Company Reports:
Staffing 360 Solutions, Inc. (Nasdaq:STAF), a public company
executing an international buy-and-build strategy through the
acquisition of staffing organizations in the United States and in
the United Kingdom, released its financial results today for its
fiscal quarter ended September 30, 2017.
“The third quarter represents a transformational
period in the short history of Staffing 360 Solutions,” stated
Brendan Flood, Executive Chairman of Staffing 360 Solutions. “We
completed two acquisitions and continued to drive margin
improvements and overhead controls. At the same time we materially
refinanced our balance sheet, improved our working capital position
and our ability to generate positive operating cash flow. Most
importantly, our trailing twelve months’ pro-forma Adjusted EBITDA,
which includes the profits of the acquisitions prior to
acquisition, is now $11 million, up from $5.4 million in the
comparable trailing twelve months of 2016.”
Summary of the Fiscal Third Quarter
Ended September 30, 2017
- Revenue increased to $50.3 million, a 9.6% increase from $46
million in the 2016 third quarter, including $6.8 million from
acquisitions. On a sequential quarterly basis, revenue improved by
$8.2 million, or 19.5% compared to the fiscal second quarter of
2017. For the nine months ended September 2017, revenue declined by
$2.2 million, including $1.8 million attributable to unfavorable
foreign currency translation, the exiting of low margin business,
partially offset by the acquisition revenue discussed above, to
$133.2 million from $135.4 million for the comparable period in
fiscal 2016.
- Gross profit increased 13.9% to $9.6 million from $8.4 million
in the fiscal third quarter of 2016. On a sequential basis, gross
profit improved by $1.7 million, or 21.5% compared to the fiscal
second quarter of 2017. For the nine months ended September
2017, gross profit increased by 5.1% to $24.8 million from $23.6
million for the comparable period in fiscal 2016.
- Gross margins continued to remain strong, increasing from 18.3%
in the prior year third quarter to 19.0% in the third quarter of
fiscal 2017. For the nine months ended September 2017, the gross
margin was 18.6%, an improvement from 17.4% for the comparable
period in fiscal 2016.
- The two acquisitions completed in September, CBS Butler
Holdings Limited in the U.K. and firstPRO Georgia in the U.S. are
included in these results for only a few weeks. The full impact of
these acquisitions will be reflected in the fiscal fourth quarter
of 2017.
- Including $5.5 million of non-cash charges, relating to the
refinancing of the balance sheet, non-cash compensation, as well as
depreciation and amortization of intangible assets, and
approximately $0.9 million of acquisition-related and other
non-recurring expenses, the net loss attributable to common stock
was $5.4 million for the fiscal third quarter of 2017 compared to
$1.0 million for the comparable period in fiscal 2016. For the nine
months, the net loss attributable to common stock was $9.5 million,
including $10.7 million of non-cash charges relating to the
refinancing, depreciation and amortization of intangible assets,
and $1.2 million of acquisition-related and other non-recurring
expenses, against approximately $6.4 million for the comparable
period in fiscal 2016.
- Adjusted EBITDA was $2 million, a 24.4% increase over $1.6
million in the fiscal third quarter of 2016. For the nine months
Adjusted EBITDA was $4.6 million, an increase of 18.6% from $3.9
million for the comparable period in fiscal 2016.
- On a Trailing Twelve Months basis pro-forma Adjusted EBITDA was
$11.0 million compared to $5.4 million.
* A table has been included in this press
release reconciling Net loss to Adjusted EBITDA.
Matt Briand, President and Chief Executive
Officer, added, “The third quarter continued our emphasis on
improving the fundamentals of the company and driving our Pathway
to Profitability. We are excited about our two recent acquisitions
and see them being perfect fits to our existing businesses. As
mentioned last quarter, we have several new contracts that have
started to ramp up and will continue to do so from now into the new
year. Our intelligent integration approach has seen zero attrition
to our staff base or client base from the completion of the two
acquisitions.
“During the third quarter, we made material
strides in improving the quality of our Balance Sheet with our Net
Assets growing to $94 million from $54 million at December 2016.
The 3-Year Note from Jackson Investment Group is non-amortizing and
has cleaned up almost all of our short-term amortizing debt and
given us the opportunity, probably for the first time, to generate
free cashflow that can be used to drive further organic growth in
our operations. Additionally, it has allowed us to reduce our
working capital deficit to $6.5 million from $15.1 million at
December 2016. During the quarter we also refinanced our Revolver
with MidCap Financial, which provided more liquidity and a smoother
working capital model. We look forward to making similar
improvements to our UK asset-backed lending facility during the
fourth quarter,” said David Faiman, Chief Financial Officer.
