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Edited Transcript of VOLT.A earnings conference call or presentation 13-Jan-21 10:00pm GMT

·30 min read

Full Year 2020 Volt Information Sciences Inc Earnings Call NEW YORK Jan 13, 2021 (Thomson StreetEvents) -- Edited Transcript of Volt Information Sciences Inc earnings conference call or presentation Wednesday, January 13, 2021 at 10:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Herbert M. Mueller Volt Information Sciences, Inc. - Senior VP & CFO * Linda Perneau Volt Information Sciences, Inc. - President, CEO & Director ================================================================================ Conference Call Participants ================================================================================ * Joshua David Vogel Sidoti & Company, LLC - Analyst * Joe Noyons Three Part Advisors, LLC - MD & Senior MD of IDEAS Conferences ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Greetings, and welcome to Volt Information Sciences, Inc.'s Fourth Quarter and Fiscal Year 2020 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to Joe Noyons with Investor Relations. -------------------------------------------------------------------------------- Joe Noyons, Three Part Advisors, LLC - MD & Senior MD of IDEAS Conferences [2] -------------------------------------------------------------------------------- Thank you, Amar, and good afternoon, everyone. Thank you for joining us today for Volt Information Sciences' Fourth Quarter and Fiscal 2020 Earnings Conference Call. On the call today are Linda Perneau, President and Chief Executive Officer; and Herb Mueller, Senior Vice President and Chief Financial Officer. After the market closed this afternoon, the company issued a press release announcing its results for the fourth quarter and fiscal year 2020. The release is available on the company's website at volt.com as well as the EDGAR SEC website filed as a Form 8-K. We have also prepared a presentation this quarter, which is available on the Investor Relations section of the company's website. We believe this provides additional detail for a better understanding of our results for the current reporting period and longer term. Before beginning today's prepared remarks, I would like to remind you that some of the statements made will be forward-looking and are made under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected or implied due to a variety of factors, including, but not limited to, potential impacts of COVID-19 pandemic on our business operation. We refer you to Volt Information Sciences' recent filings with the SEC for a more detailed discussion of the risks that could impact the company's future operating results and financial condition. Also on today's call, management will reference non-GAAP financial measures, which we believe provide useful information for investors. A reconciliation of those measures to GAAP measures are included in the earnings press release issued this afternoon. With that, I would like to turn the call over to Volt's President and CEO, Linda Perneau. Linda? -------------------------------------------------------------------------------- Linda Perneau, Volt Information Sciences, Inc. - President, CEO & Director [3] -------------------------------------------------------------------------------- Thank you, Joe. Welcome to Volt's Fourth Quarter and Full Year Fiscal 2020 Earnings Call. Before we begin, let me take a minute and wish each of you on the call a very happy new year. Although things may have been a bit different this past year, we hope you were able to enjoy a happy and healthy holiday season. Today, I will open the call with commentary on our full year 2020 results, specifically highlights of our performance throughout the pandemic, the impact of our strategic initiatives we have focused on for the last 18 to 24 months and the resulting trends realized underlying our optimism for 2021. Herb will then provide a more detailed overview of our financial performance. I will then conclude with additional commentary on trends we are seeing in the early stages of fiscal 2021, specifically the months of November and December and how we plan to achieve growth and profitability throughout the remainder of the year. I believe it is safe to say that the COVID-19 pandemic in 2020 is the most prolonged and widespread disruption our organization has faced in its 70-year history as the pandemic has profoundly impacted economies, businesses, education, employees and undoubtedly, each of our own personal lives. We have seen industries such as retail, hospitality and aerospace, previously quite resilient, suffer potentially irreparable harm as a result of COVID-19. At the same time, new opportunities utilizing emerging skills have arisen out of the need to ensure employee wellness and safety, and the determination of essential businesses to remain operational. These skills in the areas of health care monitoring and screening, logistics and even food manufacturing and distribution have provided new job opportunities for displaced and unemployed talent. And is where we realized significant growth in the latter half of 2020 as the economy continues to slowly rebound. While we have not seen a repeat of widespread shutdowns and shelter-at-home orders, we have continued to experience more targeted and localized restrictions based on specific country and/or state needs due to COVID outbreak. In the most recent U.S. staffing industry forecast published in September of 2020, the U.S. staffing industry was projected to decline 17% in overall revenue and