PFSweb Reports Record Fourth Quarter and Full Year 2014 Results

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PFSweb Reports Record Fourth Quarter and Full Year 2014 Results

PFSweb Reports Record Fourth Quarter and Full Year 2014 Results 91.6 KB

ALLEN, TX -- (Marketwired) -- 03/05/15 -- PFSweb, Inc. (NASDAQ: PFSW), a global provider of end-to-end eCommerce solutions, reported results for the fourth quarter and full year ended December 31, 2014.

Fourth Quarter 2014 Highlights

Service fee equivalent revenue (a non-GAAP measure defined below) increased 38% to a record $49.0 million compared to $35.6 million in the same period of 2013
Adjusted EBITDA (a non-GAAP measure defined below) increased 76% to a record $6.8 million compared to $3.9 million in the same period of 2013
Successfully concluded the 2014 holiday season with a high level of client satisfaction. Comparable direct-to-consumer clients experienced more than 20% year-over-year growth in their gross merchandise revenue during the quarter.
Expanded global sales operations with two additional European sales offices in London and Munich

Fourth Quarter 2014 Financial Results

Total revenues in the fourth quarter of 2014 increased 18% to $78.7 million compared to $66.7 million in the same period of 2013. Service fee revenue in the fourth quarter of 2014 increased 40% to $48.0 million compared to $34.3 million last year. Product revenue decreased to $18.1 million compared to $21.3 million in the same period of 2013, primarily due to ongoing restructuring activities by the company's largest client in this segment.

Service fee equivalent revenue in the fourth quarter of 2014 increased 38% to a record $49.0 million compared to $35.6 million in the same period of 2013. The increase was primarily due to new and expanded client relationships, higher seasonal volumes, and the benefit from the acquisitions of REV Solutions and LiveAreaLabs, both of which occurred in September 2014.

Service fee gross margin in the fourth quarter was 28.2% compared to 30.3% in the same period in 2013. While each period includes the benefit of higher margin project activity, the 2014 period included an increased level of expenses to prepare for and support certain client operations for the holiday volumes.

Adjusted EBITDA increased 76% to a record $6.8 million in the fourth quarter of 2014 compared to $3.9 million in the same period of 2013.

Net income in the fourth quarter of 2014 was $2.1 million or $0.12 per diluted share, compared to a net loss of $0.4 million or $(0.03) per diluted share in the same period of 2013. Net income in the fourth quarter of 2014 included $0.6 million in stock-based compensation expense, $0.2 million in acquisition costs, and $0.9 million in restructuring and other charges. The restructuring and other charges include costs associated with closing the company's Manila operation and integration of its recent acquisitions. This compares to $1.4 million in stock-based compensation expense and no acquisition or restructuring related costs in the same period of 2013.

Non-GAAP net income (a non-GAAP measure defined below) in the fourth quarter of 2014 was $3.7 million or $0.21 per diluted share, compared to non-GAAP net income of $1.0 million or $0.06 per diluted share in the fourth quarter of 2013.

Cash and cash equivalents decreased to $18.1 million compared to $22.4 million at December 31, 2013, primarily due to cash paid for the acquisitions of REV Solutions and LiveAreaLabs. Total debt decreased to $10.9 million at December 31, 2014 compared to $11.1 million at December 31, 2013.

Full Year 2014 Financial Results

Total revenues in 2014 increased 2% to $247.0 million compared to $241.6 million in 2013. Service fee revenue in 2014 increased 19% to $134.4 million compared to $113.0 million last year, while product revenue was $75.3 million compared to $91.0 million in the prior year. Service fee equivalent revenue increased 17% to a record $138.7 million compared to $118.7 million in 2013.

Service fee gross margin in 2014 was 29.4% compared to 31.7% last year.

Adjusted EBITDA increased 28% to a record $13.7 million in 2014 compared to $10.7 million in 2013.

Net loss in 2014 was $4.6 million or $(0.28) per diluted share compared to net loss of $5.9 million or $(0.39) per diluted share in 2013. Net loss in 2014 included $3.1 million in stock-based compensation expense, $1.7 million in acquisition costs, and $1.0 million in restructuring and other charges. This compares to $2.6 million in stock-based compensation expense and $2.5 million in restructuring and other charges in 2013.

