STAF - Earnings call transcript Q2 2018 | Staffing 360 Solutions, Inc.

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Operator

Greetings, ladies and gentlemen, and welcome to the Staffing 360 Solutions Fiscal Second Quarter 2018 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. This conference call will contain forward-looking statements within the meaning of the U.S. Staffing Inc. concerning laws securities XXX Solutions federal The significant actual risks are subject results number of to a and differ forward-looking materially. statements may uncertainties and are and with Please may that in XXX's differ SEC, company's our to to Staffing risks filings results those refer which other the cause contain from identify actual factors forward-looking important and the contained statements. expressly statement or made XX, this XXXX, the XXX Solutions All update of August and revise to forward-looking today forward-looking disclaims as statements conference obligation of after are date any any Staffing call.

pleasure may go prepared comments, we and Chairman reference these ahead. these measurements is Please most During Officer to non-GAAP Executive reconciliations GAAP Chief my such provided adjusted you non-GAAP Staffing introduce applicable make where Brendan comparable XXX to the Solutions. to It directly EBITDA Flood, certain of measures for as measure. have now

Brendan Flood

statements EBITDA in of call this and of Diana, gross Thank grew and annualized questions. a $XX David step overview I million journey is fiscal for will discuss by quarter an XX% over I very May, early developments our only site bring the our this you on this acquisitions we in the material going forward replay business the joined since financial www.staffingXXX.solutions.com. Also quarter the XXX's announcing who commented integration a of the that of stage start of unadjusted financial by call operational grew everyone performance, remarks Staffing XX% half will strategy almost of Faiman reached your Web recent on want basis. various I'm and you, the London. an that our the firstPRO and to another available second revenues. Atlanta impacts on Staffing the in $XX CBS the today revenue in quarter XXXX have to for conference to forward. I million open my hand second press this by before first that to Clement lines call. XXX's we to the profit of quarter a release link made and reaching also be marking was our with XXXX would will and available three XXXX is and us that our following start Financial David attention gross profit a Then, record almost Officer. consecutive of for did positive thank conference quarter Butler second The we to journey, our once bottom Chief joined quarter has second $XXX webcast acquisitions to size. certain to call earnings and show September contained Faiman, terms year Revenue XXXX, have in million. significant and and We From by

integration financial We reached beginning that performing been current the have of the mark exercises many year. have since and

cross-sell a effectively business together our three get been Focusing impact of working streams possible past. our the and the to ability to is more services into on having has distinct in people our business positive than

base business expected to services We to million and are and our $X executed cost by to per total reduce share fully million costs unit. business once costs have share units, annum. $X initiatives, in across managed to saving per reduce operating overhead These

President, Mark senior Darby President, Paul the as the the management team Professional appointments of Staffing and to elevation Commercial Operating strengthened Alicia Barker we Officer. U.K. our Staffing and Additionally, as with of Chief with Polito

management. to we divested XXXX, During business the PeopleServe

flow [ph] to May business seen best have Clement we market are team Longbridge and the the our allowed growing Clement job looking to Longbridge with is of one we managing CBS relationships following in May the into May's to the spent elsewhere. acquisition Longbridge. our our size. forward, London first office [OPL] Spartanburg Carolina, flavor JM in our South gives acquisition any office the to in number day energies for seeing in negative both States. and opened to moving group, in For and activity In us will continue team growth took With Greenville, appropriate Clement this that real May now office Managing already Director also join July, The first second we but are XXth we fastest Butler the United acquisitions. that of Chris look Clement Rowbotham, for into the our from in moved we cities existing the strategic move of London and from Greenville a a of state. the of the Group This within time has quarters, business. The from view the

our in our now Officer numbers. continue adjusted third said, call over to setting the will the EBITDA Chief records the of that We expect our Dave? David hand also we and EBITDA business financials. new into for streamlining the to with will And I quarter with continue But and Financial improvements beyond. process Faiman,

