SOURCE: PFSweb, Inc.

PFSweb, Inc.

November 09, 2016 16:05 ET

PFSweb Reports Third Quarter 2016 Results

ALLEN, TX--(Marketwired - Nov 9, 2016) - PFSweb, Inc. (NASDAQ: PFSW) ("PFS"), a global commerce service provider, reported results for the third quarter ended September 30, 2016.

Third Quarter 2016 Summary vs. Same Year-Ago Quarter (where applicable)

  • Total revenues increased 12% to $79.9 million
  • Service fee equivalent revenue (a non-GAAP measure defined below) increased 18% to $54.5 million
  • Service fee gross margin was 31.4% compared to 33.7%
  • Net loss was $1.0 million or $(0.06) per share compared to a loss of $3.7 million or $(0.21) per share

Management Commentary
"As described in our October 2016 pre-announcement release, our third quarter results were impacted by an operational challenge with a newly-launched fulfillment client," said Mike Willoughby, CEO of PFS. "This client's unique business model led to unanticipated operational requirements, including incremental labor and operating costs to support their seasonal peak volumes in late Q3 and early Q4. Now that we've supported this client through their seasonal peak, we will continue to work diligently to re-engineer a solution that will bring this client engagement to our desired level of profitability, while continuing to meet the operational needs of the client.

"Our incremental investments in sales, marketing and infrastructure this year continue to drive improved results as we generated another solid quarter of long-term engagements and project wins from new and existing clients. We continue to maintain a strong pipeline and expect 2016 to mark the largest number of bookings in the history of our company.

"As we prepare for the upcoming holiday season, we will continue to strive toward enabling our clients to maximize their holiday sales performance through our support and execution of their ecommerce initiatives."

Third Quarter 2016 Financial Results
Total revenues in the third quarter of 2016 increased 12% to $79.9 million compared to $71.2 million in the same period of 2015. Service fee revenue in the third quarter increased 18% to $53.8 million compared to $45.5 million last year. Product revenue was $11.7 million compared to $14.4 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 18% to $54.5 million compared to $46.2 million in the year-ago quarter, driven by both new and expanded client relationships, as well as approximately $2.7 million of incremental service fees generated in the third quarter of 2016 by the company's acquired entities, CrossView and Conexus, which were acquired in 2015 and 2016, respectively.

Service fee gross margin in the third quarter of 2016 was 31.4% compared to 33.7% in the same period of 2015. The decrease was primarily due to higher facility and other operating costs applicable to certain new large fulfillment clients won during the year, as well as incremental labor and operating costs for the newly launched client referred to above. This was partially offset by higher-margin professional services activity.

Net loss in the third quarter of 2016 was $1.0 million or $(0.06) per share, compared to a net loss of $3.7 million or $(0.21) per share in the same period of 2015. Net loss in the third quarter of 2016 included a $0.5 million net benefit from acquisition-related, restructuring and other (income) costs, $0.3 million in stock-based compensation expense, and $1.2 million in amortization of acquisition-related intangible assets. This compares to $2.6 million expense in acquisition-related, restructuring and other (income) costs, $1.5 million in stock-based compensation expense, and $1.0 million in amortization of acquisition-related intangible assets in the same period of 2015.

Adjusted EBITDA (a non-GAAP measure defined below) was $3.6 million compared to $5.4 million in the same period of 2015. As a percentage of service fee equivalent revenue, adjusted EBITDA was 6.6% compared to 11.8% in the year-ago quarter. The decline in adjusted EBITDA margin was primarily driven by incremental labor and operating costs associated with servicing certain new clients, as well as an increase in sales and marketing and infrastructure resources. This was partially offset by higher-margin professional services activity.

Non-GAAP net loss (a non-GAAP measure defined below) in the third quarter of 2016 was $0.1 million, compared to Non-GAAP net income of $1.5 million in the third quarter of 2015.

At September 30, 2016, cash and cash equivalents totaled $15.7 million compared to $21.8 million at December 31, 2015. Total debt was $60.4 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, as well as funding of incremental working capital and capital expenditure requirements.

