Re-baselined Costs to Align with Revenues, Generated Record Operating Cash Flow of $24 million

BGSF, Inc. (NYSE:BGSF), a leading provider of consulting, managed services, and professional workforce solutions, today reported financial results for the fourth fiscal quarter and fiscal year ended December 29, 2024.

Q4 2024 Highlights (results include sequential comparisons to Q3 2024):

Revenues were $64.4 million for Q4, compared to $71.2 million for Q3.
- Property Management segment revenues decreased 18.5% from Q3, primarily driven by seasonal demand.
- Professional segment revenues declined 3.0% from Q3, primarily due to a decline in billing days of approximately 5%.
Gross profit was $21.5 million, down from $24.3 million in Q3, primarily due to lower sales in Property Management.
Net loss was $1.0 million, or $0.10 per diluted share for Q4, compared to a net loss of $0.8 million in Q3 or $0.07 per diluted share.
Adjusted EBITDA¹was $1.4 million (2.2% of revenues) in Q4 compared to $3.4 million (4.8% of revenues) in Q3.
Adjusted EPS¹ was a loss of $0.06 for Q4, compared with Adjusted EPS¹ $0.14 for Q3.

SUMMARY OF FINANCIAL RESULTS (dollars in thousands) (unaudited)

		For the Thirteen Week Periods Ended
		December 29, 2024					December 31, 2023					September 29, 2024
Revenue:
	Property Management	$	24,306				$	29,624				$	29,824
	Professional		40,105					43,943					41,362
	Total	$	64,411				$	73,567				$	71,186

Gross profit / Gross profit percentage:
	Property Management	$	8,734		35.9	%	$	11,589		39.1	%	$	10,696		35.9	%
	Professional		12,732		31.7	%		13,858		31.5	%		13,633		33.0	%
	Total	$	21,466		33.3	%	$	25,447		34.6	%	$	24,329		34.2	%

Operating income		$	246				$	3,227				$	470
Net (loss) income		$	(981	)			$	999				$	(804	)
Net (loss) income per diluted share		$	(0.10	)			$	0.11				$	(0.07	)

Non-GAAP Financial Measures:
	Adjusted EBITDA¹	$	1,387				$	5,705				$	3,387
	Adjusted EBITDA Margin (% of revenue)¹		2.2	%				7.8	%				4.8	%
	Adjusted EPS¹	$	(0.06	)			$	0.40				$	0.14
	^{1 Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures as defined and reconciled below.}

Beth A. Garvey, Chair, President, and CEO, said, "Late in 2024, we implemented a significant cost restructuring plan to streamline operations and lower overhead with expense savings estimated to be between $7 to $9 million on an annual basis. We saw revenues stabilize as the year progressed and have seen similar trends in early 2025."

"While we have progressed with the Company's strategic review process, uncertainties in the demand environment persist, and we continue to expect this to be a 12- to 18-month process from our original May 2024 announcement."

Conference Call

BGSF will discuss its fourth quarter and full fiscal year 2024 financial results during a conference call and webcast at 9:00 a.m. ET on March 13, 2025. Interested participants may dial 1-844-481-3017 (Toll Free) or 1-412-317-1882 (International). A replay of the call will be available until March 20, 2025. To access the replay, please dial 1-877-344-7529 (Toll Free), or 1-412-317-0088 (International) and enter access code 3405111. The live webcast and archived replay are accessible from the investor relations section of the Company's website at https://investor.bgsf.com/events-and-presentations/default.aspx.

About BGSF

BGSF provides consulting, managed services and professional workforce solutions to a variety of industries through its various divisions in IT, Finance & Accounting, Managed Solutions, and Property Management. BGSF has integrated several regional and national brands achieving scalable growth. The Company was ranked by Staffing Industry Analysts as the 97^th largest U.S. staffing company and the 49^th largest IT staffing firm in 2024. The Company's disciplined acquisition philosophy, which builds value through both financial growth and the retention of unique and dedicated talent within BGSF's family of companies, has resulted in a seasoned management team with strong tenure and the ability to offer exceptional service to our field talent and client partners while building value for investors. For more information on the Company and its services, please visit its website at www.bgsf.com.

