Financial Performance - Total revenues for the thirteen weeks ended June 30, 2024, were $68.1 million, a decrease of approximately $12.7 million (15.7%) compared to $80.8 million for the same period in 2023[85]. - Property Management segment revenues decreased by approximately $5.4 million (17.2%) to $25.7 million, primarily due to reduced billed hours and increased competition[87]. - Professional segment revenues decreased by $7.3 million (14.7%) to $42.4 million, with a decline of $8.9 million (19.6%) in the remaining Professional business[88]. - Gross profit decreased by approximately $5.9 million (20.1%) to $23.6 million, with a gross profit margin declining to 34.7% from 36.6%[90]. - Adjusted EBITDA for the thirteen weeks ended June 30, 2024, was $2.6 million, representing a margin of 3.4% of revenue, compared to $7.5 million (9.3% margin) for the same period last year[105]. - Net loss for the thirteen weeks ended June 30, 2024, was $761,000, compared to net income of $2.6 million for the same period in 2023[85]. Cost Management - Selling, general and administrative expenses decreased by $1.0 million (4.5%) to $21.6 million, reflecting cost control efforts[92]. - Selling, general and administrative expenses decreased $3.2 million (7.0%) due to expense reduction and cost control efforts[99]. - Interest expense decreased by $0.4 million (29.4%) primarily due to reduced accretion on contingent consideration[93]. - Interest expense decreased $0.4 million (15.0%) primarily due to reduced accretion on contingent consideration associated with Arroyo Consulting[100]. Strategic Initiatives - The company announced a strategic alternatives review on May 8, 2024, to maximize shareholder value[82]. - The company reduced its Revolving Facility by $10.8 million in Fiscal 2024, while paying down $0.9 million on the Term Loan[111]. - The Amended and Restated Credit Agreement allows for a revolving credit facility of up to $40 million and a delayed draw term loan commitment of $4.3 million[113]. - The company has a maximum Leverage Ratio and a minimum Fixed Charge Coverage Ratio as per the Restated Agreement[113]. Cash Flow and Working Capital - Net cash provided by operating activities was $14.7 million, an increase of $2.2 million compared to $12.5 million for Fiscal 2023[109]. - Working capital increased to $26.7 million as of June 30, 2024, compared to a negative $18.1 million at the end of December 31, 2023[108]. Market Conditions - The current inflationary environment is negatively impacting the economy, potentially affecting labor demand and increasing borrowing costs[117]. Revenue Recognition and Accounting Policies - Revenue is recognized when workforce solutions are delivered, with services including workforce solutions, contingent placements, and managed services[118]. - Intangible assets with finite useful lives are amortized over three to ten years, while those with indefinite lives are not amortized[119]. - Goodwill is reviewed for impairment annually or when circumstances indicate potential recoverability issues[120]. - The company is exposed to interest rate and inflation risks, with variable interest rates on its Revolving Facility and Term Loan[123].

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BGSF Inc. (NYSE:BGSF) Q1 2024 Results Conference Call May 9, 2024 9:00 AM ET Company Participants Sandy Martin - Managing Director Beth Garvey - Chair, President and Chief Executive Officer John Barnett - Chief Financial Officer Conference Call Participants Jeff Martin - ROTH Capital Howard Halpern - Taglich Brothers Bill Dezellem - Tieton Capital Mike Taglich - Taglich Brothers George Melas - MKH Management Operator Good morning, and welcome to the BGSF Inc. Fiscal 2024 First Quarter Financial Results Conf ...

