SOURCE: PFSweb, Inc.

PFSweb, Inc.

March 05, 2015 08:30 ET

PFSweb Reports Record Fourth Quarter and Full Year 2014 Results

Q4 Adjusted EBITDA up 76% to Record $6.8 Million, Full Year up 28% to Record $13.7 Million

ALLEN, TX--(Marketwired - Mar 5, 2015) - PFSweb, Inc. (NASDAQ: PFSW), a global provider of end-to-end eCommerce solutions, reported results for the fourth quarter and full year ended December 31, 2014.

Fourth Quarter 2014 Highlights

  • Service fee equivalent revenue (a non-GAAP measure defined below) increased 38% to a record $49.0 million compared to $35.6 million in the same period of 2013
  • Adjusted EBITDA (a non-GAAP measure defined below) increased 76% to a record $6.8 million compared to $3.9 million in the same period of 2013
  • Successfully concluded the 2014 holiday season with a high level of client satisfaction. Comparable direct-to-consumer clients experienced more than 20% year-over-year growth in their gross merchandise revenue during the quarter.
  • Expanded global sales operations with two additional European sales offices in London and Munich

Fourth Quarter 2014 Financial Results

Total revenues in the fourth quarter of 2014 increased 18% to $78.7 million compared to $66.7 million in the same period of 2013. Service fee revenue in the fourth quarter of 2014 increased 40% to $48.0 million compared to $34.3 million last year. Product revenue decreased to $18.1 million compared to $21.3 million in the same period of 2013, primarily due to ongoing restructuring activities by the company's largest client in this segment.

Service fee equivalent revenue in the fourth quarter of 2014 increased 38% to a record $49.0 million compared to $35.6 million in the same period of 2013. The increase was primarily due to new and expanded client relationships, higher seasonal volumes, and the benefit from the acquisitions of REV Solutions and LiveAreaLabs, both of which occurred in September 2014.

Service fee gross margin in the fourth quarter was 28.2% compared to 30.3% in the same period in 2013. While each period includes the benefit of higher margin project activity, the 2014 period included an increased level of expenses to prepare for and support certain client operations for the holiday volumes.

Adjusted EBITDA increased 76% to a record $6.8 million in the fourth quarter of 2014 compared to $3.9 million in the same period of 2013.

Net income in the fourth quarter of 2014 was $2.1 million or $0.12 per diluted share, compared to a net loss of $0.4 million or $(0.03) per diluted share in the same period of 2013. Net income in the fourth quarter of 2014 included $0.6 million in stock-based compensation expense, $0.2 million in acquisition costs, and $0.9 million in restructuring and other charges. The restructuring and other charges include costs associated with closing the company's Manila operation and integration of its recent acquisitions. This compares to $1.4 million in stock-based compensation expense and no acquisition or restructuring related costs in the same period of 2013.

Non-GAAP net income (a non-GAAP measure defined below) in the fourth quarter of 2014 was $3.7 million or $0.21 per diluted share, compared to non-GAAP net income of $1.0 million or $0.06 per diluted share in the fourth quarter of 2013.

Cash and cash equivalents decreased to $18.1 million compared to $22.4 million at December 31, 2013, primarily due to cash paid for the acquisitions of REV Solutions and LiveAreaLabs. Total debt decreased to $10.9 million at December 31, 2014 compared to $11.1 million at December 31, 2013.

Full Year 2014 Financial Results

Total revenues in 2014 increased 2% to $247.0 million compared to $241.6 million in 2013. Service fee revenue in 2014 increased 19% to $134.4 million compared to $113.0 million last year, while product revenue was $75.3 million compared to $91.0 million in the prior year. Service fee equivalent revenue increased 17% to a record $138.7 million compared to $118.7 million in 2013.

Service fee gross margin in 2014 was 29.4% compared to 31.7% last year.

Adjusted EBITDA increased 28% to a record $13.7 million in 2014 compared to $10.7 million in 2013.

Net loss in 2014 was $4.6 million or $(0.28) per diluted share compared to net loss of $5.9 million or $(0.39) per diluted share in 2013. Net loss in 2014 included $3.1 million in stock-based compensation expense, $1.7 million in acquisition costs, and $1.0 million in restructuring and other charges. This compares to $2.6 million in stock-based compensation expense and $2.5 million in restructuring and other charges in 2013.

