BGSF(BGSF) - 2025 Q2 - Quarterly Report

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$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$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$21.6 million, reflecting cost control efforts[92]. - Selling, general and administrative expenses decreased $3.2 million (7.0$0.4 million (29.4%) primarily due to reduced accretion on contingent consideration[93]. - Interest expense decreased $0.4 million (15.0$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].