PFSweb Reports First Quarter 2008 Results Including Adjusted EBITDA of $2.8 Million and Net Income of $0.4 Million
PFSweb, Inc. (Nasdaq: PFSW), an international business process outsourcing provider of end-to-end web commerce solutions and an online discount retailer, today announced its financial results for the first quarter ended March 31, 2008.
Summary of consolidated results for the first quarter ended March 31, 2008:
-- Total reported revenue was $118.5 million, compared to $104.4
million for the first quarter of 2007;
-- Service fee revenues increased 23% and eCOST.com revenue
increased 29% compared to the same period in the prior year;
-- Adjusted EBITDA (as defined) was $2.8 million versus $0.8 million
for the same period in the prior year;
-- Net income, calculated in accordance with U.S. generally accepted
accounting principles (GAAP), was $0.4 million or $0.01 per basic and
diluted share, compared to a net loss of $2.4 million, or $0.05 per
basic and diluted share, for the first quarter of 2007;
-- Non-GAAP net income (as defined) was $0.8 million or $0.02 per
basic and diluted share, compared to a non-GAAP net loss of $1.9
million, or $0.04 per basic and diluted share, for the first quarter
of 2007;
-- Merchandise sales (as defined) totaled approximately $777 million
for the first quarter of 2008 versus approximately $650 million for
the same period in the prior year, an increase of 20%;
-- Total cash, cash equivalents and restricted cash remains solid and
equaled $17.9 million as of March 31, 2008.
Mark Layton, Chairman and Chief Executive Officer of PFSweb, stated, "During the first quarter of 2008, we experienced measurable growth across each of our businesses year-over-year. We believe that having a strong roster of clients and customers in multiple industries has helped us achieve this growth despite weaker macroeconomic conditions in the U.S. In addition, this quarter represents the fourth consecutive quarter of profitability. These results are a testament to the sustained momentum that we have built over the last 12 months."
Summary of results by business:
Service Fee Business:
For the first quarter of 2008, Service Fee revenue increased 23% to $20.8 million, compared with $17.0 million for the same period in 2007. The Service Fee business reported Adjusted EBITDA of $1.6 million for the first quarter of 2008, compared to $0.3 million for the same period in the prior year period.
Mike Willoughby, President of PFSweb's Services Division, commented, "The growth in our Service Fee business reflects revenue from several new clients that were signed over the past 18 months and are now fully implemented. We also benefited from incremental project work and a modified contract arrangement with one of our largest service fee clients. We continue to be excited about our growth opportunities in this business. In addition to winning the new contract announced earlier today with an iconic brand name company, we maintain a robust pipeline of pending proposals currently valued based on client projections at approximately $35 million."
Supplies Distributors Business:
For the first quarter of 2008, Supplies Distributors revenue was $62.3 million, compared to $58.8 million for the same period in the prior year. Adjusted EBITDA was $1.7 million for the first quarter of 2008, compared to $1.4 million for the same period in the prior year.
Mr. Willoughby continued, "Our Supplies Distributors business experienced a 6 percent increase in revenue for the quarter. This business continues to contribute steady Adjusted EBITDA and net income performance. In mid 2007, the core client that is supported by the Supplies Distributors business was merged into a joint venture. Since this time we have worked closely with the client's management team and continue to support this successful, long-term relationship."
eCOST.com Business:
For the first quarter of 2008, eCOST.com revenue increased 29% to $28.0 million, compared to $21.6 million in the same quarter of 2007. Adjusted EBITDA for eCOST.com in the quarter was a loss of $0.5 million, a significant improvement as compared to a loss of $0.9 million in the same quarter of 2007.
Mr. Layton continued, "We are pleased with the 29% increase in revenue that eCOST.com reported for the first quarter. In April 2008, we fully launched at eCOST.com the 'For the Home' and 'Sports and Leisure' stores. Our growth strategy, for both revenue and gross profit percentage expansion, includes the broadening of our product offering targeted to widen our customer reach and to improve our gross margin mix. The addition of more than 60,000 new products in these two new stores is a solid step forward in implementing this strategy. eCOST.com also recently launched a significant site feature and functionality upgrade, the 3rd such major upgrade since early 2006, that is designed to further improve ease of use, navigation capabilities and cross sell and up-sell capabilities.
