Volt Information Sciences, Inc. Reports Second Quarter Fiscal 2021 Financial Results

Rhea-AI Summary

Volt Information Sciences (NYSE-AMERICAN: VOLT) reported a 7.1% increase in revenue for Q2 2021, totaling $222.1 million. Adjusted Revenue rose 5.9%. The gross margin improved by 80 basis points to 16.4%. GAAP operating income was $2.7 million, a $7.1 million improvement from last year, with GAAP EPS at $0.08 compared to a loss of ($0.25). Adjusted EBITDA increased to $6.0 million from (1.4) million in the prior year. The company sees continued growth with positive results despite pandemic challenges.

Positive

• Q2 2021 revenue of $222.1 million, up 7.1% YoY
• Gross margin increased to 16.4%, an 80 basis-point improvement
• GAAP EPS of $0.08 compared to a loss of ($0.25) YoY
• Operating income improved by $7.1 million YoY to $2.7 million
• Adjusted EBITDA rose to $6.0 million from $(1.4) million YoY
• Strong year-over-year revenue growth, the best in a decade

Negative

• None.

Volt Information Sciences, Inc. (“Volt” or the “Company”) (NYSE-AMERICAN: VOLT) a global provider of staffing services, today announced financial results for the second quarter ended May 2, 2021.

Second Quarter Summary

• Revenue was $222.1 million, a 7.1% increase compared to the second quarter of fiscal 2020; Adjusted Revenue* increased 5.9%.
• Gross margin increased 80 basis points year over year to 16.4%.
• GAAP operating income was $2.7 million, a $7.1 million improvement compared to the prior-year quarter; Adjusted Operating Income*, excluding impairment and restructuring charges, was $3.5 million.
• GAAP EPS was $0.08 per diluted share compared to a loss of ($0.25) per share in the second quarter of fiscal 2020; Adjusted EPS* was $0.12 per diluted share.
• Adjusted EBITDA* increased $7.4 million year over year to $6.0 million.

* Adjusted Revenue, Adjusted Operating Income (Loss), Adjusted EPS and Adjusted EBITDA are Non-GAAP measures described and defined below.

“I remain encouraged by our continued momentum and performance this quarter. Despite experiencing significant weather-related impacts in February of this year and the first seven weeks of operations in the prior-year quarter being pre-COVID, we reported sequential and year-over-year improvement in our operating results,” said Linda Perneau, President and Chief Executive Officer. “Thanks to the continued execution of our improved sales and delivery model, and our disciplined cost management, this quarter reflects our strongest year-over-year revenue growth in a decade, and our first positive GAAP net income in 14 quarters.”

Second Quarter Results

North American Staffing revenue for the quarter was $184.3 million, as compared to $173.4 million for the second quarter of fiscal 2020. Revenue for this segment increased approximately 6.3 percent year over year. The increase is primarily attributable to business wins with new clients and expansion of business within existing clients.

International Staffing revenue for the quarter was $27.9 million, compared to $24.3 million in the prior-year quarter. Adjusted Revenue increased 4.3 percent year over year. The increase is primarily due to increased managed service business and direct hire revenue in the United Kingdom as well as increased staffing business in France.

North American MSP revenue for the second quarter was $9.8 million, compared to $9.7 million in the prior-year quarter. The increase is primarily attributable to increased demand in its payroll service business.

Gross margin for the quarter was 16.4 percent of revenue, an 80 basis-point increase from the second quarter of fiscal 2020. The increase is primarily attributable to improved margins in our North American and International Staffing segments.

SG&A expense for the second quarter was $33.0 million, a $3.2 million reduction from the prior-year quarter. The reduction is primarily attributable to lower labor and related expenses, facility costs and professional fees.

Adjusted EBITDA, which is a Non-GAAP measure, was $6.0 million for the second quarter of fiscal 2021, compared to ($1.4) million in the prior-year quarter.

