BGSF, Inc. (BGSF) Bundle
Understanding BGSF, Inc. (BGSF) Revenue Streams
Understanding BGSF, Inc.’s Revenue Streams
The revenue streams of the company are primarily derived from two segments: Property Management and Professional Services. Below is a detailed breakdown of these revenue sources.
Breakdown of Primary Revenue Sources
| Segment | Revenue (2024) | Revenue (2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| Property Management | $80,096,000 | $95,453,000 | $(15,357,000) | (16.1%) |
| Professional Services | $127,993,000 | $144,147,000 | $(16,154,000) | (11.2%) |
| Total Revenue | $208,089,000 | $239,600,000 | $(31,511,000) | (13.1%) |
Year-over-Year Revenue Growth Rate
The company experienced a decline in revenue from the previous fiscal year. The year-over-year revenue growth rates are as follows:
- Total Revenue Growth Rate: (13.1%)
- Property Management Revenue Growth Rate: (16.1%)
- Professional Services Revenue Growth Rate: (11.2%)
Contribution of Different Business Segments to Overall Revenue
In the fiscal year ended September 29, 2024, the contribution of different business segments to overall revenue was as follows:
| Segment | Contribution (%) |
|---|---|
| Property Management | 38.5% |
| Professional Services | 61.5% |
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams include:
- The Property Management segment saw a revenue decrease of approximately $15.4 million due to reduced billed hours, increased competition, and lower demand.
- The Professional Services segment also declined by approximately $16.1 million, with a notable decrease in the Finance and Accounting division.
- The Arroyo Consulting acquisition contributed $6.8 million in incremental revenues during the prior period, but this was offset by a decline in the remaining Professional segment.
Overall, the total revenue decreased by $31.5 million compared to the previous fiscal year, indicating challenges in both segments driven by market conditions and operational adjustments.
A Deep Dive into BGSF, Inc. (BGSF) Profitability
A Deep Dive into BGSF, Inc.'s Profitability
Gross Profit, Operating Profit, and Net Profit Margins
For the thirteen-week period ended September 29, 2024, total revenues were $71.2 million, down from $83.5 million in the same period in 2023. Gross profit for this period was $24.3 million, resulting in a gross profit margin of 34.2%, compared to 35.9% in the previous year.
Operating income for the thirteen-week period was $470,000, significantly lower than the $5.3 million reported in the same period last year. The net loss was $804,000, contrasting with a net income of $2.6 million in the previous year.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Total Revenues | $71.2 million | $83.5 million |
| Gross Profit | $24.3 million | $30.0 million |
| Gross Profit Margin | 34.2% | 35.9% |
| Operating Income | $470,000 | $5.3 million |
| Net Income | $(804,000) | $2.6 million |
Trends in Profitability Over Time
In the thirty-nine-week period ending September 29, 2024, total revenues were $208.1 million, down from $239.6 million in the prior year. Gross profit for this period was $71.4 million, reflecting a gross profit margin of 34.3%, down from 36.0% in 2023.
Over the same period, operating income was $967,000, compared to an operating loss of $10.4 million in the previous year. The net loss was $2.4 million, while in the previous year, the company reported a net loss of $11.2 million.
| Metric | 39 Weeks 2024 | 39 Weeks 2023 |
|---|---|---|
| Total Revenues | $208.1 million | $239.6 million |
| Gross Profit | $71.4 million | $86.3 million |
| Gross Profit Margin | 34.3% | 36.0% |
| Operating Income | $967,000 | $(10.4 million) |
| Net Income | $(2.4 million) | $(11.2 million) |
Comparison of Profitability Ratios with Industry Averages
In comparison to industry averages, the gross profit margin for the company stands at 34.3%, while the industry average is approximately 40.0%. The operating margin is 0.5%, which is significantly lower than the industry average of 5.0%. The net profit margin is currently at (1.1)%, compared to a positive industry average of 3.0%.
