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Shutterfly, Inc. Announces Formation of Strategic Review Committee
Shutterfly, Inc. (NASDAQ:SFLY), the leading retailer and manufacturing
platform dedicated to helping capture, preserve, and share life's
important moments, today announced that its Board of Directors has
formed a Strategic Review Committee and retained Morgan Stanley as
financial advisor, as it continues an ongoing review of strategic
alternatives. The Strategic Review Committee is also evaluating the
Company's capital structure and capital return policy.
In recent months, Shutterfly was approached by a third party about the
potential acquisition of the Company. The Company and Board subsequently
engaged with several additional third parties regarding a potential
acquisition of the Company, but no proposals have been received.
"Our Board continues to be committed to evaluating all options that
maximize shareholder value. We have engaged with any serious indication
of interest in the past, and given recent interest we believe it is
prudent to form a Strategic Review Committee to fully consider any
expressions of interest going forward. As we take this step, we also
believe Shutterfly is in a position of strength as a leader in each of
its businesses with opportunities to create shareholder value," said
Will Lansing, Chairman of the Board.
The Board and management have also reviewed Shutterfly's capital
structure, including appropriate leverage levels and potential share
buybacks. In the first quarter of 2019, the Company paid down $200
million of debt, consistent with its previous commitment to retain a BB
debt rating, while remaining compliant with its debt covenants. As part
of this review, the Company affirmed its objective of maintaining gross
leverage of 2.5-3.0x Adjusted EBITDA on an annual basis, and to return
cash in excess of our operating and financing needs to shareholders in
the form of share repurchases, within the parameters of appropriate cash
management that meet the needs of Shutterfly's highly seasonal business,
where substantially all of the Company's cash flow is generated in the
last four months of the year. Currently, the management team believes it
will be in position to begin executing on a capital return plan during
the fourth quarter of 2019.
The Board has not set a timetable for the conclusion of its review of
strategic alternatives, and it does not intend to comment further unless
and until the Board has approved a specific course of action or the
Company has otherwise determined that further disclosure is appropriate
or required by law. There can be no assurance that the review of
strategic alternatives will resut in a transaction or other outcome.
Notice Regarding Forward-Looking Statements
This press release 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 Shutterfly's belief that it has
opportunities to create shareholder value, Shutterfly's belief that it
will be in a position to begin execution on a capital return plan during
the fourth quarter of 2019, the timing for the conclusion of
Shutterfly's review of strategic alternatives, and whether the review of
strategic alternatives will result in a transaction or other outcome.
You can identify these statements by the use of terminology such as
"believe," "will," 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; Shutterfly's
ability to expand its customer base and increase sales to existing
customers; Shutterfly's ability to meet production requirements;
Shutterfly's ability to attract and retain management and other
personnel; Shutterfly's ability to retain and hire necessary employees,
including seasonal personnel, and appropriately staff its operations;
the impact of seasonality on Shutterfly's business; Shutterfly's ability
to develop innovative, new products and services on a timely and
cost-effective basis; failure to realize the anticipated benefits of
Shutterfly's 2017 restructuring activities or of the Lifetouch
acquisition; recent and ongoing restructuring activities (including but
not limited to those relating to manufacturing consolidation, Lifetouch
field operations and Shutterfly's single platform migration); any
indications of interest received by Shutterfly; consumer acceptance of
Shutterfly's products and services; Shutterfly's ability to develop
additional adjacent lines of business; unforeseen changes in expense
levels; refining Shutterfly's promotional strategies; competition and
the pricing strategies of Shutterfly's competitors, which could lead to
pricing pressure; the retention of Lifetouch employees and Shutterfly's
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 Shutterfly's business in general, Shutterfly refers
you to the "Risk Factors" section of its Securities and Exchange
Commission filings, including Shutterfly's most recent Form 10-K and
10-Q, which are available on the SEC's (News - Alert) website at www.sec.gov.
These forward-looking statements are based on current expectations and
Shutterfly assumes no obligation to update this information.
About Shutterfly, Inc.
Shutterfly, Inc. is the leading retailer and manufacturing platform for
personalized products and communications. Founded in 1999, Shutterfly,
Inc. has three divisions: Shutterfly Consumer, Lifetouch,
and Shutterfly Business Solutions. Shutterfly Consumer and Lifetouch
help consumers capture, preserve, and share life's important moments
through professional and personal photography, and personalized
products. The Shutterfly brand brings photos to life in photo books,
gifts, home décor, and cards and stationery. Lifetouch is the national
leader in school photography, built on the enduring tradition of
"Picture Day," and also serves families through portrait studios and
other partnerships. Shutterfly Business Solutions delivers digital
printing services that enable efficient and effective customer
engagement through personalized communications. For more information
about Shutterfly, Inc. (Nasdaq: SFLY), visit www.shutterflyinc.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190205005942/en/
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