Lundin Gold April 2024 Corporate Presentation v4.pdf
Q1 2009 Earning Report of Shutterfly Inc.
1. Q1 2009 Earnings Conference Call
g
April 29, 2009
Jeff Housenbold, CEO
Mark Rubash, CFO
2. Safe Harbor Disclaimer
This presentation contains quot;forward-lookingquot; 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 about our business outlook and strategy, and statements about
strategy
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”, or similar forward-looking terms. You should not rely on these forward-
looking statements as they involve risks and uncertainties and may cause actual results to vary materially from the forward-
looking statements. Factors that might contribute to such differences include, among others, economic downturns and the
g
general state of the economy, our ability to expand our customer base; our ability to retain and hire necessary employees,
y y y y y
including seasonal personnel, and appropriately staff our operations; the impact of seasonality on our business; our ability
to develop on a timely basis, as well as consumer acceptance of, new products and services; our ability to develop
additional adjacent lines of business; unforeseen changes in expense levels; and competition, which could lead to pricing
pressure. 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 “Ri k F t ” sections of th company’s SEC fili
f t th “Risk Factors” ti f the ’ filings, which are available on th S
hi h il bl the Securities and E h
iti d 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, and non-GAAP EPS, and Free Cash
Flows.
Flows The method we use to produce non-GAAP financial measures is not computed according to GAAP and may differ
non GAAP
from the methods used by other companies. We believe that these non-GAAP measures better reflect the company's core
operating results and thus are appropriate to enhance the overall understanding of the company's past financial
performance and its prospects for the future. These adjustments to the company's GAAP results are made with the intent of
providing both management and investors a more complete understanding of the company's underlying operational results
and trends and performance. Management uses these non-GAAP measures to evaluate the company's financial results,
develop budgets and manage expenditures. The presentation of this additional information is not meant to be considered in
isolation or as a substitute for or superior to comparable financial measures prepared in accordance with GAAP.
2
4. Today’s Key Messages
5% increase in Q1 total net revenues; and 19% increase
●
Solid in personalized products & services net revenues
p p
Q1-09 Break-even Adjusted EBITDA* of $0.1 million
●
Results
Better than expected gross and operating margins
●
Photo Books: launched personalized 8x8 soft cover
●
Focus on edition, and continued to improve experience
Three Cards & Stationery: Launched coordinated cards,
●
Strategic announcements, note pads & gift tags
t t d ift t
Imperatives
Share Sites: enhancements to drive creation, engagement
●
and conversion; ended quarter with 920k + sites
Successfully opened new Phoenix, AZ plant on schedule
●
Building Promoted Peter Elarde to SVP & CMO and
●
for the Dan McCormick to VP & GM of Products & Services units
Future
Continued focus on initiatives to increase net revenues,
●
free cash flows and long-term shareholder value
*Adjusted EBITDA is a non-GAAP financial measure defined as earnings before interest, taxes, depreciation, amortization and stock-based compensation.
4 For more information, please see Shutterfly’s First Quarter 2009 Press Release dated April 29, 2009 and other SEC Filings.
