Q4 2023 GEE Group Inc Earnings Call
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Hello, and welcome to the G group fiscal fourth quarter and year end September 30 of 2012.
Three.
Yeah.
And our update for 2024 webcast Kontras conference call.
Derek to one the chairman and Chief Executive Officer of G Group.
Derek: And we will be hosting today's call.
Derek: Joining me as a co presenter is Ken Thorpe or senior Vice President and Chief Financial Officer.
Ken Thorpe: Thank you for joining us today.
Ken Thorpe: It is our pleasure to share with you.
Ken Thorpe: The group's results for the fiscal year.
Ken Thorpe: <unk> quarter ended September 32023.
Ken Thorpe: And provide you with our outlook for the fiscal year 2024.
Ken Thorpe: In the foreseeable future.
Speaker Change: Some comments Kim and I will make may be considered forward looking.
Speaker Change: Including predictions estimates expectations and other statements about our future performance.
Speaker Change: These represent our current judgment of what the future holds and.
Speaker Change: And are subject to risks and uncertainties. The actual results may differ materially from our forward looking statements. These risks and uncertainties are described below under the caption forward looking statements Safe Harbor.
Speaker Change: And in Monday's earnings press release, and our most recent Form 10-Q Form 10-K, and other SEC filings under the captions.
Generic statement regarding forward looking statements and forward looking statements Safe Harbor.
Speaker Change: We assume no obligation to update statements made on today's call.
Speaker Change: During this presentation. We will also talk about some non-GAAP financial measures.
Speaker Change: Reconciliations and explanations of the non-GAAP financial measures.
Speaker Change: We'll address that we address today are included in our earnings press release.
Speaker Change: Our presentation of financial amounts and related items, including growth rates margins and trend metrics around it or.
Speaker Change: Based upon rounded amounts for purposes of this call.
Speaker Change: All amounts or percentages and related items presented are approximations accordingly for your convenience our prepared remarks for today's call.
Speaker Change: Are available on the Investor Center of our website Www Dot G group Dot com.
Speaker Change: Haven't turned in a record performance and results for the fiscal 2022 year.
Speaker Change: We encountered significant macroeconomic and staffing industry particular headwinds in fiscal 2023, which negatively impacted our full fiscal year and fourth quarter ended September 32023.
Speaker Change: Consolidated revenues were $152 4 million for the fiscal year.
Speaker Change: And revenues for our fiscal fourth quarter with $34 3 million.
Speaker Change: Gross profit and gross margins were $52 9 million.
Speaker Change: At 11 6 million.
Speaker Change: And 34, 7% and 34% for the fiscal year and fourth quarter ended September 32023, respectively.
Speaker Change: Consolidated non-GAAP adjusted EBITDA for fiscal 2023 was $7 million.
Speaker Change: Down $5 5 million or 44% compared to fiscal 2022.
Speaker Change: non-GAAP adjusted EBITDA for the fiscal 2023 fourth quarter was $1 2 million.
Up.
Speaker Change: $2 million or 23% compared to the fiscal 2020 to fourth quarter.
Speaker Change: We were able to achieve consolidated net income of $9 4 million or eight cents per diluted share for the 2023 fiscal year <unk>.
Speaker Change: <unk> net income for the fiscal 2023 fourth quarter.
Speaker Change: Was <unk> 2 million and slightly above breakeven per diluted share as Ken will explain further.
Speaker Change: Prior fiscal year's results were well above normal led by record high demand for direct hire placement services.
Speaker Change: Fueled by a post COVID-19, bounce upward and hiring the pullback in demand for direct hire placement services.
Speaker Change: Answered administrative clerical and light industrial contract services in 2023 contributed to the shortfall in 2023 results compared with last year's numbers.
Speaker Change: Fiscal 2020, Three's performance still compares favorably with our industry peers, taking into account the operating environment and particularly in terms of the growth we achieved in our combined professional.
Speaker Change: Contract services businesses and brands.
Speaker Change: Before I turn it over to Kim I would like to share some important achievements and milestones during the quarter.
Kim: First the September 2023 quarter was our ninth consecutive quarter of profitability and free cash flow generation since we completed our deleveraging initiatives in June of 2021.
Kim: Despite fiscal 2023s lower results compared to fiscal 2022.
Our operating performance and financial results have been on par with and better in certain respects than our largest fleet largest industry peers.
