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 fourth quarter and year ended December
31, 2009.
Summary of consolidated results for the quarter ended
December 31, 2009:
PFSweb’s fourth quarter 2009 results were favorably impacted by
new service fee client activities, increased seasonal volumes for
certain clients and continued cost management across all business
segments. However, revenue and Adjusted EBITDA results reflect a
decrease as compared to the prior year 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
previously largest Service Fee business client earlier in 2009.
- Total revenue was $95.6 million
compared to $112.8 million for the fourth quarter of 2008;
- Adjusted EBITDA (as defined) was
$1.1 million versus $2.4 million for the fourth quarter of
2008;
- Net loss was $(0.9) million, or
($0.10) per basic and diluted share, compared to net loss of
$(16.2) million, or $(1.63) per basic and diluted share, for the
fourth quarter of 2008. The 2008 fourth quarter net loss results
include a $16.3 million charge for goodwill and intangible asset
impairment;
- Non-GAAP net loss (as defined)
was $(0.8) million, or ($0.08) per basic and diluted share,
compared to non-GAAP net income of $0.4 million or $0.04 per basic
and diluted share, for the fourth quarter of 2008;
- Total cash, cash equivalents and
restricted cash equaled $16.9 million as of December 31, 2009
compared to $18.1 million as of December 31, 2008.
Summary of consolidated results for the year ended December
31, 2009:
- Total revenue was $352.5
million, compared to $451.8 million for the year ended December 31,
2008;
- Adjusted EBITDA (as defined) was
$4.2 million versus $10.1 million for the year ended December 31,
2008;
- Net loss was $(4.6) million, or
$(0.46) per basic and diluted share, compared to net loss of
$(15.7) million, or $(1.58) per basic and diluted share, for the
year ended December 31, 2008;
- Non-GAAP net loss (as defined)
was $(4.1) million, or $(0.41) per basic and diluted share,
compared to non-GAAP net income of $1.9 million, or $0.20 per basic
and diluted share, for the year ended December 31, 2008;
- Cash flow from operating
activities was $8.1 million compared to $9.5 million for the year
ended December 31, 2008; and
- Free cash flow (as defined) was
$3.7 million, consistent with $3.7 million for the year ended
December 31, 2008.
“Coming off a strong year of new business activity, we believe
PFSweb is firmly established as an eCommerce services leader in a
number of exciting product segments. This includes several rapidly
evolving market segments, including the Fashion Apparel and
Accessories, Beauty and Fragrance and Consumer Packaged Goods (CPG)
market segments, where we continue to see substantial new business
activity,” stated Mark C. Layton, Chief Executive Officer of
PFSweb. “Our success in generating new business activities,
combined with a solid financial performance highlight, what I
believe to be outstanding overall 2009 results considering the
difficult economic environment and the non-renewal of a large U.S.
Government agency client. Our ability to generate positive free
cash flow of $3.7 million in 2009, speaks directly to the
flexibility of our business model to quickly adjust spending levels
to meet lower demand, while at the same time increasing new
business activity.
“We believe the momentum we are seeing in new business will
provide the seeds for improving growth trends in the future. We are
also encouraged by the continuing improvement in our eCOST.com
business where the fourth quarter of 2009 was the first positive
net income quarterly result for this division since its acquisition
in 2006.
“I am also pleased to announce that we have completed renewals
of our financing facilities with IBM Global Finance, Comerica and
Fortis through March 2011. Along with our other credit facilities,
we believe we have the financing in place to support our current
business needs,” Mr. Layton continued.
Summary of results by business segment:
Service Fee Business:
For the fourth quarter of 2009, Service Fee revenue was $16.0
million, compared with $21.7 million for the same period in 2008.
The Service Fee business reported Adjusted EBITDA of $0.1 million
for the fourth quarter of 2009, compared to Adjusted EBITDA of $1.9
million for the same period last year.
For the year ended December 31, 2009, Service Fee revenue was
$58.6 million, compared with $85.4 million for the same period in
2008. Adjusted EBITDA for the Service Fee business was a loss of
$(0.4) million for the year ended December 31, 2009, compared to
$6.1 million for the same period last year. The quarter and year to
date declines in revenue and Adjusted EBITDA compared to the same
periods of the prior year were primarily due to the non-renewal of
a U.S. Government agency client relationship partially offset by
increased service fees generated from new service contract
relationships.
