PFSweb, Inc. (Nasdaq: PFSW), an international business
process outsourcing services provider of end-to-end web commerce
solutions, today announced its financial results for the three
months ended March 31, 2011.
Mark Layton, Chairman and Chief Executive Officer of PFSweb,
stated, “We are off to a strong start in 2011, building positive
momentum with new and existing client programs. This is reflected
in our year-over-year revenue growth for the first quarter of 2011,
including an 18% increase in Service Fee revenue, which is
primarily attributable to the ongoing ramp up of new client
relationships implemented in 2010 and 2011.
“We have also remained busy marketing our services to new
clients, signing three new or expanded client agreements thus far
in 2011, which, along with several other clients signed in late
2010, are targeted to be fully implemented later this year. We are
also nearing execution on several additional new client contracts.
These recent client wins primarily operate in three industries
where the manufacturer focus has increasingly been shifting towards
direct-to-consumer web commerce, including the exciting trends in
consumer packaged goods (CPG), fashion and health and beauty
industries. We continue to see strong demand for PFSweb’s End2End
eCommerce® solution. Our pipeline for potential new service fee
business continues to exceed $50 million in annual service fee
revenue, based on current client projections.”
Summary of consolidated results for the first quarter ended
March 31, 2011:
- Total revenue increased 6.1% to $72.4
million for the first quarter of 2011 compared to $68.2 million for
first quarter of 2010;
- Service Fee revenue increased more than
18% to $18.9 million, compared with $16.0 million for the same
period in 2010;
- Adjusted EBITDA (as defined) was $0.5
million versus $0.8 million for the first quarter of 2010;
- Net loss was $2.3 million, or $0.19 per
basic and diluted share, compared to net loss of $1.2 million, or
$0.12 per basic and diluted share, for the first quarter of 2010.
Net loss for the first quarter of 2011 included a $0.6 million loss
from discontinued operations related to eCOST.com (including
certain costs associated with exiting the business), compared to a
$6,000 net loss from discontinued operations related to eCOST.com
for the same period last year;
- Non-GAAP net loss (as defined) was $1.4
million, or $0.11 per basic and diluted share, compared to a
non-GAAP net loss of $1.1 million, or $0.11 per basic and diluted
share, for the first quarter of 2010;
- Total cash, cash equivalents and
restricted cash was $19.8 million as of March 31, 2011 compared to
$20.3 million as of December 31, 2010.
“Our bottom-line results for the first quarter of 2011 reflect
an increase in costs associated with strategic investments to
support our targeted growth of our business, including investments
in technology development, operational and support management and
sales and marketing expenses. Additionally, we have recently made
further investments with the addition of a new ‘Food Grade’
distribution facility in Memphis to support specific facility
requirements for certain new clients in the CPG industry. We also
plan to expand our distribution operations in Belgium to support
current and potential growth across Europe, and to make additions
to certain of our call centers, which will provide us with better
flexibility to react to changes in client demands. We continue to
target service fee revenue growth of 20% and an Adjusted EBITDA of
$6 million to $7 million in 2011,” concluded Mr. Layton.
As previously reported, in February 2011, the Company made the
strategic decision to divest the eCOST.com business. As a result of
this divestiture, the Company has reported certain financial
results as “discontinued operations” in the periods presented.
Conference Call Information
Management will host a conference call at 11:00 am Eastern Time
(10:00 am Central Time) on Wednesday, May 11, 2011, to discuss the
latest corporate developments and results. To listen to the call,
please dial (888) 562-3356 and enter the pin number 62638305 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 June 11, 2011 at (800) 642-1687, pin number 62638305. 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 and loss from
discontinued operations.
EBITDA represents earnings (or losses) before loss from
discontinued operations, interest, income taxes, depreciation, and
amortization. Adjusted EBITDA further eliminates the effect of
stock-based compensation.
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 and loss
from discontinued operations 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, Lucky Brand Jeans, Juicy Couture,
Kensie, Monet, kate spade new york, AAFES, Riverbed, InfoPrint
Solutions Company, Hawker Beechcraft Corp., Roots Canada Ltd. and
Xerox.
