Volt Information Sciences Reports Fiscal 2019 First Quarter Financial Results
Company Achieves Year-Over-Year Revenue Growth and Significant
Improvements in Operating Results Led by the Strength of the North
American Staffing Segment
NEW YORK–(BUSINESS WIRE)–Volt Information Sciences, Inc. (“Volt” or “the Company”)
(NYSE-AMERICAN: VISI), an international provider of staffing
services and managed service programs, today reported results for its
fiscal 2019 first quarter ended January 27, 2019. Key highlights include:
-
First quarter total Company net revenue of $253.4 million, up slightly
year-over-year; On a same-store basis, which exclude net revenue
contributed from a business exited during the past year and the effect
of foreign exchange rate fluctuations, net revenue increased $1.8
million, or 0.7%, year-over-year -
First quarter North American Staffing segment net revenue of $211.8
million increased 2.7% year-over-year; North American Staffing segment
operating income of $3.9 million compared with an operating loss of
$0.6 million a year ago -
Total Company gross margins in the first quarter of 14.9% increased 70
basis points year-over-year -
Total Company selling, administrative and other operating costs in the
first quarter of $39.8 million, declined 15.2% year-over-year -
Total Company net loss in the first quarter of $3.2 million improved
significantly compared with net loss of $10.7 million a year ago -
Total Company adjusted EBITDA in the first quarter was a loss of $1.1
million compared with a loss of $9.1 million a year ago
Commenting on Volt’s performance, Linda Perneau, President and CEO,
said, “We are off to a good, reassuring start in fiscal 2019 as our
solid execution drove improved performance in virtually every key
financial and operational metric. At the top line, we generated
year-over-year growth in net sales for the first time in 26 quarters.
This growth is largely attributed to actions we initiated last year
within our North American Staffing segment designed to improve our sales
engine and strengthen service delivery. In addition, our emphasis on
driving retail growth in our commercial and professional job categories,
pricing discipline on new business and success in reducing workers
compensation expenses improved Volt’s gross margins on a year-over-year
basis. We also continue to see benefits from our cost containment
initiatives and other efforts to achieve operational efficiencies across
the enterprise. This resulted in a sharp year-over-year reduction in
selling, administrative and other operating costs. Our success in these
key metrics during the first quarter collectively contributed to the
year-over-year improvement in Volt’s operating results and Adjusted
EBITDA.”
Ms. Perneau continued, “Overall, I am extremely proud of what our team
has accomplished in a very short period of time. Momentum continues to
build at Volt. Our results from this past quarter are strong evidence
that we are on the right track and I am encouraged by the team’s
dedication, persistence and hard work. I look forward to continued
execution of our strategy, enhancing our financial and operational
performance and driving shareholder value as we move forward.”
Fiscal 2019 First Quarter Results
Total revenue for the fiscal 2019 first quarter was $253.4 million, up
slightly compared to $253.3 million in the first quarter of fiscal 2018.
On a same-store basis, net revenue increased nearly 1% year-over-year
excluding net revenue contributed from a business exited during the past
year and the effect of currency fluctuations.
Total gross margin in the first quarter of fiscal 2019 was 14.9%, an
improvement of 70 basis points year-over-year. The margin improvement
was driven by growth in higher-margin revenue from retail customers,
improved worker compensation experience, partially offset by a higher
mix of larger price-competitive customers and competitive pricing
pressure.
Selling, administrative and other operating costs in the first quarter
of fiscal 2019 decreased $7.1 million, or 15.2%, to $39.8 million from
$46.9 million in the first quarter of fiscal 2018. The improvement is
primarily attributed to Volt’s ongoing cost reduction efforts in all
areas of the business including lower labor, legal and consulting fees,
as well as a reduction in travel and facility expenses. SG&A as a
percent of revenue improved to 15.7% in the first quarter compared with
18.5% a year ago.
Net loss was $3.2 million in the first quarter of fiscal 2019, compared
to $10.7 million in the first quarter of fiscal 2018.
