BGSF - Earnings call transcript Q2 2021

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Operator

Good afternoon, everyone, welcome to the BGSF, Inc.

Second Quarter 2021 Financial Results Conference Call.

As a reminder, this call is being recorded.

Now I will turn the call over to Hala Elsherbini, Investor Relations, to provide introductions and read the safe harbor statement. Please go ahead.

Hala Elsherbini

you earnings us results thank second discuss and XXXX quarter conference you, for to joining BGSF's Thank call.

the Chief Joining Beth me session. Officer. Hollenbach, a Garvey, are remarks, After Financial President and will on CEO and Q&A the be speakers' opening call there Dan

will XX today's noted, days company's Relations page. replay on being later today webcast live. recorded the As available and and is A call be archived for Investor

of only rebroadcast expressed with control. broadcast many or the done becomes and indicated company's including Laws certain made BGSF statements, annual covered of safe written portion the the Item today by Copyright of filings And obligation the on statement. company's and made by And which cannot of Exchange in These the statements company no the statements. by assumes on are forward-looking cases, and forward-looking results risks on the based statements the cause update harbor report materially are call. on This Form uncertainties are or the Commission. as of call with All predict safe because the permission. materially in this the publicly the uncertainties, the conference under forward-looking for listed Now Private Reform the will its any XX-Q and based XA those could any from company's The new of this from quarterly Securities company's could other these to Discussions XXXX. XX-K actual is assumptions those reports all and use provisions various beyond and may made Form differ company in BGSF indicated that date actual ability of and report differ by those available Litigation to if to uncertainties be and include are and of statements the in results Act harbor Securities the risks of forward-looking risks future. even information US

I'll management During condition which to and These the GAAP will call measures, results and financial financial related the are non-GAAP isolation with on in to should today's GAAP. in and financial posted as company's over of to be information believes substitute the of considered provided release website. in the be measures non-GAAP in measures superior measures call, operations. supplement GAAP Beth non-GAAP can comparable turn reference evaluating a accordance operating Garvey, to Beth? activities and to business or useful measures certain for earnings Reconciliations now trends management financial the most not calculated President are company's intended the directly CEO.

Beth Garvey

you, everyone today's and Thank call. for Hala, you joining thank to

be to it – the continues pandemic us we to behind professionally. COVID-XX much all for want affect As to personally and as us,

on the a We safety on serving our priorities With to while team the to have as have hybrid majority and will of and our maintaining ongoing said, our the office of that health teams of partners, members. key and talent our the pandemic. remain continue client highly returned focused monitor we basis, field

moving Now results. to on the

Second results and basis. XXXX of sequentially overall on quarter and both a first strong finished improved our year-over-year half

us are Our ongoing efforts our for driving positioning segments strategic business strategy and and growth restructuring continued across of improvement momentum profitability. all and

our HRIS, CRM project, including remaining applicant with road target system. tracking payroll, on still IT and are We map

engagement Thus here will some to of with revenues our stay. drive were virtual slow during return As but and we we a an connections are business, combined progressive ways quarter are doing engines. finish innovative real able with increase. continue see the estate. impressive Beginning we start better-than-expected client transformation to approach XX% hybrid with to in believe digital Results to to of delivery second and given our to the traditional climbs a sales the quarter and talent

and on retention the Estate is at cadence. reopenings unwind are steady talent half segment. second focus to forward the coming Several Our taking as of into market in place Real attraction backlog a this starts year,

our We are of markets to relaunches and a the normal bolster We intently regional and establishing focused and hub to strong our return placement to efforts. on in support XXXX. optimizing centralized collaboration a recruiting beginning anticipate

