FOR IMMEDIATE RELEASE

Volt Information Sciences Reports Fiscal 2016 Fourth Quarter

and Full Year Financial Results

Company achieves most profitable quarter in five years

with fourth quarter net income of $2.8 million

NEW YORK, NY, January 11, 2017 – 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 fourth quarter and full year ended October 30, 2016. Key elements include:

 

·

Fourth quarter net revenue of $341.6 million up 3.3% compared to the prior quarter and down 6.2% year-over-year; Full year net revenue of $1,334.7 million down 10.8% year-over-year

 

·

Fourth quarter gross margin percentage of 16.7% increased 70 basis points year-over-year

 

·

Fourth quarter net income of $2.8 million and full year net loss of $14.6 million; excluding special items, fourth quarter net income of $3.8 million and full year net loss of $10.4 million

 

·

Reduced fourth quarter selling, administrative and other operating costs by $4.6 million, or 8.4% year-over-year; Reduced full year selling, administrative and other operating costs by $27.1 million, or 11.7% year-over-year, as a result of headcount reductions and other initiatives to improve operating efficiencies

 

·

As of the end of the fourth quarter, the Company had $48.5 million of global liquidity for working capital requirements

 

·

Enhanced financial disclosures to include three reportable segments: North American Staffing, International Staffing, Technology Outsourcing Services and Solutions

 

·

Subsequent to the end of the fourth quarter, the Company amended its Financing Program with PNC and extended the Program by one-year to January 31, 2018.

 

Commenting on Volt’s fourth quarter performance, Michael Dean, President and CEO, said, “We concluded fiscal 2016 with a solid fourth quarter highlighted by strong year-over-year growth in gross margin percentage along with careful expense management that helped produce the most profitable quarter for Volt in five years. In addition, we continued to add to our book of business with several significant new customer engagements. This, coupled with a slower rate of revenue decline from existing customers, is helping to stabilize revenue from our core North American Staffing business.”

Mr. Dean continued, “As we head into fiscal 2017 as a financially stronger and more streamlined company, I am confident we will continue to build on the foundational strengths of our core staffing business to achieve our longer-term goal of sustained profitable growth.”

 

 

Volt Information Sciences Reports Fiscal 2016 Fourth Quarter and Full Year Results January 11, 2017 Page 2 of 12

Fiscal 2016 Fourth Quarter Results

Total revenue for the fiscal 2016 fourth quarter was $341.6 million, up $11.0 million or 3.3%, compared to total revenue of $330.6 million in the third quarter of fiscal 2016. Compared to the prior year period, total revenue decreased $22.4 million, or 6.2%, compared to $364.0 million in the fourth quarter of fiscal 2015.

North American Staffing revenue, which provides a broad spectrum of contingent staffing, direct placement, recruitment process outsourcing and other employment services, was $270.6 million, a $7.6 million or 2.9% increase compared to $263.0 million in the third quarter of fiscal 2016. Compared to the prior year period, North American Staffing revenues declined $5.6 million, or 2.0%, compared to North American Staffing revenue of $276.2 million in the fourth quarter of fiscal 2015.

International Staffing revenue, which includes the Company’s contingent staffing, direct placement and managed programs businesses in Europe and Asia, was $31.7 million, down $0.9 million or 2.6%, compared to $32.6 million in the prior quarter. International Staffing revenues declined $5.9 million, or 15.6%, from the fourth quarter of fiscal 2015.

Technology Outsourcing Services and Solutions revenue, which provides quality assurance, business intelligence and analytics and customer service support for companies in a variety of industries, was $30.5 million, up $6.7 million or 28.0% from $23.9 million in the prior quarter. Technology Outsourcing Services and Solutions revenue declined $2.6 million, or 7.8%, compared to $33.1 million in the prior year period.

Corporate and Other revenue, which primarily consists of the Company’s North American managed service business and information technology infrastructure business was $27.6 million, up $0.4 million or 1.3%, compared to $27.2 million in the prior quarter. Corporate and Other revenue declined $10.1 million, or 26.9%, compared to $37.7 million in the fourth quarter of 2015.

