Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 29, 2020 | May 06, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 29, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-36704 | |
Entity Registrant Name | BG STAFFING, INC | |
Entity Incorporation, State or Country Code | DE | |
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 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | BGSF | |
Security Exchange Name | NYSE | |
Entity Common Stock, Shares Outstanding | 10,306,986 | |
Entity Central Index Key | 0001474903 | |
Current Fiscal Year End Date | --12-27 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 |
UNAUDITED CONSOLIDATED BALANCE
UNAUDITED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 29, 2020 | Dec. 29, 2019 |
Current assets | ||
Accounts receivable (net of allowance for credit losses of $518,481 at 2020 and $468,233 for 2019) | $ 42,634,730 | $ 39,423,801 |
Prepaid expenses | 2,452,485 | 1,224,230 |
Income taxes receivable | 0 | 69,649 |
Other current assets | 515,897 | 19,516 |
Total current assets | 45,603,112 | 40,737,196 |
Property and equipment, net | 4,822,162 | 3,545,049 |
Other assets | ||
Deposits | 3,915,441 | 3,843,023 |
Deferred income taxes, net | 2,849,646 | 4,071,847 |
Right-of-use asset - operating leases | 5,696,218 | 4,386,317 |
Intangible assets, net | 43,875,709 | 33,807,973 |
Goodwill | 31,372,990 | 25,194,639 |
Total other assets | 87,710,004 | 71,303,799 |
Total assets | 138,135,278 | 115,586,044 |
Current liabilities | ||
Long-term debt, current portion | 1,300,000 | 375,000 |
Accrued interest | 181,376 | 73,027 |
Accounts payable | 226,729 | 479,422 |
Accrued expenses | 13,672,842 | 10,079,832 |
Accrued workers’ compensation | 53,598 | 405,207 |
Contingent consideration, current portion | 1,159,956 | 0 |
Lease liability, current portion | 1,612,277 | 1,277,843 |
Other current liabilities | 1,000,000 | 1,016,565 |
Income taxes payable | 330,623 | 0 |
Total current liabilities | 19,537,401 | 13,706,896 |
Line of credit (net of deferred finance fees of $324,185 and $351,128 for 2020 and 2019, respectively) | 20,687,209 | 19,993,829 |
Long-term debt, less current portion | 24,700,000 | 7,125,000 |
Contingent consideration, less current portion | 1,063,783 | 2,174,378 |
Lease liability, less current portion | 5,090,893 | 4,128,951 |
Total liabilities | 71,079,286 | 47,129,054 |
Commitments and contingencies | ||
Preferred stock, $0.01 par value per share, 500,000 shares authorized, -0- shares issued and outstanding | 0 | 0 |
Common stock, $0.01 par value per share; 19,500,000 shares authorized, 10,306,986 and 10,309,236 shares issued and outstanding for 2020 and 2019, respectively, net of treasury stock, at cost, 1,004 shares for 2020 and 2019 | 75,752 | 75,775 |
Additional paid in capital | 59,810,723 | 59,617,787 |
Retained earnings | 7,169,517 | 8,763,428 |
Total stockholders’ equity | 67,055,992 | 68,456,990 |
Total liabilities and stockholders’ equity | $ 138,135,278 | $ 115,586,044 |
UNAUDITED CONSOLIDATED BALANC_2
UNAUDITED CONSOLIDATED BALANCE SHEETS - Parenthetical - USD ($) | Mar. 29, 2020 | Dec. 29, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable, current | $ 518,481 | $ 468,233 |
Preferred stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 500,000 | 500,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 19,500,000 | 19,500,000 |
Common stock, shares issued (in shares) | 10,306,986 | 10,309,236 |
Common stock, shares outstanding (in shares) | 10,306,986 | 10,309,236 |
Treasury stock, shares outstanding (in shares) | 1,004 | 1,004 |
Deferred finance costs, line of credit arrangements, net | $ 324,185 | $ 351,128 |
UNAUDITED CONSOLIDATED STATEMEN
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME - USD ($) | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Revenues | $ 74,067,429 | $ 68,776,067 |
Cost of services | 53,791,698 | 50,337,427 |
Gross profit | 20,275,731 | 18,438,640 |
Selling, general and administrative expenses | 16,203,624 | 13,620,423 |
Depreciation and amortization | 1,414,713 | 1,231,509 |
Operating income | 2,657,394 | 3,586,708 |
Interest expense, net | 456,025 | 353,237 |
Income before income taxes | 2,201,369 | 3,233,471 |
Income tax expense | 702,509 | 737,447 |
Net income (loss) | $ 1,498,860 | $ 2,496,024 |
Net income per share: | ||
Basic (in dollars per share) | $ 0.15 | $ 0.24 |
Diluted (in dollars per share) | $ 0.14 | $ 0.24 |
Weighted-average shares outstanding: | ||
Basic (shares) | 10,308,445 | 10,229,462 |
Diluted (shares) | 10,382,999 | 10,404,355 |
Cash dividends declared per common share | $ 0.30 | $ 0.30 |
UNAUDITED CONSOLIDATED STATEM_2
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) | Total | Preferred Stock | Common Stock | Treasury Stock Amount | Additional Paid in Capital | Retained Earnings |
Stockholders’ equity, beginning balance at Dec. 30, 2018 | $ 65,702,013 | $ 0 | $ 102,273 | $ (24,027) | $ 57,624,379 | $ 7,999,388 |
Stockholders’ equity, beginning balance (in shares) at Dec. 30, 2018 | 10,227,247 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation | 320,084 | 320,084 | ||||
Cancellation of restricted shares (in shares) | (2,250) | |||||
Cancellation of restricted shares | 0 | $ (23) | 23 | |||
Exercise of common stock options and warrants (in shares) | 4,916 | |||||
Exercise of common stock options and warrants | 0 | $ 49 | (49) | |||
Change in accounting principal - operating leases | Accounting Standards Update 2016-02 | (200,607) | (200,607) | ||||
Cash dividend declared | (3,068,847) | (3,068,847) | ||||
Net income (loss) | 2,496,024 | 2,496,024 | ||||
Stockholders’ equity, ending balance at Mar. 31, 2019 | 65,248,667 | 0 | $ 102,299 | (24,027) | 57,944,437 | 7,225,958 |
Stockholders’ equity, ending balance (in shares) at Mar. 31, 2019 | 10,229,913 | |||||
Stockholders’ equity, beginning balance at Dec. 29, 2019 | 68,456,990 | 0 | $ 103,093 | (27,318) | 59,617,787 | 8,763,428 |
Stockholders’ equity, beginning balance (in shares) at Dec. 29, 2019 | 10,309,236 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation | 192,913 | 192,913 | ||||
Cancellation of restricted shares (in shares) | (2,250) | |||||
Cancellation of restricted shares | 0 | $ (23) | 23 | |||
Cash dividend declared | (3,092,771) | (3,092,771) | ||||
Net income (loss) | 1,498,860 | 1,498,860 | ||||
Stockholders’ equity, ending balance at Mar. 29, 2020 | $ 67,055,992 | $ 0 | $ 103,070 | $ (27,318) | $ 59,810,723 | $ 7,169,517 |
Stockholders’ equity, ending balance (in shares) at Mar. 29, 2020 | 10,306,986 |
UNAUDITED CONSOLIDATED STATEM_3
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - Parenthetical | Mar. 31, 2019shares |
Statement of Stockholders' Equity [Abstract] | |
Treasury stock (in shares) | 828 |
UNAUDITED CONSOLIDATED STATEM_4
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities | ||
Net income | $ 1,498,860 | $ 2,496,024 |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation | 227,271 | 202,426 |
Amortization | 1,187,442 | 1,029,083 |
Amortization of deferred financing fees | 18,703 | 68,991 |
Interest expense on earn out payable | 49,360 | 48,874 |
Provision for credit losses | 31,658 | (53,457) |
Stock-based compensation | 192,913 | 320,084 |
Deferred income taxes | 311,700 | 543,023 |
Net changes in operating assets and liabilities, net of effects of acquisitions: | ||
Accounts receivable | 3,488,673 | 1,951,758 |
Prepaid expenses | (1,197,668) | (1,475,294) |
Other current assets | (6,381) | 0 |
Deposits | (72,417) | (325,480) |
Accrued interest | 108,349 | (207,343) |
Accounts payable | (272,290) | 7,902 |
Accrued expenses | 1,100,437 | 748,466 |
Accrued workers’ compensation | (351,609) | (79,436) |
Other current liabilities | (16,565) | 0 |
Income taxes receivable and payable | 344,488 | 128,812 |
Operating leases | 5,298 | (22,891) |
Net cash provided by operating activities | 6,648,222 | 5,381,542 |
Cash flows from investing activities | ||
Business acquired, net of cash received | (21,680,455) | 0 |
Capital expenditures | (1,049,673) | (341,464) |
Net cash used in investing activities | (22,730,128) | (341,464) |
Cash flows from financing activities | ||
Net borrowings (payments) under line of credit | 674,677 | (133,731) |
Proceeds from issuance of long-term debt | 18,500,000 | 0 |
Principal payments on long-term debt | 0 | (1,837,500) |
Payments of dividends | (3,092,771) | (3,068,847) |
Net cash provided by (used in) financing activities | 16,081,906 | (5,040,078) |
Net change in cash and cash equivalents | 0 | 0 |
Cash and cash equivalents, beginning of period | 0 | 0 |
Cash and cash equivalents, end of period | 0 | 0 |
Supplemental cash flow information: | ||
Cash paid for interest | 235,493 | 510,280 |
Cash paid for taxes, net of refunds | $ 30,624 | $ 54,201 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 3 Months Ended |
Mar. 29, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | NATURE OF OPERATIONS BG Staffing, Inc. is a national provider of workforce solutions that operates, along with its wholly owned subsidiaries BG Staffing, LLC, B G Staff Services Inc., BG Personnel, LP, BG Finance and Accounting, Inc., BG California IT Staffing, Inc., BG California Multifamily Staffing, Inc., BG California Finance & Accounting Staffing, Inc., EdgeRock Technology Holdings, Inc. and EdgeRock Technologies, LLC (collectively, the “Company”), primarily within the United States of America in three industry segments: Real Estate, Professional, and Light Industrial. The Real Estate segment provides office and maintenance field talent to various apartment communities and commercial buildings in 29 states, via property management companies responsible for the apartment communities' and commercial buildings' day-to-day operations. The Professional segment provides skilled field talent on a nationwide basis for information technology (“IT”) and finance, accounting, legal and human resource client partner projects. The Light Industrial segment provides field talent primarily to manufacturing, distribution, logistics, and call center client partners needing a flexible workforce in 7 states. Our business experiences seasonal fluctuations. Our quarterly operating results are affected by the number of billing days in a quarter, as well as the seasonality of our client partners’ business. Demand for our Real Estate staffing services typically increase in the second and is highest during the third quarter of the year due to the increased turns in multifamily units during the summer months when schools are not in session. Demand for our Light Industrial staffing services typically increases during the third quarter of the year and peaks in the fourth quarter due to increases in the demand for holiday help. Overall demand can be affected by adverse weather conditions in the winter months as well as fluctuations in client partner demand. In addition, our cost of services typically increases in the first quarter primarily due to the reset of payroll taxes. The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles in the United States (“GAAP”), pursuant to the applicable rules and regulations of the SEC. The information furnished herein reflects all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary to present a fair statement of the financial position and operating results of the Company as of and for the respective periods. However, these operating results are not necessarily indicative of the results expected for a full fiscal year or any other future period. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, management of the Company believes, to the best of its knowledge, that the disclosures herein are adequate to make the information presented not misleading. The Company has determined that there were no subsequent events that would require disclosure or adjustments to the accompanying consolidated financial statements through the date the financial statements were issued. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the fiscal year ended December 29, 2019 , included in its Annual Report on Form 10-K. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 29, 2020 | |