direct placement search was projected to decline 33% due to the COVID-19 health crisis and related disruptions. I am proud of this determination and resilience demonstrated by every Volt colleague across the globe, allowing us to perform much better in fiscal 2020 than the above referenced industry revenue forecast. Through solid execution of our strategic initiatives despite profound headwinds, including roughly $90 million to $105 million in COVID-related revenue impact, we made substantive improvement in many critical areas of the business. Let me share some of the highlights. Total adjusted revenue for the full year declined 13.4%. Fourth quarter declined 11% and October, the last month of the quarter, declined 8.4%, all when compared to prior year. Overall, we saw a sequential improvement in the rate of decline with the most notable momentum coming from our North American Staffing segment. This segment specifically delivered month-over-month improvement from the low point in May at down 25.3% to ending October at a minus 6.1%. And in the last 2 weeks of October, the North American Staffing segment closed the gap to a 2% decline. We have continued to see strong momentum and performance from this segment in November and December, which we will address in more detail a bit later. Operating with approximately 15% fewer internal colleagues and largely in a work-from-home model, revenue from new business wins in the U.S. increased 33% for full year 2020 compared to full year 2019. Despite a roughly 3-month period between April and June, where there was limited to no buying activity and lingering shutdowns across the country, our teams executed on our aggressive and focused sales strategy resulting in new logo wins as well as several expansion opportunities with existing clients. The retail branch strategy continues to gain momentum and remained resilient throughout the pandemic resulting in revenue being flat to prior year. Completing our second year, we now have every location across the U.S., executing the retail model. This segment accounts for nearly 20% of our overall revenue in North America. This represents more than a 300 basis point increase from the prior year quarter and a more than 200 basis point increase for the full year, with margins 500 basis points higher than our overall gross margin. We leveraged technology in ways we had not done previously, including the introduction of a chatbot for a group of specific clients. Over an 18-week period, the use of this chatbot produced a 263% increase in the number of candidates screened for open job opportunities when compared to a manual approach. And it also reduced time to fill by 30% to 81% depending on the client. This technology gives us the ability to chat with the candidate, ask customized questions and determine whether they will advance in the process all before a recruiter engages. This freed up over 800 hours of recruiter time, significantly reducing time spent on unqualified candidates and ultimately providing bandwidth for them to place these screened candidates and generate margin dollars 13x the actual investment. Overall gross margin came in 30 basis points higher than 2019 despite significant pricing pressures. The teams continued a disciplined pricing strategy on new wins, combined with the strong retail performance, allowing us to offset any short-term reductions implemented for select clients during peaks of pandemic. We swiftly executed aggressive cost savings reduction, including a successful transition of over 130 back office roles to Arctern, our Bangalore, India operation. Overall adjusted operating income, excluding restructuring and impairments, improved every quarter with fourth quarter delivering a positive OI of $3.5 million. Every business unit was profitable each quarter and for the full year. And we generated back-to-back quarters of positive adjusted EBITDA, allowing us to finish essentially breakeven for the year. These results would not be possible without the substantive transformation that has occurred over the last 24 months and of course, without the steadfast dedication from our talented colleagues around the globe. I would like to thank them for their willingness to adapt and their unwavering commitment to Volt throughout a very challenging year. We have shifted our focus forward as we continue our path to growth and profitability in fiscal 2021. We are encouraged by the trends we are seeing early in the first quarter, all of which I will discuss in my wrap-up. But let me now turn the call over to Herb to give a more detailed overview of our results. Herb? -------------------------------------------------------------------------------- Herbert M. Mueller, Volt Information Sciences, Inc. - Senior VP & CFO [4] -------------------------------------------------------------------------------- Thank you, Linda. For this call, we have prepared a presentation, which is available on the IR section of our website. We believe this provides additional detail for a better understanding of our results for the current reporting period and longer term. I will be -- in addition, I will be switching the order and will discuss the full year results first followed by our Q4 results. We believe it's important to speak to the progress we have made since the onset of COVID-19 and the momentum we have seen in the last 6 months since bearing the full effect of COVID in May. As a reminder, fiscal year 2019 had 53 weeks compared to 52 weeks in fiscal 2020. The extra week is equivalent of approximately $18.9 million in total revenue. The GAAP numbers I'll be providing