Reverse Split
PFSweb announced that its Board of Directors approved a reverse split of the issued and outstanding shares of the Company's common stock. The reverse split will consist of a 1-for-4.7 reverse split of the common stock and will be effective as of June 2, 2008. PFSweb stockholders approved a reverse stock split up to 1-for-6 at the Company's 2007 Annual Meeting of Stockholders.
"Given the continued underperformance of our shares relative to our business performance, the Board of Directors authorized a 1-for 4.7 reverse stock split at its last meeting. This decision came only after careful deliberation and consideration of the potential risks and rewards of this course of action. By overcoming the challenges associated with trading below $1 through a reverse stock split, the Board believes that the Company will have a better chance to properly reflect the value that has been built into the business over the last 12-18 months," concluded Mr. Layton.
Significant operating events for first quarter of 2008 year-to-date:
-- Service Fee Business signed two new clients totaling $8 to $10 million in annualized service fee revenue, based on client projections once fully implemented. This includes the previously reported new contract with The Discovery Channel Store, Inc., as well as a new contract with an iconic brand retailer scheduled to be implemented in the first quarter of 2009.
-- Service Fee Business signed extensions with two large brand name clients with an aggregate value of both deals estimated to be approximately $18 million, based on current client projections, over the terms of the agreements.
-- eCOST.com added 60,000 products from many leading brands in "For the Home" and "Sports and Leisure" categories via a Virtual Warehouse ("VW") relationship.
-- eCOST.com integrated PayPal Express Checkout to provide customers an additional alternative payment option.
-- PFSweb completed the renewals, extensions or amendments on certain of its asset-based financing facilities for its Service Fee and Supplies Distributors business segments with terms that are generally similar to or improved from prior agreements.
-- In February 2008 PFSweb and Demandware launched a next-generation solution for end-to-end eCommerce. Competitively, we believe that this combination provides one of the most compelling single source eCommerce outsourcing solutions available in the industry. This strategically important partnership collectively empowers online retailers and brands with total control over their entire shopping experience and a continuous competitive differentiation.
Financial Guidance for Fiscal Year 2008
PFSweb is currently targeting total consolidated revenues, excluding pass-through revenues, of approximately $445 million to $475 million and consolidated Adjusted EBITDA of $10 - $12 million for calendar year 2008. Non-GAAP net income, which excludes the impact of stock-based compensation and amortization of identifiable intangible assets, is targeted to be approximately $1 - $3 million for 2008.
Conference Call Information
Management will host a conference call at 3:30 p.m. Central Time (4:30 p.m. Eastern Time) on May 13, 2008 to discuss the latest corporate developments and results. To listen to the call, please dial (888) 694-4728 and enter the pin number (43871715) 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 13, 2008 at (800) 642-1687, pin number (43871715). The replay also will be available at the Company's website for a limited time.
Non-GAAP Financial Measures
This news release contains the non-GAAP measures non-GAAP net income (loss), Earnings Before Interest, Income Taxes, Depreciation and Amortization ("EBITDA"), and Adjusted EBITDA.
Non-GAAP net income represents net income calculated in accordance with U.S. GAAP as adjusted for the impact of non-cash stock-based compensation expense and amortization of identifiable intangible assets.
EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation and merger integration related expenses.
Non-GAAP net income, 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, as the calculation of non-GAAP net income eliminates the effect of stock-based compensation and amortization of intangible assets and EBITDA and Adjusted EBITDA further eliminates the effect of financing, income taxes, the accounting effects of capital spending and certain other merger related expenses, which items may vary from different companies for reasons unrelated to overall operating performance.
PFSweb believes these non-GAAP measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. These non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.
Merchandise Sales
Merchandise sales represent the estimated value of all fulfillment activity that flows through PFSweb including whether or not PFSweb is the seller of the merchandise or records the full amount of such sales on its financial statements, excluding service fee revenues that PFSweb might recognize for the underlying sales transactions. PFSweb uses merchandise sales as an operating metric to allow investors to gain a more thorough understanding of its business and business volume, in addition to GAAP net revenue.
About PFSweb, Inc.
