1-800-FLOWERS.COM, Inc. Reports Financial Results From Continuing Operations For Its Fiscal 2015 Fourth Quarter and Full Year

Fourth Quarter Highlights:

  • Revenues grew 21.8 percent to $228.3 million, primarily reflecting
    contributions from Harry & David, combined with growth across all
    three of the Company’s business segments.
  • Adjusted EBITDA1, excluding stock-based
    compensation, was a loss of $1.8 million, compared with $11.3 million
    in the prior year period, primarily reflecting the seasonality of
    Harry & David.
  • Adjusted EPS1 was a loss of $0.13 per
    share, compared with a gain of $0.05 per diluted share in the prior
    year period, primarily reflecting the seasonality of Harry & David.

Full Year Highlights:

  • Revenues grew 48.3 percent to $1.12 billion, compared with $756.3
    million in the prior year, reflecting contributions from Harry &
    David, combined with growth across all three of the Company’s business
    segments.
  • Adjusted EBITDA2, excluding stock-based
    compensation, was $95.3 million, compared with $48.2 million in the
    prior year period.
  • Adjusted EPS2 from continuing operations
    was $0.51 per diluted share, compared with $0.22 per diluted share in
    the prior year.

(1Adjusted EBITDA and Adjusted EPS for the
fiscal fourth quarter exclude one-time costs associated with the
integration of Harry & David which the Company acquired on September 30,
2014;
2Adjusted EBITDA and Adjusted EPS for the
fiscal 2015 full year 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.)

CARLE PLACE, N.Y.–(BUSINESS WIRE)–1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), the world’s leading florist and
gift shop, today reported results for its fiscal 2015 fourth quarter and
full year. For the fourth quarter, total revenue from continuing
operations increased 21.8 percent to $228.3 million, compared with
$187.4 million in the prior year period. The increase primarily reflects
contributions from Harry & David, which the Company acquired on
September 30, 2014, combined with growth across all three of the
Company’s business segments.

Gross profit margin from continuing operations for the quarter increased
40.0 basis points to 43.0 percent reflecting strong gross margins in the
Company’s Consumer Floral and BloomNet segments. Operating expense ratio
for the quarter increased to 49.3 percent of total net sales, compared
with 40.0 percent in the prior year, primarily reflecting increased
operating expenses associated with the seasonality of the Harry & David
business.

Adjusted EBITDA1 for the quarter, excluding stock-based
compensation, was a loss of $1.8 million, reflecting the seasonality of
Harry & David. Excluding Harry & David, Adjusted EBITDA1
for the quarter was $10.6 million, down 6.5% compared with $11.3 million
in the prior year period, reflecting the shift of some revenues
associated with the early-season Easter holiday into the Company’s
fiscal third quarter somewhat offset by a strong contribution from
BloomNet. Adjusted Net Loss from continuing operations attributable to
1-800-FLOWERS.COM, Inc. for the quarter was $8.7 million, or $0.13 per
share, compared with a gain of $3.1million, or $0.05 per diluted share
in the prior year period. Excluding Harry & David, Adjusted Net Income
attributable to the Company was $1.7 million, or $0.03 per diluted
share, compared with $3.1 million, or $0.05 per diluted share,
reflecting the aforementioned shift of some Easter revenues into the
Company’s third quarter.

Reported EBITDA loss for the quarter, excluding stock-based
compensation, was $5.3 million, compared with a gain of $11.3 million in
the prior year period. Reported net loss from continuing operations
attributable to the Company was $10.7 million, or $0.16 per share,
compared with a gain of $3.1 million, or $0.05 per diluted share, in the
prior year period.

Fiscal 2015 Full Year Results:

Revenues from continuing operations for the Company’s full fiscal 2015
year grew 48.3 percent to $1.12 billion, compared with $756.3 million in
the prior year, reflecting contributions from Harry & David as well as
growth across all three of the Company’s business segments. Gross margin
for the year increased 170 basis points to 43.4 percent, compared with
41.7 percent in the prior year, reflecting increases in all three of the
Company’s business segments. Operating expense ratio for the year was
40.1 percent, compared with 38.5 in the prior year period, reflecting
transaction and integration costs, as well as increased operating
expenses associated with Harry & David.

Adjusted EBITDA2 for the year, excluding stock-based
compensation expense, was $95.3 million, compared with $48.2 million in
the prior year. Excluding Harry & David, Adjusted EBITDA1
for the year increased 11.6 percent to $53.8 million, compared with
$48.2 million in the prior year period. Adjusted Net Income from
continuing operations attributable to 1-800-FLOWERS.COM, Inc. was $34.7
million, or $0.51 per diluted share, compared with $14.6 million, or
$0.22 per diluted share, in the prior year. Excluding Harry & David,
Adjusted Net Income attributable to the Company was $15.9 million, or
$0.24 per diluted share, compared with $14.6 million, or $0.23 per
diluted share.

