NEW YORK, Nov. 21, 2022 (GLOBE NEWSWIRE) -- Staffing 360 Solutions, Inc. (Nasdaq: STAF), a company executing an international buy-integrate-build strategy through the acquisition of staffing organizations in the United States and the United Kingdom, today announced its Fiscal 2022 third quarter and nine-month financial results.

Q3 2022 Overview

  • Revenue increased by 39.2% to $66.1M as compared with $47.5M in the prior year period, or an increase of 44.3% on a constant currency basis
  • Gross profit was $12.3M, an increase of 28.1% from $9.6M in the prior year period, or an increase of 30% on a constant currency basis
  • Operating income was $500K for the quarter as compared with operating income of $470K in the prior year period
  • Net income was $1.0M for the quarter as compared with net income of $8.7M in the prior year period. Excluding the $9.5 million PPP loan forgiveness in the prior year, we showed significant improvement
  • EBITDA for the quarter was $3.0M vs. $10.5M in the prior year period. Excluding the $9.5 million PPP loan forgiveness in the prior year, we again showed significant improvement
  • Adjusted EBITDA was $3.1M million as compared with $1.5M million in the prior year period
  • Fully diluted EPS was $0.43 as compared with $6.89 in the same period last year

Nine Month 2022 Overview

  • Revenue increased by 19.1% to $175.1M as compared with $147.0M for the nine months ended October 2, 2021. On a constant currency basis, the increase was 22.3%
  • Gross profit was $31.4M, an increase of 17.9% from $26.7M for the nine months ended October 2, 2021. On a constant currency basis, the increase was 20%
  • Loss from operations was ($1.2M) as compared with a loss of ($1.3M) in the prior year period   
  • Net loss was ($3.5M) as compared with net income of $14.9M in the prior year period. Excluding the $19.6 million PPP loan forgiveness in the prior year, we narrowed our loss by $1.2M
  • EBITDA for the period was $1.7M vs. $20.5M in the prior year period. Excluding the $19.6 million PPP loan forgiveness in the prior year, we improved by $900K
  • Adjusted EBITDA was $5.3 million vs. $4.0 million in the prior year period
  • Fully diluted EPS was ($1.80) as compared with $13.40 in the same period last year

Brendan Flood, Chairman, CEO and President, said, “Our paradigm changing service delivery approach continues to gain momentum in the market, delivering strong revenue growth and significant margin improvements in the third quarter.

“This quarter also marked the first full quarter of contribution from our recent acquisition of Headway Workforce Solutions and to date we remain on track to implement $1.8M of wide-ranging integrations savings. We believe that Headway’s unique approach to staffing is an excellent complement to our business model and can be leveraged into our other brands in both the U.S. and U.K.

“I am also very pleased with the progress we have made in our capital structure. We have reduced our fixed term debt to $9.4M from a high of $70M in 2020 and have recently completed the consolidation of our U.S. asset-based lending facility, which will extend maturity into 2024 and significantly lower borrowing costs going forward.

“Our buy-integrate-build strategy is beginning to pay dividends, and we anticipate continued revenue growth and margin improvements as we move towards our long-term goals,” concluded Mr. Flood.

About Staffing 360 Solutions, Inc.

Staffing 360 Solutions, Inc. is engaged in the execution of an international buy-integrate-build strategy through the acquisition of domestic and international staffing organizations in the United States and United Kingdom. The Company believes that the staffing industry offers opportunities for accretive acquisitions and as part of its targeted consolidation model, is pursuing acquisition targets in the finance and accounting, administrative, engineering, IT, and light industrial staffing space.

For more information, visit http://www.staffing360solutions.com. Follow Staffing 360 Solutions on Facebook, LinkedIn and Twitter.

