SOURCE: PFSweb, Inc.

PFSweb, Inc.

March 16, 2017 08:30 ET

PFSweb Reports Fourth Quarter and Full Year 2016 Results

ALLEN, TX--(Marketwired - Mar 16, 2017) - PFSweb, Inc. (NASDAQ: PFSW) (PFS), a global commerce service provider, reported results for the fourth quarter and full year ended December 31, 2016.

Fourth Quarter 2016 Summary vs. Same Year-Ago Quarter

  • Total revenues increased 14% to $102.5 million
  • Service fee equivalent revenue (a non-GAAP measure defined below) increased 18% to $72.7 million
  • Service fee gross margin was 27.7% compared to 31.6%
  • Net loss was $3.6 million or $(0.19) per share, compared to a loss of $0.6 million or $(0.03) per share
  • Adjusted EBITDA (a non-GAAP measure defined below) was $6.9 million compared to $7.5 million

Full Year 2016 Summary vs. 2015

  • Total revenues increased 16% to $334.6 million
  • Service fee equivalent revenue increased 24% to $229.0 million
  • Service fee gross margin was 31.2% compared to 32.2%
  • Net loss was $7.5 million or $(0.41) per share, compared to a loss of $7.9 million or $(0.45) per share
  • Adjusted EBITDA was $18.2 million compared to $20.7 million

Management Commentary

"2016 marked the largest year of recurring revenue and project bookings in the history of our company," said Mike Willoughby, CEO of PFS. "These strong bookings were enabled by our investments in sales, marketing and infrastructure, as well as multiple acquisitions over the last three years that have expanded our service offering and addressable market.

"During the fourth quarter, we continued to execute on our sales pipeline, resulting in $15 million of new bookings. We also once again successfully completed the holiday season with a high level of client satisfaction during this important period.

"As announced in October, we experienced operational and financial challenges with a newly launched fulfillment client in 2016 related to their unique business requirements. While efforts were made to improve the performance of this client engagement during the quarter, we have mutually agreed to disengage and expect to fully transition them off our platform during the second quarter of 2017. As we evaluate our omni-channel operations in 2017, we will focus on driving higher margin engagements. On a year-over-year basis, this will present a slight revenue headwind, however, we plan to utilize the related infrastructure capacity for more profitable engagements in the second half of the year. As a result, we are slightly paring back our 2017 revenue guidance, while maintaining our expectation for adjusted EBITDA growth of 26% to 43%."

Fourth Quarter 2016 Financial Results

Total revenues in the fourth quarter of 2016 increased 14% to $102.5 million compared to $90.1 million in the same period of 2015. Service fee revenue in the fourth quarter increased 18% to $71.9 million compared to $60.9 million last year. Product revenue was $12.0 million compared to $13.9 million in the same period of 2015 due to ongoing restructuring activities by the company's last remaining client under this business model and their discontinuation of certain product lines.

Service fee equivalent revenue increased 18% to $72.7 million compared to $61.6 million in the year-ago quarter, driven by both new and expanded client relationships, strong client volumes during the holiday period and approximately $1.1 million of incremental service fees generated by the company's acquisition of Conexus in June 2016.

Service fee gross margin in the fourth quarter of 2016 was 27.7% compared to 31.6% in the same period of 2015. The decrease was primarily due to higher facility, labor and operating costs applicable to certain new, large fulfillment clients implemented during the year. This was partially offset by higher-margin professional services activity.

Net loss in the fourth quarter of 2016 was $3.6 million or $(0.19) per share, compared to a net loss of $0.6 million or $(0.03) per share in the same period of 2015. Net loss in the fourth quarter of 2016 included $4.0 million of acquisition-related, restructuring and other costs, $1.1 million in amortization of acquisition-related intangible assets, and $0.4 million in stock-based compensation expense. This compares to $1.3 million of acquisition-related, restructuring and other costs, $1.2 million in amortization of acquisition-related intangible assets, and $1.2 million in stock-based compensation expense in the same period of 2015.

Adjusted EBITDA (a non-GAAP measure defined below) was $6.9 million compared to $7.5 million in the same period of 2015. As a percentage of service fee equivalent revenue, adjusted EBITDA was 9.5% compared to 12.1% in the year-ago quarter. The decline in adjusted EBITDA margin was primarily driven by incremental costs associated with servicing certain new clients, as well as an increase in sales and marketing and infrastructure resources. This was partially offset by higher-margin professional services activity and reduced incentive-based compensation.

