BGSF, Inc. Reports Third Quarter 2024 Financial Results

PLANO, Texas--()--BGSF, Inc. (NYSE: BGSF), a growing provider of consulting, managed services, and professional workforce solutions, today reported financial results for the third fiscal quarter ended September 29, 2024.

Q3 2024 Highlights (results include sequential comparisons to Q2 2024):

  • Revenues were $71.2 million for Q3, compared to $68.1 million for Q2.
    • Property Management segment revenues increased 15.9% from Q2, driven by seasonal demand.
    • Professional segment revenues declined 2.5% from Q2, due to a decline in billed hours in the Finance & Accounting division.
  • Gross profit was $24.3 million, up from $23.6 million in Q2, primarily due to higher sales in Property Management.
  • Net loss was $0.8 million, or $0.07 per diluted share for Q3 and Q2.
  • Adjusted EBITDA1 was $3.2 million (4.5% of revenues) in Q3 from $2.6 million (3.8% of revenues) in Q2.
  • Adjusted EPS1 was $0.10 for Q3 compared with $0.07 for Q2.
  • Launched advanced lead generation technology, which generated significantly better lead acquisition and conversion rates in the quarter.

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

SUMMARY OF FINANCIAL RESULTS

(dollars in thousands) (unaudited)

 

 

 

For the Thirteen Week Periods Ended

 

 

September 29,
2024

 

October 1,
2023

 

June 30,
2024

Revenue:

 

 

 

 

 

 

 

 

 

Property Management

 

$

29,824

 

 

 

$

35,976

 

 

 

$

25,726

 

 

Professional

 

 

41,362

 

 

 

 

47,508

 

 

 

 

42,411

 

 

Total

 

$

71,186

 

 

 

$

83,484

 

 

 

$

68,137

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit / Gross profit percentage:

 

 

 

 

 

 

 

 

 

Property Management

 

$

10,696

 

35.9

%

 

$

14,197

 

39.5

%

 

$

9,596

 

37.3

%

Professional

 

 

13,633

 

33.0

%

 

 

15,782

 

33.2

%

 

 

14,034

 

33.1

%

Total

 

$

24,329

 

34.2

%

 

$

29,979

 

35.9

%

 

$

23,630

 

34.7

%

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

470

 

 

 

$

5,267

 

 

 

$

81

 

 

Net (loss) Income

 

$

(804

)

 

 

$

2,640

 

 

 

$

(761

)

 

Net (loss) income per diluted share

 

$

(0.07

)

 

 

$

0.24

 

 

 

$

(0.07

)

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures:

 

 

 

 

 

 

 

 

 

Adjusted EBITDA1

 

$

3,208

 

 

 

$

7,857

 

 

 

$

2,603

 

 

Adjusted EBITDA Margin (% of revenue)1

 

 

4.5

%

 

 

 

9.4

%

 

 

 

3.8

%

 

Adjusted EPS1

 

$

0.10

 

 

 

$

0.36

 

 

 

$

0.07

 

 

 

Beth A. Garvey, Chair, President, and CEO, said, “Although economic uncertainties persist and the demand environment remains choppy for the entire IT consulting and workforce industry, we are pleased to report that our third quarter total revenues improved sequentially by 4.5%. This sales progression was due to a seasonal lift in Property Management, up 15.9%, compared to the second quarter. In addition, the Professional segment stabilized late in the quarter, down 2.5% for the quarter compared to the second quarter. We continue to launch 2024 project wins expeditiously, including the major IT transformation project related to a large international client that we discussed last quarter. Our largest category in Professional, IT consulting, maintained stable topline revenues between second and third quarters, which is positive. Finance & Accounting experienced lower project work in the third quarter due to typical seasonality for calendar reporting clients. Permanent placements stabilized with flat revenues between second and third quarters. Conversely, Managed Solutions continued to grow sequentially, which aligns with our strategic goals of expanding our consulting efforts. We remain cautiously optimistic at the pockets of revenue categories that stabilized this quarter but continue to tightly manage costs and expenses.

“As part of our ongoing technology enhancements, I am pleased to share that we have launched our advanced lead generation engine in the third quarter, made possible by our earlier investment to modernize our tech stack. BGSF’s technology platform leverages our marketing automation to streamline better lead acquisition and increase conversion rates across both our Professional and Property Management divisions. We have other tech enhancements launching in the fourth quarter to drive better efficiencies and believe these initiatives demonstrate our commitment to BGSF’s digital transformation to improve client engagement and deliver cutting-edge workforce solutions.”

