Market Overview

1-800-FLOWERS.COM, Inc. Reports Results for Its Fiscal 2017 Fourth Quarter and Full Year

Share:

Fourth Quarter Highlights:

  • Total revenues increased 2.2 percent to $239.5 million, compared
    with $234.4 million in the prior year period. On a comparable basis
    1,
    revenues increased 2.9 percent.
  • EPS was $0.12 per share compared with a loss of $0.17 per share in
    the prior year period. Adjusted EPS
    1 was a
    loss of $0.11 per share compared with a loss of $0.14 per share in the
    prior year period.
  • EBITDA1, excluding stock-based
    compensation, was a loss of $2.2 million, compared with a loss of $6.0
    million in the prior year period. Adjusted EBITDA
    1
    was a loss of $1.7 million compared with a loss of $2.9 million in the
    prior year period.

Full Year Highlights:

  • Total revenues increased 1.8 percent to $1.19 billion, compared
    with $1.17 billion in the prior year. On a comparable basis
    1,
    revenues increased 3.1 percent.
  • EPS was $0.65, compared with $0.55 in the prior year period.
    Adjusted EPS
    1 was $0.43, unchanged compared
    with the prior year.
  • EBITDA1, excluding stock-based
    compensation, was $85.4 million compared with $82.0 million in the
    prior year. Adjusted EBITDA
    1 was $87.2
    million compared with $85.7 million in the prior year.

1 Refer to "Definitions of Non-GAAP Financial
Measures" and the tables attached at the end of this press release for
reconciliation of Non-GAAP results to applicable GAAP results.

1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), the leading gourmet food and
floral gift provider for all occasions, today reported results for its
Fiscal 2017 fourth quarter and full year ended July 2, 2017. Chris
McCann, CEO of 1-800-FLOWERS.COM, Inc., said, "During the fiscal fourth
quarter, we achieved solid revenue growth across all three of our
business segments. In our floral businesses, the 1-800-Flowers.com brand
continued to grow revenues and extend its market leadership position.
This was driven by strong everyday gifting demand combined with solid
growth for the Mother's Day holiday period. These factors also benefited
BloomNet, which continued its recent trend of revenue growth. In our
Gourmet Food and Gift Baskets segment, revenues for the quarter
benefited from the shift of the Easter holiday into the quarter combined
with increasing sales for every-day gifting occasions for our Harry &
David, Cheryl's Cookies, The Popcorn Factory and 1-800-Baskets brands.
Increasing customer awareness of the everyday gifting offerings in our
gourmet food gift brands is a key focus and we are pleased with the
progress we are making in this area."

Fiscal Fourth Quarter Results

Total consolidated revenue for the period increased 2.2 percent to
$239.5 million, compared with $234.4 million in the prior year period.
On a comparable basis, total consolidated revenues for the quarter
increased 2.9 percent reflecting growth in all three of the Company's
business segments. Gross profit margin for the quarter was 41.0 percent,
compared with 42.9 percent in the prior year period, primarily
reflecting a combination of product mix, the promotional environment at
Mother's Day and increased shipping expenses. Operating expense as a
percent of total sales improved 400 basis points to 45.6 percent,
compared with 49.6 percent in the prior year period.

Net income attributable to the Company for the quarter was $8.0 million,
or $0.12 per share, compared with a net loss of $11.1 million, or
($0.17) per share, in the prior year period. Adjusted net loss1
for the quarter, primarily reflecting the exclusion of the gain on the
sale of the Fannie May business, was $7.2 million, or ($0.11) per share,
compared with an adjusted net loss of $9.0 million, or ($0.14) in the
prior year period.

The EBITDA1 loss, excluding stock-based
compensation, for the quarter was $2.2 million, compared with a loss of
$6.0 million in the prior year period. Adjusted EBITDA1,
excluding stock-based compensation, was a loss of $1.7 million, compared
with a loss of $2.9 million in the prior year period. The year-over-year
improvement in EBITDA and Adjusted EBITDA reflects the benefit of the
shift of the Easter holiday into the fourth quarter, compared with the
prior year when the holiday fell in the Company's third quarter. This
was somewhat offset by the timing of the close of the Company's sale of
the Fannie May Confection Brands business during the quarter and the
timing of the Harry & David Fruit of the Month Club®
cherry shipment which, due to a late harvest, moved from the fiscal 2017
fourth quarter to the first quarter of fiscal 2018.

Fiscal 2017 Full Year Results

Total consolidated revenues for the full fiscal year increased 1.8
percent to $1.19 billion, compared with $1.17 billion in the prior year.
On a comparable basis, year-over-year revenues increased 3.1 percent.
Revenue growth was driven primarily by the Company's Consumer Floral
segment which achieved revenue growth of 4.5 percent (5.7 percent on a
comparable basis), reflecting continued expansion of the
1-800-Flowers.com brand's market leadership. Gross profit margin for the
year was 43.6 percent, compared with 44.1 percent in the prior year.
Operating expense as a percent of total revenues was 39.7 percent,
compared with 40.4 percent in the prior year.

