BGSF Q1 Earnings Call Highlights

Key Points

• BGSF completed its transition to a standalone property staffing company after the March 31 end of its agreement with INSPYR Solutions, which management said creates a simpler structure focused on efficiency, accountability and growth.
• First-quarter results were mixed: revenue was flat at $20.9 million, but adjusted EBITDA loss narrowed to $541,000 from $1 million a year earlier, helped by cost control and a debt-free balance sheet.
• The company is leaning on cost cuts, AI tools, rebranding and new PropTech consulting services to drive growth, while still expecting full-year 2026 revenue to rise in the low- to mid-single-digit range.

BGSF NYSE: BGSF said it completed its transition to operating as a standalone property staffing company during the first quarter of fiscal 2026, following the March 31 conclusion of its transition services agreement with INSPYR Solutions.

Co-CEO and CFO Keith Schroeder told investors that the end of the agreement marked “a meaningful inflection point” for the company, allowing management and employees to focus on property staffing and the company’s 2026 growth initiatives. The company previously sold its Professional Division, and Schroeder said BGSF is now operating with a simplified support structure aimed at improving operational discipline, efficiency and accountability.

For the first quarter, BGSF reported revenue of $20.9 million from continuing operations, which Schroeder said was flat compared with the prior-year period. He said the result represented a positive change compared with trends over the previous two fiscal years, though management believes severe nationwide weather and widespread power outages in late January and February affected demand during the quarter.

Revenue Flat, Adjusted EBITDA Loss Narrows

Gross profit was $7.4 million in the first quarter, compared with $7.6 million in the prior-year period. Gross margin was 35.5%, down from 36.2% a year earlier. Schroeder said the company expects full-year gross margin to trend closer to 36%.

SG&A expenses were $8.8 million, compared with $9 million a year ago. The latest quarter included $483,000 of strategic review costs, up from $21,000 in the prior-year period. BGSF also recorded a $918,000 gain in income from discontinued operations related to the final settlement of net working capital from the sale of the Professional Division, which Schroeder said was a cash inflow.

Adjusted EBITDA from continuing operations was a loss of $541,000, an improvement from a $1 million loss in the prior-year period. On a GAAP basis, the company reported a net loss from continuing operations of $0.13 per diluted share, while adjusted EPS from continuing operations was a loss of $0.07 per share. Consolidated adjusted EPS was a positive $0.01 per share.

Schroeder said BGSF exited the quarter with a “strong debt-free balance sheet” and remained focused on disciplined capital management and cost control. Cash flow from operations was essentially flat in what management described as a seasonally low revenue quarter.

Cost Reductions Target Standalone Business Model

BGSF said it has resized its general and administrative cost structure to better align with its standalone property staffing business. Schroeder said the company continues to estimate ongoing G&A costs at about $12 million annually, including roughly $2 million in public company costs.

The company also took targeted actions late in the first quarter to reduce selling costs, based on an external organizational and incentive compensation study. Schroeder said the timing limits the near-term impact, but BGSF expects the full benefit to begin in the third quarter. On an annualized basis, the initiatives are expected to generate about $1 million in cash cost savings.

“These actions reinforce our focus on execution, margin improvement, and progress towards sustained profitability,” Schroeder said.

AI, Rebranding and PropTech Services Highlight Growth Initiatives

President and Co-CEO Kelly Brown said BGSF completed the BG Staffing rebrand in the first quarter, describing it as a step toward sharpening market positioning and building a more scalable, technology-enabled digital lead generation platform.

Brown said the company is seeing improved SEO performance, a larger and more efficient funnel and deeper client engagement. She also said BGSF is using AI capabilities in both recruiting and sales, combining technology with human expertise.

According to Brown, AI-enabled recruiting tools have streamlined interviews for more than 7,500 candidates, while supporting compliance, security and identity verification. She said the tools are helping the company improve time to fill and candidate quality. On the sales side, Brown said an AI sales assistant platform has converted inquiries into new clients, with relationship teams then handling scheduling and delivery.

BGSF also launched PropTech consulting services through a strategic partnership with Yardi. Brown said the offering is still early but that the company has begun building a consulting pipeline, secured initial engagements and expanded its Yardi consultant network.

Brown said demand is being driven by increasing complexity in implementation and integrations, interest in evaluating and simplifying existing technology stacks, and consolidation of management portfolios within the property management industry. If execution continues as planned, she said PropTech could represent approximately 1% to 2% of total revenue this year.

Outlook Calls for Low- to Mid-Single-Digit Growth

BGSF reiterated its expectation for full-year 2026 revenue to grow in the low- to mid-single-digit range compared with 2025. Schroeder said revenue should strengthen during the seasonally stronger second and third quarters, with incremental gross profit expected to benefit EBITDA alongside cost reductions already implemented.

During the question-and-answer session, analyst George Melis of MKH Management asked about market conditions. Brown said clients have been managing through higher insurance costs and stubborn interest rates, pressures that continue to influence their operations.

“While we've seen some loosening in certain pockets, I just think we need to expect it to kind of stay static for a little bit longer,” Brown said. She added that many customers have adjusted their operational strategies, which could support their ongoing ability to use staffing services.

Asked about BGSF’s technology investments, Brown said the company is comfortable with its recruiting technology and its ability to use AI to improve candidate response times. However, she said BGSF is reviewing every piece of technology now that it is operating independently, including whether each tool remains appropriate for the standalone business and whether cost optimization opportunities exist.

The company repurchased 170,862 shares during the quarter at an average price of $5.11 per share, totaling about $873,000. In response to a question from Michael Taglich of Taglich Brothers about whether BGSF had been able to buy blocks of stock, Schroeder said the company is in a 10b5-1 plan and that the broker is in charge of purchases.

Brown also noted that BGSF was recognized by Staffing Industry Analysts as one of the 2026 Best Places for Working Parents and as one of the top 100 largest staffing firms in the U.S. The company said it plans to participate in industry events hosted by the National Apartment Association and BOMA International in June, as well as present at the East Coast IDEAS Conference on June 11.

About BGSF NYSE: BGSF

BGSF, Inc NYSE: BGSF is a provider of comprehensive workforce management and professional staffing services. The company specializes in designing and administering programs that help organizations optimize their contingent labor, direct hire recruiting and managed service solutions. Through an integrated approach, BGSF delivers end-to-end support that encompasses the planning, deployment and oversight of talent across multiple business functions.

BGSF's service offerings include strategic workforce planning, vendor management, compliance and risk management, onboarding, timekeeping and payroll administration.

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