2016 & 2017 Outlook
As disclosed in the company's October pre-announcement release, PFS expects 2016 service fee equivalent revenue to range between $222 million and $228 million, reflecting growth of 20% to 23% from 2015. The company also expects adjusted EBITDA to range between $18 million and $20 million, which compares to $20.7 million in 2015.

For 2017, PFS expects continued strong growth in service fee equivalent revenue as the company realizes the full year benefit of 2016 client wins and generates incremental revenue from new and expanded client relationships. At this time, the company is targeting 2017 service fee equivalent revenue to range between $245 million and $260 million. The company is also targeting adjusted EBITDA to range between $23 million and $26 million. This adjusted EBITDA target includes infrastructure expenditures to support the company's future growth strategies as well as expected costs in early 2017 associated with the continued remediation of the fulfillment client implementation noted above.

Conference Call
PFS will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the third quarter ended September 30, 2016.

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

Date: Wednesday, November 9, 2016
Time: 5:00 p.m. Eastern Time (4:00 p.m. Central time)
Toll-free dial-in number: 1-888-452-4005
International dial-in number: 1-719-325-2262
Conference ID: 7262018

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=121850 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 November 23, 2016.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 7262018

About PFSweb, Inc.
PFSweb (PFS) (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. PFS supports organizations across various industries, including Procter & Gamble, L'Oreal, LEGO, Canada Goose, ASICS, Roots Canada Ltd., PANDORA, Diageo, Anastasia Beverly Hills, See's Candies, T.J. Maxx, the United States Mint, and many more. PFS is headquartered in Allen, TX with additional locations in Tennessee, Mississippi, Minnesota, Washington, New York, Ohio, North Carolina, Canada, Belgium, United Kingdom, Bulgaria, and India. For more information, please visit www.pfsweb.com or download the free PFS 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 (income) 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 (income) 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 $219 million to $225 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 (including amortization of acquisition-related intangible assets), stock-based compensation, and acquisition-related, restructuring and other (income) 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 (income) 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.

PFS 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. PFS' 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. PFS 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,  
    2016     2015  
             
ASSETS            
CURRENT ASSETS:            
  Cash and cash equivalents   $ 15,699     $ 21,781  
  Restricted cash     219       275  
  Accounts receivable, net of allowance for doubtful accounts of $539 and $600 at September 30, 2016 and December 31, 2015, respectively     64,934       70,700  
  Inventories, net of reserves of $585 and $739 at September 30, 2016 and December 31, 2015, respectively     7,155       9,262  
  Other receivables     4,821       8,704  
  Prepaid expenses and other current assets     5,017       5,662  
    Total current assets     97,845       116,384  
                 
PROPERTY AND EQUIPMENT, net     28,812       24,093  
INTANGIBLE ASSETS, net     8,125       8,810  
GOODWILL     45,929       39,829  
OTHER ASSETS     2,433       2,174  
    Total assets     183,144       191,290  
                 
LIABILITIES AND SHAREHOLDERS EQUITY                
CURRENT LIABILITIES:                
  Current portion of long-term debt and capital lease obligations   $ 5,672     $ 3,153  
  Trade accounts payable     38,009       51,170  
  Deferred revenue     6,238       7,390  
  Performance-based contingent payments     -       11,679  
  Accrued expenses     25,109       30,563  
    Total current liabilities     75,028       103,955  
                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     54,749       32,238  
DEFERRED REVENUE     4,280       4,499  
DEFERRED RENT     4,849       4,362  
PERFORMANCE-BASED CONTINGENT PAYMENTS     380       2,478  
    Total liabilities     139,286       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; 18,740,100 and 18,136,218 shares issued at September 30, 2016 and December 31, 2015, respectively; and 18,706,633 and 18,012,751 shares outstanding as of September 30, 2016 and December 31, 2015, respectively     19       18  
  Additional paid-in capital     145,045       141,948  
  Accumulated deficit     (101,760 )     (97,787 )
  Accumulated other comprehensive income (loss)     679       (296 )
  Treasury stock at cost, 33,467 shares     (125 )     (125 )
    Total shareholders' equity     43,858       43,758  
    Total liabilities and shareholders' equity   $ 183,144     $ 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     Nine Months Ended  
    September 30,     September 30,  
    2016     2015     2016     2015  
REVENUES:                        
  Service fee revenue   $ 53,788     $ 45,528     $ 154,271     $ 121,311  
  Product revenue, net     11,671       14,419       36,658       44,731  
  Pass-thru revenue     14,451       11,236       41,259       32,163  
      Total revenues     79,910       71,183       232,188       198,205  
                                 
