Exhibit 99.1

 

Volt Information Sciences, Inc. Reports

Third Quarter Fiscal 2020 Financial Results

 

 

Orange, CA, September 10, 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 third fiscal quarter ended August 2, 2020.

Third Quarter Highlighted Results

·Revenue was $185.9 million, compared to $233.2 million in the prior-year quarter; Adjusted Revenue* decreased 18.4%.
·Gross margin was 16.1%, an 80-basis point improvement compared to the prior-year quarter.
·GAAP operating loss was $4.2 million, compared to $4.8 million in the prior-year quarter; Excluding restructuring and impairment charges, operating loss would have been $1.3 million compared to $2.7 million in the prior-year quarter.
·Adjusted EBITDA* was $1.0 million, a $2.2 million improvement compared to the prior-year quarter.

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

“I remain incredibly proud of our Volt colleagues, all of whom continue to confidently navigate the prolonged economic and health uncertainty.” said Linda Perneau, President and Chief Executive Officer. “Their efforts allowed us to safely return thousands of employees back to work, enabled multiple clients to resume full operations, and secured new business wins, partially offsetting pandemic related declines. Throughout the third quarter we posted month-over-month improvements in Adjusted Revenue and gross margin. We reduced SG&A expenses and posted positive Adjusted EBITDA of $1.0 million for the quarter. We believe these trends will continue in the fourth quarter as we remain focused on our growth and profitability initiatives.”

Third Quarter Results

North American Staffing revenue for the quarter was $154.7 million, compared to $193.6 million in the third quarter of fiscal 2019. Adjusted Revenue, which is a Non-GAAP measure, for this segment decreased approximately 18.6 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 with new and existing clients.

International Staffing revenue was $21.7 million, compared to $28.7 million in the third quarter of fiscal 2019. Adjusted Revenue, for this segment decreased 23.9 percent year over year. The decrease is primarily due to reduced work orders in the U.K.

   

 

 

North American MSP revenue was $9.4 million, compared to $9.6 million in the third quarter of fiscal 2019. The decrease is primarily attributable to a decline in managed service programs, partially offset by increased payroll revenue.

Gross margin for the quarter was 16.1 percent of revenue, compared to 15.3 percent of revenue in the third quarter of fiscal 2019. The change is attributable to a credit related to our workers’ compensation versus the prior year, and a decrease in payroll tax rates.

SG&A expense for the third quarter was $31.2 million, a $7.2 million reduction from the prior-year quarter. The decrease is primarily due to substantial cost reductions taken throughout the year and the impact of working remotely as well as COVID-19 restrictions on travel.

Volt incurred impairment and restructuring charges of $2.9 million in the third quarter as a part of its ongoing real estate rationalization and cost savings initiatives. These charges were primarily the result of consolidating and exiting certain leased office locations throughout North America based on where Volt can be fully operational and successfully support our clients and business operations remotely.

Adjusted EBITDA, which is a Non-GAAP measure, for the third quarter of fiscal 2020 was $1.0 million, as compared to a loss of $1.2 million in the prior-year quarter.

 

Business Outlook

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

 

Earnings Conference Call and Webcast

Volt Information Sciences, Inc. will conduct a conference call on Thursday, September 10, 2020, at 5:00 PM ET, to review the financial results for the third fiscal quarter ended August 2, 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 13709427. 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  Nine Months Ended
   August 2, 2020  May 3, 2020  July 28, 2019  August 2, 2020  July 28, 2019
                
Net revenue  $185,941   $207,275   $233,176   $610,982   $738,682 
Cost of services   155,983    175,038    197,528    517,360    629,078 
Gross margin   29,958    32,237    35,648    93,622    109,604 
                          
Selling, administrative and other operating costs   31,245    36,189    38,395    106,931    117,144 
Restructuring and severance costs   546    411    2,017    2,203    2,800 
Impairment charges   2,384    —      79    2,395    426 
Operating loss   (4,217)   (4,363)   (4,843)   (17,907)   (10,766)
                          