Non-GAAP net loss (a non-GAAP measure defined below) in the fourth quarter of 2016 was $2.0 million compared to $3.1 million in the fourth quarter of 2015.

At December 31, 2016, cash and cash equivalents totaled $24.4 million compared to $21.8 million at December 31, 2015. Total debt was $59.7 million compared to $35.4 million at December 31, 2015, with the increase primarily driven by funds used to support the June 2016 Conexus acquisition and payment of calendar 2015 related earn-out liabilities applicable to prior acquisitions, as well as funding of capital expenditure requirements.

Full Year 2016 Financial Results

Total revenues in 2016 increased 16% to $334.6 million compared to $288.3 million in 2015. Service fee revenue in 2016 increased 24% to a record $226.2 million compared to $182.2 million last year, while product revenue was $48.7 million compared to $58.7 million in the prior year. Service fee equivalent revenue increased 24% to a record $229.0 million compared to $185.3 million in 2015, including approximately $18 million of incremental revenue generated applicable to the company's acquisition of CrossView and Moda in 2015 and Conexus in 2016.

Service fee gross margin in 2016 decreased 100 basis points to 31.2% compared to 32.2% last year, primarily due to increased costs to support certain new fulfillment clients in 2016, partially offset by increased higher-margin professional services activity.

Net loss in 2016 was $7.5 million or $(0.41) per share, compared to a net loss of $7.9 million or $(0.45) per share in 2015. Net loss in 2016 included $3.5 million in acquisition-related, restructuring and other costs, $4.0 million in amortization of acquisition-related intangibles, and $2.1 million in stock-based compensation expense. This compares to $5.8 million in acquisition-related, restructuring and other costs, $2.8 million in amortization of acquisition-related intangibles, and $4.6 million in stock-based compensation expense in 2015.

Adjusted EBITDA was $18.2 million in 2016 compared to $20.7 million in 2015.

Non-GAAP net income in 2016 was $2.1 million compared to $5.4 million in 2015.

2017 Outlook

PFS is revising its outlook for 2017 service fee equivalent revenue to range between $240 million and $250 million (previously $245 million to $260 million), reflecting growth of 5% to 9% from 2016. The company maintains its target for adjusted EBITDA to range between $23 million and $26 million, reflecting 26% to 43% growth from 2016.

Conference Call

PFS will conduct a conference call today at 11:00 a.m. Eastern time to discuss its results for the fourth quarter and full year ended December 31, 2016.

PFS CEO Michael Willoughby and CFO Tom Madden will host the conference call, followed by a question and answer period.

Date: Thursday, March 16, 2017
Time: 11:00 a.m. Eastern Time (8:00 a.m. Pacific time)
Toll-free dial-in number: 1-877-548-7911
International dial-in number: 1-719-325-4907
Conference ID: 9392101

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at 1-949-574-3860.

The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=123341 and via the investor relations section of the company's website at www.pfsweb.com.

A replay of the conference call will be available after 2:00 p.m. Eastern Time on the same day through March 30, 2017.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 9392101

About PFSweb, Inc.

PFSweb (PFS) (NASDAQ: PFSW) is a global commerce service provider of solutions including digital strategy consulting, digital agency and marketing services, technology development services, business process outsourcing services, and a complete omni-channel technology ecosystem. The company provides these solutions and services to major brand names and other companies seeking to optimize every customer experience and enhance their traditional and online business channels. PFS supports organizations across various industries, including Procter & Gamble, L'Oreal USA, LEGO, Canada Goose, ASICS, Roots Canada Ltd., PANDORA, Charlotte Russe, Anastasia Beverly Hills, David's Bridal, T.J. Maxx, the United States Mint and many more. PFS is headquartered in Allen, TX with additional locations in Tennessee, Mississippi, Minnesota, Washington, New York, Ohio, North Carolina, Canada, Belgium, England, Bulgaria, and India. For more information, please visit www.pfsweb.com or download the free PFS IR App on your iPhone, iPad, or Android device.

Non-GAAP Financial Measures

This news release contains certain non-GAAP measures, including non-GAAP net income (loss), earnings before interest, income taxes, depreciation and amortization (EBITDA), adjusted EBITDA and service fee equivalent revenue.

Non-GAAP net income (loss) represents net income (loss) calculated in accordance with U.S. GAAP as adjusted for the impact of non-cash stock-based compensation expense, acquisition-related, restructuring and other (income) costs and the amortization of acquisition-related intangible assets.

EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, acquisition-related, restructuring and other (income) costs.

Service fee equivalent revenue represents service fee revenue plus the gross profit earned on product revenue and does not alter existing revenue recognition.