PFSweb develops and deploys integrated business infrastructure solutions and fulfillment services for Fortune 1000, Global 2000 and brand name companies, including third party logistics, call center support and e-commerce services. The company serves a multitude of industries and company types, including such clients as LEGO, Riverbed, CHiA'SSO, MARS Drinks North America, Hewlett-Packard, International Business Machines, Hawker Beechcraft Corp., Rene Furterer USA, 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. Through its website, www.ecost.com, and its catalog, eCOST.com sells approximately 170,000 different products from leading manufacturers such as Sony, JVC, Canon, Hewlett-Packard, Garmin, Panasonic, Toshiba, Microsoft, Kitchen Aid, Panasonic, Black & Decker, Cuisinart, Coleman, Wilson and Nike.
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, 2007 identifies certain factors that could cause actual results to differ materially from those projected in any forward looking statements made and investors are advised to review the Annual Report and the Risk Factors described therein. These factors include: our ability to retain and expand relationships with existing clients and attract and implement new clients; our reliance on the fees generated by the transaction volume or product sales of our clients; our reliance on our clients' projections or transaction volume or product sales; our dependence upon our agreements with IBM and Infoprint Solutions; our dependence upon our agreements with our major clients; our client mix, their business volumes and the seasonality of their business; our ability to finalize pending contracts; the impact of strategic alliances and acquisitions; trends in the e-commerce, outsourcing, government regulation both foreign and domestic and the market for our services; whether we can continue and manage growth; increased competition; our ability to generate more revenue and achieve sustainable profitability; effects of changes in profit margins; the customer and supplier concentration of our business; the unknown effects of possible system failures and rapid changes in technology; foreign currency risks and other risks of operating in foreign countries; potential litigation; potential delisting; the impact of our planned reverse stock split; our dependency on key personnel; the impact of new accounting standards and changes in existing accounting rules or the interpretations of those rules; our ability to raise additional capital or obtain additional financing; our ability and the ability of our subsidiaries to borrow under current financing arrangements and maintain compliance with debt covenants; relationship with and our guarantees of certain of the liabilities and indebtedness of our subsidiaries; our ability to successfully the anticipated benefits of the merger: eCOST's potential indemnification obligations to its former parent; eCOST's ability to maintain existing and build new relationships with manufacturers and vendors and the success of its advertising and marketing efforts; eCOST's ability to increase its sales revenue and sales margin and improve operating efficiencies and eCOST's ability to generate a profit and cash flows sufficient to cover the values of its intangible assets. PFSweb undertakes no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future. There may be additional risks that we do not currently view as material or that are not presently known.
(Tables Follow)
PFSweb, Inc. and Subsidiaries
----------------------------------------------------------------------
Unaudited Condensed Consolidated Statements of Operations (A)
(In Thousands, Except Per Share Data)
Three Months Ended
March 31,
------------------
2008 2007
-------- ---------
REVENUES:
Product revenue, net $ 90,291 $ 80,457
Service fee revenue 20,812 16,962
Pass-thru revenue 7,366 6,988
-------- ---------
Total revenues 118,469 104,407
-------- ---------
COSTS OF REVENUES:
Cost of product revenue 83,979 74,771
Cost of service fee revenue 13,844 12,664
Cost of pass-thru revenue 7,366 6,988
-------- ---------
Total costs of revenues 105,189 94,423
-------- ---------
Gross profit 13,280 9,984
-------- ---------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 12,094 11,201
MERGER INTEGRATION EXPENSE - 150
AMORTIZATION OF IDENTIFIABLE INTANGIBLES 202 204
-------- ---------
Total operating expenses 12,296 11,555
-------- ---------
Income (loss) from operations 984 (1,571)
INTEREST EXPENSE, NET 330 584
-------- ---------
Income (loss) before income taxes 654 (2,155)
INCOME TAX PROVISION 240 206
-------- ---------
NET INCOME (LOSS) $ 414 $ (2,361)
======== =========
NON-GAAP NET INCOME (LOSS) $ 817 $ (1,948)
======== =========
NET INCOME (LOSS) PER SHARE:
Basic $ 0.01 $ (0.05)
======== =========
Diluted $ 0.01 $ (0.05)
======== =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic 46,492 46,475
======== =========
Diluted 47,199 46,475
======== =========
EBITDA $ 2,565 $ 423
======== =========
ADJUSTED EBITDA $ 2,766 $ 782
======== =========
(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, 2007.
