Q3 2026 GEE Group Inc Earnings Call

August 13, 2026

Derek Dewan: Hello, and welcome to the GEE Group Fiscal 2026 third quarter and year-to-date period ended 30 June 2026, earnings and update webcast conference call. I am Derek Dewan, the Chairman and Chief Executive Officer of GEE Group. I will be hosting today's call, and joining me as the co-presenter is Kim Thorpe, our Senior Vice President and Chief Financial Officer. Thank you for joining us today. It is our pleasure to share with you GEE Group's results for the fiscal 2026 third quarter and year-to-date period ended 30 June 2026, and provide you with our outlook for the remainder of the fiscal 2026 year and the foreseeable future. Some comments Kim and I will make may be considered forward-looking, including predictions, estimates, expectations, and other statements about our future performance.

Speaker #1: Hello, and welcome to the GEE Group Fiscal 2026 third quarter and year-to-date period ended June 30, 2026, earnings and update webcast conference call. I'm Derek Dewan, the Chairman and Chief Executive Officer of GEE Group.

Speaker #1: I will be hosting today's call, and joining me is the co-presenter, Kim Thorpe, our Senior Vice President and Chief Financial Officer. Thank you for joining us today.

Speaker #1: It is our pleasure to share with you GEE Group's results for the fiscal 2026 third quarter and year-to-date period ended June 30, 2026, and to provide you with our outlook for the remainder of the fiscal 2026 year and the foreseeable future.

Speaker #1: Some comments Kim and I will make may be considered forward-looking, including predictions, estimates, expectations, and other statements about our future performance. These represent our current judgments of what the future holds and are subject to risks and uncertainties, so that actual results may differ materially from our forward-looking statements.

Derek Dewan: These represent our current judgments of what the future holds and are subject to risks and uncertainties that actual results may differ materially from our forward-looking statements. These risks and uncertainties are described below under forward-looking statements, safe harbor, and in Wednesday's earnings press release and our most recent Form 10-Q, 10-K, and other SEC filings under the captions "Cautionary Statement Regarding Forward-Looking Statements" and "Forward-Looking Statement Safe Harbor." We assume no obligation to update statements made on today's call. Throughout this presentation, we will refer to the periods being presented as this quarter or the quarter and this year to date or the year to date, which refers to the three or nine-month periods ended 30 June 2026, respectively.

Derek Dewan: These represent our current judgments of what the future holds and are subject to risks and uncertainties that actual results may differ materially from our forward-looking statements. These risks and uncertainties are described below under forward-looking statements, safe harbor, and in Wednesday's earnings press release and our most recent Form 10-Q, 10-K, and other SEC filings under the captions Cautionary Statement Regarding Forward-Looking Statements" and "Forward-Looking Statement Safe Harbor." We assume no obligation to update statements made on today's call. Throughout this presentation, we will refer to the periods being presented as this quarter or the quarter and this year to date or the year to date, which refers to the three or nine-month periods ended 30 June 2026, respectively.

Speaker #1: These risks and uncertainties are described below under "Forward-Looking Statements: Safe Harbor" and in Wednesday's earnings press release, as well as our most recent Form 10-Q, 10-K, and other SEC filings under the captions "Cautionary Statement Regarding Forward-Looking Statements" and "Forward-Looking Statements Safe Harbor." We assume no obligation for today's call.

Speaker #1: Throughout this presentation, we will refer to the periods being presented as "this quarter" or "the quarter," and "this year-to-date" or "the year-to-date," which refer to the three- or nine-month periods ended June 30, 2026, respectively.

Speaker #1: Likewise, when we refer to the prior year quarter or the prior year-to-date, we are referring to the comparable prior three- and nine-month periods ended June 30, 2025, respectively.

Derek Dewan: Likewise, when we refer to the prior year quarter or the prior year to date, we are referring to the comparable prior three and nine-month periods ended 30 June 2025, respectively. When we refer to the prior sequential quarter, we are referring to the three-month period ended 31 March 2026. During this presentation, we will also talk about some non-GAAP financial measures. Reconciliations and explanations of the non-GAAP measures we will address today are included in the earnings press release. Our presentation of financial amounts and related items, including growth rates, margins, and trend metrics, are rounded or based upon rounded amounts. For purposes of this call and all amounts, percentages, and related items presented are approximations accordingly. For your convenience, our prepared remarks for today's call are available in the investor section on our website, www.geegroup.com. Now on to today's prepared remarks.

Speaker #1: When we refer to the prior sequential quarter, we are referring to the three-month period ended March 31, 2026. During this presentation, we will also talk about some non-GAAP financial measures. Reconciliations and explanations of the non-GAAP measures we'll address today are included in the earnings press release.

Speaker #1: Our presentation of financial amounts and related items—including growth rates, margins, and trend metrics—are rounded or based upon rounded amounts. For purposes of this call, all amounts, percentages, and related items presented are approximations accordingly.

Speaker #1: For your convenience, our prepared remarks for today's call are available in the investor section on our website, www.geegroup.com, now onto today's prepared remarks. First, I am pleased to share that our GEE Group reported improved financial results, including net income for this quarter and year-to-date.

Derek Dewan: First, I am pleased to share that our GEE Group reported improved financial results, including net income for this quarter and year to date. We performed very well despite a choppy hiring environment, which has an impact on the demand for the company's staffing services. Companies and businesses continue to cautiously assess the economy and market conditions to ensure their investments in technology and human capital are strategic and sustainable. We performed well in light of the challenging macroeconomic conditions and the acquisition of one of our larger, higher volume, lower margin clients who moved their staffing services to an affiliate of the acquirer earlier this fiscal year.

