Staffing 360 Solutions announce net revenues of $33.4m for Q1 2015
"We are pleased to announce our latest quarterly results," stated Brendan Flood, Executive Chairman of Staffing 360 Solutions. "As a perfect illustration of our growth to-date, our acquisition strategy has fueled our expansion from just over $1 million in revenue in fiscal Q1 2014 to over $33 million in Q1 2015. This places us over $130 million in revenue on a current annualized basis."
Summary of Fiscal Q1 2015 (Three Months Ended August 31, 2014)
• Net revenues increased to $33.4 million, compared to $1.3 million in the quarter ended August 31, 2013.
• Gross profit increased to $5.9 million, compared to approximately $393,000 in the quarter ended August 31, 2013.
• Net loss increased to $4.7 million*, compared to a net loss of approximately $427,000 in the quarter ended August 31, 2013.
• Adjusted EBITDA loss was approximately $409,000* in the quarter ended August 31, 2014.
* A table has been included in this press release with Non-GAAP adjustments to the Company's net loss by approximately $4.3 million (including: non-cash expenses, acquisition expenses, capital raising expenses and non-recurring expenses of $378,000, depreciation and amortization of $3.6 million and approximately $309,000 of other expenses), resulting in an Adjusted EBITDA loss of $409,000.
"Not only have we demonstrated significant year-over-year growth, our most recent quarter ended August 31, 2014 has shown strong improvements on a sequential basis from our quarter ended May 31, 2014," stated Mr. Flood. "For example, our net revenue increased from $25.6 million in the previous quarter to $33.4 million, resulting in 30% sequential growth. Likewise, our Adjusted EBITDA loss of $2.5 million in the previous quarter improved to an Adjusted EBITDA loss of $409,000 for the quarter ended August 31, 2014 and we expect to continue to improve these numbers as we implement our Pathway to Profitability."
Analysis of Financial Results
As part of its targeted acquisition strategy, Staffing 360 Solutions has completed five acquisitions to-date, including The Revolution Group (renamed Cyber 360 Solutions), Control Solutions International Inc., Initio International Holdings Limited (renamed Staffing 360 Solutions Limited), Poolia UK, and PeopleSERVE. Four of these acquisitions took place after August 31, 2013.
As a result of these acquisitions, net revenues increased to $33.4 million in the quarter ended August 31, 2014, compared to approximately $1.3 million for the same period in 2013. Gross profit increased to over $5.9 million, compared to approximately $393,000 for the same period in 2013. Again, this significant increase in revenue and gross profit was principally a result of the Company's recent acquisitions, as compared to the revenue and gross profit of its lone subsidiary in 2013.
The Company's net loss for the quarter ended August 31, 2014 increased to $4.7 million (or an Adjusted EBITDA loss of approximately $409,000 on a Non-GAAP basis*), compared to a net loss of approximately $427,000 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 had not been acquired prior to August 2013. The Company incurred approximately $3.8 million of non-cash charges, including approximately $3.6 million in amortization and depreciation charges, in the fiscal first quarter ended August 31, 2014.
"Staffing 360 Solutions has grown over the past year through our highly targeted acquisition strategy," stated Jeff Mitchell, Chief Financial Officer. "From a revenue perspective, the $33.4 million we generated in our most recent quarter is consistent with what is expected on a quarterly basis going forward, prior to additional acquisitions that we may close. Although we reported a net loss of approximately $4.7 million, approximately $3.8 million is attributable to non-cash charges and $500,000 in additional adjustments to EBITDA. In addition, the investment we have made building a highly-experienced management team is expected to be a major benefit going forward and will not require material additions as we grow, both organically and through acquisitions."
Highlights of Fiscal Q1 2015 and Subsequent Events
• Increased the Company's credit facility up to $15 million with Wells Fargo Bank, which provides additional working capital for certain subsidiaries of Staffing 360 Solutions.
• Announced the Company's Cyber 360 Solutions division was awarded a GSA Schedule from the Federal Government. The five-year contract allows for all federal government agencies to obtain cybersecurity personnel and services from Cyber 360 Solutions as a trusted vendor.
• Completed a $4.1 million Series A Convertible Bond offering to continue to fund the Company's acquisition strategy.
• Announced the Company's application for uplisting its common stock on the NASDAQ Capital Market. Based on management's analysis, the Company believes it will qualify for alternate bid price criteria, which would allow it to uplist to a national exchange based on a $2.00 bid price.
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 encourage the public to join us during our earnings conference call for more details on how we plan to achieve these goals over the next year and beyond. With many exciting developments on the horizon, including potential government contracts through our new GSA Schedule as well as our potential uplisting to NASDAQ, we will remain committed to growth in revenues, growth in earnings and growth in long term shareholder value."