Adjusted EBITDA, which is a Non-GAAP measure, was negative $1.1 million
in the fiscal 2019 first quarter, compared to negative Adjusted EBITDA
of $9.1 million in the year ago period. Adjusted EBITDA excludes the
impact of special items, interest expense, income taxes, depreciation
and amortization expense, other income/loss and share-based compensation
expense.
For a reconciliation of the GAAP and Non-GAAP financial results, please
see the tables at the end of this press release.
Business Outlook
Volt’s outlook statements are based on current expectations. The
following statements are forward-looking, and actual results could
differ materially depending on market conditions and the factors set
forth under “Forward-Looking Statements” below.
For the second quarter of fiscal 2019 ending April 28, 2019, the Company
currently expects its total Company consolidated revenue will be roughly
1% lower than the prior year quarter, driven predominantly by a modest
decline in its North American Staffing segment.
Conference Call and Webcast
A conference call and simultaneous webcast to discuss the fiscal 2019
first quarter financial results will be held today at 4:30 p.m. Eastern
Time / 1:30 p.m. Pacific Time. Volt’s President and CEO Linda Perneau
and CFO Paul Tomkins will host the conference call. Participants may
listen in via webcast by visiting the Investor & Governance section of
Volt’s website at www.volt.com.
Please go to the website at least 15 minutes early to register, download
and install any necessary audio software. The conference call can also
be accessed by dialing 877-407-9039 (201-689-8470 for international
callers) and reference the “Volt Information Sciences Earnings
Conference Call.”
Following the call, an audio replay will be available beginning
Wednesday, March 6, 2019 at 7:30 p.m. Eastern Time through Wednesday,
March 20, 2019 at 11:59 p.m. Eastern Time. To access the replay, dial
(844) 512-2921 (U.S.) or (412) 317-6671 (International) and enter the
Conference ID #13687750. A replay of the webcast will also be available
for 90 days upon completion of the call, accessible through the
Investors section of the Company’s website at www.volt.com.
About Volt Information Sciences, Inc.
Volt Information Sciences, Inc. is a global provider of staffing
services (traditional time and materials-based as well as
project-based). Our staffing services consist of workforce solutions
that include providing contingent workers, personnel recruitment
services, and managed staffing services programs supporting primarily
administrative, technical, information technology, light-industrial and
engineering positions. Our managed staffing programs involve managing
the procurement and on-boarding of contingent workers from multiple
providers. Our customer care solutions specialize in serving as an
extension of our customers’ consumer relationships and processes
including collaborating with customers, from help desk inquiries to
advanced technical support. Our complementary businesses offer customer
care call centers, customized talent, and supplier management solutions
to a diverse client base. Volt services global industries including
aerospace, automotive, banking and finance, consumer electronics,
information technology, insurance, life sciences, manufacturing, media
and entertainment, pharmaceutical, software, telecommunications,
transportation, and utilities. For more information, visit www.volt.com.
Forward-Looking Statements
This press release contains forward-looking statements, including the
Company’s revenue outlook for the second quarter of fiscal 2019, that
are subject to a number of known and unknown risks, including, among
others, general economic, competitive and other business conditions, the
degree and timing of customer utilization and rate of renewals of
contracts with the Company, and the degree of success of business
improvement initiatives that could cause actual results, performance and
achievements to differ materially from those described or implied in the
forward-looking statements. Information concerning these and other
factors that could cause actual results to differ materially from those
in the forward-looking statements are contained in company reports filed
with the Securities and Exchange Commission (“SEC”). Copies of the
Company’s latest Annual Report on Form 10-K and subsequent Quarterly
Reports on Form 10-Q, as filed with the SEC, are available without
charge upon request to Volt Information Sciences, Inc., 50 Charles
Lindbergh Blvd., Suite 206, Uniondale NY 11553, Attention: Shareholder
Relations. These and other SEC filings by the Company are also available
to the public over the Internet at the SEC’s website at http://www.sec.gov
and at the Company’s website at http://www.volt.com
in the Investor & Governance section.
