Exhibit 99.1

 

PFSweb Reports Second Quarter 2014 Results

- Q2 Service Fee Equivalent Revenue Increased to $28.5 Million; Management Reiterates 2014 Guidance -

Allen, TX – August 13, 2014 – PFSweb, Inc. (NASDAQ: PFSW), a global provider of end-to-end eCommerce solutions, reported financial results for the three and six-months ended June 30, 2014.

Overview

Strong existing client activity, including incremental project work, resulted in stronger service fee revenue and operating margin during the second quarter of 2014 than originally anticipated. Prior year comparisons of both the second quarter and year-to-date results for 2014 are impacted by the previously announced client transitions, which were substantially completed by the beginning of the third quarter of 2013. Service fee revenue and operating margin are expected to improve strongly in the second half of 2014, as compared to the prior year, due to anticipated existing and new client growth.

2014 Outlook

PFSweb reiterates its 2014 service fee equivalent revenue guidance to range between $127 million to $133 million, increasing 7% to 12% as compared to 2013. The company also reiterates its outlook for 2014 adjusted EBITDA target to range between $12 million and $14 million, representing an increase of 12% to 31% as compared to 2013.

Second Quarter 2014 Financial Summary

 

•

Service fee equivalent revenue (a non-GAAP measure defined and discussed below) increased to $28.5 million compared to $28.0 million during the same period in 2013

 

•

Service fee gross margin was 30.0% compared to 33.0% during the same period in 2013

 

•

Adjusted EBITDA (a non-GAAP measure defined and discussed below) was $1.7 million compared to $2.5 million during the same period in 2013

 

•

Cash and cash equivalents totaled $23.2 million compared to $22.4 million at December 31, 2013

 

•

Debt totaled $10.2 million compared to $11.1 million at December 31, 2013

First Half 2014 Financial Summary

 

•

Service fee equivalent revenue was $57.3 million compared to $58.0 million during the same period in 2013

 

•

Service fee gross margin was 30.2% compared to 32.4% during the same period in 2013

 

•

Adjusted EBITDA was $4.0 million compared to $5.4 million during the same period in 2013

Second Quarter 2014 Financial Results Details

Total revenues in the second quarter of 2014 were $54.0 million compared to $58.2 million in the same period in 2013. Service fee revenue in the second quarter of 2014 increased to $27.4 million compared to $26.6 million last year. This increase was primarily due to higher project activity from existing clients

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as well as new and expanded client relationships, partially offset by the impact of previously announced client transitions that occurred in 2013. Product revenue decreased to $18.1 million compared to $22.9 million in the same period in 2013 primarily due to ongoing restructuring activities by the company’s largest client in this segment.

Service fee equivalent revenue in the second quarter of 2014 was $28.5 million compared to $28.0 million in the same period in 2013.

Service fee gross margin in the second quarter decreased to 30.0% compared to 33.0% in the same period in 2013. Each period included the benefit of higher margin project activity. In addition, the 2013 period included an incremental benefit applicable to client transition related activity occurring during the prior period.

Adjusted EBITDA was $1.7 million in the second quarter of 2014 compared to $2.5 million in the same period in 2013.

Net loss in the second quarter of 2014 was $2.4 million or $(0.14) per diluted share compared to a net loss of $1.0 million or $(0.07) per diluted share in the same period in 2013. Net loss in the second quarter of 2014 included approximately $0.9 million in stock-based compensation expense and $0.2 million of costs related to potential acquisitions, compared to approximately $0.3 million in stock-based compensation expense for the same period in 2013. In addition, the prior period included $0.3 million in restructuring and other charges.

Non-GAAP net loss (a non-GAAP measure defined and discussed below) in the second quarter of 2014 was $1.4 million or $(0.08) per diluted share compared to non-GAAP net loss of $0.4 million or $(0.03) per diluted share in the second quarter of 2013.

Cash and cash equivalents increased to $23.2 million from $22.4 million at December 31, 2013, while debt was reduced to $10.2 million from $11.1 million.

