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PFSweb Reports Record Fourth Quarter and Full Year 2014 Results

Q4 Adjusted EBITDA up 76% to Record $6.8 Million, Full Year up 28% to Record $13.7 Million

ALLEN, TX -- (Marketwired) -- 03/05/15 -- PFSweb, Inc. (NASDAQ: PFSW), a global provider of end-to-end eCommerce solutions, reported results for the fourth quarter and full year ended December 31, 2014.

Fourth Quarter 2014 Highlights

  • Service fee equivalent revenue (a non-GAAP measure defined below) increased 38% to a record $49.0 million compared to $35.6 million in the same period of 2013
  • Adjusted EBITDA (a non-GAAP measure defined below) increased 76% to a record $6.8 million compared to $3.9 million in the same period of 2013
  • Successfully concluded the 2014 holiday season with a high level of client satisfaction. Comparable direct-to-consumer clients experienced more than 20% year-over-year growth in their gross merchandise revenue during the quarter.
  • Expanded global sales operations with two additional European sales offices in London and Munich

Fourth Quarter 2014 Financial Results

Total revenues in the fourth quarter of 2014 increased 18% to $78.7 million compared to $66.7 million in the same period of 2013. Service fee revenue in the fourth quarter of 2014 increased 40% to $48.0 million compared to $34.3 million last year. Product revenue decreased to $18.1 million compared to $21.3 million in the same period of 2013, primarily due to ongoing restructuring activities by the company's largest client in this segment.

Service fee equivalent revenue in the fourth quarter of 2014 increased 38% to a record $49.0 million compared to $35.6 million in the same period of 2013. The increase was primarily due to new and expanded client relationships, higher seasonal volumes, and the benefit from the acquisitions of REV Solutions and LiveAreaLabs, both of which occurred in September 2014.

Service fee gross margin in the fourth quarter was 28.2% compared to 30.3% in the same period in 2013. While each period includes the benefit of higher margin project activity, the 2014 period included an increased level of expenses to prepare for and support certain client operations for the holiday volumes.

Adjusted EBITDA increased 76% to a record $6.8 million in the fourth quarter of 2014 compared to $3.9 million in the same period of 2013.

Net income in the fourth quarter of 2014 was $2.1 million or $0.12 per diluted share, compared to a net loss of $0.4 million or $(0.03) per diluted share in the same period of 2013. Net income in the fourth quarter of 2014 included $0.6 million in stock-based compensation expense, $0.2 million in acquisition costs, and $0.9 million in restructuring and other charges. The restructuring and other charges include costs associated with closing the company's Manila operation and integration of its recent acquisitions. This compares to $1.4 million in stock-based compensation expense and no acquisition or restructuring related costs in the same period of 2013.

Non-GAAP net income (a non-GAAP measure defined below) in the fourth quarter of 2014 was $3.7 million or $0.21 per diluted share, compared to non-GAAP net income of $1.0 million or $0.06 per diluted share in the fourth quarter of 2013.

Cash and cash equivalents decreased to $18.1 million compared to $22.4 million at December 31, 2013, primarily due to cash paid for the acquisitions of REV Solutions and LiveAreaLabs. Total debt decreased to $10.9 million at December 31, 2014 compared to $11.1 million at December 31, 2013.

Full Year 2014 Financial Results

Total revenues in 2014 increased 2% to $247.0 million compared to $241.6 million in 2013. Service fee revenue in 2014 increased 19% to $134.4 million compared to $113.0 million last year, while product revenue was $75.3 million compared to $91.0 million in the prior year. Service fee equivalent revenue increased 17% to a record $138.7 million compared to $118.7 million in 2013.

Service fee gross margin in 2014 was 29.4% compared to 31.7% last year.

Adjusted EBITDA increased 28% to a record $13.7 million in 2014 compared to $10.7 million in 2013.

Net loss in 2014 was $4.6 million or $(0.28) per diluted share compared to net loss of $5.9 million or $(0.39) per diluted share in 2013. Net loss in 2014 included $3.1 million in stock-based compensation expense, $1.7 million in acquisition costs, and $1.0 million in restructuring and other charges. This compares to $2.6 million in stock-based compensation expense and $2.5 million in restructuring and other charges in 2013.

Non-GAAP net income in 2014 was $1.2 million or $0.07 per diluted share, compared to non-GAAP net loss of $0.8 million or $(0.05) per diluted share in 2013.

Management Commentary

"2014 was highlighted by a number of financial and operational accomplishments," said Michael Willoughby, CEO of PFSweb. "We generated increases in nearly every metric of our business, most notably a 17% increase in service fee equivalent revenue and a 28% increase in adjusted EBITDA. In addition to new client wins and the highly-anticipated rollout of the United States Mint eCommerce solution, we strengthened our agency and technology service offerings with the acquisitions of REV Solutions and LiveAreaLabs.

