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, 2010.
Mark Layton, Chairman and Chief Executive Officer of PFSweb,
stated, “We continue to be very encouraged by the exciting
developments within our Service Fee business segment. Organic
growth from our existing business to consumer clients, recent new
client additions as well as a strong pipeline of potential new
business opportunities are all key indicators of the momentum that
our End2End eCommerce solution is building in the growing direct to
consumer marketplace. This momentum resulted in a 25% increase in
revenue and $1.1 million increase in Adjusted EBITDA for our
Service Fee business segment during the third quarter, as compared
to the prior year. This growth was offset by tempered results in
our eCOST.com and Supplies Distributors segments. As discussed
below, we have moved aggressively to address the eCOST.com business
issue and continue to evaluate ways to improve this segment and
reduce its negative impact on our overall business.”
Summary of consolidated results for the quarter ended
September 30, 2010:
- Total revenue decreased to $80.0
million for the third quarter of 2010 compared to $85.6 million for
third quarter of 2009;
- Total gross margin was 10.7% for the
third quarter of 2010 compared to 11.2% for the same period last
year;
- Adjusted EBITDA (as defined) was $0.9
million versus $1.2 million for the third quarter of 2009;
- Net loss was $1.9 million, or $0.16 per
basic and diluted share, compared to net loss of $0.8 million or
$0.09 per basic and diluted share, for the third quarter of 2009.
Net loss for the third quarter of 2010 included a $0.6 million
charge applicable to an executive’s disabilities benefits;
- Non-GAAP net loss (as defined) was $1.0
million, or $0.08 per basic and diluted share, compared to non-GAAP
net loss of $0.7 million or $0.07 per basic and diluted share, for
the third quarter of 2009;
- Total cash, cash equivalents and
restricted cash was $20.4 million as of September 30, 2010 compared
to $16.9 million as of December 31, 2009.
Summary of consolidated results for the nine months ended
September 30, 2010:
- Total reported revenue was $250.7
million compared to $256.9 million for the nine months ended
September 30, 2009;
- Total gross margin was 10.8% compared
to 11.3% for the same period last year;
- Adjusted EBITDA was $2.8 million
compared to $3.1 million for the nine months ended September 30,
2009.
- Net loss was $4.6 million, or $0.42 per
basic and diluted share, compared to net loss of $3.6 million, or
$0.36 per basic and diluted share, for the nine month period ended
September 30, 2009;
- Non-GAAP net loss was $3.0 million, or
$0.27 per basic and diluted share, compared to non-GAAP net loss of
$3.2 million, or $0.33 per basic and diluted share, for the same
period last year.
Summary of results by business segment:
Service Fee Business:
For the third quarter of 2010, Service Fee revenue was $16.4
million, compared with $13.1 million for the same period in 2009.
The Service Fee business reported Adjusted EBITDA of $0.3 million
for the third quarter of 2010, compared to an Adjusted EBITDA loss
of $0.8 million for the same period last year.
For the nine months ended September 30, 2010, Service Fee
revenue was $48.9 million, compared with $42.6 million for the same
period in 2009. Adjusted EBITDA for the Service Fee business was
$1.0 million for the nine month period of 2010, compared to an
Adjusted EBITDA loss of $0.5 million for the nine month period in
2009.
Mike Willoughby, President of PFSweb’s Services division,
commented, “During the past three months, we launched a number of
new client programs, including Volcom as well as our support of
several eCommerce sites under our previously announced master
agreement with a well-known fashion brands company geared mostly
towards women and our previously announced relationship with a
leading beauty and fragrance company. With our existing client base
and potential new business pipeline, consisting primarily of major
consumer brands, we believe we are well positioned to capture
further growth in the rapidly expanding eCommerce industry,
particularly in the fashion, apparel and accessories, beauty and
fragrance and consumer packaged goods segments.”
Supplies Distributors Business:
For the third quarter of 2010, Supplies Distributors revenue was
$39.1 million, compared to $45.1 million for the same period last
year. Adjusted EBITDA was $1.0 million for the third quarter of
2010, compared to $2.2 million for the same period last year.
For the nine months ended September 30, 2010, Supplies
Distributors revenue was $128.1 million, compared to $135.7 million
for the same period last year. Adjusted EBITDA was $2.9 million for
the nine month period in 2010, compared to $4.6 million for the
nine month period in 2009.