To find out more about PFSweb, Inc. (NASDAQ: PFSW), visit the
company's website at http://www.pfsweb.com.
The matters discussed herein consist of forward-looking
information under the Private Securities Litigation Reform Act of
1995 and is subject to and involves risks and uncertainties, which
could cause actual results to differ materially from the
forward-looking information. PFSweb's Annual Report on Form 10-K
for the year ended December 31, 2010 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 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.
(TABLES FOLLOW)
PFSweb, Inc. and
Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(A) (In Thousands, Except Per Share Data) Three Months Ended
March 31, 2011 2010 REVENUES: Product revenue, net $
45,283 $ 45,622 Service fee revenue 18,900 15,979 Pass-thru revenue
8,206 6,634 Total revenues
72,389 68,235 COSTS OF REVENUES: Cost
of product revenue 42,466 42,362 Cost of service fee revenue 13,783
11,454 Cost of pass-thru revenue 8,206 6,634
Total costs of revenues 64,455 60,450
Gross profit 7,934 7,785 SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 9,288 8,608 Loss from
operations (1,354 ) (823 ) INTEREST EXPENSE, NET 191
254 Loss before income taxes (1,545 ) (1,077 ) INCOME
TAX PROVISION 135 126 LOSS FROM
CONTINUING OPERATIONS (1,680 ) (1,203 ) LOSS FROM DISCONTINUED
OPERATIONS, NET OF TAX (603 ) (6 ) NET LOSS $ (2,283
) $ (1,209 ) NON-GAAP LOSS $ (1,370 ) $ (1,107 ) NET LOSS
PER SHARE: Basic and Diluted $ (0.19 ) $ (0.12 ) WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING: Basic and Diluted
12,268 9,936 EBITDA $ 141 $ 731
ADJUSTED EBITDA $ 451 $ 827
(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, 2010.
PFSweb, Inc. and
Subsidiaries
Reconciliation of certain Non-GAAP Items to GAAP (In Thousands,
Except Per Share Data) Three Months
Ended March 31, 2011 2010 NET LOSS $ (2,283 ) $ (1,209 ) Loss from
discontinued operations, net of tax 603 6 Income tax expense 135
126 Interest expense 191 254 Depreciation and amortization
1,495 1,554 EBITDA $ 141 $ 731 Stock-based
compensation 310 96 ADJUSTED EBITDA $
451 $ 827 Three Months Ended March 31,
2011 2010 NET LOSS $ (2,283 ) $ (1,209 ) Loss from
discontinued operations, net of tax 603 6 Stock-based compensation
310 96 NON-GAAP LOSS $ (1,370 ) $
(1,107 ) NET LOSS PER SHARE: Basic and Diluted $ (0.19 ) $
(0.12 ) NON-GAAP LOSS Per Share: Basic and Diluted $ (0.11 )
$ (0.11 )
PFSweb, Inc. and
Subsidiaries
Unaudited Condensed Consolidated Balance Sheets (In Thousands,
Except Share Data) March 31, December
31, 2011 2010
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 18,830 $ 18,430
Restricted cash 947 1,853 Accounts receivable, net of allowance for
doubtful accounts of $752 and $754 at March 31, 2011 and December
31, 2010, respectively 41,336 41,438 Inventories, net of reserves
of $1,618 and $1,561 at March 31, 2011 and December 31, 2010,
respectively 32,511 35,161 Assets of discontinued operations -
2,776 Other receivables 13,732 14,539 Prepaid expenses and other
current assets 3,801 3,580 Total
current assets 111,157 117,777
PROPERTY AND EQUIPMENT, net 9,432 9,124 ASSETS OF DISCONTINUED
OPERATIONS - 1,126 OTHER ASSETS 2,080 2,203
Total assets 122,669 130,230
