Ftd (NASDAQ:FTDI)
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FTD, Inc. Reports $0.29 EPS for Q1 of Fiscal 2004
DOWNERS GROVE, Ill., Oct. 28 /PRNewswire-FirstCall/ -- FTD, Inc. , a leading
provider of floral services and products, today announced first quarter fiscal
2004 financial results.
Revenues for the first quarter of fiscal 2004 were flat at $73.6 million
compared with the same quarter of the prior fiscal year. These results reflected
a 15.3% increase in revenues in the Consumer Business, offset by a 9.3% decrease
in revenues in the Florist Business. First quarter fiscal 2004 net income was
$4.8 million, or $0.29 per diluted share, compared to net income of $5.8
million, or $0.35 per diluted share, in the same quarter of the prior fiscal
year. The decrease in net income over the prior year first quarter was
primarily due to decreased revenues within the Florist Business segment.
"In what is traditionally our lowest revenue quarter due to the lack of any
major floral holiday, the Consumer Business continued to perform well and the
Florist Business began to show positive trends, after accounting for the
additional revenues associated with the bi-annual sale of the floral selections
guide, which occurred last year, and a change from selling to leasing certain
technology equipment used by florists. Specialty gift sales continue to
positively impact order volume and drive growth in the Consumer Business, while
the Florist Business has been helped by changes made to the sales force last
year. As we enter the holiday season this quarter, we expect to benefit from
the investments made in new products, new customer service programs and improved
product and service offerings during the past few quarters," said Robert L.
Norton, Chairman and CEO.
Consumer Business Segment
The Consumer Business is comprised of FTD.COM, a leading Internet and telephone
marketer of flowers and specialty gifts. Revenues for this segment grew $4.3
million to $31.9 million from $27.6 million in the prior year's quarter. The
revenue increase was due to both higher order volumes and an increase in average
order value from the prior year's quarter. Operating income for the Consumer
Business was $1.6 million compared to $1.0 million in the same quarter of the
prior fiscal year. This increase was primarily the result of higher revenues and
expanded gross profit margins. Additionally, Internet orders as a percentage of
total orders in the Consumer Business continued to grow, increasing to 79.2% in
the current quarter from 76.1% in the first quarter of fiscal 2003, which
resulted in improvements to our operating margin.
Consumer orders during the quarter totaled approximately 499,000 compared to
approximately 451,000 orders in the same quarter of the prior fiscal year.
Average order value increased to $63.85 in the current quarter from $61.32 in
the prior year's quarter. Growth in orders was led by the continued success in
expanding alliances with existing marketing partners, an increase in specialty
gift sales and the contribution from the acquisition of Flowers USA in October
2002. Specialty gift orders grew 48% during the quarter compared to the same
quarter of the prior fiscal year, and continue to be a significant component of
revenue in the Consumer Business segment. Specialty gift orders comprised 20.5%
of total orders for the current quarter compared to 15.6% of total orders for
the first quarter of fiscal 2003. Plants, cookies and gourmet foods continue to
be top sellers in the specialty gift category.
The Consumer Business segment remains focused on leveraging existing marketing
partnerships and developing new partnerships, which are expected to enable the
Company to expand its brand presence during the upcoming holidays. In addition,
the Company expects to add further product lines to its current offerings to
continue to attract additional purchases from its customer base.
Florist Business Segment
The Florist Business primarily markets floral products and services, such as
clearinghouse services, technology products and services and floral shop
supplies, to FTD members and other retail locations offering floral products in
the U.S. and Canada. First quarter revenues for this segment were $41.7 million,
down from $45.9 million in the prior year's comparable quarter. This decrease
was due to the bi-annual sale of the floral selections guide to member florists,
which provided $4.9 million in revenues in the first quarter of fiscal 2003, and
did not occur in fiscal 2004. Additionally, in an effort to increase penetration
of the Company's technology platforms and to provide a more consistent revenue
stream, in-line with that experienced with many of its other products, the
Company revised its mid-tier technology platform and began to lease this
platform to customers in fiscal 2004, rather than offer only a single sale of
the equipment, as was the practice in past years. This change contributed to a
reduction of revenues associated with mid-tier technology products of $1.9
million in the first quarter of fiscal 2004 compared to the same quarter of the
prior year. These decreases were partially offset by an increase in floral
container sales to member florists in the current quarter compared to the first
quarter of the prior fiscal year. Operating income for the Florist Business
decreased to $9.6 million from $13.0 million in the prior year's quarter as a
result of the reduction in revenues.
