SOURCE: Staffing 360 Solutions, Inc.

Staffing 360 Solutions, Inc.

August 03, 2015 07:00 ET

Staffing 360 Solutions Announces Financial Results for Fiscal Year 2015

Company Reports Revenue of $128.8 Million in Fiscal Year 2015, an Increase of 213% Compared to Revenue of $41.2 Million in Fiscal 2014

NEW YORK, NY--(Marketwired - August 03, 2015) - Staffing 360 Solutions, Inc. (OTCQB: STAF), a public company executing a global buy-and-build strategy through the acquisition of staffing organizations with operations in the US and UK, today released its financial results for its fiscal year ended May 31, 2015.

"We are pleased to report our financial results for fiscal 2015," stated Brendan Flood, Executive Chairman of Staffing 360 Solutions. "Over the past 2 years, our acquisition strategy has fueled our growth from nearly zero revenue in fiscal 2013, to $41.2 million of revenue in fiscal 2014, and to $128.8 million of revenue in fiscal 2015. We have now achieved positive Adjusted EBITDA for three quarters in a row, which has been the key objective of our Pathway to Profitability and our commitment to our shareholders. Importantly, we have eliminated the 'going concern' audit opinion from our 10-K financials, which is a major milestone that illustrates how Staffing 360 Solutions is ready for our next phase of growth."

Summary of the Fiscal Year Ended May 31, 2015

  • Net revenues increased to $128.8 million in fiscal 2015, compared to $41.2 million in the fiscal year ended May 31, 2014.
  • Gross profit increased to $22.5 million in fiscal 2015, compared to $7.8 million in the fiscal year ended May 31, 2014.
  • Loss from Operations reduced to $7.5 million in fiscal 2015, compared to $9.9 million in the fiscal year ended May 31, 2014.
  • Net loss increased to $18.0 million* in fiscal 2015, compared to a net loss of $12.7 million in the fiscal year ended May 31, 2014.
  • Positive Adjusted EBITDA was approximately $750,000* in fiscal 2015, compared to negative Adjusted EBITDA of $2.7 million in the fiscal year ended May 31, 2014.

* A table has been included in this press release with Non-GAAP adjustments to the Company's net loss by approximately $18.7 million in fiscal 2015 (including: non-cash expenses, acquisition expenses, capital raising expenses and non-recurring expenses of $4.0 million, restructuring expenses of $5.2 million, depreciation and amortization of $6.9 million and various other expenses detailed in the table), resulting in positive Adjusted EBITDA of approximately $750,000.

Summary of the Unaudited Fiscal Fourth Quarter Ended May 31, 2015

  • Net revenues increased to $32.2 million, compared to $24.6 million in the fourth quarter ended May 31, 2014.
  • Gross profit increased to $5.5 million, compared to $4.3 million in the fourth quarter ended May 31, 2014.
  • Positive Adjusted EBITDA was approximately $400,000*, compared to negative Adjusted EBITDA of $1.9 million in the fourth quarter ended May 31, 2014.

* A table has been included in this press release with Non-GAAP adjustments to the Company's fourth quarter fiscal 2015 net loss by approximately $4.7 million, resulting in positive Adjusted EBITDA of approximately $400,000.

Mr. Flood continued, "Similar to Staffing 360's past earnings, although our bottom line still shows a net loss, these results include a significant amount of acquisition activity, as well as strong organic growth. Many of these expenses are either non-cash in nature, acquisition-related or are non-recurring. Despite this, we still posted strong organic year-over-year growth, as well as positive Adjusted EBITDA of approximately $400,000 for the quarter ended May 31, 2015. Needless to say, we are extremely pleased with the progress we have made and the results we have achieved."

Analysis of Financial Results

As a result of the Company's numerous acquisitions and strong organic growth, revenues increased to $128.8 million in the fiscal year ended May 31, 2015, compared to approximately $41.2 million for the same period in 2014. Gross profit increased to over $22.5 million in the 2015 fiscal year, compared to approximately $7.8 million for the same period in 2014. Again, this significant increase in revenue and gross profit was principally a result of the Company's acquisitions and their timing.

