BGSF (BGSF) Q4 2025 Earnings Call Transcript

DATE

Thursday, March 12, 2026 at 9 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Keith R. Schroeder
• President, Real Estate — Kelly Brown

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TAKEAWAYS

• Revenue -- $22 million, representing a 9.4% decrease, attributed to lower billed hours and weak demand from property management clients facing cost pressures.
• Gross Profit -- $7.7 million, down from $8.7 million; gross margin was 35% and would have been 35.6% excluding $147,000 in out-of-period workers' comp costs.
• SG&A Expenses -- $9.3 million, lower than the prior year’s $10.5 million, but the figure included $403,000 in strategic review costs and $460,000 in out-of-period expenses mainly from self-insurance and divestiture-related adjustments.
• Adjusted EBITDA -- Loss of $947,000, improved from a $1.6 million loss in the prior year, due to significant cost reductions in selling and administrative expenses, despite $1 million lower gross profit.
• Net Loss from Continuing Operations (GAAP) -- $0.11 per diluted share; non-GAAP adjusted EPS loss from continuing operations was $0.09 per share; consolidated adjusted non-GAAP EPS positive $0.09 per share.
• Full-Year Net Cash from Operations -- $117,000, which included a $5.2 million escrow receivable related to the professional division sale; settlement expected in Q2.
• Capital Expenditures -- Minimal at $138,000 for the year.
• Share Repurchases -- 351,200 shares purchased for $1.5 million in 2025; cumulative total to date is 522,000 shares at a cost of $2.4 million.
• Debt Position -- All outstanding debt retired following the professional division sale; company now operates debt-free with a strong cash position.
• Special Dividend and Buyback -- Paid a $2 per share special dividend and announced a $5 million share buyback.
• Ongoing G&A Outlook -- Future general and administrative costs estimated at $12 million, including roughly $2 million in public company expenses, with ongoing efforts to achieve further reductions.
• Annualized Cost Savings -- Organizational and incentive changes expected to deliver $1 million in annualized savings, with full impact reflected by Q3.
• Revenue Trend (Early 2026) -- Management stated that sales for January and February are "slightly ahead" of the prior year, indicating a positive start; expectation communicated for full-year top-line growth in the "mid-single digits" for 2026.
• PropTech Market Initiative -- Launching first software partnership with Yardi to support the property tech market; initial consultant pool of 8–12 with first-year revenue targeted at $1 million–$2 million, growing organically.
• AI and Technology Enhancement -- Ongoing investments in AI and platform technology have improved operational efficiency and client engagement, with specific mention of improved front- and back-office processes.
• Brand Repositioning -- Website to transition to bgstaffing.com after TSA completion to enhance SEO, brand recognition, and marketing effectiveness.
• Seasonality and Fixed G&A -- G&A expenses described as "pretty flat" across quarters, while variable selling expenses increase in stronger seasonal quarters due to higher bonuses and commissions.
• TSA Agreement -- Transitional services agreement from the division sale progressing as planned, with wrap-up expected by the end of Q1.
• Conference Participation -- Scheduled as an exhibitor at major rental housing and real estate industry events in June, positioning for enhanced customer engagement and lead generation.

SUMMARY

Management affirmed the transition to a pure-play real estate staffing organization, with all debt eliminated and significant shareholder capital returned following the professional division sale. The company outlined the launch of new technology-enabled service lines, specifically entering the PropTech support segment through a nationwide partnership with Yardi and a dedicated consultant network. Operational changes—including AI-driven workflow upgrades and process streamlining—were credited for improved year-start revenue momentum, which management characterized as ahead of the 2025 pace. Cost controls were detailed, with ongoing fixed G&A optimization and expectations for $1 million in annualized expense reductions materializing in the coming quarters. The capital allocation strategy continues with ongoing share buybacks and the expectation to settle a $5.2 million escrow in the upcoming quarter.

• CEO Schroeder said, "We are now estimating ongoing G&A costs to be in the $12,000,000 range, with public company costs estimated at approximately $2,000,000."
• President Brown described the Yardi venture as "our first software partnership" and sees potential to serve all current customer properties via technology-enabled solutions.
• Schroeder confirmed revenues in January and February were above prior-year levels, marking the first positive sales trend in multiple quarters.
• Management specifically expects that "full-year sales in 2026 to be over 2025, in the mid-single digits."

