Travelzoo Reports Third Quarter 2021 Results

 

NEW YORK, 
Oct. 29, 2021 (GLOBE NEWSWIRE) — 
Travelzoo^® (NASDAQ: TZOO):

• Consolidated revenue of 
  $15.7 million, up 14% year-over-year
• Non-GAAP consolidated operating profit of 
  $1.1 million
• Earnings per share (EPS) of 
  $0.22 attributable to 
  Travelzoo from continuing operations

Travelzoo, a global Internet media company that provides exclusive offers and experiences for members, today announced financial results for the third quarter ended 
September 30, 2021.
Consolidated revenue was 
$15.7 million, up 14% from 
$13.8 million year-over-year and down 18%
from the prior quarter. Reported revenue excludes revenue from discontinued operations in 
Asia Pacific. 
Travelzoo’s reported revenue consists of advertising revenues and commissions, derived
from and generated in connection with purchases made by 
Travelzoo members.

The reported net income attributable to 
Travelzoo from continuing operations was 
$2.8 million for Q3 2021. At the consolidated level, including minority interests, the reported net income from continuing operations was 
$2.9 million. EPS from continuing operations was 
$0.22, compared to a loss per share of (
$0.10) in the prior-year period. GAAP operating loss was 
$261,000.

Non-GAAP operating profit was 
$1.1 million. The calculation of non-GAAP operating profit excludes amortization of intangibles (
$0.3 million), stock option expenses (
$1.0 million), and severance-related expenses (
$0.1 million). See section “Non-GAAP Financial Measures” below.

“We saw robust growth in our revenue and operating profit from 
Travelzoo in Europe,” said  Holger Bartel, Global CEO. “Unfortunately, revenue from 
Travelzoo in 
North America was negatively impacted by press coverage about the 
COVID-19 Delta variant and 
Do Not Travel advisories for nearly 100 countries. We believe this to be a short-term effect. We see strong pent-up demand from 
Travelzoo members to get away as soon as possible.”

Cash Position
As of 
September 30, 2021, consolidated cash, cash equivalents, and restricted cash were 
$66.4 million. Net cash used in operations was 
$12.7 million. Cash was used primarily in connection with the switch to a more efficient merchant payment processing solution. There were no significant capital expenditures.

Reserve
Reported revenues include a reserve of 
$3.1 million related to commissions to be earned from refundable vouchers sold. The reserve is booked as contra revenue.

Travelzoo North America

North America business segment revenue increased 6% year-over-year to 
$9.7 million. Operating loss for Q3 2021 was 
$918,000, compared to an operating loss of 
$696,000 in the prior-year period.

Travelzoo Europe

Europe business segment revenue increased 43% year-over-year to 
$5.2 million. Operating profit for Q3 2021 was 
$600,000, or 11% of revenue, compared to an operating loss of 
$757,000 in the prior-year period.

Jack’s Flight Club 
On 
January 13, 2020, 
Travelzoo acquired 60% of Jack’s 
Flight Club, a membership subscription service. Jack’s 
Flight Club revenue decreased 19% year-over-year to 
$796,000. Operating income for Q3 2021 was 
$57,000, compared to an operating income of 
$250,000 in the prior-year period. After consolidation with 
Travelzoo, Jack’s 
Flight Club’s net income was 
$20,000 with 
$12,000 attributable to 
Travelzoo as a result of recording 
$274,000 of amortization of intangible assets related to the acquisition.

Licensing
In June of 2020, 
Travelzoo entered into a royalty-bearing licensing agreement with a local licensee in 
Japan for the exclusive use of Travelzoo’s brand, business model, and members in 
Japan. In August of 2020, 
Travelzoo entered into a royalty-bearing licensing agreement with a local licensee in 
Australia for the exclusive use of Travelzoo’s brand, business models, and members in 
Australia, 
New Zealand and 
Singapore. Under these arrangements, Travelzoo’s existing members in 
Australia, 
Japan, 
New Zealand, and 
Singapore will continue to be owned by 
Travelzoo as the licensor. Licensing revenue is booked with a lag of one quarter. 
Travelzoo recorded 
$2,000 in licensing revenue from the licensee in 
Australia, 
New Zealand and 
Singapore in Q3 2021. Licensing revenue is expected to increase as the licensees develop their business and effects of the pandemic subside.

Members and Subscribers
As of 
September 30, 2021, we had 30.7 million members worldwide. In 
North America, the unduplicated number of 
Travelzoo members was 17.2 million as of 
September 30, 2021, up 5% from 
September 30, 2020. In 
Europe, the unduplicated number of 
Travelzoo members was 8.4 million as of 
September 30, 2021, down 5% from 
September 30, 2020. Jack’s 
Flight Club had 1.7 million subscribers as of 
September 30, 2021, consistent with 1.7 million subscribers as of 
September 30, 2020.

Discontinued Operations
As announced in a press release on 
March 10, 2020, 
Travelzoo decided to exit its 
Asia Pacific business and operate it as a licensing business going forward. Consequently, the 
Asia Pacific business has been classified as discontinued operations since 
March 31, 2020. Prior periods have been reclassified to conform with the current presentation. Certain reclassifications have been made for current and prior periods between the continued operations and the discontinued operations in accordance with 
U.S. GAAP.

Income Taxes
Income tax expense was 
$233,000 in Q3 2021, compared to an income tax benefit of 
$244,000 in the prior-year period.

