PFSweb Reports Second Consecutive Quarter of Net Income - Profit, Record Service Fee Revenue and Strong New Client Additions Highlight Third Quarter
PFSweb, Inc. (NASDAQ: PFSW), a global provider of integrated business process outsourcing (BPO) solutions, e-commerce fulfillment, supply chain management and third party logistics reports its results for the third quarter of 2004. Consolidated results include total net revenues of $73 million, net income before interest, taxes, depreciation and amortization of $2.1 million, and net income of $420,000, or $0.02 per share. The net income was a substantial improvement of more than $1.5 million from the $1.1 million loss reported in the year-ago period. The consolidated balance sheet as of Sept. 30, reflects $114.9 million in total assets, including $15.9 million in cash, of which $1 million is restricted, and shareholders’ equity of $27.7 million, or $1.29 per share. THIS RELEASE ALSO SUMMARIZES NEW CLIENTS FOR THIS YEAR, BY NAME OR GENERICALLY, WHERE ALLOWED.
PLANO, TX (PRWEB) November 9, 2004 -- PFSweb, Inc. (NASDAQ: PFSW), a global
provider of integrated business process outsourcing (BPO) solutions, today
reported its results for the quarter ended September 30, 2004. “It is very
gratifying to see the results of years of hard work by the PFSweb team begin to
come to fruition,” said Mark C. Layton, Senior Partner and Chief Executive
Officer of PFSweb.
PFSweb’s consolidated results for the September 2004
quarter include total net revenues of $73.2 million, net income before interest,
taxes, depreciation and amortization of $2.1 million, and net income of
$420,000, or $0.02 per share. The net income result was a substantial
improvement from the $1.1 million loss reported for the same period of the prior
year. The consolidated balance sheet as of September 30, 2004, reflects $114.9
million in total assets, including $15.9 million in cash, of which $1 million is
restricted, and shareholders’ equity of $27.7 million, or $1.29 per share.
“I am extremely pleased with our results this quarter,” continued
Layton. “These results indicate significant milestones for our company,
including:
• Record net service fee revenues – Our service
fee business segment reported $13.5 million of fee revenues, the highest level
in our Company’s history. This represents a 33% increase over the same quarter
of the prior year.
• Consecutive profitable quarters – This
is the first time that we have reported back-to-back profitable quarters.
Additionally, three of the past six quarters have been profitable. We believe
sustainable profitability is now in sight.
• Continued
strong new business activity – We have been very successful again this past
quarter in new contract signings. The projected annual service fees from this
year’s new and expanded client signings are already at a record pace. In
addition, our lead and proposal pipeline remains robust, including outstanding
proposals for more than $30 million in annual service fees.”
“Our service
fee business segment continues to perform well, both in terms of revenues and
costs,” stated Tom Madden, Senior Partner and Chief Financial Officer of PFSweb.
“The service fee business segment benefited this quarter from several
incremental projects with both existing and new clients and also includes
service fees from certain new clients recently implemented. Our gross margin
percentage for this business segment improved slightly over the prior year, but
was down sequentially from the June 2004 quarter. This decline was primarily due
to implementation costs on new contracts and lower overall gross margin
percentage on certain incremental projects. We continue to target a gross margin
percentage performance on our service fee clients between 30-40%, but we have
and we may continue to accept lower than this targeted range on certain larger
contracts and projects depending on contract scope and other
factors.
“SG&A levels were relatively consistent with the same period
from the prior year, yet lower than the June 2004 quarter. This decrease was
primarily due to timing of certain expenditures, including professional fees and
sales and marketing costs. We continue to review our operating expenses to
ensure they align with our targeted growth levels, and we plan to make further
investments in areas that will help continue to fuel and support our growth
plans. Additionally, we expect to experience growth in SG&A due to increased
professional fees applicable to the Sarbanes Oxley Act.”
“In addition to
the positive financial performance,” Layton said, “PFSweb continues to
experience outstanding results in new client additions. During 2004, we have
gained many new client relationships. These new relationships include Raytheon
Aircraft Company, FLAVIA® Beverage Systems, René Furterer USA, and unnamed
clients including a Fortune 500 consumer products firm, a major nutraceutical
company, a prepaid wireless provider, a healthcare payment provider and other
clients. Due to contractual agreements, we often are not allowed to mention new
clients by name.
“To meet the needs of this growth, we recently leased
an additional facility in Southaven, Miss., just a short distance from our
distribution hub in Memphis, Tenn. We expect this facility to become operational
during the first quarter of 2005. We are continually evaluating the need for
additional distribution facilities.
“Due to the time estimated to fully
implement our new contract relationships, we do not expect to fully realize the
majority of the financial revenue and gross margin benefit of these new
contracts until calendar year 2005. However, based on our current projections,
we expect to post significant year-on-year service fee revenue growth and
overall financial improvement for both the December 2004 and March 2005
quarters. However, the March quarter has been and is expected to continue to be
our weakest quarter due to seasonal fluctuations of certain clients. Our current
targets for the full calendar year 2005 call for positive cash flow from
operating activities and accelerating growth of our service fee revenue business
segment.
