Market Overview

1-800-FLOWERS.COM, Inc. Reports Results for Its Fiscal 2018 Fourth Quarter and Full Year

Share:

Fourth Quarter Highlights:

  • Total reported revenues were $229.9, compared with $239.5 million
    in the prior year period, reflecting the shift of the Easter holiday
    into the Company's fiscal third quarter and the Company's sale of
    Fannie May Confections in May of 2017. Adjusted for the sale of Fannie
    May
    (1), total revenues increased 1.7 percent.
  • EPS was ($0.13), compared with $0.12 per share in the prior year
    period. Adjusted EPS
    (1) was ($0.12), compared
    with ($0.11) in the prior year period.
  • Adjusted EBITDA1 was a loss of $1.8
    million, compared with an Adjusted EBITDA loss of $1.2 million in the
    prior year period, primarily reflecting the Easter shift.

Full Year Highlights:

  • Total reported revenues were $1.15 billion, compared with $1.19
    billion in the prior year period. Adjusted for the sale of Fannie May
    (1),
    total revenues increased 3.7 percent, primarily reflecting
    accelerating revenue growth in the Company's two largest brands,
    1-800-Flowers.com and Harry & David.
  • EPS was $0.61, compared with $0.65 in the prior year period.
    Adjusted EPS
    (1) was $0.44, compared with
    $0.44 in the prior year period.
  • Adjusted EBITDA(1), was $78.9 million,
    compared with $85.9 million in the prior year.

Fiscal 2019 Outlook:

  • The Company expects to build on the accelerated pace of revenue
    growth seen in the second half of fiscal 2018 and is providing
    guidance for revenue growth in a range of 5-to-7 percent during fiscal
    2019, driven by strong momentum in its market-leading 1-800-Flowers
    and Harry & David brands and increased investments in strategic
    marketing and merchandising programs.

( (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 ("Adjusted" and "Comparable")
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 2018 fourth quarter and full year ended July 1, 2018. Chris
McCann, CEO of 1-800-FLOWERS.COM, Inc., said, "Our results for the
fourth quarter represent a strong finish to the fiscal year. During the
quarter, we achieved healthy revenue growth in our Consumer Floral and
BloomNet segments. This was driven by strong everyday gifting demand
combined with a solid Mother's Day period, which more than offset the
impact of the Easter holiday shift. In our Gourmet Foods and Gift
Baskets segment, where the Easter shift has the largest impact, we saw a
continuation of the accelerated growth in everyday gifting that we noted
throughout the fiscal year, particularly in our Harry & David and
1-800-Baskets brands."

Regarding the full fiscal year, McCann said, "Revenue growth for the
1-800-Flowers.com brand accelerated throughout the year as we leveraged
our investments in targeted marketing and merchandising programs and
further extended our market leadership position. BloomNet also benefited
from a similar investment strategy, enabling us to expand our market
position versus the legacy wire service competition. In addition, our
Gourmet Foods and Gift Baskets segment achieved revenue growth of nearly
five percent, on a comparable basis, during the second half of the
fiscal year, primarily driven by strong everyday gifting in our Harry &
David and 1-800-Baskets brands."

He continued, "As we move into fiscal 2019, we plan to take advantage of
market conditions and build on the momentum we are seeing across our
business by continuing to invest in strategic marketing and
merchandising programs as well as in innovations that enhance the
customer experience. These investments will enable us to accelerate
revenue growth and extend our market leadership positions. We remain
intensely focused on growing our customer base and expanding the
platform we are building to help our customers express, connect and
celebrate."

Fiscal Fourth Quarter Results

Total reported revenue for the fiscal fourth quarter was $229.9 million,
down 4.0 percent compared with $239.5 million in the prior year period.
This reflected both the shift of the Easter holiday into the Company's
fiscal third quarter, compared with the prior year when the holiday fell
in the Company's fiscal fourth quarter, and the sale in May of 2017 of
the Fannie May Fine Confections business. Adjusted for the sale of
Fannie May(1), total consolidated revenues for
the quarter increased 1.7 percent, primarily reflecting growth in the
Company's 1-800-Flowers and BloomNet businesses. For the second half of
the fiscal year, which combines the Company's third and fourth quarters,
eliminating the impact of the timing of the Easter holiday, total
comparable revenues, adjusted for the sale of Fannie May(1),
increased 5.8 percent.

