Shutterfly, Inc. (NASDAQ:SFLY) Q1 2018 Earnings Conference Call - Final Transcript

May 01, 2018 • 05:00 pm ET

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Shutterfly, Inc. (NASDAQ:SFLY) Q1 2018 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions) And the first question comes from Youssef Squali with SunTrust. Please go ahead.

Analyst
Naved Khan

Yeah. Thanks. Thanks a lot. This is Naved Khan for Youssef. I had a couple of questions. I think the guidance bridge is very helpful, just wanted to get some incremental color in terms of the EBITDA contribution from Lifetouch. I guess, your guidance -- the old one -- the one you gave back in January and even this one, both kind of contemplate roughly $20 million to be spent on integration of Lifetouch. Can you just speak to specific areas where you will be focusing on as you look out now that you have completed the acquisition? And then I have a follow up.

Executive
Michael W. Pope

Yeah, this is Mike. I think back in January when we announced -- end of January when we announced the acquisition, what we said is in the first 12 months following the acquisition of Lifetouch, we expected them to contribute $935 million of revenue and a $100 million of adjusted EBITDA and that reflected the cost that we would also incur related to integrating Lifetouch and Shutterfly together, offset positively by some of the synergies that we expected to get over the course of 2018 in the near term, which are largely related to the operations side and supply chain in particular.

Analyst
Naved Khan

Okay. And in terms of just the -- the opportunities with respect to maybe facility consolidation, do you think that -- do you see any opportunity? Do you think that's 2018 or further out? And then, on the core, I guess, the 10% growth in the Shutterfly brand is that looks pretty good. Do you think that's a sustainable pace as you sort of lap the platform migration and enter Q4, and then, 2019, how should we be thinking?

Executive
Michael W. Pope

Yeah, let me take the first one as it relates to what you refer to as some of the cost synergies, I think in particular you referenced facility consolidation. I think as we said in some of our prepared remarks, both the Lifetouch team as well as the Shutterfly team are working jointly to look at the opportunities that we see for cost synergies as well as frankly revenue synergies. And so, we have teams on both sides working on that. I think near term, what we see in 2018 relates to supply chain. I think longer term, what we said before is that some of the opportunities that we see further on the operations side are driven by complementary technologies where they're strong in both silver halide and we're strong in digital printing.

Executive
Christopher North

And hi, Naved. This is Chris. I'll take your second question about the growth of the Shutterfly brand, the organic growth, and I'm certainly pleased to see that growth in Q1. I think for context I'll add that -- we've provided targets for 2018, which imply a 10% Shutterfly Consumer growth rate in Q4 and, of course,