SOURCE: PFSweb, Inc.

PFSweb, Inc.

August 13, 2014 08:30 ET

PFSweb Reports Second Quarter 2014 Results

Q2 Service Fee Equivalent Revenue Increased to $28.5 Million; Management Reiterates 2014 Guidance

ALLEN, TX--(Marketwired - Aug 13, 2014) - PFSweb, Inc. (NASDAQ: PFSW), a global provider of end-to-end eCommerce solutions, reported financial results for the three and six-months ended June 30, 2014.

Overview
Strong existing client activity, including incremental project work, resulted in stronger service fee revenue and operating margin during the second quarter of 2014 than originally anticipated. Prior year comparisons of both the second quarter and year-to-date results for 2014 are impacted by the previously announced client transitions, which were substantially completed by the beginning of the third quarter of 2013. Service fee revenue and operating margin are expected to improve strongly in the second half of 2014, as compared to the prior year, due to anticipated existing and new client growth.

2014 Outlook
PFSweb reiterates its 2014 service fee equivalent revenue guidance to range between $127 million to $133 million, increasing 7% to 12% as compared to 2013. The company also reiterates its outlook for 2014 adjusted EBITDA target to range between $12 million and $14 million, representing an increase of 12% to 31% as compared to 2013.

Second Quarter 2014 Financial Summary

  • Service fee equivalent revenue (a non-GAAP measure defined and discussed below) increased to $28.5 million compared to $28.0 million during the same period in 2013
  • Service fee gross margin was 30.0% compared to 33.0% during the same period in 2013
  • Adjusted EBITDA (a non-GAAP measure defined and discussed below) was $1.7 million compared to $2.5 million during the same period in 2013
  • Cash and cash equivalents totaled $23.2 million compared to $22.4 million at December 31, 2013
  • Debt totaled $10.2 million compared to $11.1 million at December 31, 2013

First Half 2014 Financial Summary

  • Service fee equivalent revenue was $57.3 million compared to $58.0 million during the same period in 2013
  • Service fee gross margin was 30.2% compared to 32.4% during the same period in 2013
  • Adjusted EBITDA was $4.0 million compared to $5.4 million during the same period in 2013

Second Quarter 2014 Financial Results Details
Total revenues in the second quarter of 2014 were $54.0 million compared to $58.2 million in the same period in 2013. Service fee revenue in the second quarter of 2014 increased to $27.4 million compared to $26.6 million last year. This increase was primarily due to higher project activity from existing clients as well as new and expanded client relationships, partially offset by the impact of previously announced client transitions that occurred in 2013. Product revenue decreased to $18.1 million compared to $22.9 million in the same period in 2013 primarily due to ongoing restructuring activities by the company's largest client in this segment.

Service fee equivalent revenue in the second quarter of 2014 was $28.5 million compared to $28.0 million in the same period in 2013.

Service fee gross margin in the second quarter decreased to 30.0% compared to 33.0% in the same period in 2013. Each period included the benefit of higher margin project activity. In addition, the 2013 period included an incremental benefit applicable to client transition related activity occurring during the prior period.

Adjusted EBITDA was $1.7 million in the second quarter of 2014 compared to $2.5 million in the same period in 2013.

Net loss in the second quarter of 2014 was $2.4 million or $(0.14) per diluted share compared to a net loss of $1.0 million or $(0.07) per diluted share in the same period in 2013. Net loss in the second quarter of 2014 included approximately $0.9 million in stock-based compensation expense and $0.2 million of costs related to potential acquisitions, compared to approximately $0.3 million in stock-based compensation expense for the same period in 2013. In addition, the prior period included $0.3 million in restructuring and other charges.

Non-GAAP net loss (a non-GAAP measure defined and discussed below) in the second quarter of 2014 was $1.4 million or $(0.08) per diluted share compared to non-GAAP net loss of $0.4 million or $(0.03) per diluted share in the second quarter of 2013.

Cash and cash equivalents increased to $23.2 million from $22.4 million at December 31, 2013, while debt was reduced to $10.2 million from $11.1 million.

