SOURCE: PFSweb, Inc.

PFSweb, Inc.

March 14, 2016 16:11 ET

PFSweb Reports Record Fourth Quarter and Full Year 2015 Results

Q4 Service Fee Equivalent Revenue up 26% to $61.6 Million; Adjusted EBITDA up 9% to $7.5 Million

ALLEN, TX--(Marketwired - Mar 14, 2016) - PFSweb, Inc. (NASDAQ: PFSW), a global commerce service provider, reported results for the fourth quarter and full year ended December 31, 2015.

Fourth Quarter 2015 Highlights vs. Same Year-Ago Quarter

  • Total revenues increased 14% to $90.1 million
  • Service fee equivalent revenue (a non-GAAP measure defined below) increased 26% to a record $61.6 million
  • Service fee gross margin increased 340 basis points to 31.6%
  • Adjusted EBITDA (a non-GAAP measure defined below) increased 9% to a Q4 record $7.5 million
  • Launched a new strategic commerce consulting practice to drive digital strategy for clients
  • Successfully concluded the 2015 holiday season with a high level of client satisfaction
  • Continued to aggressively build out global sales organization to support targeted future growth

Management Commentary
"2015 was a breakthrough year for PFSweb as we consistently achieved record quarterly results," said Michael Willoughby, CEO of PFSweb. "These results were driven by organic growth across all three of our core service offerings -- agency, technology and omni-channel operations -- and from the acquisitions of REV Solutions, LiveAreaLabs, Moda and CrossView. The fourth quarter was particularly strong due to heavy client volumes during the important holiday season, as well as increased project work in our higher-margin agency and technology services including the benefit of the CrossView acquisition completed in August 2015.

"During the fourth quarter, we launched our strategic commerce consulting practice, which provides high-value digital strategy and platform selection consulting to both B2B and B2C companies. Though we remain in the early stages of realizing the full benefits, we've already begun to leverage the services and insight from this practice to enhance our position and monetize earlier stages of the sales cycle.

"In 2016, we will continue to focus on driving growth through higher-margin service offerings, while serving as a strategic partner to our clients. We plan to continue leveraging the added platform and B2B capabilities from our CrossView acquisition to capitalize on a larger, more rapidly growing addressable market, with the ultimate goal of helping companies maximize their online sales across B2C and B2B channels. In order to aggressively capitalize on the opportunities we see in the market, we are making further investments in sales, marketing and infrastructure resources beginning in early 2016 to support our growth in the second half of 2016 and going forward. We will also continue to pursue strategic acquisitions to enhance our agency and technology services footprint in Western Europe. We believe the execution of these initiatives will further strengthen our leadership position in the global eCommerce marketplace."

Fourth Quarter 2015 Financial Results
Total revenues in the fourth quarter of 2015 increased 14% to $90.1 million compared to $78.7 million in the same period of 2014. Service fee revenue in the fourth quarter increased 27% to $60.9 million compared to $48.0 million last year. Product revenue was $13.9 million compared to $18.1 million in the same period of 2014 due to ongoing restructuring activities by the company's last remaining client in this segment and their discontinuation of certain product lines.

Service fee equivalent revenue increased 26% to a fourth quarter record $61.6 million compared to $49.0 million in the year-ago quarter, driven by both new and expanded client relationships, as well as approximately $8 million of service fees generated by the company's CrossView and Moda acquisitions in 2015.

Service fee gross margin in the fourth quarter increased 340 basis points to 31.6% compared to 28.2% in the same period of 2014. The increase was due to a higher proportion of agency and technology services in the 2015 quarter, in part due to the benefit from the acquisitions of REV and LiveArea that occurred in September 2014, as well as the Moda and CrossView acquisitions completed in 2015.

Adjusted EBITDA increased 9% to a fourth quarter record $7.5 million compared to $6.8 million in the same period of 2014. As a percentage of service fee equivalent revenue, adjusted EBITDA was 12.1% compared to 13.9% in the year-ago quarter.

