[Q2 2025 Financial Results Overview](index=1&type=section&id=Q2%202025%20Financial%20Results%20Overview) [Summary of Financial Results from Continuing Operations](index=1&type=section&id=SUMMARY%20OF%20FINANCIAL%20RESULTS%20FROM%20CONTINUING%20OPERATIONS) BGSF's Q2 2025 continuing operations reported sequential revenue and gross profit increases from Q1 2025, but year-over-year declines, with net and Adjusted EBITDA losses worsening sequentially and annually Financial Results from Continuing Operations (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | Q1 2025 | | :-------------------- | :------ | :------ | :------ | | Revenues | $23,506 | $25,726 | $20,883 | | Gross profit | $8,410 | $9,596 | $7,560 | | Gross profit percentage | 35.8% | 37.3% | 36.2% | | Operating loss | $(4,425) | $(1,475) | $(1,773) | | Net loss | $(4,862) | $(2,082) | $(2,245) | | Net loss per diluted share | $(0.44) | $(0.19) | $(0.21) | | Adjusted EBITDA | $(1,145) | $(264) | $(1,032) | | Adjusted EBITDA Margin (% of revenue) | (4.9)% | (1.0)% | (5.4)% | | Adjusted EPS | $(0.19) | $(0.04) | $(0.11) | - Revenues for Q2 2025 increased by **12.6%** sequentially from Q1 2025, primarily due to increased billed hours from seasonal demand, reaching **$23.5 million**, though revenues declined by **8.6%** compared to Q2 2024[5](index=5&type=chunk)[6](index=6&type=chunk) - Net loss for Q2 2025 was **$4.9 million** (**$0.44 per diluted share**), a significant increase from a net loss of **$2.2 million** (**$0.21 per diluted share**) in Q1 2025[6](index=6&type=chunk) [Management Commentary and Operational Highlights](index=1&type=section&id=Management%20Commentary%20and%20Operational%20Highlights) Management updated on the proposed Professional division sale, shareholder vote, and transition services, highlighting Property Management cost reductions and strategic AI tool investments - The proposed sale of BGSF's Professional division to INSPYR is progressing, with a proxy statement filed on July 25 for a shareholder vote on September 4[5](index=5&type=chunk) - Following the closing of the transaction, BGSF will operate under a Transition Service Agreement (TSA) for up to six months or longer, providing services to INSPYR and receiving payment[5](index=5&type=chunk) - BGSF plans to continue reducing overhead costs to align with a smaller, Property Management-focused company and is implementing AI-powered sales and recruiting tools expected to be operational by mid-Q4[5](index=5&type=chunk)[7](index=7&type=chunk) [Company Information and Strategic Developments](index=2&type=section&id=Company%20Information%20and%20Strategic%20Developments) [About BGSF](index=2&type=section&id=About%20BGSF) BGSF is a leading provider of workforce solutions, offering consulting, managed services, and professional staffing across various industries including IT, Finance & Accounting, Managed Solutions, and Property Management, achieving scalable growth through integrated regional and national brands - BGSF provides consulting, managed services, and professional workforce solutions through divisions in IT, Finance & Accounting, Managed Solutions, and Property Management[8](index=8&type=chunk) - 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[8](index=8&type=chunk) [Professional Division Sale and Transition](index=2&type=section&id=Previously%20Announced%20Equity%20Purchase%20Agreement) BGSF announced a definitive agreement to sell its Professional Division to INSPYR Solutions, a significant strategic move contingent on shareholder approval and other customary closing conditions - On June 16, 2025, BGSF signed a definitive agreement to sell its Professional Division to INSPYR Solutions[9](index=9&type=chunk) - The proposed transaction is subject to customary closing conditions, including approval from BGSF's stockholders[9](index=9&type=chunk) [Detailed Financial Statements](index=5&type=section&id=Detailed%20Financial%20Statements) [Consolidated Balance Sheets](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) The consolidated balance sheet shows a slight decrease in total assets and stockholders' equity, while total liabilities increased from December 2024 to June 2025, with key changes including a significant increase in cash and cash equivalents and an increase in current liabilities Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 29, 2025 (unaudited) | December 29, 2024 (audited) | | :-------------------- | :------------------------ | :-------------------------- | | Cash and cash equivalents | $2,777 | $32 | | Accounts receivable | $13,637 | $17,148 | | Total current assets | $47,603 | $45,347 | | Total assets | $149,692 | $150,111 | | Total current liabilities | $29,001 | $25,921 | | Total liabilities | $71,406 | $67,842 | | Total stockholders' equity | $78,286 | $82,269 | - Cash and cash equivalents saw a substantial increase from **$32 thousand** at December 29, 2024, to **$2,777 thousand** at June 29, 2025[16](index=16&type=chunk) - Total liabilities increased by **$3,564 thousand**, from **$67,842 thousand** to **$71,406 thousand**, primarily driven by an increase in accrued payroll and expenses and line of credit borrowings[16](index=16&type=chunk) [Unaudited Consolidated Statements of Operations](index=6&type=section&id=UNAUDITED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The consolidated statements of operations show a decline in revenues and gross profit for both the thirteen and twenty-six-week periods ended June 29, 2025, compared to the prior year, with net loss from continuing operations significantly widening, although income from discontinued operations partially offset the total net loss Unaudited Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Thirteen Weeks Ended June 29, 2025 | Thirteen Weeks Ended June 30, 2024 | Twenty-six Weeks Ended June 29, 2025 | Twenty-six Weeks Ended June 30, 2024 | | :-------------------- | :--------------------------------- | :--------------------------------- | :----------------------------------- | :----------------------------------- | | Revenues | $23,506 | $25,726 | $44,389 | $50,273 | | Gross profit | $8,410 | $9,596 | $15,970 | $18,939 | | Operating loss | $(4,425) | $(1,475) | $(6,198) | $(2,733) | | Net loss from continuing operations | $(4,862) | $(2,082) | $(7,098) | $(4,130) | | Income from discontinued operations | $1,309 | $1,601 | $3,377 | $3,319 | | Net loss | $(3,736) | $(761) | $(4,458) | $(1,553) | - Net loss from continuing operations for the thirteen weeks ended June 29, 2025, was **$(4.862) million**, a significant increase from **$(2.082) million** in the prior year period[18](index=18&type=chunk) - Selling, general, and administrative expenses increased to **$12.576 million** for the thirteen weeks ended June 29, 2025, from **$10.739 million** in the same period last year[18](index=18&type=chunk) [Property Management Segment Performance](index=7&type=section&id=PROPERTY%20MANAGEMENT%20SEGMENT) The Property Management segment, representing continuing operations, experienced a decrease in revenue and gross profit for both the thirteen and twenty-six-week periods compared to the prior year, with operating loss for the segment also widening significantly, partly due to increased strategic alternatives review costs Property Management Segment Performance (in thousands) | Metric (in thousands) | Thirteen Weeks Ended June 29, 2025 | Thirteen Weeks Ended June 30, 2024 | Twenty-six Weeks Ended June 29, 2025 | Twenty-six Weeks Ended June 30, 2024 | | :-------------------- | :--------------------------------- | :--------------------------------- | :----------------------------------- | :----------------------------------- | | Revenue | $23,506 | $25,726 | $44,389 | $50,273 | | Gross profit | $8,410 | $9,596 | $15,970 | $18,939 | | Operating loss | $(4,425) | $(1,475) | $(6,197) | $(2,732) | | Strategic alternatives review | $1,613 | $280 | $1,634 | $349 | - Revenue from contract field talent, the largest component, decreased from **$25.272 million** in Q2 2024 to **$23.000 million** in Q2 2025[20](index=20&type=chunk) - Strategic alternatives review costs significantly increased to **$1.613 million** in Q2 2025 from **$0.280 million** in Q2 2024, contributing to the wider operating loss[20](index=20&type=chunk) [Unaudited Consolidated Statements of Cash Flows](index=8&type=section&id=UNAUDITED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the twenty-six weeks ended June 29, 2025, BGSF generated positive net cash from operating activities, primarily driven by adjustments to reconcile net loss, with minimal cash used in investing activities and a net cash outflow from financing activities Unaudited Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Twenty-six Weeks Ended June 29, 2025 | | :-------------------- | :----------------------------------- | | Net cash provided by operating activities | $3,215 | | Net cash used