BGSF, Inc. Q4 2025 Earnings Call - Pivot Complete, Debt Cleared, PropTech Push Begins

Operator: Good morning, everyone. Welcome to the BGSF, Inc. Fiscal 2025 third quarter financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded. Now I’ll turn the call over to Sandy Martin, Three Part Advisors. Please go ahead.

Sandy Martin, Advisor, Three Part Advisors: Good morning. Thank you for joining us today for BGSF’s 2025 fourth quarter and full year earnings conference call. On the call with me are Keith Schroeder, Co-CEO and CFO, and Kelly Brown, President and Co-CEO. After our prepared remarks, there will be a Q&A session. As noted, today’s call is being webcast live. A replay will be available later today and archived on the company’s investor relations page at investor.bgsf.com. Today’s discussion will include forward-looking statements which are based on certain assumptions made by the company under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by the forward-looking statements because of various risks and uncertainties, including those listed in the company’s filings with the Securities and Exchange Commission.

Management statements are made as of today, and the company assumes no obligation to update these statements publicly, even if new information becomes available in the future. Management will refer to non-GAAP measures, including adjusted EPS and adjusted EBITDA. Reconciliations to the nearest GAAP measures are available at the end of our earnings release. I’ll now turn the call over to Keith Schroeder. Keith.

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Thank you, Sandy, and thank you all for joining us in today’s call. Fiscal 2025 was a transformational year for the company. After the sale of the professional division, we retired all outstanding debt, returned a meaningful amount of capital to shareholders via a $2 per share special dividend, and announced a $5 million share buyback. As a result of those actions, today we are a solely focused property management staffing organization, debt-free with a strong cash position. The fourth quarter was a very busy quarter for our team. As discussed in our third quarter earnings call, there are three major directives where we have been strategically focused. First, we utilized the findings from an independent consulting firm to help shape our top-line revenue initiatives as we finalized our budget for 2026 and beyond. Kelly will discuss those in more detail following my remarks.

Second, we continue to take aggressive actions to resize our general administrative expenses to be more in line with our standalone property staffing business. We are now estimating ongoing G&A costs to be in the $12 million range, with public company costs estimated at approximately $2 million. Third, we are utilizing results of an external organizational and incentive compensation study to take further actions to reduce SG&A costs, primarily in the selling cost area. Those actions have been identified, and we started taking action in late Q1 with the full effect benefiting us in Q3 of this year. The annualized cost savings are approximately $1 million. Additionally, we continue to operate under the TSA agreement following the sale of the professional division. That process is going very well and expect to wrap it up by the end of Q1.

With that, I will now turn it over to Kelly to cover the strategic initiatives that are underway.

Kelly Brown, President and Co-CEO, BGSF, Inc.: Thank you, Keith, and good morning, everyone. Before we discuss our fourth quarter sales and 2026 initiatives, I’d like to highlight an important change to our go-to-market strategy with clients and candidates. At the completion of our TSA agreement in April, we will transition our website to BGStaffing.com. Our analysis of search trends and AI activity proved that including staffing in our name consistently ranks us in the top three results for both clients seeking talent and job seekers exploring opportunities. We believe this change will significantly improve SEO performance, clarify our brand positioning, and enhance the overall effectiveness of our marketing efforts. As Keith mentioned, we are executing on our 2026 top-line strategic initiatives, leveraging insights from the market study completed late last year. A key opportunity identified through that work and reinforced through internal discussions is our expansion into the PropTech support market.

In February, we announced our first software partnership with Yardi, an industry-leading property management technology platform. Through the Yardi Independent Consultant Network, we are pairing our industry expertise with technology-enabled talent solutions. PropTech is a sizable adjacent market to our core business and further enhances our differentiated positioning across multifamily and commercial property management staffing. Turning to technology-enabled solutions, we continue to optimize our AI investments to further differentiate our platform and deepen engagement with our clients. Our focus is on elevating the overall client and candidate experience, which positions BG Staffing as an innovative workforce solutions partner. These technology and AI-driven enhancements have improved front and back office efficiency while reinforcing our people-first culture.

