SOURCE: PFSweb, Inc.

PFSweb, Inc.

November 12, 2014 08:30 ET

PFSweb Reports Third Quarter 2014 Results

Q3 Service Fee Equivalent Revenue up 28% to $32.4 Million; Adjusted EBITDA up 107% to $2.9 Million

Launched Three New Client Programs and Acquired Two eCommerce Organizations

ALLEN, TX--(Marketwired - Nov 12, 2014) - PFSweb, Inc. (NASDAQ: PFSW), a global provider of end-to-end eCommerce solutions, reported results for the three and nine-months ended September 30, 2014.

Third Quarter 2014 Highlights

  • Service fee equivalent revenue (a non-GAAP measure defined below) increased 28% to $32.4 million compared to $25.2 million in the same period of 2013
  • Adjusted EBITDA (a non-GAAP measure defined below) increased 107% to $2.9 million compared to $1.4 million in the same period of 2013
  • Acquired REV Solutions (REV), an eCommerce system integrator, enhancing PFSweb's Demandware practice and adding Oracle ATG support capabilities
  • Acquired LiveAreaLabs (LAL), a digital creative agency, strengthening PFSweb's agency service offering and adding support capabilities for hybris, Magento, WebSphere and other leading platforms
  • Launched new eCommerce solutions for Urban Decay and Canada Goose, as well as the soft launch of the United States Mint website (officially launched October 1, 2014)

First Nine Months of 2014 Financial Summary

  • Service fee equivalent revenue increased 8% to $89.6 million compared to $83.2 million in the same period of 2013
  • Adjusted EBITDA remained flat at $6.8 million compared to the same period of 2013

Third Quarter 2014 Financial Results Details
Total revenues in the third quarter of 2014 increased 7% to $57.1 million compared to $53.6 million in the same period of 2013. Service fee revenue in the third quarter of 2014 increased 31% to $31.4 million compared to $23.9 million last year. This increase was primarily due to new client programs launched in the third quarter of 2014 and increased project revenue. Product revenue decreased to $17.3 million compared to $21.5 million in the same period of 2013, primarily due to ongoing restructuring activities by the company's largest client in this segment.

Service fee equivalent revenue in the third quarter of 2014 increased 28% to $32.4 million compared to $25.2 million in the same period of 2013. Excluding the results of the REV and LAL acquisitions, which occurred in September, third quarter service fee equivalent revenue grew by 24% to $31.2 million compared to the same period in 2013.

Service fee gross margin in the third quarter decreased to 29.9% compared to 32.3% in the same period in 2013. While each period includes the benefit of higher margin project activity, the 2014 period includes certain incremental expenses incurred to prepare the operations for the upcoming holiday volume.

Adjusted EBITDA was $2.9 million in the third quarter of 2014 compared to $1.4 million in the same period in 2013.

Net loss in the third quarter of 2014 was $2.5 million or $(0.15) per diluted share, compared to a net loss of $2.0 million or $(0.12) per diluted share in the same period of 2013. Net loss in the third quarter of 2014 included approximately $0.9 million in stock-based compensation expense and $1.5 million in acquisition and restructuring related costs, compared to approximately $0.6 million in stock-based compensation expense and no acquisition or restructuring related costs in the same period of 2013.

Non-GAAP net loss (a non-GAAP measure defined below) in the third quarter of 2014 was $0.1 million or $(0.01) per diluted share, compared to non-GAAP net loss of $1.3 million or $(0.08) per diluted share in the third quarter of 2013.

Cash and cash equivalents decreased to $19.5 million compared to $22.4 million at December 31, 2013, primarily due to the acquisitions of REV and LAL. Debt was $11.3 million at September 30, 2014 compared to $11.1 million at December 31, 2013.

Management Commentary
"The third quarter marked a significant turn for our organization, both strategically and financially," said Michael Willoughby, CEO of PFSweb. "We significantly enhanced our agency and technology service offerings with the acquisitions of REV Solutions and LiveAreaLabs. Both supplement our key partnership with Demandware, while broadening our integration capabilities with Oracle ATG, hybris, Magento and others.

"Our financial results this quarter also reflect our return to strong year-over-year growth in our eCommerce business, as we are now fully past last year's client transitions. This is reflected in our service fee equivalent revenue growth of 28% and adjusted EBITDA growth of 107%. In addition to the incremental benefit from the acquisitions, these results were strengthened by new and expanded client relationships with Urban Decay, which is the ninth L'Oreal Brand in our client portfolio, Canada Goose, and the rolling out of our highly anticipated United States Mint eCommerce solution.

