BGSF (BGSF) 6 Nov 222022 Q3 Earnings call transcript

Good morning, everyone. Welcome to BGSF Inc.

Third Quarter Fiscal 2022 Financial Results Conference Call. My name is Bailey, and I'll be the moderator for today's call. [Operator Instructions] As a reminder, this conference call is being recorded.

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

good Welcome Officer. Q&A on morning, third and Dan be President you, Thank everyone. a Officer; Executive prepared earnings are Garvey, and call. remarks, and today will Chief quarter Chief to conference With our call session. me Financial the Hollenbach, Beth Chair, After XXXX BGSF the there

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

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

year-over-year. to earnings am XX.X% XXXX record continued $XX.X all momentum the thank BGSF revenues reported for and up in quarter third for through the pleased quarter Sandy, of call. XXXX that joining third million, the We half experienced we you, quarter. third the first you I report totaling Thank

with and revenues the of business accounted in selection Our side with Professional continuing XX% notable investments implementations. IT on strength ERP segment consolidated for primarily migration, cloud

in growth areas. experienced consulting also managed our and services We

Our accounted and expand Real XX% Estate segment of continues revenues. to for

are that or desirable housing and deciding for communities contributed ringing are last no multifamily industry to apartments housing across are option. estimate demand needed U.S. the we in we Apartment long-term are solution the underbuilt pandemic Council and is strong apartment Alternatively, last recognize housing significantly is years. industry apartments homes exists, by homes that single-family leadership These strong North build-to-rent Housing by the tailwinds Association apartments, the As demographic in due XXXX, been choosing shifts. live National XXX,XXX in primarily is National also People new to and quarter, transitional over We have are the seeing X.X of U.S. further housing. has in build-to-rent longer all in units Multifamily demand and BGSF's single-family are multifamily communities market long-term million discussed the today America. that for and today estimated accelerating couple categories that position a the to It pent-up and people multifamily ages which underbuilt

estate including real year, into our in this recent the key snow Our markets Canada. focused opening is across division six U.S., expansion strategically

and of that activity this delivering detail with spending call to and unique strong markets I'll of see unseasonably the plans comments current for results wrap needs, BGSF this that our future through turn With strategic call Last real coupled changing by landlord Dan? financial the fourth the then lockdowns, during quarter Finally, think walk up initiatives like I'd said, We for driven performance tougher and creates we for was on us recall customer started we experienced M&A. to in over year's our QX Dan year. some for again. that more strength demand segment with in XXXX. the to how COVID workforce comparisons estate quarter, solutions pent-up in

the Based are and from sale this operations our of results year Beth, morning, financial discussed on and discontinued today year, where Industrial you, our Thank this and for last continuing segment except exclude good everyone. operations noted, year.

relatively discussed, professional Beth segment, compared XX.X% XX.X% yet revenue the the Wage increased increased strong As million $XX.X XX% flat grew XX.X%. continued into by with momentum third year, have and estate million $XX rates to real up quarter been Q-over-Q. through to

year-over-year professional revenues segments grew segment XX% sequential showed revenue between revenues growth Solutions. X%. QX. estate was to by both strong addition improvements, Momentum growth in In double-digit The segment increased Real professional IT and growth QX impacted and and

pod continue to as expect as selection ERP demand migration, customizations. for well implementation solid and We

we Beth both digital modernization will enterprise As mentioned, these and and investments believe work transformation business are continue. strong areas in

February grew in growing spread out to Solutions Although year increased professional Momentum business to of million, compared both primarily Gross and of our due growth prior but had 'XX. managed services expansion acquisition XX% strong component segments. the small are in this in growing a of profit quarter, by $XX segment, a an the which increased XX% Q-over-Q, to we revenue

$X.X selling, As growth. and points favorably which improved late increased revenue. of basis a XX which profit million points percent our of basis increased continued XX% revenue, or compared gross to administrative XX.X%. operating total in by Positive general XX.X%, dollars to leverage SG&A XXX to expenses, revenue