Reported EBITDA for the year, excluding stock-based compensation, was
$72.7 million, compared with $48.2 million in the prior year period.
Reported net income from continuing operations attributable to the
Company was $20.3 million, or $0.30 per diluted share, compared with
$14.6 million, or $0.22 per diluted share, in the prior year period.
Free Cash Flow for the year was $93.2 million, compared with $19.6
million in the prior year period. This primarily reflected the timing of
the Harry & David acquisition which closed on September 30, 2014.

Jim McCann, CEO of 1-800-FLOWERS.COM, said, “Fiscal 2015 was a very
exciting year for our company and we are pleased to have finished the
year with solid fourth quarter results, including revenue growth across
all of our business segments. For the year, our strong top and bottom
line results reflect the significant benefits associated with the
addition of the iconic Harry & David brand to our growing family of
great gifting brands. This highly accretive acquisition helped us extend
our position as a leading, omni-channel provider of top quality gifts
that resonate with our customers for all of their celebratory occasions.
Importantly, since we began our integration process back in January, we
have made excellent progress toward leveraging our combined business
platforms so that we can capture the significant synergistic
opportunities we see for both operating efficiencies and enhanced
revenue growth.”

McCann also noted that during fiscal 2015 the Company overcame what
could have been a catastrophic fire on Thanksgiving Day at its Fannie
May warehouse and distribution facility in Ohio. “The exemplary response
of the Fannie May team, with help from across our entire enterprise,
resulted in solid performance for the Fannie May brand despite the
challenge of limited inventory. In addition, our Gourmet Foods and Gift
Baskets category benefited from the continued strong performance of our
Cheryl’s bakery gifts brand where we completed a facility expansion that
enables us to increase our production capacity to support anticipated
strong growth in the years ahead.

“On the floral side of our business, the 1-800-Flowers.com brand
continued to extend its market leading position, growing revenues and
gross margin percentage and thereby driving strong bottom line
contributions for both the fourth quarter and the full year. In our
BloomNet business, we continued to expand our market position versus the
legacy wire service competitors, achieving solid top-line growth and
strong bottom-line contributions through our extended offering of
innovative products and services designed to help florists grow their
businesses profitably,” he said.

McCann also noted that the Company finished the year with a strong
balance sheet which, combined with growing free cash flow and an
expandable credit facility, provides the Company significant flexibility
to grow its business both organically as well as through strategic
acquisitions and enhance long-term shareholder value.

Customer Metrics:

During the fourth quarter the Company attracted 850,000 new e-commerce
customers. Approximately 1.9 million e-commerce customers placed orders
during the period, with repeat customers representing 56.2 percent of
the total. During the year, the Company attracted approximately 3.4
million new customers. Approximately 6.9 million e-commerce customers
placed orders during fiscal 2015, of which 51.3 percent were repeat
customers.

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

Segment Results From Continuing Operations:

  • Consumer Floral: fourth quarter revenues grew 0.8 percent to
    $131.5 million and full-year revenues grew 0.2 percent to $422.2
    million, compared with $130.4 million and $421.3 million in the
    respective prior year periods. Revenue growth in the fourth quarter
    was impacted by the shift of some revenues associated with the Easter
    holiday into the Company’s third quarter due to its early-season
    day-placement while full year revenue growth was impacted by the
    Saturday day-placement of the Valentine Holiday.

    Gross
    profit margin increased 40 basis points to 40.0 percent for the
    quarter and 10 basis points to 39.2percent for the full year, compared
    with 39.6 percent and 39.1 percent in the respective prior year
    periods. Category contribution margin grew 1.6 percent to $14.2
    million for the quarter and 8.1 percent to $43.5 million for the full
    year, compared with $14.0 million and $40.3 million in the respective
    prior year periods.

  • BloomNet Wire Service: fourth quarter revenues increased 7.1
    percent to $22.9 million and full-year revenues increased 2.1 percent
    to $86.0 million, compared with $21.4 million and $84.2 million in the
    respective prior year periods. Gross profit margin increased 460 basis
    points to 57.6 percent in the fourth quarter and 240 basis points to
    55.7 percent for the year, compared with 53.0 percent and 53.3 percent
    in the respective prior year periods. Contribution margin increased
    34.0 percent to $8.9 million in the fourth quarter and 10.0 percent to
    $29.4 million for the full year, compared with $6.7 million and $26.7
    million in the respective prior year periods. The strong growth in
    gross margin and contribution margin primarily reflects the
    implementation of a new florist transaction program and sales mix.
  • Gourmet Food and Gift Baskets: fourth quarter revenues
    increased 106.6 percent to $74.0 million and full-year revenues grew
    143.6 percent to $614.0 million, compared with $35.8 million and
    $252.0 million in the respective prior year periods. Revenue growth
    for the quarter reflected contributions from Harry & David. For the
    year, revenue growth primarily reflected contributions from Harry and
    David combined with strong ecommerce growth in the Company’s Cheryl’s
    and 1-800-Baskets.com brands as well as increased gift basket sales
    into the mass channel. Gross profit margin for the quarter declined
    350 basis points to 43.3 percent compared with 46.8 percent, primarily
    reflecting seasonally lower gross margins associated with Harry &
    David. For the year, gross margin increased 270 basis points to 44.4
    percent, compared with 41.7 percent in the prior year, primarily
    reflecting contributions from Harry & David (which has strong gross
    margins in the fiscal second quarter when it records more than 70
    percent of its annual revenues) combined with increased operating
    leverage associated with revenue growth across the segment.
    Contribution margin loss for the quarter was $7.7 million, compared
    with a gain of $1.3 million in the prior year period, reflecting the
    seasonality of Harry and David. For the year, contribution margin
    increased 176.1 percent to $74.9 million, compared with $27.1 million
    in the prior year, primarily reflecting contributions from Harry &
    David as well as enhanced year-over-year contributions from Cheryl’s,
    Fannie May, 1-800-Baskets.com and gift baskets sales into the mass
    channel. Excluding one-time costs associated with the acquisition and
    integration of Harry & David, fourth quarter contribution margin was a
    loss of $6.6 million. Excluding these same one-time costs and the
    impact of the Fannie May fire, contribution margin for the full year
    was $91.0 million.