“Along with our pursuit of leased distribution space to support
our new client relationships, we also will incur additional capital expenditures
to support the incremental business. Our new Southaven distribution center will
include approximately $4 million to $5 million in capital expenditures. We also
expect to incur further capital expenditures, estimated to be approximately $2
million, to support other recent client additions. To finance these
expenditures, we are seeking bank financing, state bond financing, or lease
financing.
“Combined with a continuing improvement in the U.S. economic
environment, PFSweb’s many strengths are contributing to our recent new business
successes. Everything we offer is ‘world class,’ which has allowed us to develop
a reputation as a high quality service provider. Our business solutions are
custom tailored to meet each client’s specific needs. Our systems can easily
converse with virtually any IT platform. And most importantly, our people are
experts in their fields of discipline. From finance to technology to logistics
to customer retention, we offer our clients the world’s leading solutions design
talent,” Layton emphasized.
CONFERENCE CALL INFO:
PFSweb will hold a
conference call Monday, November 8, 2004 at 3:30 p.m. Central Time. To ensure
attendance on the call, plan to dial in by 3:20 p.m. to (973) 582-2741. Ask to
be placed on the PFSweb Earnings Release Conference Call. The call also can be
heard “live” by accessing the Company’s website, www.pfsweb.com, at the time of the call. Two hours after the
conference, a recorded playback can be heard for 14 days at (877) 519-4471,
using the confirmation number 5348274. Check www.pfsweb.com and our November 2, 2004 investor conference
call press release for more details on the call.
About PFSweb,
Inc.
When the world’s brand names need proven, fast and secure business
infrastructure to enable traditional and e-commerce strategies, they choose
PFSweb for comprehensive outsourcing solutions. The PFSweb team of experts
designs diverse solutions for clients around a flexible core business
infrastructure. PFSweb provides solutions that include: professional consulting
services, order management, web-enabled customer contact centers, customer
relationship management, international distribution services, kitting and
assembly services, managed web hosting and site design, billing and collection
services and ERP information interfacing utilizing the Entente Suite (SM).
Our services are provided to a multitude of industries and company
types, including such clients as Adaptec (NASDAQ: ADPT), Dupont Fluoroproducts,
FLAVIA® Beverage Systems, Hewlett-Packard (NYSE: HPQ), iGo/Mobility Electronics
(NASDAQ: MOBE), International Business Machines (NYSE: IBM), Nokia (NYSE: NOK),
Pfizer, Inc. (NYSE: PFE), Raytheon Aircraft Company, René Furterer USA, Roots,
Inc., Shell Energy Services Company, Smithsonian Institution and Xerox (NYSE:
XRX).
The matters discussed in this news release (except for historical
information) and, in particular, information regarding estimates, future
revenue, earnings and business plans and goals, consist of forward-looking
information under the Private Securities Litigation Reform Act of 1995 and are
subject to and involve risks and uncertainties, which could cause actual results
to differ materially from the forward-looking information. These forward-looking
statements are not guarantees of future performance and involve risks,
uncertainties and assumptions that are difficult to predict. These risks and
uncertainties include, but are not limited to, our ability to retain and expand
relationships with existing clients and attract new clients; our dependence upon
our agreements with IBM; our reliance on the fees generated by the transaction
volume or product sales of our clients; our reliance on our clients’ projections
or transaction volume or product sales; our client mix and the seasonality of
their business; our ability to finalize pending contracts; the impact of
strategic alliances and acquisitions; trends in the market for our services;
trends in e-commerce; whether we can continue and manage growth; changes in the
trend toward outsourcing; increased competition; our ability to generate more
revenue and achieve sustainable profitability; effects of changes in profit
margins; the customer concentration of our business; the unknown effects of
possible system failures and rapid changes in technology; trends in government
regulation both foreign and domestic; foreign currency risks and other risks of
operating in foreign countries; potential litigation involving our e-commerce
intellectual property rights; our dependency on key personnel; our ability to
raise additional capital or obtain additional financing; our relationship with
and our guarantees of the working capital indebtedness of our subsidiary,
Supplies Distributors; and our ability or the ability of our subsidiaries to
borrow under current financing arrangements and maintain compliance with debt
covenants; and whether outstanding warrants issued in a prior private placement
will be exercised in the future. A description of these factors, as well as
other factors, which could affect the Company’s business, is set forth in the
Company’s Form 10-K for the year ended December 31, 2003.
In addition,
some forward-looking statements are based upon assumptions as to future events
that may not prove to be accurate. Therefore, actual outcomes and results may
differ materially from what is expected or forecasted in such forward-looking
statements. We undertake 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.
To find out
more about PFSweb, Inc. (NASDAQ: PFSW), visit our Web site at www.pfsweb.com. The PFSweb web
site is not part of this release. PFSweb and GlobalMerchant CommerceWareTM are
registered trademarks of PFSweb, Inc. IBM is a registered trademark of
International Business Machines Corp. All rights reserved.
CONTACTS:
Mark C. Layton, Senior Partner and Chief Executive Officer
or Thomas J.
Madden, Senior Partner and Chief Financial Officer
(972)
881-2900
or
Preston F. Kirk, APR
Senior Associate - IR &
PR
Michael A. Burns & Associates
e-mail protected from spam bots
830)
693-4447
FINANCIAL TABLES FOLLOW: Please go to the corporate web site, www.pfsweb.com
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Source : http://www.prweb.com/releases/2004/11/prweb176542.htm