Forward-Looking Statements

The forward-looking statements in this press release are made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements regarding our future financial performance and the expectations and objectives of our board or management. The Company's actual results could differ materially from those indicated by the forward-looking statements because of various other risks and uncertainties, including, among other things, risks relating to volatility and uncertainty in the capital markets, availability of suitable third parties with which to conduct any strategic transaction, whether the Company will be able to pursue a strategic transaction, or whether any such transaction, if pursued, will be completed successfully and on attractive terms, or at all, the risks associated with undertaking a review of strategic alternatives, including in respect of relationships with stockholders, employees, customers, and suppliers, the risks associated with and the ultimate effects of the Company's cost restructuring plan, as well as risks and uncertainties listed in Item 1A of the Company's Annual Report on Form 10-K and in the Company's other filings and reports with the Securities and Exchange Commission. All of the risks and uncertainties are beyond the ability of the Company to control, and in many cases, the Company cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this press release, the words "allows," "anticipates," "believes," "plans," "expects," "estimates," "should," "would," "may," "might," "forward," "will," "intends," "continue," "outlook," "temporarily," "progressing," "prospects," and "anticipates" and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)

			December 29, 2024		December 31, 2023
ASSETS
Current assets
	Cash and cash equivalents		$	353	$	—
	Accounts receivable (net of allowance for credit losses of $1,133 and $554, respectively)			40,194		56,776
	Prepaid expenses			2,485		2,963
	Other current assets			2,315		7,172
		Total current assets		45,347		66,911

Property and equipment, net				1,137		1,217
Other assets
	Deposits			2,092		2,699
	Software as a service, net			4,438		5,026
	Deferred income taxes, net			8,456		7,271
	Right-of-use asset - operating leases			4,973		5,435
	Intangible assets, net			24,517		30,370
	Goodwill			59,151		59,588
		Total other assets		103,627		110,389
	Total assets		$	150,111	$	178,517

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
	Accounts payable		$	80	$	95
	Accrued payroll and expenses			13,001		14,902
	Line of credit (net of debt issuance costs of $128)			—		24,746
	Long-term debt, current portion (net of debt issuance costs of $24 and $0, respectively)			3,801		34,000
	Accrued interest			223		438
	Income taxes payable			212		282
	Contingent consideration, current portion			2,662		4,208
	Convertible note			4,368		4,368
	Lease liabilities, current portion			1,573		2,016
		Total current liabilities		25,920		85,055

Line of credit (net of debt issuance costs of $770)				5,625		—
Long-term debt, less current portion (net of debt issuance costs of $198)				32,527		—
Contingent consideration, less current portion				—		4,112
Lease liabilities, less current portion				3,770		3,814
		Total liabilities		67,842		92,981

Commitments and contingencies
Preferred stock, $0.01 par value per share, 500,000 shares authorized, -0- shares issued and outstanding				—		—
Common stock, $0.01 par value per share; 19,500,000 shares authorized, 11,038,623 and 10,887,509 shares issued and outstanding, respectively, net of treasury stock, at cost, of 3,930				53		52
Additional paid in capital				70,260		68,551
Retained earnings				11,956		16,933
		Total stockholders' equity		82,269		85,536
		Total liabilities and stockholders' equity	$	150,111	$	178,517

CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share and dividend amounts) For the Thirteen and Fifty-two Week Periods Ended December 29, 2024 and December 31, 2023

		Thirteen Weeks Ended						Fifty-two Weeks Ended
			2024			2023			2024			2023
Revenues		$	64,411		$	73,567		$	272,499		$	313,167
Cost of services			42,945			48,120			179,636			201,383
	Gross profit		21,466			25,447			92,863			111,784
Selling, general, and administrative expenses			20,784			20,175			85,333			88,650
Gain on contingent consideration			(1,452	)		—			(1,452	)		—
Impairment losses			—			—			—			22,545
Depreciation and amortization			1,888			2,045			7,769			7,774
	Operating income (loss)		246			3,227			1,213			(7,185	)
Interest expense, net			(1,403	)		(1,601	)		(4,921	)		(5,976	)
	(Loss) income before income taxes		(1,157	)		1,626			(3,708	)		(13,161	)
Income tax benefit (expense)			176			(627	)		370			2,938
	Net (loss) income	$	(981	)	$	999		$	(3,338	)	$	(10,223	)

Net (loss) income per share:
	Basic	$	(0.10	)	$	0.11		$	(0.31	)	$	(0.95	)
	Diluted	$	(0.10	)	$	0.11		$	(0.31	)	$	(0.95	)

Weighted-average shares outstanding:
	Basic		10,943			10,812			10,896			10,766
	Diluted		10,943			10,823			10,896			10,766

Cash dividends declared per common share		$	—		$	0.15		$	0.15		$	0.60

BUSINESS SEGMENTS (dollars in thousands)

