Earnings call: GEE Group reports Q2 losses amid market challenges

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Earnings call: GEE Group reports Q2 losses amid market challenges
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GEE Group Inc. (NYSEAMERICAN: JOB), a provider of professional staffing services, reported a net loss for the second quarter of fiscal year 2024 as it faced a challenging macroeconomic and labor market environment. For the quarter ending March 31, 2024, the company announced consolidated revenues of $28 million and a net loss of $1 million. Despite the downturn, GEE Group remains focused on strategic growth initiatives, including organic expansion and potential mergers and acquisitions.

Key Takeaways

  • GEE Group's Q2 2024 consolidated revenues stood at $28 million, with a net loss of $1 million.
  • Gross profit for the quarter was $8.7 million, with a gross margin of 31.3%.
  • Non-GAAP adjusted EBITDA was negative $600,000 for the quarter.
  • The company has a strong balance sheet with $21.2 million in cash and $8.2 million in credit facility availability.
  • GEE Group is exploring strategic growth through acquisitions and has received acquisition offers.

Company Outlook

  • GEE Group is cautiously optimistic, focusing on managing through the downturn.
  • Plans are in place to grow organically and through mergers and acquisitions.
  • The company has observed signs of improvement in April and expects better performance in the coming months.

Bearish Highlights

  • The decline in revenues and profits is attributed to decreased demand for temporary and permanent employees.
  • Gross profit for Q2 2024 was down 34% compared to Q2 2023.
  • Gross margin for industrial contract services declined by 130 basis points.

Bullish Highlights

  • The company's gross margin for professional contract services improved by 30 basis points.
  • Selling, general, and administrative expenses decreased by 15% in Q2 2024 compared to Q2 2023.
  • GEE Group's current margins remain relatively high compared to competitors.

Misses

  • Net loss of $1 million in Q2 2024, down from a net income of $700,000 in Q2 2023.
  • Adjusted net loss and EBITDA also showed declines.

Q&A Highlights

  • GEE Group would consider acquisitions in niche staffing sectors, with multiples ranging from five to eight times EBITDA.
  • The company will not use stock for M&A transactions at depressed price levels.
  • There are no signs of distress in customers' ability to pay.
  • Stock buybacks are part of the company's capital allocation strategy.

GEE Group's financial performance reflects the broader staffing industry's challenges, with a notable decrease in demand for permanent hires. However, the company's efforts to retain top talent and its solid financial foundation provide a basis for cautious optimism in a competitive market. GEE Group's strategic focus on acquisitions and organic growth, combined with prudent capital management, positions it to potentially capitalize on market improvements as conditions stabilize.

InvestingPro Insights

GEE Group Inc. (NYSEAMERICAN: JOB) has navigated a tough quarter, as reflected in the latest financial figures. Yet, there are some critical metrics and InvestingPro Tips that may offer a more nuanced perspective on the company's position and outlook.

InvestingPro Data highlights include:

  • A Price/Earnings (P/E) Ratio of 4.53, suggesting that the stock may be undervalued compared to earnings.
  • A Price/Book (P/B) Ratio of 0.37, indicating the market values the company at less than its book value, which could imply that the stock is undervalued or that investors are not confident in the company's ability to generate future growth.
  • A 6 Month Price Total Return of -43.86%, reflecting significant market skepticism over the past half year.

InvestingPro Tips that are particularly relevant to GEE Group at this juncture include:

1. The company is trading at a low Price/Book multiple, which could interest value investors looking for potential bargains in the market.

2. Management has been aggressively buying back shares, signaling confidence in the company's intrinsic value and potentially providing support for the stock price.

For readers looking to delve deeper into GEE Group's financials and future prospects, additional InvestingPro Tips can be found on the platform. There are 5 more tips available that provide insights into the company's financial health and market position. To access these valuable tips and more, visit https://www.investing.com/pro/JOB and remember to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. This offer could provide investors with a more comprehensive understanding of GEE Group's potential trajectory in the face of current industry challenges.

