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1-800-FLOWERS.COM, Inc. Reports Solid Revenue And Bottom-Line Performance For Its Fiscal 2012 Second Quarter Driven By Continued Strong Growth In Its Consumer Floral Business

Conference Call:

The Company will conduct a conference call to discuss the above details and attached financial results today, Thursday, January 26, 2012 at 11:00 a.m. (EST). 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. (EST) on the day of the call at: 1-855-859-2056 (domestic) or 1-404-537-3406 (international). Enter replay pass code #: 18440230.

[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)

         
Jan 1,

2012

July 3,

2011

 
Assets
Current assets:
Cash and equivalents $30,078 $21,442
Receivables, net 30,659 11,916
Inventories 59,600 51,185
Deferred tax assets 6,413 5,416
Prepaid and other 7,073 7,360
Current assets of discontinued operations 1,022 3,506
Total current assets 134,845 100,825
 
Property, plant and equipment, net 48,821 49,908
Goodwill 40,695 39,348
Other intangibles, net 43,051 41,748
Deferred tax assets 9,628 17,181
Other assets 4,325 5,203
Non-current assets from discontinued operations - 2,738
Total assets $281,365 $256,951
 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses $82,445 $65,603
Current maturities of long-term debt and obligations under capital leases 15,504 16,488
Current liabilities of discontinued operations - 956
Total current liabilities 97,949 83,047
 
Long-term debt and obligations under capital leases 21,750 29,250
Other liabilities 2,726 2,884
Non-current liabilities of discontinued operations - 109
Total liabilities 122,425 115,290
Total stockholders’ equity 158,940 141,661
Total liabilities and stockholders’ equity $281,365 $256,951

 
 

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

Selected Financial Information

Consolidated Statements of Operations

(In thousands, except for per share data)

           
Quarter Ended Six Months Ended
Jan 1,

2012

    Dec 26,

2010

Jan 1,

2012

    Dec 26,

2010

 
Net revenues:
E-commerce (combined online and telephonic) $165,130 $154,599 $243,920 $225,812
Other 74,715 74,274 113,123 104,801
 
Total net revenues 239,845 228,873 357,043 330,613
 
Cost of revenues 139,519 131,779 210,155 190,513
 
Gross profit 100,326 97,094 146,888 140,100
 
Operating expenses:
Marketing and sales 53,020 50,476 85,302 80,103
Technology and development 4,854 4,721 9,606 9,520
General and administrative 12,932 12,443 25,291 23,894
Depreciation and amortization 4,929 5,189 9,831 10,203
 
Total operating expenses 75,735 72,829 130,030 123,721
 
Gain on sale of stores 3,789 - 3,789 -
 
Operating income 28,380 24,265 20,647 16,380
 
Interest expense, net (849) (1,306) (1,671) (2,467)
 
Income from continuing operations before income taxes 27,531 22,959 18,976 13,913
Income tax expense from continuing operations 10,955 9,887 7,533 5,789
Income from continuing operations 16,576 13,072 11,443 8,124
Income (loss) from discontinued operations, net of tax 63 458 (22) 282
Gain on sale of discontinued operations, net of tax - - 4,478 -
Income from discontinued operations 63 458 4,456 282
Net income $16,639 $13,530 $15,898 $8,406
 
 

Basic net income per common share

From continuing operations $0.26 $0.20 $0.18 $0.13
From discontinued operations - 0.01 0.07 -
Net income per common share $0.26 $0.21 $0.25 $0.13
 

Diluted net income per common share

From continuing operations $0.25 $0.20 $0.17 $0.13
From discontinued operations - 0.01 0.07 -
Net income per common share $0.25 $0.21 $0.24 $0.13

 

Weighted average shares used in the calculation of net income per common share

Basic 64,841 63,966 64,530 63,930
Diluted 66,050 64,801 65,989 64,692

 
 

