PFSweb, Inc. (Nasdaq: PFSW), an international business
process outsourcing services provider of end-to-end web commerce
solutions and an online discount retailer, today announced its
financial results for the third quarter and nine months ended
September 30, 2009.
“Our consolidated results for the third quarter reflect a
sequential improvement versus our June 2009 quarter, driven by the
ramp up of new Service Fee business client activity, further cost
reduction initiatives implemented within all our business segments
and certain incremental inventory cost related adjustments. We
believe we have taken the necessary steps to manage costs without
sacrificing our ability to grow in the direct to consumer (“D2C”)
market or limiting our ability to win new Service Fee business
clients,” stated Mark Layton, Chairman and Chief Executive Officer
of PFSweb. “I am especially pleased with the new End2End solution
for our Service Fee business, which has significantly enhanced our
ability to compete for and win new client agreements. In just the
past year since it was launched, we have proven what a game changer
this new solution can be, winning new client agreements against our
competition. We are currently in the process of launching these new
client agreements, which are in different stages of being rolled
out. Further, I am encouraged that our eCOST.com subsidiary
continues to show bottom line improvement even on lower revenue
levels. Recently announced new marketing programs at eCOST.com have
been effective in increasing web traffic, boosting the number of
repeat shoppers and expanding our Platinum membership program.
“I am upbeat about the outlook for the coming year in terms of
growth in both our eCost.com and Service Fee business segments. We
continue to maintain a solid financial position to support our
operations, with more than $17 million in cash, cash equivalents
and restricted cash and we are maintaining our target to achieve
breakeven to positive free cash flow for calendar year 2009,”
continued Mr. Layton.
Summary of consolidated results for the quarter ended
September 30, 2009:
PFSweb’s September 30, 2009 results, while sequentially improved
versus the June 2009 quarter, reflect a decrease as compared to the
third quarter of 2008 primarily due to the global economic
environment and changes to the company’s client mix, including the
impact of the non-renewal of its agreement with its largest Service
Fee business client earlier this year.
- Total reported revenue was $85.6
million compared to $109.9 million for the third quarter of
2008;
- Adjusted EBITDA (as defined) was
$1.2 million versus $2.5 million for the third quarter of
2008;
- Net loss was $846,000, or $0.09
per basic and diluted share, compared to net income of $43,000, or
$0.00 per basic and diluted share, for the third quarter of
2008;
- Non-GAAP net loss (as defined)
was $723,000, or $0.07 per basic and diluted share, compared to
non-GAAP net income of $354,000, or $0.04 per basic and diluted
share, for the third quarter of 2008; and
- Total cash, cash equivalents and
restricted cash equaled $17.8 million as of September 30, 2009
compared to $18.1 million as of December 31, 2008.
Summary of consolidated results for the nine months ended
September 30, 2009:
- Total reported revenue was
$256.9 million, compared to $339.1 million for the nine months
ended September 30, 2008;
- Adjusted EBITDA (as defined) was
$3.1 million versus $7.7 million for the nine months ended
September 30, 2008;
- Net loss was $3.6 million, or
$0.36 per basic and diluted share, compared to net income of $0.5
million, or $0.05 per basic and diluted share, for the nine month
period ended September 30, 2008;
- Non-GAAP net loss (as defined)
was $3.2 million, or $0.33 per basic and diluted share, compared to
non-GAAP net income of $1.6 million, or $0.16 per basic and diluted
share, for the nine months ended September 30, 2008;
Summary of results by business:
Service Fee Business:
For the third quarter of 2009, Service Fee revenue was $13.1
million, compared with $22.9 million for the same period in 2008.
This decline was primarily due to the non-renewal of a U.S.
Government agency client relationship and lower activity among
existing clients as a result of the economy, partially offset by
increased service fees generated from new service contract
relationships. The Service Fee business reported Adjusted EBITDA of
$(0.8) million for the third quarter of 2009, compared to Adjusted
EBITDA of $1.5 million for the same period last year.
For the nine months ended September 30, 2009, Service Fee
revenue was $42.6 million, compared with $65.0 million for the same
period in 2008. This decline was primarily due to the non-renewal
of a U.S. Government agency client relationship and lower activity
among existing clients as a result of the economy, partially offset
by increased service fees generated from new service contract
relationships. The Service Fee business reported Adjusted EBITDA of
$(0.5) million for the nine months ended September 30, 2009,
compared to $4.2 million for the same period last year.
