Thank you for standing by this is a conference operator and welcome to the BG Staffing Year End Conference Call. As a reminder all participants are in listen-only-mode and the conference is being recorded. After the presentation there will be an opportunity to ask questions. [Operator Instructions]. I would now like to turn the conference over to Terri Maclnnis, Vice President, Investor Relations. Ms. Maclnnis please go ahead.

Thank you operator, and good afternoon everyone. As VP of Investor Relations representing BG Staffing it's my pleasure to welcome you to the Company's conference call to discuss Q4 and year-end financial and operating results and provide a progress report on the company's business strategy. With me today on our call is Allen Baker, Chief Executive Officer; and Dan Hollenbach, Chief Financial Officer. Yesterday’s news release announcing BG’s Q4 and yearend 2016 financial results can be found on the Investor Relations section on BG’s Web site at bgstaffing.com. Today’s call is being webcast live and recorded. A replay of the event will be available later today on the company’s Web site and will remain available for at least 90 days following the call. I remind you that our discussions today include forward-looking statements. These statements are based on certain assumptions made by BG Staffing based on and are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company’s actual results could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties including those listed in Item 1A of the Company’s Annual Report on Form 10-K and in the Company’s other filings and reports with the SEC. All of the risks and uncertainties are beyond the ability of the Company to control, and in many cases, the Company cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. These forward-looking statements are made as of the date of this call and BG Staffing assumes no obligation to update these statements publicly, even if new information becomes available in the future. This broadcast is covered by U.S. Copyright Laws and any use or rebroadcast of all or any portion of this conference call may only be done with the company’s express written information. During our call, we will discuss some non-GAAP measures which we use for internal evaluation and to report the results of the business as useful information to management, our Board of Directors and investors about our operating activity and business trends related to our financial conditions and results of operation. These non-GAAP measures are intended to supplement GAAP financial information and should not be considered in isolation, as a substitute for or superior to financial measures calculated in accordance with GAAP. For reconciliation of these non-GAAP measures to the most directly comparable GAAP measures. Please see yesterday’s earnings release as posted on BG’s Web site. I will now turn the call over to Dan Hollenbach, CFO.

Thank you, Terri. As evidenced in the financial statements contained in our Annual Report on Form 10-K filed yesterday we are pleased with the operating results for the fiscal year ended December 25, 2016. We will discuss -- as we will discuss, all three segments had record results. BG Staffing provide staffing services to a variety of industries through its various division and we’ve integrated several regional and national brands into our platform. We provide these staffing services within the three industry segments, multifamily, professional and commercial. Through 52 branches and 17 on-site location in 22 states. We continue to focus on generating higher margins while controlling our back-office cost. We also seek to continue our growth both organically and through accretive acquisitions. Before I drill into the numbers, I would like talk a bit our business segment. Our Multifamily segment distinguishes our staffing company in the marketplace. We believe we have the largest multifamily temp staffing business in the United States, this rapidly growing group provides temporary staffing need to run apartment complexes, mainly office and maintenance personnel. We believe we are the dominant provider such services in the U.S. and estimate that our closest competitor, a private company, generates less than one-third of our 58 million annual 2016 revenues in this segment. Approximately one-third of our revenue in multifamily comes from office leasing side and the other two-third comes from various maintenance activities. Most of our clients are asset management companies who management the apartment complex for the owners. Multifamily is our highest gross profit percentage segment. We believe it is a specialty niche as defined by staffing industry analysts. In our professional segment, we offer primarily two skill sets, the first is IT and the second is finance and accounting. Professional is our higher revenue segment. Our…

Thanks, Dan. I'm obviously pleased that we finished 2016 as our largest revenue year, a key factor in our ability to produce improving results is how well we manage gross profit and gross profit percentage. These are two important metrics by which we measure our success. Over the past 8 years, our business plan to diversify by geography and by segment continues to deliver and accomplish exactly what it was designed to do. That is to help build both the top line and gross profits in a sustainable, repeatable manner and absorb the bumps in the road. We certainly expect it to continue to do so. On a macro level, the general mood in the temp staffing industry is one of optimism. The highest growth is expected to come from Professional as defined by SIA. On a micro level, demand for our service offerings is strong and our outlook for '17 remains positive. 2016 year-end key metrics all trended positively as compared with the same period in ‘15. In Q3, we made some management changes in our Professional and Commercial divisions. All of the leadership positions are filled and came from within our current team. Everyone has been in their new positions for less than a year. We separate the S from the G&A, selling cost and general and administrative cost. Selling relates to the field production of revenue and gross margin while G&A is our back-office costs. We strive to maintain G&A at approximately 2% to 2.5% of revenues, and I’m pleased to note that we achieved this goal for fiscal 2016. Historically, our business cycle yields our best performance in Q3, with Q1 being the lowest, and that’s when our payroll taxes expenses are the highest. All of our growth in multifamily has been organic. A good reason…

