PFSweb Reports First Quarter 2017 Results
First Quarter 2017 Summary vs.
- Total revenues increased 5% to
$78.8 million . - Service fee equivalent revenue (a non-GAAP measure defined below) increased 16% to
$57.9 million . - Service fee gross margin was 30.9% compared to 34.6%.
- Net loss was
$4.9 million or$(0.26) per share, compared to a loss of$0.8 million or$(0.04) per share. The net loss in 2017 included a$2.7 million expense from acquisition, restructuring and other costs compared to a$0.8 million benefit in the prior year. - Adjusted EBITDA (a non-GAAP measure defined below) was
$3.7 million compared to$3.8 million .
Management Commentary
"We are keenly focused in 2017 on driving improved financial results and delivering optimal performance in support of our new and existing client relationships," said
"We continue to manage our omni-channel operations activity with a focus on driving higher-margin engagements, while also taking ongoing actions to reduce overhead and other costs where possible. We expect the benefit of our profitability initiatives to take hold in the second half of the year, driving targeted adjusted EBITDA growth of 26% to 43% in 2017."
First Quarter 2017 Financial Results
Total revenues in the first quarter of 2017 increased 5% to
Service fee equivalent revenue increased 16% to
Service fee gross margin in the first quarter of 2017 was 30.9% compared to 34.6% in the same period of 2016. The decrease was due to the impact of several large fulfillment clients that were implemented subsequent to the
Net loss in the first quarter of 2017 was
Adjusted EBITDA was
Non-GAAP net loss in the first quarter of 2017 was
At
2017 Outlook
PFS is reiterating its outlook for 2017 service fee equivalent revenue to range between
Conference Call
PFS will conduct a conference call today at
PFS CEO
Date:
Time:
Toll-free dial-in number: 1-888-395-3237
International dial-in number: 1-719-457-2081
Conference ID: 1609872
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 at http://public.viavid.com/index.php?id=124116 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: 1609872
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
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
| Condensed Consolidated Balance Sheets (A) | ||||||||||
| (In Thousands, Except Share Data) | ||||||||||
| 2017 | 2016 | |||||||||
| ASSETS | ||||||||||
| CURRENT ASSETS: | ||||||||||
| Cash and cash equivalents | $ | 15,640 | $ | 24,425 | ||||||
| Restricted cash | 215 | 215 | ||||||||
| Accounts receivable, net of allowance for doubtful accounts of | ||||||||||
| 60,762 | 80,223 | |||||||||
| Inventories, net of reserves of | ||||||||||
| 8,047 | 6,632 | |||||||||
| Other receivables | 5,347 | 6,750 | ||||||||
| Prepaid expenses and other current assets | 6,706 | 7,299 | ||||||||
| Total current assets | 96,717 | 125,544 | ||||||||
| PROPERTY AND EQUIPMENT, net | 28,265 | 30,264 | ||||||||
| INTANGIBLE ASSETS, net | 5,881 | 6,864 | ||||||||
| 46,210 | 46,210 | |||||||||
| OTHER ASSETS | 3,643 | 2,454 | ||||||||
| Total assets | 180,716 | 211,336 | ||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||
| CURRENT LIABILITIES: | ||||||||||
| Current portion of long-term debt and capital lease obligations | $ | 6,662 | $ | 7,300 | ||||||
| Trade accounts payable | 43,257 | 59,752 | ||||||||
| Deferred revenue | 5,827 | 7,156 | ||||||||
| Performance-based contingent payments | 2,425 | 2,405 | ||||||||
| Accrued expenses | 26,338 | 30,360 | ||||||||
| Total current liabilities | 84,509 | 106,973 | ||||||||
| LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion | 46,353 | 52,399 | ||||||||
| DEFERRED REVENUE | 4,073 | 4,127 | ||||||||
| DEFERRED RENT | 4,658 | 4,810 | ||||||||
| PERFORMANCE-BASED CONTINGENT PAYMENTS | 3,005 | 1,678 | ||||||||
| OTHER LIABILITIES | 2,125 | 1,066 | ||||||||
| Total liabilities | 144,723 | 171,053 | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||
