BGSF, Inc. Reports Third Quarter 2024 Financial Results
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 |
||||||||||||||||
|
|
|
|
|
|
|
||||||||||||
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 |
|
|
|||
“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
About
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
UNAUDITED CONSOLIDATED BALANCE SHEETS |
||||||
(in thousands, except share amounts) |
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|
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|
|
|
||
ASSETS |
|
|
|
|
||
Current assets |
|
|
|
|
||
Cash and cash equivalents |
|
$ |
262 |
|
$ |
— |
Accounts receivable (net of allowance for credit losses of |
|
|
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 |
|
|
|
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 |
|
— |
|
|
24,746 |
|
Long-term debt, current portion (net of debt issuance costs of |
|
|
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 |
|
|
7,381 |
|
|
— |
Long-term debt, less current portion (net of debt issuance costs of |
|
|
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, |
|
|
— |
|
|
— |
Common stock, |
|
|
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 |
||||||||||||||||
|
|
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 |
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(dollars in thousands) |
||||||||||||||||||||||||
(unaudited) |
||||||||||||||||||||||||
|
|
Thirteen Weeks Ended |
|
Thirty-nine Weeks Ended |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
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 |
||||||||
|
|
|
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
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 |
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(dollars in thousands) |
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Thirteen Weeks Ended |
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Thirty-nine Weeks Ended |
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Thirteen Weeks Ended |
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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 |
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Thirteen Weeks Ended |
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Thirty-nine Weeks Ended |
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Thirteen Weeks Ended |
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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 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20241106940362/en/
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ir@bgstaffing.com 214.872.2710 or 214.616.2207
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