BGSF (BGSF) 11 May 232023 Q1 Earnings call transcript

Good morning, everyone. Welcome to the BGSF Fiscal 2023 First Quarter Financial Results Conference Call. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded now.

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

Officer; morning, a quarter Good call to BGSF remarks, Chief the are Officer. Chief Thank our session. After conference and call. first prepared Executive and President earnings Garvey, will the John With XXXX Barnett, Beth Financial be you. there Chair, welcome and question-and-answer me today on

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

with are based of made Today's certain Exchange Management's include Litigation new discussion in those obligation statements, even which the risks statements the and uncertainties, results information of provisions including will as by indicated to made harbor Reform publicly available Actual forward-looking those under company from because filings the Securities statements on update Commission. BGSF the differ listed assumes XXXX. are if and forward-looking becomes assumptions Securities materially company's in the today statements of no future. may by Act various these and safe of the the Private

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

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

delivery strategic addition cross-sell expands and reach nearshore strategic offerings. to Consulting. as with that I'm discussion. and by add capabilities well. Thank of platform efforts alternatives GSF include our resources, IT future Royal go-to-market recruitment our late IT about announced us believe for through clients the extending America April, Latin acquisition India current Sandy, the today our our and first you, strengthens and offshore thank In We cost-effective providing and talent quarter to earnings you and Arroyo joining value for a our high excited we

these to deeper strategic we the Our together teams responses are global a well are working and and our specializations believe that encouraged clients' by addition. reach adding were and we imperative

Turning results. quarter to our

results quarter real professional with and were our First in expectations both estate. for line

see to in incremental share provide. opportunities acquisition Solutions segment and of As Professional wallet are will benefited the expanded you from release, revenues our cross-selling the our can we excited about related and it Horn

We market structure pricing are on sales cost cycling this tougher overall spreads is year against dynamics our highly as as comparisons and evolve. team focused

the side. the longer Since impacts we selling in our last which fourth decision seen quarter of time have cycle, frames professional year,

However, specialties importantly, we continue top to see migration and and cloud solid and in managed consulting have service technologies. demand wide for enterprise ERP we services

and as Today, estate at to strategy solid our a of high in expansion real revenue maintaining X.X% also value our core we consulting also Delivery while expanded of from up staffing the reported we XX.X%. was to margin managed sector. journey delivering to we our margin expertise clients, $XX.X services margins profile business, growth professional our a gross million, and company

come John. I initiatives strategic on discuss to financial this covers After call quarter, he results John? for will I Now over year. for comments our back business turn XXXX the will provide and the our outlook our and

everyone. morning, Beth, Thank you, and good

to $X.X with to capital funded targets. the back and performance seller upon $X.X million on adjustments Beth total and at price working related any payments of The held We million purchase outstanding partial As mentioned, security a agreed acquisition million of $X.X for and was up April Consulting price we closing earn-out obligations. of an XX. provides completed for of on aggregate the million acquisition announced Royal $X based

if thrilled we of $XX.X price purchase million. be pay will We all-in the

to Real closed quarter, from last the The acquisition Turning incremental increased revenues that X.X% compared and Horn included were December the year. Professional Total the Estate was revenue results. prior our first million. year in $XX.X of Solutions quarter XX.X%, up to segment segment which

Solutions, Horns down Excluding the Professional year the quarter. segment to X.X% was compared prior

quarter, last related lines to project lengthening quarter headwinds due revenues fourth new we and ends professional experienced As to budgets starts. project signaled time and

said, Professional began cloud implementation aligns first believe That spending to late will companies quarter. rebound with the work, in project We on starts in which specialization. ERP that capital general our in and segment prioritize migration

comparisons the in total first expectations, As the given mentioned, quarter revenues met for XXXX. Beth our especially tougher

quarters the four. As in first sales and over prior a and increases the three XX%, XX%, quarter with XX% of in were year and up of 'XX, reminder, continued two, starting respectively, XX% strong

XXX First basis basis quarter higher margin a has XXX driven increase in perspective, Professional business. entirely XXX was profile points was of Estate profit The expanded the quarter. gross Horn XX.X%. compared Real and segment points addition to professional the than the prior by existing Solutions, which to From year the profit to up margins segment XX.X% grew XX.X% Professional by gross basis to points a margin

