GEE Group presents strategic plan to effectively overcome macroeconomic challenges and improve financial results

JACKSONVILLE, FL / ACCESSWIRE / August 5, 2024 / GEE Group Inc. (NYSEAmerican:JOB) together with its subsidiaries (collectively the “Company”, “GEE Group”, “us”, “our” or “we”), a provider of professional recruiting services and human resources solutions, today announced a comprehensive strategic plan designed to strengthen its market position and drive sustainable, profitable growth in the face of ongoing and expected further macroeconomic weakness, a challenging labor market and changing recruiting industry dynamics.

In addition, the Company will announce its financial results for the fiscal third quarter ended June 30, 2024 at the close of business on Wednesday, August 14, 2024 and discuss its strategic plan in detail in connection with a financial results conference call on Thursday, August 15, 2024 at 11:00 a.m. Eastern Time. Further details regarding the financial results conference call will be provided in a separate envelope.

Correctly sizing the company and implementing pricing improvements

In response to the prevailing headwinds resulting from macroeconomic volatility and uncertainty, geopolitical instability and a challenging employment demand environment, GEE Group has taken proactive steps to streamline its operations and maximize operational efficiency. Significant reductions in selling, general and administrative (SG&A) costs have been implemented, including workforce realignment and realignment, to provide the Company with improved and sustained financial performance. Once fully implemented, these measures are expected to result in approximately $3 million in annual cost savings. The Company has also launched new business initiatives and will implement pricing improvements to keep pace with inflationary increases in labor and SG&A costs.

Preparing and Executing Value-Based Strategic Acquisitions

With a focus on growth opportunities, GEE Group is actively pursuing strategic, accretive acquisitions at attractive prices in targeted higher-end verticals. The Company has developed and is executing a plan to further integrate and consolidate operations to achieve additional synergies and efficiencies, paving the way for increased scalability with an improved ability to acquire, assimilate and compete more effectively in the marketplace.

Given the current and anticipated continued volatility in the employment industry and the volatile labor market conditions, the Company will also seek to capitalize on acquisition opportunities at more attractive prices that are becoming increasingly available due to the macroeconomic slowdown and pent-up demand for contract and direct employment. By strategically identifying and acquiring businesses at reduced multiples and improved valuations, the Company intends to drive expansion and unlock value, positioning itself for solid growth in the post-recovery landscape.

In addition to continuing the strategic initiatives noted above, the Company expects to reduce its amortizable intangible assets and the portion of its goodwill recorded on its balance sheet by recording a non-cash pre-tax charge of approximately $20.5 million in its statement of operations for the fiscal third quarter ended June 30, 2024. We estimate that these non-cash charges will reduce the Company’s net book value as of June 30, 2024 by approximately 16% compared to the amount as of September 30, 2023, but will not impact the Company’s cash position, tangible assets or net book value of tangible assets. These charges are timely and consistent with current market conditions. They will allow the Company to forgo significant future amortization charges and correspondingly improve net results in the future, and will reduce the level of intangible assets and goodwill, thereby reducing related risks on the Company’s balance sheet going forward.

Management Comments

Commenting on the strategic plan, Derek Dewan, President and CEO, said: “I have confidence in the company’s ability to weather the current and anticipated challenging macroeconomic environment and expect to emerge a much stronger organization. Our strategic plan is tailored to help GEE Group navigate the current and anticipated headwinds we face and position the company for long-term prosperity. The company is adapting and adjusting its operations to be able to compete more effectively in the current and developing labor market. The GEE Group is laying solid foundations for sustainable growth and value creation.”

Mr. Dewan added, “We are reviewing potential acquisition targets and have communicated with several of them. Our approach is very disciplined and thorough in evaluating potential M&A opportunities. The Company remains steadfast in its commitment to operational excellence, innovation and delivering value to stakeholders.”

