Company Shows Improved Results and Expects to
Achieve Positive Year-Over-Year Revenue Growth in its North
American Staffing Segment during First Quarter of Fiscal 2019
Volt Information Sciences, Inc. (“Volt” or the “Company”)
(NYSE-AMERICAN: VISI), an international provider of staffing
services and managed service programs, today reported improved
results for its fiscal 2018 fourth quarter. In addition, Volt
reported its full year ended October 28, 2018 results. Key
highlights include:
- Fourth quarter total Company net
revenue of $264.8 million declined 8.2%; On a same-store-basis1,
net revenue decline of 2.8% improved 780 basis points compared to a
10.6% year-over-year decline in the fourth quarter of 2017
- Total Company gross margin in the
fourth quarter of 2018 was 16.6% slightly improved from 16.5%; On a
same-store-basis, gross margin increased 160 basis points
year-over-year
- Total Company fourth quarter loss from
continuing operations of $2.9 million; Adjusted income from
continuing operations of $1.5 million, up from an adjusted loss of
$7.0 million in the previous year
- Total Company fourth quarter adjusted
EBITDA of $4.7 million, up from $0.1 million in the prior
period
- Fourth quarter North American Staffing
segment revenues of $220.5 million; net revenue decline of 1.6%,
compared to a 12.1% year-over-year decline in the fourth quarter of
2017
- Fourth quarter operating income for
North American Staffing segment of $8.2 million increased 48.3%
compared to the prior year period
1 Excludes net revenue contributed from businesses sold or
exited during the past year and the effect of foreign exchange rate
fluctuations
Commenting on Volt’s fourth quarter results, Linda Perneau,
President and CEO, said, “I am pleased with our fourth quarter
performance highlighted by improvement in same-store revenue, gross
margin expansion and careful expense management, which collectively
resulted in significant growth in adjusted income from continuing
operations. At the top line, we are beginning to realize the
benefits from changes to the North American Staffing segment’s
organizational structure, designed to strengthen its service
delivery, coupled with a much more robust sales engine. In
addition, our focus on driving retail growth in commercial and
professional job categories, as well as our renewed emphasis on
direct hire business, contributed to a 160 basis point
year-over-year improvement in gross margin on a same-store
basis.”
Ms. Perneau continued, “Our operational performance in the
fourth quarter was solid, evidenced by revenue improvements as
compared to the prior year in our North American Staffing segment
during each month of the quarter. During the last month of fiscal
2018, we generated year-over-year positive revenue growth in our
North American Staffing Segment for the first time in many years.
So far in the first quarter of fiscal 2019, that trend is
continuing. This gives us confidence that this segment will
generate positive year-over-year revenue growth during the first
quarter of fiscal 2019. As momentum continues to build across the
enterprise, I am very proud of the team’s execution of our strategy
and I anticipate a strong start to the new year.”
Fiscal 2018 Fourth Quarter Results
Total revenue for the fiscal 2018 fourth quarter was $264.8
million, down $23.7 million, or 8.2%, compared to $288.5 million in
the fourth quarter of fiscal 2017. On a same-store basis, net
revenue declined 2.8% year-over-year excluding net revenue
contributed from businesses sold or exited during the past year and
the effect of currency fluctuations.
Total gross margin in the fourth quarter of fiscal 2018 was
16.6%, an improvement of 160 basis points year-over-year, adjusted
for businesses sold. The margin improvement was driven by a
favorable California FUTA adjustment, lower worker compensation
claims, and a better mix of higher margin business.
Selling, administrative and other operating costs in the fourth
quarter of fiscal 2018 decreased $8.8 million, or 17.7%, to $41.3
million from $50.1 million in the fourth quarter of fiscal 2017.
Excluding businesses sold or exited, selling, administrative and
other operating costs for the fourth quarter of fiscal 2018
decreased 13.2% from the prior year period. The decrease was
primarily due to ongoing cost reductions throughout the business
including lower labor and consulting costs.