PFSweb, Inc. and Subsidiaries
----------------------------------------------------------------------
Reconciliation of certain Non-GAAP Items to GAAP
(In Thousands, Except Per Share Data)
Three Months Ended
March 31,
----------------------
2008 2007
---------- -----------
NET INCOME (LOSS) $ 414 $ (2,361)
Income tax expense 240 206
Interest expense 330 584
Depreciation and amortization 1,581 1,994
---------- -----------
EBITDA $ 2,565 $ 423
Stock-based compensation 201 209
Merger integration related expenses - 150
---------- -----------
ADJUSTED EBITDA $ 2,766 $ 782
========== ===========
Three Months Ended
March 31,
----------------------
2008 2007
---------- -----------
NET INCOME (LOSS) $ 414 $ (2,361)
Stock-based compensation 201 209
Amortization of identifiable intangible
assets 202 204
---------- -----------
NON-GAAP NET INCOME (LOSS) $ 817 $ (1,948)
========== ===========
NET INCOME (LOSS) PER SHARE:
Basic $ 0.01 $ (0.05)
========== ===========
Diluted $ 0.01 $ (0.05)
========== ===========
NON-GAAP NET INCOME (LOSS) Per Share:
Basic $ 0.02 $ (0.04)
========== ===========
Diluted $ 0.02 $ (0.04)
========== ===========
PFSweb, Inc. and Subsidiaries
----------------------------------------------------------------------
Unaudited Condensed Consolidated Balance Sheets
(In Thousands, Except Share Data)
March 31, December 31,
2008 2007
------------ ------------
ASSETS
--------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 13,721 $ 14,272
Restricted cash 4,166 2,021
Accounts receivable, net of allowance
for doubtful accounts of $1,205 and
$1,483 at March 31, 2008 and December
31, 2007, respectively 43,666 48,493
Inventories, net of reserves of $2,278
and $2,080 at March 31, 2008 and
December 31, 2007, respectively 50,539 46,392
Other receivables 14,901 10,372
Prepaid expenses and other current
assets 3,356 2,608
------------ ------------
Total current assets 130,349 124,158
------------ ------------
PROPERTY AND EQUIPMENT, net 11,412 11,918
IDENTIFIABLE INTANGIBLES 5,623 5,824
GOODWILL 15,362 15,362
OTHER ASSETS 845 911
------------ ------------
Total assets 163,591 158,173
============ ============
LIABILITIES AND SHAREHOLDERS EQUITY
--------------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt and
capital lease obligations $ 13,683 $ 22,238
Trade accounts payable 72,560 56,975
Accrued expenses 20,727 22,438
------------ ------------
Total current liabilities 106,970 101,651
------------ ------------
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, less current portion 5,313 6,378
OTHER LIABILITIES 1,167 1,302
------------ ------------
Total liabilities 113,450 109,331
------------ ------------
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;
75,000,000 shares authorized;
46,579,564 and 46,574,189 shares issued
at March 31, 2008 and December 31,
2007, respectively; and 46,493,264 and
46,487,889 outstanding as of March 31,
2008 and December 31, 2007,
respectively 47 47
Additional paid-in capital 92,292 92,084
Accumulated deficit (45,324) (45,738)
Accumulated other comprehensive income 3,211 2,534
Treasury stock at cost, 86,300 shares (85) (85)
------------ ------------
Total shareholders' equity 50,141 48,842
------------ ------------
Total liabilities and shareholders'
equity $ 163,591 $ 158,173
============ ============
PFSweb, Inc. and Subsidiaries
----------------------------------------------------------------------
Unaudited Consolidating Statements of Operations
For the Three Months Ended March 31, 2008
(In Thousands)
Supplies
PFSweb Distributors eCOST
-------- ------------ --------
REVENUES:
Product revenue, net $ - $62,322 $27,969
Service fee revenue 20,812 - -
Service fee revenue - affiliate 2,151 - -
Pass-thru revenue 7,366 - -
-------- ------------ --------
Total revenues 30,329 62,322 27,969
-------- ------------ --------
COSTS OF REVENUES:
Cost of product revenue - 58,252 25,727
Cost of service fee revenue 14,551 - -
Cost of pass-thru revenue 7,366 - -
