Volt Information Sciences, Inc. (“Volt” or the “Company”)
(NYSE-AMERICAN: VOLT) a global provider of staffing services, today
announced financial results for the second fiscal quarter ended May
3, 2020.
Second Quarter Highlighted Results
- Revenue was $207.3 million, compared to $252.1 million in the
prior-year quarter; Adjusted Revenue* decreased 14.1%.
- Gross margin was 15.6%, a 120-basis point improvement versus
the comparable quarter in fiscal 2019.
- GAAP operating loss was $4.4 million, compared to $3.8 million
in the prior-year quarter; Adjusted Operating Loss* increased by
$1.5 million year over year.
- Adjusted EBITDA* was a loss of $1.4 million, a $0.1 million
improvement compared to the prior-year quarter.
*Adjusted Revenue, Adjusted Operating Loss and Adjusted EBITDA
are Non-GAAP measures described and defined below.
“The second quarter of fiscal 2020 has certainly been an
unprecedented one for our organization. The magnitude of the
COVID-19 pandemic around the world triggering a rapid shutdown of
the global economy is unlike anything we have seen in Volt’s 70
year history,” said Linda Perneau, President and Chief Executive
Officer. “Our experienced management team was instrumental in
taking swift actions in response to this health and economic
crisis, resulting in substantive SG&A reductions and
improvement in both gross margin and Adjusted EBITDA. We remain
well poised as the economic recovery progresses, and our focus will
be on helping our clients and field employees return to work
safely.”
Second Quarter Results
North American Staffing revenue for the quarter was $173.4
million, as compared to $208.9 million for the second quarter of
fiscal 2019. Adjusted Revenue, which is a Non-GAAP measure, for
this segment decreased approximately 14.9 percent year over year.
The decrease is primarily attributable to client facility closures
and reduced demand associated with COVID-19, partially offset by
business wins, including from new opportunities created to meet
COVID-19 specific demand with new and existing clients.
International Staffing revenue was $24.3 million, compared to
$28.8 million in the second quarter of fiscal 2019. Adjusted
Revenue, for this segment decreased 13.2 percent year over year.
The decrease is primarily due to reduced work orders in the
U.K.
North American MSP revenue was $9.7 million, as compared to $9.6
million for the second quarter of fiscal 2019. Expansion of
services within existing clients and the incremental revenue
associated with a shift of certain clients from the North American
Staffing segment was mostly offset by factors related to
COVID-19.
Gross margin for the quarter was 15.6 percent of revenue,
compared to 14.4 percent of revenue in the second quarter of fiscal
2019. The change is attributable to a larger credit related to our
workers’ compensation versus the prior year, and a decrease in
payroll tax rates and other direct costs.
SG&A expense for the second quarter was $36.2 million, a
$2.7 million reduction from the prior-year quarter. The decrease is
primarily due to substantial cost reductions taken throughout the
year and in response to the COVID-19 pandemic.
Adjusted EBITDA, which is a Non-GAAP measure, for the second
quarter of fiscal 2020 was a loss of $1.4 million, as compared to a
loss of $1.5 million in the prior-year quarter.
Business Outlook
Due to the prolonged uncertainty surrounding the timing of
reopening specific geographies, the Company is not providing
Adjusted Revenue guidance for the third quarter of fiscal 2020.
Earnings Conference Call and Webcast
Volt Information Sciences, Inc. will conduct a conference call
on Tuesday, June 16, 2020, at 5:00 PM ET, to review the financial
results for the second fiscal quarter ended May 3, 2020. Investors
interested in participating on the live call can dial
1-877-407-9039 within the U.S. or 1-201-689-8470 from abroad, and
reference conference ID 13703899. The conference call, which may
include forward-looking statements, is also being webcast and will
be available via the investor relations section of the Company’s
website at www.volt.com. A replay of the webcast will be archived
on Volt’s investor relations website for 90 days.
Forward-Looking Statements
This press release contains forward-looking statements that are
subject to a number of known and unknown risks. Such risks include,
among others, general economic, competitive and other business
conditions (including the potential impact of the strain of
coronavirus known as COVID-19 on our operations as well as the
operations of our customers), the degree and timing of customer
utilization and renewal rate for contracts with the Company, and
the degree of success of business improvement initiatives that
could cause actual results, performance and achievements to differ
materially from those described or implied in the forward-looking
statements. Information concerning these and other factors that
could cause actual results to differ materially from those in the
forward-looking statements are contained in the “Risk Factors” and
other sections of the Company reports filed with the Securities and
Exchange Commission (SEC). You are cautioned not to place undue
reliance on such statements and to consult our SEC filings for
additional risks and uncertainties that may apply to our business
and the ownership of our securities. Our forward-looking statements
are presented as of the date made, and we disclaim any duty to
update such statements unless required by law to do so.
