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 second quarter and six months ended April 28, 2019.
Key highlights include:
-
Second quarter total Company net revenue decreased 4.2%
year-over-year, or 3.3% on a same-store basis (excluding currency
fluctuations and a business exited) -
Second quarter gross margin percentage improved 20 basis points, the
third consecutive quarter of year-over-year margin growth -
Second quarter total Company net loss was $5.2 million, an improvement
of 32.8% when compared to a year ago primarily driven by the increase
in gross margin, as well as a 9.3% reduction in selling,
administrative and other operating costs -
Second quarter total Company Adjusted EBITDA improved 58.9% when
compared to a year ago -
For the six months ended April 28, 2019, total Company net revenue was
$505.5 million, a decrease of 2.1%, year-over-year, or 1.4% on a
same-store basis; Net loss for the six-month period was $8.4 million,
an improvement of 54.4%, year-over-year -
Implemented further organizational enhancements to reduce costs and
improve operational efficiencies and service delivery in the North
American Staffing segment; commenced decommissioning of the Company’s
Customer Care Solutions business unit
Commenting on Volt’s performance, Linda Perneau, President and CEO,
said, “Our performance in the second quarter reflects the ongoing
execution of the operating strategy designed to significantly enhance
our sales engine, improve margins and generate profitable growth.
Despite revenue headwinds primarily from fluctuations in customer
demand, the implementation of our sales and delivery strategy helped to
substantially mitigate the top-line impact, while operational
efficiencies and expense reductions bolstered Volt’s profitability
metrics. We are well on our way on our transformation journey. I am
grateful to our employees around the globe, all of whom are focused on
driving top-line revenue, improving productivity and returning value to
our shareholders.”
Fiscal 2019 Second Quarter Results
Total net revenue for the fiscal 2019 second quarter was $252.1 million,
compared to $263.2 million in the second quarter of fiscal 2018. On a
same-store basis, net revenue decreased 3.3% 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 second quarter of fiscal 2019 was 14.4%, an
improvement of 20 basis points year-over-year. The margin improvement
was driven by improved customer pricing and lower payroll taxes,
partially offset by higher workers compensation expenses.
Selling, administrative and other operating costs in the second quarter
of fiscal 2019 decreased $4.0 million, or 9.3%, to $38.9 million from
$42.9 million in the second 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 and facility expenses. SG&A
as a percent of revenue improved to 15.4% in the second quarter compared
with 16.3% a year ago.
Net loss was $5.2 million in the second quarter of fiscal 2019, compared
to $7.7 million in the second quarter of fiscal 2018.
Adjusted EBITDA, which is a Non-GAAP measure, was a loss of $1.5 million
in the fiscal 2019 second quarter, compared to a loss of $3.7 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.
Six Months Ended April 28, 2019 Financial Results
Total net revenue for the six months ended April 28, 2019 was $505.5
million, down $11.1 million, or 2.1%, compared to total net revenue of
$516.6 million for the six months ended April 29, 2018. On a same-store
basis, net revenue declined 1.4% year-over-year excluding net revenue
contributed from a business exited during the past year and the effect
of currency fluctuations.
Net loss was $8.4 million for the six months ended April 28, 2019, an
improvement of $10.0 million, or 54.4% compared to net loss of $18.4
million in the same period of fiscal 2018. Adjusted net loss from
continuing operations, which is a Non-GAAP measure, was $8.2 million for
the six months ended April 28, 2019, compared to an adjusted net loss of
$19.6 million in the same period of fiscal 2018. Adjusted EBITDA, which
is a Non-GAAP measure, was a loss of $2.6 million for the six months
ended April 28, 2019, an improvement of $10.2 million from a loss of
$12.8 million in the year ago period.
For a reconciliation of the GAAP and Non-GAAP financial results, please
see the tables at the end of this press release.
Business Developments
In the second quarter of fiscal 2019, the Company commenced efforts to
decommission its Customer Care Solutions business unit, which is
currently reported as a part of the Corporate and Other category. This
will allow the Company to focus its attention and devote additional
available resources to its core staffing business.
Also, during the second quarter of fiscal 2019, the Company changed
leadership in its International Staffing segment, promoting Ben Batten
to Senior Vice President and Managing Director, International. Mr.
Batten was previously the Managing Director of Volt Asia and has over
sixteen years of staffing experience abroad.
