Corporate Resource Services Announces 1st Quarter Results

Corporate Resource Services, Inc. (OTCBB: CRRS), a national provider of temporary and permanent staffing services (the “Company”), today announced results for its first fiscal quarter of 2011.

Our revenue for the first fiscal quarter of 2011 totaled $44.9 million, an increase of $22.7 million, or 116.8%, as compared to the corresponding quarter in fiscal year 2010. The revenue increase was primarily attributable to the acquisition of the businesses of Insurance Overload Services, Inc. (“Insurance Overload”), Corporate Resource Development, Inc. (“CRD”) and Integrated Consulting Group, Inc. (“ICG”) during the last year. These three businesses increased revenues by $1.5 million, $18.6 million and $1.6 million, respectively. ICG’s business was acquired on December 14, 2010, and therefore, ICG’s results are only included during the last two and one-half weeks of the quarter. Additionally, the business of Accountabilities, Inc. (“Accountabilities”) experienced increased revenues in the first fiscal quarter of 2011 of $2.5 million, or 18%, as compared to the comparable period in fiscal 2010.

On August 27, 2010, Insurance Overload acquired Tri-Overload Staffing, Inc (“Tri-Overload”) from a common owner of the Company. Accordingly, this acquisition has been accounted for as a pooling of interest. As a result, all previously reported financial information with respect to the Company has been restated to include the operating results of Tri-Overload. The Company’s revenue for the first quarter of fiscal 2010 was restated to include $6.6 million, which amount is attributable to revenue earned by Tri-Overload during this period.

Our income from operations increased $983,000 to $941,000 during the first fiscal quarter of 2011, from a loss of ($42,000) in the corresponding period of fiscal 2010 (which amount was restated to include income of $476,000 at Insurance Overload). Accountabilities’ income from operations improved $585,000 during our first fiscal quarter of 2011. Income from operations improved at Insurance Overload as well, growing to $1.5 million in the comparable 2011 period. These improvements were offset by losses from operations at CRD and ICG.

Our diluted earnings per share for the first fiscal quarter of 2011 was $0.01, compared to a loss of ($0.02) per share in the first fiscal quarter of 2010.

Commenting on the first quarter results, Jay Schecter, Chief Executive Officer of the Company stated: “We are beginning to see the benefits of the acquisitions we made during the past year, and we continue to realize economies of scale while, at the same time, strengthening our sales programs and team. We are looking forward to our future performance, which will include the results of Diamond Staffing Services, Inc., our wholly-owned subsidiary, which acquired its business in January 2011.”

Mr. Schecter continued, “As we look to the rest of 2011 and into the future, we will continue to focus on building shareholder value by increasing our market share at each operating subsidiary, making opportunistic acquisitions, and continuing to build an appropriate infrastructure to support our business.”

About Corporate Resource Services

Through its five wholly-owned subsidiaries, Accountabilities, Corporate Resource Development, Insurance Overload Services, Integrated Consulting Group and recently acquired Diamond Staffing Services, Corporate Resource Services is a national provider of diversified staffing, recruiting and consulting services, including temporary staffing services, with a focus on light industrial services, the insurance industry and clerical and administrative support. The Company provides its services across a variety of industries and to a diverse range of clients ranging from sole proprietorships to Fortune 1000 companies. The Company conducts all of its business in the United States through the operation of over approximately 53 staffing and recruiting offices.

