Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 4, 2017

FTD Companies, Inc.
(Exact Name of Registrant as Specified in Charter)
 
Delaware
001-35901
32-0255852
(State or Other jurisdiction
of Incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
 
 
 
3113 Woodcreek Drive
Downers Grove, Illinois 60515
(Address of Principal Executive Offices) (ZIP Code)

Telephone: (630) 719-7800
(Registrant’s Telephone Number, Including Area Code)

N/A
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:  
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨





Item 2.02
Results of Operations and Financial Condition.
On August 8, 2017, FTD Companies, Inc. (the “Company”) issued a press release announcing its financial results for the quarter and six months ended June 30, 2017 and other financial information. A copy of the press release is furnished as Exhibit 99.1 to this report. The information in this Item 2.02 and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On August 4, 2017, Stephen Tucker, Executive Vice President and Chief Financial Officer of the Company, notified the Company that he will be leaving the Company to pursue a new career opportunity. Mr. Tucker and the Company agreed to a final date of September 15, 2017 in order to promote a smooth transition of leadership. The Company will conduct a comprehensive executive search for the position of Chief Financial Officer. Mr. Tucker’s departure is not related to any issues or concerns around the Company’s historical financial statements or any disagreement regarding the application of any accounting policies or procedures.
Item 9.01    Financial Statements and Exhibits.
(d)    Exhibits
Exhibit
Description
99.1
Press Release of FTD Companies, Inc., dated August 8, 2017





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
FTD COMPANIES, INC.
Dated:
August 8, 2017
By:
/s/ Scott D. Levin
 
Name:
Scott D. Levin
 
Title:
Executive Vice President, General Counsel and Secretary







EXHIBIT INDEX
Exhibit
Description
99.1
Press Release of FTD Companies, Inc., dated August 8, 2017





Exhibit


Exhibit 99.1

FTD Companies, Inc. Announces Second Quarter 2017 Financial Results

Company Updates Full Year 2017 Outlook
Announces Executive Leadership Changes

DOWNERS GROVE, Ill. — August 8, 2017 — FTD Companies, Inc. (Nasdaq: FTD) (“FTD” or the “Company”), a premier floral and gifting company, today announced financial results for the second quarter and six months ended June 30, 2017.
John C. Walden, FTD’s President and Chief Executive Officer, commented, “I am pleased with the considerable progress we have made on our strategic review of our business. We remain on-track to complete our review and strategic plan later this year, and I am increasingly optimistic about our opportunities. I have also recently made two significant additions to our executive leadership team, in the critical roles of Chief Marketing Officer and Chief Operating Officer, and I expect them to make early positive impacts. Although we still have a lot of work to do and our near-term financial results remain challenged by historical underinvestment, I believe we are beginning to put in place the important building blocks required to restore the Company’s growth and create a more compelling future.”
Second Quarter Results
Consolidated revenues were $328.1 million for the second quarter of 2017, compared to $338.2 million for the second quarter of 2016. Changes in foreign currency exchange rates negatively impacted 2017 second quarter consolidated revenues by $3.5 million. Excluding the impact of foreign currency exchange rates, the decrease in second quarter consolidated revenues compared to the prior year quarter was primarily due to a decrease in Consumer segment revenues, partially offset by increases in the Provide Commerce and Florist segment revenues.
Net income was $9.7 million for the second quarter of 2017, compared to net income of $11.8 million for the second quarter of 2016. The decrease in net income was primarily attributable to an increase in sales and marketing expenses and an increase in the provision for income taxes, partially offset by a decrease in amortization of intangible assets.
Adjusted EBITDA was $31.2 million, or 9.5% of consolidated revenues, for the second quarter of 2017, compared to $45.1 million, or 13.3% of consolidated revenues, for the second quarter of 2016. Adjusted EBITDA is a non-GAAP financial measure. Please refer to the tables in this press release for a reconciliation of all non-GAAP financial measures.
Six Month Results
Consolidated revenues were $644.6 million for the six months ended June 30, 2017, compared to $668.5 million in the six months ended June 30, 2016. Changes in foreign currency exchange rates negatively impacted consolidated revenues by $10.6 million for the first six months of 2017. Excluding the impact of foreign currency exchange rates, the decrease in six month 2017 consolidated revenues compared to the prior year period was primarily due to a decrease in Consumer segment revenues, partially offset by an increase in the Provide Commerce segment revenues.
Net income was $18.7 million for the six months ended June 30, 2017, compared to $13.5 million for the six months ended June 30, 2016.
Adjusted EBITDA was $62.3 million, or 9.7% of consolidated revenues, for the first six months of 2017, compared to $75.7 million, or 11.3% of consolidated revenues, for the prior year period.
Segment Results
Provide Commerce Segment: Provide Commerce segment revenues for the second quarter of 2017 increased 1.8% to $179.7 million, compared to $176.5 million for the second quarter of 2016, primarily as a result of a 1.3%




