JOB - Earnings call transcript Q1 2025

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Derek Dewan

Hello, and welcome to the GEE Group Fiscal 2025 First Quarter ended December 31, 2024, earnings and update webcast conference call. I'm Derek Dewan, Chairman and Chief Executive Officer of GEE Group. I will be hosting today's call.

Joining me as a co-presenter is Kim Thorpe, our Senior Vice President and Chief Financial Officer. Thank you for joining today.

the share quarter GEE and future. ended with outlook to the results provide pleasure of our first year fiscal December for our with the Group's you for you XXXX It's in fiscal foreseeable remaining XX, XXXX,

comments These make be uncertainties represent future judgments what including I our considered statements about holds will and may differ forward-looking results our the subject actual and estimates, current that expectations other and to and our Kim forward-looking, Some from may predictions, future risks are performance. of materially statements.

risks refers to under this We recent safe captions today's forward-looking regarding being forward-looking safe Throughout this press harbor. statements statements to These XXXX. SEC XX-Q, or we are uncertainties no quarter Thursday's presented and ended the the cautionary call. assume periods statements statement release and on other described refer the Form the caption which X-month earnings will under period and in and to presentation, below statements December XX-K as forward-looking most XX, our and harbor made update obligation quarter, filings

December the refer Likewise, are XXXX. to year period the comparable XX, ended prior quarter, to referring X-month we prior when we

the During press non-GAAP non-GAAP and in explanations today release. talk measures address this of that about we earnings will financial presentation, included are the also some measures. Reconciliations we will

accordingly. trend margins amounts for approximations presentation are related purposes Our rates, all items call including or and this and related percentages presented metrics and based of financial rounded of amounts rounded growth and upon are amounts, items,

of are today's available our convenience, in our the for your For Center Investor remarks www.geegroup.com. website, call prepared

XXXX aftermath and of of from interest far Beginning and second conditions XXXX have half and macroeconomic XXXX, the difficult XXXX in the acknowledged immediate have very hiring continue to today's uncertainty, what that in as in prepared pandemic place rate we our challenging remarks. is for staffing XXXX and Now and on hiring followed. in encountered so that the environment These took to face in the and now stemmed the volatility services. over inflation throughout

new have hiring labor personnel. cooling many as on full-time businesses in many in effect Since near serve employees the businesses Instead, on have existing labor general layoffs client been contingent corporate and and they're their adding focused with hold. of proceeded and use additional including IT produced have we on conditions many of put retaining of initiatives expansion implemented employees. These and XXXX, hiring these U.S. and cases, a than projects activities, requiring universal such rather employment freezes

impacted both share XXXX. for a Consolidated gross These been negatively impact $XXX,XXX help these quarter. and was continued have for XX, orders ended our XX.X%, hire to for diluted $X.X December million profits for results the Consolidated negative the quarter revenues margins XX, were December net conditions Gross ended placements. We EBITDA adjusted temporary XXXX, the the were or $X.XX the and quarter. a $XX for XXXX direct job Thus, first quarter. fiscal reported of non-GAAP have and conditions. for loss financial per by quarter $XXX,XXX million respectively,

aggressive financial improve actions results. taking are to We our

to annual eliminated reduction eliminate streamline to cost for continue million expenses. opportunity announced, our to and and our an expect in are time, the recently at $X activities on SG&A a we same Last this routine estimated and operations. more costs As taking ramp up we basis M&A opportunities fall, look

to of addition aggressively help to as near-term field as In revenues. opportunities existing grow are them closely business the working we leaders new all expand to and our continue client these with pursue initiatives, well to frontline in our verticals across

occur in demand I from win does some see business. to are am to beginning the confident we very are and We the results. new customers positioned increased anticipated future, recovery existing positive an meet When

happy also am include grow mergers to financing. time, enhanced now underway and practical position assured both with always investments organically making acquisitions. we are recently maintaining business solid we the that and plans, I prudently, to executing well a same strategic report which available will on formulating our manage through our cash that and attractive At rest