		December 29, 2024
		Thirteen Weeks Ended										Fifty-two Weeks Ended
		Property Mgmt		Profes- sional		Home Office			Total			Property Mgmt		Profes- sional		Home Office			Total
Contract field talent		$	23,907	$	38,923	$	—		$	62,830		$	102,618	$	162,759	$	—		$	265,377
Contingent placements			399		1,182		—			1,581			1,784		5,338		—			7,122
	Revenue		24,306		40,105		—			64,411			104,402		168,097		—			272,499
Cost of services			15,572		27,373		—			42,945			66,033		113,603		—			179,636
	Gross profit		8,734		12,732		—			21,466			38,369		54,494		—			92,863
Selling, general, and administrative expenses			5,929		10,248		4,607			20,784			24,693		42,432		18,208			85,333
Gain on contingent consideration			—		—		(1,452	)		(1,452	)		—		—		(1,452	)		(1,452	)
Depreciation and amortization			21		1,560		307			1,888			112		6,434		1,223			7,769
	Operating income (loss)		2,784		924		(3,462	)		246			13,564		5,628		(17,979	)		1,213
Interest expense, net			—		—		(1,403	)		(1,403	)		—		—		(4,921	)		(4,921	)
Income tax benefit from continuing operations			—		—		176			176			—		—		370			370
	Net income (loss)	$	2,784	$	924	$	(4,689	)	$	(981	)	$	13,564	$	5,628	$	(22,530	)	$	(3,338	)

		December 31, 2023
		Thirteen Weeks Ended										Fifty-two Weeks Ended
		Property Mgmt		Profes- sional		Home Office			Total			Property Mgmt		Profes- sional			Home Office			Total
Contract field talent		$	28,968	$	42,914	$	—		$	71,882		$	121,827	$	182,120		$	—		$	303,947
Contingent placements			656		1,029		—			1,685			3,250		5,970			—			9,220
	Revenue		29,624		43,943		—			73,567			125,077		188,090			—			313,167
Cost of services			18,035		30,085		—			48,120			75,292		126,091			—			201,383
	Gross profit		11,589		13,858		—			25,447			49,785		61,999			—			111,784
Selling, general, and administrative expenses			6,077		9,526		4,572			20,175			26,497		43,245			18,908			88,650
Impairment loss			—		—		—			—			—		22,545			—			22,545
Depreciation and amortization			33		1,706		306			2,045			133		6,461			1,180			7,774
	Operating income (loss)		5,479		2,626		(4,878	)		3,227			23,155		(10,252	)		(20,088	)		(7,185	)
Interest expense, net			—		—		(1,601	)		(1,601	)		—		—			(5,976	)		(5,976	)
Income tax (expense) benefit from continuing operations			—		—		(627	)		(627	)		—		—			2,938			2,938
	Net income (loss)	$	5,479	$	2,626	$	(7,106	)	$	999		$	23,155	$	(10,252	)	$	(23,126	)	$	(10,223	)

CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years ended December 29, 2024 and December 31, 2023

					2024			2023
Cash flows from operating activities
	Net loss			$	(3,338	)	$	(10,223	)
		Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation			345			446
		Amortization			7,424			7,328
		Impairment losses			—			22,545
		Loss on disposal of property and equipment			14			17
		Gain on contingent consideration			(1,452	)		—
		Amortization of debt issuance costs			425			199
		Interest expense on contingent consideration payable			44			740
		Provision for credit losses			2,066			798
		Share-based compensation			989			1,029
		Deferred income taxes, net of acquired deferred tax liability			(1,185	)		(5,075	)
		Net changes in operating assets and liabilities, net of effects of acquisitions:
			Accounts receivable		14,516			12,163
			Prepaid expenses and other current assets		5,164			(2,159	)
			Deposits		705			(83	)
			Software as a service		716			720
			Accounts payable		(14	)		(492	)
			Accrued payroll and expenses		(1,902	)		(7,426	)
			Accrued interest		(215	)		165
			Income taxes receivable and payable		103			729
			Other current liabilities		—			(1,000	)
			Operating leases		(26	)		(35	)
		Net cash provided by operating activities			24,379			20,386

Cash flows from investing activities
	Businesses acquired, net of cash acquired				—			(6,917	)
	Capital expenditures				(1,640	)		(2,597	)
		Net cash used in investing activities			(1,640	)		(9,514	)

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (in thousands) Years ended December 29, 2024 and December 31, 2023

				2024			2023
Cash flows from financing activities
	Net (payments) borrowing line of credit			(18,479	)		2,312
	Proceeds from issuance of long-term debt			4,250			—
	Principal payments on long-term debt			(1,700	)		(6,000	)
	Payments of dividends			(1,639	)		(6,507	)
	Issuance of ESPP shares			459			512
	Issuance of shares under the 2013 Long-Term Incentive Plan			262			(10	)
	Contingent consideration paid			(4,250	)		(1,110	)
	Payments of debt issuance costs			(1,289	)		(69	)
		Net cash used in continuing financing activities		(22,386	)		(10,872	)
Net change in cash and cash equivalents				353			—
Cash and cash equivalents, beginning of year				—			—
Cash and cash equivalents, end of year			$	353		$	—

Supplemental cash flow information:
	Cash paid for interest, net		$	4,475		$	4,668
	Cash paid for taxes, net of refunds		$	685		$	1,378

NON-GAAP FINANCIAL MEASURES

The financial results of BGSF, Inc. are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the rules of the U.S. Securities and Exchange Commission. To help the readers understand the Company's financial performance, the Company supplements its GAAP financial results with Adjusted EBITDA and Adjusted EPS.

