SOURCE: PFSweb, Inc.

PFSweb, Inc.

August 08, 2016 16:15 ET

PFSweb Reports Second Quarter 2016 Results

Company Reports Strong Revenue Growth and Expanding Distribution Facilities Footprint to Support Large New Client Wins

ALLEN, TX--(Marketwired - Aug 8, 2016) - PFSweb, Inc. (NASDAQ: PFSW), a global commerce service provider, reported results for the second quarter ended June 30, 2016.

Second Quarter 2016 Highlights vs. Same Year-Ago Quarter (where applicable)

  • Total revenues increased 22% to $77.2 million
  • Service fee equivalent revenue (a non-GAAP measure defined below) increased 30% to $51.8 million
  • Service fee gross margin increased 100 basis points to 32.8%
  • Acquired Conexus, a European eCommerce System Integrator
  • Expanded its distribution facilities footprint in the Memphis, TN area to support several large new client wins

Management Commentary

"Our incremental investments in sales and marketing continue to yield strong results, as reflected by the 22% increase in total revenues and 30% increase in service fee equivalent revenue, as well as several large new client wins during the second quarter," said Mike Willoughby, CEO of PFSweb. "To accommodate our new client wins, we launched a new distribution facility in the second quarter and are building out two additional footprints to further support our omni-channel operations. Though we are incurring upfront costs associated with the implementation of these new clients and facilities, we expect the benefit of these investments, along with the multi-year recurring revenue streams from these large clients, to greatly outweigh the short-term effect on profitability.

"During the second quarter, we also acquired Conexus, a European eCommerce system integrator that solidifies our positioning in Western Europe with a strong footprint in the U.K. Though we remain in the early stages of integration, we've already begun to realize synergies across our combined SAP Hybris practices, and believe we are now even better equipped to enable B2B, B2C and mobile commerce for leading brands and retailers across the globe.

"In the back half of 2016, we intend to continue positioning ourselves as a valued strategic partner for our clients and seek to drive growth through our various eCommerce service offerings. We look forward to launching this quarter's new client wins by the holiday season. We believe these client wins provide enhanced visibility to our revenue growth and profitability objectives as we look ahead into 2017."

Second Quarter 2016 Financial Results

Total revenues in the second quarter of 2016 increased 22% to $77.2 million compared to $63.2 million in the same period of 2015. Service fee revenue in the second quarter increased 31% to $51.2 million compared to $39.1 million last year. Product revenue was $11.4 million compared to $13.7 million in the same period of 2015 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 30% to $51.8 million compared to $39.8 million in the year-ago quarter, driven by both new and expanded client relationships, as well as approximately $8.3 million of incremental service fees generated in the second quarter of 2016 by the company's acquired entities -- CrossView, Moda and Conexus -- which were acquired in 2015 and 2016.

Service fee gross margin in the second quarter of 2016 increased 100 basis points to 32.8% compared to 31.8% in the same period of 2015. The increase was due to a higher proportion of agency and technology services in the second quarter of 2016, in part due to the benefit from the Moda, CrossView and Conexus acquisitions.

Net loss in the second quarter of 2016 was $2.2 million or $(0.12) per share, compared to a net loss of $1.9 million or $(0.11) per share in the same period of 2015. Net loss in the second quarter of 2016 included $0.9 million in acquisition-related, restructuring and other costs, $0.8 million in amortization of acquisition-related intangible assets, and $0.6 million in stock-based compensation expense. This compares to $1.1 million in acquisition-related, restructuring and other costs, $0.2 million in amortization of acquisition-related intangible assets, and $1.2 million in stock-based compensation expense in the same period of 2015.

Adjusted EBITDA (a non-GAAP measure defined below) was $3.9 million compared to $4.1 million in the same period of 2015. As a percentage of service fee equivalent revenue, adjusted EBITDA was 7.5% compared to 10.3% in the year-ago quarter. The decline in adjusted EBITDA margin was driven by the expected increase in sales and marketing to support the company's targeted growth, as well as investment in infrastructure resources, particularly for several large new client wins that are requiring the build-out of new distribution operations.

