Volt Information Sciences, Inc. (“Volt” or “the Company”)
(NYSE-MKT: VISI), an international provider of staffing
services and technology outsourcing services, today reported
results for its fiscal 2017 first quarter ended January 29, 2017.
Key elements include:
- Continued to slow the revenue decline
with net revenue of $313.0 million down 4.3% year-over-year, a
significant improvement compared to the year-over-year decline of
14.6% in the first quarter last year
- First quarter gross margin percentage
of 15.0% increased 110 basis points year-over-year
- Best first quarter financial results in
five years with net loss of $4.6 million, a significant improvement
from a loss of $11.0 million a year ago
- During the first quarter, the Company
amended its Financing Program with PNC Bank and extended the
Program by one-year to January 31, 2018
- Subsequent to the end of the first
quarter, the Company completed the sale of Maintech, Inc., a
non-core asset, for $18.3 million in cash
- Subsequent to the end of the first
quarter, the IRS approved the Company’s federal tax refund of
approximately $13 million
Commenting on Volt’s first quarter performance, Michael Dean,
President and CEO, said, “Volt is off to a good start in fiscal
2017 with strong improvement in our year-over-year financial
results and the recent completion of several key initiatives to
strengthen our balance sheet. At the top line, we continue to make
progress in stabilizing revenue from our existing book of business
while establishing new client relationships. We also benefited from
our ongoing focus on higher margin business as evidenced by the 110
basis point increase in gross margin compared to the prior year. As
a result, we generated the best bottom line result for Volt in a
first quarter in five years.”
Mr. Dean continued, “In addition to our improving operational
results, we also achieved key milestones that will further shore-up
our balance sheet and improve our financial flexibility. During the
quarter, we completed the amendment and extension of our $160.0
million financing program with PNC Bank. More recently, we
completed the sale of Maintech for $18.3 million and we also
received IRS approval for a federal tax refund of approximately $13
million. With these initiatives completed, I remain confident in
our ability to continue executing our turnaround strategy,
enhancing our financial and operational performance and driving
shareholder value in fiscal 2017 and beyond.”
Fiscal 2017 First Quarter Results
Total revenue for the fiscal 2017 first quarter was $313.0
million, down $14.0 million, or 4.3%, compared to $327.0 million in
the first quarter of fiscal 2016.
North American Staffing revenue, which provides a broad spectrum
of contingent staffing, direct placement, recruitment process
outsourcing and other employment services, was $231.9 million, a
$6.7 million, or 2.8% decrease compared to North American Staffing
revenue of $238.6 million in the first quarter of fiscal 2016.
International Staffing revenue, which includes the Company’s
contingent staffing, direct placement and managed programs
businesses in Europe and Asia, was $30.4 million, down $3.6
million, or 10.6%, from the first quarter of fiscal 2016, primarily
as a result of foreign exchange rate fluctuations of $4.5 million
as well as a $0.9 million impact from no longer conducting business
in certain unprofitable countries. On a constant currency basis and
excluding the impact of countries the Company no longer conducts
business in, International Staffing revenue increased $1.8 million,
or 6.3%, year-over-year.
Technology Outsourcing Services and Solutions revenue, which
provides quality assurance, business intelligence and analytics and
customer service support for companies in a variety of industries,
was $25.7 million, down $1.5 million, or 5.7%, compared to $27.2
million in the prior year period.
Corporate and Other revenue, which primarily consists of the
Company’s North American managed service business and information
technology infrastructure business was $26.3 million, down $4.1
million, or 13.5%, compared to $30.4 million in the first quarter
of 2016.
Net loss of $4.6 million in the first quarter of fiscal 2017
improved by $6.4 million, or 58.2%, from the first quarter of
fiscal 2016. Net loss in the first quarter included $0.6 million of
restructuring and severance costs, partially offset by $0.5 million
related to the amortization of the gain on the fiscal 2016 sale of
real estate. Excluding the impact of these special items, net loss
for the first quarter of 2017 would have been $4.5 million, which
improved $3.1 million, or 42.0%, on a Non-GAAP basis compared to a
net loss of $7.6 million (Non-GAAP) in the first quarter of fiscal
2016.
Adjusted EBITDA, which is also a Non-GAAP measure, was a loss of
$0.5 million in the fiscal 2017 first quarter, which improved $4.3
million, or 90.0%, compared to a loss of $4.8 million (Non-GAAP) in
the year ago period. Adjusted EBITDA excludes the impact of special
items, 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.
Financing
During the first quarter, the Company amended its $160.0 million
Financing Program with PNC to extend the program by one year to
January 31, 2018. The amendment revised the existing minimum
liquidity level from $35.0 million to $20.0 million with a step-up
to $25.0 million triggered by the sale of Maintech, Inc. The
amendment also established a new performance based covenant which
includes an EBIT requirement.
Liquidity
As of January 29, 2017, the Company had $44.0 million of global
liquidity for working capital requirements as compared to $44.7
million in the prior year period.
