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0001474903FalseQ12024BGSF, INC.00014749032024-01-012024-03-3100014749032024-05-082024-05-08

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 
 Date of Report (Date of earliest event reported):
May 8, 2024

bgicon2019a02.jpg 
BGSF, INC.
(Exact Name of Registrant as Specified in its Charter)
 
Delaware 001-36704 26-0656684
(State or Other Jurisdiction of
Incorporation)		 (Commission File Number) (I.R.S. Employer Identification
Number)
5850 Granite Parkway, Suite 730
Plano, Texas 75024
(Address of principal executive offices, including zip code)
 
(972) 692-2400
(Registrant’s telephone number, including area code)
 
Not applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨


Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock BGSF NYSE
Item 2.02 Results of Operations and Financial Condition.
On May 8, 2024, BGSF, Inc. (the "Company") issued a press release regarding its financial results for the first fiscal quarter ended March 31, 2024. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The Company is making reference to non-GAAP financial information in the press release and the related conference call, and a reconciliation of GAAP to non-GAAP results is provided in the press release.

Item 7.01 Regulation FD Disclosure.
 
The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.
 
(d)Exhibits
Exhibit No. Description
99.1 May 8, 2024
104.0 Cover Page Interactive Data File (embedded within the Inline XBRL document)


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
   
    BGSF, INC.
     
     
Date: May 8, 2024   /s/ John Barnett
  Name:
Title:		 John Barnett
Chief Financial Officer and Secretary
(Principal Financial Officer)
 
 

EX-99 2 ex991q12024earnings.htm EX-99.1 Document

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BGSF, Inc. Reports First Quarter 2024 Financial Results
Generated $7.4 Million of Operating Cash Flow

PLANO, Texas – (May 8, 2024) – BGSF, Inc. (NYSE: BGSF), a growing provider of consulting, managed services, and professional workforce solutions, today reported financial results for the first fiscal quarter ended March 31, 2024.

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 EBITDA1 was $2.7 million (3.9% of revenues) in 2024 from $4.3 million (5.6% of revenues) in 2023.
•Adjusted EPS1 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.


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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.

CONTACT:
Three Part Advisors
ir@bgstaffing.com 214.872.2710 or 214.616.2207

Source: BGSF, Inc.



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GAAP FINANCIAL MEASURES

Steven Hooser or Sandy Martin Portions of 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) by reportable segment to consolidated results for the periods indicated.

UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
March 31,
2024		 December 31, 2023
ASSETS
Current assets    
Cash and cash equivalents $ 50  $ — 
Accounts receivable (net of allowance for credit losses of $761 and $554, respectively) 52,418  56,776 
Prepaid expenses 2,502  2,963 
Other current assets 6,650  7,172 
Total current assets 61,620  66,911 
Property and equipment, net 1,255  1,217 
Other assets    
Deposits 2,106  2,699 
Software as a service, net 4,902  5,026 
Deferred income taxes, net 7,397  7,271 
Right-of-use asset - operating leases, net 4,929  5,435 
Intangible assets, net 29,192  30,370 
Goodwill 59,151  59,588 
Total other assets 107,677  110,389 
Total assets $ 170,552  $ 178,517 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities    
Accounts payable $ 224  $ 95 
Accrued payroll and expenses 14,879  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 $31 and $0, respectively) 3,369  34,000 
Accrued interest 220  438 
Income taxes payable 325  282 
Contingent consideration, current portion 4,229  4,208 
Convertible note 4,368  4,368 
Lease liabilities, current portion 1,871  2,016 
Total current liabilities 29,485  85,055 
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 
Total liabilities 86,999  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 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 
Additional paid in capital 68,999  68,551 
Retained earnings 14,502  16,933 
Total stockholders’ equity 83,553  85,536 
Total liabilities and stockholders’ equity $ 170,552  $ 178,517 



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UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share and dividend amounts)
 
Thirteen Weeks Ended
  March 31, 2024 April 2, 2023
Revenues $ 68,765  $ 75,316 
Cost of services 45,327  48,532 
Gross profit 23,438  26,784 
Selling, general and administrative expenses 21,016  23,212 
Impairment losses —  22,545 
Depreciation and amortization 2,007  1,757 
Operating income (loss) 415  (20,730)
Interest expense, net (1,235) (1,200)
Loss before income taxes (820) (21,930)
Income tax benefit 28  5,464 
Net loss $ (792) $ (16,466)
Net loss per share:    
Basic $ (0.07) $ (1.54)
Diluted $ (0.07) $ (1.54)
Weighted-average shares outstanding:    
Basic 10,831  10,712 
Diluted 10,831  10,712 
Cash dividends declared per common share $ 0.15  $ 0.15 




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BUSINESS SEGMENTS
(dollars in thousands)
(unaudited)
  Thirteen Weeks Ended
  March 31,
2024		 April 2,
2023
Revenue:    
Property Management $ 24,547  36  % $ 28,405  38  %
Professional 44,218  64  % 46,911  62  %
Total $ 68,765  100  % $ 75,316  100  %
Gross profit:
Property Management $ 9,343  40  % $ 11,347  42  %
Professional 14,095  60  % 15,437  58  %
Total $ 23,438  100  % $ 26,784  100  %
Operating income (loss):
Property Management $ 3,402  $ 4,690 
Professional -without impairment losses 1,673  2,627 
Professional - impairment losses —  (22,545)
Home office (4,660) (5,502)
Total $ 415  $ (20,730)


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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
  March 31,
2024		 April 2,
2023
Cash flows from operating activities    
Net loss $ (792) $ (16,466)
Adjustments to reconcile net loss to net cash provided by activities:    
Depreciation 94  127 
Amortization 1,913  1,630 
Impairment losses —  22,545 
Loss on disposal of property and equipment 8  — 
Amortization of debt issuance costs 49  46 
Interest expense on contingent consideration payable (45) 22 
Provision for credit losses 625  79 
Share-based compensation 235  361 
Deferred income taxes, net of acquired deferred tax liability (127) (5,193)
Net changes in operating assets and liabilities, net of effects of acquisitions:    
Accounts receivable 3,733  3,666 
Prepaid expenses 462  (784)
Other current assets 513  1,247 
Deposits 593  — 
Software as a service 180  180 
Accounts payable 129  (36)
Accrued payroll and expenses (24) (3,014)
Accrued interest (218) (103)
Income taxes receivable and payable 52  (310)
Operating leases 1  (58)
Net cash provided by operating activities 7,381  3,939 
Cash flows from investing activities    
Capital expenditures (494) (745)
Net cash used in investing activities (494) (745)
Cash flows from financing activities    
Net payments under line of credit (4,874) (646)
Principal payments on long-term debt —  (1,000)
Payments of dividends (1,639) (1,618)
Issuance of ESPP shares 112  145 
Issuance of shares under the 2013 Long-Term Incentive Plan, net of exercises 102  — 
Debt issuance costs (538) (5)
Net cash used in financing activities (6,837) (3,124)
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:    
Cash paid for interest, net $ 1,400  $ 1,183 
Cash paid for taxes, net of refunds $ 40  $ 34 





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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.

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 Net Loss to Adjusted EBITDA
(dollars in thousands)
  Thirteen Weeks Ended
  March 31,
2024		 April 2,
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 
Adjusted EBITDA Margin (% of revenue) 3.9  % 5.6  %




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Reconciliation of Net Loss EPS to Adjusted EPS
  Thirteen Weeks Ended
  March 31,
2024		 April 2,
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)
Adjusted EPS $ 0.07  $ 0.16