Exhibit 99.1

 

 

Volt Information Sciences, Inc. Reports Second Quarter Fiscal 2020 Financial Results

 

 

New York, NY, June 16, 2020 -- (BUSINESS WIRE) -- Volt Information Sciences, Inc. (“Volt” or the “Company”) (NYSE-AMERICAN: VOLT) a global provider of staffing services, today announced financial results for the second fiscal quarter ended May 3, 2020.

Second Quarter Highlighted Results

·Revenue was $207.3 million, compared to $252.1 million in the prior-year quarter; Adjusted Revenue* decreased 14.1%.
·Gross margin was 15.6%, a 120-basis point improvement versus the comparable quarter in fiscal 2019.
·GAAP operating loss was $4.4 million, compared to $3.8 million in the prior-year quarter; Adjusted Operating Loss* increased by $1.5 million year over year.
·Adjusted EBITDA* was a loss of $1.4 million, a $0.1 million improvement compared to the prior-year quarter.

*Adjusted Revenue, Adjusted Operating Loss and Adjusted EBITDA are Non-GAAP measures described and defined below.

“The second quarter of fiscal 2020 has certainly been an unprecedented one for our organization. The magnitude of the COVID-19 pandemic around the world triggering a rapid shutdown of the global economy is unlike anything we have seen in Volt’s 70 year history.” said Linda Perneau, President and Chief Executive Officer. “Our experienced management team was instrumental in taking swift actions in response to this health and economic crisis, resulting in substantive SG&A reductions and improvement in both gross margin and Adjusted EBITDA. We remain well poised as the economic recovery progresses, and our focus will be on helping our clients and field employees return to work safely.”

 

Second Quarter Results

North American Staffing revenue for the quarter was $173.4 million, as compared to $208.9 million for the second quarter of fiscal 2019. Adjusted Revenue, which is a Non-GAAP measure, for this segment decreased approximately 14.9 percent year over year. The decrease is primarily attributable to client facility closures and reduced demand associated with COVID-19, partially offset by business wins, including from new opportunities created to meet COVID-19 specific demand with new and existing clients.

   

 

International Staffing revenue was $24.3 million, compared to $28.8 million in the second quarter of fiscal 2019. Adjusted Revenue, for this segment decreased 13.2 percent year over year. The decrease is primarily due to reduced work orders in the U.K.

North American MSP revenue was $9.7 million, as compared to $9.6 million for the second quarter of fiscal 2019. Expansion of services within existing clients and the incremental revenue associated with a shift of certain clients from the North American Staffing segment was mostly offset by factors related to COVID-19.

Gross margin for the quarter was 15.6 percent of revenue, compared to 14.4 percent of revenue in the second quarter of fiscal 2019. The change is attributable to a larger credit related to our workers’ compensation versus the prior year, and a decrease in payroll tax rates and other direct costs.

SG&A expense for the second quarter was $36.2 million, a $2.7 million reduction from the prior-year quarter. The decrease is primarily due to substantial cost reductions taken throughout the year and in response to the COVID-19 pandemic.

Adjusted EBITDA, which is a Non-GAAP measure, for the second quarter of fiscal 2020 was a loss of $1.4 million, as compared to a loss of $1.5 million in the prior-year quarter.

 

Business Outlook

Due to the prolonged uncertainty surrounding the timing of reopening specific geographies, the Company is not providing Adjusted Revenue guidance for the third quarter of fiscal 2020.

 

Earnings Conference Call and Webcast

Volt Information Sciences, Inc. will conduct a conference call on Tuesday, June 16, 2020, at 5:00 PM ET, to review the financial results for the second fiscal quarter ended May 3, 2020. Investors interested in participating on the live call can dial 1-877-407-9039 within the U.S. or 1-201-689-8470 from abroad, and reference conference ID 13703899. The conference call, which may include forward-looking statements, is also being webcast and will be available via the investor relations section of the Company’s website at www.volt.com. A replay of the webcast will be archived on Volt’s investor relations website for 90 days.

