NEW YORK, NY–(Marketwired – January 11, 2017) – Staffing 360 Solutions, Inc. (NASDAQ: STAF), a public company executing a global buy-and-build strategy through the acquisition of staffing organizations in the US and the UK, today released its financial results for its fiscal quarter ended November 30, 2016.
“We have announced another quarter with growth in almost all categories,” stated Brendan Flood, Executive Chairman of Staffing 360 Solutions. “We saw revenue, gross profit, net loss attributable to common stock and Adjusted EBITDA all improve on a year-over-year basis. In fact, our revenue grew to $47.1 million in the second quarter of 2016, a 14% improvement compared to the same period last year. Although we are engaged in an M&A strategy, this growth is not just a result of acquisitions, as we’re seeing underlying organic growth of 7% for the quarter and 10% for the six-month period. This growth helps support the mission of improving our balance sheet, which is one of our core objectives in 2017.”
Summary of the Fiscal Second Quarter Ended November 30, 2016
- Revenue increased 14.0% to $47.1 million, compared to $41.4 million in the fiscal quarter ended November 30, 2015;
- Gross profit increased 8.4% to $8.1 million, compared to $7.5 million in the fiscal quarter ended November 30, 2015;
- Net loss attributable to common stock decreased 57.0% to $1.5 million*, compared to $3.4 million* in the fiscal quarter ended November 30, 2015;
- Adjusted EBITDA increased 10.1% to $1.4 million*, compared to Adjusted EBITDA of $1.3 million* in the fiscal quarter ended November 30, 2015.
Summary of the Six Months Ended November 30, 2016
- Revenue increased 22.9% to $94.9 million, compared to $77.2 million in the six months ended November 30, 2015;
- Gross profit increased 20.3% to $16.6 million, compared to $13.8 million in the six months ended November 30, 2015;
- Net loss attributable to common stock decreased 45.7% to $2.8 million*, compared to $5.2 million* in the six months ended November 30, 2015;
- Adjusted EBITDA increased 67.3% to $3.2 million*, compared to Adjusted EBITDA of $1.9 million* in the six months ended November 30, 2015.
* A table has been included in this press release reconciling net loss attributable to common stock to Adjusted EBITDA.
“We continue to make progress on the bottom line as well,” Mr. Flood continued. “Our Adjusted EBITDA of $1.4 million for the quarter, has resulted in the continued improvement of our trailing twelve month Adjusted EBITDA — at $5.4 million ending November 2016. This exceeds our prior year results for the same period by over 120%. In addition to Adjusted EBITDA, we are highly focused on strengthening our balance sheet, and although it was a subsequent event, we are pleased with the successful refinancing of over $2.7 million of debt and extending its maturity 21 months — a major win for our organization that was recently announced last week. There is still more work to be done, but we are making considerable progress and we are positioning ourselves for the next phase of our journey.”
Analysis of Financial Results
As a result of the Company’s acquisition of The JM Group and organic growth, revenues increased to $47.1 million in the fiscal quarter ended November 30, 2016, compared to $41.4 million for the same period in 2015. Gross profit increased to over $8.1 million, compared to $7.5 million for the same period in 2015.
The Company’s net loss attributable to common stock for the quarter ended November 30, 2016 was $1.5 million, compared to a net loss attributable to common stock of $3.4 million for the same period in 2015. The net loss attributable to common stock is primarily due to non-cash accounting charges, as well as professional, legal, capital raising and other non-recurring expenses.
Adjusted EBITDA for the quarter ended November 30, 2016 was $1.4 million, compared to $1.3 million for the same period of 2015. This growth is attributable to earnings from acquisitions, as well as flow through of revenue arising from organic growth.
“In addition to the increases of revenue and Adjusted EBITDA, we are leveraging our existing support functions and continuing to improve our balance sheet as well,” stated David Faiman, Chief Financial Officer. “In Q2 2017, our working capital deficiency improved by approximately $2 million and stockholder’s equity increased from $7.5 million to $8.4 million in the current quarter. We have also improved our debt levels over the past year. For the November quarter of 2015 we had a 7.1x leverage ratio. We now have $5.4 million of TTM Adjusted EBITDA compared to $10.2 million of net debt, resulting in a 1.9x leverage ratio, which is a major improvement.”
Other Highlights of the Fiscal Second Quarter and Subsequent Events
- Announced on January 5, 2017, the Company successfully refinanced over $2.7 million of debt with a senior lender and extended the maturity date 21 months, to October 1, 2018. The terms of the amended debt include a $3.00 conversion price, issuance of 600,000 shares, an increase of the total maturity value to $3.1 million, elimination of the 20% prepayment penalty, no payment of principal until maturity, and no interest payable until October 1, 2017, after which payments shall be made on a quarterly basis;
- The Company is also pursuing capital raises, including the 506(c) announced in November 2016, as well as other opportunities through the capital markets and private investments.
“Staffing 360 Solutions continues to grow every year and every quarter,” said Matt Briand, President and CEO. “Even taking out the growth from acquisitions, our organic growth of 7% has continued to drive our results. Complementing our sales growth, we have continued to improve the efficiency of our operations, and dropped our operating expenses from 22% of revenue in the second quarter last year to 17% in the most recent quarter. As we realize more economies of scale and continue to grow our revenue, we expect our overall business to see further improvements in 2017.”
Earnings Conference Call
Staffing 360 Solutions will host its earnings conference call on Wednesday, January 11, 2017 at 9:00 am Eastern to discuss its financial results for the fiscal quarter ended November 30, 2016. The conference call will include a Q&A session where investors will have the opportunity to ask questions of management.
The teleconference can be accessed by dialing 877.407.0778 within the United States, 800.756.3429 within the UK, or 201.689.8565 internationally. Please dial in 10 minutes prior to the beginning of the call. There will be a playback of the teleconference available until February 11, 2017. To listen to the playback, dial 877.481.4010 within the United States or 919.882.2331 internationally and use replay ID number: 10198.
The conference call will be simultaneously webcast and available at:
About Control Solutions International, A Division of Staffing 360 Solutions:
For over 25 years, Control Solutions has provided Internal Audit partnering services to the governmental, public and private sectors. Our firm has helped thousands of organizations maximize the effectiveness of their internal audit and risk management objectives year after year. We provide a full suite of robust Information Technology Audit and Risk Management Services which encompass practice subject matter experts and highly skilled support staff proficient in executing reviews of General Controls, Information Security, Applications, IT Infrastructure, Governance, Pre/Post Implementation System Reviews, Data Analytics Automation, Data Mining, Disaster/Business Continuity Services, Information Technology Risk Assessments, and highly sophisticated Computer Forensics/E Discovery Services.