PFSweb, Inc. (NASDAQ: PFSW), a global commerce services company, is
reporting results for the first quarter ended March 31, 2021.
“We have carried our operational momentum into 2021 with a
record bookings quarter for LiveArea and strong performance
continuing in PFS,” said Mike Willoughby, CEO of PFSweb. “Our high
levels of execution across both business units allowed us to drive
a 16% increase in service fee revenue year-over-year. Across our
organization, we have worked to optimize our resources, further
develop our strong pipeline, and stay committed to meeting our
clients’ evolving needs amid a dynamic retail environment. As
eCommerce tailwinds persist, we expect the solid foundation we have
built to fuel our continued progress.”
Q1 2021 Highlights vs. Q1 2020
- Total revenues increased slightly to
$78.0 million.
- Service fee revenue increased 16% to
$62.8 million.
- Service fee gross margin was 31.1%
compared to 36.1%.
- Net loss was $2.4 million or $(0.11)
per share, compared to a net loss of $0.2 million or $(0.01) per
share.
- Adjusted EBITDA (a non-GAAP measure
defined and reconciled below) was $3.1 million compared to $4.0
million.
Willoughby continued: “In LiveArea, our sales bookings have
recovered from the lows of the pandemic and now more fully reflect
the benefits of our strategic investments in the business. We
experienced some initial project delays and bookings softness last
year due to COVID-19-related uncertainties, but have since
continued generating strong demand as prospects began to ramp their
digital capabilities in response to elevated eCommerce trends. Our
high-performance sales team and leadership have worked tirelessly
to build our pipeline and execute on the previously booked
engagements that are starting to come online.
“Our PFS business continued to experience meaningful growth as
compared to the prior year, driven primarily by strong fulfillment
volumes in support of our clients’ eCommerce activity. Bookings in
PFS also accelerated during Q1, in which we generated our highest
level of bookings since Q2 2019. While our margins remain pressured
by COVID-19 safety measures and increased frontline labor rates, we
are committed to protecting our team and serving as a flexible
partner for our existing brands’ fulfillment needs. We have quickly
ramped operations in our newest fulfillment center in Las Vegas and
we will continue working to optimize our capacity across our global
distribution footprint. As a further extension of our successful
holiday season, we have agreed to expand our deployment of
RetailConnect for one of our clients from five stores to more than
30 by the end of Q2. Our operational agility will allow us to
continue adapting to our clients’ needs and fulfilling high
customer order volumes, whether in-store or in our facilities.
“With momentum continuing in both business units, we remain on
track to achieve our 2021 outlook, which includes targets for
year-over-year service fee revenue growth within the 10-15% range
for LiveArea and 5-10% range for PFS, as well as moderate adjusted
EBITDA margin expansion. I am proud of how well we have performed
in these first few months of 2021 and look forward to continuing
our work into the rest of the year.”
First Quarter 2021 Financial Results
Total revenues in the first quarter of 2021 increased slightly
to $78.0 million compared to $76.7 million in the same period of
2020. Service fee revenue in the first quarter increased 16% to
$62.8 million compared to $54.3 million in the same period of 2020,
primarily driven by continued strength in PFS fulfillment activity.
Service fee revenue for PFS increased by 27% to $42.4 million as
compared to the prior year, while LiveArea service fee revenue
decreased by $0.5 million to $20.4 million. LiveArea service fee
revenue in the first quarter of 2021 was impacted by softness in
new and existing client bookings during the June 2020 and September
2020 quarters, primarily as a result of the COVID-19 pandemic
causing client delays or cancellations of potential technology
related projects. Significantly improved levels of client project
and engagement bookings by LiveArea during the December 2020 and
March 2021 quarters are expected to generate increased service fee
revenue during the remainder of 2021 as these projects are
implemented. Product revenue from the company’s last remaining
client under this legacy business model was $4.3 million compared
to $7.5 million in the same period of 2020.
Service fee gross margin in the first quarter of 2021 was 31.1%
compared to 36.1% in the same period of 2020. The decrease was
primarily attributable to sustained changes in revenue mix, with
the lower gross margin PFS segment generating an increased
percentage of the overall service fee revenue, as well as increased
fulfillment-related labor rates and sanitation costs during the
quarter. Additionally, gross margin for the PFS segment continued
to be impacted by reduced IT-related project, startup and
technology-related activity. As a result, first quarter gross
margin for PFS was at the lower end of the segment’s typical 25% to
30% guidance range, while LiveArea’s gross margin continued to be
within the segment’s typical 40% to 50% range.