"Looking ahead, we expect this momentum to carry into the holiday season and 2015, driven by continued execution internally and our growth-through-acquisition strategy to support additional software platforms and geographies across the globe. We will also pursue additional opportunities to onboard new clients and expand current client relationships as we fully integrate REV Solutions and LiveAreaLabs. In fact, we are already seeing new opportunities for client engagements that combine unique services from REV, LiveAreaLabs and PFSweb. These cross-selling opportunities are yet another avenue for expansion in our eCommerce service offering."

2014 and 2015 Outlook
PFSweb reiterates its 2014 service fee equivalent revenue guidance to range between $131 million and $137 million, increasing 10% to 15% compared to 2013. The company also reiterates its outlook for 2014 adjusted EBITDA to range between $12 million and $14 million, representing an increase of 12% to 31% compared to 2013.

For 2015, PFSweb currently expects strong growth in service fee equivalent revenue and adjusted EBITDA as the company realizes a full year benefit from recent acquisitions and the United States Mint contract, as well as incremental revenue from future new and expanded client relationships. At this time, the company is targeting 2015 service fee equivalent revenue to range between $165 million and $175 million. The company is also targeting adjusted EBITDA as a percentage of service fee equivalent revenue to improve to a range between 10% and 11%. This adjusted EBITDA target includes the projected impact of incremental sales and marketing expenditures in 2015 to support the company's future revenue growth projections.

Conference Call
PFSweb will conduct a conference call today at 11:00 a.m. Eastern time to discuss its results for the third quarter ended September 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, November 12, 2014
Time: 11:00 a.m. Eastern time (10:00 a.m. Central time)
Toll-free dial-in number: 1-888-364-3109
International dial-in number: 1-719-457-2627
Conference ID: 1591635

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=111852 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 November 26, 2014.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 1591635

About PFSweb Inc.
PFSweb (NASDAQ: PFSW) is global provider of end-to-end eCommerce solutions including digital agency and marketing services, technology development services, business process outsourcing services and a complete omni-channel technology ecosystem. The company provides these solutions and services to major brand names and other companies seeking to optimize every customer experience and enhance their traditional and online business channels. PFSweb supports organizations across various industries, including Procter & Gamble, L'Oreal, LEGO, Columbia Sportswear, Ricoh, Roots Canada Ltd., Diageo, BCBGMAXAZRIA, T.J. Maxx, the United States Mint, and many more. PFSweb is headquartered in Allen, TX with additional locations in Tennessee, Mississippi, Minnesota, Washington, New York, Canada, Belgium, India 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)        
    September 30,     December 31,  
    2014     2013  
ASSETS            
CURRENT ASSETS:                
  Cash and cash equivalents   $ 19,501     $ 22,418  
  Restricted cash     202       130  
  Accounts receivable, net of allowance for doubtful accounts of $420 and $382 at September 30, 2014 and December 31, 2013, respectively    
45,157
     
55,292
 
  Inventories, net of reserves of $830 and $962 at September 30, 2014 and December 31, 2013, respectively    
14,506
     
14,169
 
  Other receivables     4,262       5,241  
  Prepaid expenses and other current assets     5,437       4,713  
    Total current assets     89,065       101,963  
                 
PROPERTY AND EQUIPMENT, net     26,970       27,190  
GOODWILL and INTANGIBLE ASSETS     9,851       -  
OTHER ASSETS     2,568       2,883  
    Total assets     128,454       132,036  
                 
LIABILITIES AND SHAREHOLDERS EQUITY                
CURRENT LIABILITIES:                
  Current portion of long-term debt and capital lease obligations   $ 7,428     $ 8,231  
  Trade accounts payable     29,590       34,096  
  Deferred revenue     11,046       8,181  
  Accrued expenses     28,824       25,045  
    Total current liabilities     76,888       75,553  
                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     3,876       2,876  
DEFERRED REVENUE     6,066       7,491  
DEFERRED RENT     5,069       5,191  
    Total liabilities     91,899       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; 16,842,450 and 16,540,904 shares issued at September 30, 2014 and December 31, 2013, respectively; and 16,808,983 and 16,507,437 shares outstanding as of September 30, 2014 and December 31, 2013, respectively    
17
      17  
  Additional paid-in capital     127,653       124,522  
  Accumulated deficit     (92,030 )     (85,300 )
  Accumulated other comprehensive income     1,040       1,811  
  Treasury stock at cost, 33,467 shares     (125 )     (125 )
    Total shareholders' equity     36,555       40,925  
    Total liabilities and shareholders' equity   $ 128,454     $ 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     Nine Months Ended  
    September 30,     September 30,  
    2014     2013     2014     2013  
REVENUES:                                
  Product revenue, net   $ 17,340     $ 21,495     $ 57,182     $ 69,660  
  Service fee revenue     31,411       23,908       86,393       78,708  
  Pass-thru revenue     8,344       8,150       24,792       26,511  
      Total revenues     57,095       53,553       168,367       174,879  
                                 