Analysis of Operational Efficiency
The company reported selling, general, and administrative expenses of $21.97 million for the thirteen-week period, which represents 30.8% of total revenues. This is an increase from 27.2% in the same quarter of 2023, indicating a decline in operational efficiency. The total SG&A expenses for the thirty-nine-week period were $64.5 million, or 31.0% of total revenues, up from 28.6% in the previous year.
| Expense Type | Q3 2024 | Q3 2023 | 39 Weeks 2024 | 39 Weeks 2023 |
|---|---|---|---|---|
| SG&A Expenses | $21.97 million | $22.68 million | $64.55 million | $68.48 million |
| SG&A as % of Revenue | 30.8% | 27.2% | 31.0% | 28.6% |
Debt vs. Equity: How BGSF, Inc. (BGSF) Finances Its Growth
Debt vs. Equity: How BGSF, Inc. Finances Its Growth
Long-term Debt: As of September 29, 2024, the company had long-term debt totaling $37.4 million, with a weighted average interest rate of 7.95%. This compares to $34.0 million in long-term debt as of December 31, 2023, at a rate of 7.79%.
Short-term Debt: The company reported short-term debt of $7.7 million on its revolving credit facilities as of September 29, 2024, down from $24.9 million at December 31, 2023.
Debt-to-Equity Ratio: The company's debt-to-equity ratio as of September 29, 2024, was approximately 0.45, calculated as total liabilities of $74.39 million divided by total stockholders' equity of $82.945 million.
Industry Comparison: The average debt-to-equity ratio for companies in the staffing and workforce solutions industry typically ranges from 0.5 to 1.0, indicating that BGSF, Inc. operates with a relatively lower leverage compared to its peers.
Recent Debt Issuances: On March 12, 2024, the company amended and restated its credit agreement, extending the maturity to March 12, 2028, and permitting borrowing up to $40 million under its revolving credit facility.
Credit Ratings: The company has not publicly disclosed a specific credit rating but continues to maintain financial flexibility through its credit agreements and refinancing activities.
Refinancing Activity: The company reduced its revolving facility by $17.2 million during Fiscal 2024, indicating proactive debt management strategies.
Equity Funding: As of September 29, 2024, total stockholders' equity stood at $82.945 million, reflecting the company’s reliance on equity financing alongside its debt structure.
| Type of Debt | Amount (in millions) | Interest Rate (%) |
|---|---|---|
| Long-term Debt | $37.4 | 7.95 |
| Short-term Debt | $7.7 | Varies |
| Total Liabilities | $74.39 | |
| Total Stockholders' Equity | $82.945 | |
| Debt-to-Equity Ratio | 0.45 |
Balancing Debt and Equity Financing: The company employs a balanced approach to financing growth, utilizing both debt and equity to support operations and strategic initiatives. This strategy helps maintain liquidity while managing financial risk.
Recent Financial Performance: For the thirty-nine week period ended September 29, 2024, the company reported a net loss of $2.357 million, with total revenues of $208.089 million, indicating ongoing adjustments in its operational strategies amidst market challenges.
Assessing BGSF, Inc. (BGSF) Liquidity
Assessing BGSF, Inc.'s Liquidity
Current Ratio: As of September 29, 2024, the current ratio is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $51,451,000 | $29,414,000 | 1.75 |
Quick Ratio: The quick ratio, which excludes inventory from current assets, is:
| Quick Assets | Current Liabilities | Quick Ratio |
|---|---|---|
| $49,096,000 | $29,414,000 | 1.67 |
Analysis of Working Capital Trends
Working capital as of September 29, 2024, is:
| Working Capital |
|---|
| $22,037,000 |
This represents a significant improvement from the working capital of $(18,144,000) at December 31, 2023.