COSTS OF REVENUES:                                
  Cost of service fee revenue     36,903       30,193       103,547       81,993  
  Cost of product revenue     10,994       13,702       34,649       42,321  
  Cost of pass-thru revenue     14,451       11,236       41,259       32,163  
      Total costs of revenues     62,348       55,131       179,455       156,477  
      Gross profit     17,562       16,052       52,733       41,728  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     17,568       18,778       53,926       47,068  
    Income (loss) from operations     (6 )     (2,726 )     (1,193 )     (5,340 )
INTEREST EXPENSE (INCOME), NET     714       706       1,807       1,247  
    Income (loss) before income taxes     (720 )     (3,432 )     (3,000 )     (6,587 )
INCOME TAX EXPENSE (BENEFIT)     319       238       973       676  
NET INCOME (LOSS)   $ (1,039 )   $ (3,670 )   $ (3,973 )   $ (7,263 )
NON-GAAP NET INCOME (LOSS)   $ (60 )   $ 1,452     $ 134     $ 2,193  
                                 
NET INCOME (LOSS) PER SHARE:                                
  Basic   $ (0.06 )   $ (0.21 )   $ (0.21 )   $ (0.42 )
  Diluted   $ (0.06 )   $ (0.21 )   $ (0.21 )   $ (0.42 )
                                 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:                                
  Basic     18,699       17,829       18,552       17,449  
  Diluted     18,699       17,829       18,552       17,449  
                                 
EBITDA   $ 3,797     $ 1,355     $ 10,013     $ 5,305  
ADJUSTED EBITDA   $ 3,599     $ 5,434     $ 11,252     $ 13,238  
(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     Nine Months Ended  
    September 30,     September 30,  
    2016     2015     2016     2015  
                         
NET INCOME (LOSS)   $ (1,039 )   $ (3,670 )   $ (3,973 )   $ (7,263 )
  Income tax expense (benefit)     319       238       973       676  
  Interest expense, net     714       706       1,807       1,247  
  Depreciation and amortization     3,803       4,081       11,206       10,645  
EBITDA   $ 3,797     $ 1,355     $ 10,013     $ 5,305  
  Stock-based compensation     347       1,492       1,743       3,446  
  Acquisition-related, restructuring and other (income) costs     (545 )     2,587       (504 )     4,487  
ADJUSTED EBITDA   $ 3,599     $ 5,434     $ 11,252     $ 13,238  
                                 
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2016     2015     2016     2015  
                                 
NET INCOME (LOSS)   $ (1,039 )   $ (3,670 )   $ (3,973 )   $ (7,263 )
  Stock-based compensation     347       1,492       1,743       3,446  
  Amortization of acquisition-related intangible assets     1,177       1,043       2,868       1,523  
  Acquisition-related, restructuring and other (income) costs     (545 )     2,587       (504 )     4,487  
NON-GAAP NET INCOME (LOSS)   $ (60 )   $ 1,452     $ 134     $ 2,193  
                                 
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2016     2015     2016     2015  
                                 
TOTAL REVENUES   $ 79,910     $ 71,183     $ 232,188     $ 198,205  
  Pass-thru revenue     (14,451 )     (11,236 )     (41,259 )     (32,163 )
  Cost of product revenue     (10,994 )     (13,702 )     (34,649 )     (42,321 )
SERVICE FEE EQUIVALENT REVENUE   $ 54,465     $ 46,245     $ 156,280     $ 123,721  
 
