BGSF, Inc. Reports Fourth Quarter 2022 Financial Results

Record Full Year Revenues of $298 million, Organic Revenue Growth of 24%

Net Income From Continuing Operations was $11.3 million

Full Year Adjusted EBITDA $22 million, up 45%

BGSF, Inc. (NYSE: BGSF), a leading national provider of consulting, managed services, and workforce solutions, today reported financial results for its fiscal year and fourth fiscal quarter ended January 1, 2023.

Beth A. Garvey, Chair, President and CEO, said, “Fiscal 2022 was a transformational year for our Company. We are very pleased with the results and believe that our stated goals of fully aligning BGSF’s core strategy around building higher margin businesses in consulting, managed services and in workforce solutions demonstrated significant progress in 2022. We still have much to do; however, I want to acknowledge and thank our BGSF teams for their hard work and dedication during a great year.”

Q4 2022 Highlights from Continuing Operations²:

• Revenues were $77.3 million, up 14.2% from 2021, including organic growth of 12.0%.

• Gross profit was $27.1 million, up 15.5% from 2021, including organic growth of 12.1%. Gross profit percent increased 40 basis points to 35.0% in 2022.

• Net income from continuing operations was $1.4 million, or $0.14 per diluted share, vs. net income from continuing operations of $4.3 million, or $0.41 per diluted share in 2021, which included a CARES Act credit with an impact on net income of $1.6 million, or $0.15 per diluted share.

• Adjusted EPS¹ from continuing operations was $0.19 for the fourth fiscal quarter of 2022 compared to $0.30 per share in 2021.

• Adjusted EBITDA¹ from continuing operations was $4.3 million (5.6% of revenues), vs. $5.1 million (7.5% of revenues) in 2021.

Full Year 2022 Highlights from Continuing Operations²:

• Revenues were $298.4 million, up 24.8% from 2021, including organic growth of 24.2%.

• Gross profit was $103.5 million, up 27.9% from 2021, including organic growth of 26.9%. Gross profit margins increased 80 basis points to 34.7% in 2022.

• Net income from continuing operations was $11.3 million, or $1.07 per diluted share, vs. net income from continuing operations of $10.5 million, or $1.00 per diluted share in 2021, net income was impacted by a CARES Act credit of $1.7 million, or $0.16 per diluted share, and a gain on contingent consideration of $1.9 million, or 0.18 per diluted share.

• Adjusted EPS¹ from continuing operations was $1.26 in 2022, up from $0.86, a 46.5% increase from 2021.

• Adjusted EBITDA¹ from continuing operations was $21.7 million (7.3% of revenues), vs. $15.0 million (6.3% of revenues) in 2021, an increase of 45% year over year.

The fiscal year financial results are for the 53 weeks ended January 1, 2023, and the 52 weeks ended December 26, 2021; the fourth fiscal quarter financial results are for the 14 weeks ended January 1, 2023, and the 13 weeks ended December 26, 2021. We believe that the fourth fiscal quarter and year-to-date 2022 results were not materially impacted by the additional week.

Conference Call

BGSF will discuss its fourth fiscal quarter and full year 2022 financial results during a conference call and webcast at 9:00 a.m. ET on March 9, 2023. Interested participants may dial 844-200-6205 (U.S. callers) or 929-526-1599 (all other locations) and provide access code 986816. A replay of the call will be available until March 16, 2023. To access the replay, please dial 929-458-6194 (U.S. Callers), 866-813-9403 (US Toll Free callers), or +44 204-525-0658 (all other locations) and enter access code 193636. The live webcast and archived replay are accessible at the investor relations section of the Company’s website at www.bgsf.com.

About BGSF

BGSF provides consulting, managed services, and workforce solutions to a variety of industries through its various divisions in IT, Cyber, Finance & Accounting, Managed Services, and Real Estate (apartment communities and commercial buildings). BGSF has integrated several regional and national brands achieving scalable growth. The Company was ranked by Staffing Industry Analysts as the 94th largest U.S. staffing company and the 49th largest IT staffing firm in 2022. 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 those 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,” “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.

The following tables have been derived from our unaudited consolidated financial statements and summarize key components of our balance sheet and statements of cash flows for the periods indicated.

BGSF, Inc.

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, transaction fees and certain non-cash expenses such as contingent consideration gains 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, transaction fees, and certain non-cash expenses such as contingent consideration gains, 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.

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