Management Commentary

“The increase in service fee equivalent revenue this quarter was an early indication of our projected return to year-over-year top-line growth in our eCommerce business as we begin to move past the quarterly comparison impact from last year’s client transitions,” said Mike Willoughby, CEO of PFSweb. “In fact, excluding the impact of these client transitions, service fee equivalent revenue increased approximately 20% compared to the prior year quarter.

“We look forward to launching the eCommerce website for our largest client win from last year, the United States Mint, which is expected to go live around the end of the third quarter. We believe the benefit from this United States Mint activity, coupled with the expansion of new and existing client relationships, positions us for improved financial performance as we exit 2014 and begin 2015.”

“We continue to explore the acquisition landscape in the growing eCommerce market, primarily searching for opportunities that would further enhance our technology and agency services capabilities,” Willoughby concluded. “We believe such acquisitions will allow us to broaden our range of services, driving higher margins and longer client life cycles.”

 

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Conference Call

PFSweb will conduct a conference call today at 11:00 a.m. Eastern time to discuss its results for the second quarter ended June 30, 2014.

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

Date: Wednesday, August 13, 2014

Time: 11:00 a.m. Eastern time (10:00 a.m. Central time)

Toll-free dial-in number: 1-888-503-8175

International dial-in number: 1-719-325-2429

Conference ID: 3009322

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=110320 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 August 27, 2014.

Toll-free replay number: 1-877-870-5176

International replay number: 1-858-384-5517

Replay ID: 3009322

About PFSweb Inc.

PFSweb (NASDAQ: PFSW) is a global business process outsourcing provider of end-to-end eCommerce solutions. The company provides these solutions and services to major brand names and other companies seeking to optimize their supply chain and enhance their traditional and online business channels, which include both direct-to-consumer and business-to-business sales 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, Canada, Belgium, and the Philippines. For more information, please visit www.pfsweb.com or download the free PFSweb IR App on your iPhone, iPad or Android device.

 

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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.

 

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PFSweb, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (A)

(In Thousands, Except Share Data)

 

		(Unaudited) June 30, 2014				December 31, 2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	23,195			$	22,418
Restricted cash			270				130
Accounts receivable, net of allowance for doubtful accounts of $430 and $382 at June 30, 2014 and December 31, 2013, respectively			40,050				55,292
Inventories, net of reserves of $901 and $962 at June 30, 2014 and December 31, 2013, respectively			13,757				14,169
Other receivables			4,696				5,241
Prepaid expenses and other current assets			5,742				4,713
Total current assets			87,710				101,963
PROPERTY AND EQUIPMENT, net			25,237				27,190
OTHER ASSETS			2,863				2,883
Total assets			115,810				132,036
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations		$	8,001			$	8,231
Trade accounts payable			27,224				34,096
Deferred revenue			10,230				8,181
Accrued expenses			18,167				25,045
Total current liabilities			63,622				75,553
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion			2,192				2,876
DEFERRED REVENUE			6,195				7,491
DEFERRED RENT			5,174				5,191
Total liabilities			77,183				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; 16,794,832 and 16,540,904 shares issued at June 30, 2014 and December 31, 2013, respectively; and 16,761,365 and 16,507,437 shares outstanding as of June 30, 2014 and December 31, 2013, respectively			17				17
Additional paid-in capital			126,527				124,522
Accumulated deficit			(89,505	)			(85,300	)
Accumulated other comprehensive income			1,713				1,811
Treasury stock at cost, 33,467 shares			(125	)			(125	)
Total shareholders’ equity			38,627				40,925
Total liabilities and shareholders’ equity		$	115,810			$	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.

