GEE Group Inc.

Hello and welcome to the GEE Group fiscal 2024 full year and fourth quarter ended September 30th, 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 GE Group's results for the fiscal year and fourth quarter end at September 30th, 2024, and provide you with our outlook for fiscal year 2025 and the foreseeable future. Some comments Kevin and I will make may be considered forward-looking, including predictions, estimates, 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 Thursday's earnings press release in our most recent Form 10Q, Form 10K, 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 statements made on today's call. Throughout this presentation, we will refer to periods being presented as this quarter or the quarter or this fiscal year or the fiscal year, which refer to the three-month or 12-month periods ended September 30, 2024, respectively. Likewise, When we refer to the prior year quarter or prior year, we are referring to the comparable prior three-month or 12-months period ended September 30, 2023, respectively. During this presentation, we will also talk about some non-GAAP financial measures, reconciliations, and explanations 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 rounded or based upon rounded amounts. For purposes of this call and all amounts, 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. Now on to today's prepared remarks. In fiscal 2024, we encountered and continue to face very difficult and challenging conditions in the hiring environment for our staffing services and human resources solutions, stemming from macroeconomic uncertainty, recession fears, interest rate volatility, and inflation, leading to a less than robust hiring environment and slowdown in the labor market, which resulted in fewer job orders and lower revenue. These conditions have produced a near universal cooling effect on businesses' use of contingent labor and the hiring of full-time personnel. As a brief reminder, the demand environment for our services, as well as our industry peers, began to soften in the latter part of calendar 2023, following a robust hiring of both contract labor and permanent employees and the calendar year 2021 and 2022, much of which was attributable to a post-COVID-19 bounce. Since then, many client initiatives such as IT projects, backfilling of open jobs, and corporate expansion activities requiring additional labor in general have been put on hold. Instead, many businesses who we serve have implemented and proceeded with layoffs and hiring freezes. These conditions persisted during the 2024 fiscal year and have continued to negatively impact job orders for both temporary help and direct hire replacements. Thus, our financial results for the 2024 fiscal fourth quarter and full year ended September 30, 2024 have been negatively impacted by these conditions. GE Group's consolidated revenues were $28.3 million for the 2024 fiscal fourth quarter and $116.5 million for the fiscal year ended September 30, 2024. Gross profits and gross margins were $9.5 million and 33.7% respectively for the quarter and $37.6 million and 32.3% respectively for the fiscal year. Consolidated non-GAAP adjusted EBITDA was negative $1 million for the quarter and negative $2.3 million for the fiscal year. We reported a net loss of $2.3 million or $0.02 per diluted share for the quarter and a net loss of $24.1 million or $0.22 negative per diluted share for the fiscal year. In order to improve our financial results, we are taking aggressive actions, both short-term and long-term. As recently announced, we are taking this opportunity to ramp up our M&A activities at the same time we're streamlining our operations. We have now executed on substantially all of the estimated $3 million in annual reduction in SG&A costs that we announced earlier and continue to tightly manage costs. In addition, we are exploring various options to streamline our business and further reduce costs. Additionally, we intend to begin to migrate and integrate further our remaining legacy front office and back office systems onto singular cloud-based platforms starting in 2025. We have the resources to complete this process over a period of 12 to 18 months once commenced and anticipate we will further achieve economies of scale and be positioned to accelerate and integrate future accretive acquisitions more efficiently. In addition to these near-term initiatives, we are closely working with our frontline leaders in the field across all of our verticals to help them continue to aggressively pursue new business as well as opportunities to grow and expand existing client revenues. We are seeing some positive results. When an anticipated recovery does occur in the future, I am very confident that we are positioned to meet the increased demand from existing customers and win new business. We successfully did this following the COVID-19 pandemic and severe downturn in 2020. We generated significant growth in 2021, 2022, and the first part of 2023 prior to the current downturn and were profitable in all three of those years. As a matter of fact, 2022 was one of our best years ever. We can do it again and are laying the foundation to do so. I am also happy to report that we are now well underway formulating and executing on our recently enhanced strategic plans, which include making prudent investments to grow both organically and through mergers and acquisitions. At the same time, rest assured that we will always manage our business prudently, maintaining a solid solid cash position with available attractive financing with regard to m a we have identified several potential strategic acquisition targets and expect to complete accretive transactions early in the calendar year 2025. as you know we paused share repurchases on december 31st 2023 having repurchased just over five percent of our outstanding shares as of the beginning of the program Share repurchases always will be considered as an alternative component of our capital allocation strategy and a bona fide alternative use of excess capital in the future, if and when considered prudent based upon all of the facts and circumstances. Before I turn it over to Kim, I want to reassure everyone that we fully intend to successfully manage through the aforementioned challenges and restore growth and profitability as quickly as possible. GEE Group has a strong balance sheet with substantial liquidity in the form of cash and borrowing capacity. The company is well positioned to grow internally and be acquisitive. We also continue to believe that our stock is undervalued and especially so based upon recent trading at levels very near and even slightly below tangible book value. Also, only a relatively small portion of our float is actually trading at these levels, further evidence that there is good opportunity for upward movement in the share price once we are able to operate again in economic and labor conditions that are more conducive to our business. The management team and our board of directors are working collectively and diligently to deliver strong financial results which will drive an increase in shareholder value. I wish to thank our wonderful, dedicated employees and associates that work extremely hard every day to ensure that our clients get the very best service. 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 the call over to our Senior Vice President and Chief Financial Officer, Kim Thorpe, who will further elaborate on our fiscal 2024 annual and fourth quarter results. Kim.