We believe the right combination of talent and technology suite enables us to deliver quality candidates faster and more efficiently, driving better outcomes for our clients. We continue to advance the operational performance initiatives discussed last quarter, and early insights indicate progress in strengthening our competitive differentiation. These efforts and strategic partnerships are beginning to support incremental top-line revenue growth and improve overall financial performance. Finally, we are excited to participate as an exhibitor at Apartmentalize hosted by the National Apartment Association, as well as the Building Owners and Managers Association International Conference, both of which are held in June. As two of the premier gatherings in the rental housing and commercial real estate industries, we expect the events to be a strong platform for customer engagement and lead generation. With that, I will turn the call back to Keith to cover our fourth quarter financial results.

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Thank you, Kelly. Our comments today mostly refer to continuing operations unless otherwise noted. Fourth quarter revenues were $22 million, a 9.4% decline compared to the prior year, driven by the lower billable hours and weak demand due to overall cost pressures on property management companies and property owners. Gross profit in the fourth quarter was $7.7 million compared to $8.7 million in the prior year quarter. Gross profit as a percentage of revenue was 35% and was negatively affected by $147,000 in out-of-period workers’ comp costs. Adjusted for those costs, our gross profit as a percentage of revenue was 35.6% in the quarter, consistent with the prior year’s quarter and the year of 2025 in total.

SG&A expenses for the fourth quarter were $9.3 million compared to $10.5 million in the prior year’s quarter. SG&A this quarter included strategic review costs of $403 thousand compared to $88 thousand in the prior year quarter. SG&A expenses in the fourth quarter of 2025 were negatively affected by approximately $460 thousand of out-of-period expenses, mostly related to the medical expenses under our self-insurance plan and the process of finalizing our closing balance sheet for the sale of the professional division. Fourth quarter adjusted EBITDA was a loss of $947 thousand, inclusive of a medical insurance adjustment mentioned above, compared to an EBITDA loss of $1.6 million in the prior year. This reduction in EBITDA loss came in spite of $1 million of lower gross profit due to lower sales.

Significant cost-cutting measures implemented in selling, general, and administrative expenses during 2025 were the main drivers behind the improved EBITDA loss. We reported fourth quarter GAAP net loss from continuing operations of $0.11 per diluted share, compared to a non-GAAP adjusted EPS loss from continuing operations of $0.09 per share. Consolidated adjusted non-GAAP EPS for the quarter was $0.09 per share. For the full year of 2025, net cash provided by continuing operating activities was $117,000, which included a $5.2 million escrow receivable from the sale of the professional division. We expect to finalize the settlement of this cash escrow amount during Q2. Our capital expenditures were minimal at $138,000. During 2025, we purchased 351,200 shares of stock, totaling approximately $1.5 million.

Our purchases to date total 522,000 shares at a total of $2.4 million. Finally, the team remains focused on executing our strategic priorities and our new roadmap, while also managing the transitional work related to the sale of the professional division. Kelly and I want to thank everyone across the organization for their continued dedication and hard work over the past year. The execution of the TSA was a particularly heavy lift and we are deeply grateful to the entire BG Staffing team for their thoughtful planning, strong execution, and sustained commitment. We look forward to updating investors each quarter on our progress and hope today’s discussion has been valuable. With that, now we would like to open the call for questions. Operator?

Operator: Certainly. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that is star one to ask a question. One moment please while we poll for questions. Your first question for today is from William Dezellem with Tieton Capital.

William Dezellem, Analyst, Tieton Capital: Thank you, and good morning. A couple of questions. Let’s just start, if we could please, with the Yardi relationship and walk us through that relationship, what you are doing with it, and what the potential implications are for the business longer term.

Kelly Brown, President and Co-CEO, BGSF, Inc.: Yes. Good morning, Bill. Thank you for the question. I’ll take that one. The Yardi partnership is an exciting one for our group because Yardi as a company has established an independent consultant network. What that means is that Yardi as a company will obviously sell and implement software to our property management customers that they use for their day-to-day operations. When and if there’s gaps between what Yardi provides as a company and the implementation or training that is needed to actually have the end user fully implemented into the software, they’ll leverage independent consultants to do that work. That’s exactly where we’ll come in with our consultant base to be able to fill those requests. Yardi essentially serves as a referral base when they know they have needs among their clients so that we can then pick that up.

It’s a really basic model of hiring the consultant, placing them, and then billing accordingly.

William Dezellem, Analyst, Tieton Capital: Kelly, what’s the potential size of that business? Or is it just more important, the relationship enhancement that it leads with your customers?

