PFSweb Reports 23% Service Fee Revenue Growth In Third 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 third quarter ended September 30, 2012.

Mark Layton, Chairman and Chief Executive Officer of PFSweb, stated, “Fueled by new clients as well as increases in certain existing client activity, our Service Fee Equivalent Revenue increased 18% to $30.2 million, as compared to the third quarter of 2011. This growth, coupled with an ongoing focus on operating costs and efficiencies, resulted in an improved Adjusted EBITDA for the third quarter of 2012 to $2.8 million, a 300% increase over the same period last year. With these improved third quarter results and our current expectations of client volumes during this upcoming holiday season, we continue to target an annual increase in our Service Fee Equivalent Revenue for 2012 of 20%, and we are increasing our Adjusted EBITDA target to a range of $10 million to $12 million for the year.”

“This past quarter we finalized two new client programs, bringing our new client program count for 2012 to 10. In addition, we continue to have a robust new business pipeline with more than $50 million in average annual contract value based on client projections. To support new clients and our existing clients’ activity anticipated for this upcoming holiday season, we continue to make investments to bolster our overall capacity and reliability across all phases of our business. These enhancements are designed to provide our clients’ customers the outstanding shopping experience they desire,” added Mr. Layton.

“We are continuing to develop new solutions to position PFSweb as a leader in the eCommerce and omni-channel evolution through PFSweb’s Infinite Commerce Initiative. Our goal is to act as the global facilitator for all types of commerce for our clients across all channels and customer touch points. At this stage, we are extending our order management and eCommerce technology platforms to include cross-channel capabilities that fully integrate brick-and-mortar stores, client and third-party fulfillment facilities. We are also working on new mobile commerce capabilities, in-store customer support, kiosks and ‘clienteling’ apps,” continued Mr. Layton.

Summary of consolidated results for the third quarter ended September 30, 2012:

  • Service Fee revenue increased 23% to $28.3 million, compared to $22.9 million for the same period in 2011; Service Fee Equivalent Revenue (as defined) increased 18% to $30.2 million, compared to $25.6 million for the same period in 2011;
  • Total revenue decreased 6% to $66.5 million, compared to $70.9 million for the third quarter of 2011;
  • Adjusted EBITDA (as defined) increased 300% to $2.8 million, compared to $0.7 million for the same period in 2011;
  • Net loss was $0.4 million, or $0.03 per basic and diluted share, compared to a net loss of $1.8 million, or $0.14 per basic and diluted share, for the third quarter of 2011;
  • Non-GAAP net loss (as defined) was $62,000, or less than $0.01 per basic and diluted share, compared to a non-GAAP net loss of $1.5 million, or $0.12 per basic and diluted share, for the quarter ended September 30, 2011;

Summary of consolidated results for the nine months ended September 30, 2012:
  • Service Fee revenue increased 35% to $85.0 million, compared with $62.8 million for the nine months ended September 30, 2011; Service Fee Equivalent Revenue (as defined) increased 28% to $92.0 million, compared to $71.6 million for the same period in 2011;
  • Total revenue decreased 1% to $209.8 million compared to $211.3 million for the nine months ended September 30, 2011;
  • Adjusted EBITDA (as defined) was $8.2 million compared to $2.2 million for the nine months ended September 30, 2011;
  • Net loss was $2.2 million, or $0.17 per basic and diluted share, compared to a net loss of $5.3 million or $0.43 per basic and diluted share, for the nine months ended September 30, 2011. Net loss for the nine months ended September 30, 2012 included approximately $0.9 million of move related expenses, and $0.5 million of lease termination costs that were reflected in selling, general and administrative expenses. Net loss for the first nine months of 2011 included approximately $0.3 million of relocation related costs. Net loss for the first nine months of 2011 also included a $0.6 million net loss from discontinued operations related to eCOST.com;
  • Non-GAAP net income was $0.2 million, or $0.01 per basic and diluted share, compared to a non-GAAP net loss of $3.7 million, or $0.30 per basic and diluted share, for the nine months ended September 30, 2011.