increase in average order value and a 0.6% increase in consumer orders. Average order value increased $0.64 to $49.86 due to favorable product mix and fewer promotional discounts on products. Second quarter of 2017 consumer orders increased due primarily to the shift in the Easter holiday from the first quarter of 2016 to the second quarter this year, partially offset by lower volume related to Mother’s Day and non-holiday periods. Within the Provide Commerce segment, second quarter 2017 revenues for the Personal Creations and Gourmet Foods businesses increased 15.2% and 4.4%, respectively.  The ProFlowers business revenues decreased 2.0% compared to the prior year quarter as a result of lower Mother’s Day related volume. Provide Commerce segment operating income was $14.5 million, or 8.1% of segment revenues, for the second quarter of 2017, compared to operating income of $22.2 million, or 12.6% of segment revenues, in the prior year quarter.
Provide Commerce segment revenues for the first six months of 2017 increased 0.6% to $335.6 million, compared to $333.6 million for the first six months of 2016. This increase was primarily driven by an increase of $1.82, or 3.7%, in average order value to $51.26, partially offset by a 3.0% decrease in consumer orders. Within the Provide Commerce segment, year-to-date 2017 revenues for the Gourmet Foods business increased 9.1% while revenues in the ProFlowers and Personal Creations businesses decreased 3.0% and 1.7%, respectively, as compared to the prior year period. Provide Commerce segment operating income was $28.0 million, or 8.3% of segment revenues, for the first six months ended June 30, 2017, compared to $29.3 million, or 8.8% of segment revenues, for the prior year period.
Consumer Segment: Consumer segment revenues for the second quarter of 2017 decreased 11.8% to $80.1 million, compared to $90.9 million for the second quarter of 2016. This decline was primarily due to a 10.7% decrease in consumer orders and a $0.97, or 1.4%, decrease in average order value to $69.17. Consumer segment operating income was $6.6 million, or 8.2% of segment revenues, for the second quarter of 2017, compared to $10.9 million, or 12.0% of segment revenues, for the prior year quarter.
Consumer segment revenues for the first six months of 2017 decreased 9.8% to $152.9 million, compared to $169.5 million for the first six months of 2016. This decline was primarily due to a 9.4% decrease in consumer orders and a $0.29, or 0.4%, decrease in average order value to $70.97. Consumer segment operating income was $12.2 million, or 8.0% of segment revenues, for the six months ended June 30, 2017, compared to $17.3 million, or 10.2% of segment revenues, for the prior year period.
Florist Segment: Florist segment revenues for the second quarter of 2017 increased 1.7% to $44.1 million, compared to $43.4 million for the second quarter of 2016, primarily driven by an increase in product revenues from sales of fresh flowers. Florist segment operating income was $12.2 million, or 27.8% of segment revenues, for the second quarter of 2017, compared to $12.6 million, or 28.9% of segment revenues, for the second quarter of 2016. Average revenues per member increased 6.4% to $3,981 for the second quarter of 2017, compared to $3,742 for the prior year quarter.
Florist segment revenues for the first six months of 2017 increased 0.3% to $90.6 million, compared to $90.4 million for the first six months of 2016. This slight increase was due to higher product revenues of $0.9 million, partially offset by a $0.6 million decrease in services revenues. Florist segment operating income was $26.2 million, or 28.9% of segment revenues, for the six months ended June 30, 2017, compared to $25.4 million, or 28.1% of segment revenues, for the prior year period. Average revenues per member increased 6.4% to $8,122 for the first six months of 2017, compared to $7,631 for the prior year period.
International Segment: International segment revenues for the second quarter of 2017 were $29.2 million, compared to $33.1 million for the second quarter of 2016. On a constant currency basis, International segment revenues decreased 1.3%, or $0.4 million, due to a 1.7% decrease in consumer orders, partially offset by a 2.4% increase in average order value. International segment operating income was $3.1 million, or 10.5% of segment revenues, for the second quarter of 2017, compared to $4.0 million, or 12.0% of segment revenues, for the prior year quarter. On a constant currency basis, International segment operating income decreased $0.6 million, or 14.5%, for the second quarter of 2017 compared to the prior year quarter.