Non-GAAP Financial Measures
Management calculates non-GAAP operating income when evaluating the financial performance of the business. Travelzoo’s calculation of non-GAAP operating income, also called “non-GAAP operating profit” in this press release and today’s earnings conference call, excludes the following items: impairment of intangibles and goodwill, amortization of intangibles, stock option expenses, and severance-related expenses. This press release includes a table which reconciles GAAP operating income to the calculation of non-GAAP operating income. Non-GAAP operating income is not required by, or presented in accordance with, generally accepted accounting principles in 
the United States of America (“GAAP”). This information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures reported by other companies.

Looking Ahead
We currently expect to achieve profitability in Q4 2021. We continue to see a trend of recovery of our revenue. However, there could be unexpected fluctuations in the short-term. We have been able to reduce our operating expenses, and we believe we can continue the trend of lower fixed costs in the foreseeable future.

Conference Call

Travelzoo will host a conference call to discuss third quarter results today at 
11:00 a.m. ET. Please visit http://ir.travelzoo.com/events-presentations to download the management presentation (PDF format) to be discussed in the conference call; and access the webcast.

About Travelzoo

Travelzoo^® provides its 30 million members exclusive offers and one-of-a-kind experiences personally reviewed by our deal experts around the globe. We have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences. We work in partnership with more than 5,000 top travel suppliers—our long-standing relationships give 
Travelzoo members access to irresistible deals.

Certain statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include, but are not limited to, statements about our plans, objectives, expectations, prospects and intentions, markets in which we participate and other statements contained in this press release that are not historical facts. When used in this press release, the words “expect”, “predict”, “project”, “anticipate”, “believe”, “estimate”, “intend”, “plan”, “seek” and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including changes in our plans, objectives, expectations, prospects and intentions and other factors discussed in our filings with the 
SEC. We cannot guarantee any future levels of activity, performance or achievements. 
Travelzoo undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release.

Travelzoo, Top 20, and 
Jack’s Flight Club are registered trademarks of 
Travelzoo.

Travelzoo
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)

	Three months ended										Nine months ended
	September 30,										September 30,
	2021					2020					2021					2020
Revenues	$	15,688				$	13,787				$	49,051				$	41,118
Cost of revenues	2,992					2,924					8,532					7,768
Gross profit	12,696					10,863					40,519					33,350
Operating expenses:
Sales and marketing	7,709					6,929					21,839					24,311
Product development	684					592					2,052					2,586
General and administrative	4,564					4,545					14,180					16,709
Impairment of intangible asset and goodwill	—					—					—					2,920
Total operating expenses	12,957					12,066					38,071					46,526
Operating income (loss)	(261		)			(1,203		)			2,448					(13,176		)
Other income (loss), net	3,344					(37		)			3,862					(222		)
Income (loss) from continuing operations before income taxes	3,083					(1,240		)			6,310					(13,398		)
Income tax expense (benefit)	233					(244		)			2,111					(2,070		)
Income (loss) from continuing operations	2,850					(996		)			4,199					(11,328		)
Income (loss) from discontinued operations, net of tax	(19		)			(230		)			(5		)			(3,944		)
Net income (loss)	2,831					(1,226		)			4,194					(15,272		)
Net income (loss) attributable to non-controlling interest	8					125					(1		)			(1,122		)
Net income (loss) attributable to  Travelzoo	$	2,823				$	(1,351	)			$	4,195				$	(14,150	)
Net income (loss) attributable to Travelzoo— continuing operations	$	2,842				$	(1,121	)			$	4,200				$	(10,206	)
Net income (loss) attributable to Travelzoo— discontinued operations	$	(19	)			$	(230	)			$	(5	)			$	(3,944	)
Income (Loss) per share—basic
Continuing operations	$	0.24				$	(0.10	)			$	0.36				$	(0.90	)
Discontinued operations	$	—				$	(0.02	)			$	—				$	(0.35	)
Net income (loss) per share —basic	$	0.24				$	(0.12	)			$	0.36				$	(1.25	)
Income (Loss) per share—diluted
Continuing operations	$	0.22				$	(0.10	)			$	0.32				$	(0.90	)
Discontinued operations	$	—				$	(0.02	)			$	—				$	(0.35	)
Net income (loss) per share—diluted	$	0.22				$	(0.12	)			$	0.32				$	(1.25	)
Shares used in per share calculation from continuing operations—basic	11,648					11,310					11,510					11,353
Shares used in per share calculation from discontinued operations—basic	11,648					11,310					11,510					11,353
Shares used in per share calculation from continuing operations—diluted	12,904					11,310					13,132					11,353
Shares used in per share calculation from discontinued operations—diluted	11,648					11,310					11,510					11,353

Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)

	September 30, 2021					December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	65,204				$	63,061
Accounts receivable, net	9,084					4,519
Prepaid income taxes	2,882					931
Deposits	104					137
Prepaid expenses and other	3,080					1,166
Assets from discontinued operations	63					230
Total current assets	80,417					70,044
Deposits and other	8,219					745
Deferred tax assets	3,637					5,067
Restricted cash	1,154					1,178
Operating lease right-of-use assets	8,005					8,541
Property and equipment, net	794					1,347
Intangible assets, net	3,700					4,534
Goodwill	10,944					10,944
Total assets	$	116,870				$	102,400
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	11,875				$	6,996
Merchant payables	73,183					57,104
Accrued expenses and other	7,546					8,649
Deferred revenue	1,805					2,688
Operating lease liabilities	3,482					3,587
PPP notes payable (current portion)	—					2,849
Income tax payable	61					326
Liabilities from discontinued operations	469					671
Total current liabilities	98,421					82,870
PPP notes payables	—					814
Deferred tax liabilities	—					357
Long-term operating lease liabilities	9,721					10,774
Other long-term liabilities	2,249					1,085
Total liabilities	110,391					95,900
Non-controlling interest	4,608					4,609
Common stock	118					114
Treasury stock (at cost)	(1,583		)			—
Additional paid-in capital	3,432					6,239
Retained earnings (accumulated deficit)	3,792					(403		)
Accumulated other comprehensive loss	(3,888		)			(4,059		)
Total stockholders’ equity	1,871					1,891
Total liabilities and stockholders’ equity	$	116,870				$	102,400

Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

	Three months ended										Nine months ended
	September 30,										September 30,
	2021					2020					2021					2020
Cash flows from operating activities:
Net income (loss)	$	2,831				$	(1,226	)			$	4,194				$	(15,272	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	448					588					1,408					1,806
Stock-based compensation	971					1,189					2,788					5,243
Deferred income tax	(68		)			14					1,073					(1,747		)
Impairment of intangible assets and goodwill	—					—					—					2,920
Gain on notes payable settlement	—					—					—					(1,500		)
Loss on long-lived assets	—					—					—					437
Loss on equity investment in WeGo	—					138					—					474
Gain on PPP notes payable forgiveness	(3,159		)			—					(3,588		)			—
Net foreign currency effects	(45		)			(86		)			(300		)			(542		)
Provision (reversal) of loss on accounts receivable and other reserves	(854		)			1,496					(1,725		)			3,923
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	933					63					(3,848		)			6,246
Prepaid income taxes	(1,294		)			(304		)			(2,007		)			685
Prepaid expenses and other	(6,698		)			206					(9,473		)			1,626
Accounts payable	3,610					10,560					5,025					12,709
Merchant payables	(8,699		)			12,372					16,486					20,532
Accrued expenses and other	(132		)			(1		)			(452		)			(1,381		)
Income tax payable	(35		)			(412		)			(263		)			(479		)
Other liabilities	(476		)			(436		)			(34		)			1,904
Net cash provided by (used in) operating activities	(12,667		)			24,161					9,283					37,584
Cash flows from investing activities:
Acquisition of business, net of cash acquired	—					—					—					(679		)
Other investment	—					—					—					(430		)
Purchases of property and equipment	60					(49		)			(24		)			(252		)
Net cash provided by (used in) investing activities	60					(49		)			(24		)			(1,361		)
Cash flows from financing activities:
Repurchase of common stock	—					—					(1,583		)			(1,205		)
Payment of promissory notes	—					—					(110		)			(7,800		)
Proceeds from notes payable	—					—					—					3,663
Exercise of stock options and taxes paid for net share settlement	(2,357		)			—					(5,424		)			—
Net cash used in financing activities	(2,357		)			—					(7,117		)			(5,342		)
Effect of exchange rate on cash, cash equivalents and restricted cash	(823		)			904					(126		)			393
Net increase (decrease) in cash, cash equivalents and restricted cash	(15,787		)			25,016					2,016					31,274
Cash, cash equivalents and restricted cash at beginning of period	82,188					26,968					64,385					20,710
Cash, cash equivalents and restricted cash at end of period	$	66,401				$	51,984				$	66,401				$	51,984

Travelzoo
Segment Information from Continuing Operations
(Unaudited)
(In thousands)

Three months ended September 30, 2021	Travelzoo North America					Travelzoo Europe					Jack’s Flight Club				Elimination				Consolidated
Revenue from unaffiliated customers	$	9,527				$	5,365				$	796			$	—			$	15,688
Intersegment revenue	136					(136		)			—				—				—
Total net revenues	9,663					5,229					796				—				15,688
Operating income (loss)	$	(918	)			$	600				$	57			$	—			$	(261	)
Three months ended September 30, 2020	Travelzoo North America					Travelzoo Europe					Jack’s Flight Club				Elimination				Consolidated
Revenue from unaffiliated customers	$	9,002				$	3,798				$	987			$	—			$	13,787
Intersegment revenue	141					(141		)			—				—				—
Total net revenues	9,143					3,657					987				—				13,787
Operating income (loss)	$	(696	)			$	(757	)			$	250			$	—			$	(1,203	)

 

Nine months ended September 30, 2021	Travelzoo North America					Travelzoo Europe					Jack’s Flight Club					Elimination					Consolidated
Revenue from unaffiliated customers	$	33,005				$	13,503				$	2,543				$	—				$	49,051
Intersegment revenue	462					(462		)			—					—					—
Total net revenues	33,467					13,041					2,543					—					49,051
Operating income (loss)	$	2,654				$	(323	)			$	117				$	—				$	2,448
Nine months ended September 30, 2020	Travelzoo North America					Travelzoo Europe					Jack’s Flight Club					Elimination					Consolidated
Revenue from unaffiliated customers	$	25,805				$	12,706				$	2,615				$	(8	)			$	41,118
Intersegment revenue	237					(245		)			—					8					—
Total net revenues	26,042					12,461					2,615					—					41,118
Operating income (loss)	$	(6,374	)			$	(3,781	)			$	(3,013	)			$	(8	)			$	(13,176	)

Travelzoo
Reconciliation of GAAP to Non-GAAP Information
(Unaudited)
(In thousands, except per share amounts)

	Three months ended										Nine months ended
	September 30,										September 30,
	2021					2020					2021				2020
GAAP operating expense	$	12,957				$	12,066				$	38,071			$	46,526
Non-GAAP adjustments:
Impairment of intangible and goodwill (A)	—					—					—				2,920
Amortization of intangibles (B)	274					333					833				944
Stock option expenses (C)	971					1,189					2,788				5,243
Severance-related expenses (D)	95					855					493				1,139
Non-GAAP operating expense	11,617					9,689					33,957				36,280
GAAP operating income (loss)	(261		)			(1,203		)			2,448				(13,176		)
Non-GAAP adjustments (A through D)	1,340					2,377					4,114				10,246
Non-GAAP operating income (loss)	1,079					1,174					6,562				(2,930		)

