BGSF, Inc. (NYSE: BGSF), a growing provider of consulting,
managed services, and professional workforce solutions, today
reported financial results for the second fiscal quarter ended June
30, 2024.
Q2 2024 Sequential Comparison to Q1 2024:
- Revenues were $68.1 million for Q2, compared to $68.8 million
for Q1.
- Property Management segment revenues increased 4.8% from Q1,
mainly due to normal seasonal fluctuations.
- Professional segment revenues declined 4.1% from Q1, with
project completions outpacing the timing of new engagement
starts.
- Gross profit was $23.6 million, up from $23.4 million in Q1,
primarily due to higher sales in Property Management.
- Net loss was $0.8 million, or $0.07 per diluted share for Q2
and Q1.
- Adjusted EBITDA1 was $2.6 million (3.8% of revenues) in Q2 from
$2.7 million (4.0% of revenues) in Q1.
- Adjusted EPS1 was $0.07 for Q2 compared with $0.07 for Q1.
SUMMARY OF FINANCIAL RESULTS
(dollars in thousands)
(unaudited)
For the Thirteen Week Periods
Ended
June 30, 2024
July 2, 2023
March 31, 2024
Revenue:
Property Management
$
25,726
$
31,071
$
24,547
Professional
42,411
49,729
44,218
Total
$
68,137
$
80,800
$
68,765
Gross profit / Gross profit
percentage:
Property Management
$
9,596
37
%
$
12,652
41
%
$
9,343
38
%
Professional
14,034
33
%
16,922
34
%
14,095
32
%
Total
$
23,630
35
%
$
29,574
37
%
$
23,438
34
%
Operating income
$
81
$
5,050
$
415
Net (loss) Income
$
(761
)
$
2,604
$
(792
)
Net (loss) income per diluted share
$
(0.07
)
$
0.24
$
(0.07
)
Non-GAAP Financial Measures:
Adjusted EBITDA1
$
2,603
$
7,500
$
2,741
Adjusted EBITDA Margin (% of revenue)1
3.8
%
9.3
%
4.0
%
Adjusted EPS1
$
0.07
$
0.37
$
0.07
1
Adjusted EBITDA and Adjusted EPS are
non-GAAP financial measures as defined and reconciled below.
Beth A. Garvey, Chair, President, and CEO, said, “Despite weak
revenue and operating trends during the second quarter, we believe
that recent project wins will begin generating additional revenue
in the second half of 2024. In the first half of the year, we
reduced headcount and lowered fixed costs to align with both our
revenues and our strategic growth plans.
“Our territory mapping strategy, which derived out of our
Salesforce platform, in Property Management is showing early
positive results between the first and second quarters, and we are
confident in our strategy to deploy in additional markets in the
coming months. Although the Professional segment has experienced a
slowdown in customer spending due to macroeconomic headwinds and
sustained higher interest rates, we are seeing significant growth
in our managed services and consulting engagements. Notably, during
the second quarter, new contract wins outpaced contract ends by
approximately 25%. We won one of the most significant single
projects in our company’s history—a major IT transformation project
for a large international client, which will start contributing to
our financials in the third quarter.
“While our first-half results do not fully capture the momentum
from these recent business wins, we anticipate a strong revenue
ramp-up in the Professional division starting in the third quarter
and continuing into the fourth. Additionally, we are seeing an
increase in our permanent placement activity in our finance &
accounting services, with recent double-digit growth, which we
believe is a positive sign for the future.
“We are cautiously optimistic about what the second half of 2024
will bring.
“Regarding the review of strategic alternatives that we
announced in May, the Board and I continue to evaluate options to
maximize shareholder value. While there is no update at this time,
the process is ongoing, and we look forward to sharing the results
in the future. I want to extend my gratitude to all our
stakeholders—employees, clients, partners, and investors—for their
continued support and belief in our vision at BGSF.
“Lastly, I am pleased to announce that we have been recognized
in Staffing Industry Analysts' 2024 U.S. rankings, placing us in
the top 50 for U.S. IT staffing firms and the top 100 for overall
U.S. staffing firms. We remain committed to delivering value and
excellence to our customers and strategic partners.” concluded
Garvey.
