Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

August 7, 2024

BGSF, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware	001-36704	26-0656684
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

5850 Granite Parkway, Suite 730

Plano, Texas 75024

(Address of principal executive offices, including zip code)

(972) 692-2400

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:


			¨			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


			¨			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


			¨			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


			¨			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	BGSF	NYSE


Item 2.02			Results of Operations and Financial Condition.

On August 7, 2024, BGSF, Inc. (the "Company") issued a press release regarding its financial results for the second fiscal quarter ended June 30, 2024. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The Company is making reference to non-GAAP financial information in the press release and the related conference call, and a reconciliation of GAAP to non-GAAP results is provided in the press release.


Item 7.01			Regulation FD Disclosure.

The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.


Item 9.01			Financial Statements and Exhibits.

(d)Exhibits


Exhibit No.	Description
99.1	Earnings release dated	August 7, 2024
104.0	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



			BGSF, INC.


Date:	August 7, 2024		/s/ John Barnett
		Name: Title:	John Barnett Chief Financial Officer and Secretary (Principal Financial Officer)

BGSF, Inc. Reports Second Quarter 2024 Financial Results

PLANO, Texas – (August 7, 2024) – BGSF, Inc. (NYSE: BGSF), a growing provider of consulting, managed services, and professional workforce solutions, today reported financial results for the second fiscal quarter ended June 30, 2024.

Q2 2024 Sequential Comparison to Q1 2024:

•Revenues were $68.1 million for Q2, compared to $68.8 million for Q1.

◦Property Management segment revenues increased 4.8% from Q1, mainly due to normal seasonal fluctuations.

◦Professional segment revenues declined 4.1% from Q1, with project completions outpacing the timing of new engagement starts.

•Gross profit was $23.6 million, up from $23.4 million in Q1, primarily due to higher sales in Property Management.

•Net loss was $0.8 million, or $0.07 per diluted share for Q2 and Q1.

•Adjusted EBITDA1 was $2.6 million (3.8% of revenues) in Q2 from $2.7 million (4.0% of revenues) in Q1.

•Adjusted EPS1 was $0.07 for Q2 compared with $0.07 for Q1.

SUMMARY OF FINANCIAL RESULTS

(dollars in thousands) (unaudited)


		For the Thirteen Week Periods Ended
		June 30, 2024					July 2, 2023					March 31, 2024
Revenue:
	Property Management	$	25,726				$	31,071				$	24,547
	Professional	42,411					49,729					44,218
	Total	$	68,137				$	80,800				$	68,765

Gross profit / Gross profit percentage:
	Property Management	$	9,596		37	%	$	12,652		41	%	$	9,343		38	%
	Professional	14,034			33	%	16,922			34	%	14,095			32	%
	Total	$	23,630		35	%	$	29,574		37	%	$	23,438		34	%

Operating income		$	81				$	5,050				$	415
Net (loss) Income		$	(761)				$	2,604				$	(792)
Net (loss) income per diluted share		$	(0.07)				$	0.24				$	(0.07)

Non-GAAP Financial Measures:
	Adjusted EBITDA1	$	2,603				$	7,500				$	2,741
	Adjusted EBITDA Margin (% of revenue)1	3.8		%			9.3		%			4.0		%
	Adjusted EPS1	$	0.07				$	0.37				$	0.07

1 Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures as defined and reconciled below.

Beth A. Garvey, Chair, President, and CEO, said, “Despite weak revenue and operating trends during the second quarter, we believe that recent project wins will begin generating additional revenue in the second half of 2024. In the first half of the year, we reduced headcount and lowered fixed costs to align with both our revenues and our strategic growth plans.

“Our territory mapping strategy, which derived out of our Salesforce platform, in Property Management is showing early positive results between the first and second quarters, and we are confident in our strategy to deploy in additional markets in the coming months. Although the Professional segment has experienced a slowdown in customer spending due to macroeconomic headwinds and sustained higher interest rates, we are seeing significant growth in our managed services and consulting engagements. Notably, during the second quarter, new contract wins outpaced contract ends by approximately 25%. We won one of the most significant single projects in our company’s history—a major IT transformation project for a large international client, which will start contributing to our financials in the third quarter.

“While our first-half results do not fully capture the momentum from these recent business wins, we anticipate a strong revenue ramp-up in the Professional division starting in the third quarter and continuing into the fourth. Additionally, we are seeing an increase in our permanent placement activity in our finance & accounting services, with recent double-digit growth, which we believe is a positive sign for the future.

“We are cautiously optimistic about what the second half of 2024 will bring.

“Regarding the review of strategic alternatives that we announced in May, the Board and I continue to evaluate options to maximize shareholder value. While there is no update at this time, the process is ongoing, and we look forward to sharing the results in the future. I want to extend my gratitude to all our stakeholders—employees, clients, partners, and investors—for their continued support and belief in our vision at BGSF.