 

   

 

Forward-Looking Statements

This press release contains forward-looking statements that are subject to a number of known and unknown risks. Such risks include, among others, general economic, competitive and other business conditions (including the potential impact of the strain of coronavirus known as COVID-19 on our operations as well as the operations of our customers), the degree and timing of customer utilization and renewal rate for 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 the “Risk Factors” and other sections of the Company reports filed with the Securities and Exchange Commission (SEC). You are cautioned not to place undue reliance on such statements and to consult our SEC filings for additional risks and uncertainties that may apply to our business and the ownership of our securities. Our forward-looking statements are presented as of the date made, and we disclaim any duty to update such statements unless required by law to do so.

Note Regarding the Use of Non-GAAP Financial Measures

The Company has provided certain Non-GAAP financial information, including Adjusted Revenue, Adjusted Operating Income (Loss) and Adjusted EBITDA, which include adjustments to our GAAP financial results. 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, including on a constant currency basis, eliminating the impact of businesses sold or exited, the extra operating week in the fourth quarter of fiscal 2019 and special items 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 which the Company does not consider indicative of the current and future period performance and are more fully disclosed in the tables.

   

 

 

Adjusted Revenue is defined as revenue excluding businesses exited, the effect of foreign currency translation and the extra operating week in the fourth quarter of fiscal 2019. The Company has also migrated certain clients from a traditional staffing model to a managed service model, resulting in the Company now managing a greater percentage of such clients’ business under its North American MSP.  This shift provides increased opportunity for the Company with the relevant clients. However, due to the structure of MSP arrangements, revenue is recognized on a net basis, thereby reducing revenues on a comparative period basis. Beginning in the first quarter of 2020, the Company includes such delivery model shifts within the Adjusted Revenue measurement, as it provides a more comparable basis for evaluating performance results from period to period and reflects the method used by management to evaluate performance. A reconciliation is shown in the tables at the end of this press release. 

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.

Adjusted Operating Income (Loss) is defined as operating income (loss) excluding businesses exited and the extra operating week in the fourth quarter of fiscal 2019.

The Company believes the presentation of Adjusted Operating Income (Loss) is relevant and useful for investors because it provides a more comparable basis to evaluate performance results and analyze trends from period to period in a manner similar to the method used by management.

The Company’s computation of Adjusted Revenue, Adjusted EBITDA and Adjusted Operating Income (Loss) 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.

   

 

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

 

Investor Relations Contacts:
Volt Information Sciences, Inc.
voltinvest@volt.com

Joe Noyons
Three Part Advisors
jnoyons@threepa.com

817-778-8424

 

Financial Tables Follow

 

 

 

   

 

 

Results of Operations
(in thousands, except per share data)

 

   Three Months Ended  Six Months Ended
   May 3, 2020  February 2, 2020  April 28, 2019  May 3, 2020  April 28, 2019
                
Net revenue  $207,275   $217,766   $252,070   $425,041   $505,506 
Cost of services   175,038    186,339    215,813    361,377    431,550 
Gross margin   32,237    31,427    36,257    63,664    73,956 
                          
Selling, administrative and other operating costs   36,189    39,497    38,939    75,686    78,749 
Restructuring and severance costs   411    1,246    724    1,657    783 
Impairment charges   —      11    347    11    347 
Operating loss   (4,363)   (9,327)   (3,753)   (13,690)   (5,923)
                          
Interest income (expense), net   (621)   (700)   (699)   (1,321)   (1,445)
Foreign exchange gain (loss), net   (266)   (328)   (314)   (594)   (101)
Other income (expense), net   (152)   (258)   (166)   (410)   (405)
Loss before income taxes   (5,402)   (10,613)   (4,932)   (16,015)   (7,874)
Income tax provision   23    195    233    218    506 
Net loss  $(5,425)  $(10,808)  $(5,165)  $(16,233)  $(8,380)
                          
