- Net revenue of $383.1 million and net
loss of $13.3 million, which included losses from discontinued
operations of $4.5 million
- Proforma operating loss of $5.0
million, a $5.2 million improvement over prior year period
- Proforma Staffing Services segment
operating income of $1.7 million improved from a loss in the same
period of 2014
Volt Information Sciences, Inc. (NYSE-MKT:VISI) today reported
financial results for its first quarter ended February 1, 2015. The
reported net loss for the first quarter of fiscal 2015 was $13.3
million, or $0.64 per share, compared to $17.1 million, or $0.82
per share, in the first quarter of fiscal 2014. Proforma operating
results improved $5.2 million in the first quarter of fiscal 2015
to a proforma operating loss of $5.0 million from a proforma loss
of $10.2 million in the first quarter of fiscal 2014. Proforma
amounts include Unrecognized Revenue (defined below).
“Our first quarter results demonstrate our ongoing execution
against the strategic goal of a more highly focused and profitable
Volt,” said Ron Kochman, President and Chief Executive Officer. “We
continue to focus on improving our core staffing and services
business, particularly in our North American traditional time and
materials staffing services, as well as reducing our exposure to
unfavorable customer contracts. Staffing Services segment operating
income and direct margin rate improved as a result of our
initiatives. We are pleased with the ongoing improvements in the
delivery of our staffing services and believe that our disciplined
focus on our business strategy and priorities will drive improved
margins and profitability over the course of this fiscal year.”
First Quarter 2015 Revenue and Operating Results
Net loss in the first quarter of fiscal 2015 of $13.3 million
(proforma $11.0 million) included losses from discontinued
operations of $4.5 million. Without this item the net loss in the
first quarter of 2015 would have been $8.8 million and proforma net
loss $6.5 million.
Net loss in the first quarter of fiscal 2014 of $17.1 million
(proforma $16.0 million) included restatement, investigations and
remediation expenses of $2.7 million, losses from discontinued
operations of $4.4 million and restructuring costs of $0.7 million.
Without these items, net loss in the first quarter of 2014 would
have been $9.3 million and proforma net loss $8.2 million.
Net revenue from continuing operations in the first quarter of
2015 decreased approximately 9% compared to the same quarter of
2014. Revenue from the Staffing Services segment decreased
approximately 8% year-over-year at both our enterprise customers
and, to a lesser extent, at retail customers.
As previously reported, the Company divested its Computer
Systems segment in the first quarter of 2015. The results of the
Computer Systems segment are presented as discontinued operations
and, as such, have been excluded from continuing operations and
from segment results for all periods presented.
Condensed Consolidated Results of
Operations by Segment
Unaudited (in Thousands)
Results of Operations by Segment (Three
Months 2015 vs. Three Months 2014)
Three months ended February 1, 2015
Three months ended February 2, 2014
Total
StaffingServices
Other Total
StaffingServices
Other Net Revenue
Staffing service revenue $ 360,821 $ 360,821 $ - $ 392,269 $
392,269 $ - Other revenue 22,245 -
22,245 29,359 -
29,359
Net revenue 383,066 360,821 22,245 421,628
392,269 29,359
Expenses Direct cost of staffing
services revenue 310,819 310,819 - 339,796 339,796 - Cost of other
revenue 19,605 - 19,605 24,133 - 24,133 Selling, administrative and
other operating costs 53,941 50,580 3,361 60,367 55,722 4,645
Restructuring costs - - -
657 657 - Segment
operating income (loss) (1,299 ) (578 ) (721 ) (3,325 ) (3,906 )
581 Corporate general and administrative 6,023 5,232 Restatement,
investigations and remediation - 2,668
Operating
loss (7,322 ) (11,225 ) Other income (expense), net (99 ) (410
) Income tax provision 1,379 1,047
Net loss from
continuing operations (8,800 ) (12,682 ) Loss from discontinued
operations, net of taxes (4,519 ) (4,392 )
Net loss $
(13,319 ) $ (17,074 )
NON-GAAP PROFORMA Three
months ended February 1, 2015 Three months
ended February 2, 2014 Total
StaffingServices
Other Total
StaffingServices
Other Net revenue $ 383,066 $ 360,821 $ 22,245
$421,628 $392,269 $29,359 Recognition of previously unrecognized
revenue (2,630 ) (2,568 ) (62 ) (5,248 ) (5,048 ) (200 ) Additions
to unrecognized revenue 4,912 4,873 39
6,293 6,160 133
Net non-GAAP proforma adjustment 2,282 2,305
(23 ) 1,045 1,112
(67 )
Proforma net revenue 385,348
363,126 22,222 422,673
393,381 29,292
Expenses
Direct cost of staffing services revenue 310,819 310,819 - 339,796
339,796 - Cost of other revenue 19,605 - 19,605 24,133 - 24,133
Selling, administrative and other operating costs 53,941 50,580
3,361 60,367 55,722 4,645 Restructuring costs - -
- 657 657
-
Proforma segment operating income (loss) 983
1,727 (744 ) (2,280 ) (2,794 ) 514
Proforma operating
loss (5,040 ) (10,180 )
Proforma net loss from
continuing operations $(6,518 ) $(11,637 )
Net revenue in the first quarter of 2015 decreased $38.5 million
to $383.1 million from $421.6 million in the first quarter of 2014,
and proforma net revenue decreased $37.4 million, or 8.8%, to
$385.3 million from $422.7 million in the first quarter of 2014.