Net income of $2.8 million in the fourth quarter of fiscal 2016 included $1.5 million of restructuring and severance costs and impairment charges, partially offset by $0.5 million related to the amortization of the gain on the sale of real estate. Excluding the impact of these special items, net income for the fourth quarter of 2016 would have been $3.8 million on a Non-GAAP basis.

Adjusted EBITDA, which is also a Non-GAAP measure, was $8.0 million in the fiscal 2016 fourth 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.

Fiscal 2016 Full Year Results

Total revenue for the full year of fiscal 2016 was $1,334.7 million, down $162.2 million, or 10.8%, compared to total revenue of $1,496.9 million for the full year of fiscal 2015.

 

North American Staffing revenue was $1,047.9 million, down $79.4 million or 7.0%, compared to $1,127.3 million for the full year of fiscal 2016. International Staffing revenue was $131.5 million, down $16.1 million or 10.9%, from $147.6 million in the prior year period.

Technology Outsourcing Services and Solutions revenue was $106.6 million, down $29.3 million or 21.6%, from $135.9 million for the full year of fiscal 2015. Corporate and Other revenue was $114.8 million, down $53.6 million or 31.9%, from $168.4 million in the prior year period.

Loss from continuing operations in fiscal 2016 of $14.6 million included $6.1 million of restructuring and severance costs and impairment charges as well as $1.0 million of consulting and professional fees, partially offset by $2.9 million related to the gain on the sale of real estate. Excluding these items, the loss from continuing operations in 2016 would have been $10.4 million on a Non-GAAP basis.

Financing

Subsequent to the end of the fourth quarter, the Company amended its $160.0 million Financing Program with PNC to extend the Program by one year to January 31, 2018. The amendment revised the existing minimum liquidity level from $35 million to $20 million with a step-up to $25.0 million at the earlier of, 1) the sale of Maintech, Inc., or 2) receipt of the IRS tax refund. The amendment also established a new performance based covenant which includes an EBIT requirement.

Liquidity

As of October 30, 2016, the Company had $48.5 million of global liquidity for working capital requirements as compared to $49.4 million in the prior year period.

Conference Call and Webcast

A conference call and simultaneous webcast to discuss the fiscal 2016 fourth 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, January 11, 2017 at 7:30 p.m. Eastern Time through Wednesday, January 25, 2017 at 11:59 p.m. Eastern Time. To access the replay, dial 844-512-2921 (412-317-6671 for international callers) and enter the Conference ID # 13651129. 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 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.

 

 

Volt Information Sciences Reports Fiscal 2016 Fourth Quarter and Full Year Results January 11, 2017 Page 4 of 12

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:

Volt Information Sciences, Inc.

voltinvest@volt.com

Lasse Glassen

Addo Investor Relations

lglassen@addoir.com

424-238-6249

--Financial Tables to Follow--

 

 

 

