Dear Fellow Shareholders:
As Chairman, CEO and President of
Improved Financial Results
We are encouraged with the strong performance in our second quarter. As recently reported in our Q2 and six-month results, the mid-point in 2021 marks growth in our business and a number of improved KPIs (key performance indicators). To highlight just two, in Q2 revenue grew 23% and gross profit grew 37% (excluding the disposed business) as compared with last year.
Also, our balance sheet is now greatly improved as a result of the substantive progress made since
- Maintained the
$6 million reduction in overhead removed in 2020, - Received full forgiveness of
$19.4 million in PPP loans from theSmall Business Administration , - Completed capital raises totaling
$43 million , - Reduced non-receivables debt and redeemable preference shares from
$72.3 million (81%) to$13.5 million - decreasing our interest burden by more than$3.6 million per annum, - We are now in compliance with Nasdaq’s Equity Requirement with today’s preliminary pro forma stockholders’ equity of
$22.5 million - far above the$2.5 million requirement
Recent Financings
As an emerging company in the staffing space, the recent series of financings were principally undertaken to reduce debt and to move us to an increased financially strengthened position. Thus, providing us with greater flexibility to both explore ways to pay off our high interest debt completely and selectively seek accretive acquisitions, while we simultaneously work to drive organic growth.
The proceeds from the most recent financing are intended to be used for working capital purposes. In particular, a portion of these funds has now been earmarked for expanding the Company’s temporary contractor payroll from September onwards to support (a) the expected seasonal increase and (b) the anticipated increase in job seekers as the unemployment stimulus ends. There is no guarantee that we will be able fill all of these roles, should they arise, but we would most certainly not be in a position to do so without working capital funding. Temporary staffing businesses are, by their nature, working capital intensive and we are no different from other staffing firms in our market as explained further below.
End of Unemployment Stimulus
The timing of this week’s financing coincided well with last week’s announcement that the federal government would end the unemployment stimulus subsidy as of
We are prepared to do our part to help swiftly fill the pent-up demand for temporary placements with what is expected to be a dramatic increase in the number of people seeking employment.
Anticipating Positive Net Income
With an improved balance sheet, we are now in a substantially strengthened financial position. Our efforts are focused on building a successful business and, just as importantly, rebuilding investor confidence and trust. I look forward to our executing on our business plan to help drive improved near-term results. We expect that Q3 operating results should exceed those reported in Q2, and that Q4 should show further improvement over Q3 as discussed on the most recent Q2 Conference Call. If all goes as anticipated, we look to achieve positive net income by the end of Q4.
Continuing Growth = Organic + M&A
Organic growth in our six operating brands is being enhanced by the expansion of our geographic footprint into new regions – and aided by increasing cross sales between our brands. Our growth initiative also includes more fully exposing our clients to our entire suite of services/brands. The ability to offer clients a one-stop-shop is a sales advantage.
We purposely seek to be subject-matter experts in our five staffing verticals (within Professional & Commercial), rather than to be staffing generalists. Our growing success in cross sales is aided by the fact that we are agnostic to the industry in which the client does business…we focus instead on the skillsets of our temporary and permanent placement employees/candidates. For example, we would place a Controller with a client in any variety of industries, ranging from aviation to healthcare, manufacturing and banking.
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Expanding collaborative cross sales are not only occurring within each vertical – but also back and forth within our brands between Professional to Commercial, and vice-versa.
Since the dawn of the pandemic, we have worked smarter and more efficiently. As part of our broader plan to drive sales, we also actively seek contracts to place a higher number of workers, honing skills and training programs for enhanced sales/client relationships. We are in the people business, and a positive company culture is important to us. We maintain a high satisfaction rate with our temps…as supported in the results of our new hire surveys (routinely conducted after 30 days and six months).
Customer satisfaction is also paramount to our success. As previously discussed, our largest
The Staffing industry is highly fragmented and is sized at nearly
Workplace Safety Policy
Both myself and our senior management team are vaccinated against COVID-19 and are leading by example. Our recently adopted workplace safety policy mandates that all of our internal employees also be fully vaccinated (unless they request and receive reasonable accommodation for a medical or religious exemption). We are following ongoing scientific advice to best allow us to meet the growing demands of our business – and to control what we can to avoid interruptions in productivity and office closings. We were all encouraged by the news this week that the Pfizer vaccine received full approval from the FDA and we remain vigilant and cautiously optimistic as we continue to progress through the coronavirus environment.
Our Vision
Our goal is to grow the Company organically and through select accretive M&A transactions on our way to achieving sustainable, profitable growth to a
We are seeing promising and positive indications in each of our five verticals, while industry trends continue to improve. We’ve concluded that now is the right time to enhance our investment community outreach, introducing the
Speaking on behalf of our entire management team and board of directors, I would like to reaffirm our commitment to building long-term value for our shareholders. Although we are proud of our accomplishments to date, we acknowledge that there is still much work to be done. We are committed to this ongoing effort, and appreciate your continuing support.
I would like to acknowledge my colleagues, our outstanding global management team and our employees. I extend my thanks and deepest gratitude to each them for their continued hard work, initiative and resilience during this unprecedented time.
Respectfully,
Chairman, CEO and President
About
Forward-Looking Statements
This 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, our ability to retain our listing on the Nasdaq Capital Market; market and other conditions; the geographic, social and economic impact of COVID-19 on the Company’s 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 Company’s customers to pay the Company’s fees; the termination of a major customer contract or project; delays or reductions in
Investor Relations Contact:
818.379.8500 x 2 terri@bibimac.com
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