GEE Group Inc.

Welcome to the GEE third quarter earnings in 2022 update webcast conference call. I'm Derek Dewan, Chairman and Chief Executive Officer of the company. Kim Thorpe, our Senior Vice President and Chief Financial Officer will also join the call. I'll be hosting today's call and we will be addressing the quarter and our outlook for the remainder of 2022. Thanks a lot for joining today. It's our pleasure to share with you our results for the fiscal 2022 third quarter ended June 30th, 2022 and provide you with our outlook for the final quarter of our fiscal year 2022 year end and also the outlook for the foreseeable future. Some comments Kim and I will make today may be considered forward looking, including predictions and estimates 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 for forward-looking statements. These risks and uncertainties are described in Monday's earnings press release and our most recent Form 10-Q and other SEC filings under the captions, Cautionary Statement Regarding Forward-Looking Statements and Forward-Looking Statements Safe Harbor. We assume no obligation to update the statements made on today's call. During this presentation, we will also talk about some non-GAAP financial measures. Reconciliations and explanations of these measures are included in the earnings press release. Our presentation of financial amounts and related amounts, including growth rates, margins, and trends are rounded or based upon rounded amounts. For purposes of this call, and all amounts and percentages and related items presented are approximations accordingly. For your convenience, our prepared remarks for today's call are available in the Investor Center of our website, www.geegroup.com. With that business behind us, I'm very happy to report that we once again achieved outstanding results, beginning with net income of $2.6 million, or $0.02 per diluted share for the third quarter of our 2022 fiscal year and for the nine-month periods ended June 30, 2022, net income of $20.4 million or $0.18 per diluted share. Consolidated revenues for the three and nine-month periods ended June 30, 2022, were $41.1 million and $123.6 million, up 8% and 15% respectively, over the comparable fiscal 2021 periods. And gross profits and gross margins were 16.5 million and 46.6 million and 40.1% and 37.7% respectively. Our non-GAAP adjusted EBITDA for the 22 fiscal third quarter was 4.1 million, up 1 million, or 34% over the comparable prior fiscal year quarter and represents a 10% margin to revenue. Non-GAAP adjusted EBITDA for the nine month periods ended June 30th, 2022 was 11.5 million up 2.8 million or 32% compared to the nine month periods ended June 30th, 2021. Before I turn it over to Kim, I want to say again how very proud I am of our dedicated and talented people. They work extremely hard every day to ensure that our clients get the very best service. This is one of, if not the most important key to our success. At this time, I'll turn the call over to our CFO, Kim Thorpe, who will further elaborate on our results for the 2022 fiscal third quarter. Kim.

