Volt Information Sciences (VOLT) 16 Jun 212021 Q2 Earnings call transcript

Greetings and welcome to the Volt Information Sciences, Inc. second quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

conference recorded. this reminder, a is being As It Joe Noyons my pleasure your host, to introduce with is now Investor Relations. Thank you Joe.

You begin. may

Paul earnings conference everyone. afternoon today Sciences and for call. quarter you second XXXX us Information for Thank year fiscal joining Volt Thank you good

fiscal Herb Officer. company call and After closed afternoon, results year at are a the The as SEC for the a available the Executive today President the press its Vice the Perneau, well EDGAR President market Senior of On on quarter Chief announcing is XXXX. and second the issued Form X-K. as release and release Linda Officer Mueller, company's Chief volt.com, Financial website this website filed as

is of Relations available on also have We the the website. which section prepared a presentation company's Investor supplemental

those the President Linda I would release which Linda? condition. measures call reconciliation measures, turn of discussion that, on Before Actual may Securities I prepared financial today's of under statements pandemic risks like more the this including, in made to, company's the issued you are recent will remind Reform be measures investors. afternoon. is the believe Volt that with but financial Sciences' certain A included of to variety potential Litigation from for Volt's the operations. remarks, Act the impacts Perneau. projected results information not COVID-XX of of for non-GAAP the factors, With to and results to over made that and Also Information to press implied a future forward-looking call, our detailed refer differ GAAP could you limited business provide XXXX. and to impact filings We to materially some will Private operating beginning today's the or CEO, SEC those on like reference would a earnings useful of management due we

call. to and Thank you everyone Joe today's welcome

wins report pre-COVID continued of this to despite Thanks pleased being firs impacts are seven new strongest expansion fiscal results in Texas especially the year, due QX Tennessee. segment. a retail performance accelerated in customers, margin of of in hire revenue Gross and decade. and to our we the quarterly related momentum branch primarily growth network We quarter recorded improved the of in direct to a combination operations weather existing prior-year within and across weeks continued within our our the February and

quarters. all, within first cost recorded We the also In positive SG&A. maintained time in successfully our XX we for discipline net income GAAP

yet strategy We Over have profitability. on further the Our XX as quarter for provides significant organization a made XX of business, and months our an present and ways to past continues number performance our in that made have a are teams evidence pandemic over to persevered our stronger challenges path overall. adversity second overcome progress found have working. prior months, to the the investments the has our and we XX emerge to overall.

over Let to on Herb? to financials. detail turn additional me Herb the now call provide the

quarter in increased second staffing improvement for adjusting increase. continued GAAP million $XXX.X currency on year X.X% segments. to the compared in the overall favorable of basis international Revenue Thank American company translations, million X.X% to million After our you a XXXX quarter, for Linda. or million comparable revenue and due or a $XX.X prior was$XXX.X $XX.X North

direct show our business and of XXXX, continued improvement. international line domestic hire During QX to

XXXX. XX% we For prior were from and the year QX the sequentially from quarter, XX% up up

revenue adjusted QX each at segment. Looking XXXX for

a reported $X.X $XX.X Adjusted year. adjusted revenue million American staffing for MSP million, our segment X.X% was from And prior slight North adjusted prior the American Our an from staffing North international prior segment $X.X year. the revenue of increase from million the up segment $XXX.X of reported million, increase revenue our of year.

Our attributable with exceeded increased second North clients wins is clients. Direct new by consecutive the XX.X% hire The quarter. business of and year-over-year second year-over-year business growth revenue X.X% the primarily staffing X.X%. expansion existing increase mid-market segment retail quarter American to combined and within posted revenue a for positive XXXX combination of and

to prior to QX revenue improved Increased compared due versus staffing was and Our within increased declines million Revenue our in demand by offset quarter, North segments. branch managed our margins or the XX.X%, service payroll American was $X.X increased international in international staffing Gross segment business, direct results was increased in in year. by staffing XXXX and K. comparable business. U. headcount for the MSP in slightly our segment primarily North year business higher managed partially service to prior revenue. improvement offset our hire margin XX.X% XX.X% in due service primarily American partially

from a Our North staffing margin XXX basis benefit points higher increased of mix American basis government due subsidies. XX wage employee segment related point cost to and a lower business,

