PFSweb Reports Second Quarter 2016 Results

<< Back

PFSweb Reports Second Quarter 2016 Results

PFSweb Reports Second Quarter 2016 Results 92.6 KB

ALLEN, TX -- (Marketwired) -- 08/08/16 -- PFSweb, Inc. (NASDAQ: PFSW), a global commerce service provider, reported results for the second quarter ended June 30, 2016.

Second Quarter 2016 Highlights vs. Same Year-Ago Quarter(where applicable)

Total revenues increased 22% to $77.2 million
Service fee equivalent revenue (a non-GAAP measure defined below) increased 30% to $51.8 million
Service fee gross margin increased 100 basis points to 32.8%
Acquired Conexus, a European eCommerce System Integrator
Expanded its distribution facilities footprint in the Memphis, TN area to support several large new client wins

Management Commentary

"Our incremental investments in sales and marketing continue to yield strong results, as reflected by the 22% increase in total revenues and 30% increase in service fee equivalent revenue, as well as several large new client wins during the second quarter," said Mike Willoughby, CEO of PFSweb. "To accommodate our new client wins, we launched a new distribution facility in the second quarter and are building out two additional footprints to further support our omni-channel operations. Though we are incurring upfront costs associated with the implementation of these new clients and facilities, we expect the benefit of these investments, along with the multi-year recurring revenue streams from these large clients, to greatly outweigh the short-term effect on profitability.

"During the second quarter, we also acquired Conexus, a European eCommerce system integrator that solidifies our positioning in Western Europe with a strong footprint in the U.K. Though we remain in the early stages of integration, we've already begun to realize synergies across our combined SAP Hybris practices, and believe we are now even better equipped to enable B2B, B2C and mobile commerce for leading brands and retailers across the globe.

"In the back half of 2016, we intend to continue positioning ourselves as a valued strategic partner for our clients and seek to drive growth through our various eCommerce service offerings. We look forward to launching this quarter's new client wins by the holiday season. We believe these client wins provide enhanced visibility to our revenue growth and profitability objectives as we look ahead into 2017."

Second Quarter 2016 Financial Results

Total revenues in the second quarter of 2016 increased 22% to $77.2 million compared to $63.2 million in the same period of 2015. Service fee revenue in the second quarter increased 31% to $51.2 million compared to $39.1 million last year. Product revenue was $11.4 million compared to $13.7 million in the same period of 2015 due to ongoing restructuring activities by the company's last remaining client in this segment and their discontinuation of certain product lines.

Service fee equivalent revenue increased 30% to $51.8 million compared to $39.8 million in the year-ago quarter, driven by both new and expanded client relationships, as well as approximately $8.3 million of incremental service fees generated in the second quarter of 2016 by the company's acquired entities -- CrossView, Moda and Conexus -- which were acquired in 2015 and 2016.

Service fee gross margin in the second quarter of 2016 increased 100 basis points to 32.8% compared to 31.8% in the same period of 2015. The increase was due to a higher proportion of agency and technology services in the second quarter of 2016, in part due to the benefit from the Moda, CrossView and Conexus acquisitions.

Net loss in the second quarter of 2016 was $2.2 million or $(0.12) per share, compared to a net loss of $1.9 million or $(0.11) per share in the same period of 2015. Net loss in the second quarter of 2016 included $0.9 million in acquisition-related, restructuring and other costs, $0.8 million in amortization of acquisition-related intangible assets, and $0.6 million in stock-based compensation expense. This compares to $1.1 million in acquisition-related, restructuring and other costs, $0.2 million in amortization of acquisition-related intangible assets, and $1.2 million in stock-based compensation expense in the same period of 2015.

Adjusted EBITDA (a non-GAAP measure defined below) was $3.9 million compared to $4.1 million in the same period of 2015. As a percentage of service fee equivalent revenue, adjusted EBITDA was 7.5% compared to 10.3% in the year-ago quarter. The decline in adjusted EBITDA margin was driven by the expected increase in sales and marketing to support the company's targeted growth, as well as investment in infrastructure resources, particularly for several large new client wins that are requiring the build-out of new distribution operations.

Non-GAAP net income (a non-GAAP measure defined below) in the second quarter of 2016 was $0.2 million, compared to $0.6 million in the second quarter of 2015.

