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| 8-K - CURRENT REPORT - VOLT INFORMATION SCIENCES, INC. | ss1498425_8k.htm |
FOR IMMEDIATE RELEASE
Volt Information Sciences Reports Fiscal 2016 Second Quarter Financial Results
NEW YORK, NY, June 8, 2016 – 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 second quarter ended May 1, 2016. Key elements include:
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Second quarter net revenue of $335.4 million up 2.6% compared to the prior quarter and down 12.9% year-over-year
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Second quarter loss from continuing operations of $1.8 million or $2.5 million excluding special items
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During the second quarter, the Company completed a sale-leaseback transaction for its office facility in Orange, California, and also sold its office facility in San Diego, California with combined net proceeds totaling $29.1 million
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As of the end of the second quarter, the Company had $58.8 million of available liquidity for working capital requirements, up from $44.7 million at the end of the prior quarter and $16.9 million a year ago
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The Company strengthened its top leadership team with the addition of four experienced senior executives and one internal promotion
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Commenting on Volt’s second quarter performance, Michael Dean, President and CEO, said, “Overall, the second quarter was a very productive period for Volt. Importantly, we continued to make good progress on our previously stated plan to streamline our organization and improve our operational and financial performance. Our cost structure is leaner and our actions to divest non-core assets have improved our liquidity position over the past year. The process to sell our last remaining non-core business, Maintech, is proceeding. I am also pleased to report that we are adding to our book of business with important new customer engagements. Finally, we continue to augment our already strong management team with the addition of several exceptional executives to head up key leadership and revenue driving roles within the organization.”
Mr. Dean concluded, “Since embarking on our turnaround plan late last year, I have maintained that it will take time to operationally address all of the issues we are dealing with—and even longer for the changes we are making to be reflected in our financial results. However, I can say with confidence that we are on-track to returning Volt to top and bottom line growth.”
Fiscal 2016 Second Quarter Results
Total revenue for the fiscal 2016 second quarter was $335.4 million, up $8.6 million, or 2.6% compared to total revenue of $326.8 million in the first quarter of fiscal 2016. Compared to the prior
| Volt Information Sciences Reports Fiscal 2016 Second Quarter Results
June 8, 2016
Page 2 of 9
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year period, total revenue decreased $49.8 million or 12.9% compared to $385.2 million in the second quarter of fiscal 2015.
Staffing Services segment revenue was $317.2 million, an $8.5 million or 2.8% increase compared to $308.7 million in the first quarter of fiscal 2016. Compared to the prior year period, Staffing Services segment revenues declined $45.0 million, or 12.4% compared to Staffing Services revenues of $362.3 million in the second quarter of fiscal 2015. Other segment revenue was $18.2 million in the second quarter of fiscal 2016, compared to $18.1 million in the first quarter of fiscal 2016 and $22.9 million in the prior year period.
Net loss of $1.8 million in the second quarter of fiscal 2016 included $2.0 million from gain on the sale of real estate, $0.8 million of restructuring and severance costs and $0.5 million in other fees. Excluding the impact of these special items, net loss for the second quarter of 2016 would have been $2.5 million on a Non-GAAP basis.
Adjusted EBITDA, which is also a Non-GAAP measure, was $2.0 million in the fiscal 2016 second 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.
Senior Leadership Update
As previously announced, the Company has hired four pivotal senior executives and promoted another, strengthening the Company’s top leadership as it moves forward on its growth and profitability strategies. Joining the company are Jorge Perez, President of Volt’s North American Staffing Business – Volt Workforce Solutions (VWS); Sue Tidswell, Senior Vice President Sales of VWS; Ann Hollins, Chief Human Resources Officer; and Chuck Sperazza, Chief Information Officer. In addition, Rhona Driggs has been promoted to President of Volt Consulting Group (VCG), Volt’s MSP service business, in addition to maintaining responsibility as Executive Vice President, Commercial Operations for VWS.
Financing
As previously mentioned, during the second quarter Maintech entered into a $10.0 million revolving credit agreement with Bank of America. The Credit Agreement was added to provide flexibility for working capital purposes. The Company expects to terminate the Credit Agreement on or before the sale of Maintech.
