Staffing 360 Solutions Reports Fiscal 2019 Third Quarter and Nine-Month Financial Results
November 12 2019 - 4:15PM
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 2019 third quarter and
nine-month results.
Q3 2019 Highlights
- Revenue declined by 5.6% to $67.3 million, from $71.3 million
in Q3 '18, driven primarily by the loss of a low margin client in
the U.K. and unfavorable foreign currency translation impact of
$1.5 million
- Gross profit of $12.5 million was flat compared with Q3
'18
- Gross margin improved to 18.5% compared with 17.5% in Q3 '18
driven by higher mix of permanent placement revenue
- Income from operations of $0.3 million as compared with $0.7
million in Q3 '18
- Net loss of $1.1 million improved against a net loss of $2.0
million in Q3 '18
- EBITDA grew 54% to $1.8 million, from $1.2 million in Q3
'18
- Adjusted EBITDA grew 16.2% to $2.9 million, from $2.5 million
in Q3 '18
Year
to Date Q3 2019 Highlights
- Revenue grew by 14.9% to $214.6 million, from $186.8 million
YTD '18, including unfavorable foreign currency translation impact
of $5.6 million
- Gross profit grew by 2% to $36.7 million, from $36.0 million
YTD '18
- Gross margin declined to 17.1% compared with 19.2% YTD '18
- Income from operations grew significantly to $1.5 million
compared with $0.4 million YTD '18
- Net loss of $2.3 million improved against a net loss of $5.1
million YTD '18
- EBITDA grew by over 62.8% to $6 million, from $3.7 million YTD
'18
- Adjusted EBITDA grew 21.3% to $7.3 million, from $6.0 million
YTD '18
Brendan Flood, Chairman and Chief Executive
Officer said, "While revenue was down for the quarter, margins were
up, overhead was strategically reduced and we remained operating
income positive. We are confident that the dip in revenue is
short-term and that we continue to be progressing in the right
direction."
"Our acquisition pipeline remains full and
active with several potential acquisitions having passed the
initial due diligence step," continued Flood. "We remain focused on
completing strategic acquisitions and also on pursuing related
financing that could involve restructuring our existing debt. To
help facilitate that endeavor, we’ve recently engaged the services
of Robert W. Baird, Inc., a multinational independent investment
bank and financial services company. I remain highly confident in
our goal to build a profitable $500 million revenue company."
Conference CallThe Participant
Dial-In Number for the conference call is 323-794-2551.
Participants should dial in to the call at least five minutes
before 9:00am ET November 13, 2019. The call can also be accessed
"live" online at http://public.viavid.com/index.php?id=137022. 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
1-888-203-1112 (international participants dial 1-719-457-0820)
starting November 13, 2019, at 7:30pm ET through November 20, 2019
at 11:59 pm ET. Please use PIN Number 3916896.
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 that can drive profitable 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.
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. Although
Staffing 360 Solutions, Inc. believes 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 acquisitions, to successfully
integrate newly acquired companies, to organically grow its
business, to successfully defend potential future litigation,
changes in local or national economic conditions, the ability to
comply with contractual covenants, including in respect of its
debt, 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: Harvey Bibicoff,
CEO Bibicoff + MacInnis, Inc. 818.379.8500
harvey@bibimac.com
Staffing 360
Solutions, Inc. and Subsidiaries |
|
Reconciliation of Net Loss to Adjusted EBITDA |
|
(All Amounts
in Thousands) |
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Q3 2019 |
|
Q3 2018 |
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Q3 2019 YTD |
|
Q3 2018 YTD |
|
|
|
Trailing Twelve Months Q3 2019 |
|
Trailing Twelve Months Q3 2018 |
|
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
(Unaudited) |
|
(Unaudited) |