Kim: We believe our IP contract services brands demonstrated the ability to grow.
Kim: Under difficult conditions, and in particular positions us well for future growth and further increasing shareholder value.
Kim: We implemented our $20 million.
Kim: Dollar share repurchase program in late April 2023.
Kim: Which has served as a key component of our capital allocation plans in fiscal 2023.
Kim: As of September 32023, we had repurchased three 4 million shares of our common shares and as of December 15, 2023, we have repurchased $5 8 million job shares or 5% of our outstanding shares at the beginning of the program.
Kim: I wanted to assure everyone that we believe our stock is undervalued.
Kim: Substantial room grow no matter of fact, many if not most publicly traded staffing firms are trading below market indices.
Kim: And there are 52 week highs due to economic concerns.
Kim: Going forward.
Kim: From this time, you announced the funding of our follow on offering on April of 2021.
Kim: G group.
Kim: <unk> has outperformed most of its public staffing industry peers.
Kim: <unk> several of the largest players despite the macroeconomic and staffing industry specific headwinds facing us we are continuing to focus on the growth of our businesses and taking other definitive actions to help grow shareholder value.
In addition to repurchasing 5% of our outstanding shares in 2023.
Kim: Added three new independent directors to our board in the fall, including the managing director of our largest shareholder appointed a lead independent director and committed to undertake a review of strategic alternatives available to us with a view towards unlocking shareholder value most.
Most recently, we have engaged an investment banking firm of DC advisory to assist us with the review of strategic alternatives, which includes capital allocation strategies mergers acquisitions et cetera.
Kim: And finally before I turn it over to Kim I want to once again, thank our wonderful dedicated employees and associates. They work extremely hard every day to ensure that our clients get the very best service.
Kim: They are a key factor in our achievements and the most important driver of our company's future success. At this time I will turn the call over to our senior Vice President and Chief Financial Officer, Jim Thorpe, who will further elaborate on our fiscal 2023 annual and fourth quarter results.
Kim: <unk>.
Jim Thorpe: Thank you Derek and good morning as.
Jim Thorpe: As Derek mentioned revenues for fiscal 2023 were $152 $4 million.
Jim Thorpe: One, 8% as compared with fiscal 2022 revenues of $165 million.
Jim Thorpe: Revenues for the fourth quarter of the fiscal year were $34 $3 million down approximately 18% as compared with the fourth quarter of fiscal 2022.
Jim Thorpe: The lower revenues in fiscal 2023 were primarily the result of the macroeconomic forces, including inflation rising interest rates and the resulting negative impacts on the labor market and hiring environment, which.
Jim Thorpe: Which impacted the entire staffing industry.
Jim Thorpe: Fiscal 2023, followed a period of recovery experienced in 2022, which was primarily due to a post COVID-19 bounce upward unemployment.
Jim Thorpe: As Derek mentioned, the pullback in demand for direct hire placement services and in certain administrative clerical and light industrial contract services in 2023 that contributed to the shortfall in 2023 resolves were primarily the result of these headwinds.
Jim Thorpe: While fiscal 2023 results were lower overall.
Jim Thorpe: The company once again was profitable and generated good positive cash flow from operations.
Jim Thorpe: As it has consistently done since completion of the significant deleveraging initiatives.
Jim Thorpe: And a follow on offering during the quarter ended June 32021.
Jim Thorpe: We also believe our top line performance has been in line with our industry peers.
Jim Thorpe: The above average in certain respects, including the performance of variety brands.
Jim Thorpe: Our lowest performing businesses continued to be those serving right industrial and administrative and office critical markets.
Jim Thorpe: At this stage, we remain cautiously optimistic about our ability and timing to return.
Jim Thorpe: To overall growth once again, which we expect to be led by our brands.
Jim Thorpe: And our other professional services businesses and with the anticipation that the uncertainties and unknowns about the economy and labor environments way among the businesses today begin to lessen.
Jim Thorpe: During fiscal 2024.
Jim Thorpe: Professional and industrial contract staffing services contributed $133 million.
$37 million or 87% or 90% of revenues for the fiscal 2023 year and fourth quarter respectively.
Jim Thorpe: <unk> contract services revenue as our largest contract services segment represents 86% of all contract services revenue and 79% of consolidated revenue and decreased $2 $5 million or 2% compared to fiscal 2022.
Jim Thorpe: Sure.
