Brendan Flood Provides an Update on the
Company’s Recent Transformative Developments, Including a $40
Million Refinancing, Improved Revolver Terms, and Acquisitions in
the United States and the United Kingdom
Staffing 360 Solutions, Inc. (Nasdaq:STAF), a public company
executing a global buy-and-build strategy through the acquisition
of staffing organizations in the United States and in the United
Kingdom, today released a letter from Brendan Flood, Executive
Chairman, that updates the Company’s commitment to growth with a
new three-year goal of $500 million in revenue and provides
shareholders with an update on Staffing 360’s major developments
and insight into management’s expectations for the remainder of the
year.
A photo accompanying this announcement is
available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/5ba43ce2-384b-4d69-87bc-e9c54755257e
Dear Employees and Shareholders:
As the Executive Chairman of Staffing 360
Solutions, I am very pleased to take this time to discuss our major
developments. Although we have achieved many significant
milestones over the past few years, the events that occurred this
week are truly transformative to our organization, to our
employees, and to our loyal shareholders as well.
This includes our $40 million refinancing – our
largest raise to-date – improvements to our existing $25 million
receivable financing in the US, as well as acquisitions in the
United States and in the United Kingdom. Needless to say, we
have completed a considerable number of major corporate events in a
short period of time, and we are looking forward to the remainder
of the year as we continue to position the Company for even more
growth.
As I’ve stated, I have the utmost confidence in
our management team, our board of directors and the 200 employees
at Staffing 360 Solutions who are tirelessly driving our business
forward. With the completion of this week’s acquisitions, we now
have 300 employees.
On to the details: First, we have
completed on what is arguably one of our most significant
financings. Staffing 360 Solutions has successfully closed
the largest capital raise since its inception – a $40 million
senior note – helping to materially refinance our existing balance
sheet, as well as to close on two significant acquisitions.
Not only does this transaction help improve our
financial position, it strengthens our relationship with Jackson
Investment Group, which many of our loyal followers may recall is
the same private investment firm that supported our strategy by
investing over $9 million beginning in January 2017.
This $40 million is a game-changing transaction
on several levels. First, the 12% senior note marks our
largest capital raise, giving us the ability to support our growth
and continue our M&A strategy with two new acquisitions.
Second, by paying down existing debt with this instrument, we have
been able to convert numerous pieces of short term debt into longer
term debt, and to further strengthen our balance sheet.
Lastly, since the debt is structured as a note with a three-year
term and zero amortization prior to maturity, it allows us to
utilize our cash flow for working capital purposes and to add
improvements to our operations over the next several years.
In addition to our major refinancing, we have
also renegotiated our existing $25 million accounts receivable
facility with MidCap Financial. The facility has more
attractive terms, including lower fees as well as additional
availability. It also has an accordion feature that allows
the revolver to expand up to $50 million as the business grows,
which is especially important as we continue to make accretive
acquisitions.
In relation to M&A, our transformative $40
million refinancing helped us to close two major acquisitions:
- CBSbutler Holdings Limited – a $65 million revenue staffing
firm in the UK.
- firstPRO Georgia – a $20 million revenue US-based company in
Georgia.
CBSbutler is an award-winning staffing firm in
the UK specializing in engineering and IT. The company brings a
wealth of management talent and client relationships to our
organization, and CBSbutler is expected to complement our existing
operations in London as we get closer to $100 million in UK
revenue.
Likewise, firstPRO Georgia brings additional
accounting, finance and IT depth to our organization in the
US. Acquiring firstPRO’s office in Atlanta allows us to
continue to expand geographically, which has been a major goal of
ours for some time.
From a financial perspective, our two new
acquisitions are expected to add approximately $85 million to the
top line, boosting our revenue to $265 million. In addition,
we are expected to more than double the pro forma Adjusted EBITDA
of Staffing 360’s overall business to $11 million on an annualized
basis. Not only have these acquisitions substantially
increased our Company’s size in one fell swoop, considering our
improved balance sheet, we believe we are in an even stronger
position to further our M&A strategy as we pursue additional
acquisitions going forward.
Staffing 360 Solutions is now much closer to our
initial goal of becoming a $300 million revenue business. We
have acquired a total of eight companies, including the two most
recent acquisitions of CBSbutler and firstPRO Georgia, and we are
now right at the threshold of our publicly stated objective, with a
revenue run rate that is within $40 million of our goal.
Needless to say, I am extremely proud of our
management team, our three hundred employees, and our recent
accomplishments that, when taken together, represent a truly
game-changing series of events for our Company.
I’d also like to take a moment to recognize our
loyal shareholders. We realize that our investors have been very
patient as our team has been working tirelessly to make these
substantial transactions a reality. It’s a tremendous
accomplishment to have finalized this significant refinancing of
our entire balance sheet and simultaneous closing of two
acquisitions.
