PFSweb Reports Second Quarter 2010 Results
PFSweb, Inc. (Nasdaq: PFSW), an international business process outsourcing services provider of end-to-end web commerce solutions and an online discount retailer, today announced its financial results for the second quarter and six months ended June 30, 2010.
Summary of consolidated results for the quarter ended June 30, 2010:
-- Total revenue increased to $82.5 million for the second quarter of 2010 compared to $82.3 million for second quarter of 2009;
-- Total gross margin improved to 10.9% for the second quarter of 2010 compared to 10.0% for the same period last year;
-- Adjusted EBITDA (as defined) was $1.0 million versus a loss of $0.7 million for the second quarter of 2009;
-- Net loss was $1.5 million, or $0.14 per basic and diluted share, compared to net loss of $2.5 million or $0.25 per basic and diluted share, for the second quarter of 2009;
-- Non-GAAP net loss (as defined) was $0.9 million, or $0.08 per basic and diluted share, compared to non-GAAP net loss of $2.4 million or $0.24 per basic and diluted share, for the second quarter of 2009;
-- Total cash, cash equivalents and restricted cash increased to $20.8 million as of June 30, 2010 compared to $16.9 million as of December 31, 2009.
Summary of consolidated results for the six months ended June 30, 2010:
-- Total reported revenue was $170.7 million compared to $171.3 million for the six months ended June 30, 2009;
-- Total gross margin was 10.9% compared to 11.3% for the same period last year;
-- Adjusted EBITDA was $1.9 million for both the six months ended June 30, 2010 and 2009;
-- Net loss was $2.7 million, or $0.26 per basic and diluted share, compared to net loss of $2.8 million, or $0.28 per basic and diluted share, for the six month period ended June 30, 2009;
-- Non-GAAP net loss was $2.0 million, or $0.19 per basic and diluted share, compared to non-GAAP net loss of $2.5 million, or $0.25 per basic and diluted share, for the same period last year.
Mark Layton, Chairman and Chief Executive Officer of PFSweb, stated, "Our financial results for the second quarter of 2010 benefited from strong momentum in our Service Fee segment as the result of the ramp up of several new client relationships that have been implemented over the past year, offsetting lower revenue from the Supplies Distributors and eCOST.com businesses. While total consolidated revenue for the 2010 second quarter only increased slightly year-over-year, our Service Fee business, which provides significantly higher gross margins than our other business units, generated 34% more revenue than the prior year quarter. This increase in higher margin Service Fee business activity, combined with a reduction in our SG&A costs, resulted in an approximately $1.7 million improvement in Adjusted EBITDA as compared to the second quarter of 2009.
"We are encouraged by the continuing growth in our End2End eCommerce solution. During the past several months, we successfully launched two new high profile eCommerce sites and we continue to experience a very active new business pipeline. As a result, we now have more than 10 active End2End eCommerce programs with our clients and are queued up for several new sites expected to launch in the coming months. The feedback we have received for our End2End solution continues to be overwhelmingly positive, and we believe this solution has truly elevated our position within the industry.
"During the quarter, we strengthened our balance sheet by raising net proceeds of approximately $7.3 million through a public offering of 2.3 million shares of common stock at a price of $3.50 per share. This capital provides us with increased flexibility to manage our businesses and planned growth," Mr. Layton continued.
Summary of results by business segment:
Service Fee Business:
For the second quarter of 2010, Service Fee revenue was $16.6 million, compared with $12.4 million for the same period in 2009. The Service Fee business reported Adjusted EBITDA of $0.5 million for the second quarter of 2010, compared to an Adjusted EBITDA loss of $1.3 million for the same period last year.
For the six months ended June 30, 2010, Service Fee revenue was $32.5 million, compared with $29.5 million for the same period in 2009. Adjusted EBITDA for the Service Fee business was $0.7 million for the six month period of 2010, compared to $0.3 million for the six month period in 2009.
Mike Willoughby, President of PFSweb's Services division, commented, "Our Service Fee business experienced significant growth in the second quarter compared to the same period last year, which marked our low point following the non-renewal of a large client agreement with a U.S. government agency. The rate at which we have been able to recapture revenue over the past year speaks directly to the strength of our business and quality of services. Most importantly, during this time we have signed multiple new client agreements that offer a much more diversified revenue base.
"In just the past several months, we launched and ramped up two prominent client programs using our End2End eCommerce Solution. The first was a co-branded solution for the Carter's and OshKosh B'gosh brands, which launched in late-March; and the second was the highly anticipated P&G eStore through our alliance with Procter and Gamble, which launched in late-May. In addition, we also announced a couple of new European client agreements, including an End2End eCommerce agreement with Havaianas, the iconic Brazilian brand of flip-flop; and a partnership with Baby Boum for a business-to-business distribution solution throughout Europe.
