FTD Group F4Q07 (Qtr End 6/30/07) Earnings Call Transcript

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FTD Group, Inc. (FTD)
F4Q07 Earnings Call
August 16, 2007 11:00 am ET

Executives

Jandy Tomy - IR
Michael Soenen - CEO
Becky Sheehan - CFO

Analysts

Mark Mahaney - Citigroup
Analyst for Anthony Noto - Goldman Sachs
Meggan Friedman – William Blair
Aaron Kessler - Piper Jaffray
Rob Magnuson - Goldman Sachs
Tom Whitecap - Value Holdings

Presentation

Operator

Welcome to the FTD Inc. fourth quarter 2007 earnings conference call. (Operator Instructions) Your speakers for today are Becky Sheehan and Michael Soenen. I would now like to turn the call over to Jandy Tomy. Please go ahead, ma'am.

Jandy Tomy

Thank you and welcome to FTD Group Inc.'s fiscal 2007 fourth quarter and full year conference call. A press release was sent out this morning highlighting the company's results. A copy of that release is available at the company's website, www.FTD.com under the investor relations section.

Before we begin, I want to reiterate that this conference call contains various forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding FTD Group Inc.'s outlook, anticipated revenue growth, and profitability. Also included are statements regarding the anticipated benefits of investments in new products, programs, and offerings, and statements regarding opportunities and trends within both the domestic and international businesses, including opportunities to expand these businesses and capitalize on growth opportunities or increased penetration of service offerings.

These forward-looking statements are based on FTD Group, Inc.'s current expectations, assumptions, estimates, and projections about the company and its industry. Actual results could differ from those anticipated by the forward-looking statements. Certain factors that could cause these results to differ are detailed in the fiscal year end and fourth quarter 2007 press release. We expressly disclaim any obligation to update forward-looking statements.

I would now like to turn the call over to Michael Soenen, President and CEO of FTD.

Michael Soenen

Thank you, Jandy. To begin, I would like to set a quick agenda for the call. I am going to cover our key items in 2007. Becky is then going to take you through some of the details of the quarter and the year. I will come back and give you our outlook for 2008, and then we are going to open up the call for some Q&A.

At a very high level, I believe you have the release, we have been very pleased with the year. Clearly, it has been a very competitive years, both in terms of the online market, in terms of the entry of 800-FLOWERS into our B2B space, making things more difficult than perhaps in past years.

In addition, despite that, I believe we have managed the company very well. We had very strong operating results, as you can see, almost 32% revenue growth. We took EBITDA from $69 million to $92.5 million this year. Our diluted EPS went from $0.86 to, as you will see in the release, $1.08. I really view it as $1.10, because we had about $0.02 of that related to our secondary offering. So I look at that on the year and say, you know, 30% plus revenue growth, very strong EBITDA conversion, and a 28% EPS growth; and feel quite good about our results for the year.

On top of that, we did see expansion in our operating income margins. You will see our consumer margins increased to 7.4% from 5.8%. You'll see the florist margins increased to a little over 32% from 30.8%. In our international business, which is doing quite well, not just on the top line but also demonstrated the ability to increase its margins quarter over quarter and throughout the year and I am very pleased with the progress we have made there.

Those are just some of the highlights. I'm going to let Becky take you through some of the details, and I will come back on to take you through the outlook for '08.

Becky Sheehan

Thanks, Mike. As Mike mentioned, we are pleased that our operating performance drove improved margins and solid bottom line results during the fiscal year. Let me begin with the consolidated results for the full year. Our fiscal 2007 revenue was $613 million, an increase of $147.9 million or 31.8% over the prior fiscal year. Interflora contributed $143.4 million of revenue. The remainder of the revenue growth was driven by order volume increases in our domestic consumer business.

Fiscal 2007 adjusted EBITDA was $92.5 million, which represents growth of $23.5 million over the prior fiscal year. Fiscal 2007 other income of $0.9 million is primarily related to foreign currency gains, net of the secondary offering costs. Net income for fiscal 2007 was $31.9 million or $1.08 per diluted share versus $25.5 million or $0.86 per diluted share last year. Diluted EPS during the current year includes $0.02 related to the cost FTD incurred associated with the secondary offering of 6.9 million shares by affiliates of Leonard Green & Partners and certain members of management. That transaction closed on March 12 of 2007.