 

Page 5 of 14

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PFSweb, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations (A)

(In Thousands, Except Per Share Data)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2014				2013				2014				2013
REVENUES:
Product revenue, net		$	18,120			$	22,898			$	39,842			$	48,165
Service fee revenue			27,384				26,583				54,982				54,800
Pass-thru revenue			8,539				8,704				16,448				18,361
Total revenues			54,043				58,185				111,272				121,326
COSTS OF REVENUES:
Cost of product revenue			17,039				21,479				37,555				44,994
Cost of service fee revenue			19,160				17,811				38,380				37,069
Cost of pass-thru revenue			8,539				8,704				16,448				18,361
Total costs of revenues			44,738				47,994				92,383				100,424
Gross profit			9,305				10,191				18,889				20,902
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES			11,485				10,938				22,507				23,739
Income (loss) from operations			(2,180	)			(747	)			(3,618	)			(2,837	)
INTEREST EXPENSE (INCOME), NET			173				184				316				402
Income (loss) before income taxes			(2,353	)			(931	)			(3,934	)			(3,239	)
INCOME TAX PROVISION (BENEFIT)			42				24				271				291
NET INCOME (LOSS)		$	(2,395	)		$	(955	)		$	(4,205	)		$	(3,530	)
NON-GAAP NET INCOME (LOSS)		$	(1,379	)		$	(421	)		$	(2,395	)		$	(400	)
NET INCOME (LOSS) PER SHARE:
Basic		$	(0.14	)		$	(0.07	)		$	(0.25	)		$	(0.26	)
Diluted		$	(0.14	)		$	(0.07	)		$	(0.25	)		$	(0.26	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic			16,736				14,525				16,630				13,661
Diluted			16,736				14,525				16,630				13,661
EBITDA		$	698			$	1,941			$	2,150			$	2,259
ADJUSTED EBITDA		$	1,714			$	2,475			$	3,960			$	5,389

 

(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.

 

Page 6 of 14

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PFSweb, Inc. and Subsidiaries

Reconciliation of certain Non-GAAP Items to GAAP

(In Thousands, Except Per Share Data)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2014				2013				2014				2013
NET INCOME (LOSS)		$	(2,395	)		$	(955	)		$	(4,205	)		$	(3,530	)
Income tax expense			42				24				271				291
Interest expense, net			173				184				316				402
Depreciation and amortization			2,878				2,688				5,768				5,096
EBITDA		$	698			$	1,941			$	2,150			$	2,259
Stock-based compensation			862				282				1,656				585
Acquisition related costs			154				—				154				—
Restructuring and other charges			—				252				—				2,545
ADJUSTED EBITDA		$	1,714			$	2,475			$	3,960			$	5,389
		Three Months Ended June 30,								Six Months Ended June 30,
		2014				2013				2014				2013
NET INCOME (LOSS)		$	(2,395	)		$	(955	)		$	(4,205	)		$	(3,530	)
Stock-based compensation			862				282				1,656				585
Acquisition related costs			154				—				154				—
Restructuring and other charges			—				252				—				2,545
NON-GAAP NET INCOME (LOSS)		$	(1,379	)		$	(421	)		$	(2,395	)		$	(400	)
NET INCOME (LOSS) PER SHARE:
Basic		$	(0.14	)		$	(0.07	)		$	(0.25	)		$	(0.26	)
Diluted		$	(0.14	)		$	(0.07	)		$	(0.25	)		$	(0.26	)
NON-GAAP NET INCOME (LOSS) Per Share:
Basic		$	(0.08	)		$	(0.03	)		$	(0.14	)		$	(0.03	)
Diluted		$	(0.08	)		$	(0.03	)		$	(0.14	)		$	(0.03	)
		Three Months Ended June 30,								Six Months Ended June 30,
		2014				2013				2014				2013
TOTAL REVENUES		$	54,043			$	58,185			$	111,272			$	121,326
Pass-thru revenue			(8,539	)			(8,704	)			(16,448	)			(18,361	)
Cost of product revenue			(17,039	)			(21,479	)			(37,555	)			(44,994	)
SERVICE FEE EQUIVALENT REVENUE		$	28,465			$	28,002			$	57,269			$	57,971

 

Page 7 of 14

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PFSweb, Inc. and Subsidiaries

Unaudited Consolidating Statements of Operations

For the Three Months Ended June 30, 2014

(In Thousands)

 

