Adjusted Revenue In-Line with
Expectations
Volt Information Sciences, Inc. (“Volt” or the “Company”)
(NYSE-AMERICAN: VOLT) a global provider of staffing services, today
announced financial results for the first quarter ended February 2,
2020.
First Quarter Highlighted Results
- Revenue was $217.8 million, compared to $253.4 million in the
prior-year quarter; Adjusted Revenue* decreased 10.4%.
- Gross margin was 14.4%, versus 14.9% for the comparable quarter
in 2019.
- GAAP operating loss increased by $7.2 million from the
prior-year quarter to a loss of $9.3 million; Adjusted Operating
Loss* increased by $6.5 million year over year.
- Adjusted EBITDA* was a loss of $5.6 million compared to a loss
of $1.1 million in the prior-year quarter.
*Adjusted Revenue, Adjusted Operating Loss
and Adjusted EBITDA are Non-GAAP measures described and defined
below.
“Our first quarter Adjusted Revenue coming in at the top-end of
our guidance reflects the continued advancement of the strategic
initiatives implemented in fiscal 2019,” said Linda Perneau,
President and Chief Executive Officer. “We expect this progress to
continue into the second quarter, which should result in a
sequential improvement in Adjusted Revenue and Adjusted EBITDA, and
we believe this favorable quarterly trend will continue throughout
fiscal 2020. Additionally, we expect further cost savings in our
SG&A expense, primarily related to the transition of certain
back office functions to our Bangalore, India office.”
First Quarter Results
North American Staffing revenue for the quarter was $182.4
million, as compared to $211.8 million for the first quarter of
fiscal 2019. Adjusted Revenue, which is a Non-GAAP measure, for
this segment decreased approximately 12.7 percent year over year.
The decrease is primarily attributable to continued workforce
adjustments at certain larger clients specifically related to their
businesses, and a slower than anticipated post-holiday ramp,
partially offset by business wins with new clients and expansion of
service with existing clients.
International Staffing revenue was $26.2 million, relatively
unchanged compared to the first quarter of 2019. Adjusted Revenue,
for this segment increased 0.2 percent year over year. The increase
is primarily due to an increase in the Belgium and Singapore
operations, offset by lower revenues from the UK operations.
North American MSP revenue was $9.4 million, as compared to $8.2
million for the first quarter of 2019. Adjusted Revenue, for this
segment increased approximately 13.1 percent over the prior year.
The increase is primarily attributable to expansion within existing
clients.
Gross margin for the quarter was 14.4 percent of revenue,
compared to 14.9 percent of revenue in the first quarter of fiscal
2019. The change is attributable to a smaller credit related to our
workers’ compensation versus the prior year, an increase in other
state-mandated benefit costs, and a mix shift within our North
American MSP segment.
SG&A expense for the first quarter was $39.5 million, a $0.3
million reduction from the prior-year quarter. The decrease is
primarily due to cost reductions in all areas of our business,
including lower professional fees, labor costs resulting from lower
headcount, and facility related costs, which were partially offset
by increased depreciation expense, and favorable adjustments for
medical claims and equity compensation from the first quarter of
2019 that did not recur this year, as well as an increase in
expenses due to the elimination of a deferred gain offset under the
new lease accounting rules effective this quarter.
Adjusted EBITDA, which is a Non-GAAP measure, for the first
quarter of fiscal 2020 was a loss of $5.6 million, as compared to a
loss of $1.1 million in the prior-year quarter.
“We are actively monitoring the spread of coronavirus
internationally and in the U.S. Though we are not experiencing any
notable business impact at this time, we are updating our
preparedness plans to minimize risk should an outbreak occur at any
of our offices, client sites, or in any of the communities in which
we operate. The health and safety of our clients, field employees
and Volt colleagues is always our top priority,” said Ms.
Perneau.
Business Outlook
The following statements are forward-looking, and actual results
could differ materially depending on market conditions and the
factors set forth under “Forward-Looking Statements” below.