Jim Thorpe: The bright spots in this comparison, where the professional brands contract services revenues, which grew 3% year over year.
Jim Thorpe: Contract services revenues were 59% of all professional services contract revenue and direct hire in contract services revenue combined.
Represent 49% nearly half of the consolidated revenues for fiscal 2023.
Jim Thorpe: Direct hire revenues for fiscal 2023 were $19 4 million down $7 2 million or 27% compared with fiscal 2022.
Jim Thorpe: Direct hire placement revenues for fiscal 2023 fourth quarter were $3 6 million down $2 9 million or 45% as compared to the fiscal 2020 to fourth quarter.
As Derek mentioned in fiscal 2022 was a record high year for direct hire placement services.
Industrial staffing revenues were $13 million and $3 million and represented 9%.
Jim Thorpe: Total revenue for both fiscal year and fourth quarter ended September 32023, respectively.
Jim Thorpe: We continue to experience growth challenges in our light industrial markets, which we attribute to increased competition for business and temporary labor.
Jim Thorpe: Which again has occurred since the COVID-19 pandemic.
Jim Thorpe: Among the newer post COVID-19 competitors for labor.
Our emerging BTC firms, such as Uber lyft to endure at Ash.
Jim Thorpe: These firms are able to compete effectively due to the additional independence and flexibility they offer workers.
Recent inflation also has led us to increase hourly wages and benefits for our temporary workers and our light industrial business in Ohio. These conditions also have helped drive the increased competition among staffing firms in Ohio for laborers to fill staffing job orders, we're continuing to actively.
Jim Thorpe: Alpha and implement new sales and recruiting programs to help attract and retain candidates and restore growth in our industrial business. We also have implemented price increases in Ohio, which have improved spreads and helped to mitigate the impact of inflation on labor conditions there.
Jim Thorpe: Consolidated gross profits and gross margins were $52 9 million or 34, 7%.
Jim Thorpe: And $11 6 million or 34% for the fiscal year and fourth quarter ended September 32023, respectively.
Jim Thorpe: The declines in gross profit and gross margin again are mainly attributable to lower revenues, including most notably direct hire placement business, which has 100% gross margin.
On the contract side increases in contractor pay associated with recent inflation also caused some spread compression.
Jim Thorpe: And certain professional services businesses. The company continues to focus on counter inflationary master, including increases in markups, bill rates and spreads in order to improve margins and profitability.
Jim Thorpe: Despite lower year over year gross profit and gross margins. Our current margins remain relatively high and are very competitive as compared with the company's industry peers.
Jim Thorpe: Selling general and administrative expenses SG&A grew.
Jim Thorpe: The fiscal year and fourth quarter ended decreased $4 $3 million and $3 2 million, respectively as compared to comparable fiscal 2022 periods SGA.
Jim Thorpe: SG&A experienced were 31, 2% and 33% of revenues for the fiscal year and fourth quarter ended September 32023, respectively, as compared with 31, 4% and 34, 8% of revenues for the fiscal year and fourth.
Jim Thorpe: Hunter ended September 32022, respectively.
Jim Thorpe: In the fiscal fourth quarter of 2023, the company's SG&A included $700000 in legal and corporate expenses related to negotiations with shareholder activist and associated from clients matters. Excluding the effect of these SG&A expenses.
Jim Thorpe: The ratio of SG&A expenses to revenue would have been.
Jim Thorpe: 39% and 37% for the fiscal year and fourth quarter ended September 32023, respectively.
Jim Thorpe: In late February and March 2023, Youll recall, the company implemented certain cost reductions with an estimated annual savings of approximately $4 million.
Jim Thorpe: Despite the significant decline in revenues in 2023. These cost reductions have helped achieve lower SG&A and total operating expense ratios in fiscal 2023 versus fiscal 2022 again, despite lower revenues the company monitors.
Jim Thorpe: <unk> costs, including the impacts of inflation with a view toward identifying and taking advantage of possible cost reductions on a routine basis.
Jim Thorpe: We achieved net income for the fiscal 2023 year of $9 4 million or <unk> <unk> per diluted share as compared with net income of $19 6 million or <unk> 17 per diluted share in fiscal 2022.
Jim Thorpe: Adjusted net income, which is a non-GAAP financial measure for <unk> for the fiscal year and fourth quarter ended September 32023 was $11 1 million or 10 cents per diluted share and $1 1 million or one cent per diluted share respectively.