Thank you, Derek, and good morning, everyone, and happy holidays. As Derek reported, consolidated revenue for revenues for the 2024 fiscal year and the fourth quarter were $116.5 million and $28.3 million, down 24% and 17% respectively. from the comparable prior year periods. Contract staffing services revenues for the fiscal year and quarter were $104.3 million and $25 million, down 22% and 19% respectively from the comparable prior year periods. Professional contract services revenue for the fiscal year, which represents 91% of all contract services revenue and 80% of total revenues, decreased $25.3 million or 21% as compared with the prior year. Professional contract services revenue for the quarter also represented 91% of all contract services revenue and 80% of total revenue and decreased $4.9 million or 18% as compared with the prior year quarter. Industrial contract services revenue for the fiscal year which represents 9% of all contract services revenue and 8% of total revenues decreased $3.5 million or 27% as compared with the prior fiscal year. Industrial contract services revenues for the quarter represented 9% of all contract services revenue and 8% of total revenue and decreased $800,000 or 27% as compared with the prior year quarter. Direct higher revenues for the fiscal year were $12.2 million, down 37% as compared with the prior year, and were $3.4 million for the quarter, down 5% as compared with the prior year quarter. As Derek commented, our top-line performance was directly impacted by the difficult economic and labor market conditions facing us and the entire industry. Gross profit for the fiscal year was $37.6 million, down 29% as compared with the prior year. Gross profit for the quarter was $9.5 million, down 18% as compared with the prior year quarter. Our overall gross margins were 32.3% and 34.7% for the fiscal year and comparable prior fiscal year, respectively. Consolidated gross margins were 33.7% and 33.9% for the quarter and comparable prior year quarter, respectively. The decreases in gross profit and gross margins are mainly attributable to the decline in volume and mix of direct higher revenues, which have 100% gross margin relative to total revenue. Lower numbers of job orders and tight labor markets on the contract services side also contributed, resulting in more competitive conditions and downward pressure on bill rates and spreads accordingly. Our professional contract services gross margin was 25.3% for the fiscal year as compared with 26.1% for the prior fiscal year, a decrease of 80 basis points. The gross margin for professional contract services was 25.5% for the quarter compared with 27.2% for the comparable prior year quarter, a decrease of 170 basis points. The decrease in professional contract staffing services gross margins is due in part to increases in contractor pay and other employment costs associated with the recent rise in inflation in combination with more competition for orders and candidates. again, resulting in overall net spread compression. Our industrial contract services gross margin for the year was 15.8%, compared with 16.5% in the prior year, which was a decrease of 70 basis points. The gross margin for industrial contract services was 16.6% for the quarter, compared with 16.5% for the prior year quarter, an increase of 10 basis points. In addition to fewer job orders, we continue to experience challenges with our industrial business, including sourcing and recruiting qualified candidates, as well as increased competition, resulting in overall net spread compression experienced. Selling general and administrative expenses, or SG&A, for the fiscal year were $41.5 million, down 13% compared with the prior fiscal year. SG&A for the quarter was $10.7 million, down 5% as compared with the prior year quarter. The ratios of SG&A to revenues were 35.7% for the fiscal year compared with 31.2% for the prior year and were 37.9% for the quarter compared with 33% for the prior year quarter. The increases in SGA's percentage of revenues during the fiscal 2024 year and fourth quarter were primarily and mainly attributable to declines in revenues in relation to the level of fixed SG&A expenses, including fixed personnel-related expenses, occupancy costs, job boards, and applicable tracking systems, and due to the presence of certain non-cash and or non-operational and other non-recurring expenses. I also wish to inform you all that as a result of the company's performance in fiscal 2024, senior management did not earn and has not or will not in the future be paid any incentive compensation for that year under the company's annual incentive compensation program. As a matter of fact, Some of the