International segment revenues for the first six months of 2017 were $74.9 million, compared to $85.5 million for the first six months of 2016. On a constant currency basis, International segment revenues were flat with the prior year period at $85.5 million. International segment operating income was $8.6 million, or 11.5% of segment revenues, for the six months ended June 30, 2017, compared to $11.4 million, or 13.3% of segment revenues, for the prior year period.
Balance Sheet and Cash Flow Highlights
Net cash provided by operating activities was $19.6 million for the six months ended June 30, 2017, compared to net cash provided by operating activities of $24.4 million for the prior year period. For each of the six month periods ended June 30, 2017 and 2016, the Company generated Free Cash Flow of $18.6 million. Free Cash Flow is a non-GAAP financial measure. Please refer to the tables in this press release for a reconciliation of all non-GAAP financial measures.
Cash and cash equivalents decreased $1.6 million to $79.4 million as of June 30, 2017 compared to $81.0 million at December 31, 2016. During the six months ended June 30, 2017, the Company made scheduled payments of $10.0 million under the term loan and net repayments of $5.0 million on its revolving credit facility. Excluding debt issuance costs, debt outstanding as of June 30, 2017 was $265.0 million, of which $150.0 million is term debt and $115.0 million is associated with the Company’s revolving credit facility.
Executive Leadership Changes
The Company recently announced the appointments of Jeffrey D. T. Severts as Executive Vice President and Chief Marketing Officer, and Simha Kumar as Executive Vice President and Chief Operating Officer, effective July 10, 2017 and August 1, 2017, respectively. In the context of these organizational changes and in order to position the executive team for the long-term, Helen Quinn, Executive Vice President U.S. Consumer Floral, will leave FTD to pursue new career opportunities. In addition, Stephen Tucker, Executive Vice President and Chief Financial Officer, will also leave the Company to pursue a new career opportunity. Both will support the Company in a smooth transition through mid-September.
Business Outlook
For the full year 2017, the Company has updated its outlook. The Company now expects the following:
Consolidated revenues for 2017 to be down 3% to 4% on reported basis compared to the Company’s 2016 consolidated revenues of $1.12 billion, or down 2% to 3% on a constant currency basis (using an average GBP to USD exchange rate of 1:1.26 as compared to the 2016 average exchange rate of 1:1.36)
Net income of approximately $8 million to $12 million
Consolidated Adjusted EBITDA margin of 7.25% to 7.75% of consolidated revenues, primarily as a result of the lower consolidated revenues outlook and an increase in marketing investments compared to fiscal 2016
Capital expenditures of approximately $22 million to $25 million, primarily due to planned enhancements to the Company’s technology platform
In connection with the outlook provided above, please note that the seasonality of the Company’s business impacts its profitability and cash flows from operations on a quarterly basis. In addition, due to a variety of factors, actual results may differ significantly from the outlook provided. These factors include, without limitation, the factors referenced in this release under “Cautionary Information Regarding Forward-Looking Statements.”