Investor Relations:
Almira Pusch
ir@travelzoo.com

Source: Travelzoo

Hemp and the FDA’s CDP DAP

 

The Food and Drug Administration (FDA) says it’s falling behind monitoring all that is new with Cannabis Derived Products (CDP). The regulator will soon ramp up its collection of data on CDPs. The plan to catch up is outlined in Cannabis-Derived
Products Data Acceleration Plan, an FDA release made public this month (October 2021). There are a number of points throughout the six-page report that could have implications for investors.

Background

“Overall, the growth of the CDP market continues to outpace the growth in the science and our understanding of the public health implications of these products,” wrote the FDA in the release. It notes the size and complexity of the CDP market, along with CDP public health concerns, require a broad effort from many entities and stakeholders. The stakeholders mentioned by the FDA are federal, state, local, territorial, and tribal government entities, academia, and industry. The involvement is needed to “identify new ways of detecting safety signals and accelerating appropriate research studies, including but not limited to rigorous toxicology studies,” according to the FDA. To advance this work, it has developed a CDP Data Acceleration Plan (DAP). The FDA’s CDP DAP is a mix of new attempts to improve data-driven safety signal detection and use technology to uncover more quickly problems should they arise.

FDA Cannabis History

The FDA Administration has been collecting information on hemp products, emphasizing cannabidiol (CBD) since the passage of the 2018 Farm Bill, which legalized hemp, defined as cannabis plants with .3% THC or less. The use of CBD skyrocketed as it became legal, available, and better known by consumers. It’s been the FDA’s job to develop regulations for CBD products.  This would include, as a food additive, for cosmetic use, and even provisions for animals. Unregulated CBD products can already be found in stores and online throughout the U.S., the growth and uses have outpaced the FDA’s oversight.

Updated FDA Plan

The new plan lays out a series of pilot initiatives and partnerships with an emphasis on data and technology. These include novel methods for the FDA to achieve a better understanding of how “safety misinformation” plays into consumer behavior, and where educational needs could benefit consumers.  The FDA also wants to measure to what extent cannabis consumers are replacing prescribed medications with cannabis products, and the “role of human and animal healthcare providers” in “promoting or preventing [cannabis-derived product] consumption.” 

As far as partnerships, the FDA is “developing an inter-Agency scientific agenda for [cannabis-derived products] through a new National Toxicology Program pilot initiative.” 

As far as “Data Gaps” are concerned, the FDA highlighted it is “proactively conducting research in key areas to inform data gaps, including several toxicology, safety, and quality initiatives.” These areas include how CBD impacts male reproduction, and neurological development, how CBD plays in in vivo and vitro toxicity, how transdermal CBD products work, more work on potential risk of liver injury due to CBD use, “characterization of chemical constituents for smoked hemp flower and vaped cannabis products,” and whether labels accurately note ingredients.

The Administration reminded, “FDA continues to encourage industry and remind them of their responsibility to develop the needed data, aligned with FDA’s current data standards, to ensure products are safe.”

To say that the cannabis industry has been tapping its feet waiting for FDA rules on products containing CBD and other cannabinoids is an understatement. 

But in addition to lacking data, there is another complication: Epidiolex, a cannabis plant-derived CBD extract, which in 2018 

Take-Away

The cannabis industry, perhaps more than any other, needs to know where the guard rails will be, what rules will be put in place. This is important on the finance and investment front, the legal and banking side, and consumer protection regulation. When it comes to regulations, sooner is often better than later when strategies for businesses and products are ongoing, and there’s a lot on the line. Ramping up information gathering and informed rule-setting will be welcomed by the industry and its investors.

There remain many unknowns surrounding cannabis products. Combining technology, the broad user, and various data-gathering entities will help the FDA speed understanding and judgment on the use of the many products and uses that are expected to come from this plant family.

Suggested Reading:

Cannabis Vape Distribution Limited Under New Law

Marijuana Dispensaries and the Impact on Marijuana Use

Cannabis Fundamentals Not Hype Important to Investors

Cannabis Related Businesses (CRB) New Access to Banking Services

 

Sources:

https://www.fda.gov/media/153183/download

https://www.fda.gov/news-events/public-health-focus/fda-regulation-cannabis-and-cannabis-derived-products-including-cannabidiol-cbd

https://cannabiswire.com/2021/10/20/fda-launches-biggest-cannabis-data-collection-plan-yet/

https://www.regulations.gov/docket/FDA-2019-N-1482/document

 

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Esports Entertainment Group Submits Transactional Waiver to New Jersey Division of Gaming Enforcement

 

Newark, New Jersey–(Newsfile Corp. – October 28, 2021) – Esports Entertainment Group, Inc. (NASDAQ: GMBL) (NASDAQ: GMBLW) (or the “Company”) is pleased to announce that its transactional waiver for the New Jersey Division of Gaming Enforcement (or “DGE”) has been submitted. Once approved, it would allow the Company to begin betting operations in the Garden State.

“New Jersey sports betting reported the first $1 billion handle in September alone and it shows no signs of slowing down anytime soon,” said Grant Johnson, CEO of Esports Entertainment Group. “The transactional waiver is one of the final steps in us being able to go live and bring the exciting world of esports betting to the state of New Jersey.”

