PFSweb Reports Third Quarter 2016 Results

<< Back

PFSweb Reports Third Quarter 2016 Results

PFSweb Reports Third Quarter 2016 Results 92.8 KB

ALLEN, TX -- (Marketwired) -- 11/09/16 -- PFSweb, Inc. (NASDAQ: PFSW) ("PFS"), a global commerce service provider, reported results for the third quarter ended September 30, 2016.

Third Quarter 2016 Summary vs. Same Year-Ago Quarter(where applicable)

Total revenues increased 12% to $79.9 million
Service fee equivalent revenue (a non-GAAP measure defined below) increased 18% to $54.5 million
Service fee gross margin was 31.4% compared to 33.7%
Net loss was $1.0 million or $(0.06) per share compared to a loss of $3.7 million or $(0.21) per share

Management Commentary
"As described in our October 2016 pre-announcement release, our third quarter results were impacted by an operational challenge with a newly-launched fulfillment client," said Mike Willoughby, CEO of PFS. "This client's unique business model led to unanticipated operational requirements, including incremental labor and operating costs to support their seasonal peak volumes in late Q3 and early Q4. Now that we've supported this client through their seasonal peak, we will continue to work diligently to re-engineer a solution that will bring this client engagement to our desired level of profitability, while continuing to meet the operational needs of the client.

"Our incremental investments in sales, marketing and infrastructure this year continue to drive improved results as we generated another solid quarter of long-term engagements and project wins from new and existing clients. We continue to maintain a strong pipeline and expect 2016 to mark the largest number of bookings in the history of our company.

"As we prepare for the upcoming holiday season, we will continue to strive toward enabling our clients to maximize their holiday sales performance through our support and execution of their ecommerce initiatives."

Third Quarter 2016 Financial Results
Total revenues in the third quarter of 2016 increased 12% to $79.9 million compared to $71.2 million in the same period of 2015. Service fee revenue in the third quarter increased 18% to $53.8 million compared to $45.5 million last year. Product revenue was $11.7 million compared to $14.4 million in the same period of 2015 due to ongoing restructuring activities by the company's last remaining client in this segment and their discontinuation of certain product lines.

Service fee equivalent revenue increased 18% to $54.5 million compared to $46.2 million in the year-ago quarter, driven by both new and expanded client relationships, as well as approximately $2.7 million of incremental service fees generated in the third quarter of 2016 by the company's acquired entities, CrossView and Conexus, which were acquired in 2015 and 2016, respectively.

Service fee gross margin in the third quarter of 2016 was 31.4% compared to 33.7% in the same period of 2015. The decrease was primarily due to higher facility and other operating costs applicable to certain new large fulfillment clients won during the year, as well as incremental labor and operating costs for the newly launched client referred to above. This was partially offset by higher-margin professional services activity.

Net loss in the third quarter of 2016 was $1.0 million or $(0.06) per share, compared to a net loss of $3.7 million or $(0.21) per share in the same period of 2015. Net loss in the third quarter of 2016 included a $0.5 million net benefit from acquisition-related, restructuring and other (income) costs, $0.3 million in stock-based compensation expense, and $1.2 million in amortization of acquisition-related intangible assets. This compares to $2.6 million expense in acquisition-related, restructuring and other (income) costs, $1.5 million in stock-based compensation expense, and $1.0 million in amortization of acquisition-related intangible assets in the same period of 2015.

Adjusted EBITDA (a non-GAAP measure defined below) was $3.6 million compared to $5.4 million in the same period of 2015. As a percentage of service fee equivalent revenue, adjusted EBITDA was 6.6% compared to 11.8% in the year-ago quarter. The decline in adjusted EBITDA margin was primarily driven by incremental labor and operating costs associated with servicing certain new clients, as well as an increase in sales and marketing and infrastructure resources. This was partially offset by higher-margin professional services activity.

Non-GAAP net loss (a non-GAAP measure defined below) in the third quarter of 2016 was $0.1 million, compared to Non-GAAP net income of $1.5 million in the third quarter of 2015.

At September 30, 2016, cash and cash equivalents totaled $15.7 million compared to $21.8 million at December 31, 2015. Total debt was $60.4 million compared to $35.4 million at December 31, 2015, with the increase primarily driven by funds used to support the June 2016 Conexus acquisition and payment of calendar 2015 related earn-out liabilities applicable to prior acquisitions, as well as funding of incremental working capital and capital expenditure requirements.