LIABILITIES AND
SHAREHOLDERS EQUITY
CURRENT LIABILITIES: Current portion of long-term debt and capital
lease obligations $ 20,404 $ 18,320 Trade accounts payable 46,698
55,692 Deferred revenue 4,979 5,254 Accrued expenses 17,313
15,870 Total current liabilities 89,394 95,136
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current
portion 1,249 2,136 OTHER LIABILITIES 3,991
3,608 Total liabilities 94,634 100,880
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; 12,299,243 and
12,255,064 shares issued at March 31, 2011 and December 31, 2010,
respectively; and 12,280,882 and 12,236,703 outstanding as of
December 31, 2010 and December 31, 2009, respectively 12 12
Additional paid-in capital 101,602 101,229 Accumulated deficit
(75,615 ) (73,332 ) Accumulated other comprehensive income 2,121
1,526 Treasury stock at cost, 18,361 shares (85 ) (85
) Total shareholders' equity 28,035 29,350
Total liabilities and shareholders' equity $ 122,669
$ 130,230
PFSweb, Inc. and
Subsidiaries
Unaudited Condensed Consolidating Statements of Operations For the
Three Months Ended March 31, 2011 (In Thousands)
Business & PFSweb Retail Connect eCOST
Eliminations Consolidated REVENUES: Product revenue, net $ - $
45,283 $ - $ - $ 45,283 Service fee revenue 18,900 - - - 18,900
Service fee revenue - affiliate 1,664 - - (1,664 ) - Pass-thru
revenue 8,206 - -
8,206 Total revenues 28,770 45,283
- (1,664 ) 72,389 COSTS
OF REVENUES: Cost of product revenue - 42,466 - - 42,466 Cost of
service fee revenue 14,348 - - (565 ) 13,783 Cost of pass-thru
revenue 8,206 - - -
8,206 Total costs of revenues 22,554
42,466 - (565 ) 64,455
Gross profit 6,216 2,817 - (1,099 ) 7,934 SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES 8,215 2,172
- (1,099 ) 9,288 Income (loss) from
operations (1,999 ) 645 - - (1,354 ) INTEREST EXPENSE (INCOME), NET
(55 ) 246 - - 191
Income (loss) before income taxes (1,944 ) 399 - - (1,545 )
INCOME TAX PROVISION (BENEFIT) (25 ) 160 -
- 135 INCOME (LOSS) FROM
CONTINUING OPERATIONS (1,919 ) 239 - - (1,680 ) LOSS FROM
DISCONTINUED OPERATIONS, NET OF TAX - -
(603 ) (603 ) NET INCOME (LOSS) $ (1,919 ) $ 239 $
(603 ) $ - $ (2,283 ) NON-GAAP NET INCOME (LOSS) $ (1,609 )
$ 239 $ - $ - $ (1,370 ) EBITDA $ (511 ) $ 652
$ - $ - $ 141 ADJUSTED EBITDA $ (201 ) $ 652 $
- $ - $ 451 A reconciliation of
NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows: NET
INCOME (LOSS) $ (1,919 ) $ 239 $ (603 ) $ - (2,283 ) Loss from
discontinued operations, net of tax - - 603 - 603 Income tax
expense (benefit) (25 ) 160 - - 135 Interest expense (income) (55 )
246 - - 191 Depreciation and amortization 1,488
7 - - 1,495 EBITDA
$ (511 ) $ 652 $ - $ - $ 141 Stock-based compensation 310
- - - 310
ADJUSTED EBITDA $ (201 ) $ 652 $ - $ - $ 451
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME
(LOSS) follows: NET INCOME (LOSS) $ (1,919 ) $ 239 $ (603 )
$ - $ (2,283 ) Loss from discontinued operations, net of tax - -
603 - 603 Stock-based compensation 310 -
- - 310 NON-GAAP NET
INCOME (LOSS) $ (1,609 ) $ 239 $ - $ - $ (1,370 )
Note: Business and Retail Connect includes our Supplies
Distributors and PFS Retail Connect operations, which operate
similar financial models on behalf of our client relationships.
