Q1 2022 GEE Group Inc Earnings Call
Okay.
[music].
Yeah.
Yeah.
Hello, and welcome to the G Group fiscal first quarter ended December 31, 2021 earnings and update webcast conference call.
I'm Derek do you want to.
The chairman and Chief Executive Officer of G Group.
I will be hosting today's call.
Joining me as a co presenter as Kim Thor, our senior Vice President and Chief Financial Officer.
Thank you very much for joining us today.
It is our pleasure to share with you.
E E group's results for the fiscal first quarter ended December 31 2021.
And to provide you with our outlook for the remainder of our 2022.
Fiscal year.
Some comments Kim and I will make may be considered forward looking including predictions and estimates about our future performance.
These represent our current judgment of what the future holds.
Subject to risks and uncertainties that actual results may differ materially from our forward looking statements.
These risks and uncertainties are described in Monday's earnings press release, and our most recent Form 10-Q , and other SEC filings under the captions cautionary statement regarding forward looking statements and forward looking statements Safe Harbor, we assume no obligation to update the statements made on today.
As call. During this presentation. We will also talk about some non-GAAP financial measures.
Reconciliations and explanations of these measures are including our included in Monday's earnings press release.
Our presentation of financial amounts and related amounts, including growth rates margins and trends around it are based upon a rounded amounts for purposes of this call and all amounts or percentages of related items presented or approximations accordingly.
For your convenience our prepared remarks for today's call are available in the Investor Center of our website Www Dot G E group Dot com.
With that business behind Us I'm very happy to report that our first quarter of our 2022 fiscal year was another outstanding quarter and arguably.
One of our best ever.
Beginning with net income of $16 7 million or 14 cents per diluted share.
Solid consolidated revenues of $42 8 million.
And gross profit and gross margin of $15 6 million and 36, 4% respectively.
Our non-GAAP adjusted EBITDA for the quarter was $3 9 million, which represents a nine 1% margin.
Compared to revenue.
This is the third consecutive quarter of solid growth and improvement since the June 32021 quarter.
During which we completed the final steps eliminating.
Over $100 million in debt and elimination of $12 million in annual interest costs.
We're very pleased with these results in particular for <unk>.
Cause customarily the strongest performing quarters.
Our our quarters ending in June and September the.
2022 fiscal first quarter performance not only exceeded the comparable prior year quarter. It also outperformed.
Each of the two sequential prior quarters ended the September 30th 2021 and June 32021.
The 24% overall growth rate and revenues was achievable in part because U S. Labor market continued to harden and trend back toward the pre COVID-19 levels are people took it from there by delivering outstanding value to our clients for their HR dollar spent with us.
As previously reported in December we obtain forgiveness from the SBA for the remaining cares Act PPP loans and related interest <unk>.
$16 8 million in the aggregate.
This resulted in a gain from debt extinguishment and accounted for or larger than usual net income of $16 7 million or 14 cents per diluted share and a substantial portion of the improvement when compared with the fiscal 2021 first quarter results.
However, even excluding the effects of the $16 7 million in gains.
A noncash goodwill impairment charge of $2 $2 million and 509000 of accrued severance pay our diluted EPS would have been.
<unk> for the fiscal 2022 first quarter compared with <unk>.
A negative <unk> <unk> for the fiscal 2021 first quarter.
<unk> per share improvement.
Tim will explain in a few moments when prior quarters are adjusted to remove similar nonrecurring or nonoperating items, our pro forma diluted EPS for the trailing 12 months period ended December 31, 2021 is 10 cents per diluted share.
Which present represents a pro forma 16, 7% annualized return.
On yesterday's closing share price of <unk> 60 per share.
Our non-GAAP adjusted EBITDA for the 2022 fiscal first quarter was $3 9 million non-GAAP adjusted EBITDA for the trailing 12 months ended December 31, 2021 was $12 6 million.
Before I turn it over to Kim I, just wanted to say again, how very proud and amazed I am by our dedicated employees. They are the key to our success and at this time I'll turn the call over to our senior Vice President and Chief Financial Officer, Jim Thorpe, who will further elaborate on our results for the 2020.
Two fiscal first quarter Kim.
Kim.
Thank you Derek and good morning.
Consolidated revenues were $42 8 million for fiscal 2020 to first quarter.
This was up 24% from.
From the fiscal 2021 first quarter.
2022 fiscal first quarter is the fourth consecutive quarter of revenue growth.
