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 third quarter ended July 29, 2018. Key highlights
include:
- Third quarter net revenue of $257.8
million, down 11.1% year-over-year; on a same-store basis, net
revenue declined 6.6% year-over-year excluding net revenue
contributed from businesses sold or exited during the past year and
the effect of foreign exchange rate fluctuations;
- Third quarter selling, administrative
and other operating costs of $42.2 million, down 10.0%,
year-over-year, or 5.4% excluding businesses sold or exited during
the past year;
- Global liquidity of $52.7 million at
quarter-end, up $19.3 million year-over-year; total outstanding
debt of $50.0 million, down $50.0 million year-over-year;
- Linda Perneau appointed Interim Chief
Executive Officer, in addition to her role as President of Volt
Workforce Solutions (VWS);
- Re-aligned the organizational structure
of Volt Workforce Solutions in order to strengthen the Company’s
focus on sales and service delivery across its spectrum of
offerings; and
- Continuation of the review of strategic
alternatives by the Company’s Board of Directors
“I see significant opportunities to enhance Volt’s competitive
position within the staffing industry and improve performance to
levels of which we can be proud,” said Linda Perneau, Interim Chief
Executive Officer and President of Volt Workforce Solutions. “Key
to achieving this will be returning our largest business, Volt
Workforce Solutions, to a trajectory of profitable growth. To
address the challenges, our leadership team is currently focused on
four strategic priorities of organization design, business
optimization, delivery excellence and growth and expansion. While
it is clear that we have a lot of work ahead of us, I am encouraged
by the progress we have made so far during my short tenure at Volt.
As we execute on our initiatives, I look forward to driving
significantly enhanced value for all of our stakeholders in the
future.”
Fiscal 2018 Third Quarter Results
Total revenue for the fiscal 2018 third quarter was $257.8
million, down $32.1 million, or 11.1%, compared to $289.9 million
in the third quarter of fiscal 2017. On a same-store basis, net
revenue declined 6.6% 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 includes a broad spectrum
of contingent staffing, direct placement, recruitment process
outsourcing and other employment services, was $215.7 million, a
$13.7 million, or 6.0% decline compared to North American Staffing
revenue of $229.4 million in the third quarter of fiscal 2017. The
decline was driven by lower demand from customers in the
professional and administrative and office job categories,
partially offset by growth in the light industrial and engineering
job categories.
International Staffing revenue, which includes the Company’s
contingent staffing, direct placement and managed service programs
businesses in Europe and Asia, was $28.6 million, a $0.4 million,
or 1.5% decrease compared to $29.0 million from the third quarter
of fiscal 2017. Excluding the positive impact of foreign exchange
rate fluctuations of $0.9 million offset by a decrease related to
business exited of $0.8 million, revenue declined $0.5 million, or
1.8%, compared to the third quarter of fiscal 2017, primarily due
to lower demand in the United Kingdom, offset by strong growth in
Belgium.
Corporate and Other revenue, which primarily consists of the
Company’s North American managed service business and the Company’s
call center business, was $14.4 million, down $19.0 million, or
56.8%, compared to $33.4 million in the third quarter of fiscal
2017. The year-over-year revenue decline was primarily driven by
the impact from the sale of the Company’s quality assurance
business which occurred at the end of the fourth quarter of fiscal
2017. On a same-store basis, excluding the business sold of $14.1
million, Corporate and Other revenue decreased $4.9 million, or
25.2%, year-over-year, as a result of winding down of certain
customer 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 third
quarter of fiscal 2018 decreased $4.7 million, or 10.0%, to $42.2
million from $46.9 million in the third quarter of fiscal 2017.
This decrease was primarily due to on-going cost reductions in all
areas of the business, including a $2.9 million reduction in labor
costs and a $1.2 million reduction in share-based compensation
expense, as well as costs from the previously-owned quality
assurance business of $2.3 million. The third quarter of fiscal
2017 also included the release of a reserve related to the
dissolution of the Employee Welfare Benefit Trust of $1.4
million.
Net loss was $11.4 million in the third quarter of fiscal 2018,
up $5.9 million compared to a loss of $5.5 million in the third
quarter of fiscal 2017. Adjusted net loss, which is a Non-GAAP
measure, was $8.8 million in the third quarter of fiscal 2018, up
$3.0 million compared to an adjusted net loss of $5.8 million in
the third quarter of fiscal 2017. For a reconciliation of the GAAP
and Non-GAAP financial results, please see the tables at the end of
this press release.
