Earnings call transcript Q2 2023

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Operator

Good morning. Welcome to the BGSF Inc. Fiscal 2023 Second Quarter Financial Results Conference Call. All lines have been placed on mute to prevent any background noise.

As a reminder, this conference call is being recorded.

the over turn Three Sandy will Advisors. Part I conference to call Martin, Now, ahead. go please Sandy,

Sandy Martin

Thank and on Good Chief Officer. earnings are you. morning Garvey, Executive conference second BGSF Beth Barnett, call. quarter Officer; XXXX and With Chief President me Chair, the John today welcome call and to Financial the

prepared our be will session. question-and-answer After a there remarks,

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

on Reform certain forward-looking the include discussion XXXX. based BGSF of which Today's made statements, under assumptions are Safe the will by Private Act provisions Harbor Securities Litigation of

and results of Commission. made are those of various if from indicated these Management's listed no today differ uncertainties, as becomes because even and publicly and update Securities new statements those in including to forward-looking filings information Exchange Actual risks available company's may statements future. in obligation statements by company materially assumes the the the the the with

also Reconciliations financial management to press the certain evaluating and non-GAAP release. as should financial company's GAAP not operations information are to earnings financial are measures, useful today's to substitute. be be supplement results. reference in in condition intended During a which the non-GAAP related can of and measures GAAP the call, will These measures considered non-GAAP provided

I'll now turn the call over to Beth Garvey. Beth?

Beth Garvey

for quarter earnings second our discussion. Sandy, you, today for thank and us Thank joining you

profitability, and their growth and want revenue, operational in Our second tremendous I financial solid resulted supported quarter team XXXX that second our quarter. generation which flow and in initiatives. our meaningful results thank the on contributions the reflect cash to progress, progress higher BGSF for

over year X.X%. which adjusted versus of EPS approximately an of in revenue million EBITDA XX% last reported both the revenues Adjusted increases year's quarter, We represented reflected adjusted margin quarter. almost which $X.X of EBITDA increased million, to X% total $XX ago and

expectations. achieved exceeded that industry-wide Notwithstanding we met performed in and quarter, our the and last well results headlines headwinds or sector

We discuss a progress few moments. will initiatives operational in on our

of segment these and April of weeks included consulting market Arroyo Professional go December BGSF's of acquisitions last year, XX our delivery of acquired in year. strengthened value in proposition. to and added quarter weeks value XX high Both acquired Second businesses results to of this Horn Solutions Consulting

Arroyo global resources in demand current capabilities, The some which the geographic and best acquisition and adds the IT resources in also IT provides talent is of from clients from industry.

reducing typical capital is are extending of economic we that As spending delaying uncertainty, project times discretionary are and in seeing by or spend companies timelines.

seeing elongated On the also hiring we contract are cycles. side,

business transformation over today, benefiting ago. I we company we years that the believe at our from As strategic started are look of the five we

solutions. focused workforce end consulting, have IT consulting management building strategic real managed acquisitions services estate professional as and We specialized high property of solutions, been and well highly as through on

part at As margin the services with value manage BGSF of and our solutions. the the we of last acceleration positioned This and unique workforce believe industrial high to company transformation business professional to transform more a from I to transformation, to other year company strategic computing light managed lower sold specialized well that operationally migrations. us respond was important to than consulting cloud and growth our allowed this staffing us divestiture line business businesses. difficult

and the agile, work save more become to hybrid proven resilient. move have from respond cloud models home fast-tracked and projects and everyone's drive to innovation. to to pandemic to companies These allow to desire be to remarkably The and quickly money,

teams build our Also, software ERP systems practices the of our for implementations life clients. in cycle out important and support specialized project involve our that

differentiated consulting, secular that continue managed people company professional service higher-value well-positioned long-term to collaboration respond technologies higher-margin and offerings. the our believe We invest to will be and workforce in to continue our to and power services, of and trends, solutions driving