Conference Call
The Company will be hosting a conference call today, August 8, 2017, at 5:00 p.m. ET. Live audio of the call will be webcast and archived on the investor relations section of the Company’s website at http://www.ftdcompanies.com. In addition, you may dial 877-407-0784 to listen to the live broadcast.
A telephonic playback and archived webcast will be available through August 22, 2017. Participants can dial 844-512-2921 to hear the playback. The passcode is 13666810.
About FTD Companies, Inc.
FTD Companies, Inc. is a premier floral and gifting company. Through our diversified family of brands, we provide floral, specialty foods, gifts and related products to consumers primarily in the United States and the United Kingdom. We also provide floral products and services to retail florists and other retail locations throughout these same geographies. FTD has been delivering flowers since 1910 and the highly-recognized FTD® and Interflora® brands are supported by the iconic Mercury Man logo®, which is displayed in nearly 35,000 floral shops in over 125 countries. In addition to FTD and Interflora, our diversified portfolio of brands includes the following trademarks: ProFlowers®, ProPlants®, Shari’s Berries®, Personal Creations®, RedEnvelope®, Flying Flowers®, Flowers Direct™, Ink Cards™, Postagram™ and Gifts.com™. FTD Companies, Inc. is headquartered in Downers Grove, Ill. For more information, please visit www.ftdcompanies.com.
Cautionary Information Regarding Forward-Looking Statements
This release contains certain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended, based on our current expectations, estimates and projections about our operations, industry, financial condition, performance, results of operations, and liquidity. Statements containing words such as “may,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “project,” “projections,” “business outlook,” “estimate,” or similar expressions constitute forward-looking statements. These forward-looking statements include, but are not limited to, statements about the Company’s strategies and future financial performance; expectations about future business plans, prospective performance and opportunities, including potential acquisitions; revenues; segment metrics; operating expenses; market trends, including those in the markets in which the Company competes; liquidity; cash flows and uses of cash; dividends; capital expenditures; depreciation and amortization; tax payments; foreign currency exchange rates; hedging arrangements; the Company’s ability to repay indebtedness and invest in initiatives; the Company’s products and services; pricing; marketing plans; competition; settlement of legal matters; and the impact of accounting changes and other pronouncements. Potential factors that could affect these forward-looking statements include, among others, the factors disclosed in the Company’s most recent Annual Report on Form 10-K and the Company’s other filings with the Securities and Exchange Commission (www.sec.gov), including, without limitation, information under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that may cause actual performance and results to differ materially from those predicted. Reported results should not be considered an indication of future performance. Except as required by law, we undertake no obligation to publicly release the results of any revision or update to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. In addition, the Company may not provide guidance of the type provided under “Business Outlook” in the future.
Definitions
(1) Segment operating income. The Company’s chief operating decision maker uses segment operating income to evaluate the performance of the business segments and to make decisions about allocating resources among segments. Segment operating income is operating income excluding depreciation, amortization, litigation and dispute settlement charges and gains, transaction-related costs, restructuring and other exit costs, and impairment of



