PFSweb, Inc. (Nasdaq: PFSW), an international provider of
end-to-end eCommerce solutions, today announced its financial
results for the quarter ended March 31, 2013.
“We are very excited about several significant developments in
our business that we believe strongly position PFSweb for solid
growth and enhanced shareholder value in the future. We have
recently won several new and expanded client relationships,
including a promising new agreement with a leading Fortune 500
retailer of apparel and home fashion, and we have seen an increase
in our sales pipeline to approximately $50 million, based on client
projections,” stated Mike Willoughby, Chief Executive Officer at
PFSweb.
“We are also excited to announce a definitive agreement to form
a strategic relationship with transcosmos inc., through which we
will gain access to both their Asian-based global client brands
looking to expand into the U.S. and European markets, and their
extensive infrastructure to support our clients’ expansion into
Asia, including Japan, China and South Korea. As part of the
relationship, transcosmos is acquiring a 19.9% equity position in
PFSweb through a direct investment of approximately $14.7 million.
This influx of capital will play an important role in allowing
PFSweb to accelerate its ongoing growth initiatives,” continued Mr.
Willoughby.
“While we are pleased with our results from the first quarter
ended March 31, 2013, we continue to expect CY2013 to be a
transition year for us as we wind down certain previously announced
client programs. However, through a combination of organic and new
growth opportunities, coupled with operational changes aimed to
drive business efficiencies and cost reductions, we believe we are
establishing the appropriate framework to usher PFSweb into a
period of exciting growth starting in 2014,” Mr. Willoughby
added.
Summary of consolidated results for the first quarter ended
March 31, 2013:
- Service Fee revenue decreased slightly
to $28.0 million, compared to $28.4 million for the same period in
2012; Service Fee Equivalent Revenue (as defined) decreased 4% to
$30.0 million, compared to $31.2 million for the same period in
2012;
- Total revenue decreased 13% to $63.1
million, compared to $72.8 million for the first quarter of
2012;
- Adjusted EBITDA (as defined) increased
12% to $2.9 million, compared to $2.6 million for the same period
in 2012; Adjusted EBITDA for the first quarter of 2013 included an
incremental benefit of approximately $0.6 million applicable to
certain client transition related agreements, which we also expect
to continue into the second quarter of CY2013;
- Net loss was $2.6 million, or $0.20 per
basic and diluted share, compared to net loss of $1.3 million, or
$0.10 per basic and diluted share, for the first quarter of 2012;
Net loss for the first quarter of 2013 included $2.3 million of
restructuring and other charges while net loss for the first
quarter of 2012 included $1.0 million of move related expenses and
lease termination costs;
- Non-GAAP net income (as defined) was
$21,000, or $0.00 per basic and diluted share, compared to non-GAAP
net income of $77,000, or $0.01 per basic and diluted share, for
the quarter ended March 31, 2012.
Mr. Willoughby continued, “The financial results for the first
quarter reflect certain impacts from the previously announced
client transitions and restructuring related activities. We
continue to expect that we will experience reduced revenue and
profit in the second and third quarters of 2013, as compared to the
first quarter of 2013, as these client programs continue to
transition. We then expect an improvement in our fourth quarter as
we realize increased benefits from new and expanded client
relationships, including potential new clients through our new
transcosmos relationship, and seasonal client volumes. We believe
we are making the appropriate adjustments to our operations and
staffing to address the reduced revenue level, while still
supporting our long-term growth initiatives.
“We are excited about the positive momentum in the business,
including the incremental new business opportunities we anticipate
from our transcosmos relationship. Given the ramp up time required
to contract and implement new client solutions, we expect the
benefits of these opportunities will primarily be reflected in our
CY014 and forward results. As such, we are reaffirming our guidance
for calendar year 2013, with Service Fee Equivalent Revenue
expected to be in the range of $110 million to $115 million, and
Adjusted EBITDA in the range of $8 million to $10 million,
excluding the impact of restructuring and other related expenses
which we expect to continue, but to a lesser extent, into the
second quarter,” Mr. Willoughby concluded.
