Revenue down over 20% in Q1 2020 for Staffing 360 Solutions
Staffing 360 Solutions has released its fiscal 2020 first quarter results.
Revenue declined by 20.5% to $58.7m. This is down from $73.8m in Q1 2019. Gross profit fell by 12.1% from $12.1m in Q1 2019 to $10.6m in Q1 2020. The company reported an income loss from operations of $4.1m compared with a net gain of $0.2m in Q1 2019. EBITDA was -$4.0m, compared with $3.1m in Q1 2019. Adjusted EBITDA, however, was positive at $1.2m, but this was down from $2.0m in Q1 2019.
Brendan Flood, chairman and chief executive officer, said, “Q1 results were directly in line with the guidance provided in our year-end financial results call. As anticipated, the revenue decline was principally due to the loss of a low-margin client in the UK and the impact of IR35 payroll tax legislation in the UK. Additionally, late in the quarter both countries in which we do business were negatively impacted by the swift worldwide economic turndown due to COVID-19.
“It’s important to note that we have moved from $2.9 million negative cash flow in Q1 2019 to breakeven in Q1 2020, driven by the successful management of our accounts receivables aging (particularly in the UK) and our overall cost controls – most of which will flow through into the second and third quarters.
“Based on our current outlook, I believe that the combined US and UK government stimulus assistance we’ve received ($19.4 million from a forgivable US PPP loan, and $1.3 million VAT deferral and government-funded furlough program from the UK) will make a significant positive improvement in our full year financial results. We expect that our use of the US PPP funds should qualify for and allow for full, or nearly full, forgiveness of that loan. We are actively evaluating additional US and UK government programs for which we may qualify,” Flood concluded.
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