Thank you, Derek, and good morning. As Derek mentioned, revenues for the three and nine-month periods ended June 30, 2022 were $41.1 million and $123.6 million of 8% and 15% respectively over the comparable fiscal 2021 period. Contract services, excuse me, contract staffing services contributed $33.1 million and $103.5 million or 80% and 84% of revenues respectively. And direct placement services contributed $8 million and $20.1 million or 20% and 16% of revenues respectively for the three and nine month periods ended June 30, 2022. Contract staffing services revenues increased by 0.6 million or $600,000 and $8.7 million or 2% and 9% for the three- and nine-month periods into June 30, 2022, respectively. These increases were mainly attributable to increased demand in our professional contract services markets as the negative effects of COVID-19 lessen and the U.S. economy and workforce continue on recovery paths toward pre-COVID-19 conditions. Direct hire placement revenues for the three and nine months into June 30, 2022 were $8 million and $20.1 million, up 45% and 60%, respectively, over the comparable fiscal 2021 periods. Direct hire revenues for Q3 2022 set a new high for us, and the first nine months of fiscal 2022 already have surpassed the entire 2021 fiscal year. Total revenues from our professional staffing services segment, which includes contract staffing and direct hire placement services, were $37 million and $111.6 million and represented 90% of total revenue for both periods, respectively, into June 30, 2022. Professional staffing services segment revenues were up 8% and 18% from the comparable fiscal 2021 periods, respectively. Our IT services in markets at Agile Resources, Access Data Consulting, Palahniuk Consulting, and SNIT accounted for 48% of our professional services business segment revenues for the nine months into June 30, 2022, and were up 27% year-over-year. The other professional services and markets, finance, accounting, administrative and office, engineering, healthcare, and others, accounted for the remaining 52% of professional services business revenues for the nine months into June 30, 2022, and were up 14% year-over-year. Industrial staffing services revenues were $4.1 million and $11.9 million for the three and nine-month periods into June 30, 2022, respectively, compared to $3.8 million and $12.9 million for the three and nine-month periods into June 30, 2021. We continue to experience some pandemic-related conditions associated with the Delta and Omicron variant, in our Ohio markets in earlier quarters of the fiscal year, including school and business closings and interruptions, which were reminiscent in some respects of the early COVID-19 pandemic. Consolidated gross profits and margins were $16.5 million, or 40.1%, and $46.6 million, or 37.7%. for the three and nine-month periods into June 30, 2022, both up substantially from comparable fiscal 2021 periods. Our consolidated gross margins for the last five consecutive quarters have been above 36%. The overall improvement in the company's combined gross profit margin is largely due to the substantial increase in our direct higher placements which have 100% gross margins. Selling general and administrative expenses, or SG&A, for the three- and nine-month periods into June 30, 2022, increased $1.7 million and $7.7 million, respectively. SG&A expenses were 31.3% and 30.3% of revenues for the three- and nine-month periods into June 30, 2022, respectively, compared to 29.2% in 2017 for the three and nine-month periods ended June 30, 2021. In addition to overall growth of the business, resulting in additional incentive compensation and bonuses, the increases in SG&A expenses and ratios were affected by $800,000 in charges associated with two former positions that were eliminated, $300,000 during the three-month period ended June 30, 2021, and $500,000 during an earlier quarter of fiscal 2022. In addition, a $400,000 increase in a bad debt expense allowance associated with one of the company's industrial services customers and the $1 million charge for the settlement of a legal matter added to our SG&A in earlier quarters of fiscal 2022. As Derek mentioned in his remarks, marks we achieved net income for the three and nine-month periods ended June 30, 2022, of 20, I'm sorry, of $2.6 million, or 2 cents per diluted share, and $20.4 million, or 18 cents per diluted share. As compared with net losses of 937,000, or negative 1 cent per diluted share, and negative $3 million, or negative 7 cents per diluted share, for the three and nine-month periods into June 30, 2021. Non-GAAP adjusted net income and diluted EPS, excluding the effects of non-operating and or non-recurring items, as outlined in the earnings press release, were $3.1 million, or $0.03 per diluted share, and $8.1 million, or $0.07 per diluted share, respectively, for the three and nine-month periods into June 30, 2022. Adjusted EBITDA, which is a non-GAAP financial measure, was $4.1 million for the 2022 fiscal third quarter, up $1 million or 34% over the comparable prior fiscal year quarter. Non-GAAP adjusted EBITDA for the nine-month period ended June 30, 2022, was $11.5 million, up $2.8 million or 32% compared to the nine-month period ended June 30, 2021. As we've commented in prior quarters, assuming the spread, persistence, and severity of COVID-19 continue to lessen, we believe these types of positive results are sustainable. A reconciliation of G Group's GAAP net income to the company's non-GAAP adjusted EBITDA and reconciliations of other non-GAAP measures with their GAAP counterparts discussed today can be found in supplemental schedules in our earnings press release. To conclude, our current and working capital ratio at June 30, 2022 was 3 to 1. Consolidated accounts receivable net of allowances for doubtful accounts at the end of the 2022 fiscal third quarter were $21.2 million. And our day sales outstanding performance metric, or DSO, was approximately 42 days. We reported positive cash flow from operating activities of $3.4 million for the 2022 fiscal third quarter and $7.8 million year-to-date and non-GAAP free cash flow of $3.4 million and $7.6 million, respectively. Our cash flow from operations and free cash flow for the nine months into June 30, 2022 were reduced in part by payment of the first of two equal installments of deferred FICA obligations allowed under the CARES Act of approximately $1.8 million in December 2021 and the payment of $1 million in settlement of an old and isolated legal matter made in April of 2022. Our liquidity position is strong. And we have no outstanding debt. Our net book value per share was 89 cents per share at June 30, 2022. And our net tangible book value per share was 25 cents.