At June 30, 2016, cash and cash equivalents totaled $16.7 million compared to $21.8 million at December 31, 2015. Total debt was $55.0 million compared to $35.4 million at December 31, 2015, with the increase primarily driven by funds used to support the June 2016 Conexus acquisition and payment of calendar 2015 related earn-out liabilities applicable to prior acquisitions.

2016 Outlook

PFSweb is reiterating its target for 2016 service fee equivalent revenue to range between $220 million and $230 million, reflecting growth of 19% to 24% from 2015. The company is revising its target for adjusted EBITDA and now expects it to range between $21.5 million to $23.5 million (previously $23 million to $25 million), reflecting growth of 4% to 14% from 2015. These targets include the expected impact of the Conexus acquisition, lower than previously targeted revenue and profit contribution from the company's CrossView business, as well as incremental sales, marketing, and other infrastructure expenditures to support certain new client activity and the company's targeted future growth.

Conference Call

PFSweb will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the second quarter ended June 30, 2016.

CEO Michael Willoughby and CFO Tom Madden will host the conference call, followed by a question and answer period.

Date: Monday, August 8, 2016
Time: 5:00 p.m. Eastern Time (4:00 p.m. Central time)
Toll-free dial-in number: 1-888-417-8465
International dial-in number: 1-719-325-2452
Conference ID: 9515441

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at 1-949-574-3860.

The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=120456 and via the investor relations section of the company's website at www.pfsweb.com.

A replay of the conference call will be available after 8:00 p.m. Eastern Time on the same day through August 22, 2016.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 9515441

About PFSweb, Inc.

PFSweb (NASDAQ: PFSW) is a global commerce service provider of solutions including digital strategy consulting, digital agency and marketing services, technology development services, business process outsourcing services, and a complete omni-channel technology ecosystem. The company provides these solutions and services to major brand names and other companies seeking to optimize every customer experience and enhance their traditional and online business channels. PFSweb supports organizations across various industries, including Procter & Gamble, L'Oreal, LEGO, Canada Goose, ASICS, Roots Canada Ltd., PANDORA, Diageo, Anastasia Beverly Hills, T.J. Maxx, the United States Mint, and many more. PFSweb is headquartered in Allen, TX with additional locations in Tennessee, Mississippi, Minnesota, Washington, New York, Ohio, North Carolina, Canada, Belgium, United Kingdom, Bulgaria, Germany, and India. For more information, please visit www.pfsweb.com or download the free PFSweb IR App on your iPhone, iPad, or Android device.

Non-GAAP Financial Measures

This news release contains certain non-GAAP measures, including non-GAAP net income (loss), earnings before interest, income taxes, depreciation and amortization (EBITDA), Adjusted EBITDA and service fee equivalent revenue.

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, acquisition related, restructuring and other costs and the amortization of acquisition-related intangible assets.

EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, acquisition related, restructuring and other costs.

Service fee equivalent revenue represents service fee revenue plus the gross profit earned on product revenue and does not alter existing revenue recognition.

Our service fee equivalent revenue target for 2016 includes an estimated gross margin on product sales of approximately $3 million (based on targeted product revenue of $50 million less targeted cost of product revenue of $47 million) plus a targeted range of between $217 million to $227 million of service fee revenue.

The adjusted EBITDA outlook for 2016 have not been reconciled to the company's net loss outlook for the same period because certain items that would impact interest expense, income tax provision (benefit), depreciation and amortization, stock-based compensation, amortization of acquisition-related intangible assets and acquisition related and restructuring costs, all of which are reconciling items between net loss and adjusted EBITDA, cannot be reasonably predicted. Accordingly, reconciliation of adjusted EBITDA outlook to net loss outlook for 2016 is not available without unreasonable effort.

Non-GAAP net income (loss), EBITDA, Adjusted EBITDA and service fee equivalent revenue 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, acquisition related, restructuring and other costs and amortization of acquisition-related intangible assets 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. Service fee equivalent revenue allows client contracts with similar operational support models but different financial models to be combined as if all contracts were being operated on a service fee revenue basis.

PFSweb believes these non-GAAP measures provide useful information to both management and investors by focusing on certain operational metrics and excluding certain expenses in order to present its core operating performance and 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.

