Revenues increase 83% YoY for First Rate Staffing
California-based First Rate Staffing Corporation has reported its results for the fourth quarter and year ended 31st December 2015.
Revenues in the fourth quarter of 2015 increased 79% to $11.1m, compared to $6.2m in the same year-ago quarter. The company says the increase in revenues was due to new clients added. For the full year of 2015, revenues increased 83% to $32.9m, compared to $18.0m in 2014. The increase in revenue for the year was primarily due to organic growth, according to First Rate Staffing.
Gross profit in fourth quarter of 2015 increased 59% to $0.9m, versus $0.6m in the same year-ago quarter. For full year of 2015, gross profit increased 57% to $2.9m, compared to $1.9m in 2014.
Gross margin in the fourth quarter of 2015 decreased 105 basis points to 8.3%, compared to 9.3% in the same year-ago quarter. For the full year of 2015, gross margin decreased 143 basis points to 8.9%, versus 10.4% in 2014. The company states that the decrease in gross margin in both periods was due to increased cost of revenues, which represent primarily staffing salaries and workers’ compensation insurance costs.
Net loss in the fourth quarter of 2015 was $0.7m or $(0.09) per share, compared to a loss of $34,000 or $(0.005) per share in the same year-ago quarter. For the full year of 2015, net loss was $639,000 or $(0.09) per share, as compared to net income of $10,000 or $0.001 per share in 2014. Net loss in both periods was primarily due to a non-recurring, non-cash impairment charge of $641,000 associated with a former client, the company claims.
Excluding the impairment charge, net loss in fourth quarter of 2015 was $42,000 or $(0.01) per share, and for the full year of 2015, net income was $2,000 or $0.00 per share.
Cash at 31st December 2015 totaled $0.6m compared to $0.8m at 31st December 2014. The decrease in cash was due to cash used by operating activities.
"During the quarter, our record topline growth was driven by the addition of new clients and increased billings," said First Rate Staffing CEO, Cliff Blake. "In 2015, we dismissed $6 million of business in line with our highly-selective customer process and unique operating model that lowers typical employer risk exposure for greater profitability. Excluding the non-cash impairment charge, we were profitable for the year.
"In 2015, we increased our presence in California with the opening of two new offices. The offices will support our more than 1,000 employees in the state and address the increasing demand for labor assistance. California recently announced its plans to raise the minimum wage to $15 per hour by 2022, which will provide us a strong tailwind for growth. In addition, bill rates in the U.S. industrial and office/clerical staffing skill segments have risen due to pass-through of new administrative and health insurance costs related to the Affordable Care Act, according to Staffing Industry Analysts.
"Also in 2015, we opened an office in Reno, Nevada, and we are planning to open additional offices in two other states to support current clients who requested our services in additional locations. Given our growth trajectory, expanding footprint, favorable industry tailwinds, and unique business model that provides strong competitive advantages, we are on track to generate revenues between $45 million to $50 million in 2016, which would represent profitable growth of 37 to 52%."