þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 26-0656684 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | ¨ | Accelerated filer | þ | |
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Emerging growth company | þ |
• | future financial performance and growth targets or expectations; |
• | market and industry trends and developments; and |
• | the benefits of our completed and future merger, acquisition and disposition transactions. |
• | the availability of workers’ compensation insurance coverage at commercially reasonable terms; |
• | the availability of qualified temporary workers; |
• | compliance with federal, state and local labor and employment laws and regulations and changes in such laws and regulations; |
• | the ability to compete with new competitors and competitors with superior marketing and financial resources; |
• | management team changes; |
• | the favorable resolution of current or future litigation; |
• | the impact of outstanding indebtedness on the ability to fund operations or obtain additional financing; |
• | the ability to leverage the benefits of recent acquisitions and successfully integrate newly acquired operations; |
• | adverse changes in the economic conditions of the industries or markets that we serve; |
• | disturbances in world financial, credit, and stock markets; |
• | unanticipated changes in regulations affecting the company’s business; |
• | a decline in consumer confidence and discretionary spending; |
• | the general performance of the U.S. and global economies; |
• | continued or escalated conflict in the Middle East; and |
• | other risks referenced from time to time in our past and future filings with the Securities and Exchange Commission (“SEC”), including in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. |
April 1, 2018 | December 31, 2017 | |||||||||
ASSETS | ||||||||||
Current assets | ||||||||||
Accounts receivable (net of allowance for doubtful accounts of $473,573 at 2018 and 2017) | $ | 35,018,400 | $ | 36,707,885 | ||||||
Prepaid expenses | 1,803,606 | 947,968 | ||||||||
Income taxes receivable | — | 190,912 | ||||||||
Other current assets | 201,862 | 143,237 | ||||||||
Total current assets | 37,023,868 | 37,990,002 | ||||||||
Property and equipment, net | 2,242,225 | 2,039,935 | ||||||||
Other assets | ||||||||||
Deposits | 3,043,368 | 2,907,104 | ||||||||
Deferred income taxes, net | 6,253,256 | 6,402,513 | ||||||||
Intangible assets, net | 36,193,616 | 37,323,286 | ||||||||
Goodwill | 17,983,549 | 17,970,049 | ||||||||
Total other assets | 63,473,789 | 64,602,952 | ||||||||
Total assets | $ | 102,739,882 | $ | 104,632,889 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
Current liabilities | ||||||||||
Long-term debt, current portion (net of deferred finance fees of $133,503 and $138,801 for 2018 and 2017, respectively) | $ | 3,235,247 | $ | 2,923,699 | ||||||
Accrued interest | 365,818 | 330,630 | ||||||||
Accounts payable | 753,965 | 1,909,612 | ||||||||
Accrued payroll and expenses | 11,210,316 | 11,540,806 | ||||||||
Accrued workers’ compensation | 406,788 | 592,121 | ||||||||
Contingent consideration, current portion | 4,432,984 | 4,299,184 | ||||||||
Other current liabilities | — | 74,052 | ||||||||
Income taxes payable | 307,176 | — | ||||||||
Total current liabilities | 20,712,294 | 21,670,104 | ||||||||
Line of credit (net of deferred finance fees of $703,733 and $747,716 for 2018 and 2017, respectively) | 20,032,312 | 20,620,352 | ||||||||
Long-term debt, less current portion (net of deferred finance fees of $214,534 and $246,030 for 2018 and 2017, respectively) | 19,691,716 | 20,578,970 | ||||||||
Contingent consideration, less current portion | 2,224,064 | 2,178,486 | ||||||||
Other long-term liabilities | 609,561 | 450,298 | ||||||||
Total liabilities | 63,269,947 | 65,498,210 | ||||||||
Commitments and contingencies | ||||||||||
Preferred stock, $0.01 par value per share, 500,000 shares authorized, -0- shares issued and outstanding | — | — | ||||||||
Common stock, $0.01 par value per share; 19,500,000 shares authorized, 8,763,965 and 8,759,376 shares issued and outstanding for 2018 and 2017, respectively | 87,640 | 87,594 | ||||||||
Additional paid in capital | 37,734,812 | 37,675,329 | ||||||||
Retained earnings | 1,647,483 | 1,371,756 | ||||||||
Total stockholders’ equity | 39,469,935 | 39,134,679 | ||||||||
Total liabilities and stockholders’ equity | $ | 102,739,882 | $ | 104,632,889 |
Thirteen Weeks Ended | |||||||||
2018 | 2017 | ||||||||
Revenues | $ | 66,855,470 | $ | 56,843,687 | |||||
Cost of services | 49,545,539 | 43,172,453 | |||||||
Gross profit | 17,309,931 | 13,671,234 | |||||||
Selling, general and administrative expenses | 11,979,120 | 9,606,444 | |||||||
Depreciation and amortization | 1,295,506 | 1,371,434 | |||||||
Operating income | 4,035,305 | 2,693,356 | |||||||
Interest expense, net | (871,092 | ) | (558,619 | ) | |||||
Income before income taxes | 3,164,213 | 2,134,737 | |||||||
Income tax expense | 698,642 | 832,906 | |||||||
Net income | $ | 2,465,571 | $ | 1,301,831 | |||||
Net income per share: | |||||||||
Basic | $ | 0.28 | $ | 0.15 | |||||
Diluted | $ | 0.27 | $ | 0.15 | |||||
Weighted-average shares outstanding: | |||||||||
Basic | 8,761,292 | 8,668,955 | |||||||
Diluted | 9,087,016 | 8,924,419 |
Common Stock | |||||||||||||||||||||||
Preferred Stock | Shares | Par Value | Additional Paid in Capital | Retained Earnings | Total | ||||||||||||||||||
Stockholders’ equity, December 31, 2017 | $ | — | 8,759,376 | $ | 87,594 | $ | 37,675,329 | $ | 1,371,756 | $ | 39,134,679 | ||||||||||||
Share-based compensation | — | — | — | 67,029 | — | 67,029 | |||||||||||||||||
Additional shares of common stock available for issuance in the 2013 Long-Term Incentive Plan | — | — | — | (7,500 | ) | — | (7,500 | ) | |||||||||||||||
Exercise of common stock options | — | 4,589 | 46 | (46 | ) | — | — | ||||||||||||||||
Cash dividend declared ($0.25 per share) | — | — | — | — | (2,189,844 | ) | (2,189,844 | ) | |||||||||||||||
Net income | — | — | — | — | 2,465,571 | 2,465,571 | |||||||||||||||||
Stockholders’ equity, April 1, 2018 | $ | — | 8,763,965 | $ | 87,640 | $ | 37,734,812 | $ | 1,647,483 | $ | 39,469,935 |
2018 | 2017 | ||||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | 2,465,571 | $ | 1,301,831 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation | 165,836 | 139,591 | |||||||||
Amortization | 1,129,670 | 1,231,843 | |||||||||
Amortization of deferred financing fees | 80,777 | 24,798 | |||||||||
Interest expense on contingent consideration payable | 179,378 | 258,116 | |||||||||
Provision for doubtful accounts | 197,321 | 4,254 | |||||||||
Share-based compensation | 67,029 | 77,563 | |||||||||
Deferred income taxes | 149,257 | — | |||||||||
Net changes in operating assets and liabilities, net of effects of acquisitions: | |||||||||||
Accounts receivable | 1,492,164 | 1,916,967 | |||||||||
Prepaid expenses | (855,638 | ) | (66,971 | ) | |||||||
Other current assets | (58,626 | ) | 2,096 | ||||||||
Deposits | (136,263 | ) | (40,123 | ) | |||||||
Accrued interest | 35,188 | (489 | ) | ||||||||
Accounts payable | (1,155,647 | ) | 350,484 | ||||||||
Accrued payroll and expenses | (330,490 | ) | 754,333 | ||||||||
Accrued workers’ compensation | (185,333 | ) | (284,020 | ) | |||||||
Other current liabilities | (87,552 | ) | — | ||||||||
Income taxes payable | 498,088 | 829,905 | |||||||||
Other long-term liabilities | (54,959 | ) | (28,294 | ) | |||||||
Net cash provided by operating activities | 3,595,771 | 6,471,884 | |||||||||
Cash flows from investing activities | |||||||||||
Capital expenditures | (153,904 | ) | (327,112 | ) | |||||||
Net cash used in investing activities | (153,904 | ) | (327,112 | ) |
Cash flows from financing activities | |||||||||||
Net payments under line of credit | (632,023 | ) | (3,977,445 | ) | |||||||
Principal payments on long-term debt | (612,500 | ) | — | ||||||||
Payments of dividends | (2,189,844 | ) | (2,167,327 | ) | |||||||
Additional shares of common stock available for issuance in the 2013 Long-Term Incentive Plan | (7,500 | ) | — | ||||||||
Net cash used in financing activities | (3,441,867 | ) | (6,144,772 | ) | |||||||
Net change in cash and cash equivalents | — | — | |||||||||
Cash and cash equivalents, beginning of period | — | — | |||||||||
Cash and cash equivalents, end of period | $ | — | $ | — | |||||||
Supplemental cash flow information: | |||||||||||
Cash paid for interest | $ | 529,195 | $ | 240,845 | |||||||
Cash paid for taxes, net of refunds | $ | 43,500 | $ | — | |||||||
Non-cash transactions: | |||||||||||
Leasehold improvements funded by landlord incentives | $ | 214,222 | $ | — |
Thirteen Weeks Ended | ||||||
April 1, 2018 | March 26, 2017 | |||||
Maryland | 12 | % | 14 | % | ||
Tennessee | 14 | % | 3 | % | ||
Texas | 28 | % | 30 | % |
Thirteen Weeks Ended | ||||||||
April 1, 2018 | March 26, 2017 | |||||||
Beginning balance | $ | 473,573 | $ | 473,573 | ||||
Provision for doubtful accounts | 197,321 | 4,254 | ||||||
Amounts written off, net | (197,321 | ) | (4,254 | ) | ||||
Ending balance | $ | 473,573 | $ | 473,573 |
Thirteen Weeks Ended | |||||||
April 1, 2018 | March 26, 2017 | ||||||
Weighted-average number of common shares outstanding: | 8,761,292 | 8,668,955 | |||||
Effect of dilutive securities: | |||||||
Stock options | 286,875 | 227,214 | |||||
Warrants | 38,849 | 28,250 | |||||
Weighted-average number of diluted common shares outstanding | 9,087,016 | 8,924,419 | |||||
Stock options | 178,000 | 50,000 | |||||
Warrants | 32,250 | 32,250 | |||||
Antidilutive shares | 210,250 | 82,250 |
Thirteen Weeks Ended | ||||
March 26, 2017 | ||||
Revenues | $ | 69,389 | ||
Gross profit | $ | 16,807 | ||
Net income | $ | 1,481 | ||
Income per share: | ||||
Basic | $ | 0.17 | ||
Diluted | $ | 0.17 |
April 1, 2018 | December 31, 2017 | |||||||
Temporary worker payroll | $ | 5,816,993 | $ | 5,124,908 | ||||
Temporary worker payroll related | 1,835,776 | 2,454,539 | ||||||
Accrued bonuses and commissions | 1,105,074 | 1,172,497 | ||||||
Other | 2,452,473 | 2,788,862 | ||||||
$ | 11,210,316 | $ | 11,540,806 |
Estimated Cash Payment | Discount | Net | |||||||||
Due in: | |||||||||||
Less than one year | $ | 4,750,000 | $ | (317,016 | ) | $ | 4,432,984 | ||||
One to two years | 2,500,000 | (275,936 | ) | 2,224,064 | |||||||
