Q4 2017 Earnings Conference Call - Christopher North, President and CEO Mike Pope, CFO Michael Meek, Lifetouch CEO
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Q4 2017 Earnings Conference Call January 30, 2018 Christopher North, President and CEO Mike Pope, CFO Michael Meek, Lifetouch CEO
Safe Harbor Disclaimer
This presentation contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. These forward-looking statements include statements regarding our
positioning for future growth, our expectations around the benefits of the Lifetouch acquisition; our first quarter and full year 2018 guidance, and statements
about historical results that may suggest trends for our business. You can identify these statements by the use of terminology such as “guidance”, “believe”,
“expect”, “will”, “should,” “could”, “estimate”, “anticipate” or similar forward-looking terms. You should not rely on these forward-looking statements as they
involve risks and uncertainties that may cause actual results to vary materially from the forward-looking statements. Factors that might contribute to such
differences include, among others, decreased consumer discretionary spending as a result of general economic conditions; our ability to expand our customer
base and increase sales to existing customers; our ability to meet production requirements; our ability to retain and hire necessary employees, including seasonal
personnel, and appropriately staff our operations; the impact of seasonality on our business; our ability to develop innovative, new products and services on a
timely and cost-effective basis; failure to realize the anticipated benefits of our 2017 restructuring activities; consumer acceptance of our products and services;
our ability to develop additional adjacent lines of business; unforeseen changes in expense levels; competition and the pricing strategies of our competitors,
which could lead to pricing pressure; the possibility that the closing conditions to the proposed Lifetouch acquisition may not be satisfied or waived, including
that a governmental entity may prohibit, delay or refuse to grant a regulatory approval; delay in closing the Lifetouch acquisition or the possibility of non-
consummation of the transaction; the risk of stockholder litigation in connection with contemplated Lifetouch Acquisition; the retention of Lifetouch employees
and our ability to successfully integrate the Lifetouch businesses; risks inherent in the achievement of anticipated synergies and the timing thereof; and general
economic conditions and changes in laws and regulations. For more information regarding the risks and uncertainties that could cause actual results to differ
materially from those expressed or implied in these forward-looking statements, as well as risks relating to our business in general, we refer you to the “Risk
Factors” section of our SEC filings, including our most recent Form 10-K and 10-Q, which are available on the Securities and Exchange Commission’s Web site at
www.sec.gov. These forward-looking statements are based on current expectations and the company assumes no obligation to update this information.
This presentation includes non-GAAP financial measures, including Adjusted EBITDA, non-GAAP profits/margins, non-GAAP net loss, and non-GAAP net loss per
share. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization and stock-based compensation. We define Adjusted EBITDA
minus Capital Expenditures as Adjusted EBITDA less purchases of property, plant and equipment and capitalization of software and website development costs.
The method we use to produce non-GAAP financial measures is not computed according to GAAP and may differ from the methods used by other companies. To
supplement our consolidated financial statements presented on a GAAP basis, we believe that these non-GAAP measures provide useful information about our
core operating results and thus are appropriate to enhance the overall understanding of our past financial performance and our prospects for the future. These
adjustments to our GAAP results are made with the intent of providing both management and investors a more complete understanding of our underlying
operational results and trends and performance. Management uses these non-GAAP measures to evaluate our financial results, develop budgets, manage
expenditures, and determine employee compensation. The presentation of additional information is not meant to be considered in isolation or as a substitute
for, or superior to, gross profit, net income (loss) or net income (loss) per share determined in accordance with GAAP. Management strongly encourages review
of our financial statements and publicly-filed reports in their entirety and to not rely on any single financial measure.
2
Q4’17 Earnings Call Agenda
• Q4’17 business review • Q4’17 and FY17 financials • Michael Meek,
• Lifetouch acquisition • FY18 and Q1’18 outlook and Lifetouch CEO
Lifetouch financial highlights
3
Q4 2017 Financial Summary
($ in Millions)
Total Revenues Adj. EBITDA1
$593.8
$561.2
$194.8 $215.6
Q4'16 Q4'17 Q4'16 Q4'17
Met or exceeded guidance on all major metrics.
