• Total Revenue: $71.2 million, down from $83.5 million in the year-ago quarter.
• Property Management Revenue: Increased by 15.9% sequentially from the second quarter of 2024.
• Professional Segment Revenue: Declined by 12.9% compared to the prior year period.
• Gross Profit: $24.3 million, with a margin of 34.2%.
• SG&A Expenses: $22 million, including $526,000 in non-recurring fees.
• Adjusted EBITDA: $3.2 million, or 4.5% of revenue.
• Adjusted Earnings Per Share: $0.10 per diluted share.
• Cash from Operating Activities: $21.2 million for the first nine months.
• Capital Expenditures: $1.4 million for the first nine months, primarily for IT investments.
• Debt to EBITDA Leverage Ratio: 3.8 times.

• Warning! GuruFocus has detected 8 Warning Signs with BGSF.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• BGSF Inc (NYSE:BGSF) reported a sequential sales improvement in IT consulting, indicating stabilization and potential recovery in this segment.
• The company launched a new lead generation technology in Q3, which generated significant leads and over $1 million in booked revenue.
• Managed Solutions business experienced double-digit growth year-over-year and a 10% sequential lift, showcasing its strength and potential for future growth.
• BGSF Inc (NYSE:BGSF) successfully launched an advanced lead generation engine, enhancing sales funnels and conversion rates across divisions.
• The company reported an improvement in adjusted earnings per share from $0.07 in Q2 to $0.10 in Q3, reflecting better financial performance.

Negative Points

• Total revenues for the third quarter were $71.2 million, down from $83.5 million in the same quarter last year, indicating a decline in overall sales.
• The professional segment revenues remained soft, declining by 12.9% compared to the prior year period.
• Gross profit margins decreased by 170 basis points year-over-year, primarily due to cost pressures and increased competition.
• SG&A expenses included $526,000 in non-recurring fees related to the strategic alternatives process, impacting overall expenses.
• The finance and accounting division experienced a sequential decline, contributing to the softness in the professional segment.

Q & A Highlights

Q: Has the pent-up maintenance demand in property management materialized, and can you update us on your territory mapping initiatives? A: John Barnett, CFO: We haven't seen the pent-up demand materialize yet. Sequential growth from Q1 to Q2 was moderated, and while Q2 to Q3 was in line with historical seasonal lifts, it wasn't beyond expectations. This suggests significant pent-up demand remains.

Q: Did the momentum in the professional segment carry through in the third quarter, and are there any timing issues that might suggest a sequential improvement in the fourth quarter? A: Beth Garvey, CEO: We saw an uptick in the third quarter, especially late in September, with project wins exceeding project ends. Some projects may have been delayed into October, but we've seen positive traction in the expected direction.

Q: Is there a timeline for when the strategic alternative review will conclude? A: Beth Garvey, CEO: We do not have a timeline at this point. We are diligently working on it but cannot provide a specific end date.

Q: Can you elaborate on the impact of budget constraints on property management demand? A: John Barnett, CFO: Budget constraints have moderated growth, but we expect pent-up demand to eventually come through, as indicated by typical seasonal uplift without exceeding expectations.

Q: How has the lead generation technology impacted your sales funnels? A: Beth Garvey, CEO: The advanced lead generation engine launched in Q3 generated almost 400 marketing qualified leads and 171 sales qualified leads, translating into over $1 million in booked revenue. This technology enhances lead acquisition and conversion rates across both divisions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.