Gross profit margin for the quarter was 40.5 percent, compared with 41.0
percent in the prior year period. Gross profit margin in the prior year
period, adjusted for the sale of Fannie May(1) was
41.3 percent. The decline in gross profit margin primarily reflects the
shift of the Easter holiday. Operating expense as a percent of total
sales was 45.4 percent, compared with 45.5 percent in the prior year
period.

The combination of these factors resulted in an Adjusted EBITDA(1)
loss of $1.8 million, compared with an Adjusted EBITDA(1)
loss of $1.2 million in the prior year period, primarily reflecting the
Easter shift. Net loss was $8.2 million, or ($0.13) per share, compared
with net income of $8.0 million, or $0.12 per share in the prior year
period, which included the gain on the sale of Fannie May Confections in
May of 2017. On a comparable basis(1), net loss
was $7.6 million, or ($0.12) per share, compared with a net loss of $7.0
million, or ($0.11) per share, in the prior year period.

Fiscal 2018 Full Year Results

Total reported revenues for the full fiscal year were $1.15 billion,
compared with $1.19 billion in the prior year. Adjusted for the sale of
Fannie May(1), year-over-year revenues
increased 3.7 percent, primarily reflecting growth in the Company's
1-800-Flowers and Harry & David brands.

Gross profit margin for the year was 42.5 percent, compared with 43.6
percent in the prior year. Adjusted for the sale of Fannie May(1),
gross profit margin in the prior year period was 43.9 percent. Operating
expense as a percent of total revenues was 38.9 percent, compared with
39.7 percent in the prior year.

Adjusted EBITDA was $78.9 million, compared with $85.9 million in the
prior year. Net income was $40.8 million, or $0.61 per share, compared
with $44.0 million, or $0.65 per share in the prior year. On a
comparable basis(1), net income was $29.3
million, or $0.44 per share, compared with $29.9 million, or $0.44 per
share in the prior year period.

Customer Metrics

During the fiscal fourth quarter, the Company attracted 746,000 new
customers. Approximately 2.0 million customers placed orders during the
quarter, of whom 62.9 percent were repeat customers. For the year, the
Company attracted 2.8 million new customers. Approximately 6.6 million
customers placed orders during the year, of whom 58.1 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 Foods
and Gift Baskets, Consumer Floral and BloomNet business segments in the
tables attached to this release and as follows:

  • Gourmet Foods and Gift Baskets: Fourth
    quarter reported revenues were $60.1 million, down 23.3 percent
    compared with $78.4 million in the prior year period. The lower
    revenues for the quarter primarily reflect the shift of the Easter
    holiday into the Company's fiscal third quarter and the sale of Fannie
    May in May of 2017. Adjusted for the sale of Fannie May(1),
    revenues for the period declined 7.1 percent reflecting strong,
    everyday gifting sales for the Harry & David and Cheryl's brands,
    which somewhat offset the Easter holiday shift. For the second half of
    the fiscal year, which combines the Company's third and fourth
    quarters, eliminating the impact of the timing of the Easter holiday,
    total comparable revenues in this segment, adjusted for the sale of
    Fannie May, increased 4.5 percent compared with the prior year period.

    Gross
    profit margin for the quarter was 36.0 percent compared with 37.6
    percent in the prior year period. Adjusted for the sale of Fannie May(1),
    gross profit margin for the prior year period was 37.8 percent.
    Contribution loss for the quarter was $8.8 million, compared with a
    contribution loss of $7.2 million in the prior year period. Adjusted
    for the sale of Fannie May(1), contribution
    margin loss in the prior year period was $6.8 million. The higher
    contribution margin loss for the quarter, on both a reported and
    comparable basis, primarily reflects the impact of the Easter holiday
    shift.