Interest income (expense), net   (467)   (621)   (714)   (1,788)   (2,159)
Foreign exchange gain (loss), net   571    (266)   (151)   (23)   (252)
Other income (expense), net   (168)   (152)   (184)   (578)   (589)
Loss before income taxes   (4,281)   (5,402)   (5,892)   (20,296)   (13,766)
Income tax provision   556    23    165    774    671 
Net loss  $(4,837)  $(5,425)  $(6,057)  $(21,070)  $(14,437)
                          
Per share data:                         
Basic:                         
Net loss  $(0.22)  $(0.25)  $(0.29)  $(0.98)  $(0.68)
Weighted average number of shares   21,589    21,416    21,157    21,474    21,106 
                          
Diluted:                         
Net loss  $(0.22)  $(0.25)  $(0.29)  $(0.98)  $(0.68)
Weighted average number of shares   21,589    21,416    21,157    21,474    21,106 
                          
Segment data:                         
                          
Net revenue:                         
North American Staffing  $154,711   $173,386   $193,641   $510,492   $614,360 
International Staffing   21,749    24,303    28,728    72,275    83,803 
North American MSP   9,436    9,745    9,555    28,550    27,351 
Corporate and Other   149    187    1,856    539    15,133 
Eliminations   (104)   (346)   (604)   (874)   (1,965)
Net revenue  $185,941   $207,275   $233,176   $610,982   $738,682 
                          
Operating income (loss):                         
North American Staffing  $2,691   $2,576   $4,365   $5,366   $10,796 
International Staffing   551    196    342    1,121    1,274 
North American MSP   944    491    1,120    2,189    3,185 
Corporate and Other   (8,403)   (7,626)   (10,670)   (26,583)   (26,021)
Operating loss  $(4,217)  $(4,363)  $(4,843)  $(17,907)  $(10,766)
                          
Work days   63    65    63    187    187 

 

   

 

Condensed Consolidated Statements of Cash Flows
(in thousands)
 
   Nine Months ended
   August 2, 2020  July 28, 2019
       
Cash, cash equivalents and restricted cash beginning of the period  $38,444   $36,544 
           
Cash used in all other operating activities   (4,821)   (10,561)
Changes in operating assets and liabilities   17,903    20,722 
Net cash provided by operating activities   13,082    10,161 
           
Purchases of property, equipment, and software   (3,925)   (6,305)
Net cash provided by (used in) all other investing activities   589    78 
Net cash used in investing activities   (3,336)   (6,227)
           
Net draw-down of borrowings   5,000    5,000 
Debt issuance costs   (331)   (621)
Net cash used in all other financing activities   (74)   (316)
Net cash provided by financing activities   4,595    4,063 
           
Effect of exchange rate changes on cash, cash equivalents and restricted cash   (463)   (633)
           
Net increase in cash, cash equivalents and restricted cash   13,878    7,364 
           
Cash, cash equivalents and restricted cash end of the period  $52,322   $43,908 
           
Cash paid during the period:          
Interest  $1,858   $2,367 
Income taxes  $1,445   $1,174 
           
Reconciliation of cash, cash equivalents and restricted cash end of the period:          
Current Assets:          
Cash and cash equivalents  $30,928   $36,031 
Restricted cash included in Restricted cash and short term investments   21,394    7,877 
Cash, cash equivalents and restricted cash, at end of period  $52,322   $43,908 

 

   

 

