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•Revenues were $83.5 million, up 6.3% from 2022. Property Management sales grew organically by 8.2% versus the prior year quarter. Professional revenues grew by 5.0%, including acquired revenues, partially offset by an organic contraction of 20.6%, compared to the prior year.

•Operating income (loss) in 2023 includes a non-cash impairment of $22.5 million related to trade name intangible assets from the rebranding to BGSF for all entities. The after-tax impact was $17.1 million or $1.59 per diluted share, using the year-to-date effective tax rate.

Beth A. Garvey, Chair, President, and Chief Executive Officer, stated, “Our performance for the third quarter reflects the continued progression of our long-term strategic plans to grow through a combination of organic and inorganic revenues, and by diversifying into higher value, specialized property management and professional consulting that drive improving gross margins. Total third quarter revenues grew by 6.3% to $83.5 million through a combination of acquired revenues and organic growth in property management, partially offset by sales softness on the professional side. For the first nine months of the year, we generated net cash from operations of $15 million.

“Despite a challenging and uncertain macro environment, we continue to focus on our controllable initiatives to drive long-term shareholder value and cash flow to fund additional growth and generate sustainable returns to shareholders through our quarterly cash dividends,” concluded Garvey.

The Company further announced that its Board of Directors has declared a quarterly cash dividend of $0.15 per share of common stock. The dividend is payable on November 28, 2023 to all shareholders of record as of the close of business on November 20, 2023. This marks the 36st consecutive quarterly dividend.

BGSF will discuss its third fiscal quarter and nine month 2023 financial results during a conference call and webcast at 9:00 a.m. ET on November 9, 2023. Interested participants may dial 1-877-317-6789 (Toll Free) or 1-412-317-6789 (International). A replay of the call will be available until November 16, 2023. To access the replay, please dial 1-877-344-7529 (Toll Free), or 1-412-317-0088 (International) and enter access code 2158975. The live webcast and archived replay are accessible from the investor relations section of the Company’s website at https://investor.bgsf.com/events-and-presentations/default.aspx

BGSF provides consulting, managed services and professional workforce solutions to a variety of industries through its various divisions in IT, Finance & Accounting, Managed Services, and Property Management (formally known as Real Estate which includes apartment communities and commercial buildings). BGSF has integrated several regional and national brands achieving scalable growth. The Company was ranked by Staffing Industry Analysts as the 121st largest U.S. staffing company and the 52nd largest IT staffing firm in 2023. The Company’s disciplined acquisition philosophy, which builds value through both financial growth and the retention of unique and dedicated talent within BGSF’s family of companies, has resulted in a seasoned management team with strong tenure and the ability to offer exceptional service to our field talent and client partners while building value for investors. For more information on the Company and its services, please visit its website at https://bgsf.com.

The forward-looking statements in this press release are made under the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements regarding our future financial performance and the expectations and objectives of our board or management. The Company’s actual results could differ materially from those indicated by the forward-looking statements because of various other risks and uncertainties, including those listed in Item 1A of the Company’s Annual Report on Form 10-K and in the Company’s other filings and reports with the Securities and Exchange Commission. All of the risks and uncertainties are beyond the ability of the Company to control, and in many cases, the Company cannot predict the risks and uncertainties that

could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this press release, the words “allows,” “believes,” “plans,” “expects,” “estimates,” “should,” “would,” “may,” “might,” “forward,” “will,” “intends,” “continue,” “outlook,” “temporarily,” “progressing,” "prospects," and “anticipates” and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

The following tables have been derived from our unaudited consolidated financial statements and summarize key components of our statements of operations for the periods indicated, as well as a reconciliation of revenue and operating income (loss) from continuing operations by reportable segment to consolidated results for the periods indicated.


		Thirteen Weeks Ended				Thirty-nine Weeks Ended
		October 1, 2023		September 25, 2022		October 1, 2023		September 25, 2022
Revenues		$	83,484	$	78,508	$	239,600	$	221,139
Cost of services		53,505		50,508		153,263		144,649
	Gross profit	29,979		28,000		86,337		76,490
Selling, general and administrative expenses		22,679		20,386		68,475		60,001

Impairment losses		—		—		22,545		—
Depreciation and amortization		2,033		1,145		5,729		2,966
	Operating income (loss)	5,267		6,469		(10,412)		13,523

Interest expense, net		(1,672)		(376)		(4,375)		(718)
	Income (loss) from continuing operations before income taxes	3,595		6,093		(14,787)		12,805
Income tax (expense) benefit from continuing operations		(955)		(1,441)		3,565		(2,961)
	Income (loss) from continuing operations	2,640		4,652		(11,222)		9,844
Income from discontinued operations:
	Income	—		—		—		1,235
	Gain on sale	—		—		—		17,266
	Income tax expense	—		—		—		(4,716)
	Net income (loss)	$	2,640	$	4,652	$	(11,222)	$	23,629

Net income (loss) per share - diluted
	Net income (loss) from continuing operations	$	0.24	$	0.44	$	(1.04)	$	0.93
	Net income from discontinued operations:
	Income	—		—		—		0.12
	Gain on sale	—		—		—		1.65
	Income tax expense	—		—		—		(0.45)
	Net income (loss) per share - diluted	$	0.24	$	0.44	$	(1.04)	$	2.25

	Weighted-average shares outstanding:
	Basic	10,791		10,492		10,753		10,465
	Diluted	10,803		10,533		10,753		10,511