For the second quarter of fiscal 2020, we have seen a favorable
trend in regard to Adjusted Revenue through the first six weeks of
the quarter. Although, we have not experienced any notable impact
that we are aware of today, due to the vast uncertainty around
COVID-19, it would not be prudent of us at this time to assume the
full impact we may incur for the remainder of the quarter. This is
a rapidly changing landscape that we are closely monitoring in real
time.
Earnings Conference Call and Webcast
Volt Information Sciences, Inc. will conduct a conference call
on Thursday, March 12, 2020, at 5:00 PM ET, to review the financial
results for the first quarter ended February 2, 2020. Investors
interested in participating on the live call can dial
1-877-407-9039 within the U.S. or 1-201-689-8470 from abroad, and
reference conference ID 13698566. The conference call, which may
include forward-looking statements, is also being webcast and will
be available via the investor relations section of the Company’s
website at www.volt.com. A replay of the webcast will be archived
on Volt’s investor relations website for 90 days.
Forward-Looking Statements
This press release contains forward-looking statements,
including the Company’s Adjusted Revenue outlook for the second
quarter of fiscal 2020 and future SG&A expense reductions that
are subject to a number of known and unknown risks. Such risks
include, among others, general economic, competitive and other
business conditions (including the potential impact of the strain
of coronavirus known as COVID-19 on our operations as well as the
operations of our customers), the degree and timing of customer
utilization and renewal rate for contracts with the Company, and
the degree of success of business improvement initiatives that
could cause actual results, performance and achievements to differ
materially from those described or implied in the forward-looking
statements. Information concerning these and other factors that
could cause actual results to differ materially from those in the
forward-looking statements are contained in the “Risk Factors” and
other sections of the Company reports filed with the Securities and
Exchange Commission (SEC). You are cautioned not to place undue
reliance on such statements and to consult our SEC filings for
additional risks and uncertainties that may apply to our business
and the ownership of our securities. Our forward-looking statements
are presented as of the date made, and we disclaim any duty to
update such statements unless required by law to do so.
Note Regarding the Use of Non-GAAP Financial Measures
The Company has provided certain Non-GAAP financial information,
including Adjusted Revenue, Adjusted Operating Income (Loss) and
Adjusted EBITDA, which include adjustments to our GAAP financial
results. These measures are not in accordance with, or an
alternative for, generally accepted accounting principles (“GAAP”)
and may be different from Non-GAAP measures reported by other
companies.
The Company believes that the presentation of Non-GAAP measures,
including on a constant currency basis and accounting for the
migration of certain clients from a traditional staffing model to a
managed service model, while eliminating the impact of businesses
sold or exited, the extra operating week in the fourth quarter of
fiscal 2019 and special items provides useful information to
management and investors regarding certain financial and business
trends relating to its financial condition and results of
operations because they permit evaluation of the results of the
Company without the effect of currency fluctuations, special items
or the impact of businesses sold or exited that management believes
make it more difficult to understand and evaluate the Company’s
results of operations. Special items include impairments,
restructuring and severance as well as certain income or expenses
which the Company does not consider indicative of the current and
future period performance and are more fully disclosed in the
tables.
Adjusted Revenue, as previously defined, is revenue excluding
businesses exited, the effect of foreign currency translation and
the extra operating week in the fourth quarter of fiscal 2019. The
Company has also migrated certain clients from a traditional
staffing model to a managed service model, resulting in the Company
now managing a greater percentage of such clients’ business under
its North American MSP. This shift provides increased opportunity
for the Company with the relevant clients. However, due to the
structure of MSP arrangements, revenue is recognized on a net
basis, thereby reducing revenues on a comparative period basis.
Beginning in the first quarter of 2020, the Company will include
such delivery model shifts within the Adjusted Revenue measurement,
as it provides a more comparable basis for evaluating performance
results from period to period and reflects the method used by
management to evaluate performance. The decrease in Adjusted
Revenue from the prior-year quarter, as previously defined, was
11.4 percent. A reconciliation is shown in the tables at the end of
this press release.