Net loss in the first quarter of 2021 was $2.4 million or
$(0.11) per share compared to a net loss of $0.2 million or $(0.01)
per share in the same period of 2020.
Adjusted EBITDA in the first quarter of 2021 was $3.1 million
compared to $4.0 million in the same period of 2020. PFS Adjusted
EBITDA increased by $0.5 million as a result of the increased PFS
service fee revenue, which was partially offset by continued cost
increases in the PFS segment due to fulfillment-related labor rates
and sanitation costs, as well as reduced IT-related project,
startup and technology-related activity. LiveArea Adjusted EBITDA
decreased by $1.3 million as compared to the prior year as a result
of reduced revenue and gross margin, as well as increased operating
expense, including the impact of strategic investments in personnel
to support the segment’s service line expansion and growth. As a
percentage of service fee revenue, adjusted EBITDA margin was 4.9%
compared to 7.3% in the same period of 2020.
Non-GAAP net income (a non-GAAP measure defined and reconciled
below) in the first quarter of 2021 was $0.2 million compared to
$1.1 million in the same period of 2020.
At March 31, 2021, net debt (a non-GAAP measure defined and
reconciled below as total debt, excluding operating lease
liabilities, less cash and cash equivalents) improved to $25.5
million compared to $31.7 million at December 31, 2020.
Cash and cash equivalents at March 31, 2021 remained flat at
$10.8 million compared to December 31, 2020, and total debt
improved to $36.3 million compared to $42.5 million at the end of
last year.
2021 OutlookWith continued eCommerce demand
strength driving elevated bookings and fulfillment activity in the
company’s PFS segment, as well as a record and expanding pipeline
in LiveArea, PFSweb continues to expect to achieve 2021 LiveArea
service fee revenue growth of 10% to 15% compared to 2020. For the
PFS segment, the company still expects to generate 5% to 10%
service fee revenue growth compared to 2020. In line with its
consistent focus on cost management, PFSweb also expects moderate
consolidated adjusted EBITDA margin expansion in 2021 when compared
to the prior year.
Conference CallPFSweb will conduct a conference
call today at 8:30 a.m. Eastern time to discuss its results for the
first quarter ended March 31, 2021.
PFSweb management will host the conference call, followed by a
question and answer period.
Date: Friday, May 7, 2021Time: 8:30 a.m. Eastern time (5:30 a.m.
Pacific time)Toll-free dial-in number: (866) 220-4153International
dial-in number: (864) 663-5228Conference ID: 8674555
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 Gateway Investor Relations at
1-949-574-3860.
The conference call will be broadcast live and available for
replay here and via the investor relations section of the company’s
website at www.pfsweb.com.
A replay of the conference call will be available after 11:30
a.m. Eastern time on the same day through May 21, 2021.
Toll-free replay number: (855) 859-2056International replay
number: (404) 537-3406Replay ID: 8674555
About PFSweb, Inc.PFSweb (NASDAQ: PFSW) is a
global commerce services company that manages the online customer
shopping experience on behalf of major branded manufacturers and
retailers. Across two business units – LiveArea
for data-driven marketing and omnichannel experience design through
technology selection, platform implementation and orchestrated
services, and PFS for order fulfillment, contact
center, payment processing/fraud management, and order management
services – they provide solutions to a broad range of Fortune 500®
companies and household brand names such as Procter & Gamble,
L’Oréal USA, Champion, Pandora, Ralph Lauren, Shiseido Americas,
the United States Mint, and many more. PFSweb enables these brands
to provide a more convenient and brand-centric online shopping
experience through both traditional and online business channels.
The company is headquartered in Allen, TX with additional locations
around the globe. For more information, visit www.pfsweb.com.
Non-GAAP Financial MeasuresThis news release
contains certain non-GAAP measures, including non-GAAP net income
(loss), net debt, earnings before interest, income taxes,
depreciation and amortization (EBITDA), adjusted EBITDA and service
fee equivalent revenue.
Non-GAAP net income (loss) represents net income (loss)
calculated in accordance with U.S. GAAP as adjusted for the impact
of non-cash stock-based compensation expense, acquisition-related,
restructuring and other costs (including certain client related
bankruptcy costs), amortization of acquisition-related intangible
assets and deferred tax expense for goodwill amortization.
EBITDA represents earnings (or losses) before interest, income
taxes, depreciation, and amortization. Adjusted EBITDA further
eliminates the effect of stock-based compensation, as well as
acquisition-related, restructuring, and other costs (including
certain client related bankruptcy costs).
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 costs (including certain client related bankruptcy costs),
amortization of acquisition-related intangible assets, and 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.