		PFSweb				Business & Retail Connect				Eliminations				Consolidated
REVENUES:
Product revenue, net		$	—			$	18,120			$	—			$	18,120
Service fee revenue			24,423				2,961				—				27,384
Service fee revenue - affiliate			3,176				595				(3,771	)			—
Pass-thru revenue			8,539				—				—				8,539
Total revenues			36,138				21,676				(3,771	)			54,043
COSTS OF REVENUES:
Cost of product revenue			—				17,039				—				17,039
Cost of service fee revenue			19,557				3,093				(3,490	)			19,160
Cost of pass-thru revenue			8,539				—				—				8,539
Total costs of revenues			28,096				20,132				(3,490	)			44,738
Gross profit			8,042				1,544				(281	)			9,305
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES			10,719				1,047				(281	)			11,485
Income (loss) from operations			(2,677	)			497				—				(2,180	)
INTEREST EXPENSE (INCOME), NET			33				140				—				173
Income (loss) before income taxes			(2,710	)			357				—				(2,353	)
INCOME TAX PROVISION (BENEFIT)			(49	)			91				—				42
NET INCOME (LOSS)		$	(2,661	)		$	266			$	—			$	(2,395	)
NON-GAAP NET INCOME (LOSS)		$	(1,645	)		$	266			$	—			$	(1,379	)
EBITDA		$	157			$	541			$	—			$	698
ADJUSTED EBITDA		$	1,173			$	541			$	—			$	1,714
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
NET INCOME (LOSS)		$	(2,661	)		$	266			$	—				(2,395	)
Income tax expense (benefit)			(49	)			91				—				42
Interest expense (income), net			33				140				—				173
Depreciation and amortization			2,834				44				—				2,878
EBITDA		$	157			$	541			$	—			$	698
Stock-based compensation			862				—				—				862
Acquisition related costs			154				—				—				154
ADJUSTED EBITDA		$	1,173			$	541			$	—			$	1,714
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
NET INCOME (LOSS)		$	(2,661	)		$	266			$	—			$	(2,395	)
Stock-based compensation			862				—				—				862
Acquisition related costs			154				—				—				154
NON-GAAP NET INCOME (LOSS)		$	(1,645	)		$	266			$	—			$	(1,379	)

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.

 

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PFSweb, Inc. and Subsidiaries

Unaudited Consolidating Statements of Operations

For the Three Months Ended June 30, 2013

(In Thousands)

 

		PFSweb				Business & Retail Connect				Eliminations				Consolidated
REVENUES:
Product revenue, net		$	—			$	22,898			$	—			$	22,898
Service fee revenue			25,304				1,279				—				26,583
Service fee revenue - affiliate			1,914				436				(2,350	)			—
Pass-thru revenue			8,704				—				—				8,704
Total revenues			35,922				24,613				(2,350	)			58,185
COSTS OF REVENUES:
Cost of product revenue			—				21,479				—				21,479
Cost of service fee revenue			18,401				1,501				(2,091	)			17,811
Cost of pass-thru revenue			8,704				—				—				8,704
Total costs of revenues			27,105				22,980				(2,091	)			47,994
Gross profit			8,817				1,633				(259	)			10,191
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES			9,600				1,597				(259	)			10,938
Income (loss) from operations			(783	)			36				—				(747	)
INTEREST EXPENSE (INCOME), NET			35				149				—				184
Income (loss) before income taxes			(818	)			(113	)			—				(931	)
INCOME TAX PROVISION (BENEFIT)			22				2				—				24
NET INCOME (LOSS)		$	(840	)		$	(115	)		$	—			$	(955	)
NON-GAAP NET INCOME (LOSS)		$	(306	)		$	(115	)		$	—			$	(421	)
EBITDA		$	1,866			$	75			$	—			$	1,941
ADJUSTED EBITDA		$	2,400			$	75			$	—			$	2,475
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
NET INCOME (LOSS)		$	(840	)		$	(115	)		$	—				(955	)
Income tax expense (benefit)			22				2				—				24
Interest expense (income), net			35				149				—				184
Depreciation and amortization			2,649				39				—				2,688
EBITDA		$	1,866			$	75			$	—			$	1,941
Stock-based compensation			282				—				—				282
Restructuring and other charges			252				—				—				252
ADJUSTED EBITDA		$	2,400			$	75			$	—			$	2,475
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
NET INCOME (LOSS)		$	(840	)		$	(115	)		$	—			$	(955	)
Stock-based compensation			282				—				—				282
Restructuring and other charges			252				—				—				252
NON-GAAP NET INCOME (LOSS)		$	(306	)		$	(115	)		$	—			$	(421	)

