1-800-FLOWERS.COM, Inc. Reports Results For Its Fiscal 2016 Fourth Quarter and Full Year

Aug 25, 2016

1-800-FLOWERS.COM, Inc. Reports Results For Its Fiscal 2016 Fourth Quarter and Full Year

Fourth Quarter Highlights:

  • Total revenues increased 2.7 percent to $234.4 million, compared with $228.3 million in the prior year period.
  • Adjusted EBITDA*, excluding stock-based compensation, was a loss of $3.0 million, compared with a loss of $1.8 million in the prior year period.
  • GAAP EPS was a loss of $0.17 per share compared with a loss of $0.16 per share in the prior year period. Adjusted EPS*was a loss of $0.14 per share compared with a loss of $0.13 per share in the prior year period.

Full Year Highlights:

  • Total revenues increased 4.6 percent to $1.17 billion, compared with $1.12 billion in the prior year.
  • Adjusted EBITDA*, excluding stock-based compensation, increased 6.6 percent to $85.8 million compared with $80.4 million in the prior year.
  • GAAP EPS was $0.55, compared with $0.30 in the prior year period. Adjusted EPS* was $0.43, compared with $0.34 per share in the prior year.

(*See tables attached to the end of this press release for reconciliation of all adjustments to applicable GAAP results.)

CARLE PLACE, N.Y.--(BUSINESS WIRE)-- 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), the leading gourmet food and floral gift provider for all occasions, today reported total revenues grew 2.7 percent to $234.4 million for its fiscal 2016 fourth quarter ended July 3, 2016. The revenue increase was driven primarily by the Company’s Consumer Floral segment which grew 4.6 percent for the quarter.

Gross profit margin for the quarter was 42.9 percent, compared with 43.0 percent in the prior year period. This reflects strong gross margin growth in the Company’s Consumer Floral and BloomNet segments offset by lower gross margin in the Company’s Gourmet Foods and Gift Baskets segment primarily due to impact of the shift of the Easter holiday into the Company’s fiscal third quarter compared with the prior year period when Easter fell in the Company’s fiscal fourth quarter. Operating expenses were 49.6 percent of total revenues compared with 49.3 percent in the prior year period.

Adjusted EBITDA*, excluding stock-based compensation, was a loss of $3.0 million, compared with a loss of $1.8 million in the prior year period, primarily reflecting the aforementioned impact of the shift of the Easter holiday into the Company’s third quarter during fiscal 2016.

GAAP net loss attributable to the Company was $11.1 million, or ($0.17) per share, compared with a GAAP net loss of $10.7 million, or ($0.16) per share, in the prior year period. Adjusted net loss* for the quarter was $9.0 million, or ($0.14) per share, compared with an adjusted net loss of $8.7 million, or ($0.13) in the prior year period.

FISCAL 2016 FULL YEAR RESULTS:

Total revenues for the Company’s full fiscal 2016 year increased 4.6 percent to $1.17 billion, compared with $1.12 billion in the prior year, primarily reflecting the timing of the Harry & David acquisition in fiscal 2015. Gross profit margin for the year increased 70 basis points to 44.1 percent, compared with 43.4 percent in the prior year. Operating expenses as a percent of total revenues increased 30 basis points to 40.4 percent, compared with 40.1 percent in the prior year. On a comparable basis, operating expenses as a percent of total revenues declined by 20 basis points in fiscal 2016.

Adjusted EBITDA* for fiscal 2016, excluding stock-based compensation, increased 6.6 percent to $85.8 million, compared with $80.4 million in the prior year.

GAAP Net Income attributable to the Company increased 81.8 percent to $36.9 million, or $0.55 per diluted share, compared with $20.3 million, or $0.30 per diluted share, in the prior year. Adjusted net income attributable to the Company* increased 25.7 percent to $28.5 million, or $0.43 per diluted share, compared with $22.7 million, or $0.34 per diluted share, in the prior year period.

(*See tables attached to the end of this press release for reconciliations of all adjustments to applicable GAAP results.)

