenses would have been 1,430,000 in ’07 as compared to 875,000 in ’06. The net loss for the six months ended June 30 was 6.7 million as compared to a net loss of $218,000 last year. Excluding the aforementioned consulting fees and other stock based compensation as well as merger integration costs of 250,000 related to the acquisition of Any Event tickets, along with 184,000 of depreciation and amortization included in selling and marketing expenses, net income would have been $997,000 for the six months. Under capital and liquidity resources, at June 30 ’07, the company had cash of $3.6 million dollars as compared to cash of 1.9 million at December 31 ’06. The company had working capital of 1,451,000 at June 30 as compared to working capital of 44,000 at December 31 ’06. On July 31, the company completed an interim closing of its private placement and raised $12,564,000 in gross proceeds. Based on the purchase price of $4.75 per share, the company issued 2.645 million shares of restricted common stock and warrants the purchase 1,322,000 shares of common stock exercisable at $5.50 per share for a period of two years. It’s anticipated there will be one more closing pursuant to the private placement subsequent to July 31, and the company utilized $11,450,000 of the proceeds to fund the acquisition of Exhibit Merchandising. About the stock, I’m very, very proud of our stock performance over the past year going from 91 cents to $8.10 in the 52-week range. Yesterday the stock closed at $6.95 per share. I’d love to thank many of you, presumably on the phone right now, for your tremendous support of Tix, both in the marketplace and in our private placements, and for your belief and commitment to help us realize our full potential of our business plan. In particular, I’d like to thank (Joe Marsh, Lee Marshall, Tony Ashcraft, Rick Craniak, Jerry Gray, Skip Davidson), our Chief Operating Officer, Ken Simon, and our fabulous Board of Directors, including (Ben Frankel, Norm Firestein, George – Sam Georges) and (Andy Pells). About our growth plans. As I said, our Las Vegas operation Tix4Tonight, we’re working on this fifth brick and mortar facility, and anticipate that it could anticipate revenue by 25 to 30 percent. Our discount ticket in – ticket business in Vegas, the infrastructure is just a profitable machine, and continues to grow and prosper dramatically with an ever-increasing footprint in that market. We want to expand our, what we call expiring inventory marketing, this discount ticket business, to other cities in the United States, and we’re working right now on our last-minute half-price ticket business nationwide. We would anticipate that most of that will be done over the internet with brick and mortar facilities in major metropolitan areas. Tix Corp. has been in the acquisition mode this year with three acquisitions accomplished since last December. The current private placement money raise may be able to fund as many as three more acquisitions that we’re pursuing for the coming months. All of these three acquisitions are synergistic and accretive, and when and if they happen, I’m sure it will be very exciting as we’re able to announce them. We plan to apply for listing on NASDAQ in the very near future, and apparently meet all – and exceed all of the requirements for NASDAQ at this time. We’re currently finalizing negotiations with an outstanding Chief Financial Officer candidate who will be able to begin next month if we’re able to come to an agreement, and keep your fingers crossed and you won’t have to hear me read the financial data again. Many of you have asked for guidance, and we feel that our business is in such a strong growth phase that it would be very, very difficult, if not impossible, to predict meaningful projections. It’s just impossible to anticipate the scope and impact from all of our new directions, such as growing the half-price ticket business on a national level. We don’t know how quickly that’s going to happen, we don’t know how quickly it will be received in the marketplace vis-à-vis our marketing programs. However, we do project record results for next year again, and I can reiterate that Tix4Tonight should do approximately $35 million dollars of gross ticket sales for this year, given that we are able to get that fifth facility, and with that fifth facility we believe it’s possible to hit $50 million dollars of gross ticket sales next year. Exhibit Merchandising, we’re anticipating doing approximately $20 million dollars of gross revenue next year with approximately 25 percent as profit margin. So now, let’s open the phone lines for a question-and-answer center. (Rose), would you do that, please? Operator: For those of you who have a question, please press star one on your touch tone phone and your questions will be answered in the order that they are received. If you are using a speakerphone, you must