“Our Supplies Distributors business experienced a reduction in
business volume this past quarter partially due to temporary
inventory supply shortages related to our largest supplier in this
segment transitioning to a new ERP system. This migration is now
generally completed and supply inflows have returned to more
normalized levels, and, as such, we currently expect that overall
business trends should improve during the December 2010 quarter,”
Mr. Layton stated.
eCOST.com Business:
For the third quarter of 2010, eCOST.com revenue was $16.6
million, compared to $20.6 million for the same period in 2009.
Adjusted EBITDA for eCOST.com was a loss of $0.5 million for the
third quarter of 2010, compared to a loss of $0.2 million for the
third quarter of 2009.
For the nine months ended September 30, 2010, eCOST.com revenue
was $52.9 million, compared to $61.8 million for the same period in
2009. Adjusted EBITDA for eCOST.com in the nine month period ended
September 30, 2010 was a loss of $1.1 million, as compared to a
loss of $0.9 million for the same period last year.
“During the third quarter, we spent considerable time enhancing
eCOST.com’s sales and marketing program to increase its
effectiveness against the ever evolving email filtering algorithms
being deployed by several internet/email service providers (ISP’s).
While this issue negatively impacted our revenue during the
quarter, I am pleased to say that by the end of the third quarter
we were experiencing higher success rates when advertising to this
portion of our customers than we had in the summer of 2010. We
expect these efforts to be ongoing as the email filtering
algorithms will continue to adjust,” stated Mr. Layton.
“This holiday season, eCOST.com will offer online shoppers the
hottest computer and electronics deals in the industry through its
patented Bargain Countdown showcase, including thousands of limited
quantity, limited time offers. We expect HDTVs, netbooks, gaming
products (like Kinect), HD cameras and camcorders to lead the way
this holiday season in terms of the hot products that consumers are
seeking. We are also excited about the exclusive free shipping
offers in our weekly Secret Sale campaign and the very popular
Make-an-Offer shopping format that has become a success over the
past few months,” Layton concluded.
Conference Call Information
Management will host a conference call at 10:00 am Central Time
(11:00 am Eastern Time) on Monday, November 15, 2010, to discuss
the latest corporate developments and results. To listen to the
call, please dial (888) 562-3356 and enter the pin number
(22026323) 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 15, 2010 at (800) 642-1687, pin number (22026323).
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, executive disability
benefits 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, executive
disability benefits 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, executive disability benefits 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, LEGO, Carter's, 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 290,000
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 six months ended June 30, 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 Nine Months Ended September 30, September 30, 2010
2009 2010 2009 REVENUES: Product revenue, net $ 55,724 $ 65,713 $
181,082 $ 197,522 Service fee revenue 16,402 13,118 48,948 42,604
Pass-thru revenue 7,842 6,776
20,662 16,748 Total revenues 79,968
85,607 250,692 256,874
COSTS OF REVENUES: Cost of product revenue 51,576
59,611 167,480 180,746 Cost of service fee revenue 11,981 9,674
35,422 30,406 Cost of pass-thru revenue 7,842
6,776 20,662 16,748 Total costs
of revenues 71,399 76,061
223,564 227,900 Gross profit 8,569 9,546
27,128 28,974 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
