Florist and gifting specialist FTD Companies (FTD +0.00%) posted quarterly results on March 10 that included a big sales jump even as the company swung to a Q4 loss.
Here's how the headline results stacked up against the prior-year period:
|
Q4 2015 Actuals |
Q4 2014 Actuals |
Growth (YOY) | |
|---|---|---|---|
|
Revenue |
$298 million |
$157 million |
89% |
|
Net Income |
($82 million) |
$5.4 million |
N/A |
|
Earnings Per Share |
($2.90) |
$0.19 |
N/A |
Data source: FTD's financial filing.
What happened this quarter?
Revenue nearly doubled, but almost all of that gain came from FTD's purchase of the Provide Commerce gifting business. Meanwhile, the $82 million loss was driven entirely by an impairment charge. Without that expense, adjusted net income would have risen to $16 million from $10 million in the prior year.
Here are a few other highlights of the quarter:
- FTD's consumer business shrank by 5% as a 7% decline in order volume was offset by a 2% increase in average spending per order. Profitability improved to 12% of sales from 10% the prior year.
- The florist segment rose 4%, thanks to a mix of higher product and services sales. Operating profit was $11 million, or roughly equal to last year's haul.
- Though the international business was flat, it grew 4% after adjusting for currency swings. Profitability held steady in this segment.
- The newly acquired Provide Commerce business suffered a 3% sales drop as both order volume and average order spending ticked lower. Yet efficient cost management helped the division log a doubling of profitability: Operating margin spiked to 9% of sales from 4% the prior year.
- Cash balances fell by $40 million to $57 million, corresponding to the same level of decrease in outstanding debt.
What management had to say
Executives said they were generally happy with FTD's growth this year. "We are pleased with our strong 2015 financial results, particularly given a challenging consumer environment," CEO Robert Apatoff said in a press release. Despite the weak overall industry, the company made major additions that should provide for future long-term growth. "We expanded our portfolio of well-known brands," Apatoff explained, in what executives described as "a transformational year for FTD."
Image source: FTD.
Management remains optimistic that the Provide Commerce business will deliver long-term value despite this quarter's large writedown.
"The non-cash impairment charge we took in the fourth quarter does not impact our belief in the strategic importance of the acquisition and the additional floral and gifting opportunities we now have with the Provide brands in our portfolio," Apatoff said.
Looking forward
FTD's outlook predicts a slight decline in sales this year while profitability ticks higher. Net income should be about $10 million, representing an improvement over last year's loss but not yet a full recovery past 2014's $23 million profit.
The company has several initiatives in the works that are aimed at returning to growth. These include partnering with greeting card specialist Hallmark, launching a new flower site called Roses.com, and extending the Provide Commerce business past reliance on just a handful of holidays. As its updated guidance suggests, these moves aren't likely to spur overall sales gains in 2016, but they should help FTD overcome an unusually weak Valentine's Day holiday that was affected by the fact that it fell on a Sunday this year.
