Staffing 360 Solutions Reports Fiscal Full Year 2020 and Fourth Quarter Results
April 19 2021 - 8:36AM
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 its Fiscal 2020 full year-end and fourth
quarter financial results.
Q4 2020 Overview
- Revenue declined by 15.7% to $53.8
million from $63.8 million in Q4 ’19 (10.9% decline excluding the
disposal of firstPRO)
- Sequential revenue growth from Q3
was 10.7% (15.3% increase excluding the disposed business)
- Gross profit declined by 28.6% to
$8.3 million from $11.6 million in Q4 ’19 (15.9% decline excluding
the disposed business)
- Loss from operations of $1.4
million as compared with a loss from operations of $0.9 million in
Q4 ’19
- Net loss of $2.2 million improved
slightly from a net loss of $2.5 million in Q4 ’19
- EBITDA declined 71.9% to $0.2
million from $0.7 million in Q4 ’19
- Adjusted EBITDA declined by 31.2%
to $1.7 million from $2.5 million in Q4 ’19
- Sequential AEBITDA grew 41.60% from
Q3 (57.3% increase excluding the disposed business)
- On a sequential basis over Q3 ‘20,
revenue grew by 10.7% (15.3% excluding disposed business), gross
profit was flat (up 10.9% excluding disposal) and AEBITDA improved
by 41.6% (57.3% excluding the disposal)
Fiscal 2020 Overview
- Revenue declined by 26.6% to $204.5 million from $278.5 million
in Fiscal 2019
- Gross profit was $34.8 million, down from $48.3 million in
Fiscal 2019, a drop of 27.9%. Excluding the disposal, the decline
was 22.8%
- Gross margin held at 17.0% compared with 17.3% in Fiscal
2019
- Income from operations was a loss of $8.8 million compared with
a profit of $0.6 million in Fiscal 2019
- Net loss of $15.6 million declined against a net loss of $4.9
million in Fiscal 2019
- EBITDA was a loss of $4.9 million compared with a profit of
$6.6 million in Fiscal 2019
- Adjusted EBITDA fell to $4.7 million from $9.8 million Fiscal
2019
Brendan Flood, Chairman and Chief Executive Officer
said, “2020 was a very challenging year for the entire economy and
for the staffing industry. We took early and on-going steps to
right-size our cost base with overhead savings that allowed us to
manage against the worst impact of the pandemic. After a
particularly painful economic period across March to July, we have
continued to grow our temporary contractor numbers month-over-month
and our permanent placement business -- and we are doing it with a
healthier economic model for our future.
“Our sequential improvements in performance across
the second half of the year are positive signs that the markets in
both the US and the UK are improving and recovering,” continued
Flood.
“While full year revenue, EBITDA and adjusted
EBITDA declined, the financial health of our Balance Sheet has
improved considerably, and has improved further post year end to
the point that we have reduced debt by 46.4% since June 2020,
redeemed approximately $6.8 million or 52.5% of Series E Preferred
Shares and eliminated approximately $8.5 million in interest and
dividends. I look forward to sharing more details on our Financial
Results Conference Call,” Flood concluded.
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 April 21, 2021. The call can also be accessed
"live" online at http://public.viavid.com/index.php?id=144551. A
replay of the recorded call will be available for 90 days on the
Company's website (http://www.staffing360solutions.com/res.html).
You can also listen to a replay of the call by dialing 844-512-2921
(international participants dial 412-317-6671) starting April 21,
2021, at 7:30pm ET through April 23, 2021 at 11:59 pm ET. Please
use PIN Number 1685371.
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 U.S. 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.
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 and as part of its targeted consolidation
model, is pursuing acquisition targets in the finance and
accounting, administrative, engineering, IT, and Light Industrial
staffing space. For more information, visit
http://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. Forward-looking
statements are not guarantees of future performance, are based on
certain assumptions and are subject to various known and unknown
risks and uncertainties, many of which are beyond the Company's
control, and cannot be predicted or quantified; consequently,
actual results may differ materially from those expressed or
implied by such forward-looking statements. Such risks and
uncertainties include, without limitation, market and other
conditions; the geographic, social and economic impact of COVID-19
on the Company’s ability to conduct its business and raise capital
in the future when needed; weakness in general economic conditions
and levels of capital spending by customers in the industries the
Company serves; weakness or volatility in the financial and capital
markets, which may result in the postponement or cancellation of
customer capital projects or the inability of the Company’s
customers to pay the Company’s fees; the termination of a major
customer contract or project; delays or reductions in U.S.