2016 & 2017 Outlook
As disclosed in the company's October pre-announcement release, PFS expects 2016 service fee equivalent revenue to range between $222 million and $228 million, reflecting growth of 20% to 23% from 2015. The company also expects adjusted EBITDA to range between $18 million and $20 million, which compares to $20.7 million in 2015.

For 2017, PFS expects continued strong growth in service fee equivalent revenue as the company realizes the full year benefit of 2016 client wins and generates incremental revenue from new and expanded client relationships. At this time, the company is targeting 2017 service fee equivalent revenue to range between $245 million and $260 million. The company is also targeting adjusted EBITDA to range between $23 million and $26 million. This adjusted EBITDA target includes infrastructure expenditures to support the company's future growth strategies as well as expected costs in early 2017 associated with the continued remediation of the fulfillment client implementation noted above.

Conference Call
PFS will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the third quarter ended September 30, 2016.

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

Date: Wednesday, November 9, 2016
Time: 5:00 p.m. Eastern Time (4:00 p.m. Central time)
Toll-free dial-in number: 1-888-452-4005
International dial-in number: 1-719-325-2262
Conference ID: 7262018

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

The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=121850 and via the investor relations section of the company's website at www.pfsweb.com.

A replay of the conference call will be available after 8:00 p.m. Eastern Time on the same day through November 23, 2016.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 7262018

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

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

Non-GAAP net income (loss) represents net income (loss) calculated in accordance with U.S. GAAP as adjusted for the impact of non-cash stock-based compensation expense, acquisition-related, restructuring and other (income) costs and the amortization of acquisition-related intangible assets.

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

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

Our service fee equivalent revenue target for 2016 includes an estimated gross margin on product sales of approximately $3 million (based on targeted product revenue of $50 million less targeted cost of product revenue of $47 million) plus a targeted range of between $219 million to $225 million of service fee revenue.

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

Non-GAAP net income (loss), EBITDA, Adjusted EBITDA and service fee equivalent revenue are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, acquisition-related, restructuring and other (income) costs and amortization of acquisition-related intangible assets and EBITDA and adjusted EBITDA further eliminate the effect of financing, income taxes and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance. Service fee equivalent revenue allows client contracts with similar operational support models but different financial models to be combined as if all contracts were being operated on a service fee revenue basis.

PFS 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. PFS' Annual Report on Form 10-K for the year ended December 31, 2015 identifies certain factors that could cause actual results to differ materially from those projected in any forward looking statements made and investors are advised to review the Annual Report of the company and the Risk Factors described therein. PFS undertakes no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future. There may be additional risks that we do not currently view as material or that are not presently known.


PFSweb, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (A)
(In Thousands, Except Share Data)

			(Unaudited)
			September 30,			December 31,
			2016			2015

ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	15,699		$	21,781
	Restricted cash			219			275
	Accounts receivable, net of allowance for doubtful accounts of $539 and $600 at September 30, 2016 and December 31, 2015, respectively			64,934			70,700
	Inventories, net of reserves of $585 and $739 at September 30, 2016 and December 31, 2015, respectively			7,155			9,262
	Other receivables			4,821			8,704
	Prepaid expenses and other current assets			5,017			5,662
		Total current assets		97,845			116,384

PROPERTY AND EQUIPMENT, net				28,812			24,093
INTANGIBLE ASSETS, net				8,125			8,810
GOODWILL				45,929			39,829
OTHER ASSETS				2,433			2,174
		Total assets		183,144			191,290

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations		$	5,672		$	3,153
	Trade accounts payable			38,009			51,170
	Deferred revenue			6,238			7,390
	Performance-based contingent payments			-			11,679
	Accrued expenses			25,109			30,563
		Total current liabilities		75,028			103,955

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion				54,749			32,238
DEFERRED REVENUE				4,280			4,499
DEFERRED RENT				4,849			4,362
PERFORMANCE-BASED CONTINGENT PAYMENTS				380			2,478
		Total liabilities		139,286			147,532


COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
	Preferred stock, $1.00 par value; 1,000,000 shares authorized; none issued and outstanding			-			-
	Common stock, $.001 par value; 35,000,000 shares authorized; 18,740,100 and 18,136,218 shares issued at September 30, 2016 and December 31, 2015, respectively; and 18,706,633 and 18,012,751 shares outstanding as of September 30, 2016 and December 31, 2015, respectively			19			18
	Additional paid-in capital			145,045			141,948
	Accumulated deficit			(101,760	)		(97,787	)
	Accumulated other comprehensive income (loss)			679			(296	)
	Treasury stock at cost, 33,467 shares			(125	)		(125	)
		Total shareholders' equity		43,858			43,758
		Total liabilities and shareholders' equity	$	183,144		$	191,290

(A) The financial data above should be read in conjunction with the audited consolidated financial statements of PFSweb, Inc. included in its Form 10-K for the year ended December 31, 2015.


PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations (A)
(In Thousands, Except Per Share Data)

				Three Months Ended						Nine Months Ended
				September 30,						September 30,
				2016			2015			2016			2015
REVENUES:
	Service fee revenue			$	53,788		$	45,528		$	154,271		$	121,311
	Product revenue, net				11,671			14,419			36,658			44,731
	Pass-thru revenue				14,451			11,236			41,259			32,163
			Total revenues		79,910			71,183			232,188			198,205

COSTS OF REVENUES:
	Cost of service fee revenue				36,903			30,193			103,547			81,993
	Cost of product revenue				10,994			13,702			34,649			42,321
	Cost of pass-thru revenue				14,451			11,236			41,259			32,163
			Total costs of revenues		62,348			55,131			179,455			156,477
			Gross profit		17,562			16,052			52,733			41,728
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					17,568			18,778			53,926			47,068
		Income (loss) from operations			(6	)		(2,726	)		(1,193	)		(5,340	)
INTEREST EXPENSE (INCOME), NET					714			706			1,807			1,247
		Income (loss) before income taxes			(720	)		(3,432	)		(3,000	)		(6,587	)
INCOME TAX EXPENSE (BENEFIT)					319			238			973			676
NET INCOME (LOSS)				$	(1,039	)	$	(3,670	)	$	(3,973	)	$	(7,263	)
NON-GAAP NET INCOME (LOSS)				$	(60	)	$	1,452		$	134		$	2,193

NET INCOME (LOSS) PER SHARE:
	Basic			$	(0.06	)	$	(0.21	)	$	(0.21	)	$	(0.42	)
	Diluted			$	(0.06	)	$	(0.21	)	$	(0.21	)	$	(0.42	)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
	Basic				18,699			17,829			18,552			17,449
	Diluted				18,699			17,829			18,552			17,449

EBITDA				$	3,797		$	1,355		$	10,013		$	5,305
ADJUSTED EBITDA				$	3,599		$	5,434		$	11,252		$	13,238

(A) The financial data above should be read in conjunction with the audited consolidated financial statements of PFSweb, Inc. included in its Form 10-K for the year ended December 31, 2015.


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

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2016			2015			2016			2015

NET INCOME (LOSS)		$	(1,039	)	$	(3,670	)	$	(3,973	)	$	(7,263	)
	Income tax expense (benefit)		319			238			973			676
	Interest expense, net		714			706			1,807			1,247
	Depreciation and amortization		3,803			4,081			11,206			10,645
EBITDA		$	3,797		$	1,355		$	10,013		$	5,305
	Stock-based compensation		347			1,492			1,743			3,446
	Acquisition-related, restructuring and other (income) costs		(545	)		2,587			(504	)		4,487
ADJUSTED EBITDA		$	3,599		$	5,434		$	11,252		$	13,238


		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2016			2015			2016			2015

NET INCOME (LOSS)		$	(1,039	)	$	(3,670	)	$	(3,973	)	$	(7,263	)
	Stock-based compensation		347			1,492			1,743			3,446
	Amortization of acquisition-related intangible assets		1,177			1,043			2,868			1,523
	Acquisition-related, restructuring and other (income) costs		(545	)		2,587			(504	)		4,487
NON-GAAP NET INCOME (LOSS)		$	(60	)	$	1,452		$	134		$	2,193


		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2016			2015			2016			2015

TOTAL REVENUES		$	79,910		$	71,183		$	232,188		$	198,205
	Pass-thru revenue		(14,451	)		(11,236	)		(41,259	)		(32,163	)
	Cost of product revenue		(10,994	)		(13,702	)		(34,649	)		(42,321	)
SERVICE FEE EQUIVALENT REVENUE		$	54,465		$	46,245		$	156,280		$	123,721