10,159 9,998 30,719
31,362 Loss from operations (1,590 ) (452 ) (3,591 ) (2,388
) INTEREST EXPENSE, NET 254 288
753 967 Loss before income taxes (1,844 ) (740
) (4,344 ) (3,355 ) INCOME TAX EXPENSE (BENEFIT) 76
106 280 268 NET LOSS $
(1,920 ) $ (846 ) $ (4,624 ) $ (3,623 ) NON-GAAP NET LOSS $ (974 )
$ (723 ) $ (2,967 ) $ (3,235 ) NET LOSS PER SHARE: Basic and
Diluted $ (0.16 ) $ (0.09 ) $ (0.42 ) $ (0.36 ) WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING: Basic and Diluted
12,237 9,931 10,998 9,927
EBITDA $ (59 ) $ 1,088 $ 1,235 $ 2,803
ADJUSTED EBITDA $ 852 $ 1,185 $ 2,787 $
3,112 (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 Nine Months Ended September 30, September 30, 2010
2009 2010 2009 NET LOSS $ (1,920 ) $ (846 ) $ (4,624 ) $ (3,623 )
Income tax expense (benefit) 76 106 280 268 Interest expense 254
288 753 967 Depreciation and amortization 1,531
1,540 4,826 5,191 EBITDA
$ (59 ) $ 1,088 $ 1,235 $ 2,803 Stock-based compensation 225 97 583
309 Executive disability benefits 650 - 650 - Vendor settlement and
other legal matters 36 - 319
- ADJUSTED EBITDA $ 852 $ 1,185
$ 2,787 $ 3,112 Three Months Ended Nine
Months Ended September 30, September 30, 2010 2009 2010 2009
NET LOSS $ (1,920 ) $ (846 ) $ (4,624 ) $ (3,623 ) Stock-based
compensation 225 97 583 309 Amortization of identifiable intangible
assets 35 26 105 79 Executive disability benefits 650 - 650 -
Vendor settlement and other legal matters 36 -
319 - NON-GAAP NET LOSS $ (974 )
$ (723 ) $ (2,967 ) $ (3,235 ) NET LOSS PER SHARE: Basic and
Diluted $ (0.16 ) $ (0.09 ) $ (0.42 ) $ (0.36 ) NON-GAAP NET
LOSS Per Share: Basic and Diluted $ (0.08 ) $ (0.07 ) $ (0.27 ) $
(0.33 )
PFSweb, Inc. and
Subsidiaries
Unaudited Condensed Consolidated Balance Sheets (In Thousands,
Except Share Data) September 30,
December 31, 2010 2009
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 18,784 $ 14,812
Restricted cash 1,656 2,096 Accounts receivable, net of allowance
for doubtful accounts of $914 and $973 at September 30, 2010 and
December 31, 2009, respectively 33,947 39,861 Inventories, net of
reserves of $1,812 and $2,016 at September 30, 2010 and December
31, 2009, respectively 37,638 37,949 Other receivables 12,847
11,605 Prepaid expenses and other current assets 4,067
4,170 Total current assets 108,939
110,493 PROPERTY AND EQUIPMENT, net
9,300 10,314 IDENTIFIABLE INTANGIBLES 687 805 GOODWILL 3,602 3,602
OTHER ASSETS 1,962 2,555 Total assets
124,490 127,769
LIABILITIES AND
SHAREHOLDERS EQUITY
CURRENT LIABILITIES: Current portion of long-term debt and capital
lease obligations $ 18,452 $ 19,179 Trade accounts payable 47,778
53,642 Deferred revenue 5,313 5,164 Accrued expenses 16,165
13,180 Total current liabilities 87,708
91,165 LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, less current portion 1,219 3,348 OTHER LIABILITIES
3,549 3,903 Total liabilities
92,476 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;
12,255,064 and 9,952,164 shares issued at September 30, 2010 and
December 31, 2009, respectively; and 12,236,703 and 9,933,803
outstanding as of September 30, 2010 and December 31, 2009,
respectively 12 10 Additional paid-in capital 101,004 93,152
Accumulated deficit (70,587 ) (65,963 ) Accumulated other
comprehensive income 1,670 2,239 Treasury stock at cost, 18,361
shares (85 ) (85 ) Total shareholders' equity
32,014 29,353 Total liabilities and
shareholders' equity $ 124,490 $ 127,769
PFSweb, Inc. and
Subsidiaries
Unaudited Consolidating Statements of Operations For the Three
Months Ended September 30, 2010 (In Thousands)
Supplies PFSweb Distributors eCOST
Eliminations Consolidated REVENUES: Product revenue, net $ - $
39,092 $ 16,632 $ - $ 55,724 Service fee revenue 16,402 - - -
16,402 Service fee revenue - affiliate 1,484 - - (1,484 ) -
Pass-thru revenue 7,843 - -