will include the 53rd week. All adjusted numbers will exclude the 53rd week of revenue as well as businesses exited or transitioned from one operating segment to another. The largest impact is the normalizing of the weeks and clearly provides most accurate apples-to-apples view. On a GAAP basis, including the 53rd week in FY '19, revenue for FY '20 was $822.1 million compared to $997.1 million, a 17.6% reduction. Overall, company adjusted revenue was down 13.4% or $127.6 million, primarily due to the estimated $90 million to $105 million in COVID-related revenue impact. You may recall that, in Q1 2020, we began to see promising revenue trends in the latter part of January and into February. However, as the pandemic escalated, revenues across the organization were impacted beginning in early March and reaching the lowest point in May. Through a combination of essential services clients continuing to operate at bearing levels, other customers returning to work, expanding business with existing clients and winning new customers, we started to see revenue rebound in the latter part of May. Our recovery is being predominantly led by our North American Staffing segment, which showed consecutive month-over-month improvement in adjusted average daily revenue when compared to the prior year from June forward. Looking at FY '20 adjusted revenue, our North American Staffing segment reported $689.1 million of adjusted revenue, down 13.9% from a year ago. International came -- segment came in at $95.3 million, down 15.1% from a year ago, and our North American MSP segment was down 1.4%. North American Staffing has seen significant sequential improvement since May. Since that time, the segment has continued to add new logos and increased revenue with core clients. Our International Staffing segment continued to see headwinds due to a difficult environment, primarily in the U.K. The combination of COVID and Brexit has created a challenging environment for regaining revenue lost earlier in the year. We are starting to see signs that it is easing, but challenges remain. Our North American MSP segment was flat for the full year, however, the segment saw larger declines in Q3 and Q4 due to longer lasting impacts from the COVID-19 pandemic. While we expect to see this business return to grow, we anticipate recovery to be a gradual return to the pre-pandemic levels throughout 2021. Slower pandemic recovery from several customers accompanied with a long cycle time of 6 months to a year on new business will result in a gradual return throughout the year. Gross margin for the year was 15.6% compared to 15.3% in the prior year. Excluding a business exited in the prior year and the additional week in 2019, gross margin increased 20 basis points. Gross margin was up for both North American Staffing segment and International Staffing segment. Our North American Staffing segment margin increase was primarily due to more favorable workers' compensation adjustments, lower payroll tax expense as a percentage of direct labor and a mix of higher-margin business resulting from our sales and pricing initiatives. Our International Staffing segment gross margin increased due to a revenue decline in the U.K. offset by increases in Belgium and Singapore. Partially offsetting these increases, our North American MSP decreased 510 bps due to higher percentage of payroll service during the year. It is important to note that all 3 segments continue to contribute positive operating income despite the substantive impact of COVID, with North American Staffing generating $14.3 million, International $1.4 million and MSP $3.1 million. SG&A expense for fiscal 2020 was $137.7 million compared to $157.1 million in fiscal 2019. Adjusted SG&A declined $16.2 million or 10.5%. The decrease was primarily due to strategic cost reductions. Impairment costs increased $16.2 million in fiscal 2020 primarily due to $14.5 million of charges related to the partial impairment of our Orange, California headquarters. The headquarters consist of 4 buildings totaling approximately 200,000 square feet. We've been subleasing 1 of the buildings for 10 years and have an additional 5 years remaining on that agreement. We have now vacated the 2 additional buildings and have consolidated into 1 building, approximately 50,000 square feet. With just over 10 years remaining on our lease, we are actively pursuing multiple options for the 2 vacant buildings as well as the overall campus. We will continue to evaluate our real estate footprint in order to continue to lower our cost. As I've stated before, we're not exiting markets. We continue to successfully support and expand in some markets without having actual brick-and-mortar locations. Restructuring and severance costs decreased $2 million in fiscal 2020, primarily due to $2.1 million of restructuring and severance costs incurred with the exit from our customer care solutions business in fiscal 2019. For fiscal 2020, we reported a GAAP net loss of $33.6 million or $1.56 per share compared to a GAAP net loss of $15.2 million or $0.72 per share in fiscal 2019. The loss during fiscal 2020 included $19.6 million or $0.91 per share of impairment and restructuring costs related to the ongoing cost reduction efforts throughout the company. Adjusted EBITDA for fiscal 2020 was near breakeven at a negative $98,000 compared to a positive $1 million in the prior year, which included $0.7 million in additional income from the extra weeks in fiscal 2019. GAAP revenue was $211.1 million in the fourth quarter of fiscal 2020. Adjusted revenue decreased $26.1 million or 11% year-over-year. As