“Although the pandemic continues to present a number of challenges across our business, we have emerged as a stronger organization overall,” commented Ms. Perneau. “We remain confident in the continued execution of our strategic initiatives and our ability to remain on the current growth trajectory for fiscal 2021.”

2021 Earnings Conference Call and Webcast

Volt Information Sciences, Inc. will conduct a conference call on Tuesday, June 15, 2021, at 5:00 p.m. Eastern Time, to review the financial results for the second quarter ended May 2, 2021. A presentation supplementing the call can be accessed through the investor relations portion of the website. Investors interested in participating on the live call can dial 1-877- 407-9039 within the U.S. or 1-201- 689-8470 from abroad. The conference call, which may include forward-looking statements, is also being webcast and will be available via the investor relations section of the Company’s website at www.volt.com. A replay of the webcast will be archived on Volt’s investor relations website for 90 days.

Forward-Looking Statements

This press release contains forward-looking statements that are subject to a number of known and unknown risks. Such risks include, among others, general economic, competitive and other business conditions (including the potential impact of the strain of coronavirus known as COVID-19 and related government actions on our operations as well as the operations of our customers), the degree and timing of customer utilization and renewal rate for contracts with the Company, and the degree of success of business improvement initiatives that could cause actual results, performance and achievements to differ materially from those described or implied in the forward-looking statements. Information concerning these and other factors that could cause actual results to differ materially from those in the forward-looking statements are contained in the “Risk Factors” and other sections of the Company reports filed with the Securities and Exchange Commission (“SEC”). You are cautioned not to place undue reliance on such statements and to consult our SEC filings for additional risks and uncertainties that may apply to our business and the ownership of our securities. Our forward-looking statements are presented as of the date made, and we disclaim any duty to update such statements unless required by law to do so.

Note Regarding the Use of Non-GAAP Financial Measures

The Company has provided certain Non-GAAP financial information, including Adjusted Revenue, Adjusted Operating Income (Loss), Adjusted EPS and Adjusted EBITDA, which include adjustments to our GAAP financial results. These measures are not in accordance with, or an alternative for, generally accepted accounting principles (“GAAP”) and may be different from Non-GAAP measures reported by other companies.

The Company believes that the presentation of Non-GAAP measures, including on a constant currency basis and eliminating (a) the impact of businesses sold or exited, (b) the impact from the migration of certain clients from a traditional staffing model to a managed service model and (c) special items provides useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations because they permit evaluation of the results of the Company without the effect of currency fluctuations, special items or the impact of businesses sold or exited that management believes make it more difficult to understand and evaluate the Company’s results of operations. Special items include impairments, restructuring and severance as well as certain income or expenses which the Company does not consider indicative of the current and future period performance and are more fully disclosed in the tables.

Adjusted Revenue is defined as revenue excluding businesses exited and the effect of foreign currency translation. The Company has also migrated certain clients from a traditional staffing model to a managed service model, resulting in the Company now managing a greater percentage of such clients’ business under its North American MSP. This shift provides increased opportunity for the Company with the relevant clients. However, due to the structure of MSP arrangements, revenue is recognized on a net basis, thereby reducing revenues on a comparative period basis. Beginning in the first quarter of 2020, the Company includes such delivery model shifts within the Adjusted Revenue measurement, as it provides a more comparable basis for evaluating performance results from period to period and reflects the method used by management to evaluate performance. A reconciliation is shown in the tables at the end of this press release.

Adjusted EBITDA is defined as earnings or loss before interest, income taxes, depreciation and amortization (“EBITDA”) adjusted to exclude share-based compensation expense as well as the special items described above.

Adjusted EBITDA is a performance measure rather than a cash flow measure. The Company believes the presentation of Adjusted EBITDA is relevant and useful for investors because it allows investors to view results in a manner similar to the method used by management.

Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, analysis of the Company’s results of operations and operating cash flows as reported under GAAP. For example, Adjusted EBITDA does not reflect capital expenditures or contractual commitments; does not reflect changes in, or cash requirements for, the Company’s working capital needs; does not reflect the interest expense, or the cash requirements necessary to service the interest payments, on the Company’s debt; and does not reflect cash required to pay income taxes.