Mike Willoughby, President of PFSweb’s Services division,
commented, “After experiencing a set back with the non-renewal of a
U.S. Government agency client, which officially ended in the second
quarter of 2009, we have been focused on winning new service fee
agreements and implementing a number of disciplined cost reduction
initiatives. The Service Fee revenue and operating results for the
September 2009 quarter reflect an improvement compared to the June
2009 quarter. We are excited about several additional new Service
Fee client programs being rolled out in the fourth quarter of 2009,
as well as additional recent client wins, which are currently
expected to be implemented during the first half of calendar year
2010. As we have previously stated, our new End2End Solution
offering has been very well received by the market, resulting in a
number of new client wins this year and a robust pipeline of
potential new agreements.”
Supplies Distributors Business:
For the third quarter of 2009, Supplies Distributors revenue was
$45.1 million, compared to $55.4 million for the same period last
year. Adjusted EBITDA was $2.2 million for the third quarter of
2009, compared to $1.4 million for the same period last year.
For the nine months ended September 30, 2009, Supplies
Distributors revenue was $135.7 million, compared to $177.8 million
for the same period last year. Adjusted EBITDA was $4.6 million for
the nine month period of 2009, compared to $5.1 million for nine
month period in 2008.
Mr. Willoughby concluded, “While the decline in activity for the
Supplies Distributors business due to the overall global economic
environment is disappointing, this business continues to be
profitable with steady net income each quarter. The September 2009
quarter results benefited from certain inventory cost related
adjustments which we do not anticipate will continue to occur at a
similar level in future quarters.”
eCOST.com Business:
For the third quarter of 2009, eCOST.com revenue was $20.6
million, compared to $23.7 million for the same period in 2008.
While revenue from our business-to-business (B2B) segment
experienced moderate growth over the prior year, this growth was
more than offset by a decline in our business-to-consumer (B2C)
segment. Primarily as a result of cost reductions, Adjusted EBITDA
for eCOST.com in the quarter improved to $(0.2) million, as
compared to $(0.5) million for the same period last year.
For the nine months ended September 2009, eCOST.com revenue was
$61.8 million, compared to $74.7 million for the same period in
2008. Revenue from both our B2B and BTC segments declined as
compared to the prior year. Once again, primarily as a result of
cost reductions, Adjusted EBITDA for eCOST.com in the nine month
period ended September 30, 2009 improved to $(0.9) million, as
compared to $(1.7) million for the same period last year.
“The improvements we have made to the eCOST.com business have
allowed us to minimize its net loss even on lower revenue levels we
have experienced during the difficult economic environment over the
past 9 months. We believe that the streamlined infrastructure we
have implemented and the effective promotional and marketing
programs we have launched will enable us to benefit from stronger
results as the economy recovers. This past week eCOST.com launched
two new high profile marketing tools, Secret Sale and Make an
Offer, that we believe will provide the business with another set
of tools to efficiently acquire new customers and generate
incremental revenue opportunities. In fact, our beta test of the
Secret Sale program increased the number of unique visitors to
eCOST.com’s site by more than 75%,” stated Mr. Layton.
“In addition to expanding the scale of our overall business and
diversifying our revenue base, eCOST.com has offered us the ability
to test new web-commerce technologies that we can utilize in our
Services Fee business and offer to our clients. This has been an
extremely effective way to improve our technology and eCommerce
platforms for existing clients and adds to our value proposition
and appeal as we target new Service Fee business clients,”
concluded Mr. Layton.
Conference Call Information
Management will host a conference call at 10:00 am Central Time
(11:00 am Eastern Time) on Friday, November 13, 2009, to discuss
the latest corporate developments and results. To listen to the
call, please dial (888) 562-3356 and enter the pin number
(40783637) 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. 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 13, 2009 at (800) 642-1687, pin number (40783637).
The replay also will be available at the Company’s website for a
limited time.
Non-GAAP Financial Measures
This news release contains the non-GAAP measures free cash flow,
non-GAAP net income (loss), Earnings Before Interest, Income Taxes,
Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA.
Free cash flow is defined as net cash provided by operating
activities less capital expenditures.
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, amortization of
identifiable intangible assets and impairment of goodwill and
identifiable intangible assets.
EBITDA represents earnings (or losses) before interest, income
taxes, depreciation, and amortization. Adjusted EBITDA further
eliminates the effect of stock-based compensation and impairment of
goodwill and identifiable intangible assets.
