NASDAQ: STAF Rapidly growing international staffing company Investor Presentation May 2018

Transcription

1 Rapidly growing international staffing company Investor Presentation May 2018

2 FORWARD-LOOKING STATEMENTS Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding the business of the Company and its industry generally, business strategy and prospects. These statements are based on the Company s estimates, projections, beliefs and assumptions and are not guarantees of future performance. These forward-looking statements are subject to various risks and uncertainties, which may cause actual results to differ materially from the forward-looking statements. The Company disclaims any obligation to update these forward-looking statements except as required by law. Non-GAAP Financial Measures The Company uses financial measures which are not calculated and presented in accordance with US generally accepted accounting principles ( GAAP ) in evaluating its financial and operational decision making regarding potential acquisitions and presenting the operating and financial performance of the Company, 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 in this presentation and applicable earnings releases issued by the Company for those respective periods. 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 goodwill impairment charges. 2

3 COMPANY & INDUSTRY OVERVIEW Staffing solution company executing an international buy-and-build strategy in the US and UK o 8 acquisitions completed since 2013 Primary focus: o Temporary staffing - representing ~ 90% of total revenue o Permanent placements - representing ~ 10% of total revenue Consolidation model: three segments NASDAQ: Headquarters: Employees: Customers: STAF New York, US ~ 5,000 temporary ~ 300 internal ~1,500 o o o Commercial Staffing (US): commercial staffing solutions Professional Staffing (US): accounting / finance, information technology, engineering, and administration staffing solutions Professional Staffing (UK): accounting / finance, information technology, engineering, and administration staffing solutions $429B global market growing 6% annually ~100,000 staffing companies globally ~15,000 US companies <$20M in revenue 3

4 INVESTMENT HIGHLIGHTS International footprint and disciplined M&A strategy o Highly fragmented market provides acquisition opportunities and ability to scale o High client retention and strong recurring revenue US: 17 offices in 8 States Impressive revenue growth: 2013 March Pro Forma TTM* goal Nearly $0 $240M $500M Recent business realignment designed to drive focus, organic growth and profitability UK: 2 London offices Strengthened and streamlined financial position o o o Closed largest capital raise, through a $40M senior note Renegotiated existing $25M accounts receivable facility in the US Renegotiated existing 11.5M ($16M) facility limit in the UK Management team with significant operational and M&A experience 2018 March pro-forma trailing twelve months (TTM) assumes that acquisitions of CBSbutler and firstpro had closed on January 1,

5 BUSINESS UNITS ACQUISITIONS: Verticals / Location / Year Commercial Engineering Administration Accounting & Finance Information Technology Information Technology Accounting & Finance Information Technology Engineering Engineering Administration Accounting & Finance Information Technology US US UK UK US UK US 2014 * ** (*- includes acquisition of CSI) (** - includes acquisition of Poolia) Accounting & Finance Information Technology Focused on United States and United Kingdom: Well developed temporary staffing markets Flexible labor laws Culturally aligned Allows management time to be optimized - leading to better performance and returns Expects to focus principally on US targets going forward Pro Forma * Revenue Split by Location (2017) US UK 34% 66% * The 2017 pro-forma assumes that acquisitions of CBSbutler and firstpro had closed on January 1,

6 REALIGNMENT OF ORGANIZATIONAL STRUCTURE New corporate structure to enhance customer focus, drive revenue growth, maximize efficiencies, and support accountability and ownership United States United Kingdom Commercial Staffing Professional Staffing Professional Staffing Pro Forma * Revenue Split by Segment (2017) 60% 40% Commercial Professional * The 2017 pro-forma assumes that acquisitions of CBSbutler and firstpro had closed on January 1,

7 Accounting & Finance Information Technology Engineering Administration Commercial BUSINESS MODEL Strategically focused on five strategic verticals that represent sub-segments of the staffing industry FIVE STRATEGIC PILLARS PROFESSIONAL & COMMERCIAL 7

8 STRATEGIC GOALS Build a profitable, international staffing firm with revenues in excess of $500M Execute disciplined acquisition strategy, supplemented by strong organic growth Use Intelligent Integration approach to maximize value, mitigate attrition and increase support of sales teams Capitalize on highly experienced executive management team Drive shareholder value through a disciplined acquisition strategy 8

