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]

Core Insights - BGSF reported a quarterly loss of $0.07 per share, outperforming the Zacks Consensus Estimate of a loss of $0.18, marking an earnings surprise of 61.11% [1] - The company generated revenues of $63.23 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 1.99%, but down from $68.77 million year-over-year [2] - BGSF shares have declined approximately 35.9% year-to-date, contrasting with the S&P 500's decline of 4.7% [3] Earnings Outlook - The future performance of BGSF's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - Current consensus EPS estimate for the upcoming quarter is -$0.02 on revenues of $69.63 million, and -$0.03 on revenues of $280.25 million for the current fiscal year [7] Industry Context - The Business - Services industry, to which BGSF belongs, is currently ranked in the top 25% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8] - Another company in the same industry, ZipRecruiter, is expected to report a quarterly loss of $0.17 per share, reflecting a year-over-year change of -142.9% [9]

Revenue Performance - Revenues for Q1 2025 were $63.2 million, a decrease of 7.4% from $68.8 million in Q1 2024[4] - Revenue for the thirteen weeks ended March 30, 2025, was $63.234 million, a decrease of 8.1% compared to $68.765 million for the same period in 2024[16] - Property Management segment revenues decreased by 14.1% from Q4 2024, primarily due to seasonal demand, while Professional segment revenues increased by 5.6%[4] Profitability Metrics - Gross profit for Q1 2025 was $20.9 million, down from $21.5 million in Q4 2024, resulting in a gross profit margin of 33.1%[4] - Gross profit for the same period was $20.921 million, down from $23.438 million, reflecting a gross margin of 33.1%[16] - Net loss for Q1 2025 was $0.7 million, or $0.07 per diluted share, compared to a net loss of $1.0 million, or $0.10 per diluted share in Q4 2024[4] - Net loss for the thirteen weeks ended March 30, 2025, was $722,000, compared to a net loss of $792,000 for the same period in 2024[18] - Adjusted EBITDA for Q1 2025 was $2.4 million, representing 3.8% of revenues, an increase from $1.4 million (2.2% of revenues) in Q4 2024[4] - Adjusted EBITDA for the period was $2.372 million, with an adjusted EBITDA margin of 3.8%[25] - Adjusted EPS for Q1 2025 was $0.05, compared to an adjusted EPS loss of $0.06 in Q4 2024[4] - Adjusted EPS for the thirteen weeks ended March 30, 2025, was $0.05, down from $0.10 in the same period of 2024[27] Cash Flow and Liquidity - Cash and cash equivalents increased to $2.05 million in Q1 2025 from $0.35 million in Q1 2024[12] - Cash and cash equivalents at the end of the period increased to $2.050 million from $50,000 at the beginning of the period[18] - Net cash provided by operating activities was $1.064 million, compared to net cash used in financing activities of $6.837 million in the prior year[18] Operational Changes - The company is advancing its restructuring plan to streamline operations based on strategic initiatives announced in late 2024[3] - Month-over-month improvements are being observed in the second quarter of 2025[3] Other Financial Metrics - Total assets increased to $152.26 million in Q1 2025 from $150.11 million in Q4 2024[12] - The company reported a decrease in accounts receivable by $2.620 million during the period[18] - Interest expense for the period was $1.146 million, slightly lower than $1.235 million in the previous year[25] - The company incurred $1.671 million in depreciation and amortization expenses during the period[25]

