What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-03-10 compared with 2021-03-11 · 47 added, 40 removed, 191 unchanged (31% of the section changed)

Overview and History

(“BGSF,” “we,” or the “Company”) is a leading national provider of workforce solutions that operates, along with its wholly owned subsidiaries, primarily within the U.S.

in three industry segments:

Real Estate, Professional, and Light Industrial.

(“BGSF,” “we,” or the “Company”) is a leading national provider of professional workforce solutions with continuing operations that, along with its wholly owned subsidiaries, operate primarily within the U.S.

in two industry segments Real Estate and Professional, with discontinued operations in the Light Industrial segment.

We provide field talent to a variety of client partners that are seeking to match their workforce requirements to their business needs.

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• In June 2013, we acquired substantially all of the assets and assumed certain liabilities of InStaff Holding Corporation and InStaff Personnel, LLC, a wholly owned subsidiary of InStaff Holding Corporation (collectively, “InStaff”).

This acquisition has allowed us to strengthen and expand our operations in our Light Industrial segment.

We continue to operate under the InStaff trade name.

• In March 2015, we acquired substantially all of the assets and assumed certain liabilities of D&W Talent, LLC (“D&W”), which specialized in providing part-time and full-time workforce solutions of accounting and finance personnel and secretarial and administrative personnel to client partners in Texas and Louisiana.

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We continue to operate under the Momentum Solutionz trade name.

On February 28, 2022, we signed a definitive agreement to sell substantially all our Light Industrial segment (“InStaff”) assets to Jobandtalent (“J&T”), through their wholly-owned subsidiary, Sentech Engineering Services, Inc.

The Company anticipates that the transaction will close during the first fiscal quarter of 2022, and anticipates using the proceeds from the transaction to, among other things, deploy additional capital into managed services and high-end consulting solutions, drive geographic expansion in the Company’s Real Estate segment, pursue potential acquisition opportunities, reduce outstanding indebtedness, and for general corporate purposes.

Instaff's financial results for periods prior to the sale have been reflected in our Consolidated Statements of Operations and Comprehensive Income and Consolidated Statements of Cash Flows as discontinued operations.

Additionally, the related assets and liabilities associated with the discontinued operations in the prior periods are classified as discontinued operations in our Consolidated Balance Sheets.

See “Note 4 - Discontinued Operations” in our Consolidated Financial Statements included elsewhere in this report for additional information.

We now operate across 46 states and D.C., as well as 13 on-site locations.

We do not currently have any foreign operations.

We do not currently have any significant foreign operations.

The workforce solution industry supplies field talent to client partners helping them minimize the cost and effort of workforce planning.

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The workforce solution industry is large and highly fragmented with approximately 25,000 competing companies, while only 186 firms exceeded $100 million in annual revenues in 2020 according to Staffing Industry Analysts (“SIA”).

In September 2020, SIA estimated the 2021 U.S.

temporary service market will be an estimated $141.5 billion, which is up from an estimated $126.9 billion in 2020 due to COVID-19.

As of September 2021, SIA estimated the 2022 U.S.

temporary service market will be an estimated $163.8 billion, which is up from an estimated $157.4 billion in 2021.

Workforce solution providers compete both to recruit and retain a supply of field talent and to attract and retain client partners to use these workers.

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We have diversified our operations to provide field talent within distinct segments of the industry.

We refer to these segments as Real Estate, Professional, and Light Industrial.

We refer to our continuing operations as the Real Estate and Professional segments, and discontinuing operations is the Light Industrial segment.

We operate separate profit centers within each segment and provide managers considerable operational autonomy and financial incentives.

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This structure also allows managers and team members to focus on market development while relying on centralized services for support in back-office operations, such as risk management programs and unemployment insurance, credit, collections, accounting, advice on legal and regulatory matters, and quality standards.

Our operations are organized into three business segments:

Real Estate, Professional, and Light Industrial.

Our continuing operations are organized into the Real Estate and Professional segments, and our discontinued operations is the Light Industrial segment.

Real Estate Segment

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All open positions nationally are recruited from this TAC.

The field talent we assign to our Real Estate client partners are our field employees, although our client partners provide on-the-job direction, control and supervision.

The field talent we assign to our Real Estate client partners are our employees, although our client partners provide on-the-job direction, control and supervision.

Professional Segment

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Light Industrial Segment

Our Light Industrial segment provides field talent to manufacturing, distribution, logistics and call center client partners needing a flexible workforce.

The Light Industrial segment, reported as discontinued operations, provides field talent to manufacturing, distribution, logistics and call center client partners needing a flexible workforce.

We currently have 11 branch offices and 13 on-site locations operating in 11 states.

Our Light Industrial segment field talent perform workforce solutions in a variety of skilled and unskilled positions.

The field talent we assign to our Light Industrial client partners are our field talent, although our client partners provide on-the-job direction, control and supervision.

The Light Industrial segment field talent perform workforce solutions in a variety of skilled and unskilled positions.

The field talent we assign to the Light Industrial client partners are our employees, although our client partners provide on-the-job direction, control and supervision.

