GEE Group(JOB) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated revenues for Q2 2025 were $24.5 million, down 41% year-over-year, and year-to-date revenues were $48.5 million, also down 41% [6][12] - Gross profits for the quarter were $8.4 million with a gross margin of 34.1%, compared to 32.8% in the prior year quarter [7][14] - The company reported a net loss from continuing operations of $33 million or $0.30 per diluted share for the quarter, compared to a net loss of $900,000 or $0.01 per diluted share in the prior year quarter [7][15] - Non-GAAP adjusted EBITDA was negative $600,000 for the quarter and negative $900,000 year-to-date [7][16] - The liquidity position remained strong with $18.7 million in cash and no outstanding debt [17] Business Line Data and Key Metrics Changes - Professional contract staffing services revenues were $21.5 million for the quarter, down 71% year-over-year, and $43 million year-to-date, also down 71% [12] - Direct hire placement revenues were $3 million for the quarter, down 20%, and $5.5 million year-to-date, slightly above the prior six-month period [12] Market Data and Key Metrics Changes - The staffing industry is experiencing a cooling effect due to macroeconomic uncertainties, interest rate volatility, and inflation, leading to layoffs and hiring freezes among clients [4][5] - Many client initiatives requiring additional labor have been put on hold, impacting job orders for both temporary help and direct hire placements [5] Company Strategy and Development Direction - The company is focusing on M&A activities, having completed its first transaction in the quarter and evaluating several others [8][20] - There is a renewed focus on integrating AI technology into recruiting and sales processes to enhance productivity [8][18] - The company aims to restore profitability by the latter part of 2025 or early 2026 through expense reduction and revenue growth [9][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging conditions in the staffing industry and is cautiously optimistic about future recovery [4][9] - The company is preparing for a more conducive labor market and aims to aggressively pursue new business opportunities [20][50] Other Important Information - The company has paused share repurchases since December 2023, having repurchased just over 5% of outstanding shares [10] - The industrial staffing services segment is classified as a discontinued operation as of March 31, 2025, as the company is negotiating its sale [6][25] Q&A Session Summary Question: Can you provide any additional color on the status of the current M&A pipeline? - The pipeline is robust, and the company is cautiously tracking the performance of potential targets [22] Question: Do you have any letters of intent that are outstanding? - Yes, there are nonbinding letters of intent outstanding [22] Question: What is the status of the industrial business and its potential sale? - The sale process has been ongoing since April of the previous year and is expected to close soon [25][26] Question: What are your plans regarding share repurchases? - Both M&A and share repurchases are being considered, with execution dependent on visibility of existing business [28][40] Question: What specific actions are being taken to reduce SG&A expenses? - The company is reviewing performance and looking to utilize offshore recruiters and AI to reduce costs [47][48]