Q1 2021 BGSF Inc Earnings Call
And realized leadership and cross selling efforts continue to scale our business.
Our teams have built and meaningful pipeline, and where you're seeing positive sequential trends, giving us confidence and our long term outlook.
Our remaining active roadmap.
Do you expect this I'm, sorry office related and digital upgrades and play.
Payroll HR I S CRM and applicant tracking system.
Dressing well and on schedule for April 'twenty, and 'twenty Twos watch.
And kind of and virtual connections are the norm, we are innovating new ways and engaging with our team members skilled talent client partners through cross sell with it.
Marketing and career programs. In addition to a strategic customer placements drive ourselves and.
P. J S. F has matured significantly at the company over the past few years and our diversified revenue model has been a key difference here yet.
Let's take a closer look at the divisions, beginning with real estate.
And you may have seen yesterday, and federal judge and validated the Nashville eviction moratorium that was extended from March to June while there's a short hold off and really give you. The U S Justice Department and opportunity to appeal. It is too early to know the impact and we remain optimistic and well positioned to meet demand.
Sequentially, we continued to see improvement and we are executing several market relaunch it with two initiated in the first quarter.
Through our talent acquisition and center, we are and the process of lineup several market reopening and the second quarter and anticipation of a rebound during the latter part of the year, which is historically stronger quarters for the sake of it.
Additionally, the recently passed 25 billion and federal relief should provide additional classrooms be trouble.
Our professional segment saw strong demand and our IQ consulting practice, but several new place next quarter over quarter debt.
The security projects through L. J Kushner rebounded from the initial pandemic impact and as previously discussed several infrastructure and development projects that were initiated and May 2020 ended during the fourth quarter.
In addition, and several of our client partners with multiyear contracts and got rebounded from COVID-19, as quickly as lead and should be expected.
However, we saw a nice something starts late in the quarter and new logos are being added from should provide momentum for the remainder of this year.
Our entry into Canada is progressing well with our first win during the quarter and we have a solid pipeline of opportunities and that market.
Additionally, with our February acquisition of momentum solutions, largely integrated active new client and infections and now taking place, which will drive cross sell and new managed service opportunities abroad.
Overall, we are seeing strong demand for resources across all areas of our professional growth.
But industrial delivered a strong start to the year, beating last year's first quarter was resolved from managing through severe industry wide labor shortages and we.
And we expected a sequential decline coming off a strong fourth quarter and online shopping and warehouse and a normalized but at the end of the holiday season, However, as strong demand and continued and like many in our industry are challenged and candidate flow and significantly tapered off primarily due to the lightest stickiness to this package we are.
Intently focused on several initiatives to educate our clients with hiring data insight training virtual route free and ways to create and new mix of work shift.
Lastly, we continue to make progress on our sustainability initiatives and I'm proud to share that we renamed our V. I counsel, the bi which stands for voices inspiring inclusion and belonging and equity.
A council made up of more than 40 people with broad perspective is energized and mobilized and efforts across our company to enrich starting development and continue to build a strong culture.
Later in the year, we expected for employee research resource groups, which will be followed from Phoenix group.
In addition, we watch and employee recognition platform as well as black re class.
Order efforts and laying the foundation and being in business for the fourth of debt further enhancing our corporate social responsibility effort and.
Truly excited about these important initiatives did not on the strength and our team and culture, but to also support and build strong community and smell it.
Before I turn the call over to Dan to discuss the financials I'd like to give a big shout out and congratulate Dan I'm being honored last night at the D. C E O Financial Executive award and the winter and the category of midsized other stuff.
Okay.
But and good afternoon, everyone and thank you for Joe.
And it goes right.
One of them and borrower form 10-K for the first quarter and with virtually zero.
And so I'll focus my remarks on the people and there's a lot of the low.
And Riverstone and my well wishes that you and the burn would usually adult.
Consolidated first quarter revenues declined slightly from 6%.
Please go and sportswear 1 billion compared with Q1 reported.
Revenues were hard to borrow.
And forces with JC flowers, and professional Florida, or the infrastructure and so resolution.
And what 1% rebar and real estate and also blah blah blah blah blah blah.
And so on and go through a revision.
We reported 9 million.
From a draw and momentum Filipino physician and professional version. Please note that Q1 revenues and real estate and light industrial were impacted negatively by approximately one point and resilience.
But just reasons it was quite low.
With these overall overload work force.
And through our resolve and compared to the same quarter last year.