Free cash flow, non-GAAP net income (loss), EBITDA and Adjusted
EBITDA are used by management, analysts, investors and other
interested parties in evaluating our operating performance compared
to that of other companies in our industry. Free cash flow is used
as a supplemental financial measure in our evaluation of liquidity
and financial strength. The calculation of non-GAAP net income
(loss) eliminates the effect of stock-based compensation,
amortization of intangible assets and impairment of goodwill and
intangible assets and EBITDA and Adjusted EBITDA further eliminates
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.
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. These non-GAAP measures included
in this press release have been reconciled to the GAAP results in
the attached tables.
About PFSweb, Inc.
PFSweb develops and deploys comprehensive end-to-end eCommerce
solutions for Fortune 1000, Global 2000 and brand name companies,
including interactive marketing services, global fulfilment and
logistics and high-touch customer care.. The company serves a
multitude of industries and company types, including such clients
as LEGO, Riverbed, InfoPrint Solutions Company (a joint venture
company owned by Ricoh and International Business Machines), Hawker
Beechcraft Corp., Rene Furterer USA, Roots Canada Ltd. and
Xerox.
Through its wholly owned eCOST.com subsidiary, PFSweb also
serves as a leading multi-category online discount retailer of
high-quality new, "close-out" and manufacturer recertified
brand-name merchandise for consumers and small to medium size
business buyers. The eCOST.com brand markets more than 300,000
different products from leading manufacturers such as Sony,
Hewlett-Packard, Denon, JVC, Canon, Nikon, Panasonic, Toshiba,
Microsoft, Dyson, Kitchen Aid, Braun, Black & Decker,
Cuisinart, Coleman, and Citizen primarily over the Internet and
through direct marketing.
To find out more about PFSweb, Inc. (NASDAQ: PFSW), visit the
company's websites at http://www.pfsweb.com and
http://www.ecost.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, 2008 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 and the Risk Factors described
therein. These factors include: our ability to retain and expand
relationships with existing clients and attract and implement new
clients; our reliance on the fees generated by the transaction
volume or product sales of our clients; our reliance on our
clients' projections or transaction volume or product sales; our
dependence upon our agreements with IBM and Infoprint Solutions;
our dependence upon our agreements with our major clients; our
client mix, their business volumes and the seasonality of their
business; our ability to finalize pending contracts; the impact of
strategic alliances and acquisitions; trends in the e-commerce,
outsourcing, government regulation both foreign and domestic and
the market for our services; whether we can continue and manage
growth; increased competition; our ability to generate more revenue
and achieve sustainable profitability; effects of changes in profit
margins; the customer and supplier concentration of our business;
the reliance on third-party subcontracted services; the unknown
effects of possible system failures and rapid changes in
technology; foreign currency risks and other risks of operating in
foreign countries; potential litigation; potential delisting; our
dependency on key personnel; the impact of new accounting standards
and changes in existing accounting rules or the interpretations of
those rules; our ability to raise additional capital or obtain
additional financing; our ability and the ability of our
subsidiaries to borrow under current financing arrangements and
maintain compliance with debt covenants; relationship with and our
guarantees of certain of the liabilities and indebtedness of our
subsidiaries; taxation on the sale of our products; eCOST's ability
to maintain existing and build new relationships with manufacturers
and vendors and the success of its advertising and marketing
efforts; eCOST's ability to increase its sales revenue and sales
margin and improve operating efficiencies and eCOST’s ability to
generate a profit and cash flows sufficient to cover the values of
its intangible assets. 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.