		Thirteen Weeks Ended								Thirty-nine Weeks Ended
		October 1, 2023				September 25, 2022				October 1, 2023				September 25, 2022
Revenue:
	Property Management	$	35,976	43	%	$	33,241	42	%	$	95,453	40	%	$	89,137	40	%
	Professional	47,508		57	%	45,267		58	%	144,147		60	%	132,002		60	%
	Total	$	83,484	100	%	$	78,508	100	%	$	239,600	100	%	$	221,139	100	%

Gross profit:
	Property Management	$	14,197	47	%	$	13,548	48	%	$	38,196	44	%	$	35,093	46	%
	Professional	15,782		53	%	14,452		52	%	48,141		56	%	41,397		54	%
	Total	$	29,979	100	%	$	28,000	100	%	$	86,337	100	%	$	76,490	100	%






Operating income (loss):
	Property Management	$	7,212			$	6,148			$	17,676			$	15,000
	Professional - without impairment losses	3,253				5,172				9,666				12,458
	Professional - impairment losses	—				—				(22,545)				—
	Home office	(5,198)				(4,851)				(15,209)				(13,935)

	Total	$	5,267			$	6,469			$	(10,412)			$	13,523


		October 1, 2023		January 1, 2023
Assets
Current assets		$	72,689	$	76,162
Property and equipment, net		1,603		2,081
Intangible assets, net		31,619		47,552
Goodwill		58,453		55,193
Other		19,310		13,685
	Total assets	$	183,674	$	194,673
Liabilities and stockholders' equity
Line of credit, current		$	26,666	$	—
Long-term debt, current portion		35,000		4,000
Other current		25,582		24,207
Line of credit		—		22,303
Long-term debt, less current portion		4,368		40,368
Contingent consideration		3,309		—
Other long-term		2,833		3,059
	Total liabilities	97,758		93,937
	Total stockholders' equity	85,916		100,736
	Total liabilities and stockholders' equity	$	183,674	$	194,673


	Working Capital
	(in thousands)
		October 1, 2023		January 1, 2023
Working capital		$	(14,559)	$	47,955
Working capital ratio		0.83		2.70

Condensed Statements of Cash Flows
(in thousands)
		Thirty-nine Weeks Ended
		October 1, 2023		September 25, 2022
Net cash provided by (used in) continuing operations:
	Operating activities	$	15,094	$	(5,557)
	Investing activities	(8,759)		25,633
	Financing activities	(6,335)		(17,888)
Net change in cash used in discontinued operations		—		(2,300)
Net change in cash and cash equivalents		$	—	$	(112)

The financial results of BGSF, Inc. are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the U.S. Securities and Exchange Commission. To help the readers understand the Company's financial performance, the Company supplements its GAAP financial results with Adjusted EBITDA and Adjusted EPS.

A non-GAAP financial measure is a numerical measure of a company's financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows of a company. Adjusted EBITDA and Adjusted EPS are not measurements of financial performance under GAAP and should not be considered as alternatives to net income, net income per diluted share, operating income, or any other performance measure derived in accordance with GAAP, or as alternatives to cash flow from operating activities or measures of our liquidity. We believe that Adjusted EBITDA and Adjusted EPS are useful performance measures and are used by us to facilitate a comparison of our operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business than measures under GAAP can provide alone. In addition, the financial covenants in our credit agreement are based on EBITDA as defined in the credit agreement.

We define “Adjusted EBITDA" as earnings before interest expense, income taxes, depreciation and amortization expense, transaction fees and certain non-cash expenses such as impairment losses and share-based compensation expense, as well as certain specific events that management does not consider in assessing our on-going operating performance.


	Thirteen Weeks Ended						Thirty-nine Weeks Ended						Trailing Twelve Months Ended
	October 1, 2023			September 25, 2022			October 1, 2023			September 25, 2022			October 1, 2023
Income (loss) from continuing operations	$	2,640		$	4,652		$	(11,222)		$	9,844		$	(9,805)
Income tax expense (benefit) from continuing operations	955			1,441			(3,565)			2,961			(2,866)
Interest expense, net	1,672			376			4,375			718			5,019
Operating income (loss)	5,267			6,469			(10,412)			13,523			(7,652)
Depreciation and amortization	2,033			1,145			5,729			2,966			6,816
Impairment losses	—			—			22,545			—			22,545


Share-based compensation	408			411			844			865			1,064
Transaction fees	149			6			901			6			1,166
Adjusted EBITDA from continuing operations	$	7,857		$	8,031		$	19,607		$	17,360		$	23,939
Adjusted EBITDA Margin (% of revenue)	9.4		%	10.2		%	8.2		%	7.9		%	7.6		%

We define “Adjusted EPS” as diluted earnings per share eliminating amortization expense of intangible assets from acquisitions, transaction fees, and certain non-cash expenses such as impairment losses, as well as certain specific events that management does not consider in assessing our on-going operating performance, net of the respective income tax effect.


	Thirteen Weeks Ended				Thirty-nine Weeks Ended
	October 1, 2023		September 25, 2022		October 1, 2023		September 25, 2022

Net income (loss) from continuing operations per diluted share	$	0.24	$	0.44	$	(1.04)	$	0.93
Acquisition amortization	0.15		0.05		0.42		0.16



Impairment losses	—		—		2.10		—
Transaction fees	0.01		—		0.08		—
Income tax expense adjustment	(0.04)		(0.01)		(0.63)		(0.04)
Adjusted EPS from continuing operations	$	0.36	$	0.48	$	0.93	$	1.05