"We are very excited about the momentum in our services business as a result of our End2End eCommerce solution, which continues to impress clients and industry professionals alike. This momentum is particularly strong in several rapidly evolving market segments, including the fashion, apparel and accessories, beauty and fragrance, and consumer packaged goods segments. As previously announced, in May 2010, we signed a new End2End eCommerce agreement with a leading fragrance and beauty company. As we look forward to the rest of 2010 and beyond, we continue to maintain a robust pipeline of potential new contracts," continued Mr. Willoughby.
Supplies Distributors Business:
For the second quarter of 2010, Supplies Distributors revenue was $43.5 million, compared to $45.3 million for the same period last year. Adjusted EBITDA was $0.9 million for the second quarter of 2010, compared to $1.0 million for the same period last year.
For the six months ended June 30, 2010, Supplies Distributors revenue was $89.1 million, compared to $90.6 million for the same period last year. Adjusted EBITDA was $1.9 million for the six month period in 2010, compared to $2.4 million for the six month period in 2009.
eCOST.com Business:
For the second quarter of 2010, eCOST.com revenue was $16.2 million, compared to $20.3 million for the same period in 2009. Adjusted EBITDA for eCOST.com was a loss of $0.4 million in both the second quarter of 2010 and 2009.
For the six months ended June 30, 2010, eCOST.com revenue was $36.3 million, compared to $41.2 million for the same period in 2009. Adjusted EBITDA for eCOST.com in the six month period ended June 30, 2010 improved to a loss of $0.6 million, as compared to a loss of $0.8 million for the same period last year.
"During the second quarter of 2010, our sales and marketing program for the eCOST.com business was negatively impacted by ever evolving email filtering algorithms being deployed by several internet/email service providers (ISP's). This action has resulted in limiting our ability to effectively advertise to a portion of our customers over the past quarter. Because we have relied primarily on email marketing, and the resulting viral impact of our emails, to generate visitor traffic, the lack of its effectiveness resulted in a decline in revenue this quarter. We are working to adjust our marketing strategy to overcome this new challenge in the most efficient and cost effective manner possible. eCOST.com's results for the second quarter of 2010 were also negatively impacted by $0.3 million of costs applicable to a vendor settlement and other legal matters," concluded Mr. Layton.
Conference Call Information
Management will host a conference call at 10:00 am Central Time (11:00 am Eastern Time) on Wednesday, August 11, 2010, to discuss the latest corporate developments and results. To listen to the call, please dial (888) 562-3356 and enter the pin number (92783977) at least five minutes before the scheduled start time. Investors can also access the call in a "listen only" mode via the Internet at the Company's website, www.pfsweb.com. Please allow extra time prior to the call to visit the site and download any necessary audio software.
A digital replay of the conference call will be available through September 11, 2010 at (800) 642-1687, pin number (92783977). The replay also will be available at the Company's website for a limited time.
Non-GAAP Financial Measures
This news release may contain certain non-GAAP measures, including non-GAAP net income (loss), Earnings Before Interest, Income Taxes, Depreciation and Amortization ("EBITDA") and Adjusted EBITDA.
Non-GAAP net income (loss) represents net income (loss) calculated in accordance with U.S. GAAP as adjusted for the impact of non-cash stock-based compensation expense, amortization of identifiable intangible assets, the impairment of goodwill and identifiable intangible assets, if any, and vendor settlement and other legal matter costs.
EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, impairment of goodwill and identifiable intangible assets, if any, and vendor settlement and other legal matter costs.
Non-GAAP net income (loss), EBITDA and Adjusted EBITDA are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, amortization of intangible assets, impairment of goodwill and intangible assets, if any, and vendor settlement and other legal matter costs and EBITDA and Adjusted EBITDA further eliminate the effect of financing, income taxes, and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance.
PFSweb believes these non-GAAP measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.
About PFSweb Inc.
PFSweb develops and deploys comprehensive end-to-end eCommerce solutions for Fortune 1000, Global 2000 and brand name companies, including interactive marketing services, global fulfillment and logistics and high-touch customer care. The company serves a multitude of industries and company types, including such clients as P&G, Carter's, LEGO, AAFES, Riverbed, InfoPrint Solutions Company, Hawker Beechcraft Corp., Roots Canada Ltd. and Xerox.
Through its wholly owned eCOST.com subsidiary, PFSweb also serves as a leading multi-category online discount retailer of high-quality new, "close-out" and manufacturer recertified brand-name merchandise for consumers and small to medium size business buyers. The eCOST.com brand markets approximately 270,000 different products from leading manufacturers such as Sony, Hewlett-Packard, Denon, JVC, Canon, Nikon, Panasonic, Toshiba, Microsoft, Garmin, Braun, Sharp, Cuisinart, Bissell and Hoover primarily over the Internet and through direct marketing.