Accounting Policies [Abstract] | |
Summary Of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements include the accounts of the Company. All significant intercompany transactions and balances have been eliminated in consolidation. Fiscal Periods The Company has a 52/53 week fiscal year. Fiscal periods for the consolidated financial statements included herein are as of March 29, 2020 and December 29, 2019 , and include the thirteen week periods ended March 29, 2020 and March 31, 2019 , referred to herein as Fiscal 2020 and 2019 , respectively. Reclassifications Certain reclassifications have been made to the 2019 financial statements to conform with the 2020 presentation. Management Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates affecting the financial statements include allowances for credit losses, goodwill, intangible assets, income taxes, leave liability, and contingent consideration obligations related to acquisitions. Additionally, the valuation of share-based compensation option expense uses a model based upon interest rates, stock prices, maturity estimates, volatility and other factors. The Company believes these estimates and assumptions are reliable. However, these estimates and assumptions may change in the future based on actual experience as well as market conditions. Financial Instruments The Company uses fair value measurements in areas that include, but are not limited to, the allocation of purchase price consideration to tangible and identifiable intangible assets and contingent consideration. The carrying values of cash and cash equivalents, accounts receivables, prepaid expenses, accounts payable, accrued liabilities, and other current assets and liabilities approximate their fair values because of the short-term nature of these instruments. The carrying value of bank debt approximates fair value due to the variable nature of the interest rates under the credit agreement with BMO Harris Bank, N.A. (“BMO”) that provided for a revolving credit facility and term loan and current rates available to the Company for debt with similar terms and risk. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. Concentration of Credit Risk Concentration of credit risk is limited due to the Company's diverse client partner base and their dispersion across many different industries and geographic locations nationwide. No single client partner accounted for more than 10% of the Company’s accounts receivable as of March 29, 2020 and December 29, 2019 or revenue for the thirteen week periods ended March 29, 2020 (“Fiscal 2020”) and March 31, 2019 (“Fiscal 2019”). Geographic revenue in excess of 10% of the Company's consolidated revenue in Fiscal 2020 and the related percentage for Fiscal 2019 was generated in the following areas: Thirteen Weeks Ended March 29, March 31, Maryland 11 % 11 % Massachusetts 10 % 1 % Tennessee 16 % 16 % Texas 24 % 29 % Consequently, weakness in economic conditions in these regions could have a material adverse effect on the Company’s financial position and results of future operations. Accounts Receivable The Company extends credit to its client partners in the normal course of business. Accounts receivable represents unpaid balances due from client partners. The Company maintains an allowance for credit losses for expected losses resulting from client partners’ non-payment of balances due to the Company. The Company’s determination of the allowance for uncollectible amounts is based on management’s judgments and assumptions, including general economic conditions, portfolio composition, prior loss experience, evaluation of credit risk related to certain individual client partners and the Company’s ongoing examination process. Receivables are written off after they are deemed to be uncollectible after all reasonable means of collection have been exhausted. Recoveries of receivables previously written off are recorded when received. The Company will continue to actively monitor the impact of the recent coronavirus pandemic (“COVID-19”) on expected credit losses. Changes in the allowance for credit losses are as follows: Thirteen Weeks Ended March 29, 2020 March 31, 2019 Beginning balance $ 468,233 $ 468,233 EdgeRock Technology Holdings, Inc. (“EdgeRock”) acquisition 47,498 — Provision for (recovery of) credit losses, net 31,658 (53,457 ) Amounts (written off) collected, net (28,908 ) 53,457 Ending balance $ 518,481 $ 468,233 Property and Equipment Property and equipment are stated net of accumulated depreciation and amortization of $3.6 million and $2.8 million at March 29, 2020 and December 29, 2019 , respectively. Deposits The Company maintains guaranteed costs policies for workers' compensation coverage in Texas, Washington, and Ohio and minimal loss retention coverage for team members and field talent in the Light Industrial segment and its other non-Texas workforce. Under these policies, the Company is required to maintain refundable deposits of $3.7 million and $3.6 million , which are included in Deposits in the accompanying consolidated balance sheets as of March 29, 2020 and December 29, 2019 , respectively. Long-Lived Assets The Company reviews its long-lived assets, primarily fixed assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recovered. The Company looks primarily to the undiscounted future cash flows in its assessment of whether or not long-lived assets have been impaired. There were no impairments during Fiscal 2020 or Fiscal 2019 . Leases The Company leases all their office space through operating leases, which expire at various dates through 2025 . Many of the lease agreements obligate the Company to pay real estate taxes, insurance and certain maintenance costs, which are accounted for separately. Certain of the Company’s lease arrangements contain renewal provisions from 1 to 10 years, exercisable at the Company's option. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company determines if an arrangement is an operating lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. All other leases are recorded on the balance sheet as right-of-use assets and lease liabilities for the lease term. Right of use lease assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available at lease commencement date. The Company’s operating lease expense is recognized on a straight-line basis over the lease term and is recorded in Selling, general and administrative expenses. Intangible Assets The Company holds intangible assets with indefinite and finite lives. Intangible assets with indefinite useful lives are not amortized. Intangible assets with finite useful lives are amortized over their respective estimated useful lives, ranging from three to ten years, based on a pattern in which the economic benefit of the respective intangible asset is realized. Identifiable intangible assets recognized in conjunction with acquisitions are recorded at fair value. Significant unobservable inputs are used to determine the fair value of the identifiable intangible assets based on the income approach valuation model whereby the present worth and anticipated future benefits of the identifiable intangible assets are discounted back to their net present value. The Company capitalizes purchased software and internal payroll costs directly incurred in the modification of software for internal use. Software maintenance and training costs are expensed in the period incurred. The Company evaluates the recoverability of intangible assets whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. The Company annually evaluates the remaining useful lives of all intangible assets to determine whether events and circumstances warrant a revision to the remaining period of amortization. The Company considered the current and expected future economic and market conditions surrounding COVID-19 and its impact on each of the reporting units. Further, the Company assessed the current market capitalization, forecasts and the amount in the 2019 impairment test. The Company determined that a triggering event has not occurred which would require an interim impairment test to be performed. Goodwill Goodwill is not amortized, but instead is evaluated at the reporting unit level for impairment annually at the end of each fiscal year, or more frequently, if conditions indicate an earlier review is necessary. If the Company has determined that it is more likely than not that the fair value for one or more reporting units is greater than their carrying value, the Company may use a qualitative assessment for the annual impairment test. The Company considered the current and expected future economic and market conditions surrounding COVID-19 and its impact on each of the reporting units. The Company determined that a triggering event has not occurred which would require an interim impairment test to be performed. Deferred Financing Fees Deferred financing fees are amortized using the effective interest method over the term of the respective loans. Debt issuance costs related to a recognized debt liability are presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability. Contingent Consideration The Company had obligations, to be paid in cash, related to its acquisitions if certain operating and financial goals were met. The fair value of this contingent consideration is determined using expected cash flows and present value technique. The fair value calculation of the expected future payments uses a discount rate commensurate with the risks of the expected cash flow. The resulting discount is amortized as interest expense over the outstanding period using the effective interest method. Revenue Recognition The Company derives its revenues from three segments: Real Estate, Professional, and Light Industrial. The Company provides workforce solutions and placement services. Revenues are recognized when promised services are delivered to client partners, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Revenues as presented on the consolidated statements of operations represent services rendered to client partners less sales adjustments and allowances. Reimbursements, including those related to out-of-pocket expenses, are also included in revenues, and the related amounts of reimbursable expenses are included in cost of services. The Company records revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses. The Company has concluded that gross reporting is appropriate because the Company (i) has the risk of identifying and hiring qualified field talent, (ii) has the discretion to select the field talent and establish their price and duties and (iii) bears the risk for services that are not fully paid for by client partners. Temporary staffing revenues - Field talent revenues from contracts with client partners are