real On growing the offer multi-family estate we property industry apartment innovations market technology across management country. for training solutions state-of-the-art the valuable and side,

diversified our the strength and XXXX expect the half will like and our We strategic second markets of continue and of benefit to beyond. investments growth us in initiatives

touch the teams marketplace impacting pricing recent occupancy briefly are on unique how and on dynamics industry differences that themselves In winning rates. me property are offerings. Let regional are our seeing management, differentiating we with and and rental

the dynamics. positions States the Our against diversified market geographic United platform benefiting changing to hedge from across us footprint

turnovers. we addition, trend normal back are In apartment to seasonality seeing a on

out us across efforts rolled when competitive clients, to with gives that maintenance advantage our training we partnering surrounding a solutions innovation Our country. distinct our teams the toward technician and it especially to technology have comes our

allows tool offerings has expert services field training device. to example one technology solutions This from we're and to the just higher-value is in our mobile unique in apartment an their real-time how that personnel AI drive providing This maintenance to of marketplace. using clients component by solutions access the

in XXXX. delay Company to decisions On and discretionary making continued are has the the backdrop Professional or side, leaders evolve managed consulting projects. to near-term solutions defer

are not project cancellations. we However, seeing

that All well-positioned BGSF prepared of the remainder feel XXXX. and we said, is for

of add full from product offerings. both they to Arroyo provide ons especially as Horn additional our the additions and are We benefiting strategic value

name managed mentioned, continue and in top technologies few. and solution wide that specialties Workday, PeopleSoft, have importantly, we for solid SAP, we I migration to consulting just to As ERP a see enterprise and ServiceNow, cloud demand services include and resources

seeing shoring We AI demand are offshore near and and development projects related to for continued also assignments. software

improve cash offerings serve us generate operations. both give are our In our summary, and specialized our needs, clients' in from incremental value ready profitability, revenues, solutions initiatives which this continuing segments by flow year to and execute grow to confidence our higher to

the over that turn I'll to said, John. call With

John Barnett

morning and everyone. Beth, good you, Thank

weeks the for included quarter As Consulting. Beth of Arroyo stated, business second XX results

were up $XX.X million, from the quarter total revenues period. year Second prior X.X%

Arroyo Declining recent business, to these the continue demand was segment two core Consulting. augmentation. staff Professional the the services staffing Horn see and in has addition reported industry. we In The declines widely up for our demand consulting for across Solutions and Professional year-over-year XX.X% excluding acquisitions, due to of been

was of year-over-year while quarter segment year the in to seasonality first growth Growth the experienced against second slowed from the prior X.X% going management period. comps, X%, property quarter, up QX slowed of QX X. segment to X.X% tough typical growing this the XXXX versus compared year. The sequentially growth

of quarter seasonal Although first period increase sequential the for show the peak property short that the for third weeks quarter historically quarter a we management expect team. this

Professional expanded XXX prior margins basis grew profit quarter. to Second expanded XX% profit quarter XXX gross points perspective, year margins margins management gross basis XX.X%. to segment compared and points XXX to by a XX.X% points by basis From the gross segment to the property

Horn with Professional Arroyo profiles margin Professional than gross higher continues now to existing Solutions benefit the from the profit of business. and blend

for For gross believe segment. the at the margin management higher that we the property business, of sustainable the range end long-term that XX.X% is

SG&A $XX.X down ago, the primarily the and due Horn expenses Arroyo. of year million, to $XX.X for quarter were quarter's and million, from a from first addition up million the $X.X

As selling I Horn costs flow brings margins, growth believe that higher we expense. quarter, balanced through which against mentioned last SG&A higher should be