Non-GAAP net income (a non-GAAP measure defined below) in the second quarter of 2016 was $0.2 million, compared to $0.6 million in the second quarter of 2015.

At June 30, 2016, cash and cash equivalents totaled $16.7 million compared to $21.8 million at December 31, 2015. Total debt was $55.0 million compared to $35.4 million at December 31, 2015, with the increase primarily driven by funds used to support the June 2016 Conexus acquisition and payment of calendar 2015 related earn-out liabilities applicable to prior acquisitions.

2016 Outlook

PFSweb 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 revising its target for adjusted EBITDA and now expects it to range between $21.5 million to $23.5 million (previously $23 million to $25 million), reflecting growth of 4% to 14% from 2015. These targets include the expected impact of the Conexus acquisition, lower than previously targeted revenue and profit contribution from the company's CrossView business, as well as incremental sales, marketing, and other infrastructure expenditures to support certain new client activity and 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 second quarter ended June 30, 2016.

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

Date: Monday, August 8, 2016
Time: 5:00 p.m. Eastern Time (4:00 p.m. Central time)
Toll-free dial-in number: 1-888-417-8465
International dial-in number: 1-719-325-2452
Conference ID: 9515441

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=120456 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 August 22, 2016.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 9515441

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, Canada Goose, ASICS, Roots Canada Ltd., PANDORA, Diageo, Anastasia Beverly Hills, 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, United Kingdom, Bulgaria, Germany, 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 contains certain non-GAAP measures, including non-GAAP net income (loss), earnings before interest, income taxes, depreciation and amortization (EBITDA), Adjusted EBITDA and service fee equivalent revenue.

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

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

Our service fee equivalent revenue target for 2016 includes an estimated gross margin on product sales of approximately $3 million (based on targeted product revenue of $50 million less targeted cost of product revenue of $47 million) plus a targeted range of between $217 million to $227 million of service fee revenue.

The adjusted EBITDA outlook for 2016 have not been reconciled to the company's net loss outlook for the same period because certain items that would impact interest expense, income tax provision (benefit), depreciation and amortization, stock-based compensation, amortization of acquisition-related intangible assets and acquisition related and restructuring costs, all of which are reconciling items between net loss and adjusted EBITDA, cannot be reasonably predicted. Accordingly, reconciliation of adjusted EBITDA outlook to net loss outlook for 2016 is not available without unreasonable effort.

Non-GAAP net income (loss), EBITDA, Adjusted EBITDA and service fee equivalent revenue are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, acquisition related, restructuring and other 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, 2015 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,  
  2016     2015  
               
ASSETS              
CURRENT ASSETS:              
  Cash and cash equivalents $ 16,692     $ 21,781  
  Restricted cash   219       275  
  Accounts receivable, net of allowance for doubtful accounts of $485 and $600 at June 30, 2016 and December 31, 2015, respectively   60,418       70,700  
  Inventories, net of reserves of $607 and $739 at June 30, 2016 and December 31, 2015, respectively   8,049       9,262  
  Other receivables   4,926       8,704  
  Prepaid expenses and other current assets   5,841       5,662  
    Total current assets   96,145       116,384  
               
PROPERTY AND EQUIPMENT, net   26,915       24,093  
INTANGIBLE ASSETS, net   9,295       8,810  
GOODWILL   45,601       39,829  
OTHER ASSETS   2,294       2,174  
    Total assets $ 180,250     $ 191,290  
               
LIABILITIES AND SHAREHOLDERS' EQUITY              
CURRENT LIABILITIES:              
  Current portion of long-term debt and capital lease obligations   5,166       3,153  
  Trade accounts payable   39,649       51,170  
  Deferred revenue   6,377       7,390  
  Performance-based contingent payments   867       11,679  
  Accrued expenses   23,950       30,563  
    Total current liabilities   76,009       103,955  
               
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion   49,864       32,238  
DEFERRED REVENUE   4,413       4,499  
DEFERRED RENT   4,918       4,362  
OTHER LONG-TERM LIABILITIES   543       2,478  
Total liabilities   135,747       147,532  
               