Management Commentary
"The increase in service fee equivalent revenue this quarter was an early indication of our projected return to year-over-year top-line growth in our eCommerce business as we begin to move past the quarterly comparison impact from last year's client transitions," said Mike Willoughby, CEO of PFSweb. "In fact, excluding the impact of these client transitions, service fee equivalent revenue increased approximately 20% compared to the prior year quarter.

"We look forward to launching the eCommerce website for our largest client win from last year, the United States Mint, which is expected to go live around the end of the third quarter. We believe the benefit from this United States Mint activity, coupled with the expansion of new and existing client relationships, positions us for improved financial performance as we exit 2014 and begin 2015."

"We continue to explore the acquisition landscape in the growing eCommerce market, primarily searching for opportunities that would further enhance our technology and agency services capabilities," Willoughby concluded. "We believe such acquisitions will allow us to broaden our range of services, driving higher margins and longer client life cycles."

Conference Call
PFSweb will conduct a conference call today at 11:00 a.m. Eastern time to discuss its results for the second quarter ended June 30, 2014.

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

Date: Wednesday, August 13, 2014
Time: 11:00 a.m. Eastern time (10:00 a.m. Central time)
Toll-free dial-in number: 1-888-503-8175
International dial-in number: 1-719-325-2429
Conference ID: 3009322

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=110320 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 August 27, 2014.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 3009322

About PFSweb Inc.
PFSweb (NASDAQ: PFSW) is a global business process outsourcing provider of end-to-end eCommerce solutions. The company provides these solutions and services to major brand names and other companies seeking to optimize their supply chain and enhance their traditional and online business channels, which include both direct-to-consumer and business-to-business sales 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, Canada, Belgium, and the Philippines. 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)  
             
    (Unaudited)        
    June 30,     December 31,  
    2014     2013  
ASSETS                
  CURRENT ASSETS:                
  Cash and cash equivalents   $ 23,195     $ 22,418  
  Restricted cash     270       130  
  Accounts receivable, net of allowance for doubtful accounts of $430 and $382 at June 30, 2014 and December 31, 2013, respectively     40,050       55,292  
  Inventories, net of reserves of $901 and $962 at June 30, 2014 and December 31, 2013, respectively     13,757       14,169  
  Other receivables     4,696       5,241  
  Prepaid expenses and other current assets     5,742       4,713  
    Total current assets     87,710       101,963  
                 
PROPERTY AND EQUIPMENT, net     25,237       27,190  
OTHER ASSETS     2,863       2,883  
    Total assets     115,810       132,036  
                 
LIABILITIES AND SHAREHOLDERS EQUITY                
CURRENT LIABILITIES:                
  Current portion of long-term debt and capital lease obligations   $ 8,001     $ 8,231  
  Trade accounts payable     27,224       34,096  
  Deferred revenue     10,230       8,181  
  Accrued expenses     18,167       25,045  
    Total current liabilities     63,622       75,553  
                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     2,192       2,876  
DEFERRED REVENUE     6,195       7,491  
DEFERRED RENT     5,174       5,191  
    Total liabilities     77,183       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; 16,794,832 and 16,540,904 shares issued at June 30, 2014 and December 31, 2013, respectively; and 16,761,365 and 16,507,437 shares outstanding as of June 30, 2014 and December 31, 2013, respectively    
17
      17  
  Additional paid-in capital     126,527       124,522  
  Accumulated deficit     (89,505 )     (85,300 )
  Accumulated other comprehensive income     1,713       1,811  
  Treasury stock at cost, 33,467 shares     (125 )     (125 )
    Total shareholders' equity     38,627       40,925  
    Total liabilities and shareholders' equity   $ 115,810     $ 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     Six Months Ended  
    June 30,     June 30,  
    2014     2013     2014     2013  
REVENUES:                                
  Product revenue, net   $ 18,120     $ 22,898     $ 39,842     $ 48,165  
  Service fee revenue     27,384       26,583       54,982       54,800  
  Pass-thru revenue     8,539       8,704       16,448       18,361  
      Total revenues     54,043       58,185       111,272       121,326  
                                 
