Good morning, everyone. Welcome to BGSF, Inc. Third Quarter F iscal 2022 F inancial Results Conference Call. My name is Bailey, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. As a reminder, this conference call is being recorded. Now I will turn the call over to Sandy Martin, Three Part Advisors. Please go ahead. Thank you, and good morning, everyone. Welcome to the BGSF third quarter 2022 earnings conference call. With me on the call today are Beth Garvey, Chair, President, and Chief Executive Officer, and Dan Hollenbach, Chief Financial Officer. After our prepared remarks, there will be a Q&A session. As noted, today's call is being webcast live. A replay will be available later today and also archived on the company's investor relations page. Today's discussion will include forward-looking statements which are based on certain assumptions made by BGSF under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by the forward-looking statements because of various risks and uncertainties, including those listed in the company's filings with the SEC. Management statements are made as of today, November 3, 2022, and the company assumes no obligation to update these statements publicly, even if new information becomes available in the future. During the call, management will also reference certain non-GAAP financial measures, which can be useful in evaluating the company's operations related to the financial condition and results. These non-GAAP measures are intended to supplement GAAP financial information and should not be considered a substitute. Reconciliations of GAAP to non-GAAP measures are provided in today's earnings press release. I'll now turn the call over to Beth Garvey. Beth? Thank you, Sandy, and thank you all for joining BGSF Third Quarter 2022 Earnings Call. I am pleased to report that the momentum we experienced in the first half of 2022 continued through the third quarter. We reported record revenues for the third quarter, totaling $78.5 million, up 22.3% year-over-year. Our professional segment accounted for 58% of consolidated revenues, with notable strength primarily on the IT side, with business investments continuing in cloud migration, ERP selection and implementations. We also experienced growth in our managed services and consulting areas. Our real estate segment continues to expand and accounted for 42% of revenues. As we discussed last quarter, the multifamily industry is significantly underbuilt, and the National Apartment Association and National Multifamily Housing Council estimate that 600,000 apartment homes are needed today in the U.S. It is also estimated that the U.S. is underbuilt by 4.3 million units by 2035, which has been accelerating primarily due to the pandemic and further demographic shifts. People today in all ages and categories are choosing to live in apartments. Multifamily housing or renting single-family homes are no longer a transitional housing option. Alternatively, people are deciding that apartments and build-to-rent communities are a desirable solution for long-term housing. These strong tailwinds have contributed to BGSF's market leadership position in the multifamily industry over the last couple of years. We recognize that long-term pent-up demand exists, and we are seeing strong new demand for apartments and build-to-rent single-family housing communities across North America. Our real estate division is strategically focused across the U.S., opening in 6 new key markets this year, including our recent expansion into Canada. Finally, recall that we experienced unseasonably strong real estate segment performance in Q4 of 2021. We think this activity was driven by pent-up demand that started during COVID lockdowns, coupled with landlords spinning again. Last year's strength creates tougher comparisons for us in the fourth quarter of this year. With that said, I'd like to turn the call over to Dan to walk through our financial results in more detail for the quarter. Then I'll wrap up the call with some comments on how we see our markets changing and BGSF plans for delivering unique workforce solutions for current and future customer needs, strategic initiatives, and M&A. Dan? Thank you, Beth, and good morning, everyone. Based on the sale of our Light Industrial segment this year, our financial results discussed today are from continuing operations and except where noted, exclude discontinued operations for this year and last year. As Beth discussed, strong momentum continued into the third quarter, with revenue up 22.3% to $78.5 million compared to $21 million. By segment, Real Estate grew 34.1% and Professional increased 14.9%. Wage rates have been relatively flat through the year, yet increased 10% quarter-over-quarter. In addition to year-over-year improvements, both segments showed sequential growth between Q2 and Q3. Real Estate revenues grew 11% and Professional segment revenues increased 3%. The Professional segment revenue growth was impacted by strong double-digit growth in IT and Momentum Solutionz. We