GEE Group(US:JOB)2022-08-15 20:32Financial Performance - Consolidated net revenues for the three months ended June 30, 2022, were $41,113, an increase of $3,045 or 8% compared to $38,068 for the same period in 2021[113]. - The Company's net income for the nine-month period ended June 30, 2022, was $20,388, compared to a net loss of $(2,987) for the same period in 2021, primarily due to gains from PPP loan forgiveness[149]. - Consolidated net revenues for the nine-month period ended June 30, 2022, were $123,589, representing a 15% increase from $107,429 in 2021[132]. Revenue Breakdown - Direct hire placement services revenues increased by $2,497, or approximately 45%, to $8,026 for the three months ended June 30, 2022, compared to $5,529 in the prior year[115]. - Professional contract services revenue increased by $9,649, or 12%, while direct hire placement services revenue surged by $7,494, or 60%, for the nine-month period ended June 30, 2022[131][134]. Profitability Metrics - The overall gross profit margin improved to approximately 40.1% for the three months ended June 30, 2022, up from 36.3% in the same period of 2021, largely due to a higher mix of direct hire revenues[119]. - The Company's combined gross profit margin improved to 37.7% for the nine-month period ended June 30, 2022, up from 34.7% in 2021, driven by a higher mix of direct hire revenues[138]. - Professional contract services gross margin was approximately 26.9% for the three months ended June 30, 2022, compared to 26.8% in the same period of 2021[120]. - Industrial contract services gross margin improved to approximately 16.6% for the three months ended June 30, 2022, from 15.4% in the prior year[121]. Expenses - Selling, general and administrative expenses (SG&A) increased by $1,747 for the three months ended June 30, 2022, with SG&A as a percentage of revenues rising to approximately 31% from 29% in the prior year[122]. - Selling, general and administrative expenses (SG&A) increased by $7,668 for the nine-month period ended June 30, 2022, with SG&A as a percentage of revenues rising to approximately 30% from 28% in 2021[144]. - The cost of contract services for the three months ended June 30, 2022, totaled $24,612, an increase of $370 or approximately 2% compared to $24,242 in the prior year[117]. - The cost of contract services for the nine-month period ended June 30, 2022, totaled $76,992, reflecting a 10% increase from $70,115 in 2021[136]. Operational Efficiency - The income from operations increased by $1,205 for the three months ended June 30, 2022, compared to the same period in 2021[127]. - Interest expense decreased to $96 for the three months ended June 30, 2022, down by $443 from $539 in the same period of 2021, primarily due to the retirement of the Former Credit Agreement[128]. Cash Flow and Liquidity - As of June 30, 2022, the Company had cash of $17,540, an increase of $7,593 from $9,947 as of September 30, 2021[152]. - Net cash provided by operating activities for the nine-month period ended June 30, 2022 was $7,818, compared to $(2,276) for the same period in 2021[153]. - The Company had working capital of $26,521 as of June 30, 2022, a significant increase from $2,528 as of September 30, 2021, primarily due to free cash flow generation and PPP loan forgiveness[152]. - The Company had approximately $14,317 in availability for borrowings under its CIT Facility as of June 30, 2022, with no outstanding borrowings[160]. Debt Management - The Company repaid $56,022 in aggregate outstanding indebtedness under the Former Credit Agreement on April 20, 2021, using proceeds from a public offering[156]. - The CIT Facility, established on May 14, 2021, provides a $20 million asset-based senior secured revolving credit facility, maturing on May 14, 2026[158]. Business Adaptation - The company continues to adapt its business model in response to COVID-19, including implementing flexible work-from-home arrangements and converting certain branch offices to virtual locations[116]. - Management aims to increase revenue through organic growth in professional contract services and direct hire placement, focusing on higher-margin sectors such as IT, engineering, healthcare, and finance[150]. Tax and Impairment - The effective tax rate for the nine-month periods ended June 30, 2022, and 2021, was lower than the statutory rate, primarily due to the valuation allowance on the net DTA position[148]. - The Company recognized a non-cash goodwill impairment charge of $2,150 during the nine-month period ended June 30, 2022, with no additional impairment charge taken as of June 30, 2022[145][149]. Payroll Tax Deferral - The Company deferred $3,654 in payroll taxes under the CARES Act, with $1,827 paid during the nine-month period ending June 30, 2022[167].