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Edited Transcript of BGSF earnings conference call or presentation 7-Aug-19 8:30pm GMT

Full Year 2019 BG Staffing Inc Earnings and to Provide an Update on Operations Call

PLANO Aug 30, 2019 (Thomson StreetEvents) -- Edited Transcript of BG Staffing Inc earnings conference call or presentation Wednesday, August 7, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Beth A. Garvey

BG Staffing, Inc. - CEO & President

* Dan Hollenbach

BG Staffing, Inc. - CFO & Secretary

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Conference Call Participants

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* Howard Allen Halpern

Taglich Brothers, Inc., Research Division - Senior Equity Analyst

* Sarra Jean Schuster

Roth Capital Partners, LLC, Research Division - Administrator of Research

* Terri MacInnis

Bibicoff & Macinnis, Inc. - VP of IR

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Presentation

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Operator [1]

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Thank you for standing by. This is the conference operator. Welcome to the BG Staffing Q2 2019 Financial Results Conference Call. (Operator Instructions)

I would now like to turn the conference over to Terri MacInnis, Vice President of Investor Relations with Bibicoff + MacInnis. Please go ahead.

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Terri MacInnis, Bibicoff & Macinnis, Inc. - VP of IR [2]

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Thank you, Gillian. It's my pleasure to welcome you to the BG Staffing conference call to discuss Q2 and 6-month financial and operating results and a progress report on the company's business strategy. With me today on our call is Beth Garvey, President and CEO; and Dan Hollenbach, Chief Financial Officer.

By now, you should have seen a copy of this morning's press release announcing BG's Q2 and 6-month financial results as well as the Form 10-Q. If you do not have a copy of either, you can find it in the Investor Relations section on BG's website at bgstaffing.com. I remind you that this call is being webcast live and recorded. A replay of the event will be available later today on the company's website and will remain available for at least 90 days following the call.

I would also like to remind you that our discussions today include forward-looking statements. These statements are based on certain assumptions made by BG Staffing based on and are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The company's actual results could differ materially from those indicated by the forward-looking statements because of various 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 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. These forward-looking statements are made as of the date of this call, and BG Staffing assumes no obligation to update these statements publicly, even if new information becomes available in the future. This broadcast is covered by U.S. copyright laws, and any use or rebroadcast of all or any portion of this conference call may only be done with the company's expressed written permission.

During our call, we will discuss some non-GAAP measures, which we use for internal evaluation and to report the results of the business as useful information to management, our Board of Directors and investors about our operating activities and business trends related to our financial condition and results of operations. These non-GAAP measures are intended to supplement GAAP financial information and should not be considered in isolation, as a substitute for or as superior to financial measures calculated in accordance with GAAP. For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please see today's earnings release posted on the company's website.

It's now my pleasure to turn the call over to Dan Hollenbach, BG Staffing's Chief Financial Officer. Dan?

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Dan Hollenbach, BG Staffing, Inc. - CFO & Secretary [3]

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Thanks, Terri, and good afternoon to everyone. I'm pleased to welcome you to our call today. I would like to start by again taking a moment to acknowledge all our team members in each of our BG Staffing business units for their hard work and dedication to our company's continued success and strong gross profit margins. Their contributions are vitally important, and we are truly proud of the job they continue to do for us.

BG Staffing provides contingent staffing services within 3 industry segments: our real estate division, which operates in apartments, communities via BG's Multifamily and in Commercial Buildings via BG Talent; our Professional division, which includes our Finance & Accounting, IT and creative groups; and our third division, Light Industrial. Today, BG Staffing operates 79 branch offices and 15 on-site locations, providing services in 42 states in the District of Columbia.

After I complete my review of our financial results, I'll turn the call over to Beth for her comments on the quarter and 6-months period just ended, our company's strategy, how we are executing on our business plan and the outlook on current industry conditions.

First, our Q2 results. Consolidated revenues for Q2 2019 were $73.9 million, up 4.1% from Q2 2018. Gross profit increased $1.7 million or 8.7%, with gross profit percentage of 28.2%, up from 27.1% for the second quarter of '18. The increase in gross profit percent was led by our F&A division, up 8.9% over 2018. This continues a string of quarterly increases in gross profit percent.