continue to expect solid demand for cloud migration, ERP selection and implementation, as well as customizations. As Beth mentioned, we believe digital transformation and enterprise modernization work are both strong and business investments in these areas will continue. Although managed services are a small but growing component of the professional segment, we had an 85% growth in this business Q-over-Q, which grew out of our Momentum Solutionz acquisition in February 2021. Gross profit increased by a strong 27% compared to the prior year quarter, growing to $28 million, primarily due to revenue expansion and increased spread in both segments. As a percent of revenue, total gross profit increased 140 basis points to 35.7%. Positive operating leverage continued in selling general and administrative expenses, which improved by 60 basis points to 26% of revenue. SG&A dollars increased $3.3 million or 19.5%, which compared favorably to our revenue growth. Third quarter net income from continuing ops was $4.7 million or $0.44 per diluted share compared to net income of $3.7 million or $0.36 per diluted share a year ago. Included in 2021 net income was a $974,000 impact on a gain from contingent consideration. Adjusted EBITDA for Q3 was $8 million or 10.2% of revenues compared to $5.4 million or 8.4% of revenues in 2021. We're excited to report the 10.2% adjusted EBITDA margin this quarter as we work towards our strategy to enhance returns after the divestiture earlier this year. Our Q3 effective rate was 23.6% for 2022 compared to 19.4% in last year's third quarter. Turning to year-to-date results, revenues were $221.1 million, up 29.1%, while gross profit was $76.5 million, up 33%. Our first nine months gross profit percent increased 100 basis points to 34.6%, while SG&A operating leverage improved by 130 basis points this year compared to last. Net income from continuing operations was $9.8 million or $0.93 per diluted share compared to $6.1 million or $0.59 per diluted share for the 2021 period. Included in 2021 net income was a $2 million impact from a gain on contingent consideration. Adjusted EBITDA from continuing operations totaled $17.4 million or 7.9% of revenue compared to $9.9 million or 5.8% of revenue last year. The year-to-date effective tax from continuing operations was 24.5% compared to 17.9% for last year. Regarding the company's financial position, we continue to maintain a strong liquidity position and balance sheet. Days sales outstanding improved by 1 day from year-end, and our working capital ratio strengthened to 2.98 from 1.95 at year-end. Based on the strength in our business through the first 9 months, we used more working capital to grow, which resulted in net cash used in continuing operating activities of $5.6 million. We continue to maintain a conservative leverage ratio of funded debt to trailing twelve months Adjusted EBITDA from continuing operations of 1.2x as of the September balance sheet date. BGSF's board of directors approved our thirty-second consecutive quarterly dividend payment of $0.15 per share in support of our strategic initiatives. We believe that our prudent financial management and capital allocation strategy will continue to provide ample flexibility to fund operations, make strategic acquisitions, and invest for future growth while returning value to our shareholders through cash dividends and stock appreciation. I will now turn the call back to Beth. Thank you, Dan. Our teams are energized around our strategic BGSF's programs, and we view changing market dynamics, pandemics, and inflationary recessionary pressures as the best time to think outside the box and provide creative solutions to our customers. That is how we've been able to win market share and enable our leaders to create meaningful differentiators for both our professional and real estate segments. BGSF's unique model empowers people and creates long-term relationships with both customers and our workforce. With U.S. job openings remaining at almost all-time high, coupled with unemployment rates at record lows, especially for those with college degrees at 1.8% unemployment rate, we've decided to change the game. We offer our people training platforms to either upskill or reskill their talents. By using specialized training modules, we are advancing both the professional and real estate segments with a more robust and skilled talent pool. These training platforms or sandbox experiences also allow existing and future BGSF workers to learn a new field or specialization. This builds important staff loyalty and retention for both our customers and our associates. This is important on the professional side with Oracle or Workday experts and on the real estate side with new leasing office personnel or property maintenance techs. Developing new diverse, highly skilled candidates for managed services, consulting, and perm placement creates a flywheel effect on the business because clients today are more likely to hire BGSF for other projects and services tomorrow. This