Revenue Performance - Revenues for the thirteen weeks ended March 30, 2025, were $63.234 million, a decrease of approximately $5.531 million (8.0%) compared to $68.765 million for the same period in 2024[116] - Property Management segment revenues decreased by approximately $3.6 million (14.9%) to $20.883 million, primarily due to reduced billed hours and increased competition[116] - Professional segment revenues decreased by $1.8 million (4.2%) to $42.351 million, mainly due to delays in client projects and reduced field talent usage[117] Profitability - Total gross profit decreased by approximately $2.5 million (10.7%) to $20.921 million, with gross profit margin declining to 33.1% from 34.1%[120] - Operating income for the thirteen weeks ended March 30, 2025, was $339 thousand, compared to $415 thousand for the same period in 2024[116] - Net loss for the period was $722 thousand, a slight improvement from a net loss of $792 thousand in the prior year[116] - Adjusted EBITDA for the same period was $2,372,000, with an adjusted EBITDA margin of 3.8%, compared to $2,918,000 and 4.2% in 2024[131] Expenses and Cost Management - Selling, general, and administrative expenses decreased by $2.1 million (10.0%) to $18.911 million, attributed to cost control measures implemented in December 2024[123] - Interest expense decreased by $0.1 million (7.2%) to $1.146 million, primarily due to a lower average balance on the Revolving Facility[125] Cash Flow and Working Capital - Cash provided by operating activities decreased to $1,064,000 in Fiscal 2025 from $7,381,000 in Fiscal 2024, primarily due to decreased receipts on accounts receivable[137] - Working capital increased to $21,449,000 as of March 30, 2025, up from $19,427,000 as of December 29, 2024[135] Financing and Strategic Initiatives - The company announced a cost restructuring plan in December 2024 as part of its strategic alternatives review to maximize shareholder value[111] - The company is actively engaging in a strategic alternatives review process and evaluating equity and debt financing opportunities[146] - The company anticipates potential non-compliance with financial covenants in the upcoming fiscal quarters, which could trigger prepayment obligations[146] Capital Expenditures and Debt - Capital expenditures remained flat in Fiscal 2025, following $0.5 million in Fiscal 2024 primarily for IT improvements[138] - The company borrowed $1.6 million on its Revolving Facility for increased operating needs in Fiscal 2025, while paying down $1.0 million on the Term Loan[139] - The company has a Revolving Facility maturing on December 31, 2026, with an aggregate borrowing capacity of up to $40 million[141] Financial Exposure - The company experienced a maximum financial exposure of $0.1 million from a standby letter of credit arrangement related to the EdgeRock acquisition[147]

Financial Performance - BGSF, Inc. reported revenue from continuing operations of $272 million in 2024, up from $35 million in 2009, indicating significant growth through acquisitions and organic strategies[39]. - Revenues for the fiscal year ended December 29, 2024, were $272,499,000, a decrease of 13% compared to $313,167,000 in 2023[138]. - Gross profit for the same period was $92,863,000, down from $111,784,000, reflecting a gross margin decline[138]. - Adjusted EBITDA from continuing operations was $10,475,000, a significant drop from $25,858,000 in the previous year[139]. - The company reported a net loss of $3,338,000 for the fiscal year, compared to a net loss of $10,223,000 in 2023[138]. - Basic net loss per share from continuing operations was $(0.31), an improvement from $(0.95) in the prior year[138]. - Total assets decreased to $150,111,000 from $178,517,000, indicating a reduction in the company's asset base[139]. - Working capital improved to $19,427,000 from a negative $18,144,000 in 2023, reflecting better liquidity[139]. - Total outstanding borrowings, net, decreased to $46,321,000 from $63,114,000, indicating a reduction in debt levels[139]. - Cash dividends declared per common share were $0.15, down from $0.60 in the previous year[139]. Market Overview - The U.S. temporary service market was valued at $145.2 billion in 2023, down from $168.8 billion in 2022, reflecting a contraction in the workforce solution industry[27]. - The workforce solution industry is highly fragmented, with approximately 25,000 competing companies, of which only 241 exceeded $100 million in annual revenues in 2023[27]. - The workforce solution market is expected to remain competitive, with price competition and the ability to attract qualified candidates being key factors for success[43][44]. Company Strategy and Growth - The company has acquired fourteen businesses since 2010, enhancing its service offerings and market presence across various sectors[22]. - The company aims to expand into new markets while continuing to grow operations in existing markets, leveraging a proven approach to acquisitions[40]. - The company initiated a strategic alternatives review process on May 8, 2024, to evaluate potential options for maximizing shareholder value[151]. - The company has completed several acquisitions, including Arroyo Consulting in 2023, which contributed $5.6 million in incremental revenues[159]. Operational Insights - BGSF operates primarily in two segments: Property Management and Professional, with the Property Management segment providing office and maintenance talent across 40 states and D.C.[31][32]. - Seasonal fluctuations affect demand, with the highest demand for Property Management solutions typically occurring in the third quarter due to increased activity in multifamily units[45]. - In 2024, BGSF placed approximately 13,300 individuals in positions with client partners, retaining responsibility for wages, benefits, and payroll taxes[49]. - In 2024, BGSF conducted over 10,000 hours of upskilling for the workforce, with more than 3,200 individuals participating in training programs[56]. Workforce and Diversity - As of August 1, 2024, BGSF employed approximately 3,456 people, with 13% being internal team members and 87% field talent supporting client partners[52]. - Women represented 36% of all team members, while underrepresented minorities accounted for 71% of reporting team members[54]. - BGSF's diversity, equity, and inclusion initiatives include the formation of resource groups and a council to promote belonging and equitable opportunities[51]. Financial Risks and Compliance - The company is subject to various regulations, which may impose financial risks but have not materially affected its business to date[58]. - The company faces significant working capital needs, requiring sufficient cash availability to meet payroll obligations, with payments to field talent made weekly while client partner payments are received 30 to 90 days after billing[75]. - The company is exposed to credit risks due to assuming payroll obligations for team members and field talent, which are fixed regardless of client partner payments[84]. - The company’s workforce solution agreements can be terminated on short notice, posing a risk of significant revenue loss[71]. - The company is contractually obligated to collateralize its workers' compensation obligations, which could pressure liquidity and working capital capacity[82]. - The company was not in compliance with certain financial covenants as of December 29, 2024, and anticipated continued noncompliance for the quarter ending March 31, 2025[199]. Technology and Cybersecurity - The company continues to invest in technology and process improvements, completing a three-year IT enhancement project in 2022 to optimize productivity[42]. - The company has implemented a cybersecurity framework based on NIST standards, with oversight from the Board and senior management[114]. - Cybersecurity risks, including potential breaches and data loss, could harm client relationships and expose the company to significant liability[93]. - The company has performed significant vendor due diligence to mitigate risks associated with third-party vendors accessing sensitive data[118]. Community Engagement - BGSF's commitment to community service included over 1,400 volunteer hours and more than $60,000 donated for philanthropic purposes in 2024[54]. - In 2024, BGSF's team members recognized company values through over 3,300 awards sent to fellow team members[55]. Stock and Shareholder Information - The company's common stock closed at $5.19 per share as of February 5, 2025, with approximately 2,386 holders of record[129]. - The company declared cash dividends totaling $6,507,249 for the fiscal year 2023, with a consistent dividend of $0.15 per share[130]. - The company has 976,432 securities available for issuance under the 2013 Long-Term Incentive Plan, with a weighted-average exercise price of $15.00[132]. - The company may issue additional common stock in the future, which could dilute existing stockholders' ownership interests[98].

