Company Reports Revenue of $42.1 Million, Gross Profit of $7.9 Million, Net Loss of $0.6 Million and Adjusted EBITDA of $1.5
Million
NEW YORK, NY --(Marketwired - August 15, 2017) - 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 July 1, 2017.
"We are pleased to report our latest set of results," stated Brendan Flood, Executive Chairman of Staffing 360 Solutions.
"Despite a decline in revenue in the quarter, Q2 2017 saw our first positive Income from Operations (of $0.8 million against a
loss in the previous year of $1.3m) and continued the improvements to our operations, to our Balance Sheet, and to our Cash Flows
from Operating Activities."
Summary of the Fiscal Second Quarter Ended July 1, 2017
- Revenue of $42.1 million, a 9.1% decrease from $46.3 million in Q2 2016. On a constant currency basis, the decrease was
6.6%;
- Gross profit of $7.9 million, was flat year on year;
- Income from Operations was $0.8 million compared to a Loss of $1.3m in 2016;
- Net loss* attributable to common stock reduced to $0.6 million compared to $2.6 million in Q2 2016. The current year
includes non-cash accounting charges of $1.5 million and the prior year includes a non-cash accounting gain of $0.5
million;
- Adjusted EBITDA of $1.5 million, was flat year on year. Impact of currency was not significant;
- Trailing Twelve Month Adjusted EBITDA of $5.33 million, an 18.7% increase over $4.49 million for the comparable trailing
period.
* A table has been included in this press release reconciling Net loss to Adjusted EBITDA.
Mr. Flood continued, "Q2 continued our emphasis on improving the fundamentals of the company. We exited $1.1m of low margin
business and continue to improve our underlying gross margin, improving from 17.3% in Q2 2016 to 18.8% in Q2 2017. As mentioned
last quarter we have several new contracts that will ramp up from mid-Summer that we anticipate will have an important impact on
the second half of the year. By continuing to generate improvements in margins, we expect to see even more improvements in
Adjusted EBITDA as sales begin to accelerate throughout the second half of 2017."
The Company encourages investors to review its Form 10-Q for the fiscal quarter ended July 1, 2017 for additional information
regarding the Company's results of operations, liquidity, reviewed financial statements and other pertinent information.
"During Q2 2017 we continued to improve the quality of our Balance Sheet. In addition to our improvements in efficiencies and
Adjusted EBITDA, this has been a significant quarter from a capital raising perspective," stated David Faiman, Chief Financial
Officer. "As we continue to realize economies of scale, we have raised over $9 million since January 1, 2017 to position
ourselves for further growth. We have also improved debt ratios with the improvements of our Adjusted EBITDA. We are currently
reporting $5.3 million of trailing twelve month Adjusted EBITDA compared to $13.6 million of net debt, resulting in a 2.6x
leverage ratio, compared to 3.1x for the comparative period."
"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," said Matt Briand, President and Chief Executive Officer. "With the improving efficiency
of our cost base, we believe we are in a stronger position for 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."
Earnings Conference Call
Staffing 360 Solutions will host its earnings conference call on Wednesday, August 16, 2017 at 9:00 am Eastern Time to discuss
the Company's financial results for the period ended July 1, 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, 800.756.3429 within the UK, 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 September 16, 2017. To listen to the playback, dial 877.481.4010 within the United States or
919.882.2331 internationally and use replay ID number: 19866.
The conference call will be simultaneously webcast and available at: http://www.investorcalendar.com/event/19866.