“Staffing 360 Solutions has continued to drive
major developments this quarter and we look forward to discussing
them in more detail on our earnings conference call,” stated Flood.
“With the improving efficiency of our cost base, the increased
scale of our operations, and the strength of our Balance Sheet, we
believe we are in a stronger position to deliver on future
growth. We encourage investors to dial into our conference
call and to download our Earnings Call Presentation from our
website, which should provide additional understanding and
assistance for investors to follow during the course of our call;
we anticipate that this will continue to be a supplemental
component of our calls going forward.”
The Company encourages investors to review its
Form 10-Q for the fiscal quarter ended September 30, 2017 for
additional information regarding the Company’s results of
operations, liquidity, reviewed financial statements and other
pertinent information.
Earnings Conference Call
Staffing 360 Solutions will host its earnings
conference call on Wednesday, November 15, 2017 at 9:00 am Eastern
Time to discuss the Company’s financial results for the period
ended September 30, 2017, as well as its latest developments. The
conference call will include a Q&A session where investors will
have the opportunity to ask questions of management.
The teleconference can be accessed by dialing
877.407.0778 within the United States, or 201.689.8565
internationally. Please dial in 10 minutes prior to the
beginning of the call. There will be a playback of the
teleconference available until November 15, 2019. To listen
to the playback, dial 877.481.4010 within the United States or
919.882.2331 internationally and use replay ID number:22349.
The conference call will be simultaneously
webcast and available
at:http://www.investorcalendar.com/event/22349.
In addition, the Company is releasing an
Earnings Call Presentation to be followed during the conference
call, which is available for download from the Company’s website
at:http://www.staffing360solutions.com/res.html
About Staffing 360 Solutions, Inc.
Staffing 360 Solutions, Inc. (Nasdaq:STAF) is a
public company in the staffing sector engaged in the execution of
an international buy-and-build strategy through the acquisition of
domestic and international staffing organizations in the United
States and in the 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.
Non-GAAP Financial Measures
The Company uses financial measures which are
not calculated and presented in accordance with US generally
accepted accounting principles (“GAAP”) in evaluating its financial
and operational decision making regarding potential acquisitions,
as well as a means to evaluate period-to-period comparison. The
Company presents these non-GAAP financial measures because it
believes them to be an important supplemental measure of
performance that is commonly used by securities analysts, investors
and other interested parties in the evaluation of companies in our
industry. We refer you to the reconciliations below.
The Company defines Adjusted EBITDA as earnings
(or loss) from continuing operations before interest expense,
income taxes, depreciation and amortization, and amortization of
non-cash stock-based compensation, non-recurring acquisition and
restructuring expenses and goodwill impairment charges.
Forward-Looking Statements
Certain matters discussed within this press
release are forward-looking statements. These statements 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 the expectations reflected in
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, due to the
Company’s ability to successfully raise sufficient capital on
reasonable terms or at all, to consummate additional target
acquisitions, to successfully integrate any newly acquired
companies, to organically grow its business, to successfully defend
any potential future litigation, changes in local or national
economic conditions, the Company’s ability to comply with its
contractual covenants, including in respect of its debt, as
well as various additional risks, many of which are unknown at this
time and generally out of the Company’s control, and which are
detailed from time to time in Staffing 360 Solutions’ reports filed
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.