		Three Months Ended												Twelve Months Ended
		October 30, 2016				July 31, 2016				November 1, 2015				October 30, 2016				November 1, 2015
Net revenue		$	341,578			$	330,625			$	363,974			$	1,334,747			$	1,496,897
Cost of services			284,651				282,098				305,800				1,132,253				1,268,363
Gross margin			56,927				48,527				58,174				202,494				228,534
Expenses:
Selling, administrative and other operating costs			50,636				49,543				55,250				203,930				231,033
Restructuring and severance costs			1,181				970				542				5,752				3,635
Impairment charges			364				-				672				364				6,626
Gain on sale of building			-				-				-				(1,663	)			-
Total expenses			52,181				50,513				56,464				208,383				241,294
Operating income (loss)			4,746				(1,986	)			1,710				(5,889	)			(12,760	)
Interest income (expense), net			(813	)			(826	)			(737	)			(3,159	)			(2,672	)
Foreign exchange gain (loss), net			(565	)			(1,003	)			(96	)			(1,803	)			(249	)
Other income (expense), net			(443	)			(402	)			578				(1,544	)			541
Income (loss) from continuing operations before income taxes			2,925				(4,217	)			1,455				(12,395	)			(15,140	)
Income tax provision			138				393				1,384				2,175				4,646
Income (loss) from continuing operations			2,787				(4,610	)			71				(14,570	)			(19,786	)
Loss from discontinued operations			-				-				(315	)			-				(4,834	)
Net income (loss)		$	2,787			$	(4,610	)		$	(244	)		$	(14,570	)		$	(24,620	)
Per share data:
Basic:
Income (loss) from continuing operations		$	0.13			$	(0.22	)		$	-			$	(0.70	)		$	(0.95	)
Loss from discontinued operations			-				-				(0.01	)			-				(0.23	)
Net income (loss)		$	0.13			$	(0.22	)		$	(0.01	)		$	(0.70	)		$	(1.18	)
Weighted average number of shares			20,852				20,846				20,799				20,831				20,816
Diluted:
Income (loss) from continuing operations		$	0.13			$	(0.22	)		$	-			$	(0.70	)		$	(0.95	)
Loss from discontinued operations			-				-				(0.01	)			-				(0.23	)
Net income (loss)		$	0.13			$	(0.22	)		$	(0.01	)		$	(0.70	)		$	(1.18	)
Weighted average number of shares			21,762				20,846				20,930				20,831				20,816
Segment data:
North American Staffing		$	270,577			$	263,048			$	276,163			$	1,047,888			$	1,127,284
International Staffing			31,730				32,565				37,585				131,496				147,649
Technology Outsourcing Services and Solutions			30,533				23,857				33,103				106,585				135,886
Corporate and Other			27,571				27,206				37,702				114,772				168,422
Eliminations			(18,833	)			(16,051	)			(20,579	)			(65,994	)			(82,344	)
Net revenue:		$	341,578			$	330,625			$	363,974			$	1,334,747			$	1,496,897
Operating income (loss):
North American Staffing		$	10,615			$	6,685			$	6,935			$	23,170			$	18,543
International Staffing			785				867				(69	)			2,357				603
Technology Outsourcing Services and Solutions			3,087				(892	)			3,359				5,498				12,032
Corporate and Other			(9,741	)			(8,646	)			(8,515	)			(38,577	)			(43,938	)
Gain on sale of building			-				-				-				1,663				-
Operating income (loss)		$	4,746			$	(1,986	)		$	1,710			$	(5,889	)		$	(12,760	)
Work days			64				63				64				251				251

Commencing in the first quarter of fiscal 2016, the Company changed its methodology for the allocation of costs to more effectively reflect and measure the individual businesses’ financial and operational efficiency. Prior period segment results have been revised for these changes.

 

		Twelve Months Ended
		October 30, 2016				November 1, 2015
Cash and cash equivalents, beginning of the period		$	10,188			$	6,723
Cash used in all other operating activities			(8,789	)			(3,388	)
Changes in operating assets and liabilities			1,178				46,712
Net cash provided by (used in) operating activities			(7,611	)			43,324
Proceeds from sale of property and equipment			36,808				465
Net cash used in all other investing activities			(17,968	)			(7,893	)
Net cash provided by (used in) investing activities			18,840				(7,428	)
Decrease in cash restricted as collateral for borrowings			-				10,436
Net change in borrowings			(2,950	)			(28,506	)
Repayment of long-term debt			(7,295	)			(832	)
Purchases of common stock under repurchase program			-				(4,262	)
Net cash used in all other financing activities			(1,141	)			(895	)
Net cash used in financing activities			(11,386	)			(24,059	)
Effect of exchange rate changes on cash and cash equivalents			(3,645	)			(924	)
Net cash used in discontinued operations			-				(7,237	)
Net increase (decrease) in cash and cash equivalents			(3,802	)			3,676
Change in cash from discontinued operations			-				(211	)
Cash and cash equivalents, end of the period		$	6,386			$	10,188
Cash paid during the period:
Interest		$	3,305			$	3,196
Income taxes		$	4,316			$	3,315

 

 

 