recognized in the amount to which the Company has a right to invoice, when the services are rendered by the Company’s field talent. Contingent placement staffing revenues - Any revenues associated with services that are provided on a contingent basis are recognized once the contingency is resolved, as this is when control is transferred to the client partner, usually when employment candidates start their employment. Retained search placement staffing revenues - any revenues from these services are recognized based on the contractual amount for services completed to date which best depicts the transfer of control of services, which is less than 1% of consolidated revenues. The Company estimates the effect of placement candidates who do not remain with its client partners through the guarantee period (generally 90 days) based on historical experience. Allowances, recorded as a liability, are established to estimate these losses. Fees to client partners are generally calculated as a percentage of the new worker’s annual compensation. No fees for placement services are charged to employment candidates. These assumptions determine the timing of revenue recognition for the reported period. Refer to Note 13 for disaggregated revenues by segment. Payment terms in the Company's contracts vary by the type and location of its client partner and the services offered. The term between invoicing and when payment is due is not significant. There were no unsatisfied performance obligations as of March 29, 2020 . There were no revenues recognized during the thirteen week period ended March 29, 2020 related to performance obligations satisfied or partially satisfied in previous periods. There are no contract costs capitalized. The Company did not recognize any contract impairments during the thirteen week period ended March 29, 2020 . Share-Based Compensation The Company recognizes compensation expense in selling, general and administrative expenses over the service period for options or restricted stock that are expected to vest and records adjustments to compensation expense at the end of the service period if actual forfeitures differ from original estimates. Earnings Per Share Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period adjusted to reflect potentially dilutive securities. Antidilutive shares are excluded from the calculation of earnings per share. The following is a reconciliation of the number of shares used in the calculation of basic and diluted earnings per share for the respective periods: Thirteen Weeks Ended March 29, March 31, Weighted-average number of common shares outstanding: 10,308,445 10,229,462 Effect of dilutive securities: Stock options and restricted stock 61,859 127,104 Warrants 12,695 47,789 Weighted-average number of diluted common shares outstanding 10,382,999 10,404,355 Stock options and restricted stock 423,150 243,750 Antidilutive shares 423,150 243,750 Income Taxes The effective tax rates of 31.9% and 22.8% for the thirteen week periods ended March 29, 2020 and March 31, 2019 , respectively, were primarily due to state taxes offset by the Work Opportunity Tax Credit in Fiscal 2019 and Fiscal 2020 and the non-deductibility of transaction costs related to the EdgeRock acquisition in Fiscal 2020. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts are classified as noncurrent in the consolidated balance sheets. Deferred tax assets are also recognized for net operating loss and tax credit carryovers. The overall change in deferred tax assets and liabilities for the period measures the deferred tax expense or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to tax expense in the period of enactment. The Company acquired a $6.9 million net operating loss carry forward in the 2020 EdgeRock acquisition. When appropriate, the Company will record a valuation allowance against net deferred tax assets to offset future tax benefits that may not be realized. In determining whether a valuation allowance is appropriate, the Company considers whether it is more likely than not that all or some portion of our deferred tax assets will not be realized, based in part upon management’s judgments regarding future events and past operating results. The Company recognizes any penalties when necessary as part of Selling, general and administrative expenses. Goodwill of $25.2 million is deductible for tax purposes. The Company follows the guidance of Accounting Standards Codification (“ASC”) Topic 740, Accounting for Uncertainty in Income Taxes. ASC Topic 740 prescribes a more-likely-than-not measurement methodology to reflect the financial statement impact of uncertain tax positions taken or expected to be taken in a tax return. Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses, which amends how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income, which applies to trade accounts receivable and the calculation of the allowance for uncollectible accounts receivable. The Company adopted this ASU in the first quarter of fiscal 2020 which did not have a material impact on the consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04 Intangibles-Goodwill and Other Simplifying the Test for Goodwill Impairment, which provides guidance to simplify the subsequent measurement of goodwill by eliminating the Step 2 procedure from the goodwill impairment test. The new guidance is effective for the Company beginning with the fourth quarter of 2020. The Company does not anticipate the adoption of ASU 2017-04 will have a material impact on the Company's financial condition or results of operations. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The new standard is part of the disclosure framework project and eliminates certain disclosure requirements for fair value measurements, requires entities to disclose new information, and modifies existing disclosure requirements. The Company adopted this ASU on a prospective basis in the first quarter of fiscal 2020 which did not have a material impact on the consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) contract modifications on financial reporting, caused by reference rate reform. The new guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is still evaluating the impact, but does not expect the adoption of the standard to have a material impact on the Company's financial condition or results of operations. |
ACQUISITIONS
ACQUISITIONS | 3 Months Ended |
Mar. 29, 2020 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS L.J. Kushner & Associates, L.L.C. On December 13, 2019, the Company acquired substantially all of the assets and assumed certain liabilities of L.J. Kushner & Associates, L.L.C. (“LJK”) for cash consideration of $8.5 million and issued $1.0 million ( 47,403 shares privately placed) of the Company's common stock at closing. $1.0 million was held back as partial security for certain post-closing liabilities. The purchase agreement further provides for contingent consideration of up to $2.5 million based on the performance of the acquired business for the two years following the date of acquisition. The net assets acquired were assigned to the Professional segment. The acquisition of LJK allows the Company to strengthen and expand its IT operations through cybersecurity retained search services specializing in recruiting high and mid-level security professionals. EdgeRock Technology Holding, Inc. On February 3, 2020, the Company acquired 100% of the equity of EdgeRock for a purchase price cash consideration of $21.7 million , subject to customary purchase price adjustments as specified in the purchase agreement. The purchase price at closing was paid out of available funds under the Company’s credit agreement led by BMO. The acquired business was assigned to the Professional segment. The acquisition of EdgeRock allows the Company to strengthen its operations in specialized IT consultants and technology professionals specialized in leading software and data ecosystems, as well as expand its IT geographic operations with offices in Arizona, Florida and Massachusetts. The 2019 consolidated statement of income does not include any operating results of EdgeRock. Eight weeks of EdgeRock operations are included in the thirteen week period ended March 29, 2020 , which is approximately $6.5 million of revenue and $0.4 million of operating income. The preliminary acquisition has been allocated to the assets acquired and liabilities assumed as of the date of acquisition as follows: Accounts receivable $ 6,731,260 Prepaid expenses and other assets 520,587 Property and equipment, net 296,309 Right-of-use asset - operating leases 1,714,984 Intangible assets 11,274,000 Goodwill (non-deductible for tax purposes) 6,178,351 Current liabilities assumed (2,409,551 ) Deferred income taxes, net (910,501 ) Lease liability - operating leases (1,714,984 ) Total net assets acquired $ 21,680,455 Cash $ 21,680,455 Total fair value of consideration transferred for acquired business $ 21,680,455 The preliminary allocation of the intangible assets is as follows: Estimated Fair Value Estimated Useful Lives Covenants not to compete $ 302,000 5 years Trade name 7,000,000 Indefinite Client partner list 3,972,000 5 years Total $ 11,274,000 For the thirteen week period ended March 29, 2020 , the Company's incurred costs of $0.5 million related to the LJK and EdgeRock acquisitions. These costs were expensed as incurred in selling, general and administrative expenses. Supplemental Unaudited Pro Forma Information The Company estimates the revenues and net income for the periods below that would have been reported if the LJK and EdgeRock acquisitions had taken place on the first day of the Company's 2019 fiscal year would be as follows (dollars in thousands, except per share amounts): Thirteen Weeks Ended March 29, March 31, Revenues $ 77,176 $ 79,890 Gross profit $ 21,184 $ 22,590 Net income $ 1,277 $ 3,041 Income per share: Basic $ 0.12 $ 0.30 Diluted $ 0.12 $ 0.29 Pro forma net income includes amortization of identifiable intangible assets, interest expense on additional borrowings on the Revolving Facility (as defined below) at a rate of 3.41% and tax expense of the pro forma adjustments at an effective tax rates of 31.9% for Fiscal 2020 and 24.5% for Fiscal 2019 . The pro forma operating results include adjustments to LJK and EdgeRock related to synergy adjustments for expenses that would be duplicative and other non-recurring, non-operating and out of period expense items once integrated with the Company. Amounts set forth above are not necessarily indicative of the results that would have been attained had the LJK and EdgeRock acquisitions taken place on the first day of the Company’s 2019 fiscal year or of the results that may be achieved by the combined enterprise in the future. |
LEASES
LEASES | 3 Months Ended |
Mar. 29, 2020 | |
Leases [Abstract] | |