(TABLES FOLLOW)
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, 2009
2008 2009 2008 REVENUES: Product revenue, net $ 65,713 $ 79,157 $
197,522 $ 252,496 Service fee revenue 13,118 22,900 42,604 64,966
Pass-thru revenue 6,776 7,852 16,748
21,600 Total revenues 85,607
109,909 256,874 339,062 COSTS OF
REVENUES: Cost of product revenue 59,611 73,128 180,746 233,475
Cost of service fee revenue 9,674 15,588 30,406 44,537 Cost of
pass-thru revenue 6,776 7,852 16,748
21,600 Total costs of revenues 76,061
96,568 227,900 299,612 Gross profit
9,546 13,341 28,974
39,450 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 9,972 12,454
31,283 36,397 AMORTIZATION OF IDENTIFIABLE INTANGIBLES 26
202 79 605 Total operating
expenses 9,998 12,656 31,362
37,002 Income (loss) from operations (452 ) 685 (2,388 )
2,448 INTEREST EXPENSE, NET 288 426 967
1,123 Income (loss) before income taxes (740 ) 259
(3,355 ) 1,325 INCOME TAX PROVISION (BENEFIT) 106
216 268 806 NET INCOME (LOSS) $ (846 )
$ 43 $ (3,623 ) $ 519 NON-GAAP NET INCOME (LOSS) $ (723 ) $ 354 $
(3,235 ) $ 1,562 NET INCOME (LOSS) PER SHARE: Basic $ (0.09
) $ 0.00 $ (0.36 ) $ 0.05 Diluted $ (0.09 ) $ 0.00 $ (0.36 ) $ 0.05
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: Basic
9,931 9,913 9,927 9,902 Diluted
9,931 9,972 9,927 9,991
EBITDA $ 1,088 $ 2,361 $ 2,803 $ 7,267
ADJUSTED EBITDA $ 1,185 $ 2,470 $ 3,112 $ 7,705
(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, 2008.
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, 2009 2008 2009
2008 NET INCOME (LOSS) $ (846 ) $ 43 $ (3,623 ) $ 519 Income tax
expense (benefit) 106 216 268 806 Interest expense 288 426 967
1,123 Depreciation and amortization 1,540
1,676 5,191 4,819 EBITDA $ 1,088 $ 2,361 $
2,803 $ 7,267 Stock-based compensation 97 109
309 438 ADJUSTED EBITDA $ 1,185 $ 2,470
$ 3,112 $ 7,705 Three Months Ended Nine Months
Ended September 30, September 30, 2009 2008
2009 2008 NET INCOME (LOSS) $ (846 ) $
43 $ (3,623 ) $ 519 Stock-based compensation 97 109 309 438
Amortization of identifiable intangible assets 26
202 79 605 NON-GAAP NET INCOME (LOSS) $
(723 ) $ 354 $ (3,235 ) $ 1,562 NET INCOME (LOSS) PER SHARE:
Basic $ (0.09 ) $ 0.00 $ (0.36 ) $ 0.05 Diluted $ (0.09 ) $ 0.00 $
(0.36 ) $ 0.05 NON-GAAP NET INCOME (LOSS) Per Share: Basic $
(0.07 ) $ 0.04 $ (0.33 ) $ 0.16 Diluted $ (0.07 ) $ 0.04 $ (0.33 )
$ 0.16
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets (In Thousands,
Except Share Data) September 30, December 31,
2009 2008
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 15,824 $ 16,050
Restricted cash 2,021 2,008 Accounts receivable, net of allowance
for doubtful accounts of $629 and $980 at September 30, 2009 and
December 31, 2008, respectively 34,790 44,546 Inventories, net of
reserves of $2,016 and $2,124 at September 30, 2009 and December
31, 2008, respectively 36,461 47,186 Other receivables 14,076
13,072 Prepaid expenses and other current assets 4,532
3,802 Total current assets 107,704
126,664 PROPERTY AND EQUIPMENT, net
10,988 12,106 IDENTIFIABLE INTANGIBLES 843 961 GOODWILL 3,602 3,602
OTHER ASSETS 1,524 1,188 Total assets
124,661 144,521
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES: Current portion of long-term debt and capital
lease obligations $ 20,191 $ 22,251 Trade accounts payable 50,481
61,988 Accrued expenses 20,123 21,054
Total current liabilities 90,795 105,293
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less
current portion 1,910 4,951 OTHER LIABILITIES 1,621
1,192 Total liabilities 94,326
