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 second quarter and six months ended June
30, 2010.
Summary of consolidated results for the quarter ended June
30, 2010:
- Total revenue increased to $82.5
million for the second quarter of 2010 compared to $82.3 million
for second quarter of 2009;
- Total gross margin improved to
10.9% for the second quarter of 2010 compared to 10.0% for the same
period last year;
- Adjusted EBITDA (as defined) was
$1.0 million versus a loss of $0.7 million for the second quarter
of 2009;
- Net loss was $1.5 million, or
$0.14 per basic and diluted share, compared to net loss of $2.5
million or $0.25 per basic and diluted share, for the second
quarter of 2009;
- Non-GAAP net loss (as defined)
was $0.9 million, or $0.08 per basic and diluted share, compared to
non-GAAP net loss of $2.4 million or $0.24 per basic and diluted
share, for the second quarter of 2009;
- Total cash, cash equivalents and
restricted cash increased to $20.8 million as of June 30, 2010
compared to $16.9 million as of December 31, 2009.
Summary of consolidated results for the six months ended June
30, 2010:
- Total reported revenue was
$170.7 million compared to $171.3 million for the six months ended
June 30, 2009;
- Total gross margin was 10.9%
compared to 11.3% for the same period last year;
- Adjusted EBITDA was $1.9 million
for both the six months ended June 30, 2010 and 2009;
- Net loss was $2.7 million, or
$0.26 per basic and diluted share, compared to net loss of $2.8
million, or $0.28 per basic and diluted share, for the six month
period ended June 30, 2009;
- Non-GAAP net loss was $2.0
million, or $0.19 per basic and diluted share, compared to non-GAAP
net loss of $2.5 million, or $0.25 per basic and diluted share, for
the same period last year.
Mark Layton, Chairman and Chief Executive Officer of PFSweb,
stated, “Our financial results for the second quarter of 2010
benefited from strong momentum in our Service Fee segment as the
result of the ramp up of several new client relationships that have
been implemented over the past year, offsetting lower revenue from
the Supplies Distributors and eCOST.com businesses. While total
consolidated revenue for the 2010 second quarter only increased
slightly year-over-year, our Service Fee business, which provides
significantly higher gross margins than our other business units,
generated 34% more revenue than the prior year quarter. This
increase in higher margin Service Fee business activity, combined
with a reduction in our SG&A costs, resulted in an
approximately $1.7 million improvement in Adjusted EBITDA as
compared to the second quarter of 2009.
“We are encouraged by the continuing growth in our End2End
eCommerce solution. During the past several months, we successfully
launched two new high profile eCommerce sites and we continue to
experience a very active new business pipeline. As a result, we now
have more than 10 active End2End eCommerce programs with our
clients and are queued up for several new sites expected to launch
in the coming months. The feedback we have received for our End2End
solution continues to be overwhelmingly positive, and we believe
this solution has truly elevated our position within the
industry.
“During the quarter, we strengthened our balance sheet by
raising net proceeds of approximately $7.3 million through a public
offering of 2.3 million shares of common stock at a price of $3.50
per share. This capital provides us with increased flexibility to
manage our businesses and planned growth,” Mr. Layton
continued.
Summary of results by business segment:
Service Fee Business:
For the second quarter of 2010, Service Fee revenue was $16.6
million, compared with $12.4 million for the same period in 2009.
The Service Fee business reported Adjusted EBITDA of $0.5 million
for the second quarter of 2010, compared to an Adjusted EBITDA loss
of $1.3 million for the same period last year.
For the six months ended June 30, 2010, Service Fee revenue was
$32.5 million, compared with $29.5 million for the same period in
2009. Adjusted EBITDA for the Service Fee business was $0.7 million
for the six month period of 2010, compared to $0.3 million for the
six month period in 2009.
Mike Willoughby, President of PFSweb’s Services division,
commented, “Our Service Fee business experienced significant growth
in the second quarter compared to the same period last year, which
marked our low point following the non-renewal of a large client
agreement with a U.S. government agency. The rate at which we have
been able to recapture revenue over the past year speaks directly
to the strength of our business and quality of services. Most
importantly, during this time we have signed multiple new client
agreements that offer a much more diversified revenue base.