| SHAREHOLDERS' EQUITY: | ||||||||||
| Preferred stock, | ||||||||||
| and outstanding | - | - | ||||||||
| Common stock, | ||||||||||
| 18,830,426 and 18,768,567 shares issued at | ||||||||||
| shares outstanding as of | 19 | 19 | ||||||||
| Additional paid-in capital | 146,556 | 146,286 | ||||||||
| Accumulated deficit | (110,173 | ) | (105,317 | ) | ||||||
| Accumulated other comprehensive income (loss) | (284 | ) | (580 | ) | ||||||
| (125 | ) | (125 | ) | |||||||
| Total shareholders' equity | 35,993 | 40,283 | ||||||||
| Total liabilities and shareholders' equity | $ | 180,716 | $ | 211,336 | ||||||
| (A) The financial data above should be read in conjunction with the audited consolidated financial statements of | ||||||||||
| Unaudited Condensed Consolidated Statements of Operations (A) | ||||||||||
| (In Thousands, Except Per Share Data) | ||||||||||
| Three Months Ended | ||||||||||
| 2017 | 2016 | |||||||||
| REVENUES: | ||||||||||
| Service fee revenue | $ | 57,265 | $ | 49,318 | ||||||
| Product revenue, net | 11,318 | 13,607 | ||||||||
| Pass-thru revenue | 10,185 | 12,155 | ||||||||
| Total revenues | 78,768 | 75,080 | ||||||||
| COSTS OF REVENUES: | ||||||||||
| Cost of service fee revenue | 39,584 | 32,274 | ||||||||
| Cost of product revenue | 10,725 | 12,903 | ||||||||
| Cost of pass-thru revenue | 10,185 | 12,155 | ||||||||
| Total costs of revenues | 60,494 | 57,332 | ||||||||
| Gross profit | 18,274 | 17,748 | ||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 21,718 | 17,550 | ||||||||
| Income (loss) from operations | (3,444 | ) | 198 | |||||||
| INTEREST EXPENSE (INCOME), NET | 637 | 484 | ||||||||
| Income (loss) before income taxes | (4,081 | ) | (286 | ) | ||||||
| INCOME TAX EXPENSE (BENEFIT) | 775 | 466 | ||||||||
| NET INCOME (LOSS) | $ | (4,856 | ) | $ | (752 | ) | ||||
| NON-GAAP NET INCOME (LOSS) | $ | (733 | ) | $ | 41 | |||||
| NET INCOME (LOSS) PER SHARE: | ||||||||||
| Basic | $ | (0.26 | ) | $ | (0.04 | ) | ||||
| Diluted | $ | (0.26 | ) | $ | (0.04 | ) | ||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: | ||||||||||
| Basic | 18,736 | 18,325 | ||||||||
| Diluted | 18,736 | 18,325 | ||||||||
| EBITDA | $ | 463 | $ | 3,801 | ||||||
| ADJUSTED EBITDA | $ | 3,652 | $ | 3,750 | ||||||
| (A) The financial data above should be read in conjunction with the audited consolidated
financial statements of | ||||||||||
|
| ||||||||||
| Unaudited Reconciliation of Certain Non-GAAP Items to GAAP | ||||||||||
| (In Thousands, Except Per Share Data) | ||||||||||
| Three Months Ended | ||||||||||
| 2017 | 2016 | |||||||||
| NET INCOME (LOSS) | $ | (4,856 | ) | $ | (752 | ) | ||||
| Income tax expense (benefit) | 775 | 466 | ||||||||
| Interest expense, net | 637 | 484 | ||||||||
| Depreciation and amortization | 3,907 | 3,603 | ||||||||
| EBITDA | $ | 463 | $ | 3,801 | ||||||
| Stock-based compensation | 524 | 766 | ||||||||
| Acquisition-related, restructuring and other (income) costs | 2,665 | (817 | ) | |||||||
| ADJUSTED EBITDA | $ | 3,652 | $ | 3,750 | ||||||
| Three Months Ended | ||||||||||
| 2017 | 2016 | |||||||||
| NET INCOME (LOSS) | $ | (4,856 | ) | $ | (752 | ) | ||||
| Stock-based compensation | 524 | 766 | ||||||||
| Amortization of acquisition-related intangible assets | 770 | 844 | ||||||||
| Acquisition-related, restructuring and other (income) costs | 2,665 | (817 | ) | |||||||
| Deferred tax expense - goodwill amortization | 164 | - | ||||||||
| NON-GAAP NET INCOME (LOSS) | $ | (733 | ) | $ | 41 | |||||
| Three Months Ended | ||||||||||
| 2017 | 2016 | |||||||||
| TOTAL REVENUES | $ | 78,768 | $ | 75,080 | ||||||
| Pass-thru revenue | (10,185 | ) | (12,155 | ) | ||||||
| Cost of product revenue | (10,725 | ) | (12,905 | ) | ||||||
| SERVICE FEE EQUIVALENT REVENUE | $ | 57,858 | $ | 50,020 | ||||||
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