GEE Group Inc. (JOB) Q4 2025 Earnings Call Transcript

2025-12-18 13:17:36 ET

GEE Group Inc. (JOB) Q4 2025 Earnings Call December 18, 2025 11:00 AM EST

Company Participants

Derek Dewan - Chairman & CEO
Kim Thorpe - Senior VP & CFO

Presentation

Derek Dewan
Chairman & CEO ...

Hello, and welcome to the GEE Group Fiscal Fourth Quarter and Fiscal Year Ended September 30, 2025 Earnings and Update Webcast Conference Call. I'm Derek Dewan, Chairman and Chief Executive Officer of GEE Group. I will be hosting today's call. Joining me as a co-presenter is Kim Thorpe, our Senior Vice President and Chief Financial Officer. Thank you for joining us today.

It is our pleasure to share with you GEE Group's results for the fiscal 2025 full year and fourth quarter ended September 30, 2025, and provide you with our outlook for the fiscal year 2026 and the foreseeable future.

Some comments Kim 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 Wednesday's earnings press release and our most recent Form 10-Q, 10-K 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 of this quarter or the quarter or this fiscal year or the fiscal year, which refers to the 3-month or 12-month periods ended September 30, 2025, respectively. Likewise, when we refer to the prior year quarter or prior year, we were referring to the comparable prior 3-month or 12-month periods ended September 30, 2024, respectively.

During this presentation, we also will 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 for 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.

We continue to face very difficult and challenging conditions in the hiring environment for our staffing services, which have been ongoing since the second half of 2023 and throughout 2024 and 2025. These have stemmed from what is now acknowledged as over hiring that took place in 2021, 2022 in the immediate aftermath of the pandemic and the macroeconomic uncertainty, interest rate volatility and inflation that followed.

These conditions have produced a near universal cooling effect on U.S. employment, including businesses' use of contingent labor and the hiring of full-time personnel. Since 2023, many client initiatives such as IT projects and corporate expansion activities requiring additional labor in general have been put on hold. Instead, many of the businesses we serve have implemented and proceeded with layoffs and hiring freezes and in many cases, have focused on retaining their existing employees rather than adding new employees.

Companies and businesses are cautiously assessing interest rates and market conditions to ensure their investments in technology and human capital are strategic and sustainable. Artificial intelligence, or AI, is gaining ground at an accelerated pace and is further complicating the HR and project planning opportunities and risks facing virtually all companies, including consumers of our services. These conditions negatively impact job orders for both contract and direct hire placements and have negatively impacted our financial results for the fiscal year and fourth quarter ended September 30, 2025, accordingly.

Our contract staffing and direct hire placement services are currently provided under our Professional segment. The operations and substantially all the assets of our former Industrial segment were sold during fiscal 2025 and have been reclassified as discontinued operations and are excluded from the results of continuing operations we'll discuss today, unless otherwise stated.

Consolidated revenues were $23.5 million for the quarter and $96.5 million for the fiscal year. Gross profits and gross margins were $8.4 million and 35.8%, respectively, for the quarter and $33.4 million and 34.6%, respectively, for the fiscal year.

Consolidated non-GAAP adjusted EBITDA was negative $306,000 for the quarter and negative $1.2 million for the fiscal year. We reported a loss from continuing operations of $613,000 and or $0.01 per diluted share for the quarter and a loss from continuing operations of $34.7 million or $0.32 per diluted share for the fiscal year.

We are aggressively taking actions to adjust and enhance our strategic focus, growth plans and financial performance and results. As we announced earlier, we completed an M&A transaction with the acquisition of Hornet Staffing in March 2025 fiscal quarter. We also continue to streamline our core operations and improve or adjust our productivity to match our current lower volumes of business, which helped us improve our results in terms of non-GAAP adjusted EBITDA and EBITDA.

We reduced our SG&A during the fiscal year by an estimated annual amount of $3.8 million, of which an estimated $954,000 was realized in our fiscal year results. In addition to our ongoing cost reduction and integration activities, we have renewed our focus on VMS and MSP source business, including the use of special recruiting resources and acceleration of the integration and use of AI technology into our recruiting, sales and other processes. Importantly, we anticipate achieving continuing improvements in our productivity and restoring profitability as soon as practically possible. Our goal is to become profitable again in fiscal 2026.

In addition to these near-term initiatives, we are working closely with our frontline leaders in the field across all of our verticals to support them as we all continue to aggressively pursue new business in addition to growing and expanding existing client revenue.

We are seeing some positive results from these efforts, as the uncertainty and volatility currently gripping our economy and labor markets begins to subside, I am very confident that we are positioned to meet the increased demand from existing customers and win new business.

As you also know, we paused share repurchases on December 31, 2023, having repurchased just over 5% of our outstanding shares as of the beginning of the program. Share repurchases will always 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.

I want to reassure everyone that we fully intend to successfully manage through the challenges I've outlined and restore the growth and profitability as soon 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 organically and to 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 and that there was a good opportunity for upward movement in the share price once we are able to operate again in more normal economic and labor conditions and restore profitable growth.

Management and our Board of Directors share the responsibility and are committed to restoring growth and profitability, which will lead to maximizing shareholder value.

Before I turn the call over to Kim, I once again wish to thank our wonderful dedicated employees and associates. They work extremely hard every day to ensure that our clients get the very best service and are the most important ingredient for 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 2025 full year and fourth quarter results. Kim?

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