Final Transcript
May. 16. 2007 / 11:00AM ET, PFSW — Q1 2007 PFSweb, Inc. Earnings Conference Call
Finally, I’m happy to report that growth in the services business segment continues into 2007. We
were notified in March that we had been awarded the contract to provide product fulfillment
customer care services for a major U.S. retailer’s new online store initiative. We signed a letter
of intent with this new client in early April and we’re now in the final stages of contracting for
a third quarter launch just in time for the 2007 holiday season. This latest addition to our
growing retail client portfolio helps confirm the validity of our goal to strengthen our presence
in the online retail space.
Our potential new business pipeline also confirms our objective to continue to focus on providing
end-to-end global solution for online retailers. Our prospective new business pipeline is currently
valued at about $25 million of annual fees based on our prospects data to us.
Within our current sales pipeline, we’re seeing an increase in prospects interested in launching
online store initiatives in Europe. This is very consistent with research that identifies the
European market as the next high-growth e-commerce opportunity and we think we’re well positioned
to take advantage of this trend with our proven experience in supporting European e-commerce
initiatives.
Some of these opportunities are proven North American brands expanding into Europe while other
prospects are European companies expanding their domestic channels with new or retooled online
stores. We believe we’re one of the few service providers in our space able to support an
end-to-end European ecommerce initiative and to our knowledge, we’re the only providers in our
space with more than seven years of experience supporting European and North American brands
ecommerce business in Europe.
With our advanced fulfillment and customer care capability in conjunction with our experienced
professional services staff, and select strategic ecommerce partners, we believe we’re able to take
care of all the complexities of operating an online store initiative across Europe. Some of these
complexities include supporting EMEA logistics, taxation calculations, presentation and submission
of taxes, payment services and broad management, customer experience localization and multilingual
customer support.
We believe our European experience and global client portfolio positions us to compete aggressively
for new business from this growing segment of the BPO market. And we look forward to further
strengthening expanding our service offering in this area as we look to successfully complete for
these deals in Europe.
In summary, our recent new business acquisition and operations experience across all of our target
markets including high-tech manufacturers, consumer products, direct marketers, and online
retailers gives us reason to be optimistic about our ability to continue to compete for and win new
business in 2007 and beyond.
I’d like to take this opportunity to hand the floor back over to Mark. Mark?
Mark Layton - PFSweb, Inc. — CEO
Great, thank you, Mike. Okay, with that summary on the services segment, let me give you a
little bit of background on eCOST activity and the results for the quarter from there.
As I stated earlier, eCOST’s financial results for the quarter are now showing good signs that the
significant enhancements we made to the operations of eCOST in 2006 were effective and we’re very
pleased with the progress that’s being made in this division. During the March quarter, our revenue
increased over the seasonally high December quarter results. We believe this is a demonstration of
the restoration of growth which we’ve been striving for since the merger.
Our gross margin also improved from recent levels. Tom will give you some details on that in a few
minutes. These items combined with strong focus on cost controls resulted in a much improved
bottom-line performance for Q1. EBITDA for the quarter for eCOST.com was a loss of about $900,000.
This is a marked improvement both over Q4 ‘06 as well as Q1 ‘06.
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