SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 16, 2005
PFSWEB, INC.
| DELAWARE (State or other jurisdiction of incorporation) |
000-28275
(Commission File Number) |
75-2837058
(I.R.S. Employer Identification Number) |
500 NORTH CENTRAL EXPRESSWAY
PLANO, TX 75074
(Address of principal executive offices)
(972) 881-2900
(Registrant’s telephone number, including area code)
NONE
(Former name or former address, if changed since last report)
ITEM 2.02. Results of Operations and Financial Condition
On May 16, 2005, PFSweb, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2005. Attached to this current report on Form 8-K is a copy of the related press release dated May 16, 2005. The information in this Report on Form 8-K, and the exhibit hereto, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section.
| Exhibit No. | Description | |
99.1
|
Press Release Issued May 16, 2005 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PFSweb, Inc. |
||||
| Dated: May 16, 2005 | By: | /s/ THOMAS J. MADDEN | ||
| Thomas J. Madden | ||||
| Executive Vice President, Chief Financial and Accounting Officer |
||||
Exhibit 99.1
Press Release Dated May 16, 2005
Contact:
| Mark C. Layton Senior Partner and Chief Executive Officer Or Thomas J. Madden Senior Partner and Chief Financial Officer (972) 881-2900 |
Todd Fromer / Lewis Goldberg Investor Relations / Media Relations KCSA Worldwide (212) 896-1215 / (212) 896-1233 tfromer@kcsa.com / lgoldberg@kcsa.com |
PFSweb Reports First Quarter 2005 Financial Results
- - -
First Quarter Service Fee Revenue Grows 98%
PLANO, Texas, May 16, 2005 — PFSweb, Inc. (Nasdaq:PFSW), a global provider of integrated business process outsourcing (BPO) solutions, today announced results for the first quarter ended March 31, 2005.
Net revenue in the first quarter increased 6% to $81.9 million from $77.5 million in the 2004 first quarter. Service fee revenue climbed 98% to a record $14.1 million from $7.1 million in the same period last year. Product revenue in the first quarter was $63.6 million versus $68.6 million in the corresponding period a year ago.
The Company’s net loss in the first quarter narrowed to $214,000, or $0.01 per basic and diluted share, compared to a net loss of $1.8 million, or $0.08 per basic and diluted share, in the first quarter last year. The weighted average common shares outstanding for the three months ended March 31, 2005 were 22,136,000 shares compared to 21,186,000 in the prior year.
Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) in the first quarter totaled $1.8 million compared to a loss of $11,000 in the same period last year. Gross profit rose 22% to $7.3 million from $6.0 million in the 2004 first quarter.
Mark Layton, Chief Executive Officer of PFSweb, said, “We are pleased with our strong year-over-year performance in the first quarter. We continue to benefit from the changes we made in our operating strategy last year, which included diversifying the mix of industry sectors where we target potential customers, and improving our ability to close larger contracts. We believe the successful execution of this strategy by our management team helped drive service revenue to nearly double in the March quarter compared to the same period last year. In 2004, we signed new agreements totaling more than $20 million in annual business, based on current client’s projections. In the first quarter, we earned at least partial service fees from all new client activity signed last year including a strong contribution from the large consumer products client we engaged in 2004. We have been successful in expanding our list of world-class customers and have established a presence as a partner of choice for business process outsourcing to the Fortune 500 and the Global 1000.”
“Product revenue in the first quarter was down slightly from last year primarily due to timing of purchases by our customers. We believe product revenue, primarily driven by IBM, will deliver single-digit growth in 2005,” Layton added.
PFSweb recently signed a five-year lease for an additional 306,000 square feet at the new Airways Distribution Center in Southaven, Miss. This state-of-the-art facility has room for a 251,000-square-foot expansion, of which we have already committed to 100,000 square feet after one year. Southaven is expected to include pick-to-light carts, pallet racking, flow rack, forklifts and RF technology. The additional space, scheduled for completion in June, is located across the street from PFSweb’s Marketplace Drive facility, which came on-line in January, and brings PFSweb’s total operations in the 135-acre industrial park to 908,000 square feet.