               
COMMITMENTS AND CONTINGENCIES              
               
SHAREHOLDERS' EQUITY:              
  Preferred stock, $1.00 par value; 1,000,000 shares authorized; none issued and outstanding   -       -  
  Common stock, $.001 par value; 35,000,000 shares authorized; 18,724,551 and 18,136,218 shares issued at June 30, 2016 and December 31, 2015, respectively; and 18,691,084 and 18,102,751 shares outstanding as of June 30, 2016 and December 31, 2015, respectively   18       18  
  Additional paid-in capital   144,662       141,948  
  Accumulated deficit   (100,721 )     (97,787 )
  Accumulated other comprehensive income   669       (296 )
  Treasury stock at cost, 33,467 shares   (125 )     (125 )
    Total shareholders' equity   44,503       43,758  
    Total liabilities and shareholders' equity $ 180,250     $ 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, 2015.
 
 
   
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,  
  2016     2015     2016     2015  
REVENUES:                              
  Service fee revenue $ 51,166     $ 39,075     $ 100,484     $ 75,783  
  Product revenue, net   11,380       13,658       24,987       30,312  
  Pass-thru revenue   14,653       10,443       26,809       20,927  
      Total revenues   77,199       63,176       152,280       127,022  
                               
COSTS OF REVENUES:                              
  Cost of service fee revenue   34,381       26,645       66,655       51,800  
  Cost of product revenue   10,742       12,911       23,644       28,619  
  Cost of pass-thru revenue   14,653       10,443       26,809       20,927  
      Total costs of revenues   59,776       49,999       117,108       101,346  
      Gross profit   17,423       13,177       35,172       25,676  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   18,808       14,676       36,358       28,290  
    Income (loss) from operations   (1,385 )     (1,499 )     (1,186 )     (2,614 )
INTEREST EXPENSE (INCOME), NET   609       223       1,094       541  
    Income (loss) before income taxes   (1,994 )     (1,722 )     (2,280 )     (3,155 )
INCOME TAX PROVISION (BENEFIT)   188       178       654       438  
NET INCOME (LOSS) $ (2,182 )   $ (1,900 )   $ (2,934 )   $ (3,593 )
NON-GAAP NET INCOME (LOSS) $ 153     $ 613     $ 194     $ 743  
                               
NET INCOME (LOSS) PER SHARE:                              
  Basic $ (0.12 )   $ (0.11 )   $ (0.16 )   $ (0.21 )
  Diluted $ (0.12 )   $ (0.11 )   $ (0.16 )   $ (0.21 )
                               
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:                              
  Basic   18,627       17,368       18,477       17,257  
  Diluted   18,627       17,368       18,477       17,257  
                               
EBITDA $ 2,415     $ 1,810     $ 6,217     $ 3,950  
ADJUSTED EBITDA $ 3,903     $ 4,083     $ 7,654     $ 7,806  
                               
(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, 2015.
 
 
   
PFSweb, Inc. and Subsidiaries  
Unaudited Reconciliation of Certain Non-GAAP Items to GAAP  
(In Thousands, Except Per Share Data)  
                       
  Three Months Ended     Six Months Ended  
  June 30,     June 30,  
  2016     2015     2016     2015  
                               
NET INCOME (LOSS) $ (2,182 )   $ (1,900 )   $ (2,934 )   $ (3,593 )
    Income tax expense (benefit)   188       178       654       438  
    Interest expense, net   609       223       1,094       541  
    Depreciation and amortization   3,800       3,309       7,403       6,564  
EBITDA $ 2,415     $ 1,810     $ 6,217     $ 3,950  
    Stock-based compensation   629       1,150       1,396       1,954  
    Acquisition related, restructuring and other costs, net   859       1,123       41       1,902  
ADJUSTED EBITDA $ 3,903     $ 4,083     $ 7,654     $ 7,806  
                               
                               
  Three Months Ended     Six Months Ended  
  June 30,     June 30,  
  2016     2015     2016     2015  
                               
NET INCOME (LOSS) $ (2,182 )   $ (1,900 )   $ (2,934 )   $ (3,593 )
    Stock-based compensation   629       1,150       1,396       1,954  
    Amortization of acquisition-related intangible assets   847       240       1,691       480  
    Acquisition related, restructuring and other costs, net   859       1,123       41       1,902  
NON-GAAP NET INCOME (LOSS) $ 153     $ 613     $ 194     $ 743  
                               
