BGSF, Inc. Reports Second Quarter 2024 Financial Results

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

 

 

Contacts

Steven Hooser or Sandy Martin

Three Part Advisors

ir@bgstaffing.com 214.872.2710 or 214.616.2207

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