PFSweb Reports Second Quarter Record Results

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PFSweb Reports Second Quarter Record Results

PFSweb Reports Second Quarter Record Results 92.7 KB

ALLEN, TX -- (Marketwired) -- 08/10/15 -- PFSweb, Inc. (NASDAQ: PFSW), a global provider of end-to-end eCommerce solutions, reported results for the second quarter ended June 30, 2015.

Second Quarter 2015 Highlights vs. Year-Ago Quarter

Service fee equivalent revenue (a non-GAAP measure defined below) increased 40% to a Q2 record $39.8 million
Service fee gross margin increased 180 basis points to 31.8%
Adjusted EBITDA (a non-GAAP measure defined below) increased 138% to a Q2 record $4.1 million

Management Commentary

"We are pleased to once again report record quarterly results," said Michael Willoughby, CEO of PFSweb. "These results reflect continued strong execution for our new and existing clients. In addition, our service fee equivalent revenue and Adjusted EBITDA again benefitted from higher margin incremental project activity in our digital agency and technology services businesses. Our second quarter was also highlighted by the acquisition of MODA, which expands our offerings into the U.K. and adds integration capabilities with the Magento software platform. We believe our continuous execution, high level of client referenceability, and expansion of agency and technology service offerings are validating our position as a leader among full-service eCommerce providers.

"As recently announced, the breadth of our agency and technology service offering has been further enhanced through our acquisition of CrossView in August. Through combining CrossView's IBM WebSphere and SAP hybris related capabilities with our Demandware, Oracle Commerce and Magento experience, we believe we are now the only provider of end-to-end eCommerce solutions in the marketplace supporting all five major eCommerce software platforms. CrossView also provides us with a robust B2B front-end commerce platform which, we believe, when combined with our strong B2B order fulfillment, customer care and financial services capabilities, creates a unique B2B offering. By providing complete platform choice and a strong B2B full-service solution, we believe we will be able to target an even larger addressable market. As a result, we plan to further ramp our sales and marketing efforts to capitalize on the newly added capabilities and the cross sell opportunities from the CrossView acquisition."

2015 Outlook

As announced in the company's CrossView acquisition press release dated August 3, 2015, PFSweb has increased its 2015 service fee equivalent revenue guidance to range between $175 million and $185 million, up from $160 million to $170 million. This reflects growth of 26% to 33% from 2014. The company has also increased its adjusted EBITDA target to range between $18 million to $20 million, up from $16 million to $18 million. This reflects growth of 32% to 47% from 2014. This guidance excludes the impact of potential future acquisitions.

The updated guidance is based on the strength of the pre-acquisition PFSweb business and the contribution from the CrossView acquisition. The new service fee equivalent revenue and adjusted EBITDA guidance also reflects the expectation that CrossView revenues will be seasonally lower in the last quarter compared to the first three quarters, which is typical of commerce system integrators. The new guidance also includes the impact from increased sales and marketing expenses in the remainder of 2015, as well as expenses related to preparation for the 2015 holiday season.

Second Quarter 2015 Financial Results

Total revenues in the second quarter of 2015 increased 17% to $63.2 million compared to $54.0 million in the same period of 2014. Service fee revenue in the second quarter of 2015 increased 43% to $39.1 million compared to $27.4 million last year. Product revenue was $13.7 million compared to $18.1 million in the same period of 2014 due to ongoing restructuring activities by the company's largest client in this segment.

Service fee equivalent revenue in the second quarter of 2015 increased 40% to a second quarter record $39.8 million compared to $28.5 million in the same period of 2014.

Service fee gross margin in the second quarter increased 180 basis points to 31.8% compared to 30.0% in the same period of 2014. The 2015 quarter included a higher proportion of professional and technology services, including the impact from our acquisitions of Rev Solutions and LiveAreaLabs and certain incremental projects.