Kelly Brown, President and Co-CEO, BGSF, Inc.: Yeah. You know, we chose Yardi as our first, partnership of this nature because they are the most widely used software in the property management space. The potential is very large, across all of our customer base. They’re certainly not the only software used, but they are the most widely used. When you look at potential, you know, you think about all the properties that we build with across the country, they all have software that they use. Every single one of them would have some type of support that they could need at any given point in time. In addition to that, even at the corporate office level, when you think about their accounting needs and things like that, Yardi is also leveraged for those types of services.

There’s potential at both the corporate office level as well as the on-site end user level.

William Dezellem, Analyst, Tieton Capital: All right, great. Thank you. I appreciate that. Keith, would you please walk through your comments about SG&A on an ongoing basis? I didn’t catch all the numbers, number one, but maybe relate it to the $9.3 million of SG&A that was reported in the fourth quarter.

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Okay. The G&A costs that we are estimating going forward once we’re clear the TSA and all of that is around $12 million, okay? Then the number obviously continues to unfold as we continue to look for ways to, you know, cut costs and software costs and, you know, things like that. That’s kind of an ongoing work that we have. There’s about $2.5 million or so of public company costs in that number. All right? The Q4 number that you cited, which was SG&A, that number is higher than what we expect in 2026 because we were still, you know, supporting the sale and we weren’t able to get out of all those software changes that we, you know, expect to change.

The Q4 number is not reflective of what we expect in 2026. Does that help?

William Dezellem, Analyst, Tieton Capital: Yeah. That is helpful. Following up on that, the SG&A that includes or is the $9.3 million, how much of that is the G&A number?

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: The G&A number for the quarter, it’s actually in the press release. It’s about $3.5 million, but there’s about $460,000 that hit in Q4 that did not relate to Q4, and that was the things that I cited that we, as we broke apart, you know, the balance sheet for the sale.

William Dezellem, Analyst, Tieton Capital: Yes.

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: We looked at our IBNR and in our reserve, we ended up taking $460,000 of expense in Q4. That is included in those numbers.

William Dezellem, Analyst, Tieton Capital: Great. That is helpful. One additional question, please. Relative to the overall market environment, how would you characterize it today versus what you were seeing a year ago at this time?

Kelly Brown, President and Co-CEO, BGSF, Inc.: Yeah. You know, what we’re seeing today, based on customer feedback, there is definitely an interest and a budget to spend on our services. This year is much more optimistic of a sentiment as what we were experiencing last year. I think our customers have navigated a lot the last couple of years economically. This year the feedback is absolutely, look, you know, we plan to leverage staffing as well as PropTech support services. We’re finding from a willingness to spend perspective, there certainly is a lot more positive feedback this year than what we were navigating this time a year ago.

William Dezellem, Analyst, Tieton Capital: Kelly, is it your sense that since we’ve had a couple of years of tight or conservative spending, that there is some catch up and delayed or deferred maintenance that could lead to a higher than average level of activity, maybe not in 2026, but as we push further into 2027 and you just start to see some catch-up?

Kelly Brown, President and Co-CEO, BGSF, Inc.: I think it’s reasonable to assume that there could be a certain level of that. What we’ve heard from customers is that as much as possible during times when they have to be conservative on their spending, they’ll do their best to just leverage the existing employee base that they have, even if that means one employee that may typically work at one property needing to float or visit several properties and try to help. To an extent, there may be a little bit of that. Nothing like what we saw, you know, after COVID or anything like that. There may be a small amount, but I think as much as possible, they really have tried to make it work with the existing employees that they have.

William Dezellem, Analyst, Tieton Capital: Great. Thank you both for taking all the questions.

Kelly Brown, President and Co-CEO, BGSF, Inc.: Absolutely.

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Thank you. Oh, Bill, there’s one other thing, just to kind of back that up. Our top-line sales through the first two months are slightly ahead of 2025, so it’s been off to a you know solid start for this year.

William Dezellem, Analyst, Tieton Capital: Just to be clear, what you’re saying is this will be if March continues the trend that you saw in January and February, the first quarter revenues would be up, which would be the first time in many quarters that that’s the case, correct?

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Yes, that is correct.

William Dezellem, Analyst, Tieton Capital: Great. Thank you for that additional perspective. Do you want to share a percentage change that you saw in January and February, combined?

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: No, but I will say that we do expect full-year sales in 2026 to be over 2025, you know, kinda in the mid-single digits. If that helps.