Mike Willoughby, President of PFSweb’s Services division,
commented, “The Service Fee revenue and operating results for the
December 31, 2009 quarter reflect an improvement compared to the
September 30, 2009 quarter. We have signed a number of new,
exciting client agreements over the past several months, including
the previously announced Procter & Gamble agreement. Based on
current client projections, we believe these new client agreements
should have a positive financial impact beginning in late 2010 and
into 2011. As we have previously stated, our End2End eCommerce
solution offering has been well received by the market,
particularly in the Fashion Apparel and Accessories, Beauty and
Fragrance and CPG market segments, resulting in a number of new
client wins this year and a robust pipeline of potential new
agreements.
“In February of 2010, we launched the beta site for the eStore
with Procter & Gamble. The site features a wide range of
P&G branded products and will serve as a learning laboratory
for P&G brands to test and innovate concepts designed to grow
the size of the web commerce market for Consumer Packaged Goods.
The site is currently slated to go live in the U.S. later this
spring.
“To support our new business efforts, we recently added an
eCOST-based Retail Services capability to our End2End offering
giving us the ability to function as the seller-of-record for our
clients. This function allows us to be more competitive when
selling our services where third party inventory ownership and
retail sales management are critical client considerations. We see
a strong and accelerating trend among major brand retailers and
manufactures seeking a closer relationship with consumers through a
direct web commerce presence. We believe the flexibility, economics
and speed-to-market advantages of our End2End offering has the
potential to firmly establish us into a dominant competitive
position, particularly among companies who own multiple consumer
brands,” continued Mr. Willoughby.
Supplies Distributors Business:
For the fourth quarter of 2009, Supplies Distributors revenue
was $47.3 million, compared to $52.9 million for the same period
last year. Adjusted EBITDA was $0.8 million for the fourth quarter
of 2009, compared to $0.7 million for the same period last
year.
For the year ended December 31, 2009, Supplies Distributors
revenue was $183.0 million, compared to $230.7 million for the same
period last year. Adjusted EBITDA was $5.4 million for the year-end
period of 2009, compared to $5.9 million for the year-end 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, it continues to report solid
bottom-line results. In addition, the Supplies Distributors
business offers us increased scale, which benefits both the Service
Fee business and eCOST.com.”
eCOST.com Business:
For the fourth quarter of 2009, eCOST.com revenue was $22.8
million, compared to $25.1 million for the same period in 2008.
Adjusted EBITDA for eCOST.com in the quarter improved to $0.2
million, as compared to a loss of $(0.2) million for the same
period last year. Net income for the 4th quarter of 2009 was
$34,000 and represents the first quarter of positive net income
performance since its acquisition in 2006.
For the year ended December 2009, eCOST.com revenue was $84.6
million, compared to $99.8 million for the same period in 2008.
Adjusted EBITDA for eCOST.com in the year ended December 31, 2009
improved to a loss of $(0.8) million, as compared to a loss of
$(1.8) million for the same period last year.
“I am pleased by the fourth quarter results of our eCOST.com
business and by the improving trends that eCOST.com demonstrated
throughout 2009. While revenues were down in 2009, primarily due to
the economy, we continue to drive forward with initiatives
orientated towards improving gross margins in the consumer segment
of eCOST.com. These actions, along with further streamlining of the
eCOST.com operations that resulted in lower cost levels, have
allowed us to improve the overall financial results of the business
on lower overall revenues. We believe this bodes well for the
future for eCOST.com in that we are well poised to add new growth
in the years to come on top of this streamlined business process
that has great leverage capabilities, resulting in an ability to
grow with minimal incremental SG&A requirements,” stated Mr.
Layton.
“In late 2009 we established a new division within eCOST.com
called eStore Retail Services that formalizes the linkage between
our PFSweb services segment and eCOST.com. This division allows
PFSweb Services to offer certain interactive marketing, product
procurement, rich content merchandising, customer acquisition
methodologies and other web retail services that eCOST.com has
developed and will continue to pioneer, innovate and mature,”
concluded Mr. Layton.
Conference Call Information
Management will host a conference call at 10:00 am Central Time
(11:00 am Eastern Time) on Thursday, March 25, 2010, to discuss the
latest corporate developments and results. To listen to the call,
please dial (888) 562-3356 and enter the pin number (61525599) 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 April 25, 2010 at (800) 642-1687, pin number (61525599).