Non-GAAP net income in 2014 was $1.2 million or $0.07 per diluted share, compared to non-GAAP net loss of $0.8 million or $(0.05) per diluted share in 2013.

Management Commentary

"2014 was highlighted by a number of financial and operational accomplishments," said Michael Willoughby, CEO of PFSweb. "We generated increases in nearly every metric of our business, most notably a 17% increase in service fee equivalent revenue and a 28% increase in adjusted EBITDA. In addition to new client wins and the highly-anticipated rollout of the United States Mint eCommerce solution, we strengthened our agency and technology service offerings with the acquisitions of REV Solutions and LiveAreaLabs.

"As an eCommerce system integrator, REV Solutions enhances our Demandware practice and adds Oracle Commerce support capabilities. LiveAreaLabs, a digital creative agency and system integrator, strengthens our agency service offering and further supplements our Demandware related technology services. LiveAreaLabs also broadens our integration capabilities with the additional strategy, creative and user experience design support for hybris, Magento, WebSphere and Drupal, among other leading platforms."

"Following these acquisitions," Willoughby continued, "the year culminated in a very strong holiday season, with clients who have been with us for more than a year realizing, on average, more than 20% year-over-year growth in gross merchandise revenue in Q4. Overall, our strong digital agency, technology and infrastructure performance for our clients during this peak-volume period positions us well for expanded opportunities in the future.

"For 2015, we remain focused on providing an exceptional omni-channel experience for both new and existing clients. With our expanded digital agency and technology service capabilities, we believe we are well-positioned to capitalize on the evolving eCommerce marketplace, both in the U.S. and abroad. We will continue to invest in our sales and marketing efforts, as reflected by our new European sales offices and recently appointed Executive VP of Sales, Travis Hess. We will also continue to target acquisitions that support our geographic growth initiatives and enhance our end-to-end solution offering, especially within professional services. Our goal is to deliver another year of record performance in 2015."

2015 Outlook

While the company's business activity in 2015 is expected to remain at previously communicated levels, the impact of foreign currency exchange related to the weak Canadian dollar and Euro is expected to partially offset the company's financial results. Accordingly, PFSweb has adjusted its 2015 service fee equivalent revenue guidance to range between $160 million and $170 million, which reflects targeted growth of 15% to 23% from 2014. The previously issued 2015 service fee equivalent revenue guidance was $165 million to $175 million. The company is targeting adjusted EBITDA to range between $16 million and $18 million, which reflects targeted growth of 17% to 32% from 2014. The 2015 guidance excludes the impact of potential future acquisitions.

Conference Call

PFSweb will conduct a conference call today at 11:00 a.m. Eastern time to discuss its results for the fourth quarter and full year ended December 31, 2014.

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

Date: Thursday, March 5, 2015
Time: 11:00 a.m. Eastern time (10:00 a.m. Central time)
Toll-free dial-in number: 1-888-417-8533
International dial-in number: 1-719-325-2329
Conference ID: 9205523

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=113361 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 2:00 p.m. Eastern time on the same day through March 19, 2015.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 9205523

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, 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 costs and restructuring and other charges.

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

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 costs and restructuring and other charges 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, 2013 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)


			December 31,			December 31,
			2014			2013
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	18,128		$	22,418
	Restricted cash			521			130
	Accounts receivable, net of allowance for doubtful accounts of $447 and $382 at December 31, 2014 and December 31, 2013, respectively			59,126			55,292
	Inventories, net of reserves of $768 and $962 at December 31, 2014 and December 31, 2013, respectively			10,534			14,169
	Other receivables			5,638			5,241
	Prepaid expenses and other current assets			7,103			4,713
		Total current assets		101,050			101,963

PROPERTY AND EQUIPMENT, net				26,604			27,190
INTANGIBLE ASSETS, net				2,170			-
GOODWILL				8,366			-
OTHER ASSETS				2,556			2,883
		Total assets		140,746			132,036

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations		$	6,850		$	8,231
	Trade accounts payable			38,842			34,096
	Deferred revenue			9,098			8,181
	Accrued expenses			28,473			25,045
		Total current liabilities		83,263			75,553

