Announces 35th Consecutive Quarterly
Dividend
Quarterly Revenues of $80.8 million, up
9%
BGSF, Inc. (NYSE: BGSF), a growing provider of consulting,
managed services, and professional workforce solutions, today
reported financial results for the second quarter ended July 2,
2023.
The Company further announced that its Board of Directors has
declared a quarterly cash dividend of $0.15 per share of common
stock. The dividend is payable on August 28, 2023 to all
shareholders of record as of the close of business on August 21,
2023. This marks the 35th consecutive quarterly dividend and based
on yesterday’s closing price of the Company’s common stock, the
annualized yield is approximately 6.4%.
Q2 2023 Highlights from Continuing Operations2:
- Revenues were $80.8 million, up 9.1% from 2022.
- Gross profit was $29.6 million, up 18.0% from 2022. Gross
profit margins increased to 36.6% in 2023, from 33.8% in 2022.
- Net income from continuing operations was $2.6 million, or
$0.24 per diluted share.
- Adjusted EBITDA1 from continuing operations was $7.5 million
(9.3% of revenues), compared to $5.4 million (7.3% of revenues) in
2022.
- Adjusted EPS1 from continuing operations was $0.37 per diluted
share compared to $0.34 per diluted share in 2022.
Six Month 2023 Highlights from Continuing
Operations2:
- Revenues were $156.1 million, up 9.5% from 2022.
- Gross profit was $56.4 million, up 16.2% from 2022. Gross
profit margins increased to 36.1% in 2023, from 34.0% in 2022.
- Operating income (loss) in 2023 includes a non-cash charge of
$22.5 million (using year-to-date tax rate, the impact was $16.9
million after-tax or $1.58 per diluted share) related to the
impairment of trade name intangible assets from the rebranding to
BGSF for all entities.
- Net loss from continuing operations was $(13.9) million, or
$(1.29) per diluted share.
- Adjusted EBITDA1 from continuing operations was $11.8 million
(7.5% of revenues), compared to $9.3 million (6.5% of revenues) in
2022, an increase of 25.9% year over year.
- Adjusted EPS1 from continuing operations was $0.55 per diluted
share in 2023, compared to $0.58 per diluted share in 2022.
1Non-GAAP financial measure. See
reconciliation below for details.
22023 operation results includes ten weeks
of Arroyo Consulting and six months of Horn Solutions.
Beth A. Garvey, Chair, President and CEO, stated, “Second
quarter total revenues increased 9.1%, and we were pleased with
improvements in gross margins and profitability, as well as
stronger cash flow from operations in the first half of 2023.
Revenues for the Professional segment included a sales lift from
Horn Solutions for the full quarter and Arroyo Consulting for a
portion of the quarter. In addition, we experienced strong momentum
in managed services that was somewhat pressured by softness on the
contract side. Our strategic acquisitions provided greater
cross-selling and go-to-market opportunities this quarter, as well
as valuable nearshore and offshore IT demand. Revenue for the Real
Estate segment continued to grow with new markets and the expansion
of existing markets. We are seeing a return to more normal
seasonality in Real Estate, and believe that our innovations and
technology, as well as our diverse geographic footprint, position
us well for changing dynamics in the apartment and multi-family
industries.”
“Although we remain cautiously optimistic given market
challenges, we are enthusiastic about our strategic growth plans to
deliver professional and IT consulting, managed solutions and
unique capabilities with high value, innovative solutions to solve
our client’s needs. We continue to maintain a relentless focus on
execution to grow revenues, improve profitability and generate cash
flow. Our strategy growth plans in 2023 and beyond give the Board,
including myself, the confidence to declare our 35th consecutive
quarterly cash dividend of $0.15 per share,” Garvey concluded.
Conference Call BGSF will discuss its second fiscal
quarter and six month 2023 financial results during a conference
call and webcast at 9:00 a.m. ET on August 10, 2023. Interested
participants may dial 877-344-2015 (U.S. Toll Free) or 646-307-1967
(Toll Callers) and provide access code 7003778. A replay of the
call will be available until August 17, 2023. To access the replay,
please dial 800-770-2030 (U.S. Toll Free callers), or 647-362-9199
(Toll Callers) and enter access code 7003778. The live webcast and
archived replay are accessible from the investor relations section
of the Company’s website at www.bgsf.com.
About BGSF BGSF provides consulting, managed services and
professional workforce solutions to a variety of industries through
its various divisions in IT, Cyber, Finance & Accounting,
Managed Services, and Real Estate (apartment communities and
commercial buildings). 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.
BGSF, Inc. GAAP Financial Measures
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) from
continuing operations by reportable segment to consolidated results
for the periods indicated.