INDUSTRY GLOSSARY

• TSA (Transitional Services Agreement): Contractual arrangement under which the seller of a business division continues to provide certain services to the buyer for a specified transition period post-sale.
• PropTech: Property technology; innovations and digital platforms that modernize how real estate is managed, operated, and serviced.
• Yardi Independent Consultant Network: A network of qualified consultants certified to provide support, implementation, and training for Yardi’s property management software solutions.
• SEO (Search Engine Optimization): Strategies and processes used to increase the visibility and ranking of web content in internet search engine results.
• AI (Artificial Intelligence): Technology that enables machines or software to mimic cognitive functions such as learning and problem solving, applied here to recruiting and operational workflows.
• IBNR (Incurred But Not Reported): Estimated insurance claims that have occurred but have not yet been reported to the insurer, impacting self-insurance reserves.

Full Conference Call Transcript

Keith R. Schroeder: Thank you, Sandra, and thank you all for joining us in today’s call. Fiscal 2025 was a transformational year for the company. After the sale of the professional division, we retired all outstanding debt, returned a meaningful amount of capital to shareholders via a $2 per share special dividend, and announced a $5,000,000 share buyback. As a result of those actions, today, we are a solely focused property management staffing organization, debt-free with a strong cash position. The fourth quarter was a very busy quarter for our team. As discussed in our third quarter earnings call, there are three major directives where we have been strategically focused.

First, we utilized the findings from an independent consulting firm to shape our top-line revenue initiatives as we finalized our budget for 2026 and beyond. Kelly will discuss those in more detail following my remarks. Second, we continued to take aggressive actions to resize our general and administrative expenses to be more in line with our stand-alone property staffing business. We are now estimating ongoing G&A costs to be in the $12,000,000 range, with public company costs estimated at approximately $2,000,000. And third, we are utilizing results of an organizational and incentive compensation study to take further actions to reduce selling and G&A costs, primarily in the selling cost area.

Those actions have been identified, and we started taking action in late Q1 with the full effect benefiting us in Q3 of this year. The annualized cost savings are approximately $1,000,000. Additionally, we continue to operate under the TSA agreement following the sale of the professional division. The process is going very well, and we expect to wrap it up by the end of Q1. With that, I will now turn it over to Kelly to cover the strategic initiatives that are underway.

Kelly Brown: Thank you, Keith, and good morning, everyone. Before we discuss our fourth quarter sales and 2026 initiatives, I would like to highlight an important change to our go-to-market strategy with clients and candidates. At the completion of our TSA agreement in April, we will transition our website to bgstaffing.com. Our analysis of search trends and AI activity proved that including “staffing” in our name consistently ranks us in the top three results for both clients seeking talent and job seekers exploring opportunities. We believe this change will significantly improve SEO performance, clarify our brand positioning, and enhance the overall effectiveness of our marketing efforts.

As Keith mentioned, we are executing on our 2026 top-line strategic initiatives, leveraging insights from the market study completed late last year. A key opportunity identified through that work and reinforced through internal discussions is our expansion into the prop tech support market. In February, we announced our first software partnership with Yardi, an industry-leading property management technology platform. Through the Yardi Independent Consultant Network, we are pairing our industry expertise with technology-enabled talent solutions. PropTech is a sizable adjacent market to our core business and further enhances our differentiated positioning across multifamily and commercial property management staffing. Turning to technology-enabled solutions, we continue to optimize our AI investments to further differentiate our platform and deepen engagement with our clients.

Our focus is on elevating the overall client and candidate experience, which positions BGSF, Inc. as an innovative workforce solutions partner. These technology- and AI-driven enhancements have improved front- and back-office efficiency while reinforcing our people-first culture. We believe the right combination of talent and technology suite enables us to deliver quality candidates faster and more efficiently, driving better outcomes for our clients. We continue to advance the operational performance initiatives discussed last quarter, and early insights indicate progress in strengthening our competitive differentiation. These efforts and strategic partnerships are beginning to support incremental top-line revenue growth and improve overall financial performance.

Finally, we are excited to participate as an exhibitor at the Apartmentalize Conference hosted by the National Apartment Association, as well as the Building Owners and Managers Association International Conference, both of which are held in June. As two of the premier gatherings in the rental housing and commercial real estate industry, we expect the events to be a strong platform for customer engagement and lead generation. I will now turn the call back to Keith to cover our fourth quarter financial results.