William Dezellem, Analyst, Tieton Capital: That is helpful, and I’m gonna take the bait and go one step further.

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Thank you, William.

William Dezellem, Analyst, Tieton Capital: You’re welcome. Relative to the monthly trends, when you look at the fourth quarter, was November decline less than October, and was December better than November, and then January being better than December, and then was February up more than March? Are we seeing that sort of trend each and every month improving?

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: You’re going sequentially, right?

William Dezellem, Analyst, Tieton Capital: Yeah. Basically, Keith, I’m essentially saying let’s just take, for example, if October was down 6%, then November being down 4%, December being down 2%, January being up 2%. I totally just made those numbers up for illustration.

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Right. Yep. I think the best way to answer that is that as we ended 2025, the seasonality effects that we would expect, we were better than those in the last month of last year. We have started out where we are higher in sales than last year for January and February, so it’s a positive trend.

William Dezellem, Analyst, Tieton Capital: That’s helpful. Did that positive trend begin in late in the fourth quarter in December or is it really-

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Yes.

William Dezellem, Analyst, Tieton Capital: Yes.

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Yes. Yes, it did. Of course, we had one really tough week, you know, in February because, you know, a snowstorm basically shut down the entire country for a few days. Still we came out pretty strong in February.

William Dezellem, Analyst, Tieton Capital: Yeah, that’s very helpful. Appreciate that additional color. Anything else you’d like to add on that front before I turn it back to the operator?

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: No, I think that’s it. Thank you.

William Dezellem, Analyst, Tieton Capital: Great. Yeah, thank you again.

Operator: Your next question is from George Melis with MKH Management.

George Melis, Analyst, MKH Management: Thank you. Good morning.

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Good morning, George.

George Melis, Analyst, MKH Management: Good morning. Maybe trying to clarify on the answer that you guys gave, that Kelly you gave to Bill regarding PropTech.

Kelly Brown, President and Co-CEO, BGSF, Inc.: Mm-hmm. Yeah.

George Melis, Analyst, MKH Management: It seems like it’s a very different line of business, right? It’s not your regular consultants or staffing that is more focused on maintenance and leasing. Is that sort of a kind of a new segment of the business, could we say? And how many consultants you have, and what kind of revenue are you expecting in 2026 from PropTech?

Kelly Brown, President and Co-CEO, BGSF, Inc.: Yeah. Well, good morning, George. Yeah. Thank you for the question. Yes, it is different from the type of staffing that we’ve delivered in the past. You’re correct. The reason why we selected PropTech as an adjacent market that we were interested in is because it’s a need that the people that we place and our existing customers have on all of their properties. They’re leveraging technology, as all of us are, in their day-to-day. We saw an opportunity to explore the support of that technology, and it really does two things. It helps solve customer problems that exist today, but it also helps lift up our candidate base, as we know they’re gonna be, you know, when they’re out to work, leveraging the same technology.

You know, learning about how Yardi structures their independent consultant network really became of interest to us because, you know, we’re building that consultant base. To answer your question, we’re gonna start with, you know, a pool of, you know, 8-12 consultants and, you know, get them out working, and it’ll just grow organically over the year. You know, early projections for 2026, we expect to be able to organically grow the revenue and ramp up through the year. You know, first year top line may be $1 million-$2 million, you know, but we really just are launching it organically this quarter. You know, we’re gonna look at the next quarter, couple quarters very carefully as sales accelerate, and we’ll be able to give much more accurate forecasting after that point.

George Melis, Analyst, MKH Management: Okay, that’s exciting. How many people do you have on staff now? How many consultants do you have? Do you train them in Yardi tech, or are they pretty much already trained and ready to go?

Kelly Brown, President and Co-CEO, BGSF, Inc.: Yeah. They tend to come in with existing Yardi experience. If we’re gonna hire them, they have existing Yardi knowledge. We’re not hiring folks to come in and then train on them. Now, I will add that Yardi does provide really impressive resources to make sure their consultant base has access to training and to knowledge and continuing education. Yardi does a really great job making sure that their consultant network is very well equipped to stay knowledgeable on their technology. That’s another reason why we selected Yardi as a partner, those resources that they have, the knowledge base that they offer. Therefore, that’s not really a lift that we have to take on internally, that type of training. We will hire consultants that have existing knowledge and then leverage Yardi’s resources to make sure that they stay fresh on that knowledge.

