PFSweb Reports Third Quarter 2010 Results
PFSweb, Inc. (Nasdaq: PFSW), an international business process outsourcing services provider of end-to-end web commerce solutions and an online discount retailer, today announced its financial results for the third quarter and nine months ended September 30, 2010.
Mark Layton, Chairman and Chief Executive Officer of PFSweb, stated, "We continue to be very encouraged by the exciting developments within our Service Fee business segment. Organic growth from our existing business to consumer clients, recent new client additions as well as a strong pipeline of potential new business opportunities are all key indicators of the momentum that our End2End eCommerce solution is building in the growing direct to consumer marketplace. This momentum resulted in a 25% increase in revenue and $1.1 million increase in Adjusted EBITDA for our Service Fee business segment during the third quarter, as compared to the prior year. This growth was offset by tempered results in our eCOST.com and Supplies Distributors segments. As discussed below, we have moved aggressively to address the eCOST.com business issue and continue to evaluate ways to improve this segment and reduce its negative impact on our overall business."
Summary of consolidated results for the quarter ended September 30, 2010:
Total revenue decreased to $80.0 million for the third quarter of 2010 compared to $85.6 million for third quarter of 2009; Total gross margin was 10.7% for the third quarter of 2010 compared to 11.2% for the same period last year; Adjusted EBITDA (as defined) was $0.9 million versus $1.2 million for the third quarter of 2009; Net loss was $1.9 million, or $0.16 per basic and diluted share, compared to net loss of $0.8 million or $0.09 per basic and diluted share, for the third quarter of 2009. Net loss for the third quarter of 2010 included a $0.6 million charge applicable to an executive's disabilities benefits; Non-GAAP net loss (as defined) was $1.0 million, or $0.08 per basic and diluted share, compared to non-GAAP net loss of $0.7 million or $0.07 per basic and diluted share, for the third quarter of 2009; Total cash, cash equivalents and restricted cash was $20.4 million as of September 30, 2010 compared to $16.9 million as of December 31, 2009.
Summary of consolidated results for the nine months ended September 30, 2010:
Total reported revenue was $250.7 million compared to $256.9 million for the nine months ended September 30, 2009; Total gross margin was 10.8% compared to 11.3% for the same period last year; Adjusted EBITDA was $2.8 million compared to $3.1 million for the nine months ended September 30, 2009. Net loss was $4.6 million, or $0.42 per basic and diluted share, compared to net loss of $3.6 million, or $0.36 per basic and diluted share, for the nine month period ended September 30, 2009; Non-GAAP net loss was $3.0 million, or $0.27 per basic and diluted share, compared to non-GAAP net loss of $3.2 million, or $0.33 per basic and diluted share, for the same period last year.
Summary of results by business segment:
Service Fee Business:
For the third quarter of 2010, Service Fee revenue was $16.4 million, compared with $13.1 million for the same period in 2009. The Service Fee business reported Adjusted EBITDA of $0.3 million for the third quarter of 2010, compared to an Adjusted EBITDA loss of $0.8 million for the same period last year.
For the nine months ended September 30, 2010, Service Fee revenue was $48.9 million, compared with $42.6 million for the same period in 2009. Adjusted EBITDA for the Service Fee business was $1.0 million for the nine month period of 2010, compared to an Adjusted EBITDA loss of $0.5 million for the nine month period in 2009.
Mike Willoughby, President of PFSweb's Services division, commented, "During the past three months, we launched a number of new client programs, including Volcom as well as our support of several eCommerce sites under our previously announced master agreement with a well-known fashion brands company geared mostly towards women and our previously announced relationship with a leading beauty and fragrance company. With our existing client base and potential new business pipeline, consisting primarily of major consumer brands, we believe we are well positioned to capture further growth in the rapidly expanding eCommerce industry, particularly in the fashion, apparel and accessories, beauty and fragrance and consumer packaged goods segments."
Supplies Distributors Business:
For the third quarter of 2010, Supplies Distributors revenue was $39.1 million, compared to $45.1 million for the same period last year. Adjusted EBITDA was $1.0 million for the third quarter of 2010, compared to $2.2 million for the same period last year.
For the nine months ended September 30, 2010, Supplies Distributors revenue was $128.1 million, compared to $135.7 million for the same period last year. Adjusted EBITDA was $2.9 million for the nine month period in 2010, compared to $4.6 million for the nine month period in 2009.