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion				4,062			2,876
DEFERRED REVENUE				5,355			7,491
DEFERRED RENT				4,870			5,191
OTHER LONG-TERM LIABILITIES				3,091			-
		Total liabilities		100,641			91,111


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; 17,047,093 and 16,540,904 shares issued at December 31, 2014 and December 31, 2013, respectively; and 17,013,626 and 16,507,437 shares outstanding as of December 31, 2014 and December 31, 2013, respectively			17			17
	Additional paid-in capital			129,457			124,522
	Accumulated deficit			(89,926	)		(85,300	)
	Accumulated other comprehensive income			682			1,811
	Treasury stock at cost, 33,467 shares			(125	)		(125	)
		Total shareholders' equity		40,105			40,925
		Total liabilities and shareholders' equity	$	140,746		$	132,036


(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, 2013.



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

				Three Months Ended						Twelve Months Ended
				December 31,						December 31,
				2014			2013			2014			2013
REVENUES:
	Product revenue, net			$	18,102		$	21,322		$	75,284		$	90,982
	Service fee revenue				47,992			34,269			134,385			112,977
	Pass-thru revenue				12,587			11,133			37,379			37,644
		Total revenues			78,681			66,724			247,048			241,603

COSTS OF REVENUES:
	Cost of product revenue				17,067			20,022			71,019			85,237
	Cost of service fee revenue				34,471			23,895			94,858			77,160
	Cost of pass-thru revenue				12,587			11,133			37,379			37,644
			Total costs of revenues		64,125			55,050			203,256			200,041
			Gross profit		14,556			11,674			43,792			41,562
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					12,387			11,840			47,658			46,235
		Income (loss) from operations			2,169			(166	)		(3,866	)		(4,673	)
INTEREST EXPENSE (INCOME), NET					323			115			813			679
		Income (loss) before income taxes			1,846			(281	)		(4,679	)		(5,352	)
INCOME TAX PROVISION (BENEFIT)					(258	)		128			(53	)		539
NET INCOME (LOSS)				$	2,104		$	(409	)	$	(4,626	)	$	(5,891	)
NON-GAAP NET INCOME (LOSS)				$	3,744		$	970		$	1,216		$	(772	)

NET INCOME (LOSS) PER SHARE:
	Basic			$	0.12		$	(0.03	)	$	(0.28	)	$	(0.39	)
	Diluted			$	0.12		$	(0.03	)	$	(0.28	)	$	(0.39	)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
	Basic				16,905			16,345			16,737			14,957
	Diluted				18,258			16,345			16,737			14,957

EBITDA				$	5,195		$	2,511		$	7,809		$	5,537
ADJUSTED EBITDA				$	6,835		$	3,890		$	13,651		$	10,656


(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, 2013.



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

			Three Months Ended						Twelve Months Ended
			December 31,						December 31,
			2014			2013			2014			2013
NET INCOME (LOSS)			$	2,104		$	(409	)	$	(4,626	)	$	(5,891	)
		Income tax expense (benefit)		(258	)		128			(53	)		539
		Interest expense, net		323			115			813			679
		Depreciation and amortization		3,026			2,677			11,675			10,210
EBITDA			$	5,195		$	2,511		$	7,809		$	5,537
		Stock-based compensation		550			1,379			3,059			2,574
		Acquisition related costs		229			-			1,749			-
		Restructuring and other charges		861			-			1,034			2,545
ADJUSTED EBITDA			$	6,835		$	3,890		$	13,651		$	10,656


			Three Months Ended						Twelve Months Ended
			December 31,						December 31,
			2014			2013			2014			2013

NET INCOME (LOSS)			$	2,104		$	(409	)	$	(4,626	)	$	(5,891	)
		Stock-based compensation		550			1,379			3,059			2,574
		Acquisition related costs		229			-			1,749			-
		Restructuring and other charges		861			-			1,034			2,545
NON-GAAP NET INCOME (LOSS)			$	3,744		$	970		$	1,216		$	(772	)

NET INCOME (LOSS) PER SHARE:
	Basic		$	0.12		$	(0.03	)	$	(0.28	)	$	(0.39	)
	Diluted		$	0.12		$	(0.03	)	$	(0.28	)	$	(0.39	)