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|
(Unaudited) |
|
(Unaudited) |
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|
Revenue |
|
|
$ |
67,320 |
|
|
$ |
71,317 |
|
|
|
|
$ |
214,644 |
|
|
$ |
186,835 |
|
|
|
|
$ |
288,735 |
|
|
$ |
246,311 |
|
|
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|
Gross Profit |
|
|
$ |
12,485 |
|
|
$ |
12,496 |
|
|
|
|
$ |
36,695 |
|
|
$ |
35,959 |
|
|
|
|
$ |
49,040 |
|
|
$ |
47,873 |
|
|
|
Gross
Margin |
|
|
|
18.5 |
% |
|
|
17.5 |
% |
|
|
|
|
17.1 |
% |
|
|
19.2 |
% |
|
|
|
|
17.0 |
% |
|
|
19.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
$ |
(1,108 |
) |
|
$ |
(1,980 |
) |
|
|
|
$ |
(2,350 |
) |
|
$ |
(5,095 |
) |
|
|
|
$ |
(3,756 |
) |
|
$ |
(12,419 |
) |
|
|
|
|
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Adjustments: |
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and amortization of debt discount and deferred
financing costs |
|
|
$ |
2,059 |
|
|
$ |
2,435 |
|
|
|
|
$ |
5,977 |
|
|
$ |
6,578 |
|
|
|
|
$ |
8,365 |
|
|
$ |
8,615 |
|
|
|
Benefit (Provision) from income taxes |
|
|
|
28 |
|
|
|
3 |
|
|
|
|
|
(296 |
) |
|
|
(78 |
) |
|
|
|
|
(196 |
) |
|
|
641 |
|
|
|
Depreciation and Amortization |
|
|
|
867 |
|
|
|
741 |
|
|
|
|
|
2,621 |
|
|
|
2,251 |
|
|
|
|
|
3,494 |
|
|
|
3,507 |
|
|
|
EBITDA |
|
|
|
1,846 |
|
|
|
1,199 |
|
|
|
|
|
5,952 |
|
|
|
3,656 |
|
|
|
|
|
7,907 |
|
|
|
344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition, capital raising and other non-recurring expenses
(1) |
|
|
|
1,558 |
|
|
|
797 |
|
|
|
|
|
2,511 |
|
|
|
2,642 |
|
|
|
|
|
2,993 |
|
|
|
3,587 |
|
|
|
Other non-cash charges (2) |
|
|
|
205 |
|
|
|
288 |
|
|
|
|
|
627 |
|
|
|
951 |
|
|
|
|
|
834 |
|
|
|
1,319 |
|
|
|
Gain in fair value of warrant liability |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
(879 |
) |
|
|
|
|
- |
|
|
|
(1,755 |
) |
|
|
Re-measurement loss on intercompany note |
|
|
|
467 |
|
|
|
186 |
|
|
|
|
|
484 |
|
|
|
332 |
|
|
|
|
|
838 |
|
|
|
332 |
|
|
|
Impairment of goodwill |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
4,790 |
|
|
|
Deferred consideration settlement |
|
|
|
(1,138 |
) |
|
|
- |
|
|
|
|
|
(1,985 |
) |
|
|
- |
|
|
|
|
|
(1,985 |
) |
|
|
- |
|
|
|
Restructuring charges |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
(57 |
) |
|
|
780 |
|
|
|
Gain from sale of business |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
(238 |
) |
|
|
|
|
- |
|
|
|
(238 |
) |
|
|
Operational (income) of divested business |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
(237 |
) |
|
|
|
|
- |
|
|
|
(357 |
) |
|
|
Other loss (income) |
|
|
|
(51 |
) |
|
|
14 |
|
|
|
|
|
(308 |
) |
|
|
(227 |
) |
|
|
|
|
(479 |
) |
|
|
(152 |
) |
|
|
Adjusted EBITDA |
|
|
$ |
2,887 |
|
|
$ |
2,484 |
|
|
|
|
$ |
7,281 |
|
|
$ |
6,000 |
|
|
|
|
$ |
10,051 |
|
|
$ |
8,650 |
|
|
|
Adjusted
EBITDA Margin |
|
|
|
4.3 |
% |
|
|
3.5 |
% |
|
|
|
|
3.4 |
% |
|
|
3.2 |
% |
|
|
|
|
3.5 |
% |
|
|
3.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Acquisition Adjusted EBITDA (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
- |
|
|
$ |
3,323 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro
Forma TTM Adjusted EBITDA (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,051 |
|
|
$ |
11,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Gross Profit TTM (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
49,040 |
|
|
$ |
46,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TTM Adjusted
EBITDA as percentage of adjusted gross profit TTM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20.5 |
% |
|
|
18.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
|
(3) Pre-Acquisition
Adjusted EBITDA excludes the Adjusted EBITDA of acquisitions for
the period prior to the acquisition date. |
|
(4) Pro Forma TTM
Adjusted EBITDA includes the Adjusted EBITDA of acquisitions for
the period prior to the acquisition date. |
|
(5) Adjusted Gross
Profit excludes gross profit of business divested in June 2018, for
the period prior to divestiture date. |
|
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