Net Income attributable to the Company was $44.0 million, or $0.65 per
fully-diluted share, compared with $36.9 million, or $0.55 per diluted
share in the prior year. Adjusted net income attributable to the Company
was $29.2 million, or $0.43 per fully-diluted share, compared with $28.5
million, or $0.43 per diluted share in the prior year period.

EBITDA, excluding stock based compensation, for the year of $85.4
million, compared with $82.0 million in the prior year. Adjusted EBITDA
for fiscal 2017, excluding stock-based compensation, was $87.2 million,
compared with $85.7 million in the prior year.

McCann said, "Our comparable revenue growth in fiscal 2017 represents an
acceleration compared with the past few years. Importantly, we see
several positive trends in all three of our business segments including
growing everyday gifting in our gourmet food gift brands, further
expansion of the 1-800-Flowers brand's market leadership, renewed
revenue growth in BloomNet and an increasing number of customers who are
shopping across our multiple brand offerings. We believe these factors,
among others, will enable us to continue to drive top and bottom-line
growth in fiscal 2018. In addition, our strong cash flows and balance
sheet – which was further bolstered by the more than $100 million we
recently received from the sale of the Fannie May business – provides us
with significant flexibility to enhance our growth through acquisitions."

Customer Metrics

During the fiscal fourth quarter, the Company attracted 918,000 new
customers. Approximately 2.0 million customers placed orders during the
quarter, of whom 54.5 percent were repeat customers. For the year, the
Company attracted 3.6 million new customers. Approximately 7.0 million
customers placed orders during the year, of whom 48.3 percent were
repeat customers. This reflects the Company's focus on effective
marketing and merchandising programs, including initiatives in social
and mobile communications channels.

Segment Results

The Company provides selected financial results for its Gourmet Food and
Gift Baskets, Consumer Floral and BloomNet business segments in the
tables attached to this release and as follows:

  • Gourmet Food and Gift Baskets: Fourth
    quarter revenues increased 3.9 percent to $78.4 million, compared with
    75.4 million in the prior year period. On a comparable basis, revenues
    for the period increased 3.4 percent. For the full year, revenues in
    this segment were essentially flat year-over-year at $670.7 million.
    On a comparable basis, revenues for the year increased 1.6 percent.
    Gross profit margin for the quarter was 37.6 percent compared with
    39.9 percent in the prior year period. Gross profit margin for the
    year was 43.6 percent compared with 44.4 percent in the prior year
    period. Adjusted contribution margin1 for the
    quarter improved 23.9 percent to a loss of $7.0 million, compared with
    a loss of $9.2 million in the prior year period. Adjusted contribution
    margin1 for the year was $78.1 million,
    compared with $79.4 million in the prior year. Results for the fourth
    quarter in this category reflect certain timing factors including the
    shift of the Easter holiday into the Company's fiscal fourth quarter,
    compared with the prior year when the holiday fell in the Company's
    fiscal third quarter, offset by a combination of the closing of the
    Company's sale of the Fannie May business on May 30, 2017, the 13-week
    fourth quarter in fiscal 2017 versus a 14-week fourth quarter in
    fiscal 2016 and the deferral of the shipment of Harry & David's Fruit
    of the Month Club
    ® cherries, due to a
    late harvest, from the Company's fiscal 2017 fourth quarter into the
    fiscal first quarter of 2018. Full-year results reflect a 52-week year
    in fiscal 2017 versus a 53-week year in fiscal 2016, reflecting the
    Company's retail calendar, the impact of the sale of the Fannie May
    business during the year and the shift of the Harry & David Fruit
    of the Month Club
    ® cherries shipment into the
    first quarter of fiscal 2018.
  • Consumer Floral: Fourth quarter
    revenues grew 1.4 percent to $139.4 million, compared with $137.5
    million in the prior year period. On a comparable basis, revenues grew
    2.9 percent for the quarter. Full-year revenues increased 4.5 percent,
    on a reported basis, to $437.1 million, compared with $418.5 million
    in the prior year period. On a comparable basis, revenues grew5.7
    percent for the year. Gross profit margin was 40.2 percent for the
    quarter and 40.6 percent for the full year, compared with 41.9 percent
    and 40.8 percent in the respective prior year periods. Contribution
    margin was $14.7 million for the quarter and $51.9 million for the
    year, compared with $17.7 million and $50.8 million in the respective
    prior year periods. Fiscal fourth quarter results in this segment
    reflect the shift of the Easter holiday into the period offset by the
    13-week quarter versus a 14-week quarter in the prior year period.
    Full-year results reflect the 52-week year in fiscal 2017 versus a
    53-week year in fiscal 2016.
  • BloomNet Wire Service: Fourth quarter
    revenues increased 1.8 percent to $22.1 million, compared with $21.7
    million in the prior year period. Full-year revenues increased 2.6
    percent to $87.7 million, compared with $85.5 million in the prior
    year period. Gross profit margin was 56.6 percent for the fourth
    quarter and 56.5 percent for the full year, compared with 58.9 percent
    and 56.3 percent in the respective prior year periods. Contribution
    margin was $8.7 million for the fourth quarter and $32.4 million for
    the full year, compared with $8.6 million and $30.6 million in the
    respective prior year periods.

