PFSweb, Inc. (NASDAQ: PFSW) (the "Company") is reporting results
for the first quarter ended March 31, 2023.
“In the first quarter, we carried on the momentum from our
record performance in 2022, with solid service fee revenue growth
and continued strong sales booking activity,” said Mike Willoughby,
CEO of PFSweb. “Our service fee revenue grew approximately 5%
year-over-year as we leveraged ongoing demand among premier and
luxury brands within our core verticals. In fact, our high
fulfillment volumes marked a new company record for first quarter
fulfillment activity. We also continued to drive sequential
improvements in our service fee gross margin, reflecting the
favorable impacts of our productivity enhancements and
cost-of-living-based pricing adjustments we implemented over the
past year. We believe our financial and operational execution
during the first quarter has placed us on strong footing for
2023.”
Q1 2023 Summary vs. Q1 2022
- Total revenues
increased 4% to $69.3 million, including $21.7 million in
pass-through revenue.
- Service fee
revenue increased 5% to $47.6 million.
- Service fee
gross margin increased 450 basis points to 24.4% compared to 19.9%.
The service fee gross margin in the first quarter of 2023 reflects
the sustained sequential improvements driven by the favorable
impact of productivity enhancements and pricing modifications
implemented in 2022.
- Net loss
improved to $1.5 million or $(0.06) per share, compared to a net
loss of $7.5 million or $(0.33) per share in Q1 22, largely driven
by the gross margin improvements and a 24% year-over-year reduction
in general and administrative expenses as a result of the reduced
professional fees related to the LiveArea transaction and the
Company’s restructuring and cost optimization measures in
2022.
- Consolidated
adjusted EBITDA (a non-GAAP measure defined and reconciled below)
increased significantly to $3.0 million compared to $(0.4)
million.
Recent Operational
Highlights
- Recorded four
bookings in Q1 worth an estimated $6.8 million in annual contract
value (ACV).
- Made continued
progress on opening the Company’s second fulfillment center in
Dallas. The facility is anticipated to go live by early Q3 2023 and
offer greater capacity to support clients’ eCommerce consumers in
the Southwestern region of the U.S.
- Signed an
agreement in April 2023, to open a second Southampton-area
fulfillment center in the United Kingdom (UK). The facility is
expected to expand the Company’s multi-node footprint in the UK and
address growing fulfillment demand among new and current European
clients.
Zach Thomann, COO and President of PFS,
commented: “Our core verticals have remained resilient within a
dynamic macroeconomic environment, with particular demand strength
in the health and beauty category, as well as jewelry and
collectibles. Amid this sustained demand, premier and luxury brands
have continued investing in their eCommerce channels to deliver
elevated, branded shopping experiences for their customers, driving
demand for our multi-node B2B and DTC fulfillment services. These
trends support the momentum in our sales pipeline, which remains
robust off the heels of a record bookings year in 2022. Based on
current visibility, we believe we are well-positioned to continue
executing on new sales opportunities.
“We also remain underway with expanding our
domestic and international fulfillment footprint. Most recently, we
announced the signing of the lease on a new 70,000 square foot
fulfillment center in Fareham, England, located just 10 miles from
our existing Southampton facility. We expect this new building to
expand our multi-node capabilities for new and existing European
clients, with our first client in this facility scheduled to go
live in the second quarter of 2023. In addition, we are tracking
towards opening our second Dallas-area fulfillment center by early
in the third quarter of 2023. Through broadening our capacity in
the UK and US, we aim to create additional flexibility for our
growing global client base, improving their shipping time to their
customers while reducing their shipping costs.
“We believe our execution has placed us in a
strong position for the first half of 2023, and we expect to
continue driving our growth as a fulfillment platform. From a sales
perspective, we are focused on converting the high-quality
opportunities in our sales pipeline and leveraging the ongoing
demand for premier and luxury brands in our core categories. We
will work to support this momentum with an optimized cost
structure, benefited by our previous restructuring work and our
focus on driving additional cost savings. With our agile and
streamlined operations, we seek to facilitate continued client
growth and long-term strategic progress.”
2023 Outlook
The Company is reiterating its previously stated
2023 outlook for annual service fee revenue growth, which is
expected to range between at least 5% to 10%. Given sustained
indications of strong consumer and fulfillment service demand
across its core verticals, the Company is optimistic that it can
achieve service fee revenue growth at the upper end of this
targeted range. As a percentage of service fee revenue, PFSweb
continues to target its annual total company consolidated adjusted
EBITDA to be within the range of 6% to 8%, inclusive of remaining
public company costs of approximately 2% of service fee revenue in
2023.
Excluding public company costs, the Company is
targeting total company adjusted EBITDA as a percentage of service
fee revenue to range between 8% to 10% in 2023. PFSweb believes its
estimates of total company adjusted EBITDA, excluding the estimated
remaining public company costs, provide an appropriate comparison
to the estimated PFS standalone adjusted EBITDA percentage of
service fee equivalent revenue metric disclosed in prior periods.
