Volt Information Sciences, Inc. (“Volt” or the “Company”)
(NYSE-AMERICAN: VOLT) a global provider of staffing services, today
announced financial results for the third fiscal quarter ended
August 2, 2020.
Third Quarter Highlighted Results
- Revenue was $185.9 million, compared to $233.2 million in the
prior-year quarter; Adjusted Revenue* decreased 18.4%.
- Gross margin was 16.1%, an 80-basis point improvement compared
to the prior-year quarter.
- GAAP operating loss was $4.2 million, compared to $4.8 million
in the prior-year quarter; excluding restructuring and impairment
charges, operating loss would have been $1.3 million compared to
$2.7 million in the prior-year quarter.
- Adjusted EBITDA* was $1.0 million, a $2.2 million improvement
compared to the prior-year quarter.
*Adjusted Revenue, Adjusted Operating Loss and Adjusted EBITDA
are Non-GAAP measures described and defined below.
“I remain incredibly proud of our Volt colleagues, all of whom
continue to confidently navigate the prolonged economic and health
uncertainty,” said Linda Perneau, President and Chief Executive
Officer. “Their efforts allowed us to safely return thousands of
employees back to work, enabled multiple clients to resume full
operations, and secured new business wins, partially offsetting
pandemic related declines. Throughout the third quarter we posted
month-over-month improvements in Adjusted Revenue and gross margin.
We reduced SG&A expenses and posted positive Adjusted EBITDA of
$1.0 million for the quarter. We believe these trends will continue
in the fourth quarter as we remain focused on our growth and
profitability initiatives.”
Third Quarter Results
North American Staffing revenue for the quarter was $154.7
million, compared to $193.6 million in the third quarter of fiscal
2019. Adjusted Revenue, which is a Non-GAAP measure, for this
segment decreased approximately 18.6 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 with new and existing clients.
International Staffing revenue was $21.7 million, compared to
$28.7 million in the third quarter of fiscal 2019. Adjusted
Revenue, for this segment decreased 23.9 percent year over year.
The decrease is primarily due to reduced work orders in the
U.K.
North American MSP revenue was $9.4 million, compared to $9.6
million in the third quarter of fiscal 2019. The decrease is
primarily attributable to a decline in managed service programs,
partially offset by increased payroll revenue.
Gross margin for the quarter was 16.1 percent of revenue,
compared to 15.3 percent of revenue in the third quarter of fiscal
2019. The change is attributable to a credit related to our
workers’ compensation versus the prior year, and a decrease in
payroll tax rates.
SG&A expense for the third quarter was $31.2 million, a $7.2
million reduction from the prior-year quarter. The decrease is
primarily due to substantial cost reductions taken throughout the
year and the impact of working remotely as well as COVID-19
restrictions on travel.
Volt incurred impairment and restructuring charges of $2.9
million in the third quarter as a part of its ongoing real estate
rationalization and cost savings initiatives. These charges were
primarily the result of consolidating and exiting certain leased
office locations throughout North America based on where Volt can
be fully operational and successfully support our clients and
business operations remotely.
Adjusted EBITDA, which is a Non-GAAP measure, for the third
quarter of fiscal 2020 was $1.0 million, as compared to a loss of
$1.2 million in the prior-year quarter.
Business Outlook
Due to the continued uncertainty surrounding the timing of
reopening specific geographies, the Company is not providing
Adjusted Revenue guidance for the fourth quarter of fiscal
2020.