Overall per quarter results, where we use it on your own or do you remember Q1, 'twenty was a strong quarter book relative to the COVID-19 Murphy and book, which started late in the quarter and for the remainder of 2020 and now in Q1 of this year. Additionally, while the first quarter's free sources and a normalized environment the pandemic related disruptions.
Order book is results, however, our realignment and restructure and others are supporting the recovery of cost.
Frequently we saw continued stabilization and consolidated Q1 revenue down three four and 1% versus a six 6% reported decline and 44 million is adjusted for acquisitions and this was supported by real estate and delivered a four 6% sequential increase.
And as a $14 three per cent decrease from 2020, despite more for an extension on frictions.
I noted during our fourth quarter earnings flow, we anticipate a flat first half from 2020.
And so in 2020 per real estate relative to the slip and fall.
And for Us.
With anticipated improvement selling and the second half of.
And this year of basketball and sportswear.
But as Doug mentioned and the decline and professional was larvae and bus and bus that's it for free.
And with several projects initiated loves you and delays have dealt with placements, specifically and our infrastructure and development.
Our pipeline and new stores in and LNG were slower than anticipated early in the fourth.
Note, our February 2020, one other additional moment and tuition increases.
Increase of 94, 2% and average daus.
Overall, we saw sequential 140 per cent decline and professional.
Our cross selling efforts for professional representing five four and 8% of revenues at $6 90 per cent of gross profit as we continue to make progress toward our goal of eight per cent of and revenues from golf selling given the 10% growth book.
As mentioned life and the road.
Like industrial revenues improved by one 5% over last year.
Were down sequentially by four 7% from me and I'll have a strong fourth quarter.
This shift to online shopping as low as the seasonal lift through the holiday.
For the quarter consolidated gross profit declined by seven 2% to $18 8 million compared with Q1 from this point.
The percent of revenue growth profit increased by 40 basis points reported seven 8% benefiting from a 220 basis points increase across our professional segment.
SG&A expenses increased familiar with LIBOR at two per cent compared to the same quarter last year.
And due to the additional expenses from <unk>.
<unk> completed in Q1 of last year and our recent acquisition of momentum solution close in February of this year the.
The increase in SG&A was offset by a reduction and legacy Division and.
Lower transaction fees.
As a percent of revenue consolidated SG&A expenses for the first quarter was 44, 7% versus 21, 9% last year, reflecting the deleveraging impact of revenue declines.
Third.
First quarter net income was 712000 or seven cents per diluted share compared with net income of $1 5 million or 14 cents per diluted share and the same quarters yourself adjust.
Adjusted EBITDA was $2 9 million or 16 cents per diluted share compared with $5 3 million or 48 cents per diluted share and the same quarter a year ago.
We generated steady margins continued to produce solid cash flow and our liquidity position remains strong cash generated from operations decreased by $4 seven from early due to lower that is and increases the opportunity for vs Q1, 2020, which is offset by increased payroll expenses.
Days sales outstanding at border and improved at 53 days versus 58 days at the end of 2020.
Leverage as measured by debt to adjusted trailing 12 month EBITDA was two four at March 31 for a while.
During the quarter was $33 8 million interest on the momentum solutions acquisitions, using our revolver and reduced our total debt by three minutes and 75.
Got it.
We invested 547000 and Capex, primarily for project and the IP roadmap.
We were pleased to see board of directors smoothed, our 26th consecutive quarterly dividend payment of things that's for sure.
Work continues and the U S sustainable recurring dividend as an important component of EPS, Buffalo Wild basin and value proposition.
I will now turn the call that older debt for closing remarks, and a general outlook for 2020 one and.
Dan.
And place a tower and tower company continues to execute.
Although first quarter got off and as far as and expect to start we are beginning to see the person or later from all the hard work, we completed last year.
It's all recovery time from real estate.
<unk> picked up and professional and light industrial demand to remain strong.
The cost efficiency realignment and cross selling strategies and investments into the business should start being realized and to drive further growth and profit profitability profit magazine and gear.
From an industry perspective, higher rates and vaccinations and COVID-19 related restrictions being lifted once a strong year of double digit expansion across most segments about forcefully she chemistry.
And within workforce solutions. The U S Bureau of Labor Statistics reported a strong temporary penetration rate of $1 19 per cent for March of 2021 compared to the April 2020 trough and one.
157% and the February 'twenty, 'twenty free pandemic level of $1 93 per cent.
The April 'twenty, 'twenty, one and staffing industry analysts forecast maintains a 12% growth rate for the overall industry.
Within U S temporary staffing growth is projected at 11%, surpassing 2019 levels and a record high.
