BGSF, Inc. (NYSE:BGSF) Q1 2026 Earnings Call Transcript

BGSF, Inc. (NYSE:BGSF) Q1 2026 Earnings Call Transcript May 7, 2026

Operator: Good morning, everyone. Welcome to BGSF, Inc. First Quarter Fiscal 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. Now I will turn the call over to Sandy Martin, Three Part Advisors. Please go ahead, ma’am.

Sandra Martin: Good morning. Thank you for joining us today for the company’s first quarter 2026 conference call to discuss our results. On the call with me are Kelly Brown, President and Co-CEO; and Keith Schroeder, Co-CEO and CFO. After our prepared remarks, there will be a question-and-answer 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’s 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. Reconciliation 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 Schroeder: Thank you, Sandy, and thank you all for joining us in today’s call. As expected, BGSF transition services agreement with INSPYR successfully concluded on March 31. Thus, beginning in the second quarter, we are now operating as a stand-alone company. This represents a meaningful inflection point for the business, enabling our leadership team and employees to dedicate their full attention to managing a best-in-class property staffing company and executing our 2026 strategic growth initiatives. Operating independently simplifies the organization support structure and strengthens our ability to drive operational discipline, efficiency and accountability. During the quarter, we made solid progress through 3 key directives that remain central to our strategy.

First, we are leveraging insights from an independent consulting firm to support incremental top line revenue. Kelly will provide an update on several encouraging developments following my remarks. Second, we have resized our general and administrative cost structure to align with our stand-alone property staffing business, and we’ll continue to look for opportunities to optimize our cost structure. We continue to estimate ongoing G&A costs at approximately $12 million annually, including roughly $2 million in public company costs, reflecting a more appropriate and sustainable cost base. Third, informed by an external organizational and incentive compensation study, we took targeted actions late in the first quarter to reduce selling costs.

While the timing will limit the near-term impact, we expect the full benefit of these actions to be realized beginning in the third quarter of this year. On an annualized basis, these initiatives are anticipated to generate approximately $1 million in cash cost savings. These actions reinforce our focus on execution, margin improvement and progress towards sustained profitability. With that, I’ll turn it over to Kelly to walk through the strategic initiatives currently underway.

Kelly Brown: Thank you, Keith, and good morning, everyone. To start, we’re proud to share that BGSF was recognized as one of the 2026 Best Places for Working Parents awarded by the Staffing Industry Analysts organization or SIA. This recognition reflects our ongoing commitment to supporting working families through flexible people-first policies that strengthen engagement and retention across the communities that we serve. We were also recognized by SIA as one of the top 100 largest staffing firms in the U.S. Operationally, we completed the BG Staffing rebrand in the first quarter, a pivotal step in sharpening our market positioning and building a more scalable technology-enabled digital lead generation platform. By clarifying our brand positioning and strengthening our digital marketing foundation, we are seeing improved SEO performance, a larger and more efficient funnel and deeper client engagement.

We are also encouraged by the early results of our technology investments. Today, we are operating in both recruiting and sales AI capabilities, and we believe we have established a balanced model that combines advanced technology with human expertise as the market continues to evolve. These capabilities are improving efficiency and accelerating speed to fill for our clients while enhancing the candidate’s experience as well. Our AI-enabled recruiting tools have already streamlined interviews for more than 7,500 candidates, strengthening compliance and security while expediting critical steps such as identity verification. The result is a materially faster time to fill with higher qualified candidates. On the sales side, our AI sales assistant platform has successfully converted inquiries into new clients, and our relationship teams then step into arrange and schedule delivery.

Taken together, these initiatives reinforce our focus on delivering better outcomes for clients and candidates, and we believe this continued focus on the end user experience will continue to position BG Staffing as a differentiated workforce solutions partner. As a part of our organic growth strategy, we launched our PropTech consulting services through our strategic partnership with Yardi. While still early, the ramp has been encouraging. We’ve begun building a consulting pipeline for PropTech services, secured initial engagements and expanded our Yardi consultant network. This opportunity is being driven by increasing complexity in implementation and integrations, the demand for our expertise in evaluation and simplification of existing tech stacks and continued consolidation of management portfolios within the property management industry.

PropTech presents a complementary adjacent market to our core staffing business and further strengthens our differentiated position across multifamily and commercial property management. If execution continues as planned, we believe PropTech could represent approximately 1% to 2% of our total revenue this year. Overall, we are making steady progress advancing our operating model and strengthening our competitive differentiation. As our AI capabilities continue to evolve, we expect further efficiency gains through recruiting sales and service delivery. Our initiatives are beginning to gain momentum, positioning the business for top line growth and improved financial performance, which Keith will discuss shortly. As previously mentioned last quarter, we also look forward to participating in the 2 leading rental housing and commercial real estate industry events in June, hosted by the National Apartment Association as well as BOMA International, which will be valuable platforms for in-person customer engagement and lead generation.

