Volt Information Sciences, Inc. Q4 FY2020 earnings call

• Linda mentioned the impact of the COVID-19 pandemic on the organization, which was the most prolonged and widespread disruption in its 70-year history.
• Herb discussed GAAP revenue for FY 2020 was $822.1 million compared to $997.1 million in FY 2019, a 17.6% reduction, and adjusted revenue was down 13.4% primarily due to COVID-related revenue impact.
• Linda spoke about strategic initiatives including continuing strategic investments, expanding chatbot usage, expanding retail branches for higher margin business, expanding national sales team, and realigning international MSP team resources.

For FY 2020 adjusted revenue, the North American Staffing segment reported $689.1 million of adjusted revenue, which is a 13.9% decrease from the prior year. The International segment came in at $95.3 million, down 15.1% from the prior year, and the North American MSP segment was down 1.4%. The North American Staffing segment was the main driver of recovery, showing consecutive month-over-month improvement in adjusted average daily revenue from June forward.

• Anticipate full year topline growth and positive adjusted EBITDA in fiscal 2021.
• Continue strategic investments, focusing on specialties, expanding chatbot usage, expanding retail branches, expanding national sales team, and realigning international MSP team.
• Plan to achieve growth and profitability throughout the remainder of fiscal 2021.

Q: Thank you. Good evening, Linda and Herb and Happy New Year. I guess my first question when we look at the adjusted revenue decline for fiscal 2020, down 13%. Don't want to get too much into the weeds, but maybe if can you just give a little bit more -- with like how much the existing base account and then quantify the expansion with other existing clients and the new business help to offset that?

A: You broke up on just a little bit in there. But basically, if I picked it up right, the expansion of new business versus the recovery impact. And again, we've had substantial amount of gains on the new logos. And that we've been in, we've gotten, we've gained a good bit of new business that has really offset -- partially offset some of the loss that we've had. So, that's continuing year-over-year, we were up, as Linda mentioned, on the amount of new business, so that's been significant as well.

Q: All right, great. And Linda you were talking about some of the new opportunities that have arisen out of the need for employee wellness safety. Can you quantify how much revenue is coming from opportunity you see when we think about monitoring and screening logistics? And you even mentioned the food manufacturing distribution, I'm just curious what piece of the pie is coming from those opportunities today?

A: Yes, I mean, what I can tell you, Josh, is that a very small percentage of the new business has come from what we'll call sort of related to COVID opportunities. The majority of the new business is coming from focus on those areas that are expanding, like food and distribution and logistics. So, a lot of those areas have has been expanding, a lot of them have robust needs, those are areas that we have really capitalized on and represents the largest percentage of our new business.

Q: All right, great. Impressive with the success using a chatbot and I know that you plan to further roll that out. Are there any other technologies -- digitally enabled technologies that you're exploring to facilitate onboarding and deployment?

A: Yes, there's multiple, right? So, we're constantly looking at what's the latest and greatest out there in the market. What is it that will specifically help our clients be advantageous for our clients, make the lives of our field employees easier, the lives of our branch teams easier. So, we are -- we consistently are looking at multiple tools, we have generally opted to take an approach of piloting them in small geographies in certain geographies or specific clients. That gives us the agility and the flexibility to kind of perfect it and make sure that it's the right tool for us and we'll continue to make investments in that area as we move through the year.

Q: Shifting gears, if I can, you talked about moving the jobs to India, I think you said there was 130 back office positions, and can you maybe quantify or discuss the cost benefits and sustainability of having those functions overseas? And then is it are you done there? Or is there more opportunities?

A: Yes, a couple things. Josh, we -- moving those jobs saves us about $6.8 million annually. So, we had about half of that benefit in FY 2020. We really completed that move in May-June time period. So, we saw clearly Q3 and Q4 you know, saw the benefit there. We're continuing to you know look at opportunities if someone leaves the organization, can we put that position in India or do we need to have it in the U.S. and we look at it on a case-by-case basis. And but at the same time, always look at other areas where tasks can be done in India. We've been very pleased with the results of the move; our team there has done a great job. Our team you know here in the U.S. has done a great job working with them and it's really been a successful transition.

Q: Okay, and when we think about the whole virtual acceleration, and I guess this is more your professional and Linda you mentioned folks, IT in the U.K., so when we think about that and then we think about North America, are you seeing any potential opportunities to place workers in a completely virtual setting? And if so, does this open the door to candidates in other geographies?

A: Yeah, absolutely. So, throughout the pandemic, we had a very high percentage of our employees working, working remotely. As you know, folks were not going into the office that has continued in certain areas, depending upon the client. We have had several clients that have come to us and looking to add additional headcount and management level positions, and they're really open to where these folks live. So, they're not looking for them to be in a specific geography. So, I do anticipate that as folks really sort of feel out how this is going to work for their organization, they understand what they're going to do from a remote work perspective and how they're going to operate. I do anticipate we'll see more and more of that.

Q: It's been about six months now since you talked about the partnerships with EmployStream and Sense, helping streamline the recruiting and onboarding, I was just wondering if you could talk to how those are going still and if there's any other partnerships you're exploring?

A: Yes, so I mean, those partnerships have gone very, very well. We continue to expand as we're learning about the capabilities of each of those tools and how we can leverage those best for not only our clients, but our field employees. We continue to gauge the adoption and the end user experience from our own internal colleagues so that we can make sure that we're fine-tuning and making it the best experience that we possibly can. So, we'll continue to tap into what those what those technology partners have to offer. And as I referenced earlier, we're absolutely exploring multiple other types of technology that will help us continue to grow revenue and margin.