Over prior year comparable quarters since the beginning of the pandemic and the third consecutive quarter of double digit top line organic growth.
Our professional staffing services segment revenues were $38 $8 million up 31% from the fiscal 2021 first quarter.
Professional direct hire a permanent placement services revenues were up 82% over the comparable prior year quarter. They comprise 16% of total revenues for the professional services business segment and.
And 14% of all revenues professional contract services revenue.
The fiscal 2022 first quarter also grew nicely up 25% over the fiscal 2021 first quarter, our it services and markets at agile access data.
Consulting and F&I technology accounted for 48% of our professional services business segment revenues and were up 21% year over year.
The other professional services end markets finance accounting.
Administrative and office engineering health care and other accounted for the remaining 52%.
Our professional services business revenues and were up 43% in the quarter year over year.
The industrial services business segment revenues, representing 10% of total revenues for the quarter were down $1 million as compared to the fiscal 2021 first quarter.
We experienced a resurgence of pandemic like conditions associated with the Delta and then omicron variance in our Ohio markets.
Recurring school of business closings, and interruptions, which were reminiscent in some respects of the early COVID-19 .
19 pandemic.
These conditions begin to recede and we exit the winter months and weather interruptions, such as the recent winter storms, we all experienced across the U S. We expect our light industrial business to begin to recover and grow again.
Collectively our professional services segment direct hiring contract revenues.
As a segment comprised 90% 85% of our total consolidated revenues for the fiscal first quarters of 2022 and 2021, respectively.
Looking at our consolidated revenue from the viewpoint of all contract services, both professional and light industrial combined.
Impaired with direct hire all of which is professional combined contract revenues were 86% and 90% of our consolidated revenues for the fiscal first quarters of 2022 and 2021, respectively.
Direct hire revenues were 14% and 10% respectively.
As Derek mentioned, our direct hire revenue performance was outstanding once again in fiscal 2020 to first quarter and was 100% gross margin was instrumental in achieving our outstanding first quarter results.
Consolidated gross profit dollars were strong at $15 6 million up 24% in the 2022 fiscal first quarter as compared to the 2021 fiscal first quarter.
Our professional staffing segment 2022 fiscal first quarter gross profit dollars were up 46%.
As compared to the comparable prior year first quarter.
The consolidated gross margin percentage for the fiscal 2022 first quarter improved over fiscal 2021, and both quarters were strong at 36, 4% and 36, 3% respectively.
Selling and selling general and administrative or SG&A expenses were approximately 29%.
Our fiscal first quarter of 2022 consolidated revenues.
Bear with approximately 27% of revenues for the 2021 fiscal first quarter.
Higher incentive and bonus compensation associated with near record record revenue production.
And $509000 of accrued severance pay contributed to this higher fiscal 2022 first quarter percentage ratio underneath that the company continues to benefit from higher productivity and operating expense savings in several areas achieved during the <unk>.
Rick came before.
As Gary mentioned in his remarks, we achieved net income of $16 7 million or <unk> 14 per diluted share in the quarter, which was larger than normal due to the gains on forgiveness as our four remaining PPP loans.
'twenty two fiscal first quarter results also included two nonrecurring or nonoperating charges.
One 200 215 million noncash goodwill impairment charge.
And a $509000 accrued severance package associated with them eliminated positions.
Pro forma net income that is excluding the effects of these three items was two cents.
Per diluted share in 2022.
Fiscal first quarter compared with the negative two <unk> for the 2021 fiscal first quarter, a 4% per share improvement.
Our pro forma diluted EPS, excluding the effects of similar nonoperating <unk> nonrecurring items for the prior three fiscal quarters.
Would have been <unk> <unk> per share for the fiscal quarters ended September 32021 June 32021, and March 31 2021, respectively.
This results and pro forma diluted EPS for the trailing 12 month period ended December 31, 2021 when combined.
10 cents per share and a 16, 7% annualized return on our common stock as Derek spoke of a moment ago.
For those of you who participated in our 2021 follow on offering recall that one of the main objectives of that offering was to redirect a 16% interest we were paying the same senior lenders to the benefit of our common shareholders instead.
These are the first installments towards that objective.
Adjusted EBITDA, which is a non-GAAP measure was $3 $9 million for the 2022 fiscal first quarter up 300000 or 8% over the prior year quarter non-GAAP adjusted EBITDA for the trailing 12 months ended December 31, 2021 was $12 $6 million up three <unk>.
Hundreds or two 4% from our adjust the build out for the fiscal year ended September 32021.