Speaker #1: We performed very well despite a choppy hiring environment, which has had an impact on the demand for the company's staffing services. Companies and businesses continue to cautiously assess the economy and market conditions to ensure their investments in technology and human capital are strategic and sustainable.

Speaker #1: We performed well in light of the challenging macroeconomic conditions and the acquisition of one of our larger, higher-volume, lower-margin clients, who moved their staffing services to an affiliate of the acquirer earlier this fiscal year.

Speaker #1: The company's improved financial performance was driven by our growth and direct hire placement revenues, which have the highest gross margin at 100% and are up 16% for the quarter and year-to-date, and appear to be on course so far for a better fiscal 2026 versus fiscal 2025.

Derek Dewan: The company's improved financial performance was driven by our growth in direct hire placement revenues, which have the highest gross margin at 100% and are up 16% for the quarter and year to date, and appear to be on course so far for a better fiscal 2026 versus fiscal 2025. We also expect and are optimistic that the use of contingent labor will stabilize this year as we are aware that some businesses are beginning to initiate new projects, which we anticipate will lend to more job orders and temporary staffing placements. Artificial intelligence, or AI, is gaining ground at an accelerated pace and is further complicating the human resources landscape, creating both challenges and opportunities for businesses, including the consumers of our services.

Speaker #1: We also expect and are optimistic that the use of contingent labor will stabilize this year, as we are aware that some businesses are beginning to initiate new projects which we anticipate will lead to more job orders and temporary staffing placements.

Speaker #1: Artificial intelligence, or AI, is gaining ground at an accelerated pace and is further complicating the human resources landscape, creating both challenges and opportunities for businesses—including the consumers of our services.

Speaker #1: We believe the uncertainties created by recent macroeconomic conditions and the acceleration in the use of AI are factors contributing to the volatility in job orders for both contract and direct hire placements.

Derek Dewan: We believe the uncertainties created by recent macroeconomic conditions and the acceleration in the use of AI are factors contributing to the volatility in job orders for both contract and direct hire placements. However, AI will benefit GEE Group as we are implementing and incorporating it into our own business and strategic plans in order to digitize, streamline, enhance, and accelerate our recruiting and sales processes. Another closely aligned AI goal of ours is to provide our clients with the necessary human resources solutions to implement and support their uses of AI and help them increase speed, efficiency, and profitability. These initiatives are a high priority for us, and our goal is to begin seeing returns later this year. Our contract staffing and direct hire placement services are currently provided under our professional segment.

Speaker #1: However, AI will benefit GEE Group as we are implementing and incorporating it into our own business and strategic plans in order to digitize, streamline, enhance, and accelerate our recruiting and sales processes.

Speaker #1: Another closely aligned AI goal of ours is to provide our clients with the necessary human resources solutions to implement and support their uses of AI, and help them increase speed, efficiency, and profitability.

Speaker #1: These initiatives are a high priority for us and our goal is to begin seeing returns later this year. Our contract staffing and direct hire placement services are currently provided under our professional segment.

Speaker #1: The operations and substantially all the assets of our former industrial segment were sold during fiscal 2025 and were reclassified as discontinued operations. Being excluded from the results of continuing operations for the fiscal 2025 periods will make comparisons today.

Derek Dewan: The operations and substantially all the assets of our former industrial segment were sold during the fiscal 2025 and were reclassified as discontinued operations being excluded from the results of continuing operations for the fiscal 2025 periods will make comparisons today. Our consolidated revenues were $20.8 million for the quarter and $60.8 million year to date. Gross profit and gross margin were $8.3 million and 39.9%, respectively, for the quarter, and $23.1 million and 38%, respectively, year to date. Consolidated non-GAAP adjusted EBITDA was $570,000 for the quarter and $582,000 year to date. We reported net income of $566,000 for the quarter and $430,000 year to date. We continue to aggressively take actions to adjust and enhance our strategic focus, growth plans, and financial performance and results, including streamlining our core operations and improving or adjusting our productivity to match our current lower volumes of business.

Speaker #1: Our consolidated revenues were $20.8 million for the quarter and $60.8 million year-to-date. Gross profit and gross margin were $8.3 million and 39.9%, respectively, for the quarter and $23.1 million and 38.0%, respectively, year-to-date.

Speaker #1: Consolidated non-GAAP adjusted EBITDA was $570,000 for the quarter and $582,000 year-to-date. We reported net income of $566,000 for the quarter and $430,000 year-to-date. We continue to aggressively take actions to adjust and enhance our strategic focus, growth plans, and financial performance and results—including streamlining our core operations and improving or adjusting our productivity to match our current lower volumes of business.

Speaker #1: This has helped improve our results despite lower business volume. We took measures to reduce our SG&A during the latter portion of fiscal 2025 by an estimated annual amount of $3.8 million.

Derek Dewan: This has helped improve our results despite lower business volume. We took measures to reduce our SG&A during the latter portion of fiscal 2025 by an estimated annual amount of $3.8 million. These cost reductions and others realized so far in fiscal 2026 have contributed $1.1 million to our decrease in SG&A for the quarter and $3.5 million year to date versus the comparable prior year periods. As we announced early last year, we completed the acquisition of Hornet Staffing in fiscal 2025 and have increased our focus on VMS and MSP sourced business, including the use of special recruiting resources and acceleration of the integration and use of AI technology into our recruiting, sales, and other processes. Our results for the quarter are encouraging, and we remain cautiously optimistic that we can improve them in the last quarter of fiscal 2026 and beyond.

Speaker #1: These cost reductions, and others realized so far in fiscal 2026, have contributed $1.1 million to our decrease in SG&A for the quarter and $3.5 million year-to-date versus the comparable prior year periods.

