SOURCE: Staffing 360 Solutions

Staffing 360 Solutions

October 20, 2014 19:11 ET

Staffing 360 Solutions Announces Financial Results for Fiscal Q1 2015

Company Reports Revenue of $33.4 Million for the Fiscal Quarter Ended August 31, 2014

NEW YORK, NY--(Marketwired - Oct 20, 2014) - Staffing 360 Solutions, Inc. (OTCQB: STAF), a public company executing a global buy-and-build strategy through the acquisition of domestic and international staffing organizations with operations in the U.S. and Europe, today released its financial results for its fiscal quarter ended August 31, 2014.

"We are pleased to announce our latest quarterly results," stated Brendan Flood, Executive Chairman of Staffing 360 Solutions. "As a perfect illustration of our growth to-date, our acquisition strategy has fueled our expansion from just over $1 million in revenue in fiscal Q1 2014 to over $33 million in Q1 2015. This places us over $130 million in revenue on a current annualized basis."

Summary of Fiscal Q1 2015 (Three Months Ended August 31, 2014)

  • Net revenues increased to $33.4 million, compared to $1.3 million in the quarter ended August 31, 2013.
  • Gross profit increased to $5.9 million, compared to approximately $393,000 in the quarter ended August 31, 2013.
  • Net loss increased to $4.7 million*, compared to a net loss of approximately $427,000 in the quarter ended August 31, 2013.
  • Adjusted EBITDA loss was approximately $409,000* in the quarter ended August 31, 2014.

* A table has been included in this press release with Non-GAAP adjustments to the Company's net loss by approximately $4.3 million (including: non-cash expenses, acquisition expenses, capital raising expenses and non-recurring expenses of $378,000, depreciation and amortization of $3.6 million and approximately $309,000 of other expenses), resulting in an Adjusted EBITDA loss of $409,000.

"Not only have we demonstrated significant year-over-year growth, our most recent quarter ended August 31, 2014 has shown strong improvements on a sequential basis from our quarter ended May 31, 2014," stated Mr. Flood. "For example, our net revenue increased from $25.6 million in the previous quarter to $33.4 million, resulting in 30% sequential growth. Likewise, our Adjusted EBITDA loss of $2.5 million in the previous quarter improved to an Adjusted EBITDA loss of $409,000 for the quarter ended August 31, 2014 and we expect to continue to improve these numbers as we implement our Pathway to Profitability."

Analysis of Financial Results

As part of its targeted acquisition strategy, Staffing 360 Solutions has completed five acquisitions to-date, including The Revolution Group (renamed Cyber 360 Solutions), Control Solutions International Inc., Initio International Holdings Limited (renamed Staffing 360 Solutions Limited), Poolia UK, and PeopleSERVE. Four of these acquisitions took place after August 31, 2013.

As a result of these acquisitions, net revenues increased to $33.4 million in the quarter ended August 31, 2014, compared to approximately $1.3 million for the same period in 2013. Gross profit increased to over $5.9 million, compared to approximately $393,000 for the same period in 2013. Again, this significant increase in revenue and gross profit was principally a result of the Company's recent acquisitions, as compared to the revenue and gross profit of its lone subsidiary in 2013.

The Company's net loss for the quarter ended August 31, 2014 increased to $4.7 million (or an Adjusted EBITDA loss of approximately $409,000 on a Non-GAAP basis*), compared to a net loss of approximately $427,000 for the same period in 2013. The increase in net loss was primarily attributable to increased operating expenses including an increased workforce due to the acquisitions made throughout the year as well as office expenses related to the Company's subsidiaries, four of which had not been acquired prior to August 2013. The Company incurred approximately $3.8 million of non-cash charges, including approximately $3.6 million in amortization and depreciation charges, in the fiscal first quarter ended August 31, 2014.

"Staffing 360 Solutions has grown over the past year through our highly targeted acquisition strategy," stated Jeff Mitchell, Chief Financial Officer. "From a revenue perspective, the $33.4 million we generated in our most recent quarter is consistent with what is expected on a quarterly basis going forward, prior to additional acquisitions that we may close. Although we reported a net loss of approximately $4.7 million, approximately $3.8 million is attributable to non-cash charges and $500,000 in additional adjustments to EBITDA. In addition, the investment we have made building a highly-experienced management team is expected to be a major benefit going forward and will not require material additions as we grow, both organically and through acquisitions."

Highlights of Fiscal Q1 2015 and Subsequent Events

  • Increased the Company's credit facility up to $15 million with Wells Fargo Bank, which provides additional working capital for certain subsidiaries of Staffing 360 Solutions.
  • Announced the Company's Cyber 360 Solutions division was awarded a GSA Schedule from the Federal Government. The five-year contract allows for all federal government agencies to obtain cybersecurity personnel and services from Cyber 360 Solutions as a trusted vendor.
  • Completed a $4.1 million Series A Convertible Bond offering to continue to fund the Company's acquisition strategy.
  • Announced the Company's application for uplisting its common stock on the NASDAQ Capital Market. Based on management's analysis, the Company believes it will qualify for alternate bid price criteria, which would allow it to uplist to a national exchange based on a $2.00 bid price.