 
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended September 30, 2016
(In Thousands)
               
 
PFSweb
  Business &
Retail Connect
 
Eliminations
 
Consolidated
REVENUES:              
  Service fee revenue $ 50,339     $ 3,449   $ -     $ 53,788  
  Service fee revenue - affiliate   2,978       231     (3,209 )     -  
  Product revenue, net   -       11,671     -       11,671  
  Pass-thru revenue   14,451       -     -       14,451  
      Total revenues   67,768       15,351     (3,209 )     79,910  
                             
COSTS OF REVENUES:                            
  Cost of service fee revenue   36,700       3,359     (3,156 )     36,903  
  Cost of product revenue   -       10,994     -       10,994  
  Cost of pass-thru revenue   14,451       -     -       14,451  
      Total costs of revenues   51,151       14,353     (3,156 )     62,348  
      Gross profit   16,617       998     (53 )     17,562  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   17,064       557     (53 )     17,568  
    Income (loss) from operations   (447 )     441     -       (6 )
INTEREST EXPENSE (INCOME), NET   631       83     -       714  
    Income (loss) before income taxes   (1,078 )     358     -       (720 )
INCOME TAX EXPENSE (BENEFIT)   195       124     -       319  
NET INCOME (LOSS) $ (1,273 )   $ 234   $ -     $ (1,039 )
NON-GAAP NET INCOME (LOSS) $ (294 )   $ 234   $ -     $ (60 )
                             
EBITDA $ 3,350     $ 447   $ -     $ 3,797  
ADJUSTED EBITDA $ 3,152     $ 447   $ -     $ 3,599  
                             
                             
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:       
                             
NET INCOME (LOSS) $ (1,273 )   $ 234   $ -       (1,039 )
    Income tax expense (benefit)   195       124     -       319  
    Interest expense (income), net   631       83     -       714  
    Depreciation and amortization   2,620       6     -       2,626  
    Amortization of acquisition-related intangible assets   1,177       -     -       1,177  
EBITDA $ 3,350     $ 447   $ -     $ 3,797  
    Stock-based compensation   347       -     -       347  
    Acquisition-related, restructuring and other income   (545 )     -     -       (545 )
ADJUSTED EBITDA $ 3,152     $ 447   $ -     $ 3,599  
                             
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:       
                             
NET INCOME (LOSS) $ (1,273 )   $ 234   $ -     $ (1,039 )
    Stock-based compensation   347       -     -       347  
    Amortization of acquisition-related intangible assets   1,177       -     -       1,177  
    Acquisition-related, restructuring and other income   (545 )     -     -       (545 )
NON-GAAP NET INCOME (LOSS) $ (294 )   $ 234   $ -     $ (60 )
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, 2016      
(In Thousands)      
                       
 
 
   
PFSweb
 
 
  Business &
Retail Connect
   
Eliminations
 
 
   
Consolidated
 
 
REVENUES:                      
  Service fee revenue   $ 143,193     $ 11,078   $ -     $ 154,271  
  Service fee revenue - affiliate     9,787       689     (10,476 )     -  
  Product revenue, net     -       36,658     -       36,658  
  Pass-thru revenue     41,259       -     -       41,259  
      Total revenues     194,239       48,425     (10,476 )     232,188  
                               
COSTS OF REVENUES:                              
  Cost of service fee revenue     103,077       10,815     (10,345 )     103,547  
  Cost of product revenue     -       34,649     -       34,649  
  Cost of pass-thru revenue     41,259       -     -       41,259  
      Total costs of revenues     144,336       45,464     (10,345 )     179,455  
      Gross profit     49,903       2,961     (131 )     52,733  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     52,419       1,638     (131 )     53,926  
    Income (loss) from operations     (2,516 )     1,323     -       (1,193 )
INTEREST EXPENSE (INCOME), NET     1,551       256     -       1,807  
    Income (loss) before income taxes     (4,067 )     1,067     -       (3,000 )
INCOME TAX EXPENSE (BENEFIT)     593       380     -       973  
NET INCOME (LOSS)   $ (4,660 )   $ 687   $ -     $ (3,973 )
NON-GAAP NET INCOME (LOSS)   $ (553 )   $ 687   $ -     $ 134  
                               