FTD florist membership in the current quarter remained constant at 19,400
members compared to the prior fiscal year end. In addition, the Company
maintained its brand presence in non-member retail locations by partnering local
FTD Florists with leading mass market retail locations to promote the FTD brand
and increase everyday purchases of flowers. The Company remains focused on a
balanced approach to strengthening its membership base, while increasing
penetration of the suite of products and services offered to the FTD membership
base and other retail locations. Management believes the investments made in
expanding the Company's sales force and broadening marketing efforts have begun
to show positive trends and expect that these initiatives will have an impact as
the higher volume holiday season approaches.
Fiscal 2004 Outlook
Norton commented, "This has been a solid quarter for FTD. I am pleased with the
consistent performance of our Consumer Business and the positive trends our
Florist Business is beginning to demonstrate. The resilience of the FTD brand
and our business in tough economic conditions is a result of the synergistic
capabilities of our two business segments.
"We expect the Florist Business segment to continue to benefit from the
strategic investments in our sales force, as well as the refinements we have
made to the products and services we offer our member florists. I am happy to
report that we are seeing the benefits of these investments, with positive
trends occurring in many of our products and services. FTD will continue to
focus on a balanced approach of acquisition and retention marketing efforts
across all of the products and services we offer within the Florist Business.
Additionally, we will continue to look for new ways to provide value and build
loyalty among our member florists, as with the exciting, new FTD exclusive
products like the FTD Waterford Holiday Heirloom(R) bouquet for Christmas and
the FTD Laura Ashley(R) bouquet for Mother's Day.
"We have seen consistent growth within the Consumer Business segment. We
anticipate that these positive trends will continue in upcoming quarters as we
approach some of the leading floral holidays, including Christmas, Valentine's
Day and Mother's Day," concluded Norton.
As previously announced, FTD entered into a merger agreement on October 5, 2003,
pursuant to which the Company would be acquired by an affiliate of Leonard Green
& Partners, L.P. Under the terms of the agreement, FTD's stockholders would
receive $24.85 per share in cash upon the closing of the merger. The closing of
the transaction is subject to certain terms and conditions customary for
transactions of this type, including stockholder approval, receipt of antitrust
clearance and completion of the acquisition financing. Stockholder approval will
be solicited by FTD by means of a proxy statement, which will be mailed to FTD
stockholders upon the completion of the required Securities and Exchange
Commission filing and review process. Subject to satisfaction or waiver of the
closing conditions, the parties currently anticipate consummating the
transaction in the first calendar quarter of 2004.
Conference Call
A conference call has been scheduled for October 28, 2003 at 9:00 a.m., Central
Time, to review the results for the first fiscal quarter ended September 30,
2003. To listen to the call over the Internet, go to http://www.ftdi.com/ at
least 15 minutes early to register, download and install any necessary audio
software. To listen to the call by telephone, dial (888) 666-1297 (mention
conference ID #3366301). A replay of the call will be available until November
10, 2003 through http://www.ftdi.com/ or by dialing (800)642-1687 (mention
conference ID #3366301). The conference call contains time-sensitive information
that is accurate only as of October 28, 2003, the date of the live broadcast.
The call is the property of FTD, Inc. Any redistribution, retransmission or
rebroadcast of the conference call in any form without the express written
consent of FTD, Inc. is strictly prohibited.
About FTD, Inc.
FTD, Inc., supported by its worldwide FTD brand, is a leading provider of floral
services and products. FTD's Florist Business primarily markets floral products
and services to approximately 20,000 FTD members and other retail locations
offering floral products in the U.S. and Canada and connects approximately
29,000 additional florists through affiliated or related organizations in 150
countries outside of North America. FTD's Consumer Business is a direct marketer
of flowers and specialty gifts, primarily through the http://www.ftd.com/ Web
site and 1-800-SEND-FTD telephone number. FTD, Inc.'s Class A Common Stock is
quoted on the NASDAQ National Market under the symbol "FTDI". Additional
information about FTD, Inc., including investor relations, is available at its
Web site, http://www.ftdi.com/ .
