Volt Information Sciences, Inc. Reports Second Quarter Fiscal 2021 Financial Results
06/15/2021 - 04:05 PM
Volt Information Sciences, Inc. (“Volt” or the “Company”) (NYSE-AMERICAN: VOLT) a global provider of staffing services, today announced financial results for the second quarter ended May 2, 2021.
Second Quarter Summary
Revenue was $222.1 million , a 7.1% increase compared to the second quarter of fiscal 2020; Adjusted Revenue* increased 5.9% .
Gross margin increased 80 basis points year over year to 16.4% .
GAAP operating income was $2.7 million , a $7.1 million improvement compared to the prior-year quarter; Adjusted Operating Income*, excluding impairment and restructuring charges, was $3.5 million .
GAAP EPS was $0.08 per diluted share compared to a loss of ($0.25) per share in the second quarter of fiscal 2020; Adjusted EPS* was $0.12 per diluted share.
Adjusted EBITDA* increased $7.4 million year over year to $6.0 million .
* Adjusted Revenue, Adjusted Operating Income (Loss), Adjusted EPS and Adjusted EBITDA are Non-GAAP measures described and defined below.
“I remain encouraged by our continued momentum and performance this quarter. Despite experiencing significant weather-related impacts in February of this year and the first seven weeks of operations in the prior-year quarter being pre-COVID, we reported sequential and year-over-year improvement in our operating results,” said Linda Perneau, President and Chief Executive Officer. “Thanks to the continued execution of our improved sales and delivery model, and our disciplined cost management, this quarter reflects our strongest year-over-year revenue growth in a decade, and our first positive GAAP net income in 14 quarters.”
Second Quarter Results
North American Staffing revenue for the quarter was $184.3 million , as compared to $173.4 million for the second quarter of fiscal 2020. Revenue for this segment increased approximately 6.3 percent year over year. The increase is primarily attributable to business wins with new clients and expansion of business within existing clients.
International Staffing revenue for the quarter was $27.9 million , compared to $24.3 million in the prior-year quarter. Adjusted Revenue increased 4.3 percent year over year. The increase is primarily due to increased managed service business and direct hire revenue in the United Kingdom as well as increased staffing business in France.
North American MSP revenue for the second quarter was $9.8 million , compared to $9.7 million in the prior-year quarter. The increase is primarily attributable to increased demand in its payroll service business.
Gross margin for the quarter was 16.4 percent of revenue, an 80 basis-point increase from the second quarter of fiscal 2020. The increase is primarily attributable to improved margins in our North American and International Staffing segments.
SG&A expense for the second quarter was $33.0 million , a $3.2 million reduction from the prior-year quarter. The reduction is primarily attributable to lower labor and related expenses, facility costs and professional fees.
Adjusted EBITDA, which is a Non-GAAP measure, was $6.0 million for the second quarter of fiscal 2021, compared to ($1.4) million in the prior-year quarter.
“Although the pandemic continues to present a number of challenges across our business, we have emerged as a stronger organization overall,” commented Ms. Perneau. “We remain confident in the continued execution of our strategic initiatives and our ability to remain on the current growth trajectory for fiscal 2021.”
2021 Earnings Conference Call and Webcast
Volt Information Sciences, Inc. will conduct a conference call on Tuesday, June 15, 2021, at 5:00 p.m. Eastern Time, to review the financial results for the second quarter ended May 2, 2021. A presentation supplementing the call can be accessed through the investor relations portion of the website. 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. 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 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 has provided 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 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. 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.
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.