Full transcript - General Employment Enterprises (JOB) Q2 2024:

Derek Dewan: Hello, and welcome to the GEE Group Fiscal 2024 Second Quarter, and First Half ended March 31, 2024, earnings and update webcast conference call. I'm Derek Dewan, Chairman and Chief Executive Officer of GEE Group. I will be hosting today's call. Joining me as a co-presenter is Kim Thorpe, our Senior Vice President and Chief Financial Officer. Thank you for joining us today. It is our pleasure to share with you GEE Group's results for the fiscal 2024 second quarter, and first half ended March 31, 2024 and provide you with our outlook for the remainder of the 2024 fiscal year and the foreseeable future. Some comments Kim and I will make may be considered forward-looking, including predictions, expectations, and other statements about our future performance. These represent our current judgments of what the future holds and are subject to risks and uncertainties that actual results may differ materially from our forward-looking statements. These risks and uncertainties are described below under the caption, forward-looking statements, safe harbor, and in Wednesday's earnings press release, and our most recent form 10-Q, 10-K and other SEC filings under the caption's cautionary statement regarding forward-looking statements and forward-looking statements. We assume no obligation to update statements made on today's call. During this presentation, we also will talk about some non-GAAP financial measures, reconciliation and explanation of the non-GAAP measures we will address today are included in the earnings press release, our presentation of financial amounts and related items including growth rates, margins, and trend metrics are based upon rounded amounts for purposes of this call, and all amounts, percentages, and related items presented or approximations accordingly. For your convenience, our prepared remarks for today's call are available at the investor center of our website, www.geegroup.com. We have faced very difficult and challenging conditions so far in the fiscal 2024 first half, mainly stemming from ongoing macroeconomic and labor market instability, volatility, and uncertainty, particularly as they have affected businesses use of contingent labor and their hiring of full-time personnel. As we reported in the past, the demand environment for us and our industry peers began to soften in the middle part of calendar 2023 following a robust hiring of both contract labor and permanent employees in calendar 2021 and 2022, much of which was attributable to a post-COVID-19 bounce in employment. Many IT projects and corporate expansion activities requiring additional labor have been put on hold with some layoffs implemented in conjunction with a hiring freeze. These conditions have continued to negatively impact JOB orders so far in the first half of calendar 2024. Consolidated revenues were $28 million for the fiscal 2024 second quarter and $58.7 million for the first half of fiscal 2024. Gross profit and gross margin were $8.7 million and 31.3% respectively for the fiscal 2024 second quarter and $18.5 million and 31.5% for the first half of fiscal 2024. Consolidated non-GAAP adjusted EBITDA was negative at $600,000 for the first -- for the fiscal 2024 second quarter and negative $800,000 for the first half of fiscal 2024. We reported a net loss of $1 million for $0.01 per diluted share for the fiscal 2024 second quarter and a net loss of $2.6 million or $0.02 per diluted share for the first half of fiscal 2024. The prior fiscal 2023 second quarter and first half results were solid although lower when compared to 2022's best-ever results, which included record high demand for direct higher placement services and many special projects on the contract side driven by a post COVID recovery resulting in an upward bounce and hiring at that time. The pullback in demand for direct higher placement services in particular which began in the middle part of calendar 2023 has continued into the first half of 2024 so far and contributed to the lower fiscal 2024 second quarter and first half results. Performance is also down in nearly universally among our industry peers as we all are facing similar challenges and the industry observers have labeled our current situation the big stay. Employers are holding tight onto their good reliable employees so turnover and replacement hiring of full-time personnel are down accordingly. On the contract side our clients continue to postpone projects in many areas including