“I am very pleased with our performance in 2012 and believe we have made the appropriate investments to finish 2012 strong. The benefits of scale in our business are clearly reflected in the improved Adjusted EBITDA results we have produced this year. However, as previously discussed, we currently expect our Service Fee Equivalent Revenue and profitability to be negatively impacted in 2013 by the conclusion or anticipated reduction of operations of several client programs, projected declines in product revenue due to the impact of restructuring efforts by our largest client relationship in our Business and Retail Connect Segment, and further by the loss of certain scale and gross margin mix benefits we achieved during 2012. While we continue to win new client relationships and generate many new and exciting opportunities in our sales pipeline, based on the client information and timing estimates we currently have, we believe it is unlikely that projected new client revenue will offset the impact of these expected reductions in 2013. We remain optimistic about our growth potential as we look towards 2014 and beyond, but our current focus on large client programs can result in large fluctuations in client activity levels as existing clients choose to move operations in-house or to other solutions and as new clients implementations begin. We expect to provide 2013 projections in the first quarter of next year as we gather more information from all our clients on their projected volumes,” concluded Mr. Layton.

Conference Call Information

Management will host a conference call at 11:00 am Eastern Time (10:00 am Central Time) on Thursday, November 8, 2012, to discuss the latest corporate developments and results. To listen to the call, please dial (888) 562-3356 and enter the pin number 58992288 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 December 10, 2012 at (855) 859-2056, pin number 58992288. 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, certain relocation related 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, the accounting effects of capital spending and certain relocation related costs, 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 and Quarterly Report on Form 10-Q for the three and six months ended June 30, 2012 identify 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 Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
REVENUES:
Product revenue, net $ 27,619 $ 37,923 $ 91,901 $ 122,005
Service fee revenue 28,260 22,949 85,022 62,819
Pass-thru revenue   10,654     9,999     32,882     26,444  

Total revenues
  66,533     70,871     209,805     211,268  
 
COSTS OF REVENUES:
Cost of product revenue 25,681 35,304 84,934 113,181
Cost of service fee revenue 20,397 17,663 61,996 47,241
Cost of pass-thru revenue   10,654     9,999     32,882     26,444  

Total costs of revenues
  56,732     62,966     179,812     186,866  

Gross profit
9,801 7,905 29,993 24,402
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   9,781     9,385     30,941     28,103  
Income (loss) from operations 20 (1,480 ) (948 ) (3,701 )
INTEREST EXPENSE, NET   236     308     758     769  
Income (loss) before income taxes (216 ) (1,788 ) (1,706 ) (4,470 )
INCOME TAX PROVISION   154     57     457     287  
INCOME (LOSS) FROM CONTINUING OPERATIONS (370 ) (1,845 ) (2,163 ) (4,757 )
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX   -     20     -     (569 )
NET INCOME (LOSS) $ (370 ) $ (1,825 ) $ (2,163 ) $ (5,326 )
NON-GAAP INCOME (LOSS) $ (62 ) $ (1,499 ) $ 167   $ (3,702 )
 
NET INCOME (LOSS) PER SHARE:
Basic $ (0.03 ) $ (0.14 ) $ (0.17 ) $ (0.43 )
Diluted $ (0.03 ) $ (0.14 ) $ (0.17 ) $ (0.43 )
 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic   12,783     12,688     12,777     12,509  
Diluted   12,783     12,688     12,777     12,509  
 
EBITDA $ 2,522   $ 57   $ 5,886   $ 874  
ADJUSTED EBITDA $ 2,830   $ 707   $ 8,216   $ 2,233  

 
 

(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, 2011.
 