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 $300 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 $300 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.
| |
| Staffing 360 Solutions, Inc. and Subsidiaries |
| Condensed Consolidated Balance Sheets |
| (All Amounts in Thousands) |
| |
| |
July 1, |
|
December 31, |
| $000s |
2017 |
|
2016 |
| |
(Unaudited) |
|
|
| ASSETS |
|
|
|
| Current Assets: |
|
|
|
|
|
| |
Cash and cash equivalents |
$ |
526 |
|
$ |
650 |
| |
Accounts receivable, net |
|
19,993 |
|
|
22,274 |
| |
Prepaid expenses and other current assets |
|
882 |
|
|
613 |
| Total Current Assets |
|
21,401 |
|
|
23,537 |
| |
|
|
|
|
|
| |
Property and equipment, net |
|
891 |
|
|
919 |
| |
Identifiable intangible assets, net |
|
7,785 |
|
|
9,149 |
| |
Goodwill |
|
15,779 |
|
|
15,779 |
| |
Other assets |
|
4,279 |
|
|
4,573 |
| Total Assets |
$ |
50,135 |
|
$ |
53,957 |
| |
|
|
|
|
|
| LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
| Current Liabilities: |
|
|
|
|
|
| |
Accounts payable and accrued expenses |
$ |
16,962 |
|
$ |
18,110 |
| |
Current portion of debt, net |
|
3,361 |
|
|
3,639 |
| |
Accounts receivable financing |
|
12,896 |
|
|
15,605 |
| |
Other current liabilities |
|
852 |
|
|
1,274 |
| Total Current Liabilities |
|
34,071 |
|
|
38,628 |
| |
|
|
|
|
|
| |
Long-term debt, net |
|
6,805 |
|
|
3,997 |
| |
Other long-term liabilities |
|
2,339 |
|
|
3,054 |
| Total Liabilities |
|
43,215 |
|
|
45,679 |
| |
|
|
|
|
|
| Commitments and contingencies |
|
- |
|
|
- |
| Series D Preferred Stock |
|
- |
|
|
612 |
| |
|
|
|
|
|
| Stockholders' Equity: |
|
|
|
|
|
| |
Preferred stock |
|
- |
|
|
- |
| |
Common Stock |
|
- |
|
|
- |
| |
Additional paid in capital |
|
58,307 |
|
|
54,658 |
| |
Accumulated other comprehensive income |
|
552 |
|
|
855 |
| |
Accumulated deficit |
|
(51,939) |
|
|
(47,847) |
| Total Stockholders' Equity |
|
6,920 |
|
|
7,666 |
| Total Liabilities, Mezzanine Equity and Stockholders' Equity |
$ |
50,135 |
|
$ |
53,957 |
| |
| Staffing 360 Solutions, Inc. and Subsidiaries |
| Condensed Consolidated Statements of Operations |
| (All Amounts in Thousands) |
| |
| |
|
April 2, 2017
to
July 1, 2017 |
|
April 3, 2016
to
July 2, 2016 |
|
January 1, 2017
to
July 1, 2017 |
|
January 3, 2016
to
July 2, 2016 |
| Revenue |
|
$ |
42,117 |
|
$ |
46,313 |
|
$ |
82,829 |
|
$ |
89,473 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of Revenue, Excluding Depreciation and Amortization Stated
Below |
|
|
34,193 |
|
|
38,323 |
|
|
67,579 |
|
|
74,257 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Gross Profit |
|
|
7,924 |
|
|
7,990 |
|
|
15,250 |
|
|
15,216 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Selling, general and administrative expenses, excluding depreciation and amortization stated
below |
|
|
6,338 |
|
|
8,431 |
|
|
13,965 |
|
|
16,307 |
| |
Depreciation and amortization |
|
|
760 |
|
|
839 |
|
|
1,520 |
|
|
1,332 |
| Total Operating Expenses |
|
|
7,098 |
|
|
9,270 |
|
|
15,485 |
|
|
17,639 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Income (Loss) From Operations |
|
|
826 |
|
|
(1,280) |
|
|
(235) |
|
|
(2,423) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Other Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Interest expense |
