Staffing 360 Solutions Reports First Quarter 2021 Results
May 17 2021 - 5:14PM
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 2021 first quarter financial
results.
Q1 2020 Overview
- Revenue declined by 16.6% to $49.0
million from $58.7 million in Q1 ’20 (11.3% decline excluding the
disposal of firstPRO)
- Gross profit declined by 24.7% to
$8.0 million from $10.6 million in Q1 ’20 (9.4% decline excluding
the disposed business)
- Loss from operations narrowed to
$0.6 million as compared with a loss from operations of $4.1
million in Q1 ’20 - a result of several measures including
annualized overhead savings of $5.5 million in ’2020
- Net loss of $1.7 million improved
substantially from a net loss of $7.0 million in Q1 ‘20
- EBITDA improved to $0.3 million
from ($4.0 million) in Q1 ’20
- Adjusted EBITDA was generally flat
at $1.1 million from $1.2 million in Q1
’20
Brendan Flood, Chairman and Chief Executive
Officer, said, “While businesses continue to operate in an economy
impacted by the COVID-19 pandemic, I’m pleased to note that we are
continuing to see the early pent-up demand for our services in this
developing recovery. For example, we have already signed just over
60 new contracts in our Commercial business this year. Our markets
are recovering and our business is steadily improving. We look
forward to what we expect will be growing momentum into a stronger
second half of the year. Q1 2020 was the last materially
pre-pandemic quarter that we experienced.
“Benefits from the financings completed in 2021
have improved our balance sheet – resulting in with a cumulative
41.4% debt reduction with enhanced ability to achieve our long-term
goals,” Flood concluded.
Conference Call The Company
will host a Q1 Results Conference Call on Tuesday, May 18th at
9:00am ET to discuss financial results, the COVID-19 environment,
and recent positive business developments.
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 May 18, 2021. The call can also
be accessed "live" online at
http://public.viavid.com/index.php?id=144829. 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 May 18,
2021, at 7:30pm ET through May 21, 2021 at 11:59 pm ET. Please use
PIN Number 2781548.
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Q1 2021 |
|
Q1 2020 |
|
|
|
Trailing TwelveMonthsQ1 2021 |
|
Trailing TwelveMonthsQ1 2020 |
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
48,951 |
|
|
$ |
58,692 |
|
|
|
|
$ |
194,785 |
|
|
$ |
263,341 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
$ |
8,015 |
|
|
$ |
10,648 |
|
|
|
|
$ |
32,179 |
|
|
$ |
46,841 |
|
|
|
Gross
Margin |
|
|
16.4% |
|
|
|
18.1% |
|
|
|
|
|
16.5% |
|
|
|
17.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(1,688 |
) |
|
$ |
(6,997 |
) |
|
|
|
$ |
(10,333 |
) |
|
$ |
(12,120 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
$ |
1,157 |
|
|
$ |
2,230 |
|
|
|
|
$ |
6,122 |
|
|
$ |
8,007 |
|
|
|
Provision (benefit) income taxes |
|
|
37 |
|
|
|
(176 |
) |
|
|
|
|
108 |
|
|
|
(509 |
) |
|
|
Depreciation and amortization |
|
|
815 |
|
|
|
972 |
|
|
|
|
|
3,520 |
|
|
|
4,165 |
|
|
|
EBITDA |
|
|
321 |
|
|
|
(3,971 |
) |
|
|
|
|
(583 |
) |
|
|
(457 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition, capital raising and other non-recurring expenses
(1) |
|
|
826 |
|
|
|
1,340 |
|
|
|
|
|
6,209 |
|
|
|
6,075 |
|
|
|
Other non-cash charges (2) |
|
|
220 |
|
|
|
184 |
|
|
|
|
|
697 |
|
|
|
827 |
|
|
|
Impairment of Goodwill |
|
|
- |
|
|
|
2,969 |
|
|
|
|
|
- |
|
|
|
2,969 |
|
|
|
Re-measurement (income) loss on intercompany note |
|
|
(128 |
) |
|
|
675 |
|
|
|
|
|
(1,387 |
) |
|
|
643 |
|
|
|
Gain on settlement of deferred consideration |
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
(1,077 |
) |
|
|
Restructuring Charges |
|
|
- |
|
|
|
- |
|
|
|
|
|
21 |
|
|
|
(0 |
) |
|
|
Gain on business sale |
|
|
- |
|
|
|
- |
|
|
|
|
|
(124 |
) |
|
|
0 |
|
|
|
Other loss |
|
|
(107 |
) |
|
|
14 |
|
|
|
|
|
(244 |
) |
|
|
(26 |
) |
|
|
Adjusted EBITDA |
|
$ |
1,132 |
|
|
$ |
1,211 |
|
|
|
|
$ |
4,589 |
|
|
$ |
8,954 |
|
|
|
Adjusted
EBITDA Margin |
|
|
2.3% |
|
|
|
2.1% |
|
|
|
|
|
2.4% |
|
|
|
3.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA of Divested Business (3) |
|
|
|
|
|
|
|
$ |
(8 |
) |
|
$ |
(998 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro
Forma TTM Adjusted EBITDA (4) |
|
|
|
|
|
|
|
$ |
4,581 |
|
|
$ |
7,956 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Gross Profit TTM (5) |
|
|
|
|
|
|
|
$ |
30,365 |
|
|
$ |
39,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TTM Adjusted
EBITDA as percentage of adjusted gross profit TTM |
|
|
|
|
|
|
|
|
15.1% |
|
|
|
22.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
(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 $1.85 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 and 2021 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 193 by the end of Q1 2021. 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. |
|
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