PFSweb, Inc. (NASDAQ: PFSW) (the "Company") is reporting results
for the second quarter ended June 30, 2023.
“We continued to support strong growth in our
fulfillment services and sales bookings during the second quarter,”
said Mike Willoughby, CEO of PFSweb. “Service fee revenue increased
7% year-over-year, and we drove both sequential and year-over-year
improvements in our service fee gross margin. Significantly, we
achieved our best quarter for sales bookings in the Company’s
history, aided by our new order fulfillment contracts and growing
transportation management services. We believe we are
well-positioned to continue capitalizing on our sales momentum and
building upon our platform efficiencies in the second half of
2023.”
Q2 2023 Highlights vs. Q2
2022
- Total revenues
increased 5% to $67.9 million, including $19.7 million in
pass-through revenue.
- Service fee
revenue increased 7% to $48.2 million.
- Service fee
gross margin increased 350 basis points to 24.7% compared to 21.2%.
The increase reflects the continued favorable impacts of
productivity enhancements and cost-of-living-based pricing
adjustments implemented in 2022.
- Net loss
improved significantly to $0.1 million or $(0.01) per share,
compared to a net loss from continuing operations of $4.5 million
or $(0.20) per share. The improvement was primarily driven by the
improvements in gross margin and a 13% year-over-year reduction in
selling, general and administrative expenses, resulting from the
reduced professional fees related to the LiveArea transaction in
2022 and the Company’s continuous cost optimization measures.
- Consolidated
adjusted EBITDA (a non-GAAP measure defined and reconciled below)
increased significantly to $3.3 million compared to $(0.4)
million.
Recent Operational
Highlights
- Recorded five
bookings in Q2 worth an estimated $35.1 million in annual contract
value (ACV), including $20.6 million in managed transportation
revenue.
- Launched
fulfillment operation for luxury beauty and wellness brand, BEAUTY
PIE, from new Southampton-area fulfillment center in the United
Kingdom.
- Opened new
Dallas-area fulfillment center, with preparations underway to
launch first client out of the facility in Q3.
- Closed a $25
million asset-based lending agreement with Texas Capital Bank,
enhancing the Company’s liquidity position and its flexibility to
support long-term growth initiatives.
Zach Thomann, COO and President of PFS,
commented: “During the second quarter, we experienced sustained
fulfillment demand across our core verticals, which continues to be
driven by the health and beauty category and increased strength in
apparel and jewelry. In conjunction with our fulfillment contracts,
our bookings this quarter reflect expansion in our transportation
management services, in which we facilitate flexible carrier
selection for clients to add more value in the fulfillment process.
As we expect transportation management to continue contributing to
top-line growth, we have started reporting managed transportation
bookings revenue as an additional sales bookings metric. We will
seek further opportunities to convert both new and existing clients
into this service as we support a healthy overall sales pipeline
through the second half of 2023.
“We also continued to progress the international
and domestic expansion of our fulfillment footprint to best support
our growing client base. Our previously announced Dallas-area
distribution center is now operational, with its first client
expected to go live in the coming weeks. In addition, our second
Southampton-area fulfillment center in the United Kingdom opened
and successfully launched its first client, BEAUTY PIE, earlier in
Q3. This increased fulfillment capacity will aid our work to launch
and ramp our new client engagements over the coming months.
“With our record performance in the first half
of 2023, we believe we have a robust foundation for driving
sustainable growth of our fulfillment platform through advancing
our multi-node fulfillment strategy, converting our growing sales
pipeline, and building out a flexible and robust distribution
network for our clients. We aim to continue executing on these
objectives and expanding our high-quality, multi-node B2B and DTC
fulfillment services for the brands we serve.”
2023 Outlook
The Company is raising its 2023 outlook for
annual service fee revenue growth, which is now expected to range
between 8% to 13% compared to the previous range of 5% to 10%.
PFSweb is reiterating its previously stated
outlook for full year 2023 consolidated adjusted EBITDA as a
percentage of service fee revenue, which is expected to be within
the range of 6% to 8%. This range is inclusive of annual remaining
public company costs of approximately 2% of service fee
revenue.
Excluding public company costs, the Company
continues to expect 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. Furthermore, the Company intends to
maintain aggressive cost controls within the category of public
company costs, with the goal of minimizing these costs 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 June
30, 2023, the Company purchased 339,563 shares for approximately
$1.4 million. The Company does not intend to comment further
regarding share repurchase activity beyond the required
disclosures.
Strategic Alternatives
Process
PFSweb continues to target 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 second
quarter ended June 30, 2023.