Our service fee equivalent revenue target for 2017 includes an estimated gross margin on product sales of approximately $2 million (based on targeted product revenue of $42 million less targeted cost of product revenue of $40 million) plus a targeted range of between $238 million to $248 million of service fee revenue.

The adjusted EBITDA outlook for 2017 have not been reconciled to the company's net loss outlook for the same period because certain items that would impact interest expense, income tax provision (benefit), depreciation and amortization (including amortization of acquisition-related intangible assets), stock-based compensation, and acquisition-related, restructuring and other (income) costs, all of which are reconciling items between net loss and adjusted EBITDA, cannot be reasonably predicted. Accordingly, reconciliation of adjusted EBITDA outlook to net loss outlook for 2017 is not available without unreasonable effort.

Non-GAAP net income (loss), EBITDA, adjusted EBITDA and service fee equivalent revenue are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, acquisition-related, restructuring and other (income) costs and amortization of acquisition-related intangible assets and EBITDA and adjusted EBITDA further eliminate the effect of financing, income taxes and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance. Service fee equivalent revenue allows client contracts with similar operational support models but different financial models to be combined as if all contracts were being operated on a service fee revenue basis.

PFS believes these non-GAAP measures provide useful information to both management and investors by focusing on certain operational metrics and excluding certain expenses in order to present its core operating performance and results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.

Forward-Looking Statements

The matters discussed herein consist of forward-looking information under the Private Securities Litigation Reform Act of 1995 and is subject to and involves risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. PFS' Annual Report on Form 10-K for the year ended December 31, 2016 identifies certain factors that could cause actual results to differ materially from those projected in any forward looking statements made and investors are advised to review the Annual Report of the company and the Risk Factors described therein. PFS undertakes no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future. There may be additional risks that we do not currently view as material or that are not presently known.

 
PFSweb, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (A)
(In Thousands, Except Share Data)
 
 
    December 31,     December 31,  
    2016     2015  
                 
ASSETS                
CURRENT ASSETS:                
  Cash and cash equivalents   $ 24,425     $ 21,781  
  Restricted cash     215       275  
  Accounts receivable, net of allowance for doubtful accounts of $494 and $600 at December 31, 2016 and December 31, 2015, respectively     80,223       70,700  
  Inventories, net of reserves of $568 and $739 at December 31, 2016 and December 31, 2015, respectively     6,632       9,262  
  Other receivables     6,750       8,704  
  Prepaid expenses and other current assets     7,299       5,662  
    Total current assets     125,544       116,384  
                 
PROPERTY AND EQUIPMENT, net     30,264       24,093  
INTANGIBLE ASSETS, net     6,864       8,810  
GOODWILL     46,210       39,829  
OTHER ASSETS     2,454       2,174  
    Total assets     211,336       191,290  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
CURRENT LIABILITIES:                
  Current portion of long-term debt and capital lease obligations   $ 7,300     $ 3,153  
  Trade accounts payable     59,752       51,170  
  Deferred revenue     7,156       7,390  
  Performance-based contingent payments     2,405       11,679  
  Accrued expenses     30,360       30,563  
    Total current liabilities     106,973       103,955  
                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     52,399       32,238  
DEFERRED REVENUE     4,127       4,499  
DEFERRED RENT     4,810       4,362  
PERFORMANCE-BASED CONTINGENT PAYMENTS     1,678       2,478  
OTHER LIABILITIES     1,066       -  
    Total liabilities     171,053       147,532  
                 
                 
COMMITMENTS AND CONTINGENCIES                
                 
SHAREHOLDERS' EQUITY:                
  Preferred stock, $1.00 par value; 1,000,000 shares authorized; none issued and outstanding     -       -  
  Common stock, $.001 par value; 35,000,000 shares authorized; 18,768,567 and 18,136,218 shares issued at December 31, 2016 and December 31, 2015, respectively; and 18,735,100 and 18,012,751 shares outstanding as of December 31, 2016 and December 31, 2015, respectively     19       18  
  Additional paid-in capital     146,286       141,948  
  Accumulated deficit     (105,317 )     (97,787 )
  Accumulated other comprehensive income (loss)     (580 )     (296 )
  Treasury stock at cost, 33,467 shares     (125 )     (125 )
    Total shareholders' equity     40,283       43,758  
    Total liabilities and shareholders' equity   $ 211,336     $ 191,290  
(A) The financial data above should be read in conjunction with the audited consolidated financial statements of PFSweb, Inc. included in its Form 10-K
   