in investing activities | $(76) | | Net cash used in financing activities | $(204) | | Cash and cash equivalents, end of period | $2,777 | - Net cash provided by operating activities was **$3.215 million** for the twenty-six weeks ended June 29, 2025, including **$2.962 million** from continuing operations[22](index=22&type=chunk) - Capital expenditures were minimal at **$13 thousand** for the twenty-six-week period[22](index=22&type=chunk) [Non-GAAP Financial Measures and Reconciliations](index=9&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) [Definition and Purpose of Non-GAAP Measures](index=9&type=section&id=Definition%20and%20Purpose%20of%20Non-GAAP%20Measures) BGSF supplements its GAAP financial results with non-GAAP measures, Adjusted EBITDA and Adjusted EPS, to provide a clearer understanding of its operating performance and facilitate period-to-period comparisons by excluding certain non-cash expenses and specific events not considered part of ongoing operations - Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization, strategic alternatives review costs, software as a service costs, and certain non-cash expenses like share-based compensation[26](index=26&type=chunk) - Adjusted EPS is defined as diluted earnings per share, excluding amortization of intangible assets from acquisitions, strategic alternatives review, software as a service costs, and certain non-cash expenses, net of tax effect[27](index=27&type=chunk) - These non-GAAP measures are used to facilitate consistent comparison of operating performance and provide a more complete understanding of factors affecting the business[25](index=25&type=chunk) [Reconciliation of Net Loss to Adjusted EBITDA](index=9&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20EBITDA) The reconciliation shows that Adjusted EBITDA from continuing operations for Q2 2025 was a loss of $1,145 thousand, worsening from a loss of $264 thousand in Q2 2024 and $1,032 thousand in Q1 2025, reflecting the impact of increased strategic alternatives review costs and aged receivable adjustments Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | Q1 2025 | | :-------------------- | :------ | :------ | :------ | | Net loss from continuing operations | $(4,862) | $(2,082) | $(2,245) | | Operating loss | $(4,425) | $(1,475) | $(1,773) | | Strategic alternatives review | $1,613 | $280 | $20 | | Aged receivable adjustment | $980 | $199 | $90 | | Adjusted EBITDA from continuing operations | $(1,145) | $(264) | $(1,032) | | Adjusted EBITDA Margin (% of revenue) | (4.9)% | (1.0)% | (5.4)% | - Adjusted EBITDA from continuing operations for the thirteen weeks ended June 29, 2025, was a loss of **$1.145 million**, compared to a loss of **$0.264 million** in the prior year period[28](index=28&type=chunk) [Reconciliation of Net Loss EPS to Adjusted EPS](index=10&type=section&id=Reconciliation%20of%20Net%20Loss%20EPS%20to%20Adjusted%20EPS) The reconciliation of EPS to Adjusted EPS shows that Adjusted EPS from continuing operations was a loss of $0.19 for Q2 2025, a deterioration from a loss of $0.04 in Q2 2024 and $0.11 in Q1 2025, reflecting the impact of various adjustments on a per-share basis Reconciliation of Net Loss EPS to Adjusted EPS | Metric | Q2 2025 | Q2 2024 | Q1 2025 | | :-------------------- | :------ | :------ | :------ | | Net loss from continuing operations per diluted share | $(0.44) | $(0.19) | $(0.21) | | Strategic alternatives review | $0.15 | $0.03 | $0.00 | | Adjusted EPS from continuing operations | $(0.19) | $(0.04) | $(0.11) | | Adjusted EPS | $0.02 | $0.25 | $0.16 | - Adjusted EPS from continuing operations for Q2 2025 was a loss of **$0.19**, compared to a loss of **$0.04** in Q2 2024[31](index=31&type=chunk) [Additional Information](index=2&type=section&id=Additional%20Information) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section contains standard forward-looking statements regarding future events, including the proposed transaction, operational performance, and business plans, highlighting inherent risks and uncertainties that could cause actual results to differ materially from projections - The press release includes forward-looking statements about the proposed transaction, future operational and financial performance, and business plans[10](index=10&type=chunk) - These statements are subject to risks and uncertainties, such as the closing conditions for the sale not being satisfied, market acceptance