$XX basis including expense to strategic related million charges was costs impaired related to to SG&A primarily year points due due in facilities segment the comparable due real and cost $X.X strategic due a incentives in XXXX second of $X.X costs the XXXX. headcount fiscal million and year primarily consolidating lower of to mix. margin to direct initiative. The from footprint increase and quarter quarter. second costs increased fiscal business American for million labor primarily in estate to volume. half due prior by reduction of basis million North the reductions QX Our lower compared included decreased international on to lower our Restructuring shift prior was XXX to cost $XX.X decrease of to MSP ongoing offset XXXX a was related primarily facility increased partially sales due The XXX points, business. business away in an the hire higher costs

actions quarter. to In improvement a $X.X is related compared of to included the comparable million, loss operating income million, million staffing income from the declined income year to million segment of And million The was quarter million previously year. income $X.X addition, increase the year-over-year was costs. North for $X.X impairment compared capitalized result Operating American quarter American a of in million. XXXX $X.X operating $X.X second $X.X mentioned. ago. prior the year the North $X.X for MSP was previously International software Operating staffing a prior million, $X.X

a prior For gross QX of comparable share QX $X.X XXXX $X.X XXXX, quarter our EBITDA income as and $X.XX $X.X million million improvement to loss compared we or million a XXXX. share, positive million of per first the or positive We quarter reported $X.XX since net initiatives. GAAP of for XXXX. in our improved net Adjusted primarily margin income fourth year $X diluted cost a to X% QX operating The to reduction reported per higher net fiscal a in by in related to was $X.X due quarter. strategic million negative the GAAP expenses

and equivalents prior in few sequentially. from cash flow and ended investments. of balance end $XX.X year second short cash an compared million key million and to a additional $XX.X $X.X to We on restricted increase The items cash increased the and $X.X the million Moving with term the quarter in sheet. and million combined

quarter to liquidity million, payroll net Our total last April. increasing result same cash $X.X increased fiscal January We tax income $XX.X the And $X.X capital since accounts million and the lower second million long at in in debt XXXX term in XX% in flow provided collections available million $XX expenditures positive from and $XX.X million. remained from payments of operations as receivable a of of with year.

Turning to QX.

to improve labor we Looking the XX% to towards expect revenue tight the remains third XX% market quarter, last year. although over

should SG&A range. operating expect comparisons revenue Linda revenue in XX% and the continue We with margin over Overall, be back million the income in second will with We performance and improved now gross $XX.X growth $XX.X the income. consistent operating combination in I to of the Linda? be and to range. EBITDA the to prior positive encouraged be the of to quarter. turn year-over-year over increased should low the to year believe favorable call cost quarter result mid XXXX Linda. in I and million

staffing to segment the continues Thank you performance way. lead our North of Herb. The American

Our of the into and expansion we nice are organization, existing work Across increasingly a momentum We progress of with of first our impactful. quarter and strategic some fallen showing out rhythm new others. within customers model. recovery coming wins, have initiatives becoming maintained logo

location. working colleagues full-time three and have are the overall in portion to hybrid a full made this network of client's rate from higher Some has on branches work the base Revenue our model And occurred basis. three clients branch working during on time, times in bootcamps in days represent and over retail several A this country approximately a remainder throughout our remotely quarter. either are Retail days the retail two revenue the the quarter, onsite in or first continue to an of XX% continues grew remote. three our we for calendar the at implemented office a since on branches of year. We this the headcount investments enterprise XXXX. already held model, time

to and well in discipline hire XXXX quarter direct pre-COVID mature strong produce as continues same and Our surpassing as results, levels XXXX. results

having We are during seeing direct fiscal across generated the every QX. with every fees country region hire branch revenue from

discipline and this market growth. is on intend have and we of area a continue in strategy, capitalize this multi-pronged improvement to to conditions ongoing margin a As invest component critical approach gross to our current fuel

