PFSW - Earnings call transcript Q1 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, everyone, and thank you for participating in today's conference call to discuss PFSweb's Q1 2022 results.

Joining us today is PFSweb's CEO, Mike Willoughby; the COO and President PFS, Zach Thomann; the company's CFO, Tom Madden; and the company's outside Investor Relations adviser, Jackie Keshner with Gateway Group.

Following their remarks, we'll be opening the call for your questions. I would now like to turn the call over to Ms. Keshner for some introductory comments.

Jackie Keshner

you. Thank

release, forward-looking further, statements. to conference will, All than facts go remarks the call guidance, would anticipate, historical the forward-looking replay way words concerning link statements are confidence, section as is of today replay starting I targets, I expressed we expect, make this also will Any through like redistribution, following other believe, projects remind website PFSweb Before available call estimate, of provided like The intend, well that the found statements. in forward-looking presentation in webcast website XXXX, statements, XXnd, the this other at PFSweb as press as in and of be without strictly identify certain expressions can our statement. any disclaimer Investors X:XX full non-GAAP rebroadcast under are typically safe The similar prohibited. everyone for used filings June well this in today's in relating would be to metrics p.m. and call harbor at will XX-K Eastern as used available statements. company's the to company's be in the this A forward-looking retransmission to Time. pfscommerce.com. on available consent via written or

Mike Now Mr. Mike? Willoughby. turn Executive call the like Officer I to would of over to PFSweb, Chief the

Mike Willoughby

and Jackie, afternoon everyone. you, good Thank

NASDAQ I and quarter report note we our reporting would with rules us Before discussing and XXXX With become allowed to our has our compliance in operational filings. full today's financial today SEC to like and financial quarter, the the with are filed XX-Q listing filing for that our obligations. performance of complete first current

delayed process last with business recent financial Merkle have by to global closing implications sale year. tax previously been we and the associated of As LiveArea labor intensive the our have results complex disclosed

and anticipated current remain we SEC our requirements Our worked reporting process bring NASDAQ and and our the has within compliant team with complete timeline filings reporting expect forward. tirelessly to going to

first highlights. our to turning Now quarter

operational our year-over-year service fee demand momentum impacted to robust performance LiveArea bottom XXXX. current process to further our efficiencies and structure expenses with we Our Across as create the related client We optimizing engagements, meet maintained we to progress restructuring current otherwise for align from fulfillment our new while PFS for line ramp transaction our and fulfillment committed our remain with base client the quarter, equivalent enhancing client our growth continue value we operational within we strategic our made cost better to revenue drove PFS to and our operational growing capabilities, our our have framework. our business, solid alternatives base.

become and changing has from shopping by e-commerce Adobe's to grown are continued estimates In relative to article the pre-pandemic spend expected a more McKinsey March, Economy Digital oriented, to trends. fulfillment e-commerce adapts business $X our XX% penetration benefit we in XXXX that As tailwinds recent trillion reported online has significant and have Index to consumer consumers levels. record that

two now evolved increased rather our qualities has we've global fulfillment opened expand highly new are a years, provide to to requires a off brands PFS three XXXX, the serve strategy quickly coming competitive our have These and to multi-node of have we clients, McKinsey environment they to we than and fulfillment services a to of with multi-node providers This distribution preferences. advantage. Operations operations our fulfillment the offer in have leverage options. the effective so behavior ability shopping that we over the operate agility and three XX% of expectation fulfillment our our at support efficiency, reached network to clients. over capacity consider in demonstrating core centers past baseline consumer each As fulfillment tailored branded consumers consumer year and shipping for fulfillment record as continued reports our three-day swiftly two

fulfillment the in year. quarter this In fact, second third track are open we on our of Las center to Vegas

year Las incremental Vegas and first strong opening with operations operational fulfillment the and be and expanding our e-commerce additional continually highlights. of I'm to services. will over and strengthening ramping a share center. fulfillment support later Just proud But our very details after on Zach our execution, call our team's capacity

to we have keep environment. we the inflationary fulfillment As the with strong steps mitigate of impact also pace trends, wage demand taken broader

client leveraging late markets, productivity to in addition more contract labor first programs additional strategy, pricing implemented In multi-node favorable our changes quarter. us the certain we to ship and beginning to allows which enhancements

headquarters, operational we structural will continue pricing business. and remain expect We of our our rest of corporate these possible structure of throughout continued year. end, these and optimization our is with QX This and as through in underway to in which work as benefit changes quickly to cost focus aim the place line this disposition we on to the the complete our To with the year. this we put

building transitioned office already remotely performed operation our functions with be We sublease to most landlord or co-located our and continue we or corporate centers arrangements have production for the to pursue itself. of with our headquarters a

further. With have agreement obligations call, QX our while PFS of Markel core or we have structure a transition XXXX adjustments significant as recent complete as improving TSA to corporate LiveArea related addition, we made discussed reductions, services we our In operational overhead concluded our supporting and and to and transition all business the April. TSA work on full-year our cost under

and is us, positioning and in for momentum alternatives growth behind the business sales focus our strategic strengthen client core process. the fulfillment our With our LiveArea the sale to sustain of

the work review of for James alternatives a We on continue with range strategic to full of Raymond PFS.