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,
2012 2011 2012 2011
NET INCOME (LOSS) $ (370 ) $ (1,825 ) $ (2,163 ) $ (5,326 )
Loss (income) from discontinued operations, net of tax - (20 ) - 569
Income tax expense 154 57 457 287
Interest expense 236 308 758 769
Depreciation and amortization   2,502     1,537     6,834     4,575  
EBITDA $ 2,522 $ 57 $ 5,886 $ 874
Stock-based compensation 308 346 1,014 1,055
Lease terminations costs - - 450 -
Relocation related costs - 304 - 304
Move related expenses   -     -     866     -  
ADJUSTED EBITDA $ 2,830   $ 707   $ 8,216   $ 2,233  
 
 
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
 
NET INCOME (LOSS) $ (370 ) $ (1,825 ) $ (2,163 ) $ (5,326 )
Loss (income) from discontinued operations, net of tax - (20 ) - 569
Stock-based compensation 308 346 1,014 1,055
Lease terminations costs - - 450 -
Move related expenses   -     -     866     -  
NON-GAAP INCOME (LOSS) $ (62 ) $ (1,499 ) $ 167   $ (3,702 )
 
NET INCOME (LOSS) PER SHARE:
Basic $ (0.03 ) $ (0.14 ) $ (0.17 ) $ (0.43 )
Diluted $ (0.03 ) $ (0.14 ) $ (0.17 ) $ (0.43 )
 
NON-GAAP INCOME (LOSS) Per Share:
Basic $ (0.00 ) $ (0.12 ) $ 0.01   $ (0.30 )
Diluted $ (0.00 ) $ (0.12 ) $ 0.01   $ (0.30 )
 
 
 
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
 
TOTAL REVENUES $ 66,533 $ 70,871 $ 209,805 $ 211,268
Pass-thru revenue (10,654 ) (9,999 ) (32,882 ) (26,444 )
Cost of product revenue   (25,681 )   (35,304 )   (84,934 )   (113,181 )
SERVICE FEE EQUIVALENT REVENUE $ 30,198   $ 25,568   $ 91,989   $ 71,643  
 
 
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(In Thousands, Except Share Data)
 
 
September 30, December 31,
2012 2011

ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 17,793 $ 17,695
Restricted cash 471 827
Accounts receivable, net of allowance for doubtful accounts of $479 and
$663 at September 30, 2012 and December 31, 2011, respectively 38,057 52,679
Inventories, net of reserves of $1,696 and $1,555 at September 30, 2012 and
December 31, 2011, respectively 25,453 30,487
Other receivables 7,340 11,915
Prepaid expenses and other current assets   4,663     4,697  
Total current assets   93,777     118,300  
 
PROPERTY AND EQUIPMENT, net 25,539 14,945
OTHER ASSETS   3,928     3,127  
Total assets   123,244     136,372  
 

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 19,073 $ 23,939
Trade accounts payable 33,437 48,544
Deferred revenue 6,808 6,766
Accrued expenses   19,353     18,657  
Total current liabilities 78,671 97,906
 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 5,771 3,583
DEFERRED REVENUE 6,190 5,908
DEFERRED RENT   5,661     901  
Total liabilities   96,293     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; 12,807,086 and 12,782,907 shares issued at September 30, 2012 and December 31, 2011, respectively; and 12,780,225 and 12,764,546 shares outstanding as of September 30, 2012 and December 31, 2011, respectively
13 13
Additional paid-in capital 105,707 104,645
Accumulated deficit (80,061 ) (77,898 )
Accumulated other comprehensive income 1,413 1,399

 

Treasury stock at cost, 32,161 and 18,361 shares as of September 30, 2012 and December 31, 2011, respectively
  (121 )   (85 )
Total shareholders' equity   26,951     28,074  
Total liabilities and shareholders' equity $ 123,244   $ 136,372  
 
 

PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended September 30, 2012
(In Thousands)
       
Business &
PFSweb Retail Connect Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 27,619 $ - $ 27,619
Service fee revenue 28,260 - - 28,260
Service fee revenue - affiliate 1,034 - (1,034 ) -
Pass-thru revenue   10,654     -   -     10,654  
Total revenues   39,948     27,619   (1,034 )   66,533  
 
