Revenue Performance - Total revenues for the thirteen weeks ended September 29, 2024, were $71.2 million, a decrease of approximately $12.3 million (14.7%) compared to $83.5 million for the same period in 2023[103]. - For the thirty-nine weeks ended September 29, 2024, total revenues were $208.1 million, a decrease of approximately $31.5 million (13.1%) compared to $239.6 million in the prior year[114]. - Property Management segment revenues decreased by approximately $6.2 million (17.1%) to $29.8 million, primarily due to reduced billed hours and increased competition[105]. - Professional segment revenues decreased by $6.1 million (12.9%) to $41.4 million, mainly due to a decline in billed hours in the Finance & Accounting division[106]. - Property Management revenues for the thirty-nine weeks decreased by approximately $15.4 million (16.1%) due to reduced billed hours and cost pressures[114]. - Professional revenues decreased by approximately $16.1 million (11.2%), with the Arroyo Consulting acquisition contributing $6.8 million of incremental revenues[115]. Profitability - Gross profit for the thirteen weeks ended September 29, 2024, was $24.3 million, down $5.7 million (18.8%) from $30.0 million in the prior year[109]. - Total company gross profit decreased by approximately $14.9 million (17.3%), with gross profit margin declining to 34.3% from 36.0%[118]. - Gross profit margin decreased to 34.2% from 35.9%, primarily due to margin decline in the Property Management segment[109]. - Property Management gross profit decreased by approximately $8.6 million (22.4%) due to increased competition and lower demand[119]. - Professional gross profit decreased by approximately $6.4 million (13.3%), with a $2.3 million contribution from Arroyo Consulting[120]. Expenses and Cost Management - Selling, general and administrative expenses decreased by $0.7 million (3.1%) to $22.0 million, reflecting cost control efforts in response to revenue decline[112]. - Selling, general and administrative expenses decreased by $3.9 million (5.7%) due to cost control efforts[121]. - Interest expense, net decreased by $0.5 million (26.9%) primarily due to lower average balance on the Revolving Facility[113]. - Interest expense decreased by $0.9 million (19.6%) due to reduced accretion on contingent consideration[122]. Cash Flow and Working Capital - Net cash provided by operating activities was $21.2 million for the thirty-nine weeks ended September 29, 2024[133]. - For Fiscal 2024, net cash provided by operating activities was $21.2 million, an increase of $6.2 million compared to $15.1 million in Fiscal 2023[135]. - Working capital increased to $22.0 million from a negative $18.1 million as of December 31, 2023[133]. Strategic Initiatives - The company has initiated a strategic alternatives review to maximize shareholder value, engaging financial advisors for this process[99]. Capital Expenditures and Financing - Capital expenditures in Fiscal 2024 amounted to $1.4 million, primarily for IT improvements, compared to $2.0 million in Fiscal 2023[136]. - The company reduced its Revolving Facility by $17.2 million and paid $4.3 million in contingent consideration related to the Arroyo Consulting acquisition in Fiscal 2024[138]. - The Amended and Restated Credit Agreement allows the company to borrow up to $40 million and includes a term loan commitment[140]. - As of September 29, 2024, the company was in compliance with all affirmative and negative covenants under the First Credit Amendment[141]. - The company has a maximum financial exposure of $0.1 million from a standby letter of credit arrangement related to the EdgeRock acquisition[142]. Economic Environment - The current inflationary environment may negatively impact labor markets and increase borrowing costs for the company[146]. Accounting Policies - Revenue is recognized when workforce solutions are delivered, with various service types contributing to total revenue[147]. - Intangible assets are amortized over estimated useful lives ranging from three to ten years, with purchased software capitalized[148]. - Goodwill is reviewed for impairment annually, with the company assessing the recoverability of its carrying value[149].