Corporate Developments
- Sale of Maintech,
Inc.—Subsequent to the end of the first quarter, the Company
completed the sale of Maintech, Inc., its information technology
infrastructure business. Under the terms of the agreement, the
Company received proceeds of $18.3 million in cash, subject to
certain adjustments including a customary working capital
adjustment to be finalized within 60 days of the sale. Net proceeds
from the transaction amounted to $13.9 million after transaction
related fees and repayment of the Bank of America, N.A. outstanding
balance.
- Tax Refunds—Subsequent to the
end of the first quarter, the IRS approved the federal portion of
the Company’s IRS refund from the filing of the Company’s amended
tax returns for fiscal years 2004 through 2010. This will result in
a refund of approximately $13 million and the Company is now
awaiting payment. The remaining receivable of approximately $3
million primarily relates to state refunds which can now be applied
for and finalized as a result of the IRS audit conclusion and are
expected to be received over the next several quarters.
- Board of Directors—Subsequent to
the end of the first quarter, the Company announced that William J.
Grubbs, President and CEO of Cross Country Healthcare, and Arnold
Ursaner, founder of independent securities research firm CJS
Securities, have been nominated to stand for election to the
Company’s Board of Directors at the 2017 Annual Meeting of
Shareholders. Volt also announced that current Director, John
Rudolf, retired from the board effective February 23, 2017, and Mr.
Grubbs has been appointed to fill the vacancy. In addition, current
Director James Boone will be stepping down in June 2017.
Conference Call and Webcast
A conference call and simultaneous webcast to discuss the fiscal
2017 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 8, 2017 at 7:30 p.m. Eastern Time through
Wednesday, March 22, 2017 at 11:59 p.m. Eastern Time. To access the
replay, dial 844-512-2921 (412-317-6671 for international callers)
and enter the Conference ID # 13655615. 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 and technology outsourcing
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. 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.
Results of Operations
(in thousands, except per share
data)
(Unaudited)
Three Months Ended January 29, 2017
October 30, 2016 January 31,
2016 Net revenue $ 313,024 $ 341,578 $ 326,968
Cost of services 266,134 284,651
281,400
Gross margin 46,890 56,927
45,568 Expenses: Selling, administrative and
other operating costs 48,890 50,636 52,623 Restructuring and
severance costs 624 1,181 2,761 Impairment charges -
364 -
Total expenses
49,514 52,181 55,384 Operating
income (loss) (2,624 ) 4,746 (9,816
) Interest income (expense), net (858 ) (813 ) (658 )
Foreign exchange gain (loss), net 127 (565 ) 344 Other income
(expense), net (599 ) (443 ) (279 )
Income
(loss) before income taxes (3,954 ) 2,925
(10,409 ) Income tax provision 623
138 553
Net income (loss)
$ (4,577 ) $ 2,787
$ (10,962 ) Per share data:
Basic: Net income (loss) $ (0.22 ) $ 0.13 $ (0.53 ) Weighted
average number of shares 20,918 20,852 20,813
Diluted: Net income (loss) $ (0.22 ) $ 0.13 $ (0.53 )
Weighted average number of shares 20,918 21,762 20,813
Segment data: Net revenue: North American
Staffing $ 231,865 $ 255,160 $ 238,575 International Staffing
30,350 31,730 33,951 Technology Outsourcing Services and Solutions
25,671 30,533 27,214 Corporate and Other 26,296 27,571 30,405
Eliminations (1,158 ) (3,416 ) (3,177 )
Net
revenue $ 313,024 $ 341,578
$ 326,968 Operating income
(loss): North American Staffing $ 2,828 $ 10,615 $ (161 )
International Staffing 642 785 (44 ) Technology Outsourcing
Services and Solutions 1,586 3,087 1,997 Corporate and Other
(7,680 ) (9,741 ) (11,608 )
Operating income
(loss) $ (2,624 ) $ 4,746
$ (9,816 ) Work days
59 64 59
Effective in the first quarter of fiscal 2017, in an effort to
simplify and refine its internal reporting, the Company modified
its intersegment sales structure between North American Staffing
and Technology Outsourcing Services and Solutions segments.
Accordingly, all prior periods have been recast to reflect the
current segment presentation.
