ATLANTA, GA--(Marketwired - Aug 18, 2015) - Labor SMART, Inc. (
Second Quarter 2015 Highlights:
-Revenue of $6.37 million
-Gross Profit Margins improved to 27.12% vs. 21.21% a year ago
-Record Gross Profit of $1.727 million
-Net Loss reduced by 39.5% to $564k vs. 933k a year ago
"Our results from the second quarter of 2015 illustrate the fantastic progress being made. Last year's decision to shed a sizeable book of business had minimal impact on year over year revenues as we replaced low margin, high risk business with more profitable customer relationships. Despite the $68k year over year decline in top line revenue, the Company's gross profit surged to record levels," said Ryan Schadel, President and CEO of Labor SMART. "In addition to achieving record gross margins, we also reduced our net loss substantially. Year over year net losses are expected to shrink further in the coming quarters and Labor SMART will continue to pursue smart growth opportunities that we believe will drive profitability and position the Company to provide the best experience to our customers across multiple geographies."
Over the last week, the Company has received several inquiries from shareholders and is providing the following answers to those questions:
Q: You've stated before that 100 offices nationwide was your goal, but you've recently sold 5 locations. Has the goal changed?
A: The goal has not changed but the plan has evolved. The major contributor to this evolution was becoming substantially self-insured last year. This changed our financial model drastically, making acquisitions more appealing than organic expansion. Acquisitions do not impact the Company's financial statements in the same way that organic expansion does.
Q: Is the note that Command Center, Inc. bought in default?
A: The Company believes that prior to the sale of the note to Command Center, Inc., the terms of the note were amended by the prior note holder to allow the note to be repaid in monthly installments. The Company provided documentation to the new note holder that, it believes, substantiates the amendment. Additional details regarding this note and the Company's legal action against Command Center, Inc. are included in our recently filed 10Q.
Q: Payroll taxes payable appears to have gone up in the new 10Q. What happened?
A: Early in 2015 the Company created several subsidiaries. Operations were strategically placed into these subsidiaries in preparation for state income tax management strategies on future profits. These subsidiaries were quarterly schedule tax depositors, whereas the parent company is a semi-weekly depositor. The increase in payroll taxes payable from Q1 2015 to Q2 2015 is driven by the change in the required deposit schedule. All taxes accrued during Q2 2015 were paid subsequent to the calendar quarter closing as required.
Q: I see there is a new convertible note agreement on June 1, 2015. I thought we were done with those?
A: The note from June 1, 2015 was part of an extension of a prior note entered into on August 8, 2014. Half of the prior note was refinanced at no material cost to the Company and the maturity date was extended into 2016 at the Company's request.
Q: Is the Company planning to do a reverse split soon?
A: No.
About Labor SMART, Inc.
Labor SMART, Inc. provides On-Demand temporary labor to a variety of industries. The Company's clients range from small businesses to Fortune 100 companies. Labor SMART was founded to provide reliable, dependable and flexible resources for on-demand personnel to small and large businesses in areas that include construction, manufacturing, hospitality, event-staffing, restoration, warehousing, retailing, disaster relief and cleanup, demolition and landscaping. Labor SMART believes it can make a positive contribution each and every day for the benefit of its clients and temporary employees. The Company's mission is to be the provider of choice to its growing portfolio of customers with a service-focused approach that enables Labor SMART to be seen as a resource and partner to its clients.
Safe Harbor Statement
This release contains statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements appear in a number of places in this release and include all statements that are not statements of historical fact regarding the intent, belief or current expectations of Labor SMART, Inc., its directors or its officers with respect to, among other things: (i) financing plans; (ii) trends affecting its financial condition or results of operations; (iii) growth strategy and operating strategy. The words "may", "would", "will", "expect", "estimate", "can", "believe", "potential", and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond Labor SMART, Inc.'s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. More information about the potential factors that could affect the business and financial results is and will be included in Labor SMART, Inc.'s filings with the U.S. Securities and Exchange Commission.
Contact Information:
Contact:
Labor SMART, Inc.
shareholderrelations@laborsmart.com