Company Guidance

For fiscal 2018, the Company is providing guidance for revenue and
bottom-line results as follows:

  • Consolidated revenue in a range of $1.14 billion - to - $1.16 billion;
  • EPS in a range of $0.46 - to - $0.48. This includes an anticipated
    normalized effective tax rate of 35 percent, and;
  • EBITDA in a range of $90 million - to - $93 million;
  • Free Cash Flow for the year in a range of $30.0 million - to - $40.0
    million.
  • The Company's guidance for fiscal 2018 top and bottom-line results
    reflects the sale of the Fannie May business in fiscal 2017.

Definitions of Non-GAAP Financial Measures:

We sometimes use financial measures derived from consolidated financial
information, but not presented in our financial statements prepared in
accordance with U.S. generally accepted accounting principles ("GAAP").
Certain of these are considered "non-GAAP financial measures" under the
U.S. Securities and Exchange Commission rules. Non-GAAP financial
measures referred to in this document are either labeled as "non-GAAP"
or designated as such with a "(1)." See below for the definitions and
the reasons we use these non-GAAP financial measures. Where applicable,
see the Selected Financial Information section below for reconciliations
of these non-GAAP measures to their most directly comparable GAAP
financial measures.

Comparable Revenues

Comparable revenues measures GAAP revenues adjusted for the effects of
acquisitions, dispositions and other items affecting period to period
comparability. Comparable revenues referenced in this press release are
adjusted for certain timing factors including: (i) the closing of the
Company's sale of the Fannie May Confection Brands business on May 30,
2017, (ii) a 13-week quarter and a 52-week full year in fiscal 2017
versus a 14-week quarter and a 53-week full year in fiscal 2016,
reflecting the Company's retail calendar, and (iii) the shift of Harry &
David's Fruit of the Month Club® cherries
shipment out of the Company's fiscal fourth quarter in fiscal 2017, due
to a late harvest, into the first quarter of fiscal 2018. For the fiscal
fourth quarter, these factors were somewhat offset by the shift of the
Easter holiday into the Company's fiscal fourth quarter compared with
the prior year when the holiday fell in the Company's fiscal third
quarter. Comparable revenues referenced in this press release adjust
fiscal year 2016 fourth quarter and full year revenues to remove: (i)
the 14th week and the 53rd week, respectively
($8.0 million), (ii) Fannie May's June 2016 revenues ($4.8 million) and
(iii) the June 2016 Harry & David Fruit of the Month Club®
cherry shipment ($2.4 million), and add Easter revenues ($13.5 million).

We believe that this measure provides management and investors with a
more complete understanding of underlying revenue trends of established,
ongoing operations by excluding the effect of activities which are
subject to volatility and can obscure underlying trends.

Management recognizes that the term "comparable revenues" may be
interpreted differently by other companies and under different
circumstances. Although this may influence comparability of absolute
percentage growth from company to company, we believe that these
measures are useful in assessing trends of the Company and its segments,
and may therefore be a useful tool in assessing period-to-period
performance trends.

EBITDA and Adjusted EBITDA

We define EBITDA as Net income (loss) before interest, taxes,
depreciation and amortization. Adjusted EBITDA is defined as EBITDA
adjusted for certain items affecting period to period comparability.
Adjusted EBITDA for fiscal 2017 excludes certain charges including
severance and investment gains or losses associated with the Company's
non-qualified 401k executive compensation plan. EBITDA and Adjusted
EBITDA for fiscal 2016 exclude investment gains or losses associated
with the Company's non-qualified 401k executive compensation plan,
litigation settlement costs, as well as final integration costs,
including severance expenses, associated with Harry & David and the
rightsizing of the Fannie May operations.

The Company presents EBITDA because it considers such information
meaningful supplemental measures of its performance and believes such
information is frequently used by the investment community in the
evaluation of similarly situated companies. The Company uses EBITDA and
Adjusted EBITDA as factors used to determine the total amount of
incentive compensation available to be awarded to executive officers and
other employees. The Company's credit agreement uses EBITDA and Adjusted
EBITDA to measure compliance with covenants such as interest coverage
and debt incurrence. EBITDA and Adjusted EBITDA are also used by the
Company to evaluate and price potential acquisition candidates.

EBITDA and Adjusted EBITDA have limitations as analytical tools and
should not be considered in isolation or as a substitute for analysis of
the Company's results as reported under GAAP. Some of the limitations
are: (a) EBITDA and Adjusted EBITDA do not reflect changes in, or cash
requirements for, the Company's working capital needs; (b) EBITDA and
Adjusted EBITDA do not reflect the significant interest expense, or the
cash requirements necessary to service interest or principal payments,
on the Company's debts; and (c) although depreciation and amortization
are non-cash charges, the assets being depreciated and amortized may
have to be replaced in the future and EBITDA does not reflect any cash
requirements for such capital expenditures. EBITDA should only be used
on a supplemental basis combined with GAAP results when evaluating the
Company's performance.

Category Contribution Margin and Adjusted Category Contribution Margin

We define Category Contribution Margin as earnings before interest,
taxes, depreciation and amortization, before the allocation of corporate
overhead expenses. Adjusted Category contribution margin is defined as
Category Contribution Margin adjusted for certain items affecting period
to period comparability.

