Announces 36th Consecutive Quarterly
Dividend Quarterly Revenues Up 6% Generated $15
Million of Operating Cash Flow Year-to-Date
BGSF, Inc. (NYSE: BGSF), a growing provider of consulting,
managed services, and professional workforce solutions, today
reported financial results for the third quarter ended October 1,
2023.
Q3 2023 Highlights from Continuing Operations:
- Revenues were $83.5 million, up 6.3% from 2022. Property
Management sales grew organically by 8.2% versus the prior year
quarter. Professional revenues grew by 5.0%, including acquired
revenues, partially offset by an organic contraction of 20.6%,
compared to the prior year.
- Gross profit was $30.0 million, up 7.1% from 2022. Gross profit
margins increased to 35.9% in 2023, from 35.7% in 2022.
- Net income from continuing operations was $2.6 million, or
$0.24 per diluted share, compared to $4.7 million in 2022,
primarily due to increased acquisition amortization and interest
expense.
- Adjusted EBITDA1 from continuing operations was $7.9 million
(9.4% of revenues), vs. $8.0 million in 2022.
- Adjusted EPS1 from continuing operations was $0.36 per diluted
share, vs. $0.48 per diluted share in 2022.
Nine Month 2023 Highlights from Continuing
Operations2:
- Revenues were $239.6 million, up 8.3% from 2022.
- Gross profit was $86.3 million, up 12.9% from 2022. Gross
profit margins increased to 36.0% in 2023, from 34.6% in 2022.
- Operating income (loss) in 2023 includes a non-cash impairment
of $22.5 million related to trade name intangible assets from the
rebranding to BGSF for all entities. The after-tax impact was $17.1
million or $1.59 per diluted share, using the year-to-date
effective tax rate.
- Net loss from continuing operations was $11.2 million, or $1.04
per diluted share, compared to net income of $9.8 million in 2022,
primarily due to trade name impairment and increased acquisition
amortization and interest expense.
- Adjusted EBITDA1 from continuing operations was $19.6 million
(8.2% of revenues), vs. $17.4 million in 2022.
- Adjusted EPS1 from continuing operations was $0.93 per diluted
share in 2023, vs. $1.05 per diluted share in 2022.
Beth A. Garvey, Chair, President, and Chief Executive Officer,
stated, “Our performance for the third quarter reflects the
continued progression of our long-term strategic plans to grow
through a combination of organic and inorganic revenues, and by
diversifying into higher value, specialized property management and
professional consulting that drive improving gross margins. Total
third quarter revenues grew by 6.3% to $83.5 million through a
combination of acquired revenues and organic growth in property
management, partially offset by sales softness on the professional
side. For the first nine months of the year, we generated net cash
from operations of $15 million.
“Despite a challenging and uncertain macro environment, we
continue to focus on our controllable initiatives to drive
long-term shareholder value and cash flow to fund additional growth
and generate sustainable returns to shareholders through our
quarterly cash dividends,” concluded Garvey.
1Non-GAAP financial measure. See
reconciliation below for details.
22023 operation results includes
twenty-three weeks of Arroyo Consulting and thirty-nine weeks of
Horn Solutions.
Q3 2023 Cash Dividend Declared:
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 November 28, 2023 to all
shareholders of record as of the close of business on November 20,
2023. This marks the 36th consecutive quarterly dividend.
Conference Call
BGSF will discuss its third fiscal quarter and nine month 2023
financial results during a conference call and webcast at 9:00 a.m.
ET on November 9, 2023. Interested participants may dial
1-877-317-6789 (Toll Free) or 1-412-317-6789 (International). A
replay of the call will be available until November 16, 2023. To
access the replay, please dial 1-877-344-7529 (Toll Free), or
1-412-317-0088 (International) and enter access code 2158975. 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 Services, and
Property Management (formally known as Real Estate which includes
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 https://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
(in thousands, except per share
amounts)
Thirteen Weeks Ended
Thirty-nine Weeks Ended
October 1, 2023
September 25, 2022
October 1, 2023
September 25, 2022
Revenues
$
83,484
$
78,508
$
239,600
$
221,139
Cost of services
53,505
50,508
153,263
144,649
Gross profit
29,979
28,000
86,337
76,490
Selling, general and administrative
expenses
22,679
20,386
68,475
60,001
Impairment losses
—
—
22,545
—
Depreciation and amortization
2,033
1,145
5,729
2,966
Operating income (loss)
5,267
6,469
(10,412
)
