BGSF Inc (BGSF) Reports Growth Amidst Challenges in Q3 2023
Q3 2023 revenues increased by 6.3% year-over-year to $83.5 million.
Gross profit rose to $30.0 million, with margins improving slightly to 35.9%.
Net income from continuing operations declined to $2.6 million, or $0.24 per diluted share.
Adjusted EBITDA from continuing operations slightly decreased to $7.9 million.
On November 9, 2023, BGSF Inc (NYSE:BGSF), a prominent provider of workforce solutions, announced its financial results for the third quarter ended October 1, 2023. The company reported a revenue increase of 6.3% to $83.5 million, compared to the same period in 2022, driven by organic growth in Property Management and acquired revenues. Despite the positive revenue trend, net income from continuing operations saw a decrease to $2.6 million, or $0.24 per diluted share, primarily due to higher acquisition amortization and interest expenses.
Income Statement Highlights
BGSF Inc (NYSE:BGSF) experienced a gross profit increase of 7.1% to $30.0 million, with gross profit margins inching up to 35.9% from 35.7% in the prior year. However, the company faced a net loss from continuing operations of $11.2 million, or $1.04 per diluted share, over the first nine months of 2023. This loss was largely attributed to a non-cash impairment of $22.5 million related to trade name intangible assets and increased acquisition-related costs. Adjusted EBITDA from continuing operations for the nine months was $19.6 million, representing an 8.2% margin on revenues, showing a slight improvement from $17.4 million in 2022.
Balance Sheet and Cash Flow Statement Synopsis
The balance sheet of BGSF Inc (NYSE:BGSF) as of October 1, 2023, showed total assets of $183.7 million, with current assets at $72.7 million. The company's working capital was negative at $(14.6) million, reflecting a working capital ratio of 0.83. The condensed statement of cash flows highlighted that BGSF generated $15.1 million in net cash from operating activities during the thirty-nine weeks ended October 1, 2023, a significant improvement from the $(5.6) million used in the comparable period of 2022.
Executive Commentary
Beth A. Garvey, Chair, President, and CEO of BGSF Inc (NYSE:BGSF), commented on the results:
Our performance for the third quarter reflects the continued progression of our long-term strategic plans to grow through a combination of organic and inorganic revenues, and by diversifying into higher value, specialized property management and professional consulting that drive improving gross margins."
Garvey also highlighted the company's focus on controllable initiatives to drive long-term shareholder value and cash flow, which supports growth and quarterly cash dividends.
Dividend Announcement and Conference Call
In addition to the earnings report, BGSF Inc (NYSE:BGSF) declared its 36th consecutive quarterly cash dividend of $0.15 per share, payable on November 28, 2023, to shareholders of record as of November 20, 2023. The company will further discuss its financial results in a conference call and webcast scheduled for 9:00 a.m. ET on November 9, 2023.
BGSF Inc (NYSE:BGSF) continues to execute its growth strategy, achieving revenue increases and improved gross margins despite a challenging macroeconomic environment. The company's commitment to shareholder returns through dividends remains steadfast, even as it navigates through increased expenses and impairment losses. Investors and stakeholders will be watching closely to see how BGSF's strategic initiatives unfold in the coming quarters.
Explore the complete 8-K earnings release (here) from BGSF Inc for further details.
This article first appeared on GuruFocus.