Financial Data and Key Metrics Changes - Fourth quarter revenue was $64.4 million, down from $73.6 million in Q4 2023, reflecting a decline in both segments [17] - Professional segment revenue declined 8.7% year-over-year and 3% sequentially, but grew 2% sequentially on a billing day adjusted basis [17] - Gross profit was $21.5 million in Q4 with a margin of 33.3%, compared to 34.6% in the prior year, attributed to increased competition and economic pressures [19] - Adjusted EBITDA was $1.4 million or 2.2% of revenue, down from $3.4 million or 4.8% in Q3 [20] Business Line Data and Key Metrics Changes - In the Professional segment, monthly IT contract revenue normalized for billing days reached its lowest point in June 2024, but has since stabilized or grown sequentially [12] - The Property Management segment saw a significant restructuring, with revenue trends expected to improve starting mid-2025, despite current challenges in the multifamily housing sector [14][15] - A 23% increase in revenue was driven by territory mapping initiatives in key markets [15] Market Data and Key Metrics Changes - The broader multifamily housing sector is facing challenges due to rising operating expenses and credit issues, impacting the Property Management segment [14] - Increased customer engagement and a 30% rise in signed master service agreements compared to Q4 2023 indicate a growing opportunity pipeline [13] Company Strategy and Development Direction - The company announced a restructuring plan aimed at reducing costs and improving operational performance, expecting cash savings of approximately $7 million to $9 million in 2025 [9] - Investments in technology, partnerships, and people are expected to drive long-term value creation, with a focus on enhancing profitability in 2025 [24] - The company is leveraging AI capabilities through the Arroyo team to address client needs and improve service delivery [40][41] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the second half of 2025, with expectations for improvement in property management revenue trends [32] - The economic and political uncertainties have created a more cautious environment, but management remains committed to providing updates on strategic alternatives [11][25] Other Important Information - The company has been recognized as one of the best places for working parents for five consecutive years [8] - A new lead generation engine launched in Q3 generated $2 million in revenue for the property management team [22] Q&A Session Summary Question: What type of cadence could be expected in terms of seeing restructuring on the SG&A line? - Management indicated that the majority of cuts took place in December and will start showing up in Q1 results, with further reductions throughout the year [28] Question: How is the process going with relocating operations to Arroyo? - Management expressed pride in the Arroyo team's capabilities and ongoing efforts to streamline costs [30] Question: What improvements are expected in the second half of the year for property management? - Management noted hopeful conversations within the National Apartment Association regarding potential improvements [32] Question: How is client feedback on professional services and new logos? - Management reported increased activity in the pipeline and optimism following recent elections, with more scope meetings occurring [35] Question: How will the $7 million to $9 million annual savings be realized? - The majority of cost savings were personnel-related and will be reflected in Q1, with further changes in commission plans expected in Q2 [48] Question: What percentage of the footprint is utilizing territory mapping? - Management confirmed that territory mapping has been launched in key markets like Houston and Atlanta, with plans for further expansion [54]