has proven to work very well for us. Although we are not immune to recessionary pressures, we have continued to execute with excellence in our markets and have a proven track record of managing through past down cycles. In addition, our divestiture of the Light Industrial business makes us less vulnerable to cyclical headwinds, and we benefit from our specialization in professional and real estate segments, which operate oftentimes from different business environments. The pandemic introduced unprecedented events to the businesses in North America, and corporate response to those events give us confidence today that customers are not likely to pull back on IT investments for important cloud migrations or ERP projects. From what we have experienced, coupled with prevailing housing trends, we believe that the real estate segment is more recession resistant and will greatly benefit from our client partnerships. We remain optimistic about BGSF growth prospects as we get closer to 2023, and we believe that our business will continue to be driven by strength in our people, technology, reputation, business model, and client partnerships. A few final words concerning our M&A work. Deal flow continues to be strong and valuations have softened somewhat. Our focus remains on the evaluation of strategic bolt-on acquisitions, and we are actively looking for transactions both in North America and a few globally. Also, we continue to seek business and technology that could strongly fit for our customers and our culture. With that said, that concludes our prepared remarks for the third quarter. We will now open the call for questions. Operator? Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, please press star followed by one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. The first question today comes from the line of Howard Halpern from Tigress Financial Partners. Please go ahead. Your line is now open. Thank you and congratulations. Great quarter, great year so far. Thanks, Howard. First question is in regards to, I guess, the real estate and, you know, what really drove the gross margin above that 40% level? It's the first time we've seen that in its history. Interesting. That's normally in the third quarter. It's tough to maintain that because that's normally their highest volume, and they tend to have a little bit of a pressure on pay to keep our people working. But did a much better job of managing that this year, and we're able to pass through that cost to the customers and help support that spread increase. Okay. Is that something that you're gonna be able to maintain that, or it's gonna fluctuate again, depending on the volume that you have going forward? Howard, I think there's another piece to that too, along with what Dan said, and that's the fact that we've got the strategic relationships we have right now. With that comes some direct hire. That direct hire will also, you know, push up the margin. You know, right now we don't feel like there's a reason for us not to think we can't maintain it, based on the pipelines of activity we have right now. Okay. Yeah, their perm revenue almost doubled Q over Q. Yeah. Thanks for that. Okay. Have you laid out, and I know you've you know opened what number of offices you said you were so far? Is there a plan or a hint of how many new offices or split offices you're gonna have heading into next year? We're in the process of doing our budgets right now, so we're identifying new opportunities for the future. I think it's kinda early for me to answer that. Let me rephrase. There definitely will be new office openings. There will definitely be expansions in markets we're in. We just haven't nailed it down completely. Okay. You talked about, you know, essentially, you know, your partnerships, 'cause you announced that Interplay and, you know, developing your talent pool. Has that actually begun or is that in the process of being developed to begin at a certain point? It has begun. We just finished the pilot program. We found it to be successful and now we are working with Interplay to expand that throughout our markets. Okay. You believe you'll be able to I'm sorry, Howard, you cut out. Howard? I guess that was the thought process in developing these partnerships. Howard, I'm sorry. You cut out. We missed half of what you said. You know, with the partnerships that you are developing, and, you know, the deficit in housing going forward, you know, for the segment that you're in. I mean, is this extra forward thinking that you have in play to maintain, you know, I mean, to get new employees basically or to have the talent pool once those, you know, if the housing deficit ever begins to close? You know, obviously it's all about the talent pool, correct? That's what you're driving for. It is. We do, you know, the shortage of workers in the workforce right now is something that's painful for everybody. We really strategically spend a lot of time figuring out, you know, we can either sit back and be like everybody else and wait for