|
|
(580) |
|
|
(792) |
|
|
(1,082) |
|
|
(1,392) |
| |
Amortization of beneficial conversion feature |
|
|
- |
|
|
(184) |
|
|
(184) |
|
|
(367) |
| |
Amortization of debt discount and deferred financing costs |
|
|
(760) |
|
|
(436) |
|
|
(1,095) |
|
|
(909) |
| |
Debt extinguishment costs |
|
|
- |
|
|
- |
|
|
(1,368) |
|
|
- |
| |
Other income (expense) |
|
|
(23) |
|
|
504 |
|
|
(21) |
|
|
482 |
| Total Other Expenses |
|
|
(1,363) |
|
|
(908) |
|
|
(3,750) |
|
|
(2,186) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss Before Provision for Income Tax |
|
|
(537) |
|
|
(2,188) |
|
|
(3,985) |
|
|
(4,609) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
(Provision for) benefit from income taxes |
|
|
(2) |
|
|
(334) |
|
|
(7) |
|
|
(635) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss |
|
|
(539) |
|
|
(2,522) |
|
|
(3,992) |
|
|
(5,244) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net income (loss) attributable to non-controlling interest |
|
|
- |
|
|
(5) |
|
|
- |
|
|
37 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss Before Preferred Share Dividends |
|
|
(539) |
|
|
(2,517) |
|
|
(3,992) |
|
|
(5,281) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Dividends - Series A preferred stock |
|
|
(50) |
|
|
(50) |
|
|
(100) |
|
|
(100) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss Attributable to Common Stock |
|
$ |
(589) |
|
$ |
(2,567) |
|
$ |
(4,092) |
|
$ |
(5,381) |
| |
| Staffing 360 Solutions, Inc. and Subsidiaries |
| Reconciliation of Net Loss Attributable to Common Stock to
Adjusted EBITDA |
| (All Amounts in Thousands) |
| |
|
|
|
|
|
|
|
|
| |
|
April 2, 2017
to
July 1, 2017 |
|
April 3, 2016
to
July 2, 2016 |
|
January 1, 2017
to
July 1, 2017 |
|
January 3, 2016
to
July 2, 2016 |
| |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss Attributable to Common Stock |
|
$ |
(589) |
|
$ |
(2,567) |
|
$ |
(4,092) |
|
$ |
(5,381) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Interest Expense |
|
$ |
580 |
|
$ |
792 |
|
$ |
1,082 |
|
$ |
1,392 |
| |
Provision for Income Taxes |
|
|
2 |
|
|
334 |
|
|
7 |
|
|
635 |
| |
Depreciation and Amortization |
|
|
1,520 |
|
|
1,113 |
|
|
2,799 |
|
|
2,608 |
| EBITDA |
|
|
1,513 |
|
|
(328) |
|
|
(204) |
|
|
(746) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Acquisition, Capital Raising and Other Non-Recurring Expenses |
|
|
(322) |
|
|
2,034 |
|
|
260 |
|
|
2,700 |
| |
Other Non-Cash Charges |
|
|
251 |
|
|
276 |
|
|
1,008 |
|
|
626 |
| |
Debt Extinguishment Costs |
|
|
- |
|
|
- |
|
|
1,368 |
|
|
- |
| |
Restructuring Charges |
|
|
2 |
|
|
5 |
|
|
2 |
|
|
10 |
| |
Modification Expense |
|
|
28 |
|
|
- |
|
|
26 |
|
|
31 |
| |
Dividends - Series A Preferred Stock |
|
|
50 |
|
|
50 |
|
|
100 |
|
|
100 |
| |
Other Expense |
|
|
(7) |
|
|
(509) |
|
|
(7) |
|
|
(523) |
| |
Net Income Attributable to Non-Controlling Interest |
|
|
- |
|
|
(5) |
|
|
- |
|
|
37 |
| Adjusted EBITDA |
|
$ |
1,515 |
|
$ |
1,523 |
|
$ |
2,553 |
|
$ |
2,235 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| TTM Adjusted EBITDA |
|
$ |
5,331 |
|
$ |
4,492 |
|
$ |
5,331 |
|
$ |
4,49 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
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