PFSweb Reports Strong Fourth Quarter and Full Year 2022 Results
Demonstrates Strong 2022 Results and Continued Momentum Into 2023, Backed by Record Annual Sales Bookings and Order Fulfillment Performance
Full Year 2023 Guidance of Annual Service Fee Revenue Growth of 5% to 10%
“2022 was a strong year for PFS as we leveraged ongoing tailwinds in the eCommerce industry,” said
“We successfully navigated labor cost volatility early last year and significant restructuring of the Company following the LiveArea transaction, including the completion of transition services to Merkle. Additionally, despite headwinds from European and Canadian foreign currency exchange rate fluctuations, our service fee equivalent revenue growth and estimated pro forma standalone adjusted EBITDA percentage of service fee equivalent revenue performance came in line within our targeted 2022 guidance ranges. With the aforementioned challenges, I am especially proud of our team’s exceptional performance during the holiday peak and throughout 2022 as we continued to grow our fulfillment platform, post a record sales bookings year, and grow our client brand portfolio to over 100 brands, positioning our company for strong growth in 2023.”
Q4 2022 Financial and Operational Highlights vs. Q4 2021
- Total revenues increased 5% to
$98.5 million . - PFS Operations service fee equivalent (SFE) revenue (a non-GAAP measure defined and reconciled below) increased 4% to
$65.6 million . Excluding approximately$1.4 million in unfavorable foreign exchange (FX) SFE revenue impacts, SFE revenue would have increased approximately 6%. - PFS Operations service fee gross margin was 23.1% compared to 24.2%. The service fee gross margin in the fourth quarter of 2022 reflects continued improvement on a sequential basis as compared to previous quarterly results in 2022 due to the impact of increased productivity and improved contract pricing implemented throughout the year.
- Net loss from continuing operations was
$2.1 million or$(0.09) per share, compared to a net loss from continuing operations of$0.9 million or$(0.04) per share, largely driven by a$2.0 million increase in stock-based compensation in the fourth quarter of the current year as compared to the prior year period. - Consolidated adjusted EBITDA from continuing operations (a non-GAAP measure defined and reconciled below) increased 10% to
$5.6 million compared to$5.0 million . - PFS Operations adjusted EBITDA from continuing operations (a non-GAAP measure defined and reconciled below) increased 2% to
$9.4 million compared to$9.2 million . - Authorized special cash dividend of
$4.50 per share, which returns approximately$110 million of capital generated from the LiveArea divestiture toPFSweb shareholders.
Full Year 2022 Highlights
- Total revenues increased 6% to
$295.1 million , driven by growth across both new and existing fulfillment clients throughout the year. - PFS Operations SFE revenue (a non-GAAP measure defined and reconciled below) increased 7% to
$200.3 million . Excluding approximately$3.5 million in unfavorable annual FX SFE revenue impacts, SFE revenue would have increased by approximately 9%, which is near the upper end of the Company’s top-line CY2022 guidance range for annual SFE revenue growth. - PFS Operations service fee gross margin was 21.8% compared to 24.4%, reflecting the continued impacts of industry-wide wage inflation pressures—especially early in the year—and reduced higher margin, non-fulfillment-related revenue within the Company’s service mix, partially offset by improved contract pricing implemented throughout 2022.
- Net loss from continuing operations was
$20.2 million or$(0.89) per share, compared to a net loss from continuing operations of$13.6 million or$(0.64) per share, primarily driven by incremental restructuring related costs within 2022. - Consolidated adjusted EBITDA from continuing operations (a non-GAAP measure defined and reconciled below) increased 67% to
$5.0 million compared to$3.0 million . - PFS Operations adjusted EBITDA from continuing operations (a non-GAAP measure defined and reconciled below) increased 3% to
$23.2 million compared to$22.6 million . - Estimated 2022 PFS pro forma standalone AEBITDA percentage of service fee equivalent revenue was approximately 8%.
