VOLT

Management Statement and Operational Highlights

• 2021 was a year of several financial milestones including achieving year-over-year revenue growth and positive EBITDA each quarter and for the full year, improving gross margins while reducing SG&A, and achieving full year positive net income for the first time in four years.
• Each operating segment (North American Staffing, North American MSP, international) achieved year-over-year growth. North American staffing and North American MSP had year-over-year growth in all four quarters, and international had year-over-year growth in the last three quarters.
• Addressed COVID-19 impacts by adjusting internally, using technology like an AI-powered job board (jobs.volt.com) to enhance candidate and client experience, and preparing for OSHA's Emergency Temporary Standard with an automated solution for vaccination status during onboarding.
• Made investments in technology to drive productivity and efficiency, such as saving recruiters' time with automated surveys and scheduling tools, and rolling out a daily pay option for field employees.

Guidance

• Expect revenue to improve 3% to 4% over last year in the first quarter.
• Gross margin should be consistent with last year with gross margin percentage increasing throughout the year due to lower payroll taxes.
• SG&A should be in the high $35 million range in the first quarter.
• Believe increased revenue should result in improved EBITDA over the prior year quarter. Anticipate full year top line revenue growth, margin expansion, positive net income and continued year-over-year EBITDA improvement for 2022, aiming for an adjusted EBITDA margin of 3%.

Segment Performance

• North American Staffing: Fourth quarter 2021 adjusted revenue was $190.9 million, an increase of $12.3 million or 6.9%. Full year 2021 adjusted revenue was $738.8 million, an increase of $51.7 million or 7.5%.
• International Staffing: Fourth quarter 2021 adjusted revenue was $26.8 million, an increase of $3.3 million or 13.9%. Full year 2021 adjusted revenue was $107 million, up $5 million or 4.9% from the prior year.
• North American MSP: Fourth quarter 2021 adjusted revenue was $10 million, up 7% compared to the prior year. Full year 2021 adjusted revenue was $39.3 million, up $1.3 million or 3.5% from prior year.

Risks

• Potential impacts of the COVID-19 pandemic on business operations, including ongoing labor market tightness and supply chain shortages.
• Uncertainty around the ultimate enforceability or effective date of OSHA's Emergency Temporary Standard, which could pose challenges for compliance, although many clients have already imposed variations of vaccine mandates or testing requirements.

Q: Are there any markets where or specialty skill sets where you find yourself having a stronger candidate pool relative to peers?

A: Linda Perneau says it's a tight labor market across all skill sets, and it's about broadening the net wider to capture available candidates across all skill sets.

Q: General commentary on wage environment and wage inflation?

A: Linda Perneau says there's been a shift in clients accepting wage increases, with mid-single digit wage inflation across skill sets, and it's accretive to Volt as bill rates increase commensurately.

Q: What specifically drove the 30 basis point bump in gross margin?

A: Linda Perneau says it was due to strong direct hire performance across North American Staffing and international.

Q: Sequential downtick in international revenue?

A: Leonard Naujokas says it was due to summer slowdown in some countries with people taking vacations, but revenue increased as the quarter progressed.

Q: Commentary on pricing pressure?

A: Linda Perneau says there are ongoing pricing pressures, but the team has found ways to run more leanly and efficiently, and expects some relief but it remains a challenge.

Q: Sustainability of direct hire business going into 2022?

A: Linda Perneau says it's very sustainable, with the professional search group expected to be a larger contributor in 2022.

Q: Prospects for North American MSP business?

A: Linda Perneau says it's cautiously optimistic with expansion opportunities within existing clients, new wins, and greater collaboration with North American staffing.

Q: Impact of latest COVID wave on top line growth?

A: Linda Perneau says it's built into the guidance, with some impact seen in the last couple of weeks but majority of Q1 having smaller impact, and more impact expected in subsequent quarters.

Q: Reconciliation of flat year-over-year gross margin in Q1?

A: Linda Perneau says it's due to lower government subsidies, pricing pressures, and other moving parts, and will look into it further for specifics.