The Company's net loss for fiscal 2015 increased to $18.0 million (or positive Adjusted EBITDA of approximately $750,000 on a Non-GAAP basis*), compared to a net loss of approximately $12.7 million for the same period in 2014. The increase in net loss was primarily attributable to increased restructuring costs totaling $4.4 million, increased financing expenses of $5.9 million, and operating expenses totaling $30.0 million in fiscal 2015 compared to $17.7 million in fiscal 2014 due to the Company's various acquisitions, a full year of which was recorded for the first time in period ended May 31, 2015. In addition, the Company recorded various non-cash charges, including $703,000 of non-cash impairment charges against its intangible assets, and $2.5 million of non-cash amortization of intangibles.

"Staffing 360 Solutions is a different company to what it was a year ago," stated Jeff R. Mitchell, Chief Financial Officer. "Our top line revenue of $128.8 million is more than 3 times the amount achieved last year, and we have made significant progress reducing corporate overheads through our Pathway to Profitability. Just as importantly, through strong collective efforts of our entire team at Staffing 360 Solutions and our Company's performance, our independent auditors have now lifted the 'going concern' qualification on their audit opinion and the Company has a standard 'unqualified opinion' associated with our audited financial statements. Clearly this is a major development and bodes well for our future outlook and capital raising opportunities."

Highlights of the 2015 Fiscal Year and Subsequent Events

  • Realized positive Adjusted EBITDA two quarters ahead of schedule. Successfully achieved this objective with the Company's financial results for the fiscal quarter ended November 30, 2014 and then repeated it for the quarters ended February 28, 2015 and May 31, 2015.
  • Reduced corporate overheads by approximately $3 million per year. Management believes overall costs of corporate are now in line with industry levels and are sustainable going forward.
  • Experienced strong organic growth from the acquisition of various staffing divisions and assets in Fiscal 2014, including: Monroe Staffing Services, Longbridge Recruitment, Poolia UK and PeopleSERVE.
  • Demonstrated management's deep faith in the Company with the above-market conversion of $3.3 million of principal and interest relating to the promissory notes of the Initio acquisition. Both Executive Chairman Brendan Flood, and CEO Matt Briand, were among the note holders that converted into equity at $1.00 per share, plus warrants.
  • Raised a $25 million revolving credit facility and $3 million term loan from MidCap Financial, which is backed by Apollo Global Management, LLC, one of the world's leading alternative investment managers. The $25 million revolving credit facility replaced the Company's previous $15 million facility with Wells Fargo, providing additional room for expansion and has an accordion facility to expand to $50 million in certain circumstances.
  • Completed the Company's latest acquisition of Lighthouse Placement Services, LLC on July 8, 2015. Lighthouse specializes in providing engineering workforce solutions to a diverse set of clients, ranging from local firms to international enterprises and defense contractors. Founded in 2001, Lighthouse generated approximately $15 million in revenue over the past year.

"As these improvements to our financials demonstrate, each of us at Staffing 360 Solutions is fully committed to reaching our stated goal of $300 million in annualized revenues," said Matt Briand, President and CEO. "Our path to achieving this milestone will be accomplished by acquiring well-managed, growing companies, such as our recently announced $15 million Lighthouse acquisition earlier this month. With several key developments on the horizon, we encourage investors to join us during our earnings conference call for more details on how we plan to achieve our objectives over the next year and build long term value for our shareholders."

Earnings Conference Call

Staffing 360 Solutions will host its earnings conference call on Wednesday, August 5, 2015, at 11:00 am Eastern to discuss its financial results for the fiscal year and fiscal fourth quarter ended May 31, 2015. 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 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 August 20, 2015. To listen to the playback dial 877.660.6853 within the United States or 201.612.7415 internationally and use replay ID number: 13616746.

The conference call will be simultaneously webcast and available at:
http://www.investorcalendar.com/event/174257

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 UK. The Company believes 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 and IT industries. 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 timing and ability to enter into any additional acquisitions, as well as 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. Specifically, in order for the Company to achieve annualized revenues of $300 million, the Company will need to successfully raise sufficient capital, to consummate additional target acquisitions, successfully integrate any newly acquired companies, organically grow its business, successfully defend current and any potential future litigation, as well as various additional contingencies, many of which are unknown at this time and generally out of the Company's control. The Company can give no assurance that it will be able to achieve these objectives. 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
Condensed Consolidated Balance Sheets
         