government spending; credit risks associated with the Company’s
customers; competitive market pressures; the availability and cost
of qualified labor; the Company’s level of success in attracting,
training and retaining qualified management personnel and other
staff employees; changes in tax laws and other government
regulations, including the impact of health care reform laws and
regulations; the possibility of incurring liability for the
Company’s business activities, including, but not limited to, the
activities of the Company’s temporary employees; the Company’s
performance on customer contracts; negative outcome of pending and
future claims and litigation; government policies, legislation or
judicial decisions adverse to the Company’s businesses; the
Company’s ability to access the capital markets by pursuing
additional debt and equity financing to fund its business plan and
expenses on terms acceptable to the Company or at all; the
Company’s ability to achieve loan forgiveness under Paycheck
Protection Program; and the Company’s ability to comply with its
contractual covenants, including in respect of its debt agreements,
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:Terri
MacInnis, VP of IRBibicoff + MacInnis, Inc.818.379.8500 x 2
terri@bibimac.com
|
|
Staffing 360
Solutions, Inc. and Subsidiaries |
Reconciliation
of Net Loss to Adjusted EBITDA |
(All Amounts
in Thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2020 |
|
Q4 2019 |
|
|
|
Fiscal 2020 |
|
|
Fiscal 2019 |
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
53,834 |
|
|
$ |
63,834 |
|
|
|
|
$ |
204,527 |
|
|
|
$ |
278,478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
$ |
8,288 |
|
|
$ |
11,614 |
|
|
|
|
$ |
34,813 |
|
|
|
$ |
48,309 |
|
|
|
Gross
Margin |
|
|
15.4 |
% |
|
|
18.2 |
% |
|
|
|
|
17.0 |
% |
|
|
|
17.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(2,241 |
) |
|
$ |
(2,544 |
) |
|
|
|
$ |
(15,642 |
) |
|
|
$ |
(4,894 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
$ |
1,439 |
|
|
$ |
2,180 |
|
|
|
|
$ |
7,195 |
|
|
|
$ |
7,628 |
|
|
|
Benefit from income taxes income taxes |
|
|
147 |
|
|
|
(39 |
) |
|
|
|
|
(100 |
) |
|
|
|
(335 |
) |
|
|
Depreciation and amortization |
|
|
844 |
|
|
|
1,076 |
|
|
|
|
|
3,677 |
|
|
|
|
4,226 |
|
|
|
EBITDA |
|
|
189 |
|
|
|
673 |
|
|
|
|
|
(4,870 |
) |
|
|
|
6,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition, capital raising and other non-recurring expenses
(1) |
|
|
2,241 |
|
|
|
2,445 |
|
|
|
|
|
6,714 |
|
|
|
|
4,956 |
|
|
|
Other non-cash charges (2) |
|
|
107 |
|
|
|
213 |
|
|
|
|
|
662 |
|
|
|
|
840 |
|
|
|
Impairment of Goodwill |
|
|
- |
|
|
|
- |
|
|
|
|
|
2,969 |
|
|
|
|
- |
|
|
|
Re-measurement (income) loss on intercompany note |
|
|
(932 |
) |
|
|
(867 |
) |
|
|
|
|
(584 |
) |
|
|
|
(383 |
) |
|
|
Gain on settlement of deferred consideration |
|
|
- |
|
|
|
61 |
|
|
|
|
|
- |
|
|
|
|
(1,924 |
) |
|
|
Restructuring Charges |
|
|
21 |
|
|
|
(10 |
) |
|
|
|
|
21 |
|
|
|
|
(10 |
) |
|
|
Gain on business sale |
|
|
96 |
|
|
|
- |
|
|
|
|
|
(124 |
) |
|
|
|
- |
|
|
|
Other loss |
|
|
(3 |
) |
|
|
(19 |
) |
|
|
|
|
(125 |
) |
|
|
|
(326 |
) |
|
|
Adjusted EBITDA |
|
$ |
1,719 |
|
|
$ |
2,497 |
|
|
|
|
$ |
4,663 |
|
|
|
$ |
9,778 |
|
|
|
Adjusted
EBITDA Margin |
|
|
3.2 |
% |
|
|
3.9 |
% |
|
|
|
|
2.3 |
% |
|
|
|
3.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA of Divested Business (3) |
|
|
|
|
|
|
|
|
|
|
|
$ |
(507 |
) |
|
|
$ |
(908 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro
Forma TTM Adjusted EBITDA (4) |
|
|
|
|
|
|
|
|
|
|
|
$ |
4,156 |
|
|
|
$ |
8,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Gross Profit TTM (5) |
|
|
|
|
|
|
|
|
|
|
|
$ |
31,199 |
|
|
|
$ |
40,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TTM Adjusted
EBITDA as percentage of adjusted gross profit TTM |
|
|
|
|
|
|
|
|
|
|
|
|
14.9 |
% |
|
|
|
24.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. In addition, the Company included
non-recurring expenses related to salaries, rent and bad debts
which were a direct result of the Covid-19 pandemic. Due to
government mandated restrictions, the Company had to temporarily
close all of its offices and, due to social distancing
restrictions, could not make full use of these facilities for
significant periods of time during the year, both in the US and UK.