Net loss from continuing operations was $2.9 million in the
fourth quarter of fiscal 2018, compared to net income from
continuing operations of $39.8 million in the fourth quarter of
fiscal 2017. Net income in the fourth quarter of fiscal 2017
benefitted by a gain on the sale of the Company’s quality assurance
business totaling $48.0 million. On an adjusted (Non-GAAP) basis,
the Company reported positive net income from continuing operations
of $1.5 million in the fourth quarter of fiscal 2018, compared to
an adjusted net loss from continuing operations of $7.0 million in
the fourth quarter of fiscal 2017.
Adjusted EBITDA, which is a Non-GAAP measure, was $4.7 million
in the fiscal 2018 fourth quarter, compared to Adjusted EBITDA of
$0.1 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.
Fiscal 2018 Full Year Results
Total revenue for the full year of fiscal 2018 was $1,039.2
million, down $155.2 million, or 13.0%, compared to total revenue
of $1,194.4 million for the full year of fiscal 2017. On a
same-store basis, net revenue declined 6.9% year-over-year
excluding net revenue contributed from businesses sold or exited
during the past year and the effect of currency fluctuations.
Net loss from continuing operations was $32.7 million for the
full year of fiscal 2018, down from net income of $28.8 million
from the full year of fiscal 2017. Net income in fiscal 2017
included $3.1 million of restructuring and severance costs and
settlement charges, offset by a $52.0 million gain on the sale of
Maintech, a non-core business and the sale of the Company’s quality
assurance business. Adjusted net loss from continuing operations,
which is a Non-GAAP measure, was $26.9 million for the full year of
fiscal 2018, compared to an adjusted net loss of $23.3 million from
the full fiscal year of 2017. Adjusted EBITDA, which is a Non-GAAP
measure, was a loss of $13.1 million for the full year of fiscal
2018, up $12.2 million from a loss of $0.9 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.
Conference Call and Webcast
A conference call and simultaneous webcast to discuss the fiscal
2018 fourth quarter and full year 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 January 9, 2019 at 7:30 p.m. Eastern Time through
Wednesday, January 23, 2019 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 # 13685608. 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 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 North American Staffing segment’s revenue outlook for the
first 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.
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., 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 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 Twelve Months Ended October 28,
2018 July 29, 2018 October 29, 2017 October
28, 2018 October 29, 2017 Net revenue $
264,805 $ 257,808 $ 288,483 $ 1,039,170 $ 1,194,436 Cost of
services 220,797 221,448 240,816
885,492 1,007,041
Gross
margin 44,008 36,360 47,667 153,678
187,395 Selling, administrative and other operating
costs 41,261 42,222 50,138 173,337 197,130 Restructuring and
severance costs 4,512 3,108 307 8,242 1,379 Impairment and
settlement charges 351 - 1,404 506 1,694 Gain from divestitures
- - (48,033 ) -
(51,971 )
Operating income (loss) (2,116
) (8,970 ) 43,851 (28,407
) 39,163 Interest income (expense), net (627 )
(552 ) (1,026 ) (2,592 ) (3,751 ) Foreign exchange gain (loss), net
491 (294 ) (218 ) 403 (1,637 ) Other income (expense), net
(252 ) (296 ) (375 ) (1,131 ) (1,562 )
Income (loss) before income taxes (2,504 )
(10,112 ) 42,232 (31,727 )
32,213 Income tax provision 382 1,306
2,458 958 3,388
Income (loss) from continuing operations (2,886
) (11,418 ) 39,774 (32,685
) 28,825 Loss from discontinued operations -
- (1,693 ) -
(1,693 )
Net income (loss) $ (2,886 )
$ (11,418 ) $ 38,081
