Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 04, 2020 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Entity Registrant Name | PFSWEB INC | |
Entity Central Index Key | 0001095315 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Shell Company | false | |
Entity Common Stock, Shares Outstanding | 19,465,753 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 14,503 | $ 12,434 |
Restricted cash | 214 | 214 |
Accounts receivable, net of allowance for doubtful accounts of $1,237 and $1,071 at March 31, 2020 and December 31, 2019, respectively | 63,898 | 72,262 |
Inventories, net of reserves of $166 and $291 at March 31, 2020 and December 31, 2019, respectively | 2,012 | 3,281 |
Other receivables | 4,019 | 3,324 |
Prepaid expenses and other current assets | 7,696 | 6,954 |
Total current assets | 92,342 | 98,469 |
PROPERTY AND EQUIPMENT: | ||
Cost | 97,582 | 99,750 |
Less: accumulated depreciation | (80,501) | (81,314) |
PROPERTY AND EQUIPMENT | 17,081 | 18,436 |
OPERATING LEASE RIGHT-OF-USE ASSETS | 34,550 | 36,403 |
IDENTIFIABLE INTANGIBLES, net | 1,012 | 1,135 |
GOODWILL | 44,910 | 45,393 |
OTHER ASSETS | 3,909 | 3,772 |
Total assets | 193,804 | 203,608 |
CURRENT LIABILITIES: | ||
Trade accounts payable | 37,455 | 44,640 |
Accrued expenses | 21,013 | 21,625 |
Current portion of operating lease liabilities | 8,728 | 8,904 |
Current portion of long-term debt and finance lease obligations | 3,040 | 2,971 |
Deferred revenues | 4,846 | 6,058 |
Total current liabilities | 75,082 | 84,198 |
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS, less current portion | 37,313 | 34,829 |
DEFERRED REVENUES, less current portion | 959 | 1,398 |
OPERATING LEASE LIABILITIES | 31,165 | 33,295 |
OTHER LIABILITIES | 3,146 | 3,046 |
Total liabilities | 147,665 | 156,766 |
COMMITMENTS AND CONTINGENCIES | ||
SHAREHOLDERS’ EQUITY: | ||
Preferred stock, $1.00 par value; 1,000,000 shares authorized; none issued or outstanding | 0 | 0 |
Common stock, $0.001 par value; 35,000,000 shares authorized; 19,499,220 and 19,465,877 issued at March 31, 2020 and December 31, 2019, respectively; and 19,465,753 and 19,432,410 outstanding at March 31, 2020 and December 31, 2019, respectively | 19 | 19 |
Additional paid-in capital | 158,664 | 158,192 |
Accumulated deficit | (110,174) | (109,943) |
Accumulated other comprehensive loss | (2,245) | (1,301) |
Treasury stock at cost, 33,467 shares | (125) | (125) |
Total shareholders’ equity | 46,139 | 46,842 |
Total liabilities and shareholders’ equity | $ 193,804 | $ 203,608 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 1,237 | $ 1,071 |
Inventories reserves | $ 166 | $ 291 |
Preferred stock, par value (in USD per share) | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 35,000,000 | 35,000,000 |
Common stock, shares issued (in shares) | 19,499,220 | 19,465,877 |
Common stock, shares outstanding (in shares) | 19,465,753 | 19,432,410 |
Treasury stock, shares (in shares) | 33,467 | 33,467 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
REVENUES: | ||
Total revenues | $ 76,699 | $ 72,149 |
COSTS OF REVENUES: | ||
Total costs of revenues | 56,707 | 54,246 |
Gross profit | 19,992 | 17,903 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 19,369 | 18,346 |
Income (loss) from operations | 623 | (443) |
INTEREST EXPENSE, net | 415 | 512 |
Income (loss) before income taxes | 208 | (955) |
INCOME TAX EXPENSE, net | 439 | 209 |
Net loss | $ (231) | $ (1,164) |
NET LOSS PER SHARE: | ||
Basic (in USD per share) | $ (0.01) | $ (0.06) |
Diluted (in USD per share) | $ (0.01) | $ (0.06) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: | ||
Basic (in shares) | 19,679 | 19,486 |
Diluted (in shares) | 19,679 | 19,486 |
COMPREHENSIVE LOSS: | ||
Net loss | $ (231) | $ (1,164) |
Foreign currency translation adjustment | (944) | 31 |
TOTAL COMPREHENSIVE LOSS | (1,175) | (1,133) |
Service fee revenue | ||
REVENUES: | ||
Total revenues | 54,298 | 51,439 |
COSTS OF REVENUES: | ||
Total costs of revenues | 34,716 | 33,958 |
Product revenue, net | ||
REVENUES: | ||
Total revenues | 7,533 | 7,499 |
COSTS OF REVENUES: | ||
Total costs of revenues | 7,123 | 7,077 |
Pass-through revenue | ||
REVENUES: | ||
Total revenues | 14,868 | 13,211 |
COSTS OF REVENUES: | ||
Total costs of revenues | $ 14,868 | $ 13,211 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Treasury Stock |
Beginning balance at Dec. 31, 2018 | $ 46,583 | $ 19 | $ 155,455 | $ (107,773) | $ (993) | $ (125) |
Beginning balance (in shares) at Dec. 31, 2018 | 19,294,296 | 33,467 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (1,164) | (1,164) | ||||
Stock-based compensation | 651 | 651 | ||||
Exercise of stock options (in shares) | 1,500 | |||||
Exercise of stock options | 2 | 2 | ||||
Foreign currency translation adjustment, net of taxes | 31 | 31 | ||||
Ending balance (in shares) at Mar. 31, 2019 | 19,295,796 | 33,467 | ||||
Ending balance at Mar. 31, 2019 | 46,103 | $ 19 | 156,108 | (108,937) | (962) | $ (125) |
Beginning balance at Dec. 31, 2019 | 46,842 | $ 19 | 158,192 | (109,943) | (1,301) | $ (125) |
Beginning balance (in shares) at Dec. 31, 2019 | 19,465,877 | 33,467 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (231) | (231) | ||||
Stock-based compensation | $ 545 | 545 | ||||
Issuance of restricted stock (in shares) | 33,343 | |||||
Issuance of restricted stock | $ 0 | |||||