“In just the past several months, we launched and ramped up two
prominent client programs using our End2End eCommerce Solution. The
first was a co-branded solution for the Carter’s and OshKosh B’gosh
brands, which launched in late-March; and the second was the highly
anticipated P&G eStore through our alliance with Procter and
Gamble, which launched in late-May. In addition, we also announced
a couple of new European client agreements, including an End2End
eCommerce agreement with Havaianas, the iconic Brazilian brand of
flip-flop; and a partnership with Baby Boum for a
business-to-business distribution solution throughout Europe.
“We are very excited about the momentum in our services business
as a result of our End2End eCommerce solution, which continues to
impress clients and industry professionals alike. This momentum is
particularly strong in several rapidly evolving market segments,
including the fashion, apparel and accessories, beauty and
fragrance, and consumer packaged goods segments. As previously
announced, in May 2010, we signed a new End2End eCommerce agreement
with a leading fragrance and beauty company. As we look forward to
the rest of 2010 and beyond, we continue to maintain a robust
pipeline of potential new contracts,” continued Mr. Willoughby.
Supplies Distributors Business:
For the second quarter of 2010, Supplies Distributors revenue
was $43.5 million, compared to $45.3 million for the same period
last year. Adjusted EBITDA was $0.9 million for the second quarter
of 2010, compared to $1.0 million for the same period last
year.
For the six months ended June 30, 2010, Supplies Distributors
revenue was $89.1 million, compared to $90.6 million for the same
period last year. Adjusted EBITDA was $1.9 million for the six
month period in 2010, compared to $2.4 million for the six month
period in 2009.
eCOST.com Business:
For the second quarter of 2010, eCOST.com revenue was $16.2
million, compared to $20.3 million for the same period in 2009.
Adjusted EBITDA for eCOST.com was a loss of $0.4 million in both
the second quarter of 2010 and 2009.
For the six months ended June 30, 2010, eCOST.com revenue was
$36.3 million, compared to $41.2 million for the same period in
2009. Adjusted EBITDA for eCOST.com in the six month period ended
June 30, 2010 improved to a loss of $0.6 million, as compared to a
loss of $0.8 million for the same period last year.
“During the second quarter of 2010, our sales and marketing
program for the eCOST.com business was negatively impacted by ever
evolving email filtering algorithms being deployed by several
internet/email service providers (ISP’s). This action has resulted
in limiting our ability to effectively advertise to a portion of
our customers over the past quarter. Because we have relied
primarily on email marketing, and the resulting viral impact of our
emails, to generate visitor traffic, the lack of its effectiveness
resulted in a decline in revenue this quarter. We are working to
adjust our marketing strategy to overcome this new challenge in the
most efficient and cost effective manner possible. eCOST.com’s
results for the second quarter of 2010 were also negatively
impacted by $0.3 million of costs applicable to a vendor settlement
and other legal matters,” concluded Mr. Layton.
Conference Call Information
Management will host a conference call at 10:00 am Central Time
(11:00 am Eastern Time) on Wednesday, August 11, 2010, to discuss
the latest corporate developments and results. To listen to the
call, please dial (888) 562-3356 and enter the pin number
(92783977) 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 September 11, 2010 at (800) 642-1687, pin number
(92783977). 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”) and Adjusted
EBITDA.
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, the impairment of goodwill and
identifiable intangible assets, if any, and vendor settlement and
other legal matter costs.
EBITDA represents earnings (or losses) before interest, income
taxes, depreciation, and amortization. Adjusted EBITDA further
eliminates the effect of stock-based compensation, impairment of
goodwill and identifiable intangible assets, if any, and vendor
settlement and other legal matter costs.
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. The calculation of non-GAAP net income
(loss) eliminates the effect of stock-based compensation,
amortization of intangible assets, impairment of goodwill and
intangible assets, if any, and vendor settlement and other legal
matter costs and EBITDA and Adjusted EBITDA further eliminate the
effect of financing, income taxes, and the accounting effects of
capital spending, which items may vary from different companies for
reasons unrelated to overall operating performance.
