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spk03: Good morning everyone and welcome to the BGSF Inc fiscal 2022 fourth quarter and four year financial results conference call. All lines have been placed on mute for the presentation portion of the call with an opportunity for question and answer at the end. If you would like to ask a question, please press start followed by one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn you over to Sandy Martin, Freepath Advisors. Please go ahead.
spk00: Thank you. Good morning, and welcome to the BGSF 2022 fourth quarter and four-year earnings conference call. With me on the call today are Beth Garvey, Chair, President, and Chief Executive Officer, and Dan Hollenbeck, 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 Securities and Exchange Commission. Management statements are made as of today, March 9th, 2023, 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?
spk02: Thank you, Sandy, and thank you for joining us today for our year-end 2022 earnings discussions. and very pleased to report record revenues in 2022 of $298 million, a strong 24.8% increase over 2021, and full-year adjusted EBITDA and adjusted EPS were up 45% and 47%, respectively, over prior year periods. As a reminder, we divested our light industrial segment during the first quarter of 2022. We believe this more fully aligns with our core strategy of building higher-margin work in consulting, managed service, and workforce solutions. Also during 2022, we successfully launched the company's integrated IT technology platform, which we know is foundational to our plans to create significant long-term value for our business. I will speak more about this in a few moments. We've had a very busy and productive year, and I would like to recognize and thank all of our BGSS team members and their commitment and diligence last year. Our teams work together with purpose, persistence, and perseverance to complete our strategic directives in 2022, and they deserve the credit for our operational and financial successes. While I am discussing our teams, I also want to share that we have continued to build on a strong bench our culture and our talent development. As announced earlier this week, we are making a CFO transition later this month, and I want to welcome John Barnett as our incoming Chief Financial Officer. John brings strong finance leadership capabilities with deep experience working in public and private companies, and his leadership style fits well with our BGSF culture. Dan will be working with John and transitioning his CFO duties, and I look forward to having John join this call in a couple of months to discuss our Q1 results. I also want to take a moment to thank Dan for his tremendous contributions to our organization. Everyone in our organization is grateful to him for his dedicated leadership as a CFO role in 2015. Additionally, we have continued to strengthen our leadership bench in many ways. In November of 2022, we added Melissa Phillips as our Chief Digital Officer. Melissa is a strong leader in sales and digital delivery. and she is responsible for lead generation enablement on BGSS sales and recruiting technical platform. Tech-enabled lead generation is a valuable component of our growth initiative for 2023 and beyond. Early in 2023, we moved Chris Loop into the important role of chief strategy officer. Chris is a visionary leader in business transformation and growth, and he has been responsible for championing BGSS IT innovation platform as we scaled our businesses. Chris is providing project management leadership for a company's strategic initiatives and is also defining the structure and process for our important M&A work. We also promoted Nicole Rosen to our position of Chief Information Officer. Nicole joined our company in 2019 and was instrumental in the success of our IT roadmap journey. Today, we believe that our current IT tech staff, as well as our digital tools and resources, are distinct competitive advantages for our company. The successful implementation of our strategic initiatives three years ago has positioned us for growth and value creation in 2023 and beyond. Before I turn the call over to Dan, I want to cover a couple of strategic initiatives that we are working on. During the second quarter, we plan to rebrand all of our businesses to BGSF. We know that the power of maximizing our reputation by going to market as BGSF gives us traction on cross-selling efforts and we have seen evidence of this on professional sites during a soft launch of our renaming in 2022. Dan and I will provide more details on that in a few minutes. Also, I want to comment on Horn Solutions' acquisition that we closed in December of 2022. We have known the Horn leadership team for many years, and this was a natural fit for our business. With annual revenues of $30 million, this company was a sizable acquisition for us, which adds to the top line starting in 2023. As we previously discussed, Horn is a good strategic fit because it builds on high-value consulting and managed service businesses in the finance and accounting sector. We envision expanded market share in terms of geographic footprint, as well as new client partners and significant cross-sell prospects. This business has also demonstrated a track record of double-digit growth rates, excellent EBITDA returns, and industry-leading margins. Financially, this transaction was immediately accretive to our business and is also benefiting our BGSF team members and our customers. Now I will turn the call over to Dan after he covers our financial results. For the quarter and the year, I will come back and discuss our business outlook for 2023 and mission-critical initiatives that we are working on.
