SOURCE: PFSweb, Inc.

PFSweb, Inc.

August 10, 2015 16:02 ET

PFSweb Reports Second Quarter Record Results

Q2 Service Fee Equivalent Revenue up 40% to $39.8 Million; Adjusted EBITDA up 138% to $4.1 Million

ALLEN, TX--(Marketwired - Aug 10, 2015) - PFSweb, Inc. (NASDAQ: PFSW), a global provider of end-to-end eCommerce solutions, reported results for the second quarter ended June 30, 2015.

Second Quarter 2015 Highlights vs. Year-Ago Quarter

  • Service fee equivalent revenue (a non-GAAP measure defined below) increased 40% to a Q2 record $39.8 million

  • Service fee gross margin increased 180 basis points to 31.8%

  • Adjusted EBITDA (a non-GAAP measure defined below) increased 138% to a Q2 record $4.1 million

Management Commentary

"We are pleased to once again report record quarterly results," said Michael Willoughby, CEO of PFSweb. "These results reflect continued strong execution for our new and existing clients. In addition, our service fee equivalent revenue and Adjusted EBITDA again benefitted from higher margin incremental project activity in our digital agency and technology services businesses. Our second quarter was also highlighted by the acquisition of MODA, which expands our offerings into the U.K. and adds integration capabilities with the Magento software platform. We believe our continuous execution, high level of client referenceability, and expansion of agency and technology service offerings are validating our position as a leader among full-service eCommerce providers.

"As recently announced, the breadth of our agency and technology service offering has been further enhanced through our acquisition of CrossView in August. Through combining CrossView's IBM WebSphere and SAP hybris related capabilities with our Demandware, Oracle Commerce and Magento experience, we believe we are now the only provider of end-to-end eCommerce solutions in the marketplace supporting all five major eCommerce software platforms. CrossView also provides us with a robust B2B front-end commerce platform which, we believe, when combined with our strong B2B order fulfillment, customer care and financial services capabilities, creates a unique B2B offering. By providing complete platform choice and a strong B2B full-service solution, we believe we will be able to target an even larger addressable market. As a result, we plan to further ramp our sales and marketing efforts to capitalize on the newly added capabilities and the cross sell opportunities from the CrossView acquisition."

2015 Outlook

As announced in the company's CrossView acquisition press release dated August 3, 2015, PFSweb has increased its 2015 service fee equivalent revenue guidance to range between $175 million and $185 million, up from $160 million to $170 million. This reflects growth of 26% to 33% from 2014. The company has also increased its adjusted EBITDA target to range between $18 million to $20 million, up from $16 million to $18 million. This reflects growth of 32% to 47% from 2014. This guidance excludes the impact of potential future acquisitions.

The updated guidance is based on the strength of the pre-acquisition PFSweb business and the contribution from the CrossView acquisition. The new service fee equivalent revenue and adjusted EBITDA guidance also reflects the expectation that CrossView revenues will be seasonally lower in the last quarter compared to the first three quarters, which is typical of commerce system integrators. The new guidance also includes the impact from increased sales and marketing expenses in the remainder of 2015, as well as expenses related to preparation for the 2015 holiday season. 

Second Quarter 2015 Financial Results

Total revenues in the second quarter of 2015 increased 17% to $63.2 million compared to $54.0 million in the same period of 2014. Service fee revenue in the second quarter of 2015 increased 43% to $39.1 million compared to $27.4 million last year. Product revenue was $13.7 million compared to $18.1 million in the same period of 2014 due to ongoing restructuring activities by the company's largest client in this segment.

Service fee equivalent revenue in the second quarter of 2015 increased 40% to a second quarter record $39.8 million compared to $28.5 million in the same period of 2014.

Service fee gross margin in the second quarter increased 180 basis points to 31.8% compared to 30.0% in the same period of 2014. The 2015 quarter included a higher proportion of professional and technology services, including the impact from our acquisitions of Rev Solutions and LiveAreaLabs and certain incremental projects.

Adjusted EBITDA increased 138% to a second quarter record $4.1 million in of 2015 compared to $1.7 million in the same period of 2014. As a percentage of service fee equivalent revenue, adjusted EBITDA increased 430 basis points to 10.3% compared to 6.0% in the year-ago quarter.