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 fulfillment and
logistics and high-touch customer care. The company serves a
multitude of industries and company types, including such clients
as P&G, LEGO, AAFES, Riverbed, InfoPrint Solutions Company (a
joint venture company owned by Ricoh and International Business
Machines), Hawker Beechcraft Corp., 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 approximately 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; 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.
PFSweb, Inc. and Subsidiaries Unaudited
Condensed Consolidated Statements of Operations (A) (In Thousands,
Except Per Share Data) Three Months Ended
Twelve Months Ended December 31, December 31, 2009
2008 2009 2008 REVENUES:
Product revenue, net $ 70,093 $ 78,036 $ 267,615 $ 330,532 Service
fee revenue 16,015 21,691 58,619 85,406 Pass-thru revenue
9,517 13,054 26,265
35,905 Total revenues 95,625 112,781
352,499 451,843 COSTS OF
REVENUES: Cost of product revenue 64,526 71,615 245,272 305,090
Cost of service fee revenue 11,492 14,723 41,898 58,009 Cost of
pass-thru revenue 9,517 13,054
26,265 35,905 Total costs of revenues
85,535 99,392 313,435
399,004 Gross profit 10,090 13,389
39,064 52,839 SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES 10,713 12,675 41,995 49,073
AMORTIZATION OF IDENTIFIABLE INTANGIBLES 26 202 105 806 GOODWILL
AND INTANGIBLE ASSET IMPAIRMENT - 16,250
- 16,250 Total operating
expenses 10,739 29,127 42,100
66,129 Income (loss) from operations (649 )
(15,738 ) (3,036 ) (13,290 ) INTEREST EXPENSE, NET 237
437 1,205 1,560
Income (loss) before income taxes (886 ) (16,175 ) (4,241 ) (14,850
) INCOME TAX PROVISION (BENEFIT) 61 (1 )
329 805 NET INCOME (LOSS) $ (947 ) $
(16,174 ) $ (4,570 ) $ (15,655 ) NON-GAAP NET INCOME (LOSS) $ (823
) $ 387 $ (4,058 ) $ 1,948 NET INCOME (LOSS)
PER SHARE: Basic and Diluted $ (0.10 ) $ (1.63 ) $ (0.46 ) $ (1.58
) WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: Basic and
Diluted 9,934 9,916 9,929
9,905 EBITDA $ 1,012 $ (13,935 ) $
3,816 $ (6,668 ) ADJUSTED EBITDA $ 1,110 $ 2,424
$ 4,223 $ 10,129
(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 Twelve Months Ended
December 31,
December 31,
2009 2008 2009
2008 NET INCOME (LOSS) $ (947 ) $ (16,174 ) $ (4,570 ) $
(15,655 ) Income tax expense (benefit) 61 (1 ) 329 805 Interest
expense 237 437 1,205 1,560 Depreciation and amortization
1,661 1,803 6,852 6,622
EBITDA $ 1,012 $ (13,935 ) $ 3,816 $ (6,668 ) Stock-based
compensation 98 109 407 547 Goodwill and intangible asset
impairment - 16,250 -
16,250 ADJUSTED EBITDA $ 1,110 $ 2,424
$ 4,223 $ 10,129 Three Months Ended
Twelve Months Ended December 31, December 31, 2009
2008 2009 2008 NET
INCOME (LOSS) $ (947 ) $ (16,174 ) $ (4,570 ) $ (15,655 )
Stock-based compensation 98 109 407 547 Amortization of
identifiable intangible assets 26 202 105 806 Goodwill and
intangible asset impairment - 16,250
- 16,250 NON-GAAP NET INCOME (LOSS) $
(823 ) $ 387 $ (4,058 ) $ 1,948 NET INCOME
(LOSS) PER SHARE: Basic and Diluted $ (0.10 ) $ (1.63 ) $ (0.46 ) $
(1.58 ) NON-GAAP NET INCOME (LOSS) Per Share: Basic and
Diluted $ (0.08 ) $ 0.04 $ (0.41 ) $ 0.20
Twelve Months Ended December 31, 2009
2008 GAAP cash flow from operating activities $ 8,126 $