Subsequent Events
On June 4, 2019, the Company entered into an amendment with DZ BANK AG
Deutsche Zentral-Genossenschaftsbank. Under this Amendment, receivables
due from a specific customer will be excluded from eligible receivables
under the Company’s Financing Program for a three-month period while the
customer resolves internal processing issues causing temporary payment
delays. Volt anticipates a resolution no later than the end of its
fiscal third quarter, at which time the receivables from this customer
will be added back to the securitization pool under the original terms
of the agreement.
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 third quarter of fiscal 2019, the Company currently expects a
consolidated same-store year-over-year net revenue decline similar to
the decline experienced in the second quarter of fiscal 2019.
Conference Call and Webcast
A conference call and simultaneous webcast to discuss the fiscal 2019
second 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, June 5, 2019 at 7:30 p.m. Eastern Time through Wednesday,
June 19, 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 #13690992. 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. 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 third quarter of 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 certain line items on a
constant currency basis, 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 on a
constant currency basis, eliminating special items and the impact of
businesses sold or exited 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 or exited
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 | Six Months Ended | ||||||||||||||||||||||||
| April 28, 2019 | January 27, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | |||||||||||||||||||||
| Net revenue | $ | 252,070 | $ | 253,436 | $ | 263,219 | $ | 505,506 | $ | 516,557 | |||||||||||||||
| Cost of services | 215,813 | 215,737 | 225,918 | 431,550 | 443,247 | ||||||||||||||||||||
| Gross margin | 36,257 | 37,699 | 37,301 | 73,956 | 73,310 | ||||||||||||||||||||
| Selling, administrative and other operating costs | 38,939 | 39,810 | 42,916 | 78,749 | 89,854 | ||||||||||||||||||||
| Restructuring and severance costs | 724 | 59 | 104 | 783 | 622 | ||||||||||||||||||||
| Impairment charges | 347 | – | 155 | 347 | 155 | ||||||||||||||||||||
| Operating loss | (3,753 | ) | (2,170 | ) | (5,874 | ) | (5,923 | ) | (17,321 | ) | |||||||||||||||
| Interest income (expense), net | (699 | ) | (746 | ) | (631 | ) | (1,445 | ) | (1,413 | ) | |||||||||||||||
| Foreign exchange gain (loss), net | (314 | ) | 213 | (497 | ) | (101 | ) | 206 | |||||||||||||||||
| Other income (expense), net | (166 | ) | (239 | ) | (55 | ) | (405 | ) | (583 | ) | |||||||||||||||
| Loss before income taxes | (4,932 | ) | (2,942 | ) | (7,057 | ) | (7,874 | ) | (19,111 | ) | |||||||||||||||
| Income tax provision (benefit) | 233 | 273 | 630 | 506 | (730 | ) | |||||||||||||||||||
| Net loss | $ | (5,165 | ) | $ | (3,215 | ) | $ | (7,687 | ) | $ | (8,380 | ) | $ | (18,381 | ) | ||||||||||
| Per share data: | |||||||||||||||||||||||||
| Basic: | |||||||||||||||||||||||||
| Net loss | $ | (0.24 | ) | $ | (0.15 | ) | $ | (0.37 | ) | $ | (0.40 | ) | $ | (0.87 | ) | ||||||||||
| Weighted average number of shares | 21,082 | 21,080 | 21,032 | 21,081 | 21,030 | ||||||||||||||||||||
| Diluted: | |||||||||||||||||||||||||
| Net loss | $ | (0.24 | ) | $ | (0.15 | ) | $ | (0.37 | ) | $ | (0.40 | ) | $ | (0.87 | ) | ||||||||||
| Weighted average number of shares | 21,082 | 21,080 | 21,032 | 21,081 | 21,030 | ||||||||||||||||||||
| Segment data: | |||||||||||||||||||||||||
| Net revenue: | |||||||||||||||||||||||||
| North American Staffing | $ | 208,871 | $ | 211,848 | $ | 218,090 | $ | 420,719 | $ | 424,325 | |||||||||||||||
| International Staffing | 28,809 | 26,266 | 31,904 | 55,075 | 61,483 | ||||||||||||||||||||
| North American MSP | 9,579 | 8,217 | 6,339 | 17,796 | 14,819 | ||||||||||||||||||||
