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Shutterfly attracts attention
Posted on Wednesday, 06 February 2019 12:42
Shares in Shutterfly fell 6.3 per cent in after-hours trading yesterday after the online personalised photo book printer announced a couple of startling pieces of news alongside an earnings report. Not only is chief executive Christopher North stepping down from his position and the board in August, but also the company has pulled the trigger on a strategic review following an expression of interest. Morgan Stanley is working alongside the Internet-based photo products retailer on evaluating the capital structure, including appropriate leverage levels and potential share buybacks. In the first quarter of 2019, Shutterfly paid down USD 200.00 million of debt, which is in line with its previous commitment to retain a BB rating, while remaining compliant with covenants. As part of this review, the online retailer has confirmed its objective of maintaining gross leverage of 2.5 to 3.0x adjusted earnings before interest, tax, depreciation and amortisation on an annual basis, among other things. Currently, management believes it will be in position to begin a capital return plan during the fourth quarter of 2019. With regards to an approach by a third party in recent months about a potential acquisition of Shutterfly, the board said it has subsequently held talks with other interested parties. At this point in time, the suitors have not tabled an offer but this will not stop the advisor and review committee from fully considering any other additional expressions. Shutterfly officially closed at USD 45.23 and a market capitalisation of USD 1.52 billion yesterday, before shares slipped in extended trading. In the 12 months to 31st December 2018, net revenue was up at USD 1.96 billion (FY 2017: USD 1.19 billion) while net profit rose to USD 50.40 million (FY 2017: USD 30.09 million). The company ended 2018 with cash and equivalents of USD 566.00 million, which fell to USD 225.00 million by the end of January due to the repayment of debt and working capital used to pay vendors and suppliers. © Zephus Ltd