As we reported last quarter. These results continued the growth trend since the onset of the COVID-19 pandemic combined with cost savings from integration and restructuring activities, both before and after the effects of COVID-19.
These measures have resulted in higher productivity lower operating cost improvements in earnings and quality of earnings and solid cash flow generated from operations with the many improvements we've now made we.
Believe the positive trends in the company's results are sustainable.
A reconciliation of G group's GAAP net income to the company's non-GAAP adjusted EBITDA for the quarters can be found in the supplemental schedule in our earnings press release.
To conclude our current our working capital ratio at December 31, 2021 was two five to one as of December 31, 2021. The company had consolidated accounts receivable net of $21 $2 million and implied days sales outstanding or DSO.
So of approximately 46 days.
We reported positive cash flow from operating activities of $2 $3 billion for the 2022 first quarter, our liquidity position is very strong.
Finally, our net book value per share was <unk> 86 per share at December 31, 2021.
Now I will turn the call back over to Derek.
Okay.
Thank you Kim.
The 2022 fiscal first quarter is one of our best ever and a great start for fiscal 2022.
At December 31, 2021, the company had $12 million of cash at the bank and no borrowings outstanding.
On our bank ABL credit facility.
With over $13 million and availability now.
Now that all of our former cares Act PPP loans have been forgiven by the SBA.
Our debt leverage is nil.
Yeah.
Okay.
This all greatly enhances both the current enterprise value and financial fundamentals of our company exited significantly improves G group's prospects for future profitable growth in 2022, and beyond we are well positioned to augment organic growth.
With strategic acquisitions.
G Group has continued its strong momentum from the fourth quarter of fiscal 2021 and fiscal 2022.
And we expect to report good results for the remainder of our 2022 fiscal year and beyond and.
And finally, we'd like to again, thank our wonderful employees.
For the professionalism hard work and dedication without which we could not have accomplished.
All the good things, we have this quarter and this year.
Now Kim and I will be happy to answer your questions. Please just ask one question via email and rejoin the queue with a follow up as needed. If there is time, we'll come back to you for additional questions.
Thank you very much and we'll proceed to the question and answer session.
Yes.
Okay.
Yeah.
Yeah.
So the first question we have is from Spain.
And.
Thank you for your complements on our.
On the company's.
Performance and what we've done to date.
Question is.
You have earned the possibility for share buybacks, you've been generating cash.
Should be reinvested in the company and if you buy another company.
You can use the shares purchase.
The answer to that question is spot on that we are capable of doing share buybacks.
Would we consider it we will consider it and those shares could be.
Issued from the Treasury in connection with an acquisition.
And I'll answer the second question is just the same.
Person.
The question was you made an offering in 2021 and equity offering.
I think you rolled out.
Another equity offering before an acquisition.
The answer to that is correct, we don't need to do equity offerings at this point clearly.
And.
Please be supportive of shareholders.
Going forward and we deserve it and thank you very much we agree with you.
And.
We will follow through as discussed thank you for your question.
We will go to another question here in a second.
Okay.
Hello.
Yes can you take the next question sure.
Given the business requires little tangible capital to operate what are the barriers to organic growth that that may be make it not as vocal within the strategy is M&A.
That's a great question.
<unk>.
We were in a very competitive industry.
It does have very solid organic growth, but it's low single digit or.
Organic growth and to achieve the growth objectives that we've established to internally for ourselves.
That will that really sort of dictates us to look for strategic acquisitions.
When we when we formed <unk> in 2015 that is we got reversed acquired G.
It was.
Only about $40 million in revenue and wasn't really making money.
Today, we are trending up towards $160 million in revenue we've done five acquisitions. We've said the last couple of years.
Integrating assimilating.
Building platforms, with which to take the next big steps and to be able to acquire companies and assimilate them and integrate them efficiently and now we're in a position to be able to do that so it will be a combination of both we will always focus on our own.
On organic growth and we're doing very well organically.
So.
That's that's my answer.
Thank you Kim Youre welcome the.
The next question.
Is.
Unless catastrophe hits within the industry or the company it seems that the company.
Is clearly undervalued.
To a large degree given the large cash position can we expect a tender offer or a buyback so that the M&A strategy can begin to pick up again.
The answer to that is we're always looking at acquisitions and we do have a pipeline.
Good targets.
This person is very correct or the shareholder.
And that we are now positioned to be able to do those things.
And there is a second part of this question or another question in connection with it says.