goodwill and intangible assets. In addition, stock-based and incentive compensation and general corporate expenses are not allocated to the segments. Segment operating income is prior to intersegment eliminations and excludes other income/(expense), net. Please refer to the tables in this press release for a reconciliation of segment operating income to net income.
(2) Consumer orders. The Company monitors the number of consumer orders for floral, gift, and related products during a given period. Consumer orders are individual units delivered during the period that were originated through our consumer websites, associated mobile sites and applications, and various telephone numbers. The number of consumer orders is not adjusted for non-delivered orders that are refunded on or after the scheduled delivery date. Orders originating with a florist or other retail location for delivery to consumers are not included as part of this number.
(3) Average order value. The Company monitors the average value for consumer orders delivered in a given period, which is referred to as the average order value. Average order value represents the average amount received for consumer orders delivered during a period. The average order value of consumer orders within the Provide Commerce, Consumer, and International segments is tracked in their local currency, the U.S. Dollar for both the Provide Commerce and Consumer segments and the British Pound (“GBP”) for the International segment. The local currency amounts received for the International segment are then translated into U.S. dollars at the average currency exchange rate for the period. Average order value includes merchandise revenues and shipping or service fees paid by the consumer, less discounts and refunds (net of refund-related fees charged to floral network members).
(4) Average revenues per member. The Company monitors average revenues per member for floral network members in the Florist segment. Average revenues per member represents the average revenues earned from a member of the Company’s floral network during a period. Revenues include services revenues and products revenues, but exclude revenues from sales to non-members. Floral network members include retail florists and other non-florist retail locations that offer floral and gifting solutions. Average revenues per member is calculated by dividing Florist segment revenues for the period, excluding sales to non-members, by the average number of floral network members for the period.
Non-GAAP Measures
(5) Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). The Company defines Adjusted EBITDA as net income/(loss) before net interest expense, provision/(benefit) for income taxes, depreciation, amortization, stock-based compensation, transaction-related costs, litigation and dispute settlement charges and gains, restructuring and other exit costs, and impairment of goodwill and intangible assets.
Litigation and dispute settlement charges and gains include estimated losses for which the Company has established a reserve, as well as actual settlements, judgments, fines, penalties, assessments or other resolutions against, or in favor of, the Company related to litigation, arbitration, investigations, disputes, or similar matters. Insurance recoveries received by the Company related to such matters are also included in these adjustments.
Transaction-related costs are certain expense items resulting from actual or potential transactions such as business combinations, mergers, acquisitions, dispositions, spin-offs, financing transactions, and other strategic transactions, including, without limitation, (i) transaction-related bonuses and (ii) expenses for advisors and representatives such as investment bankers, consultants, attorneys, and accounting firms. Transaction-related costs may also include, without limitation, transition and integration costs such as retention bonuses and acquisition-related milestone payments to acquired employees, in addition to consulting, compensation, and other incremental costs associated with integration projects.
The Company’s definition of Adjusted EBITDA may be modified from time to time. Management believes that because Adjusted EBITDA excludes (i) certain non-cash expenses (such as depreciation, amortization, and stock-based compensation) and (ii) expenses that are not reflective of the Company’s core operations, this measure provides investors with additional useful information to measure the Company’s financial performance, particularly with respect to changes in performance from period to period. Management uses Adjusted EBITDA to measure the



Company’s performance. The Adjusted EBITDA metric also is used as a performance measure under the Company’s senior secured credit facility and includes adjustments such as the items defined above and other further adjustments, which are defined in the senior secured credit facility. The Company also uses this measure as a basis in determining certain incentive compensation targets for certain members of the Company’s management.
Adjusted EBITDA is not determined in accordance with GAAP and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. A limitation associated with the use of Adjusted EBITDA is that it does not reflect the periodic costs of certain tangible and intangible assets used in generating revenues in the Company’s business. Management evaluates the costs of such tangible and intangible assets through other financial activities such as evaluations of capital expenditures and purchase accounting. An additional limitation associated with this measure is that it does not include stock-based compensation expenses related to the Company’s workforce. A further limitation associated with the use of this measure is that it does not reflect expenses or gains that are not considered reflective of the Company’s core operations. Management compensates for this limitation by providing supplemental information about such charges, gains and costs within its financial press releases and SEC filings, when applicable.
An additional limitation associated with the use of this measure is that the term “Adjusted EBITDA” does not have a standardized meaning. Therefore, other companies may use the same or a similarly named measure but exclude different items or use different computations, which may not provide investors a comparable view of the Company’s performance in relation to other companies. Management compensates for this limitation by presenting the most comparable GAAP measure, net income, directly ahead of Adjusted EBITDA within this and other financial press releases and by providing a reconciliation that shows and describes the adjustments made. A reconciliation to net income is provided in the accompanying tables. In addition, many of the adjustments to the Company’s GAAP financial measures reflect the exclusion of items that are recurring in nature and will be reflected in the Company’s financial results for the foreseeable future.
(6) Free Cash Flow. The Company defines Free Cash Flow as net cash provided by operating activities less capital expenditures, plus cash paid for transaction-related costs, cash paid or received for litigation and dispute settlement charges or gains, and cash paid for restructuring and other exit costs.
Contacts
Investor Relations:
Katie Turner
646-277-1228
ir@ftdi.com