Adjusted Operating Income (Loss) is defined as operating income (loss) excluding businesses exited.

The Company believes the presentation of Adjusted Operating Income (Loss) is relevant and useful for investors because it provides a more comparable basis to evaluate performance results and analyze trends from period to period in a manner similar to the method used by management.

Adjusted EPS is defined as earnings per share excluding impairment and restructuring charges. The Company believes that the presentation of Adjusted EPS is useful for investors since it removes certain special items which the Company does not consider indicative of the current and future period performance.

The Company’s computation of Adjusted Revenue, Adjusted EBITDA, Adjusted Operating Income (Loss) and Adjusted EPS may not be comparable to other similarly titled measures computed by other companies because all companies do not calculate these measures in the same fashion.

About Volt Information Sciences, Inc.

Volt Information Sciences, Inc. is a global provider of staffing services (traditional time and materials-based as well as project-based). Our staffing services consist of workforce solutions that include providing contingent workers, personnel recruitment services and managed staffing services programs supporting primarily administrative, technical, information technology, light-industrial and engineering positions. Our managed staffing programs involve managing the procurement and on-boarding of contingent workers from multiple providers. Volt services global industries including aerospace, automotive, banking and finance, consumer electronics, information technology, insurance, life sciences, manufacturing, media and entertainment, pharmaceutical, software, telecommunications, transportation and utilities. For more information, visit www.volt.com.

Investor Relations Contacts:
Volt Information Sciences, Inc.
voltinvest@volt.com

Joe Noyons
Three Part Advisors
jnoyons@threepa.com
817-778-8424

Financial Tables Follow

Results of Operations
(in thousands, except per share data)
	Three Months Ended												Six Months Ended
	May 2, 2021				January 31, 2021				May 3, 2020				May 2, 2021				May 3, 2020
Net revenue	$	222,092			$	217,958			$	207,275			$	440,050			$	425,041
Cost of services		185,613				185,276				175,038				370,889				361,377
Gross margin		36,479				32,682				32,237				69,161				63,664
Selling, administrative and other operating costs		32,950				33,747				36,189				66,697				75,686
Restructuring and severance costs		595				632				411				1,227				1,657
Impairment charges		261				31				-				292				11
Operating income (loss)		2,673				(1,728	)			(4,363	)			945				(13,690	)
Interest income (expense), net		(430	)			(477	)			(621	)			(907	)			(1,321	)
Foreign exchange gain (loss), net		71				242				(266	)			313				(594	)
Other income (expense), net		(147	)			(156	)			(152	)			(303	)			(410	)
Income (loss) before income taxes		2,167				(2,119	)			(5,402	)			48				(16,015	)
Income tax provision		288				327				23				615				218
Net income (loss)	$	1,879			$	(2,446	)		$	(5,425	)		$	(567	)		$	(16,233	)
Per share data:
Basic:
Net income (loss)	$	0.09			$	(0.11	)		$	(0.25	)		$	(0.03	)		$	(0.76	)
Weighted average number of shares		21,793				21,793				21,416				21,793				21,416
Diluted:
Net income (loss)	$	0.08			$	(0.11	)		$	(0.25	)		$	(0.03	)		$	(0.76	)
Weighted average number of shares		22,588				21,793				21,416				21,793				21,416
Segment data:
Net revenue:
North American Staffing	$	184,295			$	184,216			$	173,386			$	368,511			$	355,781
International Staffing		27,880				24,013				24,303				51,893				50,526
North American MSP		9,832				9,669				9,745				19,501				19,114
Corporate and Other		117				119				187				236				390
Eliminations		(32	)			(59	)			(346	)			(91	)			(770	)
Net revenue	$	222,092			$	217,958			$	207,275			$	440,050			$	425,041
Operating income (loss):
North American Staffing	$	9,471			$	6,175			$	2,576			$	15,646			$	2,675
International Staffing		1,097				382				196				1,479				570
North American MSP		309				532				491				841				1,245
Corporate and Other		(8,204	)			(8,817	)			(7,626	)			(17,021	)			(18,180	)
Operating income (loss)	$	2,673			$	(1,728	)		$	(4,363	)		$	945			$	(13,690	)
Work days		65				59				65				124				124

