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 2018 second quarter ended April 29, 2018. Key highlights
include:
- Second quarter net revenue of $263.2
million, down 13.1% year-over-year; on a same-store basis, net
revenue declined 7.8% year-over-year excluding net revenue
contributed from businesses sold or exited during the past year and
the effect of foreign exchange rate fluctuations;
- Second quarter selling, administrative
and other operating costs of $42.9 million, down 16.1%,
year-over-year, or 10.8% excluding businesses sold;
- Global liquidity of $59.4 million at
quarter-end, up $3.5 million year-over-year; total outstanding debt
of $50.0 million, down $40.0 million year-over-year; and
- Effective June 6, 2018 the Company
announced that President and Chief Executive Officer Michael Dean
left the Company and the Board; The Company also announced that
Linda Perneau was appointed Interim Chief Executive Officer, in
addition to her role as President of Volt Workforce Solutions.
Commenting on Volt’s second quarter performance, Paul Tomkins,
Senior Vice President and CFO, said, “The Company continues to
benefit from our ongoing activities to drive operational
efficiencies and manage expenses, which is delivering lower
selling, administrative and other operating costs. As part of this
effort, on a same store basis, we achieved a 10.8% reduction in
expenses from a year ago. Furthermore, during the quarter we
continued to make progress in stabilizing and strategically
positioning our smaller businesses—namely International Staffing,
Volt Consulting Group and Volt Customer Care Solutions.”
Mr. Tomkins continued, “While these incremental improvements are
encouraging, we still have work ahead to get Volt back on a
trajectory to profitable growth. A key to reaching this goal will
be generating topline growth through improving the performance of
our largest business, Volt Workforce Solutions, or VWS. With new
senior leadership in place at VWS and a team dedicated to executing
a plan to drive revenue growth, I am confident we can achieve our
objective.”
Fiscal 2018 Second Quarter Results
Total revenue for the fiscal 2018 second quarter was $263.2
million, down $39.8 million, or 13.1%, compared to $303.0 million
in the second quarter of fiscal 2017. On a same-store basis, net
revenue declined 7.8% year-over-year excluding net revenue
contributed from businesses sold or exited during the past year and
the effect of currency fluctuations.
North American Staffing revenue, which provides a broad spectrum
of contingent staffing, direct placement, recruitment process
outsourcing and other employment services, was $218.1 million, a
$15.7 million, or 6.7% decline compared to North American Staffing
revenue of $233.8 million in the second quarter of fiscal 2017. The
decline was driven by lower demand from customers in both
professional and commercial job families, as well as a significant
change in a large customer’s contingent labor strategy in the
latter part of fiscal 2017.
International Staffing revenue, which includes the Company’s
contingent staffing, direct placement and managed service programs
businesses in Europe and Asia, was $31.9 million, a $1.7 million,
or 5.5% increase compared to $30.2 million from the second quarter
of fiscal 2017. Excluding the impact of foreign exchange rate
fluctuations, revenue declined $1.9 million, or 5.6%, on a constant
currency basis compared to the second quarter of fiscal 2017,
primarily due to lower demand in the United Kingdom, offset by
strong growth in Belgium and Singapore.
Corporate and Other revenue, which primarily consists of the
Company’s North American managed service business and the Company’s
call center business, was $14.2 million, down $26.3 million, or
65.1%, compared to $40.5 million in the second quarter of fiscal
2017. The year-over-year revenue decline was primarily driven by
the impact from the sale of Maintech and the quality assurance
businesses, which occurred in the second quarter of fiscal 2017 and
at the end of the fourth quarter of fiscal 2017, respectively. On a
same-store basis, excluding businesses sold or exited of $21.2
million, Corporate and Other revenue decreased $5.2 million, or
26.9%, year-over-year, as a result of winding down of certain
programs in the Company’s managed service business as well as
normal fluctuations in call center activity.