of new offerings, and general economic activity[11](index=11&type=chunk) [Additional Information About the Equity Purchase Agreement](index=3&type=section&id=Additional%20Information%20About%20the%20Equity%20Purchase%20Agreement%20and%20Where%20to%20Find%20It) BGSF has filed a definitive proxy statement with the SEC regarding the proposed transaction, urging shareholders to review these documents before making any voting decisions, with information available on the SEC's website and BGSF's investor relations page - BGSF filed a definitive proxy statement with the SEC on July 25, 2025, and mailed it to shareholders around August 5, 2025, concerning the proposed transaction[12](index=12&type=chunk) - Shareholders are urged to read the definitive proxy statement and other related documents for important information about the proposed transaction[12](index=12&type=chunk) [Participants in the Solicitation](index=3&type=section&id=Participants%20in%20the%20Solicitation) This section clarifies that BGSF, its directors, and certain executive officers and employees may be considered participants in soliciting proxies for the proposed transaction, with detailed information on their interests available in the definitive proxy statement - BGSF, its directors, and certain executive officers and employees may be deemed participants in soliciting proxies for the proposed transaction[13](index=13&type=chunk) - More detailed information regarding the identity and interests of potential participants is provided in the definitive proxy statement filed with the SEC[13](index=13&type=chunk) [Contact Information](index=4&type=section&id=CONTACT) Contact details for investor relations are provided for inquiries regarding BGSF, Inc - Investor relations contacts are Steven Hooser or Sandy Martin of Three Part Advisors, reachable via ir@BGSF.com or phone[14](index=14&type=chunk)

PART I FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Financial statements reflect the sale of the Professional segment, with continuing operations showing lower revenue and a wider net loss [Unaudited Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) Total assets were $149.7 million, while stockholders' equity decreased to $78.3 million due to net losses Balance Sheet Summary | Balance Sheet Items (in thousands) | June 29, 2025 | December 29, 2024 | | :--- | :--- | :--- | | **Total current assets** | $47,603 | $45,347 | | *Current assets of discontinued operations* | *$27,473* | *$24,354* | | **Total assets** | **$149,692** | **$150,111** | | **Total current liabilities** | $29,001 | $25,921 | | *Current liabilities of discontinued operations* | *$11,093* | *$11,825* | | **Total liabilities** | **$71,406** | **$67,842** | | **Total stockholders' equity** | **$78,286** | **$82,269** | [Unaudited Consolidated Statements of Operations](index=7&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) Revenues from continuing operations decreased 8.6% year-over-year, leading to a significantly wider operating and net loss Quarterly Operations Summary | Metric (in thousands) | Thirteen Weeks Ended June 29, 2025 | Thirteen Weeks Ended June 30, 2024 | | :--- | :--- | :--- | | Revenues | $23,506 | $25,726 | | Gross profit | $8,410 | $9,596 | | Operating loss | $(4,425) | $(1,475) | | Net loss from continuing operations | $(4,862) | $(2,082) | | Net Loss | $(3,736) | $(761) | | Net loss per share - basic | $(0.34) | $(0.07) | [Unaudited Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from continuing operating activities decreased significantly from $14.6 million to $3.0 million year-over-year Cash Flow Summary | Cash Flow Activity (in thousands) | Twenty-six Weeks Ended June 29, 2025 | Twenty-six Weeks Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by continuing operating activities | $2,962 | $14,585 | | Net cash used in continuing investing activities | $(13) | $(863) | | Net cash used in continuing financing activities | $(204) | $(13,496) | | **Net change in cash (continuing ops)** | **$2,745** | **$226** | [Notes to Unaudited Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Notes detail the sale of the Professional segment, debt covenant non-compliance, and subsequent waivers from lenders - On June 14, 2025, the Company entered into an Equity Purchase Agreement to sell its Professional segment for **$99.0 million in cash**[28](index=28&type=chunk)[68](index=68&type=chunk) - The Company was **not in compliance with