IT software implementation and systems upgrades, accounting and finance special work in manufacturing production and facilities expansion resulting in fewer contractor assignments. The good news in this is that our client retention itself remains outstanding even though orders are down from normal levels across nearly all verticals. Additionally we are beginning to see signs of improvement in some of the leading indicators we have been tracking. These positive trends have been mentioned in recent reports covering the staffing industry and by other peer group companies and their press releases and public filings. It remains unclear at this juncture however whether it's sustainable and as to when exactly the challenges faced by us in the US staffing industry overall may be expected to meaningfully subside. So as indicated in our earnings press release we do remain cautiously optimistic in our outlook. Before I turn it over to Kim, I would like to touch on some other recent important developments. Less than a month ago we announced the completion of the company's review of strategic alternatives undertaken by our board directors in conjunction with its M&A committee with the assistance of the investment banking firm DC advisory. We are now well underway formulating our plans and budgets with which to execute on the M&A committees and DC advisories recommendations which include making prudent investments to grow both organically and through mergers and acquisitions. Without going into details for now armed with considerable excess cash and potential available financing we already have begun both adding and training new revenue producers and revving up sales initiatives in key markets and also revisiting our M&A targets and socializing with several targets at this stage. We paused share repurchases on December 31, 2023 having purchased 6.1 million shares of GEE Group stock for just over 5% of our outstanding shares at the beginning of the program. For now our board and management agree that it is judicious to discontinue share repurchases for the time being at least until we gain more clarity on when market conditions may improve and until then how much of our excess cash should be held in reserve. Share repurchases always will be a part of our capital allocation strategy and a bonafide alternative use of our excess capital and implemented if and when prudent. However, in the context of our overall growth strategy it is not by itself a bonafide long-term course of action to maximize enterprise value and increase shareholder value. Also there's some other bright spots in our outlook. It is still too early to predict when a definitive upward turn in our existing down cycle will occur. However, we are seeing some positive results from our recent investments to accelerate growth. Price and spread improvements in our professional verticals for beginning to take hold and JOB orders were up in April. Our revenues for April and revenues for billing day are coming in higher than both the month of March 2024 and the average monthly revenues for the entire quarter. We also have continued to achieve excellent client retention most notably among our largest clients throughout the current cycle. We view continued good client retention to be a positive sign for things to come as the cycle begins to approve. I want to assure everyone once again that our sole focus is to manage through the downturn and to restore growth as quickly as possible. We have a strong balance sheet with substantial liquidity in the form of cash and borrowing capacity and are well prepared to do both. We also continue to assert that our stock is undervalued and especially. So based upon recent trading at levels very near and even slightly below tangible book value. Also, while our stock price has been down since the last earnings release, only a small portion of our float is actually trading at this low level. Further evidence that is undervalued and has substantial room to grow especially from here. And finally before I turn it over to Kim, I once again wish to thank our wonderful dedicated employees and associates. They work extremely hard every day to ensure that our clients get the very best services. They are a key factor in our prior achievements and the most important driver of our company's future success. At this time, I'll turn over the call to our Senior Vice President and Chief Financial Officer, Kim Thorpe, who will further elaborate on our fiscal 2024 second quarter and the year-to-date results. Kim?