Selling, administrative and other operating costs in the second
quarter of fiscal 2018 decreased $8.3 million, or 16.1%, to $42.9
million from $51.2 million in the second quarter of fiscal 2017.
This decrease was primarily due to on-going cost reductions in all
areas of the business and favorable medical claims experience, as
well as, costs attributed to the previously-owned quality assurance
and Maintech businesses of $3.0 million.
Net loss was $7.7 million in the second quarter of fiscal 2018,
up $6.8 million compared to a loss of $0.9 million in the second
quarter of fiscal 2017. Adjusted net loss, which is a Non-GAAP
measure, was $7.9 million in the second quarter of fiscal 2018, up
$1.8 million compared to an adjusted net loss of $6.1 million in
the second quarter of fiscal 2017.
Adjusted EBITDA, which is a Non-GAAP measure, was a loss of $3.7
million in the fiscal 2018 second quarter, up $1.8 million from a
loss of $1.9 million (Non-GAAP) in the year ago period. Excluding
$1.5 million from businesses sold, adjusted EBITDA in the second
quarter of fiscal 2017 was a loss of $3.4 million. 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.
Liquidity
As of April 29, 2018, the Company had $59.4 million of global
liquidity as compared to $55.9 million at April 30, 2017.
Corporate Developments
The Company announced that President and Chief Executive Officer
Michael Dean left the Company and the Board, effective June 6,
2018. The Company also announced that Linda Perneau was appointed
Interim Chief Executive Officer, in addition to her role as
President of Volt Workforce Solutions. In connection with this
development, current director Nick Cyprus was appointed Chairman of
the Board and current director William Grubbs was appointed
Vice-Chairman. The Company has formed an Executive Management
Committee comprised of Linda Perneau, Paul Tomkins, Nancy
Avedissian (Senior Vice President and General Counsel), and Ann
Hollins (Senior Vice President and Chief Human Resources Officer).
The Executive Management Committee will be responsible for the
day-to-day operational and corporate management of the Company, and
will report directly to the Board of Directors.
Review of Strategic Alternatives
As previously announced, the Company is fully engaged in a
process to review and evaluate potential strategic alternatives to
maximize shareholder value. Such strategic alternatives could
include a sale of the Company or a sale of a division or divisions
thereof, a strategic merger, a business combination or continuing
as a standalone company executing on its business plan. The Company
has engaged Houlihan Lokey Capital, Inc. as financial advisor and
Milbank, Tweed, Hadley & McCloy LLP as legal advisor to assist
in its review.
The Board and the Company have not set a definitive timetable
for completion of its review of strategic alternatives, nor has it
made any decisions related to any particular strategic alternative,
and there can be no assurance that the process will result in any
transaction being announced or completed in the future. The Company
does not intend to make any further announcements related to its
review unless and until its Board of Directors has approved a
specific transaction or otherwise determined that further
disclosure is appropriate.
Conference Call and Webcast
A conference call and simultaneous webcast to discuss the fiscal
2018 second quarter financial results will be held today at 4:30
p.m. Eastern Time / 1:30 p.m. Pacific Time. Volt’s Interim Chief
Executive Officer and President of Volt Workforce Solutions, Linda
Perneau, and Senior Vice President and Chief Financial Officer 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 visit 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
Thursday, June 7, 2018 at 7:30 p.m. Eastern Time through Thursday,
June 21, 2018 at 11:59 p.m. Eastern Time. To access the replay,
dial 844-512-2921 (412-317-6671 for international callers) and
enter the Conference ID #13679698. A replay of the webcast will
also be available for 90 days upon completion of the call,
accessible through the Company's website
at www.volt.com in the Investors & Governance
section.
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 consists 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 involves managing the procurement and on-boarding
of contingent workers from multiple providers. Our customer care
solutions specializes 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 that are
subject to a number of known and unknown risks, including, among
others, the impact of management changes, the outcome of the
Company’s previously announced strategic alternatives process, the
outcome of the Company’s turnaround plan, 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., 1133 Avenue of the
Americas, New York, New York 10036, 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
www.sec.gov and at the Company’s website at www.volt.com in the
Investors section.
