BGSF - Earnings call 3 2023

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Operator

Good morning, everyone, and welcome to the BGSF Inc. Fiscal 2023 Third Quarter Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

Now I would like to turn the call over to Sandy Martin, Three Part Advisors. Please go ahead.

Sandra Martin

you. Thank welcome XXXX and Conference Quarter the Call. to morning, Third BGSF Earnings Good the Beth Financial today and me call With on are Officer; John Chief and Garvey, Barnett, Chief Officer. Executive President Chair, there will After our prepared be Q&A session. a remarks,

may the on webcast the will As A harbor be Litigation which include safe archived the forward-looking replay and company page Relations based live. company's noted, statements, today is XXXX. Investor the later certain at of will by Private call Act Management's on in today's Reform under and the statements uncertainties, by assumptions are information Actual being made available today, of investor.bgsf.com. Today's results statements materially provisions are discussion Securities of Securities company company's forward-looking risks listed new becomes those of available the in made the no these as future. various those update differ the obligation including to from and publicly filings Commission. statements assumes if Exchange indicated even the with because and

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

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

Beth Garvey

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

the for third continued on performance Our initiatives. reflects long-term progress our quarter strategic

segments. Solutions our project to and value and profile. gross diversification to enhance goals company's and actions through revenues Management work through grow higher and both specialized in consolidated are and by Consulting continue margins organic inorganic and return Professional offerings Our Property

a in environment. the cloud performance the The consulting mainly believe as million. demand in pockets our grew this X% growth effects reflects progress our us toppy Management Our Professional good $XX.X clients in the X% that in of interest resulted X.X% of ERP-related segment continue diversification area. total of in segments and third segment of high by and in and We weakness revenues the across uncertainties Property despite of environment. rates end sales the that with XXXX of position quarter We well markets X to as well offerings economic create our industry the unique this

the is Our Consulting earlier the strategic segment years have added recently over our acquired investments from workforce acquisition early and us ago. benefits or offshore Professional technology to people, competencies. more years from given last in This and succeed in of than realizing stages and process year. solution capabilities X the Arroyo includes stability X The of capabilities this nearshore

includes projects full global capabilities, and includes suite of resources acquisitions has proposition. strengthened and solutions. our IT professional Our delivery added value customer in This services go-to-market AI with capabilities our solutions

With that, financial the detailed results. to I'll the turn call cover over John to

John Barnett

you, Thank everyone. morning, Beth, and good

Management quarter and Seasonal XXXX. the expansion translates apartment in revenue to This Property turnover, XX% demand of revenue the third growth division. compared quarters of quarter. in organic, and quarter $XX.X year This grew strength by Third growth third in X.X% The prior the X.X% from to Property up on revenues show XX.X% revenues million, all Management segment, grew total of the was top to cumulative last second over to to the continued quarter. advance continues make-ready X-year year. third

recent X%, Organic by acquisitions. Professional declined and quarterly versus year the increased Professional third in the revenues driven The prior quarter. by sales segment's by XX.X% quarter

primarily softness staff starts. technology difficult first that the prior year against related by implementation quarter and year's in year augmentation quarter tailwinds to up third comparisons was was going driving was macro prior aided in Sales sales by The up XX.X% quarter. placements this

have invested differentiated acquired our We and and solution pleased businesses to offer and offshore solutions. IT service that businesses, and finance we new in accounting capabilities are from higher-end these offerings from are benefiting nearshore and

on from expanded in XX.X% quarter was the permanent Management quarter XX.X% due but up third to Property were points prior and margins the year to quarter. relatively the a XX.X% up gross quarter. profit gross against to up from margins placements. low-margin Professional in prior tough XX.X% prior year lower to Management compared permanent continued flat acquired comps IT placement. sequential The year Property from placement XXX basis quarter margins businesses away basis The XX.X%, gross shift segment due was were the

quarter $XX.X flat $XXX,XXX. for million, essentially fees quarter. the to transaction expenses SG&A quarter third for the Nonrecurring were were compared the second

reported was revenue, and dollars or EBITDA the sequentially higher million EBITDA adjusted $X.X second X.X%. of expense than this quarter. of We lower diluted in quarter which or $X.X due per adjusted the per compared which share quarter $X.XX margin percentage $X.XX interest impact of was share to second primarily X.X% the million earnings adjusted for of of to was Third terms more quarter

on working efficiencies. focusing sheet, balance our managing prudently capital are We

pay continued to have debt. We down

the funded adjusted ratio to covenant trailing EBITDA debt forma bank debt offset reduction pro increased as of pro in did EBITDA. XX-month adjusted X.Xx from decline X.Xx not to forma in Our the

