Staffing 360 Solutions confirms revenues of $45.8m for year end results
"Quite clearly, the Company has grown dramatically over the last year," stated Brendan Flood, Executive Chairman of Staffing 360 Solutions. "As a perfect illustration of our significant growth to-date, our net revenues increased to $45.8 million in fiscal 2014, up from less than $1 million in the prior year."
Summary of the Fiscal Year Ended May 31, 2014
• Net revenues increased to $45.8 million in fiscal 2014, compared to $648,000 in the fiscal year ended May 31, 2013.
• Gross profit increased to $9.1 million in fiscal 2014, compared to $199,000 in the fiscal year ended May 31, 2013.
• Net loss increased to $12.7 million* in fiscal 2014, compared to a net loss of $3.4 million in the fiscal year ended May 31, 2013.
• Adjusted EBITDA loss was approximately $2.7 million* in fiscal 2014.
* A table has been included in this press release with Non-GAAP adjustments to the Company's net loss by approximately $10 million in fiscal 2014 due to the significant amount of M&A activity relating to its four acquisitions (including: non-cash expenses, acquisition expenses, capital raising expenses and non-recurring expenses of $2.5 million, impairment of goodwill of $3.5 million, depreciation and amortization of $3.4 million and approximately $670,000 of other expenses), resulting in a Pro Forma Adjusted EBITDA loss of $2.7 million.
Summary of the Unaudited Fiscal Fourth Quarter Ended May 31, 2014
• Net revenues increased to $25.6 million, compared to $557,000 in the fourth quarter ended May 31, 2013.
• Gross profit increased to $4.6 million, compared to $159,000 in the fourth quarter ended May 31, 2013.
Mr. Flood continued, "Although our bottom line still shows a net loss, these results include a significant amount of M&A activity relating to our four acquisitions during the fiscal year. Many of these expenses are either non-cash in nature, acquisition-related or are non-recurring. In addition, these consolidated results only include a portion of the revenues from our acquisitions due to the timing of the closings throughout the year. Therefore our future quarterly results will more fully reflect income and expenses for all of our operating companies going forward. We are pleased to report that our acquisition strategy has fueled our growth from less than $1 million of revenue in fiscal 2013 to over $45 million in fiscal 2014."
Analysis of Financial Results
During the recent fiscal year, Staffing 360 Solutions completed four acquisitions, including Control Solutions International Inc., Initio International Holdings Limited (renamed Staffing 360 Solutions Limited), Poolia UK, and PeopleSERVE. These four acquisitions are in addition to the Company's first acquisition of The Revolution Group (renamed Cyber 360 Solutions) which was completed in the fourth quarter of fiscal 2013, resulting in a total of five acquisitions to-date.
As a result of these acquisitions, net revenues increased to $45.8 million in the fiscal year ended May 31, 2014, compared to approximately $648,000 for the same period in 2013. Gross profit increased to over $9.1 million in the 2014 fiscal year, compared to approximately $199,000 for the same period in 2013. Again, this significant increase in revenue and gross profit was principally a result of the Company's four new acquisitions, as compared to the revenue and gross profit of its lone subsidiary in 2013.
It is important to note, however, that these consolidated fiscal year results only include five months -- or approximately 40% -- of Initio's full year financial results due to the fact that Staffing 360 Solutions acquired Initio on January 3, 2014. Initio was an $80 million business (according to previously announced pre-acquisition calendar 2013 revenues). In addition, these results only reflect three months of the Company's Poolia UK acquisition and less than 15 days of the Company's most recent PeopleSERVE acquisition which closed on May 17, 2014. The timing of these acquisitions explains the difference between the Company's $45 million in revenues in fiscal 2014 versus the Company's current run-rate of $120 million in revenues on an annualized basis. The Company's future quarterly results will more fully reflect these acquisitions.
The Company's net loss for fiscal 2014 increased to $12.7 million (or a Pro Forma Adjusted EBITDA loss of $2.7 million on a Non-GAAP basis*), compared to a net loss of approximately $3.4 million for the same period in 2013. The increase in net loss was primarily attributable to increased operating expenses including an increased workforce due to the acquisitions made throughout the year as well as office expenses related to the Company's subsidiaries, four of which did not exist in 2013. In addition, the Company fully impaired its goodwill assets related to the acquisition of Cyber 360 Solutions for a total of $1.4 million and $1.3 million associated with the acquisition of Control Solutions International. In addition, the Company incurred substantial one-time costs that were attributable to its four acquisitions in fiscal 2014.
"We have grown significantly over the past year," stated Jeff Mitchell, Chief Financial Officer. "Our first two acquisitions allowed us to make our transformative acquisition of Initio, which in turn enabled us to complete our next two acquisitions and grow past the key threshold of $100 million in annualized revenues. Although the impairment charges relating to our first two acquisitions are correct from an accounting GAAP perspective, they must be viewed in the totality of our M&A program. Considering the fact that our first two acquisitions only contribute approximately 6% of our consolidated revenue on a current run-rate basis, these are largely immaterial to our long term plans, especially as we add additional acquisitions."
Matt Briand, Chief Executive Officer, added, "As we continue to implement our acquisition strategy, Staffing 360 Solutions is fully committed to reaching our stated goal of $300 million in annualized revenues. We believe our consolidation strategy is ideally suited for the highly fragmented temporary staffing industry, especially considering our highly experienced management team. As our reach is extended around the world, we look forward to relaying our exciting developments and important milestones with our loyal shareholders."
Highlights of the 2014 Fiscal Year and Subsequent Events
• Completed the acquisition of Initio International Holdings Limited (renamed Staffing 360 Solutions Limited) on January 3, 2014, which included the Monroe Staffing division in the US and Longbridge Recruitment division in the UK. Initio generated approximately $80 million in revenues during calendar 2013.
• Appointed staffing industry veterans Brendan Flood as Executive Chairman and Matt Briand as Chief Executive Officer. Included in Mr. Flood's significant industry experience was his role as the former CFO of the Americas for Monster Worldwide, Inc., which generated $1.8 billion of annualized revenue in 2002.
• Completed the acquisition of Poolia UK Ltd. on February 28, 2014, a subsidiary of Poolia AB, a publicly listed company on NASDAQ OMX Stockholm.
• Completed the acquisition of PeopleSERVE on May 17, 2014, a fast-growing IT staffing firm with an emphasis on security, development and project management.
• Completed a $1.7 million convertible note financing, a $10 million equity private placement and a $4.1 million Series A Convertible Bond offering to continue to fund the Company's acquisition strategy.
• Hired seasoned accounting executive Jeff R. Mitchell as the Company's new Chief Financial Officer. Mr. Mitchell was the former CFO of Select Staffing, where he led over 40 acquisitions in the staffing industry as part of their M&A strategy, which contributed $1.3 billion in revenue.
Mr. Flood concluded, "While our current highly experienced management team was only in place for less than five months during this reporting period, based on the acquisitions we have completed to-date, we are already in the top 30 public staffing companies in the United States. As we continue to explore and evaluate further acquisitions, we will be moving ever closer towards our publicly stated mission of being a $300 million revenue business. This growth will result in many more significant announcements throughout the remainder of 2014 as we leverage our operational and capital markets expertise, while maintaining a steadfast commitment to growth in revenues, growth in earnings and growth in long term shareholder value."