Good morning, everyone, and welcome to the BGSF Inc. Fourth Quarter Fiscal Year 2021 Financial Results Conference Call. As a reminder, this call is being recorded. [Operator Instructions] Now I will call to turn over to Hala Elsherbini, Investor Relations to provide instructions, introductions and read the Safe Harbor statement. Please Hala go ahead.

Thank you, and welcome to the BGSF fourth quarter and fiscal year 2021 earnings results conference call. With me today are Beth Garvey, President and CEO; and Dan Hollenbach, Chief Financial Officer. After the speakers' opening remarks, 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. Now for the Safe Harbor statement. I like to take a moment to remind you today that today’s discussions 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 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 the quarterly reports on Form 10-Q and in 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 of this call, and 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 expressed written permission. During the call, management will also reference to some non-GAAP measures, which management believes can be useful in evaluating the company’s operating activities and business trends related to the financial conditions and results of operations. 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. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are provided in today's earnings release posted on the company's website. I'll now turn the call over to President and CEO, Beth Garvey. Beth?

Thank you, Hala. And thank you to everyone for joining today's call to discuss our fourth quarter results and another eventful year. Before we begin our regular review of operational and segment performance, I'd like to highlight the announcement we made last Tuesday regarding the strategic sale of our Light Industrial segment, which is expected to close later this month. We disclosed the purchase price of $32.3 million, which represents 7.5 times adjusted EBITDA multiple in the Form 8-K filed on March 2. From a strategic rationale perspective, when the company was founded in 2007, our revenues were 100% Light Industrial. As we evolved in strategically diversified into Professional and Real Estate sectors, InStaff continued to develop long-term client relationships, creating deep onsite engagements and logistics and warehousing and maintained high client retention. Having completed several strategic initiatives over the past two years to support our overall platform for future growth, the sale aligns perfectly with our core strategy to focus on higher margin opportunities. With the divestiture, we can fully turn our attention to professional high-end IT consulting, higher project-based opportunities and managed services, in addition to our niche position in real estate. We are pleased with our fourth quarter results, which reflect a strong finish to a year that began with considerable uncertainty. Our ability to quickly and effectively address industry and macro headwinds and to execute internal realignment and restructuring initiatives enabled us to report progressive improvement throughout 2021. Additionally, our timely and strategic acquisition of Momentum Solutionz early in the year drove solid contributions within our IT consulting brands. We have greatly improved our market position, which solidifies our outlook going forward. Underscoring our success is a digital transformation in critical technology and cybersecurity system upgrades, which will go live as we enter the second quarter.…

Thank you, Beth. And good morning, everyone. We filed our annual report on Form 10-K for the fiscal year ended December 26, 2021 last night. As a result of the definitive agreement to sell our Light Industrial segment, which operates as InStaff, we have determined that this represents a strategic shift in our business model and meets the criteria for classification as held for sale. Therefore, our consolidated financial statements reflect this segment as discontinued operations for the historical periods presented. As a discontinued operation our discussions today on performance and growth rates exclude the Light Industrial segment. For additional details on the sale please refer to our 8-K filed March 2 and our 2021 the Form 10-K. Moving to our financial highlights from continuing operations. Fourth quarter revenues surged 37.8% to $60.7 million. Real Estate delivered a stellar performance up 54% and Professional climbed 28.6%. Real Estate benefit from continued pent-up demand, market relaunches and improved recruiting. The Professional segment benefited from increasing demand and a $1.2 million contribution from the 2021 Momentum Solutionz acquisition, which was offset by a 5.5% decline in the infrastructure and development division. While I&D has been slower to recover from the effects of the pandemic, we remain encouraged by activity we are seeing early in 2022. Gross profit improved 43.6% to $23.4 million, benefiting from Real Estate growth up 62.8% and Professional up 30.6%. As a percent of revenue gross margin increased 141 basis points to 34.6%. SG&A expenses for the fourth quarter increased by $2.8 million or 20% due to higher compensation on growth and the addition of Momentum Solutionz, which was offset by a net $2.1 million, CARES tax credit. As a percent of revenue, SG&A expenses for the fourth quarter was 24.4% versus 27.9% last year. Adjusted for the CARES…