Forward-Looking Statements

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, 2015 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 of the company 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
Condensed Consolidated Balance Sheets (A)
(In Thousands, Except Share Data)

			(Unaudited)
			June 30,			December 31,
			2016			2015

ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	16,692		$	21,781
	Restricted cash			219			275
	Accounts receivable, net of allowance for doubtful accounts of $485 and $600 at June 30, 2016 and December 31, 2015, respectively			60,418			70,700
	Inventories, net of reserves of $607 and $739 at June 30, 2016 and December 31, 2015, respectively			8,049			9,262
	Other receivables			4,926			8,704
	Prepaid expenses and other current assets			5,841			5,662
		Total current assets		96,145			116,384

PROPERTY AND EQUIPMENT, net				26,915			24,093
INTANGIBLE ASSETS, net				9,295			8,810
GOODWILL				45,601			39,829
OTHER ASSETS				2,294			2,174
		Total assets	$	180,250		$	191,290

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations			5,166			3,153
	Trade accounts payable			39,649			51,170
	Deferred revenue			6,377			7,390
	Performance-based contingent payments			867			11,679
	Accrued expenses			23,950			30,563
		Total current liabilities		76,009			103,955

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion				49,864			32,238
DEFERRED REVENUE				4,413			4,499
DEFERRED RENT				4,918			4,362
OTHER LONG-TERM LIABILITIES				543			2,478
Total liabilities				135,747			147,532


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; 18,724,551 and 18,136,218 shares issued at June 30, 2016 and December 31, 2015, respectively; and 18,691,084 and 18,102,751 shares outstanding as of June 30, 2016 and December 31, 2015, respectively			18			18
	Additional paid-in capital			144,662			141,948
	Accumulated deficit			(100,721	)		(97,787	)
	Accumulated other comprehensive income			669			(296	)
	Treasury stock at cost, 33,467 shares			(125	)		(125	)
		Total shareholders' equity		44,503			43,758
		Total liabilities and shareholders' equity	$	180,250		$	191,290

(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, 2015.


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,
				2016			2015			2016			2015
REVENUES:
	Service fee revenue			$	51,166		$	39,075		$	100,484		$	75,783
	Product revenue, net				11,380			13,658			24,987			30,312
	Pass-thru revenue				14,653			10,443			26,809			20,927
			Total revenues		77,199			63,176			152,280			127,022

COSTS OF REVENUES:
	Cost of service fee revenue				34,381			26,645			66,655			51,800
	Cost of product revenue				10,742			12,911			23,644			28,619
	Cost of pass-thru revenue				14,653			10,443			26,809			20,927
			Total costs of revenues		59,776			49,999			117,108			101,346
			Gross profit		17,423			13,177			35,172			25,676
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					18,808			14,676			36,358			28,290
		Income (loss) from operations			(1,385	)		(1,499	)		(1,186	)		(2,614	)
INTEREST EXPENSE (INCOME), NET					609			223			1,094			541
		Income (loss) before income taxes			(1,994	)		(1,722	)		(2,280	)		(3,155	)
INCOME TAX PROVISION (BENEFIT)					188			178			654			438
NET INCOME (LOSS)				$	(2,182	)	$	(1,900	)	$	(2,934	)	$	(3,593	)
NON-GAAP NET INCOME (LOSS)				$	153		$	613		$	194		$	743

NET INCOME (LOSS) PER SHARE:
	Basic			$	(0.12	)	$	(0.11	)	$	(0.16	)	$	(0.21	)
	Diluted			$	(0.12	)	$	(0.11	)	$	(0.16	)	$	(0.21	)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
	Basic				18,627			17,368			18,477			17,257
	Diluted				18,627			17,368			18,477			17,257

EBITDA				$	2,415		$	1,810		$	6,217		$	3,950
ADJUSTED EBITDA				$	3,903		$	4,083		$	7,654		$	7,806

(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, 2015.


