BGSF(US:BGSF)2025-11-07 13:34Revenue and Profit Performance - Revenues for the thirteen weeks ended September 28, 2025, decreased by approximately $2.9 million (9.8%) to $26.895 million, primarily due to a 12.0% reduction in billed hours driven by lower demand and increased competition[116] - Gross profit for the same period decreased by approximately $1.0 million (9.7%) to $9.660 million, consistent with the revenue decline, partially offset by higher permanent placement business[117] - For the thirty-nine weeks ended September 28, 2025, revenues decreased by approximately $8.8 million (11.0%) to $71.284 million, attributed to a 12.3% reduction in billed hours[120] - Gross profit for the thirty-nine weeks decreased by approximately $4.0 million (13.5%) to $25.630 million, aligning with the revenue decline[120] - The company recorded a net loss from continuing operations of $3.078 million for the thirteen weeks ended September 28, 2025, compared to a net loss of $1.812 million for the same period in 2024[115] - Net loss from continuing operations for the thirty-nine weeks ended September 28, 2025, was $10.3 million, an increase from a loss of $5.9 million in the same period of 2024[127] - Adjusted EBITDA for the thirteen weeks ended September 28, 2025, was $980,000, representing a margin of 3.6% of revenue, compared to $75,000 and 0.3% for the same period in 2024[127] - Adjusted EBITDA from discontinued operations was $144,000 for the thirteen weeks ended September 28, 2025, compared to $3.9 million for the same period in 2024[127] Expenses and Cost Management - Selling, general, and administrative expenses decreased by $1.1 million (10.0%) to $10.223 million, mainly due to reduced compensation costs from a lower headcount[117] - Interest expense, net increased by $1.1 million (30.6%) primarily due to adjustments related to debt issuance costs and the repayment of the existing Term Loan and Revolving Facility[121] - Cash used in operating activities from continuing operations was $1.8 million for Fiscal 2025, a decrease of $18.2 million compared to $16.4 million provided in Fiscal 2024[134] Cash Flow and Liquidity - Cash provided by investing activities included net proceeds from the sale of BGSF Professional of approximately $91.5 million, with minimal capital expenditures in Fiscal 2025[135] - The company declared a special dividend of $2.00 per share, totaling approximately $20.0 million in available cash as of September 30, 2025[129] - Working capital from continuing operations increased to $31.5 million as of September 28, 2025, compared to $6.9 million as of December 29, 2024[132] - The company paid off its Term Loan, Revolving Facility, and Convertible Note totaling $47.3 million during Fiscal 2025[137] - The company’s primary sources of liquidity included cash generated from operations and borrowings under a revolving credit facility, with a focus on maintaining sufficient liquidity for operational needs[129] - Future growth opportunities may require new debt or equity financing, which could be adversely affected if favorable terms are not secured[130] Strategic Initiatives and Market Position - The company announced a cost restructuring plan in December 2024 as part of its strategic review process to maximize shareholder value[112] - The company operates primarily in the Property Management segment across 44 states and D.C., providing workforce solutions for property management companies[112] - The company experienced seasonal fluctuations, with demand typically peaking in the second and third quarters due to increased activity in multifamily units during summer[113] Tax and Regulatory Considerations - The current provision for income taxes includes estimated amounts payable or refundable for the year, with penalties recognized as part of selling, general, and administrative expenses[151] - Deferred tax assets and liabilities are recorded for estimated future tax effects of temporary differences, with net deferred tax assets subject to a valuation allowance if future tax benefits may not be realized[151] Risk Factors - The company is primarily exposed to inflation risks, which have been moderated through adjustments in the pricing model[153]