   
PFSweb, Inc. and Subsidiaries  
Unaudited Condensed Consolidated Statements of Operations (A)  
(In Thousands, Except Per Share Data)  
                         
    Three Months Ended     Year ended  
    December 31,     December 31,  
    2016     2015     2016     2015  
REVENUES:                                
  Service fee revenue   $ 71,894     $ 60,865     $ 226,165     $ 182,175  
  Product revenue, net     12,037       13,928       48,695       58,659  
  Pass-thru revenue     18,524       15,271       59,783       47,435  
      Total revenues     102,455       90,064       334,643       288,269  
                                 
COSTS OF REVENUES:                                
  Cost of service fee revenue     51,966       41,633       155,513       123,574  
  Cost of product revenue     11,234       13,215       45,883       55,587  
  Cost of pass-thru revenue     18,524       15,271       59,783       47,435  
      Total costs of revenues     81,724       70,119       261,179       226,596  
      Gross profit     20,731       19,945       73,464       61,673  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     22,378       19,212       76,304       66,280  
    Income (loss) from operations     (1,647 )     733       (2,840 )     (4,607 )
INTEREST EXPENSE (INCOME), NET     516       509       2,323       1,757  
    Income (loss) before income taxes     (2,163 )     224       (5,163 )     (6,364 )
INCOME TAX EXPENSE (BENEFIT)     1,394       822       2,367       1,497  
NET INCOME (LOSS)   $ (3,557 )   $ (598 )   $ (7,530 )   $ (7,861 )
NON-GAAP NET INCOME (LOSS)   $ 1,956     $ 3,132     $ 2,090     $ 5,435  
                                 
NET INCOME (LOSS) PER SHARE:                                
  Basic   $ (0.19 )   $ (0.03 )   $ (0.41 )   $ (0.45 )
  Diluted   $ (0.19 )   $ (0.03 )   $ (0.41 )   $ (0.45 )
                                 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:                                
  Basic     18,714       18,080       18,542       17,608  
  Diluted     18,714       18,080       18,542       17,608  
                                 
EBITDA   $ 2,524     $ 4,918     $ 12,537     $ 10,224  
ADJUSTED EBITDA   $ 6,911     $ 7,453     $ 18,163     $ 20,692  
                                 
(A) The financial data above should be read in conjunction with the audited consolidated financial statements of PFSweb, Inc. included in its Form 10-K for the year ended December 31, 2016.  
   
   
PFSweb, Inc. and Subsidiaries  
Unaudited Reconciliation of Certain Non-GAAP Items to GAAP  
(In Thousands, Except Per Share Data)  
   
   
  Three Months Ended     Year ended  
  December 31,     December 31,  
  2016     2015     2016     2015  
                               
NET INCOME (LOSS) $ (3,557 )   $ (598 )   $ (7,530 )   $ (7,861 )
  Income tax expense (benefit)   1,394       822       2,367       1,497  
  Interest expense, net   516       509       2,323       1,757  
  Depreciation and amortization   4,171       4,185       15,377       14,831  
EBITDA $ 2,524     $ 4,918     $ 12,537     $ 10,224  
  Stock-based compensation   368       1,191       2,111       4,637  
  Acquisition-related, restructuring and other (income) costs   4,019       1,344       3,515       5,831  
ADJUSTED EBITDA $ 6,911     $ 7,453     $ 18,163     $ 20,692  
                               
                               
  Three Months Ended     Year ended  
  December 31,     December 31,  
  2016     2015     2016     2015  
                               
NET INCOME (LOSS) $ (3,557 )   $ (598 )   $ (7,530 )   $ (7,861 )
  Stock-based compensation   368       1,191       2,111       4,637  
  Amortization of acquisition-related intangible assets   1,126       1,195       3,994       2,828  
  Acquisition-related, restructuring and other (income) costs   4,019       1,344       3,515       5,831  
NON-GAAP NET INCOME (LOSS) $ 1,956     $ 3,132     $ 2,090     $ 5,435  
                               
                               
  Three Months Ended     Year ended  
  December 31,     December 31,  
  2016     2015     2016     2015  
                               
TOTAL REVENUES $ 102,455     $ 90,064     $ 334,643     $ 288,269  
  Pass-thru revenue   (18,524 )     (15,271 )     (59,783 )     (47,435 )
  Cost of product revenue   (11,234 )     (13,215 )     (45,883 )     (55,587 )
SERVICE FEE EQUIVALENT REVENUE $ 72,697     $ 61,578     $ 228,977     $ 185,247  
   
