SOURCE: PFSweb, Inc.

PFSweb, Inc.

November 09, 2015 16:05 ET

PFSweb Reports Third Quarter Record Results

Q3 Service Fee Equivalent Revenue up 43% to $46.2 Million; Adjusted EBITDA up 90% to $5.4 Million

ALLEN, TX--(Marketwired - Nov 9, 2015) - PFSweb, Inc. (NASDAQ: PFSW), a global provider of end-to-end eCommerce solutions, reported results for the third quarter ended September 30, 2015.

Third Quarter 2015 Highlights vs. Same Year-Ago Quarter

  • Service fee equivalent revenue (a non-GAAP measure defined below) increased 43% to a Q3 record $46.2 million

  • Service fee gross margin increased 380 basis points to 33.7%

  • Adjusted EBITDA (a non-GAAP measure defined below) increased 90% to a Q3 record $5.4 million

  • Acquired CrossView, an eCommerce system integrator with B2B and B2C Websphere Commerce and SAP/hybris integration capabilities, significantly expanding PFSweb's addressable market

Management Commentary

"We continued to benefit from strong growth in our agency and technology services, driving record results for the fourth consecutive quarter," said Michael Willoughby, CEO of PFSweb. "Our omni-channel operations also continued to perform well, supporting the overall strong growth in our B2C clients' volumes over the same year-ago period.

"Most notably, the third quarter was highlighted by the acquisition of CrossView, which we believe dramatically strengthens our position as a leader among full service eCommerce providers. The integration of CrossView is tracking well and according to plan. In fact, we've already begun to pursue several promising cross-sell opportunities, while also realizing synergies across our technology platforms."

"Subsequent to the quarter," continued Willoughby, "we launched our strategic commerce consulting practice, through which we'll provide high-value digital strategy and platform selection consulting to both B2B and B2C clients. This new practice demonstrates our commitment to expanding higher-margin service offerings and engaging with our clients as a strategic partner as we continue to evolve PFSweb from a full service eCommerce provider into a leading global commerce service provider.

"As we head into the all-important holiday season, we will continue to focus on client execution, with the ultimate goal of helping our clients maximize their holiday sales performance. According to eMarketer, holiday online sales are expected to grow 14% this year to a record $79.4 billion. We plan to capitalize on these secular tailwinds and leverage the unique strength of our platform to drive growth in the fourth quarter and beyond."

2015 & 2016 Outlook

Based on year-to-date results and current projections for the fourth quarter, PFSweb is increasing its service fee equivalent revenue guidance to range between $180 million to $186 million, up from $175 million to $185 million, reflecting growth of 30% to 34% from 2014. The company has also increased its adjusted EBITDA guidance to range between $18.5 million to $20.5 million, up from $18 million to $20 million, reflecting growth of 36% to 50% from 2014.

For 2016, PFSweb currently expects continued strong growth in service fee equivalent revenue and adjusted EBITDA as the company realizes a full year of benefit from its recent acquisitions, as well as incremental revenue from new and expanded client relationships. At this time, the company is targeting 2016 service fee equivalent revenue to range between $220 million to $230 million. The company is also targeting adjusted EBITDA to range between $23 million to $25 million. This adjusted EBITDA target includes the expected impact of incremental sales and marketing expenditures as well as other infrastructure expenditures to support the company's future growth strategies. 

Third Quarter 2015 Financial Results

Total revenues in the third quarter of 2015 increased 25% to $71.2 million compared to $57.1 million in the same period of 2014. Service fee revenue in the third quarter of 2015 increased 45% to $45.5 million compared to $31.4 million last year. Product revenue was $14.4 million compared to $17.3 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 third quarter of 2015 increased 43% to a third quarter record $46.2 million compared to $32.4 million in the year-ago quarter.

Service fee gross margin in the third quarter increased 380 basis points to 33.7% compared to 29.9% in the same period of 2014. The increase was due to a higher proportion of agency and technology services in the 2015 quarter, in part due to the benefit from the acquisitions of REV Solutions and LiveArea that occurred in September 2014 and the CrossView acquisition completed in August 2015.

