GlobeNewswire Inc | Apr 19, 2021 08:36AM EDT

April 19, 2021

NEW YORK, April 19, 2021 (GLOBE NEWSWIRE) -- Staffing 360 Solutions, Inc. (NASDAQ: STAF), a company executing an international buy-integrate-build strategy through the acquisition of staffing organizations in the United States and the United Kingdom, today announced its Fiscal 2020 full year-end and fourth quarter financial results.

Q4 2020 Overview

-- Revenue declined by 15.7% to $53.8 million from $63.8 million in Q4 19 (10.9% decline excluding the disposal of firstPRO) Sequential revenue growth from Q3 was 10.7% (15.3% increase excluding the disposed business) -- Gross profit declined by 28.6% to $8.3 million from $11.6 million in Q4 19 (15.9% decline excluding the disposed business) -- Loss from operations of $1.4 million as compared with a loss from operations of $0.9 million in Q4 19 -- Net loss of $2.2 million improved slightly from a net loss of $2.5 million in Q4 19 -- EBITDA declined 71.9% to $0.2 million from $0.7 million in Q4 19 -- Adjusted EBITDA declined by 31.2% to $1.7 million from $2.5 million in Q4 19 Sequential AEBITDA grew 41.60% from Q3 (57.3% increase excluding the disposed business) -- On a sequential basis over Q3 20, revenue grew by 10.7% (15.3% excluding disposed business), gross profit was flat (up 10.9% excluding disposal) and AEBITDA improved by 41.6% (57.3% excluding the disposal)

Fiscal 2020 Overview

-- Revenue declined by 26.6% to $204.5 million from $278.5 million in Fiscal 2019 -- Gross profit was $34.8 million, down from $48.3 million in Fiscal 2019, a drop of 27.9%. Excluding the disposal, the decline was 22.8% -- Gross margin held at 17.0% compared with 17.3% in Fiscal 2019 -- Income from operations was a loss of $8.8 million compared with a profit of $0.6 million in Fiscal 2019 -- Net loss of $15.6 million declined against a net loss of $4.9 million in Fiscal 2019 -- EBITDA was a loss of $4.9 million compared with a profit of $6.6 million in Fiscal 2019 -- Adjusted EBITDA fell to $4.7 million from $9.8 million Fiscal 2019

Brendan Flood, Chairman and Chief Executive Officer said, 2020 was a very challenging year for the entire economy and for the staffing industry. We took early and on-going steps to right-size our cost base with overhead savings that allowed us to manage against the worst impact of the pandemic. After a particularly painful economic period across March to July, we have continued to grow our temporary contractor numbers month-over-month and our permanent placement business -- and we are doing it with a healthier economic model for our future.

Our sequential improvements in performance across the second half of the year are positive signs that the markets in both the US and the UK are improving and recovering, continued Flood.

While full year revenue, EBITDA and adjusted EBITDA declined, the financial health of our Balance Sheet has improved considerably, and has improved further post year end to the point that we have reduced debt by 46.4% since June 2020, redeemed approximately $6.8 million or 52.5% of Series E Preferred Shares and eliminated approximately $8.5 million in interest and dividends. I look forward to sharing more details on our Financial Results Conference Call, Flood concluded.

Conference CallThe Participant Dial-In Number for the conference call is 323-701-0225. Participants should dial in to the call at least five minutes before 9:00am ET April 21, 2021. The call can also be accessed "live" online at http://public.viavid.com/index.php?id=144551. A replay of the recorded call will be available for 90 days on the Company's website ( http://www.staffing360solutions.com/res.html). You can also listen to a replay of the call by dialing 844-512-2921 (international participants dial 412-317-6671) starting April 21, 2021, at 7:30pm ET through April 23, 2021 at 11:59 pm ET. Please use PIN Number 1685371.

Use of Non-GAAP Financial Measures EBITDA and Adjusted EBITDA are non-GAAP financial measures. Other companies may have different definitions of these non-GAAP financial measures, and as a result they may not be comparable with non-GAAP financial measures provided by other companies. EBITDA and Adjusted EBITDA are calculated in a manner consistent with that shown in the table at the end of this press release and should not be considered alternatives to measurements required by U.S. GAAP, such as net revenue, operating profit or net income, and should not be considered a measure of the Companys liquidity.