Non-GAAP net income in 2014 was $1.2 million or $0.07 per diluted share, compared to non-GAAP net loss of $0.8 million or $(0.05) per diluted share in 2013.

Management Commentary

"2014 was highlighted by a number of financial and operational accomplishments," said Michael Willoughby, CEO of PFSweb. "We generated increases in nearly every metric of our business, most notably a 17% increase in service fee equivalent revenue and a 28% increase in adjusted EBITDA. In addition to new client wins and the highly-anticipated rollout of the United States Mint eCommerce solution, we strengthened our agency and technology service offerings with the acquisitions of REV Solutions and LiveAreaLabs.

"As an eCommerce system integrator, REV Solutions enhances our Demandware practice and adds Oracle Commerce support capabilities. LiveAreaLabs, a digital creative agency and system integrator, strengthens our agency service offering and further supplements our Demandware related technology services. LiveAreaLabs also broadens our integration capabilities with the additional strategy, creative and user experience design support for hybris, Magento, WebSphere and Drupal, among other leading platforms."

"Following these acquisitions," Willoughby continued, "the year culminated in a very strong holiday season, with clients who have been with us for more than a year realizing, on average, more than 20% year-over-year growth in gross merchandise revenue in Q4. Overall, our strong digital agency, technology and infrastructure performance for our clients during this peak-volume period positions us well for expanded opportunities in the future.

"For 2015, we remain focused on providing an exceptional omni-channel experience for both new and existing clients. With our expanded digital agency and technology service capabilities, we believe we are well-positioned to capitalize on the evolving eCommerce marketplace, both in the U.S. and abroad. We will continue to invest in our sales and marketing efforts, as reflected by our new European sales offices and recently appointed Executive VP of Sales, Travis Hess. We will also continue to target acquisitions that support our geographic growth initiatives and enhance our end-to-end solution offering, especially within professional services. Our goal is to deliver another year of record performance in 2015."

2015 Outlook

While the company's business activity in 2015 is expected to remain at previously communicated levels, the impact of foreign currency exchange related to the weak Canadian dollar and Euro is expected to partially offset the company's financial results. Accordingly, PFSweb has adjusted its 2015 service fee equivalent revenue guidance to range between $160 million and $170 million, which reflects targeted growth of 15% to 23% from 2014. The previously issued 2015 service fee equivalent revenue guidance was $165 million to $175 million. The company is targeting adjusted EBITDA to range between $16 million and $18 million, which reflects targeted growth of 17% to 32% from 2014. The 2015 guidance excludes the impact of potential future acquisitions.

Conference Call

PFSweb 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, 2014.

The company's CEO Mike Willoughby and CFO Tom Madden will host the conference call, followed by a question and answer period.

Date: Thursday, March 5, 2015
Time: 11:00 a.m. Eastern time (10:00 a.m. Central time)
Toll-free dial-in number: 1-888-417-8533
International dial-in number: 1-719-325-2329
Conference ID: 9205523

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 Group at 1-949-574-3860.

The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=113361 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 19, 2015.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 9205523

About PFSweb Inc.

PFSweb (NASDAQ: PFSW) is a global provider of end-to-end eCommerce solutions including 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. PFSweb supports organizations across various industries, including Procter & Gamble, L'Oreal, LEGO, Columbia Sportswear, Ricoh, Roots Canada Ltd., Diageo, BCBGMAXAZRIA, T.J. Maxx, the United States Mint, and many more. PFSweb is headquartered in Allen, TX with additional locations in Tennessee, Mississippi, Minnesota, Washington, New York, Canada, Belgium, London, Munich, and India. For more information, please visit www.pfsweb.com or download the free PFSweb IR App on your iPhone, iPad or Android device.

Non-GAAP Financial Measures

This news release may contain 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 costs and restructuring and other charges.

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

Service fee equivalent revenue represents service fee revenue plus the gross profit earned on product revenue.

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 costs and restructuring and other charges 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.