9,451 Capital expenditures (4,440 ) (5,754 ) FREE
CASH FLOW $ 3,686 $ 3,697
PFSweb, Inc. and
Subsidiaries
Unaudited Condensed Consolidated
Balance Sheets
(In Thousands, Except Share Data) December 31,
December 31, 2009 2008
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 14,812 $ 16,050
Restricted cash 2,096 2,008 Accounts receivable, net of allowance
for doubtful accounts of $973 and $980 at December 31, 2009 and
December 31, 2008, respectively 39,861 44,546 Inventories, net of
reserves of $2,016 and $2,124 at December 31, 2009 and December 31,
2008, respectively 37,949 47,186 Other receivables 11,605 13,072
Prepaid expenses and other current assets 4,170
3,802 Total current assets 110,493
126,664 PROPERTY AND EQUIPMENT, net 10,314
12,106 IDENTIFIABLE INTANGIBLES 805 961 GOODWILL 3,602 3,602 OTHER
ASSETS 2,555 1,188 Total assets
127,769 144,521
LIABILITIES AND SHAREHOLDERS
EQUITY
CURRENT LIABILITIES: Current portion of long-term debt and capital
lease obligations $ 19,179 $ 22,251 Trade accounts payable 53,642
61,988 Deferred revenue 5,164 3,640 Accrued expenses 13,180
17,414 Total current liabilities 91,165
105,293 LONG-TERM DEBT AND CAPITAL
LEASE OBLIGATIONS, less current portion 3,348 4,951 OTHER
LIABILITIES 3,903 1,192 Total
liabilities 98,416 111,436
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; 9,952,164 and 9,935,095 shares issued
at December 31, 2009 and December 31, 2008, respectively; and
9,933,803 and 9,916,734 outstanding as of December 31, 2009 and
December 31, 2008, respectively 10 10 Additional paid-in capital
93,152 92,728 Accumulated deficit (65,963 ) (61,393 ) Accumulated
other comprehensive income 2,239 1,825 Treasury stock at cost,
18,361 shares (85 ) (85 ) Total shareholders' equity
29,353 33,085 Total liabilities and
shareholders' equity $ 127,769 $ 144,521
PFSweb, Inc. and Subsidiaries Unaudited
Consolidating Statements of Operations
For the Three Months Ended
December 30, 2009
(In Thousands) Supplies PFSweb
Distributors eCOST Eliminations Consolidated REVENUES: Product
revenue, net $ - $ 47,288 $ 22,805 $ - $ 70,093 Service fee revenue
16,015 - - - 16,015 Service fee revenue - affiliate 1,700 - -
(1,700 ) - Pass-thru revenue 9,520 - -
(3 ) 9,517 Total revenues 27,235
47,288 22,805 (1,703 ) 95,625
COSTS OF REVENUES: Cost of product revenue - 44,048 20,478 -
64,526 Cost of service fee revenue 12,143 - - (651 ) 11,492 Cost of
pass-thru revenue 9,520 - - (3 )
9,517 Total costs of revenues 21,663
44,048 20,478 (654 ) 85,535
Gross profit 5,572 3,240 2,327
(1,049 ) 10,090 SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 7,090 2,434 2,238 (1,049 ) 10,713 AMORTIZATION OF
IDENTIFIABLE INTANGIBLES - - 26
- 26 Total operating expenses 7,090
2,434 2,264 (1,049 ) 10,739
Income (loss) from operations (1,518 ) 806 63 - (649 )
INTEREST EXPENSE (INCOME), NET (68 ) 301 4
- 237 Income (loss) before income taxes
(1,450 ) 505 59 - (886 ) INCOME TAX PROVISION (BENEFIT) (146
) 182 25 - 61 NET INCOME
(LOSS) $ (1,304 ) $ 323 $ 34 $ - $ (947 ) NON-GAAP NET
INCOME (LOSS) $ (1,206 ) $ 323 $ 60 $ - $ (823 )
EBITDA $ 45 $ 815 $ 152 $ - $ 1,012 ADJUSTED
EBITDA $ 143 $ 815 $ 152 $ - $ 1,110
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED
EBITDA follows: NET INCOME (LOSS) $ (1,304 ) $ 323 $ 34 $ -