The decrease in revenue was primarily due to decreased Staffing
Services revenues of $31.5 million (proforma of $30.3 million) to
$360.8 million (proforma $363.1 million). This primarily reflected
lower demand at both enterprise and retail customers, as well as
the Company’s continuing initiative to reduce exposure to customers
with unfavorable business terms. The Other segment revenues
decreased $7.2 million to $22.2 million in the first quarter of
2015 primarily due to lower volume of business from information
technology infrastructure services, as well as for
telecommunication infrastructure and security services.
Despite the decrease in revenue, Staffing Services segment
operating income and direct margin rate improved as a result of
actions taken in recent quarters, including the reorganization of
the traditional staffing business, the divestiture of the
ProcureStaff business, and continuing initiatives to reduce
exposure to customers with unfavorable business terms. However,
these improvements in our Staffing Services segment were partially
offset by a decline in operating results in our Other segment of
$1.3 million (proforma $1.3 million), primarily from decreased
volume and lower margins.
Unrecognized Revenue - Non-GAAP Proforma Measures
– Volt sometimes provides services despite a customer arrangement
not yet being finalized, or continues to provide services under an
expired arrangement while a renewal arrangement is being finalized.
Generally Accepted Accounting Principles (“GAAP”) usually requires
that services revenue be deferred until arrangements are finalized
or in some cases until cash is received, which causes some periods
to include the expense of providing services although the related
revenue is not recognized until a subsequent period (“Unrecognized
Revenue”). The discussion herein refers to financial data
determined both using GAAP as well as on a non-GAAP proforma basis.
The non-GAAP proforma basis includes adjustments for Unrecognized
Revenue so that revenue is shown in the same period as the related
services are provided. This non-GAAP financial information is used
by management and provided herein because it provides a more
complete understanding of the Company’s business results and
trends. In addition, the Company believes that lenders, analysts
and others in the investment community use this non-GAAP financial
information to assess the Company’s historical results, and that
failure to report this non-GAAP measure could result in a
potentially misplaced perception that the Company’s results have
met, exceeded or underperformed expectations. This non-GAAP
information should not be considered an alternative for, or in
isolation from, the financial information prepared and presented in
accordance with GAAP. In addition, this measure may not be
comparable to similarly titled measures used by other
companies.
Liquidity
During the first quarter of fiscal 2015, continuing operations
provided $18.0 million in cash. Of this amount, $4.4 million was
used to reduce borrowings, $7.4 million in funding the discontinued
Computer Systems segment, and the majority of the remainder was
held by the Company. The Company used $1.2 million for capital
expenditures of property, equipment and software, and received $0.3
million for the sale of investments net of purchases.