Kim Thorpe: Thank you, Derek, and good morning. As Derek mentioned, consolidated revenues for the three and six month periods in March 31, 2024 were $28 million and $58.7 million, down 28% and 27% respectively compared with the same fiscal 2023 periods. Professional and industrial contract staffing services revenues for the fiscal 2024 second quarter were $25.6 million, down 25% as compared to the fiscal 2023 second quarter. Professional and industrial contract staffing services revenues for the first half of fiscal 2024 were $53.2 million, down 23% as compared to the first half of fiscal 2023. Professional contract services revenue, which represents 90% of all contract services revenue and 82% of total revenue decreased $7.6 million or 25% quarter-over-quarter. And the first half of fiscal 2024 again, professional contract services revenue represented 91% of all contract services revenue and again, 82% of total revenues and decreased $14.3 million or 23% as compared with the first half of fiscal 2023. Industrial contract services revenue, which represents 10% of all contract services revenue and 9% of total revenue decreased $800,000 or 24% quarter-over-quarter. And the first half of fiscal 2024 industrial contract services revenue represented 9% of all contract services revenue and 8% of total revenues and decreased $1.9 million or 28% as compared with fiscal 2023's first half. Direct revenues for fiscal 2024 for the fiscal 2024 second quarter were $2.4 million, down 50% as compared with fiscal 2023 second quarter revenues and we're $5.5 million for the first half of fiscal 2024, down 48% from the first half of 2023. The effects of the economic and labor conditions referred to by Derek have resulted in declines in JOB orders for temporary and direct higher personnel from clients and the decline in revenues and end the declining revenues virtually all of my virtually all are professional verticals. Recruiting qualified temporary labor to fill JOB orders for our industrial division in particular led to decreases in contract revenues for that business. The big stay as it's called has been widely chronicled throughout the staffing industry by our observers and has led to the overall decline to demand for permanent hires. Gross profit for fiscal 2024's second quarter was $8.7 million, down 34% as compared with fiscal 2023's second quarter gross profit. Gross profit for the first half of 2024 was $18.5 million, down 33% as compared with the first half of fiscal 2023. Our overall gross margins were 31.3% and 34% for the fiscal 2024 and 2023 second quarters respectively. The differences in gross profit and gross margin are mainly attributable to the decline in the percentages of direct higher revenue which has 100% gross margin to total revenue. Our professional contract services gross margin was 25.7% for the fiscal 2024 second quarter compared with 25.4% for the fiscal 2023 second quarter and improvement of 30 basis points. The gross margin for professional contract services was 25.3% for the first half of fiscal 2024 as compared with 25.4% for the first half of fiscal 2023, a slight decline of 10 basis points. Our industrial contract services gross margin was 15.2% for the fiscal 2024 second quarter compared with 16.5% for the fiscal 2023 quarter which was a decline of 130 basis points. In addition to fewer JOB orders, we continue to face challenges with our industrial business including sourcing and recruiting qualified candidates as well as increased competition in those markets. Despite lower overall gross profit and gross margins so far in 2024 however our current margins remain relatively high as compared with those of our competitors. Selling general and administrative expenses, SG&A for the fiscal 2024 second quarter were $10 million, down 15% compared with the fiscal 2023 quarter, second quarter, SG&A expenses for the first half were $20.6 million, down 16% as compared with the first half of fiscal 2023. SG&A expenses were 35.7% of revenues for fiscal 2024 second quarter compared with 30.1% for fiscal 2023 second quarter. The increase in SG&A relative to revenue is mainly attributable to our fixed cost including personnel related expenses, occupancy costs, software subscriptions, for the applicant tracking and sourcing systems, our producers use and others which became proportionately higher relative to lower revenues in the quarter in the half or in the quarter in particular and to a lesser extent certain non-recurring expenses not associated with ongoing core business operations. Management has made a concerted effort to reduce SG&A and will continue to do so in a manner that will not hinder revenue growth as the business environment improves. In addition, we have begun to selectively add and train new revenue producing personnel and launch sales initiatives and key markets in order to enhance our resources to obtain new clients, new job orders and increased market share. Our management team is experienced and managing through cyclical conditions such as the ones we're now experiencing and these investments are being made in anticipation of the eventual recovery. We reported in that loss for fiscal 2024 second quarter of $1 million or one penny a share, down $1.7 million as compared to net income of 700,000 or a penny a share positive per that is per diluted share per fiscal 2023 second quarter. Our net loss for the first half of fiscal 2024 was $2.6 million or a negative $0.02 per diluted share, down $3.9 million dollars as compared with net income of $1.3 million dollars or a penny per diluted share positive for the first half of fiscal 2023. Adjusted net loss which is a non-GAAP financial measure for fiscal 2024 second quarter was approximately $400,000, down $1.2 million as compared with adjusted net income of $800,000 positive for fiscal 2023 second quarter. Our adjusted net loss for the first half of 2024 was $1.3 million down $3.2 million as compared with positive adjusted net income of $1.9 million for the first half of fiscal 2023. EBITDA which is a non-GAAP measure for the fiscal 2024 second quarter was negative $1.2 million, down $2.7 million as compared with $1.5 million per fiscal 2023 second quarter, $1.5 million which was positive. EBITDA for the first half of fiscal 2024 was a negative $2.1 million, down $5.2 million as compared with positive $3.1 million for the first half of fiscal 2023. Adjusted EBITDA which also is a non-GAAP financial measure for the fiscal 2024 second quarter was negative $600,000 down $2.3 million as compared with $1.7 million positive EBITDA for the fiscal 2023 second quarter and our adjusted EBITDA for the first half of 2024 was a negative $800,000 down $4.5 million as compared to $3.7 million for the first half of fiscal 2023. Our current working capital ratio as of March 31, 2024 was 3.9 to 1 up from 3.6 to 1 as of September 30, 2023. We reported positive cash flow from operating activities and free cash flow which is a non-GAAP -- the latter which is a non-GAAP financial measure of about $400,000 for fiscal 2024 second half ended March 31, 2024. Our liquidity position remains very strong and we have an undrawn ABL credit facility and no outstanding debt. Our net book value per share and net tangible book value per share were $0.92 and $0.32 respectively as of March 31, 2024. In conclusion while we're obviously disappointed in our fiscal 2024 second quarter results and first half, we do remain cautiously optimistic in our near-term outlook and in our, I'm sorry, in our long-term outlook and have demonstrated that we can generate substantial earnings consistently under more favorable economic conditions and a more conducive environment for the staffing industry and have done so in the past. Before I turn it back over to Derek please note that reconciliations of GEE Group's non-GAAP financial measures discussed today with their GAAP counterparts can be found in the supplemental schedules included in our earnings press relates. Now I'll turn it back over to Derek.