-------- ------------ --------
Total costs of revenues 21,917 58,252 25,727
-------- ------------ --------
Gross profit 8,412 4,070 2,242
-------- ------------ --------
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 8,313 2,418 2,807
AMORTIZATION OF IDENTIFIABLE
INTANGIBLES - - 202
-------- ------------ --------
Total operating expenses 8,313 2,418 3,009
-------- ------------ --------
Income (loss) from operations 99 1,652 (767)
INTEREST EXPENSE (INCOME), NET (60) 389 1
-------- ------------ --------
Income (loss) before income taxes 159 1,263 (768)
INCOME TAX PROVISION (BENEFIT) (195) 435 -
-------- ------------ --------
NET INCOME (LOSS) $ 354 $ 828 $ (768)
======== ============ ========
NON-GAAP NET INCOME (LOSS) $ 555 $ 828 $ (566)
======== ============ ========
EBITDA $ 1,434 $ 1,656 $ (525)
======== ============ ========
ADJUSTED EBITDA $ 1,635 $ 1,656 $ (525)
======== ============ ========
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ 354 $ 828 $ (768)
Income tax expense (benefit) (195) 435 -
Interest expense (income) (60) 389 1
Depreciation and amortization 1,335 4 242
-------- ------------ --------
EBITDA $ 1,434 $ 1,656 $ (525)
Stock-based compensation 201 - -
-------- ------------ --------
ADJUSTED EBITDA $ 1,635 $ 1,656 $ (525)
======== ============ ========
A reconciliation of NET INCOME(LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ 354 $ 828 $ (768)
Stock-based compensation 201 - -
Amortization of intangible assets - - 202
-------- ------------ --------
NON-GAAP NET INCOME (LOSS) $ 555 $ 828 $ (566)
======== ============ ========
Eliminations Consolidated
------------- ------------
REVENUES:
Product revenue, net $ - $ 90,291
Service fee revenue - 20,812
Service fee revenue - affiliate (2,151) -
Pass-thru revenue - 7,366
------------- ------------
Total revenues (2,151) 118,469
------------- ------------
COSTS OF REVENUES:
Cost of product revenue - 83,979
Cost of service fee revenue (707) 13,844
Cost of pass-thru revenue - 7,366
------------- ------------
Total costs of revenues (707) 105,189
------------- ------------
Gross profit (1,444) 13,280
------------- ------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (1,444) 12,094
AMORTIZATION OF IDENTIFIABLE INTANGIBLES - 202
------------- ------------
Total operating expenses (1,444) 12,296
------------- ------------
Income (loss) from operations - 984
INTEREST EXPENSE (INCOME), NET - 330
------------- ------------
Income (loss) before income taxes - 654
INCOME TAX PROVISION (BENEFIT) - 240
------------- ------------
NET INCOME (LOSS) $ - $ 414
============= ============
NON-GAAP NET INCOME (LOSS) $ - $ 817
============= ============
EBITDA $ - $ 2,565
============= ============
ADJUSTED EBITDA $ - $ 2,766
============= ============
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ - $ 414
Income tax expense (benefit) - 240
Interest expense (income) - 330
Depreciation and amortization - 1,581
------------- ------------
EBITDA $ - $ 2,565
Stock-based compensation - 201
------------- ------------
ADJUSTED EBITDA $ - $ 2,766
============= ============
A reconciliation of NET INCOME(LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ - $ 414
Stock-based compensation - 201
Amortization of intangible assets - 202
------------- ------------
NON-GAAP NET INCOME (LOSS) $ - $ 817
============= ============
PFSweb, Inc. and Subsidiaries
----------------------------------------------------------------------
Unaudited Condensed Consolidating Balance Sheets
as of March 31, 2008
(In Thousands)
Supplies
PFSweb Distributors eCOST
--------- ----------------------
ASSETS
------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 11,085 $ 2,580 $ 56
Restricted cash 1,575 1,643 948
Accounts receivable, net 19,235 22,289 2,407
Inventories, net - 43,010 7,529
Other receivables 14 14,887 -
Prepaid expenses and other
current assets 1,626 1,514 216
--------- ------------ ---------
Total current assets 33,535 85,923 11,156