When viewed together with our GAAP results, we believe Category
Contribution Margin and Adjusted Category Contribution Margin provides
management and users of the financial statements information about the
performance of our business segments.

Category Contribution Margin and Adjusted Category Contribution Margin
are used in addition to and in conjunction with results presented in
accordance with GAAP and should not be relied upon to the exclusion of
GAAP financial measures. The material limitation associated with the use
of the Category Contribution Margin and Adjusted Category Contribution
Margin is that it is an incomplete measure of profitability as it does
not include all operating expenses or non-operating income and expenses.
Management compensates for these limitations when using this measure by
looking at other GAAP measures, such as operating income and net income.

Adjusted Net Income (loss), Adjusted EPS:

We define Adjusted Net Income (loss) and Adjusted EPS as Net Income and
EPS adjusted for certain items affecting period to period comparability.
Adjusted Net Income and Adjusted EPS for fiscal 2017 exclude certain
charges including Harry & David severance and the gain on the sale of
Fannie May. Adjusted Net Income/ Loss and Adjusted EPS for the fiscal
2016 fourth quarter and full year exclude: (i) the gain from insurance
recovery on the warehouse fire, (ii) loss on the sale of iflorist, (iii)
the impairment of a foreign equity method investment, (iv) Harry & David
integration costs, (v) litigation settlement costs as well as (vi)
severance expenses associated with Harry & David and the rightsizing of
the Fannie May.

We believe that Adjusted Net Income (Loss) and Adjusted EPS are
meaningful measures because they increase the comparability of period to
period results. Since these are not measures of performance calculated
in accordance with GAAP, they should not be considered in isolation of,
or as a substitute for GAAP Net Income and EPS as indicators of
operating performance and they may not be comparable to similarly titled
measures employed by other companies.

Free Cash Flow

We define Free Cash Flow as net cash provided by operating activities
less capital expenditures. The Company considers Free Cash Flow to be a
liquidity measure that provides useful information to management and
investors about the amount of cash generated by the business after the
purchases of fixed assets, which can then be used to, among other
things, invest in the Company's business, make strategic acquisitions,
strengthen the balance sheet and repurchase stock or retire debt. Free
Cash Flow is a liquidity measure that is frequently used by the
investment community in the evaluation of similarly situated companies.
Free Cash Flow has limitations as an analytical tool and should not be
considered in isolation or as a substitute for analysis of the Company's
results as reported under GAAP. A limitation of the utility of free cash
flow as a measure of financial performance is that it does not represent
the total increase or decrease in the company's cash balance for the
period.

About 1-800-FLOWERS.COM,
Inc.

1-800-FLOWERS.COM,
Inc.
 is a leading provider of gourmet food and floral gifts for all
occasions. For the past 40 years, 1-800-FLOWERS® (1-800-356-9377 or www.1800flowers.com) has
been helping deliver smiles for our customers with gifts for every
occasion, including fresh flowers and the finest selection of plants,
gift baskets, gourmet foods, confections, candles, balloons and plush
stuffed animals. As always, our 100% Smile Guarantee® backs every
gift. The company's Celebrations suite of services including
Celebrations Passport Free Shipping Program, Celebrations Rewards and
Celebrations Reminders, are all designed to engage with customers and
deepen relationships as a one-stop destination for all celebratory and
gifting occasions. In 2017, 1-800-FLOWERS.COM, Inc. was named as the
Gold Winner for The Golden Bridge Awards in the "New Products and
Services" category for the company's groundbreaking implementation of an
artificial intelligence-powered online gift concierge, GWYN. Earlier in
the year, 1-800-Flowers.com was awarded the Gold Stevie "e-Commerce
Customer Service" Award, recognizing the company's innovative use of
online technologies and social media to service the needs of customers.
In addition, 1-800-FLOWERS.COM, Inc. was recognized as one of Internet
Retailer's Top 300 B2B e-commerce companies in 2015 and was also
recently named in Internet Retailer's 2016 Top Mobile 500 as one of the
world's leading mobile commerce sites. The company was included in
Internet Retailer's 2015 Top 500 for fast growing e-commerce companies.
In 2015, 1-800-Flowers.com was named a winner of the "Best Companies to
Work for in New York State" Award by The New York Society for Human
Resource Management (NYS-SHRM). The Company's BloomNet® international
floral wire service (www.mybloomnet.net) provides
a broad range of quality products and value-added services designed to
help professional florists grow their businesses profitably. The 1-800-FLOWERS.COM,
Inc.
 "Gift Shop" also includes gourmet gifts such as premium,
gift-quality fruits and other gourmet items from Harry & David®
(1-877-322-1200) or www.harryanddavid.com), popcorn
and specialty treats from The Popcorn Factory® (1-800-541-2676 or www.thepopcornfactory.com); cookies
and baked gifts from Cheryl's® (1-800-443-8124 or www.cheryls.com); gift
baskets and towers from 1-800- Baskets.com® (www.1800baskets.com); premium
English muffins and other breakfast treats from Wolferman's
(1-800-999-1910 or www.wolfermans.com);
carved fresh fruit arrangements from FruitBouquets.com (www.fruitbouquets.com); and
top quality steaks and chops from Stock Yards® (www.stockyards.com).
Shares in 1-800-FLOWERS.COM, Inc.
are traded on the NASDAQ Global Select Market, ticker symbol: FLWS.