Per share data:                         
Basic:                         
Net loss  $(0.25)  $(0.50)  $(0.24)  $(0.76)  $(0.40)
Weighted average number of shares   21,416    21,416    21,082    21,416    21,081 
                          
Diluted:                         
Net loss  $(0.25)  $(0.50)  $(0.24)  $(0.76)  $(0.40)
Weighted average number of shares   21,416    21,416    21,082    21,416    21,081 
                          
Segment data:                         
                          
Net revenue:                         
North American Staffing  $173,386   $182,395   $208,871   $355,781   $420,719 
International Staffing   24,303    26,223    28,809    50,526    55,075 
North American MSP   9,745    9,369    9,579    19,114    17,796 
Corporate and Other   187    203    5,431    390    13,277 
Eliminations   (346)   (424)   (620)   (770)   (1,361)
Net revenue  $207,275   $217,766   $252,070   $425,041   $505,506 
                          
Operating income (loss):                         
North American Staffing  $2,576   $99   $2,544   $2,675   $6,431 
International Staffing   196    374    628    570    932 
North American MSP   491    754    1,100    1,245    2,065 
Corporate and Other   (7,626)   (10,554)   (8,025)   (18,180)   (15,351)
Operating loss  $(4,363)  $(9,327)  $(3,753)  $(13,690)  $(5,923)
                          
Work days   65    59    65    124    124 

 

 

   

 

 

Condensed Consolidated Statements of Cash Flows      
(in thousands)      
   Six Months ended
   May 3, 2020  April 28, 2019
       
Cash, cash equivalents and restricted cash beginning of the period  $38,444   $36,544 
           
Cash used in all other operating activities   (7,161)   (6,239)
Changes in operating assets and liabilities   10,071    15,697 
Net cash provided by operating activities   2,910    9,458 
           
Purchases of property, equipment, and software   (3,092)   (4,058)
Net cash provided by (used in) all other investing activities   615    (21)
Net cash used in investing activities   (2,477)   (4,079)
           
Net draw-down of borrowings   5,000    5,000 
Debt issuance costs   (243)   (177)
Net cash used in all other financing activities   (6)   (40)
Net cash provided by financing activities   4,751    4,783 
           
Effect of exchange rate changes on cash, cash equivalents and restricted cash   (521)   (249)
           
Net increase in cash, cash equivalents and restricted cash   4,663    9,913 
           
Cash, cash equivalents and restricted cash end of the period  $43,107   $46,457 
           
Cash paid during the period:          
Interest  $1,382   $1,560 
Income taxes  $258   $216 
           
Reconciliation of cash, cash equivalents and restricted cash end of the period:          
Current Assets:          
Cash and cash equivalents  $26,223   $39,689 
Restricted cash included in Restricted cash and short term investments   16,884    6,768 
Cash, cash equivalents and restricted cash, at end of period  $43,107   $46,457 

 

   

 

Condensed Consolidated Balance Sheets      
(in thousands, except share amounts)      
   May 3, 2020  November 3, 2019
ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents  $26,223   $28,672 
Restricted cash and short-term investments   19,445    12,794 
Trade accounts receivable, net of allowances of $150 and $117, respectively   116,373    135,950 
Other current assets   8,480    7,252 
TOTAL CURRENT ASSETS   170,521    184,668 
Property, equipment and software, net   24,792    25,890 
Right of use assets - operating leases   43,495    —   
Other assets, excluding current portion   6,538    7,446 
TOTAL ASSETS  $245,346   $218,004 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
CURRENT LIABILITIES:          
Accrued compensation  $16,644   $21,507 
Accounts payable   29,668    36,341 
Accrued taxes other than income taxes   13,360    11,244 
Accrued insurance and other   21,008    24,654 
Operating lease liabilities   7,807    —   
Income taxes payable   1,651    1,570 
TOTAL CURRENT LIABILITIES   90,138    95,316 
Accrued insurance and other, excluding current portion   12,733    12,029 
Operating lease liabilities, excluding current portion   40,312    —   
Deferred gain on sale of real estate, excluding current portion   —      20,270 
Income taxes payable, excluding current portion   289    289 
Deferred income taxes   12    17 
Long-term debt   58,916    53,894 
TOTAL LIABILITIES   202,400    181,815 
           