NON-GAAP NET INCOME (LOSS) Per Share:
	Basic		$	0.22		$	0.06		$	0.07		$	(0.05	)
	Diluted		$	0.21		$	0.06		$	0.07		$	(0.05	)



			Three Months Ended						Twelve Months Ended
			December 31,						December 31,
			2014			2013			2014			2013

TOTAL REVENUES			$	78,681		$	66,724		$	247,048		$	241,603
	Pass-thru revenue			(12,587	)		(11,133	)		(37,379	)		(37,644	)
	Cost of product revenue			(17,067	)		(20,022	)		(71,019	)		(85,237	)
SERVICE FEE EQUIVALENT REVENUE			$	49,027		$	35,569		$	138,650		$	118,722



PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended December 31, 2014
(In Thousands)

							Business &
				PFSweb			Retail Connect		Eliminations			Consolidated
REVENUES:
	Product revenue, net			$	-		$	18,102	$	-		$	18,102
	Service fee revenue				42,634			5,358		-			47,992
	Service fee revenue - affiliate				4,642			292		(4,934	)		-
	Pass-thru revenue				12,587			-		-			12,587
			Total revenues		59,863			23,752		(4,934	)		78,681

COSTS OF REVENUES:
	Cost of product revenue				-			17,067		-			17,067
	Cost of service fee revenue				33,855			5,328		(4,712	)		34,471
	Cost of pass-thru revenue				12,587			-		-			12,587
			Total costs of revenues		46,442			22,395		(4,712	)		64,125
			Gross profit		13,421			1,357		(222	)		14,556
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					12,025			584		(222	)		12,387
		Income (loss) from operations			1,396			773		-			2,169
INTEREST EXPENSE (INCOME), NET					196			127		-			323
		Income (loss) before income taxes			1,200			646		-			1,846
INCOME TAX PROVISION (BENEFIT)					(497	)		239		-			(258	)
NET INCOME (LOSS)				$	1,697		$	407	$	-		$	2,104
NON-GAAP NET INCOME (LOSS)				$	3,337		$	407	$	-		$	3,744

EBITDA				$	4,409		$	786	$	-		$	5,195
ADJUSTED EBITDA				$	6,049		$	786	$	-		$	6,835


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

NET INCOME (LOSS)				$	1,697		$	407	$	-			2,104
		Income tax expense (benefit)			(497	)		239		-			(258	)
		Interest expense (income), net			196			127		-			323
		Depreciation and amortization			3,013			13		-			3,026
EBITDA				$	4,409		$	786	$	-		$	5,195
		Stock-based compensation			550			-		-			550
		Acquisition related costs			229			-		-			229
		Restructuring and other charges			861			-		-			861
ADJUSTED EBITDA				$	6,049		$	786	$	-		$	6,835

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

NET INCOME (LOSS)				$	1,697		$	407	$	-		$	2,104
		Stock-based compensation			550			-		-			550
		Acquisition related costs			229			-		-			229
		Restructuring and other charges			861			-		-			861
NON-GAAP NET INCOME (LOSS)				$	3,337		$	407	$	-		$	3,744

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 December 31, 2013
(In Thousands)

							Business &
				PFSweb			Retail Connect		Eliminations			Consolidated
REVENUES:
	Product revenue, net			$	-		$	21,322	$	-		$	21,322
	Service fee revenue				30,580			3,689		-			34,269
	Service fee revenue - affiliate				3,779			338		(4,117	)		-
	Pass-thru revenue				11,133			-		-			11,133
			Total revenues		45,492			25,349		(4,117	)		66,724

COSTS OF REVENUES:
	Cost of product revenue				-			20,022		-			20,022
	Cost of service fee revenue				24,028			3,547		(3,680	)		23,895
	Cost of pass-thru revenue				11,133			-		-			11,133
			Total costs of revenues		35,161			23,569		(3,680	)		55,050
			Gross profit		10,331			1,780		(437	)		11,674
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					11,036			1,241		(437	)		11,840
		Income (loss) from operations			(705	)		539		-			(166	)
INTEREST EXPENSE (INCOME), NET					(29	)		144		-			115
		Income (loss) before income taxes			(676	)		395		-			(281	)
INCOME TAX PROVISION (BENEFIT)					(15	)		143		-			128
NET INCOME (LOSS)				$	(661	)	$	252	$	-		$	(409	)
NON-GAAP NET INCOME (LOSS)				$	718		$	252	$	-		$	970

