Post on 27-Aug-2018
transcript
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This presentation contains forward-looking statements regarding the business, operations and prospects of BG Staffing and industry
factors affecting it. These statements are identified by words such as “may,” “will,” “begin,” “look forward,” “expect,” “believe,” “intend,”
“anticipate,” “should,” “potential,” “estimate,” “continue,” “momentum,” and other words referring to events to occur in the future. These
statements reflect BG Staffing’s current view of future events and are based on its assessment of, and are subject to, a variety of risks
and uncertainties beyond its control, including: the availability of workers’ compensation insurance coverage at commercially
reasonable terms; the availability of qualified temporary personnel; compliance with federal and state labor and employment laws and
regulations and changes in such laws and regulations; the ability to compete with new competitors and competitors with superior
marketing and financial resources; management team changes; the favorable resolution of current or future litigation; the ability to
begin to generate sufficient revenue to produce net profits; the impact of outstanding indebtedness on the ability to fund operations or
obtain additional financing; the ability to leverage the benefits of recent acquisitions and successfully integrate newly acquired
operations; adverse changes in the economic conditions of the industries, countries or markets that BG Staffing serves; disturbances in
world financial, credit, and stock markets; unanticipated changes in national and international regulations affecting the company’s
business; a decline in consumer confidence and discretionary spending; the general performance of the U.S. and global economies;
economic disruptions resulting from the European debt crisis; and continued or escalated conflict in the Middle East, each of which
could cause actual results to differ materially from those projected in the forward-looking statements. BG Staffing is under no obligation
to (and expressly disclaims any such obligation to) update or alter its forward-looking statements, whether as a result of new
information, future events or otherwise.
This presentation also contains information about BG Staffing’s Adjusted EBITDA, which is not a measure derived in accordance with
GAAP and which exclude components that are important to understanding BG Staffing’s financial performance. The definition of
Adjusted EBITDA is disclosed in BG Staffing’s Forms 10-K and 10-Q filed with the Securities and Exchange Commission. Investors
should recognize that this non-GAAP measure might not be comparable to similarly titled measures of other companies. This measure
should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity
prepared in accordance with accounting principles generally accepted in the United States.
Forward-Looking Statements
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1 Treasury stock method2 Adjusted TTM EBITDA/Annual Dividend3 Adjusted TTM EBITDA, less TTM: cash taxes, cash interest, cap ex
Source: Public filings, YAHOO Finance, and Bloomberg
Company Key Statistics
Market Statistics
Share Price (as of 3/7/17) $14.10
Shares Out - Primary 8.67m
Shares Out - Diluted1 8.96m
52-Week (Intraday) High $21.75
52-Week (Intraday) Low $11.23
Market Cap. $122m
Financial Highlights
Quarterly Dividend $0.25
Dividend Yield (Annualized) 7.2%
Dividend Cover2 2.6x
Enterprise Value $146m
Debt / Adjusted TTM EBITDA 1.04x
BG Staffing, Inc. is a national provider of temporary staffing services across a diverse set of industries.
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L. Allen Baker, Jr. Dan Hollenbach Beth Garvey Adam Tibbets
President & CEO CFO COO VP of Administration
Year Joined BGSF 20081 2015 2013 2009
Years of Experience 40+ 35+ 30+ 25+
Prior Experience • EVP & CFO, Impact
Confections
• EVP & CFO, PDS Technical
Services
• Controller, Core Laboratories
