ALLEN, TX — (Marketwired) — 11/12/14 — PFSweb, Inc. (NASDAQ: PFSW), a global provider of end-to-end eCommerce solutions, reported results for the three and nine-months ended September 30, 2014.
Service fee equivalent revenue (a non-GAAP measure defined below) increased 28% to $32.4 million compared to $25.2 million in the same period of 2013
Adjusted EBITDA (a non-GAAP measure defined below) increased 107% to $2.9 million compared to $1.4 million in the same period of 2013
Acquired REV Solutions (REV), an eCommerce system integrator, enhancing PFSweb–s Demandware practice and adding Oracle ATG support capabilities
Acquired LiveAreaLabs (LAL), a digital creative agency, strengthening PFSweb–s agency service offering and adding support capabilities for hybris, Magento, WebSphere and other leading platforms
Launched new eCommerce solutions for Urban Decay and Canada Goose, as well as the soft launch of the United States Mint website (officially launched October 1, 2014)
Service fee equivalent revenue increased 8% to $89.6 million compared to $83.2 million in the same period of 2013
Adjusted EBITDA remained flat at $6.8 million compared to the same period of 2013
Total revenues in the third quarter of 2014 increased 7% to $57.1 million compared to $53.6 million in the same period of 2013. Service fee revenue in the third quarter of 2014 increased 31% to $31.4 million compared to $23.9 million last year. This increase was primarily due to new client programs launched in the third quarter of 2014 and increased project revenue. Product revenue decreased to $17.3 million compared to $21.5 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 third quarter of 2014 increased 28% to $32.4 million compared to $25.2 million in the same period of 2013. Excluding the results of the REV and LAL acquisitions, which occurred in September, third quarter service fee equivalent revenue grew by 24% to $31.2 million compared to the same period in 2013.
Service fee gross margin in the third quarter decreased to 29.9% compared to 32.3% in the same period in 2013. While each period includes the benefit of higher margin project activity, the 2014 period includes certain incremental expenses incurred to prepare the operations for the upcoming holiday volume.
Adjusted EBITDA was $2.9 million in the third quarter of 2014 compared to $1.4 million in the same period in 2013.
Net loss in the third quarter of 2014 was $2.5 million or $(0.15) per diluted share, compared to a net loss of $2.0 million or $(0.12) per diluted share in the same period of 2013. Net loss in the third quarter of 2014 included approximately $0.9 million in stock-based compensation expense and $1.5 million in acquisition and restructuring related costs, compared to approximately $0.6 million in stock-based compensation expense and no acquisition or restructuring related costs in the same period of 2013.
Non-GAAP net loss (a non-GAAP measure defined below) in the third quarter of 2014 was $0.1 million or $(0.01) per diluted share, compared to non-GAAP net loss of $1.3 million or $(0.08) per diluted share in the third quarter of 2013.
Cash and cash equivalents decreased to $19.5 million compared to $22.4 million at December 31, 2013, primarily due to the acquisitions of REV and LAL. Debt was $11.3 million at September 30, 2014 compared to $11.1 million at December 31, 2013.
“The third quarter marked a significant turn for our organization, both strategically and financially,” said Michael Willoughby, CEO of PFSweb. “We significantly enhanced our agency and technology service offerings with the acquisitions of REV Solutions and LiveAreaLabs. Both supplement our key partnership with Demandware, while broadening our integration capabilities with Oracle ATG, hybris, Magento and others.
“Our financial results this quarter also reflect our return to strong year-over-year growth in our eCommerce business, as we are now fully past last year–s client transitions. This is reflected in our service fee equivalent revenue growth of 28% and adjusted EBITDA growth of 107%. In addition to the incremental benefit from the acquisitions, these results were strengthened by new and expanded client relationships with Urban Decay, which is the ninth L–Oreal Brand in our client portfolio, Canada Goose, and the rolling out of our highly anticipated United States Mint eCommerce solution.
“Looking ahead, we expect this momentum to carry into the holiday season and 2015, driven by continued execution internally and our growth-through-acquisition strategy to support additional software platforms and geographies across the globe. We will also pursue additional opportunities to onboard new clients and expand current client relationships as we fully integrate REV Solutions and LiveAreaLabs. In fact, we are already seeing new opportunities for client engagements that combine unique services from REV, LiveAreaLabs and PFSweb. These cross-selling opportunities are yet another avenue for expansion in our eCommerce service offering.”
PFSweb reiterates its 2014 service fee equivalent revenue guidance to range between $131 million and $137 million, increasing 10% to 15% compared to 2013. The company also reiterates its outlook for 2014 adjusted EBITDA to range between $12 million and $14 million, representing an increase of 12% to 31% compared to 2013.
For 2015, PFSweb currently expects strong growth in service fee equivalent revenue and adjusted EBITDA as the company realizes a full year benefit from recent acquisitions and the United States Mint contract, as well as incremental revenue from future new and expanded client relationships. At this time, the company is targeting 2015 service fee equivalent revenue to range between $165 million and $175 million. The company is also targeting adjusted EBITDA as a percentage of service fee equivalent revenue to improve to a range between 10% and 11%. This adjusted EBITDA target includes the projected impact of incremental sales and marketing expenditures in 2015 to support the company–s future revenue growth projections.
PFSweb will conduct a conference call today at 11:00 a.m. Eastern time to discuss its results for the third quarter ended September 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, November 12, 2014
Time: 11:00 a.m. Eastern time (10:00 a.m. Central time)
Toll-free dial-in number: 1-888-364-3109
International dial-in number: 1-719-457-2627
Conference ID: 1591635
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 and via the investor relations section of the company–s website at .
A replay of the conference call will be available after 2:00 p.m. Eastern time on the same day through November 26, 2014.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 1591635
PFSweb (NASDAQ: PFSW) is 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, India and the Philippines. For more information, please visit or download the free PFSweb IR App on your or device.
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.
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.
Michael C. Willoughby
Chief Executive Officer
or
Thomas J. Madden
Chief Financial Officer
Tel 972-881-2900
Liolios Group Inc.
Cody Slach or Sean Mansouri
Tel 949-574-3860
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