Net income for Q2 2019 was $3.8 million versus $5.2 million in Q2 2018. 2018 was impacted positively by the recognition of a $1.1 million gain on contingent earn-out and an effective tax rate of 11.4% due to the favorable tax treatment of the option buyback agreement.

Diluted earnings per share were $0.37 versus $0.54 in 2018, while adjusted diluted earnings per share was $0.44 versus $0.46 in 2018. Adjusted EPS was normalized for amortization, the contingent gain and the option cancellation tax impact.

Now for year-to-date results. Consolidated revenues for the first 6 months of 2019 were $142.6 million, up 3.5% from 2018. Gross profit increased $2.8 million or 7.7%, with gross profit percentage of 27.6%, up from 26.5% last year. The increase in gross profit percent was led by our F&A division, up 6.8% over 2018.

Net income for 2019 was $6.3 million versus $7.6 million in 2018. Again, year-to-date results were impacted -- 2018 positively by the previously discussed gain and effective tax rate last year of 15.2%. Diluted earnings per share was $0.61 versus $0.82 in Q2 '18, while adjusted diluted earnings per share was $0.75 versus $0.83 in 2018. Adjusted EPS was normalized for the impact, as described in the quarterly numbers.

Looking at our segment results. Q2 2019 real estate revenues, which continue to be from organic growth, increased $3.1 million or 14.6% to $24.4 million, with Talent contributing $1.3 million of total. Gross profit increased $1.3 million or 15.6% to $9.4 million. Gross profit percentage was 38.5% for 2019, up from 38.1% for the same period in 2018. Operating income increased 10.8% to $4.1 million.

Multifamily has opened 7 new markets in the last 3 quarters. Today, multifamily has reached a milestone and operates 50 offices, and Talent has 6 offices together serving 29 states. Professional revenues for the quarter were $31.1 million, up $1.2 million or 3.9% compared with 2018. Our IT division produced the growth, while F&A was flat. Gross profit increased $713,000 or 8.8%. Although F&A revenues were flat, GP dollars increased 20.5%. Gross profit percentage for the Professional segment increased from 28.1 -- to 28.1% from 26.8% in the prior year. Operating income increased 5.9% to $2.2 million. Light Industrial Q2 revenues decreased $1.4 million to $18.1 million or 7% versus 2018. Gross profit decreased $308,000 or 10.3%. Light Industrial gross profit percentage was 14.8% compared with 15.4% in 2018. And operating income decreased 14.6% to $1.1 million.

Our LI business slowed in Q2 due to the decline in use from 3 of our largest client partners. One lost business from their major customer, resulting in an initial 63% reduction in its staffing requirements. It's currently running at 62% of the previous volume. Two others brought in other suppliers to assist in their needs as a result of the tight labor market and this eroded our share of those businesses. As a result, we expect 2019 Light Industrial revenues to be down approximately 10% year-over-year.

Selling expenses increased approximately $1.4 million or 12.3% over 2018, led by continued expansion in the Real Estate segment, up $880,000. Professional segment expenses increased $577,000 or 11.8%, primarily a result of compensation adjustments in our commission plans driving the higher-margin business. Light Industrial decreased to $80,000 or 5%. G&A expenses increased $208,000 or 14% due to increased spend in our IT and Human Resources support units as well as SEC-related costs. G&A expenses were 2.3% of revenues in Q2 '19, which compares to 2.1% for the second quarter of '18. Adjusted EBITDA for the quarter was $6.8 million or 9.3% of revenues in '19 compared with $7 million or 9.8% of revenues for 2018.

And now for year-to-date segment results. 2019 Real Estate revenues increased $4.3 million or 10.8% to $43.6 million, with Talent contributing $2.5 million of the total. Gross profit increased $1.8 million or 11.8%. Gross profit percentage was 38.5%, up from 38.1% for the same period in 2018. Operating income increased 9.7% to $6.9 million. Professional revenues for the first 6 months were $61.9 million, up $692,000 or 1.1% compared with '18. Our IT division produced a growth, while F&A was flat. Gross profit increased $1.1 million or 7%. Both IT and F&A had increases in gross profit dollars with F&A growing 18%. Year-to-date gross profit percentage for the Professional segment increased to 27.6% from 26% in the prior year. Operating income decreased 7.1% to $4 million. Light Industrial revenues decreased $99,000 to $37.1 million or 0.3% versus 2018. Gross profit decreased $98,000 or 1.7%. Light Industrial gross profit percentage was 14.7% compared with 14.9% in 2018. Operating income was flat at $2.3 million.