--------- ------------ ---------
PROPERTY AND EQUIPMENT, net 11,024 25 363
NOTES RECEIVABLE FROM AFFILIATES 18,645 - -
INVESTMENT IN AFFILIATES 39,746 - -
IDENTIFIABLE INTANGIBLES - - 5,623
GOODWILL - - 15,362
OTHER ASSETS 710 - 135
--------- ------------ ---------
Total assets 103,660 85,948 32,639
========= ============ =========
LIABILITIES AND SHAREHOLDERS EQUITY
------------------------------------
CURRENT LIABILITIES:
Current portion of long-term
debt and capital lease
obligations $ 5,034 $ 8,649 $ -
Trade accounts payable 12,092 52,157 8,576
Accrued expenses 10,134 7,745 2,848
--------- ------------ ---------
Total current liabilities 27,260 68,551 11,424
--------- ------------ ---------
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, less current portion 5,313 - -
NOTES PAYABLE TO AFFILIATES - 5,505 13,140
OTHER LIABILITIES 898 - 269
--------- ------------ ---------
Total liabilities 33,471 74,056 24,833
--------- ------------ ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock 47 - 19
Capital contributions - 1,000 -
Additional paid-in capital 92,292 - 28,059
Retained earnings (accumulated
deficit) (25,102) 7,429 (20,272)
Accumulated other comprehensive
income 3,037 3,463 -
Treasury stock (85) - -
--------- ------------ ---------
Total shareholders' equity 70,189 11,892 7,806
--------- ------------ ---------
Total liabilities and
shareholders' equity $103,660 $85,948 $ 32,639
========= ============ =========
Eliminations Consolidated
------------ ------------
ASSETS
---------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ - $ 13,721
Restricted cash - 4,166
Accounts receivable, net (265) 43,666
Inventories, net - 50,539
Other receivables - 14,901
Prepaid expenses and other current assets - 3,356
------------ ------------
Total current assets (265) 130,349
------------ ------------
PROPERTY AND EQUIPMENT, net - 11,412
NOTES RECEIVABLE FROM AFFILIATES (18,645) -
INVESTMENT IN AFFILIATES (39,746) -
IDENTIFIABLE INTANGIBLES - 5,623
GOODWILL - 15,362
OTHER ASSETS - 845
------------ ------------
Total assets (58,656) 163,591
============ ============
LIABILITIES AND SHAREHOLDERS EQUITY
---------------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt and
capital lease obligations $ - $ 13,683
Trade accounts payable (265) 72,560
Accrued expenses - 20,727
------------ ------------
Total current liabilities (265) 106,970
------------ ------------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS,
less current portion - 5,313
NOTES PAYABLE TO AFFILIATES (18,645) -
OTHER LIABILITIES - 1,167
------------ ------------
Total liabilities (18,910) 113,450
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock (19) 47
Capital contributions (1,000) -
Additional paid-in capital (28,059) 92,292
Retained earnings (accumulated deficit) (7,379) (45,324)
Accumulated other comprehensive income (3,289) 3,211
Treasury stock - (85)
------------ ------------
Total shareholders' equity (39,746) 50,141
------------ ------------
Total liabilities and shareholders'
equity $(58,656) $163,591
============ ============
PFSweb, Inc. and Subsidiaries
----------------------------------------------------------------------
Unaudited Consolidating Statements of Operations
For the Three Months Ended March 31, 2007
(In Thousands)
Supplies
PFSweb Distributors eCOST
-------- ------------ --------
REVENUES:
Product revenue, net $ - $58,810 $21,647
Service fee revenue 16,962 - -
Service fee revenue - affiliate 2,026 - -
Pass-thru revenue 7,096 - -
-------- ------------ --------
Total revenues 26,084 58,810 21,647
-------- ------------ --------
COSTS OF REVENUES:
Cost of product revenue - 54,940 19,834
Cost of service fee revenue 13,303 - -
Cost of pass-thru revenue 7,096 - -
-------- ------------ --------
Total costs of revenues 20,399 54,940 19,834
-------- ------------ --------
Gross profit 5,685 3,870 1,813
-------- ------------ --------
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 7,297 2,503 2,785