To find out more about PFSweb, Inc. (NASDAQ: PFSW), visit the company's websites at http://www.pfsweb.com and http://www.ecost.com.
The matters discussed herein consist of forward-looking information under the Private Securities Litigation Reform Act of 1995 and is subject to and involves risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. PFSweb's Annual Report on Form 10-K for the year ended December 31, 2009 and Quarterly Report on Form 10-Q for the three months ended March 31, 2010 identify certain factors that could cause actual results to differ materially from those projected in any forward looking statements made and investors are advised to review the Annual and Quarterly Reports and the Risk Factors described therein. PFSweb undertakes no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future. There may be additional risks that we do not currently view as material or that are not presently known.
PFSweb, Inc. and Subsidiaries
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Unaudited Condensed Consolidated Statements of Operations (A)
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- ---------------------------------
2010 2009 2010 2009
------ ------ ------- -------
REVENUES:
Product revenue, net $ 59,711 $ 65,546 $ 125,358 $ 131,809
Service fee revenue 16,567 12,367 32,546 29,486
Pass-thru revenue 6,186 4,417 12,820 9,972
------ ------ ------- -------
Total revenues 82,464 82,330 170,724 171,267
------ ------ ------- -------
COSTS OF REVENUES:
Cost of product revenue 55,282 60,303 115,904 121,134
Cost of service fee revenue 11,987 9,414 23,441 20,733
Cost of pass-thru revenue 6,186 4,417 12,820 9,972
------ ------ ------- -------
Total costs of revenues 73,455 74,134 152,165 151,839
------ ------ ------- -------
Gross profit 9,009 8,196 18,559 19,428
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 10,190 10,670 20,560 21,363
------ ------ ------- -------
(1,181 ) (2,474 ) (2,001 ) (1,935 )
Loss from operations
INTEREST EXPENSE, NET 237 321 499 678
------ ------ ------- -------
Income (loss) before income taxes (1,418 ) (2,795 ) (2,500 ) (2,613 )
INCOME TAX EXPENSE (BENEFIT) 77 (266 ) 204 164
------ ------ --- ------- -------
NET LOSS $ (1,495 ) $ (2,529 ) $ (2,704 ) $ (2,777 )
=== ====== === === ====== === === ======= === === ======= ===
NON-GAAP NET LOSS $ (915 ) $ (2,393 ) $ (1,993 ) $ (2,512 )
=== ====== === === ====== === === ======= === === ======= ===
NET LOSS PER SHARE:
Basic and Diluted $ (0.14 ) $ (0.25 ) $ (0.26 ) $ (0.28 )
=== ====== === === ====== === === ======= === === ======= ===
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic and Diluted 10,796 9,927 10,369 9,925
====== ====== ======= =======
EBITDA $ 479 $ (851 ) $ 1,294 $ 1,716
=== ====== === ====== === === ======= === =======
ADJUSTED EBITDA $ 1,024 $ (742 ) $ 1,935 $ 1,928
=== ====== === ====== === === ======= === =======
(A) The financial data above should be read in conjunction with the
audited consolidated financial statements of PFSweb, Inc. included
in its Form 10-K for the year ended December 31, 2009.
PFSweb, Inc. and Subsidiaries
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Reconciliation of Certain Non-GAAP Items to GAAP
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
2010 2009 2010 2009
------ ------ ------ ------
NET LOSS $ (1,495 ) $ (2,529 ) $ (2,704 ) $ (2,777 )
Income tax expense (benefit) 77 (266 ) 204 164
Interest expense 237 321 499 678
Depreciation and amortization 1,660 1,623 3,295 3,651
------ ------ ------ ------
EBITDA $ 479 $ (851 ) $ 1,294 $ 1,716
Stock-based compensation 262 109 358 212
Vendor settlement and other legal matters 283 - 283 -
------ ------ ------ ------
ADJUSTED EBITDA $ 1,024 $ (742 ) $ 1,935 $ 1,928
== ====== == ====== == == ====== == ======
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
2010 2009 2010 2009
------ ------ ------ ------
NET LOSS $ (1,495 ) $ (2,529 ) $ (2,704 ) $ (2,777 )
Stock-based compensation 262 109 358 212
Amortization of identifiable intangible assets 35 27 70 53
Vendor settlement and other legal matters 283 - 283 -
------ ------ ------ ------
NON-GAAP NET LOSS $ (915 ) $ (2,393 ) $ (1,993 ) $ (2,512 )
== ====== == == ====== == == ====== == == ====== ==
