PFSweb Reports Fourth Quarter and Full Year 2017 Results
Fourth Quarter 2017 Summary vs. Same Year-Ago Quarter
- Total revenues were
$92.7 million compared to$102.5 million . - Service fee equivalent (SFE) revenue (a non-GAAP measure defined below) was
$67.6 million compared to$72.7 million . - Service fee gross margin increased 690 basis points to 34.6%.
- Net income increased significantly to
$3.6 million or$0.19 per share, compared to a loss of$3.6 million or$(0.19) per share. - Adjusted EBITDA (a non-GAAP measure defined below) increased 36% to
$9.4 million .
Full Year 2017 Summary vs. 2016
- Total revenues were
$326.8 million compared to$334.6 million . - SFE revenue (a non-GAAP measure defined below) increased to
$235.7 million compared to$229.0 million . - Service fee gross margin increased 240 basis points to 33.6%.
- Net loss was
$4.0 million or$(0.21) per share, compared to a loss of$7.5 million or$(0.41) per share. - Adjusted EBITDA (a non-GAAP measure defined below) increased 27% to
$23.0 million .
Management Commentary
“Our fourth quarter was highlighted by another strong period of execution during the all-important holiday season,” said
“Over the last several months, we’ve continued to make progress in our efforts toward segregating our business and go-to-market strategies into professional services (our LiveArea brand) and operations services (our PFS brand). By doing so, we expect to enhance our growth opportunities by increasing the visibility and competitiveness of both brands in the industry and within our strategic partner ecosystem. We also believe this will provide current and prospective investors with additional transparency and insight into the financial performance of each brand.
“In 2017, we generated professional services SFE revenue of approximately
“Our 2018 SFE revenue target for PFS will be tempered as a result of certain client transitions including several low margin engagements. While the PFS client transitions will also impact our overall SFE revenue, we expect to meet our objective of continuing to grow our adjusted EBITDA and improve our adjusted EBITDA margin as a percentage of SFE revenue on a companywide basis.”
Fourth Quarter 2017 Financial Results
Total revenues in the fourth quarter of 2017 were
SFE revenue was
Service fee gross margin in the fourth quarter of 2017 increased 690 basis points to 34.6% compared to 27.7% in the same period of 2016. The increase was due to improved operational efficiency, a higher proportion of agency and technology services in the 2017 quarter, as well as higher-margin operations engagements compared to the year-ago period.
Net income in the fourth quarter of 2017 increased significantly to
Adjusted EBITDA increased 36% to
Non-GAAP net income in the fourth quarter of 2017 increased 175% to
At
Full Year 2017 Financial Results
Total revenues in 2017 were
SFE revenue increased to
Service fee gross margin in 2017 increased 240 basis points to 33.6% compared to 31.2% in 2016.
Net loss in 2017 improved to
Adjusted EBITDA increased 27% to
Non-GAAP net income in 2017 increased 238% to
2018 Outlook
Conference Call
Date:
Time:
Toll-free dial-in number: 1-888-882-4478
International dial-in number: 1-323-794-2149
Conference ID: 1550370
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 here 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
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 1550370
About
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, amortization of acquisition-related intangible assets and deferred tax expense for goodwill amortization.
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 2017 includes an estimated gross margin on product sales of approximately
The adjusted EBITDA outlook for 2017 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 2017 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, amortization of acquisition-related intangible assets, deferred tax expense for goodwill amortization, and EBITDA and adjusted EBITDA further eliminate the effect of financing, remaining income taxes and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance. Service fee equivalent revenue allows client contracts with similar operational support models but different financial models to be combined as if all contracts were being operated on a service fee revenue basis.