Net loss in the fourth quarter was $0.6 million or $(0.03) per diluted share, compared to net income of $2.1 million or $0.12 per diluted share in the same period of 2014. Net loss in the fourth quarter of 2015 included $1.2 million in amortization of acquisition-related intangible assets, $1.2 million in stock-based compensation expense, and $1.3 million in acquisition-related, restructuring and other costs. This compares to $0.1 million in amortization of acquisition-related intangible assets, $0.6 million in stock-based compensation expense and $1.1 million in acquisition-related, restructuring and other costs in the same period of 2014.

Non-GAAP net income (a non-GAAP measure defined below) in the fourth quarter of 2015 was $3.1 million or $0.16 per diluted share, compared to $3.9 million or $0.21 per diluted share in the fourth quarter of 2014.

At December 31, 2015, cash and cash equivalents was $21.8 million compared to $18.1 million at December 31, 2014. Total debt was $35.4 million compared to $10.9 million at December 31, 2014, with the increase primarily due to funding of the CrossView acquisition.

Full Year 2015 Financial Results
Total revenues in 2015 increased 17% to $288.3 million compared to $247.0 million in 2014. Service fee revenue in 2015 increased 36% to a record $182.2 million compared to $134.4 million last year, while product revenue was $58.7 million compared to $75.3 million in the prior year. Service fee equivalent revenue increased 34% to a record $185.3 million compared to $138.7 million in 2014.

Service fee gross margin in 2015 increased 280 basis points to 32.2% compared to 29.4% last year.

Adjusted EBITDA increased 52% to a record $20.7 million in 2015 compared to $13.7 million in 2014.

Net loss in 2015 was $7.9 million or $(0.45) per diluted share, compared to net loss of $4.6 million or $(0.28) per diluted share in 2014. Net loss in 2015 included $2.8 million in amortization of acquisition-related intangibles, $4.6 million in stock-based compensation expense, and $5.8 million in acquisition-related, restructuring and other costs. This compares to $0.1 million in amortization of acquisition-related intangibles, $3.1 million in stock-based compensation expense and $2.8 million in acquisition-related, restructuring and other costs in 2014.

Non-GAAP net income in 2015 increased 301% to a record $5.4 million or $0.29 per diluted share, compared to non-GAAP net income of $1.4 million or $0.08 per diluted share in 2014.

2016 Outlook
PFSweb currently expects continued strong growth in service fee equivalent revenue and adjusted EBITDA as the company realizes a full year of benefit from its recent acquisitions, as well as incremental revenue from new and expanded client relationships. At this time, the company is reiterating its target for 2016 service fee equivalent revenue to range between $220 million and $230 million, reflecting growth of 19% to 24% from 2015. The company is also reiterating its target for adjusted EBITDA to range between $23 million to $25 million, up 11% to 21% from 2015. This adjusted EBITDA target includes the expected impact of incremental sales and marketing expenditures as well as other infrastructure expenditures to support the company's targeted future growth.

Conference Call
PFSweb will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the fourth quarter and full year ended December 31, 2015.

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

Date: Monday, March 14, 2016
Time: 5:00 p.m. Eastern Time (4:00 p.m. Central time)
Toll-free dial-in number: 1-888-523-1228
International dial-in number: 1-719-785-1765
Conference ID: 8183564

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=118606 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 8:00 p.m. Eastern Time on the same day through March 28, 2016.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 8183564

About PFSweb, Inc.
PFSweb (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. PFSweb supports organizations across various industries, including Procter & Gamble, L'Oreal, LEGO, Columbia Sportswear, ASICS, Roots Canada Ltd., PANDORA, Diageo, BCBGMAXAZRIA, ROKA Sports, 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, Ohio, North Carolina, 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, restructuring and other 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 costs and amortization of acquisition-related intangible assets.

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, restructuring and other 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.