NET LOSS PER SHARE:
Basic and Diluted $ (0.14 ) $ (0.25 ) $ (0.26 ) $ (0.28 )
== ====== == == ====== == == ====== == == ====== ==
NON-GAAP NET LOSS Per Share:
Basic and Diluted $ (0.08 ) $ (0.24 ) $ (0.19 ) $ (0.25 )
== ====== == == ====== == == ====== == == ====== ==
PFSweb, Inc. and Subsidiaries
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Unaudited Condensed Consolidated Balance Sheets
(In Thousands, Except Share Data)
June 30, December 31,
2010 2009
------- -------
ASSETS
-------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 19,410 $ 14,812
Restricted cash 1,410 2,096
Accounts receivable, net of allowance for doubtful accounts of $901
and
$973 at June 30, 2010 and December 31, 2009, respectively 35,456 39,861
Inventories, net of reserves of $2,003 and $2,016 at June 30, 2010
and
December 31, 2009, respectively 35,353 37,949
Other receivables 11,881 11,605
Prepaid expenses and other current assets 4,004 4,170
------- -------
Total current assets 107,514 110,493
------- -------
PROPERTY AND EQUIPMENT, net 9,214 10,314
IDENTIFIABLE INTANGIBLES 726 805
GOODWILL 3,602 3,602
OTHER ASSETS 2,084 2,555
------- -------
Total assets 123,140 127,769
======= =======
LIABILITIES AND SHAREHOLDERS EQUITY
-------------------------------------------------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 17,362 $ 19,179
Trade accounts payable 47,383 53,642
Deferred revenue 5,235 5,164
Accrued expenses 15,439 13,180
------- -------
Total current liabilities 85,419 91,165
------- -------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 1,263 3,348
OTHER LIABILITIES 3,606 3,903
------- -------
Total liabilities 90,288 98,416
------- -------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $1.00 par value; 1,000,000 shares authorized; none
issued
and outstanding - -
Common stock, $.001 par value; 37,300,000 shares authorized;
12,254,957 and 9,952,164 shares issued at June 30, 2010 and
December 31, 2009, respectively; and 12,236,596 and 9,933,803
outstanding as of June 30, 2010 and December 31, 2009, respectively 12 10
Additional paid-in capital 100,793 93,152
Accumulated deficit (68,667 ) (65,963 )
Accumulated other comprehensive income 799 2,239
Treasury stock at cost, 18,361 shares (85 ) (85 )
------- ---- ------- ----
Total shareholders' equity 32,852 29,353
------- -------
Total liabilities and shareholders' equity $ 123,140 $ 127,769
==== ======= ==== =======
PFSweb, Inc. and Subsidiaries
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Unaudited Consolidating Statements of Operations
For the Three Months Ended June 30, 2010
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
----------------- -------------- ----------------- ----------------- -----------------
REVENUES:
Product revenue, net $ - $ 43,548 $ 16,163 $ - $ 59,711
Service fee revenue 16,567 - - - 16,567
Service fee revenue - affiliate 1,738 - - (1,738 ) -
Pass-thru revenue 6,202 - - (16 ) 6,186
------ ------ ------ ------ ---- ------
Total revenues 24,507 43,548 16,163 (1,754 ) 82,464
------ ------ ------ ------ ---- ------
COSTS OF REVENUES:
Cost of product revenue - 40,528 14,754 - 55,282
Cost of service fee revenue 12,572 - - (585 ) 11,987
Cost of pass-thru revenue 6,202 - - (16 ) 6,186
------ ------ ------ ------ ---- ------
Total costs of revenues 18,774 40,528 14,754 (601 ) 73,455
------ ------ ------ ------ ---- ------
Gross profit 5,733 3,020 1,409 (1,153 ) 9,009
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 7,013 2,153 2,177 (1,153 ) 10,190
------ ------ ------ ------ ---- ------
Income (loss) from operations (1,280 ) 867 (768 ) - (1,181 )
INTEREST EXPENSE (INCOME), NET (59 ) 293 3 - 237
------ ---- ------ ------ ------ ------
Income (loss) before income taxes (1,221 ) 574 (771 ) - (1,418 )
INCOME TAX PROVISION (BENEFIT) (146 ) 196 27 - 77
------ ---- ------ ------ ------ ------
NET INCOME (LOSS) $ (1,075 ) $ 378 $ (798 ) $ - $ (1,495 )
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ====== ====
NON-GAAP NET INCOME (LOSS) $ (813 ) $ 378 $ (480 ) $ - $ (915 )
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ====== ====
EBITDA $ 277 $ 874 $ (672 ) $ - $ 479
==== ====== ====== ====== ==== ====== ==== ==== ====== ==== ======
