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 second quarter and six months ended April 28,
2019.
Key highlights include:
- Second quarter total Company net
revenue decreased 4.2% year-over-year, or 3.3% on a same-store
basis (excluding currency fluctuations and a business exited)
- Second quarter gross margin percentage
improved 20 basis points, the third consecutive quarter of
year-over-year margin growth
- Second quarter total Company net loss
was $5.2 million, an improvement of 32.8% when compared to a year
ago primarily driven by the increase in gross margin, as well as a
9.3% reduction in selling, administrative and other operating
costs
- Second quarter total Company Adjusted
EBITDA improved 58.9% when compared to a year ago
- For the six months ended April 28,
2019, total Company net revenue was $505.5 million, a decrease of
2.1%, year-over-year, or 1.4% on a same-store basis; Net loss for
the six-month period was $8.4 million, an improvement of 54.4%,
year-over-year
- Implemented further organizational
enhancements to reduce costs and improve operational efficiencies
and service delivery in the North American Staffing segment;
commenced decommissioning of the Company’s Customer Care Solutions
business unit
Commenting on Volt’s performance, Linda Perneau, President and
CEO, said, “Our performance in the second quarter reflects the
ongoing execution of the operating strategy designed to
significantly enhance our sales engine, improve margins and
generate profitable growth. Despite revenue headwinds primarily
from fluctuations in customer demand, the implementation of our
sales and delivery strategy helped to substantially mitigate the
top-line impact, while operational efficiencies and expense
reductions bolstered Volt’s profitability metrics. We are well on
our way on our transformation journey. I am grateful to our
employees around the globe, all of whom are focused on driving
top-line revenue, improving productivity and returning value to our
shareholders.”
Fiscal 2019 Second Quarter Results
Total net revenue for the fiscal 2019 second quarter was $252.1
million, compared to $263.2 million in the second quarter of fiscal
2018. On a same-store basis, net revenue decreased 3.3%
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 second quarter of fiscal 2019 was
14.4%, an improvement of 20 basis points year-over-year. The margin
improvement was driven by improved customer pricing and lower
payroll taxes, partially offset by higher workers compensation
expenses.
Selling, administrative and other operating costs in the second
quarter of fiscal 2019 decreased $4.0 million, or 9.3%, to $38.9
million from $42.9 million in the second 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 and facility expenses. SG&A as a percent of revenue
improved to 15.4% in the second quarter compared with 16.3% a year
ago.
Net loss was $5.2 million in the second quarter of fiscal 2019,
compared to $7.7 million in the second quarter of fiscal 2018.
Adjusted EBITDA, which is a Non-GAAP measure, was a loss of $1.5
million in the fiscal 2019 second quarter, compared to a loss of
$3.7 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.
Six Months Ended April 28, 2019 Financial Results
Total net revenue for the six months ended April 28, 2019 was
$505.5 million, down $11.1 million, or 2.1%, compared to total net
revenue of $516.6 million for the six months ended April 29, 2018.
On a same-store basis, net revenue declined 1.4% year-over-year
excluding net revenue contributed from a business exited during the
past year and the effect of currency fluctuations.
Net loss was $8.4 million for the six months ended April 28,
2019, an improvement of $10.0 million, or 54.4% compared to net
loss of $18.4 million in the same period of fiscal 2018. Adjusted
net loss from continuing operations, which is a Non-GAAP measure,
was $8.2 million for the six months ended April 28, 2019, compared
to an adjusted net loss of $19.6 million in the same period of
fiscal 2018. Adjusted EBITDA, which is a Non-GAAP measure, was a
loss of $2.6 million for the six months ended April 28, 2019, an
improvement of $10.2 million from a loss of $12.8 million in the
year ago period.
For a reconciliation of the GAAP and Non-GAAP financial results,
please see the tables at the end of this press release.
Business Developments
In the second quarter of fiscal 2019, the Company commenced
efforts to decommission its Customer Care Solutions business unit,
which is currently reported as a part of the Corporate and Other
category. This will allow the Company to focus its attention and
devote additional available resources to its core staffing
business.
Also, during the second quarter of fiscal 2019, the Company
changed leadership in its International Staffing segment, promoting
Ben Batten to Senior Vice President and Managing Director,
International. Mr. Batten was previously the Managing Director of
Volt Asia and has over sixteen years of staffing experience
abroad.
