SOURCE: Staffing 360 Solutions

Staffing 360 Solutions

October 28, 2014 07:01 ET

Staffing 360 Solutions' Executive Chairman Releases Letter to Shareholders

Brendan Flood Updates Shareholders and Speaks to Future Corporate Initiatives With the Company's Consolidation Strategy in the Fragmented Staffing Industry

NEW YORK, NY--(Marketwired - Oct 28, 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 US and Europe, today released a letter to shareholders from Brendan Flood, Executive Chairman, providing shareholders with an update on current business initiatives, and insight into management's expectations for fiscal 2015 and beyond.

Dear Shareholders:

As the Executive Chairman of Staffing 360 Solutions, it is my pleasure to highlight details of our exciting new corporate initiatives and to discuss our plans for the future. Going forward, my intent is to regularly inform current shareholders and potential investors of our progress and achievements as we position the company to achieve our publicly stated objective of $300 million in revenues. We believe the highly fragmented staffing industry, combined with our buy-and-build consolidation strategy, highly experienced leadership team, and our significant pipeline of acquisition targets will push us past our goal in the next 24 months.

Since this time last year, we have already grown from $5 million in revenues, to over $130 million in revenues on a current annualized basis. In addition, our combined business units now include over 3,000 full-time and contract employees across the United States and the United Kingdom.

However, before I get into too much detail, for those of you that may be new to the company, let me explain what makes the staffing industry so attractive for our buy-and-build strategy.

First, the staffing industry is large, growing and here to stay. After the post-2008 recession, entire economies and workforces around the world have had to adapt and become much more flexible. Companies ranging from small businesses to Fortune 500 enterprises are deploying more temporary staffing services and they are outsourcing job functions that don't relate to their core business, especially in flourishing sectors such as finance and accounting, engineering and cybersecurity.

Globally, staffing companies generate more than $400 billion in annual revenue, according to 2013 data from Staffing Industry Analysts (SIA). There are approximately 70,000 private employment services agencies around the world, with the top 10 companies accounting for about a third of industry sales. Overall, the US is the largest single country in the world's staffing market, with $124 billion of revenue, while Europe is the largest region, representing approximately 40% of global revenue.

To provide some sense of the M&A opportunities, the high-growth staffing market is very fragmented with an estimated 15,000 companies, each generating less than $20 million in revenues in the United States alone. The 50 largest staffing companies in the US generate only 40% of annual US industry revenues.

For an emerging public company like Staffing 360 Solutions, the expanding staffing industry is a fantastic opportunity because there are so many acquisition targets from which to choose. Staffing 360 is committed to creating a major international publicly-held staffing organization through our targeted acquisition strategy.

Since inception we have acquired five staffing companies, ranging from $5 million in annual revenues to over $80 million in annual revenues. We had a single acquisition under our belt this time last year: Cyber 360 Solutions. Since then, we have completed four additional acquisitions: Control Solutions International, Initio International Holdings Limited, Poolia UK and PeopleSERVE. We believe that these acquisitions -- and the larger critical mass we have been able to achieve as a result -- improves our attractiveness to acquisition targets.

In fact, the primary initiative at Staffing 360 Solutions right now is what we call our "Pathway to Profitability." This touches every part of our organization, including reducing costs, streamlining corporate overhead and growth through our highly targeted M&A program. As mentioned previously, we have a publicly-stated aim of getting to $300 million in annualized revenues. To achieve this objective, we have developed a detailed list of potential acquisition targets -- our M&A Pipeline -- with combined revenues in excess of $600 million.

While we will not be able to execute all of these transactions, and indeed we may not want to if the fit is not right, what is clear to us is that there are many excellent staffing companies in the United States and the United Kingdom that are eager to join our journey. We will continue to update the market as we make progress on this initiative.

On our earnings calls I have also discussed the cost reduction initiatives as part of our Pathway to Profitability and promised to follow up with more detail. We are fully committed to becoming profitable as soon as possible. Our expectation is that we will move into profitability on an Adjusted EBITDA basis during Fiscal 2015. Moving to profitability at a net income level will be driven by the timings of the acquisitions that we make and the one-off costs incurred in completing these acquisitions.

As we reduce costs and maximize efficiencies across our organization we are focusing on the following areas:

  • Reviewing the debt on our balance sheet with a view to converting a significant portion to equity. We have been very successful in debt conversions over the past twelve months and we look forward to continuing the same level of success.

  • Materially evaluating and reducing our corporate overhead as we become a more mature business with different support needs.

  • Integrating our acquired operations to improve efficiencies and operational excellence.

Our overall mission is to continue to acquire larger and increasingly more attractive companies with strong margins as we drive for profitability in 2015 and beyond.

Last but not least, we plan to uplist to a national exchange as soon as we meet all listing requirements. As part of this mission, we are pleased to announce that we have submitted our initial application with NASDAQ. Based on our analysis, the Company believes it will qualify for the alternate bid price criteria, which would allow us to uplist to a national exchange based on a $2.00 bid price. This threshold can be achieved through a reverse stock split -- which is a common practice for companies that uplist from the OTC markets -- and I believe this would be an exceptionally positive development as long as it is done in conjunction with our move to a national exchange.

In fact, I am confident that a national exchange listing such as NASDAQ will be of tremendous benefit to existing and potential shareholders alike. Not only would we expect a national exchange listing to attract additional investors and increase liquidity, we would also expect it to make Staffing 360 Solutions available to a broader segment of the institutional investment community.

In summary, our pipeline is stocked with quality targets, and I expect to announce more completed acquisitions throughout the fiscal year as we get closer to our publicly stated objective of reaching $300 million in revenue.

Staffing 360 Solutions represents a tremendous opportunity for rapid growth in both the United States and around the world. As we continue to implement Staffing 360's high-growth acquisition model, we remain committed to growth in revenues, growth in earnings and growth in shareholder value.

I thank you for your attention and continued support. We look forward to maintaining an open dialogue between management and our shareholders. For further information, please visit the "Investors" section of our website at:
www.staffing360solutions.com/investors.html.

Respectfully,

Brendan Flood
Executive Chairman
Staffing 360 Solutions, Inc.
Ticker: STAF

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

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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, becoming profitable in the future 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.

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