pick up your handset before pressing star one to register for a question. If at any time your question has already been answered, please press star two to remove yourself from the question lineup. Please allow one moment for our first question. Our first question is from Norman Lipton. Please proceed with your question. Norman Lipton: Good morning. I was wondering about the premium ticket business and those headlines out today Ticketmaster and Live Nation no longer doing business, and I was wondering with the change in landscape, I guess, of purchasing tickets, do you see any competition coming into the premium ticket business and the half-price ticket business, for that matter? Mitch Francis: Well, that’s a good question, and real timely, (Norman). For many of our listeners who aren’t aware, this morning Ticketmaster announced that they’re basically conceding that they’re not going to be able to get their contract renewed when it expires next year with Live Nation. We’ve been watching this very closely for many months and have been actually anticipating this occurrence. It’s been our MO to try to work with everyone. I would say our relationships with Live Nation and with Ticketmaster are very good and have the potential of growing very nicely over the year, the next year. I think that the landscape on premium ticket sales is definitely changing very, very rapidly with the ownership groups, the producers, the artists, the agents, managers, venues, all trying to increase their revenues and recognizing that there’s a premium for the best seats and that they’re all trying to find ways to get that extra revenue, so I think that that has a very significant amount of competition coming in line, mostly from the ownership group themselves as opposed to other outside brokers. We also have been tailoring our Tix4AnyEvent business to assist ownership groups in the sale of those premium tickets and actually recognize revenue themselves with using us, so it’s – I think we’re able to position ourselves very nicely that way. With regard to additional competition on the discount side, no, I don’t think that’s really occurring. I think the people seem to be actually looking to us to carry that ball, and it’s a ball we’re real excited about carrying, so they seem to understand that there’s a conflict of interest in selling the regular and full price tickets – I’m sorry, the full price tickets, and selling half price or discount tickets at the same time. Norman Lipton: OK, great. Thank you. Mitch Francis: Sure, Norm. Operator: Our next question is from Frank Finizio. Please proceed with your question. Frank Finizio: Hi, Mitch. As far as general administration as administrative expenses going forward, are you seeing these subside going forward into ’08 and are you seeing any economies of scale, and will this benefit the bottom line? Mitch Francis: Yes. We’re actually trying to have as much of these extra non-cash type expenses and one-time expenses in this year so that beginning in ’08 we will have, you know, true net income to be able to look to, so we’re – that’s one of the reasons that we’re trying to close these other acquisitions if we’re able to get them in this year and have all those costs go into this year, so I would anticipate that from ’08 forward, we’ll be producing real honest – not honest, but real net income from that point forward. Operator: There are no further questions at this time. Mitch Francis: OK. Well, I want to thank everyone for participating, and I’ll look forward to talking to you in the very near future. Thank you. END
Tix4Tonight has four prime ticket booth facilities, strategically placed at highly foot-trafficked locations in Las Vegas, Nevada. They include the Hawaiian Marketplace at the South end of the Strip, the Fashion Show Mall in front of Neiman Marcus, directly across the street from the new Wynn Resort at the middle of the Strip, North Strip, just South of the Riviera Hotel, and a downtown Las Vegas facility in the Four Queens Hotel, fronting onto the Fremont Street Experience. Cautionary Statement pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995: All statements in this news release that are not statements of historical fact are deemed to be forward-looking statements. 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. Many of these risks and uncertainties are identified in the Company's filings with the Securities and Exchange Commission. The Company assumes no obligation to update these forward-looking statements. This document is only for the general information of shareholders, potential investors and other interested parties, and is not to be construed as an offer to sell or the solicitation of an offer to buy any securities. The opinions expressed herein are the current opinions of management as of the date appearing on this document.
|
Tix Corporation. 2007. Copyright. All Rights Reserved. |