In preparation for the issuance of its New Jersey gaming license, the Company opened an office in Hoboken at the beginning of September. In the Company’s October earnings call, it was announced that Q4 revenue was up 63 percent from Q3 and there was a significant increase in stockholder equity to $74.8 million in FY2021.

About Esports Entertainment Group

Esports Entertainment Group is a full stack esports and online gambling company fueled by the growth of video-gaming and the ascendance of esports with new generations. Our mission is to help connect the world at large with the future of sports entertainment in unique and enriching ways that bring fans and gamers together. Esports Entertainment Group and its affiliates are well-poised to help fans and players to stay connected and involved with their favorite esports. From traditional sports partnerships with professional NFL/NHL/NBA/FIFA teams, community-focused tournaments in a wide range of esports, and boots-on-the-ground LAN cafes, EEG has influence over the full-spectrum of esports and gaming at all levels. The Company maintains offices in New Jersey, the UK and Malta. For more information visit www.esportsentertainmentgroup.com.

Forward-Looking Statements

The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act.

Contact:
U.S. Investor Relations
RedChip Companies, Inc.
Dave Gentry
407-491-4498
dave@redchip.com

Media Inquiries
brandon.apter@esportsentertainmentgroup.com

Investor Relations Inquiries
Jeff@esportsentertainmentgroup.com

Thursday, October 28, 2021

1-800-Flowers.com (FLWS)
Caught A Nice One

1-800-FLOWERS.COM, Inc. is the leading provider of gourmet and floral gifts for all occasions. For nearly 40 years, 1-800-FLOWERS® has been helping deliver smiles for customers with gifts for every occasion, including fresh flowers, premium, gift-quality fruits, and other gourmet items from Harry & David®, popcorn and specialty treats from The Popcorn Factory®; cookies and baked gifts from Cheryl’s®; premium chocolates and confections from Fannie May®; gift baskets and towers from 1-800-Baskets.com®; premium English muffins and other breakfast treats from Wolferman’s; carved fresh fruit arrangements from FruitBouquets.com; and top quality steaks and chops from Stock Yards®. The Company’s BloomNet® international floral wire service provides a broad range of quality products and value-added services designed to help professional florists grow their businesses profitably.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Attractive tuck-in acquisition. 1-800-Flowers announced that it has acquired Vital Choice, an organic seafood delivery company for $20 million in cash. The transaction will add over 400 food based products to its Gourmet Foods & Gift Baskets business segment and an attractive complement to Harry & David. We estimate that the transaction is less than 1 times revenues and 8 times EBITDA, an attractive price based on a business that has been growing revenues in the double digits and with healthy 10% margins.


A nice fit.  Vital Choice was founded in 2001 as a premium seafood delivery company and has partnered with dozens of fisheries to ensure it maintains its commitment to quality. It now also offers many other organic foods, such as meats, fruits, and soups, to name a few. The company will be keeping its current management team to head the operations. The company is self consumption based with a …

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

Schwazze CEO Justin Dye and CFO Nancy Huber make a formal corporate presentation. Afterwards they are joined by Noble Capital Markets Senior Research Analyst Joe Gomes for a Q & A session. Research, News, and Advanced Market Data on SHWZ Information on upcoming live virtual roadshows Schwazze (OTCQX: SHWZ) is building the premier vertically integrated cannabis company in Colorado and plans to take its operating system to other states where it can develop a differentiated leadership position. Schwazze is the parent company of a portfolio of leading cannabis businesses and brands spanning seed to sale. The Company is committed to unlocking the full potential of the cannabis plant to improve the human condition. Schwazze is anchored by a high-performance culture that combines customer-centric thinking and data science to test, measure, and drive decisions and outcomes. The Company’s leadership team has deep expertise in retailing, wholesaling, and building consumer brands at Fortune 500 companies as well as in the cannabis sector. Schwazze is passionate about making a difference in our communities, promoting diversity and inclusion, and doing our part to incorporate climate-conscious best practices. Medicine Man Technologies, Inc. was Schwazze’s former operating trade name. The corporate entity continues to be named Medicine Man Technologies, Inc. Schwazze derives its name from the pruning technique of a cannabis plant to enhance plant structure and promote healthy growth.

Thursday, October 28, 2021

ACCO Brands (ACCO)
Post Call Commentary; Favorable Risk/Reward

ACCO Brands Corporation designs, manufactures, sources, markets, and sells office products, academic supplies, and calendar products primarily in the United States, Canada, Northern Europe, Brazil, Australia, and Mexico. It operates through three segments: ACCO Brands North America, ACCO Brands EMEA, and ACCO Brands International. The company offers office products, such as stapling, binding and laminating equipment, and related consumable supplies, as well as shredders and whiteboards; and academic products, including notebooks, folders, decorative calendars, and stationery products. It also provides private label products, as well as business machine maintenance and repair services. The company offers its business, academic, and calendar product lines under the Artline, AT-A-GLANCE, Derwent, Esselte, Five Star, GBC, Hilroy, Leitz, Marbig, Mead, NOBO, Quartet, Rapid, Rexel, Swingline, Tilibra, Wilson Jones, and other brand names. In addition, it designs, sources, distributes, markets, and sells accessories for laptop and desktop computers, and tablets comprising security products; input devices, such as presenters, mice, and trackballs; ergonomic aids, including foot and wrist rests; docking stations; and other personal computers and tablet accessories under the Kensington, Microsaver, and ClickSafe brand names. The company sells its products to consumers and commercial end-users primarily through resellers, including traditional office supply resellers, wholesalers, mass merchandisers, and retailers, as well as directly to consumers through on-line and direct mail. ACCO Brands Corporation is headquartered in Lake Zurich, Illinois.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Operating Environment Trending Positive. As we mentioned last quarter, the overall operating environment continues to trend in a positive manner, although there remain some potential hiccups. The commercial business continues to improve with the return to the office of workers, worldwide economies are improving, and school instruction continues to return to in-classroom instruction. Commodity inflation and logistics remain the biggest concerns.