[PART I—FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This section presents the company's unaudited consolidated financial statements and management's discussion and analysis for the reporting period [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents BGSF, Inc.'s unaudited consolidated financial statements, including balance sheets, statements of operations, equity changes, and cash flows, with detailed notes on operations and accounting policies [Unaudited Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates Unaudited Consolidated Balance Sheets (in thousands) | Metric (in thousands) | March 31, 2024 | December 31, 2023 | | :-------------------- | :------------- | :---------------- | | Total Assets | $170,552 | $178,517 | | Total Current Assets | $61,620 | $66,911 | | Total Liabilities | $86,999 | $92,981 | | Total Current Liabilities | $29,485 | $85,055 | | Total Stockholders' Equity | $83,553 | $85,536 | - **Total current liabilities** significantly decreased from **$85,055k** to **$29,485k**, primarily due to changes in the line of credit and long-term debt current portion[29](index=29&type=chunk) [Unaudited Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) This section details the company's financial performance, including revenues, gross profit, operating income, and net loss over specific periods Unaudited Consolidated Statements of Operations (in thousands, except per share) | Metric (in thousands, except per share) | Thirteen Weeks Ended March 31, 2024 | Thirteen Weeks Ended April 2, 2023 | | :-------------------------------------- | :---------------------------------- | :--------------------------------- | | Revenues | $68,765 | $75,316 | | Gross Profit | $23,438 | $26,784 | | Operating Income (Loss) | $415 | $(20,730) | | Net Loss | $(792) | $(16,466) | | Basic Net Loss Per Share | $(0.07) | $(1.54) | | Diluted Net Loss Per Share | $(0.07) | $(1.54) | | Cash dividends declared per common share | $0.15 | $0.15 | - **Operating income** significantly improved from a loss of **$(20,730)k** in 2023 to an income of **$415k** in 2024, primarily due to the absence of impairment losses in the current period[58](index=58&type=chunk) [Unaudited Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This section outlines changes in the company's stockholders' equity, reflecting impacts from net loss, dividends, and share-based compensation Unaudited Consolidated Statements of Changes in Stockholders' Equity (in thousands) | Metric (in thousands) | December 31, 2023 | March 31, 2024 | | :------------------------------ | :---------------- | :------------- | | Stockholders' equity, beginning | $85,536 | $85,536 | | Share-based compensation | — | $235 | | Cash dividend declared | — | $(1,639) | | Net loss | — | $(792) | | Stockholders' equity, ending | $85,536 | $83,553 | - **Total stockholders' equity** decreased from **$85,536k** at December 31, 2023, to **$83,553k** at March 31, 2024, primarily due to cash dividends declared and net loss, partially offset by share-based compensation and ESPP share issuances[59](index=59&type=chunk) [Unaudited Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing activities over specific periods Unaudited Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Thirteen Weeks Ended March 31, 2024 | Thirteen Weeks Ended April 2, 2023 | | :-------------------------------- | :---------------------------------- | :--------------------------------- | | Net cash provided by operating activities | $7,381 | $3,939 | | Net cash used in investing activities | $(494) | $(745) | | Net cash used in financing activities | $(6,837) | $(3,124) | | Net change in cash and cash equivalents | $50 | $70 | - **Net cash provided by operating activities** increased by **$3.4 million** year-over-year, while **net cash used in financing activities** more than doubled, primarily due to net payments under the line of credit[35](index=35&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited consolidated financial statements [NOTE 1 - NATURE OF OPERATIONS](index=9&type=section&id=NOTE%201%20-%20NATURE%20OF%20OPERATIONS) This note describes BGSF, Inc.'s business, service offerings, segment structure, and key operational factors including seasonality and macroeconomic impacts - BGSF, Inc. provides consulting, managed services, and professional workforce solutions across IT, Finance & Accounting, Managed Solutions, and Property Management segments, primarily within the U.S[36](index=36&type=chunk)[37](index=37&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - The Professional segment offers nearshore and offshore solutions in Colombia and India, strengthened by the acquisition of Arroyo Consulting on April 24, 2023[38](index=38&type=chunk)[63](index=63&type=chunk)[109](index=109&type=chunk) - The