"As an eCommerce system integrator, REV Solutions enhances our Demandware practice and adds Oracle Commerce support capabilities. LiveAreaLabs, a digital creative agency and system integrator, strengthens our agency service offering and further supplements our Demandware related technology services. LiveAreaLabs also broadens our integration capabilities with the additional strategy, creative and user experience design support for hybris, Magento, WebSphere and Drupal, among other leading platforms."

"Following these acquisitions," Willoughby continued, "the year culminated in a very strong holiday season, with clients who have been with us for more than a year realizing, on average, more than 20% year-over-year growth in gross merchandise revenue in Q4. Overall, our strong digital agency, technology and infrastructure performance for our clients during this peak-volume period positions us well for expanded opportunities in the future.

"For 2015, we remain focused on providing an exceptional omni-channel experience for both new and existing clients. With our expanded digital agency and technology service capabilities, we believe we are well-positioned to capitalize on the evolving eCommerce marketplace, both in the U.S. and abroad. We will continue to invest in our sales and marketing efforts, as reflected by our new European sales offices and recently appointed Executive VP of Sales, Travis Hess. We will also continue to target acquisitions that support our geographic growth initiatives and enhance our end-to-end solution offering, especially within professional services. Our goal is to deliver another year of record performance in 2015."

2015 Outlook

While the company's business activity in 2015 is expected to remain at previously communicated levels, the impact of foreign currency exchange related to the weak Canadian dollar and Euro is expected to partially offset the company's financial results. Accordingly, PFSweb has adjusted its 2015 service fee equivalent revenue guidance to range between $160 million and $170 million, which reflects targeted growth of 15% to 23% from 2014. The previously issued 2015 service fee equivalent revenue guidance was $165 million to $175 million. The company is targeting adjusted EBITDA to range between $16 million and $18 million, which reflects targeted growth of 17% to 32% from 2014. The 2015 guidance excludes the impact of potential future acquisitions.

Conference Call

PFSweb will conduct a conference call today at 11:00 a.m. Eastern time to discuss its results for the fourth quarter and full year ended December 31, 2014.

The company's CEO Mike Willoughby and CFO Tom Madden will host the conference call, followed by a question and answer period.

Date: Thursday, March 5, 2015
Time: 11:00 a.m. Eastern time (10:00 a.m. Central time)
Toll-free dial-in number: 1-888-417-8533
International dial-in number: 1-719-325-2329
Conference ID: 9205523

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=113361 and via the investor relations section of the company's website at www.pfsweb.com.

A replay of the conference call will be available after 2:00 p.m. Eastern time on the same day through March 19, 2015.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 9205523

About PFSweb Inc.

PFSweb (NASDAQ: PFSW) is a global provider of end-to-end eCommerce solutions including digital agency and marketing services, technology development services, business process outsourcing services and a complete omni-channel technology ecosystem. The company provides these solutions and services to major brand names and other companies seeking to optimize every customer experience and enhance their traditional and online business channels. PFSweb supports organizations across various industries, including Procter & Gamble, L'Oreal, LEGO, Columbia Sportswear, Ricoh, Roots Canada Ltd., Diageo, BCBGMAXAZRIA, T.J. Maxx, the United States Mint, and many more. PFSweb is headquartered in Allen, TX with additional locations in Tennessee, Mississippi, Minnesota, Washington, New York, Canada, Belgium, London, Munich, and India. For more information, please visit www.pfsweb.com or download the free PFSweb IR App on your iPhone, iPad or Android device.

Non-GAAP Financial Measures

This news release may contain certain non-GAAP measures, including non-GAAP net income (loss), earnings before interest, income taxes, depreciation and amortization (EBITDA), Adjusted EBITDA and service fee equivalent revenue.

Non-GAAP net income (loss) represents net income (loss) calculated in accordance with U.S. GAAP as adjusted for the impact of non-cash stock-based compensation expense, acquisition related costs and restructuring and other charges.

EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, acquisition related costs and restructuring and other charges.

Service fee equivalent revenue represents service fee revenue plus the gross profit earned on product revenue.

Non-GAAP net income (loss), EBITDA, Adjusted EBITDA and service fee equivalent revenue are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, acquisition related costs and restructuring and other charges and EBITDA and adjusted EBITDA further eliminate the effect of financing, income taxes and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance. Service fee equivalent revenue allows client contracts with similar operational support models but different financial models to be combined as if all contracts were being operated on a service fee revenue basis.

PFSweb believes these non-GAAP measures provide useful information to both management and investors by focusing on certain operational metrics and excluding certain expenses in order to present its core operating performance and results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.

Forward-Looking Statements

The matters discussed herein consist of forward-looking information under the Private Securities Litigation Reform Act of 1995 and is subject to and involves risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. PFSweb's Annual Report on Form 10-K for the year ended December 31, 2013 identifies certain factors that could cause actual results to differ materially from those projected in any forward looking statements made and investors are advised to review the Annual Report of the Company and the Risk Factors described therein. PFSweb undertakes no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future. There may be additional risks that we do not currently view as material or that are not presently known.