Liquidity
As of May 1, 2016, the Company had $58.8 million of available liquidity for working capital requirements as compared to $16.9 million in the prior year period.
Conference Call and Webcast
A conference call and simultaneous webcast to discuss the fiscal 2016 second 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
| Volt Information Sciences Reports Fiscal 2016 Second Quarter Results
June 8, 2016
Page 3 of 9
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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, June 8, 2016 at 7:30 p.m. Eastern Time through Wednesday, June 22, 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 # 13638068. 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.
Investor Contacts:
Paul Tomkins
Volt Information Sciences, Inc.
| Volt Information Sciences Reports Fiscal 2016 Second Quarter Results
June 8, 2016
Page 4 of 9
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voltinvest@volt.com
212-704-7921
Lasse Glassen
Addo Communications
lasseg@addocommunications.com
424-238-6249
--Financial Tables to Follow--
| Volt Information Sciences Reports Fiscal 2016 Second Quarter Results
June 8, 2016
Page 5 of 9
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Sequential Results of Operations
(in thousands, except per share data)
(Unaudited)
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Three Months Ended
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Six Months Ended
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May 1, 2016
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January 31, 2016
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May 3, 2015
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May 1, 2016
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May 3, 2015
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Revenue:
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Staffing services revenue
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$ | 317,247 | $ | 308,681 | $ | 362,277 | $ | 625,928 | $ | 723,098 | ||||||||||
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Other revenue
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18,192 | 18,149 | 22,912 | 36,341 | 45,157 | |||||||||||||||
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Net revenue
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335,439 | 326,830 | 385,189 | 662,269 | 768,255 | |||||||||||||||
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Expenses:
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Direct cost of staffing services revenue
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267,826 | 264,172 | 303,837 | 531,998 | 613,355 | |||||||||||||||
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Cost of other revenue
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15,887 | 16,788 | 19,909 | 32,675 | 39,514 | |||||||||||||||
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Selling, administrative and other operating costs
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51,382 | 52,925 | 59,912 | 104,307 | 120,202 | |||||||||||||||
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Restructuring and severance costs
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840 | 2,761 | 251 | 3,601 | 1,226 | |||||||||||||||
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Impairment charges
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- | - | 5,374 | - | 5,374 | |||||||||||||||
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Gain on sale of building
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(1,663 | ) | - | - | (1,663 | ) | - | |||||||||||||
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Total expenses
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334,272 | 336,646 | 389,283 | 670,918 | 779,671 | |||||||||||||||
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Operating income (loss)
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1,167 | (9,816 | ) | (4,094 | ) | (8,649 | ) | (11,416 | ) | |||||||||||
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Interest income (expense), net
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(862 | ) | (658 | ) | (730 | ) | (1,520 | ) | (1,364 | ) | ||||||||||
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Foreign exchange gain (loss), net
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(579 | ) | 344 | (1,600 | ) | (235 | ) | (1,163 | ) | |||||||||||
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Other income (expense), net
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(420 | ) | (279 | ) | 43 | (699 | ) | 141 | ||||||||||||
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Loss from continuing operations before income taxes
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(694 | ) | (10,409 | ) | (6,381 | ) | (11,103 | ) | (13,802 | ) | ||||||||||
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Income tax provision
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1,091 | 553 | 532 | 1,644 | 1,911 | |||||||||||||||
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Loss from continuing operations
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(1,785 | ) | (10,962 | ) | (6,913 | ) | (12,747 | ) | (15,713 | ) | ||||||||||
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Loss from discontinued operations
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- | - | - | - | (4,519 | ) | ||||||||||||||
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Net loss
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$ | (1,785 | ) | $ | (10,962 | ) | $ | (6,913 | ) | $ | (12,747 | ) | $ | (20,232 | ) | |||||
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Per share data:
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Basic:
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Loss from continuing operations
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$ | (0.09 | ) | $ | (0.53 | ) | $ | (0.33 | ) | $ | (0.61 | ) | $ | (0.75 | ) | |||||
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Loss from discontinued operations
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- | - | - | - | (0.22 | ) | ||||||||||||||
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Net loss
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$ | (0.09 | ) | $ | (0.53 | ) | $ | (0.33 | ) | $ | (0.61 | ) | $ | (0.97 | ) | |||||
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Weighted average number of shares
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20,814 | 20,813 | 20,793 | 20,813 | 20,861 | |||||||||||||||
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Diluted:
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Loss from continuing operations
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$ | (0.09 | ) | $ | (0.53 | ) | $ | (0.33 | ) | $ | (0.61 | ) | $ | (0.75 | ) | |||||
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Loss from discontinued operations
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- | - | - | - | (0.22 | ) | ||||||||||||||