Tax withholding on restricted stock | (73) | (73) | ||||
Foreign currency translation adjustment, net of taxes | (944) | |||||
Ending balance (in shares) at Mar. 31, 2020 | 19,499,220 | 33,467 | ||||
Ending balance at Mar. 31, 2020 | $ 46,139 | $ 19 | $ 158,664 | $ (110,174) | $ (2,245) | $ (125) |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (231) | $ (1,164) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 2,285 | 2,715 |
Deferred income taxes | 183 | 189 |
Stock-based compensation expense | 545 | 651 |
Other | 20 | 1 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 7,623 | 19,841 |
Inventories | 1,269 | 1,973 |
Prepaid expenses, other receivables and other assets | (1,673) | (34) |
Operating leases | (367) | 13 |
Trade accounts payable, deferred revenues, accrued expenses and other liabilities | (9,374) | (17,818) |
Net cash provided by operating activities | 280 | 6,367 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (954) | (911) |
Proceeds from sale of property and equipment | 142 | 0 |
Net cash used in investing activities | (812) | (911) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net proceeds from issuance of common stock | 0 | 2 |
Taxes paid on behalf of employees for withheld shares | (73) | 0 |
Payments on finance lease obligations | (319) | (495) |
Payments on revolving loan | (34,526) | (42,428) |
Borrowings on revolving loan | 37,594 | 35,653 |
Payments on other debt | (482) | (256) |
Borrowings on other debt | 755 | 1,616 |
Net cash provided by (used in) financing activities | 2,949 | (5,908) |
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (348) | (288) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 2,069 | (740) |
Cash and cash equivalents, beginning of period | 12,434 | 15,419 |
Restricted cash, beginning of period | 214 | 207 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 12,648 | 15,626 |
Cash and cash equivalents, end of period | 14,503 | 14,679 |
Restricted cash, end of period | 214 | 207 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | 14,717 | 14,886 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Cash paid for income taxes | 352 | 101 |
Cash paid for interest | 432 | 588 |
Non-cash investing and financing activities: | ||
Property and equipment acquired under long-term debt and finance leases | $ 370 | $ 0 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of PFSweb, Inc. and its subsidiaries have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and include all normal and recurring adjustments necessary to present fairly the unaudited condensed consolidated balance sheets, statements of operations and comprehensive loss, statements of shareholders' equity, and statements of cash flows for the periods indicated. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the SEC. This report should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019 . We refer to PFSweb, Inc. and its subsidiaries collectively as “PFSweb,” the “Company,” “us,” “we” and “our” in these unaudited condensed consolidated financial statements. Results of our operations for interim periods may not be indicative of results for the full fiscal year. We reclassify certain prior year amounts, as applicable, to conform to the current year presentation. Recent Developments We are closely monitoring the impact of the 2019 novel coronavirus, or COVID-19, on all aspects of our business. COVID-19 was declared a global pandemic by the World Health Organization on March 11, 2020 and the President of the United States declared the COVID-19 outbreak a national emergency. While the COVID-19 pandemic has not had a material adverse impact on our operations to date, the future impacts of the pandemic and any resulting economic impact are largely unknown and rapidly evolving. We have taken a number of precautionary measures designed to help minimize the risk of the spread of the virus to our employees and adjusted our operations wherever necessary to help ensure a safe environment for our staff across business functions. Beginning in April 2020, we began to receive requests from a limited number of our clients to assist them with extended payment terms and/or pricing adjustments for a short time period. We have also begun to see delays in certain limited projects and requests from certain clients to reduce current staffing on our time and materials projects. While we believe this will have a short-term impact on cash flow and revenues, we do not currently anticipate these identified modifications to date will have a material impact to our overall business and financial results. As a result of the impact of COVID-19, many businesses have or will be experiencing short-term or long-term liquidity issues. Based on our current expectations, we believe we have the appropriate financial structure in place to support our own business operations. However, we do expect increased potential risk from the viability of clients. We have and will continue to closely monitor our clients’ financial results, payment patterns and business updates in an effort to minimize the potential impact of our credit risk. It is possible that the COVID-19 pandemic, the measures taken by the governments affected and the resulting economic impact may cause disruptions and impact our business as we continue to move through the fiscal year which may materially and adversely affect the Company’s results of operations, cash flows and financial position as well as that of our customers. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted. The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States’ economy and fund a nationwide effort to curtail the effect of COVID-19. The Company plans to make use of the allowance granted under section 2302 of the CARES Act, which permits employers to forgo timely payment of the employer portions of Social Security and RRTA taxes that would otherwise be due from March 27 through December 31, 2020, without penalty or interest charges. Similarly, the UK and Belgium governments have granted businesses the option to defer the payment of certain value-added tax ("VAT") amounts. The Company intends to elect this option and we continue to examine the impact that the CARES Act may have on our business. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Use of Estimates The preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. The recognition and allocation of certain revenues and selling, general and administrative expenses in these unaudited condensed consolidated financial statements also require management estimates and assumptions. Estimates and assumptions about future events and their effects cannot be determined with certainty. The Company bases its estimates on historical experience and various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as the operating environment changes. These changes have been included in the unaudited condensed consolidated financial statements as soon as they became known. In addition, management is periodically faced with uncertainties, the outcomes of which are not within its control and will not be known for prolonged periods of time. Based on a critical assessment of accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes the Company’s unaudited condensed consolidated financial statements are fairly stated in accordance with US GAAP and provide a fair presentation of the Company’s financial position and results of operations. Furthermore, we considered the impact of the COVID-19 pandemic on the use of estimates and assumptions used for financial reporting and determined that there was no adverse material impact to our results of operations for the first quarter of 2020; however, the extent and duration of future impacts of the COVID-19 pandemic and any resulting economic impact are largely unknown and difficult to predict due to these unknown factors which may have a material impact on our financial position and results of operations in the future. For a complete set of our significant accounting policies, refer to our Annual Report on Form 10-K for the year ended December 31, 2019 . During the three -month periods ended March 31, 2020 , there were no significant changes to our significant accounting policies. Impact of Recently Issued Accounting Standards Pronouncements Recently Adopted In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill impairment” (“ASU 2017-04”), which removes Step 2 of the goodwill impairment test. A goodwill impairment will now be determined by the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019, with early adoption permitted. The adoption of ASU 2017-04 did not have a material impact on our condensed consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15 " Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract; Disclosures for Implementation Costs Incurred for Internal-Use Software and Cloud Computing Arrangements " (“ASU 2018-15”), which aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software under ASC Subtopic 350-40, in order to determine which costs to capitalize and recognize as an asset. ASU 2018-15 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019, and can be applied either prospectively to implementation costs incurred after the date of adoption or retrospectively to all arrangements. We have adopted ASU 2018-15 on January 1, 2020 on a prospective basis. The adoption of ASU 2018-15 did not have a material impact on our condensed consolidated financial statements. Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, " Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ," ("ASU 2016-13") which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019 for all public entities, excluding smaller reporting companies, and after December 15, 2022 for smaller reporting companies. It requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. We will adopt ASU 2016-13 on January 1, 2023. We are currently in the process of evaluating the impact of the adoption of ASU 2016-13 on our condensed consolidated financial statements. |
Revenue from Contracts with Cli
