Staffing 360 Solutions Announces Financial Results for Fiscal Q3 2015

NEW YORK, NY--(Marketwired - Apr 14, 2015) - Staffing 360 Solutions, Inc. (OTCQB: STAF), a public company executing a global buy-and-build strategy through the acquisition of staffing organizations with operations in the US and Europe, today released its financial results for its fiscal quarter ended February 28, 2015.

"We continue to achieve new milestones every quarter," stated Brendan Flood, Executive Chairman of Staffing 360 Solutions. "First and foremost, our acquisition strategy has fueled our expansion from around $15.8 million in revenue in fiscal Q3 2014 to approximately $31.0 million in Q3 2015. In addition, we have now achieved positive Adjusted EBITDA for two quarters in a row, which has been a strategic objective within our Pathway to Profitability. Lastly, we are closer than ever to reaching our longer term goal of positive net income. With all of these developments at Staffing 360, it is clear our growth story and long term journey are beginning to take shape."

Summary of Fiscal Q3 2015 (Three Months Ended February 28, 2015)

• Net revenues increased to $31.0 million, compared to $15.8 million in the quarter ended February 28, 2014.
• Gross profit increased to $5.5 million, compared to approximately $3.2 million in the quarter ended February 28, 2014.
• Net loss decreased to approximately $81,000*, compared to a net loss of approximately $1.8 million in the quarter ended February 28, 2014.
• Adjusted EBITDA was approximately $148,000* in the quarter ended February 28, 2015.
  
  

* A table has been included in this press release with Non-GAAP adjustments to the Company's net loss of approximately $229,000 resulting in Adjusted EBITDA of $148,000.

"As our management team has stated in the past, our revenue typically shows a seasonal dip in Q3 due to the impact of winter weather," stated Mr. Flood. "In fact, this year's winter was especially harsh due to the numerous snow storms that disrupted business throughout the Northeast, and especially Boston, where several of our divisions are located. However, despite these extenuating circumstances, we still posted strong organic year-over-year growth, as well as positive Adjusted EBITDA of $148,000 for the quarter ended February 28, 2015. In addition, we improved our net loss to within $81,000 of break-even, one of our last remaining milestones on our Pathway to Profitability."

Analysis of Financial Results

As part of its targeted acquisition strategy, Staffing 360 Solutions has completed five acquisitions to-date, including The Revolution Group (renamed Cyber 360 and subsequently sold), Control Solutions International, Initio International Holdings Limited (renamed Staffing 360 Solutions Limited), certain business assets of Poolia UK, and PeopleSERVE (acquired as two separate entities: PeopleSERVE, Inc. and PeopleSERVE PRS, Inc.). As noted previously, the operations of Cyber 360 were discontinued and sold, resulting in the restatement of Staffing 360 Solutions' historical results to exclude Cyber 360's balance sheet and operations from the comparative periods.

As a result of these acquisitions and very strong organic growth, revenue increased to approximately $31.0 million in the quarter ended February 28, 2015, compared to approximately $15.8 million for the same period in 2014. Gross profit increased to over $5.5 million, compared to approximately $3.2 million for the same period in 2014. 

The Company's net loss for the quarter ended February 28, 2015 was approximately $81,000 (or positive Adjusted EBITDA of approximately $148,000 on a Non-GAAP basis*), compared to a net loss of approximately $1.8 million for the same period in 2014. The decrease in net loss was primarily attributable to the Company's increased gross profit due to its acquisitions made throughout the year, its sale of Cyber 360, its gain on the CSI earn-out liability, as well as its Pathway to Profitability, which has helped streamline expenses.

"Despite experiencing a significant number of snow days in the Northeast, we still out performed the prior year as a result of our strong organic growth," stated Jeff Mitchell, Chief Financial Officer. "Since the Pathway to Profitability was first announced, we have successfully reduced Company debt, while increasing stockholder's equity. Our existing business is now producing and forecasted to generate positive cash flow from operations for the balance of fiscal year 2015 and onward. Our current mission is to continue to raise capital as we acquire additional staffing companies as part of our selective M&A strategy."