Chris McCann, CEO of 1-800-FLOWERS.COM, said, “Fiscal 2016 was a very good year for our company on a number of fronts. We achieved solid revenue growth and drove increases in margins and earnings, despite some significant headwinds we faced during the year. Importantly, we also made excellent progress executing on our vision to build what we call our “Celebratory Ecosystem” which includes our all-star collection of gifting brands and an ever increasing suite of products and services designed to help our customers connect and express themselves and deliver smiles to the important people in their lives.

“We also continued to make progress in our integration initiatives, which began with our acquisition of Harry & David and has now evolved into a holistic approach to operating our entire company. And, we advanced our ability to increase multi-brand customers – a key long-term growth strategy – by completing the migration of all of our brands onto the multi-brand website.”

In addition to the progress achieved during fiscal 2016, McCann said the Company saw some positive trends across all three of its business segments. “In Consumer Floral we grew 2.21 percent for the year on a comparable basis as we continued to expand 1-800-Flowers.com’s market leading position and drive further increases in bottom line contribution. BloomNet also continued to drive strong contribution margin growth, reaching record highs as a percent of total revenues. And in Gourmet Food and Gift Baskets revenues increased as we saw Harry & David gradually building momentum, which more than offset lower results in our Fannie May business, which is now on the mend.” (1Adjusted for the sale of two, small non-core businesses.)

McCann added that the Company plans to build on the progress that it made during fiscal 2016 as well as the positive trends it is seeing in its business to further enhance top and bottom line performance in fiscal 2017. “As we enter fiscal 2017, we are well positioned to accelerate revenue growth while continuing to drive strong bottom-line results.”

During the fiscal fourth quarter, the Company attracted 922,000 new customers. Approximately 2.0 million customers placed orders during the quarter, of whom 53.8 percent were repeat customers. For the year, the Company attracted 3.5 million new customers. Approximately 6.8 million customers placed orders during the year, of whom 49.0 percent were repeat customers. This reflects the Company’s focus on effective marketing and merchandising programs, including initiatives in social and mobile communications channels and its Celebrations suite of services – including Celebrations Passport free shipping, Celebrations Rewards and Celebrations Reminder services.

SEGMENT RESULTS:

  • Consumer Floral: fourth quarter revenues grew 4.6 percent to $137.5 million and full-year revenues decreased 0.9 percent to $418.5 million, compared with $131.5 million and $422.2 million in the respective prior year periods. Adjusted for the sale of two small, non-core businesses, revenues in this category grew 2.0 percent for the full year. Gross profit margin increased 190 basis points to 41.9 percent for the quarter and 160 basis points to 40.8 percent for the full year, compared with 40.0 percent and 39.2 percent in the respective prior year periods. Gross margin benefited from enhanced sourcing and logistics as well as strong customer satisfaction metrics. These factors, combined with a continued focus on efficient marketing programs, resulted in a contribution margin increase of 25.0 percent to $17.7 million and an increase of 16.6 percent to $50.8 million for the full year, compared with $14.2 million and $43.5 million in the respective prior year periods.
  • BloomNet Wire Service: fourth quarter revenues declined 5.0 percent to $21.7 million and full-year revenues declined 0.6 percent to $85.5 million, compared with $22.9 million and $86.0 million in the respective prior year periods. Gross profit margin increased 130 basis points to 58.9 percent in the fourth quarter and 60 basis points to 56.3 percent for the year, compared with 57.6 percent and 55.7 percent in the respective prior year periods. Contribution margin was $8.6 million for the fourth quarter, down $331,000 compared with $8.9 million in the prior year period and $30.6 million for the full year, up $1.2 million compared with $29.4 million in the prior year.
  • Gourmet Food and Gift Baskets: fourth quarter revenues increased 2.0 percent to $75.4 million compared with $74.0 million. Gross profit margin for the quarter declined 340 basis points to 39.9 percent compared with 43.3 percent in the prior year period. Contribution margin for the quarter declined 19.6 percent to a loss of $9.2 million, compared with a loss of $7.7 million in the prior year period. Results for the fourth quarter in this category reflect the impact of 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. For the year, revenues grew 9.2 percent to $670.5 million, compared with $614.0 million in the prior year. Gross margin for the year was unchanged from the prior year at 44.4 percent. Contribution margin for the year increased 6.0 percent to $79.4 million, compared with $74.9 million in the prior year. On a comparable basis, contribution margin for the year was down 4.9 percent compared with adjusted contribution margin of $83.5 million in the prior year. Full year results comparisons in this category reflect the timing of the Harry & David acquisition in fiscal 2015.