a reminder, the fourth quarter of fiscal 2019 included an additional week. We estimate the revenue decline associated to the impact of COVID-19 to be approximately $35 million for the fourth quarter compared to approximately $45 million last quarter. Nearly all of the COVID impact was in our North American Staffing segment. On a sequential basis, adjusted revenue decline improved from 18.4% in the third quarter to 11% in the fourth quarter. Similar to the third quarter, adjusted revenues improved sequentially throughout the fourth quarter of 2020 with August down 14.8%, September 10.6% and October 8.4%. During Q4 2020, our direct hire line of business continued to show improvement from the impact of COVID. For the quarter, we were down 27% from the prior year quarter, however, we're up 23% sequentially from Q3 2020. November direct hire revenue was down 18% from last year, continuing the positive trend, and December results continue to show improvement. Our North American Staffing segment, which represents 85% of revenue in the fourth quarter is the primary driver for our overall revenue recovery, with August down 14.2%, September down 9% and October only showing a 6.1% decline for this segment. We continue to have this favorable trend with November down only 1.3% and December up year-over-year. Operating income in the fourth quarter of fiscal 2020 was $9 million. The International Staffing segment reported revenue of $23 million, which represented 11% of total revenue in the fourth quarter and operating income of $0.3 million. Adjusted revenue decreased by 22% year-over-year primarily due to a 47% decline in contractor headcount in the U.K. United Kingdom economy has been heavily impacted by COVID, which has slowed our recovery, and we anticipate continued challenges in the short term. Offsetting the challenges in the U.K. was our performance in [VCG Europe] primarily due to an increase in refer business previously included in U.K. staffing. At 4% of total revenue, North American MSP revenue was $9.4 million with an operating income of $0.9 million. Adjusted revenue decreased 13.6% during the fourth quarter. The decrease is primarily attributable to the impact of COVID-19 headcount reductions partially offset by expansion with existing clients and the incremental revenue associated with certain clients shifting into the segment. Gross margin for the fourth quarter was 16.2% compared to 16.6% in the year ago quarter. The decline in gross margin was primarily due to the North American MSP lower managed margins and onetime favorable adjustments in the prior period. During the extremely competitive environment, we are pleased that we've been able to hold margins, and we expect this to continue until we get past the current COVID environment. We do, however, expect gross margins in the first quarter to drop sequentially following historical trends as we expect -- experience higher holiday pay and the reset of payroll taxes in January. SG&A expense for the fourth quarter was $30.7 million, compared to $39.9 million in the fourth quarter of fiscal 2019. Adjusted SG&A declined $6.5 million or 17.5%. The decrease was primarily due to strategic cost reductions, COVID-19 restrictions on travel and working remotely, including $4 million in labor and related costs due to lower headcount and a $1.3 million decline in noncapitalized IT professional fees, $0.6 million in lower facility costs, and $0.5 million decrease in travel expense. In addition, other professional fees declined by $0.8 million. These decreases were partially offset by a $486,000 increase in expenses due to the elimination of the deferred real estate gain offset under the new lease accounting rules. Impairment costs increased $14.3 million in the fourth quarter of fiscal 2020, primarily due to $14.5 million of charges relating to the partial impairment of the Orange, California facility I discussed earlier. Restructuring and severance costs decreased $1.4 million in the fourth quarter fiscal 2020. The prior year quarter included charges related to the change in executive management. Operating income for the quarter was a negative $11.5 million. Excluding impairment and restructuring, however, OI would have been a positive $3.5 million, driven by the items mentioned above. Adjusted operating income for North American Staffing segment was $9 million compared to $6.4 million a year ago. Q4 continued the positive sequential trend for the year. As a reminder, Q1 was $0.1 million, Q2 $2.6 million, and Q3 was $2.7 million. For the fourth quarter of fiscal 2020, we reported a GAAP net loss of $12.5 million or $0.58 per share compared to a GAAP net loss of $0.7 million or $0.04 in the fourth quarter of fiscal 2019. The loss during the fourth quarter of 2020 included $15 million or $0.69 per share of impairment and restructuring costs related to the ongoing cost reduction efforts throughout the company. Excluding the impairment and restructuring costs, earnings per share would have been $0.11. Adjusted EBITDA for the fourth quarter was $5.9 million, a $1.1 million improvement from the prior year quarter and a $4.9 million improvement sequentially. This is the second quarter in a row where we've achieved sequential improvement. Moving on to a few key items from cash flow and the balance sheet. At the end of fiscal 2020, we had $38.6 million in cash and equivalents, an additional $20.7 million in restricted cash and short-term investments, an increase of $17.8 million combined from the prior year and $4.1 million increase from the prior quarter. Our long-term debt remained the same