Q4 2023 BGSF Inc Earnings Call
Operator: Good morning, everyone. Welcome to the BGSF Inc. Fiscal 2023 fourth quarter and full year financial results conference call. All participants will be in a listen-only mode.
Good morning, everyone and welcome to the P. G. S S Inc. Fiscal 2023 fourth quarter and full year financial results Conference call.
All participants will be in a listen only mode.
Operator: If you need assistance, please send a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key and then 1 on your touchtone telephone.
Do you need assistance. Please they know a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions.
To ask a question you May press Star and then one on your Touchtone telephone.
Operator: Withdraw your questions; you may press star and two. As a reminder, this conference call is being recorded. Now I'd like to turn the call over to Sandy Martin, our three-part advisor. Ma'am, please go ahead.
So all your questions you May press Star then two.
As a reminder, this conference call is being recorded now I'd like to turn the call over to Sandy Martin three part advisors.
Please go ahead.
Sandy Martin: Thank you. Good morning, and welcome to the BGSF 2023 fourth quarter and full year earnings conference call. With me on the call today are Beth Garvey, Chair, President, and Chief Executive Officer, and John Barnett, Chief Financial Officer. After our prepared remarks, there will be a Q&A session. As noted, today's call is being webcast live, and a replay will be available later today and archived on the company's investor relations page at investor.bgsf.com.
Thank you good morning, and welcome to the Bgs F 'twenty twenty-three fourth quarter and full year earnings conference call with me on the call today are Beth Garvey Chair, President and Chief Executive Officer, and John Barnett Chief Financial Officer. 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 Dot C. G yourself dot com.
Sandy Martin: Today's discussion will include forward-looking statements that are based on certain assumptions made by the company under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. However, 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. During the call, management will also reference certain non-GAAP financial measures, which can be useful in evaluating the company's operations as related to its financial condition and results. These non-GAAP measures are intended to supplement GAAP financial information and should not be considered a substitute.
Today's discussions 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. During the call management will also reference certain non-GAAP financial measures, which can be useful in evaluating the company's operations related to the financial.
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These non-GAAP measures are intended to supplement GAAP financial information and should not be considered a substitute.
Beth A. Garvey: GAAP and non-GAAP measures are reconciled in today's earnings press release. I'll now turn the call over to Beth Garvey. Thank you, Sandy, and greetings to everyone on today's call. Fiscal 2023 marked a pivotal year for BGSS, characterized by significant achievements and the successful execution of our strategic and transformative plans. We are pleased to report over $20 million in operating cash flow, accompanied by a nearly 5% increase in revenues to $313 million. It's worth noting that the fourth quarter of 2022 included an extra week of operations due to a calendar shift on a same-day basis. We estimate 7% growth in total 2023 revenue compared to an adjusted 2022. In specific segments, property management revenues grew by almost 5% on a same-day basis for the year, while professional revenues experienced an 8% increase on a same-day basis. Notably, professional revenue in the second half of 2023 was intentionally lowered due to a strategic shift away from lower-margin IT markets.
GAAP and non-GAAP measures are reconciled in today's earnings press release, I'll now turn the call over to Beth Garvey Beth.
Thank you Sandy and greetings to everyone on today's call.
Fiscal 2023 marked a pivotal year for P. J S. S characterized by significant achievements and the successful execution of our strategic and transformative plan.
We are pleased to report over 20 million in operating cash flow accompanied by nearly 5% increase in revenues to 313 million, it's worth noting that fourth quarter of 2022, but he had an extra week of operations due to a calendar shift on a same day basis, we estimate 7% growth in total 2023.
Compared to an adjusted 2022.
In specific segments property management revenues grew by almost 5% on a same day basis for the year, while professional revenues experienced an 8% increase on a same day basis, notably professional revenue in the second half of 2023 was intentionally lowered due to a strategic shift away from lower margin I T placement.
Beth A. Garvey: Our 2023 initiatives involved successfully integrating HORN solutions acquired in December of 2022 and acquiring Arroyo Consulting in April of 2023. These acquisitions provide clients with high-end finance and accounting workforce solutions and robust nearshore and offshore development capabilities. Furthermore, our strength in partnerships with leading technology companies, including Workday, ServiceNow, Microsoft, SAP, Oracle, and Salesforce, have amplified the BGSF brand, fostering new business opportunities. The rebranding to BGS Act from various acquired trade names will further enhance our branding recognition in 2023 as well. I'm immensely proud of our team's dedication and hard work, which has been instrumental in advancing our vision. The Mark CEO Confidence Index Poll, hitting its highest level since 2021, gives us confidence in the continued growth of U.S. businesses. Our strategic decisions regarding service offerings are well positioned for growth in 2024 and beyond. Now, I'll turn the call over to John. Thank you, Beth, and good morning, everyone.
Our 2023 initiatives involved successfully integrating harm solutions acquired in December of 2022, and acquiring a royal consulting in April of 2023. These.
These acquisitions provide clients with high in finance and accounting work force solutions, and robots nearshore and offshore development capabilities.