Adjusted EBITDA is defined as earnings or loss before interest,
income taxes, depreciation and amortization (“EBITDA”) adjusted to
exclude share-based compensation expense as well as the special
items described above.
Adjusted EBITDA is a performance measure rather than a cash flow
measure. The Company believes the presentation of Adjusted EBITDA
is relevant and useful for investors because it allows investors to
view results in a manner similar to the method used by
management.
Adjusted EBITDA has limitations as an analytical tool and should
not be considered in isolation from, or as a substitute for,
analysis of the Company’s results of operations and operating cash
flows as reported under GAAP. For example, Adjusted EBITDA does not
reflect capital expenditures or contractual commitments; does not
reflect changes in, or cash requirements for, the Company’s working
capital needs; does not reflect the interest expense, or the cash
requirements necessary to service the interest payments, on the
Company’s debt; and does not reflect cash required to pay income
taxes.
Adjusted Operating Income (Loss) is defined as operating income
(loss) excluding businesses exited and the extra operating week in
the fourth quarter of fiscal 2019. The Company believes the
presentation of Adjusted Operating Income (Loss) is relevant and
useful for investors because it provides a more comparable basis to
evaluate performance results and analyze trends from period to
period in a manner similar to the method used by management.
The Company’s computation of Adjusted Revenue, Adjusted EBITDA
and Adjusted Operating Income (Loss) may not be comparable to other
similarly titled measures computed by other companies because all
companies do not calculate these measures in the same fashion.
About Volt Information Sciences, Inc.
Volt Information Sciences, Inc. is a global provider of staffing
services (traditional time and materials-based as well as
project-based). Our staffing services consist of workforce
solutions that include providing contingent workers, personnel
recruitment services, and managed staffing services programs
supporting primarily administrative, technical, information
technology, light-industrial and engineering positions. Our managed
staffing programs involve managing the procurement and on-boarding
of contingent workers from multiple providers. Volt services global
industries including aerospace, automotive, banking and finance,
consumer electronics, information technology, insurance, life
sciences, manufacturing, media and entertainment, pharmaceutical,
software, telecommunications, transportation, and utilities. For
more information, visit www.volt.com
Investor Relations Contacts: Volt Information Sciences,
Inc. voltinvest@volt.com
Joe Noyons Three Part Advisors jnoyons@threepa.com
817-778-8424
Financial Tables Follow
Results of Operations (in thousands, except per
share data)
Three Months Ended
February 2, 2020
November 3, 2019
January 27, 2019
Net revenue
$
217,766
$
258,408
$
253,436
Cost of services
186,339
215,449
215,737
Gross margin
31,427
42,959
37,699
Selling, administrative and other operating costs
39,497
39,908
39,810
Restructuring and severance costs
1,246
1,856
59
Impairment charges
11
262
-
Operating income/(loss)
(9,327
)
933
(2,170
)
Interest income (expense), net
(700
)
(723
)
(746
)
Foreign exchange gain (loss), net
(328
)
(360
)
213
Other income (expense), net
(258
)
(292
)
(239
)
Loss before income taxes
(10,613
)
(442
)
(2,942
)
Income tax provision
195
307
273
Net loss
$
(10,808
)
$
(749
)
$
(3,215
)
Per share data: Basic: Net loss
$
(0.50
)
$
(0.04
)
$
(0.15
)
Weighted average number of shares
21,416
21,157
21,080
Diluted: Net loss
$
(0.50
)
$
(0.04
)
$
(0.15
)
Weighted average number of shares
21,416
21,157
21,080
Segment data: Net revenue: North
American Staffing
$
182,395
$
216,587
$
211,848
International Staffing
26,223
30,574
26,266
North American MSP
9,369
11,659
8,217
Corporate and Other
203
187
7,846
Eliminations
(424
)
(599
)
(741
)
Net revenue
$
217,766
$
258,408
$
253,436
Operating income (loss): North American Staffing
$
99
$
7,167
$
3,887
International Staffing
374
1,619
304
North American MSP
754
1,838
965
Corporate and Other
(10,554
)
(9,691
)
(7,326
)
Operating income (loss)
$
(9,327
)
$
933
$
(2,170
)
Work days
59
69
59
Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months ended
February 2, 2020