COSTS OF REVENUES:                                
  Cost of product revenue     16,397       20,221       53,952       65,215  
  Cost of service fee revenue     22,007       16,196       60,387       53,265  
  Cost of pass-thru revenue     8,344       8,150       24,792       26,511  
      Total costs of revenues     46,748       44,567       139,131       144,991  
    Gross profit     10,347       8,986       29,236       29,888  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     12,764       10,656       35,271       34,395  
    Income (loss) from operations     (2,417 )     (1,670 )     (6,035 )     (4,507 )
INTEREST EXPENSE (INCOME), NET     174       162       490       564  
    Income (loss) before income taxes     (2,591 )     (1,832 )     (6,525 )     (5,071 )
INCOME TAX PROVISION (BENEFIT)     (66 )     120       205       411  
NET INCOME (LOSS)   $ (2,525 )   $ (1,952 )   $ (6,730 )   $ (5,482 )
NON-GAAP NET INCOME (LOSS)   $ (133 )   $ (1,342 )   $ (2,528 )   $ (1,742 )
                                 
NET INCOME (LOSS) PER SHARE:                                
  Basic   $ (0.15 )   $ (0.12 )   $ (0.40 )   $ (0.38 )
  Diluted   $ (0.15 )   $ (0.12 )   $ (0.40 )   $ (0.38 )
                                 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:                                
  Basic     16,779       16,121       16,680       14,490  
  Diluted     16,779       16,121       16,680       14,490  
                                 
EBITDA   $ 464     $ 767     $ 2,614     $ 3,026  
ADJUSTED EBITDA   $ 2,856     $ 1,377     $ 6,816     $ 6,766  
                                 
(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     Nine Months Ended  
    September 30,       September 30,    
    2014     2013     2014     2013  
NET INCOME (LOSS)   $ (2,525 )   $ (1,952 )   $ (6,730 )   $ (5,482 )
    Income tax expense (benefit)     (66 )     120       205       411  
    Interest expense, net     174       162       490       564  
    Depreciation and amortization     2,881       2,437       8,649       7,533  
EBITDA   $ 464     $ 767     $ 2,614     $ 3,026  
    Stock-based compensation     853       610       2,509       1,195  
    Acquisition related costs     1,366       -       1,520       -  
    Restructuring and other charges     173       -       173       2,545  
ADJUSTED EBITDA   $ 2,856     $ 1,377     $ 6,816     $ 6,766  
                                 
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2014     2013     2014     2013  
                                 
NET INCOME (LOSS)   $ (2,525 )   $ (1,952 )   $ (6,730 )   $ (5,482 )
    Stock-based compensation     853       610       2,509       1,195  
    Acquisition related costs     1,366       -       1,520       -  
    Restructuring and other charges     173       -       173       2,545  
NON-GAAP NET INCOME (LOSS)   $ (133 )   $ (1,342 )   $ (2,528 )   $ (1,742 )
                                 
NET INCOME (LOSS) PER SHARE:                                
  Basic   $ (0.15 )   $ (0.12 )   $ (0.40 )   $ (0.38 )
  Diluted   $ (0.15 )   $ (0.12 )   $ (0.40 )   $ (0.38 )
                                 
NON-GAAP NET INCOME (LOSS) Per Share:                                
  Basic   $ (0.01 )   $ (0.08 )   $ (0.15 )   $ (0.12 )
  Diluted   $ (0.01 )   $ (0.08 )   $ (0.15 )   $ (0.12 )
                                   
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2014     2013     2014     2013  
                                 
TOTAL REVENUES   $ 57,095     $ 53,553     $ 168,367     $ 174,879  
  Pass-thru revenue     (8,344 )     (8,150 )     (24,792 )     (26,511 )
  Cost of product revenue     (16,397 )     (20,221 )     (53,952 )     (65,215 )
SERVICE FEE EQUIVALENT REVENUE   $ 32,354     $ 25,182     $ 89,623     $ 83,153  
                                 