Turning now to selling expenses, which increased approximately $2.5 million or 11.6% over 2018, with the Real Estate segment up $1.1 million or 13.1% and the Professional segment up $1.4 million or 14.9%. Light Industrial segment expenses were flat for the period. G&A expenses increased $481,000 or 15.5% due to increased spend as previously discussed. G&A expenses were 2.5% of revenues in 2019, which compares to 2.3% in 2018. Our effective income tax rate was 22.8% for 2019 compared with 15.2% last year. Adjusted EBITDA for the first 6 months of 2019 was $12 million or 8.4% of revenues compared with $12.4 million or 9% of revenues in 2018.

We believe that adjusted EBITDA and earnings per share are useful performance measures and are used by us to facilitate comparison of our operating performance on a consistent basis from period-to-period and to provide a more complete understanding of the factors and trends affecting our business. We also believe that investors, analysts and other interested parties view our ability to generate adjusted EBITDA as an important measure of our operating performance and that of other companies in our industry. Additionally, the financial covenants in our credit agreement are based on adjusted EBITDA.

Reconciliations of adjusted EBITDA and earnings per share to net income are available in our latest quarterly report on Form 10-Q and in our earnings release, both of which are available on our website.

Cash provided from operations more than doubled over 2018 to $9.2 million. We continue to generate robust operating cash flow as a result of our strong balance sheet, effective working capital management and solid earnings, allowing us to reduce debt and invest in technology, while at the same time, keep returning capital to our shareholders in the form of regular quarterly dividend currently set at $0.30 per share with an approximate yield of 7.4%. BG Staffing has now paid a dividend for 19 consecutive quarters, and our current debt to adjusted trailing 12-month EBITDA is 0.7%.

I am pleased to report that we recently improved our liquidity and capital resources by refinancing our senior lending facility with a new group led by BMO Harris Bank, with Citibank and Independent Bank, rounding out the syndicate.

We are well positioned for growth with a $35 million revolver, $30 million of committed term loan and a $40 million accordion. Additionally, we were able to reduce both our borrowing costs and treasury fees. We are excited to move forward with our new partners, supporting our growth plans.

Before I turn the call over to Beth, I'd like to acknowledge a few of our industry awards and achievements during the second quarter. Drew Perry, President of our Light Industrial division was named one of the 40 Under 40 by staffing industry analysts. The Dallas Business Journal included BG Staffing in its middle market 50 fastest-growing companies. Our company was ranked #103 in a 2019 list of Dallas-Fort Worth's 150 largest public companies. And finally, Beth Garvey has been named a Texas Trailblazer honoree by the nonprofit organization Family Place as one of only 5 DFW female CEOs of public companies.

And now that I'm done bragging, I'd like to turn the call over to Beth.

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Beth A. Garvey, BG Staffing, Inc. - CEO & President [4]

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Thank you, Dan. Good afternoon, everyone, and thank you for joining our discussion. I'm pleased with our operating results and happy to talk today in more detail about how well we are performing and the reasons why I'm thrilled about the runway in front of us.

The outlook for our industry for the remainder of 2019, which is, of course, subject to normal seasonal patterns, remains optimistic, and both the present economy and labor markets remain positive for staffing overall. Our solid second quarter operating results support my continued confidence about the remainder of the year.

I'm pleased to report that strong customer demand continues to drive our success and is led once again by solid operational performance by our extremely capable teams in the field. I'm so very proud of them and glad to report 28.2% consolidated quarterly gross profit, our ninth consecutive quarter with consolidated gross profit percentages in excess of 25%, which is outstanding for our industry.

We believe that our historic strong and steady revenue growth continues to benefit from our laser focus on the strategic priority of growing returns. We keep close tabs on our key performance indicators, which were our bill rates, our pay rate, our build hours and gross profit, always looking for continuous improvement on efficiencies to drive sustained value creation.

We also pay close attention to our gross margin strength, with an emphasis on operational discipline, organic growth initiatives and selective value-creating M&A. On the M&A front, we are known as a disciplined acquirer, and our pipeline remains very full and active. Literally, every week, we evaluate opportunities for businesses that will add thesis to our client solution matrix.