Revenue from Contracts with Clients and Customers | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Clients and Customers | Revenue from Contracts with Clients and Customers The following table presents our revenues, excluding sales and usage-based taxes, disaggregated by revenue source (in thousands): Three Months Ended Three Months Ended PFS Operations LiveArea Professional Services Total PFS Operations LiveArea Professional Services Total Revenues: Service fee revenue $ 33,431 $ 20,867 $ 54,298 $ 33,055 $ 18,384 $ 51,439 Product revenue, net 7,533 — 7,533 7,499 — 7,499 Pass-through revenue 13,956 912 14,868 12,876 335 13,211 Total revenues $ 54,920 $ 21,779 $ 76,699 $ 53,430 $ 18,719 $ 72,149 The following table presents our revenues, excluding sales and usage-based taxes, disaggregated by timing of revenue recognition (in thousands): Three Months Ended Three Months Ended PFS Operations LiveArea Professional Services Total PFS Operations LiveArea Professional Services Total Revenues: Over time $ 47,387 $ 21,779 $ 69,166 $ 45,931 $ 18,719 $ 64,650 Point-in-time 7,533 — 7,533 7,499 — 7,499 Total revenues $ 54,920 $ 21,779 $ 76,699 $ 53,430 $ 18,719 $ 72,149 The following table presents our revenues, excluding sales and usage-based taxes, disaggregated by region (in thousands): Three Months Ended Three Months Ended PFS Operations LiveArea Professional Services Total PFS Operations LiveArea Professional Services Total Revenues by region: North America $ 45,098 $ 19,197 $ 64,295 $ 43,602 $ 16,718 $ 60,320 Europe 9,822 2,582 12,404 9,828 2,001 11,829 Total revenues $ 54,920 $ 21,779 $ 76,699 $ 53,430 $ 18,719 $ 72,149 Contract Assets and Contract Liabilities Changes in costs to fulfill contract assets during the period decreased $0.6 million from December 31, 2019 to March 31, 2020 , primarily due to a decrease of approximately $1.7 million for amortization and recognition of costs, offset by approximately $1.1 million from new projects in the three months ended March 31, 2020 . Costs to fulfill contract assets relate to deferred costs, which are included within other current assets and/or other assets, and software development costs, which are included within property and equipment, in our condensed consolidated balance sheets. Changes in contract liabilities during the period decreased $2.2 million from December 31, 2019 to March 31, 2020 , primarily due to a decrease of approximately $4.4 million for amortization and recognition of revenue, offset by approximately $2.2 million from new projects in the three months ended March 31, 2020 . Contract losses recognized for the three months ended March 31, 2020 were not material. Accrued contract liabilities below are included within accrued expenses in our condensed consolidated balance sheets. The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables, and customer advances and deposits (contract liabilities) on the condensed consolidated balance sheets. Changes in the contract asset and liability balances during the three months ended March 31, 2020 were not materially impacted by any other factors. Contract balances consist of the following (in thousands): March 31, 2020 December 31, 2019 Contract Assets Trade accounts receivable, net $ 62,462 $ 71,183 Unbilled accounts receivable 1,436 1,079 Costs to fulfill 4,293 4,875 Total contract assets $ 68,191 $ 77,137 Contract Liabilities Accrued contract liabilities $ 1,303 $ 1,806 Deferred revenue 5,805 7,456 Total contract liabilities $ 7,108 $ 9,262 Remaining performance obligations represent the transaction price of firm orders for which work has not yet been performed. This amount does not include 1) contracts that are less than one year in duration, 2) contracts for which we recognize revenue based on the right to invoice for services performed, or 3) variable consideration allocated entirely to a wholly unsatisfied performance obligation. Much of our revenue qualifies for one of these exemptions. As of March 31, 2020 , the aggregate amount of the transaction price allocated to remaining performance obligations for contracts with an original expected duration of one year or more was $11.7 million . We expect to recognize revenue on approximately 87% of the remaining performance obligations in 2020 , 12% in 2021 , and the remaining recognized thereafter. |
Inventory Financing
Inventory Financing | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Inventory Financing | Inventory Financing Supplies Distributors has a short-term credit facility with IBM Credit LLC and its assignees (“IBM Credit Facility”) to finance its purchase and distribution of Ricoh products in the United States, providing financing for eligible Ricoh inventory and certain receivables up to $7.5 million , as per amended agreement. The agreement has no stated maturity date and provides either party the ability to exit the facility following a 90 -day notice. Given the structure of this facility and as outstanding balances, which represent inventory purchases, are repaid within twelve months, we have classified the outstanding amounts under this facility, which were $3.7 million and $3.0 million as of March 31, 2020 and December 31, 2019 , respectively, as trade accounts payable in the condensed consolidated balance sheets. As of March 31, 2020 , Supplies Distributors had $0.3 million of available credit under this facility. The credit facility contains cross default provisions, various restrictions upon the ability of Supplies Distributors to, among other things, merge, consolidate, sell assets, incur indebtedness, make loans and payments to related parties (including entities directly or indirectly owned by PFSweb, Inc.), provide guarantees, make investments and loans, pledge assets, make changes to capital stock ownership structure and pay dividends. The credit facility also contains financial covenants, such as annualized revenue to working capital, net profit after tax to revenue, and total liabilities to tangible net worth, as defined, and is secured by certain of the assets of Supplies Distributors, as well as a collateralized guaranty of PFSweb. Additionally, PFSweb is required to maintain a minimum Subordinated Note receivable balance from Supplies Distributors of $1.0 million , as per amended agreement. Borrowings under the credit facility accrue interest, after a defined free financing period, at prime rate plus 0.5% , which resulted in a weighted average interest rate of 5.25% as of March 31, 2020 and December 31, 2019 . As of March 31, 2020 , the Company was in compliance with all financial covenants. |
