Staffing 360 Solutions Reports First Quarter 2020 Results
June 26 2020 - 4:20PM
Staffing 360 Solutions, Inc. (NASDAQ: STAF), a company executing an
international buy-integrate-build strategy through the acquisition
of staffing organizations in the United States and the United
Kingdom, today announced Fiscal 2020 first quarter results, which
were impacted in March by the economic downturn resulting from the
COVID-19 pandemic.
Brendan Flood, Chairman and Chief Executive
Officer said, “Q1 results were directly in line with the guidance
provided in our year-end financial results call. As anticipated,
the revenue decline was principally due to the loss of a low-margin
client in the UK and the impact of IR35 payroll tax legislation in
the UK. Additionally, late in the quarter both countries in
which we do business were negatively impacted by the swift
worldwide economic turndown due to COVID-19.
“It’s important to note that we have moved from
$2.9 million negative cash flow in Q1 2019 to breakeven in Q1 2020,
driven by the successful management of our accounts receivables
aging (particularly in the UK) and our overall cost controls – most
of which will flow through into the second and third quarters.”
Q1 2020 Overview
- Revenue declined by 20.5% to $58.7 million, from $73.8 million
in Q1 ’19
- Gross profit declined by 12.1% to $10.6 million, from $12.1
million in Q1 ’19
- Gross margin increased to 18.1% compared with 16.4% in Q1
’19
- Income (Loss) from operations of ($4.1 million) compared with
income from operations of $0.8 million in Q1 ’19 was primarily
driven by a goodwill impairment charge of $3 million
- Net Income (Loss) of ($7.0 million) compared with net gain of
$0.2 million in Q1 ’19
- EBITDA declined to negative ($4.0 million) from $3.1 million in
Q1 ’19
- Adjusted EBITDA remained positive at $1.2 million, down from
$2.0 million in Q1 ’19
Flood continued, “I am very proud of the way our
team quickly and efficiently reorganized itself to effectively
begin and continued working remotely. We have served, and are
continuing to serve, our clients efficiently and productively
during these unprecedented times of economic turbulence.
“I am more than pleased to be able to report
that we are encouraged to see revenue improvement, albeit slow,
over the past four weeks. We are cautiously optimistic looking
ahead into the end of year.
“Based on our current outlook, I believe that
the combined US and UK government stimulus assistance we’ve
received ($19.4 million from a forgivable US PPP loan, and $1.3
million VAT deferral and government-funded furlough program from
the UK) will make a significant positive improvement in our full
year financial results. We expect that our use of the US PPP funds
should qualify for and allow for full, or nearly full, forgiveness
of that loan. We are actively evaluating additional US and UK
government programs for which we may qualify,” Flood concluded.
Use of Non-GAAP Financial
Measures EBITDA and Adjusted EBITDA are non-GAAP financial
measures. Other companies may have different definitions of these
non-GAAP financial measures, and as a result they may not be
comparable with non-GAAP financial measures provided by other
companies. EBITDA and Adjusted EBITDA are calculated in a manner
consistent with that shown in the table at the end of this press
release and should not be considered alternatives to measurements
required by US GAAP, such as net revenue, operating profit or net
income, and should not be considered a measure of the Company’s
liquidity.
The Company uses these non-GAAP financial
measures, among several other metrics, to assess and analyze its
operational results and trends. The Company also believes these
measures are useful to investors because they are common operating
performance metrics as well as metrics routinely used to assess
potential enterprise value.
Conference CallThe Participant
Dial-In Number for the conference call is 323-701-0225.
Participants should dial in to the call at least five minutes
before 9:00am ET June 29, 2020. The call can also be accessed
"live" online at http://public.viavid.com/index.php?id=140365. A
replay of the recorded call will be available for 90 days on the
Company's website
(https://www.staffing360solutions.com/investors-2/links-page/investors-material-1?).
You can also listen to a replay of the call by dialing 888-203-1112
(international participants dial 719-457-0820) starting June 29,
2020, at 7:30pm ET through July 6, 2020 at 11:59pm ET. Please use
PIN Number 5528829.
About Staffing 360 Solutions,
Inc.Staffing 360 Solutions, Inc. is engaged in the
execution of an international buy-integrate-build strategy through
the acquisition of domestic and international staffing
organizations in the United States and United Kingdom. The
Company believes that the staffing industry offers opportunities
for accretive acquisitions that will drive its annual revenues to
$500 million. As part of its targeted consolidation model, the
Company is pursuing acquisition targets in the finance and
accounting, administrative, engineering, IT, and Light Industrial
staffing space. For more information, please
visit: www.staffing360solutions.com. Follow Staffing 360
Solutions
on Facebook, LinkedIn and Twitter.