Media Inquiries:
Amy Toosley
858-638-4648
pr@ftdi.com




FTD COMPANIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
    
2017
    
2016
    
2017
    
2016
Revenues:
 
 
 
 
 
 
 
 
Provide Commerce segment
 
$
179,691

 
$
176,542

 
$
335,559

 
$
333,639

Consumer segment
 
80,113

 
90,876

 
152,917

 
169,483

Florist segment
 
44,090

 
43,358

 
90,596

 
90,350

International segment
 
29,201

 
33,105

 
74,938

 
85,482

Intersegment eliminations
 
(4,949
)
 
(5,642
)
 
(9,371
)
 
(10,501
)
Total revenues
 
328,146

 
338,239

 
644,639

 
668,453

 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
Cost of revenues
 
203,179

 
209,744

 
399,553

 
423,510

Sales and marketing
 
76,224

 
65,957

 
145,120

 
133,873

General and administrative
 
27,039

 
28,389

 
55,794

 
58,133

Amortization of intangible assets
 
3,819

 
15,217

 
7,639

 
30,633

Restructuring and other exit costs
 
136

 
1,185

 
944

 
1,618

Total operating expenses
 
310,397

 
320,492

 
609,050

 
647,767

 
 
 
 
 
 
 
 
 
Operating income
 
17,749

 
17,747

 
35,589

 
20,686

Interest expense, net
 
(2,440
)
 
(2,255
)
 
(4,713
)
 
(4,569
)
Other income, net
 
223

 
4

 
198

 
1,813

 
 
 
 
 
 
 
 
 
Net income before income taxes
 
15,532

 
15,496

 
31,074

 
17,930

Provision for income taxes
 
5,816

 
3,721

 
12,335

 
4,404

 
 
 
 
 
 
 
 
 
Net income
 
$
9,716

 
$
11,775

 
$
18,739

 
$
13,526

 
 
 
 
 
 
 
 
 
Earnings per common share
 
 
 
 
 
 
 
 
Basic earnings per share
 
$
0.35

 
$
0.42

 
$
0.67

 
$
0.48

Diluted earnings per share
 
$
0.35

 
$
0.42

 
$
0.67

 
$
0.48

 
 
 
 
 
 
 
 
 
Average Shares Outstanding:
 
 
 
 
 
 
 
 
Basic
 
27,452

 
27,640

 
27,415

 
27,647

Diluted
 
27,452

 
27,695

 
27,449

 
27,705






FTD COMPANIES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

 
    
June 30, 2017
    
December 31, 2016
ASSETS
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
79,356

 
$
81,002

Accounts receivable, net
 
22,211

 
26,659

Inventories
 
24,867

 
24,996

Property and equipment, net
 
53,227

 
57,559

Intangible assets, net
 
267,092

 
272,798

Goodwill
 
467,522

 
463,465

Other assets
 
31,222

 
35,835

Total assets
 
$
945,497

 
$
962,314

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
123,133

 
$
157,693

Debt
 
261,986

 
276,306

Deferred tax liabilities, net
 
88,111

 
85,932

Other liabilities
 
14,840

 
14,656

Total liabilities
 
488,070

 
534,587

Total equity
 
457,427

 
427,727

Total liabilities and equity
 
$
945,497

 
$
962,314






FTD COMPANIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
    
2016
    
2017
    
2016
Cash flows from operating activities:
 
 
 
 
 
 
 
Net income
$
9,716

 
$
11,775

 
$
18,739

 
$
13,526

Adjustments to reconcile net income to net cash provided by/(used for)
operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
9,285

 
21,239

 
18,583

 
42,516

Stock-based compensation
3,529

 
3,440

 
5,870

 
7,480

Provision for doubtful accounts receivable
429

 
1,115

 
779

 
2,808

Accretion of discounts and amortization of deferred financing and
debt issue costs
340

 
340

 
680

 
680

Impairment of fixed assets

 
398

 

 
398

Deferred taxes, net
(1,394
)
 