Forward-Looking Statements

This press release contains forward-looking statements, which may be identified by words such as "expect," "look forward to," "anticipate," "intend," "plan," "believe," "seek," "estimate," "will," "project" or words of similar meaning. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified; consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, our ability to retain our listing on the Nasdaq Capital Market; market and other conditions; the geographic, social and economic impact of COVID-19 on the Company’s ability to conduct its business and raise capital in the future when needed; weakness in general economic conditions and levels of capital spending by customers in the industries the Company serves; weakness or volatility in the financial and capital markets, which may result in the postponement or cancellation of customer capital projects or the inability of the Company’s customers to pay the Company’s fees; the termination of a major customer contract or project; delays or reductions in U.S. government spending; credit risks associated with the Company’s customers; competitive market pressures; the availability and cost of qualified labor; the Company’s level of success in attracting, training and retaining qualified management personnel and other staff employees; changes in tax laws and other government regulations, including the impact of health care reform laws and regulations; the possibility of incurring liability for the Company’s business activities, including, but not limited to, the activities of the Company’s temporary employees; the Company’s performance on customer contracts; negative outcome of pending and future claims and litigation; government policies, legislation or judicial decisions adverse to the Company’s businesses; the Company’s ability to access the capital markets by pursuing additional debt and equity financing to fund its business plan and expenses on terms acceptable to the Company or at all; and the Company’s ability to comply with its contractual covenants, including in respect of its debt agreements, as well as various additional risks, many of which are now unknown and generally out of the Company’s control, and which are detailed from time to time in reports filed by the Company with the SEC, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K. Staffing 360 Solutions does not undertake any duty to update any statements contained herein (including any forward-looking statements), except as required by law.

Investor Relations Contact:
Matt Blazei
CoreIR
516-386-0430
mattb@coreir.com


Staffing 360 Solutions and Subsidiaries
Condensed Consolidated Statements of Operations
(All amounts in thousands, except share and per share values)
(Unaudited)

  QUARTERS ENDED NINE MONTHS ENDED
  October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021
Revenue $66,120  $47,501  $175,066  $146,982 
         
Cost of Revenue, excluding depreciation and amortization stated below  53,795   37,877   143,709   120,324 
         
Gross Profit  12,325   9,624   31,357   26,658 
         
Operating Expenses:        
Selling, general and administrative expenses  11,043   8,463   30,416   25,811 
Depreciation and amortization  787   688   2,140   2,122 
Total Operating Expenses  11,830   9,151   32,556   27,933 
         
Income (Loss) From Operations  495   473   (1,199)  (1,275)
         
Other (Expenses) Income:        
Interest expense and amortization of debt discount and deferred financing costs  (1,127)  (1,006)  (3,030)  (3,432)
Re-measurement (loss) gain on intercompany note  1,009   (315)  —   (219)
PPP forgiveness gain  —   9,504   —   19,609 
Other income (loss), net  717   188   738   292 
Total Other Income (Expenses), net  599   8,371   (2,292)  16,250 
         
Income (Loss) Before Benefit from Income Tax  1,094   8,844   (3,491)  14,975 
         
Benefit (Provision) from Income taxes  (62)  (131)  (65)  (102)
         
Net Income (Loss)  1,032   8,713   (3,556)  14,873 
         
Dividends - Series E Preferred Stock - related party  —   —   —   319 
Dividends - Series E-1 Preferred Stock - related party  —   —   —   192 
Dividends - Series G Preferred Stock - related party  —   43   —   166 
Dividends - Series G-1 Preferred Stock - related party  —   40   —   118 
Deemed Dividend  —   —   —   1,798 
Earnings allocated to participating securities  —   (1,077)  —   (1,763)
         
Net Income (Loss) Attributable to Common Stockholders $1,032  $7,553  $(3,556) $10,517 
         
Net Income (Loss) Attributable to Common Stockholders - Basic $0.43  $7.00  $(1.80) $14.26 
         
Weighted Average Shares Outstanding – Basic $2,401,961   1,079,050   1,980,398   737,729 
         
Earnings allocated to participating securities– Diluted (Footnote 3) $1,032  $7,636  $(3,556) $11,312 
         
Earnings Income (Loss) per Share Attributed to Common Stockholders - Diluted $0.43  $6.89  $(1.80) $13.39 
         
Weighted Average Shares Outstanding – Diluted  2,401,961   1,107,910   1,980,398   844,929 
         

The accompanying notes are an integral part of these unaudited condensed financial statements.