COMPANY GUIDANCE:

For fiscal 2017, the Company is providing guidance for revenue growth and bottom-line results as follows:

  • Consolidated revenue growth for the year in a range of 4-to-5 percent, compared with revenues of $1.17 billion reported for fiscal 2016.
  • EBITDA growth in a range of 8-to-10 percent compared with Adjusted EBITDA of $85.8 reported for fiscal 2016.
  • EPS growth in a range of 5-to-10 percent compared with Adjusted EPS of $0.43 reported for fiscal 2016. EPS guidance for fiscal 2017 includes an anticipated normalized effective tax rate of 35 percent compared with and effective tax rate of 30 percent in fiscal 2016 which reflected certain one-time benefits associated with research and development credits and the sale of the Company’s non-core UK affiliate.
  • Free Cash Flow for the year of approximately $40 million compared with $24 million in fiscal 2016.

DEFINITIONS:

EBITDA: Net income (loss) before interest, taxes, depreciation, amortization. Free Cash Flow: net cash provided by operating activities less capital expenditures. Category contribution margin: earnings before interest, taxes, depreciation and amortization, before the allocation of corporate overhead expenses. Adjusted EBITDA, Adjusted EPS and Adjusted Net Income/Loss for the fiscal 2016 fourth quarter excludes litigation settlement costs as well as the final integration costs, including severance expenses, associated with Harry & David and the rightsizing of our Fannie May operations. Adjusted EBITDA, Adjusted EPS and Adjusted Net Income for full year fiscal 2016 exclude the aforementioned items as well as the one-time insurance settlement gain related to the Fannie May warehouse and distribution center fire that occurred in fiscal 2015 and the costs related to the divestiture and impairment of certain, non-core international investments. Adjusted EBITDA, Adjusted EPS and Adjusted Net Income/Loss for the fiscal 2015 fourth quarter exclude one-time costs associated with the integration of Harry & David; Adjusted EBITDA, Adjusted EPS and Adjusted Net Income for fiscal 2015 exclude one-time costs associated with the acquisition and integration of Harry & David and the impact of the Fannie May warehouse fire in November 2014. Additionally, fiscal 2015 EBITDA and EPS adjusts for seasonal losses associated with the Harry & David business in its fiscal 2015 first quarter which were not captured in the Company’s fiscal 2015 results due to the close of the acquisition on September 30, 2014. The Company presents EBITDA, Adjusted EBITDA, Adjusted EPS and Free Cash Flow 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 also 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, Adjusted EBITDA, Adjusted EPS and Free Cash Flow 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. EBITDA, Adjusted EBITDA, Adjusted EPS and Free Cash Flow should only be used on a supplemental basis combined with GAAP results when evaluating the Company's performance.

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 2016, 1-800-Flowers.com was awarded Silver 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 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); premium chocolates and confections from Fannie May® (www.fanniemay.com and www.harrylondon.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 by the use of 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 achieve its guidance for consolidated revenue growth for the full year in a range of four-to-five percent; its ability to achieve EBITDA growth in a range of 8-to-10 percent and EPS growth in a range of 5-to-10 percent, compared with fiscal 2016 Adjusted EBITDA of $85.8 million and Adjusted EPS of $0.43 per share and its ability to generate Free Cash Flow for the year of approximately $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 as a result 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 25, 2016, 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 #: 10090089.