Now moving on to our segments, our domestic consumer segment achieved revenues of $287.6 million for fiscal 2007, representing growth of 4.3%. This was primarily driven by a 1.8% increase in order volume, which totaled $4.6 million during fiscal 2007, and an increase in average order value to $61.31 in the current year from $60.38 in the prior year. Operating income was $21.2 million or 7.4% of revenue, which compared to $16.1 million in fiscal 2006 or 5.8% of revenue. Operating margins during the fiscal year strengthened as a result of increases in gross margins and effective management of our marketing, technology and general and administrative costs.

Moving on to our florist segment, which reported revenues of $182 million in fiscal 2007 compared to $189.4 million in the prior year. The decline in the florist segment revenues was primarily due to the sale of Renaissance in December of 2005, which had contributed $3.9 million in revenue in fiscal 2006, and to the elimination of certain unprofitable customers during the fiscal year. Operating margins in the business also remained strong. Operating income for 2007 was $58.7 million or 32.2% of revenue compared to $58.4 million or 30.8% of revenue last year.

Finally, our international segment. Revenues were up $143.4 million in fiscal 2007, and operating income was $13 million or 9.1% of revenues. Consumer order volume in the international segment totaled $1.8 million, up 15.9% over the same period of the prior fiscal year, driven by increased order volume in both their Valentines and Mother's Day holiday periods, both of which occurred in the third quarter. Average order value in the international segment was $64.78 for the period. Internet orders comprised 71% of the order volume.

Now, turning to the balance sheet. Cash totaled $25.5 million at June 30, 2007. Total debt was $313.7 million, which includes notes payable related to the Interflora acquisition totaling $1.7 million. We did pay $23.1 million of the notes payable from the acquisition during the fourth quarter. During the year, we also repaid $8.1 million on our term loan. As of June 30, 2007, the company had $72.2 million available under its revolving credit facility.

Additionally, FTD initiated a dividend program in fiscal 2007. The company paid its first-ever dividend of $0.1625 per share on April 2, 2007, in an amount totaling $4.7 million. The company declared another dividend for the same amount during the fourth quarter, which was paid on July 6. In total, the company has paid $9.4 million in dividends. Our business model generates strong cash flow, and we remain committed to returning value to our shareholders while actively reinvesting in the business.

Now, moving to our fourth quarter results. Revenue for the fourth quarter was $169.8 million, an increase of $28.3 million or 20% over the fourth quarter of the prior fiscal year. Interflora contributed $34.8 million of revenue. This revenue growth was driven by strong sales in a non-holiday quarter. Fourth quarter revenues for the domestic consumer and florist segments were $90.5 million and $44.5 million, respectively. Fourth quarter 2007 adjusted EBITDA was $26.7 million, which represents growth of $6.5 million or 32% over the fourth quarter of 2006. Fourth quarter fiscal 2007 other income of $0.2 million primarily relates to foreign currency gains. Net income for the fourth quarter was $10.7 million or $0.36 per diluted share versus $8.8 million or $0.30 per diluted share for the same period of last year.

I will now turn call back over to Mike for him to comment on our outlook.

Michael Soenen

Thanks, Becky. As I look forward to the coming year, I am very excited. Certainly on the domestic consumer business, I continue to imagine a fairly aggressive online marketing environment. I don't see that changing. I really see us continuing to manage that the way we have in the past, which is continuing to focus on our offline campaigns, our affinity accounts, our corporate accounts, and what we're doing with retention marketing. We have historically been very successful at that, and we have used that as a way to keep down our CPOs, and it is one of the reasons why we have been so strong on the margin side. Recognizing that I do make conscious decisions throughout the year to trade off higher CPO deals in exchange for profitability, that is my focus for the way I run the company. That will be a constant trade off we are always going to be making.

We are also going to be expanding our product set. Our Vera Wang product offerings were very successful last year. They continue to do well, and I suspect we will probably nearly double the sales of those product lines this year, something I am very excited about and continue to look forward to. Then we will keep moving into the gift categories, the stuff we are doing with Build-A-Bear, Mrs. Fields, Harry and David, Godiva. Those product lines sold very well for us. We don't take any inventory of those products and yet they contribute very good margins for us. So we are very pleased with that. Investors should expect to see us continue to expand those product sets and use that as a way to drive additional sales.

We will continue to make tech investments. We don't have anything huge planned for the year in the category. Our call centers and such are in pretty good shape. The website is in good shape. But I do believe we will make additional investments to help improve our conversion rates and really just improve the overall customer experience.