Cash Flow Statements Overview
Net cash provided by operating activities for the thirty-nine weeks ended September 29, 2024, was:
| Net Cash Provided by Operating Activities |
|---|
| $21,246,000 |
This reflects an increase from $15,094,000 for the same period in 2023. The cash flow from investing activities was:
| Cash Used in Investing Activities |
|---|
| $(1,370,000) |
In contrast, cash used in investing activities was $(8,759,000) for the thirty-nine weeks ended October 1, 2023. Cash flows from financing activities showed a net outflow of:
| Cash Flows from Financing Activities |
|---|
| $(19,614,000) |
Compared to $(6,335,000) for the same period in 2023.
Potential Liquidity Concerns or Strengths
Overall, the company’s liquidity appears strong with a current ratio of 1.75 and a quick ratio of 1.67, indicating sufficient short-term assets to cover liabilities. However, the significant net cash outflow from financing activities could raise concerns about long-term liquidity.
Additionally, the company’s total liabilities as of September 29, 2024, amounted to:
| Total Liabilities |
|---|
| $74,390,000 |
While total assets are reported at:
| Total Assets |
|---|
| $157,335,000 |
This results in a debt-to-equity ratio of:
| Debt-to-Equity Ratio |
|---|
| 0.89 |
Indicating a balanced approach to leveraging debt against equity in financing operations.
Is BGSF, Inc. (BGSF) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key valuation ratios including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA).
Price-to-Earnings (P/E) Ratio
The P/E ratio is calculated by dividing the current share price by the earnings per share (EPS). As of September 29, 2024, the stock price was $9.02, and the diluted earnings per share was ($0.07).
- P/E Ratio = Price / EPS = $9.02 / ($0.07) = -128.86
Price-to-Book (P/B) Ratio
The P/B ratio is calculated as the current share price divided by the book value per share. The total stockholders' equity as of September 29, 2024, was $82,945,000, with 11,006,696 shares outstanding.
- Book Value per Share = Total Stockholders' Equity / Shares Outstanding = $82,945,000 / 11,006,696 = $7.53
- P/B Ratio = Price / Book Value per Share = $9.02 / $7.53 = 1.20
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated by taking the enterprise value and dividing it by EBITDA. The enterprise value is calculated as market capitalization plus debt minus cash. As of September 29, 2024, the total debt was $41,153,000, and cash and cash equivalents were $262,000.
- Market Capitalization = Stock Price Shares Outstanding = $9.02 11,006,696 = $99,295,000
- Enterprise Value = Market Capitalization + Total Debt - Cash = $99,295,000 + $41,153,000 - $262,000 = $140,186,000
For the thirty-nine weeks ended September 29, 2024, EBITDA was $5,610,000.
- EV/EBITDA Ratio = Enterprise Value / EBITDA = $140,186,000 / $5,610,000 = 24.96
Stock Price Trends
Over the past 12 months, the stock price has fluctuated significantly. The stock opened at $12.50 a year ago and has since decreased to $9.02 as of the latest reporting period.
Dividend Yield and Payout Ratios
As of September 29, 2024, the company did not declare any dividends. The cash dividends declared per common share for the last fiscal year were $0.15, which was a decrease from $0.45 the previous year.
Analyst Consensus on Stock Valuation
Analyst ratings indicate a consensus of Hold for the stock, with various analysts suggesting that the current price reflects a fair valuation considering the company's recent performance and market conditions.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | -128.86 |
| P/B Ratio | 1.20 |
| EV/EBITDA Ratio | 24.96 |
| Current Stock Price | $9.02 |
| 12-Month Stock Price Change | -27.6% |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing BGSF, Inc. (BGSF)
Key Risks Facing BGSF, Inc.
Understanding the risk factors affecting the financial health of BGSF, Inc. is crucial for investors. The company faces a variety of internal and external risks that could impact its operations and financial performance.
Overview of Internal and External Risks
- Industry Competition: The company has reported a decrease in revenues across its segments, with Property Management revenues down by approximately $6.2 million (17.1%) and Professional revenues down by $6.1 million (12.9%) due to increased competition and lower demand.
