PFSweb Inc. (PFSW) filed Quarterly Report for the period ended 2009-09-30.
PFSWeb Inc. is an international provider of transaction management services for both traditional commerce and electronic commerce, or e-commerce, companies. The company provides a broad range of services, including order management, customer care services, billing services, information management and fulfillment and distribution services. The fulfillment and distribution services are conducted at the warehouses and include picking, packing and shipping the clients' customer orders. Pfsweb Inc. has a market cap of $15.39 million; its shares were traded at around $1.55 with and P/S ratio of 0.03.
Highlight of Business Operations:
Supplies Distributors product revenue of $45.1 million decreased $10.3 million, or 18.6%, in the three months ended September 30, 2009 as compared to the same quarter of the prior year. Product revenue of $135.7 million decreased $42.1 million, or 23.7%, in the nine months ended September 30, 2009 as compared to the same period of the prior year. The decreases are primarily due to decreased sales volume resulting from the impact of the overall global economic pressures, inventory rationalization by customers, reduced IBM and IPS printer installations in certain categories as well as the negative impact of foreign exchange rates compared to the same three and nine month periods in the prior year. In addition, product revenue in the nine months ended September 30, 2009 was negatively impacted by a $1.4 million reduction of revenue resulting from a customer bankruptcy.
Service Fee Revenue. Service fee revenue of $13.1 million decreased $9.8 million, or 42.7%, in the three months ended September 30, 2009 as compared to the same quarter of the prior year. Service fee revenue of $42.6 million decreased $22.4 million, or 34.4%, in the nine months ended September 30, 2009 as compared to the same period of the prior year. The decrease in service fee revenue for the three and nine months ended September 30, 2009 is primarily due to the non-renewal of a certain U.S. government agency client relationship partially offset by increased service fees generated from the impact of new service contract relationships. The change in service fee revenue is shown below ($ millions):
The $22.7 million reduction of service fee revenue which resulted from the non-renewal of the U.S. government agency client is included in the existing client line item above for the nine month period as there was activity with this client in each of the nine month periods. For the three month period, the $10.3 million reduction of service fee revenue which resulted from the non-renewal is included in the terminated client line item.
Cost of Product Revenue. The gross margin for eCOST was $1.8 million or 9.0% of product revenue in the three months ended September 30, 2009 and $2.2 million or 9.2% of product revenue during the comparable period of 2008. The decline in gross margin is primarily due to the customer mix, which included a larger percentage of sales to the lower margin business-to-business segment during the three months ended September 30, 2009 compared to the same period last year.
Supplies Distributors cost of product revenue decreased by $10.7 million, or 20.8%, to $40.9 million in the three months ended September 30, 2009 primarily as a result of decreased product sales. The resulting gross profit margin was $4.2 million, or 9.4% of product revenue, for the three months ended September 30, 2009 and $3.8 million, or 6.9% of product revenue, for the comparable 2008 period. The three month period ending September 30, 2009 includes the impact of certain incremental inventory cost related adjustments which are not expected to continue at the same rate in future periods.
Supplies Distributors cost of product revenue decreased by $40.3 million, or 23.7%, to $124.8 million in the nine months ended September 30, 2009 primarily as a result of decreased product sales. The resulting gross profit margin was $10.9 million, or 8.0% of product revenue, for the nine months ended September 30, 2009 and $12.7 million, or 7.1% of product revenue, for the comparable 2008 period. The 2008 and 2009 nine month periods include the impact of certain incremental inventory cost adjustments. The 2009 margin percentage reflects an increase due to incremental gross margin earned on product sales resulting from certain product price increases, which is partially offset by a reduction in revenue resulting from a customer bankruptcy during the first quarter of 2009.
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