Results of
Operations (in thousands, except per share data)
Three Months Ended Six Months Ended April 29,
2018 January 28, 2018 April 30, 2017 April 29,
2018 April 30, 2017 Net revenue $ 263,219
$ 253,338 $ 303,005 $ 516,557 $ 616,029 Cost of services
225,918 217,329 255,886
443,247 522,020
Gross margin
37,301 36,009 47,119 73,310
94,009 Expenses: Selling, administrative and
other operating costs 42,916 46,938 51,171 89,854 100,061
Restructuring and severance costs 104 518 199 622 823 Impairment
charges 155 - 290 155 290 Gain from divestiture -
- (3,938 ) - (3,938 )
Total expenses 43,175 47,456 47,722
90,631 97,236 Operating loss
(5,874 ) (11,447 ) (603 )
(17,321 ) (3,227 ) Interest
income (expense), net (631 ) (782 ) (891 ) (1,413 ) (1,749 )
Foreign exchange gain (loss), net (497 ) 703 184 206 311 Other
income (expense), net (55 ) (528 ) (311 )
(583 ) (910 )
Loss before income taxes
(7,057 ) (12,054 ) (1,621
) (19,111 ) (5,575 ) Income tax
provision (benefit) 630 (1,360 ) (767 )
(730 ) (144 )
Net loss $ (7,687 ) $ (10,694 )
$ (854 ) $ (18,381 ) $ (5,431 )
Per share data:
Basic: Net loss $ (0.37 ) $ (0.51 ) $ (0.04 ) $ (0.87 ) $
(0.26 ) Weighted average number of shares 21,032 21,029 20,921
21,030 20,919
Diluted: Net loss $ (0.37 ) $ (0.51 ) $
(0.04 ) $ (0.87 ) $ (0.26 ) Weighted average number of shares
21,032 21,029 20,921 21,030 20,919
Segment data:
Net revenue: North American Staffing $ 218,090 $
206,235 $ 233,804 $ 424,325 $ 465,669 International Staffing 31,904
29,579 30,231 61,483 60,581 Corporate and Other 14,156 18,727
40,532 32,883 92,499 Eliminations (931 ) (1,203 )
(1,562 ) (2,134 ) (2,720 )
Net revenue
$ 263,219 $ 253,338
$ 303,005 $ 516,557
$ 616,029 Operating income
(loss): North American Staffing $ 1,571 $ (626 ) $ 3,058 $ 945
$ 5,886 International Staffing 818 (98 ) 531 720 1,173 Corporate
and Other (8,263 ) (10,723 ) (8,130 ) (18,986 ) (14,224 ) Gain from
divestiture - - 3,938
- 3,938
Operating loss $
(5,874 ) $ (11,447 ) $
(603 ) $ (17,321 ) $
(3,227 ) Work days 65 59
65 124 124
Condensed Consolidated Statements of Cash
Flows (in thousands) Six Months ended April
29, 2018 April 30, 2017 Cash and cash
equivalents, beginning of the period $ 37,077
$ 6,386
Cash used in all other operating
activities
(14,314 ) (6,074 ) Changes in operating assets and liabilities
14,590 17,873
Net cash provided by
operating activities 276
11,799 Purchases of property, equipment, and
software (1,298 ) (6,385 ) Proceeds from divestitures - 15,224 Net
cash provided by all other investing activities
164
592
Net cash provided by (used in)
investing activities (1,134 )
9,431 Net repayment of borrowings - (7,050 )
Debt issuance costs (1,411 ) (726 ) Net cash used in all other
financing activities (60 ) (7 )
Net cash used in
financing activities (1,471 )
(7,783 ) Effect of exchange rate changes on
cash and cash equivalents (571 ) 910
Net increase (decrease) in cash and cash equivalents
(2,900 ) 14,357
Cash and cash equivalents, end of the period $
34,177 $ 20,743 Cash
paid during the period: Interest $ 1,482 $ 1,838 Income taxes $
1,132 $ 1,111
Condensed Consolidated Balance Sheets
(in thousands, except
share amounts) April 29, 2018 October 29, 2017
ASSETS (unaudited)
