August 12, 2022

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BGSF, Inc. Reports Strong Second Quarter 2022 Financial Results and Declares 31st Consecutive Cash Dividend Quarterly Revenues of $74 million, up 29% – Stocks News Feed

PLANO, Texas–(BUSINESS WIRE)–BGSF, Inc. (NYSE: BGSF), a leading national provider of workforce solutions, today reported financial results for its second quarter ended June 26, 2022.

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 August 22, 2022 to all shareholders of record as of the close of business on August 15, 2022. This marks the 31st consecutive quarterly dividend and based on yesterday’s closing price of the Company’s common stock, the annualized yield is approximately 4.7%.

Q2 2022 Highlights from Continuing Operations:

  • Revenues were $74.1 million, an increase of 29.1% from 2021
  • Gross profit was $25.1 million, up 30.2% from 2021, while gross profit percent increased 0.3% to 33.8% in 2022
  • Selling, general and administrative expenses increased $3.6 million, or 22.3%, over 2021, primarily due to additional compensation generated from increased overall gross profit
  • Net income from continuing operations was $3.2 million, or $0.30 per diluted share, vs. net income from continuing operations of $2.6 million, or $0.25 per diluted share in 2021
  • Adjusted EBITDA1 from continuing operations was $5.4 million (7.3% of revenues), vs. $3.2 million (5.6% of revenues) in 2021
  • Adjusted EPS1 from continuing operations was $0.34 in 2022, up from $0.21 in 2021

Six Month 2022 Highlights from Continuing Operations:

  • Revenues were $142.6 million, an increase of 33.1% from 2021
  • Gross profit was $48.5 million, up 36.7% from 2021, while gross profit percent increased 0.9% to 34.0% in 2022
  • Selling, general and administrative expenses increased $8.0 million, or 25.5%, over 2021, primarily due to additional compensation generated from increased overall gross profit
  • Net income from continuing operations was $5.2 million, or $0.50 per diluted share, vs. net income from continuing operations of $2.3 million, or $0.23 per diluted share in 2021
  • Adjusted EBITDA1 from continuing operations was $9.3 million (6.5% of revenues), vs. $4.5 million (4.2% of revenues) in 2021
  • Adjusted EPS1 from continuing operations was $0.58 in 2022, up from $0.24 in 2021

1Non-GAAP financial measure. See reconciliation below for details.

Beth A. Garvey, Chair, President and CEO, said, “We are delighted to report continued momentum with second quarter results, which gives us confidence regarding the U.S. labor market and client demand. Revenues meaningfully improved quarter over quarter, as well as sequentially.

“Our longer-term strategy of building and buying higher margin businesses, coupled with identifying additional revenue streams within our segments, are gaining traction this year. Additionally, we remain focused on solving business challenges for our clients and growing our market share through our well-aligned teams.

“Due to our strong operational results, the Board has declared our 31st consecutive quarterly dividend of $0.15 per share. This reinforces a continuing level of confidence in the strength of our business and cash flow prospects. Looking ahead, we will continue to focus on our communities, training, culture, internal team, and clients, which we believe will further strengthen BGSF’s positioning as a best-in-class workforce solutions company.”

Conference Call

BGSF call at 9:00 a.m. ET on August 4, 2022. Interested participants may dial 844-200-6205 (U.S. callers) or 929-526-1599 (all other locations) and provide access code 464896. A replay of the call will be available until August 11, 2022. To access the replay, please dial 929-458-6194 (U.S. Callers), 866-813-9403 (US Toll Free callers), or +44 204-525-0658 (all other locations) and enter access code 400404. The live webcast and archived replay are accessible at the investor relations section of the Company’s website at www.bgsf.com.

About BGSF

With its home office in Plano, Texas, BGSF provides workforce solutions to a variety of industries through its various divisions in IT, Cyber, Finance & Accounting, Creative, and Real Estate (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 79th largest U.S. staffing company and the 48th largest IT staffing firm in 2021. 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.

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 results from continuing operations for the periods indicated, as well as a reconciliation of revenue and income from continuing operations by reportable segment to consolidated results for the periods indicated.

 

Results of Operations

 

 

 

 

Thirteen Weeks Ended

 

Twenty-six Weeks Ended

 

 

 

June 26,

2022

 

June 27,

2021

 

June 26,

2022

 

June 27,

2021

 

 

 

(dollars in thousands)

Revenues

 

$

74,089

 

 

$

57,398

 

 

$

142,631

 

 

$

107,148

 

Cost of services

 

 

49,030

 

 

 

38,151

 

 

 

94,141

 

 

 

71,686

 

 

Gross profit

 

 

25,059

 

 

 

19,247

 

 

 

48,490

 

 

 

35,462

 

Selling, general and administrative expenses

 

 

19,898

 

 

 

16,269

 

 

 

39,614

 

 

 

31,572

 

Gain on contingent consideration

 

 

 

 

 

(1,195

)

 

 

 

 

 