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

				PFSweb			Business & Retail Connect		Eliminations			Consolidated
REVENUES:
	Service fee revenue			$	50,339		$	3,449	$	-		$	53,788
	Service fee revenue - affiliate				2,978			231		(3,209	)		-
	Product revenue, net				-			11,671		-			11,671
	Pass-thru revenue				14,451			-		-			14,451
			Total revenues		67,768			15,351		(3,209	)		79,910

COSTS OF REVENUES:
	Cost of service fee revenue				36,700			3,359		(3,156	)		36,903
	Cost of product revenue				-			10,994		-			10,994
	Cost of pass-thru revenue				14,451			-		-			14,451
			Total costs of revenues		51,151			14,353		(3,156	)		62,348
			Gross profit		16,617			998		(53	)		17,562
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					17,064			557		(53	)		17,568
		Income (loss) from operations			(447	)		441		-			(6	)
INTEREST EXPENSE (INCOME), NET					631			83		-			714
		Income (loss) before income taxes			(1,078	)		358		-			(720	)
INCOME TAX EXPENSE (BENEFIT)					195			124		-			319
NET INCOME (LOSS)				$	(1,273	)	$	234	$	-		$	(1,039	)
NON-GAAP NET INCOME (LOSS)				$	(294	)	$	234	$	-		$	(60	)

EBITDA				$	3,350		$	447	$	-		$	3,797
ADJUSTED EBITDA				$	3,152		$	447	$	-		$	3,599


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

NET INCOME (LOSS)				$	(1,273	)	$	234	$	-			(1,039	)
		Income tax expense (benefit)			195			124		-			319
		Interest expense (income), net			631			83		-			714
		Depreciation and amortization			2,620			6		-			2,626
		Amortization of acquisition-related intangible assets			1,177			-		-			1,177
EBITDA				$	3,350		$	447	$	-		$	3,797
		Stock-based compensation			347			-		-			347
		Acquisition-related, restructuring and other income			(545	)		-		-			(545	)
ADJUSTED EBITDA				$	3,152		$	447	$	-		$	3,599

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

NET INCOME (LOSS)				$	(1,273	)	$	234	$	-		$	(1,039	)
		Stock-based compensation			347			-		-			347
		Amortization of acquisition-related intangible assets			1,177			-		-			1,177
		Acquisition-related, restructuring and other income			(545	)		-		-			(545	)
NON-GAAP NET INCOME (LOSS)				$	(294	)	$	234	$	-		$	(60	)

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 Nine Months Ended September 30, 2016
(In Thousands)

				PFSweb			Business & Retail Connect		Eliminations			Consolidated
REVENUES:
	Service fee revenue			$	143,193		$	11,078	$	-		$	154,271
	Service fee revenue - affiliate				9,787			689		(10,476	)		-
	Product revenue, net				-			36,658		-			36,658
	Pass-thru revenue				41,259			-		-			41,259
			Total revenues		194,239			48,425		(10,476	)		232,188

COSTS OF REVENUES:
	Cost of service fee revenue				103,077			10,815		(10,345	)		103,547
	Cost of product revenue				-			34,649		-			34,649
	Cost of pass-thru revenue				41,259			-		-			41,259
			Total costs of revenues		144,336			45,464		(10,345	)		179,455
			Gross profit		49,903			2,961		(131	)		52,733
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					52,419			1,638		(131	)		53,926
		Income (loss) from operations			(2,516	)		1,323		-			(1,193	)
INTEREST EXPENSE (INCOME), NET					1,551			256		-			1,807
		Income (loss) before income taxes			(4,067	)		1,067		-			(3,000	)
INCOME TAX EXPENSE (BENEFIT)					593			380		-			973
NET INCOME (LOSS)				$	(4,660	)	$	687	$	-		$	(3,973	)
NON-GAAP NET INCOME (LOSS)				$	(553	)	$	687	$	-		$	134

EBITDA				$	8,672		$	1,341	$	-		$	10,013
ADJUSTED EBITDA				$	9,911		$	1,341	$	-		$	11,252


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

NET INCOME (LOSS)				$	(4,660	)	$	687	$	-			(3,973	)
		Income tax expense (benefit)			593			380		-			973
		Interest expense (income), net			1,551			256		-			1,807
		Depreciation and amortization			8,320			18		-			8,338
		Amortization of acquisition-related intangible assets			2,868			-		-			2,868
EBITDA				$	8,672		$	1,341	$	-		$	10,013
		Stock-based compensation			1,743			-		-			1,743
		Acquisition-related, restructuring and other income			(504	)		-		-			(504	)
ADJUSTED EBITDA				$	9,911		$	1,341	$	-		$	11,252