NET INCOME (LOSS) PER SHARE:                              
  Basic $ (0.12 )   $ (0.11 )   $ (0.16 )   $ (0.21 )
  Diluted $ (0.12 )   $ (0.11 )   $ (0.16 )   $ (0.21 )
                               
NON-GAAP NET INCOME (LOSS) Per Share:                              
  Basic $ 0.01     $ 0.04     $ 0.01     $ 0.04  
  Diluted $ 0.01     $ 0.03     $ 0.01     $ 0.04  
                               
                               
                               
  Three Months Ended     Six Months Ended  
  June 30,     June 30,  
  2016     2015     2016     2015  
                               
TOTAL REVENUES $ 77,199     $ 63,176     $ 152,280     $ 127,022  
  Pass-thru revenue   (14,653 )     (10,443 )     (26,809 )     (20,927 )
  Cost of product revenue   (10,742 )     (12,911 )     (23,644 )     (28,619 )
SERVICE FEE EQUIVALENT REVENUE $ 51,804     $ 39,822     $ 101,827     $ 77,476  
                               
                               
   
PFSweb, Inc. and Subsidiaries  
Unaudited Consolidating Statements of Operations  
For the Three Months Ended June 30, 2016  
(In Thousands)  
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                              
  Service fee revenue   $ 47,638     $ 3,528   $ -     $ 51,166  
  Service fee revenue - affiliate     3,193       222     (3,415 )     -  
  Product revenue, net     -       11,380     -       11,380  
  Pass-thru revenue     14,653       -     -       14,653  
      Total revenues     65,484       15,130     (3,415 )     77,199  
                               
COSTS OF REVENUES:                              
  Cost of service fee revenue     33,689       3,474     (2,782 )     34,381  
  Cost of product revenue     16       10,726     -       10,742  
  Cost of pass-thru revenue     14,653       -             14,653  
      Total costs of revenues     48,358       14,200     (2,782 )     59,776  
      Gross profit     17,126       930     (633 )     17,423  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     18,943       498     (633 )     18,808  
    Income (loss) from operations     (1,817 )     432     -       (1,385 )
INTEREST EXPENSE (INCOME), NET     526       83             609  
    Income (loss) before income taxes     (2,343 )     349     -       (1,994 )
INCOME TAX PROVISION (BENEFIT)     72       116             188  
NET INCOME (LOSS)   $ (2,415 )   $ 233   $ -     $ (2,182 )
NON-GAAP NET INCOME (LOSS)   $ (80 )   $ 233   $ -     $ 153  
    $ -                        
EBITDA   $ 1,977     $ 438   $ -     $ 2,415  
ADJUSTED EBITDA   $ 3,465     $ 438   $ -     $ 3,903  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
                               
NET INCOME (LOSS)   $ (2,415 )   $ 233   $ -       (2,182 )
    Income tax expense (benefit)     72       116     -       188  
    Interest expense (income), net     526       83     -       609  
    Depreciation and amortization     2,947       6     -       2,953  
    Amortization of acquisition-related intangible assets     847       -     -       847  
EBITDA   $ 1,977     $ 438   $ -     $ 2,415  
    Stock-based compensation     629       -     -       629  
    Acquisition related, restructuring and other costs, net     859       -     -       859  
ADJUSTED EBITDA   $ 3,465     $ 438   $ -     $ 3,903  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
                               
NET INCOME (LOSS)   $ (2,415 )   $ 233   $ -     $ (2,182 )
    Stock-based compensation     629       -     -       629  
    Amortization of acquisition-related intangible assets     847       -     -       847  
    Acquisition related, restructuring and other costs, net     859       -     -       859  
NON-GAAP NET INCOME (LOSS)   $ (80 )   $ 233   $ -     $ 153  
                               
