PFSweb Reports Third Quarter Record Results

<< Back

PFSweb Reports Third Quarter Record Results

PFSweb Reports Third Quarter Record Results 94.6 KB

ALLEN, TX -- (Marketwired) -- 11/09/15 -- PFSweb, Inc. (NASDAQ: PFSW), a global provider of end-to-end eCommerce solutions, reported results for the third quarter ended September 30, 2015.

Third Quarter 2015 Highlights vs. Same Year-Ago Quarter

Service fee equivalent revenue (a non-GAAP measure defined below) increased 43% to a Q3 record $46.2 million
Service fee gross margin increased 380 basis points to 33.7%
Adjusted EBITDA (a non-GAAP measure defined below) increased 90% to a Q3 record $5.4 million
Acquired CrossView, an eCommerce system integrator with B2B and B2C Websphere Commerce and SAP/hybris integration capabilities, significantly expanding PFSweb's addressable market

Management Commentary

"We continued to benefit from strong growth in our agency and technology services, driving record results for the fourth consecutive quarter," said Michael Willoughby, CEO of PFSweb. "Our omni-channel operations also continued to perform well, supporting the overall strong growth in our B2C clients' volumes over the same year-ago period.

"Most notably, the third quarter was highlighted by the acquisition of CrossView, which we believe dramatically strengthens our position as a leader among full service eCommerce providers. The integration of CrossView is tracking well and according to plan. In fact, we've already begun to pursue several promising cross-sell opportunities, while also realizing synergies across our technology platforms."

"Subsequent to the quarter," continued Willoughby, "we launched our strategic commerce consulting practice, through which we'll provide high-value digital strategy and platform selection consulting to both B2B and B2C clients. This new practice demonstrates our commitment to expanding higher-margin service offerings and engaging with our clients as a strategic partner as we continue to evolve PFSweb from a full service eCommerce provider into a leading global commerce service provider.

"As we head into the all-important holiday season, we will continue to focus on client execution, with the ultimate goal of helping our clients maximize their holiday sales performance. According to eMarketer, holiday online sales are expected to grow 14% this year to a record $79.4 billion. We plan to capitalize on these secular tailwinds and leverage the unique strength of our platform to drive growth in the fourth quarter and beyond."

2015 & 2016 Outlook

Based on year-to-date results and current projections for the fourth quarter, PFSweb is increasing its service fee equivalent revenue guidance to range between $180 million to $186 million, up from $175 million to $185 million, reflecting growth of 30% to 34% from 2014. The company has also increased its adjusted EBITDA guidance to range between $18.5 million to $20.5 million, up from $18 million to $20 million, reflecting growth of 36% to 50% from 2014.

For 2016, PFSweb currently expects continued strong growth in service fee equivalent revenue and adjusted EBITDA as the company realizes a full year of benefit from its recent acquisitions, as well as incremental revenue from new and expanded client relationships. At this time, the company is targeting 2016 service fee equivalent revenue to range between $220 million to $230 million. The company is also targeting adjusted EBITDA to range between $23 million to $25 million. This adjusted EBITDA target includes the expected impact of incremental sales and marketing expenditures as well as other infrastructure expenditures to support the company's future growth strategies.

Third Quarter 2015 Financial Results

Total revenues in the third quarter of 2015 increased 25% to $71.2 million compared to $57.1 million in the same period of 2014. Service fee revenue in the third quarter of 2015 increased 45% to $45.5 million compared to $31.4 million last year. Product revenue was $14.4 million compared to $17.3 million in the same period of 2014 due to ongoing restructuring activities by the company's largest client in this segment.

Service fee equivalent revenue in the third quarter of 2015 increased 43% to a third quarter record $46.2 million compared to $32.4 million in the year-ago quarter.

