Volt Information Sciences, Inc. Reports First Quarter 2022 Financial Results
Reports Year-Over-Year Revenue Growth and Improved Operating Results
Volt Information Sciences, Inc. ("Volt" or the "Company") (NYSE-AMERICAN: VOLT) a global provider of staffing services, today announced financial results for the first quarter ended January 30, 2022.
Summary of First Quarter 2022 Results
- Revenue was $226.9 million, a 4.1% increase compared to the first quarter of fiscal 2021; Adjusted Revenue* increased 4.5%.
- Gross Margin increased 50 basis points year over year to 15.5%.
- GAAP Operating Loss was $0.5 million, a $1.2 million improvement compared to the prior-year quarter; Operating Income, excluding impairment and restructuring charges, was $0.1 million.
- GAAP EPS was ($0.06) per share, a five-cent improvement from the first quarter of fiscal 2021; Adjusted EPS* was $0.03 per diluted share.
- Adjusted EBITDA* was $2.9 million, an increase of $2.0 million year over year.
* Adjusted Revenue, Adjusted EPS and Adjusted EBITDA are Non-GAAP measures described and defined below. |
"I am very pleased with yet another quarter of strong performance, propelling our positive growth trajectory despite the labor supply challenges. Our consistent performance demonstrates our business strategies are sustainable," said Linda Perneau, President and Chief Executive Officer. "We remain confident that with the steady execution of our strategic initiatives and continued heightened demand for our workforce solutions, we will see similar momentum in our second quarter."
First Quarter Results
North American Staffing revenue was $191.2 million, a 3.8 percent increase compared to $184.2 million in the prior-year quarter. The increase is primarily attributable to business wins in a combination of retail and mid-market clients, combined with the expansion of business within existing clients and improvements in direct hire revenue.
International Staffing revenue was $26.0 million, compared to $24.0 million in the prior-year quarter. Adjusted Revenue increased 12.3 percent year over year primarily due to increased direct hire revenue in the United Kingdom and Singapore, as well as increases in other staffing business in France, Belgium and the United Kingdom.
North American MSP revenue was $9.7 million, a slight increase from the prior year quarter, primarily attributable to increased demand in its payroll service business offset by a decrease in managed service revenue.
Gross margin was 15.5 percent of revenue, a 50 basis-point increase from the prior-year quarter. The increase is primarily attributable to improved margins and higher direct hire revenue in our North American and International Staffing segments.
SG&A expense was $35.0 million, or 15.4 percent of revenue, a $1.2 million increase from the prior-year quarter. The increase was primarily attributable to higher labor costs, professional fees and depreciation expense.
Adjusted EBITDA, which is a Non-GAAP measure, was $2.9 million for the first quarter of fiscal 2022, compared to $0.9 million in the prior-year quarter.
Subsequent Events
The Company and Vega Consulting, Inc. ("Vega"), an affiliate of ACS Solutions, a global provider of information technology solutions and services (www.acsicorp.com), announced on March 14, 2022, that Volt and Vega entered into a definitive merger agreement under which Volt will be acquired for $6.00 per share in cash. This per share purchase price represents a premium of 99% to the Company's closing stock price on March 11, 2022.
Vega will commence a tender offer no later than March 25, 2022, to acquire all outstanding shares of Volt for $6.00 per share in cash. The merger agreement was approved by Volt's board of directors, which recommends that Volt stockholders tender their shares in the tender offer. Additional information related to the Merger Agreement can be found within the Form 8-K filed by the Company on March 14, 2022.
In light of the announced transaction, the earnings conference call that was scheduled for Tuesday, March 15, 2022 at 5:00 p.m. ET will no longer be held.
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 and related government actions 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 may provide certain Non-GAAP financial information, including Adjusted Revenue, Adjusted Operating Income (Loss), Adjusted EPS 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 and eliminating (a) the impact of businesses sold or exited, (b) the impact from the migration of certain clients from a traditional staffing model to a managed service model and (c) 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 sold or exited and the effect of foreign currency translation. 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. 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 Operating Income (Loss) is defined as operating income (loss) excluding businesses sold or exited.
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.
Adjusted EPS is defined as earnings per share excluding impairment and restructuring charges. The Company believes that the presentation of Adjusted EPS is useful for investors since it removes certain special items which the Company does not consider indicative of the current and future period performance.
Adjusted EBITDA is defined as earnings or loss before interest, income taxes, depreciation and amortization ("EBITDA") adjusted to exclude share-based compensation expense as well as the special items described above.