Furthermore, our strengthened partnerships with leading technology companies, including Workday service now, Microsoft SAP, Oracle and Salesforce have amplified the B G. S S brand fostering new business opportunities.
The rebranding to be G. S that from various acquired trade names further enhanced our brand name recognition in 2023 as well.
And then mostly proud of our team's dedication and hard work, which has been instrumental in advancing our vision and.
And Mark CEO confidence index, Paul hitting its highest level since 2021 it gives us confidence in the continued growth at U S businesses.
Our strategic decisions regarding service offerings are well positioned for growth in 'twenty 'twenty four and beyond now I'll turn the call over to John Thank.
Thank you Bob and good morning, everyone as Beth mentioned 2022 was a 53 week fiscal year in 2023 was a 52 week fiscal year the extra week in 2022 within the fourth quarter, making the as reported year over year fourth quarter comparison difficult.
John Richard Barnett: As Beth mentioned, 2022 was a 53-week fiscal year, and 2023 was a 52-week fiscal year. The extra week in 2022 was in the fourth quarter, making the as-reported year-over-year fourth quarter comparison difficult. 2023 total revenue was $313.2 million, up 4.9% on an as-reported basis. On a same day basis, adjusting 2022 for the extra five days, total revenue was up 7%. For the segments, reported professional revenue for the year was up 6.1% on an as-reported basis and 8% on a same-day basis. The increase was driven by the acquisition of Arroyo Consulting and Horn Solutions. As we integrated Horn Solutions in 2023, we lost the ability to cleanly separate our organic or existing business from the Horn Solutions business. For the year, and on a same-day basis, we estimated that our organic professional business declined in the mid-teens in percentage terms.
2023, total revenue was $313 2 million up four 9% on an as reported basis.
On a same day basis, adjusting 2022 for the extra five days total revenue was up 7%.
But the segments reported professional revenue for the year was up six 1% on an as reported basis and 8% on a same day basis.
The increase was driven by the acquisition of our Royal consulting and Horn solutions as.
As we integrated Horn solutions in 2020 three we lost the ability to cleanly separate our organic or existing business from the horn solution business.
For the year and on a same day basis, we estimated that our organic professional business declined in the mid teens in percentage terms.
John Richard Barnett: Property Management increased 3.3% on an as-reported basis and 5% on a same-day basis. Gross profit for the year was $112 million, up 8% from the prior year, and gross margins were 35.7%, up 100 basis points from 2022. Recall that our 2023 operating results included a one-time $22.5 million pre-tax non-cash brand name impairment charge related to the rebranding project. Excluding the non-recurring impairment charge, transaction fees, and acquisition amortization, a reported loss from continuing operations of $0.95 per share is adjusted to $1.19 earnings per share compared to $1.26 earnings per share in 2022.
Property management increased three 3% on an as reported basis and 5% on a same day basis.
Gross profit for the year was $112 million up 8% from the prior year and gross margins were 35, 7% up 100 basis points from 2022.
Recall that our 2023 operating results included a onetime $22 5 million pretax noncash brand name impairment charge related to the rebranding project.
Excluding the nonrecurring impairment charge transaction fees and acquisition amortization, our reported loss from continuing operations of <unk> 95 per share as adjusted to $1 19 earnings per share compared to $1 26 earnings per share in 2022.
John Richard Barnett: We increased adjusted EBITDA from continuing operations by 15.9% to $25 million compared to $21.7 million. Our adjusted EBITDA margin grew from 7.3% of revenue in 2022 to 8% in 2023. Turning to the fourth quarter, revenues were $73.6 million compared to $77.3 million in 2022. On a same-day basis, adjusting 2022 for the extra five days, fourth quarter revenue was up 3% versus same-day revenue of $71.4 million in the prior year quarter.
We increased adjusted EBITDA from continuing operations by 15, 9% to $25 million compared to $21 7 million or.
Our adjusted EBITDA margin grew from seven 3% of revenue in 'twenty 'twenty, 2% to 8% in 2023.
Turning to the fourth quarter revenues were $73 6 million compared to $77 3 million in 2022.
On a same day basis, adjusting 2022 for the extra five days fourth quarter revenue was up 3% versus same day basis revenue of $71 4 million in the prior year quarter.
John Richard Barnett: For the segments, on a same-day basis, property management revenue increased by an estimated 0.4%, and professional revenue increased by 5%, which included the benefit of acquired revenue. As stated earlier, as the Horn Solutions integration progressed, it became difficult to separate out our organic or existing business. We estimate that the organic professional revenue contracted in the high mid teams on a same-day basis during the fourth quarter.
For the segments on a same day basis property management revenue increased at an estimated 4% and professional increased by 5%, which included the benefit of acquired revenues.
As stated earlier as the Horn solutions integration progressed, it became difficult to separate out our organic or existing business.
We estimate that the organic professional revenue contracted in the high mid teens on a same day basis during the fourth quarter.