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 - 21,408,659 and 21,367,821 shares, respectively   2,374    2,374 
Paid-in capital   78,593    77,688 
(Accumulated deficit) retained earnings   (5,673)   (10,917)
Accumulated other comprehensive loss   (7,039)   (6,801)
Treasury stock, at cost; 2,329,344 and 2,370,182 shares, respectively   (25,309)   (26,155)
TOTAL STOCKHOLDERS' EQUITY   42,946    36,189 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $245,346   $218,004 

 

   

 

GAAP to Non-GAAP Reconciliations

 

(in thousands)

 

   Three Months Ended
   May 3, 2020  April 28, 2019
Reconciliation of GAAP net loss to Non-GAAP net loss:      
GAAP net loss  $(5,425)  $(5,165)
  Selling, administrative and other operating costs   —      (486)(b)
  Restructuring and severance costs   411(a)   724   (c)
  Impairment Costs   —      347  (d)
Non-GAAP net loss  $(5,014)  $(4,580)
           
    Three Months Ended
    May 3, 2020   April 28, 2019
Reconciliation of GAAP net loss to Adjusted EBITDA:          
GAAP net loss  $(5,425)  $(5,165)
  Selling, administrative and other operating costs   —      (486)(b)
  Restructuring and severance costs   411(a)   724  (c)
  Impairment Costs   —      347  (d)
  Depreciation and amortization   2,027    1,755 
  Share-based compensation expense   508    (95)
  Total other (income) expense, net   1,039    1,179 
  Provision for income taxes   23    233 
Adjusted EBITDA  $(1,417)  $(1,508)

 

Special item adjustments consist of the following:

(a)

Relates to actions taken by the Company as part of its continued efforts to reduce costs and to offset COVID-19 related revenue losses. 

   
(b)

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.

   
(c)

Relates to exit of customer care solutions business and continued efforts to reduce costs.

   
(d)

Relates to exit of customer care solutions business.

   

 

GAAP to Non-GAAP Reconciliations

 

(in thousands)

 

   Six Months Ended
   May 3, 2020  April 28, 2019
Reconciliation of GAAP net loss to Non-GAAP net loss:      
GAAP net loss  $(16,233)  $(8,380)
  Selling, administrative and other operating costs   —      (972)(b)
  Restructuring and severance costs   1,657(a)   783  (c)
  Impairment Costs   11    347  (d)
Non-GAAP net loss  $(14,565)  $(8,222)
           
    Six Months Ended
   May 3, 2020  April 28, 2019
Reconciliation of GAAP net loss to Adjusted EBITDA:          
GAAP net loss  $(16,233)  $(8,380)
  Selling, administrative and other operating costs   —      (972)(b)
  Restructuring and severance costs   1,657(a)   783  (c)
  Impairment Costs   11    347  (d)
  Depreciation and amortization   4,000    3,358 
  Share-based compensation expense   1,019    (208)
  Total other (income) expense, net   2,325    1,951 
  Provision for income taxes   218    506 
Adjusted EBITDA  $(7,003)  $(2,615)

 

Special item adjustments consist of the following:

(a)

Primarily relates to the strategic initiative costs to offshore a significant number of identified roles to our staffing operations in India and continued efforts to reduce costs and to offset COVID-19 related revenue losses.

   
(b)

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.

   
(c)

Relates to exit of customer care solutions business and continued efforts to reduce costs.

   
(d)

Relates to exit of customer care solutions business.