Net loss in the second quarter was $1.9 million or $(0.11) per diluted share, compared to a net loss of $2.4 million or $(0.14) per diluted share in the same period of 2014. Net loss in the second quarter of 2015 included $1.2 million in stock-based compensation expense and $1.1 million in acquisition related and restructuring costs. This compares to $0.9 million in stock-based compensation expense and $0.2 million in acquisition related and restructuring costs in the same period of 2014.

Non-GAAP net income (a non-GAAP measure defined below) in the second quarter of 2015 was $0.6 million or $0.03 per diluted share, compared to non-GAAP net loss of $1.4 million or $(0.08) per diluted share in the second quarter of 2014.

At June 30, 2015, cash and cash equivalents was $15.7 million compared to $18.1 million at December 31, 2014. Total debt decreased to $9.5 million from $10.9 million at December 31, 2014.

First Half 2015 Financial Results

Total revenues in the first six months of 2015 increased 14% to $127.0 million compared to $111.3 million in the same period of 2014. Service fee revenue in the first six months of 2015 increased 38% to $75.8 million compared to $55.0 million last year. Product revenue was $30.3 million compared to $39.8 million in the same period of 2014.

Service fee equivalent revenue in the first six months of 2015 increased 35% to $77.5 million compared to $57.3 million in the same period of 2014.

Service fee gross margin in the first six months of 2015 increased 140 basis points to 31.6% compared to 30.2% in the same period of 2014.

Adjusted EBITDA increased 97% to $7.8 million in the first six months of 2015 compared to $4.0 million in the same period of 2014. As a percentage of service fee equivalent revenue, adjusted EBITDA increased 320 basis points to 10.1% compared to 6.9% in the year-ago period.

Net loss in the first six months of 2015 was $3.6 million or $(0.21) per diluted share, compared to a net loss of $4.2 million or $(0.25) per diluted share in the same period of 2014. Net loss in the first six months of 2015 included $2.0 million in stock-based compensation expense and $1.9 million in acquisition related and restructuring costs. This compares to $1.7 million in stock-based compensation expense and $0.2 million in acquisition related and restructuring costs in the same period of 2014.

Non-GAAP net income in the first six months of 2015 was $0.7 million or $0.04 per diluted share, compared to non-GAAP net loss of $2.4 million or $(0.14) per diluted share in the same period of 2014.

Conference Call

PFSweb will conduct a conference call today at 4:30 p.m. Eastern time to discuss its results for the second quarter ended June 30, 2015.

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

Date: Monday, August 10, 2015
Time: 4:30 p.m. Eastern time (3:30 p.m. Central time)
Toll-free dial-in number: 1-888-539-3678
International dial-in number: 1-719-325-2454
Conference ID: 8118507

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=115575 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 7:30 p.m. Eastern time on the same day through August 24, 2015.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 8118507

About PFSweb Inc.

PFSweb (NASDAQ: PFSW) is a global provider of end-to-end eCommerce solutions including digital agency and marketing services, technology development services, business process outsourcing services and a complete omni-channel technology ecosystem. The company provides these solutions and services to major brand names and other companies seeking to optimize every customer experience and enhance their traditional and online business channels. PFSweb supports organizations across various industries, including Procter & Gamble, L'Oreal, LEGO, Columbia Sportswear, Ricoh, Roots Canada Ltd., Diageo, BCBGMAXAZRIA, T.J. Maxx, the United States Mint, and many more. PFSweb is headquartered in Allen, TX with additional locations in Tennessee, Mississippi, Minnesota, Washington, New York, 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 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, 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)  
           
           
  June 30,     December 31,  
  2015     2014  
               
ASSETS              
CURRENT ASSETS:              
  Cash and cash equivalents $ 15,721     $ 18,128  
  Restricted cash   374       521  
  Accounts receivable, net of allowance for doubtful accounts of $446 and $447 at June 30, 2015 and December 31, 2014, respectively   42,961       59,126  
  Inventories, net of reserves of $635 and $768 at June 30, 2015 and December 31, 2014, respectively   10,333       10,534  
  Other receivables   4,565       5,638  
  Prepaid expenses and other current assets   4,551       7,103  
    Total current assets   78,505       101,050  
               