PowerA Continues to Impress.  PowerA contributed $57 million of revenue in 3Q, up from $51 million in 2Q. Notably, the higher PowerA sales were in spite of constrained availability of gaming consoles, sales of which drive PowerA sales. Although management lowered full year expectation for PowerA growth to 20% from 25% due to the lack of gaming consoles, this remains above the 15% originally …

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

1-800-FLOWERS.COM, Inc. Reports 9.0 Percent Revenue Growth for Its Fiscal 2022 First Quarter

 

• Total net revenues increased 9.0 percent to $309.4 million, compared with $283.8 million in the prior year period. This revenue growth was on top of the 51.5 percent revenue growth reported in the Company’s year-ago first quarter.

• Net loss for the quarter was $13.2 million, or ($0.20) per share. Adjusted net loss¹ was $12.9 million, or ($0.20) per share, compared with a net loss of $9.8 million, or ($0.15) per share, and adjusted net loss of $6.5 million, or ($0.10) per share, in the prior year period.

• Adjusted EBITDA¹ loss for the quarter was $5.3 million, compared with adjusted EBITDA of $3.2 million in the prior year period.

• Company reaffirms its full-year guidance including revenue growth of 10.0 percent-to-12.0 percent and adjusted EBITDA growth of 5.0 percent-to-8.0 percent.

(¹ Refer to “Definitions of Non-GAAP Financial Measures” and the tables attached at the end of this press release for reconciliation of non-GAAP results to applicable GAAP results.)  

JERICHO, N.Y.–(BUSINESS WIRE)– 1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS), a leading e-commerce provider of products and services designed to inspire more human expression, connection, and celebration, today reported results for its fiscal 2022 first quarter ended September 26, 2021.

Chris McCann, CEO of 1-800-FLOWERS.COM, Inc., said “We are very pleased to report strong revenue growth for what was one of our most challenging year-over-year comparisons. Importantly, our 9.0 percent revenue growth for the quarter was on top of the 51.5 percent revenue growth we reported in the first quarter last year. This illustrates the strong growth momentum that we have been building over the past several years. As we had anticipated, the first quarter this year started out somewhat slowly with demand gradually ramping up resulting in double-digit revenue growth for the month of September.”

McCann said that increased recognition and relevance for its family of brands for everyday gifting and connective occasions, as well as its expanded product offering, including PersonalizationMall.com, were

primary drivers of the strong revenue growth. “We also continued to see strong growth in our Celebrations Passport loyalty program, which helps drive increased purchase frequency, retention, and life-time value along with solid growth in customers buying from multiple product categories and multiple brands.”

McCann noted that, “the combination of these positive trends positions us well to deliver on our guidance for double-digit revenue growth in fiscal 2022 on top of the tremendous growth we achieved last year. As we head into our fiscal second quarter, which includes the important year-end holiday season, we are cognizant of several significant headwinds affecting the marketplace, including limited availability and increased costs for labor, increased digital marketing costs, and wide-spread delays and rising costs for shipping.

“We have implemented a number of initiatives designed to help mitigate the impact of these issues and take advantage of the strong ecommerce demand we anticipate during the key holiday season. These initiatives include strategic pricing programs across our brands, as well as the significant investments we have made in our operating platform, including pre-building inventory, which leverages our expanded cold-storage facilities, and deploying automation in our warehouse and distribution facilities to increase throughput and reduce reliance on seasonal labor. As a result, we are well positioned to help our customers connect and express themselves with the important people in their lives for both everyday occasions and the key holiday season and drive solid top and bottom-line performance.”

First Quarter 2022 Financial Results

Total consolidated revenues increased 9.0 percent to 
$309.4 million, compared with total consolidated revenues of 
$283.8 million in the prior year period, reflecting strong ecommerce growth of 10.3 percent including contributions from PersonalizationMall, which the Company acquired on August 3, 2020. Excluding the non-comparable five weeks of contribution from PersonalizationMall in the quarter, total net revenues increased 4.3 percent, compared with the prior year period.

Gross profit margin for the quarter was 40.6 percent, a decline of 10 basis points compared with 40.7 percent in the prior year period. Operating expenses as a percent of total revenues, increased 170 basis points to 47.1 percent of total sales, compared with 45.4 percent of total sales in the prior year period primarily reflecting higher, year-over-year digital marketing rates.

The combination of these factors resulted in an adjusted EBITDA loss of 
$5.3 million, compared with adjusted EBITDA of 
$3.2 million in the prior year period. Net loss for the quarter was 
$13.2 million, or (
$0.20) per share. Adjusted net loss was 
$12.9 million, or (
$0.20) per share, compared with a net loss of 
$9.8 million, or (
$0.15) per share, and adjusted net loss of 
$6.5 million, or (
$0.10) per share, in the prior year period.

Segment Results:

The Company provides selected financial results for its Gourmet Foods and Gift Baskets, Consumer Floral and Gifts, and BloomNet segments in the tables attached to this release and as follows:

• Gourmet Foods and Gift Baskets: Revenues for the quarter increased 8.4 percent to 
  $97.5 million, compared with 
  $89.9 million in the prior year period. The strong growth was primarily driven by increased demand for the Company’s gourmet food gift brands for everyday occasions. Gross profit margin was 35.0 percent, a decline of 390 basis points compared with 38.9 percent in the prior year period, primarily reflecting increased costs for labor and transportation. Segment contribution margin was a loss of 
  $7.7 million, compared with a loss of 
  $2.6 million, and an adjusted loss of 
  $3.0 million, in the prior year period, reflecting higher year-over-year marketing costs as well as the reduced gross margin.