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

Selected Financial Information

Consolidated Statements of Cash Flows

(In thousands)

     
Six Months Ended
Jan 1,

2012

    Dec 26,

2010

 
Operating activities
Net income $15,898 $8,406
Reconciliation of net income to net cash provided by operations:
Operating activities of discontinued operations 1,112 (1,230 )
Gain on sale of discontinued operations (8,953 ) -
Depreciation and amortization 9,831 10,203
Amortization of deferred financing costs 229 246
Deferred income taxes 6,032 5,475
Bad debt expense 327 944
Stock based compensation 2,380 1,757
Other non-cash items 110 -
Changes in operating items, excluding the effects of acquisitions:
Receivables (18,526 ) (24,980 )
Inventories (8,150 ) (5,184 )
Prepaid and other 307 (1,651 )
Accounts payable and accrued expenses 16,098 10,959
Other assets 1,772 (288 )
Other liabilities 95   (108 )
 
Net cash provided by operating activities 18,562 4,549
 
Investing activities
Acquisitions, net of cash acquired (4,336 ) -
Proceeds from sale of business 14,074 -
Capital expenditures, net of non-cash expenditures (8,689 ) (7,559 )
Purchase of investment (1,111 ) -
Other, net (257 ) 73
Investing activities of discontinued operations -   (121 )
 
Net cash used in investing activities (319 ) (7,607 )
Financing activities
Acquisition of treasury stock (1,111 ) (98 )
Proceeds from bank borrowings 56,000 40,000
Repayment of notes payable and bank borrowings (63,500 ) (46,000 )
Debt issuance cost - (17 )
Repayment of capital lease obligations (996 ) (962 )
 
Net cash used in financing activities (9,607 ) (7,077 )
 
Net change in cash and equivalents 8,636 (10,135 )
Cash and equivalents:
Beginning of period 21,442   27,843  
 
End of period $30,078   $17,708  

 
 

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

Selected Financial Information

Category Information

(in thousands)

           

 

Three Months Ended

Six Months Ended

Jan 1,     Dec 26,    

 

Jan 1,     Dec 26,    

 

2012 2010

% Change

2012 2010

% Change

Net revenues from continuing operations:

1-800-Flowers.com Consumer Floral $ 91,041 $ 82,574 10.3 % $ 161,181 $ 145,177 11.0 %
BloomNet Wire Service 18,272 16,219 12.7 % 36,777 31,178 18.0 %
Gourmet Food & Gift Baskets 131,100 130,139 0.7 % 159,725 154,267 3.5 %
Corporate (*) 189 339 (44.2 %) 376 554 (32.1 %)
Intercompany eliminations   (757 )   (398 ) 90.0 %   (1,016 )   (563 ) (80.5 %)

Total net revenues from continuing operations

$ 239,845   $ 228,873   4.8 % $ 357,043   $ 330,613   8.0 %

 

Three Months Ended

Six Months Ended

Jan 1, Dec 26,

 

Jan 1, Dec 26,

 

  2012     2010  

% Change

    2012     2010  

% Change

 

Gross profit from continuing operations:

1-800-Flowers.com Consumer Floral $ 35,254 $ 31,854 11.5 % $ 62,213 $ 55,693 11.7 %
39.0 % 38.6 % 38.6 % 38.4 %
BloomNet Wire Service 8,992 9,086 (1.0 %) 17,521 17,549 (0.2 %)
49.2 % 56.0 % 47.6 % 56.3 %
Gourmet Food & Gift Baskets 55,650 55,941 (0.5 %) 66,865 66,570 0.4 %
42.4 % 43.0 % 41.9 % 43.2 %
Corporate (*) 160 213 (24.9 %) 289 288 0.3 %
  84.7 %   62.8 %   76.7 %   52.0 %

Total gross profit from continuing operations

$ 100,326   $ 97,094   3.3 % $ 146,888   $ 140,100   4.8 %
  41.8 %   42.4 %   41.1 %   42.4 %
 