John Richard Barnett: We continue to see pressure in the fourth quarter on staff augmentation, project starts, and permanent placement. However, the opportunity pipeline has grown as we move through the first quarter, and we are optimistic about 2024. Gross profit margins in the fourth quarter were $25.4 million and 34.6% compared to $27.1 million and 35% in the prior year quarter.
We continue to see pressure in the fourth quarter on staff augmentation project starts and permanent placement.
However, the opportunity pipeline has grown as we move through the first quarter and we were optimistic about 2024.
Gross profit margins in the fourth quarter were $25 4 million and 34, 6% compared to $27 1 million and 35% in the prior year quarter.
John Richard Barnett: The slight decline in margin is attributed to lower permanent placement business, which carries a gross margin of 100%. SG&A expenses for the fourth quarter were $20.2 million and 27.4% of revenue, which was an improvement versus the prior year quarter of $23.2 million and 30% of revenue. Operating income increased $3.2 million from $2.8 million in the prior year quarter driven by lower SG&A expenses. Fourth quarter adjusted EBITDA was $5.5 million, or 7.5% of revenue, compared to $4.3 million or 5.6% of revenue in the prior year quarter. We reported adjusted earnings of $0.21 per diluted share compared to $0.19 per share for the 2022 fourth quarter.
The slight decline in margin is attributed to lower permanent placement business, which carries a gross margin of 100%.
SG&A expenses for the fourth quarter were $20 2 million and 27.4% of revenue, which was an improvement versus the prior year quarter of $23 2 million and 30% of revenue.
Operating income increased $3 2 million from $2 8 million in the prior year quarter, driven by lower SG&A expenses.
Fourth quarter, adjusted EBITDA was $5 5 million or seven 5% of revenue compared to $4 3 million.
Or five 6% of revenue in the prior year quarter.
We reported adjusted earnings of 21 cents per diluted share compared to <unk> 19 per share for the 2020 to fourth quarter.
Yeah.
John Richard Barnett: I'm happy to announce that we closed the refinancing of our credit facility this past Tuesday. We have a great group of banks in this syndicate, and we are appreciative of their partnership. We prudently manage our balance sheet, focusing on working capital efficiencies and carefully evaluating our leverage ratio, funded that to trailing 12 months pro forma adjusted EBITDA at 2.48 times at year end. We maintain a disciplined approach to our capital allocation strategy, which includes investments in capital expenditures, organic growth, cash to pay down debt, a quarterly cash dividend with an annualized yield of approximately 6%, and strategic acquisitions. We have no immediate plans for acquisitions in 2024.
I'm happy to announce that we closed the refinancing of our credit facility. This past Tuesday, we have a great group of banks in the syndicate and we are appreciative of their partnership.
We prudently manage our balance sheet, focusing on working capital efficiencies and carefully evaluating our leverage ratio.
Funded debt to trailing 12 months pro forma adjusted EBITDA was 2.48 times at year end.
We maintain a disciplined approach to our capital allocation strategy, which includes investments in capital expenditures organic growth cash to pay down debt, our quarterly cash dividend with an annualized yield of approximately 6% and strategic acquisitions.
We have no immediate plans for acquisitions in 2024.
Beth A. Garvey: With that, I would like to turn the call back to Beth. Thank you, John. As we reflect on 2023, we recognize the challenges posed by tough double-digit sales comps from 2022, coupled with economic uncertainty. Despite these challenges, our commitment to short-term and long-term strategic initiatives, supporting our teams, and streamlining operations has positioned us for success in 2024 and beyond. Looking ahead to 2024, we plan to leverage our proprietary territory mapping tool for better Salesforce deployment and property management and continue upskilling talent through our virtual training partnership. On the professional side, our partnerships with leading technologies and our recent appointment as a direct Workday service partner elevate us to new heights.
With that I would like to turn the call back to Beth.
Thank you John as we reflect on 2023, we recognize the challenges posed by tough double digit sales comps for 2022, coupled with economic uncertainty. Despite these challenges our commitment to short term and long term strategic initiatives supporting our teams and streamlining operations has positioned us for success in 2024.
Uh huh.
Looking ahead to 2020 four we plan to leverage our proprietary territory mapping tool for better sales force deployment and property management and continue Upskilling talent to our virtual training partnerships on the professional side, our partnerships with leading technology and our recent appointment as a direct workday service partner elevates us to knit.
Operator: We are also seeing momentum growing our managed solutions and cross selling of our nearshore and offshore IT services. Our strategic repositioning, including higher value consulting, management solutions, and a unique property management platform, sets us up for long-term success and shareholder value creation. I'm extremely proud of the progress and execution, which are the building blocks for our future growth and profitability. Our team's dedication and nimble approach position us well for the opportunities that lie ahead. I look forward to what we can achieve at BGSF in the future. Before we open the line for questions, I wanted to mention that we will be at the Ross Student Investor Conference next week and hope to see many of you there. With that said, I will turn it over to the operator for questions.
Hi.
We are also seeing momentum growing our managed solutions and cross selling of our nearshore and offshore I T services are.
Our strategic repositioning, including higher value consulting management solutions, and a unique property management platform sets us up for long term success and shareholder value creation.