Adjusted EBITDA is a performance measure rather than a cash flow measure. The Company believes the presentation of Adjusted EBITDA is relevant and useful for investors because it allows investors to view results in a manner similar to the method used by management.
Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, analysis of the Company's results of operations and operating cash flows as reported under GAAP. For example, Adjusted EBITDA does not reflect capital expenditures or contractual commitments; does not reflect changes in, or cash requirements for, the Company's working capital needs; does not reflect the interest expense, or the cash requirements necessary to service the interest payments, on the Company's debt; and does not reflect cash required to pay income taxes.
The Company's computation of Adjusted Revenue, Adjusted Operating Income (Loss), Adjusted EPS and 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.
About Volt Information Sciences, Inc.
Volt 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.
[email protected]
Joe Noyons
Three Part Advisors
[email protected]
817-778-8424
Financial Tables Follow
Condensed Consolidated Results of Operations |
|||||||||||
| (in thousands, except per share data) | |||||||||||
| (unaudited) | |||||||||||
| Three Months Ended | |||||||||||
| January 30, 2022 | October 31, 2021 | January 31, 2021 | |||||||||
| Net revenue | $ |
226,928 |
|
$ |
227,809 |
|
$ |
217,958 |
|
||
| Cost of services |
|
191,835 |
|
|
189,648 |
|
|
185,276 |
|
||
| Gross margin |
|
35,093 |
|
|
38,161 |
|
|
32,682 |
|
||
| Selling, administrative and other operating costs |
|
34,976 |
|
|
34,691 |
|
|
33,747 |
|
||
| Restructuring and severance costs |
|
591 |
|
|
1,123 |
|
|
632 |
|
||
| Impairment charges |
|
23 |
|
|
20 |
|
|
31 |
|
||
| Operating income (loss) |
|
(497 |
) |
|
2,327 |
|
|
(1,728 |
) |
||
| Interest income (expense), net |
|
(414 |
) |
|
(416 |
) |
|
(477 |
) |
||
| Foreign exchange gain (loss), net |
|
(12 |
) |
|
39 |
|
|
242 |
|
||
| Other income (expense), net |
|
(143 |
) |
|
(150 |
) |
|
(156 |
) |
||
| Income (loss) before income taxes |
|
(1,066 |
) |
|
1,800 |
|
|
(2,119 |
) |
||
| Income tax provision |
|
153 |
|
|
474 |
|
|
327 |
|
||
| Net income (loss) | $ |
(1,219 |
) |
$ |
1,326 |
|
$ |
(2,446 |
) |
||
| Per share data: | |||||||||||
| Basic: | |||||||||||
| Net income (loss) | $ |
(0.06 |
) |
$ |
0.06 |
|
$ |
(0.11 |
) |
||
| Weighted average number of shares |
|
22,158 |
|
|
21,981 |
|
|
21,793 |
|
||
| Diluted: | |||||||||||
| Net income (loss) | $ |
(0.06 |
) |
$ |
0.06 |
|
$ |
(0.11 |
) |
||
| Weighted average number of shares |
|
22,158 |
|
|
22,811 |
|
|
21,793 |
|
||
| Segment data: | |||||||||||
| Net revenue: | |||||||||||
| North American Staffing | $ |
191,196 |
|
$ |
190,875 |
|
$ |
184,216 |
|
||
| International Staffing |
|
26,018 |
|
|
26,814 |
|
|
24,013 |
|
||
| North American MSP |
|
9,709 |
|
|
10,021 |
|
|
9,669 |
|
||
| Corporate and Other |
|
78 |
|
|
99 |
|
|
119 |
|
||
| Eliminations |
|
(73 |
) |
|
- |
|
|
(59 |
) |
||
| Net revenue | $ |
226,928 |
|
$ |
227,809 |
|
$ |
217,958 |
|
||
| Operating income (loss): | |||||||||||
| North American Staffing | $ |
6,575 |
|
$ |
9,064 |
|
$ |
6,175 |
|
||
| International Staffing |
|
868 |
|
|
1,419 |
|
|
382 |
|
||
| North American MSP |
|
973 |
|
|
706 |
|
|
532 |
|
||
| Corporate and Other |
|
(8,913 |
) |
|
(8,862 |
) |
|
(8,817 |
) |
||
| Operating income (loss) | $ |
(497 |
) |