spk06: Dan? Thank you, Beth, and good morning, everyone. This is my final earnings call as the CFO of BGSF. Some might jump for joy at not having to do these calls anymore. However, it is with deeply mixed emotions that I will be leaving my post as CFO of this great organization. It has truly been an honor and privilege to have served in this role since mid-2015, and I look forward to helping the transition with John and the team as the company starts a new chapter in its strategic growth plan. Today, I will be discussing results based on the earnings release filed last night. Our annual report on Form 10-K will be filed next Wednesday. I will also be using the term property management loop real estate to describe that segment. As Beth mentioned, we sold our light industrial segment in early 2022, and our financial results are discussed as continuing operations and, where noted, exclude discontinued operations for this year and last year. And now for the numbers. Fourth quarter revenues were up 14.2% to $77.3 million. By segment, property management grew 16.6%, and professional increased 8.9 on an organic basis. Horn Solutions contributed 1.4 million in revenue in December for three weeks. Professional wage rates increased 17%, while property management wage rates increased 10%, Q over Q. And permanent placement revenues remained consistent. As we expected, our Q4 revenues returned to more normalized patterns in 2022, and declined sequentially coming off a strong COVID recovery quarter a year ago. Between Q3 and Q4, professional was essentially flat due to more ends in December this year versus last year and the deferment of some managed services projects in the late Q1 and Q2 of 23. Property management was down 4% as expected. We continue to see solid demand in projects related to cloud migration, ERP selection, and implementation, as well as customizations. Fourth quarter gross profit dollars increased by 15.5% compared to the prior year quarter to 27.1 million. Professional was up 7.6% on an organic basis and property management up over 17%. As a percentage of revenue, total gross profit margin increased by 40 basis points to a strong 35%. Compared to a year ago quarter, selling general administrative expenses were 23.2 million compared to $16.5 million last year. The increase was driven by $4 million in annualized headcount costs for new roles, primarily in the second half of the year, associated with strategic investments for internal talent to support known projects and fuel future growth plans. The additions for property management relate to the return of the commercial business post-COVID, as well as planned growth in multifamily this year. In addition, the fourth quarter of 2021 included a $2 million CARES Act credit. Finally, we recorded M&A deal cost of $265,000 and bonus accruals and other year-end reserves of approximately $500,000 in the fourth quarter of 22 over 21. The fourth quarter net income from continuing operations was $1.4 million or $0.14 per diluted share compared with net income of $4.3 million or $0.41 per diluted share a year ago which included a net CARES credit of $1.6 million, or $0.15 per donated share. Adjusted EBITDA for Q4 was $4.3 million, or 5.6% of revenues, compared to $5.1 million, or 7.5% of revenues in 2021. Although revenues and gross profit margins grew year over year, as mentioned, we invested in people to drive growth in 2023, which impacted our actual and adjusted EBITDA margins in Q4 of 2022. Our effective Q4 tax rate was 33% for 22 compared with 24.3% in last year's fourth quarter. As Beth mentioned, for the year, we reported record 22 revenues of $298.4 million, up 24.8%, while gross profit was $103.5 million, up 27.9%. Property management revenues grew 31.6%, with professional up 19.7% organically. Our managed services began solutions acquisition in 2021 doubled in size during the year. Permanent placement revenues were up 13.5% year over year. Our gross profit percent increased 80 basis points to 34.7% in 2022. Property management grew 36.4% with professional up 19.8% organically. SD&A cost as a percentage of sales grew 60 basis points this year compared with last year. A detail of our 22 versus 21 SG&A cost is included in the MD&A section of our annual report on Form 10-K. Net income from continued operations was $11.3 million, or $1.7 per diluted share, compared to $10.5 million, or $1 per diluted share, for the 21 period. Benefiting 21 were two things, a $1.9 million net gain on continued consideration and a $1.7 million CARES credit. Adjusted EBITDA from continuing operations totaled $21.7 million, or 7.3% of revenue, compared to $15 million, or 6.3% of revenue, last year. Finally, the full-year effective tax rate from continuing operations was 23.1% for 2022, compared to 20.1% a year ago. Regarding the company's financial position, we continue to maintain a strong liquidity position and balance sheet. At the end of Q4, our accounts