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.
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, Carter’s, LEGO, AAFES, Riverbed, InfoPrint Solutions
Company, 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 270,000
different products from leading manufacturers such as Sony,
Hewlett-Packard, Denon, JVC, Canon, Nikon, Panasonic, Toshiba,
Microsoft, Garmin, Braun, Sharp, Cuisinart, Bissell and Hoover
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, 2009 and Quarterly Report on Form
10-Q for the three months ended March 31, 2010 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.
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations (A) (In
Thousands, Except Per Share Data) Three Months
Ended Six Months Ended June 30, June 30, 2010
2009 2010 2009 REVENUES: Product
revenue, net $ 59,711 $ 65,546 $ 125,358 $ 131,809 Service fee
revenue 16,567 12,367 32,546 29,486 Pass-thru revenue 6,186
4,417 12,820 9,972
Total revenues 82,464 82,330
170,724 171,267 COSTS OF REVENUES: Cost
of product revenue 55,282 60,303 115,904 121,134 Cost of service
fee revenue 11,987 9,414 23,441 20,733 Cost of pass-thru revenue
6,186 4,417 12,820
9,972 Total costs of revenues 73,455
74,134 152,165 151,839 Gross
profit 9,009 8,196 18,559 19,428 SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 10,190 10,670
20,560 21,363
Loss from operations
(1,181 ) (2,474 ) (2,001 ) (1,935 ) INTEREST EXPENSE, NET
237 321 499 678
Income (loss) before income taxes (1,418 ) (2,795 ) (2,500 ) (2,613
) INCOME TAX EXPENSE (BENEFIT) 77 (266 )
204 164 NET LOSS $ (1,495 ) $ (2,529 )
$ (2,704 ) $ (2,777 ) NON-GAAP NET LOSS $ (915 ) $ (2,393 ) $
(1,993 ) $ (2,512 ) NET LOSS PER SHARE: Basic and Diluted $
(0.14 ) $ (0.25 ) $ (0.26 ) $ (0.28 ) WEIGHTED AVERAGE
NUMBER OF SHARES OUTSTANDING: Basic and Diluted 10,796
9,927 10,369 9,925
EBITDA $ 479 $ (851 ) $ 1,294 $ 1,716
ADJUSTED EBITDA $ 1,024 $ (742 ) $ 1,935 $ 1,928
(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, 2009.
PFSweb, Inc. and Subsidiaries
Reconciliation of Certain Non-GAAP Items to GAAP (In Thousands,
Except Per Share Data)
Three Months Ended Six Months Ended June 30, June 30, 2010
2009 2010 2009 NET
LOSS $ (1,495 ) $ (2,529 ) $ (2,704 ) $ (2,777 ) Income tax expense
(benefit) 77 (266 ) 204 164 Interest expense 237 321 499 678
Depreciation and amortization 1,660 1,623
3,295 3,651 EBITDA $ 479 $ (851
) $ 1,294 $ 1,716 Stock-based compensation 262 109 358 212 Vendor
settlement and other legal matters 283 -
283 - ADJUSTED EBITDA $ 1,024
$ (742 ) $ 1,935 $ 1,928 Three
Months Ended Six Months Ended June 30, June 30, 2010
2009 2010 2009 NET
LOSS $ (1,495 ) $ (2,529 ) $ (2,704 ) $ (2,777 ) Stock-based
compensation 262 109 358 212 Amortization of identifiable
intangible assets 35 27 70 53 Vendor settlement and other legal
matters 283 - 283
- NON-GAAP NET LOSS $ (915 ) $ (2,393 ) $ (1,993 ) $ (2,512
) NET LOSS PER SHARE: Basic and Diluted $ (0.14 ) $ (0.25 )
$ (0.26 ) $ (0.28 ) NON-GAAP NET LOSS Per Share: Basic and
Diluted $ (0.08 ) $ (0.24 ) $ (0.19 ) $ (0.25 )
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets (In Thousands,