In the domestic florist business, I really see us see us running down three key avenues. First, further penetrating our existing product lines; specifically, our technology products. If you look in the marketplace right now, it is pretty well known that we have the best product out there. In fact, even this year we have had ten of the top 100 customers in the industry switch to our technology platform. It has been an ongoing investment over the last two or three years. We are going to make another additional investment in that this year.

But I believe we have the best product today. I believe we will have a blow-away product a year from now. It is really nice to see the very, very top customers embrace that product, recognizing that when those systems end up in their stores, that tends to drive a lot of our other product line and revenues. It acts almost as an ERP system for these florists. Once they go in, they run their shop on them, it really gives us the opportunity to leverage additional sales. Seeing it embraced like I said by the very top customers in the industry as well as it has been embraced has been new for us at FTD and reflects how well I believe that investment is going to go.

We will still see additional growth in our online services, what we are doing with our websites and our marketing and merchandising around that. Those are very hot product lines for us right now. They are product lines the florists aren't being offered in other ways; and as a result, we are seeing tremendous growth there.

I think the second area where we are really going to focus is on our fresh flower initiative. You know, we launched the online trading exchange which really connects our retail florists with the growers, with FTD in the middle acting as a bank, if you will, guaranteeing credit on both sides and earning a margin in doing so. The business got off to a fairly good start. This is not an industry that embraces technology very quickly. But I think the average florist will see a 20% or 30% reduction in their cost of goods when buying through our exchange. That 20% or 30% reduction, mind you, comes on their single largest expense every year, which is the purchase of fresh flowers. We are up to nearly 1,000 customers every month that are actively buying. It is still a new business for us, just coming out of its first year. But with 1,000 buyers already online, and us having the opportunity to move it to not only all of the FTD customers over time but also our grocery accounts, I feel strongly that this could be a large growth driver for us going forward.

Finally, we are going to continue to focus on our grocery initiative. We expect to see not just additional penetration in there in terms of accounts; we are doing great on accounts. We are starting to get some nice shelf space placements for a lot of our key products. We learned a lot last year. I think we have another opportunity to learn a lot this year. But even product lines like our licensed exclusive line like Todd Oldham, the ability to sell that through at retail as an exclusive product line for us, it's a high-margin product line, and it's one that is doing very, very well.

On the International front, we are going to continue to see strong growth there, in my opinion. We are tapping a market that is just now starting to embrace the Internet for commerce. It is almost like the US market was five years ago. Certainly the CPOs in that market are very low. They are running around $6 now compared to $13 or so that we run here domestically. It also has a big opportunity for us to leverage our existing product sets that we have developed here in the States and port them over to the UK market, and see which ones over time will be accepted. So we have very, very little development costs and we can rapidly expand that product set. So not only do we have a very strong market there, we are also walking in with products that require little incremental investment to bring to market.

In the consumer segment, we will continue to focus on the marketing side. That is going to be the key to that business, of course. What we are doing with Google and Yahoo! over there, like I said, very low CPOs, very efficient. The affinity account business is starting to take some strong growth. We have been engaging some third-party advertising programs there that seem to have been done very well so far. We are also going to continue to expand the product set over there. 800 of the florists actually have licenses to deliver wine. That is a new product line that we are hoping to see some traction from this year, along with the traditional gift businesses that we have been engaged with here, that we think we'll have further traction with in the UK.

On the florist business in the international side, one of the big changes there is that they have begun to selectively add new members. For years, that business had membership declines. Now that it has more of a for profit focus we are seeing membership counts increase. We are also seeing better acceptance of our products. For example, our florist online product set, which is the websites we've built for florists, those products have been accepted by nearly 800 customers over there already. We would expect to continue to see growth both from furthering that product line and, hopefully, seeing acceptance of other product lines that we have already developed here that are ready to be deployed in the UK.

Finally, we will continue to look at additional acquisitions, not just internationally but even domestically. It is a very robust market right now for M&A. There is a lot of product in our vertical that is moving around. I would expect and would hope investors would expect and understand that we will be active on that front, as I believe there are some significant opportunities there to leverage what we know and leverage our existing infrastructure to do. Really strategic, well thought out, and highly profitable acquisitions. Not unlike the success we have had with the UK business, where we bought it at a good multiple; we have seen tremendous growth top line; tremendous earnings growth and that is an acquisition that has worked out spectacularly well for the company. We are going to continue to look for other opportunities to do that.