(1 ) 7,842 Total revenues 25,729
39,092 16,632 (1,485 ) 79,968
COSTS OF REVENUES: Cost of product revenue - 36,233
15,343 - 51,576 Cost of service fee revenue 12,543 - - (562 )
11,981 Cost of pass-thru revenue 7,843 -
- (1 ) 7,842 Total costs of
revenues 20,386 36,233 15,343
(563 ) 71,399 Gross profit 5,343 2,859 1,289
(922 ) 8,569 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
7,318 1,896 1,867 (922 )
10,159 Income (loss) from operations (1,975 ) 963 (578 ) -
(1,590 ) INTEREST EXPENSE (INCOME), NET (63 ) 313
4 - 254 Income (loss)
before income taxes (1,912 ) 650 (582 ) - (1,844 ) INCOME TAX
PROVISION (BENEFIT) (139 ) 207 8
- 76 NET INCOME (LOSS) $ (1,773 ) $ 443 $ (590
) $ - $ (1,920 ) NON-GAAP NET INCOME (LOSS) $ (898 ) $ 443 $
(519 ) $ - $ (974 ) EBITDA $ (542 ) $ 970 $ (487 ) $
- $ (59 ) ADJUSTED EBITDA $ 333 $ 970 $ (451 ) $ -
$ 852 A reconciliation of NET INCOME
(LOSS) to EBITDA and ADJUSTED EBITDA follows: NET INCOME
(LOSS) $ (1,773 ) $ 443 $ (590 ) $ - $ (1,920 ) Income tax expense
(benefit) (139 ) 207 8 - 76 Interest expense (income) (63 ) 313 4 -
254 Depreciation and amortization 1,433 7
91 - 1,531 EBITDA $ (542
) $ 970 $ (487 ) $ - $ (59 ) Stock-based compensation 225 - - - 225
Executive disability benefits 650 - - - 650 Vendor settlement and
other legal matters - - 36
- 36 ADJUSTED EBITDA $ 333 $ 970
$ (451 ) $ - $ 852 A reconciliation of NET
INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows: NET
INCOME (LOSS) $ (1,773 ) $ 443 $ (590 ) $ - $ (1,920 ) Stock-based
compensation 225 - - - 225 Amortization of intangible assets - - 35
- 35 Executive disability benefits 650 - - - 650 Vendor settlement
and other legal matters - - 36
- 36 NON-GAAP NET INCOME (LOSS) $ (898
) $ 443 $ (519 ) $ - $ (974 )
PFSweb, Inc. and
Subsidiaries
Unaudited Consolidating Statements of Operations For the Nine
Months Ended September 30, 2010 (In Thousands)
Supplies PFSweb Distributors eCOST
Eliminations Consolidated REVENUES: Product revenue, net $ - $
128,142 $ 52,940 $ - $ 181,082 Service fee revenue 48,948 - - -
48,948 Service fee revenue - affiliate 4,921 - - (4,921 ) -
Pass-thru revenue 20,682 - -
(20 ) 20,662 Total revenues 74,551
128,142 52,940 (4,941 )
250,692 COSTS OF REVENUES: Cost of product revenue -
119,039 48,441 - 167,480 Cost of service fee revenue 37,215 - -
(1,793 ) 35,422 Cost of pass-thru revenue 20,682
- - (20 ) 20,662 Total
costs of revenues 57,897 119,039 48,441
(1,813 ) 223,564 Gross profit 16,654
9,103 4,499 (3,128 ) 27,128 SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 21,388 6,260 6,199
(3,128 ) 30,719 Income (loss) from operations
(4,734 ) 2,843 (1,700 ) - (3,591 ) INTEREST EXPENSE (INCOME), NET
(178 ) 916 15 -
753 Income (loss) before income taxes (4,556 ) 1,927 (1,715
) - (4,344 ) INCOME TAX PROVISION (BENEFIT) (421 )
659 42 - 280 NET INCOME
(LOSS) $ (4,135 ) $ 1,268 $ (1,757 ) $ - $ (4,624 ) NON-GAAP
NET INCOME (LOSS) $ (2,902 ) $ 1,268 $ (1,333 ) $ - $ (2,967
) EBITDA $ (214 ) $ 2,864 $ (1,415 ) $ - $ 1,235
ADJUSTED EBITDA $ 1,019 $ 2,864 $ (1,096 ) $ -
$ 2,787 A reconciliation of NET INCOME (LOSS)
to EBITDA and ADJUSTED EBITDA follows: NET INCOME (LOSS) $
(4,135 ) $ 1,268 $ (1,757 ) $ - $ (4,624 ) Income tax expense
(benefit) (421 ) 659 42 - 280 Interest expense (income) (178 ) 916
15 - 753 Depreciation and amortization 4,520
21 285 - 4,826 EBITDA $
(214 ) $ 2,864 $ (1,415 ) $ - $ 1,235 Stock-based compensation 583
- - - 583 Executive disability benefits 650 - - - 650 Vendor
settlement and other legal matters - -
319 - 319 ADJUSTED EBITDA $
1,019 $ 2,864 $ (1,096 ) $ - $ 2,787 A
reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows: NET INCOME (LOSS) $ (4,135 ) $ 1,268 $ (1,757 ) $ -
$ (4,624 ) Stock-based compensation 583 - - - 583 Amortization of
intangible assets - - 105 - 105 Executive disability benefits 650 -
