PFSweb Reports 50% Service Fee Revenue Growth In First Quarter Of 2012 Compared To Prior Year

PFSweb, Inc. (Nasdaq: PFSW), an international provider of end-to-end web commerce solutions, today announced its financial results for the first quarter ended March 31, 2012.

“New business agreements and expanding existing client engagements continue to drive our strong Service Fee Business growth, resulting in a 50% increase in Service Fee revenue for the first quarter of 2012 compared to the first quarter of 2011,” stated Mark Layton, Chairman and Chief Executive Officer of PFSweb. “This strong Service Fee revenue growth, coupled with an ongoing focus on costs, enabled us to report a significant improvement in our Adjusted EBITDA, which increased more than 475% to $2.6 million for the first quarter of 2012 compared to the same period last year.”

Summary of consolidated results for the first quarter ended March 31, 2012:
  • Service Fee revenue increased 50% to $28.4 million, compared to $18.9 million for the same period in 2011; Service Fee Equivalent revenue (as defined) increased 44% to $31.2 million, compared to $21.7 million for the same period in 2011;
  • Total revenue increased to $74.5 million, compared to $72.4 million for the first quarter of 2011;
  • Adjusted EBITDA (as defined) increased more than 475% to $2.6 million, compared to $0.5 million for the same period in 2011;
  • Net loss was $1.3 million, or $0.10 per basic and diluted share, compared to a net loss of $2.3 million, or $0.19 per basic and diluted share, for the first quarter of 2011. Net loss for the first quarter of 2012 included approximately $0.6 million of relocation related costs and approximately $0.5 million of lease termination costs, which were both reflected in selling, general and administrative expenses;
  • Non-GAAP net income (as defined) was $0.1 million, or $0.01 per basic and diluted share, compared to Non-GAAP net loss of $1.4 million, or $0.11 per basic and diluted share, for the quarter ended March 31, 2011;
  • Total cash, cash equivalents and restricted cash was $18.4 million as of March 31, 2012, compared to $18.5 million as of December 31, 2011.

“Our outlook for fiscal 2012 remains positive and we continue to pursue exciting opportunities within the eCommerce sector. On an overall basis, we are targeting a year-over-year increase in Service Fee Equivalent revenue (as defined) of approximately 20% in 2012. This includes growth from existing and new Service Fee clients, partially offset by the impact from client programs that we expect will conclude or significantly reduce operations during 2012 and reduced product revenue. While we continue to make certain investments to support our growth, we are targeting consolidated Adjusted EBITDA of approximately $8 million to $10 million for fiscal 2012,” Mr. Layton concluded.

Conference Call Information

Management will host a conference call at 11:00 am Eastern Time (10:00 am Central Time) on Monday, May 14, 2012, to discuss the latest corporate developments and results. To listen to the call, please dial (888) 562-3356 and enter the pin number 74815599 at least five minutes before the scheduled start time. Investors can also access the call in a “listen only” mode via the Internet at the Company’s website, www.pfsweb.com or www.kcsa.com. Please allow extra time prior to the call to visit the site and download any necessary audio software.

A digital replay of the conference call will be available through June 14, 2012 at (855) 859-2056, pin number 74815599. The replay also will be available at the Company’s website for a limited time.

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, income (loss) from discontinued operations, lease termination costs and certain move related expenses.

EBITDA represents earnings (or losses) before income (loss) from discontinued operations, interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, lease termination costs and certain move related expenses.

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, income (loss) from discontinued operations, lease termination costs and certain move related expenses 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 excluding certain expenses that may not be indicative of its core operating 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.

About PFSweb, Inc.Iconic brands engage PFSweb to enable their eCommerce initiatives. PFSweb’s End2End eCommerce® solution includes interactive marketing services, robust eCommerce technology, global fulfillment and logistics, high-touch customer care, financial services, and order management. PFSweb’s eCommerce solutions provide international reach and expertise in both direct-to-consumer and business-to-business initiatives, supporting organizations across multiple industries including Procter & Gamble, L’Oreal, LEGO, Columbia Sportswear, Sorel, Carter’s, Lucky Brand Jeans, kate spade new york, Juicy Couture, AAFES, Riverbed, Ricoh, Hawker Beechcraft Corp, Roots Canada Ltd. and Xerox. PFSweb is headquartered in Allen, TX with additional locations in Tennessee, Mississippi, Canada, Belgium, and the Philippines.

To find out more about PFSweb, Inc. (NASDAQ: PFSW), visit the company’s website at http://www.PFSweb.com.

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, 2011 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 and Quarterly Reports 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.