   
PFSweb, Inc. and Subsidiaries  
Unaudited Consolidating Statements of Operations  
For the Three Months Ended December 31, 2016  
(In Thousands)  
   
                       
        Business &              
  PFSweb     Retail Connect     Eliminations     Consolidated  
REVENUES:                              
  Service fee revenue $ 64,448     $ 7,446     $ -     $ 71,894  
  Service fee revenue - affiliate   7,120       189       (7,309 )     -  
  Product revenue, net   -       12,037       -       12,037  
  Pass-thru revenue   18,524       -       -       18,524  
      Total revenues   90,092       19,672       (7,309 )     102,455  
                               
COSTS OF REVENUES:                              
  Cost of service fee revenue   51,908       6,504       (6,446 )     51,966  
  Cost of product revenue   -       11,234       -       11,234  
  Cost of pass-thru revenue   18,524       -       -       18,524  
      Total costs of revenues   70,432       17,738       (6,446 )     81,724  
      Gross profit   19,660       1,934       (863 )     20,731  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   22,876       365       (863 )     22,378  
    Income (loss) from operations   (3,216 )     1,569       -       (1,647 )
INTEREST EXPENSE (INCOME), NET   443       73       -       516  
    Income (loss) before income taxes   (3,659 )     1,496       -       (2,163 )
INCOME TAX EXPENSE (BENEFIT)   874       520       -       1,394  
NET INCOME (LOSS) $ (4,533 )   $ 976     $ -     $ (3,557 )
NON-GAAP NET INCOME (LOSS) $ 980     $ 976     $ -     $ 1,956  
                               
EBITDA $ 951     $ 1,573     $ -     $ 2,524  
ADJUSTED EBITDA $ 5,338     $ 1,573     $ -     $ 6,911  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:                              
                               
NET INCOME (LOSS) $ (4,533 )   $ 976     $ -       (3,557 )
    Income tax expense (benefit)   874       520       -       1,394  
    Interest expense (income), net   443       73       -       516  
    Depreciation and amortization   3,041       4       -       3,045  
    Amortization of acquisition-related intangible assets   1,126       -       -       1,126  
EBITDA $ 951     $ 1,573     $ -     $ 2,524  
    Stock-based compensation   368       -       -       368  
    Acquisition-related, restructuring and other income   4,019       -       -       4,019  
ADJUSTED EBITDA $ 5,338     $ 1,573     $ -     $ 6,911  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:                              
                               
NET INCOME (LOSS) $ (4,533 )   $ 976     $ -     $ (3,557 )
    Stock-based compensation   368       -       -       368  
    Amortization of acquisition-related intangible assets   1,126       -       -       1,126  
    Acquisition-related, restructuring and other income   4,019       -       -       4,019  
NON-GAAP NET INCOME (LOSS) $ 980     $ 976     $ -     $ 1,956  
   
Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.  
   
   
PFSweb, Inc. and Subsidiaries  
Unaudited Consolidating Statements of Operations  
For the Twelve Months Ended December 31, 2016  
(In Thousands)  
   
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                              
  Service fee revenue   $ 207,641     $ 18,524   $ -     $ 226,165  
  Service fee revenue - affiliate     16,907       878     (17,785 )     -  
  Product revenue, net     -       48,695     -       48,695  
  Pass-thru revenue     59,783       -     -       59,783  
      Total revenues     284,331       68,097     (17,785 )     334,643  
                               
COSTS OF REVENUES:                              
  Cost of service fee revenue     154,985       17,319     (16,791 )     155,513  
  Cost of product revenue     -       45,883     -       45,883  
  Cost of pass-thru revenue     59,783       -     -       59,783  
      Total costs of revenues     214,768       63,202     (16,791 )     261,179  
      Gross profit     69,563       4,895     (994 )     73,464  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     75,295       2,003     (994 )     76,304  
    Income (loss) from operations     (5,732 )     2,892     -       (2,840 )
INTEREST EXPENSE (INCOME), NET     1,994       329     -       2,323  
    Income (loss) before income taxes     (7,726 )     2,563     -       (5,163 )
INCOME TAX EXPENSE (BENEFIT)     1,467       900     -       2,367  
NET INCOME (LOSS)   $ (9,193 )   $ 1,663   $ -     $ (7,530 )
NON-GAAP NET INCOME (LOSS)   $ 427     $ 1,663   $ -     $ 2,090  
                               
