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BGSF, Inc. Reports First Quarter 2024 Financial Results Generated $7.4 Million of Operating Cash Flow
Q1 2024 Highlights from Operations:
Revenues were $68.8 million for 2024, compared to $75.3 million for 2023. Gross profit was $23.4 million, from $26.8 million in 2023. Operating income was $0.4 million in 2024, up from an operating loss of $20.7 million, which included a one-time non-cash impairment of $22.5 million related to trade name intangible assets from the branding to BGSF for all entities. The after-tax impact was $16.9 million or $1.58 per diluted share, using the effective tax rate. Net loss was $0.8 million, or $0.07 per diluted share, versus net loss of $16.5 million, or $1.54 per diluted share in 2023, primarily due to the trade name impairment. Adjusted EBITDA(1)was $2.7 million (3.9% of revenues) in 2024 from $4.3 million (5.6% of revenues) in 2023. Adjusted EPS(1) was $0.07 for 2024 compared with $0.16 for 2023.
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
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
March 31, December 31,
2024 2023
---------------------------------------- ----------------------------------------
ASSETS
Current assets
$ 50 $ --
Cash and cash equivalents
52,418 56,776
Accounts receivable (net of allowance for credit losses of $761 and $554, respectively)
2,502 2,963
Prepaid expenses
6,650 7,172
Other current assets
-------------------- -------------------- -------------------- --------------------
61,620 66,911
Total current assets
Property and equipment, net 1,255 1,217
Other assets
2,106 2,699
Deposits
4,902 5,026
Software as a service, net
7,397 7,271
Deferred income taxes, net
4,929 5,435
Right-of-use asset - operating leases, net
29,192 30,370
Intangible assets, net
59,151 59,588
Goodwill
-------------------- -------------------- -------------------- --------------------
107,677 110,389
Total other assets
-------------------- -------------------- -------------------- --------------------
$ 170,552 $ 178,517
Total assets
==================== ==================== ==================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
$ 224 $ 95
Accounts payable
14,879 14,902
Accrued payroll and expenses
-- 24,746
Line of credit (net of debt issuance costs of $128)
3,369 34,000
Long-term debt, current portion (net of debt issuance costs of $31 and $0, respectively)
220 438
Accrued interest
325 282
Income taxes payable
4,229 4,208
Contingent consideration, current portion
4,368 4,368
Convertible note
1,871 2,016
Lease liabilities, current portion
-------------------- -------------------- -------------------- --------------------
29,485 85,055
Total current liabilities
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
-------------------- -------------------- -------------------- --------------------
86,999 92,981
Total liabilities
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 52 52
Additional paid in capital 68,999 68,999 68,999 68,551
--------------------------- -------------------- -------------------- -------------------- --------------------
Retained earnings 14,502 14,502 14,502 16,933
--------------------------- -------------------- -------------------- -------------------- --------------------
83,553 83,553 83,553 85,536
Total stockholders' equity
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share and dividend amounts)
Thirteen Weeks Ended
-------------------------------------------------------------------------------------------------------------------------
March 31, April 2,
2024 2023
------------------------------------------------------ -----------------------------------------------
Revenues $ 68,765 $ 75,316
Cost of services 45,327 48,532
-------------------- -------------- -------------------- -------------------- ------- --------------------
23,438 26,784
Gross profit
Selling, general and administrative expenses 21,016 23,212
Impairment losses -- 22,545
Depreciation and amortization 2,007 1,757
-------------------- -------------- -------------------- -------------------- ------- --------------------
415 (20,730 )
Operating income (loss)
Interest expense, net (1,235 ) (1,200 )
-------------------- -------------- -------------------- -------------------- ------- --------------------
(820 ) (21,930 )
Loss before income taxes
Income tax benefit 28 5,464
-------------------- -------------- -------------------- -------------------- ------- --------------------
$ (792 ) $ (16,466 )
Net loss
==================== ============== ==================== ==================== ======= ====================
Net loss per share:
$ (0.07 ) $ (1.54 )
Basic
$ (0.07 ) $ (1.54 )
Diluted
Weighted-average shares outstanding:
10,831 10,712
Basic
10,831 10,712
Diluted
BUSINESS SEGMENTS
(dollars in thousands)
(unaudited)