Subsequent Events
On June 4, 2019, the Company entered into an amendment with DZ
BANK AG Deutsche Zentral-Genossenschaftsbank. Under this Amendment,
receivables due from a specific customer will be excluded from
eligible receivables under the Company’s Financing Program for a
three-month period while the customer resolves internal processing
issues causing temporary payment delays. Volt anticipates a
resolution no later than the end of its fiscal third quarter, at
which time the receivables from this customer will be added back to
the securitization pool under the original terms of the
agreement.
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 third quarter of fiscal 2019, the Company currently
expects a consolidated same-store year-over-year net revenue
decline similar to the decline experienced in the second quarter of
fiscal 2019.
Conference Call and Webcast
A conference call and simultaneous webcast to discuss the fiscal
2019 second 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, June 5, 2019 at 7:30 p.m. Eastern Time through
Wednesday, June 19, 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 #13690992. 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. 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 third quarter of
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 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 or exited 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 or exited 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 Six Months Ended
April 28, 2019 January 27, 2019 April 29, 2018
April 28, 2019 April 29, 2018 Net
revenue $ 252,070 $ 253,436 $ 263,219 $ 505,506 $ 516,557 Cost
of services 215,813 215,737
225,918 431,550 443,247
Gross
margin 36,257 37,699 37,301 73,956
73,310 Selling, administrative and other operating
costs 38,939 39,810 42,916 78,749 89,854 Restructuring and
severance costs 724 59 104 783 622 Impairment charges 347
- 155 347
155
Operating loss (3,753 )
(2,170 ) (5,874 ) (5,923
) (17,321 ) Interest income (expense),
net (699 ) (746 ) (631 ) (1,445 ) (1,413 ) Foreign exchange gain
(loss), net (314 ) 213 (497 ) (101 ) 206 Other income (expense),
net (166 ) (239 ) (55 ) (405 )
(583 )
Loss before income taxes (4,932 )
(2,942 ) (7,057 ) (7,874
) (19,111 ) Income tax provision (benefit)
233 273 630 506
(730 )
Net loss $ (5,165
) $ (3,215 ) $ (7,687
) $ (8,380 ) $ (18,381
) Per share data: Basic: Net loss $
(0.24 ) $ (0.15 ) $ (0.37 ) $ (0.40 ) $ (0.87 ) Weighted average
number of shares 21,082 21,080 21,032 21,081 21,030
Diluted: Net loss $ (0.24 ) $ (0.15 ) $ (0.37 ) $ (0.40 ) $
(0.87 ) Weighted average number of shares 21,082 21,080 21,032
21,081 21,030
Segment data: Net
revenue: North American Staffing $ 208,871 $ 211,848 $ 218,090
$ 420,719 $ 424,325 International Staffing 28,809 26,266 31,904
55,075 61,483 North American MSP 9,579 8,217 6,339 17,796 14,819
Corporate and Other 5,431 7,846 7,817 13,277 18,064 Eliminations
(620 ) (741 ) (931 ) (1,361 )
(2,134 )
Net revenue $ 252,070 $
253,436 $ 263,219 $
505,506 $ 516,557
Operating income (loss): North American Staffing $ 2,544 $
3,887 $ 1,571 $ 6,431 $ 945 International Staffing 628 304 818 932
720 North American MSP 1,100 965 417 2,065 682 Corporate and Other
(8,025 ) (7,326 ) (8,680 ) (15,351 )
(19,668 )
Operating loss $ (3,753
) $ (2,170 ) $ (5,874
) $ (5,923 ) $ (17,321
) Work days 65 59 65
124 124 Condensed Consolidated Statements
of Cash Flows (in thousands)
Six Months ended April 28, 2019 April 29, 2018
Cash, cash equivalents and restricted cash beginning of
the period $ 36,544 $ 54,097
Cash used in all other operating activities (6,239 ) (14,314 )
Changes in operating assets and liabilities 15,697
14,792
Net cash provided by operating
activities 9,458 478
Purchases of property, equipment, and software (4,058 )
(1,298 ) Net cash (used in) provided by all other investing
activities (21 ) 164
Net cash used in
investing activities (4,079 )
(1,134 ) Net draw-down of borrowings 5,000 -
Debt issuance costs (177 ) (1,411 ) Net cash used in all other
financing activities (40 ) (60 )
Net cash provided
by (used in) financing activities 4,783
(1,471 ) Effect of exchange rate
changes on cash, cash equivalents and restricted cash
(249 ) (571 ) Net increase
(decrease) in cash, cash equivalents and restricted cash