SG&A $XX.X expenses expenses first the up the selling expenses of Horn $X.X of the which million, selling Solutions $X.X Of for were $X.X were $X.X increase, million, million. million quarter were million.

revenue. and Horn As $XXX,XXX quarter existing the and represents increase a than costs higher has profit gross professional margin business. technology. the higher were has expense Horn people approximately a in percentage also the as remaining Solutions previously selling Transaction a in investments of Solutions mentioned,

impairment As first to results names that in we operating included used and business. the asset for intangible charge we rebranding the the quarter a non-cash of last quarter, trade subsequent related messaged

name quarter, per first million, by of negatively income During the or $X.XX wrote-off we intangibles million net impacted $XX.X trade which share. $XX.X

to exclude earnings and trade costs. Adjusted EBITDA impairment quarter transaction acquisition the acquisition compared for and in the million first EBITDA year impact for was $X.X $X.X the measures prior million adjusted per was share acquisition charge name of expense in higher financing per prior the amortization, share the by non-GAAP largely per quarter Our diluted Adjusted earnings interest current quarter. related The rates. Horn Solutions to year in earnings driven difference compared and higher in share $X.XX adjusted to is $X.XX quarter. interest the

quarter, the of $XX.X totaled sales first last the with end accounts remaining receivable outstanding with days consistent million year. the end of At

and to leverage EBITDA announced a funded month in X.X to from X.X dividend cash capital Our shareholders via to XX at week. and last consecutive dividend the working was adjusted of capital returned XX our ratio forma quarter first times. trailing pro our We late strengthened year-end ratio X.X cash debt

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

We well I'm Last M&A shared improvements quarter, you, one brand included of brand names about that but voice address trade initiatives branding cuts John. believe the services, process our project strategic well enhance even calls. on in our and to which as it for may more that report confusion which to all I Thank the pleased we the underway. importantly, power, our four talked growth, as future rebranding will marketplace. out we BGSF XXXX, more fully is believe that

enabler Going be to offerings to The to market brand global expand to we transition cost a platform on as an our minimal. a as is BGSF, continue brand should a single stage. single

move to with technology continue our efforts. We forward

a our into product sides focused the minimal from operational recruiting our billing go-live enhancements viable Moving and payroll of on business. with benefit sales to and

time the right capabilities financial profile. meaning transactions excited we are Both recent with cultivated and strategically right on and criteria, over Consulting. as fit Solutions the acquisition about recent our and our Royal activity, well with acquisition as cultural our the were Horn were and pleased Commenting well

are and/or talent search will accretive, add We to an proactively for footprint continues resource client important our pipeline and expertise. that to deals to be long-term our M&A base, component strategy. of expand active our remains continue The growth

our revenue normalization of outlook we to continue expect our seasonality. for XXXX, see to on Based

First starting quarter is typically ramp expect a value a for to we revenue side, in see business resilient and consulting are to year consulting to projects expected the we high low a quarter. the estate managed be this headwinds and on grow for our second standpoint some and and point Real grow year, normal XXXX. macro services anticipate in practices professional but is

we as growth difficult business expenses XXXX. comparisons in with against and around carefully revenues up we'll growth. rates the align are John the mentioned, quarter with year versus our XX% second to remain realistic Finally, last manage We up

up questions. call said, With open Operator? that for can we the

With question Howard Howard, [Operator from Brothers. is now you. Halpern open. comes first Thank your line our Instructions] from Taglich

the Nice start Congratulations. to year, guys.

Thanks, Howard.

you acquisition bit -- guess, if profile? in about, could their there acquisitions, more I any there's any recent to tends business? of if a In margin And Arroyo, the the little terms recent gross seasonality their of talk be

seasonality. their the -- gross we where pretty margin are they profile And business. really what assignments really that pretty are driven in we And project of as These line with them, rest not consistent. is in there's far the expect from type as are

haven't any So there. seen in we seasonality

the over guess, started of what little and And own talked that bit your Horn months goals client to, and the Okay. acquisition next I has do XX of them? about XX you activity acquisition, type what just and you a for do months base to cross-selling. have What type could educate you with