The Company’s computation of Adjusted Revenue, Adjusted EBITDA, Adjusted Operating Income (Loss) and Adjusted EPS 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 2, 2021
January 31, 2021
May 3, 2020
May 2, 2021
May 3, 2020
Net revenue
$
222,092
$
217,958
$
207,275
$
440,050
$
425,041
Cost of services
185,613
185,276
175,038
370,889
361,377
Gross margin
36,479
32,682
32,237
69,161
63,664
Selling, administrative and other operating costs
32,950
33,747
36,189
66,697
75,686
Restructuring and severance costs
595
632
411
1,227
1,657
Impairment charges
261
31
-
292
11
Operating income (loss)
2,673
(1,728
)
(4,363
)
945
(13,690
)
Interest income (expense), net
(430
)
(477
)
(621
)
(907
)
(1,321
)
Foreign exchange gain (loss), net
71
242
(266
)
313
(594
)
Other income (expense), net
(147
)
(156
)
(152
)
(303
)
(410
)
Income (loss) before income taxes
2,167
(2,119
)
(5,402
)
48
(16,015
)
Income tax provision
288
327
23
615
218
Net income (loss)
$
1,879
$
(2,446
)
$
(5,425
)
$
(567
)
$
(16,233
)
Per share data:
Basic:
Net income (loss)
$
0.09
$
(0.11
)
$
(0.25
)
$
(0.03
)
$
(0.76
)
Weighted average number of shares
21,793
21,793
21,416
21,793
21,416
Diluted:
Net income (loss)
$
0.08
$
(0.11
)
$
(0.25
)
$
(0.03
)
$
(0.76
)
Weighted average number of shares
22,588
21,793
21,416
21,793
21,416
Segment data:
Net revenue:
North American Staffing
$
184,295
$
184,216
$
173,386
$
368,511
$
355,781
International Staffing
27,880
24,013
24,303
51,893
50,526
North American MSP
9,832
9,669
9,745
19,501
19,114
Corporate and Other
117
119
187
236
390
Eliminations
(32
)
(59
)
(346
)
(91
)
(770
)
Net revenue
$
222,092
$
217,958
$
207,275
$
440,050
$
425,041
Operating income (loss):
North American Staffing
$
9,471
$
6,175
$
2,576
$
15,646
$
2,675
International Staffing
1,097
382
196
1,479
570
North American MSP
309
532
491
841
1,245
Corporate and Other
(8,204
)
(8,817
)
(7,626
)
(17,021
)
(18,180
)
Operating income (loss)
$
2,673
$
(1,728
)
$
(4,363
)
$
945
$
(13,690
)
Work days
65
59
65
124
124
Condensed Consolidated Statements of Cash Flows
(in thousands)
Six Months Ended
May 2, 2021
May 3, 2020
Cash, cash equivalents and restricted cash beginning of the period
$
56,433
$
38,444
Cash provided by (used in) all other operating activities
9,161
(7,161
)
Changes in operating assets and liabilities
(7,349
)
10,071
Net cash provided by operating activities
1,812
2,910
Purchases of property, equipment, and software
(1,755
)
(3,092
)
Net cash provided by (used in) all other investing activities
(40
)
615
Net cash used in investing activities
(1,795
)
(2,477
)
Net draw-down of borrowings
-
5,000
Debt issuance costs
(166
)
(243
)
Net cash provided by (used in) all other financing activities
23
(6
)
Net cash (used in) provided by financing activities
(143
)
4,751
Effect of exchange rate changes on cash, cash equivalents and restricted cash
281
(521
)
Net increase in cash, cash equivalents and restricted cash
155
4,663
Cash, cash equivalents and restricted cash end of the period
$
56,588
$
43,107
Cash paid during the period:
Interest
$
917
$
1,382
Income taxes
$
142
$
258
Reconciliation of cash, cash equivalents and restricted cash end of the period:
Current Assets:
Cash and cash equivalents
$
47,231
$
26,223
Restricted cash included in Restricted cash and short term investments
9,357
16,884
Cash, cash equivalents and restricted cash, at end of period
$
56,588
$
43,107
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
May 2, 2021
November 1, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
47,231