And then our focus industry I T is projected to grow 9% and industrial is forecasted to grow by six feet.
Additionally, the National apartment Association released its March 'twenty, 'twenty, one economic and industry update the trains per renter demand outpacing that of a typical piedmont.
And if trends continue and rent growth is expected to surpass 6%.
And the indicators point to multifamily turning the corner and we are back.
Sales and improved second half of the year for real estate.
We're very well positioned and increase our market share as we relaunch market talk during the pandemic.
We remain highly engaged and that broker partners and we continue to take on and and stuff like that unexplored and select acquisition opportunities to augment our organic growth strategy.
So you're seeing a steady flow of opportunities after the slowdown caused by the pandemic and.
As a reminder, we seek geographic and brand and reputation and numerous complementary high growth areas that are synergistic Martin and quickly accretive to EBITDA and net.
Cost of debt.
From an outlet perspective, I remain highly confident and our strategic position for the remainder of the year and be off each.
Each of our segments are positioned in Scotland, and supported by investing cash digital infrastructure and <unk>.
And there continues to be up and we should see momentum and our real estate and professional segment profit.
Progress and employee adds to address the continued demands and light industrial.
In summary, we are seeing positive trends developing across our business and industry sectors, we have revitalized the business and our teams and well positioned to execute our growth strategy.
And I always I would like to thank all of our team members for their continued hard work and dedication and building long term shareholder and stakeholder value with that I'll turn the call over.
The operator.
We will now begin the question and answer session.
To ask a question you May Press Star then one on your Touchtone phone.
A reminder, if youre using a speakerphone please pick up your handset before pressing the keys. If you would like to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Today's first question comes from Mike, Katanga, which with Ritchie brothers.
Hi, guys, congratulations and congratulations on your award.
A quick question.
What are your thoughts about when we see a breakout and real estate or is that the right.
The board.
Ascribed to it and you want it.
Some color about what youre seeing a we're into may we're into the Q2.
What are your thoughts on this.
And especially back we are seeing and active.
Activity in that division net debt, we feel very positive about them you know where the only thing. We're finding right now is what everybody is fighting and that is.
People not wanting to go to work because of the stimulus packages.
We still feel optimistic that and and second is that a division and picked up and third quarter. So we're still feeling optimistic about that and with the and I Ain't given out their projections that they've had and active Q1 and with people moving I think that that bodes well for that division and you know keeping in mind that people didn't lose last year. So.
People start moving and that's a good thing for us and so if the industry has already seen that and we feel optimistic of that but again, we usually see that and third and fourth quarter and right. Now we have no reason to believe that we won't be pushing as well.
Mhm are you are you seeing any of it.
This month from West.
Walker.
And it should be should we should be a sequential burn up through.
Or is it going to be a hockey stick you had to guess.
So can you.
And I think it'll be sequential fair enough I don't anticipate a hockey stick book love to have fun.
I don't anticipate that right now and I think there's just so much it's still uncertain.
For the first and I will say for the first time and.
Over a year and we feel very optimistic about the activity per se, we have a substantial number of open orders and yeah, Mike and.
And as Scott mentioned, it's just trying to find the people to go to work and I had this morning, I had 600 positions that were open.
And we didn't have to find people so in creative and that aspect, but the jobs are there and we just got to get people.
Alright, thanks, and what somebody else gets more questions keep up the good work guys.
Thank you Joseph.
The next question comes from Sara Schuster with Roth Capital Partners.
Flow back from them.
Okay.
Dan Congratulations on your award I'm, calling in on behalf of Jeff Martin.
A couple of questions here the performance of the real estate segment was slightly better than we had modeled in light of the severe storms in Texas. During the quarter are you able to provide an estimate of the revenue impact from the storms and was there actually recovery related work from the storms that perhaps aided performance.
Real estate and the quarter.
And yes, so we had over a half a million dollars that was impacting just it and real estate and because of the storm here and then we one once people got electricity again, we actually have people from all over the U S that started and helping us make calls to people within Texas.
And it can do what's called fire and watch so he if he saw the needs across the country. You saw all of these and buildings that had broken pipes and water and flowing throughout the building and a parking garages and that's actually firewall position for us and what we would do is go in and make sure that the types and the.
Fire systems weren't breaking and then let people know we did see a big jump on that.
And which helped debt, but that was about a two week bump on that but it is revenue and general is about and effect and that over happening.
Okay. Thank you.
With respect to your outlook for real estate are what are the key factors that you perceive between now and the end of the year that will most influenced the rebound for the business.