Thanks Dan. Like everyone else we continue to see challenges in the overall labor market given continued workforce shortages. However, the labor market is poised for growth with continued signs of recovery ahead. Within workforce solutions, the U.S. Bureau of Labor Statistics reported a temporary penetration rate of 2.09% in January of 2022, which is an all time high. The September 2021 Staffing Industry Analysts report forecast 4% growth for the Staffing Industry in 2022, compared to 16% in 2021, which benefited from a broad based resurgence in temporary staffing. Within our focus industries IT is projected to grow 6% year-over-year. As we move into 2022, we remain laser focused and extremely optimistic on the real estate and professional segments. Both of these businesses have made great strides back to pre-pandemic levels and we look forward to that natural continuation as we return to higher cadence of growth. As I mentioned earlier we spent a lot of time over the past year-and-a-half implementing a strategic changes that will make each of these segments even stronger. Turning to M&A, the sale of InStaff will allow for debt reduction and more capital to deploy into high end IT Consulting Solutions and High Margin Manage Services as well as drive geographic expansion in real estate. We will focus more time on continuing our organic build growing our professional and real estate segments as well. And as we look to deploy the capital, we will be seeking the right strategic partner that provides geographic and brand diversification into new or complimentary high growth areas that are synergistic to margin enhancement, quickly accretive to EBITDA and have a strong culture fit. We continue to be grateful to our entire team for their passion and diligence, and I want to publically thank our entire Light Industrial team and personally wish them the very best. With that I've will turn the call over to the operator for questions. Operator?

Thank you. [Operator Instructions] And the first question comes from the line of Jeff Martin from Roth Capital Partners. Please Jeff, your line is now open.

Thanks. Good morning, Beth – Beth and Dan. Hope you're doing well?

Good morning.

Good.

Can you hear me, okay? Great. Great.

Can you all hear us?

I wanted to get – I can, thanks. Wanted to get a little more of under the hood look into real estate, it looks like things are progressing well, good growth in the quarter margin expansion just was curious with respect to your market re-openings there where can you give us a breakdown of markets reopened and those that are still kind of opening back up and maybe what percentage of back to normal you are within real estate?

Well we're tracking where we – we're tracking way ahead of schedule actually at this point, which is a good thing. All of the markets reopened last year that we expected to reopen and we're ahead of schedule now. We just – we had New York – we have six openings for this year and New York was supposed to be in the schedule for May and I'm happy to report work that we had our first placement there two weeks ago. So things are really progressing very, very well.

Great. And then you mentioned IND slower to recover. Maybe give us a little bit of detail as to why that is and what your expectation is for that part of the professional segment over the balance of 2022?

IND really got hit if you recall from a lot of our customers, just that's kind of the lower margin business. And so they got hit pretty hard with some of our larger clients that just didn't rebound quickly. We have carried some new wins within the IND group, I mean, and expanded some of the business and the clients that we typically have. I mean, you've heard us talk about going deep and wide into our customers and the team has done a really good job in going in and looking for other business within those customers that we had. So we've had some wins in the last month or two and should start seeing them have a nice little recovery into 2022.

Okay, great. And then maybe you could give us a sense for professional and real estate from a high level in terms of what's a reasonable growth assumption for 2022, I would imagine professional somewhere in the mid-single digit range, maybe a little higher and real estate, maybe getting back to the historic growth rates, which are well into the 20s, if not the 30% ranges?

Well, no. Thank you for the confidence in us, Jeff, but yes, I think SII has predicted the professional was in the low-single digits – high-single digs, yes, next year. And we think that's a reasonable growth plan. I think on the real estate side we're sort of maybe a little bit more conservative in that low-double digit range right now. It's very early. We're just in February, so yes.

Okay. That's great. I appreciate the context. Thanks for taking my questions.

Thank you. Our next question comes from Howard Halpern from Taglich Brothers. Please Howard, your line is now open.