I hybrid as earlier, mentioned be restrictions overall process to on in COVID-XX shortages markets remainder labor and a and anticipate capturing teams manage pent-up in I we As focused lumpiness some basis office do year. the positive the of well as new are new but through demand. the on expect are as phase our this for

biggest Professional segment exceeded the highlight results. Our which and saw business business. a in targets. Infrastructure nice a We've to levels. benefits in with accounting cyber being our finance the pre-pandemic brands IT although the growth and and during slower is many Momentum group our six-month development brought has latest rebound our consulting our to towards Solutionz, continues tracking performed acquisition seen impact the pace which well our quarter, at

place we opportunities, pipeline and strategic cross-selling strong on New through customers. have executing taken a client are building and introductions services numerous managed

cross-selling lift quarter. Our solid one the ramp saw late wins We our in programs. and up nice strategic starts efforts a in our starting BGSF seeing and through contributions approach we customer to are cross-divisional from are

have we slow client partners However, return. been of several that have our still to

though drive labor the high in across are And We demand to continued we expect through resources demand to strong the and we show for quarter. segment. overall, industry-wide Flat within growth demand continue shortages. this areas seeing will industrial fourth strong all professional remains manage third continue even to and

by down. slowing optimistic see this softer strength to year, the the the significant online half typically to signs driven segment. shopping holiday momentum by are any in followed uplift year appears shopping, our shift a in not of primarily continued from and It first half the continues we we is full Although, numbers second about showing of

corporate initiatives, our responsibility community on progress particularly in good and training make to continue we leadership Lastly, work.

a training. completed leadership senior quarter, leaders the During all three-day inclusive successfully

next pillars identified into has our support and DEI council VIIBE the to steps of for remainder XXXX Our XXXX.

our addition, philanthropy about to of only a not continues utilized. to important recognition In teams build and our it seeing cloud these initiatives excited our employee well platform through team is across strong truly I'm strengthen and support being but and also around are the we lot culture, engagement communities us.

Dan. these will we diversified I to changing revenue As times, it key continues a continue be with over our navigate And rapidly differentiator BGSF. to that, for turn to model

Dan Hollenbach

second you, remarks XXXX; Thank we filed and I'll and Thank highlights. June ended today. for again for us key everyone. morning, financial you afternoon Form XX-Q joining good Beth quarter XX, the my on focus This our

of by estate. revenues QX tempered infrastructure $XX.X 'XX. up of compared to revenues, revenues from fees industrial down pandemic with million, reported higher in $XX.X to a professional recovers in were effects permanent the $XXX,XXX in this real QX offset quarter XX.X% $X from increased the of XX.X%, while professional. grew acquisition, of XX.X% placement also decline, helped slowly Light Momentum increase development and XX% million year. Second benefited significant a from million Most X.X% contribution Solutionz decline last notably, Higher as an and revenues

that up already QX This X.X%. estate rebound the full by impact of sequential Professional As the supported projects segment momentum labor place. were the until XX% was build with a not in we large, experience despite long-term increase challenges. we Sequentially, pandemic, in COVID 'XX, a from last QX did revenues real saw to due noted continuing quarter, with

we We some to increased the Professional are well. relaunches see come secure of real in recovery efforts to half could our perform continues to start online. work seeing XX.X%, second though hold as year, consulting volatility pandemic the and we take market talent as as IT group by estate, to during continue

which efforts a QX our XX.X% We and of success revenues year-to-date. are professional, quite see tremendous represented in pleased to XX.X% the of cross-selling in

year-to-date. As a in gross of QX XX.X% and represented efforts profit XX.X% percent cross-selling

last X.X%. was year, increased As consistent were with mentioned, but industrial light sequentially down revenues by This XX.X% XXXX. over

the quarter, profit year quarter. For $XX.X compared by increased a XX.X% ago to million, to gross

XX.X% increased the real profit revenue, and primarily Light As to increase and increased in a improved gross was addition benefited across profit revenues line XXX by our basis gross or with Solutionz. additional from by of compensation industrial SG&A of estate expenses slightly. million XX.X%, X.X% segment. slightly to $X.X and increased percent Momentum down Professional a due point