$
38,550
Restricted cash and short-term investments
12,788
20,736
Trade accounts receivable, net of allowances of $156 and $219, respectively
127,435
121,916
Other current assets
7,567
7,058
TOTAL CURRENT ASSETS
195,021
188,260
Property, equipment and software, net
20,180
22,167
Right of use assets - operating leases
23,513
25,107
Other assets, excluding current portion
6,633
6,311
TOTAL ASSETS
$
245,347
$
241,845
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued compensation
$
18,630
$
18,357
Accounts payable
24,793
31,221
Accrued taxes other than income taxes
31,828
12,983
Accrued insurance and other
17,710
15,908
Operating lease liabilities
6,817
7,144
Income taxes payable
515
891
TOTAL CURRENT LIABILITIES
100,293
86,504
Accrued payroll taxes and other, excluding current portion
21,237
29,988
Operating lease liabilities, excluding current portion
35,424
38,232
Income taxes payable, excluding current portion
90
90
Deferred income taxes
-
3
Long-term debt
59,153
59,154
TOTAL LIABILITIES
216,197
213,971
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 - 21,736,575 and 21,729,400 shares, respectively
2,374
2,374
Paid-in capital
80,673
79,937
Accumulated deficit
(30,505
)
(29,793
)
Accumulated other comprehensive loss
(5,367
)
(6,458
)
Treasury stock, at cost; 2,001,428 and 2,008,603 shares, respectively
(18,025
)
(18,186
)
TOTAL STOCKHOLDERS' EQUITY
29,150
27,874
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
245,347
$
241,845
GAAP to Non-GAAP Reconciliations
(in thousands)
Three Months Ended
May 2, 2021
May 3, 2020
Reconciliation of GAAP net income (loss) to Non-GAAP net income (loss):
GAAP net income (loss)
$
1,879
$
(5,425
)
Restructuring and severance costs
595
(a)
411
(c)
Impairment costs
261
(b)
-
Non-GAAP net income (loss)
$
2,735
$
(5,014
)
Three Months Ended
May 2, 2021
May 3, 2020
Reconciliation of GAAP net income (loss) to Adjusted EBITDA:
GAAP net income (loss)
$
1,879
$
(5,425
)
Restructuring and severance costs
595
(a)
411
(c)
Impairment costs
261
(b)
-
Depreciation and amortization
1,951
2,027
Share-based compensation expense
531
508
Total other (income) expense, net
506
1,039
Provision for income taxes
288
23
Adjusted EBITDA
$
6,011
$
(1,417
)
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 impaired in the second half of fiscal 2020.
(b)
Relates to impairment of capitalized software costs.
(c)
Primarily relates to actions taken by the Company as part of its continued efforts to reduce costs and to offset COVID-19 related revenue losses.
GAAP to Non-GAAP Reconciliations
(in thousands)
Six Months Ended
May 2, 2021
May 3, 2020
Reconciliation of GAAP net loss to Non-GAAP net income (loss):
GAAP net loss
$
(567
)
$
(16,233
)
Restructuring and severance costs
1,227
(a)
1,657
(c)
Impairment costs
292
(b)
11
Non-GAAP net income (loss)
$
952
$
(14,565
)
Six Months Ended
May 2, 2021
May 3, 2020
Reconciliation of GAAP net loss to Adjusted EBITDA:
GAAP net loss
$
(567
)
$
(16,233
)
Restructuring and severance costs
1,227
(a)
1,657
(c)
Impairment costs
292
(b)
11
Depreciation and amortization
3,656
4,000
Share-based compensation expense
757
1,019
Total other (income) expense, net
897
2,325
Provision for income taxes
615
218
Adjusted EBITDA
$
6,877
$
(7,003
)
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 impaired in the second half of fiscal 2020, net of a lease termination gain.
(b)
Relates to impairment of capitalized software costs.
(c)
Primarily relates to the strategic initiative 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.