performance-based equity awards previously granted to the senior management team members were clawed back under the workings of the company's annual incentive compensation plan based upon the fiscal 2024 performance. A key aspect of our plans to streamline operations that Derek spoke of in his opening remarks is to migrate and integrate our remaining legacy front and back office systems onto cloud-based platforms. And that means consolidation of some of these systems. The company has the financial means to do this and expects to commence this task in early 2025. We anticipate financial and operational returns, operational returns in terms of providing the means to improve our ability to generate organic growth, and to accelerate and integrate future accretive acquisitions more efficiently and achieve economies of scale more rapidly. We reported a net loss for the fiscal year of $24.1 million, or negative 22 cents per diluted share, as compared with net income of $9.4 million, or 8 cents per diluted share for the prior year. Our net loss for the quarter was $2.3 million, or negative 2 cents per diluted share, compared with net income of $200,000 or nil, zero per diluted share for the prior year quarter. Our adjusted net loss, which is a non-GAAP financial measure for the fiscal year was a negative $7.6 million, down $18.7 million as compared with adjusted net income of $11.1 million for the prior fiscal year. Our adjusted net loss for the quarter was 2.1, negative 2.1 million down 33.2 million, excuse me, as compared with the adjusted net income of 1.1 million for the prior year quarter. The main drivers of these declines in net income and loss for the quarter and the fiscal year were, I'm sorry, for the fiscal year were the 28.5 million dollars in non-cash impairment charges taken in the June quarter, and the declines in job orders and placements resulting in lower recurring revenues that we've discussed, as well as the reversal of evaluation allowance of our deferred tax assets in the prior year. EBITDA is a non-GAAP financial measure. and for the fiscal year was negative $4 million, down $9.3 million as compared with $5.3 million positive for the prior year. EBITDA for the quarter was negative $1.2 million, down $1.5 million as compared with positive $300,000 for the prior year. Adjusted EBITDA also is a non-GAAP measure, and for the fiscal year was negative $2.3 million, down $9.3 million as compared with $7 million for the prior year. Adjusted EBITDA for the quarter was a negative $1 million, down $2.2 million as compared with $1.2 million of adjusted EBITDA in the prior year quarter. Again, the main drivers for the declines in non-GAAP EBITDA and non-GAAP adjusted EBITDA for the quarter are the declines in job orders and placements resulting in lower revenues, as we've discussed. Our current or operating, I'm sorry, our current or working capital ratio as of September 30, 2024 was 3.8 to 1, up from 3.6 to 1 as of September 30, 2023. The company reported $200,000 and $5.9 million in cash flow from operations for the fiscal years ended September 30, 2024 and 2023 respectively. Our liquidity position at September 30, 2024 remains strong with $20.8 million in cash, an undrawn ABL credit facility with availability of $8.1 million, networking capital of $26.1 million and no outstanding debt. Our net book value per share and net tangible book value per share were 77 cents and 34 cents respectively as of September 30, 2024. Our net book value per share and net tangible book value per share were 96 cents and 35 cents respectively as of September 30, 2023. The decrease in net book value per share in particular was the result of the non-cash impairment charges taken in the third quarter into June 30, 2024. These had no effect on our cash position, tangible assets, networking capital, or net tangible book value. In conclusion, while we're obviously disappointed with our results and remain somewhat cautious in our near-term outlook, we do remain optimistic about and are preparing for the long term. Our management team and field leadership are experienced in managing through difficult times such as the business disruption attributable to COVID, and previous cyclical downturns affecting the labor markets. Collectively, we have demonstrated that our company can generate earnings consistently under more favorable economic conditions and a more conducive demand environment for the staffing industry. Before I turn it back over to Derek, please note that reconciliations of G Group's non-GAAP financial measures discussed today with their GAAP counterparts can be found in supplemental schedules included in our earnings press release. Now I'll turn the call back over to Derek.