1Adjusted
EBITDA is a Non-GAAP measure defined as earnings before interest, taxes, depreciation, amortization and stock-based
compensation.
4
4
Strong Q4 Execution
• Platform migration exceeded
expectations
• Retained majority of revenue and
customers from the migrating
brands
• Premium features in Tiny Prints
Boutique resonated with
customers
• Cross-purchase of products
Successful platform consolidation significant contributor to Q4 success.
5
5
Broad-based Holiday Success
• New Cards formats and features
resonated with customers
• Double-digit growth in Personalized
Gifts and Home Decor
• Mobile revenue 21% of Shutterfly brand
revenue; increase of 465 basis
points over Q4’16
• Cards & Stationery and Personalized Gifts
and Home Décor over 60% of App
revenue
Strong performance in Cards & Stationery, Personalized Gifts and Home Décor, and mobile.
6
6
Manufacturing and Technology Investments Paying Off
• Benefits from platform consolidation,
process improvements, and equipment
upgrades
• Significant year-over-year improvement
in speed and availability of sites,
apps and upload
• Manufacturing quality, delivery
speed, accuracy, and customer service
Strong execution in technology and manufacturing.
7
7
Solid Shutterfly Brand Growth
Shutterfly platform and Shutterfly brand growth in Q4’17. See Appendix for additional details.
8
8Strong Growth Year for SBS
• SBS revenue of $71.9M in Q4’17
• Growth driven by major multi-
year deal signed in Q3
• Onboarded programs and ramped
volumes quicker than expected
• Early phases of this deal are low margin
with clear opportunities to
improve in 2018
Full Year SBS growth of 41% as volumes ramped sooner than expected.
9
92018 Plans
Make
Purchasing Offer a
Personalized Broader Range
Products of Products
Simple
Leverage Our
Pivot to
Manufacturing
Mobile
Platform
Continue to focus on our four strategic growth initiatives.
10
10Q4 FY17 Financial Results Review
Mike Pope, CFO
11Q4 Revenue
($ in Millions)
$593.8
$561.2
Q4'16 Q4'17
Q4’17 net revenues of $593.8 million.
12Q4 Revenue by Segment
($ in Millions)
Total Consumer SBS
$593.8
$561.2
$521.5 $521.8
$71.9
$39.7
Q4'16 Q4'17 Q4'16 Q4'17 Q4'16 Q4'17
Consumer revenue flat; Shutterfly brand growth
offset by anticipated declines from shuttered websites.
13Q4 Consumer Metrics
Active Customers (000’s) Orders (000’s) Average Order Value 1
10,869 10,464
$47.98 $49.87
6,219 6,111
Q4'16 Q4'17 Q4'16 Q4'17 Q4'16 Q4'17
As expected, platform consolidation impacted our customers and orders volume this quarter,
AOV increased primarily due to stronger performance in premium and more selective discounts.
1Average order value excludes SBS revenues.
14Q4 Gross Profit by Segment
($ in Millions)
Total Consumer SBS
$331.2 $339.5 $322.5 $328.5
$11.1 $13.1
Q4'16 Q4'17 Q4'16 Q4'17 Q4'16 Q4'17
GM%
59.0% 57.2% 61.8% 63.0% 27.9% 18.3%
Q4’17 overall gross margin of 57.2%.
15Q4 Total Operating Expenses
($ in Millions)
$177.4
$11.3 $160.5
$12.7 $9.8
$153.4 $10.0
$140.7
Q4'16 Q4'17
Cash Opex Depreciation & Amortization Stock Based Comp
% Revenue 31.6% 27.0%
Total operating expenses decreased 10%
due to strong expense control and platform consolidation.