Conference Call
BGSF will discuss its second quarter 2024 financial results
during a conference call and webcast at 9:00 a.m. ET on August 8,
2024. Interested participants may dial 1-844-481-3017 (Toll Free)
or 1-412-317-1882 (International). A replay of the call will be
available until August 15, 2024. To access the replay, please dial
1-877-344-7529 (Toll Free), or 1-412-317-0088 (International) and
enter access code 4959867. The live webcast and archived replay are
accessible from the investor relations section of the Company’s
website at
https://investor.bgsf.com/events-and-presentations/default.aspx
About BGSF
BGSF provides consulting, managed services and professional
workforce solutions to a variety of industries through its various
divisions in IT, Finance & Accounting, Managed Solutions, and
Property Management. BGSF has integrated several regional and
national brands achieving scalable growth. The Company was ranked
by Staffing Industry Analysts as the 97th largest U.S. staffing
company and the 49th largest IT staffing firm in 2024. The
Company’s disciplined acquisition philosophy, which builds value
through both financial growth and the retention of unique and
dedicated talent within BGSF’s family of companies, has resulted in
a seasoned management team with strong tenure and the ability to
offer exceptional service to our field talent and client partners
while building value for investors. For more information on the
Company and its services, please visit its website at
www.bgsf.com.
Forward-Looking Statements
The forward-looking statements in this press release are made
under the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may
include, but are not limited to, statements regarding our future
financial performance and the expectations and objectives of our
board or management. The Company’s actual results could differ
materially from those indicated by the forward-looking statements
because of various other risks and uncertainties, including, among
other things, risks relating to volatility and uncertainty in the
capital markets, availability of suitable third parties with which
to conduct any strategic transaction, whether the Company will be
able to pursue a strategic transaction, or whether any such
transaction, if pursued, will be completed successfully and on
attractive terms, or at all, the risks associated with undertaking
a review of strategic alternatives, including in respect of
relationships with stockholders, employees, customers, and
suppliers, as well as risks and uncertainties listed in Item 1A of
the Company’s Annual Report on Form 10-K and in the Company’s other
filings and reports with the Securities and Exchange Commission.
All of the risks and uncertainties are beyond the ability of the
Company to control, and in many cases, the Company cannot predict
the risks and uncertainties that could cause its actual results to
differ materially from those indicated by the forward-looking
statements. When used in this press release, the words “allows,”
“anticipates,” “believes,” “plans,” “expects,” “estimates,”
“should,” “would,” “may,” “might,” “forward,” “will,” “intends,”
“continue,” “outlook,” “temporarily,” “progressing,” "prospects,"
and “anticipates” and similar expressions as they relate to the
Company or its management are intended to identify forward-looking
statements. Except as required by law, the Company is not obligated
to publicly release any revisions to these forward-looking
statements to reflect the events or circumstances after the date of
this press release or to reflect the occurrence of unanticipated
events.
Source: BGSF, Inc.
UNAUDITED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
amounts)
June 30, 2024
December 31, 2023
ASSETS
Current assets
Cash and cash equivalents
$
226
$
—
Accounts receivable (net of allowance for
credit losses of $674 and $554, respectively)
46,430
56,776
Prepaid expenses
2,870
2,963
Other current assets
3,416
7,172
Total current assets
52,942
66,911
Property and equipment, net
1,284
1,217
Other assets
Deposits
2,093
2,699
Software as a service, net
4,750
5,026
Deferred income taxes, net
7,398
7,271
Right-of-use asset - operating leases,
net
4,481
5,435
Intangible assets, net
27,655
30,370
Goodwill
59,151
59,588
Total other assets
105,528
110,389
Total assets
$
159,754
$
178,517
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Accounts payable
$
254
$
95
Accrued payroll and expenses
14,004
14,902
Line of credit (net of debt issuance costs
of $128)
—
24,746
Long-term debt, current portion (net of
debt issuance costs of $29 and $0, respectively)
3,371
34,000
Accrued interest
220
438
Income taxes payable
165
282
Contingent consideration, current
portion
—
4,208
Convertible note
4,368
4,368
Other current liabilities
2,116
—
Lease liabilities, current portion
1,719
2,016
Total current liabilities
26,217
85,055
Line of credit (net of debt issuance costs
of $318)
13,748
—
Long-term debt, less current portion (net
of debt issuance costs of $236)
29,514
—
Contingent consideration, less current
portion
3,981
4,112
Lease liabilities, less current
portion
3,133
3,814
Total liabilities
76,593
92,981
Commitments and contingencies
Preferred stock, $0.01 par value per
share, 500,000 shares authorized, -0- shares issued and
outstanding
—
—
Common stock, $0.01 par value per share;
19,500,000 shares authorized 10,956,137 and 10,887,509 shares
issued and outstanding, respectively, net of 3,930 shares of
treasury stock, at cost, respectively.
