Bgsf, inc. reports record third quarter 2022 financial results
Plano, texas--(business wire)--bgsf, inc. (nyse: bgsf), a leading national provider of workforce solutions, today reported financial results for its third quarter ended september 25, 2022. the company further announced that its board of directors has declared a quarterly cash dividend of $0.15 per share of common stock. the dividend is payable on november 21, 2022 to all shareholders of record as of the close of business on november 14, 2022. this marks the 32nd consecutive quarterly dividend and based on yesterday’s closing price of the company’s common stock, the annualized yield is approximately 4.8%. q3 2022 highlights from continuing operations: revenues were $78.5 million, an increase of 22.3% from 2021 gross profit was $28.0 million, up 27.0% from 2021, while gross profit percent increased 140 basis points to 35.7% in 2022 selling, general and administrative expenses of $20.4 million, improved 60 basis points as a percentage of revenue over 2021 net income from continuing operations was $4.7 million, or $0.44 per diluted share, vs. net income from continuing operations of $3.7 million, or $0.36 per diluted share in 2021, which included a net gain on contingent consideration of $1.0 million adjusted ebitda1 from continuing operations was $8.0 million (10.2% of revenues), vs. $5.4 million (8.4% of revenues) in 2021 adjusted eps1 from continuing operations was $0.48 in 2022, up from $0.31 in 2021 nine month 2022 highlights from continuing operations: revenues were $221.1 million, an increase of 29.1% from 2021 gross profit was $76.5 million, up 33.0% from 2021, while gross profit percent increased 100 basis points to 34.6% in 2022 selling, general and administrative expenses of $60.0 million improved 130 basis points as a percentage of revenue over 2021 net income from continuing operations was $9.8 million, or $0.93 per diluted share, vs. net income from continuing operations of $6.0 million, or $0.59 per diluted share in 2021, which includes a net gain on consideration of $2.0 million adjusted ebitda1 from continuing operations was $17.4 million (7.9% of revenues), vs. $9.9 million (5.8% of revenues) in 2021 adjusted eps1 from continuing operations was $1.05 in 2022, up from $0.55 in 2021 1non-gaap financial measure. see reconciliation below for details. beth a. garvey, chair, president and ceo, said, “i am pleased to report that momentum from the first half of 2022 continued into our fiscal third quarter, which resulted in record high revenue and gross profit from continuing operations. we believe our continued strong performance is supported by bgsf’s unique business model that empowers people and creates long-term relationships, both with clients and our workforce. we are strategically focused on solving business challenges for our clients, while building a higher margin business, growing market share and gaining further traction as we close out this year and move into ‘23. "our continued strong operating results support the board’s declaration of a quarterly cash dividend of $0.15 per share which is our 32nd consecutive quarterly cash dividend.” garvey continues. “we are enthusiastic about planned growth initiatives and prospects as we approach 2023. we see strong tailwinds in both segments as we work to build leadership positions in both the professional and real estate segments. our teams are energized around our vision and strategic direction, and this alignment has contributed to more creative solutions for our clients. the business will continue to be driven by strength in our people, technology, reputation, business model, and client partnerships as we continue our journey as a best-in-class workforce solutions company,” garvey concluded. conference call bgsf call at 9:00 a.m. et on november 3, 2022. interested participants may dial 844-200-6205 (u.s. callers) or 929-526-1599 (all other locations) and provide access code 250313. a replay of the call will be available until november 10, 2022. to access the replay, please dial 929-458-6194 (u.s. callers), 866-813-9403 (us toll free callers), or +44 204-525-0658 (all other locations) and enter access code 840249. the live webcast and archived replay are accessible at the investor relations section of the company’s website at www.bgsf.com. about bgsf bgsf provides workforce solutions to a variety of industries through its various divisions in it, cyber, finance & accounting, and real estate (apartment communities and commercial buildings). bgsf has integrated several regional and national brands achieving scalable growth. the company was ranked by staffing industry analysts as the 94th largest u.s. staffing company and the 49th largest it staffing firm in 2022. 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 those 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,” “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. bgsf, inc. gaap financial measures the following tables have been derived from our unaudited consolidated financial statements and summarize key components of our statements of operations for the periods indicated, as well as a reconciliation of revenue and operating income from continuing operations by reportable segment to consolidated results for the periods indicated. results of operations thirteen weeks ended thirty-nine weeks ended september 25, 2022 september 26, 2021 september 25, 2022 september 26, 2021 (dollars in thousands) revenues $ 78,508 $ 64,185 $ 221,139 $ 171,333 cost of services 50,508 42,138 144,649 113,824 gross profit 28,000 22,047 76,490 57,509 selling, general and administrative expenses 20,386 17,054 60,001 48,626 gain on contingent consideration — (1,208 ) — (2,403 ) depreciation and amortization 1,146 1,169 2,966 2,871 