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, 2014 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,  
    2015     2014  
             
ASSETS            
CURRENT ASSETS:            
  Cash and cash equivalents   $ 21,781     $ 18,128  
  Restricted cash     275       521  
  Accounts receivable, net of allowance for doubtful accounts of $600 and $447 at December 31, 2015 and December 31, 2014, respectively     70,700       59,126  
  Inventories, net of reserves of $739 and $768 at December 31, 2015 and December 31, 2014, respectively     9,262       10,534  
  Other receivables     8,704       5,638  
  Prepaid expenses and other current assets     5,662       7,103  
    Total current assets     116,384       101,050  
                 
PROPERTY AND EQUIPMENT, net     24,093       26,604  
INTANGIBLE ASSETS, net     8,810       2,170  
GOODWILL     39,829       8,366  
OTHER ASSETS     2,174       2,556  
    Total assets     191,290       140,746  
                 
LIABILITIES AND SHAREHOLDERS EQUITY                
CURRENT LIABILITIES:                
  Current portion of long-term debt and capital lease obligations   $ 3,153     $ 6,850  
  Trade accounts payable     51,170       38,842  
  Deferred revenue     7,390       9,098  
  Performance-based contingent payments     11,679       2,338  
  Accrued expenses     30,563       26,135  
    Total current liabilities     103,955       83,263  
                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     32,238       4,062  
DEFERRED REVENUE     4,499       5,355  
DEFERRED RENT     4,362       4,870  
OTHER LONG-TERM LIABILITIES     2,478       3,091  
    Total liabilities     147,532       100,641  
                 
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; 18,136,218 and 17,047,093 shares issued at December 31, 2015 and December 31, 2014, respectively; and 18,102,751 and 17,013,622 shares outstanding as of December 31, 2015 and December 31, 2014, respectively     18       17  
  Additional paid-in capital     141,948       129,457  
  Accumulated deficit     (97,787 )     (89,926 )
  Accumulated other comprehensive income     (296 )     682  
  Treasury stock at cost, 33,467 shares     (125 )     (125 )
    Total shareholders' equity     43,758       40,105  
    Total liabilities and shareholders' equity   $ 191,290     $ 140,746  
                     
PFSweb, Inc. and Subsidiaries  
Unaudited Condensed Consolidated Statements of Operations (A)  
(In Thousands, Except Per Share Data)  
                         
    Three Months Ended     Years Ended  
    December 31,     December 31,  
    2015     2014     2015     2014  
REVENUES:                        
  Product revenue, net   $ 13,928     $ 18,102     $ 58,659     $ 75,284  
  Service fee revenue     60,865       47,992       182,175       134,385  
  Pass-thru revenue     15,271       12,587       47,435       37,379  
      Total revenues     90,064       78,681       288,269       247,048  
                                 
COSTS OF REVENUES:                                
  Cost of product revenue     13,215       17,067       55,587       71,019  
  Cost of service fee revenue     41,633       34,471       123,574       94,858  
  Cost of pass-thru revenue     15,271       12,587       47,435       37,379  
      Total costs of revenues     70,119       64,125       226,596       203,256  
      Gross profit     19,945       14,556       61,673       43,792  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     19,212       12,387       66,280       47,658  
    Income (loss) from operations     733       2,169       (4,607 )     (3,866 )
INTEREST EXPENSE, NET     509       323       1,757       813  
    Income (loss) before income taxes     224       1,846       (6,364 )     (4,679 )
INCOME TAX PROVISION (BENEFIT)     822       (258 )     1,497       (53 )
NET INCOME (LOSS)   $ (598 )   $ 2,104     $ (7,861 )   $ (4,626 )
NON-GAAP NET INCOME   $ 3,132     $ 3,883     $ 5,435     $ 1,355  
                                 
NET INCOME (LOSS) PER SHARE:                                
  Basic   $ (0.03 )   $ 0.12     $ (0.45 )   $ (0.28 )
  Diluted   $ (0.03 )   $ 0.12     $ (0.45 )   $ (0.28 )
                                 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:                                
  Basic     18,080       16,905       17,608       16,737  
  Diluted     18,080       18,258       17,608       16,737  
                                 
EBITDA   $ 4,918     $ 5,195     $ 10,224     $ 7,809  
ADJUSTED EBITDA   $ 7,453     $ 6,835     $ 20,692     $ 13,651  
                                 
(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, 2014.  
   