Condensed Consolidated Balance Sheets      
(in thousands, except share amounts)      
   August 2, 2020  November 3, 2019
ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents  $30,928   $28,672 
Restricted cash and short-term investments   24,285    12,794 
Trade accounts receivable, net of allowances of $235 and $117, respectively   108,395    135,950 
Other current assets   7,067    7,252 
TOTAL CURRENT ASSETS   170,675    184,668 
Property, equipment and software, net   23,706    25,890 
Right of use assets - operating leases   40,146    —   
Other assets, excluding current portion   6,802    7,446 
TOTAL ASSETS  $241,329   $218,004 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
CURRENT LIABILITIES:          
Accrued compensation  $16,412   $21,507 
Accounts payable   27,010    36,341 
Accrued taxes other than income taxes   10,292    11,244 
Accrued insurance and other   19,077    24,654 
Operating lease liabilities   7,552    —   
Income taxes payable   955    1,570 
TOTAL CURRENT LIABILITIES   81,298    95,316 
Accrued payroll taxes and other, excluding current portion   21,099    12,029 
Operating lease liabilities, excluding current portion   39,442    —   
Deferred gain on sale of real estate, excluding current portion   —      20,270 
Income taxes payable, excluding current portion   289    289 
Deferred income taxes   11    17 
Long-term debt   58,930    53,894 
TOTAL LIABILITIES   201,069    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 - 21,702,078 and 21,367,821 shares, respectively   2,374    2,374 
Paid-in capital   79,686    77,688 
(Accumulated deficit) retained earnings   (16,777)   (10,917)
Accumulated other comprehensive loss   (6,306)   (6,801)
Treasury stock, at cost; 2,035,925 and 2,370,182 shares, respectively   (18,717)   (26,155)
TOTAL STOCKHOLDERS' EQUITY   40,260    36,189 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $241,329   $218,004 

 

   

 

GAAP to Non-GAAP Reconciliations
 
(in thousands)
       
   Three Months Ended
   August 2, 2020  July 28, 2019
Reconciliation of GAAP net loss to Non-GAAP net loss:      
GAAP net loss  $(4,837)  $(6,057)
  Selling, administrative and other operating costs   —      (486)(c)
  Restructuring and severance costs   546 (a)   2,017 (d)
  Impairment Costs   2,384 (b)   79 
Non-GAAP net loss  $(1,907)  $(4,447)
           
    Three Months Ended
   August 2, 2020  July 28, 2019
Reconciliation of GAAP net loss to Adjusted EBITDA:          
GAAP net loss  $(4,837)  $(6,057)
  Selling, administrative and other operating costs   —      (486)(c)
  Restructuring and severance costs   546 (a)   2,017 (d)
  Impairment Costs   2,384 (b)   79 
  Depreciation and amortization   1,884    1,769 
  Share-based compensation expense   414    294 
  Total other (income) expense, net   64    1,049 
  Provision for income taxes   556    165 
Adjusted EBITDA  $1,011   $(1,170)

 

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 consolidating and exiting certain leased office locations throughout North America where we could be fully operational and successfully support our clients and business operations remotely.
         
(c) 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.
         
(d) Relates to exit of customer care solutions business and continued efforts to reduce costs.

 

   

 

GAAP to Non-GAAP Reconciliations
 
(in thousands)
       
   Nine Months Ended
   August 2, 2020  July 28, 2019
Reconciliation of GAAP net loss to Non-GAAP net loss:      
GAAP net loss  $(21,070)  $(14,437)
  Selling, administrative and other operating costs   —      (1,458)(c)
  Restructuring and severance costs   2,203 (a)   2,800 (d)
  Impairment Costs   2,395 (b)   426 (e)
Non-GAAP net loss  $(16,472)  $(12,669)
           
   Nine Months Ended
   August 2, 2020  July 28, 2019
Reconciliation of GAAP net loss to Adjusted EBITDA:          
GAAP net loss  $(21,070)  $(14,437)
  Selling, administrative and other operating costs   —      (1,458)(c)
  Restructuring and severance costs   2,203 (a)   2,800 (d)
  Impairment Costs   2,395 (b)   426 (e)
  Depreciation and amortization   5,884    5,127 
  Share-based compensation expense   1,433    86 
  Total other (income) expense, net   2,389    3,000 
  Provision for income taxes   774    671 
Adjusted EBITDA  $(5,992)  $(3,785)

 

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 as well as continued efforts to reduce costs and to offset COVID-19 related revenue losses.
             
(b) Primarily relates to consolidating and exiting certain leased office locations throughout North America where we could be fully operational and successfully support our clients and business operations remotely.
             
(c) 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.
             
(d) Relates to exit of customer care solutions business and continued efforts to reduce costs.
             
(e) Primarily relates to exit of customer care solutions business.
   