COSTS OF REVENUES:                                
  Cost of product revenue     17,039       21,479       37,555       44,994  
  Cost of service fee revenue     19,160       17,811       38,380       37,069  
  Cost of pass-thru revenue     8,539       8,704       16,448       18,361  
      Total costs of revenues     44,738       47,994       92,383       100,424  
      Gross profit     9,305       10,191       18,889       20,902  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     11,485       10,938       22,507       23,739  
    Income (loss) from operations     (2,180 )     (747 )     (3,618 )     (2,837 )
INTEREST EXPENSE (INCOME), NET     173       184       316       402  
    Income (loss) before income taxes     (2,353 )     (931 )     (3,934 )     (3,239 )
INCOME TAX PROVISION (BENEFIT)     42       24       271       291  
NET INCOME (LOSS)   $ (2,395 )   $ (955 )   $ (4,205 )   $ (3,530 )
NON-GAAP NET INCOME (LOSS)   $ (1,379 )   $ (421 )   $ (2,395 )   $ (400 )
                                 
NET INCOME (LOSS) PER SHARE:                                
  Basic   $ (0.14 )   $ (0.07 )   $ (0.25 )   $ (0.26 )
  Diluted   $ (0.14 )   $ (0.07 )   $ (0.25 )   $ (0.26 )
                                 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:                                
  Basic     16,736       14,525       16,630       13,661  
  Diluted     16,736       14,525       16,630       13,661  
                                 
EBITDA   $ 698     $ 1,941     $ 2,150     $ 2,259  
ADJUSTED EBITDA   $ 1,714     $ 2,475     $ 3,960     $ 5,389  
                                 
(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     Six Months Ended  
    June 30,     June 30,  
    2014     2013     2014     2013  
NET INCOME (LOSS)   $ (2,395 )   $ (955 )   $ (4,205 )   $ (3,530 )
  Income tax expense     42       24       271       291  
  Interest expense, net     173       184       316       402  
  Depreciation and amortization     2,878       2,688       5,768       5,096  
EBITDA   $ 698     $ 1,941     $ 2,150     $ 2,259  
  Stock-based compensation     862       282       1,656       585  
  Acquisition related costs     154       -       154       -  
  Restructuring and other charges     -       252       -       2,545  
ADJUSTED EBITDA   $ 1,714     $ 2,475     $ 3,960     $ 5,389  
                                 
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2014     2013     2014     2013  
                                 
NET INCOME (LOSS)   $ (2,395 )   $ (955 )   $ (4,205 )   $ (3,530 )
  Stock-based compensation     862       282       1,656       585  
  Acquisition related costs     154       -       154       -  
  Restructuring and other charges     -       252       -       2,545  
NON-GAAP NET INCOME (LOSS)   $ (1,379 )   $ (421 )   $ (2,395 )   $ (400 )
                                 
NET INCOME (LOSS) PER SHARE:                                
  Basic   $ (0.14 )   $ (0.07 )   $ (0.25 )   $ (0.26 )
  Diluted   $ (0.14 )   $ (0.07 )   $ (0.25 )   $ (0.26 )
                                 
NON-GAAP NET INCOME (LOSS) Per Share:                                
  Basic   $ (0.08 )   $ (0.03 )   $ (0.14 )   $ (0.03 )
  Diluted   $ (0.08 )   $ (0.03 )   $ (0.14 )   $ (0.03 )
                                 
                                 
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2014     2013     2014     2013  
                                 
TOTAL REVENUES   $ 54,043     $ 58,185     $ 111,272     $ 121,326  
  Pass-thru revenue     (8,539 )     (8,704 )     (16,448 )     (18,361 )
  Cost of product revenue     (17,039 )     (21,479 )     (37,555 )     (44,994 )
SERVICE FEE EQUIVALENT REVENUE   $ 28,465     $ 28,002     $ 57,269     $ 57,971  
                                 
   
PFSweb, Inc. and Subsidiaries  
Unaudited Consolidating Statements of Operations  
For the Three Months Ended June 30, 2014  
(In Thousands)  
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                              
  Product revenue, net   $ -     $ 18,120   $ -     $ 18,120  
  Service fee revenue     24,423       2,961     -       27,384  
  Service fee revenue - affiliate     3,176       595     (3,771 )     -  
  Pass-thru revenue     8,539       -     -       8,539  
      Total revenues     36,138       21,676     (3,771 )     54,043  
                               
