Third Quarter 2023 Overview
- Revenue declined by 4.0% (a decline of 5.5% in constant currency) to
$63.5 million , compared with$66.1 million for the prior year period, resulting primarily from market softening in the current economic environment. - Gross profit was
$9.4 million , compared with$12.3 million for the prior-year period. - Operating loss was
$2.3 million , compared with an operating profit of$496,000 for the prior-year period. - Net loss totaled
$4.3 million , compared with a net profit of$1.0 million for the prior-year period. - Diluted loss per share loss was
$0.98 , compared with a diluted profit per share of$0.43 in the prior-year period. - EBITDA loss was
$1.7 million , compared with an EBITDA profit of$3.0 million for the prior-year period. - Adjusted EBITDA, a non-GAAP measure, was
$190,000 , compared with$4.9 million in the prior-year period.
Nine-Month 2023 Overview
- Revenue increased by 7.8% (an increase of 8.0% in constant currency) to
$188.7 million , compared with$175.1 million for the prior-year period, resulting primarily from the Company’s acquisition ofHeadway Workforce Solutions in 2022. - Gross profit was
$27.7 million , compared with$31.4 million for the prior-year period. - Operating loss was
$5.3 million , compared with an operating loss of$1.2 million for the prior-year period. - Net loss totaled
$10.0 million , compared with a net loss of$3.6 million for the prior-year period. - Diluted loss per share loss was
$2.63 , compared with a diluted loss per share loss of$1.80 in the prior-year period. - EBITDA loss was
$3.1 million , compared with an EBITDA profit of$1.7 million for the prior-year period. - Adjusted EBITDA, a non-GAAP measure, was
$2.1 million , compared with$5.3 million in the prior-year period.
Non-GAAP financial measures are meant to supplement, and be viewed in conjunction with, GAAP financial results. The presentation of these non-GAAP financial measures should not be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with the Company’s financial statements prepared in accordance with GAAP. Reconciliations of the Company’s non-GAAP measures are included in the tables below.
“Our third quarter results reflect the continued uncertainty that has been characteristic of the employment sector, with clients remaining cautious about their hiring needs and the economy,” said
Outlook
Although industry conditions remain uncertain and are subject to change, the Company currently estimates revenues in excess of
About
For more information, visit http://www.staffing360solutions.com. Follow
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 and to regain and maintain compliance with the rules of the Nasdaq Capital Market; market and other conditions; the geographic, social and economic impact of COVID-19 endemic and its ongoing effects 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
Investor Relations Contact:
310-279-5980
pwinvestor@pondel.com
(financial tables follow)
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(All amounts in thousands, except share, per share and par values) | ||||||||
As of | As of | |||||||
ASSETS | (Unaudited) | |||||||
Current Assets: | ||||||||
Cash | $ | 681 | $ | 1,992 | ||||
Accounts receivable, net | 25,222 | 23,628 | ||||||
Prepaid expenses and other current assets | 1,774 | 1,762 | ||||||
Total Current Assets | 27,677 | 27,382 | ||||||
Property and equipment, net | 1,296 | 1,230 | ||||||
19,891 | 19,891 | |||||||
Intangible assets, net | 15,404 | 17,385 | ||||||
Other assets | 8,018 | 6,701 | ||||||
Right of use asset | 8,269 | 9,070 | ||||||
Total Assets | $ | 80,555 | $ | 81,659 | ||||
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 19,146 | $ | 16,526 | ||||
Accrued expenses - related party | 227 | 218 | ||||||
Current portion of debt | — | 249 | ||||||
Accounts receivable financing | 15,937 | 18,268 | ||||||
Leases - current liabilities | 1,297 | 1,188 | ||||||
Earnout liabilities | 7,489 | 7,489 | ||||||
Other current liabilities | 2,610 | 2,639 | ||||||
Total Current Liabilities | 46,706 | 46,577 | ||||||
Long-term debt | 9,740 | 8,661 | ||||||
Redeemable Series H preferred stock, net | 7,520 | 8,393 | ||||||
Leases - non current | 7,807 | 8,640 | ||||||
Other long-term liabilities | 248 | 180 | ||||||
Total Liabilities | 72,021 | 72,451 | ||||||
Commitments and contingencies | — | — | ||||||
Stockholders' Equity: | ||||||||
Preferred stock, | ||||||||
Series J Preferred Stock, 40,000 designated, | ||||||||
Common stock, | 1 | 1 | ||||||
Additional paid in capital | 120,896 | 111,586 | ||||||
Accumulated other comprehensive loss | (1,359 | ) | (2,219 | ) | ||||
Accumulated deficit | (111,004 | ) | (101,015 | ) | ||||
Total Stockholders' Equity | 8,534 | 8,353 | ||||||
Total Liabilities and Stockholders' Equity | $ | 80,555 | $ | 80,804 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(All amounts in thousands, except share, per share and par values) | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||