   
PFSweb, Inc. and Subsidiaries  
Unaudited Consolidating Statements of Operations  
For the Three Months Ended September 30, 2014  
(In Thousands)  
                       
 
 
 
 
 
PFSweb
 
 
 
 
Business &
Retail Connect
 
 
 
Eliminations
 
 
 
 
 
Consolidated
 
 
REVENUES:                              
  Product revenue, net   $ -     $ 17,340   $ -     $ 17,340  
  Service fee revenue     28,362       3,049     -       31,411  
  Service fee revenue - affiliate     3,048       238     (3,286 )     -  
  Pass-thru revenue     8,344       -     -       8,344  
      Total revenues     39,754       20,627     (3,286 )     57,095  
                               
COSTS OF REVENUES:                              
  Cost of product revenue     -       16,397     -       16,397  
  Cost of service fee revenue     21,972       3,145     (3,110 )     22,007  
  Cost of pass-thru revenue     8,344       -     -       8,344  
      Total costs of revenues     30,316       19,542     (3,110 )     46,748  
      Gross profit     9,438       1,085     (176 )     10,347  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     12,255       685     (176 )     12,764  
    Income (loss) from operations     (2,817 )     400     -       (2,417 )
INTEREST EXPENSE (INCOME), NET     36       138     -       174  
    Income (loss) before income taxes     (2,853 )     262     -       (2,591 )
INCOME TAX PROVISION (BENEFIT)     (209 )     143     -       (66 )
NET INCOME (LOSS)   $ (2,644 )   $ 119   $ -     $ (2,525 )
NON-GAAP NET INCOME (LOSS)   $ (252 )   $ 119   $ -     $ (133 )
                               
EBITDA   $ 22     $ 442   $ -     $ 464  
ADJUSTED EBITDA   $ 2,414     $ 442   $ -     $ 2,856  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:                              
                               
NET INCOME (LOSS)   $ (2,644 )   $ 119   $ -       (2,525 )
    Income tax expense (benefit)     (209 )     143     -       (66 )
    Interest expense (income), net     36       138     -       174  
    Depreciation and amortization     2,839       42     -       2,881  
EBITDA   $ 22     $ 442   $ -     $ 464  
    Stock-based compensation     853       -     -       853  
    Acquisition related costs     1,366       -     -       1,366  
    Restructuring and other charges     173       -     -       173  
ADJUSTED EBITDA   $ 2,414     $ 442   $ -     $ 2,856  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:                              
                               
NET INCOME (LOSS)   $ (2,644 )   $ 119   $ -     $ (2,525 )
    Stock-based compensation     853       -     -       853  
    Acquisition related costs     1,366       -     -       1,366  
    Restructuring and other charges     173       -     -       173  
NON-GAAP NET INCOME (LOSS)   $ (252 )   $ 119   $ -     $ (133 )
                               
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 September 30, 2013  
(In Thousands)  
                         
          Business &              
    PFSweb     Retail Connect     Eliminations     Consolidated  
REVENUES:                                
  Product revenue, net   $ -     $ 21,495     $ -     $ 21,495  
  Service fee revenue     22,123       1,785       -       23,908  
  Service fee revenue - affiliate     2,198       312       (2,510 )     -  
  Pass-thru revenue     8,150       -       -       8,150  
      Total revenues     32,471       23,592       (2,510 )     53,553  
                                 
COSTS OF REVENUES:                                
  Cost of product revenue     -       20,221       -       20,221  
  Cost of service fee revenue     16,634       1,862       (2,300 )     16,196  
  Cost of pass-thru revenue     8,150       -       -       8,150  
      Total costs of revenues     24,784       22,083       (2,300 )     44,567  
      Gross profit     7,687       1,509       (210 )     8,986  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     9,510       1,356       (210 )     10,656  
    Income (loss) from operations     (1,823 )     153       -       (1,670 )
INTEREST EXPENSE (INCOME), NET     11       151       -       162  
    Income (loss) before income taxes     (1,834 )     2       -       (1,832 )
INCOME TAX PROVISION (BENEFIT)     58       62       -       120  
NET INCOME (LOSS)   $ (1,892 )   $ (60 )   $ -     $ (1,952 )
NON-GAAP NET INCOME (LOSS)   $ (1,282 )   $ (60 )   $ -     $ (1,342 )
                                 