Jim Thorpe: As compared to $7 $7 million or <unk> <unk> per diluted share and a $400000 loss are just under breakeven per diluted share for the fiscal year and fourth quarter ended September 32022, respectively.
The company recognized a net deferred tax benefit of $7 $2 million for the fiscal year ended September 32023, which accounted for approximately six sets of this period's earnings per diluted share.
Jim Thorpe: The elimination of our former longstanding 100% deferred tax asset valuation allowance.
Jim Thorpe: That resulted in this large net deferred tax benefit has been another positive achievement for our company.
Adjusted EBITDA, which is a non-GAAP financial measure for the fiscal year and fourth quarter ended September 32023 was $7 million and $1 $2 million as.
Jim Thorpe: Paired with $12 $5 million and $1 million, respectively for the comparable 2022 periods.
Jim Thorpe: Several factors, we've covered including notably the decrease in fiscal 2023 revenues from fiscal 2020, two's record highs as well as economic headwinds and inflationary pressures and rising interest rates present. This year account for these declines as.
Jim Thorpe: As I mentioned, a moment ago, we continue to monitor operating costs, where possible cost reductions on a routine basis and also will take other definitive actions in order to improve our margins and profitability.
Jim Thorpe: Our current our working capital ratio at September 32023 was a strong three 7% to one up 100 basis points from two seven to one as of September 32022.
Jim Thorpe: Free cash flow are non-GAAP financial measure for the fiscal year ended September 32023 was $5 8 million as compared with $9 1 million for fiscal 2022.
Jim Thorpe: Our liquidity position remains strong we have no outstanding debt, our net book value per share and our net tangible book value per share were 98 cents and 36, respectively as of September 32023.
Jim Thorpe: Net book value per share is up 10 cents.
Jim Thorpe: And net tangible book value per share is up 11 cents compared with 88, <unk> and 25, respectively as of September 32022.
Jim Thorpe: To conclude.
Speaker Change: As Derek said, we remain cautiously optimistic in our outlook for fiscal 2024 with appropriate consideration of macro economic and labor market related uncertainties and announce that exists in our operating environment.
Speaker Change: Before I turn it back over to Gary. Please note again that reconciliations of <unk> non-GAAP financial measures discussed today and in our earnings release with their GAAP counterparts can be found in supplemental schedules included in our earnings press release.
Now I'll turn the call back over to Derek Derrick.
Derek Derrick: Thank you Kim.
Derek Derrick: Fiscal 2023 fourth quarter marked our ninth consecutive quarter.
Derek Derrick: Strong operating performance since deleveraging the company.
Having consistently achieved higher margins and free cash flow over the years, we continue to build our positive track record.
Derek Derrick: As well as positive momentum for the future.
Derek Derrick: As of September 30th 2023, the company had no debt.
Derek Derrick: And approximately $22 5 million in cash was $11 3 million in availability under its bank ABL credit facility.
Derek Derrick: G E groups prospects today for future profitable growth continue to expand and improve.
Derek Derrick: Despite macroeconomic headwinds.
Derek Derrick: The industry specific challenges and unforeseen events, we will continue to work hard for the benefit of our shareholders and.
Derek Derrick: And we expect to deliver solid results for the upcoming fiscal 2024 year and beyond.
Derek Derrick: And significantly increase shareholder value.
Derek Derrick: Before we pause to take your questions I want to again say a special thank you to all of our wonderful people for their professionalism hard work and dedication without them, we could not have accomplished all the good things that we have shared with you today.
Speaker Change: Now Kevin I would be happy to answer your questions. Please just ask one question and rejoin the queue.
A follow up as needed if theres time, we'll come back to you for additional questions. So the question and answer period will now start.
Speaker Change: And one of the first questions is regarding a stock buyback versus a potential for a dividend payout.
Speaker Change: We have engaged DC advisory.
To explore all of these strategic alternatives, including capital allocation strategies and the best use of.
Speaker Change: Of our funds.
Speaker Change: So that.
That will be included as part of the analysis and we expect that information to be furnished to us see a conclusion of the project.
Speaker Change: Which you'll probably somewhere in 45 days or so possibly 60 on the outside but they will do an extensive review.
Speaker Change: Of all the alternatives, including.
Speaker Change: The potential for a dividend or otherwise.
Speaker Change: The next question is.
