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BGSF, INC. (BGSF)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue of $64.4M and GAAP diluted EPS of $(0.10) missed Wall Street consensus of $67.7M and $(0.08), respectively; Adjusted EBITDA fell to $1.4M as Property Management seasonality and restructuring disruption weighed on results . Q4 2024 consensus data from S&P Global: revenue $67.65M*, EPS $(0.08)*.
  • Sequentially, revenue declined 9.5% vs Q3 ($71.2M), with Property Management down 18.5% and Professional down 3.0%; gross margin compressed to 33.3% vs 34.2% in Q3 .
  • Management executed a cost restructuring plan targeting $7–$9M annual savings and ~$0.8M reduction in capital spend via nearshore IT support; majority of people-related savings start in Q1 2025 with commission plan changes fully visible in Q2 .
  • Strategic alternatives review remains on a 12–18 month timeline from May 2024; CFO transition announced with Keith Schroeder appointed as CFO, effective after the 10-K filing, adding a potential execution catalyst .

What Went Well and What Went Wrong

What Went Well

  • Stabilizing trends in Professional: billing-day adjusted Professional revenue grew ~2% sequentially; 50 new logos added in Q4 and 30% increase in signed MSAs vs Q4 2023, indicating pipeline improvement .
  • Cost actions advancing: restructuring targets $7–$9M annual savings and ~$0.8M lower cash capex; SG&A reductions started in December with further benefits as contracts roll off and commission plan changes flow through Q2 .
  • Operational excellence and AI initiatives: expanded advanced lead generation engine (from Property Management to Finance & Accounting) and leveraging AI through the Arroyo team to drive productivity and client solutions .

What Went Wrong

  • Seasonal and restructuring disruptions in Property Management: revenue down 18.5% sequentially; larger-than-normal seasonal decline partially due to ceasing service to certain higher credit-risk customers and field reorg disruptions .
  • Margin pressure: gross margin decreased to 33.3% vs 34.6% YoY and 34.2% QoQ; competition and macro pressures cited, especially in Property Management .
  • Miss vs consensus: revenue and EPS both missed Q4 Street estimates amid softer Property Management and fewer billing days in Professional; Adjusted EBITDA margin fell to 2.2% vs 4.8% in Q3 . Q4 2024 consensus revenue $67.65M*, EPS $(0.08)*.

Financial Results

Headline metrics: sequential and YoY

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$73.567 $68.137 $71.186 $64.411
Gross Profit ($USD Millions)$25.447 $23.630 $24.329 $21.466
Gross Margin %34.6% 35.0% 34.2% 33.3%
Operating Income ($USD Millions)$3.227 $0.081 $0.470 $0.246
Net (Loss) Income ($USD Millions)$0.999 $(0.761) $(0.804) $(0.981)
Diluted EPS ($USD)$0.11 $(0.07) $(0.07) $(0.10)
Adjusted EBITDA ($USD Millions)$5.705 $2.603 $3.208 $1.387
Adjusted EBITDA Margin %7.8% 3.8% 4.5% 2.2%
Adjusted EPS ($USD)$0.40 $0.07 $0.10 $(0.06)

Q4 vs Wall Street consensus

MetricQ4 2024 ConsensusQ4 2024 Actual
Revenue ($USD Millions)$67.65*$64.411
Primary EPS ($USD)$(0.08)*$(0.10)
# of Estimates (EPS / Revenue)2 / 2*—

Values with asterisks (*) retrieved from S&P Global.

Segment breakdown

SegmentQ4 2023 Revenue ($MM)Q3 2024 Revenue ($MM)Q4 2024 Revenue ($MM)Q4 2023 Gross Profit ($MM)Q3 2024 Gross Profit ($MM)Q4 2024 Gross Profit ($MM)Q4 2023 GM%Q3 2024 GM%Q4 2024 GM%
Property Management$29.624 $29.824 $24.306 $11.589 $10.696 $8.734 39.1% 35.9% 35.9%
Professional$43.943 $41.362 $40.105 $13.858 $13.633 $12.732 31.5% 33.0% 31.7%
Total$73.567 $71.186 $64.411 $25.447 $24.329 $21.466 34.6% 34.2% 33.3%

KPIs (operational)

KPIQ4 2024Prior Year/Quarter Reference
New logos added (Professional)50 —
Signed MSAs YoY+30% vs Q4 2023 Baseline Q4 2023
Billing-day adjusted Professional revenue~+2% QoQ Q3 2024 baseline
Operating Cash Flow (FY)$24.379M (record) $20.386M FY 2023

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cost restructuring savings (annual)FY 2025$5M comp/benefits + $2–$4M other (announced Dec 2024) $7–$9M savings reiterated Maintained
Cash capex reductionFY 2025~$0.8M reduction via nearshore IT shift ~$0.8M reduction reiterated Maintained
SG&A cadence realization1H 2025Not previously quantifiedMajority of people-related reductions visible in Q1; commission plan changes fully in Q2 Clarified timing
Strategic alternatives timeline2024–202512–18 months from May 2024 Unchanged; process progressing Maintained
Dividend per share (declared)Q4 2024$0.15 in Q4 2023 $0.00 in Q4 2024 Lowered (actual declaration)

