Staffing 360 Solutions announces 213% increase in revenue
"We are pleased to report our financial results for fiscal 2015," stated Brendan Flood, Executive Chairman of Staffing 360 Solutions.
"Over the past 2 years, our acquisition strategy has fueled our growth from nearly zero revenue in fiscal 2013, to $41.2 million of revenue in fiscal 2014, and to $128.8 million of revenue in fiscal 2015. We have now achieved positive Adjusted EBITDA for three quarters in a row, which has been the key objective of our Pathway to Profitability and our commitment to our shareholders.
"Importantly, we have eliminated the 'going concern' audit opinion from our 10-K financials, which is a major milestone that illustrates how Staffing 360 Solutions is ready for our next phase of growth."
Summary of the Fiscal Year Ended May 31, 2015
• Net revenues increased to $128.8 million in fiscal 2015, compared to $41.2 million in the fiscal year ended May 31, 2014.
• Gross profit increased to $22.5 million in fiscal 2015, compared to $7.8 million in the fiscal year ended May 31, 2014.
• Loss from Operations reduced to $7.5 million in fiscal 2015, compared to $9.9 million in the fiscal year ended May 31, 2014.
• Net loss increased to $18.0 million* in fiscal 2015, compared to a net loss of $12.7 million in the fiscal year ended May 31, 2014.
• Positive Adjusted EBITDA was approximately $750,000* in fiscal 2015, compared to negative Adjusted EBITDA of $2.7 million in the fiscal year ended May 31, 2014.
• Net revenues increased to $32.2 million, compared to $24.6 million in the fourth quarter ended May 31, 2014.
• Gross profit increased to $5.5 million, compared to $4.3 million in the fourth quarter ended May 31, 2014.
• Positive Adjusted EBITDA was approximately $400,000*, compared to negative Adjusted EBITDA of $1.9 million in the fourth quarter ended May 31, 2014.
Flood continued, "Similar to Staffing 360's past earnings, although our bottom line still shows a net loss, these results include a significant amount of acquisition activity, as well as strong organic growth. Many of these expenses are either non-cash in nature, acquisition-related or are non-recurring. Despite this, we still posted strong organic year-over-year growth, as well as positive Adjusted EBITDA of approximately $400,000 for the quarter ended May 31, 2015. Needless to say, we are extremely pleased with the progress we have made and the results we have achieved."
As a result of the Company's numerous acquisitions and strong organic growth, revenues increased to $128.8 million in the fiscal year ended 31st May 2015, compared to approximately $41.2m for the same period in 2014.
Gross profit increased to over $22.5 million in the 2015 fiscal year, compared to approximately $7.8 million for the same period in 2014. Again, this significant increase in revenue and gross profit was principally a result of the Company's acquisitions and their timing.
The Company's net loss for fiscal 2015 increased to $18.0 million (or positive Adjusted EBITDA of approximately $750,000 on a Non-GAAP basis*), compared to a net loss of approximately $12.7 million for the same period in 2014.
The increase in net loss was primarily attributable to increased restructuring costs totaling $4.4 million, increased financing expenses of $5.9 million, and operating expenses totaling $30.0 million in fiscal 2015 compared to $17.7 million in fiscal 2014 due to the Company's various acquisitions, a full year of which was recorded for the first time in period ended May 31, 2015.
In addition, the Company recorded various non-cash charges, including $703,000 of non-cash impairment charges against its intangible assets, and $2.5 million of non-cash amortization of intangibles.
"Staffing 360 Solutions is a different company to what it was a year ago," stated Jeff R. Mitchell, chief financial officer. "Our top line revenue of $128.8 million is more than 3 times the amount achieved last year, and we have made significant progress reducing corporate overheads through our Pathway to Profitability. Just as importantly, through strong collective efforts of our entire team at Staffing 360 Solutions and our Company's performance, our independent auditors have now lifted the 'going concern' qualification on their audit opinion and the Company has a standard 'unqualified opinion' associated with our audited financial statements. Clearly this is a major development and bodes well for our future outlook and capital raising opportunities."
Highlights of the 2015 Fiscal Year and Subsequent Events
• Realized positive Adjusted EBITDA two quarters ahead of schedule. Successfully achieved this objective with the Company's financial results for the fiscal quarter ended November 30, 2014 and then repeated it for the quarters ended February 28, 2015 and May 31, 2015.
• Reduced corporate overheads by approximately $3 million per year. Management believes overall costs of corporate are now in line with industry levels and are sustainable going forward.
• Experienced strong organic growth from the acquisition of various staffing divisions and assets in Fiscal 2014, including: Monroe Staffing Services, Longbridge Recruitment, Poolia UK and PeopleSERVE.
• Demonstrated management's deep faith in the Company with the above-market conversion of $3.3 million of principal and interest relating to the promissory notes of the Initio acquisition. Both Executive Chairman Brendan Flood, and CEO Matt Briand, were among the note holders that converted into equity at $1.00 per share, plus warrants.
• Raised a $25 million revolving credit facility and $3 million term loan from MidCap Financial, which is backed by Apollo Global Management, LLC, one of the world's leading alternative investment managers. The $25 million revolving credit facility replaced the Company's previous $15 million facility with Wells Fargo, providing additional room for expansion and has an accordion facility to expand to $50 million in certain circumstances.
• Completed the Company's latest acquisition of Lighthouse Placement Services, LLC on July 8, 2015. Lighthouse specializes in providing engineering workforce solutions to a diverse set of clients, ranging from local firms to international enterprises and defense contractors. Founded in 2001, Lighthouse generated approximately $15 million in revenue over the past year.
"As these improvements to our financials demonstrate, each of us at Staffing 360 Solutions is fully committed to reaching our stated goal of $300 million in annualized revenues," said Matt Briand, president and CEO. "Our path to achieving this milestone will be accomplished by acquiring well-managed, growing companies, such as our recently announced $15 million Lighthouse acquisition earlier this month. With several key developments on the horizon, we encourage investors to join us during our earnings conference call for more details on how we plan to achieve our objectives over the next year and build long term value for our shareholders."