Tom Madden, PFSweb Chief Financial Officer, said, “Our expansion in Southaven is necessary to better accommodate our company’s growing client base. Accordingly, we have made a strategic decision to streamline operations and relocate two of our existing distribution facilities from Memphis to our new facility in Southaven. During the June and September 2005 quarters, we plan to relocate inventory for nine PFSweb clients and estimate approximately 60 employees will make the short move to Southaven. We also plan to replace the jobs in Memphis with an expanded PFSweb call center. As a result of these activities, we expect to incur incremental relocation and lease termination costs totaling approximately $700,000 over the second and third quarters. We also expect to incur capital expenditures applicable to this new facility of approximately $1 million. We believe this new facility will further our ability to improve operating efficiencies and quality service for our clients.”
Mr. Layton concluded, “In the first quarter, one of our large clients modified its product release schedule, shifting certain of its 2005 order activity from the second half to the first quarter of the year. As a result, service revenue from this contract increased significantly to approximately $4.5 million for the quarter compared to $2.1 million last year. We expect the June quarter with this client to be in-line with the prior year’s June quarter. However, in the second half of the year, we are anticipating reduced service fee revenue from this client when compared to the second half of 2004. Despite this change in the timing of orders, we believe our strong sales traction from new business agreements signed in 2004 and an overall more diversified client base will strengthen our future operations and promote a more stable revenue stream in the second half of 2005.”
“Our improved results from a year ago also reflect our success in attracting new business and generating greater service fees. We will continue to benefit from new client activity throughout the year and remain on track to grow our annual service fee revenue 25% to 35% in 2005.”
“In the first quarter, PFSweb generated EBITDA of $1.8 million. The significant operating leverage that enabled our successful turnaround in 2004 is continuing to drive strong operating results in 2005. As a result, we anticipate EBITDA of approximately $8.0 to $9.0 million in 2005 and remain on track to meet our earnings guidance for fiscal 2005 of $0.00 to $0.03 per share, including the impact of the approximately $700,000 of incremental relocation and termination costs we expect to incur in the second and third quarters.”
PFSweb will hold a conference call Monday, May 16, 2005 at 10:00 a.m. Central Time. To ensure attendance on the call, plan to dial in by 9:50 a.m. to 973-935-2100. Ask to be placed on the PFSweb Earnings Release Conference Call. The call also can be heard “live” by accessing the Company’s website, www.pfsweb.com, at the time of the call. Two hours after the conference, a recorded playback can be heard for 14 days at 973-341-3080, using the confirmation number 6040357.
About PFSweb, Inc.
PFSweb develops and deploys integrated business infrastructure solutions and fulfillment services
for Fortune 1000, Global 2000 and brand name companies, including third party logistics, call
center support and e-commerce services. The company serves a multitude of industries and company
types, including such clients as Adaptec, CHiA’SSO, FLAVIA® Beverage Systems, Hewlett-Packard,
iGo/Mobility Electronics (Nasdaq:MOBE), International Business Machines, Nokia, Pfizer, Inc.
(NYSE:PFE), Raytheon Aircraft Company, Rene Furterer USA, Roots, Inc., Smithsonian Institution and
Xerox.
To find out more about PFSweb, Inc. (Nasdaq:PFSW), visit our website at www.pfsweb.com. PFSweb is a registered trademark. Entente Suite is a service mark of PFSweb. All rights reserved.
The matters discussed in this news release, particularly information regarding future revenue, earnings, business plans and goals, consist of forward-looking information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are subject to and involve risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. Such statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management’s assumptions and the Company’s future performance are both subject to a wide range of business risks and uncertainties, and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially. The Company undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking information contained herein is subject to the risk factors and uncertainties described in the Company’s filings with the Securities and Exchange Commission, which risk factors and uncertainties are incorporated by this reference as though fully set forth herein.