Conference Call Information
Management will host a conference call at 11:00 am Eastern Time
(10:00 am Central Time) on Wednesday, May 15, 2013, to discuss the
latest corporate developments and results. To listen to the call,
please dial (888) 562-3356 and enter pin number 69039308 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 or www.kcsa.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 June 14, 2013 at (855) 859-2056, pin number 69039308. 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”), 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, restructuring and
other charges, lease termination costs and certain move related
expenses.
EBITDA represents earnings (or losses) before interest, income
taxes, depreciation, and amortization. Adjusted EBITDA further
eliminates the effect of stock-based compensation, restructuring
and other charges, lease termination costs and certain move related
expenses.
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, restructuring and other charges, lease
termination costs and certain move related expenses 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 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 is engaged by iconic brands to enable and manage
customized eCommerce and omni-channel commerce initiatives.
PFSweb’s iCommerce Hub(SM) technology ecosystem offers retailers a
multi-channel order management system that allows partner/client
data integration and international payment processing. PFSweb’s
iCommerce Professional Service(SM) provides interactive marketing
services, eCommerce web site development and support services, IT
development services, content management, customer intelligence and
relationship and account management services. PFSweb’s iCommerce
Centers of Excellence(SM) provides global fulfillment and
logistics, high-touch customer care, client financial services and
technology hosting.
Together, PFSweb’s iCommerce Solutions allows for international
reach and expertise in both direct-to-consumer and
business-to-business initiatives. PFSweb supports organizations
across multiple industries including Procter & Gamble, L’Oreal,
LEGO, Columbia Sportswear, Sorel, Carter’s, AAFES, Riverbed, Ricoh,
Hawker Beechcraft Corp, Roots Canada Ltd., Diageo, BCBGMAXAZRIA,
BCBGENERATION and HERVÉ LÉGER BY MAX AZRIA. PFSweb is headquartered
in Allen, TX with additional locations in Tennessee, Mississippi,
Canada, Belgium, and the Philippines.
To find out more about PFSweb (NASDAQ: PFSW), visit the
company’s website at http://www.PFSweb.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, 2012 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 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
Unaudited Condensed Consolidated Statements of Operations (A) (In
Thousands, Except Per Share Data) Three Months Ended
March 31, 2013 2012 REVENUES:
Product revenue, net
$ 25,482 $ 34,551 Service fee revenue 28,002 28,378
Pass-thru revenue
9,657 9,839
Total revenues
63,141 72,768 COSTS OF REVENUES:
Cost of product revenue 23,515 31,682 Cost of service fee revenue
19,258 21,655 Cost of pass-thru revenue 9,657
9,839 Total costs of revenues 52,430
63,176 Gross profit 10,711 9,592 SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 12,801 10,504
Income (loss) from operations (2,090 ) (912 ) INTEREST EXPENSE, NET
218 264 Income (loss) before income
taxes (2,308 ) (1,176 ) INCOME TAX PROVISION (BENEFIT) 267
109 NET INCOME (LOSS) $ (2,575 ) $ (1,285 )
NON-GAAP INCOME (LOSS) $ 21 $ 77 NET INCOME
(LOSS) PER SHARE: Basic $ (0.20 ) $ (0.10 ) Diluted $ (0.20 ) $
(0.10 )
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: Basic 12,786
12,765 Diluted 12,786
12,765 EBITDA $ 318 $ 1,230 ADJUSTED
EBITDA $ 2,914 $ 2,592
(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, 2012.
