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):
November 2, 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 November 2, 2022, BGSF, Inc. (the "Company") issued a press release regarding its financial results for the third fiscal quarter ended September 25, 2022. 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 7.01 | Regulation FD Disclosure. |
|---|
On November 2, 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 November 21, 2022 to all shareholders of record as of the close of business on November 14, 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 | November 2, 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: | November 2, 2022 | /s/ Dan Hollenbach | |
| Name:<br>Title: | Dan Hollenbach<br>Chief Financial Officer and Secretary<br>(Principal Financial Officer) |
Document
BGSF, Inc. Reports Record Third Quarter 2022 Financial Results
Strong Quarterly Revenues Up 22% and Adjusted EBITDA Margin of 10.2%
Board Declares Cash Dividend of $0.15 Per Share, 32nd Consecutive Quarterly Dividend
PLANO, Texas – (November 2, 2022) – BGSF, Inc. (NYSE: BGSF), a leading national provider of workforce solutions, today reported financial results for its third quarter ended September 25, 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 November 21, 2022 to all shareholders of record as of the close of business on November 14, 2022. This marks the 32nd consecutive quarterly dividend and based on yesterday’s closing price of the Company’s common stock, the annualized yield is approximately 4.8%.
Q3 2022 Highlights from Continuing Operations:
•Revenues were $78.5 million, an increase of 22.3% from 2021
•Gross profit was $28.0 million, up 27.0% from 2021, while gross profit percent increased 140 basis points to 35.7% in 2022
•Selling, general and administrative expenses of $20.4 million, improved 60 basis points as a percentage of revenue over 2021
•Net income from continuing operations was $4.7 million, or $0.44 per diluted share, vs. net income from continuing operations of $3.7 million, or $0.36 per diluted share in 2021, which included a net gain on contingent consideration of $1.0 million
•Adjusted EBITDA1 from continuing operations was $8.0 million (10.2% of revenues), vs. $5.4 million (8.4% of revenues) in 2021
•Adjusted EPS1 from continuing operations was $0.48 in 2022, up from $0.31 in 2021
Nine Month 2022 Highlights from Continuing Operations:
•Revenues were $221.1 million, an increase of 29.1% from 2021
•Gross profit was $76.5 million, up 33.0% from 2021, while gross profit percent increased 100 basis points to 34.6% in 2022
•Selling, general and administrative expenses of $60.0 million improved 130 basis points as a percentage of revenue over 2021
•Net income from continuing operations was $9.8 million, or $0.93 per diluted share, vs. net income from continuing operations of $6.0 million, or $0.59 per diluted share in 2021, which includes a net gain on consideration of $2.0 million
•Adjusted EBITDA1 from continuing operations was $17.4 million (7.9% of revenues), vs. $9.9 million (5.8% of revenues) in 2021
•Adjusted EPS1 from continuing operations was $1.05 in 2022, up from $0.55 in 2021
1Non-GAAP financial measure. See reconciliation below for details.
Beth A. Garvey, Chair, President and CEO, said, “I am pleased to report that momentum from the first half of 2022 continued into our fiscal third quarter, which resulted in record high revenue and gross profit from continuing operations. We believe our continued strong performance is supported by BGSF’s unique business model that empowers people and creates long-term relationships, both with clients and our workforce. We are strategically focused on solving business challenges for our clients, while building a higher margin business, growing market share and gaining further traction as we close out this year and move into ‘23.
"Our continued strong operating results support the Board’s declaration of a quarterly cash dividend of $0.15 per share which is our 32nd consecutive quarterly cash dividend.” Garvey continues.
“We are enthusiastic about planned growth initiatives and prospects as we approach 2023. We see strong tailwinds in both segments as we work to build leadership positions in both the Professional and Real Estate segments. Our teams are energized around our vision and strategic direction, and this alignment has contributed to more creative solutions for our clients. The business will continue to be driven by strength in our people, technology, reputation, business model, and client partnerships as we continue our journey as a best-in-class workforce solutions company,” Garvey concluded.