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

NET INCOME (LOSS)				$	(4,660	)	$	687	$	-		$	(3,973	)
		Stock-based compensation			1,743			-		-			1,743
		Amortization of acquisition-related intangible assets			2,868			-		-			2,868
		Acquisition-related, restructuring and other income			(504	)		-		-			(504	)
NON-GAAP NET INCOME (LOSS)				$	(553	)	$	687	$	-		$	134

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 September 30, 2015
(In Thousands)

				PFSweb			Business & Retail Connect			Eliminations			Consolidated
REVENUES:
	Service fee revenue			$	42,167		$	3,361		$	-		$	45,528
	Service fee revenue - affiliate				3,494			195			(3,689	)		-
	Product revenue, net				-			14,419			-			14,419
	Pass-thru revenue				11,236			-			-			11,236
			Total revenues		56,897			17,975			(3,689	)		71,183

COSTS OF REVENUES:
	Cost of service fee revenue				30,369			3,323			(3,499	)		30,193
	Cost of product revenue				-			13,702			-			13,702
	Cost of pass-thru revenue				11,236			-			-			11,236
			Total costs of revenues		41,605			17,025			(3,499	)		55,131
			Gross profit		15,292			950			(190	)		16,052
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					18,049			919			(190	)		18,778
		Income (loss) from operations			(2,757	)		31			-			(2,726	)
INTEREST EXPENSE (INCOME), NET					584			122			-			706
		Income (loss) before income taxes			(3,341	)		(91	)		-			(3,432	)
INCOME TAX EXPENSE (BENEFIT)					171			67			-			238
NET INCOME (LOSS)				$	(3,512	)	$	(158	)	$	-		$	(3,670	)
NON-GAAP NET INCOME (LOSS)				$	1,288		$	162		$	-		$	1,450

EBITDA				$	1,309		$	46		$	-		$	1,355
ADJUSTED EBITDA				$	5,066		$	366		$	-		$	5,432


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

NET INCOME (LOSS)				$	(3,512	)	$	(158	)	$	-			(3,670	)
		Income tax expense (benefit)			171			67			-			238
		Interest expense (income), net			584			122			-			706
		Depreciation and amortization			3,023			15			-			3,038
		Amortization of acquisition-related intangible assets			1,043			-			-			1,043
EBITDA				$	1,309		$	46		$	-		$	1,355
		Stock-based compensation			1,492			-			-			1,492
		Acquisition-related, restructuring and other costs			2,265			320			-			2,585
ADJUSTED EBITDA				$	5,066		$	366		$	-		$	5,432

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

NET INCOME (LOSS)				$	(3,512	)	$	(158	)	$	-		$	(3,670	)
		Stock-based compensation			1,492			-			-			1,492
		Amortization of acquisition-related intangible assets			1,043			-			-			1,043
		Acquisition-related, restructuring and other costs			2,265			320			-			2,585
NON-GAAP NET INCOME (LOSS)				$	1,288		$	162		$	-		$	1,450

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 Nine Months Ended September 30, 2015
(In Thousands)

							Business &
				PFSweb			Retail Connect		Eliminations			Consolidated
REVENUES:
	Service fee revenue			$	110,740		$	10,571	$	-		$	121,311
	Service fee revenue - affiliate				10,137			568		(10,705	)		-
	Product revenue, net				-			44,731		-			44,731
	Pass-thru revenue				32,163			-		-			32,163
			Total revenues		153,040			55,870		(10,705	)		198,205

COSTS OF REVENUES:
	Cost of service fee revenue				81,637			10,467		(10,111	)		81,993
	Cost of product revenue				-			42,321		-			42,321
	Cost of pass-thru revenue				32,163			-		-			32,163
			Total costs of revenues		113,800			52,788		(10,111	)		156,477
			Gross profit		39,240			3,082		(594	)		41,728
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					45,528			2,134		(594	)		47,068
		Income (loss) from operations			(6,288	)		948		-			(5,340	)
INTEREST EXPENSE (INCOME), NET					911			336		-			1,247
		Income (loss) before income taxes			(7,199	)		612		-			(6,587	)
INCOME TAX EXPENSE (BENEFIT)					363			313		-			676
NET INCOME (LOSS)				$	(7,562	)	$	299	$	-		$	(7,263	)
NON-GAAP NET INCOME (LOSS)				$	1,574		$	619	$	-		$	2,193