$X.XX EBITDA $X.XX diluted of revenues for $X of revenues income to or contingent net million to X.X% net ops income compared was $X.X income compared 'XX $X.X XX.X% in a was or in a 'XX. a from of $XXX,XXX net impact per QX or million from or quarter year Adjusted million ago. on share Third Included diluted gain continuing share consideration. $X.X million per was

work earlier returns EBITDA this report divestiture to towards We the are to we excited year. our the XX.X% strategy adjusted enhance quarter after this as margin

rate compared XX.X% effective to QX for quarter. Our XX.X% third year's last was 'XX in

up gross million, while XX%. XX.X% were profit was $XXX.X up million, results. Revenues Turning to $XX.X year-to-date

points Included increased $X.XX million continuing contingent to or basis 'XX Our operations Adjusted per first XXX 'XX was income operating million continuing totaled profit XX.X% million for to last. diluted leverage XXX period. from basis while per or Net diluted for continuing operations $XX.X share the million SG&A on of last $X.X operations was XX.X%, XX.X% by compared from last from a tax compared EBITDA $X X.X% improved this consideration. to year revenue effective gain or impact compared net share compared year. revenue year-to-date $X.X income nine million months’ $X.X a to gross points $X.XX in was or from X.X% year. to The percent of

to X.XX a strong we and position continue one and Regarding improved liquidity strengthened day by capital Days year-end, sales balance on working sheet. to continuing $X.X cash the position, strength maintain from our in company's X.XX first operation ratio through outstanding financial at used of used the the year-end. to months, in business, activities we net nine more in working our million. Based which resulted grow, capital from

We of continued Directors quarterly continue to of our maintain share consecutive September trailing funded strategic of operations X.Xx a approved per to months conservative dividend of Silos the EBITDA of leverage from debt management our balance provide support appreciation. as our I XX adjusted of call shareholders Board in $X.XX XXnd operations, value payment and Beth. initiatives. the date. ratio to and financial invest ample that future cash now stock acquisitions and allocation growth back while strategic fund through dividends continue make to capital will flexibility believe for our We strategy turn prudent to will to returning sheet

Dan. you, Thank

we've That think time strategic Our pressures to people how relationships been teams win is BGSS view as are we solutions market our both and share energized best customers. real creates recessionary long-term our unique able and inflationary market the and with and meaningful customers and to professional creative both box changing and outside empowers and enable around programs provide create for our our dynamics, BGSF workforce. our pandemics model to differentiators segments. the estate to leaders

training almost the well we BGSF learn to advancing the coupled leasing with field our loyalty more new retention with both side modules, allow for job high, are With and existing the estate reskill services or office and for lows, real with record to estate with has training also These flywheel creates staff We candidates property and degrees and placement specialized real clients the other change and more both This This to our likely a game. and is or openings managed experts experiences for either platforms college side, important the at build on using at associates. we've the at perm highly-skilled those rate, and are diverse unemployment new unemployment They rates on or maintenance upscale decided work business services, robust developing new people effect personnel By especially to customers training for proven and Workday on pool. very our for X.X% with or tomorrow. platforms because to Oracle specialization. offer hire professional U.S. future professional training talent. a talent BGSF consulting workers skilled their segment Sandbox all-time important today techs, projects us. a or

Although have past recessionary cycles. execute we are managing proven not continued markets excellence our in through to of we a and to amending down record pressures, track with have

of estate business our many headwinds, cyclical from the we different Light segments, makes in real and events operate give In our in divestiture professional businesses events which important projects. us business The North from addition, to and likely less migrations today are Industrial vulnerable that America benefit specialization ERP unprecedented or those and not times us corporate cloud introduced confidence IT pandemic pull to the to response to investments for on environments. customers

believe closer we For and strong continue words partnerships. technology, more what with to fiber the be business benefit our get real trends, XXXX, prospects few in estate and softened to will we housing growth greatly people, reputation, to we M&A and remain business client driven the flow experienced, continues partnerships. client is and our from by have we about strength valuations our work. GSS that concerning optimistic Deal somewhat. be as believe A our have that We coupled prevailing segment model recession-resistant will

the we North concludes both our prepared that America evaluation to that for culture. business continue and we strongly acquisitions, technologies of globally. for said, bolt-on strategic fit and the our on our looking remains focus With remarks actively and could quarter. and customers seek that Also, Our third few for transactions a are in

the will questions. call now open We Operator? for

the Howard Please Brothers. line comes first The ahead. of today from Halpern Instructions] go Taglich from [Operator question

Your line is now open.

congratulations. year you. Great great quarter, so far. And Thank

Howard. Thanks,

level, estate. what seen really question the margin guess, in regards is I history. First XX% And in gross above to, its real that we've the time first drove that

Yes.