Adjusted EBITDA increased 138% to a second quarter record $4.1 million in of 2015 compared to $1.7 million in the same period of 2014. As a percentage of service fee equivalent revenue, adjusted EBITDA increased 430 basis points to 10.3% compared to 6.0% in the year-ago quarter.

Net loss in the second quarter was $1.9 million or $(0.11) per diluted share, compared to a net loss of $2.4 million or $(0.14) per diluted share in the same period of 2014. Net loss in the second quarter of 2015 included $1.2 million in stock-based compensation expense and $1.1 million in acquisition related and restructuring costs. This compares to $0.9 million in stock-based compensation expense and $0.2 million in acquisition related and restructuring costs in the same period of 2014.

Non-GAAP net income (a non-GAAP measure defined below) in the second quarter of 2015 was $0.6 million or $0.03 per diluted share, compared to non-GAAP net loss of $1.4 million or $(0.08) per diluted share in the second quarter of 2014.

At June 30, 2015, cash and cash equivalents was $15.7 million compared to $18.1 million at December 31, 2014. Total debt decreased to $9.5 million from $10.9 million at December 31, 2014.

First Half 2015 Financial Results

Total revenues in the first six months of 2015 increased 14% to $127.0 million compared to $111.3 million in the same period of 2014. Service fee revenue in the first six months of 2015 increased 38% to $75.8 million compared to $55.0 million last year. Product revenue was $30.3 million compared to $39.8 million in the same period of 2014.

Service fee equivalent revenue in the first six months of 2015 increased 35% to $77.5 million compared to $57.3 million in the same period of 2014.

Service fee gross margin in the first six months of 2015 increased 140 basis points to 31.6% compared to 30.2% in the same period of 2014.

Adjusted EBITDA increased 97% to $7.8 million in the first six months of 2015 compared to $4.0 million in the same period of 2014. As a percentage of service fee equivalent revenue, adjusted EBITDA increased 320 basis points to 10.1% compared to 6.9% in the year-ago period.

Net loss in the first six months of 2015 was $3.6 million or $(0.21) per diluted share, compared to a net loss of $4.2 million or $(0.25) per diluted share in the same period of 2014. Net loss in the first six months of 2015 included $2.0 million in stock-based compensation expense and $1.9 million in acquisition related and restructuring costs. This compares to $1.7 million in stock-based compensation expense and $0.2 million in acquisition related and restructuring costs in the same period of 2014.

Non-GAAP net income in the first six months of 2015 was $0.7 million or $0.04 per diluted share, compared to non-GAAP net loss of $2.4 million or $(0.14) per diluted share in the same period of 2014.

Conference Call

PFSweb will conduct a conference call today at 4:30 p.m. Eastern time to discuss its results for the second quarter ended June 30, 2015.

The company's CEO Mike Willoughby and CFO Tom Madden will host the conference call, followed by a question and answer period.

Date: Monday, August 10, 2015
Time: 4:30 p.m. Eastern time (3:30 p.m. Central time)
Toll-free dial-in number: 1-888-539-3678
International dial-in number: 1-719-325-2454
Conference ID: 8118507

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 Group at 1-949-574-3860.

The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=115575 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 7:30 p.m. Eastern time on the same day through August 24, 2015.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 8118507

About PFSweb Inc.

PFSweb (NASDAQ: PFSW) is a global provider of end-to-end eCommerce solutions including 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, Columbia Sportswear, Ricoh, Roots Canada Ltd., Diageo, BCBGMAXAZRIA, 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, London, Munich 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 may contain 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 costs and restructuring and other charges.

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

Service fee equivalent revenue represents service fee revenue plus the gross profit earned on product revenue.