53
52
Additional paid in capital
69,367
68,551
Retained earnings
13,741
16,933
Total stockholders’ equity
83,161
85,536
Total liabilities and stockholders’
equity
$
159,754
$
178,517
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per share
and dividend amounts)
For the Thirteen and Twenty-six
Week Periods Ended June 30, 2024 and July 2, 2023
Thirteen Weeks Ended
Twenty-six Weeks Ended
2024
2023
2024
2023
Revenues
$
68,137
$
80,800
$
136,903
$
156,116
Cost of services
44,507
51,226
89,835
99,758
Gross profit
23,630
29,574
47,068
56,358
Selling, general and administrative
expenses
21,568
22,584
42,583
45,796
Impairment losses
—
—
—
22,545
Depreciation and amortization
1,981
1,940
3,988
3,696
Operating income (loss)
81
5,050
497
(15,679
)
Interest expense, net
(1,061
)
(1,502
)
(2,297
)
(2,703
)
(Loss) income before income taxes
(980
)
3,548
(1,800
)
(18,382
)
Income tax benefit (expense)
219
(944
)
247
4,520
Net (loss) income
$
(761
)
$
2,604
$
(1,553
)
$
(13,862
)
Net (loss) income per share:
Basic
$
(0.07
)
$
0.24
$
(0.14
)
$
(1.29
)
Diluted
$
(0.07
)
$
0.24
$
(0.14
)
$
(1.29
)
Weighted-average shares outstanding:
Basic
10,880
10,759
10,858
10,731
Diluted
10,880
10,770
10,858
10,731
Cash dividends declared per common
share
$
—
$
0.15
$
0.15
$
0.30
BUSINESS SEGMENTS
(dollars in thousands)
(unaudited)
Thirteen Weeks Ended
Twenty-six Weeks Ended
June 30, 2024
July 2, 2023
June 30, 2024
July 2, 2023
Revenue:
Property Management
$
25,726
38
%
$
31,071
38
%
$
50,273
37
%
$
59,477
38
%
Professional
42,411
62
49,729
62
86,630
63
96,639
62
Total
$
68,137
100
%
$
80,800
100
%
$
136,903
100
%
$
156,116
100
%
Gross profit:
Property Management
9,596
41
%
$
12,652
43
%
$
18,939
40
%
$
23,999
43
%
Professional
14,034
59
16,922
57
28,129
60
32,359
57
Total
$
23,630
100
%
$
29,574
100
%
$
47,068
100
%
$
56,358
100
%
Operating income (loss):
Property Management
$
3,203
$
5,774
$
6,605
$
10,464
Professional -without impairment
losses
1,556
3,786
3,230
6,413
Professional - impairment losses
—
—
—
(22,545
)
Home office
(4,678
)
(4,510
)
(9,338
)
(10,011
)
Total
$
81
$
5,050
$
497
$
(15,679
)
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
For the Twenty-six Week Periods
Ended June 30, 2024 and July 2, 2023
2024
2023
Cash flows from operating activities
Net loss
$
(1,553
)
$
(13,862
)
Adjustments to reconcile net loss to net
cash provided by activities:
Depreciation
184
238
Amortization
3,804
3,458
Impairment losses
—
22,545
Loss on disposal of property and
equipment
9
—
Amortization of debt issuance costs
89
92
Interest expense on contingent
consideration payable
(90
)
202
Provision for credit losses
1,116
321
Share-based compensation
471
436
Deferred income taxes, net of acquired
deferred tax liability
(127
)
(5,287
)
Net changes in operating assets and
liabilities, net of effects of acquisitions:
Accounts receivable
9,230
7,672
Prepaid expenses
93
(93
)
Other current assets
1,597
2,572
Deposits
607
(9
)
Software as a service
358
362
Accounts payable
160
(1,515
)
Accrued payroll and expenses
(219
)
(5,033
)
Accrued interest
(218
)
264
Income taxes receivable and payable
(771
)
274
Operating leases
(23
)
(88
)
Net cash provided by operating
activities
14,717
12,549
Cash flows from investing activities
Businesses acquired, net of cash
received
—
(6,740
)
Capital expenditures
(995
)
(1,490
)
Net cash used in investing activities
(995
)
(8,230
)
Cash flows from financing activities
Net (payments) borrowings under line of
credit
(10,808
)
2,438
Principal payments on long-term debt
(850
)
(2,000
)
Payments of dividends
(1,639
)
(3,244
)
Issuance of ESPP shares
244
292
Issuance of shares under the 2013
Long-Term Incentive Plan, net of exercises
102
30
Contingent consideration paid
—
(1,110
)
Debt issuance costs
(545
)
(65
)
Net cash used in financing activities
(13,496
)
(3,659
)
Net change in cash and cash
equivalents
226
660
Cash and cash equivalents, beginning of
period
—
—
Cash and cash equivalents, end of
period
$
226
$
660
Supplemental cash flow information:
Cash paid for interest, net
$
2,417
$
2,036
Cash paid for taxes, net of refunds
$
636
$
484
NON-GAAP FINANCIAL MEASURES
The financial results of BGSF, Inc. are prepared in conformity
with accounting principles generally accepted in the United States
of America (“GAAP”) and the rules of the U.S. Securities and
Exchange Commission. To help the readers understand the Company's
financial performance, the Company supplements its GAAP financial
results with Adjusted EBITDA and Adjusted EPS.