believe we return previously the represents shareholders. to capital communicated, As significant efficient way most we our to completing transaction we second to a hold that

attractive work strategic opportunities in to believe optimize Tom specific And priority. first platform I'll turn ongoing top to timeline an While discuss our and not Tom? this our this we has business to do potential completing completion PFS have at remains point, strengthen our further for financials it disclose the that, and detail. quarter over a made it process with to we

Tom Madden

Mike, everyone. you, afternoon and Thank good

As for our SFE release, period. PFS or you will PFS fee $XX.X press year-ago Operations business compared service the million revenue presentation from equivalent X% the $X.X revenue QX our non-GAAP to during see in the million, XXXX increased to

revenue contributions product XXXX As its arrangement a quarter Effective marked we terminated agreement our have This client revenue Ricoh. was confusion restructuring part eliminate some final XXXX and of of financial our comparative previously our analysis March our discontinue the in service product of use fee to the revenue as we may model operations, as with Ricoh as short-term Ricoh term revenue Ricoh’s future. discontinued. our result from disclosed, continued product lead and the distributor in equivalent QX the of with was from P&L

believe And this and results. past consolidated financial over a due presentations. our benefit change will significantly minimal of importantly the this to we will ultimately impact a several program clarify as However, EBITDA adjusted most on reminder comparative years, have the this reduced size our

period. of margin a approximately Our revenue, in PFS year of was gross ago profit compared gross PFS approximately fee service XX% XXXX margin Operations to the XX% QX profit

will XXXX decreased of with overall are result, continued We've our contact for margins which gross and XX%. likely see industry-wide wage range this drive margin also that the gross XX% to impacts shift these relative pressures. between percentage as and gross core to center Our margins ongoing a in more primarily to long-term fulfillment of reflects revenues services, to line tend

throughout contracts programs. existing pricing earlier, we permanent increases in implemented Mike help client instituted remainder the year, to QX price throughout and client inflation the or adjustments As impacts including in and wage new selected additional of on QX and previewed late surcharges both offset

macroeconomic these will revenue or until do we year, these year. ongoing impact as to not productivity While and we greater through begin us QX adjustments, profitability later help price pressures and enhancements changes with most move this operate the cost controls, believe mitigate of

aligning To While we are we'll are QX to to end, to the wage compared effect. our committed less with building company our This We to similar agility. oriented reduce desired structure having macro positive our this we vigilant seeing and additional remain our remain year and further any with and pressures and SG&A respond fulfillment our work volatility, business. smaller reducing headquarters this our organizational associated transition measures with structure. previous holding overall later cost overhead more our by corporate corporate closely includes

year actual operations EBITDA adjusted partially non-restructuring from SG&A consolidated in margin negative XXXX an The $X.X Our the in costs. gross impact primarily period. to a was earlier, decrease ago reduced million continuing EBITDA related ongoing and the compared by quarter discussed offset $X.X the contribution of of first reflects adjusted million,

under acquired exclusive leases Our million. property finance capital QX, $X.X equipment PFS expenditures of were for in and approximately debt and

to facilities, $XX to anticipated new our we support million between range expect contracts, to $X capital to XXXX we As growth opportunities continue expenditures future continue and million.

XX cash our balance $XXX year. initiatives XXXX, over Our comfortable million $X.X throughout We approximately sheet liquidity with position includes of as we our of very the growth and as of to strong million remain debt. progress seek only March

We year, continue sales the growth and optimistic X% to XX% reiterate strong As that by revenue we targeted from Operations we can upper in annual remain clients, range, PFS look of existing we financial previously end XXXX stated robust the remainder growth growth range. at organic our achieve SFE expected this driven bookings, the pipeline. anticipate targets, to of to revenue the SFE our which

We target to estimated percentage range XX%. XXXX to service fee the of of continue also within X% EBITDA adjusted revenue standalone PFS

PFS a in metric QX corporate estimated the operating and to adjusted the Zach? I for will turn over standalone forma now we costs. this call business PFS highlights. to non-public EBITDA environment our operational our to pro review Zach profitability if without as As certain refers were sales reminder overhead a EBITDA adjusted

