Volt Information Sciences, Inc. (“Volt” or “the Company)
(NYSE-MKT: VISI), a global provider of staffing services and
information technology infrastructure services, today reported
results for its first quarter ended January 31, 2016. Key elements
include:
- First quarter net revenue of $326.8
million down 10.2% compared to the prior quarter and down 14.7%
year-over-year
- First quarter loss from continuing
operations of $11.0 million or $8.2 million excluding special
items
- During the first quarter, the Company
completed the sale of its Uruguayan staffing business and announced
plans to sell Maintech, its IT infrastructure services
business
- During the first quarter, the Company
entered into a one-year extension of its $150.0 million Financing
Program with PNC Bank, National Association (“PNC”) with an
expiration date of January 31, 2017
- Subsequent to quarter end, the Company
completed a sale-leaseback transaction for its office facility in
Orange, California, and also completed the sale of its office
facility in San Diego, California with combined net proceeds
totaling $29 million
Commenting on Volt’s first quarter performance, Michael Dean,
President and CEO, said, “Our results in the first quarter reflect
our ongoing efforts to stabilize the financial performance of
Volt’s core staffing business and solidify our book of business
with our customers. After normalizing for fewer work days during
the fiscal first quarter, staffing revenue was down slightly on a
sequential quarter basis. We also saw the initial benefit of the
workforce reduction we announced early in the quarter as total
selling, administrative and other operating costs declined 5%
compared to the prior quarter. While much of the first quarter
benefit from the lower headcount was offset by restructuring costs,
this headcount reduction will contribute significantly to $10
million in anticipated cost savings during the full year.”
Mr. Dean concluded, “We’ve made significant progress on key
initiatives aimed at divesting non-core assets, reducing costs and
improving our liquidity position as we continue to build the
foundation for returning Volt to a growth trajectory. Adding to the
divestiture of several non-core businesses last year, during the
first quarter we completed the sale of our Uruguayan staffing
business, announced plans to sell Maintech, and subsequent to
quarter end, completed the sale of real estate assets. Looking
forward, we remain acutely focused on strengthening our competitive
position, improving efficiencies, and reinvesting to drive top line
growth in our business. Based on our ongoing progress, I remain
confident that our actions will lead to significant improvements in
the quarters and years ahead.”
Fiscal 2016 First Quarter Results
Total revenue for the fiscal 2016 first quarter was $326.8
million, down $37.1 million or 10.2% compared to $364.0 million for
the fourth quarter of fiscal 2015. Compared to the prior year
period, total revenue decreased $56.2 million, or 14.7% compared to
net revenues of $383.1 million for the first quarter of fiscal
2015.
Staffing Services segment revenue was $308.7 million, a $33.6
million or 9.8% decrease compared to $342.3 million in the fourth
quarter of fiscal 2015. Compared to the prior year period, Staffing
Services segment revenues declined $52.1 million, or 14.5% compared
to Staffing Services revenues of $360.8 million in the first
quarter of fiscal 2015. Other segment revenue was $18.1 million in
the first quarter of fiscal 2016, compared to $21.6 million in the
fourth quarter of fiscal 2015 and $22.2 million in the prior year
period.
Staffing Services segment operating income in the first quarter
of fiscal 2016 of $1.7 million included $1.5 million of
restructuring costs. Excluding the impact of this special item,
Staffing Services segment operating income would have been $3.2
million on a Non-GAAP basis.
Net loss of $11.0 million in the first quarter of fiscal 2016
included $2.8 million of restructuring costs. Excluding the impact
of this special item, net loss for the first quarter of 2016 would
have been $8.2 million on a Non-GAAP basis.
Adjusted EBITDA, which is also a Non-GAAP measure, was a loss of
$5.3 million in the fiscal 2016 first quarter. Adjusted EBITDA
excludes the impact of interest expense, income tax expense,
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.
Divestiture of Non-Core Assets
During the first quarter, the Company completed the sale of its
Uruguayan staffing services business as part of the Company’s
ongoing initiative to simplify its corporate structure and improve
operational focus on its core staffing business. This sale is in
addition to several non-core divestitures completed in fiscal 2015,
including the sale of substantially all of the assets of Volt
Telecommunications Group in the fourth quarter of 2015, the
sale of the Company’s Uruguayan publishing and printing business in
the third quarter of 2015, and the sale of the Company’s computer
systems business in the first quarter of 2015. While the
consideration Volt received in the sale of each of these businesses
has been modest, the divestiture of these businesses is expected to
eliminate approximately $3 million in operating losses in fiscal
2016.