Service fee gross margin in the third quarter increased 380 basis points to 33.7% compared to 29.9% in the same period of 2014. The increase was due to a higher proportion of agency and technology services in the 2015 quarter, in part due to the benefit from the acquisitions of REV Solutions and LiveArea that occurred in September 2014 and the CrossView acquisition completed in August 2015.

Adjusted EBITDA increased 90% to a third quarter record of $5.4 million compared to $2.9 million in the same period of 2014. As a percentage of service fee equivalent revenue, adjusted EBITDA increased 300 basis points to 11.8% compared to 8.8% in the year-ago quarter.

Net loss in the third quarter was $3.7 million or $(0.21) per diluted share, compared to a net loss of $2.5 million or $(0.15) per diluted share in the same period of 2014. Net loss in the third quarter of 2015 included $1.5 million in stock-based compensation expense, $2.6 million in acquisition-related, restructuring and other costs and $1.0 million in amortization of acquisition-related intangible assets. This compares to $0.9 million in stock-based compensation expense and $1.5 million in acquisition-related, restructuring and other costs in the same period of 2014.

Non-GAAP net income (a non-GAAP measure defined below) in the third quarter of 2015 was $1.5 million or $0.08 per diluted share, compared to non-GAAP net loss of $0.1 million or $(0.01) per diluted share in the third quarter of 2014.

At September 30, 2015, cash and cash equivalents was $13.0 million compared to $18.1 million at December 31, 2014. Total debt increased to $38.4 million from $10.9 million at December 31, 2014 as the Company entered into a new credit facility with Regions Bank, Bank of America and HSBC, primarily to facilitate the acquisition of CrossView. This new credit facility replaces the Company's previous senior banking facilities.

First Nine Months of 2015 Financial Results

Total revenues in the first nine months of 2015 increased 18% to $198.2 million compared to $168.4 million in the same period of 2014. Service fee revenue in the first nine months of 2015 increased 40% to $121.3 million compared to $86.4 million in the same period last year. Product revenue was $44.7 million compared to $57.2 million in the same period of 2014.

Service fee equivalent revenue in the first nine months of 2015 increased 38% to $123.7 million compared to $89.6 million in the same period of 2014.

Service fee gross margin in the first nine months of 2015 increased 230 basis points to 32.4% compared to 30.1% in the same period of 2014.

Adjusted EBITDA increased 94% to $13.2 million in the first nine months of 2015 compared to $6.8 million in the same period of 2014. As a percentage of service fee equivalent revenue, adjusted EBITDA increased 330 basis points to 10.7% compared to 7.6% in the year-ago period.

Net loss in the first nine months of 2015 was $7.3 million or $(0.42) per diluted share, compared to a net loss of $6.7 million or $(0.40) per diluted share in the same period of 2014. Net loss in the first nine months of 2015 included $3.4 million in stock-based compensation expense, $4.5 million in acquisition related, restructuring and other costs and $1.5 million in amortization of acquisition-related intangible assets. This compares to $2.5 million in stock-based compensation expense and $1.7 million in acquisition related, restructuring and other costs in the same period of 2014.

Non-GAAP net income in the first nine months of 2015 was $2.2 million or $0.12 per diluted share, compared to non-GAAP net loss of $2.5 million or $(0.15) per diluted share in the same period of 2014.

Conference Call

PFSweb will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the third quarter ended September 30, 2015.

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

Date: Monday, November 9, 2015
Time: 5:00 p.m. Eastern Time (4:00 p.m. Central time)
Toll-free dial-in number: 1-888-466-4462
International dial-in number: 1-719-785-1765
Conference ID: 4158053

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

The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=116986 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, 2015.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 4158053

About PFSweb Inc.

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

Non-GAAP Financial Measures

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

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

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

Non-GAAP net income (loss), EBITDA, Adjusted EBITDA and service fee equivalent revenue are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, acquisition related, restructuring and other charges 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.

PFSweb believes these non-GAAP measures provide useful information to both management and investors by focusing on certain operational metrics and excluding certain expenses in order to present its core operating performance and results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.