January 27, 2019
Cash, cash equivalents and restricted cash beginning of
the period
$
38,444
$
36,544
Cash used in all other operating activities
(6,081
)
(2,188
)
Changes in operating assets and liabilities
6,114
4,148
Net cash provided by operating activities
33
1,960
Purchases of property, equipment, and software
(1,370
)
(1,698
)
Net cash provided by (used in) all other investing activities
336
(69
)
Net cash used in investing activities
(1,034
)
(1,767
)
Net draw-down of borrowings
-
5,000
Debt issuance costs
(230
)
(140
)
Net cash used in all other financing activities
(6
)
-
Net cash provided by (used in) financing activities
(236
)
4,860
Effect of exchange rate changes on cash, cash equivalents
and restricted cash
(565
)
(429
)
Net increase (decrease) in cash, cash equivalents and
restricted cash
(1,802
)
4,624
Cash, cash equivalents and restricted cash end of the
period
$
36,642
$
41,168
Cash paid during the period: Interest
$
730
$
801
Income taxes
$
4
$
146
Reconciliation of cash, cash equivalents and restricted
cash end of the period: Current Assets: Cash and cash
equivalents
$
30,876
$
32,925
Restricted cash included in Restricted cash and short term
investments
5,766
8,243
Cash, cash equivalents and restricted cash, at end of period
$
36,642
$
41,168
Condensed Consolidated Balance Sheets (in
thousands, except share amounts)
February 2, 2020
November 3, 2019
ASSETS CURRENT ASSETS: Cash and cash equivalents
$
30,876
$
28,672
Restricted cash and short-term investments
8,484
12,794
Trade accounts receivable, net of allowances of $95 and $117,
respectively
125,113
135,950
Other current assets
7,595
7,252
TOTAL CURRENT ASSETS
172,068
184,668
Property, equipment and software, net
25,274
25,890
Right of use assets - operating leases
45,158
-
Other assets, excluding current portion
6,781
7,446
TOTAL ASSETS
$
249,281
$
218,004
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES: Accrued compensation
$
20,713
$
21,507
Accounts payable
29,939
36,341
Accrued taxes other than income taxes
13,062
11,244
Accrued insurance and other
22,841
24,654
Operating lease liabilities
8,123
-
Income taxes payable
1,741
1,570
TOTAL CURRENT LIABILITIES
96,419
95,316
Accrued insurance and other, excluding current portion
8,579
12,029
Operating lease liabilities, excluding current portion
41,693
-
Deferred gain on sale of real estate, excluding current portion
-
20,270
Income taxes payable, excluding current portion
289
289
Deferred income taxes
5
17
Long-term debt
53,831
53,894
TOTAL LIABILITIES
200,816
181,815
Commitments and contingencies
STOCKHOLDERS'
EQUITY Preferred stock, par value $1.00; Authorized - 500,000
shares; Issued - none
-
-
Common stock, par value $0.10; Authorized - 120,000,000 shares;
Issued - 23,738,003 shares; Outstanding - 21,408,659 and 21,367,821
shares, respectively
2,374
2,374
Paid-in capital
78,085
77,688
(Accumulated deficit) retained earnings
(248
)
(10,917
)
Accumulated other comprehensive loss
(6,437
)
(6,801
)
Treasury stock, at cost; 2,329,344 and 2,370,182 shares,
respectively
(25,309
)
(26,155
)
TOTAL STOCKHOLDERS' EQUITY
48,465
36,189
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
249,281
$
218,004
GAAP to Non-GAAP
Reconciliations
(in thousands)
Three Months Ended
February 2, 2020
January 27, 2019
Reconciliation of GAAP net loss to Non-GAAP net loss: GAAP
net loss
$
(10,808
)
$
(3,215
)
Selling, administrative and other operating costs
-
(486
)
(b) Restructuring and severance costs
1,246
(a)
59
Impairment Costs
11
-
Non-GAAP net loss
$
(9,551
)
$
(3,642
)
Three Months Ended
February 2, 2020
January 27, 2019
Reconciliation of GAAP net loss to Adjusted EBITDA: GAAP net
loss
$
(10,808
)
$
(3,215
)
Selling, administrative and other operating costs
-
(486
)
(b) Restructuring and severance costs
1,246
(a)
59
Impairment Costs
11
-
Depreciation and amortization
1,973
1,603
Share-based compensation expense
511
(113
)
Total other (income) expense, net
1,286
772
Provision (benefit) for income taxes
195
273
Adjusted EBITDA
$
(5,586
)
$
(1,107
)
Special item adjustments consist of the following: (a)
Primarily relates to the strategic initiative costs to offshore a
significant number of identified roles to our staffing operations
in Bangalore, India. (b) Relates to the amortization of the
gain on the sale of the Orange, CA facility, which is included in
Selling, administrative and other operating costs.