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
Company Contact:
Chief Executive Officer
Or
Chief Financial Officer
972-881-2900
Investor Relations:
Liolios Investor Relations
949-574-3860
PFSW@liolios.com
PFSweb, Inc. and Subsidiaries | ||||||||
Consolidated Balance Sheets | ||||||||
(In Thousands, Except Share Data) | ||||||||
December 31, | December 31, | |||||||
2017 | 2016 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 19,078 | $ | 24,425 | ||||
Restricted cash | 214 | 215 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $373 and | ||||||||
$494 at December 31, 2017 and December 31, 2016, respectively | 72,062 | 80,223 | ||||||
Inventories, net of reserves of $342 and $568 at December 31, 2017 and | ||||||||
December 31, 2016, respectively | 5,326 | 6,632 | ||||||
Other receivables | 5,366 | 6,750 | ||||||
Prepaid expenses and other current assets | 6,633 | 7,299 | ||||||
Total current assets | 108,679 | 125,544 | ||||||
PROPERTY AND EQUIPMENT, net | 24,178 | 30,264 | ||||||
IDENTIFIABLE INTANGIBLES, net | 3,371 | 6,864 | ||||||
GOODWILL | 45,698 | 46,210 | ||||||
OTHER ASSETS | 3,861 | 2,454 | ||||||
Total assets | 185,787 | 211,336 | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade accounts payable | $ | 45,070 | $ | 59,752 | ||||
Accrued expenses | 29,074 | 30,360 | ||||||
Current portion of long-term debt and capital lease obligations | 9,460 | 7,300 | ||||||
Deferred revenue | 7,405 | 7,156 | ||||||
Performance-based contingent payments | 3,967 | 2,405 | ||||||
Total current liabilities | 94,976 | 106,973 | ||||||
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion | 37,866 | 52,399 | ||||||
DEFERRED REVENUE, less current portion | 4,034 | 4,127 | ||||||
DEFERRED RENT | 5,464 | 4,810 | ||||||
PERFORMANCE-BASED CONTINGENT PAYMENTS, less current portion | - | 1,678 | ||||||
OTHER LIABILITIES | 2,150 | 1,066 | ||||||
Total liabilities | 144,490 | 171,053 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS' EQUITY: | ||||||||
Preferred stock, $1.00 par value; 1,000,000 shares authorized; none issued | ||||||||
or outstanding | - | - | ||||||
Common stock, $0.001 par value; 35,000,000 shares authorized; | ||||||||
19,058,685 and 18,768,567 shares issued at December 31, 2017 and | ||||||||
December 31, 2016, respectively; and 19,025,218 and 18,735,100 | ||||||||
shares outstanding as of December 31, 2017 and December 31, 2016, respectively | 19 | 19 | ||||||
Additional paid-in capital | 150,614 | 146,286 | ||||||
Accumulated deficit | (109,281 | ) | (105,317 | ) | ||||
Accumulated other comprehensive income (loss) | 70 | (580 | ) | |||||
Treasury stock at cost, 33,467 shares | (125 | ) | (125 | ) | ||||
Total shareholders' equity | 41,297 | 40,283 | ||||||
Total liabilities and shareholders' equity | $ | 185,787 | $ | 211,336 | ||||
PFSweb, Inc. and Subsidiaries | |||||||||||||||
Unaudited Consolidated Statements of Operations | |||||||||||||||
(In Thousands, Except Per Share Data) | |||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
REVENUES: | |||||||||||||||
Service fee revenue | $ | 67,125 | $ | 71,894 | $ | 233,580 | $ | 226,165 | |||||||
Product revenue, net | 9,782 | 12,037 | 40,663 | 48,695 | |||||||||||
Pass-through revenue | 15,766 | 18,524 | 52,582 | 59,783 | |||||||||||
Total revenues | 92,673 | 102,455 | 326,825 | 334,643 | |||||||||||