Note Regarding the Use of Non-GAAP Financial Measures
The Company has provided certain Non-GAAP financial information, which
includes adjustments for special items and the impact of foreign
currency fluctuations on certain line items, as additional information
for its segment revenue, consolidated net income (loss), segment
operating income (loss) and Adjusted EBITDA. These measures are not in
accordance with, or an alternative for, generally accepted accounting
principles (“GAAP”) and may be different from Non-GAAP measures reported
by other companies.
The Company believes that the presentation of Non-GAAP measures,
eliminating special items, the impact of foreign currency
fluctuations and the impact of businesses sold provides useful
information to management and investors regarding certain financial and
business trends relating to its financial condition and results of
operations because they permit evaluation of the results of the Company
without the effect of currency fluctuations, special items or the impact
of businesses sold that management believes make it more difficult to
understand and evaluate the Company’s results of operations. Special
items include impairments, restructuring and severance as well as
certain income or expenses not indicative of the Company’s current or
future period performance and are more fully disclosed in the tables.
Adjusted EBITDA is defined as earnings or loss before interest, income
taxes, depreciation and amortization (“EBITDA”) adjusted to exclude
share-based compensation expense as well as the special items described
above.
Adjusted EBITDA is a performance measure rather than a cash flow
measure. The Company believes the presentation of Adjusted EBITDA is
relevant and useful for investors because it allows investors to view
results in a manner similar to the method used by management.
Adjusted EBITDA has limitations as an analytical tool and should not be
considered in isolation from, or as a substitute for, analysis of the
Company’s results of operations and operating cash flows as reported
under GAAP. For example, Adjusted EBITDA does not reflect capital
expenditures or contractual commitments; does not reflect changes in, or
cash requirements for, the Company’s working capital needs; does not
reflect the interest expense, or the cash requirements necessary to
service the interest payments, on the Company’s debt; and does not
reflect cash required to pay income taxes.
The Company’s computation of Adjusted EBITDA may not be comparable to
other similarly titled measures computed by other companies because all
companies do not calculate these measures in the same fashion.
| Results of Operations | ||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||
| Three Months Ended | ||||||||||||||||||
| January 27, 2019 | October 28, 2018 | January 28, 2018 | ||||||||||||||||
| Net revenue | $ | 253,436 | $ | 264,805 | $ | 253,338 | ||||||||||||
| Cost of services | 215,737 | 220,797 | 217,329 | |||||||||||||||
| Gross margin | 37,699 | 44,008 | 36,009 | |||||||||||||||
| Selling, administrative and other operating costs | 39,810 | 41,261 | 46,938 | |||||||||||||||
| Restructuring and severance costs | 59 | 4,512 | 518 | |||||||||||||||
| Impairment charges | – | 351 | – | |||||||||||||||
| Operating loss | (2,170 | ) | (2,116 | ) | (11,447 | ) | ||||||||||||
| Interest income (expense), net | (746 | ) | (627 | ) | (782 | ) | ||||||||||||
| Foreign exchange gain (loss), net | 213 | 491 | 703 | |||||||||||||||
| Other income (expense), net | (239 | ) | (252 | ) | (528 | ) | ||||||||||||
| Loss before income taxes | (2,942 | ) | (2,504 | ) | (12,054 | ) | ||||||||||||
| Income tax provision (benefit) | 273 | 382 | (1,360 | ) | ||||||||||||||