		October 30, 2016				November 1, 2015
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	6,386			$	10,188
Restricted cash and short-term investments			13,948				14,977
Trade accounts receivable, net of allowances of $801 and $960, respectively			193,866				198,385
Recoverable income taxes			16,979				16,633
Prepaid insurance and other current assets			11,806				15,865
Assets held for sale			17,580				22,943
TOTAL CURRENT ASSETS			260,565				278,991
Other assets, excluding current portion			25,767				23,740
Property, equipment and software, net			30,133				24,095
TOTAL ASSETS		$	316,465			$	326,826
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued compensation		$	29,147			$	29,548
Accounts payable			32,425				39,164
Accrued taxes other than income taxes			22,791				22,719
Accrued insurance and other			34,306				34,391
Short-term borrowings, including current portion of long-term debt			2,050				982
Income taxes payable			-				1,658
Liabilities held for sale			5,760				7,345
TOTAL CURRENT LIABILITIES			126,479				135,807
Accrued insurance and other, excluding current portion			13,136				13,699
Deferred gain on sale of real estate, excluding current portion			26,108				-
Income taxes payable, excluding current portion			6,777				6,516
Long-term debt, excluding current portion			95,000				106,313
TOTAL LIABILITIES			267,500				262,335
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 and 23,738,003, respectively; Outstanding - 20,917,500 and 20,801,080, respectively			2,374				2,374
Paid-in capital			76,564				75,803
Retained earnings			21,000				38,034
Accumulated other comprehensive loss			(10,612	)			(7,994	)
Treasury stock, at cost; 2,820,503 shares and 2,936,923 shares, respectively			(40,361	)			(43,726	)
TOTAL STOCKHOLDERS' EQUITY			48,965				64,491
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	316,465			$	326,826

 

 

 

		Three Months Ended October 30, 2016													Three Months Ended November 1, 2015
		GAAP				Special Items			Ref		Non-GAAP				GAAP				Special Items			Ref		Non-GAAP
Net Revenue:		$	341,578			$	-				$	341,578			$	363,974			$	-				$	363,974
Cost of services			284,651				-					284,651				305,800				-					305,800
Gross margin			56,927				-					56,927				58,174				-					58,174
Expenses:
Selling, administrative and other operating costs			50,636				486		(a)			51,122				55,250				(368	)	(d)			54,882
Restructuring and severance costs			1,181				(1,181	)	(b)			-				542				(542	)	(e)			-
Impairment charges			364				(364	)	(c)			-				672				(672	)	(f)			-
Total expenses			52,181				(1,059	)				51,122				56,464				(1,582	)				54,882
Operating income			4,746				1,059					5,805				1,710				1,582					3,292
Other income (expense), net:
Interest income (expense), net			(813	)			-					(813	)			(737	)			-					(737	)
Foreign exchange gain (loss), net			(565	)			-					(565	)			(96	)			96		(g)			-
Other income (expense), net			(443	)			-					(443	)			578				(764	)	(h)			(186	)
Total other income (expense), net			(1,821	)			-					(1,821	)			(255	)			(668	)				(923	)
Income from continuing operations before income taxes			2,925				1,059					3,984				1,455				914					2,369
Income tax provision			138				-					138				1,384				-					1,384
Income from continuing operations		$	2,787			$	1,059				$	3,846			$	71			$	914				$	985
* Basic income from continuing operations		$	0.13			$	0.05				$	0.18			$	-			$	0.04				$	0.05
* Diluted income from continuing operations		$	0.13			$	0.05				$	0.18			$	-			$	0.04				$	0.05
Basic weighted average number of shares			20,852				20,852					20,852				20,799				20,799					20,799
Diluted weighted average number of shares			21,762				21,762					21,762				20,930				20,930					20,930

 

 

 

Volt Information Sciences Reports Fiscal 2016 Fourth Quarter and Full Year Results January 11, 2017 Page 9 of 12