Highlights of Fiscal Q3 2015 and Subsequent Events

• Realized positive Adjusted EBITDA two quarters ahead of schedule. Successfully achieved this objective with the Company's financial results for the fiscal quarter ended November 30, 2014 and then repeated it for the quarter ended February 28, 2015.
• Reduced corporate overheads by approximately $3 million per annum. Management believes overall costs of corporate are now in line with industry levels.
• Demonstrated management's deep faith in the Company with the above-market conversion of $3.3 million of principal and interest relating to the promissory notes of the Initio acquisition. Both Executive Chairman Brendan Flood, and CEO Matt Briand, were among the note holders that converted into equity at $1.00 per share, plus warrants.
• Strengthened the Company's balance sheet through the discontinuation and sale of Cyber 360. This was done as part of Company's Pathway to Profitability and resulted in the elimination of $1.6 million of liabilities. 
• Engaged a New York-based investment bank with particular expertise in emerging small-cap companies. Staffing 360's first raise has now been accomplished (see details below), with additional financings expected in the future to support its M&A strategy.
• Raised a $25 million revolving credit facility and $3 million term loan from MidCap Financial. The transaction was managed by Alexander Capital L.P. as the financial advisor. The $3 million loan has a term of 4 years and is being used to pay down short term debt and provide working capital to support organic growth and improve the Company's balance sheet. The $25 million revolving credit facility replaces the Company's existing $15 million facility with Wells Fargo, providing additional room for expansion.
  
  

"Although the $25 million facility and $3 million term loan are now under our belt, our capital raising objectives are far from over," said Matt Briand, President and CEO. "Each of us at Staffing 360 Solutions is fully committed to reaching our stated goal of $300 million in annualized revenues. Our path to achieving this milestone is through highly targeted acquisitions that are fueled by additional capital raises and our robust M&A pipeline. With many exciting developments on the horizon, we encourage investors to join us during our earnings conference call for more details on how we plan to achieve our objectives over the next year."

Earnings Conference Call

Staffing 360 Solutions will host a conference call on Thursday, April 16, 2015 at 10:00 am Eastern Time to discuss its financial results for the fiscal third quarter ended February 28, 2015. The conference call will include a Q&A session where investors will have the opportunity to ask questions of management.

The teleconference can be accessed by dialing 877.407.0778 within the United States, 800.756.3429 within the UK, or 201.689.8565 internationally. Please dial in 10 minutes prior to the beginning of the call. There will be a playback of the teleconference available until April 30, 2015. To listen to the playback dial 877.660.6853 within the United States or 201.612.7415 internationally and use replay ID number: 13607197.

The conference call will be simultaneously webcast and available at:
http://www.investorcalendar.com/event/173923 

About Staffing 360 Solutions, Inc.

Staffing 360 Solutions, Inc. (OTCQB: STAF) is a public company in the staffing sector engaged in the execution of a global buy-and-build strategy through the acquisition of domestic and international staffing organizations with operations in the US and Europe. The Company believes the staffing industry offers opportunities for accretive acquisitions that will drive its annual revenues to $300 million. As part of its targeted consolidation model, the Company is pursuing acquisition targets in the finance and accounting, administrative, engineering and IT industries. For more information, please visit: www.staffing360solutions.com.

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Non-GAAP Financial Measures

The Company uses financial measures which are not calculated and presented in accordance with U.S. generally accepted accounting principles ("GAAP") in evaluating its financial and operational decision making regarding potential acquisitions, as well as a means to evaluate period-to period comparison. The Company presents these non-GAAP financial measures because it believes them to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We refer you to the reconciliations below.

The Company defines Adjusted EBITDA as earnings (or loss) from continuing operations before interest expense, income taxes, depreciation and amortization, and amortization of non-cash stock-based compensation, non-recurring acquisition and restructuring expenses and the goodwill impairment charges. The Company excludes stock-based compensation because it is non-cash in nature.

