GEE Group(US:JOB)2025-02-14 21:05Fiscal 2025 First Quarter Financial Highlights GEE Group reported a 15% revenue decline to $26.0 million in Q1 FY2025, improving net loss to $(0.7) million via 17% SG&A cuts Q1 FY2025 vs Q1 FY2024 Key Financial Metrics (in millions, except percentages and per share data) | Financial Metric | Q1 FY2025 | Q1 FY2024 | Change | | :--- | :--- | :--- | :--- | | Consolidated Revenues | $26.0 million | $30.6 million | -15% | | Gross Profit | $8.3 million | $9.7 million | -14.4% | | Gross Margin | 31.9% | 31.8% | +0.1 p.p. | | SG&A Expenses | $8.8 million | $10.6 million | -17% | | Net Loss | $(0.7) million | $(1.6) million | +56.3% | | Diluted Loss Per Share | $(0.01) | $(0.01) | No Change | | Adjusted EBITDA | $(0.3) million | $(0.2) million | -50% | - The decrease in consolidated revenues was primarily caused by a persistent malaise in demand, with fewer job orders from companies due to macroeconomic weaknesses, policy uncertainty, and persistent inflation4 - SG&A expenses decreased by 17% YoY, driven by cost reduction initiatives targeting fixed expenses like personnel, occupancy, and job boards, with SG&A as a percentage of revenue improving to 33.9% from 34.6%4 Business Segment Performance All segments experienced Q1 FY2025 revenue declines, with professional contract staffing down 14% to $21.5 million Q1 FY2025 Revenue by Segment (YoY Comparison, in millions) | Revenue Segment | Q1 FY2025 | Q1 FY2024 | Change | | :--- | :--- | :--- | :--- | | Professional Contract Staffing | $21.5 million | ~$25.0 million* | -14% | | Industrial Contract Services | $2.0 million | ~$2.5 million* | -20% | | Direct Hire Placement | $2.5 million | $3.1 million | -18% | Note: Q1 FY2024 segment revenues were not explicitly stated but calculated from the provided percentage changes and Q1 FY2025 values - The declines across all segments were attributed to reduced demand, workforce volatility, and economic headwinds, leading to fewer job orders and projects utilizing contract labor4 - The performance challenges experienced by the company are consistent with trends in the broader U.S. staffing industry, particularly in the cyclical direct hire placement sector4 Financial Position and Strategic Developments GEE Group maintained a strong balance sheet with $19.7 million cash and zero long-term debt, acquiring Hornet Staffing to enhance capabilities Key Balance Sheet and Liquidity Metrics (as of Dec 31, 2024, in millions) | Metric | Value | | :--- | :--- | | Cash Balance | $19.7 million | | ABL Credit Facility Availability | $7.0 million (undrawn) | | Net Working Capital | $25.9 million | | Long-Term Debt | Zero | | Shareholders' Equity | $83.6 million | | Current Ratio | 4.7 | | Net Book Value Per Share | $0.76 | | Net Tangible Book Value Per Share | $0.34 | - Subsequent to the quarter, the Company acquired Hornet Staffing, Inc., a provider of IT, professional, and customer service staffing solutions to large-scale, 'blue chip' companies8 - The Hornet acquisition is expected to enhance GEE Group's ability to compete for business from Fortune 1000 companies and other large users of contingent labor, particularly through Hornet's expertise with MSP and VMS systems89 Management Commentary and Outlook Management noted weak Q1 FY2025 demand, actively managing costs, adopting AI, and anticipating gradual demand improvement in late 2025 - CEO Derek E. Dewan noted that the hiring slowdown is due to an uncertain macroeconomic environment and the end of the post-pandemic 'job switching frenzy'9 - The company is tightly managing costs and plans to adopt artificial intelligence (AI) software for more cost-efficient recruiting and AI agents for prospecting target accounts9 - Management anticipates a gradual improvement in the demand environment in the latter part of 2025 and is prepared for an eventual recovery9 - GEE Group intends to deploy its capital judiciously, leveraging its strong balance sheet for both organic growth and strategic acquisitions like Hornet Staffing9 Non-GAAP Financial Measures and Reconciliations The company uses non-GAAP measures like adjusted net loss and adjusted EBITDA to evaluate performance, with Q1 FY2025 adjusted net loss at $(0.6) million Reconciliation of Net Loss to Non-GAAP Adjusted Net Loss Reconciliation to Non-GAAP Adjusted Net Loss (In thousands) | | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net loss | $ (692) | $ (1,555) | | Non-cash stock compensation | 118 | 153 | | Other income | (33) | - | | Severance agreements | - | 300 | | Acquisition, integration & restructuring | 91 | 243 | | Other losses (gains) | - | 5 | | Net tax effect (25.1%) | (44) | (176) | | Non-GAAP adjusted net loss | $ (560) | $ (1,030) | Reconciliation of Net Loss to Non-GAAP EBITDA and Adjusted EBITDA Reconciliation to Non-GAAP EBITDA and Adjusted EBITDA (In thousands) | | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net loss | $ (692) | $ (1,555) | | Interest expense | 66 | 71 | | Interest income | (155) | (190) | | Depreciation | 57 | 84 | | Amortization | 205 | 720 | | Other income | (33) | - | | Non-GAAP EBITDA | (552) | (870) | | Non-cash stock compensation | 118 | 153 | | Severance agreements | - | 300 | | Acquisition, integration & restructuring | 91 | 243 | | Other losses (gains) | - | 5 | | Non-GAAP adjusted EBITDA | $ (343) | $ (169) | Condensed Consolidated Financial Statements Unaudited financial statements detail Q1 FY2025 performance, showing a net loss of $692 thousand and total assets of $92.8 million Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (unaudited, in thousands) | | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | | :--- | :--- | :--- | | NET REVENUES | $ 26,026 | $ 30,631 | | Cost of contract services | 17,730 | 20,895 | | GROSS PROFIT | 8,296 | 9,736 | | Selling, general and administrative expenses | 8,815 | 10,606 | | Depreciation expense | 57 | 84 | | Amortization of intangible assets | 205 | 720 | | LOSS FROM OPERATIONS | (781) | (1,674) | | Interest income / (expense), net | 89 | 119 | | LOSS BEFORE INCOME TAX PROVISION | (692) | (1,555) | | NET LOSS | $ (692) | $ (1,555) | | BASIC & DILUTED LOSS PER SHARE | $ (0.01) | $ (0.01) | Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (unaudited, in thousands) | | Dec 31, 2024 | Sep 30, 2024 | | :--- | :--- | :--- | | ASSETS | | | | Cash | $ 19,694 | $ 20,828 | | Accounts receivable, net | 12,334 | 13,747 | | Total current assets | 32,988 | 35,400 | | Goodwill | 46,008 | 46,008 | | TOTAL ASSETS | $ 92,789 | $ 95,901 | | LIABILITIES & EQUITY | | | | Total current liabilities | 7,026 | 9,321 | | Total liabilities | 9,152 | 11,690 | | Total shareholders' equity | 83,637 | 84,211 | | TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | $ 92,789 | $ 95,901 |