PFSweb Breaks Through to Profitability in 2004 - Record Revenue and Net Income of $1.1 Million Highlight Fourth Quarter
PFSweb, Inc. (NASDAQ: PFSW), which IPO'd in December 1999, reports its first profitable year and sustainable profitability, with record revenue and net income for the Fourth Quarter. The share price, $3.28 at the market close, zoomed up in after-hours trading: After Hours (RT-ECN): 3.80 0.52 (15.85%). The global business process outsourcer (BPO), is known for e-commerce fulfillment and supply chain management, as well as its many blue chip clients, such as IBM, Xerox, Hewlett-Packard, a Fortune 500 company and the U.S. Government. It projects earnings per share in 2005 of 0 cents to 3 cents.
Plano, TX (PRWEB) March 4, 2005 -- PFSweb, Inc. (NASDAQ: PFSW), a global
provider of integrated business process outsourcing (BPO) solutions, today
reported its results for the quarter and fiscal year ended December 31, 2004.
PFSweb’s consolidated results were as follows (In millions, except per
share data):
Quarter
Ended Year Ended
Dec.
31, 2004 Dec. 31, 2004
Product
Revenue $72.0 $267.5
Service Fee Revenue, excluding affiliate
$12.3 $42.1
Net income before interest,
taxes,
depreciation and
amortization $2.8 $7.1
Net income $1.1 $0.2
Net income per share $0.05 $0.01
The
consolidated balance sheet as of December 31, 2004, reflects $130.3 million in
total assets, including $17.0 million in cash, of which $3.4 million is
restricted, and shareholders’ equity of $29.9 million, or $1.39 per share.
“We are extremely pleased with the December quarter and year-end
results,” said Mark C. Layton, Senior Partner and Chief Executive Officer of
PFSweb. “Our team continues to achieve significant milestones for our company,
including:
• Full year profitability – 2004 is the first fiscal year we have
reported net income since our IPO and represents a $4.0 million improvement from
our 2003 results.
• Consecutive profitable quarters – The December quarter
results represent record net income from ongoing operations and the third
consecutive quarter that we have reported profitable results.
•Record
revenues – Our consolidated revenue for the December quarter was $87.1 million,
the highest level in our history.
• Strong new business activity – We were
very successful during 2004 with new contract signings. In addition, our lead
and proposal pipeline remains robust, including currently pending proposals for
more than $30 million in annual service fees.”
“Our service fee revenues,
excluding affiliate, for the December quarter were $12.3 million, a record
quarterly level for our service fee business segment,” stated Tom Madden, Senior
Partner and Chief Financial Officer of PFSweb. “These results included the
benefit from several incremental projects. During the quarter, we also generated
increased service fee revenue from some of the new contracts signed during
2004.”
“We had our best year ever for gaining new client relationships,”
Layton said. “During 2004, PFSweb was successful in winning new contracts with
an estimated value exceeding $20 million in annual service fees based on current
client projections. These new relationships include Raytheon Aircraft Company,
FLAVIA® Beverage Systems, René Furterer USA, CHiA’SSO and other unnamed clients
including a Fortune 500 consumer products firm, a major nutraceutical company, a
prepaid wireless provider and a healthcare payment provider. Due to contractual
agreements, we are often prohibited from mentioning new clients by name. Service
fee revenues invoiced from these new contracts in 2004 were approximately $5.0
million, including $2.9 million during the December quarter. We currently expect
to invoice more than 80% of the annual run-rate of these new contracts in 2005.
“We continue to expand our operations and technology infrastructure to
meet existing and new client growth requirements. As we announced in November
2004, we leased an additional facility in Southaven, Miss., just a short
distance from our distribution hub in Memphis, Tenn. This new facility became
operational in January 2005. Also during the December 2004 quarter, we expanded
this facility to accommodate a new service parts facility for one of our large,
existing clients. We continue to evaluate our facilities to ensure our
infrastructure and available space meet the needs of our current and prospective
clients.”