Condensed Consolidated Statements of Cash Flows
(in thousands)
	Six Months Ended
	May 2, 2021				May 3, 2020
Cash, cash equivalents and restricted cash beginning of the period	$	56,433			$	38,444
Cash provided by (used in) all other operating activities		9,161				(7,161	)
Changes in operating assets and liabilities		(7,349	)			10,071
Net cash provided by operating activities		1,812				2,910
Purchases of property, equipment, and software		(1,755	)			(3,092	)
Net cash provided by (used in) all other investing activities		(40	)			615
Net cash used in investing activities		(1,795	)			(2,477	)
Net draw-down of borrowings		-				5,000
Debt issuance costs		(166	)			(243	)
Net cash provided by (used in) all other financing activities		23				(6	)
Net cash (used in) provided by financing activities		(143	)			4,751
Effect of exchange rate changes on cash, cash equivalents and restricted cash		281				(521	)
Net increase in cash, cash equivalents and restricted cash		155				4,663
Cash, cash equivalents and restricted cash end of the period	$	56,588			$	43,107
Cash paid during the period:
Interest	$	917			$	1,382
Income taxes	$	142			$	258
Reconciliation of cash, cash equivalents and restricted cash end of the period:
Current Assets:
Cash and cash equivalents	$	47,231			$	26,223
Restricted cash included in Restricted cash and short term investments		9,357				16,884
Cash, cash equivalents and restricted cash, at end of period	$	56,588			$	43,107

Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
	May 2, 2021				November 1, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	47,231			$	38,550
Restricted cash and short-term investments		12,788				20,736
Trade accounts receivable, net of allowances of $156 and $219, respectively		127,435				121,916
Other current assets		7,567				7,058
TOTAL CURRENT ASSETS		195,021				188,260
Property, equipment and software, net		20,180				22,167
Right of use assets - operating leases		23,513				25,107
Other assets, excluding current portion		6,633				6,311
TOTAL ASSETS	$	245,347			$	241,845
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued compensation	$	18,630			$	18,357
Accounts payable		24,793				31,221
Accrued taxes other than income taxes		31,828				12,983
Accrued insurance and other		17,710				15,908
Operating lease liabilities		6,817				7,144
Income taxes payable		515				891
TOTAL CURRENT LIABILITIES		100,293				86,504
Accrued payroll taxes and other, excluding current portion		21,237				29,988
Operating lease liabilities, excluding current portion		35,424				38,232
Income taxes payable, excluding current portion		90				90
Deferred income taxes		-				3
Long-term debt		59,153				59,154
TOTAL LIABILITIES		216,197				213,971
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00; Authorized - 500,000 shares; Issued - none		-				-
Common stock, par value $0.10; Authorized - 120,000,000 shares; Issued - 23,738,003 shares; Outstanding - 21,736,575 and 21,729,400 shares, respectively		2,374				2,374
Paid-in capital		80,673				79,937
Accumulated deficit		(30,505	)			(29,793	)
Accumulated other comprehensive loss		(5,367	)			(6,458	)
Treasury stock, at cost; 2,001,428 and 2,008,603 shares, respectively		(18,025	)			(18,186	)
TOTAL STOCKHOLDERS' EQUITY		29,150				27,874
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	245,347			$	241,845