MERGER INTEGRATION EXPENSE - - 150
AMORTIZATION OF IDENTIFIABLE
INTANGIBLES - - 204
-------- ------------ --------
Total operating expenses 7,297 2,503 3,139
-------- ------------ --------
Income (loss) from operations (1,612) 1,367 (1,326)
INTEREST EXPENSE (INCOME), NET 37 563 (16)
-------- ------------ --------
Income (loss) before income
taxes (1,649) 804 (1,310)
INCOME TAX PROVISION (BENEFIT) (144) 350 -
-------- ------------ --------
NET INCOME (LOSS) $(1,505) $ 454 $(1,310)
======== ============ ========
NON-GAAP NET INCOME (LOSS) $(1,296) $ 454 $(1,106)
======== ============ ========
EBITDA $ 133 $ 1,371 $(1,081)
======== ============ ========
ADJUSTED EBITDA $ 342 $ 1,371 $ (931)
======== ============ ========
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $(1,505) $ 454 $(1,310)
Income tax expense (benefit) (144) 350 -
Interest expense (income) 37 563 (16)
Depreciation and amortization 1,745 4 245
-------- ------------ --------
EBITDA $ 133 $ 1,371 $(1,081)
Stock-based compensation 209 - -
Merger integration expense - - 150
-------- ------------ --------
ADJUSTED EBITDA $ 342 $ 1,371 $ (931)
======== ============ ========
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $(1,505) $ 454 $(1,310)
Stock-based compensation 209 - -
Amortization of intangible assets - - 204
-------- ------------ --------
NON-GAAP NET INCOME (LOSS) $(1,296) $ 454 $(1,106)
======== ============ ========
Eliminations Consolidated
------------- ------------
REVENUES:
Product revenue, net $ - $ 80,457
Service fee revenue - 16,962
Service fee revenue - affiliate (2,026) -
Pass-thru revenue (108) 6,988
------------- ------------
Total revenues (2,134) 104,407
------------- ------------
COSTS OF REVENUES:
Cost of product revenue (3) 74,771
Cost of service fee revenue (639) 12,664
Cost of pass-thru revenue (108) 6,988
------------- ------------
Total costs of revenues (750) 94,423
------------- ------------
Gross profit (1,384) 9,984
------------- ------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (1,384) 11,201
MERGER INTEGRATION EXPENSE - 150
AMORTIZATION OF IDENTIFIABLE INTANGIBLES - 204
------------- ------------
Total operating expenses (1,384) 11,555
------------- ------------
Income (loss) from operations - (1,571)
INTEREST EXPENSE (INCOME), NET - 584
------------- ------------
Income (loss) before income taxes - (2,155)
INCOME TAX PROVISION (BENEFIT) - 206
------------- ------------
NET INCOME (LOSS) $ - $ (2,361)
============= ============
NON-GAAP NET INCOME (LOSS) $ - $ (1,948)
============= ============
EBITDA $ - $ 423
============= ============
ADJUSTED EBITDA $ - $ 782
============= ============
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ - $ (2,361)
Income tax expense (benefit) - 206
Interest expense (income) - 584
Depreciation and amortization - 1,994
------------- ------------
EBITDA $ - $ 423
Stock-based compensation - 209
Merger integration expense - 150
------------- ------------
ADJUSTED EBITDA $ - $ 782
============= ============
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ - $ (2,361)
Stock-based compensation - 209
Amortization of intangible assets - 204
------------- ------------
NON-GAAP NET INCOME (LOSS) $ - $ (1,948)
============= ============
PFSweb, Inc. and Subsidiaries
----------------------------------------------------------------------
Unaudited Condensed Consolidating Balance Sheets
as of December 31, 2007
(In Thousands)
Supplies
PFSweb Distributors eCOST
--------- ----------------------
ASSETS
------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 10,835 $ 1,757 $ 1,680
Restricted cash 50 1,464 507
Accounts receivable, net 21,366 25,126 2,585
Inventories, net - 39,596 6,796
Other receivables 211 10,161 -
Prepaid expenses and other
current assets 923 1,321 364
--------- ------------ ---------
Total current assets 33,385 79,425 11,932
--------- ------------ ---------
PROPERTY AND EQUIPMENT, net 11,549 21 348