Keith R. Schroeder: Thank you, Kelly. Our comments today mostly refer to continuing operations unless otherwise noted. Quarter revenues were $22,000,000, a 9.4% decline compared to the prior year, driven by lower billed hours and weak demand due to overall cost pressures on property management companies and property owners. Gross profit in the fourth quarter was $7,700,000 compared to $8,700,000 in the prior year quarter. Gross profit as a percentage of revenue was 35% and was negatively affected by $147,000 in out-of-period workers’ comp costs. Adjusted for those costs, our gross profit as a percentage of revenue was 35.6% in the quarter, consistent with the prior year’s quarter and the year of 2025 in total.

SG&A expenses for the fourth quarter were $9,300,000 compared to $10,500,000 in the prior year’s quarter. SG&A this quarter included strategic review costs of $403,000 compared to $88,000 in the prior year quarter. SG&A expenses in 2025 were negatively affected by approximately $460,000 of out-of-period expenses, mostly related to the medical expenses under our self-insurance plan and the process of finalizing our closing balance sheet for the sale of the professional division. Fourth quarter adjusted EBITDA was a loss of $947,000 inclusive of the medical insurance adjustment mentioned above, compared to an EBITDA loss of $1,600,000 in the prior year. This reduction in EBITDA loss came in spite of $1,000,000 of lower gross profit due to lower sales.

Significant cost-cutting measures implemented in selling and in general and administrative expenses during 2025 were the main drivers behind the improved EBITDA loss. We reported fourth quarter GAAP net loss from continuing operations of $0.11 per diluted share, compared to a non-GAAP adjusted EPS loss from continuing operations of $0.09 per share. Consolidated adjusted non-GAAP EPS for the quarter was $0.09 per share. For the full year of 2025, net cash provided by continuing operating activities was $117,000, which included a $5,200,000 escrow receivable from the sale of the professional division. We expect to finalize the settlement of this cash escrow amount during Q2. Our capital expenditures were minimal at $138,000.

During 2025, we purchased 351,200 shares of stock totaling approximately $1,500,000. Our purchases to date total 522,000 shares at a total of $2,400,000. Finally, the team remains focused on executing our strategic priorities and our new roadmap while also managing the transitional work related to the sale of the professional division. Kelly and I want to thank everyone across the organization for their continued dedication and hard work over the past year. The execution of the TSA was a particularly heavy lift, and we are deeply grateful to the entire BGSF, Inc. team for their thoughtful planning, strong execution, and sustained commitment. We look forward to updating investors each quarter on our progress and hope today’s discussion has been valuable.

We will now open for questions. Operator?

Operator: Certainly. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that is 1 to ask a question. One moment while we poll for questions. Your first question for today is from William Dezellem with Tieton Capital.

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

Kelly Brown: Yes. Good morning, Bill. Thank you for the question. I will take that one. The Yardi partnership is an exciting one for our group because Yardi, as a company, has established an independent consultant network, and what that means is that Yardi as a company will obviously sell and implement software to our property management customers that they use for their day-to-day operations. So when and if there are gaps between what Yardi provides as a company and the implementation or training that is needed to actually have the end user fully implemented into the software, they will leverage independent consultants to do that work.

And that is exactly where we will come in with our consultant base to be able to fill those requests. So Yardi essentially serves as a base when they know they have needs among their clients so that we can then pick that up, and it is a really basic model of hiring the consultant, placing them, and then billing accordingly.

William Dezellem: And, Kelly, what is the potential size of that business? Or is it more important, the relationship enhancement that it leads with your customers?

Kelly Brown: Yes. You know, we chose Yardi as our first partnership of this nature because they are the most widely used software in the property management space. So the potential is very large across all of our customer base. They are certainly not the only software used; they are the most widely used. So when you look at potential, you think about all the properties that we bill with across the country; they all have software that they use. So every single one of them would have some type of support that they could need at any given point in time.

In addition to that, even at the corporate office level, when you think about their accounting needs and things like that, Yardi is also leveraged for those types of services. So there is potential at both the corporate office level as well as the on-site end user level.

William Dezellem: Alright. Great. Thank you. I appreciate that. And then, Keith, would you please walk through your comments about SG&A on an ongoing basis, and I did not catch all the numbers, number one, but maybe related to the $9,300,000 of SG&A that was reported in the fourth quarter?

Keith R. Schroeder: Okay. So the G&A cost that we are estimating going forward once we are clear of the TSA and all of that is around $12,000,000. Okay? And then the number obviously continues to unfold as we continue to look for ways to cut costs and software costs and things like that. So that is kind of an ongoing work that we have. There is about $2,500,000 or so of public company costs in that number. Alright?