Core Viewpoint - BGSF reported a quarterly loss of $0.07 per share, missing the Zacks Consensus Estimate of $0.11, and showing a significant decline from earnings of $0.36 per share a year ago, indicating an earnings surprise of -163.64% [1] Financial Performance - BGSF's revenues for the quarter ended September 2024 were $71.19 million, which missed the Zacks Consensus Estimate by 5.09% and decreased from $83.48 million year-over-year [2] - The company has not surpassed consensus revenue estimates over the last four quarters [2] Stock Performance - BGSF shares have declined approximately 19.2% since the beginning of the year, contrasting with the S&P 500's gain of 21.2% [3] Future Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $0.09 on revenues of $75.5 million, and for the current fiscal year, it is $0.06 on revenues of $287.4 million [7] Industry Context - The Business - Services industry, to which BGSF belongs, is currently ranked in the top 23% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Performance - Revenues for Q3 2024 were $71.2 million, a 4.5% increase from Q2 2024's $68.1 million, driven by a 15.9% increase in the Property Management segment[3][6] - Gross profit rose to $24.3 million in Q3 2024, up from $23.6 million in Q2 2024, primarily due to higher sales in Property Management[4] - Adjusted EBITDA for Q3 2024 was $3.2 million, representing 4.5% of revenues, compared to $2.6 million (3.8% of revenues) in Q2 2024[4][5] - Adjusted EPS increased to $0.10 in Q3 2024 from $0.07 in Q2 2024[4][5] - Revenues for the thirteen weeks ended September 29, 2024, were $71,186, a decrease of 14.7% compared to $83,484 for the same period in 2023[14] - Gross profit for the thirty-nine weeks ended September 29, 2024, was $71,397, down 17.3% from $86,337 in the prior year[14] - Operating income for the thirteen weeks ended September 29, 2024, was $470, a significant decline from $5,267 in the same period last year[14] - Net loss for the thirty-nine weeks ended September 29, 2024, was $(2,357), compared to a net loss of $(11,222) for the same period in 2023[14] - Adjusted EBITDA for the thirteen weeks ended September 29, 2024, was $3,208, representing a margin of 4.5% of revenue[22] - Adjusted EPS for the thirteen weeks ended September 29, 2024, is $0.10, compared to $0.36 for the same period last year[23] - Net (loss) income per diluted share for the thirteen weeks ended September 29, 2024, is $(0.07), a decrease from $0.24 in the prior year[23] - The adjusted EPS for the thirty-nine weeks ended September 29, 2024, is $0.24, down from $0.93 in the previous year[23] - The company reported a net (loss) income per diluted share of $(0.22) for the thirty-nine weeks ended September 29, 2024[23] Segment Performance - The Professional segment experienced a 2.5% revenue decline from Q2 2024, attributed to a decrease in billed hours in the Finance & Accounting division[4][6] - Property Management segment revenue for the thirteen weeks ended September 29, 2024, was $29,824, accounting for 42% of total revenue[15] - Professional segment revenue for the same period was $41,362, making up 58% of total revenue[15] Expenses and Liabilities - Total current assets decreased to $51.5 million in Q3 2024 from $66.9 million in Q2 2024[12] - Total liabilities were reported at $74.4 million, down from $92.9 million in the previous quarter[12] - Selling, general and administrative expenses for the thirty-nine weeks ended September 29, 2024, were $64,549, down from $68,475 in the previous year[14] - The company reported interest expense, net, of $(1,222) for the thirteen weeks ended September 29, 2024, compared to $(1,672) in the same period last year[14] Strategic Initiatives - The company launched an advanced lead generation technology in Q3 2024, improving lead acquisition and conversion rates[4][7] - The company is focused on expanding consulting efforts and has plans for further technology enhancements in Q4 2024[6][7] Company Rankings - BGSF was ranked as the 97th largest U.S. staffing company and the 49th largest IT staffing firm in 2024[9] Other Financial Metrics - Cash dividends declared per common share were $0.15 for the thirty-nine weeks ended October 1, 2023, unchanged from the previous year[14] - Acquisition amortization for the thirteen weeks ended September 29, 2024, is $0.13, compared to $0.15 for the same period last year[23] - Impairment losses (pre-tax) for the thirty-nine weeks ended September 29, 2024, are $0, while the previous year recorded $2.10[23] - Strategic alternatives review contributed $0.05 to adjusted EPS for the thirteen weeks ended September 29, 2024[23] - Transaction fees for the thirteen weeks ended October 1, 2023, were $0.01, compared to $0.08 in the previous year[23] - Income tax expense adjustment for the thirteen weeks ended September 29, 2024, is $(0.01), compared to $(0.04) in the prior year[23]