16Q4 Operating Expenses by Category
($ in Millions)
Technology & Development Sales & Marketing General & Administrative
$98.3
$78.5
$44.0 $43.4 $38.6
$35.0
Q4'16 Q4'17 Q4'16 Q4'17 Q4'16 Q4'17
%
7.8% 7.3% 17.5% 13.2% 6.2% 6.5%
Revenue
Sales & Marketing decreased over prior year, largely driven by more efficient external marketing
spend due to the platform consolidation.
17Q4 Profitability
($ in Millions)
Gross Profit Operating Income Adjusted EBITDA1
$331.2 $339.5
$215.6
$194.8
$179.0
$153.8
1
Q4'16 Q4'17 Q4'16 Q4'17
Q4'16 Q4'17
%
Revenue
59.0% 57.2% 27.4% 30.2% 34.7% 36.3%
Q4’17 Adjusted EBITDA was $215.6 million.
1Adjusted
EBITDA is a Non-GAAP measure defined as earnings before interest, taxes, depreciation, amortization and stock-based
compensation.
18Q4 Profitability
($ in millions except per share amounts) Q4 FY17 Q4 FY171 Q4 FY16 Change1
(Y/Y)
Net Revenue $593.8 $593.8 $561.2 6%
Gross Profit $339.5 $339.5 $331.2 3%
Gross Margin 57.2% 57.2% 59.0%
Operating Income $179.0 $179.0 $153.8 16%
Operating Margin 30.2% 30.2% 27.4%
Adjusted EBITDA2 $215.6 $215.6 $194.8 11%
Adjusted EBITDA Margin 36.3% 36.3% 34.7%
Income before Taxes $170.6 $170.6 $148.0 15%
Provision for Income Taxes ($58.9) ($67.7) ($57.0) 19%
Tax Rate 34.5% 39.7% 38.5%
Net Income $111.7 $102.8 $91.0 13%
Diluted Shares (in millions) 33.1 33.1 34.6 (4%)
Net Income per Share (Diluted)
1Normalized
$3.37 $3.11 $2.63 18%
for tax benefit of $8.9 million related to one-time revaluation of net deferred tax liability as a result of tax law changes.
2Adjusted EBITDA is a Non-GAAP measure defined as earnings before interest, taxes, depreciation, amortization and stock-based compensation.
19Annual Capital Expenditures
($ in Millions)
$100 0
$90.2
0
$81.4
CapEx $M $80 $75.0 $75.5
$73.0 0
0
$60
0
0
$40
0
0
(% of Rev) $20
9.6% 9.8% 7.7%
6.7% 0
6.1%
$0 -
1
2013 2014 2015 2016 2017
Q4’17 capital expenditures were $20.0 million.
1Excludes $9.8 million of printers that the Company acquired in 2016 and immediately sold.
20Shares Outstanding Trend
(in Millions)
37.9
34.8
4.9 33.6 32.3
1.8 2.5 1.3 2.3 1.0
FY14 FY15 FY16 FY17
Shares Repurchased Shares Exercised/Vested
In Q4’17, we repurchased a total of 660 thousand shares for $30.0 million, bringing our
year-to-date repurchases to 2.3 million shares or $110.0 million.
212017 Financial Summary
($ in Millions)
Total Revenues Adj. EBITDA1
$1,190.2
$1,134.2
$208.5 $215.8 $234.1
2
FY16 FY17 FY16 FY17 FY17 (adj.)
2017 revenue of $1.19 billion, and Adjusted EBITDA of $234.1 million.
1AdjustedEBITDA is a Non-GAAP measure defined as earnings before interest, taxes, depreciation, amortization and stock-based compensation.
2Normalizedfor restructuring charges of $17.0 million and capital lease termination charges of $8.1 million in 2017, of which $18.3 million
impacted Adjusted EBITDA. 22
222017 Financial Summary
(In Millions except EPS)
Adjusted EBITDA minus
EPS (Diluted) Operating Income Capital Expenditures
$161.1
$1.05 $142.8
$132.9
$0.88
$86.7
$0.45 $61.6
$49.1
FY16 FY17 FY17 (adj.) 1 FY16 FY17 FY17 (adj.) 1 FY16 2 FY17 FY17 (adj.)
