Good morning, everyone. Welcome to the BGSF Inc. Third Quarter 2021 Financial Results Conference Call. As a reminder, this call is being recorded. Now, I will now turn the call over to Steven Hooser, Investor Relations, to provide instructions and read the safe harbor statement. Please go ahead.

Thank you, operator, and thank you to everyone for joining us to discuss BGSF's Third Quarter 2021 Earnings Results. Joining me on the call is Dan Hollenbach, Chief Financial Officer. Beth Garvey, President and CEO, unfortunately, has laryngitis and is unable to make this morning's call. However, she is going to do her best to join us for the Q&A session at the end. Dan will cover operational and financial highlights for this call. After Dan's review, there will be a Q&A session. As noted, today's call is being recorded and webcast live. A replay will be available later today and archived for 90 days on the Company's Investor Relations page. I now want to take a moment to remind you that today's discussion will include forward-looking statements, which are based on certain assumptions made by BGSF, based on and are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company's actual results may 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, the quarterly reports on Form 10-Q and other company filings and reports with the Securities and Exchange Commission. All 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 and time of this call. BGSF 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 permission. During the call, management will also reference certain non-GAAP financial measures, which management believes can be useful in evaluating the Company's operating activities and business trends related to financial conditions and results of operations. These non-GAAP measures are intended to supplement GAAP financial information and not be consistent in isolation, as a substitute for or superior to financial measures calculated in accordance with GAAP. Reconciliation of non-GAAP measures to the most direct comparable GAAP measures are provided in today's earnings release posted on the Company's website. With that, I'll now turn the call over to Dan Hollenbach, Chief Financial Officer. Dan?

Thank you, Steven, and thank you to everyone for joining today's call. I'll begin with a review of our operational highlights and segment performance. I will then discuss our financial results in more detail before wrapping up the call with some closing remarks. Overall, as we reflect on our third quarter and the first nine months of '21, our momentum is best defined as progressive improvement across the board. Our team members in all three segments have done an exceptional job of elevating our client and talent engagement to unlock new opportunities through our realigned sales strategy, optimized and strengthened leadership structure and digital transformation. Our remaining IT road map projects are set for an April 2022 launch with new payroll, HRIS, CRM and applicant tracking systems. We look forward to the expected benefit from greater process efficiencies and to providing a better foundation for our teams to work across a single source of truth. Moving to our results. We are pleased with our third quarter performance, having posted both sequential and year-over-year growth across our key financial measures. In fact, the third quarter is a continuation of both top and bottom line sequential growth in each of our quarterly results for the '21 nine-month period. Additionally, cross-selling efforts are gaining further momentum and becoming a solid contributor to our results. Third quarter consolidated revenue increased 15% compared to the 2020 quarter, with net income up significantly by 80%. More detail on the numbers shortly. Turning to segment highlights. We continue to see positive trends across our end markets, with real estate showing progress from a market recovery and pent-up demand. During the quarter, the CDC eviction moratorium expired with rent relief funding slowly funneling through but has a long way to go. We are taking a measured approach to…

[Operator Instructions] First question comes from Brian Kinstlinger of Alliance Global Partners.

This is [Matt Campuccelo] in for Brian. So in terms of labor challenges, would you say it's gotten better, worse or the same as 2Q '21?

I think it's tougher right now across all the divisions. The open orders that we have are probably as high as they've ever been. So it's a good news, bad thing news, right? Demand is outstanding. It's just a matter of finding the talent to go out there. Wages are going up. Demand across all of the companies is out there. And everybody is having a harder time finding the people. So I would say harder across the board.

Okay. And another one, how much benefit to revenue was there in September quarter, if any, related to the fallout of the eviction moratorium? And have you seen increased demand related to this so far during the fourth quarter?

Yes. So demand was up. We think the moratorium helped. And we're continuing to see strength in the real estate sector as we move into October.

And the next question is from Jeff Martin of ROTH Capital.

You mentioned in your prepared remarks that you're using creative ways to combat the labor shortage. I was just curious if you could elaborate on that.