Net debt represents total debt, excluding operating lease
liabilities, less cash and cash equivalents.
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 StatementsThe 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. You can
identify these forward-looking statements by words such as “may,”
“will,” “would,” “should,” “could,” “expect,” “anticipate,”
“believe,” “intend,” “plan,” “potential,” “project,” “seek,”
“strive,” “predict,” “continue,” “target,” and “estimate” and other
similar expressions. These forward-looking statements involve risks
and uncertainties and may include assumptions as to how we may
perform in the future, including the impact of the COVID-19
pandemic on our business, results of operations and global economic
conditions. Although we believe the expectations reflected in our
forward-looking statements are reasonable, we cannot guarantee
these expectations will actually be achieved. PFS’ Annual Report on
Form 10-K, as amended, for the year ended December 31, 2020 and any
subsequent amendments or quarterly reports on Form 10-Q 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 periodic reports of
the company and the Risk Factors described therein. PFS 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.
Company Contact:Michael C. WilloughbyChief
Executive OfficerOrThomas J. MaddenChief Financial
Officer1-972-881-2900
Investor Relations:Cody Slach and Jackie
KeshnerGateway Investor
Relations1-949-574-3860PFSW@gatewayir.com
PFSweb, Inc.
and Subsidiaries |
Condensed
Consolidated Balance Sheets |
(In Thousands,
Except Share Data) |
|
|
|
|
|
(Unaudited) |
|
|
|
March 31, |
|
December 31, |
|
|
2021 |
|
|
|
2020 |
|
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
10,844 |
|
|
$ |
10,751 |
|
Restricted cash |
|
214 |
|
|
|
214 |
|
Accounts receivable, net of allowance for doubtful accounts of
$1,352 and $1,465 at March 31, 2021 and December 31, 2020,
respectively |
|
58,627 |
|
|
|
80,778 |
|
Related party receivable |
|
1,012 |
|
|
|
730 |
|
Inventories, net of reserves of $94 and $96 at March 31, 2021 and
December 31, 2020, respectively |
|
3,889 |
|
|
|
3,644 |
|
Other receivables |
|
3,519 |
|
|
|
3,758 |
|
Prepaid expenses and other current assets |
|
10,087 |
|
|
|
8,694 |
|
Total current assets |
|
88,192 |
|
|
|
108,569 |
|
|
|
|
|
Property and
equipment, net |
|
18,541 |
|
|
|
19,178 |
|
Operating
lease right-of-use assets, net |
|
40,900 |
|
|
|
34,982 |
|
Identifiable
intangibles, net |
|
594 |
|
|
|
665 |
|
Goodwill |
|
45,677 |
|
|
|
45,615 |
|
Other
assets |
|
4,186 |
|
|
|
4,152 |
|
Total assets |
$ |
198,090 |
|
|
$ |
213,161 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Trade accounts payable |
$ |
27,574 |
|
|
$ |
35,648 |
|
Accrued expenses |
|
26,072 |
|
|
|
30,881 |
|
Current portion of operating lease liabilities |
|
10,064 |
|
|
|
9,487 |
|
Current portion of long-term debt and capital lease
obligations |
|
3,138 |
|
|
|
3,414 |
|
Deferred revenues |
|
4,690 |
|
|
|
5,115 |
|
Total current liabilities |
|
71,538 |
|
|
|
84,545 |
|
|
|
|
|
Long-term
debt and capital lease obligations, less current portion |
|
33,166 |
|
|
|
39,073 |
|
Deferred
revenue, less current portion |
|
1,366 |
|
|
|
1,341 |
|
Operating
lease liabilities |
|
35,745 |
|
|
|
30,553 |
|
Other
liabilities |
|
5,417 |
|
|
|
5,286 |
|
Total liabilities |
|
147,232 |
|
|
|
160,798 |
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES |
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
Preferred stock, $1.00 par value; 1,000,000 shares authorized; none
issued or outstanding |
|
- |
|
|
|
- |
|
Common stock, $0.001 par value; 35,000,000 shares authorized;
20,482,974 and 20,408,558 issued at March 31, 2021 and December 31,
2020, respectively; and 20,449,507 and 20,375,091 outstanding at
March 31, 2021 and December 31, 2020, respectively |
|
20 |
|
|
|
20 |
|
Additional paid-in capital |
|
169,474 |
|
|
|
168,244 |
|
Accumulated deficit |
|
(117,827 |
) |
|
|
(115,447 |
) |
Accumulated other comprehensive income |
|
(684 |
) |
|
|
(329 |
) |
Treasury stock at cost, 33,467 shares |
|
(125 |
) |
|
|
(125 |
) |
Total shareholders’ equity |
|
50,858 |
|
|
|
52,363 |
|
Total liabilities and shareholders’ equity |
$ |
198,090 |
|
|
$ |
213,161 |
|
PFSweb, Inc.