1
Improvement to quality of earnings with Operating Income increasing 76% over 2016, and
EPS improving $0.60 to $1.05 per share.
1Normalized for restructuring charges of $17.0 million, capital lease termination charges of $8.1 million, and one-time benefit from tax reform of
$8.9 million in 2017; $0.17 impacted earnings per share, $25.1 million impacted operating income, and $18.3 million impacted Adjusted EBITDA
2Excludes $9.8 million of printers that the Company acquired in 2016 and immediately sold. 23
23Free Cash Flow1
($ in Millions)
$240
$194 $71
$166 $165
$147 2
$80
$92 $77
$78
$169
$114
$88
$69 $74
2013 2014 2015 2016 2017
Free Cash Flow Cash flow from Operations Capital Expenditures
FY17 Free Cash Flow grew 49% over the prior year.
1Free cash flow is a non-GAAP financial measure that the Company defines as net cash provided by operating activities less capital expenditures.
2Excludes $9.8 million of printers that the Company acquired in 2016 and immediately sold. 242017 Consumer Metrics
Active Customers (000’s) Orders (000’s) Average Order Value 1
27,109 26,328
10,116 10,048 $36.80 $37.87
FY16 FY17 FY16 FY17 FY16 FY17
Customers remained relatively flat over prior year despite shuttering of three websites,
and significantly reducing marketing spend.
1Average order value excludes SBS revenues.
252017 Revenue by Segment
($ in Millions)
Total Consumer SBS
$1,134.2 $1,190.2
$997.6 $997.0
$193.2
$136.7
FY16 FY17 FY16 FY17 FY16 FY17
Consumer revenues remained flat, while SBS revenue grew 41% over 2016.
26Lifetouch Acquisition
Christopher North, CEO
27Compelling Strategic and Financial Rationale
Combine shared mission and cultures focused on sharing life’s joy through photos
Uniquely complementary asset (customers, revenue diversity, seasonality,
manufacturing)
Significant cost synergies, leveraging shared manufacturing platform, increasing scale,
utilization, and driving cost savings
Significant near and longer-term cross-sell opportunities
Ongoing source of customer acquisition, corresponding to Shutterfly’s target customer
profile
Improved financial profile with increased revenue, adjusted EBITDA and FCF scale
28
28Lifetouch is the Undisputed Leader of
Cherished School Picture Day Tradition
Lifetouch Overview and History
• Lifetouch has provided cherished, iconic school photographs
to families since 1936
• Large and stable consumer expenditure; 123 thousand
schools and 53 million students (1)
Lifetouch Revenue Breakdown
• Undisputed leader in School photography
Other (4)
• Only national brand; more than 10x next largest regional
player
26%
• Prior to acquisition by Shutterfly, Lifetouch was 100%
employee owned ESOP with large use of cash for ESOP
repurchase obligations (2)
74% School
• New management team in place since 2017 is leading Photography
transition to position Lifetouch for long-term success
• Large employee base; 8,000 year-round, full and part-time
employees, and up to 10,000 seasonal employees (peak in
September and October for Fall School photo days) (3)
Notes
1. Expected market statistics – source: U.S. Department of Education National Center for Education Statistics
2. The ESOP will wind-down subsequent to closing of the acquisition
3. As of June 30, 2017