(Tables Follow)
Exhibit A
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations (A)
(In Thousands, Except Per Share Data)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2005 | 2004 | |||||||
Revenues: |
||||||||
Product revenue, net |
$ | 63,630 | $ | 68,570 | ||||
Service fee revenue |
14,085 | 7,131 | ||||||
Pass-through revenue |
4,150 | 1,784 | ||||||
Total revenues |
81,865 | 77,485 | ||||||
Costs of revenues: |
||||||||
Cost of product revenue |
59,637 | 64,453 | ||||||
Cost of service fee revenue |
10,768 | 5,253 | ||||||
Pass-through cost of revenue |
4,150 | 1,784 | ||||||
Total costs of revenues |
74,555 | 71,490 | ||||||
Gross profit |
7,310 | 5,995 | ||||||
Selling, general and administrative expenses |
6,966 | 7,132 | ||||||
Income (loss) from operations |
344 | (1,137 | ) | |||||
Interest expense, net |
319 | 428 | ||||||
Income (loss) from before income taxes |
25 | (1,565 | ) | |||||
Income tax provision |
239 | 202 | ||||||
Net loss |
$ | (214 | ) | $ | (1,767 | ) | ||
Net loss per share: |
||||||||
Basic and diluted |
$ | (0.01 | ) | $ | (0.08 | ) | ||
Weighted average number of shares outstanding: |
||||||||
Basic and diluted |
22,136 | 21,186 | ||||||
EBITDA (LBITDA)(B) |
$ | 1,847 | $ | (11 | ) | |||
| (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, 2004. |
| (B) | “EBITDA (LBITDA) or earnings before interest, taxes, depreciation, and amortization, and excluding equity in earnings of affiliate, is widely used by analysts, investors and other interested parties. We present EBITDA (LBITDA) because we believe it is useful in evaluating our operating performance compared to that of other companies in our industry, as the calculation of EBITDA (LBITDA) eliminates 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. EBITDA (LBITDA) is not a financial measure determined by generally accepted accounting principles and should not be considered as an alternative to net loss as a measure of operating results or to cash flows as a measure of funds available for discretionary or other liquidity purposes. EBITDA (LBITDA) may not be comparably calculated from one company to another. A reconciliation of Net loss to EBITDA (LBITDA) is as follows: |
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2005 | 2004 | |||||||
Net loss |
$ | (214 | ) | $ | (1,767 | ) | ||
Income tax provision |
239 | 202 | ||||||
Interest expense, net |
319 | 428 | ||||||
Depreciation and amortization |
1,503 | 1,126 | ||||||
EBITDA (LBITDA) |
$ | 1,847 | $ | (11 | ) | |||
Exhibit A (continued)
PFSweb, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Share Data)
| March 31, | December 31, | |||||||
| 2005 | 2004 | |||||||
| (Unaudited) | ||||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 14,948 | $ | 13,592 | ||||
Restricted cash |
845 | 2,746 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $419 and
$504 at March 31, 2005 and December 31, 2004, respectively |
39,718 | 41,565 | ||||||
Inventories, net |
46,198 | 44,947 | ||||||
Other receivables |
10,092 | 8,061 | ||||||
Prepaid expenses and other current assets |
3,361 | 3,349 | ||||||
Total current assets |