Conference Call
BGSF call at 9:00 a.m. ET on November 3, 2022. Interested participants may dial 844-200-6205 (U.S. callers) or 929-526-1599 (all other locations) and provide access code 250313. A replay of the call will be available until November 10, 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 840249. 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 workforce solutions to a variety of industries through its various divisions in IT, Cyber, Finance & Accounting, 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
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| September 25,<br>2022 | September 26,<br>2021 | September 25,<br>2022 | September 26,<br>2021 | ||||||
| (dollars in thousands) | |||||||||
| Revenues | $ | 78,508 | $ | 64,185 | $ | 221,139 | $ | 171,333 | |
| Cost of services | 50,508 | 42,138 | 144,649 | 113,824 | |||||
| Gross profit | 28,000 | 22,047 | 76,490 | 57,509 | |||||
| Selling, general and administrative expenses | 20,386 | 17,054 | 60,001 | 48,626 | |||||
| Gain on contingent consideration | — | (1,208) | — | (2,403) | |||||
| Depreciation and amortization | 1,146 | 1,169 | 2,966 | 2,871 | |||||
| Operating income | 6,468 | 5,032 | 13,523 | 8,415 | |||||
| Interest expense, net | (376) | (432) | (718) | (1,026) | |||||
| Income from continuing operations before income taxes | 6,092 | 4,600 | 12,805 | 7,389 | |||||
| Income tax expense from continuing operations | (1,440) | (893) | (2,961) | (1,344) | |||||
| Income from continuing operations | 4,652 | 3,707 | 9,844 | 6,045 | |||||
| Income from discontinued operations: | |||||||||
| Income | — | 1,164 | 1,235 | 3,331 | |||||
| Gain on sale | — | — | 17,266 | — | |||||
| Income tax expense | — | (227) | (4,716) | (578) | |||||
| Net income | $ | 4,652 | $ | 4,644 | $ | 23,629 | $ | 8,798 | |
| Net income per share - diluted | |||||||||
| Net income from continuing operations | $ | 0.44 | $ | 0.36 | $ | 0.93 | $ | 0.59 | |
| Net income from discontinued operations: | |||||||||
| Income | — | 0.11 | 0.12 | 0.32 | |||||
| Gain on sale | — | — | 1.65 | — | |||||
| Income tax expense | — | (0.02) | (0.45) | (0.06) | |||||
| Net income per share - diluted | $ | 0.44 | $ | 0.45 | $ | 2.25 | $ | 0.85 |
Business Segments
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 25,<br>2022 | September 26,<br>2021 | September 25,<br>2022 | September 26,<br>2021 | ||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Revenue: | |||||||||||||||||
| Real Estate | $ | 33,241 | 42 | % | $ | 24,789 | 39 | % | $ | 89,137 | 40 | % | $ | 64,614 | 38 | % | |
| Professional | 45,267 | 58 | % | 39,396 | 61 | % | 132,002 | 60 | % | 106,719 | 62 | % | |||||
| Total | $ | 78,508 | 100 | % | $ | 64,185 | 100 | % | $ | 221,139 | 100 | % | $ | 171,333 | 100 | % | |
| Gross profit: | |||||||||||||||||
| Real Estate | $ | 13,548 | 48 | % | $ | 9,515 | 43 | % | $ | 35,093 | 46 | % | $ | 24,235 | 42 | % | |
| Professional | 14,452 | 52 | % | 12,532 | 57 | % | 41,397 | 54 | % | 33,274 | 58 | % | |||||
| Total | $ | 28,000 | 100 | % | $ | 22,047 | 100 | % | $ | 76,490 | 100 | % | $ | 57,509 | 100 | % | |
| Selling2: | |||||||||||||||||
| Real Estate | $ | 7,301 | $ | 5,057 | $ | 19,874 | $ | 14,222 | |||||||||
| Professional | 8,601 | 8,385 | 26,948 | 23,602 | |||||||||||||
| Total | $ | 15,902 | $ | 13,442 | $ | 46,822 | $ | 37,824 | |||||||||
| Operating income (expense): | |||||||||||||||||
| Real Estate | $ | 6,148 | $ | 4,370 | $ | 15,000 | $ | 9,796 | |||||||||
| Professional | 5,172 | 3,399 | 12,458 | 7,477 | |||||||||||||
| Home office - Selling, general and administrative | (4,852) | (3,945) | (13,935) | (11,261) | |||||||||||||
| Home - gain on contingent consideration | — | 1,208 | — | 2,403 | |||||||||||||
| Total | $ | 6,468 | $ | 5,032 | $ | 13,523 | $ | 8,415 |
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
| September 25,<br>2022 | December 26, 2021 | ||||
|---|---|---|---|---|---|
| Assets | (dollars in thousands) | ||||
| Current assets | $ | 70,813 | $ | 52,972 | |
