Record Full Year Revenues of $313.2 million,
up 4.9%
Generated $20.4 Million of Operating Cash
Flow
New Credit Facility Closed March 12,
2024
BGSF, Inc. (NYSE: BGSF), a growing
provider of consulting, managed services, and professional
workforce solutions, today reported financial results for its
fiscal year and fourth fiscal quarter ended December 31, 2023.
Note: Fiscal 2023 financial results are on a 52-week year
ended December 31, 2023, compared to Fiscal 2022 financial results
on a 53-week year ended January 1, 2023.
Full Year 2023 Highlights from Continuing
Operations2,3:
- Revenues were $313.2 million, up 4.9% from 2022. Property
Management revenues grew organically by 3.3% versus the prior year.
Professional revenues grew by 6.1% from prior year, with Arroyo
Consulting acquisition contributing $14.8 million in new revenues,
partially offset by a decline in the existing Professional
business.
- Gross profit was $111.8 million, up 8.0% from 2022. Gross
profit margins increased 100 basis points to 35.7%.
- Operating loss in 2023 includes a non-cash impairment of $22.5
million related to trade name intangible assets from the rebranding
to BGSF for all entities. The after-tax impact was $17.5 million or
$1.63 per diluted share, using the year-to-date effective tax
rate.
- Net loss from continuing operations was $10.2 million, or $0.95
per diluted share, vs. net income from continuing operations of
$11.3 million, or $1.07 per diluted share in 2022, primarily due to
the trade name impairment and increased acquisition amortization
and interest expense.
- Adjusted EBITDA1 from continuing operations was $25.1 million
(8.0% of revenues), up from $21.7 million (7.3% of revenues) in
2022, an increase of 15.9% year over year.
- Adjusted EPS1 from continuing operations was $1.19 in 2023, vs.
$1.26 in 2022.
Fiscal 2023 Same Day Revenue(1), Same Day Gross Profit(1) and
Same Day EBITDA(1) increased 7.1%, 10.2%, and 18.1% from 2022,
respectively.
Note: Fourth quarter 2023 financial results are on a 13-week
period ended December 31, 2023, compared to fourth quarter 2022
financial results on a 14-week period ended January 1,
2023.
Q4 2023 Highlights from Continuing Operations2,3:
- Revenues were $73.6 million, vs. $77.3 million in 2022.
- Gross profit was $25.4 million, compared to $27.1 million in
2022.
- Operating income was $3.2 million in 2023, up from $2.8 million
in 2022.
- Net income from continuing operations was $1.0 million, or
$0.11 per diluted share, vs. net income from continuing operations
of $1.4 million, or $0.14 per diluted share in 2022, primarily due
to increased acquisition amortization and interest expense.
- Adjusted EBITDA1 from continuing operations was $5.5 million
(7.5% of revenues), vs. $4.3 million (5.6% of revenues) in 2022, an
increase of 27.6% over prior year.
- Adjusted EPS1 from continuing operations was $0.21 for 2023 up
from $0.19 in 2022.
Fourth quarter 2023 Same Day Revenue(1), Same Day Gross
Profit(1) and Same Day EBITDA(1) increased 3.1%, 1.8%, and 38.2%
from 2022, respectively.
1Non-GAAP financial measure. See
reconciliation below for details.
22022 includes three weeks of operating
results from the Horn Solutions acquisition.
3 2023 includes 39 weeks of Arroyo
Consulting and a full year of Horn Solutions.
On March 12, 2024, our credit agreement was amended with BMO
Bank, N.A., as administrative agent, and swing line lender, and BMO
Capital Markets Corp., as sole lead arranger and sole book runner,
with a maturity date of March 12, 2028. The revolving credit
facility with an outstanding balance of approximately $22 million
provides for the borrowing of funds from time to time in an
aggregate amount up to $40 million. Term loans with an outstanding
principal balance of $34 million were outstanding under the Credit
Agreement and remain outstanding under the amended agreement.
Beth A. Garvey, Chair, President and CEO, said, “Fiscal 2023 was
a significant year for BGSF. We successfully executed our long-term
strategic plans through an accretive acquisition, rebranding all
our businesses, and building stronger relationships with
world-class ERP technologies. For the year, we grew revenues to
$313 million, up almost 5%, and generated over $20 million of cash
from operations. I am proud of our team’s ability to achieve key
objectives in 2023 despite project delays and persistent
macroeconomic headwinds impacting corporations throughout North
America. Our confidence in BGSF’s business and strategy was
demonstrated through our return to shareholders by consistent
quarterly cash dividends.”