Leases | LEASES At March 29, 2020 , the weighted average remaining lease term and weighted average discount rate for operating leases was 4.0 years and 5.2% , respectively. The Company's future operating lease obligations that have not yet commenced are immaterial. For the thirteen week period ended March 29, 2020 , the Company's cash paid for operating leases was $505,531 , and operating lease and short-term lease costs were $491,019 and $126,378 , respectively. The undiscounted annual future minimum lease payments consist of the following at: March 29, 2020 $ 1,892,473 2021 1,925,177 2022 1,745,463 2023 1,136,654 2024 590,910 Thereafter 142,601 Total lease payments 7,433,278 Interest (730,108 ) Present value of lease liabilities $ 6,703,170 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 29, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | INTANGIBLE ASSETS Intangible assets are stated net of accumulated amortization of $45.5 million and $44.3 million at March 29, 2020 and December 29, 2019 , respectively. Amortization expense for the fiscal years are comprised of following: Thirteen Weeks Ended March 29, March 31, Client partner lists $ 1,050,616 $ 908,099 Covenant not to compete 69,689 42,250 Acquisition intangibles 1,120,305 950,349 Computer software - amortization expense 67,137 78,734 Amortization expense 1,187,442 1,029,083 Computer software - selling, general and administrative expense 18,822 5,806 Total expense $ 1,206,264 $ 1,034,889 |
ACCRUED PAYROLL AND EXPENSES AN
ACCRUED PAYROLL AND EXPENSES AND CONTINGENT CONSIDERATION | 3 Months Ended |
Mar. 29, 2020 | |
Accrued Liabilities, Current [Abstract] | |
Accrued Payable And Expenses And Contingent Consideration | ACCRUED PAYROLL AND EXPENSES AND CONTINGENT CONSIDERATION Accrued payroll and expenses consist of the following at: March 29, December 29, Field talent payroll $ 6,952,089 $ 4,505,264 Field talent payroll related 1,503,458 1,246,353 Accrued bonuses and commissions 1,682,872 1,585,681 Other 3,534,423 2,742,534 Accrued payroll and expenses $ 13,672,842 $ 10,079,832 The following is a schedule of future estimated contingent consideration payments to various parties as of March 29, 2020 : Estimated Cash Payment Discount Net Due in: Less than one year $ 1,250,000 $ (90,044 ) $ 1,159,956 One to two years 1,250,000 (186,217 ) 1,063,783 Contingent consideration $ 2,500,000 $ (276,261 ) $ 2,223,739 |
DEBT
DEBT | 3 Months Ended |
Mar. 29, 2020 | |
Debt Disclosure [Abstract] | |
Debt | DEBT On July 16, 2019, the Company entered into a Credit Agreement (the “Credit Agreement”), maturing July 16, 2024, with BMO, as lead administrative agent, lender, letters of credit issuer, and swing line lender. The Credit Agreement provides for a revolving credit facility (the “Revolving Facility”) permitting the Company to borrow funds from time to time in an aggregate amount up to $35 million . The Credit Agreement also provides for a term loan commitment (the “Term Loan”) permitting the Company to borrow funds from time to time in an aggregate amount not to exceed $30 million with principal payable quarterly, based on an annual percentage of the original principal amount as defined in the Credit Agreement. The Company may from time to time, with a maximum of two , request an increase in the aggregate Term Loan by $40 million , with minimum increases of $10 million . The Company’s obligations under the Credit Agreement are secured by a first priority security interest in substantially all tangible and intangible property of the Company and its subsidiaries. The Credit Agreement bears interest either at the Base Rate plus the Applicable Margin or LIBOR plus the Applicable Margin (as such terms are defined in the Credit Agreement). The Company also pays an unused commitment fee on the daily average unused amount of Revolving Facility and Term Loan. The Credit Agreement contains customary affirmative and negative covenants. The Company is subject to a maximum Leverage Ratio and a minimum Fixed Charge Coverage Ratio as defined in the Credit Agreement. The Company was in compliance with these covenants as of March 29, 2020 . On February 3, 2020, the Company borrowed $18.5 million on the Term Loan in conjunction with the closing of the EdgeRock acquisition. Letter of Credit In March 2020, in conjunction with the 2020 EdgeRock acquisition, the Company entered into a standby letter of credit arrangement, which expires December 31, 2024, for purposes of protecting a lessor against default on lease payments. As of March 29, 2020 , the Company had a maximum financial exposure from this standby letter of credit totaling $0.1 million , all of which is considered usage against the Revolving Facility. The Company has no history of default, nor is it aware of circumstances that would require it to perform under any of these arrangements and believes that the resolution of any disputes that might arise in the future would not materially affect the Company's consolidated financial statements. Accordingly, no liability has been recorded in respect to these arrangements as of March 29, 2020 . Line of Credit At March 29, 2020 and December 29, 2019 , $21.0 million and $20.3 million , respectively, was outstanding on the revolving facilities. Average daily balance for the thirteen week periods ended March 29, 2020 and March 31, 2019 was $19.2 million and $10.0 million , respectively. Borrowings under the revolving facilities consisted of and bore interest at: March 29, December 29, Base Rate $ 1,011,394 3.75 % $ 2,844,957 5.25 % LIBOR 10,000,000 3.13 % 17,500,000 3.26 % LIBOR 10,000,000 3.18 % — — % Total $ 21,011,394 $ 20,344,957 Long-Term Debt Long-term debt consists of and bore interest at: March 29, December 29, Base Rate $ 18,500,000 3.75 % $ 7,500,000 5.25 % LIBOR 7,500,000 3.18 % — — % Long-term debt $ 26,000,000 $ 7,500,000 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 29, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS The accounting standard for fair value measurements defines fair value, and establishes a market-based framework or hierarchy for measuring fair value. The standard is applicable whenever assets and liabilities are measured at fair value. The fair value hierarchy established prioritizes the inputs used in valuation techniques into three levels as follows: Level 1 - Observable inputs - quoted prices in active markets for identical assets and liabilities; Level 2 - Observable inputs other than the quoted prices in active markets for identical assets and liabilities - includes quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets, and amounts derived from valuation models where all significant inputs are observable in active markets, for substantially the full term of the financial instrument; and Level 3 - Unobservable inputs - includes amounts derived from valuation models where one or more significant inputs are unobservable and require us to develop relevant assumptions. The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis and the level they fall within the fair value hierarchy: Amounts Recorded at Fair Value Financial Statement Classification Fair Value Hierarchy March 29, December 29, Contingent consideration, net Contingent consideration, net - current and long-term Level 3 $ 2,223,739 $ 2,174,378 The changes in the Level 3 fair value measurements from December 29, 2019 to March 29, 2020 relates to accretion. Key inputs in determining the fair value of the contingent consideration as of March 29, 2020 and December 29, 2019 included the discount rate of 7.5% as well as management's estimates of future sales volumes and EBITDA. |
CONTINGENCIES
CONTINGENCIES | 3 Months Ended |
Mar. 29, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | CONTINGENCIES The Company is engaged from time to time in legal matters and proceedings arising out of its normal course of business. The Company establishes a liability related to its legal proceedings and claims when it has determined that it is probable that the Company has incurred a liability and the related amount can be reasonably estimated. If the Company determines that an obligation is reasonably possible, the Company will, if material, disclose the nature of the loss contingency and the estimated range of possible loss, or include a statement that no estimate of the loss can be made. The Company insures against, subject to and upon the terms and conditions of various insurance policies, claims or losses from workers’ compensation, general liability, automobile liability, property damage, professional liability, employment practices, fiduciary liability, fidelity losses and director and officer liability. Under the Company's bylaws, the Company’s directors and officers are indemnified against certain liabilities arising out of the performance of their duties to the Company. The Company also has an insurance policy for our directors and officers to insure them against liabilities arising from the performance of their positions with the Company or its subsidiaries. The Company has also entered into indemnification agreements with its directors and certain officers. |
EQUITY
EQUITY | 3 Months Ended |
Mar. 29, 2020 | |
Stockholders' Equity Note [Abstract] | |
Equity | EQUITY Authorized capital stock consists of 19,500,000 shares of common stock, par value $0.01 per share and 500,000 shares of undesignated preferred stock, par value $0.01 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 3 Months Ended |
Mar. 29, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | SHARE-BASED COMPENSATION Stock Options and Restricted Stock For the thirteen week periods ended March 29, 2020 and March 31, 2019 , the Company recognized $0.2 million and $0.3 million of compensation expense related to stock awards, respectively. Unamortized share-based compensation expense as of March 29, 2020 amounted to $1.5 million which is expected to be recognized over the next 2.5 years. A summary of stock option and restricted stock activity is presented as follows: Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Life Total Intrinsic Value of Awards (in thousands) Awards outstanding at December 29, 2019 582,845 $ 18.32 7.5 $ 2,793 Awards outstanding at March 29, 2020 582,845 $ 18.32 7.3 $ 241 Awards exercisable at December 29, 2019 313,645 $ 16.05 6.8 $ 1,991 Awards exercisable at March 29, 2020 326,395 $ 16.45 6.7 $ 85 Number of Weighted Average Grant Date Fair Value Nonvested outstanding at December 29, 2019 269,200 $ 20.96 Nonvested outstanding at March 29, 2020 256,450 $ 20.69 For the thirteen week period ended March 31, 2019 , the Company issued 4,493 shares of common stock upon the cashless exercise of 11,840 stock options. Included in awards outstanding are 18,000 and 20,250 shares of restricted stock, at a grant date price per share of $28.61 , issued under the 2013 Plan as of March 29, 2020 and December 29, 2019 , respectively. For the thirteen week periods ended March 29, 2020 and March 31, 2019 , the Company recognized $0.1 million of compensation expense related to restricted stock. Warrant Activity For the thirteen week periods ended March 29, 2020 and March 31, 2019 , the Company did not recognize compensation cost related to warrants. There was no unamortized stock compensation expense to be recognized as of March 29, 2020 . A summary of warrant activity is presented as follows: Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Life Total Intrinsic Value of Options (in thousands) Warrants outstanding at December 29, 2019 64,482 $ 13.84 0.8 $ 473 Warrants outstanding at March 29, 2020 64,482 $ 13.84 0.5 $ — Warrants exercisable at December 29, 2019 64,482 $ 13.84 0.8 $ 473 Warrants exercisable at March 29, 2020 64,482 $ 13.84 0.5 $ — There were no nonvested warrants outstanding at March 29, 2020 and December 29, 2019 . For the thirteen week period ended March 31, 2019 , the Company issued 423 shares of common stock upon the cashless exercise of 1,020 warrants. |
TEAM MEMBER BENEFIT PLAN
TEAM MEMBER BENEFIT PLAN | 3 Months Ended |
Mar. 29, 2020 | |
