Staffing 360 Solutions Reports Year End 2022 Financial Results
May 22 2023 - 8:00AM
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 Year End 2022 financial
results.
YE 2022 Overview
- Revenue
increased by 23.8% (26.7% in constant currency) to $244.9M compared
with $197.7M in the prior year period
- Gross profit
was $42.8M from $33.8M in the prior year period, or an increase of
26.3% (or 29.1% in constant currency)
- An impairment
to Goodwill of $10M was booked at the year-end to recognize the
performance of the stock price
- Operating loss
was ($13.46M), after the impairment, compared with operating loss
of ($7.3M) in the prior year, which contained a $3.1M
impairment
- Net loss was
($17.0M), including the impairment, compared with net income of
$8.2M in the prior year period. The prior year included forgiveness
of PPP loans and interest of $19.6M
- EBITDA for the
fiscal year was a loss of ($9.7M), including the impairment,
compared to income of $14.8M in the prior year period, which
included the one-time gain of $19.6M for the forgiveness of PPP
loans and interest.
- Adjusted
EBITDA was $7.4M as compared with $2.4M in the prior year period,
an increase of 205%
- Diluted EPS
was a loss of ($8.04) as compared to $3.70 in the same period last
year
Quarter 4 2022 Overview
- Revenue
increased by 37.5% (39.2% in constant currency) to $69.9M compared
with $50.8M in the prior year period
- Gross profit
was $11.4M from $7.2M in the prior year period, or an increase of
58.3% (or 60.6% in constant currency)
- An impairment
to Goodwill of $10M was booked at the year-end to recognize the
performance of the stock price
- Adjusted
EBITDA was $2.1M as compared to a loss of ($1.6M) in the prior year
period
A table showing a reconciliation of the
financial statements to Adjusted EBITDA is provided with this Press
Release.
Brendan Flood, Chairman, CEO and President,
said, “Our paradigm changing service delivery approach continues to
make advances in very challenging markets, with our year-over-year
revenue growth well into double digits with strong gross profit for
the year.
“It is important to note that the impairment
charge, while disappointing, is a non-cash charge and is a
reflection of the current condition of the micro-cap stock market
and is not related to the performance of any individual part of the
company.
“Following our acquisition of Headway Workforce
Solutions, we have continued to execute our stated strategy, and
believe that Headway’s unique service delivery model complements,
and enhances, our overall business model. The integration of
Headway into the Staffing 360 Solutions’ businesses has
successfully increased the combined profitability by $2M as of
year-end and we expect continued improvements to profitability in
2023.
“Our buy-integrate-build strategy is beginning
to pay dividends, and we anticipate continued revenue growth and
margin improvements as we move towards our long-term goals. As with
all staffing companies we continue to monitor the marketplace and
our client needs for any recessionary impacts, or other
macro-economic issues, and will take any necessary actions to
mitigate its impact.” concluded Mr. Flood.
