BGSF, INC. Q1 FY2025 earnings call

• Continued strategic alternative work with 12-18 month timeline remaining realistic. Restructuring initiatives to recalibrate costs. - Professional segment managed consulting ends well in March, avoided typical first quarter drop-off. Focus on team specializations for improved project efficiencies. Billed hours up ~5%. Permanent placement business strong start in 2025. Awarded Workday partnership, launched product with Workday, signed 23 new logos. - Property Management segment eliminated direct and indirect operating costs last year. Entering seasonally high sales period. Implemented workflows and reorganizations. Seeing signs of improvement in revenues per billing day. Team working on exclusive/semi-exclusive property management service agreements.

Total revenues for the first quarter of 2025 were $63.2 million, down 8% from prior year. Professional segment revenues were down 4.2% year-over-year but increased 5.6% sequentially from the December quarter. Billed hours for Professional were up ~5% in the quarter. Margins in Q1 for Professional were about 32%, down slightly sequentially and year-over-year. Permanent placement business started strong in 2025. Property Management segment revenues were down 14.9% year-over-year and 14.1% sequentially. Property Management is entering seasonally high sales period, with revenues per billing day showing improvement. Property Management eliminated costs last year to align with revenues. Professional segment signed 23 new logos in Q1 2025, up over 60% from Q1 2024. Professional was officially awarded the Workday Application Management Service partnership and launched a product with Workday for compliance reporting support for colleges and universities.

• First quarter revenues $63.2M, down 8% y/y. Adjusted EBITDA $2.4M, margin 3.8%. Adjusted EPS $0.05. - Sequential improvement in Professional segment revenues. Property Management entering seasonally high sales period. Expect corporate leaders to invest as markets normalize, benefiting BGSF growth with customer partners.

• Uncertainties and concerns over administration's trade policies creating headwinds in project hiring and spending. - Macroeconomic uncertainties persisting could impact business performance.

Q: Jeff Martin asked about new logos, average deal size, and project commencement.

A: Beth Garvey said several contracts signed in March, data on deal size to follow.

Q: Jeff Martin asked about existing clients and pent-up demand post-tariff uncertainty.

A: Beth Garvey said there's pent-up demand in both segments, customers are cautious but conversations ongoing.

Q: Jeff Martin asked about technology platform status.

A: Beth Garvey said the platform is fully rolled out, with ongoing enhancements for efficiency gains.

Q: Jeff Martin asked about expense reductions factored in and future reductions.

A: Keith Schroeder said ~65-70% benefit in Q1, 100% in Q2, with ongoing cost improvement efforts.

Q: Jeff Martin asked about Property Management competitive dynamics and preferred partner agreements.

A: Beth Garvey said competitive environment stable, team pivoting, strategic agreements ongoing with recent progress.

Q: Jeff Martin asked about timeframe for Property Management to return to year-over-year stability.

A: Beth Garvey said doing everything to get back on growth trajectory, seeing positive signs.

Q: Michael Taglich asked about comfort with Street estimates.

A: Keith Schroeder said beat estimates in Q1 on revenue, net income, and EPS, would look at Q2 estimates.

Q: Michael Taglich asked about tracking vs plan for Q2.

A: Beth Garvey said tracking where they thought they would be, both divisions have momentum.

Q: William Dezellem asked about wait and see mindset vs new logos contrast.

A: Beth Garvey said it's a mixed bag across business sectors.

Q: William Dezellem asked about Professional services billing hours and seasonality.

A: Keith Schroeder said Professional segment saw sequential growth above seasonality expectations.

Q: William Dezellem asked about historic behavior post-recession and Property Management rent growth.

A: Beth Garvey said industry first to down and up, Property Management seeing rent growth aiding spending.