1-800-FLOWERS.COM (FLWS) Q4 2016 earnings summary

Executive summary

• FY16 revenue rose 4.6% to $1.173B; adjusted EBITDA, excluding stock-based compensation, increased 6.6% to $85.8M and adjusted EPS rose 26.5% to $0.43.

• Growth reflected Harry & David, organic gains in several brands and a 53rd week; Fannie May's slower recovery, Valentine's Day timing and labor costs weighed on results.

• All brands migrated to a multi-brand website; integration synergies reached $10M captured, with more than $20M in annual savings targeted by FY18.

Financial highlights

• FY16 net revenue was $1,173.0M, up 4.6%; gross profit was $517.5M, up 6.2%, and gross margin was 44.1%, up 70 bps YoY.

• Operating income increased to $43.3M from $37.6M; net income attributable to shareholders was $36.9M versus $20.3M, and diluted reported EPS was $0.55 versus $0.30.

• Adjusted EBITDA, excluding stock-based compensation and specified one-time items, was $85.8M; adjusted diluted EPS was $0.43. Reported FY16 adjusted figures exclude severance, integration and litigation costs, among other items.

Outlook and guidance

• FY17 consolidated revenue growth expected at 4%–5%; EBITDA growth of 8%–10% and EPS growth of 5%–10%, compared with FY16 adjusted EBITDA of $85.8M and adjusted EPS of $0.43.

• FY17 gross margin expected to remain consistent with FY16; gross profit expected to improve in line with sales growth.

• FY17 capital spending expected to be consistent with FY16; expected cost synergies exceed $20M annually by FY18.