Transaction for $XXX,XXX Arroyo consulting the driven the were quarter complexity costs or by acquisition. deal international of the

non-GAAP trade the acquisition acquisition share costs. Our adjusted and exclude impairment for the name per and EBITDA earnings measures related charge, impact amortization, of fiscal year XXXX

of prior quarter. million Second XXX quarter the to year $X.X of revenue EBITDA strengthened from to basis adjusted X.X% points

resulting earnings recent was million even solid of $X.XX, the expense with diluted X.X% improvement share This adjusted We $X.X disclosed ago. of of in interest incremental from versus an year EPS, increase acquisitions. for a

to sheet addition prudently profitability, on expansion working balance working margin In sales been improving we a focus managing and on growth, have our efficiencies. with capital

first million from quarter. including X.X end quarter, receivables totaled accounts of the the the second versus million, acquisition XX.X the At of at $XX.X the million end Arroyo

to the continued pay EBITDA end times our leverage to of to of months trailing funded down times from X.X ratio forma XX last quarter. adjusted at have debt We debt and down X.X pro is

approach a We allocation investments continue disciplined that in debt, we to growth, cash announced quarterly the shareholders like one strategy returning to down to dividend includes maintain yesterday. through a and capital paying capital

investments Our we included XXXX. to in acquisitions industry, tabs activity growth and although plan immediate strategic plans in valuations continue our no in on have acquisitions keep to we and have for

call Beth. with to back turn like I And would that, the to

Beth Garvey

John. Thank you,

four for to turning XXXX. initiatives Now, strategic our

First, initiative BGSF. transition our to our implemented team rebranding the trade with names of many successfully

our this branded over added years, complexity, a customers. acquisitions completed milestone cost, seem these Although, of or to and potential we each not big for XX and may of different like XX important last our the total a company, confusion

media the our followers after year-over-year. week consolidation, social XXX.X% net One increased

over So through transitioning continue this very for we stakeholders will I'm moving clients, to believe this positively our forward. impact process. team proud our all and employees, our organization of successfully

services clients to market as our us benefit solutions we we scale of breadth our with segments. and in partners go BGSF this both of are seeing and Today, recognizing and and

ways. about all technology initiative, and The IT further small big leveraging second is platform our strategic in Process Improvement,

and do people reducing and allow mapping process recruiting with on focused our and our engaging to been from have customer-centric them clients. our to sales We tasks teams more and

leveraging we underway I'm pleased optimization also this that as well and employees, that earlier, are our customers, for with reduce candidates. reduce our friction mentioned for progress and are believe business mobile-first our tasks process we very As tools improvements on goals process well as year.

initiative services. is strategic shared third Our

delivery generating best activities. will our we We gain and allowing will process grow more are be and attendance efficiencies, focus process as revenue our meaningful focused to on leveraged improving These and teams developments and believe the our time continue to practice enhancements on expand improvements businesses.\

the M&A an pipeline well as valuations that in know the position we I update and Finally, our on provide industry. as routinely

with and in are are Arroyo at We to criteria, that deals that most well Horn were were fit the years, cultural or the our and Solutions deals capabilities strategically our over with right. over pipeline fit with Consulting. and transactions that strategic to We the acquisition Both plan our pleased already the meaning criteria. continue time including look recent cultivated

we proactively time. mentioned, John M&A as pursuing However, not at are this

some wrapping the with comments remainder year. up of the Now, regarding

are segments both they of industry. resistant that staffing business not do versus proof, segments While the our recession in believe are we recession other

We expect we the real large-scale normal estate to and continued our business other mostly to we lift in the for know when implementations seasonality of also economic expect not fog new cross-sell For prospects, will growth acquisitions. support. by XXXX, remainder but opportunities, professional work in demand we the and segments expect driven continue plan do and we'll and ERP

conditions continue and impact as We the the move year. we monitor to the economic markets in through will

Excellence of Year. recruiting the awarded I Award and Association, of delivering excited communities Supplier NAA, Apartment Finally, recognition staffing proud that for multifamily recognition for year. to Companies award Management team am the and extremely industry. the commitment the this the dedication National was for services to underscores high-value apartment innovative and and This or for I'm our XXXX Kelly distinguished and her solutions Division their share Property

out open in call like the Chicago we we will Investor line August Ideas to that be Conference the Before we presenting XXrd. for on would questions, Midwest

we'd love chat us, with If you'd meet to with like to come you.