 

GAAP to Non-GAAP Reconciliations
(in thousands)
                   
   Three Months
Ended
August 2, 2020
  Three Months Ended July 28, 2019
   As Reported  As Reported  FX impact  Business
 Exited
  MSP Delivery
Model Shift
  Adjusted
Revenue                  
North American Staffing  $154,711   $193,641   $—     $(76)  $(3,447)  $190,118 
International Staffing   21,749    28,728    (165)   —      —      28,563 
North American MSP   9,436    9,555    —      —      87    9,642 
Corporate and Other   149    1,856    —      (1,662)   —      194 
Eliminations   (104)   (604)   —      76    —      (528)
Total Revenue  $185,941   $233,176   $(165)  $(1,662)  $(3,360)  $227,989 
% change                            -18.4%
                               
                               
    Nine Months
Ended
August 2, 2020
   Nine Months Ended July 28, 2019
    As Reported    As Reported    FX impact    Business
 Exited
    MSP Delivery
Model Shift
    Adjusted 
Revenue                              
North American Staffing  $510,492   $614,360   $—     $(692)  $(10,835)  $602,833 
International Staffing   72,275    83,803    (1,097)   —      —      82,706 
North American MSP   28,550    27,351    —      —      274    27,625 
Corporate and Other   539    15,133    —      (14,593)   —      540 
Eliminations   (874)   (1,965)   —      692    —      (1,273)
Total Revenue  $610,982   $738,682   $(1,097)  $(14,593)  $(10,561)  $712,431 
% change                            -14.2%

 

GAAP to Non-GAAP Reconciliations
(in thousands)
                   
   Three Months Ended August 2, 2020  Three Months Ended July 28, 2019
   As Reported  Business Exited  Adjusted  As Reported  Business Exited  Adjusted
Operating Income (Loss)                              
North American Staffing  $2,691   $—     $2,691   $4,365   $—     $4,365 
International Staffing   551    —      551    342    15    357 
North American MSP   944    —      944    1,120    —      1,120 
Corporate and Other   (8,403)   (14)   (8,417)   (10,670)   1,890    (8,780)
Total Operating Loss  $(4,217)  $(14)  $(4,231)  $(4,843)  $1,905   $(2,938)
                               
                               
   Nine Months Ended August 2, 2020  Nine Months Ended July 28, 2019
    As Reported    Business Exited    Adjusted    As Reported    Business Exited    Adjusted 
Operating Income (Loss)                              
North American Staffing  $5,366   $—     $5,366   $10,796   $—     $10,796 
International Staffing   1,121    —      1,121    1,274    19    1,293 
North American MSP   2,189    —      2,189    3,185    —      3,185 
Corporate and Other   (26,583)   (27)   (26,610)   (26,021)   2,025    (23,996)
Total Operating Loss  $(17,907)  $(27)  $(17,934)  $(10,766)  $2,044   $(8,722)

 

GAAP to Non-GAAP Reconciliations
(in thousands)
                   
   Three Months Ended August 2, 2020  Three Months Ended July 28, 2019
   As Reported  Business Exited  Adjusted  As Reported  Business Exited  Adjusted
Operating Loss                              
Gross Margin  $29,958   $—     $29,958   $35,648   $346   $35,994 
Selling, administrative and other operating costs   31,245    —      31,245    38,395    (136)   38,259 
Restructuring and severance costs   546    14    560    2,017    (1,422)   595 
Impairment charges   2,384    —      2,384    79    (1)   78 
Total Operating Loss  $(4,217)  $(14)  $(4,231)  $(4,843)  $1,905   $(2,938)
                               
                               
   Nine Months Ended August 2, 2020  Nine Months Ended July 28, 2019
    As Reported    Business Exited    Adjusted    As Reported    Business Exited    Adjusted 
Operating Loss                              
Gross Margin  $93,622   $—     $93,622   $109,604   $(523)  $109,081 
Selling, administrative and other operating costs   106,931    —      106,931    117,144    (535)   116,609 
Restructuring and severance costs   2,203    27    2,230    2,800    (1,684)   1,116 
Impairment charges   2,395    —      2,395    426    (348)   78 
Total Operating Loss  $(17,907)  $(27)  $(17,934)  $(10,766)  $2,044   $(8,722)