Congratulations on the year and all the things that have gone on since just at the beginning of the year. So in terms of the technology roadmap is most of it now going to be activated by the second half of this year and start to impact streamlining operations and improving operating expenses?

Well that is the goal. We actually go live on the 21st, so what s that seven business days. So whereas everybody is prepared for that, so we've got two months of what we're calling hypercare that will do additional support because we anticipate as much testing and end-to-end testing we've already done over the last two months that to try to make sure that it's a smooth transition, there'll still be some bugs that will need to be worked out. So once everybody gets used to the system and gets up and going and we've got all the little kinks worked out of it. We anticipate seeing some of the efficiencies that we expected later in the year.

Okay. And based on what you've seen in last fiscal year and going into this fiscal year in terms of cross-selling opportunities to generate revenue growth, what are you seeing as we enter 2022?

Our goal for cross sale's always been around 10% and we exceeded that last year. So the teams have done a really good job. Our alignment last year with our teams getting them reporting to one manager, if it's an SAP manager or Workday manager that realignment and restructure we did last year was super beneficial for how we produced in the fourth quarter. And so I anticipate that that cross sell effort will continue just based off the fact that the realignment really supports those efforts.

Okay. And within real estate I know you've said you're ahead of schedule a little bit in openings, but how has talent figured into how things – how growth will proceed in 2022?

I'm assuming you mean in regard to the shortage of them.

Well. Well, no, I guess in – I mean, in the real estate segment you merge the talent part of it. How is that operating within real estate?

It's doing very well. And we've discovered that there's a lot of opportunities in direct hire in real estate and a lot of that comes from the talent side – the BG talent side. But the integration of those two together with the management teams has also been very good for us, it's been a success.

Okay. And just lastly, in terms of the merger and acquisition landscape out there, being in terms of multiple – multiples out there, are things – are things normalizing compared to maybe last year and what you're seeing?

So I think we've seen the turn in that market that we play in on that 5 million-ish plus or minus EBITDA range. The multiple terms are up half to a point from where they were pre-pandemic, so, yes.

Okay. Okay. Well congratulations and keep up the good work.

Thank you.

Great. Thank you.

Thank you. The next question comes from the line of Brian Kinstlinger from Alliance Global. Please, Brian your line is now open.

Yes. Hi Beth and Dan. Nice work on the sale of Light Industrial.

Thank you.

Just to be clear – just to be clear on M&A that up a half point from pre-pandemic, that's significantly down from say the last 12 months similar to the – similar to how valuations are trending in small caps or are they not coming down that much?

I'm not sure Brian, I understand that.

You compared it to pre – sorry, you compared valuations to pre-pandemic, which is now almost – I'm just curious how they compare to say a year ago.

Well we didn't see much a year ago. Yes, so we saw a lot of activity early on probably last summer I think in anticipation of the tax rate. And that's probably the pricing that I'm talking about because that's when we saw activity. It's sort of, at least for us went a little cold in the fourth quarter. I think because everybody was either not going to do it, or in the tax changed or everybody was so busy they couldn't get anybody to help them. We just sort of started entertaining again and seeing activity flow. So we were a little busy selling InStaff, and – yes, that said, does that help you?

Yes. Yes. And then with increased capital that you're going to be bringing in, what kind of investments are you making both from a go-to-market strategy, maybe business development resources in addition to recruiting investments that you may need to make?

Well, we're definitely looking at our recruiting efforts in regards to bringing in more recruiters and seeing how that plays out. So that that definitely is in the work. The expansion of the real estate group, they're easy to expand in the market. So we're looking at things along those lines and then once our IT roadmap goes live there'll probably be some additional things that we're going to need to bolt on to kind of later in the year, as everybody gets used to it. So we're going to going live on what our IT – our CIO would say is a minimal liable product. So we just want to make sure we can pay and build, put people out on assignment and then all the bells and whistles will start happening later in the year. So there may be some additional costs with that later on.

Great. Lastly, can you talk about how the spreads are trending for billable staff versus salaries?

Spreads are up actually close to salaries.

How in terms of salaries?