- Regulatory Changes: Changes in labor laws and regulations can impact operational costs and compliance obligations, affecting profitability.
- Market Conditions: Economic conditions, including inflation and interest rates, have led to reduced demand for workforce solutions, lengthened client decision cycles, and increased early terminations.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Operational Risks: The company has faced challenges with a decrease in billed hours, particularly in the Finance & Accounting division, affecting its Professional segment.
- Financial Risks: Net loss for the thirteen weeks ended September 29, 2024, was $804,000, compared to a net income of $2.64 million for the same period in 2023.
- Strategic Risks: The company’s ability to pursue growth opportunities may be limited by liquidity constraints, as indicated by a net cash used in financing activities of $19.6 million.
Mitigation Strategies
The company has implemented several strategies to mitigate these risks:
- Cost Control Measures: Selling, general and administrative expenses decreased by 3.1% in response to revenue declines.
- Liquidity Management: As of September 29, 2024, the working capital was $22.04 million, improving from a negative $18.14 million at the end of 2023.
- Access to Capital: The company has a revolving credit facility maturing December 31, 2026, which provides for borrowings up to $40 million.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Revenue Decrease | Property Management revenues decreased by $6.2 million (17.1%) | Impact on overall profitability |
| Net Loss | Net loss of $804,000 for Q3 2024 | Reduction in shareholder equity |
| Cash Flow Constraints | Net cash used in financing activities of $19.6 million | Potential inability to fund growth initiatives |
| Working Capital Improvement | Working capital improved to $22.04 million | Increased liquidity for operations |
Future Growth Prospects for BGSF, Inc. (BGSF)
Future Growth Prospects for BGSF, Inc.
Analysis of Key Growth Drivers
The company has identified several key growth drivers that are expected to propel its future expansion. These include:
- Product Innovations: The introduction of managed solutions within the Professional segment aims to capture a larger market share.
- Market Expansions: The company continues to explore new geographic markets to enhance its service offerings.
- Acquisitions: The integration of Arroyo Consulting, which contributed approximately $6.8 million in incremental revenues, is a strategic move to diversify service capabilities.
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year 2024, total revenues are projected to be around $208.1 million, reflecting a decline from $239.6 million in fiscal 2023, primarily due to reduced customer demand. However, the company anticipates a rebound in the following years as new initiatives take hold.
Strategic Initiatives or Partnerships That May Drive Future Growth
Strategic initiatives include:
- Focus on enhancing managed solutions to address evolving client needs.
- Potential partnerships with technology firms to leverage advanced software solutions for better service delivery.
Competitive Advantages That Position the Company for Growth
The company benefits from several competitive advantages:
- Established Brand Recognition: A strong presence in the property management and professional services sectors.
- Diverse Service Offerings: A wide range of services that cater to various client needs, reducing dependency on a single revenue stream.
- Operational Efficiency: Improved cost control measures have resulted in a decrease in selling, general, and administrative expenses by 3.1% to $21.97 million.
Financial Overview
The following table summarizes key financial metrics that reflect the company’s performance and potential growth:
| Metric | Fiscal 2024 | Fiscal 2023 |
|---|---|---|
| Total Revenues | $208.1 Million | $239.6 Million |
| Net (Loss) Income | ($2.36 Million) | ($11.22 Million) |
| Gross Profit | $71.4 Million | $86.3 Million |
| Adjusted EBITDA | $8.55 Million | $19.6 Million |
| Cash Dividends Declared | $0.00 | $0.15 |
The company’s gross profit margin has shown a decline, decreasing from 36.0% in fiscal 2023 to 34.3% in fiscal 2024, primarily due to reduced customer demand.
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Resources:
- BGSF, Inc. (BGSF) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of BGSF, Inc. (BGSF)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View BGSF, Inc. (BGSF)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.