About GEE Group

GEE Group Inc. is a provider of specialized staffing solutions and the successor to employment agencies that have been in business since 1893. The company operates in two industry segments, providing professional staffing services and solutions in information technology, engineering, finance and accounting, and commercial staffing services under the Access Data Consulting, Agile Resources, Ashley Ellis, General Employment, Omni-One, Paladin Consulting, and Triad brands. Additionally, in the healthcare sector, GEE Group employs medical scribes through its Scribe Solutions brand to assist physicians in hospital emergency departments and physician offices by providing required patient care documentation related to electronic medical records (EMRs). Additionally, the company provides contract and direct staffing services through the following SNI brands: Accounting Now®, SNI Technology®, Legal Now®, SNI Financial®, Staffing Now®, SNI Energy®, and SNI Certes.

Safe Harbor Forward-Looking Statements

In addition to historical information, this press release contains statements regarding possible future events and/or the Company’s future performance (including business results, certain projections, future financial condition, pro forma financial information, and business trends and prospects) that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, and are subject to the safe harbor created by those sections. Statements in this press release that are not historical facts are forward-looking statements that are predictive in nature and depend on or relate to future events. These forward-looking statements include, without limitation, information regarding our intended share repurchases, the amount and timing of share repurchases, the possibility of discontinuing or suspending our share repurchase program, anticipated cash flow generation and expected benefits to stockholders. Such forward-looking statements often include or are preceded by words such as “will,” “may,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “pro forma,” “estimates,” “aims,” “believes,” “hopes,” “potential,” “intends,” “suggests,” “appears,” “seeks” or variations of such words or similar words and expressions. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known risks and uncertainties, many of which are beyond the Company’s control and cannot be predicted or quantified, and as a result, as a result of a number of factors, the Company’s actual results may differ materially from those expressed or implied by such forward-looking statements. The international pandemic, the “Novel Coronavirus” (“COVID”-19), has been harmful and may continue to adversely affect and disrupt the Company’s business operations. The outbreak has had a significant negative impact on the global economy, employment in general, including a lack of demand for the Company’s services, which has been exacerbated by government and customer-led “quarantines”, “work from home”, “lockdowns” and “social distancing”. There can be no assurance that conditions will not continue or worsen and will not have a further negative impact on the GEE Group. Certain other factors that could cause the Company’s actual results to differ materially from those contained in the forward-looking statements include, without limitation: (i) the loss, insolvency or bankruptcy of one or more customers; (ii) changes in general, regional, national or international economic conditions; (iii) an act of war or terrorism, industrial accidents or cybersecurity breaches that disrupt operations; (iv) changes in laws and regulations; (v) the effects of liabilities and other claims asserted against the Company, including the failure to repay debt or meet credit obligations, including the failure to obtain sufficient liquidity to support operations and the inability to refinance debt, the failure to obtain necessary financing or the inability to access the capital markets and/or obtain alternative sources of capital; (vi) changes in the size and nature of the Company’s competition; (vii) the loss of one or more key executives; (viii) increased credit risk from customers; (ix) the failure of the Company to grow internally or through acquisitions or the failure to successfully integrate acquisitions; (x) the failure of the Company to improve its operating margins and achieve cost efficiencies and economies of scale; (xi) the failure of the Company to attract, hire and retain qualified recruiters, account managers and salespeople; (xii) the failure of the Company to recruit qualified candidates for placement with clients on a contract or full-time basis; (xiii) adverse impacts from geopolitical events, governmental orders, natural disasters or health crises, force majeure events, global pandemics such as the deadly “coronavirus” (COVID-19) or other harmful viral or non-viral diseases that are rapidly spreading, and such other factors as set forth in the “Forward-Looking Statements” section of the Company’s annual reports on Form 10-K, its quarterly reports on Form 10-Q and the Company’s other filings with the Securities and Exchange Commission (SEC). More detailed information about the Company and the risk factors that could affect the realization of forward-looking statements is included in the Company’s filings with the SEC. Investors and security holders are encouraged to review those documents, free of charge, on the SEC’s website at http://www.sec.gov. The Company is under no obligation (and expressly disclaims any such obligation) and does not intend to publicly update, revise or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:

GEE Group Inc.
Kim Thorpe
630.954.0400
[email protected]

SOURCE:GEE Group Inc.

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