Executive Summary

Q3 2022 delivered strong top-line growth: revenue rose 39.2% to $66.1M (44.3% constant-currency), with gross profit up 28.1% to $12.3M; adjusted EBITDA improved to $3.1M from $1.5M YoY, reflecting Headway integration benefits and margin progress .
GAAP profitability was modest: operating income of $0.5M and net income of $1.0M, versus prior-year net income inflated by $9.5M PPP loan forgiveness; diluted EPS was $0.43 vs $6.89 last year due to PPP comps .
Management highlighted structural improvements: fixed-term debt reduced to $9.4M from ~$70M in 2020 and U.S. ABL facilities consolidated to extend maturity into 2024 and lower borrowing costs, supporting future cash flow and growth .
No formal quantitative guidance was issued; tone was constructive with expectations for continued revenue growth and margin improvement, with integration savings of ~$1.8M on track from Headway .

What Went Well and What Went Wrong

What Went Well

Revenue growth accelerated with Q3 revenue at $66.1M (+39.2% YoY; +44.3% cc), driven by seasonally strong period and first full-quarter contribution from Headway Workforce Solutions .
Adjusted EBITDA improved to $3.1M vs $1.5M YoY, reflecting integration synergies and operational execution; management emphasized “paradigm changing service delivery approach” and margin progress .
Capital structure progress: fixed-term debt down to $9.4M (from ~$70M in 2020) and U.S. ABL consolidation to extend maturities into 2024 and reduce borrowing costs, positioning for scalability .

What Went Wrong

Comparability issues: prior-year PPP loan forgiveness of $9.5M inflated Q3 2021 EBITDA ($10.5M) and EPS ($6.89), obscuring underlying YoY trends on GAAP metrics; excluding PPP, the company showed improvement but headline YoY comps appear weaker .
Currency headwinds: GBP/USD movements adversely impacted translation of UK results (management quantified a $54K adjusted EBITDA translation headwind in H1; Q3 saw continued FX pressure) .
UK demand variability: certain UK clients slowed due to project evaluations and pending government contracts, requiring cost actions (~GBP 500k annualized) and implying a multi-quarter recovery path .

Financial Results

Consolidated Performance vs Prior Periods and Year-Over-Year

Metric	Q3 2021	Q2 2022	Q3 2022
Revenue ($USD Millions)	$47.5	$59.1	$66.1
Gross Profit ($USD Millions)	$9.6	$10.5	$12.3
Gross Profit Margin %	20.2% (=$9.6/$47.5)	17.8% (=$10.5/$59.1)	18.6% (=$12.3/$66.1)
Operating Income ($USD Millions)	$0.47	N/A (not disclosed in call)	$0.50
EBIT Margin %	1.0% (=$0.47/$47.5)	N/A	0.8% (=$0.50/$66.1)
Net Income ($USD Millions)	$8.7 (includes $9.5M PPP forgiveness)	N/A (not disclosed in call)	$1.0
Net Income Margin %	18.3% (=$8.7/$47.5; PPP-influenced)	N/A	1.5% (=$1.0/$66.1)
Diluted EPS ($USD)	$6.89	N/A (see Q2 10-Q)	$0.43
EBITDA ($USD Millions)	$10.5 (PPP-influenced)	N/A	$3.0
Adjusted EBITDA ($USD Millions)	$1.5	$1.438	$3.1

Notes:

Q2 2022 operating income, net income, EPS were not specified on the call transcript; see Q2 2022 10-Q for full GAAP details (filed 2022-08-23) .
PPP forgiveness ($9.5M in Q3’21) materially affected YoY comparability for EBITDA and EPS .

Sequential Trend View (Q2 2022 → Q3 2022)

Revenue increased from $59.1M to $66.1M (+11.8%), reflecting seasonality and Headway contribution .
Gross profit rose from $10.5M to $12.3M (+17.2%); margin improved from 17.8% to 18.6% (+80 bps) .
Adjusted EBITDA increased from $1.438M to $3.1M, driven by integration savings and operational execution .