Derek Dewan: Thank you, Kim. At March 31, 2024 the company had $21.2 million in cash and another $8.2 million in availability under its bank ABL credit facility. Despite economic headwinds and staffing industry specific challenges impacting demand for our services we are aggressively managing and preparing our business for an inevitable recovery. As I mentioned in our earnings press release and again in my opening remark we are moving aggressively not only to prepare for an eventual recovery but also to restore growth sooner to be driven by both organic and M&A growth plans and other initiatives. We'll continue to work hard for the benefit of our shareholders including consistently evaluating strategic uses of GEE Group's capital to maximize shareholder returns. Before we pause to take your questions I want to again say a special thank you to all of our wonderful people for their professionalism, hard work and dedication. Now Kim and I would be happy to answer your questions. Please ask just one question and rejoin the queue with a follow-up as needed. If there's time we'll come back to you for additional questions. And at this point that concludes our formal remarks and we'll move to Q&A. Thank you. So Kim, will you take the first question please?

A - Kim Thorpe: Sure, Derek. The first question is, why do you appear to be losing market share? Your results are considerably weaker than peers and are symbolic of the deep recession. My answer to that is, based on our data, we do note that our results are down at, let's say, the lower end of a group of larger companies, but the core reason that I believe our results show a little bit worse than other larger public company peers is because we have a larger contingent of small and medium-sized enterprises as clients. As Derek mentioned, we have that retention, especially among our larger clients and also in our smaller clients, but orders are down. Some of it in terms of the margins in our profits is because of our size, but overall we are not necessarily, in fact, our orders are good and our trends are moving in the same direction and everything else being the same. I would not say that we're considerably weaker than our peers.

Derek Dewan: Okay, thank you. Another question, are you concerned that discontinuing share repurchases, when your book value is $0.92, is sending a bad message to prospective shareholders? Kim, you want to take that one as well?

Kim Thorpe: Sure. We're not concerned about the share repurchases for a few reasons. One is, and we haven't completely discounted forever share repurchases, but share repurchases are not, in and of themselves, the way forward with our long-term growth goals, because we're buying stock back and I understand why some of our individual investors feel as strongly as they do about share repurchases, but our duty is to provide stewardship at a fiduciary basis for all of our capital and all of our shareholders. And we believe that the steps we're taking now, in concert with the recent strategic alternatives study we performed, are the way forward for the company. So I hope it's not sending a bad message. The message it's supposed to send is that we believe very strongly that we have alternative uses for capital that will improve shareholder return even more than share repurchases. So those are my thoughts on that.