Corporate Investor Contact:Staffing 360
Solutions, Inc.Brendan Flood, Executive Chairman+1
646.507.5715info@staffing360solutions.com
Financial Contact:Staffing 360
Solutions, Inc.David Faiman, Chief Financial
Officer+1.646.507.5711info@staffing360solutions.com
Staffing 360 Solutions, Inc. and
SubsidiariesCondensed Consolidated Balance
Sheet(All Amounts in Thousands of U.S. Dollars)
|
|
September 30, |
|
December 31, |
$000s |
|
|
2017 |
|
|
|
2016 |
|
|
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
Current Assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
5,380 |
|
|
$ |
650 |
|
Accounts
receivable, net |
|
|
33,797 |
|
|
|
22,274 |
|
Prepaid
expenses and other current assets |
|
|
1,174 |
|
|
|
613 |
|
Total Current Assets |
|
|
40,351 |
|
|
|
23,537 |
|
|
|
|
|
|
Property
and equipment, net |
|
|
1,241 |
|
|
|
919 |
|
Identifiable intangible assets, net |
|
|
16,199 |
|
|
|
9,149 |
|
Goodwill |
|
|
33,362 |
|
|
|
15,779 |
|
Other
assets |
|
|
2,972 |
|
|
|
4,573 |
|
Total Assets |
|
$ |
94,125 |
|
|
$ |
53,957 |
|
|
|
|
|
|
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS'
EQUITY |
|
|
|
|
Current Liabilities: |
|
|
|
|
Accounts
payable and accrued expenses |
|
$ |
22,151 |
|
|
$ |
18,110 |
|
Current
portion of debt, net |
|
|
367 |
|
|
|
3,639 |
|
Accounts
receivable financing |
|
|
23,076 |
|
|
|
15,605 |
|
Other
current liabilities |
|
|
1,247 |
|
|
|
1,274 |
|
Total Current Liabilities |
|
|
46,841 |
|
|
|
38,628 |
|
|
|
|
|
|
Long-term
debt, net |
|
|
36,574 |
|
|
|
3,997 |
|
Other
long-term liabilities |
|
|
6,615 |
|
|
|
3,054 |
|
Total Liabilities |
|
|
90,030 |
|
|
|
45,679 |
|
|
|
|
|
|
Commitments and contingencies |
|
|
— |
|
|
|
— |
|
Series D
Preferred Stock |
|
|
— |
|
|
|
612 |
|
|
|
|
|
|
Stockholders' Equity: |
|
|
|
|
Preferred
stock |
|
|
— |
|
|
|
— |
|
Common
Stock |
|
|
— |
|
|
|
— |
|
Additional paid in capital |
|
|
60,784 |
|
|
|
54,658 |
|
Accumulated other comprehensive income |
|
|
662 |
|
|
|
855 |
|
Accumulated deficit |
|
|
(57,351 |
) |
|
|
(47,847 |
) |
Total Stockholders' Equity |
|
|
4,095 |
|
|
|
7,666 |
|
Total Liabilities, Mezzanine Equity and Stockholders'
Equity |
|
$ |
94,125 |
|
|
$ |
53,957 |
|
|
|
|
|
|
Staffing 360 Solutions, Inc. and
SubsidiariesCondensed Consolidated Statement of
Operations(All Amounts in Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
July 2, 2017 to
September 30, 2017 |
|
July 3, 2016 to
October 1, 2016 |
|
January 1, 2017 to
September 30, 2017 |
|
January 3, 2016 to
October 1, 2016 |
|
Revenue |
|
$ |
50,345 |
|
|
$ |
45,950 |
|
|
$ |
133,174 |
|
|
$ |
135,423 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenue, Excluding Depreciation and Amortization
Stated Below |
|
|
40,768 |
|
|
|
37,545 |
|
|
|
108,347 |
|
|
|
111,802 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
9,577 |
|
|
|
8,405 |
|
|
|
24,827 |
|
|
|
23,621 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses, excluding depreciation
and amortization stated below |
|
|
9,140 |
|
|
|
7,795 |
|
|
|
23,105 |
|
|
|
24,102 |
|
|
Depreciation and amortization |
|
|
790 |
|
|
|
727 |
|
|
|
2,310 |
|
|
|
2,059 |
|
|
Total Operating Expenses |
|
|
9,930 |
|
|
|
8,522 |
|
|
|
25,415 |
|
|
|
26,161 |
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) From Operations |
|
|
(353 |
) |
|
|
(117 |
) |
|
|
(588 |
) |
|
|
(2,540 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other Expenses: |