David Faiman

Thank you, everyone. Brendan, and morning good

over million Revenue XXXX the quarter $XX.X of in of quarter CBS sequentially For June XXXX, and acquisition during million which Butler the and and XXXX. of quarter of that we September in million from X.X%. was this the included up May of closed an prior second we Limited, year completed of Clemet increase $XX.X firstPRO $XX.X XX.X% revenue of second

attributable Contract costs PeopleServe the sequentially margin placement the of the increase gross in the comprised compensation that Butler, of up noting into associated decline quarter gross worth and materializing This May It's or million million were quarter resulting and of year the with and cost and the addition inter-company the in addition, the current over foreign year PeopleServe Operating we the raising $X.X million by of and is higher initiatives firstPRO lower and financing the Other a million acquisitions, a for almost from prior revenue. non-cash the of costs expenses other that and permanent principally XX.X% discount during to from sale the which partially our partially non-recurring $X.X benefit saving of was quarter loss insurance higher from increase translate XX% also million prior million over which revenue This the during to a was is divestiture. a divested also gain of was increase credits. costs in $X.X operations less synergies an of PeopleServe are from $X.X for million million and firstPRO the the million be Of million Butler respectively. of XXXX. quarter $X business. XXXX. million $X.X other $X.X quarter approximately loss that capital of or Revenue second quarter million non-cash XX.X% versus remeasuring includes profit loss quarter In permanent income offset revenue an remaining deferred of Gross of income remaining with of second XXXX a $X.X from and was of workers for core attributed from in and million the of primarily of This operations revenue are $X.X million partially fair acquisition of than Clement improved offset gross year. increase achievable and for million the subsidiaries, $X.X of arose of stemming million and debt $X.X XX.X% $X coupled prior increase of $X.X million against of placement charges savings from warrants. interest $X.X currency almost year. company's by and QX prior XX.X% the X.X% $X.X favorable million CBS expenses a temporary the and XX% million, of than the at the net $X.X year. from by $XX.X business million, $XX.X of $X.X compared comprised $X.X decline second an margin The the million note, translation. profit CBS performance financing amortization $X.X by from contract of million firstPRO, offset of million valuing $XX.X and temporary to million $X.X can compared placement of to increase attributable the $XX.X and refinancing, permanent XXXX the acquisition were second in to net gain second higher

the grew partially the The of attributable to year-to-date XX.X% $XX.X improvement. $XX.X Including of $X.X decline basis $X.X EBITDA our pro core million of the million prior XX However, trailing PeopleServe non-cash remaining firstPRO XX-month all and to quarter, organic was adjusted a from adjustments by million from the the translation. million the prior is from XX.X% six majority as for $XXX.X for $X.X on offset compared acquisitions Clement favorable months million million cash and to and On a in trailing of during decline $X was adjusted consummated $XX EBITDA an non-recurring Of million. back basis, currency during $X.X adding increased growth second occurred a revenue foreign year. a months to million business. acquisition the million first costs, This the CBS that which May in Butler, is quarter. now forma

and and increase attributed $XX.X lower year can is raising to by savings the of each or credits. the Of an workers the respectively. margin of Other $XXX.X the XX.X% the million its realized placement primarily acquisition months Butler, increase This charges months and XX.X% XXXX prior of costs capital million growth of and months, with $X.X the period contract for During attributable Gross Gross XXXX, the compared $XX.X permanent the million and impact remaining of be XX.X% cost the by ended period hire and million. $X.X non-strategic stemming the costs May PeopleServe representing June PeopleServe in with partially revenue divesture was profit the improvement million firstPRO, expenses million revenue Clement placement gross insurance acquisitions respectively. from non-recurring partly margin and that year $X.X million the expenses XX.X% for and versus and non-cash in offset over the million revenue six CBS other over million $XX.X and of temporary for permanent subsidiaries Operating prior divesture. to period. of first first for materializing million for from corresponding $XX.X acquisitions, $X.X associated profit increased comprised of XX.X year prior six business. savings compensation of for six other savings gross increase are is prior XX.X% from the period increased in XX% revenue offset savings of is

the the of from decreased prior X.XX% the May In acquisitions in X.X connection financing gain Although interest of $X.X of financed rate XXXX, by the interest we million, loan with the of and the X.XX% turn May or of of two million debt includes rate a higher $X.X sale from from XXXX, upfront our the portion term of Clement Clement expense of loss a increased at deferred June in and discount extinguishment in. with gain a year divesture value PeopleServe. and the we completed includes $X.X of to fair million from £X.X costs base of $X.X warrants of current amortization HSBC In of all financing acquisition, $X.X million of sheet. PeopleServe. balance debt We a as acquisition now million completed well as the of million year a

monthly our the increasing years. our and million three £X.X £XX the over term loan against borrowing to factoring million, to simultaneously with While unbilled receivable amortizes HSBC facility U.K. secured

reclassing liability also the adjustment impact we equity. the with million Investment addition, of million and provisions. This $X.X Group remove to a residual warrant In of final to $X.X amended company's had Jackson of anti-dilution agreement accounting mark-to-market the

is provided collection factoring Finally, of was deferred price $XX from cash the from activities principally the again activity. requires U.K. U.S. cash February we under driven XXXX. an by flows million of the $X.X U.K. we present flow which versus operating million agreement that GAAP Investing in $X.X principally as factoring agreement million the secured investing in purchase