COSTS OF REVENUES: | |||||||||||||||
Cost of service fee revenue | 43,880 | 51,966 | 155,160 | 155,513 | |||||||||||
Cost of product revenue | 9,283 | 11,234 | 38,504 | 45,883 | |||||||||||
Cost of pass-through revenue | 15,766 | 18,524 | 52,582 | 59,783 | |||||||||||
Total costs of revenues | 68,929 | 81,724 | 246,246 | 261,179 | |||||||||||
Gross profit | 23,744 | 20,731 | 80,579 | 73,464 | |||||||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 19,299 | 22,378 | 79,981 | 76,304 | |||||||||||
Income (loss) from operations | 4,445 | (1,647 | ) | 598 | (2,840 | ) | |||||||||
INTEREST EXPENSE, NET | 613 | 516 | 2,738 | 2,323 | |||||||||||
Income (loss) before income taxes | 3,832 | (2,163 | ) | (2,140 | ) | (5,163 | ) | ||||||||
INCOME TAX EXPENSE | 246 | 1,394 | 1,824 | 2,367 | |||||||||||
NET INCOME (LOSS) | $ | 3,586 | $ | (3,557 | ) | $ | (3,964 | ) | $ | (7,530 | ) | ||||
NON-GAAP NET INCOME | $ | 5,377 | $ | 1,956 | $ | 7,074 | $ | 2,090 | |||||||
NET INCOME (LOSS) PER SHARE: | |||||||||||||||
Basic | $ | 0.19 | $ | (0.19 | ) | $ | (0.21 | ) | $ | (0.41 | ) | ||||
Diluted | $ | 0.19 | $ | (0.19 | ) | $ | (0.21 | ) | $ | (0.41 | ) | ||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: | |||||||||||||||
Basic | 19,022 | 18,714 | 18,933 | 18,542 | |||||||||||
Diluted | 19,284 | 18,714 | 18,933 | 18,542 | |||||||||||
EBITDA | $ | 8,250 | $ | 2,524 | $ | 15,497 | $ | 12,537 | |||||||
ADJUSTED EBITDA | $ | 9,369 | $ | 6,911 | $ | 23,017 | $ | 18,163 | |||||||
PFSweb, Inc. and Subsidiaries | |||||||||||||||||
Unaudited Reconciliation of Certain Non-GAAP Items to GAAP | |||||||||||||||||
(In Thousands, Except Per Share Data) | |||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
NET INCOME (LOSS) | $ | 3,586 | $ | (3,557 | ) | $ | (3,964 | ) | $ | (7,530 | ) | ||||||
Income tax expense (benefit) | 246 | 1,394 | 1,824 | 2,367 | |||||||||||||
Interest expense, net | 613 | 516 | 2,738 | 2,323 | |||||||||||||
Depreciation and amortization | 3,805 | 4,171 | 14,899 | 15,377 | |||||||||||||
EBITDA | $ | 8,250 | $ | 2,524 | $ | 15,497 | $ | 12,537 | |||||||||
Stock-based compensation | 789 | 368 | 3,333 | 2,111 | |||||||||||||
Acquisition-related, restructuring and other (income) costs | 330 | 4,019 | 4,187 | 3,515 | |||||||||||||
ADJUSTED EBITDA | $ | 9,369 | $ | 6,911 | $ | 23,017 | $ | 18,163 | |||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
NET INCOME (LOSS) | $ | 3,586 | $ | (3,557 | ) | $ | (3,964 | ) | $ | (7,530 | ) | ||||||
Stock-based compensation | 789 | 368 | 3,333 | 2,111 | |||||||||||||
Amortization of acquisition-related intangible assets | 1,085 | 1,126 | 3,391 | 3,994 | |||||||||||||
Acquisition-related, restructuring and other (income) costs | 330 | 4,019 | 4,187 | 3,515 | |||||||||||||
Deferred tax (benefit) expense - goodwill amortization | (413 | ) | - | 127 | - | ||||||||||||
NON-GAAP NET INCOME | $ | 5,377 | $ | 1,956 | $ | 7,074 | $ | 2,090 | |||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
TOTAL REVENUES | $ | 92,673 | $ | 102,455 | $ | 326,825 | $ | 334,643 | |||||||||
Pass-through revenue | (15,766 | ) | (18,524 | ) | (52,582 | ) | (59,783 | ) | |||||||||
Cost of product revenue | (9,283 | ) | (11,234 | ) | (38,504 | ) | (45,883 | ) | |||||||||
SERVICE FEE EQUIVALENT REVENUE | $ | 67,624 | $ | 72,697 | $ | 235,739 | $ | 228,977 | |||||||||
Source: PFSweb, Inc.