Contingent consideration | $ | 7,250,000 | $ | (592,952 | ) | $ | 6,657,048 |
April 1, 2018 | December 31, 2017 | |||||||||||
Base Rate | $ | 5,736,045 | 5.50 | % | $ | 6,368,068 | 5.50 | % | ||||
LIBOR | 5,000,000 | 4.45 | % | 5,000,000 | 4.09 | % | ||||||
LIBOR | 5,000,000 | 4.54 | % | 5,000,000 | 4.13 | % | ||||||
LIBOR | 5,000,000 | 4.77 | % | 5,000,000 | 4.24 | % | ||||||
Total | $ | 20,736,045 | $ | 21,368,068 |
April 1, 2018 | December 31, 2017 | |||||||||||
Base Rate | $ | 687,500 | 5.50 | % | $ | 687,500 | 5.50 | % | ||||
LIBOR | 6,500,000 | 4.70 | % | 6,500,000 | 4.34 | % | ||||||
LIBOR | 6,500,000 | 4.79 | % | 6,500,000 | 4.38 | % | ||||||
LIBOR | 6,000,000 | 5.02 | % | 6,000,000 | 4.49 | % | ||||||
LIBOR | 3,587,500 | 5.22 | % | 4,200,000 | 4.64 | % | ||||||
Long-term debt | $ | 23,275,000 | $ | 23,887,500 |
Amounts Recorded at Fair Value | Financial Statement Classification | Fair Value Hierarchy | April 1, 2018 | December 31, 2017 | ||||||||
Contingent consideration, net | Contingent consideration, net - current and long-term | Level 3 | $ | 6,657,048 | $ | 6,477,670 |
Number of Shares | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life | Total Intrinsic Value of Options (in thousands) | |||||||||
Options outstanding at December 31, 2017 | 765,411 | $ | 10.27 | 7.3 | $ | 4,521 | ||||||
Exercised | (9,000 | ) | $ | 8.36 | ||||||||
Options outstanding at April 1, 2018 | 756,411 | $ | 10.29 | 7.0 | $ | 6,579 | ||||||
Options exercisable at December 31, 2017 | 498,611 | $ | 8.74 | 6.8 | $ | 3,640 | ||||||
Options exercisable at April 1, 2018 | 536,011 | $ | 8.53 | 6.5 | $ | 5,605 |
Number of Shares | Weighted Average Grant Date Fair Value | ||||||
Nonvested outstanding at December 31, 2017 | 266,800 | $ | 3.09 | ||||
Nonvested outstanding at April 1, 2018 | 220,400 | $ | 3.12 |
Number of Shares | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life | Total Intrinsic Value of Options (in thousands) | |||||||||
Warrants outstanding at December 31, 2017 | 123,984 | $ | 11.51 | 2.2 | $ | 577 | ||||||
Warrants outstanding at April 1, 2018 | 123,984 | $ | 11.51 | 1.9 | $ | 927 | ||||||
Warrants exercisable at December 31, 2017 | 123,984 | $ | 11.51 | 2.2 | $ | 577 | ||||||
Warrants exercisable at April 1, 2018 | 123,984 | $ | 11.51 | 1.9 | $ | 927 |
Thirteen Weeks Ended | ||||||||
April 1, 2018 | March 26, 2017 | |||||||
Revenue: | ||||||||
Multifamily | $ | 18,034,363 | $ | 13,091,645 | ||||
Professional | 31,089,755 | 25,832,624 | ||||||
Commercial | 17,731,352 | 17,919,418 | ||||||
Total | $ | 66,855,470 | $ | 56,843,687 | ||||
Depreciation: | ||||||||
Multifamily | $ | 39,282 | $ | 23,310 | ||||
Professional | 52,029 | 41,161 | ||||||
Commercial | 26,352 | 26,169 | ||||||
Corporate | 48,173 | 48,951 | ||||||
Total | $ | 165,836 | $ | 139,591 |
Amortization: | ||||||||
Professional | $ | 1,060,147 | $ | 1,137,222 | ||||
Commercial | 66,151 | 94,621 | ||||||
Corporate | 3,372 | — | ||||||
Total | $ | 1,129,670 | $ | 1,231,843 | ||||
Operating income: | ||||||||
Multifamily | $ | 2,606,378 | $ | 1,701,517 | ||||
Professional | 2,266,655 | 1,811,980 | ||||||
Commercial | 1,056,055 | 853,645 | ||||||
Corporate - selling | (173,948 | ) | (126,921 | ) | ||||
Corporate - general and administrative | (1,719,835 | ) | (1,546,865 | ) | ||||
Total | $ | 4,035,305 | $ | 2,693,356 | ||||
Capital expenditures: | ||||||||
Multifamily | $ | 9,161 | $ | 43,287 | ||||
Professional | 10,992 | 117,819 | ||||||
Commercial | — | 34,157 | ||||||
Corporate | 133,751 | 131,849 | ||||||
Total | $ | 153,904 | $ | 327,112 |
April 1, 2018 | December 31, 2017 | |||||||
Total Assets: | ||||||||
Multifamily | $ | 11,158,439 | $ | 11,678,908 | ||||
Professional | 65,881,159 | 67,089,681 | ||||||
Commercial | 17,896,666 | 18,075,307 | ||||||
Corporate | 7,803,618 | 7,788,993 | ||||||
Total | $ | 102,739,882 | $ | 104,632,889 |
Thirteen Weeks Ended | |||||||||
April 1, 2018 | March 26, 2017 | ||||||||
(dollars in thousands) | |||||||||
Revenues | $ | 66,855 | $ | 56,844 | |||||
Cost of services | 49,545 | 43,173 | |||||||
Gross profit | 17,310 | 13,671 | |||||||
Selling, general and administrative expenses | 11,978 | 9,606 | |||||||
Depreciation and amortization | 1,296 | 1,371 | |||||||
Operating income | 4,036 | 2,694 | |||||||
Interest expense, net | (871 | ) | (559 | ) | |||||
Income before income tax | 3,165 | 2,135 | |||||||
Income tax expense | 699 | 833 | |||||||
Net income | $ | 2,466 | $ | 1,302 | |||||
Revenues | 100.0 | % | 100.0 | % | |||||
Cost of services | 74.1 | % | 75.9 | % | |||||
Gross profit | 25.9 | % | 24.1 | % | |||||
Selling, general and administrative expenses | 17.9 | % | 16.9 | % | |||||
Depreciation and amortization | 1.9 | % | 2.4 | % | |||||
Operating income | 6.0 | % | 4.7 | % | |||||
Interest expense, net | (1.3 | )% | (1.0 | )% | |||||
Income before income tax | 4.7 | % | 3.8 | % | |||||
Income tax expense | 1.0 | % | 1.5 | % | |||||
Net income | 3.7 | % | 2.3 | % |
Revenues: | Thirteen Weeks Ended | ||||||||||||||
April 1, 2018 | March 26, 2017 | ||||||||||||||
(dollars in thousands) | |||||||||||||||
Revenues by segment: | |||||||||||||||
Multifamily | $ | 18,034 | 27.0 | % | $ | 13,092 | 23.0 | % | |||||||
Professional | 31,090 | 46.5 | % | 25,833 | 45.4 | % | |||||||||
Commercial | 17,731 | 26.5 | % | 17,919 | 31.6 | % | |||||||||
Total Revenues | $ | 66,855 | 100.0 | % | $ | 56,844 | 100.0 | % |
Thirteen Weeks Ended | |||||||||||||||
April 1, 2018 | March 26, 2017 | ||||||||||||||
(dollars in thousands) | |||||||||||||||
Gross Profit by segment: | |||||||||||||||
Multifamily | $ | 6,880 | 39.7 | % | $ | 4,984 | 36.5 | % | |||||||
Professional | 7,872 | 45.5 | % | 6,211 | 45.4 | % | |||||||||
Commercial | 2,558 | 14.8 | % | 2,476 | 18.1 | % | |||||||||
Total Gross Profit | $ | 17,310 | 100.0 | % | $ | 13,671 | 100.0 | % |
Thirteen Weeks Ended | |||||||
April 1, 2018 | March 26, 2017 | ||||||
Gross Profit Percentage by segment: | |||||||
Multifamily | 38.2 | % | 38.1 | % | |||
Professional | 25.3 | % | 24.0 | % | |||
Commercial | 14.4 | % | 13.8 | % | |||
Company Gross Profit | 25.9 | % | 24.1 | % |
Thirteen Weeks Ended | ||||||||
April 1, 2018 | March 26, 2017 | |||||||
(dollars in thousands) | ||||||||
Net income | $ | 2,466 | $ | 1,302 | ||||
Interest expense, net | 871 | 559 | ||||||
Income tax expense | 699 | 833 | ||||||
Operating income | 4,036 | 2,694 | ||||||
Depreciation and amortization | 1,296 | 1,371 | ||||||
Share-based compensation | 67 | 78 | ||||||
Adjusted EBITDA | $ | 5,399 | $ | 4,143 |
Thirteen Weeks Ended | ||||||||
April 1, 2018 | March 26, 2017 | |||||||
(dollars in thousands) | ||||||||
Net cash provided by operating activities | $ | 3,596 | $ | 6,472 | ||||
Net cash used in investing activities | (154 | ) | (327 | ) | ||||
Net cash used in financing activities | (3,442 | ) | (6,145 | ) | ||||
Net change in cash and cash equivalents | $ | — | $ | — |
Exhibit Number | Description | |
3.1 | ||
3.2 | ||
4.1 | ||
31.1* | ||
31.2* | ||
32.1† | ||
101.INS * | XBRL Instance Document. | |
101.SCH * | XBRL Taxonomy Extension Schema Document. | |
101.CAL * | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF * | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB * | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE * | XBRL Taxonomy Extension Presentation Linkbase Document. |
* | Filed herewith. | |
† | This certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act. |
BG STAFFING, INC. | ||
/s/ L. Allen Baker, Jr. | ||
Name: | L. Allen Baker, Jr. | |
Title: | President and Chief Executive Officer | |
(Principal Executive Officer) | ||
/s/ Dan Hollenbach | ||
Name: | Dan Hollenbach | |
Title: | Chief Financial Officer and Secretary | |
(Principal Financial Officer) | ||
1 | I have reviewed this quarterly report on Form 10-Q for the quarterly period ended April 1, 2018 of BG Staffing, Inc. | |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4 | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. | |
5 | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ L. Allen Baker, Jr. | |
Name: | L. Allen Baker, Jr. | |
Title: | President and Chief Executive Officer | |
(Principal Executive Officer) |
1 | I have reviewed this quarterly report on Form 10-Q for the quarterly period ended April 1, 2018 of BG Staffing, Inc. | |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4 | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. | |
5 | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Dan Hollenbach | |
Name: | Dan Hollenbach | |
Title: | Chief Financial Officer and Secretary | |
(Principal Financial Officer) |
(1) | The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ L. Allen Baker, Jr. | By: | /s/ Dan Hollenbach | |
Name: | L. Allen Baker, Jr. | Name: | Dan Hollenbach | |
Title: | President and Chief Executive Officer | Title: | Chief Financial Officer and Secretary | |
(Principal Executive Officer) | (Principal Financial Officer) |
Document And Entity Information - shares |
3 Months Ended | |
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Apr. 01, 2018 |
May 10, 2018 |
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Document And Entity Information [Abstract] | ||
Entity Registrant Name | BG Staffing, Inc. | |
Entity Central Index Key | 0001474903 | |
Current Fiscal Year End Date | --12-30 | |
Entity Filer Category | Accelerated Filer | |
Trading Symbol | BGSF | |
Entity Common Stock, Shares Outstanding | 8,764,020 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Apr. 01, 2018 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2018 |
UNAUDITED CONSOLIDATED BALANCE SHEETS [Parenthetical] - USD ($) |
Apr. 01, 2018 |
Dec. 31, 2017 |
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Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable, current | $ 473,573 | $ 473,573 |
Preferred stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 500,000 | 500,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 19,500,000 | 19,500,000 |
Common stock, shares issued (in shares) | 8,763,965 | 8,759,376 |
Common stock, shares outstanding (in shares) | 8,763,965 | 8,759,376 |
Deferred finance costs, line of credit arrangements, net | $ 703,733 | $ 747,716 |
Deferred finance costs, current | 133,503 | 138,801 |
Deferred finance costs, noncurrent | $ 214,534 | $ 246,030 |
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME - USD ($) |