PFSweb, Inc. and Subsidiaries
Unaudited Reconciliation of Certain Non-GAAP Items to GAAP
(In Thousands, Except Per Share Data)

			Three Months Ended						Six Months Ended
			June 30,						June 30,
			2016			2015			2016			2015

NET INCOME (LOSS)			$	(2,182	)	$	(1,900	)	$	(2,934	)	$	(3,593	)
		Income tax expense (benefit)		188			178			654			438
		Interest expense, net		609			223			1,094			541
		Depreciation and amortization		3,800			3,309			7,403			6,564
EBITDA			$	2,415		$	1,810		$	6,217		$	3,950
		Stock-based compensation		629			1,150			1,396			1,954
		Acquisition related, restructuring and other costs, net		859			1,123			41			1,902
ADJUSTED EBITDA			$	3,903		$	4,083		$	7,654		$	7,806


			Three Months Ended						Six Months Ended
			June 30,						June 30,
			2016			2015			2016			2015

NET INCOME (LOSS)			$	(2,182	)	$	(1,900	)	$	(2,934	)	$	(3,593	)
		Stock-based compensation		629			1,150			1,396			1,954
		Amortization of acquisition-related intangible assets		847			240			1,691			480
		Acquisition related, restructuring and other costs, net		859			1,123			41			1,902
NON-GAAP NET INCOME (LOSS)			$	153		$	613		$	194		$	743

NET INCOME (LOSS) PER SHARE:
	Basic		$	(0.12	)	$	(0.11	)	$	(0.16	)	$	(0.21	)
	Diluted		$	(0.12	)	$	(0.11	)	$	(0.16	)	$	(0.21	)

NON-GAAP NET INCOME (LOSS) Per Share:
	Basic		$	0.01		$	0.04		$	0.01		$	0.04
	Diluted		$	0.01		$	0.03		$	0.01		$	0.04



			Three Months Ended						Six Months Ended
			June 30,						June 30,
			2016			2015			2016			2015

TOTAL REVENUES			$	77,199		$	63,176		$	152,280		$	127,022
	Pass-thru revenue			(14,653	)		(10,443	)		(26,809	)		(20,927	)
	Cost of product revenue			(10,742	)		(12,911	)		(23,644	)		(28,619	)
SERVICE FEE EQUIVALENT REVENUE			$	51,804		$	39,822		$	101,827		$	77,476


PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended June 30, 2016
(In Thousands)

							Business &
				PFSweb			Retail Connect		Eliminations			Consolidated
REVENUES:
	Service fee revenue			$	47,638		$	3,528	$	-		$	51,166
	Service fee revenue - affiliate				3,193			222		(3,415	)		-
	Product revenue, net				-			11,380		-			11,380
	Pass-thru revenue				14,653			-		-			14,653
			Total revenues		65,484			15,130		(3,415	)		77,199

COSTS OF REVENUES:
	Cost of service fee revenue				33,689			3,474		(2,782	)		34,381
	Cost of product revenue				16			10,726		-			10,742
	Cost of pass-thru revenue				14,653			-					14,653
			Total costs of revenues		48,358			14,200		(2,782	)		59,776
			Gross profit		17,126			930		(633	)		17,423
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					18,943			498		(633	)		18,808
		Income (loss) from operations			(1,817	)		432		-			(1,385	)
INTEREST EXPENSE (INCOME), NET					526			83					609
		Income (loss) before income taxes			(2,343	)		349		-			(1,994	)
INCOME TAX PROVISION (BENEFIT)					72			116					188
NET INCOME (LOSS)				$	(2,415	)	$	233	$	-		$	(2,182	)
NON-GAAP NET INCOME (LOSS)				$	(80	)	$	233	$	-		$	153
				$	-
EBITDA				$	1,977		$	438	$	-		$	2,415
ADJUSTED EBITDA				$	3,465		$	438	$	-		$	3,903


A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:

NET INCOME (LOSS)				$	(2,415	)	$	233	$	-			(2,182	)
		Income tax expense (benefit)			72			116		-			188
		Interest expense (income), net			526			83		-			609
		Depreciation and amortization			2,947			6		-			2,953
		Amortization of acquisition-related intangible assets			847			-		-			847
EBITDA				$	1,977		$	438	$	-		$	2,415
		Stock-based compensation			629			-		-			629
		Acquisition related, restructuring and other costs, net			859			-		-			859
ADJUSTED EBITDA				$	3,465		$	438	$	-		$	3,903

A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:

NET INCOME (LOSS)				$	(2,415	)	$	233	$	-		$	(2,182	)
		Stock-based compensation			629			-		-			629
		Amortization of acquisition-related intangible assets			847			-		-			847
		Acquisition related, restructuring and other costs, net			859			-		-			859
NON-GAAP NET INCOME (LOSS)				$	(80	)	$	233	$	-		$	153

Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.


PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended June 30, 2015
(In Thousands)

							Business &
				PFSweb			Retail Connect		Eliminations			Consolidated
REVENUES:
	Service fee revenue			$	35,841		$	3,234	$	-		$	39,075
	Service fee revenue - affiliate				3,150			169		(3,319	)		-
	Product revenue, net				-			13,658		-			13,658
	Pass-thru revenue				10,443			-		-			10,443
			Total revenues		49,434			17,061		(3,319	)		63,176

COSTS OF REVENUES:
	Cost of service fee revenue				26,611			3,198		(3,164	)		26,645
	Cost of product revenue				-			12,911		-			12,911
	Cost of pass-thru revenue				10,443			-		-			10,443
			Total costs of revenues		37,054			16,109		(3,164	)		49,999
			Gross profit		12,380			952		(155	)		13,177
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					14,249			582		(155	)		14,676
		Income (loss) from operations			(1,869	)		370		-			(1,499	)
INTEREST EXPENSE (INCOME), NET					121			102		-			223
		Income (loss) before income taxes			(1,990	)		268		-			(1,722	)
INCOME TAX PROVISION (BENEFIT)					86			92		-			178
NET INCOME (LOSS)				$	(2,076	)	$	176	$	-		$	(1,900	)
NON-GAAP NET INCOME (LOSS)				$	437		$	176	$	-		$	613

EBITDA				$	1,421		$	389	$	-		$	1,810
ADJUSTED EBITDA				$	3,694		$	389	$	-		$	4,083


A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:

NET INCOME (LOSS)				$	(2,076	)	$	176	$	-		$	(1,900	)
		Income tax expense (benefit)			86			92		-			178
		Interest expense, net			121			102		-			223
		Depreciation and amortization			3,290			19		-			3,309
EBITDA				$	1,421		$	389	$	-		$	1,810
		Stock-based compensation			1,150			-		-			1,150
		Acquisition related, restructuring and other costs, net			1,123			-		-			1,123
ADJUSTED EBITDA				$	3,694		$	389	$	-		$	4,083

A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:

NET INCOME (LOSS)				$	(2,076	)	$	176	$	-		$	(1,900	)
		Stock-based compensation			1,150			-		-			1,150
		Amortization of intangible assets			240			-		-			240
		Acquisition related, restructuring and other costs, net			1,123			-		-			1,123
NON-GAAP NET INCOME (LOSS)				$	437		$	176	$	-		$	613

Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.


PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Six Months Ended June 30, 2016
(In Thousands)

							Business &
				PFSweb			Retail Connect		Eliminations			Consolidated
REVENUES:
	Service fee revenue			$	92,854		$	7,630	$	-		$	100,484
	Service fee revenue - affiliate				6,811			457		(7,268	)		-
	Product revenue, net				-			24,987		-			24,987
	Pass-thru revenue				26,809			-		-			26,809
			Total revenues		126,474			33,074		(7,268	)		152,280

COSTS OF REVENUES:
	Cost of service fee revenue				65,156			7,460		(5,961	)		66,655
	Cost of product revenue				16			23,628		-			23,644
	Cost of pass-thru revenue				26,809			-		-			26,809
			Total costs of revenues		91,981			31,088		(5,961	)		117,108
			Gross profit		34,493			1,986		(1,307	)		35,172
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					36,607			1,058		(1,307	)		36,358
		Income (loss) from operations			(2,114	)		928		-			(1,186	)
INTEREST EXPENSE (INCOME), NET					921			173		-			1,094
		Income (loss) before income taxes			(3,035	)		755		-			(2,280	)
INCOME TAX PROVISION (BENEFIT)					398			256		-			654
NET INCOME (LOSS)				$	(3,433	)	$	499	$	-		$	(2,934	)
NON-GAAP NET INCOME (LOSS)				$	(305	)	$	499	$	-		$	194
				$	-
EBITDA				$	5,276		$	941	$	-		$	6,217
ADJUSTED EBITDA				$	6,713		$	941	$	-		$	7,654


A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:

NET INCOME (LOSS)				$	(3,433	)	$	499	$	-		$	(2,934	)
		Income tax expense (benefit)			398			256		-			654
		Interest expense, net			921			173		-			1,094
		Depreciation and amortization			5,699			13		-			5,712
		Amortization of acquisition-related intangible assets			1,691			-		-			1,691
EBITDA				$	5,276		$	941	$	-		$	6,217
		Stock-based compensation			1,396			-		-			1,396
		Acquisition related, restructuring and other costs, net			41			-		-			41
ADJUSTED EBITDA				$	6,713		$	941	$	-		$	7,654

A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:

NET INCOME (LOSS)				$	(3,433	)	$	499	$	-		$	(2,934	)
		Stock-based compensation			1,396			-		-			1,396
		Amortization of acquisition-related intangible assets			1,691			-		-			1,691
		Acquisition related, restructuring and other costs, net			41			-		-			41
NON-GAAP NET INCOME (LOSS)				$	(305	)	$	499	$	-		$	194

Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.


PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Six Months Ended June 30, 2015
(In Thousands)

							Business &
				PFSweb			Retail Connect		Eliminations			Consolidated
REVENUES:
	Service fee revenue			$	68,573		$	7,210	$	-		$	75,783
	Service fee revenue - affiliate				6,643			373		(7,016	)		-
	Product revenue, net				-			30,312		-			30,312
	Pass-thru revenue				20,927			-		-			20,927
			Total revenues		96,143			37,895		(7,016	)		127,022

	COSTS OF REVENUES:
	Cost of service fee revenue				51,268			7,144		(6,612	)		51,800
	Cost of product revenue				-			28,619		-			28,619
	Cost of pass-thru revenue				20,927			-		-			20,927
			Total costs of revenues		72,195			35,763		(6,612	)		101,346
			Gross profit		23,948			2,132		(404	)		25,676
	SELLING, GENERAL AND ADMINISTRATIVE EXPENSES				27,479			1,215		(404	)		28,290
		Income (loss) from operations			(3,531	)		917		-			(2,614	)
	INTEREST EXPENSE (INCOME), NET				327			214		-			541
		Income (loss) before income taxes			(3,858	)		703		-			(3,155	)
INCOME TAX PROVISION (BENEFIT)					192			246		-			438
NET INCOME (LOSS)				$	(4,050	)	$	457	$	-		$	(3,593	)
NON-GAAP NET INCOME (LOSS)				$	286		$	457	$	-		$	743

EBITDA				$	2,990		$	960	$	-		$	3,950
ADJUSTED EBITDA				$	6,846		$	960	$	-		$	7,806


A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:

NET INCOME (LOSS)				$	(4,050	)	$	457	$	-			(3,593	)
		Income tax expense (benefit)			192			246		-			438
		Interest expense (income), net			327			214		-			541
		Depreciation and amortization			6,521			43		-			6,564
EBITDA				$	2,990		$	960	$	-		$	3,950
		Stock-based compensation			1,954			-		-			1,954
		Acquisition related, restructuring and other costs, net			1,902			-		-			1,902
		ADJUSTED EBITDA		$	6,846		$	960	$	-		$	7,806

A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:

NET INCOME (LOSS)				$	(4,050	)	$	457	$	-		$	(3,593	)
		Stock-based compensation			1,954			-		-			1,954
		Amortization of intangible assets			480			-		-			480
		Acquisition related, restructuring and other costs, net			1,902			-		-			1,902
NON-GAAP NET INCOME (LOSS)				$	286		$	457	$	-		$	743

Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.


PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets
as of June 30, 2016
(In Thousands)

						Business &
			PFSweb			Retail Connect		Eliminations			Consolidated

ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	6,621		10,071		$	-		$	16,692
	Restricted cash			-		219			-			219
	Accounts receivable, net			46,457		14,988			(1,027	)		60,418
	Inventories, net			-		8,049			-			8,049
	Other receivables			825		4,101			-			4,926
	Prepaid expenses and other current assets			4,997		844			-			5,841
		Total current assets		58,900		38,272			(1,027	)		96,145

PROPERTY AND EQUIPMENT, net				26,879		15			-			26,894
RECEIVABLE/INVESTMENT IN AFFILIATES				9,451		-			(9,451	)		-
INTANGIBLE ASSETS, net				9,316		-			-			9,316
GOODWILL				45,601		-			-			45,601
OTHER ASSETS				2,294		-			-			2,294
		Total assets		152,441		38,287			(10,478	)		180,250