company experiences seasonal fluctuations, with Property Management demand typically increasing in Q2 and Q3, while Q1 can be affected by adverse weather and increased payroll taxes[64](index=64&type=chunk)[132](index=132&type=chunk) - Ongoing macroeconomic uncertainty and interest rates continue to adversely impact market conditions, potentially reducing demand for workforce solutions and lengthening client decision cycles[39](index=39&type=chunk)[176](index=176&type=chunk)[200](index=200&type=chunk) [NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=NOTE%202%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the critical accounting policies and estimates used in preparing the consolidated financial statements, including revenue recognition and asset valuation - The consolidated financial statements are prepared in accordance with GAAP, requiring management to make significant estimates and assumptions regarding allowances for credit losses, intangible assets, lease liabilities, contingent consideration, and income taxes[43](index=43&type=chunk)[202](index=202&type=chunk) - Revenue is recognized on a gross basis as a principal, reflecting the company's risk in identifying and hiring talent, selecting talent, establishing pricing, and bearing the risk for unpaid services[2](index=2&type=chunk)[54](index=54&type=chunk)[100](index=100&type=chunk) - Goodwill is reviewed annually for impairment, and intangible assets with finite lives are amortized over 3 to 10 years. Deferred tax assets are recognized for net operating loss and tax credit carryovers, with a valuation allowance recorded if future benefits are unlikely to be realized[3](index=3&type=chunk)[51](index=51&type=chunk)[74](index=74&type=chunk)[81](index=81&type=chunk)[106](index=106&type=chunk) - The company is evaluating the impact of new FASB ASUs 2023-09 (Income Taxes) and 2023-07 (Segment Reporting) on its financial statements and disclosures[83](index=83&type=chunk)[108](index=108&type=chunk)[208](index=208&type=chunk) [NOTE 3 - ACQUISITIONS](index=15&type=section&id=NOTE%203%20-%20ACQUISITIONS) This note details the acquisition of Arroyo Consulting, including its financial impact and strategic rationale for enhancing IT resources - On April 24, 2023, BGSF acquired Arroyo Consulting for **$6.8 million cash**, plus contingent consideration up to **$8.5 million** based on performance over two years. The acquisition aims to strengthen nearshore and offshore IT resources[84](index=84&type=chunk)[109](index=109&type=chunk)[153](index=153&type=chunk) Arroyo Consulting Financial Impact (in thousands) | Metric (in thousands) | Thirteen Weeks Ended March 31, 2024 | | :-------------------- | :---------------------------------- | | Arroyo Consulting Revenue | $5,400 | | Arroyo Consulting Operating Income | $1,400 | | Amortization Expense on Acquisition Intangibles | $400 | - Acquisition-related costs of **$0.6 million** were expensed in selling, general and administrative expenses in Fiscal 2024 and Fiscal 2023[87](index=87&type=chunk) Pro Forma Financials (in thousands, except per share) | Pro Forma Metric (in thousands, except per share) | Thirteen Weeks Ended April 2, 2023 | | :------------------------------------------------ | :--------------------------------- | | Revenues | $80,491 | | Gross Profit | $28,501 | | Net Loss | $(15,641) | | Basic Loss Per Share | $(1.50) | | Diluted Loss Per Share | $(1.49) | [NOTE 4 - OTHER CURRENT ASSETS](index=16&type=section&id=NOTE%204%20-%20OTHER%20CURRENT%20ASSETS) This note provides a breakdown of other current assets, including receivables from the CARES Act, income tax, and the Arroyo Consulting seller Other Current Assets (in thousands) | Other Current Assets (in thousands) | March 31, 2024 | December 31, 2023 | | :---------------------------------- | :------------- | :---------------- | | CARES Act receivable | $2,188 | $2,188 | | Income tax receivable | $676 | $685 | | Receivable from seller of Arroyo Consulting, net | $3,344 | $3,843 | | Other | $442 | $456 | | Total | $6,650 | $7,172 | [NOTE 5 - LEASES](index=16&type=section&id=NOTE%205%20-%20LEASES) This note describes the company's operating lease arrangements for office space, including lease terms, discount rates, and future payment obligations - The company leases all its office space through operating leases, with a **weighted average remaining lease term of 3.4 years** and a **weighted average discount rate of 6.6%** as of March 31, 2024[71](index=71&type=chunk)[89](index=89&type=chunk) Lease Information (in thousands) | Lease Information (in thousands) | Thirteen Weeks Ended March 31, 2024 | Thirteen Weeks Ended April 2, 2023 | | :------------------------------- | :---------------------------------- | :--------------------------------- | | Cash paid for