PFSweb, Inc. and
Subsidiaries
Reconciliation of certain Non-GAAP Items to GAAP (In Thousands,
Except Per Share Data)
Three Months Ended March 31, 2013
2012 NET INCOME (LOSS) $ (2,575 ) $ (1,285 ) Income tax
expense 267 109 Interest expense, net 218 264 Depreciation and
amortization 2,408 2,142 EBITDA $ 318 $
1,230 Stock-based compensation 303 340 Restructuring and other
charges 2,293 - Lease termination costs - 450 Move related expenses
- 572 ADJUSTED EBITDA $ 2,914 $
2,592 Three Months Ended March 31, 2013 2012
NET INCOME (LOSS) $ (2,575 ) $ (1,285 ) Stock-based
compensation 303 340 Restructuring and other charges 2,293 - Lease
terminations costs - 450 Move related expenses -
572 NON-GAAP INCOME (LOSS) $ 21 $ 77
NET INCOME (LOSS) PER SHARE: Basic $ (0.20 ) $ (0.10 )
Diluted $ (0.20 ) $ (0.10 ) NON-GAAP INCOME (LOSS) Per
Share: Basic $ 0.00 $ 0.01 Diluted $ 0.00 $
0.01 Three Months Ended March 31, 2013
2012 TOTAL REVENUES $ 63,141 $ 72,768 Pass-thru revenue
(9,657 ) (9,839 ) Cost of product revenue (23,515 )
(31,682 ) SERVICE FEE EQUIVALENT REVENUE $ 29,969 $ 31,247
PFSweb, Inc. and
Subsidiaries
Unaudited Condensed Consolidated Balance Sheets (In Thousands,
Except Share Data)
March 31,
December 31, 2013 2012
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 17,951 $ 19,626
Restricted cash 362 283 Accounts receivable, net of allowance for
doubtful accounts of $404 and $450 at March 31, 2013 and December
31, 2012, respectively 40,501 45,684 Inventories, net of reserves
of $1,752 and $1,789 at March 31, 2013 and December 31, 2012,
respectively 20,643 24,654 Other receivables 7,712 7,675 Prepaid
expenses and other current assets 4,325 4,346
Total current assets 91,494 102,268
PROPERTY AND EQUIPMENT, net 27,045 27,917 OTHER
ASSETS 3,009 3,286 Total assets
121,548 133,471
LIABILITIES AND
SHAREHOLDERS EQUITY
CURRENT LIABILITIES: Current portion of long-term debt and capital
lease obligations $ 19,290 $ 16,660 Trade accounts payable 31,988
40,493 Deferred revenue 6,943 6,648 Accrued expenses 20,860
23,097 Total current liabilities 79,081 86,898
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current
portion 4,664 5,400 DEFERRED REVENUE 6,889 7,562 DEFERRED RENT
5,375 5,560 Total liabilities
96,009 105,420 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;
12,825,418 and 12,812,386 shares issued at March 31, 2013 and
December 31, 2012, respectively; and 12,791,951 and 12,778,919
shares outstanding as of March 31, 2013 and December 31, 2012,
respectively 13 13 Additional paid-in capital 106,340 106,018
Accumulated deficit (81,984 ) (79,409 ) Accumulated other
comprehensive income 1,295 1,554 Treasury stock at cost, 33,467
shares (125 ) (125 ) Total shareholders' equity
25,539 28,051 Total liabilities and
shareholders' equity $ 121,548 $ 133,471
PFSweb, Inc. and
Subsidiaries
Unaudited Consolidating Statements of Operations For the Three
Months Ended March 31, 2013 (In Thousands)
Business & PFSweb Retail
Connect Eliminations Consolidated REVENUES: Product revenue, net $
- $ 25,482 $ - $ 25,482 Service fee revenue 26,441 1,561 - 28,002
Service fee revenue - affiliate 2,355 362 (2,717 ) - Pass-thru
revenue 9,657 - - 9,657
Total revenues 38,453 27,405
(2,717 ) 63,141 COSTS OF REVENUES: Cost of
product revenue - 23,515 - 23,515 Cost of service fee revenue