Yes. So spreads certainly are up in real estate. They've been very good at keeping their pricing model working. I want to say professional, it's probably hanging in there, maybe down a hair in the Q4 but probably more mix of business than it is pricing, so.

Okay. Thank you so much.

Thank you. The next question comes from the line of Daryl Davis, who is a private investor. Please Daryl, your line is now open.

Hey, congrats on multiple fronts, Beth and Dan.

Thank you.

Thank you.

Dan, this is a numbers question unless if you are going to have at your fingertips, but focusing on real estate, I'm wondering if you have data or revenues for this January 2022 versus pre-pandemic. If we said January 2020 which was sort of unaffected by pandemic, do you have those figures?

I don't. I can tell you that when you look at the third and fourth quarter numbers on a run rate they're in excess of their 2019 revenue numbers.

Got it. That's very helpful. And then sort of a big question, traditional annual, looking back on things; if you look back at 2021, Beth, what are one or two of BGSF's best moves and one or two of BGSF's worst moves?

Great question. I would say our best moves was the acquisition early on in Momentum Solutionz. That was a game changer to the Professional brand. And we didn't realize how much of a game changer it was going to be until we got them in. And it's just continues to evolve into something special. And I would also say that the restructure of the professional group and aligning those teams, we had nine different brands and aligning those teams really has helped solidify and we saw those results in fourth quarter, really kind of just pop it out. So I think those are two things that we really did well. As well as supporting the real estate group as they continue to start to reopen some of their brands or some of their markets. I think what we could have done better on – when we started seeing life back into things, we got really excited and started doing a whole lot of other stuff, and we underestimated the impact that that would have on the mental health kind of cited it, the pandemic and COVID didn't go away. So there were still people that were dealing with a lot of the childcare issues or parent issues or things along those lines. And so as we started opening up offices again and getting all excited and pushing out more initiatives and we were really good at doing pulse checks with the group every quarter, and they were like stop enough. And so we pulled back and paid attention to what we were doing, and then got really strategic with the executive team and really started aligning what we were going to push out as an initiative and what projects we were going to work on so that we – everybody in the executive team knew every initiative that was going on. Because I think we were working kind of in silos at some point where the IT group would do something and then Professional was doing something. And we didn't realize how it was affecting all the stakeholders in it. So we had to adjust for that.

Got you. Specifically, I'm very happy with the lot of industrial sales, really congratulations on that. That's a – it’s a big move.

Thank you. Thank you.

Thank you.

I will put that in next year's growth.

Thank you. The next question comes from the line of Michael Taglich from Taglich Brothers. Please Michael, your line is now open.

Alright. Good morning and great quarter Beth and Dan. Congratulations for us, okay?

Thank you, sir.

I guess the first blush is real estate should have a record year this year, right? Or am I wrong to say that?

I think they're off to a banner year, yes.

Well, I'm just doing the math on what you said. How you answered the previous questions, I'm looking at last quarter. So which is spectacular. So the absolutely terrific. A couple of quick questions, okay. The IT road map when is that done? And what kind of payoff should we start seeing from it?

And we go live on the 21st, so right around the corner. So that we figured that's going to take the team some time to get adjusted to what the, I mean, everything changes. So I mean, it's the applicant tracking system, the CRM, the payroll system, the invoicing system. So it's going to take some time to make sure that before everybody gets up 100% on it. So we anticipate we'll start seeing some of the efficiencies later on in the year. And I think we've indicated in the past that we're looking to try to get in that 10% efficiency range based off what we've heard from other people who've gone through the same type of grades.

10% of what?

So a lot of it is on the recruiting side, Michael.

Yes.

So when we get the new system in and then we bolt on a lot of the enhancements that make some of the AI stuff that we'll probably bring in that will make recruiting faster and easier and allow them to focus on fulfilling orders versus finding people. We think that will provide some efficiencies on the recruiting side.

It's going to have a really big impact on the real estate group. And the Real Estate Group brand, several different systems between an Excel spreadsheets for scheduling and going into Temp works. And then they have another system that they do their CRM on. And all of that gets consolidated. And so that is going to free up the recruiting team for – in real estate significantly. And so we were – we really will probably see the biggest side of it with them.