                       PFSweb, Inc. and Subsidiaries
                 Condensed Consolidated Balance Sheets (A)
                     (In Thousands, Except Share Data)


                                              December 31,    December 31,
                                                  2014            2013
                                             --------------  --------------
                   ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                  $       18,128  $       22,418
  Restricted cash                                       521             130
  Accounts receivable, net of allowance for
   doubtful accounts of $447 and $382 at
   December 31, 2014 and December 31, 2013,
   respectively                                      59,126          55,292
  Inventories, net of reserves of $768 and
   $962 at December 31, 2014 and December
   31, 2013, respectively                            10,534          14,169
  Other receivables                                   5,638           5,241
  Prepaid expenses and other current assets           7,103           4,713
                                             --------------  --------------
    Total current assets                            101,050         101,963

PROPERTY AND EQUIPMENT, net                          26,604          27,190
INTANGIBLE ASSETS, net                                2,170               -
GOODWILL                                              8,366               -
OTHER ASSETS                                          2,556           2,883
                                             --------------  --------------
    Total assets                                    140,746         132,036
                                             ==============  ==============

     LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
  Current portion of long-term debt and
   capital lease obligations                 $        6,850  $        8,231
  Trade accounts payable                             38,842          34,096
  Deferred revenue                                    9,098           8,181
  Accrued expenses                                   28,473          25,045
                                             --------------  --------------
    Total current liabilities                        83,263          75,553

LONG-TERM DEBT AND CAPITAL LEASE
 OBLIGATIONS, less current portion                    4,062           2,876
DEFERRED REVENUE                                      5,355           7,491
DEFERRED RENT                                         4,870           5,191
OTHER LONG-TERM LIABILITIES                           3,091               -
                                             --------------  --------------
    Total liabilities                               100,641          91,111
                                             --------------  --------------


COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
  Preferred stock, $1.00 par value;
   1,000,000 shares authorized; none issued
   and outstanding                                        -               -
  Common stock, $.001 par value; 35,000,000
   shares authorized; 17,047,093 and
   16,540,904 shares issued at December 31,
   2014 and December 31, 2013, respectively;
   and 17,013,626 and 16,507,437 shares
   outstanding as of December 31, 2014 and
   December 31, 2013, respectively                       17              17
  Additional paid-in capital                        129,457         124,522
  Accumulated deficit                               (89,926)        (85,300)
  Accumulated other comprehensive income                682           1,811
  Treasury stock at cost, 33,467 shares                (125)           (125)
                                             --------------  --------------
    Total shareholders' equity                       40,105          40,925
                                             --------------  --------------
    Total liabilities and shareholders'
     equity                                  $      140,746  $      132,036
                                             ==============  ==============

(A) The financial data above should be read in conjunction with the audited
     consolidated financial statements of PFSweb, Inc. included in its Form
     10-K for the year ended December 31, 2013.





                       PFSweb, Inc. and Subsidiaries
       Unaudited Condensed Consolidated Statements of Operations (A)
                   (In Thousands, Except Per Share Data)

                                                            Twelve Months
                                     Three Months Ended         Ended
                                        December 31,        December 31,
                                     ------------------  ------------------
                                       2014      2013      2014      2013
                                     --------  --------  --------  --------
REVENUES:
  Product revenue, net               $ 18,102  $ 21,322  $ 75,284  $ 90,982
  Service fee revenue                  47,992    34,269   134,385   112,977
  Pass-thru revenue                    12,587    11,133    37,379    37,644
                                     --------  --------  --------  --------
    Total revenues                     78,681    66,724   247,048   241,603
                                     --------  --------  --------  --------

COSTS OF REVENUES:
  Cost of product revenue              17,067    20,022    71,019    85,237
  Cost of service fee revenue          34,471    23,895    94,858    77,160
  Cost of pass-thru revenue            12,587    11,133    37,379    37,644
                                     --------  --------  --------  --------
      Total costs of revenues          64,125    55,050   203,256   200,041
                                     --------  --------  --------  --------
      Gross profit                     14,556    11,674    43,792    41,562
SELLING, GENERAL AND ADMINISTRATIVE
 EXPENSES                              12,387    11,840    47,658    46,235
    Income (loss) from operations       2,169      (166)   (3,866)   (4,673)
INTEREST EXPENSE (INCOME), NET            323       115       813       679
                                     --------  --------  --------  --------
    Income (loss) before income
     taxes                              1,846      (281)   (4,679)   (5,352)
INCOME TAX PROVISION (BENEFIT)           (258)      128       (53)      539
                                     --------  --------  --------  --------
NET INCOME (LOSS)                    $  2,104  $   (409) $ (4,626) $ (5,891)
                                     ========  ========  ========  ========
NON-GAAP NET INCOME (LOSS)           $  3,744  $    970  $  1,216  $   (772)
                                     ========  ========  ========  ========