receivables grew to $66.3 million, driven by our growth and addition of foreign solutions. While day sales outstanding remained consistent with the end of Q3, and our working capital ratio strengthened to 2.7 from 1.95 last year. Based on our strong EBITDA during 2022, we continue to invest in our IT roadmap and return capital to our shareholders through the dividend program. Our banking leveraged ratio of funded debt to trailing 12 months pro forma adjusted EBITDA moved to 2.4 times due to the foreign solutions acquisition. As Beth mentioned, the company's board of directors recently approved management's plan to rebrand all of our businesses to BGSF, which eliminates the various trade names currently in use. It is management's intent to complete this rebranding by the end of Q2. The decision to rebrand creates an indication of impairment of the trade name assets, and as such, the company will record a write-off of approximately $22.5 million, its basis in the trade names, in 2023. As the trade names were classified as indefinite life intangible assets, the company has not been amortizing the carrying values. There is no cash impact or any adjustment to amortization expense related to the suspected impairment charge. Bethel will provide more details in her closing remarks. As we have said previously, we believe our prudent financial management and capital allocation strategy are sufficient to provide ample flexibility to fund operations, invest for future growth, and return value to shareholders through cash dividends and stock appreciation. I will now turn the call back to Beth.
spk02: Thank you, Dan. Fiscal 2022 was a transformational year for our company. Our internal goals and objectives set in motion in 2019 were successfully implemented, and now we have transitioned to enhancements and continuous improvements on our IT roadmap. In addition, our strategic M&A work, including our divestiture of in-staff completed in 2022, has allowed our company to grow in more high-value, high-margin businesses like consulting and managed services on the professional side. Finally, we continued to expand our multifamily solutions into six North American cities during 2022 and added our first Canadian office in Toronto. Late in 2022, we began to experience advancement in our commercial real estate or property management solutions, which we knew would be slow to recover after the pandemic. Now I would like to comment about our IT Roadmap Initiative a bit further. Our technology modernization project that went live last year was built to scale BGSF's growth plans to support a billion-dollar revenue company. We have identified efficiencies that allow us to grow faster while reducing overall costs and risk in cyber and other regulatory and ESG-related ways. We're also tracking ROI metrics this year against our IT roadmap investment and are beginning to capture both hard dollar and soft dollar cost savings. For example, we are saving annual software costs of approximately $350,000 and believe that we will capture north of 5% gross profit benefit from our IT modernization efforts. Over the next two years, we have set aggressive goals in accordance with our new strategic growth plan. We believe the successful implementation of these initiatives are important table stakes to reach the next level of growth and to capture meaningful share in a highly competitive marketplace. Said another way, these goals and objectives are foundational for our long-term sustainable growth and value creation. Today, I plan to define these four initiatives, and I will continue to update you as years progress. First, process improvement. Before our IT roadmap, we believed that our processes were either very good or adequate. Based on the work we did during our IT systems upgrades, we learned that there are much better and more efficient ways to do many things. We want to institutionalize best practices and processes in many areas. Secondly, shared services. An efficient and effective shared service platform will allow us to remove back office tasks and responsibilities from our recruiting and sales efforts, reduce risk, and realize significant cost synergies along the way. Our primary target with the shared service platform is to efficiently scale the business and eliminate non-revenue-producing tasks from our two segments. Third, mergers and acquisitions and organic growth. Although we have reported strong growth over the past several years, we know that the comparisons or comps will continue to get tougher. We have a well-defined plan for both organic and acquisition growth and now must execute on those plans. We plan to open new markets in real estate segment and leverage technology to create territory mapping to expand and grab more market share in 2023. We are encouraged by the growth prospects of both of our segments. In our real estate and property management segment, we see pent-up demand in multifamily as well as the return-to-work