PROPERTY AND EQUIPMENT, net   23,912       26,604  
INTANGIBLE ASSETS, net   1,813       2,170  
GOODWILL   10,322       8,366  
OTHER ASSETS   2,101       2,556  
    Total assets $ 116,653     $ 140,746  
               
LIABILITIES AND SHAREHOLDERS EQUITY              
CURRENT LIABILITIES:              
  Current portion of long-term debt and capital lease obligations $ 5,717     $ 6,850  
  Trade accounts payable   27,839       38,842  
  Deferred revenue   6,806       9,098  
  Accrued expenses   24,124       28,473  
    Total current liabilities   64,486       83,263  
               
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion   3,739       4,062  
DEFERRED REVENUE   4,481       5,355  
DEFERRED RENT   4,561       4,870  
OTHER LONG-TERM LIABILITIES   368       3,091  
    Total liabilities   77,635       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; 17,511,982 and 17,047,093 shares issued at June 30, 2015 and December 31, 2014, respectively; and 17,478,515 and 17,013,622 shares outstanding as of June 30, 2015 and December 31, 2014, respectively   17       17  
  Additional paid-in capital   132,631       129,457  
  Accumulated deficit   (93,519 )     (89,926 )
  Accumulated other comprehensive income   14       682  
  Treasury stock at cost, 33,467 shares   (125 )     (125 )
    Total shareholders' equity   39,018       40,105  
    Total liabilities and shareholders' equity $ 116,653     $ 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.
   
   
   
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,  
  2015     2014     2015     2014  
REVENUES:                              
  Product revenue, net $ 13,658     $ 18,120     $ 30,312     $ 39,842  
  Service fee revenue   39,075       27,384       75,783       54,982  
  Pass-thru revenue   10,443       8,539       20,927       16,448  
    Total revenues   63,176       54,043       127,022       111,272  
                               
COSTS OF REVENUES:                              
  Cost of product revenue   12,911       17,039       28,619       37,555  
  Cost of service fee revenue   26,645       19,160       51,800       38,380  
  Cost of pass-thru revenue   10,443       8,539       20,927       16,448  
      Total costs of revenues   49,999       44,738       101,346       92,383  
      Gross profit   13,177       9,305       25,676       18,889  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   14,676       11,485       28,290       22,507  
    Income (loss) from operations   (1,499 )     (2,180 )     (2,614 )     (3,618 )
INTEREST EXPENSE (INCOME), NET   223       173       541       316  
    Income (loss) before income taxes   (1,722 )     (2,353 )     (3,155 )     (3,934 )
INCOME TAX PROVISION (BENEFIT)   178       42       438       271  
NET INCOME (LOSS) $ (1,900 )   $ (2,395 )   $ (3,593 )   $ (4,205 )
NON-GAAP NET INCOME (LOSS) $ 613     $ (1,379 )   $ 743     $ (2,395 )
                               
NET INCOME (LOSS) PER SHARE:                              
  Basic $ (0.11 )   $ (0.14 )   $ (0.21 )   $ (0.25 )
  Diluted $ (0.11 )   $ (0.14 )   $ (0.21 )   $ (0.25 )
                               
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:                              
  Basic   17,368       16,736       17,257       16,630  
  Diluted   17,368       16,736       17,257       16,630  
                               
EBITDA $ 1,810     $ 698     $ 3,950     $ 2,150  
ADJUSTED EBITDA $ 4,083     $ 1,714     $ 7,806     $ 3,960  
   
(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     Six Months Ended  
  June 30,     June 30,  
  2015     2014     2015     2014  
                               
NET INCOME (LOSS) $ (1,900 )   $ (2,395 )   $ (3,593 )   $ (4,205 )
    Income tax expense (benefit)   178       42       438       271  
    Interest expense, net   223       173       541       316  
    Depreciation and amortization   3,309       2,878       6,564       5,768  
EBITDA $ 1,810     $ 698     $ 3,950     $ 2,150  
    Stock-based compensation   1,150       862       1,954       1,656  
    Acquisition related and restructuring costs   1,123       154       1,902       154  
ADJUSTED EBITDA $ 4,083     $ 1,714     $ 7,806     $ 3,960  
                               
                               
  Three Months Ended     Six Months Ended  
  June 30,     June 30,  
  2015     2014     2015     2014  
                               
