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0001474903FalseQ32024BGSF, INC.00014749032024-01-012024-09-2900014749032024-11-062024-11-06

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):
November 6, 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 November 6, 2024, BGSF, Inc. (the "Company") issued a press release regarding its financial results for the third fiscal quarter ended September 29, 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 November 6, 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: November 6, 2024   /s/ John Barnett
  Name:
Title:
John Barnett
Chief Financial Officer and Secretary
(Principal Financial Officer)
 
 

EX-99 2 ex991q32024earnings.htm EX-99.1 Document

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BGSF, Inc. Reports Third Quarter 2024 Financial Results

PLANO, Texas – (November 6, 2024) – BGSF, Inc. (NYSE: BGSF), a growing provider of consulting, managed services, and professional workforce solutions, today reported financial results for the third fiscal quarter ended September 29, 2024.

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.

SUMMARY OF FINANCIAL RESULTS
(dollars in thousands) (unaudited)
For the Thirteen Week Periods Ended
  September 29,
2024
October 1,
2023
June 30,
2024
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 
1 Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures as defined and reconciled below.



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Beth A. Garvey, Chair, President, and CEO, said, “Although economic uncertainties persist and the demand environment remains choppy for the entire IT consulting and workforce industry, we are pleased to report that our third quarter total revenues improved sequentially by 4.5%. This sales progression was due to a seasonal lift in Property Management, up 15.9%, compared to the second quarter. In addition, the Professional segment stabilized late in the quarter, down 2.5% for the quarter compared to the second quarter. We continue to launch 2024 project wins expeditiously, including the major IT transformation project related to a large international client that we discussed last quarter. Our largest category in Professional, IT consulting, maintained stable topline revenues between second and third quarters, which is positive. Finance & Accounting experienced lower project work in the third quarter due to typical seasonality for calendar reporting clients. Permanent placements stabilized with flat revenues between second and third quarters. Conversely, Managed Solutions continued to grow sequentially, which aligns with our strategic goals of expanding our consulting efforts. We remain cautiously optimistic at the pockets of revenue categories that stabilized this quarter but continue to tightly manage costs and expenses.

“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
BGSF will discuss its third quarter 2024 financial results during a conference call and webcast at 9:00 a.m. ET on November 7, 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 November 14, 2024. To access the replay, please dial 1-877-344-7529 (Toll Free), or 1-412-317-0088 (International) and enter access code 4519768. 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 97th largest U.S. staffing company and the 49th largest IT staffing firm in 2024. 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.





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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 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,” “anticipates,” “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:
Steven Hooser or Sandy Martin (in thousands, except share amounts)
Three Part Advisors
ir@bgstaffing.com 214.872.2710 or 214.616.2207

Source: BGSF, Inc.




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UNAUDITED CONSOLIDATED BALANCE SHEETS
September 29,
2024
December 31, 2023
ASSETS
Current assets    
Cash and cash equivalents $ 262  $ — 
Accounts receivable (net of allowance for credit losses of $933 and $554, respectively) 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 
Goodwill 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 $128) —  24,746 
Long-term debt, current portion (net of debt issuance costs of $27 and $0, respectively) 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 $305) 7,381  — 
Long-term debt, less current portion (net of debt issuance costs of $220) 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, $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 11,006,696 and 10,887,509 shares issued and outstanding, respectively, net of 3,930 shares of treasury stock, at cost, respectively. 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 





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UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share and dividend amounts)
 
For the Thirteen and Thirty-nine Week Periods Ended September 29, 2024 and October 1, 2023
 
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 
 




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BUSINESS SEGMENTS
(dollars in thousands)
(unaudited)
Thirteen Weeks Ended Thirty-nine Weeks Ended
  September 29,
2024
October 1,
2023
September 29,
2024
October 1,
2023
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)



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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

For the Thirty-nine Week Periods Ended September 29, 2024 and October 1, 2023
  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 




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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, 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
(dollars in thousands)
  Thirteen Weeks Ended Thirty-nine Weeks Ended Thirteen Weeks Ended
  September 29,
2024
October 1,
2023
September 29,
2024
October 1,
2023
June 30,
2024
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 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  %





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Reconciliation of Net (Loss) Income EPS to Adjusted EPS
  Thirteen Weeks Ended Thirty-nine Weeks Ended Thirteen Weeks Ended
  September 29,
2024
October 1,
2023
September 29,
2024
October 1,
2023
June 30,
2024
 
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