A non-GAAP financial measure is a numerical measure of a
company's financial performance that excludes or includes amounts
so as to be different than the most directly comparable measure
calculated and presented in accordance with GAAP in the statement
of income, balance sheet or statement of cash flows of a company.
Adjusted EBITDA and Adjusted EPS are not measurements of financial
performance under GAAP and should not be considered as alternatives
to net income, net income per diluted share, operating income, or
any other performance measure derived in accordance with GAAP, or
as alternatives to cash flow from operating activities or measures
of our liquidity. We believe that Adjusted EBITDA and Adjusted EPS
are useful performance measures and are used by us to facilitate a
comparison of our operating performance on a consistent basis from
period-to-period and to provide for a more complete understanding
of factors and trends affecting our business than measures under
GAAP can provide alone. In addition, the financial covenants in our
credit agreement are based on EBITDA as defined in the credit
agreement.
We define “Adjusted EBITDA" as earnings before interest expense,
income taxes, depreciation and amortization expense, costs
associated with the evaluation of potential strategic alternatives
(“Strategic alternatives review”), transaction fees, and certain
non-cash expenses such as impairment losses and share-based
compensation expense, as well as certain specific events that
management does not consider in assessing our on-going operating
performance.
We define “Adjusted EPS” as diluted earnings per share
eliminating amortization expense of intangible assets from
acquisitions, the Strategic Alternatives Review, transaction fees,
and certain non-cash expenses such as impairment losses, as well as
certain specific events that management does not consider in
assessing our on-going operating performance, net of the respective
income tax effect.
Reconciliation of Net (Loss)
Income to Adjusted EBITDA
(dollars in thousands)
Thirteen Weeks Ended
Twenty-six Weeks Ended
Thirteen Weeks Ended
June 30, 2024
July 2, 2023
June 30, 2024
July 2, 2023
March 31, 2024
Net (loss) income
$
(761
)
$
2,604
$
(1,553
)
$
(13,862
)
$
(792
)
Income tax (benefit) expense
(219
)
944
(247
)
(4,520
)
(28
)
Interest expense, net
1,061
1,502
2,297
2,703
1,235
Operating income (loss)
81
5,050
497
(15,679
)
415
Depreciation and amortization
1,981
1,940
3,988
3,696
2,007
Impairment losses
—
—
—
22,545
—
Share-based compensation
236
75
471
436
235
Strategic alternatives review
280
—
348
—
68
Transaction fees
25
435
40
753
16
Adjusted EBITDA
$
2,603
$
7,500
$
5,344
$
11,751
$
2,741
Adjusted EBITDA Margin
(% of revenue)
3.8
%
9.3
%
3.9
%
7.5
%
4.0
%
Reconciliation of Net (Loss)
Income EPS to Adjusted EPS
Thirteen Weeks Ended
Twenty-six Weeks Ended
Thirteen Weeks Ended
June 30, 2024
July 2, 2023
June 30, 2024
July 2, 2023
March 31, 2024
Net (loss) income per diluted share
$
(0.07
)
$
0.24
$
(0.14
)
$
(1.29
)
$
(0.07
)
Acquisition amortization
0.15
0.14
0.29
0.27
0.15
Impairment losses (pre-tax)
—
—
—
2.10
—
Strategic alternatives review
0.03
—
0.03
—
0.01
Transaction fees
—
0.04
—
0.07
—
Income tax expense adjustment
(0.04
)
(0.05
)
(0.04
)
(0.60
)
(0.02
)
Adjusted EPS
$
0.07
$
0.37
$
0.14
$
0.55
$
0.07
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807354173/en/
Steven Hooser or Sandy Martin Three Part Advisors
ir@bgstaffing.com 214.872.2710 or 214.616.2207
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