"Our Supplies Distributors business experienced a reduction in business volume this past quarter partially due to temporary inventory supply shortages related to our largest supplier in this segment transitioning to a new ERP system. This migration is now generally completed and supply inflows have returned to more normalized levels, and, as such, we currently expect that overall business trends should improve during the December 2010 quarter," Mr. Layton stated.
eCOST.com Business:
For the third quarter of 2010, eCOST.com revenue was $16.6 million, compared to $20.6 million for the same period in 2009. Adjusted EBITDA for eCOST.com was a loss of $0.5 million for the third quarter of 2010, compared to a loss of $0.2 million for the third quarter of 2009.
For the nine months ended September 30, 2010, eCOST.com revenue was $52.9 million, compared to $61.8 million for the same period in 2009. Adjusted EBITDA for eCOST.com in the nine month period ended September 30, 2010 was a loss of $1.1 million, as compared to a loss of $0.9 million for the same period last year.
"During the third quarter, we spent considerable time enhancing eCOST.com's sales and marketing program to increase its effectiveness against the ever evolving email filtering algorithms being deployed by several internet/email service providers (ISP's). While this issue negatively impacted our revenue during the quarter, I am pleased to say that by the end of the third quarter we were experiencing higher success rates when advertising to this portion of our customers than we had in the summer of 2010. We expect these efforts to be ongoing as the email filtering algorithms will continue to adjust," stated Mr. Layton.
"This holiday season, eCOST.com will offer online shoppers the hottest computer and electronics deals in the industry through its patented Bargain Countdown showcase, including thousands of limited quantity, limited time offers. We expect HDTVs, netbooks, gaming products (like Kinect), HD cameras and camcorders to lead the way this holiday season in terms of the hot products that consumers are seeking. We are also excited about the exclusive free shipping offers in our weekly Secret Sale campaign and the very popular Make-an-Offer shopping format that has become a success over the past few months," Layton concluded.
Conference Call Information
Management will host a conference call at 10:00 am Central Time (11:00 am Eastern Time) on Monday, November 15, 2010, to discuss the latest corporate developments and results. To listen to the call, please dial (888) 562-3356 and enter the pin number (22026323) 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 December 15, 2010 at (800) 642-1687, pin number (22026323). The replay also will be available at the Company's website for a limited time.
Non-GAAP Financial Measures
This news release may contain certain non-GAAP measures, including non-GAAP net income (loss), Earnings Before Interest, Income Taxes, Depreciation and Amortization ("EBITDA") and Adjusted EBITDA.
Non-GAAP net income (loss) represents net income (loss) calculated in accordance with U.S. GAAP as adjusted for the impact of non-cash stock-based compensation expense, amortization of identifiable intangible assets, the impairment of goodwill and identifiable intangible assets, if any, executive disability benefits and vendor settlement and other legal matter costs.
EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, impairment of goodwill and identifiable intangible assets, if any, executive disability benefits and vendor settlement and other legal matter costs.
Non-GAAP net income (loss), EBITDA and Adjusted EBITDA are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, amortization of intangible assets, impairment of goodwill and intangible assets, if any, executive disability benefits and vendor settlement and other legal matter costs and EBITDA and Adjusted EBITDA further eliminate the effect of financing, income taxes, and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance.
PFSweb believes these non-GAAP measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.
About PFSweb, Inc.
PFSweb develops and deploys comprehensive end-to-end eCommerce solutions for Fortune 1000, Global 2000 and brand name companies, including interactive marketing services, global fulfillment and logistics and high-touch customer care. The company serves a multitude of industries and company types, including such clients as P&G, LEGO, Carter's, AAFES, Riverbed, InfoPrint Solutions Company, Hawker Beechcraft Corp., 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. The eCOST.com brand markets approximately 290,000 different products from leading manufacturers such as Sony, Hewlett-Packard, Denon, JVC, Canon, Nikon, Panasonic, Toshiba, Microsoft, Garmin, Braun, Sharp, Cuisinart, Bissell and Hoover primarily over the Internet and through direct marketing.
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, 2009 and Quarterly Report on Form 10-Q for the six months ended June 30, 2010 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 Annual and Quarterly Reports and the Risk Factors described therein. PFSweb undertakes no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future. There may be additional risks that we do not currently view as material or that are not presently known.