    For the year, revenues in this segment were $605.5
    million, down 9.7 percent compared with $670.7 million in the prior
    year, primarily reflecting the sale of Fannie May. Adjusted for the
    sale of Fannie May(1), revenues for the year
    increased 3.2 percent. Gross profit margin for the year was 42.6
    percent, compared with 43.6 percent in the prior year. On a comparable
    basis(1), gross profit margin for the prior
    year was 44.2 percent. The lower gross profit margin for the year, on
    both a reported and comparable basis, primarily reflects the impact of
    operational issues at the Company's Cheryl's Cookies brand during the
    fiscal second quarter as well as higher transportation and
    labor-related costs incurred throughout the year. As a result of these
    factors, contribution margin for the year was $70.9 million, compared
    with $77.3 million in the prior year. On a comparable basis(1),
    contribution margin in the prior year was $75.5 million.
  • Consumer Floral: Fourth quarter
    revenues grew 4.0 percent to $145.0 million, compared with $139.4
    million in the prior year period reflecting solid every-day gifting
    growth and strong Mother's Day sales, which more than offset the
    impact of the Easter holiday shift. Gross profit margin for the
    quarter was 40.2 percent, unchanged compared with the prior year
    period. Contribution margin for the quarter increased 14.5 percent to
    $16.8 million, compared with $14.7 million in the prior year period.

    For
    the year, revenues increased 4.7 percent to $457.5 million, compared
    with $437.1 million in the prior year. The strong revenue growth
    primarily reflects benefits from the Company's investments in
    strategic marketing and merchandising programs designed to accelerate
    growth and extend its market leadership in the consumer floral space.
    Gross profit margin for the year was 39.7 percent, compared with 40.6
    percent in the prior year. Contribution margin was $50.8 million,
    compared with $51.9 million in the prior year.
  • BloomNet Wire Service: Fourth quarter
    revenues increased 12.6 percent to $24.9 million, compared with $22.1
    million in the prior year period, reflecting increased order volumes
    as BloomNet continues to enhance its market position. Gross profit
    margin for the quarter was 51.8 percent, compared with 56.6 percent in
    the prior year period, primarily reflecting product mix. Contribution
    margin for the quarter increased 2.1 percent to $8.9 million compared
    with $8.7 million in the prior year period.

    For the year,
    revenues increased 2.1 percent to $89.6 million, compared with $87.7
    million in the prior year period. Gross profit margin for the year was
    54.3 percent, compared with 56.5 percent in the prior year.
    Contribution margin for the year was $31.7 million, compared with
    $32.4 million in the prior year.

Company Guidance

For fiscal 2019, the Company's guidance includes its plan to increase
investments in strategic marketing and merchandising programs to take
advantage of market conditions and build on the revenue growth momentum
it is seeing across all three of its business segments. In addition, the
Company's guidance for bottom-line metrics assumes the restoration of
100 percent bonus payout in fiscal 2019, compared with minimal bonus
payout in fiscal 2018. As a result, the Company is providing guidance
for revenue and bottom-line results for fiscal 2019 as follows:

  • Consolidated revenue growth of 5.0%-to-7.0% compared with the prior
    year;
  • EPS in a range of $0.38-to-$0.42. This includes an anticipated
    normalized effective tax rate of 26 percent;
  • Adjusted EBITDA in a range of $77.0 million-to-$80.0 million, and;
  • Free Cash Flow for the year in a range of $30.0 million-to-$40.0
    million.

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 definitions and the
reasons why we use these non-GAAP financial measures. Where applicable,
see the Selected Financial Information below for reconciliations of
these non-GAAP measures to their most directly comparable GAAP financial
measures.

Adjusted/ Comparable Revenue

Adjusted/ Comparable revenues measure GAAP revenues adjusted for the
effects of acquisitions, dispositions, and other items affecting period
to period comparability. See Selected Financial Information for details
on how comparable revenues were calculated for each period presented. 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 that are
subject to volatility and can obscure underlying trends. Management
recognizes that the term "comparable or adjusted 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/ Comparable EBITDA

We define EBITDA as net income (loss) before interest, taxes,
depreciation and amortization. Adjusted/ Comparable EBITDA is defined as
EBITDA adjusted for the impact of stock-based compensation,
Non-Qualified Plan Investment appreciation/depreciation, and for certain
items affecting period to period comparability. See Selected Financial
Information at the end of this release for details on how EBITDA and
Adjusted EBITDA were calculated for each period presented. The Company
presents EBITDA and Adjusted/ Comparable 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 debt; 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 and Adjusted EBITDA
should only be used on a supplemental basis combined with GAAP results
when evaluating the Company's performance.