Special Note Regarding Forward Looking
Statements
:

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements represent the Company's current expectations
or beliefs concerning future events and can generally be identified
using statements that include words such as "estimate," "expects,"
"project," "believe," "anticipate," "intend," "plan," "foresee,"
"forecast," "likely," "will," "target" or similar words or phrases.
These forward-looking statements are subject to risks, uncertainties and
other factors, many of which are outside of the Company's control which
could cause actual results to differ materially from the results
expressed or implied in the forward- looking statements; including, but
are not limited to, statements regarding the Company's expectations for:
its ability to accelerate revenue growth to achieve its guidance for
consolidated revenue for the full year in a range of $1.14-to-$1.16
billion; its ability to achieve EBITDA in a range of $90 million-to-$93
million and EPS in a range of $0.46 -to- $0.48 per fully-diluted share,
its ability to generate Free Cash Flow for the year in a range of $30
million- to -$40.0 million; its ability to leverage its operating
platform and reduce operating expense ratio; its ability to cost
effectively acquire and retain customers; the outcome of contingencies,
including legal proceedings in the normal course of business; its
ability to compete against existing and new competitors; its ability to
manage expenses associated with sales and marketing and necessary
general and administrative and technology investments; its ability to
reduce promotional activities and achieve more efficient marketing
programs; and general consumer sentiment and economic conditions that
may affect levels of discretionary customer purchases of the Company's
products. The Company undertakes no obligation to publicly update any of
the forward-looking statements, whether because of new information,
future events or otherwise, made in this release or in any of its SEC
filings except as may be otherwise stated by the Company. For a more
detailed description of these and other risk factors, please refer to
the Company's SEC filings including the Company's Annual Reports on Form
10-K and its Quarterly Reports on Form 10-Q. Consequently, you should
not consider any such list to be a complete set of all potential risks
and uncertainties.

Conference Call:

The Company will conduct a conference call to discuss the above details
and attached financial results today, Thursday, August 24, 2017, at
11:00 a.m. (EDT). The call will be "web cast" live via the Internet and
can be accessed from the Investor Relations section of the
1-800-FLOWERS.COM web site at www.1800flowersinc.com
A recording of the call will be posted on the Investor Relations section
of the Company's web site within two hours of the call's completion. A
telephonic replay of the call can be accessed for 48 hours beginning at
2:00 p.m. EDT on the day of the call at: (US) 1-877-344-7529; (CA)
1-855-669-9658; (International) 1-412-317-0088; enter conference ID #:
10110936.

Note: The attached tables are an integral part of this press
release without which the information presented in this press release
should be considered incomplete.

       

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands)

(unaudited)

 
July 2, 2017 July 3, 2016
 
Assets
Current assets:
Cash and cash equivalents $ 149,732 $ 27,826
Trade receivables, net 14,073 19,123
Inventories 75,862 103,328
Prepaid and other   17,735   16,382
Total current assets 257,402 166,659
 
Property, plant and equipment, net 161,381 171,362
Goodwill 62,590 77,667
Other intangibles, net 61,090 79,000
Other assets   10,007   8,253
Total assets $ 552,470 $ 502,941
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 27,781 $ 35,201
Accrued expenses 90,206 66,066
Current maturities of long-term debt   7,188   19,594
Total current liabilities $ 125,175 $ 120,861
 
Long-term debt 101,377 94,396
Deferred tax liabilities 33,868 35,517
Other liabilities   9,811   9,581
Total liabilities   270,231   260,355
Total equity   282,239   242,586
Total liabilities and stockholders' equity $ 552,470 $ 502,941
 

       

1-800-FLOWERS.COM, Inc. and Subsidiaries

Selected Financial Information

Condensed Consolidated Statements of Income

(In thousands, except for per share data)

(unaudited)

 
Three Months Ended Years Ended
July 2, 2017     July 3, 2016 July 2, 2017     July 3, 2016
Net revenues:
E-commerce (combined online and telephonic) $ 191,355 $ 186,411 $ 896,762 $ 882,782
Other   48,173     47,984     296,863     290,242  
Total net revenues 239,528 234,395 1,193,625 1,173,024
Cost of revenues   141,209     133,750     673,344     655,566  
Gross profit 98,319 100,645 520,281 517,458
Operating expenses:
Marketing and sales 72,415 74,608 317,527 318,175
Technology and development 9,312 10,175 38,903 39,234
General and administrative 19,670 23,351 84,116 84,383
Depreciation and amortization   7,720     8,105     33,376     32,384  
Total operating expenses   109,117     116,239     473,922     474,176  
Operating income (loss) (10,798 ) (15,594 ) 46,359 43,282
Interest expense, net 1,025 1,382 5,821 6,674
Other (income) expense, net   (14,901 )   312     (15,471 )   (14,839 )
Income (loss) before income taxes 3,078 (17,288 ) 56,009 51,447
Income tax expense (benefit)   (4,935 )   (6,234 )   11,968     15,579  
Net income (loss) $ 8,013   $ (11,054 ) $ 44,041   $ 35,868  
Less: Net loss attributable to noncontrolling interest   -     -     -     (1,007 )
Net income (loss) attributable to 1-800-FLOWERS.COM, Inc. $ 8,013   $ (11,054 ) $ 44,041   $ 36,875  
 