Speaker #1: As we announced early last year, we completed the acquisition of Hornet Staffing in fiscal 2025 and have increased our focus on VMS and MSP-sourced business, including the use of special recruiting resources and acceleration of the integration and use of AI technology into our recruiting, sales, and other processes.

Speaker #1: Our results for the quarter are encouraging, and we remain cautiously optimistic that we can improve them in the last quarter of fiscal 2026 and beyond.

Speaker #1: In addition to these near-term initiatives, we are working closely with our frontline leaders in the field to support them as we all continue to aggressively pursue new business in addition to growing and expanding existing client revenues.

Derek Dewan: In addition to these near-term initiatives, we are working closely with our frontline leaders in the field to support them as we all continue to aggressively pursue new business in addition to growing and expanding existing client revenues. We are seeing some positive results from these efforts and are well-positioned to meet the anticipated increased demand from existing customers and expect to win new business. GEE Group has a strong balance sheet with substantial liquidity in the form of cash and borrowing capacity. The company is well-positioned to grow organically and to execute on strategic opportunities.

Speaker #1: We are seeing some positive results from these efforts and are well positioned to meet the anticipated increased demand from existing customers and expect to win new business.

Speaker #1: GEE Group has a strong balance sheet, with substantial liquidity in the form of cash and borrowing capacity. The company is well positioned to grow organically and to execute on strategic opportunities.

Speaker #1: We also continue to believe that our stock is undervalued, especially when considering recent trading at levels near and even slightly below tangible book value. We believe there is a good opportunity for upward movement in the share price as we deliver growth and sustainable profitability, which will lead to maximizing shareholder value.

Derek Dewan: We also continue to believe that our stock is undervalued, and especially so based upon recent trading at levels very near and even slightly below tangible book value, and that there is a good opportunity for upward movement in the share price as we deliver growth and sustainable profitability, which will lead to maximizing shareholder value. Once again, I wish to thank our wonderful, dedicated employees and associates. They work extremely hard every day to ensure that our clients get the very best service and are the most important ingredient for our company's current and future success. At this time, I'll turn the call over to our Senior Vice President and Chief Financial Officer, Kim Thorpe, who will further elaborate on our fiscal 2026 Q3 and year-to-date results. Kim?

Speaker #1: Once again, I wish to thank our wonderful, dedicated employees and associates who work extremely hard every day to ensure that our clients get the very best service. They are the most important ingredient for our company's current and future success.

Speaker #1: At this time, I'll turn the call over to our Senior Vice President and Chief Financial Officer, Kim Thorpe, who will further elaborate on our fiscal 2026 third quarter and year-to-date results.

Speaker #1: Kim,

Speaker #2: Thank you, Derek, and good morning. As Derek mentioned, we reported net income of $566,000, or $0.01 per diluted share, for the quarter ended, and $430,000, or $0.00 per diluted share, year-to-date.

Kim Thorpe: Thank you, Derek, and good morning. As Derek mentioned, we reported net income of $566,000, or $0.01 per diluted share for the quarter ended, and $430,000, or $0.00 per diluted share year-to-date, as compared with net losses from continuing operations of -$401,000, or approximately $0.00 per diluted share for the prior year quarter, and -$34.0 million, or -$0.31 per diluted share for the prior year to date. The comparable prior year-to-date period included a $22 million non-cash goodwill impairment charge and a $9.7 million provision for income taxes that was attributable to an increase in the company's valuation allowance on its deferred tax assets. These non-cash charges alone accounted for approximately 93% of our fiscal 2025 year-to-date net loss.

Speaker #2: As compared with net losses from continuing operations of a negative $401,000 or approximately $0.00 per diluted share, for the prior year quarter, and $34.00 a negative $34.00 million or a negative $31.00 per diluted share for the prior year-to-date.

Speaker #2: The comparable prior year-to-date period included a $22 million non-cash goodwill impairment charge and a $9.7 million provision for income taxes that was attributable to an increase in the company's valuation allowance on its deferred tax assets.

Speaker #2: These non-cash charges alone accounted for approximately 93% of our fiscal 2025 year-to-date net loss. In addition to the absence of these non-cash charges in fiscal 2026, we have been able to grow our direct hire revenues, significantly improve our gross margins, and realize the benefits of the cost reductions and productivity improvements we began implementing in the latter portion of fiscal 2025 and others realized so far in fiscal 2026.

Kim Thorpe: In addition to the absence of these non-cash charges in fiscal 2026, we have been able to grow our direct hire revenues significantly, improve our gross margins, and realize the benefits of the cost reductions and productivity improvements we began implementing in the latter portion of fiscal 2025, and others realized so far in fiscal 2026. Our adjusted EBITDA, a non-GAAP financial measure, was $570,000 for the quarter and $582,000 year-to-date, improving from negative adjusted EBITDA of -$25,000 and -$918,000 for the comparable prior periods, respectively. EBITDA, which is also a non-GAAP measure, was $444,000 for the quarter and $149,000 year-to-date, improving again from negative EBITDA of -$270,000 and -$1.7 million for the comparable prior year periods, respectively.

Speaker #2: Our adjusted EBITDA, a non-GAAP financial measure, was $570,000 for the quarter and $582,000 year-to-date, improving from negative adjusted EBITDA of $25,000 and negative $918,000 for the comparable prior periods, respectively.

Speaker #2: EBITDA, which is also a non-GAAP measure, was $444,000 for the quarter and $149,000 year-to-date, improving again from negative EBITDA of a negative $270,000 and a negative $1.7 million for the comparable prior year periods respectively.

Speaker #2: One of the bright spots in our results so far in fiscal 2026 has been our ability to grow our highly profitable direct hire placement revenues.

