Staffing 360 Solutions Reports Third Quarter and Nine-Month 2020 Results
November 10 2020 - 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 Fiscal 2020 third quarter and nine-month
results impacted by the economic downturn resulting from the
COVID-19 pandemic.
Brendan Flood, Chairman and Chief Executive
Officer said, “We are encouraged that we continue to achieve
sequential week-over-week improvements in our overall business,
even as the impact of the COVID-19 pandemic affects us all. We are
cautiously optimistic these improvements will continue through the
end of the year and beyond. Our contingent workforce head count is
back to where it was at the beginning of March and we are hopeful
to return to pre-COVID numbers by the end of the year. I reiterate
my belief that we will be a stronger company when we come out of
this than we were when we went into it.
“While overall third quarter results were not
where we’d like them to be, we saw improvements in key metrics from
Q2 to Q3 including revenue, gross profit, net loss and Adjusted
EBITDA. Nearly $1.0 million of our $2.6 million net loss was
COVID-related and our cash balance at the end of the quarter was
$10.7 million, which includes $3.3 million of restricted cash.”
Q3 2020 Overview
- Revenue declined by 27.7% to $48.6
million from $67.3 million in Q3 ’19
- Gross profit declined by 33.3% to
$8.3 million from $12.5 million in Q3 ’19
- Gross margin decreased to 17.1%
compared with 18.5% in Q3 ’19
- Loss from operations of $1.8
million compared with income from operations of $0.3 million in Q3
’19
- Net loss of $2.6 million compared
with net loss of $1.1 million in Q3 ’19
- EBITDA declined to negative $0.2
million from $1.8 million in Q3 ’19
- Adjusted EBITDA remained positive
at $1.2 million down from $2.9 million in Q3 ’19
Year to Date Q3 2020
Overview
- Revenue declined by 29.8% to $150.7
million from $214.6 million YTD ’19
- Gross profit declined by 27.7% to
$26.5 million from $36.7 million YTD ’19
- Gross margin increased to 17.6%
compared with 17.1% YTD ’19
- Loss from operations of $7.4
million compared with income of $1.5 million YTD ’19
- Net loss of $13.4 million compared
with net loss of $2.4 million YTD ’19
- EBITDA declined to negative $5.1
million from $6.0 million YTD ’19
- Adjusted EBITDA remained positive
at $2.9 million down from $7.3 million YTD ’19
Flood continued, “We are now harvesting the
benefits of our aggressive, ongoing cost controls. Having
materially reduced expenses resulting in $5.2 million in cost
savings by the end of September, we followed that with a further
$1.0 million overhead reduction in October.
“Recently, we strengthened our financial outlook
with the successful restructuring of our senior debt agreement:
- Reducing the cash outflow related
with this financing by 50% from the previous facility,
- Further reducing $1.0 million in
interest expense in the first six months,
- Extended by two years both the due
date of the debt and conversion of the preferred shares,
- The two-year length of the
extension period is significant as it provides us with a
considerable runway in which to refinance the loan and/or our total
debt prior to its maturity.”
Added Flood, “I am pleased to note that October
results were in line with plan - coming in at 101% of our internal
forecast - and the outlook for our industry remains positive. The
vast majority of our clients never stopped working remotely and our
outstanding team possess the skills and abilities to drive sales
growth while continuing to deliver on our reputation for providing
best-in-class service while fulfilling our client’s needs.”
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.
Conference CallThe Participant
Dial-In Number for the conference call is 646-828-8143.
Participants should dial in to the call at least five minutes
before 9:00am ET November 11, 2020. The call can also be accessed
"live" online at http://public.viavid.com/index.php?id=142346. 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 844-512-2921
(international participants dial 412-317-6671) starting November
11, 2020, at 7:30pm ET through November 13, 2020 at 11:59 pm ET.
Please use PIN Number 3539724.
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
www.staffing360solutions.com. Follow Staffing 360 Solutions
on Facebook and LinkedIn.
