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Sell-side reaction to FTD earnings (2Q05 earnings results)

Aug. 18, 2005 4:51 AM ETFTD Group Inc. (FTD-OLD)
David Jackson profile picture
David Jackson
5.21K Followers

Citigroup analyst Mark Mahaney sent a note to clients August 9th analyzing FTD's (ticker: FTD) Q2 earnings. Excerpts:

FTD - Still Not Spring

SUMMARY

FTD reported a Modest Beat & In-Line Quarter -- $123MM revenue was a tad shy of our/Street's $124MM estimate, but $0.18 EPS beat our/Street's $0.15 estimate. FY06 guidance was In-Line with the Street. The EPS upside sources were better than expected gross margins and lower than expected G&A.

Fundies worsened - 1.8% Y/Y rev growth was the lowest in many quarters, although Easter holiday timing played a major factor. Easter-normalized Y/Y growth was approx 9%, a deceleration from prior periods. 13.3% EBITDA margin was down 10 bps Y/Y and down 180 bps Q/Q.

No change in our opinion on the stock. Our FY2006 estimate nudges up from $0.74 to $0.75, but our price target remains $13.

Among the positives - sustainably ramping gross margins and debt paydown. Among the negatives - still rising marketing costs and guidance-implied margin declines in FY06. Marketshare shifts ambiguous.

JUNE BY THE NUMBERS

FTD reported June quarter revenue of $123MM, EBITDA of $16.2MM, and EPS of $0.18, vs. our estimates of $124MM, $14.5MM, and $0.15 EPS, respectively.

The slight revenue miss vs. our expectations was due to underperformance in the Florist segment. Florist revenue came in at $44.6MM, $2.6MM or 6% below our expectation of $47.2MM and down 2.8% Y/Y. Florist results reflected the elimination of unprofitable product lines in the Specialty wholesaling business, as well as Easter holiday timing, which was in the third quarter of fiscal year 2005 vs. the fourth quarter in 2004 (the June quarter is Q4 for FTD). Consumer revenue of $78MM exceeded our estimate of $76.2 by 2%, and was up 4.7% Y/Y, driven by an increase in Mother’s Day orders but partially offset by the timing of the Easter holiday.

This article was written by

David Jackson profile picture
5.21K Followers
I'm the founder and CEO of Seeking Alpha. Before Seeking Alpha, I worked as a technology research analyst for Morgan Stanley in New York. After I left, I wrote The ETF Investing Guide (which you can find by clicking on "Author's Picks" below), and some articles about individual stocks, and then started inviting other people to contribute to the website. Seeking Alpha is now the dominant crowdsourced platform for discussion of stocks and investing, and the only place with coverage of many mid and small cap stocks. I have a B.A from Oxford University and an MSc from The London School of Economics, and am married with five children.

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