U.S.A. Floral Products, Inc. Comments on Second Quarter and Full Year Earnings Results
WASHINGTON--(BUSINESS WIRE)--July 1, 1999--U.S.A. Floral Products, Inc. (Nasdaq: ROSI) today announced that due to severe global pricing pressure the Company expects to report earnings in the range of $0.10 to $0.15 per share, including a non-recurring gain from anti dumping duties, versus the First Call consensus estimate of $0.26 per share for the second quarter ended June 30, 1999. Consequently, for the year ending December 31, 1999, the Company expects to report earnings in the range of $0.20 to $0.45 per share versus the First Call consensus estimate of $0.63 per share. The variance on this estimated annual range is due to the continued uncertainty of extremely low pricing, which has negatively impacted operating results in the first six months of this year. U.S.A. Floral Products intends to report actual second quarter results during the week of August 2, 1999.
The principal cause of the anticipated earnings shortfall is continued pricing pressure resulting from a global oversupply of product. This resulted in significantly reduced operating margins when comparing to the same prior year period. U.S. Department of Agriculture data on North American imports from South America indicates pricing on red roses is down as much as 35%, for the second quarter of 1999 relative to the second quarter of 1998, chrysanthemums down as much as 56% and carnations down as much as 65%. The pricing pressure experienced this quarter is a continuation of the pricing pressure experienced in the first quarter that resulted in decline of approximately 20% to 30%.
The Company's International Division also contributed to the expected earnings shortfall. Industry-wide Dutch export pricing in major product categories declined more than 10% when compared to the same period in 1998. The strength of the U.S. dollar versus the Euro has negatively impacted international revenues and earnings. U.S.A. Floral derives about 40% of its revenue internationally, principally from Europe, and the Company estimates this currency swing has negatively impacted revenues and earnings by approximately 11%.
Also contributing to the anticipated earnings shortfall this quarter was the underperformance of the Miami Bouquet Division. As announced on June 8, 1999, the workforce has been reduced by 150 employees to lower costs and improve operating performance.
Despite the disappointing pricing environment, the Company reported that the volume of fresh floral product shipments in the North American import division for April and May 1999 increased 13% over the same period last year. Import shipments in May alone were up 26% versus May 1998. This suggests that consumer demand for fresh floral products increased this year when compared to the same period a year ago.
USA Floral Products, Inc. also announced that it has retained Morgan Stanley Dean Witter and Salomon Smith Barney to advise it in the development and consideration of strategic and financial alternatives.
Robert J. Poirier, CEO of U.S.A. Floral Products said, "The current sustained pricing pressure has severely impacted operating margins in the first six months of 1999. We will continue to move aggressively on integration efforts to achieve companywide cost savings in response to this current revenue trend. The company remains committed to delivering the highest quality product and value to our customers."
Founded in April 1997, U.S.A. Floral Products is the world's largest floral supplier. The Company was formed to create a fully-integrated international floral product distribution business. U.S.A. Floral Products engages primarily in the importation and wholesale distribution of floral and floral-related products. The Company also provides pre-packaged floral bouquets and arrangements to retail florists and mass market retailers, engages in brokerage services for wholesalers of both international and domestic cut flowers, and provides floral fulfillment and shipping services to direct shippers.
The matters discussed in this press release include forward-looking statements regarding, among other things, future operating results and preliminary estimates of earnings. When used in this press release, the words "intends to," "believes," "anticipates," "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those expressed or implied in the forward-looking statements as a result of various important factors, including the following: the effects of purchasing synergies, expense reductions, acquisition explorations and marketing and research and development efforts; the absence of a combined operating history; the Company's acquisition strategy; the concentration of flower sales in traditional holiday periods; the availability and terms of financing for acquisitions; the Company's internal growth and operating strategies; seasonality, cyclicality, fluctuations in quarterly operating results; weather; competition; the amortization of intangible assets; dependence upon key personnel; and imported products matters. The Company may not realize any or all of the savings from its integration efforts due to market factors, unforeseen costs and expenses and other risks and uncertainties, many of which are beyond the Company's control. In addition, results may vary as a result of factors set forth from time to time in the documents filed by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances
CONTACT:
U.S.A. Floral Products, Inc.
W. Michael Kipphut
Chief Financial Officer
202/333-0800 |