$ (947 ) Income tax expense (benefit) (146 ) 182 25 - 61 Interest
expense (income) (68 ) 301 4 - 237 Depreciation and amortization
1,563 9 89 - 1,661
EBITDA $ 45 $ 815 $ 152 $ - $ 1,012 Stock-based compensation
98 - - - 98
ADJUSTED EBITDA $ 143 $ 815 $ 152 $ - $ 1,110
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME
(LOSS) follows: NET INCOME (LOSS) $ (1,304 ) $ 323 $ 34 $ -
$ (947 ) Stock-based compensation 98 - - - 98 Amortization of
intangible assets - - 26 -
26 NON-GAAP NET INCOME (LOSS) $ (1,206 ) $ 323
$ 60 $ - $ (823 )
PFSweb, Inc. and
Subsidiaries Unaudited Consolidating Statements of
Operations For the Twelve Months Ended December 31, 2009 (In
Thousands) Supplies PFSweb
Distributors eCOST Eliminations Consolidated REVENUES: Product
revenue, net $ - $ 183,008 $ 84,607 $ - $ 267,615 Service fee
revenue 58,619 - - - 58,619 Service fee revenue - affiliate 7,093 -
- (7,093 ) - Pass-thru revenue 26,335 -
- (70 ) 26,265 Total revenues
92,047 183,008 84,607 (7,163 )
352,499 COSTS OF REVENUES: Cost of product
revenue - 168,864 76,408 - 245,272 Cost of service fee revenue
44,453 - - (2,555 ) 41,898 Cost of pass-thru revenue 26,335
- - (70 ) 26,265
Total costs of revenues 70,788 168,864
76,408 (2,625 ) 313,435 Gross profit
21,259 14,144 8,199
(4,538 ) 39,064 SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 28,536 8,779 9,218 (4,538 ) 41,995 AMORTIZATION OF
IDENTIFIABLE INTANGIBLES - - 105
- 105 Total operating expenses
28,536 8,779 9,323 (4,538 )
42,100 Income (loss) from operations (7,277 ) 5,365
(1,124 ) - (3,036 ) INTEREST EXPENSE (INCOME), NET (202 )
1,388 19 - 1,205
Income (loss) before income taxes (7,075 ) 3,977 (1,143 ) - (4,241
) INCOME TAX PROVISION (BENEFIT) (769 ) 1,055
43 - 329 NET INCOME (LOSS) $
(6,306 ) $ 2,922 $ (1,186 ) $ - $ (4,570 ) NON-GAAP NET
INCOME (LOSS) $ (5,899 ) $ 2,922 $ (1,081 ) $ - $ (4,058 )
EBITDA $ (804 ) $ 5,400 $ (780 ) $ - $ 3,816
ADJUSTED EBITDA $ (397 ) $ 5,400 $ (780 ) $ - $ 4,223
A reconciliation of NET INCOME (LOSS) to EBITDA and
ADJUSTED EBITDA follows: NET INCOME (LOSS) $ (6,306 ) $
2,922 $ (1,186 ) $ - $ (4,570 ) Income tax expense (benefit) (769 )
1,055 43 - 329 Interest expense (income) (202 ) 1,388 19 - 1,205
Depreciation and amortization 6,473 35
344 - 6,852 EBITDA $ (804 ) $
5,400 $ (780 ) $ - $ 3,816 Stock-based compensation 407
- - - 407
ADJUSTED EBITDA $ (397 ) $ 5,400 $ (780 ) $ - $ 4,223
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME
(LOSS) follows: NET INCOME (LOSS) $ (6,306 ) $ 2,922 $
(1,186 ) $ - $ (4,570 ) Stock-based compensation 407 - - - 407
Amortization of intangible assets - -
105 - 105 NON-GAAP NET INCOME
(LOSS) $ (5,899 ) $ 2,922 $ (1,081 ) $ - $ (4,058 )
PFSweb, Inc. and Subsidiaries Unaudited
Condensed Consolidating Balance Sheets as of December 31, 2009 (In
Thousands) Supplies
PFSweb Distributors eCOST Eliminations Consolidated
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 9,698 $ 2,628 $ 2,486 $
- $ 14,812 Restricted cash 732 1,137 227 - 2,096 Accounts
receivable, net 19,499 18,764 1,719 (121 ) 39,861 Inventories, net
- 33,577 4,372 - 37,949 Other receivables 49 11,556 - - 11,605
Prepaid expenses and other current assets 2,515
1,575 80 - 4,170
Total current assets 32,493 69,237
