1-800-FLOWERS.COM, Inc. Reports Strong Revenue Growth of 8.6 Percent For Its Fiscal 2019 Second Quarter

  • Total revenues were $571.3 million, up 8.6 percent compared with $526.1 million in the prior year period, driven by strong growth in all three of the Company’s business segments.
  • Net Income was $68.6 million, or EPS of $1.04 per diluted share, compared with Net Income of $70.7 million, or EPS of $1.06 per diluted share in the prior year period. Adjusted for a one-time benefit of $0.18 per diluted share associated with the “Tax Cuts and Jobs Act of 2017,” Adjusted Net Income in the prior year period was $58.5 million, or EPS of $0.88 per diluted share.
  • Adjusted EBITDA1 was $103.1 million, compared with $94.5 million in the prior year period.
  • Company increases its guidance for fiscal year 2019 revenues and earnings.

(1Refer to “Definitions of Non-GAAP Financial Measures” and the tables attached at the end of this press release for reconciliation of Non-GAAP (“Adjusted”) results to applicable GAAP results.)

CARLE PLACE, N.Y.--()--1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS), a leading gourmet food and floral gift provider for all occasions, today reported results for its fiscal 2019 second quarter. Chris McCann, CEO of 1-800-FLOWERS.COM, said, “We are pleased to report accelerated revenue growth and solid year-over-year increases in earnings and cash flows for our fiscal second quarter. These results were driven by strong holiday and everyday gifting demand, combined with excellent execution, across all three of our business segments.” McCann said that consolidated revenue growth of 8.6 percent during the quarter was driven, in large part, by the Company’s Harry & David business. “Customers who were looking to express themselves, connect and celebrate for the year-end holidays, as well as for everyday occasions, clearly responded to Harry & David’s “Share More” brand messaging and its continued focus on truly original product offerings. In addition, our increased investments in digital marketing programs for Harry & David contributed to total-company new customer growth of nearly twelve percent during the quarter while also enabling us to continue to deepen our relationships with existing customers.” McCann said strong growth in the Company’s Gourmet Food and Gift Baskets segment also benefited from enhanced operating performance in its Cheryl’s Cookies business as well as solid wholesale channel growth in gift baskets and The Popcorn Factory brand.

McCann noted that the strong results for the quarter also benefited from continued positive trends in its Consumer Floral and BloomNet businesses. “The investments we have made – and continue to make – in our floral business are helping us to accelerate new customer growth and increase total order volumes. As a result, the 1-800-Flowers.com brand is further expanding its market leading position and BloomNet continues to grow its market share versus the legacy wire service providers. These positive trends position us well for continued accelerated revenue growth in the second half of our fiscal year, which features the Valentine’s Day and Mother’s Day holidays as well as everyday occasions such as birthdays, anniversaries, sympathy and get well for which the 1-800-Flowers.com brand is the go-to destination for our customers,” he said.

Fiscal 2019 Second Quarter Results:

Total net revenues for the quarter were $571.3 million, up 8.6 percent compared with $526.1 million in the prior year period. The strong growth was driven by increases in all three of the Company’s business segments with net revenues for Gourmet Foods and Gift Baskets up 8.4 percent, Consumer Floral up 8.0 percent and BloomNet up 15.0 percent compared with the prior year period.

Gross profit margin for the quarter was 44.6 percent, compared with gross profit margin of 44.7 percent in the prior year period. Operating expenses as a percent of total revenues was 28.0 percent, compared with operating expenses as a percent of total revenues of 28.7 percent in the prior year period.

The combination of these factors resulted in Net Income for the quarter of $68.6 million, or EPS of $1.04 per diluted share, compared with Net Income of $70.7 million, or EPS of $1.06 per diluted share in the prior year period. Adjusted for a one-time benefit of $12.2 million, or $0.18 per diluted share, associated with the Tax Cut and Jobs Act of 2017, adjusted net income in the prior year period was $58.5 million, or EPS of $0.88 per diluted share.

Adjusted EBITDA for the quarter was $103.1 million, compared with Adjusted EBITDA of $94.5 million in the prior year period.