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, 2015  
(In Thousands)  
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                              
  Service fee revenue   $ 35,841     $ 3,234   $ -     $ 39,075  
  Service fee revenue - affiliate     3,150       169     (3,319 )     -  
  Product revenue, net     -       13,658     -       13,658  
  Pass-thru revenue     10,443       -     -       10,443  
      Total revenues     49,434       17,061     (3,319 )     63,176  
                                 
COSTS OF REVENUES:                              
  Cost of service fee revenue     26,611       3,198     (3,164 )     26,645  
  Cost of product revenue     -       12,911     -       12,911  
  Cost of pass-thru revenue     10,443       -     -       10,443  
      Total costs of revenues     37,054       16,109     (3,164 )     49,999  
      Gross profit     12,380       952     (155 )     13,177  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     14,249       582     (155 )     14,676  
    Income (loss) from operations     (1,869 )     370     -       (1,499 )
INTEREST EXPENSE (INCOME), NET     121       102     -       223  
    Income (loss) before income taxes     (1,990 )     268     -       (1,722 )
INCOME TAX PROVISION (BENEFIT)     86       92     -       178  
NET INCOME (LOSS)   $ (2,076 )   $ 176   $ -     $ (1,900 )
NON-GAAP NET INCOME (LOSS)   $ 437     $ 176   $ -     $ 613  
                               
EBITDA   $ 1,421     $ 389   $ -     $ 1,810  
ADJUSTED EBITDA   $ 3,694     $ 389   $ -     $ 4,083  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
                               
NET INCOME (LOSS)   $ (2,076 )   $ 176   $ -     $ (1,900 )
    Income tax expense (benefit)     86       92     -       178  
    Interest expense, net     121       102     -       223  
    Depreciation and amortization     3,290       19     -       3,309  
EBITDA   $ 1,421     $ 389   $ -     $ 1,810  
    Stock-based compensation     1,150       -     -       1,150  
    Acquisition related, restructuring and other costs, net     1,123       -     -       1,123  
ADJUSTED EBITDA   $ 3,694     $ 389   $ -     $ 4,083  
                                   
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
                                   
NET INCOME (LOSS)   $ (2,076 )   $ 176   $ -     $ (1,900 )
    Stock-based compensation     1,150       -     -       1,150  
    Amortization of intangible assets     240       -     -       240  
    Acquisition related, restructuring and other costs, net     1,123       -     -       1,123  
NON-GAAP NET INCOME (LOSS)   $ 437     $ 176   $ -     $ 613  
                               
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, 2016  
(In Thousands)  
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                              
  Service fee revenue   $ 92,854     $ 7,630   $ -     $ 100,484  
  Service fee revenue - affiliate     6,811       457     (7,268 )     -  
  Product revenue, net     -       24,987     -       24,987  
  Pass-thru revenue     26,809       -     -       26,809  
      Total revenues     126,474       33,074     (7,268 )     152,280  
                                   
COSTS OF REVENUES:                              
  Cost of service fee revenue     65,156       7,460     (5,961 )     66,655  
  Cost of product revenue     16       23,628     -       23,644  
  Cost of pass-thru revenue     26,809       -     -       26,809  
      Total costs of revenues     91,981       31,088     (5,961 )     117,108  
      Gross profit     34,493       1,986     (1,307 )     35,172  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     36,607       1,058     (1,307 )     36,358  
    Income (loss) from operations     (2,114 )     928     -       (1,186 )
INTEREST EXPENSE (INCOME), NET     921       173     -       1,094  
    Income (loss) before income taxes     (3,035 )     755     -       (2,280 )
INCOME TAX PROVISION (BENEFIT)     398       256     -       654  
NET INCOME (LOSS)   $ (3,433 )   $ 499   $ -     $ (2,934 )
NON-GAAP NET INCOME (LOSS)   $ (305 )   $ 499   $ -     $ 194  
    $ -                        
EBITDA   $ 5,276     $ 941   $ -     $ 6,217  
ADJUSTED EBITDA   $ 6,713     $ 941   $ -     $ 7,654  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:  
                               