2023 Momentum and Growth Objectives
“To further supplement our growth objectives, we have remained committed to rapidly activating and expanding our multi-node fulfillment network. We quickly ramped our second
“With our corporate restructuring work substantially complete as of year-end 2022, we believe we have built a leaner and more efficient foundation from which to propel additional growth for PFS in the year ahead. As we progress further into 2023, we aim to further enhance our fulfillment platform through expanding our multi-node fulfillment strategy, converting our strong sales pipeline for continued growth, and driving our fulfillment-as-a-service product offering to build a more robust and flexible distribution network for our clients. Through our work to streamline our business and support our expanding client base, we believe we can facilitate a swift and sustained growth trajectory for PFS.”
2023 Outlook
The Company is reiterating its previously stated 2023 outlook for annual service fee revenue growth, which is expected to range between at least 5% to 10%. Based on continued indications of strong consumer and fulfillment service demand across its core verticals, the Company is optimistic that it can achieve service fee revenue growth at the upper end of this targeted range. As a percentage of service fee revenue,
Excluding public company costs, the Company is targeting total company adjusted EBITDA as a percentage of service fee revenue to range between 8% to 10% in 2023.
Strategic Alternatives Process
Conference Call
Date:
Time:
Registration Link: https://register.vevent.com/register/BI43b5a161ecc14398b02f1461c50d99f0
Please call the conference telephone number 5-10 minutes prior to the start time. If you have any difficulty connecting with the conference call, please contact
The conference call will be broadcast live and available for replay here and via the investor relations section of the company’s website at www.ir.pfsweb.com.
Forward-Looking Information
This press release contains 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. You can identify these forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “intend,” “plan,” “potential,” “project,” “seek,” “strive,” “predict,” “continue,” “target,” “estimate”, and other similar expressions. These forward-looking statements involve risks and uncertainties and may include assumptions as to how we may perform in the future, including our overall performance for our clients, as well as the impact of inflation, labor cost increases and overall economic conditions. Although we believe the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee these expectations will actually be achieved. The Company’s 2022 10-K, and any subsequent amendments thereto and our quarterly reports on Form 10-Q identify certain factors that could cause actual results to differ materially from those projected in any forward looking statements made and investors are advised to review the periodic reports of the Company and the Risk Factors described therein.
The Company 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.
Financial Statement Presentation Matters
The LiveArea segment has been presented as a discontinued operation for all periods presented in this news release.
Non-GAAP Financial Measures
This news release contains certain non-GAAP measures, including non-GAAP net income (loss) from continuing operations, earnings before interest, income taxes, depreciation and amortization (EBITDA) from continuing operations, adjusted EBITDA from continuing operations and service fee equivalent revenue.
Non-GAAP net income (loss) from continuing operations represents net income (loss) from continuing operations calculated in accordance with
EBITDA from continuing operations represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA from continuing operations further eliminates the effect of stock-based compensation, as well as restructuring and other.
PFS pro forma standalone AEBITDA percentage of service fee equivalent revenue measures estimated Adjusted EBITDA profitability for the PFS business on a pro forma basis as if the company were operating in a non-public environment without certain corporate overhead costs and after taking into account the impact of restructuring activity and other client contract modifications.
Non-GAAP net income (loss) from continuing operations, EBITDA from continuing operations, adjusted EBITDA from continuing operations 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, restructuring and other costs, and EBITDA from continuing operations and adjusted EBITDA from continuing operations further eliminate the effect of financing, remaining 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.
The Company has presented non-GAAP financial measures for the PFS Operations business including total revenues, service fee equivalent revenue, cost of service fee revenue, gross profit, direct contribution, and adjusted EBITDA which include adjustments for certain LiveArea related revenue activity and unallocated corporate costs. Such measures are reconciled below.
The Company 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.