GAAP to Non-GAAP Reconciliations
(in thousands)
Three Months Ended May 2, 2021
Three Months Ended May 3, 2020
As Reported
As Reported
FX Impact
MSP Delivery Model Shift
Adjusted
Revenue
North American Staffing
$
184,295
$
173,386
$
-
$
-
$
173,386
International Staffing
27,880
24,303
2,432
-
26,735
North American MSP
9,832
9,745
-
-
9,745
Corporate and Other
117
187
-
187
Eliminations
(32
)
(346
)
-
-
(346
)
Total Revenue
$
222,092
$
207,275
$
2,432
$
-
$
209,707
% change
5.9
%
Six Months Ended May 2, 2021
Six Months Ended May 3, 2020
As Reported
As Reported
FX impact
MSP Delivery Model Shift
Adjusted
Revenue
North American Staffing
$
368,511
$
355,781
$
-
$
(2,072
)
$
353,709
International Staffing
51,893
50,526
3,787
54,313
North American MSP
19,501
19,114
-
52
19,166
Corporate and Other
236
390
-
-
390
Eliminations
(91
)
(770
)
-
-
(770
)
Total Revenue
$
440,050
$
425,041
$
3,787
$
(2,020
)
$
426,808
GAAP to Non-GAAP Reconciliations
(in thousands)
Three Months Ended May 2, 2021
Three Months Ended May 3, 2020
As Reported
Business Exited
Adjusted
As Reported
Business Exited
Adjusted
Operating Income (Loss)
North American Staffing
$
9,471
$
-
$
9,471
$
2,576
$
-
$
2,576
International Staffing
1,097
-
1,097
196
-
196
North American MSP
309
-
309
491
-
491
Corporate and Other
(8,204
)
1
(8,203
)
(7,626
)
(45
)
(7,671
)
Total Operating Income (Loss)
$
2,673
$
1
$
2,674
$
(4,363
)
$
(45
)
$
(4,408
)
Six Months Ended May 2, 2021
Six Months Ended May 3, 2020
As Reported
Business Exited
Adjusted
As Reported
Business Exited
Adjusted
Operating Income (Loss)
North American Staffing
$
15,646
$
-
$
15,646
$
2,675
$
-
$
2,675
International Staffing
1,479
-
1,479
570
-
570
North American MSP
841
-
841
1,245
-
1,245
Corporate and Other
(17,021
)
1
(17,020
)
(18,180
)
(13
)
(18,193
)
Total Operating Income (Loss)
$
945
$
1
$
946
$
(13,690
)
$
(13
)
$
(13,703
)
GAAP to Non-GAAP Reconciliations
(in thousands)
Three Months Ended May 2, 2021
Three Months Ended May 3, 2020
As Reported
Business Exited
Adjusted
As Reported
Business Exited
Adjusted
Operating Income (Loss)
Gross margin
$
36,479
$
-
$
36,479
$
32,237
$
-
$
32,237
Selling, administrative and other operating costs
32,950
-
32,950
36,189
-
36,189
Restructuring and severance costs
595
(1
)
594
411
45
456
Impairment charges
261
-
261
-
-
-
Total Operating Income (Loss)
$
2,673
$
(1
)
$
2,674
$
(4,363
)
$
(45
)
$
(4,408
)
Six Months Ended May 2, 2021
Six Months Ended May 3, 2020
As Reported
Business Exited
Adjusted
As Reported
Business Exited
Adjusted
Operating Income (Loss)
Gross margin
$
69,161
$
-
$
69,161
$
63,664
$
-
$
63,664
Selling, administrative and other operating costs
66,697
-
66,697
75,686
-
75,686
Restructuring and severance costs
1,227
(1
)
1,226
1,657
13
1,670
Impairment charges
292
-
292
11
-
11
Total Operating Income (Loss)
$
945
$
(1
)
$
946
$
(13,690
)
$
(13
)
$
(13,703
)
GAAP to Non-GAAP Reconciliations
(in thousands, except per share data)
Three Months Ended May 2, 2021
As Reported
Restructuring and Impairment Costs
Adjusted
Earnings per Share
Net income
$
1,879
$
856
$
2,735
Per share data:
Basic:
Net income
$
0.09
$
0.13
Weighted average number of shares
21,793
21,793
Diluted
Net income
$
0.08
$
0.12
Weighted average number of shares
22,588
22,588
Six Months Ended May 2, 2021
As Reported
Restructuring and Impairment Costs
Adjusted
Earnings per Share
Net income (loss)
$
(567
)
$
1,519
$
952
Per share data:
Basic:
Net income (loss)
$
(0.03
)
$
0.04
Weighted average number of shares
21,793
21,793
Diluted
Net income (loss)
$
(0.03
)
$
0.04
Weighted average number of shares
21,793
21,793
View source version on businesswire.com: https://www.businesswire.com/news/home/20210615006059/en/