ADJUSTED EBITDA $ 539 $ 874 $ (389 ) $ - $ 1,024
==== ====== ====== ====== ==== ====== ==== ==== ====== ==== ======
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ (1,075 ) $ 378 $ (798 ) $ - $ (1,495 )
Income tax expense (benefit) (146 ) 196 27 - 77
Interest expense (income) (59 ) 293 3 - 237
Depreciation and amortization 1,557 7 96 - 1,660
------ ------ ------ ------ ------
EBITDA $ 277 $ 874 $ (672 ) $ - $ 479
Stock-based compensation 262 - - - 262
Vendor settlement and other legal matters - - 283 - 283
------ ------ ------ ------ ------
ADJUSTED EBITDA $ 539 $ 874 $ (389 ) $ - $ 1,024
==== ====== ====== ====== ==== ====== ==== ==== ====== ==== ======
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ (1,075 ) $ 378 $ (798 ) $ - $ (1,495 )
Stock-based compensation 262 - - - 262
Amortization of intangible assets - - 35 - 35
Vendor settlement and other legal matters - - 283 - 283
------ ------ ------ ------ ------
NON-GAAP NET INCOME (LOSS) $ (813 ) $ 378 $ (480 ) $ - $ (915 )
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ====== ====
PFSweb, Inc. and Subsidiaries
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Unaudited Consolidating Statements of Operations
For the Six Months Ended June 30, 2010
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
----------------- -------------- ----------------- ----------------- ------------------
REVENUES:
Product revenue, net $ - $ 89,050 $ 36,308 $ - $ 125,358
Service fee revenue 32,546 - - - 32,546
Service fee revenue - affiliate 3,438 - - (3,438 ) -
Pass-thru revenue 12,839 - - (19 ) 12,820
------ ------ ------ ------ ---- -------
Total revenues 48,823 89,050 36,308 (3,457 ) 170,724
------ ------ ------ ------ ---- -------
COSTS OF REVENUES:
Cost of product revenue - 82,806 33,098 - 115,904
Cost of service fee revenue 24,672 - - (1,231 ) 23,441
Cost of pass-thru revenue 12,839 - - (19 ) 12,820
------ ------ ------ ------ ---- -------
Total costs of revenues 37,511 82,806 33,098 (1,250 ) 152,165
------ ------ ------ ------ ---- -------
Gross profit 11,312 6,244 3,210 (2,207 ) 18,559
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 14,071 4,364 4,332 (2,207 ) 20,560
------ ------ ------ ------ ---- -------
Income (loss) from operations (2,759 ) 1,880 (1,122 ) - (2,001 )
INTEREST EXPENSE (INCOME), NET (115 ) 603 11 - 499
------ ---- ------ ------ ------ -------
Income (loss) before income taxes (2,644 ) 1,277 (1,133 ) - (2,500 )
INCOME TAX PROVISION (BENEFIT) (282 ) 452 34 - 204
------ ---- ------ ------ ------ -------
NET INCOME (LOSS) $ (2,362 ) $ 825 $ (1,167 ) $ - $ (2,704 )
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ======= ====
NON-GAAP NET INCOME (LOSS) $ (2,004 ) $ 825 $ (814 ) $ - $ (1,993 )
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ======= ====
EBITDA $ 328 $ 1,894 $ (928 ) $ - $ 1,294
==== ====== ====== ====== ==== ====== ==== ==== ====== ==== =======
ADJUSTED EBITDA $ 686 $ 1,894 $ (645 ) $ - $ 1,935
==== ====== ====== ====== ==== ====== ==== ==== ====== ==== =======
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ (2,362 ) $ 825 $ (1,167 ) $ - $ (2,704 )
Income tax expense (benefit) (282 ) 452 34 - 204
Interest expense (income) (115 ) 603 11 - 499
Depreciation and amortization 3,087 14 194 - 3,295
------ ------ ------ ------ -------
EBITDA $ 328 $ 1,894 $ (928 ) $ - $ 1,294
Stock-based compensation 358 - - - 358
Vendor settlement and other legal matters - - 283 - 283
------ ------ ------ ------ -------
ADJUSTED EBITDA $ 686 $ 1,894 $ (645 ) $ - $ 1,935
==== ====== ====== ====== ==== ====== ==== ==== ====== ==== =======
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ (2,362 ) $ 825 $ (1,167 ) $ - $ (2,704 )
Stock-based compensation 358 - - - 358
Amortization of intangible assets - - 70 - 70
Vendor settlement and other legal matters - - 283 - 283
------ ------ ------ ------ -------
NON-GAAP NET INCOME (LOSS) $ (2,004 ) $ 825 $ (814 ) $ - $ (1,993 )
==== ====== ==== ====== ====== ==== ====== ==== ==== ====== ==== ======= ====
PFSweb, Inc. and Subsidiaries
--------------------------------------------------------------------------------------------------------------------------------------
Unaudited Condensed Consolidating Balance Sheets