“Lastly, I am pleased to announce that we have been recognized in Staffing Industry Analysts' 2024 U.S. rankings, placing us in the top 50 for U.S. IT staffing firms and the top 100 for overall U.S. staffing firms. We remain committed to delivering value and excellence to our customers and strategic partners.” concluded Garvey.

Conference Call

BGSF will discuss its second quarter 2024 financial results during a conference call and webcast at 9:00 a.m. ET on August 8, 2024. Interested participants may dial 1-844-481-3017 (Toll Free) or 1-412-317-1882 (International). A replay of the call will be available until August 15, 2024. To access the replay, please dial 1-877-344-7529 (Toll Free), or 1-412-317-0088 (International) and enter access code 4959867. The live webcast and archived replay are accessible from the investor relations section of the Company’s website at https://investor.bgsf.com/events-and-presentations/default.aspx

About BGSF

BGSF provides consulting, managed services and professional workforce solutions to a variety of industries through its various divisions in IT, Finance & Accounting, Managed Solutions, and Property Management. BGSF has integrated several regional and national brands achieving scalable growth. 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. The Company’s disciplined acquisition philosophy, which builds value through both financial growth and the retention of unique and dedicated talent within BGSF’s family of companies, has resulted in a seasoned management team with strong tenure and the ability to offer exceptional service to our field talent and client partners while building value for investors. For more information on the Company and its services, please visit its website at www.bgsf.com.

Forward-Looking Statements

The forward-looking statements in this press release are made under the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements regarding our future financial performance and the expectations and objectives of our board or management. The Company’s actual results could differ materially from those indicated by the forward-looking statements because of various other risks and uncertainties, including, among other things, risks relating to volatility and uncertainty in the capital markets, availability of suitable third parties with which to conduct any strategic transaction, whether the Company will be able to pursue a strategic transaction, or whether any such transaction, if pursued, will be completed successfully and on attractive terms, or at all, the risks associated with undertaking a review of strategic alternatives, including in respect of relationships with stockholders, employees, customers, and suppliers, as well as risks and uncertainties listed in Item 1A of the Company’s Annual Report on Form 10-K and in the Company’s other filings and reports with the Securities and Exchange Commission. All of the risks and uncertainties are beyond the ability of the Company to control, and in many cases, the Company cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this press release, the words “allows,” “anticipates,” “believes,” “plans,” “expects,” “estimates,” “should,” “would,” “may,” “might,” “forward,” “will,” “intends,” “continue,” “outlook,” “temporarily,” “progressing,” "prospects," and “anticipates” and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

CONTACT:

Steven Hooser or Sandy Martin

Three Part Advisors

ir@bgstaffing.com 214.872.2710 or 214.616.2207

Source: BGSF, Inc.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)


			June 30, 2024		December 31, 2023
ASSETS
Current assets
	Cash and cash equivalents		$	226	$	—
	Accounts receivable (net of allowance for credit losses of $674 and $554, respectively)		46,430		56,776
	Prepaid expenses		2,870		2,963


	Other current assets		3,416		7,172

		Total current assets	52,942		66,911

Property and equipment, net			1,284		1,217

Other assets
	Deposits		2,093		2,699
	Software as a service, net		4,750		5,026
	Deferred income taxes, net		7,398		7,271
	Right-of-use asset - operating leases, net		4,481		5,435
	Intangible assets, net		27,655		30,370
	Goodwill		59,151		59,588

		Total other assets	105,528		110,389
	Total assets		$	159,754	$	178,517
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
	Accounts payable		$	254	$	95
	Accrued payroll and expenses		14,004		14,902
	Line of credit (net of debt issuance costs of $128)		—		24,746
	Long-term debt, current portion (net of debt issuance costs of $29 and $0, respectively)		3,371		34,000
	Accrued interest		220		438
	Income taxes payable		165		282
	Contingent consideration, current portion		—		4,208
	Convertible note		4,368		4,368
	Other current liabilities		2,116		—
	Lease liabilities, current portion		1,719		2,016
		Total current liabilities	26,217		85,055

Line of credit (net of debt issuance costs of $318)			13,748		—
Long-term debt, less current portion (net of debt issuance costs of $236)			29,514		—
Contingent consideration, less current portion			3,981		4,112

Lease liabilities, less current portion			3,133		3,814


	Total liabilities		76,593		92,981


Commitments and contingencies

Preferred stock, $0.01 par value per share, 500,000 shares authorized, -0- shares issued and outstanding		—		—
Common stock, $0.01 par value per share; 19,500,000 shares authorized 10,956,137 and 10,887,509 shares issued and outstanding, respectively, net of 3,930 shares of treasury stock, at cost, respectively.		53		52
Additional paid in capital		69,367		68,551
Retained earnings		13,741		16,933