   

 

GAAP to Non-GAAP Reconciliations

(in thousands)

 

   Three Months Ended
May 3, 2020
  Three Months Ended April 28, 2019
   As Reported  As Reported  FX impact  Business
 Exited
  MSP Delivery
Model Shift
  Adjusted
Revenue                  
North American Staffing  $173,386   $208,871   $—     $(266)  $(4,825)  $203,780 
International Staffing   24,303    28,809    (826)   —      —      27,983 
North American MSP   9,745    9,579    —      —      122    9,701 
Corporate and Other   187    5,431    —      (5,257)   —      174 
Eliminations   (346)   (620)   —      266    —      (354)
Total Revenue  $207,275   $252,070   $(826)  $(5,257)  $(4,703)  $241,284 
% change                            -14.1%
                               
                               
    Six Months Ended
May 3, 2020
   Six Months Ended April 28, 2019
   As Reported  As Reported  FX impact  Business
 Exited
  MSP Delivery
Model Shift
  Adjusted
Revenue                              
North American Staffing  $355,781   $420,719   $—     $(616)  $(7,388)  $412,715 
International Staffing   50,526    55,075    (932)   —      —      54,143 
North American MSP   19,114    17,796    —      —      188    17,984 
Corporate and Other   390    13,277    —      (12,931)   —      346 
Eliminations   (770)   (1,361)   —      616    —      (745)
Total Revenue  $425,041   $505,506   $(932)  $(12,931)  $(7,200)  $484,443 
% change                            -12.3%

 

   

GAAP to Non-GAAP Reconciliations

(in thousands)

 

   Three Months Ended May 3, 2020  Three Months Ended April 28, 2019
   As Reported  Business Exited  Adjusted  As Reported  Business Exited  Adjusted
Operating Income (Loss)                              
North American Staffing  $2,576   $—     $2,576   $2,544   $—     $2,544 
International Staffing   196    —      196    628    1    629 
North American MSP   491    —      491    1,100    —      1,100 
Corporate and Other   (7,626)   (45)   (7,671)   (8,025)   801    (7,224)
Total Operating Loss  $(4,363)  $(45)  $(4,408)  $(3,753)  $802   $(2,951)
                               
                               
   Six Months Ended May 3, 2020    Six Months Ended April 28, 2019 
   As Reported  Business Exited  Adjusted  As Reported  Business Exited  Adjusted
Operating Income (Loss)                              
North American Staffing  $2,675   $—     $2,675   $6,431   $—     $6,431 
International Staffing   570    —      570    932    4    936 
North American MSP   1,245    —      1,245    2,065    —      2,065 
Corporate and Other   (18,180)   (13)   (18,193)   (15,351)   135    (15,216)
Total Operating Loss  $(13,690)  $(13)  $(13,703)  $(5,923)  $139   $(5,784)

 

   

GAAP to Non-GAAP Reconciliations

(in thousands)

 

   Three Months Ended May 3, 2020  Three Months Ended April 28, 2019
   As Reported  Business Exited  Adjusted  As Reported  Business Exited  Adjusted
Operating Loss                              
Gross Margin  $32,237   $—     $32,237   $36,257   $136   $36,393 
Selling, administrative and other operating costs   36,189    —      36,189    38,939    (66)   38,873 
Restructuring and severance costs   411    45    456    724    (253)   471 
Impairment charges   —      —      —      347    (347)   —   
Total Operating Loss  $(4,363)  $(45)  $(4,408)  $(3,753)  $802   $(2,951)
                               
                               
   Six Months Ended May 3, 2020   Six Months Ended April 28, 2019 
   As Reported  Business Exited  Adjusted  As Reported  Business Exited  Adjusted
Operating Loss                              
Gross Margin  $63,664   $—     $63,664   $73,956   $(869)  $73,087 
Selling, administrative and other operating costs   75,686    —      75,686    78,749    (399)   78,350 
Restructuring and severance costs   1,657    13    1,670    783    (262)   521 
Impairment charges   11    —      11    347    (347)   —   
Total Operating Loss  $(13,690)  $(13)  $(13,703)  $(5,923)  $139   $(5,784)