5. New Soft Cover Photo Books
Key Features
• Expanded photo book choice set with new 8x8 soft cover books
• Priced at $
$19.99 to compliment hard cover edition at $ $29.99
• New option will encourage trial, increase gift giving and expand
consideration to more causal use occasions
5
6. Expanded Card & Stationery Collection
Personal Stationery
Coordinated Invitation Suites
Invitation
Thank You Card
Gift Tag
Address Label
6
8. Improvements to Share sites
• Enhanced share
site permissions
and notifications
• Optimized ability to
order prints and
photo books
• Improved ability to
share to favorite
social networking
and blogging sites
8
9. Shutterfly for iPhone
Key Features
• Access & view Shutterfly
albums
• Upload photos to Shutterfly
account from iPhone
• Post photos to Shutterfly
Share sites
Results
• #1 free photo app
• Top 100 overall free apps
9
10. Q1 Site & User Experience Changes
• Homepage redesign:
improved registration,
abandonment, conversion
rates and natural search
rankings
• Updated registration page:
improved conversion rates
• Updated promotion engine:
improved segmentation and
targeting
10
12. Enhanced Adobe Integration
• Announced default print solution into Adobe Photoshop Elements 6 & 7,
Photoshop Album Starter Edition and Photoshop.com
• Changes allow Adobe users to create photo books, cards, calendars
and prints in just a few clicks
12
16. Leverage Manufacturing Assets
Redwood City, CA
Corporate HQ
Charlotte, NC
Manufacturing
Phoenix, AZ
Manufacturing
16
17. Strong Management Team
Peter Elarde
Senior Vice President and Chief Marketing Officer
Dan McCormick
D MC ik
Vice President & General Manager, Products and Services
17
18. In Summary
Driving Key Initiatives
• Lead in photo books, cards & stationery and memory sharing
• Revenue, free cash flow and long term shareholder value
Market Leaders
• Best products, services and brand
• Track record of profitability since 2003
• Strong balance sheet
Talented Managers
• History of executing in good and bad economic cycles
• Commitment to financial discipline
18
20. Financial Topics
• Q1 Performance
• Key Metrics
• Q1 Operating Results
• Q2 and Full Year 2009 Guidance
20
21. Q1 2009 User Engagement Metrics
User engagement metrics continued to show trends experienced in 2008
• Lower activity during non-seasonal periods
non seasonal
• Stronger performance during days surrounding traditional gift-giving periods
Up slightly year over year with fairly consistent growth
year-over-year,
●
Site Visits
rates across the quarter
Accelerated significantly from Q4, with double-digit
●
User Registrations
year-over-year growth
Up only slightly year-over-year, but strong double-digit
●
Unique Uploaders
growth in images uploaded
Double-digit year-over-year growth
●
Image Shares Sent
21
22. Q1 2009 Key Metrics
Year-Over-
Q1 2008 Q1 2009
Year Growth
(1%)
Customers 895,000 888,000
Orders 1,617,000 1,471,000 (9%)
15%
Average Order Value $21.23 $24.48
22
25. GAAP Operating Results –
Gross Profit Margins
Q1 2008 Q1 2009 Q1 2008 Q1 2009
2007
Net Revenue $34.3 M % of Total Revenues
$36.0 M
48%
$16.3 M
Gross Profit/Margins 45%
$16.4 M
• Year-over-year margin decline due to planned manufacturing
transition from Hayward, CA to Phoenix, AZ
• Stronger-than-expected margin performance from
improvements in shipping and materials costs and improved
product mix
25
26. GAAP Operating Results –
Technology & Development Expenses
Q1 2008 Q1 2009 Q1 2008 Q1 2009
2007
Net Revenue $34.3 M % of Total Revenues
$36.0 M
48%
$16.3 M
Gross Profit/Margins 45%
$16.4 M
Operating Expenses
Technology & Dev’t $9.2 M $11.0 M 27% 31%
• Increases in depreciation, amortization and stock-based
compensation and increases in power, co-location space and