We're always looking for acquisitions that are accretive in both EBITDA and valuation. The most attractive targets we see are primarily in Professional segment as we conclude it's better to build growth than to buy growth in our Real Estate division. We're looking for acquisitions that expand our footprint into new geographic markets and/or provide a new or complementary skill set that helps complete our talent offering puzzle.

Our goal is for acquisitions to strengthen our cross-sell efforts across the country. The team is properly incented and doing a terrific job with cross-selling. I'm delighted to say that they're charged up in building traction. In 2017, cross-sales were 0. In 2019, 6% of our organic growth has come from cross-sells. Ongoing sale blitz and contests are driving the momentum. On the operations side of the business, I feel very good about the 3 -- about the early progress we've made in our 3 2019 initiatives we launched in Q1. They are: entering the California market, technology enhancement and culture.

I'm excited to talk about the California opportunity. You may recall, we prepared for entry into that market with the hire of our new VP of HR with experience in California to manage compliance as well as other responsibilities. Like in Q1, we opened our sales office for Multifamily, BG Multifamily. And in Q2, I'm pleased to tell you that we are on target for that market. California, by the way, is the largest U.S. department market with 2.8 million units. For reference, Texas has approximately 2 million apartment units. According to The Wall Street Journal, demand for rental apartments reached a 5-year high this spring, increasing 11% in Q2 year-over-year.

Continuing our early momentum and expansion into California, our IT division has also secured consulting engagements, with discussions underway for additional roles in Q3. We're looking forward to California making a more meaningful revenue contribution over the next 12 to 24 months.

Now I'd like to update you on our technology enhancement initiatives, led by our new CIO, Chris Loope, who is methodically implementing our 23 project technology road map. That road map is cloud-based and focused in 3 areas: reduced cycle times to fill orders and onboard new talent; improved operational efficiencies through automation; and scalability and security, leveraging cloud solutions.

Our investment in this vital initiative will transform our performance and is expected to increase our value proposition, lower our cost to serve, improving several key areas, including leveraging new technologies for efficiencies, drive incremental revenue, and boost overall performance and increase talent and client loyalty.

Chris and his team are doing an amazing job with multiple projects already underway. We are expecting to start seeing values later part of 2019 and especially in 2020 and beyond.

We are building an integration layer with the other enhancements being plug and play, providing adaptability for future changes as we invest in innovation to support the company now and where we will be 5 years from now and beyond. Our 3-year tech program is budgeted for approximately $9 million. Approximately 45% of that will be CapEx and 55% will be OpEx. We are benchmarking a goal to achieve 10% of operating efficiencies. We think this is an achievable goal as many of our larger competitors have already began technology initiatives, with one reporting recruiting efficiencies of 11%. These initiatives will drive improved productivity and strengthen our delivery system from top to bottom.

We reiterate prior guidance that the cost of implementing these efficiencies will also impact comparative earnings over the next 2 years.

I recognize that these exciting and important technology tools will help our company grow and stay competitive, and I promise you that we won't lose sight of the fact that we still are in the people business. Technology certainly is a vital enhancement of that process. The feedback we obtained from our candidates and client partner surveys made it clear that speed mixed with personal interaction from our teams resulted in a most engaged talent resource and enhanced client experience.

Company culture is a subject that's close to my heart, and I want you to know that it's also a big priority for me as well as my team. We look to attract the best in the industry and know from experience from -- that a positive culture supports a work-life balance and invigorates and engages the team to help build a robust organization, one that we are all very proud to be associated with.

We like to think that our competitive edge is our people-centric culture. That foundation infuses all of our programs and initiatives and encourages prospective candidates to want to choose us and our culture. If you haven't already done so, I invite you to visit our active social outlet media of LinkedIn, Facebook, Twitter, Instagram. You name it, we seem to be there. And our marketing team does a very good job in making sure that we are very visible.

Last quarter, I talked about the recent completion of our strategic plan. It was an incredible experience. We interviewed and learned so much from our client partners, our field talent and our team associates. One of the many great outcomes was that we identified areas of growth for our teams through financial segmentation of the business. We're now using divisional scorecards with road maps to the overall company goals. That allows our entire team to see a clear path for the future. I can tell you that this invaluable feedback and the road map have reinvigorated as all.