3 Months Ended | |
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Apr. 01, 2018 |
Mar. 26, 2017 |
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Income Statement [Abstract] | ||
Revenues | $ 66,855,470 | $ 56,843,687 |
Cost of services | 49,545,539 | 43,172,453 |
Gross profit | 17,309,931 | 13,671,234 |
Selling, general and administrative expenses | 11,979,120 | 9,606,444 |
Depreciation and amortization | 1,295,506 | 1,371,434 |
Operating income | 4,035,305 | 2,693,356 |
Interest expense, net | (871,092) | (558,619) |
Income (loss) before income taxes | 3,164,213 | 2,134,737 |
Income tax expense | 698,642 | 832,906 |
Net income (loss) | $ 2,465,571 | $ 1,301,831 |
Net income per share: | ||
Basic (in dollars per share) | $ 0.28 | $ 0.15 |
Diluted (in dollars per share) | $ 0.27 | $ 0.15 |
Weighted-average shares outstanding: | ||
Basic (shares) | 8,761,292 | 8,668,955 |
Diluted (shares) | 9,087,016 | 8,924,419 |
NATURE OF OPERATIONS |
3 Months Ended |
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Apr. 01, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | NATURE OF OPERATIONS BG Staffing, Inc. is a national provider of temporary staffing services that operates, along with its wholly owned subsidiaries BG Staffing, LLC, B G Staff Services Inc., BG Personnel, LP and BG Finance and Accounting, Inc. (“BGFA”) (collectively, the “Company”), primarily within the United States of America in three industry segments: Multifamily, Professional, and Commercial. We now have 65 branch offices and 15 on-site locations located across 26 states. The Multifamily segment provides front office and maintenance temporary workers to various apartment communities, in 23 states, via property management companies responsible for the apartment communities' day-to-day operations. The Professional segment provides skilled temporary workers on a nationwide basis for information technology ("IT") and finance and accounting customer projects. The Commercial segment provides temporary workers primarily to logistics, distribution, and call center customers needing a flexible workforce in Illinois, Wisconsin, New Mexico, Texas, Tennessee and Mississippi. Our business experiences seasonal fluctuations. Our quarterly operating results are affected by the number of billing days in a quarter, as well as the seasonality of our customers’ business. Demand for our Multifamily staffing services increase in the second and is highest during the third quarter of the year due to the increased turns in multifamily units during the summer months when schools are not in session. Demand for our Commercial staffing services increases during the third quarter of the year and peaks in the fourth quarter. Demand for our Commercial staffing services is lower during the first quarter, in part due to customer shutdowns and adverse weather conditions in the winter months. In addition, our cost of services typically increases in the first quarter primarily due to the reset of payroll taxes. The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles in the United States (“GAAP”), pursuant to the applicable rules and regulations of the SEC. The information furnished herein reflects all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary to present a fair statement of the financial position and operating results of the Company as of and for the respective periods. However, these operating results are not necessarily indicative of the results expected for a full fiscal year or any other future period. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, management of the Company believes, to the best of their knowledge, that the disclosures herein are adequate to make the information presented not misleading. The Company has determined that there were no subsequent events that would require disclosure or adjustments to the accompanying consolidated financial statements through the date the financial statements were issued. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the fiscal year ended December 31, 2017, included in its Annual Report on Form 10-K. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements include the accounts of the Company. All significant intercompany transactions and balances have been eliminated in consolidation. Fiscal Periods The Company has a 52/53 week fiscal year. Fiscal periods for the consolidated financial statements included herein are as of April 1, 2018 and December 31, 2017, and include the thirteen week periods ended April 1, 2018 and March 26, 2017, referred to herein as Fiscal 2018 and 2017, respectively. Reclassifications Certain reclassifications have been made to the 2017 financial statements to conform with the 2018 presentation. Management Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates affecting the financial statements include goodwill, intangible assets and contingent consideration obligations related to acquisitions. Additionally, the valuation of share based compensation option expense uses a model based upon interest rates, stock prices, maturity estimates, volatility and other factors. The Company believes these estimates and assumptions are reliable. However, these estimates and assumptions may change in the future based on actual experience as well as market conditions. Financial Instruments The Company uses fair value measurements in areas that include, but are not limited to, the allocation of purchase price consideration to tangible and identifiable intangible assets and contingent consideration. The carrying values of cash and cash equivalents, accounts receivables, prepaid expenses, accounts payable, accrued liabilities, and other current assets and liabilities approximate their fair values because of the short-term nature of these instruments. The carrying value of bank debt approximates fair value due to the variable nature of the interest rates under the credit agreement with Texas Capital Bank, National Association (“TCB”) that provides for a revolving credit facility and term loan and current rates available to the Company for debt with similar terms and risk. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. Concentration of Credit Risk Concentration of credit risk is limited due to the Company's diverse customer base and their dispersion across many different industries and geographic locations nationwide. No single customer accounted for more than 10% of the Company’s accounts receivable as of April 1, 2018 and December 31, 2017 or revenue for the thirteen week periods ended April 1, 2018 and March 26, 2017. Geographic revenue in excess of 10% of the Company's consolidated revenue in Fiscal 2018 and the related percentage for Fiscal 2017 was generated in the following areas:
Consequently, weakness in economic conditions in these regions could have a material adverse effect on the Company’s financial position and results of future operations. Accounts Receivable The Company extends credit to its customers in the normal course of business. Accounts receivable represents unpaid balances due from customers. The Company maintains an allowance for doubtful accounts for expected losses resulting from customers’ non-payment of balances due to the Company. The Company’s determination of the allowance for uncollectible amounts is based on management’s judgments and assumptions, including general economic conditions, portfolio composition, prior loss experience, evaluation of credit risk related to certain individual customers and the Company’s ongoing examination process. Receivables are written off after they are deemed to be uncollectible after all reasonable means of collection have been exhausted. Recoveries of receivables previously written off are recorded when received. Changes in the allowance for doubtful accounts are as follows:
Property and Equipment Property and equipment are stated net of accumulated depreciation and amortization of $1,542,497 and $1,377,319 at April 1, 2018 and December 31, 2017, respectively. Deposits The Company maintains guaranteed costs policies for workers' compensation coverage in the states in which it operates, with minimal loss retention for employees in the Commercial segment. Under these policies, the Company is required to maintain refundable deposits of $2,799,218 and $2,665,665, which are included in Deposits the accompanying consolidated balance sheets as of April 1, 2018 and December 31, 2017, respectively. Long-Lived Assets The Company reviews its long-lived assets, primarily fixed assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recovered. The Company looks primarily to the undiscounted future cash flows in its assessment of whether or not long-lived assets have been impaired. There were no impairments during Fiscal 2018 and Fiscal 2017. Intangible Assets The Company holds intangible assets with indefinite and finite lives. Intangible assets with indefinite useful lives are not amortized. Intangible assets with finite useful lives are amortized over their respective estimated useful lives, ranging from three to ten years, based on a pattern in which the economic benefit of the respective intangible asset is realized. Identifiable intangible assets recognized in conjunction with acquisitions are recorded at fair value. Significant unobservable inputs are used to determine the fair value of the identifiable intangible assets based on the income approach valuation model whereby the present worth and anticipated future benefits of the identifiable intangible assets are discounted back to their net present value. The Company capitalizes purchased software and internal payroll costs directly incurred in the modification of software for internal use. Software maintenance and training costs are expensed in the period incurred. The Company evaluates the recoverability of intangible assets whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. The Company annually evaluates the remaining useful lives of all intangible assets to determine whether events and circumstances warrant a revision to the remaining period of amortization. Goodwill Goodwill is not amortized, but instead is evaluated at the reporting unit level for impairment annually at the end of each fiscal year, or more frequently, if conditions indicate an earlier review is necessary. If the Company has determined that it is more likely than not that the fair