| Net loss | $ | (3,215 | ) | $ | (2,886 | ) | $ | (10,694 | ) | |||||||||
| Per share data: | ||||||||||||||||||
| Basic: | ||||||||||||||||||
| Net loss | $ | (0.15 | ) | $ | (0.14 | ) | $ | (0.51 | ) | |||||||||
| Weighted average number of shares | 21,080 | 21,072 | 21,029 | |||||||||||||||
| Diluted: | ||||||||||||||||||
| Net loss | $ | (0.15 | ) | $ | (0.14 | ) | $ | (0.51 | ) | |||||||||
| Weighted average number of shares | 21,080 | 21,072 | 21,029 | |||||||||||||||
| Segment data: | ||||||||||||||||||
| Net revenue: | ||||||||||||||||||
| North American Staffing | $ | 211,848 | $ | 220,540 | $ | 206,235 | ||||||||||||
| International Staffing | 26,266 | 27,289 | 29,579 | |||||||||||||||
| North American MSP | 8,217 | 8,208 | 8,480 | |||||||||||||||
| Corporate and Other | 7,846 | 9,708 | 10,247 | |||||||||||||||
| Eliminations | (741 | ) | (940 | ) | (1,203 | ) | ||||||||||||
| Net revenue | $ | 253,436 | $ | 264,805 | $ | 253,338 | ||||||||||||
| Operating income (loss): | ||||||||||||||||||
| North American Staffing | $ | 3,887 | $ | 8,197 | $ | (626 | ) | |||||||||||
| International Staffing | 304 | 1,000 | (98 | ) | ||||||||||||||
| North American MSP | 965 | 844 | 265 | |||||||||||||||
| Corporate and Other | (7,326 | ) | (12,157 | ) | (10,988 | ) | ||||||||||||
| Operating income (loss) | $ | (2,170 | ) | $ | (2,116 | ) | $ | (11,447 | ) | |||||||||
| Work days | 59 | 64 | 59 | |||||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||
| (in thousands) | ||||||||||||
| Three Months ended | ||||||||||||
| January 27, 2019 | January 28, 2018 | |||||||||||
| Cash, cash equivalents and restricted cash beginning of the period | $ | 36,544 | $ | 54,097 | ||||||||
| Cash used in all other operating activities | (2,188 | ) | (8,625 | ) | ||||||||
| Changes in operating assets and liabilities | 4,148 | 21,654 | ||||||||||
| Net cash provided by operating activities | 1,960 | 13,029 | ||||||||||
| Purchases of property, equipment, and software | (1,698 | ) | (345 | ) | ||||||||
| Net cash provided by all other investing activities | (69 | ) | 92 | |||||||||
| Net cash used in investing activities | (1,767 | ) | (253 | ) | ||||||||
| Net draw-down of borrowings | 5,000 | 30,000 | ||||||||||
| Debt issuance costs | (140 | ) | (1,327 | ) | ||||||||
| Net cash provided by financing activities | 4,860 | 28,673 | ||||||||||
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
(429 | ) | 112 | |||||||||
| Net increase in cash, cash equivalents and restricted cash | 4,624 | 41,561 | ||||||||||
| Cash, cash equivalents and restricted cash end of the period | $ | 41,168 | $ | 95,658 | ||||||||
| Cash paid during the period: | ||||||||||||
| Interest | $ | 801 | $ | 926 | ||||||||
| Income taxes | $ | 146 | $ | 627 | ||||||||
|
Reconciliation of cash, cash equivalents and restricted cash end of the period: |
||||||||||||
| Current Assets: | ||||||||||||
| Cash and cash equivalents | $ | 32,925 | $ | 53,868 | ||||||||
|
Restricted cash included in Restricted cash and short term investments |
8,243 | 12,094 | ||||||||||
|
Restricted cash as collateral for borrowings included in Restricted cash and short term investments |
– | 29,696 | ||||||||||
| Cash, cash equivalents and restricted cash, at end of period | $ | 41,168 | $ | 95,658 | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||
| (in thousands, except share amounts) | ||||||||||||
| January 27, 2019 | October 28, 2018 | |||||||||||
| ASSETS | ||||||||||||
| CURRENT ASSETS: | ||||||||||||
| Cash and cash equivalents | $ | 32,925 | $ | 24,763 | ||||||||
| Restricted cash and short-term investments | 11,262 | 14,844 | ||||||||||
|
Trade accounts receivable, net of allowances of $31 and $759, respectively |
150,339 | 157,445 | ||||||||||
| Other current assets | 6,658 | 7,444 | ||||||||||
