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):
March 8, 2023
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 March 8, 2023, BGSF, Inc. (the "Company") issued a press release regarding its financial results for the fourth fiscal quarter ended January 1, 2023. 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 9.01 | Financial Statements and Exhibits. |
|---|
(d)Exhibits
| Exhibit No. | Description | |
|---|---|---|
| 99.1 | Earnings release dated | March 8, 2023 |
| 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: | March 8, 2023 | /s/ Dan Hollenbach | |
| Name:<br>Title: | Dan Hollenbach<br>Chief Financial Officer and Secretary<br>(Principal Financial Officer) |
Document
BGSF, Inc. Reports Fourth Quarter 2022 Financial Results
Record Full Year Revenues of $298 million, Organic Revenue Growth of 24%
Net Income From Continuing Operations was $11.3 million
Full Year Adjusted EBITDA $22 million, up 45%
PLANO, Texas – (March 8, 2023) – BGSF, Inc. (NYSE: BGSF), a leading national provider of consulting, managed services, and workforce solutions, today reported financial results for its fiscal year and fourth fiscal quarter ended January 1, 2023.
Beth A. Garvey, Chair, President and CEO, said, “Fiscal 2022 was a transformational year for our Company. We are very pleased with the results and believe that our stated goals of fully aligning BGSF’s core strategy around building higher margin businesses in consulting, managed services and in workforce solutions demonstrated significant progress in 2022. We still have much to do; however, I want to acknowledge and thank our BGSF teams for their hard work and dedication during a great year.”
Q4 2022 Highlights from Continuing Operations2:
•Revenues were $77.3 million, up 14.2% from 2021, including organic growth of 12.0%.
•Gross profit was $27.1 million, up 15.5% from 2021, including organic growth of 12.1%. Gross profit percent increased 40 basis points to 35.0% in 2022.
•Net income from continuing operations was $1.4 million, or $0.14 per diluted share, vs. net income from continuing operations of $4.3 million, or $0.41 per diluted share in 2021, which included a CARES Act credit with an impact on net income of $1.6 million, or $0.15 per diluted share.
•Adjusted EPS1 from continuing operations was $0.19 for the fourth fiscal quarter of 2022 compared to $0.30 per share in 2021.
•Adjusted EBITDA1 from continuing operations was $4.3 million (5.6% of revenues), vs. $5.1 million (7.5% of revenues) in 2021.
Full Year 2022 Highlights from Continuing Operations2:
•Revenues were $298.4 million, up 24.8% from 2021, including organic growth of 24.2%.
•Gross profit was $103.5 million, up 27.9% from 2021, including organic growth of 26.9%. Gross profit margins increased 80 basis points to 34.7% in 2022.
•Net income from continuing operations was $11.3 million, or $1.07 per diluted share, vs. net income from continuing operations of $10.5 million, or $1.00 per diluted share in 2021, net income was impacted by a CARES Act credit of $1.7 million, or $0.16 per diluted share, and a gain on contingent consideration of $1.9 million, or 0.18 per diluted share.
•Adjusted EPS1 from continuing operations was $1.26 in 2022, up from $0.86, a 46.5% increase from 2021.
•Adjusted EBITDA1 from continuing operations was $21.7 million (7.3% of revenues), vs. $15.0 million (6.3% of revenues) in 2021, an increase of 45% year over year.
1Non-GAAP financial measure. See reconciliation below for details.
22022 includes three weeks of operation results from the Horn Solutions acquisition.
The fiscal year financial results are for the 53 weeks ended January 1, 2023, and the 52 weeks ended December 26, 2021; the fourth fiscal quarter financial results are for the 14 weeks ended January 1, 2023, and the 13 weeks ended December 26, 2021. We believe that the fourth fiscal quarter and year-to-date 2022 results were not materially impacted by the additional week.
Conference Call
BGSF will discuss its fourth fiscal quarter and full year 2022 financial results during a conference call and webcast at 9:00 a.m. ET on March 9, 2023. Interested participants may dial 844-200-6205 (U.S. callers) or 929-526-1599 (all other locations) and provide access code 986816. A replay of the call will be available until March 16, 2023. 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 193636. The live webcast and archived replay are accessible at the investor relations section of the Company’s website at www.bgsf.com.