115,162 | 114,260 | ||||||
PROPERTY AND EQUIPMENT, net |
14,547 | 14,264 | ||||||
RESTRICTED CASH |
475 | 675 | ||||||
OTHER ASSETS |
1,295 | 1,128 | ||||||
Total assets |
$ | 131,479 | $ | 130,327 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
CURRENT LIABILITIES: |
||||||||
Current portion of long-term debt and capital lease obligations |
$ | 22,625 | $ | 19,098 | ||||
Trade accounts payable |
58,191 | 61,583 | ||||||
Accrued expenses |
10,988 | 10,971 | ||||||
Total current liabilities |
91,804 | 91,652 | ||||||
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion |
6,950 | 7,232 | ||||||
OTHER LIABILITIES |
1,856 | 1,517 | ||||||
COMMITMENTS AND CONTINGENCIES |
||||||||
SHAREHOLDERS’ EQUITY: |
||||||||
Preferred stock, $1.00 par value; 1,000,000 shares authorized; none issued
and outstanding |
— | — | ||||||
Common stock, $0.001 par value; 40,000,000 shares authorized;
22,384,524 and 21,665,585 shares issued at March 31, 2005 and
December31, 2004, respectively; and 22,298,224 and 21,579,285
outstanding at March 31, 2005 and December 31, 2004, respectively |
22 | 22 | ||||||
Additional paid-in capital |
58,344 | 56,645 | ||||||
Accumulated deficit |
(29,291 | ) | (29,077 | ) | ||||
Accumulated other comprehensive income |
1,879 | 2,421 | ||||||
Treasury stock at cost, 86,300 shares |
(85 | ) | (85 | ) | ||||
Total shareholders’ equity |
30,869 | 29,926 | ||||||
Total liabilities and shareholders’ equity |
$ | 131,479 | $ | 130,327 | ||||
Exhibit B
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations for the Three Months Ended March 31, 2005
(In Thousands)
| Business Supplies | ||||||||||||||||
| Distributors | ||||||||||||||||
| PFSweb, Inc. | Holdings, LLC | Eliminations | Consolidated | |||||||||||||
REVENUES: |
||||||||||||||||
Product revenue, net |
$ | — | $ | 63,630 | $ | — | $ | 63,630 | ||||||||
Service fee revenue |
14,085 | — | — | 14,085 | ||||||||||||
Service fee revenue, affiliate |
2,074 | — | (2,074 | ) | — | |||||||||||
Pass-through revenue |
4,206 | — | (56 | ) | 4,150 | |||||||||||
Total revenues |
20,365 | 63,630 | (2,130 | ) | 81,865 | |||||||||||
COSTS OF REVENUES: |
||||||||||||||||
Cost of product revenue |
— | 59,637 | — | 59,637 | ||||||||||||
Cost of service fee revenue |
11,480 | — | (712 | ) | 10,768 | |||||||||||
Pass-through cost of revenue |
4,206 | — | (56 | ) | 4,150 | |||||||||||
Total costs of revenues |
15,686 | 59,637 | (768 | ) | 74,555 | |||||||||||
Gross profit |
4,679 | 3,993 | (1,362 | ) | 7,310 | |||||||||||
SELLING, GENERAL AND ADMINISTRATIVE |
||||||||||||||||
EXPENSES |
6,013 | 2,315 | (1,362 | ) | 6,966 | |||||||||||
Income (loss) from operations |
(1,334 | ) | 1,678 | — | 344 | |||||||||||
EQUITY IN EARNINGS OF AFFILIATE |
827 | — | (827 | ) | — | |||||||||||
INTEREST EXPENSE (INCOME), NET |
(86 | ) | 405 | — | 319 | |||||||||||
Income (loss) before income taxes |
(421 | ) | 1,273 | (827 | ) | 25 | ||||||||||
INCOME TAX PROVISION (BENEFIT) |
(207 | ) | 446 | — | 239 | |||||||||||
NET INCOME (LOSS) |
$ | (214 | ) | $ | 827 | $ | (827 | ) | $ | (214 | ) | |||||
A reconciliation of net income (loss) to EBITDA (LBITDA) follows: |
