BGSF, INC. 10-K

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Stock Performance Graph The following graph compares, through December 26, 2021, the cumulative total return of the Company’s common stock, a peer group index of certain publicly traded workforce solutions companies, and the Russell 2000. The graph assumes the investment of $100 at the beginning of the period depicted in the chart and reinvestment of all dividends. Note that historic stock price performance is not necessarily indicative of future stock price performance. The following graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing. Periodically, we review companies within our peer group and decide if we need to make any changes. The new peer group index represents the cumulative total return of the Company and the following corporations providing field talent or permanent employment workforce solutions: GEE Group, Mastech Digital, Resources Connection, Inc., and Staffing 360 Solutions. The old peer group index represents: GEE Group, Mastech Digital, RCM Technologies, and Staffing 360 Solutions. Market Information and Holders Our common stock commenced listing on the NYSE on November 14, 2019 under the symbol “BGSF,” was listed on the NYSE American from to October 27, 2014 to November 13, 2019 under the symbol “BGSF” and was quoted on the OTC Bulletin Board, or OTCBB, under the symbol “BGSF” from April 30, 2014 to October 27, 2014. Prior to the quotation of our common stock on the OTCBB, there was no public market for our common stock. The table below sets forth information on the range of high and low sales prices for our common stock. 24 Quarter Ended: High Low December 26, 2021 $ 15.65 $ 11.61 September 26, 2021 $ 13.99 $ 11.55 June 27, 2021 $ 14.77 $ 11.45 March 28, 2021 $ 16.91 $ 12.24 December 27, 2020 $ 15.36 $ 7.41 September 27, 2020 $ 11.83 $ 7.88 June 28, 2020 $ 14.31 $ 5.69 March 29, 2020 $ 22.38 $ 6.01 As of February 2, 2022, the last reported sales price for our common stock was $14.03 per share. As of February 2, 2022, there were approximately 3,675 holders of record of our common stock. Dividends The board of directors has declared or paid the following cash dividends during the fiscal years ended 2021, 2020, and 2019: Declared Date Record Date Distribution Date Dividend per Share Amount Paid February 6, 2019 February 19, 2019 February 26, 2019 $0.30 $ 3,068,847 April 25, 2019 May 6, 2019 May 13, 2019 $0.30 3,068,974 July 31, 2019 August 12, 2019 August 19, 2019 $0.30 3,071,862 October 29, 2019 November 11, 2019 November 18, 2019 $0.30 3,072,659 Total $ 12,282,342 January 30, 2020 February 10, 2020 February 18, 2020 $0.30 $ 3,092,771 May 7, 2020 May 20, 2020 May 27, 2020 $0.05 515,349 August 5, 2020 August 18, 2020 August 25, 2020 $0.05 515,349 November 5, 2020 November 16, 2020 November 23, 2020 $0.10 1,031,679 Total $ 5,155,148 February 8, 2021 February 18, 2021 February 26, 2021 $0.10 $ 1,033,597 May 6, 2021 May 17, 2021 May 24, 2021 $0.10 1,034,334 August 5, 2021 August 16, 2021 August 23, 2021 $0.12 1,248,183 November 3, 2021 November 15, 2021 November 22, 2021 $0.12 1,251,025 Total $ 4,567,139 On February 2, 2022, the Company's board of directors declared a cash dividend in the amount of $0.15 per share of common stock to be paid on February 22, 2022 to all shareholders of record as of the close of business on February 14, 2022. Our ability to pay dividends is restricted under the terms of our credit agreement and may be restricted under other agreements governing our outstanding indebtedness from time to time. Any future determination with respect to the payment of dividends, including whether to declare a dividend, and, if so, the amount thereof, will be at the discretion of our board of directors and will be dependent upon, among other things, our financial condition, results of operations, capital requirements, the terms of our then existing indebtedness, contractual restrictions, future prospects, general economic conditions and other factors considered relevant by our board of directors. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations–Liquidity and Capital Resources–Credit Agreements” for a description of the restrictions in our credit agreements on our ability to pay dividends. 