About BGSF
BGSF provides consulting, managed services, and workforce solutions to a variety of industries through its various divisions in IT, Cyber, Finance & Accounting, Managed Services, 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 94th largest U.S. staffing company and the 49th largest IT staffing firm in 2022. 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 214.872.2710 or 214.616.2207
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 for the periods indicated, as well as a reconciliation of revenue and operating income from continuing operations by reportable segment to consolidated results for the periods indicated.
Results of Operations
| Fiscal Quarter Ended | Fiscal Year Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| January 1,<br>2023 | December 26,<br>2021 | January 1,<br>2023 | December 26,<br>2021 | ||||||
| (dollars in thousands) | |||||||||
| Revenues | $ | 77,283 | $ | 67,694 | $ | 298,422 | $ | 239,027 | |
| Cost of services | 50,226 | 44,262 | 194,874 | 158,086 | |||||
| Gross profit | 27,057 | 23,432 | 103,548 | 80,941 | |||||
| Selling, general and administrative expenses | 23,210 | 16,490 | 83,211 | 65,115 | |||||
| Gain on contingent consideration | — | — | — | (2,403) | |||||
| Depreciation and amortization | 1,087 | 827 | 4,054 | 3,698 | |||||
| Operating income | 2,760 | 6,115 | 16,283 | 14,531 | |||||
| Interest expense, net | (644) | (406) | (1,363) | (1,433) | |||||
| Income from continuing operations before income taxes | 2,116 | 5,709 | 14,920 | 13,098 | |||||
| Income tax expense from continuing operations | (699) | (1,388) | (3,659) | (2,640) | |||||
| Income from continuing operations | 1,417 | 4,321 | 11,261 | 10,458 | |||||
| Income from discontinued operations: | |||||||||
| Income | — | 1,240 | 1,235 | 4,570 | |||||
| Gain on sale | 409 | — | 17,675 | — | |||||
| Income tax expense | (95) | (249) | (4,810) | (919) | |||||
| Net income | $ | 1,732 | $ | 5,311 | $ | 25,361 | $ | 14,109 | |
| Net income per share - diluted | |||||||||
| Net income from continuing operations | $ | 0.14 | $ | 0.41 | $ | 1.07 | $ | 1.00 | |
| Net income from discontinued operations: | |||||||||
| Income | — | 0.12 | 0.12 | 0.44 | |||||
| Gain on sale | 0.03 | — | 1.69 | — | |||||
| Income tax expense | (0.01) | (0.03) | (0.46) | (0.09) | |||||
| Net income per share - diluted | $ | 0.16 | $ | 0.50 | $ | 2.42 | $ | 1.35 |
Business Segments
| Fiscal Quarter Ended | Fiscal Year Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| January 1,<br>2023 | December 26,<br>2021 | January 1,<br>2023 | December 26,<br>2021 | ||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Revenue: | |||||||||||||||||
| Real Estate | $ | 31,956 | 41 | % | $ | 27,404 | 40 | % | $ | 121,093 | 41 | % | $ | 92,018 | 38 | % | |
| Professional | 45,326 | 59 | % | 40,290 | 60 | % | 177,329 | 59 | % | 147,009 | 62 | % | |||||
| Total | $ | 77,282 | 100 | % | $ | 67,694 | 100 | % | $ | 298,422 | 100 | % | $ | 239,027 | 100 | % | |
| Gross profit: | |||||||||||||||||
| Real Estate | $ | 12,602 | 47 | % | $ | 10,734 | 46 | % | $ | 47,695 | 46 | % | $ | 34,969 | 43 | % | |
| Professional | 14,455 | 53 | % | 12,698 | 54 | % | 55,853 | 54 | % | 45,972 | 57 | % | |||||
| Total | $ | 27,057 | 100 | % | $ | 23,432 | 100 | % | $ | 103,548 | 100 | % | $ | 80,941 | 100 | % | |
| Operating income (expense): | |||||||||||||||||
| Real Estate | $ | 4,803 | $ | 4,867 | $ | 19,803 | $ | 14,663 | |||||||||
| Professional | 3,146 | 3,785 | 1 | 15,604 | 10,340 | 1 | |||||||||||
| Home office - Selling, general and administrative | (5,189) | (2,537) | 2 | (19,124) | (12,875) | 2 | |||||||||||
| Home - gain on contingent consideration | — | — | — | 2,403 | |||||||||||||