STAFFING 360 SOLUTIONS AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands except share and par values)

  As of As of
  October 1, 2022 January 1, 2022
ASSETS (Unaudited)  
Current Assets:    
Cash $1,753  $4,558 
Accounts receivable, net  29,864   20,718 
Prepaid expenses and other current assets  3,227   988 
Total Current Assets  34,844   26,264 
     
Property and equipment, net  1,262   865 
Goodwill  27,696   23,828 
Intangible assets, net  16,614   13,649 
Other assets  6,465   3,506 
Right of use asset  8,693   5,578 
Total Assets $95,574  $73,690 
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY     
     
Current Liabilities:    
Accounts payable and accrued expenses $16,005  $12,532 
Accrued expenses - related party  215   216 
Current portion of debt  345   9,223 
Accounts receivable financing  19,113   15,199 
Leases - current liabilities  1,010   1,006 
Earnout liabilities  8,344   4,054 
Other current liabilities  3,573   2,503 
Total Current Liabilities  48,605   44,733 
     
Long-term debt  9,016   279 
Redeemable Series H preferred stock, net  8,340   — 
Leases - non current  8,477   4,568 
Other long-term liabilities  829   785 
Total Liabilities  75,267   50,365 
     
Commitments and contingencies  —   — 
     
 Stockholders' Equity:    
Preferred stock, $0.00001 par value, 20,000,000 shares authorized;    
Series J Preferred Stock, 40,000 designated, $0.00001 par value, 0 and 0 shares issued and outstanding as of October 1, 2022 and January 1, 2022, respectively        
Common stock, $0.00001 par value, 40,000,000 shares authorized; 2,433,199 and 1,758,835 shares issued and outstanding, as of October 1, 2022 and January 1, 2022, respectively  1   1 
Additional paid in capital  110,968   107,183 
Accumulated other comprehensive (loss) income  (3,085)  162 
Accumulated deficit  (87,577)  (84,021)
Total Stockholders' Equity  20,307   23,324 
Total Liabilities and Stockholders' Equity $95,574  $73,690 
     

The accompanying notes are an integral part of these unaudited condensed financial statements.



STAFFING 360 SOLUTIONS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)
(UNAUDITED)

 October 1, 2022 October 2, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:   
Net (Loss) Income$(3,556) $14,873 
Adjustments to reconcile net (loss) income to net cash used in operating activities:  
Depreciation and amortization 2,140   2,122 
Amortization of debt discount and deferred financing costs 518   365 
Bad debt expense (302)  260 
Right of use assets depreciation 1,066   852 
Stock based compensation 325   350 
Forgiveness of PPP loan and related interest —   (19,609)
Re-measurement (loss) gain on intercompany note —   219 
Changes in operating assets and liabilities:   
Accounts receivable (6,114)  (5,343)
Prepaid expenses and other current assets (1,854)  (289)
Other assets (944)  (438)
Accounts payable and accrued expenses (1,083)  (2,356)
Accounts payable, related party 125   (326)
Other current liabilities 357   (105)
Other long-term liabilities and other 1,040   (349)
NET CASH USED IN OPERATING ACTIVITIES (8,282)  (9,774)
    
CASH FLOWS FROM INVESTING ACTIVITIES:   
Purchase of property and equipment (719)  (100)
Acquisition of business, net of cash acquired 1,395   — 
Collection of UK factoring facility deferred purchase price 5,282   5,349 
NET CASH PROVIDED BY INVESTING ACTIVITIES 5,958   5,249 
    