Condensed Consolidated Statements of
Cash Flows
(in thousands)
(Unaudited)
Three Months Ended January 29, 2017
January 31, 2016 Cash and
cash equivalents, beginning of the period $ 6,386
$ 10,188 Cash used in all other operating
activities (3,153 ) (9,701 ) Changes in operating assets and
liabilities 20,026 22,304
Net cash
provided by operating activities 16,873
12,603 Purchases of property, equipment
and software (4,373 ) (3,887 ) Net cash provided by all other
investing activities 287 707
Net
cash used in investing activities (4,086 )
(3,180 ) Repayment of long-term debt -
(318 ) Net cash used in all other financing activities (626
) (465 )
Net cash used in financing activities
(626 ) (783 ) Effect
of exchange rate changes on cash and cash equivalents
471 (2,313 ) Net increase in cash
and cash equivalents 12,632
6,327 Cash and cash equivalents, end of the
period $ 19,018 $ 16,515
Cash paid during the period: Interest $ 869 $
782 Income taxes $ 327 $ 2,112
Condensed Consolidated Balance
Sheets
(in thousands, except share
amounts)
January 29, 2017
October 30, 2016 ASSETS (unaudited)
CURRENT
ASSETS: Cash and cash equivalents $ 19,018 $ 6,386 Restricted
cash and short-term investments 12,140 13,948 Trade accounts
receivable, net of allowances of $762 and $801, respectively
172,164 193,866 Recoverable income taxes 16,943 16,979 Other
current assets 12,458 11,806 Assets held for sale 19,075
17,580
TOTAL CURRENT ASSETS
251,798 260,565 Other assets, excluding current
portion 25,118 25,767 Property, equipment and software, net
33,063 30,133
TOTAL ASSETS $
309,979 $ 316,465
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES: Accrued compensation $ 28,219 $ 29,147 Accounts
payable 28,639 32,425 Accrued taxes other than income taxes 24,752
22,791 Accrued insurance and other 33,224 34,306 Short-term
borrowings 97,050 2,050 Income taxes payable 324 - Liabilities held
for sale 5,975 5,760
TOTAL CURRENT
LIABILITIES 218,183 126,479 Accrued insurance and
other 13,863 13,136 Deferred gain on sale of real estate 25,622
26,108 Income taxes payable 6,780 6,777 Long-term debt -
95,000
TOTAL LIABILITIES 264,448
267,500 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 - 20,917,500 shares 2,374 2,374 Paid-in capital
77,180 76,564 Retained earnings 16,423 21,000 Accumulated other
comprehensive loss (10,085 ) (10,612 ) Treasury stock, at cost;
2,820,503 shares (40,361 ) (40,361 )
TOTAL
STOCKHOLDERS' EQUITY 45,531
48,965 TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 309,979 $ 316,465
Unaudited Non-GAAP Statement of
Operations and Reconciliations
(in thousands, except earnings per
share)
Three Months Ended January 29, 2017
Three Months Ended January 31, 2016
GAAP Special Items
Ref Non-GAAP GAAP
Special Items Ref
Non-GAAP Net Revenue $ 313,024 $ - $ 313,024 $
326,968 $ - $ 326,968 Cost of services 266,134
- 266,134 281,400 -
281,400
Gross margin 46,890 - 46,890
45,568 - 45,568 Expenses: Selling, administrative and other
operating costs 48,890 486 (a) 49,376 52,623 (552 ) (c) 52,071
Restructuring and severance costs 624 (624 )
(b) - 2,761 (2,761 ) (b)
- Total expenses 49,514 (138 ) 49,376 55,384 (3,313 ) 52,071
Operating loss (2,624 )
138 (2,486 ) (9,816 ) 3,313 (6,503 ) Other income (expense),
net: ` Interest income (expense), net (858 ) - (858 ) (658 ) - (658
) Foreign exchange gain (loss), net 127 - 127 344 - 344 Other
income (expense), net (599 ) - (599 )
(279 ) - (279 ) Total other income
(expense), net (1,330 ) - (1,330 ) (593 ) - (593 )
Loss before income taxes (3,954 ) 138
(3,816 ) (10,409 ) 3,313 (7,096 ) Income tax provision 623
- 623 553 -
553 Net loss $ (4,577 ) $ 138 $ (4,439
) $ (10,962 ) $ 3,313 $ (7,649 ) * Basic net loss $
(0.22 ) $ 0.01 $ (0.21 ) $ (0.53 ) $ 0.16 $ (0.37 ) * Diluted net
loss $ (0.22 ) $ 0.01 $ (0.21 ) $ (0.53 ) $ 0.16 $ (0.37 )
Basic weighted average number of shares 20,918 20,918 20,918 20,813
20,813 20,813 Diluted weighted average number of shares 20,918
20,918 20,918 20,813 20,813 20,813
Special item
adjustments consist of the following: (a) Relates
to the amortization of the gain on the sale of the Orange, CA
facility. (b) Relates primarily to Company-wide cost reduction plan
implemented in the first quarter of fiscal 2016. (c) Relates
primarily to consultants and professional fees incurred to attract
world class executive talent and implementing a pay for performance
annual incentive plan.
* 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 29,
2017 January 31, 2016 GAAP net loss
$ (4,577 ) $ (10,962 ) Special items 138 3,313
Non-GAAP net loss (4,439 ) (7,649 ) Adjustments:
Depreciation and amortization 1,379 1,538 Share-based compensation
expense 615 187 Other (income) loss, net (a) 1,330 593 Provision
for income taxes 623 553 Adjusted
EBITDA $ (492 ) $ (4,778 ) (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 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 and eliminating 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’s continuing operations without the effect
of currency fluctuations or special items 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 expenses or income
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 from continuing
operations 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 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20170308006275/en/
Volt Information Sciences, Inc.voltinvest@volt.comorAddo
Investor RelationsLasse Glassen,
424-238-6249lglassen@addoir.com
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