PFSweb and PFS Retail Connect include certain ongoing activity
formerly reported as eCOST.
PFSweb, Inc. and
Subsidiaries Unaudited Condensed Consolidating
Statements of Operations For the Three Months Ended March 31, 2010
(In Thousands) Business &
PFSweb Retail Connect eCOST Eliminations Consolidated REVENUES:
Product revenue, net $ - $ 45,622 $ - $ - $ 45,622 Service fee
revenue 15,979 - - - 15,979 Service fee revenue - affiliate 1,700 -
- (1,700 ) - Pass-thru revenue 6,637 -
- (3 ) 6,634 Total revenues
24,316 45,622 - (1,703 )
68,235 COSTS OF REVENUES: Cost of product revenue -
42,362 - - 42,362 Cost of service fee revenue 12,101 - - (647 )
11,454 Cost of pass-thru revenue 6,637 -
- (3 ) 6,634 Total costs of
revenues 18,738 42,362 -
(650 ) 60,450 Gross profit 5,578 3,260 - (1,053 )
7,785 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 7,400
2,261 - (1,053 ) 8,608
Income (loss) from operations (1,822 ) 999 - - (823 )
INTEREST EXPENSE (INCOME), NET (56 ) 310 -
- 254 Income (loss) before
income taxes (1,766 ) 689 - - (1,077 ) INCOME TAX PROVISION
(BENEFIT) (130 ) 256 - -
126 INCOME (LOSS) FROM CONTINUING OPERATIONS (1,636 )
433 - - (1,203 ) LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX
- - (6 ) (6 ) NET INCOME
(LOSS) $ (1,636 ) $ 433 $ (6 ) $ - $ (1,209 ) NON-GAAP NET
INCOME (LOSS) $ (1,540 ) $ 433 $ - $ - $ (1,107 )
EBITDA $ (276 ) $ 1,007 $ - $ - $ 731
ADJUSTED EBITDA $ (180 ) $ 1,007 $ - $ - $ 827
A reconciliation of NET INCOME (LOSS) to EBITDA and
ADJUSTED EBITDA follows: NET INCOME (LOSS) $ (1,636 ) $ 433
$ (6 ) $ - (1,209 ) Loss from discontinued operations, net of tax -
- 6 - 6 Income tax expense (benefit) (130 ) 256 - - 126 Interest
expense (income) (56 ) 310 - - 254 Depreciation and amortization
1,546 8 - -
1,554 EBITDA $ (276 ) $ 1,007 $ - $ - $ 731 Stock-based
compensation 96 - - -
96 ADJUSTED EBITDA $ (180 ) $ 1,007 $ -
$ - $ 827 A reconciliation of NET INCOME
(LOSS) to NON-GAAP NET INCOME (LOSS) follows: NET INCOME
(LOSS) $ (1,636 ) $ 433 $ (6 ) $ - $ (1,209 ) Loss from
discontinued operations, net of tax - - 6 - 6 Stock-based
compensation 96 - - -
96 NON-GAAP NET INCOME (LOSS) $ (1,540 ) $ 433
$ - $ - $ (1,107 ) Note: Business and Retail
Connect includes our Supplies Distributors and PFS Retail Connect
operations, which operate similar financial models on behalf of our
client relationships. PFSweb and PFS Retail Connect include certain
ongoing activity formerly reported as eCOST.