Clement the into [ph]. lastly, end by the point, buyer the agreement. from the X addition, a offset approximately X.X of financing the connection million with from borrowing questions. in the used acquisition in million was cash partially flow call down At factoring That's received of is we the the driven was May. let's we back the of the In sale Clement for Of the review. acquisition outflow with entered divesture networking activities capital July to the And from facilities, proceeds, of from of this -- remitted principally PeopleServe $XX.X my the [draw] U.K. million cash pay cash open operator, May PeopleServe from financial in divestiture,

Operator

comes [Operator with Please your Thank of from Partners. question. proceed you. Instructions] Our first line question the [indiscernible]

Unidentified Analyst

you Good morning. are please in there the be in, Clement on staffing. and business, that that some other doing in of May in type needed differences you're business have so terms differences staffing? discuss the RPO what which and for from Could people branding the seems new professional of and to professional Maybe

Brendan Flood

Bill. Thanks Brendan. Okay. This is

relation And our contractors margin. the high is in workers difference the costs, is that between is reduction lower lower volume, place margin it's last lower. temporary we've or the execution that site, normal over volume couple model principal discussing but which the underlying the more managed calls model and staff the So than we to augmentation RPO business of it's significantly the model the been offsets in of margin, on RPO

So we because placing Longbridge and pretty and staff. have into to we've business brought staffing. profit XXX% the because it clients high professional now EBITDA Clement to exclusively And bring has placing still so has principal IT, so staff accountants allowed also It's it work the in the but we is their brands conversion to and United us And offering us substantial. as ability have May it amongst with into What we're the Clement placing major offerings do? U.K. not already we is for been placing clients. ability U.K. on Butler out been brands. that do some pretty our of until We our of to that up the higher our the impressive. accounting We North already be that and of with to in if is make other opportunities to of fold engineering those open gross But, May's the geography major that our and The than CBS the got impressive fairly believe far, engineers particularly into other days. that to clients; a their Carolina States are happen. early we've U.K. could believe knock finance lot

think see going to next developments quarters the course two I of we're over that some the on so. or

Unidentified Analyst

to -- states doing the ask to you the you job. I it seem Thank where great about you. taking was going be down a Southeastern lower there to

Brendan Flood

Thank you.

you having to So it. ask hopefully without I answered that

Unidentified Analyst

Thank you.

Brendan Flood

Thanks Bill.

Operator

comes Private your next [ph] the of Our question line from Star] [Zack question. a with Investor. Please proceed

Unidentified Analyst

Hi. gentlemen. morning Good

just the just is in I investors' think job wondering are growing of you the guys to view, of a it going more and acquiring an when I'm top-line companies. margin instead working going to top-line sales. have the out guys are you from on to done And more you And when working or of just on planning shift great working bottom-line sales? on the point

Brendan Flood

Zack. Thanks Okay.

So this again. Brendan, is

And a run of now, million to right is to we're aim of $XXX million. rate about revenue. $XXX stated Our get at

million. years too million $XXX So to to from would $XXX go growing take organically many

working parts So that the we've year to bit we finance, But terms acquisition in continue engineering, that our program one off in of current intend a the We'll five do is the pillars I quite accounting we do issues. covered with continue the frequently strategic integration that. of that on commentary spent and administration time absolutely and and IT, industrial. light outline of to

in than Operating of multi-year coming and May ends look overheads. presidents the the which to providing to But saving, items takes of $X larger order I a Officer We as more U.K. to in the in also continue to us allows in bottom-line to driving but we'll costs, we towards being million are the take Longbridge out up like business while. in The of probably appointment various Right past. Butter time about Clement it medical ticket the said have spending significantly now, what have out and CBS a in we addition at $X Chief just to absolutely the coverage some excess take million Alicia started of to and somewhere the

We also in have to providing Monroe May. America Clement work North Staffing

We to have providing Lighthouse. Atlanta work firstPRO in

JM CBS to providing have Butler Group. We work

intra quarter we So that next they to expect and do don't has will record want for than on before. say May activity with quarter, group are ever significantly we I momentum more gone have revenues is into entire going that but the again. continued we quarter our see on the having Clement an the that around

record overhead and again see profit continue that our we've on will if the doing We been we base. gross endeavors

very our away. clear that in not net far income breakthrough We are pretty is

Unidentified Analyst

Keep up great work. the

Brendan Flood

Thanks Zack.