it to hopefully get better, or we can start really aggressively moving forward. We decided to aggressively move forward, so we are upskilling and reskilling people. We're creating a group of people who not only we can end up helping place them for ourselves, but our customers. We're upskilling our customers, their workers as well. Okay. Just one last one on the, you know, professional services. You're seeing a robust pipeline from your customers for you know projects and still maintaining some of the cross-selling opportunities that you previously talked about? Absolutely. We signed more new contracts and added more logos, which we call as a company, in third quarter than in the history of the company. Okay. Okay, guys. Keep up the great work. Thank you. Thank you. Thank you. The next question today comes from the line of Brian Kinstlinger from Alliance Global Partners. Please go ahead. Your line is now open. Hi, good morning. Nice quarter, and thanks for taking my questions. First, many of the IT services company- Hi. Hi, Beth. First, many of the IT services companies are talking about a slowdown in growth and budgets are being pressured and therefore projects are being delayed. The only real area of strength is digital transformation. I didn't hear such comments from you other than you know you're not immune to recessionary pressures. Can you touch on changes in the pipeline sales cycles and whether you're experiencing any of those trends? Right now, we are not experiencing a slowdown. I think the only area we might have a little bit is in direct hire. I think some of the customers are taking a little bit longer to make a decision on that. In all the other areas of our business, we're not feeling it. We still have many RFPs t hat are in the works right now. Great to hear. Then can you talk about spreads on the, IT staffing side? How are they being impacted? I guess how are they historically? Have they been impacted during recessionary periods? Q-over-Q spreads in the professional side were up 17%, primarily because of the strategic direction to shift our model from lower type roles to more consulting type roles. With the addition of Momentum Solutionz, you know, which is a managed service product where we, you know, help our customers through the whole project phase. That's been the driver of that spread increase as well as the average bill rate is up dramatically. It's that whole shift towards a consulting model. Great. My last question is, you touched on M&A. You also touched on office openings in strategic regions where you want to expand or open up. Will M&A possibly play a role in those office openings? If not, do you expect in the early time-frame of next year, there'll be a little bit of pressure on margins as you open offices ahead of business? Just how do you think about each of those? Thank you so much. On M&A side, we're focused on the professional side, so it doesn't impact the opening of territories or offices on the real estate side, because that's where the focus is on that. I see. I see. So on the- Sorry. For- Okay. Yeah. That's okay. We have a robust M&A pipeline. We've probably seen about 100 deals. We continue to remain interested in a couple of those. We fully expect M&A to be a part of our ongoing growth model. Yeah. I think as Beth has mentioned on calls before, when we open a new territory or a new market, if you will, for real estate, we really talk about adding a salesperson. There's no brick and mortar or anything like that. Generally, you know, you can get 10-15 people working in a 3- or 4-month period, and the return on that is pretty quick. Understood. Thank you so much. You bet. Thank you. The next question today comes from the line of Jeff Martin from Roth Capital Partners. Please go ahead. Your line is now open. Thank you. Good morning, Beth and Dan. Morning, Jeff. Morning. I was hoping, Beth, you could give us some, you know, maybe some discussion around maybe some key performance indicators relating to your technology investment and IT roadmap. You know, I would imagine one of those is, you know, openings versus fill rates and time to fill, those sorts of things. Just was curious what you're experiencing and if you think that's contributing to the, you know, the nice growth that you're seeing. I don't think we're seeing a whole lot of the efficiencies. As I've said in the past, we really think that we'll start seeing major efficiencies due to the technology going into the first quarter. However, I will say that we are seeing efficiencies in the professional group with how quickly they can get things turn, you know, moving in the process. They're doing more revenue with less people than they were a year ago. We feel that that's positive. We're still setting a lot of the KPIs and what the growth projections can be and getting the efficiencies. You know, remembering we just went live at the end of June. We're still in hypercare, which we're hoping to come out of hyper-care by Thanksgiving. We really have a pretty robust KPI dashboard that