NET INCOME (LOSS)   $ (3,433 )   $ 499   $ -     $ (2,934 )
    Income tax expense (benefit)     398       256     -       654  
    Interest expense, net     921       173     -       1,094  
    Depreciation and amortization     5,699       13     -       5,712  
    Amortization of acquisition-related intangible assets     1,691       -     -       1,691  
EBITDA   $ 5,276     $ 941   $ -     $ 6,217  
    Stock-based compensation     1,396       -     -       1,396  
    Acquisition related, restructuring and other costs, net     41       -     -       41  
ADJUSTED EBITDA   $ 6,713     $ 941   $ -     $ 7,654  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:  
                               
NET INCOME (LOSS)   $ (3,433 )   $ 499   $ -     $ (2,934 )
    Stock-based compensation     1,396       -     -       1,396  
    Amortization of acquisition-related intangible assets     1,691       -     -       1,691  
    Acquisition related, restructuring and other costs, net     41       -     -       41  
NON-GAAP NET INCOME (LOSS)   $ (305 )   $ 499   $ -     $ 194  
                               
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, 2015  
(In Thousands)  
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                              
  Service fee revenue   $ 68,573     $ 7,210   $ -     $ 75,783  
  Service fee revenue - affiliate     6,643       373     (7,016 )     -  
  Product revenue, net     -       30,312     -       30,312  
  Pass-thru revenue     20,927       -     -       20,927  
      Total revenues     96,143       37,895     (7,016 )     127,022  
                                 
  COSTS OF REVENUES:                              
  Cost of service fee revenue     51,268       7,144     (6,612 )     51,800  
  Cost of product revenue     -       28,619     -       28,619  
  Cost of pass-thru revenue     20,927       -     -       20,927  
      Total costs of revenues     72,195       35,763     (6,612 )     101,346  
      Gross profit     23,948       2,132     (404 )     25,676  
  SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     27,479       1,215     (404 )     28,290  
    Income (loss) from operations     (3,531 )     917     -       (2,614 )
  INTEREST EXPENSE (INCOME), NET     327       214     -       541  
    Income (loss) before income taxes     (3,858 )     703     -       (3,155 )
INCOME TAX PROVISION (BENEFIT)     192       246     -       438  
NET INCOME (LOSS)   $ (4,050 )   $ 457   $ -     $ (3,593 )
NON-GAAP NET INCOME (LOSS)   $ 286     $ 457   $ -     $ 743  
                               
EBITDA   $ 2,990     $ 960   $ -     $ 3,950  
ADJUSTED EBITDA   $ 6,846     $ 960   $ -     $ 7,806  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
                               
NET INCOME (LOSS)   $ (4,050 )   $ 457   $ -       (3,593 )
    Income tax expense (benefit)     192       246     -       438  
    Interest expense (income), net     327       214     -       541  
    Depreciation and amortization     6,521       43     -       6,564  
EBITDA   $ 2,990     $ 960   $ -     $ 3,950  
    Stock-based compensation     1,954       -     -       1,954  
    Acquisition related, restructuring and other costs, net     1,902       -     -       1,902  
    ADJUSTED EBITDA   $ 6,846     $ 960   $ -     $ 7,806  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
                               
NET INCOME (LOSS)   $ (4,050 )   $ 457   $ -     $ (3,593 )
    Stock-based compensation     1,954       -     -       1,954  
    Amortization of intangible assets     480       -     -       480  
    Acquisition related, restructuring and other costs, net     1,902       -     -       1,902  
NON-GAAP NET INCOME (LOSS)   $ 286     $ 457   $ -     $ 743  
                               
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, 2016  
(In Thousands)  
                         
          Business &              
    PFSweb     Retail Connect     Eliminations     Consolidated  
                         
ASSETS                        
CURRENT ASSETS:                              
  Cash and cash equivalents   $ 6,621     10,071     $ -     $ 16,692  
  Restricted cash     -     219       -       219  
  Accounts receivable, net     46,457     14,988       (1,027 )     60,418  
  Inventories, net     -     8,049       -       8,049  
  Other receivables     825     4,101       -       4,926  
  Prepaid expenses and other current assets     4,997     844       -       5,841  
    Total current assets     58,900     38,272       (1,027 )     96,145  
                               