Segment Contribution Margin and Adjusted or Comparable Segment
Contribution Margin

We define Segment Contribution Margin as earnings before interest,
taxes, depreciation and amortization, before the allocation of corporate
overhead expenses. Adjusted or Comparable Segment Contribution Margin is
defined as Segment Contribution Margin adjusted for certain items
affecting period to period comparability. See Selected Financial
Information for details on how Segment Contribution Margin and Adjusted
Segment Contribution margin were calculated for each period presented.
When viewed together with our GAAP results, we believe Segment
Contribution Margin and Adjusted Segment Contribution Margin provide
management and users of the financial statements meaningful information
about the performance of our business segments. Segment Contribution
Margin and Adjusted Segment 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 Segment
Contribution Margin and Adjusted Segment 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 and Adjusted or Comparable Net Income Per Common
Share (or EPS):

We define Adjusted Net Income and Adjusted or Comparable Net Income Per
Common Share (or EPS) as Net Income and Net Income Per Common Share (or
EPS) adjusted for certain items affecting period to period
comparability. See Selected Financial Information below for details on
how Adjusted Net Income and Adjusted or Comparable Net Income Per Common
Share (or EPS) were calculated for each period presented. We believe
that Adjusted Net Income and Adjusted or Comparable Net Income Per
Common Share (or 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
Net Income Per Common share (or 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.
Since Free Cash Flow is not a measure of performance calculated in
accordance with GAAP, it 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 gifts for all celebratory occasions.
For more than 40 years, 1-800-Flowers.com®
has been delivering smiles to customers with a 100% Smile Guarantee®
backing every gift. The 1-800-FLOWERS.COM, Inc. family of brands also
includes everyday gifting and entertaining products from 1-800-Baskets.com®,
Cheryl's
Cookies
®, FruitBouquets.com®,
Harry & David®, Moose
Munch
®, The
Popcorn Factory
®, Wolferman's®,
Personalization
Universe
®, Simply
Chocolate
®, and GoodseySM.
Additionally, the Company offers top-quality steaks and chops from Stock
Yards
®. The Celebrations Passport® loyalty program, which provides
members with free standard shipping and no service charge across the
Company's portfolio of brands, is designed to deepen relationships with
customers. BloomNet®,
an international floral wire service operated by the Company, provides a
broad-range of products and services designed to help professional
florists grow their businesses profitably. The Company also operates NapcoSM,
a resource for floral gifts and seasonal décor and DesignPac Gifts, LLC,
a manufacturer of gift baskets and towers. 1-800-FLOWERS.COM, Inc. was
named to the Stores® 2017 Hot 100 Retailers List by the National Retail
Federation and received the Gold award in the "Best Artificial
Intelligence" category at the Data & Marketing Association's 2017
International ECHO Awards. 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
not limited to, statements regarding the Company's expectations for: the
success of its planned investments in strategic or targeted investments
in marketing and merchandising programs designed to accelerate revenue
growth; its ability to achieve its guidance for full fiscal-year 2019
revenue growth rate in a range of 5-to-7 percent; its ability to achieve
full fiscal-year 2019 Adjusted EBITDA in a range of $77.0
million-to-$80.0 million and EPS in a range of $0.38 -to- $0.42 per
fully-diluted share, its ability to generate Free Cash Flow for the full
fiscal 2019 year in a range of $30.0 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 23, 2018, 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; (Canada)
1-855-669-9658; (International) 1-412-317-0088; enter conference ID #:
10122803.

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)

     
July 1, 2018 July 2, 2017
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 147,240 $ 149,732
Trade receivables, net 12,935 14,073
Inventories 88,825 75,862
Prepaid and other   24,021   17,735
Total current assets 273,021 257,402
 
Property, plant and equipment, net 163,340 161,381
Goodwill 62,590 62,590
Other intangibles, net 59,823 61,090
Other assets   12,115   10,007
Total assets $ 570,889 $ 552,470
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 41,437 $ 27,781
Accrued expenses 73,299 90,206
Current maturities of long-term debt   10,063   7,188
Total current liabilities 124,799 125,175
 
Long-term debt 92,267 101,377
Deferred tax liabilities 26,200 33,868
Other liabilities   12,719   9,811
Total liabilities   255,985   270,231
Total stockholders' equity   314,904   282,239
Total liabilities and stockholders' equity $ 570,889 $ 552,470
 

