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

Transcription

1 Rapidly growing international staffing company Investor Presentation April 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: E (annualized *) 2019 goal Nearly $0 $265M $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 * 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 Adjusted EBITDA & EBITDA Margin % 19.1% 17.6% % May-14 May-15 May-16 Dec-15 Dec-16 Dec-17 PF Dec % 3.2% % 1.9% May-14 May-15 May-16 Dec-15 Dec-16 Dec-17 PF Dec 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 2017 pro-forma assumes that acquisitions of CBSbutler and firstpro had closed on January 1,

12 CONDENSED BALANCE SHEET December 30, December 31, $ in 000s ASSETS Current Assets $ 37,935 $ 23,537 Other Assets 48,813 30,400 Total Assets $ 86,748 $ 53,957 LIABILITIES AND STOCKHOLDERS' EQUITY Total Current Liabilities $ 49,309 $ 38,994 Long-term liabilities 44,224 6,685 Total Liabilities $ 93,533 $ 45,679 Series D Preferred Stock (Redeemed in April 2017) 884 Total Stockholders (Deficit) Equity (6,785) 7,394 Total Liabilities and Stockholders' Equity $ 86,748 $ 53,957 12

13 CAPITALIZATION TABLE $ in 000 s December 30, 2017 Accounts Receivable Based Facilities $ 25,983 Term Loans 40,245 Total Debt $ 66,228 Series A Preferred Stock 1,663,008 Stock Options 122,400 Warrants (Weighted Average Strike Price of $5.00) 925,934 Restricted shares 471,132 Common Stock 3,909,114 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 & CEO David Faiman CFO Christopher Lutzo General Counsel 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). Graduated from Dublin City University (Ireland) with a BA in Accounting and Finance. 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. Acting CFO at Cengage Learning, Inc. (formerly Thomson Learning of Thomson Reuters). Certified Public Accountant who began his career at PricewaterhouseCoopers LLP. 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, conducted M&A, and managed compliance and regulatory functions; Senior Legal Counsel at Presstek, Inc., negotiated and closed various strategic transactions and financings. J.D. from Quinnipiac University School of Law, and a B.A. from Duquesne University in Pittsburgh, Pennsylvania. 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. $265M in annualized revenue today; 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 * The 2017 pro-forma 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 October 1, 2017 to October 2, 2016 to January 1, 2017 to January 2, 2016 to December 30, 2017 December 31, 2016 December 30, 2017 December 31, 2016 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue $ 59,476 $ 46,064 $ 192,650 $ 181,487 Gross Profit $ 11,914 $ 7,941 $ 36,741 $ 31,562 Gross Margin 20.0% 17.2% 19.1% 17.4% Loss from Operations $ (5,370) $ (276) $ (5,214) $ (2,816) Net Loss $ (7,508) $ (1,360) $ (18,491) $ (7,580) Adjustments: Interest Expense $ 1,902 $ 547 $ 3,745 $ 2,554 Provision for Income Taxes 719 (218) Depreciation and Amortization 1,430 1,383 6,311 5,302 EBITDA (3,457) 352 (7,503) 318 Acquisition, Capital Raising and Other Non-Recurring Expenses (1,428) 718 2,139 4,290 Other Non-Cash Charges 389 (9) 1, Debt Extinguishment Costs 2,024-6,132 - Restructuring Charges Impairment of Goodwill 4,790-4,790 - Other (Income) Expense (301) 129 (277) (334) Adjusted EBITDA $ 2,790 $ 1,193 $ 7,391 $ 5,074 TTM Adjusted EBITDA $ 7,391 $ 5,074 $ 7,391 $ 5,074 Pre-Acquisition Adjusted EBITDA 3,457 Pro Forma TTM Adjusted EBITDA $ 10,848 17

18 Rapidly growing international staffing company Investor Presentation April 2018