    May 31,
    2015   2014 *
         
         
ASSETS        
         
Assets        
 Current Assets   $20,953,697   $18,853,524
 Other Assets    21,378,558    24,141,938
Total Assets   $42,332,255   $42,995,462
           
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Liabilities          
 Current Liabilities   $27,548,579   $26,048,343
 Other Liabilities    5,281,616    6,327,709
Total Liabilities    32,830,195    32,376,052
           
Stockholders' Equity          
 Stockholders' Equity    8,448,715    10,036,873
 Non-Controlling Interest    1,053,345    582,537
Total Stockholders' Equity    9,502,060    10,619,410
           
Total Liabilities and Stockholders' Equity   $42,332,255   $42,995,462
           
* Pursuant to US GAAP requirements, the Company has revised the historical balance sheet to exclude Cyber 360, Inc. as a discontinued operation.
 
 
Staffing 360 Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
 
          
    For the Years Ended May 31, 
    2015    2014 *
          
Sales   $128,829,330    $41,198,162
            
Cost of Sales    106,280,617     33,394,503
            
Gross Profit    22,548,713     7,803,659
            
Operating Expenses    30,018,209     17,686,323
            
Loss from Operations    (7,469,496 )   (9,882,664)
            
Other Income (Expenses)    (10,093,627 )   (2,725,646)
            
Loss Before Provision for Income Tax    (17,563,123 )   (12,608,310)
            
 Income Tax Benefit / (Expense)    60,322     (69,968)
            
Net Loss from Continued Operations    (17,502,801 )   (12,678,278)
            
Net Loss from Discontinued Operations    (47,154 )   20,539
            
Net Loss   $(17,549,955 )  $(12,657,739)
            
 Net Income / (Loss) Attributable to Non-Controlling Interest    470,808     9,637
            
Net Loss Attributable to STAF   $(18,020,763 )  $(12,667,376)
            
* Pursuant to US GAAP requirements, the Company has revised the historical results to exclude Cyber 360, Inc. as a discontinued operation.
 
  
Staffing 360 Solutions, Inc. and Subsidiaries  
Condensed Consolidated Non-GAAP Adjusted EBITDA Calculations  
Comparing the Years Ended May 31, 2015 and 2014  
(Unaudited)  
                   
    For the Years Ended May 31,   For the Three Months Ended May 31,  
                   
    2015   2014 *   2015   2014 *  
                   
                   
Sales   $128,829,330   $41,198,162   $32,188,410   $24,567,451  
                       
Gross Profit   $22,548,713   $7,803,659   $5,517,587   $4,258,763  
                       
Loss from Operations   $(7,469,496 ) $(9,882,664 ) $(2,578,703 ) $(7,108,196 )
                       
Net Loss Attributable to STAF   $(18,020,763 ) $(12,667,376 ) $(4,322,823 ) $(9,042,974 )
                       
Adjustments:
                     
 Interest   $1,645,533   $479,609   $332,526   $280,260  
 Restructuring Expenses    5,236,992    -    1,571    -  
 Other Income    (141,595 )  -    3,689    -  
 Depreciation and Amortization    6,931,442    3,444,154    885,909    2,348,809  
 Tax    (60,322 )  69,968    6,314    69,968  
 Impairment of Goodwill    703,222    3,533,847    -    3,533,847  
 Non-Controlling Interest    470,808    9,637    357,098    -  
 Gain on Change in Fair Value of CSI
Earn Out Liability
   -    -    840,455    -  
 Acquisition, Capital Raising,
Non-Cash and Other Expenses
   3,986,804    2,456,755    2,299,600    894,248  
                       
Total Adjustments    18,772,884    9,993,970    4,727,162    7,127,132  
                       
Adjusted EBITDA   $752,121   $(2,673,406 ) $404,339   $(1,915,842 )
                       
* Pursuant to US GAAP requirements, the Company has revised the historical results to exclude Cyber 360, Inc. as a discontinued operation.
 

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Contact Information

  • Investor Contact:

    Staffing 360 Solutions, Inc.
    Darren Minton
    Executive Vice President
    212.634.6413
    Email contact

    Financial Contact:

    Staffing 360 Solutions, Inc.
    Jeff R. Mitchell
    Chief Financial Officer
    212.634.6411
    Email contact