NET INCOME (LOSS) $ (1,900 )   $ (2,395 )   $ (3,593 )   $ (4,205 )
    Stock-based compensation   1,150       862       1,954       1,656  
    Amortization of intangible assets   240       -       480       -  
    Acquisition related and restructuring costs   1,123       154       1,902       154  
NON-GAAP NET INCOME (LOSS) $ 613     $ (1,379 )   $ 743     $ (2,395 )
                               
NET INCOME (LOSS) PER SHARE:                              
  Basic $ (0.11 )   $ (0.14 )   $ (0.21 )   $ (0.25 )
  Diluted $ (0.11 )   $ (0.14 )   $ (0.21 )   $ (0.25 )
                               
NON-GAAP NET INCOME (LOSS) Per Share:                              
  Basic $ 0.04     $ (0.08 )   $ 0.04     $ (0.14 )
  Diluted $ 0.03     $ (0.08 )   $ 0.04     $ (0.14 )
                               
                               
                               
  Three Months Ended     Six Months Ended  
  June 30,     June 30,  
  2015     2014     2015     2014  
                               
TOTAL REVENUES $ 63,176     $ 54,043     $ 127,022     $ 111,272  
  Pass-thru revenue   (10,443 )     (8,539 )     (20,927 )     (16,448 )
  Cost of product revenue   (12,911 )     (17,039 )     (28,619 )     (37,555 )
SERVICE FEE EQUIVALENT REVENUE $ 39,822     $ 28,465     $ 77,476     $ 57,269  
                               
                               
                               
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:                            
  Product revenue, net $ -     $ 13,658   $ -     $ 13,658  
  Service fee revenue   35,841       3,234     -       39,075  
  Service fee revenue - affiliate   3,150       169     (3,319 )     -  
  Pass-thru revenue   10,443       -     -       10,443  
      Total revenues   49,434       17,061     (3,319 )     63,176  
                             
COSTS OF REVENUES:                            
  Cost of product revenue   -       12,911     -       12,911  
  Cost of service fee revenue   26,611       3,198     (3,164 )     26,645  
  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 (income), 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 and restructuring costs   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 and restructuring costs   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 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 Six Months Ended June 30, 2015  
(In Thousands)  
                     
        Business &            
  PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                            
  Product revenue, net $ -     $ 30,312   $ -     $ 30,312  
  Service fee revenue   68,573       7,210     -       75,783  
  Service fee revenue - affiliate   6,643       373     (7,016 )     -  
  Pass-thru revenue   20,927       -     -       20,927  
      Total revenues   96,143       37,895     (7,016 )     127,022  
                             
COSTS OF REVENUES:                            
  Cost of product revenue   -       28,619     -       28,619  
  Cost of service fee revenue   51,268       7,144     (6,612 )     51,800  
  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 and restructuring costs   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 and restructuring costs   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 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   $ -     $ 41,703  
  Service fee revenue   48,576       6,406     -       55,025  
  Service fee revenue - affiliate   6,866       1,210     (8,076 )     (1,904 )
  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     -       36,781  
  Cost of service fee revenue   39,077       6,709     (7,406 )     39,154  
  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 Condensed Consolidating Balance Sheets  
as of June 30, 2015  
(In Thousands)  
                       
        Business &              
  PFSweb     Retail Connect     Eliminations     Consolidated  
                               
ASSETS                              
CURRENT ASSETS:                              
  Cash and cash equivalents $ 9,036     $ 6,685     $ -     $ 15,721  
  Restricted cash   -       374       -       374  
  Accounts receivable, net   30,064       13,727       (830 )     42,961  
  Inventories, net   -       10,333       -       10,333  
  Other receivables   160       4,405       -       4,565  
  Prepaid expenses and other current assets   3,687       864       -       4,551  
      Total current assets   42,947       36,388       (830 )     78,505  
                               
PROPERTY AND EQUIPMENT, net   23,858       54       -       23,912  
RECEIVABLE/INVESTMENT IN AFFILIATES   11,039       -       (11,039 )     -  
INTANGIBLE ASSETS, net   1,813       -       -       1,813  
GOODWILL   10,322       -       -       10,322  
OTHER ASSETS   2,101       -       -       2,101  
      Total assets   92,080       36,442       (11,869 )     116,653  
                               