Retirement Benefits [Abstract] | |
Team Member Benefit Plan | TEAM MEMBER BENEFIT PLAN The Company provides a defined contribution plan (the “401(k) Plan”) for the benefit of its eligible team members and field talent. The 401(k) Plan allows participants to make contributions subject to applicable statutory limitations. The Company matches participants contributions 100% up to the first 3% and 50% of the next 2% of a team member or field talent’s compensation. The Company contributed $0.3 million to the 401(k) Plan for the thirteen week periods ended March 29, 2020 and March 31, 2019 . |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 3 Months Ended |
Mar. 29, 2020 | |
Segment Reporting [Abstract] | |
Business Segments | BUSINESS SEGMENTS The Company operates within three industry segments: Real Estate, Professional, and Light Industrial. The Real Estate segment provides office and maintenance field talent to various apartment communities and commercial buildings in 29 states, via property management companies responsible for the apartment communities' and commercial buildings' day-to-day operations. The Professional segment provides skilled field talent on a nationwide basis for IT and finance, accounting, legal and human resource client partner projects. The Light Industrial segment provides field talent primarily to manufacturing, distribution, logistics, and call center client partners needing a flexible workforce in 7 states. Segment operating income includes all revenue and cost of services, direct selling expenses, depreciation and amortization expense and excludes all general and administrative (home office) expenses. Assets of home office include cash, unallocated prepaid expenses, deferred tax assets, and other assets. The following table provides a reconciliation of revenue and operating income by reportable segment to consolidated results for the periods indicated: Thirteen Weeks Ended March 29, March 31, Revenue: Real Estate $ 20,027,833 $ 19,175,782 Professional 36,343,906 30,593,668 Light Industrial 17,695,690 19,006,617 Total $ 74,067,429 $ 68,776,067 Depreciation: Real Estate $ 55,340 $ 44,113 Professional 99,432 84,483 Light Industrial 27,105 25,421 Home office 45,394 48,409 Total $ 227,271 $ 202,426 Amortization: Professional $ 1,180,834 $ 1,022,805 Home office 6,608 6,278 Total $ 1,187,442 $ 1,029,083 Operating income (expense): Real Estate $ 3,039,274 $ 2,819,711 Professional 1,839,783 1,833,559 Light Industrial 1,097,098 1,202,991 Home office - selling (92,662 ) (132,428 ) Home office - general and administrative (3,226,099 ) (2,137,125 ) Total $ 2,657,394 $ 3,586,708 Thirteen Weeks Ended March 29, 2020 March 31, 2019 Capital expenditures: Real Estate $ 25,724 $ 10,661 Professional 40,972 328,648 Light Industrial — 2,155 Home office 982,977 — Total $ 1,049,673 $ 341,464 March 29, December 29, Total Assets: Real Estate $ 15,024,352 $ 16,785,163 Professional 96,523,696 72,623,242 Light Industrial 13,423,703 15,223,581 Home office 13,163,527 10,954,058 Total $ 138,135,278 $ 115,586,044 |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 3 Months Ended |
Mar. 29, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event | SUBSEQUENT EVENTS Debt On April 6, 2020, the Company borrowed the remaining $4.0 million on the Term Loan under its Credit Agreement led by BMO, as described in Note 7 above. The proceeds were used to pay down the Revolving Facility. Dividend On May 5, 2020 , the Company's board of directors declared a cash dividend in the amount of $0.05 per share of common stock to be paid on May 27, 2020 to all shareholders of record as of the close of business on May 20, 2020 COVID-19 The Company has adjusted its operations in response to COVID-19 in all of its segment and Home Office operations. The extent of the impact from the outbreak on its operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on the Company's client partners and the range of governmental and community reactions to the pandemic, which are uncertain and cannot be fully predicted at this time. CARES Act The Coronavirus Aid, Relief, and Economic Security (CARES) Act allows relief to employers affected by the coronavirus pandemic. In order to provide liquidity and retain employees during this period, the CARES Act allows employers to delay the payment of the employer’s share of Old-Age, Survivors, and Disability Insurance Tax (“Social Security”), which is 6.2% of wages up to the annual wage base ($137,700 in 2020). The CARES Act only applies to taxes incurred from March 27, 2020 through December 31, 2020. Half of the delayed payments are due by December 31, 2021, and the other half by December 31, 2022. The Company has elected to delay the payment of these taxes. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 29, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated financial statements include the accounts of the Company. All significant intercompany transactions and balances have been eliminated in consolidation. |
Fiscal Year | Fiscal Periods The Company has a 52/53 week fiscal year. Fiscal periods for the consolidated financial statements included herein are as of March 29, 2020 and December 29, 2019 , and include the thirteen week periods ended March 29, 2020 and March 31, 2019 , referred to herein as Fiscal 2020 and 2019 , respectively. |
Reclassifications | Reclassifications Certain reclassifications have been made to the 2019 financial statements to conform with the 2020 presentation. |
Management Estimates | Management Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates affecting the financial statements include allowances for credit losses, goodwill, intangible assets, income taxes, leave liability, and contingent consideration obligations related to acquisitions. Additionally, the valuation of share-based compensation option expense uses a model based upon interest rates, stock prices, maturity estimates, volatility and other factors. The Company believes these estimates and assumptions are reliable. However, these estimates and assumptions may change in the future based on actual experience as well as market conditions. |
Financial Instruments | Financial Instruments The Company uses fair value measurements in areas that include, but are not limited to, the allocation of purchase price consideration to tangible and identifiable intangible assets and contingent consideration. The carrying values of cash and cash equivalents, accounts receivables, prepaid expenses, accounts payable, accrued liabilities, and other current assets and liabilities approximate their fair values because of the short-term nature of these instruments. The carrying value of bank debt approximates fair value due to the variable nature of the interest rates under the credit agreement with BMO Harris Bank, N.A. (“BMO”) that provided for a revolving credit facility and term loan and current rates available to the Company for debt with similar terms and risk. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. |
Accounts Receivable | Accounts Receivable |
Property and Equipment | Property and Equipment Property and equipment are stated net of accumulated depreciation and amortization of $3.6 million and $2.8 million at March 29, 2020 and December 29, 2019 |
Deposits | Deposits The Company maintains guaranteed costs policies for workers' compensation coverage in Texas, Washington, and Ohio and minimal loss retention coverage for team members and field talent in the Light Industrial segment and its other non-Texas workforce. Under these policies, the Company is required to maintain refundable deposits of $3.7 million and $3.6 million , which are included in Deposits in the accompanying consolidated balance sheets as of March 29, 2020 and December 29, 2019 , respectively. |
Long-Lived Assets | Long-Lived Assets The Company reviews its long-lived assets, primarily fixed assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recovered. The Company looks primarily to the undiscounted future cash flows in its assessment of whether or not long-lived assets have been impaired. There were no impairments during Fiscal 2020 or Fiscal 2019 . |
Leases | Leases The Company leases all their office space through operating leases, which expire at various dates through 2025 . Many of the lease agreements obligate the Company to pay real estate taxes, insurance and certain maintenance costs, which are accounted for separately. Certain of the Company’s lease arrangements contain renewal provisions from 1 to 10 years, exercisable at the Company's option. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company determines if an arrangement is an operating lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. All other leases are recorded on the balance sheet as right-of-use assets and lease liabilities for the lease term. |
Intangible Assets | Intangible Assets The Company holds intangible assets with indefinite and finite lives. Intangible assets with indefinite useful lives are not amortized. Intangible assets with finite useful lives are amortized over their respective estimated useful lives, ranging from three to ten years, based on a pattern in which the economic benefit of the respective intangible asset is realized. Identifiable intangible assets recognized in conjunction with acquisitions are recorded at fair value. Significant unobservable inputs are used to determine the fair value of the identifiable intangible assets based on the income approach valuation model whereby the present worth and anticipated future benefits of the identifiable intangible assets are discounted back to their net present value. The Company capitalizes purchased software and internal payroll costs directly incurred in the modification of software for internal use. Software maintenance and training costs are expensed in the period incurred. |
Goodwill | Goodwill |
Deferred Financing Fees | Deferred Financing Fees Deferred financing fees are amortized using the effective interest method over the term of the respective loans. Debt issuance costs related to a recognized debt liability are presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability. |
Contingent Consideration | Contingent Consideration The Company had obligations, to be paid in cash, related to its acquisitions if certain operating and financial goals were met. The fair value of this contingent consideration is determined using expected cash flows and present value technique. The fair value calculation of the expected future payments uses a discount rate commensurate with the risks of the expected cash flow. The resulting discount is amortized as interest expense over the outstanding period using the effective interest method. |