A non-GAAP financial measure is a numerical measure of a company's financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows of a company. Adjusted EBITDA and Adjusted EPS are not measurements of financial performance under GAAP and should not be considered as alternatives to net income, net income per diluted share, operating income, or any other performance measure derived in accordance with GAAP, or as alternatives to cash flow from operating activities or measures of our liquidity. We believe that Adjusted EBITDA and Adjusted EPS are useful performance measures and are used by us to facilitate a comparison of our operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business than measures under GAAP can provide alone. In addition, the financial covenants in our credit agreement are based on EBITDA as defined in the credit agreement.

We define "Adjusted EBITDA" as earnings before interest expense, income taxes, depreciation and amortization expense, costs associated with the evaluation of potential strategic alternatives ("Strategic alternatives review"), transaction fees, software as a service costs, restructuring plan costs, and certain non-cash expenses such as impairment losses and share-based compensation expense, as well as certain specific events that management does not consider in assessing our on-going operating performance.

We define "Adjusted EPS" as diluted earnings per share eliminating amortization expense of intangible assets from acquisitions, the Strategic Alternatives Review, transaction fees, software as a service costs, restructuring plan costs, and certain non-cash expenses such as impairment losses, as well as certain specific events that management does not consider in assessing our on-going operating performance, net of the respective income tax effect.

Reconciliation of Net (Loss) Income to Adjusted EBITDA (dollars in thousands)

	Thirteen Weeks Ended						Fifty-two Weeks Ended						Thirteen Weeks Ended
	December 29, 2024			December 31, 2023			December 29, 2024			December 31, 2023			September 29, 2024
Net (loss) income	$	(981	)	$	999		$	(3,338	)	$	(10,223	)	$	(804	)
Income tax expense (benefit)		(176	)		627			(370	)		(2,938	)		52
Interest expense, net		1,403			1,601			4,921			5,976			1,222
Operating income (loss)		246			3,227			1,213			(7,185	)		470
Depreciation and amortization		1,888			2,045			7,769			7,774			1,893
Gain on contingent consideration		(1,452	)		—			(1,452	)		—			—
Impairment losses		—			—			—			22,545			—
Share-based compensation		201			184			989			1,029			317
Strategic alternatives review		88			—			962			—			526
Cost restructuring plan		230			—			230			—			—
Software as a service²		179			177			716			720			179
Transaction fees		7			72			48			975			2
Adjusted EBITDA	$	1,387		$	5,705		$	10,475		$	25,858		$	3,387
Adjusted EBITDA Margin (% of revenue)		2.2	%		7.8	%		3.8	%		8.3	%		4.8	%
^{2 The Company capitalizes direct costs incurred in cloud computing implementation costs from hosting arrangements, which are reported as a Software as a service and are expensed as incurred in selling, general and administrative expenses.}

Reconciliation of Net (Loss) Income EPS to Adjusted EPS

	Thirteen Weeks Ended					Fifty-two Weeks Ended						Thirteen Weeks Ended
	December 29, 2024			December 31, 2023		December 29, 2024			December 31, 2023			September 29, 2024
Net (loss) income per diluted share	$	(0.10	)	$	0.11	$	(0.31	)	$	(0.95	)	$	(0.07	)
Acquisition amortization		0.13			0.15		0.56			0.57			0.13
Gain on contingent consideration		(0.13	)		—		(0.13	)		—			—
Impairment losses (pre-tax)		—			—		—			2.09			—
Strategic alternatives review		0.01			—		0.09			—			0.05
Cost restructuring plan		0.02			—		0.02			—			—
Software as a service²		0.02			0.02		0.07			0.07			0.02
Transaction fees		—			0.01		—			0.09			—
Income tax (benefit) expense adjustment		(0.01	)		0.11		0.03			0.42			0.01
Adjusted EPS	$	(0.06	)	$	0.40	$	0.33		$	2.29		$	0.14
^{2 The Company capitalizes direct costs incurred in cloud computing implementation costs from hosting arrangements, which are reported as a Software as a service and are expensed as incurred in selling, general and administrative expenses.}

View source version on businesswire.com: https://www.businesswire.com/news/home/20250312709863/en/

Steven Hooser or Sandy Martin

Three Part Advisors

ir@bgstaffing.com 214.872.2710 or 214.616.2207

BGSF, Inc. Reports Fourth Quarter and Fiscal Year 2024 Financial Results