• CFO, Cybergy Partners
• Division Director, Robert Half
Management Resources
• CFO, Global Employment
Solutions
• CFO, Imprimis
• Sr. Manager, EY
• CEO, InStaff
• Human Resources, El Chico
Corporation
• Human Resources, Madix Store
Fixtures
• Manager, Technology Projects,
Jones Lang LaSalle
• Systems Manager, Staubach
Company
• IT Director, Impact Confections
• IT Director, PDS Technical Services
• IT Manager, Pay America
¹ Year joined Board of Directors. Mr. Baker became President & CEO in April 2009
Seasoned Leadership Team
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Strong Growth Profile
Revenue Adjusted EBITDA
($ in millions)
19.2% 20.0% 22.0% 23.7%
Gross Margin %
$151.7
$172.8
$217.5
$253.9
2013 2014 2015 2016
$10.0
$11.6
$17.9
$22.6
2013 2014 2015 2016
Adjusted EBITDA Margin %:
6.6% 6.7% 8.2% 8.9%
Source: Annual Report on Form 10-K for fiscal 2016
Fiscal Years Ended December
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SIA Industry Rankings
– Ranked #56 –
Largest Staffing Firms in the USin Staffing Industry Analysts
2016 Report
– Ranked #71 –
Fastest Growing Staffing Firms in the USin Staffing Industry Analysts
2016 Report
– 2017 Staffing 100 –
Allen Baker named as one of the North American Staffing 100 by
Staffing Industry Analysts
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2010 2013
October 2014
Listed on NYSE MKT
February 2015
Acquired Donovan &
Watkins for $12.0 million
2007
October 2007
Acquired by Taglich
Private Equity
(undisclosed price)
201520122011 2014
May 2010
Acquired BG Personnel
for $3.0 million
December 2010
Acquired JNA Staffing
(undisclosed price)
November 2011
Acquired Extrinsic for $9.9
million
December 2012
Acquired American
Partners for $13.2 million
May 2013
Acquired InStaff Holdings for
$10.0 million
August 2016
New COO
September 2015
Acquired Vision Technology
Services for $20.8 million
Significant Events
2016
June 2016
Paid off high
interest debt
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Segment Brands % of Revenues1 Gross Profit %1 % of Gross Profit $’s 1
Multifamily(apartments)
22.8% 37.2% 35.9%
Professional 42.2% 24.0% 42.8%
Commercial 35.0% 14.4% 21.3%
Three Segments
1 Fiscal Year 2016
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Growing Higher Margin Segments
2013 2016
Commercial47.2%
Professional37.1%
Multifamily15.7%
Commercial35.0%
Professional42.2%
Multifamily22.8%
% of Total Revenue
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Primary Skills Offered Multifamily Revenue
Office: (Approx.1/3 of multifamily revenue)
Manager
Assistant Manager
Leasing Agent
Bilingual Leasing Agent
Maintenance: (Approx. 2/3 of multifamily revenue)
Supervisor
Lead (HVAC)
Assistant
Make Ready
Groundskeeper
Porter
Multifamily Operating Income
Multifamily (Apartments)
($ in 000’s)
$43,197
$57,995
2015 2016
$6,021
$8,782
2015 2016
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Colorado (1)Kansas (1)
New MexicoArizona (1)
California
Oklahoma (1)
Texas (6)
Missouri (1)
Louisiana
Mississippi
AlabamaGeorgia (1)
Florida (4)
South
Carolina (3)
North Carolina (3)Tennessee (2)
Kentucky Virginia (1)
West
Virginia
Michigan
Ohio
Indiana (1)
Illinois (1)
Iowa
Wisconsin
Minnesota (1)
Arkansas
Nebraska
Wyoming
South Dakota
North DakotaMontana
Utah
Idaho
Nevada (1)
Oregon
Washington
Pennsylvania (1)
New York
Maine
New Jersey
Rhode Island
Connecticut
Massachusetts (1)
Vermont
New Hampshire
Delaware
Maryland (1)
Multifamily (Apartments)
Office growth 2016
New• Baltimore
• Boston
• Kansas City
• St. Louis
• Minneapolis
• Columbus
• Indianapolis
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Splits• Ft. Worth (Dallas)
• N. Houston (Houston)
• Greenville (Charlotte)
• Greensboro (Raleigh)
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Finance & Accounting
Controllers, Accountants &
Clerks to Managers
Information Technology
SAP
Workday
Hyperion
Peoplesoft
Application Development
Web, Mobile, Client Server, Cloud,
Legacy Mainframe
System & Network Services
Network Optimization, Engineering,
