Good morning, and welcome to the GEE Group Fiscal Fourth Quarter and Year-Ended September 30, 2022 Earnings and 2023 Update Webcast Conference Call. I’m Derek Dewan, Chairman and Chief Executive Officer of GEE Group. I’ll be hosting today’s call. And joining me as a co-presenter is Kim Thorpe, our Senior Vice President and Chief Financial Officer. Thank you for joining us today. It’s our pleasure to share with you GEE Group’s results for the fiscal year and for the fourth quarter ended September 30, 2022 and also to provide you with our outlook for fiscal year 2023 and the foreseeable future. Some comments Kim and I will make 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 from our forward-looking statements. These risks and uncertainties are described in Tuesday’s earnings press release and our most recent 10-K and other SEC filings under the captions Cautionary Statement Regarding Forward-Looking Statements and Forward-looking Statements Safe Harbor. We assume no obligations to update the statements made on today’s call. During this presentation, we will also talk about some non-GAAP financial measures. And reconciliations and explanations of these metrics were included in the earnings press release. Our presentation of financial amounts and related amounts, including growth rates, margins and trends and metrics 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. With that business behind us, I am very happy to report that we achieved outstanding results in the fiscal year 2022 with revenue of…

Derek, thank you very much and good morning, everyone. As Derek mentioned, revenues for fiscal 2022 were $165.1 million, up 11% as compared with fiscal 2021 revenues of $148.9 million. Revenues for the fourth quarter of fiscal 2022 once again were $41.5 million, up slightly as compared with revenues reported for the fiscal 2021 fourth quarter. Contract staffing services contributed $138.5 million and $35 million, or 84% of revenues for both the fiscal year and fourth quarter ended September 30, 2022, respectively. Direct hire placement revenues contributed $26.6 million and $6.5 million, or in both cases 16% of revenues for the fiscal year and fourth quarters ended September 30, 2022, respectively. Contract staffing services revenues for fiscal 2022 increased $8.7 million, or 7%, as compared to fiscal 2021. Contract staffing services revenues were near level for each of fiscal 2022 and 2021 fourth quarters, although up slightly in the 2022 fourth quarter. Direct hire placement revenues for fiscal 2022 increased by $7.5 million, or 39%, as compared to fiscal 2021. Direct hire placement revenues again were near level for each of fiscal 2022 and 2021 fourth quarters. Direct hire placement revenues for fiscal 2022 set a record high for the company, exceeding even pre-COVID-19 results. The increases in total contracts and direct hire placement services revenues for the fiscal year ended September 30, 2022 were primarily attributable to increased demand in our professional staffing services segment as the negative effects of COVID-19 have continued to lessen. In addition, the volatility experienced in the U.S. economy and workforce in 2022 created many opportunities and increased demand, particularly in the direct hire placement services market. Total revenues from our professional staffing services segment, which includes contract staffing and direct hire placement services, were $149.2 million and $37.5 million and represented 90% of…

Thank you, Kim. The 2022 fiscal fourth quarter and fiscal year marked our fifth consecutive quarter and first full-year of strong performance since deleveraging the company. Having consistently achieved higher margins and free cash flow for the last five quarters, we are establishing a positive sustainable track record, as well as positive momentum for the future. At September 30, 2022, the company had over $18.8 million in cash and another $15.4 million in availability under its ABL facility. GEE Group’s prospects for today – and for future profitable growth have never been better. Despite macroeconomic challenges or unforeseen events, we believe we can continue to produce solid results in fiscal year 2023 and beyond. Before we pause to take your questions, I want to again say thank you to all our wonderful people for their professionalism, hard work and dedication. Without them, we could not have accomplished all the good things we shared with you today. If you have questions, please submit those by e-mail, and we’ll start the queue. At that point, please just ask one question or rejoin the queue with a follow-up, as needed. If there’s time, we’ll come back to you as well. Thank you, and we’ll start the Q&A session.

One of the first questions is related to the fourth quarter and the revenue in our fourth quarter was very similar to the fourth quarter of fiscal 2021. However, the SG&A was higher and thus net income and adjusted EBITDA were lower. Kim, will you address that for me please?

Sure.

The question was why is your EBITDA lower and what caused your SG&A to increase?

Part of the reason why SG&A was higher is because – in the fourth quarter was because we accrued additional incentive compensation and bonuses commensurate with the outstanding performance that we had put in throughout the remainder of the year. We held off in doing that until the fourth quarter for various practical reasons. So we thought it was prudent to take the full charge for all of that incentive comp. And then also, there was – there is a progression of increased compensation and bonuses over a calendar year of which the last three quarters of this fiscal year were the first three quarters of calendar year. So there is an upward progression over the year, but those things specifically account for the increase in SG&A. And one other thing I might point out that I think is worthy. If you go back to our 2018 year, and you compare our revenues, they are literally within $200,000 of loan. Our revenues in 2018 were $165.3 million, they were $165.1 million. However, our gross profit this year was $3 million higher. And if you take that same ratio concept and instead applying the ratio of SG&A against revenue you applied against gross profit, our SG&A expenses were actually lower as a percentage of gross profit. And the reason they came in that well is because of all the extensive restructuring and expenses we took out of the business between 2018 and absolutely the [payment there]. So I just want to point that out.

Okay. Thank you, Kim. Another question is it seems like in the middle of the month there were some large – there were large trades of the stock upward around 250,000 at the close. I also observed that occur for several days maybe four or five days. Is that stock manipulation? And if so, who is doing it? And I’m paraphrasing the question. The answer to that is that we just don’t know. A lot of the trades are made around the New York on some of the electronic mediums. And those trades influenced the stock price at closing or slightly after hours. That happens from time to time and we’re not too concerned about it. We don’t have a large short position in our company either. So if someone was trying to manipulate the stock price, has been suggested in the question, we’re not aware of who that might be. And I think that it’s temporary at best. The other question that came up is, what are you going to do with your large cash position? The comment – a couple of comments related to stock buybacks. We were restricted until about now mid-December because of the CARES Act, PPP loans that you had one-year after the date of the last loan being forgiven. That would preclude you up until that time that we were precluded from doing a stock buyback. So now that we’re in a position that stock buybacks could be done. Those discussions are happening with our Directors at our Board meetings. And we will address that soon after these earnings releases get digested by The Street. So there are some rules on stock buybacks that the SEC [filed]. There are some rules on 10b5-1 plans, which we would be likely to adopt. So that when…

I thank everyone for being on. I can tell you that we are very optimistic absent some macroeconomic potential noise going into this fiscal year, although we’re going to manage our income statement appropriately in our expense line to match revenues, so that we can stay in the profitability areas that we want to be at and also generating substantial cash flow, which we will continue to do and which we are doing now. And we will use our cash wisely and look for some good things coming. That concludes our call today. We sincerely appreciate all of your time and effort and your investment. And I can assure you be good fiduciaries for you all shareholders and we will take care of our employees and look forward to some really good things. This is a journey. It’s not a sprint. So we will absolutely make sure the journey is successful. Thank you very much, and that concludes our call.