Now I'll turn it back over to Derek. Thank you, Kim.

The 2022 fiscal third quarter was our fourth consecutive full quarter of strong performance since deleveraging the company. Having consistently achieved profitable growth at higher margins, earnings and free cash flow for the last four quarters as well, we now have a positive track record as well as positive momentum for the future. At June 30, 2022, the company had over $17 million in cash and another $14 million in availability under GEE Group's bank asset-based credit facility. GE Group prospects today and for the future have never been better. Absent the onset of a recession or other unforeseen events, we anticipate outstanding results for our final quarter and all of our 2022 fiscal year and beyond. Before we pause to take your questions, I want to again say thank you to all of our wonderful people for their professionalism, hard work, and dedication. Without them, we could not have accomplished all the good things we have shared with you today. Now, Kim and I will be happy to take questions. Please ask just one question via email and rejoin the queue where the follow-up is needed. If there's time, we'll come back to you for additional questions.

So the first question that we've received

is as follows i know it's important to maintain a cash reserve for m a opportunities however sometimes the best opportunity is buying back your own stock why not use the newly generated cash each quarter for stock buybacks similar to that question is the next question given the price of the stock and our estimate of intrinsic value, every dollar of stock bought back would conservatively create 30 to 40 cents of shareholder value. Could you give us a rough percentage of how high that is being considered come December when the company will likely have well over $20 million in cash? December is the first time, and that's after the mid part of the month, that we can buy back stock pursuant to the CARES Act provision on the last day of forgiveness of our PPP loans. So that's the comment related to December is spot on. The whole buyback situation relative to M&A is that, or observation, is that when you're trading at the level we are now, it's more efficient and effective to buy back shares versus making an acquisition. I can say that there's been significant discussion regarding share buybacks, and I think it's important for everyone to stay tuned. The next question is regarding insider or management purposes, including directors' purchases of stock. Why hasn't there been more of it? There's been several discussions about blackout periods and so forth. And we have a lot of activity going on in our company that preclude us because of inside information for purchasing, um, including, you know, results when we get toward the end of a quarter. So I think that you'll see some activity there, but it's a, it's a personal decision of directors and officers to buy stock, although we're bullish and we own significant positions in the company. But I think that, um, enhancing those positions, is a good thing to do, particularly since our stock price is cheap relative to the peer group and relative to other metrics that are out there. So I agree with the comment, and to the extent we can do it, I think you'll see activity there. Interesting. The next question is, how much cash do we need to run operations? Kim, do you want to comment on that? How much cash do we need to fund what the capital needs.

You know, for almost the entire period, 2018, 2019, 2020, until the beginning of the pandemic, we operated the company essentially on $3 to $4 million of cash, which covers about one and a half to two payroll cycles. We were able to do that primarily because of how efficient our business is, the only strain that we recognize in our cash flow is while we're growing significantly. And that amount of strain only lasts about eight to nine weeks. And what it represents is paying our employees who we contract with clients and then billing our clients and collecting our accounts receivable, as I mentioned in my comments 42 days later. So, but other than that, our collections are really very good relative to other businesses, in part because we supply a major resource and asset to our clients that support their business cycles. So, but three to four million dollars we operated on very successfully for almost three years, including through a fairly tumultuous period.

Let me add to that that staffing companies that do contract staffing, in addition to permanent placements, tend to collect cash and increase cash flow more in a downturn because they're collecting accounts receivable that were on the books faster than they're expending money for contract payroll. That's something that I've experienced in 2000, 2001, 2008, 09, and briefly during the pandemic. So, or the effects of the severe parts of the pandemic on business in general. So, To answer the question is we don't need a lot of cash to fund payroll, which is our biggest cash flow obligation if we're not growing. So that's an interesting dynamic that we actually collect more cash when things are bad on a net basis than the cash outflow. However, we'd rather have the outflow going and growing And the assumption on that is that your accounts receivable are good, and they are. We have a great track record there. We have great collection efforts by our teams, and our DSOs are very low. The next question is, how will acquisitions be funded? Kim, give your observation on that, and I know where someone's heading on that, but go ahead.