we are building right now to be able to really kind of see where we are. To your point, we are doing fill ratios, time to fill, what's the sales pipeline gonna give us? How quickly do we close a deal? We should be able to do some projections in whatever's in the funnel, what percentage we think will kick out, so we'll be able to do a lot more financial planning in the future. Okay, great. Was curious on the professional side, if you're seeing extended assignment duration, you know, if people are being put to work on projects that go longer, you know, does that increase the visibility of the segment, you know, for a better period of time? We do have several long-term customers where we have people that are, you know, where they've outsourced their whole, you know, project or their whole IT department to us. The rest of them are probably. It's still running in the 7-9-month project range, depending, you know, on what the implementation or project we're working on. We're still running about the way we always have. Okay, great. You know, last question on the market in cybersecurity. There's a massive labor shortage in cybersecurity, and that's gonna be, you know, probably a hot segment for many years to come. Was just curious if you're doing anything in cybersecurity now and if that's a focus strategically for you going forward. We are. We do have a lot of security folks that are, you know, data security folks that are working within our divisions. One of the other things we'll be able to get out of our technology is we're gonna start being able to separate how much of the business is in SAP, how much of it is in Oracle or Workday or ServiceNow or what. We do have it. It is. You're definitely right. It is something that everybody talks about. It is something that our teams are constantly working on filling and doing a really good job in providing those resources to our customers. It is on our wish list. Yeah, it's on our wish list for on the M&A side as well, Jeff. As we talk to our partners out there who, you know, are in the market on the broker side, that certainly we would love to find a cyber company. Consulting company. consulting company, on the M&A side, so yeah. Great. Great. Then one more if I could. With entry into real estate in Canada, I was just curious how you think about that market in terms of you know, longer term opportunity relative to the U.S. market? We're pretty optimistic about the Toronto area, and we're gonna see how that pans out before we start looking at other provinces in Canada. You know, all indicators are that it should be beneficial for us. Great. Thanks for taking the questions. Thank you. Thank you. Our final question today comes from the line of Bruce Geller from Geller Ventures. Please go ahead. Your line is now open. Hey. Good morning, guys. Congratulations on the impressive earnings progress. Thank you. Good morning. You're welcome. I have a question related to the M&A discussion. You mentioned that earnings multiples are getting a little bit more reasonable, which is favorable. I'm curious how you adjust for or address the fact that the Fed's clearly stated intention is to weaken the job market in order to get inflation under control. With that said, you know, some of the multiples or valuations you're looking at may be based on inflated trailing earnings, which are at risk of a weakening job market, again, since that is a clear intent of the Fed. How do you adjust for that in evaluating a potential acquisition? Well, we do look at that and we try and go in and understand. Certainly if we get into an active deal, we spend a lot of time on due diligence to ensure the validity certainly of the numbers. There are still, last number I saw, 10 million open jobs out there. You know, even if you cut that back by 20%, there's still 8 million jobs. In the world that we work in, you know, the sort of higher end accounting IT consulting side particularly, it's 60% of our revenue, unemployment there is less than 2%. We see demand continuing as Beth mentioned. It's still hard to find resources. They've been raising rates for 6 months now or 29 months and we're still signing more logos than we ever have, so. Yeah. That's great. I appreciate that. I just don't wanna see a situation where you make an acquisition that in hindsight turns out to be based on peak earnings. Because again, I mean, the Fed stated it very clearly yesterday. They're not gonna stop in their mission until the job market weakens, and there is a long lag effect. Even though they've raised rates a bunch to now and the market is still strong, you know, I don't think we can assume that it's gonna stay that way indefinitely. I guess my concern would be paying for something based on peak earnings, and I just wanted to understand how you adjust for that in your acquisition model. We'll certainly look at it and make sure we're, you know, that we're paying what we believe to be a fair price based on what we see and we spend a lot of time talking about the pipeline with a potential