 
1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information
Consolidated Statements of Income

(in thousands, except for per share data)

(unaudited)

 
  Three Months Ended   Years Ended
July 1, 2018   July 2, 2017 July 1, 2018   July 2, 2017
Net revenues:
E-commerce (combined online and telephonic) $ 192,079 $ 191,355 $ 921,848 $ 896,762
Other   37,855     48,173     230,073     296,863  
Total net revenues 229,934 239,528 1,151,921 1,193,625
Cost of revenues   136,901     141,209     662,896     673,344  
Gross profit 93,033 98,319 489,025 520,281
Operating expenses:
Marketing and sales 67,102 72,415 298,810 317,527
Technology and development 10,172 9,312 39,258 38,903
General and administrative 19,312 19,670 77,440 84,116
Depreciation and amortization   7,823     7,720     32,469     33,376  
Total operating expenses   104,409     109,117     447,977     473,922  
Operating income (loss) (11,376 ) (10,798 ) 41,048 46,359
Interest expense, net 712 1,025 3,631 5,821
Other income, net   (290 )   (14,901 )   (605 )   (15,471 )
Income (loss) before income taxes (11,798 ) 3,078 38,022 56,009
Income tax expense (benefit)   (3,575 )   (4,935 )   (2,769 )   11,968  
Net income (loss) $ (8,223 ) $ 8,013   $ 40,791   $ 44,041  
 
Basic net income (loss) per common share $ (0.13 ) $ 0.12   $ 0.63   $ 0.68  
 
Diluted net income (loss) per common share $ (0.13 ) $ 0.12   $ 0.61   $ 0.65  
 
Weighted average shares used in the calculation of net income (loss)
per common share:
Basic   64,583     65,255     64,666     65,191  
Diluted   64,583     67,604     66,938     67,735  
 

 
1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information
Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 
  Years ended
July 1, 2018   July 2, 2017
 
Operating activities:
Net income $ 40,791 $ 44,041
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 32,469 33,376
Amortization of deferred financing costs 953 1,532
Deferred income taxes (7,668 ) (1,649 )
Bad debt expense 1,068 1,158
Stock-based compensation 3,726 6,102
Other non-cash items 565 133
Changes in operating items:
Trade receivables 70 (6,220 )
Inventories (12,963 ) (9,277 )
Prepaid and other (6,286 ) (2,609 )
Accounts payable and accrued expenses 5,249 9,132
Other assets (88 ) (36 )
Other liabilities   455     (66 )
Net cash provided by operating activities 58,341 61,010
 
Investing activities:
Proceeds from sale of business - 111,955
Working capital adjustment related to sale of business (8,500 ) -
Capital expenditures, net of non-cash expenditures   (33,306 )   (33,653 )
Net cash provided by (used in) investing activities (41,806 ) 78,302
 
Financing activities:
Acquisition of treasury stock (12,176 ) (10,735 )
Proceeds from exercise of employee stock options 337 285
Proceeds from bank borrowings 30,000 181,000
Repayment of notes payable and bank borrowings (37,188 ) (186,451 )
Debt issuance costs   -     (1,506 )
Net cash used in financing activities (19,027 ) (17,407 )
   
Net change in cash and cash equivalents (2,492 ) 121,906
Cash and cash equivalents:
Beginning of year   149,732     27,826  
 
End of year $ 147,240   $ 149,732  
 

 
1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information – Category Information

(dollars in thousands) (unaudited)

 
  Three Months Ended

July 1,
2018

 

Severance
Costs

 

Litigation
Settlement

 

As Adjusted
(non-GAAP)
July 1, 2018

   

July 2,
2017

 

Exclude
Operating
Results of Fannie
May

 

Severance
Costs

 

As
Adjusted
(non-
GAAP)
July
2, 2017

 

As Adjusted
(non-GAAP)
% Change

             
Net revenues:
1-800-Flowers.com Consumer Floral $ 145,004 $ - $ 145,004 $ 139,425 $ - $ - $ 139,425 4.0%
BloomNet Wire Service 24,932 24,932 22,143 22,143 12.6%
Gourmet Food & Gift Baskets 60,115 60,115 78,382 (13,644) 64,738 -7.1%
Corporate 263 263 263 263 0.0%
Intercompany eliminations   (380)             (380)   (685)     290         (395) 3.8%
Total net revenues $ 229,934   $ -   $ -   $ 229,934 $ 239,528   $ (13,354)   $ -   $ 226,174 1.7%
 