gain professional staffing to Hornet GEE X, offshore recruiting and It reduce serving solutions acquired has markets and verticals. utilized will Hornet efficiency an across to verticals information which the customer all blue-chip in costs. recruiting XXXX, team, Inc. Group large-scale January companies we staffing service more provides On experienced Staffing, technology, be

to We expect providers, Fortune to more and ability users from vendor VMS. labor. MSP large Hornet's solutions secure compete workforce XXXX expertise other service systems, managed and new anticipate our the helping business significant and contingent enhance include to and acquisition effectively, working of Hornet it, with management outsourced

our date X, in closing beginning financial the results to January the consolidated accretive Hornet's are post-acquisition transaction of initial earnings. statements XXXX, be reflected and will

fide our and X% As on capital always in just we as the strategy repurchases be as considered of will repurchases share use beginning know, alternative capital over repurchased you excess program. shares allocation when of XX, component prudent. of future, Share if an outstanding having a XXXX, the alternative our paused and considered December of of bona the

reassure and to has well Group in the grow substantial company I that as and a balance liquidity I profitability internally with form want Before sheet borrowing previously restore growth and acquisitive. fully GEE outlined through and everyone possible. to challenges successfully over headwinds be to cash quickly is as it of The Kim, and to intend strong managed turn the positioned we to capacity.

more especially a near normal in market movement and we are below labor good operate share based continue that opportunity stock undervalued for that recent levels, so value, our a economic slightly the to believe upward also is and to there's We even very price tangible book in upon better and trading able and conditions. again once

key and achievements to every wish hard driver our employees are future company's time, service. factor and in again an on who clients President dedicated At success. associates. Financial once and get our best extremely elaborate fiscal work very to Vice They prior turn I first a to quarter Kim over the day that our ensure will They thank important Chief Senior further XXXX our this Kim? our Thorpe, call our Officer, I'll the results. of Finally,

Kim Thorpe

Thank good you, Derek, morning. and

quarter -- $XX sorry, for prior I'm revenues $XX services $XX.X services quarter contract quarter prior consolidated Derek the quarter. were from comparable down revenues XX% quarter. the the $XX.X services down As contract Professional from the XX%. for reported, comparable revenues were down contract consolidated year Consolidated staffing XX% million, for million, million were revenues were the million,

quarter of revenues prior services decreased with revenue all the services XX% with contract year revenue for quarter, million represents $XXX,XXX of total represents all contract XX% which for the million decreased as services quarter. was Professional or XX% revenue services quarter. and XX% compared $X.X of the million and contract $X contract the were X% $XX.X prior Industrial year as compared revenue and which revenue X% total and of or

for million, quarter. compared were revenues year the the $X.X as hire down prior XX% Direct quarter with

million, referenced prior and year labor staffing line with opening Gross directly his performance XX% for industry as the by remarks. the difficult conditions facing Derek down compared the was top and quarter. profit us was in by Our economic impacted $X.X the quarter

temporary quarter mainly or for direct spread, our XX.X% year increase businesses prior Consolidated higher perm consolidated small is services favoring the gross margins to and extent gross respectively. XX.X% in lower revenue. of margins the to changes The were offset the contract placements some in and by our quarter, hire margin attributable mix and

gross XX with for for basis for points. an services Our quarter the the of contract XX% year was prior quarter, increase margin professional XX.X% compared

Again, margin due services compared industrial the higher-margin focus these quarter, for of for the XXX business as increase the mentioned. the gross basis prior for contract increases are mainly Our previously on XX.X% an with to business XX% year was quarter points.

cost quarter $X.X was to administrative general the compared the The of or fixed the were as not with job the for of fixed boards during XX.X% like decrease taken that down fiscal for in quarter. and XX.X% compared to The revenues Selling, of SG&A XX% cost, SG&A percentage revenues. revenues quarter. occupancy a to as prior during and applicant tracking expenses ratio prior initiatives are improvement million expenses expenses, the were driven for result and quarter the including personnel-related XXXX prior quarter primarily sequential first expenses, the SG&A the quarter by reduction systems SG&A

of quarter $XXX,XXX share per of of also a a compared loss for quarter. per as for or net loss We with diluted net diluted year approximately $X.XX a or $X.X share $X.XX million prior the the reported loss

the for in loss and expense. due with was expenses improvement quarter adjusted in Our in net compared $X reduction for well the the amortization quarter. net loss is adjusted of million decreases $XXX,XXX as loss as net The mainly to SG&A depreciation as prior