111,436 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; 9,949,551 and
9,935,095 shares issued at September 30, 2009 and December 31,
2008, respectively; and 9,931,190 and 9,916,734 outstanding as of
September 30, 2009 and December 31, 2008, respectively
10 10 Additional paid-in capital 93,050 92,728 Accumulated
deficit (65,016 ) (61,393 ) Accumulated other comprehensive income
2,376 1,825 Treasury stock at cost, 18,361 shares (85 )
(85 ) Total shareholders' equity 30,335
33,085 Total liabilities and shareholders' equity $ 124,661
$ 144,521
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations For the Three
Months Ended September 30, 2009 (In Thousands)
Supplies PFSweb Distributors eCOST Eliminations
Consolidated REVENUES: Product revenue, net $ - $ 45,120 $ 20,593 $
- $ 65,713 Service fee revenue 13,118 - - - 13,118 Service fee
revenue - affiliate 1,598 - - (1,598 ) - Pass-thru revenue
6,778 - - (2 ) 6,776
Total revenues 21,494 45,120
20,593 (1,600 ) 85,607 COSTS OF
REVENUES: Cost of product revenue - 40,881 18,730 - 59,611 Cost of
service fee revenue 10,295 - - (621 ) 9,674 Cost of pass-thru
revenue 6,778 - - (2 )
6,776 Total costs of revenues 17,073
40,881 18,730 (623 ) 76,061
Gross profit 4,421 4,239 1,863
(977 ) 9,546 SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 6,797 2,077 2,076 (977 ) 9,973 AMORTIZATION
OF IDENTIFIABLE INTANGIBLES - - 26
- 26 Total operating expenses
6,797 2,077 2,102 (977 )
9,999 Income (loss) from operations (2,376 ) 2,162
(239 ) - (453 ) INTEREST EXPENSE (INCOME), NET (54 )
333 9 - 288 Income (loss)
before income taxes (2,322 ) 1,829 (248 ) - (741 ) INCOME TAX
PROVISION (BENEFIT) (508 ) 604 9
- 105 NET INCOME (LOSS) $ (1,814 ) $ 1,225 $
(257 ) $ - $ (846 ) NON-GAAP NET INCOME (LOSS) $ (1,717 ) $
1,225 $ (231 ) $ - $ (723 ) EBITDA $ (931 ) $ 2,170 $
(152 ) $ - $ 1,087 ADJUSTED EBITDA $ (834 ) $ 2,170 $
(152 ) $ - $ 1,184 A reconciliation of
NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows: NET
INCOME (LOSS) $ (1,814 ) $ 1,225 $ (257 ) $ - $ (846 ) Income tax
expense (benefit) (508 ) 604 9 - 105 Interest expense (income) (54
) 333 9 - 288 Depreciation and amortization 1,445
8 87 - 1,540
EBITDA $ (931 ) $ 2,170 $ (152 ) $ - $ 1,087 Stock-based
compensation 97 - - -
97 ADJUSTED EBITDA $ (834 ) $ 2,170 $ (152 ) $
- $ 1,184 A reconciliation of NET INCOME
(LOSS) to NON-GAAP NET INCOME (LOSS) follows: NET INCOME
(LOSS) $ (1,814 ) $ 1,225 $ (257 ) $ - $ (846 ) Stock-based
compensation 97 - - - 97 Amortization of intangible assets -
- 26 - 26
NON-GAAP NET INCOME (LOSS) $ (1,717 ) $ 1,225 $ (231 ) $ - $
(723 )
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations For the Nine
Months Ended September 30, 2009 (In Thousands)
Supplies PFSweb Distributors eCOST Eliminations Consolidated
REVENUES: Product revenue, net $ - $ 135,720 $ 61,802 $ - $ 197,522
Service fee revenue 42,604 - - - 42,604 Service fee revenue -
affiliate 5,393 - - (5,393 ) - Pass-thru revenue 16,815
- - (67 ) 16,748
Total revenues 64,812 135,720 61,802
(5,460 ) 256,874 COSTS OF
REVENUES: Cost of product revenue - 124,816 55,930 - 180,746 Cost
of service fee revenue 32,310 - - (1,904 ) 30,406 Cost of pass-thru
revenue 16,815 - - (67 )
16,748 Total costs of revenues 49,125
124,816 55,930 (1,971 ) 227,900
Gross profit 15,687 10,904 5,872
(3,489 ) 28,974 SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 21,447 6,345 6,980 (3,489 ) 31,283
AMORTIZATION OF IDENTIFIABLE INTANGIBLES - -
79 - 79 Total operating
expenses 21,447 6,345 7,059
(3,489 ) 31,362 Income (loss) from operations