trends in commercial. For professional, consulting work continues to be very specialized, which we believe are based on long-term secular growth trends in IT transformation, finance and accounting, and cybersecurity. We are well-positioned in all of these areas. Fourth, branding and BGS apps. As I alluded to earlier, the power of consolidating our name, offices, and more importantly, our voice in the marketplace will allow us to gain traction in the market. Eliminating the confusion of going to market in multiple names will benefit everyone, our clients, our consultants, and our skilled talent. This is foundational to our business, and we believe that our BGSS brand power and brand recognition is important, especially as we expand in high-value professional consulting and managed services. Also, our real estate segment for multifamily and commercial are very much tied to the confidence that our brand brings regarding skilled talent and augmented workforces. This is a simple yet powerful pivot for us, and we like that it does not cost us much to implement across our segment. In 2023, we are poised for another strong year at BGSF. And with unemployment numbers at a 50-year low at 3.5% and college-degreed unemployment numbers even lower at just 1.9%, we know that finding the right labor and talent will benefit from long-term secular growth trends. Finding people and then training and deploying the right talent is a key differentiator for us. I want to close today with some additional commentary on our strategy on M&A outlook. Although valuations have improved, we continue to be very selective. As we have stated in the past, we want to add businesses that improve our margins and or solve a problem for our customers. One of the areas we continue to hear from our customers is the need for a nearshore or offshore talent. This is another potential opportunity for us. However, our defined M&A criteria remains unchanged as we look for good DNA fit with our business in North America and or abroad. We require a strong fit for our customers and for our culture, and we want good valuations with high margin businesses. With that, we will now open the call to your questions.
spk03: Operator? Thank you, Beth. If you'd like to ask a question, please press star followed by one on your telephone keypad. If for any reason you'd like to withdraw your question, please press star followed by two. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. So our first question comes from the line of Howard Halpern of the Glitch Brothers. Your line is now open. Please go ahead.
spk05: Congratulations, guys. Great year. Thank you. The real estate and property management, how many offices did you end the year in and what kind of pace of openings or splits do you anticipate? going forward?
spk02: We have a total of 64 markets right now that are active in real estate, and we are targeting six new markets next year, and we have four markets that we are going to be doing the territory mapping in. Okay.
spk05: That sounds good. It's going to be great. In terms of, you know, what you've done to restructure a little bit for the, you know, in the fourth quarter, that $4 million, is that going to be the new, what the SG&A, is that the new baseline going forward, that $23 million, and then work off that number for modeling purposes?
spk06: Well, I think in that number was about $765,000, part of a transactional fees, Howard. Okay. Which, you know, depending on M&A deals may continue or not, but, you know, it depends on what we have going in the pipeline. And then, as mentioned, there was about $500,000 a year in sort of catch-up stuff that, you know, just normally catch in the fourth quarter. So, probably... just south of 23 million might be your base.
spk05: Okay. And that will cover the horn operations too? You're going to be able to absorb all that in there with that?
spk06: Well, I apologize for that. Yeah, that only has three weeks of horn in it. When we chat this afternoon, I can give you an adjusted number on that. Okay.
spk05: Okay. In terms of the rebranding, what might the incremental cost be at least in the first half of the year?
spk06: Are you saying is there a cost of change in the name out?
spk05: Right. Is it just going to be the right down that we're going to see?
spk06: Yes, I've I believe, from what I've heard and we've had discussions, there's very minimal cost in terms of changing this. We already own the name. We're using BGSF a lot. So, Beth, is that correct?
spk02: There's only a few things we'll be changing. We'll have to change some things when it comes to trade shows and some of our marketing material that we get pushed out. But it'll be minimal, and we budgeted for that.
spk05: Okay. And in terms of the cross-sell opportunities with Horn and what's going on internally. What are you seeing, you know, and what are your people seeing in terms of the opportunities that are out there to even drive that further?