I'm extremely proud of the progress and execution of building blocks for our future growth and profitability, our team's dedication and nimble approach position us well for the opportunities that lie ahead I look forward to what we can achieve at B G. S. F N teacher.
Before we open the line for questions I wanted to mention that we will be at the Roth Investor Conference next week and hope to see many of you there with that said I will turn it over to the operator for questions.
Operator: Ladies and gentlemen, at this time, we'll begin that question and answer session. If you would like to ask a question, once again, please press star and then one on a touch-tone telephone. To withdraw your question, you may press star and two. If you are using a speakerphone, could I please ask you please pick up the handset prior to pressing the keys to ensure the best sound quality?
Ladies and gentlemen at this time, we'll begin the question and answer session. If you would like to ask a question. Once again. Please press star and then one using a touchtone telephone to withdraw your question you May Press Star two.
If you are using a speaker phone would you ask that you. Please pick up the handset prior to pressing the keys to ensure the best sound quality.
Operator: Again, that is a star and then one to join the question. Our first question today comes from Jeff Martin from Roth MKM. Please go ahead with your question. Thanks. Good morning, Beth and John.
Once again that is star and then one he joined the question to you.
Our first question today comes from Jeff Martin from Roth and Kim. Please go ahead with your question.
Thanks, Good morning, John.
Good morning.
Beth A. Garvey: Beth, I want to, Hoping you could give us a little more insight into the professional segment. You mentioned the uptick in the CEO survey and others, that level. Are you seeing that trickle through to the pipeline of business and professional services? We definitely are. So there's a lot of optimism going on right now at BGSF. The professional group is, they're buzzing right now. It's all good.
Beth Owens.
Hoping you could give us a little more insight in the professional segment you mentioned the uptick in the CEO Survey you know first time in two years or so you've seen that level.
Have you seen that trickle through to the pipeline.
Yes and professional.
We definitely are so there's a lot of optimism going on right now would be G. S. S. A professional group is everybody's in right now it's all good.
Beth A. Garvey: Right, and then with the Arroyo acquisition with you now, you know, probably coming on a year here. How is the progress towards, I know, the initial reaction towards nearshowing and offshoring was very positive, and soon that will flow through. And, you know, if so, maybe give some anecdotes.
Great and then with the Arroyo you know.
Acquisition, unless you know you know probably coming out of year here.
How is the progress towards I know the initial reaction towards near showing in Russia, and with very positive net flow through.
And yeah, yeah, Yeah. So maybe you can give some anecdotes oh on what you're seeing.
And well it took us a while to really figure out their capabilities down there and they they have such a.
Beth A. Garvey: And well, it took us a while to really figure out their capabilities, and down there they have such robust, what they call, products at work, so they can do many different things. And so it took us a while to figure out all the many different things that they could do. We're mostly excited about the way they can build some different tools. We have a connector tool that we're working with that can connect some ERP systems. Not all the time do you have tools that connect ERP systems to, like, a pricing tool.
Robust.
And what they call.
Products that work so they can do many different things and so it took us a while to figure out all the many different things that they can do and we're mostly excited about the way. They can build some different tools that we have a connector tool that we're working with that content connects and ERP systems and you know not all the time and do you have a tools that connect ERP systems.
Beth A. Garvey: Right. So we're able to start to build some AI products that help connect those things. We've also got a team of AI developers down there that's actually working a lot on building products for some of our other customers. And so the more that we recognize what they do, and the more we talk to our customers about what they need. Luis Sanchez, who runs that group, has done an amazing job talking to our customers in regards to what they are able to, you know, what's their pain point and what we could do to help them. And so it's been really fun to see all that play out.
Like a pricing tool right and so we're able to start to build some AI products that help connect those things. We've also got a I'd probably add a team of accurate down there that's actually working a lot in building products for some of our other customers and so the more that we recognize what they do it and why do we talk to our customers about what they need them.
Luis Sanchez, who runs that group has done an amazing job and talking to our customers in regards to what they they would.
What's your pain point, and what we can do to help them and so it's been really fun to see all of that play out.
Beth A. Garvey: And then on the Workday partnership, maybe you could elaborate on what that means for BG. In the past, we were like a third party. We were approved to be able to do some work, but we were not a direct competitor.
And then on the Workday partnership or maybe you could elaborate what that means for be yourself.
In the past we work like a third party, we were proud to be able to do some mark that we were not a direct so we would have at it with a second party could walk us into one of our customers. This gives us the ability to be able to go direct so they have on their website now and I prefer to implement or.
Beth A. Garvey: So we would have a second party could walk us into one of our customers. This gives us the ability to be able to go direct. So they have us on their website now as a preferred implementer. And so it allows us really a lot of visibility and not having to wait for somebody else to tag us on the shoulder. Great. And then I know, you know, strategically BGS staff has made strides towards more technologically advanced solutions and maybe talk about the progression that you've made over the past year, year and a half since you've layered in some acquisitions to enhance the technology aspect. I think there are a lot of things. It's a great question, Jeff.