PFSweb 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. PFSweb's Annual Report on Form 10-K for the year ended December 31, 2013 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. PFSweb 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,  
    2014     2013  
ASSETS                
CURRENT ASSETS:                
  Cash and cash equivalents   $ 18,128     $ 22,418  
  Restricted cash     521       130  
  Accounts receivable, net of allowance for doubtful accounts of $447 and $382 at December 31, 2014 and December 31, 2013, respectively    
59,126
     
55,292
 
  Inventories, net of reserves of $768 and $962 at December 31, 2014 and December 31, 2013, respectively    
10,534
     
14,169
 
  Other receivables     5,638       5,241  
  Prepaid expenses and other current assets     7,103       4,713  
    Total current assets     101,050       101,963  
                 
PROPERTY AND EQUIPMENT, net     26,604       27,190  
INTANGIBLE ASSETS, net     2,170       -  
GOODWILL     8,366       -  
OTHER ASSETS     2,556       2,883  
    Total assets     140,746       132,036  
                 
LIABILITIES AND SHAREHOLDERS EQUITY                
CURRENT LIABILITIES:                
  Current portion of long-term debt and capital lease obligations   $ 6,850     $ 8,231  
  Trade accounts payable     38,842       34,096  
  Deferred revenue     9,098       8,181  
  Accrued expenses     28,473       25,045  
    Total current liabilities     83,263       75,553  
                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     4,062       2,876  
DEFERRED REVENUE     5,355       7,491  
DEFERRED RENT     4,870       5,191  
OTHER LONG-TERM LIABILITIES     3,091       -  
    Total liabilities     100,641       91,111  
                 
                 
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; 17,047,093 and 16,540,904 shares issued at December 31, 2014 and December 31, 2013, respectively; and 17,013,626 and 16,507,437 shares outstanding as of December 31, 2014 and December 31, 2013, respectively    


17
     


17
 
  Additional paid-in capital     129,457       124,522  
  Accumulated deficit     (89,926 )     (85,300 )
  Accumulated other comprehensive income     682       1,811  
  Treasury stock at cost, 33,467 shares     (125 )     (125 )
    Total shareholders' equity     40,105       40,925  
    Total liabilities and shareholders' equity   $ 140,746     $ 132,036  
 
(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, 2013.
 
 
 
   
   
PFSweb, Inc. and Subsidiaries  
Unaudited Condensed Consolidated Statements of Operations (A)  
(In Thousands, Except Per Share Data)  
                         
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2014     2013     2014     2013  
REVENUES:                                
  Product revenue, net   $ 18,102     $ 21,322     $ 75,284     $ 90,982  
  Service fee revenue     47,992       34,269       134,385       112,977  
  Pass-thru revenue     12,587       11,133       37,379       37,644  
    Total revenues     78,681       66,724       247,048       241,603  
                                 
COSTS OF REVENUES:                                
  Cost of product revenue     17,067       20,022       71,019       85,237  
  Cost of service fee revenue     34,471       23,895       94,858       77,160  
  Cost of pass-thru revenue     12,587       11,133       37,379       37,644  
      Total costs of revenues     64,125       55,050       203,256       200,041  
      Gross profit     14,556       11,674       43,792       41,562  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     12,387       11,840       47,658       46,235  
    Income (loss) from operations     2,169       (166 )     (3,866 )     (4,673 )
INTEREST EXPENSE (INCOME), NET     323       115       813       679  
    Income (loss) before income taxes     1,846       (281 )     (4,679 )     (5,352 )
INCOME TAX PROVISION (BENEFIT)     (258 )     128       (53 )     539  
NET INCOME (LOSS)   $ 2,104     $ (409 )   $ (4,626 )   $ (5,891 )
NON-GAAP NET INCOME (LOSS)   $ 3,744     $ 970     $ 1,216     $ (772 )
                                 
NET INCOME (LOSS) PER SHARE:                                
  Basic   $ 0.12     $ (0.03 )   $ (0.28 )   $ (0.39 )
  Diluted   $ 0.12     $ (0.03 )   $ (0.28 )   $ (0.39 )
                                 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:                                
  Basic     16,905       16,345       16,737       14,957  
  Diluted     18,258       16,345       16,737       14,957  
                                 
EBITDA   $ 5,195     $ 2,511     $ 7,809     $ 5,537  
ADJUSTED EBITDA   $ 6,835     $ 3,890     $ 13,651     $ 10,656  
   
(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, 2013.
   