Adjusted EBITDA increased 90% to a third quarter record of $5.4 million compared to $2.9 million in the same period of 2014. As a percentage of service fee equivalent revenue, adjusted EBITDA increased 300 basis points to 11.8% compared to 8.8% in the year-ago quarter.

Net loss in the third quarter was $3.7 million or $(0.21) per diluted share, compared to a net loss of $2.5 million or $(0.15) per diluted share in the same period of 2014. Net loss in the third quarter of 2015 included $1.5 million in stock-based compensation expense, $2.6 million in acquisition-related, restructuring and other costs and $1.0 million in amortization of acquisition-related intangible assets. This compares to $0.9 million in stock-based compensation expense and $1.5 million in acquisition-related, restructuring and other costs in the same period of 2014.

Non-GAAP net income (a non-GAAP measure defined below) in the third quarter of 2015 was $1.5 million or $0.08 per diluted share, compared to non-GAAP net loss of $0.1 million or $(0.01) per diluted share in the third quarter of 2014.

At September 30, 2015, cash and cash equivalents was $13.0 million compared to $18.1 million at December 31, 2014. Total debt increased to $38.4 million from $10.9 million at December 31, 2014 as the Company entered into a new credit facility with Regions Bank, Bank of America and HSBC, primarily to facilitate the acquisition of CrossView. This new credit facility replaces the Company's previous senior banking facilities.

First Nine Months of 2015 Financial Results

Total revenues in the first nine months of 2015 increased 18% to $198.2 million compared to $168.4 million in the same period of 2014. Service fee revenue in the first nine months of 2015 increased 40% to $121.3 million compared to $86.4 million in the same period last year. Product revenue was $44.7 million compared to $57.2 million in the same period of 2014.

Service fee equivalent revenue in the first nine months of 2015 increased 38% to $123.7 million compared to $89.6 million in the same period of 2014.

Service fee gross margin in the first nine months of 2015 increased 230 basis points to 32.4% compared to 30.1% in the same period of 2014.

Adjusted EBITDA increased 94% to $13.2 million in the first nine months of 2015 compared to $6.8 million in the same period of 2014. As a percentage of service fee equivalent revenue, adjusted EBITDA increased 330 basis points to 10.7% compared to 7.6% in the year-ago period.

Net loss in the first nine months of 2015 was $7.3 million or $(0.42) per diluted share, compared to a net loss of $6.7 million or $(0.40) per diluted share in the same period of 2014. Net loss in the first nine months of 2015 included $3.4 million in stock-based compensation expense, $4.5 million in acquisition related, restructuring and other costs and $1.5 million in amortization of acquisition-related intangible assets. This compares to $2.5 million in stock-based compensation expense and $1.7 million in acquisition related, restructuring and other costs in the same period of 2014.

Non-GAAP net income in the first nine months of 2015 was $2.2 million or $0.12 per diluted share, compared to non-GAAP net loss of $2.5 million or $(0.15) per diluted share in the same period of 2014. 

Conference Call

PFSweb will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the third quarter ended September 30, 2015.

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

Date: Monday, November 9, 2015
Time: 5:00 p.m. Eastern Time (4:00 p.m. Central time)
Toll-free dial-in number: 1-888-466-4462
International dial-in number: 1-719-785-1765
Conference ID: 4158053

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=116986 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, 2015.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 4158053

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, restructuring and other charges 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 charges and amortization of acquisition-related intangible assets.

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, restructuring and other charges and amortization of acquisition-related intangible assets and EBITDA and adjusted EBITDA further eliminate the effect of financing, income taxes and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance. Service fee equivalent revenue allows client contracts with similar operational support models but different financial models to be combined as if all contracts were being operated on a service fee revenue basis.

PFSweb believes these non-GAAP measures provide useful information to both management and investors by focusing on certain operational metrics and excluding certain expenses in order to present its core operating performance and results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.