4. Includes Portrait Studios, Church Photography, and iMemories Platform. Twelve month period ended December 31, 2017. 29
29Combining Shared Mission to Better Serve Customers
Helping people share life’s joy Providing lifelong memories for all
› Leader in personalized photo-based products › Leader in school photography
› $1.2 billion LTM Revenue › $953.6 million LTM Revenue (3)
› $234 million LTM Adjusted EBITDA › $120.9 million LTM EBITDA (3)
› 10 million active customers › 10+ million households
› 26 million orders per year › 50+ thousand schools served; 25+ million children
› Vertically integrated manufacturing, specializing in photographed
four-color digital › Vertically integrated manufacturing, specializing in
› Peak demand in November/December traditional prints
› 40+ billion photos hosted on platform › Peak demand in September/October
› 1+ million new kindergarten households per year
Notes
1. LTM represents the twelve month period-ended December 31, 2017
2. Shutterfly metrics as of December 31, 2017, Lifetouch metrics as of June 30, 2017
30
3. See appendix for detailsRevenue Value Creation Opportunities
Additional Cross-sell New Customer Acquisition
Customer Touchpoints Opportunity Channel for Shutterfly
1. Combined we can be present for every
important milestone and celebration
K-12
PRESCHOOL GRADUATION Wide assortment Photo packages to Various marketing Engages with over
of products parents channels for 10 million
BIRTH
HOLIDAYS & customer acquisition households
SEASONAL
= =
WEDDINGS
2. Combined we can offer a wide variety of 1. Add all student photos to Shutterfly Photos and use 1. Shutterfly has access to highly qualified potential
cherished photography products year-round Shutterfly platform for purchasing customers from Lifetouch at low customer
acquisition cost
2. Market Shutterfly’s personalized products to
PERSONALIZED GIFTS /
HOME DECOR
PRINTS parents in addition to current student photo 2. Ability to touch new parent photo customers who
packages do not yet shop on Shutterfly.com
CARDS AND PHOTO
STATIONERY BOOKS
SCHOOL
PICTURES CALENDARS
31
31Outlook and Lifetouch Financial
Mike Pope, CFO
322018 Shutterfly Guidance1
($ and shares in millions, except per share amounts)
FY18
Net Revenues $1,220 to $1,260
Consumer Net Revenues $1,020 to $1,050
Shutterfly Business Solutions (SBS) Net Revenues $200 to $210
Gross Profit Margin 48.5% to 49.5%
Operating Income $115 to $135
Adjusted EBITDA2 $260 to $280
Adjusted EBITDA Margin2 21.3% to 22.2%
Effective Tax Rate 26.0%
Net Income per Share $1.94 to $2.38
Diluted Shares (weighted average share in millions) 33.9
Capital Expenditures $65
1Excludes acquisition-related expenses.
2Adjusted EBITDA is a Non-GAAP measure and is defined as earnings before interest, taxes, depreciation, amortization and stock based compensation.
33Q1 FY18 Shutterfly Guidance1
($ and shares in millions, except per share amounts) Q1 FY18
Net Revenues $190 to $194
Gross Profit Margin 38.0% to 38.5%
Operating Loss $(32) to $(34)
Adjusted EBITDA2 $3 to $5
Effective Tax Rate 26.0%
Net Loss per Share $(0.92) to $(0.96)
Basic Shares (weighted average share in millions) 32.5
1Excludes acquisition-related expense.
2Adjusted EBITDA is a Non-GAAP measure and is defined as earnings before interest, taxes, depreciation, amortization and stock-based compensation.