SEGMENT RESULTS:

The Company provides fiscal 2019 second quarter selected financial results for its Gourmet Foods and Gift Baskets, Consumer Floral and BloomNet business segments in the tables attached to this release and as follows:

  • Gourmet Foods and Gift Baskets: Revenues for the quarter were $440.0 million, an increase of 8.4 percent compared with reported revenues of $406.0 million in the prior year period. Revenue growth was driven primarily by Harry & David combined with improved performance by the Company’s Cheryl’s Cookies brand and increased wholesale channel sales for gift baskets and The Popcorn Factory. Gross profit margin was 45.6 percent for the period, up 20 basis points compared with gross profit margin of 45.4 percent in the prior year period. Segment contribution margin increased 12.9 percent to $105.5 million, compared with segment contribution margin of $93.5 million in the prior year period. The increased contribution margin primarily reflects the strong revenue growth in the quarter combined with improved gross profit margin.
  • Consumer Floral: Revenues in this segment increased 8.0 percent to $108.1 million, compared with $100.1 million in the prior year period. Gross profit margin was 38.5 percent, down 30 basis points compared with 38.8 percent in the prior year period. Segment contribution margin was $9.8 million, compared with $10.8 million in the prior year period. The lower gross margin and lower segment contribution margin primarily reflects the assumption of a full bonus payout for fiscal 2019 compared with a reduced payout in the prior year period, as well as increased investments the Company is making to extend its market leadership position in floral gifting and to launch its newest brand, Goodsey.
  • BloomNet Wire Service: Revenues for the quarter increased 15.0 percent to $23.4 million, compared with $20.4 million in the prior year period. Gross profit margin was 52.6 percent, down 480 basis points compared with 57.4 percent in the prior year period. The lower gross profit margin percentage reflects the investments the Company is making to drive increased order volumes and expand BloomNet’s market position. Segment contribution margin increased 7.3 percent to 8.3 million, compared with $7.7 million in the prior year period, reflecting the strong revenue growth, which more than offset the lower gross margin percentage in the quarter.

COMPANY GUIDANCE

The Company is increasing its guidance for fiscal year 2019 revenue and earnings as follows:

  • Consolidated revenue growth in a range of 7.0-to-8.0 percent compared with the prior year;
  • EPS in a range of $0.44 - to - $0.46 per diluted share;
  • Adjusted EBITDA in a range of $80.0 - to - $82.0 million.

The Company anticipates Free Cash Flow for the year will remain in a range of $30.0 million - to - $40.0 million.

Definitions of non-GAAP Financial Measures:

We sometimes use financial measures derived from consolidated financial information, but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain of these are considered "non-GAAP financial measures" under the U.S. Securities and Exchange Commission rules. Non-GAAP financial measures referred to in this document are either labeled as “non-GAAP” or designated as such with a “1”. See below for definitions and the reasons why we use these non-GAAP financial measures. Where applicable, see the Selected Financial Information below for reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures.

EBITDA and Adjusted/ Comparable EBITDA

We define EBITDA as net income (loss) before interest, taxes, depreciation and amortization. Adjusted/ Comparable EBITDA is defined as EBITDA adjusted for the impact of stock-based compensation, Non-Qualified Plan Investment appreciation/depreciation, and for certain items affecting period to period comparability. See Selected Financial Information for details on how EBITDA and Adjusted EBITDA were calculated for each period presented. The Company presents EBITDA and Adjusted/ Comparable EBITDA because it considers such information meaningful supplemental measures of its performance and believes such information is frequently used by the investment community in the evaluation of similarly situated companies. The Company uses EBITDA and Adjusted EBITDA as factors used to determine the total amount of incentive compensation available to be awarded to executive officers and other employees. The Company's credit agreement uses EBITDA and Adjusted EBITDA to measure compliance with covenants such as interest coverage and debt incurrence. EBITDA and Adjusted EBITDA are also used by the Company to evaluate and price potential acquisition candidates. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of the limitations are: (a) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, the Company's working capital needs; (b) EBITDA and Adjusted EBITDA do 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. EBITDA and Adjusted EBITDA should only be used on a supplemental basis combined with GAAP results when evaluating the Company's performance.