and Subsidiaries |
Unaudited Condensed
Consolidated Statements of Operations |
(In Thousands,
Except Per Share Data) |
|
|
|
|
|
Three Months
Ended |
|
March 31, |
|
|
2021 |
|
|
|
2020 |
|
Revenues: |
|
|
|
Service fee revenue |
$ |
62,786 |
|
(1) |
$ |
54,298 |
|
Product revenue, net |
|
4,308 |
|
|
|
7,533 |
|
Pass-through revenue |
|
10,876 |
|
|
|
14,868 |
|
Total revenues |
|
77,970 |
|
|
|
76,699 |
|
|
|
|
|
Costs of
revenues: |
|
|
|
Cost of service fee revenue |
|
43,244 |
|
|
|
34,716 |
|
Cost of product revenue |
|
4,086 |
|
|
|
7,123 |
|
Cost of pass-through revenue |
|
10,876 |
|
|
|
14,868 |
|
Total costs of revenues |
|
58,206 |
|
|
|
56,707 |
|
Gross profit |
|
19,764 |
|
|
|
19,992 |
|
Selling,
general, and administrative expenses |
|
21,303 |
|
|
|
19,369 |
|
Income (loss) from operations |
|
(1,539 |
) |
|
|
623 |
|
Interest
expense, net |
|
376 |
|
|
|
415 |
|
Income (loss) before income taxes |
|
(1,915 |
) |
|
|
208 |
|
Income tax
expense, net |
|
465 |
|
|
|
439 |
|
Net
loss |
|
(2,380 |
) |
|
|
(231 |
) |
Non-GAAP net
income (loss) |
$ |
226 |
|
|
$ |
1,076 |
|
|
|
|
|
Net loss per
share |
|
|
|
Basic |
$ |
(0.11 |
) |
|
$ |
(0.01 |
) |
Diluted |
$ |
(0.11 |
) |
|
$ |
(0.01 |
) |
|
|
|
|
Weighted
average number of shares outstanding: |
|
|
|
Basic |
|
21,274 |
|
|
|
19,679 |
|
Diluted |
|
21,274 |
|
|
|
19,679 |
|
|
|
|
|
EBITDA |
$ |
677 |
|
|
$ |
2,908 |
|
Adjusted
EBITDA |
$ |
3,082 |
|
|
$ |
3,959 |
|
|
|
|
|
(1) Includes $0.5 million of related party service fee revenue for
the three months ended March 31, 2021. |
PFSweb, Inc.
and Subsidiaries |
Unaudited
Reconciliation of Certain Non-GAAP Items to GAAP |
(In Thousands) |
|
|
|
|
|
Three Months
Ended |
|
March 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
Net
loss |
$ |
(2,380 |
) |
|
$ |
(231 |
) |
Income tax expense (benefit), net |
|
465 |
|
|
|
439 |
|
Interest expense, net |
|
376 |
|
|
|
415 |
|
Depreciation and amortization |
|
2,216 |
|
|
|
2,285 |
|
EBITDA |
|
677 |
|
|
|
2,908 |
|
Stock-based compensation |
|
853 |
|
|
|
545 |
|
Acquisition-related, restructuring and other costs |
|
1,552 |
|
|
|
506 |
|
ADJUSTED
EBITDA |
$ |
3,082 |
|
|
$ |
3,959 |
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
March 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
Net
loss |
$ |
(2,380 |
) |
|
$ |
(231 |
) |
Stock-based compensation |
|
853 |
|
|
|
545 |
|
Amortization of acquisition-related intangible assets |
|
71 |
|
|
|
122 |
|
Acquisition-related, restructuring and other costs |
|
1,552 |
|
|
|
506 |
|
Deferred tax expense - goodwill amortization |
|
130 |
|
|
|
134 |
|
Non-GAAP net
income (loss) |
$ |
226 |
|
|
$ |
1,076 |
|
|
|
|
|
|
Three Months
Ended |
|
March 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
Total
revenues |
$ |
77,970 |
|
|
$ |
76,699 |
|
Pass-through revenue |
|
(10,876 |
) |
|
|
(14,868 |
) |
Cost of product revenue |
|
(4,086 |
) |
|
|
(7,123 |
) |
Service fee
equivalent revenue |
$ |
63,008 |
|
|
$ |
54,708 |
|
PFSweb, Inc.
