GEE Group(US:JOB)2022-08-16 22:04Financial Data and Key Metrics Changes - The company reported net income of $2.6 million or $0.02 per diluted share for Q3 2022, and for the nine-month period, net income was $20.4 million or $0.18 per diluted share, compared to net losses in the same periods of the previous year [5][20]. - Consolidated revenues for Q3 2022 were $41.1 million, up 8% year-over-year, and for the nine-month period, revenues were $123.6 million, up 15% year-over-year [6][9]. - Non-GAAP adjusted EBITDA for Q3 2022 was $4.1 million, a 34% increase from the prior year, representing a 10% margin to revenue [7][22]. Business Line Data and Key Metrics Changes - Contract staffing services contributed $33.1 million (80% of revenues) for Q3 2022, with a 2% increase year-over-year, while direct placement services contributed $8 million (20% of revenues), showing a 45% increase year-over-year [9][10][11]. - Total revenues from the professional staffing services segment were $37 million, representing 90% of total revenue, with an 8% increase year-over-year [13]. - Industrial staffing services revenues were $4.1 million for Q3 2022, compared to $3.8 million in Q3 2021, indicating a slight increase despite pandemic-related challenges [15]. Market Data and Key Metrics Changes - The IT services end markets accounted for 48% of professional services business segment revenues for the nine-month period, with a 27% year-over-year increase [13]. - Other professional services markets accounted for 52% of revenues, with a 14% year-over-year increase [14]. Company Strategy and Development Direction - The company aims for sustainable growth and has a target of reaching $1 billion in sales, focusing on creating shareholder value and opportunities for employees [29][46]. - There is a strong emphasis on maintaining a clean balance sheet with no outstanding debt, which positions the company well for future growth and acquisitions [26][29]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate potential economic downturns, citing a strong labor market and ongoing demand for staffing services [56][96]. - The company is actively hiring and filling job orders, indicating a bullish outlook despite economic uncertainties [56][57]. Other Important Information - The company reported a working capital ratio of 3.0 to 1 and positive cash flow from operating activities of $3.4 million for Q3 2022 [24]. - The liquidity position is strong, with over $17 million in cash and $14 million available under a bank credit facility [29]. Q&A Session Summary Question: Why not use cash for stock buybacks? - Management indicated that while stock buybacks are considered, maintaining cash reserves for M&A opportunities is prioritized [31][33]. Question: What is the company's plan regarding undervaluation? - Management acknowledged the company's undervaluation and mentioned ongoing discussions about stock buybacks and potential acquisitions [44][66]. Question: How much cash is needed to run operations? - The company has historically operated on $3 million to $4 million in cash, which covers payroll cycles effectively [35][36]. Question: How will acquisitions be funded? - Acquisitions will be funded through available cash, financing, or seller financing, with a focus on not over-leveraging the company [41][42]. Question: What is the outlook for the labor market? - Management noted that the labor market remains tight, with more job orders than candidates, indicating continued demand for staffing services [56][57]. Question: How does the company view competition? - The company monitors various competitors across different verticals, emphasizing its unique positioning in the market [77][78].