Financial Data and Key Metrics Changes - Total revenues for Q2 2024 were $68 million, down from $80.8 million in the prior year quarter, and flat sequentially [7] - Gross profit was $23.6 million with a margin of 34.7%, compared to $29.6 million and 36.6% in the prior year [8] - Adjusted EBITDA for Q2 was $2.6 million or 3.8% of revenue, down from $7.5 million or 9.3% in Q2 2023 [9] Business Line Data and Key Metrics Changes - Property Management revenues were approximately $26 million, down year-over-year but up sequentially by 4.8% from Q1 2024 [5][7] - Professional segment revenues were approximately $42 million, declining both sequentially and year-over-year due to project ends exceeding project starts [6][7] - New contract wins in the Professional segment outpaced contract ends by approximately 25% through June [6] Market Data and Key Metrics Changes - The multifamily sector experienced higher M&A activity, leading to delays in capital decisions and increased deferred maintenance levels [13] - A pilot market for territory mapping strategy saw a 19% increase in revenue year-over-year [13] Company Strategy and Development Direction - The company is focused on maximizing shareholder value through a review of strategic alternatives [4] - There is a strategic shift towards managed solutions and IT consulting, with an emphasis on building long-term partnerships [15][17] - The company is enhancing its sales enablement process and targeting properties with specific campaigns [12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the second half of 2024, expecting improved results in both segments [11] - The company anticipates a strong revenue ramp-up in the Professional division starting in Q3 [16] - Management noted that macroeconomic pressures, including inflation and interest rates, continue to challenge the industry [5] Other Important Information - The company has reduced funded debt from $63 million at the end of 2023 to $52 million at the end of Q2 2024 [9] - The company has been recognized as the 49th largest IT staffing firm in the U.S., an improvement from 52nd [4] Q&A Session Summary Question: Expectations for the third and fourth quarters - Management believes the second half of the year will be significantly better than the first half in both segments, with positive momentum in contract wins [19] Question: Status of large contracts - Some large contracts have started, with significant revenue expected to begin in late August and September [20] Question: Working capital and cash flow - Management feels comfortable with capital availability, attributing improved cash flow to effective accounts receivable management [23] Question: Pipeline and verticals for projects - The pipeline is primarily in technology, focusing on managed solutions and expanding service offerings to existing customers [24] Question: Trends in permanent placements - There has been double-digit growth in permanent placements, indicating increased confidence in the economy [28] Question: Reasons for increased contract wins - The increase in contract wins is attributed to pent-up demand as companies move forward with ERP system upgrades [29]