	Total stockholders’ equity	83,161		85,536
	Total liabilities and stockholders’ equity	$	159,754	$	178,517

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share and dividend amounts)

For the Thirteen and Twenty-six Week Periods Ended June 30, 2024 and July 2, 2023


		Thirteen Weeks Ended				Twenty-six Weeks Ended
		2024		2023		2024		2023
Revenues		$	68,137	$	80,800	$	136,903	$	156,116
Cost of services		44,507		51,226		89,835		99,758
	Gross profit	23,630		29,574		47,068		56,358
Selling, general and administrative expenses		21,568		22,584		42,583		45,796

Impairment losses		—		—		—		22,545
Depreciation and amortization		1,981		1,940		3,988		3,696
	Operating income (loss)	81		5,050		497		(15,679)

Interest expense, net		(1,061)		(1,502)		(2,297)		(2,703)
	(Loss) income before income taxes	(980)		3,548		(1,800)		(18,382)
Income tax benefit (expense)		219		(944)		247		4,520
	Net (loss) income	$	(761)	$	2,604	$	(1,553)	$	(13,862)










Net (loss) income per share:
	Basic	$	(0.07)	$	0.24	$	(0.14)	$	(1.29)
	Diluted	$	(0.07)	$	0.24	$	(0.14)	$	(1.29)













Weighted-average shares outstanding:
	Basic	10,880		10,759		10,858		10,731
	Diluted	10,880		10,770		10,858		10,731

Cash dividends declared per common share		$	—	$	0.15	$	0.15	$	0.30

BUSINESS SEGMENTS

(dollars in thousands)

(unaudited)


		Thirteen Weeks Ended								Twenty-six Weeks Ended
		June 30, 2024				July 2, 2023				June 30, 2024				July 2, 2023
Revenue:
	Property Management	$	25,726	38	%	$	31,071	38	%	$	50,273	37	%	$	59,477	38	%
	Professional	42,411		62		49,729		62		86,630		63		96,639		62
	Total	$	68,137	100	%	$	80,800	100	%	$	136,903	100	%	$	156,116	100	%

Gross profit:
	Property Management	9,596		41	%	$	12,652	43	%	$	18,939	40	%	$	23,999	43	%
	Professional	14,034		59		16,922		57		28,129		60		32,359		57
	Total	$	23,630	100	%	$	29,574	100	%	$	47,068	100	%	$	56,358	100	%






Operating income (loss):
	Property Management	$	3,203			$	5,774			$	6,605			$	10,464
	Professional -without impairment losses	1,556				3,786				3,230				6,413
	Professional - impairment losses	—				—				—				(22,545)
	Home office	(4,678)				(4,510)				(9,338)				(10,011)
	Total	$	81			$	5,050			$	497			$	(15,679)

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

For the Twenty-six Week Periods Ended June 30, 2024 and July 2, 2023


				2024		2023
Cash flows from operating activities
	Net loss			$	(1,553)	$	(13,862)

		Adjustments to reconcile net loss to net cash provided by activities:
		Depreciation		184		238
		Amortization		3,804		3,458

		Impairment losses		—		22,545
		Loss on disposal of property and equipment		9		—


		Amortization of debt issuance costs		89		92

		Interest expense on contingent consideration payable		(90)		202
		Provision for credit losses		1,116		321
		Share-based compensation		471		436
		Deferred income taxes, net of acquired deferred tax liability		(127)		(5,287)
		Net changes in operating assets and liabilities, net of effects of acquisitions:
			Accounts receivable	9,230		7,672
			Prepaid expenses	93		(93)
			Other current assets	1,597		2,572
			Deposits	607		(9)
			Software as a service	358		362

			Accounts payable	160		(1,515)
			Accrued payroll and expenses	(219)		(5,033)
			Accrued interest	(218)		264
			Income taxes receivable and payable	(771)		274
			Operating leases	(23)		(88)

		Net cash provided by operating activities		14,717		12,549



Cash flows from investing activities
	Businesses acquired, net of cash received			—		(6,740)

	Capital expenditures			(995)		(1,490)



		Net cash used in investing activities		(995)		(8,230)




Cash flows from financing activities
	Net (payments) borrowings under line of credit		(10,808)		2,438

	Principal payments on long-term debt		(850)		(2,000)

	Payments of dividends		(1,639)		(3,244)
	Issuance of ESPP shares		244		292
	Issuance of shares under the 2013 Long-Term Incentive Plan, net of exercises		102		30

	Contingent consideration paid		—		(1,110)
	Debt issuance costs		(545)		(65)
		Net cash used in financing activities	(13,496)		(3,659)


Net change in cash and cash equivalents			226		660
Cash and cash equivalents, beginning of period			—		—
Cash and cash equivalents, end of period			$	226	$	660

Supplemental cash flow information:
	Cash paid for interest, net		$	2,417	$	2,036
	Cash paid for taxes, net of refunds		$	636	$	484

NON-GAAP FINANCIAL MEASURES

The financial results of BGSF, Inc. are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the U.S. Securities and Exchange Commission. To help the readers understand the Company's financial performance, the Company supplements its GAAP financial results with Adjusted EBITDA and Adjusted EPS.