NOTES RECEIVABLE FROM AFFILIATES 18,645 - -
INVESTMENT IN AFFILIATES 38,609 - -
IDENTIFIABLE INTANGIBLES - - 5,824
GOODWILL - - 15,362
OTHER ASSETS 762 - 149
--------- ------------ ---------
Total assets 102,950 79,446 33,615
========= ============ =========
LIABILITIES AND SHAREHOLDERS EQUITY
------------------------------------
CURRENT LIABILITIES:
Current portion of long-term
debt and capital lease
obligations $ 10,063 $12,175 $ -
Trade accounts payable 5,615 43,265 8,679
Accrued expenses 11,604 7,416 3,418
--------- ------------ ---------
Total current liabilities 27,282 62,856 12,097
--------- ------------ ---------
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, less current portion 6,378 - -
NOTES PAYABLE TO AFFILIATES - 6,005 12,640
OTHER LIABILITIES 998 - 304
--------- ------------ ---------
Total liabilities 34,658 68,861 25,041
--------- ------------ ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock 47 - 19
Capital contributions - 1,000 -
Additional paid-in capital 92,084 - 28,059
Retained earnings (accumulated
deficit) (26,288) 6,601 (19,504)
Accumulated other comprehensive
income 2,534 2,984 -
Treasury stock (85) - -
--------- ------------ ---------
Total shareholders' equity 68,292 10,585 8,574
--------- ------------ ---------
Total liabilities and
shareholders' equity $102,950 $79,446 $ 33,615
========= ============ =========
Eliminations Consolidated
------------ ------------
ASSETS
---------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ - $ 14,272
Restricted cash - 2,021
Accounts receivable, net (584) 48,493
Inventories, net - 46,392
Other receivables - 10,372
Prepaid expenses and other current assets - 2,608
------------ ------------
Total current assets (584) 124,158
------------ ------------
PROPERTY AND EQUIPMENT, net - 11,918
NOTES RECEIVABLE FROM AFFILIATES (18,645) -
INVESTMENT IN AFFILIATES (38,609) -
IDENTIFIABLE INTANGIBLES - 5,824
GOODWILL - 15,362
OTHER ASSETS - 911
------------ ------------
Total assets (57,838) 158,173
============ ============
LIABILITIES AND SHAREHOLDERS EQUITY
---------------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt and
capital lease obligations $ - $ 22,238
Trade accounts payable (584) 56,975
Accrued expenses - 22,438
------------ ------------
Total current liabilities (584) 101,651
------------ ------------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS,
less current portion - 6,378
NOTES PAYABLE TO AFFILIATES (18,645) -
OTHER LIABILITIES - 1,302
------------ ------------
Total liabilities (19,229) 109,331
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock (19) 47
Capital contributions (1,000) -
Additional paid-in capital (28,059) 92,084
Retained earnings (accumulated deficit) (6,547) (45,738)
Accumulated other comprehensive income (2,984) 2,534
Treasury stock - (85)
------------ ------------
Total shareholders' equity (38,609) 48,842
------------ ------------
Total liabilities and shareholders'
equity $(57,838) $158,173
============ ============
eCOST.com, Inc.
----------------------------------------------------------------------
Selected Operating Data
Three Months Ended
March 31,
----------------------
2008 2007
----------- ----------
Total Customers (1) 1,775,636 1,668,882
Active Customers (2) 164,416 167,148
New Customers (3) 22,939 27,735
Number of Orders (4) 61,432 66,000
Average Order Value (5) $ 450 $ 326
Advertising Expense (6) $ 189,676 $ 302,915
Cost to Acquire a New Customer (7) $ 7.10 $ 10.50
(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 $26,771 and $11,574 was not included in the
2008 and 2007 calculation, respectively as it is used for
retention and not acquisition.
SOURCE: PFSweb, Inc.
PFSweb, Inc. Mark C. Layton, 972-881-2900 Senior Partner and Chief Executive Officer or Thomas J. Madden, 972-881-2900 Senior Partner and Chief Financial Officer or Investor Relations: KCSA Strategic Communications Todd Fromer / Garth Russell 212-896-1215 / 212-896-1250 tfromer@kcsa.com / grussell@kcsa.com