Corporate Resource Services Announces Record Revenues of $819 Million, 20% Growth and Releases 2013 Fiscal Results
- Revenues Up 20.6 percent to $819.7 million
- Adjusted EBITDA increases 190% to $17.8 million
- Adjusted EBITDA Margin rises to 2.2%
- Company Expects to File 2014 Q1 Results within 45 days or as soon as they are available
NEW YORK--(BUSINESS WIRE)--Corporate Resource Services, Inc. (NASDAQ:CRRS), (the “Company” or, “CRS”), a diversified technology, staffing, recruiting, and consulting services firm, today reported its financial results for the fourth quarter and fiscal year ended January 3, 2014. Corporate Resource Services has also made substantial progress toward becoming current with its Securities and Exchange Commission (the “SEC”) reports by finalizing its Annual Report on Form 10-K for the year ended January 3, 2014, the filing of which is imminent.
“We are pleased with the strong 2013 results and to bring our 2013 audit to a close with the filing of our Form 10-K with the SEC”
Revenue for the fiscal year 2013 ended January 3, 2014 was $819.7 million, an increase of $139.9 million, or 20.6 percent, as compared to fiscal 2012. The Company had 16.4 percent organic growth, with acquisitions accounting for $28.7 million in total revenue.
Gross profit for the fiscal year 2013 increased by $16.4 million, or 20.5 percent to $96.4 million, a gross margin of 11.8 percent.
For fiscal 2013, selling, general and administrative expenses and non-cash equity compensation increased by $9.2 million or 12.4 percent to $83.7 million, or 10.2 percent of revenues, as compared to $74.4 million, or 10.9 percent of revenue for fiscal 2012. The increase was primarily due to increased professional fees, an increase in stock-based compensation expenses of $4.4 million, NASDAQ listing fees in fiscal 2013, and costs relating to growth investments. This increase was offset by the Company’s ability to curb and reduce non-personnel costs, including ongoing consolidation of Company offices and functions.
Sustained revenue growth has allowed the Company to better leverage its fixed costs as indicated by the year-over-year decrease in selling, general and administrative costs as a percentage of revenues. In addition, the Company has completed and continues to undertake initiatives to reduce selling, general and administrative costs through consolidation of select offices and administrative functions. We expect that the integration of recently acquired operations as well as the continued growth of revenues will continue to reduce selling, general and administrative costs as a percentage of revenues in 2014 and beyond.
Operating income for fiscal 2013 was $10.6 million, an improvement of $7.4 million compared to operating income of $3.2 million for fiscal 2012. The improvement in operating income reflects a 20.6 percent revenue growth and a decrease in depreciation and amortization expenses $(0.2) million to $1.8 million as compared to $2.0 million for fiscal year 2012, primarily due to the timing of acquisitions and the fluctuation in the amortization of acquisition-related long-lived assets.
Net income was $2.8 million, compared to a loss in fiscal 2012 of $1.7 million.
Adjusted EBITDA, a non-GAAP measure defined as earnings before interest, taxes, depreciation, amortization of identifiable intangibles, equity-based compensation expense, loss from equity investment and change in fair value of contingent consideration, was $17.8 million for fiscal 2013, an increase of 176% from $6.5 million in 2012.
“We are pleased with the strong 2013 results and to bring our 2013 audit to a close with the filing of our Form 10-K with the SEC,” said John Messina, CEO of Corporate Resource Services. “While the past few months have been challenging on several fronts, we have continued to focus on executing our business strategy and moving the business forward.”
Added Mr. Messina, “We have made strategic acquisitions to expand our footprint, establish strategic partnerships and to obtain technology that is complementary to our business. We are confident in our ability to execute our organic growth strategy, and continue to improve our margins through higher margin acquisitions outside the light industry segment of staffing. We have also maintained financial stability, and are focused on cultivating new banking relationships with major financial institutions to secure the capital resources necessary to position CRS for continued growth as we pursue niche acquisition opportunities. We remain focused on completing our 10-Q for 2014 first quarter, which we expect to file as soon as possible, but within 45 days.”
As the company previously reported, CRS revised certain prior period amounts and presentations including reflecting our change in fiscal year end and to reflect the correction of certain errors. Additional information regarding these matters and the impact of the revisions on the consolidated balance sheets and consolidated statements of income by quarter are outlined in the tables that can be found in the company’s Annual Report on Form 10-K filed today with the SEC.
Corporate Resource Services management remains focused on completing and filing of Corporate Resource Services’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2014. The Company submitted to the NASDAQ Stock Market LLC a compliance plan with respect to the delinquent Form 10-Q on June 23, 2014. The Company is continuing to work diligently to complete and finalize the Form 10-Q. Based on discussions with the independent auditors, management expects to finalize and file the Form 10-Q as soon as it is available, but in any event within the next 45 days.
In conjunction with the completion of the audit of Corporate Resource Services financial statements for the year ended January 3, 2014 by its independent auditor, Crowe Horwath LLP, the Company included a statement of a material weakness in its internal controls over its financial statement close process in its Annual Report on Form 10-K for year ended January 3, 2014. Management is undertaking steps to remediate the material weakness, including the development of enhanced procedures and processes, augment its staffing, and are engaging internal control specialists to address the underlying causes of the material weakness. Management believes in the future these additional control procedures will, when fully implemented, remediate this material weakness. Further discussion of the material weakness can be found in the Company's Form 10-K, filed today with the SEC.
About Corporate Resource Services, Inc.:
Corporate Resource Services, Inc. provides cloud-based enterprise applications and hosting services to PEO and staffing companies, as well as diversified staffing, recruiting, and consulting services. The Company offers trained employees in the areas of Insurance, Information Technology, Accounting, Legal, Engineering, Science, Healthcare, Life Sciences, Creative Services, Hospitality, Retail, General Business and Light Industrial work. The company’s blended staffing solutions are tailored to our customers’ needs and can include customized employee pre-training and testing, on-site facilities management, vendor management, risk assessment and management, market analyses and productivity/occupational engineering studies.
The Company operates 244 staffing and on-site facilities throughout the United States and the United Kingdom and it offers its services to a wide variety of clients in many industries, ranging from sole proprietorships to Fortune 1000 companies. To learn more, visit http://www.crsco.com.
Forward Looking Statements:
Certain information contained in this press release, particularly information regarding completion of this offering, constitutes forward-looking statements. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “comfortable with,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.