COSTS OF REVENUES:                              
  Cost of product revenue     -       17,039     -       17,039  
  Cost of service fee revenue     19,557       3,093     (3,490 )     19,160  
  Cost of pass-thru revenue     8,539       -     -       8,539  
      Total costs of revenues     28,096       20,132     (3,490 )     44,738  
      Gross profit     8,042       1,544     (281 )     9,305  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     10,719       1,047     (281 )     11,485  
    Income (loss) from operations     (2,677 )     497     -       (2,180 )
INTEREST EXPENSE (INCOME), NET     33       140     -       173  
    Income (loss) before income taxes     (2,710 )     357     -       (2,353 )
INCOME TAX PROVISION (BENEFIT)     (49 )     91     -       42  
NET INCOME (LOSS)   $ (2,661 )   $ 266   $ -     $ (2,395 )
NON-GAAP NET INCOME (LOSS)   $ (1,645 )   $ 266   $ -     $ (1,379 )
                               
EBITDA   $ 157     $ 541   $ -     $ 698  
ADJUSTED EBITDA   $ 1,173     $ 541   $ -     $ 1,714  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:                        
                               
NET INCOME (LOSS)   $ (2,661 )   $ 266   $ -       (2,395 )
    Income tax expense (benefit)     (49 )     91     -       42  
    Interest expense (income), net     33       140     -       173  
    Depreciation and amortization     2,834       44     -       2,878  
EBITDA   $ 157     $ 541   $ -     $ 698  
    Stock-based compensation     862       -     -       862  
    Acquisition related costs     154       -     -       154  
ADJUSTED EBITDA   $ 1,173     $ 541   $ -     $ 1,714  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:                        
                               
NET INCOME (LOSS)   $ (2,661 )   $ 266   $ -     $ (2,395 )
    Stock-based compensation     862       -     -       862  
    Acquisition related costs     154       -     -       154  
NON-GAAP NET INCOME (LOSS)   $ (1,645 )   $ 266   $ -     $ (1,379 )
                               
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 June 30, 2013  
(In Thousands)  
                         
          Business &              
    PFSweb     Retail Connect     Eliminations     Consolidated  
REVENUES:                                
  Product revenue, net   $ -     $ 22,898     $ -     $ 22,898  
  Service fee revenue     25,304       1,279       -       26,583  
  Service fee revenue - affiliate     1,914       436       (2,350 )     -  
  Pass-thru revenue     8,704       -       -       8,704  
      Total revenues     35,922       24,613       (2,350 )     58,185  
                                 
COSTS OF REVENUES:                                
  Cost of product revenue     -       21,479       -       21,479  
  Cost of service fee revenue     18,401       1,501       (2,091 )     17,811  
  Cost of pass-thru revenue     8,704       -       -       8,704  
      Total costs of revenues     27,105       22,980       (2,091 )     47,994  
      Gross profit     8,817       1,633       (259 )     10,191  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     9,600       1,597       (259 )     10,938  
    Income (loss) from operations     (783 )     36       -       (747 )
INTEREST EXPENSE (INCOME), NET     35       149       -       184  
    Income (loss) before income taxes     (818 )     (113 )     -       (931 )
INCOME TAX PROVISION (BENEFIT)     22       2       -       24  
NET INCOME (LOSS)   $ (840 )   $ (115 )   $ -     $ (955 )
NON-GAAP NET INCOME (LOSS)   $ (306 )   $ (115 )   $ -     $ (421 )
                                 
EBITDA   $ 1,866     $ 75     $ -     $ 1,941  
ADJUSTED EBITDA   $ 2,400     $ 75     $ -     $ 2,475  
                                 
                                 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:                          
                                 