So customers it's the to of maintain third a year, little tough but that volume help spread working, Normally, that that's to normally did bit have the people and on this better to their they quarter, support we're through to pay highest a interesting tend in that pressure enough, our because able much keep pass and job and increase. managing to cost of that

that? volume Is that again, to fluctuate to going that on you're have you something Okay. that going to going forward? Or able maintain depending it's the be

Howard, relationships we that's strategic I that with another hire. along what there's direct have comes right with piece of that the that we've from Dan fact said, and some and got think now

So now, we that And based have of we up it for like don't think feel the activity on will to us right margin. we tire now. pipeline direct right also reason push the can't maintain a not there's

revenue Q Q. perm Their doubled -over- almost

Thanks. yes. So

offices new laid of is there many next what were a or far a offices going know number or plan you you you've -- heading said of have out, hint so year? opened split And to have how into and you you're I offices

doing in process the budgets our right of now. We're

new identifying for future. we're So the opportunities

it's be openings me -- that's office let just there that there's answer think we're because definitely haven't -- be that definitely of nailed in. expansion complete. early that to me I kind in markets the So some would for will We

developing talked you developed begin Has begun? a because in you pool. is Or to and an that And announced essentially inner the about process that certain Okay. actually at partnerships talent interplay being your of your point?

to found we throughout It with are successful. And our has Interplay the finished begun. to now working just that pilot it be program. expand We We markets.

right. thought developing partnerships? you'll able believe process to you the do was And in And -- I Okay. guess all that be these

Howard, of what I'm out. missed sorry, you you said. cut We half

Sorry.

forward going close. mean, the With have the driving that play that to to basically about in the in. once the this you're you those guess, the pool I that in employees are mean forward the new talent correct? and Obviously, deficit segment you're get talent if it's begins to pool, I -- to for. you thinking maintain -- housing housing partnerships I developing have That's it's the ever what deficit is ex for all

shortage the for painful is -- in It workforce that's is. And were we something the right now everybody.

time back aggressively we either and strategically wait and we out be so of can we aggressively or it get for everybody move we to sit decided spend hopefully So reskilling moving forward else and better and to can like forward, really really are people. upskilling lot figuring start a we've

only So ourselves for workers we're who people their creating our customers we we're our well. helping well, with a can customers, their end not helping group place of as up work upscale as

last Okay. professional one services. just on one And

robust a and projects seeing of opportunities from maintaining You're pipeline customers for that about? you cross-selling your some talked the previously still

Absolutely. We call and as the in added quarter company signed history contracts we the company. third in more more which new a of than logos,

work. up the keep guys, great Okay,

Kinstlinger Alliance today The Global of you. go Partners. from Thank line the next question Brian Please ahead. comes from

Your is line open. now

for question. thanks And taking Good my morning. Nice quarter.

IT are pressured pressuring budgets a of didn't the are is from progress I has First, therefore, many not and other in than many in only recessionary the slowdown real The area on--Just budgets growth you're to companies digital services immune pressures. are about hear being you, been transformation. delayed. IT of comments of such talking services strength sorry,

pipeline, in whether touch changes trends? any and you're you experiencing So the sales those of on can cycles

we are a experiencing not slowdown. now, Right

I bit hire. think a area we little only the in might have is direct

I think other that. decision But a feeling many the works we're the we a are little RFPs And still make in bit customers the it. now. right have longer some all on areas in are business, taking our that of not to of

they on can talk then I impacted? the during about impacted are have are And And recessionary staffing IT How side. spreads you how being hear. they they historically to periods. been guess, Great

direction And service which were managed addition from our Solutions, help model Momentum we customers type Well, XX%, whole shift product in project a strategic the the the Q-over-Q spreads professional roles. up with to type the our side to lower because more primarily roles through of is of where consulting phase.

that the rate shift driver of Fila So spread increase dramatically. as is that's as model. well It consulting a been a up average bill towards

last Great. touched My on M&A. question is, you

do of next office of so on bit -- you do on role openings possibly expect touched think you offices year, Just Thank be about will not, you pressure up? lesions early a time expand frame M&A there in ahead open also want or open play those as strategic margins each little you of openings those. of in business? You office much. a how to in if where you Will that the

On we're the M&A the side on focused where side. professional

does opening the did that's M&A it focus estate seen the deals. that's probably robust about XXX a So that. the -- we We're on impact -- on have of real side have -- is territories pipeline. we or offices where because have

you market, interested continue a for really of talk will, Beth adding when remain we model. We a mentioned before, about growth part on to those. M&A or a new salesperson. be estate, think And if couple calls we to when territory as in Yes. of fully ongoing our a new I opened And expect a has real

anything no X- is period working get or on like can quick. XX people brick-and-mortar that X-month in that. And generally, or a So XX pretty you the and there's to return