“To support our new client relationships, we incurred
additional capital expenditures during the December quarter, primarily to
support the incremental business in our new Southaven distribution center,”
added Madden. “Upon completion, which is expected to occur during the first and
second quarters of 2005, we expect the total capital expenditures to support
this facility will total approximately $6 million. We financed a significant
portion of these expenditures via the issuance of $5 million of Mississippi
taxable revenue bonds. We have classified $1.3 million of the bond proceeds as
restricted cash at December 31, 2004, as the proceeds are restricted
specifically for payment on capital additions or as repayment on the outstanding
bonds. The bond financing provides us the flexibility to use our cash for
operations and other growth opportunities.
“We also amended and extended
our financing agreement with Comerica Bank. This agreement provides for up to $5
million of available financing under a revolving working capital line of credit
through 2007 and a $1 million equipment line of credit through June 2008. Our
existing credit facilities provide us with a solid financial foundation to
support our current business level. As we continue to grow, further expansion
efforts may require us to seek additional financing sources, such as bank,
equity or lease financing, to maintain our existing cash levels.”
“We are
very pleased with our 2004 financial results and the progress we continue to
make,” Layton said. “As we look ahead, in 2005 our goal is to capitalize on our
growth momentum and client diversity by targeting a much broader group of
Fortune 500 and Global 1000 companies. We believe our experience and technology
offering allow us to market our services to many other industry segments,
including aerospace, healthcare, automotive and large equipment manufacturers.
Additionally, in 2005 we will focus our efforts to increase the number of large
value contracts that we pursue. We believe this strategic avenue provides us the
greatest ability to leverage our team of experts. We are targeting to win new
business in 2005 with annual, run-rate service fees of $25 million, only a
portion of which would result in invoiced activity during 2005. We currently
estimate that the new contracts won in 2004 and in 2005 will yield gross margins
ranging from 25% to 35% once fully operational. Certain of these contracts may
require incremental implementation costs.
“Our service fee business
growth rate target is 25% to 35% for 2005, and we expect single-digit growth
from our product revenue business. While we expect this incremental service fee
revenue to yield increased gross profit, we expect this profit will be offset
somewhat by incremental investments to implement new contracts, investments in
infrastructure and sales and marketing to support our targeted growth and
professional fees related to the Sarbanes-Oxley Act. We also expect interest
costs to increase in 2005 due to higher interest rates. For fiscal 2005, we are
currently targeting earnings per share between $0.00 and $0.03, excluding the
impact of any non-cash compensation-related charges.
“We reiterate that
the March quarter has been and is expected to continue to be our weakest quarter
due to seasonal fluctuations of certain clients. However, we do not expect this
seasonality factor to be as significant in 2005 due to product release schedule
changes from certain of our clients. We continue to target a significantly
improved result for the March 2005 quarter as compared to the March 2004
results.
“Our many strengths continue to put us in front of prospective
clients with an advantage over our competition,” Layton emphasized. “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. Most importantly, our people are experts in their
fields of discipline. From technology to logistics to customer contact, we offer
our clients the world’s leading solutions design talent.”
The Company has
modified its financial statement presentation of certain liabilities such that
it now classifies amounts outstanding under inventory financing arrangements
with IBM Credit as a component of vendor accounts payable. Historically, the
Company has reported these amounts as short-term debt.
The Company’s
billings for reimbursement of out-of-pocket expenses, including travel, and
certain third-party vendor expenses such as shipping and handling costs and
telecommunication charges, are included in pass-through revenue. Historically,
the related reimbursable costs were reflected as pass-through charges and
reduced total gross service fee revenue in computing net service fee revenue.
The Company has modified its financial statement presentation and now classifies
the related reimbursable costs as a component of cost of pass-through revenue.
The impact of this reclassification is to increase total revenues and total
costs of revenues, but the gross profit earned on service fee revenues remains
unchanged.
Conference Call Info:
PFSweb will hold a conference call
Friday, March 4, 2005 at 10:00 a.m. Central Time. To ensure attendance on the
call, plan to dial in by 9:50 a.m. to (973) 582-2703. 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 5776543. Check www.pfsweb.com and our March 1, 2005 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), 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., 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 new accounting standards and rules regarding revenue recognition,
stock options, and other matters; changes in accounting rules or current
interpretation of those rules; 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, Investor/Public Relations,
Kirk
Public Relations, Austin TX,
(830) 693-4447
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Source : http://www.prweb.com/releases/2005/3/prweb214940.htm