spk02: I think the team was super excited about Horn. Actually, both teams were excited. When we went down to visit the Horn team, it was probably one of our most energetic meetings with a new company we've ever acquired. So they see the benefit of the cross-sell initiatives and they actually, a lot of members of our team knew the teams over at Horn. So the energies and synergy just in getting to know each other was immediate. And so I think that everyone is super excited and they've already started cross-selling a lot and introducing each other to each other's clients. Okay.
spk05: And one last one, more what you see in the landscape out there, is are you seeing more talent? Are you drawing more talent in versus the projects that are out there? I guess what I'm getting at is are you seeing a more balanced market out there, or is it still tilted one way or the other?
spk02: It's still tilted. So it's just an interesting market out there right now. There's still a drive for people and it hadn't led up much. Even though there's a bunch of layoffs, it's not where we play. So we're not getting a benefit from that side.
spk05: Okay. Okay. Congratulations and keep up the good work.
spk02: Thank you, Howard.
spk03: Thank you. Our next question comes from the line of Jeff Martin of Roth Capital. Your line is now open. Please go ahead.
spk04: Thanks. Good morning. Dan, congratulations on your retirement. I wish you well. I hope you have a lot of fun and happy memories ahead of you. I guess just piggybacking off the SG&A question, is it fair to look at this as a 14-week quarter, therefore you back out 1 14th of that 23 million, which is more like 23.5 million kind of run rate, And then you've got a couple items that you mentioned that, you know, Q1 you're going to be half a million lower for the year-end catch-up on comp and then subtract transaction fees. So we're actually closer probably to $20 million on a run rate basis, at least for Q1. Is that fair?
spk06: Yeah. I'd rather chat about that later on when we have our call, if you don't mind.
spk04: Yep, yep.
spk06: Okay. And then, Beth,
spk04: Beth, maybe you could speak to the longer-term opportunity strategically with Horn. I know they bring expanded capabilities, particularly on the consulting side. But maybe speak to kind of the end markets you're most excited about and then also the transition to geographic expansion and how that plays out over what timeframe.
spk02: Okay. Okay, well, the one thing about Horn is they're located in Austin, Houston, and Dallas, and the ability to be able to expand them in the other markets that we operate in will be very beneficial for us. The thing that we're most excited about it is they have such a strong finance and accounting group, and it's high in consulting. What it really does is it completes another piece of our puzzle with our customers. So when we go in and we help a customer pick what software they want. Then we go in and help them implement the software that they get. Then we help customize the software and then the horn solutions, we get to help them come in and do the reporting that comes out of the software. So it really does make the circle complete in regards to what we are able to do with a customer to keep them a BGSF client versus having to go somewhere else to get those resources. And that's the one thing that we're the most excited about because we were strong in F&A, but Horn is three times larger than what we had in place already. So very good for us.
spk04: Okay. And then on the commercial side of real estate, maybe walk us through the transition to 2022 if you saw pent-up demand coming. Trying to get a sense because real estate in general had a very strong year. Looks like that was driven primarily by multifamily. But maybe give us a look at if that pent-up demand on the commercial side is unwinding.
spk02: It is still in play right now. I know that there's still the return to work out there. In the fourth quarter, third and fourth quarter, we started to see more companies come back to work, which gave us an opportunity. We had consolidated that team within our multifamily group during COVID-19. As that started to break free and we started seeing people go back into the offices, we broke it back out. And once we did that, we put a manager over the entire group and then started back filling positions so that we could get back into the market early as those things started to break. So I think that as we moved into 2023, We are still seeing some cities across the U.S. that are ready to open up and get back to normal and some that still aren't. And so, you know, the one thing about real estate we have learned is there's no wide sweep of what's going on. It's just pockets. Some pockets are doing better than others and some pockets are growing and some pockets are still holding on to deciding whether or not people are going to go back to the office. So we just have to be very careful. aware of how we sell in those markets to be able to stay on top of it. And going ahead and breaking that group out and allowing them to start getting in the market early will be helpful for us in this year.
spk04: Yep. Okay. And then last question on the margin front. You've been very disciplined over the years in terms of expanding gross margins. That's typically translated into very good EBITDA margins. Just curious with the growth investments that you made in the back half of 2022, how should we think about EBITDA margins in 2023 relative to the last couple of years? And is it going to take a little bit of time to digest those investments and see the longer-term benefit on the EBITDA margin side?