		Twelve months ended October 30, 2016													Twelve Months ended November 1, 2015
		GAAP				Special Items			Ref		Non-GAAP				GAAP				Special Items			Ref		Non-GAAP
Revenue:		$	1,334,747			$	-				$	1,334,747			$	1,496,897			$	-				$	1,496,897
Cost of services			1,132,253				-					1,132,253				1,268,363				-					1,268,363
Gross margin			202,494				-					202,494				228,534				-					228,534
Expenses:
Selling, administrative and other operating costs			203,930				317		(a)			204,247				231,033				(4,548	)	(e)			226,485
Restructuring and severance costs			5,752				(5,752	)	(b)			-				3,635				(3,635	)	(f)			-
Impairment charges			364				(364	)	(c)			-				6,626				(6,626	)	(g)			-
Gain on sale of building			(1,663	)			1,663		(d)			-				-				-					-
Total expenses			208,383				(4,136	)				204,247				241,294				(14,809	)				226,485
Operating income (loss)			(5,889	)			4,136					(1,753	)			(12,760	)			14,809					2,049
Other income (expense), net:
Interest income (expense), net			(3,159	)			-					(3,159	)			(2,672	)			-					(2,672	)
Foreign exchange gain (loss), net			(1,803	)			-					(1,803	)			(249	)			249		(h)			-
Other income (expense), net			(1,544	)			-					(1,544	)			541				(723	)	(i)			(182	)
Total other income (expense), net			(6,506	)			-					(6,506	)			(2,380	)			(474	)				(2,854	)
Income (loss) from continuing operations before income taxes			(12,395	)			4,136					(8,259	)			(15,140	)			14,335					(805	)
Income tax provision			2,175				-					2,175				4,646				-					4,646
Income (loss) from continuing operations		$	(14,570	)		$	4,136				$	(10,434	)		$	(19,786	)		$	14,335				$	(5,451	)
* Basic income (loss) from continuing operations		$	(0.70	)		$	0.20				$	(0.50	)		$	(0.95	)		$	0.69				$	(0.26	)
* Diluted income (loss) from continuing operations		$	(0.70	)		$	0.20				$	(0.50	)		$	(0.95	)		$	0.69				$	(0.26	)
Basic weighted average number of shares			20,831				20,831					20,831				20,816				20,816					20,816
Diluted weighted average number of shares			20,831				20,831					20,831				20,816				20,816					20,816

 

 

 

 

Volt Information Sciences Reports Fiscal 2016 Fourth Quarter and Full Year Results January 11, 2017 Page 10 of 12

Unaudited Reconciliation of GAAP Loss from Continuing Operations

to Adjusted EBITDA

(in thousands)

 

		Three Months Ended
		October 30, 2016				November 1, 2015
GAAP income from continuing operations		$	2,787			$	71
Special items			1,059				914
Non-GAAP income from continuing operations			3,846				985
Adjustments:
Depreciation and amortization			1,428				1,701
Share-based compensation expense			808				342
Other (income) loss, net (a)			1,821				923
Provision for income taxes			138				1,384
Adjusted EBITDA		$	8,041			$	5,335

 

 

 

 

 

 

 

 

 

 

 

		Twelve Months Ended
		October 30, 2016				November 1, 2015
GAAP loss from continuing operations		$	(14,570	)		$	(19,786	)
Special items			4,136				14,335
Non-GAAP loss from continuing operations			(10,434	)			(5,451	)
Adjustments:
Depreciation and amortization			5,969				6,811
Share-based compensation expense			1,828				1,400
Other (income) loss, net (a)			6,506				2,854
Provision for income taxes			2,175				4,646
Adjusted EBITDA		$	6,044			$	10,260

(a) Includes interest income (expense) and other income (expense), net.

 

 

 

 

Note Regarding the Use of Non-GAAP Financial Measures

 

The Company has provided certain non-GAAP financial information, which includes adjustments for special items, as additional information for its consolidated income (loss) from continuing operations, segment operating income (loss) and Adjusted EBITDA.  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 eliminating 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’s continuing operations without the effect of special items 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 expenses or income not indicative of the Company’s current or future period performance and are more fully disclosed in the tables.

 

Adjusted EBITDA is defined as earnings or loss from continuing operations 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 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.

 

The Company’s computation of Adjusted EBITDA 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.