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 Statements
This 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, our ability to
retain our listing on the Nasdaq Capital Market; 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; 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:Matt
BlazeiCoreIR516-386-0430mattb@coreir.com
STAFFING 360 SOLUTIONS, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(All amounts in thousands, except share
and per share values) |
|
|
Quarters Ended |
|
Fiscal Years Ended |
|
December 31, 2022 |
|
January 1, 2022 |
|
December 31, 2022 |
|
January 1, 2022 |
Revenue |
$ |
69,851 |
|
|
$ |
50,788 |
|
|
$ |
244,917 |
|
|
$ |
197,770 |
|
|
|
|
|
|
|
|
|
Cost of Revenue |
|
58,439 |
|
|
|
43,579 |
|
|
|
202,148 |
|
|
|
163,903 |
|
|
|
|
|
|
|
|
|
Gross Profit |
|
11,412 |
|
|
|
7,209 |
|
|
|
42,769 |
|
|
|
33,867 |
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
12,820 |
|
|
|
9,494 |
|
|
|
43,236 |
|
|
|
35,305 |
|
Impairment of Goodwill |
|
10,000 |
|
|
|
3,104 |
|
|
|
10,000 |
|
|
|
3,104 |
|
Depreciation and amortization |
|
850 |
|
|
|
636 |
|
|
|
2,990 |
|
|
|
2,758 |
|
Total Operating Expenses |
|
23,670 |
|
|
|
13,234 |
|
|
|
56,226 |
|
|
|
41,167 |
|
|
|
|
|
|
|
|
|
Loss From Operations |
|
(12,258 |
) |
|
|
(6,025 |
) |
|
|
(13,457 |
) |
|
|
(7,300 |
) |
|
|
|
|
|
|
|
|
Other (Expenses) Income: |
|
|
|
|
|
|
|
Interest expense |
|
(1,369 |
) |
|
|
(789 |
) |
|
|
(3,881 |
) |
|
|
(3,856 |
) |
Amortization of debt discount and deferred financing costs |
|
(86 |
) |
|
|
6 |
|
|
|
(604 |
) |
|
|
(359 |
) |
Re-measurement loss on intercompany note |
- |
|
|
(41 |
) |
|
- |
|
|
(260 |
) |
PPP forgiveness gain |
|
|
- |
|
- |
|
|
19,609 |
|
Other income (loss), net |
|
(12 |
) |
|
|
(325 |
) |
|
|
726 |
|
|
|
(33 |
) |
Total Other (Expenses) Income, net |
|
(1,467 |
) |
|
|
(1,149 |
) |
|
|
(3,759 |
) |
|
|
15,101 |
|
|
|
|
|
|
|
|
|
(Loss) Income Before Benefit from Income Tax |
|
(13,725 |
) |
|
|
(7,174 |
) |
|
|
(17,216 |
) |
|
|
7,801 |
|
|
|
|
|
|
|
|
|
Benefit from Income taxes |
|
287 |
|
|
|
459 |
|
|
|
222 |
|
|
|
357 |
|
|
|
|
|
|
|
|
|
Net (Loss) Income |
$ |
(13,438 |
) |
|
$ |
(6,715 |
) |
|
$ |
(16,994 |
) |
|
$ |
8,158 |
|
|
|
|
|
|
|
|
|
STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIESCONSOLIDATED
BALANCE SHEETS(All amounts in thousands, except share and par
values) |
|
|
|
|
|
As of |
|
As of |
|
December 31, 2022 |
|
January 1, 2022 |
ASSETS |
|
|
|
Current Assets: |
|
|
|
Cash |
$ |
1,992 |
|
|
$ |
4,558 |
|
Accounts receivable, net |
|
23,628 |
|
|
|
20,718 |
|
Prepaid expenses and other current assets |
|
1,762 |
|
|
|
988 |
|
Total Current Assets |
|
27,382 |
|
|
|
26,264 |
|
|
|
|
|
Property and equipment, net |
|
1,230 |
|
|
|
865 |
|
Goodwill |
|
19,891 |
|
|
|
23,828 |
|
Intangible assets, net |
|
17,385 |
|
|
|
13,649 |
|
Other assets |
|
6,701 |
|
|
|
3,506 |
|
Right of use asset |
|
9,070 |
|
|
|
5,578 |
|
Total Assets |
$ |
81,659 |
|
|
$ |
73,690 |
|
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
EQUITY |
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
Accounts payable and accrued expenses |
$ |
16,526 |
|
|
$ |
12,532 |
|
Accrued expenses - related party |
|
218 |
|
|
|
216 |
|
Current portion of debt |
|
249 |
|
|
|
9,223 |
|
Accounts receivable financing |
|
18,268 |
|
|
|
15,199 |
|
Leases - current liabilities |
|
1,188 |
|
|
|
1,006 |
|
Earnout liabilites |
|
8,344 |
|
|
|
4,054 |
|