(5,760 ) 4,559 (1,187 ) - (2,388 ) INTEREST EXPENSE (INCOME), NET
(135 ) 1,087 15 -
967 Income (loss) before income taxes (5,625 ) 3,472 (1,202
) - (3,355 ) INCOME TAX PROVISION (BENEFIT) (623 )
873 18 - 268 NET INCOME
(LOSS) $ (5,002 ) $ 2,599 $ (1,220 ) $ - $ (3,623 ) NON-GAAP
NET INCOME (LOSS) $ (4,693 ) $ 2,599 $ (1,141 ) $ - $ (3,235
) EBITDA $ (850 ) $ 4,585 $ (932 ) $ - $ 2,803
ADJUSTED EBITDA $ (541 ) $ 4,585 $ (932 ) $ - $ 3,112
A reconciliation of NET INCOME (LOSS) to EBITDA and
ADJUSTED EBITDA follows: NET INCOME (LOSS) $ (5,002 ) $
2,599 $ (1,220 ) $ - $ (3,623 ) Income tax expense (benefit) (623 )
873 18 - 268 Interest expense (income) (135 ) 1,087 15 - 967
Depreciation and amortization 4,910 26
255 - 5,191 EBITDA $ (850 ) $
4,585 $ (932 ) $ - $ 2,803 Stock-based compensation 309
- - - 309
ADJUSTED EBITDA $ (541 ) $ 4,585 $ (932 ) $ - $ 3,112
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME
(LOSS) follows: NET INCOME (LOSS) $ (5,002 ) $ 2,599 $
(1,220 ) $ - $ (3,623 ) Stock-based compensation 309 - - - 309
Amortization of intangible assets - -
79 - 79 NON-GAAP NET INCOME
(LOSS) $ (4,693 ) $ 2,599 $ (1,141 ) $ - $ (3,235 )
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets as of September
30, 2009 (In Thousands) Supplies
PFSweb Distributors eCOST Eliminations Consolidated
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 11,037 $ 1,878 $ 2,909
$ - $ 15,824 Restricted cash 1,550 249 222 - 2,021 Accounts
receivable, net 14,241 18,990 1,670 (110 ) 34,791 Inventories, net
- 32,439 4,022 - 36,461 Other receivables - 14,076 - - 14,076
Prepaid expenses and other current assets 2,823
1,550 158 - 4,531
Total current assets 29,651 69,182
8,981 (110 ) 107,704 PROPERTY
AND EQUIPMENT, net 10,510 63 415 - 10,988 NOTES RECEIVABLE FROM
AFFILIATES 20,845 - - (20,845 ) - INVESTMENT IN AFFILIATES (381 ) -
- 381 - IDENTIFIABLE INTANGIBLES 395 - 448 - 843 GOODWILL - - 3,602
- 3,602 OTHER ASSETS 1,385 - 139
- 1,524 Total assets 62,405
69,245 13,585 (20,574 )
124,661
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES: Current portion of long-term debt and capital
lease obligations $ 8,017 $ 12,174 $ - $ - $ 20,191 Trade accounts
payable 6,869 36,681 7,040 (110 ) 50,480 Accrued expenses
12,551 5,159 2,414 -
20,124 Total current liabilities 27,437
54,014 9,454 (110 ) 90,795
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less
current portion 1,910 - - - 1,910 NOTES PAYABLE TO AFFILIATES -
5,005 15,840 (20,845 ) - OTHER LIABILITIES 1,563
- 58 - 1,621 Total
liabilities 30,910 59,019 25,352
(20,955 ) 94,326 COMMITMENTS AND
CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock 10 - 19 (19
) 10 Capital contributions 1,000 (1,000 ) - Additional paid-in
capital 93,050 - 28,059 (28,059 ) 93,050 Retained earnings
(accumulated deficit) (63,844 ) 6,458 (39,838 ) 32,208 (65,016 )
Accumulated other comprehensive income 2,364 2,768 (7 ) (2,749 )
2,376 Treasury stock (85 ) - - -
(85 ) Total shareholders' equity 31,495
10,226 (11,767 ) 381 30,335
Total liabilities and shareholders' equity $ 62,405 $
69,245 $ 13,585 $ (20,574 ) $ 124,661
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations For the Three
Months Ended September 30, 2008 (In Thousands)
Supplies PFSweb Distributors eCOST Eliminations
Consolidated REVENUES: Product revenue, net $ - $ 55,448 $ 23,709 $
- $ 79,157 Service fee revenue 22,900 - - - 22,900 Service fee
revenue - affiliate 1,886 - - (1,886 ) - Pass-thru revenue
7,859 - - (7 ) 7,852
Total revenues 32,645 55,448 23,709
(1,893 ) 109,909 COSTS OF REVENUES:
Cost of product revenue - 51,604 21,524 - 73,128 Cost of service
fee revenue 16,265 - - (677 ) 15,588 Cost of pass-thru revenue
7,859 - - (7 )
7,852 Total costs of revenues 24,124 51,604
21,524 (684 ) 96,568 Gross profit
8,521 3,844 2,185 (1,209
) 13,341 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 8,515
2,417 2,731 (1,209 ) 12,454 AMORTIZATION OF IDENTIFIABLE
INTANGIBLES - - 202 -
202 Total operating expenses 8,515
2,417 2,933 (1,209 ) 12,656
Income (loss) from operations 6 1,427 (748 ) - 685 INTEREST EXPENSE
(INCOME), NET (50 ) 466 10 -
426 Income (loss) before income taxes 56 961 (758 ) -
259 INCOME TAX PROVISION (BENEFIT) (213 ) 429
- - 216 NET INCOME (LOSS) $ 269
$ 532 $ (758 ) $ - $ 43 NON-GAAP NET INCOME (LOSS) $ 378
$ 532 $ (556 ) $ - $ 354 EBITDA $ 1,432
$ 1,429 $ (500 ) $ - $ 2,361 ADJUSTED EBITDA $ 1,541
$ 1,429 $ (500 ) $ - $ 2,470 A
reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows: NET INCOME (LOSS) $ 269 $ 532 $ (758 ) $ - $ 43
Income tax expense (benefit) (213 ) 429 - - 216 Interest expense
(income) (50 ) 466 10 - 426 Depreciation and amortization
1,426 2 248 -
1,676 EBITDA $ 1,432 $ 1,429 $ (500 ) $ - $ 2,361 Stock-based
compensation 109 - - -
109 ADJUSTED EBITDA $ 1,541 $ 1,429 $ (500 ) $
- $ 2,470 A reconciliation of NET INCOME(LOSS) to
NON-GAAP NET INCOME (LOSS) follows: NET INCOME (LOSS) $ 269
$ 532 $ (758 ) $ - $ 43 Stock-based compensation 109 - - - 109
Amortization of intangible assets - -
202 - 202 NON-GAAP NET INCOME (LOSS) $
378 $ 532 $ (556 ) $ - $ 354
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations For the Nine
Months Ended September 30, 2008 (In Thousands)
Supplies PFSweb Distributors eCOST Eliminations
Consolidated REVENUES: Product revenue, net $ - $ 177,795 $ 74,701
$ - $ 252,496 Service fee revenue 64,966 - - - 64,966 Service fee
revenue - affiliate 6,106 - - (6,106 ) - Pass-thru revenue
21,565 - - 35
21,600 Total revenues 92,637 177,795
74,701 (6,071 ) 339,062 COSTS OF
REVENUES: Cost of product revenue - 165,103 68,372 - 233,475 Cost
of service fee revenue 46,587 - - (2,050 ) 44,537 Cost of pass-thru
revenue 21,565 - - 35
21,600 Total costs of revenues 68,152
165,103 68,372 (2,015 ) 299,612
Gross profit 24,485 12,692 6,329
(4,056 ) 39,450 SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 24,774 7,556 8,123 (4,056 ) 36,397 AMORTIZATION OF
IDENTIFIABLE INTANGIBLES - - 605
- 605 Total operating expenses 24,774
7,556 8,728 (4,056 )
37,002 Income (loss) from operations (289 ) 5,136 (2,399 ) - 2,448
INTEREST EXPENSE (INCOME), NET (110 ) 1,216 17
- 1,123 Income (loss) before income
taxes (179 ) 3,920 (2,416 ) - 1,325 INCOME TAX PROVISION (BENEFIT)
(658 ) 1,464 - -
806 NET INCOME (LOSS) $ 479 $ 2,456 $ (2,416 ) $ - $
519 NON-GAAP NET INCOME (LOSS) $ 917 $ 2,456 $ (1,811 ) $ -
$ 1,562 EBITDA $ 3,785 $ 5,148 $ (1,666
) $ - $ 7,267 ADJUSTED EBITDA $ 4,223 $ 5,148 $
(1,666 ) $ - $ 7,705 A reconciliation of NET
INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows: NET
INCOME (LOSS) $ 479 $ 2,456 $ (2,416 ) $ - $ 519 Income tax expense
(benefit) (658 ) 1,464 - - 806 Interest expense (income) (110 )
1,216 17 - 1,123 Depreciation and amortization 4,074
12 733 - 4,819 EBITDA $
3,785 $ 5,148 $ (1,666 ) $ - $ 7,267 Stock-based compensation
438 - - -
438 ADJUSTED EBITDA $ 4,223 $ 5,148 $ (1,666 ) $ - $
7,705 A reconciliation of NET INCOME(LOSS) to NON-GAAP NET
INCOME (LOSS) follows: NET INCOME (LOSS) $ 479 $ 2,456 $
(2,416 ) $ - $ 519 Stock-based compensation 438 - - - 438
Amortization of intangible assets - -