Condensed Consolidated Statements of
Cash Flows
(in Thousands)
Three months ended
February 1,2015
February 2,2014
Cash and cash equivalents, beginning of the period
$9,105 $9,847 Other changes in
operating assets and liabilities 25,572 34,217 Cash used in all
other operating activities (7,533 ) (9,951 )
Net
cash provided by operating activities 18,039
24,266 Net cash (used in)
provided by investing activities (772 )
2,157 Net release of cash restricted as
collateral for borrowings 9,123 (16 ) Net cash used in all other
financing activities (13,653 ) (22,516 )
Net cash
used in financing activities (4,530 )
(22,532 ) Effect of exchange rate
changes on cash and cash equivalents 402 176
Net cash used in discontinued operations
(7,448 ) (1,830 )
Net increase in cash and cash equivalents
5,691 2,237
Change in cash from discontinued operations -
(1,161 ) Cash and cash
equivalents, end of the period $14,796
$10,923 Cash paid during the
period: Interest $644 $953 Income taxes $329 $1,136
On February 1, 2015, excluding $8.0 million of long-term debt,
the Company’s consolidated borrowings were $115.0 million, which
was drawn under the short-term financing program. The Company had
cash and cash equivalents of $14.8 million and an additional $1.3
million of cash restricted as collateral for foreign currency
credit lines and banking facilities. Based on current collateral
levels (certain staffing segment receivables) the Company also had
approximately $15.3 million available under the short-term
financing program.
Condensed Consolidated Balance
Sheets
(in Thousands, except share
amounts)
February 1, 2015 November 2,
2014 ASSETS (unaudited)
CURRENT
ASSETS: Cash and cash equivalents $ 14,796 $ 9,105 Restricted
cash and short-term investments 18,477 32,436 Trade accounts
receivable, net of allowances of $968 and $868, respectively
216,439 248,101 Recoverable income taxes 18,097 18,311 Prepaid
insurance and other current assets 24,432 26,255 Assets held for
sale - 24,220
TOTAL CURRENT ASSETS
292,241 358,428 Prepaid insurance and other assets,
excluding current portion 46,809 39,600 Property, equipment and
software, net 25,659 26,304
TOTAL ASSETS $
364,709 $ 424,332 LIABILITIES
AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accrued
compensation $ 36,201 $ 41,182 Accounts payable 48,329 55,873
Accrued taxes other than income taxes 18,901 17,099 Accrued
insurance and other 35,975 39,104 Deferred revenue, net, current
portion 4,007 3,491 Short-term borrowings, including current
portion of long-term debt 115,923 129,417 Liabilities held for sale
- 19,126
TOTAL CURRENT LIABILITIES
259,336 305,292 Accrued insurance and other,
excluding current portion 12,217 11,874 Income taxes payable,
excluding current portion 8,677 8,556 Long-term debt, excluding
current portion 7,057 7,216
TOTAL LIABILITIES
287,287 332,938 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 - 23,625,103 and 23,610,103,
respectively; Outstanding - 20,937,796 and 20,922,796,
respectively
2,363
2,361
Paid-in capital 73,669 73,194 Retained earnings 50,815 64,119
Accumulated other comprehensive loss (7,545) (6,400) Treasury
stock, at cost; 2,687,307 shares (41,880) (41,880)
TOTAL STOCKHOLDERS' EQUITY 77,422
91,394 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 364,709 $ 424,332
About Volt Information Sciences, Inc.
Volt Information Sciences, Inc. is an international provider of
staffing services (traditional time and materials based as well as
project based), information technology infrastructure services,
telecommunication infrastructure and security services, and
telephone directory publishing and printing in Uruguay. Our
staffing services consists of workforce solutions that include
providing contingent workers, personnel recruitment services, and
managed staffing services programs supporting primarily
professional administration, technical, information technology and
engineering positions. Our project-based staffing assists with
individual customer assignments as well as customer care call
centers and gaming industry quality assurance testing services, and
our managed service programs consist of managing the procurement
and on-boarding of contingent workers from multiple providers. Our
information technology infrastructure services provide server,
storage, network and desktop IT hardware maintenance, data center
and network monitoring and operations. For more information visit
www.volt.com.
Forward-Looking Statements
This press release contains forward-looking statements 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. Copies of the
Company’s latest Annual Report on Form 10-K and subsequent
Quarterly Reports on Form 10-Q, as filed with the Securities and
Exchange Commission, are available without charge upon request to
Volt Information Sciences, Inc., 1065 Avenue of the Americas, New
York, New York 10018, Attention: Shareholder Relations,
212-704-7921. 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.
Volt Information Sciences, Inc.James Whitney,
212-704-7921voltinvest@volt.com
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