The Company uses these non-GAAP financial measures, among several other metrics, to assess and analyze its operational results and trends. The Company also believes these measures are useful to investors because they are common operating performance metrics as well as metrics routinely used to assess potential enterprise value.

About Staffing 360 Solutions, Inc.Staffing 360 Solutions, Inc. is engaged in the execution of an international buy-integrate-build strategy through the acquisition of domestic and international staffing organizations in the United States and United Kingdom. The Company believes that the staffing industry offers opportunities for accretive acquisitions and as part of its targeted consolidation model, is pursuing acquisition targets in the finance and accounting, administrative, engineering, IT, and Light Industrial staffing space. For more information, visit http://www.staffing360solutions.com. Follow Staffing 360 Solutions on Facebook, LinkedIn and Twitter.

Forward-Looking StatementsThis press release contains forward-looking statements, which may be identified by words such as "expect," "look forward to," "anticipate," "intend," "plan," "believe," "seek," "estimate," "will," "project" or words of similar meaning. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified; consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, market and other conditions; the geographic, social and economic impact of COVID-19 on the Companys ability to conduct its business and raise capital in the future when needed; weakness in general economic conditions and levels of capital spending by customers in the industries the Company serves; weakness or volatility in the financial and capital markets, which may result in the postponement or cancellation of customer capital projects or the inability of the Companys customers to pay the Companys fees; the termination of a major customer contract or project; delays or reductions in U.S. government spending; credit risks associated with the Companys customers; competitive market pressures; the availability and cost of qualified labor; the Companys level of success in attracting, training and retaining qualified management personnel and other staff employees; changes in tax laws and other government regulations, including the impact of health care reform laws and regulations; the possibility of incurring liability for the Companys business activities, including, but not limited to, the activities of the Companys temporary employees; the Companys performance on customer contracts; negative outcome of pending and future claims and litigation; government policies, legislation or judicial decisions adverse to the Companys businesses; the Companys ability to access the capital markets by pursuing additional debt and equity financing to fund its business plan and expenses on terms acceptable to the Company or at all; the Companys ability to achieve loan forgiveness under Paycheck Protection Program; and the Companys ability to comply with its contractual covenants, including in respect of its debt agreements, as well as various additional risks, many of which are now unknown and generally out of the Companys control, and which are detailed from time to time in reports filed by the Company with the SEC, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K. Staffing 360 Solutions does not undertake any duty to update any statements contained herein (including any forward-looking statements), except as required by law.

Investor Relations Contact:Terri MacInnis, VP of IRBibicoff + MacInnis, Inc.818.379.8500x 2 terri@bibimac.com



