Volt Information Sciences Inc (NYSE:VOLT) Q4 2019 Earnings Conference Call - Final Transcript

Jan 15, 2020 • 05:00 pm ET

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Volt Information Sciences Inc (NYSE:VOLT) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Herb Mueller

we have made to the organization. We're beginning to see growth in some of the most profitable parts of our business and improvement in profitability overall.

Before I review our results, I'd like to remind everyone that our fiscal fourth quarter of 2019 includes a 14th week compared to our normal 13-week quarter and our fiscal 2019 results consists of 53-weeks of operation versus the usual 52-weeks. In my review, I will go over actual comparisons as well as provide the numbers related to the extra week, which will allow for an apples-to-apples comparison. Also we are modifying our language regarding same-store sales. To avoid any confusion with the traditional definition of this term going forward, we will -- we are referring to this metric as adjusted revenue, which excludes the extra week, as well as the effects of foreign currency translations and businesses exited.

I'll begin by reviewing our fourth quarter results. Revenue for the fiscal fourth quarter was $258.4 million, including approximately $18.9 million related to the extra operating week. On an adjusted revenue basis, revenue for the fourth quarter of fiscal 2019 decreased 5.7% year-over-year and was within the range of our guidance provided on our third quarter call.

Looking at our business segment results, North American Staffing represented 84% of overall revenue during the fourth quarter. Revenue from this segment was $216.6 million, including approximately $15.8 million associated with the extra week. Adjusted revenue decreased approximately 8.7% year-over-year. The decrease was primarily attributable to continued workforce adjustments from certain larger clients, specifically related to changes in their businesses, partially offset by business wins with new clients.

Our two other segments delivered solid growth during the fourth quarter. The International Staffing business, which represented 12% of total sales in the fourth quarter increased by 12% year-over-year to $30.6 million. Adjusted International revenue increased by approximately 8.8% year-over-year primarily due to stronger results in Belgium, the UK and Singapore. At about 5% of total revenue, North American MSP is our smallest yet fastest growing business segment. Revenue increased 42% to $11.7 million during the fourth quarter. Removing the extra week from the comparisons North American MSP increased 31%. The increase is primarily attributable to expansion with an existing clients and new wins for managed service programs and payroll services.

Moving down the P&L. Gross margin for the fourth quarter was 16.6% similar to the year ago quarter. I want to point out that last year's fourth quarter included a $2.2 million favorable California federal unemployment tax credit. Without this credit in last year's fourth quarter and adjusting for the 53rd week, gross margin would have increased approximately 80 basis points year-over-year. The primary driver for the improvement in gross margin was related to the growth in North American MSP and international segments, which tend to generate higher gross margin. SG&A expense for the fourth quarter was $39.9 million, excluding the approximately $2.6 million associated with the 14-week and SG&A expense decreased $1.1 million from the third quarter of