8,884 (121 ) 110,493 PROPERTY
AND EQUIPMENT, net 9,900 54 360 - 10,314 NOTES RECEIVABLE FROM
AFFILIATES 20,845 - - (20,845 ) - INVESTMENT IN AFFILIATES (149 ) -
- 149 - IDENTIFIABLE INTANGIBLES 383 - 422 - 805 GOODWILL - - 3,602
- 3,602 OTHER ASSETS 2,244 - 311
- 2,555 Total assets 65,716
69,291 13,579 (20,817 )
127,769
LIABILITIES AND SHAREHOLDERS
EQUITY CURRENT LIABILITIES: Current portion of long-term
debt and capital lease obligations $ 8,770 $ 10,374 $ 35 $ - $
19,179 Trade accounts payable 8,396 38,753 6,614 (121 ) 53,642
Accrued expenses 10,994 4,701 2,649
- 18,344 Total current
liabilities 28,160 53,828 9,298
(121 ) 91,165 LONG-TERM DEBT AND
CAPITAL LEASE OBLIGATIONS, less current portion 3,208 - 140 - 3,348
NOTES PAYABLE TO AFFILIATES - 5,005 15,840 (20,845 ) - OTHER
LIABILITIES 3,880 - 23 -
3,903 Total liabilities 35,248
58,833 25,301 (20,966 ) 98,416
COMMITMENTS AND CONTINGENCIES SHAREHOLDERS'
EQUITY: Common stock 10 - 19 (19 ) 10 Capital contributions - 1,000
- (1,000 ) - Additional paid-in capital 93,152 - 28,059 (28,059 )
93,152 Retained earnings (accumulated deficit) (64,828 ) 6,781
(39,805 ) 31,889 (65,963 ) Accumulated other comprehensive income
2,219 2,677 5 (2,662 ) 2,239 Treasury stock (85 ) -
- - (85 ) Total shareholders'
equity 30,468 10,458 (11,722 )
149 29,353 Total liabilities and shareholders'
equity $ 65,716 $ 69,291 $ 13,579 $ (20,817 ) $
127,769
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations For the Three
Months Ended December 31, 2008 (In Thousands)
Supplies PFSweb Distributors eCOST Eliminations
Consolidated REVENUES: Product revenue, net $ - $ 52,915 $ 25,121 $
- $ 78,036 Service fee revenue 21,691 - - - 21,691 Service fee
revenue - affiliate 2,497 - - (2,497 ) - Pass-thru revenue
13,085 - - (31 )
13,054 Total revenues 37,273 52,915
25,121 (2,528 ) 112,781
COSTS OF REVENUES: Cost of product revenue - 48,974 22,641 -
71,615 Cost of service fee revenue 15,457 - - (734 ) 14,723 Cost of
pass-thru revenue 13,085 - -
(31 ) 13,054 Total costs of revenues
28,542 48,974 22,641
(765 ) 99,392 Gross profit 8,731
3,941 2,480 (1,763 )
13,389 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 8,511
3,211 2,716 (1,763 ) 12,675 AMORTIZATION OF IDENTIFIABLE
INTANGIBLES - - 202 - 202 GOODWILL AND INTANGIBLE ASSET IMPAIRMENT
- - 16,250 -
16,250 Total operating expenses 8,511
3,211 19,168 (1,763 )
29,127 Income (loss) from operations 220 730 (16,688
) - (15,738 ) INTEREST EXPENSE (INCOME), NET (7 ) 434
10 - 437 Income
(loss) before income taxes 227 296 (16,698 ) - (16,175 ) INCOME TAX
PROVISION (BENEFIT) (399 ) 398 -
- (1 ) NET INCOME (LOSS) $ 626 $ (102 )
$ (16,698 ) $ - $ (16,174 ) NON-GAAP NET INCOME (LOSS) $ 735
$ (102 ) $ (246 ) $ - $ 387
EBITDA $ 1,753 $ 738 $ (16,426 ) $ - $ (13,935
) ADJUSTED EBITDA $ 1,862 $ 738 $ (176 ) $ - $
2,424 A reconciliation of NET INCOME (LOSS) to
EBITDA and ADJUSTED EBITDA follows: NET INCOME (LOSS) $ 626
$ (102 ) $ (16,698 ) $ - $ (16,174 ) Income tax expense (benefit)
(399 ) 398 - - (1 ) Interest expense (income) (7 ) 434 10 - 437
Depreciation and amortization 1,533 8
262 - 1,803 EBITDA $
1,753 $ 738 $ (16,426 ) $ - $ (13,935 ) Stock-based compensation
109 - - 109 Goodwill and intangible asset impairment -
- 16,250 -
16,250 ADJUSTED EBITDA $ 1,862 $ 738 $ (176 )