Note Regarding the Use of Non-GAAP Financial Measures
The Company has provided certain Non-GAAP financial information,
including Adjusted Revenue, Adjusted Operating Income (Loss) and
Adjusted EBITDA, which include adjustments to our GAAP financial
results. These measures are not in accordance with, or an
alternative for, generally accepted accounting principles (“GAAP”)
and may be different from Non-GAAP measures reported by other
companies.
The Company believes that the presentation of Non-GAAP measures,
including on a constant currency basis, eliminating the impact of
businesses sold or exited, the extra operating week in the fourth
quarter of fiscal 2019 and special items provides useful
information to management and investors regarding certain financial
and business trends relating to its financial condition and results
of operations because they permit evaluation of the results of the
Company without the effect of currency fluctuations, special items
or the impact of businesses sold or exited that management believes
make it more difficult to understand and evaluate the Company’s
results of operations. Special items include impairments,
restructuring and severance as well as certain income or expenses
which the Company does not consider indicative of the current and
future period performance and are more fully disclosed in the
tables.
Adjusted Revenue is defined as revenue excluding businesses
exited, the effect of foreign currency translation and the extra
operating week in the fourth quarter of fiscal 2019. The Company
has also migrated certain clients from a traditional staffing model
to a managed service model, resulting in the Company now managing a
greater percentage of such clients’ business under its North
American MSP. This shift provides increased opportunity for the
Company with the relevant clients. However, due to the structure of
MSP arrangements, revenue is recognized on a net basis, thereby
reducing revenues on a comparative period basis. Beginning in the
first quarter of 2020, the Company includes such delivery model
shifts within the Adjusted Revenue measurement, as it provides a
more comparable basis for evaluating performance results from
period to period and reflects the method used by management to
evaluate performance. A reconciliation is shown in the tables at
the end of this press release.
Adjusted EBITDA is defined as earnings or loss before interest,
income taxes, depreciation and amortization (“EBITDA”) adjusted to
exclude share-based compensation expense as well as the special
items described above.
Adjusted EBITDA is a performance measure rather than a cash flow
measure. The Company believes the presentation of Adjusted EBITDA
is relevant and useful for investors because it allows investors to
view results in a manner similar to the method used by
management.
Adjusted EBITDA has limitations as an analytical tool and should
not be considered in isolation from, or as a substitute for,
analysis of the Company’s results of operations and operating cash
flows as reported under GAAP. For example, Adjusted EBITDA does not
reflect capital expenditures or contractual commitments; does not
reflect changes in, or cash requirements for, the Company’s working
capital needs; does not reflect the interest expense, or the cash
requirements necessary to service the interest payments, on the
Company’s debt; and does not reflect cash required to pay income
taxes.
Adjusted Operating Income (Loss) is defined as operating income
(loss) excluding businesses exited and the extra operating week in
the fourth quarter of fiscal 2019.
The Company believes the presentation of Adjusted Operating
Income (Loss) is relevant and useful for investors because it
provides a more comparable basis to evaluate performance results
and analyze trends from period to period in a manner similar to the
method used by management.
The Company’s computation of Adjusted Revenue, Adjusted EBITDA
and Adjusted Operating Income (Loss) may not be comparable to other
similarly titled measures computed by other companies because all
companies do not calculate these measures in the same fashion.
About Volt Information Sciences, Inc.