Conference Call
BGSF will discuss its fourth fiscal quarter and full year 2023
financial results during a conference call and webcast at 9:00 a.m.
ET on March 14, 2024. Interested participants may dial
1-877-317-6789 (Toll Free) or 1-412-317-6789 (International). A
replay of the call will be available until March 21, 2024. To
access the replay, please dial 1-877-344-7529 (Toll Free), or
1-412-317-0088 (International) and enter access code 6349244. 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 (formally known as Real Estate which includes
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
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.
GAAP FINANCIAL MEASURES
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) from continuing operations by reportable segment to
consolidated results for the periods indicated.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share
amounts)
December 31, 2023
January 1, 2023
ASSETS
Current assets
Accounts receivable (net of allowance for
credit losses of $554 and $558, respectively)
$
56,776
$
66,285
Prepaid expenses
2,963
2,418
Other current assets
7,172
7,459
Total current assets
66,911
76,162
Property and equipment, net
1,217
2,081
Other assets
Deposits
2,699
2,616
Other, net
5,026
4,411
Deferred income taxes, net
7,271
2,196
Right-of-use asset - operating leases
5,435
4,462
Intangible assets, net
30,370
47,552
Goodwill
59,588
55,193
Total other assets
110,389
116,430
Total assets
$
178,517
$
194,673
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Accounts payable
$
95
$
587
Accrued payroll and expenses
14,902
19,171
Line of credit (net of debt issuance costs
of $128)
24,746
—
Long-term debt, current portion
34,000
4,000
Accrued interest
438
273
Income taxes payable
282
253
Contingent consideration, current
portion
4,208
1,081
Convertible Note
4,368
—
Other current liabilities
—
1,000
Lease liabilities, current portion
2,016
1,842
Total current liabilities
85,055
28,207
Line of credit (net of debt issuance costs
of $259)
—
22,303
Long-term debt, less current portion
—
36,000
Contingent consideration, less current
portion
4,112
—
Convertible note
—
4,368
Lease liabilities, less current
portion
3,814
3,049
Other long-term liabilities
—
10
Total liabilities
92,981
93,937
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, 10,887,509 and 10,772,515 shares
issued and outstanding, respectively, net of treasury stock, at
cost, of 3,930 and 1,845 shares, respectively
52
70
Additional paid in capital
68,551
67,003
Retained earnings
16,933
33,663
Total stockholders’ equity
85,536
100,736
Total liabilities and stockholders’
equity
$
178,517
$
194,673
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except share
amounts)
Fiscal Quarter Ended
Fiscal Year Ended
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
(unaudited)
Revenues
$
73,567
$
77,283
$
313,167
$
298,422
Cost of services
48,120
50,225
201,383
194,874
Gross profit
25,447
27,058
111,784
103,548
Selling, general and administrative
expenses
20,175
23,210
88,650
83,211
Impairment losses
—
—
22,545
—
Depreciation and amortization
2,045
1,087
7,774
4,054
Operating income (loss)
3,227
2,761
(7,185
)
16,283
Interest expense, net
(1,601
)
(644
)
(5,976
)
(1,363
)
Income (loss) from continuing operations
before income taxes
1,626
2,117
(13,161
)
14,920
Income tax benefit (expense) from
continuing operations
(627
)
(699
)
2,938
(3,659
)
Income (loss) from continuing
operations
999
1,418
(10,223
)
11,261
Income from discontinued operations:
Income
—
—
—
1,235
Gain on sale
—
409
—
17,675
Income tax expense
—
95
—
4,810
Net income (loss)
$
999
$
1,732
$
(10,223
)
$
25,361
Net income (loss) per share - diluted
Net (loss) income from continuing
operations
$
0.11
$
0.14
$
(0.95
)
$
1.07
Net income from discontinued
operations:
Income
—
—
—
0.12
Gain on sale
—
0.03
—
1.69
Income tax expense
—
(0.01
)
—
(0.46
)
Net income (loss) per share - diluted
$
0.11
$
0.16
$
(0.95
)
$
2.42
BUSINESS SEGMENTS
(dollars in thousands)
Fiscal Quarter Ended
Fiscal Year Ended
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
