EX-99.1 2 ex99-1.htm

 

EXHIBIT 99.1

 

 

Staffing 360 Solutions Reports Third Quarter and

Nine-Month 2022 Results

 

NEW YORK, November 21, 2022 (GLOBE NEWSWIRE) - Staffing 360 Solutions, Inc. (Nasdaq: STAF), a company executing an international buy-integrate-build strategy through the acquisition of staffing organizations in the United States and the United Kingdom, today announced its Fiscal 2022 third quarter and nine-month financial results.

 

Q3 2022 Overview

 

Revenue increased by 39.2% to $66.1M as compared with $47.5M in the prior year period, or an increase of 44.3% on a constant currency basis
Gross profit was $12.3M, an increase of 28.1% from $9.6M in the prior year period, or an increase of 30% on a constant currency basis
Operating income was $500K for the quarter as compared with operating income of $470K in the prior year period
Net income was $1.0M for the quarter as compared with net income of $8.7M in the prior year period. Excluding the $9.5 million PPP loan forgiveness in the prior year, we showed significant improvement
EBITDA for the quarter was $3.0M vs. $10.5M in the prior year period. Excluding the $9.5 million PPP loan forgiveness in the prior year, we again showed significant improvement
Adjusted EBITDA was $3.1M million as compared with $1.5M million in the prior year period
Fully diluted EPS was $0.43 as compared with $6.89 in the same period last year

 

 

 

 

Nine Month 2022 Overview

 

Revenue increased by 19.1% to $175.1M as compared with $147.0M for the nine months ended October 2, 2021. On a constant currency basis, the increase was 22.3%
Gross profit was $31.4M, an increase of 17.9% from $26.7M for the nine months ended October 2, 2021. On a constant currency basis, the increase was 20%
Loss from operations was ($1.2M) as compared with a loss of ($1.3M) in the prior year period
Net loss was ($3.5M) as compared with net income of $14.9M in the prior year period. Excluding the $19.6 million PPP loan forgiveness in the prior year, we narrowed our loss by $1.2
EBITDA for the period was $1.7M vs. $20.5M in the prior year period. Excluding the $19.6 million PPP loan forgiveness in the prior year, we improved by $900K
Adjusted EBITDA was $5.3 million vs. $4.0 million in the prior year period
Fully diluted EPS was ($1.80) as compared with $13.40 in the same period last year

 

Brendan Flood, Chairman, CEO and President, said, “Our paradigm changing service delivery approach continues to gain momentum in the market, delivering strong revenue growth and significant margin improvements in the third quarter.

 

“This quarter also marked the first full quarter of contribution from our recent acquisition of Headway Workforce Solutions and to date we remain on track to implement $1.8M of wide-ranging integrations savings. We believe that Headway’s unique approach to staffing is an excellent complement to our business model and can be leveraged into our other brands in both the U.S. and U.K.

 

“I am also very pleased with the progress we have made in our capital structure. We have reduced our fixed term debt to $9.4M from a high of $70M in 2020 and have recently completed the consolidation of our U.S. asset-based lending facility, which will extend maturity into 2024 and significantly lower borrowing costs going forward.

 

“Our buy-integrate-build strategy is beginning to pay dividends, and we anticipate continued revenue growth and margin improvements as we move towards our long-term goals,” concluded Mr. Flood.

 

About Staffing 360 Solutions, Inc.

 

Staffing 360 Solutions, Inc. is engaged in the execution of an international buy-integrate-build strategy through the acquisition of domestic and international staffing organizations in the United States and United Kingdom. The Company believes that the staffing industry offers opportunities for accretive acquisitions and as part of its targeted consolidation model, is pursuing acquisition targets in the finance and accounting, administrative, engineering, IT, and light industrial staffing space.

 

For more information, visit http://www.staffing360solutions.com. Follow Staffing 360 Solutions on Facebook, LinkedIn and Twitter.