These restrictions are still ongoing in 2021. The Company
calculated an adjustment of $1.4 million for the time these offices
were closed or partially not used due to Covid-19 related
restrictions. In addition, the Company reduced headcounts
throughout the Company. The reduction in 2019 related to
performance and in 2020 related to Covid-19 staff reductions. These
positions are no longer included in the current cost structure. The
Company had internal staff of 291 just before the onset of the
pandemic and 196 by the end of the Fiscal 2020. Salary adjustments
are standard treatment for adjustment to EBITDA for management
reporting purposes. |
(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) Adjusted EBITDA of
Divested Business for the period prior to the divestment date. |
(4) Pro Forma Adjusted
EBITDA excludes the Adjusted EBITDA of Divested Business for the
period prior to the divestment date. |
(5) Adjusted Gross
Profit excludes gross profit of business divested in September
2020, for the period prior to divestment date. |
|
Staffing 360
Solutions, Inc. and Subsidiaries |
Reconciliation
of Net Loss to Adjusted EBITDA |
(All Amounts
in Thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2020 |
|
Q3 2020 |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
Revenue |
|
$ |
53,834 |
|
|
$ |
48,640 |
|
|
|
|
|
|
|
|
Gross Profit |
|
$ |
8,288 |
|
|
$ |
8,323 |
|
|
Gross
Margin |
|
|
15.4 |
% |
|
|
17.1 |
% |
|
|
|
|
|
|
|
Net
loss |
|
$ |
(2,241 |
) |
|
$ |
(2,641 |
) |
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
Interest expense |
|
$ |
1,439 |
|
|
$ |
1,582 |
|
|
Benefit from income taxes income taxes |
|
|
147 |
|
|
|
(118 |
) |
|
Depreciation and amortization |
|
|
844 |
|
|
|
932 |
|
|
EBITDA |
|
|
189 |
|
|
|
(245 |
) |
|
|
|
|
|
|
|
Acquisition, capital raising and other non-recurring expenses
(1) |
|
|
2,241 |
|
|
|
2,073 |
|
|
Other non-cash charges (2) |
|
|
107 |
|
|
|
209 |
|
|
Impairment of Goodwill |
|
|
- |
|
|
|
- |
|
|
Re-measurement (income) loss on intercompany note |
|
|
(932 |
) |
|
|
(442 |
) |
|
Gain on settlement of deferred consideration |
|
|
- |
|
|
|
- |
|
|
Restructuring Charges |
|
|
21 |
|
|
|
- |
|
|
Gain on business sale |
|
|
96 |
|
|
|
(220 |
) |
|
Other loss |
|
|
(3 |
) |
|
|
(161 |
) |
|
Adjusted EBITDA |
|
$ |
1,719 |
|
|
$ |
1,214 |
|
|
Adjusted
EBITDA Margin |
|
|
3.2 |
% |
|
|
2.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. In addition, the Company included
non-recurring expenses related to salaries, rent and bad debts
which were a direct result of the Covid-19 pandemic. Due to
government mandated restrictions, the Company had to temporarily
close all of its offices and, due to social distancing
restrictions, could not make full use of these facilities for
significant periods of time during the year, both in the US and UK.
These restrictions are still ongoing in 2021. The Company
calculated an adjustments of $0.5 million and $0.3M in Q3 and Q4,
respectively for the time these offices were closed or partially
not used due to Covid-19 related restrictions. |
|
(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. |
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