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spk04: day and welcome to the Staffing 360 Solutions Year-End Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Terri McInnis, VP of IR at Bibicoff and McInnis. Please go ahead.
spk05: Thank you, Operator. Greetings to all and welcome to the Staffing 360 Solutions Fiscal Q4 Year-End 2021 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation in which management will answer questions previously submitted via email. As a reminder, this call is being recorded. This conference call will contain forward-looking statements within the meaning of the U.S. Federal Securities Laws concerning Staffing 360 Solutions, Inc. The forward-looking statements are subject to a number of significant risks and uncertainties, and actual results may differ materially. Please refer to the company's filings with the SEC, which contain and identify important risks and other factors that may cause staffing 360 solutions actual results to differ from those contained in our forward-looking statements. All forward-looking statements are made as of today, June 30, 2022, and staffing 360 solutions expressly disclaims any obligation to revise or to update any forward-looking statement after the date of this conference call. During these prepared remarks, the company may make reference to certain non-GAAP measures, such as adjusted EBITDA. Where applicable, we have provided reconciliations of these non-GAAP measures to the most directly comparable GAAP measure. It is now my pleasure to introduce Brendan Flood, Chairman, President, and Chief Executive Officer of Staffing360 Solutions. Brendan, please begin.
spk02: Thank you, Terry. And welcome to everyone who has joined us for Staffing360 Solutions Fiscal Q4 and 2021 Year-End Financial Results Conference Call. I'm joined today by Khaled Anwar, our Principal Accounting and Principal Financial Officer. Our much delayed audit is now completed and I'm pleased to speak to you today to briefly review last year's results and our plans for improving upon them and then spend time talking about the brighter horizon before us after our accretive acquisition in May of Headway Workforce Solutions. Headway brings approximately $85 million of revenue and a leading edge proprietary technological platform and delivery methodology critical to the future of national human capital management. Headway sits within our professional staffing U.S. business dream, but we'll also work closely with our commercial staffing business dream. We view Headway as an important value creator for shareholders as it supports and accelerates both our business model and our growth strategy. Although it seems like ancient history now, I think it's worth noting that we successfully navigated the ongoing social and economic vagaries of 2021 and are making a way through those similar conditions in 2022. We've maintained our focus to make the hard choices to continue to position our company for future growth and success. And we now have a materially improving outlook for 2022, improved by our recent acquisition of Headway Workforce Solutions. We continue to make progress across a number of important metrics throughout the fourth quarter of the year, and are now positioned for a particularly strong second half of 2022. There is no doubt about it, 2021 was certainly a challenging year for our industry and for us in particular. We adapted and reacted to the ebb and flow of business and to the differing recovery phases in our markets. We particularly benefited from our early swift and strong reorganization at the onset of the pandemic the lowered overall spending by the company, the capital raises improving our balance sheet, and subsequent meaningful debt reduction. These factors and others combine to leave us optimistic about our ability to deliver materially improved results in 2022.
spk01: We remain optimistic based on our internal progress and the roadmap ahead,
spk02: Both are bolstered by the economic recovery advancements in the United States and the United Kingdom, although we are closely watching the impact of inflationary pressures in both markets. I'm pleased to note that we still see a considerable and increasing pipeline of opportunities in the staffing industry, and M&A deal flow remains active. And of course, as always, an essential and significant priority for us is the continued well-being of our staff, contractors, and clients. We nurture our company culture by continuing to lead with values and lead with a shared purpose. The format of our call today will begin with my brief overview of our financial results, with Khaled providing more detail on the financials. After that, I'll discuss the many reasons for my confidence in the business outlook for both Staffing360 and our industry into 2022 and beyond. I will then address the questions which were submitted to us via email. As outlined in Monday's news release, revenue for 2021 was $197.8 million, a drop of 3.3% year-on-year, but slightly up when excluding First Pro, which was disposed of in September 2020. Gross profit was down 2.7% at $33.9 million, but improved by 8.6% when First Pro is excluded. Net income improved by $23.8 million year-on-year, greatly enhanced by the forgiveness of four PPP loans amounting to $19.6 million, including interest. Another strong contributor to bottom line improvement was the reduction in our debt burden. We have continued to reduce our non-receivables debt and redeemable preference shares, which were approximately $72.3 million in June 2020, down to $9.5 million at the end of 2021 year. As a consequence, our interest burden reduced from $7.2 million in 2020 to $3.9 million in 2021. Overall, we continue to have work to do and are armed with a realistic plan to achieve cash flow break-even and to demonstrate our persistent ability to change, adapt, grow, and prepare for future success. With that, I will hand the call over to Khaled Anwar, our Principal Financial and Accounting Officer, for a further financial update.
spk03: Thank you, Brendan, and good morning, everyone. For the full year fiscal 2021, revenues of $197.8 million decreased by 3.3% from $204.5 million in 2020. This decline was driven by a combination of continued impact of COVID during most of 2021, IR35 in the UK, and divestment of First Pro Business in September 2020. Excluding the divested business, revenues increased just slightly. Gross profit for fiscal 2021 was $33.9 million, posting a decrease of $945,000, or 2.7%. Excluding the divested business, gross profit increased by $2.7 million, or an increase of 8.6%. This was due to increase in direct high revenue by about $0.7 million, or 16%. Gross profit in contract business grew by 2 million, or 7.4%. This is despite the adverse impact of IR35 in the UK. Operating expenses for the year came to 41.2 million, a decrease of 5.6% over last year's amount of 43.6 million. As mentioned earlier, the company aggressively reduced headcount and other discretionary costs like professional fees to bring the base cost structure to a more sustainable level. SG&A, for example, decreased by approximately $2.2 million, or 5.8% from prior year. Operating expense included $3.1 million of goodwill impairment charge to our UK business. The company recognized other income of $19.6 million to receive 100% forgiveness on its four PPP loans. On the other hand, the company recognized the loss of $260,000 on FX remeasurement of intercompany loan compared with a gain of $584,000 in 2020, an unfavorable variance of $844,000 on currency movements. Interest expense for fiscal 2021 declined by $3.3 million for fiscal 2020 as the company aggressively reduced its debt with Jackson Investment Group. The net income for fiscal 2021 came to $8.2 million as compared with a net loss of $15.6 million for fiscal 2020, an increase of $23.8 million. EBITDA of $14.8 million was higher from last year by $19.6 million, primarily due to PPP loan forgiveness. Adjusted EBITDA of $2.4 million was unfavorable to fiscal 2020 by $2.2 million. On the balance sheet side, total long-term debt for the company is now down to only $9.5 million, At the same time, the company has been able to bring its receivables down so that the DSO has come down to only 38 days from 43 days last year, a decrease of six days.
spk00: I will now turn the call back to Brandon. Thank you. You were muted, go ahead.
spk02: Thank you, Caleb. Sorry, apologies, I appear to have been on mute. As we look at our three business streams, we can see that they are broadly performing in line with the markets in which they operate. Revenue and commercial staffing was up 4.3% for the year, where the most of the market was flat. Gross profit improved in that segment by 9.5% as we engaged in a more consultative approach with our clients in relation to the need to recognize pay rate
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