   
PFSweb, Inc. and Subsidiaries  
Reconciliation of Certain Non-GAAP Items to GAAP  
(In Thousands, Except Per Share Data)  
                         
    Three Months Ended     Years Ended  
    December 31,     December 31,  
    2015     2014     2015     2014  
                         
NET INCOME (LOSS)   $ (598 )   $ 2,104     $ (7,861 )   $ (4,626 )
    Income tax expense (benefit)     822       (258 )     1,497       (53 )
    Interest expense, net     509       323       1,757       813  
    Depreciation and amortization     4,185       3,026       14,831       11,675  
EBITDA   $ 4,918     $ 5,195     $ 10,224     $ 7,809  
    Stock-based compensation     1,191       550       4,637       3,059  
    Acquisition related, restructuring and other costs     1,344       1,090       5,831       2,783  
ADJUSTED EBITDA   $ 7,453     $ 6,835     $ 20,692     $ 13,651  
                                 
                                 
    Three Months Ended     Years Ended  
    December 31,     December 31,  
    2015     2014     2015     2014  
                                 
NET INCOME (LOSS)   $ (598 )   $ 2,104     $ (7,861 )   $ (4,626 )
    Stock-based compensation     1,191       550       4,637       3,059  
    Amortization of acquisition-related intangible assets     1,195       139       2,828       139  
    Acquisition related, restructuring and other costs     1,344       1,090       5,831       2,783  
NON-GAAP NET INCOME   $ 3,132     $ 3,883     $ 5,435     $ 1,355  
                                 
NET INCOME (LOSS) PER SHARE:                                
  Basic   $ (0.03 )   $ 0.12     $ (0.45 )   $ (0.28 )
  Diluted   $ (0.03 )   $ 0.12     $ (0.45 )   $ (0.28 )
                                 
NON-GAAP NET INCOME PER SHARE:                                
  Basic   $ 0.17     $ 0.23     $ 0.31     $ 0.08  
  Diluted   $ 0.16     $ 0.21     $ 0.29     $ 0.08  
                                 
                                 
                                 
      Three Months Ended       Years Ended  
      December 31,       December 31,  
      2015       2014       2015       2014  
                                 
TOTAL REVENUES   $ 90,064     $ 78,681     $ 288,269     $ 247,048  
  Pass-thru revenue     (15,271 )     (12,587 )     (47,435 )     (37,379 )
  Cost of product revenue     (13,215 )     (17,067 )     (55,587 )     (71,019 )
SERVICE FEE EQUIVALENT REVENUE   $ 61,578     $ 49,027     $ 185,247     $ 138,650  
   
   
PFSweb, Inc. and Subsidiaries  
Unaudited Consolidating Statements of Operations  
For the Three Months Ended December 31, 2015  
(In Thousands)  
                     
  PFSweb     Business & Retail Connect   Eliminations     Consolidated  
REVENUES:                    
  Product revenue, net $ -     $ 13,928   $ -     $ 13,928  
  Service fee revenue   54,771       6,094     -       60,865  
  Service fee revenue - affiliate   5,422       250     (5,672 )     -  
  Pass-thru revenue   15,271       -     -       15,271  
      Total revenues   75,464       20,272     (5,672 )     90,064  
                             
COSTS OF REVENUES:                            
  Cost of product revenue   -       13,256     -       13,256  
  Cost of service fee revenue   41,345       5,736     (5,489 )     41,592  
  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, NET   414       95     -       509  
    Income (loss) before income taxes   (465 )     689     -       224  
INCOME TAX PROVISION   592       230     -       822  
NET INCOME (LOSS) $ (1,057 )   $ 459   $ -     $ (598 )
NON-GAAP NET INCOME $ 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   592       230     -       822  
    Interest expense, net   414       95     -       509  
    Amortization of acquisition-related intangible assets   1,195       -     -       1,195  
    Depreciation and amortization   2,980       10     -       2,990  
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 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 $ 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 Three Months Ended December 31, 2014  
(In Thousands)  
                       
   
PFSweb
    Business &
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 from operations     1,396       773     -       2,169  
INTEREST EXPENSE, NET     196       127     -       323  
    Income before income taxes     1,200       646     -       1,846  
INCOME TAX PROVISION (BENEFIT)     (497 )     239     -       (258 )
NET INCOME   $ 1,697     $ 407   $ -     $ 2,104  
NON-GAAP NET INCOME   $ 3,476     $ 407   $ -     $ 3,883  
                               