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.

 

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PFSweb, Inc. and Subsidiaries

Unaudited Consolidating Statements of Operations

For the Six Months Ended June 30, 2014

(In Thousands)

 

		PFSweb				Business & Retail Connect				Eliminations				Consolidated
REVENUES:
Product revenue, net		$	—			$	39,842			$	—			$	39,842
Service fee revenue			48,576				6,406				—				54,982
Service fee revenue—affiliate			6,866				1,210				(8,076	)			—
Pass-thru revenue			16,448				—								16,448
Total revenues			71,890				47,458				(8,076	)			111,272
COSTS OF REVENUES:
Cost of product revenue			—				37,555				—				37,555
Cost of service fee revenue			39,077				6,709				(7,406	)			38,380
Cost of pass-thru revenue			16,448				—				—				16,448
Total costs of revenues			55,525				44,264				(7,406	)			92,383
Gross profit			16,365				3,194				(670	)			18,889
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES			20,895				2,282				(670	)			22,507
Income (loss) from operations			(4,530	)			912				—				(3,618	)
INTEREST EXPENSE (INCOME), NET			32				284				—				316
Income (loss) before income taxes			(4,562	)			628				—				(3,934	)
INCOME TAX PROVISION (BENEFIT)			81				190				—				271
NET INCOME (LOSS)		$	(4,643	)		$	438			$	—			$	(4,205	)
NON-GAAP NET INCOME (LOSS)		$	(2,833	)		$	438			$	—			$	(2,395	)
EBITDA		$	1,151			$	999			$	—			$	2,150
ADJUSTED EBITDA		$	2,961			$	999			$	—			$	3,960
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
NET INCOME (LOSS)		$	(4,643	)		$	438			$	—				(4,205	)
Income tax expense (benefit)			81				190				—				271
Interest expense (income), net			32				284				—				316
Depreciation and amortization			5,681				87				—				5,768
EBITDA		$	1,151			$	999			$	—			$	2,150
Stock-based compensation			1,656				—				—				1,656
Acquisition related costs			154				—				—				154
ADJUSTED EBITDA		$	2,961			$	999			$	—			$	3,960
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
NET INCOME (LOSS)		$	(4,643	)		$	438			$	—			$	(4,205	)
Stock-based compensation			1,656				—				—				1,656
Acquisition related costs			154				—				—				154
NON-GAAP NET INCOME (LOSS)		$	(2,833	)		$	438			$	—			$	(2,395	)

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.

 

Page 10 of 14

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PFSweb, Inc. and Subsidiaries

Unaudited Consolidating Statements of Operations

For the Six Months Ended June 30, 2013

(In Thousands)

 