XX% for the and percent SG&A MD&A for last a revenue, of quarter SG&A the section XX-Q. is in expense was XX% year. versus included A QX As year-to-date the detail for our of of

income which XX% million per tax, was QX division. was $X.XX diluted was in or $X.X million a diluted in 'XX the or quarter of net consideration assets net the share quarter impairment ago. a compared adjustment an million $X.XX same last diluted Second of included note, million finance $X.X year net negative net tax, million share, intangible or and related and and quarter Adjusted 'XX in certain a included compared per of share contingent same share of diluted $X our of loss year. goodwill with EBITDA to Of or to $X.X $X.X QX per per million $X.X accounting $X.XX recognized

profit increased results. $XX.X by XX.X% to Higher Turning and margin X.X% year. to gross contributions increased $XXX.X versus to million last segment Revenues by to profit X% gross our contributed our gross six $XXX.X versus million million. improvement month 'XX to across Professional XX.X% in

adjusted as occupancy XX driven quarter related position acquisitions, fees. the as in discussed. for versus loss at was impacted $X.X the XXXX were the 'XX. or in and Leverage, 'XX 'XX. at remains was costs rate gross was XX diluted $X.XX six-month were in debt million, changed adjusted versus offset to end Both our software quarter million trailing and $X.X strong to for versus end. from $X Solutionz half the profit XX.X% times XX.X% at we by earnings the or XX-month million 'XX. $X.XX additional first a margins Our per in EBITDA incurred $X.XX effective impairment liquidity per higher by and strong. 'XX end $X.XX to $X.X of negative improved share transition at in of million per to the share by by increased compensation 'XX. of million and Momentum days tax revenues, lower DSO share was compared generated and 'XX EdgeRock costs. our X.X versus measured income days period EBITDA Net Overall, $X.X by in additional gain These Adjusted SG&A

pleased turn that at Beth our to to approved year. for remarks the of per remainder share. raising quarterly and I are will see call XX% outlook to the XXth $X.XX of consecutive the for Board closing general Directors We dividend, a back the now

Beth Garvey

with rise Thanks, to the how the entire to company occasion. I'm continues pleased execute Dan. and

efficiencies, with adapt quickly strategic to future realignment, environment. to able into growth strategies are changing and cost We business our areas bolster investments the and to our and We being of out the paying continue cross-selling to profitability. business manage of digital operating key and key attention thinking, our that and flexibility focus box on macro off

recovery activity We strong. are remained higher-margin light a and demands in professional in industrial estate, seeing real

On highly year. organic broker slow to the M&A front, but we landscape as M&A expect engaged right in activity continue increase, partners, seeking see acquisitions started our the the a growth. to to in valuations to second The augment half we the has our remained resurgence with of

one focus fit. positive each diversification outlook geographic strong are continued In is and demand, our new quickly changes units. seeing strategic accretive cultural each to into margin synergistic always, positive momentum are segment, complementary from As areas business and from or we to across our pent-up brand in high-growth and EBITDA our enhancement summary, of that impacts on our

for and said. the always call long-term hard dedication over all shareholder to thank operator in value. As like members turn our continued of that building team I'll questions. the I'd With for to work

Operator

you. Thank

question Please question-and-answer [Operator first the The ROTH session. from Capital. begin now ahead. Jeff will comes Instructions] Martin We from go

Jeff Martin

Dan. Good Hope afternoon well. Beth doing Thanks. and you're

Dan Hollenbach

Hey Jeff.

Beth Garvey

How you? Jeff. are Hey

Jeff Martin

there? markets And get quarter How I July reopening second and maybe could detail estate. reopening the many you a if sense of throughout through are those of markets market open? the various how I'm good. the terms total cadence maybe Thanks. some give around in many wanted remind of real us and of to within us

Beth Garvey

If that three have eight we had And XXXX commercial. we of XX multifamily markets today and six had paused you recall, the multifamily the in of commercial. reopened and

Jeff Martin

how Maybe baseball or Okay. in demand? inning And would to servicing demand, then with of percentage analogy? that in in how a you are far along basis respect we the characterize are what a pent-up we pent-up either unwinding

Beth Garvey

like do a would not not estate fan, I'm basketball. I I we so are we I'm want be sure. baseball where to but in not I Well, real know, say yet.