EBITDA   $ 8,672     $ 1,341   $ -     $ 10,013  
ADJUSTED EBITDA   $ 9,911     $ 1,341   $ -     $ 11,252  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:  
                               
NET INCOME (LOSS)   $ (4,660 )   $ 687   $ -       (3,973 )
    Income tax expense (benefit)     593       380     -       973  
    Interest expense (income), net     1,551       256     -       1,807  
    Depreciation and amortization     8,320       18     -       8,338  
    Amortization of acquisition-related intangible assets     2,868       -     -       2,868  
EBITDA   $ 8,672     $ 1,341   $ -     $ 10,013  
    Stock-based compensation     1,743       -     -       1,743  
    Acquisition-related, restructuring and other income     (504 )     -     -       (504 )
ADJUSTED EBITDA   $ 9,911     $ 1,341   $ -     $ 11,252  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:  
                               
NET INCOME (LOSS)   $ (4,660 )   $ 687   $ -     $ (3,973 )
    Stock-based compensation     1,743       -     -       1,743  
    Amortization of acquisition-related intangible assets     2,868       -     -       2,868  
    Acquisition-related, restructuring and other income     (504 )     -     -       (504 )
NON-GAAP NET INCOME (LOSS)   $ (553 )   $ 687   $ -     $ 134  
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, 2015
(In Thousands)
                         
 
 
 
 
 
PFSweb
 
 
 
 
Business &
Retail Connect
 
 
 
 
 
Eliminations
 
 
 
 
 
Consolidated
 
 
REVENUES:                        
  Service fee revenue   $ 42,167     $ 3,361     $ -     $ 45,528  
  Service fee revenue - affiliate     3,494       195       (3,689 )     -  
  Product revenue, net     -       14,419       -       14,419  
  Pass-thru revenue     11,236       -       -       11,236  
      Total revenues     56,897       17,975       (3,689 )     71,183  
                                 
COSTS OF REVENUES:                                
  Cost of service fee revenue     30,369       3,323       (3,499 )     30,193  
  Cost of product revenue     -       13,702       -       13,702  
  Cost of pass-thru revenue     11,236       -       -       11,236  
      Total costs of revenues     41,605       17,025       (3,499 )     55,131  
      Gross profit     15,292       950       (190 )     16,052  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     18,049       919       (190 )     18,778  
    Income (loss) from operations     (2,757 )     31       -       (2,726 )
INTEREST EXPENSE (INCOME), NET     584       122       -       706  
    Income (loss) before income taxes     (3,341 )     (91 )     -       (3,432 )
INCOME TAX EXPENSE (BENEFIT)     171       67       -       238  
NET INCOME (LOSS)   $ (3,512 )   $ (158 )   $ -     $ (3,670 )
NON-GAAP NET INCOME (LOSS)   $ 1,288     $ 162     $ -     $ 1,450  
                                 
EBITDA   $ 1,309     $ 46     $ -     $ 1,355  
ADJUSTED EBITDA   $ 5,066     $ 366     $ -     $ 5,432  
                                 
                                 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:  
                                 
NET INCOME (LOSS)   $ (3,512 )   $ (158 )   $ -       (3,670 )
    Income tax expense (benefit)     171       67       -       238  
    Interest expense (income), net     584       122       -       706  
    Depreciation and amortization     3,023       15       -       3,038  
    Amortization of acquisition-related intangible assets     1,043       -       -       1,043  
EBITDA   $ 1,309     $ 46     $ -     $ 1,355  
    Stock-based compensation     1,492       -       -       1,492  
    Acquisition-related, restructuring and other costs     2,265       320       -       2,585  
ADJUSTED EBITDA   $ 5,066     $ 366     $ -     $ 5,432  
                                 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:  
                                 