Thank you Mr. Baker. We will now begin the Question-and-Answer Session. [Operator Instructions]. Your first question today comes from Jeff Martin with ROTH Capital Partners. Please go ahead.

Could you give us the number of branches for multifamily that we're opened in 2016 and did I hear you correctly, you plan to open five or you have five openings in the current plans for this year?

Yes, we actually opened 11 branches, however four of those splits.

Okay. And then you mentioned some management changes in commercial and professional, was curious how that is progressing. If you could give some detail on the progress that you're making? And do you expect to get those two segments back to growth in Q1 or Q2 of this year?

I'm sorry I -- you blipped out on the first part of that question, could you repeat it?

Sure. The management changes that you've made in Professional and Commercial, I was looking for a progress update with how that transition is going if it's in the completion stage. And if you expect to get back to growth in those two segments in the first quarter or second quarter of this year?

Yes, first of all we have put people in a position currently, they've all been there less than a year they've all been promoted in the company. I think we're finished making the changes, it's probably too early to tell at this point how well they're going do. And we do anticipate returning to growth probably in Q2.

Okay. And then was curious, Dan, if could touch on the credit facility balance and if you expect that to normalize at a certain level. And if so, what level that is?

Yeah, I think we were a bit high at the end of the year, just under $24 million. And we’re currently running in $20 million, plus or minus over the last few months. I think our expectations are to remain in that range, if you will.

Okay. And then your contingent consideration payments will be the last of them, at least from the current portfolio, are ending this year, is that correct?

There’s one potentially due in December, and there is one potentially due in December of ‘18.

Okay, great. That’s helpful. Thank you, guys.

The next question is from Howard Halpern with Taglich Brothers. Please go ahead.

Great fourth quarter and full year, nicely done. In multifamily, in the five that you anticipate opening, are any of those going to be splits? And are any of those going to be in brand-new states?

Currently, we never plan on a split that only occurs if we feel like it would be advantageous. I guess, I’m not sure where -- are they in new state --.

They are in new states, yes.

There are in new state, okay.

Okay. And of the ones that you opened in 2016, are all of them or what portion of them are running at -- I don’t know if full capacity is really the right term, but are they approaching full capacity at this point in terms of revenue generation?

In terms of revenue generation, they’re all performing as planned. I know what you’re saying when you say full capacity, but I don’t know exactly how to define that. But for those that we opened up earlier in the year, obviously, they’re generating more revenue than those that we opened up later in the year. But the ones that we did open up later in the year are performing at where we would like to see them in terms of their profitability and their revenue generation.

Okay. And I noticed in Q4, on the income statement is the SG&A line, that it was lower than the previous year. Is that due to -- did management -- the changes that you made in leadership? Is that what affected the G&A line?

In general, that’s usually due to the seasonality in our business. I think Q4 is typically our second worst quarter. There’s more detail we could describe there if you’d like, but that’s basically the answer to that.

Okay. And with the acquisitions now rolled over, I mean, do you actually see ways that you're going to be able to expand gross margin maybe to the 24% plus area in 2017?

That’s really a tough question. It’s like well, how big can gross margin be. Middle 20s for a staffing company is not too bad, particularly a public staffing company. But if we can find an accretive acquisition that at least is equal to or greater than our consolidated gross margin, we'll certainly pursue it. I don't know what else to say, we're always trying to expand our gross margin sometimes you win, sometimes you lose, but that certainly top of our mind. And I think we've done that certainly over quarter that we've went public.

And with the commercials that I know have you pretty much cycled through the customers that were generating I guess lower than optimal of gross margin historical cycle through that?

I would say no, we're in the middle of cycling through it. We're trying to raise our gross margin in commercial. We started off on this project some years ago at 12%, I think we finished this year at 14.4% and we're just going to continue to do that. And no, we're not asking anybody to leave, we're just trying to add higher margin customers when we add a customer.