The proxy statement that FTD plans to file with the Securities and Exchange
Commission and mail to its stockholders in connection with the proposed merger
will contain information about FTD, Inc., Leonard Green & Partners, L.P. and its
affiliated participants in the proposed transaction, the proposed merger and
related matters. Stockholders are urged to read the proxy statement carefully
when it is available, as it will contain important information that stockholders
should consider before making a decision about the merger. In addition to
receiving the proxy statement from FTD in the mail, stockholders will also be
able to obtain the proxy statement, as well as other filings containing
information about FTD, Inc., without charge, at the Securities and Exchange
Commission's web site (http://www.sec.gov/). Stockholders may also obtain
copies of these documents without charge by requesting them in writing from FTD,
Inc. 3113 Woodcreek Drive, Downers Grove, Illinois, 60515, or by telephone at
(630) 719-7800.
FTD and its executive officers and directors may be deemed to be participants in
the solicitation of proxies from FTD's stockholders with respect to the proposed
merger. Information regarding any interests that FTD's executive officers and
directors may have in the transaction will be set forth in the proxy statement.
Forward-Looking Statements
This press release contains various "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 regarding the
Company's outlook, including: statements regarding the proposed transaction with
Leonard Green & Partners, L.P.; statements regarding anticipated revenue growth
and profitability, including the anticipated effect of charges and gains that
are not expected to reoccur, expectations regarding the benefits of investment
in new products, programs and offerings; and statements regarding opportunities
and trends within both the Consumer and Florist Business segments, including
opportunities to expand these businesses and capitalize on growth opportunities
or increase penetration of service offerings. These forward-looking statements
are based on management's current expectations, assumptions, estimates and
projections about the Company and its industry. Investors are cautioned that
actual results could differ from those anticipated by the forward-looking
statements as a result of: the failure to obtain the necessary stockholder
approval, antitrust clearance or required financing for the proposed transaction
with Leonard Green & Partners, L.P. in a timely manner or at all; satisfaction
of various other closing conditions contained in the definitive merger
agreement; the Company's ability to acquire and retain FTD member florists and
continued recognition by members of the value of the Company's products and
services; the acceptance by members of the new or modified service offerings
recently introduced; the Company's ability to sell additional products and
services to member florists; the Company's ability to expand existing marketing
partnerships and secure new marketing partners within the Consumer Business
segment; the success of the Company's marketing campaigns; the ability to retain
customers and increase average order value within the Consumer Business segment;
the existence of failures in the Mercury Network or the Company's Consumer
Business segment systems; competition from existing and potential new
competitors; levels of discretionary consumer purchases of flowers and specialty
gifts; the Company's ability to manage or reduce its level of expenses within
both the Consumer and Florist Business segments; actual growth rates for the
markets in which the Company competes compared with forecasted growth rates; the
Company's ability to increase capacity and introduce enhancements to its Web
sites; the Company's ability to integrate additional partners or acquisitions,
if any are identified; and the resolution of pending or threatened litigation.
These factors, along with other potential risks and uncertainties, are discussed
in the Company's reports and other documents filed with the Securities and
Exchange Commission.
FTD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended
September 30,
2003 2002
Revenues:
Florist Business $ 41,692 $ 45,944
Consumer Business 31,884 27,642
Total revenues 73,576 73,586
Costs of goods sold and services provided:
Florist Business 14,521 16,075
Consumer Business 24,050 21,475
Corporate 630 570
Total costs of goods sold and services
provided 39,201 38,120
Gross profit:
Florist Business 27,171 29,869
Consumer Business 7,834 6,167
Corporate (630) (570)
Total gross profit 34,375 35,466
Advertising and selling:
Florist Business 11,781 11,478
Consumer Business 2,526 1,920
Total advertising and selling 14,307 13,398
General and administrative:
Florist Business 2,717 2,532
Consumer Business 2,995 2,538
Corporate 6,025 6,632
Total general and administrative 11,737 11,702
Operating income (loss) before corporate
allocations:
Florist Business 12,673 15,859