Forward-Looking Statements

The matters discussed herein consist of forward-looking information under the Private Securities Litigation Reform Act of 1995 and is subject to and involves risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. PFSweb's Annual Report on Form 10-K for the year ended December 31, 2014 identifies certain factors that could cause actual results to differ materially from those projected in any forward looking statements made and investors are advised to review the Annual Report of the Company and the Risk Factors described therein. PFSweb undertakes no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future. There may be additional risks that we do not currently view as material or that are not presently known.


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


				September 30,			December 31,
				2015			2014

			ASSETS
CURRENT ASSETS:
	Cash and cash equivalents			$	13,000		$	18,128
	Restricted cash				52			521
	Accounts receivable, net of allowance for doubtful accounts of $469 and $447 at September 30, 2015 and December 31, 2014, respectively				55,552			59,126
	Inventories, net of reserves of $682 and $768 at September 30, 2015 and December 31, 2014, respectively				8,673			10,534
	Other receivables				3,973			5,638
	Prepaid expenses and other current assets				3,853			7,103
		Total current assets			85,103			101,050

PROPERTY AND EQUIPMENT, net					24,852			26,604
INTANGIBLE ASSETS, net					12,916			2,170
GOODWILL					40,778			8,366
OTHER ASSETS					2,321			2,556
		Total assets			165,970			140,746

	LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations			$	3,512		$	6,850
	Trade accounts payable				29,356			38,842
	Deferred revenue				5,600			9,098
	Accrued expenses				35,412			28,473
		Total current liabilities			73,880			83,263

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion					34,870			4,062
DEFERRED REVENUE					4,197			5,355
DEFERRED RENT					4,430			4,870
OTHER LONG-TERM LIABILITIES					5,074			3,091
		Total liabilities			122,451			100,641


COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
	Preferred stock, $1.00 par value; 1,000,000 shares authorized; none issued and outstanding				-			-
	Common stock, $.001 par value; 35,000,000 shares authorized; 18,100,589 and 17,047,093 shares issued at September 30, 2015 and December 31, 2014, respectively; and 18,067,122 and 17,013,622 shares outstanding as of September 30, 2015 and December 31, 2014, respectively				18			17
	Additional paid-in capital				140,890			129,457
	Accumulated deficit				(97,189	)		(89,926	)
	Accumulated other comprehensive income				(75	)		682
	Treasury stock at cost, 33,467 shares				(125	)		(125	)
		Total shareholders' equity			43,519			40,105
		Total liabilities and shareholders' equity		$	165,970		$	140,746

(A) The financial data above should be read in conjunction with the audited consolidated financial statements of PFSweb, Inc. included in its Form 10-K for the year ended December 31, 2014.


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

				Three Months Ended						Nine Months Ended
				September 30,						September 30,
				2015			2014			2015			2014
REVENUES:
	Product revenue, net			$	14,419		$	17,340		$	44,731		$	57,182
	Service fee revenue				45,528			31,411			121,311			86,393
	Pass-thru revenue				11,236			8,344			32,163			24,792
			Total revenues		71,183			57,095			198,205			168,367

COSTS OF REVENUES:
	Cost of product revenue				13,702			16,397			42,321			53,952
	Cost of service fee revenue				30,193			22,007			81,993			60,387
	Cost of pass-thru revenue				11,236			8,344			32,163			24,792
			Total costs of revenues		55,131			46,748			156,477			139,131
			Gross profit		16,052			10,347			41,728			29,236
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					18,778			12,764			47,068			35,271
		Income (loss) from operations			(2,726	)		(2,417	)		(5,340	)		(6,035	)
INTEREST EXPENSE (INCOME), NET					706			174			1,247			490
		Income (loss) before income taxes			(3,432	)		(2,591	)		(6,587	)		(6,525	)
INCOME TAX PROVISION (BENEFIT)					238			(66	)		676			205
NET INCOME (LOSS)				$	(3,670	)	$	(2,525	)	$	(7,263	)	$	(6,730	)
NON-GAAP NET INCOME (LOSS)				$	1,452		$	(133	)	$	2,193		$	(2,528	)