See “Note 4 - Discontinued Operations” in our Consolidated Financial Statements for additional information.

Financial Information about Segments

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We are committed to growing our operations.

Revenues have grown from $35 million in 2009 to $277.9 million in 2020, by using a growth strategy reliant upon both acquisitions and organic growth.

We have grown from $35 million of Light Industrial revenue in 2009 to $239 million of continuing revenue in 2021, by using a growth strategy reliant upon both acquisitions and organic growth.

We will continue to evaluate acquisition opportunities utilizing our proven approach to the assessment, valuation, and integration of acquisitions.

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We continue to invest in technology and process improvements, as necessary, to ensure that we are operating at optimal productivity and performance.

In April 2019, our board of directors authorized $10.0 million over a three year period to enhance our technology infrastructure, which is our “IT roadmap.” We have organized our top information technology goals and success criteria into six workstreams designed to align similar technologies, project predecessors and business stakeholders that will guide the roadmap for delivery prioritization.

In April 2019, our board of directors authorized a three year plan to enhance our technology infrastructure, which is our “IT roadmap.” We have organized our top information technology goals and success criteria into six workstreams designed to align similar technologies, project predecessors and business stakeholders that will guide the roadmap for delivery prioritization.

These workstreams include front office, middle office, back office, modern workplace, IT infrastructure and project management.

To date we have spent $6.8 million of which $2.3 million is in our selling and administrative expense and we have been able to complete 14 projects across all of the workstreams.

There are currently 7 active projects, with several starting in 2021.

To date we have spent $10.8 million of which $4.0 million is in our selling and administrative expense over the past three years and we have been able to complete 19 projects across all of the workstreams.

There are currently 6 active projects, estimated to be completed in the second quarter 2022.

The workforce solutions market is highly competitive with limited barriers to entry.

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Our quarterly operating results are affected by the number of billing days in a quarter, as well as the seasonality of our client partners’ business.

Demand for our Real Estate workforce solutions increase in the second quarter and is highest during the third quarter of the year due to the increased turns in multifamily units during the summer months when schools are not in session.

Demand for our Light Industrial workforce solutions increases during the third quarter of the year and peaks in the fourth quarter due to increase in the demand for holiday help.

Demand for our Real Estate workforce solutions typically increase in the second quarter and is highest during the third quarter of the year due to the increased turns in multifamily units during the summer months when schools are not in session.

Overall first quarter demand can be affected by adverse weather conditions in the winter months.

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Historically, demand for permanent placement workforce solutions is even more sensitive to economic and labor market conditions than demand for workforce and consultant solutions and this is expected to continue.

Our business, results of operations, and financial condition have been, and may continue to be, adversely impacted in material respects by COVID-19 and by related government actions, non-governmental organization recommendations, and public perceptions, all of which have led and may continue to lead to disruption in global economic and labor markets.

These effects have had a significant impact on our business, including reduced demand for our workforce solutions, early terminations or reductions in projects, and hiring freezes, and a shift of a majority of our workforce to remote operations, all of which have contributed to a decline in revenues and other significant adverse impacts on our financial results.

Our business, results of operations, and financial condition have been, and may continue to be, impacted by the COVID-19 pandemic.

During 2020, the pandemic had a significant impact on our business, including reduced demand for our workforce solutions, early terminations or reductions in projects, hiring freezes, and a shift of a majority of our workforce to remote operations.

These factors contributed to a decline in revenues and other significant adverse impacts on our financial results in 2020.

Human Capital

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This includes having the vast majority of our internal team members work from home, while implementing additional safety measures for team members and talent continuing critical on-site work.

As of January 15, 2021, we employed approximately 400 team members working remotely or in our various market locations in the United States.

As of February 2, 2022, we employed approximately 400 team members working remotely or in our various market locations in the United States.

In addition to our team members, BGSF matches talent with our client partners.

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We believe that our programs provide fair and competitive opportunities that align team member and shareholder interests.

In addition to cash and equity compensation, we also offer team members competitive benefits such as life and health (medical, dental and vision) insurance, paid time off including volunteer time off, wellness benefits, education/tuition reimbursement, a defined contribution retirement plan and in 2021 will offer an Employee Stock Purchase Plan.

Diversity, Equity, and Inclusion

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In September 2020, we formed a diversity, equity and inclusion council called Voices Inspiring Inclusion, Belonging, and Equity (“VIIBE”), which now comprises more than 34 team members and represents broad perspectives across our organization.

VIIBE is chaired by our new Director of Diversity, Development and Learning appointment made in February 2021.

Later in the year, we expect to form team member resource groups to foster an environment of belonging and support team members’ efforts to maximize their potential.

VIIBE is chaired by our Director of Diversity, Development and Learning, whose appointment was made in February 2021.

Later in the year, we expect to launch our first two team member resource groups:

African American/Black Employees & Allies and Single-Working Parents and Allies.

Our team member resource groups are designed to create a strong sense of belonging within our work culture, to provide awareness and gain collaborative support from allies, and to help drive equitable opportunities throughout our organization for all.