Gross profit:
1-800-Flowers.com Consumer Floral $ 58,279 $ 58,279 $ 56,105 $ 56,105 3.9%
40.2% 40.2% 40.2% 40.2%
 
BloomNet Wire Service 12,922 $ 12,922 12,543 12,543 3.0%
51.8% 51.8% 56.6% 56.6%
 
Gourmet Food & Gift Baskets 21,651 21,651 29,483 (5,012) 24,471 -11.5%
36.0% 36.0% 37.6% 37.8%
 
Corporate (a) 181 181 188 188 -3.7%
68.8% 68.8% 71.5% 71.5%
                           
Total gross profit $ 93,033   $ -   $ -   $ 93,033 $ 98,319   $ (5,012)   $ -   $ 93,307 -0.3%
  40.5%     -     -     40.5%   41.0%     -     -     41.3%
EBITDA (non-GAAP):
Segment Contribution Margin (non-GAAP):
1-800-Flowers.com Consumer Floral $ 16,820 $ 16,820 $ 14,688 $ 14,688 14.5%
BloomNet Wire Service 8,851 8,851 8,670 8,670 2.1%
Gourmet Food & Gift Baskets   (8,771)             (8,771)   (7,232)     218     214     (6,800) -29.0%
Segment Contribution Margin Subtotal 16,900 - - 16,900 16,126 218 214 16,558 2.1%
Corporate (a) (20,453) 429 426 (19,598) (19,204) 223 (18,981) -3.3%
                           
EBITDA (non-GAAP) (3,553) 429 426 (2,698) (3,078) 441 214 (2,423) -11.3%
 
Add: Stock-based compensation 724 724 910 910 -20.4%
Add: Comp charge related to NQ Plan investment appreciation

128

128

302

302

-57.6%

                           
Adjusted EBITDA (non-GAAP) $ (2,701)   $ 429   $ 426   $ (1,846) $ (1,866)   $ 441   $ 214   $ (1,211) -52.4%
 
 
Years Ended

July 1,
2018

 

Severance
Costs

 

Litigation
Settlement

 

As Adjusted
(non-GAAP)
July 1, 2018

July 2,
2017

 

Exclude
Operating
Results of Fannie
May

 

Severance
Costs

 

As
Adjusted
(non-
GAAP)
July
2, 2017

 

As Adjusted
(non-GAAP)
% Change

 
Net revenues:
1-800-Flowers.com Consumer Floral

$

457,460

$

-

$

-

$

457,460

$

437,132

$

-

$

-

$

437,132

4.7%

BloomNet Wire Service 89,569 89,569 87,700 87,700 2.1%
Gourmet Food & Gift Baskets 605,523 605,523 670,677 (83,917) 586,760 3.2%
Corporate 1,114 1,114 1,102 1,102 1.1%
Intercompany eliminations   (1,745)             (1,745)   (2,986)     1,341         (1,645) -6.1%
Total net revenues $ 1,151,921   $ -   $ -   $ 1,151,921 $ 1,193,625   $ (82,575)   $ -   $ 1,111,050 3.7%
 
Gross profit:
1-800-Flowers.com Consumer Floral

$

181,601

$

-

$

-

$

181,601

$

177,488

$

-

$

-

$

177,488

2.3%

39.7% 39.7% 40.6% - 40.6%
 
BloomNet Wire Service 48,604 48,604 49,562 - 49,562 -1.9%
54.3% 54.3% 56.5% - 56.5%
 
Gourmet Food & Gift Baskets 257,803 257,803 292,199 (32,571) - 259,628 -0.7%
42.6% 42.6% 43.6% - 44.2%
 
Corporate (a) 1,017 1,017 1,032 - 1,032 -1.5%
91.3% 91.3% 93.6% - 93.6%
                           
Total gross profit $ 489,025   $ -   $ -   $ 489,025 $ 520,281   $ (32,571)   $ -   $ 487,710 0.3%
  42.5%     -     -     42.5%   43.6%     -         43.9%
 
EBITDA (non-GAAP):
Segment Contribution Margin (non-GAAP):
1-800-Flowers.com Consumer Floral