Our passion is to enrich the lives of those we serve by connecting talent and opportunities so that they can fulfill their life's mission. I'm very proud of the role we play towards those goals. We contributed to livelihoods of the temporary and contract workers for whom we currently issue an average of 6,800 weekly paychecks, paying close to 30,000 people annually. Not only are we in the people business, but we are in the purpose business. After all, it all begins with the job.

We're going to keep on looking to identify areas across all 3 of our segments in which we can provide added staffing services, and we will continue to invest in incremental growth activities.

I'm looking forward to needle-moving initiatives from cross-selling revenues, growing the business in our new California market, finding new acquisition partners, and reaping so many exciting benefits from our technology initiative, all as we continue to result to build value and grow revenue.

I'll now turn the call back over to the operator for the Q&A session.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question is from Jeff Martin with Roth Capital.

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Sarra Jean Schuster, Roth Capital Partners, LLC, Research Division - Administrator of Research [2]

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This is Sarra Schuster on behalf of Jeff Martin from Roth. Beth, congratulations on your award.

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Beth A. Garvey, BG Staffing, Inc. - CEO & President [3]

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Thank you.

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Sarra Jean Schuster, Roth Capital Partners, LLC, Research Division - Administrator of Research [4]

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In terms of your 3-year strategic plan, while it's still relatively early in the first year, are you seeing any immediate efficiency gains, particularly in terms of automation and efficiency gains in recruiter resources? And are there specific segments, Professional, Real Estate and Light Industrial that are benefiting or stand to benefit more than others?

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Beth A. Garvey, BG Staffing, Inc. - CEO & President [5]

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It's still early right now. So we have not started to see some of the rewards that we plan to get out of this. If you recall, we had a -- in Q1 was when we put together the plan, and we are just now making decisions about the partners that we're going to be partnering with and getting staffed up to make sure that these initiatives are rolled out the way we need them to be rolled out.

As far as divisions, who we think is going to stay and then reap the most benefit, I believe the Real Estate division is going to be -- it's going to be life-changing for that division. I think they're going to really see the best bang for the buck from what we get out of that, which is great since it is our fastest-growing and largest gross margin division.

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Sarra Jean Schuster, Roth Capital Partners, LLC, Research Division - Administrator of Research [6]

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There was a small but noticeable tick-up in permanent placement in the quarter, at least versus the second quarter of 2018 in Professional. Is that something that BG is more focused on? Or is that just part of the variability of perm over the course of the year?

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Beth A. Garvey, BG Staffing, Inc. - CEO & President [7]

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A lot of it has to do with where we are right now. The more companies are starting to offer perm placement -- perm positions over a temporary position just because of the shortage of talent. So people are moving into going in and realizing that people want to actually have a job. So we're seeing a tick-up in that area. And it's usually in our F&I group, but not necessarily in our IT group. But that's usually where we see the most activity in that area.

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Sarra Jean Schuster, Roth Capital Partners, LLC, Research Division - Administrator of Research [8]

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The Real Estate segment had a handful of markets with somewhat recent sales hires in certain offices. How are those offices performing? And what is your outlook for the Real Estate segment from both a commercial and a multifamily point of view?

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Beth A. Garvey, BG Staffing, Inc. - CEO & President [9]

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We did -- we are all fully staffed now. I believe our growth in the first quarter was right at 6%, right? And in Q2, we were 14, 15. So we're back up to where we are -- we actually live in that area. So we're back up to the levels that we normally experience. I think we can continue to see double-digit growth out of that group in both the real estate side, and as we're getting more traction, under the commercial side.

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Sarra Jean Schuster, Roth Capital Partners, LLC, Research Division - Administrator of Research [10]

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And then one final question. Can you please provide an update on the new market initiative in California in terms of staffing up? I know you mentioned it a little bit on the call, but client wins and growth expectations for that market over maybe the next 12 to 24 months?

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Dan Hollenbach, BG Staffing, Inc. - CFO & Secretary [11]

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We are -- on the real estate side, we are running, from an FTE standpoint, exactly where we thought they'd be 3 months into -- 4 months into it. So we're very pleased with that activity.