bandwidth costs
26
27. GAAP Operating Results –
Sales & Marketing Expenses
Q1 2008 Q1 2009 Q1 2008 Q1 2009
2007
Net Revenue $34.3 M % of Total Revenues
$36.0 M
48%
$16.3 M
Gross Profit/Margins 45%
$16.4 M
Operating Expenses
Technology & Dev’t $9.2 M $11.0 M 27% 31%
Sales & Marketing
g $
$8.1 M $
$7.8 M 23% 22%
• Q1 customer acquisition costs decreased by 4% from prior
year,
year reflecting improved performance from our search engine
optimization efforts and greater promotional efficiency
27
28. GAAP Operating Results – General and
Administrative Expenses
Q1 2008 Q1 2009 Q1 2008 Q1 2009
2007
Net Revenue $34.3 M % of Total Revenues
$36.0 M
48%
$16.3 M
Gross Profit/Margins 45%
$16.4 M
Operating Expenses
Technology & Dev’t $9.2 M $11.0 M 27% 31%
Sales & Marketing
g $
$8.1 M $
$7.8 M 23% 22%
General & Admin. $7.6 M $6.9 M 22% 19%
• Year-over-year decrease attributed primarily to headcount
reductions and lower use of outside consultants and contractors
• G&A savings partially offset by increased costs for office space
28
29. Adjusted EBITDA
Q1 2008 Q1 2009 Q1 2008 Q1 2009
2007
Net Revenue $34.3 M % of Total Revenues
$36.0 M
48%
$16.3 M
Gross Profit/Margins 45%
$16.4 M
Operating Expenses
Technology & Dev’t $9.2 M $11.0 M 27% 31%
Sales & Marketing
g $
$8.1 M $
$7.8 M 23% 22%
General & Admin. $7.6 M $6.9 M 22% 19%
Operating Loss ($8.4) M ($9.4) M (24%) (26%)
Adjusted
Adj sted EBITDA* ($0.7)
($0 7) M $0.1
$0 1 M (2%) -
• Consistent, sustained effort across entire business to manage
cost structure in line with revenue growth
• Continued commitment to deliver increasing profitability and free
cash flows
* Adjusted EBITDA is a non-GAAP financial measure defined as earnings before interest, taxes, depreciation, amortization and stock-based
29 compensation. For more information, please see Shutterfly’s First Quarter 2009 Press Release dated April 29, 2009 and other SEC Filings.
30. GAAP Operating Results - EPS
Q1 2008 Q1 2009 Q1 2008 Q1 2009
2007
Net Revenue $34.3 M % of Total Revenues
$36.0 M
48%
$16.3 M
Gross Profit/Margins 45%
$16.4 M
Operating Expenses
Technology & Dev’t $9.2 M $11.0 M 27% 31%
Sales & Marketing
g $
$8.1 M $
$7.8 M 23% 22%
General & Admin. $7.6 M $6.9 M 22% 19%
Operating Loss ($8.4) M ($9.4) M (24%) (26%)
Adjusted
Adj sted EBITDA* ($0.7)
($0 7) M $0.1
$0 1 M (2%) -
Tax Rate 49% 32%
($ )
($3.6) M ($ )
($6.2) M (
(10%)
) (
(17%)
)
GAAP Net Loss
($0.15) ($0.25)
EPS
* Adjusted EBITDA is a non-GAAP financial measure defined as earnings before interest, taxes, depreciation, amortization and stock-based
30 compensation. For more information, please see Shutterfly’s First Quarter 2009 Press Release dated April 29, 2009 and other SEC Filings.
31. Capital Expenditures
($ in millions)
Annual
Capital E
C it l Expenditures
dit
$35.0
Q1-09
2009
Capital Expenditures
Guidance:
$5.0
$22 - $26
$0.8
$22.7 Cap’d R&D
$20.7
Bldg. Improvements
$1.3 Manf. equipment
Tech equip / software
18.7%
16.8% $0.3
CapEx as
% of Rev
11% - 12%
10.7%
$2.6
2009
2006 2007 2008 Q1-09
31
32. Balance Sheet Update: Mar. 31, 2009
• $65.9 million in cash and liquid investments
q
• $52.3 million in auction rate securities and UBS rights
– In November 2008, accepted formal rights offering from UBS entitling Shutterfly to
sell auction rate securities to UBS at par value beginning June 30, 2010
p g g ,
– Auction rate securities impairment of $9M at 12/31/08 reduced to $7.3M at
3/31/09, with $1.7M gain recognized as component of other income/expense
– UBS rights valued as separate financial instrument, with 1.7M loss recognized in
Q1 as a component of other income/expense
t f th i /
• $20 million revolving line of credit through April 29, 2009