Earnings Conference Call and Webcast
Volt Information Sciences, Inc. will conduct a conference call
on Thursday, September 10, 2020, at 5:00 PM ET, to review the
financial results for the third fiscal quarter ended August 2,
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 13709427. 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
Nine Months
Ended
August 2, 2020
May 3, 2020
July 28, 2019
August 2, 2020
July 28, 2019
Net revenue
$
185,941
$
207,275
$
233,176
$
610,982
$
738,682
Cost of services
155,983
175,038
197,528
517,360
629,078
Gross margin
29,958
32,237
35,648
93,622
109,604
Selling, administrative and other operating costs
31,245
36,189
38,395
106,931
117,144
Restructuring and severance costs
546
411
2,017
2,203
2,800
Impairment charges
2,384
-
79
2,395
426
Operating loss
(4,217
)
(4,363
)
(4,843
)
(17,907
)
(10,766
)
Interest income (expense), net
(467
)
(621
)
(714
)
(1,788
)
(2,159
)
Foreign exchange gain (loss), net
571
(266
)
(151
)
(23
)
(252
)
Other income (expense), net
(168
)
(152
)
(184
)
(578
)
(589
)
Loss before income taxes
(4,281
)
(5,402
)
(5,892
)
(20,296
)
(13,766
)
Income tax provision
556
23
165
774
671
Net loss
$
(4,837
)
$
(5,425
)
$
(6,057
)
$
(21,070
)
$
(14,437
)
Per share data:
Basic:
Net loss
$
(0.22
)
$
(0.25
)
$
(0.29
)
$
(0.98
)
$
(0.68
)
Weighted average number of shares
21,589
21,416
21,157
21,474
21,106
Diluted:
Net loss
$
(0.22
)
$
(0.25
)
$
(0.29
)
$
(0.98
)
$
(0.68
)
Weighted average number of shares
21,589
21,416
21,157
21,474
21,106
Segment data:
Net revenue:
North American Staffing
$
154,711
$
173,386
$
193,641
$
510,492
$
614,360
International Staffing
21,749
24,303
28,728
72,275
83,803
North American MSP
9,436
9,745
9,555
28,550
27,351
Corporate and Other
149
187
1,856
539
15,133
Eliminations
(104
)
(346
)
(604
)
(874
)
(1,965
)
Net revenue
$
185,941
$
207,275
$
233,176
$
610,982
$
738,682
Operating income (loss):
North American Staffing
$
2,691
$
2,576
$
4,365
$
5,366
$
10,796
International Staffing
551
196
342
1,121
1,274
North American MSP
944
491
1,120
2,189
3,185
Corporate and Other
(8,403
)
(7,626
)
(10,670
)
(26,583
)
(26,021
)
Operating loss
$
(4,217
)
$
(4,363
)
$
(4,843
)
$
(17,907
)
$
(10,766
)
Work days
63
65
63
187
187
Condensed Consolidated Statements of
Cash Flows (in thousands)
Nine Months ended
August 2, 2020
July 28, 2019
Cash, cash equivalents and restricted cash beginning of
the period
$
38,444
$
36,544
Cash used in all other operating activities
(4,821
)
(10,561
)
Changes in operating assets and liabilities
17,903
20,722
Net cash provided by operating activities
13,082
10,161
Purchases of property, equipment, and software
(3,925
)
(6,305
)
Net cash provided by (used in) all other investing activities
589
78
Net cash used in investing activities
(3,336
)
(6,227
)
Net draw-down of borrowings
5,000
5,000
Debt issuance costs
(331
)
(621
)
Net cash used in all other financing activities
(74
)
(316
)
Net cash provided by financing activities
4,595
4,063
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
(463
)
(633
)
Net
increase in cash, cash equivalents and restricted cash
13,878
7,364
Cash,
cash equivalents and restricted cash end of the period
$
52,322
$
43,908
Cash
paid during the period: Interest
$
1,858
$
2,367
Income taxes
$
1,445
$
1,174
Reconciliation of cash, cash
equivalents and restricted cash end of the period: Current
Assets: Cash and cash equivalents
$
30,928
$
36,031
Restricted cash included in Restricted cash and short term
investments
21,394
7,877
Cash, cash equivalents and restricted cash, at end of period
$
52,322
$
43,908
Condensed Consolidated Balance
Sheets (in thousands, except share amounts)
August 2, 2020
November 3, 2019
ASSETS CURRENT ASSETS: Cash and
cash equivalents
$
30,928
$
28,672
Restricted cash and short-term investments
24,285
12,794
Trade accounts receivable, net of allowances of $235 and $117,
respectively
108,395
135,950
Other current assets
7,067
7,252
TOTAL CURRENT ASSETS
170,675
184,668
