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. - August 25, 2016 - (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 $331,000compared 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-coreUK 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 Ended     Years 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
             

 To see wide spreadsheet go to: [http://investor.1800flowers.com/investors/news-and-events/press-releases/2016/08-25-2016-120130355].

                         

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
                                 

To see wide spreadsheet go to: [http://investor.1800flowers.com/investors/news-and-events/press-releases/2016/08-25-2016-120130355].

             

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.
           

View source version on businesswire.com: http://www.businesswire.com/news/home/20160825005291/en/

SOURCE 1-800-FLOWERS.COM, Inc.

Contacts:

Joseph D. Pititto
1-800-FLOWERS.COM, Inc.
Investor Relations
516-237-6131
invest@1800flowers.com

Yanique Woodall
1-800-FLOWERS.COM, Inc.
Media Relations
516-237-6028<br

###

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