BGSF(BGSF) - 2026 Q2 - Quarterly Results

Q2 2025 Financial Results Overview Summary of Financial Results from Continuing Operations BGSF's Q2 2025 continuing operations reported sequential revenue and gross profit increases from Q1 2025, but year-over-year declines, with net and Adjusted EBITDA losses worsening sequentially and annually Financial Results from Continuing Operations (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | Q1 2025 | | :-------------------- | :------ | :------ | :------ | | Revenues | $23,506 | $25,726 | $20,883 | | Gross profit | $8,410 | $9,596 | $7,560 | | Gross profit percentage | 35.8% | 37.3% | 36.2% | | Operating loss | $(4,425) | $(1,475) | $(1,773) | | Net loss | $(4,862) | $(2,082) | $(2,245) | | Net loss per diluted share | $(0.44) | $(0.19) | $(0.21) | | Adjusted EBITDA | $(1,145) | $(264) | $(1,032) | | Adjusted EBITDA Margin (% of revenue) | (4.9)% | (1.0)% | (5.4)% | | Adjusted EPS | $(0.19) | $(0.04) | $(0.11) | - Revenues for Q2 2025 increased by 12.6% sequentially from Q1 2025, primarily due to increased billed hours from seasonal demand, reaching $23.5 million, though revenues declined by 8.6% compared to Q2 2024[5][6] - Net loss for Q2 2025 was $4.9 million ($0.44 per diluted share), a significant increase from a net loss of $2.2 million ($0.21 per diluted share) in Q1 2025[6] Management Commentary and Operational Highlights Management updated on the proposed Professional division sale, shareholder vote, and transition services, highlighting Property Management cost reductions and strategic AI tool investments - The proposed sale of BGSF's Professional division to INSPYR is progressing, with a proxy statement filed on July 25 for a shareholder vote on September 4[5] - Following the closing of the transaction, BGSF will operate under a Transition Service Agreement (TSA) for up to six months or longer, providing services to INSPYR and receiving payment[5] - BGSF plans to continue reducing overhead costs to align with a smaller, Property Management-focused company and is implementing AI-powered sales and recruiting tools expected to be operational by mid-Q4[5][7] Company Information and Strategic Developments About BGSF BGSF is a leading provider of workforce solutions, offering consulting, managed services, and professional staffing across various industries including IT, Finance & Accounting, Managed Solutions, and Property Management, achieving scalable growth through integrated regional and national brands - BGSF provides consulting, managed services, and professional workforce solutions through divisions in IT, Finance & Accounting, Managed Solutions, and Property Management[8] - The company was ranked by Staffing Industry Analysts as the 97th largest U.S. staffing company and the 49th largest IT staffing firm in 2024[8] Professional Division Sale and Transition BGSF announced a definitive agreement to sell its Professional Division to INSPYR Solutions, a significant strategic move contingent on shareholder approval and other customary closing conditions - On June 16, 2025, BGSF signed a definitive agreement to sell its Professional Division to INSPYR Solutions[9] - The proposed transaction is subject to customary closing conditions, including approval from BGSF's stockholders[9] Detailed Financial Statements Consolidated Balance Sheets The consolidated balance sheet shows a slight decrease in total assets and stockholders' equity, while total liabilities increased from December 2024 to June 2025, with key changes including a significant increase in cash and cash equivalents and an increase in current liabilities Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 29, 2025 (unaudited) | December 29, 2024 (audited) | | :-------------------- | :------------------------ | :-------------------------- | | Cash and cash equivalents | $2,777 | $32 | | Accounts receivable | $13,637 | $17,148 | | Total current assets | $47,603 | $45,347 | | Total assets | $149,692 | $150,111 | | Total current liabilities | $29,001 | $25,921 | | Total liabilities | $71,406 | $67,842 | | Total stockholders' equity | $78,286 | $82,269 | - Cash and cash equivalents saw a substantial increase from $32 thousand at December 29, 2024, to $2,777 thousand at June 29, 2025[16] - Total liabilities increased by $3,564 thousand, from $67,842 thousand to $71,406 thousand, primarily driven by an increase in accrued payroll