And then there's many other things that and we just talked about with Mike and I mean, it's just making sure that we get out there and actually start to reopen I think a lot of it has to do with.
People are ready to make moves that didnt move last year, So, we'll wait and see some activity and that and then if they rent relief packages and if theres a more education that goes on with the renters right now to be able to let people know if they do need assistance to how to apply for that assistance and then that will give and the management company.
And the relief and they need to be able to loosen the purse strings.
Yeah.
Thank you and.
The next question the professional segment and had some project completion thrust here based on your commentary in your press release. This morning. It appears new long term contracts are ramping up can you provide some specifics with respect to timing and impact of these contracts relative to the project completions last year.
Sure and I think he talked about the fact that there's been a lot of RFP activity out there right now for the professional division has had several wins in the past three to four week, but I don't like you know a win and light industrial or are women and real estate and those are immediately.
And.
Jobs that get built but when we get a win and professional venue.
And you go in and you have discovery meetings and you figure out what your timing and it's gonna be felt and all.
All of that to say is we did have some positive wins on RFP, but sometimes it can take about four to six weeks for those are and so we're seeing and some of that will probably start paying off and the end of may and Heath and Shane.
Oh.
And thank you one last question here for light industrial and logistics demand and you're seeing it appears bill rates are up nicely. While hours worked are down about 6% is there more work and you have labor for and if so are there ways to increase your labor capacity to continue to grow the light industrial segment.
We are there and everything we've got.
So the answer is yes, so bill rates are up and I think customers are saying that theyre, having to really go in and paying work and get more and we're seeing bonus program and put into place where scale and sign on bonuses being put into place. So when a client and line industrial places their bill rates up and good thing for us because that day.
We have a in that division of pay and bill rates and vacated so if they have to get more on an hourly pay right and that helps us on the bill rate, they're down because we expected and since they began and first quarter because it comes at fourth quarter as always and busy quarter to begin with because of the holidays and we weren't surprised by that but I will say that you know again, we have about 600 and physician network.
And and and real estate. We also had about 600 physicians that are out there and in light industrial and we're doing a lot of different things to educate our clients and regards to doing surveys and research for where they are and what their pay rates are and compared to what they should be for the region and really just going in and saying you need people your way and them.
Market and here's what you need to price it theres, a lot of education and going into making sure. Our clients have the day, they should be able to make good decisions and we're being as creative as we can to try to make sure that we supported but we're all and the thing about and it's nice to see some of the clients really targeting to engage and understand even if they're going to have the types and bonuses and sign on.
And and he reached their pay rates does that debt that is a good thing for us.
Great well, thank you very much and again congratulations on the quarter and just look forward to a phone call tomorrow.
That's great. Thank you.
As a reminder, if you do have a question. Please press Star then one on your Touchtone phone.
The next question comes from Howard Halpern, with Todd and which brothers.
Good afternoon guys.
And.
I'll go back and real estate for snack and.
Talked about reopening some offices and Q1 and Q2 could you give us.
And give us the locations and is there any incremental costs to reopening those.
Offices.
And Howard I'm, not going to tell you and location because that's Intel and I don't know, who Oakland and this fall, but I will tell you bring up and that and to and.
First quarter, we have five scheduled for second.
Second quarter and five scheduled for third quarter.
And and keeping in mind that we and when we opened and market and real estate it's not.
Anything more than people. So if the sales person and a recruiter and that market. So that is what our expenses would be up in that market.
And when we talk tomorrow.
Okay and.
In terms of you know the growth potential in real estate are you going to.
See the new business that comes in again, and there is a little bit higher margin to get there.
Overall gross margin back to that 38% plus level.
We don't think so but there is a there is some pricing pressure.
Okay, and the fact is and move into the queue three to four when revenue start to.
We anticipate get back to a quote and more normalized level.
Mmk and with that more I I, well overall normal and.
Normalized glamour, what what for modeling purposes, what would be a good overall tax rate for the year.
You know and we don't we don't do that out.
And.
Okay.
Okay, well you guys keep up the good work and we'll talk.
Thank you I appreciate it.
[noise] at this time there are no further questionnaires in the queue and this concludes the question and answer session I would now like to turn the conference back over to best Garvey for closing remarks.
Okay, and you said.
And as far as.
Policy today, and we appreciate Ya.
Or to add a new on our second quarter results in all day.
And helpful and we'll talk to you.
Day.
The conference's now concluded. Thank you for attending today's presentation and you may now disconnect.
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