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 costs and restructuring and other charges 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, 2014 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)


			June 30,			December 31,
			2015			2014

ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	15,721		$	18,128
	Restricted cash			374			521
	Accounts receivable, net of allowance for doubtful accounts of $446 and $447 at June 30, 2015 and December 31, 2014, respectively			42,961			59,126
	Inventories, net of reserves of $635 and $768 at June 30, 2015 and December 31, 2014, respectively			10,333			10,534
	Other receivables			4,565			5,638
	Prepaid expenses and other current assets			4,551			7,103
		Total current assets		78,505			101,050

PROPERTY AND EQUIPMENT, net				23,912			26,604
INTANGIBLE ASSETS, net				1,813			2,170
GOODWILL				10,322			8,366
OTHER ASSETS				2,101			2,556
		Total assets	$	116,653		$	140,746

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations		$	5,717		$	6,850
	Trade accounts payable			27,839			38,842
	Deferred revenue			6,806			9,098
	Accrued expenses			24,124			28,473
		Total current liabilities		64,486			83,263

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion				3,739			4,062
DEFERRED REVENUE				4,481			5,355
DEFERRED RENT				4,561			4,870
OTHER LONG-TERM LIABILITIES				368			3,091
		Total liabilities		77,635			100,641


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; 17,511,982 and 17,047,093 shares issued at June 30, 2015 and December 31, 2014, respectively; and 17,478,515 and 17,013,622 shares outstanding as of June 30, 2015 and December 31, 2014, respectively			17			17
	Additional paid-in capital			132,631			129,457
	Accumulated deficit			(93,519	)		(89,926	)
	Accumulated other comprehensive income			14			682
	Treasury stock at cost, 33,467 shares			(125	)		(125	)
		Total shareholders' equity		39,018			40,105
		Total liabilities and shareholders' equity	$	116,653		$	140,746


(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, 2014.

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,
				2015			2014			2015			2014
REVENUES:
	Product revenue, net			$	13,658		$	18,120		$	30,312		$	39,842
	Service fee revenue				39,075			27,384			75,783			54,982
	Pass-thru revenue				10,443			8,539			20,927			16,448
		Total revenues			63,176			54,043			127,022			111,272

COSTS OF REVENUES:
	Cost of product revenue				12,911			17,039			28,619			37,555
	Cost of service fee revenue				26,645			19,160			51,800			38,380
	Cost of pass-thru revenue				10,443			8,539			20,927			16,448
			Total costs of revenues		49,999			44,738			101,346			92,383
			Gross profit		13,177			9,305			25,676			18,889
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					14,676			11,485			28,290			22,507
		Income (loss) from operations			(1,499	)		(2,180	)		(2,614	)		(3,618	)
INTEREST EXPENSE (INCOME), NET					223			173			541			316
		Income (loss) before income taxes			(1,722	)		(2,353	)		(3,155	)		(3,934	)
INCOME TAX PROVISION (BENEFIT)					178			42			438			271
NET INCOME (LOSS)				$	(1,900	)	$	(2,395	)	$	(3,593	)	$	(4,205	)
NON-GAAP NET INCOME (LOSS)				$	613		$	(1,379	)	$	743		$	(2,395	)

NET INCOME (LOSS) PER SHARE:
	Basic			$	(0.11	)	$	(0.14	)	$	(0.21	)	$	(0.25	)
	Diluted			$	(0.11	)	$	(0.14	)	$	(0.21	)	$	(0.25	)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
	Basic				17,368			16,736			17,257			16,630
	Diluted				17,368			16,736			17,257			16,630

EBITDA				$	1,810		$	698		$	3,950		$	2,150
ADJUSTED EBITDA				$	4,083		$	1,714		$	7,806		$	3,960


(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, 2014.