605 - 605 NON-GAAP NET INCOME (LOSS) $
917 $ 2,456 $ (1,811 ) $ - $ 1,562
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets as of December 31,
2008 (In Thousands) Supplies
PFSweb Distributors eCOST Eliminations Consolidated
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 11,570 $ 3,870 $ 610 $
- $ 16,050 Restricted cash 1,550 242 216 - 2,008 Accounts
receivable, net 21,676 22,103 2,065 (1,298 ) 44,546 Inventories,
net - 41,382 5,804 - 47,186 Other receivables - 13,072 - - 13,072
Prepaid expenses and other current assets 2,222
1,526 54 - 3,802
Total current assets 37,018 82,195
8,749 (1,298 ) 126,664 PROPERTY
AND EQUIPMENT, net 11,544 85 477 - 12,106 NOTES RECEIVABLE FROM
AFFILIATES 20,845 - - (20,845 ) - INVESTMENT IN AFFILIATES 37,541 -
- (37,541 ) - IDENTIFIABLE INTANGIBLES 434 - 527 - 961 GOODWILL - -
3,602 - 3,602 OTHER ASSETS 1,054 - 134
- 1,188 Total assets
108,436 82,280 13,489 (59,684 )
144,521
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES: Current portion of long-term debt and capital
lease obligations $ 9,045 $ 13,206 $ - $ - $ 22,251 Trade accounts
payable 9,063 48,640 5,583 (1,298 ) 61,988 Accrued expenses
12,665 5,434 2,955 -
21,054 Total current liabilities 30,773
67,280 8,538 (1,298 ) 105,293
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less
current portion 4,951 - - - 4,951 NOTES PAYABLE TO AFFILIATES -
5,505 15,340 (20,845 ) - OTHER LIABILITIES 1,029
- 163 - 1,192
Total liabilities 36,753 72,785 24,041
(22,143 ) 111,436 COMMITMENTS
AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock 10 - 19
(19 ) 10 Capital contributions 1,000 (1,000 ) - Additional paid-in
capital 92,728 - 28,059 (28,059 ) 92,728 Retained earnings
(accumulated deficit) (22,825 ) 6,002 (38,618 ) (5,952 ) (61,393 )
Accumulated other comprehensive income 1,855 2,493 (12 ) (2,511 )
1,825 Treasury stock (85 ) - - -
(85 ) Total shareholders' equity 71,683
9,495 (10,552 ) (37,541 ) 33,085
Total liabilities and shareholders' equity $ 108,436 $
82,280 $ 13,489 $ (59,684 ) $ 144,521
eCOST.com, Inc.
Selected Operating Data
Three Months Ended September 30, 2009 2008
Total Customers (1) 2,006,689 1,839,824 Active Customers (2)
224,297 178,610 New Customers (3) 37,079 34,748
Number of Orders (4) 74,770 71,575 Average Order Value (5) $
271 $ 323 Advertising Expense (6) $ 216,475 $ 273,935
Cost to Acquire a New Customer (7) $ 5.84 $ 5.62
(1) Total customers have been
calculated as the cumulative number of customers for which orders
have been taken from eCOST.com's inception to the end of the
reported period.
(2) Active customers consist of
the approximate number of customers who placed orders during the 12
months prior to the end of the reported period.
(3) New Customers represent the
number of persons that established a new account and placed an
order during the reported period.
(4) Number of orders represents
the total number of orders shipped during the reported period (not
reflecting returns).
(5) Average order value has been
calculated as gross sales divided by the total number of orders
during the period presented. The impact of returns is not reflected
in average order value.
(6) Advertising expense includes
the total dollars spent on advertising during the reported period,
including internet, direct mail, print and e-mail advertising, as
well as customer list enhancement services.
(7) Catalog expense of $0 and
$78,814 was not included in the 2009 and 2008 calculation,
respectively, as it is used for retention and not acquisition.
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