EBITDA				$	1,929		$	582	$	-		$	2,511
ADJUSTED EBITDA				$	3,308		$	582	$	-		$	3,890


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

NET INCOME (LOSS)				$	(661	)	$	252	$	-			(409	)
		Income tax expense (benefit)			(15	)		143		-			128
		Interest expense (income), net			(29	)		144		-			115
		Depreciation and amortization			2,634			43		-			2,677
EBITDA				$	1,929		$	582	$	-		$	2,511
		Stock-based compensation			1,379			-		-			1,379
ADJUSTED EBITDA				$	3,308		$	582	$	-		$	3,890

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

NET INCOME (LOSS)				$	(661	)	$	252	$	-		$	(409	)
		Stock-based compensation			1,379			-		-			1,379
NON-GAAP NET INCOME (LOSS)				$	718		$	252	$	-		$	970

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 Twelve Months Ended December 31, 2014
(In Thousands)

							Business &
				PFSweb			Retail Connect		Eliminations			Consolidated
REVENUES:
	Product revenue, net			$	-		$	75,284	$	-		$	75,284
	Service fee revenue				119,573			14,812		-			134,385
	Service fee revenue - affiliate				14,556			1,138		(15,694	)		-
	Pass-thru revenue				37,379			-					37,379
			Total revenues		171,508			91,234		(15,694	)		247,048

COSTS OF REVENUES:
	Cost of product revenue				-			71,019		-			71,019
	Cost of service fee revenue				94,301			15,182		(14,625	)		94,858
	Cost of pass-thru revenue				37,379			-		-			37,379
			Total costs of revenues		131,680			86,201		(14,625	)		203,256
			Gross profit		39,828			5,033		(1,069	)		43,792
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					45,779			2,948		(1,069	)		47,658
		Income (loss) from operations			(5,951	)		2,085		-			(3,866	)
INTEREST EXPENSE (INCOME), NET					264			549		-			813
		Income (loss) before income taxes			(6,215	)		1,536		-			(4,679	)
INCOME TAX PROVISION (BENEFIT)					(625	)		572		-			(53	)
NET INCOME (LOSS)				$	(5,590	)	$	964	$	-		$	(4,626	)
NON-GAAP NET INCOME (LOSS)				$	252		$	964	$	-		$	1,216

EBITDA				$	5,669		$	2,140	$	-		$	7,809
ADJUSTED EBITDA				$	11,511		$	2,140	$	-		$	13,651


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

NET INCOME (LOSS)				$	(5,590	)	$	964	$	-			(4,626	)
		Income tax expense (benefit)			(625	)		572		-			(53	)
		Interest expense (income), net			264			549		-			813
		Depreciation and amortization			11,620			55		-			11,675
EBITDA				$	5,669		$	2,140	$	-		$	7,809
		Stock-based compensation			3,059			-		-			3,059
		Acquisition related costs			1,749			-		-			1,749
		Restructuring and other charges			1,034			-		-			1,034
ADJUSTED EBITDA				$	11,511		$	2,140	$	-		$	13,651

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

NET INCOME (LOSS)				$	(5,590	)	$	964	$	-		$	(4,626	)
		Stock-based compensation			3,059			-		-			3,059
		Acquisition related costs			1,749			-		-			1,749
		Restructuring and other charges			1,034			-		-			1,034
NON-GAAP NET INCOME (LOSS)				$	252		$	964	$	-		$	1,216

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 Twelve Months Ended December 31, 2013
(In Thousands)

							Business &
				PFSweb			Retail Connect		Eliminations			Consolidated
REVENUES:
	Product revenue, net			$	-		$	90,982	$	-		$	90,982
	Service fee revenue				104,448			8,529		-			112,977
	Service fee revenue - affiliate				10,246			1,448		(11,694	)		-
	Pass-thru revenue				37,644			-		-			37,644
			Total revenues		152,338			100,959		(11,694	)		241,603