COSTS OF REVENUES:
Cost of product revenue - 25,681 - 25,681
Cost of service fee revenue 21,099 - (702 ) 20,397
Cost of pass-thru revenue   10,654     -   -     10,654  
Total costs of revenues   31,753     25,681   (702 )   56,732  
Gross profit 8,195 1,938 (332 ) 9,801
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   8,763     1,350   (332 )   9,781  
Income (loss) from operations (568 ) 588 - 20
INTEREST EXPENSE, NET   49     187   -     236  
Income (loss) before income taxes (617 ) 401 - (216 )
INCOME TAX PROVISION (BENEFIT)   (23 )   177   -     154  
NET INCOME (LOSS) $ (594 ) $ 224 $ -   $ (370 )
NON-GAAP NET INCOME (LOSS) $ (286 ) $ 224 $ -   $ (62 )
 
EBITDA $ 1,908   $ 614 $ -   $ 2,522  
ADJUSTED EBITDA $ 2,216   $ 614 $ -   $ 2,830  
 
 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
 
NET INCOME (LOSS) $ (594 ) $ 224 $ - (370 )
Income tax expense (benefit) (23 ) 177 - 154
Interest expense , net 49 187 - 236
Depreciation and amortization   2,476     26   -     2,502  
EBITDA $ 1,908 $ 614 $ - $ 2,522
Stock-based compensation   308     -   -     308  
ADJUSTED EBITDA $ 2,216   $ 614 $ -   $ 2,830  
 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
 
NET INCOME (LOSS) $ (594 ) $ 224 $ - $ (370 )
Stock-based compensation   308     -   -     308  
NON-GAAP NET INCOME (LOSS) $ (286 ) $ 224 $ -   $ (62 )
 

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, 2012
(In Thousands)
       
Business &
PFSweb Retail Connect Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 91,901 $ - $ 91,901
Service fee revenue 85,022 - - 85,022
Service fee revenue - affiliate 3,620 - (3,620 ) -
Pass-thru revenue   32,882     -   -     32,882  
Total revenues   121,524     91,901   (3,620 )   209,805  
 
COSTS OF REVENUES:
Cost of product revenue - 84,934 - 84,934
Cost of service fee revenue 64,196 - (2,200 ) 61,996
Cost of pass-thru revenue   32,882     -   -     32,882  
Total costs of revenues   97,078     84,934   (2,200 )   179,812  
Gross profit 24,446 6,967 (1,420 ) 29,993
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   27,342     5,019   (1,420 )   30,941  
Income (loss) from operations (2,896 ) 1,948 - (948 )
INTEREST EXPENSE (INCOME), NET   140     618   -     758  
Income (loss) before income taxes (3,036 ) 1,330 - (1,706 )
INCOME TAX PROVISION (BENEFIT)   (92 )   549   -     457  
NET INCOME (LOSS)   (2,944 )   781   -     (2,163 )
NON-GAAP NET INCOME (LOSS) $ (614 ) $ 781 $ -   $ 167  
 
EBITDA $ 3,872   $ 2,014 $ -   $ 5,886  
ADJUSTED EBITDA $ 6,202   $ 2,014 $ -   $ 8,216  
 
 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
 
NET INCOME (LOSS) $ (2,944 ) $ 781 $ - (2,163 )
Income tax expense (benefit) (92 ) 549 - 457
Interest expense (income) 140 618 - 758
Depreciation and amortization   6,768     66   -     6,834  
EBITDA $ 3,872 $ 2,014 $ - $ 5,886
Stock-based compensation 1,014 - - 1,014
Lease termination costs 450 - - 450
Move related costs   866     -   -     866  
ADJUSTED EBITDA $ 6,202   $ 2,014 $ -   $ 8,216  
 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
 
NET INCOME (LOSS) $ (2,944 ) $ 781 $ - $ (2,163 )
Stock-based compensation 1,014 - - 1,014
Lease termination costs 450 - - 450
Move related costs   866     -   -     866  
NON-GAAP NET INCOME (LOSS) $ (614 ) $ 781 $ -   $ 167  
 

