BGSF, Inc. Reports Record Third Quarter 2022 Financial Results

Strong Quarterly Revenues Up 22% and Adjusted EBITDA Margin of 10.2%

Board Declares Cash Dividend of $0.15 Per Share, 32^nd Consecutive Quarterly Dividend

PLANO, Texas–(BUSINESS WIRE)–BGSF, Inc. (NYSE: BGSF), a leading national provider of workforce solutions, today reported financial results for its third quarter ended September 25, 2022.

The Company further announced that its Board of Directors has declared a quarterly cash dividend of $0.15 per share of common stock. The dividend is payable on November 21, 2022 to all shareholders of record as of the close of business on November 14, 2022. This marks the 32^nd consecutive quarterly dividend and based on yesterday’s closing price of the Company’s common stock, the annualized yield is approximately 4.8%.

Q3 2022 Highlights from Continuing Operations:

• Revenues were $78.5 million, an increase of 22.3% from 2021

• Gross profit was $28.0 million, up 27.0% from 2021, while gross profit percent increased 140 basis points to 35.7% in 2022

• Selling, general and administrative expenses of $20.4 million, improved 60 basis points as a percentage of revenue over 2021

• Net income from continuing operations was $4.7 million, or $0.44 per diluted share, vs. net income from continuing operations of $3.7 million, or $0.36 per diluted share in 2021, which included a net gain on contingent consideration of $1.0 million

• Adjusted EBITDA¹ from continuing operations was $8.0 million (10.2% of revenues), vs. $5.4 million (8.4% of revenues) in 2021

• Adjusted EPS¹ from continuing operations was $0.48 in 2022, up from $0.31 in 2021

Nine Month 2022 Highlights from Continuing Operations:

• Revenues were $221.1 million, an increase of 29.1% from 2021

• Gross profit was $76.5 million, up 33.0% from 2021, while gross profit percent increased 100 basis points to 34.6% in 2022

• Selling, general and administrative expenses of $60.0 million improved 130 basis points as a percentage of revenue over 2021

• Net income from continuing operations was $9.8 million, or $0.93 per diluted share, vs. net income from continuing operations of $6.0 million, or $0.59 per diluted share in 2021, which includes a net gain on consideration of $2.0 million

• Adjusted EBITDA¹ from continuing operations was $17.4 million (7.9% of revenues), vs. $9.9 million (5.8% of revenues) in 2021

• Adjusted EPS¹ from continuing operations was $1.05 in 2022, up from $0.55 in 2021

¹Non-GAAP financial measure. See reconciliation below for details.

Beth A. Garvey, Chair, President and CEO, said, “I am pleased to report that momentum from the first half of 2022 continued into our fiscal third quarter, which resulted in record high revenue and gross profit from continuing operations. We believe our continued strong performance is supported by BGSF’s unique business model that empowers people and creates long-term relationships, both with clients and our workforce. We are strategically focused on solving business challenges for our clients, while building a higher margin business, growing market share and gaining further traction as we close out this year and move into ‘23.

“Our continued strong operating results support the Board’s declaration of a quarterly cash dividend of $0.15 per share which is our 32^nd consecutive quarterly cash dividend.” Garvey continues.

“We are enthusiastic about planned growth initiatives and prospects as we approach 2023. We see strong tailwinds in both segments as we work to build leadership positions in both the Professional and Real Estate segments. Our teams are energized around our vision and strategic direction, and this alignment has contributed to more creative solutions for our clients. The business will continue to be driven by strength in our people, technology, reputation, business model, and client partnerships as we continue our journey as a best-in-class workforce solutions company,” Garvey concluded.

Conference Call

BGSF call at 9:00 a.m. ET on November 3, 2022. Interested participants may dial 844-200-6205 (U.S. callers) or 929-526-1599 (all other locations) and provide access code 250313. A replay of the call will be available until November 10, 2022. To access the replay, please dial 929-458-6194 (U.S. Callers), 866-813-9403 (US Toll Free callers), or +44 204-525-0658 (all other locations) and enter access code 840249. The live webcast and archived replay are accessible at the investor relations section of the Company’s website at www.bgsf.com.

About BGSF

BGSF provides workforce solutions to a variety of industries through its various divisions in IT, Cyber, Finance & Accounting, and Real Estate (apartment communities and commercial buildings). BGSF has integrated several regional and national brands achieving scalable growth. The Company was ranked by Staffing Industry Analysts as the 94th largest U.S. staffing company and the 49th largest IT staffing firm in 2022. The Company’s disciplined acquisition philosophy, which builds value through both financial growth and the retention of unique and dedicated talent within BGSF’s family of companies, has resulted in a seasoned management team with strong tenure and the ability to offer exceptional service to our field talent and client partners while building value for investors. For more information on the Company and its services, please visit its website at www.bgsf.com.

Forward-Looking Statements

The forward-looking statements in this press release are made under the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements regarding our future financial performance and the expectations and objectives of our board or management. The Company’s actual results could differ materially from those indicated by the forward-looking statements because of various other risks and uncertainties, including those listed in Item 1A of the Company’s Annual Report on Form 10-K and in the Company’s other filings and reports with the Securities and Exchange Commission. All of the risks and uncertainties are beyond the ability of the Company to control, and in many cases, the Company cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this press release, the words “allows,” “believes,” “plans,” “expects,” “estimates,” “should,” “would,” “may,” “might,” “forward,” “will,” “intends,” “continue,” “outlook,” “temporarily,” “progressing,” “prospects,” and “anticipates” and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

The following tables have been derived from our unaudited consolidated financial statements and summarize key components of our balance sheet and statements of cash flows for the periods indicated.

BGSF, Inc.

Non-GAAP Financial Measures

The financial results of BGSF, Inc. are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the U.S. Securities and Exchange Commission. To help the readers understand the Company’s financial performance, the Company supplements its GAAP financial results with Adjusted EBITDA and Adjusted EPS.

A non-GAAP financial measure is a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows of a company. Adjusted EBITDA and Adjusted EPS are not measurements of financial performance under GAAP and should not be considered as alternatives to net income, net income per diluted share, operating income, or any other performance measure derived in accordance with GAAP, or as alternatives to cash flow from operating activities or measures of our liquidity. We believe that Adjusted EBITDA and Adjusted EPS are useful performance measures and are used by us to facilitate a comparison of our operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business than measures under GAAP can provide alone. In addition, the financial covenants in our credit agreement are based on EBITDA as defined in the credit agreement.

We define “Adjusted EBITDA” as earnings before interest expense, income taxes, depreciation and amortization expense, transaction fees and certain non-cash expenses such as contingent consideration gains and share-based compensation expense, as well as certain specific events that management does not consider in assessing our on-going operating performance.

Reconciliation of Income from Continuing Operations to Adjusted EBITDA

We define “Adjusted EPS” as diluted earnings per share eliminating amortization expense of intangible assets from acquisitions, transaction fees, and certain non-cash expenses such as contingent consideration gains, as well as certain specific events that management does not consider in assessing our on-going operating performance, net of the respective income tax effect.

Reconciliation of Adjusted EPS

Contacts

Steven Hooser or Sandy Martin

Three Part Advisors

ir@bgstaffing.com 214.872.2710 or 214.616.2207