Thirteen Weeks Ended
---------------------------------------------------------------------------------------------------------------------------------------------------------------
March 31, April 2,
2024 2023
------------------------------------------------------------------------- ------------------------------------------------------------------
Revenue:
$ 24,547 36 % $ 28,405 38 %
Property Management
44,218 64 % 46,911 62 %
Professional
-------------------- -------------- -------------------- ---------- --------- -------------------- ------- -------------------- ---------- ---------
$ 68,765 100 % $ 75,316 100 %
Total
==================== ============== ==================== ========== ========= ==================== ======= ==================== ========== =========
Gross profit:
$ 9,343 40 % $ 11,347 42 %
Property Management
14,095 60 % 15,437 58 %
Professional
-------------------- -------------- -------------------- ---------- --------- -------------------- ------- -------------------- ---------- ---------
$ 23,438 100 % $ 26,784 100 %
Total
==================== ============== ==================== ========== ========= ==================== ======= ==================== ========== =========
Operating income (loss):
$ 3,402 $ 4,690
Property Management
1,673 2,627
Professional -without impairment losses
-- (22,545 )
Professional - impairment losses
(4,660 ) (5,502 )
Home office
-------------------- -------------- -------------------- -------------------- ------- --------------------
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
March 31, April 2,
2024 2023
-------------------------------------------------------------------------- ------------------------------------------------------
Cash flows from operating activities
$ (792 ) $ (16,466 )
Net loss
Adjustments to reconcile net loss to net cash provided by activities:
94 127
Depreciation
1,913 1,630
Amortization
-- 22,545
Impairment losses
8 --
Loss on disposal of property and equipment
49 46
Amortization of debt issuance costs
(45 ) 22
Interest expense on contingent consideration payable
625 79
Provision for credit losses
235 361
Share-based compensation
(127 ) (5,193 )
Deferred income taxes, net of acquired deferred tax liability
Net changes in operating assets and liabilities, net of effects of acquisitions:
3,733 3,666
Accounts receivable
462 (784 )
Prepaid expenses
513 1,247
Other current assets
593 --
Deposits
180 180
Software as a service
129 (36 )
Accounts payable
(24 ) (3,014 )
Accrued payroll and expenses
(218 ) (103 )
Accrued interest
52 (310 )
Income taxes receivable and payable
1 (58 )
Operating leases
-------------------- -------------- -------------------- -------------------- -------------- --------------------
7,381 3,939
Net cash provided by operating activities
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Cash flows from investing activities
(494 ) (745 )
Capital expenditures
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Cash flows from financing activities
(4,874 ) (646 )
Net payments under line of credit
-- (1,000 )
Principal payments on long-term debt
(1,639 ) (1,618 )
Payments of dividends
112 145
Issuance of ESPP shares
102 --
Issuance of shares under the 2013 Long-Term Incentive Plan, net of exercises
(538 ) (5 )
Debt issuance costs
-------------------- -------------- -------------------- -------------------- -------------- --------------------
(6,837 ) (3,124 )
Net cash used in financing activities
-------------------- -------------- -------------------- -------------------- -------------- --------------------
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:
$ 1,400 $ 1,183
Cash paid for interest, net
$ 40 $ 34
Cash paid for taxes, net of refunds
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 Net Loss to Adjusted EBITDA
(dollars in thousands)
Thirteen Weeks Ended
-------------------------------------------------------------------------------------------------------------------------
March 31, April 2,
2024 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
==================== ============== ==================== ==================== ======= ====================
Reconciliation of Net Loss EPS to Adjusted EPS
Thirteen Weeks Ended
------------------------------------------------------------------------------------------------------------------------
March 31, April 2,
2024 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 )
-------------------- -------------- -------------------- -------------------- ------ --------------------
View source version on businesswire.com: https://www.businesswire.com/news/home/20240508202319/en/
SOURCE: BGSF, Inc.
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Steven Hooser or Sandy Martin Three Part Advisors ir@bgstaffing.com 214.872.2710 or 214.616.2207
COMTEX_452082401/1006/2024-05-08T16:58:00