Adjusted EBITDA, which is a Non-GAAP measure, was a loss of $5.0
million in the fiscal 2018 third quarter, down $6.4 million from
income of $1.4 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.
Liquidity
As of August 31, 2018, the Company had $54.1 million of global
liquidity as compared to $38.9 million at September 1, 2017.
Corporate Developments
During the quarter the Company re-aligned the organizational
structure of VWS to include a Specialty Solutions Group, Strategic
Solutions Group and Global Solutions Group in order to strengthen
VWS’ focus on sales and delivery. Chris Kelly has joined Volt as
Senior Vice President, Strategic Solutions, VWS and brings over 25
years of industry experience. In her new role, Ms. Kelly will bring
a greater focus to vendor-on-premise accounts, a growing segment
within the staffing industry and one that represents a significant
strategic opportunity for Volt.
Subsequent to the end of the quarter, the Company announced it
has hired two senior executives, Lori Schultz, Chief Operating
Officer, VWS and Lauren Griffin, Senior Vice President, Specialty
Solutions Group, VWS, strengthening Volt’s top leadership as the
Company moves forward on its growth and profitability strategies.
Ms. Schultz and Ms. Griffin each join Volt with over 25 years of
experience in the staffing industry.
Conference Call and Webcast
A conference call and simultaneous webcast to discuss the fiscal
2018 third 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, September 6, 2018 at 7:30 p.m. Eastern Time through
Thursday, September 20, 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 #13682668. 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.
A copy of this earnings release and a corresponding supplemental
slide presentation will be available prior to the call, accessible
through the Investor Relations section of 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 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 that are
subject to a number of known and unknown risks, including, among
others, the Company’s ability to strengthen its sales and service
delivery efforts, capitalize on trends in the staffing industry,
increase market share and achieve sales growth 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 Nine Months Ended July 29,
2018 April 29, 2018 July 30, 2017 July 29,
2018 July 30, 2017 Net revenue $ 257,808 $
263,219 $ 289,924 $ 774,365 $ 905,953 Cost of services
221,448 225,918 244,205
664,695 766,225
Gross margin
36,360 37,301 45,719 109,670
139,728 Expenses: Selling, administrative and
other operating costs 42,222 42,916 46,931 132,076 146,992
Restructuring and severance costs 3,108 104 249 3,730 1,072
Impairment charges - 155 - 155 290 Gain from divestiture -
- - -
(3,938 )
Total expenses 45,330 43,175
47,180 135,961 144,416 Operating
loss (8,970 ) (5,874 )
(1,461 ) (26,291 ) (4,688
) Interest income (expense), net (552 ) (631 ) (976 )
(1,965 ) (2,725 ) Foreign exchange gain (loss), net (294 ) (497 )
(1,730 ) (88 ) (1,419 ) Other income (expense), net (296 )
(55 ) (277 ) (879 ) (1,187 )
Loss
before income taxes (10,112 ) (7,057
) (4,444 ) (29,223 )
(10,019 ) Income tax provision 1,306
630 1,074 576 930
Net loss $ (11,418 ) $ (7,687 ) $ (5,518 ) $ (29,799
) $ (10,949 )
Per share data: Basic: Net loss
$ (0.54 ) $ (0.37 ) $ (0.26 ) $ (1.42 ) $ (0.52 ) Weighted average
number of shares 21,071 21,032 20,963 21,044 20,934
Diluted: Net loss $ (0.54 ) $ (0.37 ) $ (0.26 ) $ (1.42 ) $
(0.52 ) Weighted average number of shares 21,071 21,032 20,963
21,044 20,934
Segment data: Net
revenue: North American Staffing $ 215,679 $ 218,090
$ 229,372 $ 640,004 $ 695,041 International Staffing 28,579 31,904
29,018 90,062 89,599 Corporate and Other 14,415 14,156 33,365
47,298 125,864 Eliminations (865 ) (931 )
(1,831 ) (2,999 ) (4,551 )
Net revenue
$ 257,808 $ 263,219
$ 289,924 $ 774,365
$ 905,953 Operating income
(loss): North American Staffing $ 2,961 $ 1,571 $ 5,741 $ 3,906
$ 11,627 International Staffing 677 818 731 1,397 1,904 Corporate
and Other (12,608 ) (8,263 ) (7,933 ) (31,594 ) (14,281 ) Gain from