Except Share Data) June 30, December 31, 2010
2009
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 19,410 $ 14,812
Restricted cash 1,410 2,096 Accounts receivable, net of allowance
for doubtful accounts of $901 and $973 at June 30, 2010 and
December 31, 2009, respectively 35,456 39,861 Inventories, net of
reserves of $2,003 and $2,016 at June 30, 2010 and December 31,
2009, respectively 35,353 37,949 Other receivables 11,881 11,605
Prepaid expenses and other current assets 4,004
4,170 Total current assets 107,514
110,493 PROPERTY AND EQUIPMENT, net 9,214
10,314 IDENTIFIABLE INTANGIBLES 726 805 GOODWILL 3,602 3,602 OTHER
ASSETS 2,084 2,555 Total assets
123,140 127,769
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES: Current portion of long-term debt and capital
lease obligations $ 17,362 $ 19,179 Trade accounts payable 47,383
53,642 Deferred revenue 5,235 5,164 Accrued expenses 15,439
13,180 Total current liabilities 85,419
91,165 LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, less current portion 1,263 3,348 OTHER LIABILITIES
3,606 3,903 Total liabilities
90,288 98,416 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; 37,300,000 shares authorized;
12,254,957 and 9,952,164 shares issued at June 30, 2010 and
December 31, 2009, respectively; and 12,236,596 and 9,933,803
outstanding as of June 30, 2010 and December 31, 2009, respectively
12 10 Additional paid-in capital 100,793 93,152 Accumulated deficit
(68,667 ) (65,963 ) Accumulated other comprehensive income 799
2,239 Treasury stock at cost, 18,361 shares (85 ) (85
) Total shareholders' equity 32,852 29,353
Total liabilities and shareholders' equity $ 123,140
$ 127,769
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations For the
Three Months Ended June 30, 2010 (In Thousands)
Supplies PFSweb Distributors
eCOST Eliminations Consolidated REVENUES: Product revenue, net $ -
$ 43,548 $ 16,163 $ - $ 59,711 Service fee revenue 16,567 - - -
16,567 Service fee revenue - affiliate 1,738 - - (1,738 ) -
Pass-thru revenue 6,202 - -
(16 ) 6,186 Total revenues 24,507
43,548 16,163 (1,754 )
82,464 COSTS OF REVENUES: Cost of product revenue -
40,528 14,754 - 55,282 Cost of service fee revenue 12,572 - - (585
) 11,987 Cost of pass-thru revenue 6,202 -
- (16 ) 6,186 Total costs of
revenues 18,774 40,528 14,754
(601 ) 73,455 Gross profit 5,733 3,020 1,409
(1,153 ) 9,009 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
7,013 2,153 2,177 (1,153 )
10,190 Income (loss) from operations (1,280 ) 867
(768 ) - (1,181 ) INTEREST EXPENSE (INCOME), NET (59 )
293 3 - 237 Income
(loss) before income taxes (1,221 ) 574 (771 ) - (1,418 ) INCOME
TAX PROVISION (BENEFIT) (146 ) 196 27
- 77 NET INCOME (LOSS) $ (1,075 ) $ 378
$ (798 ) $ - $ (1,495 ) NON-GAAP NET INCOME (LOSS) $ (813 )
$ 378 $ (480 ) $ - $ (915 ) EBITDA $ 277 $ 874
$ (672 ) $ - $ 479 ADJUSTED EBITDA $ 539 $ 874
$ (389 ) $ - $ 1,024 A reconciliation
of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
NET INCOME (LOSS) $ (1,075 ) $ 378 $ (798 ) $ - $ (1,495 ) Income
tax expense (benefit) (146 ) 196 27 - 77 Interest expense (income)