Note: No formal revenue/EPS/margin guidance was provided for Q1/Q2 2025 on the call or in the press release .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI/technology initiativesMajor IT transformation win; tech stack modernization; territory mapping strategy Advanced lead generation engine launched; digital transformation emphasis Expanded lead gen to Finance & Accounting; operational excellence team leveraging AI via Arroyo Building momentum; broader deployment
Macro/tariffsMacro headwinds and higher rates impacting Professional Demand environment choppy; cautious cost management Cautious optimism; some pause tied to tariff conversations post-election Mixed; caution persists
Property Management performanceSeasonal lift planned; mapping strategy early positives Seasonal lift delivered; segment up 15.9% QoQ Larger-than-normal seasonal decline; restructuring/credit-policy actions disrupted relationships Near-term pressure; aiming for mid-2025 improvement
Professional segmentSlowdown in spend; managed services growth; new wins outpaced ends by ~25% Stabilized late in quarter; IT consulting stable Billing-day adjusted +2% QoQ; 50 new logos; +30% MSAs Improving pipeline and engagement
Strategic alternativesAnnounced, ongoing Ongoing, no updates Ongoing; 12–18 month timeline reiterated No change
Cost restructureHeadcount/fixed cost actions in 1H Continued cost control $7–$9M savings, ~$0.8M capex cut; SG&A cadence Q1/Q2 Execution phase

Management Commentary

  • “We implemented a significant cost restructuring plan… expense savings estimated to be between $7 to $9 million on an annual basis.”
  • “Professional segment… revenue has stabilized or grown sequentially… added 50 new logos in Q4 and saw a 30% increase in signed master service agreements compared to Q4 of 2023.”
  • “By shifting our IT middleware maintenance and development to lower-cost nearshore support… we expect to save an additional $800,000 annually.”
  • “Gross profit was $21.5 million in Q4… margin of 33.3%… partly due to increased competition and economic pressures in property management.”
  • “We launched an operational excellence team… leveraging AI to improve productivity and eliminating repetitive tasks.”

Q&A Highlights

  • SG&A cadence: Majority of people-related cost reductions were in December and will show up in Q1; commission plan changes fully visible in Q2 .
  • Arroyo nearshore efficiencies: Continued migration of IT work to the Arroyo team to streamline home office and IT costs .
  • Property Management recovery: Sector headwinds persist; industry peers hopeful for second-half improvement; company optimistic about mid-2025 revenue trend improvement .
  • Growth strategy post-cuts: Back-office heavy reductions; some field reorganization caused temporary disruption in Property Management; relationships are being re-established; Professional less disrupted .
  • AI opportunities: Increasing client conversations; Arroyo team solving client problems using AI tools; early results are “very exciting” .

Estimates Context

  • Q4 2024: Revenue $64.411M vs consensus $67.65M* (miss ~4.8%); EPS $(0.10) vs $(0.08)* (miss $0.02). Limited coverage with two estimates for both revenue and EPS* . Values retrieved from S&P Global.
  • Prior quarters: Consensus EPS for Q3/Q2 was $0.11*/$0.08* vs reported $(0.07)/$(0.07) , indicating ongoing estimate recalibration needs. Values retrieved from S&P Global.

Where estimates may adjust:

  • Property Management seasonality/disruption and competitive pressures likely drive near-term downward revisions to margins; cost savings and pipeline strength in Professional support medium-term EPS normalization as SG&A benefits phase in by Q2 .

Key Takeaways for Investors

  • Near-term softness: Sequential and YoY misses reflect Property Management seasonality and restructuring impacts; watch Q1 SG&A step-down and Q2 full commission plan effect for margin recovery .
  • Pipeline quality improving: 50 new logos, +30% MSAs, and billing-day adjusted +2% Professional sequential growth suggest demand stabilization and potential revenue re-acceleration in Professional .
  • Cost actions are tangible: $7–$9M annual savings and ~$0.8M capex reduction provide a clear path to operating leverage as revenue stabilizes; monitor realized savings versus plan .
  • AI/Operational excellence: Leveraging Arroyo’s AI capabilities and internal operational excellence team may enhance productivity and win rates, a potential medium-term margin catalyst .
  • Strategic alternatives optionality: Timeline maintained (12–18 months from May 2024); any definitive update could be a stock catalyst; CFO transition may strengthen execution .
  • Segment focus: Property Management needs rebuilding of local relationships post-reorg and may improve mid-2025; Professional appears steadier with managed services and consulting focus .
  • Trading implications: In the short term, the miss vs consensus and margin compression bias caution; into Q2, visible cost benefits and Professional momentum could shift sentiment if revenue stabilizes and Adjusted EBITDA trends improve .