and expenses and line of credit borrowings[16] Unaudited Consolidated Statements of Operations The consolidated statements of operations show a decline in revenues and gross profit for both the thirteen and twenty-six-week periods ended June 29, 2025, compared to the prior year, with net loss from continuing operations significantly widening, although income from discontinued operations partially offset the total net loss Unaudited Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Thirteen Weeks Ended June 29, 2025 | Thirteen Weeks Ended June 30, 2024 | Twenty-six Weeks Ended June 29, 2025 | Twenty-six Weeks Ended June 30, 2024 | | :-------------------- | :--------------------------------- | :--------------------------------- | :----------------------------------- | :----------------------------------- | | Revenues | $23,506 | $25,726 | $44,389 | $50,273 | | Gross profit | $8,410 | $9,596 | $15,970 | $18,939 | | Operating loss | $(4,425) | $(1,475) | $(6,198) | $(2,733) | | Net loss from continuing operations | $(4,862) | $(2,082) | $(7,098) | $(4,130) | | Income from discontinued operations | $1,309 | $1,601 | $3,377 | $3,319 | | Net loss | $(3,736) | $(761) | $(4,458) | $(1,553) | - Net loss from continuing operations for the thirteen weeks ended June 29, 2025, was $(4.862) million, a significant increase from $(2.082) million in the prior year period[18] - Selling, general, and administrative expenses increased to $12.576 million for the thirteen weeks ended June 29, 2025, from $10.739 million in the same period last year[18] Property Management Segment Performance The Property Management segment, representing continuing operations, experienced a decrease in revenue and gross profit for both the thirteen and twenty-six-week periods compared to the prior year, with operating loss for the segment also widening significantly, partly due to increased strategic alternatives review costs Property Management Segment Performance (in thousands) | Metric (in thousands) | Thirteen Weeks Ended June 29, 2025 | Thirteen Weeks Ended June 30, 2024 | Twenty-six Weeks Ended June 29, 2025 | Twenty-six Weeks Ended June 30, 2024 | | :-------------------- | :--------------------------------- | :--------------------------------- | :----------------------------------- | :----------------------------------- | | Revenue | $23,506 | $25,726 | $44,389 | $50,273 | | Gross profit | $8,410 | $9,596 | $15,970 | $18,939 | | Operating loss | $(4,425) | $(1,475) | $(6,197) | $(2,732) | | Strategic alternatives review | $1,613 | $280 | $1,634 | $349 | - Revenue from contract field talent, the largest component, decreased from $25.272 million in Q2 2024 to $23.000 million in Q2 2025[20] - Strategic alternatives review costs significantly increased to $1.613 million in Q2 2025 from $0.280 million in Q2 2024, contributing to the wider operating loss[20] Unaudited Consolidated Statements of Cash Flows For the twenty-six weeks ended June 29, 2025, BGSF generated positive net cash from operating activities, primarily driven by adjustments to reconcile net loss, with minimal cash used in investing activities and a net cash outflow from financing activities Unaudited Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Twenty-six Weeks Ended June 29, 2025 | | :-------------------- | :----------------------------------- | | Net cash provided by operating activities | $3,215 | | Net cash used in investing activities | $(76) | | Net cash used in financing activities | $(204) | | Cash and cash equivalents, end of period | $2,777 | - Net cash provided by operating activities was $3.215 million for the twenty-six weeks ended June 29, 2025, including $2.962 million from continuing operations[22] - Capital expenditures were minimal at $13 thousand for the twenty-six-week period[22] Non-GAAP Financial Measures and Reconciliations Definition and Purpose of Non-GAAP Measures BGSF supplements its GAAP financial results with non-GAAP measures, Adjusted EBITDA and Adjusted EPS, to provide a clearer understanding of its operating performance and facilitate period-to-period comparisons by excluding certain non-cash expenses and specific events not considered part of ongoing operations - Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization, strategic alternatives review costs, software as a service costs, and certain non-cash expenses like share-based compensation[26] - Adjusted EPS