   
   
   
PFSweb, Inc. and Subsidiaries  
Reconciliation of certain Non-GAAP Items to GAAP  
(In Thousands, Except Per Share Data)  
                         
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2014     2013     2014     2013  
NET INCOME (LOSS)   $ 2,104     $ (409 )   $ (4,626 )   $ (5,891 )
    Income tax expense (benefit)     (258 )     128       (53 )     539  
    Interest expense, net     323       115       813       679  
    Depreciation and amortization     3,026       2,677       11,675       10,210  
EBITDA   $ 5,195     $ 2,511     $ 7,809     $ 5,537  
    Stock-based compensation     550       1,379       3,059       2,574  
    Acquisition related costs     229       -       1,749       -  
    Restructuring and other charges     861       -       1,034       2,545  
ADJUSTED EBITDA   $ 6,835     $ 3,890     $ 13,651     $ 10,656  
                                 
                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2014     2013     2014     2013  
                                 
NET INCOME (LOSS)   $ 2,104     $ (409 )   $ (4,626 )   $ (5,891 )
    Stock-based compensation     550       1,379       3,059       2,574  
    Acquisition related costs     229       -       1,749       -  
    Restructuring and other charges     861       -       1,034       2,545  
NON-GAAP NET INCOME (LOSS)   $ 3,744     $ 970     $ 1,216     $ (772 )
                                 
NET INCOME (LOSS) PER SHARE:                                
  Basic   $ 0.12     $ (0.03 )   $ (0.28 )   $ (0.39 )
  Diluted   $ 0.12     $ (0.03 )   $ (0.28 )   $ (0.39 )
                                 
NON-GAAP NET INCOME (LOSS) Per Share:                                
  Basic   $ 0.22     $ 0.06     $ 0.07     $ (0.05 )
  Diluted   $ 0.21     $ 0.06     $ 0.07     $ (0.05 )
                                 
                                 
                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2014     2013     2014     2013  
                                 
TOTAL REVENUES   $ 78,681     $ 66,724     $ 247,048     $ 241,603  
  Pass-thru revenue     (12,587 )     (11,133 )     (37,379 )     (37,644 )
  Cost of product revenue     (17,067 )     (20,022 )     (71,019 )     (85,237 )
SERVICE FEE EQUIVALENT REVENUE   $ 49,027     $ 35,569     $ 138,650     $ 118,722  
                                 
                                 
   
   
PFSweb, Inc. and Subsidiaries  
Unaudited Consolidating Statements of Operations  
For the Three Months Ended December 31, 2014  
(In Thousands)  
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                              
  Product revenue, net   $ -     $ 18,102   $ -     $ 18,102  
  Service fee revenue     42,634       5,358     -       47,992  
  Service fee revenue - affiliate     4,642       292     (4,934 )     -  
  Pass-thru revenue     12,587       -     -       12,587  
      Total revenues     59,863       23,752     (4,934 )     78,681  
                               
COSTS OF REVENUES:                              
  Cost of product revenue     -       17,067     -       17,067  
  Cost of service fee revenue     33,855       5,328     (4,712 )     34,471  
  Cost of pass-thru revenue     12,587       -     -       12,587  
      Total costs of revenues     46,442       22,395     (4,712 )     64,125  
      Gross profit     13,421       1,357     (222 )     14,556  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     12,025       584     (222 )     12,387  
    Income (loss) from operations     1,396       773     -       2,169  
INTEREST EXPENSE (INCOME), NET     196       127     -       323  
    Income (loss) before income taxes     1,200       646     -       1,846  
INCOME TAX PROVISION (BENEFIT)     (497 )     239     -       (258 )
NET INCOME (LOSS)   $ 1,697     $ 407   $ -     $ 2,104  
NON-GAAP NET INCOME (LOSS)   $ 3,337     $ 407   $ -     $ 3,744  
                               
EBITDA   $ 4,409     $ 786   $ -     $ 5,195  
ADJUSTED EBITDA   $ 6,049     $ 786   $ -     $ 6,835  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:  
                               
NET INCOME (LOSS)   $ 1,697     $ 407   $ -       2,104  
    Income tax expense (benefit)     (497 )     239     -       (258 )
    Interest expense (income), net     196       127     -       323  
    Depreciation and amortization     3,013       13     -       3,026  
EBITDA   $ 4,409     $ 786   $ -     $ 5,195  
    Stock-based compensation     550       -     -       550  
    Acquisition related costs     229       -     -       229  
    Restructuring and other charges     861       -     -       861  
ADJUSTED EBITDA   $ 6,049     $ 786   $ -     $ 6,835  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:  
                               
NET INCOME (LOSS)   $ 1,697     $ 407   $ -     $ 2,104  
    Stock-based compensation     550       -     -       550  
    Acquisition related costs     229       -     -       229  
    Restructuring and other charges     861       -     -       861  
NON-GAAP NET INCOME (LOSS)   $ 3,337     $ 407   $ -     $ 3,744  
                               