NET INCOME (LOSS) PER SHARE:
  Basic                              $   0.12  $  (0.03) $  (0.28) $  (0.39)
                                     ========  ========  ========  ========
  Diluted                            $   0.12  $  (0.03) $  (0.28) $  (0.39)
                                     ========  ========  ========  ========

WEIGHTED AVERAGE NUMBER OF SHARES
 OUTSTANDING:
  Basic                                16,905    16,345    16,737    14,957
                                     ========  ========  ========  ========
  Diluted                              18,258    16,345    16,737    14,957
                                     ========  ========  ========  ========

EBITDA                               $  5,195  $  2,511  $  7,809  $  5,537
                                     ========  ========  ========  ========
ADJUSTED EBITDA                      $  6,835  $  3,890  $ 13,651  $ 10,656
                                     ========  ========  ========  ========

(A) The financial data above should be read in conjunction with the audited
     consolidated financial statements of PFSweb, Inc. included in its Form
     10-K for the year ended December 31, 2013.




                       PFSweb, Inc. and Subsidiaries
              Reconciliation of certain Non-GAAP Items to GAAP
                   (In Thousands, Except Per Share Data)

                                                            Twelve Months
                                     Three Months Ended         Ended
                                        December 31,        December 31,
                                     ------------------  ------------------
                                       2014      2013      2014      2013
                                     --------  --------  --------  --------
NET INCOME (LOSS)                    $  2,104  $   (409) $ (4,626) $ (5,891)
    Income tax expense (benefit)         (258)      128       (53)      539
    Interest expense, net                 323       115       813       679
    Depreciation and amortization       3,026     2,677    11,675    10,210
                                     --------  --------  --------  --------
EBITDA                               $  5,195  $  2,511  $  7,809  $  5,537
    Stock-based compensation              550     1,379     3,059     2,574
    Acquisition related costs             229         -     1,749         -
    Restructuring and other charges       861         -     1,034     2,545
                                     --------  --------  --------  --------
ADJUSTED EBITDA                      $  6,835  $  3,890  $ 13,651  $ 10,656
                                     ========  ========  ========  ========


                                                            Twelve Months
                                     Three Months Ended         Ended
                                        December 31,        December 31,
                                     ------------------  ------------------
                                       2014      2013      2014      2013
                                     --------  --------  --------  --------

NET INCOME (LOSS)                    $  2,104  $   (409) $ (4,626) $ (5,891)
    Stock-based compensation              550     1,379     3,059     2,574
    Acquisition related costs             229         -     1,749         -
    Restructuring and other charges       861         -     1,034     2,545
                                     --------  --------  --------  --------
NON-GAAP NET INCOME (LOSS)           $  3,744  $    970  $  1,216  $   (772)
                                     ========  ========  ========  ========

NET INCOME (LOSS) PER SHARE:
  Basic                              $   0.12  $  (0.03) $  (0.28) $  (0.39)
                                     ========  ========  ========  ========
  Diluted                            $   0.12  $  (0.03) $  (0.28) $  (0.39)
                                     ========  ========  ========  ========

NON-GAAP NET INCOME (LOSS) Per
 Share:
  Basic                              $   0.22  $   0.06  $   0.07  $  (0.05)
                                     ========  ========  ========  ========
  Diluted                            $   0.21  $   0.06  $   0.07  $  (0.05)
                                     ========  ========  ========  ========



                                                            Twelve Months
                                     Three Months Ended         Ended
                                        December 31,        December 31,
                                     ------------------  ------------------
                                       2014      2013      2014      2013
                                     --------  --------  --------  --------

TOTAL REVENUES                       $ 78,681  $ 66,724  $247,048  $241,603
  Pass-thru revenue                   (12,587)  (11,133)  (37,379)  (37,644)
  Cost of product revenue             (17,067)  (20,022)  (71,019)  (85,237)
                                     --------  --------  --------  --------
SERVICE FEE EQUIVALENT REVENUE       $ 49,027  $ 35,569  $138,650  $118,722
                                     ========  ========  ========  ========




                       PFSweb, Inc. and Subsidiaries
              Unaudited Consolidating Statements of Operations
                For the Three Months Ended December 31, 2014
                               (In Thousands)

                                     Business &
                                       Retail
                         PFSweb        Connect   Eliminations  Consolidated
                      ------------  ------------ ------------  ------------
REVENUES:
  Product revenue,
   net                $          -  $     18,102 $          -  $     18,102
  Service fee revenue       42,634         5,358            -        47,992
  Service fee revenue
   - affiliate               4,642           292       (4,934)            -
  Pass-thru revenue         12,587             -            -        12,587
                      ------------  ------------ ------------  ------------
      Total revenues        59,863        23,752       (4,934)       78,681
                      ------------  ------------ ------------  ------------