(Financial Tables Below)
 

PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations (A)

(In Thousands, Except Per Share Data)
       
Three Months Ended
March 31,
2012 2011
REVENUES:
Product revenue, net $ 34,725 $ 45,283
Service fee revenue 28,378 18,900
Pass-thru revenue   11,409     8,206  
Total revenues   74,512     72,389  
 
COSTS OF REVENUES:
Cost of product revenue 31,856 42,466
Cost of service fee revenue 21,259 13,783
Cost of pass-thru revenue   11,409     8,206  
Total costs of revenues   64,524     64,455  
Gross profit 9,988 7,934
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   10,900     9,288  
Loss from operations (912 ) (1,354 )
INTEREST EXPENSE, NET   264     191  
Income (loss) before income taxes (1,176 ) (1,545 )
INCOME TAX PROVISION   109     135  
INCOME (LOSS) FROM CONTINUING OPERATIONS (1,285 ) (1,680 )
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX   -     (603 )
NET INCOME (LOSS) $ (1,285 ) $ (2,283 )
NON-GAAP INCOME (LOSS) $ 77   $ (1,370 )
 
NET INCOME (LOSS) PER SHARE:
Basic $ (0.10 ) $ (0.19 )
Diluted $ (0.10 ) $ (0.19 )
 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic   12,765     12,268  
Diluted   12,765     12,268  
 
EBITDA $ 1,230   $ 141  
ADJUSTED EBITDA $ 2,592   $ 451  
 

(A) The financial data above should be read in conjunction with the audited consolidated financial statements ofPFSweb, Inc. included in its Form 10-K for the year ended December 31, 2011.
 
 

PFSweb, Inc. and Subsidiaries
Reconciliation of certain Non-GAAP Items to GAAP
(In Thousands, Except Per Share Data)
     
Three Months Ended
March 31,
2012 2011
NET INCOME (LOSS) $ (1,285 ) $ (2,283 )
Loss from discontinued operations, net of tax - 603
Income tax expense 109 135
Interest expense 264 191
Depreciation and amortization   2,142     1,495  
EBITDA $ 1,230 $ 141
Stock-based compensation 340 310
Lease terminations costs 450 -
Move related expenses   572     -  
ADJUSTED EBITDA $ 2,592   $ 451  
 
 
Three Months Ended
March 31,
  2012     2011  
 
NET INCOME (LOSS) $ (1,285 ) $ (2,283 )
Loss from discontinued operations, net of tax - 603
Stock-based compensation 340 310
Lease terminations costs 450 -
Move related expenses   572     -  
NON-GAAP INCOME (LOSS) $ 77   $ (1,370 )
 
NET INCOME (LOSS) PER SHARE:
Basic $ (0.10 ) $ (0.19 )
Diluted $ (0.10 ) $ (0.19 )
 
NON-GAAP INCOME (LOSS) Per Share:
Basic $ 0.01   $ (0.11 )
Diluted $ 0.01   $ (0.11 )
 
 
 
Three Months Ended
March 31,
2012 2011
 
TOTAL REVENUES $ 74,512 $ 72,389
Pass-thru revenue (11,409 ) (8,206 )
Cost of product revenue   (31,856 )   (42,466 )
SERVICE FEE EQUIVALENT REVENUE $ 31,247   $ 21,717  
 
 

PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(In Thousands, Except Share Data)
       
 
March 31, December 31,
2012 2011

ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 18,165 $ 17,695
Restricted cash 212 827

Accounts receivable, net of allowance for doubtful accounts of $686 and
$663 at March 31, 2012 and December 31, 2011, respectively 41,989 52,679
Inventories, net of reserves of $1,646 and $1,555 at March 31, 2012 and
December 31, 2011, respectively 29,977 30,487
Other receivables 10,187 11,915
Prepaid expenses and other current assets   4,431     4,697  
Total current assets   104,961     118,300  
 
PROPERTY AND EQUIPMENT, net 22,680 14,945
OTHER ASSETS   3,043     3,127  
Total assets   130,684     136,372  
 

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 15,661 $ 23,939
Trade accounts payable 43,475 48,544
Deferred rent 956 288
Deferred revenue 7,494 6,766
Accrued expenses   20,757     18,369  
Total current liabilities 88,343 97,906
 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 4,388 3,583
DEFERRED RENT 5,678 901
OTHER LIABILITIES   4,871     5,908  
Total liabilities   103,280     108,298  
 
 
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;
12,782,907 shares issued at March 31, 2012 and
December 31, 2011; and 12,764,546
outstanding as of March 31, 2012 and December 31, 2011 13 13
Additional paid-in capital 104,985 104,645
Accumulated deficit (79,183 ) (77,898 )
Accumulated other comprehensive income 1,674 1,399
Treasury stock at cost, 18,361 shares   (85 )   (85 )
Total shareholders' equity   27,404     28,074  
Total liabilities and shareholders' equity $ 130,684   $ 136,372  
 