Thank Understood. so much. you

Thank you. today line Martin Capital Partners. The the ahead. go from next from of comes question Jeff Please ROTH

now Your line open. is

your to I indicators some maybe Thank you. and is one those could things. openings maybe time give fill sorts imagine IT road fill key performance and Dan. was would and those discussion technology relating Good morning some I you some of to versus map. hoping, us rates Beth of Beth, investment

to if seeing. you growth what you're you're nice that's curious and contributing the think Just that experiencing

lot we'll seeing efficiencies, start and due technology as efficiencies we past, the I seeing really in whole the to we're that quarter. said the I've going major think first the don't of into think a

moving that I professional efficiencies how we However, the will group say quickly are was things they seeing in the process. get can in

more year doing with they a they're were than So people revenue less ago.

by in what still then the of June. be right really live to are have we of be to the we we're we the we We're And what lot do think the to a projections point, just of robust plan to fill, so in the should efficiencies. so the doing a able KPIs And fill be see us, we in to of we really percentage we went KPI can end kind which pretty -- and dashboard hoping lot that's where we now do your building some -- and Remembering is pipeline care whatever will in able to getting are close But quickly we care, future. going ratios, we'll hyper are. at a that out more still Thanksgiving. do kick able out come deal, funnel, saying positive. But feel that hyper we time from financial to the sales give be what's the how growth to projections we're

was Okay. I the go extended that to period people of on does time? duration, side, on increase are that then put segment assignment seeing the longer, work better curious you're projects the Great. And being a professional if of for visibility

we several their have -- people are their do or long-term outsourced We whole department have whole where us. that -- project to customers IT they've were

is rest working what the range X- or are the to projects depending implementation in probably running on X-month and them So project still on. the of we're

we So always have. we're still running way about the

segment Okay. if I Great. and labor and massive cybersecurity. cybersecurity, anything if was focus you for forward? now going for probably the years cybersecurity a come. that's last many you're strategically And be in then to going hot on curious just market shortage question that's to a in in doing There's a

data are security of We a working are. our that security within We folks divisions. that have are folks do lot

of how being to going much SAP, you're It it. it working be of really providing much business what is doing is or the a customers. is able and filling technology something those our -- in or It something that to things of everybody that to on able teams in our is we'll about. do Workday -- have job of to Oracle is separate or is constantly right. so are Service we're the get Now good definitely out we It in our talks other resources One how start

for It our side on well, wish Yes. on Jeff. is It's M&A as on list the our wish --

certainly consulting the on the side. So who as our to partners M&A find the on company are to cyber-company-- love we that's there a out talk we market side, broker would in --

Great. And if I real I more you about market in to With was one of opportunity Great. in relative Canada. think then could. how longer-term for entry the just market? estate that curious U.S. terms

about the going beneficial out see we indicators optimistic Toronto looking And and are pretty us. for other to We're provinces Canada. area, that all we're start should at pans how it be before in

Great. Thanks for questions. taking the

Thank you.

go Please final Our line Geller of Bruce from from comes question Ventures. ahead. today Geller the

Your line now is open.

on morning, good to Hi, earnings guys. related the a have the Congratulations progress. M&A question I impressive discussion.

is multiples or You intention the is little getting inflation job how Fed's to curious that reasonable, I'm mentioned stated adjust that earnings order for control. under But bit clearly market in favorable. get the fact address which are you a more to weaken the

at that of multiples Fed. trailing weakening is on based with looking valuations of maybe the inflated again which job So you're since that market a are the or at said, some of clear intent a risk earnings,

that adjust acquisition? evaluating a you for potential do how So in

into deal, we XX there. and look due try that, an the last spent to lot the certainly we if I of we still out active ensure jobs numbers. million -- do at a we validity are saw, of Well, time certainly, and on number open in get go diligence There the and understand

million you by if X that even XX%, there's cut jobs. back So still

that side, there of -- it's and X%. higher-end sort is accounting, XX% in, Unemployment revenue, we IT of work consulting world particularly less than in So the

still So find we've it's seen Beth continuing, as hard demand resources. and mentioned, to

have. they've nine more raising than or still rates So been signing to we months we're for six logos and ever now months,