Revenue Recognition | Revenue Recognition The Company derives its revenues from three segments: Real Estate, Professional, and Light Industrial. The Company provides workforce solutions and placement services. Revenues are recognized when promised services are delivered to client partners, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Revenues as presented on the consolidated statements of operations represent services rendered to client partners less sales adjustments and allowances. Reimbursements, including those related to out-of-pocket expenses, are also included in revenues, and the related amounts of reimbursable expenses are included in cost of services. The Company records revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses. The Company has concluded that gross reporting is appropriate because the Company (i) has the risk of identifying and hiring qualified field talent, (ii) has the discretion to select the field talent and establish their price and duties and (iii) bears the risk for services that are not fully paid for by client partners. Temporary staffing revenues - Field talent revenues from contracts with client partners are recognized in the amount to which the Company has a right to invoice, when the services are rendered by the Company’s field talent. Contingent placement staffing revenues - Any revenues associated with services that are provided on a contingent basis are recognized once the contingency is resolved, as this is when control is transferred to the client partner, usually when employment candidates start their employment. Retained search placement staffing revenues - any revenues from these services are recognized based on the contractual amount for services completed to date which best depicts the transfer of control of services, which is less than 1% of consolidated revenues. |
Share-based Compensation | Share-Based Compensation The Company recognizes compensation expense in selling, general and administrative expenses over the service period for options or restricted stock that are expected to vest and records adjustments to compensation expense at the end of the service period if actual forfeitures differ from original estimates. |
Earnings Per Share | Earnings Per Share Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period adjusted to reflect potentially dilutive securities. Antidilutive shares are excluded from the calculation of earnings per share. |
Income Taxes | Income Taxes The effective tax rates of 31.9% and 22.8% for the thirteen week periods ended March 29, 2020 and March 31, 2019 , respectively, were primarily due to state taxes offset by the Work Opportunity Tax Credit in Fiscal 2019 and Fiscal 2020 and the non-deductibility of transaction costs related to the EdgeRock acquisition in Fiscal 2020. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts are classified as noncurrent in the consolidated balance sheets. Deferred tax assets are also recognized for net operating loss and tax credit carryovers. The overall change in deferred tax assets and liabilities for the period measures the deferred tax expense or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to tax expense in the period of enactment. The Company acquired a $6.9 million net operating loss carry forward in the 2020 EdgeRock acquisition. When appropriate, the Company will record a valuation allowance against net deferred tax assets to offset future tax benefits that may not be realized. In determining whether a valuation allowance is appropriate, the Company considers whether it is more likely than not that all or some portion of our deferred tax assets will not be realized, based in part upon management’s judgments regarding future events and past operating results. The Company recognizes any penalties when necessary as part of Selling, general and administrative expenses. Goodwill of $25.2 million is deductible for tax purposes. The Company follows the guidance of Accounting Standards Codification (“ASC”) Topic 740, Accounting for Uncertainty in Income Taxes. ASC Topic 740 prescribes a more-likely-than-not measurement methodology to reflect the financial statement impact of uncertain tax positions taken or expected to be taken in a tax return. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses, which amends how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income, which applies to trade accounts receivable and the calculation of the allowance for uncollectible accounts receivable. The Company adopted this ASU in the first quarter of fiscal 2020 which did not have a material impact on the consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04 Intangibles-Goodwill and Other Simplifying the Test for Goodwill Impairment, which provides guidance to simplify the subsequent measurement of goodwill by eliminating the Step 2 procedure from the goodwill impairment test. The new guidance is effective for the Company beginning with the fourth quarter of 2020. The Company does not anticipate the adoption of ASU 2017-04 will have a material impact on the Company's financial condition or results of operations. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The new standard is part of the disclosure framework project and eliminates certain disclosure requirements for fair value measurements, requires entities to disclose new information, and modifies existing disclosure requirements. The Company adopted this ASU on a prospective basis in the first quarter of fiscal 2020 which did not have a material impact on the consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) contract modifications on financial reporting, caused by reference rate reform. The new guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is still evaluating the impact, but does not expect the adoption of the standard to have a material impact on the Company's financial condition or results of operations. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Accounting Policies [Abstract] | |
Revenue from External Customers by Geographic Areas | Geographic revenue in excess of 10% of the Company's consolidated revenue in Fiscal 2020 and the related percentage for Fiscal 2019 was generated in the following areas: Thirteen Weeks Ended March 29, March 31, Maryland 11 % 11 % Massachusetts 10 % 1 % Tennessee 16 % 16 % Texas 24 % 29 % |
Summary of Valuation Allowance | Changes in the allowance for credit losses are as follows: Thirteen Weeks Ended March 29, 2020 March 31, 2019 Beginning balance $ 468,233 $ 468,233 EdgeRock Technology Holdings, Inc. (“EdgeRock”) acquisition 47,498 — Provision for (recovery of) credit losses, net 31,658 (53,457 ) Amounts (written off) collected, net (28,908 ) 53,457 Ending balance $ 518,481 $ 468,233 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following is a reconciliation of the number of shares used in the calculation of basic and diluted earnings per share for the respective periods: Thirteen Weeks Ended March 29, March 31, Weighted-average number of common shares outstanding: 10,308,445 10,229,462 Effect of dilutive securities: Stock options and restricted stock 61,859 127,104 Warrants 12,695 47,789 Weighted-average number of diluted common shares outstanding 10,382,999 10,404,355 Stock options and restricted stock 423,150 243,750 Antidilutive shares 423,150 243,750 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The preliminary acquisition has been allocated to the assets acquired and liabilities assumed as of the date of acquisition as follows: Accounts receivable $ 6,731,260 Prepaid expenses and other assets 520,587 Property and equipment, net 296,309 Right-of-use asset - operating leases 1,714,984 Intangible assets 11,274,000 Goodwill (non-deductible for tax purposes) 6,178,351 Current liabilities assumed (2,409,551 ) Deferred income taxes, net (910,501 ) Lease liability - operating leases (1,714,984 ) Total net assets acquired $ 21,680,455 Cash $ 21,680,455 Total fair value of consideration transferred for acquired business $ 21,680,455 The preliminary allocation of the intangible assets is as follows: Estimated Fair Value Estimated Useful Lives Covenants not to compete $ 302,000 5 years Trade name 7,000,000 Indefinite Client partner list 3,972,000 5 years Total $ 11,274,000 |
Business Acquisition, Pro Forma Information | The Company estimates the revenues and net income for the periods below that would have been reported if the LJK and EdgeRock acquisitions had taken place on the first day of the Company's 2019 fiscal year would be as follows (dollars in thousands, except per share amounts): Thirteen Weeks Ended March 29, March 31, Revenues $ 77,176 $ 79,890 Gross profit $ 21,184 $ 22,590 Net income $ 1,277 $ 3,041 Income per share: Basic $ 0.12 $ 0.30 Diluted $ 0.12 $ 0.29 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Leases [Abstract] | |
Lessee, Operating Lease, Liability, Maturity | The undiscounted annual future minimum lease payments consist of the following at: March 29, 2020 $ 1,892,473 2021 1,925,177 2022 1,745,463 2023 1,136,654 2024 590,910 Thereafter 142,601 Total lease payments 7,433,278 Interest (730,108 ) Present value of lease liabilities $ 6,703,170 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | Thirteen Weeks Ended March 29, March 31, Client partner lists $ 1,050,616 $ 908,099 Covenant not to compete 69,689 42,250 Acquisition intangibles 1,120,305 950,349 Computer software - amortization expense 67,137 78,734 Amortization expense 1,187,442 1,029,083 Computer software - selling, general and administrative expense 18,822 5,806 Total expense $ 1,206,264 $ 1,034,889 |
ACCRUED PAYROLL AND EXPENSES _2
ACCRUED PAYROLL AND EXPENSES AND CONTINGENT CONSIDERATION (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Accrued Liabilities, Current [Abstract] | |
Schedule of Accrued Expenses | Accrued payroll and expenses consist of the following at: March 29, December 29, Field talent payroll $ 6,952,089 $ 4,505,264 Field talent payroll related 1,503,458 1,246,353 Accrued bonuses and commissions 1,682,872 1,585,681 Other 3,534,423 2,742,534 Accrued payroll and expenses $ 13,672,842 $ 10,079,832 |
Schedule of Future Estimated Earnout Payments | The following is a schedule of future estimated contingent consideration payments to various parties as of March 29, 2020 : Estimated Cash Payment Discount Net Due in: Less than one year $ 1,250,000 $ (90,044 ) $ 1,159,956 One to two years 1,250,000 (186,217 ) 1,063,783 Contingent consideration $ 2,500,000 $ (276,261 ) $ 2,223,739 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Line of Credit Facilities | Borrowings under the revolving facilities consisted of and bore interest at: March 29, December 29, Base Rate $ 1,011,394 3.75 % $ 2,844,957 5.25 % LIBOR 10,000,000 3.13 % 17,500,000 3.26 % LIBOR 10,000,000 3.18 % — — % Total $ 21,011,394 $ 20,344,957 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis and the level they fall within the fair value hierarchy: Amounts Recorded at Fair Value Financial Statement Classification Fair Value Hierarchy March 29, December 29, Contingent consideration, net Contingent consideration, net - current and long-term Level 3 $ 2,223,739 $ 2,174,378 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Stock options and restricted stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Share-based Compensation, Activity | A summary of stock option and restricted stock activity is presented as follows: Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Life Total Intrinsic Value of Awards (in thousands) Awards outstanding at December 29, 2019 582,845 $ 18.32 7.5 $ 2,793 Awards outstanding at March 29, 2020 582,845 $ 18.32 7.3 $ 241 Awards exercisable at December 29, 2019 313,645 $ 16.05 6.8 $ 1,991 Awards exercisable at March 29, 2020 326,395 $ 16.45 6.7 $ 85 |
Schedule of Nonvested Share Activity | Number of Weighted Average Grant Date Fair Value Nonvested outstanding at December 29, 2019 269,200 $ 20.96 Nonvested outstanding at March 29, 2020 256,450 $ 20.69 |