And so and it allows us really a lot of visibility and not having to wait for somebody else to take us on the shoulder.
Great and then I know strategically beat yourself has made strides towards more technology technologically advanced solutions.
Solutions, and maybe talk about the progression.
And that you've made over the past year year and a half since you've layered in some acquisitions to enhance the technology aspect of the altra.
I think theres a lot of things. It's a great question Geoff So I think there's a lot of things that we realized as we started to look at the business and acquisition going through and talking to our customers about what they they are needing and then looking at our business as a puzzle piece you know what what do our customers start with well first they have to pay pik and their software. It then they have to implement it then they have.
Beth A. Garvey: So I think there are a lot of things that we realized as we started to look at the business and acquisitions, going through and talking to our customers about what they needed, and then looking at our business as a puzzle piece. You know, what do our customers start with? Well, first they have to pick their software, then they have to implement it, then they have to customize it.
To customize it and so how do we make sure that weird that player that goes all the way around the circle and I think we've done an amazing job in being able to figure those things out and in doing so we can figure it out that we had teams of people who could do really great things and move the business into higher margin and some of these other products.
Beth A. Garvey: And so how do we make sure that we are that player that goes all the way around the circle? And I think we've done an amazing job of being able to figure those things out. And in doing so, we figured out that we had teams of people who could do really great things and move the business into higher margin. And some of these other project types of work that we had customers asking us to do were really higher volume, lower margin businesses. And it took two or three people to keep that going.
<unk> type of work that we had customers asking us to do well really higher volume lower margin business and it took two or three people to actually keep that going and we just decided that it was strategically a good idea for us to shift to be able to do that higher margin business, where we were seeing our customers see the benefit of us close.
Beth A. Garvey: And we just decided that it was a strategically a good idea for us to shift to be able to do that higher-margin business where we were seeing our customers see the benefit of us closing the gaps on their needs. And so that was kind of how we shifted last year. One of the main reasons we shifted last year to get away from that lower margin business and really double down on the things that our customers needed and that we were finding we were really, really good at. I would also say that we did go through a pretty big transformation, right? Bringing these two acquisitions on board, we had some redundancies, not necessarily I'd say redundancies, because I think the finance and accounting expertise that Horn brought on board was more high end, but we had similar groups, right?
And the gap on their needs and so that was kind of how we shifted last year. One of the main reasons, we shifted last year to get away from that lower margin business to really double down on the things that our customers needed and we were finding was really really good at.
I would say also that we did go through a pretty big transformation right, bringing these two acquisitions onboard.
We had some redundancies not necessarily I'd say redundancies, because I think the.
The finance and accounting expertise that horn brought onboard with more higher end, but we had similar groups right and so we needed to really organize our business and Eric Peters did a great job working with the professional team to kind of organize our business around <unk>.
Beth A. Garvey: And so we needed to really organize our business, and Eric Peters did a great job working with the professional team to kind of organize our business around finance and accounting, IT, managed solutions, and then, you know, Arroyo, the nearshore offshore. So we spent, you know, he spent, and we spent a lot of time as an organization to get that alignment. And we feel really good about how we're set up, especially in the face of some of this economic fog lifting and more optimism, which we expect to result in higher spending by our customers. And then one more for me, if I could, on the property management side. You know, it's a segment that's traditionally grown at a very attractive and rapid rate. See?
Finance and accounting.
<unk> managed solutions and then.
Arroyo nearshore offshore. So we spent he spent and we spent a lot of time as an organization.
To get that alignment and we feel really good about how we're set up.
Especially in the face of <unk>.
Some of this.
This economic log lifting and more optimism, which we expect to result in higher spend by our customers.
Great and then one more for me as I said on the property management side.
That's a segment that's traditionally grown in a.
Very attractive and rapid rate.
You foresee.
Beth A. Garvey: Getting back to double-digit growth on the property management side, and if you're not seeing it now, what kind of environment? I think we've had to do some adjusting in that segment. We've got more competition out there than we've had before. We've had to change some of the ways we look at different things along those lines.
Getting back to say double digit growth in the property management side, and if you're not seeing it now.
Kind of environment are you seeing out there currently.
I think we've had to do some adjusting and and that segment and you had.
Yeah.
We've got more competition out there than we've had before we've had to change some of the ways. We look at different things along those lines, but I think our property management and the territory told him. We'd mentioned earlier is really going to help us be able to be more targeted and ourselves approach and I think that's gonna be beneficial for us going forward and so we're.
Beth A. Garvey: But I think our property management and the territory tool that we've mentioned earlier is really going to help us be able to be more targeted in our sales approach. And I think that's going to be beneficial for us going forward. So we're optimistic about where it's headed. But we also understand that it's a different environment out there now than what it was, you know, three years ago.
Domestic about where it's headed but we also understand that you know there's different environment out there now than what it was you know three years ago.
That's helpful. Thank you.
Howard Allen Halpern: Thank you. Our next question comes from Howard Halpern from Taglich Brothers. Please go ahead with your question.
Yes.