 

 

 

 

Forward-Looking Statements

 

This press release contains forward-looking statements, which may be identified by words such as “expect,” “look forward to,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “project” or words of similar meaning. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company’s control, and cannot be predicted or quantified; consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, our ability to retain our listing on the Nasdaq Capital Market; market and other conditions; the geographic, social and economic impact of COVID-19 on the Company’s ability to conduct its business and raise capital in the future when needed; weakness in general economic conditions and levels of capital spending by customers in the industries the Company serves; weakness or volatility in the financial and capital markets, which may result in the postponement or cancellation of customer capital projects or the inability of the Company’s customers to pay the Company’s fees; the termination of a major customer contract or project; delays or reductions in U.S. government spending; credit risks associated with the Company’s customers; competitive market pressures; the availability and cost of qualified labor; the Company’s level of success in attracting, training and retaining qualified management personnel and other staff employees; changes in tax laws and other government regulations, including the impact of health care reform laws and regulations; the possibility of incurring liability for the Company’s business activities, including, but not limited to, the activities of the Company’s temporary employees; the Company’s performance on customer contracts; negative outcome of pending and future claims and litigation; government policies, legislation or judicial decisions adverse to the Company’s businesses; the Company’s ability to access the capital markets by pursuing additional debt and equity financing to fund its business plan and expenses on terms acceptable to the Company or at all; and the Company’s ability to comply with its contractual covenants, including in respect of its debt agreements, as well as various additional risks, many of which are now unknown and generally out of the Company’s control, and which are detailed from time to time in reports filed by the Company with the SEC, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K. Staffing 360 Solutions does not undertake any duty to update any statements contained herein (including any forward-looking statements), except as required by law.

 

Investor Relations Contact:

 

Matt Blazei

CoreIR

516-386-0430

mattb@coreir.com

 

 

 

 

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands, except share and per share values)

(UNAUDITED)

 

    THREE MONTHS ENDED     NINE MONTHS ENDED  
    October 1, 2022     October 2, 2021     October 1, 2022     October 2, 2021  
Revenue   $ 66,120     $ 47,501     $ 175,066     $ 146,982  
                                 
Cost of Revenue, excluding depreciation and amortization stated below     53,795       37,877       143,709       120,324  
                                 
Gross Profit     12,325       9,624       31,357       26,658  
                                 
Operating Expenses:                                
Selling, general and administrative expenses     11,043       8,463       30,416       25,811  
Depreciation and amortization     787       688       2,140       2,122  
Total Operating Expenses     11,830       9,151       32,556       27,933  
                                 
Income (Loss) From Operations     495       473       (1,199 )     (1,275 )
                                 
Other (Expenses) Income:                                
Interest expense and amortization of debt discount and deferred financing costs     (1,127 )     (1,006 )     (3,030 )     (3,432 )
Re-measurement loss on intercompany note     1,009       (315 )           (219 )
Gain on extinguishment of debt -PPP Loan           9,504             19,609  
Other income (loss), net     717       188       738       292  
Total Other (Expenses) Income, net     599       8,371       (2,292 )     16,250  
                                 
Income (Loss) Before Benefit from Income Tax     1,094       8,844       (3,491 )     14,975  
                                 
Benefit (Provision) from Income taxes     (62 )     (131 )     (65 )     (102 )
                                 
Net Income (Loss)     1,032       8,713       (3,556 )     14,873  
                                 
Dividends - Series E Preferred Stock - related party                       319  
Dividends - Series E-1 Preferred Stock - related party                       192  
Dividends - Series G Preferred Stock - related party           43             166  
Dividends - Series G-1 Preferred Stock - related party           40             118  
Deemed Dividend                       1,798  
Earnings allocated to participating securities           (1,077 )           (1,763 )
                                 
Net Income (Loss) Attributable to Common Stockholders   $ 1,032     $ 7,553     $ (3,556 )   $ 10,517  
                                 
Net Income (Loss) Attributable to Common Stockholders - Basic   $ 0.43     $ 7.00     $ (1.80 )   $ 14.26  
                                 
Weighted Average Shares Outstanding – Basic   $ 2,401,961       1,079,050       1,980,398       737,729  
                                 