As previously announced, the Company is engaged in a process to
sell Maintech, its IT infrastructure services business. It is
anticipated that as the next part of this process, the Company will
select a potential buyer shortly with whom it will enter a
non-binding letter of intent. If a transaction then proceeds with a
potential buyer, the Company would expect to complete a transaction
by the end of the second quarter or sometime in the third quarter
of fiscal 2016.
Sale of Real Estate
In conjunction with the Company’s asset divestiture strategy,
subsequent to quarter end, the Company completed a sale-leaseback
transaction of its office properties in Orange, California, with
Glassell Acquisitions Partners LLC, a limited liability company
formed by Hines, a real estate investment and management firm, and
funds managed by Oaktree Capital Management L.P., an investment
management firm. The Orange facility comprises four buildings
totaling approximately 191,000 square feet of Class A office space.
The terms of the transaction included a $35.9 million purchase
price and a concurrent leaseback agreement with an initial term of
15 years, plus renewal options. The property will continue to house
approximately 400 Volt employees. After the repayment of mortgage
indebtedness on the property along with transaction-related
expenses and fees, Volt received net cash proceeds of approximately
$27 million from the sale of the property.
The Company also completed the sale of its approximate 19,000
square foot office facility in San Diego, California. Net proceeds
to the Company, after transaction-related expenses and fees,
totaled $2.0 million.
Net proceeds from the transactions will be used to ensure
adequate levels of liquidity for working capital purposes, as well
as to fund investments in technology and sales and marketing
activities in support of the Company’s growth objectives.
Financing
During the quarter, the Company entered into a one-year
extension of its $150.0 million Financing Program with PNC with an
expiration date of January 31, 2017.
Subsequent to quarter end, on February 17, 2016, Maintech
entered into a $10.0 million revolving credit agreement with Bank
of America. The Credit Agreement was entered into to provide
short-term flexibility for working capital purposes. The Company
expects to terminate the Credit Agreement on or before the sale of
Maintech.
Liquidity
As of January 31, 2016, the Company had $44.7 million of
available liquidity for working capital requirements.
Conference Call and Webcast
A conference call and simultaneous webcast to discuss the fiscal
2016 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 Michael Dean and CFO Paul Tomkins will host the conference
call. Participants can 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 9, 2016 at 7:30 p.m. Eastern Time through
Wednesday, March 23, 2016 at 11:59 p.m. Eastern Time. To access the
replay, dial 877-870-5176 (858-384-5517 for international callers)
and enter the Conference ID # 13630984. A replay of the webcast
will also be available for 90 days upon completion of the call,
accessible through the Company's website
at www.volt.com in the Investors & Governance
section.
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), managed service programs, technology outsourcing
services and information technology infrastructure services. Our
staffing services consists of workforce solutions that include
providing contingent workers, personnel recruitment services, and
managed services programs supporting primarily professional
administration, technical, information technology, light-industrial
and engineering positions. Our managed service programs consist of
managing the procurement and on-boarding of contingent workers from
multiple providers. Our technology outsourcing services provide pre
and post production development, testing and customer support to
companies in the mobile, gaming, and technology devices industries.
In addition, we provide information technology infrastructure
services which provide server, storage, network and desktop IT
hardware maintenance, data center and network monitoring and
operations. Our complementary businesses offer customized talent,
technology and consulting 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 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. Copies of the
Company’s latest Annual Report on Form 10-K and subsequent
Quarterly Reports on Form 10-Q, as filed with the Securities and
Exchange Commission, are available without charge upon request to
Volt Information Sciences, Inc., 1133 Avenue of the Americas, New
York, New York 10036, Attention: Shareholder Relations,
212-704-7921. 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.