Company Guidance:

For fiscal 2016, the Company said it expects to achieve consolidated
revenue growth for the year in a range of five-to-seven percent,
compared with revenues of $1.12 billion reported for fiscal 2015. In
terms of bottom-line results, the Company expects to grow EBITDA
approximately 10% and EPS in excess of 20 percent, compared with pro
forma fiscal 2015 Adjusted EBITDA* of $80.5 million and pro forma fiscal
2015 Adjusted EPS* of $0.33 per diluted share. (*Pro forma fiscal 2015
Adjusted EBITDA and Adjusted EPS include seasonal losses associated with
Harry & David that are incurred in its fiscal 2015 first quarter. These
losses were not captured in the Company’s fiscal 2015 results due to the
close of the acquisition on September 30, 2014.)

The Company anticipates generating approximately $35 million of Free
Cash Flow in fiscal 2016.

The Company’s guidance for top- and bottom-line results for fiscal 2016
includes the revenues and aforementioned losses associated with Harry &
David’s fiscal first quarter as well as the anticipated impact of the
Sunday placement of the Valentine holiday on the Company’s Consumer
Floral segment.

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 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. Pro
forma 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 from continuing operations 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 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. Some of the limitations of EBITDA and Adjusted
EBITDA 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 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 the world’s leading florist and gift shop. For nearly 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. 1-800-FLOWERS.COM was
recently named in Internet Retailer’s 2016 Top Mobile 500 as one of the
world’s leading mobile commerce sites. Additionally, 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). 1-800-FLOWERS.COM was
awarded the 2014 Silver Stevie Award, recognizing the organization’s
outstanding Customer Service and commitment to our 100% Smile
Guarantee®. 1-800-FLOWERS.COM received
a Gold Award for Best User Experience on a Mobile Optimized Site for
the 2013 Horizon
Interactive Awards
. 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 “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,”
“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:
continued market penetration in its BloomNet wire service business, its
ability to leverage its consolidated customer database and new
multi-brand website to attract and retain customers and help grow
revenues; its ability to achieve its guidance for consolidated revenue
growth for the full year in a range of five-to-seven percent; its
ability to achieve Adjusted EBITDA growth of approximately 10% and
Adjusted EPS growth in excess of 20 percent, compared with pro forma
fiscal 2015 Adjusted EBITDA* of $80.0 million and pro forma fiscal 2015
Adjusted EPS* of $0.33 per fully diluted share and its ability to
generate Free Cash Flow for the year of approximately $35 million; its
ability to leverage its operating platform and reduce operating expense
ratio, its ability to utilize its expanded production capacity at
Cheryl’s to drive incremental revenue growth; 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 27th, 2015 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: 1-855-859-2056 or
1-404-537-3406; Conference ID: 84488447.

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)

 
   

June 28,
2015

  June 29,

2014

 
Assets
Current assets:
Cash and cash equivalents $ 27,940 $ 5,203
Receivables, net 16,191 13,339
Insurance receivable 2,979
Inventories 93,163 58,520
Deferred tax assets 4,873 5,156
Prepaid and other   14,822   9,600
Total current assets 159,968 91,818
 
Property, plant and equipment, net 170,100 60,147
Goodwill 77,097 60,166
Other intangibles, net 82,125 44,616
Deferred tax assets 2,002
Other assets   12,656   8,820
Total assets $ 501,946 $ 267,569
 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 35,425 $ 24,447
Accrued expenses 73,639 49,517
Current maturities of long-term debt   14,543   343
Total current liabilities 123,607 74,307
 
Long-term debt 117,563
Deferred tax liabilities 42,680 649
Other liabilities   7,840   6,495
Total liabilities   291,690   81,451
Total 1-800-FLOWERS.COM, Inc. stockholders’ equity 208,241 183,199
Noncontrolling interest in subsidiary   2,015   2,919
Total equity   210,256   186,118
Total liabilities and equity $ 501,946 $ 267,569
 

Contacts

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

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