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Net loss
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$ | (0.09 | ) | $ | (0.53 | ) | $ | (0.33 | ) | $ | (0.61 | ) | $ | (0.97 | ) | |||||
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Weighted average number of shares
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20,814 | 20,813 | 20,793 | 20,813 | 20,861 | |||||||||||||||
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Segment data:
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Revenue:
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Staffing Services
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$ | 317,247 | $ | 308,681 | $ | 362,277 | $ | 625,928 | $ | 723,098 | ||||||||||
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Other Segment
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18,192 | 18,149 | 22,912 | 36,341 | 45,157 | |||||||||||||||
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Net revenue
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$ | 335,439 | $ | 326,830 | $ | 385,189 | $ | 662,269 | $ | 768,255 | ||||||||||
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Operating income (loss):
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Staffing Services
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$ | 7,934 | $ | 1,734 | $ | 10,337 | $ | 9,668 | $ | 13,967 | ||||||||||
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Other Segment
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224 | (371 | ) | (5,325 | ) | (147 | ) | (5,610 | ) | |||||||||||
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Corporate general & administrative
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(8,654 | ) | (11,179 | ) | (9,106 | ) | (19,833 | ) | (19,773 | ) | ||||||||||
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Gain on sale of building
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1,663 | - | - | 1,663 | - | |||||||||||||||
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Operating income (loss)
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$ | 1,167 | $ | (9,816 | ) | $ | (4,094 | ) | $ | (8,649 | ) | $ | (11,416 | ) | ||||||
Commencing in the first quarter of fiscal 2016, the Comp any 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.
| Volt Information Sciences Reports Fiscal 2016 Second Quarter Results
June 8, 2016
Page 6 of 9
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Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
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Six months ended
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May 1, 2016
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May 3, 2015
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Cash and cash equivalents, beginning of the period
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$ | 10,188 | $ | 6,723 | ||||
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Cash used in all other operating activities
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(10,230 | ) | (6,277 | ) | ||||
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Changes in operating assets and liabilities
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12,719 | 7,259 | ||||||
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Net cash provided by operating activities
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2,489 | 982 | ||||||
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Proceeds from sale of property and equipment
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36,878 | 227 | ||||||
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Net cash used in all other investing activities
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(9,325 | ) | (2,981 | ) | ||||
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Net cash provided by (used in) investing activities
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27,553 | (2,754 | ) | |||||
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Decrease in cash restricted as collateral for borrowings
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- | 10,352 | ||||||
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Net change in borrowings
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(8,000 | ) | 1,494 | |||||
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Repayment of long-term debt
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(7,295 | ) | (446 | ) | ||||
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Purchases of common stock under repurchase program
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- | (4,262 | ) | |||||
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Net cash provided by (used in) all other financing activities
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(536 | ) | 206 | |||||
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Net cash provided by (used in) financing activities
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(15,831 | ) | 7,344 | |||||
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Effect of exchange rate changes on cash and cash equivalents
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(1,228 | ) | (1,958 | ) | ||||
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Net cash used in discontinued operations
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- | (4,056 | ) | |||||
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Net increase (decrease) in cash and cash equivalents
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12,983 | (442 | ) | |||||
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Change in cash from discontinued operations
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- | (211 | ) | |||||
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Cash and cash equivalents, end of the period
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$ | 23,171 | $ | 6,070 | ||||
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Cash paid during the period:
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Interest
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$ | 1,662 | $ | 1,690 | ||||
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Income taxes
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$ | 2,473 | $ | 634 | ||||
| Volt Information Sciences Reports Fiscal 2016 Second Quarter Results
June 8, 2016
Page 7 of 9
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Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
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May 1, 2016
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November 1, 2015
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ASSETS
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(unaudited)
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CURRENT ASSETS:
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Cash and cash equivalents
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$ | 23,171 | $ | 10,188 | ||||
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Restricted cash and short-term investments