Additionally, the Company intends to maintain aggressive cost
controls within the category of public company costs, with the goal
of further reducing these costs while continuing to support
accelerating service fee revenue growth.
Share Repurchase Update
PFSweb authorized a two-year share repurchase
program on March 20, 2023, under which the Company may repurchase
an aggregate of 1,000,000 shares of its common stock. As of March
31, 2023, the Company purchased approximately 96 thousand shares
for approximately $0.4 million. In April, the Company purchased an
incremental 138 thousand shares for approximately $0.6 million. The
Company does not intend to comment further regarding share
repurchase activity beyond the required disclosures.
Strategic Alternatives
Process
PFSweb is currently targeting completion of its
strategic review process with its financial advisor, Raymond James,
during 2023. The Company does not intend to comment further
regarding the review process unless or until the review process is
concluded or it has otherwise determined that further disclosure is
appropriate or required by law.
Conference Call
PFSweb will conduct a conference call today at
5:00 p.m. Eastern time to discuss its results for the first quarter
ended March 31, 2023.
PFSweb management will host the conference call,
followed by a question-and-answer period.
Date: Tuesday, May 9, 2023Time: 5:00 p.m.
Eastern time (2:00 p.m. Pacific time)Registration Link:
https://register.vevent.com/register/BI040f7e898f3948a695c87eaa18b29952
Please call the conference telephone number 5-10
minutes prior to the start time. If you have any difficulty
connecting with the conference call, please contact Gateway Group
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.ir.pfsweb.com.
Forward-Looking Information
This press release contains 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,” “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 our overall performance for our clients, as well as the
impact of inflation, labor cost increases and overall economic
conditions. Although we believe the expectations reflected in our
forward-looking statements are reasonable, we cannot guarantee
these expectations will actually be achieved. The Company’s 2022
10-K, and any subsequent amendments thereto and our 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.
The Company 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.
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) and
adjusted EBITDA.
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 costs.
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 restructuring and other costs.
Non-GAAP net income (loss), EBITDA and adjusted
EBITDA 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 costs, 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.
The Company 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.
About PFSweb, Inc.
PFS, the business unit of PFSweb, Inc. (NASDAQ:
PFSW) is a premier eCommerce order fulfillment provider. We
facilitate each operational step of an eCommerce order in support
of DTC and B2B retail brands and specialize in health & beauty,
fashion & apparel, jewelry, and consumer packaged goods. Our
scalable solutions support customized pick/pack/ship services that
deliver on brand ethos with each order. A proven order management
platform, as well as high-touch customer care, reinforce our
operation. With 20+ years as an industry leader, PFS is the BPO of
choice for brand-centric companies and household brand names, such
as L’Oréal USA, Champion, Pandora, Shiseido Americas, Kendra Scott,
the United States Mint, and many more. The company is headquartered
in Irving, TX with additional locations around the globe. For more
information, visit www.pfscommerce.com or ir.pfsweb.com for
investor information.
Investor Relations: Cody Slach or Jackie
KeshnerGateway Group, Inc. 1-949-574-3860 PFSW@gatewayir.com
|
PFSWEB, INC. AND SUBSIDIARIES |
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In Thousands, Except Share Data) |
|
|
|
(Unaudited) March 31, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
39,741 |
|
|
$ |
30,034 |
|
Accounts receivable, net of reserve for credit loss of $375 and
$365 at March 31, 2023 and December 31, 2022, respectively |