Segment / Contribution (where disclosed)

Item	Q2 2022	Q3 2022
Headway Revenue Contribution ($USD Millions)	$11.5	Not disclosed (first full quarter cited qualitatively)
Headway Gross Profit Contribution ($USD Millions)	$1.3	Not disclosed (seasonality noted)

KPIs

KPI	Value	Period
Adjusted EBITDA ($USD Millions)	$3.1	Q3 2022
EBITDA ($USD Millions)	$3.0	Q3 2022
TTM Adjusted EBITDA ($USD Millions)	$5.7	TTM to Oct 1, 2022
TTM Adjusted Gross Profit ($USD Millions)	$35.9	TTM to Oct 1, 2022
TTM Adjusted EBITDA as % of Adjusted GP	10.4%	TTM to Oct 1, 2022
Operating Leverage (TTM)	Derived from growth of Adj. EBITDA vs Adj. GP (company KPI definition)	TTM

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue, Margins, EPS	FY 2022 / Q4 2022	None issued	None issued	Maintained: No formal quantitative guidance provided

Management qualitative outlook: “anticipate continued revenue growth and margin improvements” with ~$1.8M integration savings on track from Headway; ABL facility consolidation to extend maturity to 2024 and lower borrowing costs .

Earnings Call Themes & Trends

Note: No Q3 2022 earnings call transcript located; themes below reflect Q2 2022 call and Q3 2022 press release.

Topic	Previous Mentions (Q2 2022)	Current Period (Q3 2022)	Trend
AI/Technology initiatives (CRM consolidation)	Implementing single U.S. CRM (AvionteBOLD) to double candidate access; aggressive go-live schedule; remote onboarding to reduce costs	Continued emphasis on “paradigm changing service delivery approach” and operational efficiency; specific CRM progress not detailed in press release	Continuing execution; digital enablement underpinning margin gains
Integration savings (Headway)	~$1.8M integration savings realized; more to come with system/vendor consolidation	First full-quarter Headway contribution; $1.8M integration savings “on track”	Scaling benefits materializing; savings tracking to plan
Macro/FX impacts	GBP/USD translation headwind; adjusted EBITDA impacted by ~$54K YTD	Continued FX translation pressure implied; constant-currency growth cited (+44.3%)	FX headwinds persist; cc reporting mitigates
Regional trends (UK)	Two clients slowed; cost actions (~GBP 500k annualized) to improve productivity; recovery expected over “couple of quarters”	UK specifics not quantified; continued margin improvements referenced	Stabilization expected; recovery underway but multi-quarter
Capital structure & liquidity	Working to renew/migrate ABL facilities (MidCap, HSBC, White Oak); maturities addressed, diligence ongoing	U.S. ABL facility consolidation complete; extends maturity to 2024 and lowers borrowing costs; fixed-term debt reduced to $9.4M	De-risking balance sheet; improved financing terms
Product/brand development	Launch of Butler, Bridge & May in UK; early results “better than expected”	Not discussed in Q3 press release	Early traction; monitoring rollout

Management Commentary

“Our paradigm changing service delivery approach continues to gain momentum in the market, delivering strong revenue growth and significant margin improvements in the third quarter.” — Brendan Flood, Chairman, CEO and President .
“This quarter also marked the first full quarter of contribution from our recent acquisition of Headway Workforce Solutions… on track to implement $1.8M of wide-ranging integrations savings.” .
“We have reduced our fixed term debt to $9.4M from a high of $70M in 2020 and… consolidated our U.S. asset-based lending facility, which will extend maturity into 2024 and significantly lower borrowing costs.” .
“Our buy-integrate-build strategy is beginning to pay dividends, and we anticipate continued revenue growth and margin improvements…” .

Additional operational detail (Q2 call):

“We delivered $1.438M adjusted EBITDA… Headway provided $140,000… integration savings of $1.8M will flow through the second half and beyond.” .
“Implementing a single CRM… AvionteBOLD… more than doubles our candidate database… reducing brick-and-mortar in favor of hubs and remote onboarding.” .