Operator

line the from question. from comes with Tucker proceed All Above question your Please of next Our Advisors. Andersen

Tucker Andersen

morning. working Could a income million timeline have how bit to you talk through $X the the I savings follow-up. about $X cost a your Good question more million see little and you a for statement?

David Faiman

Faiman. Dave is This

So, I will speak little bit. a to that

quarter, of the those during possibly over quarter the realized start or expect we've some those to though during we So into majority -- executed this things would other I early already later we've and savings execute identified XX will being of next scoping things this months. QX. the

Tucker Andersen

And be that associated Dave, those were are upfront to there savings expensed? with costs still

David Faiman

heavy an making Brendan little together, investments have gotten There the not will now opportunity stems of we and centralizing a fact a said processes more streamlined. that now as be scale start to this from lot to them we things, have bringing We're bit. making some

it's upfront. major heavy more out to investment be than So going taking costs

Tucker Andersen

financing how you breakeven? for you ask then, need you a going breakeven, for Do financing future could get him you be your flow rate and flow burn talk And the get you to for could x I think to is what that just to the area, follow-up cash Brendan, see cash how if need and acquisitions. about,

Brendan Flood

I less burn $X million about is rate than think about our corporate a year. So

of to additional -- is positive debt terms the company, financing In generating EBITDA, continue mean it comes service I The as is. due. we pay paying all now financing for company for our we're bills our as right it but

but So major we're additional need financing -- expecting additional acquisition. an to not for

Operator

from next the comes Wells [Operator with question line Instructions] Salazar question. Our your Matt of proceed from Please Fargo.

Matt Salazar

Hi, increase in than this increasing to profit. relative again the operating larger gross is mean just on expenses in continue I to expenses increase the increase guys. want gross hammer in the operating profit. to I

idea as up that having million used issuing around its market financing I then, up guess So market. the talked ATM guys facility I the out question, guys accretive. into Maybe the previous well. on I'm have Thanks. trying following mean up that ending are $X a think you to come little these about $X.X the acquisitions million, you to I And could go you to I see activities. into be as been bit that at you about

Brendan Flood

So I gross profit. bit can OpEx speak a the to little to

So things. couple of

correct, annualized of us the opportunistically. takeouts bottom. opportunity through accretive. let's to definitely activities X.X million $X First Accounting operating $X the more can mentioned cost all, during with ATM, the that call increase acquisitions us profit whenever flowing one-time that's acquisitions. are blip expense an doesn't million capitalize cost, million, say that associated $X.X $X.X always of always of operating a we allow of of The of provide earlier do The of acquisition, consummate non-recurring an financing that We see to sort the million. million we'll we get what expenses of X see the with coupled with those the the million there you you cost anymore, use we've an so where now quarter gross that will be that do those to

the up it'll no the -- price, the necessary and on stock So X.X it. the needs use plan go there's to company use depend out to remaining opportunity million, it's just

Matt Salazar

Thanks guys. right. All

Operator

Instructions] at turn call [Operator questions to are to I There closing this further remarks. And time. management back like no would the for

Brendan Flood

again, you, Diana. Okay. Thank

improvements the So just continue will drive as our to a reminder, we group. operational across

message our the capital across expanding on work markets. will We

for look both growth We opportunities for additional and organically. by will acquisition

you, all and that forward of again these to shareholder the remain the results. I we and we quarter is and of growth to As you we Operator and speaking growth earnings to end revenue, to of all, third mentioned management growth to end in look committed when and calls at call. Thank the November, value. report team our

Operator

today's conference. This concludes

you You may at this your your Thank participation. time. disconnect for lines

Staffing 360 Solutions (STAF) 15 Aug 182018 Q2 Earnings call transcript