BG Staffing, Inc. Corporate Presentation

Transcription

1 BG Staffing, Inc. Corporate Presentation December 2017 (NYSE American: BGSF) 1

2 Forward-Looking Statements 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. 2

3 Company Key Statistics BG Staffing, Inc. is a national provider of professional temporary staffing services across a diverse set of industries. Market Statistics Financial Highlights Share Price* $15.79 Shares Out - Primary 8.76m Shares Out - Diluted m 52-Week (Intraday) High $ Week (Intraday) Low $11.23 Market Cap.* $138m Quarterly Dividend $0.25 Dividend Yield (Annualized)* 6.3% Dividend Cover 2 2.7x Enterprise Value* $183m Debt / Adjusted TTM EBITDA 3 1.8x * As of November 28, Treasury stock method 13 Weeks Ended September 24, Adjusted TTM EBITDA for the Period Ended September 24, 2017/Annual Dividend Source: Public filings 3 As of and for the Period Ended September 24,

4 Seasoned Leadership Team L. Allen Baker, Jr. Dan Hollenbach Beth Garvey Adam Tibbets President & CEO CFO COO VP of Administration Year Joined BGSF Years of Experience 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

5 Our Newest Brand Acquired September 2017 Annual revenues in 2016 were in excess of $13 million Historical gross margin in excess of 35% The seasoned leadership team is remaining and fits well with our team 23-year history of serving the Chicago market with exemplary staffing services, consistently receiving best in industry awards for several years Strong client relationships with top clients have been active for five years or more Broadens both our geographic footprint and finance & accounting skill set offerings 5

6 Strong Growth Profile Revenue Adjusted EBITDA ($ in millions) $300.0 $250.0 $200.0 $150.0 $100.0 $196.9 $189.6 $261.2 $253.9 $ CAGR 18.7% CAGR 31.1% $25.0 $24.0 $217.5 $22.6 $20.0 $172.8 $17.9 $17.9 $16.5 $151.7 $15.0 $11.6 $10.0 $10.0 $50.0 $5.0 $- 9M '17 9M '16 TTM $- 9M '17 9M '16 TTM Fiscal Years Ended December Fiscal Years Ended December Gross Margin % Adjusted EBITDA Margin % 25.0% 23.7% 24.6% 23.7% 22.0% 20.0% 19.2% 9.1% 8.7% 9.2% 8.9% 8.2% 6.7% 6.6% Source: Annual Report on Form 10-K for fiscal 2016 and Form 10-Q as of September 24,

7 SIA Industry Rankings 2017 Staffing 100 Allen Baker named as one of the North American Staffing 100 by Staffing Industry Analysts Ranked #60 Largest Staffing Firms in the US in Staffing Industry Analysts 2017 Report Ranked #71 Fastest Growing Staffing Firms in the US in Staffing Industry Analysts 2016 Report 7

8 Significant Events May 2010 Acquired BG Personnel for $3.0 million November 2011 Acquired Extrinsic for $9.9 million May 2013 Acquired InStaff Holdings for $10.0 million February 2015 Acquired Donovan & Watkins for $12.0 million September 2015 Acquired Vision Technology Services for $20.8 million October 2007 Acquired by Taglich Private Equity (undisclosed price) December 2010 Acquired JNA Staffing (undisclosed price) December 2012 Acquired American Partners for $13.2 million October 2014 Listed on NYSE American April 2017 Acquired Zycron for $23 million zycron September 2017 Acquired SRI for $8 million 8

9 Three Segments Segment Brands % of Revenues 1 Gross Profit % 1 % of Gross Profit $ s 1 Multifamily (apartments) 26.1% 37.9% 39.7% Professional 46.6% 24.0% 44.7% Commercial 27.3% 14.3% 15.6% 1 Nine Months Ended September 24,

10 Growing Higher Margin Segments % of Total Revenue 2013 YTD Q Multifamily 15.7% Multifamily 26.1% Commercial 27.3% Commercial 47.2% Professional 37.1% Professional 46.6% 10

11 Multifamily (Apartments) ($ in 000 s) Primary Skills Offered Multifamily Revenue Office: (approximately 1/3 of multifamily revenue) Manager Assistant Manager Leasing Agent Bilingual Leasing Agent Maintenance: (approximately 2/3 of multifamily revenue) Supervisor Lead (HVAC) Assistant Make Ready (Handyman) Groundskeeper Porter $51, % Increase $43,556 9M '17 9M '16 Multifamily Operating Income $8,525 $6, % Increase 9M '17 9M '16 11