value for one or more reporting units is greater than their carrying value, the Company may use a qualitative assessment for the annual impairment test. Deferred Rent The Company recognizes rental expense on a straight-line basis over the life of the agreement. Deferred rent is recognized as the difference between cash payments and rent expense, including any landlord incentives. Deferred Financing Fees Deferred financing fees are amortized using the effective interest method over the term of the respective loans. Debt issuance costs related to a recognized debt liability are presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability. Contingent Consideration The Company has obligations, to be paid in cash, related to its acquisitions if certain future operating and financial goals are met. The fair value of this contingent consideration is determined using expected cash flows and present value technique. Prior to Fiscal 2017, the calculation of the fair value of the expected future payments uses a discount rate that approximates the Company's weighted average cost of capital. For acquisitions beginning in Fiscal 2017, based on a new valuation methodology, the fair value calculation of the expected future payments uses a discount rate commensurate with the risks of the expected cash flow. The resulting discount is amortized as interest expense over the outstanding period using the effective interest method. Revenue Recognition The Company derives its revenues from three segments: Multifamily, Professional, and Commercial. The Company provides temporary staffing and permanent placement services. Revenues are recognized when promised services are delivered to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Revenues as presented on the consolidated statements of operations represent services rendered to customers less variable consideration, such as sales adjustments and allowances. Reimbursements, including those related to out-of-pocket expenses, are also included in revenues, and equivalent amounts of reimbursable expenses are included in cost of services. The Company records revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses. The Company has concluded that gross reporting is appropriate because the Company (i) has the risk of identifying and hiring qualified workers, (ii) has the discretion to select the workers and establish their price and duties and (iii) bears the risk for services that are not fully paid for by customers. Temporary staffing revenues - Temporary and consultant staffing revenues from contracts with customers are recognized in the amount to which the Company has a right to invoice, when the services are rendered by the Company’s temporary employees. Permanent placement staffing revenues - Permanent placement staffing revenues are recognized when employment candidates start their permanent employment. The Company estimates the effect of permanent placement candidates who do not remain with its customers through the guarantee period (generally 90 days) based on historical experience. Allowances, recorded as a liability, are established to estimate these losses. Fees to customers are generally calculated as a percentage of the new worker’s annual compensation. No fees for permanent placement services are charged to employment candidates. Refer to Note 12 for disaggregated revenues by segment. Payment terms in our contracts vary by the type and location of our customer and the services offered. The term between invoicing and when payment is due is not significant. There were no unsatisfied performance obligations as of April 1, 2018. There were no revenues recognized during the thirteen week period ended April 1, 2018 related to performance obligations satisfied or partially satisfied in previous periods. There are no contract costs capitalized. The Company did not recognize any contract impairments during the thirteen week period ended April 1, 2018. Share-Based Compensation The Company recognizes compensation expense in selling, general and administrative expenses over the service period for options that are expected to vest and records adjustments to compensation expense at the end of the service period if actual forfeitures differ from original estimates. Earnings Per Share Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period adjusted to reflect potentially dilutive securities. Antidilutive shares are excluded from the calculation of earnings per share. The following is a reconciliation of the number of shares used in the calculation of basic and diluted earnings per share for the respective periods:
Income Taxes The current provision for income taxes represents estimated amounts payable or refundable on tax returns filed or to be filed for the year. The Company recognizes any penalties when necessary as part of selling, general and administrative expenses. Goodwill is deductible for tax purposes. On December 22, 2017, the President signed the Tax Cuts and Jobs Act (“TCJA”) into law. Effective January 1, 2018, among other changes, TCJA reduced the federal corporate tax rate to 21 percent. Accounting Standards Codification ("ASC") Topic 740-25 and 35 prescribes that the impact of changes in laws or rates shall be recognized at the date of enactment. The Company recorded a $3.3 million impact of the TCJA in the fourth quarter of Fiscal 2017. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts are classified as noncurrent in the consolidated balance sheets. Deferred tax assets are also recognized for net operating loss and tax credit carryovers. The overall change in deferred tax assets and liabilities for the period measures the deferred tax expense or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to tax expense in the period of enactment. When appropriate, we record a valuation allowance against net deferred tax assets to offset future tax benefits that may not be realized. In determining whether a valuation allowance is appropriate, we consider whether it is more likely than not that all or some portion of our deferred tax assets will not be realized, based in part upon management’s judgments regarding future events and past operating results. The Company follows the guidance of Accounting Standards Codification ("ASC") Topic 740, Accounting for Uncertainty in Income Taxes. ASC Topic 740 prescribes a more-likely-than-not measurement methodology to reflect the financial statement impact of uncertain tax positions taken or expected to be taken in a tax return. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updates ("ASU") ASU 2014-09, Revenue from Contracts with Customers. Since May 2014, the FASB has issued additional and amended authoritative guidance regarding revenue from contracts with customers in order to clarify and improve the understanding of the implementation guidance. As amended, the new guidance requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration a company expects to receive in exchange for those goods or services. The new standard is effective for annual and interim periods beginning after December 15, 2017. The Company adopted this ASU on January 1, 2018 on a modified retrospective basis. As the initial adoption of the standard did not have a material impact on the Company's financial condition or results of operations, no cumulative effect was recognized at the date of initial application. The Company also had no significant changes to systems, processes, or controls. In February 2016, the FASB issued ASU 2016-02 Leases, which changes financial reporting as it relates to leasing transactions. Under the new guidance, lessees will be required to recognize a lease liability, measured on a discounted basis; and a right-of-use asset, for the lease term. The new guidance is effective for annual and interim periods beginning after December 15, 2018. Early application is permitted. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. While the impact of the adoption of this guidance will include the recognition of right-of-use assets and lease liabilities on the Company’s statement of financial position, the Company is in the process of evaluating the impact of adoption of this guidance on its systems, processes, and controls. In January 2017, the FASB issued ASU No. 2017-04 Intangibles-Goodwill and Other Simplifying the Test for Goodwill Impairment, which provides guidance to simplify the subsequent measurement of goodwill by eliminating the Step 2 procedure from the goodwill impairment test. The new standard is effective for the Company beginning with the fourth quarter of 2020. The Company does not anticipate the adoption of ASU 2017-04 will have a material impact on the Company's financial condition or results of operations. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting which provides clarification on when modification accounting should be used for changes to the terms or conditions of a share-based payment award. The Company adopted this ASU on a prospective basis in the first quarter of fiscal 2018 which did not have a material impact on the consolidated financial statements. In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 which adds SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No. 118 and expresses the view of the staff regarding application of Topic 740, Income Taxes. The amendments are effective upon addition to the FASB Accounting Standards Codification. The Company adopted this ASU in the first quarter of 2018 which had no impact on the consolidated financial statements |