Results of Operations
Thirteen Weeks Ended
Twenty-six Weeks Ended
July 2,
2023
June 26,
2022
July 2,
2023
June 26,
2022
(dollars in thousands)
Revenues
$
80,800
$
74,089
$
156,116
$
142,631
Cost of services
51,226
49,030
99,758
94,141
Gross profit
29,574
25,059
56,358
48,490
Selling, general and administrative
expenses
22,584
19,898
45,796
39,614
Impairment losses
—
—
22,545
—
Depreciation and amortization
1,940
922
3,696
1,821
Operating income (loss)
5,050
4,239
(15,679
)
7,055
Interest expense, net
(1,502
)
(69
)
(2,703
)
(343
)
Income (loss) from continuing operations
before income taxes
3,548
4,170
(18,382
)
6,712
Income tax (expense) benefit from
continuing operations
(944
)
(986
)
4,520
(1,521
)
Income (loss) from continuing
operations
2,604
3,184
(13,862
)
5,191
Income from discontinued operations:
Income
—
—
—
1,235
(Loss) gain on sale
—
(8
)
—
17,266
Income tax expense
—
—
—
(4,716
)
Net income (loss)
$
2,604
$
3,176
$
(13,862
)
$
18,976
Net income (loss) per share - diluted
Net income (loss) from continuing
operations
$
0.24
$
0.30
$
(1.29
)
$
0.50
Net income from discontinued
operations:
Income
—
—
—
0.12
Gain on sale
—
—
—
1.65
Income tax expense
—
—
—
(0.45
)
Net income (loss) per share - diluted
$
0.24
$
0.30
$
(1.29
)
$
1.82
Weighted-average shares outstanding:
Basic
10,759
10,472
10,731
10,451
Diluted
10,770
10,514
10,731
10,500
Business Segments
Thirteen Weeks Ended
Twenty-six Weeks Ended
July 2,
2023
June 26,
2022
July 2,
2023
June 26,
2022
(dollars in thousands)
Revenue:
Real Estate
$
31,071
38
%
$
29,980
40
%
$
59,477
38
%
$
55,896
39
%
Professional
49,729
62
%
44,109
60
%
96,639
62
%
86,735
61
%
Total
$
80,800
100
%
$
74,089
100
%
$
156,116
100
%
$
142,631
100
%
Gross profit:
Real Estate
$
12,652
43
%
$
11,574
46
%
$
23,999
43
%
$
21,545
44
%
Professional
16,922
57
%
13,485
54
%
32,359
57
%
26,945
56
%
Total
$
29,574
100
%
$
25,059
100
%
$
56,358
100
%
$
48,490
100
%
Operating income (loss):
Real Estate
$
5,774
$
4,817
$
10,464
$
8,852
Professional - without impairment
losses
3,786
3,817
6,413
7,286
Professional - impairment losses
—
—
(22,545
)
—
Home office - Selling, general and
administrative
(4,510
)
(4,395
)
(10,011
)
(9,083
)
Total
$
5,050
$
4,239
$
(15,679
)
$
7,055
The following tables have been derived from our unaudited
consolidated financial statements and summarize key components of
our balance sheet and statements of cash flows for the periods
indicated.
Condensed Balance Sheets
July 2,
2023
January 1,
2023
Assets
(dollars in thousands)
Current assets
$
69,433
$
76,162
Property and equipment, net
1,623
2,081
Intangible assets, net
33,156
47,552
Goodwill
58,453
55,193
Other
19,773
13,685
Total assets
$
182,438
$
194,673
Liabilities and stockholders'
equity
Long-term debt, current portion
$
4,000
$
4,000
Other current
24,680
24,207
Line of credit
24,768
22,303
Long-term debt, less current portion
38,368
40,368
Contingent consideration
3,184
—
Other long-term
3,050
3,059
Total liabilities
98,050
93,937
Total stockholders' equity
84,388
100,736
Total liabilities and stockholders'
equity
$
182,438
$
194,673
Working Capital
July 2,
2023
January 1,
2023
(dollars in thousands)
Working capital from continuing
operations
$
40,753
$
47,955
Working capital ratio
2.42
2.70
Condensed Statements of Cash
Flows
Twenty-six Weeks Ended
July 2,
2023
June 26,
2022
(dollars in thousands)
Net cash provided by (used in) continuing
operations:
Operating activities
$
12,549
$
1,217
Investing activities
(8,230
)
26,775
Financing activities
(3,659
)
(25,760
)
Net change in cash used in discontinued
operations
—
(2,299
)
Net change in cash and cash
equivalents
$
660
$
(67
)
BGSF, Inc. 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 contingent consideration
gains and share-based compensation expense, as well as certain
specific events that management does not consider in assessing our
on-going operating performance.
Reconciliation of Income (Loss) from
Continuing Operations to Adjusted EBITDA
Thirteen Weeks Ended
Twenty-six Weeks Ended
Trailing
Twelve
Months
Ended
July 2,
2023
June 26,
2022
July 2,
2023
June 26,
2022
July 2,
2023
(dollars in thousands)
Income (loss) from continuing
operations
$
2,604
$
3,184
$
(13,862
)
$
5,191
$
(7,481
)
Income tax expense (benefit) from
continuing operations
944
986
(4,520
)
1,521
(2,286
)
Interest expense, net
1,502
69
2,703
343
3,772
Operating income (loss)
5,050
4,239
(15,679
)
7,055
(5,995
)
Depreciation and amortization
1,940
922
3,696
1,821
5,929
Impairment losses
—
—
22,545
—
22,545
Share-based compensation
75
243
436
454
1,067
Transaction fees
435
—
753
—
1,025
Adjusted EBITDA from continuing
operations
$
7,500
$
5,404
$
11,751
$
9,330
$
24,571
Adjusted EBITDA Margin (% of revenue)
9.3
%
7.3
%
7.5
%
6.5
%
7.9
%
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 contingent consideration gains, 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 Adjusted EPS
Thirteen Weeks Ended
Twenty-six Weeks Ended
July 2,
2023
June 26,
2022
July 2,
2023
June 26,
2022
Net income (loss) from continuing
operations per diluted share
$
0.24
$
0.30
$
(1.29
)
$
0.50
Acquisition amortization
0.14
0.05
0.27
0.10
Impairment losses
—
—
2.10
—
Transaction fees
0.04
—
0.07
—
Income tax expense adjustment
(0.05
)
(0.01
)
(0.60
)
(0.02
)
Adjusted EPS from continuing
operations
$
0.37
$
0.34
$
0.55
$
0.58
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809426435/en/
Steven Hooser or Sandy Martin Three Part Advisors
ir@bgstaffing.com 214.872.2710 or 214.616.2207
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