During the previous acquisition spree, the double digit growth rates on that are double digit interest rates on the financing for it.
Crippling and ultimately led to the stockholders.
Yeah.
Being diluted because the equity offering going forward, how will the balance look like between that cash and equity to finance M&A.
And is there going to be not to take on high rate financing in the future. The answer is Ah.
A combination of cash.
Equity and seller financing will be used and possibly bank financing off our low priced ABL and we are not going to get into a high rate financing.
Nor are we going to do an equity offering.
In connection with M&A.
We have the capacity to do what we need to do.
With our balance sheet today, and without getting into high rate debt. So that's a good observation and I agree with exactly what was said.
The next question says congrats on the recovery.
The case for reversed reverse stock split and a share repurchase or obviously compelling.
<unk> trading at <unk> 60, a share and only <unk> five times EBITDA.
No meaningful.
Acquisition.
Can match the return on buying back stock here and the company has cash to begin a program.
Most investors will not look at stocks trading below a certain price reverse split solves that why has it taken so long for the board.
To act on his essentially the obvious moves.
So the reverse split is something that you contemplate if you're staying with your stock price below a buck or otherwise.
One of the questions I get on that is.
Is there a break the Buck rule so to speak that you have to worry about from the exchanges and we are on the New York.
<unk> and the New York Stock Exchange does not have a hard fast rule like the NASDAQ does on breaking the Buck.
They look at your capitalization and your performance and were solid as a rock so I don't anticipate that being the driver. However.
The reverse stock split can make sense when certain institutional investors can't bias stock below a certain threshold price. So it's something that the board has considered and discussed extensively and I.
I would say nothing's off the table and neither is a stock buybacks stock buybacks.
I personally have done a $300 million stock buyback and my predecessor company that I was running.
And it proved to be very good and removing.
Dilution to EPS so.
All of these things are definitely on the table and discuss frequently with our board.
And you can look for us to.
To execute as we've discussed previously the.
The next question is you mentioned inside are biding buying window is small so when is the next insider buying windows.
It's usually the next two weeks or so after the earnings settle in a couple of days that kind of lifts our blackout period, unless there's some other reason.
With nonpublic information that's materials.
That we're aware of as insiders.
Yes.
In previous remarks.
I personally mentioned the $1 billion revenue target by 2025 was mentioned is it still in the outlook and accompanying this what are the.
Owners, earning share targets to go along with the revenue targets without getting into too much detail.
Our operating margin Slash EBITDA margin. However, you look at it.
Well.
Is approaching double digits right now and it will increase as we have operating leverage.
We will not have to spend a lot of money on SG&A.
In connection with an increase significant.
Of revenue and the top line so.
The growth to $1 billion, we set the targets Super high done that before and achieved it or exceeded it.
It is not unusual it clearly would result.
And a larger acquisition or a series of acquisitions to get there to augment internal growth, but I believe that this is a scalable business and size matters over time.
To develop the most profitability, we can we need to utilize our people.
And our infrastructure to leverage that.
Our.
Next question says great job on leading the turnaround.
Excluding the severance SG&A was up some is it expected to continue.
Do you expect to leverage SG&A as the year progresses, how would you expect it to compare to the 27, 7% for the full year 2021, So Kim why don't you come.
Comment on SG&A.
And it's.
It's up some but it's why don't you tell them why it's up.
SG&A was up this particular quarter, because we took a charge of $5 million charge to eliminate a position and believe it or not thats about a one per almost a 1% impact.
For the quarter and then also because the revenue growth was so strong.
And both in this quarter and in the September quarter, we paid more in bonuses and incentive comp.
We had a step up as opposed to you know a pro rata smooth ramp up.
Bonuses and.
And incentive comp so those two things combined caused SG&A.
Pop up from 27% to 29%.
But let me say back.
Back in 2018, and 2019 SG&A was running well.
Well above 30% every quarter.
Some cases $32 33.
We're doing we will continue to manage this to keep the SG&A.
Hello.
It is now as.
As Derek mentioned in one of our goals is to get to double digit EBITDA.
Double digit EBITDA margin.
So.
And I'll.
I will tell you I think.
Done a fairly good job of.
And making sure that we get the most out of our SG&A dollars, but yes that will always be and then again when we grow as Derek said that number will come down even though the percentage will come down even more.
Thank you Kim.
The next question refers to strategic acquisitions.
That's just how close are you to a strategic acquisition.