Adjusted loss the with quarter as measure, a year $XXX,XXX a prior for non-GAAP is non-GAAP Adjusted also compared which for EBITDA for negative non-GAAP financial the quarter also is which the is for $XXX,XXX was the year measure. measure negative a prior a with quarter. negative financial $XXX,XXX negative compared net $XXX,XXX was EBITDA, financial quarter.

as XXXX. from or up December XX, as XX, of current ratio of XXXX, working X.X:X, December Our capital X.X:X was

net with $XX.X credit an XX, availability facility very cash, as Our $X strong million, $XX December with ABL no and working capital million of outstanding position liquidity of of XXXX, remained million undrawn in debt.

net book net December per respectively, $X.XX value as share XX, and per were tangible value Our of book $X.XX, our share XXXX. and

were was $X.XX, in respectively, value per share per the share December book noncash book fiscal the assets, no of These position, net taken result quarter primarily The impairment value net or value. cash book net Our and effect XXXX. June charges -- tangible tangible value share XXXX. as net $X.XX on noncash a had net our working book per of XX, and decrease capital in or tangible ended of XX, third

disappointed we're our with conclusion, outlook. remain near-term and our while In cautious results, in

term. for We and also long prepared remain optimistic the

attributable leadership difficult pandemic the experienced cyclical downturns business and in managing management affecting team such previous and recent Our are markets. COVID very times the labor as through field interruption to

Collectively, quarter, profitable to intend macroeconomic acquisition environment current overall. environment more consistently to taking conducive Having our generate completed new industry this pursue for substantial staffing our company for continue under growth. we opportunities have acquisition demonstrated to develop earnings the the advantage demand of Hornet favorable can and also we platforms other of conditions that more a

that back schedules Derek, turn I reconciliations over about today be in GAAP with included Before note supplemental can release. financial found of in counterparts it please non-GAAP our Group's earnings press GEE to talked their measures the

the back turn Now over call I'll to Derek.

Derek Dewan

restore aggressively profitability our industry macroeconomic release from remarks staffing impacting hope managing restore to demand you, execution the recovery. you aggressively M&A our press organic announcements today we with but moving be prepare and conducive and more business earnings and also challenges away losses, that for a and Thank and plans initiatives. are strategic Despite headwinds from and our not for to take only we and on is to growth-oriented Kim. we our for continuing and What prepared mitigate labor preparing market both anticipated growth an services, by our growth the are

We to the to strategic maximize for of benefit GEE capital shareholder hard Group's shareholders, will returns. consistently uses of our including continue work evaluating

of for offer it have acquisition believe We and our platforms acquisition value very other us. Staffing are and Hornet opportunities we additional with profitability identified the can growth and that recent opportunities and brings pleased

would I go questions. to Instructions] be into We'll and Kim answer Now question-and-answer now session. the happy [Operator your

Kim Thorpe

a of and have sales drive or we from such interested question motivate the now? the What cycle, our a as Derek, in the doing down company call sales the investors one Is in we're on teams to one parties.

Derek Dewan

revenue important because That's very and business drives growth. the sales really

progress So targets, meets from increase vertical the our identify on that talk customers business field, customers. each and management and discuss about penetration new and with regularly made existing of team they to our plans leaders they

then third between leaders the the and is finance. each the accounting IT communication and vertical And the leg verticals, of there's amongst good stool like on cross-selling opportunities the and

into been the business, management team a Hornet particularly the and collaboration brought there for the we've fold, new on MSP and gaining there's addition, In accounts. system vendor

a are follow-up. very pursuing in we organized customers business, and both regular So new new fashion with and aggressively customers strategic from existing

rewards participate motivate order them In plan people addition, higher if lower our production structure our than sharing actually commission we've production. into our and who sales profit well to as recruiters to -- revamped in were that move percentage-wise and had they in structure better that

to So add Kim, we we compensation put that want and in in robust believe anything incentive extremely that? plans are you to the do competitive industry.