--Financial Tables to Follow--
Sequential Results of
Operations
(in thousands, except per share data) Three Months
Ended (unaudited)
January 31, 2016
November 1, 2015
February 1, 2015
Revenue: Staffing services revenue $ 308,681 $
342,328 $ 360,821 Other revenue 18,149 21,646
22,245
Net revenue 326,830
363,974 383,066 Expenses: Direct cost
of staffing services revenue 264,172 287,230 309,518 Cost of other
revenue 16,788 18,021 19,605 Selling, administrative and other
operating costs 52,925 55,799 60,290 Restructuring and severance
costs 2,761 542 975 Impairment charges - 672
-
Total expenses 336,646
362,264 390,388
Operating income (loss)
(9,816 ) 1,710 (7,322 )
Interest income (expense), net (658 ) (737 ) (634 ) Foreign
exchange gain (loss), net 344 (96 ) 437 Other income (expense), net
(279 ) 578 98
Income (loss)
from continuing operations before income taxes (10,409
) 1,455 (7,421 ) Income tax provision
553 1,384 1,379
Income
(loss) from continuing operations (10,962 )
71 (8,800 ) Loss from discontinued operations
- (315 ) (4,519 )
Net loss
$ (10,962 ) $ (244 )
$ (13,319 ) Per share data:
Basic: Loss from continuing operations $ (0.53 ) $ - $ (0.42
) Loss from discontinued operations - (0.01 )
(0.22 )
Net loss $ (0.53 )
$ (0.01 ) $ (0.64 )
Weighted average number of shares 20,813 20,799 20,930
Diluted: Loss from continuing operations $ (0.53 ) $ - $
(0.42 ) Loss from discontinued operations -
(0.01 ) (0.22 )
Net loss $ (0.53
) $ (0.01 ) $ (0.64
) Weighted average number of shares 20,813 20,930 20,930
Segment data: Revenue: Staffing Services $
308,681 $ 342,328 $ 360,821 Other Segment 18,149
21,646 22,245
Net revenue
$ 326,830 $ 363,974
$ 383,066 Operating income
(loss): Staffing Services $ 1,734 $ 10,358 $ 3,630
Other Segment
(371 ) 1,657 (285 ) Corporate general & administrative
(11,179 ) (10,305 ) (10,667 )
Operating income
(loss) $ (9,816 ) $ 1,710
$ (7,322 )
Commencing in the first quarter of fiscal
2016, the Company changed its methodology for the allocation of
costs to more effectively reflect and measure the individual
businesses' financial and operational efficiency. Prior period
segment results have been revised for these changes.
Condensed Consolidated Statements of
Cash Flows
(in thousands)
Three months ended (unaudited)
January 31, 2016 February 1, 2015
Cash and cash equivalents, beginning of the
period $ 10,188 $ 6,723
Changes in operating assets and liabilities 22,369 27,168 Cash used
in all other operating activities (9,766 ) (7,533 )
Net cash provided by operating activities
12,603 19,635 Net cash
used in investing activities (3,180 )
(772 ) Decrease in cash restricted as
collateral for borrowings - 9,123 Net change in borrowings -
(13,506 ) Net cash used in all other financing activities
(783 ) (379 )
Net cash used in financing activities
(783 ) (4,762 )
Effect of exchange rate changes on cash and cash equivalents
(2,313 ) 402 Net cash used in
discontinued operations - (7,237 )
Net increase in cash and cash equivalents
6,327 7,266 Change in
cash from discontinued operations -
(211 ) Cash and cash equivalents, end of
the period $ 16,515 $ 13,778
Cash paid during the period: Interest $ 782 $
644 Income taxes $ 2,112 $ 329
Condensed Consolidated Balance
Sheets
(in thousands, except share amounts) January 31,
2016 November 1, 2015
ASSETS
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 16,515 $ 10,188 Restricted cash and
short-term investments 16,630 14,977 Trade accounts receivable, net
of allowances of $785 and $960, respectively 170,150 198,385
Recoverable income taxes 17,771 17,583 Prepaid insurance and other
current assets 16,229 15,865 Assets held for sale 21,395
22,943
TOTAL CURRENT ASSETS
258,690 279,941 Other assets, excluding current
portion 23,600 22,790 Property, equipment and software, net
26,338 24,095
TOTAL ASSETS $
308,628 $ 326,826
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES: Accrued compensation $ 29,055 $ 29,548 Accounts
payable 35,126 39,164 Accrued taxes other than income taxes 25,109
22,719 Accrued insurance and other 33,938 34,391 Short-term
borrowings, including current portion of long-term debt 101,009 982
Income taxes payable - 1,658 Liabilities held for sale 6,672
7,345
TOTAL CURRENT LIABILITIES
230,909 135,807 Accrued insurance and other,
excluding current portion 13,976 13,699 Income taxes payable,
