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View All NewsWorld – Staffing 360 revenue up 42% in Q2 with acquisitions, but falls on organic basis
Staffing 360 Solutions Inc. (NASD: STAF), a staffing provider operating in the US and UK, reported second-quarter revenue rose 41.8%, which includes $20.1 million from acquisitions completed in September 2017; the June 2018 acquisition Clement May, completed in June 2018; and $400,000 from favorable foreign currency translation.
Revenue also reflects a $1.6 million decline driven by PeopleServe and an organic decline of $1.4 million from the remaining core business.
| (USD thousands) | Q2 2018 | Q2 2017 | % change |
| Revenue | 59,727 | 42,117 | 41.8% |
| Gross profit | 11,882 | 7,924 | 49.9% |
| Gross margin | 19.9% | 18.8% | N/A |
| Net loss | (1,844) | (432) | N/A |
Staffing 360 operates in three segments: Commercial Staffing US, Professional Staffing US and Professional Staffing UK. Revenue by segment was broken down as follows.
| (USD thousands) | Q2 2018 | Q2 2017 | % change |
| Commercial Staffing US | 23,549 | 23,308 | 1.0% |
| Professional Staffing US | 14,066 | 12,232 | 15.0% |
| Professional Staffing UK | 22,112 | 6,577 | 70.2% |
Staffing 360 acquired US-based PeopleServe in 2014 but divested the IT staffing firm on 6 June 2018, for a total consideration of $1.5 million, net of $567,000 that was remitted back to the buyer on July 31. The company recorded a gain of $238,000 from the sale of the business.
Net loss increased to $1.8 million from a net loss of $432,000 in the year-ago quarter, which the company attributed mainly to higher acquisition, capital-raising and noncash expenses; and legal expense settlement income of $600,000 in last year’s second quarter.
Gross margin improved to 19.9% from 18.8% in the prior-year period. This reflects improvement in Staffing 360’s underlying temporary contractor revenue, coupled with the acquisition of two higher-margin businesses. This was partly offset by lower savings from workers’ compensation insurance versus the savings realized in the corresponding period in 2017.
“We experienced an increase in the number of temporary contractors deployed and a higher number of temporary contractor hours billed; while at the same time saw strength in the permanent placement business,” said Chairman and CEO Brendan Flood.
Shares in Staffing 360 rose 10.21% to $2.59 as of 1:18 p.m. Eastern time. The company had a market cap of $11.02 million.
In trading yesterday, Staffing 360 Solutions shares closed at $2.26, down 3.83% on the day and 98.25% above the 52 week low of $1.14 set on 20 June 2018. Based on its current share price the company has a market value of $10.00 million.