Our next question comes from Howard Halpern from Tango X Burgers Playbook tablets brothers. Please go ahead with your question.
Beth A. Garvey: Congratulations on the valid results. Forward to 2024. In terms of property management, how many locations did you end the year with and what are the prospects for increasing the number of locations or splitting locations in 2024? I believe we are at 64 right now, Howard.
Oh, who graduate congratulations on the solid results and.
Looking forward to 2024 are in terms of property management.
How many locations did you end the year with and what are the prospects for our you know increasing the number of locations where splitting locations in 2024.
Yeah.
I believe we are at 64 right now Howard and then but you know the way we're doing this territory mapping tool.
Beth A. Garvey: And then, but you know, the way we're doing this territory mapping tool, you know, I'm gonna use, you know, Atlanta as an example, where we may have two salespersons out there now, we may end up having six out there. And so that's kind of how we're expanding our growth from that perspective. So they won't have as many, one person won't have as many properties they need to hit.
Yeah, Atlanta as an example.
And you know where we may have two sales people out there now we may end up having six out there and so that's kind of how we're expanding our growth from that perspective. So they won't have as many white person won't have as many properties they need to hit so it'll be more targeted and then as always you know, we've always kind of looked at and being able to be opportunistic.
Beth A. Garvey: So it'll be more targeted. And then, as always, you know, we've always kind of looked at being able to be opportunistic in opening different markets out in the US. And so we've got a couple that are identified, but right now, we're really gonna focus on this territory side, because we think that that's closest to the dollar. Okay.
In opening different markets out and they use in the U S and so we've got a couple that are identified but right now we're really going to focus on its territory side, because we think that that is closest to the dollar.
John Richard Barnett: And in terms of, you know, how you set yourself up for 2024, what are you seeing in terms of your own internal productivity based on all the technology that you've put in place to grow the business? Yeah, I think we should continue to evolve our systems. And, you know, if you look at what we did last year, in addition to the work we did to align the organization on the professional side, we also went through the process of, you know, right sizing the organization and becoming more efficient there. So you would see that in our costs as we went through the year and our SG&A cost as a percent of revenue as we went through the quarters. So, you know, we feel like we are in good shape today. Obviously, as we grow, we'll continue to add to our organization. And we still believe that there are efficiencies to be gained from our system.
Okay.
And in terms of Ah you know how you're set up for 2024, what are you seeing in terms of your own internal productivity based on all the technology that you've put in place to grow the business.
Yeah, I think you know, we we continue to evolve our systems and it.
If you look at what we did last year.
In addition to.
In addition to the work we did to align the organization on the professional side.
We also went through the process of.
Of right sizing the organization and becoming more efficient there. So you would see that in our in.
And our cost as we went through the year and our SG&A cost as a percent of revenue as we went through the quarters.
So we feel like we are in good shape.
Today, obviously as we grow we will continue to add on to our organization.
And we still believe that there are efficiencies to be gained out of our system and we continue to work on evolving our system.
Beth A. Garvey: And we continue to work on evolving our system to get those efficiencies out. And I will add, too, that I think that we did a really good job last year with some of the economic pressures that we had to really kind of right-size the players on the team. So, you know, when we look at it, we're in a position right now where we can bring in a lot more revenue and not have to bring in any more G&A expenses. And so I think we feel really confident about that in how we've restructured and positioned ourselves for this year. Okay. And one last one.
To get those efficiencies al and I will add to that I think we've done a really good job last year with some of the economic pressures that we had to really kind of right sized and the players on the team. So you know when.
When we look at it where where to position right now where we can bring on a whole.
A lot more revenue and not have to bring on any more G&A expense and so I think we feel really confident about that and how we've restructured and position yourself for this year.
Okay and one last one you know you talk a little bit about you know the customer side and the outlook. There. How are you how are you seeing the.
Beth A. Garvey: You know, you talked a little bit about the customer side and the outlook there. How are you seeing... and bringing in people to fill the requests of customers? And we've talked about in the past, we just have such a great group of consultants and field talent that are loyal to us. And so we aren't really seeing a problem with recruiting right now because we do a very good job of making sure people once they work for us, they continue to work for us. So we're able to redeploy people back out, so we're not feeling a lot of pressure in that area right now. And that's a testament to the team.
The talent side and bringing on people to fill those.
To fill the requests of customers.
And we've talked about in the past, we just have such a great group of consultants and field talent that are loyal to us and so we arent really seeing a problem in recruiting right now because we do a very good job in making sure people once they work for us they continue to work for us. So we were able to.
Redeploy people back out so we're not feeling a lot of pressure in that area right now and that's a testament to the team.
Okay, Okay, thanks, and keep up the great work.
Howard Allen Halpern: Thanks and keep up the great work. Our next question comes from Bill Desalegn from Keaton Capital. Please go ahead with your question. All right, great.
Sure.
Our next question comes from Bill.
I'm from Teton capital. Please go ahead with your question.
Beth A. Garvey: Thank you. Would you please dive into a bit more detail on that additional competition that you're seeing on the property management side and how it's manifesting itself? And we've always had competition, but you know, there are more and more people that have decided that this is, you know, an interesting niche to be in. And so we get followed around.