(1,195

)

Depreciation and amortization

 

 

922

 

 

 

866

 

 

 

1,821

 

 

 

1,702

 

 

Operating income

 

 

4,239

 

 

 

3,307

 

 

 

7,055

 

 

 

3,383

 

Interest expense, net

 

 

(69

)

 

 

(218

)

 

 

(343

)

 

 

(595

)

 

Income from continuing operations before income taxes

 

 

4,170

 

 

 

3,089

 

 

 

6,712

 

 

 

2,788

 

Income tax expense from continuing operations

 

 

(986

)

 

 

(493

)

 

 

(1,521

)

 

 

(451

)

 

Income from continuing operations

 

 

3,184

 

 

 

2,596

 

 

 

5,191

 

 

 

2,337

 

Income from discontinued operations:

 

 

 

 

 

 

 

 

 

Income

 

 

 

 

 

1,011

 

 

 

1,235

 

 

 

2,167

 

 

Gain (Loss) on sale

 

 

(8

)

 

 

 

 

 

17,266

 

 

 

 

 

Income tax expense

 

 

 

 

 

(164

)

 

 

(4,716

)

 

 

(349

)

 

Net income

 

$

3,176

 

 

$

3,443

 

 

$

18,976

 

 

$

4,155

 

 

 

 

 

 

 

 

 

 

 

Net income per share – diluted

 

 

 

 

 

 

 

 

 

Net income from continuing operations

 

$

0.30

 

 

$

0.25

 

 

$

0.50

 

 

$

0.23

 

 

Net income from discontinued operations:

 

 

 

 

 

 

 

 

 

Income

 

 

 

 

 

0.10

 

 

 

0.12

 

 

 

0.20

 

 

Gain on sale

 

 

 

 

 

 

 

 

1.65

 

 

 

 

 

Income tax expense

 

 

 

 

 

(0.02

)

 

 

(0.45

)

 

 

(0.03

)

 

Net income per share – diluted

 

$

0.30

 

 

$

0.33

 

 

$

1.82

 

 

$

0.40

 

Business Segments

 

 

 

 

Thirteen Weeks Ended

 

Twenty-six Weeks Ended

 

 

 

June 26,

2022

 

June 27,

2021

 

June 26,

2022

 

June 27,

2021

 

 

 

(dollars in thousands)

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

 

$

29,980

 

40

%

 

$

21,212

 

37

%

 

$

55,896

 

39

%

 

$

39,825

 

37

%

 

Professional

 

 

44,109

 

60

%

 

 

36,186

 

63

%

 

 

86,735

 

61

%

 

 

67,323

 

63

%

 

Total

 

$

74,089

 

100

%

 

$

57,398

 

100

%

 

$

142,631

 

100

%

 

$

107,148

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

 

$

11,574

 

46

%

 

$

7,855

 

41

%

 

$

21,545

 

44

%

 

$

14,720

 

42

%

 

Professional

 

 

13,485

 

54

%

 

 

11,392

 

59

%

 

 

26,945

 

56

%

 

 

20,742

 

58

%

 

Total

 

$

25,059

 

100

%

 

$

19,247

 

100

%

 

$

48,490

 

100

%

 

$

35,462

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling2:

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

 

$

6,696

 

 

 

$

4,817

 

 

 

$

12,573

 

 

 

$

9,165

 

 

 

Professional

 

 

9,023

 

 

 

 

8,085

 

 

 

 

18,347

 

 

 

 

15,217

 

 

 

Total

 

$

15,719

 

 

 

$

12,902

 

 

 

$

30,920

 

 

 

$

24,382

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

 

$

4,817

 

 

 

$

2,973

 

 

 

$

8,852

 

 

 

$

5,426

 

 

 

Professional

 

 

3,817

 

 

 

 

2,584

 

 

 

 

7,286

 

 

 

 

4,077

 

 

 

Home office – Selling, general and administrative

 

 

(4,395

)

 

 

 

(3,445

)

 

 

 

(9,083

)

 

 

 

(7,315

)

 

 

Home – gain on contingent consideration

 

 

 

 

 

 

1,195

 

 

 

 

 

 

 

 

1,195

 

 

 

Total

 

$

4,239

 

 

 

$

3,307

 

 

 

$

7,055

 

 

 

$

3,383

 

 

 

2Selling is a component of Selling, general and administrative on the Unaudited Consolidated Statement of Operations and Comprehensive Income.

The following tables have been derived from our unaudited consolidated financial statements and summarize key components of our balance sheet and statements of cash flows for the periods indicated.