$ - $ 2,424 A reconciliation of NET
INCOME(LOSS) to NON-GAAP NET INCOME (LOSS) follows: NET
INCOME (LOSS) $ 626 $ (102 ) $ (16,698 ) $ - $ (16,174 )
Stock-based compensation 109 - - - 109 Amortization of intangible
assets - - 202 - 202 Goodwill and intangible asset impairment
- - 16,250 -
16,250 NON-GAAP NET INCOME (LOSS) $ 735
$ (102 ) $ (246 ) $ - $ 387
PFSweb, Inc. and
Subsidiaries Unaudited Consolidating Statements of
Operations For the Twelve Months Ended December 31, 2008 (In
Thousands) Supplies PFSweb
Distributors eCOST Eliminations Consolidated REVENUES: Product
revenue, net $ - $ 230,710 $ 99,822 $ - $ 330,532 Service fee
revenue 85,406 - - - 85,406 Service fee revenue - affiliate 8,603 -
- (8,603 ) - Pass-thru revenue 35,901 -
- 4 35,905 Total revenues
129,910 230,710 99,822 (8,599 )
451,843 COSTS OF REVENUES: Cost of product
revenue - 214,077 91,013 - 305,090 Cost of service fee revenue
60,793 - - (2,784 ) 58,009 Cost of pass-thru revenue 35,901
- - 4 35,905
Total costs of revenues 96,694 214,077
91,013 (2,780 ) 399,004 Gross
profit 33,216 16,633 8,809
(5,819 ) 52,839 SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 33,285 10,767 10,840 (5,819 ) 49,073
AMORTIZATION OF IDENTIFIABLE INTANGIBLES - - 806 - 806 GOODWILL AND
INTANGIBLE ASSET IMPAIRMENT - - 16,250
- 16,250 Total operating
expenses 33,285 10,767 27,896
(5,819 ) 66,129 Income (loss) from operations
(69 ) 5,866 (19,087 ) - (13,290 ) INTEREST EXPENSE (INCOME), NET
(117 ) 1,650 27 -
1,560 Income (loss) before income taxes 48 4,216 (19,114 ) -
(14,850 ) INCOME TAX PROVISION (BENEFIT) (1,057 )
1,862 - - 805 NET INCOME
(LOSS) $ 1,105 $ 2,354 $ (19,114 ) $ - $ (15,655 )
NON-GAAP NET INCOME (LOSS) $ 1,652 $ 2,354 $ (2,058 ) $ -
$ 1,948 EBITDA $ 5,538 $ 5,886 $
(18,092 ) $ - $ (6,668 ) ADJUSTED EBITDA $ 6,085 $
5,886 $ (1,842 ) $ - $ 10,129 A
reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows: NET INCOME (LOSS) $ 1,105 $ 2,354 $ (19,114 ) $ - $
(15,655 ) Income tax expense (benefit) (1,057 ) 1,862 - - 805
Interest expense (income) (117 ) 1,650 27 - 1,560 Depreciation and
amortization 5,607 20 995
- 6,622 EBITDA $ 5,538 $ 5,886 $ (18,092 ) $ -
$ (6,668 ) Stock-based compensation 547 - - - 547 Goodwill and
intangible asset impairment - - 16,250
- 16,250 ADJUSTED EBITDA $ 6,085
$ 5,886 $ (1,842 ) $ - $ 10,129 A
reconciliation of NET INCOME(LOSS) to NON-GAAP NET INCOME (LOSS)
follows: NET INCOME (LOSS) $ 1,105 $ 2,354 $ (19,114 ) $ - $
(15,655 ) Stock-based compensation 547 - - - 547 Amortization of
intangible assets - - 806 - 806 Goodwill and intangible asset
impairment - - 16,250 -
16,250 NON-GAAP NET INCOME (LOSS) $ 1,652
$ 2,354 $ (2,058 ) $ - $ 1,948
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 December 31, 2009 2008 Total Customers (1)
2,067,384 1,888,250 Active Customers (2) 230,091 192,846
New Customers (3) 60,695 48,426 Number of Orders (4)
112,224 108,999 Average Order Value (5) $ 199 $ 223
Advertising Expense (6) $ 269,483 $ 309,836 Cost to Acquire
a New Customer (7) $ 4.44 $ 4.74
(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 $80,064 was not included in the 2009
and 2008 calculation, respectively, as it is used for retention and
not acquisition.
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