that we in think doing I segment. are well the very Professional

is of somewhat now are which increase their right in still think issues having positive. estate finding have I industrial talent. we a We mixed bag headcount is but a light real with super everybody seeing daily in

things there up we there. So, that happening are think

in things division to do face-forward. segment Estate seeing also And a starting as are reminder that are events We where Real the they very again. is

So, of they are of association sales events. And their the those arm is going are and -- being pick customer much in we to of very back part up. some seeing these to front

baseball So, I -- about if in we're it in put seventh made be it we know don't optimistic the that. I was But that to stretch yet. inning may to the we've

Jeff Martin

Okay. Thanks stab for at taking that. a

and that, nailed You that mean the anticipated to balance -- sources year lumpiness remedies exactly this lumpiness? it. by I referenced for what what you what you you in estate When of know the do real are but

Beth Garvey

salesperson getting get open a can of reminder opened. it there. going in to as these And markets market Part is also hiring how a in is quickly we be

can their feet to really be. days to things sometimes need them where to And XX get we get it to wet, moving take XX it

they on bit of part And come are resurgence the little in the back this a areas as hesitation well. So, of COVID it of depends with some how engaged. get then is quickly we Delta see to variant some we're other starting new seeing as it

just So, is kind sitting for like to that to we're of look what us. anticipate that's going lumpiness back

Jeff Martin

Sure, sure.

then anything particular strategically you're That makes And there light in the market sense. the well to is industrial? labor combat Okay. tightness with in doing

Beth Garvey

customers to be and some lot to on surveys a We of what need market they our a prices people. lot. what education. resources them doing doing for pay to moving do We're educating We're do of have the able

if increases beginning year to the back move. the example have For overall look I of the started pay really to

year-over-year up almost $X, July, are they they're by up in industrial light but For $X.

to in do what's really so on you you're to on customers jump offering and And what here's going that going of well as need be happening really and around want sign-on bonuses. competitive and educating you customers seeing here's some to if as our we're our

We start mark. customers the at a another bonuses they of couple bonus have are that as doing then and XX-day

competitive. so And clients to that lot is creativity but and information our a need education side, be lot they what feeding of a on side of on our it

Jeff Martin

terms that Okay, year year? good of And on got great. could you like then we've for of next technology this in but spend remind what a balance the think I sense us does look roadmap the the

Beth Garvey

a but about keep the Well, to get talking I think that we foundation. being roadmap was a with us roadmap,

I a for anticipate that be change our of So, lot of don't technology. what IT percentage there'll be in spend will

But in be debt think into we I of getting buckets. had us just tech be such live get technology fall that it to will go when we April technology with to done in And will our to well. different that as that where all done just behind where part that new the top be. we foundation we foundation we had bit to it we get the to get on need we those of then start of things. After get a building but little needed we're

or in kind differently I will we'll be -- still it So, whether that. in not of what think impact. same on the CapEx we're P&L or that a targeting have But in I buckets area of kind think be of fall

Jeff Martin

helpful. Thanks question. my taking That’s for

Beth Garvey

Sure.

Operator

Thank you. is Howard The Taglich next go from ahead. question Please Brothers. Halpern from

Howard Halpern

Congratulations on a quarter guys. great

Dan Hollenbach

Howard. Thanks,

Beth Garvey

Howard. Thanks,

Howard Halpern

being close subsidiaries. last or back that at in to at there you about openings two talked between you guess Has go X,XXX is -- reference, from eased I different quarter Could level? that the guess I still all, like that

Beth Garvey

as extended some been the come have has so But the But but would have multifamily, that the industrial we benefit it for to not lot the of in unemployment are industrial as much in it is we on little unemployment a down area. movement -- dropped -- we of in -- down drop helpful. it The bit like It's benefits seeing on in little that. side. seen light -- It's side. markets a

Howard Halpern

held going in guess cross-selling? be if acquisitions can about, services? some the of I And to momentum gross the And really margins bit professional were to Okay. forward attributable to solid. the quarter be Is that is together talk little able a in going that the you

Dan Hollenbach

Yeah.