operating leases | $588 | $584 | | Operating lease expense | $589 | $526 | Undiscounted Annual Future Minimum Lease Payments (in thousands) | Undiscounted Annual Future Minimum Lease Payments (in thousands) | March 31, 2024 | | :--------------------------------------------------------------- | :------------- | | 2024 (remaining) | $2,154 | | 2025 | $1,492 | | 2026 | $1,119 | | 2027 | $815 | | 2028 | $334 | | Thereafter | $55 | | Total lease payments | $5,969 | | Present value of lease liabilities | $5,325 | [NOTE 6 - INTANGIBLE ASSETS](index=17&type=section&id=NOTE%206%20-%20INTANGIBLE%20ASSETS) This note details the company's intangible assets, their amortization, and any impairment considerations, highlighting changes from prior periods - Intangible assets with finite lives are amortized over estimated useful lives ranging from three to ten years. No impairment indicators were identified in Fiscal 2024, compared to a **$22.5 million impairment** in Fiscal 2023 due to rebranding[51](index=51&type=chunk)[52](index=52&type=chunk)[72](index=72&type=chunk) Amortization Expense (in thousands) | Amortization Expense (in thousands) | Thirteen Weeks Ended March 31, 2024 | Thirteen Weeks Ended April 2, 2023 | | :---------------------------------- | :---------------------------------- | :--------------------------------- | | Client partner lists | $1,495 | $1,306 | | Covenant not to compete | $82 | $57 | | Acquisition intangibles | $1,577 | $1,363 | | Computer software | $336 | $267 | | Total expense | $1,913 | $1,630 | - **Amortization expense** increased by **$0.283 million (17.36%)** year-over-year, primarily due to acquisition intangibles[91](index=91&type=chunk) [NOTE 7 - ACCRUED PAYROLL AND EXPENSES AND CONTINGENT CONSIDERATION](index=17&type=section&id=NOTE%207%20-%20ACCRUED%20PAYROLL%20AND%20EXPENSES%20AND%20CONTINGENT%20CONSIDERATION) This note provides a breakdown of accrued payroll and expenses, along with details on contingent consideration liabilities Accrued Payroll and Expenses (in thousands) | Accrued Payroll and Expenses (in thousands) | March 31, 2024 | December 31, 2023 | | :------------------------------------------ | :------------- | :---------------- | | Field talent payroll | $5,519 | $5,014 | | Field talent payroll related | $1,655 | $1,039 | | Accrued bonuses and commissions | $2,351 | $2,931 | | Other | $5,354 | $5,918 | | Total Accrued payroll and expenses | $14,879 | $14,902 | [NOTE 8 - DEBT](index=18&type=section&id=NOTE%208%20-%20DEBT) This note outlines the company's debt structure, including the amended credit agreement, revolving facility, term loan, and compliance with covenants - The Credit Agreement was amended and restated on March 12, 2024, extending its maturity to **March 12, 2028**. It provides for a Revolving Facility up to **$40 million** and a Term Loan commitment[142](index=142&type=chunk)[195](index=195&type=chunk) Borrowings Under Revolving Facilities (in thousands) | Borrowings Under Revolving Facilities (in thousands) | March 31, 2024 | December 31, 2023 | | :--------------------------------------------------- | :------------- | :---------------- | | Total Outstanding | $20,000 | $24,874 | - The company had a **$4.4 million** convertible unsecured promissory note due to the seller of Horn Solutions, with a **6% annual interest rate**, convertible at **$17.12 per share**, maturing **December 12, 2024**[122](index=122&type=chunk)[144](index=144&type=chunk) - BGSF was in compliance with all affirmative and negative covenants of the Restated Agreement as of March 31, 2024[142](index=142&type=chunk)[195](index=195&type=chunk) [NOTE 9 - FAIR VALUE MEASUREMENTS](index=19&type=section&id=NOTE%209%20-%20FAIR%20VALUE%20MEASUREMENTS) This note explains the company's fair value measurements for financial instruments, categorizing them by hierarchy levels and detailing valuation inputs - The company uses a fair value hierarchy (Level 1, 2, and 3) for financial instruments. Contingent consideration is measured using **Level 3 unobservable inputs**, including discount rates of approximately **7%** and management's estimates of future sales and EBITDA[123](index=123&type=chunk)[144](index=144&type=chunk) Amounts Recorded at Fair Value (in thousands) | Amounts Recorded at Fair Value (in thousands) | Financial Statement Classification | Fair Value Hierarchy | March 31, 2024 | December 31, 2023 | | :-------------------------------------------- | :--------------------------------- | :------------------- | :------------- | :---------------- | | Convertible note | Convertible note | Level 2 | $4,368 | $4,368 | | Contingent consideration | Contingent consideration - current and long-term | Level 3 | $8,275 | $8,320 | [NOTE 10 - CONTINGENCIES](index=19&type=section&id=NOTE%2010%20-%20CONTINGENCIES) This