Scott D. Levin Appointed Interim
President and Chief Executive Officer
FTD Companies, Inc. (Nasdaq:FTD) (“FTD” or
the “Company”), a premier floral and gifting company, today
announced that its Board of Directors has initiated a review of
strategic alternatives focused on maximizing stockholder value. The
strategic alternatives expected to be considered include, but are
not limited to, a sale or merger of the Company, FTD continuing to
pursue value-enhancing initiatives as a standalone company, a
capital structure optimization that may involve potential
financings, or the sale or other disposition of certain of the
Company’s businesses or assets. FTD has retained Moelis &
Company LLC as financial advisor to assist with its strategic
alternatives review.
The FTD Board of Directors also announced that it has appointed
Scott D. Levin, currently FTD’s Executive Vice President, General
Counsel and Secretary, as interim President and Chief Executive
Officer. Mr. Levin succeeds John C. Walden, who has stepped down
from these positions and from FTD's board of directors, effective
immediately.
FTD also announced today a corporate restructuring and cost
savings plan, under which it has identified opportunities to
optimize its operations, drive efficiency and reduce costs. Under
this plan, FTD expects to generate approximately $18 million to $23
million in annualized run-rate cost savings in 2019, with
approximately $4 million to $5 million in savings expected in the
second half of 2018. FTD expects to incur pre-tax restructuring and
corporate reorganization costs in the second half of 2018 in
connection with the implementation of this plan. The Company
expects to disclose an estimate of these costs when it reports
financial results for the second quarter ended June 30, 2018.
As a result of these corporate restructuring efforts, the Chief
Operating Officer position held by Simha Kumar has been eliminated,
effective immediately. In addition, Jeffrey D. T. Severts, FTD’s
Executive Vice President and Chief Marketing Officer, will be
leaving the Company following a transition of his marketing
responsibilities to Jay Topper. Mr. Topper, who joined FTD as Chief
Information Officer in October 2016, has been promoted to the newly
expanded role of Executive Vice President and Chief Digital
Officer. FTD’s floral and gifting general managers will now report
directly to the Chief Digital Officer.
“The Board of Directors is committed to enhancing stockholder
value and has determined, after careful consideration, that it is
prudent to conduct a thorough review of strategic alternatives,”
said Robert Berglass, Chairman of FTD’s Board of Directors. “FTD
remains a leader in the floral and gifting industry, with widely
recognized consumer brands and a global fulfillment network that
includes its member florists. While the review is ongoing, FTD will
remain focused on the execution of its strategic initiatives, in
conjunction with the new corporate restructuring and cost savings
plan announced today, as the Company works to create value for
stockholders.”
Mr. Berglass continued, “The Board of Directors believes that
Scott is best positioned to lead the Company as we begin our
strategic review process and work to execute on opportunities to
achieve greater operational efficiencies. Scott is a strong
executive with a deep understanding of our business and we have
tremendous confidence that he and the Company’s experienced
management team are well prepared to implement these
initiatives.”
FTD’s Board of Directors has not set a definitive timetable for
the process of reviewing and evaluating strategic alternatives.
There can be no assurance that the strategic alternatives review
will result in any particular strategic alternative or strategic
transaction. The Company does not intend to disclose developments
or provide updates on the progress or status of this process unless
and until further disclosure is appropriate or required.
Preliminary Second Quarter 2018
Results
The Company also announced preliminary financial results for the
second quarter ended June 30, 2018. These preliminary results
include expectations for the following:
- Consolidated revenues of $299.0 million to $301.0
million, compared to reported consolidated revenues of $328.1
million for the second quarter last year;
- Net income of $1.5 million to $4.5 million, compared to
reported net income of $9.7 million for the second quarter last
year. Preliminary net income for the second quarter of 2018
excludes anticipated impairments of goodwill, intangible assets
and/or other long-lived assets;
- Adjusted EBITDA of $15.7 million to $18.4 million,
compared to Adjusted EBITDA of $31.2 million for the second quarter
last year.
Adjusted EBITDA is a non-GAAP financial measure. Please refer to
the table in this press release for a reconciliation of this
non-GAAP financial measure. FTD expects to report financial results
for the second quarter ended June 30, 2018 in early August.
Updates 2018 Business Outlook
FTD has updated its consolidated revenues and Adjusted EBITDA
outlook for the full year ending December 31, 2018. The updated
annual outlook reflects the Company’s year-to-date results,
including lower than expected traffic and conversion for the first
and second quarters, as well as the Company’s expectations for the
rest of the year, including anticipated continued traffic and
conversion headwinds. The updated outlook also includes the
anticipated impact of the corporate restructuring and cost savings
plan announced today. As a result, the Company now expects the
following:
- Consolidated revenues of $1.03 billion to $1.04 billion,
compared to the Company’s prior outlook at the lower end of down 2%
to an increase of 2% as compared to 2017;
- Adjusted EBITDA of approximately $37 million to $41
million, compared to the Company’s prior outlook at the lower end
of $52 million to $62 million;
- Capital expenditures in a range of $35 million to $40 million,
consistent with previous guidance.
In connection with the outlook provided above, please note that
the seasonality of the Company’s business impacts the quarterly
pattern of its profitability and cash flows from operations.
The Company is not providing 2018 guidance for net income, the
GAAP measure most directly comparable to Adjusted EBITDA, and
similarly cannot provide a reconciliation between its forecasted
Adjusted EBITDA and net income metrics without unreasonable effort
due to the unavailability of reliable estimates for certain items,
including restructuring and corporate reorganization costs,
transaction-related costs, impairments of goodwill, intangible
assets and other long-lived assets, and discrete tax items. These
items may vary significantly between periods and could materially
impact future financial results.