| Property and equipment, net | 1,599 | 4,331 | |||
| Intangible assets, net | 34,142 | 33,585 | |||
| Goodwill | 29,142 | 29,142 | |||
| Other | 13,568 | 13,853 | |||
| Assets of discontinued operations | — | 14,411 | |||
| Total assets | $ | 149,264 | $ | 148,294 | |
| Liabilities and stockholders' equity | |||||
| Long-term debt, current portion | $ | — | $ | 3,563 | |
| Other current | 23,786 | 23,559 | |||
| Line of credit | 27,004 | 12,588 | |||
| Long-term debt, less current portion | — | 23,300 | |||
| Other long-term | 1,580 | 7,240 | |||
| Liabilities of discontinued operations | — | 1,452 | |||
| Total liabilities | 52,370 | 71,702 | |||
| Total stockholders' equity | 96,894 | 76,592 | |||
| Total liabilities and stockholders' equity | $ | 149,264 | $ | 148,294 | |
| Working Capital | |||||
| --- | --- | --- | --- | --- | --- |
| September 25,<br>2022 | December 26,<br>2021 | ||||
| (dollars in thousands) | |||||
| Working capital from continuing operations | $ | 47,027 | $ | 25,850 | |
| Working capital ratio | 2.98 | 1.95 | |||
| Condensed Statements of Cash Flows | |||||
| Thirty-nine Weeks Ended | |||||
| September 25,<br>2022 | September 26,<br>2021 | ||||
| (dollars in thousands) | |||||
| Net cash provided by (used in) continuing operations: | |||||
| Operating activities | $ | (5,557) | $ | (2,720) | |
| Investing activities | 25,633 | (5,307) | |||
| Financing activities | (17,888) | 2,986 | |||
| Net change in cash and cash equivalents discontinued operations | (2,300) | 5,041 | |||
| Net change in cash and cash equivalents | $ | (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
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | Trailing Twelve Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 25,<br>2022 | September 26,<br>2021 | September 25,<br>2022 | September 26,<br>2021 | September 25,<br>2022 | |||||||||||
| (dollars in thousands) | |||||||||||||||
| Income from continuing operations | $ | 4,652 | $ | 3,707 | $ | 9,844 | $ | 6,045 | $ | 14,165 | |||||
| Income tax expense from continuing operations | 1,440 | 893 | 2,961 | 1,344 | 4,349 | ||||||||||
| Interest expense, net | 376 | 432 | 718 | 1,026 | 1,125 | ||||||||||
| Operating income | 6,468 | 5,032 | 13,523 | 8,415 | 19,639 | ||||||||||
| CARES Act credit | — | — | — | — | (2,084) | ||||||||||
| Depreciation and amortization | 1,146 | 1,169 | 2,966 | 2,871 | 3,792 | ||||||||||
| Gain on contingent consideration | — | (1,208) | — | (2,403) | — | ||||||||||
| Share-based compensation | 411 | 406 | 865 | 842 | 1,082 | ||||||||||
| Transaction fees | 6 | 1 | 6 | 155 | 21 | ||||||||||
| Adjusted EBITDA from continuing operations | 8,031 | 5,400 | 17,360 | 9,880 | 22,450 | ||||||||||
| Adjusted EBITDA Margin (% of revenue) | 10.2 | % | 8.4 | % | 7.9 | % | 5.8 | % | 7.8 | % | |||||
| Income from discontinued operations | — | 1,164 | 1,235 | 3,331 | 2,475 | ||||||||||
| Income adjustments to discontinued operations | — | 39 | (249) | 114 | (220) | ||||||||||
| Adjusted EBITDA from discontinued operations, net of gain on sale, net of tax | — | 1,203 | 986 | 3,445 | 2,255 | ||||||||||
| Adjusted EBITDA, net of gain | $ | 8,031 | $ | 6,603 | $ | 18,346 | $ | 13,325 | $ | 24,705 |
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 | Thirty-nine Weeks Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| September 25,<br>2022 | September 26,<br>2021 | September 25,<br>2022 | September 26,<br>2021 | |||||
| Net income from continuing operations per diluted share, excluding gain on sale of discontinued operations | $ | 0.44 | $ | 0.36 | $ | 0.93 | $ | 0.59 |
| Acquisition amortization | 0.05 | 0.06 | 0.16 | 0.17 | ||||
| Gain on contingent consideration | — | (0.12) | — | (0.23) | ||||
| Transaction fees | — | — | — | 0.01 | ||||
| Income tax expense adjustment | (0.01) | 0.01 | (0.04) | 0.01 | ||||
| Adjusted EPS from continuing operations | 0.48 | 0.31 | 1.05 | 0.55 | ||||
| Adjusted EPS from discontinued operations | — | 0.09 | 0.09 | 0.26 | ||||
| Adjusted EPS | $ | 0.48 | $ | 0.40 | $ | 1.14 | $ | 0.81 |