note discusses the company's involvement in legal matters and its approach to establishing liabilities for probable and estimable losses - BGSF is involved in legal matters arising from its normal course of business and establishes liabilities when a loss is probable and estimable. The company maintains various insurance policies, including workers' compensation, general liability, professional liability, and D&O liability[124](index=124&type=chunk)[146](index=146&type=chunk) [NOTE 11 – EQUITY](index=19&type=section&id=NOTE%2011%20%E2%80%93%20EQUITY) This note details the company's authorized capital stock, including common and preferred shares, and their par values - Authorized capital stock consists of **19,500,000 shares of common stock ($0.01 par value)** and **500,000 shares of undesignated preferred stock ($0.01 par value)**[147](index=147&type=chunk) [NOTE 12 – SHARE-BASED COMPENSATION](index=20&type=section&id=NOTE%2012%20%E2%80%93%20SHARE-BASED%20COMPENSATION) This note provides information on share-based compensation expense, unamortized amounts, and activity related to stock options and restricted stock awards - The company recognized **$0.1 million** in share-based compensation expense for stock options and restricted stock awards for the thirteen weeks ended March 31, 2024, down from **$0.2 million** in the prior year[126](index=126&type=chunk)[149](index=149&type=chunk) - Unamortized share-based compensation expense as of March 31, 2024, amounted to **$0.7 million** for stock options (expected over **2.4 years**) and **$0.6 million** for restricted stock (expected over **1.7 years**)[126](index=126&type=chunk)[149](index=149&type=chunk) Stock Option Activity | Stock Option Activity | Number of Shares | Weighted Average Exercise Price Per Share | | :-------------------- | :--------------- | :---------------------------------------- | | Outstanding at Dec 31, 2023 | 922,310 | $15.30 | | Exercised | (16,298) | $6.25 | | Outstanding at Mar 31, 2024 | 906,012 | $15.47 | | Exercisable at Mar 31, 2024 | 649,957 | $17.11 | [NOTE 13 - TEAM MEMBER BENEFIT PLAN](index=20&type=section&id=NOTE%2013%20-%20TEAM%20MEMBER%20BENEFIT%20PLAN) This note details the company's contributions to its 401(k) Plan, including matching percentages for participant contributions - The company contributed **$0.5 million** to its 401(k) Plan for both the thirteen-week periods ended March 31, 2024, and April 2, 2023, matching participants' contributions **100% up to the first 3%** and **50% of the next 2%** of compensation[127](index=127&type=chunk)[150](index=150&type=chunk) [NOTE 14 - BUSINESS SEGMENTS](index=21&type=section&id=NOTE%2014%20-%20BUSINESS%20SEGMENTS) This note presents financial performance data by business segment, including revenue, operating income, and total assets for Property Management and Professional divisions Segment Performance (in thousands) | Segment Performance (in thousands) | Thirteen Weeks Ended March 31, 2024 | Thirteen Weeks Ended April 2, 2023 | | :--------------------------------- | :---------------------------------- | :--------------------------------- | | **Revenue:** | | | | Property Management | $24,547 | $28,405 | | Professional | $44,218 | $46,911 | | Total Revenue | $68,765 | $75,316 | | **Operating Income (Loss):** | | | | Property Management | $3,402 | $4,690 | | Professional (without impairment) | $1,673 | $2,627 | | Professional (impairment losses) | — | $(22,545) |\ | Home office | $(4,660) | $(5,502) | | Total Operating Income (Loss) | $415 | $(20,730) | | **Total Assets:** | | | | Property Management | $25,396 | $29,884 | | Professional | $120,312 | $122,751 | | Home office | $24,844 | $25,882 | | Total Assets | $170,552 | $178,517 | - **Total revenue** decreased by **8.7%** year-over-year, with Property Management revenue declining by **13.6%** and Professional revenue by **5.7%**, despite a **$5.4 million** contribution from Arroyo Consulting[128](index=128&type=chunk)[134](index=134&type=chunk)[181](index=181&type=chunk) - **Total operating income** significantly improved from a loss of **$(20,730)k** in 2023 to an income of **$415k** in 2024, primarily due to the absence of impairment losses in the Professional segment[128](index=128&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operational results, non-GAAP measures, liquidity, and critical accounting policies for the reporting period [Overview](index=22&type=section&id=Overview) This section provides an overview of BGSF's business, recent acquisitions, debt restructuring, and seasonal operational factors - BGSF provides consulting, managed services, and professional workforce solutions across IT, Finance & Accounting, Managed Solutions, and Property Management, operating primarily in the U.S. through its Property Management and