HR, Professional a search Search. veteran fees a Head typically professional search the staffing as brings the will Direct hired His discipline executive pursue than During QX capabilities expand we tenured for Hire The including to on times of IT He professional we of five four over scope fees XX our decades specifically, the is engineering. staffing disciplines this organization. experience finance, charter of Director are to accounting our general several National of as the higher roles disciplines. years and and across in industry global of for

benefits with stimulus payments volumes similar proved weekly fiscal in hourly continue job than that in order are the roles. willing the income we is being the from opening. offered generating case As the unemployment clients lower exceed wage and of fiscal QX, increasingly states Traditional or existing additional particularly that greater volumes levels. challenging, $XXX pre-pandemic new sufficient combined throughout in demand available to the ongoing supplemental for and was and most to payments and realize the rate QX Identifying work candidates to

opt labor to payment unemployment portion the a a out pressure. force decision mid-June July of states We return XX to additional and by end cause beginning some supplemental $XXX through of may the of the alleviate expect the

our have the We immediate of taken meet can shortage candidate to hiring needs clients. we the steps address and ensure

leverage our program expand usage across We to our technology branch partners and availability network. and large continue platform and

exploring tools candidates. also We potential of screening sourcing that and additional are will accelerate

is time off-hours, client furthering in this our professional headcount clients team cultivating partnership specific clients. in America. the education Arctern employees of leader their Better we impacting instances. that nationwide. to and selectable, central recruiting valued these development and increasing for increased free Better in U at operational challenges our our new U team of same a we employees retention the online hours have our across Through our and achieving attraction India in accredited talent Foster, to March Academy another a for skilled provides better year, introduced leveraged is We This personal In aggressively which are our Academy goals mobile-friendly. source while pool to with creation XX/X even contingent candidate have North are and addressing Academy, way of upscaling their support Better The program yet skill education courses our contingent Penn and our for of goal U

XX help Our have retention our employee talent improved legacy over to and and was and The our and bolster than XX already providing determined value better opportunity skilled job celebrated of harder loyalty, anticipate do it as secure makes investment X,XXX expect to need both workers shortage graduates. skills want and always who to current we learn founders their the to employees desired the the in and In short over just development clients ever workers and set find improve pay. we and and them. with more. commitment We gap attract championed in by education skill to continues enrollments that increase we weeks,

on promise of the part Our a U.K. France. in the Both hire. direct double by the restrictions, and reported contingent in specifically easing sequential digit is early international in revenue increase showing and helped recovery, staffing COVID segment

Belgium However, challenges and we experience in during second quarter. lockdown continue both the to do due to measures Singapore

related like COVID more As Belgium conditions additional to place on expected the however restrictions strict, have other direct slightly foreseeable as eased of performance. working continued Singapore's fully as our recovers. we remain recent are with recovery lockdown landscape results We will beginning understand as capitalize are in lockdowns remain to about the countries hire in have and been our international in the Historically, have cautiously happen start restrictions, May hard overall gotten domestic be slowly for economic to there's teams and Singapore work impacted results. operate many X, hand, The ease in substantive optimistic on May the We all has done the future. restrictions restrictions contributor on a XX. opportunities that fits and and operational.

continues During last anticipated we shared were pandemic slight that from a quarter's rebound impact. I segment fiscal slower than recovery initial earnings for MSP call, seeing This the our QX. into

and activity course lack M&A segment by willing this Our multiple has growth been clients ability to of and decision delayed to on work. making of vast multiple available candidates within the hampered arches, accelerate consolidation in

on pipeline have of tasked to are currently multiple in location which to off demand quarter new we and teams of on notification sales few slated Based to late the we end our program remain hearing Our accounts sectors. increased solutions. projects expansion opportunities expansion last existing SOW talent their having the portfolio, they in at within focused healthcare our solution that planning The into identifying the frequent clients, small and our our go anticipate manufacturing specifically MSP XX XXXX, business are targets with wins live and include XXXX adding our top conversations in management with team, fiscal paid QX. with prospective

Lastly, were second Forbes Best magazine the Firms by as of one for consecutive year. Temporary America's recognized we Staffing

