1-800-FLOWERS.COM (FLWS) Q4 2013 earnings summary

Executive summary

• Third consecutive year of solid top- and bottom-line results: FY13 continuing-operations revenue rose 4.0%, Adjusted EBITDA increased 10.2%, and EPS grew 20.0%.

• Growth came amid a weak consumer environment; the year ended debt-free, with more than $14 million in free cash flow.

Financial highlights

• Continuing-operations revenue was $735.5 million, up 4.0% YoY; gross profit was $305.2 million, up 4.3%.

• Operating income reached $25.8 million versus $23.7 million; income from continuing operations was $15.7 million versus $13.3 million.

• Net income was $12.3 million versus $17.6 million; FY13 included a $3.4 million discontinued-operations loss, while FY12 included a $4.5 million after-tax gain on discontinued operations.

• E-commerce revenue rose 4.7% to $536.6 million; 8.7 million orders were fulfilled, with average order value of $61.60 versus $62.26.

Outlook and guidance

• FY14 consolidated revenue expected to grow in the mid-single-digit range, with EBITDA and EPS growth rates exceeding revenue growth.

• Gross margin expected to improve through sales mix changes and better sourcing, supply-chain and manufacturing efficiencies; operating leverage also expected to continue improving.

• FY14 free cash flow projected at ~$20 million; capital expenditures expected to rise to ~$23 million, including Cheryl’s plant expansion to double capacity.

• Planned growth investments include social and mobile engagement, FruitBouquets, Fannie May Berries and BloomNet market penetration.