Basic net income (loss) per common share attributable to
1-800-FLOWERS.COM, Inc.
$ 0.12   $ (0.17 ) $ 0.68   $ 0.57  
 
Diluted net income (loss) per common share attributable to
1-800-FLOWERS.COM, Inc.
$ 0.12   $ (0.17 ) $ 0.65   $ 0.55  
 
Weighted average shares used in the calculation of net income (loss)
per common share:
Basic   65,255     65,376     65,191     64,896  
Diluted   67,604     65,376     67,735     67,083  
 

   

1-800-FLOWERS.COM, Inc. and Subsidiaries

Selected Financial Information

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

 
Years ended
July 2, 2017     July 3, 2016
 
Operating activities:
Net income $ 44,041 $ 35,868
Reconciliation of net income to net cash provided by operating
activities, net of dispositions:
Gain on sale of Fannie May (14,607 ) -
Depreciation and amortization 33,376 32,384
Amortization of deferred financing costs 1,532 1,791
Deferred income taxes (1,649 ) (3,000 )
Foreign equity method investment impairment - 2,278
Loss on sale/impairment of iFlorist - 1,990
Bad debt expense 1,158 1,278
Stock-based compensation 6,102 6,343
Excess tax benefit from stock-based compensation - (2,400 )
Other non-cash items 133 517
Changes in operating items:
Trade receivables (6,220 ) (4,210 )
Insurance receivable - 2,979
Inventories (9,277 ) (10,216 )
Prepaid and other (2,609 ) (1,560 )
Accounts payable and accrued expenses 9,132 (6,429 )
Other assets (36 ) (29 )
Other liabilities   (66 )   89  
Net cash provided by operating activities 61,010 57,673
 
Investing activities:
Proceeds from sale of business 111,955 -
Capital expenditures, net of non-cash expenditures   (33,652 )   (33,938 )
Net cash provided by (used in) investing activities 78,303 (33,938 )
 
Financing activities:
Acquisition of treasury stock (10,735 ) (15,223 )
Excess tax benefit from stock based compensation - 2,400
Proceeds from exercise of employee stock options 285 3,517
Proceeds from bank borrowings 181,000 178,000
Repayment of notes payable and bank borrowings (186,451 ) (192,543 )
Debt issuance costs   (1,506 )   -  
Net cash used in financing activities (17,407 ) (23,849 )
   
Net change in cash and cash equivalents 121,906 (114 )
Cash and cash equivalents:
Beginning of year   27,826     27,940  
 
End of year $ 149,732   $ 27,826  
 

   

1-800-FLOWERS.COM, Inc. and Subsidiaries

Selected Financial Information – Category Information

(in thousands)

(unaudited)

 
Three Months Ended
July 2, 2017    

Compensation
Charge related to
NQ Plan
Investment

Appreciation

   

Severance
Costs

   

Adjusted
(non-GAAP)
July 2, 2017

    July 3, 2016    

Litigation
Settlement

   

Compensation
Charge related to
NQ Plan
Investment

Appreciation

   

Severance
Costs

   

Adjusted
(non-GAAP)
July 3, 2016

                           
Net revenues:
1-800-Flowers.com Consumer Floral $ 139,425 $ - $ - $ 139,425 $ 137,536 $ - $ - $ - $ 137,536
BloomNet Wire Service 22,143 22,143 21,743 21,743
Gourmet Food & Gift Baskets 78,382 78,382 75,447 75,447
Corporate 263 263 249 249
Intercompany eliminations   (685 )       (685 )   (580 )         (580 )
Total net revenues $ 239,528   $ - $ - $ 239,528   $ 234,395   $ - $ - $ - $ 234,395  
 
Gross profit:
1-800-Flowers.com Consumer Floral $ 56,105 $ 56,105 $ 57,575 $ 57,575
40.2 % 40.2 % 41.9 % 41.9 %
 
BloomNet Wire Service 12,543 12,543 12,809 12,809
56.6 % 56.6 % 58.9 % 58.9 %
 
Gourmet Food & Gift Baskets 29,483 29,483 30,132 30,132
37.6 % 37.6 % 39.9 % 39.9 %
 
Corporate (a) 188 188 129 129
  71.5 %       71.6 %   51.8 %         51.8 %
Total gross profit $ 98,319   $ - $ - $ 98,319   $ 100,645   $ - $ - $ - $ 100,645  
  41.0 %   -   -   41.0 %   42.9 %   -   -   -   42.9 %
 
