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FTD News FTD Group, Inc. Reports First Quarter Fiscal Year 2007 Revenue Increase of 26.7% versus the Prior Year

DOWNERS GROVE, Ill.--(BUSINESS WIRE)--FTD Group, Inc. (NYSE:FTD):

FTD Group, Inc. (NYSE:FTD), a leading global provider of floral products and services, today announced first quarter fiscal year 2007 financial results for the period ended September 30, 2006.

FIRST QUARTER FISCAL YEAR 2007 RESULTS

First quarter fiscal year 2007 consolidated revenue grew $22.9 million, or 26.7%, to $108.8 million, compared to revenue of $85.9 million for the same period of fiscal year 2006. Interflora Holdings Limited (“Interflora”), which the Company acquired on July 31, 2006, accounted for $17.6 million of this increase in revenue. Growth in the Company’s domestic business contributed the remaining $5.3 million increase.

Net income for the first quarter of fiscal year 2007 was $5.4 million, or $0.18 per diluted share, which includes $0.9 million, or $0.03 per diluted share, related to other income, net, compared to net income of $3.4 million, or $0.11 per diluted share, in the prior year quarter. Other income, net, on a pre-tax basis of $1.5 million is primarily related to net foreign currency gains recognized during the first quarter of fiscal year 2007. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the current fiscal year period was $20.2 million compared to EBITDA of $12.9 million for the prior fiscal year period. EBITDA excluding other income, net, for the first quarter of fiscal year 2007 was $18.7 million, which represents growth of $5.8 million over the same period of the prior fiscal year.

“We are pleased to begin fiscal 2007 with such solid results. Our ability to take advantage of opportunities in the marketplace allowed us to generate strong growth across all business segments,” said Michael J. Soenen, President and Chief Executive Officer of FTD.

A table reconciling net income to EBITDA (including adjustments) is included with the attached consolidated financial statements. The Company believes EBITDA (including adjustments) provides supplemental information related to the Company’s operations and results. Management did not consider any items, other than other income, net, to be outside of the Company’s core operations during the period.

Domestic Consumer Segment

The Domestic Consumer Segment is a leading Internet and telephone marketer of flowers and specialty gifts, which sells products directly to consumers primarily through the Internet via the www.ftd.com Web site and through the 1-800-SEND-FTD toll-free telephone number. The Domestic Consumer Segment achieved revenues of $47.4 million in the first quarter of fiscal year 2007, compared to revenues of $41.6 million in the same period of fiscal year 2006, representing a 14.0% increase. Growth was driven by an 11.5% increase in order volumes. First quarter operating income in the Domestic Consumer Segment was $3.8 million, or 7.9% of Domestic Consumer Segment revenues, and represented an increase of 44.5% over operating income of $2.6 million for the prior year period, which represented 6.3% of Domestic Consumer Segment revenues in the prior year period. This expansion in operating income as a percent of revenues was primarily related to the addition of advertising revenue (which commenced in December 2005) and a decrease in marketing cost per order during the current year period.

Domestic Consumer orders during the first quarter of fiscal year 2007 totaled 768,000 compared to 689,000 orders in the same period of fiscal year 2006. Average order value increased slightly to $60.52 in the current quarter from $60.31 in the prior year’s quarter. The percentage of Internet orders increased slightly to 88.1% from 88.0% in the first quarter of fiscal year 2006.

Domestic Florist Segment

The Domestic Florist Segment markets floral products and services to FTD members and other retail locations offering floral products in the U.S. and Canada. The Domestic Florist Segment achieved revenues of $43.8 million in the first quarter of fiscal year 2007, compared to revenues of $44.3 million in the same period of the prior fiscal year. Included in the prior year was approximately $2.1 million of revenue related to the Renaissance Greeting Card business which the Company sold in December 2005. Excluding the revenue from the prior fiscal year period related to Renaissance, revenues from the Domestic Florist Segment grew at 3.9% over the same period of the prior year primarily as a result of increased technology system sales and an increase in sales related to the Company’s online services. First quarter fiscal year 2007 operating income in the Domestic Florist Segment was $14.2 million, or 32.5% of Domestic Florist Segment revenues, compared to operating income of $11.3 million in the prior year quarter, or 25.4% of Domestic Florist Segment revenue. The expansion in margin was primarily related to planned reductions in operating costs and increased profitability on service offerings to FTD members.

International Segment

The International Segment, a new segment in fiscal year 2007, is primarily comprised of Interflora, a U.K. based provider of floral and gift products and services to consumers and retail floral locations in the U.K. and the Republic of Ireland. Interflora was acquired by the Company on July 31, 2006 and as a result, only two months of its results are included in the Company’s first quarter fiscal year 2007 financial statements. The International Segment achieved revenues of $17.6 million in the first quarter of 2007, driven by sales volume in both the consumer and florist businesses. First quarter 2007 operating income in the International Segment was $1.2 million, or 6.8% of revenues. Both were in line with management’s expectations. Consumer orders in the International Segment totaled 229,000, up 25.6% over the same period of the prior fiscal year. Average order value in the International Segment was $62.84 for the two month period and Internet orders comprised 69.7% of the order volume.