COSTS OF REVENUES:
  Cost of product
   revenue                       -        17,067            -        17,067
  Cost of service fee
   revenue                  33,855         5,328       (4,712)       34,471
  Cost of pass-thru
   revenue                  12,587             -            -        12,587
                      ------------  ------------ ------------  ------------
      Total costs of
       revenues             46,442        22,395       (4,712)       64,125
                      ------------  ------------ ------------  ------------
      Gross profit          13,421         1,357         (222)       14,556
SELLING, GENERAL AND
 ADMINISTRATIVE
 EXPENSES                   12,025           584         (222)       12,387
    Income (loss)
     from operations         1,396           773            -         2,169
INTEREST EXPENSE
 (INCOME), NET                 196           127            -           323
                      ------------  ------------ ------------  ------------
    Income (loss)
     before income
     taxes                   1,200           646            -         1,846
INCOME TAX PROVISION
 (BENEFIT)                    (497)          239            -          (258)
                      ------------  ------------ ------------  ------------
NET INCOME (LOSS)     $      1,697  $        407 $          -  $      2,104
                      ============  ============ ============  ============
NON-GAAP NET INCOME
 (LOSS)               $      3,337  $        407 $          -  $      3,744
                      ============  ============ ============  ============

EBITDA                $      4,409  $        786 $          -  $      5,195
                      ============  ============ ============  ============
ADJUSTED EBITDA       $      6,049  $        786 $          -  $      6,835
                      ============  ============ ============  ============


A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
 follows:

NET INCOME (LOSS)     $      1,697  $        407 $          -         2,104
    Income tax
     expense
     (benefit)                (497)          239            -          (258)
    Interest expense
     (income), net             196           127            -           323
    Depreciation and
     amortization            3,013            13            -         3,026
                      ------------  ------------ ------------  ------------
EBITDA                $      4,409  $        786 $          -  $      5,195
    Stock-based
     compensation              550             -            -           550
    Acquisition
     related costs             229             -            -           229
    Restructuring and
     other charges             861             -            -           861
                      ------------  ------------ ------------  ------------
ADJUSTED EBITDA       $      6,049  $        786 $          -  $      6,835
                      ============  ============ ============  ============

A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
 follows:

NET INCOME (LOSS)     $      1,697  $        407 $          -  $      2,104
    Stock-based
     compensation              550             -            -           550
    Acquisition
     related costs             229             -            -           229
    Restructuring and
     other charges             861             -            -           861
                      ------------  ------------ ------------  ------------
NON-GAAP NET INCOME
 (LOSS)               $      3,337  $        407 $          -  $      3,744
                      ============  ============ ============  ============

Note: Business and Retail Connect includes our Supplies Distributors and
 PFSweb Retail Connect operations, which operate similar financial models
 on behalf of our client relationships.




                       PFSweb, Inc. and Subsidiaries
              Unaudited Consolidating Statements of Operations
                For the Three Months Ended December 31, 2013
                               (In Thousands)

                                     Business &
                                       Retail
                         PFSweb        Connect   Eliminations  Consolidated
                      ------------  ------------ ------------  ------------
REVENUES:
  Product revenue,
   net                $          -  $     21,322 $          -  $     21,322
  Service fee revenue       30,580         3,689            -        34,269
  Service fee revenue
   - affiliate               3,779           338       (4,117)            -
  Pass-thru revenue         11,133             -            -        11,133
                      ------------  ------------ ------------  ------------
      Total revenues        45,492        25,349       (4,117)       66,724
                      ------------  ------------ ------------  ------------

COSTS OF REVENUES:
  Cost of product
   revenue                       -        20,022            -        20,022
  Cost of service fee
   revenue                  24,028         3,547       (3,680)       23,895
  Cost of pass-thru
   revenue                  11,133             -            -        11,133
                      ------------  ------------ ------------  ------------
      Total costs of
       revenues             35,161        23,569       (3,680)       55,050
                      ------------  ------------ ------------  ------------
      Gross profit          10,331         1,780         (437)       11,674
SELLING, GENERAL AND
 ADMINISTRATIVE
 EXPENSES                   11,036         1,241         (437)       11,840
    Income (loss)
     from operations          (705)          539            -          (166)
INTEREST EXPENSE
 (INCOME), NET                 (29)          144            -           115
                      ------------  ------------ ------------  ------------
    Income (loss)
     before income
     taxes                    (676)          395            -          (281)
INCOME TAX PROVISION
 (BENEFIT)                     (15)          143            -           128
                      ------------  ------------ ------------  ------------
NET INCOME (LOSS)     $       (661) $        252 $          -  $       (409)
                      ============  ============ ============  ============
NON-GAAP NET INCOME
 (LOSS)               $        718  $        252 $          -  $        970
                      ============  ============ ============  ============

EBITDA                $      1,929  $        582 $          -  $      2,511
                      ============  ============ ============  ============
ADJUSTED EBITDA       $      3,308  $        582 $          -  $      3,890
                      ============  ============ ============  ============


A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
 follows:

NET INCOME (LOSS)     $       (661) $        252 $          -          (409)
    Income tax
     expense
     (benefit)                 (15)          143            -           128
    Interest expense
     (income), net             (29)          144            -           115
    Depreciation and
     amortization            2,634            43            -         2,677
                      ------------  ------------ ------------  ------------
EBITDA                $      1,929  $        582 $          -  $      2,511
    Stock-based
     compensation            1,379             -            -         1,379
                      ------------  ------------ ------------  ------------
ADJUSTED EBITDA       $      3,308  $        582 $          -  $      3,890
                      ============  ============ ============  ============

A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
 follows:

NET INCOME (LOSS)     $       (661) $        252 $          -  $       (409)
    Stock-based
     compensation            1,379             -            -         1,379
                      ------------  ------------ ------------  ------------
NON-GAAP NET INCOME
 (LOSS)               $        718  $        252 $          -  $        970
                      ============  ============ ============  ============

Note: Business and Retail Connect includes our Supplies Distributors and
 PFSweb Retail Connect operations, which operate similar financial models
 on behalf of our client relationships.




                       PFSweb, Inc. and Subsidiaries
              Unaudited Consolidating Statements of Operations
               For the Twelve Months Ended December 31, 2014
                               (In Thousands)

                                     Business &
                                       Retail
                         PFSweb        Connect   Eliminations  Consolidated
                      ------------  ------------ ------------  ------------
REVENUES:
  Product revenue,
   net                $          -  $     75,284 $          -  $     75,284
  Service fee revenue      119,573        14,812            -       134,385
  Service fee revenue
   - affiliate              14,556         1,138      (15,694)            -
  Pass-thru revenue         37,379             -                     37,379
                      ------------  ------------ ------------  ------------
      Total revenues       171,508        91,234      (15,694)      247,048
                      ------------  ------------ ------------  ------------

COSTS OF REVENUES:
  Cost of product
   revenue                       -        71,019            -        71,019
  Cost of service fee
   revenue                  94,301        15,182      (14,625)       94,858
  Cost of pass-thru
   revenue                  37,379             -            -        37,379
                      ------------  ------------ ------------  ------------
      Total costs of
       revenues            131,680        86,201      (14,625)      203,256
                      ------------  ------------ ------------  ------------
      Gross profit          39,828         5,033       (1,069)       43,792
SELLING, GENERAL AND
 ADMINISTRATIVE
 EXPENSES                   45,779         2,948       (1,069)       47,658
    Income (loss)
     from operations        (5,951)        2,085            -        (3,866)
INTEREST EXPENSE
 (INCOME), NET                 264           549            -           813
                      ------------  ------------ ------------  ------------
    Income (loss)
     before income
     taxes                  (6,215)        1,536            -        (4,679)
INCOME TAX PROVISION
 (BENEFIT)                    (625)          572            -           (53)
                      ------------  ------------ ------------  ------------
NET INCOME (LOSS)     $     (5,590) $        964 $          -  $     (4,626)
                      ============  ============ ============  ============
NON-GAAP NET INCOME
 (LOSS)               $        252  $        964 $          -  $      1,216
                      ============  ============ ============  ============

EBITDA                $      5,669  $      2,140 $          -  $      7,809
                      ============  ============ ============  ============
ADJUSTED EBITDA       $     11,511  $      2,140 $          -  $     13,651
                      ============  ============ ============  ============


A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
 follows:

NET INCOME (LOSS)     $     (5,590) $        964 $          -        (4,626)
    Income tax
     expense
     (benefit)                (625)          572            -           (53)
    Interest expense
     (income), net             264           549            -           813
    Depreciation and
     amortization           11,620            55            -        11,675
                      ------------  ------------ ------------  ------------
EBITDA                $      5,669  $      2,140 $          -  $      7,809
    Stock-based
     compensation            3,059             -            -         3,059
    Acquisition
     related costs           1,749             -            -         1,749
    Restructuring and
     other charges           1,034             -            -         1,034
                      ------------  ------------ ------------  ------------
ADJUSTED EBITDA       $     11,511  $      2,140 $          -  $     13,651
                      ============  ============ ============  ============

A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
 follows:

NET INCOME (LOSS)     $     (5,590) $        964 $          -  $     (4,626)
    Stock-based
     compensation            3,059             -            -         3,059
    Acquisition
     related costs           1,749             -            -         1,749
    Restructuring and
     other charges           1,034             -            -         1,034
                      ------------  ------------ ------------  ------------
NON-GAAP NET INCOME
 (LOSS)               $        252  $        964 $          -  $      1,216
                      ============  ============ ============  ============

Note: Business and Retail Connect includes our Supplies Distributors and
 PFSweb Retail Connect operations, which operate similar financial models
 on behalf of our client relationships.