NET INCOME (LOSS)   $ (840 )   $ (115 )   $ -       (955 )
    Income tax expense (benefit)     22       2       -       24  
    Interest expense (income), net     35       149       -       184  
    Depreciation and amortization     2,649       39       -       2,688  
EBITDA   $ 1,866     $ 75     $ -     $ 1,941  
    Stock-based compensation     282       -       -       282  
    Restructuring and other charges     252       -       -       252  
ADJUSTED EBITDA   $ 2,400     $ 75     $ -     $ 2,475  
                                 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:                          
                                 
NET INCOME (LOSS)   $ (840 )   $ (115 )   $ -     $ (955 )
    Stock-based compensation     282       -       -       282  
    Restructuring and other charges     252       -       -       252  
NON-GAAP NET INCOME (LOSS)   $ (306 )   $ (115 )   $ -     $ (421 )
                                 
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 Six Months Ended June 30, 2014  
(In Thousands)  
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                              
  Product revenue, net   $ -     $ 39,842   $ -     $ 39,842  
  Service fee revenue     48,576       6,406     -       54,982  
  Service fee revenue - affiliate     6,866       1,210     (8,076 )     -  
  Pass-thru revenue     16,448       -             16,448  
      Total revenues     71,890       47,458     (8,076 )     111,272  
                               
COSTS OF REVENUES:                              
  Cost of product revenue     -       37,555     -       37,555  
  Cost of service fee revenue     39,077       6,709     (7,406 )     38,380  
  Cost of pass-thru revenue     16,448       -     -       16,448  
      Total costs of revenues     55,525       44,264     (7,406 )     92,383  
      Gross profit     16,365       3,194     (670 )     18,889  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     20,895       2,282     (670 )     22,507  
    Income (loss) from operations     (4,530 )     912     -       (3,618 )
INTEREST EXPENSE (INCOME), NET     32       284     -       316  
    Income (loss) before income taxes     (4,562 )     628     -       (3,934 )
INCOME TAX PROVISION (BENEFIT)     81       190     -       271  
NET INCOME (LOSS)   $ (4,643 )   $ 438   $ -     $ (4,205 )
NON-GAAP NET INCOME (LOSS)   $ (2,833 )   $ 438   $ -     $ (2,395 )
                               
EBITDA   $ 1,151     $ 999   $ -     $ 2,150  
ADJUSTED EBITDA   $ 2,961     $ 999   $ -     $ 3,960  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:                        
                               
NET INCOME (LOSS)   $ (4,643 )   $ 438   $ -       (4,205 )
    Income tax expense (benefit)     81       190     -       271  
    Interest expense (income), net     32       284     -       316  
    Depreciation and amortization     5,681       87     -       5,768  
EBITDA   $ 1,151     $ 999   $ -     $ 2,150  
    Stock-based compensation     1,656       -     -       1,656  
    Acquisition related costs     154       -     -       154  
ADJUSTED EBITDA   $ 2,961     $ 999   $ -     $ 3,960  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:                        
                               
NET INCOME (LOSS)   $ (4,643 )   $ 438   $ -     $ (4,205 )
Stock-based compensation     1,656       -     -       1,656  
Acquisition related costs     154       -     -       154  
NON-GAAP NET INCOME (LOSS)   $ (2,833 )   $ 438   $ -     $ (2,395 )
                               
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 Six Months Ended June 30, 2013  
(In Thousands)  
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                              
  Product revenue, net   $ -     $ 48,165   $ -     $ 48,165  
  Service fee revenue     51,745       3,055     -       54,800  
  Service fee revenue - affiliate     4,269       798     (5,067 )     -  
  Pass-thru revenue     18,361       -     -       18,361  
      Total revenues     74,375       52,018     (5,067 )     121,326  
                               
COSTS OF REVENUES:                              
  Cost of product revenue     -       44,994     -       44,994  
  Cost of service fee revenue     38,181       3,299     (4,411 )     37,069  
  Cost of pass-thru revenue     18,361       -     -       18,361  
      Total costs of revenues     56,542       48,293     (4,411 )     100,424  
      Gross profit     17,833       3,725     (656 )     20,902  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     21,163       3,232     (656 )     23,739  
    Income (loss) from operations     (3,330 )     493     -       (2,837 )
INTEREST EXPENSE (INCOME), NET     102       300     -       402  
    Income (loss) before income taxes     (3,432 )     193     -       (3,239 )
INCOME TAX PROVISION (BENEFIT)     142       149     -       291  
NET INCOME (LOSS)   $ (3,574 )   $ 44   $ -     $ (3,530 )
NON-GAAP NET INCOME (LOSS)   $ (444 )   $ 44   $ -     $ (400 )
                               