Derek Dewan: Thank you, Kim. So the next question is in regard to acquisitions, but I do want to mention on the call that yesterday an IT staffing company called with the ticker symbol TSRI, which happens to be the name of the company TSR, Inc. traded on the NASDAQ under TSRI, agreed to be acquired at a 71% premium over its trading price. TSRI's gross margins, and we know our peer group really well, are around 17.5% to 18%. Our gross margins are 31.5% this quarter, and that's down from our usual highs of 34% to 37%. Also, our contract gross margin by itself without the influence of Perm is in the mid and upper 20s. So from a performance metric standpoint, it's very appealing to look at our company from an undervalued standpoint. But that's just one indication of how undervalued the trading prices are of the entire group. I just wanted to point that out, and that announcement was made yesterday on all cash deal. I think what's important to look at, the question that I have before me are suitable acquisitions in niche staffing appealing to you. The answer is absolutely yes. We do have a healthcare component dealing with medical scribes. We're in the IT and accounting and finance verticals, and if we find a niche business that fits in nicely or is in one of our existing verticals, for sure, that would be appealing. And what multiples might we pay for acquisitions and would we use stock for an M&A transaction? The multiples range from five to eight times, depending upon the type of business it is and whether or not there's synergies to bring the multiple down, among other things, the type of consideration used in various other factors, growth rates, margins, and so forth. Clearly, when we use stock of GEE Group, we would only contemplate using GEE Group stock that were highly valued. For example, if our peer just got acquired at a 71% premium, if you applied a 71% premium to our stock price, that may be attractive to use some equity on a deal, particularly if it's someone that would like to grow their equity value with our company. We clearly wouldn't use it at the depressed levels that we've seen in recent times. Another question is, in the December call, we saw some signs of improvement in January, better than December, but March was a low report in terms of revenue. The March quarter or the March quarter is typically our lowest quarter in the fiscal year. There's a lot of peaks and valleys in the contract staffing side and also on the direct hire side. However, we do look at trend lines. And Kim, you can comment on our trends. We also have on the call, after you comment, Kim, I'd like Alex Stuckey, our Chief Operating Officer, to comment too, because he has been on top of the trending. And I'd like to hear his commentary and share it with you in the street. Kim?

Kim Thorpe: Yes. First of all, let me on the question. April revenues are up. The detailed question part is, we thought we saw improvement in January, but now the quarter is lower than December. And now we're saying April is better than March. April is better than March. April is better than the average of January through March, and May so far is looking very promising. That's the answer to that. Alex, do you want to comment?

Alex Stuckey: Sure. To go a little further and a little deeper on that, we see green shoots across all of our verticals and across all of our brands in order flow and in placements. We feel like the summer is going to produce a substantially different result than we've seen in the past. We believe that we have hit the bottom. You asked when we hit the bottom, we feel like the bottom has been hit, and like I said, we see green shoots across all verticals and all brands in order flow, so we feel they're positive about the coming summer.

Derek Dewan: Thank you, Alex. Another question is, business is getting more competitive. Is there over capacity in the industry at this time? How do you see this being rationalized? I've been in the industry since the 90s, and the industry, if you look at its growth rate, has been solidly upward with a few dips for recessionary periods along the way. What we're finding is, because of the robust nature of technology and the verticals we're in, of the demand environment, when people are confident in the economic aspects of the economy growing, for example, or at lower rates, things that right now aren't happening, when those turn, the demand usually exceeds the supply, and staffing companies have more JOB orders than they can fill. We anticipate we'll get there again soon, but we're tracking it very tightly to make sure that our cost structure is appropriate for the revenue that we have, and we believe we'll get there. We don't believe there's an over capacity. There's been a lot of consolidation in the industry, and if you look at the larger companies and what markets here they have relative to all the other companies, it's still minuscule in compared to the totality of the entire staffing industry. What are industry indicators for the recovery? You heard some of those today, JOB orders coming in across each of the verticals or up. Those are the things we look at. Here's another question. Is there a plan to look offshore to save recruiting costs in the U.S. with demand being low? Adding an offshore component to recruiting has been done successfully by several companies, and we are looking into that and would likely move forward with that, as our IT leader and his group agree that that's a viable option to enhance our recruiting capability at a lower cost. So the answer is yes. Total cash in hand was $21.2 million. That's what it was as of March 31. Yes, correct, and it's in that range now. What do you attribute your higher than industry average gross margin to professional contract services? Alex, why don't you cover that since you're on top of the professional division as well?

