Labor SMART, Inc Reports Best July Revenue in History
Company Sheds Low-Margin, Higher Risk Business
HIRAM, GA--(Marketwired - Jul 28, 2014) - Labor SMART, Inc. (OTCQB: LTNC) (the "Company"), a leader in providing on-demand blue collar staffing primarily in the southeastern United States, today announced that the Company posted record revenue for July. Additionally, the Company provided some details regarding recent changes implemented in its growth strategy.
Company-wide revenue for the month ended July 25, 2014 was $2,068,532 a 30.4% increase compared to July 2013 revenue of $1,586,351. Among the 14 branches open one year or more at July, 2014 revenue was $1,595,534, essentially flat in a year over year comparison. However, revenue in branches that were open one year or more were impacted by the company's decision to discontinue low-margin, higher risk business, which represented an average of $320,000 in monthly revenue. "We have cleaned out a book of business that does not fit squarely with our new growth plan," said Ryan Schadel, President and CEO of Labor SMART.
He added, "July has been a transition month for Labor SMART as we begin to implement changes that will strengthen the company as a result of our becoming substantially self-insured in 14 states. This is a very important step in positioning Labor SMART for future growth and profitability. Our growth continues, as evidenced by our ability to meet last year's same branch revenues while cutting a sizable amount of unhealthy business from our revenue stream in our older branches. However, our growth strategy and priorities are changing. We have grown rapidly in a very short period of time. In July 2012, our monthly revenue was just $583,228. Two years later, we now consistently deliver revenue above $2 million monthly. We have executed our growth strategy with little regard for profitability, as scale and market share were more important early on. Now, with our new insurance, our risk tolerance has changed and so must our growth strategy. We are implementing a plan to grow even faster, but it will include a focus on driving top line growth, profitability, and shareholder value. As a result, we made the decision to stop carrying business that posed significant risk," Schadel explained.
Mr. Schadel advised that the company is revising its yearly revenue projection to reflect the change. "We expect that revenue for 2014 will come in around $25-27 million with a significant improvement on gross margins and cash flow. Our new projection is to reach gross margins of 23.5% for all of 2014, achieving gross margins of 25% in the fourth quarter compared to our original goal of 22% in the fourth quarter. More importantly, we have reduced our risk exposure from a safety and credit perspective and intend to continue to take a risk adverse position in regards to safety."
Schadel added that the company will provide more details regarding new strategy initiatives in a conference call to be announced later this week. Going forward, the company will also host a quarterly earnings call.