Earnings (Loss) allocated to participating securities– Diluted (Footnote 3)   $ 1,032     $ 7,636     $ (3,556 )   $ 11,312  
                                 
Earnings (Loss) per Share Attributed to Common Stockholders - Diluted   $ 0.43     $ 6.89     $ (1.80 )   $ 13.40  
                                 
Weighted Average Shares Outstanding – Diluted     2,401,961       1,107,910       1,980,398       844,929  

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

 

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except share and par values)

 

   As of   As of 
   October 1, 2022   January 1, 2022 
   (Unaudited)     
ASSETS         
Current Assets:          
Cash  $1,753   $4,558 
Accounts receivable, net   29,864    20,718 
Prepaid expenses and other current assets   3,227    988 
Total Current Assets   34,844    26,264 
           
Property and equipment, net   1,262    865 
Goodwill   27,696    23,828 
Intangible assets, net   16,614    13,649 
Other assets   6,465    3,506 
Right of use asset   8,693    5,578 
Total Assets  $95,574   $73,690 
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Current Liabilities:          
Accounts payable and accrued expenses  $16,005   $12,532 
Accrued expenses - related party   215    216 
Current portion of debt   345    9,223 
Accounts receivable financing   19,113    15,199 
Leases - current liabilities   1,010    1,006 
Earnout liabilities   8,344    4,054 
Other current liabilities   3,573    2,503 
Total Current Liabilities   48,605    44,733 
           
Long-term debt   9,016    279 
Redeemable Series H preferred stock, net   

8,340

    

 
Leases - noncurrent   8,477    4,568 
Other long-term liabilities   829    785 
Total Liabilities   75,267    50,365 
           
Commitments and contingencies        
           
Stockholders’ Equity:          
Preferred stock, $0.00001 par value, 20,000,000 shares authorized;          
Series J Preferred Stock, 40,000 designated, $0.00001 par value, 0 and 0 shares issued and outstanding as of October 1, 2022 and January 1, 2022, respectively        
Common stock, $0.00001 par value, 40,000,000 shares authorized; 2,433,199 and 1,758,835 shares issued and outstanding, as of October 1, 2022 and January 1, 2022, respectively   1    1 
Additional paid in capital   110,968    107,183 
Accumulated other comprehensive (loss) income   (3,085)   162 
Accumulated deficit   (87,577)   (84,021)
Total Stockholders’ Equity   20,307    23,324 
Total Liabilities and Stockholders’ Equity  $95,574   $73,690 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

 

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(All amounts in thousands)

(UNAUDITED)

 

  

NINE MONTHS ENDED

 
   October 1, 2022   October 2, 2021 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net (Loss) Income  $(3,556)  $14,873 
Adjustments to reconcile net (loss) income to net cash used in operating activities:          
Depreciation and amortization   2,140    2,122 
Amortization of debt discount and deferred financing costs   518    365 
Bad debt (recovery) expense   (302)   260 
Right of use assets depreciation   1,066    852 
Stock based compensation   325    350 
Forgiveness of PPP loan and related interest       (19,609)
Re-measurement (loss) gain on intercompany note       219 
Changes in operating assets and liabilities:          
Accounts receivable   (6,114)   (5,343)
Prepaid expenses and other current assets   (1,854)   (289)
Other assets   (944)   (438)
Accounts payable and accrued expenses   (1,083)   (2,356)
Accounts payable, related party   125    (326)
Other current liabilities   357    (105)
Other long-term liabilities and other   1,040   (349)
NET CASH USED IN OPERATING ACTIVITIES   (8,282)   (9,774)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of property and equipment   (719)   (100)
Acquisition of business, net of cash acquired   1,395     
Collection of UK factoring facility deferred purchase price   5,282    5,349 
NET CASH PROVIDED BY INVESTING ACTIVITIES   5,958    5,249 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Third party financing costs   (554)   (3,769)
Proceeds from term loan - Related party       130 
Repayment of term loan   (379)   (29,244)
Proceeds from term loan   67     
Repayments on accounts receivable financing, net   (3,345)   (3,659)
Dividends paid to related parties       (591)
Redemption of Series E preferred stock, related party       (4,908)
Proceeds from sale of common stock   4,013    33,769 
Payments made on earnouts   (160)    
Proceeds from sale of Series F preferred stock       4,698 
NET CASH USED IN FINANCING ACTIVITIES   (358)   (3,574)
           