$ (32,685 ) $ 27,132
Per share data: Basic: Income (loss) from
continuing operations $ (0.14 ) $ (0.54 ) $ 1.90 $ (1.55 ) $ 1.38
Loss from discontinued operations - -
(0.08 ) - (0.08 ) Net income (loss) $
(0.14 ) $ (0.54 ) $ 1.82 $ (1.55 ) $ 1.30 Weighted
average number of shares 21,072 21,071 20,967 21,051 20,942
Diluted: Income (loss) from continuing operations $ (0.14 )
$ (0.54 ) $ 1.90 $ (1.55 ) $ 1.37 Loss from discontinued operations
- - (0.08 ) -
(0.08 ) Net income (loss) $ (0.14 ) $ (0.54 ) $ 1.82
$ (1.55 ) $ 1.29 Weighted average number of shares 21,072
21,071 20,982 21,051 21,017
Segment data:
Net revenue: North American Staffing $ 220,540 $ 215,679
$ 224,219 $ 860,544 $ 919,260 International Staffing 27,289 28,579
30,163 117,351 119,762 North American MSP 8,208 6,959 9,423 29,986
36,783 Corporate and Other 9,708 7,456 26,585 35,228 125,089
Eliminations (940 ) (865 ) (1,907 )
(3,939 ) (6,458 )
Net revenue $ 264,805
$ 257,808 $ 288,483
$ 1,039,170 $ 1,194,436
Operating income (loss): North American
Staffing $ 8,197 $ 2,961 $ 5,526 $ 12,103 $ 17,153 International
Staffing 1,000 677 944 2,397 2,848 North American MSP 844 107 809
1,633 2,613 Corporate and Other (12,157 ) (12,715 ) (11,461 )
(44,540 ) (35,422 ) Gain from divestiture - -
48,033 - 51,971
Operating income (loss) $ (2,116 )
$ (8,970 ) $ 43,851
$ (28,407 ) $ 39,163
Work days 64 63 64 251
251
Condensed Consolidated Statements of Cash Flows (in
thousands)
Twelve Months ended October 28, 2018
October 29, 2017 Cash and cash equivalents,
beginning of the period $ 37,077 $
6,386 Cash used in all other operating activities
(25,525 ) (9,586 ) Changes in operating assets and liabilities
20,029 14,155
Net cash provided by
(used in) operating activities (5,496 )
4,569 Purchases of property, equipment,
and software (3,565 ) (9,312 ) Proceeds from divestitures - 81,102
Net cash provided by all other investing activities 331
876
Net cash provided by (used in)
investing activities (3,234 )
72,666 Net repayment of borrowings - (47,050 )
Debt issuance costs (1,469 ) (1,190 ) Net cash used in all other
financing activities (271 ) (50 )
Net cash used in
financing activities (1,740 )
(48,290 ) Effect of exchange rate changes
on cash and cash equivalents (1,844 )
1,746 Net increase (decrease) in cash and cash
equivalents (12,314 ) 30,691
Cash and cash equivalents, end of the period
$ 24,763 $ 37,077
Cash paid during the period: Interest $ 2,765 $ 3,840 Income
taxes $ 3,341 $ 3,521
Condensed Consolidated Balance Sheets (in thousands,
except share amounts) October 28, 2018 October
29, 2017 ASSETS CURRENT ASSETS: Cash and cash
equivalents $ 24,763 $ 37,077 Restricted cash and short-term
investments 14,844 20,544 Trade accounts receivable, net of
allowances of $759 and $1,249, respectively 157,445 173,818
Recoverable income taxes 96 1,643 Other current assets 7,348
11,755
TOTAL CURRENT ASSETS
204,496 244,837 Other assets, excluding current
portion 7,808 10,851 Property, equipment and software, net
24,392 29,121
TOTAL ASSETS $
236,696 $ 284,809
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES: Accrued compensation $ 27,120 $ 24,504 Accounts
payable 33,498 36,895 Accrued taxes other than income taxes 15,275
20,467 Accrued insurance and other 23,335 30,282 Short-term
borrowings - 50,000 Income taxes payable 1,097
808
TOTAL CURRENT LIABILITIES 100,325
162,956 Accrued insurance and other, excluding current
portion 13,478 10,828 Deferred gain on sale of real estate,
excluding current portion 22,216 24,162 Income taxes payable,
excluding current portion 600 1,663 Deferred income taxes 510 1,206
Long-term debt 49,068 -
TOTAL
LIABILITIES 186,197 200,815 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 - 21,179,068 and 21,026,253
shares, respectively 2,374 2,374 Paid-in capital 79,057 78,645
Retained earnings 9,738 45,843 Accumulated other comprehensive loss