Forward-Looking Statements

The matters discussed herein consist of forward-looking information under the Private Securities Litigation Reform Act of 1995 and is subject to and involves risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. PFSweb's Annual Report on Form 10-K for the year ended December 31, 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)  
           
           
  September 30,     December 31,  
  2015     2014  
               
        ASSETS              
CURRENT ASSETS:              
  Cash and cash equivalents $ 13,000     $ 18,128  
  Restricted cash   52       521  
  Accounts receivable, net of allowance for doubtful accounts of $469 and $447 at September 30, 2015 and December 31, 2014, respectively   55,552       59,126  
  Inventories, net of reserves of $682 and $768 at September 30, 2015 and December 31, 2014, respectively   8,673       10,534  
  Other receivables   3,973       5,638  
  Prepaid expenses and other current assets   3,853       7,103  
      Total current assets   85,103       101,050  
               
PROPERTY AND EQUIPMENT, net   24,852       26,604  
INTANGIBLE ASSETS, net   12,916       2,170  
GOODWILL   40,778       8,366  
OTHER ASSETS   2,321       2,556  
      Total assets   165,970       140,746  
               
  LIABILITIES AND SHAREHOLDERS EQUITY              
CURRENT LIABILITIES:              
  Current portion of long-term debt and capital lease obligations $ 3,512     $ 6,850  
  Trade accounts payable   29,356       38,842  
  Deferred revenue   5,600       9,098  
  Accrued expenses   35,412       28,473  
      Total current liabilities   73,880       83,263  
               
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion   34,870       4,062  
DEFERRED REVENUE   4,197       5,355  
DEFERRED RENT   4,430       4,870  
OTHER LONG-TERM LIABILITIES   5,074       3,091  
      Total liabilities   122,451       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; 18,100,589 and 17,047,093 shares issued at September 30, 2015 and December 31, 2014, respectively; and 18,067,122 and 17,013,622 shares outstanding as of September 30, 2015 and December 31, 2014, respectively   18       17  
  Additional paid-in capital   140,890       129,457  
  Accumulated deficit   (97,189 )     (89,926 )
  Accumulated other comprehensive income   (75 )     682  
  Treasury stock at cost, 33,467 shares   (125 )     (125 )
      Total shareholders' equity   43,519       40,105  
      Total liabilities and shareholders' equity $ 165,970     $ 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     Nine Months Ended  
  September 30,     September 30,  
  2015     2014     2015     2014  
REVENUES:                              
  Product revenue, net $ 14,419     $ 17,340     $ 44,731     $ 57,182  
  Service fee revenue   45,528       31,411       121,311       86,393  
  Pass-thru revenue   11,236       8,344       32,163       24,792  
      Total revenues   71,183       57,095       198,205       168,367  
                               
COSTS OF REVENUES:                              
  Cost of product revenue   13,702       16,397       42,321       53,952  
  Cost of service fee revenue   30,193       22,007       81,993       60,387  
  Cost of pass-thru revenue   11,236       8,344       32,163       24,792  
      Total costs of revenues   55,131       46,748       156,477       139,131  
      Gross profit   16,052       10,347       41,728       29,236  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   18,778       12,764       47,068       35,271  
    Income (loss) from operations   (2,726 )     (2,417 )     (5,340 )     (6,035 )
INTEREST EXPENSE (INCOME), NET   706       174       1,247       490  
    Income (loss) before income taxes   (3,432 )     (2,591 )     (6,587 )     (6,525 )
INCOME TAX PROVISION (BENEFIT)   238       (66 )     676       205  
NET INCOME (LOSS) $ (3,670 )   $ (2,525 )   $ (7,263 )   $ (6,730 )
NON-GAAP NET INCOME (LOSS) $ 1,452     $ (133 )   $ 2,193     $ (2,528 )
                               