• Consumer Floral and Gifts: Total revenues in this segment increased 12.2 percent to 
  $181.2 million, compared with 
  $161.5 million in the prior year period. Excluding the non-comparable five weeks of contribution from PersonalizationMall in the quarter, total revenues in this segment increased 3.9 percent. Gross profit margin increased 130 basis points to 41.9 percent, compared with 40.6 percent in the prior year period, primarily reflecting contributions from PersonalizationMall. Segment contribution margin was 
  $19.2 million, essentially unchanged compared with the prior year period, primarily reflecting increased digital marketing costs offset by contributions from PersonalizationMall.

• BloomNet: Revenues for the quarter were 
  $30.8 million, a decline of 5.8 percent, compared with 
  $32.7 million in the prior year period, primarily reflecting delays in hard goods shipments as well as reduced order volume from third-party online floral companies. Gross profit margin increased 470 basis points to 50.0 percent, compared with 45.3 percent in the prior year period, primarily reflecting product mix. Segment contribution margin increased 4.2 percent to 
  $10.9 million, compared with 
  $10.4 million in the prior year period.

Company Guidance

The Company is reaffirming its guidance for its fiscal 2022 year, which includes:

• Total revenue growth of 10.0 percent-to-12.0 percent compared with the prior year;
• Adjusted EBITDA growth of 5.0 percent-to-8.0 percent compared with the prior year;
• EPS in line with fiscal 2021 as improved EBITDA is offset by higher depreciation and a higher effective tax rate; and
• Free Cash Flow to exceed 
  $100 million.

The Company’s guidance for the year is based on several factors, including:

• The significant increase in consumers shopping online where the Company’s broad product offering and brand portfolio makes it a leading destination for customers looking for solutions to help them connect, express themselves and celebrate – sentiments that have become more important than ever;
• Significant expansion of the Company’s product offering, both organically and through strategic acquisitions like Shari’s Berries and PersonalizationMall;
• The expanded size of the Company’s customer file along with continued positive customer behavior trends; and
• Continued strong growth in the Company’s Celebrations Passport® loyalty program, which is helping drive increased frequency, retention, and cross-category/cross-brand purchases.

Definitions of non-GAAP Financial Measures:

We sometimes use financial measures derived from consolidated financial information, but not presented in our financial statements prepared in accordance with 
U.S. generally accepted accounting principles

(“GAAP”). Certain of these are considered “non-GAAP financial measures” under the 
U.S. Securities and

Exchange Commission rules. Non-GAAP financial measures referred to in this document are either labeled as “non-GAAP” or designated as such with a “1”. See below for definitions and the reasons why we use these non-GAAP financial measures. Where applicable, see the Selected Financial Information below for reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures.

EBITDA and Adjusted EBITDA:

We define EBITDA as net income (loss) before interest, taxes, depreciation, and amortization. Adjusted EBITDA is defined as EBITDA adjusted for the impact of stock-based compensation, Non-Qualified Plan Investment appreciation/depreciation, and for certain items affecting period-to-period comparability. See

Selected Financial Information for details on how EBITDA and adjusted EBITDA were calculated for

each period presented. The Company presents EBITDA and adjusted EBITDA because it considers such information meaningful supplemental measures of its performance and believes such information is

frequently used by the investment community in the evaluation of similarly situated companies. The Company uses EBITDA and adjusted EBITDA as factors to determine the total amount of incentive compensation available to be awarded to executive officers and other employees. The Company’s credit agreement uses EBITDA and adjusted EBITDA to determine its interest rate and to measure compliance with certain covenants. EBITDA and adjusted EBITDA are also used by the Company to evaluate and price potential acquisition candidates. EBITDA and adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Some of the limitations are: (a) EBITDA and adjusted EBITDA do not reflect changes in, or cash requirements for, the Company’s working capital needs; (b) EBITDA and adjusted

EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company’s debts; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and EBITDA does not reflect any cash requirements for such capital expenditures. EBITDA and adjusted EBITDA should only be used on a supplemental basis combined with GAAP results when evaluating the Company’s performance.

Segment Contribution Margin and Adjusted Segment Contribution Margin:

We define segment contribution margin as earnings before interest, taxes, depreciation, and amortization, before the allocation of corporate overhead expenses. Adjusted contribution margin is defined as contribution margin adjusted for certain items affecting period-to-period comparability. See Selected Financial Information for details on how segment contribution margin and adjusted segment

contribution margin were calculated for each period presented. When viewed together with our GAAP

results, we believe segment contribution margin and adjusted segment contribution margin provide

management and users of the financial statements meaningful information about the performance of our business segments. Segment contribution margin and adjusted segment contribution margin are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. The material limitation associated with the use of the segment contribution margin and adjusted segment contribution margin is that they are an incomplete measure of profitability as they do not include all operating expenses or non-operating income and expenses. Management compensates for these limitations when using this measure by looking at other GAAP measures, such as operating income and net income.