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations		$	4,491		-		$	-		$	4,491
	Trade accounts payable			13,878		26,798			(1,027	)		39,649
	Deferred revenue			6,377		-			-			6,377
	Performance-based contingent payments			867		-			-			867
	Accrued expenses			21,354		2,596			-			23,950
		Total current liabilities		46,967		29,394			(1,027	)		75,334

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion				50,539		-			-			50,539
PAYABLE TO AFFILIATES				-		22,045			(22,045	)		-
DEFERRED REVENUE				4,413		-			-			4,413
DEFERRED RENT				4,918		-			-			4,918
OTHER LONG-TERM LIABILITIES				543		-			-			543
		Total liabilities		107,380		51,439			(23,072	)		135,747


COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
	Common stock			18		19			(19	)		18
	Capital contributions			-		1,000			(1,000	)		-
	Additional paid-in capital			144,662		28,060			(28,060	)		144,662
	Retained earnings (accumulated deficit)			(100,525	)	(43,438	)		43,242			(100,721	)
	Accumulated other comprehensive income			1,031		1,207			(1,569	)		669
	Treasury stock			(125	)	-			-			(125	)
		Total shareholders' equity		45,061		(13,152	)		12,594			44,503
		Total liabilities and shareholders' equity	$	152,441		38,287		$	(10,478	)	$	180,250

(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, 2015.


PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets
as of December 31, 2015
(In Thousands)

						Business &
			PFSweb			Retail Connect			Eliminations			Consolidated

ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	7,962		$	13,819		$	-		$	21,781
	Restricted cash			51			224			-			275
	Accounts receivable, net			51,231			20,348			(879	)		70,700
	Inventories, net			-			9,262			-			9,262
	Other receivables			2,621			6,083			-			8,704
	Prepaid expenses and other current assets			4,744			918			-			5,662
		Total current assets		66,609			50,654			(879	)		116,384

PROPERTY AND EQUIPMENT, net				24,065			28			-			24,093
RECEIVABLE/INVESTMENT IN AFFILIATES				9,577			-			(9,577	)		-
INTANGIBLE ASSETS, net				8,810			-			-			8,810
GOODWILL				39,829			-			-			39,829
OTHER ASSETS				2,174			-			-			2,174
		Total assets		151,064			50,682			(10,456	)		191,290

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations		$	3,153		$	-		$	-		$	3,153
	Trade accounts payable			15,329			36,710			(869	)		51,170
	Deferred revenue			7,390			-			-			7,390
	Performance-based contingent payments			11,679			-			-			11,679
	Accrued expenses			26,015			4,558			(10	)		30,563
		Total current liabilities		63,566			41,268			(879	)		103,955

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion				32,238			-			-			32,238
PAYABLE TO AFFILIATES				-			22,056			(22,056	)		-
DEFERRED REVENUE				4,499			-			-			4,499
DEFERRED RENT				4,362			-			-			4,362
OTHER LONG-TERM LIABILITIES				2,478			-			-			2,478
		Total liabilities		107,143			63,324			(22,935	)		147,532


COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
	Common stock			18			19			(19	)		18
	Capital contributions			-			1,000			(1,000	)		-
	Additional paid-in capital			141,948			28,060			(28,060	)		141,948
	Retained earnings (accumulated deficit)			(97,616	)		(42,827	)		42,656			(97,787	)
	Accumulated other comprehensive income			(304	)		1,106			(1,098	)		(296	)
	Treasury stock			(125	)		-			-			(125	)
		Total shareholders' equity		43,921			(12,642	)		12,479			43,758
		Total liabilities and shareholders' equity	$	151,064		$	50,682		$	(10,456	)	$	191,290

(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, 2015.

Company Contact:
Michael C. Willoughby
Chief Executive Officer
Or
Thomas J. Madden
Chief Financial Officer
Tel 972-881-2900

Investor Relations:
Liolios
Scott Liolios or Sean Mansouri
Tel 949-574-3860
Email Contact

Source: PFSweb, Inc.

News Provided by Acquire Media

Press Release

PFSweb Reports Second Quarter 2016 Results

Search Investor Relations