| Total | $ | 2,760 | $ | 6,115 | $ | 16,283 | $ | 14,531 |
1Includes CARES Act credit of $0.9 million
2Includes CARES Act credit of $1.1 million
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
| January 1,<br>2023 | December 26, 2021 | ||||
|---|---|---|---|---|---|
| Assets | (dollars in thousands) | ||||
| Current assets | $ | 76,162 | $ | 52,972 | |
| Property and equipment, net | 2,081 | 4,331 | |||
| Intangible assets, net | 47,552 | 33,585 | |||
| Goodwill | 55,193 | 29,142 | |||
| Other | 13,685 | 13,853 | |||
| Assets of discontinued operations | — | 14,411 | |||
| Total assets | $ | 194,673 | $ | 148,294 | |
| Liabilities and stockholders' equity | |||||
| Long-term debt, current portion | $ | 4,000 | $ | 3,563 | |
| Other current | 24,207 | 23,559 | |||
| Line of credit | 22,302 | 12,588 | |||
| Long-term debt, less current portion | 40,368 | 23,300 | |||
| Other long-term | 3,059 | 7,240 | |||
| Liabilities of discontinued operations | — | 1,452 | |||
| Total liabilities | 93,936 | 71,702 | |||
| Total stockholders' equity | 100,737 | 76,592 | |||
| Total liabilities and stockholders' equity | $ | 194,673 | $ | 148,294 | |
| Working Capital | |||||
| --- | --- | --- | --- | --- | --- |
| January 1,<br>2023 | December 26,<br>2021 | ||||
| (dollars in thousands) | |||||
| Working capital from continuing operations | $ | 47,955 | $ | 25,851 | |
| Working capital ratio | 2.70 | 1.95 | |||
| Condensed Statements of Cash Flows | |||||
| Fiscal Year Ended | |||||
| January 1,<br>2023 | December 26,<br>2021 | ||||
| (dollars in thousands) | |||||
| Net cash provided by (used in) continuing operations: | |||||
| Operating activities | $ | (3,300) | $ | 1,358 | |
| Investing activities | (8,898) | (6,990) | |||
| Financing activities | 15,934 | 473 | |||
| Net change in cash (used in) provided by discontinued operations | (3,848) | 5,271 | |||
| Net change in cash and cash equivalents | $ | (112) | $ | 112 |
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
| Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| January 1,<br>2023 | December 26,<br>2021 | January 1,<br>2023 | December 26,<br>2021 | |||||||||
| (dollars in thousands) | ||||||||||||
| Income from continuing operations | $ | 1,417 | $ | 4,321 | $ | 11,261 | $ | 10,458 | ||||
| Income tax expense from continuing operations | 699 | 1,388 | 3,659 | 2,640 | ||||||||
| Interest expense, net | 644 | 406 | 1,363 | 1,433 | ||||||||
| Operating income | 2,760 | 6,115 | 16,283 | 14,531 | ||||||||
| Depreciation and amortization | 1,087 | 827 | 4,054 | 3,698 | ||||||||
| Gain on contingent consideration | — | — | — | (2,403) | ||||||||
| CARES Act credit | — | (2,084) | — | (2,084) | ||||||||
| Share-based compensation | 220 | 217 | 1,085 | 1,058 | ||||||||
| Transaction fees | 265 | 15 | 271 | 170 | ||||||||
| Adjusted EBITDA from continuing operations | $ | 4,332 | $ | 5,090 | $ | 21,693 | $ | 14,970 | ||||
| Adjusted EBITDA Margin (% of revenue) | 5.6 | % | 7.5 | % | 7.3 | % | 6.3 | % |
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
| Fiscal Quarter Ended | Fiscal Year Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| January 1,<br>2023 | December 26,<br>2021 | January 1,<br>2023 | December 26,<br>2021 | |||||
| Net income from continuing operations per diluted share | $ | 0.14 | $ | 0.41 | $ | 1.07 | $ | 1.00 |
| Acquisition amortization | 0.05 | 0.06 | 0.22 | 0.23 | ||||
| Gain on contingent consideration | — | — | — | (0.23) | ||||
| CARES Act | — | (0.20) | — | (0.20) | ||||
| Transaction fees | 0.03 | — | 0.03 | 0.02 | ||||
| Income tax expense adjustment | (0.03) | 0.03 | (0.06) | 0.04 | ||||
| Adjusted EPS from continuing operations | $ | 0.19 | $ | 0.30 | $ | 1.26 | $ | 0.86 |