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Original Source: FD (FAIR DISCLOSURE) WIRE
. Darin White, Celebrate Express, Inc., VP, Finance & Secretary . Mike Jewell, Celebrate Express, Inc., CEO, President & Chairman of the Board . Lori Liddle, Celebrate Express, Inc., Chief Marketing & Merchandising Officer
The Co. reported 3Q05 net income of $521,000 or $0.07 per diluted share and net sales of $16.3m. For 4Q05, the Co. expects net sales to be between $18.2-19.2m and net income to be between $0.12-0.14 per diluted share. For FY05, the Co. expects net sales to be between $67.8-68.8m and net income to be between $0.35-0.37 per diluted share. Q&A Focus: Build-a-Bear, avg. order value, and guidance.
A. Key Data From Call 1. 3Q05 net sales = $16.3m. 2. 3Q05 net income = $521,000 or $0.07 per diluted share. 3. 3Q05 GM = $8.4m. 4. As of 02/28/05, cash and marketable securities = $31m. 5. 4Q05 net sales guidance = $18.2-19.2m. 6. 4Q05 net income guidance = $0.12-0.14 per diluted share. 7. FY05 net sales guidance = $67.8-68.8m. 8. FY05 net income guidance = $0.35-0.37 per diluted share.
S1. Financial Overview (M.J.) 1. Overview of Business Model: 1. BDAY is a leading online catalog provider of celebration products serving families with young children. 2. The Co. currently markets three brands: 1. Birthday Express. 2. Storybook.
3. Costume Express. 3. Each of the Co.'s brands offers customers a wide selection of both proprietary and third-party products.
1. These third-party products are important as they provide customers with unique selection and a higher GM to the Co. 4. Since the Co.'s infrastructure is in place, and it is less than 50% of capacity, its business model requires minimal capital investment for future growth. 5. The Co.'s business has historically had a non-seasonal revenue stream. 1. Therefore, BDAY does not rely on any one week, month, or qtr. to make its year. 6. The growing customer file provides the Co. a competitive advantage and a continuing source of reoccurring revenue. 2. 3Q05 Performance:
1. The Co. achieved net sales of $16.3m for 3Q05, up from $12.6m
in 3Q04, a YoverY revenue increase of 29%. 2. 3Q05 pretax profit increased to $828,000 vs. $298,000 for 3Q04, a 177% increase.
3. The Co. also increased its net avg. order value in 3Q05 and
its GM from 3Q04. 4. BDAY's fulfillment cost decreased as a percent of sales from 3Q04 as customers migrate to the Web and the Co. continues to grow intra-infrastructure. 5. During 3Q05, the Co. also invested in marketing to drive its topline sales and customer acquisition. 6. Long term, the Co. anticipates its marketing cost to be between 23-25% of net sales. 7. As communicated in the initial public offering in 2004, the Co.'s long-term revenue growth target is in the mid-to-low 20%
level. 3. Jack Sansolo: 1. The Co. wants to publicly thank one of its directors, Jack Sansolo, for his contribution over the past three years. 2. Jack has recently taken the Chief Marketing Officer position, Getty Images, and will be coming off the Board effective 03/31/05.
S2. Detailed Financial Review (D.W.) 1. Highlights: 1. Results for 3Q05 showed consistent growth in net sales and net profits.
2. 3Q05 net sales were $16.3m, an increase of 29% vs. 3Q04 net
sales of $12.6m. 3. 3Q05 growth was driven by the Co.'s core brands Birthday Express, and Storybook Heirlooms, which together represented over 98% of net sales during 3Q05 with the remainder coming from the Costume Express brand. 4. The Costume Express brand derived nearly all of its revenue from 1Q and 2Q each year. 5. The Co. shipped 194,000 orders during 3Q05, and net sales per order for BDAY was $84.26. 1. This was an increase of 6.4% in the Co.'s net sales per order vs. 3Q04 and was driven by increases in each of its brands. 2. Gross Margin: 1. 3Q05 GM was $8.4m vs. $6.2m in 3Q04, an increase of 36.2%. 1. For 3Q05, GM improved 51.6% of net sales, up from 48.9% in 3Q04. 2. The increase in GM is due to: 1. Increase in the percentage of the Co.'s revenue coming from higher margin performance in its proprietary party themes. 2. The new proprietary product introductions within the existing brands. 3. These products continue to help the Co. increase its overall GM. 3. The Co. expects GM to fluctuate from QtoQ based upon variations in revenue levels as well as the revenue mix among its three brands.
4. BDAY continues to see YoverY GM improvements. 3. Fulfillment Cost: 1. Increased $336,000 or 20.4% during 3Q05 …