Alright, great. Thank you would you please to dive into a bit more detail on that additional competition that youre seeing on the property management side and and how it's manifesting itself. Please.
And we've always had competition, but you know there's there's more and more people that you know who have decided that this is you know.
Got it.
An interesting niche to be N and M. So we get followed around and so when we open a market. We have some of our competitors that will actually go in and follow us and so again, it's a testament to us being able to go in and double down on our relationships that segment is a relationship business. It is a deep and wide in and you have.
Beth A. Garvey: So when we open a market, we have some of our competitors that will actually go in and follow us. And so, again, it's a testament to us being able to go in and double down on our relationships. That segment is a relationship business. It is deep and wide.
Beth A. Garvey: And, you know, if you recall last year, we got supplier of the year with the National Department Association. And I think those kinds of things help benefit us and move us above the pack. But still, it changes.
If you recall last year, we got supplier of the year with a national apartment Association and I think those kinds of things help benefit us and.
Move us above the pack, but still it changes it changes a little bit how the sales team has to sell and we're structuring that and leave them for being announced directions.
Beth A. Garvey: It changes a little bit how the sales team has to sell, and we are structuring that and moving forward in those directions. Thank you, and when you first purchased Arroyo, there appeared to be some interesting organic growth opportunities. Could you expand on what you're seeing now, please?
Thank you and and when you first.
Purchased Arroyo there appeared to be some interesting organic growth opportunities could you expand on what you're seeing now please.
Beth A. Garvey: There is a lot of cross-sell opportunity with the Arroyo teams. Many things that they do, capabilities that they have that we've uncovered, as I mentioned earlier, just knowing what they're capable of doing and then talking to our customers. They do a really good job listening to the pain points of what our customers are going through and figuring out if there's a way that they can help. And we are very careful in making sure that we get Luis and his team in front of the right people, and they move things in that direction.
There's a lot of cross sell opportunity with their royal teams and many things that they that capabilities that they have that we've uncovered as I mentioned earlier and just knowing what they're capable of doing and then talking to our customers. They do a really good job listening to the pain points of why our customers are going through and figuring out if there's a way that they can help and we are very careful.
And making sure that we get the Luis and his team in front of the right people and they moved it thinks that direction, but I think that as we continue to talk to our customers and they continue to understand what we can do I think there's great opportunity for us in growth in that area and Bill. This is one. This is one of these areas where companies have existing relationships right and they may have.
John Richard Barnett: But I think that as we continue to talk to our customers and they continue to understand what we can do, I think there's great opportunity for us and growth in that area. Yeah, Bill, this is one of these areas where companies have existing relationships, right? And they may have near shore, offshore resources working.
Near shore offshore resources.
John Richard Barnett: And what we've had to do through this process is start with a few people, right? Build our reputation with our current customer base and with the goal of proving our capabilities and getting more work from them. That is helpful, and I do want one point of clarification from your opening remarks. You had talked about learning the capabilities and the ability to tie pricing to an ERP system. That was Arroyo.
Working in what we've had to do through this process is.
Start with a few people right build our reputation with our current customer base and with the goal of <unk>.
Of proving our capabilities and getting more work from them.
Yeah.
That is helpful. And then they do on one point of clarification from your opening remarks, you had talked about.
Learning capabilities.
And the.
The ability to tie pricing to an ERP system that was a royal is that correct or was that another part of the business and I am.
Beth A. Garvey: Is that correct, or was that another part of the business, and I just missed what you were saying? and tried to tie business to. I'm sorry, I'm struggling with that segment. Okay, you had referenced that one of the capabilities that you have learned, that you have from one of the acquisitions, was the ability to tie pricing to an ERP system. Okay, I'm sorry. So there are companies out there that do pricing tools, like a manufacturing pricing tool, to price this product, right?
Just missed what you were saying.
Tried to tie business sure I'm I'm, sorry, I'm struggling with that segment.
Okay. So you had referenced that one of the capabilities that you have learned.
That you have from one of the acquisitions was the ability to tie pricing to Oh ERP system.
I'm sorry, so there there are companies out there that do pricing tools like our manufacturing pricing tool how to price this product right and.
Beth A. Garvey: And we have the ability now to do connections with the Arroyo team has built connecting tools that take an ERP system and tie it to a manufacturing pricing tool, right? But that capability of feeding that into an ERP system has been lacking.
We have the ability now to do connections with the.
The ROI our team has built connecting tools it take a ERP system and tie it to a manufacturing pricing tool right that capability of feeding that into an ERP system has been lacking and so we've done a really good job in being able to build that out.
Beth A. Garvey: And so we've done a really good job of being able to build that out. Great, thank you both and I appreciate the time.
Great. Thank you both and Oh.
I appreciate the time.
Bill Desalegn: Our next question comes from Brian Kitzlinger from Alliance Global Partners. Please go ahead with your question. Great. Thanks for taking my question. Sorry, I joined late, so not sure if this was asked already. Can you talk about your current appetite for M&A with your recent transactions and solid cash flow trends? And then maybe you can speak to valuation expectations for private companies and how they may have changed over the last few quarters?