as of June 30, 2010
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
-------------- -------------- -------------- ------------------ ------------------
ASSETS
----------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 16,614 $ 2,656 $ 140 $ - $ 19,410
Restricted cash 776 515 119 - 1,410
Accounts receivable, net 16,459 17,830 1,509 (342 ) 35,456
Inventories, net - 30,669 4,684 - 35,353
Other receivables - 11,144 737 - 11,881
Prepaid expenses and other current assets 2,398 1,515 91 - 4,004
------- ------ ------- ------- -------
Total current assets 36,247 64,329 7,280 (342 ) 107,514
------- ------ ------- ------- ---- -------
PROPERTY AND EQUIPMENT, net 8,922 33 259 - 9,214
NOTES RECEIVABLE FROM AFFILIATES 21,195 - - (21,195 ) -
INVESTMENT IN AFFILIATES (3,200 ) - - 3,200 -
IDENTIFIABLE INTANGIBLES 357 - 369 - 726
GOODWILL - - 3,602 - 3,602
OTHER ASSETS 1,871 - 213 - 2,084
------- ------ ------- ------- -------
Total assets 65,392 64,362 11,723 (18,337 ) 123,140
======= ====== ======= ======= ==== =======
LIABILITIES AND SHAREHOLDERS EQUITY
----------------------------------------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 7,287 $ 10,040 $ 35 $ - $ 17,362
Trade accounts payable 4,611 37,468 5,646 (342 ) 47,383
Deferred revenue 4,342 - 893 - 5,235
Accrued expenses 9,251 5,192 996 - 15,439
------- ------ ------- ------- -------
Total current liabilities 25,491 52,700 7,570 (342 ) 85,419
------- ------ ------- ------- ---- -------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 1,158 - 105 - 1,263
NOTES PAYABLE TO AFFILIATES - 4,255 16,940 (21,195 ) -
OTHER LIABILITIES 3,606 - - - 3,606
------- ------ ------- ------- -------
Total liabilities 30,255 56,955 24,615 (21,537 ) 90,288
------- ------ ------- ------- ---- -------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock 12 - 19 (19 ) 12
Capital contributions - 1,000 - (1,000 ) -
Additional paid-in capital 100,793 - 28,059 (28,059 ) 100,793
Retained earnings (accumulated deficit) (66,365 ) 4,676 (40,972 ) 33,994 (68,667 )
Accumulated other comprehensive income 782 1,731 2 (1,716 ) 799
Treasury stock (85 ) - - - (85 )
------- -- ------ ------- ------- ------- ----
Total shareholders' equity 35,137 7,407 (12,892 ) 3,200 32,852
------- ------ ------- -- ------- -------
Total liabilities and shareholders' equity $ 65,392 $ 64,362 $ 11,723 $ (18,337 ) $ 123,140
== ======= ====== ====== == ======= ==== ======= ==== ==== =======
PFSweb, Inc. and Subsidiaries
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Unaudited Consolidating Statements of Operations
For the Three Months Ended June 30, 2009
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
--------------- ----------------- --------------- ----------------- -----------------
REVENUES:
Product revenue, net $ - $ 45,269 $ 20,277 $ - $ 65,546
Service fee revenue 12,367 - - - 12,367
Service fee revenue - affiliate 1,736 - - (1,736 ) -
Pass-thru revenue 4,451 - - (34 ) 4,417
------ ------ ------ ------ ---- ------
Total revenues 18,554 45,269 20,277 (1,770 ) 82,330
------ ------ ------ ------ ---- ------
COSTS OF REVENUES:
Cost of product revenue - 41,984 18,319 - 60,303
Cost of service fee revenue 10,052 - - (638 ) 9,414
Cost of pass-thru revenue 4,451 - - (34 ) 4,417
------ ------ ------ ------ ---- ------
Total costs of revenues 14,503 41,984 18,319 (672 ) 74,134
------ ------ ------ ------ ---- ------
Gross profit 4,051 3,285 1,958 (1,098 ) 8,196
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 7,033 2,304 2,431 (1,098 ) 10,670
------ ------ ------ ------ ---- ------
Income (loss) from operations (2,982 ) 981 (473 ) - (2,474 )
INTEREST EXPENSE (INCOME), NET (59 ) 377 3 - 321
------ --- ------ ------ ------ ------
Income (loss) before income taxes (2,923 ) 604 (476 ) - (2,795 )
INCOME TAX PROVISION (BENEFIT) (62 ) (213 ) 9 - (266 )
------ --- ------ ---- ------ ------ ------ ----
NET INCOME (LOSS) $ (2,861 ) $ 817 $ (485 ) $ - $ (2,529 )
=== ====== === ==== ====== === ====== === ==== ====== ==== ====== ====
NON-GAAP NET INCOME (LOSS) $ (2,752 ) $ 817 $ (458 ) $ - $ (2,393 )
=== ====== === ==== ====== === ====== === ==== ====== ==== ====== ====
EBITDA $ (1,452 ) $ 989 $ (388 ) $ - $ (851 )