Debt and Finance Lease Obligati
Debt and Finance Lease Obligations | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt and Finance Lease Obligations | Debt and Finance Lease Obligations Outstanding debt and finance lease obligations consist of the following (in thousands): March 31, 2020 December 31, 2019 U.S. Credit Agreement Revolver $ 33,268 $ 30,200 Equipment loan 5,262 5,426 Debt issuance costs (283 ) (303 ) Finance Leases 1,852 2,177 Other 254 300 Total 40,353 37,800 Less current portion of long-term debt 3,040 2,971 Long-term debt, less current portion $ 37,313 $ 34,829 U.S. Credit Agreement On November 1, 2018 , we entered into Amendment No. 1 to our Credit Agreement with Regions Bank (the “Amended Facility”). The Amended Facility provided for an increase in availability of our revolving loans to $60.0 million , with the ability for a further increase of $20.0 million to $80.0 million , and the elimination of the term loan. Amounts outstanding under the term loan were reconstituted as revolving loans. The Amended Facility also extended the maturity date to November 1, 2023 and provided for additional $10.0 million in equipment financing. As of March 31, 2020 , we had $11.2 million of available credit under the revolving loan facility. As of March 31, 2020 and December 31, 2019 , the weighted average interest rate on the revolving loan facility was 3.10% and 3.96% , respectively. As of March 31, 2020 , we had $4.2 million of available credit in equipment financing. As of March 31, 2020 , we were in compliance with all debt covenants. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic net loss per common share was computed by dividing net loss by the weighted-average number of common shares outstanding for the reporting period. In periods when we recognize a net loss, we exclude the impact of outstanding common stock equivalents from the diluted loss per share calculation as their inclusion would have an antidilutive effect. As of March 31, 2020 and March 31, 2019 , we had outstanding common stock equivalents of approximately 2.3 million and 1.8 million , respectively, that have been excluded from the calculations of diluted earnings per share attributable to common stockholders because their effect would have been antidilutive. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Our segments are comprised of strategic businesses that are defined by the service offerings they provide and consist of PFS Operations (which provides client services in relation to the customer physical experience, such as order management (OMS), order fulfillment, customer care and financial services) and LiveArea Professional Services (which provides client services in relation to the digital experience of shopping online, such as strategic commerce consulting, strategy, design and digital marketing services and technology services). Each segment is led by a separate Business Unit Executive who reports directly to our Chief Operating Decision Maker. The following table presents information concerning operations by segment (in thousands): Three Months Ended 2020 2019 Revenues: PFS Operations $ 54,920 $ 53,430 LiveArea Professional Services 21,779 18,719 Total revenues $ 76,699 $ 72,149 Business unit direct contribution: PFS Operations $ 3,092 $ 2,527 LiveArea Professional Services 3,182 1,873 Total business unit direct contribution 6,274 4,400 Unallocated corporate expenses (5,651 ) (4,843 ) Income (loss) from operations $ 623 $ (443 ) Depreciation and amortization: PFS Operations $ 1,774 $ 2,052 LiveArea Professional Services 223 331 Unallocated corporate expenses 288 332 Total depreciation and amortization $ 2,285 $ 2,715 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | . Commitments and Contingencies The Company is subject to claims in the ordinary course of business, including claims of alleged infringement by the Company or its subsidiaries of the patents, trademarks and other intellectual property rights of third parties. The Company is generally required to indemnify its service fee clients against any third party claims asserted against such clients alleging infringement by the Company of the patents, trademarks and other intellectual property rights of third parties. In the opinion of management, any liabilities resulting from these claims, would not have a material adverse effect on the Company’s financial position or results of operations. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event On April 27, 2020, we granted 428,531 fully-vested shares of common stock to certain executives under the 2018 Employee Stock and Incentive Plan. We will recognize related stock-based compensation expense of approximately $1.6 million in the second quarter of 2020. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements of PFSweb, Inc. and its subsidiaries have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and include all normal and recurring adjustments necessary to present fairly the unaudited condensed consolidated balance sheets, statements of operations and comprehensive loss, statements of shareholders' equity, and statements of cash flows for the periods indicated. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the SEC. This report should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019 . We refer to PFSweb, Inc. and its subsidiaries collectively as “PFSweb,” the “Company,” “us,” “we” and “our” in these unaudited condensed consolidated financial statements. Results of our operations for interim periods may not be indicative of results for the full fiscal year. We reclassify certain prior year amounts, as applicable, to conform to the current year presentation |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. The recognition and allocation of certain revenues and selling, general and administrative expenses in these unaudited condensed consolidated financial statements also require management estimates and assumptions. Estimates and assumptions about future events and their effects cannot be determined with certainty. The Company bases its estimates on historical experience and various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as the operating environment changes. These changes have been included in the unaudited condensed consolidated financial statements as soon as they became known. In addition, management is periodically faced with uncertainties, the outcomes of which are not within its control and will not be known for prolonged periods of time. Based on a critical assessment of accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes the Company’s unaudited condensed consolidated financial statements are fairly stated in accordance with US GAAP and provide a fair presentation of the Company’s financial position and results of operations. Furthermore, we considered the impact of the COVID-19 pandemic on the use of estimates and assumptions used for financial reporting and determined that there was no adverse material impact to our results of operations for the first quarter of 2020; however, the extent and duration of future impacts of the COVID-19 pandemic and any resulting economic impact are largely unknown and difficult to predict due to these unknown factors which may have a material impact on our financial position and results of operations in the future. |
Impact of Recently Issued Accounting Standards | Impact of Recently Issued Accounting Standards Pronouncements Recently Adopted In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill impairment” (“ASU 2017-04”), which removes Step 2 of the goodwill impairment test. A goodwill impairment will now be determined by the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019, with early adoption permitted. The adoption of ASU 2017-04 did not have a material impact on our condensed consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15 " Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract; Disclosures for Implementation Costs Incurred for Internal-Use Software and Cloud Computing Arrangements " (“ASU 2018-15”), which aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software under ASC Subtopic 350-40, in order to determine which costs to capitalize and recognize as an asset. ASU 2018-15 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019, and can be applied either prospectively to implementation costs incurred after the date of adoption or retrospectively to all arrangements. We have adopted ASU 2018-15 on January 1, 2020 on a prospective basis. The adoption of ASU 2018-15 did not have a material impact on our condensed consolidated financial statements. Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, " Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ," ("ASU 2016-13") which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019 for all public entities, excluding smaller reporting companies, and after December 15, 2022 for smaller reporting companies. It requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. We will adopt ASU 2016-13 on January 1, 2023. We are currently in the process of evaluating the impact of the adoption of ASU 2016-13 on our condensed consolidated financial statements. |
Revenue from Contracts with C_2
Revenue from Contracts with Clients and Customers (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Revenues Disaggregated by Revenue Source and Region | The following table presents our revenues, excluding sales and usage-based taxes, disaggregated by revenue source (in thousands): Three Months Ended Three Months Ended PFS Operations LiveArea Professional Services Total PFS Operations LiveArea Professional Services Total Revenues: Service fee revenue $ 33,431 $ 20,867 $ 54,298 $ 33,055 $ 18,384 $ 51,439 Product revenue, net 7,533 — 7,533 7,499 — 7,499 Pass-through revenue 13,956 912 14,868 12,876 335 13,211 Total revenues $ 54,920 $ 21,779 $ 76,699 $ 53,430 $ 18,719 $ 72,149 The following table presents our revenues, excluding sales and usage-based taxes, disaggregated by timing of revenue recognition (in thousands): Three Months Ended Three Months Ended PFS Operations LiveArea Professional Services Total PFS Operations LiveArea Professional Services Total Revenues: Over time $ 47,387 $ 21,779 $ 69,166 $ 45,931 $ 18,719 $ 64,650 Point-in-time 7,533 — 7,533 7,499 — 7,499 Total revenues $ 54,920 $ 21,779 $ 76,699 $ 53,430 $ 18,719 $ 72,149 The following table presents our revenues, excluding sales and usage-based taxes, disaggregated by region (in thousands): Three Months Ended Three Months Ended PFS Operations LiveArea Professional Services Total PFS Operations LiveArea Professional Services Total Revenues by region: North America $ 45,098 $ 19,197 $ 64,295 $ 43,602 $ 16,718 $ 60,320 Europe 9,822 2,582 12,404 9,828 2,001 11,829 Total revenues $ 54,920 $ 21,779 $ 76,699 $ 53,430 $ 18,719 $ 72,149 |
