Le Lézard
Classified in: Business
Subjects: EARNINGS, Conference Call, Webcast

BGSF, Inc. Reports First Quarter 2024 Financial Results Generated $7.4 Million of Operating Cash Flow


BGSF, Inc. (NYSE: BGSF), a growing provider of consulting, managed services, and professional workforce solutions, today reported financial results for the first fiscal quarter ended March 31, 2024.

Q1 2024 Highlights from Operations:

Beth A. Garvey, Chair, President, and CEO, said, "Our first quarter results aligned with expectations, and we are encouraged by recent activity in higher-end consulting. The Professional division has experienced meaningful progress each month this year with IT consulting and other IT-related tool deployments, and we are benefiting from BGSF's enhanced Workday strategic partnership. In addition, the Professional segment landed senior-level projects, managed solutions, and permanent placements as we continue to leverage important Horn Solutions relationships. We are utilizing technology in the Property Management division to penetrate existing markets. Although Property Management is facing industry competition for the first time, we believe that our strategic transition of the sales organization using stronger results-oriented compensation plans, will drive meaningfully improved sales performance starting in 2024.

"The current macro environment and economic cycle are different than prior cycles, and we believe that our planned business transformation positions us to begin to significantly grow our business in high-value ERP selection, implementation, and project consulting, as well as managed solutions, nearshore and offshore accounting and software engineering, and project management of data security and mobile. We are very excited to provide recognized and highly differentiated offerings, expertise, and next-gen solutions and services, and we are confident that our business is well positioned to generate cash flow and create long-term value for shareholders," concluded Garvey.

1 Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures as defined and reconciled below.

Conference Call

BGSF will discuss its first quarter 2024 financial results during a conference call and webcast at 9:00 a.m. ET on May 9, 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 May 16, 2024. To access the replay, please dial 1-877-344-7529 (Toll Free), or 1-412-317-0088 (International) and enter access code 8216166. 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 121st largest U.S. staffing company and the 52nd largest IT staffing firm in 2023. 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 those 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," "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.

GAAP FINANCIAL MEASURES

 

Portions of the following tables have been derived from our unaudited consolidated financial statements and summarize key components of our statements of operations for the periods indicated, as well as a reconciliation of revenue and operating income (loss) by reportable segment to consolidated results for the periods indicated.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

 

 

March 31,
2024

 

December 31,
2023

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

50

 

$

?

Accounts receivable (net of allowance for credit losses of $761 and $554, respectively)

 

 

52,418

 

 

56,776

Prepaid expenses

 

 

2,502

 

 

2,963

Other current assets

 

 

6,650

 

 

7,172

Total current assets

 

 

61,620

 

 

66,911

 

 

 

 

 

Property and equipment, net

 

 

1,255

 

 

1,217

 

 

 

 

 

Other assets

 

 

 

 

Deposits

 

 

2,106

 

 

2,699

Software as a service, net

 

 

4,902

 

 

5,026

Deferred income taxes, net

 

 

7,397

 

 

7,271

Right-of-use asset - operating leases, net

 

 

4,929

 

 

5,435

Intangible assets, net

 

 

29,192

 

 

30,370

Goodwill

 

 

59,151

 

 

59,588

Total other assets

 

 

107,677

 

 

110,389

Total assets

 

$

170,552

 

$

178,517

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

 

$

224

 

$

95

Accrued payroll and expenses

 

 

14,879

 

 

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 $31 and $0, respectively)

 

 

3,369

 

 

34,000

Accrued interest

 

 

220

 

 

438

Income taxes payable

 

 

325

 

 

282

Contingent consideration, current portion

 

 

4,229

 

 

4,208

Convertible note

 

 

4,368

 

 

4,368

Lease liabilities, current portion

 

 

1,871

 

 

2,016

Total current liabilities

 

 

29,485

 

 

85,055

 

 

 

 

 

Line of credit (net of debt issuance costs of $333)

 

 

19,667

 

 

?

Long-term debt, less current portion (net of debt issuance costs of $253)

 

 

30,347

 

 

?

Contingent consideration, less current portion

 

 

4,046

 

 

4,112

Lease liabilities, less current portion

 

 

3,454

 

 

3,814

Total liabilities

 

 

86,999

 

 

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 10,928,763 and 10,887,509 shares issued and outstanding, respectively, net of treasury stock, at cost, and 3,930 shares, respectively.

52

 

 

52

Additional paid in capital

68,999

 

 

68,551

Retained earnings

14,502

 

 

16,933

Total stockholders' equity

83,553

 

 

85,536

Total liabilities and stockholders' equity

$

170,552

 

 

178,517

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share and dividend amounts)

 

 

 

Thirteen Weeks Ended

 

 

March 31,
2024

 

April 2,
2023

Revenues

 

$

68,765

 

 

$

75,316

 

Cost of services

 

 

45,327

 

 

 

48,532

 

Gross profit

 

 

23,438

 

 

 

26,784

 

Selling, general and administrative expenses

 

 

21,016

 

 

 

23,212

 

Impairment losses

 

 

?