Professional segments[154](index=154&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - The company acquired Arroyo Consulting on April 24, 2023, to enhance its nearshore and offshore IT and software development capabilities[109](index=109&type=chunk)[153](index=153&type=chunk) - The Credit Agreement was amended and restated on March 12, 2024, extending its maturity to **March 12, 2028**, and establishing a revolving credit facility and term loan commitment[131](index=131&type=chunk)[195](index=195&type=chunk) - The business experiences seasonal fluctuations, with Property Management demand typically increasing in the second and third quarters, and the first quarter being affected by weather conditions and increased payroll taxes[132](index=132&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing changes in revenues, gross profit, operating income, and expenses Results of Operations (in thousands) | Metric (in thousands) | Thirteen Weeks Ended March 31, 2024 | Thirteen Weeks Ended April 2, 2023 | % Change | | :-------------------- | :---------------------------------- | :--------------------------------- | :------- | | Revenues | $68,765 | $75,316 | (8.7)% | | Cost of services | $45,327 | $48,532 | (6.6)% | | Gross profit | $23,438 | $26,784 | (12.5)% | | Selling, general and administrative expenses | $21,016 | $23,212 | (9.5)% | | Operating income (loss) | $415 | $(20,730) | 102.0% | | Net loss | $(792) | $(16,466) | 95.2% | - Property Management revenues decreased by **13.6%** due to a decrease in billed hours. Professional revenues decreased by **5.7%**, with a **$5.4 million** contribution from Arroyo Consulting offset by an **$8.1 million (17.2%)** decline in the core IT and Finance & Accounting divisions[134](index=134&type=chunk)[181](index=181&type=chunk) - **Gross profit** decreased by **12.5%**, and the **gross profit margin** declined from **35.6% to 34.1%**, with both segments contributing to the decrease. Professional gross profit decreased by **8.7%**, despite Arroyo Consulting's **$1.7 million** contribution[158](index=158&type=chunk)[159](index=159&type=chunk)[182](index=182&type=chunk) - Selling, general and administrative expenses decreased by **$2.2 million (9.5%)**, excluding a **$0.6 million** impact from the Arroyo Consulting acquisition. Bad debt expense increased significantly by **691% to $625k**[137](index=137&type=chunk)[183](index=183&type=chunk) - **Operating income** improved significantly from a loss of **$(20,730)k** to an income of **$415k**, primarily due to the absence of **$22.5 million** in impairment losses recorded in the prior year[155](index=155&type=chunk) [Use of Non-GAAP Financial Measures](index=25&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) This section explains the company's use of Adjusted EBITDA as a non-GAAP financial measure to provide additional insight into operating performance - **Adjusted EBITDA**, a non-GAAP measure, is used to provide a supplemental view of operating performance by excluding interest, taxes, depreciation, amortization, impairment losses, transaction fees, and share-based compensation[162](index=162&type=chunk)[186](index=186&type=chunk) Adjusted EBITDA (in thousands) | Adjusted EBITDA (in thousands) | Thirteen Weeks Ended March 31, 2024 | Thirteen Weeks Ended April 2, 2023 | | :----------------------------- | :---------------------------------- | :--------------------------------- | | Net loss | $(792) | $(16,466) | | Adjusted EBITDA | $2,673 | $4,252 | | Adjusted EBITDA Margin (% of revenue) | 3.9% | 5.6% | - **Adjusted EBITDA** decreased from **$4,252k** in 2023 to **$2,673k** in 2024, with the **Adjusted EBITDA Margin** declining from **5.6% to 3.9%**[164](index=164&type=chunk)[188](index=188&type=chunk) - **Adjusted EBITDA** has limitations as an analytical tool, as it does not reflect cash expenditures, working capital changes, tax payments, or debt service requirements[187](index=187&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources of liquidity, cash flow activities, and working capital position - Primary liquidity sources are cash from operations and borrowings under the amended and restated credit agreement with BMO, which includes a **$40 million** revolving credit facility maturing **March 12, 2028**[165](index=165&type=chunk)[195](index=195&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Summary (in thousands) | Thirteen Weeks Ended March 31, 2024 | Thirteen Weeks Ended April 2, 2023 | | :------------------------------- | :---------------------------------- | :--------------------------------- | | Operating activities | $7,381 | $3,939 | | Investing activities | $(494) | $(745) | | Financing activities | $(6,837) | $(3,124) | | Net change in cash and cash equivalents | $50 | $70 | - **Net cash provided