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

			Three Months Ended						Six Months Ended
			June 30,						June 30,
			2015			2014			2015			2014

NET INCOME (LOSS)			$	(1,900	)	$	(2,395	)	$	(3,593	)	$	(4,205	)
		Income tax expense (benefit)		178			42			438			271
		Interest expense, net		223			173			541			316
		Depreciation and amortization		3,309			2,878			6,564			5,768
EBITDA			$	1,810		$	698		$	3,950		$	2,150
		Stock-based compensation		1,150			862			1,954			1,656
		Acquisition related and restructuring costs		1,123			154			1,902			154
ADJUSTED EBITDA			$	4,083		$	1,714		$	7,806		$	3,960


			Three Months Ended						Six Months Ended
			June 30,						June 30,
			2015			2014			2015			2014

NET INCOME (LOSS)			$	(1,900	)	$	(2,395	)	$	(3,593	)	$	(4,205	)
		Stock-based compensation		1,150			862			1,954			1,656
		Amortization of intangible assets		240			-			480			-
		Acquisition related and restructuring costs		1,123			154			1,902			154
NON-GAAP NET INCOME (LOSS)			$	613		$	(1,379	)	$	743		$	(2,395	)

NET INCOME (LOSS) PER SHARE:
	Basic		$	(0.11	)	$	(0.14	)	$	(0.21	)	$	(0.25	)
	Diluted		$	(0.11	)	$	(0.14	)	$	(0.21	)	$	(0.25	)

NON-GAAP NET INCOME (LOSS) Per Share:
	Basic		$	0.04		$	(0.08	)	$	0.04		$	(0.14	)
	Diluted		$	0.03		$	(0.08	)	$	0.04		$	(0.14	)



			Three Months Ended						Six Months Ended
			June 30,						June 30,
			2015			2014			2015			2014

TOTAL REVENUES			$	63,176		$	54,043		$	127,022		$	111,272
	Pass-thru revenue			(10,443	)		(8,539	)		(20,927	)		(16,448	)
	Cost of product revenue			(12,911	)		(17,039	)		(28,619	)		(37,555	)
SERVICE FEE EQUIVALENT REVENUE			$	39,822		$	28,465		$	77,476		$	57,269

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

COSTS OF REVENUES:
	Cost of product revenue				-			12,911		-			12,911
	Cost of service fee revenue				26,611			3,198		(3,164	)		26,645
	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 (income), 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 and restructuring costs			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 and restructuring costs			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 Three Months Ended June 30, 2014
(In Thousands)

							Business &
				PFSweb			Retail Connect		Eliminations			Consolidated
REVENUES:
	Product revenue, net			$	-		$	18,120	$	-		$	18,120
	Service fee revenue				24,423			2,961		-			27,384
	Service fee revenue - affiliate				3,176			595		(3,771	)		-
	Pass-thru revenue				8,539			-		-			8,539
			Total revenues		36,138			21,676		(3,771	)		54,043

COSTS OF REVENUES:
	Cost of product revenue				-			17,039		-			17,039
	Cost of service fee revenue				19,557			3,093		(3,490	)		19,160
	Cost of pass-thru revenue				8,539			-		-			8,539
			Total costs of revenues		28,096			20,132		(3,490	)		44,738
			Gross profit		8,042			1,544		(281	)		9,305
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					10,719			1,047		(281	)		11,485
		Income (loss) from operations			(2,677	)		497		-			(2,180	)
INTEREST EXPENSE (INCOME), NET					33			140		-			173
		Income (loss) before income taxes			(2,710	)		357		-			(2,353	)
INCOME TAX PROVISION (BENEFIT)					(49	)		91		-			42
NET INCOME (LOSS)				$	(2,661	)	$	266	$	-		$	(2,395	)
NON-GAAP NET INCOME (LOSS)				$	(1,645	)	$	266	$	-		$	(1,379	)

EBITDA				$	157		$	541	$	-		$	698
ADJUSTED EBITDA				$	1,173		$	541	$	-		$	1,714


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

NET INCOME (LOSS)				$	(2,661	)	$	266	$	-			(2,395	)
		Income tax expense (benefit)			(49	)		91		-			42
		Interest expense (income), net			33			140		-			173
		Depreciation and amortization			2,834			44		-			2,878
EBITDA				$	157		$	541	$	-		$	698
		Stock-based compensation			862			-		-			862
		Acquisition related costs			154			-		-			154
ADJUSTED EBITDA				$	1,173		$	541	$	-		$	1,714

