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BGSF, Inc. Reports First Quarter 2025 Financial Results

BGSF | 11 days ago

BGSF, Inc. (NYSE: BGSF), a leading provider of consulting, managed services, and professional workforce solutions, today reported financial results for the first fiscal quarter ended March 30, 2025.

Q1 2025 Highlights (results include sequential comparisons to Q4 2024):

Revenues were $63.2 million for Q1, compared to $64.4 million for Q4.
- Property Management segment revenues decreased 14.1% from Q4, primarily driven by seasonal demand.
- Professional segment revenues increased 5.6% from Q4, primarily due to an increase in billed hours of approximately 5%.
Gross profit was $20.9 million for Q1, down from $21.5 million in Q4, primarily due to lower sales in Property Management.
Net loss was $0.7 million, or $0.07 per diluted share for Q1, compared to a net loss of $1.0 million in Q4 or $0.10 per diluted share.
Adjusted EBITDA1 was $2.4 million (3.8% of revenues) in Q1 compared to $1.4 million (2.2% of revenues) in Q4.
Adjusted EPS1 was $0.05 for Q1, compared with Adjusted EPS1 loss of $0.06 for Q4.

Beth A. Garvey, Chair, President, and CEO, said, “During the first quarter, business results strengthened as we moved through the quarter. We are also seeing month-over-month improvements in the second quarter. We continue advancing the Company’s restructuring plan to streamline operations based on strategic initiatives we announced in late 2024. Performance improved in the Professional segment, with revenues sequentially up 5.6% in the first quarter compared to the fourth quarter. As we signaled last quarter, the Property Management revenues were seasonally soft; however, gross margins sequentially improved.”

SUMMARY OF FINANCIAL RESULTS (dollars in thousands) (unaudited)

		For the Thirteen Week Periods Ended
		March 30, 2025					March 31, 2024					December 29, 2024
Revenue:
	Property Management	$	20,883				$	24,547				$	24,306
	Professional		42,351					44,218					40,105
	Total	$	63,234				$	68,765				$	64,411

Gross profit / Gross profit percentage:
	Property Management	$	7,560		36.2	%	$	9,344		38.1	%	$	8,734		35.9	%
	Professional		13,361		31.5	%		14,094		31.9	%		12,732		31.7	%
	Total	$	20,921		33.1	%	$	23,438		34.1	%	$	21,466		33.3	%

Operating income		$	339				$	415				$	246
Net loss		$	(722	)			$	(792	)			$	(981	)
Net loss per diluted share		$	(0.07	)			$	(0.07	)			$	(0.10	)

Non-GAAP Financial Measures:
	Adjusted EBITDA1	$	2,372				$	2,919				$	1,387
	Adjusted EBITDA Margin (% of revenue)1		3.8	%				4.2	%				2.2	%
	Adjusted EPS1	$	0.05				$	0.10				$	(0.06	)

	1 Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures as defined and reconciled below.

Conference Call

BGSF will discuss its first quarter 2025 financial results during a conference call and webcast at 9:00 a.m. ET on May 8, 2025. Interested participants may dial 1-888-506-0062 (Toll Free) or 1-973-528-0011 (International). A replay of the call will be available until May 22, 2025. To access the replay, please dial 1-877-481-4010 (Toll Free), or 1-919-882-2331 (International) and enter access code 52350. 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. BGSF has integrated several regional and national brands achieving scalable growth. The Company was ranked by Staffing Industry Analysts as the 97th largest U.S. staffing company and the 49th largest IT staffing firm in 2024. 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, among other things, risks relating to volatility and uncertainty in the capital markets, availability of suitable third parties with which to conduct any strategic transaction, whether the Company will be able to pursue a strategic transaction, or whether any such transaction, if pursued, will be completed successfully and on attractive terms, or at all, the risks associated with undertaking a review of strategic alternatives, including in respect of relationships with stockholders, employees, customers, and suppliers, the risks associated with and the ultimate effects of the Company's cost restructuring plan, as well as risks and uncertainties 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,” “anticipates,” “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.

CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)

			March 30, 2025		December 29, 2024
			(unaudited)		(audited)
ASSETS
Current assets
	Cash and cash equivalents		$	2,050	$	353
	Accounts receivable (net of allowance for credit losses of $1,223 and $1,133, respectively)			42,553		40,194
	Prepaid expenses			2,447		2,485
	Other current assets			2,492		2,315
		Total current assets		49,542		45,347

Property and equipment, net				947		1,137

Other assets
	Deposits			2,087		2,092
	Software as a service, net			4,269		4,438
	Deferred income taxes, net			8,611		8,456
	Right-of-use asset - operating leases, net			4,613		4,973
	Intangible assets, net			23,040		24,517
	Goodwill			59,151		59,151
		Total other assets		101,771		103,627
	Total assets		$	152,260	$	150,111
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
	Accounts payable		$	1,605	$	80
	Accrued payroll and expenses			13,539		13,001
	Long-term debt, current portion (net of debt issuance costs of $77 and $24, respectively)			3,748		3,801
	Accrued interest			286		223
	Income taxes payable			250		212
	Contingent consideration, current portion			2,706		2,662
	Convertible note			4,368		4,368
	Lease liabilities, current portion			1,591		1,573
		Total current liabilities		28,093		25,920

Line of credit (net of debt issuance costs of $696 and $770, respectively)				7,304		5,625
Long-term debt, less current portion (net of debt issuance costs of $174 and $198, respectively)				31,595		32,527
Lease liabilities, less current portion				3,448		3,770
	Total liabilities			70,440		67,842

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 11,108,693 and 11,038,623 shares issued and outstanding, respectively, net of 3,930 shares of treasury stock, at cost, respectively.			54		53
Additional paid in capital			70,532		70,260
Retained earnings			11,234		11,956
	Total stockholders’ equity		81,820		82,269
	Total liabilities and stockholders’ equity	$	152,260	$	150,111

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share and dividend amounts) For the Thirteen Week Periods Ended March 30, 2025 and March 31, 2024

		Thirteen Weeks Ended
			2025			2024
Revenues		$	63,234		$	68,765
Cost of services			42,313			45,327
	Gross profit		20,921			23,438
Selling, general, and administrative expenses			18,911			21,016
Depreciation and amortization			1,671			2,007
	Operating income		339			415
Interest expense, net			(1,146	)		(1,235	)
	Loss before income taxes		(807	)		(820	)
Income tax benefit			85			28
	Net loss	$	(722	)	$	(792	)

Net loss per share:
	Basic	$	(0.07	)	$	(0.07	)
	Diluted	$	(0.07	)	$	(0.07	)

Weighted-average shares outstanding:
	Basic		10,954			10,831
	Diluted		10,954			10,831

Cash dividends declared per common share		$	—		$	0.15

BUSINESS SEGMENTS (dollars in thousands)

		Thirteen Weeks Ended
		March 30, 2025										March 31, 2024
		Property Mgmt		Profes- sional		Home Office			Total			Property Mgmt		Profes- sional		Home Office			Total
Contract field talent		$	20,279	$	41,285	$	—		$	61,564		$	24,060	$	42,778	$	—		$	66,838
Contingent placements			604		1,066		—			1,670			487		1,440		—			1,927
	Revenue		20,883		42,351		—			63,234			24,547		44,218		—			68,765
Cost of services			13,323		28,990		—			42,313			15,203		30,124		—			45,327
	Gross profit		7,560		13,361		—			20,921			9,344		14,094		—			23,438
Selling, general, and administrative expenses			5,064		9,908		3,939			18,911			5,908		10,753		4,355			21,016
Depreciation and amortization			20		1,342		309			1,671			32		1,669		306			2,007
	Operating income (loss)		2,476		2,111		(4,248	)		339			3,404		1,672		(4,661	)		415
Interest expense, net			—		—		(1,146	)		(1,146	)		—		—		(1,235	)		(1,235	)
Income tax benefit			—		—		85			85			—		—		28			28
	Net income (loss)	$	2,476	$	2,111	$	(5,309	)	$	(722	)	$	3,404	$	1,672	$	(5,868	)	$	(792	)

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the Thirteen Week Periods Ended March 30, 2025 and March 31, 2024