Zach Thomann

flexible expanding growth. for fulfillment previous and QX with service offering better our focus more to three key growth pipeline our driving multi-node fulfillment and strong fulfillment And its in continued for networks. to momentum supporting Thanks, serve Tom. Two customers. objectives Consistent allow drivers. our topline our sales our our calls One, dynamic as converting on continued earning through strategy a PFS product three, clients,

fulfillment at XXXX, at as service These in mix During convert contract seven estimated that the additional pipeline bookings were is new we and well within we annual near of client engagements. core existing increasingly engagements, direct-to-consumer expansions health largely business-to-business a of emerging fall and comprised both current indicate of record our Europe. across new to service value. clients among levels, several center solutions. apparel, industry beauty, bookings continue reported combined fulfillment a and net first our a contact our sales million are prospects as they established bundles as jewelry Further, quarter CPG. pipeline, brands North continued Within America alike, and And and robust seeking within bookings and verticals strength and $X.X

our new and last of launched As channels. an example, brand's the one in supports deployed DXC for QX clients BXB e-commerce service the we wholesale eyewear blenders year,

management, Now a warehouse the services use tailwinds fulfillment. inventory brands experience [taking] made To fulfillment our have CloudPick expectations their today's of control echo comments process technology of place differentiated order fulfillment e-commerce the order and lighted helps speed for maximize (ph) swift, on a blenders' and of e-commerce and provide experiences providing evolving tailored efficiency and the customer Mike's fulfillment customers. priority some earlier demand strong throughout

X Our We clients' To a branded to brand briefly of excess first this distribution distinct straight fulfillment record client stay rapidly kitting in third partner whether benefits over present our specific network. during the our hold compelling new their we're make about pace order services us million speak from providing for this our we volume X year. annual performance performance or in and on engagements, reflecting packaging million attuned volume recent identities. quarter, trends leveraging units and to orders in us environment, achieve fulfillment incremental if our brand fulfilled the closely needs solutions expanding puts

inflationary fee costs. margins alongside improvement have just to pricing productivity wage by service impacted initiatives gross Tom mitigate as enhancements our mentioned, of a implemented remain and and these other select number we current operational the While changes environment surcharge

into clients while allowed is capacity to us to strategy ramp for clients. client geographies our has strategy also multi-node certain labor programs one markets, favorable expand that more new shift to existing and us allowing Our new such

provide As QX. expanded opened to first to open year Mike for environments we new the on second fulfillment mentioned which near new and to center plan our our include in we second center Vegas training in earlier is facility, North within training Vegas, Las Nevada and last center are This just employees. we contact pace building Las in-person

distribution and strengthens With clients our to expand another existing the fulfillment network accommodate decentralize operations to node to looking new e-commerce increased West Coast demand capabilities. capacity their and adding and

to and due opportunities continue base. our progress expect our expand for ACV on the initiatives. our to committed year environment. to strong pipeline, to of remain Q&A. continue supporting the new clients operational now growth support optimize will our to that higher for seeing and look our client forward We our net proud we best expansion additional sales clients success operational our We making evaluate additional in and and bookings capacity we I'm to trajectory pipeline to high admitted up our With dynamic ahead. goals call in we'll to demand open Within

Operator

you, of sir. Craig-Hallum. from [Operator Instructions] comes And Thank first Sutton question Please sir. our proceed, George

George Sutton

you. Thank

of and -- referring and enthusiasm we're is your us I'm what give hear range the the starting Amazons to some of say a just bit the a sense Can to from would of enthusiasm? e-commerce customers. I in your SFE your upper better you organic contrast and growth end your enthusiasm, So at the Shopify's from little to

Mike Willoughby

think I to categories. has sort portfolio. year that vertical see of apparel product for those George of core high-end that our of so and especially our of will and been of clients far part this mentioned our comes health strong of markets continue the luxury Zach jewelry CPG the experience demand nature Well, from large of client beauty, their

I have and positioning to have e-commerce presence within kind and investments, with see our expectation and a think to e-commerce is continue to see of good the largely overall to retail. strong really those think because to the that tend because that the clients in channel that, client marketing large bookings also I more that a e-commerce pipeline, et which current with more multi-channel tend strong be quarter see their channel our Also, for expenditures opposed in tend high-end but in to more the retailers see looking to QX, bookings very we you brands flowing is sales about platform of these as -- a so And clients QX of service see conversion needs. are channel. cetera preference additional that can continue brands, to brick-and-mortar and first are the dependent throughout continue organic demand, excited element of, invested will our by to sales clients, pipeline of continue strong and for we evidenced of their indicative growth growth

looking as we Nordstrom products, same if somebody would Target if and Walmart us, a or like pretty results another that, some store has the a reiterated category, you're say or comp at So Nordstrom or think I not for guess high-end a guidance. department best that's probably better Shopify or the kind at increase good of their a product comp you probably I announced that luxury recently comp look

than a a So, like better comp probably or a general even bit Target retailers like merchandise Walmart, Shopify. platform