Warrant | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Share-based Compensation, Activity | A summary of warrant activity is presented as follows: Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Life Total Intrinsic Value of Options (in thousands) Warrants outstanding at December 29, 2019 64,482 $ 13.84 0.8 $ 473 Warrants outstanding at March 29, 2020 64,482 $ 13.84 0.5 $ — Warrants exercisable at December 29, 2019 64,482 $ 13.84 0.8 $ 473 Warrants exercisable at March 29, 2020 64,482 $ 13.84 0.5 $ — |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following table provides a reconciliation of revenue and operating income by reportable segment to consolidated results for the periods indicated: Thirteen Weeks Ended March 29, March 31, Revenue: Real Estate $ 20,027,833 $ 19,175,782 Professional 36,343,906 30,593,668 Light Industrial 17,695,690 19,006,617 Total $ 74,067,429 $ 68,776,067 Depreciation: Real Estate $ 55,340 $ 44,113 Professional 99,432 84,483 Light Industrial 27,105 25,421 Home office 45,394 48,409 Total $ 227,271 $ 202,426 Amortization: Professional $ 1,180,834 $ 1,022,805 Home office 6,608 6,278 Total $ 1,187,442 $ 1,029,083 Operating income (expense): Real Estate $ 3,039,274 $ 2,819,711 Professional 1,839,783 1,833,559 Light Industrial 1,097,098 1,202,991 Home office - selling (92,662 ) (132,428 ) Home office - general and administrative (3,226,099 ) (2,137,125 ) Total $ 2,657,394 $ 3,586,708 Thirteen Weeks Ended March 29, 2020 March 31, 2019 Capital expenditures: Real Estate $ 25,724 $ 10,661 Professional 40,972 328,648 Light Industrial — 2,155 Home office 982,977 — Total $ 1,049,673 $ 341,464 March 29, December 29, Total Assets: Real Estate $ 15,024,352 $ 16,785,163 Professional 96,523,696 72,623,242 Light Industrial 13,423,703 15,223,581 Home office 13,163,527 10,954,058 Total $ 138,135,278 $ 115,586,044 |
NATURE OF OPERATIONS (Details T
NATURE OF OPERATIONS (Details Textual) | 3 Months Ended |
Mar. 29, 2020segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 3 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Sales Revenue, Net - Credit Concentration Risk | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Maryland | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk, percentage | 11.00% | 11.00% |
Massachusetts | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk, percentage | 10.00% | 1.00% |
Tennessee | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk, percentage | 16.00% | 16.00% |
Texas | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk, percentage | 24.00% | 29.00% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Changes In The Allowance For Credit Losses (Details) - USD ($) | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 468,233 | $ 468,233 |
EdgeRock Technology Holdings, Inc. (“EdgeRock”) acquisition | 47,498 | 0 |
Provision for (recovery of) credit losses, net | 31,658 | (53,457) |
Amounts (written off) collected, net | (28,908) | |
Amounts (written off) collected, net | 53,457 | |
Ending balance | $ 518,481 | $ 468,233 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) | 3 Months Ended | |||
Mar. 29, 2020USD ($)segment | Mar. 31, 2019USD ($) | Feb. 03, 2020USD ($) | Dec. 29, 2019USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | ||||
Effective income tax rate reconciliation, percent | 31.90% | 22.80% | ||
Accumulated depreciation and amortization, property, plant, and equipment | $ 3,600,000 | $ 2,800,000 | ||
Deposit contracts, assets | 3,700,000 | $ 3,600,000 | ||
Impairment of long-lived assets | $ 0 | $ 0 | ||
Number of reportable segments | segment | 3 | |||
Revenue, remaining performance obligation, amount | $ 0 | |||
Contract with customer, performance obligation satisfied in previous period | 0 | |||
Capitalized contract cost, gross | 0 | |||
Capitalized contract cost, impairment loss | 0 | |||
Operating loss carryforwards | $ 6,900,000 | |||
Goodwill, expected tax deductible amount | $ 25,200,000 | |||
Minimum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Renewal term | 1 year | |||
Useful life | 3 years | |||
Maximum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Renewal term | 10 years | |||
Useful life | 10 years |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings Per Share (Details) - shares | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Schedule of Weighted Average Number of Shares, Diluted [Line Items] | ||
Basic (shares) | 10,308,445 | 10,229,462 |
Effect of dilutive securities: | ||
Weighted-average number of diluted common shares outstanding | 10,382,999 | 10,404,355 |
Antidilutive securities excluded from computation of earnings per share, amount | 423,150 | 243,750 |
Stock options and restricted stock | ||
Effect of dilutive securities: | ||
Stock options and restricted stock | 61,859 | 127,104 |
Antidilutive securities excluded from computation of earnings per share, amount | 423,150 | 243,750 |
Warrant | ||
Effect of dilutive securities: | ||
Warrants | 12,695 | 47,789 |
ACQUISITIONS (Details Textual)
ACQUISITIONS (Details Textual) - USD ($) | Feb. 03, 2020 | Dec. 13, 2019 | Mar. 29, 2020 | Mar. 31, 2019 |
Business Acquisition [Line Items] | ||||
Contingent consideration | $ 2,223,739 | |||
Acquisition related costs | $ 500,000 | |||
Effective income tax rate reconciliation, percent | 31.90% | 22.80% | ||
L.J. Kushner & Associates, L.L.C. | ||||
Business Acquisition [Line Items] | ||||
Initial cash paid for acquisition | $ 8,500,000 | |||
Stock issued during period, value, acquisitions | 1,000,000 | |||
Escrow deposit | 1,000,000 | |||
Contingent consideration | $ 2,500,000 | |||
Business combination, period of contingency | 2 years | |||
EdgeRock Technology Holdings, Inc | ||||
Business Acquisition [Line Items] | ||||
Initial cash paid for acquisition | $ 21,700,000 | |||
Percentage acquired | 100.00% | |||
Pro forma revenue | $ 6,500,000 | |||
Pro forma net income | $ 400,000 | |||
Private Placement | L.J. Kushner & Associates, L.L.C. | ||||
Business Acquisition [Line Items] | ||||
Stock issued during period, shares, acquisitions | 47,403 | |||
Pro Forma | ||||
Business Acquisition [Line Items] | ||||
Effective income tax rate reconciliation, percent | 31.90% | 24.50% | ||
Revolving Credit Facility | Pro Forma | ||||
Business Acquisition [Line Items] | ||||
Line of credit facility, interest rate during period | 3.41% |
ACQUISITIONS - Schedule of Reco
ACQUISITIONS - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) | Feb. 03, 2020 | Mar. 29, 2020 | Dec. 29, 2019 |
Business Acquisition [Line Items] | |||
Goodwill | $ 31,372,990 | $ 25,194,639 | |
EdgeRock Technology Holdings, Inc | |||
Business Acquisition [Line Items] | |||
Accounts receivable | $ 6,731,260 | ||
Prepaid expenses and other assets | 520,587 | ||
Property and equipment | 296,309 | ||
Right-of-use asset - operating leases | 1,714,984 | ||
Intangible assets | 11,274,000 | $ 11,274,000 | |
Goodwill | 6,178,351 | ||
Liabilities assumed | (2,409,551) | ||
Deferred income taxes, net | (910,501) | ||
Lease liability - operating leases | (1,714,984) | ||
Total net assets acquired | 21,680,455 | ||
Cash | 21,680,455 | ||
Total fair value of consideration transferred for acquired business | $ 21,680,455 |
ACQUISITIONS - Finite-Lived and
ACQUISITIONS - Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination (Details) - EdgeRock Technology Holdings, Inc - USD ($) | 3 Months Ended | |
Mar. 29, 2020 | Feb. 03, 2020 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets | $ 11,274,000 | $ 11,274,000 |
Covenants not to compete | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets acquired | $ 302,000 | |
Useful life | 5 years | |
Client partner lists | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets acquired | $ 3,972,000 | |
Useful life | 5 years | |
Trade name | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets acquired | $ 7,000,000 |
ACQUISITIONS (Supplemental Unau
ACQUISITIONS (Supplemental Unaudited Pro Forma Information) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Income per share: | ||
Effective income tax rate reconciliation, percent | 31.90% | 22.80% |
L.J. Kushner & Associates, L.L.C. | ||
Business Acquisition [Line Items] | ||
Revenues | $ 77,176 | $ 79,890 |
Gross profit | 21,184 | 22,590 |
Net income | $ 1,277 | $ 3,041 |
Income per share: | ||
Basic pro forma (in usd per share) | $ 0.12 | $ 0.30 |
Diluted pro forma (in usd per share) | $ 0.12 | $ 0.29 |
Pro Forma | ||
Income per share: | ||
Effective income tax rate reconciliation, percent | 31.90% | 24.50% |
Pro Forma | Revolving Credit Facility | ||
Income per share: | ||
Line of credit facility, interest rate during period | 3.41% |
LEASES - Narrative (Details)
LEASES - Narrative (Details) | 3 Months Ended |
Mar. 29, 2020USD ($) | |
Leases [Abstract] | |
Operating lease, weighted average remaining lease term (years) | 4 years |
Operating lease, weighted average discount rate, percent | 5.20% |
Operating lease, payments | $ 505,531 |
Operating lease, cost | 491,019 |
Short-term lease, cost | $ 126,378 |
LEASES - Undiscounted Annual Fu
LEASES - Undiscounted Annual Future Minimum Lease Payments (Details) | Mar. 29, 2020USD ($) |
Leases [Abstract] | |
2020 | $ 1,892,473 |
2021 | 1,925,177 |
2022 | 1,745,463 |
2023 | 1,136,654 |
2024 | 590,910 |
Thereafter | 142,601 |
Total lease payments | 7,433,278 |
Interest | (730,108) |
Present value of lease liabilities | $ 6,703,170 |
INTANGIBLE ASSETS (Details Text
INTANGIBLE ASSETS (Details Textual) - USD ($) $ in Millions | Mar. 29, 2020 | Dec. 29, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangible assets, accumulated amortization | $ 45.5 | $ 44.3 |
INTANGIBLE ASSETS (Schedule of
INTANGIBLE ASSETS (Schedule of Intangible Assets) (Details) - USD ($) | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of acquired intangible assets | $ 1,120,305 | $ 950,349 |
Amortization of intangible assets | 1,187,442 | 1,029,083 |
Total expense | 1,206,264 | 1,034,889 |
Client partner lists | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of acquired intangible assets | 1,050,616 | 908,099 |
Covenants not to compete | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of acquired intangible assets | 69,689 | 42,250 |
Amortization Expense | Computer Software, Intangible Asset [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | 67,137 | 78,734 |
Selling, General and Administrative Expenses | Computer Software, Intangible Asset [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | $ 18,822 | $ 5,806 |
ACCRUED PAYROLL AND EXPENSES _3
ACCRUED PAYROLL AND EXPENSES AND CONTINGENT CONSIDERATION - Accrued Payroll and Expenses (Details) - USD ($) | Mar. 29, 2020 | Dec. 29, 2019 |
Accrued Liabilities, Current [Abstract] | ||
Field talent payroll | $ 6,952,089 | $ 4,505,264 |
Field talent payroll related | 1,503,458 | 1,246,353 |
Accrued bonuses and commissions | 1,682,872 | 1,585,681 |
Other | 3,534,423 | 2,742,534 |
Accrued payroll and expenses | $ 13,672,842 | $ 10,079,832 |
ACCRUED PAYROLL AND EXPENSES _4
ACCRUED PAYROLL AND EXPENSES AND CONTINGENT CONSIDERATION - Schedule of Future Estimated Earn Out Payments (Details) - USD ($) | Mar. 29, 2020 | Dec. 29, 2019 |
Accrued Liabilities, Current [Abstract] | ||
Estimated Cash Payment, Less than one year | $ 1,250,000 | |
Discount, Less than one year | (90,044) | |
Net, Less than one year | 1,159,956 | $ 0 |
Estimated Cash Payment, One to two years | 1,250,000 | |
Discount, One to two years | (186,217) | |
Net, One to two years | 1,063,783 | $ 2,174,378 |
Estimated Cash Payment, Total | 2,500,000 | |
Discount, Total | (276,261) | |
Net, Total | $ 2,223,739 |
DEBT (Details Textual)