Staffing 360 Solutions, Inc. and SubsidiariesReconciliation of Net Loss to Adjusted EBITDA(All Amounts in Thousands) Q4 2020 Q4 2019 Fiscal 2020 Fiscal 2019 (Unaudited) (Unaudited) Revenue $ 53,834 $ 63,834 $ 204,527 $ 278,478 Gross Profit $ 8,288 $ 11,614 $ 34,813 $ 48,309 Gross Margin 15.4 % 18.2 % 17.0 % 17.3 % Net loss $ (2,241 ) $ (2,544 ) $ (15,642 ) $ (4,894 ) Adjustments: Interest expense $ 1,439 $ 2,180 $ 7,195 $ 7,628 Benefit from income 147 (39 ) (100 ) (335 ) taxes income taxesDepreciation and 844 1,076 3,677 4,226 amortizationEBITDA 189 673 (4,870 ) 6,625 Acquisition, capitalraising and other 2,241 2,445 6,714 4,956 non-recurringexpenses (1)Other non-cash 107 213 662 840 charges (2)Impairment of - - 2,969 - GoodwillRe-measurement(income) loss on (932 ) (867 ) (584 ) (383 ) intercompany noteGain on settlementof deferred - 61 - (1,924 ) considerationRestructuring 21 (10 ) 21 (10 ) ChargesGain on business 96 - (124 ) - saleOther loss (3 ) (19 ) (125 ) (326 ) Adjusted EBITDA $ 1,719 $ 2,497 $ 4,663 $ 9,778 Adjusted EBITDA 3.2 % 3.9 % 2.3 % 3.5 % Margin Adjusted EBITDA ofDivested Business $ (507 ) $ (908 ) (3) Pro Forma TTM $ 4,156 $ 8,870 Adjusted EBITDA (4) Adjusted Gross $ 31,199 $ 40,424 Profit TTM (5) TTM Adjusted EBITDAas percentage of 14.9 % 24.2 % adjusted grossprofit TTM (1) Acquisition, capital raising and other non-recurring expenses primarilyrelate to capital raising expenses, acquisition and integration expenses andlegal expenses incurred in relation to matters outside the ordinary course ofbusiness. In addition, the Company included non-recurring expenses related tosalaries, rent and bad debts which were a direct result of the Covid-19pandemic. Due to government mandated restrictions, the Company had totemporarily close all of its offices and, due to social distancingrestrictions, could not make full use of these facilities for significantperiods of time during the year, both in the US and UK. These restrictions arestill ongoing in 2021. The Company calculated an adjustment of $1.4 million forthe time these offices were closed or partially not used due to Covid-19related restrictions. In addition, the Company reduced headcounts throughoutthe Company. The reduction in 2019 related to performance and in 2020 relatedto Covid-19 staff reductions. These positions are no longer included in thecurrent cost structure. The Company had internal staff of 291 just before theonset of the pandemic and 196 by the end of the Fiscal 2020. Salary adjustmentsare standard treatment for adjustment to EBITDA for management reportingpurposes.(2) Other non-cash charges primarily relate to staff option and sharecompensation expense, expense for shares issued to directors for boardservices, and consideration paid for consulting services.(3) Adjusted EBITDA of Divested Business for the period prior to the divestmentdate.(4) Pro Forma Adjusted EBITDA excludes the Adjusted EBITDA of Divested Businessfor the period prior to the divestment date.(5) Adjusted Gross Profit excludes gross profit of business divested inSeptember 2020, for the period prior to divestment date.

Staffing 360 Solutions, Inc. and SubsidiariesReconciliation of Net Loss to Adjusted EBITDA(All Amounts in Thousands) Q4 2020 Q3 2020 (Unaudited) (Unaudited) Revenue $ 53,834 $ 48,640 Gross Profit $ 8,288 $ 8,323 Gross Margin 15.4 % 17.1 % Net loss $ (2,241 ) $ (2,641 ) Adjustments: Interest expense $ 1,439 $ 1,582 Benefit from income taxes income taxes 147 (118 ) Depreciation and amortization 844 932 EBITDA 189 (245 ) Acquisition, capital raising and other 2,241 2,073 non-recurring expenses (1)Other non-cash charges (2) 107 209 Impairment of Goodwill - - Re-measurement (income) loss on (932 ) (442 ) intercompany noteGain on settlement of deferred - - considerationRestructuring Charges 21 - Gain on business sale 96 (220 ) Other loss (3 ) (161 ) Adjusted EBITDA $ 1,719 $ 1,214 Adjusted EBITDA Margin 3.2 % 2.5 % (1) Acquisition, capital raising and other non-recurring expenses primarilyrelate to capital raising expenses, acquisition and integration expenses andlegal expenses incurred in relation to matters outside the ordinary course ofbusiness. In addition, the Company included non-recurring expenses related tosalaries, rent and bad debts which were a direct result of the Covid-19pandemic. Due to government mandated restrictions, the Company had totemporarily close all of its offices and, due to social distancingrestrictions, could not make full use of these facilities for significantperiods of time during the year, both in the US and UK. These restrictions arestill ongoing in 2021. The Company calculated an adjustments of $0.5 millionand $0.3M in Q3 and Q4, respectively for the time these offices were closed orpartially not used due to Covid-19 related restrictions.

(2) Other non-cash charges primarily relate to staff option and sharecompensation expense, expense for shares issued to directors for boardservices, and consideration paid for consulting services.