CASH FLOWS FROM FINANCING ACTIVITIES:   
Third party financing costs (554)  (3,769)
Proceeds from term loan - Related party —   130 
Repayment of term loan (379)  (29,244)
Proceeds from term loan 67   — 
Repayments on accounts receivable financing, net (3,345)  (3,659)
Dividends paid to related parties —   (591)
Redemption of Series E preferred stock, related party —   (4,908)
Proceeds from sale of common stock 4,013   33,769 
Payments made on earnouts (160)  — 
Proceeds from sale of Series F preferred stock —   4,698 
NET CASH USED IN FINANCING ACTIVITIES (358)  (3,574)
    
NET DECREASE IN CASH (2,682)  (8,099)
    
Effect of exchange rates on cash (123)  (6)
    
Cash - Beginning of period 4,558   10,336 
    
Cash - End of period$1,753  $2,231 
    

The accompanying notes are an integral part of these unaudited condensed financial statements.



Adjusted EBITDA This measure is defined as net income (loss) attributable to common stock before: interest expense, benefit from income taxes; depreciation and amortization; acquisition, capital raising and other non-recurring expenses; other non-cash charges; impairment of goodwill; re-measurement gain on intercompany note; restructuring charges; gain from sale of business; PPP Forgiveness Gain; other income; and charges we consider to be non-recurring in nature such as legal expenses associated with litigation, professional fees associated potential and completed acquisitions. We use this measure because we believe it provides a more meaningful understanding of our profit and cash flow generation.

  Quarter Ended Nine Months Ended Trailing Twelve Months
  October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021
Net loss $1,032  $8,713  $(3,556) $14,873  $(10,271) $12,632 
             
Interest expense  891   814   2,512   3,068   3,301   4,506 
(Benefit) expense from income taxes  62   131   65   102   (392)  247 
Depreciation and amortization  1,023   880   2,658   2,486   3,289   3,330 
EBITDA $3,008  $10,538  $1,679  $20,529  $(4,073) $20,715 
             
Acquisition, capital raising and other non-recurring expenses (1)  1,788   321   4,375   2,802   4,847   5,024 
Other non-cash charges (2)  7   8   32   344   253   450 
Impairment of Goodwill  -   -   -   -   3,104   - 
Re-measurement gain on intercompany note  (1,009)  315   -   219   -   (712)
Deferred consideration settlement  -   -   -   -   -   41 
PPP Forgiveness Gain  -   (9,504)  -   (19,609)  -   (19,609)
Gain on sale of business  -         -   95 
Other (income) loss  (717)  (188)  (738)  (292)  (412)  (296)
Adjusted EBITDA $3,077  $1,490  $5,348  $3,993  $3,719  $5,708 
             
Adjusted EBITDA of Divested Business (3)         $-  $101 
             
Pro Forma Adjusted EBITDA (4)         $3,719  $5,809 
             
Adjusted Gross Profit (5)         $35,866  $34,945 
             
Adjusted EBITDA as percentage of Adjusted Gross Profit          10.4%  16.6%
             

(1)  Acquisition, capital raising, and other non-recurring expenses primarily relate to capital raising expenses; acquisition and integration expenses, and legal expenses incurred in relation to matters outside the ordinary course of business.  Due to government mandated restrictions, the Company had to temporarily close some of its offices and, due to social distancing restrictions, could not make full use of these facilities for significant periods of time during 2021.

(2)  Other non-cash charges primarily relate to staff option and share compensation expense, expense for shares issued to directors for board services, and consideration paid for consulting services.

(3)  Adjusted EBITDA of Divested Business for the period prior to the divestment date.

(4)  Pro Forma Adjusted EBITDA excludes the Adjusted EBITDA of Divested Business for the period prior to the divestment date.

(5)  Adjusted Gross Profit excludes gross profit of business divested in September 2020 for the period prior to divestment date.

Operating Leverage This measure is calculated by dividing the growth in Adjusted EBITDA by the growth I Adjusted Gross Profit on a trailing 12-month basis.  We use this KPI because we believe it provides a measure of our efficiency for converting incremental gross profit into Adjusted EBITDA.


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Source: Staffing 360 Solutions, Inc.

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