PFSweb management will host the conference call,
followed by a question-and-answer period.
Date: Tuesday, August 8, 2023Time: 5:00 p.m. Eastern time (2:00
p.m. Pacific time)Registration Link:
https://register.vevent.com/register/BIb20bcf14cc76474b842c7ddc0f9cc909
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@gateway-grp.com
PFSWEB, INC. AND SUBSIDIARIESUNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS(In
Thousands, Except Share Data) |
|
|
(Unaudited) June 30, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
39,022 |
|
|
$ |
30,034 |
|
Accounts receivable, net of reserve for credit loss of $383 and
$365 at June 30, 2023 and December 31, 2022, respectively |
|
44,917 |
|
|
|
82,540 |
|
Other receivables |
|
2,251 |
|
|
|
9,578 |
|
Prepaid expenses and other current assets |
|
6,478 |
|
|
|
7,665 |
|
Total current assets |
|
92,668 |
|
|
|
129,817 |
|
Property and equipment, net |
|
20,460 |
|
|
|
20,888 |
|
Operating lease right-of-use assets, net |
|
34,979 |
|
|
|
30,841 |
|
Goodwill |
|
21,795 |
|
|
|
21,310 |
|
Other
assets |
|
1,717 |
|
|
|
1,806 |
|
Total assets |
$ |
171,619 |
|
|
$ |
204,662 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Trade accounts payable |
$ |
18,288 |
|
|
$ |
38,518 |
|
Accrued expenses |
|
22,659 |
|
|
|
36,973 |
|
Current portion of operating lease liabilities |
|
8,987 |
|
|
|
8,284 |
|
Current portion of finance lease obligations |
|
53 |
|
|
|
72 |
|
Deferred revenues |
|
2,521 |
|
|
|
3,906 |
|
Total current liabilities |
|
52,508 |
|
|
|
87,753 |
|
Finance lease obligations, less current portion |
|
3 |
|
|
|
22 |
|
Deferred revenue, less current portion |
|
930 |
|
|
|
870 |
|
Operating lease liabilities, less current portion |
|
28,454 |
|
|
|
25,478 |
|
Other
liabilities |
|
4,378 |
|
|
|
4,315 |
|
Total liabilities |
|
86,273 |
|
|
|
118,438 |
|
|
|
|
|
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;
23,084,766 and 22,725,116 issued and 22,711,736 and 22,691,649
outstanding at June 30, 2023 and December 31, 2022,
respectively |
|
23 |
|
|
|
23 |
|
Additional paid-in capital |
|
181,853 |
|
|
|
180,353 |
|
Accumulated deficit |
|
(92,397 |
) |
|
|
(90,893 |
) |
Accumulated other comprehensive loss |
|
(2,592 |
) |
|
|
(3,134 |
) |
Treasury stock at cost, 373,030 and 33,467 shares at June 30, 2023
and December 31, 2022, respectively |
|
(1,541 |
) |
|
|
(125 |
) |
Total shareholders’ equity |
|
85,346 |
|
|
|
86,224 |
|
Total liabilities and shareholders’ equity |
$ |
171,619 |
|
|
$ |
204,662 |
|
|
PFSWEB, INC. AND SUBSIDIARIESUNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In
Thousands, Except Per Share Data) |
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Revenues: |
|
|
|
|
|
|
|
Service fee revenue |
$ |
48,206 |
|
|
$ |
45,234 |
|
|
$ |
95,818 |
|
|
$ |
90,765 |
|
Product revenue, net |
|
— |
|
|
|
122 |
|
|
|
— |
|
|
|
3,319 |
|
Pass-through revenue |
|
19,716 |
|
|
|
19,278 |
|
|
|
41,368 |
|
|
|
37,037 |
|
Total revenues |
|
67,922 |
|
|
|
64,634 |
|
|
|
137,186 |
|
|
|
131,121 |
|
Costs of revenues: |
|
|
|
|
|
|
|
Cost of service fee revenue |
|
36,314 |
|
|
|
35,645 |
|
|
|
72,311 |
|
|
|
72,137 |
|
Cost of product revenue |
|
— |
|
|
|
104 |
|
|
|
— |
|
|
|
3,055 |
|
Cost of pass-through revenue |
|
19,716 |
|
|
|
19,278 |
|
|
|
41,368 |
|
|
|
37,037 |
|
Total costs of revenues |
|
56,030 |
|
|
|
55,027 |
|
|
|
113,679 |
|
|
|
112,229 |
|
Gross profit |
|
11,892 |
|
|
|
9,607 |
|
|
|
23,507 |
|
|
|
18,892 |
|
Selling, general and administrative expenses |
|
12,286 |
|
|
|
14,077 |
|
|
|
24,818 |
|
|
|
30,505 |
|
Loss from continuing
operations |
|
(394 |