– Expect to replace existing line with new $20M facility in Q2 2009
32
33. Context on Guidance
• Since the end of Q4 holiday shopping period, have seen a consistent,
seasonal slow-down in site traffic & order volumes
slow down
• With continuing recessionary pressures, continue to believe 2009 will be most
challenging year on record
• Given early ‘09 trends, believe ’09 top-line results will be difficult to predict
• Expect continued trend of weak non-seasonal order volumes, with modest year-
over-year improvements around seasonal holidays
• Expect consistent mix of revenues between new and existing customers, modest
growth in average order values and shift from prints to personalized products
•G
Generated $680k of Q1 Commercial Print revenues and expect to substantially
td f C i lPi t d tt b t ti ll
build on that amount throughout ’09. However, initiative still in early business
development phase and we are excluding from guidance
• Implemented cost management strategies in ‘08 and will continue in ’09
• Remain firmly committed to increasing long-term profitability and free cash flows
33
34. Full Year 2009 Guidance
2009 2009
$ and shares in millions GAAP Non GAAP
Non-GAAP*
Net Revenues $195 – $215 $195 – $215
Gross Profit/Margins 51% – 53% 52% – 54%
Operating Income / (Loss) ($13) – ($2) $1 – $13
14% – 18%
Adjusted EBITDA** Margin
EBITDA
40% – 67% (10%) – 32%
Effective Tax Rate
Diluted EPS ($0.29)
($0 29) – ($0 01)
($0.01) $0.09
$0 09 – $0 35
$0.35
Weighted Average Shares 25.4 26.7
Capital Expenditures 11% - 12% 11% - 12%
(% of revenues)
*Non-GAAP calculations exclude stock-based compensation expense, amortization of purchased intangibles and the income tax impact related to these adjustments.
* *Adjusted EBITDA is a non-GAAP financial measure defined as earnings before interest, taxes, depreciation, amortization and stock-based compensation. For more
34 information, please see Shutterfly’s First Quarter 2009 Press Release dated April 29, 2009 and other SEC Filings.
35. Q2 2009 Guidance
Q2 2009 Q2 2009
$ and shares in millions GAAP Non GAAP
Non-GAAP*
Net Revenues $34 – $37 $34 – $37
Gross Profit/Margins 45% – 47% 47% – 49%
Operating Loss ($13) – ($11) ($10) – ($8)
Adjusted EBITDA**
EBITDA ($3.0)
($3 0) – ($1 0)
($1.0)
Effective Tax Rate 40% – 67% (10%) – 32%
Diluted EPS ($0.30)
($0 30) – ($0 14)
($0.14) ($0.41)
($0 41) – ($0 20)
($0.20)
Weighted Average Shares 25.2 25.2
*Non-GAAP calculations exclude stock-based compensation expense, amortization of purchased intangibles and the income tax impact related to these adjustments.
* *Adjusted EBITDA is a non-GAAP financial measure defined as earnings before interest, taxes, depreciation, amortization and stock-based compensation. For more
35 information, please see Shutterfly’s First Quarter 2009 Press Release dated April 29, 2009 and other SEC Filings.
36. Annual Operating Results
($ in millions)
Net Revenues Adjusted EBITDA*
j Free Cash Flows**
PP&S
$195
Prints to
$213.5 $215
$27
$186.7 to $4
$39
$38.4 to
$15.6 $15
$32.9
61%
56%
$123.4
$21.6
51% 14%
to
18.0%
18%
17.6%
17.5%
39%
44%
49%
$1.0
2006 2007 2008 2009E
2006 2007 2008 2009E 2006 2007 2008 2009E
Y/Y Growth:
($2.1)
77% 69% 23%
PP&S
25% 34% 3%
Print
(9%) – 1%
47% 51% 14%
Net Revenues
For more information, please see Shutterfly’s First Quarter 2009 Press Release dated April 29, 2009 and other SEC Filings.
*Adjusted EBITDA is a non-GAAP financial measure defined as earnings before interest, taxes, depreciation, amortization and stock-based compensation.
**Free Cash Flows is a non-GAAP financial measure defined as Adjusted EBITDA* less purchases of property and equipment and capitalization of
36 software and website development costs.