13,523
Interest expense, net
(1,672
)
(376
)
(4,375
)
(718
)
Income (loss) from continuing operations
before income taxes
3,595
6,093
(14,787
)
12,805
Income tax (expense) benefit from
continuing operations
(955
)
(1,441
)
3,565
(2,961
)
Income (loss) from continuing
operations
2,640
4,652
(11,222
)
9,844
Income from discontinued operations:
Income
—
—
—
1,235
Gain on sale
—
—
—
17,266
Income tax expense
—
—
—
(4,716
)
Net income (loss)
$
2,640
$
4,652
$
(11,222
)
$
23,629
Net income (loss) per share - diluted
Net income (loss) from continuing
operations
$
0.24
$
0.44
$
(1.04
)
$
0.93
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
$
0.44
$
(1.04
)
$
2.25
Weighted-average shares outstanding:
Basic
10,791
10,492
10,753
10,465
Diluted
10,803
10,533
10,753
10,511
Business Segments
(in thousands)
Thirteen Weeks Ended
Thirty-nine Weeks Ended
October 1, 2023
September 25, 2022
October 1, 2023
September 25, 2022
Revenue:
Property Management
$
35,976
43
%
$
33,241
42
%
$
95,453
40
%
$
89,137
40
%
Professional
47,508
57
%
45,267
58
%
144,147
60
%
132,002
60
%
Total
$
83,484
100
%
$
78,508
100
%
$
239,600
100
%
$
221,139
100
%
Gross profit:
Property Management
$
14,197
47
%
$
13,548
48
%
$
38,196
44
%
$
35,093
46
%
Professional
15,782
53
%
14,452
52
%
48,141
56
%
41,397
54
%
Total
$
29,979
100
%
$
28,000
100
%
$
86,337
100
%
$
76,490
100
%
Operating income (loss):
Property Management
$
7,212
$
6,148
$
17,676
$
15,000
Professional - without impairment
losses
3,253
5,172
9,666
12,458
Professional - impairment losses
—
—
(22,545
)
—
Home office
(5,198
)
(4,851
)
(15,209
)
(13,935
)
Total
$
5,267
$
6,469
$
(10,412
)
$
13,523
The following tables have been derived from our unaudited
consolidated financial statements and summarize key components of
our balance sheets and statements of cash flows.
Condensed Balance
Sheets
(in thousands)
October 1, 2023
January 1, 2023
Assets
Current assets
$
72,689
$
76,162
Property and equipment, net
1,603
2,081
Intangible assets, net
31,619
47,552
Goodwill
58,453
55,193
Other
19,310
13,685
Total assets
$
183,674
$
194,673
Liabilities and stockholders'
equity
Line of credit, current
$
26,666
$
—
Long-term debt, current portion
35,000
4,000
Other current
25,582
24,207
Line of credit
—
22,303
Long-term debt, less current portion
4,368
40,368
Contingent consideration
3,309
—
Other long-term
2,833
3,059
Total liabilities
97,758
93,937
Total stockholders' equity
85,916
100,736
Total liabilities and stockholders'
equity
$
183,674
$
194,673
Working Capital
(in thousands)
October 1, 2023
January 1, 2023
Working capital
$
(14,559
)
$
47,955
Working capital ratio
0.83
2.70
Condensed Statements of Cash
Flows
(in thousands)
Thirty-nine Weeks Ended
October 1, 2023
September 25, 2022
Net cash provided by (used in) continuing
operations:
Operating activities
$
15,094
$
(5,557
)
Investing activities
(8,759
)
25,633
Financing activities
(6,335
)
(17,888
)
Net change in cash used in discontinued
operations
—
(2,300
)
Net change in cash and cash
equivalents
$
—
$
(112
)
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 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.
Reconciliation of Income
(Loss) from Continuing Operations to Adjusted EBITDA
(in thousands)
Thirteen Weeks Ended
Thirty-nine Weeks Ended
Trailing Twelve Months Ended
October 1, 2023
September 25, 2022
October 1, 2023
September 25, 2022
October 1, 2023
Income (loss) from continuing
operations
$
2,640
$
4,652
$
(11,222
)
$
9,844
$
(9,805
)
Income tax expense (benefit) from
continuing operations
955
1,441
(3,565
)
2,961
(2,866
)
Interest expense, net
1,672
376
4,375
718
5,019
Operating income (loss)
5,267
6,469
(10,412
)
13,523
(7,652
)
Depreciation and amortization
2,033
1,145
5,729
2,966
6,816
Impairment losses
—
—
22,545
—
22,545
Share-based compensation
408
411
844
865
1,064
Transaction fees
149
6
901
6
1,166
Adjusted EBITDA from continuing
operations
$
7,857
$
8,031
$
19,607
$
17,360
$
23,939
Adjusted EBITDA Margin (% of revenue)
9.4
%
10.2
%
8.2
%
7.9
%
7.6
%
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 Adjusted
EPS
Thirteen Weeks Ended
Thirty-nine Weeks Ended
October 1, 2023
September 25, 2022
October 1, 2023
September 25, 2022
Net income (loss) from continuing
operations per diluted share
$
0.24
$
0.44
$
(1.04
)
$
0.93
Acquisition amortization
0.15
0.05
0.42
0.16
Impairment losses
—
—
2.10
—
Transaction fees
0.01
—
0.08
—
Income tax expense adjustment
(0.04
)
(0.01
)
(0.63
)
(0.04
)
Adjusted EPS from continuing
operations
$
0.36
$
0.48
$
0.93
$
1.05
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108405144/en/
Steven Hooser or Sandy Martin Three Part Advisors
ir@bgstaffing.com 214.872.2710 or 214.616.2207
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