excluding current portion 6,573 6,516 Long-term debt, excluding
current portion 5,968 106,313
TOTAL
LIABILITIES 257,426 262,335 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 and 23,738,003,
respectively; Outstanding – 20,830,457 and 20,801,080,
respectively
2,374 2,374 Paid-in capital 75,600 75,803 Retained earnings 26,423
38,034 Accumulated other comprehensive loss (10,509 ) (7,994 )
Treasury stock, at cost; 2,907,546 shares and 2,936,923 shares
(42,686 ) (43,726 )
TOTAL STOCKHOLDERS' EQUITY
51,202 64,491 TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY $ 308,628
$ 326,826 Unaudited
Non-GAAP Statement of Operations and Reconciliations
(in thousands, except earnings per
share)
Three Months Ended January 31, 2016
Three Months Ended February 1, 2015 GAAP
Special Items Ref
Non-GAAP GAAP Special Items
Ref Non-GAAP Net revenue $ 326,830 $ -
$ 326,830 $ 383,066 $ - $ 383,066 Expenses: Direct cost of
staffing services revenue 264,172 - 264,172 309,518 - 309,518 Cost
of other revenue 16,788 - 16,788 19,605 - 19,605 Selling,
administrative and other operating costs 52,925 - 52,925 60,290
(572 ) (b) 59,718 Restructuring and severance costs 2,761
(2,761 ) (a) - 975
(975 ) (c) - Total expenses 336,646 (2,761 ) 333,885
390,388 (1,547 ) 388,841
Operating income (loss) (9,816 ) 2,761 (7,055 ) (7,322 ) 1,547
(5,775 ) Other income (expense), net: Interest income
(expense), net (658 ) - (658 ) (634 ) - (634 ) Foreign exchange
gain (loss), net 344 - 344 437 (437 ) (d) - Other income (expense),
net (279 ) - (279 ) 98
- 98 Total other income (expense), net
(593 ) - (593 ) (99 ) (437 ) (536 )
Income (loss) from continuing operations before
income taxes (10,409 ) 2,761 (7,648 ) (7,421 ) 1,110 (6,311 )
Income tax provision 553 - 553
1,379 - 1,379
Income (loss) from continuing operations $ (10,962 ) $ 2,761
$ (8,201 ) $ (8,800 ) $ 1,110 $ (7,690 ) * Basic
income (loss) from continuing operations $ (0.53 ) $ 0.13 $ (0.39 )
$ (0.42 ) $ 0.05 $ (0.37 ) * Diluted income (loss) from continuing
operations $ (0.53 ) $ 0.13 $ (0.39 ) $ (0.42 ) $ 0.05 $ (0.37 )
Basic weighted average number of shares 20,813 20,813 20,813
20,930 20,930 20,930 Diluted weighted average number of shares
20,813 20,813 20,813 20,930 20,930 20,930
Special item
adjustments consist of the following: (a) Relates
primarily to Company-wide cost reduction plan implemented in
November 2015. (b) Relates primarily to the Board of Director fees
and other items. (c) Relates to severance costs related to the
departure of our former Chief Financial Officer. (d) Relates
primarily to non-cash foreign exchange gain or loss on our
intercompany balances. * Earnings per share may not add in
certain periods due to rounding.
Unaudited Reconciliation of GAAP Loss
from Continuing Operations
to Adjusted EBITDA
(in thousands)
Three Months Ended January 31,
2016 February 1, 2015 GAAP loss from continuing
operations $ (10,962 ) $ (8,800 ) Special items 2,761
1,110 Non-GAAP loss from continuing operations (8,201
) (7,690 ) Adjustments: Depreciation and amortization 1,538
1,771 Share-based compensation expense 187 476 Other (income) loss,
net (a) 593 536 Provision for income taxes 553
1,379 Adjusted EBITDA $ (5,330 ) $ (3,528 ) (a)
Includes interest income (expense) and other income (expense), net.
Note Regarding the Use of Non-GAAP Financial Measures
The Company has provided certain non-GAAP financial information,
which includes adjustments for special items, as additional
information for its consolidated income (loss) from continuing
operations, 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 these Non-GAAP measures
provides useful information to management and investors regarding
certain financial and business trends relating to its financial
condition and results of operations because it permits evaluation
of the results of the Company’s continuing operations without the
effect of special items that management believes make it more
difficult to understand and evaluate the Company’s results of
operations.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160309006299/en/
Investor Contacts:Volt Information Sciences, Inc.Paul
Tomkins212-704-7921voltinvest@volt.comorAddo CommunicationsLasse
Glassen424-238-6249lasseg@addocommunications.com
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