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
approximately 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®, Ink Cards™, Postagram™, Gifts.com™, and
BloomThat™. 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 regarding the exploration of strategic alternatives, the
strategic and financial evaluation of the Company’s business, the
Company’s corporate restructuring and cost savings plan and other
strategies, and future financial performance, including 2018
financial outlooks discussed herein. Potential factors that could
affect these forward-looking statements include, among others,
uncertainties associated with being able to identify, evaluate or
complete any strategic alternative or strategic transaction, the
impact of the announcement of the Company’s review of strategic
alternatives, as well as any strategic alternative or strategic
transaction that may be pursued, on the Company’s business,
including its financial and operating results and its employees,
suppliers and customers, the Company’s ability to implement and
realize anticipated benefits from its corporate restructuring and
cost savings plan and other initiatives, the Company’s ability to
repay, refinance or restructure its outstanding debt, and the other
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), as updated from time to
time in our subsequent filings with the SEC, 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
the Company’s analysis only as of the date hereof. 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. Except as required by law, we undertake no obligation to
publicly release the results of any revision 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.
Non-GAAP Measures
To supplement the Company’s consolidated financial statements
presented in accordance with generally accepted accounting
principles (“GAAP”), the Company uses Adjusted EBITDA as a measure
of certain components of financial performance. The Company’s
definition of Adjusted EBITDA, as set forth below, may be modified
from time to time.
Management believes that Adjusted EBITDA is an important measure
of operating performance because it allows for a period-to-period
comparison of the Company’s operating performance by removing the
impact of the Company’s capital structure (interest expense on
outstanding debt), asset base (depreciation, amortization and
impairment charges), tax consequences, certain other non-operating
items, and stock-based compensation. The Company further emphasizes
the importance of Adjusted EBITDA as an operating performance
measure by utilizing the Adjusted EBITDA measure as a basis for
determining certain incentive compensation targets for certain
members of the Company’s management. The Adjusted EBITDA measure
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.
Management believes that presenting this non-GAAP financial
measure provides additional information to facilitate comparison of
the Company’s historical operating results and trends in its
underlying operating results, and provides additional transparency
on how the Company evaluates its businesses.
In addition to the use of this non-GAAP measure by management
for the purposes outlined above, the Company believes Adjusted
EBITDA is a measure widely used by securities analysts, investors
and others to evaluate the financial performance of the Company and
its competitors.
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 depreciation and amortization expense for various
long-lived assets, impairment charges, interest expense, income
taxes, and other items that have been and will be incurred. Each of
these items should also be considered in the overall evaluation of
the Company’s results. In addition, Adjusted EBITDA does not
reflect capital expenditures and other investing activities. An
additional limitation associated with Adjusted EBITDA is that the
measure does not include stock-based compensation expenses related
to the Company’s workforce. A further limitation associated with
the use of this non-GAAP financial measure is that it does not
reflect expenses or gains that are not considered reflective of the
Company’s core operations. Management compensates for these
limitations by providing the relevant disclosure of its
depreciation and amortization, impairment charges, interest and
income tax expenses, capital expenditures, stock-based
compensation, and other items within its financial press releases
and SEC filings, all of which should be considered when evaluating
the Company’s performance.
A further 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/(loss), directly ahead of
Adjusted EBITDA; within this and other financial press releases and
by providing reconciliations that show and describe the adjustments
made. 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.
Definitions
Adjusted earnings before interest, taxes, depreciation and
amortization (“Adjusted EBITDA”). The Company defines Adjusted
EBITDA as net income/(loss) before net interest expense, provision
for/(benefit from) income taxes, depreciation, amortization,
stock-based compensation, transaction-related costs, litigation and
dispute settlement charges and gains, restructuring, corporate
reorganization and other exit costs, and impairment of goodwill,
intangible assets, and other long-lived 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.
Corporate reorganization costs are costs, other than
restructuring and other exit costs, associated with our corporate
restructuring and cost savings plan such as retention bonuses for
key employee, travel expenses related to transition of
responsibilities between locations and other similar costs.
FTD COMPANIES, INC. |
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PRELIMINARY AND UNAUDITED
RECONCILIATION |
|
(in thousands) |
|
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The following table contains a reconciliation of
Adjusted EBITDA to financial measures reported in accordance with
Generally Accepted Accounting Principles ("GAAP"). |
|
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|
|
RECONCILIATION OF NET INCOME TO ADJUSTED
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
2018 Low Case |
|
2018 High Case |
|
Net income (GAAP Basis) |
|
$ |
1,450 |
|
|
4,450 |
|
Interest
expense, net |
|
|
4,500 |
|
|
4,300 |
|
Provision
for income taxes |
|
|
2,350 |
|
|
2,850 |
|
Depreciation and amortization |
|
|
4,200 |
|
|
4,000 |
|
Stock-based compensation |
|
|
2,700 |
|
|
2,500 |
|
Transaction-related costs |
|
|
250 |
|
|
150 |
|
Legal
settlements |
|
|
200 |
|
|
100 |
|
Impairment of goodwill, intangible assets, and other
long-lived assets |
|
|
- |
* |
|
- |
* |
Adjusted EBITDA |
|
$ |
15,650 |
|
$ |
18,350 |
|
|
|
|
|
|
|
|
|
* - anticipated
impairments to be determined |
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Contact: Katie Turner 646-277-1228
ir@ftdi.com
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