is defined as diluted earnings per share, excluding amortization of intangible assets from acquisitions, strategic alternatives review, software as a service costs, and certain non-cash expenses, net of tax effect[27] - These non-GAAP measures are used to facilitate consistent comparison of operating performance and provide a more complete understanding of factors affecting the business[25] Reconciliation of Net Loss to Adjusted EBITDA The reconciliation shows that Adjusted EBITDA from continuing operations for Q2 2025 was a loss of $1,145 thousand, worsening from a loss of $264 thousand in Q2 2024 and $1,032 thousand in Q1 2025, reflecting the impact of increased strategic alternatives review costs and aged receivable adjustments Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | Q1 2025 | | :-------------------- | :------ | :------ | :------ | | Net loss from continuing operations | $(4,862) | $(2,082) | $(2,245) | | Operating loss | $(4,425) | $(1,475) | $(1,773) | | Strategic alternatives review | $1,613 | $280 | $20 | | Aged receivable adjustment | $980 | $199 | $90 | | Adjusted EBITDA from continuing operations | $(1,145) | $(264) | $(1,032) | | Adjusted EBITDA Margin (% of revenue) | (4.9)% | (1.0)% | (5.4)% | - Adjusted EBITDA from continuing operations for the thirteen weeks ended June 29, 2025, was a loss of $1.145 million, compared to a loss of $0.264 million in the prior year period[28] Reconciliation of Net Loss EPS to Adjusted EPS The reconciliation of EPS to Adjusted EPS shows that Adjusted EPS from continuing operations was a loss of $0.19 for Q2 2025, a deterioration from a loss of $0.04 in Q2 2024 and $0.11 in Q1 2025, reflecting the impact of various adjustments on a per-share basis Reconciliation of Net Loss EPS to Adjusted EPS | Metric | Q2 2025 | Q2 2024 | Q1 2025 | | :-------------------- | :------ | :------ | :------ | | Net loss from continuing operations per diluted share | $(0.44) | $(0.19) | $(0.21) | | Strategic alternatives review | $0.15 | $0.03 | $0.00 | | Adjusted EPS from continuing operations | $(0.19) | $(0.04) | $(0.11) | | Adjusted EPS | $0.02 | $0.25 | $0.16 | - Adjusted EPS from continuing operations for Q2 2025 was a loss of $0.19, compared to a loss of $0.04 in Q2 2024[31] Additional Information Forward-Looking Statements This section contains standard forward-looking statements regarding future events, including the proposed transaction, operational performance, and business plans, highlighting inherent risks and uncertainties that could cause actual results to differ materially from projections - The press release includes forward-looking statements about the proposed transaction, future operational and financial performance, and business plans[10] - These statements are subject to risks and uncertainties, such as the closing conditions for the sale not being satisfied, market acceptance of new offerings, and general economic activity[11] Additional Information About the Equity Purchase Agreement BGSF has filed a definitive proxy statement with the SEC regarding the proposed transaction, urging shareholders to review these documents before making any voting decisions, with information available on the SEC's website and BGSF's investor relations page - BGSF filed a definitive proxy statement with the SEC on July 25, 2025, and mailed it to shareholders around August 5, 2025, concerning the proposed transaction[12] - Shareholders are urged to read the definitive proxy statement and other related documents for important information about the proposed transaction[12] Participants in the Solicitation This section clarifies that BGSF, its directors, and certain executive officers and employees may be considered participants in soliciting proxies for the proposed transaction, with detailed information on their interests available in the definitive proxy statement - BGSF, its directors, and certain executive officers and employees may be deemed participants in soliciting proxies for the proposed transaction[13] - More detailed information regarding the identity and interests of potential participants is provided in the definitive proxy statement filed with the SEC[13] Contact Information Contact details for investor relations are provided for inquiries regarding BGSF, Inc - Investor relations contacts are Steven Hooser or Sandy Martin of Three Part Advisors, reachable via ir@BGSF.com or phone[14]