Thank you, Kim. Despite some economic headwinds and staffing industry specific challenges impacting the demand for our services, we are aggressively managing our business and taking steps to increase revenue and reduce expenses to mitigate losses and restore profitability. What we hope to take away from our remarks today, our earnings release, and from our strategic announcement last quarter is that we are moving aggressively not only to prepare for a more conducive and growth-oriented recovery in the labor market, but also to restore growth sooner by executing on both organic and M&A growth plans and initiatives. We will continue to work hard for the benefit of our shareholders, including consistently evaluating strategic uses of GE Group's capital to maximize shareholder returns. Before we pause to take your questions, I want to again say a specific thank you to all our wonderful people for their professionalism, hard work, and dedication. Now, Kim and I would be happy to take questions. Please ask just one question 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 have is, at what price would you start buying back stock?

We are approaching net cash value on the company.

So the answer to that is we constantly evaluate alternative uses of our capital. And the question is very relevant at these levels of our trading. The comment was you could be buying cash back at a discount. And it's kind of interesting. We're trading about at our cash level right now on a market cap basis. The board of directors and senior management have had discussions regarding capital allocation. And my response to that is stay tuned. I think that we will move forward as appropriate and do our capital allocation. We have enough cash and liquidity to do a lot. We do want to protect our balance sheet as well. as we get out of these rough times and we anticipate, um, a more favorable economic environment for our business going forward. Uh, political climate's better for us, um, in terms of the labor laws and rules. And we look forward to, uh, restoring profitability. So the buyback is definitely something we would consider and, uh, stay tuned regarding it and, our M&A activity, and hopefully restoration of profitability in the near term. Another question is the company has grown in size over the years since 2015. Quite frankly, in 2015, when we took over the company, the company was ready to be delisted, had heavy debt, was losing money. We turned the corner, had several great years of profitability, made strategic acquisitions, built the company up, and performed quite well over a period of years. We ran into a rough spot during COVID. We were able to last through COVID and come out of that pretty good. I think we're kind of in the same situation now and are looking for the same type of recovery post-deal. Um, the question too is what, what happened to results industry versus your results? Um, we were, we were geared, we had about 18%, 13 to 18% perm in that range. And we had a perm year in 2022. That was a record, uh, permanent placements. The first part of our staffing business that would get hit when there's a hiring freeze or a downturn or perceived economic weakness in our economy. Also, project work would be put on hold for fear of the unknown, and there's been a lot of pauses in continuing IT projects, engaging in new ones, and so forth. We're starting to see that change, and we're very optimistic over a period of months that we will get back to where we were before. Why is the company less profitable, as I said, during COVID versus now? The difference is, during COVID, that was a force that was layered upon a good economy. And business continued, mostly remote, as we had almost 100% remote workers at that time. And in particular, the IT business was very robust with projects that had started and continued because that could be done remotely. And the perm business was pretty solid. Despite that, they were perming perm hires and putting them remote. So it was an interesting dynamic. And we flew out of that 2020 malaise of COVID and into 2021 and 2022 with very good years. And the first part of 2023 was outstanding relative. But we started to see that weakness, as we said earlier, in the middle latter part of 2023 that's continued into 2024. Optimism for 2025 is out there. Industry leaders feel that way. And we share that sentiment. It'll be a gradual process, but we're very excited about moving forward. But we will also adjust our income statement based on the current revenue to restore profitability and of course look for new business, new business from existing customers, new clients, and of course make strategic acquisitions and then reexamine our capital allocation strategy. Another question. Kim, this one's for you. What is the quarterly annual revenue level to achieve breakeven results? What is the annual revenue level needed to generate 5 to 10 million in EBITDA as you were not too long ago? That's an outstanding question and something we look at regularly.