We credit are facility. in the process of refinancing our

investment, maintain returns annualized of yield We the our capital to capital our details and a strategy through participate disciplined in shareholders group that a the dividend to quarterly through banks paydown refinancing, get consistent X.X%. agreement to are working debt at includes an committed executed. cash allocation approach of approximately have and growth great we We to an

review or immediate to XXXX continue plans we acquisitions pipeline, for acquisition will have in the XXXX. no early we Although

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

Beth Garvey

this which changing prospects navigate a significant progress on on the the solutions John. includes the last and company's several you, through market we repositioning of platform. bullish growing over our strategic continue Thank years, consulting, Management based value Like most remain managed to dynamics Property year. We higher businesses, and manage

unique We the truly workforce space. are in solutions

and to value. higher cash stock the we industry, shareholder future in margins meaningful are with generation, believe for has and gross we leading down it's Although our positioned mostly traded line that flow better growth, long-term

last and still progress for significant positioned market that segments over to compared The and few new years and from plan by have million both addressable the believe planned We small expanded in U.S. well we significantly are the growth. In X.X we are Apartment have from the capacity this be added across profitable Management, we Property XXXX, Canada changes the apartments approximately and benefit with potential. growth. to built expects perspective to National Association industry penetration made

report, with and On leading we a Workday, the Gartner's partnered according technologies Oracle world's Professional are ERP SAP, includes Cloud to XXXX few. side, name to which the

other offshore high-value IT provide for building and AI accounting, solutions engineers managed also IT We valuable projects finance consulting, clients. and long-standing

build with in accelerated that business recent the sustainable continue decisions X growing shareholder plan a to value. an to continue Our company creates prudent years. transformational we workforce to solutions plan enduring segments build as most to We long-term strategic make

initiatives Looking focus despite to quarter, strategic on plan our flow. comps, expand continue improve We year into continuing cash our we difficult expect fourth somewhat. generate business, profitability to Professional to stabilize the to this segment and

proof, Our the believe are positions the more -- diverse not in businesses they cycles the typical to industry. markets segments we that others us recession compared down staffing and but be resistant to to

our segment expect For the Property XXXX, we the acquisitions. driven to our remainder Professional and normal Management in in seasonality see growth of by

progress diligence hard and team for I this in BGSF company's their plans, acquisition the supporting the work year. expansion entire want and profitability to thank integrations

is His fabric marked our passing and the so know Chairman that the his of that it sadness wanted a BGSF excellence person thinking to I to on President an company. this the helping a the Board, impact you is and leader was steadfast Baker. and leaving Allen life his by to knew Tuesday a commitment former I shape of share on indelible of a a show Finally, many with you for a success. passion who and of dedicated extends CEO, mark integrity over legacy forward great of Allen driving today. beyond industry him, I decade

go memorial dignitymemorial.com. the details For on to please service,

we for Dallas presenting on Ideas XX. the questions, Before I the will Southwest Conference in to November that wanted in mention be open we line

call I Operator, up open like would that, questions. With to the for

Operator

comes from [Operator first Jeff MKM. Martin Instructions] question The ROTH from

Jeff Martin

you're hear Wondered of not a sad deeper innovation Allen starts if I'm could the quarter over Baker. Professional that us or technology maybe of And being on segment? kind first you the happening. out, sense of is has now just the My into there on piece a to a give of the occurred large trends trend and that experiencing fourth pushed condolences little ERP of delayed consulting that. how How half dive and the progression quarter.

Beth Garvey

Jeff. Thanks,

nervous see really bit slower. in about which on be was we've X started pipe area a to it. on still being ERP the have Companies pull They little are activity months We to able the in pushed September, the to come those pretty do bit just first little starts all been much talking in, But was of a need helpful. quarter when things. to trigger year. of The

we hopeful are at little September that to quarter and a flat. translate in we better or bit life least into will into back So a October of activity the see fourth started

Jeff Martin

the those the could and year Horn. an progress acquired now the is X of Maybe how you've X Arroyo different even And versus update business then ago? ago changed some now X position business since much or with it Yes. What has Great. a than strategically years of businesses? was us you and you give

Beth Garvey

that do We've to through X the a be continue software. can for. able is the our would they to we offerings our strived we ability have pick Good make thing question. in the acquisitions to always say customers talked to somebody us that, asked sure have I that help past, have to to add we

need and of the the And acquisitions and we Horn help reporting has years. circle. us group you ability that from last that for teams, with all to which get finance strategic our to it piece to group. We I group to of accounting the to with make the for path encompasses a circle IT we think it helped don't Arroyo accounting selection the have of kind sure it, customize What many been from and do to break take do that that out X

ask that proved quarter who us and has that not to not have managed past the we didn't And We out that starting opportunities. had customers we to be talked nearshore/offshore considering with then if year in had in the that us. conversations were that. very did -- services over beneficial prove the any last about world, our for We've F&A

