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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Q & A
Operator
Operator

At this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question is from Josh Vogel with Sidoti & Company. Please proceed with your question.

Analyst
Josh Vogel

Thank you. Hi. Linda and Herb, hope you both are doing well.

Executive
Herb Mueller

Great.

Executive
Linda Perneau

Hi, Josh.

Executive
Herb Mueller

Hope you're also -- doing well as well.

Analyst
Josh Vogel

So it's good to see the broad-based improvement across the business here in the face of some of those revenue headwinds in North America. I guess my first question here is, I was hoping you could just provide a little bit more color on the transition to Arctern, maybe how long you expect us to take and what exactly you are transitioning over there?

Executive
Linda Perneau

Yes, absolutely. I'll take that and Herb, you can certainly add commentary after I do. So we're going to leverage the global capabilities of Arctern. We have spent the last several months looking at very closely and have a strategically selected certain roles that today are based in Orange California as well as in the UK. We will be moving those functions over to Arctern. There are 125 employees that are impacted. The plan is to allow for a 60 to 90-day transition, once those employees are selected and in place in Bangalore. We have already begun the process, the internal notification occurred last week. We begun the process of hiring individuals to take on those functions in Bangalore and we will continue to be doing that aggressively over the next couple of months. We will see the majority of the impact of these savings accelerate towards the latter part of the year as those transitions of the roles begin to take place.

Analyst
Josh Vogel

Okay, that's helpful. And then actually kind of lead into my last question or my second part of the question is when -- how we should think about that $3 million in savings, more of a second half event? I guess I'm curious, will there be some upfront costs involved in this? Whether it's a transition of those 125 employees impacted that could be a little bit of a margin drag in Q1 or potentially Q2?

Executive
Herb Mueller

Yes, you will have a little bit of an impact on the SG&A line again, because most of these are back office support positions. As we bring these people on we have some overlap, we're managing that very aggressively. And then of course as we mentioned in or you'll see there'll be some restructuring costs related to the severance associated with this as well.

Executive
Linda Perneau

I don't expect any impact from a gross margin perspective, Josh. So that should not at all impact. And our outlook on the savings for 2020 takes into account all of the transition and any upfront costs that will go into place.

Analyst
Josh Vogel

Okay, great. I guess, I have a question around the guidance. You gave a little bit more in terms of expectations adjusted revenue down 10% to 12% year-over-year. So obviously that excludes the call center operation. So I just kind of