Segment Contribution Margin and Adjusted/ (Comparable) Segment Contribution Margin

We define Segment Contribution Margin as earnings before interest, taxes, depreciation and amortization, before the allocation of corporate overhead expenses. Adjusted (“Comparable”) Segment Contribution Margin is defined as Segment Contribution Margin adjusted for certain items affecting period to period comparability. See Selected Financial Information for details on how Segment Contribution Margin and Adjusted Segment Contribution margin were calculated for each period presented. When viewed together with our GAAP results, we believe Segment Contribution Margin and Adjusted Segment Contribution Margin provide management and users of the financial statements information about the performance of our business segments. Segment Contribution Margin and Adjusted Segment Contribution Margin are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. The material limitation associated with the use of the Segment Contribution Margin and Adjusted Segment Contribution Margin is that it is an incomplete measure of profitability as it does not include all operating expenses or non-operating income and expenses. Management compensates for these limitations when using this measure by looking at other GAAP measures, such as Operating Income and Net Income.

Adjusted Net Income and Adjusted or Comparable Net Income Per Common Share (or EPS):

We define Adjusted Net Income and Adjusted or Comparable Net Income Per Common Share (or EPS) as Net Income and Net Income Per Common Share (or EPS) adjusted for certain items affecting period to period comparability. See Selected Financial Information below for details on how Adjusted Net Income and Adjusted or Comparable Net Income Per Common Share (or EPS) were calculated for each period presented. We believe that Adjusted Net Income and Adjusted or Comparable Net Income Per Common Share (or EPS) are meaningful measures because they increase the comparability of period to period results. Since these are not measures of performance calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, GAAP Net Income and Net Income Per Common share (or EPS), as indicators of operating performance and they may not be comparable to similarly titled measures employed by other companies.

Free Cash Flow

We define Free Cash Flow as net cash provided by operating activities less capital expenditures. The Company considers Free Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of fixed assets, which can then be used to, among other things, invest in the Company’s business, make strategic acquisitions, strengthen the balance sheet and repurchase stock or retire debt. Free Cash Flow is a liquidity measure that is frequently used by the investment community in the evaluation of similarly situated companies. Since Free Cash Flow is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. A limitation of the utility of Free Cash Flow as a measure of financial performance is that it does not represent the total increase or decrease in the Company's cash balance for the period.

About 1-800-FLOWERS.COM, Inc.

1-800-FLOWERS.COM, Inc. is a leading provider of gifts designed to help customers express, connect and celebrate. The Company’s Celebrations Ecosystem features our all-star family of brands, including: 1-800-Flowers.com®, 1-800-Baskets.com®, Cheryl’s Cookies®, FruitBouquets.com®, Harry & David®, Moose Munch®, The Popcorn Factory®, Wolferman’s®, Personalization Universe®, Simply Chocolate®, and GoodseySM. We also offer top-quality steaks and chops from Stock Yards®. Through the Celebrations Passport® loyalty program, which provides members with free standard shipping and no service charge across our portfolio of brands, 1-800-FLOWERS.COM, Inc. strives to deepen relationships with customers. The Company also operates BloomNet®, an international floral wire service providing a broad-range of products and services designed to help professional florists grow their businesses profitably; Napco SM, a resource for floral gifts and seasonal décor; and DesignPac Gifts, LLC, a manufacturer of gift baskets and towers. 1-800-FLOWERS.COM, Inc. received the Gold award in the “Mobile Payments and Commerce” category at the Mobile Marketing Association 2018 Global Smarties Awards. In addition, Harry & David was named to the Internet Retailer 2019 “The Hot 100” list. Shares in 1-800-FLOWERS.COM, Inc. are traded on the NASDAQ Global Select Market, ticker symbol: FLWS.

