1-800-FLOWERS.COM (FLWS) Q4 2017 earnings summary

Executive summary

• FY17 comparable revenue grew 3.1% to $1.19B; GAAP net income and EPS increased, while Adjusted EBITDA rose to $87.2M.

• Consumer Floral and BloomNet growth offset weaker holiday demand at Harry & David; the Fannie May sale strengthened liquidity and enabled renewed focus on growth.

• FY18 guidance targets revenue of $1.14B–$1.16B, EPS of $0.46–$0.48 and EBITDA of $90M–$93M.

Financial highlights

• FY17 net revenue was $1,193.6M, up 1.8% reported and 3.1% on a comparable basis; FY16 included a 53rd week and other comparability items.

• GAAP operating income was $46.4M versus $43.3M; net income was $44.0M versus $35.9M, and diluted EPS was $0.65 versus $0.55.

• Adjusted EBITDA, excluding stock compensation and specified items including Harry & David severance, was $87.2M versus $85.7M; Adjusted diluted EPS was $0.43 versus $0.43.

• Gross profit was $520.3M, up 0.5%; gross margin was 43.6% versus 44.1%, reflecting shipping-rate increases, product mix and promotions.

• Operating cash flow was $61.0M; net cash increased $121.9M to $149.7M at year-end, primarily reflecting Fannie May sale proceeds.

Outlook and guidance

• FY18 consolidated revenue guidance is $1.14B–$1.16B, reflecting the Fannie May disposition; growth is expected across all three segments.

• FY18 EPS guidance is $0.46–$0.48, assuming a normalized 35% effective tax rate; EBITDA guidance is $90M–$93M.

• Gross profit is expected to improve through sales growth and stronger margins from manufacturing and supply-chain initiatives; capital spending is expected to remain consistent with FY17.