Speaker Change:
Speaker Change: Why don't you start on time to be honest I held back the start time for the benefit of our shareholders.
Speaker Change: There were logging in and rapid numbers.
Speaker Change: We can actually see when you login, so I felt like I need to give all shareholders an opportunity for a couple of minutes and we started approximately 11 O three.
Speaker Change: The company performance.
Speaker Change:
Speaker Change: In a nutshell.
Speaker Change: This was a tough year are.
Speaker Change: Are we satisfied absolutely not do we do well under the circumstances.
Speaker Change: What.
We did pretty well generating cash flow and profitability, but we're never satisfied so complacency breeds poor performance of mediocrity, that's not in my vocabulary.
Speaker Change: Going forward I.
Speaker Change: I can assure you that winning matters to us.
Speaker Change: And as Vince Lombardi said, winning isn't everything its the only thing and I believe that give us. Some time, we will get to where you want us to be and where I want us to be and I am a significant shareholder as as Kim Ann.
We will continue to execute our largest shareholders on the board of directors and he has affirmed our strategy going forward and is totally supportive of where we're going.
Speaker Change: Upward.
Speaker Change: Why on Earth should we have equity investments in your company and the answer to that is because we believe that you will ultimately do well given a period of time.
Speaker Change: And not too long based upon our strategy and how we execute and there's a lot of arrows in the quiver to deliver success and we are focused on that.
Speaker Change: Rest assured we are not satisfied with the performance or complacent.
Speaker Change: Because complacency breeds mediocrity and that's not in our vocabulary.
Speaker Change: Let's see.
Speaker Change: For peer group analysis, we're happy to provide that separately from discussion.
Speaker Change: And we can talk about that so if you want to make an inquiry to us.
Speaker Change: On a separate call about talking about the peer group in the industry, including statistical data.
Speaker Change: We have that information, we're happy to share. It with you said, just let us know if you'd like to conduct.
Speaker Change: Our call regarding that.
Speaker Change: By the way, Missouri.
Speaker Change: May Love company, but we don't like it so just because of the peer group is not doing great because of external factors that doesn't mean, we're complacent satisfied so rest assured we're doing everything in our power to deliver great results.
Speaker Change: We don't think we had a great year, we think we had a good year relative to the circumstances, but not a great year.
Speaker Change: Let's see.
Why is the stock price dropping well, it's pretty clear that due to the result, not being as stellar as they were the prior year. Some people take that to mean, that's indicative of a longer term downfall in results that is not what we think.
Nor predict so.
Speaker Change: I would say you know rest assured.
We will get back on track.
Speaker Change: Where we need to be or wanted to be and move forward.
Speaker Change: The revenue run rate going from here is Q3, a baseline going into next year.
Speaker Change: The important thing here is.
Speaker Change: Is that we do believe that.
Speaker Change: The industry suffered this year some decline clearly in permanent placement or direct hire revenue across the board that was down substantially but also there's been a pause in the labor markets on hiring due to uncertainty.
Speaker Change: And the macroeconomic sense higher interest rates, so projects were put on hold as well.
Speaker Change: And there was tepid hiring.
Speaker Change: Particularly in the fourth quarter for us.
Speaker Change: <unk>.
Speaker Change: Indicative someone said is Q3 indicative of what you can do it.
Speaker Change: It is but we can we don't know when that fast. It turns on is it first quarter is it set which has seasonality in it or is it second or third quarter. The important thing is on a on a fairly short.
Speaker Change: P. J view, we think were going up.
Speaker Change: And we will turn the corner. The other thing is I mean, we are working on keeping SG&A down.
Don't want to cut too much we're actually hiring people to generate revenue.
Speaker Change: So that's very important to be prepared for an upswing.
And cyclicality in this industry over the years. So we're happy to share that with you privately because I don't want to get into a dissertation about it but you can see the downswing, an upswing and I do want to say that typically in a downturn Perm gets hit first then tap a bit but the upswing contract starts.
Speaker Change: Upward and then Perm follows so that's been traditionally so and you can go back to 80, 80, 198, <unk> 2000 2001.
Speaker Change: Oh six to OE.
Speaker Change: And then the decline in a recession, then the upswing again COVID-19.
Speaker Change: <unk> performance in 2020, but then the upswing.
Speaker Change: 'twenty, one 'twenty two and last year was a big postpone the COVID-19 bounce because of really.
Speaker Change: Cutting to the bone unemployment by many companies and then of course, a quick recovery so.