financial covenants** for its credit agreement for multiple quarters but received waivers contingent on the sale of the Professional segment[82](index=82&type=chunk)[86](index=86&type=chunk)[109](index=109&type=chunk) - Following the reclassification, continuing operations consist solely of the **Property Management segment**[26](index=26&type=chunk)[106](index=106&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 8.6% revenue decline to reduced billed hours, while SG&A expenses rose due to strategic review costs Key Operating Metrics | Metric (in thousands) | Thirteen Weeks Ended June 29, 2025 | Thirteen Weeks Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $23,506 | $25,726 | (8.6)% | | Gross Profit | $8,410 | $9,596 | (12.4)% | | SG&A Expenses | $12,576 | $10,739 | 17.1% | - The decrease in revenue was primarily due to a **9.7% reduction in billed hours**, resulting from lower demand and increased competition[117](index=117&type=chunk) - The increase in SG&A expenses was primarily driven by **$1.6 million in costs** related to the strategic alternatives review process[119](index=119&type=chunk)[120](index=120&type=chunk) Adjusted EBITDA Reconciliation | Adjusted EBITDA (in thousands) | Thirteen Weeks Ended June 29, 2025 | Thirteen Weeks Ended June 30, 2024 | | :--- | :--- | :--- | | Net loss from continuing operations | $(4,862) | $(2,082) | | **Adjusted EBITDA from continuing operations** | **$(1,145)** | **$(264)** | [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure relates to variable interest rates on its debt facilities - The company is exposed to market risk from **variable interest rates** on its Revolving Facility and Term Loan, which could negatively impact future earnings[155](index=155&type=chunk)[156](index=156&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in internal controls - Based on an evaluation as of June 29, 2025, the CEO and CFO concluded that the company's **disclosure controls and procedures are effective**[157](index=157&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal quarter that have **materially affected** these controls[158](index=158&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) No material changes have occurred in legal proceedings since the last annual report - There has been **no change** from the information provided in the Annual Report on Form 10-K for the fiscal year ended December 29, 2024[161](index=161&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) New risks arise from the pending sale of the Professional segment, including non-completion and potential NYSE delisting - The closing of the sale of the Professional segment is contingent upon receiving **stockholder approval** and satisfying other conditions[163](index=163&type=chunk) - The pending sale may adversely affect the retained business through **management distraction** and higher employee turnover[164](index=164&type=chunk) - Following the sale, the company's reduced size may affect its ability to satisfy NYSE's continued listing standards, which could result in **delisting**[165](index=165&type=chunk) - If the sale is not completed, the company may be required to pay a **termination fee of $2,970,000** or expense reimbursement up to $3,000,000[167](index=167&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[170](index=170&type=chunk) [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) Key exhibits include the Equity Purchase Agreement for the segment sale and an amendment to the credit agreement - Key exhibits filed include the **Equity Purchase Agreement** dated June 14, 2025, and the Waiver and Second Amendment to the Credit Agreement[174](index=174&type=chunk)

Company Performance - BGSF has returned approximately 40.1% since the beginning of the calendar year, significantly outperforming the average gain of 4.1% in the Business Services group [4] - The Zacks Consensus Estimate for BGSF's full-year earnings has increased by 366.7% over the past 90 days, indicating improved analyst sentiment and a stronger earnings outlook [3] Industry Context - BGSF is part of the Business Services sector, which includes 260 individual stocks and currently holds a Zacks Sector Rank of 1 [2] - Within the Business - Services industry, which consists of 26 companies, BGSF ranks 37 in the Zacks Industry Rank, with the industry averaging a gain of 19.1% this year [6] Comparison with Peers - Cintas (CTAS), another stock in the Business Services sector, has returned 20.1% year-to-date and has a Zacks Rank of 2 (Buy) [4][5] - Both BGSF and Cintas are noted for their strong performance within the Business Services sector, attracting investor attention [7]