But what we've tried to do was position ourselves and our balance sheet. So that we can make the acquisitions not only make them accretive to earnings per share.
But also to make sure that.
We keep the strength of our balance sheet.
And we have acquisitions in.
In the pipeline, we were waiting to get our PPP loans forgiven, which occurred in December .
So now.
We have cash we have an unused credit facility.
As appropriate we have equity that we could issue connection with an acquisition.
We have stock buyback potential too.
And I would say that the combo of all of those things.
Would be more likely to occur.
In the near term so.
The key is with acquisitions as well.
We have to see how they perform during the Covid era.
Coming out of Covid, we want to see normalized numbers.
We want to make sure they're strategic.
The acquisitions that we're looking at.
Almost exclusively related to information technology, which is the fastest growth sector.
And has the highest profitability and staffing and otherwise so.
Our landscape looks good were charged up.
We also wanted to get the internal growth machine going so we can fund.
With operating cash flow.
Acquisitions, and buybacks and everything else that that are.
Or in what I call the Arsenal of improvement.
Regarding shareholder value.
EPS EBITDA net income.
And we will move forward.
The next question is ties into one of the earlier ones given the variable nature of many of our expenses.
And the variable nature is basically recruiting and account management costs and they're tied to volume.
Theres commissions involved there on performance and things like that.
And just.
Salaries and headcount internally our productivity is very high.
In terms of <unk>.
Each individual in the company and what they are able to produce either on the recruiting end or on the sales and the business.
So do we have scale.
And can we expand the answer is I think I hit it earlier.
The goal is to keep their infrastructure tight in your cost and to scale up we are adding headcount internally, but that is production head count not overhead or administrative head count.
The head count, we're adding our recruiters and account managers remote recruiting.
Virtual recruiters.
Our demand is off the charts. So we have we have what they call the champagne issue.
Phil as many orders you can of course, we're feeling the most profitable orders first.
Our spreads are high our gross margins high.
Even without Perm, our gross margins high.
Particularly obviously in the professional division or.
Our segment.
So great question, Yes, we will scale and we can hold SG&A should drop as a percentage of revenue at some point when our revenue.
Expands what do you expect for organic growth rate going forward, what portion is volume versus pricing.
That's a really good question. So I'll answer the second part first.
As we raise wages for contract workers.
That will improve because of the way, we mark up on payroll, what we called the spread or gross profit dollar per hour.
So there is margin expansion going on from a pricing standpoint, and yes, we billed the customer more.
And that's that specific situation, which is pretty predominant right now.
And our business units, what organic growth rate going forward do you expect.
You know to grow double digit organically is a good target I would say the higher single digits initially.
<unk>.
And that's what's limiting us is really.
Adding more horsepower quote people production personnel recruiters and account managers, so we've been adding them as fast as we can.
The other thing that's very notable is that our retention rate of internal staff.
And our longevity their tenure with our company is outstanding.
So we're doing everything.
Right, we just need to do more of it and we will and we are.
Kim the next when asked about our expected tax rate for 2022.
And do you have net operating losses to offset.
Taxable income from a cash perspective.
The answer to that is we do expect a low effective tax rate and we do have Nols.
To help offset that for this year.
Great.
Do you expect negative neutral or favorable cash flow related to working capital in 2022, you want to take that.
Yes.
Right now.
Our EBITDA.
As a fairly good proxy.
For cash flow and when I say EBITDA.
Pure EBITDA.
Because we know we have no interest right now prior to that.
Big chunk of our cash flow was growing the interest that is now not happening.
So that cash is now redirected inward.
So.
Sure.
That's a pretty good way to look at.
Gauging, our cash flow for the year.
Okay great.
What are expectations for revenue growth in fiscal 2022 should we expect good operating leverage.
Our EBITDA and earnings growth exceeding revenue growth and free cash flow.
We hit some of those points, but Kim why don't we cover that as well yes.
You look at if we break our SG&A down further.
About two thirds of it is what I would call selling expense, which really funds all of our people in the field.
And of that amount about 40% of that is variable comp.
Bonuses incentives other than base.
And then.
The rest are our salaries those will step up as we hire more people the salary portion and of course, the variable portion will go up.
Kind of pro rata as sales increase.
But are the other third of our SG&A is what I would call pure G&A and those costs tend to be more fixed.
So I would expect that third to remain relatively stable. So if you follow all that math.
Then we could scale down.
Somewhere.
We were we're citing breath of 27%, 28% right now that could scale down one or 2%.