So aligned being organization teams able as those integrated X the cross-sell in efforts. and the to get sales those companies get in more

and those expect grow and keep make have but to to continue go us. all of to can revenues our with an We the offering business that increase actually won't outside customers

Jeff Martin

is it kind of but Professional, digits acquisitions, on driving from Maybe in Great. that then to Yes. looking, basis? core the double Because be up last you Professional a QX what give on an year, And sense year-over-year. Yes. organic. I'm for grew sequential improvement you you referenced us year-over-year a improvement of mainly expect the still

an does So it's it easier? necessarily little easy a get . but not comp,

John Barnett

Yes.

quarter, we'll of weeks to have you last our doing, fourth weeks do later. to couple sooner you're going comment. fourth quarter me a the and the which quarter, Sorry, One, have last in including to year will a last quarter things typical than did XX going year XX at are versus if year, comparison fourth in this everybody and of this fourth to be you're quarter. do -- We looking year

we're we comparable talk with I adjusting right? weak seeing fourth based for we're of that what and a prior So week quarter, our far. quarter year kind It's the when and we're what think the -- so on expectations or aligned expecting when extra about

how that has So for Professional sequential weeks did core We means level X our see seen stabilization, X, IT we we hate group. some core our And in September performance I on we looking right have been. now, at a group, we are say think seeing, that week off -- basis. to but daylight that

We that those quarter fourth is continue the going typical along same are to with seasonality. lines optimistic

we Property were go before had you seasonality, growth look if you general. very at back you'll So quarters. vacations last we that it's Management in in tough the segment, fourth aggressive that, because not see quarter. seasonality have second one, business, holidays the you the right, that more see as really little as and that and as what demand there you we in much, we But if And extra at the year. years, third is week have look hit a would do in market a our the to But in segment two, last X high Professional see

Jeff Martin

competition trends? talk on and Okay. basis wage seeing the I Could or worth in then one, And that And . seeing last rates wage noting? out other you're if are could. terms factors of to you you a or are increased competitively there what rate on any

John Barnett

I to there specific. there note don't would anything think be

Operator

from Our Brothers. Taglich Howard next comes question with Halpern

Howard Halpern

Congratulations guys for environment. a navigating tough

how open? regarding, is the forward terms offices I going many question And of locations? you First in or segment. the what's new And opening do guess, Property plan currently splitting have existing

Beth Garvey

XX point. down that this in P&L we're markets we that's Property But double always but cost it's say and -- that I sector the would up quickly, right the at believe I to at love open Management hit. would --

utilize. So up we the now always up manage teams to anticipate to we markets to markets costs sales as from the have us that not a you also lot territorial past. year. stress marketing opened the effectively really in to sure new than new larger we history, But we've these to able grow have those markets. we penetrate our can out been better mapping that that And been open know as going every that's prior able allow make tool they into force We new and we've

Howard Halpern

In be to terms potential terms guess, potential people will your customers? of, And -- who to in you terms complete deployed guess, is your that in going what request, are or how of I the I educating, customers' people that? of seeing finding

Beth Garvey

talent Finding this I past. think the be best as through strive that and problem of as talent, leader attract in do it big about a relationships. the had not talked But in we've we We a past. and the to been is

our a referral very organization. program And within big have we so

that tool. somebody for working So recruiting friends ask us, be have we our bring #X them found their along to and to is probably if

Howard Halpern

or it Okay. are And from of done projects you've has and maintenance year are the that in technology is sure just working there making any additional internal tightened everything now past you most just what on? Or X. up

Beth Garvey

As the MVP. live technologies we a with went reminder, on the

that that basics. to were wanted or disruptive gate to our all of consultants our they We make it -- out could the we and and So right pay sure we bill customers. wasn't

And into efficiency the so we have now it. moved of side

regards as in see we're getting implemented things to the up that actually more less starting well. and and into So to it and things efficiencies, cleaned move

Howard Halpern

Okay.

fourth should impact the quarter, P&L So we that we and -- on really should of some should the line. maybe but see next that year,

Beth Garvey

employee. a And Internally, of getting overhead We've I started track that. see X% already to think we we had the to contribution target by efficiencies.

last third But quarter happens see in mind that our highest quarter what going -- this We're is quarter. far, So in we've wait stabilizes. our it hit But see to revenue. keeping we've been that to thus pleased. to what in how December

Operator

next from Our MKH comes question George from Management. Melas

George Melas

congrats a general good environment. results which a is did in I you this tough and the very Beth John, question, have on rebranding.

that? do? now few think quarters the that a How have you ago. I already differently does do business quite manage you that you to enable And it's what