EBITDA				$	4,299		$	1,006	$	-		$	5,305
ADJUSTED EBITDA				$	11,912		$	1,326	$	-		$	13,238


A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
		Amortization of acquisition-related intangible assets
NET INCOME (LOSS)				$	(7,562	)	$	299	$	-			(7,263	)
		Income tax expense (benefit)			363			313		-			676
		Interest expense (income), net			911			336		-			1,247
		Depreciation and amortization			9,064			58		-			9,122
		Amortization of acquisition-related intangible assets			1,523			-		-			1,523
EBITDA				$	4,299		$	1,006	$	-		$	5,305
		Stock-based compensation			3,446			-		-			3,446
		Acquisition-related, restructuring and other costs			4,167			320		-			4,487
ADJUSTED EBITDA				$	11,912		$	1,326	$	-		$	13,238

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

NET INCOME (LOSS)				$	(7,562	)	$	299	$	-		$	(7,263	)
		Stock-based compensation			3,446			-		-			3,446
		Amortization of acquisition-related intangible assets			1,523			-		-			1,523
		Acquisition-related, restructuring and other costs			4,167			320		-			4,487
NON-GAAP NET INCOME (LOSS)				$	1,574		$	619	$	-		$	2,193

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 September 30, 2016
(In Thousands)

			PFSweb			Business & Retail Connect			Eliminations			Consolidated

ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	5,639		$	10,060		$	-		$	15,699
	Restricted cash			-			219			-			219
	Accounts receivable, net			50,844			14,993			(903	)		64,934
	Inventories, net			-			7,155			-			7,155
	Other receivables			600			4,221			-			4,821
	Prepaid expenses and other current assets			4,173			844			-			5,017
		Total current assets		61,256			37,492			(903	)		97,845

PROPERTY AND EQUIPMENT, net				28,803			9			-			28,812
RECEIVABLE/INVESTMENT IN AFFILIATES				9,342			-			(9,342	)		-
INTANGIBLE ASSETS, net				8,125			-			-			8,125
GOODWILL				45,929			-			-			45,929
OTHER ASSETS				2,433			-			-			2,433
Total assets				155,888			37,501			(10,245	)		183,144

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations		$	5,672		$	-		$	-		$	5,672
	Trade accounts payable			13,395			25,517			(903	)		38,009
	Deferred revenue			6,238			-			-			6,238
	Performance-based contingent payments			-			-			-			-
	Accrued expenses			22,270			2,839			-			25,109
		Total current liabilities		47,575			28,356			(903	)		75,028

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion				54,749			-			-			54,749
PAYABLE TO AFFILIATES				-			22,045			(22,045	)		-
DEFERRED REVENUE				4,280			-			-			4,280
DEFERRED RENT				4,849			-			-			4,849
PERFORMANCE-BASED CONTINGENT PAYMENTS				380			-			-			380
		Total liabilities		111,833			50,401			(22,948	)		139,286


COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
	Common stock			19			19			(19	)		19
	Capital contributions			-			1,000			(1,000	)		-
	Additional paid-in capital			145,045			28,060			(28,060	)		145,045
	Retained earnings (accumulated deficit)			(101,563	)		(43,205	)		43,008			(101,760	)
	Accumulated other comprehensive income (loss)			679			1,226			(1,226	)		679
	Treasury stock			(125	)		-			-			(125	)
		Total shareholders' equity		44,055			(12,900	)		12,703			43,858
		Total liabilities and shareholders' equity	$	155,888		$	37,501		$	(10,245	)	$	183,144

(A) The financial data above should be read in conjunction with the audited consolidated financial statements of PFSweb, Inc. included in its Form 10-K for the year ended December 31, 2015.


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

			PFSweb			Business & Retail Connect			Eliminations			Consolidated

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

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

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

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


COMMITMENTS AND CONTINGENCIES

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

(A) The financial data above should be read in conjunction with the audited consolidated financial statements of PFSweb, Inc. included in its Form 10-K for the year ended December 31, 2015.

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

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

Source: PFSweb, Inc.

News Provided by Acquire Media

Press Release

PFSweb Reports Third Quarter 2016 Results

Search Investor Relations