So it It's slightly a in gross the helped part percent wonderful margin of by XXs. momentum. got up was upper

of business little The at million has which the portion bit. a in $X the helped a the that through XXX%. larger side professional also that firm flows being increase consulting higher margin So that of placements to in switch. contributes

than from we So division what real estate, heard down pricing while bit, was based it mix of more business yesterday a little the president. on a probably

Howard Halpern

see is you Okay. can talk we up how the continuing picking And sequentially. It's as program you obviously bit how do move that little a forward? about cross-selling But going?

Beth Garvey

of come the started we cross-sell in -- part think from has I it Howard XXXX.

we that those this was year lot right to and of due our had when cross-sell. to off do at divisionally, along think business of decided it sides. started X% I But kicked we cross a -- things different in to XXXX we've see

group. one So there several biggest that sale now didn't real out resources that of estate cross-divisional customers are And our on. we our of IT in has have going

So it our the it what -- was tossing division. we wanted about division when to targets about we be. professional the our really in talked past to professional the we've targets It

are wanted units understanding in I the F&A for business right the now. it divisions group. think the the it we a group that So of But to are -- we and set giving the we've together IT an we of haven't now doing group the working giving the consulting amazing new be, it And group it cyber lot job to or what one there's IT but seeing a to one momentum. each BGSF got target launch,

they're month the everybody just what organization. really an a once and they're doing and as together get talking experience presidents served about divisions it's in they eye-opening for to the who have and We talk

watch. been fun So to it's

Howard Halpern

-- technology about How April. leverage I that in much of along? cost helping guess you how that that is to going all much is we And as move getting talked foundation year? into help how next process is forward expenses that started And or

Dan Hollenbach

let's the help benefit… the is infrastructure, Howard, to -- in investing make how So it going sure

Howard Halpern

couple going infrastructure the as would further help road efficiencies cross-selling to that Is with down with years? and operating the we next get in the process help eventually of

Beth Garvey

Yeah.

here the know report me doing in we of kind of that heard we that I what's system. just all -- first meetings don't is and let started we XX-some in noise outs all you on -- but out -- we're So I people came if had when IT the and had happening

So to ATS. we But and across to do build with wide Salesforce is go organization our We're CRM back-office decided what to it's going the applicant tracking it for we're building our going open. system.

game-changer instead having will the where us able So where the sit, that. people to customers in many, be of segments visibility the three going many be That's consultants know a where everyone across to organization don't ways. are, different have into

So and you're hook we think somebody the system there let you I I says, customer, into if me know that working know somebody "Hey up". somebody goes see on-X I right?

they and time help then tighten will going far shorten the as lot get and actually the we and along, get that future. people the to to the that as build time we to the that processes a in build be have be ability And our efficiencies think then we able placed think So to significant we'll -- able speed will apply them. be time very That that's between efficiencies, for because to profitability. to that a faster will the we

Howard Halpern

Okay.

Okay great work. guys. Keep the up

Dan Hollenbach

Thank you.

Beth Garvey

you. Thank

Operator

Instructions] [Operator go next Global Brian you. question Kinstlinger Alliance Partners. Please from ahead. Thank from is Your

Brian Kinstlinger

Thanks you? are How taking my Dan. questions. for hi, Beth, Hi,

Dan Hollenbach

Brian. Hey,

Beth Garvey

Hi, Brian.

Brian Kinstlinger

But estate. better maybe joined in don't but trends answered. for like hope Sorry. late, in hiring, light I not professional have the so real I industrial much and gotten already so you it hit sounds I topics

improve look So the eases you you hiring as events be and do And real ball in will in your triggering professional -- Beth hiring think estate? trends? are you catalyst when the crystal think you to what that

Beth Garvey

a We're professional rate. sector lot of estate problem. and we've of Brian. it kind the as of just is identified real a light not think in And much having I having pay harder estate backward in that's real we're time industrial a

about really our king we're costs the that I it right near because So going the and are having pay away is looks. continue future. getting see to that something rates to in candidates don't to able drive customers educate right think they're up And very that on -- they're now. how that's I these just And