		PFSweb				Business & Retail Connect				Eliminations				Consolidated
REVENUES:
Product revenue, net		$	—			$	48,165			$	—			$	48,165
Service fee revenue			51,745				3,055				—				54,800
Service fee revenue—affiliate			4,269				798				(5,067	)			—
Pass-thru revenue			18,361				—				—				18,361
Total revenues			74,375				52,018				(5,067	)			121,326
COSTS OF REVENUES:
Cost of product revenue			—				44,994				—				44,994
Cost of service fee revenue			38,181				3,299				(4,411	)			37,069
Cost of pass-thru revenue			18,361				—				—				18,361
Total costs of revenues			56,542				48,293				(4,411	)			100,424
Gross profit			17,833				3,725				(656	)			20,902
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES			21,163				3,232				(656	)			23,739
Income (loss) from operations			(3,330	)			493				—				(2,837	)
INTEREST EXPENSE (INCOME), NET			102				300				—				402
Income (loss) before income taxes			(3,432	)			193				—				(3,239	)
INCOME TAX PROVISION (BENEFIT)			142				149				—				291
NET INCOME (LOSS)		$	(3,574	)		$	44			$	—			$	(3,530	)
NON-GAAP NET INCOME (LOSS)		$	(444	)		$	44			$	—			$	(400	)
EBITDA		$	1,688			$	571			$	—			$	2,259
ADJUSTED EBITDA		$	4,818			$	571			$	—			$	5,389
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
NET INCOME (LOSS)		$	(3,574	)		$	44			$	—				(3,530	)
Income tax expense (benefit)			142				149				—				291
Interest expense (income), net			102				300				—				402
Depreciation and amortization			5,018				78				—				5,096
EBITDA		$	1,688			$	571			$	—			$	2,259
Stock-based compensation			585				—				—				585
Restructuring and other charges			2,545				—				—				2,545
ADJUSTED EBITDA		$	4,818			$	571			$	—			$	5,389
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
NET INCOME (LOSS)		$	(3,574	)		$	44			$	—			$	(3,530	)
Stock-based compensation			585				—				—				585
Restructuring and other charges			2,545				—				—				2,545
NON-GAAP NET INCOME (LOSS)		$	(444	)		$	44			$	—			$	(400	)

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.

 

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PFSweb, Inc. and Subsidiaries

Unaudited Condensed Consolidating Balance Sheets

as of June 30, 2014

(In Thousands)

 

						Business &
		PFSweb				Retail Connect				Eliminations				Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	17,328			$	5,867			$	—			$	23,195
Restricted cash			—				270				—				270
Accounts receivable, net			26,105				14,638				(693	)			40,050
Inventories, net			—				13,757				—				13,757
Other receivables			—				4,696				—				4,696
Prepaid expenses and other current assets			4,679				1,063				—				5,742
Total current assets			48,112				40,291				(693	)			87,710
PROPERTY AND EQUIPMENT, net			25,040				197				—				25,237
RECEIVABLE/INVESTMENT IN AFFILIATES			10,031				—				(10,031	)			—
OTHER ASSETS			2,816				47				—				2,863
Total assets			85,999				40,535				(10,724	)			115,810
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations		$	3,651			$	4,350			$	—			$	8,001
Trade accounts payable			6,937				20,980				(693	)			27,224
Deferred revenue			10,230				—				—				10,230
Accrued expenses			13,134				5,033				—				18,167
Total current liabilities			33,952				30,363				(693	)			63,622
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion			2,192				—				—				2,192
PAYABLE TO AFFILIATES			—				22,045				(22,045	)			—
DEFERRED REVENUE			6,195				—				—				6,195
DEFERRED RENT			5,174				—				—				5,174
Total liabilities			47,513				52,408				(22,738	)			77,183
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock			17				19				(19	)			17
Capital contributions			—				1,000				(1,000	)			—
Additional paid-in capital			126,527				28,060				(28,060	)			126,527
Retained earnings (accumulated deficit)			(89,641	)			(43,239	)			43,375				(89,505	)
Accumulated other comprehensive income			1,708				2,287				(2,282	)			1,713
Treasury stock			(125	)			—				—				(125	)
Total shareholders’ equity			38,486				(11,873	)			12,014				38,627
Total liabilities and shareholders’ equity		$	85,999			$	40,535			$	(10,724	)		$	115,810

 

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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

 

Page 13 of 14

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Company Contact:

Michael C. Willoughby

Chief Executive Officer

or

Thomas J. Madden

Chief Financial Officer

Tel 972-881-2900

Investor Relations:

Liolios Group Inc.

Cody Slach or Greg Falesnik

Tel 949-574-3860

PFSW@liolios.com

 

Page 14 of 14