About
PFS, the business unit of
Investor Relations:
1-949-574-3860
PFSW@gatewayir.com
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
2022 |
2021 |
||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 30,034 | $ | 152,332 | |||
Restricted cash | — | 214 | |||||
Accounts receivable, net of allowance for doubtful accounts of |
82,540 | 78,024 | |||||
Inventories, net of reserves of $— and |
— | 3,133 | |||||
Other receivables | 9,578 | 7,005 | |||||
Prepaid expenses and other current assets | 7,665 | 7,244 | |||||
Total current assets | 129,817 | 247,952 | |||||
Property and equipment, net | 20,888 | 19,315 | |||||
Operating lease right-of-use assets, net | 30,841 | 35,370 | |||||
21,310 | 22,218 | ||||||
Other assets | 1,806 | 1,611 | |||||
Total assets | $ | 204,662 | $ | 326,466 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Trade accounts payable | $ | 38,518 | $ | 36,450 | |||
Accrued expenses | 36,973 | 31,643 | |||||
Current portion of operating lease liabilities | 8,284 | 10,104 | |||||
Current portion of finance lease obligations | 72 | 222 | |||||
Deferred revenue | 3,906 | 4,391 | |||||
Total current liabilities | 87,753 | 82,810 | |||||
Finance lease obligations, less current portion | 22 | 89 | |||||
Deferred revenue, less current portion | 870 | 833 | |||||
Operating lease liabilities | 25,478 | 30,393 | |||||
Other liabilities | 4,315 | 2,565 | |||||
Total liabilities | 118,438 | 116,690 | |||||
Commitments and Contingencies | |||||||
Shareholders' equity: | |||||||
Preferred stock, |
— | — | |||||
Common stock, |
23 | 21 | |||||
Additional paid-in capital | 180,353 | 177,511 | |||||
Retained earnings (accumulated deficit) | (90,893 | ) | 33,522 | ||||
Accumulated other comprehensive loss | (3,134 | ) | (1,153 | ) | |||
(125 | ) | (125 | ) | ||||
Total shareholders’ equity | 86,224 | 209,776 | |||||
Total liabilities and shareholders’ equity | $ | 204,662 | $ | 326,466 | |||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In Thousands, Except Per Share Data)
(Unaudited) Three Months Ended |
Twelve Months Ended |
||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Revenues: | |||||||||||||||
Service fee revenue | $ | 65,611 | $ | 62,711 | $ | 200,034 | $ | 195,516 | |||||||
Product revenue, net | — | 4,717 | 3,333 | 17,612 | |||||||||||
Pass-through revenue | 32,905 | 26,731 | 91,755 | 64,174 | |||||||||||
Total revenues | 98,516 | 94,159 | 295,122 | 277,302 | |||||||||||
Costs of Revenues: | |||||||||||||||
Cost of service fee revenue | 50,443 | 47,524 | 156,365 | 146,311 | |||||||||||
Cost of product revenue | — | 4,315 | 3,059 | 16,580 | |||||||||||
Cost of pass-through revenue | 32,905 | 26,731 | 91,755 | 64,174 | |||||||||||
Total costs of revenues | 83,348 | 78,570 | 251,179 | 227,065 | |||||||||||
Gross profit | 15,168 | 15,589 | 43,943 | 50,237 | |||||||||||
Selling, general and administrative expenses | 17,111 | 16,272 | 63,957 | 61,040 | |||||||||||
Loss from operations | (1,943 | ) | (683 | ) | (20,014 | ) | (10,803 | ) | |||||||
Interest (income) expense, net | (727 | ) | 6 | (1,426 | ) | 879 | |||||||||
Loss on extinguishment of debt | — | — | — | 426 | |||||||||||
Income (loss) from continuing operations before income taxes | (1,216 | ) | (689 | ) | (18,588 | ) | (12,108 | ) | |||||||
Income tax expense, net | 929 | 254 | 1,617 | 1,530 | |||||||||||