Company Overview - BGSF shares increased by 12.9% to $6.31 in the last trading session, with a notable trading volume, and have gained 25.6% over the past four weeks [1] - The company has agreed to sell its Professional Division to INSPYR Solutions for $99 million in cash, which includes IT consulting, finance & accounting, managed solutions, and near/offshore software services [1] Earnings Expectations - BGSF is expected to report break-even quarterly earnings per share (EPS), reflecting a year-over-year change of +100%, with revenues projected at $66.5 million, a decrease of 2.4% from the previous year [2] - The consensus EPS estimate for BGSF has been revised 100% higher in the last 30 days, indicating a positive trend that typically correlates with stock price appreciation [3] Industry Comparison - BGSF is part of the Zacks Business - Services industry, where another company, Crawford & Company B, saw its stock rise by 2.2% to $10.19, but has returned -0.9% over the past month [3] - Crawford & Company B's consensus EPS estimate remains unchanged at $0.24, representing a -4% change compared to the previous year, and holds a Zacks Rank of 3 (Hold) [4]

Core Viewpoint - BGSF has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, indicating a positive earnings outlook that may lead to increased stock price [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, suggesting that revisions in earnings estimates are a powerful indicator of near-term stock performance [4][6]. - For BGSF, the recent increase in earnings estimates reflects an improvement in the company's underlying business, which is expected to drive the stock price higher [5]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions and potential for market-beating returns [10]. Earnings Estimate Revisions for BGSF - BGSF is projected to earn $0.08 per share for the fiscal year ending December 2025, with no year-over-year change expected [8]. - Over the past three months, the Zacks Consensus Estimate for BGSF has increased by 366.7%, highlighting significant upward revisions by analysts [8].

Company Overview - BGSF's market capitalization is approximately $77 million as of November 15, 2024[9] - The company's trailing 12-month revenue through September 2024 is $282 million[11, 12] - Adjusted EBITDA for the trailing 12 months through September 2024 is $14.1 million[10] - Professional segment accounts for 61% of the company's revenue, while Property Management accounts for 39%[12] Financial Performance - In Q3 2024, BGSF's revenue was $71.2 million compared to $83.5 million in Q3 2023[44] - Adjusted EBITDA for Q3 2024 was $3.2 million, representing a 4.5% margin, compared to $7.9 million and 9.4% in Q3 2023[44] - Adjusted net income per share for Q3 2024 was $0.10, compared to $0.36 in Q3 2023[44] - The gross profit margin for the Professional segment was 32.3%, while for Property Management it was 37.6% for the trailing twelve months through September 2024[20] Strategic Focus - The company is focused on revenue growth and diversification strategies within the workforce solutions and consulting services market[13, 53] - BGSF aims to reduce its debt leverage ratio and is prioritizing investments to support organic growth[52, 51] - No new acquisitions are planned for 2025, with a focus on enhancing existing systems to drive growth and efficiency[52]

Group 1: Company Overview - BGSF is part of the Business Services group, which consists of 271 companies and ranks 3 in the Zacks Sector Rank [2] - BGSF currently holds a Zacks Rank of 2 (Buy), indicating a positive outlook based on earnings estimates and revisions [3] Group 2: Performance Metrics - Year-to-date, BGSF has returned 5%, significantly outperforming the Business Services sector's average return of 0.3% [4] - In comparison, FirstCash Holdings (FCFS) has seen a year-to-date increase of 24% [4] - BGSF's full-year earnings consensus estimate has risen by 366.7% over the past three months, reflecting improved analyst sentiment [3] Group 3: Industry Context - BGSF belongs to the Business - Services industry, which includes 26 companies and currently ranks 70 in the Zacks Industry Rank; this industry has gained an average of 16.3% year-to-date, indicating BGSF is slightly underperforming its industry [5] - FirstCash Holdings operates within the Financial Transaction Services industry, which has 35 stocks and ranks 57, with a year-to-date increase of 0.4% [6]