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11,647 | 14,977 | ||||||
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Trade accounts receivable, net of allowances of $749 and $960, respectively
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177,178 | 198,385 | ||||||
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Recoverable income taxes
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17,762 | 17,583 | ||||||
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Prepaid insurance and other current assets
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17,724 | 15,865 | ||||||
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Assets held for sale
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21,572 | 22,943 | ||||||
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TOTAL CURRENT ASSETS
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269,054 | 279,941 | ||||||
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Other assets, excluding current portion
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24,695 | 22,790 | ||||||
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Property, equipment and software, net
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24,186 | 24,095 | ||||||
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TOTAL ASSETS
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$ | 317,935 | $ | 326,826 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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CURRENT LIABILITIES:
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Accrued compensation
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$ | 28,601 | $ | 29,548 | ||||
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Accounts payable
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31,312 | 39,164 | ||||||
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Accrued taxes other than income taxes
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26,205 | 22,719 | ||||||
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Accrued insurance and other
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34,327 | 34,391 | ||||||
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Short-term borrowings, including current portion of long-term debt
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92,000 | 982 | ||||||
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Income taxes payable
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- | 1,658 | ||||||
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Liabilities held for sale
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6,119 | 7,345 | ||||||
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TOTAL CURRENT LIABILITIES
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218,564 | 135,807 | ||||||
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Accrued insurance and other, excluding current portion
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13,606 | 13,699 | ||||||
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Deferred gain on sale of real estate, excluding current portion
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27,080 | - | ||||||
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Income taxes payable, excluding current portion
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6,585 | 6,516 | ||||||
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Long-term debt, excluding current portion
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- | 106,313 | ||||||
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TOTAL LIABILITIES
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265,835 | 262,335 | ||||||
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Commitments and contingencies
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STOCKHOLDERS’ EQUITY
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Preferred stock, par value $1.00; Authorized - 500,000 shares; Issued - none
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- | - | ||||||
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Common stock, par value $0.10; Authorized - 120,000,000 shares; Issued - 23,738,003 and 23,738,003, respectively; Outstanding - 20,832,503 and 20,801,080, respectively
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2,374 | 2,374 | ||||||
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Paid-in capital
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75,480 | 75,803 | ||||||
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Retained earnings
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24,569 | 38,034 | ||||||
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Accumulated other comprehensive loss
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(7,692 | ) | (7,994 | ) | ||||
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Treasury stock, at cost; 2,905,500 shares and 2,936,923 shares
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(42,631 | ) | (43,726 | ) | ||||
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TOTAL STOCKHOLDERS’ EQUITY
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52,100 | 64,491 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 317,935 | $ | 326,826 | ||||
| Volt Information Sciences Reports Fiscal 2016 Second Quarter Results
June 8, 2016
Page 8 of 9
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Unaudited Non-GAAP Statement of Operations and Reconciliations
(in thousands, except earnings per share)
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Three Months Ended May 1, 2016
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Three Months Ended May 3, 2015
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GAAP
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Special Items
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Ref
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Non-GAAP
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GAAP
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Special Items
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Ref
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Non-GAAP
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Revenue:
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Staffing services revenue
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$ | 317,247 | $ | - | $ | 317,247 | $ | 362,277 | $ | - | $ | 362,277 | ||||||||||||||
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Other revenue
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18,192 | - | 18,192 | 22,912 | - | 22,912 | ||||||||||||||||||||
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Net revenue
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335,439 | - | 335,439 | 385,189 | - | 385,189 | ||||||||||||||||||||
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Expenses:
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Direct cost of staffing services revenue
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267,826 | - | 267,826 | 303,837 | - | 303,837 | ||||||||||||||||||||