Special Note Regarding Forward Looking Statements:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company’s current expectations or beliefs concerning future events and can generally be identified using statements that include words such as “estimate,” “expects,” “project,” “believe,” “anticipate,” “intend,” “plan,” “foresee,” “forecast,” “likely,” “will,” “target” or similar words or phrases. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from the results expressed or implied in the forward- looking statements; including, but not limited to, statements regarding the Company’s expectations for: its ability to continue to drive accelerated revenue growth in the second half of fiscal 2019 compared with the prior year period and to achieve its increased guidance for fiscal year 2019 revenue and earnings for consolidated revenue growth in a range of 7.0-to-8.0 percent compared with the prior year; EPS in a range of $0.44 - to - $0.46 per diluted share; Adjusted EBITDA in a range of $80.0 - to - $82.0 million; and Free Cash Flow for the year in a range of $30.0 million - to - $40.0 million; its ability to leverage its operating platform and reduce its operating expense ratio; its ability to cost effectively acquire and retain customers; the outcome of contingencies, including legal proceedings in the normal course of business; its ability to compete against existing and new competitors; its ability to manage expenses associated with sales and marketing and necessary general and administrative and technology investments; its ability to reduce promotional activities and achieve more efficient marketing programs; and general consumer sentiment and economic conditions that may affect levels of discretionary customer purchases of the Company’s products. The Company undertakes no obligation to publicly update any of the forward-looking statements, whether because of new information, future events or otherwise, made in this release or in any of its SEC filings except as may be otherwise stated by the Company. For a more detailed description of these and other risk factors, please refer to the Company’s SEC filings, including the Company’s Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q. Consequently, you should not consider any such list to be a complete set of all potential risks and uncertainties.

Conference Call:

The Company will conduct a conference call to discuss the above details and attached financial results today, Thursday, January 31, 2019, at 11:00 a.m. (ET). 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. EDT on the day of the call at: (US) 1-888-203-1112; (International) 1-719-457-0820; enter conference ID #: 3377858.

Note: The 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)

 
December 30, 2018 July 1, 2018
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 257,685 $ 147,240
Trade receivables, net 48,400 12,935
Inventories 64,006 88,825
Prepaid and other   20,108   24,021
Total current assets 390,199 273,021
 
Property, plant and equipment, net 160,204 163,340
Goodwill 62,590 62,590
Other intangibles, net 59,909 59,823
Other assets   12,559   12,115
Total assets $ 685,461 $ 570,889
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 51,947 $ 41,437
Accrued expenses 140,065 73,299
Current maturities of long-term debt   11,500   10,063
Total current liabilities 203,512 124,799
 
Long-term debt 86,970 92,267
Deferred tax liabilities 25,546 26,200
Other liabilities   13,360   12,719
Total liabilities   329,388   255,985
Total stockholders’ equity   356,073   314,904
Total liabilities and stockholders’ equity $ 685,461 $ 570,889
 

     

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

Selected Financial Information

Consolidated Statements of Income

(In thousands, except for per share data)

(unaudited)

 
Three Months Ended Six Months Ended

December 30,
2018

   

December 31,
2017

December 30,
2018

   

December 31,
2017

Net revenues:
E-Commerce $ 458,821 $ 424,132 $ 576,521 $ 532,903
Other   112,495   101,961   164,291   150,539
Total net revenues 571,316 526,093 740,812 683,442
Cost of revenues   316,489   290,834   417,445   380,905
Gross profit 254,827 235,259 323,367 302,537
Operating expenses:
Marketing and sales 119,664 113,771 172,618 163,493
Technology and development 10,906 9,175 21,185 18,845
General and administrative 21,603 19,170 42,033 38,575
Depreciation and amortization   7,969   8,677   15,812   16,761
Total operating expenses   160,142   150,793   251,648   237,674
Operating income 94,685 84,466 71,719 64,863
Interest expense, net 1,430 1,226 2,420 2,257
Other (income) expense, net   1,266   (86 )   992   (346 )
Income before income taxes 91,989 83,326 68,307 62,952
Income tax expense   23,411   12,627   16,995   5,475
Net income $ 68,578 $ 70,699 $ 51,312 $ 57,477
 
Basic net income per common share $ 1.07 $ 1.09 $ 0.80 $ 0.89
 
Diluted net income per common share $ 1.04 $ 1.06 $ 0.77 $ 0.86
 
Weighted average shares used in the calculation of net income per common share:
Basic   64,209   64,601   64,415   64,778
Diluted   66,136   66,782   66,483   67,037
 

   