Kim Thorpe: One of the bright spots in our results so far in fiscal 2026 has been our ability to grow our highly profitable direct hire placement revenues. These were $3.8 million for the quarter and $9.7 million year-to-date, up approximately 16% and 10% respectively from the comparable prior year periods. Additionally, direct hire placement revenues were up 18% from the prior sequential quarter. As Derek also reported, consolidated revenues were $20.8 million for the quarter and $60.8 million year-to-date, down 15% and 17% respectively from the comparable prior periods. Contract staffing revenues were $17 million for the quarter, and $51.1 million year-to-date, down 20% and 21% respectively from the comparable prior periods. As Derek also reported, one of our former higher volume, low margin clients was acquired and moved its business to an affiliate of the acquirer at the beginning of our fiscal 2026 year.

Speaker #2: These were $3.8 million for the quarter and $9.7 million year-to-date, up approximately 16% and 10%, respectively, from the comparable prior year periods. Additionally, direct hire placement revenues were up 18% from the prior sequential quarter.

Speaker #2: As Derek also reported, consolidated revenues were $20.8 million for the quarter and $60.8 million year-to-date, down 15% and 17%, respectively, from the comparable prior periods.

Speaker #2: Contract staffing revenues were $17 million for the quarter and $51.1 million year-to-date, down 20% and 21%, respectively, from the comparable prior periods. As Derek also reported, one of our former higher-volume, low-margin clients was acquired and moved its business to an affiliate of the acquirer at the beginning of our fiscal 2026 year.

Speaker #2: This accounted for $2.2 million and $7.3 million of the net decreases in our contract staffing revenues for the quarter and the year-to-date, respectively. Absent the loss of this single account, contract staffing services revenues decreased 11% for the quarter and 10% year-to-date. Contract staffing services revenues were up 4% from the prior sequential quarter.

Kim Thorpe: This accounted for $2.2 million and $7.3 million of the net decreases in our contract staffing revenues for the quarter and the year-to-date, respectively. Absent the loss of this single account, contract staffing services revenues decreased 11% for the quarter and 10% year-to-date. Contract staffing service revenues were up 4% from the prior sequential quarter. The volatile macroeconomic environment and the implementation of AI to replace certain types of jobs has impacted the hiring environment and the demand for our staffing services. Many companies and businesses, including some of our existing clients, remain somewhat tentative regarding making investments in human resources. However, we have been able to adjust and adapt during this quarter and year-to-date so far, and we are working very hard to realize significantly improved financial results for this year.

Speaker #2: The volatile macroeconomic environment and the implementation of AI to replace certain types of jobs has impacted the hiring environment and the demand for our staffing services.

Speaker #2: Many companies and businesses, including some of our existing clients, remain somewhat tentative regarding making investments in human resources. However, we have been able to adjust and adapt during this quarter and year-to-date so far and we are working very hard to realize significantly improved financial results for this year.

Speaker #2: Gross profit was $8.3 million for the quarter and $23.1 million year-to-date, down 5% and 7% respectively, from the comparable prior year periods, primarily due to the lower contract services revenue.

Kim Thorpe: Gross profit was $8.3 million for the quarter, and $23.1 million year-to-date, down 5% and 7% respectively from the comparable prior year periods, primarily due to the lower contract services revenue. Our gross margins improved and were 39.9% for the quarter and 38.0% year-to-date, both up significantly, 450 basis points and 380 basis points respectively from 35.4% for the prior year quarter and 34.2% for the prior year-to-date. The significant improvements in our gross margins are mainly attributable to the gross and increase in the mix of direct hire relative to total revenue. Also contributing to a lesser extent is an increase in prices and spreads on some of our contracting services business.

Speaker #2: However, gross margins improved and were 39.9% for the quarter and 38.0% year-to-date, both up significantly—450 basis points and 380 basis points, respectively—from 35.4% for the prior-year quarter and 34.2% for the prior year-to-date.

Speaker #2: The significant improvements in our gross margins are mainly attributable to the growth and increase in the mix of direct hire relative to total revenue.

Speaker #2: Also contributing to a lesser extent is an increase in prices and spreads on some of our contracting services business, while the loss of the higher-volume low-margin account we spoke about earlier caused a significant portion of our contract revenue reduction, year-to-date, it also has contributed slightly to an improvement in the business mix in our gross margins.

Kim Thorpe: While the loss of the higher volume, low margin account we spoke about earlier caused a significant portion of our contract revenue reduction year-to-date, it also has contributed slightly to an improvement in the business mix and our gross margins. Selling general and administrative expenses, or SG&A, were $7.8 million for the quarter and $23 million year-to-date, down 12% and 14% from the comparable prior year periods. Our SG&A as a percentage of revenues for the quarter was 37.7%, up from 36.5% for the prior year quarter. SG&A for the year-to-date was 37.8% and 36.5% for the prior year-to-date. This percentage increase is attributable to lower revenues in relation to fixed costs such as certain personnel and occupancy costs.

Speaker #2: Selling, general and administrative expenses, or SG&A, were $7.8 million for the quarter and $23 million year-to-date, down 12% and 14%, respectively, from the comparable prior-year periods.

Speaker #2: Our SG&A as a percentage of revenues for the quarter was 37.7%, up from 36.5% for the prior year quarter. SG&A for the year-to-date was 37.8%, compared to 36.5% for the prior year-to-date.

Speaker #2: This percentage increase is attributable to lower revenues in relation to fixed costs, such as certain personnel and occupancy costs. Execution of the cost reductions realized so far in fiscal 2026 has allowed us to throttle back the potential growth in this percentage that would have been more expected compared with the higher declines in revenues realized.