PFSweb, Inc. and Subsidiaries
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Unaudited Condensed Consolidated Statements of Operations (A)
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- ---------------------------------
2010 2009 2010 2009
--------------- --------------- ---------------- ----------------
REVENUES:
Product revenue, net $ 55,724 $ 65,713 $ 181,082 $ 197,522
Service fee revenue 16,402 13,118 48,948 42,604
Pass-thru revenue 7,842 6,776 20,662 16,748
------ ------ ------- -------
Total revenues 79,968 85,607 250,692 256,874
------ ------ ------- -------
COSTS OF REVENUES:
Cost of product revenue 51,576 59,611 167,480 180,746
Cost of service fee revenue 11,981 9,674 35,422 30,406
Cost of pass-thru revenue 7,842 6,776 20,662 16,748
------ ------ ------- -------
Total costs of revenues 71,399 76,061 223,564 227,900
------ ------ ------- -------
Gross profit 8,569 9,546 27,128 28,974
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 10,159 9,998 30,719 31,362
------ ------ ------- -------
Loss from operations (1,590 ) (452 ) (3,591 ) (2,388 )
INTEREST EXPENSE, NET 254 288 753 967
------ ------ ------- -------
Loss before income taxes (1,844 ) (740 ) (4,344 ) (3,355 )
INCOME TAX EXPENSE (BENEFIT) 76 106 280 268
------ ------ ------- -------
NET LOSS $ (1,920 ) $ (846 ) $ (4,624 ) $ (3,623 )
===== ====== = ===== ====== = === ======= === === ======= ===
NON-GAAP NET LOSS $ (974 ) $ (723 ) $ (2,967 ) $ (3,235 )
===== ====== = ===== ====== = === ======= === === ======= ===
NET LOSS PER SHARE:
Basic and Diluted $ (0.16 ) $ (0.09 ) $ (0.42 ) $ (0.36 )
===== ====== = ===== ====== = === ======= === === ======= ===
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic and Diluted 12,237 9,931 10,998 9,927
====== ====== ======= =======
EBITDA $ (59 ) $ 1,088 $ 1,235 $ 2,803
===== ====== = ===== ====== === ======= === =======
ADJUSTED EBITDA $ 852 $ 1,185 $ 2,787 $ 3,112
===== ====== ===== ====== === ======= === =======
(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, 2009.
PFSweb, Inc. and Subsidiaries
------------------------------------------------------------------------------------------------
Reconciliation of certain Non-GAAP Items to GAAP
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- ---------------------------
2010 2009 2010 2009
------------- ------------ ------------- -------------
NET LOSS $ (1,920 ) $ (846 ) $ (4,624 ) $ (3,623 )
Income tax expense (benefit) 76 106 280 268
Interest expense 254 288 753 967
Depreciation and amortization 1,531 1,540 4,826 5,191
------ ----- ------ ------
EBITDA $ (59 ) $ 1,088 $ 1,235 $ 2,803
Stock-based compensation 225 97 583 309
Executive disability benefits 650 - 650 -
Vendor settlement and other legal matters 36 - 319 -
------ ----- ------ ------
ADJUSTED EBITDA $ 852 $ 1,185 $ 2,787 $ 3,112
== ====== == ===== == ====== == ======
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- ---------------------------
2010 2009 2010 2009
------------- ------------ ------------- -------------
NET LOSS $ (1,920 ) $ (846 ) $ (4,624 ) $ (3,623 )
Stock-based compensation 225 97 583 309
Amortization of identifiable intangible assets 35 26 105 79
Executive disability benefits 650 - 650 -
Vendor settlement and other legal matters 36 - 319 -
------ ----- ------ ------
NON-GAAP NET LOSS $ (974 ) $ (723 ) $ (2,967 ) $ (3,235 )
== ====== == == ===== == == ====== == == ====== ==
NET LOSS PER SHARE:
Basic and Diluted $ (0.16 ) $ (0.09 ) $ (0.42 ) $ (0.36 )
== ====== == == ===== == == ====== == == ====== ==
NON-GAAP NET LOSS Per Share:
Basic and Diluted $ (0.08 ) $ (0.07 ) $ (0.27 ) $ (0.33 )
== ====== == == ===== == == ====== == == ====== ==
PFSweb, Inc. and Subsidiaries
----------------------------------------------------------------------------------------------------------------
Unaudited Condensed Consolidated Balance Sheets
(In Thousands, Except Share Data)
September 30, December 31,
2010 2009
------------------ ------------------
ASSETS
----------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 18,784 $ 14,812