GAAP to Non-GAAP
Reconciliations
(in thousands)
Three Months Ended February 2,
2020
Three Months Ended January 27,
2019
As Reported
As Reported
FX impact
Business Exited
Adjusted
Revenue North American Staffing
$
182,395
$
211,848
$
-
$
(350
)
$
211,498
International Staffing
26,223
26,266
(106
)
-
26,160
North American MSP
9,369
8,217
-
-
8,217
Corporate and Other
203
7,846
-
(7,674
)
172
Eliminations
(424
)
(741
)
-
350
(391
)
Total Revenue
$
217,766
$
253,436
$
(106
)
$
(7,674
)
$
245,656
% change
-11.4
%
Three Months Ended February 2,
2020
Three Months Ended January 27,
2019
Revenue
As Reported
Adjusted
MSP Delivery Model
Shift
Adjusted afterMSP Delivery ModelShift North American
Staffing
$
182,395
$
211,498
$
(2,563
)
$
208,935
International Staffing
26,223
26,160
-
26,160
North American MSP
9,369
8,217
66
8,283
Corporate and Other
203
172
-
172
Eliminations
(424
)
(391
)
-
(391
)
Total Revenue
$
217,766
$
245,656
$
(2,497
)
$
243,159
% change
-10.4
%
GAAP to Non-GAAP
Reconciliations
(in thousands)
Three Months Ended February 2,
2020
Three Months Ended January 27,
2019
As Reported
Business Exited
Adjusted
As Reported
Business Exited
Adjusted
Operating Income (Loss) North American Staffing
$
99
$
-
$
99
$
3,887
$
-
$
3,887
International Staffing
374
-
374
304
3
307
North American MSP
754
-
754
965
-
965
Corporate and Other
(10,554
)
32
(10,522
)
(7,326
)
(666
)
(7,992
)
Total Operating Income (Loss)
$
(9,327
)
$
32
$
(9,295
)
$
(2,170
)
$
(663
)
$
(2,833
)
GAAP to Non-GAAP
Reconciliations
(in thousands)
Three Months Ended February 2,
2020
Three Months Ended January 27,
2019
As Reported
Business Exited
Adjusted
As Reported
Business Exited
Adjusted
Operating Loss Gross Margin
$
31,427
$
-
$
31,427
$
37,699
$
(1,005
)
$
36,694
Selling, administrative and other operating costs
39,497
-
39,497
39,810
(333
)
39,477
Restructuring and severance costs
1,246
(32
)
1,214
59
(9
)
50
Impairment charges
11
-
11
-
-
-
Total Operating Loss
$
(9,327
)
$
32
$
(9,295
)
$
(2,170
)
$
(663
)
$
(2,833
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200312005722/en/
Investor Relations Contacts: Volt Information Sciences,
Inc. voltinvest@volt.com
Joe Noyons Three Part Advisors jnoyons@threepa.com
817-778-8424
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