Kim Thorpe

the covers that part. mean I No. think main I

-- We are industry verticals helping that positions the field to right the being where and input we're mentioned. it's members the things. now from of are, what job or sort a due Derek to -- are But the in other are communications field as communication based those are intense through that orders very trying for there we kind process are help the receive the the of on hiring with like

Derek Dewan

process in target customers I to with want to are to new we going of contact add the agents AI and business. new to gain that make to them and integrating also

In automate which and market would place are a candidate. more AI time exploring decrease testing addition, recruiting we increase and to and cost are process of a that to tools candidate

that tools So those revenue well. as in are will aid growth

occurred? acquisition the you we can trading volume, $XX remember what million your comment the hit? more, it somewhere... or question that rather the Kim, Was the of announced on do what we acquisition, Hornet Hornet next of upon The unusual When understanding trading occurred announcement the and you is,

Kim Thorpe

I over million... thought XXX it million, XXX was

Derek Dewan

Yes, had million traded shares yes. outstanding, and Yes. XXX we actually than total shares. We outstanding the more

I was think significantly it more.

the price the in and -- process. doubled So

shareholders So with trades in happen? Stock explored that actually possible New larger the that is, it We had one Exchange. is We and directors with well. could multiple the someone as exchanges the forth. how that York And And how print of volume that back had happen? question does explore type of to that our and

that hard But activity. it source very very, trading the electronic was to with of identify

debt to it put our for on able finger I it So a we'll time would happened call an It couple back doubt our sure. be we when less looking that at for outstanding aberration it. face. I than and one it, years really other of we're but settled still renegotiated

I in XXXX? think, Kim, when was that back

Kim Thorpe

day, XXXX, That X traded XX-some and I we shares to believe. up in was in million

Derek Dewan

Right. Right...

Kim Thorpe

shares at we outstanding. million had the that time, And way, about XX

Derek Dewan

Yes.

we've pronounced. the trades that. of this at and otherwise. it I tracking FINRA can't more get information we it. point. what But make And just and that do had But even made it's inquiry hard occurred of watch then So exchange, the who We both completely explain because to some was

-- and your to on front question. impact on impact in also Next as on use the update Could generative question -- could to and so any you it both you benefit internally the of competition customer, your such us business, and use good ability AI operations competitors forth?

Okay.

and with day-to-day AI these another ERP to mentioned tracking existing targeting with and also are I systems, will necessary, be addition, in integrated the So sales or both will management customers in our in systems new pursuing agents recruiting, applicant contact connection of tech environment. for that's our It our we environment of application. and extent it installed be but aggressively. Both

of to in use now and but mentioned further bringing the firm it think things. we've only And tools I AI compete -- a the for We next to we speed But use evaluation. And it are to ChatGPT I beta. in I'm for we've that believer those and announce to other increase the tested lower can forward to am cost. several not that and quarter, do aggressively I into what phase. the I corporate field done hopefully, implementation some by moved on also personally

going we're levels I've since of knowledge anything confident in -- that peer shared our strategy do well? you and and group add Kim, So with with at highest to the feel involved as where want very and my you're it.

Kim Thorpe

for -- department for not it fairly to couple of it for some individual out application it, it to just write example, that new will it's a a there it We've have things innovation did. use We and one along for using Yes. lot be now my of years And involved. quick. It's does. there. composition only is a my lot although I obviously, lot we the accurate, regulatory is technology, and review also a mean because is of been here of been AI to extent, put like coming microcomputer really, nature

the helps things. largely really innovated right So the in productive being it But now. level across more types be us of business at grassroots those it's