19,780 1,647 (2,169 ) 19,258 Cost of pass-thru revenue 9,657
- - 9,657 Total costs of
revenues 29,437 25,162 (2,169 )
52,430 Gross profit 9,016 2,243 (548 ) 10,711 SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES 11,563
1,786 (548 ) 12,801 Income (loss) from
operations (2,547 ) 457 - (2,090 ) INTEREST EXPENSE, NET 67
151 - 218 Income (loss)
before income taxes (2,614 ) 306 - (2,308 ) INCOME TAX PROVISION
(BENEFIT) 120 147 - 267
NET INCOME (LOSS) $ (2,734 ) $ 159 $ - $ (2,575 )
NON-GAAP NET INCOME (LOSS) $ (138 ) $ 159 $ - $ 21
EBITDA $ (178 ) $ 496 $ - $ 318 ADJUSTED
EBITDA $ 2,418 $ 496 $ - $ 2,914
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows: NET INCOME (LOSS) $ (2,734 ) $ 159 $ - (2,575 )
Income tax expense (benefit) 120 147 - 267 Interest expense, net 67
151 - 218 Depreciation and amortization 2,369
39 - 2,408 EBITDA $ (178 ) $ 496 $ - $
318 Stock-based compensation 303 - - 303 Restructuring and other
charges 2,293 - - 2,293
ADJUSTED EBITDA $ 2,418 $ 496 $ - $ 2,914
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET
INCOME (LOSS) follows: NET INCOME (LOSS) $ (2,734 ) $ 159 $
- $ (2,575 ) Stock-based compensation 303 - - 303 Restructuring and
other charges 2,293 - -
2,293 NON-GAAP NET INCOME (LOSS) $ (138 ) $ 159 $ - $
21
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 March 31, 2012 (In Thousands)
Business & PFSweb Retail
Connect Eliminations Consolidated REVENUES: Product revenue, net $
- $ 34,551 $ -
$
34,551 Service fee revenue 28,378 - - 28,378 Service fee revenue -
affiliate 1,462 174 (1,636 ) - Pass-thru revenue 9,839
- - 9,839 Total revenues
39,679 34,725 (1,636 ) 72,768
COSTS OF REVENUES: Cost of product revenue - 31,682 -
31,682 Cost of service fee revenue 22,270 174 (789 ) 21,655 Cost of
pass-thru revenue 9,839 - -
9,839 Total costs of revenues 32,109
31,856 (789 ) 63,176 Gross profit 7,570
2,869 (847 ) 9,592 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
9,310 2,041 (847 ) 10,504
Income (loss) from operations (1,740 ) 828 - (912 ) INTEREST
EXPENSE, NET 34 230 - 264
Income (loss) before income taxes (1,774 ) 598 - (1,176 )
INCOME TAX PROVISION (BENEFIT) (116 ) 225 -
109 NET INCOME (LOSS) $ (1,658 ) $ 373 $ -
$ (1,285 ) NON-GAAP NET INCOME (LOSS) $ (296 ) $ 373 $ -
$ 77 EBITDA $ 386 $ 844 $ - $
1,230 ADJUSTED EBITDA $ 1,748 $ 844 $ - $
2,592 A reconciliation of NET INCOME (LOSS) to
EBITDA and ADJUSTED EBITDA follows: NET INCOME (LOSS) $
(1,658 ) $ 373 $ - (1,285 ) Income tax expense (benefit) (116 ) 225
- 109 Interest expense, net 34 230 - 264 Depreciation and
amortization 2,126 16 -
2,142 EBITDA $ 386 $ 844 $ - $ 1,230 Stock-based
compensation 340 - - 340 Lease termination costs 450 450 Move
related expenses 572 572
ADJUSTED EBITDA $ 1,748 $ 844 $ - $ 2,592
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME
(LOSS) follows: NET INCOME (LOSS) $ (1,658 ) $ 373 $ - $
(1,285 ) Stock-based compensation 340 - - 340 Lease termination
costs 450 - - 450 Move related expenses 572 -
- 572 NON-GAAP NET INCOME (LOSS) $ (296
) $ 373 $ - $ 77 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 March 31,
2013 (In Thousands) Business
&
PFSweb Retail Connect Eliminations Consolidated
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 11,262 $ 6,689 $ - $
17,951 Restricted cash - 362 - 362 Accounts receivable, net 29,100