Restricted cash 1,656 2,096
Accounts receivable, net of allowance for doubtful accounts of $914
and
$973 at September 30, 2010 and December 31, 2009, respectively 33,947 39,861
Inventories, net of reserves of $1,812 and $2,016 at September 30,
2010 and
December 31, 2009, respectively 37,638 37,949
Other receivables 12,847 11,605
Prepaid expenses and other current assets 4,067 4,170
------- -------
Total current assets 108,939 110,493
------- -------
PROPERTY AND EQUIPMENT, net 9,300 10,314
IDENTIFIABLE INTANGIBLES 687 805
GOODWILL 3,602 3,602
OTHER ASSETS 1,962 2,555
------- -------
Total assets 124,490 127,769
======= =======
LIABILITIES AND SHAREHOLDERS EQUITY
----------------------------------------------------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 18,452 $ 19,179
Trade accounts payable 47,778 53,642
Deferred revenue 5,313 5,164
Accrued expenses 16,165 13,180
------- -------
Total current liabilities 87,708 91,165
------- -------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 1,219 3,348
OTHER LIABILITIES 3,549 3,903
------- -------
Total liabilities 92,476 98,416
------- -------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $1.00 par value; 1,000,000 shares authorized; none
issued
and outstanding - -
Common stock, $.001 par value; 37,300,000 shares authorized;
12,255,064 and 9,952,164 shares issued at September 30, 2010 and
December 31, 2009, respectively; and 12,236,703 and 9,933,803
outstanding as of September 30, 2010 and December 31, 2009, 12 10
respectively
Additional paid-in capital 101,004 93,152
Accumulated deficit (70,587 ) (65,963 )
Accumulated other comprehensive income 1,670 2,239
Treasury stock at cost, 18,361 shares (85 ) (85 )
------- ---- ------- ----
Total shareholders' equity 32,014 29,353
------- -------
Total liabilities and shareholders' equity $ 124,490 $ 127,769
==== ======= ==== =======
PFSweb, Inc. and Subsidiaries
----------------------------------------------------------------------------------------------------------------------------
Unaudited Consolidating Statements of Operations
For the Three Months Ended September 30, 2010
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
----------------- -------------- ----------------- ----------------- -----------------
REVENUES:
Product revenue, net $ - $ 39,092 $ 16,632 $ - $ 55,724
Service fee revenue 16,402 - - - 16,402
Service fee revenue - affiliate 1,484 - - (1,484 ) -
Pass-thru revenue 7,843 - - (1 ) 7,842
------ ------ ------ ------ ---- ------
Total revenues 25,729 39,092 16,632 (1,485 ) 79,968
------ ------ ------ ------ ---- ------
COSTS OF REVENUES:
Cost of product revenue - 36,233 15,343 - 51,576
Cost of service fee revenue 12,543 - - (562 ) 11,981
Cost of pass-thru revenue 7,843 - - (1 ) 7,842
------ ------ ------ ------ ---- ------
Total costs of revenues 20,386 36,233 15,343 (563 ) 71,399
------ ------ ------ ------ ---- ------
Gross profit 5,343 2,859 1,289 (922 ) 8,569
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 7,318 1,896 1,867 (922 ) 10,159
------ ------ ------ ------ ---- ------
Income (loss) from operations (1,975 ) 963 (578 ) - (1,590 )
INTEREST EXPENSE (INCOME), NET (63 ) 313 4 - 254
------ ---- ------ ------ ------ ------
Income (loss) before income taxes (1,912 ) 650 (582 ) - (1,844 )
INCOME TAX PROVISION (BENEFIT) (139 ) 207 8 - 76
------ ---- ------ ------ ------ ------
NET INCOME (LOSS) $ (1,773 ) $ 443 $ (590 ) $ - $ (1,920 )
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ====== ====
NON-GAAP NET INCOME (LOSS) $ (898 ) $ 443 $ (519 ) $ - $ (974 )
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ====== ====
EBITDA $ (542 ) $ 970 $ (487 ) $ - $ (59 )
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ====== ====
ADJUSTED EBITDA $ 333 $ 970 $ (451 ) $ - $ 852
==== ====== ====== ====== ==== ====== ==== ==== ====== ==== ======
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ (1,773 ) $ 443 $ (590 ) $ - $ (1,920 )
Income tax expense (benefit) (139 ) 207 8 - 76