NET INCOME (LOSS) PER SHARE:                              
  Basic $ (0.21 )   $ (0.15 )   $ (0.42 )   $ (0.40 )
  Diluted $ (0.21 )   $ (0.15 )   $ (0.42 )   $ (0.40 )
                               
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:                              
  Basic   17,829       16,779       17,449       16,680  
  Diluted   17,829       16,779       17,449       16,680  
                               
EBITDA $ 1,355     $ 464     $ 5,305     $ 2,614  
ADJUSTED EBITDA $ 5,434     $ 2,856     $ 13,238     $ 6,816  
                               
(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     Nine Months Ended  
  September 30,     September 30,  
  2015     2014     2015     2014  
                               
NET INCOME (LOSS) $ (3,670 )   $ (2,525 )   $ (7,263 )   $ (6,730 )
    Income tax expense (benefit)   238       (66 )     676       205  
    Interest expense, net   706       174       1,247       490  
    Depreciation and amortization   4,081       2,881       10,645       8,649  
EBITDA $ 1,355     $ 464     $ 5,305     $ 2,614  
    Stock-based compensation   1,492       853       3,446       2,509  
    Acquisition related, restructuring and other costs   2,587       1,539       4,487       1,693  
ADJUSTED EBITDA $ 5,434     $ 2,856     $ 13,238     $ 6,816  
                               
                               
  Three Months Ended     Nine Months Ended  
  September 30,     September 30,  
  2015     2014     2015     2014  
                               
NET INCOME (LOSS) $ (3,670 )   $ (2,525 )   $ (7,263 )   $ (6,730 )
    Stock-based compensation   1,492       853       3,446       2,509  
    Amortization of acquisition-related intangible assets   1,043       -       1,523       -  
    Acquisition related, restructuring and other costs   2,587       1,539       4,487       1,693  
NON-GAAP NET INCOME (LOSS) $ 1,452     $ (133 )   $ 2,193     $ (2,528 )
                               
NET INCOME (LOSS) PER SHARE:                              
  Basic $ (0.21 )   $ (0.15 )   $ (0.42 )   $ (0.40 )
  Diluted $ (0.21 )   $ (0.15 )   $ (0.42 )   $ (0.40 )
                               
NON-GAAP NET INCOME (LOSS) Per Share:                              
  Basic $ 0.08     $ (0.01 )   $ 0.13     $ (0.15 )
  Diluted $ 0.08     $ (0.01 )   $ 0.12     $ (0.15 )
                               
                               
                               
  Three Months Ended     Nine Months Ended  
  September 30,     September 30,  
  2015     2014     2015     2014  
                               
TOTAL REVENUES $ 71,183     $ 57,095     $ 198,205     $ 168,367  
  Pass-thru revenue   (11,236 )     (8,344 )     (32,163 )     (24,792 )
  Cost of product revenue   (13,702 )     (16,397 )     (42,321 )     (53,952 )
SERVICE FEE EQUIVALENT REVENUE $ 46,245     $ 32,354     $ 123,721     $ 89,623  
                               
                               
                               
PFSweb, Inc. and Subsidiaries  
Unaudited Consolidating Statements of Operations  
For the Three Months Ended September 30, 2015  
(In Thousands)  
                       
        Business &              
  PFSweb     Retail Connect     Eliminations     Consolidated  
REVENUES:                              
  Product revenue, net $ -     $ 14,419     $ -     $ 14,419  
  Service fee revenue   42,167       3,361       -       45,528  
  Service fee revenue - affiliate   3,494       195       (3,689 )     -  
  Pass-thru revenue   11,236       -       -       11,236  
      Total revenues   56,897       17,975       (3,689 )     71,183  
                               
COSTS OF REVENUES:                              
  Cost of product revenue   -       13,702       -       13,702  
  Cost of service fee revenue   30,369       3,323       (3,499 )     30,193  
  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 PROVISION (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   4,066       15       -       4,081  
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 Three Months Ended September 30, 2014  
(In Thousands)  
                       