spk06: Well, we do see, you know, some leveraging of the cost that we spent over the last three years going into 23 and 24, Jeff. So we anticipate better EBITDA return as we move forward, as we leverage the people that we have and grow faster than that SG&A cost and leverage the cost that we put into the IT roadmap. I can't give you a specific percent, but we do expect that to expand, yes.
spk04: Yep, yep. Great. Congratulations on a good year, and Dan, again, wish you well in retirement. Congratulations.
spk06: Thanks, sir.
spk04: Well, I'm not leaving yet. He's not being set free yet.
spk02: Thank you.
spk03: Our next question comes from the line of Michael Taglich of Taglich Brothers. Your line is now open. Please go ahead.
spk07: Morning, guys, and congratulations, Dan. Thanks, sir. Thanks. But I'm actually surprised at the explosion at SG&A. I mean, was this the plan, to spend, to have this kind of level of expenses?
spk02: Well, I do think, Mike, that we had to, when we kind of paused our hiring when we went live on the systems at the end of June. And so in order for us to be able to go through and hit our numbers for 2023, we needed to be able to go ahead and get positions in place to be profitable or not profitable, but to drive the sales and growth for 23. So it was a decision that was made to go ahead and move things forward or move things back so that we could be advanced in the forecast. So I think that, yes, it was part of the plan to answer in regards to the hiring part of it.
spk06: How much of it was the hiring? Michael, we did have the wrap-up of the IT roadmap this year as well, so that cost was anticipated.
spk07: Well, but the fourth quarter was a dramatic increase in SG&A versus the three quarters before that. I mean, it's great sales are up and all that. Obviously, earnings are down, which is not the plan. So it was part of plan or not. I mean, I'm surprised that we didn't bring more to the bottom line. So I want to spend some time understanding that better.
spk06: Well, we did mention that in the managed services division, you know, brought to us by Momentum, we had some delays in projects that was anticipated in November and December. Their numbers were lower than expected. And then there were ends on the IT side higher than there were last year. Again, we were sort of anticipating this year to be like last year, and we had more ends than we did last year. That affected November and December numbers. We had some adjustments in terms of year-end accruals. We had some transaction fees related to porn.
spk07: When you said, so if I'm running a budget, should I assume it's going to be SG&A $26.8 million plus an inflation factor? You're annualizing the fourth quarter? No. So what should I assume it should be? I mean, you guys have a budget for this coming year.
spk06: I'm really surprised at the miss, but.
spk07: you know we we prefer not to give those numbers out on on the earnings call happy to have a follow-up call with you michael okay um the um uh would you go into detail about um uh the uh the the catch-up stuff was that under accruals or what is that some expenses you weren't uh or surprise expenses that just happened in Q4?
spk06: We had some catch-up on bonus plans where we had some kickers that came in as people reached certain levels in their bonus plan that we picked up in Q4 versus picking up earlier in the year. We had some other expenses that came in. How much did that add up to? $50. That was about 200, just north of $200,000. Okay. And then we had just under $300,000 on some other accruals that we needed to adjust. And then we had the transaction fees related to horn.
spk07: And you couldn't put those, you couldn't capitalize those transaction fees into the transaction.
spk06: Transaction fees are not capitalizable anymore. So no. Okay. It used to be under old-on-gap, but not under new-gap.
spk07: I'd love to see some of this top-line growth and gross margin growth work the magical way where we get leverage on the bottom line.
spk06: As we mentioned, we certainly are looking at next year and seeing expansion in the bottom even percent. Michael?
spk07: I hope so. Okay. All right. Thank you very much. We'll talk offline.
spk03: Thank you. As a reminder, if you'd like to ask a question, it is start followed by one on your telephone keypad. Our next question comes from the line of Darrell Davis, who is an investor. Your line is now open. Please go ahead.
spk08: Hey, Beth and Dan. Way to go on a successful 2022.
spk02: Thank you, Darrell.