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. 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, 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; the
Company’s ability to achieve loan forgiveness under Paycheck
Protection Program; 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 Contacts: |
|
Harvey
Bibicoff, CEO |
Terri
MacInnis, VP of IR |
Bibicoff +
MacInnis, Inc. |
Bibicoff +
MacInnis, Inc. |
818-379-8500
x1 harvey@bibimac.com |
818-379-8500
x2 terri@bibimac.com |
Staffing 360
Solutions, Inc. and Subsidiaries |
|
Reconciliation of Net Loss to Adjusted EBITDA |
|
(All Amounts
in Thousands) |
|
|
|
|
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|
|
|
|
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|
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Q3 2020 |
|
Q3 2019 |
|
|
|
Q3 2020 YTD |
|
Q3 2019 YTD |
|
|
|
Trailing Twelve Months Q3 2020 |
|
Trailing Twelve Months Q3 2019 |
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
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|
|
|
|
|
|
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|
|
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|
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|
|
|
|
Net loss |
|
$ |
(2,641 |
) |
|
$ |
(1,108 |
) |
|
|
|
$ |
(13,401 |
) |
|
$ |
(2,350 |
) |
|
|
|
$ |
(15,945 |
) |
|
$ |
(3,756 |
) |
|
|
|
|
|
|
|
|
|
|
|
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Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and amortization of debt discount and deferred
financing costs |
|
$ |
1,746 |
|
|
$ |
2,059 |
|
|
|
|
$ |
6,277 |
|
|
$ |
5,977 |
|
|
|
|
$ |
8,784 |
|
|
$ |
8,365 |
|
|
|
(Benefit from) Provision for income taxes |
|
|
(118 |
) |
|
|
28 |
|
|
|
|
|
(247 |
) |
|
|
(296 |
) |
|
|
|
|
(286 |
) |
|
|
(196 |
) |
|
|
Depreciation and Amortization |
|
|
768 |
|
|
|
867 |
|
|
|
|
|
2,312 |
|
|
|
2,621 |
|
|
|
|
|
3,061 |
|
|
|
3,494 |
|
|
|
EBITDA |
|
|
(245 |
) |
|
|
1,846 |
|
|
|
|
|
(5,059 |
) |
|
|
5,952 |
|
|
|
|
|
(4,386 |
) |
|
|
7,907 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition, capital raising, restructuring charges and other
non-recurring expenses (1) |
|
|
2,073 |
|
|
|
1,558 |
|
|
|
|
|
4,473 |
|
|
|
2,511 |
|
|
|
|
|
6,908 |
|
|
|
2,993 |
|
|
|
Other non-cash charges (2) |
|
|
209 |
|
|
|
205 |
|
|
|
|
|
555 |
|
|
|
627 |
|
|
|
|
|
768 |
|
|
|
834 |
|
|
|
Re-measurement (income) loss on intercompany note |
|
|
(442 |
) |
|
|
467 |
|
|
|
|
|
348 |
|
|
|
484 |
|
|
|
|
|
(519 |
) |
|
|
838 |
|
|
|
Gain on business sale |
|
|
(220 |
) |
|
|
- |
|
|
|
|
|
(220 |
) |
|
|
- |
|
|
|
|
|
(220 |
) |
|
|
- |
|
|
|
Impairment of goodwill |
|
|
- |
|
|
|
- |
|
|
|
|
|
2,969 |
|
|
|
- |
|
|
|
|
|
2,969 |
|
|
|
- |
|
|
|
Deferred consideration settlement |
|
|
- |
|
|
|
(1,138 |
) |
|
|
|
|
- |
|
|
|
(1,985 |
) |
|
|
|
|
61 |
|
|
|
(1,985 |
) |
|
|
Other loss |
|
|
(161 |
) |
|
|
(51 |
) |
|
|
|
|
(122 |
) |
|
|
(308 |
) |
|
|
|
|
(140 |
) |
|
|
(536 |
) |
|
|
Adjusted EBITDA |
|
$ |
1,214 |
|
|
$ |
2,887 |
|
|
|
|
$ |
2,944 |
|
|
$ |
7,281 |
|
|
|
|
$ |
5,441 |
|
|
$ |
10,051 |
|
|
|
Adjusted
EBITDA Margin |
|
|
2.5 |
% |
|
|
4.3 |
% |
|
|
|
|
2.0 |
% |
|
|
3.4 |
% |
|
|
|
|
2.5 |
% |
|
|
2.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Acquisition Adjusted EBITDA (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro
Forma TTM Adjusted EBITDA (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,441 |
|
|
$ |
10,051 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Adjusted
Gross Profit TTM (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
38,139 |
|
|
$ |
49,040 |
|
|
|
|
|
|
|
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|
|
|
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|
|
TTM Adjusted
EBITDA as percentage of adjusted gross profit TTM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14.3 |
% |
|
|
20.5 |
% |
|
|
|
|
|
|
|
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(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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