COSTS OF REVENUES:
	Cost of product revenue				-			85,237		-			85,237
	Cost of service fee revenue				78,843			8,708		(10,391	)		77,160
	Cost of pass-thru revenue				37,644			-		-			37,644
			Total costs of revenues		116,487			93,945		(10,391	)		200,041
			Gross profit		35,851			7,014		(1,303	)		41,562
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					41,709			5,829		(1,303	)		46,235
		Income (loss) from operations			(5,858	)		1,185		-			(4,673	)
INTEREST EXPENSE (INCOME), NET					84			595		-			679
		Income (loss) before income taxes			(5,942	)		590		-			(5,352	)
INCOME TAX PROVISION (BENEFIT)					185			354		-			539
NET INCOME (LOSS)				$	(6,127	)	$	236	$	-		$	(5,891	)
NON-GAAP NET INCOME (LOSS)				$	(1,008	)	$	236	$	-		$	(772	)

EBITDA				$	4,193		$	1,344	$	-		$	5,537
ADJUSTED EBITDA				$	9,312		$	1,344	$	-		$	10,656


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

NET INCOME (LOSS)				$	(6,127	)	$	236	$	-			(5,891	)
		Income tax expense (benefit)			185			354		-			539
		Interest expense (income), net			84			595		-			679
		Depreciation and amortization			10,051			159		-			10,210
EBITDA				$	4,193		$	1,344	$	-		$	5,537
		Stock-based compensation			2,574			-		-			2,574
		Restructuring and other charges			2,545			-		-			2,545
ADJUSTED EBITDA				$	9,312		$	1,344	$	-		$	10,656

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

NET INCOME (LOSS)				$	(6,127	)	$	236	$	-		$	(5,891	)
		Stock-based compensation			2,574			-		-			2,574
		Restructuring and other charges			2,545			-		-			2,545
NON-GAAP NET INCOME (LOSS)				$	(1,008	)	$	236	$	-		$	(772	)

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 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



PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets
as of December 31, 2013
(In Thousands)


						Business &
			PFSweb			Retail Connect			Eliminations			Consolidated
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	15,028		$	7,390		$	-		$	22,418
	Restricted cash			-			130			-			130
	Accounts receivable, net			37,857			18,697			(1,262	)		55,292
	Inventories, net			-			14,169			-			14,169
	Other receivables			-			5,241			-			5,241
	Prepaid expenses and other current assets			3,552			1,161			-			4,713
		Total current assets		56,437			46,788			(1,262	)		101,963

PROPERTY AND EQUIPMENT, net				26,945			245			-			27,190
RECEIVABLE/INVESTMENT IN AFFILIATES				12,563			-			(12,563	)		-
OTHER ASSETS				2,800			83			-			2,883
		Total assets		98,745			47,116			(13,825	)		132,036

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations		$	4,419		$	3,812		$	-		$	8,231
	Trade accounts payable			11,602			23,756			(1,262	)		34,096
	Deferred revenue			8,181			-			-			8,181
	Accrued expenses			18,114			6,931			-			25,045
		Total current liabilities		42,316			34,499			(1,262	)		75,553

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion				2,876			-			-			2,876
PAYABLE TO AFFILIATES				-			23,045			(23,045	)		-
DEFERRED REVENUE				7,491			-			-			7,491
DEFERRED RENT				5,191			-			-			5,191
		Total liabilities		57,874			57,544			(24,307	)		91,111

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
	Common stock			17			19			(19	)		17
	Capital contributions			-			1,000			(1,000	)		-
	Additional paid-in capital			124,522			28,060			(28,060	)		124,522
	Retained earnings (accumulated deficit)			(85,360	)		(41,850	)		41,910			(85,300	)
	Accumulated other comprehensive income			1,817			2,343			(2,349	)		1,811
	Treasury stock			(125	)		-			-			(125	)
		Total shareholders' equity		40,871			(10,428	)		10,482			40,925
		Total liabilities and shareholders' equity	$	98,745		$	47,116		$	(13,825	)	$	132,036

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

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

Source: PFSweb, Inc.

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