Kim, go ahead. We're very close right underneath the level. to that I would call break even, as you can tell from the numbers. If you focus on the adjusted EBITDA number that we quoted for the quarter, you could just about tune everything else from there. And that's before we do anything else, including all the strategic things that we're in process of doing with systems and so forth to improve profitability and to improve throughput on sales. One of the things we didn't get into in detail on the call is one of the reasons we're taking this hiatus and spending investment money into our systems is because it will help us share orders across all our brands, which now we're having to do more or less through referral the old-fashioned way. With the systems we have teed up, which are very affordable, it's an excellent investment for us to now share orders across brands. And we were very bullish on that. Let me also say that as a rule of thumb, you can go back to 2018, 2021, 2022, and those are the levels that you would see where we're anywhere from $150 million up in revenue. We're beginning to generate high single digit EBITDA numbers again. And then, of course, we want to grow beyond that. And the icing on the cake, in our view, to get beyond that is to focus both on organic and M&A, which Derek mentioned. So that, as a rule of thumb, I think if you look at our 2018 year, our 2019 year, 2021 and 2022, those are good benchmarks to look at to figure out profitability of the business. Let me say one more thing, talking about the pandemic and the recovery from the pandemic and so on. 2020 was not only a pandemic year. For us, it was a huge deleveraging event that occurred in June of 2020. We took out all our subordinated debt and all of our preferred, and we basically cleaned up our balance sheet a lot and for a little bit of money. We took out about $47 million in subordinated debt for about 5 million in cash and 1.8 million shares of stock. So that was a hallmark. The following year, we took out senior debt and the senior debt really was what was choking us. We took the senior debt out and to do that, we had to do large offering and the large offering you know, did cause dilution, but we made the strategic decision and the tactical decision that it was better to take the dilution and grow from there than to continue in a downward spiral late with debt laden. So in 2020 and 2021, the result was we took out over $120 million in debt. And I'm throwing the PPP money in there. We took out $120 million in debt. And since then, we've built up $20 million in cash, free cash. So you can't look at 21, 22, and 23 and say, oh, well, you just had a short period of profitability. No, we rebuilt and restructured the company in 2020 to be profitable. We are experiencing a temporary downturn and profitability right now. We proved out of COVID that we can produce and be profitable. When this recovery happens, I'm fairly confident. In fact, I'm very confident we can do it again.

Thank you, Kim.

That leads into the next question, which is right on target. Can you speak to the current national unemployment rate which suggests a tight labor market versus the performance of J-O-B in the past year, which suggests a loose market. Is this a result of the markets that job operates in, or are there other factors? So the employment statistics that the BLS puts out are interesting. First of all, as you know, they've been adjusted downward several times in each quarter that they've been announced. Also, the job gains that have been announced have been primarily in government-assisted jobs, hospitality, and some what we call lower-end type jobs. Our business does not benefit from that. In fact, IT is huge for us, and projects have been put on hold due to economic uncertainty. And accounting and finance, which is our next largest segment, also there's been hesitancy in hiring there, particularly in the full-time side. So there's a big discrepancy in how the staffing industry operates at what I call the higher-end professional segments versus the jobs that are being added mostly in the lower-end segments. Interestingly, the industrial sector of staffing took a hit as well. So it's a dynamic that you have to digest further when you get a labor report from the BLS. You really have to look into it and how it impacts the staffing industry as a whole and then what vertical you're in in segment. Healthcare took a hit too, pretty big. Now, the good news is we think we've hit the bottom of the cycle with respect to contingent labor employment and direct hire employment. And we see a gradual increase moving forward. On top of that, we are taking aggressive action in any event to streamline our cost structure and run off the existing revenue that we have. Someone asked, you know, at what point would you be breakeven or profitable? That analysis is ongoing and we're pretty hopeful that it'll be sooner versus later. In any event, we're prepared for a robust, robust recovery. I had another staffing company in 08 when we took a hit about one third of our revenue. We were heavily IT at that point, as well as accounting and finance. Took a hit, about one third of our revenue went down in 08 during the great recession. started to see flatness from that downturn in 2009 and then an unbelievable recovery in 2010. We think we're in a similar pattern now, and that was the most prolonged downturn in the whole industry for years, 80-81, 90-91, 2000-2001, and then 2008-2009 with a recovery in 2010. That's the cycle of staffing. I believe that we're well-positioned here to get upward movement in profitability and also be very prudent in how we use our cash. Those things are something that we do. We're not leveraged at all, and we're poised to really take off. Can you comment on demand trends you're seeing toward the end of the fiscal Q1 and into fiscal 25 by end market? Has there been any change in the environment? That's another great question. The environment for IT seems to be perking upward. We have pretty good per month in December. It looks good. It's better than the prior month. November was an interesting dynamic. Most of the workers took off the whole week of Thanksgiving instead of the two days or even three days of that week, most took the whole week off. So there's a lot going on in the labor market within corporate America and also in the temp sector. But again, we're seeing the activity pick up again in December. The first quarter of which is our actual second quarter fiscally, which would end March 31, is not our most robust quarter, typically. However, the hiring starts hard in early February, and then it picks up, runs hard through the spring into the summer, and is usually strong in the fall as well. So we're highly optimistic, quite frankly, and we're working really hard to get back to profitability. I mean, that's, that's the key focus right now. Uh, above all, we're not used to and don't like running at the level we're at now. So we're going to fix that. Uh, the temp penetration, this is another good observation. The temp penetration rate is currently around 1.69. Historically, It has averaged around 1.9, and the last time it came to that was 08-09. So that validates what I just said. That was a great observation, and we believe it will pick back up. In terms of acquisitions, are you looking at expanding areas like IT where you are already a player or bolt-on acquisitions of different specialties? The answer on that one is both. There's some other verticals that will benefit us. And here's the other thing. Prices for deals and structure of deals are much better now. After staffing companies took a hit, people are becoming more realistic on pricing and structure of the deal. So we'll be very opportunistic in that regard. And we're trying to find deals that And we'll do deals that not only bring their business to the table, but that would benefit us. For example, if we could get an offshore recruiting model to lower our SG&A, that would be very helpful so we can compete more effectively on high-volume accounts on what we call managed service provider or VMS accounts, vendor management systems. Most of the Fortune 500 have those programs in place. I'd say the Fortune 1000, actually. So that's another area that we don't typically go after very hard, that we will if we get the recruiting mechanism in place. And one way to do that is through an acquisition that has an existing recruiting offshore model going. That's been successful. That's proven, too. How is AI affecting the sectors you operate in, either in new jobs or jobs lost? Again, we think AI is a benefit to our industry. It streamlines recruiting. We have AI in some of our tools that we use. It's becoming more prevalent as a tool in our industry. And is it eliminating positions that we would normally fill? Clearly, low-end positions can be replaced by AI. AI will benefit the high-end IT business. And we have a focus to staff jobs that require AI capability and AI knowledge. So we're big fans of AI. We think AI will actually allow us to move quicker on placements, find the best candidates, and create jobs, but high-end jobs. it'll replace menial task-oriented jobs. So that's our view on AI. Let's see.