Consumer Business 2,313 1,709
Corporate (6,655) (7,202)
Total operating income before corporate
allocations 8,331 10,366
Corporate Allocations:
Florist Business 3,097 2,879
Consumer Business 739 756
Corporate (3,836) (3,635)
Total corporate allocations - -
Income (loss) from operations:
Florist Business 9,576 12,980
Consumer Business 1,574 953
Corporate (2,819) (3,567)
Total income from operations 8,331 10,366
Other income and expenses:
Interest income (6) (109)
Interest expense 241 600
Other expense (income), net 65 (56)
Total other income and expenses 300 435
Income before income tax and minority
interest 8,031 9,931
Income tax expense 3,223 4,121
Net income $ 4,808 $ 5,810
Net income per common share - basic $ 0.29 $ 0.35
Net income per common share - diluted $ 0.29 $ 0.35
Weighted average common shares outstanding
- basic 16,359 16,403
Weighted average common shares outstanding
- diluted 16,638 16,629
FTD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
September 30,
2003 2002
Cash flows from operating activities:
Net income $4,808 $5,810
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 2,008 1,829
Amortization and write off of deferred
financing costs and original issue discount 60 82
Deferred compensation expense 57 420
Provision for doubtful accounts 787 807
Deferred income taxes 19 4,121
Increase (decrease) in cash due to change in
assets and liabilities, net of acquisitions:
Restricted cash - 1,400
Accounts receivable (7,503) (14,662)
Inventories (236) (202)
Prepaid expenses and other (613) (2,633)
Other noncurrent assets (72) (1,099)
Accounts payable (6,687) (4,944)
Other accrued liabilities, unearned income
and customer deposits 275 (2,319)
Net cash used in operating activities (7,097) (11,390)
Cash flows from investing activities:
Acquisitions - (4,703)
Expenditures related to the 2002 Merger - (87)
Capital expenditures (1,179) (53)
Decrease in officer notes receivable - 48
Net cash used in investing activities (1,179) (4,795)
Cash flows from financing activities:
Net proceeds from (repayments of) revolving
credit facility 9,000 (7,650)
Deferred financing costs - (188)
Issuance of treasury stock 17 75
Treasury stock repurchases - (2,633)
Net cash provided by (used in)
financing activities 9,017 (10,396)
Effect of foreign exchange rate changes on
cash (18) (50)
Net increase (decrease) in cash and cash
equivalents 723 (26,631)
Cash and cash equivalents at beginning of period 1,921 36,410
Cash and cash equivalents at end of period $2,644 $9,779
FTD, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
September 30, June 30,
2003 2003
ASSETS
Current assets:
Cash and cash equivalents $2,644 $1,921
Accounts receivable, less allowance for
doubtful accounts of $5,322 at September 30,
2003 and $5,284 at June 30, 2003 29,860 23,398
Inventories, net 8,904 8,668
Deferred income taxes 4,740 4,740
Prepaid expenses and other 4,837 4,224
Total current assets 50,985 42,951
Property and equipment:
Land and improvements 1,600 1,600
Building and improvements 8,881 8,858
Mercury consoles 4,230 4,233
Furniture and equipment 19,142 19,131
Total 33,853 33,822
Less accumulated depreciation 21,422 20,648
Property and equipment, net 12,431 13,174
Other assets:
Other noncurrent assets, net 12,396 11,986
Customer lists, less accumulated amortization
of $1,257 at September 30, 2003 and $1,023 at
June 30, 2003 3,419 3,653
Trademark, less accumulated amortization of
$2,719 at September 30, 2003 and June 30,
2003 12,281 12,281
Goodwill, less accumulated amortization of
$17,286 at September 30, 2003 and June 30,
2003 120,326 120,326
Total other assets 148,422 148,246
Total assets $211,838 $204,371
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $31,042 $37,729
Customer deposits 5,907 6,095
Unearned income 1,788 1,664
Other accrued liabilities 20,259 19,655
Total current liabilities 58,996 65,143
Long-term debt 15,500 6,500
Post-retirement benefits and accrued pension
obligations, less current portion 4,589 4,858
Deferred income taxes 5,566 5,547
Stockholders' equity:
Preferred stock: $0.01 par value, 5,000,000
shares authorized, no shares issued and
outstanding - -
Common stock:
Class A, $0.01 par value, 300,000,000 shares
authorized; 15,516,800 shares issued at
September 30, 2003 and June 30, 2003 155 155
Class B convertible, $0.0005 par value,
20,000,000 shares authorized; 2,112,502
shares issued at September 30, 2003 and
June 30, 2003 1 1
Paid-in capital 148,825 148,840
Accumulated deficit (2,278) (7,086)
Accumulated other comprehensive loss (639) (621)
Unamortized restricted stock (193) (250)
Treasury stock at cost, 435,996 shares of
Class A and 801,250 shares of Class B
convertible as of September 30, 2003 and
June 30, 2003 (18,684) (18,716)
Total stockholders' equity 127,187 122,323
Total liabilities and stockholders'
equity $211,838 $204,371
DATASOURCE: FTD, Inc.
CONTACT: Investors, Carrie Wolfe, Chief Financial Officer,
+1-630-724-6512, , or Investors-Media, Lisa Witek, Director of
IR, +1-630-719-6174, , both of FTD, Inc.
Web site: http://www.ftd.com/