Category Contribution Margin (non-GAAP):
1-800-Flowers.com Consumer Floral $ 14,688 $ 14,688 $ 17,742 $ 17,742
BloomNet Wire Service 8,670 8,670 8,612 8,612
Gourmet Food & Gift Baskets   (7,232 )     213   (7,019 )   (9,228 )         (9,228 )
Category Contribution Margin Subtotal 16,126 - 213 16,339 17,126 - - - 17,126
Corporate (a)   (19,204 )   303     (18,901 )   (24,615 )   1,500   149   1,437   (21,529 )
EBITDA (non-GAAP) $ (3,078 ) $ 303 $ 213 $ (2,562 ) $ (7,489 ) $ 1,500 $ 149 $ 1,437 $ (4,403 )
Add: Stock-based compensation   910         910     1,512           1,512  
EBITDA, excluding stock-based compensation (non-GAAP) $ (2,168 ) $ 303 $ 213 $ (1,652 ) $ (5,977 ) $ 1,500 $ 149 $ 1,437 $ (2,891 )
 

   

1-800-FLOWERS.COM, Inc. and Subsidiaries

Selected Financial Information – Category Information

(in thousands)

(unaudited)

 
Years Ended
July 2, 2017    

Compensation
Charge related
to NQ Plan
Investment
Appreciation

   

Severance
Costs

   

Adjusted
(non-GAAP)
July 2, 2017

    July 3, 2016    

Harry & David
Integration
Costs

   

Litigation
Settlement

   

Compensation
Charge related
to NQ Plan
Investment
Appreciation

   

Severance
Costs

   

Adjusted
(non-GAAP)
July 3, 2016

                               
Net revenues:
1-800-Flowers.com Consumer Floral $ 437,132 $ - $ - $ 437,132 $ 418,492 $ - $ - $ - $ - $ 418,492
BloomNet Wire Service 87,700 87,700 85,483 85,483
Gourmet Food & Gift Baskets 670,677 670,677 670,453 670,453
Corporate 1,102 1,102 1,066 1,066
Intercompany eliminations   (2,986 )       (2,986 )   (2,470 )           (2,470 )
Total net revenues $ 1,193,625   $ - $ - $ 1,193,625   $ 1,173,024   $ - $ - $ -   $ - $ 1,173,024  
 
Gross profit:
1-800-Flowers.com Consumer Floral $ 177,488 $ - $ - $ 177,488 $ 170,536 $ - $ - $ - $ - $ 170,536
40.6 % 40.6 % 40.8 % - 40.8 %
 
BloomNet Wire Service 49,562 49,562 48,169 - 48,169
56.5 % 56.5 % 56.3 % - 56.3 %
 
Gourmet Food & Gift Baskets 292,199 292,199 297,782 - 297,782
43.6 % 43.6 % 44.4 % - 44.4 %
 
Corporate (a) 1,032 1,032 971 - 971
93.6 % 93.6 % 91.1 % - 91.1 %
                   
Total gross profit $ 520,281   $ - $ - $ 520,281   $ 517,458   $ - $ - $ -   $ - $ 517,458  
  43.6 %   -   -   43.6 %   44.1 %   -   -   -       44.1 %
 
Category Contribution Margin (non-GAAP):
1-800-Flowers.com Consumer Floral $ 51,860 $ - $ - $ 51,860 $ 50,773 $ - $ - $ - $ - $ 50,773
BloomNet Wire Service 32,383 32,383 30,629 - - - - 30,629
Gourmet Food & Gift Baskets   77,312       756   78,068     79,398     -   -   -     -   79,398  
Category Contribution Margin Subtotal 161,555 - 756 162,311 160,800 - - - - 160,800
Corporate (a) (81,820 ) 988 (80,832 ) (85,134 ) 828 1,500 (122 ) 1,437 (81,491 )
                   
EBITDA (non-GAAP) $ 79,735 $ 988 $ 756 $ 81,479 $ 75,666 $ 828 $ 1,500 $ (122 ) $ 1,437 $ 79,309
 
Add: Stock-based compensation 5,694 5,694 6,343 6,343
                   

EBITDA, excluding stock-based compensation
(Non-GAAP)

$ 85,429   $ 988 $ 756 $ 87,173   $ 82,009   $ 828 $ 1,500 $ (122 ) $ 1,437 $ 85,652  
 

 

1-800-FLOWERS.COM, Inc. and Subsidiaries

Selected Financial Information

(in thousands)

(unaudited)

 

Reconciliation of GAAP net income (loss) to adjusted (non-GAAP)
income (loss) attributable to 1-800-FLOWERS.COM, Inc.:

       
Three Months Ended Years Ended
July 2, 2017     July 3, 2016 July 2, 2017     July 3, 2016
 
GAAP net income (loss) $ 8,013 $ (11,054 ) $ 44,041 $ 35,868
Less: Net loss attributable to noncontrolling interest   -     -     -     (1,007 )
Income (loss) attributable to 1-800-FLOWERS.COM, Inc. 8,013 (11,054 ) 44,041 36,875

Adjustments to reconcile income (loss) attributable to
1-800-FLOWERS.COM, Inc. adjusted
(non-GAAP) income (loss)
attributable to 1-800-FLOWERS.COM, Inc.