LIABILITIES AND SHAREHOLDERS EQUITY                              
CURRENT LIABILITIES:                              
Current portion of long-term debt and capital lease obligations $ 3,550     $ 2,167     $ -     $ 5,717  
Trade accounts payable   8,393       20,287       (841 )     27,839  
Deferred revenue   6,806       -       -       6,806  
Accrued expenses   19,394       4,730       -       24,124  
      Total current liabilities   38,143       27,184       (841 )     64,486  
                               
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion   3,739       -       -       3,739  
PAYABLE TO AFFILIATES   -       22,045       (22,045 )     -  
DEFERRED REVENUE   4,481       -       -       4,481  
DEFERRED RENT   4,561       -       -       4,561  
OTHER LONG-TERM LIABILITIES   368       -       -       368  
      Total liabilities   51,292       49,229       (22,886 )     77,635  
                               
                               
COMMITMENTS AND CONTINGENCIES                              
                               
SHAREHOLDERS' EQUITY:                              
  Common stock   17       1,019       (1,019 )     17  
  Capital contributions   -               -       -  
  Additional paid-in capital   134,557       28,060       (29,986 )     132,631  
  Retained earnings (accumulated deficit)   (93,661 )     (43,128 )     43,270       (93,519 )
  Accumulated other comprehensive income   -       1,262       (1,248 )     14  
  Treasury stock   (125 )     -       -       (125 )
    Total shareholders' equity   40,788       (12,787 )     11,017       39,018  
    Total liabilities and shareholders' equity $ 92,080     $ 36,442     $ (11,869 )   $ 116,653  
   
(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)  
                       
        Business &              
  PFSweb     Retail Connect     Eliminations     Consolidated  
                               
ASSETS                              
CURRENT ASSETS:                              
  Cash and cash equivalents $ 6,671     $ 11,457     $ -     $ 18,128  
  Restricted cash   -       521       -       521  
  Accounts receivable, net   42,081       18,415       (1,370 )     59,126  
  Inventories, net   -       10,534       -       10,534  
  Other receivables   -       5,638       -       5,638  
  Prepaid expenses and other current assets   6,141       962       -       7,103  
      Total current assets   54,893       47,527       (1,370 )     101,050  
                               
PROPERTY AND EQUIPMENT, net   26,478       126       -       26,604  
RECEIVABLE/INVESTMENT IN AFFILIATES   9,938       -       (9,938 )     -  
INTANGIBLE ASSETS, net   2,170       -       -       2,170  
GOODWILL   8,366       -       -       8,366  
OTHER ASSETS   2,527       29       -       2,556  
      Total assets   104,372       47,682       (11,308 )     140,746  
                               
LIABILITIES AND SHAREHOLDERS EQUITY                              
CURRENT LIABILITIES:                              
  Current portion of long-term debt and capital lease obligations $ 3,583     $ 3,267     $ -     $ 6,850  
  Trade accounts payable   13,001       27,211       (1,370 )     38,842  
  Deferred revenue   9,098       -       -       9,098  
  Accrued expenses   21,338       7,135       -       28,473  
      Total current liabilities   47,020       37,613       (1,370 )     83,263  
                               
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion   4,062       -       -       4,062  
PAYABLE TO AFFILIATES   -       22,045       (22,045 )     -  
DEFERRED REVENUE   5,355       -       -       5,355  
DEFERRED RENT   4,870       -       -       4,870  
OTHER LONG-TERM LIABILITIES   3,091       -       -       3,091  
      Total liabilities   64,398       59,658       (23,415 )     100,641  
                               
                               
COMMITMENTS AND CONTINGENCIES                              
                               
SHAREHOLDERS' EQUITY:                              
  Common stock   17       19       (19 )     17  
  Capital contributions   -       1,000       (1,000 )     -  
  Additional paid-in capital   129,457       28,060       (28,060 )     129,457  
  Retained earnings (accumulated deficit)   (90,061 )     (42,711 )     42,846       (89,926 )
  Accumulated other comprehensive income   686       1,656       (1,660 )     682  
  Treasury stock   (125 )     -       -       (125 )
      Total shareholders' equity   39,974       (11,976 )     12,107       40,105  
      Total liabilities and shareholders' equity $ 104,372     $ 47,682     $ (11,308 )   $ 140,746  
   
(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 Group Inc.
    Scott Liolios or Sean Mansouri
    Tel 949-574-3860
    Email Contact