=== ====== === ==== ====== === ====== === ==== ====== ==== ====== ====
ADJUSTED EBITDA $ (1,343 ) $ 989 $ (388 ) $ - $ (742 )
=== ====== === ==== ====== === ====== === ==== ====== ==== ====== ====
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ (2,861 ) $ 817 $ (485 ) $ - $ (2,529 )
Income tax expense (benefit) (62 ) (213 ) 9 - (266 )
Interest expense (income) (59 ) 377 3 - 321
Depreciation and amortization 1,530 8 85 - 1,623
------ ------ ------ ------ ------
EBITDA $ (1,452 ) $ 989 $ (388 ) $ - $ (851 )
Stock-based compensation 109 - - - 109
------ ------ ------ ------ ------
ADJUSTED EBITDA $ (1,343 ) $ 989 $ (388 ) $ - $ (742 )
=== ====== === ==== ====== === ====== === ==== ====== ==== ====== ====
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ (2,861 ) $ 817 $ (485 ) $ - $ (2,529 )
Stock-based compensation 109 - - - 109
Amortization of intangible assets - - 27 - 27
------ ------ ------ ------ ------
NON-GAAP NET INCOME (LOSS) $ (2,752 ) $ 817 $ (458 ) $ - $ (2,393 )
=== ====== === ==== ====== === ====== === ==== ====== ==== ====== ====
PFSweb, Inc. and Subsidiaries
--------------------------------------------------------------------------------------------------------------
Unaudited Consolidating Statements of Operations
For the Six Months Ended June 30, 2009
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
--------------- -------------- --------------- ----------------- ------------------
REVENUES:
Product revenue, net $ - $ 90,600 $ 41,209 $ - $ 131,809
Service fee revenue 29,486 - - - 29,486
Service fee revenue - affiliate 3,795 - - (3,795 ) -
Pass-thru revenue 10,037 - - (65 ) 9,972
------ ------ ------ ------ ---- -------
Total revenues 43,318 90,600 41,209 (3,860 ) 171,267
------ ------ ------ ------ ---- -------
COSTS OF REVENUES:
Cost of product revenue - 83,934 37,200 - 121,134
Cost of service fee revenue 22,016 - - (1,283 ) 20,733
Cost of pass-thru revenue 10,037 - - (65 ) 9,972
------ ------ ------ ------ ---- -------
Total costs of revenues 32,053 83,934 37,200 (1,348 ) 151,839
------ ------ ------ ------ ---- -------
Gross profit 11,265 6,666 4,009 (2,512 ) 19,428
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 14,650 4,268 4,957 (2,512 ) 21,363
------ ------ ------ ------ ---- -------
Income (loss) from operations (3,385 ) 2,398 (948 ) - (1,935 )
INTEREST EXPENSE (INCOME), NET (82 ) 754 6 - 678
------ --- ------ ------ ------ -------
Income (loss) before income taxes (3,303 ) 1,644 (954 ) - (2,613 )
INCOME TAX PROVISION (BENEFIT) (114 ) 269 9 - 164
------ --- ------ ------ ------ -------
NET INCOME (LOSS) $ (3,189 ) $ 1,375 $ (963 ) $ - $ (2,777 )
=== ====== === ====== ====== === ====== === ==== ====== ==== ======= ====
NON-GAAP NET INCOME (LOSS) $ (2,977 ) $ 1,375 $ (910 ) $ - $ (2,512 )
=== ====== === ====== ====== === ====== === ==== ====== ==== ======= ====
EBITDA $ 80 $ 2,416 $ (780 ) $ - $ 1,716
=== ====== ====== ====== === ====== === ==== ====== ==== =======
ADJUSTED EBITDA $ 292 $ 2,416 $ (780 ) $ - $ 1,928
=== ====== ====== ====== === ====== === ==== ====== ==== =======
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ (3,189 ) $ 1,375 $ (963 ) $ - $ (2,777 )
Income tax expense (benefit) (114 ) 269 9 - 164
Interest expense (income) (82 ) 754 6 - 678
Depreciation and amortization 3,465 18 168 - 3,651
------ ------ ------ ------ -------
EBITDA $ 80 $ 2,416 $ (780 ) $ - $ 1,716
Stock-based compensation 212 - - - 212
------ ------ ------ ------ -------
ADJUSTED EBITDA $ 292 $ 2,416 $ (780 ) $ - $ 1,928
=== ====== ====== ====== === ====== === ==== ====== ==== =======
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ (3,189 ) $ 1,375 $ (963 ) $ - $ (2,777 )
Stock-based compensation 212 - - - 212
Amortization of intangible assets - - 53 - 53
------ ------ ------ ------ -------
NON-GAAP NET INCOME (LOSS) $ (2,977 ) $ 1,375 $ (910 ) $ - $ (2,512 )
=== ====== === ====== ====== === ====== === ==== ====== ==== ======= ====
PFSweb, Inc. and Subsidiaries
--------------------------------------------------------------------------------------------------------------------------------------
Unaudited Condensed Consolidating Balance Sheets
as of December 31, 2009
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
