BGSF(BGSF) - 2026 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements Financial statements reflect the sale of the Professional segment, with continuing operations showing lower revenue and a wider net loss Unaudited Consolidated Balance Sheets 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 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 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 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][68] - 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][86][109] - Following the reclassification, continuing operations consist solely of the Property Management segment[26][106] Management's Discussion and Analysis of Financial Condition and Results of Operations 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] - The increase in SG&A expenses was primarily driven by $1.6 million in costs related to the strategic alternatives review process[119][120] 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 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][156] Controls and Procedures 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] - No changes in internal control over financial reporting occurred during the fiscal quarter that have materially affected these controls[158] PART II OTHER INFORMATION Legal Proceedings 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] Risk Factors 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] - The pending sale may adversely affect the retained business through management distraction and higher employee turnover[164] - 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] - 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] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[170] Exhibits 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]