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 Consolidating Statements of Operations
For the Three Months Ended September 30, 2011
(In Thousands)
         
Business &
PFSweb Retail Connect eCOST Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 37,923 $ - $ - $ 37,923
Service fee revenue 22,949 - - - 22,949
Service fee revenue - affiliate 1,518 - - (1,518 ) -
Pass-thru revenue   9,999     -   -     -     9,999  
Total revenues   34,466     37,923   -     (1,518 )   70,871  
 
COSTS OF REVENUES:
Cost of product revenue - 35,304 - - 35,304
Cost of service fee revenue 18,204 - - (541 ) 17,663
Cost of pass-thru revenue   9,999     -   -     -     9,999  
Total costs of revenues   28,203     35,304   -     (541 )   62,966  
Gross profit 6,263 2,619 - (977 ) 7,905
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   8,398     1,964   -     (977 )   9,385  
Income (loss) from operations (2,135 ) 655 - - (1,480 )
INTEREST EXPENSE (INCOME), NET   (30 )   338   -     -     308  
Income (loss) before income taxes (2,105 ) 317 - - (1,788 )
INCOME TAX PROVISION (BENEFIT)   (74 )   131   -     -     57  
INCOME (LOSS) FROM CONTINUING OPERATIONS (2,031 ) 186 - - (1,845 )
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX   -     -   20       20  
NET INCOME (LOSS) $ (2,031 ) $ 186 $ 20   $ -   $ (1,825 )
NON-GAAP NET INCOME (LOSS) $ (1,685 ) $ 186 $ -   $ -   $ (1,499 )
 
EBITDA $ (606 ) $ 663 $ -   $ -   $ 57  
ADJUSTED EBITDA $ 44   $ 663 $ -   $ -   $ 707  
 
 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
 
NET INCOME (LOSS) $ (2,031 ) $ 186 $ 20 $ - (1,825 )
Income from discontinued operations, net of tax - - (20 ) - (20 )
Income tax expense (benefit) (74 ) 131 - - 57
Interest expense (income) (30 ) 338 - - 308
Depreciation and amortization   1,529     8   -     -     1,537  
EBITDA $ (606 ) $ 663 $ - $ - $ 57
Stock-based compensation 346 - - - 346
Relocation related costs   304           304  
ADJUSTED EBITDA $ 44   $ 663 $ -   $ -   $ 707  
 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
 
NET INCOME (LOSS) $ (2,031 ) $ 186 $ 20 $ - $ (1,825 )
Income from discontinued operations, net of tax - - (20 ) - (20 )
Stock-based compensation   346     -   -     -     346  
NON-GAAP NET INCOME (LOSS) $ (1,685 ) $ 186 $ -   $ -   $ (1,499 )

 

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 Consolidating Statements of Operations
For the Nine Months Ended September 30, 2011
(In Thousands)
         
Business &
PFSweb Retail Connect eCOST Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 122,005 $ - $ - $ 122,005
Service fee revenue 62,819 - - - 62,819
Service fee revenue - affiliate 4,769 - - (4,769 ) -
Pass-thru revenue   26,446     -   -     (2 )   26,444  
Total revenues   94,034     122,005   -     (4,771 )   211,268  
 
COSTS OF REVENUES:
Cost of product revenue - 113,181 - - 113,181
Cost of service fee revenue 48,904 - - (1,663 ) 47,241
Cost of pass-thru revenue   26,446     -   -     (2 )   26,444  
Total costs of revenues   75,350     113,181   -     (1,665 )   186,866  
Gross profit 18,684 8,824 - (3,106 ) 24,402
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   24,974     6,235   -     (3,106 )   28,103  
Income (loss) from operations (6,290 ) 2,589 - - (3,701 )
INTEREST EXPENSE (INCOME), NET   (146 )   915   -     -     769  
Income (loss) before income taxes (6,144 ) 1,674 - - (4,470 )
INCOME TAX PROVISION (BENEFIT)   (350 )   637   -     -     287  
INCOME (LOSS) FROM CONTINUING OPERATIONS (5,794 ) 1,037 - - (4,757 )
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX   -     -   (569 )     (569 )
NET INCOME (LOSS) $ (5,794 ) $ 1,037 $ (569 ) $ -   $ (5,326 )
NON-GAAP NET INCOME (LOSS) $ (4,739 ) $ 1,037 $ -   $ -   $ (3,702 )
 