Derek Dewan

Okay. of And group, verticals. the have the and large in both companies is, then industry met in another I What and everyone peer small struggling? the outperforming several different doing? And is question are with

size vertical direct break it of also then slightly I'll And I relevant. So differently. hire that's down contract and because by staffing, both are impacted think versus which

the Both direct hire have staffing contract by staffing industry. and for staff labor -- markets impacted been stagnant

which a historically, weathered layoffs better in a you've Within pretty downturns And the much took hit, big than the of seen other IT IT the lot it's verticals. space. verticals,

you Google, from other Cisco, it. name it see Meta, companies, tech You

And in hit his the Kim of pandemic. particular, hiring leveling mentioned or this We larger is been post that another accounting finance that perm hire that over in the That's and off space. direct in has that's one occurred a verticals, well. presentation that, portion. as correction kind And of the portion believe our in

you been we a that the mixed. the little in industry that has bit make it's hit, impacted. at If can have And also industrial has but that, whole you of been staffing, look which been comment general,

However, particularly the customer competitor say the a is are gas Houston question that better, to industry advantage is market. or not We of of their faring doing said, that, going I on. oil and than there would better as the are others. pickup hope that layoffs that in there's by impacted a take bit base performers some in

week comparative own the off. in and see look I which to volatility starting is statistic out if are The leveling some How but the far Bullhorn flattened week. weekly. whether our industry upward? And look you down group there, we that statistics banking to an what's called we're we then put moving Are Index, sector or at out? heavy to at we And internally both data got Staffing data peer hit, we're there's see pretty of are? And

the Meaning changing to on in in that everything a XX% down starting of digits basis. You're on single to instead down portion professional see comparative else, is staffing see week-to-week starting basis XX% to going down you're a downward. and

flatness that, -- but that. the mirroring very are first, we to that So found hopeful got you we're we find and bottom,

billable we're more the lumpy upward which moving want And perm the I some what call it to see consultants in still is direction. in in movement now is business, headcount to starting right and

we bottom looked healthcare yet. and particular, think I'll something reached hit not been has tell segment, that in staffing, So you into, nurse we I hard, the got

Allied which audiologists, physical we support pathologists, is upward. pockets of and has speech staffing, allied health moving includes therapists and what other done call There's better success.

look Now spotty there's Manpower, Adecco, Robert big Randstad you at performance Half, others, the there. companies, and see

Some of and they're their global. sectors,

have Clearly, as they So foreign hit. well. been operations has global

So in and results they've overseas had mixed U.S. the

of a others, verticals down typically their a are but the better bit across performing board. Some than comparative on they're basis

the I forth. of do that And with materials has practice call vertical, of say its Robert of into competitor and statement part consultative what of will cuts on general, moving for move performance. some IT moved for has that up a would with by with the a our type consulting of the down. business, as of But be and is I but ASGN heavy up be that and trend but Half, business forward, units. a enhanced having a food consultative has nature and strategy now. they're food approach are hopeful your or work going been ton accounting that is staffing, projects be have to upscale impacted more I of government IT finance, chain chain, as in won't food the and consultative chain it, too unit, going they their Protiviti some federal They so up call business part the a our

there as to faster would way through the build be one acquire And acquisition is trying well as but to get space. to internally, that in route

a business to is that doing. putting addition, In into we're forward stream our recurring something model looking revenue

take those do let's next the do Kim, want Okay, to So question? next is. to fronts. add moving what to that? aggressively you question on X the we you anticipate see anything want Kim

Kim Thorpe

I don't -- question. Yes. Derek, that showing not isn't believe last I'm I the another question?

Derek Dewan

talking same is it's and question. prior -- just the Well, basically which competitors, about industry the as

going see XXXX. So the be we move leveling we there's covered do feel it pretty optimism can going further a steps off We're group in good. upward a peer you to we cautious But climbing to not movement. and upward that hockey the into but for as tell stick, I we're

The is adjusting other to current environment. the thing we're structure cost our

we've realized cost, made and do concludes dollars. of So to spend evaluation some in And our talk to think you pretty constant getting call it's you but and for we today. where we've good That best benefits for we'll more. the quarter. will I on cuts our reductions a much from Thank next

GEE (JOB) 14 Feb 252025 Q1 Earnings call transcript