Alex Stuckey: As Kim noted earlier, we have a very distinct group of customers that are in the mid-market range, which are able and willing to pay a slightly higher spread than the much, much larger VMS and MSP-type agreements and companies. So I believe that because of the type of customer we have and our marketing strategy, that that's attributable to our higher gross margin and higher spread.

Derek Dewan: Thank you. Another question relates to turnover and retention of top producers. We have been very successful in retaining top producers. Our average tenure is very high, particularly with top producers. We just had our top producers on our annual sales award trip with excellent feedback from them. And we really try to take care of our people across the board. And we have hired aggressively additional top producers potentially or with experience. So, we're doing pretty well on retention, and we will continue to do the right things to keep our valuable staff. Someone said they're concerned about using stock at a cheap valuation. The answer is no. That will not happen. Next question. Do you see investments in M&A that provide more returns in buying back your stock? That analysis was done by DC advisory and made available to our board of directors and management team. We studied it and concurred that at this time, that's the most optimal way to enhance shareholder value. As Kim said, in our capital allocation strategy, stock buybacks are still there. At the appropriate time we would initiate that if it was felt that the M&A side of the equation and organic growth weren't getting to the answer, but we do believe we will get there, and we could in fact add both at the same time, and that's a possibility. Have you seen signs of distress in your customer's ability to pay? Alex, on the receivable side, our DSOs run about 43-44 days, correct?

Alex Stuckey: That's correct. Receivables are holding at the same consistent level they have in the mid-40 range. We've had very good success with our receivables, and we don't have any signs of our particular customers having an inability to pay, nor asking for extended terms.

Derek Dewan: Thank you. Another question is they've been receiving offers to be acquired. If so, what's the premium they're offering? Are these from peers or private equity? Well, I have to say that good companies typically are called to explore opportunities to merge, to get bought, or otherwise. And I think that it's safe to say that the premiums, one, as I said yesterday, was a 71% premium to the trading price of a public IT staffing company, which is significant. But yes, all the time, we always get opportunities, and if it makes sense from a shareholder value standpoint, we must consider that. However, we're building this company for long-term growth and enhancing shareholder value. All three of us are significant stockholders in the company, and we'd like to see our equity value really accelerate, as do you, our shareholder base. So yes, good companies will always get offers. The best companies continue to operate for maximum shareholder value, and of course, we will do whatever is appropriate at the right time if opportunities come in. However, at depressed prices at this level, even a 70% premium only brings you back to a reasonable trading range. So nonetheless, we are very, very confident that we will get to where we need to be from a shareholder value standpoint, and we really appreciate all of you that have been with us for some period of time, and those new shareholders as well. We are working very, very hard to get the growth engine going, to get the earnings back to where we want it to be, and we believe that will help influence shareholder value coupled with acquisition growth and other capital allocation strategies as we move forward. So that concludes our call today. And one other question someone asked about a 13G filing. We had a 13G filing, but it was an existing shareholder, and a very long-term shareholder who we communicate with regularly, so there was no surprises there. So the answer to that is no, there's no surprises, and we have some very solid shareholders, including one of our directors who owns -- who has a majority percentage of the company right now, about 9%, but we're very solid with our shareholders, and we appreciate your investment, and we are working hard to deliver. And that concludes our call today. Thanks again for coming on. Thanks.

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