NET INCOME (LOSS)   $ (3,512 )   $ (158 )   $ -     $ (3,670 )
    Stock-based compensation     1,492       -       -       1,492  
    Amortization of acquisition-related intangible assets     1,043       -       -       1,043  
    Acquisition-related, restructuring and other costs     2,265       320       -       2,585  
NON-GAAP NET INCOME (LOSS)   $ 1,288     $ 162     $ -     $ 1,450  
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, 2015
(In Thousands)
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                      
  Service fee revenue   $ 110,740     $ 10,571   $ -     $ 121,311  
  Service fee revenue - affiliate     10,137       568     (10,705 )     -  
  Product revenue, net     -       44,731     -       44,731  
  Pass-thru revenue     32,163       -     -       32,163  
      Total revenues     153,040       55,870     (10,705 )     198,205  
                               
COSTS OF REVENUES:                              
  Cost of service fee revenue     81,637       10,467     (10,111 )     81,993  
  Cost of product revenue     -       42,321     -       42,321  
  Cost of pass-thru revenue     32,163       -     -       32,163  
      Total costs of revenues     113,800       52,788     (10,111 )     156,477  
      Gross profit     39,240       3,082     (594 )     41,728  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     45,528       2,134     (594 )     47,068  
    Income (loss) from operations     (6,288 )     948     -       (5,340 )
INTEREST EXPENSE (INCOME), NET     911       336     -       1,247  
    Income (loss) before income taxes     (7,199 )     612     -       (6,587 )
INCOME TAX EXPENSE (BENEFIT)     363       313     -       676  
NET INCOME (LOSS)   $ (7,562 )   $ 299   $ -     $ (7,263 )
NON-GAAP NET INCOME (LOSS)   $ 1,574     $ 619   $ -     $ 2,193  
                               
EBITDA   $ 4,299     $ 1,006   $ -     $ 5,305  
ADJUSTED EBITDA   $ 11,912     $ 1,326   $ -     $ 13,238  
                               
                               
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:  
    Amortization of acquisition-related intangible assets                              
NET INCOME (LOSS)   $ (7,562 )   $ 299   $ -       (7,263 )
    Income tax expense (benefit)     363       313     -       676  
    Interest expense (income), net     911       336     -       1,247  
    Depreciation and amortization     9,064       58     -       9,122  
    Amortization of acquisition-related intangible assets     1,523       -     -       1,523  
EBITDA   $ 4,299     $ 1,006   $ -     $ 5,305  
    Stock-based compensation     3,446       -     -       3,446  
    Acquisition-related, restructuring and other costs     4,167       320     -       4,487  
ADJUSTED EBITDA   $ 11,912     $ 1,326   $ -     $ 13,238  
                               
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:  
                               
NET INCOME (LOSS)   $ (7,562 )   $ 299   $ -     $ (7,263 )
    Stock-based compensation     3,446       -     -       3,446  
    Amortization of acquisition-related intangible assets     1,523       -     -       1,523  
    Acquisition-related, restructuring and other costs     4,167       320     -       4,487  
NON-GAAP NET INCOME (LOSS)   $ 1,574     $ 619   $ -     $ 2,193  
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, 2016      
(In Thousands)      
                         
 
 
 
 
 
PFSweb
 
 
 
 
Business &
Retail Connect
 
 
 
 
 
Eliminations
 
 
 
 
 
Consolidated
 
 
                         
ASSETS                        
CURRENT ASSETS:                        
  Cash and cash equivalents   $ 5,639     $ 10,060     $ -     $ 15,699  
  Restricted cash     -       219       -       219  
  Accounts receivable, net     50,844       14,993       (903 )     64,934  
  Inventories, net     -       7,155       -       7,155  
  Other receivables     600       4,221       -       4,821  
  Prepaid expenses and other current assets     4,173       844       -       5,017  
    Total current assets     61,256       37,492       (903 )     97,845  
                                 