Beth Garvey

Great question, George. it. Thank you for asking

that ways had We quarter. what us order, XX of website the XX do the and So brands supply weeks, based that the we to different is directly we believe this to and have social the increase through to allows XX different all public at in that initiatives That on the able and presence our over off we've Centralizing few those had. do we allow that was last more able the be we this communicated at in we -- of platform able to be now done. allows it Xx triple reported second come to to did campaigns had be had -- us some change sometimes candidates. I having the it us orders out orders depending what of it an to before, our had BGSF, customers point attract in customers we platforms. to things to that because week to out report we targeted to come into the give to have in a we've have and

closely that to attraction the initiatives we So all very, new within track the about working platforms. very as and customer, the candidate well of the see are how as

George Melas

separate they at had . Clearly, Okay. P&L Professional a P&L. from can't do of if manage the reporting point, then from the that X segment? brands perspective, you these -- had And in remember sort How did. I you

John Barnett

we often, -- it. quite George, that's internally, acquisitions, earnout when there actually made attached was we're to right. an Traditionally,

keep -- a we so And P&L. separate internally, did we as it

Now different which acquisitions really with of finance kind than IT Arroyo, is business aside from view our traditional segments. that IT and what in right? accounting then We really is, and

looking and accounting performing both our and finance, in services that will services added how business have traditional part Horn we total IT that from managed really as start is becomes but bigger of and finance -- the internally, is also how to managed then Now traditional we will IT, specific IT, how business. at and is we a

George Melas

extremely Okay. That's It continued And it it a quarter seems What really sounds it seems like very doing so at it little like Management back momentum there. interesting. and was it's be Because it decelerating bit, track it's and best X there like Property Great. point, successful? your strong. on makes now was to well. and ever, seems really

Beth Garvey

they do really engaged during is the amazingly and decelerated COVID. things They industry. really that within team George, very, hard. an got Well, hit But great team, they very

a to is which Association. Year amongst for suppliers As of the NAA, the Supplier they all won National the Department reminder,

solutions they turns the job team So -- revenue. these whole. that into to they does customers, and our results it shines -- that in this making sure team offering relationship amazing is an business in and and bright a And are .

Operator

from Mike Brothers. question [Operator comes Taglich next Taglich Instructions] Our from

Michael Taglich

of as EBITDA my was already number? this and Allen questions answered. EBITDA if number beginning in guy. looking is What Arroyo it. If the put would X-month adjusted the obviously, I'm be, of acquisition been the have adjusted I condolences my on obviously, year, for Horn Most Again, at terrific of

John Barnett

separate don't EBITDA. answer. out way We down Yes, that's the the short it all to

Michael Taglich

or Okay. to for you offices the Beth, Estate division. over how so? money Opening do Real spend next year new expect much the

Beth Garvey

We're really in and are that's going doubling successful. the past, is in X-ish signs we've ended always we've We budgeted the down budget more. up be the larger then The territory process right to up opened now. early always on in markets. And maybe -- as this mapping doing super

we're keep we and probably Dallas And penetrate in salesperson the how idea that. we'd currently quarter do apartments person a of a be one when in. reminder, good able to markets Because we're there's better a like next to for that's as really So that can't question have have going in one mind, those here.

So with able this to take salespeople out more and these there higher touch territory mapping to be get we'll customers tool, value and have more often. several a

So and it going in started have that Houston launched to benefits we're from major direction that. we of little see think in We get bit movement on a to right the that. already

more I do as opening going to of we do be is think penetration sure year are. we that And a as So next fast markets successfully. better it's go into make bit that And we're it everybody's already can the offices we little the and to in. faster goal well that, the

Michael Taglich

is on if If that? opportunities is the If the office. you Or to X offices get what area, existing obviously, It's I are up had if on be a to the much staffing XX% thoughts which And be money an of right, cheaper versus don't will your want have to in you to market spending another correctly, guess out how feel were that? that -- XX%? open offices, going on growth up the there. open X, to hearing you initiatives, would be some you flesh I'm so better

Beth Garvey

brick-and-mortar. offices. no we sales open these -- We When of a none market, have person. there a are places it's No,

with There So this associated offices no all that. people. is is

we that. I'll be little whether matter just not to whether And later. it's salespeople, just manage markets and better from able that's But answer people we're perspective. a in, or it's it's just not like being right starting to now, I bit that markets that have So able hire are said, or really going to X the process that new existing through budget we're we do and what X of XX to about in a

Operator

session. our Garvey concludes for the This conference over like question-and-answer I to back turn Beth to remarks. any would closing

Beth Garvey

continued we Thanks Thank your today, you, and for your time appreciate support. Scott.

are forward great quarter As for available you and we always, fourth we results a to updating calls, in our day. look Have March. follow-up

Operator

attending The presentation. today's conference Thank has now concluded. you for

now You disconnect. may

BGSF (BGSF) 9 Nov 232023 Q3 Earnings call transcript