We start locally. You know, we start with a clean template on any target that we look at, and we generally go to three sources. Available cash, financing, or stock, depending, and of course, right now, given where our stock's trading, we probably would not entertain issuing stock. But then also seller financing, and then, you know, because of, how we've set the table with the deleveraging, we have ample opportunities for senior financing from other sources. But the idea is to create an acquisition strategy and implement it in a way that does not over-leverage the company and takes advantage of available cash we have. And again, all those things, are analyzed in relation to what we believe the opportunity is in the acquisition. So, but it's generally, we start with three to four sources of funds when we look at an acquisition.

Oh, and earn outs, I forgot earn outs.

Okay, thank you, Kim. Sure. The next question is threefold. The first part of the question is, the company is severely undervalued, about 30% discount to book. What is your plan to pass through those results? The company, and then the next part of that, in stellar financial times, has the company received interest for a merger or complete buyout? Is the company planning to staff overseas contract construction labor as this sector is severely impacted? The answer to the last question is in terms of any significant investment overseas is no. We have a lot of territory in the U.S. We may use some resources from overseas to staff or fund our U.S. business, but we're not planning a major movement into the international front. We've got a lot of footprint and opportunity in the U.S. Has the company received interest for a merger or complete buyout? I may say the company always gets interest and from time to time clearly proposals for buying part or all of the businesses. And that in turn, by the way, limits the ability of management directors to buy back stock if those are reviewed or entertained because we don't want to have a look-back period where people bought stock and then there was a buyout. The answer is the company is very, very satisfied today growing and participating in acquisitions to grow its business. And we have a billion-dollar target to get to today. But I think importantly, you know, we want to create shareholder value and opportunities for our employees. So that's our prime focus here. But we do get interest, of course. And I've done a lot of acquisitions over the years. And, you know, I ran a business for 17 years before we had a transaction and ran it. Now, that was successful. We got to several billion dollars and we have growth opportunities here that are tremendous. But from time to time, we do get acquisition offers, participation and equity investments and so forth. But I think you have a very good standalone business with a lot of opportunity to grow. And I think there's another part of that question. Let's see. What's going on with inflation? I'll say ask somebody else. Inflation happens to be pretty good. We've had price increases. That's not all bad. We're able to pass those through, and we've had to adapt our business to higher prices for different aspects of goods that we use and or labor, but it's worked out quite well for us. We have a variable cost business, and we're able to do a lot of pass-through on that. How do acquisitions look in the sector? I'll say that we don't get a day where we get an offer – or an acquisition prospect or opportunity, plus our own work that we know where the good ones are. So it's robust and there's a lot of activity. I will say that a downturn typically increases the opportunities out there at lower prices. So patience is a virtue right now. Jumping in an acquisition and, you know, potentially uncertain times coming up. I mean, there are uncertain And I would say they're always uncertain, but if we execute and continue our strategy, we're perfectly fine. And if a deal comes across the table, that's an offer that we can't refuse, then obviously we'll be opportunistic. Someone else said, you know, would you do an acquisition or a buyback? The answer is, you know, on a purely mathematical basis, buybacks appear to be more effective in the short run, but we could do both. So I think that's strategically what we'll look at. Can you discuss pricing actions taken during the quarter? Kim, you want to talk about what we've done on pricing our services?

Sure. There have been two sources of, and let me just say our prices have moved along, as you might imagine, with the economy and inflation and increase in wages. The way we price, Our pricing begins, the first step is a leveraging of whatever we're paying our employees, our contract employees. So on the contract business, our prices move up as we increase their pay by design. And we coordinate, obviously, with our clients. Our clients are aware. Nonetheless, employment and the workforce is still somewhat volatile. So, our clients are very willing to work with us on those increases, and that's helpful. On permanent placements, we get increases not so much in prices, but as, again, salaries go up, our fees for placements are based on first-year base salaries. So, as the cost of salaries go up, our fees go up accordingly. And, you know, I think in the past we've commented, and I think so far this year, it's fair to say that our prices are probably up somewhere between 8% and 9% overall. And that's taking into account mostly contract, that is, not necessarily permanent placement of the contract.