|
|
49,398 |
|
|
|
82,540 |
|
Other receivables |
|
|
1,936 |
|
|
|
9,578 |
|
Prepaid expenses and other current assets |
|
|
7,393 |
|
|
|
7,665 |
|
Total current assets |
|
|
98,468 |
|
|
|
129,817 |
|
Property and equipment,
net |
|
|
19,915 |
|
|
|
20,888 |
|
Operating lease right-of-use
assets, net |
|
|
30,084 |
|
|
|
30,841 |
|
Goodwill |
|
|
21,468 |
|
|
|
21,310 |
|
Other assets |
|
|
1,486 |
|
|
|
1,806 |
|
Total assets |
|
$ |
171,421 |
|
|
$ |
204,662 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Trade accounts payable |
|
$ |
20,286 |
|
|
$ |
38,518 |
|
Accrued expenses |
|
|
24,284 |
|
|
|
36,973 |
|
Current portion of operating lease liabilities |
|
|
9,118 |
|
|
|
8,284 |
|
Current portion of finance lease obligations |
|
|
63 |
|
|
|
72 |
|
Deferred revenues |
|
|
3,055 |
|
|
|
3,906 |
|
Total current liabilities |
|
|
56,806 |
|
|
|
87,753 |
|
Finance lease obligations,
less current portion |
|
|
10 |
|
|
|
22 |
|
Deferred revenue, less current
portion |
|
|
970 |
|
|
|
870 |
|
Operating lease liabilities,
less current portion |
|
|
23,783 |
|
|
|
25,478 |
|
Other liabilities |
|
|
4,902 |
|
|
|
4,315 |
|
Total liabilities |
|
|
86,471 |
|
|
|
118,438 |
|
|
|
|
|
|
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;
23,056,513 and 22,725,116 issued and 22,926,949 and 22,691,649
outstanding at March 31, 2023 and December 31, 2022,
respectively |
|
|
23 |
|
|
|
23 |
|
Additional paid-in capital |
|
|
180,661 |
|
|
|
180,353 |
|
Accumulated deficit |
|
|
(92,269 |
) |
|
|
(90,893 |
) |
Accumulated other comprehensive loss |
|
|
(2,944 |
) |
|
|
(3,134 |
) |
Treasury stock at cost, 129,564 and 33,467 shares at March 31,
2023 and December 31, 2022, respectively |
|
|
(521 |
) |
|
|
(125 |
) |
Total shareholders’ equity |
|
|
84,950 |
|
|
|
86,224 |
|
Total liabilities and shareholders’ equity |
|
$ |
171,421 |
|
|
$ |
204,662 |
|
|
PFSWEB, INC. AND SUBSIDIARIES |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In Thousands, Except Per Share Data) |
|
|
|
Three Months EndedMarch 31, |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues: |
|
|
|
|
Service fee revenue |
|
$ |
47,612 |
|
|
$ |
45,531 |
|
Product revenue, net |
|
|
— |
|
|
|
3,197 |
|
Pass-through revenue |
|
|
21,652 |
|
|
|
17,759 |
|
Total revenues |
|
|
69,264 |
|
|
|
66,487 |
|
Costs of Revenues: |
|
|
|
|
Cost of service fee revenue |
|
|
35,997 |
|
|
|
36,492 |
|
Cost of product revenue |
|
|
— |
|
|
|
2,951 |
|
Cost of pass-through revenue |
|
|
21,652 |
|
|
|
17,759 |
|
Total costs of revenues |
|
|
57,649 |
|
|
|
57,202 |
|
Gross profit |
|
|
11,615 |
|
|
|
9,285 |
|
Selling, general and
administrative expenses |
|
|
12,532 |
|
|
|
16,428 |
|
Loss from operations |
|
|
(917 |
) |
|
|
(7,143 |
) |
Interest (income) expense, net |
|
|
(78 |
) |
|
|
6 |
|
Loss before income taxes |
|
|
(839 |
) |
|
|
(7,149 |
) |
Income tax expense, net |
|
|
645 |
|
|
|
318 |
|
Net loss |
|
$ |
(1,484 |
) |
|
$ |
(7,467 |
) |
|
|
|
|
|
Loss per share: |
|
|
|
|
Basic |
|
$ |
(0.06 |
) |
|
$ |
(0.33 |
) |
Diluted |
|
$ |
(0.06 |
) |
|
$ |
(0.33 |
) |
Weighted average number of
shares outstanding: |
|
|
|
|
Basic |
|
|
23,079 |
|
|
|
22,445 |
|
Diluted |
|
|
23,079 |
|
|
|
22,445 |
|
|
|
|
|
|
EBITDA |
|
$ |
1,134 |
|
|
$ |
(5,188 |
) |
Adjusted EBITDA |
|
$ |
2,956 |
|
|
$ |
(371 |
) |
|
PFSWEB, INC. AND SUBSIDIARIES |
Unaudited Reconciliation of Certain Non-GAAP Items to GAAP |
(In Thousands) |
|
|
|
Three Months EndedMarch 31, |
|
|
|
2023 |
|
|
|
2022 |
|
Net loss |
|
$ |
(1,484 |
) |
|
$ |
(7,467 |
) |
Income tax expense, net |
|
|
645 |
|
|
|
318 |
|
Interest (income) expense, net |
|
|
(78 |
) |
|
|
6 |
|
Depreciation and amortization |
|
|
2,051 |
|
|
|
1,955 |
|
EBITDA |
|
|
1,134 |
|
|
|
(5,188 |
) |
Stock-based compensation |
|
|
1,004 |
|
|
|
739 |
|
Restructuring and other costs |
|
|
818 |
|
|
|
4,078 |
|
Adjusted EBITDA |
|
$ |
2,956 |
|
|
$ |
(371 |
) |
|
|
Three Months EndedMarch 31, |
|
|
|
2023 |
|
|
|
2022 |
|
Net loss |
|
$ |
(1,484 |
) |
|
$ |
(7,467 |
) |
Stock-based compensation |
|
|
1,004 |
|
|
|
739 |
|
Restructuring and other costs |
|
|
818 |
|
|
|
4,078 |
|
Non-GAAP net income
(loss) |
|
$ |
338 |
|
|
$ |
(2,650 |
) |
Pfsweb (NASDAQ:PFSW)
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