by operating activities** increased to **$7.4 million** in Fiscal 2024, up from **$3.9 million** in Fiscal 2023, primarily due to less payments on accrued payroll and expenses and reduced prepaid expenses[191](index=191&type=chunk) - **Net cash used in financing activities** increased to **$(6.8) million** in Fiscal 2024, primarily due to **$4.9 million** in reductions to the Revolving Facility and **$1.6 million** in cash dividends[172](index=172&type=chunk)[192](index=192&type=chunk) - On May 8, 2024, the Board of Directors indefinitely suspended its quarterly cash dividend, commencing with the dividend that would have been declared and paid in May 2024[190](index=190&type=chunk) Working Capital (in thousands) | Working Capital (in thousands) | March 31, 2024 | December 31, 2023 | | :----------------------------- | :------------- | :---------------- | | Working capital | $32,135 | $(18,144) | [Off-Balance Sheet Arrangements](index=28&type=section&id=Off-Balance%20Sheet%20Arrangements) This section describes the company's off-balance sheet arrangements, specifically a standby letter of credit - The company has a standby letter of credit arrangement for **$0.1 million**, expiring **February 12, 2028**, related to the EdgeRock acquisition, which is considered usage against the Revolving Facility[93](index=93&type=chunk)[174](index=174&type=chunk) [Critical Accounting Policies and Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section outlines the significant accounting policies and estimates that require management judgment and could materially impact financial results - The preparation of consolidated financial statements requires management to make assumptions and estimates about future events, which could result in material differences from actual results due to economic uncertainty[1](index=1&type=chunk)[175](index=175&type=chunk) - The current inflationary environment and rising interest rates may negatively impact labor markets, reducing demand for workforce solutions, increasing early terminations, or diminishing projects, potentially increasing borrowing costs[176](index=176&type=chunk)[200](index=200&type=chunk) - Significant estimates include allowances for credit losses, intangible assets, lease liabilities, contingent consideration obligations, and income taxes[43](index=43&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily related to interest rates and inflation, and how these factors could impact its financial performance - BGSF is exposed to market risks from interest rate and inflation fluctuations. While inflation impacts have been moderated by adjusting the pricing model, variable interest rates on the Revolving Facility and Term Loan pose a risk to future earnings and cash flows[209](index=209&type=chunk)[210](index=210&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures and internal control over financial reporting, including management's conclusions on their effectiveness and inherent limitations - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2024[212](index=212&type=chunk)[223](index=223&type=chunk) - No material changes in internal control over financial reporting were identified for the quarter ended March 31, 2024, and remote work has not materially affected these controls[213](index=213&type=chunk)[224](index=224&type=chunk) - Control systems, by their inherent limitations, can only provide reasonable assurance and may not prevent or detect all errors or fraud due to resource constraints, human error, collusion, or management override[214](index=214&type=chunk) [PART II—OTHER INFORMATION](index=31&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This section provides additional information including legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) This section states that there have been no changes to the legal proceedings information since the last annual report - No change from the legal proceedings information provided in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023[226](index=226&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) This section highlights the risks associated with the company's ongoing evaluation of strategic alternatives, emphasizing potential costs, complexities, and uncertainties that could impact stock price and business relationships - The company's strategic alternatives review process, initiated on May 8, 2024, may be costly, time-consuming, and complex, with no assurance of a definitive course of action or successful completion on attractive terms[216](index=216&type=chunk)[228](index=228&type=chunk) - Speculation regarding strategic alternatives and perceived uncertainties could cause significant stock price fluctuations or materially impact relationships with stockholders, employees, customers, and