“The review of strategic alternatives work continues, and we have no updates that we can share today. We look forward to discussing in more detail in the future,” concluded Garvey.

Conference Call

BGSF will discuss its third quarter 2024 financial results during a conference call and webcast at 9:00 a.m. ET on November 7, 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 November 14, 2024. To access the replay, please dial 1-877-344-7529 (Toll Free), or 1-412-317-0088 (International) and enter access code 4519768. 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.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

 

 

September 29,
2024

 

December 31, 2023

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

262

 

$

Accounts receivable (net of allowance for credit losses of $933 and $554, respectively)

 

 

46,074

 

 

56,776

Prepaid expenses

 

 

2,355

 

 

2,963

Other current assets

 

 

2,760

 

 

7,172

Total current assets

 

 

51,451

 

 

66,911

 

 

 

 

 

Property and equipment, net

 

 

1,204

 

 

1,217

 

 

 

 

 

Other assets

 

 

 

 

Deposits

 

 

2,092

 

 

2,699

Software as a service, net

 

 

4,592

 

 

5,026

Deferred income taxes, net

 

 

7,587

 

 

7,271

Right-of-use asset - operating leases, net

 

 

5,065

 

 

5,435

Intangible assets, net

 

 

26,193

 

 

30,370

Goodwill

 

 

59,151

 

 

59,588

Total other assets

 

 

104,680

 

 

110,389

Total assets

 

$

157,335

 

$

178,517

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

 

$

221

 

$

95

Accrued payroll and expenses

 

 

15,361

 

 

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 $27 and $0, respectively)

 

 

3,373

 

 

34,000

Accrued interest

 

 

286

 

 

438

Income taxes payable

 

 

172

 

 

282

Contingent consideration, current portion

 

 

4,047

 

 

4,208

Convertible note

 

 

4,368

 

 

4,368

Lease liabilities, current portion

 

 

1,586

 

 

2,016

Total current liabilities

 

 

29,414

 

 

85,055

 

 

 

 

 

Line of credit (net of debt issuance costs of $305)

 

 

7,381

 

 

Long-term debt, less current portion (net of debt issuance costs of $220)

 

 

33,780

 

 

Contingent consideration, less current portion

 

 

 

 

4,112

Lease liabilities, less current portion

 

 

3,815

 

 

3,814

Total liabilities

 

 

74,390

 

 

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 11,006,696 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

 

 

69,955

 

 

68,551

Retained earnings

 

 

12,937

 

 

16,933

Total stockholders’ equity

 

 

82,945

 

 

85,536

Total liabilities and stockholders’ equity

 

$

157,335

 

$

178,517

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share and dividend amounts)

 

For the Thirteen and Thirty-nine Week Periods Ended September 29, 2024 and October 1, 2023

 

 

 

Thirteen Weeks Ended

 

Thirty-nine Weeks Ended

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenues

 

$

71,186

 

 

$

83,484

 

 

$

208,089

 

 

$

239,600

 

Cost of services

 

 

46,857

 

 

 

53,505

 

 

 

136,692

 

 

 

153,263

 

Gross profit

 

 

24,329

 

 

 

29,979

 

 

 

71,397

 

 

 

86,337

 

Selling, general and administrative expenses

 

 

21,966

 

 

 

22,679

 

 

 

64,549

 

 

 

68,475

 

Impairment losses

 

 

 

 

 

 

 

 

 

 

 

22,545

 

Depreciation and amortization

 

 

1,893

 

 

 

2,033

 

 

 

5,881

 

 

 

5,729

 

Operating income (loss)

 

 

470

 

 

 

5,267

 

 

 

967

 

 

 

(10,412

)

Interest expense, net

 

 

(1,222

)

 

 

(1,672

)

 

 

(3,518

)

 

 

(4,375

)

(Loss) income before income taxes

 

 

(752

)

 

 

3,595

 

 

 

(2,551

)

 

 

(14,787

)

Income tax (expense) benefit

 

 

(52

)

 

 

(955

)

 

 

194

 

 

 

3,565

 

Net (loss) income

 

$

(804

)

 

$

2,640

 

 

$

(2,357

)

 

$

(11,222

)

 

 

 

 