The targets for 2008. We are a business that obviously looks at the top line. We focus on it, but we tend to be very focused on operating margins and net income, especially net income growth. That is the number that we really try to focus on and make sure we're delivering for investors. We are seeing a target next year, I'm setting a 645 on the revenue side. EBITDA should be at $98 million with about $4 million of stock comp and deferred comp and diluted EPS of $1.18. We will, obviously as we move throughout the year, we will give investors guidance and updates as to where we are and progress we're making against those targets. But based on everything I can see today, I think that is a good stake to put in the ground. We will see how we do throughout the year.

Obviously, we are very pleased with the year. Not only have we continued to work in a fairly competitive environment, but generating increasing amounts of free cash flow and EBITDA and 28% EPS growth I believe is a spectacular performance. I appreciate all the investors who have kind of backed the company and own our stock and who continue to do so going forward.

Thank you for your support and interest. With that, I would like to open the call to any questions people may have.

Question-and-Answer Session

Operator

Your first question comes from Mark Mahaney - Citigroup.

Mark Mahaney - Citigroup

The question I had was on your fiscal '08 guidance. Could you flesh that our a little bit more? Do you need to have a material re-acceleration in your domestic florist and in your domestic consumer orders business in order to make those numbers? You have obviously got a lot of strength in Interflora in Europe. Is that enough? If you were going to just take those two domestic segments, which of those two do you have the greatest confidence in being able to re-accelerate those growth rates? Thank you.

Michael Soenen

Mark, we're not projecting accelerated growth rates really for either. I think that is why it is a good target. Obviously, we would hope to accelerate growth rates; that's really the focus that we have. But I think if we just ride the existing trend lines, I think we have clearly shed some customers throughout the year, one of them being a large sender of ours that was generating a little over $2 million a year in revenue that we have kind of shed in the fourth quarter. In doing so, we are obviously going to have a tough comp on the revenue side for the first three quarters of next year. But we are not really seeing any fundamental shift in the trend lines in those businesses and I have tremendous confidence that we are going to maintain the trend lines that we have. My real focus is going to be to change those trend lines for the better.

Operator

Your next question comes from Anthony Noto - Goldman Sachs.

Analyst for Anthony Noto - Goldman Sachs

First on the international business. Can you just discuss the margin profile of that business and how you see that progressing over the next few years? Secondly, just any color that you can give on any impact that the current credit market would have on your business? Thank you.

Becky Sheehan

I will take the first part of your question which relates to the international margins. You know, I think as we've described in the past, the international segment, really there's a couple of dynamics to think about. One is that about 80% of that segment is a consumer business; the other 20% is a florist segment so it is blended. When you compare it to the US margins, you really need to compare it on a blended basis from a comparison perspective. We are pleased with where the international segment's margins have come out this year. We would expect those margins to remain consistent during a period where there may be some ongoing investments that we have referenced in earlier calls. Over time, we would expect those margins to grow and to get closer to kind of where the margins are in the US.

Michael Soenen

On the credit market side, I think it's a big opportunity for the company. I do believe there is a fair amount of product from an M&A perspective in the market or I expect to be in the market. Frankly, with the credit markets being in a fairly disruptive situation, it is helpful because it eliminates most of the financial sponsor activity. Two, in many cases, when you combine a company with FTD, we end up being a much better credit than if that company had to stand on its own. So I think this will be a big opportunity for the company going forward.

Operator

Your next question comes from Meggan Friedman - William Blair.

Meggan Friedman – William Blair

First of all, thanks for quantifying the revenue impact from the customers whose business you walked away from for the florist segment. Can you talk a little bit about the outlook for perhaps any further customer rationalization there?

Michael Soenen

I don't think we have a lot more on that front. Certainly if 800-FLOWERS comes in and pays top, top dollar for a customer and it doesn't make sense, we are going to let it go away. But no customer comes anywhere near the size of that. I will give you kind of a perspective. A customer that generates $2 million a year would have in the neighborhood of 400,000 orders, let's say. My number 100 customer might do 4,000 or 5,000 orders a year. So anything that you would see from here on out, at least on an individual customer basis, wouldn't be anything that would touch any realm of materiality.

Meggan Friedman – William Blair

You also walked away from an online sponsorship deal recently, right? Can you quantify the impact there?