Kim Thorpe: Execution of the cost reductions realized so far in fiscal 2026 has allowed us to throttle back the potential growth in this percentage that would have been more expected compared with the higher declines in revenues realized. In response to the realities of our environment and in order to maintain a resilient posture, we continue to prioritize and focus heavily on the opportunities that are in front of us, including streamlining our core operations and improving our productivity to better match our current volumes of business. As Derek mentioned, we reduced our SG&A during the latter portion of fiscal 2025 by an estimated $3.8 million on an annual basis.

Speaker #2: In response to the realities of our environment, and in order to maintain a resilient posture, we continue to prioritize and focus heavily on the opportunities that are in front of us, including streamlining our core operations and improving our productivity to better match our current volumes of business.

Speaker #2: As Derek mentioned, we reduced our SG&A during the latter portion of fiscal 2025 by an estimated $3.8 million on an annual basis. These and other cost reductions so far have contributed $1.1 million to our decrease in SG&A for the quarter and $3.5 million year-to-date over the comparable prior year periods, aiding in our improvement in financial results despite lower volumes of business.

Kim Thorpe: These and other cost reductions so far have contributed $1.1 million to our decrease in SG&A for the quarter and $3.5 million year to date over the comparable prior year periods, aiding in our improvement in financial results despite lower volumes of business overall. We are now well underway updating and further integrating our ERP and applicant tracking systems and certain other key operating systems and processes. These new tools are expected to add substantial enhancements to our core business processes, ranging from significant improvements in the speed and accuracy of our client and candidate service processes and cycles, our ability to share and leverage client and candidate information across all our businesses, and are expected to increase our overall productivity and scalability and result in additional cost reductions and revenue improvements.

Speaker #2: Overall, we are now well underway, updating and further integrating our ERP and applicant tracking systems and certain other key operating systems and processes. These new tools are expected to add substantial enhancements to our core business processes ranging from significant improvements in the speed and accuracy of our client and candidate service processes and cycles, our ability to share and leverage client and candidate information across all our businesses, and are expected to increase our overall productivity and scalability and result in additional cost reductions and revenue improvements.

Kim Thorpe: Importantly, these initiatives also will include strategic and thoughtful implementation of AI tools to make us even more efficient and competitive. We are on track to be substantially complete with the implementation by the end of September and to be fully complete by the end of calendar 2026. In addition to positive earnings in terms of net income, EBITDA, and adjusted EBITDA in the quarter and significant improvements in our year-to-date operating results, the company also produced net cash from continuing operations for the quarter and reduced the amount of cash used in our operations year to date compared with the prior year to date. As of 30 June 2026, our liquidity position remained very strong at $20.3 million in cash. Our ABL facility, which remains undrawn, had availability of $5.2 million, net working capital of $24.4 million, and we had no outstanding debt.

Speaker #2: Importantly, these initiatives also will include strategic and thoughtful implementation of AI tools to make us even more efficient and competitive. We're on track to be substantially complete with the implementation by the end of September, and to be fully complete by the end of calendar 2026.

Speaker #2: In addition to positive earnings in terms of net income, EBITDA, and adjusted EBITDA in the quarter, and significant improvements in our year-to-date operating results, the company also produced net cash from continuing operations for the quarter and reduced the amount of cash used in our operations year-to-date compared with the prior year-to-date.

Speaker #2: As of June 30, 2026, our liquidity position remained very strong at $20.3 million in cash. Our ABL facility, which remains undrawn, had availability of $5.2 million. Net working capital was $24.4 million, and we had no outstanding debt.

Speaker #2: Our current and working capital ratio was a strong 5:1. Our net book value per share and net tangible book value per share were $46.23, respectively, as of June 30, 2026.

Kim Thorpe: Our current and working capital ratio was a strong five to one. Our net book value per share and net tangible book value per share were $0.46 and $0.23 respectively as of 30 June 2026. In conclusion, while these improvements in our results so far this fiscal year are a source of optimism, we do remain cautiously optimistic in our near-term outlook. At the same time, we also remain resolved to continue to improve our financial results and profitability and to stay focused and prepare for the long term, including the improvements in our core business processes and systems and the integration of AI that Derek and I just spoke about. Before I turn it back over to Derek, please note that reconciliations of GEE Group's non-GAAP financial measures discussed today with their GAAP counterparts can be found in the supplemental schedules included in our earnings press release.

Speaker #2: In conclusion, while these improvements in our results so far this fiscal year are a source of optimism, we do remain cautiously optimistic in our near-term outlook.

Speaker #2: At the same time, we also remain resolved to continue to improve our financial results and profitability, and to stay focused and prepare for the long term, including improvements in our core business processes and systems and the integration of AI that Derek and I just spoke about.

Speaker #2: Before I turn it back over to Derek, please note that reconciliations of GEE Group's non-GAAP financial measures discussed today with their GAAP counterparts can be found in the supplemental schedules included in our earnings press release.

Speaker #2: Now I'll turn the call back over to Derek.

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

Speaker #1: Thank you, Kim. Despite some macroeconomic headwinds and staffing industry challenges impacting the demand for our services, we are aggressively managing and preparing our business to continue to deliver profitability, and continuing with the execution on both organic and M&A growth plans and initiatives.

Derek Dewan: Thank you, Kim. Despite some macroeconomic headwinds and staffing industry challenges impacting the demand for our services, we are aggressively managing and preparing our business to continue to deliver profitability and continuing with the execution on both organic and M&A growth plans and initiatives. As previously announced, GEE Group has engaged Roth Capital Partners to assist in evaluating strategic alternatives available to the company, which would maximize shareholder value. This initiative has been led by the board's mergers and acquisition committee in conjunction with the entire board of directors, management, and Roth. This robust process included several meetings to review and evaluate multiple expressions of interest for a potential M&A transaction with the company from various parties, as well as the consideration of other strategic alternatives to enhance shareholder value.