I said, will to back that With operator. over the turn it

Operator

Thank ROTH Your Jeff question first go from you. Instructions] ahead. [Operator comes Martin, Capital. Jeff,

Jeff Martin

Beth John. Thanks. Good morning, and

done the range whether high you First platform of wanted and the the congratulations margin gains made is from years. a investment the sense to some that's you've mentioned function should of you at the of was NICs, get there and all, long-term know in from or also quarter, but of on margins the a Horn several were over I technology the throughout efficiency consistently that the real years? addition the gains estate Arroyo, margin past increased what more the be, something end

John Barnett

thanks. Yes,

trend. a Horn it's side, our everything. this it's from and Definitely quarter some gains coming professional and good those of But from addition certainly definitely together I of combination actually having our trend all the same at a Arroyo. time we're think of the on really and the actually things combination of

Jeff Martin

or Was placement track the the the Okay. quarter in last permanent high last months? the it in quarter to quarter? relative XX How did fairly the

John Barnett

with leave to They we thing we hiring. the positions in perm slowdown are open the longer. I think there's they go open And of competitors similar at you in the trends placement. of fog is look uncertainty It when this seeing, economy their seeing the are marketplace. kind delay, if in over industry, kind again, people first is

So XX%, what in anywhere down is XX% business. we've seen that

Jeff Martin

significant a is that because to margins is potentially. ask lift I reason The Okay.

in professional. the the of in have the in the of of delays size? if decline significant gains you you permits. Were uncertainty impressive. provide could any That's any the midst the little more wondered, So, kind detail of contract you visibility those Or timing? just Do have of those respect a a with margin to all in face economy? Beth in of fog the on

Beth Garvey

do resources have into been we have visibility hold. put on Sure, what the

to So just we month. decide they our they're have where delay lined people got they then a of many customers doing, and we've every up, it project have

just They're for any hearing to rest we're going these not how the hopeful that where pull they out. waiting They're year. it's everything anything. kind them, see from to trigger of And to this the very through so nobody's kind just change of canceling that things we're move being they're going cautious And as kind of of deals. shake on not be

Jeff Martin

give could real you the next year what plans Okay. And are a us the of then sense or expansion estate segment? for so over

Beth Garvey

things right about in now. that I'm we going real the all on estate very excited have

do and the of digits double outside mapping. been take able now and new Salesforce out are year ALN, we that efforts really be and were it's So territory to fact with consistently some grown the technology to go we rolling implemented able has that the to they've all just organic, allowed out we of and us last help take,

then here's out territories and are there are the be mapping figure this X,XXX it allows larger allow markets country the to And in now really system go Salesforce. Atlanta, properties a us having is in Houston out. to and to a have on matches take that taking to spell properties just our no than to our able that data to out like Dallas need types every start. you people of and try we property the bigger So And just we focus sales to

this defining shows if a and system to in it where So able white areas gone go focus bigger that it who in on be when tie to historically to us of take revenue we this can we those go to -- haven't customer, if allows to see, past. to in go lot move it so space, pocket, we're tell see, into a able spent we've somebody maybe they they the revenue

Jen So project, last a that. that Kelly of kind that super launched sure get know excited has who of we week, job positioned are up Roeder week. went have out And and the most [ph], about That I making really live good heads that to in done that. last

So in for us that's exciting an move management. property

Jeff Martin

right you fruition contracts you offshoring us I give of the after had purchased you a Great. in clients. And know with come interest sense some Are to inbound is Arroyo, there? then offshoring. how Maybe seeing initiative trending significant

Beth Garvey

And we in seeing the offshoring are And customers U.S. activity here out are it. of the in side starting slow. they're

three be your saying, shot But hey, it's what give in we see a people that your get people two door. feel us that's expansion Arroyo. once giving those us in the or are. the have for the And ground to they're departments on definitely in that So going of foot an capabilities to and kind departments, we we

exciting. leading through they Peters been with telling the made that services team. have Eric really Arroyo capabilities the of managed gone and and super are the sure And It's and and the story team

Jeff Martin

time. the for Thanks Great.