Note: 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 3,
2016

   

June 28,

2015

 
Assets
Current assets:
Cash and cash equivalents $27,826$27,940
Trade receivables, net 19,123 16,191
Insurance receivable - 2,979
Inventories 103,328 93,163
Prepaid and other 16,382 14,822
Total current assets 166,659 155,095
 
Property, plant and equipment, net 171,362 170,100
Goodwill 77,667 77,097
Other intangibles, net 79,000 82,125
Other assets 11,826 12,656
Total assets $506,514$497,073
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $35,201$35,425
Accrued expenses 66,066 73,639
Current maturities of long-term debt 19,594 14,543
Total current liabilities $120,861 123,607
 
Long-term debt 97,969 117,563
Deferred tax liabilities 35,517 37,807
Other liabilities 9,581 7,840
Total liabilities 263,928 286,817
Total 1-800-FLOWERS.COM, Inc. stockholders' equity 242,586 208,449
Noncontrolling interest in subsidiary - 1,807
Total equity 242,586 210,256
Total liabilities and equity $506,514$497,073
 

       

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

Selected Financial Information

Condensed Consolidated Statements of Operations

(In thousands, except for per share data)

(unaudited)

 
 
Three Months EndedYears Ended

July 3,
2016

   

June 28,

2015

July 3,
2016

   

June 28,

2015

Net revenues:
E-commerce (combined online and telephonic) $186,411$178,830$882,782$849,853
Other 47,984 49,461 290,242 271,653
Total net revenues 234,395 228,291 1,173,024 1,121,506
Cost of revenues 133,750 130,156 655,566 634,311
Gross profit 100,645 98,135 517,458 487,195
Operating expenses:
Marketing and sales 74,608 71,629 318,175 299,801
Technology and development 10,175 9,427 39,234 34,745
General and administrative 23,351 23,910 84,383 85,908
Depreciation and amortization 8,105 7,519 32,384 29,124
Total operating expenses 116,239 112,485 474,176 449,578
Operating income (loss) (15,594) (14,350) 43,282 37,617
Interest expense, net 1,382 1,431 6,674 5,753
Other (income) expense, net 312 850 (14,839) 1,550
Income (loss) before income taxes (17,288) (16,631) 51,447 30,314
Income tax expense (benefit) (6,234) (5,866) 15,579 10,930
Net income (loss) $(11,054)$(10,765)$35,868$19,384
Less: Net loss attributable to noncontrolling interest - (26) (1,007) (903)
Net income (loss) attributable to 1-800-FLOWERS.COM, Inc. $(11,054)$(10,739)$36,875$20,287
 
Basic net income (loss) per common share attributable to 1-800-FLOWERS.COM, Inc. $(0.17)$(0.16)$0.57$0.31
 
Diluted net income (loss) per common share attributable to 1-800-FLOWERS.COM, Inc. $(0.17)$(0.16)$0.55$0.30
 
Weighted average shares used in the calculation of net income (loss) per common share:
Basic 65,376 65,188 64,896 64,976
Diluted 65,376 65,188 67,083 67,602
 

   

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

Selected Financial Information

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

 
 
Years ended

July 3,

2016

   

June 28,

2015

 
Operating activities:
Net income $35,868$19,384
Reconciliation of net income to net cash provided by operating activities, net of acquisitions/dispositions:
Depreciation and amortization 32,384 29,124
Amortization of deferred financing costs 1,791 1,501
Deferred income taxes (3,000) 2,471
Foreign equity method investment impairment 2,278 -
Loss on sale/impairment of iFlorist 1,990 -
Non-cash impact of write-offs related to warehouse fire - 29,522
Bad debt expense 1,278 1,295
Stock-based compensation 6,343 5,962
Excess tax benefit from stock-based compensation (2,400) (2,550)
Other non-cash items 517 1,439
Changes in operating items:
Trade receivables (4,210) 8,331
Insurance receivable 2,979 (2,979)
Inventories (10,216) 26,390
Prepaid and other (1,560) 8,047
Accounts payable and accrued expenses (6,429) (2,235)
Other assets (29) (1,058)
Other liabilities 89 1,089
Net cash provided by operating activities 57,673 125,733
 