PROPERTY AND EQUIPMENT, net     28,803       9       -       28,812  
RECEIVABLE/INVESTMENT IN AFFILIATES     9,342       -       (9,342 )     -  
INTANGIBLE ASSETS, net     8,125       -       -       8,125  
GOODWILL     45,929       -       -       45,929  
OTHER ASSETS     2,433       -       -       2,433  
Total assets     155,888       37,501       (10,245 )     183,144  
                                 
LIABILITIES AND SHAREHOLDERS EQUITY                                
CURRENT LIABILITIES:                                
  Current portion of long-term debt and capital lease obligations   $ 5,672     $ -     $ -     $ 5,672  
  Trade accounts payable     13,395       25,517       (903 )     38,009  
  Deferred revenue     6,238       -       -       6,238  
  Performance-based contingent payments     -       -       -       -  
  Accrued expenses     22,270       2,839       -       25,109  
    Total current liabilities     47,575       28,356       (903 )     75,028  
                                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     54,749       -       -       54,749  
PAYABLE TO AFFILIATES     -       22,045       (22,045 )     -  
DEFERRED REVENUE     4,280       -       -       4,280  
DEFERRED RENT     4,849       -       -       4,849  
PERFORMANCE-BASED CONTINGENT PAYMENTS     380       -       -       380  
    Total liabilities     111,833       50,401       (22,948 )     139,286  
                                 
                                 
COMMITMENTS AND CONTINGENCIES                                
                                 
SHAREHOLDERS' EQUITY:                                
  Common stock     19       19       (19 )     19  
  Capital contributions     -       1,000       (1,000 )     -  
  Additional paid-in capital     145,045       28,060       (28,060 )     145,045  
  Retained earnings (accumulated deficit)     (101,563 )     (43,205 )     43,008       (101,760 )
  Accumulated other comprehensive income (loss)     679       1,226       (1,226 )     679  
  Treasury stock     (125 )     -       -       (125 )
    Total shareholders' equity     44,055       (12,900 )     12,703       43,858  
    Total liabilities and shareholders' equity   $ 155,888     $ 37,501     $ (10,245 )   $ 183,144  
(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)      
                         
 
 
 
 
 
PFSweb
 
 
 
 
Business &
Retail Connect
 
 
 
 
 
Eliminations
 
 
 
 
 
Consolidated
 
 
                         
ASSETS                        
CURRENT ASSETS:                        
  Cash and cash equivalents   $ 7,962     $ 13,819     $ -     $ 21,781  
  Restricted cash     51       224       -       275  
  Accounts receivable, net     51,231       20,348       (879 )     70,700  
  Inventories, net     -       9,262       -       9,262  
  Other receivables     2,621       6,083       -       8,704  
  Prepaid expenses and other current assets     4,744       918       -       5,662  
    Total current assets     66,609       50,654       (879 )     116,384  
                                 
PROPERTY AND EQUIPMENT, net     24,065       28       -       24,093  
RECEIVABLE/INVESTMENT IN AFFILIATES     9,577       -       (9,577 )     -  
INTANGIBLE ASSETS, net     8,810       -       -       8,810  
GOODWILL     39,829       -       -       39,829  
OTHER ASSETS     2,174       -       -       2,174  
    Total assets     151,064       50,682       (10,456 )     191,290  
                                 
LIABILITIES AND SHAREHOLDERS EQUITY                                
CURRENT LIABILITIES:                                
  Current portion of long-term debt and capital lease obligations   $ 3,153     $ -     $ -     $ 3,153  
  Trade accounts payable     15,329       36,710       (869 )     51,170  
  Deferred revenue     7,390       -       -       7,390  
  Performance-based contingent payments     11,679       -       -       11,679  
  Accrued expenses     26,015       4,558       (10 )     30,563  
    Total current liabilities     63,566       41,268       (879 )     103,955  
                                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     32,238       -       -       32,238  
PAYABLE TO AFFILIATES     -       22,056       (22,056 )     -  
DEFERRED REVENUE     4,499       -       -       4,499  
DEFERRED RENT     4,362       -       -       4,362  
PERFORMANCE-BASED CONTINGENT PAYMENTS     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 (loss)     (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