Matt Briand, Chief Executive Officer, added, "As we continue to implement our acquisition strategy, Staffing 360 Solutions is fully committed to reaching our stated goal of $300 million in annualized revenues. We encourage the public to join us during our earnings conference call for more details on how we plan to achieve these goals over the next year and beyond. With many exciting developments on the horizon, including potential government contracts through our new GSA Schedule as well as our potential uplisting to NASDAQ, we will remain committed to growth in revenues, growth in earnings and growth in long term shareholder value."

Earnings Conference Call

Staffing 360 Solutions will host its earnings conference call on Tuesday, October 21, 2014, at 11:00 am Eastern to discuss its financial results for the fiscal quarter ended August 31, 2014. 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 November 4, 2014. To listen to the playback dial 877.660.6853 within the United States or 201.612.7415 internationally and use replay ID number: 13593807.

The conference call will be simultaneously webcast and available at:
http://www.investorcalendar.com/event/173333

About Staffing 360 Solutions, Inc.

Staffing 360 Solutions, Inc. (OTCQB: STAF) is a public company in the staffing sector engaged in the execution of a global buy-and-build strategy through the acquisition of domestic and international staffing organizations with operations in the US and Europe. As part of its targeted consolidation model, the Company is pursuing acquisition targets in the finance and accounting, administrative, engineering, IT and cybersecurity industries. The Company believes the staffing industry offers opportunities to create a successful public company with a longer term objective of accretive acquisitions that will drive annual revenues to $300 million. 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 U.S. 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 above.

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 the goodwill impairment charges. The Company excludes stock-based compensation because it is non-cash in nature.

Forward-Looking Statements

Certain matters discussed within this press release are forward-looking statements including, but not limited to, the ability to enter into any additional acquisitions, or the size of future revenue. 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. Staffing 360 Solutions does not undertake any duty to update any statements contained herein (including any forward-looking statements), except as required by law. Factors that could cause actual results to differ materially from expectations include general industry considerations, regulatory changes, changes in local or national economic conditions and other risks 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, Inc. and Subsidiaries  
Consolidated Statements of Operations  
             
    For the Three Months Ended August 31,  
    2014     2013  
                 
Net Sales   $ 33,439,373     $ 1,343,375  
                 
Cost of Sales     27,529,559       950,609  
                 
Gross Profit     5,909,814       392,766  
                 
Operating Expenses:                
  Salaries and wages     4,047,298       278,214  
  Professional fees     915,895       196,544  
  Director and related party consulting     186,758       116,250  
  Depreciation and amortization     695,187       65,233  
  General and administrative expenses     1,494,317       150,226  
Total Operating Expenses     7,339,455       806,467  
                 
Loss From Operations     (1,429,641 )     (413,701 )
                 
Other Income (Expenses):                
  Interest expense     (458,211 )     (13,790 )
  Amortization of deferred financing     (351,370 )     -  
  Amortization of beneficial conversion feature     (1,748,436 )     -  
  Amortization of debt discount     (790,375 )     -  
  Other income     52,021       -  
Loss Before Provision For Income Tax     (4,726,012 )     (427,491 )
                 
Income tax benefit     62,614       -  
Net Loss   $ (4,663,398 )   $ (427,491 )
                 
  Net income attributable to non-controlling interest     104,663       -  
Net Loss Attributable To Staffing 360 Solutions   $ (4,768,061 )   $ (427,491 )
                 
Other Comprehensive Loss                
  Foreign exchange translation     (17,789 )     -  
Comprehensive Loss   $ (4,681,187 )   $ (427,491 )
                 
                 
   
Non-GAAP Adjusted EBITDA Calculations  
Comparing the Three Months Ended May 31, 2014 to August 31, 2014  
             
    Fiscal Q1 2015     Fiscal Q4 2014  
    Three Months Ended August 31     Three Months Ended May 31  
    2014     2014  
                 
Net Sales   $ 33,439,373     $ 25,562,712  
Cost of Sales     27,529,559       21,004,508  
Gross Profit     5,909,814       4,558,204  
                 
Total Operating Expenses     7,339,455       11,721,149  
                 
Loss From Operations     (1,429,641 )     (7,162,945 )
                 
Net Loss     (4,663,398 )     (9,042,975 )
                 
Comprehensive Loss   $ (4,681,187 )   $ (9,062,949 )
                 
Adjustments:                
  Interest   $ 458,211     $ 332,406  
  Depreciation and amortization     3,585,368       2,268,360  
  Tax     (62,614 )     69,968  
  Foreign exchange     17,789       19,974  
  Impairment of goodwill     -       3,533,847  
  Non-controlling interest     (104,663 )     (9,637 )
  Non-cash, acquisition, capital raising and other expenses     378,000       394,500  
                 
Total Adjustments   $ 4,272,091     $ 6,609,418  
                 
Adjusted EBITDA   $ (409,096 )   $ (2,453,531 )
                 
                 

Contact Information

  • Company Contact:

    Staffing 360 Solutions, Inc.
    Alfonso J. Cervantes
    Vice Chairman and President
    212.634.6410
    Email Contact

    Financial Communications:

    Trilogy Capital Partners, Inc.
    Darren Minton
    President
    212.634.6413
    Email Contact