Investing activities:
Acquisitions, net of cash acquired - (131,994)
Capital expenditures, net of non-cash expenditures (33,938) (32,572)
Other - 963
Net cash used in investing activities (33,938) (163,603)
 
Financing activities:
Acquisition of treasury stock (15,223) (8,360)
Excess tax benefit from stock based compensation 2,400 2,550
Proceeds from exercise of employee stock options 3,517 5,542
Proceeds from bank borrowings 178,000 239,500
Repayment of notes payable and bank borrowings (192,543) (172,983)
Debt issuance costs - (5,642)
Net cash (used in) provided by financing activities (23,849) 60,607
   
Net change in cash and cash equivalents (114) 22,737
Cash and cash equivalents:
Beginning of year 27,940 5,203
End of year $27,826$27,940
 

   

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

Selected Financial Information – Category Information

(in thousands)

(unaudited)

 
 
Three Months Ended

Reported
July 3, 2016

 

Litigation
Settlement

 

Severance
Costs

 

Adjusted
July 3, 2016

   

Reported
June 28, 2015

 

Acquisition
Costs

 

Integration
Costs

  Severance Costs  

Adjusted
June 28, 2015

                 
Net revenues:
1-800-Flowers.com Consumer Floral $ 137,536 $ - $ - $ 137,536 $ 131,496 $ - $ - $ - $ 131,496
BloomNet Wire Service 21,743 21,743 22,897 - - - 22,897
Gourmet Food & Gift Baskets 75,447 75,447 73,974 - - - 73,974
Corporate 249 249 225 - - - 225
Intercompany eliminations   (580)             (580)   (301)     -     -     -       (301)
Total net revenues $ 234,395   $ -   $ -   $ 234,395 $ 228,291   $ -   $ -   $ -     $ 228,291
 
 
Gross profit:
1-800-Flowers.com Consumer Floral $ 57,575 $ 57,575 $ 52,650 $ - $ - $ - $ 52,650
41.9% 41.9% 40.0% - - - 40.0%
 
BloomNet Wire Service 12,809 12,809 13,199 - - - 13,199
58.9% 58.9% 57.6% - - - 57.6%
 
Gourmet Food & Gift Baskets 30,132 30,132 32,045 - - - 32,045
39.9% 39.9% 43.3% - - - 43.3%
 
Corporate (a) 129 129 241 - - - 241
51.9% 51.9% 107.1% - - - 107.1%
                                 
Total gross profit $ 100,645   $ -   $ -   $ 100,645 $ 98,135   $ -   $ -   $ -     $ 98,135
  42.9%     -     -     42.9%   43.0%     -     -     -       43.0%
 
 
Category Contribution Margin:
1-800-Flowers.com Consumer Floral $ 17,742 $ 17,742 $ 14,195 $ - $ - $ - $ 14,195
BloomNet Wire Service 8,612 8,612 8,943 - - - 8,943
Gourmet Food & Gift Baskets   (9,228)             (9,228)   (7,718)     43     -     1,027       (6,648)
Category Contribution Margin Subtotal 17,126 17,126 15,420 43 - 1,027 16,490
Corporate (a)   (24,615)     1,500     1,437     (21,678)   (22,251)     43     1,866     468       (19,874)
EBITDA (7,489) 1,500 1,437 (4,552) (6,831) 86 1,866 1,495 (3,384)
 
Add: Stock-based compensation   1,512             1,512   1,557     -     -     -       1,557
EBITDA, excluding stock-based compensation

$

(5,977)

 

$

1,500

 

$

1,437

 

$

(3,040)

$

(5,274)

 

$

86

 

$

1,866

 

$

1,495

   

$

(1,827)

 

   

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

Selected Financial Information – Category Information

(in thousands)

(unaudited)

 
 
Years Ended

Reported
July 3,
2016

   

Harry &
David
Integration
Costs

   