Our goal is to normalized profitability upwards.
Speaker Change: As far as revenue growth as well.
Speaker Change: With vertical she'll improving demand.
Which was industry down 10% to 12%, but we're seeing good solid movement. The key is the rate of decline slowed.
Speaker Change: And then now we're starting to see some pickup.
Speaker Change: That's historic as well and I can tell you that as I sit here today I'm focused on growth.
Speaker Change: And profitability and I think we're starting to see improving demand someone said went when do you think.
Speaker Change: It's going to happen, we think it's probably the second quarter.
Speaker Change: Which is our June 30 quarter in 2024.
Speaker Change: Our March quarter, we stable.
Speaker Change: 12, 31 quarter, which and soon will be on par with where we've been with showing some some increase.
Speaker Change: And demand, but I think more importantly, we're well positioned we have no debt we have cash we have good operating margin.
We have better than peer group gross margin I can go down the list and I'm happy to share those with you, but you know again.
Speaker Change: I don't compare our company to the peer group as much as what we need to do.
Speaker Change: To be successful are you looking at M&A opportunities, yes, and we are having.
Speaker Change: Strategic review by D C advisory too.
Speaker Change: Analyzed what makes sense tuck in acquisitions.
Speaker Change: All the other options that are out there.
Speaker Change: As well.
Speaker Change: And let's see.
Speaker Change: Deeper the oil and gas.
Speaker Change: But penni.
Speaker Change: Okay.
Speaker Change: Uh huh.
Speaker Change: I think you better manage expectations.
Speaker Change: Some of the macro challenges makes it a little more difficult from a quarterly basis.
Speaker Change: On an annualized basis annualized basis, we're better able to manage the expectations and cash flow sharply.
Uh huh.
What do you think about cash flow okay.
Speaker Change: Mhm.
Speaker Change:
Industry conditions are they getting better answer is yes.
Speaker Change: And we feel like we have.
Speaker Change: We've hit kind of the bottoming out phase.
Speaker Change: The cyclicality and the staffing industry and we are seeing.
Speaker Change: Improvement.
Speaker Change: The improvement typically does not drastic and as gradual except.
Speaker Change: In the spring and summer months.
We're looking forward to.
Speaker Change: Better than <unk>.
Speaker Change:
Speaker Change: Gradual improvement, we hope, there's some better acceleration there.
Speaker Change: Okay.
Speaker Change: Let's see what someone sit here.
With.
Speaker Change: I think you'd better manage this year.
[laughter].
Speaker Change: This was a very nice.
Speaker Change: <unk> you very much.
Speaker Change: Someone's a packer fan so.
Speaker Change: They like my vessel Barney closed and let me, let me tell you something I'm dead serious I always a packer fan growing up.
Speaker Change: In Green Bay was Americas team.
Speaker Change: So Dallas claims that position so.
Speaker Change: I have a lot of respect for people that can win consistently and that's.
Speaker Change: And then Mike you know track record high I will absolutely win.
Speaker Change: I'm not happy with with results that we have.
Speaker Change: Reasonably satisfied because how we're positioned for success is probably the best of the.
Speaker Change: The best indicator.
Speaker Change: Future stock performance, let's see internal head count How's that looking.
Any sectors that grew more than others Kim.
Speaker Change: Tim would you comment on I T contract, because we actually grew that yes, even in the environment.
Tim: Happy to.
Tim: Yes, we only grew at contract, but we also grew our engineering contract services, which is a much smaller business.
Tim: But it grew nonetheless, and we grew our accounting firm business, which also is small the reason it's important is because.
Tim: This is our strategy, it's our priority vertical.
Tim: It is becoming larger and larger.
Tim: In proportion to our total business.
Tim: When I joined the company. It was just under 40% now, it's almost 50% and.
Tim: And the significance of it is is that it has much more.
Tim: Our resilience in economic cycles or tends to although there was a pullback.
Tim: Hiring.
Tim: Actually I think that began in 2022 of them went into 2023.
Tim: We have a very good array of businesses, we're focused on cutting edge areas, such as AI and generative AI cyber security in those.
Speaker Change: And I also Derek if you don't mind I'd like to comment on there's been a couple of questions. Your stock's down why should we buy your stock.
Speaker Change: I just want to point out a metric.
Maybe some of you havent necessarily focused on and that is if I look at the stock price where it is right now at 49 cents.