Brian Kinstlinger

they step towards estate Is So reluctant customer little higher more maybe it's going pay the might a maybe time they're that could little essentially once that will they President now convincing moratorium, that real to pay that and facing, a to Biden maybe a they're the given bit eases accept in, be and doesn't right? have which difficulties the given rate. the be but right afford bit might

Beth Garvey

it I our customers open think that are right all now. to

had not from when data. have We pushback give customers our we much them

what when hour and management it they're $XX to go So them say -- the to would a to and you have cost you costs ago, and maintenance tech now around more. tell you it that company go is $XX we hour and pay an an and here going a year

of again that end assistance So out keeping there that strings spend. an there's feel education as of the rental on moratorium been purse loosened was $X.X in billion there's $XX is goes it. getting be that we up but that. But that mind put And yes only there was some do to in that as far billion going it side

companies to So them the give there's that's still hitting a lot there, management not relief. these money out of

on So to you able back put I until variant. to they putting super about bullish if based were of it some it's fact break apartment in that, they think delta they're But going there that that pushing that the the tell to communities lifted yesterday itself, the think that it I of moratory there's don't -- as association now and were free. out the there off be starts that will yes -- has been talking is

moratorium packets. ends may be some the pockets there getting up placed So where

that. watching we're So

Brian Kinstlinger

And so doing to side we going it's is rates? how it kind Is they reset that? of it we benefits just mean, I should think unemployed to of more to And come that are that, for industrial end still take increased you light the the so pay is so used making how think as to their time expectations? much little? do then about about it? And

Beth Garvey

of heard know that's In I number the have gave if it part but rates our you year-over-year, the don't industrial up think in I But pay -- I July pay by up earlier. KPIs light went gone from rates itself, $X $X.XX. the $X.XX.

So we're And seeing in just big pushes then last job the those says pay increase. in $X just we just increase. goes a get we -- month client I next-door neighbor in right in them did and for is we the problem now and rates their people to get

And have hopping. a lot so we of

We they have hopping can. are because people around a that lot of

And company so -- $X.X more. one they'll change then get jobs at start they for they and

that So we are seeing a lot happening. of

So it's it. of just stay ahead to a matter of trying

Brian Kinstlinger

Yes.

all at know Lastly, if you staffing but it it about you -- obstacle you questions the firms other had as I talked I are. facing if don't on because obviously, are M&A. take same

can are they given you the a very And near-term very in environment? generally high, valuations then your about M&A? strategy the from So and or are current and thoughts valuation generally low private talk standpoint,

Dan Hollenbach

trailing we is saw of the discussions, numbers. plus or half so XX bit deals play in multiples remember and that our Word EBITDA year XX turn is deals street active and last we've seeing range of ago. ago a had $X sort more we on everybody's minus. should in three year little two months or partners be from a couple or M&A a over We've So seen a In million a are up as with activities. that QX QX rolled the about from We the off that QX.

Brian Kinstlinger

Okay. And point? your price is reluctancy that

Dan Hollenbach

No.

it's basket making a that that it's culturally Our add fulfills is our reluctancy needs; fit. to that customer that sure will the a product something

Beth Garvey

XX acquisitions. do don't there we XXX to seen standing deals think of some that a we've don't we were a go we XXXX, if year. haven't And those anything reluctance. in we and XXXX XXXX, I I we interesting. found between didn't had and -- And any back

it be so And has the right to deal. just

think I there's reluctancy. don't So a

that's that inspired it. intentional something we're us. very about just I really haven't seen think we And

Brian Kinstlinger

was all I Sorry though my that's better reluctancy the Thanks. didn’t questions. say chose could baseball my word. wrong but have words I

Beth Garvey

That’s curious. – That’s Thank you.

Beth Garvey

our conference any remarks. Beth, session. the Thank I now back you. to closing This does would like question-and-answer conclude over to turn for

Beth Garvey

Thank We to continued Thank appreciate appreciate in us November. our you you, quarter taking today join third healthy. to on support. you on and your look call you. results time the Rachel. our We forward Stay and updating

Operator

Thank conference for disconnect. now for may Thank and you. participating you you our This conclude does today.

BGSF (BGSF) 8 Aug 212021 Q2 Earnings call transcript