12 Multifamily (Apartments) Washington Montana North Dakota Minnesota (1) Oregon Idaho Nevada (1) California Utah (1) Wyoming Colorado (1) Arizona (1) New Mexico South Dakota Nebraska Kansas (1) Oklahoma (1) Arkansas Texas (9) Iowa Wisconsin (1) Missouri (1) Mississippi Alabama Georgia (1) Louisiana (1) Michigan (1) Illinois (2) Indiana (1) Kentucky Virginia (2) Tennessee (2) 41 branches located across 23 states Pennsylvania (1) Ohio (1) New Jersey West Virginia North Carolina (3) South Carolina (3) Florida (4) New York Vermont Maryland Delaware Maine New Hampshire Massachusetts (1) Rhode Island Connecticut Branch Growth 2017 Detroit Salt Lake City New Orleans Columbus Milwaukee Richmond Austin Charleston Chicago Columbia Indianapolis Dallas 12

13 Professional ($ in 000 s) Primary Skills Offered Finance & Accounting Controllers, Accountants & Clerks to Managers Information Technology SAP, Vistex, Workday, Hyperion, PeopleSoft, Oracle BI Application Development Web, Mobile, Client Server, Cloud, Legacy Mainframe System & Network Services Project Management, Network Optimization, Engineering, Administration, Desktop Support, Help Desk, Business Analyst, System Architecture, ETL Development Professional Revenue $91,770 $80,829 9M '17 9M '16 Professional Operating Income $6, % Increase $4, % Increase 9M '17 9M '16 13

14 Professional Washington Montana North Dakota Minnesota Wisconsin Maine Oregon Idaho Nevada California Utah Arizona Wyoming Colorado New Mexico South Dakota Nebraska Kansas Oklahoma Iowa Missouri Arkansas Illinois (2) Mississippi Michigan Indiana Kentucky Tennessee (3) Ohio West Virginia Virginia North Carolina (1) South Carolina New York Pennsylvania Maryland (1) Vermont Rhode Island (1) Connecticut New Jersey Delaware New Hampshire Massachusetts Texas (2) Alabama Georgia Louisiana Florida 10 branches located across 6 states 14

15 Commercial ($ in 000 s) Primary Skills Offered Commercial Revenue Logistics/Warehouse Call Center Operations Forklift Drivers Pickers/Packers Production Workers Light Assembly Light Manufacturing General Labor 17.6% Decrease $53,693 $65,188 9M '17 9M '16 Commercial Operating Income 26.3% Decrease $3,000 $4,070 9M '17 9M '16 15

16 Commercial Washington Montana North Dakota Minnesota Wisconsin (2) Maine Oregon Idaho Nevada California Utah Wyoming Colorado South Dakota Nebraska Kansas Iowa Missouri Illinois (1) Indiana Michigan Kentucky Ohio West Virginia Virginia New York Pennsylvania Vermont Maryland Delaware New Hampshire Massachusetts Rhode Island Connecticut New Jersey Oklahoma Tennessee * North Carolina Arizona New Mexico ** Arkansas Mississippi (2) South Carolina Texas (7) Louisiana Alabama Georgia Florida * Managed out of MS office ** Managed out of ELP office 12 branches located across 6 states 16

17 Strategy 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 % of revenue Continue to generate profitable revenue growth Organically Acquisitions 17

18 Acquisition Criteria Selectively pursue U.S. acquisitions accretive to value and to earnings - based on the following: Gross margins equal to or greater than the mid 20 s EBITDA in the $5 million range New skill set offerings New geographic regions Cross-selling opportunities Staff/personnel culture fit 18

19 Dividend History Board of Directors anticipates maintaining its quarterly dividend program (established Q4 14) and management is optimistic about the Company s future growth and increased cash flow Q3 17 Q2 17 Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 Quarterly Dividend $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 Adjusted TTM EBITDA $ 24.0m $ 23.1m $ 22.2m $ 22.6m $ 22.1m $ 22.0m $ 20.3m Debt $ 43.7m $ 40.5m $ 19.7m $ 23.6m $ 19.0m $ 17.6m $ 29.6m Debt / Adjusted TTM EBITDA 1.82x 1.76x.89x 1.04x.86x.80x 1.46x 19

