NEW YORK, NY, March 9, 2016 – Volt Information Sciences, Inc. (“Volt” or “the Company) (NYSE-MKT: VISI), a global provider of staffing services and information technology infrastructure services, today reported results for its first quarter ended January 31, 2016. Key elements include:
| | · | First quarter net revenue of $326.8 million down 10.2% compared to the prior quarter and down 14.7% year-over-year |
| | · | First quarter loss from continuing operations of $11.0 million or $8.2 million excluding special items |
| | · | During the first quarter, the Company completed the sale of its Uruguayan staffing business and announced plans to sell Maintech, its IT infrastructure services business |
| | · | During the first quarter, the Company entered into a one-year extension of its $150.0 million Financing Program with PNC Bank, National Association (“PNC”) with an expiration date of January 31, 2017 |
| | · | Subsequent to quarter end, the Company completed a sale-leaseback transaction for its office facility in Orange, California, and also completed the sale of its office facility in San Diego, California with combined net proceeds totaling $29 million |
Commenting on Volt’s first quarter performance, Michael Dean, President and CEO, said, “Our results in the first quarter reflect our ongoing efforts to stabilize the financial performance of Volt’s core staffing business and solidify our book of business with our customers. After normalizing for fewer work days during the fiscal first quarter, staffing revenue was down slightly on a sequential quarter basis. We also saw the initial benefit of the workforce reduction we announced early in the quarter as total selling, administrative and other operating costs declined 5% compared to the prior quarter. While much of the first quarter benefit from the lower headcount was offset by restructuring costs, this headcount reduction will contribute significantly to $10 million in anticipated cost savings during the full year.”
Mr. Dean concluded, “We’ve made significant progress on key initiatives aimed at divesting non-core assets, reducing costs and improving our liquidity position as we continue to build the foundation for returning Volt to a growth trajectory. Adding to the divestiture of several non-core businesses last year, during the first quarter we completed the sale of our Uruguayan staffing business, announced plans to sell Maintech, and subsequent to quarter end, completed the sale of real estate assets. Looking forward, we remain acutely focused on strengthening our competitive position, improving efficiencies, and reinvesting to drive top line growth in our business. Based on our ongoing progress, I remain confident that our actions will lead to significant improvements in the quarters and years ahead.”
Fiscal 2016 First Quarter Results
Total revenue for the fiscal 2016 first quarter was $326.8 million, down $37.1 million or 10.2% compared to $364.0 million for the fourth quarter of fiscal 2015. Compared to the prior year period, total revenue decreased $56.2 million, or 14.7% compared to net revenues of $383.1 million for the first quarter of fiscal 2015.
Staffing Services segment revenue was $308.7 million, a $33.6 million or 9.8% decrease compared to $342.3 million in the fourth quarter of fiscal 2015. Compared to the prior year period, Staffing Services segment revenues declined $52.1 million, or 14.5% compared to Staffing Services revenues of $360.8 million in the first quarter of fiscal 2015. Other segment revenue was $18.1 million in the first quarter of fiscal 2016, compared to $21.6 million in the fourth quarter of fiscal 2015 and $22.2 million in the prior year period.
Staffing Services segment operating income in the first quarter of fiscal 2016 of $1.7 million included $1.5 million of restructuring costs. Excluding the impact of this special item, Staffing Services segment operating income would have been $3.2 million on a Non-GAAP basis.
Net loss of $11.0 million in the first quarter of fiscal 2016 included $2.8 million of restructuring costs. Excluding the impact of this special item, net loss for the first quarter of 2016 would have been $8.2 million on a Non-GAAP basis.
Adjusted EBITDA, which is also a Non-GAAP measure, was a loss of $5.3 million in the fiscal 2016 first quarter. Adjusted EBITDA excludes the impact of interest expense, income tax expense, depreciation and amortization expense, other income/loss and share-based compensation expense. For a reconciliation of the GAAP and Non-GAAP financial results, please see the tables at the end of this press release.
Divestiture of Non-Core Assets
During the first quarter, the Company completed the sale of its Uruguayan staffing services business as part of the Company’s ongoing initiative to simplify its corporate structure and improve operational focus on its core staffing business. This sale is in addition to several non-core divestitures completed in fiscal 2015, including the sale of substantially all of the assets of Volt Telecommunications Group in the fourth quarter of 2015, the sale of the Company’s Uruguayan publishing and printing business in the third quarter of 2015, and the sale of the Company’s computer systems business in the first quarter of 2015. While the consideration Volt received in the sale of each of these businesses has been modest, the divestiture of these businesses is expected to eliminate approximately $3 million in operating losses in fiscal 2016.