Derek, can I go back and pick up what I think we skipped over?

Of course.

Yeah. There was a question by one of our good investors who we talk with occasionally about our revenues having declined in the 20% range this year while the industry was down 10% to 15%. Therefore, are we losing market share? How does it get resolved? We're a large company in the big pond of small staffing firms, but there are several companies that are larger than we are. They tend to have more large client business than we do. We have our fair share, but the preponderance of our business is SMA, small, medium enterprise type business. And the 10 or 15% that the questioner's referencing is probably more of an average. We're a little higher than average because we have a preponderance of smaller businesses. Smaller businesses, being a higher proportion, tend to take the hits more at a down economy. How does it get resolved? It gets resolved with a rising economy and a recovery. And we will be right back in business, we believe, when that happens.

So let me add that in the peer group, you know, there's some really good companies in the peer group, larger, much larger than us that are down 20% plus. And I have a list of those. I'm not going to go through them now. And I don't want to say misery loves company because we don't like that. But these are blue chip staffing companies. And they're taking aggressive actions as well on their SG&A to restore profitability at the levels that they're used to. So we look at those hard. We also look at the international firms to see if the US segment's taking a hit. That seems to be the trend on the large firms that are global as well. So typically, IT has been immune from downturns, uh, in the staffing industry. Uh, this year, uh, you saw a lot of it layoffs at Cisco and Facebook and Google and Amazon and some others plus corporate America as well. So, uh, that's just something that's, that's pretty new actually to the industry. And, um, that will, that's on the Wayne and the recovery, um, on project work and so forth is starting to move forward. We're starting to see that. So we're very optimistic, but not complacent. I think that's very important. Complacency breeds mediocrity, and that's not something that's in our vocabulary or plans. We need to move forward and deliver the results that you should expect and want. So I think we're all geared up for that. I think the activity on the M&A and capital allocation front will benefit us greatly, both existing operations and to enter new markets, possibly new verticals, too. Those are the things that we're doing, and I think you'll be pleased, hopefully, in our next call that we've made great progress here. Kevin, do you see any other questions that we need to address?

Yes. A new question just popped up. Can you talk a bit about client retention rates? I can speak to this. We track clients and client retention. And Derek and I get regular reports on all clients that generate $100,000 a month or more. And on the basis of that report and on the basis of other intelligence from our businesses, We have not lost any large clients. Rather, our issue is more with clients reacting to the current economy and cutting back orders as we discussed. So our client retention is very good. We haven't lost any major accounts recently or that I can recall throughout 2024 for that matter.

Okay, good.

So that pretty much concludes covering the questions that we have for today. And I can say, everyone, happy holidays to you. And please enjoy that period of time. And note and rest assured that we will work hard for all of our shareholders And thank you so much for getting on today and your investment and interest in our company. That concludes our call for today. Thank you.