Group 1 - BGSF, Inc. has sold its professional division to INSPYR Solutions, resulting in a significant stock price increase of 35%, closing at $5.37 [1] - The company operates in the professional workforce solutions and property management sector [1] Group 2 - The article highlights the potential for story-based trading opportunities in the context of BGSF's recent transaction [1]

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were $63.2 million, down 8% from the prior year, with professional services down 4.2% and property management down 14.9% year-over-year [7][15] - Adjusted EBITDA was $2.4 million with an EBITDA margin of 3.8%, showing improvement from $1.4 million or 2.2% in the previous quarter [17] - The company reported a GAAP loss of $0.07 per diluted share and adjusted EPS of $0.05 [17] Business Line Data and Key Metrics Changes - Professional segment revenues increased sequentially by 5.6% compared to the previous quarter, although organic sales declined 4.2% year-over-year [15][16] - Property management revenues declined over 14% on both a sequential and year-over-year basis, but there are signs of improvement with revenues per billing day increasing steadily [16][12] Market Data and Key Metrics Changes - The U.S. apartment rental rates are starting to elevate again, which is expected to improve the economics for property management companies [13] - The labor market remains solid with 177,000 jobs added in April and a steady jobless rate of 4.2%, indicating a positive development despite macroeconomic uncertainties [21] Company Strategy and Development Direction - The company is focused on strategic alternatives and restructuring initiatives to recalibrate costs, including headcount reductions [6] - There is a commitment to growth initiatives and managing controllable factors while remaining cautious about the ongoing business disruptions from trade policy changes [20] - The company aims to leverage prior investments in technology and processes to drive long-term shareholder value [21] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about consulting projects and business spending moving forward, despite uncertainties in trade policies [8][19] - The company is seeing measurable progress in revenue per billing and is optimistic about the business momentum in the professional segment [11][21] - Management acknowledged the mixed environment for clients, with some sectors showing pent-up demand while others remain in a wait-and-see mode [27][46] Other Important Information - The company generated $1.1 million in cash from operating activities, with minimal capital expenditures of $23,000 primarily for IT investments [18] - The company entered into waivers and amendments with lenders due to non-compliance with financial covenants at the end of 2024 [18] Q&A Session Summary Question: Could you provide context around the new logos and average deal size? - Management noted that several contracts were signed in March, and they would follow up with specific data [24][25] Question: Are there discussions regarding tariff uncertainties and potential pent-up demand? - Management believes there is pent-up demand, but clients are currently cautious and in a wait-and-see mode [26][27] Question: Update on the technology platform rollout? - The technology platform is fully rolled out, with ongoing improvements being made to enhance efficiency [28][29] Question: How much of the expense reductions are reflected in Q1 results? - Approximately 65% to 70% of the benefits from expense reductions were realized in Q1, with full benefits expected in Q2 [30] Question: Update on competitive dynamics within property management? - The competitive environment remains unchanged, and the team is effectively adjusting to it [31][32] Question: When might property management return to year-over-year stability? - Management is working towards regaining growth trajectory and is seeing positive signs [33] Question: How comfortable is management with street estimates? - Management beat estimates for Q1 but has not yet reviewed Q2 estimates [39] Question: How is the company tracking against its plan? - Management feels they are tracking positively and both divisions have momentum [40][41] Question: Clarification on the wait-and-see mindset versus new logos? - Management indicated that it varies by sector, with some areas moving forward while others remain cautious [46] Question: Insights on professional services revenue trends? - Professional segment revenues increased sequentially, indicating a positive shift [47][48] Question: Historical behavior in spending post-recession? - Management noted that the industry typically rebounds quickly, but current conditions are unusual [56][58]