34Lifetouch Acquisition Highlights
• Shutterfly will acquire Lifetouch for $825 million in cash
– Transaction multiple of 8.25x NTM Pro-forma Adjusted EBITDA of $100 million; 5.5x NTM Pro-forma
Transaction Adjusted EBITDA ($100 million) plus year 3 synergies ($50 million), totaling $150 million
– Approved by Board of Directors of Shutterfly and Lifetouch ESOP trustee
• Increased revenue scale with significant Adjusted EBITDA and cash flow contribution
– In the first twelve months following close, Lifetouch is expected to contribute revenue of $935 million,
Financial and Adjusted EBITDA of $100 million
Impact – Revenue and cost synergies contributing $50 million of incremental Adjusted EBITDA annually by year 3
• Targeted $450+ million of Total Adjusted EBITDA by 2020 (1)
• Cash consideration fully funded through $825 million incremental 1st Lien Term Loan B
• Pro-forma Adjusted Total Debt of $1.5 billion, including $300 million of convertible debt scheduled to be
Financing repaid in May 2018
• For the time being, suspension of Shutterfly share repurchase program
• Subject to customary closing conditions, including regulatory review
Process and
• Expect transaction to close in Q2 2018
Timing
• Lifetouch to be reported as a separate segment in company filings
Notes 35
35
1. See slide 36 for additional detail2020 Adjusted EBITDA Target of $450M
Targeting a minimum of $450 million of Adjusted EBITDA in 2020 based on:
• $270 million of Shutterfly stand-alone Adjusted EBITDA in 2018 (based on mid-point)
• $100 million of Lifetouch stand-alone Adjusted EBITDA
• 5% growth in the combined underlying Shutterfly and Lifetouch baseline businesses
• $50 million of incremental Adjusted EBITDA as a result of revenue and cost synergies
($ in Millions)
2020 Adjusted EBITDA Target
Baseline 2018 Adjusted EBITDA
Shutterfly $ 270
Lifetouch $ 100
Shutterfly + Lifetouch Baseline 2018 Adjusted EBITDA $ 370
add: 2019 and 2020 Baseline Growth $ 37
Shutterfly + Lifetouch Baseline 2020 Adjusted EBITDA $ 407
add: Year 3 EBITDA contribution from Revenue & Cost Synergies $ 50
2020 Adjusted EBITDA target $ 457
We have not reconciled our 2020 combined company adjusted ebitda target and 2018 Lifetouch stand-alone adjusted ebitda to comparable GAAP
operating income at this stage of the process because it is unreasonably difficult to provide guidance for stock-based compensation expense,
capitalization and amortization of internal-use software and charges related to the proposed acquisition, which are reconciling items between GAAP
operating loss and non-GAAP Adjusted EBITDA. The factors that may impact our future stock-based compensation expense and capitalization and
amortization of internal-use software are out of our control and/or cannot be reasonably predicted, and therefore we are unable to provide such
guidance without unreasonable effort. Factors include our market capitalization and related volatility of our stock price and our inability to project
36
the cost or scope of internally-produced software and charges related to the proposed acquisition during this time period. 36Q&A
Appendix
Reconciliation of Non-GAAP Adjusted EBITDA
($ in millions) Q4’17 Q4’16
GAAP net income $111.7 $91.0
Interest expense, net 8.4 5.8
Tax provision 58.9 57.0
Depreciation and amortization 25.7 28.6
Stock-based compensation expense 10.9 12.4
Restructuring charges - -
Non-GAAP Adjusted EBITDA $215.6 $194.8
39FY17 Restructuring
($ in millions) Q1’17 Q2’17 Q3’17 Q4’17 FY17
Restructuring charges:
Property, equipment
$3.9 $2.8 $1.8 - $8.5
and intangibles
Employee costs 3.8 1.4 0.7 - 5.9
Inventory 1.2 0.2 - - 1.4
Other costs 0.1 0.3 0.8 - 1.2
Total $9.0 $4.7 $3.3 - $17.0
40Q4’17 Shutterfly Revenue Bridge
Shutterfly Brand and Shutterfly Platform revenue growth rates include a benefit from the platform consolidation and the shuttering of
legacy Tiny Prints, Wedding Paper Divas, and MyPublisher websites. The following bridges Q4’16 Shutterfly Brand revenue to Q4’17
Shutterfly Brand revenue and Q4’17 Shutterfly Platform revenue by estimating revenue attributable to i) baseline Shutterfly brand
revenue growth (our best estimate of an organic Shutterfly brand growth rate), ii) incremental Shutterfly Brand revenue growth from
the shuttering of legacy Tiny Prints, Wedding Paper Divas, and MyPublisher websites, and iii) the opening of the Tiny Prints Boutique.
(1) The Revenue bridge uses customer cohort data to estimate Q4'17 Shutterfly brand revenue from the shuttering of legacy Tiny Prints, Wedding
Paper Divas, and MyPublisher websites that benefits the Shutterfly brand growth rate (“Incremental Revenue from Shuttered Websites”). Baseline
Shutterfly brand revenue growth ($29.9 million or 7%) is then calculated as the difference between total Shutterfly brand growth ($60.4 million),
less Incremental Revenue from Shuttered Websites ($30.5 million).