CURRENT ASSETS: Cash and cash
equivalents $ 34,177 $ 37,077 Restricted cash and short-term
investments 20,455 20,544 Trade accounts receivable, net of
allowances of $773 and $1,249, respectively 166,201 173,818
Recoverable income taxes 53 1,643 Other current assets 6,730
11,755
TOTAL CURRENT ASSETS
227,616 244,837 Other assets, excluding current
portion 11,032 10,851 Property, equipment and software, net
26,349 29,121
TOTAL ASSETS $
264,997 $ 284,809
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES: Accrued compensation $ 23,134 $ 24,504 Accounts
payable 40,118 36,895 Accrued taxes other than income taxes 21,995
20,467 Accrued insurance and other 27,098 30,282 Short-term
borrowings - 50,000 Income taxes payable 1,154
808
TOTAL CURRENT LIABILITIES 113,499
162,956 Accrued insurance and other, excluding current
portion 10,727 10,828 Deferred gain on sale of real estate,
excluding current portion 23,189 24,162 Income taxes payable,
excluding current portion 615 1,663 Deferred income taxes 1,207
1,206 Long-term debt 48,758 -
TOTAL
LIABILITIES 197,995 200,815 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 - 21,035,503 and 21,026,253
shares, respectively 2,374 2,374 Paid-in capital 79,547 78,645
Retained earnings 27,303 45,843 Accumulated other comprehensive
loss (4,804 ) (5,261 ) Treasury stock, at cost; 2,702,500 and
2,711,750 shares, respectively (37,418 ) (37,607 )
TOTAL STOCKHOLDERS' EQUITY 67,002
83,994 TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 264,997 $ 284,809
GAAP to Non-GAAP Reconciliations (in
thousands)
Three Months Ended April 29, 2018 April 30,
2017 Reconciliation of GAAP net loss to Non-GAAP net
loss: GAAP loss
$
(7,687 ) $ (854 ) Selling, administrative and other operating costs
(486 )
(a)
(486 ) (a) Restructuring and severance costs 104 199 Impairment
charges 155
(b)
290 (b) Gain from divestitures - (3,938 ) (c) Income tax benefit
- (1,283 ) (d) Non-GAAP net loss
$
(7,914 ) $ (6,072 )
Three Months Ended April 29,
2018 April 30, 2017 Reconciliation of GAAP net loss
to Adjusted EBITDA: GAAP loss
$
(7,687 ) $ (854 ) Selling, administrative and other operating costs
(486 )
(a)
(486 ) (a) Restructuring and severance costs 104 199 Impairment
charges 155
(b)
290 (b) Gain from divestitures - (3,938 ) (c) Depreciation and
amortization 1,874 2,001 Share-based compensation expense 557 627
Total other (income) expense, net 1,183 1,018 (Benefit) provision
for income taxes 630 (767 ) Adjusted EBITDA
$
(3,670 ) $ (1,910 )
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 previously purchased software module that is
no longer in use. (c) Relates to the sale of Maintech, a non-core
business. (d) Relates to a discrete tax benefit resulting from the
resolution of uncertain tax positions upon the completion and
effective settlement of the IRS audit of the Company's fiscal 2004
through 2010 federal tax and associated state tax audits.
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 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20180607006096/en/
Investor Contacts:Volt Information Sciences,
Inc.voltinvest@volt.comorAddo Investor RelationsLasse Glassen,
424-238-6249lglassen@addoir.com
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