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

Selected Financial Information

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

 
Six months ended
December 30, 2018   December 31, 2017
 
Operating activities:
Net income $ 51,312 $ 57,477
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization 15,812 16,761
Amortization of deferred financing costs 452 480
Deferred income taxes (654 ) (12,338 )
Bad debt expense 582 418
Stock-based compensation 2,628 2,069
Other non-cash items (501 ) (103 )
Changes in operating items:
Trade receivables (36,047 ) (30,769 )
Inventories 24,819 15,295
Prepaid and other 3,159 (4,272 )
Accounts payable and accrued expenses 78,361 69,269
Other assets (410 ) (97 )
Other liabilities   70   (24 )
Net cash provided by operating activities 139,583 114,166
 
Investing activities:
Working capital adjustment related to sale of business - (8,500 )
Capital expenditures, net of non-cash expenditures   (11,786 )   (8,864 )
Net cash used in investing activities (11,786 ) (17,364 )
 
Financing activities:
Acquisition of treasury stock (13,405 ) (11,085 )
Proceeds from exercise of employee stock options 365 15
Proceeds from bank borrowings 30,000 30,000
Repayment of bank borrowings (34,312 ) (32,875 )
Net cash used in financing activities (17,352 ) (13,945 )
       
Net change in cash and cash equivalents 110,445 82,857
Cash and cash equivalents:
Beginning of period   147,240   149,732
End of period $ 257,685 $ 232,589
 

   

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

Selected Financial Information – Category Information

(in thousands)

(unaudited)

 
Three Months Ended
December 30, 2018     December 31, 2017     % Change  
       
Net revenues:
1-800-Flowers.com Consumer Floral $ 108,106 $ 100,064 8.0 %
BloomNet Wire Service 23,435 20,375 15.0 %
Gourmet Food & Gift Baskets 440,003 405,964 8.4 %
Corporate 315 317 -0.6 %
Intercompany eliminations   (543)   (627) 13.4 %
Total net revenues $ 571,316 $ 526,093 8.6 %
 
Gross profit:
1-800-Flowers.com Consumer Floral $ 41,632 $ 38,844 7.2 %
38.5% 38.8%
 
BloomNet Wire Service 12,328 11,693 5.4 %
52.6% 57.4%
 
Gourmet Food & Gift Baskets 200,666 184,468 8.8 %
45.6% 45.4%
 
Corporate 201 254 -20.9 %
63.8% 80.1%
   
Total gross profit $ 254,827 $ 235,259 8.3 %
  44.6%   44.7%
 
EBITDA (non-GAAP)
Segment Contribution Margin (non-GAAP) (a):
1-800-Flowers.com Consumer Floral $ 9,808 $ 10,791 -9.1 %
BloomNet Wire Service 8,257 7,692 7.3 %
Gourmet Food & Gift Baskets   105,514   93,496 12.9 %
Segment Contribution Margin Subtotal 123,579 111,979 10.4 %
Corporate (b)   (20,925)   (18,836) -11.1 %
EBITDA (non-GAAP) 102,654 93,143 10.2 %
Add: Stock-based compensation 1,673 968 72.8 %
Add: Comp charge related to NQ Plan Investment Appreciation  

(1,249)

 

364

-443.1

%

Adjusted EBITDA (non-GAAP) $ 103,078 $ 94,475 9.1 %
 

    Six Months Ended
December 30, 2018     December 31, 2017     % Change  
 
Net revenues:
1-800-Flowers.com Consumer Floral $ 193,182 $ 176,674 9.3 %
BloomNet Wire Service 47,428 40,139 18.2 %
Gourmet Food & Gift Baskets 500,521 466,950 7.2 %
Corporate 582 587 -0.9 %
Intercompany eliminations   (901)   (908) 0.8 %
Total net revenues $ 740,812 $ 683,442 8.4 %
 
Gross profit:
1-800-Flowers.com Consumer Floral $ 74,920 $ 69,578 7.7 %
38.8% 39.4%
 