Company Performance - BGSF reported a quarterly loss of $0.07 per share, missing the Zacks Consensus Estimate of $0.08, and down from earnings of $0.24 per share a year ago, representing an earnings surprise of -187.50% [1] - The company posted revenues of $68.14 million for the quarter ended June 2024, missing the Zacks Consensus Estimate by 7.92%, and down from $80.8 million in the same quarter last year [2] - Over the last four quarters, BGSF has surpassed consensus EPS estimates three times but has not beaten consensus revenue estimates [2] Stock Performance - BGSF shares have lost about 10.6% since the beginning of the year, while the S&P 500 has gained 9.9% [3] - The current Zacks Rank for BGSF is 3 (Hold), indicating that shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the coming quarter is $0.30 on $83 million in revenues, and $0.40 on $300.77 million in revenues for the current fiscal year [7] - The outlook for the industry can significantly impact the stock's performance, with the Business - Services industry currently in the top 34% of Zacks industries [8]

Financial Performance - Q2 2024 revenues were $68.1 million, a slight decrease of 1.0% from Q1 2024's $68.8 million[3] - Adjusted EBITDA for Q2 2024 was $2.6 million, representing 3.8% of revenues, down from 4.0% in Q1 2024[3] - Net loss for Q2 2024 was $0.8 million, or $0.07 per diluted share, consistent with Q1 2024[3] - Revenues for the thirteen weeks ended June 30, 2024, were $68,137, a decrease of 15.0% compared to $80,800 for the same period in 2023[12] - Gross profit for the twenty-six weeks ended June 30, 2024, was $47,068, down 16.4% from $56,358 in 2023[12] - Operating income for the thirteen weeks ended June 30, 2024, was $81, compared to $5,050 in the same period of 2023, indicating a significant decline[12] - Net loss for the twenty-six weeks ended June 30, 2024, was $(1,553), an improvement from a net loss of $(13,862) in 2023[12] - Adjusted EBITDA for the thirteen weeks ended June 30, 2024, was $2.6 million, with an adjusted EBITDA margin of 3.8%[18] - Net loss income per diluted share for the thirteen weeks ended June 30, 2024, was $(0.07), compared to $0.24 for the same period in the previous year[19] - The company reported an operating income of $81,000 for the thirteen weeks ended June 30, 2024, compared to $5.05 million for the same period last year[18] - Total interest expense, net, was $1.06 million for the thirteen weeks ended June 30, 2024, down from $1.5 million in the prior year[18] - Adjusted EPS for the thirteen weeks ended June 30, 2024, was $0.07, down from $0.37 in the same period last year[19] - The company reported a net loss income of $(1.55) million for the twenty-six weeks ended June 30, 2024, compared to $(13.86) million for the same period last year[18] Segment Performance - Property Management segment revenues increased by 4.8% from Q1 2024, while Professional segment revenues declined by 4.1%[3] - Property Management segment revenue for the thirteen weeks ended June 30, 2024, was $25,726, representing 38% of total revenue[13] - Professional segment revenue for the same period was $42,411, accounting for 62% of total revenue[13] Strategic Initiatives - The company anticipates a strong revenue ramp-up in the Professional division starting in Q3 2024[6] - New contract wins in Q2 2024 outpaced contract ends by approximately 25%[5] - The company has been recognized in Staffing Industry Analysts' 2024 U.S. rankings, placing in the top 50 for U.S. IT staffing firms[7] - The company reduced headcount and lowered fixed costs in the first half of 2024 to align with revenues and strategic growth plans[4] - The company is evaluating strategic alternatives to maximize shareholder value, with no updates available at this time[6] - The company is reviewing strategic alternatives, incurring $280,000 in related costs for the thirteen weeks ended June 30, 2024[18] Cash Flow and Assets - Total assets as of June 30, 2024, were $159.8 million, down from $178.5 million a year earlier[11] - The company reported cash flows from operating activities of $14,717 for the twenty-six weeks ended June 30, 2024, compared to $12,549 in 2023[14] - The company had capital expenditures of $(995) for the twenty-six weeks ended June 30, 2024, down from $(1,490) in 2023[14] - Cash and cash equivalents at the end of the period were $226, indicating a stable liquidity position[14] Impairment and Costs - The company incurred impairment losses of $22.5 million for the thirteen weeks ended July 2, 2023[18] - Share-based compensation increased to $236,000 for the thirteen weeks ended June 30, 2024, compared to $75,000 for the same period last year[18] - Transaction fees for the thirteen weeks ended June 30, 2024, were $25,000, significantly lower than $435,000 in the prior year[18]