A non-GAAP financial measure is a numerical measure of a company's financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows of a company. Adjusted EBITDA and Adjusted EPS are not measurements of financial performance under GAAP and should not be considered as alternatives to net income, net income per diluted share, operating income, or any other performance measure derived in accordance with GAAP, or as alternatives to cash flow from operating activities or measures of our liquidity. We believe that Adjusted EBITDA and Adjusted EPS are useful performance measures and are used by us to facilitate a comparison of our operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business than measures under GAAP can provide alone. In addition, the financial covenants in our credit agreement are based on EBITDA as defined in the credit agreement.

We define “Adjusted EBITDA" as earnings before interest expense, income taxes, depreciation and amortization expense, costs associated with the evaluation of potential strategic alternatives (“Strategic alternatives review”), transaction fees, and certain non-cash expenses such as impairment losses and share-based compensation expense, as well as certain specific events that management does not consider in assessing our on-going operating performance.

We define “Adjusted EPS” as diluted earnings per share eliminating amortization expense of intangible assets from acquisitions, the Strategic Alternatives Review, transaction fees, and certain non-cash expenses such as impairment losses, as well as certain specific events that management does not consider in assessing our on-going operating performance, net of the respective income tax effect.

Reconciliation of Net (Loss) Income to Adjusted EBITDA

(dollars in thousands)


	Thirteen Weeks Ended						Twenty-six Weeks Ended						Thirteen Weeks Ended
	June 30, 2024			July 2, 2023			June 30, 2024			July 2, 2023			March 31, 2024
Net (loss) income	$	(761)		$	2,604		$	(1,553)		$	(13,862)		$	(792)
Income tax (benefit) expense	(219)			944			(247)			(4,520)			(28)
Interest expense, net	1,061			1,502			2,297			2,703			1,235
Operating income (loss)	81			5,050			497			(15,679)			415
Depreciation and amortization	1,981			1,940			3,988			3,696			2,007
Impairment losses	—			—			—			22,545			—
Share-based compensation	236			75			471			436			235
Strategic alternatives review	280			—			348			—			68
Transaction fees	25			435			40			753			16
Adjusted EBITDA	$	2,603		$	7,500		$	5,344		$	11,751		$	2,741
Adjusted EBITDA Margin (% of revenue)	3.8		%	9.3		%	3.9		%	7.5		%	4.0		%

Reconciliation of Net (Loss) Income EPS to Adjusted EPS


	Thirteen Weeks Ended				Twenty-six Weeks Ended				Thirteen Weeks Ended
	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023		March 31, 2024

Net (loss) income per diluted share	$	(0.07)	$	0.24	$	(0.14)	$	(1.29)	$	(0.07)
Acquisition amortization	0.15		0.14		0.29		0.27		0.15

Impairment losses (pre-tax)	—		—		—		2.10		—


Strategic alternatives review	0.03		—		0.03		—		0.01
Transaction fees	—		0.04		—		0.07		—
Income tax expense adjustment	(0.04)		(0.05)		(0.04)		(0.60)		(0.02)
Adjusted EPS	$	0.07	$	0.37	$	0.14	$	0.55	$	0.07

Cover		6 Months Ended
Cover	Aug. 07, 2024	Jun. 30, 2024
Cover [Abstract]
Document Type		8-K
Document Period End Date	Aug. 07, 2024
Entity Registrant Name		BGSF, INC.
Entity Incorporation, State or Country Code		DE
Entity File Number		001-36704
Entity Tax Identification Number		26-0656684
Entity Address, Address Line One		5850 Granite Parkway, Suite 730
Entity Address, City or Town		Plano
Entity Address, State or Province		TX
Entity Address, Postal Zip Code		75024
City Area Code		972
Local Phone Number		692-2400
Written Communications		false
Soliciting Material		false
Pre-commencement Tender Offer		false
Pre-commencement Issuer Tender Offer		false
Entity Emerging Growth Company		false
Title of 12(b) Security		Common Stock
Trading Symbol		BGSF
Security Exchange Name		NYSE
Amendment Flag		false
Document Fiscal Period Focus		Q2
Document Fiscal Year Focus		2024
Entity Central Index Key		0001474903

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