(2) Incremental Revenue from Shuttered Websites is Q4’17 Shutterfly brand revenue from legacy Tiny Prints, Wedding Paper Divas, and MyPublisher
registered users, less an estimate of what Shutterfly brand revenue from this cohort would have been if the legacy Tiny Prints, Wedding Paper
Divas, and MyPublisher websites were still open. 41Consumer Revenues by Brand
($ in Millions)
Three Months Ended Year Ended
Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30, Sep. 30, Dec. 31, Dec. 31, Dec. 31,
2016 2016 2016 2016 2017 2017 2017 2017 2016 2017
Consumer net revenues
Shutterfly Brand $ 114.4 $ 133.4 $ 111.0 $ 404.1 $ 123.9 $ 139.9 $ 115.9 $ 464.5 $ 762.9 $ 844.2
Tiny Prints Boutique - - - - - - 1.9 48.9 - 50.8
Tiny Prints (1) 12.2 14.8 8.0 93.6 10.5 12.9 - - 128.6 23.4
(2)
Wedding Paper Divas 16.4 14.6 11.4 9.0 14.2 11.4 8.5 - 51.5 34.2
My Publisher (3) 5.0 4.5 4.4 6.6 5.0 6.1 - - 20.5 11.1
Other 7.4 9.3 9.2 8.2 7.0 8.8 9.1 8.3 34.1 33.3
Total $ 155.4 $ 176.6 $ 144.0 $ 521.5 $ 160.6 $ 179.1 $ 135.4 $ 521.7 $ 997.6 $ 997.0
(1)
Tiny Prints website shut down on June 28, 2017.
(2)
Wedding Paper Divas website shut down on September 13, 2017.
(3)
MyPublisher website shut down on May 15, 2017.
42Lifetouch Income Statements
($ in Millions)
Audited Unaudited
Fiscal Year Ended June 30, 12 Months Ended
2015 2016 2017 Dec 31, 2017
Net Sales $1,021.9 $986.6 $963.9 $953.6
Cost and Expenses
Materials, Labor and Processing 192.2 184.9 185.8 179.8
Engineering and Development 9.2 8.8 8.7 7.8
Selling Expenses 621.6 597.6 591.8 580.7
General and Administrative Expenses 77.9 85.2 88.5 80.3
Amortization of Intangible Assets 11.3 10.2 5.3 4.5
Restructuring, Acquisition and Other Charges 17.2 4.0 15.1 20.1
Total Costs and Expenses 929.4 890.7 895.2 873.2
Operating Income Before Contributions to ESOP
and Retirement Plans 92.5 95.9 68.7 80.4
Contributions to ESOP and Retirement Plans 76.4 72.1 72.6 72.6
Operating Income (Loss) 16.1 23.8 (3.9) 7.8
Other Income (Expense) 2.1 2.2 1.9 1.8
Income (Loss) Before Income Taxes 18.2 26.0 (2.0) 9.6
Income Tax (Benefit) Provision 1.6 2.0 (1.4) (1.6)
Net Income (Loss) $16.6 $24.0 ($0.6) $11.2
43
43Lifetouch Operating Income to EBITDA Bridge
($ in Millions)
Audited Unaudited
Fiscal Year Ended June 30, 12 Months Ended
2015 2016 2017 Dec 31, 2017
Operating Income (Loss) $16.1 $23.8 ($3.9) $7.8
Depreciation 41.1 38.7 37.3 36.0
Amortization of Intangible Assets 11.3 10.2 5.3 4.5
Contributions to ESOP and Retirement Plans 76.4 72.1 72.6 72.6
EBITDA $144.9 $144.8 $111.3 $120.9
Purchases of Property, Plant and Equipment ($25.8) ($37.6) ($35.5) ($29.6)
44
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