BGSF, Inc.

Good morning, everyone. Welcome to the BGSF Inc. Fiscal 2025 Second Quarter Financial Results Conference Call. At this time, all participants are on a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. As a reminder, this conference is being recorded. Now I will turn the call over to Sandy Martin, three-part advisors. Please go ahead.

Good morning. Thank you for joining us today for BGSF's second quarter 2025 earnings conference call. With me on the call are Keith Schrader, Interim Co-CEO and CFO, and Kelly Brown, Interim Co-CEO and President of Property Management. 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 archived on the company's investor relations page at investor.bgsf.com. Today's discussion will include forward-looking statements which are based on certain assumptions made by the company 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 and the company's filings with the Securities and Exchange Commission. Management statements are made as of today, and the company assumes no obligation to update these statements publicly, even if new information becomes available in the future. Management will refer to non-GET measures, including adjusted EPS and adjusted EBITDA. Reconciliations to the nearest GET measures can be found at the end of our earnings release. I'll now turn the call over to Keith Schrader.

Thank you, Sandy, and thank you all for joining us on today's call. I will start today's call with some opening comments and discussion points. Kelly will then cover the property management group performance and discuss strategic initiatives. I will then cover the financial results. After Kelly and I have finished our prepared remarks, we will open the call up for analysts and investor questions. First, I will start with an update on the previously announced proposed sale of our professional division to Inspire Solutions. We filed a proxy statement on July 25th, which established a meeting date of September 4th for a special meeting of shareholders to vote on the sale of the professional group. That process is moving along as planned, and both companies are preparing for the proposed sale. We will not be taking any questions on the proxy or sales process on this call. I would now like to address the question of what the business will look like post the closing of the sale of the professional group. Referring to previous SEC filings, we have been providing segment information that reports the profit contribution, or what we call contribution to overhead, by segment to cover head office G&A expenses. With a smaller business post-closing, we will be taking and have taken actions to reduce our head office G&A expense. We have a path to reduce head office G&A expense following the completion of the TSA period to around $10 million annually and are aggressively pursuing that path. The $10 million figure includes roughly $1.5 million of public company costs. We currently estimate the property management's contribution to overhead for 2025 to be in the $11 to $12 million range. Looking back on the contribution to overhead provided by the Property Management Group in 2022 and 2023, we were providing over $20 million of contribution to overhead. While our revenue has dropped during 2024 and 2025 due to market softness, our gross profit margins have held fairly steady. So, top-line growth is the key. And as a result, Kelly and team are aggressively pursuing various strategic actions to improve top line from its current run rate, which she will cover shortly. Also, Kelly and I are continuing to review other avenues to further reduce SG&A expenses. Under GAAP, we will be reporting the financial performance of the professional group as discontinued operations, thus leaving the property management group as our sole segment. For clarity... In the MBA section of our Form 10Q, we are breaking out SG&A expenses into two main sections, selling costs for the property management group and G&A for the head office function. This will allow you to build a model to forecast the future success of the company. Following close, we will be performing under a TSA agreement for up to six months or longer to help Inspire stand up the business in their operating environment. This means we will be hanging on to certain expenses longer than we would without the TSA. However, we will be paid for those services, which will be reported as a reduction of our G&A expenses. As a result, our results may be a bit lumpy during this transition period. With that, Gilly will briefly cover the property management results and our strategic initiatives that are underway.