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:
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:
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.
“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.
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.
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.
source: FTD Companies