Administration, Desktop Support,
Help Desk
Professional
1 Vision Technology and Donovan & Watkins acquisitions consummated in 2015
$86,712
$107,037
2015 2016
$5,998
$6,386
2015 2016
($ in 000’s)
$10,355
$12,112
2015 2016
Professional Operating Income before Amortization
Primary Skills Offered Professional Revenue1
Professional Operating Income
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ColoradoKansas
New MexicoArizona
California
Oklahoma
Texas (2)
Missouri
Louisiana
Mississippi
Alabama Georgia
Florida
South
Carolina
North Carolina (1)Tennessee
Kentucky Virginia
West
Virginia
Michigan
OhioIndianaIllinois
Iowa
Wisconsin
Minnesota
Arkansas
Nebraska
Wyoming
South Dakota
North DakotaMontana
Utah
Idaho
Nevada
Oregon
Washington
Pennsylvania
New York
Maine
New Jersey
Rhode Island (1)
Connecticut
Massachusetts
Vermont
New Hampshire
Delaware
Maryland (1)
Professional
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Primary Skills Offered Commercial Revenue
Logistics/Warehouse
Call Center Operations
Forklift Drivers
Pickers/Packers
Production Workers
Light Assembly
Light Manufacturing
General Labor Commercial Operating Income
Commercial
($ in 000’s)
$87,625
$88,820
2015 2016
$5,387
$5,717
2015 2016
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ColoradoKansas
New MexicoArizona
California
Oklahoma
Texas (11)
Missouri
Louisiana
Mississippi (2)
Alabama Georgia
Florida
South
Carolina
North CarolinaTennessee *
Kentucky Virginia
West
Virginia
Michigan
OhioIndiana
Illinois (1)
Iowa
Wisconsin (1)
Minnesota
Arkansas
Nebraska
Wyoming
South Dakota
North DakotaMontana
Utah
Idaho
Nevada
Oregon
Washington
Pennsylvania
New York
Maine
New Jersey
Rhode Island
Connecticut
Massachusetts
Vermont
New Hampshire
Delaware
Maryland
Commercial
* Managed out of MS office
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Build Value / Grow Revenue / Grow Margins
Continue to diversify revenue and grow higher margin segments
Industry – skill sets offered
Geography
Continue to maintain centralized back office
Target costs between 2.0 – 2.5% of revenue
Continue to generate profitable revenue growth
Organically
Acquisitions
Strategy
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Selectively pursue U.S. acquisitions accretive to value and to earnings -
based on the following:
Gross margins at least equal to our consolidated gross margin % (currently 23.7%)
EBITDA of less than $5 million
New skill set offerings
New geographic regions
Cross-selling opportunities
Staff/personnel culture fit
Acquisition Criteria
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Board of Directors anticipates maintaining its quarterly dividend program and
company management is optimistic about its future growth and increased cash flow.
Q1 ’15 Q2 ’15 Q3 ’15 Q4 ’15 Q1 ’16 Q2 ’16 Q3 ’16 Q4 ’16
Quarterly
Dividend$ 0.15 $ 0.25 $ 0.25 $ 0.25 $ 0.25 $ 0.25 $ 0.25 $ 0.25
Adjusted
TTM
EBITDA$ 11.6m $ 12.8m $ 15.1m $ 17.9m $ 20.3m $ 22.0m $ 22.1m $ 22.6m
Debt $ 27.6m $ 22.1m $ 24.7m $ 30.6m $ 29.6m $ 17.6m $ 19.0m $ 23.6m
Debt /
Adjusted
TTM
EBITDA
2.38x 1.73x 1.64x 1.71x 1.46x .80x .86x 1.04x
Dividend History
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Source: Annual Report on Form 10-K for fiscal 2016
Balance SheetDecember 25, 2016 December 27, 2015
Current assets
Cash and cash equivalents $ - $ -
Accounts Receivable, net 33,328,900 32,324,284
Prepaid expenses 950,696 861,146
Other current assets 154,673 134,170
Total current assets 34,434,269 33,319,600
Property and equipment, net 1,910,858 1,489,061
Other assets
Deposits 2,657,517 2,233,410
Deferred income taxes 9,512,455 8,411,792
Intangible assets, net 23,514,376 29,761,035
Goodwill 9,184,659 9,184,659
Total other assets 44,869,007 49,590,896
Total assets $ 81,214,134 $ 84,399,557
Current liabilities
Accrued interest $ 100,868 $ 627,638
Accounts payable 951,672 1,572,195
Accrued payroll and expenses 9,668,475 11,554,868
Accrued workers' compensation 754,556 788,878
Contingent consideration 3,580,561 6,856,121