So the Q4 number, which you cited, which was selling and G&A, that number is higher than what we expect in 2026 because we were still supporting the sale, and we were not able to get out of all those software changes that we expect to change. So the Q4 number is not reflective of what we expect in 2026. Does that help?

William Dezellem: Yes. That is helpful. And, following up on that, the SG&A that includes—there is the $9,300,000—how much of that is the G&A number?

Keith R. Schroeder: Oh, the G&A number for the quarter, it is actually in the press release. It was about $3,500,000, but there is about $460,000 that hit in Q4 that did not relate to Q4, and that was the things that I cited that we, as we broke apart the balance sheet for the sale and we looked at our IBNR in our reserve, we ended up taking $460,000 of expense in Q4. So that is included in those numbers.

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

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

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

Kelly Brown: I think it is reasonable to assume that there could be a certain level of that. What we have heard from customers is that as much as possible during times when they have to be conservative on their spending, they will do their best to just leverage the existing employee base that they have, even if that means one employee that may typically work at one property needing to float or visit several properties and try to help. So to an extent, there may be a little bit of that. Nothing like what we saw after COVID or anything like that.

But there may be a small amount, but I think as much as possible, they really have tried to make it work with the existing employees that they have.

William Dezellem: Great. Thank you both for taking all the questions.

Kelly Brown: Absolutely. Thank you.

Keith R. Schroeder: Bill, one other thing just to back that up with our top-line sales: through the first two months are slightly ahead of 2025. So it has been off to a solid start for this year.

William Dezellem: So just to be clear, what you are saying is if March continues the trend that you saw in January and February, the first quarter revenues would be up, which would be the first time in many quarters that is the case. Correct?

Keith R. Schroeder: Yes. That is correct.

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

Keith R. Schroeder: No. But I will say that we do expect full-year sales in 2026 to be over 2025, in the mid-single digits. So if that helps.

William Dezellem: That is helpful. And I am going to take the bait and go one step further. Thank you, Bill. So relative to the monthly trends, when you look at the fourth quarter, was November decline less than October, and was December better than November? And then January being better than December, and then was February up more than March? Are we seeing that sort of trend, each and every month improving?

Keith R. Schroeder: You are going sequentially. Right?

William Dezellem: Yes. Basically, Keith, I am essentially saying let us just take, for example, if October was down 6%, then November being down 4%, December being down 2%, January being up 2%. And I totally just made those numbers up for illustration.

Keith R. Schroeder: Yep. So I think the best way to answer that is that as we ended 2025, the seasonality effects that we would expect, we were better than those in the last month of last year. And so we have started out where we are higher in sales than last year for January and February. So it is a positive trend.

William Dezellem: That is helpful. Did that positive trend begin late in the fourth quarter in December? Or is it really—

Keith R. Schroeder: Yes.

William Dezellem: Yes. It did.

Keith R. Schroeder: And, of course, we had one really tough week in February because a snowstorm basically shut down the entire country for a few days. But, still, we came out pretty strong.

William Dezellem: Yes. That is very helpful. Appreciate that additional color. Anything else you would like to add on that front before I turn it back to the operator?

Keith R. Schroeder: No. I think that is it. But thank you.

William Dezellem: Thank you again.

Operator: Your next question is from George Melas-Kyriazi with MKH Management.

George Melas-Kyriazi: Thank you. Good morning.

Keith R. Schroeder: Good morning.

George Melas-Kyriazi: Trying to clarify the answer that you gave, Kelly, to Bill regarding the PropTech. It seems like it is a very different line of business. Right? It is not your regular consultants or staffing that is more focused on maintenance and leasing. So is that a new segment of the business, could we say? And how many consultants do you have and what kind of revenue are you expecting in 2026 from PropTech?

Kelly Brown: Yes. Well, good morning, George. Thank you for the question. Yes. It is different from the type of staffing that we have delivered in the past. You are correct. And the reason why we selected PropTech as an adjacent market that we were interested in is because it is a need that the people that we place and our existing customers have on all of their properties. They are leveraging technology, as all of us are, in their day to day. So we saw an opportunity to explore the support of that technology, and it really does two things.

It helps solve customer problems that exist today, but it also helps lift up our candidate base as we know they are going to be, when they are out to work, leveraging the same technology. And so, learning about how Yardi structures their independent consultant network really became of interest to us because we are building that consultant base. To answer your question, we are going to start with a pool of 8 to 12 consultants and get them out working, and it will just grow organically over the year. So, early projections for 2026, we expect to be able to organically grow the revenue and ramp up through the year.