(6,420
)
 
1,758

 
(8,935
)
Gains on life insurance

 

 

 
(1,583
)
Other, net
(52
)
 
59

 
(69
)
 
60

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable, net
7,828

 
5,406

 
3,887

 
697

Inventories
2,169

 
4,361

 
170

 
2,412

Prepaid expenses and other assets
1,908

 
638

 
5,049

 
4,844

Accounts payable and accrued liabilities
(35,917
)
 
(36,949
)
 
(36,060
)
 
(45,927
)
Income taxes receivable or payable
(1,174
)
 
2,226

 
66

 
4,970

Other liabilities
(1,274
)
 
(804
)
 
157

 
449

Net cash provided by/(used for) operating activities
(4,607
)
 
6,824

 
19,609

 
24,395

Cash flows from investing activities:
 
 
 
 
 
 
 
Purchases of property and equipment and intangible assets
(3,174
)
 
(3,565
)
 
(6,370
)
 
(8,176
)
Proceeds from life insurance

 

 

 
944

Net cash used for investing activities
(3,174
)
 
(3,565
)
 
(6,370
)
 
(7,232
)
Cash flows from financing activities:
 
 
 
 
 
 
 
Proceeds from debt
55,000

 

 
70,000

 

Payments on long-term debt
(20,000
)
 
(5,000
)
 
(85,000
)
 
(10,000
)
Exercise of stock options and purchases from employee stock plans
1,042

 
1,304

 
1,042

 
1,304

Repurchases of common stock withheld for taxes
(25
)
 
(7
)
 
(1,969
)
 
(1,640
)
Repurchases of common stock

 
(8,172
)
 

 
(8,172
)
Net cash provided by/(used for) financing activities
36,017

 
(11,875
)
 
(15,927
)
 
(18,508
)
Effect of foreign currency exchange rate changes on cash and
cash equivalents
676

 
(505
)
 
1,042

 
(448
)
Change in cash and cash equivalents
28,912

 
(9,121
)
 
(1,646
)
 
(1,793
)
Cash and cash equivalents, beginning of period
50,444

 
65,220

 
81,002

 
57,892

Cash and cash equivalents, end of period
$
79,356

 
$
56,099

 
$
79,356

 
$
56,099

 
 
 
 
 
 
 
 
Supplemental Cash Flow Information:
 
 
 
 
 
 
 
Cash paid for interest
$
2,170

 
$
2,160

 
$
4,074

 
$
3,601

Cash paid for income taxes, net
8,485

 
7,765

 
10,517

 
8,201

Cash paid for restructuring and other exit costs
615

 
537

 
3,233

 
1,302

Cash paid for litigation and dispute settlement charges

 
197

 
25

 
364

Cash paid for transaction-related costs
1,369

 
347

 
2,056

 
665






FTD COMPANIES, INC.
UNAUDITED SEGMENT INFORMATION
(in thousands, except average order value, average revenues per member, and average currency exchange rates)
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
    
2017
    
2016
    
2017
    
2016
Provide Commerce:
 
 
 
 
 
 
 
 
Segment revenues
 
$
179,691

 
$
176,542

 
$
335,559

 
$
333,639

Segment operating income (1)
 
$
14,543

 
$
22,177

 
$
27,990

 
$
29,253

Consumer orders (2)
 
3,562

 
3,542

 
6,468

 
6,665

Average order value (3)
 
$
49.86

 
$
49.22

 
$
51.26

 
$
49.44

 
 
 
 
 
 
 
 
 
Consumer:
 
 
 
 
 
 
 
 
Segment revenues
 
$
80,113

 
$
90,876

 
$
152,917

 
$
169,483

Segment operating income (1)
 
$
6,577

 
$
10,878

 
$
12,237

 
$
17,307

Consumer orders (2)
 
1,092

 
1,223

 
2,033

 
2,245

Average order value (3)
 
$
69.17

 
$
70.14

 
$
70.97

 
$
71.26

 
 
 
 
 
 
 
 
 
Florist:
 
 
 
 
 
 
 