(59 ) 293 3 - 237 Depreciation and amortization 1,557
7 96 - 1,660
EBITDA $ 277 $ 874 $ (672 ) $ - $ 479 Stock-based compensation 262
- - - 262 Vendor settlement and other legal matters -
- 283 - 283
ADJUSTED EBITDA $ 539 $ 874 $ (389 ) $ - $ 1,024
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET
INCOME (LOSS) follows: NET INCOME (LOSS) $ (1,075 ) $ 378 $
(798 ) $ - $ (1,495 ) Stock-based compensation 262 - - - 262
Amortization of intangible assets - - 35 - 35 Vendor settlement and
other legal matters - - 283
- 283 NON-GAAP NET INCOME (LOSS) $ (813
) $ 378 $ (480 ) $ - $ (915 )
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations For the Six Months
Ended June 30, 2010 (In Thousands)
Supplies PFSweb Distributors eCOST
Eliminations Consolidated REVENUES: Product revenue, net $ - $
89,050 $ 36,308 $ - $ 125,358 Service fee revenue 32,546 - - -
32,546 Service fee revenue - affiliate 3,438 - - (3,438 ) -
Pass-thru revenue 12,839 - -
(19 ) 12,820 Total revenues 48,823
89,050 36,308 (3,457 )
170,724 COSTS OF REVENUES: Cost of product revenue -
82,806 33,098 - 115,904 Cost of service fee revenue 24,672 - -
(1,231 ) 23,441 Cost of pass-thru revenue 12,839
- - (19 ) 12,820 Total
costs of revenues 37,511 82,806 33,098
(1,250 ) 152,165 Gross profit 11,312
6,244 3,210 (2,207 ) 18,559 SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 14,071 4,364 4,332
(2,207 ) 20,560 Income (loss) from operations
(2,759 ) 1,880 (1,122 ) - (2,001 ) INTEREST EXPENSE (INCOME), NET
(115 ) 603 11 -
499 Income (loss) before income taxes (2,644 ) 1,277 (1,133
) - (2,500 ) INCOME TAX PROVISION (BENEFIT) (282 )
452 34 - 204 NET INCOME
(LOSS) $ (2,362 ) $ 825 $ (1,167 ) $ - $ (2,704 ) NON-GAAP
NET INCOME (LOSS) $ (2,004 ) $ 825 $ (814 ) $ - $ (1,993 )
EBITDA $ 328 $ 1,894 $ (928 ) $ - $ 1,294
ADJUSTED EBITDA $ 686 $ 1,894 $ (645 ) $ - $
1,935 A reconciliation of NET INCOME (LOSS) to
EBITDA and ADJUSTED EBITDA follows: NET INCOME (LOSS) $
(2,362 ) $ 825 $ (1,167 ) $ - $ (2,704 ) Income tax expense
(benefit) (282 ) 452 34 - 204 Interest expense (income) (115 ) 603
11 - 499 Depreciation and amortization 3,087
14 194 - 3,295 EBITDA $
328 $ 1,894 $ (928 ) $ - $ 1,294 Stock-based compensation 358 - - -
358 Vendor settlement and other legal matters -
- 283 - 283
ADJUSTED EBITDA $ 686 $ 1,894 $ (645 ) $ - $ 1,935
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET
INCOME (LOSS) follows: NET INCOME (LOSS) $ (2,362 ) $ 825 $
(1,167 ) $ - $ (2,704 ) Stock-based compensation 358 - - - 358
Amortization of intangible assets - - 70 - 70 Vendor settlement and
other legal matters - - 283
- 283 NON-GAAP NET INCOME (LOSS) $
(2,004 ) $ 825 $ (814 ) $ - $ (1,993 )
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets as of June 30,
2010 (In Thousands)
Supplies PFSweb Distributors eCOST Eliminations
Consolidated
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 16,614 $ 2,656 $ 140 $
- $ 19,410 Restricted cash 776 515 119 - 1,410 Accounts receivable,
net 16,459 17,830 1,509 (342 ) 35,456 Inventories, net - 30,669
4,684 - 35,353 Other receivables - 11,144 737 - 11,881 Prepaid