 

 

 

 

 

Net (loss) income per share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.07

)

 

$

0.24

 

 

$

(0.22

)

 

$

(1.04

)

Diluted

 

$

(0.07

)

 

$

0.24

 

 

$

(0.22

)

 

$

(1.04

)

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

10,919

 

 

 

10,791

 

 

 

10,882

 

 

 

10,753

 

Diluted

 

 

10,919

 

 

 

10,803

 

 

 

10,882

 

 

 

10,753

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

 

 

$

0.15

 

 

$

0.15

 

 

$

0.45

 

BUSINESS SEGMENTS

(dollars in thousands)

(unaudited)

 

 

 

Thirteen Weeks Ended

 

Thirty-nine Weeks Ended

 

 

September 29,
2024

 

October 1,
2023

 

September 29,
2024

 

October 1,
2023

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Property Management

 

$

29,824

 

42

%

 

$

35,976

 

43

%

 

$

80,096

 

38

%

 

$

95,453

 

40

%

Professional

 

 

41,362

 

58

 

 

 

47,508

 

57

 

 

 

127,993

 

62

 

 

 

144,147

 

60

 

Total

 

$

71,186

 

100

%

 

$

83,484

 

100

%

 

$

208,089

 

100

%

 

$

239,600

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

Property Management

 

 

10,696

 

44

%

 

$

14,197

 

47

%

 

 

29,635

 

42

%

 

$

38,196

 

44

%

Professional

 

 

13,633

 

56

 

 

 

15,782

 

53

 

 

 

41,762

 

58

 

 

 

48,141

 

56

 

Total

 

$

24,329

 

100

%

 

$

29,979

 

100

%

 

$

71,397

 

100

%

 

$

86,337

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Property Management

 

$

4,175

 

 

 

$

7,212

 

 

 

$

10,780

 

 

 

$

17,676

 

 

Professional -without impairment losses

 

 

1,474

 

 

 

 

3,253

 

 

 

 

4,704

 

 

 

 

9,666

 

 

Professional - impairment losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,545

)

 

Home office

 

 

(5,179

)

 

 

 

(5,198

)

 

 

 

(14,517

)

 

 

 

(15,209

)

 

Total

 

$

470

 

 

 

$

5,267

 

 

 

$

967

 

 

 

$

(10,412

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

For the Thirty-nine Week Periods Ended September 29, 2024 and October 1, 2023

 

 

 

 

2024

 

 

 

2023

 

Cash flows from operating activities

 

 

 

 

Net loss

 

$

(2,357

)

 

$

(11,222

)

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

 

 

 

 

Depreciation

 

 

271

 

 

 

343

 

Amortization

 

 

5,610

 

 

 

5,386

 

Impairment losses

 

 

 

 

 

22,545

 

Loss on disposal of property and equipment

 

 

12

 

 

 

 

Amortization of debt issuance costs

 

 

129

 

 

 

145

 

Interest (income) expense on contingent consideration payable

 

 

(23

)

 

 

468

 

Provision for credit losses

 

 

1,670

 

 

 

658

 

Share-based compensation

 

 

788

 

 

 

844

 

Deferred income taxes, net of acquired deferred tax liability

 

 

(316

)

 

 

(5,092

)

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

 

 

 

 

Accounts receivable

 

 

9,033

 

 

 

1,795

 

Prepaid expenses

 

 

609

 

 

 

313

 

Other current assets

 

 

4,868

 

 

 

3,179

 

Deposits

 

 

607

 

 

 

(84

)

Software as a service

 

 

537

 

 

 

543

 

Accounts payable

 

 

126

 

 

 

(337

)

Accrued payroll and expenses

 

 

459

 

 

 

(4,251

)

Other current liabilities

 

 

 

 

 

(1,000

)

Accrued interest

 

 

(152

)

 

 

23

 

Income taxes receivable and payable

 

 

(566

)

 

 

938

 

Operating leases

 

 

(59

)

 

 

(100

)

Net cash provided by operating activities

 

 

21,246

 

 

 

15,094

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Businesses acquired, net of cash received

 

 

 

 

 

(6,740

)

Capital expenditures

 

 

(1,370

)

 

 

(2,019

)

Net cash used in investing activities

 

 

(1,370

)

 

 

(8,759

)

Cash flows from financing activities

 

 

 

Net (payments) borrowings under line of credit

 