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, 2013  
(In Thousands)  
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                              
  Product revenue, net   $ -     $ 21,322   $ -     $ 21,322  
  Service fee revenue     30,580       3,689     -       34,269  
  Service fee revenue - affiliate     3,779       338     (4,117 )     -  
  Pass-thru revenue     11,133       -     -       11,133  
      Total revenues     45,492       25,349     (4,117 )     66,724  
                               
COSTS OF REVENUES:                              
  Cost of product revenue     -       20,022     -       20,022  
  Cost of service fee revenue     24,028       3,547     (3,680 )     23,895  
  Cost of pass-thru revenue     11,133       -     -       11,133  
      Total costs of revenues     35,161       23,569     (3,680 )     55,050  
      Gross profit     10,331       1,780     (437 )     11,674  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     11,036       1,241     (437 )     11,840  
    Income (loss) from operations     (705 )     539     -       (166 )
INTEREST EXPENSE (INCOME), NET     (29 )     144     -       115  
    Income (loss) before income taxes     (676 )     395     -       (281 )
INCOME TAX PROVISION (BENEFIT)     (15 )     143     -       128  
NET INCOME (LOSS)   $ (661 )   $ 252   $ -     $ (409 )
NON-GAAP NET INCOME (LOSS)   $ 718     $ 252   $ -     $ 970  
                               
EBITDA   $ 1,929     $ 582   $ -     $ 2,511  
ADJUSTED EBITDA   $ 3,308     $ 582   $ -     $ 3,890  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:  
                               
NET INCOME (LOSS)   $ (661 )   $ 252   $ -       (409 )
    Income tax expense (benefit)     (15 )     143     -       128  
    Interest expense (income), net     (29 )     144     -       115  
    Depreciation and amortization     2,634       43     -       2,677  
EBITDA   $ 1,929     $ 582   $ -     $ 2,511  
    Stock-based compensation     1,379       -     -       1,379  
ADJUSTED EBITDA   $ 3,308     $ 582   $ -     $ 3,890  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:  
                               
NET INCOME (LOSS)   $ (661 )   $ 252   $ -     $ (409 )
    Stock-based compensation     1,379       -     -       1,379  
NON-GAAP NET INCOME (LOSS)   $ 718     $ 252   $ -     $ 970  
                               
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, 2014  
(In Thousands)  
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                              
  Product revenue, net   $ -     $ 75,284   $ -     $ 75,284  
  Service fee revenue     119,573       14,812     -       134,385  
  Service fee revenue - affiliate     14,556       1,138     (15,694 )     -  
  Pass-thru revenue     37,379       -             37,379  
      Total revenues     171,508       91,234     (15,694 )     247,048  
                               
COSTS OF REVENUES:                              
  Cost of product revenue     -       71,019     -       71,019  
  Cost of service fee revenue     94,301       15,182     (14,625 )     94,858  
  Cost of pass-thru revenue     37,379       -     -       37,379  
      Total costs of revenues     131,680       86,201     (14,625 )     203,256  
      Gross profit     39,828       5,033     (1,069 )     43,792  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     45,779       2,948     (1,069 )     47,658  
    Income (loss) from operations     (5,951 )     2,085     -       (3,866 )
INTEREST EXPENSE (INCOME), NET     264       549     -       813  
    Income (loss) before income taxes     (6,215 )     1,536     -       (4,679 )
INCOME TAX PROVISION (BENEFIT)     (625 )     572     -       (53 )
NET INCOME (LOSS)   $ (5,590 )   $ 964   $ -     $ (4,626 )
NON-GAAP NET INCOME (LOSS)   $ 252     $ 964   $ -     $ 1,216  
                               
EBITDA   $ 5,669     $ 2,140   $ -     $ 7,809  
ADJUSTED EBITDA   $ 11,511     $ 2,140   $ -     $ 13,651  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:  
                               
NET INCOME (LOSS)   $ (5,590 )   $ 964   $ -       (4,626 )
    Income tax expense (benefit)     (625 )     572     -       (53 )
    Interest expense (income), net     264       549     -       813  
    Depreciation and amortization     11,620       55     -       11,675  
EBITDA   $ 5,669     $ 2,140   $ -     $ 7,809  
    Stock-based compensation     3,059       -     -       3,059  
    Acquisition related costs     1,749       -     -       1,749  
    Restructuring and other charges     1,034       -     -       1,034  
ADJUSTED EBITDA   $ 11,511     $ 2,140   $ -     $ 13,651  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:  
                               