Interest expense (income) (63 ) 313 4 - 254
Depreciation and amortization 1,433 7 91 - 1,531
------ ------ ------ ------ ------
EBITDA $ (542 ) $ 970 $ (487 ) $ - $ (59 )
Stock-based compensation 225 - - - 225
Executive disability benefits 650 - - - 650
Vendor settlement and other legal matters - - 36 - 36
------ ------ ------ ------ ------
ADJUSTED EBITDA $ 333 $ 970 $ (451 ) $ - $ 852
==== ====== ====== ====== ==== ====== ==== ==== ====== ==== ======
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ (1,773 ) $ 443 $ (590 ) $ - $ (1,920 )
Stock-based compensation 225 - - - 225
Amortization of intangible assets - - 35 - 35
Executive disability benefits 650 - - - 650
Vendor settlement and other legal matters - - 36 - 36
------ ------ ------ ------ ------
NON-GAAP NET INCOME (LOSS) $ (898 ) $ 443 $ (519 ) $ - $ (974 )
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ====== ====
PFSweb, Inc. and Subsidiaries
------------------------------------------------------------------------------------------------------------------------------
Unaudited Consolidating Statements of Operations
For the Nine Months Ended September 30, 2010
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
----------------- --------------- ----------------- ----------------- ------------------
REVENUES:
Product revenue, net $ - $ 128,142 $ 52,940 $ - $ 181,082
Service fee revenue 48,948 - - - 48,948
Service fee revenue - affiliate 4,921 - - (4,921 ) -
Pass-thru revenue 20,682 - - (20 ) 20,662
------ ------- ------ ------ ---- -------
Total revenues 74,551 128,142 52,940 (4,941 ) 250,692
------ ------- ------ ------ ---- -------
COSTS OF REVENUES:
Cost of product revenue - 119,039 48,441 - 167,480
Cost of service fee revenue 37,215 - - (1,793 ) 35,422
Cost of pass-thru revenue 20,682 - - (20 ) 20,662
------ ------- ------ ------ ---- -------
Total costs of revenues 57,897 119,039 48,441 (1,813 ) 223,564
------ ------- ------ ------ ---- -------
Gross profit 16,654 9,103 4,499 (3,128 ) 27,128
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 21,388 6,260 6,199 (3,128 ) 30,719
------ ------- ------ ------ ---- -------
Income (loss) from operations (4,734 ) 2,843 (1,700 ) - (3,591 )
INTEREST EXPENSE (INCOME), NET (178 ) 916 15 - 753
------ ---- ------- ------ ------ -------
Income (loss) before income taxes (4,556 ) 1,927 (1,715 ) - (4,344 )
INCOME TAX PROVISION (BENEFIT) (421 ) 659 42 - 280
------ ---- ------- ------ ------ -------
NET INCOME (LOSS) $ (4,135 ) $ 1,268 $ (1,757 ) $ - $ (4,624 )
==== ====== ==== ====== ======= ==== ====== ==== ==== ====== ==== ======= ====
NON-GAAP NET INCOME (LOSS) $ (2,902 ) $ 1,268 $ (1,333 ) $ - $ (2,967 )
==== ====== ==== ====== ======= ==== ====== ==== ==== ====== ==== ======= ====
EBITDA $ (214 ) $ 2,864 $ (1,415 ) $ - $ 1,235
==== ====== ==== ====== ======= ==== ====== ==== ==== ====== ==== =======
ADJUSTED EBITDA $ 1,019 $ 2,864 $ (1,096 ) $ - $ 2,787
==== ====== ====== ======= ==== ====== ==== ==== ====== ==== =======
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ (4,135 ) $ 1,268 $ (1,757 ) $ - $ (4,624 )
Income tax expense (benefit) (421 ) 659 42 - 280
Interest expense (income) (178 ) 916 15 - 753
Depreciation and amortization 4,520 21 285 - 4,826
------ ------- ------ ------ -------
EBITDA $ (214 ) $ 2,864 $ (1,415 ) $ - $ 1,235
Stock-based compensation 583 - - - 583
Executive disability benefits 650 - - - 650
Vendor settlement and other legal matters - - 319 - 319
------ ------- ------ ------ -------
ADJUSTED EBITDA $ 1,019 $ 2,864 $ (1,096 ) $ - $ 2,787
==== ====== ====== ======= ==== ====== ==== ==== ====== ==== =======
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ (4,135 ) $ 1,268 $ (1,757 ) $ - $ (4,624 )
Stock-based compensation 583 - - - 583
Amortization of intangible assets - - 105 - 105
Executive disability benefits 650 - - - 650
Vendor settlement and other legal matters - - 319 - 319
------ ------- ------ ------ -------
NON-GAAP NET INCOME (LOSS) $ (2,902 ) $ 1,268 $ (1,333 ) $ - $ (2,967 )