Thank you. The next question is regarding analyst coverage. There's one analyst with a $2 price target. Actually, Mark Riddick is on the call and was on the call today and also covering the company from Sedoti. So we have Mark and his coverage, and you'll probably get an update from him after this report. But we are seeking other analyst coverage, and we're also marketing to a broader base of investors as well. with the roadshow and other techniques. How much does a company have remaining in NOLs, net operating losses, and does amortization of intangibles have a similar effect? Kim, you want to take that?

Yeah, the company has between $15 and $20 million of NOLs carry forwards remaining. That's a rough estimate. I actually saw the question and tried to open up my my last 10K, but it's disclosed in our 10K in the tax note for those that want to look it up specifically. And then on amortization of intangibles, we amortize goodwill for tax purposes. So we do get a benefit from that. That creates in part a net deferred tax asset, but because our prosperity has been relatively recent, we have not fully recognized that yet. The accounting rules generally say they like to see three years of improved performance before you tinker with your allowance for deferred tax assets. So that's out there somewhere in the future that could become beneficial later on.

Most of our intangibles are from net income that's sort of built in over time.

Okay, thanks, Kim. But the reference to the footnote in the 10-K will cover most of that question. The next question is, recession is now widely expected, rather unforeseen. How would you adjust your outlook for this expectation? I think there's a debate on what the definition of a recession is, but I'll tell you the real definition of a recession. Recession is when your neighbor loses his job, and a depression is when you lose yours. After that definition, I can say that we're hiring actively now and getting a lot of quality people to fill jobs and meet our recruiting needs. And I can safely say that I've lived through, let's see, one, two, three downturns. And the most material downturn was the, you know, 08, 09 because of the length of it. and that the financial crisis was layered on top of the economic downturn with instability in the banking system. But for that, and that was around an 18-month, 17- to 18-month downturn, sailed right through it with my predecessor company with no debt and a bunch of cash. As I said, cash flow typically goes up for a good period of time during that period. So our outlook is bullish at this point because – Even if the general economy doesn't grow, the labor market is so tight that just filling existing jobs that were either cut or abandoned during the COVID downturn, there still hasn't been a recovery to that level. So we have more job orders unfilled than we do candidates, and that continues. And I looked at a few competitors' opinions, and they concur. particularly the higher end businesses. And that's why we're focused on the higher end professional services businesses. So I'm not concerned much about the downturn, especially since our balance sheet's pristine and we're highly liquid. Can you discuss current end market activities in key areas such as IT, finance, accounting, et cetera? Well, I can say that IT, finance, and accounting are all robust. IT is one that allows for the most remote working and virtual working. And we have great leadership there and continue to grow that. In addition, our accounting and finance units have performed really, really well the past several quarters because of the demand for permanent placement. And we have some highly experienced recruiters in that segment. And we're continuing to add talent, by the way, across both of these segments, IT, finance, and accounting. Are you starting to see any softness in permanent placements in light of economic uncertainty? I can say that what's happened a bit is that we see some shifts from permanent hires to contract workers during a period of uncertainty. So we're seeing kind of the movement toward contract staffing a bit from permanent hires. And you can say it's a try before you buy. concept. We've seen it obviously several times in the past and based on my experience in the industry. And it's one that we adapt well to. So we are lean and our productivity is so high from our recruitment personnel that we're not overstaffed by any means. And I can say that we adapt to that. So the expectation of lower permanent placements possibly if there's a recession or economic uncertainty That happens, but we're still showing very good permanent placement activity, and we've increased our contract headcount recently, which is very, very good. So we're in great shape, and we can deal with periods of uncertainty with no problem. Next question is, what has been – okay, are you starting to see – you've got that – prospects – For acquisitions, we talked about that. What has been the trend over the past few months for bill spreads, permanent placement refunds, and general demand for employment? Demand's high. Unfold orders continue. Permanent placement refunds are very, very minor or nonexistent, very rare. What else? That's about it with the trend, and the trend continues to be very good. Has there been any institutional interest or expected analyst coverage of the company? The answer to that is yes. Do you see a lot of acquisition targets? Yes, and they're increasing. As I had said before, in a period of uncertainty, a lot of smaller players or boutique players, you know, become available for whatever, you know, because of that. And we see more activity. and opportunities. Do you see a lot of exigent targets? We got that. What is the interest charged on the revolving credit facility? Kim, you want to handle that?