and Subsidiaries |
Unaudited
Consolidated Segment Information |
and Reconciliation
of Certain Non-GAAP Items to GAAP |
(In Thousands) |
|
|
|
|
The segment financial data for the three and twelve months ended
March 31, 2021 and 2020, reflect the financial performance for each
of the segments based on the current financial presentation
reviewed by the company’s Chief Operating Decision Makers. The
company is continuing to evaluate its segregation of costs among
the business units, including an effort to further allocate certain
Corporate costs into the two operating business units to enhance
cost focus and responsibility. |
|
|
|
|
|
Three Months
Ended |
|
March 31, |
|
|
2021 |
|
|
|
2020 |
|
PFS
Operations |
|
|
|
Revenues: |
|
|
|
Service fee revenue |
$ |
42,431 |
|
|
$ |
33,431 |
|
Product revenue, net |
|
4,308 |
|
|
|
7,533 |
|
Pass-through revenue |
|
10,163 |
|
|
|
13,956 |
|
Total revenues |
|
56,902 |
|
|
|
54,920 |
|
Costs of
revenues: |
|
|
|
Cost of service fee revenue |
|
31,709 |
|
|
|
23,305 |
|
Cost of product revenue |
|
4,086 |
|
|
|
7,123 |
|
Cost of pass-through revenue |
|
10,163 |
|
|
|
13,956 |
|
Total costs of revenues |
|
45,958 |
|
|
|
44,384 |
|
Gross profit |
|
10,944 |
|
|
|
10,536 |
|
Direct
operating expenses |
|
7,228 |
|
|
|
7,444 |
|
Direct contribution |
|
3,716 |
|
|
|
3,092 |
|
Depreciation
and amortization |
|
1,885 |
|
|
|
1,774 |
|
Stock-based
compensation |
|
152 |
|
|
|
69 |
|
Acquisition-related, restructuring and other costs |
|
300 |
|
|
|
640 |
|
Adjusted
EBITDA |
$ |
6,053 |
|
|
$ |
5,575 |
|
|
|
|
|
Total
revenues |
$ |
56,902 |
|
|
$ |
54,920 |
|
Pass-through revenue |
|
(10,163 |
) |
|
|
(13,956 |
) |
Cost of product revenue |
|
(4,086 |
) |
|
|
(7,123 |
) |
Service fee
equivalent revenue |
$ |
42,653 |
|
|
$ |
33,841 |
|
PFSweb, Inc.
and Subsidiaries |
Unaudited
Consolidated Segment Information |
and Reconciliation
of Certain Non-GAAP Items to GAAP |
(In Thousands) |
|
|
|
|
|
Three Months
Ended |
|
March 31, |
|
|
2021 |
|
|
|
2020 |
|
LiveArea Professional Services |
|
|
|
Revenues: |
|
|
|
Service fee revenue |
$ |
20,355 |
|
(1) |
$ |
20,867 |
|
Pass-through revenue |
|
713 |
|
|
|
912 |
|
Total revenues |
|
21,068 |
|
|
|
21,779 |
|
Costs of
revenues: |
|
|
|
Cost of service fee revenue |
|
11,535 |
|
|
|
11,411 |
|
Cost of pass-through revenue |
|
713 |
|
|
|
912 |
|
Total costs of revenues |
|
12,248 |
|
|
|
12,323 |
|
Gross profit |
|
8,820 |
|
|
|
9,456 |
|
Direct
operating expenses |
|
7,088 |
|
|
|
6,274 |
|
Direct contribution |
|
1,732 |
|
|
|
3,182 |
|
Depreciation
and amortization |
|
159 |
|
|
|
223 |
|
Stock-based
compensation |
|
233 |
|
|
|
135 |
|
Acquisition-related, restructuring and other costs |
|
102 |
|
|
|
1 |
|
Adjusted
EBITDA |
$ |
2,226 |
|
|
$ |
3,541 |
|
|
|
|
|
Corporate |
|
|
|
Selling,
general and administrative expenses |
$ |
(6,987 |
) |
|
$ |
(5,651 |
) |
Depreciation
and amortization |
|
172 |
|
|
|
288 |
|
EBITDA |
|
(6,815 |
) |
|
|
(5,363 |
) |
Stock-based
compensation |
|
468 |
|
|
|
341 |
|
Acquisition-related, restructuring and other costs |
|
1,150 |
|
|
|
(135 |
) |
Adjusted
EBITDA |
$ |
(5,197 |
) |
|
$ |
(5,157 |
) |
|
|
|
|
(1) Includes $0.5 million of related party service fee revenue for
the three months ended March 31, 2021. |
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