==== ====== ==== ====== ======= ==== ====== ==== ==== ====== ==== ======= ====
PFSweb, Inc. and Subsidiaries
---------------------------------------------------------------------------------------------------------------------------------------------
Unaudited Condensed Consolidating Balance Sheets
as of September 30, 2010
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
-------------- -------------- -------------- ------------------ ------------------
ASSETS
-----------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 16,014 $ 2,622 $ 148 $ - $ 18,784
Restricted cash 777 666 213 - 1,656
Accounts receivable, net 15,857 16,601 2,020 (531 ) 33,947
Inventories, net - 33,208 4,430 - 37,638
Other receivables - 12,183 664 - 12,847
Prepaid expenses and other current assets 2,391 1,483 193 - 4,067
------- ------ ------- ------- -------
Total current assets 35,039 66,763 7,668 (531 ) 108,939
------- ------ ------- ------- ---- -------
PROPERTY AND EQUIPMENT, net 8,996 30 274 - 9,300
NOTES RECEIVABLE FROM AFFILIATES 21,945 - - (21,945 ) -
INVESTMENT IN AFFILIATES (2,179 ) - - 2,179 -
IDENTIFIABLE INTANGIBLES 344 - 343 - 687
GOODWILL - - 3,602 - 3,602
OTHER ASSETS 1,760 - 202 - 1,962
------- ------ ------- ------- -------
Total assets 65,905 66,793 12,089 (20,297 ) 124,490
======= ====== ======= ======= ==== =======
LIABILITIES AND SHAREHOLDERS EQUITY
-----------------------------------------------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 8,139 $ 10,278 $ 35 $ - $ 18,452
Trade accounts payable 4,575 37,876 5,858 (531 ) 47,778
Deferred revenue 4,441 - 872 - 5,313
Accrued expenses 9,195 5,956 1,014 - 16,165
------- ------ ------- ------- -------
Total current liabilities 26,350 54,110 7,779 (531 ) 87,708
------- ------ ------- ------- ---- -------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 1,114 - 105 - 1,219
NOTES PAYABLE TO AFFILIATES - 4,255 17,690 (21,945 ) -
OTHER LIABILITIES 3,549 - - - 3,549
------- ------ ------- ------- -------
Total liabilities 31,013 58,365 25,574 (22,476 ) 92,476
------- ------ ------- ------- ---- -------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock 12 - 19 (19 ) 12
Capital contributions - 1,000 - (1,000 ) -
Additional paid-in capital 101,004 - 28,059 (28,059 ) 101,004
Retained earnings (accumulated deficit) (67,694 ) 5,119 (41,563 ) 33,551 (70,587 )
Accumulated other comprehensive income 1,655 2,309 - (2,294 ) 1,670
Treasury stock (85 ) - - - (85 )
------- -- ------ ------- ------- ------- ----
Total shareholders' equity 34,892 8,428 (13,485 ) 2,179 32,014
------- ------ ------- -- ------- -------
Total liabilities and shareholders' equity $ 65,905 $ 66,793 $ 12,089 $ (20,297 ) $ 124,490
== ======= ====== ====== == ======= ==== ======= ==== ==== =======
- - - - -
PFSweb, Inc. and Subsidiaries
------------------------------------------------------------------------------------------------------------------------
Unaudited Consolidating Statements of Operations
For the Three Months Ended September 30, 2009
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
----------------- -------------- ----------------- ----------------- -----------------
REVENUES:
Product revenue, net $ - $ 45,120 $ 20,593 $ - $ 65,713
Service fee revenue 13,118 - - - 13,118
Service fee revenue - affiliate 1,598 - - (1,598 ) -
Pass-thru revenue 6,778 - - (2 ) 6,776
------ ------ ------ ------ ---- ------
Total revenues 21,494 45,120 20,593 (1,600 ) 85,607
------ ------ ------ ------ ---- ------
COSTS OF REVENUES:
Cost of product revenue - 40,881 18,730 - 59,611
Cost of service fee revenue 10,295 - - (621 ) 9,674
Cost of pass-thru revenue 6,778 - - (2 ) 6,776
------ ------ ------ ------ ---- ------
Total costs of revenues 17,073 40,881 18,730 (623 ) 76,061
------ ------ ------ ------ ---- ------
Gross profit 4,421 4,239 1,863 (977 ) 9,546
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 6,797 2,076 2,102 (977 ) 9,998
------ ------ ------ ------ ---- ------
Income (loss) from operations (2,376 ) 2,163 (239 ) - (452 )