Yeah, that's a, we have an unused portion fee, which is common on asset-backed facilities like ours, and I think it's 37 basis points or something, and so that's our, and there's some other fees that the banks throw in there, but It's all fee income. There's been no borrowings on our facility since the very first two weeks we had it, which we paid off right away.

Okay. And can you talk about free cash flow and the need for capital near term? I'll let you handle that one too.

Yeah, great question. Outlook for free cash flow is very good. Our cash flow, and I realize as a CPA, I want to be delicate here, but if you look at our EBITDA and our adjusted EBITDA, because of the formulas that are underneath those two numbers, and you combine that with the efficiency in our cash flows from operations that I mentioned a little earlier, that's a fairly good proxy for our capacity to generate cash flow. And our working capital is very strong right now at 3 to 1, half of which is cash and growing. So our operating needs for what we currently have are there. And as a lot of your questions that have come in so far, a lot of all the investors' questions have alluded to, we are in constant internal discussions on how to best deploy the capital going forward and considering a lot of the various things that have been brought up on the call.

Thanks, Kim. The next question says, I know that you do not have to worry about your share price relative to your NYSE listing compared to the NASDAQ, and that's true. And they're talking about trading below $1. but we would appreciate your thoughts on a potential reverse split. And this person happened to be foreign and submitting it says you're executing well, keep on doing it. Greetings from Switzerland. So the concept there is that if you're trading at a certain dollar price, certain institutional investors cannot buy your stock. So at this point, We took some dilution on the stock price when we paid off our debt with an equity offering. And we're in that recovery mode to get the share price back up through performance and execution. Stock buybacks help that. Acquisitions that are creative help that. And then the constant reverse split obviously pushes your price up with fewer shares outstanding and allows for some institutional investors for sure, to participate in your company as shareholders. So all of those things are considered by our company and under discussion and review with advisors as well. And I can say during these periods of trying to increase shareholder value and planning, it's difficult for us to buy shares if we execute on any of these particulars Um, before we go public, so that's something that we navigate through as well, relative to a prior question that I had. So, you know, are these things under consideration? They always are. And by the way, I have solicited input from our shareholders, all of you. And others and experts, and I don't get a uniform answer. Uh, 1 way or the other, but, you know, I have a lot of experience in the area dealing with the street and institutional investors. and listening to what our shareholders say and potential shareholders say. So we will continue to move forward and evaluate alternatives for those type of things. But I can tell you one thing, focus on your business and execution, profitability and growth all matter significantly and will tend to help cure the problem. And if we could boost that by other methods, we will continue to do that. How much revenue is still within the 90-day period on PERMs? What risk do you have? Kim, essentially they're saying fall-offs on PERMs, which you're comment on.

Yeah, we carry a reserve on our books. It's combined for financial reporting purposes with our allowance for doubtful accounts. But we carry a reserve that we update every quarter. And it moves, the reserve moves up naturally when business moves up. And I would say right now, commensurate with the comments that you heard Derek make earlier on our outlook, we don't foresee at this point that a big, a bubble of cancellations coming if we go into a recession. That's not to say that they might not go up, but I don't think, you know, we're not fearful that it would be a massive reversal of, for example, the good results that we just reported outside of the reserves that we already carry.

Okay. Thank you, Kim.