effect. yesterday, mean, that don't a see the because, I based in on to be again, they're it and in that's stated the until Fed turns clearly their very to you stop earnings acquisition mission hindsight I long that. not going appreciate great. job I lag want make just weakens an a situation to Yes, market there peak is out where

rates now, stay assume So is that to even I the bunch strong. they've raised that think way still though can to don't it's a we indefinitely. going market

paying So something earnings. for I guess based my on peak concern would be

how And just understand model. wanted adjust your that to for so I in acquisition you

look at based and we're of see. sure certainly we it We'll to a a on lot spend time the what price pipeline potential we target. be about what talking believe And with we paying make fair that a

you. Thank

have else? Bailey, anybody do we

do some questions. have We more

Here we go.

today from go Please Next comes the line [Darrell question of Davis]. ahead.

Your open. line now is

Beth. and Dan morning, Good

a that be This last backward-looking So I'm question was forward-looking really The question. to to is going last on dovetail question. question. going a

months. industrial the at multiple some sale there, changed you marketplace the light early past look this you has multiples around year the the garnered over If and eight certainly

You market to think you And this light not today, may price get? have took industrial ready could you do you for question. that that what morning sort woken of up

a give you if big a have is much appreciated. range to So range,

to I trade today. at probably If I say guess, X that X.X would to had would

translate So where dollars? does to in that

So XX% $X Yes. million less. million, $X less,

Got you. guys. Great quarter,

today [indiscernible] Thank comes Please you. Taxpayers. go question next ahead. from the from line The of

open. now is line Your

standing in Hi Bob. is for guys. This Mike,

quarter. excellent more I these of in of to And on an congratulations go forward will future. First all, the

steady, So a to part it's leadership guys. your steady due all on

another quarters? about came that question my to your technology So to from results spend. how a four look the of technology quarter? you much some that next that I more forward seeing how Can the into three, three into of much we're months rolling guess And this from is, into put have

Yes.

that the of of QX. live So much the last end at beginning at that went we QX. pretty wrapped up the with of We piece

to enhancements our year next big credit next to We the over. relative state just working we $X current we're have forecast, for for map CapEx will, million you steady forecasted or in million if So this year's is $X and road currently, the about year and spending, on close products. probably -- to

return getting Right? do standpoint, -- return quarter? return we this what a though, we the of see kind are from So

No.

we I the think, care. that, like calling Michael, about are hyper we're make there fixing do that We're is a want anticipated. we fix. we're as to migration working you what in -- this that, when things Beth talked you product sure mentioned, massive to quarter, as trying

quarter. processes. So quarter, we'll Fourth at look this we're doing that

efficiencies, expect we've as think, to calls was, to I in mentioned on those We early before, begin mid-'XX.

Okay.

no Same quarter in QX mid-next just early efficiencies year? expense. So thing this and in to

We're start seeing we are it. seeing some on return efficiencies. Well,

earlier system, we I we that work the are to more able to part of bit before we think live think little I on systems, I put a our that do because of mentioned a has went revenue can it wasting we of with to the with process processes less but works And don't a people. processes you that your you're with money. a make sure is identifying lot have system on you but because really could in, do had our that so

in of for did in So preparation a work system. we lot processes the

less with So we revenue are doing more people.

that. these these getting all are we're doing. seeing working KPIs are systems. sure still We're are They're are in on and CIO working says, still we -- the place the baby. way So things But baby making as our

a more seeing we're track we'll people, for be So the get just now, more of solid I from it in data able think less future. revenue. we'll that that But to perspective right

Right, money, more means usually more which earnings.

But a a -- next or productivity Dan which said. I said to the some end you're number here, we how going to about significant I basis. of had listing want we make all no, try So run spent year the quarter from increases hear not? see at sort When much money, to good with I is it's day, it was on more of figure rate money in should or what it's a quarter

We the as expect line bottom to well as the see line or the both EBITDA efficiencies we COH, operating and EBITDA COH, next the call improvements in what year.

yes. So

work. ask going great Thanks. question same the the keep so free you just was up at and quarter conference I'm good It to the Okay. next call, know.

go questions at I'd to further pass are no There this the remarks. time, closing to for ahead. conference so registered Beth like Please any Garvey over

Thank our you, forward for and fourth a on great We quarter Thank support. you a your continued we time Have in updating your look today, months. Bailey. day. few you appreciate to

today's your call. concludes Thank participation. conference you all for This

disconnect You lines. may now your