Michael Soenen

I'm not going to quantify it, but we did have a large network deal with MSN that we had carried in the prior year and that we did not carry this year. The impact that obviously had is we have less revenue, because of the large deal we didn't have. But it also translated, as you see, into higher margins. Because we had less very high cost-per-order orders flowing through the system. So I'm not going to quantify it in dollars. But it is just a good thing to point out. It was a fairly large network deal. We did walk away from it because it went beyond our threshold. That contributed a meaningful part of the revenue shortfall to the prior year.

Meggan Friedman – William Blair

When did that agreement terminate?

Michael Soenen

I want to check exactly. Let me come back to you on that, Meggan. I don't want to speak and not have the date correct.

Meggan Friedman – William Blair

No worries. You are paying down debt. You've got the new dividend policies. How are you prioritizing paying down debt, share repurchases, and any changes to the dividend policy? How does that prioritization work?

Michael Soenen

We are committed to the dividend. We really think it is the best way to get cash back to shareholders. Certainly we look at the other means, mostly being a stock buyback, which we thought would shrink our float and make the stock trade, our stock isn't as liquid as we would like. So I think that would only complicate that further. So I think we are committed to the dividend. We are going to always re-evaluate it and always continue to look at is it the right amount? Should it be something bigger or not? That is something we are going to consider. But I also don't want investors to think that if the stock moves down we won't act aggressively to buy back shares if we change our mind.

You know, a little over a year ago, maybe even further than that, maybe closer to two years ago, we took a stock buyback. I think we had a $30 million program that I stepped in the market and bought $15 million of the stock at $10 bucks simply because I thought the market was trading it irrationally. That is probably more the type of behavior I would have. If I think I have a 0.5 million or 1 million shares that people are just very focused on selling, I will probably step in and clear the market. That is really more in my DNA, to take that pressure off the stock.

So I'm going to look at both, I'm going to use both. We see the dividend being the primary vehicle long-term. But if I find out that I have sellers who are just moving stock for whatever reason, and it seems to be a fairly large amount, I will have a strong preference to step in and clear the market.

Meggan Friedman – William Blair

I just have some housekeeping questions if you guys are willing to answer them. I don't know if you might provide Q4 details on average order value and percentage of orders online. Then also for 2008, I think historically you have provided a quarterly contribution breakdown, at least for revenue for guidance, when you introduce new guidance. Is that something you guys would be willing to do this year?

Becky Sheehan

Yes, a couple things. Average order value in the consumer segment for the fourth quarter was $61.25. That is up from last year's fourth quarter of $59.76. Internet orders, that mix doesn't change terribly. It is at 91.8% for the fourth quarter of '07 versus 90.5% in the fourth quarter of '06. As you think about the quarters and how the revenue gets generated through the quarterly period of the year, I would say that we would expect '08 to look fairly similar to '07 in the prior year. About 18%, 19% of the revenues this year were generated in the first quarter; about a quarter in the second quarter; 30% in the third quarter; and the remainder in the fourth quarter, 26%, 27%. So I don't think that is going to vary very significantly in '08 compared to where it has historically been.

Meggan Friedman – William Blair

There are no holiday shifts quarter to quarter?

Becky Sheehan

There are no holiday shifts quarter to quarter.

Operator

Your next question comes from Aaron Kessler - Piper Jaffray.

Aaron Kessler - Piper Jaffray

Looking at target operating margins or gross margins for the segments, clearly margins have improved over the last year. But I just want to see how much further room you have to go there.

Becky Sheehan

Our targeted EBITDA margin is at about 15.2%. That is just slightly ahead of where we ended '07. As you know, we don't typically give segment guidance in that manner. So obviously we feel comfortable with the target that we have out there for '08.

Aaron Kessler - Piper Jaffray

That's fine for '08. Can you also help us with the metrics in the international segment in terms of maybe customer orders for Q4, maybe the average order size there, and then what the consumer revenues were in Q4?

Becky Sheehan

In the fourth quarter for the international segment they had 419,000 consumer orders. Their average order value in the fourth quarter was approximately $66.90.

Aaron Kessler - Piper Jaffray

The florist organic growth, do you have that number for Q4 as well?

Becky Sheehan

What do you mean?

Aaron Kessler - Piper Jaffray

If you stripped out the Renaissance from the florist segment in Q4, what would the growth have looked like?

Becky Sheehan

There was no Renaissance in Q4 of last year. We sold the Renaissance greeting card business in December of '05. So it was really the first half of the year of '06 that Renaissance would have been included.

Operator

Your next question comes from Mark Mahaney - Citigroup.