The headline terms of the refinancings and the
acquisitions are as follows:
Jackson Investment Group, LLC Senior
Note |
Facility |
|
|
$40
million, secured term loan |
|
Maturity |
|
|
September
2020 |
|
Interest
Rate / Fees |
|
|
12.00%,
payable quarterly |
|
Prepayment Incentive |
|
|
Year 1:
3% Year 2: 2% Year 3: 1% |
|
Amortization |
|
|
None |
|
Equity
Issued |
|
|
2.25
million shares of common stock of STAF |
|
|
Amended MidCap Asset Based Lending
Facility |
Facility |
|
|
$25
million, with accordion for additional $25 million |
|
Maturity |
|
|
April
2020 |
|
Interest Rate |
|
|
LIBOR +
400 bps (LIBOR floor of 1.00%) |
|
Draw
Availability |
|
|
85%
Billed Receivables |
|
Additional Draw Availability |
|
|
85%
Unbilled Receivables (capped at $1.3 million) |
|
|
Acquisition of CBSbutler Holdings
Limited |
Form |
|
|
Stock |
|
Initial Consideration |
|
|
£13.8
million cash up-front, less loans of £1.85 million |
|
Earnout |
|
|
Max of
£4.2 million earnout payable December 2018 |
|
Deferred |
|
|
£150,000 |
|
Net
Assets acquired |
|
|
£3.8
million |
|
Equity Issued |
|
|
500,000
shares of common stock of STAF |
|
|
Acquisition of
firstPRO Georgia |
Form |
|
|
Asset |
|
Initial Consideration |
|
|
$4.5
million cash upfront |
|
Deferred |
|
|
$3.5
million payable over three years |
|
In conclusion, I would like to reaffirm the
Company’s strategy and confirm one new change. To this point our
publicly stated intention was to build a $300 million international
staffing firm with locations in the US and in the UK. Following the
changes that we have now made it is time for a new target. Our
intention now is to continue to grow and to double in size to over
$500m over the course of the next three years. We will deliver on
this both organically and through accretive acquisitions and we
will stay within our five Strategic Pillars of Accounting &
Finance, IT, Engineering, Administration, and Light Industrial
staffing.
Going forward, please stay tuned for more news
and developments at Staffing 360 Solutions including an Investor
Conference Call on Wednesday September 27th at 9.00am CDT/10.00am
EDT/3.00pm BST. Details of how to access this call will be issued
early next week. I want to reiterate that our management team
and board of directors remain committed to growth in revenue, to
growth in profit and to growth in shareholder value.
I thank you for your attention and continued
support. For further information, please visit the
“Investors” section of our website
at:www.staffing360solutions.com/investors.html
Respectfully,
Brendan FloodExecutive ChairmanStaffing 360
Solutions, Inc.Ticker: STAF
About Staffing 360 Solutions,
Inc.
Staffing 360 Solutions, Inc. (Nasdaq:STAF) is a
public company in the staffing sector engaged in the execution of
an international buy-and-build strategy through the acquisition of
domestic and international staffing organizations in the United
States and in the United Kingdom. The Company believes that
the staffing industry offers opportunities for accretive
acquisitions that will drive its annual revenues to $500
million. As part of its targeted consolidation model, the
Company is pursuing acquisition targets in the finance and
accounting, administrative, engineering, IT, and light industrial
staffing space. For more information, please visit:
www.staffing360solutions.com.
Follow Staffing 360 Solutions on Facebook,
LinkedIn and Twitter.
Non-GAAP Financial Measures
Staffing 360 Solutions 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.
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. Although Staffing 360 Solutions, Inc. believes such
forward-looking statements are based on reasonable assumptions, it
can give no assurance that its expectations will be attained.
Actual results may vary materially from those expressed or implied
by the statements herein, including the goal of achieving
annualized revenues of $500 million, due to the Company’s ability
to successfully raise sufficient capital on reasonable terms or at
all, to consummate additional acquisitions, to successfully
integrate newly acquired companies, to organically grow its
business, to successfully defend potential future litigation,
changes in local or national economic conditions, the ability to
comply with contractual covenants, including in respect of its
debt, as well as various additional risks, many of which are now
unknown and generally out of the Company’s control, and which are
detailed from time to time in reports filed by the Company 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 does
not undertake any duty to update any statements contained herein
(including any forward-looking statements), except as required by
law.
Corporate Investor Contact:
Staffing 360 Solutions, Inc.Brendan Flood, Executive
Chairman+1.646.507.5715brendan.flood@staffing360solutions.com
Financial Contact:
Staffing 360 Solutions, Inc.David Faiman, Chief
Financial Officer+1.646.507.5711info@staffing360solutions.com
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