Speaker Change: A mark that down for reasonable control premiums say, 30%.
Speaker Change: That gets me in the high 30% mid to high 30 range.
Speaker Change: Our tangible book value that is only our cash minus all liabilities is 36 a share.
Speaker Change: That means that there is zero value zero being given to the operating businesses.
Speaker Change: Even though we just went through an audit and we're able to support the value of nearly $70 million of intangible assets.
With conservative cash flow forecasts so.
Speaker Change: All I can say is I think.
Speaker Change: That something is missing in the marketplace here that we're not getting any recognition for that.
Speaker Change: Sure there was a comment around here that said something about the job market was hot the entire year what are we talking about.
I don't know that that the entire staffing industry would agree with that because I can tell you that staffing industry analysts published.
Speaker Change: There are industry update an economic update in September and their prediction is that the entire staffing industry top line will be down 10% for 2023. So.
Speaker Change: I just wanted to bring a few facts to the table to respond to some of this.
Sure.
Speaker Change: Yeah, let me amplify that because the job market.
Speaker Change: As kind of a misnomer and have to bifurcate.
Speaker Change: The the term job market job market for what hospitality was up.
Speaker Change: Some lower level positions hiring was up.
Speaker Change: It was down look at lay offs that occurred in I T and we succeeded despite that we're picking up a lot of those people and putting them back to work.
Speaker Change: On project works and quite frankly projects were put on hold because of the higher interest rate environment environment uncertainty.
Speaker Change: Macroeconomic environment, including things like Ukraine things like Gaza all of those things.
Speaker Change: You know way on Ceos in corporate America a bit.
Speaker Change: Now I can say that it's an election year next year rich look like they're coming down they probably have already but we think that you know the federal reserve and that group will actually take appropriate actions to stimulate the economy.
Speaker Change: Once people think things are more normal.
Speaker Change: We'll tend to hire more contract labor because theres still a bit uncertain then when they feel really bullish the perm business kicks in and and.
Speaker Change: Hi gear.
We're hiring people now internally to grow our business because our we measure performance by per desk average okay. Our pro desk average is good but we want more people at that per desk average to get revenue up we have a huge sales program going on right now in it.
Speaker Change: T that we're launching.
Speaker Change: There's a whole bunch of things, we're doing to get that topline crank and on the other hand, you know we're very cost conscious. So we're working on SG&A to keep that lower and in fact reduce it particularly.
Speaker Change: When your top line is down so there's a lot we're doing.
Speaker Change: I want to assure you that we're doing it.
Speaker Change: <unk> and judiciously. Another question is please touch on how the new directors.
Speaker Change: Added value the G group I have to say that we recently had a board meeting.
Speaker Change: The input from the new directors and their perspective has been most.
Speaker Change: Valuable to us.
Speaker Change: We all we all have a ton of experience, but our new directors bring a different view of the table our loss per share for each one of them.
Speaker Change: The other two directors that came on as well have experience in the industry.
Speaker Change: And so that's been most valuable to.
Speaker Change: To the executive team to get their perspective, and they are very very active so we.
Speaker Change: We feel real good about the choices, we've made and their contribution to us.
Speaker Change: I see.
I talked about the labor market.
Speaker Change: Can you provide an update on your.
Speaker Change: And as the market down enough when you see some.
Speaker Change: Uh huh.
Speaker Change: Obviously, some deals will now be cheaper and have then we have some targets and you know the multiples low.
Speaker Change: On getting these targets so.
Speaker Change: Is it better than buying stock you know that's an evaluation that it'll be done by D. C advisory, which will make sense not to overpay for something when you're trading at a certain multiple but I think importantly, we want to acquire.
Speaker Change: Businesses that grow.
Speaker Change: Can add EBITDA and top line to our company.
Speaker Change: Uh huh.
So at this point.
I would like to terminate the call and those of you that have follow up questions.
Speaker Change: I would like to have a discussion just let us know we're happy to address it.
Speaker Change:
Speaker Change: We value you as shareholders.
Speaker Change: And.
Speaker Change: We will deliver to work really hard to get our stock price appropriately priced.
Speaker Change: And more importantly.
Speaker Change: To you know move forward in a big way to create value and again, thanks again have a great holiday season.
We wish you all well and trust that we're working very hard to deliver the results that you guys deserve we deserve so thanks that concludes our call.