Volt Information Sciences, Inc. Q2 FY2021 earnings call

• Revenue for Q2 2021 was $221.1 million, up 7.1% YOY. Adjusted for currency, overall revenue up 5.9%.
• Gross margin improved to 16.4% from 15.6% YOY, driven by North American staffing and international segments.
• Direct hire revenue in North American staffing was up 37.4% YOY and exceeded Q2 2019 by 7.5%.
• Retail branch network revenue grew over three times enterprise clients' rate this quarter, retail represents ~20% of revenue.
• Hired a National Director of Professional Search to expand executive search capabilities, with fees 4-5x higher than general staffing.

For the second quarter of 2021, the North American staffing segment reported adjusted revenue of $184.3 million, an increase of 6.3% from the prior year. The international staffing segment had adjusted revenue of $27.9 million, up $4.3 million from the prior year, a 14.7% increase. The North American MSP segment had adjusted revenue of $9.8 million, a slight increase from the prior year. The North American staffing segment's 6.3% growth is due to new business wins and client expansion. International staffing grew primarily from managed service business and direct hire. North American MSP saw slight growth with payroll offsetting managed service declines.

• Herb Mueller mentioned upping Q3 SG&A spend due to investments in direct hire, sales functions, and technology. Expect to ease back into investments after cutting back over 12 months. Intend to maintain SG&A levels longer term and find additional savings next year.

• Pervasive talent shortage across all clients and skill sets/locations. COVID impacts still affecting business with some clients not recovered. 25 states rolling back $300 unemployment benefits, though impact on revenue is not huge and state enforcement of work requirements is a factor.

Q: Josh Vogel asked about client base facing talent challenges and tough end markets.

A: Linda Perneau said all clients face talent challenges, pervasive across board.

Q: Josh Vogel asked about wage bill pay spreads and Q3 investment.

A: Linda explained wage increases passed along as commensurate bill rates; Herb said SG&A spend will increase for direct hire, sales, tech investments.

Q: Mike Hughes asked about Q3 revenue expectations.

A: Herb Mueller said Q3 revenue expected up 12%-15% YOY, noting holiday impacts.

Q: Mike Hughes asked about labor challenges and fill rates.

A: Linda Perneau said fill rates became more challenging but year-to-date placements up 25% despite challenges.

Q: Mike Hughes asked about state rollbacks in unemployment and impact.

A: Herb Mueller said no significant impact seen yet; Linda added proactively reaching out to candidates.

Q: Mike Hughes asked about sublease of corporate headquarters.

A: Herb Mueller said progress but nothing to announce yet, market value up in Southern California