I think before. a from didn't which perspective, services we Solutions have they offerings, lot of accounting the financed Horn have managed

are that IT on accounting it the an go move implement – side the ERP side. so system tech reporting into and And then in things profiles as fit very actually those well our over on we the and into

fit good for cross-sell a from So a that's perspective. us very

to that it. us cost really and out regards so of for they Arroyo, nearshore/offshore so more get there had in and can then ask we've years capabilities several -- And recently for effectiveness customers

to popular our And in just market -- the two the so with we've it word, we've this weeks has what’s been had when highly gone – now. right what baby

around is they this there. want business there the out of So lot a fact energy

that So our customers are already very acquisition. made that we pleased

the is expanding seeing, existing in of or your within or new that from growth the is customer would propelling be are that guess, And within it between I real kind you're What that customers? growth Okay. segment? -- -- that you breakdown, estate it segment, is base

Our customer of lot and base a remains consistent. buying selling. There's pretty much

seeing some of by one things customer. customers bought we So another are got our where

we talked as there's movement the some But we there's those in growth really opened, so areas. about the is same the around have. that well that to way get And customers past traction But relatively the they we've markets as starting other around slower react. And then were rebound are U.S. to there's starting that to pre-COVID. in want that little -- that markets the bit to are markets there's start really a the they still

markets across lay the doing. real whole a blanket as is depends and It segment what just can't you back. statement the a estate coming they're on where are So

me. for one final one just And Okay.

of With a bit in will the little QX? in from costs acquisition, costs, there G&A bump up transaction-related Royal Arroy a be

costs There will be some in QX.

good up keep the work and guys. Congratulations Okay.

Thanks, Howard.

Thank you, Howard.

Roth our now comes question from Martin Jeff, have from is line next your We Jeff MKM. open.

Thanks. Beth John. and Good morning,

morning. Good

The want of it for asking a from for to if imagine that the sense potential your strong would Royal they've got appears years. you've get to been I strategic. demand scale transaction business, and highly I clients,

and Royal going easy How do how for to business? You're see probably of that have to growth there. demand the lot a is it you potential scale

Well, to allows a with I to just benefit from in the I to returned model Latin America. Colombia And train them have be of able that had visit down partners the up people pretty quickly. got they

are but we we business, how that is we go business are for calling strategic the have successfully to a that our out successful customers being everybody. we the pace grow So so very sure at roll that wanting on that make

now. and the But go customers we is and the have in to to to the do of getting they customer do right in right now team across our and a base our base people introduce introduction Royal client couple process weeks ready an have to sales -- professional talk lift of wings ready in the next current our

So again, customers of we've has it's but had to extremely been the balancing from positive. out the be comments going gate that a act, initial

you've services. does Great. segment? in recently represent percentage and what managed and ERP, And layered mentioned of good the Professional Okay. the in the percentage Horn seeing of given business then What business, of you're demand consulting you that

the We system. don't it push up things we that to efforts involved as don't are. But be broke know trying in those at invite that now, in offerings to track. out have way, able that what to there's we We right our some out of don't I Jeff, the to have track start more moment. get

the what's your it Professional? we for professional of coming side in on terms your touched in and of of outlook prepared throughout accounting bit you pure finance a then of finance just or terms little progress terms of as And comparisons starting on year-over-year Okay. remarks accounting, in part that in and growth year up back projects

morning stay about they'll what industry were not are. our line our what believe the this just I is saying. growth and John or expectations I reset has talking in with whether industry

in growth be in the it at chance be to originally So stay will thought pace and haven't go look line. I was But we some it beginning expect at them are, do the a had know going what to to if them. in we will the There year. be don't they but I of

calls the segment Okay. Great. an been of and based estate commercial the bit over and us last on on commercial necessarily business, where estate real is comments give the And has growth the currently more real maybe for couple of tracking? your isn't on then a the update choppy side side of right just

last been. try with they're quarters. the again, of commercial side to new they think estate, have but they of year the I markets I it the about had on couple pockets, pockets still where have what we've just mean, real I it's of know seeing on talked depends but -- two open this to slated consistency the success, in market. we're that

you. That’s it me. for Thank

Jeff. Thanks,

Jeff. Thank you,

questions to further on remarks. for team no management closing I line. pass the will the now back have We

today Thank continued results few We our all on to in appreciate support. your a a your of we look Have you updating all second time great forward and day. you months. for quarter

Ladies you. for you today's this and Thank gentlemen, joining. call. Thank concludes

now may disconnect your You lines.