11,669 (268 ) 40,501 Inventories, net - 20,643 - 20,643 Other
receivables - 7,712 - 7,712 Prepaid expenses and other current
assets 2,850 1,475 -
4,325 Total current assets 43,212
48,550 (268 ) 91,494
PROPERTY AND EQUIPMENT, net 26,799 246 - 27,045
RECEIVABLE/INVESTMENT IN AFFILIATES 13,667 - (13,667 ) - OTHER
ASSETS 2,898 111 -
3,009 Total assets 86,576 48,907
(13,935 ) 121,548
LIABILITIES AND
SHAREHOLDERS EQUITY
CURRENT LIABILITIES: Current portion of long-term debt and capital
lease obligations $ 14,099 $ 5,191 $ - $ 19,290 Trade accounts
payable 7,900 24,356 (268 ) 31,988 Deferred revenue 6,921 22 -
6,943 Accrued expenses 15,196 5,664
- 20,860 Total current liabilities
44,116 35,233 (268 ) 79,081 LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, less current portion 4,664 - - 4,664 PAYABLE TO
AFFILIATES - 22,995 (22,995 ) - DEFERRED REVENUE 6,889 - - 6,889
DEFERRED RENT 5,333 42 -
5,375 Total liabilities 61,002
58,270 (23,263 ) 96,009
COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common
stock 13 19 (19 ) 13 Capital contributions - 1,000 (1,000 ) -
Additional paid-in capital 106,340 28,059 (28,059 ) 106,340
Retained earnings (accumulated deficit) (81,943 ) (40,447 ) 40,406
(81,984 ) Accumulated other comprehensive income 1,289 2,006 (2,000
) 1,295 Treasury stock (125 ) - -
(125 ) Total shareholders' equity 25,574
(9,363 ) 9,328 25,539
Total liabilities and shareholders' equity $ 86,576 $ 48,907
$ (13,935 ) $ 121,548
PFSweb, Inc. and
Subsidiaries
Unaudited Condensed Consolidating Balance Sheets as of December 31,
2012 (In Thousands) Business
& PFSweb Retail Connect
Eliminations Consolidated
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 13,079 $ 6,547 $ - $
19,626 Restricted cash - 283 - 283 Accounts receivable, net 34,831
11,574 (721 ) 45,684 Inventories, net - 24,654 - 24,654 Other
receivables - 7,675 - 7,675 Prepaid expenses and other current
assets 2,817 1,529 -
4,346 Total current assets 50,727
52,262 (721 ) 102,268
PROPERTY AND EQUIPMENT, net 27,651 266 - 27,917
RECEIVABLE/INVESTMENT IN AFFILIATES 13,396 - (13,396 ) - OTHER
ASSETS 3,166 120 -
3,286 Total assets 94,940 52,648
(14,117 ) 133,471
LIABILITIES AND
SHAREHOLDERS EQUITY
CURRENT LIABILITIES: Current portion of long-term debt and capital
lease obligations $ 13,072 $ 3,588 $ - $ 16,660 Trade accounts
payable 12,109 29,105 (721 ) 40,493 Deferred revenue 6,573 75 -
6,648 Accrued expenses 16,743 6,354
- 23,097 Total current liabilities
48,497 39,122 (721 ) 86,898
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, less current portion
5,400 - - 5,400 PAYABLE TO AFFILIATES - 22,795 (22,795 ) - DEFERRED
REVENUE 7,562 - - 7,562 DEFERRED RENT 5,482 78
- 5,560 Total liabilities
66,941 61,995 (23,516 ) 105,420
COMMITMENTS AND CONTINGENCIES SHAREHOLDERS'
EQUITY: Common stock 13 19 (19 ) 13 Capital contributions - 1,000
(1,000 ) - Additional paid-in capital 106,018 28,059 (28,059 )
106,018 Retained earnings (accumulated deficit) (79,461 ) (40,606 )
40,658 (79,409 ) Accumulated other comprehensive income 1,554 2,181
(2,181 ) 1,554 Treasury stock (125 ) -
- (125 ) Total shareholders' equity 27,999
(9,347 ) 9,399 28,051
Total liabilities and shareholders' equity $ 94,940 $ 52,648
$ (14,117 ) $ 133,471
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