20 Balance Sheet September 24, 2017 December 25, 2016 Current assets Cash and cash equivalents $ - $ - Accounts receivable, net 40,618,312 33,328,900 Prepaid expenses 529, ,696 Other current assets 98, ,673 Total current assets 41,246,042 34,434,269 Property and equipment, net 1,700,470 1,910,858 Other assets Deposits 2,799,813 2,657,517 Deferred income taxes 9,916,170 9,512,455 Intangible assets, net 38,803,342 23,514,376 Goodwill 17,826,199 9,184,659 Total other assets 69,345,524 44,869,007 Total assets $ 112,292,036 $ 81,214,134 Current liabilities Long-term debt, current portion, net $ 2,614,160 $ - Accrued interest 308, ,868 Accounts payable 1,946, ,672 Accrued payroll and expenses 12,566,637 9,668,475 Accrued workers' compensation 281, ,556 Contingent consideration 5,535,068 3,580,561 Other current liabilities 317,294 - Income taxes payable 437, ,264 Total current liabilities 24,007,374 15,249,396 Line of credit, net 19,598,722 23,618,194 Long-term debt, net 21,466,000 - Contingent consideration 4,891,847 1,586,324 Other long-term liabilities 219, ,766 Total liabilities 70,183,004 40,725,680 Preferred stock - - Common stock 87,594 86,685 Additional paid in capital 37,585,052 36,142,688 Retained earnings 4,436,386 4,259,081 Source: Form 10-Q for Q Total stockholders' equity 42,109,032 40,488,454 Total liabilities and stockholders' equity $ 112,292,036 $ 81,214,134 20

21 Income Statement (in 000 s, except per share amounts) For the 39 Week Periods Ended September 24, 2017 and September 25, Revenues $ 196,899 $ 189,573 Cost of services 147, ,610 Gross profit 49,147 44,963 % of revenue 25.0% 23.7% Selling, general and administrative expenses 31,562 28,668 Depreciation and amortization 4,673 5,181 Operating income 12,911 11,113 % of revenue 6.6% 5.9% Source: Form 10-Q for Q Total non-operating expenses 2,280 3,682 Income before income taxes 10,632 7,431 Income tax expense 3,909 2,852 Net income $ 6,723 $ 4,578 % of revenue 3.4% 2.3% Net income per diluted share: $ 0.75 $ 0.56 Adjusted EBITDA Reconciliation: Net income $ 6,723 $ 4,578 Income tax expense 2,280 3,278 Interest expense, net 3,909 2,852 Loss on extinguishment of debt Depreciation and amortization 4,673 5,181 Share-based compensation Adjusted EBITDA $ 17,942 $ 16,546 % of revenue 9.1% 8.4% 21

22 Staffing Industry Segments Combined these temp staffing segments accounted for $118.7 billion in annual sales for FY Industrial * Office/Clerical * du Commercial Professional & Specialty Multifamily * Finance & Accounting * Information Technology * Clinical/Scientific Education/Library Engineering/Design Healthcare Legal Marketing/Creative 1 Source: Staffing Industry Analysts: U.S. Staffing Industry Forecast Update September 18, 2017 * Current market segments for BGSF 22

23 U.S. Staffing Industry Forecast Market Size ($B) $160.0 $140.0 $ % 4% 5% 6% 3% 3% 3% $136.8 $140.7 $145.1 $133.3 $124.8 $118.2 $112.9 $100.0 $80.0 $60.0 $40.0 $20.0 $ P 2018P Source: Staffing Industry Analysts: U.S. Staffing Industry Forecast September 18,

24 U. S. Staffing Industry Forecast ($B) 2018P 2017P Growth Growth Commercial $51.1 $50.8 $50.7-1% 0% Professional/Specialty $74.5 $71.3 $68.1 5% 5% $19.5 Place & Search $18.6 $18.1 3% 5% $0.0 $20.0 $40.0 $60.0 $80.0 Source: Staffing Industry Analysts: U.S. Staffing Industry Forecast September 18,

25 Temp Penetration Rate The temporary penetration rate was at 2.08% for Sept Temp Penetration - Long Term Temp Penetration 2.50% Temp Penetration (Long-Term) 2.10% 2.08% 2.00% 2.06% 2.04% 1.50% 2.02% 2.00% 1.00% 1.98% 0.50% 1.96% 1.94% Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 Mar 2017 Jun 2017 Sep % Source: Staffing Industry Analysts: Daily News November 3,

26 Unemployment Rate 5.20% 5.00% 4.80% 4.60% 4.40% 4.20% General Unemployment Rate 4.22% College Unemployment Rate 2.26% Unemployment Rate College Unemployment Rate 2.80% 2.70% 2.60% 2.50% 2.40% 2.30% 2.20% 2.10% 4.00% Sep Dec Mar Jun Sep Dec Mar Jun Sep % Sep Dec Mar Jun Sep Dec Mar Jun Sep Source: Staffing Industry Analysts: Daily News November 3,

27 Investor Relations Terri MacInnis, VP of IR Bibicoff + MacInnis, Inc terri@bibimac.com 27