Condensed Balance Sheets

 

 

 

 

June 26,

2022

 

December 26,

2021

Assets

 

(dollars in thousands)

Current assets

 

$

56,718

 

$

60,170

Property and equipment, net

 

 

6,344

 

 

4,331

Intangible assets, net

 

 

32,411

 

 

33,585

Goodwill

 

 

29,142

 

 

29,142

Other

 

 

11,351

 

 

6,655

Assets of discontinued operations

 

 

 

 

14,411

 

Total assets

 

$

135,966

 

$

148,294

Liabilities and stockholders’ equity

 

 

 

 

Long-term debt, current portion

 

$

 

$

3,563

Other current

 

 

23,139

 

 

24,821

Line of credit

 

 

17,661

 

 

12,588

Long-term debt, less current portion

 

 

 

 

23,300

Other long-term

 

 

1,882

 

 

5,978

Liabilities of discontinued operations

 

 

 

 

1,452

 

Total liabilities

 

 

42,682

 

 

71,702

 

Total stockholders’ equity

 

 

93,284

 

 

76,592

 

Total liabilities and stockholders’ equity

 

$

135,966

 

$

148,294

 

Working Capital

 

 

 

June 26,

2022

 

December 26,

2021

 

 

 

(dollars in thousands)

Working capital from continuing operations

 

$

33,578

 

 

$

25,851

 

Working capital ratio

 

 

2.45

 

 

 

1.95

 

 

 

 

 

 

 

Condensed Statements of Cash Flows

 

 

 

Twenty-six Weeks Ended

 

 

 

June 26,

2022

 

June 27,

2021

 

 

 

(dollars in thousands)

Net cash provided by (used in) continuing operations:

 

 

 

 

 

Operating activities

 

$

1,217

 

 

$

(2,366

)

 

Investing activities

 

 

26,775

 

 

 

(4,856

)

 

Financing activities

 

 

(25,760

)

 

 

3,145

 

Net change in cash and cash equivalents discontinued operations

 

 

(2,300

)

 

 

4,077

 

Net change in cash and cash equivalents

 

$

(68

)

 

$

 

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 contingent consideration gains 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 from Continuing Operations to Adjusted EBITDA

 

 

 

Thirteen Weeks Ended

 

Twenty-six Weeks Ended

 

Trailing

Twelve

Months

Ended

 

 

June 26,

2022

 

June 27,

2021

 

June 26,

2022

 

June 27,

2021

 

June 26,

2022

 

 

(dollars in thousands)

Income from continuing operations

 

$

3,184

 

$

2,596

 

 

$

5,191

 

$

2,337

 

 

$

13,225

 

Income tax expense from continuing operations

 

 

986

 

 

493

 

 

 

1,520

 

 

451

 

 

 

3,795

 

Interest expense, net

 

 

69

 

 

218

 

 

 

344

 

 

595

 

 

 

1,181

 

Operating income

 

 

4,239

 

 

3,307

 

 

 

7,055

 

 

3,383

 

 

 

18,201

 

CARES Act credit

 

 

 

 

 

 

 

 

 

 

 

 

(2,084

)

Depreciation and amortization

 

 

922

 

 

866

 

 

 

1,820

 

 

1,702

 

 

 

3,816

 

Gain on contingent consideration

 

 

 

 

(1,195

)

 

 

 

 

(1,195

)

 

 

(1,208

)

Share-based compensation

 

 

242

 

 

215

 

 

 

454

 

 

435

 

 

 

1,077

 

Transaction fees

 

 

 

 

19

 

 

 

 

 

155

 

 

 

16

 

Adjusted EBITDA from continuing operations

 

 

5,403

 

 

3,212

 

 

 

9,329

 

 

4,480

 

 

 

19,818

 

Adjusted EBITDA from discontinued operations, net of gain on sale, net of tax

 

 

 

 

1,046

 

 

 

986

 

 

2,241

 

 

 

3,459

 

Adjusted EBITDA, net of gain

 

$

5,403

 

$

4,258

 

 

$

10,315

 

$

6,721

 

 

$

23,277

 

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 contingent consideration gains, 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

 

Twenty-six Weeks Ended

 

 

June 26,

2022

 

June 27,

2021

 

June 26,

2022

 

June 27,

2021

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations per diluted share, excluding gain on sale of discontinued operations

 

$

0.30

 

 

$

0.25

 

 

$

0.50

 

 

$

0.23

 

Acquisition amortization

 

 

0.05

 

 

 

0.06

 

 

 

0.10

 

 

 

0.12

 

Gain on contingent consideration

 

 

 

 

 

(0.11

)

 

 

 

 

 

(0.12

)

Transaction fees

 

 

 

 

 

 

 

 

 

 

 

0.01

 

Income tax expense adjustment

 

 

(0.01

)

 

 

0.01

 

 

 

(0.02

)

 

 

 

Adjusted EPS from continuing operations

 

 

0.34

 

 

 

0.21

 

 

 

0.58

 

 

 

0.24

 

Adjusted EPS from discontinued operations

 

 

 

 

 

0.08

 

 

 

0.09

 

 

 

0.17

 

Adjusted EPS

 

$

0.34

 

 

$

0.29

 

 

$

0.67

 

 

$

0.41

 

Contacts

Steven Hooser or Sandy Martin

Three Part Advisors

[email protected] 214.442.0016