As previously announced, the Company is engaged in a process to sell Maintech, its IT infrastructure services business. It is anticipated that as the next part of this process, the Company will select a potential buyer shortly with whom it will enter a non-binding letter of intent. If a transaction then proceeds with a potential buyer, the Company would expect to complete a transaction by the end of the second quarter or sometime in the third quarter of fiscal 2016.
Sale of Real Estate
In conjunction with the Company’s asset divestiture strategy, subsequent to quarter end, the Company completed a sale-leaseback transaction of its office properties in Orange, California, with Glassell Acquisitions Partners LLC, a limited liability company formed by Hines, a real estate investment and
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management firm, and funds managed by Oaktree Capital Management L.P., an investment management firm. The Orange facility comprises four buildings totaling approximately 191,000 square feet of Class A office space. The terms of the transaction included a $35.9 million purchase price and a concurrent leaseback agreement with an initial term of 15 years, plus renewal options. The property will continue to house approximately 400 Volt employees. After the repayment of mortgage indebtedness on the property along with transaction-related expenses and fees, Volt received net cash proceeds of approximately $27 million from the sale of the property.
The Company also completed the sale of its approximate 19,000 square foot office facility in San Diego, California. Net proceeds to the Company, after transaction-related expenses and fees, totaled $2.0 million.
Net proceeds from the transactions will be used to ensure adequate levels of liquidity for working capital purposes, as well as to fund investments in technology and sales and marketing activities in support of the Company’s growth objectives.
Financing
During the quarter, the Company entered into a one-year extension of its $150.0 million Financing Program with PNC with an expiration date of January 31, 2017.
Subsequent to quarter end, on February 17, 2016, Maintech entered into a $10.0 million revolving credit agreement with Bank of America. The Credit Agreement was entered into to provide short-term flexibility for working capital purposes. The Company expects to terminate the Credit Agreement on or before the sale of Maintech.
Liquidity
As of January 31, 2016, the Company had $44.7 million of available liquidity for working capital requirements.
Conference Call and Webcast
A conference call and simultaneous webcast to discuss the fiscal 2016 first quarter financial results will be held today at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time. Volt’s President and CEO Michael Dean and CFO Paul Tomkins will host the conference call. Participants can listen in via webcast by visiting the Investor & Governance section of Volt’s website at www.volt.com. Please go to the website at least 15 minutes early to register, download and install any necessary audio software. The conference call can also be accessed by dialing 877-407-9039 (201-689-8470 for international callers) and reference the "Volt Information Sciences Earnings Conference Call."
Following the call, an audio replay will be available beginning Wednesday March 9, 2016 at 7:30 p.m. Eastern Time through Wednesday, March 23, 2016 at 11:59 p.m. Eastern Time. To access the replay, dial 877-870-5176 (858-384-5517 for international callers) and enter the Conference ID # 13630984. A replay of the webcast will also be available for 90 days upon completion of the call, accessible through the Company's website at www.volt.com in the Investors & Governance section.
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), managed service programs, technology outsourcing services and
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information technology infrastructure services. Our staffing services consists of workforce solutions that include providing contingent workers, personnel recruitment services, and managed services programs supporting primarily professional administration, technical, information technology, light-industrial and engineering positions. Our managed service programs consist of managing the procurement and on-boarding of contingent workers from multiple providers. Our technology outsourcing services provide pre and post production development, testing and customer support to companies in the mobile, gaming, and technology devices industries. In addition, we provide information technology infrastructure services which provide server, storage, network and desktop IT hardware maintenance, data center and network monitoring and operations. Our complementary businesses offer customized talent, technology and consulting solutions to a diverse client base. 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.
Forward-Looking Statements
This press release contains forward-looking statements that are subject to a number of known and unknown risks, including, among others, general economic, competitive and other business conditions, the degree and timing of customer utilization and rate of renewals of 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 company reports filed with the Securities and Exchange Commission. Copies of the Company’s latest Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, as filed with the Securities and Exchange Commission, are available without charge upon request to Volt Information Sciences, Inc., 1133 Avenue of the Americas, New York, New York 10036, Attention: Shareholder Relations, 212-704-7921. These and other SEC filings by the company are also available to the public over the Internet at the SEC’s website at http://www.sec.gov and at the company’s website at http://www.volt.com in the Investor & Governance section.
Investor Contacts:
Paul Tomkins
Volt Information Sciences, Inc.
voltinvest@volt.com
212-704-7921
Lasse Glassen
Addo Communications
lasseg@addocommunications.com
424-238-6249
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