(7,070 ) (5,261 ) Treasury stock, at cost; 2,558,935 and 2,711,750
shares, respectively (33,600 ) (37,607 )
TOTAL
STOCKHOLDERS' EQUITY 50,499
83,994 TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 236,696 $ 284,809
GAAP to Non-GAAP
Reconciliations (in thousands) Three Months
Ended October 28, 2018 October 29, 2017
Reconciliation of GAAP income (loss) from continuing operations
to Non-GAAP net income (loss) from continuing operations: GAAP
income (loss) from continuing operations $ (2,886 ) $ 39,774
Selling, administrative and other operating costs (486 ) (a) (486 )
(a) Restructuring and severance costs 4,512 307 Settlement and
impairment charges 351 1,404 (b) Gain from divestitures -
(48,033 ) (c) Non-GAAP income (loss) from continuing
operations $ 1,491 $ (7,034 )
Three Months
Ended October 28, 2018 October 29, 2017
Reconciliation of GAAP income (loss) from continuing operations
to Adjusted EBITDA: GAAP income (loss) from continuing
operations $ (2,886 ) $ 39,774 Selling, administrative and other
operating costs (486 ) (a) (486 ) (a) Restructuring and severance
costs 4,512 307 Settlement and impairment charges 351 1,404 (b)
Gain from divestitures - (48,033 ) (c) Depreciation and
amortization 1,694 2,407 Share-based compensation expense 753 644
Total other (income) expense, net 388 1,619 Provision for income
taxes 382 2,458 Adjusted EBITDA $ 4,708
$ 94
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 the settlement charge associated with the early
payment of the NewNet note. (c) Relates to the gain on the sale of
the quality assurance testing division of the Technology
Outsourcing Services and Solutions segment.
GAAP to Non-GAAP Reconciliations (in
thousands) Twelve Months Ended October 28,
2018 October 29, 2017 Reconciliation of GAAP income
(loss) from continuing operations to Non-GAAP net income (loss)
from continuing operations: GAAP income (loss) from continuing
operations $ (32,685 ) $ 28,825 Selling, administrative and other
operating costs (1,944 ) (a) (1,944 ) (a) Restructuring and
severance costs 8,242 1,379 Settlement and impairment charges 506
(b) 1,694 (e) Gain from divestitures - (51,971 ) (f) Income tax
benefit (1,052 ) (c) (1,283 ) (g) Non-GAAP income
(loss) from continuing operations $ (26,933 ) $ (23,300 )
Twelve Months Ended October 28, 2018 October 29,
2017 Reconciliation of GAAP income (loss) from continuing
operations to Adjusted EBITDA: GAAP income (loss) from
continuing operations $ (32,685 ) $ 28,825 Selling, administrative
and other operating costs (1,944 ) (a) (1,944 ) (a) Restructuring
and severance costs 8,242 1,379 Settlement and impairment charges
506 (b) 1,694 (e) Gain from divestitures - (51,971 ) (f)
Depreciation and amortization 7,209 8,025 Share-based compensation
expense 1,270 (d) 2,755 Total other (income) loss, net 3,320 6,950
Provision for income taxes 958 3,388
Adjusted EBITDA $ (13,124 ) $ (899 )
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 a discrete tax benefit resulting from
the expiration of uncertain tax positions in the first quarter of
fiscal 2018. (d) Includes share-based compensation forfeited in
accordance with the former chief executive officer's separation
agreement. (e) Relates to the settlement charge associated with the
early payment of the NewNet note and impairment of previously
purchased software module no longer in use. (f) Relates to the sale
of Maintech, a non-core business and the sale of the quality
assurance testing division of the Technology Outsourcing Services
and Solutions segment. (g)
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.
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Investor Contacts:Volt Information Sciences,
Inc.voltinvest@volt.comLasse GlassenAddo Investor
Relationslglassen@addoir.com424-238-6249
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