Company Achieves Year-Over-Year Revenue Growth
and Significant Improvements in Operating Results Led by the
Strength of the North American Staffing Segment
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 first quarter ended January 27, 2019. Key
highlights include:
- First quarter total Company net revenue
of $253.4 million, up slightly year-over-year; On a same-store
basis, which exclude net revenue contributed from a business exited
during the past year and the effect of foreign exchange rate
fluctuations, net revenue increased $1.8 million, or 0.7%,
year-over-year
- First quarter North American Staffing
segment net revenue of $211.8 million increased 2.7%
year-over-year; North American Staffing segment operating income of
$3.9 million compared with an operating loss of $0.6 million a year
ago
- Total Company gross margins in the
first quarter of 14.9% increased 70 basis points
year-over-year
- Total Company selling, administrative
and other operating costs in the first quarter of $39.8 million,
declined 15.2% year-over-year
- Total Company net loss in the first
quarter of $3.2 million improved significantly compared with net
loss of $10.7 million a year ago
- Total Company adjusted EBITDA in the
first quarter was a loss of $1.1 million compared with a loss of
$9.1 million a year ago
Commenting on Volt’s performance, Linda Perneau, President and
CEO, said, “We are off to a good, reassuring start in fiscal 2019
as our solid execution drove improved performance in virtually
every key financial and operational metric. At the top line, we
generated year-over-year growth in net sales for the first time in
26 quarters. This growth is largely attributed to actions we
initiated last year within our North American Staffing segment
designed to improve our sales engine and strengthen service
delivery. In addition, our emphasis on driving retail growth in our
commercial and professional job categories, pricing discipline on
new business and success in reducing workers compensation expenses
improved Volt’s gross margins on a year-over-year basis. We also
continue to see benefits from our cost containment initiatives and
other efforts to achieve operational efficiencies across the
enterprise. This resulted in a sharp year-over-year reduction in
selling, administrative and other operating costs. Our success in
these key metrics during the first quarter collectively contributed
to the year-over-year improvement in Volt’s operating results and
Adjusted EBITDA.”
Ms. Perneau continued, “Overall, I am extremely proud of what
our team has accomplished in a very short period of time. Momentum
continues to build at Volt. Our results from this past quarter are
strong evidence that we are on the right track and I am encouraged
by the team’s dedication, persistence and hard work. I look forward
to continued execution of our strategy, enhancing our financial and
operational performance and driving shareholder value as we move
forward.”
Fiscal 2019 First Quarter Results
Total revenue for the fiscal 2019 first quarter was $253.4
million, up slightly compared to $253.3 million in the first
quarter of fiscal 2018. On a same-store basis, net revenue
increased nearly 1% 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 first quarter of fiscal 2019 was
14.9%, an improvement of 70 basis points year-over-year. The margin
improvement was driven by growth in higher-margin revenue from
retail customers, improved worker compensation experience,
partially offset by a higher mix of larger price-competitive
customers and competitive pricing pressure.
Selling, administrative and other operating costs in the first
quarter of fiscal 2019 decreased $7.1 million, or 15.2%, to $39.8
million from $46.9 million in the first 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, legal and consulting fees, as well as a reduction in travel
and facility expenses. SG&A as a percent of revenue improved to
15.7% in the first quarter compared with 18.5% a year ago.
Net loss was $3.2 million in the first quarter of fiscal 2019,
compared to $10.7 million in the first quarter of fiscal 2018.
Adjusted EBITDA, which is a Non-GAAP measure, was negative $1.1
million in the fiscal 2019 first quarter, compared to negative
Adjusted EBITDA of $9.1 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.
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 second quarter of fiscal 2019 ending April 28, 2019, the
Company currently expects its total Company consolidated revenue
will be roughly 1% lower than the prior year quarter, driven
predominantly by a modest decline in its North American Staffing
segment.
Conference Call and Webcast
A conference call and simultaneous webcast to discuss the fiscal
2019 first 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, March 6, 2019 at 7:30 p.m. Eastern Time through
Wednesday, March 20, 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 #13687750. 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. 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 the Company’s revenue outlook for the second 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 (“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 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.