- - 650 Vendor settlement and other legal matters -
- 319 - 319
NON-GAAP NET INCOME (LOSS) $ (2,902 ) $ 1,268 $ (1,333 ) $ -
$ (2,967 )
PFSweb, Inc. and
Subsidiaries
Unaudited Condensed Consolidating Balance Sheets as of September
30, 2010 (In Thousands)
Supplies PFSweb Distributors eCOST Eliminations
Consolidated
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 16,014 $ 2,622 $ 148 $
- $ 18,784 Restricted cash 777 666 213 - 1,656 Accounts receivable,
net 15,857 16,601 2,020 (531 ) 33,947 Inventories, net - 33,208
4,430 - 37,638 Other receivables - 12,183 664 - 12,847 Prepaid
expenses and other current assets 2,391 1,483
193 - 4,067 Total current
assets 35,039 66,763 7,668
(531 ) 108,939 PROPERTY AND EQUIPMENT,
net 8,996 30 274 - 9,300 NOTES RECEIVABLE FROM AFFILIATES 21,945 -
- (21,945 ) - INVESTMENT IN AFFILIATES (2,179 ) - - 2,179 -
IDENTIFIABLE INTANGIBLES 344 - 343 - 687 GOODWILL - - 3,602 - 3,602
OTHER ASSETS 1,760 - 202
- 1,962 Total assets 65,905
66,793 12,089 (20,297 ) 124,490
LIABILITIES AND
SHAREHOLDERS EQUITY
CURRENT LIABILITIES: Current portion of long-term debt and capital
lease obligations $ 8,139 $ 10,278 $ 35 $ - $ 18,452 Trade accounts
payable 4,575 37,876 5,858 (531 ) 47,778 Deferred revenue 4,441 -
872 - 5,313 Accrued expenses 9,195 5,956
1,014 - 16,165 Total
current liabilities 26,350 54,110 7,779
(531 ) 87,708 LONG-TERM DEBT AND
CAPITAL LEASE OBLIGATIONS, less current portion 1,114 - 105 - 1,219
NOTES PAYABLE TO AFFILIATES - 4,255 17,690 (21,945 ) - OTHER
LIABILITIES 3,549 - - -
3,549 Total liabilities 31,013
58,365 25,574 (22,476 ) 92,476
COMMITMENTS AND CONTINGENCIES SHAREHOLDERS'
EQUITY: Common stock 12 - 19 (19 ) 12 Capital contributions - 1,000
- (1,000 ) - Additional paid-in capital 101,004 - 28,059 (28,059 )
101,004 Retained earnings (accumulated deficit) (67,694 ) 5,119
(41,563 ) 33,551 (70,587 ) Accumulated other comprehensive income
1,655 2,309 - (2,294 ) 1,670 Treasury stock (85 ) -
- - (85 ) Total shareholders'
equity 34,892 8,428 (13,485 )
2,179 32,014 Total liabilities and
shareholders' equity $ 65,905 $ 66,793 $ 12,089 $
(20,297 ) $ 124,490 - - - - -
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
2,076 2,102 (977 ) 9,998
Income (loss) from operations (2,376 ) 2,163 (239 ) - (452 )
INTEREST EXPENSE (INCOME), NET (54 ) 333 9
- 288 Income (loss) before
income taxes (2,322 ) 1,830 (248 ) - (740 ) INCOME TAX PROVISION
(BENEFIT) (508 ) 605 9 -
106 NET INCOME (LOSS) $ (1,814 ) $ 1,225 $ (257 ) $ -
$ (846 ) NON-GAAP NET INCOME (LOSS) $ (1,717 ) $ 1,225 $
(231 ) $ - $ (723 ) EBITDA $ (931 ) $ 2,171 $ (152 )
$ - $ 1,088 ADJUSTED EBITDA $ (834 ) $ 2,171 $ (152 )
$ - $ 1,185 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 ) 605 9 - 106 Interest expense (income) (54
) 333 9 - 288 Depreciation and amortization 1,445
8 87 - 1,540
EBITDA $ (931 ) $ 2,171 $ (152 ) $ - $ 1,088 Stock-based
compensation 97 - - -
97 ADJUSTED EBITDA $ (834 ) $ 2,171 $ (152 ) $
- $ 1,185 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 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 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 September 30, 2010 2009 Total Customers (1) 2,173,542
2,006,689 Active Customers (2) 208,582 224,297 New
Customers (3) 33,230 37,079 Number of Orders (4) 53,652
74,770 Average Order Value (5) $ 300 $ 271
Advertising Expense (6) $ 192,950 $ 216,475 Cost to Acquire
a New Customer $ 5.81 $ 5.84 (1)
Total customers have been calculated as
the cumulative number of customers for which ordershave 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 duringthe 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 anorder 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 ordersduring 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.
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