$

50,808

$

-

$

-

$

50,808

$

51,860

$

-

$

-

$

51,860

-2.0%

BloomNet Wire Service 31,683 31,683 32,383 - - 32,383 -2.2%
Gourmet Food & Gift Baskets   70,927             70,927   77,312     (2,575)     756     75,493 -6.0%
Segment Contribution Subtotal 153,418 - - 153,418 161,555 (2,575) 756 159,736 -4.0%
Corporate (a)   (79,901)     429     426     (79,046)   (81,820)     1,310         (80,510) 1.8%
EBITDA (non-GAAP) 73,517 $ 429 $ 426 $ 74,372 79,735 (1,265) 756 79,226 -6.1%
Add: Stock-based compensation 3,726 3,726 5,694 5,694 -34.6%
Add: Comp charge related to NQ Plan investment appreciation

797

797

987

987

-19.4%

                           
Adjusted EBITDA (non-GAAP) $ 78,040   $ 429   $ 426   $ 78,895 $ 86,416   $ (1,265)   $ 756   $ 85,907 -8.2%
 

   

Reconciliation of net income (loss) to adjusted net income
(loss) (non-GAAP):

Three Months Ended Years Ended
July 1, 2018   July 2, 2017 July 1, 2018   July 2, 2017
 
Net income (loss) $ (8,223 ) $ 8,013 $ 40,791 $ 44,041
Adjustments to reconcile net income (loss) to adjusted net income
(loss) (non-GAAP)
Add back: Litigation Settlement 426 - 426 -
Add back: Severance costs 429 213 429 756
Deduct: Fannie May operating losses - (305 ) - (1,036 )
Deduct: Gain from Sale of Fannie May - 14,607 - 14,607
Deduct: Income tax benefit on adjustments 211 952 211 1,344
Deduct: U.S. tax reform benefit on deferred taxes (b)   -     -     12,158   -  
Adjusted net income (loss) (non-GAAP) $ (7,579 ) $ (7,028 ) $ 29,277 $ 29,882  
 
Basic and diluted net income (loss) per common share
Basic $ (0.13 ) $ 0.12   $ 0.63 $ 0.68  
Diluted $ (0.13 ) $ 0.12   $ 0.61 $ 0.65  
 
Basic and diluted adjusted net income (loss) per common share
(non-GAAP)
Basic $ (0.12 ) $ (0.11 ) $ 0.45 $ 0.46  
Diluted $ (0.12 ) $ (0.11 ) $ 0.44 $ 0.44  
 
Weighted average shares used in the calculation of net income and
adjusted net income (loss) (non-GAAP) per common share
Basic   64,583     65,255     64,666   65,191  
Diluted   64,583     65,255     66,938   67,735  
 

 

Reconciliation of net income (loss) to adjusted EBITDA
(non-GAAP) (c):

   
Three Months Ended Years Ended
July 1, 2018   July 2, 2017 July 1, 2018   July 2, 2017
 
Net income (loss) $ (8,223 ) $ 8,013 $ 40,791 $ 44,041
Add:
Interest expense, net 422 731 3,026 4,957
Depreciation and amortization 7,823 7,720 32,469 33,376
Income tax expense (benefit) (3,575 ) (4,935 ) (2,769 ) 11,968
Less:
Gain from sale of Fannie May     14,607       14,607
EBITDA (non-GAAP) (3,553 ) (3,078 ) 73,517 79,735
Add:
Severance costs 429 213 429 756
Litigation Settlement 426 - 426 -
Compensation charge related to NQ plan investment appreciation

128

302

797

987

Stock-based compensation 724 910 3,726 5,694
Less:
Fannie May EBITDA   -     (442 )   -     1,265
Adjusted EBITDA (non-GAAP) $ (1,846 ) $ (1,211 ) $ 78,895   $ 85,907
 
(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,
Executive and Customer Service Center functions, as well as
Stock-Based Compensation. In order 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) The adjustment to deduct the impact of the U.S. tax reform from net
income, for the year ended July 1, 2018, includes the impact of the
re-valuation of the Company's deferred tax liability of $12.2mm or
$0.18 per diluted share, but does not include the ongoing impact of
the lower federal corporate tax rate.
 
(c) Segment 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.
 

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

View Comments and Join the Discussion!