Volt Information Sciences, Inc. is a global provider of staffing
services (traditional time and materials-based as well as
project-based). Our staffing services consist of workforce
solutions that include providing contingent workers, personnel
recruitment services, and managed staffing services programs
supporting primarily administrative, technical, information
technology, light-industrial and engineering positions. Our managed
staffing programs involve managing the procurement and on-boarding
of contingent workers from multiple providers. Volt services global
industries including aerospace, automotive, banking and finance,
consumer electronics, information technology, insurance, life
sciences, manufacturing, media and entertainment, pharmaceutical,
software, telecommunications, transportation, and utilities. For
more information, visit www.volt.com
Investor Relations Contacts: Volt Information Sciences,
Inc. voltinvest@volt.com
Joe Noyons Three Part Advisors jnoyons@threepa.com
817-778-8424
Financial Tables Follow
Results of Operations
(in thousands, except per share data)
Three Months Ended
Six Months Ended
May 3, 2020
February 2, 2020
April 28, 2019
May 3, 2020
April 28, 2019
Net revenue
$
207,275
$
217,766
$
252,070
$
425,041
$
505,506
Cost of services
175,038
186,339
215,813
361,377
431,550
Gross margin
32,237
31,427
36,257
63,664
73,956
Selling, administrative and other operating costs
36,189
39,497
38,939
75,686
78,749
Restructuring and severance costs
411
1,246
724
1,657
783
Impairment charges
-
11
347
11
347
Operating loss
(4,363
)
(9,327
)
(3,753
)
(13,690
)
(5,923
)
Interest income (expense), net
(621
)
(700
)
(699
)
(1,321
)
(1,445
)
Foreign exchange gain (loss), net
(266
)
(328
)
(314
)
(594
)
(101
)
Other income (expense), net
(152
)
(258
)
(166
)
(410
)
(405
)
Loss before income taxes
(5,402
)
(10,613
)
(4,932
)
(16,015
)
(7,874
)
Income tax provision
23
195
233
218
506
Net loss
$
(5,425
)
$
(10,808
)
$
(5,165
)
$
(16,233
)
$
(8,380
)
Per share data:
Basic:
Net loss
$
(0.25
)
$
(0.50
)
$
(0.24
)
$
(0.76
)
$
(0.40
)
Weighted average number of shares
21,416
21,416
21,082
21,416
21,081
Diluted:
Net loss
$
(0.25
)
$
(0.50
)
$
(0.24
)
$
(0.76
)
$
(0.40
)
Weighted average number of shares
21,416
21,416
21,082
21,416
21,081
Segment data:
Net revenue:
North American Staffing
$
173,386
$
182,395
$
208,871
$
355,781
$
420,719
International Staffing
24,303
26,223
28,809
50,526
55,075
North American MSP
9,745
9,369
9,579
19,114
17,796
Corporate and Other
187
203
5,431
390
13,277
Eliminations
(346
)
(424
)
(620
)
(770
)
(1,361
)
Net revenue
$
207,275
$
217,766
$
252,070
$
425,041
$
505,506
Operating income (loss):
North American Staffing
$
2,576
$
99
$
2,544
$
2,675
$
6,431
International Staffing
196
374
628
570
932
North American MSP
491
754
1,100
1,245
2,065
Corporate and Other
(7,626
)
(10,554
)
(8,025
)
(18,180
)
(15,351
)
Operating loss
$
(4,363
)
$
(9,327
)
$
(3,753
)
$
(13,690
)
$
(5,923
)
Work days
65
59
65
124
124
Condensed Consolidated
Statements of Cash Flows (in thousands)
Six Months ended
May 3, 2020
April 28, 2019
Cash, cash equivalents and restricted cash beginning of
the period
$
38,444
$
36,544
Cash used in all other operating activities
(7,161
)
(6,239
)
Changes in operating assets and liabilities
10,071
15,697
Net cash provided by operating activities
2,910
9,458
Purchases of property, equipment, and software
(3,092
)
(4,058
)
Net cash provided by (used in) all other investing activities
615
(21
)
Net cash used in investing activities
(2,477
)
(4,079
)
Net draw-down of borrowings
5,000
5,000
Debt issuance costs
(243
)
(177
)
Net cash used in all other financing activities
(6
)
(40
)
Net cash provided by financing activities
4,751
4,783
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
(521
)
(249
)
Net
increase in cash, cash equivalents and restricted cash
4,663
9,913
Cash,
cash equivalents and restricted cash end of the period
$
43,107
$
46,457
Cash
paid during the period: Interest
$
1,382
$
1,560
Income taxes
$
258
$
216
Reconciliation of cash, cash
equivalents and restricted cash end of the period: Current
Assets: Cash and cash equivalents
$
26,223
$
39,689
Restricted cash included in Restricted cash and short term
investments
16,884
6,768
Cash, cash equivalents and restricted cash, at end of period
$
43,107
$
46,457
Condensed Consolidated
Balance Sheets (in thousands, except share
amounts)
May 3,
2020
November 3,
2019
ASSETS CURRENT ASSETS: Cash and
cash equivalents