9 Accounting & Finance Information Technology Engineering Administration Commercial DISCIPLINED ACQUISITION CRITERIA Robust pipeline of highly selective targets Must fit within at least one of five strategic pillars Must be accretive, no turn-arounds o Sustainable margins o Recurring revenues o Quality customers o Reliable employees Objective: 95% temporary / 5% permanent revenue mix (80% / 20% gross profit mix) Sellers receive cash, stock, notes plus performance-based incentives positioned to take advantage of market opportunities 9

10 STAFFING EMPLOYMENT TRENDS: UNITED STATES Shift Toward Higher Margin & Scalable Segments: Professional & Temporary Staffing US Professional Staffing Industry Revenue (Dollars in Billions) $54 $56 $60 $64 $49 $74 Shift toward more temporary workers is expected to be a permanent change to jobs market Structural change largely driven by demand for IT US staffing market grew 5% CAGR during vs. GDP CAGR of 2.2%* US staffing market expected to grow to $147 billion by 2018* Commercial vs. Professional Staffing Trend 1995: Industry Revenue $55 Billion 2016: Industry Revenue $134 Billion 64% 36% 45% 55% Commercial Professional Commercial Professional * Source: Global Staffing Industry Market Estimates and Forecast, October 2017 Update (Staffing Industry Analysts) 10

11 HISTORICAL FINANCIAL PERFORMANCE Revenue, Gross Profit & Gross Margin ($ Millions) Adjusted EBITDA & EBITDA Margin ($ Millions) $300 $250 $200 $150 $100 $50 $0 $41.2 $9.1 May 2014 $128.8 $22.5 May 2015 $165.6 $144.4 $29.0 May % $25.3 Dec % $207.8 $192.7 $181.5 $31.5 Dec % $36.7 Dec % $41.0 TTM Mar % $239.9 $49.2 PF TTM Mar 2018 $80 $70 $60 $50 $40 $30 $20 $10 $0 $11.0 $9.0 $7.0 $5.0 $3.0 $1.0 $(1.0) $(3.0) $(2.7) May 2014 $0.8 May 2015 $4.1 May % $2.7 Dec % $5.1 Dec % 3.8% $7.4 Dec 2017 $8.0 TTM Mar % $10.3 PF TTM Mar % 4 % 3 % 2 % 1 % 0 % -1% -2% Revenue Gross Profit Adjusted EBITDA EBITDA Margin In 2017, the Company changed its fiscal year end to December. All periods shown are for 12 months. The 2018 pro-forma TTM assumes that acquisitions of CBSbutler and firstpro had closed on January 1,

12 CONDENSED BALANCE SHEET March 31, December 30, $ in 000s (Unaudited) ASSETS Current Assets $ 30,045 $ 37,935 Other Assets 48,052 48,813 Total Assets $ 78,097 $ 86,748 LIABILITIES AND STOCKHOLDERS' EQUITY Total Current Liabilities $ 42,564 $ 49,309 Long-term liabilities 43,774 44,224 Total Liabilities $ 86,338 $ 93,533 Total Stockholders (Deficit) Equity (8,241) (6,785) Total Liabilities and Stockholders' Equity $ 78,097 $ 86,748 12

13 CAPITALIZATION TABLE $ in 000 s March 31, 2018 Accounts Receivable Based Facilities $16,269 Term Loans 40,000 Total Debt $56,269 Series A Preferred Stock 1,663,008 Stock Options 125,400 Warrants (Weighted Average Strike Price of $5.03) 925,934 Restricted shares 475,759 Common Stock 4,058,285 For additional information and transactions that may have occurred subsequent to the balance sheet date, please see Staffing 360 Solutions filing with the SEC. 13