Yes. So I think it's a combination of you get some recruiting efficiencies, probably some cost efficiencies there. But the bigger part of it is they're able to fill more orders and create faster growth.

Okay. Because I'm lazy, how much money you spend on it?

In total, when we shut it down in seven days, we would have been a bit north of $11 million. So $10 million budget. Yes, that was created...

Which you have spent $380 – it's been about $400 last quarter. I'm saying $1.7 million on your – for last year on IT road map.

That's on the P&L side. And then there's another $3 million in CapEx. So that's the software side of it.

Okay. So you spent $4.7 million-ish.

Last year, correct. Yes. That was the biggest year worked on implementing really the biggest part of a new brand-new ATS system, ran new payroll system and integrating that in with our Dynamics 365 that we put in two years ago.

So two weeks from now, that spending is behind us?

The implementation cost goes away, then we start doing some add-ons to make it more efficient.

As our case. And it will start...

We anticipate the IT spend for us will kind of hover around the 2% of revenue for us to be able to stay ahead of that.

Sustainable, yes.

Got you. All right. So, but that's over and above the IT road map, which is more of a onetime expense, I suppose, what you're presenting?

So a lot of the CapEx side of it was a onetime expense. Most – a significant portion of that sort of drops off at the end of Q1, we'll still have operating cost and some CapEx as we add add-ons, like some of the AI software and whatever that we add on, that will be on the CapEx side. But the consultant side, particularly the third-party consultant side will drop off dramatically at beginning in Q2. So certainly, I can put those numbers together and we can certainly share that with everybody on next quarter's call if that would be helpful.

Well, it would be really helpful. So when you guys – certainly, as you point out, there's a CapEx spending on IT is in fact the life of the business that we're in here. But this is a big onetime spend, which is why you guys carve it out. And hopefully, there's a big onetime boost in productivity. I don't understand how much you pick up in productivity going forward from this big spend in dollars, okay? So you said 10% reduction in cost on what or I want to get that straight. Again, you got to talk to me like I'm four years old, okay?

And I don't have the numbers at my fingertips right now, but we can certainly put them together. So we talked about creating some efficiencies – yes, pardon me. We create decisions on the recruiting. Yes. I literally – I would have to start pulling spreadsheets and I can work on some numbers and share it off the call. But, yes, yes.

All right. So Beth, on the $11 million spend, do you pick up $2 million or $3 million in EBITDA going forward? Or is it that kind of thing?

Well, it depends on how much more a recruiter can produce. I mean, so we have a recruiter right now who produces $500,000 in gross profit, but because of the efficiencies they're now able to produce $650,000 in gross profit. So it just depends on what we're going to see from that perspective. And that's how we'll look at it Mike. We'll look at it when this is what you were doing before now we have all these systems and now you are able to produce more and we would have to go in and really take it down to that level by producer to get that number.

All right. So, I'm going to hold you to it. So basically, if recruiter does 500 grand, now they do 650 and earnings go 30% realty, free.

[Indiscernible]

All right, but do you have an idea on order magnitude that, I mean, you must have pitched your board some number. Okay. When they greenlighted the spend.

We talked about a 10% efficiency primarily on the recruiting cost. I don't have that number at my fingertips right now. Sorry.

That would be the Real Estate part of the business, right? Yes.

That'd be in Professional and Real Estate. Both of the segments are going on the software.

Right.

It's probably much more efficient on the Real Estate side.

Correct.

Because there recruiting and fulfillment process was burdensome more burdensome than professional. And then there is an enhancement by creating more, again, as we mentioned earlier, by creating more efficient recruiters, there is a much better chance of increasing sales and gross profits. So, you got two sides of the equation going on, more efficient recruiters that can sell more, or fill more. So, you don't have to have as many recruiters, you get some savings on the sell side, SG&A side, and they are filling more or so you're getting gross profit improvement.