Summary of Contract Balances | Contract balances consist of the following (in thousands): March 31, 2020 December 31, 2019 Contract Assets Trade accounts receivable, net $ 62,462 $ 71,183 Unbilled accounts receivable 1,436 1,079 Costs to fulfill 4,293 4,875 Total contract assets $ 68,191 $ 77,137 Contract Liabilities Accrued contract liabilities $ 1,303 $ 1,806 Deferred revenue 5,805 7,456 Total contract liabilities $ 7,108 $ 9,262 |
Debt and Finance Lease Obliga_2
Debt and Finance Lease Obligations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Debt and Finance Lease Obligations | Outstanding debt and finance lease obligations consist of the following (in thousands): March 31, 2020 December 31, 2019 U.S. Credit Agreement Revolver $ 33,268 $ 30,200 Equipment loan 5,262 5,426 Debt issuance costs (283 ) (303 ) Finance Leases 1,852 2,177 Other 254 300 Total 40,353 37,800 Less current portion of long-term debt 3,040 2,971 Long-term debt, less current portion $ 37,313 $ 34,829 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Summary of Segment Information | The following table presents information concerning operations by segment (in thousands): Three Months Ended 2020 2019 Revenues: PFS Operations $ 54,920 $ 53,430 LiveArea Professional Services 21,779 18,719 Total revenues $ 76,699 $ 72,149 Business unit direct contribution: PFS Operations $ 3,092 $ 2,527 LiveArea Professional Services 3,182 1,873 Total business unit direct contribution 6,274 4,400 Unallocated corporate expenses (5,651 ) (4,843 ) Income (loss) from operations $ 623 $ (443 ) Depreciation and amortization: PFS Operations $ 1,774 $ 2,052 LiveArea Professional Services 223 331 Unallocated corporate expenses 288 332 Total depreciation and amortization $ 2,285 $ 2,715 |
Revenue from Contracts with C_3
Revenue from Contracts with Clients and Customers - Summary of Revenues Disaggregated (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | $ 76,699 | $ 72,149 |
North America | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 64,295 | 60,320 |
Europe | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 12,404 | 11,829 |
PFS Operations | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 54,920 | 53,430 |
PFS Operations | North America | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 45,098 | 43,602 |
PFS Operations | Europe | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 9,822 | 9,828 |
LiveArea Professional Services | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 21,779 | 18,719 |
LiveArea Professional Services | North America | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 19,197 | 16,718 |
LiveArea Professional Services | Europe | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 2,582 | 2,001 |
Service fee revenue | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 54,298 | 51,439 |
Service fee revenue | PFS Operations | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 33,431 | 33,055 |
Service fee revenue | LiveArea Professional Services | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 20,867 | 18,384 |
Product revenue, net | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 7,533 | 7,499 |
Product revenue, net | PFS Operations | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 7,533 | 7,499 |
Product revenue, net | LiveArea Professional Services | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 0 | 0 |
Pass-through revenue | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 14,868 | 13,211 |
Pass-through revenue | PFS Operations | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 13,956 | 12,876 |
Pass-through revenue | LiveArea Professional Services | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 912 | 335 |
Over time | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 69,166 | 64,650 |
Over time | PFS Operations | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 47,387 | 45,931 |
Over time | LiveArea Professional Services | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 21,779 | 18,719 |
Point-in-time | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 7,533 | 7,499 |
Point-in-time | PFS Operations | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | 7,533 | 7,499 |
Point-in-time | LiveArea Professional Services | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated revenue | $ 0 | $ 0 |
Revenue from Contracts with C_4
Revenue from Contracts with Clients and Customers - Additional Information (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Changes in costs to fulfill contract assets | $ 0.6 |
Amortization of costs to fulfill contract assets | 1.7 |