Forward-Looking Statements

Certain matters discussed within this press release are forward-looking statements including, but not limited to the timing and ability to enter into any additional acquisitions, as well as the size of future revenue. Although Staffing 360 Solutions, Inc. believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Specifically, in order for the Company to achieve annualized revenues of $300 million, the Company will need to successfully raise sufficient capital, to consummate additional target acquisitions, successfully integrate any newly acquired companies, organically grow its business, successfully defend current and any potential future litigation, as well as various additional contingencies, many of which are unknown at this time and generally out of the Company's control. The Company can give no assurance that the Company will be able to achieve these objectives. Staffing 360 Solutions does not undertake any duty to update any statements contained herein (including any forward-looking statements), except as required by law. Factors that could cause actual results to differ materially from expectations include general industry considerations, regulatory changes, changes in local or national economic conditions and other risks detailed from time to time in Staffing 360 Solutions' reports filed 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, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
			February 28,			May 31,
			2015			2014 *
			(Unaudited)
ASSETS
Assets
	Current Assets		$	18,824,540		$	18,853,524
	Other Assets			21,741,739			24,141,938
Total Assets			$	40,566,279		$	42,995,462
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
	Current Liabilities		$	26,700,652		$	26,048,343
	Other Liabilities			1,810,627			6,327,709
Total Liabilities				28,511,279			32,376,052
Stockholders' Equity
	Stockholders' Equity			11,358,753			10,036,873
	Non-Controlling Interest			696,247			582,537
Total Stockholders' Equity				12,055,000			10,619,410
Total Liabilities and Stockholders' Equity			$	40,566,279		$	42,995,462
* Pursuant to US GAAP requirements, the Company has revised the historical balance sheet for May 31, 2014 to exclude items relating to Cyber 360, Inc.

Staffing 360 Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
			For the Three Months Ended February 28,
			2015				2014 *
Sales			$	30,963,598			$	15,799,695
Cost of Sales				25,438,029				12,592,706
Gross Profit				5,525,569				3,206,989
Operating Expenses				6,462,724				4,210,486
Loss from Operations				(937,155	)			(1,003,497	)
Other Income (Expenses)				786,272				(701,369	)
Loss Before Provision for Income Tax				(150,883	)			(1,704,866	)
	Income Tax Benefit / (Expense)			(32,359	)			-
Net Loss from Continued Operations				(183,242	)			(1,704,866	)
Net Loss from Discontinued Operations				(392	)			(58,496	)
Net Loss			$	(183,634	)		$	(1,763,362	)
	Net Income / (Loss) Attributable to Non-Controlling Interest			(102,845	)			-
Net Loss Attributable to STAF			$	(80,789	)		$	(1,763,362	)
* Pursuant to US GAAP requirements, the Company has revised the historical results for February 28, 2014 to exclude Cyber 360, Inc. as a discontinued operation.

Staffing 360 Solutions, Inc. and Subsidiaries
Condensed Consolidated Non-GAAP Adjusted EBITDA Calculations
Comparing the Three Months to the Nine Months Ended February 28, 2015
(Unaudited)
				Fiscal Q3 2015
				For the Three Months Ended February 28, 2015				For the Nine Months Ended February 28, 2015 *
Sales				$	30,963,598			$	96,640,920
Gross Profit				$	5,525,569			$	17,031,126
Loss from Operations				$	(937,155	)		$	(4,890,793	)
Net Loss Attributable to STAF				$	(80,789	)		$	(13,697,940	)
Adjustments:
		Interest		$	346,322			$	1,313,007
		Restructuring Expenses - Cash			-				441,868
		Restructuring Expenses - Non-Cash			(443,174	)			4,793,553
		Other Income			15,409				(145,284	)
		Depreciation and Amortization			771,223				6,045,533
		Tax			32,359				(66,636	)
		Impairment of Goodwill			-				703,222
		Non-Controlling Interest			(102,845	)			113,710
		Gain on Change in Fair Value of CSI Earn Out Liability			(840,455	)			(840,455	)
		Acquisition, Capital Raising, Non-Cash and Other Expenses			449,890				1,687,204
Total Adjustments					228,729				14,045,722
Adjusted EBITDA				$	147,940			$	347,782
* Pursuant to US GAAP requirements, the Company has revised the historical results for the nine months ended February 28, 2015 to exclude Cyber 360, Inc. as a discontinued operation.