PROPERTY AND EQUIPMENT, net     26,879     15       -       26,894  
RECEIVABLE/INVESTMENT IN AFFILIATES     9,451     -       (9,451 )     -  
INTANGIBLE ASSETS, net     9,316     -       -       9,316  
GOODWILL     45,601     -       -       45,601  
OTHER ASSETS     2,294     -       -       2,294  
    Total assets     152,441     38,287       (10,478 )     180,250  
                               
LIABILITIES AND SHAREHOLDERS EQUITY                        
CURRENT LIABILITIES:                              
  Current portion of long-term debt and capital lease obligations   $ 4,491     -     $ -     $ 4,491  
  Trade accounts payable     13,878     26,798       (1,027 )     39,649  
  Deferred revenue     6,377     -       -       6,377  
  Performance-based contingent payments     867     -       -       867  
  Accrued expenses     21,354     2,596       -       23,950  
    Total current liabilities     46,967     29,394       (1,027 )     75,334  
                               
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     50,539     -       -       50,539  
PAYABLE TO AFFILIATES     -     22,045       (22,045 )     -  
DEFERRED REVENUE     4,413     -       -       4,413  
DEFERRED RENT     4,918     -       -       4,918  
OTHER LONG-TERM LIABILITIES     543     -       -       543  
    Total liabilities     107,380     51,439       (23,072 )     135,747  
                               
                               
COMMITMENTS AND CONTINGENCIES                              
                               
SHAREHOLDERS' EQUITY:                              
  Common stock     18     19       (19 )     18  
  Capital contributions     -     1,000       (1,000 )     -  
  Additional paid-in capital     144,662     28,060       (28,060 )     144,662  
  Retained earnings (accumulated deficit)     (100,525 )   (43,438 )     43,242       (100,721 )
  Accumulated other comprehensive income     1,031     1,207       (1,569 )     669  
  Treasury stock     (125 )   -       -       (125 )
    Total shareholders' equity     45,061     (13,152 )     12,594       44,503  
    Total liabilities and shareholders' equity   $ 152,441     38,287     $ (10,478 )   $ 180,250  
                               
(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, 2015.  
   
   
                         
PFSweb, Inc. and Subsidiaries  
Unaudited Condensed Consolidating Balance Sheets  
as of December 31, 2015  
(In Thousands)  
                         
          Business &              
    PFSweb     Retail Connect     Eliminations     Consolidated  
                         
ASSETS                        
CURRENT ASSETS:                                
  Cash and cash equivalents   $ 7,962     $ 13,819     $ -     $ 21,781  
  Restricted cash     51       224       -       275  
  Accounts receivable, net     51,231       20,348       (879 )     70,700  
  Inventories, net     -       9,262       -       9,262  
  Other receivables     2,621       6,083       -       8,704  
  Prepaid expenses and other current assets     4,744       918       -       5,662  
    Total current assets     66,609       50,654       (879 )     116,384  
                                 
PROPERTY AND EQUIPMENT, net     24,065       28       -       24,093  
RECEIVABLE/INVESTMENT IN AFFILIATES     9,577       -       (9,577 )     -  
INTANGIBLE ASSETS, net     8,810       -       -       8,810  
GOODWILL     39,829       -       -       39,829  
OTHER ASSETS     2,174       -       -       2,174  
    Total assets     151,064       50,682       (10,456 )     191,290  
                                 
LIABILITIES AND SHAREHOLDERS EQUITY                        
CURRENT LIABILITIES:                                
  Current portion of long-term debt and capital lease obligations   $ 3,153     $ -     $ -     $ 3,153  
  Trade accounts payable     15,329       36,710       (869 )     51,170  
  Deferred revenue     7,390       -       -       7,390  
  Performance-based contingent payments     11,679       -       -       11,679  
  Accrued expenses     26,015       4,558       (10 )     30,563  
    Total current liabilities     63,566       41,268       (879 )     103,955  
                                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     32,238       -       -       32,238  
PAYABLE TO AFFILIATES     -       22,056       (22,056 )     -  
DEFERRED REVENUE     4,499       -       -       4,499  
DEFERRED RENT     4,362       -       -       4,362  
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, 2015.  
   
   

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