PFSweb, Inc. and
Subsidiaries
Unaudited Condensed Consolidating Balance Sheets as of March 31,
2011 (In Thousands)
Business & PFSweb Retail Connect Eliminations
Consolidated
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 14,034 $ 4,796 $ - $
18,830 Restricted cash 138 809 - 947 Accounts receivable, net
20,179 21,488 (331 ) 41,336 Inventories, net - 32,511 - 32,511
Other receivables - 13,732 - 13,732 Prepaid expenses and other
current assets 2,151 1,650 -
3,801 Total current assets 36,502
74,986 (331 ) 111,157
PROPERTY AND EQUIPMENT, net 9,303 129 - 9,432
RECEIVABLE/INVESTMENT IN AFFILIATES 14,960 - (14,960 ) - OTHER
ASSETS 1,903 177 -
2,080 Total assets 62,668 75,292
(15,291 ) 122,669
LIABILITIES AND
SHAREHOLDERS EQUITY
CURRENT LIABILITIES: Current portion of long-term debt and capital
lease obligations $ 8,781 $ 11,623 $ - $ 20,404 Trade accounts
payable 5,123 41,906 (331 ) 46,698 Accrued expenses 14,703
7,589 - 22,292
Total current liabilities 28,607 61,118 (331 ) 89,394
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion
1,179 70 - 1,249 PAYABLE TO AFFILIATES - 22,745 (22,745 ) - OTHER
LIABILITIES 3,991 - -
3,991 Total liabilities 33,777
83,933 (23,076 ) 94,634
COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common
stock 12 19 (19 ) 12 Capital contributions - 1,000 (1,000 ) -
Additional paid-in capital 101,602 28,059 (28,059 ) 101,602
Retained earnings (accumulated deficit) (74,766 ) (40,314 ) 39,465
(75,615 ) Accumulated other comprehensive income 2,128 2,595 (2,602
) 2,121 Treasury stock (85 ) - -
(85 ) Total shareholders' equity 28,891
(8,641 ) 7,785 28,035 Total liabilities
and shareholders' equity $ 62,668 $ 75,292 $ (15,291
) $ 122,669
PFSweb, Inc. and
Subsidiaries
Unaudited Condensed Consolidating Balance Sheets as of December 31,
2010 (In Thousands)
Supplies PFSweb Distributors eCOST Eliminations Consolidated
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 13,471 $ 3,110 $ 1,849
$ - $ 18,430 Restricted cash 777 884 192 - 1,853 Accounts
receivable, net 21,234 19,524 987 (307 ) 41,438 Inventories, net -
35,161 - - 35,161 Assets of discontinued operations - - 2,776 -
2,776 Other receivables - 13,822 717 - 14,539 Prepaid expenses and
other current assets 2,006 1,469 105
- 3,580 Total current assets
37,488 73,970 6,626 (307
) 117,777 PROPERTY AND EQUIPMENT, net 8,861 22
241 - 9,124 RECEIVABLE/INVESTMENT IN AFFILIATES 14,255 - - (14,255
) - ASSETS OF DISCONTINUED OPERATIONS - - 1,126 - 1,126 OTHER
ASSETS 2,013 - 190 -
2,203 Total assets 62,617
73,992 8,183 (14,562 ) 130,230
LIABILITIES AND
SHAREHOLDERS EQUITY
CURRENT LIABILITIES: Current portion of long-term debt and capital
lease obligations $ 8,332 $ 9,953 $ 35 $ - $ 18,320 Trade accounts
payable 6,356 44,896 4,747 (307 ) 55,692 Accrued expenses
12,994 6,260 1,870 -
21,124 Total current liabilities 27,682 61,109 6,652
(307 ) 95,136 LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS,
less current portion 2,031 - 105 - 2,136 PAYABLE TO AFFILIATES -
4,255 18,490 (22,745 ) - OTHER LIABILITIES 3,608
- - - 3,608 Total
liabilities 33,321 65,364 25,247
(23,052 ) 100,880 COMMITMENTS AND
CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock 12 - 19 (19
) 12 Capital contributions - 1,000 - (1,000 ) - Additional paid-in
capital 101,229 - 28,059 (28,059 ) 101,229 Retained earnings
(accumulated deficit) (73,387 ) 5,410 (45,148 ) 39,793 (73,332 )
Accumulated other comprehensive income 1,527 2,218 6 (2,225 ) 1,526
Treasury stock (85 ) - - -
(85 ) Total shareholders' equity 29,296
8,628 (17,064 ) 8,490 29,350
Total liabilities and shareholders' equity $ 62,617 $
73,992 $ 8,183 $ (14,562 ) $ 130,230
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