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

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 31^st 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

 

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Steven Hooser or Sandy Martin

Three Part Advisors

ir@bgstaffing.com 214.442.0016

Source: BGSF, Inc.