Litigation
Settlement

   

Severance
Costs

   

Adjusted
July 3,
2016

     

Reported
June 28,
2015

   

Impact of
Warehouse
Fire

   

Purchase
Accounting
Adjustment
to Deferred
Revenue

   

Purchase
Accounting
Adjustment for
Inventory
Fair Value
Step-Up

   

Harry &
David
Acquisition
Costs

   

Harry &
David
Integration
Costs

   

Harry &
David
Severance
Costs

   

Annualization
of Acquisition
of Harry &
David

   

Adjusted
June 28,
2015

                                                     
Net revenues:
1-800-Flowers.com Consumer Floral $418,492 $- $- $- $418,492$422,199 $- $- $- $- $- $- $- $422,199
BloomNet Wire Service 85,483 85,483 85,968 350 - - - - - - 86,318
Gourmet Food & Gift Baskets 670,453 670,453 613,953 16,934 1,621 - - - - 29,393 661,901
Corporate 1,066 1,066 1,020 - - - - - - - 1,020

Intercompany eliminations

(2,470)                       (2,470) (1,634)     -     -     -     -     -     -     -     (1,634)
Total net revenues$1,173,024     $-     $-     $-     $1,173,024$1,121,506     $17,284     $1,621     $-     $-     $-     $-     $29,393     $1,169,804
 
Gross profit:
1-800-Flowers.com Consumer Floral $170,536 $- $- $- $170,536$165,677 $- $- $- $- $- $- $- $165,677
40.8% 40.8% 39.2% - - - - - - - 39.2%
 
BloomNet Wire Service 48,169 48,169 47,924 70 - - - - - - 47,994
56.3% 56.3% 55.7% - - - - - - - 55.6%
 
Gourmet Food & Gift Baskets 297,782 297,782 272,690 6,745 1,621 4,760 - - - 12,701 298,517
44.4% 44.4% 44.4% - - - - - - - 45.1%
 
Corporate (a) 971 971 904 - - - - - - - 904
91.1% 91.1% 88.6% - - - - - - - 88.6%
                                                                           
Total gross profit$517,458    

$-

   

$-

   

$-

    $517,458$487,195     $6,815     $1,621     $4,760     $-     $-     $-     $12,701     $513,092
44.1%    

-

   

-

   

-

    44.1% 43.4%     39.4%     -     -     -                 -     43.9%
 
 
Category Contribution Margin:
1-800-Flowers.com Consumer Floral $50,773 $- $- $- $50,773$43,529 $- $- $- $- $- $- $- $43,529
BloomNet Wire Service 30,629 30,629 29,398 70 - - - - - - 29,468
Gourmet Food & Gift Baskets 79,398                       79,398 74,889     6,486     1,621     4,760     1,238     -     1,989     (7,441)     83,542
Category Contribution Margin Subtotal 160,800 - - - 160,800 147,816 6,556 1,621 4,760 1,238 - 1,989 (7,441) 156,539
Corporate (a) (85,134)     828     1,500     1,437     (81,369) (81,075)     -     -     -     2,910     3,039     468     (7,397)     (82,055)
EBITDA 75,666 828 1,500 1,437 79,431 66,741 6,556 1,621 4,760 4,148 3,039 2,457 (14,838) 74,484
 
Add: Stock-based compensation 6,343                       6,343 5,962     -     -     -     -                 -     5,962
EBITDA, excluding stock-based compensation

$82,009

   

$828

   

$1,500

   

$1,437

   

$85,774

$72,703

   

$6,556

   

$1,621

   

$4,760

   

$4,148

   

$3,039

   

$2,457

   

$(14,838)

   

$80,446

 

               

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

Selected Financial Information

(in thousands)

(unaudited)

 
 

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

Three Months Ended Years Ended
July 3, 2016 June 28, 2015 July 3, 2016 June 28, 2015
 
GAAP net income (loss) $ (11,054) $ (10,765) $ 35,868 $ 19,384
Less: Net loss attributable to noncontrolling interest   -   (26)   (1,007)   (903)
Income (loss) attributable to 1-800-FLOWERS.COM, Inc. (11,054) (10,739) 36,875 20,287