EBITDA   $ 4,409     $ 786   $ -     $ 5,195  
ADJUSTED EBITDA   $ 6,049     $ 786   $ -     $ 6,835  
                               
                               
A reconciliation of NET INCOME to EBITDA and ADJUSTED EBITDA follows:                
                               
NET INCOME   $ 1,697     $ 407   $ -       2,104  
    Income tax expense (benefit)     (497 )     239     -       (258 )
    Interest expense, net     196       127     -       323  
    Amortization of acquisition-related intangible assets     139       -     -       139  
    Depreciation and amortization     2,874       13     -       2,887  
EBITDA   $ 4,409     $ 786   $ -     $ 5,195  
    Stock-based compensation     550       -     -       550  
    Acquisition related, restructuring and other costs     1,090       -     -       1,090  
ADJUSTED EBITDA   $ 6,049     $ 786   $ -     $ 6,835  
                               
A reconciliation of NET INCOME to NON-GAAP NET INCOME follows:                
                               
NET INCOME   $ 1,697     $ 407   $ -     $ 2,104  
    Stock-based compensation     550       -     -       550  
    Amortization of acquisition-related intangible assets     139       -     -       139  
    Acquisition related, restructuring and other costs     1,090       -     -       1,090  
NON-GAAP NET INCOME   $ 3,476     $ 407   $ -     $ 3,883  
                               
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 Year Ended December 31, 2015  
(In Thousands)  
                       
   
PFSweb
    Business &
Retail Connect
 
Eliminations
   
Consolidated
 
REVENUES:                              
  Product revenue, net   $ -     $ 58,659   $ -     $ 58,659  
  Service fee revenue     165,510       16,665     -       182,175  
  Service fee revenue - affiliate     15,559       818     (16,377 )     -  
  Pass-thru revenue     47,435       -     -       47,435  
      Total revenues     228,504       76,142     (16,377 )     288,269  
                               
COSTS OF REVENUES:                              
  Cost of product revenue     -       55,587     -       55,587  
  Cost of service fee revenue     122,981       16,193     (15,600 )     123,574  
  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, NET     1,326       431     -       1,757  
    Income (loss) before income taxes     (7,665 )     1,301     -       (6,364 )
INCOME TAX PROVISION     954       543     -       1,497  
NET INCOME (LOSS)   $ (8,619 )   $ 758   $ -     $ (7,861 )
NON-GAAP NET INCOME   $ 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:                
                               
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  
    Amortization of acquisition-related intangible assets     2,828       -     -       2,828  
    Depreciation and amortization     11,935       68     -       12,003  
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 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   $ 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 Consolidating Statements of Operations  
For the Year Ended December 31, 2014  
(In Thousands)  
                       
   
PFSweb
    Business &
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   $ 391     $ 964   $ -     $ 1,355  
                               
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  
    Amortization of acquisition-related intangible assets     139       -     -       139  
    Depreciation and amortization     11,481       55     -       11,536  
EBITDA   $ 5,669     $ 2,140   $ -     $ 7,809  
    Stock-based compensation     3,059       -     -       3,059  
    Acquisition related, restructuring and other costs     2,783       -     -       2,783  
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  
    Amortization of acquisition-related intangible assets     139       -     -       139  
    Acquisition related, restructuring and other costs     2,783       -     -       2,783  
NON-GAAP NET INCOME   $ 391     $ 964   $ -     $ 1,355  
                               
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, 2015  
(In Thousands)  
                         
   
PFSweb
    Business &
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  
OTHER LONG-TERM LIABILITIES     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     (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, 2014.      
                                 
                         
PFSweb, Inc. and Subsidiaries  
Unaudited Condensed Consolidating Balance Sheets  
as of December 31, 2014  
(In Thousands)  
                         
   
PFSweb
    Business &
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  
  Performance-based contingent payments     2,338       -       -       2,338  
  Accrued expenses     19,000       7,135       -       26,135  
    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  
                                 
(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, 2014.      
                                 

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