1-800 FLOWERS.COM, Inc. (FLWS)

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1-800-FLOWERS.COM, Inc. (FLWS)

F1Q09 (Qtr End 09/30/08) Earnings Call Transcript

October 23, 2008, 11:00 am ET


Joseph Pititto – VP of IR

Jim McCann – Chairman and CEO

Bill Shea – SVP, Finance and Administration, Treasurer and CFO

Chris McCann – President


Jennifer Watson – Goldman Sachs

Jeff Stein – Soleil Securities

Kristine Koerber – JMP Securities

Eric Beder – Brean Murray & Co., Inc.

Jim Leahy – Morgan Joseph



Good day everyone and welcome to the 1-800-FLOWERS.COM, Inc. fiscal 2009 first quarter results conference call. This call is being recorded. At this time for opening remarks and introduction, I would like to turn the call over to the company’s Vice President of Investor Relations Mr. Joseph Pititto. Mr. Pititto, please go ahead.

Joseph Pititto

Thank you, Connie. Good morning and thank you all for joining us today to discuss 1-800-FLOWERS.COM's financial results for our fiscal 2009 first quarter. My name is Joseph Pititto and I'm Vice President of Investor Relations. For those of you who have not received a copy of our press release issued earlier this morning, the release can be accessed at the Investor Relations section of our Web site at 1-800-FLOWERS.COM or you can call Patty Altadonna at 516-237-6113 to receive a copy of the release by e-mail or fax.

In terms of structure, our call today will begin with brief formal remarks and then we will open the call to your questions. Presenting today will be Jim McCann, CEO, and Bill Shea, CFO. Also joining us for the Q&A section of our call is Chris McCann, our President.

Before we begin, I need to remind everyone that a number of the statements that we will make today may be forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. For a detailed description of these risks and uncertainties, please refer to our press release issued this morning as well as our SEC filings, including the company's Annual Report on Form 10-K, and quarterly reports on Form 10-Q..

In addition, this morning we will discuss certain supplemental financial measures that were not prepared in accordance with Generally Accepted Accounting Principles. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables accompanying the company's press release issued this morning. The company expressly disclaims any intent or obligation to update any of the forward-looking statements made in today's call, and recordings of today's call, the press release issued earlier today or any of the SEC filings except as may be otherwise stated by the company.

I will now turn the call over to Jim McCann.

Jim McCann

Good morning everyone. For our fiscal first quarter, we grew revenues more than 8% to $158 million and increased EBITDA and EPS at double-digit rate. These results highlight the benefits from our recent acquisitions as well as our continued focus on enhancing our operating expense ratio and thereby driving improved bottom line results. We achieved these results in what is traditionally our lowest quarter in terms of revenues due to the lack of gifting holidays during the summer months.

Revenue growth for the period was driven by our recent acquisitions and continued strong market share growth in our BloomNet Wire Service business. DesignPac Gifts which we acquired at the end of April is performing very well. During our fiscal first quarter, we began shipping the orders that they received back in the Spring for this year’s holiday period and they are now in full swing for what looks to be a very good contribution for our fiscal fourth quarter and for the full year. BloomNet’s accelerated growth benefited from both the acquisitions we made in July as well as continued market share gains. BloomNet’s superior value proposition combined with its industry leading focus on quality and service is increasingly attractive to florists throughout the country particularly in the current economic climate. As a result, BloomNet is achieving increased penetration for its expanded suite of products and services.

We improved our operating expense ratio by 300 basis points during this quarter. This combined with our revenue growth enabled us to improve EBITDA by 40% or approximately $1.4 million and EPS by 12% or $0.01 per share. We expect to build on these results during the current fiscal second quarter, our largest in terms of revenue and profits.

If we turn to our gift brands Fannie May, Cheryl & Co. and the Popcorn Factory all generate the majority of their annual revenues and profits during the year-end holiday period. Adding to this will be the top and bottom line contributions from DesignPac Gifts. As a result, we anticipate good top line and strong bottom line performance in our current fiscal second quarter despite the very challenging economic environment which I will comment further in a few minutes.

Before I turn the call over to Bill for his review of specific results and metrics for the quarter, I would like to highlight a few additional areas. First turning to our balance sheet, we further strengthened our balance sheet and liquidity to an amended agreement with syndicate of banks led by JPMorgan Chase. The new credit facility increases our borrowing capacity by $150 million to $293 million. We are very pleased to have completed this new agreement at favorable rates and terms particularly considering the uncertainty in the credit markets today. This combined with our increasing cash flow positions us well to continue our growth strategy.

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