operating income 6,468 5,032 13,523 8,415 interest expense, net (376 ) (432 ) (718 ) (1,026 ) income from continuing operations before income taxes 6,092 4,600 12,805 7,389 income tax expense from continuing operations (1,440 ) (893 ) (2,961 ) (1,344 ) income from continuing operations 4,652 3,707 9,844 6,045 income from discontinued operations: income — 1,164 1,235 3,331 gain on sale — — 17,266 — income tax expense — (227 ) (4,716 ) (578 ) net income $ 4,652 $ 4,644 $ 23,629 $ 8,798 net income per share - diluted net income from continuing operations $ 0.44 $ 0.36 $ 0.93 $ 0.59 net income from discontinued operations: income — 0.11 0.12 0.32 gain on sale — — 1.65 — income tax expense — (0.02 ) (0.45 ) (0.06 ) net income per share - diluted $ 0.44 $ 0.45 $ 2.25 $ 0.85 business segments thirteen weeks ended thirty-nine weeks ended september 25, 2022 september 26, 2021 september 25, 2022 september 26, 2021 (dollars in thousands) revenue: real estate $ 33,241 42 % $ 24,789 39 % $ 89,137 40 % $ 64,614 38 % professional 45,267 58 % 39,396 61 % 132,002 60 % 106,719 62 % total $ 78,508 100 % $ 64,185 100 % $ 221,139 100 % $ 171,333 100 % gross profit: real estate $ 13,548 48 % $ 9,515 43 % $ 35,093 46 % $ 24,235 42 % professional 14,452 52 % 12,532 57 % 41,397 54 % 33,274 58 % total $ 28,000 100 % $ 22,047 100 % $ 76,490 100 % $ 57,509 100 % selling2: real estate $ 7,301 $ 5,057 $ 19,874 $ 14,222 professional 8,601 8,385 26,948 23,602 total $ 15,902 $ 13,442 $ 46,822 $ 37,824 operating income (expense): real estate $ 6,148 $ 4,370 $ 15,000 $ 9,796 professional 5,172 3,399 12,458 7,477 home office - selling, general and administrative (4,852 ) (3,945 ) (13,935 ) (11,261 ) home - gain on contingent consideration — 1,208 — 2,403 total $ 6,468 $ 5,032 $ 13,523 $ 8,415 2selling is a component of selling, general and administrative on the unaudited consolidated statement of operations and comprehensive income. the following tables have been derived from our unaudited consolidated financial statements and summarize key components of our balance sheet and statements of cash flows for the periods indicated. condensed balance sheets september 25, 2022 december 26, 2021 assets (dollars in thousands) current assets $ 70,813 $ 52,972 property and equipment, net 1,599 4,331 intangible assets, net 34,142 33,585 goodwill 29,142 29,142 other 13,568 13,853 assets of discontinued operations — 14,411 total assets $ 149,264 $ 148,294 liabilities and stockholders' equity long-term debt, current portion $ — $ 3,563 other current 23,786 23,559 line of credit 27,004 12,588 long-term debt, less current portion — 23,300 other long-term 1,580 7,240 liabilities of discontinued operations — 1,452 total liabilities 52,370 71,702 total stockholders' equity 96,894 76,592 total liabilities and stockholders' equity $ 149,264 $ 148,294 working capital september 25, 2022 december 26, 2021 (dollars in thousands) working capital from continuing operations $ 47,027 $ 25,850 working capital ratio 2.98 1.95 condensed statements of cash flows thirty-nine weeks ended september 25, 2022 september 26, 2021 (dollars in thousands) net cash provided by (used in) continuing operations: operating activities $ (5,557 ) $ (2,720 ) investing activities 25,633 (5,307 ) financing activities (17,888 ) 2,986 net change in cash and cash equivalents discontinued operations (2,300 ) 5,041 net change in cash and cash equivalents $ (112 ) $ — bgsf, inc. 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, transaction fees and certain non-cash expenses such as contingent consideration gains and share-based compensation expense, as well as certain specific events that management does not consider in assessing our on-going operating performance. reconciliation of income from continuing operations to adjusted ebitda thirteen weeks ended thirty-nine weeks ended trailing twelve months ended september 25, 2022 september 26, 2021 september 25, 2022 september 26, 2021 september 25, 2022 (dollars in thousands) income from continuing operations $ 4,652 $ 3,707 $ 9,844 $ 6,045 $ 14,165 income tax expense from continuing operations 1,440 893 2,961 1,344 4,349 interest expense, net 376 432 718 1,026 1,125 operating income 6,468 5,032 13,523 8,415 19,639 cares act credit — — — — (2,084 ) depreciation and amortization 1,146 1,169 2,966 2,871 3,792 gain on contingent consideration — (1,208 ) — (2,403 ) — share-based compensation 411 406 865 842 1,082 transaction fees 6 1 6 155 21 adjusted ebitda from continuing operations 8,031 5,400 17,360 9,880 22,450 adjusted ebitda margin (% of revenue) 10.2 % 8.4 % 7.9 % 5.8 % 7.8 % income from discontinued operations — 1,164 1,235 3,331 2,475 income adjustments to discontinued operations — 39 (249 ) 114 (220 ) adjusted ebitda from discontinued operations, net of gain on sale, net of tax — 1,203 986 3,445 2,255 adjusted ebitda, net of gain $ 8,031 $ 6,603 $ 18,346 $ 13,325 $ 24,705 we define “adjusted eps” as diluted earnings per share eliminating amortization expense of intangible assets from acquisitions, transaction fees, and certain non-cash expenses such as contingent consideration gains, 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 adjusted eps thirteen weeks ended thirty-nine weeks ended september 25, 2022 september 26, 2021 september 25, 2022 september 26, 2021 net income from continuing operations per diluted share, excluding gain on sale of discontinued operations $ 0.44 $ 0.36 $ 0.93 $ 0.59 acquisition amortization 0.05 0.06 0.16 0.17 gain on contingent consideration — (0.12 ) — (0.23 ) transaction fees — — — 0.01 income tax expense adjustment (0.01 ) 0.01 (0.04 ) 0.01 adjusted eps from continuing operations 0.48 0.31 1.05 0.55 adjusted eps from discontinued operations — 0.09 0.09 0.26 adjusted eps $ 0.48 $ 0.40 $ 1.14 $ 0.81