| Corporate and Other | 5,431 | 7,846 | 7,817 | 13,277 | 18,064 | ||||||||||||||||||||
| Eliminations | (620 | ) | (741 | ) | (931 | ) | (1,361 | ) | (2,134 | ) | |||||||||||||||
| Net revenue | $ | 252,070 | $ | 253,436 | $ | 263,219 | $ | 505,506 | $ | 516,557 | |||||||||||||||
| Operating income (loss): | |||||||||||||||||||||||||
| North American Staffing | $ | 2,544 | $ | 3,887 | $ | 1,571 | $ | 6,431 | $ | 945 | |||||||||||||||
| International Staffing | 628 | 304 | 818 | 932 | 720 | ||||||||||||||||||||
| North American MSP | 1,100 | 965 | 417 | 2,065 | 682 | ||||||||||||||||||||
| Corporate and Other | (8,025 | ) | (7,326 | ) | (8,680 | ) | (15,351 | ) | (19,668 | ) | |||||||||||||||
| Operating loss | $ | (3,753 | ) | $ | (2,170 | ) | $ | (5,874 | ) | $ | (5,923 | ) | $ | (17,321 | ) | ||||||||||
| Work days | 65 | 59 | 65 | 124 | 124 | ||||||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||
| (in thousands) | ||||||||||
| Six Months ended | ||||||||||
| April 28, 2019 | April 29, 2018 | |||||||||
| Cash, cash equivalents and restricted cash beginning of the period | $ | 36,544 | $ | 54,097 | ||||||
| Cash used in all other operating activities | (6,239 | ) | (14,314 | ) | ||||||
| Changes in operating assets and liabilities | 15,697 | 14,792 | ||||||||
| Net cash provided by operating activities | 9,458 | 478 | ||||||||
| Purchases of property, equipment, and software | (4,058 | ) | (1,298 | ) | ||||||
| Net cash (used in) provided by all other investing activities | (21 | ) | 164 | |||||||
| Net cash used in investing activities | (4,079 | ) | (1,134 | ) | ||||||
| Net draw-down of borrowings | 5,000 | – | ||||||||
| Debt issuance costs | (177 | ) | (1,411 | ) | ||||||
| Net cash used in all other financing activities | (40 | ) | (60 | ) | ||||||
| Net cash provided by (used in) financing activities | 4,783 | (1,471 | ) | |||||||
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
(249 | ) | (571 | ) | ||||||
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
9,913 | (2,698 | ) | |||||||
| Cash, cash equivalents and restricted cash end of the period | $ | 46,457 | $ | 51,399 | ||||||
| Cash paid during the period: | ||||||||||
| Interest | $ | 1,560 | $ | 1,482 | ||||||
| Income taxes | $ | 216 | $ | 1,132 | ||||||
|
Reconciliation of cash, cash equivalents and restricted cash end of the period: |
||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 39,689 | $ | 34,177 | ||||||
|
Restricted cash included in Restricted cash and short term investments |
6,768 | 17,222 | ||||||||
| Cash, cash equivalents and restricted cash, at end of period | $ | 46,457 | $ | 51,399 | ||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (in thousands, except share amounts) | ||||||||||
| April 28, 2019 | October 28, 2018 | |||||||||
| ASSETS | ||||||||||
| CURRENT ASSETS: | ||||||||||
| Cash and cash equivalents | $ | 39,689 | $ | 24,763 | ||||||
| Restricted cash and short-term investments | 9,925 | 14,844 | ||||||||
|
Trade accounts receivable, net of allowances of $104 and $759, respectively |
139,213 | 157,445 | ||||||||
| Other current assets | 5,659 | 7,444 | ||||||||
| TOTAL CURRENT ASSETS | 194,486 | 204,496 | ||||||||
| Other assets, excluding current portion | 7,779 | 7,808 | ||||||||
| Property, equipment and software, net | 24,880 | 24,392 | ||||||||
| TOTAL ASSETS | $ | 227,145 | $ | 236,696 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| CURRENT LIABILITIES: | ||||||||||
| Accrued compensation | $ | 23,403 | $ | 27,120 | ||||||
| Accounts payable | 26,183 | 33,498 | ||||||||
| Accrued taxes other than income taxes | 18,316 | 15,275 | ||||||||
| Accrued insurance and other | 28,217 | 23,335 | ||||||||
| Income taxes payable | 1,404 | 1,097 | ||||||||
| TOTAL CURRENT LIABILITIES | 97,523 | 100,325 | ||||||||
| Accrued insurance and other, excluding current portion | 10,816 | 13,478 | ||||||||
| Deferred gain on sale of real estate, excluding current portion | 21,244 | 22,216 | ||||||||