Deduct: Gain from sale of Fannie May 14,607 - 14,607 -
Deduct: Gain from insurance recovery on warehouse fire - - - 19,611
Add back: Loss on sale/impairment of iFlorist - - - 2,121
Add back: Impairment of foreign equity method investment - - - 1,728
Add back: Harry & David integration costs - - - 828
Add back: Litigation costs - 1,500 - 1,500
Add back: Severance costs 213 1,437 756 1,437
Add back: income tax expense/(benefit) effect on adjustments   (858 )     (889 )   (1,025 )     3,633  
Adjusted (non-GAAP) income (loss) attributable to
1-800-FLOWERS.COM, Inc.
$ (7,239 )   $ (9,006 ) $ 29,165     $ 28,511  
 
GAAP income (loss) per common share attributable to
1-800-FLOWERS.COM, Inc.
Basic $ 0.12   $ (0.17 ) $ 0.68   $ 0.57  
Diluted $ 0.12   $ (0.17 ) $ 0.65   $ 0.55  
 

Adjusted (non-GAAP) income (loss) per common share attributable
to 1-800-FLOWERS.COM, Inc.

Basic $ (0.11 ) $ (0.14 ) $ 0.45   $ 0.44  
Diluted $ (0.11 ) $ (0.14 ) $ 0.43   $ 0.43  
 

Weighted average shares used in the calculation of GAAP income
(loss) and Adjusted

(non-GAAP) income (loss) per
common share attributable to 1-800-FLOWERS.COM, Inc

Basic   65,255     65,376     65,191     64,896  
Diluted   67,604     65,376     67,735     67,083  

 

Reconciliation of GAAP income (loss) attributable to
1-800-Flowers.com, Inc. to adjusted EBITDA (Non-GAAP), excluding
stock-based compensation (b):

    Three Months Ended     Years Ended
July 2, 2017     July 3, 2016 July 2, 2017     July 3, 2016
 
Income (loss) attributable to 1-800-FLOWERS.COM, Inc. $ 8,013 $ (11,054) $ 44,041 $ 36,875
Add:
Interest expense and other, net 731 1,694 4,957 7,597
Depreciation and amortization 7,720 8,105 33,376 32,384
Income tax expense - - 11,968 15,579
Loss on sale/impairment of iFlorist - - - 2,121
Impairment of foreign equity method investment - - - 1,728
Less:
Net loss attributable to noncontrolling interest - - - 1,007
Income tax benefit 4,935 6,234 - -
Gain from sale of Fannie May 14,607 - 14,607 -
Gain from insurance recovery on warehouse fire - - - 19,611
EBITDA (non-GAAP) (3,078) (7,489) 79,735 75,666
Add: Integration costs - - - 828
Add: Litigation settlement - 1,500 - 1,500
Add: Compensation Charge related to NQ Plan Investment Appreciation 303 149 988 (122)
Add: Severance costs 213 1,437 756 1,437
Adjusted EBITDA (non-GAAP) (2,562) (4,403) 81,479 79,309
Add: Stock-based compensation 910 1,512 5,694 6,343
Adjusted EBITDA (non-GAAP), excluding stock-based compensation $ (1,652) $ (2,891) $ 87,173 $ 85,652
 
(a)   Corporate expenses consist of the Company's enterprise shared
service cost centers, and include, among other items, Information
Technology, Human Resources, Accounting and Finance, Legal, and
Executive and Customer Service Center functions, as well as
Stock-Based Compensation. To leverage the Company's infrastructure,
these functions are operated under a centralized management
platform, providing support services throughout the organization.
The costs of these functions, other than those of the Customer
Service Center, which are allocated directly to the above categories
based upon usage, are included within corporate expenses as they are
not directly allocable to a specific segment.
(b) Performance is measured based on segment contribution margin or
segment Adjusted EBITDA, reflecting only the direct controllable
revenue and operating expenses of the segments, both of which are
non-GAAP measurements. As such, management's measure of
profitability for these segments does not include the effect of
corporate overhead, described above, depreciation and amortization,
other income (net), and other items that we do not consider
indicative of our core operating performance. Management utilizes
EBITDA, and adjusted financial information, as a performance
measurement tool because it considers such information a meaningful
supplemental measure of its performance and believes it is
frequently used by the investment community in the evaluation of
companies with comparable market capitalization. The Company also
uses EBITDA and adjusted financial information as one of the factors
used to determine the total amount of bonuses available to be
awarded to executive officers and other employees. The Company's
credit agreement uses EBITDA and adjusted financial information to
measure compliance with covenants such as interest coverage and debt
incurrence. EBITDA and adjusted financial information is also used
by the Company to evaluate and price potential acquisition
candidates. EBITDA and adjusted financial information have
limitations as an analytical tool, and should not be considered in
isolation or as a substitute for analysis of the Company's results
as reported under GAAP. Some of these limitations are: (a) EBITDA
does not reflect changes in, or cash requirements for, the Company's
working capital needs; (b) EBITDA does not reflect the significant
interest expense, or the cash requirements necessary to service
interest or principal payments, on the Company's debts; and (c)
although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized may have to be replaced in
the future, and EBITDA does not reflect any cash requirements for
such capital expenditures. Because of these limitations, EBITDA
should only be used on a supplemental basis combined with GAAP
results when evaluating the Company's performance.

Click
here to subscribe to Mobile Alerts for 1-800-Flowers
.

View Comments and Join the Discussion!