INTEREST EXPENSE (INCOME), NET (54 ) 333 9 - 288
------ ---- ------ ------ ------ ------
Income (loss) before income taxes (2,322 ) 1,830 (248 ) - (740 )
INCOME TAX PROVISION (BENEFIT) (508 ) 605 9 - 106
------ ---- ------ ------ ------ ------
NET INCOME (LOSS) $ (1,814 ) $ 1,225 $ (257 ) $ - $ (846 )
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ====== ====
NON-GAAP NET INCOME (LOSS) $ (1,717 ) $ 1,225 $ (231 ) $ - $ (723 )
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ====== ====
EBITDA $ (931 ) $ 2,171 $ (152 ) $ - $ 1,088
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ======
ADJUSTED EBITDA $ (834 ) $ 2,171 $ (152 ) $ - $ 1,185
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ======
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ (1,814 ) $ 1,225 $ (257 ) $ - $ (846 )
Income tax expense (benefit) (508 ) 605 9 - 106
Interest expense (income) (54 ) 333 9 - 288
Depreciation and amortization 1,445 8 87 - 1,540
------ ------ ------ ------ ------
EBITDA $ (931 ) $ 2,171 $ (152 ) $ - $ 1,088
Stock-based compensation 97 - - - 97
------ ------ ------ ------ ------
ADJUSTED EBITDA $ (834 ) $ 2,171 $ (152 ) $ - $ 1,185
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ======
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ (1,814 ) $ 1,225 $ (257 ) $ - $ (846 )
Stock-based compensation 97 - - - 97
Amortization of intangible assets - - 26 - 26
------ ------ ------ ------ ------
NON-GAAP NET INCOME (LOSS) $ (1,717 ) $ 1,225 $ (231 ) $ - $ (723 )
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ====== ====
PFSweb, Inc. and Subsidiaries
--------------------------------------------------------------------------------------------------------------------------
Unaudited Consolidating Statements of Operations
For the Nine Months Ended September 30, 2009
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
----------------- --------------- ----------------- ----------------- ------------------
REVENUES:
Product revenue, net $ - $ 135,720 $ 61,802 $ - $ 197,522
Service fee revenue 42,604 - - - 42,604
Service fee revenue - affiliate 5,393 - - (5,393 ) -
Pass-thru revenue 16,815 - - (67 ) 16,748
------ ------- ------ ------ ---- -------
Total revenues 64,812 135,720 61,802 (5,460 ) 256,874
------ ------- ------ ------ ---- -------
COSTS OF REVENUES:
Cost of product revenue - 124,816 55,930 - 180,746
Cost of service fee revenue 32,310 - - (1,904 ) 30,406
Cost of pass-thru revenue 16,815 - - (67 ) 16,748
------ ------- ------ ------ ---- -------
Total costs of revenues 49,125 124,816 55,930 (1,971 ) 227,900
------ ------- ------ ------ ---- -------
Gross profit 15,687 10,904 5,872 (3,489 ) 28,974
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 21,447 6,345 7,059 (3,489 ) 31,362
------ ------- ------ ------ ---- -------
Income (loss) from operations (5,760 ) 4,559 (1,187 ) - (2,388 )
INTEREST EXPENSE (INCOME), NET (135 ) 1,087 15 - 967
------ ---- ------- ------ ------ -------
Income (loss) before income taxes (5,625 ) 3,472 (1,202 ) - (3,355 )
INCOME TAX PROVISION (BENEFIT) (623 ) 873 18 - 268
------ ---- ------- ------ ------ -------
NET INCOME (LOSS) $ (5,002 ) $ 2,599 $ (1,220 ) $ - $ (3,623 )
==== ====== ==== ====== ======= ==== ====== ==== ==== ====== ==== ======= ====
NON-GAAP NET INCOME (LOSS) $ (4,693 ) $ 2,599 $ (1,141 ) $ - $ (3,235 )
==== ====== ==== ====== ======= ==== ====== ==== ==== ====== ==== ======= ====
EBITDA $ (850 ) $ 4,585 $ (932 ) $ - $ 2,803
==== ====== ==== ====== ======= ==== ====== ==== ==== ====== ==== =======
ADJUSTED EBITDA $ (541 ) $ 4,585 $ (932 ) $ - $ 3,112
==== ====== ==== ====== ======= ==== ====== ==== ==== ====== ==== =======
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ (5,002 ) $ 2,599 $ (1,220 ) $ - $ (3,623 )
Income tax expense (benefit) (623 ) 873 18 - 268
Interest expense (income) (135 ) 1,087 15 - 967
Depreciation and amortization 4,910 26 255 - 5,191
------ ------- ------ ------ -------
EBITDA $ (850 ) $ 4,585 $ (932 ) $ - $ 2,803
Stock-based compensation 309 - - - 309