Speaker #1: As previously announced, GEE Group has engaged Roth Capital Partners to assist in evaluating strategic alternatives available to the company which would maximize shareholder value.

Speaker #1: This initiative has been led by the Board’s Mergers and Acquisitions Committee, in conjunction with the entire Board of Directors, management, and Roth. This robust process included several meetings to review and evaluate multiple expressions of interest for a potential M&A transaction with the company from various parties, as well as the consideration of other strategic alternatives to enhance shareholder value.

Speaker #1: Our board of directors, in accordance with its fiduciary duty, will consider any bona fide offer regarding a business combination, acquisition, or other transaction that it believes will enhance shareholder value.

Derek Dewan: Our board of directors, in accordance with its fiduciary duty, will consider any bona fide offer regarding a business combination, acquisition, or other transaction that it believes will enhance shareholder value. 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. Now, Kim and I would be happy to answer your questions. Please just ask one question and rejoin the queue with a follow-up as needed. If there's time, we'll come back to you for additional questions.

Speaker #1: 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.

Speaker #1: Now, Kim and I would be happy to answer your questions. Please just ask one question, and rejoin the queue with a follow-up as needed.

Speaker #1: If there's time, we'll come back to you for additional questions.

Speaker #3: Okay, at this time, just give us a moment to reposition here for the Q&A. Okay, our first question is from one of our investors.

Kim Thorpe: Okay. At this time, just give us a moment to reposition here for the Q&A. Okay, our first question is from one of our investors. Roth was engaged 5 months ago, and substantial progress was the message in May. How many parties have submitted indications of interest? How many have progressed to diligence? Will you commit to a decision timeframe? Do you want me to take that?

Speaker #3: Roth was engaged five months ago, and substantial progress was the message in May. How many parties have submitted indications of interest?

Speaker #3: How many have progressed to diligence? Will you commit to a decision timeframe? Do you want me to take that? Yeah. As Derek just reported, we are in a process. I can't get into details about the process because that wouldn't be appropriate, but I can say that the response has been robust.

Derek Dewan: Sure.

Kim Thorpe: Yeah. As Derek just reported, we are in a process. I can't get into details about the process because that wouldn't be appropriate, but I can say that the response has been robust. We're well along our way, and our board and M&A committee are actively at it. We hope to have a decision very soon. It wouldn't be appropriate to try to pre-announce a timeframe, but it'll be as soon as the time is right, and when the time is right, we will report something out on it. The next question is I'm skipping over several questions that are getting into some activists, it looks like, planted inappropriate questions. I'm going to skip over those. What would be your ideal outcome of the strategic review? Derek, do you want to take that?

Speaker #3: We're well along our way, and our Board and M&A Committee are actively at it. We hope to have a decision very soon. It wouldn't be appropriate to try to pre-announce a timeframe, but it will be as soon as the time is right, and when the time is right, we will report something out on it.

Speaker #3: The next question is—I'm skipping over several questions that are getting into some activists, it looks like, planted inappropriate questions. So I'm going to skip over those.

Speaker #3: What would be your ideal outcome of the strategic review? Derek, do you want to take that?

Speaker #4: The likely outcome?

Derek Dewan: The likely outcome?

Speaker #3: What would be the ideal outcome?

Kim Thorpe: What would be the ideal outcome?

Speaker #4: Ideal outcome? Well, obviously, the goal is to maximize shareholder value, and the process has been, as you said, robust and has included various options—different proposals, all of which would lead to increased shareholder value.

Derek Dewan: Well, obviously, the goal is to maximize shareholder value, and the process has been, as you said, robust and includes various options, different proposals, all of which would lead to increased shareholder value. So the evaluation process is what's happening now, and the M&A committee, in conjunction with the board and Roth, have met several times with management facilitating information flow. I can safely say that it will come to fruition soon, and we're optimistic that the result will be very good for shareholders. I think that's the important thing here, and we're very pleased that we can also deliver good operating results while this is going on because the bread and butter of the company is to deliver the results and have an appropriate balance sheet and outlook. We have.

Speaker #4: So, the evaluation process is what's happening now, and the M&A committee, in conjunction with the board and Roth, have met several times with management facilitating information flow. I can safely say that it will come to fruition soon, and we're optimistic that the result will be very good for shareholders.

Speaker #4: And I think that's the important thing here. We're very pleased that we can also deliver good operating results while this is going on, because the bread and butter of the company is to deliver the results and have an appropriate balance sheet and outlook—and we do.

Speaker #3: Can I add something? Just to make everybody aware, the process is being virtually entirely driven by the independent members of our board, including our largest shareholder.

Kim Thorpe: Can I add something?

Derek Dewan: Sure.

Kim Thorpe: Just to make everybody aware, the process is being virtually entirely driven by the independent members of our board, including our largest shareholder.

Speaker #4: Great point.

Derek Dewan: Great point.

Speaker #3: Okay, the next question is: What is the rationale behind the ABL facility? And it indicates, why do we keep it? It costs us $120,000 a year, etc.

Kim Thorpe: Okay. The next question is: What is the rationale behind the ABL facility? It indicates why do we keep it? It costs us $120,000 a year, et cetera. I will give you my take on it. Having an ABL is a pretty standard thing for staffing companies. Not to say that we are trying to follow a pack or anything, but in the staffing world, when there is a recovery, we would prefer not to burn excess cash that we have on hand potentially for other strategic things, including an attractive acquisition or a stock repurchase program or whatever the board might decide from time to time. We would rather have an ABL facility.