| TOTAL CURRENT ASSETS | 201,184 | 204,496 | ||||||||||
| Other assets, excluding current portion | 7,941 | 7,808 | ||||||||||
| Property, equipment and software, net | 24,515 | 24,392 | ||||||||||
| TOTAL ASSETS | $ | 233,640 | $ | 236,696 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| CURRENT LIABILITIES: | ||||||||||||
| Accrued compensation | $ | 25,203 | $ | 27,120 | ||||||||
| Accounts payable | 26,442 | 33,498 | ||||||||||
| Accrued taxes other than income taxes | 17,218 | 15,275 | ||||||||||
| Accrued insurance and other | 25,688 | 23,335 | ||||||||||
| Income taxes payable | 1,224 | 1,097 | ||||||||||
| TOTAL CURRENT LIABILITIES | 95,775 | 100,325 | ||||||||||
| Accrued insurance and other, excluding current portion | 13,177 | 13,478 | ||||||||||
| Deferred gain on sale of real estate, excluding current portion | 21,730 | 22,216 | ||||||||||
| Income taxes payable, excluding current portion | 604 | 600 | ||||||||||
| Deferred income taxes | 509 | 510 | ||||||||||
| Long-term debt | 54,090 | 49,068 | ||||||||||
| TOTAL LIABILITIES | 185,885 | 186,197 | ||||||||||
| Commitments and contingencies | ||||||||||||
| STOCKHOLDERS’ EQUITY | ||||||||||||
|
Preferred stock, par value $1.00; Authorized – 500,000 shares; Issued – none |
– | – | ||||||||||
|
Common stock, par value $0.10; Authorized – 120,000,000 shares; Issued – 23,738,003 shares; Outstanding – 21,191,030 and 21,179,068 shares, respectively |
2,374 | 2,374 | ||||||||||
| Paid-in capital | 78,909 | 79,057 | ||||||||||
| Retained earnings | 6,743 | 9,738 | ||||||||||
| Accumulated other comprehensive loss | (6,912 | ) | (7,070 | ) | ||||||||
| Treasury stock, at cost; 2,546,973 and 2,558,935 shares, respectively | (33,359 | ) | (33,600 | ) | ||||||||
| TOTAL STOCKHOLDERS’ EQUITY | 47,755 | 50,499 | ||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 233,640 | $ | 236,696 | ||||||||
| GAAP to Non-GAAP Reconciliations | |||||||||||||||
| (in thousands) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| January 27, 2019 | January 28, 2018 | ||||||||||||||
| Reconciliation of GAAP net loss to Non-GAAP net loss: | |||||||||||||||
| GAAP net loss | $ | (3,215 | ) | $ | (10,694 | ) | |||||||||
| Selling, administrative and other operating costs | (486 | ) | (a) | (486 | ) | (a) | |||||||||
| Restructuring and severance costs | 59 | 518 | |||||||||||||
| Income tax benefit | – | (1,052 | ) | (b) | |||||||||||
| Non-GAAP net loss | $ | (3,642 | ) | $ | (11,714 | ) | |||||||||
| Three Months Ended | |||||||||||||||
| January 27, 2019 | January 28, 2018 | ||||||||||||||
| Reconciliation of GAAP net loss to Adjusted EBITDA: | |||||||||||||||
| GAAP net loss | $ | (3,215 | ) | $ | (10,694 | ) | |||||||||
| Selling, administrative and other operating costs | (486 | ) | (a) | (486 | ) | (a) | |||||||||
| Restructuring and severance costs | 59 | 518 | |||||||||||||
| Depreciation and amortization | 1,603 | 1,852 | |||||||||||||
| Share-based compensation expense | (113 | ) | 435 | ||||||||||||
| Total other (income) expense, net | 772 | 607 | |||||||||||||
| Provision (benefit) for income taxes | 273 | (1,360 | ) | ||||||||||||
| Adjusted EBITDA | $ | (1,107 | ) | $ | (9,128 | ) | |||||||||
| Special item adjustments consist of the following: | |||||
| (a) |
Relates to the amortization of the gain on the sale of the Orange, CA facility, which is included in |
||||
| Selling, administrative and other operating costs. | |||||
| (b) |
Relates to a discrete tax benefit resulting from the expiration of uncertain tax positions in Q1 2018. |
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Contacts
Investor Contacts:
Volt Information Sciences, Inc.
[email protected]
Lasse Glassen, Addo Investor Relations
[email protected]
424-238-6249