Three Months Ended Six Months Ended
Jan 1,

Dec 26,

Jan 1,

Dec 26,

  2012    

2010

  % Change     2012    

2010

  % Change  

Adjusted EBITDA from continuing operations, excluding stock-based compensation:

1-800-Flowers.com Consumer Floral $ 9,984 $ 8,180 22.1 % $ 15,951 $ 13,533 17.9 %
BloomNet Wire Service 5,074 5,363 (5.4 %) 9,667 9,662 0.0 %
Gourmet Food & Gift Baskets   30,166     27,668   9.0 %   28,240     25,734 9.7 %
Category Contribution Margin Subtotal 45,224 41,212 9.7 % 53,858 48,929 10.1 %
Corporate (*)   (11,915 )   (11,758 ) (1.3 %)   (23,380 )   (22,346 ) (4.6 %)

EBITDA

$ 33,309 $ 29,454 13.1 % $ 30,478 $ 26,583 14.7 %
Add: Stock-based compensation   1,211     1,102   (9.9 %)   2,380     1,757   (35.5 %)

EBITDA, excluding stock-based compensation

$ 34,520 $ 30,556 13.0 % $ 32,858 $ 28,340 15.9 %
Less: Gain on sale of stores   3,789     -   - %   3,789     -   - %

Adjusted EBITDA from continuing operations, excluding stock-based compensation

$ 30,731   $ 30,556   0.6 % $ 29,069   $ 28,340   2.6 %
 
Three Months Ended Six Months Ended
Jan 1, Dec 26,

 

Jan 1, Dec 26,

 

  2012     2010  

% Change

    2012     2010  

% Change

 

Discontinued Operations:

Net revenues - 6,530 - 2,003 9,311 (78.5 %)
Gross profit - 1,738 - 405 2,313 (82.5 %)
Contribution margin - 913 - (190 ) 686 (127.7 %)

   
 

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

Selected Financial Information

(in thousands, except for per share data)

             
Three Months Ended Six Months Ended

 

Jan 1,

2012

    Dec 26,

2010

Jan 1,

2012

    Dec 26,

2010

 
Reconciliation of Net Income from continuing operations to EBITDA and Adjusted EBITDA from continuing operations, less stock-based compensation:
Net income from continuing operations $16,576 $13,072 $11,443 $8,124
Add:
Interest expense 849 1,306 1,671 2,467
Depreciation and amortization 4,929 5,189 9,831 10,203
Income tax expense 10,955 9,887 7,533 5,789
EBITDA $33,309 $29,454 $30,478 $26,583
Stock-based compensation 1,211 1,102 2,380 1,757
EBITDA, less stock-based compensation $34,520 $30,556 $32,858 $28,340
Gain on sale of stores (3,789) - (3,789) -
Adjusted EBITDA from continuing operations, less stock-based compensation

$30,731

$30,556

$29,069

$28,340

 
Three Months Ended Six Months Ended

 

Jan 1,

2012

Dec 26,

2010

Jan 1,

2012

Dec 26,

2010

 
Reconciliation of Net Income from continuing operations to Adjusted Net Income from continuing operations:
Net income from continuing operations $16,576 $13,072 $11,443 $8,124
Less: Gain on sale of stores, net of tax (2,281) - (2,281) -
Adjusted Net Income from continuing operations $14,295 $13,072 $9,162 $8,124
 
Basic and Diluted Adjusted Net Income per common share from continuing operations

$0.22

$0.20

$0.14

$0.13

 
        (*)   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 Share-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 category.    
 
(**) Performance is measured based on category contribution margin or category Adjusted EBITDA, reflecting only the direct controllable revenue and operating expenses of the categories. As such, management’s measure of profitability for these categories does not include the effect of corporate overhead, described above, depreciation and amortization, other income (net), nor does it include one-time charges. 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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