With that, I will turn the call back to Keith to cover our first quarter financial results.

Keith Schroeder: Thank you, Kelly. As a reminder, our comments today refer to continuing operations unless otherwise noted. First quarter revenue was $20.9 million. While revenue was flat year-over-year, this was a positive change compared to the prior 2 fiscal years. Further, we believe severe nationwide weather and widespread power outages in late January and February affected demand during the quarter. Our gross profit for the first quarter was $7.4 million, slightly down from the $7.6 million achieved in the prior year period. Our gross margin was 35.5% down from 36.2% last year. We believe our gross margin for the full year will trend closer to 36%. SG&A expenses were $8.8 million for the quarter compared to $9 million a year ago.

This quarter includes $483,000 of strategic review costs compared to $21,000 in the prior year period. In addition, income from discontinued operations included a $918,000 gain from the final settlement of net working capital from the sale of the Professional division, which is a cash inflow to our financial results. Our adjusted EBITDA for the first quarter was a loss of $541,000, an improvement compared to the $1 million loss in the prior year period. As our revenue strengthened during seasonally stronger Q2 and Q3 time periods, the additional gross profit will positively affect our EBITDA as well as the previously discussed cost reduction actions we implemented during the quarter. On a GAAP basis, we reported a net loss from continuing operations of $0.13 per diluted share compared to an adjusted EPS loss from continuing operations of $0.07 per share.

Consolidated adjusted EPS for the quarter was a positive $0.01 per share. We exited the quarter with a strong debt-free balance sheet and remain committed to disciplined capital management and cost control. Our cash flows from operations in the first quarter were essentially flat in a seasonally low revenue quarter. We also repurchased 170,862 shares of common stock at an average price of $5.11 per share, which totaled approximately $873,000 for the quarter. We do continue to expect full year 2026 revenue to grow in the low to mid-single-digit range compared to 2025. As Kelly outlined, our teams are focused on executing our property management staffing strategy, advancing our growth initiatives and building momentum across the business. Completing the divestiture of Professional required a significant effort across the organization, and Kelly and I want to thank our employees for their commitment and perseverance throughout the process.

From an investor engagement perspective, we will present at the East Coast IDEAS Conference on June 11, participating in a live presentation and one-on-one meetings. We look forward to updating investors on our progress each quarter. Please reach out after this call if you would like to schedule a follow-up meeting. With that, we would now like to open the call for questions. Operator?

Q&A Session

Operator: [Operator Instructions] The first question will come from Michael Taglich with Taglich Brothers.

Michael Taglich: Just a quick question on the stock buyback. Have you been able to buy any blocks of stock, especially recently or no?

Keith Schroeder: We are in a 10b5-1 Plan. So we really don’t know that. So it’s the broker that is in charge of that. But I don’t think so.

Operator: [Operator Instructions] The next question will come from George Melas with MKH Management.

George Melas: Could you guys give us a little bit of sense of how you see the market? It seems like the market was a bit tight and in a downturn for a couple of years. How do you see that evolving? What did you see in so far in ’26? And how — what are your expectations for the rest of the year from a market perspective?

Kelly Brown: Certainly. It’s been certainly an interesting couple of years. We’ve had to really work with our clients as they navigated a couple of different things, heightened insurance costs, kind of stubborn interest rates, that does impact how they operate for various reasons. And I think some of that pressure does continue. However, I also think that we’ve seen a lot of adjustment to just knowing what these costs are, and the impact they can have. So while we’ve seen some loosening in certain pockets, I just think we need to expect it to kind of stay static for a little bit longer, frankly. But I also think that there’s been a lot of adjusting to what impact does that have on their operational strategy and where does staffing fit into that. So while I certainly don’t think that it’s loosened up significantly, I do think a lot of adjusting has happened that does have a positive impact on our customers’ ability to leverage services such as ours ongoing.

George Melas: Okay. Great. And then maybe just a second question. From a tech perspective, the company has invested quite a bit of tech in tech in the last, let’s say, 3, 4, 5 years. And of course, it’s an evolving process. It’s a never-ending process. But how comfortable are you right now with your current tech in particular, to recruit your staff and to meet the need of your customers?

Kelly Brown: It’s a great question. We’re really comfortable with the technology that we have with regards to our ability to recruit. We are able to leverage AI in various ways to get our candidates, the response time to our candidates. much quicker. That said, now that we are past the TSA, we continue to go through a review of every piece of technology that we are using. Is it the right technology for our business as a stand-alone business? And where are there any sort of cost optimization efforts that we can make. So I would say that we’re comfortable right now with the technology that we have with regards specifically to recruiting, but know that we will continue to evaluate now that we do operate as a stand-alone company.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Kelly Brown for any closing remarks.

Kelly Brown: Thank you for your time today. We appreciate your interest in BGSF and look forward to providing an update on our second quarter in a few months. Have a great day.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.