Speaker #3: I can—I'll give you my take on it. Having an ABL is a pretty standard thing for staffing companies, not to say that we're trying to follow the pack or anything.

Speaker #3: But in the staffing world, when there is a recovery, we would prefer not to burn excess cash that we have on hand, potentially for other strategic things, including an attractive acquisition or a stock repurchase program, or whatever the board might decide.

Speaker #3: From time to time, we would rather have an ABL facility when the business grows and there's a cash strain, because you are identifying, recruiting, and bringing on board—and paying—contractors to send out to clients in advance of sending the bills to the clients and then collecting the cash, on average, 40 to 45 days later.

Kim Thorpe: When the business grows, there is a cash strain because you are identifying, recruiting, and bringing on board and paying contractors to send out to clients in advance of sending the bills to the clients and then collecting the cash, on average, 40 to 45 days later. That is the purpose of keeping the ABL. In our case, our cost of our ABL is nearly, in fact, I think it is almost entirely offset by the interest income we are earning on our excess cash. We keep the facility in place. We did renew it, and we did renew it for a short period for a year recently. We intend to keep looking at it and see if we can get better pricing in the market.

Speaker #3: So that's the purpose of keeping the ABL. In our case, the cost of our ABL is nearly, in fact—I think it's almost entirely—offset by the interest income we're earning on our excess cash.

Speaker #3: So, we keep the facility in place now. We did renew it, and we did renew it for a short period—for a year—recently.

Speaker #3: And so we intend to keep looking at it and see if we can get better pricing in the market.

Derek Dewan: Derek, let me add, too, that virtually all staffing companies that do contract staffing have an ABL facility because the way contract staffing works, you expend dollars for payroll, and you hold an account receivable for the customer. But in order to fund the payroll, particularly in a growth mode, you do need to draw down on the ABL periodically. If the growth is not substantial, you are able to use your internally generated cash flow. However, most staffing companies, if not all, view it prudent to have an ABL facility. We have reduced it over time to reduce unused fees. But at this point, I think it is perfectly set to handle our business volume.

Speaker #4: Let me add, too, that virtually all staffing companies that do contract staffing have an ABL facility, because the way contract staffing works, you expend dollars for payroll, and you hold the account receivable for the customer.

Speaker #4: But in order to fund the payroll, particularly in a growth mode, you do need to draw down on the ABL periodically. Now, if the growth isn't substantial, you're able to use your internally generated cash flow.

Speaker #4: However, most staffing companies, if not all, view it as prudent to have an ABL facility. We've reduced it over time to reduce unused fees, but at this point, I think it's perfectly set to handle our business volume.

Speaker #3: Okay. The next question: Do you consider a share buyback to be part of a future capital allocation strategy?

Kim Thorpe: Okay. The next question: Do you consider a share buyback to be part of a future capital allocation strategy?

Speaker #4: The answer to that is yes. That's always on the table as an option for us. So, in connection with the review of strategic alternatives, that option in some form or fashion is presenting itself as well.

Derek Dewan: The answer to that is yes. That is always on the table as an option for us. In connection with the review of strategic alternatives, that option, in some form or fashion, is presenting itself as well. That is one option. I call it the arrows in the quiver, and it could come in different forms. But yes, the answer is yes.

Speaker #4: So that's one option. I call it the arrows in the quiver, and it could come in different forms. But yes, the answer is yes.

Kim Thorpe: Okay. Give me just a minute. The next question is: Now that the results are positive, does management have any plans to repurchase shares? I think Derek and I just

Speaker #3: Okay. Give me just a minute. The next question is, now that the results are positive, does management have any plans to repurchase shares? I think Derek and I just—.

Speaker #4: That dovetails back into what I just said, and in conjunction with the strategic alternative process. So, it's one of the options that we have available and will absolutely be considered.

Derek Dewan: That dovetails back into

Kim Thorpe: Right

Derek Dewan: what I just said, and in conjunction with the strategic alternative process.

Kim Thorpe: Right.

Derek Dewan: It is one of the options that we have available and will absolutely be considered.

Speaker #3: Yeah. And then straighten my book value would management consider buy? Yes. We've discussed that. Can you clarify what Roth's scope of work is or was for their engagement?

Kim Thorpe: Yeah. Straight low book value, would management consider buy. Yes, we discussed that. Can you clarify what Roth's scope of work is or was for their engagement? What is the status of that engagement? I think we talked about that.

Speaker #3: What is the status of that engagement? I think we talked about that.

Speaker #4: I can comment a little bit more because I think it's critical that it's very broad and encompasses kind of the universe of potential activities and things that we could do to benefit our shareholders.

Derek Dewan: I can comment a little bit more.

Kim Thorpe: Yeah

Derek Dewan: Because I think it is critical that it is very broad and encompasses the universe of potential activities and things that we could do to benefit our shareholders. They have been dutiful in their approach, timely, and in communication with our M&A committee, who have in turn included the full board, and management as appropriate. So, we feel confident that all of the alternatives are being addressed and the best option will be presented to shareholders. As you know, shareholders ultimately will have the final say into any type of transaction of significance.

Speaker #4: They have been dutiful in their approach and timely, and in communication with our M&A committee, who have in turn included the full Board and management as appropriate.

Speaker #4: So we feel confident that all of the alternatives are being addressed and the best option will be presented to shareholders. And as you know, shareholders ultimately will have the final say in any type of transaction of significance.

Speaker #3: Yeah. And then the final question: you mentioned that you think the stock is materially undervalued, and getting back to a prior question that cited the $0.21 a share.