Safe Harbor Disclaimer: This press release contains “forward-looking statements”. These statements relate to expectations concerning matters that are not historical facts. Such forward-looking statements may be identified by words such as “anticipates,” “believes,” “can," “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of these terms or other comparable terminology. These statements, and all phases of our operations, are subject to known and unknown risks, uncertainties and other factors, including, but not limited to, our ability to satisfy our working capital requirements; our ability to identify suitable acquisition candidates or investment opportunities; our ability to integrate any acquisitions made and fully realize the anticipated benefits of these acquisitions; successor liabilities that we may be subject to as a result of acquisitions; material employment related claims and costs as a result of the nature of our business; our ability to retain key management personnel; the financial difficulty of our clients, which may result in nonpayment of amounts owed to us; significant economic downturns resulting in reduced demand for our services; our ability to attract and retain qualified temporary personnel, who possess the skills and experience necessary to satisfy our clients and other risk factors as identified in our annual report on Form 10-K for the fiscal year ended September 30, 2010, and our other reports filed with the Securities and Exchange Commission, or SEC. Readers are cautioned not to place undue reliance on these forward-looking statements. Our actual results, levels of activity, performance or achievements and those of our industry may be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Except as required by law, we undertake no obligation to update the forward-looking statements. We refer to our Quarterly Report on Form 10Q for the quarter ended December 31, 2010 for additional information regarding the Company’s results of operations, balance sheet, liquidity and working capital and strategy.

(Tables follow)

CORPORATE RESOURCE SERVICES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS
 
December 31, September 30,
2010 2010
(unaudited)
ASSETS
 
Current assets:
Cash $ 395,000 $ 254,000

Accounts receivable – less allowance for  doubtful accounts of $1,669,000 and $473,000, respectively
4,838,000 269,000

Due from financial institution, net of allowance for  chargebacks of $730,000 and $468,000, respectively
1,342,000 1,556,000
Unbilled receivables 2,507,000 2,767,000
Prepaid expenses   179,000   169,000
Total current assets 9,261,000 5,015,000
 
Property and equipment, net 1,091,000 1,078,000
Other assets 719,000 567,000
Intangible assets, net 6,354,000 2,946,000
Goodwill   4,939,000   3,623,000
 
Total assets $ 22,364,000 $ 13,229,000
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable and accrued liabilities $ 6,121,000 $ 3,968,000
Accrued wages and related obligations–due to related party 2,754,000 3,340,000
Borrowings under revolving credit facility 3,059,000

–  
Current portion of long-term debt 2,298,000 1,478,000
Current portion of related party long-term debt 1,009,000 1,009,000
Due to related party   2,382,000   1,994,000
Total current liabilities 17,623,000 11,789,000
 
Long term debt, net of current portion 3,990,000 1,000,000
Deferred Rent   108,000   97,000
Total liabilities   21,721,000   12,886,000
 
Commitments and contingencies
 
Stockholders’ equity:

Preferred stock, $0.0001 par value, 5,000,000  shares authorized; zero shares issued and outstanding

–  

–  

Common stock, $0.0001 par value, 95,000,000 shares authorized;  42,286,000 and 42,186,000 shares issued and 38,029,000 and  37,929,000 outstanding as of December 31, 2010 and September 30,  2010, respectively
4,000 4,000
Additional paid-in capital 6,202,000 6,134,000
Accumulated deficit   (5,563,000 )   (5,795,000 )
Total stockholders’ equity   643,000   343,000
 
Total liabilities and stockholders’ equity $ 22,364,000 $ 13,229,000  
 
 

CORPORATE RESOURCE SERVICES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)
   
Three Months Ended

December 31,2010

December 31,2009
 
Revenues $ 44,864,000 $ 20,696,000
 
Direct cost of producing revenues 365,000 77,000

Direct cost of producing revenues purchased from related parties
  35,362,000   17,633,000
 
Gross profit 9,137,000 2,986,000
 

Selling, general and administrative expenses (including  stock-based compensation of $28,000 and $40,000, respectively)
2,041,000 2,192,000
Selling, general and administrative expenses - related parties 5,939,000 694,000
Depreciation and amortization 256,000 142,000
Other (income)   (40,000 )  
 
Income (loss) from operations 941,000 (42,000 )
 
Interest expense 334,000 136,000
Acquisition expenses 375,000
Loss on debt extinguishments     501,000
 
Net income (loss) available to common stockholders $ 232,000 $ (679,000 )
 
Net income (loss) per common share:
Basic $ 0.01 $ (0.02 )
Diluted $ 0.01 $ (0.02 )
 
Weighted average shares outstanding:
Basic   37,971,000   31,357,000
Diluted   38,274,000   31,357,000

Copyright Business Wire 2010

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