NET INCOME (LOSS)   $ (5,590 )   $ 964   $ -     $ (4,626 )
    Stock-based compensation     3,059       -     -       3,059  
    Acquisition related costs     1,749       -     -       1,749  
    Restructuring and other charges     1,034       -     -       1,034  
NON-GAAP NET INCOME (LOSS)   $ 252     $ 964   $ -     $ 1,216  
                               
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, 2013  
(In Thousands)  
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                              
  Product revenue, net   $ -     $ 90,982   $ -     $ 90,982  
  Service fee revenue     104,448       8,529     -       112,977  
  Service fee revenue - affiliate     10,246       1,448     (11,694 )     -  
  Pass-thru revenue     37,644       -     -       37,644  
      Total revenues     152,338       100,959     (11,694 )     241,603  
                               
COSTS OF REVENUES:                              
  Cost of product revenue     -       85,237     -       85,237  
  Cost of service fee revenue     78,843       8,708     (10,391 )     77,160  
  Cost of pass-thru revenue     37,644       -     -       37,644  
      Total costs of revenues     116,487       93,945     (10,391 )     200,041  
      Gross profit     35,851       7,014     (1,303 )     41,562  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     41,709       5,829     (1,303 )     46,235  
    Income (loss) from operations     (5,858 )     1,185     -       (4,673 )
INTEREST EXPENSE (INCOME), NET     84       595     -       679  
    Income (loss) before income taxes     (5,942 )     590     -       (5,352 )
INCOME TAX PROVISION (BENEFIT)     185       354     -       539  
NET INCOME (LOSS)   $ (6,127 )   $ 236   $ -     $ (5,891 )
NON-GAAP NET INCOME (LOSS)   $ (1,008 )   $ 236   $ -     $ (772 )
                               
EBITDA   $ 4,193     $ 1,344   $ -     $ 5,537  
ADJUSTED EBITDA   $ 9,312     $ 1,344   $ -     $ 10,656  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:  
                               
NET INCOME (LOSS)   $ (6,127 )   $ 236   $ -       (5,891 )
    Income tax expense (benefit)     185       354     -       539  
    Interest expense (income), net     84       595     -       679  
    Depreciation and amortization     10,051       159     -       10,210  
EBITDA   $ 4,193     $ 1,344   $ -     $ 5,537  
    Stock-based compensation     2,574       -     -       2,574  
    Restructuring and other charges     2,545       -     -       2,545  
ADJUSTED EBITDA   $ 9,312     $ 1,344   $ -     $ 10,656  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:  
                               
NET INCOME (LOSS)   $ (6,127 )   $ 236   $ -     $ (5,891 )
    Stock-based compensation     2,574       -     -       2,574  
    Restructuring and other charges     2,545       -     -       2,545  
NON-GAAP NET INCOME (LOSS)   $ (1,008 )   $ 236   $ -     $ (772 )
                               
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, 2014  
(In Thousands)  
                         
                         
          Business &              
    PFSweb     Retail Connect     Eliminations     Consolidated  
ASSETS                                
CURRENT ASSETS:                                
  Cash and cash equivalents   $ 6,671     $ 11,457     $ -     $ 18,128  
  Restricted cash     -       521       -       521  
  Accounts receivable, net     42,081       18,415       (1,370 )     59,126  
  Inventories, net     -       10,534       -       10,534  
  Other receivables     -       5,638       -       5,638  
  Prepaid expenses and other current assets     6,141       962       -       7,103  
    Total current assets     54,893       47,527       (1,370 )     101,050  
                                 
PROPERTY AND EQUIPMENT, net     26,478       126       -       26,604  
RECEIVABLE/INVESTMENT IN AFFILIATES     9,938       -       (9,938 )     -  
INTANGIBLE ASSETS, net     2,170                       2,170  
GOODWILL     8,366       -       -       8,366  
OTHER ASSETS     2,527       29       -       2,556  
    Total assets     104,372       47,682       (11,308 )     140,746  
                                 