Property, equipment and software, net
23,706
25,890
Right of use assets - operating leases
40,146
-
Other assets, excluding current portion
6,802
7,446
TOTAL ASSETS
$
241,329
$
218,004
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES: Accrued compensation
$
16,412
$
21,507
Accounts payable
27,010
36,341
Accrued taxes other than income taxes
10,292
11,244
Accrued insurance and other
19,077
24,654
Operating lease liabilities
7,552
-
Income taxes payable
955
1,570
TOTAL CURRENT LIABILITIES
81,298
95,316
Accrued payroll taxes and other, excluding current portion
21,099
12,029
Operating lease liabilities, excluding current portion
39,442
-
Deferred gain on sale of real estate, excluding current portion
-
20,270
Income taxes payable, excluding current portion
289
289
Deferred income taxes
11
17
Long-term debt
58,930
53,894
TOTAL LIABILITIES
201,069
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 - 21,702,078 and 21,367,821
shares, respectively
2,374
2,374
Paid-in capital
79,686
77,688
(Accumulated deficit) retained earnings
(16,777
)
(10,917
)
Accumulated other comprehensive loss
(6,306
)
(6,801
)
Treasury stock, at cost; 2,035,925 and 2,370,182 shares,
respectively
(18,717
)
(26,155
)
TOTAL STOCKHOLDERS' EQUITY
40,260
36,189
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
241,329
$
218,004
GAAP to Non-GAAP
Reconciliations
(in thousands)
Three Months Ended
August 2, 2020
July 28, 2019
Reconciliation of GAAP net loss to Non-GAAP net loss: GAAP
net loss
$
(4,837
)
$
(6,057
)
Selling, administrative and other operating costs
-
(486
)
(c) Restructuring and severance costs
546
(a)
2,017
(d) Impairment Costs
2,384
(b)
79
Non-GAAP net loss
$
(1,907
)
$
(4,447
)
Three Months Ended
August 2, 2020
July 28, 2019
Reconciliation of GAAP net loss to Adjusted EBITDA: GAAP net
loss
$
(4,837
)
$
(6,057
)
Selling, administrative and other operating costs
-
(486
)
(c) Restructuring and severance costs
546
(a)
2,017
(d) Impairment Costs
2,384
(b)
79
Depreciation and amortization
1,884
1,769
Share-based compensation expense
414
294
Total other (income) expense, net
64
1,049
Provision for income taxes
556
165
Adjusted EBITDA
$
1,011
$
(1,170
)
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 consolidating and
exiting certain leased office locations throughout North America
where we could be fully operational and successfully support our
clients and business operations remotely.
(c)
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.
(d)
Relates to exit of customer care
solutions business and continued efforts to reduce costs.
Nine Months Ended
August 2, 2020
July 28, 2019
Reconciliation of GAAP net loss to Non-GAAP net loss: GAAP
net loss
$
(21,070
)
$
(14,437
)
Selling, administrative and other operating costs
-
(1,458
)
(c) Restructuring and severance costs
2,203
(a)
2,800
(d) Impairment Costs
2,395
(b)
426
(e)
Non-GAAP net loss
$
(16,472
)
$
(12,669
)
Nine Months Ended
August 2, 2020
July 28, 2019
Reconciliation of GAAP net loss to Adjusted EBITDA: GAAP net
loss
$
(21,070
)
$
(14,437
)
Selling, administrative and other operating costs
-
(1,458
)
(c) Restructuring and severance costs
2,203
(a)
2,800
(d) Impairment Costs
2,395
(b)
426
(e) Depreciation and amortization
5,884
5,127
Share-based compensation expense
1,433
86
Total other (income) expense, net
2,389
3,000
Provision for income taxes
774
671
Adjusted EBITDA
$
(5,992
)
$
(3,785
)
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 as well as
continued efforts to reduce costs and to offset COVID-19 related
revenue losses.
(b)
Primarily relates to
consolidating and exiting certain leased office locations
throughout North America where we could be fully operational and
successfully support our clients and business operations
remotely.
(c)
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.
(d)
Relates to exit of customer care
solutions business and continued efforts to reduce costs.
(e)
Primarily relates to exit of
customer care solutions business.