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were $63.2 million, down 8% from the prior year, with professional services down 4.2% and property management down 14.9% [6][13] - Adjusted EBITDA was $2.4 million with an EBITDA margin of 3.8%, showing improvement from $1.4 million or 2.2% in the previous quarter [15] - Adjusted EPS was $0.05 per share, while the GAAP loss was $0.07 per diluted share [15] Business Line Data and Key Metrics Changes - Professional segment revenues increased sequentially by 5.6% compared to the previous quarter, despite a year-over-year decline of 4.2% [6][13] - Property management revenues declined over 14% on both a sequential and year-over-year basis, but there are signs of improvement with revenues per billing day increasing [14][10] Market Data and Key Metrics Changes - The U.S. apartment rental rates are starting to elevate again, which is expected to improve the economics for property management companies [11] - The company signed 23 new logos in Q1 2025, up over 60% from 14 in Q1 2024, indicating positive momentum [10] Company Strategy and Development Direction - The company is focused on strategic alternatives and restructuring initiatives to recalibrate costs and improve efficiency [5] - There is a commitment to growth initiatives and managing controllable factors amidst macroeconomic uncertainties [19] - The company aims to leverage prior investments in technology and processes to drive long-term shareholder value [19] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding consulting projects and business spending, despite uncertainties in trade policies [7][18] - The labor market remains solid, with job additions indicating potential for future growth [19] - Management is optimistic about the property management segment as rental rates improve, but acknowledges ongoing challenges [12][11] Other Important Information - The company entered into waivers and amendments with lenders due to non-compliance with financial covenants at the end of 2024 [16] - The company is continuously looking for ways to improve cost effectiveness and operational efficiency [28] Q&A Session Summary Question: Could you provide context around the new logos and average deal size? - Management indicated that several contracts were signed in March, and they would follow up with specific data [22][23] Question: Are there discussions regarding pent-up demand due to tariff uncertainties? - Management believes there is pent-up demand, but clients are currently in a cautious "wait and see" mode [24][25] Question: Is the technology platform fully rolled out? - The technology platform is fully rolled out, with ongoing improvements being made to enhance efficiency [26][27] Question: How much of the expense reductions were factored into Q1 results? - Approximately 65% to 70% of the expense reductions were realized in Q1, with full benefits expected in Q2 [28] Question: What is the competitive dynamic within property management? - The competitive environment remains stable, and the company continues to secure preferred partner agreements [29][30] Question: When might property management return to year-over-year stability? - Management is working towards regaining growth trajectory and is seeing positive signs [31] Question: How comfortable is management with street estimates? - Management beat estimates for Q1 but has not yet reviewed Q2 estimates [37] Question: How does the company reconcile the cautious mindset of customers with the increase in new logos? - It varies by sector, with some sectors showing movement while others remain cautious [44] Question: Is there a shift in professional services performance? - Professional segment revenues increased in Q1 compared to Q4, indicating a positive trend [46][47] Question: What is the historical behavior in spending post-recession? - Historically, the industry rebounds quickly, but current conditions are unique, with cautious spending observed [54]