NET DECREASE IN CASH   (2,682)   (8,099)
           
Effect of exchange rates on cash   (123)   (6)
           
Cash - Beginning of period   4,558    10,336 
           
Cash - End of period  $1,753   $2,231 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

 

Adjusted EBITDA This measure is defined as net income (loss) attributable to common stock before: interest expense, benefit from income taxes; depreciation and amortization; acquisition, capital raising and other non-recurring expenses; other non-cash charges; impairment of goodwill; re-measurement gain on intercompany note; restructuring charges; gain from sale of business; PPP Forgiveness Gain; other income; and charges we consider to be non-recurring in nature such as legal expenses associated with litigation, professional fees associated potential and completed acquisitions. We use this measure because we believe it provides a more meaningful understanding of our profit and cash flow generation.

 

   Three Months Ended   Nine Months Ended   Trailing Twelve Months 
   October 1, 2022   October 2, 2021   October 1, 2022   October 2, 2021   October 1, 2022   October 2, 2021 
Net loss  $1,032   $8,713   $(3,556)  $14,873   $(10,200)  $12,632 
                               
Interest expense   891    814    2,512    3,068    3,301    4,506 
(Benefit) expense from income taxes   62   131    65   102    (392)   247 
Depreciation and amortization   1,023    880    2,658    2,486    3,289    3,330 
EBITDA  $3,008   $10,538   $1,679   $20,529   $(4,073)  $20,715 
                               
Acquisition, capital raising and other non-recurring expenses (1)   1,788    321    4,375    2,802    4,847    5,024 
Other non-cash charges (2)   7    8    32    344    253    450 
Impairment of Goodwill   -    -    -    -    3,104    - 
Re-measurement gain on intercompany note   

(1,009

)   315    -    219    -    (712)
Deferred consideration settlement   -    -    -    -    -    41 
PPP Forgiveness Gain   -    (9,504)   -    (19,609)   -    (19,609)
Gain on sale of business   -    -    -    -    -    95 
Other (income) loss   (717)   (188)   (738)   (292)   (412)   (296)
Adjusted EBITDA  $3,077   $1,490   $5,348   $3,993   $3,719   $5,708 
                               
Adjusted EBITDA of Divested Business (3)                      $-   $101 
                               
Pro Forma Adjusted EBITDA (4)                      $3,719   $5,809 
                               
Adjusted Gross Profit (5)                      $35,866   $34,945 
                               
Adjusted EBITDA as percentage of Adjusted Gross Profit                       10.4%   16.6%

 

  (1) Acquisition, capital raising, and other non-recurring expenses primarily relate to capital raising expenses, acquisition and integration expenses, and legal expenses incurred in relation to matters outside the ordinary course of business. Due to government mandated restrictions, the Company had to temporarily close some of its offices and, due to social distancing restrictions, could not make full use of these facilities for significant periods of time during 2021.
     
  (2) Other non-cash charges primarily relate to staff option and share compensation expense, expense for shares issued to directors for board services, and consideration paid for consulting services.
     
  (3) Adjusted EBITDA of Divested Business for the period prior to the divestment date.
     
  (4) Pro Forma Adjusted EBITDA excludes the Adjusted EBITDA of Divested Business for the period prior to the divestment date.
     
  (5) Adjusted Gross Profit excludes gross profit of business divested in September 2020, for the period prior to divestment date.

 

Operating Leverage This measure is calculated by dividing the growth in Adjusted EBITDA by the growth in Adjusted Gross Profit, on a trailing 12-month basis. We use this KPI because we believe it provides a measure of our efficiency for converting incremental gross profit into Adjusted EBITDA.