$
26,223
$
28,672
Restricted cash and short-term investments
19,445
12,794
Trade accounts receivable, net of allowances of $150 and $117,
respectively
116,373
135,950
Other current assets
8,480
7,252
TOTAL CURRENT ASSETS
170,521
184,668
Property, equipment and software, net
24,792
25,890
Right of use assets - operating leases
43,495
-
Other assets, excluding current portion
6,538
7,446
TOTAL ASSETS
$
245,346
$
218,004
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES: Accrued compensation
$
16,644
$
21,507
Accounts payable
29,668
36,341
Accrued taxes other than income taxes
13,360
11,244
Accrued insurance and other
21,008
24,654
Operating lease liabilities
7,807
-
Income taxes payable
1,651
1,570
TOTAL CURRENT LIABILITIES
90,138
95,316
Accrued insurance and other, excluding current portion
12,733
12,029
Operating lease liabilities, excluding current portion
40,312
-
Deferred gain on sale of real estate, excluding current portion
-
20,270
Income taxes payable, excluding current portion
289
289
Deferred income taxes
12
17
Long-term debt
58,916
53,894
TOTAL LIABILITIES
202,400
181,815
Commitments and contingencies
STOCKHOLDERS' EQUITY Preferred stock,
par value $1.00; Authorized - 500,000 shares; Issued - none
-
-
Common stock, par value $0.10; Authorized - 120,000,000 shares;
Issued - 23,738,003 shares; Outstanding - 21,408,659 and 21,367,821
shares, respectively
2,374
2,374
Paid-in capital
78,593
77,688
(Accumulated deficit) retained earnings
(5,673
)
(10,917
)
Accumulated other comprehensive loss
(7,039
)
(6,801
)
Treasury stock, at cost; 2,329,344 and 2,370,182 shares,
respectively
(25,309
)
(26,155
)
TOTAL STOCKHOLDERS' EQUITY
42,946
36,189
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
245,346
$
218,004
GAAP to Non-GAAP
Reconciliations
(in thousands)
Three Months Ended
May 3, 2020
April 28, 2019
Reconciliation of GAAP net
loss to Non-GAAP net loss:
GAAP net loss
$
(5,425
)
$
(5,165
)
Selling, administrative
and other operating costs
-
(486
)
(b)
Restructuring and
severance costs
411
(a)
724
(c)
Impairment Costs
-
347
(d)
Non-GAAP net loss
$
(5,014
)
$
(4,580
)
Three Months Ended
May 3, 2020
April 28, 2019
Reconciliation of GAAP net
loss to Adjusted EBITDA:
GAAP net loss
$
(5,425
)
$
(5,165
)
Selling, administrative
and other operating costs
-
(486
)
(b)
Restructuring and
severance costs
411
(a)
724
(c)
Impairment Costs
-
347
(d)
Depreciation and
amortization
2,027
1,755
Share-based compensation
expense
508
(95
)
Total other (income)
expense, net
1,039
1,179
Provision for income
taxes
23
233
Adjusted EBITDA
$
(1,417
)
$
(1,508
)
Special item adjustments consist of the
following:
(a)
Relates to actions taken by the Company as part of its continued
efforts to reduce costs and to offset COVID-19 related revenue
losses.
(b)
Relates to the amortization of the gain on the sale of the Orange,
CA facility, which is included in Selling, administrative and other
operating costs.
(c)
Relates to exit of customer care solutions business and continued
efforts to reduce costs.
(d)
Relates to exit of customer care solutions business.
GAAP to Non-GAAP
Reconciliations
(in thousands)
Six Months Ended
May 3, 2020
April 28, 2019
Reconciliation of GAAP net loss to Non-GAAP net loss: GAAP
net loss
$
(16,233
)
$
(8,380
)
Selling, administrative and other operating costs
-
(972
)
(b) Restructuring and severance costs
1,657
(a)
783
(c) Impairment Costs
11
347
(d)
Non-GAAP net loss
$
(14,565
)
$
(8,222
)
Six Months Ended
May 3, 2020
April 28, 2019
Reconciliation of GAAP net loss to Adjusted EBITDA: GAAP net
loss
$
(16,233
)
$
(8,380
)
Selling, administrative and other operating costs
-
(972
)
(b) Restructuring and severance costs
1,657
(a)
783
(c) Impairment Costs
11
347
(d) Depreciation and amortization
4,000
3,358
Share-based compensation expense
1,019
(208
)
Total other (income) expense, net
2,325
1,951
Provision for income taxes
218
506
Adjusted EBITDA
$
(7,003
)
$
(2,615
)
Special item adjustments consist of the
following:
(a)
Primarily relates to the strategic initiative costs to offshore a
significant number of identified roles to our staffing operations
in India and continued efforts to reduce costs and to offset
COVID-19 related revenue losses.
(b)
Relates to the amortization of the gain on the sale of the Orange,
CA facility, which is included in Selling, administrative and other
operating costs.
(c)
Relates to exit of customer care solutions business and continued
efforts to reduce costs.
