• Revenue: $26 million for the quarter ended December 31, 2024, down 15% from the prior-year quarter.
• Gross Profit: $8.3 million, down 15% from the prior-year quarter.
• Gross Margin: 31.9%, slightly up from 31.8% in the prior-year quarter.
• Net Loss: $700,000, or $0.01 per diluted share, compared to a net loss of $1.6 million in the prior-year quarter.
• Adjusted EBITDA: Negative $300,000 for the quarter, compared to negative $200,000 in the prior-year quarter.
• SG&A Expenses: $8.8 million, down 17% from the prior-year quarter.
• Cash Position: $19.7 million as of December 31, 2024.
• Working Capital Ratio: 4.7-to-1 as of December 31, 2024, up from 4.2-to-1 as of December 31, 2023.
• Contract Staffing Services Revenue: $23.5 million, down 15% from the prior-year quarter.
• Professional Contract Services Revenue: $21.5 million, representing 91% of contract services revenue.
• Industrial Contract Services Revenue: $2 million, down 20% from the prior-year quarter.
• Direct Hire Revenues: $2.5 million, down 18% from the prior-year quarter.

• Warning! GuruFocus has detected 3 Warning Signs with JOB.

Release Date: February 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• GEE Group Inc (JOB) has a strong balance sheet with substantial liquidity, including $19.7 million in cash and no outstanding debt.
• The company is actively pursuing mergers and acquisitions, as evidenced by the recent acquisition of Hornet Staffing Inc, which is expected to enhance competitiveness and secure new business.
• Cost reduction initiatives have been implemented, resulting in a 17% decrease in SG&A expenses compared to the prior quarter.
• The company is integrating AI tools to improve sales targeting and recruiting processes, aiming to reduce costs and increase efficiency.
• GEE Group Inc (JOB) is positioned to capitalize on an anticipated recovery in the labor market, with strategic plans for organic growth and acquisitions.

Negative Points

• Consolidated revenues for the quarter were $26 million, down 15% from the comparable prior-year quarter.
• The company reported a net loss of $700,000 for the quarter, indicating ongoing financial challenges.
• The staffing industry is facing difficult economic and labor market conditions, impacting GEE Group Inc (JOB)'s top-line performance.
• Adjusted EBITDA for the quarter was negative $300,000, reflecting continued operational struggles.
• Direct hire revenues decreased by 18% compared to the prior-year quarter, highlighting challenges in this segment.

Q & A Highlights

Q: What is the company doing to drive sales and motivate the sales teams in a down cycle? A: Derek Dewan, CEO, explained that each vertical leader meets regularly with management to identify targets and discuss progress. They focus on cross-selling opportunities and have integrated the Hornet team to gain new business. The company has revamped its commission and profit-sharing structures to motivate salespeople and recruiters, offering better incentives for higher production.

Q: Can you comment on the unusual trading activity following the Hornet acquisition announcement? A: Derek Dewan, CEO, noted that the trading volume exceeded the total outstanding shares, which was unusual. Despite inquiries with exchanges, the source of the activity remains unclear. He described it as an aberration, similar to an event in 2020 when the company renegotiated its debt.

Q: How is GEE Group utilizing generative AI in its operations? A: Derek Dewan, CEO, mentioned the integration of AI agents for sales targeting and recruiting, which will be part of their tech environment. AI tools are expected to increase speed and reduce costs. Kim Thorpe, CFO, added that AI is used for regulatory composition, enhancing productivity.

Q: Is everyone in the industry struggling, and what are outperforming companies doing? A: Derek Dewan, CEO, acknowledged industry-wide challenges, particularly in IT and accounting. Some companies perform better due to less impacted customer bases. He noted a trend towards consultative approaches and recurring revenue streams, which GEE Group plans to pursue through acquisitions and internal growth.

Q: What is the outlook for the staffing industry and GEE Group's strategy moving forward? A: Derek Dewan, CEO, expressed cautious optimism for a leveling off and gradual improvement in 2025. The company is adjusting its cost structure and focusing on strategic spending. They aim to restore growth through organic and M&A initiatives, leveraging the Hornet acquisition and exploring further opportunities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.