 
Segment revenues
 
$
44,090

 
$
43,358

 
$
90,596

 
$
90,350

Segment operating income (1)
 
$
12,248

 
$
12,550

 
$
26,202

 
$
25,360

Average revenues per member (4)
 
$
3,981

 
$
3,742

 
$
8,122

 
$
7,631

 
 
 
 
 
 
 
 
 
International:
 
 
 
 
 
 
 
 
Segment revenues (in USD)
 
$
29,201

 
$
33,105

 
$
74,938

 
$
85,482

Segment revenues (in GBP)
 
£
22,798

 
£
23,053

 
£
59,679

 
£
59,617

Segment operating income (in USD) (1)
 
$
3,066

 
$
3,963

 
$
8,598

 
$
11,380

Consumer orders (2)
 
532

 
541

 
1,374

 
1,419

Average order value (in USD) (3)
 
$
45.57

 
$
49.90

 
$
44.91

 
$
49.49

Average order value (in GBP) (3)
 
£
35.61

 
£
34.77

 
£
35.79

 
£
34.53

Average currency exchange rate: GBP to USD
 
1.28

 
1.44

 
1.26

 
1.43






FTD COMPANIES, INC.
UNAUDITED RECONCILIATIONS
(in thousands)

The following tables contain reconciliations of Adjusted EBITDA and Free Cash Flow to financial measures reported in accordance with Generally Accepted Accounting Principles (“GAAP”).

RECONCILIATION OF SEGMENT OPERATING INCOME TO NET INCOME
AND NET INCOME TO ADJUSTED EBITDA
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
    
2016
    
2017
    
2016
Segment Operating Income (1) :
 
 
 
 
 
 
 
Provide Commerce
$
14,543

 
$
22,177

 
$
27,990

 
$
29,253

Consumer
6,577

 
10,878

 
12,237

 
17,307

Florist
12,248

 
12,550

 
26,202

 
25,360

International
3,066

 
3,963

 
8,598

 
11,380

Unallocated expenses
(9,400
)
 
(10,582
)
 
(20,855
)
 
(20,098
)
Depreciation and amortization
(9,285
)
 
(21,239
)
 
(18,583
)
 
(42,516
)
Operating income
17,749

 
17,747

 
35,589

 
20,686

 
 
 
 
 
 
 
 
Interest expense, net
(2,440
)
 
(2,255
)
 
(4,713
)
 
(4,569
)
Other income, net
223

 
4

 
198

 
1,813

Provision for income taxes
(5,816
)
 
(3,721
)
 
(12,335
)
 
(4,404
)
Net income (GAAP Basis)
$
9,716

 
$
11,775

 
$
18,739

 
$
13,526

 
 
 
 
 
 
 
 
Net income (GAAP Basis)
$
9,716

 
$
11,775

 
$
18,739

 
$
13,526

Interest expense, net
2,440

 
2,255

 
4,713

 
4,569

Provision for income taxes
5,816

 
3,721

 
12,335

 
4,404

Depreciation and amortization
9,285

 
21,239

 
18,583

 
42,516

Stock-based compensation
3,529

 
3,440

 
5,870

 
7,480

Transaction-related costs
269

 
1,131

 
1,070

 
1,257

Litigation and dispute settlement charges

 
313

 

 
313

Restructuring and other exit costs
136

 
1,185

 
944

 
1,618

Adjusted EBITDA (5)
$
31,191

 
$
45,059


$
62,254


$
75,683



RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
    
2016
    
2017
    
2016
Net cash provided by/(used for) operating activities (GAAP Basis)
$
(4,607
)
 
$
6,824

 
$
19,609

 
$
24,395

Capital expenditures
(3,174
)
 
(3,565
)
 
(6,370
)
 
(8,176
)
Cash paid for transaction-related costs
1,369

 
347

 
2,056

 
665

Cash paid for litigation and dispute settlement charges

 
197

 
25

 
364

Cash paid for restructuring and other exit costs
615

 
537

 
3,233

 
1,302

Free Cash Flow (6)
$
(5,797
)
 
$
4,340


$
18,553


$
18,550