| Income taxes payable, excluding current portion | 608 | 600 | ||||||||
| Deferred income taxes | 509 | 510 | ||||||||
| Long-term debt | 54,169 | 49,068 | ||||||||
| TOTAL LIABILITIES | 184,869 | 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 – 21,211,828 and 21,179,068 shares, respectively |
2,374 | 2,374 | ||||||||
| Paid-in capital | 77,931 | 79,057 | ||||||||
| (Accumulated deficit) retained earnings | (656 | ) | 9,738 | |||||||
| Accumulated other comprehensive loss | (7,091 | ) | (7,070 | ) | ||||||
| Treasury stock, at cost; 2,526,175 and 2,558,935 shares, respectively | (30,282 | ) | (33,600 | ) | ||||||
| TOTAL STOCKHOLDERS’ EQUITY | 42,276 | 50,499 | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 227,145 | $ | 236,696 | ||||||
| GAAP to Non-GAAP Reconciliations | |||||||||||||
| (in thousands) | |||||||||||||
| Three Months Ended | |||||||||||||
| April 28, 2019 | April 29, 2018 | ||||||||||||
| Reconciliation of GAAP net loss to Non-GAAP net loss: | |||||||||||||
| GAAP net loss | $ | (5,165 | ) | $ | (7,687 | ) | |||||||
| Selling, administrative and other operating costs | (486 | ) | (a) | (486 | ) | (a) | |||||||
| Restructuring and severance costs | 724 | 104 | |||||||||||
| Impairment charge | 347 | (b) | 155 | (c) | |||||||||
| Non-GAAP net loss | $ | (4,580 | ) | $ | (7,914 | ) | |||||||
| Three Months Ended | |||||||||||||
| April 28, 2019 | April 29, 2018 | ||||||||||||
| Reconciliation of GAAP net loss to Adjusted EBITDA: | |||||||||||||
| GAAP net loss | $ | (5,165 | ) | $ | (7,687 | ) | |||||||
| Selling, administrative and other operating costs | (486 | ) |
(a) |
(486 | ) | (a) | |||||||
| Restructuring and severance costs | 724 | 104 | |||||||||||
| Impairment charge | 347 | (b) | 155 | (c) | |||||||||
| Depreciation and amortization | 1,755 | 1,874 | |||||||||||
| Share-based compensation | (95 | ) | 557 | ||||||||||
| Total other (income) expense, net | 1,179 | 1,183 | |||||||||||
| Provision for income taxes | 233 | 630 | |||||||||||
| Adjusted EBITDA | $ | (1,508 | ) | $ | (3,670 | ) | |||||||
| 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 exit of customer care solutions business. | ||||
| (c) |
Relates to previously purchased software module that is no longer in use. |
||||
| Six Months Ended | |||||||||||||
| April 28, 2019 | April 29, 2018 | ||||||||||||
| Reconciliation of GAAP net loss to Non-GAAP net loss: | |||||||||||||
| GAAP net loss | $ | (8,380 | ) | $ | (18,381 | ) | |||||||
| Selling, administrative and other operating costs | (972 | ) | (a) | (972 | ) | (a) | |||||||
| Restructuring and severance costs | 783 | 622 | |||||||||||
| Impairment charge | 347 | (b) | 155 | (c) | |||||||||
| Income tax benefit | – | (1,052 | ) | (d) | |||||||||
| Non-GAAP net loss | $ | (8,222 | ) | $ | (19,628 | ) | |||||||
| Six Months Ended | |||||||||||||
| April 28, 2019 | April 29, 2018 | ||||||||||||
| Reconciliation of GAAP net loss to Adjusted EBITDA: | |||||||||||||
| GAAP net loss | $ | (8,380 | ) | $ | (18,381 | ) | |||||||
| Selling, administrative and other operating costs | (972 | ) | (a) | (972 | ) | (a) | |||||||
| Restructuring and severance costs | 783 | 622 | |||||||||||
| Impairment charge | 347 | (b) | 155 | (c) | |||||||||
| Depreciation and amortization | 3,358 | 3,726 | |||||||||||
| Share-based compensation | (208 | ) | 992 | ||||||||||
| Total other (income) expense, net | 1,951 | 1,790 | |||||||||||
| Provision (benefit) for income taxes | 506 | (730 | ) | ||||||||||
| Adjusted EBITDA | $ | (2,615 | ) | $ | (12,798 | ) | |||||||
| 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 exit of customer care solutions business. | ||||
| (c) |
Relates to previously purchased software module that is no longer in use. |
||||
| (d) |
Relates to a discrete tax benefit resulting from the expiration of uncertain tax positions in Q1 2018. |
||||
Contacts
Investor Contacts:
Volt Information Sciences, Inc.
[email protected]
Lasse Glassen
Addo Investor Relations
[email protected]
424-238-6249