As for the growth pattern, we don't talk about that, trying not to give guidance, particularly at that level. But as you've been following us for years, generally, the growth starts to come on those offices at the end of year 1 and the year 2 and year 3. And then we expect at some point to expand into that -- to expand the California market.

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Operator [12]

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(Operator Instructions) Our next question is from Howard Halpern with Taglich Brothers.

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Howard Allen Halpern, Taglich Brothers, Inc., Research Division - Senior Equity Analyst [13]

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Congratulations on a nice solid quarter, guys. I think this goes back to a little bit from last quarter, but how has the progress been on the different cross-selling opportunities within -- especially within the Professional segment?

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Beth A. Garvey, BG Staffing, Inc. - CEO & President [14]

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I think our cross-sell initiatives are one of the most exciting things we have going in the Professional brands right now. They really are starting to break down all the silos. They all know how -- they all know what other people do. They're having meetings every day now, where they're talking about different services in different areas that we can help our customers grow.

The last -- I thought it was really pretty exciting. The last sales blitz they did a few weeks ago, the professional brands actually sold all BG services, including Light Industrial and real estate. So everybody is getting on board now, and the momentum just keeps going. I mean like I said, they are having major meetings every day in conversations with our customers. It's pretty exciting.

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Howard Allen Halpern, Taglich Brothers, Inc., Research Division - Senior Equity Analyst [15]

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Okay. And in terms of the commercial real estate, has -- I guess, you had talked about the sales cycle prior. That's still about the same. You're still sort of in the middle of that process of gaining significant traction, I guess, in that business?

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Beth A. Garvey, BG Staffing, Inc. - CEO & President [16]

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Correct. And also in that division, to the earlier question we see that division really high in perm as well. These are engineers, people that are higher quality. So they have a lot of perm in their area as well.

So the sales cycle is slower than what it is in multifamily. More people want to take a look at a resume. They want to have some time to look at it. So they're adjusting to that. And again, if -- we had to teach people how to use this in the multifamily side, and we're having to teach people -- since we're kind of inventing this commercial strategy, we're trying to teach people how to use this in that area as well.

So they're doing a really good job. They've moved into their first stand-alone office. They got big enough and strong enough that they've moved out of the multifamily office that they moved last month into their own operational and like, I guess, what you'd call it, their headquarters for their little division. And their heads are starting to grow. It'll be -- they'll have everybody supporting everybody across the U.S. located in Houston.

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Howard Allen Halpern, Taglich Brothers, Inc., Research Division - Senior Equity Analyst [17]

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Okay. And one final one from me. With the new credit agreement in place, what would you anticipate the quarterly interest expense to be approximately in the second half, excluding, I guess, the onetime charge?

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Dan Hollenbach, BG Staffing, Inc. - CFO & Secretary [18]

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Yes. So we'll have a onetime charge just north of $500,000 in third quarter for the old existing fees, but we've got anywhere -- we've got about 150 basis point reduction in our overall cost. It's now -- if you look at the -- it's now a structured thing based on leverage. And then we expect, probably beginning in the fourth quarter to start benefiting on the service fees. And we expect that number to probably decrease by 30% to 40%. But we won't have the full transition of the treasury down until early September. So...

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Howard Allen Halpern, Taglich Brothers, Inc., Research Division - Senior Equity Analyst [19]

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Okay. And to pay down of debt will still be slow and steady as you're going forward?

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Dan Hollenbach, BG Staffing, Inc. - CFO & Secretary [20]

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Slow and steady, absent an acquisition. So yes.

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Operator [21]

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There are no further questions at this time. I'd like to turn the conference back over to Beth Garvey for any closing remarks.

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Beth A. Garvey, BG Staffing, Inc. - CEO & President [22]

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Thank you, operator, and thanks to all of you for joining our call today. I hope you can tell that we take great pride in our people and our purpose. Every day, we try to drive and make a positive impact and deliver appealing returns to our shareholders.

Our vision is to become the national leader in staffing and impact our communities by unleashing the power of connecting people to opportunities and transforming lives. I'm looking forward to reporting more progress to you next quarter as we continue to drive towards our 3-year goals of generating $500 million in revenue and 10-plus adjusted EBITDA. Have a terrific rest of the day.

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Operator [23]

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This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.