expenses and other current assets 2,398 1,515
91 - 4,004 Total current
assets 36,247 64,329 7,280
(342 ) 107,514 PROPERTY AND EQUIPMENT,
net 8,922 33 259 - 9,214 NOTES RECEIVABLE FROM AFFILIATES 21,195 -
- (21,195 ) - INVESTMENT IN AFFILIATES (3,200 ) - - 3,200 -
IDENTIFIABLE INTANGIBLES 357 - 369 - 726 GOODWILL - - 3,602 - 3,602
OTHER ASSETS 1,871 - 213
- 2,084 Total assets 65,392
64,362 11,723 (18,337 ) 123,140
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES: Current portion of long-term debt and capital
lease obligations $ 7,287 $ 10,040 $ 35 $ - $ 17,362 Trade accounts
payable 4,611 37,468 5,646 (342 ) 47,383 Deferred revenue 4,342 -
893 - 5,235 Accrued expenses 9,251 5,192
996 - 15,439 Total
current liabilities 25,491 52,700 7,570
(342 ) 85,419 LONG-TERM DEBT AND
CAPITAL LEASE OBLIGATIONS, less current portion 1,158 - 105 - 1,263
NOTES PAYABLE TO AFFILIATES - 4,255 16,940 (21,195 ) - OTHER
LIABILITIES 3,606 - - -
3,606 Total liabilities 30,255
56,955 24,615 (21,537 ) 90,288
COMMITMENTS AND CONTINGENCIES SHAREHOLDERS'
EQUITY: Common stock 12 - 19 (19 ) 12 Capital contributions - 1,000
- (1,000 ) - Additional paid-in capital 100,793 - 28,059 (28,059 )
100,793 Retained earnings (accumulated deficit) (66,365 ) 4,676
(40,972 ) 33,994 (68,667 ) Accumulated other comprehensive income
782 1,731 2 (1,716 ) 799 Treasury stock (85 ) -
- - (85 ) Total shareholders'
equity 35,137 7,407 (12,892 )
3,200 32,852 Total liabilities and
shareholders' equity $ 65,392 $ 64,362 $ 11,723 $
(18,337 ) $ 123,140
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations For the Three
Months Ended June 30, 2009 (In Thousands)
Supplies PFSweb Distributors eCOST
Eliminations Consolidated REVENUES: Product revenue, net $ - $
45,269 $ 20,277 $ - $ 65,546 Service fee revenue 12,367 - - -
12,367 Service fee revenue - affiliate 1,736 - - (1,736 ) -
Pass-thru revenue 4,451 - -
(34 ) 4,417 Total revenues
18,554 45,269 20,277
(1,770 ) 82,330 COSTS OF REVENUES: Cost of
product revenue - 41,984 18,319 - 60,303 Cost of service fee
revenue 10,052 - - (638 ) 9,414 Cost of pass-thru revenue
4,451 - - (34 )
4,417 Total costs of revenues 14,503
41,984 18,319 (672 ) 74,134
Gross profit 4,051 3,285 1,958 (1,098 ) 8,196 SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES 7,033
2,304 2,431 (1,098 ) 10,670
Income (loss) from operations (2,982 ) 981 (473 ) - (2,474 )
INTEREST EXPENSE (INCOME), NET (59 ) 377
3 - 321 Income (loss)
before income taxes (2,923 ) 604 (476 ) - (2,795 ) INCOME TAX
PROVISION (BENEFIT) (62 ) (213 ) 9
- (266 ) NET INCOME (LOSS) $ (2,861 ) $ 817
$ (485 ) $ - $ (2,529 ) NON-GAAP NET INCOME (LOSS) $
(2,752 ) $ 817 $ (458 ) $ - $ (2,393 ) EBITDA
$ (1,452 ) $ 989 $ (388 ) $ - $ (851 ) ADJUSTED
EBITDA $ (1,343 ) $ 989 $ (388 ) $ - $ (742 )
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED
EBITDA follows: NET INCOME (LOSS) $ (2,861 ) $ 817 $ (485 )
$ - $ (2,529 ) Income tax expense (benefit) (62 ) (213 ) 9 - (266 )
Interest expense (income) (59 ) 377 3 - 321 Depreciation and
amortization 1,530 8 85
- 1,623 EBITDA $ (1,452 ) $ 989 $ (388