Adjusted Net Income (Loss) and Adjusted or Comparable Net Income (Loss) Per Common Share:

We define adjusted net income (loss) and adjusted or comparable net income (loss) per common share as net income (loss) and net income (loss) per common share adjusted for certain items affecting period to period comparability. See Selected Financial Information below for details on how adjusted net income (loss) and adjusted or comparable net income (loss) per common share were calculated for each period presented. We believe that adjusted net income (loss) and adjusted or comparable EPS are meaningful measures because they increase the comparability of period-to-period results. Since these are not measures of performance calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, GAAP net income (loss) and net income (loss) per common share, as indicators of operating performance and they may not be comparable to similarly titled measures employed by other companies.

Free Cash Flow:

We define free cash flow as net cash provided by operating activities less capital expenditures. The Company considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of fixed assets, which can then be used to, among other things, invest in the Company’s business, make strategic acquisitions, strengthen the balance sheet, and repurchase stock or retire debt. Free cash flow is a liquidity measure that is frequently used by the investment community in the evaluation of similarly situated companies. Since free cash flow is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in the company’s cash balance for the period.

About 1-800-FLOWERS.COM, Inc.

About 1-800-FLOWERS.COM, Inc. 1-800-FLOWERS.COM, Inc. is a leading provider of gifts designed to help customers express, connect and celebrate. The Company’s e-commerce business platform features an all-star family of brands, including: 1-800-Flowers.com®, 1-800-Baskets.com®, Cheryl’s Cookies®, Harry & David®, PersonalizationMall.com®, Shari’s Berries®, FruitBouquets.com®, Moose Munch®, The Popcorn Factory®, Wolferman’s Bakery®, Vital Choice®, Stock Yards® and Simply Chocolate®. Through the Celebrations Passport® loyalty program, which provides members with free standard shipping and no service charge across our portfolio of brands, 1-800-FLOWERS.COM, Inc. strives to deepen relationships with customers. The Company also operates BloomNet®, an international floral and gift industry service provider offering a broad-range of products and services designed to help members grow their businesses profitably; Napco?, a resource for floral gifts and seasonal décor; and DesignPac Gifts, LLC, a manufacturer of gift baskets and towers. 1-800-FLOWERS.COM, Inc. was recognized among the top 5 on the National Retail Federation’s 2021 Hot 25 Retailers list, which ranks the nation’s fastest-growing retail companies. Shares in 1-800-FLOWERS.COM, Inc. are traded on the NASDAQ Global Select Market, ticker symbol: FLWS. For more information, visit 1800flowersinc.com or follow @1800FLOWERSInc on Twitter. [FLWS-COMP / FLWS-FN / FLWS-VC]

Special Note Regarding Forward Looking Statements:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company’s current expectations or beliefs concerning future events and can generally be identified using statements that include words such as “estimate,” “expects,” “project,” “believe,” “anticipate,” “intend,” “plan,”

“foresee,” “forecast,” “likely,” “will,” “target” or similar words or phrases. These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from the results expressed or

implied in the forward-looking statements, including, but not limited to, statements regarding the Company’s ability to achieve its guidance for the fiscal-year 2022 second quarter; the impact of the Covid-19 pandemic on the Company; its ability to successfully integrate acquired businesses and assets; its ability to successfully execute its strategic initiatives; its ability to cost-effectively acquire and retain customers; the outcome of contingencies, including legal proceedings in the normal course of business; its ability to compete against existing and new competitors; its ability to manage expenses associated with sales and marketing and necessary general and administrative and technology investments; its ability to reduce promotional activities and achieve more efficient marketing programs; and general consumer sentiment and industry and economic conditions that may affect levels of discretionary customer purchases of the Company’s products. Reconciliations for forward looking figures would require unreasonable efforts at this time because of the uncertainty and variability of the nature and amount of certain components of various necessary GAAP components, including for example those related to compensation, tax items, amortization or others that may arise during the year, and the Company’s management believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. The lack of such reconciling information should be considered when assessing the impact of such disclosures. The Company undertakes no obligation to publicly update any of the forward-looking statements, whether because of new information, future events or otherwise, made in this release or in any of its SEC filings. Consequently, you should not consider any such list to be a complete set of all potential risks and uncertainties. For a more detailed description of these and other risk factors, refer to the Company’s SEC filings, including the Company’s Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q.

Conference Call:

The Company will conduct a conference call to discuss the above details and attached financial results today, Thursday, October 28, 2021, at 8:00 a.m. (ET). The conference call will be webcast live from the Investor Relations section of the Company’s website at www.1800flowersinc.com. A recording of the call will be posted on the Investor Relations section of the Company’s web site within two hours of the call’s completion. A replay of the call can be accessed beginning at 2:00 p.m. ET on the day of the call through November 4, 2021, at: (US) 1-877-344-7529; (
Canada) 855-669-9658; (International) 1-412-317-0088; enter conference ID #: 10148432.

Note: The attached tables are an integral part of this press release without which the information presented in this press release should be considered incomplete.

(a) Segment performance is measured based on segment contribution margin or segment Adjusted EBITDA, reflecting only the direct controllable revenue and operating expenses of the segments, both of which are non-GAAP measurements. As such, management’s measure of profitability for these segments does not include the effect of corporate overhead, described above, depreciation and amortization, other income (net), and other items that we do not consider indicative of our core operating performance.
(b) Corporate expenses consist of the Company’s enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive and Customer Service Center functions, as well as Stock-Based Compensation. In order to leverage the Company’s infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. The costs of these functions, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, are included within corporate expenses as they are not directly allocable to a specific segment.

Investor Contact:

Joseph D. Pititto

(516) 237-6131

invest@1800flowers.com 

Media Contact:

Kathleen Waugh

(516) 237-6028

kwaugh@1800flowers.com      

Source: 1-800-FLOWERS.COM, Inc.