DEBT (Details Textual) | Jul. 16, 2019USD ($)request | Mar. 29, 2020USD ($) | Mar. 31, 2019USD ($) | Feb. 03, 2020USD ($) | Dec. 29, 2019USD ($) |
Debt Instrument [Line Items] | |||||
Letters of credit outstanding, amount | $ 100,000 | ||||
Long-term line of credit | 20,687,209 | $ 19,993,829 | |||
Line of credit facility, average outstanding amount | 19,200,000 | $ 10,000,000 | |||
Credit Agreement | BMO Harris Bank, N.A. | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 35,000,000 | ||||
Credit Agreement | Texas Capital Bank, National Association (TCB) | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Long-term line of credit | $ 21,011,394 | $ 20,344,957 | |||
Term Loan | Credit Agreement | BMO Harris Bank, N.A. | |||||
Debt Instrument [Line Items] | |||||
Long term debt | $ 30,000,000 | ||||
Number of requests to increase term loan | request | 2 | ||||
Line of credit facility, maximum increase | $ 40,000,000 | ||||
Line of credit facility, minimum increase | $ 10,000,000 | ||||
Senior Notes | Term Loan | BMO Harris Bank, N.A. | |||||
Debt Instrument [Line Items] | |||||
Long term debt | $ 18,500,000 |
DEBT - Borrowings Under Revolvi
DEBT - Borrowings Under Revolving Facility (Details) - USD ($) | Mar. 29, 2020 | Dec. 29, 2019 |
Line of Credit Facility [Line Items] | ||
Total borrowing amount | $ 20,687,209 | $ 19,993,829 |
Credit Agreement | Texas Capital Bank, National Association (TCB) | Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Initial borrowing amount | $ 1,011,394 | $ 2,844,957 |
Debt Instrument, Interest Rate, Effective Percentage for Initial Borrowing Amount | 3.75% | 5.25% |
Second borrowing amount | $ 10,000,000 | $ 17,500,000 |
Debt Instrument, Interest Rate, Effective Percentage for Second Borrowing Amount | 3.13% | 3.26% |
Third borrowing amount | $ 10,000,000 | $ 0 |
Debt Instrument, Interest Rate, Effective Percentage for Third Borrowing Amount | 3.18% | 0.00% |
Total borrowing amount | $ 21,011,394 | $ 20,344,957 |
DEBT - Borrowing Under Term Loa
DEBT - Borrowing Under Term Loan (Details) - Texas Capital Bank, National Association (TCB) - Revolving Credit Facility - Credit Agreement - USD ($) | Mar. 29, 2020 | Dec. 29, 2019 |
Debt Instrument [Line Items] | ||
Long-Term Debt, Gross, Initial Borrowing | $ 18,500,000 | $ 7,500,000 |
Debt Instrument, Interest Rate, Effective Percentage for Initial Borrowing Amount | 3.75% | 5.25% |
Long-Term Debt, Gross, Second Borrowing Amount | $ 7,500,000 | $ 0 |
Debt Instrument, Interest Rate, Effective Percentage for Second Borrowing Amount | 3.18% | 0.00% |
Long-term debt, less current portion | $ 26,000,000 | $ 7,500,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) | Mar. 29, 2020USD ($) | Dec. 29, 2019USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | $ 2,223,739 | |
Fair Value, Inputs, Level 3 | Contingent Consideration | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | $ 2,223,739 | $ 2,174,378 |
Measurement Input, Discount Rate [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Discount rate | 0.075 | 0.075 |
EQUITY (Details Textual)
EQUITY (Details Textual) - $ / shares | Mar. 29, 2020 | Dec. 29, 2019 |
Class of Stock [Line Items] | ||
Common stock, shares authorized (in shares) | 19,500,000 | 19,500,000 |
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 500,000 | 500,000 |
Preferred stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details Textual) - USD ($) | 3 Months Ended | ||
Mar. 29, 2020 | Mar. 31, 2019 | Dec. 29, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options converted | 11,840 | ||
Shares outstanding | 10,306,986 | 10,309,236 | |
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share based compensation expense | $ 200,000 | $ 300,000 | |
Unamortized stock compensation expense | $ 1,500,000 | ||
Unamortized stock compensation expense, recognition period | 2 years 6 months | ||
Shares issued in period | 4,493 | ||
Restricted stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share based compensation expense | $ 64,258 | $ 71,382 | |
Shares outstanding | 18,000 | 20,250 | |
Granted (in dollars per share) | $ 28.61 | ||
Warrant | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share based compensation expense | $ 0 | $ 0 | |
Non-option equity instruments, nonvested, number of shares | 0 | 0 | |
Shares issued in period | 423 | ||
Options converted | 1,020 |
SHARE-BASED COMPENSATION - Summ
SHARE-BASED COMPENSATION - Summary of Stock Option and Restricted Stock Activity (Details) - Stock options and restricted stock - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 29, 2020 | Dec. 30, 2018 | Dec. 29, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Beginning number of shares, outstanding (in shares) | 582,845 | ||
Number of shares, outstanding (in shares) | 582,845 | ||
Ending number of shares, options exercisable | 326,395 | 313,645 | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Weighted Average Exercise Price [Roll Forward] | |||
Beginning balance of options outstanding (in dollars per share) | $ 18.32 | ||
Ending balance of options outstanding (in dollars per share) | 18.32 | ||
Options exercisable at end of period | $ 16.45 | $ 16.05 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Roll Forward] | |||
Options outstanding, weighted average remaining contractual term | 7 years 3 months 18 days | 7 years 6 months | |
Optons exercisable, weighted average remaining contractual term | 6 years 8 months 12 days | 6 years 9 months 18 days | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value [Roll Forward] | |||
Beginning balance, intrinsic value | $ 2,793 | ||
Ending value, intrinsic value | 241 | ||
Options exercisable, aggregate intrinsic value | $ 85 | $ 1,991 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||
Nonvested, number of shares | 256,450 | 269,200 | |
Nonvested options, weighted average grant date fair value | $ 20.69 | $ 20.96 |
SHARE-BASED COMPENSATION - Su_2
SHARE-BASED COMPENSATION - Summary of Warrant Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | Dec. 29, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |||
Number of warrants, exercisable | 64,482 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Weighted Average Exercise Price [Roll Forward] | |||
Exercisable warrants, weighted average exercise price (in dollars per share) | $ 13.84 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Intrinsic Value [Roll Forward] | |||
Options converted | 11,840 | ||
Warrant | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares issued in period | 423 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |||
Number of warrants, outstanding, beginning balance (in shares) | 64,482 | ||
Number of warrants, outstanding, ending balance (in shares) | 64,482 | 64,482 | |
Number of warrants, exercisable | 64,482 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Weighted Average Exercise Price [Roll Forward] | |||
Outstanding warrants, weighted average exercise price, beginning balance (in dollars per share) | $ 13.84 | ||
Outstanding warrants, weighted average exercise price, ending balance (in dollars per share) | 13.84 | $ 13.84 | |
Exercisable warrants, weighted average exercise price (in dollars per share) | $ 13.84 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | |||
Warrants outstanding, weighted average remaining contractual life | 6 months | 9 months 18 days | |
Exercisable warrants, weighted average remaining contractual life | 6 months | 9 months 18 days | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Intrinsic Value [Roll Forward] | |||
Outstanding warrants, intrinsic value, beginning balance | $ 473 | ||
Outstanding warrants, intrinsic value, ending balance | 0 | $ 473 | |
Exercisable warrants, intrinsic price | $ 0 | $ 473 | |
Options converted | 1,020 | ||
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares issued in period | 4,493 |
TEAM MEMBER BENEFIT PLAN (Detai
TEAM MEMBER BENEFIT PLAN (Details Textual) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Defined contribution plan, cost recognized | $ 0.3 | $ 0.3 |
First 3% Employee Compensation | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined contribution plan, employer matching contribution, percent of match | 100.00% | |
Defined contribution plan, employer matching contribution, percent of employees' gross pay | 3.00% | |
Next 2% Employee Compensation | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined contribution plan, employer matching contribution, percent of match | 50.00% | |
Defined contribution plan, employer matching contribution, percent of employees' gross pay | 2.00% |
BUSINESS SEGMENTS (Details Text
BUSINESS SEGMENTS (Details Textual) | 3 Months Ended |
Mar. 29, 2020segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
BUSINESS SEGMENTS (Reconciliati
BUSINESS SEGMENTS (Reconciliation of Revenue and Operating Income) (Details) - USD ($) | 3 Months Ended | ||
Mar. 29, 2020 | Mar. 31, 2019 | Dec. 29, 2019 | |
Segment Reporting Information [Line Items] | |||
Revenues | $ 74,067,429 | $ 68,776,067 | |
Depreciation | 227,271 | 202,426 | |
Amortization | 1,187,442 | 1,029,083 | |
Operating income | 2,657,394 | 3,586,708 | |
Capital expenditures | 1,049,673 | 341,464 | |
Total assets | 138,135,278 | $ 115,586,044 | |
Operating Segments | Real Estate | |||
Segment Reporting Information [Line Items] | |||
Revenues | 20,027,833 | 19,175,782 | |
Depreciation | 55,340 | 44,113 | |
Operating income | 3,039,274 | 2,819,711 | |
Capital expenditures | 25,724 | 10,661 | |
Total assets | 15,024,352 | 16,785,163 | |
Operating Segments | Professional | |||
Segment Reporting Information [Line Items] | |||
Revenues | 36,343,906 | 30,593,668 | |
Depreciation | 99,432 | 84,483 | |
Amortization | 1,180,834 | 1,022,805 | |
Operating income | 1,839,783 | 1,833,559 | |
Capital expenditures | 40,972 | 328,648 | |
Total assets | 96,523,696 | 72,623,242 | |
Operating Segments | Light Industrial | |||
Segment Reporting Information [Line Items] | |||
Revenues | 17,695,690 | 19,006,617 | |
Depreciation | 27,105 | 25,421 | |
Operating income | 1,097,098 | 1,202,991 | |
Capital expenditures | 0 | 2,155 | |
Total assets | 13,423,703 | 15,223,581 | |
Home office | |||
Segment Reporting Information [Line Items] | |||
Depreciation | 45,394 | 48,409 | |
Amortization | 6,608 | 6,278 | |
Capital expenditures | 982,977 | 0 | |
Total assets | 13,163,527 | $ 10,954,058 | |
Home office | Selling and Marketing Expense | |||
Segment Reporting Information [Line Items] | |||
Operating income | (92,662) | (132,428) | |
Home office | General and Administrative Expense | |||
Segment Reporting Information [Line Items] | |||
Operating income | $ (3,226,099) | $ (2,137,125) |
SUBSEQUENT EVENT - Narrative (D
SUBSEQUENT EVENT - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | May 05, 2020 | Mar. 29, 2020 | Mar. 31, 2019 | Apr. 06, 2020 | Feb. 03, 2020 |
Subsequent Event [Line Items] | |||||
Cash dividends declared per common share | $ 0.30 | $ 0.30 | |||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Dividends payable, date declared | May 5, 2020 | ||||
Cash dividends declared per common share | $ 0.05 | ||||
Dividends payable, date to be paid | May 27, 2020 | ||||
Dividends payable, date of record | May 20, 2020 | ||||
Term Loan | Senior Notes | BMO Harris Bank, N.A. | |||||
Subsequent Event [Line Items] | |||||
Long term debt | $ 18.5 | ||||
Term Loan | Senior Notes | BMO Harris Bank, N.A. | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Long term debt | $ 4 |