25 Equity Compensation Plans The following equity compensation plan information is provided as of December 26, 2021: Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted-average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Equity Compensation Plans Approved by Security Holders 2013 Long-Term Incentive Plan 756,173 $16.51 287,457 2020 Employee Stock Purchase Plan — $0.00 218,224 Total 756,173 $16.51 505,681 A description of the equity compensation plan is incorporated by reference to Note 15 in the Notes to Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K. Recent Sales of Unregistered Securities There were no unregistered securities during the fiscal year ended 2021. Share Repurchases During 2021, we repurchased 610 shares of the Company's common stock at a cost of $8,442 and a weighted average price of $13.84 upon the vesting of restricted stock to satisfy statutory minimum tax withholding requirements. Item 6. [Reserved]. The following tables set forth our summary consolidated historical financial data for continuing operations. You should read the information set forth below in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated historical financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. The statement of operations data for the fiscal years ended 2021, 2020, and 2019 and the balance sheet data as of December 26, 2021 and December 27, 2020 set forth below are derived from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. The statement of operations data for the fiscal years ended 2018 and 2017 and the balance sheet data as of December 29, 2019, December 31, 2018, and December 25, 2017 set forth below were derived from our audited financial statements not included in this Annual Report on Form 10-K. 26 Fiscal Years Ended December 26, 2021 December 27, 2020 December 29, 2019 December 31, 2018 December 25, 2017 (dollars in thousands, except per share data) Statement of Operations Data: Revenues $ 239,027 $ 207,125 $ 219,764 $ 206,174 $ 198,448 Gross profit $ 80,941 $ 66,040 $ 69,826 $ 64,520 $ 57,764 Selling, general and administrative expenses $ 65,115 $ 55,244 $ 50,222 $ 44,787 $ 38,659 Gain on contingent consideration $ (2,403) $ (76) $ — $ (3,775) $ (226) Impairment losses $ — $ 7,240 $ — $ — $ — Depreciation and amortization $ 3,698 $ 4,861 $ 4,718 $ 4,833 $ 5,873 Operating income (loss) $ 14,531 $ (1,229) $ 14,886 $ 18,675 $ 13,458 Loss on extinguishment of debt $ — $ — $ 541 $ — $ — Interest expense, net $ 1,433 $ 1,584 $ 1,569 $ 2,850 $ 3,253 Income (loss) from continuing operations before income taxes $ 13,098 $ (2,813) $ 12,776 $ 15,825 $ 10,205 Income tax expense (benefit) from continuing operations (1) $ 2,640 $ (741) $ 3,135 $ 2,855 $ 6,090 Income (loss) from continuing operations $ 10,458 $ (2,072) $ 9,641 $ 12,970 $ 4,115 Income from discontinued operations, net of tax $ 3,652 $ 3,513 $ 3,606 $ 4,579 $ 1,735 Net income $ 14,110 $ 1,441 $ 13,247 $ 17,549 $ 5,850 Basic income (loss) per share: Continuing operations $ 1.01 $ (0.20) $ 0.94 $ 1.35 $ 0.47 Discontinued operations 0.35 0.34 0.35 0.48 0.20 Net income per share – basic $ 1.36 $ 0.14 $ 1.29 $ 1.83 $ 0.67 Diluted income (loss) per share: Continuing operations $ 1.00 $ (0.20) $ 0.93 $ 1.32 $ 0.46 Discontinued operations 0.35 0.34 0.35 0.47 0.19 Net income per share – diluted $ 1.35 $ 0.14 $ 1.28 $ 1.79 $ 0.65 Weighted average shares outstanding – basic 10,367 10,312 10,239 9,577 8,734 Weighted average shares outstanding – diluted 10,417 10,338 10,351 9,808 9,038 Other Financial Data: Adjusted EBITDA from continuing operations (2) $ 16,659 $ 13,760 $ 21,609 $ 21,256 $ 19,970 Same Day EBITDA from continuing operations (2) $ 16,659 $ 13,760 $ 21,609 $ 21,256 $ 19,449 Cash dividends declared per common share $ 0.44 $ 0.50 $ 1.20 $ 1.15 $ 1.00 27 Balance Sheet Data from Continuing Operations: Working capital $ 25,851 $ 17,960 $ 20,532 $ 13,079 $ 9,797 Total assets $ 148,294 $ 130,278 $ 100,378 $ 84,316 $ 89,325 Total outstanding borrowings, net $ 39,450 $ 34,634 $ 27,494 $ 20,089 $ 44,123 Total other long-term liabilities $ 7,240 $ 14,224 $ 6,068 $ 654 $ 2,628 Stockholders’ equity $ 76,592 $ 65,458 $ 68,457 $ 65,702 $ 39,135 (1) 2017 Include a $3.3 million re-measurement of the net deferred tax assets as a result of the TCJA. (2) We present Adjusted EBITDA and Same Day EBITDA (defined below), measures that are not in accordance with accounting principles generally accepted in the United States of America (“non-GAAP”), in this Annual Report on Form 10-K to provide investors with a supplemental measure of our operating performance. We believe that Adjusted EBITDA and Same Day EBITDA are useful performance measures and are used by us to facilitate comparisons 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 accounting principles generally accepted in the United States of America (“GAAP”) can provide alone. Our board and management also use Adjusted EBITDA and Same Day EBITDA as some of the primary methods for planning and forecasting overall expected performance and for evaluating on a quarterly and annual basis actual results against such expectations, and as a performance evaluation metric in determining achievement of certain compensation programs and plans for our management. 