spk08: Hey, Dan, congratulations on your next step. Personally, your role at PTSF has been critical for me. When I assess management, the first quality I look at is integrity. And you have that, sir. So thank you very much, and I wish you the best. And hopefully you'll stick around longer than a year in that transition. Appreciate it, sir. Speaking of the transition, the news release for Dan, I think it was described that the change was part of a transition plan. I think I missed that. Where is that plan?
spk01: Dan, do you want to address this?
spk06: I'm sorry, Darrell.
spk08: Darrell, I don't know that it was published.
spk02: We've been doing succession planning for a while. We always try to think about where leaders are and succession planning so that we are prepared. So Dan has been open and saying that when he wanted to retire. And so I've known for a couple of years when he wanted to retire. And so we talked with the board and decided to go ahead and push forward in having the CFO search so that we would have long enough time to have the transition before Dan decided that it would be his last day. So we worked backward on it, but we've known for a couple years what his timeline was.
spk08: Gotcha. In your opening remarks, you mentioned the write-down for 2023. Can you specify what is being written down?
spk06: That we're going to write down this year? Yeah. So when we buy the companies, we allocate the purchase price to various things, primarily the customer list and the trade name that we're going to use. So that $22.5 million are values that we've assigned to trade names over the last seven or eight or nine acquisitions on the IT side. Gotcha. So the visions, the Zyprons, all those.
spk08: Gotcha. Basically the trade names for the past seven, eight, or nine acquisitions. And by the way, I'm a fan of Zypron. I'm a fan of the single brand. I don't know if I'm right or wrong in that attitude, but I'm a fan of the single brand. The next question I think has been answered in a release a few months ago. What were the revenues for Horn for 2022?
spk06: They're about a $30 million company.
spk08: Got you. And then finally, Beth, here's the annual question. Looking back at 2022, can you name one or some of the actions that y'all made that were good and one or some of the actions y'all made that were not good?
spk02: We had so many good things, Daryl. I mean, the fact that we're going live on our technology, that was a three-year journey that took us a little bit longer because you threw in a pandemic in the middle of it. But The fact that the whole company has all new technology and that it's all live right now, that is a major accomplishment for us. So I would say that was a great thing. I'd say the horn acquisition was also a great thing. As far as the bad things, I mean, let's call it fourth quarters. SG&A was a little bit of a hit, but we understand it. We know what happened, and we'll adjust for that going forward. And I think other than that, um, I think we've had, I think I'm very, very proud of our team and what we accomplished over the past year. I think we did a lot of revenue growth, GP growth while we went live on a system. And I think that that, um, shows so much about our team and the people at BGSL.
spk08: Thank you for that. Personally, um, obviously the SG&A for the Q4 jumps off the page, uh, and, uh, Also, what jumps off the page is the revenue growth. You had gone out of your way to set expectations low for Q4, especially in real estate because of the pent-up demand that you experienced in 2021 Q4. I'm not looking at the numbers, but it was an impressive comp year over year. I guess that compliment has a question embedded in it, so I'll just go ahead and make explicit. Was that Q4 that we just finished, the 2022 Q4, is there still pinup demand from the eviction moratoriums? Are we done with, I mean, let's say if we're 1%, 2%, or 3%, let's call that done. Is there any real pinup demand still?
spk02: I think it's mostly on the commercial side right now. I think the real estate multifamily side is doing, is back. But I would say that the commercial side with the offices still, you know, there's This back-to-work discussion is still happening on a daily basis with companies. And I think that once that all shakes out, that will help us. But I think that's definitely still out there.
spk08: Gotcha. Well, thank you all so much.
spk02: Thank you, Daryl.
spk03: Thank you. As there are no additional questions waiting at this time, I'll pass the conference back over to Beth Garvey for closing remarks.
spk02: Thank you, Candice. Thank you for your time today, and we appreciate your continued support. We look forward to updating you on our first quarter results in a couple months. Have a great day.
spk03: Ladies and gentlemen, that concludes today's BGSF Fourth Quarter 2022 Earnings Conference Con webcast. Have a great day ahead. You may now disconnect your lines.
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