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

Add back: Annualization of net loss attributable to Harry & David (18,812)
Add back: Loss on sale/impairment of iFlorist 2,121
Add back: Impairment of foreign equity method investment 1,728
Add back: Litigation costs 1,500 1,500
Add back: Harry & David integration costs 1,866 828 3,039
Add back: Harry & David acquisition costs 86 4,148
Add back: Severance costs 1,437 1,495 1,437 2,457
Add back: Harry & David Purchase accounting adjustment to deferred revenue 1,621
Add: Purchase accounting adjustment for inventory fair value step-up 4,760
Add back: Impact of warehouse fire 6,556
Deduct: Gain from insurance recovery on warehouse fire (19,611)
Income tax effect of adjustments   (889)     (1,432)   3,633     (1,369)
Adjusted income (loss) attributable to 1-800-FLOWERS.COM, Inc. $ (9,006)   $ (8,724) $ 28,511   $ 22,687
 
GAAP income (loss) per common share attributable to 1-800-FLOWERS.COM, Inc.
Basic $ (0.17) $ (0.16) $ 0.57 $ 0.31
Diluted $ (0.17) $ (0.16) $ 0.55 $ 0.30
 
Adjusted income (loss) per common share attributable to 1-800-FLOWERS.COM, Inc.
Basic $ (0.14) $ (0.13) $ 0.44 $ 0.35
Diluted $ (0.14) $ (0.13) $ 0.43 $ 0.34
 

Weighted average shares used in the calculation of GAAP income (loss) and
Adjusted income (loss) per common share attributable to 1-800-
FLOWERS.COM, Inc.

Basic   65,376   65,188   64,896   64,976
Diluted   65,376   65,188   67,083   67,602
 

       

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

Selected Financial Information

(in thousands) (unaudited)

 
 
Three Months Ended Years Ended

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

July 3, 2016

   

June 28, 2015

July 3, 2016

   

June 28, 2015

 
Income (loss) attributable to 1-800-FLOWERS.COM, Inc. $ (11,054) $ (10,739) $ 36,875 $ 20,287
Add:
Interest expense and other, net 1,694 2,281 7,597 7,303
Depreciation and amortization 8,105 7,519 32,384 29,124
Income tax expense 15,579 10,930
Loss on sale/impairment of iFlorist 2,121
Impairment of foreign equity method investment 1,728
Less:
Net loss attributable to noncontrolling interest 26 1,007 903
Income tax benefit 6,234 5,866
Gain from insurance recovery on warehouse fire       19,611  
EBITDA (7,489) (6,831) 75,666 66,741
Add: Impact of warehouse fire - 6,556
Add: Purchase accounting adjustment to deferred revenue 1,621
Add: Purchase accounting adjustment for inventory fair value step-up 4,760
Add: Litigation settlement 1,500 1,500
Add: Acquisition costs 86 4,148
Add: Integration costs 1,866 828 3,039
Add: Severance costs 1,437 1,495 1,437 2,457

Add: Harry & David Q1 2015 EBITDA loss (pre-acquisition: 3 months ended 9/28/14)

        (14,838)
Adjusted EBITDA (4,552) (3,384) 79,431 74,484
Add: Stock-based compensation   1,512   1,557   6,343   5,962
Adjusted EBITDA, excluding stock-based compensation $ (3,040) $ (1,827) $ 85,774 $ 80,446
 
       
(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) Performance is measured based on segment contribution margin or segment Adjusted EBITDA, reflecting only the direct controllable revenue and operating expenses of the segments. 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), nor does it include one-time charges or gains. 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.
 

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1-800-FLOWERS.COM, Inc.
Investors:
Joseph D. Pititto, 516-237-6131
invest@1800flowers.com
or
Media:
Yanique Woodall, 516-237-6028
ywoodall@1800flowers.com

Source: 1-800-FLOWERS.COM, Inc.