LTNC Labor Smart Inc (PK)

Revenue up 28% Year over Year
Gross Margins Improve by 800 Basis Points

ATLANTA, GA / ACCESSWIRE / November 11, 2014 / Labor SMART, Inc. (LTNC) (the "Company"), a leader in providing on-demand blue collar staffing primarily in the southeastern United States, today announced it has filed its 10Q for the quarter ending September 26, 2014. The company will host its third quarter earnings call on November 13, 2014 at 4:30pm EDT.

Third Quarter 2014 Highlights:

- Revenues up 28% to $6.8 million vs. $5.3 million a year ago
- Same branch revenue up 12.5% year-over-year
- Gross profit margins improve to 25% vs. 17% a year ago
- Added 315 new customers
- EBITDA* of $121,577
- Adjusted EBITDA* of $344,731
- 30 branches, up from 15 at year end 2013 

"I am very pleased with our financial results from the third quarter," said Ryan Schadel, President and CEO of Labor SMART. "The Labor SMART team delivered on all of our key metrics. Becoming substantially self-insured, combined with our culling of low margin accounts this summer has boosted our gross profit margins above internal expectations. I am also pleased with our growth as reflected in our EBITDA of $121,577. The attainment of positive EBITDA for two consecutive quarters evidences our business strategy is paying off." Schadel added that the company continues to grow and is working to strengthen its presence, management team, financial resources and capital structure.

During the remainder of 2014, Labor SMART does not expect to open any new branches, however, it is aggressively pursuing acquisitions that fit well with its culture and will continue to seek more acquisition opportunities than in prior years. This major shift in focus is directly related to the new large deductible worker's compensation policy. The industry is very fragmented. The Company has invested heavily in its corporate infrastructure in the last two years and believes it can execute acquisitions to immediately recognize economies of scale. Labor SMART believes it can successfully execute and close acquisitions totaling $20-$40 million in revenue in 2015.

Financial Results:

Third Quarter 2014 Compared to Third Quarter 2013

Revenue for the three months ended September 26, 2014 increased 28% to $6.8 million as compared to $5.3 million for the three months ended September 30, 2013. This increase was due to improved revenue from existing branches and the opening of new branches in the first half of fiscal 2014 as well as our acquisition of Shirley's Employment. Of the 15 branches that were open at September 30, 2013, revenue for the three months ended September 26, 2014 was $6.0 million, representing a 12.50% increase in same branch revenue in a year-over-year comparison.

Gross profit margin improved 800 basis points to 25% for the three months ended September 26, 2014, from 17% for the three months ended September 30, 2013. 

Operating loss for the third quarter of 2014 was $0.1 million, an improvement from $0.2 million in the third quarter of 2013. Net loss for the third quarter of 2014 was $1.1 million, an increase from $0.4 million in the third quarter of 2013. This net loss increase was due to non-cash interest and finance expense offset by gain on change in fair value in derivative liability of $1.0 million. In the comparable third quarter 2013, such non-cash interest and finance expense and gain on change in fair value in derivative liability was $0.3 million. The resulting EPS is ($0.04), as compared to ($0.02) a year earlier, due to an increase in average shares outstanding to 26.8 million, from 19.4 million.

Year-to-Date 2014 Compared to Year-to-Date 2013

Revenue for the nine months ended September 26, 2014 increased 52% to $18.1 million as compared to $11.9 million for the nine months ended September 30, 2013.

Gross profit margin improved 700 basis points to 23% for the nine months ended September 26, 2014, from 16% for the nine months ended September 30, 2013. 

Operating loss for the nine months ended September 26, 2014 was $0.5 million, an improvement from $1.1 million in the nine months ended September 30, 2013. Net loss for the nine months ended September 26, 2014 was $3.1 million, an increase from $1.8 million in the nine months ended September 30, 2013. This net loss increase was due to non-cash interest and finance expense offset by gain on change in fair value in derivative liability of $2.6 million. In the comparable third quarter 2013, such non-cash interest and finance expense and gain on change in fair value in derivative liability was $0.7 million. The resulting EPS is ($0.13), as compared to ($0.10) a year earlier, due to an increase in average shares outstanding to 23.7 million, from 19.0 million.

During Thursday's earnings call management is expected to discuss the reported third quarter results as well as other developments at the company. Callers may dial toll-free 844-831-4027 with conference ID: 34514379 or listen online at http://www.media-server.com/m/p/z6r4xuwg.

*EBITDA and Adjusted EBITDA are non-GAAP financial measures for which a reconciliation is provided as part of this press release and filed on Form 10Q.

Labor SMART, Inc.  
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)

September 26, 2014

About Labor SMART, Inc.

Labor SMART, Inc. provides On-Demand temporary labor to a variety of industries. The Company's clients range from small businesses to Fortune 100 companies. Labor SMART was founded to provide reliable, dependable and flexible resources for on-demand personnel to small and large businesses in areas that include construction, manufacturing, hospitality, event-staffing, restoration, warehousing, retailing, disaster relief and cleanup, demolition and landscaping. Labor SMART believes it can make a positive contribution each and every day for the benefit of its clients and temporary employees. The Company's mission is to be the provider of choice to its growing portfolio of customers with a service-focused approach that enables Labor SMART to be seen as a resource and partner to its clients.

Safe Harbor Statement

This release contains statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements appear in a number of places in this release and include all statements that are not statements of historical fact regarding the intent, belief or current expectations of Labor SMART, Inc., its directors or its officers with respect to, among other things: (i) financing plans; (ii) trends affecting its financial condition or results of operations; (iii) growth strategy and operating strategy. The words "may", "would", "will", "expect", "estimate", "can", "believe", "potential", and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond Labor SMART, Inc.'s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. More information about the potential factors that could affect the business and financial results is and will be included in Labor SMART, Inc.'s filings with the U.S. Securities and Exchange Commission.

Contacts:

Hayden IR
917-658-7878
hart@haydenir.com

Beverly Jedynak
Martin E. Janis & Company, Inc.
312-943-1123 
bjedynak@janispr.com

SOURCE: Labor SMART, Inc.

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