Your next question comes from Brian Pitz singer from Alliance Global Partners. Please go ahead with your question.
Great. Thanks for taking my question, sorry, I joined late so not sure. If this was asked can you talk about your current appetite for M&A with your recent transactions and solid cash flow trends and then maybe can you speak to valuation expectations for private companies and how they may have changed over the last few quarters. Thank you.
John Richard Barnett: Thank you, and the Board of Trustees. Thank you. Thank you. Yeah, I think you know where we are right now, at making two very large acquisitions, going through our realignment process, and where we are from a leverage standpoint. Unless something that was really a good fit came up, we are looking at acquisition opportunities as they come up, but, you know, I highly doubt that we would pull the trigger on anything except something that was exceptional at a low price this year. This year, we're really focused on execution.
Yeah, I think you know rate right now where we're at I'm, making two very large acquisitions going through our realignment process.
Yeah.
And where we are from a leverage standpoint, we unless something that was really a good fit came up we are looking at acquisition opportunities as they come up but.
I highly doubt that we would pull the trigger on anything.
Something that was exceptional at a low price. This year. This year, we're really focused on execution. We've done the alignment. We believe we have some final finally have some tailwind from the economy behind us.
John Richard Barnett: We've done the alignment. We believe we have some final, finally have some tailwinds from the economy behind us. And we need to focus on driving business and full adoption of selling in what we have acquired across our sales platform. Great, thank you. And our next question comes from Mike Taglich from Taglich Brothers. Please go ahead with your question. Good morning, everybody. I hope I didn't miss anything. One question. Is there a high or low?
And and we need to focus on driving business and full adoption of selling in what we have acquired across our sales platform.
Yeah.
Great. Thank you.
And our next question comes from Mike tablets from Tiger Woods Brothers. Please go ahead with your question.
Good morning, everybody I hope I didn't Miss that one question is there a high whoa.
Michael Nicholas Taglich: on the growth range for the property management business and then the tech business for this coming year and percentages about how high we think it is, are you asking for guidance, Mike? Yeah, well, you know, are you gonna beat inflation or not in tech? Are you gonna beat inflation or not in real estate?
On the growth range on the property management business and then the tech business for this coming year.
Okay.
And percentages about how hard we think are you asking for guidance right.
Yeah.
Are you going to beat inflation or not and tech are you going to beat inflation or not and and.
In our real estate.
Beth A. Garvey: I feel very good about 2024. All right, you want to give a little more specific, or do you not feel like it? I feel like we have great momentum going in our professional group. We have had numerous conversations with a lot of customers who are starting to break free from what they have going on. I was traveling last week with a professional team and was wildly overwhelmed by the positivity that was coming from our customers. So I feel very, very good about what is happening in that area. And I think from the property management group, as we continue to move forward, I know the interest rates for some of these mortgage leases that are coming up. I know there's been some conversations about some concerns out there with owners of the properties and that.
I feel very good about 'twenty 'twenty four.
Alright, you want to give Uh huh.
A little bit more.
Specific or you don't feel like it.
Okay.
I feel like we have and great momentum going in our professional group and we have had numerous conversations with a lot of customers who were starting to break free with what they have going on and I was traveling last week with a professional team and with wildly overwhelmed with the positivity that was coming from our customers. So I feel very very good.
About what is happening in that area and I think from the property management great.
And as we continue to move forward I know the interest rates and for some of these.
Mortgage leases that are coming up and I know theres been some conversations about some concerns out there with ownership the properties not so we're just going to watch that and so.
Beth A. Garvey: So we're just going to watch that. But all in all, I think that the restructure that we have made through the last couple years with the systems and with the realignment of our teams, I feel very, very good going into 2024 about the potential of our growth. Great. Okay, thanks. The rest of my questions have been answered.
But all in all I think that the restructure that we have made through the last couple of years with the systems and with the realignment of our teams and I feel very very good going into 2024 about.
The potential of our growth.
Okay. Thanks, much rest of my questions have been answered. Thank you good luck. Thank.
Michael Nicholas Taglich: Thank you. Good luck! Thank you. And ladies and gentlemen, with that, we'll be ending today's question and answer session. I'd like to turn the floor back over to Beth Garvey for any closing remarks. Thank you, everyone, for your time today, and we appreciate your continued support. We look forward to updating you with our first quarter results in early May. Have a great day! And ladies and gentlemen, with that, we'll be concluding today's conference call and presentation. We do thank you for joining us. You may now disconnect your line.
Thank you.
And ladies and gentlemen, with that we'll be ending today's question and answer session I'd like to turn the floor back over to Beth Garvey for any closing remarks.
Thank you everyone for your time today and we appreciate your continued support we look forward to updating you with our first quarter results in early May I have a great day.
And ladies and gentlemen, with that we'll be concluding today's conference call and presentation. We do thank you for joining you may now disconnect your lines.