With that level of growth that we're looking forward fiscal 2022.
Okay.
The next question says great quarter, Derek and Kim would it be possible to get a sense of the range for revenue and EBITDA growth for 2022 and then.
This ties into it can you help us with growth expectations for this year 2022 should we think 20% given year over year comps it gets harder, but the labor market remains tight.
We can both work on that so.
Clearly.
You know when you're coming off the downturn. There is some growth that's recovery growth then layered on top of that there is.
Growth because business is great.
The labor market's great hiring and so forth is conducive to our industry and our company, particularly in the segments that we're in which I believe we're in the best segments with a huge focus on it.
So 20% on comps get harder.
In a tight labor market that is a true statement.
A tight labor market, but.
It doesn't mean that we can't grow significantly.
20% would be a great target.
Organic growth in any business.
I've been able to do that historically in our predecessor company and we are well positioned to do it but I would I would tend to think that you know a more normalized growth expectation is a lower double digit and augmented with an acquisition you could push it over 'twenty Kim you want to add anything to it.
Yes, I would just say that first.
First of all.
Going into last year last year fiscal 2021, and the early part of that you are coming out of the pandemic here.
We overshot our growth Mark.
Significantly.
We thought we would finish.
<unk> finished the year at about 100.
39, or $140 million of revenue, we ended up almost $149 million.
There is still some catch up happening in the economy right now.
As we pointed out in our remarks.
Somewhat unusual to have a December quarter as big as we just had because normally our June and September quarters.
More active and unemployment.
Opportunity, but again because the country is all still yes, the labor market is still a hardening.
We're having this quarter.
Conservatively.
Yes, we are.
Or kind of pull back a little bit of the March quarter, because the March quarter is typically.
Kind of a lower number of work days and.
There is weather and holidays and the like so.
We're not expecting.
Conservatively, we think March will drop a little bit, but we think we will end up clearly will be above.
2020, and above and above 2019.
So that's kind of how we're looking at it and again I think high single digit low double digit is not unreasonable.
The next question is do you have.
Yeah, sorry organic.
The next question.
Do you anticipate as inflation has increase with inflation premium.
We passed on to clients is labor.
Charges have increased across the U S.
I mentioned that previously the answer is yes, we've been able to pass it through and it does increase.
The gross profit dollar per hour build and the gross margin percentage.
Share buybacks were supposed to be part of our triple option football play for the last conference call.
Why have we kept it eliminated from our playbook, it's still in the playbook.
We still have the triple option.
And I think that.
One of the hesitancy is before we executed our play so to speak or called the play was to get our PPP loans forgiven, which occurred in December .
So.
Right.
Also.
We wanted to see another quarter of good results.
As well and you know patience is a virtue that I've learned to have overtime, it's called old age I guess, but I.
I can safely say that the playbook is still there.
And now it's time to execute the place.
And.
I think all of these questions are things we focus on.
Every day, so yes the option.
I'm not going to tell you right now, which play we're gonna take out of the playbook.
But our goal is to score touchdowns and win.
We have it in our Arsenal.
And I think that it's a reasonable expectation at some point.
As well with the stock trading at four times EBITDA why would you consider using equity for acquisitions that would dilute shareholders as target would be priced at a higher multiple excellent point.
Unless we can see accretion to earnings per share.
It makes no sense to use your own equity at depressed levels agree with the comment.
I recall from the previous earnings discussion there would be a roadshow to further market.
Ah the great performance of the company to institutional investors and analysts can provide some additional insight as to the progress on gaining further analyst coverage and further institutional investment.
Work very hard at that.
You've done a few conference investor conferences since the last call. However will be will be involved in the Sidoti conference in March.
And we also anticipate analyst coverage increasing.
Working with analysts now.
Giving them appropriate information that they can move forward.
And pick up coverage on our company so is that a reasonable expectation yes.
We have done subsequent road shows, but I think the important thing.
And we've done them subsequent to the equity offering that we did.
But I think what our target is here is to increase awareness with institutional investors.
Upsize.
So that we can get positions in our equity that are substantive and our longer term.
So that's the key to.
Improved stock price performance of course results matter and we were delivering those so yes exposure is critical and the analyst community and at conferences and road shows all of which will happen at all in progress.
So we'll be putting an announcement out about the institutional conference that we're participating in presenting at <unk>.
And the timing of that will probably correspond with some analyst coverage as well.
Our expectation and it's reasonable.
Regarding organic growth can you provide some additional insight on further selling of additional products to current clients or on boarding of new clients.