EBITDA   $ 9,623     $ 2,914   $ -     $ 12,537  
ADJUSTED EBITDA   $ 15,249     $ 2,914   $ -     $ 18,163  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:                        
                               
NET INCOME (LOSS)   $ (9,193 )   $ 1,663   $ -       (7,530 )
    Income tax expense (benefit)     1,467       900     -       2,367  
    Interest expense (income), net     1,994       329     -       2,323  
    Depreciation and amortization     11,361       22     -       11,383  
    Amortization of acquisition-related intangible assets     3,994       -     -       3,994  
EBITDA   $ 9,623     $ 2,914   $ -     $ 12,537  
    Stock-based compensation     2,111       -     -       2,111  
    Acquisition-related, restructuring and other income     3,515       -     -       3,515  
ADJUSTED EBITDA   $ 15,249     $ 2,914   $ -     $ 18,163  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:                        
                               
NET INCOME (LOSS)   $ (9,193 )   $ 1,663   $ -     $ (7,530 )
    Stock-based compensation     2,111       -     -       2,111  
    Amortization of acquisition-related intangible assets     3,994       -     -       3,994  
    Acquisition-related, restructuring and other income     3,515       -     -       3,515  
NON-GAAP NET INCOME (LOSS)   $ 427     $ 1,663   $ -     $ 2,090  
                               
Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.  
   
   
PFSweb, Inc. and Subsidiaries  
Unaudited Consolidating Statements of Operations  
For the Three Months Ended December 31, 2015  
(In Thousands)  
   
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                              
  Service fee revenue   $ 54,771     $ 6,094   $ -     $ 60,865  
  Service fee revenue - affiliate     5,422       250     (5,672 )     -  
  Product revenue, net     -       13,928     -       13,928  
  Pass-thru revenue     15,271       -     -       15,271  
      Total revenues     75,464       20,272     (5,672 )     90,064  
                               
COSTS OF REVENUES:                              
  Cost of service fee revenue     41,345       5,777     (5,489 )     41,633  
  Cost of product revenue     -       13,215     -       13,215  
  Cost of pass-thru revenue     15,271       -     -       15,271  
      Total costs of revenues     56,616       18,992     (5,489 )     70,119  
      Gross profit     18,848       1,280     (183 )     19,945  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     18,899       496     (183 )     19,212  
    Income (loss) from operations     (51 )     784     -       733  
INTEREST EXPENSE (INCOME), NET     414       95     -       509  
    Income (loss) before income taxes     (465 )     689     -       224  
INCOME TAX EXPENSE (BENEFIT)     592       230     -       822  
NET INCOME (LOSS)   $ (1,057 )   $ 459   $ -     $ (598 )
NON-GAAP NET INCOME (LOSS)   $ 2,673     $ 459   $ -     $ 3,132  
                               
EBITDA   $ 4,124     $ 794   $ -     $ 4,918  
ADJUSTED EBITDA   $ 6,659     $ 794   $ -     $ 7,453  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:                        
                               
NET INCOME (LOSS)   $ (1,057 )   $ 459   $ -       (598 )
    Income tax expense (benefit)     592       230     -       822  
    Interest expense (income), net     414       95     -       509  
    Depreciation and amortization     2,980       10     -       2,990  
    Amortization of acquisition-related intangible assets     1,195       -     -       1,195  
EBITDA   $ 4,124     $ 794   $ -     $ 4,918  
    Stock-based compensation     1,191       -     -       1,191  
    Acquisition-related, restructuring and other costs     1,344       -     -       1,344  
ADJUSTED EBITDA   $ 6,659     $ 794   $ -     $ 7,453  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:                        
                               
NET INCOME (LOSS)   $ (1,057 )   $ 459   $ -     $ (598 )
    Stock-based compensation     1,191       -     -       1,191  
    Amortization of acquisition-related intangible assets     1,195       -     -       1,195  
    Acquisition-related, restructuring and other costs     1,344       -     -       1,344  
NON-GAAP NET INCOME (LOSS)   $ 2,673     $ 459   $ -     $ 3,132  
Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.
   