Revenue | $ | 63,467 | $ | 66,120 | $ | 188,650 | $ | 175,066 | ||||||||
Cost of Revenue, excluding depreciation and amortization stated below | 54,095 | 53,795 | 160,929 | 143,709 | ||||||||||||
Gross Profit | 9,372 | 12,325 | 27,721 | 31,357 | ||||||||||||
Operating Expenses: | ||||||||||||||||
Selling, general and administrative expenses | 10,837 | 11,043 | 30,720 | 30,416 | ||||||||||||
Depreciation and amortization | 882 | 787 | 2,308 | 2,140 | ||||||||||||
Total Operating Expenses | 11,719 | 11,829 | 33,028 | 32,556 | ||||||||||||
Loss From Operations | (2,347 | ) | 496 | (5,307 | ) | (1,199 | ) | |||||||||
Other Expenses: | ||||||||||||||||
Interest expense | (1,530 | ) | (891 | ) | (4,229 | ) | (2,512 | ) | ||||||||
Amortization of debt discount and deferred financing costs | (120 | ) | (236 | ) | (322 | ) | (518 | ) | ||||||||
Other loss, net | (237 | ) | 717 | (63 | ) | 738 | ||||||||||
Total Other Expenses, net | (1,887 | ) | 599 | (4,615 | ) | (2,292 | ) | |||||||||
Loss Before Benefit from Income Tax | (4,234 | ) | 1,094 | (9,922 | ) | (3,491 | ) | |||||||||
Provision from Income taxes | (22 | ) | (62 | ) | (67 | ) | (65 | ) | ||||||||
Net Loss | (4,256 | ) | 1,032 | (9,989 | ) | (3,556 | ) | |||||||||
Net Loss - Basic and Diluted | $ | (0.98 | ) | $ | 0.43 | $ | (2.63 | ) | $ | (1.80 | ) | |||||
Weighted Average Shares Outstanding — Basic and Diluted | 4,349,587 | 2,401,961 | 3,800,371 | 1,980,398 | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(All amounts in thousands) | ||||||||
(UNAUDITED) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net (Loss) Income | $ | (9,989 | ) | $ | (3,556 | ) | ||
Adjustments to reconcile net loss income to net cash used in operating activities: | ||||||||
Depreciation and amortization | 2,308 | 2,140 | ||||||
Amortization of debt discount and deferred financing costs | 322 | 518 | ||||||
Bad debt expense | 21 | (302 | ) | |||||
Right of use assets depreciation | 973 | 1,066 | ||||||
Stock based compensation | 1,167 | 325 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (6,611 | ) | (6,114 | ) | ||||
Prepaid expenses and other current assets | (12 | ) | (1,854 | ) | ||||
Other assets | (2,167 | ) | (944 | ) | ||||
Accounts payable and accrued expenses | 2,462 | (1,083 | ) | |||||
Accounts payable, related party | — | 125 | ||||||
Other current liabilities | 79 | 357 | ||||||
Other long-term liabilities and other | 721 | 1,041 | ||||||
(10,726 | ) | (8,281 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (328 | ) | (719 | ) | ||||
Acquisition of business, net of cash acquired | — | 1,395 | ||||||
Collection of | 5,046 | 5,282 | ||||||
NET CASH PROVIDED BY INVESTING ACTIVITIES | 4,718 | 5,958 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Third party financing costs | (653 | ) | (554 | ) | ||||
Proceeds from term loan - Related party | 2,000 | 67 | ||||||
Repayment of term loan | (1,156 | ) | (379 | ) | ||||
Repayments on accounts receivable financing, net | (2,239 | ) | (3,345 | ) | ||||
Warrant Inducement, net | 2,292 | (160 | ) | |||||
Proceeds from sale of common stock | 4,433 | 4,013 | ||||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 4,677 | (358 | ) | |||||
(1,331 | ) | (2,681 | ) | |||||
Effect of exchange rates on cash | 19 | (123 | ) | |||||
Cash - Beginning of period | 1,992 | 4,558 | ||||||
Cash - End of period | $ | 681 | $ | 1,754 | ||||
Use of Non-GAAP Financial Measures
Three Months Ended | Nine Months Ended | Trailing Twelve Months | ||||||||||||||||||||||
Net (loss) income | $ | (4,256 | ) | $ | 1,032 | $ | (9,989 | ) | $ | (3,556 | ) | $ | (23,427 | ) | $ | (10,200 | ) | |||||||
Interest expense | 1,530 | 891 | 4,229 | 2,512 | 5,598 | 3,301 | ||||||||||||||||||
Expense (benefit) from income taxes | 22 | 62 | 67 | 65 | (220 | ) | (392 | ) | ||||||||||||||||
Depreciation and amortization | 1,002 | 1,023 | 2,630 | 2,658 | 3,566 | 3,289 | ||||||||||||||||||
EBITDA | $ | (1,702 | ) | $ | 3,008 | $ | (3,062 | ) | $ | 1,679 | $ | (14,482 | ) | $ | (4,073 | ) | ||||||||
Acquisition, capital raising and other non-recurring expenses (1) | 1,730 | 1,399 | 5,053 | 2,587 | 7,724 | 4,847 | ||||||||||||||||||
Other non-cash charges (2) | 59 | (16 | ) | 133 | - | 949 | 253 | |||||||||||||||||
Impairment of | - | - | - | - | 10,000 | 3,104 | ||||||||||||||||||
Re-measurement gain on intercompany note | - | 566 | - | 1,009 | - | - | ||||||||||||||||||
Other loss (income) | 103 | (79 | ) | (63 | ) | (21 | ) | (51 | ) | (412 | ) | |||||||||||||
Adjusted EBITDA | $ | 190 | $ | 4,878 | $ | 2,061 | $ | 5,254 | $ | 4,140 | $ | 3,719 | ||||||||||||
Adjusted Gross Profit | $ | 39,133 | $ | 35,866 | ||||||||||||||||||||
Adjusted EBITDA as percentage of Adjusted Gross Profit | 10.6 | % | 10.4 | % | ||||||||||||||||||||
(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. | ||
(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. |
Source:
2024 GlobeNewswire, Inc., source