In in worked best. These final based over and on were of the clients XXXX. service staffing I XX,XXX teams and the with involving XXXX. and than work candidates all especially I trajectory us Professional concur this comprised high recognitions for our analysis as a results nominations difficult as and our a are independent our are the XXXX the beside recruiting was the XX,XXX one firms. addition, team of to the Best named we global of to More also lists Recruiting who surveys X,XXX Firm best considered selected of managers The as have Volt agencies job recruiters hiring the were of projected result providing of to to am the of hard throughout growth summary, for Herb, colleagues. fiscal leaves the with half first well-poised In year the performance support our across during honored year. as well work an level candidates continue of

difficult of our call during adults and by to the express the and On time questions, like appreciation available can your for vaccine for turn as and wishes you Board, good and all battle the hopefully I COVID-XX in safe doses over colleagues an Before that behalf daily increase free I in I to relief cases. would all and your recent this for remain health. country like the in continues management Arctern dedication surges families well team to thank you to India The to will announcement distribution receive the our and everyone. heartfelt charge offer would of the in hope government

Now I questions. open to the would like Operator? call for up

Instructions]. [Operator

Our first question. question proceed & with Josh from Sidoti Company. with Vogel comes your Please

Hope Thank you. and well. Herb. you Good afternoon, doing both Linda are

Yes.

Great.

especially more of big theme on constraints, or supply collar the side. my obviously the blue first remains lack around workers So the question, the

am bit And as the with the still base North talk workers? more would you though. just a business, end of You find curious finding the gave much how good think you toughest are Thank you insights about specific available some there. facing maybe you. little to which I detail staffing can American challenges the for markets about classify talent? I When client

Yes.

than challenges are those will a not what posing location. is more that I I in it I as a this board, of pandemic irregardless particularly, individuals significant is a the experiencing number generally roles. country, It the one, different wages is some wage in So the are those reason take that And mentioned, We the that irregardless that exceeds challenge unemployment low a really of the that having a generally in started. roles. And across the lot have yet about what they challenges dynamic one in dynamic skill of seen. well Across It's getting not isn't have Herb. in the because the stimulus heard roles, were set, a we making talent. is occurred between supplemental roles. those initially when client as pervasive identifying of certainly is of

clients have address areas, many working our very to closely in we So this. been with

that clients internal are own a is starts extent have a glass they start the where and to challenge. they pay their pay present have against There had ceiling to that increased able. up to We rates that employees' budding

have that looked in flexibility shifts. at bonuses, clients We they other have had provide, benefits that specific types of can

So we that to we and certainly very understand been got addressing can. have a are portfolio of extent that challenge they the the that it clients fortunate

to some start the optimistic will are of out which to We that see opt here as some started this we start week. we see states relief

So of we through we hopefully that as calendar some continue are move expecting relief that the provide year. remainder the will to

helpful. really you. was Thank That

of go to wanted today give up And dynamic us get pay about wages. just into some when wages I was to I spread back. question wage commentary think general your about to seemingly leads trends, next some potentially come the my you of bill where And entice can to are there? workers better a and wondering, understanding just thinking commentary in going I

side? pricing How would bill longer you does on spread ultimately on that but compress the pay for early the work? So term you that benefit

right, along rate. through commensurate and wage increase Yes. done bill is wages, we base obviously the Typically, in a a we increase, either it state when pass

months, proactively the XX working past we clients passed have commensurate increase to the have have been been As working we rate. over along And with wages. extremely bill we

there with how generally not where bill be our is Are rate? Yes. we client that the not works. work XXX% That an So situations rule. it is exception, really might the of it and commensurate

this a year, level shifting we maybe should XX I little around And gears looking investment to out? certainly guidance on as And three into offerings line. term about bit, some Great. Okay. How we get and should great as service a capability, like or always next QX. late Herbie guess anywhere out, give how job the it's we SG&A about the months think for I staffing be SG&A headcount? thinking from about spend whether think new longer of year

both as last saw in am my And Right. we bit that in are sales little as we going well I our the with as upping as the to couple very in in to then And what direct the as be and have tire guidance, you and about from of quarters. number invest look the we then functions a important business, technology had well. talked

into expecting start are back easing to We that.

have the ease have some really back cut got And XX We months to a on opportunity that we or bit. little last over up that so.