 

 

 

22,545

 

Depreciation and amortization

 

 

2,007

 

 

 

1,757

 

Operating income (loss)

 

 

415

 

 

 

(20,730

)

Interest expense, net

 

 

(1,235

)

 

 

(1,200

)

Loss before income taxes

 

 

(820

)

 

 

(21,930

)

Income tax benefit

 

 

28

 

 

 

5,464

 

Net loss

 

$

(792

)

 

$

(16,466

)

 

 

 

 

 

Net loss per share:

 

 

 

 

Basic

 

$

(0.07

)

 

$

(1.54

)

Diluted

 

$

(0.07

)

 

$

(1.54

)

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

Basic

 

 

10,831

 

 

 

10,712

 

Diluted

 

 

10,831

 

 

 

10,712

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.15

 

 

$

0.15

 

BUSINESS SEGMENTS

(dollars in thousands)

(unaudited)

 

 

 

 

Thirteen Weeks Ended

 

 

 

March 31,
2024

 

April 2,
2023

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

Property Management

 

 

$

24,547

 

36

%

 

$

28,405

 

38

%

Professional

 

 

 

44,218

 

64

%

 

 

46,911

 

62

%

Total

 

 

$

68,765

 

100

%

 

$

75,316

 

100

%

 

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

 

Property Management

 

 

$

9,343

 

40

%

 

$

11,347

 

42

%

Professional

 

 

 

14,095

 

60

%

 

 

15,437

 

58

%

Total

 

 

$

23,438

 

100

%

 

$

26,784

 

100

%

 

 

 

 

 

 

 

 

Operating income (loss):

 

 

 

 

 

 

 

Property Management

 

 

$

3,402

 

 

 

$

4,690

 

 

Professional -without impairment losses

 

 

 

1,673

 

 

 

 

2,627

 

 

Professional - impairment losses

 

 

 

?

 

 

 

 

(22,545

)

 

Home office

 

 

 

(4,660

)

 

 

 

(5,502

)

 

Total

 

 

$

415

 

 

 

$

(20,730

)

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

March 31,
2024

April 2,
2023

Cash flows from operating activities

 

 

 

 

Net loss

 

$

(792

)

 

$

(16,466

)

Adjustments to reconcile net loss to net cash provided by activities:

 

 

 

 

Depreciation

 

 

94

 

 

 

127

 

Amortization

 

 

1,913

 

 

 

1,630

 

Impairment losses

 

 

?

 

 

 

22,545

 

Loss on disposal of property and equipment

 

 

8

 

 

 

?

 

Amortization of debt issuance costs

 

 

49

 

 

 

46

 

Interest expense on contingent consideration payable

 

 

(45

)

 

 

22

 

Provision for credit losses

 

 

625

 

 

 

79

 

Share-based compensation

 

 

235

 

 

 

361

 

Deferred income taxes, net of acquired deferred tax liability

 

 

(127

)

 

 

(5,193

)

Net changes in operating assets and liabilities, net of effects of acquisitions:

 

 

 

 

Accounts receivable

 

 

3,733

 

 

 

3,666

 

Prepaid expenses

 

 

462

 

 

 

(784

)

Other current assets

 

 

513

 

 

 

1,247

 

Deposits

 

 

593

 

 

 

?

 

Software as a service

 

 

180

 

 

 

180

 

Accounts payable

 

 

129

 

 

 

(36

)

Accrued payroll and expenses

 

 

(24

)

 

 

(3,014

)

Accrued interest

 

 

(218

)

 

 

(103

)

Income taxes receivable and payable

 

 

52

 

 

 

(310

)

Operating leases

 

 

1

 

 

 

(58

)

Net cash provided by operating activities

 

 

7,381

 

 

 

3,939

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Capital expenditures

 

 

(494

)

 

 

(745

)

Net cash used in investing activities

 

 

(494

)

 

 

(745

)

Cash flows from financing activities

 

 

 

 

Net payments under line of credit

 

 

(4,874

)

 

 

(646

)

Principal payments on long-term debt

 

 

?

 

 

 

(1,000

)

Payments of dividends

 

 

(1,639

)

 

 

(1,618

)

Issuance of ESPP shares

 

 

112

 

 

 

145

 

Issuance of shares under the 2013 Long-Term Incentive Plan, net of exercises

 

 

102

 

 

 

?

 

Debt issuance costs

 

 

(538

)

 

 

(5

)

Net cash used in financing activities

 

 

(6,837

)

 

 

(3,124

)

Net change in cash and cash equivalents

 

 

50

 

 

 

70

 

Cash and cash equivalents, beginning of period

 

 

?

 

 

 

?

 

Cash and cash equivalents, end of period

$

50

 

 

$

70

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

Cash paid for interest, net

 

$

1,400

 

 

$

1,183

 

Cash paid for taxes, net of refunds

 

$

40

 

 

$

34

 

 

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, 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, 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 to Adjusted EBITDA

(dollars in thousands)

 

 

 

Thirteen Weeks Ended

 

 

March 31,
2024

 

April 2,
2023

Net loss

 

$

(792

)

 

$

(16,466

)

Income tax benefit

 

 

(28

)

 

 

(5,464

)

Interest expense, net

 

 

1,235

 

 

 

1,200

 

Operating income (loss)

 

 

415

 

 

 

(20,730

)

Depreciation and amortization

 

 

2,007

 

 

 

1,757

 

Impairment losses

 

 

?

 

 

 

22,545

 

Share-based compensation

 

 

235

 

 

 

361

 

Transaction fees

 

 

16

 

 

 

319

 

Adjusted EBITDA

 

$

2,673

 

 

$

4,252

 

Adjusted EBITDA Margin (% of revenue)

 

 

3.9

%

 

 

5.6

%

Reconciliation of Net Loss EPS to Adjusted EPS

 

 

 

Thirteen Weeks Ended

 

 

March 31,
2024

 

April 2,
2023

 

 

 

 

 

Net loss per diluted share

 

$

(0.07

)

 

$

(1.54

)

Acquisition amortization

 

 

0.15

 

 

 

0.13

 

Impairment losses (pre-tax)

 

 

?

 

 

 

2.10

 

Transaction fees

 

 

?

 

 

 

0.03

 

Income tax expense adjustment

 

 

(0.01

)

 

 

(0.56

)

Adjusted EPS

 

$

0.07

 

 

$

0.16

 

 


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