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, impairment losses, transaction fees and other non-capital information technology project (“IT roadmap”) and certain non-cash expenses such as share-based compensation expense. Omitting interest, taxes and the other items provides a financial measure that facilitates comparisons of our results of operations with those of companies having different capital structures. Since the levels of indebtedness and tax structures that other companies have are different from ours, we omit these amounts to facilitate investors’ ability to make these comparisons. Similarly, we omit depreciation and amortization because other companies may employ a greater or lesser amount of property and intangible assets. We also believe that investors, analysts and other interested parties view our ability to generate Adjusted EBITDA as an important measure of our operating performance and that of other companies in our industry. Adjusted EBITDA should not be considered as an alternative to net income for the periods indicated as a measure of our performance. Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. We define “Same Day EBITDA” as Adjusted EBITDA on a fifty-two week fiscal year basis. Omitting the additional revenue days in a fifty-three week fiscal year ended provides a financial measure that facilitates comparisons of our results of operations with those of our fifty-two week fiscal year and comparisons of our results with those companies having same number of days. Same Day EBITDA should not be considered as an alternative to net income for the periods indicated as a measure of our performance. Other companies in our industry may calculate Adjusted EBITDA or Same Day EBITDA differently than we do, limiting their usefulness as comparative measures. The use of Adjusted EBITDA and Same Day EBITDA have limitations as analytical tools, and you should not consider these performance measures in isolation from, or as an alternative to, GAAP measures such as net income. Adjusted EBITDA and Same Day EBITDA are not measures of liquidity under GAAP or otherwise, and are not alternatives to cash flow from continuing operating activities. Our presentation of Adjusted EBITDA and Same Day EBITDA should not be construed as an inference that our future results will be unaffected by the expenses that are excluded from that term or by unusual or non-recurring items. The limitations of Adjusted EBITDA and Same Day EBITDA include: (i) they do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; (ii) they do not reflect changes in, or cash requirements for, our working capital needs; (iii) they do not reflect income tax payments we may be required to make; and (iv) they do not reflect the cash requirements necessary to service interest or principal payments associated with indebtedness. To properly and prudently evaluate our business, we encourage you to review our consolidated financial statements included elsewhere in this Annual Report on Form 10-K and the reconciliation to Adjusted EBITDA and Same Day EBITDA from net income, the most directly comparable financial measure presented in accordance with GAAP, set forth in the following table. All of the items included in the reconciliation from net income to Adjusted EBITDA are either (i) non-cash items or (ii) items that management does not consider in assessing our on-going operating performance. In the case of the non-cash items, management believes that investors may find it useful to assess our comparative operating performance because the measures without such items are less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges and more reflective of other factors that affect operating performance. In the case of the other items that management does not consider in assessing our on-going operating performance, management believes that investors may find it useful to assess our operating performance if the measures are presented without these items because their financial impact may not reflect ongoing operating performance. 28 Fiscal Years Ended December 26, 2021 December 27, 2020 December 29, 2019 December 31, 2018 December 25, 2017 (dollars in thousands) Net income (loss) from continuing operations $ 10,458 $ (2,072) $ 9,641 $ 12,970 $ 4,115 Income tax expense (benefit) from continuing operations(1) 2,640 (741) 3,135 2,855 6,090 Interest expense, net 1,433 1,584 1,569 2,850 3,253 Loss on extinguishment of debt — — 541 — — CARES Act credit (2,084) — — — — Operating income (loss) 12,447 (1,229) 14,886 18,675 13,458 Depreciation and amortization 3,698 4,861 4,718 4,833 5,873 Gain on contingent consideration (2,403) (76) — (3,775) (226) Impairment losses (2) — 7,240 — — — Share-based compensation 1,058 786 850 1,015 401 Transaction fees 170 615 434 508 464 IT roadmap 1,689 1,563 721 — — Adjusted EBITDA from continuing operations 16,659 13,760 21,609 21,256 19,970 Same day adjustment — — — — (521) Same day EBITDA from continuing operations $ 16,659 $ 13,760 $ 21,609 $ 21,256 $ 19,449 (1) 2020 Included a $3.3 million re-measurement of the net deferred tax assets as a result of the TCJA. (2) In the professional segment, we recognized a $3.7 million trade name impairment loss and a $3.5 million client partner list impairment loss during the thirteen week period ended June 28, 2020. 29