$ |
2,327 |
|
$ |
(1,728 |
) |
||
| Work days |
|
59 |
|
|
64 |
|
|
59 |
|
||
Condensed Consolidated Statements of Cash Flows |
|||||||
| (in thousands) | |||||||
| (unaudited) | |||||||
| Three Months Ended | |||||||
| January 30, 2022 | January 31, 2021 | ||||||
| Cash, cash equivalents and restricted cash beginning of the period | $ |
76,609 |
|
$ |
56,433 |
|
|
| Cash provided by all other operating activities |
|
3,581 |
|
|
2,392 |
|
|
| Changes in operating assets and liabilities |
|
(15,497 |
) |
|
(8,891 |
) |
|
| Net cash used in operating activities |
|
(11,916 |
) |
|
(6,499 |
) |
|
| Purchases of property, equipment, and software |
|
(797 |
) |
|
(959 |
) |
|
| Net cash provided by (used in) all other investing activities |
|
156 |
|
|
(4 |
) |
|
| Net cash used in investing activities |
|
(641 |
) |
|
(963 |
) |
|
| Debt issuance costs |
|
- |
|
|
(161 |
) |
|
| Net cash used in all other financing activities |
|
(16 |
) |
|
(5 |
) |
|
| Net cash used in financing activities |
|
(16 |
) |
|
(166 |
) |
|
| Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
(597 |
) |
|
(13 |
) |
|
| Net decrease in cash, cash equivalents and restricted cash |
|
(13,170 |
) |
|
(7,641 |
) |
|
| Cash, cash equivalents and restricted cash end of the period | $ |
63,439 |
|
$ |
48,792 |
|
|
| Cash paid during the period: | |||||||
| Interest | $ |
422 |
|
$ |
484 |
|
|
| Income taxes | $ |
85 |
|
$ |
8 |
|
|
| Reconciliation of cash, cash equivalents and restricted cash end of the period: | |||||||
| Current Assets: | |||||||
| Cash and cash equivalents | $ |
54,864 |
|
$ |
40,062 |
|
|
| Restricted cash included in Restricted cash and short term investments |
|
8,575 |
|
|
8,730 |
|
|
| Cash, cash equivalents and restricted cash, at end of period | $ |
63,439 |
|
$ |
48,792 |
|
|
Condensed Consolidated Balance Sheets |
|||||||
| (in thousands, except share amounts) | |||||||
| January 30, 2022 | October 31, 2021 | ||||||
| (unaudited) | |||||||
| ASSETS | |||||||
| CURRENT ASSETS: | |||||||
| Cash and cash equivalents | $ |
54,864 |
|
$ |
71,373 |
|
|
| Restricted cash and short-term investments |
|
11,587 |
|
|
8,729 |
|
|
| Trade accounts receivable, net of allowances of $148 and $137, respectively |
|
129,303 |
|
|
127,211 |
|
|
| Other current assets |
|
6,486 |
|
|
6,229 |
|
|
| TOTAL CURRENT ASSETS |
|
202,240 |
|
|
213,542 |
|
|
| Property, equipment and software, net |
|
16,253 |
|
|
17,482 |
|
|
| Right of use assets - operating leases |
|
22,025 |
|
|
22,496 |
|
|
| Other assets, excluding current portion |
|
6,537 |
|
|
6,584 |
|
|
| TOTAL ASSETS | $ |
247,055 |
|
$ |
260,104 |
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| CURRENT LIABILITIES: | |||||||
| Accrued compensation | $ |
21,811 |
|
$ |
22,629 |
|
|
| Accounts payable |
|
36,649 |
|
|
36,544 |
|
|
| Accrued taxes other than income taxes |
|
32,486 |
|
|
31,112 |
|
|
| Accrued insurance and other |
|
17,573 |
|
|
16,298 |
|
|
| Operating lease liabilities |
|
7,052 |
|
|
6,775 |
|
|
| Income taxes payable |
|
1,012 |
|
|
956 |
|
|
| TOTAL CURRENT LIABILITIES |
|
116,583 |
|
|
114,314 |
|
|
| Accrued insurance and other, excluding current portion |
|
8,877 |
|
|
21,832 |
|
|
| Operating lease liabilities, excluding current portion |
|
32,434 |
|
|
33,558 |
|
|
| Long-term debt |
|
59,384 |
|
|
59,307 |
|
|
| TOTAL LIABILITIES |
|
217,278 |
|
|
229,011 |
|
|
| 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 - 22,099,246 shares |
|
2,374 |
|
|