Q&A Highlights

UK revenue softness and recovery path: FX explained ~$1.7M of YoY decline; project/government contract timing drove demand variability; cost actions (~GBP 500k) implemented; recovery expected over a couple of quarters .
Headway margins: Long-term average margin expected ~10% given seasonality (e.g., teacher roles hibernate in summer), with employer-of-record mix influencing quarterly swings .
Debt maturities/ABL facilities: Active work with White Oak/MidCap/HSBC; diligence progressed; facilities continue to run; subsequent Q3 update confirms U.S. ABL consolidation and extended maturity .
Share buybacks/insider purchases: No buyback due to low float; insider purchases constrained by possession of MNPI during acquisition and financing processes .
New brand launch: Butler, Bridge & May launched in UK for professional admin roles; early results better than expected, aiding cross-brand opportunities .

Estimates Context

S&P Global consensus estimates for Q3 2022 (revenue and EPS) were unavailable due to missing CIQ mapping for STAF in the SPGI database. As a result, we cannot provide a beat/miss assessment versus Wall Street consensus for this quarter. Values would have been retrieved from S&P Global if available.

Key Takeaways for Investors

Strong sequential and YoY revenue growth with improving gross margins and adjusted EBITDA signal operational momentum entering seasonally strong periods; Headway integration is contributing to scale benefits .
GAAP YoY comparisons are distorted by prior-year PPP forgiveness; focus on adjusted metrics and constant-currency growth to assess underlying trends .
Balance sheet de-risking and ABL consolidation extend maturities to 2024 and reduce borrowing costs, supporting cash generation and future acquisition capacity .
FX remains a headwind; UK demand variability is being actively managed with cost actions and a multi-quarter recovery trajectory, suggesting near-term margin sensitivity to mix and currency .
Digital transformation (AvionteBOLD CRM, remote onboarding) should enhance candidate sourcing and productivity, underpinning margin improvement initiatives through 2023 .
With no formal guidance and unavailable consensus estimates, near-term trading will hinge on continued execution, Headway synergy realization, and updates on financing terms and UK pipeline stabilization .
Watch for Q4 seasonal uplift, additional integration savings disclosures, and any segment/geographic detail to validate margin trajectory and cross-selling progress .

Appendix: Detailed Financial Tables

Income Statement Highlights

Metric	Q3 2021	Q2 2022	Q3 2022
Revenue ($USD Millions)	$47.5	$59.1	$66.1
Cost of Revenue ($USD Millions)	$37.9	N/A	$53.8
Gross Profit ($USD Millions)	$9.6	$10.5	$12.3
SG&A ($USD Millions)	$8.5	N/A	$11.0
D&A ($USD Millions)	$0.69	N/A	$0.79
Operating Income ($USD Millions)	$0.47	N/A	$0.50
Interest Expense ($USD Millions)	$1.01	N/A	$1.13
Net Income ($USD Millions)	$8.71 (PPP-influenced)	N/A	$1.03
Diluted EPS ($USD)	$6.89	N/A	$0.43

Non-GAAP Reconciliation (Quarterly/TTM)

Metric	Q3 2021	Q2 2022	Q3 2022	TTM (Oct 1, 2022)
EBITDA ($USD Millions)	$10.54 (PPP-influenced)	N/A	$3.01	$(4.07)
Adjusted EBITDA ($USD Millions)	$1.49	$1.44	$3.08	$5.71
Adjusted GP ($USD Millions)	N/A	N/A	N/A	$35.87
Adjusted EBITDA / Adjusted GP (%)	N/A	N/A	N/A	10.4%

Disclosure: Non-GAAP definitions include exclusions for interest, taxes, D&A, acquisitions/capital raising/non-recurring expenses, non-cash charges, goodwill impairment, re-measurement gains, restructuring, PPP forgiveness, other income, and non-recurring legal/professional fees .

Staffing 360 Solutions, Inc. (STAF)·Q3 2022 Earnings Summary