as last quarter at $60 million, and total available liquidity increased from $16.2 million in July to $24 million in October as a result of deferred payroll tax payments under the CARES Act. As a reminder, through the passage of the CARES Act legislation in March, we were able to defer the payment of the social security portion of our calendar 2020 payroll taxes. As a result, $26.2 million of employer payroll taxes were deferred with 50% due by December 31, 2021, and the remaining 50% by December 31, 2022. This action provides greater financial flexibility for Volt over the next 12 to 24 months. We anticipate paying this from cash flows generated from the business in the upcoming years. We generated $5.1 million in cash flow from operations in the fourth quarter of fiscal 2020 with capital expenditures of $1.3 million. In December, we extended our credit facility with DZ Bank through January 2024. In addition, we reduced restrictions on availability of AR for a certain customer as well as minor adjustments on the covenants. Now I'd like to take a minute and update you on our cost-saving efforts throughout the year. Using FY '19 as a baseline, adjusted for onetime changes, we had an FY '20 trend towards $159.4 million in SG&A. During FY '20, we furloughed employees, reduced compensation, cut back on outside services resulting in onetime savings of $4.7 million during the year, which will not carry over into FY '21. We also made permanent reductions in headcount, professional fees and real estate that reduced $18.2 million in FY '20 and will gain an additional benefit of $11.6 million in FY '21, totaling a $29.8 million reduction from FY '19. Looking towards the first quarter, we're closing the gap on year-over-year decline. Adjusted revenue for November was down 3.3%, and December revenue was up. We expect gross margin percent to be down slightly from last year as a result of lower direct hire revenue. The trend should be consistent with FY '20 with gross margin percent increasing throughout the year as a result of lower payroll taxes. SG&A should be in the $34 million to $35 million range, a sequential increase from Q4 as a majority of our year-end audit expense occurs in the first quarter, though this still represents a substantial reduction from the prior year. This, coupled with our favorable revenue trends, creates a significant opportunity for us to achieve an operating income and EBITDA improvement over the prior year quarter. I will now turn the call back over to Linda. -------------------------------------------------------------------------------- Linda Perneau, Volt Information Sciences, Inc. - President, CEO & Director [5] -------------------------------------------------------------------------------- Thank you, Herb. As we look at fiscal 2020 as a whole, we believe there is a path to positive revenue growth and significantly improved adjusted EBITDA for the full year. The path consists of growing revenue through a combination of continued expansion opportunities within existing clients as well as winning new logos, improving our gross margin through focused efforts on higher-margin business, accountability and execution on direct hire, driving efficiency and effectiveness in all processes, and maintaining pricing discipline as appropriate. And finally, we will continue our aggressive cost discipline, investing to fuel growth, expansion and delivery support where necessary, simultaneously identifying additional strategic reductions that can be achieved without impacting ability to meet client demand. As Herb mentioned, early trends are encouraging as we are seeing continued momentum, most notably within our North American Staffing segment. This segment, specifically, finished November down approximately 1.3% from a year ago, and preliminary results for December show positive top line growth on a year-over-year basis. In order to not only maintain but also accelerate the existing momentum across all business units, we will be continuing strategic investments, focusing on specialties designed for optimum scope and success and expanding use of technology to capitalize as markets continue to rebound. Given the success of the chatbot technology, we will be expanding the usage of this tool to a broader base of clients before the end of fiscal Q1 2021. We anticipate, once implementation and adoption are complete, we will realize an additional uplift in connecting more field employees with our impressive existing client portfolio and those new clients we will add throughout the year. Expansion of our retail branches generating higher-margin business will continue immediately with additional investments in a select handful of markets with ongoing markets added in subsequent quarters. In order to capitalize on larger sales opportunities, we will be expanding our national sales team in the U.S. focused on industries with the most robust needs in geographies that will prevail at attracting, placing and retaining field employees. Having recently completed the build-out of the sales team for MSP, we are focusing on restructuring and realigning resources in our international MSP team to maximize existing client expansion in addition to securing new opportunities. We have strategically selected 3 specialties as key areas of focus in the U.K., IT, engineering and life sciences, due to the robust needs and our existing ability to provide quality talent in these areas. This provides a more disciplined expert approach resulting in targeted sales activity and more rapid placements. Overall, we believe successful execution across these areas will