2,374 |
|
|
| Paid-in capital |
|
80,827 |
|
|
80,062 |
|
|
| Accumulated deficit |
|
(33,427 |
) |
|
(32,208 |
) |
|
| Accumulated other comprehensive loss |
|
(7,111 |
) |
|
(6,249 |
) |
|
| Treasury stock, at cost; 1,638,757 shares |
|
(12,886 |
) |
|
(12,886 |
) |
|
| TOTAL STOCKHOLDERS' EQUITY |
|
29,777 |
|
|
31,093 |
|
|
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ |
247,055 |
|
$ |
260,104 |
|
|
| GAAP to Non-GAAP Reconciliations | ||||||||
| (in thousands) | ||||||||
| Three Months Ended | ||||||||
| January 30, 2022 | January 31, 2021 | |||||||
| Reconciliation of GAAP net loss to Non-GAAP net loss: | ||||||||
| GAAP net loss | $ |
(1,219 |
) |
$ |
(2,446 |
) |
||
| Restructuring and severance costs |
|
591 |
|
(a) |
|
632 |
|
(a) |
| Impairment Costs |
|
23 |
|
|
31 |
|
||
| Non-GAAP net loss | $ |
(605 |
) |
$ |
(1,783 |
) |
||
| Three Months Ended | ||||||||
| January 30, 2022 | January 31, 2021 | |||||||
| Reconciliation of GAAP net loss to Adjusted EBITDA: | ||||||||
| GAAP net loss | $ |
(1,219 |
) |
$ |
(2,446 |
) |
||
| Restructuring and severance costs |
|
591 |
|
(a) |
|
632 |
|
(a) |
| Impairment Costs |
|
23 |
|
|
31 |
|
||
| Depreciation and amortization |
|
2,032 |
|
|
1,705 |
|
||
| Share-based compensation expense |
|
765 |
|
|
226 |
|
||
| Total other (income) expense, net |
|
569 |
|
|
391 |
|
||
| Provision for income taxes |
|
153 |
|
|
327 |
|
||
| Adjusted EBITDA | $ |
2,914 |
|
$ |
866 |
|
||
| Special item adjustments consist of the following: | |
| (a) | Primarily relates to actions taken by the Company as part of its continued efforts to reduce costs and on-going costs related to facilities exited in fiscal 2020. |
GAAP to Non-GAAP Reconciliations |
|||||||||||||
| (in thousands) | |||||||||||||
| Three Months Ended January 30, 2022 |
Three Months Ended January 31, 2021 | ||||||||||||
| As Reported | As Reported | FX Impact | Adjusted | ||||||||||
| Revenue | |||||||||||||
| North American Staffing | $ |
191,196 |
|
$ |
184,216 |
|
$ |
- |
|
$ |
184,216 |
|
|
| International Staffing |
|
26,018 |
|
|
24,013 |
|
|
(842 |
) |
|
23,171 |
|
|
| North American MSP |
|
9,709 |
|
|
9,669 |
|
|
- |
|
|
9,669 |
|
|
| Corporate and Other |
|
78 |
|
|
119 |
|
|
- |
|
|
119 |
|
|
| Eliminations |
|
(73 |
) |
|
(59 |
) |
|
- |
|
|
(59 |
) |
|
| Total Revenue | $ |
226,928 |
|
$ |
217,958 |
|
$ |
(842 |
) |
$ |
217,116 |
|
|
| % change |
|
4.5 |
% |
||||||||||
GAAP to Non-GAAP Reconciliations |
|||||||||||||||||||
| (in thousands, except per share data) | |||||||||||||||||||
| Three Months Ended January 30, 2022 | Three Months Ended January 31, 2021 | ||||||||||||||||||
| As Reported | Restructuring and Impairment Costs |
Adjusted | As Reported | Restructuring and Impairment Costs |
Adjusted | ||||||||||||||
| Earnings per Share | |||||||||||||||||||
| Net income (loss) | $ |
(1,219 |
) |
$ |
614 |
) |
$ |
(605 |
) |
$ |
(2,446 |
) |
$ |
663 |
) |
$ |
(1,783 |
) |
|
| Per share data: | |||||||||||||||||||
| Basic: | |||||||||||||||||||
| Net income (loss) | $ |
(0.06 |
) |
$ |
(0.03 |
) |
$ |
(0.11 |
) |
$ |
(0.08 |
) |
|||||||
| Weighted average number of shares |
|
22,158 |
|
|
22,158 |
|
|
21,793 |
|
|
21,793 |
|
|||||||
| Diluted | |||||||||||||||||||
| Net income (loss) | $ |
(0.06 |
) |
$ |
(0.03 |
) |
$ |
(0.11 |
) |
$ |
(0.08 |
) |
|||||||
| Weighted average number of shares |
|
22,158 |
|
|
22,158 |
|
|
21,793 |
|
|
21,793 |
|
|||||||
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