All of those things are happening happening.
Our product mix.
In terms of what we're able to offer.
Clients.
Has changed but we've also.
Can count it on what we do and what we do well. So we don't want to dilute our offerings to clients by trying to do more than we.
We're capable of delivering but we have added.
Based on market demand select service.
Lines, particularly in I T.
We also have project type work and when we get a big project, we're able to staff up hundreds of people.
For several months.
One of those projects we did.
Involved you know kind of the Covid response.
But we were hired to participate and staff centers to provide the resources for.
Amelioration of Covid.
And things like that so we are able to move quickly and Marshal resources.
And get our contract work.
Both the new <unk> and our head count up.
So yes, we are doing that throughout the industry I have heard a lot of companies investing in technology. Given this would increase productivity across the industry do you expect more competition on the bill spread.
In tech not the technology, we have the state of the art our front office system.
Applicant tracking system.
This is by far the best in the industry.
Some of the larger competitors habit, many smaller competitors do not.
We also use what I call the the realm of job boards like Linkedin recruiter dies for I T. Careerbuilder monster. Indeed, all of those tools are available to the majority of our people.
And we are speed to market when you find the candidates.
Critical so.
We are.
We are very very.
Astute and using technology and do you expect more competition on the bill spread not really today. Its more can you get the right person than the pricing.
How do you how do acquisition multiples in your pipeline.
Compare to your own valuation of five X.
That's that question dovetails with the prior question, if you're if you're a valued at five X and you pay a tax for our company.
Clearly I T H eight paid acts as a reasonable target range maybe nine.
Don't want to use equity basically to do that and again can you get deal accretion from it and I think structurally you can't seller notes.
Cash.
That works and sometimes we do it.
Now so that we see.
The growth and pay for the growth as earned so I agree with that.
Observation there.
Any other questions. We have time for more we're getting towards the end, but we have clearly have some time as you need it.
These are excellent questions hopefully we've answered.
That's factually those questions.
So.
I wanted to speak about a few things since we're getting towards the end of this.
<unk> conference call.
The strength of the company is phenomenal at this point.
We have great leadership in the field.
With good tenure.
That's really difficult in a very competitive environment for labor and leadership.
From the top down.
Our field personnel.
You've done a fabulous job are buttoned down.
We don't have what I call losers.
We're not struggling at any particular office much at all.
And if we are.
Those offices are either gone or they there.
<unk> staffed and producing so.
We've gone virtual on a few offices in some markets. That's it that's a trend.
We get rid of lease costs.
People like it it's easier to attract talent in many cases to do that we have rotational shifts at our offices.
We have a lot of flexibility.
For our people.
And it's paid dividends, how we performed during Covid was also.
<unk>.
What I think it was it was a really fabulous.
Reaction to the pandemic in terms of how hard our people worked how we were able to work remotely with our technology.
We do have teams we have office 365.
We have.
We have state of the art tools.
In the offices and.
And people can work remote to there's a lot of desk.
Notebooks and so forth. So we support our teams so they can.
Work from home.
As necessary or permanently.
Depending upon their status and what our design was for that particular market.
And we're adding talent everyday.
To grow and that's how in this business you grow you have to get maximum capacity from your existing personnel, but the only way to really fill all the job orders is to increase and.
In particular your recruiting horsepower in this market and we have <unk> and continue to do so.
So at this point.
Further we have one more question if you want to take a look oh.
It didn't just come in yes.
Is that a how do acquisition multiples in your pipeline, especially for it staffing compare to your own valuation of five X is that the one you're referring.
Hi, all my questions have already been answered.
Oh got it Okay, Hi, Oh, Okay, you want me to say that one because it's a really.
Complementary it says hi, all of my questions have already been answered just wanted to give it a quick and simple feedback great job. We're very pleased with how you guys Act and very happy with our position from last year's offering we do share the ambitious revenue target for 2025 and strongly believe.
You guys are capable to execute best wishes from Switzerland.
Well boy, that's great we like that.
Thank you very much for the comment we will work hard to continue that momentum.
We have another one in insiders continue to not buy any shares is this something that is talked about with our directors and C suite team.
Insiders have a lot of shares.
Leading me and a lot of shares that were paid for with cash they are much higher than where we're trading today. So.
Our targets are high.
For us what we have expectations for for our stock price.
And we all have a stake in the game part of the problem is too that.
When the stock dips.