ACQUISITIONS |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS | ACQUISITIONS Zycron, Inc. On April 3, 2017, the Company acquired substantially all of the assets and assumed certain liabilities of Zycron, Inc. (“Zycron”) for an initial cash consideration paid of $18.5 million and issued $1.0 million (70,670 shares privately placed) of the Company's common stock at closing. An additional $0.5 million was held back as partial security for post-closing purchase price adjustments and indemnification obligations, which was paid on October 24, 2017 net of a working capital adjustment. The purchase agreement further provides for contingent consideration of up to $3.0 million based on the performance of the acquired business for the two years following the date of acquisition. The purchase agreement contained a provision for a “true up” of acquired working capital 120 days after the closing date. The Fiscal 2017 consolidated statement of income does not include any operating results of Zycron. Smart Resources, Inc. On September 18, 2017, the Company acquired substantially all of the assets and assumed certain liabilities of Smart Resources, Inc. and Accountable Search, LLC (collectively, "Smart") for an initial cash consideration paid of $6.0 million. The purchase agreement provides for contingent consideration of up to $2.0 million based on the performance of the acquired business for the two years following the date of acquisition. The purchase agreement contained a provision for a “true up” of acquired working capital 90 days after the closing date. The Fiscal 2017 consolidated statement of income does not include any operating results of Smart. Supplemental Unaudited Pro Forma Information The Company estimates that the revenues and net income for the periods below that would have been reported if the Zycron and Smart acquisitions had taken place on the first day of the Company's 2017 fiscal year would be as follows (dollars in thousands, except per share amounts):
Pro forma net income includes amortization of identifiable intangible assets, interest expense on additional borrowings on the Revolving Facility at a rate of 4.5% and tax expense of the pro forma adjustments at an effective tax rate of approximately 38.3% for Fiscal 2017. The pro forma information presented includes adjustments that will have a continuing impact on the operations that management considers non-recurring in assessing Zycron and Smart's historical performances. Amounts set forth above are not necessarily indicative of the results that would have been attained had the Zycron and Smart acquisitions taken place on the first day of the Company’s 2017 fiscal year or of the results that may be achieved by the combined enterprise in the future. |
INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | INTANGIBLE ASSETS Intangible assets are stated net of accumulated amortization of $37,086,125 and $35,956,455 at April 1, 2018 and December 31, 2017, respectively. Total amortization expense for the thirteen week periods ended April 1, 2018 and March 26, 2017 was $1,129,670 and $1,231,843, respectively. |
ACCRUED PAYROLL AND EXPENSES AND CONTINGENT CONSIDERATION |
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Accrued Payable And Expenses And Contingent Consideration | ACCRUED PAYROLL AND EXPENSES AND CONTINGENT CONSIDERATION Accrued payroll and expenses consist of the following at:
The following is a schedule of future estimated contingent consideration payments to various parties as of April 1, 2018:
In May 2018, the Company determined the preliminary year one earn out related to the Zycron acquisition was $0.1 million of a potential $1.5 million. Under the provisions of the Asset Purchase Agreement, the remaining $1.4 million can be earned at the year two measurement period. Accordingly, management believes that no adjustment to fair value is necessary as of April 1, 2018. |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | DEBT In connection with the acquisition of the assets of Zycron described above, on April 3, 2017, the Company entered into an Amended and Restated Credit Agreement (the “Amended Credit Agreement”) with TCB with an aggregate commitment of $55.0 million. The Amended Credit Agreement provides for a revolving credit facility maturing April 3, 2022 (the “Revolving Facility”), permitting the Company to borrow funds from time to time in an aggregate amount equal to the lesser of the borrowing base amount, which is 85% of eligible accounts receivable, and TCB’s commitment of $35.0 million and also provided for a term loan maturing April 3, 2022 (the “Term Loan”) in the amount of $20.0 million with principal payable quarterly, based on an annual percentage of the original principal amount as defined in the Amended Credit Agreement. TCB may also make loans (“Swing Line Loans”) not to exceed the lesser of $7.5 million or the aggregate commitment. Additionally, the Amended Credit Agreement originally provided for the Company to increase the commitment by $20.0 million ($15.0 million remaining) with an accordion feature. The Company borrowed $20.0 million on the Term Loan in conjunction with the closing of the Zycron acquisition on April 3, 2017. Proceeds from the foregoing loan arrangements were used to pay off existing indebtedness of the Company on the revolving credit facility under the credit agreement, dated as of August 21, 2015, as amended, with TCB. The Company borrowed $5.0 million on the accordion in conjunction with the closing of the Smart acquisition on September 18, 2017. The Revolving Facility and Term Loan bear interest either at the Base Rate plus the Applicable Margin or LIBOR plus the Applicable Margin (as such terms are defined in the Amended Credit Agreement). Swing Line Loans bear interest at the Base Rate plus the Applicable Margin. All interest and commitment fees are generally paid quarterly. Additionally, the Company pays an unused commitment fee on the unfunded portion of the Revolving Facility. The Company’s obligations under the Amended Credit Agreement are secured by a first priority security interest in substantially all tangible and intangible property of the Company and its subsidiaries. The Amended Credit Agreement's customary affirmative and negative covenants remain substantially the same as those in effect under the original credit agreement. The Company is subject to a maximum Leverage Ratio, a minimum Fixed Charge Coverage Ratio, and a minimum Dividend Fixed Charge Coverage Ratio, as defined in the Amended Credit Agreement. The Company was in compliance with these covenants as of April 1, 2018. Line of Credit At April 1, 2018 and December 31, 2017, $20.7 million and $21.4 million, respectively, was outstanding on the Revolving Facility with TCB. Borrowings under the Revolving Facility bore interest at:
Long-Term Debt Long-term debt consists of and bore interest at:
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS The accounting standard for fair value measurements defines fair value, and establishes a market-based framework or hierarchy for measuring fair value. The standard is applicable whenever assets and liabilities are measured at fair value. The fair value hierarchy established prioritizes the inputs used in valuation techniques into three levels as follows: Level 1 - Observable inputs - quoted prices in active markets for identical assets and liabilities; Level 2 - Observable inputs other than the quoted prices in active markets for identical assets and liabilities - includes quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets, and amounts derived from valuation models where all significant inputs are observable in active markets, for substantially the full term of the financial instrument; and Level 3 - Unobservable inputs - includes amounts derived from valuation models where one or more significant inputs are unobservable and require us to develop relevant assumptions. The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis and the level they fall within the fair value hierarchy:
The changes in the Level 3 fair value measurements from December 31, 2017 to April 1, 2018 relates to $0.2 million in accretion. The key inputs in determining the fair value of the contingent consideration as of April 1, 2018 and December 31, 2017 included discount rates of ranging from 8% and 22% as well as management's estimates of future sales volumes and EBITDA. |
CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | CONTINGENCIES The Company is engaged from time to time in legal matters and proceedings arising out of its normal course of business. The Company establishes a liability related to its legal proceedings and claims when it has determined that it is probable that the Company has incurred a liability and the related amount can be reasonably estimated. If the Company determines that an obligation is reasonably possible, the Company will, if material, disclose the nature of the loss contingency and the estimated range of possible loss, or include a statement that no estimate of the loss can be made. The Company is not currently a party to any material litigation; however, in the ordinary course of our business the Company is periodically threatened with or named as a defendant in various lawsuits or actions. The principal risks that the Company insures against, subject to and upon the terms and conditions of various insurance policies, are workers’ compensation, general liability, automobile liability, property damage, professional liability, employment practices, fiduciary liability, fidelity losses and director and officer liability. Under the Company's bylaws, the Company’s directors and officers are indemnified against certain liabilities arising out of the performance of their duties to the Company. The Company also has an insurance policy for our directors and officers to insure them against liabilities arising from the performance of their positions with the Company or its subsidiaries. The Company has also entered into indemnification agreements with its directors and certain officers. |
EQUITY |
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Stockholders' Equity Note [Abstract] | |
Equity | EQUITY Authorized capital stock consists of 19,500,000 shares of common stock, par value $0.01 per share and 500,000 shares of undesignated preferred stock, par value $0.01 per share. |
SHARE-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | SHARE-BASED COMPENSATION Stock Options For the thirteen week periods ended April 1, 2018 and March 26, 2017, the Company recognized $0.1 million and $0.1 million of compensation expense related to stock awards, respectively. Unamortized share-based compensation expense as of April 1, 2018 amounted to $0.5 million which is expected to be recognized over the next 2.3 years. A summary of stock option activity is presented as follows:
For the thirteen week periods ended April 1, 2018, the Company issued 4,589 shares of common stock upon the cashless exercise of 9,000 stock options. Warrant Activity For the thirteen week periods ended April 1, 2018 and March 26, 2017, the Company did not recognize compensation cost related to warrants. There was no unamortized stock compensation expense to be recognized as of April 1, 2018. A summary of warrant activity is presented as follows:
There were no nonvested warrants outstanding at April 1, 2018 and December 31, 2017. The intrinsic value in the tables above is the amount by which the market value of the underlying stock exceeded the exercise price of outstanding options or warrants, before applicable income taxes and represents the amount holders would have realized if all in-the-money options or warrants had been exercised on the last business day of the period indicated. |
EMPLOYEE BENEFIT PLAN |
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Retirement Benefits [Abstract] | |
Employee Benefit Plan | EMPLOYEE BENEFIT PLAN The Company provides a defined contribution plan (the “401(k) Plan”) for the benefit of its eligible full-time employees. The 401(k) Plan allows employees to make contributions subject to applicable statutory limitations. The Company matches employee contributions 100% up to the first 3% and 50% of the next 2% of an employee’s compensation. The Company contributed $268,985 and $202,421 to the 401(k) Plan for the thirteen week periods ended April 1, 2018 and March 26, 2017, respectively. |
BUSINESS SEGMENTS |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | BUSINESS SEGMENTS The Company operates within three industry segments: Multifamily, Professional, and Commercial. The Multifamily segment provides front office and maintenance temporary workers to various apartment communities, in 23 states, via property management companies responsible for the apartment communities' day-to-day operations. The Professional segment provides skilled temporary workers on a nationwide basis for IT and finance and accounting customer projects. The Commercial segment provides temporary workers primarily to logistics, distribution, and call center customers needing a flexible workforce in Illinois, Wisconsin, New Mexico, Texas, Tennessee and Mississippi. Segment operating income includes all revenue and cost of services, direct selling expenses, depreciation and amortization expense and excludes all general and administrative (corporate) expenses. Assets of corporate include cash, unallocated prepaid expenses, deferred tax assets, and other assets. The following table provides a reconciliation of revenue and operating income by reportable segment to consolidated results for the periods indicated:
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SUBSEQUENT EVENTS |
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Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Dividend On May 10, 2018, the Company's board of directors declared a cash dividend in the amount of $0.30 per share of common stock to be paid on May 29, 2018 to all shareholders of record as of the close of business on May 21, 2018. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated financial statements include the accounts of the Company. All significant intercompany transactions and balances have been eliminated in consolidation. |
Fiscal Year | Fiscal Periods The Company has a 52/53 week fiscal year. Fiscal periods for the consolidated financial statements included herein are as of April 1, 2018 and December 31, 2017, and include the thirteen week periods ended April 1, 2018 and March 26, 2017 |
Reclassifications | Reclassifications Certain reclassifications have been made to the 2017 financial statements to conform with the 2018 presentation. |
Management Estimates | Management Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates affecting the financial statements include goodwill, intangible assets and contingent consideration obligations related to acquisitions. Additionally, the valuation of share based compensation option expense uses a model based upon interest rates, stock prices, maturity estimates, volatility and other factors. The Company believes these estimates and assumptions are reliable. However, these estimates and assumptions may change in the future based on actual experience as well as market conditions. |
Financial Instruments | Financial Instruments The Company uses fair value measurements in areas that include, but are not limited to, the allocation of purchase price consideration to tangible and identifiable intangible assets and contingent consideration. The carrying values of cash and cash equivalents, accounts receivables, prepaid expenses, accounts payable, accrued liabilities, and other current assets and liabilities approximate their fair values because of the short-term nature of these instruments. The carrying value of bank debt approximates fair value due to the variable nature of the interest rates under the credit agreement with Texas Capital Bank, National Association (“TCB”) that provides for a revolving credit facility and term loan and current rates available to the Company for debt with similar terms and risk. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. |
Accounts Receivable | Accounts Receivable The Company extends credit to its customers in the normal course of business. Accounts receivable represents unpaid balances due from customers. The Company maintains an allowance for doubtful accounts for expected losses resulting from customers’ non-payment of balances due to the Company. The Company’s determination of the allowance for uncollectible amounts is based on management’s judgments and assumptions, including general economic conditions, portfolio composition, prior loss experience, evaluation of credit risk related to certain individual customers and the Company’s ongoing examination process. Receivables are written off after they are deemed to be uncollectible after all reasonable means of collection have been exhausted. Recoveries of receivables previously written off are recorded when received. |
Property and Equipment | Property and Equipment Property and equipment are stated net of accumulated depreciation and amortization of $1,542,497 and $1,377,319 at April 1, 2018 and December 31, 2017, respectively. |
Deposits | Deposits The Company maintains guaranteed costs policies for workers' compensation coverage in the states in which it operates, with minimal loss retention for employees in the Commercial segment. Under these policies, the Company is required to maintain refundable deposits of $2,799,218 and $2,665,665, which are included in Deposits the accompanying consolidated balance sheets as of April 1, 2018 and December 31, 2017, respectively. |
Long-Lived Assets | Long-Lived Assets The Company reviews its long-lived assets, primarily fixed assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recovered. The Company looks primarily to the undiscounted future cash flows in its assessment of whether or not long-lived assets have been impaired. There were no impairments during Fiscal 2018 and Fiscal 2017. |
Intangible Assets | Intangible Assets The Company holds intangible assets with indefinite and finite lives. Intangible assets with indefinite useful lives are not amortized. Intangible assets with finite useful lives are amortized over their respective estimated useful lives, ranging from three to ten years, based on a pattern in which the economic benefit of the respective intangible asset is realized. Identifiable intangible assets recognized in conjunction with acquisitions are recorded at fair value. Significant unobservable inputs are used to determine the fair value of the identifiable intangible assets based on the income approach valuation model whereby the present worth and anticipated future benefits of the identifiable intangible assets are discounted back to their net present value. The Company capitalizes purchased software and internal payroll costs directly incurred in the modification of software for internal use. Software maintenance and training costs are expensed in the period incurred. The Company evaluates the recoverability of intangible assets whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. The Company annually evaluates the remaining useful lives of all intangible assets to determine whether events and circumstances warrant a revision to the remaining period of amortization. |
Goodwill | Goodwill Goodwill is not amortized, but instead is evaluated at the reporting unit level for impairment annually at the end of each fiscal year, or more frequently, if conditions indicate an earlier review is necessary. If the Company has determined that it is more likely than not that the fair value for one or more reporting units is greater than their carrying value, the Company may use a qualitative assessment for the annual impairment test. |
Deferred Rent | Deferred Rent The Company recognizes rental expense on a straight-line basis over the life of the agreement. Deferred rent is recognized as the difference between cash payments and rent expense, including any landlord incentives. |
Deferred Financing Fees | Deferred Financing Fees Deferred financing fees are amortized using the effective interest method over the term of the respective loans. Debt issuance costs related to a recognized debt liability are presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability. |
Contingent Consideration | Contingent Consideration The Company has obligations, to be paid in cash, related to its acquisitions if certain future operating and financial goals are met. The fair value of this contingent consideration is determined using expected cash flows and present value technique. Prior to Fiscal 2017, the calculation of the fair value of the expected future payments uses a discount rate that approximates the Company's weighted average cost of capital. For acquisitions beginning in Fiscal 2017, based on a new valuation methodology, the fair value calculation of the expected future payments uses a discount rate commensurate with the risks of the expected cash flow. The resulting discount is amortized as interest expense over the outstanding period using the effective interest method. |