lead to full year top line growth and positive adjusted EBITDA in fiscal 2021. We acknowledge that the complete turnaround has not happened as quickly as any of us would have preferred. There is no denying, however, since introducing our current operating strategy 2 years ago, we have made substantial progress in many critical areas of the business, including our financial performance. The pandemic and resulting business impact didn't bring us to our knees. Rather, it demonstrated our resilience, determination and dedication to our valued clients, field employees and each other. The efforts and progress our teams across the globe has made in the face of multiple challenges have set the stage for us to achieve an adjusted EBITDA margin of 3% in 3 years. We remain steadfast in our commitment to deliver both top line growth and sustained profitability and ultimately, increasing shareholder value. We would like to thank our valued long-term shareholders for your continued support and our more recent investors who have recognized the progress being made and the substantive upside potential that exists. I'd also like to thank our clients, our field employees working at our clients on behalf of Volt, our Board of Directors and, of course, our Volt colleagues. Although lingering disruption continues, we believe the worst of the pandemic is behind us; and together, we will emerge as a stronger organization. I will now open the call for questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) And our first question comes from Josh Vogel with Sidoti & Company. -------------------------------------------------------------------------------- Joshua David Vogel, Sidoti & Company, LLC - Analyst [2] -------------------------------------------------------------------------------- I guess my first question is, when we look at the adjusted revenue decline for fiscal '20 down 13%, don't want to get too much into the weeds, but maybe if -- can you just give a little bit more [premier] with like how much is the existing base count and then quantify the expansion with other existing lines in the new business that would help to offset that? -------------------------------------------------------------------------------- Herbert M. Mueller, Volt Information Sciences, Inc. - Senior VP & CFO [3] -------------------------------------------------------------------------------- Yes. You broke up on me just a little bit in there. But basically, if I picked it up right, the expansion of new business versus the recovery impact. And again, we've had substantial amount of gains on the new logos that we've been in. We've gotten -- we've gained a good bit of new business that has really offset the -- partially offset some of the loss that we've had. So that's continuing year-over-year. We were up, as Linda mentioned, on the amount of new business. So that's been significant as well. -------------------------------------------------------------------------------- Joshua David Vogel, Sidoti & Company, LLC - Analyst [4] -------------------------------------------------------------------------------- All right. Great. And Linda, you were talking about some of the new opportunities that have arisen out of the need to ensure employee wellness, safety. Can you quantify how much revenue is coming from or opportunity you see when we think about monitoring and screening, logistics and you even mentioned food manufacturing, distribution? I'm just curious what piece of the pie is coming from those opportunities today. -------------------------------------------------------------------------------- Linda Perneau, Volt Information Sciences, Inc. - President, CEO & Director [5] -------------------------------------------------------------------------------- Yes. I mean what I can tell you, Josh, is that a very small percentage of the new business has come from the -- what we'll call sort of related to COVID opportunities. The majority of the new business is coming from a focus on those areas that are expanding like food and distribution and logistics, so a lot of those areas have been expanding. A lot of them have robust needs. Those are areas that we have really capitalized on and represents the largest percentage of our new business. -------------------------------------------------------------------------------- Joshua David Vogel, Sidoti & Company, LLC - Analyst [6] -------------------------------------------------------------------------------- All right. Great. Really impressive with the success using a chatbot, and I know that you plan to further roll that out. Are there any other technologies, digitally enabled technologies that you're exploring to facilitate onboarding and deployment? -------------------------------------------------------------------------------- Linda Perneau, Volt Information Sciences, Inc. - President, CEO & Director [7] -------------------------------------------------------------------------------- Yes, there's multiple, right. So we're constantly looking at what's the latest and greatest out there in the market, what is it that will specifically help our clients, be advantageous for our clients, make the lives of our field employees easier, the lives of our branch teams easier. So we are -- we consistently are looking at multiple tools. We've generally opted to take an approach of piloting them in small geographies, in certain geographies or with specific clients. That gives us the agility and the flexibility to kind of perfect it and make sure that it's the right tool for us, and we'll continue to make investments in that area as we move through the