EBITDA $ (1,737 ) $ 2,611 $ -   $ -   $ 874  
ADJUSTED EBITDA $ (378 ) $ 2,611 $ -   $ -   $ 2,233  
 
 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
 
NET INCOME (LOSS) $ (5,794 ) $ 1,037 $ (569 ) $ - (5,326 )
Loss from discontinued operations, net of tax - - 569 - 569
Income tax expense (benefit) (350 ) 637 - - 287
Interest expense (income) (146 ) 915 - - 769
Depreciation and amortization   4,553     22   -     -     4,575  
EBITDA $ (1,737 ) $ 2,611 $ - $ - $ 874
Stock-based compensation 1,055 - - - 1,055
Relocation related costs   304           304  
ADJUSTED EBITDA $ (378 ) $ 2,611 $ -   $ -   $ 2,233  
 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
 
NET INCOME (LOSS) $ (5,794 ) $ 1,037 $ (569 ) $ - $ (5,326 )
Loss from discontinued operations, net of tax - - 569 - 569
Stock-based compensation   1,055     -   -     -     1,055  
NON-GAAP NET INCOME (LOSS) $ (4,739 ) $ 1,037 $ -   $ -   $ (3,702 )
 

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 September 30, 2012
(In Thousands)
       
 
Business &
PFSweb Retail Connect Eliminations Consolidated

ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 13,983 $ 3,810 $ - $ 17,793
Restricted cash - 471 - 471
Accounts receivable, net 25,465 12,909 (317 ) 38,057
Inventories, net - 25,453 - 25,453
Other receivables - 7,340 - 7,340
Prepaid expenses and other current assets   3,182     1,481     -     4,663  
Total current assets   42,630     51,464     (317 )   93,777  
 
PROPERTY AND EQUIPMENT, net 25,325 214 - 25,539
RECEIVABLE/INVESTMENT IN AFFILIATES 13,456 - (13,456 ) -
OTHER ASSETS   3,799     129     -     3,928  
Total assets   85,210     51,807     (13,773 )   123,244  
 

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 12,003 $ 7,070 $ - $ 19,073
Trade accounts payable 8,461 25,293 (317 ) 33,437
Deferred revenue 6,781 27 - 6,808
Accrued expenses   13,336     6,017     -     19,353  
Total current liabilities 40,581 38,407 (317 ) 78,671
 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 5,725 46 - 5,771
PAYABLE TO AFFILIATES - 22,795 (22,795 ) -
DEFERRED REVENUE 6,190 - - 6,190
DEFERRED RENT   5,629     32     -     5,661  
Total liabilities   58,125     61,280     (23,112 )   96,293  
 
COMMITMENTS AND CONTINGENCIES
 
SHAREHOLDERS' EQUITY:
Common stock 13 19 (19 ) 13
Capital contributions - 1,000 (1,000 ) -
Additional paid-in capital 105,707 28,059 (28,059 ) 105,707
Retained earnings (accumulated deficit) (79,920 ) (40,630 ) 40,489 (80,061 )
Accumulated other comprehensive income 1,406 2,079 (2,072 ) 1,413
Treasury stock   (121 )   -     -     (121 )
Total shareholders' equity   27,085     (9,473 )   9,339     26,951  
Total liabilities and shareholders' equity $ 85,210   $ 51,807   $ (13,773 ) $ 123,244  
 
 

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
Deferred revenue 6,749 17 - 6,766
Accrued expenses   11,998     6,659     -     18,657  
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 ) -
DEFERRED REVENUE 5,908 - - 5,908
DEFERRED RENT   901     -     -     901  
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  
 

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