Kim Thorpe: Yeah. The final question, you mentioned that you think stock is materially undervalued. Getting back to a prior question that cited the $0.21 a share, our tangible book value per share is greater than $0.21. So it is absurd that a business that is turning profitable again with $80 million in revenue would be valued at a negative number. So that is the math behind our thoughts there.

Speaker #3: I mean, our net book value — or tangible book value per share — is greater than $0.21. So, it's absurd that a business that is turning a profit again, with $80 million in revenue, would be valued at a negative number.

Speaker #3: So that's kind of the math behind our thought there.

Speaker #4: Let me add that, in connection with the share value and the share price, when the strategic alternatives are being reviewed, there's an impact analysis done to see the impact on share price.

Derek Dewan: Let me add that in connection with the share value or the share price, when the strategic alternatives are being reviewed, there is an impact analysis done to see the impact on share price.

Speaker #3: Correct.

Kim Thorpe: Correct.

Speaker #4: So the M&A committee is looking at that very, very hard in conjunction with the process, to make sure that it isn't just a strategic move with a hope for a benefit.

Derek Dewan: The M&A committee is looking at that very hard in conjunction with the process to make sure that it is not just a strategic move with a hope for a benefit. There is an analytical process to determine what the impact should be or could be on share price upon the consummation of the transaction or strategic alternative chosen.

Speaker #4: There's an analytical process to determine what impact there could be on share price upon the consummation of the transaction or strategic alternative chosen.

Speaker #3: Yeah, and there’s one more question that came in, and I think I skipped over one, and I apologize. The original question was: It sounds like the Hornet acquisition has not been successful in meeting the target.

Kim Thorpe: Yeah. There is one more question that came in, and I think I skipped over one and I apologize. The original question was: It sounds like the Hornet acquisition has not been successful in meeting the target you set when underwriting the deal, given the track record of poor acquisitions. I will just remind everybody that GEE Group had $40 million in revenue and a negative $4 million in operating losses and was about to be delisted when the present founders took it over. I will just throw that out there. I would quibble a little bit with the poor acquisition track record. We will commit to suspending acquisitions until at least the strategic review is concluded. As a practical matter, nothing probably is likely to happen until the strategic review is completed.

Speaker #3: You said, when underwriting the deal, given the track record of poor acquisitions, I'm just reminding everybody that GEE Group had $40 million in revenue and a negative $4 million or $4 million in operating losses, and was about to be delisted.

Speaker #3: When the president founders took it over. So I'll just throw that out there. So I would quibble a little bit with the 'poor acquisition track record.'

Speaker #3: We'll commit to suspending acquisitions until at least the strategic review concludes. As a practical matter, nothing is likely to happen until the strategic review is finished.

Speaker #3: It is completed. But having said that, we still maintain relationships with other parties in the marketplace. So we're going to continue to have those discussions.

Derek Dewan: Well, the strategic, yeah.

Kim Thorpe: Having said that, we still maintain relationships with other relations out in the marketplace. We are going to continue to have those discussions, but we are not going to rush out and do anything rash, to put you at ease on that. On the Hornet acquisition, the Hornet acquisition has been, I would argue, for the revenue it has brought and for the additional resources it has brought to the company, it has been hugely successful.

Speaker #3: But we're not going to rush out and do anything rash, so to put you at ease on that. And on the Hornet acquisition, the Hornet acquisition has been, I would argue, for the revenue it's brought and for the additional resources it's brought to the company, has been hugely successful.

Speaker #4: The offshore recruiting capability.

Derek Dewan: The offshore recruiting capabilities.

Speaker #3: For what we paid for it, it's generating four and a half to five million in revenues, and the total purchase price after adjustments we paid has been less than the commission we would pay annually.

Kim Thorpe: For what we paid for it is generating $4.5 or $5 million in revenues, and the total purchase price after adjustments we paid has been less than the commission we would pay annually.

Derek Dewan: Right

Speaker #3: To buy that much revenue. So, I would say the Hornet acquisition was a very nice, timely, tuck-in acquisition for us.

Kim Thorpe: To buy that much revenue. I would say the Hornet acquisition was a very nice, timely tuck-in acquisition for us.

Speaker #4: And the other branch and operating units are sharing the Hornet resources to fill job orders using the offshore team. So, we're going to a common applicant tracking system that happens to be the same system that the Hornet team is using offshore, so that we can integrate and share resources in real time.

Derek Dewan: The other brands and operating units are sharing the Hornet resources to fill job orders.

Kim Thorpe: Right

Derek Dewan: using the offshore team. We are going to a common applicant tracking system that happens to be the same system that the Hornet team is using offshore, so that we can integrate and share resources real time. So it has been a very good strategic transaction overall.

Speaker #4: So, it's been a very good strategic transaction overall.

Speaker #3: I think that's the last question, if I'm not mistaken. Yeah, that's the last question.

Kim Thorpe: I think that is the last question, if I am not mistaken. Yeah, that is the last question.

Speaker #4: We really appreciate you joining us today. We'll keep you posted on all developments, and most importantly, we have our noses to the grindstone, so to speak, on keeping the results where they need to be and growing them further, in fact.

Derek Dewan: We really appreciate you joining us today, and we will keep you posted on all developments. Most importantly, we have our noses to the grindstone, so to speak, on keeping the results where they need to be and growing them further, in fact, while the strategic alternatives process comes to some conclusion that we believe will benefit all shareholders substantially. Thank you for joining us today, and that concludes our call.

Speaker #4: While the strategic alternatives process comes to some conclusion, that we believe will benefit all shareholders. Substantially. Thank you for joining us today and that concludes our call.