[ROSI] - U.S.A. Floral Products Reports Fourth Quarter and Year End 1998 Results
Business Wire - February 23, 1999 08:25
WASHINGTON--(BUSINESS WIRE)--Feb. 23, 1999--U.S.A. Floral Products, Inc. (Nasdaq: ROSI), the largest integrated distributor of floral products in the world, today announced results for the fourth quarter period and year-ended December 31, 1998, as well as preliminary Valentine's Day revenues for 1999.
-- Fourth quarter diluted EPS of $0.11 before nonrecurring charges
vs. Pro Forma Q4 1997 diluted EPS of $0.00
-- Fiscal year 1998 diluted EPS of $0.73 before nonrecurring charges
-- Florimex contributes to strong Q4 1998 performance
-- Fourth quarter gross margins increased by 2.7% over Pro Forma Q4
1997 to 26.6%.
-- Company announces preliminary Valentine's Day revenues for 1999
Fourth Quarter and Year End Results 1998
Revenues for the fiscal year 1998 were $589 million (pro forma $999.8 million) compared to $37.4 million (pro forma $930.3 million) in 1997. Net income was $7.7 million, or $0.52 per diluted share (pro forma $9.2 million or $0.56) compared to $0.4 million, or $0.09 per diluted share (pro forma $11 million or $0.68) for 1997. The 1998 results are after pretax nonrecurring charges aggregating $5 million (approximately $0.21 per diluted share) for the Company's previously announced integration plan and a write-off of unamortized financing fees in connection with the Credit Facility. Pro Forma 1998 results also include integration charges incurred by Florimex prior to its acquisition, bringing the total impact of such charges to approximately $0.28 per diluted share on a pro forma basis.
For the fourth quarter of 1998, revenues rose to $243.9 million from $37.4 million (pro forma $233.4 million) in the fourth quarter of 1997. Gross profit margins improved to 26.6% from pro forma margins of 23.9%. For the period, the Company reported a net loss of $1.3 million or $0.08 per diluted share, compared to net income of $0.5 million or $0.06 per diluted share (pro forma $7 thousand or $0.00) for the fourth quarter of 1997. The aforementioned nonrecurring charges reduced the fourth quarter 1998 net income by approximately $0.19 per diluted share.
The Company incurred a nonrecurring charge of $3.4 million in the fourth quarter of 1998 to integrate certain warehouse and distribution facilities principally associated with the Company's Import and Bouquet operations in Miami, Florida. This charge principally relates to the write-down to fair value of equipment made obsolete or redundant, severance, and lease termination costs due to the decision to merge certain facilities. The integration of the warehouses and distribution facilities began in November, 1998 and is expected to be completed by September 30, 1999. The Company also recorded a nonrecurring charge of approximately $1.6 million in the fourth quarter of 1998 to write-off the unamortized portion of the financing fee related to the Company's original Credit Facility, which was replaced on October 2, 1998.
The pro forma results represent the operating results of the Company's original eight founding companies acquired in October 1997, the six companies acquired in January 1998, the eight companies acquired in April 1998, the nine companies acquired in July 1998 and the acquisition of Florimex on October 1, 1998 as if the acquisitions, the new Credit Facility and the U.S.A. Floral's IPO had occurred on January 1, 1997. Pro forma results for the 1997 fourth quarter and the year do not include the effects of Florimex's acquisition of Sierafor on January 1, 1998. Sierafor's revenues for the quarter and year ended December 31, 1997 were approximately $10 and $50 million, respectively.
Robert J. Poirier, Chairman, President and Chief Executive Officer of U.S.A. Floral Products, stated, "Our fourth quarter and year end results are exciting. We beat consensus analysts' estimates for the fifth consecutive quarter. This year-end marks our first full year of operations for the company, a year that everyone associated with U.S.A. Floral is very proud of, especially our 4,300 employees in 21 countries. In the past year, we achieved more than anyone could have imagined, and we continue to expand our vision in revolutionizing the floral distribution industry."
Florimex exceeded management's expectations in its first quarter under U.S.A. Floral's ownership, contributing $3.0 million in operating income on revenues of approximately $108.1 million. On a comparative basis for the three months ended December 31, 1997, Florimex's pro forma operating income was approximately $1.2 million on revenues of approximately $96.5 million, which represents a 150% increase in operating income.
Dwight Ferguson, Vice-Chairman of U.S.A. Floral Products, stated, "We are very pleased with the strong performance of Florimex. The performance is directly attributable to recent strategic efforts in Europe and strong sales performance in Japan. Specifically, the International Division experienced improved productivity in Germany as a result of recent integration efforts and increased supermarket sales in Europe, consistent with the division's strategy. We are proud to make such a significant contribution to U.S.A. Floral Products in our first quarter under ownership."
The results for the North American division for the three months ended December 31, 1998 were in line with management's expectations. The division contributed approximately $4.4 million in operating income, before nonrecurring charges noted previously, on revenues of approximately $135.8 million. On a comparative basis for the three months ended December 31, 1997, the division's pro forma operating income was approximately $2.5 million on revenues of approximately $136.8 million, which represents a 76% increase in operating income before nonrecurring charges.
Mr. Poirier added, "Over the past several months we have emphasized our focus is on integration and operating efficiencies. The integration plan seeks to align the North American division into three operating segments: Importers, Wholesalers and Bouquet Companies, which allows our companies and employees to work more closely together, create efficiencies and ultimately serve our customers better. We anticipate cost savings from the integration plan and other initiatives should reduce operating expenses approximately $5.5 million in 1999."
Valentine's Day 1999
As anticipated, with Valentine's Day falling on a Sunday of a Holiday weekend, the Company's preliminary results indicate revenues may be off 10% from the prior year. Lower product prices during the period leading up to Valentine's Day, however, should allow the wholesale and bouquet operations at U.S.A. Floral to improve operating margins. Therefore, the Company remains comfortable with analysts' consensus estimate for the first quarter of 1999.
Founded in April 1997, U.S.A. Floral 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.
Except for historical information contained herein, the statements made in this release, including those with respect to results for the three-month period and year ended December 31, 1998, and those with respect to the effects of purchasing synergies, expense reductions, acquisition explorations and marketing and research and development efforts, as they apply to possible future such synergies, reductions, exploration efforts or the Company's results therefore constitute forward-looking statements that involve certain risks and uncertainties. Certain factors may cause actual results to differ materially from those contained in the forward looking statements, including those risks detailed in the Company's Prospectus dated May 8, 1998 relating to, among other things: the absence of a combined operating history; the Company's acquisition strategy; the concentration of flower sales in traditional holiday periods; the financing of acquisitions; the Company's internal growth and operating strategies; seasonality, cyclicality, fluctuations in quarterly operating results, and 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 Company's reports on file at the Securities and Exchange Commission
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