 

PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended March 31, 2012
(In Thousands)
       
Business &
PFSweb Retail Connect Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 34,725 $ - $ 34,725
Service fee revenue 28,378 - - 28,378
Service fee revenue - affiliate 1,462 - (1,462 ) -
Pass-thru revenue   11,409     -   -     11,409  
Total revenues   41,249     34,725   (1,462 )   74,512  
 
COSTS OF REVENUES:
Cost of product revenue - 31,856 - 31,856
Cost of service fee revenue 22,048 - (789 ) 21,259
Cost of pass-thru revenue   11,409     -   -     11,409  
Total costs of revenues   33,457     31,856   (789 )   64,524  
Gross profit 7,792 2,869 (673 ) 9,988
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   9,532     2,041   (673 )   10,900  
Income from operations (1,740 ) 828 - (912 )
INTEREST EXPENSE, NET   34     230   -     264  
Income before income taxes (1,774 ) 598 - (1,176 )
INCOME TAX PROVISION (BENEFIT)   (116 )   225   -     109  
NET INCOME (LOSS) $ (1,658 ) $ 373 $ -   $ (1,285 )
NON-GAAP NET INCOME $ (296 ) $ 373 $ -   $ 77  
 
EBITDA $ 386   $ 844 $ -   $ 1,230  
ADJUSTED EBITDA $ 1,748   $ 844 $ -   $ 2,592  
 
 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
 
NET INCOME (LOSS) $ (1,658 ) $ 373 $ - (1,285 )
Income tax expense (benefit) (116 ) 225 - 109
Interest expense , net 34 230 - 264
Depreciation and amortization   2,126     16   -     2,142  
EBITDA $ 386 $ 844 $ - $ 1,230
Stock-based compensation 340 - - 340
Lease termination costs 450 450
Move related costs   572         572  
ADJUSTED EBITDA $ 1,748   $ 844 $ -   $ 2,592  
 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME follows:
 
NET INCOME (LOSS) $ (1,658 ) $ 373 $ - $ (1,285 )
Stock-based compensation 340 - - 340
Lease termination costs 450 - - 450
Move related costs   572     -   -     572  
NON-GAAP NET INCOME $ (296 ) $ 373 $ -   $ 77  
 

Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of ourclient relationships.
 
 

PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended March 31, 2011
(In Thousands)
         
Business &
PFSweb Retail Connect eCOST Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 45,283 $ - $ - $ 45,283
Service fee revenue 18,900 - - - 18,900
Service fee revenue - affiliate 1,664 - - (1,664 ) -
Pass-thru revenue   8,206     -   -     -     8,206  
Total revenues   28,770     45,283   -     (1,664 )   72,389  
 
COSTS OF REVENUES:
Cost of product revenue - 42,466 - - 42,466
Cost of service fee revenue 14,348 - - (565 ) 13,783
Cost of pass-thru revenue   8,206     -   -     -     8,206  
Total costs of revenues   22,554     42,466   -     (565 )   64,455  
Gross profit 6,216 2,817 - (1,099 ) 7,934
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   8,215     2,172   -     (1,099 )   9,288  
Income (loss) from operations (1,999 ) 645 - - (1,354 )
INTEREST EXPENSE (INCOME), NET   (55 )   246   -     -     191  
Income (loss) before income taxes (1,944 ) 399 - - (1,545 )
INCOME TAX PROVISION (BENEFIT)   (25 )   160   -     -     135  
INCOME (LOSS) FROM CONTINUING OPERATIONS (1,919 ) 239 - - (1,680 )
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX   -     -   (603 )     (603 )
NET INCOME (LOSS) $ (1,919 ) $ 239 $ (603 ) $ -   $ (2,283 )
NON-GAAP NET INCOME (LOSS) $ (1,609 ) $ 239 $ -   $ -   $ (1,370 )
 
EBITDA $ (511 ) $ 652 $ -   $ -   $ 141  
ADJUSTED EBITDA $ (201 ) $ 652 $ -   $ -   $ 451  
 
 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
 
NET INCOME (LOSS) $ (1,919 ) $ 239 $ (603 ) $ - (2,283 )
Loss from discontinued operations, net of tax - - 603 - 603
Income tax expense (benefit) (25 ) 160 - - 135
Interest expense (income) (55 ) 246 - - 191
Depreciation and amortization   1,488     7   -     -     1,495  
EBITDA $ (511 ) $ 652 $ - $ - $ 141
Stock-based compensation   310     -   -     -     310  
ADJUSTED EBITDA $ (201 ) $ 652 $ -   $ -   $ 451  
 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
 
NET INCOME (LOSS) $ (1,919 ) $ 239 $ (603 ) $ - $ (2,283 )
Loss from discontinued operations, net of tax - - 603 - 603
Stock-based compensation   310     -   -     -     310  
NON-GAAP NET INCOME (LOSS) $ (1,609 ) $ 239 $ -   $ -   $ (1,370 )
 

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 and PFSweb Retail Connect include certain ongoing activity formerly reported as eCOST.
 