(d)
Relates to exit of customer care solutions business.
GAAP to Non-GAAP
Reconciliations
(in thousands)
Three Months
Ended May 3, 2020
Three Months Ended April 28,
2019
As Reported
As Reported
FX impact
Business
Exited
MSP Delivery
Model Shift
Adjusted
Revenue North American Staffing
$
173,386
$
208,871
$
-
$
(266
)
$
(4,825
)
$
203,780
International Staffing
24,303
28,809
(826
)
-
-
27,983
North American MSP
9,745
9,579
-
-
122
9,701
Corporate and Other
187
5,431
-
(5,257
)
-
174
Eliminations
(346
)
(620
)
-
266
-
(354
)
Total Revenue
$
207,275
$
252,070
$
(826
)
$
(5,257
)
$
(4,703
)
$
241,284
% change
-14.1
%
Six Months Ended
May 3, 2020
Six Months Ended April 28,
2019
As Reported
As Reported
FX impact
Business
Exited
MSP Delivery
Model Shift
Adjusted
Revenue North American Staffing
$
355,781
$
420,719
$
-
$
(616
)
$
(7,388
)
$
412,715
International Staffing
50,526
55,075
(932
)
-
-
54,143
North American MSP
19,114
17,796
-
-
188
17,984
Corporate and Other
390
13,277
-
(12,931
)
-
346
Eliminations
(770
)
(1,361
)
-
616
-
(745
)
Total Revenue
$
425,041
$
505,506
$
(932
)
$
(12,931
)
$
(7,200
)
$
484,443
% change
-12.3
%
GAAP to Non-GAAP
Reconciliations
(in thousands)
Three Months Ended May 3,
2020
Three Months Ended April 28,
2019
As Reported
Business Exited
Adjusted
As Reported
Business Exited
Adjusted
Operating Income (Loss) North American Staffing
$
2,576
$
-
$
2,576
$
2,544
$
-
$
2,544
International Staffing
196
-
196
628
1
629
North American MSP
491
-
491
1,100
-
1,100
Corporate and Other
(7,626
)
(45
)
(7,671
)
(8,025
)
801
(7,224
)
Total Operating Loss
$
(4,363
)
$
(45
)
$
(4,408
)
$
(3,753
)
$
802
$
(2,951
)
Six Months Ended May 3,
2020
Six Months Ended April 28,
2019
As Reported
Business Exited
Adjusted
As Reported
Business Exited
Adjusted
Operating Income (Loss) North American Staffing
$
2,675
$
-
$
2,675
$
6,431
$
-
$
6,431
International Staffing
570
-
570
932
4
936
North American MSP
1,245
-
1,245
2,065
-
2,065
Corporate and Other
(18,180
)
(13
)
(18,193
)
(15,351
)
135
(15,216
)
Total Operating Loss
$
(13,690
)
$
(13
)
$
(13,703
)
$
(5,923
)
$
139
$
(5,784
)
GAAP to Non-GAAP
Reconciliations
(in thousands)
Three Months Ended May 3,
2020
Three Months Ended April 28,
2019
As Reported
Business Exited
Adjusted
As Reported
Business Exited
Adjusted
Operating Loss Gross Margin
$
32,237
$
-
$
32,237
$
36,257
$
136
$
36,393
Selling, administrative and other operating costs
36,189
-
36,189
38,939
(66
)
38,873
Restructuring and severance costs
411
45
456
724
(253
)
471
Impairment charges
-
-
-
347
(347
)
-
Total Operating Loss
$
(4,363
)
$
(45
)
$
(4,408
)
$
(3,753
)
$
802
$
(2,951
)
Six Months Ended May 3,
2020
Six Months Ended April 28,
2019
As Reported
Business Exited
Adjusted
As Reported
Business Exited
Adjusted
Operating Loss Gross Margin
$
63,664
$
-
$
63,664
$
73,956
$
(869
)
$
73,087
Selling, administrative and other operating costs
75,686
-
75,686
78,749
(399
)
78,350
Restructuring and severance costs
1,657
13
1,670
783
(262
)
521
Impairment charges
11
-
11
347
(347
)
-
Total Operating Loss
$
(13,690
)
$
(13
)
$
(13,703
)
$
(5,923
)
$
139
$
(5,784
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200616005944/en/
Investor Relations Contacts: Volt Information Sciences,
Inc. voltinvest@volt.com
Joe Noyons Three Part Advisors jnoyons@threepa.com
817-778-8424
Volt Information Sciences (AMEX:VOLT)
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Volt Information Sciences (AMEX:VOLT)
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