EBITDA   $ 576     $ 191     $ -     $ 767  
ADJUSTED EBITDA   $ 1,186     $ 191     $ -     $ 1,377  
                                 
                                 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:                                
                                 
NET INCOME (LOSS)   $ (1,892 )   $ (60 )   $ -       (1,952 )
    Income tax expense (benefit)     58       62       -       120  
    Interest expense (income), net     11       151       -       162  
    Depreciation and amortization     2,399       38       -       2,437  
EBITDA   $ 576     $ 191     $ -     $ 767  
    Stock-based compensation     610       -       -       610  
ADJUSTED EBITDA   $ 1,186     $ 191     $ -     $ 1,377  
                                 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:                                
                                 
NET INCOME (LOSS)   $ (1,892 )   $ (60 )   $ -     $ (1,952 )
    Stock-based compensation     610       -       -       610  
NON-GAAP NET INCOME (LOSS)   $ (1,282 )   $ (60 )   $ -     $ (1,342 )
                                 
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 Nine Months Ended September 30, 2014  
(In Thousands)  
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                              
  Product revenue, net   $ -     $ 57,182   $ -     $ 57,182  
  Service fee revenue     76,939       9,454     -       86,393  
  Service fee revenue - affiliate     9,914       846     (10,760 )     -  
  Pass-thru revenue     24,792       -             24,792  
      Total revenues     111,645       67,482     (10,760 )     168,367  
                               
COSTS OF REVENUES:                              
  Cost of product revenue     -       53,952     -       53,952  
  Cost of service fee revenue     60,446       9,854     (9,913 )     60,387  
  Cost of pass-thru revenue     24,792       -     -       24,792  
      Total costs of revenues     85,238       63,806     (9,913 )     139,131  
      Gross profit     26,407       3,676     (847 )     29,236  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     33,754       2,364     (847 )     35,271  
    Income (loss) from operations     (7,347 )     1,312     -       (6,035 )
INTEREST EXPENSE (INCOME), NET     68       422     -       490  
    Income (loss) before income taxes     (7,415 )     890     -       (6,525 )
INCOME TAX PROVISION (BENEFIT)     (128 )     333     -       205  
NET INCOME (LOSS)   $ (7,287 )   $ 557   $ -     $ (6,730 )
NON-GAAP NET INCOME (LOSS)   $ (3,085 )   $ 557   $ -     $ (2,528 )
                               
EBITDA   $ 1,173     $ 1,441   $ -     $ 2,614  
ADJUSTED EBITDA   $ 5,375     $ 1,441   $ -     $ 6,816  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:                              
                               
NET INCOME (LOSS)   $ (7,287 )   $ 557   $ -       (6,730 )
    Income tax expense (benefit)     (128 )     333     -       205  
    Interest expense (income), net     68       422     -       490  
    Depreciation and amortization     8,520       129     -       8,649  
EBITDA   $ 1,173     $ 1,441   $ -     $ 2,614  
    Stock-based compensation     2,509       -     -       2,509  
    Acquisition related costs     1,520       -     -       1,520  
    Restructuring and other charges     173       -     -       173  
ADJUSTED EBITDA   $ 5,375     $ 1,441   $ -     $ 6,816  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:                              
                               
NET INCOME (LOSS)   $ (7,287 )   $ 557   $ -     $ (6,730 )
    Stock-based compensation     2,509       -     -       2,509  
    Acquisition related costs     1,520       -     -       1,520  
    Restructuring and other charges     173       -     -       173  
NON-GAAP NET INCOME (LOSS)   $ (3,085 )   $ 557   $ -     $ (2,528 )
                               
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 Nine Months Ended September 30, 2013  
(In Thousands)  
                         
          Business &              
    PFSweb     Retail Connect     Eliminations     Consolidated  
REVENUES:                                
  Product revenue, net   $ -     $ 69,660     $ -     $ 69,660  
  Service fee revenue     73,868       4,840       -       78,708  
  Service fee revenue - affiliate     6,467       1,110       (7,577 )     -  
  Pass-thru revenue     26,511       -       -       26,511  
      Total revenues     106,846       75,610       (7,577 )     174,879  
                                 