First-year top line may be $1,000,000 to $2,000,000, but we really are just launching it organically this quarter. So we are going to look at the next couple of quarters very carefully as sales accelerate, and we will be able to give much more accurate forecasting after that point.

George Melas-Kyriazi: Okay. That is exciting. And how many people do you have on staff now? How many consultants do you have, and do you train them in the Yardi tech, or are they pretty much already trained and ready to go?

Kelly Brown: Yes. They tend to come in with existing Yardi experience. If we are going to hire them, they have existing Yardi knowledge. We are not hiring folks to come in and then train them. Now I will add that Yardi does provide really impressive resources to make sure their consultant base has access to training and to knowledge and continuing education. Yardi does a really great job making sure that their consultant network is very well equipped to stay knowledgeable on their technology. So that is another reason why we selected Yardi as a partner: those resources that they have, the knowledge base that they offer.

Therefore, that is not really a lift that we have to take on internally, that type of training. We will hire consultants that have existing knowledge, then leverage Yardi’s resources to make sure that they stay fresh on that knowledge.

George Melas-Kyriazi: Great. And maybe I am digging too much into the weeds, but I am really curious. Are you starting in Texas, for example? Are you starting in one market? How do you see the ramp of that business segment unfolding?

Kelly Brown: Fortunately, this service is not necessarily geographically driven because a lot of the work that these consultants can deliver is remote. So we will not be a geographically based expansion. It will really be more of a customer-by-customer-based expansion. And so we will grow that way between both our own sales initiatives and Yardi’s referral base. It will not necessarily have a geographic component.

George Melas-Kyriazi: Okay. Great. That sounds like an exciting initiative. It is nice to see having these growth initiatives. Maybe just also trying to clarify a little bit what you said at the end regarding a solid start to the year. The fourth quarter, year over year, was down 9.4%, right, I think the top line.

Keith R. Schroeder: Yes. That is correct.

George Melas-Kyriazi: If part of December was a positive comp, it sort of means that, actually, maybe October and November were down double digits. And then so that seems like a very dramatic change from down double digit in a few months to going up comp. And how do you explain this change, and to what extent is this change market-driven, and to what extent is it your own execution and what you are doing internally that is driving that, in your opinion?

Keith R. Schroeder: Yes. I think there is some market improvement in there, but really from our perspective, it is more driven by execution. The things that we learned from one of these studies are the speed to fill, giving them the right candidate in the right spot quickly. Those things all make a big difference, and we have changed some things up, and we are laser-focused on that stuff.

George Melas-Kyriazi: And let us see if we can try to extrapolate that to the year. So you expect mid-single-digit growth. Does that mean that you expect growth pretty much in every—year-over-year growth, I mean—in every quarter of 2026?

Keith R. Schroeder: Yes. That is correct.

George Melas-Kyriazi: Okay. Great. That is really good to know. And to what extent is that driven by—I think, Kelly, you mentioned that you feel like customers have a slightly greater propensity to purchase and to spend. So you have that on the one hand. On the other hand, you have that execution on your side. Is that the way one would look at it?

Kelly Brown: Yes. It is definitely a mixture of both of those factors that would lead to the year-over-year performance being more favorable.

George Melas-Kyriazi: Okay. Great. Good. And then on the cost side, thank you very much for what you have as the property management segment. It is super helpful, and it really helps us understand the business much better. So if we look at the G&A, it is $3.9. But if we take out the medical and the cost of the review, it comes down to pretty much $3.1. So let us say $3.0 to $3.1, and if we annualize that, it is roughly $12. Which I think is what you said, Keith, as kind of the ongoing expenses of G&A. Does that mean that if we take out those two one-time things, we are pretty much at the steady-state level for G&A?

Keith R. Schroeder: Yes. But just to make clear that we are looking at ways ongoing to bring down those costs. So it is not a done deal. That is where we are now, but we are constantly looking at ways to bring down those costs.

George Melas-Kyriazi: Okay. And with, of course, seasonality, your second and third quarter are your best quarters from a revenue perspective. That impacts somewhat selling expenses. But would that have an impact on G&A, or is G&A basically flattish from quarter to quarter?

Keith R. Schroeder: G&A is pretty flat. So selling would go up some. You have more sales; you have more bonus dollars, commission dollars, things like that. But with the G&A, it is basically pretty fixed across all four quarters.

George Melas-Kyriazi: Okay. Great. Thank you very much for taking my questions.

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

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

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

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