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(761 |
) |
|
|
(615 |
) |
|
|
(1,843 |
) |
|
|
(2,007 |
) |
|
Amortization of beneficial conversion feature |
|
|
— |
|
|
|
(183 |
) |
|
|
(184 |
) |
|
|
(550 |
) |
|
Amortization of debt discount and deferred financing costs |
|
|
(1,213 |
) |
|
|
(401 |
) |
|
|
(2,387 |
) |
|
|
(1,310 |
) |
|
Debt
extinguishment costs |
|
|
(2,819 |
) |
|
|
— |
|
|
|
(4,108 |
) |
|
|
— |
|
|
Other
income (expense) |
|
|
(10 |
) |
|
|
(35 |
) |
|
|
(31 |
) |
|
|
447 |
|
|
Total Other Expenses |
|
|
(4,803 |
) |
|
|
(1,234 |
) |
|
|
(8,553 |
) |
|
|
(3,420 |
) |
|
|
|
|
|
|
|
|
|
|
|
Loss Before Provision for Income Tax |
|
|
(5,156 |
) |
|
|
(1,351 |
) |
|
|
(9,141 |
) |
|
|
(5,960 |
) |
|
|
|
|
|
|
|
|
|
|
|
(Provision for) benefit from income taxes |
|
|
(206 |
) |
|
|
375 |
|
|
|
(213 |
) |
|
|
(260 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
|
(5,362 |
) |
|
|
(976 |
) |
|
|
(9,354 |
) |
|
|
(6,220 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) attributable to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
37 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Before Preferred Share Dividends |
|
|
(5,362 |
) |
|
|
(976 |
) |
|
|
(9,354 |
) |
|
|
(6,257 |
) |
|
|
|
|
|
|
|
|
|
|
|
Dividends
- Series A preferred stock |
|
|
(50 |
) |
|
|
(50 |
) |
|
|
(150 |
) |
|
|
(150 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net Loss Attributable to Common Stock |
|
$ |
(5,412 |
) |
|
$ |
(1,026 |
) |
|
$ |
(9,504 |
) |
|
$ |
(6,407 |
) |
|
|
|
|
|
|
|
|
|
|
|
Staffing 360 Solutions, Inc. and
SubsidiariesReconciliation of Net Loss
Attributable to Common Stock to Adjusted EBITDA(All
Amounts in Thousands of U.S. Dollars)
|
July 2, 2017 to
September 30, 2017 |
|
July 3, 2016 to
October 1, 2016 |
|
January 1, 2017 to
September 30, 2017 |
|
January 3, 2016 to
October 1, 2016 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Net Loss
Attributable to Common Stock |
$ |
(5,412 |
) |
|
$ |
(1,026 |
) |
|
$ |
(9,504 |
) |
|
$ |
(6,407 |
) |
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Interest
Expense |
$ |
761 |
|
|
$ |
615 |
|
|
$ |
1,843 |
|
|
$ |
2,007 |
|
|
Provision
for Income Taxes |
|
206 |
|
|
|
(375 |
) |
|
|
213 |
|
|
|
260 |
|
|
Depreciation and Amortization |
|
2,003 |
|
|
|
1,311 |
|
|
|
4,881 |
|
|
|
3,919 |
|
|
EBITDA |
|
(2,442 |
) |
|
|
525 |
|
|
|
(2,567 |
) |
|
|
(221 |
) |
|
|
|
|
|
|
|
|
|
|
Acquisition, Capital Raising and Other Non-Recurring
Expenses |
|
934 |
|
|
|
872 |
|
|
|
1,194 |
|
|
|
3,572 |
|
|
Other
Non-Cash Charges |
|
677 |
|
|
|
164 |
|
|
|
1,685 |
|
|
|
790 |
|
|
Debt
Extinguishment Costs |
|
2,819 |
|
|
|
- |
|
|
|
4,108 |
|
|
|
- |
|
|
Restructuring Charges |
|
5 |
|
|
|
6 |
|
|
|
7 |
|
|
|
16 |
|
|
Modification Expense |
|
11 |
|
|
|
- |
|
|
|
37 |
|
|
|
31 |
|
|
Dividends
– Series A Preferred Stock |
|
50 |
|
|
|
50 |
|
|
|
150 |
|
|
|
150 |
|
|
Other
Expense |
|
(6 |
) |
|
|
29 |
|
|
|
(13 |
) |
|
|
(494 |
) |
|
Net
Income Attributable to Non-Controlling Interest |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
37 |
|
|
Adjusted
EBITDA |
$ |
2,048 |
|
|
$ |
1,646 |
|
|
$ |
4,601 |
|
|
$ |
3,881 |
|
|
|
|
|
|
|
|
|
|
|
TTM Adjusted
EBITDA |
$ |
5,794 |
|
|
$ |
5,362 |
|
|
$ |
5,794 |
|
|
$ |
5,362 |
|
|
|
|
|
|
|
|
|
|
|
Pro Forma TTM
Adjusted EBITDA |
$ |
11,034 |
|
|
$ |
5,362 |
|
|
$ |
11,034 |
|
|
$ |
5,362 |
|
|
|
|
|
|
|
|
|
|
|
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