We're sitting on results that have been reported yet we can't we can't buy in at that point, where we have acquisitions that we're considering or other information that's not public at that point. So it's a little trickier today.
To buy at certain times, but yes insiders, we talk about it our directors often asks can they buy at this point and sometimes we have to black about because of what I just discussed I've seen for a review of an opposite they said they felt cash flow to the company working remotely obviously the company provides tremendous value to.
The worker, but how does the company make sure that the virtual workers field tied in.
I can tell you the virtual workers and all workers have meetings every day teams meetings and are able to interface with our leadership in the field.
By the way that's an excellent question.
And a good observation when you have remote workers.
Theyre not on an island and they have to feel part of the team.
In particular, our remote workers.
Our tenured so and.
Have a lot of experience so it's easier to.
To manage that workforce than what I call you know.
Neophytes.
No.
We do communicate regularly and often.
Several times a day at times, we can track their productivity, whether applicant tracking systems. We can see number of calls made number of sales and all that.
And we absolutely.
Make sure they feel part of the team. So that's something that's new to pretty much the workforce.
A byproduct of Covid, but very good for us by the way.
Covid was kind of a blessing in disguise it forced good behavior and it's forest.
Productivity and economies of scale and all those things.
You should have been doing.
It was a wake up call to tighten the belt, a little bit and to pursue alternatives.
And the workforce, it's a different world today, and we've responded I believe.
Very quickly, we're nimble and we're quick to adapt to environmental changes.
Let's see what else we got.
I agree with the gentleman in Switzerland.
Great job, let me, let me just say that and thank you for that.
My comment is I am I'm not satisfied.
It may be.
K, but I'm clearly not satisfied because we.
We want to do and will do much better.
We want to get our stock price up and do the right things.
One of the right things as continued good results from operations.
And then expanding.
And using the tools that we mentioned before.
Where we have the so called Triple option playbook. So all of those things will happen give us a little time and patience, but not a whole lot cause them not to patients.
I have it.
That stock price sitting there.
Got.
Okay for now but it's.
It's not okay.
And the long term so.
We're all part of this and we appreciate your interest level.
And we also.
<unk>.
Invite you to keep in touch and to look forward for good things.
We're very bullish.
On 2022 and beyond.
Alright.
There is one more quiet we have time for one more question I think it's a pretty good one do you want to okay.
What do you have to say to those that state that peer play online staffers.
Your business.
As lower price substitutes.
That's question comes up a lot and there's a few online staffers out there.
I know of one that's public.
And losing money, but.
Again online staffing is no different than I use the real estate analogy.
That's out there. So you have a lot of what I call website real estate.
Sites that actually our exchanges medium of exchanges for valuing real estate and in fact advertising real estate and so forth.
Realtors that actually deliver the sale and close the sale.
Are killing it so those sites have been used as tools and visibility.
And I believe that.
At some point, we'll have our own version of an online exchange your medium where the hiring manager can engage into a database. If they have the recruiting horsepower remember theres a theres a task here you can have an online exchange, but somebody's got to go in there and sort out thousands of resin.
We have experts doing that every day from a narrow database. So aggregating a bunch of revenue I mean of resumes into a database is just one facet.
Parsing, the resumes by skill set and otherwise.
We used a little bit of artificial intelligence, we had a tool used but the machine learning aspect of it was still flawed because it was based on human.
Humans and their biases by the way so we've really sharpened the pencil on narrowing down what tools, we use and how we use them to shrink the database to only quality candidates that have the skill sets.
So those aren't mature enough actually but they serve a purpose of aggregating resumes that can be tapped. But then you have to have further analysis on that but.
But remember Derek also 90% of our business, we actually employ people employing people is a big value add.
That a pure play online can do.
Right and everybody you have to assume that every potential worker. That's available we will post on multiple job boards as well as the online exchanges, so Linkedin recruiter.
Dice for I T Careerbuilder monster.
Indeed.
ZIP recruiter I mean, we have them all sense, we have text messaging texts kernel I can go down the list so.
I view those as additional tools.
And we May in fact have our own version of it.
As an alternative for a customer, but you know youre going to find there was another one out in Texas and they created a portal and a whole game and it literally had to sell because it just couldn't get off the ground and it merged with another so I don't view that as a threat I view it as an added tool to use and delivering resources.
That concludes our presentation for today, thanks for coming on look for good things going forward and those of you that are investors. Thank you for your investment and those who are not we'd love to have you as a shareholder. Thanks again have a wonderful 2022, and we'll talk soon.