Increase in costs to fulfill contracts with customers from new projects | 1.1 |
Change in contract liabilities | (2.2) |
Change in contract liabilities from amortization and recognition and recognition of revenue | 4.4 |
Increase in contract liabilities for new projects | $ 2.2 |
Revenue from Contracts with C_5
Revenue from Contracts with Clients and Customers - Summary of Contract Balances (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Contract Assets | ||
Trade accounts receivable, net | $ 62,462 | $ 71,183 |
Unbilled accounts receivable | 1,436 | 1,079 |
Costs to fulfill | 4,293 | 4,875 |
Total contract assets | 68,191 | 77,137 |
Contract Liabilities | ||
Accrued contract liabilities | 1,303 | 1,806 |
Deferred revenue | 5,805 | 7,456 |
Total contract liabilities | $ 7,108 | $ 9,262 |
Revenue from Contracts with C_6
Revenue from Contracts with Clients and Customers - Additional Information, Performance Obligation (Details) $ in Millions | Mar. 31, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligation, percentage | 87.00% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation, expected timing of satisfaction | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligation, percentage | 12.00% |
Performance obligation, amount | $ 11.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation, expected timing of satisfaction | 12 months |
Inventory Financing - Additiona
Inventory Financing - Additional Information (Details) - Line of Credit - Short Term Credit Facility - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Line of Credit Facility [Line Items] | ||
Maximum credit under credit agreement | $ 7.5 | |
Termination notice period | 90 days | |
Outstanding borrowings | $ 3.7 | $ 3 |
Available credit under credit agreement | 0.3 | |
Subordinated note outstanding, minimum limit | $ 1 | |
Weighted average interest rate | 5.25% | 5.25% |
Prime Rate | ||
Line of Credit Facility [Line Items] | ||
Variable rate basis | 0.50% |
Debt and Finance Lease Obliga_3
Debt and Finance Lease Obligations - Summary of Outstanding Debt and Capital Lease Obligations (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Finance Leases | $ 1,852 | $ 2,177 |
Other | 254 | 300 |
Debt and capital lease obligation | 40,353 | 37,800 |
Less current portion of long-term debt | 3,040 | 2,971 |
Long-term debt, less current portion | 37,313 | 34,829 |
U.S. Credit Agreement | ||
Debt Instrument [Line Items] | ||
Debt issuance costs | (283) | (303) |
U.S. Credit Agreement | Revolver | ||
Debt Instrument [Line Items] | ||
U.S. Credit Agreement | 33,268 | 30,200 |
U.S. Credit Agreement | Equipment loan | ||
Debt Instrument [Line Items] | ||
U.S. Credit Agreement | $ 5,262 | $ 5,426 |
Debt and Finance Lease Obliga_4
Debt and Finance Lease Obligations - U.S. Credit Agreement - Additional Information (Details) - U.S. Credit Agreement - Revolving Loan Facility - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Nov. 01, 2018 |
Line of Credit Facility [Line Items] | |||
Availability under credit agreement | $ 60,000,000 | ||
Available increase under credit agreement | 20,000,000 | ||
Availability under credit agreement after available increase under credit agreement | 80,000,000 | ||
Availability under credit agreement for equipment purchases | $ 10,000,000 | ||
Available credit under credit agreement | $ 11,200,000 | ||
Weighted average interest rate on outstanding borrowings | 3.10% | 3.96% | |
Available credit under credit agreement for equipment purchases | $ 4,200,000 |
Earnings (Loss) Per Share - Add
Earnings (Loss) Per Share - Additional Information (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Outstanding common stock excluded from calculations of diluted earnings per share (in shares) | 2.3 | 1.8 |
Segment Information - Summary o
Segment Information - Summary of Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment Reporting Information [Line Items] | ||
Total revenues | $ 76,699 | $ 72,149 |
Income (loss) from operations | 623 | (443) |
Depreciation and amortization | 2,285 | 2,715 |
PFS Operations | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 54,920 | 53,430 |
LiveArea Professional Services | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 21,779 | 18,719 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 76,699 | 72,149 |
Income (loss) from operations | 6,274 | 4,400 |
Operating Segments | PFS Operations | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 54,920 | 53,430 |
Income (loss) from operations | 3,092 | 2,527 |
Depreciation and amortization | 1,774 | 2,052 |
Operating Segments | LiveArea Professional Services | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 21,779 | 18,719 |
Income (loss) from operations | 3,182 | 1,873 |
Depreciation and amortization | 223 | 331 |
Unallocated Corporate | ||
Segment Reporting Information [Line Items] | ||
Income (loss) from operations | (5,651) | (4,843) |
Depreciation and amortization | $ 288 | $ 332 |
Subsequent Event (Details)
Subsequent Event (Details) - Restricted Stock - Subsequent Event $ in Millions | Apr. 27, 2020USD ($)shares |
Subsequent Event [Line Items] | |
Awards granted (in shares) | shares | 428,531 |
Share-based compensation expense | $ | $ 1.6 |
Uncategorized Items - pfsw-2020
Label | Element | Value |
Restricted Cash | us-gaap_RestrictedCash | $ 207,000 |
Restricted Cash | us-gaap_RestrictedCash | $ 214,000 |