Net income (loss) from continuing operations | (2,145 | ) | (943 | ) | (20,205 | ) | (13,638 | ) | |||||||
Income from discontinued operations before income taxes | — | — | 180 | 196,508 | |||||||||||
Income tax expense (benefit), net | (3,467 | ) | (679 | ) | (3,467 | ) | 35,636 | ||||||||
Net income from discontinued operations | 3,467 | 679 | 3,647 | 160,872 | |||||||||||
Net income (loss) | $ | 1,322 | $ | (264 | ) | $ | (16,558 | ) | $ | 147,234 | |||||
Basic earnings (loss) per share: | |||||||||||||||
Net income (loss) from continuing operations per share | $ | (0.09 | ) | $ | (0.04 | ) | $ | (0.89 | ) | $ | (0.64 | ) | |||
Net income from discontinued operations per share | 0.15 | 0.03 | 0.16 | 7.51 | |||||||||||
Basic earnings (loss) per share | $ | 0.06 | $ | (0.01 | ) | $ | (0.73 | ) | $ | 6.87 | |||||
Diluted earnings (loss) per share: | |||||||||||||||
Net income (loss) from continuing operations per share | $ | (0.09 | ) | $ | (0.04 | ) | $ | (0.89 | ) | $ | (0.64 | ) | |||
Net income from discontinued operations per share | 0.15 | 0.03 | 0.16 | 7.51 | |||||||||||
Diluted earnings (loss) per share | $ | 0.06 | $ | (0.01 | ) | $ | (0.73 | ) | $ | 6.87 | |||||
Weighted average number of shares outstanding: | |||||||||||||||
Basic | 22,670 | 22,152 | 22,664 | 21,410 | |||||||||||
Diluted | 22,670 | 22,152 | 22,664 | 21,410 | |||||||||||
EBITDA from continuing operations | $ | 63 | $ | 1,182 | $ | (12,458 | ) | $ | (3,186 | ) | |||||
Adjusted EBITDA from continuing operations | $ | 5,556 | $ | 5,046 | $ | 5,009 | $ | 2,996 | |||||||
Unaudited Reconciliation of Certain Non-GAAP Items to GAAP
(In Thousands)
Three Months Ended |
Twelve Months Ended |
||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Net income (loss) from continuing operations | $ | (2,145 | ) | $ | (943 | ) | $ | (20,205 | ) | $ | (13,638 | ) | |||
Income tax expense, net | 929 | 254 | 1,617 | 1,530 | |||||||||||
Loss on extinguishment of debt | — | — | — | 426 | |||||||||||
Interest (income) expense, net | (727 | ) | 6 | (1,426 | ) | 879 | |||||||||
Depreciation and amortization | 2,006 | 1,865 | 7,556 | 7,617 | |||||||||||
EBITDA from continuing operations | 63 | 1,182 | (12,458 | ) | (3,186 | ) | |||||||||
Gross margin on LiveArea activity(1) | — | — | — | (3,615 | ) | ||||||||||
Stock-based compensation | 2,983 | 981 | 5,928 | 4,784 | |||||||||||
Restructuring and other costs | 2,510 | 2,882 | 11,539 | 5,012 | |||||||||||
Adjusted EBITDA from continuing operations | 5,556 | 5,046 | 5,009 | 2,996 |
Three Months Ended |
Twelve Months Ended |
||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Net income (loss) from continuing operations | $ | (2,145 | ) | $ | (943 | ) | $ | (20,205 | ) | $ | (13,638 | ) | |||
Stock-based compensation | 2,983 | 981 | 5,928 | 4,784 | |||||||||||
Restructuring and other costs | 2,510 | 2,882 | 11,539 | 5,012 | |||||||||||
Non-GAAP net income (loss) from continuing operations | $ | 3,347 | $ | 2,920 | $ | (2,738 | ) | $ | (3,842 | ) |
Three Months Ended |
Twelve Months Ended |
||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Total revenues from continuing operations | $ | 98,516 | $ | 94,159 | $ | 295,122 | $ | 277,302 | |||||||
Pass-through revenue | (32,905 | ) | (26,731 | ) | (91,755 | ) | (64,174 | ) | |||||||
Cost of product revenue | — | (4,315 | ) | (3,059 | ) | (16,580 | ) | ||||||||
Service fee revenue related to LiveArea activity(1) | — | — | — | (8,813 | ) | ||||||||||