GAAP to Non-GAAP Reconciliations
(in thousands)
		Three Months Ended
		May 2, 2021			May 3, 2020
Reconciliation of GAAP net income (loss) to Non-GAAP net income (loss):
GAAP net income (loss)		$	1,879		$	(5,425	)
Restructuring and severance costs			595	(a)		411		(c)
Impairment costs			261	(b)		-
Non-GAAP net income (loss)		$	2,735		$	(5,014	)
		Three Months Ended
		May 2, 2021			May 3, 2020
Reconciliation of GAAP net income (loss) to Adjusted EBITDA:
GAAP net income (loss)		$	1,879		$	(5,425	)
Restructuring and severance costs			595	(a)		411		(c)
Impairment costs			261	(b)		-
Depreciation and amortization			1,951			2,027
Share-based compensation expense			531			508
Total other (income) expense, net			506			1,039
Provision for income taxes			288			23
Adjusted EBITDA		$	6,011		$	(1,417	)

Special item adjustments consist of the following:
(a)	Primarily relates to actions taken by the Company as part of its continued efforts to reduce costs and on-going costs related to facilities impaired in the second half of fiscal 2020.
(b)	Relates to impairment of capitalized software costs.
(c)	Primarily relates to actions taken by the Company as part of its continued efforts to reduce costs and to offset COVID-19 related revenue losses.

GAAP to Non-GAAP Reconciliations
(in thousands)
		Six Months Ended
		May 2, 2021				May 3, 2020
Reconciliation of GAAP net loss to Non-GAAP net income (loss):
GAAP net loss		$	(567	)		$	(16,233	)
Restructuring and severance costs			1,227		(a)		1,657		(c)
Impairment costs			292		(b)		11
Non-GAAP net income (loss)		$	952			$	(14,565	)
		Six Months Ended
		May 2, 2021				May 3, 2020
Reconciliation of GAAP net loss to Adjusted EBITDA:
GAAP net loss		$	(567	)		$	(16,233	)
Restructuring and severance costs			1,227		(a)		1,657		(c)
Impairment costs			292		(b)		11
Depreciation and amortization			3,656				4,000
Share-based compensation expense			757				1,019
Total other (income) expense, net			897				2,325
Provision for income taxes			615				218
Adjusted EBITDA		$	6,877			$	(7,003	)

Special item adjustments consist of the following:
(a)	Primarily relates to actions taken by the Company as part of its continued efforts to reduce costs and on-going costs related to facilities impaired in the second half of fiscal 2020, net of a lease termination gain.
(b)	Relates to impairment of capitalized software costs.
(c)	Primarily relates to the strategic initiative to offshore a significant number of identified roles to our staffing operations in India and continued efforts to reduce costs and to offset COVID-19 related revenue losses.

GAAP to Non-GAAP Reconciliations
(in thousands)
		Three Months Ended May 2, 2021				Three Months Ended May 3, 2020
		As Reported				As Reported			FX Impact		MSP Delivery Model Shift			Adjusted
Revenue
North American Staffing		$	184,295			$	173,386		$	-	$	-		$	173,386
International Staffing			27,880				24,303			2,432		-			26,735
North American MSP			9,832				9,745			-		-			9,745
Corporate and Other			117				187					-			187
Eliminations			(32	)			(346	)		-		-			(346	)
Total Revenue		$	222,092			$	207,275		$	2,432	$	-		$	209,707
% change															5.9	%
		Six Months Ended May 2, 2021				Six Months Ended May 3, 2020
		As Reported				As Reported			FX impact		MSP Delivery Model Shift			Adjusted
Revenue
North American Staffing		$	368,511			$	355,781		$	-	$	(2,072	)	$	353,709
International Staffing			51,893				50,526			3,787					54,313
North American MSP			19,501				19,114			-		52			19,166
Corporate and Other			236				390			-		-			390
Eliminations			(91	)			(770	)		-		-			(770	)
Total Revenue		$	440,050			$	425,041		$	3,787	$	(2,020	)	$	426,808