Other current liabilities - 1,459,838
Income taxes payable 193,264 444,165
Total current liabilities 15,249,396 23,303,703
Line of credit, net 23,618,194 16,041,476
Long-term debt, less current portion, net - 14,607,450
Contingent consideration 1,586,324 4,191,160
Other long-term liabilities 271,766 327,344
Total liabilities 40,725,680 58,471,133
Preferred stock - -
Common stock 86,685 73,880
Additional paid in capital 36,142,688 20,446,948
Retained earnings 4,259,081 5,407,596
Total stockholders' equity 40,488,454 25,928,424
Total liabilities and stockholders' equity $ 81,214,134 $ 84,399,557
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Income Statement
Source: Annual Report on Form 10-K for fiscal 2016
($ in thousands) Fiscal Year Ended December
2014 2015 2016
Revenues $ 172,811 $ 217,534 $ 253,852
% growth 13.9% 25.9% 16.7%
Cost of Services 138,284 169,627 193,779
Gross Profit 34,527 47,907 60,073
% of revenue 20.0% 22.0% 23.7%
Selling, general and administrative expenses 24,084 30,390 37,804
Depreciation and amortization 4,642 5,544 6,733
Operating Income 5,801 11,973 15,536
% of revenue 3.4% 5.5% 6.1%
Total non-operating expenses 4,856 3,258 4,366
Earnings before income taxes 945 8,715 11,170
Income tax expense (benefit) 1,374 3,368 4,288
Net income (loss) $ (429) $ 5,347 $ 6,882
% of revenue -0.2% 2.5% 2.7%
Net income (loss) per diluted share $ (0.08) $ 0.73 $ 0.82
Adjusted EBITDA Reconciliation:
Net income (loss) $ (429) $ 5,347 $ 6,882
Income tax expense (benefit) 1,374 3,368 4,288
Interest expense, net 2,685 2,996 3,962
Loss on extinguishment of debt 987 439 404
Change in fair value of put option 1,184 (177) -
Depreciation and amortization 4,642 5,544 6,733
Share based compensation 1,193 353 314
Adjusted EBITDA $ 11,636 $ 17,870 $ 22,583
% of revenue 6.7% 8.2% 8.9%
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Commercial Professional & Specialty
Industrial *
Office/Clerical *
Multifamily *
Finance & Accounting *
Information Technology *
Clinical/Scientific
Education/Library
Engineering/Design
Healthcare
Legal
Marketing/Creative
Staffing Industry Segments
* Current market segments for BGSF
(1) Source: Staffing Industry Analysts: U.S. Staffing Industry Forecast Update September 13, 2016
*Combined these temp staffing segments account for $120 billion in annual sales for FY 2016(1)
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$118.3$124.9
$133.3$139.0
$144.9
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
2013 2014 2015 2016P 2017P
U.S. Staffing Industry Forecast – Market Size ($B)
Source: Staffing Industry Analysts: U.S. Staffing Industry Forecast Update September 13, 2016
4%7%
6%5%
4%
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$17.6
$64.3
$51.4
$19.0
$68.3
$51.7
$20.1
$72.3
$52.5
$0.0 $20.0 $40.0 $60.0 $80.0
Place & Search
Professional/Specialty
Commercial
2017P 2016P 2015
2%
2017
Growth
6%
6%
U.S. Staffing Industry Forecast
Source: Staffing Industry Analysts: U.S. Staffing Industry Forecast Update September 13, 2016
($ in billions)
2016
Growth
1%
6%
8%
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Temp Penetration Rate
•The temporary penetration rate was at 2.04%.
Source: Staffing Industry Analysts: Daily News – Jan 6,2017
Temp Penetration - Long Term
1.98%
1.99%
2.00%
2.01%
2.02%
2.03%
2.04%
2.05%
2.06%
2.07%
Sep-2014
Dec-2014
Mar-2015
Jun-2015
Sep-2015
Dec-2015
Mar-2016
Jun-2016
Sep-2016
Temp Penetration
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
Temp Penetration (Long-Term)
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Unemployment Rate
General Unemployment Rate 4.72% College Unemployment Rate 2.47%
Source: Staffing Industry Analysts: Daily News – Jan 6,2017
4.00%
4.20%
4.40%
4.60%
4.80%
5.00%
5.20%
5.40%
5.60%
5.80%
Dec-2014
Mar-2015
Jun-2015
Sep-2015
Dec-2015
Mar-2016
Jun-2016
Sep-2016
Dec-2016
Unemployment Rate
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
Dec-2014
Mar-2015
Jun-2015
Sep-2015
Dec-2015
Mar-2016
Jun-2016
Sep-2016
Dec-2016
College Unemployment Rate