George Melis, Analyst, MKH Management: Great. Maybe I’m digging too much into the weeds, but I’m really curious. Are you starting in Texas, for example? Are you starting in one market? How do you see sort of the ramp of that, you know, business segment unfolding?

Kelly Brown, President and Co-CEO, BGSF, Inc.: Fortunately, this service is not necessarily geographically driven because a lot of the work that these consultants can deliver is remote. We won’t be a geographically-based expansion. It’ll really be more of a customer-by-customer based expansion. You know, we’ll grow that way between both our own internal sales initiatives and Yardi’s referral base. It won’t necessarily have a geographic component.

George Melis, Analyst, MKH Management: Okay, great. That sounds like an exciting initiative. It’s nice to see having these growth initiatives. Maybe just also trying to clarify a little bit to what you said at the end regarding, you know, a solid start to the year. The fourth quarter year-over-year was down 9.4%, right? I think the top line.

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Yes, that’s correct.

George Melis, Analyst, MKH Management: If part of December was a positive comp, it sort of means that actually maybe October and November were down double digits. That seems like a very dramatic change from down double digits in a few months to going up, you know, up comp. How do you explain this change? To what extent is this change market driven? To what extent is it your own execution and what you guys are doing internally that is driving that, in your opinion?

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Yeah. I think this is, well, there’s some market improvement in there, but really from our perspective, it’s more driven by execution. You know, the things that we learned from one of the studies is the speed to fill, getting the right candidate in the right spot quickly. Those things all make a big difference, and we have changed some things up, and we are laser-focused on that stuff.

George Melis, Analyst, MKH Management: Okay. Let’s see if we can try to extrapolate that to the year. You expect mid- to single-digit growth. Does that mean that you expect growth pretty much in every year-over-year growth, I mean, in every quarter of 2026?

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Yes.

George Melis, Analyst, MKH Management: Um.

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: That is correct.

George Melis, Analyst, MKH Management: Okay. Great. That’s really good to know. To what extent is that driven by I think, Kelly, you mentioned that you feel like customers have a slightly greater propensity to purchase and to spend. You have that on the one hand. On the other hand, you have better execution on your side.

Kelly Brown, President and Co-CEO, BGSF, Inc.: Mm-hmm.

George Melis, Analyst, MKH Management: Is that the way one would look at it?

Kelly Brown, President and Co-CEO, BGSF, Inc.: Yeah. It is definitely a mixture of both of those factors, that would lead to the year-over-year performance being more favorable.

George Melis, Analyst, MKH Management: Okay, great. Good. Then on the cost side, thank you very much for what you have as the property management segment. It’s super helpful, and it really helps us, I think, understand the, you know, the model much better. If we look at the G&A, it’s $3.9. But if we take out the medical and the cost of the review, it comes down to pretty much $3.1, let’s say $3-$3.1. If we annualize that, it’s roughly $12, which I think is what you said, Keith, as kind of the ongoing expenses of G&A. Does that mean-

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Yes.

George Melis, Analyst, MKH Management: That if we take out those two one-time things, we are pretty much at a steady-state level for G&A?

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Yes. Just to make clear that we are looking at ways ongoing to bring down those costs. It’s not a done deal. That’s kinda like where we are now, but we are constantly looking at ways to bring down those costs.

George Melis, Analyst, MKH Management: Okay. With, of course, seasonality, your second and third quarter are your best quarters from a revenue perspective. That impacts somewhat selling expenses. Would that have an impact on G&A, or is G&A basically flattish from quarter to quarter to quarter?

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: No, G&A is pretty flat. Selling would go up some. You have more sales, you have more, you know, bonus dollars, commission dollars, things like that. With the G&A, it’s basically pretty fixed across all four quarters.

George Melis, Analyst, MKH Management: Okay, great. Okay, thank you very much for taking my questions.

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Sure.

Kelly Brown, President and Co-CEO, BGSF, Inc.: Thank you.

Keith Schroeder, Co-CEO and CFO, BGSF, Inc.: Thanks, George.

Operator: We have reached the end of the question and answer session, and I will now turn the call over to Kelly for closing remarks.

Kelly Brown, President and Co-CEO, BGSF, Inc.: Thank you for your time today. We appreciate your continued support and look forward to providing an update on our first quarter in a couple of months. Have a great day.

Operator: This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.