Another question is, I don't see information regarding bill rates or revenue producing workers or other similar measures in the presentation. Can we get some numbers in regards to total billed hours for the period and other metrics? We do have various metrics that we put out and they're in some of the public filings. They're in the presentation that's current, and they're in some prior presentations. We talk about bill rate ranges for verticals like IT and accounting and finance. Are gross margins indicative of bill rates and spreads? One thing we don't do is put out information that could be used by competitors either in pricing or shopping for customers. and trying to lowball or do whatever. So we are very sensitive to those metrics. But, you know, in terms of, Kim, how many revenue-producing workers do we have? That's a pretty, you know, straightforward.

Well, that's a good question because actually we were running at about between 260 and 270 full-time core employees. Those don't include the people that we employ that work for our clients. Those are the folks that man our front offices here, that make our sales, that recruit our candidates, et cetera, and our support. And we've now recently made headway in adding some meaningful hires, including a couple of rainmakers in certain markets. So our number is getting closer to 300 now. And that's, we've done that in recognition of, as Derek mentioned, there's kind of a soft hedge, if you will, that happens around cycles between perm and contract. And we're really shoring up our contract resources because we think that that's the next big source for revenue going forward. And we're doing it selectively. in chosen markets that we believe represent the best opportunity to grow our contract business professional.

The next question deals with competition in the market. Can you speak about the companies in the competition? Can you speak about HireQuest? HireQuest is not a competitor for the most part with our company. Our competitors vary based upon the vertical or specialization that we are operating in. For example, in finance and accounting, Robert Half would be a big competitor. In IT, in the higher end IT, there's a lot of boutique companies that are out there that compete with us. And then some of the bigger ones, like ASGN, in their higher end piece, for example, would be a competitor. Each of the big staffing companies, like a Manpower, my predecessor, a Deco Group that bought MPS Group, the company that I was with before, that they essentially bought our IT business and have it, that would be a competitor. Manpower's experience at times is a competitor, but then there's a lot of local players that compete very effectively at the higher end with us. Robert has got an IT group that would compete with our SNI IT group. So in each vertical, and then specifically within that vertical, there's several competitors, and that's based on the type of skill positions they're filling. And we keep track of all that to see how they're performing, how they're growing, how they're pricing to the extent we can get the data. Are there any special events to be discussed at the end of the month board meeting? There's a lot of discussion at the end of the month board meeting and our annual shareholder meeting. We will delve into strategy with our directors. We will address all the things that have been brought up today, and we constantly do, but we'll have some very, very in-depth FaceTime meetings with our team. Given the much higher cash balance and the consistency of the business, Is there an opportunity to push? Let's see. Let's see what it says. Okay. Is there any opportunity to breach a bill? How are you going to get a billion in sales? We got that. How much cash balance and consistency of the business? Has there been an opportunity to push the company's cost of debt down? We don't have any debt. So that answers that one. Does the company plan on expanding the scope of services from staffing and placement to online placement as well? Great question. So online job boards, online exchanges for labor and so forth are a tool that we are able to access, but they're not a replacement for what we do. It's very similar. I use the analogy of a real estate agent. still being very, very active, even though there's a lot of online tools and even exchanges where you can buy real estate. For example, I believe Zillow used to actually buy and sell real estate through their mechanism, and they've abandoned that. Now they're more an information source. Again, we have state-of-the-art tools. We have just met with all of the, what I call, job board providers, database aggregators, and so forth. And there's no company that has better access to technology or better tools than us. We're nimble, we're quick, we've made the investments, and our people are highly specialized and use those tools effectively. And we just went through with all of our providers how much better we can be and what other information we can garner in order to make the appropriate placements for our customers. I will say speed to market is probably the most critical aspect of our business, and that aids in finding the candidates in a scarce specialty and a job shortage that's going on and then getting that candidate to the customer. So we're very, very skilled at that, and we have great tenure amongst our employees, which I think matters greatly, and a good training program that we've implemented, too, for the younger crowd coming in. uh let's see so the next question is what's the company going to how do you highlight your brands we're going through a brand consolidation in certain areas or a refinement and that'll be forthcoming and we'll talk a little bit more about that as we get to the next quarter uh recruiting and training uh Talk about SG&A, Kim, and our percentage of SG&A and what impacts the dollar amount and the percentage of revenue calculation.