-------------- -------------- -------------- ------------------ ------------------
ASSETS
----------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 9,698 $ 2,628 $ 2,486 $ - $ 14,812
Restricted cash 732 1,137 227 - 2,096
Accounts receivable, net 19,499 18,764 1,719 (121 ) 39,861
Inventories, net - 33,577 4,372 - 37,949
Other receivables 49 11,556 - - 11,605
Prepaid expenses and other current assets 2,515 1,575 80 - 4,170
------- ------ ------- ------- -------
Total current assets 32,493 69,237 8,884 (121 ) 110,493
------- ------ ------- ------- ---- -------
PROPERTY AND EQUIPMENT, net 9,900 54 360 - 10,314
NOTES RECEIVABLE FROM AFFILIATES 20,845 - - (20,845 ) -
INVESTMENT IN AFFILIATES (149 ) - - 149 -
IDENTIFIABLE INTANGIBLES 383 - 422 - 805
GOODWILL - - 3,602 - 3,602
OTHER ASSETS 2,244 - 311 - 2,555
------- ------ ------- ------- -------
Total assets 65,716 69,291 13,579 (20,817 ) 127,769
======= ====== ======= ======= ==== =======
LIABILITIES AND SHAREHOLDERS EQUITY
----------------------------------------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 8,770 $ 10,374 $ 35 $ - $ 19,179
Trade accounts payable 8,396 38,753 6,614 (121 ) 53,642
Deferred revenue 3,948 - 1,216 - 5,164
Accrued expenses 7,046 4,701 1,433 - 13,180
------- ------ ------- ------- -------
Total current liabilities 28,160 53,828 9,298 (121 ) 91,165
------- ------ ------- ------- ---- -------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 3,208 - 140 - 3,348
NOTES PAYABLE TO AFFILIATES - 5,005 15,840 (20,845 ) -
OTHER LIABILITIES 3,880 - 23 - 3,903
------- ------ ------- ------- -------
Total liabilities 35,248 58,833 25,301 (20,966 ) 98,416
------- ------ ------- ------- ---- -------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock 10 - 19 (19 ) 10
Capital contributions - 1,000 - (1,000 ) -
Additional paid-in capital 93,152 - 28,059 (28,059 ) 93,152
Retained earnings (accumulated deficit) (64,828 ) 6,781 (39,805 ) 31,889 (65,963 )
Accumulated other comprehensive income 2,219 2,677 5 (2,662 ) 2,239
Treasury stock (85 ) - - - (85 )
------- -- ------ ------- ------- ------- ----
Total shareholders' equity 30,468 10,458 (11,722 ) 149 29,353
------- ------ ------- -- ------- -------
Total liabilities and shareholders' equity $ 65,716 $ 69,291 $ 13,579 $ (20,817 ) $ 127,769
== ======= ====== ====== == ======= ==== ======= ==== ==== =======
eCOST.com, Inc.
------------------------------------------------------------
Selected Operating Data
Three Months Ended
June 30,
-----------------------------
2010 2009
--------- ---------
Total Customers (1) 2,140,312 1,969,610
Active Customers (2) 142,387 222,095
New Customers (3) 30,192 49,192
Number of Orders (4) 66,778 96,186
Average Order Value (5) $ 216 $ 203
Advertising Expense (6) $ 201,515 $ 218,943
Cost to Acquire a New Customer (7) $ 6.67 $ 4.44
(1) Total customers have been calculated as the cumulative number of
customers for which orders have been taken from eCOST.com's
inception to the end of the reported period.
(2) Active customers consist of the approximate number of customers who
placed orders during the 12 months prior to the end of the reported
period.
(3) New Customers represent the number of persons that established a new
account and placed an order during the reported period.
(4) Number of orders represents the total number of orders shipped
during the reported period (not reflecting returns).
(5) Average order value has been calculated as gross sales divided by
the total number of orders during the period presented. The impact
of returns is not reflected in average order value.
(6) Advertising expense includes the total dollars spent on advertising
during the reported period, including internet, direct mail, print
and e-mail advertising, as well as customer list enhancement
services.
(7) Catalog expense of $0 and $303 was not included in the 2010 and 2009
calculation, respectively, as it is used for retention and not
acquisition.
SOURCE: PFSweb, Inc.
PFSweb, Inc. Mark C. Layton, Chief Executive Officer Thomas J. Madden, Chief Financial Officer 972-881-2900 or KCSA Strategic Communications Investor Relations Todd Fromer / Garth Russell 212-896-1215 / 212-896-1250 tfromer@kcsa.com / grussell@kcsa.com