target, so. Thank you. Thank you. Thank you. Is that all? Thank you. Okay. Bailey, do we have anybody else? We do have some more questions. Here we go. Our next question today comes from the line of Darryl Davis. Please go ahead. Your line is now open. Good morning, Dan and Beth. Morning. Hey, I'm gonna dovetail on that last question. The last question was really a forward-looking question. This is gonna be a backward-looking question. If you look at the Light Industrial sale early this year and the multiple you garnered there, the multiples around the marketplace have certainly changed over the past eight months. If you took that Light Industrial to market today, what sort of price do you think you could get? You may not have woken up this morning ready for that question, so if you have to give a range, a big range is much appreciated. You know, if I had to guess, Darryl, I would probably say that would trade at 5-5.5 today, so. What does that translate to in dollars? 20% less, $6-7 million less. Yeah. Gotcha. Very good. Great quarter, guys. Thank you, Darryl. Thank you. The next question today comes from the line of Bob Taglich from Taglich Brothers. Please go ahead. Your line is now open. Hi, guys. This is Mike. I stole Bob's phone. First off, congratulations on an excellent quarter. I'm looking forward to more of these in the future. It's all due to the steady leadership on your part, guys. My question is, we're another three months into seeing some results from your technology spend. Can you put a guess about how much of that came from that this quarter and how much more of that I have to look forward to rolling into the next three, four quarters? Yes. We pretty much wrapped that up at the end of Q2. We went live with the last piece of that at the beginning of Q3. The big spending, if you will, of the IT roadmap is over. We forecasted currently we're working on next year's forecast, and we have about $2 million in CapEx relative to probably close to $6 million this year for next year for just steady state and enhancements to our current products. From a return standpoint, though, what kind of return are we getting? Did we see the return this quarter from it? No. I think, Michael, we talked about that, as Beth mentioned, this quarter we're in what we're calling hypercare. We're trying to make sure that the product is working as we anticipated, fixing. You know, when you do a massive migration like that, there are things you want to fix. We're doing that this quarter. Fourth quarter, we'll look at processes. We expect those efficiencies, I think it was, as we've mentioned on calls before, to begin in early to mid-2023. Okay. No efficiencies in this quarter, just expense. Same thing in Q4, and early to mid-next year, we'll start seeing some return on it. Mm-mm. Well, we are seeing efficiencies. I think I mentioned earlier that we are able to do more revenue with less people. I think part of that is, you know, a little bit because of the systems, but a lot of it has to do with identifying our processes. You know, we really had to work on our processes before we went live on the system, so we could make sure, you know, you can put a system in, but if you don't have a process that works with it, you're wasting your money. We did a lot of work on processes in preparation for the system. We are doing more revenue with less people, so we are seeing that. You know, these are, as our CIO says, these are baby systems. They're still baby. We're still working on getting all the KPIs in place and making sure things are working the way we're doing. I think that, you know, we'll get more solid data that we'll be able to track in the future. For right now, we're just seeing it from a perspective of less people, more revenue. Right, which usually means more money, more earnings. Is it- Change the quarter, Mike. Change the quarter. Was it in the quarter or not? I mean, when it's all said and done, we spent some money, we had a good quarter, or should I see significant productivity increases from here? Which is sort of what Dan said, but I'm trying. At the end, all I care about is a number. I'm trying to figure out how much more money you're gonna make next year with this listing on a run rate basis. We expect to see efficiencies and improvements in both the COGS, what we call the COGS, or the operating EBITDA line, as well as the bottom EBITDA line next year. Yeah. Okay. I'm gonna ask you the same question at the next three conference calls, just so you know, okay? Thanks. It was a great quarter, and keep up the good work. Okay. Thank you, sir. Thank you. There are no further questions registered at this time, so I'd like to pass the conference over to Beth Garvey for any closing remarks. Please go ahead. Thank you, Bailey. Thank you for your time today, and we appreciate your continued support. We look forward to updating you on our fourth quarter in a few months. Have a great day. This concludes today's conference call. Thank you all for your participation. You may now disconnect your line.