MAY 14, 2012 / 03:00PM GMT, PFSW - Q1 2012 PFSweb, Inc. Earnings Conference Call
After considering all these items, our consolidated adjusted EBITDA, which
excludes the impact of these two incremental SG&A costs referred to previously, was $2.6 million in the first quarter of 2012. This reflects a significant increase from the $0.5 million reported in the same period of the prior year. For the
first quarter, we had a net loss of $1.3 million or $0.10 per basic and diluted share, compared to a net loss of approximately $2.3 million or $0.19 per basic and diluted share for the same period last year.
The net loss for the first quarter of 2012 did not include any impact from discontinued operations related to eCOST.com, which we sold in February 2011.
The prior-year March quarter included a loss from discontinued operations of $0.6 million.
Note that, on a non-GAAP basis, which is
calculated excluding the impact of stock compensation charges, move related costs, lease termination costs, and discontinued operations, we earned $0.1 million of non-GAAP net income during the first quarter of 2012, as compared to a non-GAAP net
loss of $1.4 million in the same quarter of the prior year, so a significant improvement on a year-over-year basis.
We continue to maintain a
solid financial position with total cash and restricted cash as of March 31, 2012 of approximately $18.4 million. As expected, we did see a significant drop in our Accounts Receivable balance this quarter. Overall, our trade A/R dropped
approximately $11 million as compared to the December 31, 2011 levels, primarily related to a reduction of A/R applicable to our service fee business following the December quarter holiday spike volume.
We also had a significant increase in property and equipment during the quarter. Most of this increase is related to the new headquarters and call center
operations. While the net operating cost per square foot of these new facilities will be relatively consistent with our prior rental costs, as we discussed last quarter, there are some nuances related to the accounting treatment for these leases.
First, both leases provide for tenant improvement allowances from the landlords. These tenant improvements are expected to total over $6
million in aggregate for both locations. While the tenant improvements are generally being funded by the landlords, from an accounting standpoint, we have recognized the full amount of these tenant improvements as capital expenditures in our
property and equipment account, and have recorded a corresponding deferred rent credit. The property and equipment portion will be amortized over the useful life of the related asset into depreciation expense, and the deferred rent credit will be
treated as a reduction in rent expense on a straight line basis over the lease terms.
In addition to these capital expenditures related to
tenant improvements, we also had other capital expenditures and capital leases totaling approximately $4 million during the March quarter to support internally developed software activity, technology, call center and distribution equipment and
furniture and fixtures. These investments have been funded generally by equipment financing and/or client reimbursements.
As you may recall,
in December of 2011, we issued a press release regarding a PFSweb share repurchase program, which authorized the Company to purchase up to $1 million of shares in the open market. While we continue to closely monitor the activity of our shares, as
of today, we have not yet repurchased any shares.
As we now look to 2012 guidance, we continue to target service fee equivalent revenue
growth of 20% as compared to 2011 levels. As Mark indicated earlier, we do believe our service fee revenue will be impacted later in the year by client programs that we are currently expecting to conclude or significantly reduce operations. We
expect the gross margins for our Service Fee segment to remain approximately 25% though, as Mike indicated earlier, we are looking for opportunities to improve on that with some higher gross margin value-added services.
We also expect SG&A to increased somewhat from 2011 as we continue to support our continued growth, and we do expect depreciation expense to increase
year-over-year in relation to the higher level of capital expenditures made in 2011 and forecasted for 2012, including the depreciation on the tenant improvements to the new facilities.
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