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Volt Information Sciences reports improved operating results in Q1

The reported net loss for the first quarter of fiscal 2015 was $13.3 million, or $0.64 per share, compared to $17.1 million, or $0.82 per share, in the first quarter of fiscal 2014. Proforma operating results improved $5.2 million in the first quarter of fiscal 2015 to a proforma operating loss of $5.0 million from a proforma loss of $10.2 million in the first quarter of fiscal 2014. Proforma amounts include Unrecognized Revenue (defined below).

“Our first quarter results demonstrate our ongoing execution against the strategic goal of a more highly focused and profitable Volt”

“Our first quarter results demonstrate our ongoing execution against the strategic goal of a more highly focused and profitable Volt,” said Ron Kochman, President and Chief Executive Officer. “We continue to focus on improving our core staffing and services business, particularly in our North American traditional time and materials staffing services, as well as reducing our exposure to unfavorable customer contracts. Staffing Services segment operating income and direct margin rate improved as a result of our initiatives. We are pleased with the ongoing improvements in the delivery of our staffing services and believe that our disciplined focus on our business strategy and priorities will drive improved margins and profitability over the course of this fiscal year.”

First Quarter 2015 Revenue and Operating Results

Net loss in the first quarter of fiscal 2015 of $13.3 million (proforma $11.0 million) included losses from discontinued operations of $4.5 million. Without this item the net loss in the first quarter of 2015 would have been $8.8 million and proforma net loss $6.5 million.

Net loss in the first quarter of fiscal 2014 of $17.1 million (proforma $16.0 million) included restatement, investigations and remediation expenses of $2.7 million, losses from discontinued operations of $4.4 million and restructuring costs of $0.7 million. Without these items, net loss in the first quarter of 2014 would have been $9.3 million and proforma net loss $8.2 million.

Net revenue from continuing operations in the first quarter of 2015 decreased approximately 9% compared to the same quarter of 2014. Revenue from the Staffing Services segment decreased approximately 8% year-over-year at both our enterprise customers and, to a lesser extent, at retail customers.

As previously reported, the Company divested its Computer Systems segment in the first quarter of 2015. The results of the Computer Systems segment are presented as discontinued operations and, as such, have been excluded from continuing operations and from segment results for all periods presented.

Condensed Consolidated Results of Operations by Segment

Unaudited (in Thousands)

Results of Operations by Segment (Three Months 2015 vs. Three Months 2014)

 

Three months ended February 1, 2015

Three months ended February 2, 2014

 

Total

Staffing
Services

Other

Total

Staffing
Services

Other

Net Revenue

 

 

 

Staffing service revenue

$ 360,821

 

$ 360,821

 

$ -

 

$ 392,269

 

$ 392,269

 

$ -

Other revenue

22,245

-

22,245

29,359

-

29,359

Net revenue

383,066

 

360,821

 

22,245

 

421,628

 

392,269

 

29,359

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

Direct cost of staffing services revenue

310,819

 

310,819

 

-

 

339,796

 

339,796

 

-

Cost of other revenue

19,605

 

-

 

19,605

 

24,133

 

-

 

24,133

Selling, administrative and other operating costs

53,941

 

50,580

 

3,361

 

60,367

 

55,722

 

4,645

Restructuring costs

-

-

-

657

657

-

Segment operating income (loss)

(1,299

)

(578

)

(721

)

 

(3,325

)

(3,906

)

581

Corporate general and administrative

6,023

 

 

 

5,232

 

 

Restatement, investigations and remediation

-

 

 

 

2,668

 

 

Operating loss

(7,322

)

 

 

 

(11,225

)

 

 

Other income (expense), net

(99

)

 

 

 

(410

)

 

 

Income tax provision

1,379

 

 

 

1,047

 

 

Net loss from continuing operations

(8,800

)

 

 

 

(12,682

)

 

 

Loss from discontinued operations, net of taxes

(4,519

)

 

 

 

(4,392

)

 

 

Net loss

$ (13,319

)

 

 

 

$ (17,074

)

 

 

 

 

 

 

 

 

NON-GAAP PROFORMA

 

 

 

 

 

 

 

Three months ended February 1, 2015

Three months ended February 2, 2014

 

Total

Staffing
Services

Other

Total

Staffing
Services

Other

Net revenue

$ 383,066

 

$ 360,821

 

$ 22,245

 

$421,628

 

$392,269

 

$29,359

Recognition of previously unrecognized revenue

(2,630

)

(2,568

)

(62

)

 

(5,248

)

(5,048

)

(200

)

Additions to unrecognized revenue

4,912

4,873

39

6,293

6,160

133

Net non-GAAP proforma adjustment

2,282

2,305

(23

)

1,045

1,112

(67

)

Proforma net revenue

385,348

363,126

22,222

422,673

393,381

29,292

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

Direct cost of staffing services revenue

310,819

 

310,819

 

-

 

339,796

 

339,796

 

-

Cost of other revenue

19,605

 

-

 

19,605

 

24,133

 

-

 

24,133

Selling, administrative and other operating costs

53,941

 

50,580

 

3,361

 

60,367

 

55,722

 

4,645

Restructuring costs

-

-

-

657

657

-

Proforma segment operating income (loss)

983

 

1,727

 

(744

)

 

(2,280

)

(2,794

)

514

 

 

 

 

 

 

Proforma operating loss

(5,040

)

 

 

 

(10,180

)

 

 

 

 

 

 

 

 

Proforma net loss from continuing operations

$(6,518

)

 

 

 

$(11,637

)

 

 

 

 

 

 

 

 

Net revenue in the first quarter of 2015 decreased $38.5 million to $383.1 million from $421.6 million in the first quarter of 2014, and proforma net revenue decreased $37.4 million, or 8.8%, to $385.3 million from $422.7 million in the first quarter of 2014. The decrease in revenue was primarily due to decreased Staffing Services revenues of $31.5 million (proforma of $30.3 million) to $360.8 million (proforma $363.1 million). This primarily reflected lower demand at both enterprise and retail customers, as well as the Company’s continuing initiative to reduce exposure to customers with unfavorable business terms. The Other segment revenues decreased $7.2 million to $22.2 million in the first quarter of 2015 primarily due to lower volume of business from information technology infrastructure services, as well as for telecommunication infrastructure and security services.

Despite the decrease in revenue, Staffing Services segment operating income and direct margin rate improved as a result of actions taken in recent quarters, including the reorganization of the traditional staffing business, the divestiture of the ProcureStaff business, and continuing initiatives to reduce exposure to customers with unfavorable business terms. However, these improvements in our Staffing Services segment were partially offset by a decline in operating results in our Other segment of $1.3 million (proforma $1.3 million), primarily from decreased volume and lower margins.

 

David Head

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