GAAP to Non-GAAP Reconciliations
(in thousands)
		Three Months Ended May 2, 2021									Three Months Ended May 3, 2020
		As Reported			Business Exited		Adjusted				As Reported			Business Exited			Adjusted
Operating Income (Loss)
North American Staffing		$	9,471		$	-	$	9,471			$	2,576		$	-		$	2,576
International Staffing			1,097			-		1,097				196			-			196
North American MSP			309			-		309				491			-			491
Corporate and Other			(8,204	)		1		(8,203	)			(7,626	)		(45	)		(7,671	)
Total Operating Income (Loss)		$	2,673		$	1	$	2,674			$	(4,363	)	$	(45	)	$	(4,408	)
		Six Months Ended May 2, 2021									Six Months Ended May 3, 2020
		As Reported			Business Exited		Adjusted				As Reported			Business Exited			Adjusted
Operating Income (Loss)
North American Staffing		$	15,646		$	-	$	15,646			$	2,675		$	-		$	2,675
International Staffing			1,479			-		1,479				570			-			570
North American MSP			841			-		841				1,245			-			1,245
Corporate and Other			(17,021	)		1		(17,020	)			(18,180	)		(13	)		(18,193	)
Total Operating Income (Loss)		$	945		$	1	$	946			$	(13,690	)	$	(13	)	$	(13,703	)

GAAP to Non-GAAP Reconciliations
(in thousands)
		Three Months Ended May 2, 2021								Three Months Ended May 3, 2020
		As Reported		Business Exited			Adjusted			As Reported			Business Exited			Adjusted
Operating Income (Loss)
Gross margin		$	36,479	$	-		$	36,479		$	32,237		$	-		$	32,237
Selling, administrative and other operating costs			32,950		-			32,950			36,189			-			36,189
Restructuring and severance costs			595		(1	)		594			411			45			456
Impairment charges			261		-			261			-			-			-
Total Operating Income (Loss)		$	2,673	$	(1	)	$	2,674		$	(4,363	)	$	(45	)	$	(4,408	)
		Six Months Ended May 2, 2021								Six Months Ended May 3, 2020
		As Reported		Business Exited			Adjusted			As Reported			Business Exited			Adjusted
Operating Income (Loss)
Gross margin		$	69,161	$	-		$	69,161		$	63,664		$	-		$	63,664
Selling, administrative and other operating costs			66,697		-			66,697			75,686			-			75,686
Restructuring and severance costs			1,227		(1	)		1,226			1,657			13			1,670
Impairment charges			292		-			292			11			-			11
Total Operating Income (Loss)		$	945	$	(1	)	$	946		$	(13,690	)	$	(13	)	$	(13,703	)

GAAP to Non-GAAP Reconciliations
(in thousands, except per share data)
		Three Months Ended May 2, 2021
		As Reported			Restructuring and Impairment Costs		Adjusted
Earnings per Share
Net income		$	1,879		$	856	$	2,735
Per share data:
Basic:
Net income		$	0.09				$	0.13
Weighted average number of shares			21,793					21,793
Diluted
Net income		$	0.08				$	0.12
Weighted average number of shares			22,588					22,588
		Six Months Ended May 2, 2021
		As Reported			Restructuring and Impairment Costs		Adjusted
Earnings per Share
Net income (loss)		$	(567	)	$	1,519	$	952
Per share data:
Basic:
Net income (loss)		$	(0.03	)			$	0.04
Weighted average number of shares			21,793					21,793
Diluted
Net income (loss)		$	(0.03	)			$	0.04
Weighted average number of shares			21,793					21,793

 

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FAQ

What are the Q2 2021 financial results for Volt (VOLT)?

For Q2 2021, Volt reported revenue of $222.1 million, a 7.1% increase from the previous year, with GAAP EPS at $0.08 and an adjusted EBITDA of $6.0 million.

How did Volt (VOLT) perform compared to last year?

Volt's performance showed significant improvements, with revenue up 7.1% and a positive GAAP net income for the first time in 14 quarters.

What contributed to Volt's (VOLT) revenue growth in Q2 2021?

The revenue growth was primarily driven by new client acquisitions and expansion in existing client contracts, especially in North America and the United Kingdom.