EBITDA   $ 1,688     $ 571   $ -     $ 2,259  
ADJUSTED EBITDA   $ 4,818     $ 571   $ -     $ 5,389  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:                        
                               
NET INCOME (LOSS)   $ (3,574 )   $ 44   $ -       (3,530 )
    Income tax expense (benefit)     142       149     -       291  
    Interest expense (income), net     102       300     -       402  
    Depreciation and amortization     5,018       78     -       5,096  
EBITDA   $ 1,688     $ 571   $ -     $ 2,259  
    Stock-based compensation     585       -     -       585  
    Restructuring and other charges     2,545       -     -       2,545  
ADJUSTED EBITDA   $ 4,818     $ 571   $ -     $ 5,389  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:                        
                               
NET INCOME (LOSS)   $ (3,574 )   $ 44   $ -     $ (3,530 )
Stock-based compensation     585       -     -       585  
Restructuring and other charges     2,545       -     -       2,545  
NON-GAAP NET INCOME (LOSS)   $ (444 )   $ 44   $ -     $ (400 )
                               
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 June 30, 2014  
(In Thousands)  
                         
                         
          Business &              
    PFSweb     Retail Connect     Eliminations     Consolidated  
ASSETS                        
CURRENT ASSETS:                                
  Cash and cash equivalents   $ 17,328     $ 5,867     $ -     $ 23,195  
  Restricted cash     -       270       -       270  
  Accounts receivable, net     26,105       14,638       (693 )     40,050  
  Inventories, net     -       13,757       -       13,757  
  Other receivables     -       4,696       -       4,696  
  Prepaid expenses and other current assets     4,679       1,063       -       5,742  
    Total current assets     48,112       40,291       (693 )     87,710  
                                 
PROPERTY AND EQUIPMENT, net     25,040       197       -       25,237  
RECEIVABLE/INVESTMENT IN AFFILIATES     10,031       -       (10,031 )     -  
OTHER ASSETS     2,816       47       -       2,863  
    Total assets     85,999       40,535       (10,724 )     115,810  
                                 
LIABILITIES AND SHAREHOLDERS EQUITY                                
CURRENT LIABILITIES:                                
  Current portion of long-term debt and capital lease obligations   $ 3,651     $ 4,350     $ -     $ 8,001  
  Trade accounts payable     6,937       20,980       (693 )     27,224  
  Deferred revenue     10,230       -       -       10,230  
  Accrued expenses     13,134       5,033       -       18,167  
    Total current liabilities     33,952       30,363       (693 )     63,622  
                                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     2,192       -       -       2,192  
PAYABLE TO AFFILIATES     -       22,045       (22,045 )     -  
DEFERRED REVENUE     6,195       -       -       6,195  
DEFERRED RENT     5,174       -       -       5,174  
    Total liabilities     47,513       52,408       (22,738 )     77,183  
                                 
COMMITMENTS AND CONTINGENCIES                                
                                 
SHAREHOLDERS' EQUITY:                                
  Common stock     17       19       (19 )     17  
  Capital contributions     -       1,000       (1,000 )     -  
  Additional paid-in capital     126,527       28,060       (28,060 )     126,527  
  Retained earnings (accumulated deficit)     (89,641 )     (43,239 )     43,375       (89,505 )
  Accumulated other comprehensive income     1,708       2,287       (2,282 )     1,713  
  Treasury stock     (125 )     -       -       (125 )
    Total shareholders' equity     38,486       (11,873 )     12,014       38,627  
    Total liabilities and shareholders' equity   $ 85,999     $ 40,535     $ (10,724 )   $ 115,810  
                                 
   
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.
    Cody Slach or Greg Falesnik
    Tel 949-574-3860
    Email Contact