) $ - $ (851 ) Stock-based compensation 109 -
- - 109 ADJUSTED
EBITDA $ (1,343 ) $ 989 $ (388 ) $ - $ (742 )
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows: NET INCOME (LOSS) $ (2,861 ) $ 817 $ (485 ) $ - $
(2,529 ) Stock-based compensation 109 - - - 109 Amortization of
intangible assets - - 27
- 27 NON-GAAP NET INCOME (LOSS) $
(2,752 ) $ 817 $ (458 ) $ - $ (2,393 )
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations For the Six Months
Ended June 30, 2009 (In Thousands)
Supplies PFSweb Distributors eCOST
Eliminations Consolidated REVENUES: Product revenue, net $ - $
90,600 $ 41,209 $ - $ 131,809 Service fee revenue 29,486 - - -
29,486 Service fee revenue - affiliate 3,795 - - (3,795 ) -
Pass-thru revenue 10,037 - -
(65 ) 9,972 Total revenues 43,318
90,600 41,209 (3,860 )
171,267 COSTS OF REVENUES: Cost of product revenue -
83,934 37,200 - 121,134 Cost of service fee revenue 22,016 - -
(1,283 ) 20,733 Cost of pass-thru revenue 10,037
- - (65 ) 9,972 Total
costs of revenues 32,053 83,934 37,200
(1,348 ) 151,839 Gross profit 11,265
6,666 4,009 (2,512 ) 19,428 SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 14,650 4,268 4,957
(2,512 ) 21,363 Income (loss) from operations
(3,385 ) 2,398 (948 ) - (1,935 ) INTEREST EXPENSE (INCOME), NET
(82 ) 754 6 - 678
Income (loss) before income taxes (3,303 ) 1,644 (954 ) -
(2,613 ) INCOME TAX PROVISION (BENEFIT) (114 ) 269
9 - 164 NET INCOME (LOSS)
$ (3,189 ) $ 1,375 $ (963 ) $ - $ (2,777 ) NON-GAAP NET
INCOME (LOSS) $ (2,977 ) $ 1,375 $ (910 ) $ - $ (2,512 )
EBITDA $ 80 $ 2,416 $ (780 ) $ - $ 1,716
ADJUSTED EBITDA $ 292 $ 2,416 $ (780 ) $ - $
1,928 A reconciliation of NET INCOME (LOSS) to
EBITDA and ADJUSTED EBITDA follows: NET INCOME (LOSS) $
(3,189 ) $ 1,375 $ (963 ) $ - $ (2,777 ) Income tax expense
(benefit) (114 ) 269 9 - 164 Interest expense (income) (82 ) 754 6
- 678 Depreciation and amortization 3,465 18
168 - 3,651 EBITDA $ 80 $
2,416 $ (780 ) $ - $ 1,716 Stock-based compensation 212
- - - 212
ADJUSTED EBITDA $ 292 $ 2,416 $ (780 ) $ - $ 1,928
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET
INCOME (LOSS) follows: NET INCOME (LOSS) $ (3,189 ) $ 1,375
$ (963 ) $ - $ (2,777 ) Stock-based compensation 212 - - - 212
Amortization of intangible assets - -
53 - 53 NON-GAAP NET INCOME
(LOSS) $ (2,977 ) $ 1,375 $ (910 ) $ - $ (2,512 )
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 Deferred revenue 3,948 -
1,216 - 5,164 Accrued expenses 7,046 4,701
1,433 - 13,180 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
eCOST.com, Inc.
Selected Operating Data Three Months
Ended June 30, 2010 2009 Total Customers (1)
2,140,312 1,969,610 Active Customers (2) 142,387 222,095
New Customers (3) 30,192 49,192 Number of Orders (4)
66,778 96,186 Average Order Value (5) $ 216 $ 203
Advertising Expense (6) $ 201,515 $ 218,943 Cost to Acquire
a New Customer (7) $ 6.67 $ 4.44 (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 $303 was not included in the 2010 and 2009 calculation,
respectively, as it is used for retention and not acquisition.
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