Revenue Recognition | Revenue Recognition The Company derives its revenues from three segments: Multifamily, Professional, and Commercial. The Company provides temporary staffing and permanent placement services. Revenues are recognized when promised services are delivered to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Revenues as presented on the consolidated statements of operations represent services rendered to customers less variable consideration, such as sales adjustments and allowances. Reimbursements, including those related to out-of-pocket expenses, are also included in revenues, and equivalent amounts of reimbursable expenses are included in cost of services. The Company records revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses. The Company has concluded that gross reporting is appropriate because the Company (i) has the risk of identifying and hiring qualified workers, (ii) has the discretion to select the workers and establish their price and duties and (iii) bears the risk for services that are not fully paid for by customers. Temporary staffing revenues - Temporary and consultant staffing revenues from contracts with customers are recognized in the amount to which the Company has a right to invoice, when the services are rendered by the Company’s temporary employees. Permanent placement staffing revenues - Permanent placement staffing revenues are recognized when employment candidates start their permanent employment. The Company estimates the effect of permanent placement candidates who do not remain with its customers through the guarantee period (generally 90 days) based on historical experience. Allowances, recorded as a liability, are established to estimate these losses. Fees to customers are generally calculated as a percentage of the new worker’s annual compensation. No fees for permanent placement services are charged to employment candidates. |
Share-based Compensation | Share-Based Compensation The Company recognizes compensation expense in selling, general and administrative expenses over the service period for options that are expected to vest and records adjustments to compensation expense at the end of the service period if actual forfeitures differ from original estimates. |
Earnings Per Share | Earnings Per Share Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period adjusted to reflect potentially dilutive securities. Antidilutive shares are excluded from the calculation of earnings per share. |
Income Taxes | Income Taxes The current provision for income taxes represents estimated amounts payable or refundable on tax returns filed or to be filed for the year. The Company recognizes any penalties when necessary as part of selling, general and administrative expenses. Goodwill is deductible for tax purposes. On December 22, 2017, the President signed the Tax Cuts and Jobs Act (“TCJA”) into law. Effective January 1, 2018, among other changes, TCJA reduced the federal corporate tax rate to 21 percent. Accounting Standards Codification ("ASC") Topic 740-25 and 35 prescribes that the impact of changes in laws or rates shall be recognized at the date of enactment. The Company recorded a $3.3 million impact of the TCJA in the fourth quarter of Fiscal 2017. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts are classified as noncurrent in the consolidated balance sheets. Deferred tax assets are also recognized for net operating loss and tax credit carryovers. The overall change in deferred tax assets and liabilities for the period measures the deferred tax expense or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to tax expense in the period of enactment. When appropriate, we record a valuation allowance against net deferred tax assets to offset future tax benefits that may not be realized. In determining whether a valuation allowance is appropriate, we consider whether it is more likely than not that all or some portion of our deferred tax assets will not be realized, based in part upon management’s judgments regarding future events and past operating results. The Company follows the guidance of Accounting Standards Codification ("ASC") Topic 740, Accounting for Uncertainty in Income Taxes. ASC Topic 740 prescribes a more-likely-than-not measurement methodology to reflect the financial statement impact of uncertain tax positions taken or expected to be taken in a tax return. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updates ("ASU") ASU 2014-09, Revenue from Contracts with Customers. Since May 2014, the FASB has issued additional and amended authoritative guidance regarding revenue from contracts with customers in order to clarify and improve the understanding of the implementation guidance. As amended, the new guidance requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration a company expects to receive in exchange for those goods or services. The new standard is effective for annual and interim periods beginning after December 15, 2017. The Company adopted this ASU on January 1, 2018 on a modified retrospective basis. As the initial adoption of the standard did not have a material impact on the Company's financial condition or results of operations, no cumulative effect was recognized at the date of initial application. The Company also had no significant changes to systems, processes, or controls. In February 2016, the FASB issued ASU 2016-02 Leases, which changes financial reporting as it relates to leasing transactions. Under the new guidance, lessees will be required to recognize a lease liability, measured on a discounted basis; and a right-of-use asset, for the lease term. The new guidance is effective for annual and interim periods beginning after December 15, 2018. Early application is permitted. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. While the impact of the adoption of this guidance will include the recognition of right-of-use assets and lease liabilities on the Company’s statement of financial position, the Company is in the process of evaluating the impact of adoption of this guidance on its systems, processes, and controls. In January 2017, the FASB issued ASU No. 2017-04 Intangibles-Goodwill and Other Simplifying the Test for Goodwill Impairment, which provides guidance to simplify the subsequent measurement of goodwill by eliminating the Step 2 procedure from the goodwill impairment test. The new standard is effective for the Company beginning with the fourth quarter of 2020. The Company does not anticipate the adoption of ASU 2017-04 will have a material impact on the Company's financial condition or results of operations. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting which provides clarification on when modification accounting should be used for changes to the terms or conditions of a share-based payment award. The Company adopted this ASU on a prospective basis in the first quarter of fiscal 2018 which did not have a material impact on the consolidated financial statements. In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 which adds SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No. 118 and expresses the view of the staff regarding application of Topic 740, Income Taxes. The amendments are effective upon addition to the FASB Accounting Standards Codification. The Company adopted this ASU in the first quarter of 2018 which had no impact on the consolidated financial statements |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from External Customers by Geographic Areas | Geographic revenue in excess of 10% of the Company's consolidated revenue in Fiscal 2018 and the related percentage for Fiscal 2017 was generated in the following areas:
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Summary of Valuation Allowance | Changes in the allowance for doubtful accounts are as follows:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following is a reconciliation of the number of shares used in the calculation of basic and diluted earnings per share for the respective periods:
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ACQUISITIONS (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | |||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition, Pro Forma Information | The Company estimates that the revenues and net income for the periods below that would have been reported if the Zycron and Smart acquisitions had taken place on the first day of the Company's 2017 fiscal year would be as follows (dollars in thousands, except per share amounts):
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ACCRUED PAYROLL AND EXPENSES AND CONTINGENT CONSIDERATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses | Accrued payroll and expenses consist of the following at:
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Schedule of Future Estimated Earnout Payments | The following is a schedule of future estimated contingent consideration payments to various parties as of April 1, 2018:
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DEBT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Line of Credit Facilities | Borrowings under the Revolving Facility bore interest at:
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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis and the level they fall within the fair value hierarchy:
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SHARE-BASED COMPENSATION (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 01, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Stock Option | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Activity | A summary of stock option activity is presented as follows:
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Schedule of Nonvested Share Activity |
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Warrant | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Activity | A summary of warrant activity is presented as follows:
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BUSINESS SEGMENTS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 01, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following table provides a reconciliation of revenue and operating income by reportable segment to consolidated results for the periods indicated:
|
NATURE OF OPERATIONS (Details Textual) |
3 Months Ended |
---|---|
Apr. 01, 2018
segment
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 3 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Sales Revenue, Net - Credit Concentration Risk |
3 Months Ended | |
---|---|---|
Apr. 01, 2018 |
Mar. 26, 2017 |
|
Maryland | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk, percentage | 12.00% | 14.00% |