BALANCE SHEET AND OTHER HIGHLIGHTS

As of September 30, 2006 the Company’s debt balance totaled $349.5 million, including notes payable of $23.3 million related to the Interflora acquisition, up from $220.1 million as of June 30, 2006. At the time of the acquisition of Interflora, the Company entered into a new senior secured credit facility consisting of a $150 million term loan and a $75 million revolving credit facility. As of September 30, 2006, the Company had $44 million available under its revolving credit facility. Capital expenditures for the quarter ended September 30, 2006 were $1.9 million and were primarily related to continued technology improvements. Cash and cash equivalents were $13.3 million at September 30, 2006.

OUTLOOK

“As we prepare to enter the busy holiday season, we believe we are well positioned to achieve the previously provided revenue, EBITDA and EPS targets,” concluded Soenen.

For the full fiscal year 2007, the Company previously announced targeted annual revenues of $630 million, net income of $26.5 million, with diluted earnings per share of $0.91 and targeted annual EBITDA of $85.4 million. As previously announced, net income, EPS and EBITDA targets include approximately $3 million of expense related to stock compensation associated with Statement of Financial Accounting Standards No. 123R and a deferred compensation plan related to Interflora. These net income, EPS and EBITDA targets exclude other income, net, which is expected to primarily relate to foreign currency related gains and losses. The Company’s financial statements for the quarter ended September 30, 2006 classifies the expense related to the write-off of deferred financing fees associated with the refinancing of the bank debt in July 2006 as interest expense.

CONFERENCE CALL

A conference call has been scheduled for October 31, 2006 at 10:00 a.m., ET, to review results for the first quarter of fiscal year 2007. To listen to the call over the Internet, go to the investor relations portion of the Company’s Web site, www.ftd.com. Please allow at least 15 minutes to register, download and install any necessary audio software. To listen to the call by phone dial (877) 381-6199 for North American callers or (706) 679-4384 for International callers; mention Conference ID #21307097. A replay of the conference call will be available through November 14, 2006 beginning one hour after the completion of the live call by phone at (800) 633-8284 for North American callers or (402) 977-9140 for International callers or on the Web at www.ftd.com. The conference call contains time-sensitive information that is accurate only as of October 31, 2006, the date of the live broadcast. The call is the property of FTD Group, Inc. Any redistribution, retransmission or rebroadcast of the conference call in any form without the express written consent of FTD Group, Inc. is strictly prohibited.

ABOUT FTD GROUP, INC.

FTD Group, Inc. is a leading provider of floral-related products and services to consumers and retail florists, as well as other retail locations offering floral products, in the U.S., Canada and the U.K. The business is supported by the highly recognized FTD and Interflora brands. Both brands utilize the Mercury Man logo, which is displayed in approximately 50,000 floral shops globally. The consumer businesses operate primarily through the www.ftd.com Web site in the U.S. and Canada and the www.interflora.co.uk Web site in the U.K. and are complemented by the florist businesses which provide products and services to our independent members.

FORWARD-LOOKING STATEMENTS

This press release contains various "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements include statements regarding the Company’s outlook, anticipated revenue growth and profitability; anticipated benefits of its acquisition of Interflora, anticipated benefits of investments in new products, programs and offerings and opportunities and trends within both the domestic and international floral businesses, including opportunities to expand these businesses and capitalize on growth opportunities or increase penetration of service offerings. The international business will reflect the operations of Interflora Holdings Limited. These forward-looking statements are based on management's current expectations, assumptions, estimates and projections about the Company and the Company’s industry. Investors are cautioned that actual results could differ from those contained in any forward-looking statements as a result of: the Company's ability to acquire and retain FTD and Interflora members and continued recognition by members of the value of the Company's products and services; the acceptance by members of new or modified service offerings recently introduced; the Company's ability to sell additional products and services to FTD and Interflora members; the Company’s ability to expand existing marketing partnerships and secure new marketing partners within the domestic and international consumer businesses; the success of the Company's marketing campaigns; the ability to retain customers and maintain average order value within the domestic and international consumer businesses; the existence of failures in the Company’s computer systems; competition from existing and potential new competitors; levels of discretionary consumer purchases of flowers and specialty gifts; the Company's ability to manage or reduce its level of expenses within both the domestic and international businesses; actual growth rates for the markets in which the Company competes compared with forecasted growth rates; the Company's ability to increase capacity and introduce enhancements to its Web sites; and the Company's ability to integrate Interflora and additional partners or acquisitions, if any are identified. These factors, along with other potential risks and uncertainties, are discussed in the Company's reports and other documents filed with the Securities and Exchange Commission. The Company expressly disclaims any obligation to update its forward-looking statements.