NET INCOME (LOSS) PER SHARE:
	Basic			$	(0.21	)	$	(0.15	)	$	(0.42	)	$	(0.40	)
	Diluted			$	(0.21	)	$	(0.15	)	$	(0.42	)	$	(0.40	)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
	Basic				17,829			16,779			17,449			16,680
	Diluted				17,829			16,779			17,449			16,680

EBITDA				$	1,355		$	464		$	5,305		$	2,614
ADJUSTED EBITDA				$	5,434		$	2,856		$	13,238		$	6,816

(A) The financial data above should be read in conjunction with the audited consolidated financial statements of PFSweb, Inc. included in its Form 10-K for the year ended December 31, 2014.

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

			Three Months Ended						Nine Months Ended
			September 30,						September 30,
			2015			2014			2015			2014

NET INCOME (LOSS)			$	(3,670	)	$	(2,525	)	$	(7,263	)	$	(6,730	)
		Income tax expense (benefit)		238			(66	)		676			205
		Interest expense, net		706			174			1,247			490
		Depreciation and amortization		4,081			2,881			10,645			8,649
EBITDA			$	1,355		$	464		$	5,305		$	2,614
		Stock-based compensation		1,492			853			3,446			2,509
		Acquisition related, restructuring and other costs		2,587			1,539			4,487			1,693
ADJUSTED EBITDA			$	5,434		$	2,856		$	13,238		$	6,816


			Three Months Ended						Nine Months Ended
			September 30,						September 30,
			2015			2014			2015			2014

NET INCOME (LOSS)			$	(3,670	)	$	(2,525	)	$	(7,263	)	$	(6,730	)
		Stock-based compensation		1,492			853			3,446			2,509
		Amortization of acquisition-related intangible assets		1,043			-			1,523			-
		Acquisition related, restructuring and other costs		2,587			1,539			4,487			1,693
NON-GAAP NET INCOME (LOSS)			$	1,452		$	(133	)	$	2,193		$	(2,528	)

NET INCOME (LOSS) PER SHARE:
	Basic		$	(0.21	)	$	(0.15	)	$	(0.42	)	$	(0.40	)
	Diluted		$	(0.21	)	$	(0.15	)	$	(0.42	)	$	(0.40	)

NON-GAAP NET INCOME (LOSS) Per Share:
	Basic		$	0.08		$	(0.01	)	$	0.13		$	(0.15	)
	Diluted		$	0.08		$	(0.01	)	$	0.12		$	(0.15	)



			Three Months Ended						Nine Months Ended
			September 30,						September 30,
			2015			2014			2015			2014

TOTAL REVENUES			$	71,183		$	57,095		$	198,205		$	168,367
	Pass-thru revenue			(11,236	)		(8,344	)		(32,163	)		(24,792	)
	Cost of product revenue			(13,702	)		(16,397	)		(42,321	)		(53,952	)
SERVICE FEE EQUIVALENT REVENUE			$	46,245		$	32,354		$	123,721		$	89,623

PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended September 30, 2015
(In Thousands)

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

COSTS OF REVENUES:
	Cost of product revenue				-			13,702			-			13,702
	Cost of service fee revenue				30,369			3,323			(3,499	)		30,193
	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 PROVISION (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			4,066			15			-			4,081
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 Three Months Ended September 30, 2014
(In Thousands)

							Business &
				PFSweb			Retail Connect		Eliminations			Consolidated
REVENUES:
	Product revenue, net			$	-		$	17,340	$	-		$	17,340
	Service fee revenue				28,362			3,049		-			31,411
	Service fee revenue - affiliate				3,048			238		(3,286	)		-
	Pass-thru revenue				8,344			-		-			8,344
			Total revenues		39,754			20,627		(3,286	)		57,095

