Staffing 360 Solutions Inc (STAF) Shares Jump on Encouraging Earnings


Staffing 360 Solutions Inc (NASDAQ:STAF) shareholders are having a great day. Shares of the staffing firm are up nearly 22% on the back of encouraging earnings release.

STAF’s revenue for the twelve months ended December 31, 2016 was $183.5 million, a 27.1% increase, compared to $144.4 million in the comparable twelve-month period, including organic growth of 10.5%. Gross profit was $31.9 million, a 26.1% increase, compared to $25.3 million in the comparable twelve-month period. Net loss attributable to common stock decreased to $8.1 million*, compared to $9.4 million in the comparable twelve-month period. Adjusted EBITDA was $5.0 million*, an increase of 85.2%, compared to $2.7 million in the comparable twelve-month period.

“We are excited by the results for the twelve-month period ended December 31, 2016,” stated Brendan Flood, Executive Chairman of Staffing 360 Solutions. “Although presentation of the twelve-month period is not required for a transition report, we wanted to include this supplemental information to provide investors with a more complete view of our performance. We reported a record amount of revenue, at $183.5 million, increasing 27% from the previous twelve-month period. Likewise, Adjusted EBITDA hit $5.0 million compared to $2.7 million and we experienced over 10% organic growth for this period as well, which is quite an achievement.”

Summary of the Transition Period Ended December 31, 2016

  • Revenue was $109.4 million in the transition period, a 19.7% increase, compared to $91.4 million in the comparable seven-month period, including organic growth of 11.1%.
  • Gross profit was $19.1 million, a 17.3% increase, compared to $16.3 million in the comparable seven-month period.
  • Net loss attributable to common stock decreased to $3.7 million*, compared to $5.3 million in the comparable seven-month period.
  • Adjusted EBITDA was $3.3 million*, a 37.5% increase, compared to $2.4 million in the comparable seven-month period.

“Staffing 360 Solutions has concluded a series of major initiatives recently and we are pleased to add the change to a more industry-standard year-end to the list of accomplishments,” stated Brendan Flood, Executive Chairman of Staffing 360 Solutions. “Our new year-end will align ourselves with the majority of publicly listed companies in the staffing industry and makes Staffing 360 Solutions easier to follow for both analysts and investors alike. In addition, we are very pleased with our financial results for both the full year and the transition period. We experienced close to a 20% growth in revenue, and over 17% increase in gross profit in the transition period, compared to the same seven-month period in the prior year. Even more impressively, we achieved 11% organic growth for the transition period, one of the highest organic growth rates we’ve reported.”

The Company encourages investors to review its Form 10-K/T for the transition period ended December 31, 2016 for additional information regarding the Company’s results of operations, liquidity, audited financial statements and other pertinent information.

David Faiman, Chief Financial Officer, added, “Staffing 360 Solutions continues to grow considerably, but in addition to the increases of revenue and Adjusted EBITDA, we are driving costs lower and continuing to improve our balance sheet. In the transition period, our stockholders’ equity has increased and our working capital deficiency has improved by approximately $1.5 million since the previous period of May 31, 2016. We have also improved our debt levels significantly. For the 12 month period ended December 26, 2015, we had a 6.2x leverage ratio. We now have over $5.0 million of TTM Adjusted EBITDA compared to $10.0 million of non-asset backed debt, resulting in a 2.0x leverage ratio, which is a significant improvement.”

Major Recent Developments

  • Completed the Company’s Annual Shareholder Meeting, which was held on January 26, 2017. Not only was this significant because it was the first Annual Shareholder Meeting since uplisting to Nasdaq, it also included voting proposals necessary for the milestone financings we closed over the following months.
  • Successfully closed over $9.0 million of financing with Jackson Investment Group, LLC, since the beginning of January, that has given the Company the opportunity to refinance debt, support operations with working capital, redeem the outstanding Series D Preferred Stock, and position Staffing 360 to continue its high-growth strategy.
  • Received a buy-out offer from Jackson Investment Group, LLC with an offer to purchase all of the shares of Staffing 360 Solutions at $1.10 per share. As mentioned in the formal response, we respectfully declined the offer, as we don’t believe that the valuation was in the best interest of the Company and its shareholders.
  • Staffing 360’s board of directors has decided to hold a Special Meeting of Stockholders. In addition to the proposal for the change in domicile to Delaware, the meeting will also include new proposals relating to Jackson Investment Group potentially owning more than 20% of the Company’s common stock, and approval on other potential financings, which we believe will be beneficial for the Company as we continue to grow and secure more capital in 2017. The Special Meeting of Stockholders is expected to be held in June.

“Staffing 360 Solutions has achieved some major milestones recently,” said Matt Briand, President and Chief Executive Officer. “From our first Annual Shareholder Meeting in January, to our recent financings with Jackson Investment Group, as well as our upcoming Special Meeting of Stockholders, there has been a significant amount of activity. With our $9.0 million of recent funding in place and our balance sheet strengthened, we believe our management team is now in a strong position to direct our focus toward operations and our M&A pipeline.”

Staffing 360 Solutions, Inc. operates as a staffing company. It finds and acquires operating staffing companies in the information technology, financial, accounting, healthcare, and cyber security industries; and provides veterans’ staffing services. 

 

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