GEE Group(JOB) - 2025 Q2 - Quarterly Results

Financial Highlights GEE Group experienced revenue declines and a significant net loss in Q2 and YTD FY2025, primarily due to non-cash impairment charges, despite slight gross margin improvement Q2 & YTD FY2025 Key Financial Metrics (vs. FY2024) | Metric | Q2 FY2025 | Q2 FY2024 | Change | YTD FY2025 | YTD FY2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Consolidated Revenues | $24.5M | $25.6M | -4% | $48.5M | $53.7M | -10% | | Gross Profit | $8.4M | $8.4M | 0% | $16.3M | $17.7M | -8% | | Gross Margin | 34.1% | 32.8% | +1.3 p.p. | 33.6% | 33.0% | +0.6 p.p. | | SG&A Expenses | $9.3M | $9.6M | -3% | $17.7M | $19.7M | -10% | | Loss from Continuing Ops | $(33.0)M | $(0.9)M | N/A | $(33.6)M | $(2.4)M | N/A | | Diluted EPS (Continuing Ops) | $(0.30) | $(0.01) | N/A | $(0.31) | $(0.02) | N/A | Revenue by Service Type (Q2 & YTD FY2025) | Revenue Source | Q2 FY2025 | Q2 FY2024 | Change | YTD FY2025 | YTD FY2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Professional Contract Staffing | $21.5M | $23.1M | -7% | $43.0M | $48.2M | -11% | | Direct Hire Placement | $3.0M | $2.5M | +20% | $5.5M | $5.5M | 0% | - The significant increase in loss from continuing operations was primarily due to two non-cash charges: a $22.0 million goodwill impairment and a $9.9 million valuation allowance against net deferred tax assets[2][3] - As of March 31, 2025, the company reported a strong liquidity position with $18.7 million in cash, $7.4 million available under its undrawn credit facility, and zero long-term debt[7] Operational Highlights & Strategic Updates GEE Group reclassified Industrial Staffing as discontinued operations and acquired Hornet Staffing to enhance professional services and leverage offshore recruiting - The former Industrial Staffing Services segment has been classified as a discontinued operation, with its results reclassified accordingly[1][7] - On January 3, 2025, the Company acquired Hornet Staffing, Inc. to enhance its service offerings for large companies, particularly in IT and professional verticals, utilizing managed service providers (MSP) and an offshore recruiting team[7] Management Commentary and Outlook Management acknowledges a challenging macroeconomic environment, expressing cautious optimism for H2 FY2025, focusing on AI integration, offshore recruiting, and expansion into higher-value services - Management attributes the challenging business environment to macroeconomic uncertainty, causing clients to be cautious with hiring and new projects, and a reduction in available candidates due to the "great stay" phenomenon[8] - The company's strategic plan focuses on competing more effectively by: * Embracing artificial intelligence (AI) to enhance recruiting and sales * Using offshore recruiting to maximize fill rates efficiently * Expanding into higher-end services like HR consulting, IT statement of work (SOW) projects, and resource process outsourcing (RPO)[8] - GEE Group is focused on prudently managing costs and streamlining the business, while leveraging its strong balance sheet (current ratio of 3.9) to make investments that maximize shareholder value[8] Financial Statements The consolidated financial statements reflect a significant net loss driven by goodwill impairment and a substantial decrease in total assets and shareholders' equity Consolidated Statements of Operations Condensed Statement of Operations (in thousands) | Line Item | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $24,495 | $25,589 | $48,520 | $53,726 | | Gross Profit | $8,360 | $8,393 | $16,286 | $17,729 | | Goodwill impairment charge | $22,000 | $0 | $22,000 | $0 | | Loss from Operations | $(23,220) | $(1,948) | $(23,993) | $(3,586) | | Loss from Continuing Operations | $(32,956) | $(919) | $(33,640) | $(2,436) | | Consolidated Net Loss | $(33,119) | $(1,008) | $(33,811) | $(2,563) | | Diluted EPS (Consolidated) | $(0.30) | $(0.01) | $(0.31) | $(0.02) | Consolidated Balance Sheets Condensed Balance Sheet (in thousands) | Line Item | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Cash | $18,501 | $20,735 | | Total current assets | $32,472 | $35,401 | | Goodwill | $24,607 | $46,008 | | Deferred tax assets, net | $0 | $9,495 | | Total Assets | $61,770 | $95,902 | | Total current liabilities | $8,363 | $9,322 | | Total Liabilities | $11,129 | $11,691 | | Total Shareholders' Equity | $50,641 | $84,211 | Reconciliation of Non-GAAP Financial Measures The company's non-GAAP measures show Adjusted EBITDA declined and Free Cash Flow turned negative for Q2 and YTD FY2025, reflecting operational challenges Reconciliation of Net Loss to EBITDA and Adjusted EBITDA Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss from continuing ops | $(32,956) | $(919) | $(33,640) | $(2,436) | | Non-GAAP EBITDA | $(945) | $(1,163) | $(1,458) | $(2,009) | | Non-GAAP adjusted EBITDA | $(590) | $(554) | $(894) | $(699) | Reconciliation of Net Cash to Free Cash Flow Free Cash Flow Reconciliation (in thousands) | Metric | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(1,141) | $423 | | Acquisition of property and equipment | $(4) | $(38) | | Non-GAAP free cash flow | $(1,145) | $385 | Company Overview GEE Group Inc. is a long-standing specialized staffing solutions provider, offering professional services in IT, engineering, finance, accounting, and healthcare - GEE Group provides professional staffing services in IT, engineering, finance, and accounting through brands like Access Data Consulting, Agile Resources, Omni-One, Paladin Consulting, and various SNI brands[24] - The company also operates in the healthcare sector via its Scribe Solutions brand, providing medical scribes for emergency departments and medical practices[24] Forward-Looking Statements This section outlines the inherent risks and uncertainties associated with forward-looking statements, emphasizing that actual results may differ materially from projections - The press release contains forward-looking statements that are subject to risks and uncertainties and are not guarantees of future performance[25] - Key risk factors include changes in economic conditions, loss of customers, acts of war or terrorism, changes in regulations, failure to integrate acquisitions, and the adverse impact of geopolitical events or health crises[25]