Yes. And the other thing to keep in mind is because we did not have any of our systems that kind of talked together we did management by Excel spreadsheet. And so, with the new systems, every manager will have new dashboards, we will be able to know on a daily basis where their team is at, so that we can help prop them up and give them support. So just having better visibility into the activity of each of the team members will be helpful for us to be able to be ahead and manage and support the team. So just that part of the visibility is going to be a game-changer for us as well.

Okay. So, you're running the business better, but you're expecting significant topline growth because you'll be able to fulfill more unmet need and a dramatic improvement in productivity from a efficiency standpoint filling needs.

Correct.

I mean, it sounds pretty dramatic or should I look at like – I mean, it's the best acquisition you ever made if you get like a 10% improvement in your profit gross margins, I should say. And it drives some top line on top of that.

10%...

I would say it would be great to get a really good on the understanding of that, because I mean, its material enough from an expense standpoint, you carve it out its material. You are hopeful, I guess, that it's material enough to drive results. Now that you're right there it would be great to show us what it's going to do besides just obviously letting the P&L roll out over the next four quarters.

Correct. Again, the visibility into the reporting side of it will be super beneficial for us to be able to give you better information in the future.

On, the tech sites I’ll switch one more question, I'll let everybody else speak. On the tech side, what kind of visibility do you have demand today and how does the IT roadmap change that the sales pipeline?

I'm not sure I understand your question, Mike.

Okay. How much visibility do you have on the IT sales pipeline now and how much do you have – when the roadmap is implemented?

Well, again, I think, it’s right now, because we have such a strong management team the IT group is able to, but again, it's on Excel spreadsheets, right. And I think they'll be able to kind of move things through a lot quicker. I think the team has got good visibility on the pipeline. I have a one-on-one call with the Division President every week and we go through the pipeline, and they've got a lot of activity out there right now. So, it will be, I don't know that the roadmap will change what they've already got in place or increase the sales efforts, because I think that their pipeline is super full right now. I think what it'll do is it'll help us figure out from the time that we get a sale, or are we put in an RFP, how long does it take to close it? And we'll be able to see with the funnel a lot better, the sales funnel a lot better.

All right, terrific. Well, great quarter. I'm delighted to hear that we're really back on track and making real money and I'm looking forward to a great year. Thank you.

Thank you.

Thank you, sir.

Thank you. [Operator Instructions] The next question comes from Bruce Geller from Geller Ventures, please Bruce your line is now open.

Hi, good morning. It's Bruce Geller. Congratulations on the nice progress.

Thank you.

I'm probably asking you a redundant question relative to the last caller, but can you quantify the annual benefit in either dollars or margins that you're expecting from this systems transition?

Yes, I think, as we just answered Bruce right now, we don't have numbers in front of us to do that. I will work on that and we'll certainly share it. Again, as we mentioned, it's a combination of efficiencies on the recruiting side and ability for them to fill more orders, which drives the gross profit line. So, we will put some numbers together and certainly share those with everybody on the next call.

But was there a payback period in your mind? Like when you decided we were going to spend $12 million typically there was a thought of, oh, we can pay this back in two years, three years, four years. And I'm just curious what your – without the need for a lot of spreadsheets, what was the anticipation in terms of payback period?

If I wanted to do a swag, I would say the payback is three to four years. That being said, we were at a point three years ago, Bruce, that had we not spent any money, we would not have been competitive in this world. So, our systems three years ago were archaic.

Okay, fair enough.

We have not spent too much on IT improvement in years.

Okay. That's fair. Thank you. With respect to the sale of your Light Industrial Division it seems like the loss of that EBITDA in the near-term at least is going to be dilutive until you reinvest those proceeds. Would you agree that that is an accurate statement? And then in terms of reinvesting those proceeds is it likely that you're going to have to pay a higher multiple on whatever you purchase than the multiple you received on the sale?

Well, we got a great multiple for Light Industrial business frankly. As we have been discussions and again, it's probably been, as I mentioned, six months since we had serious talks with anybody. But the multiples on the IT side, which was primarily what we were looking at last summer, we're in the seven to eight range. So, if those haven't gone up dramatically, then we could probably buy much better margin business at the same price that we sold LI with a far less worker's comp risk and management headaches. So not headaches, I won't say headaches intensity. So, yes.