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

NET INCOME (LOSS)				$	(2,661	)	$	266	$	-		$	(2,395	)
		Stock-based compensation			862			-		-			862
		Acquisition related costs			154			-		-			154
NON-GAAP NET INCOME (LOSS)				$	(1,645	)	$	266	$	-		$	(1,379	)

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

COSTS OF REVENUES:
	Cost of product revenue				-			28,619		-			28,619
	Cost of service fee revenue				51,268			7,144		(6,612	)		51,800
	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 and restructuring costs			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 and restructuring costs			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 Consolidating Statements of Operations
For the Six Months Ended June 30, 2014
(In Thousands)

							Business &
				PFSweb			Retail Connect		Eliminations			Consolidated
REVENUES:
	Product revenue, net			$	-		$	39,842	$	-		$	41,703
	Service fee revenue				48,576			6,406		-			55,025
	Service fee revenue - affiliate				6,866			1,210		(8,076	)		(1,904	)
	Pass-thru revenue				16,448			-		-			16,448
			Total revenues		71,890			47,458		(8,076	)		111,272

COSTS OF REVENUES:
	Cost of product revenue				-			37,555		-			36,781
	Cost of service fee revenue				39,077			6,709		(7,406	)		39,154
	Cost of pass-thru revenue				16,448			-		-			16,448
			Total costs of revenues		55,525			44,264		(7,406	)		92,383
			Gross profit		16,365			3,194		(670	)		18,889
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					20,895			2,282		(670	)		22,507
		Income (loss) from operations			(4,530	)		912		-			(3,618	)
INTEREST EXPENSE (INCOME), NET					32			284		-			316
		Income (loss) before income taxes			(4,562	)		628		-			(3,934	)
INCOME TAX PROVISION (BENEFIT)					81			190		-			271
NET INCOME (LOSS)				$	(4,643	)	$	438	$	-		$	(4,205	)
NON-GAAP NET INCOME (LOSS)				$	(2,833	)	$	438	$	-		$	(2,395	)

EBITDA				$	1,151		$	999	$	-		$	2,150
ADJUSTED EBITDA				$	2,961		$	999	$	-		$	3,960


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

NET INCOME (LOSS)				$	(4,643	)	$	438	$	-			(4,205	)
		Income tax expense (benefit)			81			190		-			271
		Interest expense (income), net			32			284		-			316
		Depreciation and amortization			5,681			87		-			5,768
EBITDA				$	1,151		$	999	$	-		$	2,150
		Stock-based compensation			1,656			-		-			1,656
		Acquisition related costs			154			-		-			154
ADJUSTED EBITDA				$	2,961		$	999	$	-		$	3,960

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

NET INCOME (LOSS)				$	(4,643	)	$	438	$	-		$	(4,205	)
		Stock-based compensation			1,656			-		-			1,656
		Acquisition related costs			154			-		-			154
NON-GAAP NET INCOME (LOSS)				$	(2,833	)	$	438	$	-		$	(2,395	)

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, 2015
(In Thousands)

							Business &
				PFSweb			Retail Connect			Eliminations			Consolidated

ASSETS
CURRENT ASSETS:
	Cash and cash equivalents			$	9,036		$	6,685		$	-		$	15,721
	Restricted cash				-			374			-			374
	Accounts receivable, net				30,064			13,727			(830	)		42,961
	Inventories, net				-			10,333			-			10,333
	Other receivables				160			4,405			-			4,565
	Prepaid expenses and other current assets				3,687			864			-			4,551
			Total current assets		42,947			36,388			(830	)		78,505

PROPERTY AND EQUIPMENT, net					23,858			54			-			23,912
RECEIVABLE/INVESTMENT IN AFFILIATES					11,039			-			(11,039	)		-
INTANGIBLE ASSETS, net					1,813			-			-			1,813
GOODWILL					10,322			-			-			10,322
OTHER ASSETS					2,101			-			-			2,101
			Total assets		92,080			36,442			(11,869	)		116,653