Yeah, our SG&A, about two-thirds of our SG&A is what I would call falls under the S or selling. That has the salaries of all our front office personnel. Of our 300 and some odd employees, about 260 of those represent front office and we have about actually probably about 250 we have about 50 support staff some of which are in the field also embedded in the field but there's about 40 that support all the businesses are you'll find that we had a few non-recurring kind of things come up in the nine months which which happened from time to time one being a large legal settlement And when you clear those out and take into account the growth we've had, you'll see that our SG&A should be a tick below the 30% range, which basically puts it in the ballpark of several of the larger players in the market, which is a good comparison for us because that means we're being lean. And I can tell you, we are very lean here. We manage the dollars here as though they're coming out of our own pockets. But we make smart investments. Someone mentioned here investing in technology. Our most recent investments in technology are shoring up and preparing ourselves for the brave new world out there of cyber risk, which we're investing in. And as far as forward-facing, as Derek mentioned, We had some very good discussions with some of our providers and hope to take advantage of some of those things. The other one-third of our SG&A is relatively fixed. The questions have been asked a couple of times about our average remaining lease life of two years or less. Are we going to consider virtual markets? The answer to that is yes. When we're expanding, for example, we've expanded into the Austin market recently, and we're getting ready to move into a couple of others. We converted our bricks and mortar in Houston to a virtual. So I think in the future, the future G will be more of a blend of centers of excellence with servicing different markets, some of which will be virtual, some which might have small branches. But yes, very much we're taking advantage of reducing that cost, which was our second largest cost and now is our third largest cost behind job boards and personnel. So those are great questions, but we manage our SG&A very, very well and keep it nice and low. Our total corporate expenses are less than 3% of our total revenue. So all those things bode well.

Kim, that leads to the question that came up regarding leases and whether you're going to move some of those leases or leased office space when the lease expires to virtual ones. The answer is when it's appropriate, and conducive to our business, we will do that. And we have done that in certain markets already and will continue to do it selectively. Additionally, when we're opening in new markets, for example, Austin, Texas, we went completely virtual in our IT group. So it's a very convenient way because of our technology and our ability to manage our resources from afar without fixed base offices. To do that, it's cost effective and it allows you to enter into a new market. Let me also say that acquisitions come in various forms. Acquisitions of talent that can increase your business without violating non-compete agreements, which we honor of our competitors, that's a form of acquisition because they bring other talent to the table and customers, and we grow. And the cost of that is much cheaper and less risky than spending a whole lot of money on a big company. Now, the flip side is, can you get a good target? And the answer is some of these individuals are able to tell us that come from some competitors that that would be a good group to bring in to our company, and they help facilitate the introductions And then we have a great opportunity because of that hire for an acquisition. So all these things are dealt with daily, and we are not ever complacent. We will never be complacent. Somebody said, are you doing anything for brand awareness? Are you doing anything to get street exposure, analysts, new institutional investors? The answer is yes, yes, yes, and yes, yes, yes. So expect this company to really take off and not take undue risk and not lever up to the point that we were to get to a good footprint. And then we paid off the debt, obviously. But we're so well positioned right now that we will get to the next level. We will increase shareholder value and price and market cap. And we're bullish about going forward. We're not too concerned about downturns because we've lived through them before and we're able to successfully navigate through those and come out even better. So the industry actually recovers. As you can see, the post-COVID industry recovery was super. And then historically, the industry does quite well and will be the bellwether going into a recession and coming out. And I can tell you, you know, there's mixed there's mixed activity. there economically. Employment's hot, continues to be. There's a little loosening, but not enough to really matter to us at this point. Hiring could be put on hold a bit, but that'll increase contract business. Hiring for permanent hires. And these different areas will actually contribute to our ability to get more business, actually. We're nimble, we're quick, decision making from the level, which is me. I participate actively with the field personnel. We got great leadership out in the field and they're well experienced. Our tenure is phenomenal, both at the recruiting and account management level and at the leadership level by vertical. So that pretty much concludes our call for today. We appreciate your interest on getting on the call, participating. investing or possibly investing if you're not already a shareholder. Look for good things to happen. And we appreciate all of you as shareholders and interested parties. Thank you very much.