BGSF(BGSF) - 2025 Q3 - Quarterly Report

Revenue Performance - Total revenues for the thirteen weeks ended September 29, 2024, were $71.2 million, a decrease of approximately$ 12.3 million (14.7%) compared to $83.5 million for the same period in 2023[103]. - For the thirty-nine weeks ended September 29, 2024, total revenues were$ 208.1 million, a decrease of approximately $31.5 million (13.1%) compared to$ 239.6 million in the prior year[114]. - Property Management segment revenues decreased by approximately $6.2 million (17.1%) to$ 29.8 million, primarily due to reduced billed hours and increased competition[105]. - Professional segment revenues decreased by $6.1 million (12.9%) to$ 41.4 million, mainly due to a decline in billed hours in the Finance & Accounting division[106]. - Property Management revenues for the thirty-nine weeks decreased by approximately $15.4 million (16.1%) due to reduced billed hours and cost pressures[114]. - Professional revenues decreased by approximately$ 16.1 million (11.2%), with the Arroyo Consulting acquisition contributing $6.8 million of incremental revenues[115]. Profitability - Gross profit for the thirteen weeks ended September 29, 2024, was$ 24.3 million, down $5.7 million (18.8%) from$ 30.0 million in the prior year[109]. - Total company gross profit decreased by approximately $14.9 million (17.3%), with gross profit margin declining to 34.3% from 36.0%[118]. - Gross profit margin decreased to 34.2% from 35.9%, primarily due to margin decline in the Property Management segment[109]. - Property Management gross profit decreased by approximately$ 8.6 million (22.4%) due to increased competition and lower demand[119]. - Professional gross profit decreased by approximately $6.4 million (13.3%), with a$ 2.3 million contribution from Arroyo Consulting[120]. Expenses and Cost Management - Selling, general and administrative expenses decreased by $0.7 million (3.1%) to$ 22.0 million, reflecting cost control efforts in response to revenue decline[112]. - Selling, general and administrative expenses decreased by $3.9 million (5.7%) due to cost control efforts[121]. - Interest expense, net decreased by$ 0.5 million (26.9%) primarily due to lower average balance on the Revolving Facility[113]. - Interest expense decreased by $0.9 million (19.6%) due to reduced accretion on contingent consideration[122]. Cash Flow and Working Capital - Net cash provided by operating activities was$ 21.2 million for the thirty-nine weeks ended September 29, 2024[133]. - For Fiscal 2024, net cash provided by operating activities was $21.2 million, an increase of$ 6.2 million compared to $15.1 million in Fiscal 2023[135]. - Working capital increased to$ 22.0 million from a negative $18.1 million as of December 31, 2023[133]. Strategic Initiatives - The company has initiated a strategic alternatives review to maximize shareholder value, engaging financial advisors for this process[99]. Capital Expenditures and Financing - Capital expenditures in Fiscal 2024 amounted to$ 1.4 million, primarily for IT improvements, compared to $2.0 million in Fiscal 2023[136]. - The company reduced its Revolving Facility by$ 17.2 million and paid $4.3 million in contingent consideration related to the Arroyo Consulting acquisition in Fiscal 2024[138]. - The Amended and Restated Credit Agreement allows the company to borrow up to$ 40 million and includes a term loan commitment[140]. - As of September 29, 2024, the company was in compliance with all affirmative and negative covenants under the First Credit Amendment[141]. - The company has a maximum financial exposure of $0.1 million from a standby letter of credit arrangement related to the EdgeRock acquisition[142]. Economic Environment - The current inflationary environment may negatively impact labor markets and increase borrowing costs for the company[146]. Accounting Policies - Revenue is recognized when workforce solutions are delivered, with various service types contributing to total revenue[147]. - Intangible assets are amortized over estimated useful lives ranging from three to ten years, with purchased software capitalized[148]. - Goodwill is reviewed for impairment annually, with the company assessing the recoverability of its carrying value[149].