guidance So the we to that's little those a giving bit term. we be really, able expect see longer maintain as there that beyond you to are levels will why that But higher.

year. find into as to for We are we opportunities really continuing next committed savings additional to move

whether prior been annualized trending? how in you Okay. client Great. that's of average to And size curious, just dollars? are a headcount new the curious or engagement seeing versus or it's revenue am with pandemic, today mid-market retailer a I I the was what's

Yes.

our $X onsite. when over to spend ways. million million. generally something have at that we So are less. annualized are in many branch network, retail $X Generally, is $X at that's we our then across on look over clients we one could $X our look in in kind Again, clients and or $X to three mid-market of million large or buckets or say locations And potentially continue something we country. mark Generally, million sit or average million the different

change when when how think it. haven't it It's we really sell And seen at from design we we how solution about it we It's the delivery how think much throughout really that's So model. that the we look about pandemic. we it.

last one Okay. Great. one And here. just

thoughts out there. over it Given I maintaining office you And the are prayers operating India, go just and situation everyone and back unfortunate has curious, at over functions was in my to Arctern all? there?

contingency be our significant question. scrambling Great the was more we up, about second the of peak We plans. team. impact proud We month that Arctern COVID could flare Yes. team We had a its had were on job at ago on there have not a our did. when to

people, some really through In and up fact, to worried to work. personal to these have together make great it teams get scrambled and And roles in took we was some got stepped on and people we sacrifice, us combined just to cases, pulled worse. at get new

So billing of this there. We over we much really got our are pretty through unaffected. course doing

We We your hit and still doing able are collections our metrics. to were that. all

it again, it proud immediate testament But and resiliency rallied each pulled just devastating and it in could had we there. the and really I indicated will Linda was these was their a be because that a some losses through team they that up. So not of to family up, impact And other just it has. more back people

had the I So a over rebounding little started team where things our bit paying We for there, for as well. vaccines actually were we better. think program a getting are

here in stepped has government the to do that. Now

impressive just really they what been So there. again, it's have done

Yes. Really remarkable.

speedy hoping taking a thanks for my questions results. there. for Well, over And recovery for and impressive Yes. everyone

rest Looking forward year out. how the of see to plays the

Thanks Josh.

Thanks Josh.

Thank you.

your question. with Our Capital. next Please question SGF from with proceed comes Hughes Mike

my for Thanks taking afternoon. Good questions.

you First July expectations one, quarter for can repeat revenue your please? just the

Yes.

to expect XX% be year from them XX% a to We up ago. about

Okay.

So are quarter that and sequential quarter. think I about imply decline two roughly the the X.X% there in would fewer days April versus current a

There correct. That's are.

one in end just both the beyond July taking impact they associate not after have of getting the the Friday holidays, Monday with like into a those day and you just you with you people the Fourth close also weekend. take typically per for days, but on have, the one holiday off fairly day. day the then those top revenue because So But it's staying it's

that. with into your So Day. Same you Memorial run thing

day when So bigger than little two a a have those holidays. it's you impact

that, Know just think decline. very And I might it. you does you The that reality Mike. that imply it looking will is at literal way be it's look to in mentioned in, at it I jump that hard a X% very

our So impact continue because have if mean that have versus COVID what year, recovered. about year have this you we to impacts. by COVID think our not we COVID impact clients is, last And I that

and We aren't. have And a clients I have then that that like doing recovered that, said, are better. others little

Our last million impact related COVID this when year in compared QX $X worsened by to year.

Now line weeks is year recovery, quarter that punch customer were QX growth keep new what but last in seven combination of from expansion the mind, that pre-COVID of business this wins. is, overall existing of that and customers' the came the occurred

So actually the COVID these exceeded negative impact. factors

quite actually business significantly. our is So underlying growing

Okay.

everyone turning So clients that you and labor to faces. the and just challenges your

Just fill kind become stay actually the did quarter? more of thinking, month-by-month, the rates challenging? the did same they throughout Or

Yes.