Forward-Looking StatementsThis press release
contains forward-looking statements, which may be identified by
words such as "expect," "look forward to," "anticipate," "intend,"
"plan," "believe," "seek," "estimate," "will," "project" or words
of similar meaning. Although Staffing 360 Solutions, Inc.
believes such forward-looking statements are based on reasonable
assumptions, it can give no assurance that its expectations will be
attained. Actual results may vary materially from those
expressed or implied by the statements herein, including the goal
of achieving annualized revenues of $500 million, the forgiveness
of the US PPP loans, due to the Company’s ability to successfully
raise sufficient capital on reasonable terms or at all, to
consummate additional acquisitions, to successfully integrate newly
acquired companies, to organically grow its business, to
successfully defend potential future litigation, changes in local
or national economic conditions, the ability to comply with
contractual covenants, including in respect of its debt, as well as
various additional risks, many of which are now unknown and
generally out of the Company’s control, and which are detailed from
time to time in reports filed by the Company with the SEC,
including quarterly reports on Form 10-Q, reports on Form 8-K and
annual reports on Form 10-K. Staffing 360 Solutions does not
undertake any duty to update any statements contained herein
(including any forward-looking statements), except as required by
law.
Investor Relations Contact: Harvey Bibicoff,
CEO Bibicoff + MacInnis, Inc. 818.379.8500
harvey@bibimac.com
Staffing 360 Solutions, Inc. and Subsidiaries |
Reconciliation of Net Loss to Adjusted EBITDA |
(All Amounts in Thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2020 YTD |
|
Q1 2019 YTD |
|
|
|
Trailing Twelve Months Q1 2020 |
|
Trailing Twelve Months Q1 2019 |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) income |
|
$ |
(6,997 |
) |
|
$ |
229 |
|
|
|
|
$ |
(12,120 |
) |
|
$ |
(5,001 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Interest expense and amortization of debt discount and deferred
financing costs |
|
$ |
2,417 |
|
|
$ |
2,007 |
|
|
|
|
$ |
8,894 |
|
|
$ |
8,896 |
|
|
Benefit from income taxes |
|
|
(176 |
) |
|
|
(2 |
) |
|
|
|
|
(509 |
) |
|
|
(132 |
) |
|
Depreciation and Amortization |
|
|
785 |
|
|
|
877 |
|
|
|
|
|
3,278 |
|
|
|
3,203 |
|
|
EBITDA |
|
|
(3,971 |
) |
|
|
3,111 |
|
|
|
|
|
(457 |
) |
|
|
6,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition, capital raising, restructuring charges and other
non-recurring expenses (1) |
|
|
1,340 |
|
|
|
211 |
|
|
|
|
|
6,075 |
|
|
|
2,488 |
|
|
Other non-cash charges (2) |
|
|
184 |
|
|
|
197 |
|
|
|
|
|
827 |
|
|
|
926 |
|
|
Re-measurement income (loss) on intercompany note |
|
|
675 |
|
|
|
(351 |
) |
|
|
|
|
643 |
|
|
|
910 |
|
|
Gain in fair value of warranty liability |
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
(341 |
) |
|
Impairment of goodwill |
|
|
2,969 |
|
|
|
- |
|
|
|
|
|
2,969 |
|
|
|
- |
|
|
Deferred consideration settlement |
|
|
- |
|
|
|
(847 |
) |
|
|
|
|
(1,077 |
) |
|
|
(847 |
) |
|
Gain from sale of business |
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
(238 |
) |
|
Other loss (income) |
|
|
14 |
|
|
|
(286 |
) |
|
|
|
|
(26 |
) |
|
|
(434 |
) |
|
Adjusted EBITDA |
|
$ |
1,211 |
|
|
$ |
2,035 |
|
|
|
|
$ |
8,954 |
|
|
$ |
9,429 |
|
|
Adjusted EBITDA Margin |
|
|
2.1 |
% |
|
|
2.8 |
% |
|
|
|
|
3.4 |
% |
|
|
3.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Acquisition
Adjusted EBITDA (3) |
|
|
|
|
|
|
|
$ |
- |
|
|
$ |
1,389 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma TTM Adjusted
EBITDA (4) |
|
|
|
|
|
|
|
$ |
8,954 |
|
|
$ |
10,818 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Gross Profit TTM
(5) |
|
|
|
|
|
|
|
$ |
46,839 |
|
|
$ |
48,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TTM Adjusted EBITDA as
percentage of adjusted gross profit TTM |
|
|
|
|
|
|
|
|
19.1 |
% |
|
|
19.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Acquisition,
capital raising and other non-recurring expenses primarily
relate to capital raising expenses, acquisition and integration
expenses and legal expenses incurred in relation to matters outside
the ordinary course of business. |
(2) Other non-cash
charges primarily relate to staff option and share
compensation expense, expense for shares issued to directors for
board services, and consideration paid for consulting
services. |
(3)
Pre-Acquisition Adjusted EBITDA excludes the Adjusted EBITDA of
acquisitions for the period prior to the acquisition date. |
(4) Pro Forma
TTM Adjusted EBITDA includes the Adjusted EBITDA of acquisitions
for the period prior to the acquisition date. |
(5) Adjusted Gross
Profit excludes gross profit of business divested in June 2018, for
the period prior to divestiture date. |
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