COSTS OF REVENUES:
	Cost of product revenue				-			16,397		-			16,397
	Cost of service fee revenue				21,972			3,145		(3,110	)		22,007
	Cost of pass-thru revenue				8,344			-		-			8,344
			Total costs of revenues		30,316			19,542		(3,110	)		46,748
			Gross profit		9,438			1,085		(176	)		10,347
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					12,255			685		(176	)		12,764
		Income (loss) from operations			(2,817	)		400		-			(2,417	)
INTEREST EXPENSE (INCOME), NET					36			138		-			174
		Income (loss) before income taxes			(2,853	)		262		-			(2,591	)
INCOME TAX PROVISION (BENEFIT)					(209	)		143		-			(66	)
NET INCOME (LOSS)				$	(2,644	)	$	119	$	-		$	(2,525	)
NON-GAAP NET INCOME (LOSS)				$	(252	)	$	119	$	-		$	(133	)

EBITDA				$	22		$	442	$	-		$	464
ADJUSTED EBITDA				$	2,414		$	442	$	-		$	2,856


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

NET INCOME (LOSS)				$	(2,644	)	$	119	$	-			(2,525	)
		Income tax expense (benefit)			(209	)		143		-			(66	)
		Interest expense (income), net			36			138		-			174
		Depreciation and amortization			2,839			42		-			2,881
EBITDA				$	22		$	442	$	-		$	464
		Stock-based compensation			853			-		-			853
		Acquisition related, restructuring and other costs			1,539			-		-			1,539
ADJUSTED EBITDA				$	2,414		$	442	$	-		$	2,856

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

NET INCOME (LOSS)				$	(2,644	)	$	119	$	-		$	(2,525	)
		Stock-based compensation			853			-		-			853
		Acquisition related, restructuring and other costs			1,539			-		-			1,539
NON-GAAP NET INCOME (LOSS)				$	(252	)	$	119	$	-		$	(133	)

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

COSTS OF REVENUES:
	Cost of product revenue				-			42,321		-			42,321
	Cost of service fee revenue				81,637			10,467		(10,111	)		81,993
	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 PROVISION (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:

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			10,587			58		-			10,645
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 Consolidating Statements of Operations
For the Nine Months Ended September 30, 2014
(In Thousands)

							Business &
				PFSweb			Retail Connect		Eliminations			Consolidated
REVENUES:
	Product revenue, net			$	-		$	57,182	$	-		$	57,182
	Service fee revenue				76,939			9,454		-			86,393
	Service fee revenue - affiliate				9,914			846		(10,760	)		-
	Pass-thru revenue				24,792			-		-			24,792
			Total revenues		111,645			67,482		(10,760	)		168,367

COSTS OF REVENUES:
	Cost of product revenue				-			53,952		-			53,952
	Cost of service fee revenue				60,446			9,854		(9,913	)		60,387
	Cost of pass-thru revenue				24,792			-		-			24,792
			Total costs of revenues		85,238			63,806		(9,913	)		139,131
			Gross profit		26,407			3,676		(847	)		29,236
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					33,754			2,364		(847	)		35,271
		Income (loss) from operations			(7,347	)		1,312		-			(6,035	)
INTEREST EXPENSE (INCOME), NET					68			422		-			490
		Income (loss) before income taxes			(7,415	)		890		-			(6,525	)
INCOME TAX PROVISION (BENEFIT)					(128	)		333		-			205
NET INCOME (LOSS)				$	(7,287	)	$	557	$	-		$	(6,730	)
NON-GAAP NET INCOME (LOSS)				$	(3,085	)	$	557	$	-		$	(2,528	)