   
PFSweb, Inc. and Subsidiaries  
Unaudited Consolidating Statements of Operations  
For the Twelve Months Ended December 31, 2015  
(In Thousands)  
   
                     
        Business &            
  PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                            
  Service fee revenue $ 165,510     $ 16,665   $ -     $ 182,175  
  Service fee revenue - affiliate   15,559       818     (16,377 )     -  
  Product revenue, net   -       58,659     -       58,659  
  Pass-thru revenue   47,435       -     -       47,435  
      Total revenues   228,504       76,142     (16,377 )     288,269  
                             
COSTS OF REVENUES:                            
  Cost of service fee revenue   122,981       16,193     (15,600 )     123,574  
  Cost of product revenue   -       55,587     -       55,587  
  Cost of pass-thru revenue   47,435       -     -       47,435  
      Total costs of revenues   170,416       71,780     (15,600 )     226,596  
      Gross profit   58,088       4,362     (777 )     61,673  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   64,427       2,630     (777 )     66,280  
    Income (loss) from operations   (6,339 )     1,732     -       (4,607 )
INTEREST EXPENSE (INCOME), NET   1,326       431     -       1,757  
    Income (loss) before income taxes   (7,665 )     1,301     -       (6,364 )
INCOME TAX EXPENSE (BENEFIT)   954       543     -       1,497  
NET INCOME (LOSS) $ (8,619 )   $ 758   $ -     $ (7,861 )
NON-GAAP NET INCOME (LOSS) $ 4,357     $ 1,078   $ -     $ 5,435  
                             
EBITDA $ 8,424     $ 1,800   $ -     $ 10,224  
ADJUSTED EBITDA $ 18,572     $ 2,120   $ -     $ 20,692  
                             
                             
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:                        
    Amortization of acquisition-related intangible assets                            
NET INCOME (LOSS) $ (8,619 )   $ 758   $ -       (7,861 )
    Income tax expense (benefit)   954       543     -       1,497  
    Interest expense (income), net   1,326       431     -       1,757  
    Depreciation and amortization   11,935       68     -       12,003  
    Amortization of acquisition-related intangible assets   2,828       -     -       2,828  
EBITDA $ 8,424     $ 1,800   $ -     $ 10,224  
    Stock-based compensation   4,637       -     -       4,637  
    Acquisition-related, restructuring and other costs   5,511       320     -       5,831  
ADJUSTED EBITDA $ 18,572     $ 2,120   $ -     $ 20,692  
                             
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:                        
                             
NET INCOME (LOSS) $ (8,619 )   $ 758   $ -     $ (7,861 )
    Stock-based compensation   4,637       -     -       4,637  
    Amortization of acquisition-related intangible assets   2,828       -     -       2,828  
    Acquisition-related, restructuring and other costs   5,511       320     -       5,831  
NON-GAAP NET INCOME (LOSS) $ 4,357     $ 1,078   $ -     $ 5,435  
                             
Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.  
   
   
PFSweb, Inc. and Subsidiaries  
Unaudited Condensed Consolidating Balance Sheets  
as of December 31, 2016  
(In Thousands)  
   
   
          Business &              
    PFSweb     Retail Connect     Eliminations     Consolidated  
                                 
ASSETS                                
CURRENT ASSETS:                                
  Cash and cash equivalents   $ 5,166     $ 19,259     $ -     $ 24,425  
  Restricted cash     -       215       -       215  
  Accounts receivable, net     59,292       22,243       (1,312 )     80,223  
  Inventories, net     -       6,632       -       6,632  
  Other receivables     362       6,388       -       6,750  
  Prepaid expenses and other current assets     6,511       788       -       7,299  
    Total current assets     71,331       55,525       (1,312 )     125,544  
                                 
PROPERTY AND EQUIPMENT, net     30,230       34       -       30,264  
RECEIVABLE/INVESTMENT IN AFFILIATES     10,063       -       (10,063 )     -  
INTANGIBLE ASSETS, net     6,864       -       -       6,864  
GOODWILL     46,210       -       -       46,210  
OTHER ASSETS     2,454       -       -       2,454  
    Total assets     167,152       55,559       (11,375 )     211,336  
                                 
LIABILITIES AND SHAREHOLDERS EQUITY                                
CURRENT LIABILITIES:                                
  Current portion of long-term debt and capital lease obligations   $ 7,300     $ -     $ -     $ 7,300  
  Trade accounts payable     19,687       41,377       (1,312 )     59,752  
  Deferred revenue     7,156       -       -       7,156  
  Performance-based contingent payments     2,405       -       -       2,405  
  Accrued expenses     26,048       4,312       -       30,360  
    Total current liabilities     62,596       45,689       (1,312 )     106,973  
                                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     52,399       -       -       52,399  
PAYABLE TO AFFILIATES     -       22,045       (22,045 )     -  
DEFERRED REVENUE     4,127       -       -       4,127  
DEFERRED RENT     4,810       -       -       4,810  
PERFORMANCE-BASED CONTINGENT PAYMENTS     1,678       -       -       1,678  
OTHER LIABILITIES     1,066       -       -       1,066  
    Total liabilities     126,676       67,734       (23,357 )     171,053  
                                 