9,913 (2,698 ) Cash,
cash equivalents and restricted cash end of the period $
46,457 $ 51,399 Cash
paid during the period: Interest $ 1,560 $ 1,482 Income taxes $
216 $ 1,132
Reconciliation of cash, cash equivalents and
restricted cash end of the period: Current Assets: Cash
and cash equivalents $ 39,689 $ 34,177 Restricted cash included in
Restricted cash and short term investments 6,768
17,222
Cash, cash equivalents and restricted cash,
at end of period $ 46,457 $
51,399 Condensed Consolidated Balance
Sheets (in thousands, except
share amounts) April 28, 2019 October 28, 2018
ASSETS CURRENT ASSETS: Cash and cash equivalents $
39,689 $ 24,763 Restricted cash and short-term investments 9,925
14,844 Trade accounts receivable, net of allowances of $104 and
$759, respectively 139,213 157,445 Other current assets
5,659 7,444
TOTAL CURRENT ASSETS
194,486 204,496 Other assets, excluding current
portion 7,779 7,808 Property, equipment and software, net
24,880 24,392
TOTAL ASSETS $
227,145 $ 236,696
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES: Accrued compensation $ 23,403 $ 27,120 Accounts
payable 26,183 33,498 Accrued taxes other than income taxes 18,316
15,275 Accrued insurance and other 28,217 23,335 Income taxes
payable 1,404 1,097
TOTAL CURRENT
LIABILITIES 97,523 100,325 Accrued insurance and
other, excluding current portion 10,816 13,478 Deferred gain on
sale of real estate, excluding current portion 21,244 22,216 Income
taxes payable, excluding current portion 608 600 Deferred income
taxes 509 510 Long-term debt 54,169 49,068
TOTAL LIABILITIES 184,869 186,197
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 -
21,211,828 and 21,179,068 shares, respectively 2,374 2,374 Paid-in
capital 77,931 79,057 (Accumulated deficit) retained earnings (656
) 9,738 Accumulated other comprehensive loss (7,091 ) (7,070 )
Treasury stock, at cost; 2,526,175 and 2,558,935 shares,
respectively (30,282 ) (33,600 )
TOTAL
STOCKHOLDERS' EQUITY 42,276
50,499 TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 227,145 $ 236,696
GAAP to Non-GAAP Reconciliations (in
thousands) Three Months
Ended April 28, 2019 April 29, 2018
Reconciliation of GAAP net loss to Non-GAAP net loss: GAAP
net loss $ (5,165 ) $ (7,687 ) Selling, administrative and other
operating costs (486 ) (a) (486 ) (a) Restructuring and severance
costs 724 104 Impairment charge 347 (b) 155
(c) Non-GAAP net loss $ (4,580 ) $ (7,914 )
Three
Months Ended April 28, 2019 April 29, 2018
Reconciliation of GAAP net loss to Adjusted EBITDA: GAAP net
loss $ (5,165 ) $ (7,687 ) Selling, administrative and other
operating costs (486 )
(a)
(486 ) (a) Restructuring and severance costs 724 104 Impairment
charge 347 (b) 155 (c) Depreciation and amortization 1,755 1,874
Share-based compensation (95 ) 557 Total other (income) expense,
net 1,179 1,183 Provision for income taxes 233
630 Adjusted EBITDA $ (1,508 ) $ (3,670 )
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 exit of
customer care solutions business. (c) Relates to previously
purchased software module that is no longer in use.
Six Months Ended April 28, 2019
April 29, 2018 Reconciliation of GAAP net loss to
Non-GAAP net loss: GAAP net loss $ (8,380 ) $ (18,381 )
Selling, administrative and other operating costs (972 ) (a) (972 )
(a) Restructuring and severance costs 783 622 Impairment charge 347
(b) 155 (c) Income tax benefit - (1,052 ) (d)
Non-GAAP net loss $ (8,222 ) $ (19,628 )
Six Months
Ended April 28, 2019 April 29, 2018
Reconciliation of GAAP net loss to Adjusted EBITDA: GAAP net
loss $ (8,380 ) $ (18,381 ) Selling, administrative and other
operating costs (972 ) (a) (972 ) (a) Restructuring and severance
costs 783 622 Impairment charge 347 (b) 155 (c) Depreciation and
amortization 3,358 3,726 Share-based compensation (208 ) 992 Total
other (income) expense, net 1,951 1,790 Provision (benefit) for
income taxes 506 (730 ) Adjusted EBITDA $
(2,615 ) $ (12,798 )
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 exit of customer care solutions business. (c)
Relates to previously purchased software module that is no longer
in use. (d) 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 GlassenAddo Investor
Relationslglassen@addoir.com424-238-6249
Volt Information Sciences (AMEX:VISI)
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