) |
|
|
(4,470 |
) |
|
|
(1,311 |
) |
|
|
(11,613 |
) |
Interest income, net |
|
(254 |
) |
|
|
(151 |
) |
|
|
(332 |
) |
|
|
(145 |
) |
Loss from continuing
operations before income taxes |
|
(140 |
) |
|
|
(4,319 |
) |
|
|
(979 |
) |
|
|
(11,468 |
) |
Income tax expense (benefit), net |
|
(12 |
) |
|
|
184 |
|
|
|
633 |
|
|
|
502 |
|
Net loss from continuing
operations |
|
(128 |
) |
|
|
(4,503 |
) |
|
|
(1,612 |
) |
|
|
(11,970 |
) |
|
|
|
|
|
|
|
|
Income from discontinued
operations before income taxes |
|
— |
|
|
|
180 |
|
|
|
— |
|
|
|
180 |
|
Income tax expense, net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net income from discontinued
operations |
|
— |
|
|
|
180 |
|
|
|
— |
|
|
|
180 |
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(128 |
) |
|
$ |
(4,323 |
) |
|
$ |
(1,612 |
) |
|
$ |
(11,790 |
) |
|
|
|
|
|
|
|
|
Basic loss per share: |
|
|
|
|
|
|
|
Net loss from continuing operations per share |
$ |
(0.01 |
) |
|
$ |
(0.20 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.53 |
) |
Net income from discontinued operations per share |
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
0.01 |
|
Basic loss per share |
$ |
(0.01 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.52 |
) |
Diluted loss per share: |
|
|
|
|
|
|
|
Net loss from continuing operations per share |
$ |
(0.01 |
) |
|
$ |
(0.20 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.53 |
) |
Net income from discontinued operations per share |
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
0.01 |
|
Diluted loss per share |
$ |
(0.01 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.52 |
) |
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
22,788 |
|
|
|
22,650 |
|
|
|
22,933 |
|
|
|
22,547 |
|
Diluted |
|
22,788 |
|
|
|
22,650 |
|
|
|
22,933 |
|
|
|
22,547 |
|
|
|
|
|
|
|
|
|
EBITDA from continuing operations |
$ |
1,661 |
|
|
$ |
(2,748 |
) |
|
$ |
2,795 |
|
|
$ |
(7,936 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA from continuing operations |
$ |
3,348 |
|
|
$ |
(361 |
) |
|
$ |
6,304 |
|
|
$ |
(732 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PFSWEB, INC. AND SUBSIDIARIESUnaudited
Reconciliation of Certain Non-GAAP Items to GAAP(In Thousands) |
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net loss from continuing operations |
$ |
(128 |
) |
|
$ |
(4,503 |
) |
|
$ |
(1,612 |
) |
|
$ |
(11,970 |
) |
Income tax expense (benefit), net |
|
(12 |
) |
|
|
184 |
|
|
|
633 |
|
|
|
502 |
|
Interest income, net |
|
(254 |
) |
|
|
(151 |
) |
|
|
(332 |
) |
|
|
(145 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
2,055 |
|
|
|
1,722 |
|
|
|
4,106 |
|
|
|
3,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA from continuing
operations |
|
1,661 |
|
|
|
(2,748 |
) |
|
|
2,795 |
|
|
|
(7,936 |
) |
Stock-based compensation |
|
1,226 |
|
|
|
577 |
|
|
|
2,230 |
|
|
|
1,316 |
|
Restructuring and other costs |
|
461 |
|
|
|
1,810 |
|
|
|
1,279 |
|
|
|
5,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA from
continuing operations |
$ |
3,348 |
|
|
$ |
(361 |
) |
|
$ |
6,304 |
|
|
$ |
(732 |
) |
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net loss from continuing operations |
$ |
(128 |
) |
|
$ |
(4,503 |
) |
|
$ |
(1,612 |
) |
|
$ |
(11,970 |
) |
Stock-based compensation |
|
1,226 |
|
|
|
577 |
|
|
|
2,230 |
|
|
|
1,316 |
|
Restructuring and other costs |
|
461 |
|
|
|
1,810 |
|
|
|
1,279 |
|
|
|
5,888 |
|
Non-GAAP net income (loss)
from continuing operations |
$ |
1,559 |
|
|
$ |
(2,116 |
) |
|
$ |
1,897 |
|
|
$ |
(4,766 |
) |
Pfsweb (NASDAQ:PFSW)
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