year. -------------------------------------------------------------------------------- Joshua David Vogel, Sidoti & Company, LLC - Analyst [8] -------------------------------------------------------------------------------- All right. Shifting gears if I can. You're talking about moving the jobs to India. I think you said there was 130 back-office positions. And can you maybe quantify or discuss the cost benefits and sustainability of having those functions overseas? And then is this -- are you done there? Or is there more opportunity? -------------------------------------------------------------------------------- Herbert M. Mueller, Volt Information Sciences, Inc. - Senior VP & CFO [9] -------------------------------------------------------------------------------- Yes. A couple of things, Josh. We -- moving those jobs saves us about $6.8 million annually. So we had about half of that benefit in FY '20. We really completed that move in the May-June time period, so we saw -- clearly, Q3 and Q4 saw the benefit there. We're continuing to look at opportunities. As someone leaves the organization, can we put that position in India? Or do we need to have it in the U.S.? We look at it on a case-by-case basis and -- but at the same time, always look at other areas where tasks can be done in India. We've been very pleased with the results of the move. Our team there has done a great job. Our team here in the U.S. has done a great job working with them, and it's really been a successful transition. -------------------------------------------------------------------------------- Joshua David Vogel, Sidoti & Company, LLC - Analyst [10] -------------------------------------------------------------------------------- Okay. And when we think about the whole virtual acceleration -- and I guess this is more relevant with your professional offerings, and Linda, you mentioned about focusing on IT and engineering in the U.K. So when we think about that and then we think about North America, are you seeing any potential opportunities to place workers in a completely virtual setting? And if so, does this open the door to candidates in other geographies? -------------------------------------------------------------------------------- Linda Perneau, Volt Information Sciences, Inc. - President, CEO & Director [11] -------------------------------------------------------------------------------- Yes, absolutely. So throughout the pandemic, we had a very high percentage of our employees working remotely as folks were not going into the office. That has continued in certain areas depending upon the client. We have had several clients that have come to us and looking to add additional headcount and management level positions, and they're really open to where these folks live, so they're not looking for them to be in a specific geography. So I do anticipate that as folks really sort of feel out how this is going to work for their organization, they understand what they're going to do from a remote work perspective and how they're going to operate, I do anticipate we'll see more and more of that. -------------------------------------------------------------------------------- Joshua David Vogel, Sidoti & Company, LLC - Analyst [12] -------------------------------------------------------------------------------- All right. Great. I just want to sneak one more in. It's been about 6 months now since you talked about the partnerships with EmployeeStream and Sense, helping streamline the recruiting and onboarding. I was just wondering if you could talk to how those are going still and if there's any other partnerships you're exploring. -------------------------------------------------------------------------------- Linda Perneau, Volt Information Sciences, Inc. - President, CEO & Director [13] -------------------------------------------------------------------------------- Yes. So I mean those partnerships have gone very, very well. We continue to expand as we're learning about the capabilities of each of those tools and how we can leverage those best for not only our clients but our field employees. We continue to gauge the adoption and the end user experience from our own internal colleagues so that we can make sure that we're fine-tuning and making it the best experience that we possibly can. So we'll continue to tap into what those technology partners have to offer. And as I referenced earlier, we're absolutely exploring multiple other types of technology that will help us continue to grow revenue and margins. -------------------------------------------------------------------------------- Operator [14] -------------------------------------------------------------------------------- Ladies and gentlemen, we have reached the end of the question-and-answer session. I'd now like to turn the call back to Linda Perneau for closing remarks. -------------------------------------------------------------------------------- Linda Perneau, Volt Information Sciences, Inc. - President, CEO & Director [15] -------------------------------------------------------------------------------- Thank you. So we appreciate your participation in today's call. Thanks so much, and we certainly appreciate your continued interest in Volt. We look forward to speaking with you again when we report our fiscal first quarter 2021 results in March. Thanks. -------------------------------------------------------------------------------- Operator [16] -------------------------------------------------------------------------------- This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great evening all.