Well, I think they're reaching out to other sources that they've used before. I'll give you an example. We -- as you know, we do a lot of work in El Paso. El Paso has a cross-border opportunity. And for the very first time, I think, in -- I don't know if it started in Q2 or early Q3. We actually did some recruiting across the border and so try to develop some worker base in the El Paso area. So just expanding out to different ways, different sources. Certainly looking at our compensation levels to try and be competitive.

Okay. Great. And then on the real estate side. Could you give us an update on markets reopening? Where are you at with respect to all markets being reopened? Are there certain geographies that are opening more quickly and having greater progress than others? And then if you could touch on where you think real estate is currently relative to, say, running at full capacity?

Yes. So I do -- I apologize, I do not have the locations that we opened. But I can certainly get those for you later on. I think across the board, based on feedback from our Division President, the openings have been successful. We're certainly seeing the numbers rise. We're -- so Q3, they did $25 million. If you go back to 2019, which is probably the last sort of time we sort of measured them against -- they were on a $100 million run rate. So Q3 looks good relative to where we are in 2019. I think they're looking forward to a very positive '22. And I will get the information on the locations for you, but I apologize for that.

Okay. Great. And then if you could touch on how wage inflation either benefits or hurts the model. Obviously, as wages rise, people are more willing to work and open orders can get filled. Just curious if you're seeing clients more accepting the notion that they're going to have to raise wages and then, generally speaking, how that may benefit the model for BGSF.

Yes, absolutely. So Light Industrial, Light Industrial is done based on a markup business, right? So as wages go up, we make more money. So it's very beneficial to us. And wages are actually up almost -- probably close to $2 an hour from a year ago. So that clearly benefits us. Clients are recognizing that wages are having to go up. They may or may not be happy about it, but they recognize that to get resources, they had to do it. Real Estate, as -- our margins have gone up as well. and we've been telling our customers we have to pay the wages to get the resources. There doesn't seem to be a lot of resistance there. On the Professional side, those wages tend to be high anyway. So probably not the impact that we feel in the other two divisions. So...

[Operator Instructions] Next question, Howard Halpern, Taglich Brothers.

Congratulations, guys. Great quarter.

Thanks, Howard.

Could you, I guess, delve a little deeper into the cross-selling and the contributions it made during the first nine months of the year?

Yes. So we put a big effort on cross-selling. As you well know, we started it, I guess, probably in mid- to late '20 as the pandemic was there, primarily focused between the professional divisions. But we brought in Real Estate and Light Industrial this year and started having a whole company, what they call, big cross-selling opportunities. So again, you saw the number, 21% versus 8% on our cross-selling opportunities. So that's one location finding an order; another location filling it, which didn't happen very much before we started this process. So 21% of our Professional numbers is $10 million. So we're pleased and happy with the direction of that effort. So...

And I guess you talked a little bit earlier about developing, I guess, like a training hub. Is that for all divisions and everybody in the Company? And what do you hope over the next years to gain from that type of internal opportunity, I guess?

Are you talking training? Are you talking recruiting hub?

I think you talked about a training hub for employees, I guess, or...

Real Estate is working on their -- on a centralized recruiting hub. So over the next probably three to four years, that group will be in Dallas, helping to support each other. So you have backup and support as people are in and out. I know we're working on training opportunities for everybody. We started some leadership training. We're doing DE&I training. But I don't know -- I'm not sure about this training hub. The recruiting hub, the Real Estate Group is working on it currently and will continue over the next few years to make that happen as other leases expire. So...

Okay. And just one from a modeling perspective. Is that under-20% tax rate, do you think that will hold during the fourth quarter?

We do. We do, yes.

And one final one also. Do you anticipate any additional contingent adjustments in the fourth quarter? Or were the second and third quarters it?

We don't -- right now, we don't expect any other adjustments.

This concludes our question-and-answer session. I'd like to turn the conference back over to Mr. Dan Hollenbach for closing remarks. Please go ahead.

Thank you, Nick. We appreciate you all taking time to join us for our call today, and we appreciate your continued support. We look forward to updating you on our fourth quarter year-end 2021 results in March. Please stay safe and healthy over the holiday season.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.