GAAP to Non-GAAP
Reconciliations
(in thousands)
Three Months Ended
August 2, 2020
Three Months Ended July 28,
2019
As Reported
As Reported
FX impact
Business
Exited
MSP Delivery
Model Shift
Adjusted
Revenue North American Staffing
$
154,711
$
193,641
$
-
$
(76
)
$
(3,447
)
$
190,118
International Staffing
21,749
28,728
(165
)
-
-
28,563
North American MSP
9,436
9,555
-
-
87
9,642
Corporate and Other
149
1,856
-
(1,662
)
-
194
Eliminations
(104
)
(604
)
-
76
-
(528
)
Total Revenue
$
185,941
$
233,176
$
(165
)
$
(1,662
)
$
(3,360
)
$
227,989
% change
-18.4
%
Nine Months Ended
August 2, 2020
Nine Months Ended July 28,
2019
As Reported
As Reported
FX impact
Business
Exited
MSP Delivery
Model Shift
Adjusted
Revenue North American Staffing
$
510,492
$
614,360
$
-
$
(692
)
$
(10,835
)
$
602,833
International Staffing
72,275
83,803
(1,097
)
-
-
82,706
North American MSP
28,550
27,351
-
-
274
27,625
Corporate and Other
539
15,133
-
(14,593
)
-
540
Eliminations
(874
)
(1,965
)
-
692
-
(1,273
)
Total Revenue
$
610,982
$
738,682
$
(1,097
)
$
(14,593
)
$
(10,561
)
$
712,431
% change
-14.2
%
GAAP to Non-GAAP
Reconciliations
(in thousands)
Three Months Ended August 2,
2020
Three Months Ended July 28,
2019
As Reported
Business Exited
Adjusted
As Reported
Business Exited
Adjusted
Operating Income (Loss) North American Staffing
$
2,691
$
-
$
2,691
$
4,365
$
-
$
4,365
International Staffing
551
-
551
342
15
357
North American MSP
944
-
944
1,120
-
1,120
Corporate and Other
(8,403
)
(14
)
(8,417
)
(10,670
)
1,890
(8,780
)
Total Operating Loss
$
(4,217
)
$
(14
)
$
(4,231
)
$
(4,843
)
$
1,905
$
(2,938
)
Nine Months Ended August 2,
2020
Nine Months Ended July 28,
2019
As Reported
Business Exited
Adjusted
As Reported
Business Exited
Adjusted
Operating Income (Loss) North American Staffing
$
5,366
$
-
$
5,366
$
10,796
$
-
$
10,796
International Staffing
1,121
-
1,121
1,274
19
1,293
North American MSP
2,189
-
2,189
3,185
-
3,185
Corporate and Other
(26,583
)
(27
)
(26,610
)
(26,021
)
2,025
(23,996
)
Total Operating Loss
$
(17,907
)
$
(27
)
$
(17,934
)
$
(10,766
)
$
2,044
$
(8,722
)
GAAP to Non-GAAP
Reconciliations
(in thousands)
Three Months Ended August 2,
2020
Three Months Ended July 28,
2019
As Reported
Business Exited
Adjusted
As Reported
Business Exited
Adjusted
Operating Loss Gross Margin
$
29,958
$
-
$
29,958
$
35,648
$
346
$
35,994
Selling, administrative and other operating costs
31,245
-
31,245
38,395
(136
)
38,259
Restructuring and severance costs
546
14
560
2,017
(1,422
)
595
Impairment charges
2,384
-
2,384
79
(1
)
78
Total Operating Loss
$
(4,217
)
$
(14
)
$
(4,231
)
$
(4,843
)
$
1,905
$
(2,938
)
Nine Months Ended August 2,
2020
Nine Months Ended July 28,
2019
As Reported
Business Exited
Adjusted
As Reported
Business Exited
Adjusted
Operating Loss Gross Margin
$
93,622
$
-
$
93,622
$
109,604
$
(523
)
$
109,081
Selling, administrative and other operating costs
106,931
-
106,931
117,144
(535
)
116,609
Restructuring and severance costs
2,203
27
2,230
2,800
(1,684
)
1,116
Impairment charges
2,395
-
2,395
426
(348
)
78
Total Operating Loss
$
(17,907
)
$
(27
)
$
(17,934
)
$
(10,766
)
$
2,044
$
(8,722
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200910005937/en/
Investor Relations Contacts: Volt Information Sciences,
Inc. voltinvest@volt.com
Joe Noyons Three Part Advisors jnoyons@threepa.com
817-778-8424
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