SOURCE: Staffing 360 Solutions

Staffing 360 Solutions

February 11, 2015 07:31 ET

Staffing 360 Solutions' Executive Chairman Releases Quarterly Letter to Shareholders

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

NEW YORK, NY--(Marketwired - Feb 11, 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 Europe, today released its quarterly 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 provide this update as we highlight our corporate initiatives, as well as our plans for the future. As previously mentioned, my intent is to regularly inform current shareholders and potential investors of our progress and achievements on a quarterly basis.

The primary initiative at Staffing 360 Solutions right now is what we call our "Pathway to Profitability," which is a program we have commenced to drive efficiencies and improve bottom line performance. We are pleased to report that we continue to make significant progress on this front.

There are four parts to this initiative. Some of the developments within each are as follows:

1) The deleveraging of our balance sheet to raise new capital for acquisitions:

  • In the past six months, we have successfully converted $5.9 million of debt into equity.
  • We intend to reduce our debt by an additional $1.5 million in the very near-term.
  • We have engaged a NY-based investment bank for the purpose of raising additional capital to finance our M&A program.

2) A comprehensive review of our corporate overhead base:

  • We have successfully reduced the cost of our corporate overhead from an annualized $7.5 million to below $4.0 million. Accomplishing this was a material driver in delivering positive Adjusted EBITDA (as defined below) in fiscal Q2 2015. 
  • Our corporate functions have been streamlined specifically to meet the needs of our growing business without increasing corporate overhead costs.

3) The uplisting of our stock to a major exchange:

  • We announced on October 14, 2014 that we had submitted an application to uplist to NASDAQ. 
  • We are in continuing discussions with NASDAQ on the progress of this application.

4) The drive for further efficiencies and growth within our operations:

  • We achieved overhead savings by merging our two London-based operations and successfully rebranding them as Longbridge 360. This business has now generated operating profit for each of the last 4 months. 
  • Monroe Staffing, our largest brand, grew revenue by more than 15% in the twelve months post acquisition. 
  • PeopleSERVE, our IT acquisition in Massachusetts, has experienced over 20% revenue growth post acquisition.

In our most recent quarter, which ended November 30, 2014, we reported record revenue for the Company of $33.9 million. Annualized revenues have grown from $5 million to over $130 million since fiscal Q2 2014. In addition, our combined business units now include over 3,500 full-time and contract employees across the United States and the United Kingdom.

Additionally, our financials show that we took $5.7 million in restructuring charges to expedite our move to positive Adjusted EBITDA. The non-cash element of this charge was over $5.2 million and it has significantly improved our financial position. It reduced our cash outflows by $7.3 million over the next four years and more importantly by $5.3 million in the next 24 months alone. 

However, we recognize that there is still more work to be done. The Pathway to Profitability is a journey. We believe that it is working and that it is delivering major improvements and benefits. With these improvements, we strongly believe in our long-term vision at Staffing 360 Solutions.

Although we have experienced volatility in our stock over the past several months, our management team is steadfastly committed to our shareholders. We don't believe the recent trading reflects our long-term value. In fact, as the single largest shareholder of the company, I am particularly focused on this issue and that is why I participated -- along with Matt Briand our President and CEO -- in the above-market conversion of our Initio promissory notes into shares of common stock at $1.00 per share, plus warrants.

We expect the improvements to our top and bottom line to continue as we focus on M&A. For an emerging public company like Staffing 360 Solutions, the staffing industry represents a fantastic opportunity because there are so many quality acquisition targets from which to choose. Not only that, the industry is growing organically and represents a rising tide for all companies in the temporary staffing sector. In fact, the American Staffing Association (ASA) announced this month that the global employment and recruitment industry grew by 9.6% in 2013, the most recent data available.

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 -- what we call our M&A Pipeline -- with combined revenues in excess of $600 million.

While we will not acquire all of the potential acquisition targets in the M&A Pipeline, what is clear to us is that there are many excellent staffing companies in the United States and the United Kingdom that are interested in joining our journey. We will continue to update the market as we make progress on this initiative.

In my last letter to shareholders, although we currently have a net loss, we stated that we expected to move into profitability on an Adjusted EBITDA basis during Fiscal 2015. Not only have we accomplished this goal in our quarter ended November 30, 2014 -- we accomplished it two full quarters ahead of schedule.

We are now looking to move to profitability on a Non-Adjusted EBITDA basis. Once this has been achieved, we will set our sights toward profitability on a net income level. This will be driven by the timing of the acquisitions that we make and the one-off costs incurred in completing these acquisitions.

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

Last but not least, Staffing 360 intends to uplist to a national exchange as soon as we meet all listing requirements. We strongly believe a national exchange listing will attract additional investors and increase the liquidity of our stock. We also expect the uplisting to alleviate some of the recent trading volatility and make Staffing 360 Solutions available to a broader segment of the institutional investment community.

Please stay tuned as we make additional improvements to our balance sheet in the coming weeks that we expect to announce as soon as consummated. We remain fully committed to our Pathway to Profitability and we look forward to sharing our progress with you.

In summary, 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 growing revenues, earnings and 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. 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, IT and cybersecurity industries. For more information, please visit: www.staffing360solutions.com

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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.

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 the Company 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.

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