divestiture - - -
- (3,938 )
Operating loss $
(8,970 ) $ (5,874 ) $
(1,461 ) $ (26,291 ) $
(4,688 ) Work days 63 65
63 187 187
Condensed Consolidated Statements of Cash
Flows (in thousands)
Nine Months ended July 29, 2018
July 30, 2017 Cash and cash equivalents, beginning
of the period $ 37,077 $ 6,386
Cash used in all other operating activities (25,057 ) (6,612
) Changes in operating assets and liabilities 22,509
3,574
Net cash used in operating activities
(2,548 ) (3,038 )
Purchases of property, equipment, and software (2,332 ) (7,753 )
Proceeds from divestitures - 15,224 Net cash provided by all other
investing activities 233 782
Net
cash provided by (used in) investing activities
(2,099 ) 8,253 Net
repayment of borrowings - 2,950 Debt issuance costs (1,415 ) (751 )
Net cash used in all other financing activities (269 )
(44 )
Net cash provided by (used in) financing
activities (1,684 ) 2,155
Effect of exchange rate changes on cash and cash
equivalents (817 ) 2,601 Net
increase (decrease) in cash and cash equivalents
(7,148 ) 9,971 Cash
and cash equivalents, end of the period $ 29,929
$ 16,357 Cash paid during the
period: Interest $ 2,084 $ 2,815 Income taxes $ 2,483 $ 2,256
Condensed Consolidated
Balance Sheets (in thousands, except share amounts)
July 29, 2018 October 29, 2017 ASSETS
(unaudited)
CURRENT ASSETS: Cash and cash equivalents $
29,929 $ 37,077 Restricted cash and short-term investments 12,993
20,544 Trade accounts receivable, net of allowances of $810 and
$1,249, respectively 152,794 173,818 Recoverable income taxes 53
1,643 Other current assets 8,484 11,755
TOTAL CURRENT ASSETS 204,253 244,837 Other
assets, excluding current portion 10,739 10,851 Property, equipment
and software, net 25,523 29,121
TOTAL ASSETS $ 240,515 $
284,809 LIABILITIES AND STOCKHOLDERS'
EQUITY CURRENT LIABILITIES: Accrued compensation $
27,086 $ 24,504 Accounts payable 28,684 36,895 Accrued taxes other
than income taxes 18,399 20,467 Accrued insurance and other 25,236
30,282 Short-term borrowings - 50,000 Income taxes payable
1,535 808
TOTAL CURRENT LIABILITIES
100,940 162,956 Accrued insurance and other,
excluding current portion 12,128 10,828 Deferred gain on sale of
real estate, excluding current portion 22,702 24,162 Income taxes
payable, excluding current portion 619 1,663 Deferred income taxes
1,208 1,206 Long-term debt 48,939 -
TOTAL LIABILITIES 186,536 200,815
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 -
21,178,515 and 21,026,253 shares, respectively 2,374 2,374 Paid-in
capital 78,308 78,645 Retained earnings 12,636 45,843 Accumulated
other comprehensive loss (5,725 ) (5,261 ) Treasury stock, at cost;
2,559,488 and 2,711,750 shares, respectively (33,614 )
(37,607 )
TOTAL STOCKHOLDERS' EQUITY
53,979 83,994 TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY $ 240,515
$ 284,809
GAAP to Non-GAAP Reconciliations (in
thousands) Three Months Ended July 29,
2018 July 30, 2017 Reconciliation of GAAP net loss to
Non-GAAP net loss: GAAP loss $ (11,418 ) $ (5,518 ) Selling,
administrative and other operating costs (486 ) (a) (486 ) (a)
Restructuring and severance costs 3,108 249
Non-GAAP net loss $ (8,796 ) $ (5,755 )
Three Months Ended July 29, 2018 July 30, 2017
Reconciliation of GAAP net loss to Adjusted EBITDA: GAAP
loss $ (11,418 ) $ (5,518 ) Selling, administrative and other
operating costs (486 ) (a) (486 ) (a) Restructuring and severance
costs 3,108 249 Depreciation and amortization 1,789 2,238
Share-based compensation expense (475 ) (b) 869 Total other
(income) expense, net 1,142 2,983 Provision for income taxes
1,306 1,074 Adjusted EBITDA $ (5,034 ) $ 1,409
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) Includes share-based compensation forfeited in accordance with
the former chief executive officer's separation agreement.
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20180906005882/en/
Investor Contacts:Volt Information Sciences,
Inc.voltinvest@volt.comorAddo Investor RelationsLasse
Glassenlglassen@addoir.com424-238-6249
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