George Sutton

an back to pleased I to long transaction And go for time All the we've priority. a to business hear in second market top would seller's iterations Mike. if wanted market that your we've I curious opinion? is talking good dynamic and recently still where been. a been is these and was e-commerce any points, a fulfillment with your I'm macro of that change about selling sellers

Mike Willoughby

Not in in the differentiated I we've current my platform an market. opinion, even become think more

trends hold think to that expectation. So that's current and as our as I Zach mentioned these continue long

platform. desirable very a be to continue We

George Sutton

about healthy the you just additional many pipeline Perfect. you're your where Thanks. terms in then new having excess to the into stand you And because of centers? Can about you're sell how much you of time, talk up lastly, at filled talking about, investment capacity, fulfillment in of same talking talk and can you opportunities centers. about a have new

Mike Willoughby

Sure. answer going I capacity to and, responding to the let mike but turn I’m kind question. to of, I about about question think to And for thanks we the to would Zach how out over before point tend like the him. pipeline, our

have ability our Northeast, in the that facility than which have I, in or XX-days. facility to we if we the instance, One might agility the waters whether and kind with of, last go single test the to PFS open like we Dallas just sauce facilities. of a from secret here new cycle want in facility, year deploy four think things we within is Vegas do where several to on open client, new Las in months full done of new for make lease less to a short-term a I three brand time of is normal we signing the the we a that production a that did the to a geography have business sales plan we -- in like into the joke decision with times or

in on gives as to that pipeline our let that capacity? we respond opportunities with agility. our sales some us So Zach, knowing come these can I’ll they to comfort comment current you

Zach Thomann

Mike. Thanks, Sure.

have if that you that current future. growth for always that the the looking at specifically, the of one we points So keeping year. growth we opening planned look mentioned, in you And the have eye Las really year, the Vegas, our out towards an things pass challenge that North we the is team as at

to of space. that opportunities certainly the So in we're we already the and seeing in evaluating front demand incremental make sure XXXX we're for stay beyond that e-commerce

make partners there. the planning appropriate So to that's certainly look up into site successful the of we're challenging go and partners now, they our to estate and for visits options right here broker and real during XXXX

Mike Willoughby

sort last of thing -- I say, the would Maybe

George Sutton

Mike. Yes. Can I just ask sorry, --

Mike Willoughby

Zach want our runs to we the just about I game demand. where need going and kind run as response say in facilities over -- to client last thinking of be to he things of is that say would Go we is as I Yes. Well, ahead. this Tetris, was

the sure the that our given we card have to that rate clients make costs also agility in a reflects the use with region. We

seen have card open for our rate to facility, a we we plan, opened facility. if in there just to kind in the the we reflects where we area in medium facility instance realize cost that we is when long-term and So, like a opened Northeast, might cost ability of have be that higher sure we which make Vegas, reflected the may actual each

go and question. your with proceed So

George Sutton

us Can ever hope pipeline of I is than you better Then Tetris kinds just on doing are player you I give you I'm side? Yes. that curious, initiatives. of mentioned sense But Zach what Zach, things a sales was. a

Zach Thomann

Sure.

with we're taking So curated a pipeline incremental we're deals best fit to pipeline to little that our of the with Tetris the selecting really we're that game seeing, a use make metaphor approach that bit further. sure that with

So lot to also product to us sales help together work we of a in have solutions that deploy with side doing or cobble satisfy own needs and infrastructure through their going approach some strategy leveraging fulfillment concentrated clients front different with that really partners. the enablement allow comprehensive our to the

strategic e-commerce out So as clients to really with our solution the approach we've build taken really the objectives. we best a very our growth meet infrastructure find

Mike Willoughby

maybe as part we for of also a key facilities, into solution their activating Retail Connect call, very to the to was to look a the little for we Hey, next we on about recently client decision choosing or revealing their moved them. won us. I fulfillment pipeline and decision were there locations our that was quickly George And but but metro regional that forward bit this, critical a had more our deploying

continue to capability strategy think our for us. we and multi-node is us gives differentiator a the to enablement important super agility in that So fulfillment and

George Sutton

guys. Thanks

Mike Willoughby

Thank you, George.

Operator

any back the for time would this this conclude turn today's I to you. conference. remarks. does Thank At over closing Willoughby Mr. call

Mike Willoughby

call to thank Okay. and that everyone Valerie, Thank attended afternoon. the you, like this I'd

Operator

does and today's Ladies this gentlemen, you. teleconference. Thank conclude

you lines now disconnect this for Thank your at participation. You may time. your

Pfsweb (PFSW) 13 Jun 222022 Q1 Earnings call transcript