Tennessee | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk, percentage | 14.00% | 3.00% |
Texas | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk, percentage | 28.00% | 30.00% |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Changes In The Allowance For Doubtful Accounts (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Apr. 01, 2018 |
Mar. 26, 2017 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||
Beginning balance | $ 473,573 | $ 473,573 |
Provision for doubtful accounts | 197,321 | 4,254 |
Amounts written off, net | (197,321) | (4,254) |
Ending balance | $ 473,573 | $ 473,573 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Apr. 01, 2018
USD ($)
segment
|
Mar. 26, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Summary Of Significant Accounting Policies [Line Items] | |||
Accumulated depreciation and amortization, property, plant, and equipment | $ 1,542,497 | $ 1,377,319 | |
Deposit contracts, assets | 2,799,218 | 2,665,665 | |
Impairment of long-lived assets | $ 0 | $ 0 | |
Number of reportable segments | segment | 3 | ||
Change in deferred tax assets valuation allowance, amount | $ 3,300,000 | ||
Revenue, Remaining Performance Obligation | $ 0 | ||
Contract with Customer, Performance Obligation Satisfied in Previous Period | 0 | ||
Capitalized Contract Cost, Gross | 0 | ||
Capitalized Contract Cost, Impairment Loss | $ 0 | ||
Minimum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Fiscal period, length | 364 days | 364 days | |
Useful life | 3 years | ||
Maximum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Fiscal period, length | 371 days | 371 days | |
Useful life | 10 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings Per Share (Details) - shares |
3 Months Ended | |
---|---|---|
Apr. 01, 2018 |
Mar. 26, 2017 |
|
Schedule of Weighted Average Number of Shares, Diluted [Line Items] | ||
Basic (shares) | 8,761,292 | 8,668,955 |
Effect of dilutive securities: | ||
Weighted-average number of diluted common shares outstanding | 9,087,016 | 8,924,419 |
Antidilutive securities excluded from computation of earnings per share, amount | 210,250 | 82,250 |
Employee Stock Option | ||
Effect of dilutive securities: | ||
Stock options | 286,875 | 227,214 |
Antidilutive securities excluded from computation of earnings per share, amount | 178,000 | 50,000 |
Warrant | ||
Effect of dilutive securities: | ||
Warrants | 38,849 | 28,250 |
Antidilutive securities excluded from computation of earnings per share, amount | 32,250 | 32,250 |
ACQUISITIONS (Details Textual) - USD ($) $ in Millions |
Sep. 18, 2017 |
Apr. 03, 2017 |
---|---|---|
Zycron, Inc. | ||
Business Acquisition [Line Items] | ||
Initial cash paid for acquisition | $ 18.5 | |
Stock issued during period, value, acquisitions | 1.0 | |
Escrow deposit | 0.5 | |
Contingent consideration | $ 3.0 | |
Business combination, period of contingency | 2 years | |
Business combination, period for true-up of acquired working capital | 120 days | |
Smart, Inc. | ||
Business Acquisition [Line Items] | ||
Initial cash paid for acquisition | $ 6.0 | |
Contingent consideration | $ 2.0 | |
Business combination, period of contingency | 2 years | |
Business combination, period for true-up of acquired working capital | 90 days | |
Private Placement | Zycron, Inc. | ||
Business Acquisition [Line Items] | ||
Stock issued during period, shares, acquisitions | 70,670 |
ACQUISITIONS (Supplemental Unaudited Pro Forma Information) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 01, 2018 |
Mar. 26, 2017 |
|
Zycron, Inc. | ||
Business Acquisition [Line Items] | ||
Revenues | $ 69,389 | |
Gross profit | 16,807 | |
Net income | $ 1,481 | |
Income per share: | ||
Basic pro forma (in usd per share) | $ 0.17 | |
Diluted pro forma (in usd per share) | $ 0.17 | |
Pro Forma | ||
Income per share: | ||
Effective income tax rate reconciliation, percent | 38.30% | |
Pro Forma | Revolving Credit Facility | ||
Income per share: | ||
Line of credit facility, interest rate during period | 4.50% |
INTANGIBLE ASSETS (Details Textual) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Apr. 01, 2018 |
Mar. 26, 2017 |
Dec. 31, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Intangible assets, accumulated amortization | $ 37,086,125 | $ 35,956,455 | |
Amortization of intangible assets | $ 1,129,670 | $ 1,231,843 |
ACCRUED PAYROLL AND EXPENSES AND CONTINGENT CONSIDERATION - Accrued Payroll and Expenses (Details) - USD ($) |
Apr. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Accrued Liabilities, Current [Abstract] | ||
Temporary worker payroll | $ 5,816,993 | $ 5,124,908 |
Temporary worker payroll related | 1,835,776 | 2,454,539 |
Accrued bonuses and commissions | 1,105,074 | 1,172,497 |
Other | 2,452,473 | 2,788,862 |
Accrued liabilities, current | $ 11,210,316 | $ 11,540,806 |
ACCRUED PAYROLL AND EXPENSES AND CONTINGENT CONSIDERATION - Schedule of Future Estimated Earn Out Payments (Details) - USD ($) |
Apr. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Accrued Liabilities, Current [Abstract] | ||
Contingent consideration, current portion | $ 4,750,000 | |
Contingent consideration, liability in year two | 2,500,000 | |
Contingent consideration, liability, total | 7,250,000 | |
Interest expense, earn out payable, current portion | (317,016) | |
Interest expense, earn out payable in year two | (275,936) | |
Interest expense, earn out payable, total | 592,952 | |
Contingent consideration, current portion, net | 4,432,984 | $ 4,299,184 |
Contingent consideration, liability in year two, net | 2,224,064 | |
Contingent consideration, liability, total, net | $ 6,657,048 |
ACCRUED PAYROLL AND EXPENSES AND CONTINGENT CONSIDERATION - Narrative (Details) - USD ($) |
May 31, 2018 |
Apr. 01, 2018 |
---|---|---|
Gain Contingencies [Line Items] | ||
Contingent consideration, current portion | $ 4,750,000 | |
Contingent consideration, liability in year two | $ 2,500,000 | |
Subsequent Event | Zycron, Inc. | ||
Gain Contingencies [Line Items] | ||
Contingent consideration, current portion | $ 73,000 | |
Subsequent Event | Maximum | Zycron, Inc. | ||
Gain Contingencies [Line Items] | ||
Contingent consideration, current portion | 1,500,000 | |
Subsequent Event | Minimum | Zycron, Inc. | ||
Gain Contingencies [Line Items] | ||
Contingent consideration, liability in year two | $ 1,427,000 |
DEBT - Borrowings Under Revolving Facility (Details) - Credit Agreement - Texas Capital Bank, National Association (TCB) - Revolving Credit Facility - USD ($) |
Apr. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Line of Credit Facility [Line Items] | ||
Initial borrowing amount | $ 5,736,045 | $ 6,368,068 |
Debt Instrument, Interest Rate, Effective Percentage for Initial Borrowing Amount | 5.50% | 5.50% |
Second borrowing amount | $ 5,000,000 | $ 5,000,000 |
Debt Instrument, Interest Rate, Effective Percentage for Second Borrowing Amount | 4.45% | 4.09% |
Third borrowing amount | $ 5,000,000 | $ 5,000,000 |
Debt Instrument, Interest Rate, Effective Percentage for Third Borrowing Amount | 4.54% | 4.13% |
Fourth borrowing amount | $ 5,000,000 | $ 5,000,000 |
Debt Instrument, Interest Rate, Effective Percentage for Fourth Borrowing Amount | 4.77% | 4.24% |
Total borrowing amount | $ 20,736,045 | $ 21,368,068 |
FAIR VALUE MEASUREMENTS (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Apr. 01, 2018 |
Mar. 26, 2017 |
Dec. 31, 2017 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration | $ 6,657,048 | ||
Interest expense on earn out payable | 179,378 | $ 258,116 | |
Fair Value, Inputs, Level 3 | Contingent Consideration | Fair Value, Measurements, Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration | $ 6,657,048 | $ 6,477,670 | |
Minimum | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Discount rate (percentage) | 8.00% | ||
Maximum | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Discount rate (percentage) | 22.00% |
EQUITY (Details Textual) - $ / shares |
Apr. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Stockholders' Equity Note [Abstract] | ||
Common stock, shares authorized (in shares) | 19,500,000 | 19,500,000 |
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 500,000 | 500,000 |
Preferred stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
SHARE-BASED COMPENSATION (Details Textual) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Apr. 01, 2018 |
Mar. 26, 2017 |
Dec. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options converted | 9,000 | ||
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation cost related to stock awards | $ 67,029 | $ 77,563 | |
Unamortized stock compensation expense | $ 520,097 | ||
Unamortized stock compensation expense, recognition period | 2 years 4 months 2 days | ||
Shares issued in period | 4,589 | ||
Options converted | 9,000 | ||
Warrant | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation cost related to stock awards | $ 0 | $ 0 | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Nonvested, Number of Shares | 0 | 0 |
EMPLOYEE BENEFIT PLAN (Details Textual) - USD ($) |
3 Months Ended | |
---|---|---|
Apr. 01, 2018 |
Mar. 26, 2017 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
Defined contribution plan, cost recognized | $ 268,985 | $ 202,421 |
First 3% Employee Compensation | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined contribution plan, employer matching contribution, percent of match | 100.00% | |
Defined contribution plan, employer matching contribution, percent of employees' gross pay | 3.00% | |
Next 2% Employee Compensation | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined contribution plan, employer matching contribution, percent of match | 50.00% | |
Defined contribution plan, employer matching contribution, percent of employees' gross pay | 2.00% |
BUSINESS SEGMENTS (Details Textual) |
3 Months Ended |
---|---|
Apr. 01, 2018
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
SUBSEQUENT EVENTS - Narrative (Details) - $ / shares |
3 Months Ended | |
---|---|---|
May 10, 2018 |
Apr. 01, 2018 |
|
Subsequent Event [Line Items] | ||
Common stock, dividends, per share, declared | $ 0.25 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Dividend payable date | May 10, 2018 | |
Common stock, dividends, per share, declared | $ 0.3 | |
Dividend declared date | May 29, 2018 | |
Dividend payable date of record | May 21, 2018 |
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