there so programs a all is that. a, it that metric business, Fill there into different became is of is that challenging. rates while are particularly of bit fill business of with doing is rates look certainly rate, aspect when a other software tool fill go a many at are MSP you where more business, we the So handling that factors

the is tell year-to-date, the rate for that, can funky. get our What despite fill the XX% So can challenges, you year. up placements are little year-to-date I number versus candidate prior a

overall challenges placement and placement, drive seen efficient, headcount. candidate effective placement have becoming a to less with year-to-date despite more technology, driven higher leveraging higher more So more revenue, through we year-to-date placement, managed have

Okay.

the part think to bridge the I X% goal is of pricing.

key your continue like improve. indicators performance sounds it So to

on Is go-forward better a So on garner to that fair? you would mean that maybe still that basis. track pricing are

Yes. definitely think so. I

really the other despite our a again, way, which and labor KPIs tough are that market. turning are both retail it. on focused hire We direct year-over-year up And key the involve heavily performance

XX. about just on comes more then week but of think here X% Not a your extra $XXX revenue are And dead rolling Texas. horse back a to roughly They beat questions. from June Okay. the I two

that in would think for So one would Texas work receiving looking now. that people be

other So Texas have change behavior you of see you to rolled the seen yet? that states in any have of state any started Have back.? that actually or

XX have of Yes. A One, overall, couple things states that rollback, those started XX. the rollbacks really of there. June just announced

date July the XX revenue. direct that. our And also, XX% represent So of nothing XX that. latter states for they from then is lose But overall

a not effect. going it do a the impact. other out people to work. But it's is, for to part it positive So states and have of how then is the huge look But well enforce having go

So is the $XXX it's one thing of it. part

I right, significant other But from if answer accountable? But it yet. haven't Linda, or a measurable? seen is, are have better. Are don't people impact to standpoint anything from starting don't there's know The the are states see But feel field the I looking? the you starting your jobs that are to seen holding like it's getting people Are think you to I the part short available. answers, all my I

We work pinpoint previously why We, Yes. started had in candidates that or very roles. It's proactively, turned reach to where a happening to folks to begin exactly get can to out look put out benefits and expired. and points together presentation and have encouraging like exactly go so areas. it's hard to for inspiring work this of certain ahead and the before down conversation, whole a talking folks to

Over weeks, little things a from things teams couple am to I Arizona. hear in my look, that be different seem better. the of that, anecdotally, field I last hearing

of ago XX full to registering people various would hearing would done number a applicants are month couple actually a for there starting we show have that registered when job get showing are up, we And getting more candidates. of clients. two I that the and up. We am are now

going to that promising. yet. But think changes, it's think is I I So needle nothing again do slight move materially the

Okay. And quarter? is back the are shortages potential about the the any think holding way how much revenue current labor there in to

Yes.

factor. order mean activity is our concern key high. extremely a that's it's again because I think I our

We happy It's The fast with how fill that. are there. very of can we opportunity it. matter is just a

halfway upside this extent know definitely, but are to think got project again, of us, in quarter for balance some So the that we really that I quarter. to some are market of labor starting can you as to through are see we we kind improves I third quarter to the were hesitant and close the just have at where but of he we we for held signs the upside the

Okay. It question. sense. Last makes

you sublease on front? part are of that headquarters. trying your progress to Any think corporate I

did to I aggressively off until thought announce time, saying would now that very nothing weeks than on hold actually will happen. a get I But ago doing I done. it that really But probably would And much point. happen better there's that good the at deal we felt we it. I this ago. say about didn't something progress months six are I but it I more feel about six And at same

until done, property dynamic of that potential California make months is six in happen. me last has not industrial one market the that that changed over about to Southern up the feel the it's and place the developers The in it's the area. having has So in in value considerably interest going does you better it gone market

you Thank much. Great. very Okay.

Mike. It Thanks. to was you, good talk to

to I Linda turn you. questions floor would to are over the at closing Perneau like further back any for no comments. There Thank this time.

and for call today's for interest you Thank participation you continued Thank Volt. Paul. in your your in

Part As during in third call we in a to on fiscal Coast forward with speaking quarter East IDEAS We Thursday, XXXX Advisors the Three our look are you September. again XX. reminder, Conference earnings participating Virtual June

conference. today's concludes This

a disconnect your evening. you time. your at for this wonderful lines may Have participation. You Thank