8-K
BGSF, INC. (BGSF)
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):
August 3, 2022
BGSF, INC.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-36704 | 26-0656684 |
|---|---|---|
| (State or Other Jurisdiction of<br>Incorporation) | (Commission File Number) | (I.R.S. Employer Identification<br>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 August 3, 2022, BGSF, Inc. issued a press release regarding its financial results for the second fiscal quarter ended June 26, 2022. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
| Item 7.01 | Regulation FD Disclosure. |
|---|
On August 3, 2022, the Company issued a press release reporting that its Board of Directors approved the payment of a dividend of $0.15 per share of common stock to be paid on August 22, 2022 to all shareholders of record as of the close of business on August 15, 2022. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
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 | Earnings release dated | August 3, 2022 |
| 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: | August 3, 2022 | /s/ Dan Hollenbach | |
| Name:<br>Title: | Dan Hollenbach<br>Chief Financial Officer and Secretary<br>(Principal Financial Officer) |
Document
BGSF, Inc. Reports Strong Second Quarter 2022 Financial Results
and Declares 31st Consecutive Cash Dividend
Quarterly Revenues of $74 million, up 29%
PLANO, Texas – (August 3, 2022) – 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.
CONTACT:
Steven Hooser or Sandy Martin
Three Part Advisors
ir@bgstaffing.com 214.442.0016
Source: BGSF, Inc.
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,<br>2022 | June 27,<br>2021 | June 26,<br>2022 | June 27,<br>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,<br>2022 | June 27,<br>2021 | June 26,<br>2022 | June 27,<br>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,<br>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,<br>2022 | December 26,<br>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,<br>2022 | June 27,<br>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,<br>2022 | June 27,<br>2021 | June 26,<br>2022 | June 27,<br>2021 | June 26,<br>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,<br>2022 | June 27,<br>2021 | June 26,<br>2022 | June 27,<br>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 |