(unaudited)
Revenue:
Property Management
$
29,624
40
%
$
31,956
41
%
$
125,077
40
%
$
121,093
41
%
Professional
43,943
60
%
45,327
59
%
188,090
60
%
177,329
59
%
Total
$
73,567
100
%
$
77,283
100
%
$
313,167
100
%
$
298,422
100
%
Gross profit:
Property Management
$
11,589
46
%
$
12,602
47
%
$
49,785
45
%
$
47,695
46
%
Professional
13,858
54
%
14,456
53
%
61,999
55
%
55,853
54
%
Total
$
25,447
100
%
$
27,058
100
%
$
111,784
100
%
$
103,548
100
%
Operating income (loss):
Property Management
$
5,479
$
4,803
$
23,155
$
19,803
Professional -without impairment
losses
2,626
3,146
12,292
15,604
Professional - impairment losses
—
—
(22,545
)
—
Home office
(4,878
)
(5,188
)
(20,087
)
(19,124
)
Total
$
3,227
$
2,761
$
(7,185
)
$
16,283
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in thousands)
Years ended December 31, 2023,
January 1, 2023 and December 26, 2021
2023
2022
2021
Cash flows from operating activities
Net (loss) income
$
(10,223
)
$
25,361
$
14,109
(Income) from discontinued
operations
—
(1,235
)
(4,570
)
Adjustments to reconcile net (loss) income
to net cash provided by (used in) operating activities:
Depreciation
446
597
685
Amortization
7,328
3,457
3,013
Gain on sale of discontinued
operations
—
(17,675
)
—
Impairment losses
22,545
—
—
CARES Act credit
—
—
(2,368
)
Loss on disposal of property and
equipment
17
6
8
Contingent consideration adjustment
—
—
(2,403
)
Amortization of debt issuance costs
199
172
75
Interest expense on contingent
consideration payable
740
128
252
Provision for credit losses
798
315
221
Share-based compensation
1,029
1,085
1,058
Deferred income taxes, net of acquired
deferred tax liability
(5,075
)
2,353
1,279
Net changes in operating assets and
liabilities, net of effects of acquisitions:
Accounts receivable
12,163
(14,793
)
(15,178
)
Prepaid expenses and other current
assets
(2,159
)
(866
)
(200
)
Deposits
(83
)
1,503
(126
)
Other assets
720
660
319
Accounts payable
(492
)
(228
)
156
Accrued payroll and expenses
(7,426
)
1,633
5,730
Accrued interest
165
171
24
Income taxes receivable and payable
729
(1,202
)
(560
)
Other current liabilities
(1,000
)
(4,551
)
19
Operating leases
(35
)
(127
)
(107
)
Other long-term liabilities
—
(64
)
(78
)
Net cash provided by (used in) continuing
operating activities
20,386
(3,300
)
1,358
Net cash (used in) provided by
discontinued operating activities
—
(3,822
)
5,305
Net cash provided by (used in) operating
activities
20,386
(7,122
)
6,663
Cash flows from investing activities
Businesses acquired, net of cash
acquired
(6,917
)
(33,940
)
(3,791
)
Businesses sold
—
30,722
—
Capital expenditures
(2,597
)
(5,680
)
(3,204
)
Proceeds from sale of property and
equipment
—
—
5
Net cash used in continuing investing
activities
(9,514
)
(8,898
)
(6,990
)
Net cash used in discontinued investing
activities
—
(26
)
(34
)
Net cash used in investing activities
(9,514
)
(8,924
)
(7,024
)
CONSOLIDATED STATEMENTS OF CASH
FLOWS (CONTINUED)
(in thousands)
Years ended December 31, 2023,
January 1, 2023 and December 26, 2021
2023
2022
2021
Cash flows from financing activities
Net borrowings under line of credit
2,312
9,781
6,804
Proceeds from issuance of long-term
debt
—
40,000
—
Principal payments on long-term debt
(6,000
)
(26,863
)
(2,063
)
Payments of dividends
(6,507
)
(6,290
)
(4,567
)
Issuance of ESPP shares
512
653
340
Issuance of shares under the 2013
Long-Term Incentive Plan and Form S-3 registration statement costs,
net of exercises
(10
)
(1
)
(41
)
Contingent consideration paid
(1,110
)
(1,110
)
—
Debt issuance costs
(69
)
(236
)
—
Net cash (used in) provided by continuing
financing activities
(10,872
)
15,934
473
Net change in cash and cash
equivalents
—
(112
)
112
Cash and cash equivalents, beginning of
year
—
112
—
Cash and cash equivalents, end of year
$
—
$
—
$
112
Supplemental cash flow information:
Cash paid for interest, net
$
4,668
$
641
$
879
Cash paid for taxes, net of refunds
$
1,378
$
7,562
$
3,676
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, Same Day EBITDA, Adjusted EPS, Same
Day Adjusted EPS, Same Day Revenue, and Same Day Gross Profit.