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations				$	3,550		$	2,167		$	-		$	5,717
Trade accounts payable					8,393			20,287			(841	)		27,839
Deferred revenue					6,806			-			-			6,806
Accrued expenses					19,394			4,730			-			24,124
			Total current liabilities		38,143			27,184			(841	)		64,486

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion					3,739			-			-			3,739
PAYABLE TO AFFILIATES					-			22,045			(22,045	)		-
DEFERRED REVENUE					4,481			-			-			4,481
DEFERRED RENT					4,561			-			-			4,561
OTHER LONG-TERM LIABILITIES					368			-			-			368
			Total liabilities		51,292			49,229			(22,886	)		77,635


COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
	Common stock				17			1,019			(1,019	)		17
	Capital contributions				-						-			-
	Additional paid-in capital				134,557			28,060			(29,986	)		132,631
	Retained earnings (accumulated deficit)				(93,661	)		(43,128	)		43,270			(93,519	)
	Accumulated other comprehensive income				-			1,262			(1,248	)		14
	Treasury stock				(125	)		-			-			(125	)
		Total shareholders' equity			40,788			(12,787	)		11,017			39,018
		Total liabilities and shareholders' equity		$	92,080		$	36,442		$	(11,869	)	$	116,653


(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, 2014.


PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets
as of December 31, 2014
(In Thousands)

						Business &
			PFSweb			Retail Connect			Eliminations			Consolidated

ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	6,671		$	11,457		$	-		$	18,128
	Restricted cash			-			521			-			521
	Accounts receivable, net			42,081			18,415			(1,370	)		59,126
	Inventories, net			-			10,534			-			10,534
	Other receivables			-			5,638			-			5,638
	Prepaid expenses and other current assets			6,141			962			-			7,103
		Total current assets		54,893			47,527			(1,370	)		101,050

PROPERTY AND EQUIPMENT, net				26,478			126			-			26,604
RECEIVABLE/INVESTMENT IN AFFILIATES				9,938			-			(9,938	)		-
INTANGIBLE ASSETS, net				2,170			-			-			2,170
GOODWILL				8,366			-			-			8,366
OTHER ASSETS				2,527			29			-			2,556
		Total assets		104,372			47,682			(11,308	)		140,746

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations		$	3,583		$	3,267		$	-		$	6,850
	Trade accounts payable			13,001			27,211			(1,370	)		38,842
	Deferred revenue			9,098			-			-			9,098
	Accrued expenses			21,338			7,135			-			28,473
		Total current liabilities		47,020			37,613			(1,370	)		83,263

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion				4,062			-			-			4,062
PAYABLE TO AFFILIATES				-			22,045			(22,045	)		-
DEFERRED REVENUE				5,355			-			-			5,355
DEFERRED RENT				4,870			-			-			4,870
OTHER LONG-TERM LIABILITIES				3,091			-			-			3,091
		Total liabilities		64,398			59,658			(23,415	)		100,641


COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
	Common stock			17			19			(19	)		17
	Capital contributions			-			1,000			(1,000	)		-
	Additional paid-in capital			129,457			28,060			(28,060	)		129,457
	Retained earnings (accumulated deficit)			(90,061	)		(42,711	)		42,846			(89,926	)
	Accumulated other comprehensive income			686			1,656			(1,660	)		682
	Treasury stock			(125	)		-			-			(125	)
		Total shareholders' equity		39,974			(11,976	)		12,107			40,105
		Total liabilities and shareholders' equity	$	104,372		$	47,682		$	(11,308	)	$	140,746


(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, 2014.

Company Contact:

Michael C. Willoughby
Chief Executive Officer
or
Thomas J. Madden
Chief Financial Officer
Tel 972-881-2900

Investor Relations:

Liolios Group Inc.
Scott Liolios or Sean Mansouri
Tel 949-574-3860
Email Contact

Source: PFSweb, Inc.

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