Results of Operations
(in thousands, except per share
data) Three Months Ended January 27, 2019
October 28, 2018 January 28, 2018 Net
revenue $ 253,436 $ 264,805 $ 253,338 Cost of services
215,737 220,797 217,329
Gross
margin 37,699 44,008 36,009
Selling, administrative and other operating costs 39,810 41,261
46,938 Restructuring and severance costs 59 4,512 518 Impairment
charges - 351 -
Operating loss (2,170 ) (2,116 )
(11,447 ) Interest income (expense), net (746
) (627 ) (782 ) Foreign exchange gain (loss), net 213 491 703 Other
income (expense), net (239 ) (252 ) (528 )
Loss before income taxes (2,942 )
(2,504 ) (12,054 ) Income tax provision
(benefit) 273 382 (1,360 )
Net loss $ (3,215 ) $
(2,886 ) $ (10,694 )
Per share data: Basic: Net loss $ (0.15 ) $ (0.14 ) $
(0.51 ) Weighted average number of shares 21,080 21,072 21,029
Diluted: Net loss $ (0.15 ) $ (0.14 ) $ (0.51 )
Weighted average number of shares 21,080 21,072 21,029
Segment data: Net revenue: North American
Staffing $ 211,848 $ 220,540 $ 206,235 International Staffing
26,266 27,289 29,579 North American MSP 8,217 8,208 8,480 Corporate
and Other 7,846 9,708 10,247 Eliminations (741 ) (940
) (1,203 )
Net revenue $ 253,436
$ 264,805 $ 253,338
Operating income (loss): North American Staffing $
3,887 $ 8,197 $ (626 ) International Staffing 304 1,000 (98 ) North
American MSP 965 844 265 Corporate and Other (7,326 )
(12,157 ) (10,988 )
Operating income (loss) $
(2,170 ) $ (2,116 ) $
(11,447 ) Work days 59 64
59 Condensed Consolidated Statements of Cash
Flows (in
thousands) Three Months ended January 27, 2019
January 28, 2018 Cash, cash equivalents and
restricted cash beginning of the period $ 36,544
$ 54,097 Cash used in all other operating
activities (2,188 ) (8,625 ) Changes in operating assets and
liabilities 4,148 21,654
Net cash
provided by operating activities 1,960
13,029 Purchases of property,
equipment, and software (1,698 ) (345 ) Net cash provided by all
other investing activities (69 ) 92
Net
cash used in investing activities (1,767 )
(253 ) Net draw-down of borrowings
5,000 30,000 Debt issuance costs (140 ) (1,327 )
Net cash provided by financing activities
4,860 28,673 Effect of
exchange rate changes on cash, cash equivalents and restricted
cash (429 ) 112 Net increase in
cash, cash equivalents and restricted cash 4,624
41,561 Cash, cash equivalents
and restricted cash end of the period $ 41,168
$ 95,658 Cash paid during the
period: Interest $ 801 $ 926 Income taxes $ 146 $ 627
Reconciliation of cash, cash equivalents and restricted cash end
of the period: Current Assets: Cash and cash equivalents
$ 32,925 $ 53,868 Restricted cash included in Restricted cash and
short term investments 8,243 12,094 Restricted cash as collateral
for borrowings included in Restricted cash and short term
investments - 29,696 Cash, cash
equivalents and restricted cash, at end of period
$
41,168 $ 95,658
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
January 27, 2019 October 28, 2018 ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 32,925 $ 24,763
Restricted cash and short-term investments 11,262 14,844 Trade
accounts receivable, net of allowances of $31 and $759,
respectively 150,339 157,445 Other current assets 6,658
7,444
TOTAL CURRENT ASSETS
201,184 204,496 Other assets, excluding current
portion 7,941 7,808 Property, equipment and software, net
24,515 24,392
TOTAL ASSETS $
233,640 $ 236,696
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES: Accrued compensation $ 25,203 $ 27,120 Accounts
payable 26,442 33,498 Accrued taxes other than income taxes 17,218
15,275 Accrued insurance and other 25,688 23,335 Income taxes
payable 1,224 1,097
TOTAL CURRENT
LIABILITIES 95,775 100,325 Accrued insurance and
other, excluding current portion 13,177 13,478 Deferred gain on
sale of real estate, excluding current portion 21,730 22,216 Income
taxes payable, excluding current portion 604 600 Deferred income
taxes 509 510 Long-term debt 54,090 49,068
TOTAL LIABILITIES 185,885 186,197
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 -
21,191,030 and 21,179,068 shares, respectively 2,374 2,374 Paid-in
capital 78,909 79,057 Retained earnings 6,743 9,738 Accumulated
other comprehensive loss (6,912 ) (7,070 ) Treasury stock, at cost;
2,546,973 and 2,558,935 shares, respectively (33,359 )
(33,600 )
TOTAL STOCKHOLDERS' EQUITY
47,755 50,499 TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY $ 233,640
$ 236,696 GAAP to Non-GAAP
Reconciliations (in thousands)
Three Months Ended January
27, 2019 January 28, 2018 Reconciliation of GAAP net
loss to Non-GAAP net loss: GAAP net loss $ (3,215 ) $ (10,694 )
Selling, administrative and other operating costs (486 ) (a) (486 )
(a) Restructuring and severance costs 59 518 Income tax benefit
- (1,052 ) (b) Non-GAAP net loss $ (3,642 ) $
(11,714 )
Three Months Ended January 27,
2019 January 28, 2018 Reconciliation of GAAP
net loss to Adjusted EBITDA: GAAP net loss $ (3,215 ) $ (10,694
) Selling, administrative and other operating costs (486 ) (a) (486
) (a) Restructuring and severance costs 59 518 Depreciation and
amortization 1,603 1,852 Share-based compensation expense (113 )
435 Total other (income) expense, net 772 607 Provision (benefit)
for income taxes 273 (1,360 ) Adjusted EBITDA
$ (1,107 ) $ (9,128 )
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 a discrete tax benefit resulting from the
expiration of uncertain tax positions in Q1 2018.
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Investor Contacts:Volt Information Sciences,
Inc.voltinvest@volt.com
Lasse Glassen, Addo Investor
Relationslglassen@addoir.com424-238-6249
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