Okay. But in the interim period, once you have those proceeds, they're not going to be earning much. And you do lose some EBIDA here, are you looking at a few months of dilution prior to being…

We are yes. On earnings per share we are looking at some dilution. We lost probably on a net income basis about $3.5 million. So we have $0.35 a share. But we think in the long-term, the capital that it gives us buy and expand on the Professional side was worth the transaction.

Okay. Thank you very much.

Thank you. Our next question comes from the line of James Maxwell from Tocqueville. Please, James your lane is now open.

Hey, good morning, guys.

Good morning.

I guess – good morning. I guess over the last couple of years you've deployed maybe about $45 million of capital into the Professional segment. And some of that has been impacted by COVID, et cetera. Are we fully recovered in that segment? Have they fully recovered to pre-COVID levels? I'm just trying to understand the sort of the productivity of LJK, EdgeRock, Momentum?

So, specifically, Momentum is doing fantastic. I think we bought that business around a $3 million-ish range and it will do well better than $3 million as we move forward. EdgeRock is back to pre-COVID levels. What we now call our ITC, I mean yes, ITC, which is our sort of higher end consulting side of the IT business is doing very, very well. As we mentioned, and as you mentioned, probably every quarter of this year, the IND side suffered dramatically in the latter part of 2020 and has been slower to recover. So, we feel very good about all of that. LJK, we are two years into that. The principal that we bought with that has left and we're sort of restructuring that business to support the other two divisions on a retained search basis.

Okay. And then what are the organic capital needs of the Real Estate segment? And is there any way to accelerate the growth by deploying more capital there?

So, it's really finding the right people in the right location, because it's really a salesperson and a recruiter. There's no office space cost or whatever. So, it's really talent acquisition is the cost of that expanding that business. So…

Okay. And [indiscernible].

We have an advantage – pardon me, I'm sorry,

So similar to Professional businesses, so there's not a lot of the proceeds from your divestiture are not really to grow the business organically. It's more to make traditional Professional acquisitions.

Well, I think it allows for both. I mean, we're going to reduce our debt down to again, less than one on the new EBITDA number. So, we do away totally with our debt requirement – annual debt requirements lower in interest. So, we do have additional cash available to us, cash flow available to us. When we plan this year clearly when we budgeted, we didn't share with the Real Estate team that we were considering selling in staff. So, yes, I know Beth and Kelly will go back and take a look at that growth and see whether it makes sense, given our markets and our customers, whether we want to accelerate that or not. So, we certainly had the availability to do it.

I spoke with both of our division presidents last week in regards to increasing our amount of recruiters out there for this year. So, we're in the process right now of evaluating what that looks like, how quickly we can do it and what we would expect to get out of it?

Okay. Do you have more real estate locations open today than you did pre-pandemic?

I think we're back to where we were, from in 2019. But we do have six additional openings scheduled for this year. And we're also going into Canada. So, that will be an interesting venture for us. I think we got Ken down on the schedule for May. So, we do have big expansion plans for them.

So, based on the Q4 results that the productivity of each office location is much higher than it was pre-pandemic. Was that pent-up demand? So, that is the possibly not sustainable or in your opinion, does that continue?

I think some of it was pent-up demand. But I mean if you look around, there's a bajillion cranes out there and multifamily locations are being built left and right. So, I think that as the construction side of it opens up, I think, there was capital that was being held because of the moratorium. So, I think once people started being able to open up their purse strings, I think, we saw some additional activity just in that side of it. So part of it was pent-up stuff, but another part of it was just everybody going, okay, now we can go in and start spending money, and that's always good for us.

Okay, great. Thank you. I appreciate it.

You are welcome.

Thank you. We currently have no further questions. So, I will hand over back to Beth Garvey for any final remarks.

Thank you. We appreciate you taking time to join us today on the call and appreciate your continued support. And we look forward to sharing our first quarter results with you in late April. So, everybody stay safe and healthy, and thank you again for joining the call.

This concludes today's call. Thank you so much for joining. You may now disconnect your lines.