LIABILITIES AND SHAREHOLDERS EQUITY                                
CURRENT LIABILITIES:                                
  Current portion of long-term debt and capital lease obligations   $ 3,583     $ 3,267     $ -     $ 6,850  
  Trade accounts payable     13,001       27,211       (1,370 )     38,842  
  Deferred revenue     9,098       -       -       9,098  
  Accrued expenses     21,338       7,135       -       28,473  
    Total current liabilities     47,020       37,613       (1,370 )     83,263  
                                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     4,062       -       -       4,062  
PAYABLE TO AFFILIATES     -       22,045       (22,045 )     -  
DEFERRED REVENUE     5,355       -       -       5,355  
DEFERRED RENT     4,870                       4,870  
OTHER LONG TERM LIABILITIES     3,091       -       -       3,091  
    Total liabilities     64,398       59,658       (23,415 )     100,641  
                                 
COMMITMENTS AND CONTINGENCIES                                
                                 
SHAREHOLDERS' EQUITY:                                
  Common stock     17       19       (19 )     17  
  Capital contributions     -       1,000       (1,000 )     -  
  Additional paid-in capital     129,457       28,060       (28,060 )     129,457  
  Retained earnings (accumulated deficit)     (90,061 )     (42,711 )     42,846       (89,926 )
  Accumulated other comprehensive income     686       1,656       (1,660 )     682  
  Treasury stock     (125 )     -       -       (125 )
    Total shareholders' equity     39,974       (11,976 )     12,107       40,105  
    Total liabilities and shareholders' equity   $ 104,372     $ 47,682     $ (11,308 )   $ 140,746  
                                 
                                 
   
   
PFSweb, Inc. and Subsidiaries  
Unaudited Condensed Consolidating Balance Sheets  
as of December 31, 2013  
(In Thousands)  
                         
                         
          Business &              
    PFSweb     Retail Connect     Eliminations     Consolidated  
ASSETS                                
CURRENT ASSETS:                                
  Cash and cash equivalents   $ 15,028     $ 7,390     $ -     $ 22,418  
  Restricted cash     -       130       -       130  
  Accounts receivable, net     37,857       18,697       (1,262 )     55,292  
  Inventories, net     -       14,169       -       14,169  
  Other receivables     -       5,241       -       5,241  
  Prepaid expenses and other current assets     3,552       1,161       -       4,713  
    Total current assets     56,437       46,788       (1,262 )     101,963  
                                 
PROPERTY AND EQUIPMENT, net     26,945       245       -       27,190  
RECEIVABLE/INVESTMENT IN AFFILIATES     12,563       -       (12,563 )     -  
OTHER ASSETS     2,800       83       -       2,883  
    Total assets     98,745       47,116       (13,825 )     132,036  
                                 
LIABILITIES AND SHAREHOLDERS EQUITY                                
CURRENT LIABILITIES:                                
  Current portion of long-term debt and capital lease obligations   $ 4,419     $ 3,812     $ -     $ 8,231  
  Trade accounts payable     11,602       23,756       (1,262 )     34,096  
  Deferred revenue     8,181       -       -       8,181  
  Accrued expenses     18,114       6,931       -       25,045  
    Total current liabilities     42,316       34,499       (1,262 )     75,553  
                                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     2,876       -       -       2,876  
PAYABLE TO AFFILIATES     -       23,045       (23,045 )     -  
DEFERRED REVENUE     7,491       -       -       7,491  
DEFERRED RENT     5,191       -       -       5,191  
    Total liabilities     57,874       57,544       (24,307 )     91,111  
                                 
COMMITMENTS AND CONTINGENCIES                                
                                 
SHAREHOLDERS' EQUITY:                                
  Common stock     17       19       (19 )     17  
  Capital contributions     -       1,000       (1,000 )     -  
  Additional paid-in capital     124,522       28,060       (28,060 )     124,522  
  Retained earnings (accumulated deficit)     (85,360 )     (41,850 )     41,910       (85,300 )
  Accumulated other comprehensive income     1,817       2,343       (2,349 )     1,811  
  Treasury stock     (125 )     -       -       (125 )
    Total shareholders' equity     40,871       (10,428 )     10,482       40,925  
    Total liabilities and shareholders' equity   $ 98,745     $ 47,116     $ (13,825 )   $ 132,036  
                                 
                                 

Contact Information

  • Company Contact:
    Michael C. Willoughby
    Chief Executive Officer
    or
    Thomas J. Madden
    Chief Financial Officer
    Tel 972-881-2900

    Investor Relations:
    Liolios Group Inc.
    Scott Liolios or Sean Mansouri
    Tel 949-574-3860
    Email Contact