The essential work of VIIBE has already begun with the development of foundational pillars of excellence that promote this philosophy.

We are focused on how we source, recruit, develop, appreciate, and leverage perspectives and experiences of underrepresented talent.

We are focused on how we source, recruit, develop, appreciate, and leverage

perspectives and experiences of underrepresented talent.

This focus will extend to our collaboration with client partners, selection of vendor partners, engagement in our communities and prioritization of overall work-life harmony.

Our commitment to diversity, equity and inclusion does not sit with a singular individual, but with every employee at BGSF.

BGSF leaders will be provided additional inclusive-leadership growth opportunities, understanding the importance of mitigating biases, as we shape our future talent pool selections, onboard new talent, and support future career trajectories.

On November 27, 2020, we employed approximately 5,000 people, of which 8% were internal team members and 92% were field talent supporting our client partners across the country.

• Women represented 39% of all employees, and underrepresented minorities (“URMs”, defined as those who identify as Black/African American, Hispanic/Latinx, Native American/Alaska Native, Asian, Native Hawaiian/Pacific Islander and/or two or more races) represented 72% of our all of our reporting employees (13% of employees in contingent roles chose not to disclose this information);

Our commitment to diversity, equity and inclusion does not sit with a singular individual, but with every team member at BGSF.

BGSF leaders will continue to be provided additional inclusive-leadership growth opportunities, understanding the importance of mitigating biases, as an ongoing effort to shape our future talent pool selections, onboard new talent, and support future career trajectories.

As of November 26, 2021, we employed approximately 4,900 people, of which 8% were internal team members and 92% were field talent supporting our client partners across the country.

• Women represented 42% of all team members, and underrepresented minorities (“URMs”, defined as those who identify as Black/African American, Hispanic/Latinx, Native American/Alaska Native, Asian, Native Hawaiian/Pacific Islander and/or two or more races) represented 78% of our all of our reporting team members (9% of team members in contingent roles chose not to disclose this information);

• Women represented 64% of our internal team members and 56% of internal team members in managerial and leadership roles;

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To this end, we support volunteerism through two paid days so team members can serve their charity, cause or not-for-profit organization of choice.

For 2020, our team members supported several causes of personal importance, such as Breast Cancer Awareness, Autism, Make-A-Wish Foundation, various domestic violence groups, American Heart Association, Dress for Success, United Way, and Chefs Across America, supporting restaurants and food insecurity during COVID-19.

We also launched Philanthropy Cloud to fully empower team member-driven giving by accessing a global network of opportunities to donate, volunteer and advocate for any cause.

In 2021, BGSF team members donated more than $29,000 to support the work of 31 nonprofit organizations, including The American Red Cross and United Way to support relief efforts for people affected by 2021 Winter Storm Uri.

Team members also served more than 700 hours at several nonprofits of personal importance as well as BGSF-organized volunteer projects including “The Great BGSF Cleanup,” an Earth Day initiative;

market-led back to school supply drives;

and the 2021 State Fair of Texas Youth Job Interview Contest.

BGSF named Junior Achievement its 2021 Charity of Choice, furthering the organization’s mission to prepare students for successful futures by providing work-readiness, entrepreneurship, and financial literacy learning programs.

Team Engagement

As part of the BGSF initiative to provide its team members with feedback opportunities, in 2020, we conducted several surveys to understand team member needs and support team members both prior to and, more importantly, during the pandemic.

The survey results were analyzed and reviewed by our senior leadership.

The results of this engagement survey were shared with individual managers, who were then tasked with taking action based on their team members’ confidential feedback (both quantitative and qualitative).

By paying close attention to the results both at an aggregate enterprise level as well as at a department/business/workgroup level, we have been able to enhance our culture of rewards and recognition, drive efforts to promote inclusion and diversity, increase communication in support of team member well-being and modernize our approach to foster a culture of continuous learning and feedback.

We are also nearing the rollout of a social recognition platform to align awards and recognition to our BGSF values.

As part of BGSF’s continued initiative to provide its team members with feedback opportunities, in 2021, we conducted several pulse surveys to understand team member needs and provide support.

Survey results were analyzed and reviewed by our senior leadership, as well as shared with individual managers, who were then tasked with taking action based on their team members’ confidential feedback (both quantitative and qualitative).

By paying close attention to the results, both at an aggregate enterprise level as well as at a department/business/workgroup level, we have been able to continue the enhancement of our culture of rewards and recognition, drive efforts to promote inclusion and diversity, increase communication in support of team member well-being and modernize our approach to foster a culture of continuous learning and feedback.

In 2021, we rolled out our social recognition “BiG Deal” platform to align awards and recognition to our BGSF values.

Learning and Development

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We believe learning and development are key elements to overall retention, engagement, and team member experience strategy.

This direction is led by our new Director of Diversity, Development and Learning appointment made in February 2021.

This direction is led by our Director of Diversity, Development and Learning.

Our strategy is designed to empower team members to reach their full potential, and we provide a wide range of development programs, opportunities, and resources needed to be successful.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business