And has the general economic point done anything that you could see on the ground, changes in like the commercial area with manufacturing and such, any of that sort of filtered down to your level yet?

Well I would say that, what's filtered down to us at our level has been what you would normally expect in staffing. We have customers that come, we have customers that go as their needs changed. So I haven't seen anything anymore unusual than that, at least at our level.

Okay, well keep up the great work guys.

[Operator Instructions]. The next question is from John [indiscernible] with Origin Capital. Please go ahead.

Couple of just quick follow ups. The management changes at Professional and Commercial. You've had some sort of same branch -- modest same branch headwinds in the segments over the last two quarters. Given that in conjunction with these management changes, is it fair to assume that you guys believe that the weakness in recent quarters there has been largely sort of self-imposed, and if so, has it in your mind really been sort of a sales issue more than anything, or are there other sort of broad macro market technology focus issues in Professional that have sort of hurt growth there in the last couple of quarters as well?

Yeah that's always a good question to ask. I don't think any of our softness in the marketplace has been as the result of people in different positions. In think in professional we're seeing more weakness in finance and accounting than we are in IT staffing. So I don't think it's fair to assume what you said there is not one particular reason causing it. But that staffing and that's one of the reasons why we have a diverse strategy and that's another reason why we have the four verticals and in all of the different states, because when one thing is down we're hoping something else is up, et cetera. And so that produces a nice continuing growth top-line issue for us. So we're kind of I say top line which I know is what investors like to see, but at the same time we’re really focused on profits and I think all of our profit targets were up, both in Q4 and for the year.

So what did you really -- with the management changes at Professional and Commercial, I mean, what do you really hope that those will achieve for you, if you don’t feel like they were sort of personnel specific issues that were causing some of that weakness? What’s the goal of the management changes in those two segments?

Well, we had to fill some open positions and we did that.

Okay. Got you, so this wasn’t sort of enforced turnover where you would let people go who you thought weren’t performing the way you wanted them to, [Multiple Speakers].

No. Everybody was performing well. Just some people had a change of heart, wanted to do something different.

Got it, okay. A couple other quick questions. One in multifamily. I think you guys have sort of talked publicly before about trying to get that to $100 million revenue run rate by 2019. Is that still something that you feel that you can commit to?

That’s certainly a goal we have, and we're striving the best we can to get there. And kudos to the group in multifamily for growing that particular segment by almost 35% this last year. So I think we’re on our way, and we never know what's going to happen. And it’s certainly an attainable goal, I think, based on what we know about the marketplace today. And hopefully, we’re going to get there.

Okay. Lastly, I would just encourage you guys to at least think about, in your press releases, in your communications, to possibly present an adjusted earnings number where you add back the acquisition-related amortization. I think your reported earnings really -- pretty significantly understate the sort of free cash generation potential of the company given that you have a really substantial slug of acquisition-related amortization running through the P&L. And I think frankly, folks who are screening the business and don’t kind of dig in and understand that look at reported in earnings versus the dividend and make the assumption that the dividend is unsustainable, and I think that's been a headwind from evaluation perspective for you guys. So I would just encourage you to think about possibly doing that going forward. I think it would be helpful for your trading multiple.

Appreciate that input.

The next question is from Dan Abramowitz with Hillson Financial Management. Please go ahead.

Hi, guys actually, the previous caller stole my thunder. I was going to ask about the intangibles amortization, which is, as you know, a very big number, $6.2 million, I think, in 2016 and it really -- it does distort your GAAP reported earnings number pretty substantially. And I would just second that suggestion that you consider adding a pro forma earnings number that adds back specifically that line item and presents more of a cash earnings number, if you will, which I think at least, on a pretax basis, your earnings would have been over 50% higher, adding that back. So it’s really quite significant. That was all I really wanted to say. Otherwise, the numbers are good and keep up the good work.

Okay. Thanks, Dan.

Thank you. This concludes question-and-answer session, and now I'd like to turn the conference back over to Allen Baker for any closing remarks.

Thanks operator. And thanks to all of you for joining our call today. I hope that it's clear that we're focused on execution and the long-term success of our success. I believe that overtime a keen attention will be a key factor to achieving our goals. Our business is based on relationships and relationship building is one of our essential competitive skills. We'll continue developing these abilities as we look forward to another great year again in 2017. Thank you and have a good day.

This concludes today's conference call. You may disconnect your lines. Thank you for participating. Have a pleasant day.