Other current liabilities |
|
2,639 |
|
|
|
2,503 |
|
Total Current Liabilities |
|
47,432 |
|
|
|
44,733 |
|
|
|
|
|
Long-term debt - Related party |
|
8,661 |
|
|
|
279 |
|
Redeemable Series H preferred stock, net |
|
8,393 |
|
|
|
- |
|
Leases - non current |
|
8,640 |
|
|
|
4,568 |
|
Other long-term liabilities |
|
180 |
|
|
|
785 |
|
Total Liabilities |
|
73,306 |
|
|
|
50,365 |
|
|
|
|
|
Commitments and contingencies |
|
- |
|
|
|
- |
|
|
|
|
|
Stockholders' Equity: |
|
|
|
Preferred stock, $0.00001 par value, 20,000,000 shares
authorized; |
|
|
|
Series J Preferred Stock, 40,000 designated, $0.00001 par value, 0
and 0 shares issued and outstanding as of December 31, 2022 and
January 1, 2022, respectively |
|
|
|
Common stock, $0.00001 par value, 200,000,000 shares authorized;
2,629,199 and 1,758,835 shares issued and outstanding, as of
December 31, 2022 and January 1, 2022, respectively |
|
1 |
|
|
|
1 |
|
Additional paid in capital |
|
111,586 |
|
|
|
107,183 |
|
Accumulated other comprehensive (loss) income |
|
(2,219 |
) |
|
|
162 |
|
Accumulated deficit |
|
(101,015 |
) |
|
|
(84,021 |
) |
Total Stockholders' Equity |
|
8,353 |
|
|
|
23,324 |
|
Total Liabilities and Stockholders' Equity |
$ |
81,659 |
|
|
$ |
73,690 |
|
|
|
|
|
Adjusted EBITDA This measure is
defined as net income (loss) attributable to common stock before:
interest expense, benefit from income taxes; depreciation and
amortization; acquisition, capital raising and other non-recurring
expenses; other non-cash charges; impairment of goodwill;
re-measurement gain on intercompany note; restructuring charges;
gain from sale of business; PPP Forgiveness Gain; other income; and
charges we consider to be non-recurring in nature such as legal
expenses associated with litigation, professional fees associated
potential and completed acquisitions. We use this measure because
we believe it provides a more meaningful understanding of our
profit and cash flow generation.
|
Quarter Ended |
|
Twelve Months Ended |
|
December 31, 2022 |
|
January 1, 2022 |
|
December 31, 2022 |
|
January 1, 2022 |
Net (loss) income |
$ |
(13,438 |
) |
|
$ |
(6,715 |
) |
|
$ |
(16,994 |
) |
|
$ |
8,158 |
|
|
|
|
|
|
|
|
|
Interest expense |
|
1,369 |
|
|
|
788 |
|
|
|
3,881 |
|
|
|
3,856 |
|
Benefit from income taxes |
|
(287 |
) |
|
|
(459 |
) |
|
|
(222 |
) |
|
|
(357 |
) |
Depreciation and amortization |
|
936 |
|
|
|
632 |
|
|
|
3,594 |
|
|
|
3,118 |
|
EBITDA |
$ |
(11,420 |
) |
|
$ |
(5,754 |
) |
|
$ |
(9,741 |
) |
|
$ |
14,775 |
|
|
|
|
|
|
|
|
|
Acquisition, capital raising and other non-recurring expenses
(1) |
|
2,671 |
|
|
|
708 |
|
|
|
7,046 |
|
|
|
3,510 |
|
Other non-cash charges (2) |
|
816 |
|
|
|
17 |
|
|
|
848 |
|
|
|
361 |
|
Impairment of Goodwill |
|
10,000 |
|
|
|
3,104 |
|
|
|
10,000 |
|
|
|
3,104 |
|
Re-measurement gain on intercompany note |
|
- |
|
|
|
41 |
|
|
|
- |
|
|
|
260 |
|
PPP Forgiveness Gain |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(19,609 |
) |
Other (income) loss |
|
12 |
|
|
|
325 |
|
|
|
(726 |
) |
|
|
33 |
|
Adjusted EBITDA |
$ |
2,079 |
|
|
$ |
(1,559 |
) |
|
$ |
7,427 |
|
|
$ |
2,434 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as percentage of Gross Profit |
|
16.9 |
% |
|
|
-16.2 |
% |
|
|
17.4 |
% |
|
|
7.2 |
% |
|
|
|
|
|
|
|
|
(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. |
|
|
|
|
|
|
|
|
(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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