BGSF, Inc. Reports Fourth Quarter 2022 Financial Results

03/08/2023

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%

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.

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,
2023

 

December 26,
2021

 

January 1,
2023

 

December 26,
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,
2023

 

December 26,
2021

 

January 1,
2023

 

December 26,
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,
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,
2023

 

December 26,
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,
2023

 

December 26,
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,
2023

 

December 26,
2021

 

January 1,
2023

 

December 26,
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,
2023

 

December 26,
2021

 

January 1,
2023

 

December 26,
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

 

 

Steven Hooser or Sandy Martin
Three Part Advisors
ir@bgstaffing.com 214.872.2710 or 214.616.2207

Source: BGSF, Inc.