EBITDA				$	1,173		$	1,441	$	-		$	2,614
ADJUSTED EBITDA				$	5,375		$	1,441	$	-		$	6,816


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

NET INCOME (LOSS)				$	(7,287	)	$	557	$	-			(6,730	)
		Income tax expense (benefit)			(128	)		333		-			205
		Interest expense (income), net			68			422		-			490
		Depreciation and amortization			8,520			129		-			8,649
EBITDA				$	1,173		$	1,441	$	-		$	2,614
		Stock-based compensation			2,509			-		-			2,509
		Acquisition related, restructuring and other costs			1,693			-		-			1,693
ADJUSTED EBITDA				$	5,375		$	1,441	$	-		$	6,816

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

NET INCOME (LOSS)				$	(7,287	)	$	557	$	-		$	(6,730	)
		Stock-based compensation			2,509			-		-			2,509
		Acquisition related, restructuring and other costs			1,693			-		-			1,693
NON-GAAP NET INCOME (LOSS)				$	(3,085	)	$	557	$	-		$	(2,528	)

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, 2015
(In Thousands)

							Business &
				PFSweb			Retail Connect			Eliminations			Consolidated

			ASSETS
CURRENT ASSETS:
	Cash and cash equivalents			$	6,252		$	6,748		$	-		$	13,000
	Restricted cash				-			52			-			52
	Accounts receivable, net				44,636			12,680			(1,764	)		55,552
	Inventories, net				-			8,673			-			8,673
	Other receivables				207			3,766			-			3,973
	Prepaid expenses and other current assets				2,960			893			-			3,853
		Total current assets			54,055			32,812			(1,764	)		85,103

PROPERTY AND EQUIPMENT, net					24,813			39			-			24,852
RECEIVABLE/INVESTMENT IN AFFILIATES					60,392			-			(60,392	)		-
INTANGIBLE ASSETS, net					12,916			-			-			12,916
GOODWILL					40,778			-			-			40,778
OTHER ASSETS					2,321			-			-			2,321
		Total assets			195,275			32,851			(62,156	)		165,970

	LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations			$	3,512		$	-		$	-		$	3,512
	Trade accounts payable				10,679			20,428			(1,751	)		29,356
	Deferred revenue				5,577			23			-			5,600
	Accrued expenses				32,808			2,617			(13	)		35,412
		Total current liabilities			52,576			23,068			(1,764	)		73,880

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion					34,870			-			-			34,870
PAYABLE TO AFFILIATES					-			22,756			(22,756	)		-
DEFERRED REVENUE					4,197			-			-			4,197
DEFERRED RENT					4,430			-			-			4,430
OTHER LONG-TERM LIABILITIES					5,074			-			-			5,074
		Total liabilities			101,147			45,824			(24,520	)		122,451


COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
	Common stock				18			1,019			(1,019	)		18
	Capital contributions				-			-			-			-
	Additional paid-in capital				191,304			28,060			(78,474	)		140,890
	Retained earnings (accumulated deficit)				(97,002	)		(43,286	)		43,099			(97,189	)
	Accumulated other comprehensive income				(67	)		1,234			(1,242	)		(75	)
	Treasury stock				(125	)		-			-			(125	)
		Total shareholders' equity			94,128			(12,973	)		(37,636	)		43,519
		Total liabilities and shareholders' equity		$	195,275		$	32,851		$	(62,156	)	$	165,970

(A) The financial data above should be read in conjunction with the audited consolidated financial statements of PFSweb, Inc. included in its Form 10-K for the year ended December 31, 2014.

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

							Business &
				PFSweb			Retail Connect			Eliminations			Consolidated

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

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

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

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


COMMITMENTS AND CONTINGENCIES

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

(A) The financial data above should be read in conjunction with the audited consolidated financial statements of PFSweb, Inc. included in its Form 10-K for the year ended December 31, 2014.

Company Contact:

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

Investor Relations:

Liolios
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 Record Results

Search Investor Relations