                                 
COMMITMENTS AND CONTINGENCIES                                
                                 
SHAREHOLDERS' EQUITY:                                
  Common stock     19       19       (19 )     19  
  Capital contributions     -       1,000       (1,000 )     -  
  Additional paid-in capital     146,286       28,060       (28,060 )     146,286  
  Retained earnings (accumulated deficit)     (105,317 )     (42,230 )     42,230       (105,317 )
  Accumulated other comprehensive income (loss)     (387 )     976       (1,169 )     (580 )
  Treasury stock     (125 )     -       -       (125 )
    Total shareholders' equity     40,476       (12,175 )     11,982       40,283  
    Total liabilities and shareholders' equity   $ 167,152     $ 55,559     $ (11,375 )   $ 211,336  
(A) The financial data above should be read in conjunction with the audited consolidated financial statements of PFSweb, Inc. included in its Form 10-K for the year ended December 31, 2016.
   
   
PFSweb, Inc. and Subsidiaries  
Unaudited Condensed Consolidating Balance Sheets  
as of December 31, 2015  
(In Thousands)  
   
                         
          Business &              
    PFSweb     Retail Connect     Eliminations     Consolidated  
                                 
ASSETS                                
CURRENT ASSETS:                                
  Cash and cash equivalents   $ 7,962     $ 13,819     $ -     $ 21,781  
  Restricted cash     51       224       -       275  
  Accounts receivable, net     51,231       20,348       (879 )     70,700  
  Inventories, net     -       9,262       -       9,262  
  Other receivables     2,621       6,083       -       8,704  
  Prepaid expenses and other current assets     4,744       918       -       5,662  
    Total current assets     66,609       50,654       (879 )     116,384  
                                 
PROPERTY AND EQUIPMENT, net     24,065       28       -       24,093  
RECEIVABLE/INVESTMENT IN AFFILIATES     9,577       -       (9,577 )     -  
INTANGIBLE ASSETS, net     8,810       -       -       8,810  
GOODWILL     39,829       -       -       39,829  
OTHER ASSETS     2,174       -       -       2,174  
      Total assets     151,064       50,682       (10,456 )     191,290  
                                 
LIABILITIES AND SHAREHOLDERS EQUITY                                
CURRENT LIABILITIES:                                
  Current portion of long-term debt and capital lease obligations   $ 3,153     $ -     $ -     $ 3,153  
  Trade accounts payable     15,329       36,710       (869 )     51,170  
  Deferred revenue     7,390       -       -       7,390  
  Performance-based contingent payments     11,679       -       -       11,679  
  Accrued expenses     26,015       4,558       (10 )     30,563  
    Total current liabilities     63,566       41,268       (879 )     103,955  
                                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     32,238       -       -       32,238  
PAYABLE TO AFFILIATES     -       22,056       (22,056 )     -  
DEFERRED REVENUE     4,499       -       -       4,499  
DEFERRED RENT     4,362       -       -       4,362  
PERFORMANCE-BASED CONTINGENT PAYMENTS     2,478       -       -       2,478  
    Total liabilities     107,143       63,324       (22,935 )     147,532  
                                 
                                 
COMMITMENTS AND CONTINGENCIES                                
                                 
SHAREHOLDERS' EQUITY:                                
  Common stock     18       19       (19 )     18  
  Capital contributions     -       1,000       (1,000 )     -  
  Additional paid-in capital     141,948       28,060       (28,060 )     141,948  
  Retained earnings (accumulated deficit)     (97,616 )     (42,827 )     42,656       (97,787 )
  Accumulated other comprehensive income (loss)     (304 )     1,106       (1,098 )     (296 )
  Treasury stock     (125 )     -       -       (125 )
    Total shareholders' equity     43,921       (12,642 )     12,479       43,758  
    Total liabilities and shareholders' equity   $ 151,064     $ 50,682     $ (10,456 )   $ 191,290  
                                 
(A) The financial data above should be read in conjunction with the audited consolidated financial statements of PFSweb, Inc. included in its Form 10-K for the year ended December 31, 2016.  
   

Contact Information

  • Company Contact:

    Michael C. Willoughby
    Chief Executive Officer
    Or
    Thomas J. Madden
    Chief Financial Officer
    Tel 972-881-2900

    Investor Relations:

    Liolios
    Scott Liolios or Sean Mansouri
    Tel 949-574-3860
    Email Contact