 

PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets
as of March 31, 2012
(In Thousands)
                 
 
Business &
PFSweb Retail Connect Eliminations Consolidated

ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 14,441 $ 3,724 $ - $ 18,165
Restricted cash - 212 - 212
Accounts receivable, net 28,161 14,099 (271 ) 41,989
Inventories, net - 29,977 - 29,977
Other receivables - 10,187 - 10,187
Prepaid expenses and other current assets   2,964     1,467     -     4,431  
Total current assets   45,566     59,666     (271 )   104,961  
 
PROPERTY AND EQUIPMENT, net 22,550 130 - 22,680
RECEIVABLE/INVESTMENT IN AFFILIATES 12,909 - (12,909 ) -
OTHER ASSETS   2,897     146     -     3,043  
Total assets   83,922     59,942     (13,180 )   130,684  
 

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 9,596 $ 6,065 $ - $ 15,661
Trade accounts payable 9,784 33,962 (271 ) 43,475
Accrued expenses   22,206     7,001     -     29,207  
Total current liabilities 41,586 47,028 (271 ) 88,343
 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 4,353 35 - 4,388
PAYABLE TO AFFILIATES - 22,595 (22,595 ) -
OTHER LIABILITIES   10,549     -     -     10,549  
Total liabilities   56,488     69,658     (22,866 )   103,280  
 
COMMITMENTS AND CONTINGENCIES
 
SHAREHOLDERS' EQUITY:
Common stock 13 19 (19 ) 13
Capital contributions - 1,000 (1,000 ) -
Additional paid-in capital 104,985 28,059 (28,059 ) 104,985
Retained earnings (accumulated deficit) (79,153 ) (41,045 ) 41,015 (79,183 )
Accumulated other comprehensive income 1,674 2,251 (2,251 ) 1,674
Treasury stock   (85 )   -     -     (85 )
Total shareholders' equity   27,434     (9,716 )   9,686     27,404  
Total liabilities and shareholders' equity $ 83,922   $ 59,942   $ (13,180 ) $ 130,684  
 
 

PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets
as of December 31, 2011
(In Thousands)
                 
 
Business &
PFSweb Retail Connect Eliminations Consolidated

ASSETS

 
CURRENT ASSETS:
Cash and cash equivalents $ 12,818 $ 4,877 $ - $ 17,695
Restricted cash 138 689 - 827
Accounts receivable, net 35,881 17,133 (335 ) 52,679
Inventories, net - 30,487 - 30,487
Other receivables - 11,915 - 11,915
Prepaid expenses and other current assets   3,273     1,424     -     4,697  
Total current assets   52,110     66,525     (335 )   118,300  
 
PROPERTY AND EQUIPMENT, net 14,884 61 - 14,945
RECEIVABLE/INVESTMENT IN AFFILIATES 13,130 - (13,130 ) -
OTHER ASSETS   2,973     154     -     3,127  
Total assets   83,097     66,740     (13,465 )   136,372  
 

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 13,918 $ 10,021 $ - $ 23,939
Trade accounts payable 12,089 36,790 (335 ) 48,544
Accrued expenses   18,747     6,676     -     25,423  
Total current liabilities 44,754 53,487 (335 ) 97,906
 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 3,513 70 - 3,583
PAYABLE TO AFFILIATES - 22,495 (22,495 ) -
OTHER LIABILITIES   6,809     -     -     6,809  
Total liabilities   55,076     76,052     (22,830 )   108,298  
 
COMMITMENTS AND CONTINGENCIES
 
SHAREHOLDERS' EQUITY:
Common stock 13 19 (19 ) 13
Capital contributions - 1,000 (1,000 ) -
Additional paid-in capital 104,645 28,059 (28,059 ) 104,645
Retained earnings (accumulated deficit) (77,950 ) (40,446 ) 40,498 (77,898 )
Accumulated other comprehensive income 1,398 2,056 (2,055 ) 1,399
Treasury stock   (85 )   -     -     (85 )
Total shareholders' equity   28,021     (9,312 )   9,365     28,074  
Total liabilities and shareholders' equity $ 83,097   $ 66,740   $ (13,465 ) $ 136,372  
 

Copyright Business Wire 2010

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