Beth Garvey

Thanks, Jeff.

Operator

[Operator Instructions]

Next Taglich Halpern, question please Howard, ahead. comes from Howard go Brothers.

Howard Halpern

quarter. Great Congratulations.

the In terms and terms of future of pipeline the for projects? cross-selling in that that two acquisitions, helped building type of how has

Beth Garvey

strategic Is we've ever something was acquisition of in know, you there basically us go of there managed out every is those team need? board. a Horn made has acquisition India the two has things. a and be that that has a given as effort our in, asked capability the to And solutions services customer both acquisitions, as really to for? And Howard, the the able we Solutions the it as to as really for abilities Well, that been well professional, market sales Colombia across side the strong and the acquisition, for sell of operations, a

team platforms get quickly. built been team and sales There's that has a excited think the that of of allowed got has landing And We've market of motivation pages has a to we've a the the that lot to that different out lot energy. really that marketing team. lot I

unfold. week So we're watch new acquisition, process, team the it building just to exciting has of and finding in super that the these the do especially ability every things Arroyo with But capability some its out. that we're to

Howard Halpern

within some wage And Have seen you that occur? abated? Okay. of real segment, the have the pressures estate

Beth Garvey

on inflation saw last I not are in think that we the segments both wage year. seeing we

is out it it lined that's is now. what right all and think kind I of

So not year. be it crazy seeing like we're was last it

Howard Halpern

Okay. see Are the any out more keys. quarter? round with just we this in did from transaction the a couple this to And more keys going forward then transaction acquisitions or going

John Barnett

expect would I very little.

still have through some Arroyo. related We're We of come items acquisition a through. working will of number legal to the

saw be As you through complex, quarter. it But significant Colombian can we won't entity as imagine, anywhere certainly quarter what it's fairly the or India. with and this the flow as last

Howard Halpern

Okay.

work. Keep guys. great the Okay, up

John Barnett

you. Thank

Operator

from Brothers. Next Taglich question Taglich ahead. comes Michael, please go from Michael

Michael Taglich

street. an tech excellent business. I to the congratulations about the going is to side. you've industry had help the beating of is fairly Terrific. quarter, Obviously, on a part acquisition, question Arroyo, small been on team think do Do you the outperforming you Beth which to tech and a the continue that?

Beth Garvey

do. definitely I

Arroyo that So the altogether. professional doors up division going segment that across to capabilities is the open IT team really

exciting that in So with team. very got works things are that the we've

Michael Taglich

All right.

I numbers, I that should now. a it's look like the that as think cushion the Now tech business will don't improved seeing we're synergies in you margins those if in but my and spend at the

Beth Garvey

Correct.

Michael Taglich

estate Good. Congratulations performance strong on there. real a

Beth Garvey

the right of you. Super Thank now. proud teams

Michael Taglich

doing They're much. Thank very great job. you a

quarters. a more Looking great couple forward to

Beth Garvey

Thank you.

Operator

ahead. turn closing call Beth over now remarks. Beth, back to Garvey the will please I for go

Beth Garvey

thank time you We for always, As appreciate your continued your today. support.

for As calls. always, follow-up we're available

out advisors, in when you November. quarter with detail. If you our report Otherwise, we'd like -- will third a we would more Have after we to talk in happy to be work day. the to great chat report we

Operator

Ladies you concludes so now for you much call. today's gentlemen, Thank that disconnect. may and and joining,

BGSF (BGSF) 10 Aug 232023 Q2 Earnings call transcript