------ ------- ------ ------ -------
ADJUSTED EBITDA $ (541 ) $ 4,585 $ (932 ) $ - $ 3,112
==== ====== ==== ====== ======= ==== ====== ==== ==== ====== ==== =======
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ (5,002 ) $ 2,599 $ (1,220 ) $ - $ (3,623 )
Stock-based compensation 309 - - - 309
Amortization of intangible assets - - 79 - 79
------ ------- ------ ------ -------
NON-GAAP NET INCOME (LOSS) $ (4,693 ) $ 2,599 $ (1,141 ) $ - $ (3,235 )
==== ====== ==== ====== ======= ==== ====== ==== ==== ====== ==== ======= ====
PFSweb, Inc. and Subsidiaries
---------------------------------------------------------------------------------------------------------------------------------------------
Unaudited Condensed Consolidating Balance Sheets
as of December 31, 2009
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
-------------- -------------- -------------- ------------------ ------------------
ASSETS
-----------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 9,698 $ 2,628 $ 2,486 $ - $ 14,812
Restricted cash 732 1,137 227 - 2,096
Accounts receivable, net 19,499 18,764 1,719 (121 ) 39,861
Inventories, net - 33,577 4,372 - 37,949
Other receivables 49 11,556 - - 11,605
Prepaid expenses and other current assets 2,515 1,575 80 - 4,170
------- ------ ------- ------- -------
Total current assets 32,493 69,237 8,884 (121 ) 110,493
------- ------ ------- ------- ---- -------
PROPERTY AND EQUIPMENT, net 9,900 54 360 - 10,314
NOTES RECEIVABLE FROM AFFILIATES 20,845 - - (20,845 ) -
INVESTMENT IN AFFILIATES (149 ) - - 149 -
IDENTIFIABLE INTANGIBLES 383 - 422 - 805
GOODWILL - - 3,602 - 3,602
OTHER ASSETS 2,244 - 311 - 2,555
------- ------ ------- ------- -------
Total assets 65,716 69,291 13,579 (20,817 ) 127,769
======= ====== ======= ======= ==== =======
LIABILITIES AND SHAREHOLDERS EQUITY
-----------------------------------------------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 8,770 $ 10,374 $ 35 $ - $ 19,179
Trade accounts payable 8,396 38,753 6,614 (121 ) 53,642
Deferred revenue 3,948 - 1,216 - 5,164
Accrued expenses 7,046 4,701 1,433 - 13,180
------- ------ ------- ------- -------
Total current liabilities 28,160 53,828 9,298 (121 ) 91,165
------- ------ ------- ------- ---- -------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 3,208 - 140 - 3,348
NOTES PAYABLE TO AFFILIATES - 5,005 15,840 (20,845 ) -
OTHER LIABILITIES 3,880 - 23 - 3,903
------- ------ ------- ------- -------
Total liabilities 35,248 58,833 25,301 (20,966 ) 98,416
------- ------ ------- ------- ---- -------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock 10 - 19 (19 ) 10
Capital contributions - 1,000 - (1,000 ) -
Additional paid-in capital 93,152 - 28,059 (28,059 ) 93,152
Retained earnings (accumulated deficit) (64,828 ) 6,781 (39,805 ) 31,889 (65,963 )
Accumulated other comprehensive income 2,219 2,677 5 (2,662 ) 2,239
Treasury stock (85 ) - - - (85 )
------- -- ------ ------- ------- ------- ----
Total shareholders' equity 30,468 10,458 (11,722 ) 149 29,353
------- ------ ------- -- ------- -------
Total liabilities and shareholders' equity $ 65,716 $ 69,291 $ 13,579 $ (20,817 ) $ 127,769
== ======= ====== ====== == ======= ==== ======= ==== ==== =======
eCOST.com, Inc.
--------------------------------------------------------------
Selected Operating Data
Three Months Ended
September 30,
---------------------------------
2010 2009
---------- --------------------
Total Customers (1) 2,173,542 2,006,689
Active Customers (2) 208,582 224,297
New Customers (3) 33,230 37,079
Number of Orders (4) 53,652 74,770
Average Order Value (5) $ 300 $ 271
Advertising Expense (6) $ 192,950 $ 216,475
Cost to Acquire a New Customer $ 5.81 $ 5.84
(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.
SOURCE: PFSweb, Inc.
PFSweb, Inc. Mark C. Layton Chief Executive Officer or Thomas J. Madden Chief Financial Officer (972) 881-2900 or Investor Relations KCSA Strategic Communications Todd Fromer / Garth Russell (212) 896-1215 / (212) 896-1250 tfromer@kcsa.com / grussell@kcsa.com