BloomNet Wire Service 24,235 22,751 6.5 %
51.1% 56.7%
 
Gourmet Food & Gift Baskets 223,702 209,620 6.7 %
44.7% 44.9%
 
Corporate (a) 510 588 -13.3 %
87.6% 100.2%
   
Total gross profit $ 323,367 $ 302,537 6.9 %
  43.7%   44.3%
 
EBITDA (non-GAAP):
Segment Contribution Margin (non-GAAP) (a):
1-800-Flowers.com Consumer Floral $ 17,303 $ 17,762 -2.6 %
BloomNet Wire Service 15,895 14,393 10.4 %
Gourmet Food & Gift Baskets   96,393   88,509 8.9 %
Segment Contribution Margin Subtotal 129,591 120,664 7.4 %
Corporate (b)   (42,060)   (39,040) -7.7 %
EBITDA (non-GAAP) 87,531 81,624 7.2 %
Add: Stock-based compensation 2,628 2,069 27.0 %
Add: Comp charge related to NQ Plan Investment Appreciation  

(967)

 

639

-251.3

%

Adjusted EBITDA (non-GAAP) $ 89,192 $ 84,332 5.8 %
 

       

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

Selected Financial Information

(in thousands)

(unaudited)

 

Reconciliation of Net Income to Adjusted Net Income (non-GAAP):

Three Months Ended Six Months Ended

December 30,
2018

   

December 31,
2017

December 30,
2018

   

December 31,
2017

 
Net income $ 68,578 $ 70,699 $ 51,312 $ 57,477
Adjustments to reconcile net income to adjusted net income (non-GAAP)
Deduct U.S. tax reform benefit on deferred taxes (1)   -   12,158   -     12,158
Adjusted net income (non-GAAP) $ 68,578 $ 58,541 $ 51,312   $ 45,319
 
Basic and diluted net income per common share
Basic $ 1.07 $ 1.09 $ 0.80 $ 0.89
Diluted $ 1.04 $ 1.06 $ 0.77 $ 0.86
 
Basic and diluted adjusted net income per common share (non-GAAP)
Basic $ 1.07 $ 0.91 $ 0.80 $ 0.70
Diluted $ 1.04 $ 0.88 $ 0.77 $ 0.68
 
Weighted average shares used in the calculation of net income and adjusted net income per common share
Basic   64,209   64,601   64,415   64,778
Diluted   66,136   66,782   66,483   67,037
 
     

(1)

  The adjustment to deduct U.S. tax reform impact from Net Income includes the impact of the re-valuation of the Company’s deferred tax liability of $12.2 million, or $0.18 per diluted share, but does not include the ongoing impact of the lower federal corporate tax rate.

     

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

Selected Financial Information

(in thousands)

(unaudited)

(continued)

 

Reconciliation of Net Income to Adjusted EBITDA (non-GAAP):

 
Three Months Ended Six Months Ended

December 30,
2018

   

December 31,
2017

December 30,
2018

   

December 31,
2017

 
Net income $ 68,578 $ 70,699 $ 51,312 $ 57,477
Add:
Interest expense, net 2,696 1,140 3,412 1,911
Depreciation and amortization 7,969 8,677 15,812 16,761
Income tax expense   23,411     12,627   16,995     5,475
EBITDA 102,654 93,143 87,531 81,624
Add: Compensation charge/(benefit) related to NQ plan investment appreciation/depreciation (1,249 )

364

(967 )

639

Add: Stock-based compensation   1,673     968   2,628     2,069
Adjusted EBITDA $ 103,078   $ 94,475 $ 89,192   $ 84,332
 
  a)   Segment performance is measured based on segment contribution margin or segment Adjusted EBITDA, reflecting only the direct controllable revenue and operating expenses of the segments, both of which are non-GAAP measurements. As such, management’s measure of profitability for these segments does not include the effect of corporate overhead, described above, depreciation and amortization, other income (net), and other items that we do not consider indicative of our core operating performance.
 
b) 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 Stock-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 segment.
 

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Contacts

Investor Contact:
Joseph D. Pititto
(516) 237-6131
E-mail: invest@1800flowers.com

Media Contact:
Kathleen Waugh
(516) 237-6028
kwaugh@1800flowers.com

Contacts

Investor Contact:
Joseph D. Pititto
(516) 237-6131
E-mail: invest@1800flowers.com

Media Contact:
Kathleen Waugh
(516) 237-6028
kwaugh@1800flowers.com