SOURCE: Staffing 360 Solutions, Inc.

Staffing 360 Solutions, Inc.

August 15, 2017 16:30 ET

Staffing 360 Solutions Announces Financial Results for Fiscal Q2 2017

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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Contact Information

  • Corporate Investor Contact:
    Staffing 360 Solutions, Inc.
    Brendan Flood
    Executive Chairman
    Email contact


    Financial Contact:

    Staffing 360 Solutions, Inc.
    David Faiman
    Chief Financial Officer
    +1.646.507.5711
    Email contact