Service fee equivalent revenues from continuing operations | $ | 65,611 | $ | 63,113 | $ | 200,308 | $ | 187,735 |
(1) In completing the discontinued operations presentation, certain LiveArea revenues, costs of revenues and gross margin related to client contracts that were not fully transferred to contracts directly operating under the LiveArea operating entities as of the
UNAUDITED NON-GAAP OPERATING INFORMATION
(In Thousands)
The following tables represents the financial information for PFS Operations for the three and twelve months ended
Three Months Ended |
Twelve Months Ended |
||||||||||||||
PFS Operations (Non-GAAP) | 2022 | 2021 | 2022 | 2021 | |||||||||||
Revenues: | |||||||||||||||
Service fee revenue | $ | 65,611 | $ | 62,711 | $ | 200,034 | $ | 195,516 | |||||||
Product revenue, net | — | 4,717 | 3,333 | 17,612 | |||||||||||
Pass-through revenue | 32,905 | 26,731 | 91,755 | 64,174 | |||||||||||
Service fee revenue related to LiveArea activity(1) | — | — | — | (8,813 | ) | ||||||||||
Total revenues | 98,516 | 94,159 | 295,122 | 268,489 | |||||||||||
Costs of Revenues: | |||||||||||||||
Cost of service fee revenue | 50,443 | 47,524 | 156,365 | 146,311 | |||||||||||
Cost of product revenue | — | 4,315 | 3,059 | 16,580 | |||||||||||
Cost of pass-through revenue | 32,905 | 26,731 | 91,755 | 64,174 | |||||||||||
Cost of service fee revenue related to LiveArea activity(1) | — | — | — | (5,198 | ) | ||||||||||
Total costs of revenues | 83,348 | 78,570 | 251,179 | 221,867 | |||||||||||
Gross profit | 15,168 | 15,589 | 43,943 | 46,622 | |||||||||||
Direct operating expenses(2) | 8,483 | 8,985 | 30,657 | 33,829 | |||||||||||
Direct contribution | 6,685 | 6,604 | 13,286 | 12,793 | |||||||||||
Depreciation and amortization(3) | 1,850 | 1,728 | 7,179 | 7,044 | |||||||||||
Stock-based compensation(4) | 707 | 341 | 1,775 | 1,533 | |||||||||||
Restructuring and other costs(5) | 143 | 491 | 989 | 1,218 | |||||||||||
Adjusted EBITDA | $ | 9,385 | $ | 9,164 | $ | 23,229 | $ | 22,588 | |||||||
Total Revenues | $ | 98,516 | $ | 94,159 | $ | 295,122 | $ | 268,489 | |||||||
Pass-through revenue | (32,905 | ) | (26,731 | ) | (91,755 | ) | (64,174 | ) | |||||||
Cost of product revenue | — | (4,315 | ) | (3,059 | ) | (16,580 | ) | ||||||||
Service fee equivalent revenue | $ | 65,611 | $ | 63,113 | $ | 200,308 | $ | 187,735 |
(1) In completing the discontinued operations presentation, certain LiveArea revenues, costs of revenues and gross profit related to client contracts that were not fully transferred to contracts directly operating under the LiveArea operating entities as of the
(2) Direct operating expenses for PFS Operations exclude unallocated corporate costs included in consolidated selling, general and administrative expense of
(3) Depreciation and amortization for PFS Operations exclude depreciation and amortization applicable to unallocated corporate costs included in consolidated selling, general and administrative expense of approximately
(4) Stock based compensation for PFS Operations exclude stock-based compensation applicable to unallocated corporate costs included in consolidated selling, general and administrative expense of
(5) Restructuring and other costs for PFS Operations exclude restructuring and other costs applicable to unallocated corporate costs included in consolidated selling, general and administrative expense of
Source: PFSweb, Inc.