14 EXECUTIVE MANAGEMENT TEAM Brendan Flood Chairman & Chief Executive Officer Extensive financial, M&A and turn-around experience over a 30-year career. Former CFO of the Americas for Monster Worldwide Inc., (Nasdaq: MWW), in addition to leading the 2003 IPO of Hudson Global Inc. (Nasdaq: HSON). David Faiman Chief Financial Officer Over 20 years of financial experience at both private and public companies, including Vice President of Financial Planning and Chief Accounting Officer of Novitex Enterprise Solutions and Acting CFO at Cengage Learning, Inc. (formerly Thomson Learning of Thomson Reuters). Certified Public Accountant who began his career at PricewaterhouseCoopers LLP. Christopher Lutzo General Counsel 25 years in practice, most recently corporate governance and M&A for GE Capital and CA Technologies via Axiom Global. Assistant General Counsel at Smith & Wesson and Senior Legal Counsel at Presstek, Inc. Paul Polito President, Commercial Staffing Mark Darby President, Professional Staffing (UK) Over 20 years of operational management, sales, and recruiting experience in the staffing and customer service industries of Monroe Staffing. In addition to creating solutions for clients, Paul oversees the professional development, Corporate Safety, and employeedirected giving programs. Over 20 years in the staffing industry including experience in Senior Leadership roles, M&A, Change Management & business integration space. Former Group COO and Executive Board member of Kellan Group Plc, an AIM listed multisector professional staffing business. 14

15 KEY TAKEAWAYS Committed to driving growth, profits and shareholder value Highly focused M&A STRATEGY with 8 acquisitions completed to date Grew from nearly zero revenue in 2013 to approx. $240M in annualized revenue through March 2018*; goal of GROWING TO $500M within the next two years Recent business segment REALIGNMENT TO DRIVE PROFITABILITY and organic growth STRONGER BALANCE SHEET positions the company well to take advantage of opportunities of a fragmented staffing market Led by a MANAGEMENT TEAM with significant operational and M&A experience 2018 March pro-forma trailing twelve months (TTM) reflected here assumes that acquisitions of CBSbutler and firstpro had closed on January 1,

16 CONTACT US Staffing 360 Solutions, Inc. Brendan Flood Chairman & CEO David Faiman Chief Financial Officer Headquarters: 641 Lexington Ave, Suite 2701 New York, NY UK Office: 3 rd floor 3 London Wall Buildings London Wall, London EC2M 5SY +44 (0) Investor Relations: The Equity Group, Inc. Lena Cati lcati@equityny.com / (212) Devin Sullivan dsullivan@equityny.com / (212)

17 APPENDIX December 31, 2017 to January 1, 2017 to TTM Period Ended January 1, 2017 to January 2, 2016 to March 31, 2018 April 1, 2017 March 31, 2018 December 30, 2017 December 31, 2016 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) $000s Revenue $55,791 $40,712 $207,729 $192,650 $181,487 Gross Profit $11,581 $7,326 $40,996 $36,741 $31,562 Gross Margin 20.8% 18.0% 19.7% 19.1% 17.4% Loss from Operations ($405) ($557) ($5,062) ($5,214) ($2,816) Net Loss ($1,271) ($3,081) ($16,681) ($18,491) ($7,580) Adjustments: Interest Expense $1,955 $502 $5,198 $3,745 $2,554 Provision for Income Taxes , Depreciation and Amortization 920 1,319 5,912 6,311 5,302 EBITDA 1,756 (1,255) (4,492) (7,503) 318 Acquisition, Capital Raising and Other Non-Recurring Expenses ,455 2,139 4,290 Other Non-Cash Charges ,409 1, Debt Extinguishment Costs - 1,368 4,764 6,132 - Restructuring Charges Impairment of Goodwill - - 4,790 4,790 - Change in fair value of warrant liability (538) 92 (630) - Gain on intercompany note (575) - (575) - - Other (Income) Expense (250) (2) (525) (277) (334) Adjusted EBITDA $1,613 $1,028 $7,976 $7,391 $5,074 Adjusted EBITDA Margin 2.9% 2.5% 3.8% 3.8% 2.8% TTM Adjusted EBITDA $7,976 $5,390 $7,976 $7,391 $5,074 Pro Forma TTM Adjusted EBITDA $10,340 N/A $10,340 $10,848 N/A 17

18 Rapidly growing international staffing company Investor Presentation May 2018