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Cost of other revenue
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15,887 | - | 15,887 | 19,909 | - | 19,909 | ||||||||||||||||||||
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Selling, administrative and other operating costs
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51,382 | (103 | ) |
(a)
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51,279 | 59,912 | (1,632 | ) |
(d)
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58,280 | ||||||||||||||||
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Restructuring and severance costs
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840 | (840 | ) |
(b)
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- | 251 | (251 | ) | - | |||||||||||||||||
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Impairment charges
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- | - | - | 5,374 | (5,374 | ) |
(e)
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- | ||||||||||||||||||
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Gain on sale of building
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(1,663 | ) | 1,663 |
(c)
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- | - | - | - | ||||||||||||||||||
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Total expenses
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334,272 | 720 | 334,992 | 389,283 | (7,257 | ) | 382,026 | |||||||||||||||||||
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Operating income (loss)
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1,167 | (720 | ) | 447 | (4,094 | ) | 7,257 | 3,163 | ||||||||||||||||||
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Other income (expense), net:
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Interest income (expense), net
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(862 | ) | - | (862 | ) | (730 | ) | - | (730 | ) | ||||||||||||||||
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Foreign exchange gain (loss), net
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(579 | ) | - | (579 | ) | (1,600 | ) | 1,600 |
(f)
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- | ||||||||||||||||
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Other income (expense), net
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(420 | ) | - | (420 | ) | 43 | - | 43 | ||||||||||||||||||
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Total other income (expense), net
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(1,861 | ) | - | (1,861 | ) | (2,287 | ) | 1,600 | (687 | ) | ||||||||||||||||
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Income (loss) from continuing operations before income taxes
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(694 | ) | (720 | ) | (1,414 | ) | (6,381 | ) | 8,857 | 2,476 | ||||||||||||||||
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Income tax provision
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1,091 | - | 1,091 | 532 | - | 532 | ||||||||||||||||||||
| Income (loss) from continuing operations | $ | (1,785 | ) | $ | (720 | ) | $ | (2,505 | ) | $ | (6,913 | ) | $ | 8,857 | $ | 1,944 | ||||||||||
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* Basic income (loss) from continuing operations
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$ | (0.09 | ) | $ | (0.03 | ) | $ | (0.12 | ) | $ | (0.33 | ) | $ | 0.43 | $ | 0.09 | ||||||||||
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* Diluted income (loss) from continuing operations
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$ | (0.09 | ) | $ | (0.03 | ) | $ | (0.12 | ) | $ | (0.33 | ) | $ | 0.43 | $ | 0.09 | ||||||||||
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Basic weighted average number of shares
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20,814 | 20,814 | 20,814 | 20,793 | 20,793 | 20,793 | ||||||||||||||||||||
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Diluted weighted average number of shares
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20,814 | 20,814 | 20,814 | 20,793 | 20,793 | 20,793 | ||||||||||||||||||||
Special item adjustments consist of the following:
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(a)
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Relates primarily to fees incurred to attract world class executive talent partially offset by the amortization of the gain on the sale of the Orange, CA facility.
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(b)
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Relates primarily to company-wide cost reduction plan implemented in November 2015.
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(c)
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Relates to the gain on the sale of the San Diego, CA facility
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(d)
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Relates primarily to costs incurred responding to activist shareholders and related Board of Director search fees, as well as legal and other items.
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(e)
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Relates primarily to the impairment of net assets in our publishing and printing business in Uruguay as well as the impairment of goodwill related to our staffing business in Uruguay.
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(f)
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Relates primarily to non-cash foreign exchange gain or loss on our intercompany balances.
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* Earnings per share may not add in certain periods due to rounding.
| Volt Information Sciences Reports Fiscal 2016 Second Quarter Results
June 8, 2016
Page 9 of 9
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Unaudited Reconciliation of GAAP Loss from Continuing Operations
to Adjusted EBITDA
(in thousands)
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Three Months Ended
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||||||||
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May 1, 2016
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May 3, 2015
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|||||||
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GAAP loss from continuing operations
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$ | (1,785 | ) | $ | (6,913 | ) | ||
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Special items
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(720 | ) | 8,857 | |||||
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Non-GAAP income (loss) from continuing operations
|
(2,505 | ) | 1,944 | |||||
|
Adjustments:
|
||||||||
|
Depreciation and amortization
|
1,519 | 1,639 | ||||||
|
Share-based compensation expense
|
78 | 242 | ||||||
|
Other (income) loss, net (a)
|
1,861 | 687 | ||||||
|
Provision for income taxes
|
1,091 | 532 | ||||||
|
Adjusted EBITDA
|
$ | 2,044 | $ | 5,044 | ||||
(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.