suppliers[217](index=217&type=chunk)[228](index=228&type=chunk) - Even if a transaction is consummated, there is a risk of failing to realize anticipated benefits, experiencing longer-than-expected realization times, or encountering integration difficulties[217](index=217&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no unregistered sales of equity securities or use of proceeds during the period - None[229](index=229&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities during the reporting period - None[218](index=218&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Not applicable[230](index=230&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) This section provides information on trading plans by directors and officers - No director or Section 16 officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the fiscal quarter ended March 31, 2024[219](index=219&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed or furnished with the Quarterly Report on Form 10-Q, including key agreements and certifications - Exhibits include the Amended and Restated Credit Agreement, Certificate of Incorporation, Bylaws, Common Stock Certificate, and certifications from the CEO and CFO[231](index=231&type=chunk) - The financial information from the Quarterly Report is formatted in Inline XBRL (Extensible Business Reporting Language)[220](index=220&type=chunk)[231](index=231&type=chunk) [SIGNATURES](index=34&type=section&id=SIGNATURES) This section contains the required signatures for the Quarterly Report on Form 10-Q - The report was signed by Beth Garvey, President and Chief Executive Officer, and John Barnett, Chief Financial Officer and Secretary, on May 8, 2024[221](index=221&type=chunk)[222](index=222&type=chunk)[233](index=233&type=chunk)

BGSF, Inc. Reports First Quarter 2024 Financial Results Generated $7.4 Million of Operating Cash Flow • Revenues were $68.8 million for 2024, compared to $75.3 million for 2023. Beth A. Garvey, Chair, President, and CEO, said, "Our first quarter results aligned with expectations, and we are encouraged by recent activity in higher-end consulting. The Professional division has experienced meaningful progress each month this year with IT consulting and other IT-related tool deployments, and we are benefiting f ...

Upon dissolution of our company, you may not recoup all or any portion of your investment. • a classified board of directors with three-year staggered terms; • the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms, including preferences and voting rights, of those shares without stockholder approval; • stockholder action can only be taken at a special or regular meeting and not by written consent except in limited circumstances; • advance notice ...

PLANO, Texas--(BUSINESS WIRE)--BGSF, Inc. (NYSE: BGSF), a growing provider of consulting, managed services, and professional solutions, today announced that Beth Garvey, Chair, President, and Chief Executive Officer, and John Barnett, Chief Financial Officer, will participate in the 36th Annual Roth Conference on March 18-19, 2024, in Laguna Niguel, CA. Investors interested in arranging a one-on-one meeting should contact your conference representative or the Company’s investor relations contacts below. Ab ...

BGSF, Inc. (NYSE:BGSF) Q4 2023 Earnings Conference Call March 14, 2024 9:00 AM ET Company Participants Sandra Martin - IR, Three Part Advisors Beth Garvey - Chair, President, & CEO John Barnett - CFO Conference Call Participants Jeff Martin - Roth MKM Howard Halpern - Taglich Brothers Bill Donohue - Teton Capital Brian Kinstlinger - Alliance Global Partners Michael Taglich - Taglich Brothers Operator Good morning, everyone. Welcome to the BGSF Inc. Fiscal 2023 Fourth Quarter and Full Year Financial Results ...

PLANO, Texas--(BUSINESS WIRE)--BGSF, Inc. (NYSE: BGSF), a growing provider of consulting, managed services, and professional workforce solutions, today reported financial results for its fiscal year and fourth fiscal quarter ended December 31, 2023. Note: Fiscal 2023 financial results are on a 52-week year ended December 31, 2023, compared to Fiscal 2022 financial results on a 53-week year ended January 1, 2023. Full Year 2023 Highlights from Continuing Operations2,3: Revenues were $313.2 million, up 4. ...

BGSF, Inc. Reports Full Year and Fourth Quarter 2023 Financial Results Record Full Year Revenues of $313.2 million, up 4.9% Generated $20.4 Million of Operating Cash Flow New Credit Facility Closed March 12, 2024 PLANO, Texas – (March 13, 2024) – BGSF, Inc. (NYSE: BGSF), a growing provider of consulting, managed services, and professional workforce solutions, today reported financial results for its fiscal year and fourth fiscal quarter ended December 31, 2023. Note: Fiscal 2023 financial results are on a 5 ...