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 operations, balance sheet or statement of cash flows of a
company. Adjusted EBITDA, Same Day EBITDA, Adjusted EPS, Same Day
Adjusted EPS, Same Day Revenue, and Same Day Gross Profit 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, revenue, gross profit, 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, Same Day EBITDA,
Adjusted EPS, Same Day Adjusted EPS, Same Day Revenue, and Same Day
Gross Profit are useful performance measures and are used by us to
facilitate comparisons 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 share-based compensation
expense, as well as certain specific events that management does
not consider in assessing our on-going operating performance. We
define “Same Day EBITDA” as Adjusted EBITDA on a fifty-two week
fiscal year. We define “Same Day Revenue” and “Same Day Gross
Profit” as revenue and gross profit on a fifty-two week fiscal
year. 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 INCOME FROM
CONTINUING OPERATIONS TO ADJUSTED AND SAME DAY EBITDA
(dollars in thousands)
Fiscal Quarter Ended
Fiscal Year Ended
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
Income (loss) from continuing
operations
$
999
$
1,417
$
(10,223
)
$
11,261
Income tax expense (benefit) from
continuing operations
626
699
(2,938
)
3,659
Interest expense, net
1,601
644
5,976
1,363
Operating income (loss)
3,226
2,760
(7,185
)
16,283
Depreciation and amortization
2,045
1,087
7,774
4,054
Impairment losses
—
—
22,545
—
Share-based compensation
184
220
1,029
1,085
Transaction fees
73
265
974
271
Adjusted EBITDA from continuing
operations
5,528
4,332
25,137
21,693
Adjusted EBITDA Margin (% of revenue)
7.5
%
5.6
%
8.0
%
7.3
%
Adjusted EBITDA from continuing
operations
$
5,528
$
4,332
$
25,137
$
21,693
Same day adjustment
—
(332
)
—
(410
)
Same Day EBITDA from continuing
operations
$
5,528
$
4,000
$
25,137
$
21,283
RECONCILIATION OF ADJUSTED EPS
AND SAME DAY ADJUSTED EPS
Fiscal Quarter Ended
Fiscal Year Ended
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
Net income (loss) from continuing
operations per diluted share
$
0.11
$
0.14
$
(0.95
)
$
1.07
Acquisition amortization
0.15
0.05
0.57
0.22
Impairment losses
—
—
2.09
—
Transaction fees
0.01
0.03
0.09
0.03
Income tax expense adjustment
(0.06
)
(0.03
)
(0.61
)
(0.06
)
Adjusted EPS from continuing
operations
$
0.21
$
0.19
$
1.19
$
1.26
Same day adjustment
—
(0.02
)
—
(0.03
)
Same Day Adjusted EPS from continuing
operations
$
0.21
$
0.17
$
1.19
$
1.23
RECONCILIATION OF SAME DAY
REVENUES AND SAME DAY GROSS PROFIT
(dollars in thousands)
January 1, 2023
Revenues
Gross Profit
Fourteen Weeks (65 revenue days) -
GAAP
$
77,283
$
27,058
Five Days
(5,916
)
(2,068
)
Thirteen Weeks (60 revenue days) - Same
Day
$
71,367
$
24,990
Fifty-three Weeks (254 revenue days) -
GAAP
$
298,422
$
103,548
Five Days
(5,916
)
(2,068
)
Fifty-two Weeks (249 revenue days) - Same
Day
$
292,506
$
101,480
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240313226666/en/
Steven Hooser or Sandy Martin Three Part Advisors
ir@bgstaffing.com 214.872.2710 or 214.616.2207
BGSF (NYSE:BGSF)
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