NEW YORK, NY -- (Marketwired) -- 10/20/14 -- 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
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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. 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
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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
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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)
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Net income attributable to non-controlling
interest 104,663 -
------------ ------------
Net Loss Attributable To Staffing 360 Solutions $ (4,768,061) $ (427,491)
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Other Comprehensive Loss
Foreign exchange translation (17,789) -
------------ ------------
Comprehensive Loss $ (4,681,187) $ (427,491)
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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 Three Months
Ended August 31 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)
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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