||||||||||||||||
Net income (loss) |
$ | (214 | ) | $ | 827 | $ | (827 | ) | $ | (214 | ) | |||||
Income tax expense (benefit) |
(207 | ) | 446 | — | 239 | |||||||||||
Interest expense (income) |
(86 | ) | 405 | — | 319 | |||||||||||
Equity in earnings of affiliate |
(827 | ) | — | 827 | — | |||||||||||
Depreciation and amortization |
1,503 | — | — | 1,503 | ||||||||||||
EBITDA (LBITDA) (B) |
$ | 169 | $ | 1,678 | $ | — | $ | 1,847 | ||||||||
(B) See Exhibit A for description and discussion of EBITDA (LBITDA)
Exhibit B (continued)
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets as of March 31, 2005
(In Thousands)
| Business Supplies | ||||||||||||||||
| Distributors | ||||||||||||||||
| PFSweb, Inc. | Holdings, LLC | Eliminations | Consolidated | |||||||||||||
ASSETS |
||||||||||||||||
CURRENT ASSETS: |
||||||||||||||||
Cash and cash equivalents |
$ | 12,973 | $ | 1,975 | $ | — | $ | 14,948 | ||||||||
Restricted cash |
557 | 288 | — | 845 | ||||||||||||
Accounts receivables, net |
12,468 | 27,446 | (196 | ) | 39,718 | |||||||||||
Inventories, net |
— | 46,198 | — | 46,198 | ||||||||||||
Other receivables |
— | 10,092 | — | 10,092 | ||||||||||||
Prepaid expenses and other current assets |
1,809 | 1,552 | — | 3,361 | ||||||||||||
Total current assets |
27,807 | 87,551 | (196 | ) | 115,162 | |||||||||||
PROPERTY AND EQUIPMENT, net |
14,547 | — | — | 14,547 | ||||||||||||
NOTE RECEIVABLE FROM AFFILIATE |
7,005 | — | (7,005 | ) | — | |||||||||||
RESTRICTED CASH |
475 | — | — | 475 | ||||||||||||
INVESTMENT IN AFFILIATE |
8,002 | — | (8,002 | ) | — | |||||||||||
OTHER ASSETS |
1,295 | — | — | 1,295 | ||||||||||||
Total assets |
$ | 59,131 | $ | 87,551 | $ | (15,203 | ) | $ | 131,479 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||||||
CURRENT LIABILITIES: |
||||||||||||||||
Current portion of long-term debt and capital
lease obligations |
$ | 6,622 | $ | 16,003 | $ | — | $ | 22,625 | ||||||||
Trade accounts payable |
5,534 | 52,853 | (196 | ) | 58,191 | |||||||||||
Accrued expenses |
7,354 | 3,634 | — | 10,988 | ||||||||||||
Total current liabilities |
19,510 | 72,490 | (196 | ) | 91,804 | |||||||||||
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less
current portion |
6,950 | — | — | 6,950 | ||||||||||||
NOTE PAYABLE TO AFFILIATE |
— | 7,005 | (7,005 | ) | — | |||||||||||
OTHER LIABILITIES |
1,856 | — | — | 1,856 | ||||||||||||
COMMITMENTS AND CONTINGENCIES |
||||||||||||||||
SHAREHOLDERS’ EQUITY: |
||||||||||||||||
Common stock |
22 | — | — | 22 | ||||||||||||
Capital contributions |
— | 1,000 | (1,000 | ) | — | |||||||||||
Additional paid-in capital |
58,344 | — | — | 58,344 | ||||||||||||
Retained earnings (accumulated deficit) |
(29,345 | ) | 4,972 | (4,918 | ) | (29,291 | ) | |||||||||
Accumulated other comprehensive income |
1,879 | 2,084 | (2,084 | ) | 1,879 | |||||||||||
Treasury stock |
(85 | ) | — | — | (85 | ) | ||||||||||
Total shareholders’ equity |
30,815 | 8,056 | (8,002 | ) | 30,869 | |||||||||||
Total liabilities and shareholders’ equity |
$ | 59,131 | $ | 87,551 | $ | (15,203 | ) | $ | 131,479 | |||||||
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