          Business &            
    PFSweb     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, restructuring and other costs     1,539       -     -       1,539  
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, restructuring and other costs     1,539       -     -       1,539  
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 Nine Months Ended September 30, 2015  
(In Thousands)  
                       
          Business &            
    PFSweb     Retail Connect   Eliminations     Consolidated  
REVENUES:                              
  Product revenue, net   $ -     $ 44,731   $ -     $ 44,731  
  Service fee revenue     110,740       10,571     -       121,311  
  Service fee revenue - affiliate     10,137       568     (10,705 )     -  
  Pass-thru revenue     32,163       -     -       32,163  
      Total revenues     153,040       55,870     (10,705 )     198,205  
                               
COSTS OF REVENUES:                              
  Cost of product revenue     -       42,321     -       42,321  
  Cost of service fee revenue     81,637       10,467     (10,111 )     81,993  
  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 PROVISION (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:                        
                               
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     10,587       58     -       10,645  
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 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, restructuring and other costs     1,693       -     -       1,693  
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, restructuring and other costs     1,693       -     -       1,693  
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 Condensed Consolidating Balance Sheets  
as of September 30, 2015  
(In Thousands)  
                         
          Business &              
    PFSweb     Retail Connect     Eliminations     Consolidated  
                                 
      ASSETS                                
CURRENT ASSETS:                                
  Cash and cash equivalents   $ 6,252     $ 6,748     $ -     $ 13,000  
  Restricted cash     -       52       -       52  
  Accounts receivable, net     44,636       12,680       (1,764 )     55,552  
  Inventories, net     -       8,673       -       8,673  
  Other receivables     207       3,766       -       3,973  
  Prepaid expenses and other current assets     2,960       893       -       3,853  
    Total current assets     54,055       32,812       (1,764 )     85,103  
                                 
PROPERTY AND EQUIPMENT, net     24,813       39       -       24,852  
RECEIVABLE/INVESTMENT IN AFFILIATES     60,392       -       (60,392 )     -  
INTANGIBLE ASSETS, net     12,916       -       -       12,916  
GOODWILL     40,778       -       -       40,778  
OTHER ASSETS     2,321       -       -       2,321  
    Total assets     195,275       32,851       (62,156 )     165,970  
                                 
  LIABILITIES AND SHAREHOLDERS EQUITY                                
CURRENT LIABILITIES:                                
  Current portion of long-term debt and capital lease obligations   $ 3,512     $ -     $ -     $ 3,512  
  Trade accounts payable     10,679       20,428       (1,751 )     29,356  
  Deferred revenue     5,577       23       -       5,600  
  Accrued expenses     32,808       2,617       (13 )     35,412  
    Total current liabilities     52,576       23,068       (1,764 )     73,880  
                                 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion     34,870       -       -       34,870  
PAYABLE TO AFFILIATES     -       22,756       (22,756 )     -  
DEFERRED REVENUE     4,197       -       -       4,197  
DEFERRED RENT     4,430       -       -       4,430  
OTHER LONG-TERM LIABILITIES     5,074       -       -       5,074  
    Total liabilities     101,147       45,824       (24,520 )     122,451  
                                 
                                 
COMMITMENTS AND CONTINGENCIES                                
                                 
SHAREHOLDERS' EQUITY:                                
  Common stock     18       1,019       (1,019 )     18  
  Capital contributions     -       -       -       -  
  Additional paid-in capital     191,304       28,060       (78,474 )     140,890  
  Retained earnings (accumulated deficit)     (97,002 )     (43,286 )     43,099       (97,189 )
  Accumulated other comprehensive income     (67 )     1,234       (1,242 )     (75 )
  Treasury stock     (125 )     -       -       (125 )
    Total shareholders' equity     94,128       (12,973 )     (37,636 )     43,519  
    Total liabilities and shareholders' equity   $ 195,275     $ 32,851     $ (62,156 )   $ 165,970  
                                 
(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
    Scott Liolios or Sean Mansouri
    Tel 949-574-3860
    Email Contact