(17,188

)

 

 

4,282

 

Proceeds from issuance of long-term debt

 

4,250

 

 

 

 

Principal payments on long-term debt

 

(850

)

 

 

(5,000

)

Payments of dividends

 

(1,639

)

 

 

(4,874

)

Issuance of ESPP shares

 

355

 

 

 

412

 

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

 

262

 

 

 

19

 

Contingent consideration paid

 

(4,250

)

 

 

(1,110

)

Payments of debt issuance costs

 

(554

)

 

 

(64

)

Net cash used in financing activities

 

(19,614

)

 

 

(6,335

)

Net change in cash and cash equivalents

 

262

 

 

 

 

Cash and cash equivalents, beginning of period

 

 

 

 

 

Cash and cash equivalents, end of period

$

262

 

 

$

 

 

 

 

 

Supplemental cash flow information:

 

 

 

Cash paid for interest, net

$

3,419

 

 

$

3,573

 

Cash paid for taxes, net of refunds

$

666

 

 

$

569

 

 

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

 

Thirty-nine Weeks Ended

 

Thirteen Weeks Ended

 

 

September 29,
2024

 

October 1,
2023

 

September 29,
2024

 

October 1,
2023

 

June 30,
2024

Net (loss) income

 

$

(804

)

 

$

2,640

 

 

$

(2,357

)

 

$

(11,222

)

 

$

(761

)

Income tax expense (benefit)

 

 

52

 

 

 

955

 

 

 

(194

)

 

 

(3,565

)

 

 

(219

)

Interest expense, net

 

 

1,222

 

 

 

1,672

 

 

 

3,518

 

 

 

4,375

 

 

 

1,061

 

Operating income (loss)

 

 

470

 

 

 

5,267

 

 

 

967

 

 

 

(10,412

)

 

 

81

 

Depreciation and amortization

 

 

1,893

 

 

 

2,033

 

 

 

5,881

 

 

 

5,729

 

 

 

1,981

 

Impairment losses

 

 

 

 

 

 

 

 

 

 

 

22,545

 

 

 

 

Share-based compensation

 

 

317

 

 

 

408

 

 

 

788

 

 

 

844

 

 

 

236

 

Strategic alternatives review

 

 

526

 

 

 

 

 

 

874

 

 

 

 

 

 

280

 

Transaction fees

 

 

2

 

 

 

149

 

 

 

42

 

 

 

901

 

 

 

25

 

Adjusted EBITDA

 

$

3,208

 

 

$

7,857

 

 

$

8,552

 

 

$

19,607

 

 

$

2,603

 

Adjusted EBITDA Margin

(% of revenue)

 

 

4.5

%

 

 

9.4

%

 

 

4.1

%

 

 

8.2

%

 

 

3.8

%

Reconciliation of Net (Loss) Income EPS to Adjusted EPS

 

 

 

Thirteen Weeks Ended

 

Thirty-nine Weeks Ended

 

Thirteen Weeks Ended

 

 

September 29,
2024

 

October 1,
2023

 

September 29,
2024

 

October 1,
2023

 

June 30,
2024

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per diluted share

 

$

(0.07

)

 

$

0.24

 

 

$

(0.22

)

 

$

(1.04

)

 

$

(0.07

)

Acquisition amortization

 

 

0.13

 

 

 

0.15

 

 

 

0.42

 

 

 

0.42

 

 

 

0.15

 

Impairment losses (pre-tax)

 

 

 

 

 

 

 

 

 

 

 

2.10

 

 

 

 

Strategic alternatives review

 

 

0.05

 

 

 

 

 

 

0.08

 

 

 

 

 

 

0.03

 

Transaction fees

 

 

 

 

 

0.01

 

 

 

 

 

 

0.08

 

 

 

 

Income tax expense adjustment

 

 

(0.01

)

 

 

(0.04

)

 

 

(0.04

)

 

 

(0.63

)

 

 

(0.04

)

Adjusted EPS

 

$

0.10

 

 

$

0.36

 

 

$

0.24

 

 

$

0.93

 

 

$

0.07

 

 

Contacts

Steven Hooser or Sandy Martin
Three Part Advisors
ir@bgstaffing.com 214.872.2710 or 214.616.2207

Contacts

Steven Hooser or Sandy Martin
Three Part Advisors
ir@bgstaffing.com 214.872.2710 or 214.616.2207