COSTS OF REVENUES:                                
  Cost of product revenue     -       65,215       -       65,215  
  Cost of service fee revenue     54,815       5,161       (6,711 )     53,265  
  Cost of pass-thru revenue     26,511       -       -       26,511  
      Total costs of revenues     81,326       70,376       (6,711 )     144,991  
      Gross profit     25,520       5,234       (866 )     29,888  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     30,673       4,588       (866 )     34,395  
    Income (loss) from operations     (5,153 )     646       -       (4,507 )
INTEREST EXPENSE (INCOME), NET     113       451       -       564  
    Income (loss) before income taxes     (5,266 )     195       -       (5,071 )
INCOME TAX PROVISION (BENEFIT)     200       211       -       411  
NET INCOME (LOSS)   $ (5,466 )   $ (16 )   $ -     $ (5,482 )
NON-GAAP NET INCOME (LOSS)   $ (1,726 )   $ (16 )   $ -     $ (1,742 )
                                 
EBITDA   $ 2,264     $ 762     $ -     $ 3,026  
ADJUSTED EBITDA   $ 6,004     $ 762     $ -     $ 6,766  
                                 
                                 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:                                
                                 
NET INCOME (LOSS)   $ (5,466 )   $ (16 )   $ -       (5,482 )
    Income tax expense (benefit)     200       211       -       411  
    Interest expense (income), net     113       451       -       564  
    Depreciation and amortization     7,417       116       -       7,533  
EBITDA   $ 2,264     $ 762     $ -     $ 3,026  
    Stock-based compensation     1,195       -       -       1,195  
    Restructuring and other charges     2,545       -       -       2,545  
ADJUSTED EBITDA   $ 6,004     $ 762     $ -     $ 6,766  
                                 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:                                
                                 
NET INCOME (LOSS)   $ (5,466 )   $ (16 )   $ -     $ (5,482 )
    Stock-based compensation     1,195       -       -       1,195  
    Restructuring and other charges     2,545       -       -       2,545  
NON-GAAP NET INCOME (LOSS)   $ (1,726 )   $ (16 )   $ -     $ (1,742 )
                                 
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 September 30, 2014  
(In Thousands)  
                         
                         
          Business &              
    PFSweb     Retail Connect     Eliminations     Consolidated  
ASSETS                                
CURRENT ASSETS:                                
  Cash and cash equivalents   $ 12,845     $ 6,656     $ -     $ 19,501  
  Restricted cash     -       202       -       202  
  Accounts receivable, net     32,126       13,750       (719 )     45,157  
  Inventories, net     -       14,506       -       14,506  
  Other receivables     -       4,262       -       4,262  
  Prepaid expenses and other current assets     4,388       1,049       -       5,437  
    Total current assets     49,359       40,425       (719 )     89,065  
                                 
PROPERTY AND EQUIPMENT, net     26,810       160       -       26,970  
RECEIVABLE/INVESTMENT IN AFFILIATES     9,715       -       (9,715 )     -  
GOODWILL and INTANGIBLE ASSETS     9,851       -       -       9,851  
OTHER ASSETS     2,530       38       -       2,568  
    Total assets     98,265       40,623       (10,434 )     128,454  
                                 
LIABILITIES AND SHAREHOLDERS EQUITY                                
CURRENT LIABILITIES:                                
  Current portion of long-term debt and capital lease obligations   $ 3,769     $ 3,659     $ -     $ 7,428  
  Trade accounts payable     7,640       22,669       (719 )     29,590  
  Deferred revenue     11,046       -       -       11,046  
  Accrued expenses     24,383       4,441       -       28,824  
    Total current liabilities     46,838       30,769       (719 )     76,888  
                                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     3,876       -       -       3,876  
PAYABLE TO AFFILIATES     -       22,045       (22,045 )     -  
DEFERRED REVENUE     6,066       -       -       6,066  
DEFERRED RENT     5,069       -       -       5,069  
Total liabilities     61,849       52,814       (22,764 )     91,899  
                                 
COMMITMENTS AND CONTINGENCIES                                
                                 
SHAREHOLDERS' EQUITY:                                
  Common stock     17       19       (19 )     17  
  Capital contributions     -       1,000       (1,000 )     -  
  Additional paid-in capital     127,653       28,060       (28,060 )     127,653  
  Retained earnings (accumulated deficit)     (92,169 )     (43,120 )     43,259       (92,030 )
  Accumulated other comprehensive income     1,040       1,850       (1,850 )     1,040  
  Treasury stock     (125 )     -       -       (125 )
    Total shareholders' equity     36,416       (12,191 )     12,330       36,555  
    Total liabilities and shareholders' equity   $ 98,265     $ 40,623     $ (10,434 )   $ 128,454  
                                 
   
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 Sean Mansouri
    Tel 949-574-3860
    Email Contact