                       PFSweb, Inc. and Subsidiaries
              Unaudited Consolidating Statements of Operations
               For the Twelve Months Ended December 31, 2013
                               (In Thousands)

                                     Business &
                                       Retail
                         PFSweb        Connect   Eliminations  Consolidated
                      ------------  ------------ ------------  ------------
REVENUES:
  Product revenue,
   net                $          -  $     90,982 $          -  $     90,982
  Service fee revenue      104,448         8,529            -       112,977
  Service fee revenue
   - affiliate              10,246         1,448      (11,694)            -
  Pass-thru revenue         37,644             -            -        37,644
                      ------------  ------------ ------------  ------------
      Total revenues       152,338       100,959      (11,694)      241,603
                      ------------  ------------ ------------  ------------

COSTS OF REVENUES:
  Cost of product
   revenue                       -        85,237            -        85,237
  Cost of service fee
   revenue                  78,843         8,708      (10,391)       77,160
  Cost of pass-thru
   revenue                  37,644             -            -        37,644
                      ------------  ------------ ------------  ------------
      Total costs of
       revenues            116,487        93,945      (10,391)      200,041
                      ------------  ------------ ------------  ------------
      Gross profit          35,851         7,014       (1,303)       41,562
SELLING, GENERAL AND
 ADMINISTRATIVE
 EXPENSES                   41,709         5,829       (1,303)       46,235
    Income (loss)
     from operations        (5,858)        1,185            -        (4,673)
INTEREST EXPENSE
 (INCOME), NET                  84           595            -           679
                      ------------  ------------ ------------  ------------
    Income (loss)
     before income
     taxes                  (5,942)          590            -        (5,352)
INCOME TAX PROVISION
 (BENEFIT)                     185           354            -           539
                      ------------  ------------ ------------  ------------
NET INCOME (LOSS)     $     (6,127) $        236 $          -  $     (5,891)
                      ============  ============ ============  ============
NON-GAAP NET INCOME
 (LOSS)               $     (1,008) $        236 $          -  $       (772)
                      ============  ============ ============  ============

EBITDA                $      4,193  $      1,344 $          -  $      5,537
                      ============  ============ ============  ============
ADJUSTED EBITDA       $      9,312  $      1,344 $          -  $     10,656
                      ============  ============ ============  ============


A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
 follows:

NET INCOME (LOSS)     $     (6,127) $        236 $          -        (5,891)
    Income tax
     expense
     (benefit)                 185           354            -           539
    Interest expense
     (income), net              84           595            -           679
    Depreciation and
     amortization           10,051           159            -        10,210
                      ------------  ------------ ------------  ------------
EBITDA                $      4,193  $      1,344 $          -  $      5,537
    Stock-based
     compensation            2,574             -            -         2,574
    Restructuring and
     other charges           2,545             -            -         2,545
                      ------------  ------------ ------------  ------------
ADJUSTED EBITDA       $      9,312  $      1,344 $          -  $     10,656
                      ============  ============ ============  ============

A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
 follows:

NET INCOME (LOSS)     $     (6,127) $        236 $          -  $     (5,891)
    Stock-based
     compensation            2,574             -            -         2,574
    Restructuring and
     other charges           2,545             -            -         2,545
                      ------------  ------------ ------------  ------------
NON-GAAP NET INCOME
 (LOSS)               $     (1,008) $        236 $          -  $       (772)
                      ============  ============ ============  ============

Note: Business and Retail Connect includes our Supplies Distributors and
 PFSweb Retail Connect operations, which operate similar financial models
 on behalf of our client relationships.




                       PFSweb, Inc. and Subsidiaries
              Unaudited Condensed Consolidating Balance Sheets
                          as of December 31, 2014
                               (In Thousands)


                                    Business &
                                      Retail
                         PFSweb       Connect    Eliminations  Consolidated
                      -----------  ------------  ------------  ------------
        ASSETS
CURRENT ASSETS:
  Cash and cash
   equivalents        $     6,671  $     11,457  $          -  $     18,128
  Restricted cash               -           521             -           521
  Accounts
   receivable, net         42,081        18,415        (1,370)       59,126
  Inventories, net              -        10,534             -        10,534
  Other receivables             -         5,638             -         5,638
  Prepaid expenses
   and other current
   assets                   6,141           962             -         7,103
                      -----------  ------------  ------------  ------------
    Total current
     assets                54,893        47,527        (1,370)      101,050
                      -----------  ------------  ------------  ------------

PROPERTY AND
 EQUIPMENT, net            26,478           126             -        26,604
RECEIVABLE/INVESTMENT
 IN AFFILIATES              9,938             -        (9,938)            -
INTANGIBLE ASSETS,
 net                        2,170                                     2,170
GOODWILL                    8,366             -             -         8,366
OTHER ASSETS                2,527            29             -         2,556
                      -----------  ------------  ------------  ------------
    Total assets          104,372        47,682       (11,308)      140,746
                      ===========  ============  ============  ============

   LIABILITIES AND
  SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
  Current portion of
   long-term debt and
   capital lease
   obligations        $     3,583  $      3,267  $          -  $      6,850
  Trade accounts
   payable                 13,001        27,211        (1,370)       38,842
  Deferred revenue          9,098             -             -         9,098
  Accrued expenses         21,338         7,135             -        28,473
                      -----------  ------------  ------------  ------------
    Total current
     liabilities           47,020        37,613        (1,370)       83,263