Mark Mahaney - Citigroup

Great. I just wanted to follow-up, please. on your guidance for fiscal '08, this 15.2% EBITDA margin. Could you just talk about the factors that could allow you to produce margin results higher than that? You are showing a lot of leverage in the business, particularly in the sales and marketing line. I understand you want to be conservative this very early on in the year. But what factors could actually cause those margins to come in theoretically 50 bps or 100 bps higher than that? Thank you.

Michael Soenen

I think there are a couple areas. One, in the UK, we have a significant amount of opportunity in what I consider very high-margin product lines: both products that flow into the UK from the US, which you know are very high margin. Many opportunities I believe, as I have discussed before, they have many opportunities on the pricing side, whether it is through service fees or product pricing, I believe, for margin expansion. So we are not forecasting any of that. We are not telling investors to expect it. But I think certainly growth in the international segment will likely come from some of, if not the, very, very highest margin product lines that we have.

I think domestically, we may have some pricing opportunities. Once again, we have put none of them into our forecasts, and none that we are giving investors. But we do seem to have some opportunities relative to our competitors to perhaps close a pricing gap. In doing so, if we thought that was the right thing, you would see additional margin expansion there.

So those would be the two kind of major buckets. Certainly sales growth in general above what we have indicated will also be a third contributor just to margin expansion.

Operator

Your next question comes from Rob Magnuson - Goldman Sachs.

Rob Magnuson - Goldman Sachs

Did you guys give CapEx guidance for the coming fiscal year?

Becky Sheehan

We haven't given CapEx guidance specifically. We came out this year with just slightly under $8 million of CapEx; and I would anticipate it would be somewhere in that range of $8 million to $10 million for '08.

Rob Magnuson - Goldman Sachs

One housekeeping and one strategic question. I guess, first housekeeping. What is the current RP basket?

Becky Sheehan

The current restricted payment basket is about $20 million.

Rob Magnuson - Goldman Sachs

As you look for potential acquisitions and the opportunity out there, is there a maximum leverage that you would look at? How would you look to finance any potential acquisition?

Michael Soenen

Obviously the credit markets are very different today, so I would re-evaluate historical levels. Not having had the opportunity to do that, we have had the company levered at 5.8 times post-acquisitions, 5.2, you know, definitely right up to 6. I don't see us taking the company there. I think even in this rather challenging credit market, I can get done everything that I would like to, at least everything that I see in the pipeline today, at a 5 times level. I am more than comfortable at that level today.

Operator

Your next question comes from Tom Whitecap - Value Holdings.

Tom Whitecap - Value Holdings

Can we get more color on your wine initiative in the UK you mentioned earlier?

Michael Soenen

Yes, the wine initiative, it is hard to tell if it is going to be big or not. We have 800 florists over there who have the ability to legally deliver wine, so we don't see it being wine only; but we do think it is a gift basket strategy with wine and fruit and other items in it. It is something different than we can do here in the States. Obviously, we don't have florists who have the ability to deliver wine. I am very intrigued by it. I think it is very unique. It certainly creates a big opportunity. So we will see where it goes. I have factored it in at very little to zero. But I'm going to be watching it very closely and we are going to see how that behaves.

Tom Whitecap - Value Holdings

If that does take off in the UK, what logistically is required to bring that to the US?

Michael Soenen

The US is a whole different set of rules. You have got to have, if you will, liquor licenses; and I don't want to discuss the laws because they are fairly complicated. But in the hands of any retail florist, I think that is probably difficult to very unlikely.

Tom Whitecap - Value Holdings

So this is pretty much going to remain an international opportunity is what you are saying?

Michael Soenen

I think wine in general, as the laws around it loosen, will become increasingly an FTD opportunity, mostly through direct shipping and other vehicles. But the concept of local retail florists delivering wine for any horizon I can see is largely a UK opportunity.

Operator

Mr. Soenen, there are no further questions at this time. I will now turn the call back over to you. Please continue with your presentation or closing remarks.

Michael Soenen

I just want to thank everybody for your support. We had a great year. We are hopeful to put another great year up for next year and look forward to keeping you guys apprised of any new and exciting developments as the years goes on. So thank you for your support. I look forward to talking to you all soon.

Jandy Tomy

That was FTD Group, Inc.'s fiscal 2007 year end and fourth quarter conference call. If you did not have the opportunity to listen to the entire call, a replay will be available through August 30, 2007 by calling 800-633-8284 for North American callers, or 402-977-9140 for international callers. Please mention conference ID 21346468. Thank you.

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