					2025			2024
Cash flows from operating activities
	Net loss			$	(722	)	$	(792	)
		Adjustments to reconcile net loss to net cash provided by activities:
		Depreciation			98			94
		Amortization			1,573			1,913
		Software as a service			176			180
		Loss on disposal of property and equipment			11			8
		Amortization of debt issuance costs			124			49
		Interest expense (income) on contingent consideration payable			44			(45	)
		Provision for credit losses			260			625
		Share-based compensation			186			235
		Deferred income taxes, net of acquired deferred tax liability			(155	)		(127	)
		Net changes in operating assets and liabilities:
			Accounts receivable		(2,620	)		3,733
			Prepaid expenses		38			462
			Other current assets		(192	)		513
			Deposits		6			593
			Accounts payable		1,525			129
			Accrued payroll and expenses		537			(24	)
			Accrued interest		63			(218	)
			Income taxes receivable and payable		54			52
			Operating leases		58			1
		Net cash provided by operating activities			1,064			7,381

Cash flows from investing activities
	Capital expenditures				(23	)		(494	)
		Net cash used in investing activities			(23	)		(494	)

Cash flows from financing activities
	Net borrowings (payments) under line of credit			1,604			(4,874	)
	Principal payments on long-term debt			(956	)		—
	Payments of dividends			—			(1,639	)
	Issuance of ESPP shares			87			112
	Issuance of shares under the 2013 Long-Term Incentive Plan			—			102
	Payments of debt issuance costs			(79	)		(538	)
		Net cash provided by (used in) financing activities		656			(6,837	)
Net change in cash and cash equivalents				1,697			50
Cash and cash equivalents, beginning of period				353			—
Cash and cash equivalents, end of period			$	2,050		$	50

Supplemental cash flow information:
	Cash paid for interest, net		$	868		$	1,400
	Cash paid for taxes, net of refunds		$	14		$	40

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, costs associated with the evaluation of potential strategic alternatives (“strategic alternatives review”), transaction fees, software as a service costs, restructuring plan costs, and certain non-cash expenses such as impairment losses and share-based compensation expense, as well as certain specific events that management does not consider in assessing our on-going operating performance.

We define “Adjusted EPS” as diluted earnings per share eliminating amortization expense of intangible assets from acquisitions, the strategic alternatives review, transaction fees, software as a service costs, restructuring plan costs, 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 Net Loss to Adjusted EBITDA (dollars in thousands)

	Thirteen Weeks Ended						Thirteen Weeks Ended
	March 30, 2025			March 31, 2024			December 29, 2024
Net loss	$	(722	)	$	(792	)	$	(981	)
Income tax benefit		(85	)		(28	)		(176	)
Interest expense, net		1,146			1,235			1,403
Operating income		339			415			246
Depreciation and amortization		1,671			2,007			1,888
Gain on contingent consideration		—			—			(1,452	)
Share-based compensation		186			235			201
Strategic alternatives review		—			67			88
Cost restructuring plan		—			—			230
Software as a service2		176			180			179
Transaction fees		—			15			7
Adjusted EBITDA	$	2,372		$	2,919		$	1,387
Adjusted EBITDA Margin (% of revenue)		3.8	%		4.2	%		2.2	%

2 The Company capitalizes direct costs incurred in cloud computing implementation costs from hosting arrangements, which are reported as a Software as a service and are expensed as incurred in selling, general, and administrative expenses.

Reconciliation of Net Loss EPS to Adjusted EPS

	Thirteen Weeks Ended						Thirteen Weeks Ended
	March 30, 2025			March 31, 2024			December 29, 2024
Net loss per diluted share	$	(0.07	)	$	(0.07	)	$	(0.10	)
Acquisition amortization		0.11			0.15			0.13
Gain on contingent consideration		—			—			(0.13	)
Strategic alternatives review		—			0.01			0.01
Cost restructuring plan		—			—			0.02
Software as a service2		0.02			0.02			0.02
Income tax benefit adjustment		(0.01	)		(0.01	)		(0.01	)
Adjusted EPS	$	0.05		$	0.10		$	(0.06	)

2 The Company capitalizes direct costs incurred in cloud computing implementation costs from hosting arrangements, which are reported as a Software as a service and are expensed as incurred in selling, general, and administrative expenses.