Financial Performance - Total revenues for the thirteen weeks ended June 30, 2024, were $68.1 million, a decrease of approximately $12.7 million (15.7%) compared to $80.8 million for the same period in 2023[85]. - Property Management segment revenues decreased by approximately $5.4 million (17.2%) to $25.7 million, primarily due to reduced billed hours and increased competition[87]. - Professional segment revenues decreased by $7.3 million (14.7%) to $42.4 million, with a decline of $8.9 million (19.6%) in the remaining Professional business[88]. - Gross profit decreased by approximately $5.9 million (20.1%) to $23.6 million, with a gross profit margin declining to 34.7% from 36.6%[90]. - Adjusted EBITDA for the thirteen weeks ended June 30, 2024, was $2.6 million, representing a margin of 3.4% of revenue, compared to $7.5 million (9.3% margin) for the same period last year[105]. - Net loss for the thirteen weeks ended June 30, 2024, was $761,000, compared to net income of $2.6 million for the same period in 2023[85]. Cost Management - Selling, general and administrative expenses decreased by $1.0 million (4.5%) to $21.6 million, reflecting cost control efforts[92]. - Selling, general and administrative expenses decreased $3.2 million (7.0%) due to expense reduction and cost control efforts[99]. - Interest expense decreased by $0.4 million (29.4%) primarily due to reduced accretion on contingent consideration[93]. - Interest expense decreased $0.4 million (15.0%) primarily due to reduced accretion on contingent consideration associated with Arroyo Consulting[100]. Strategic Initiatives - The company announced a strategic alternatives review on May 8, 2024, to maximize shareholder value[82]. - The company reduced its Revolving Facility by $10.8 million in Fiscal 2024, while paying down $0.9 million on the Term Loan[111]. - The Amended and Restated Credit Agreement allows for a revolving credit facility of up to $40 million and a delayed draw term loan commitment of $4.3 million[113]. - The company has a maximum Leverage Ratio and a minimum Fixed Charge Coverage Ratio as per the Restated Agreement[113]. Cash Flow and Working Capital - Net cash provided by operating activities was $14.7 million, an increase of $2.2 million compared to $12.5 million for Fiscal 2023[109]. - Working capital increased to $26.7 million as of June 30, 2024, compared to a negative $18.1 million at the end of December 31, 2023[108]. Market Conditions - The current inflationary environment is negatively impacting the economy, potentially affecting labor demand and increasing borrowing costs[117]. Revenue Recognition and Accounting Policies - Revenue is recognized when workforce solutions are delivered, with services including workforce solutions, contingent placements, and managed services[118]. - Intangible assets with finite useful lives are amortized over three to ten years, while those with indefinite lives are not amortized[119]. - Goodwill is reviewed for impairment annually or when circumstances indicate potential recoverability issues[120]. - The company is exposed to interest rate and inflation risks, with variable interest rates on its Revolving Facility and Term Loan[123].

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BGSF Inc. (NYSE:BGSF) Q1 2024 Results Conference Call May 9, 2024 9:00 AM ET Company Participants Sandy Martin - Managing Director Beth Garvey - Chair, President and Chief Executive Officer John Barnett - Chief Financial Officer Conference Call Participants Jeff Martin - ROTH Capital Howard Halpern - Taglich Brothers Bill Dezellem - Tieton Capital Mike Taglich - Taglich Brothers George Melas - MKH Management Operator Good morning, and welcome to the BGSF Inc. Fiscal 2024 First Quarter Financial Results Conf ...

As a result of the economic uncertainty, we may need to make necessary changes to accounting policy judgments and estimates over time, which could result in meaningful impacts to our financial statements in future periods. Actual results and outcomes may differ from our estimates and assumptions. We derive our revenues from operations in our Property Management and Professional segments. We provide workforce solutions, placement services, and managed services. Revenues are recognized when promised workforce ...