LONG-TERM DEBT AND
 CAPITAL LEASE
 OBLIGATIONS, less
 current portion            4,062             -             -         4,062
PAYABLE TO AFFILIATES           -        22,045       (22,045)            -
DEFERRED REVENUE            5,355             -             -         5,355
DEFERRED RENT               4,870                                     4,870
OTHER LONG TERM
 LIABILITIES                3,091             -             -         3,091
                      -----------  ------------  ------------  ------------
    Total liabilities      64,398        59,658       (23,415)      100,641
                      -----------  ------------  ------------  ------------

COMMITMENTS AND
 CONTINGENCIES

SHAREHOLDERS' EQUITY:
  Common stock                 17            19           (19)           17
  Capital
   contributions                -         1,000        (1,000)            -
  Additional paid-in
   capital                129,457        28,060       (28,060)      129,457
  Retained earnings
   (accumulated
   deficit)               (90,061)      (42,711)       42,846       (89,926)
  Accumulated other
   comprehensive
   income                     686         1,656        (1,660)          682
  Treasury stock             (125)            -             -          (125)
                      -----------  ------------  ------------  ------------
    Total
     shareholders'
     equity                39,974       (11,976)       12,107        40,105
                      -----------  ------------  ------------  ------------
    Total liabilities
     and
     shareholders'
     equity           $   104,372  $     47,682  $    (11,308) $    140,746
                      ===========  ============  ============  ============




                       PFSweb, Inc. and Subsidiaries
              Unaudited Condensed Consolidating Balance Sheets
                          as of December 31, 2013
                               (In Thousands)


                                    Business &
                                      Retail
                        PFSweb        Connect    Eliminations  Consolidated
                     ------------  ------------  ------------  ------------
       ASSETS
CURRENT ASSETS:
  Cash and cash
   equivalents       $     15,028  $      7,390  $          -  $     22,418
  Restricted cash               -           130             -           130
  Accounts
   receivable, net         37,857        18,697        (1,262)       55,292
  Inventories, net              -        14,169             -        14,169
  Other receivables             -         5,241             -         5,241
  Prepaid expenses
   and other current
   assets                   3,552         1,161             -         4,713
                     ------------  ------------  ------------  ------------
    Total current
     assets                56,437        46,788        (1,262)      101,963

PROPERTY AND
 EQUIPMENT, net            26,945           245             -        27,190
RECEIVABLE/INVESTMEN
 T IN AFFILIATES           12,563             -       (12,563)            -
OTHER ASSETS                2,800            83             -         2,883
                     ------------  ------------  ------------  ------------
    Total assets           98,745        47,116       (13,825)      132,036
                     ============  ============  ============  ============

   LIABILITIES AND
 SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
  Current portion of
   long-term debt
   and capital lease
   obligations       $      4,419  $      3,812  $          -  $      8,231
  Trade accounts
   payable                 11,602        23,756        (1,262)       34,096
  Deferred revenue          8,181             -             -         8,181
  Accrued expenses         18,114         6,931             -        25,045
                     ------------  ------------  ------------  ------------
    Total current
     liabilities           42,316        34,499        (1,262)       75,553

LONG-TERM DEBT AND
 CAPITAL LEASE
 OBLIGATIONS, less
 current portion            2,876             -             -         2,876
PAYABLE TO
 AFFILIATES                     -        23,045       (23,045)            -
DEFERRED REVENUE            7,491             -             -         7,491
DEFERRED RENT               5,191             -             -         5,191
                     ------------  ------------  ------------  ------------
    Total
     liabilities           57,874        57,544       (24,307)       91,111
                     ------------  ------------  ------------  ------------

COMMITMENTS AND
 CONTINGENCIES

SHAREHOLDERS'
 EQUITY:
  Common stock                 17            19           (19)           17
  Capital
   contributions                -         1,000        (1,000)            -
  Additional paid-in
   capital                124,522        28,060       (28,060)      124,522
  Retained earnings
   (accumulated
   deficit)               (85,360)      (41,850)       41,910       (85,300)
  Accumulated other
   comprehensive
   income                   1,817         2,343        (2,349)        1,811
  Treasury stock             (125)            -             -          (125)
                     ------------  ------------  ------------  ------------
    Total
     shareholders'
     equity                40,871       (10,428)       10,482        40,925
                     ------------  ------------  ------------  ------------
    Total
     liabilities and
     shareholders'
     equity          $     98,745  $     47,116  $    (13,825) $    132,036
                     ============  ============  ============  ============


Company Contact:
Michael C. Willoughby
Chief Executive Officer
or
Thomas J. Madden
Chief Financial Officer
Tel 972-881-2900

Investor Relations:
Liolios Group Inc.
Scott Liolios or Sean Mansouri
Tel 949-574-3860
Email Contact

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