Earnings Call Transcript - JOB Q1 2022

Derek Dewan, Chairman and CEO

Hello, and welcome to the GEE Group Fiscal First Quarter Ended December 31, 2021 Earnings and Update Webcast Conference Call. I'm Derek Dewan the 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 very much for joining us today. It is our pleasure to share with you GEE Group's results for the fiscal first quarter ended December 31, 2021, and to provide you with our outlook for the remainder of our 2022 fiscal year. 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 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 in included in Monday's earnings press release, our presentation of financial amounts and related amounts, including growth rates, margins and trends around it are 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. With that business behind us, I'm very happy to report that our first quarter of our 2022 fiscal year was another outstanding quarter and arguably one of our best ever, beginning with net income of $16.7 million or $0.14 per diluted share, consolidated revenues of $42.8 million and gross profit and gross margin of $15.6 million and 36.4%, respectively. Our non-GAAP adjusted EBITDA for the quarter was $3.9 million, which represents a 9.1% margin compared to revenue. This is the third consecutive quarter of solid growth and improvement since the June 30, 2021 quarter during which we completed the final steps in eliminating over $100 million in debt and elimination of $12 million in annual interest costs. We're very pleased with these results, in particular because customarily, the strongest performing quarters are quarters ending in June and September. The 2022 fiscal first quarter performance not only exceeded the comparable prior year quarter, it also outperformed each of the 2 sequential prior quarters ended the September 30, 2021, and June 30, 2021. The 24% overall growth rate in revenues was achievable in part because U.S. labor markets continued to harden and trend back towards the pre-COVID-19 levels. Our people took it from there by delivering outstanding value to our clients for their HR dollars spent with us. As previously reported in December, we obtained forgiveness from the SBA for the remaining CARES Act PPP loans and related interest, $16.8 million in the aggregate. This resulted in a gain from debt extinguishment and accounted for our larger-than-usual net income of $16.7 million or $0.14 per diluted share and a substantial portion of the improvement when compared with the fiscal 2021 first quarter results. However, even excluding the effects of the $16.7 million in gains, a noncash goodwill impairment charge of $2.2 million and $509,000 of accrued severance pay, our diluted EPS would have been $0.02 in the fiscal 2022 first quarter compared with a negative $0.02 for the fiscal 2021 first quarter, a $0.04 per share improvement. As Kim will explain in a few moments, when prior quarters are adjusted to remove similar nonrecurring and nonoperating items, our pro forma diluted EPS for the trailing 12-month period ended December 31, 2021, is $0.10 per diluted share, which represents a pro forma 16.7% annualized return on yesterday's closing share price of $0.60 per share. Our non-GAAP adjusted EBITDA for the 2022 fiscal first quarter was $3.9 million. Non-GAAP adjusted EBITDA for the trailing 12 months ended December 31, 2021, was $12.6 million. Before I turn it over to Kim, I just want to say again how very proud and amazed I am by our dedicated employees. They are the key to our success. And 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 results for the 2022 fiscal first quarter. Kim?

Kim Thorpe, SVP and CFO

Thank you, Derek, and good morning. As Derek said, consolidated revenues were $42.8 million of the fiscal 2022 first quarter. This was up 24% from the fiscal 2021 first quarter, the 2022 fiscal first quarter is the fourth consecutive quarter of revenue growth over prior year comparable quarters since the beginning of the pandemic and the third consecutive quarter of double-digit top line organic growth. Our professional staffing services segment revenues were $38.8 million, up 31% from the fiscal 2021 first quarter. Professional direct hire or permanent placement services revenues were up 82% over the comparable prior year quarter. They comprised 16% of total revenues for the Professional Services Business segment and 14% of all revenues. Professional contract services revenue in the fiscal 2022 first quarter also grew nicely, up 25% over the fiscal 2021 first quarter. Our IT services end markets at Agile, Access Data, Paladin Consulting and SNI Technology accounted for 48% of our Professional Services Business segment revenues and were up 21% year-over-year. The other professional services end markets, finance, accounting, administrative and office, engineering, health care and other accounted for the remaining 52% of professional services business revenues and were up 43% in the quarter year-over-year. The industrial services business segment revenues representing 10% of total revenues for the quarter were down $1 million as compared to the fiscal 2021 first quarter. We experienced a resurgence of pandemic-like conditions associated with the Delta and then Omicron variants in our Ohio markets including recurring school and business closings and interruptions, which were reminiscent in some respects of the early COVID-19 pandemic. As these conditions begin to recede and we exit the winter months and weather interruptions, such as the recent winter storms we all experienced across the U.S., we expect our light industrial business to begin to recover and grow again. Collectively, our Professional Services segment direct hire and contract revenues as a segment comprised 90% and 85% of our total consolidated revenues for the fiscal first quarters of 2022 and 2021, respectively. Looking at our consolidated revenue from the viewpoint of all contract services both professional and light industrial combined compared with direct hire, all of which is professional, combined contract revenues were 86% and 90% of our consolidated revenues for the fiscal first quarters of 2022 and 2021 results, respectively. Direct hire revenues were 14% and 10%, respectively. As Derek mentioned, our direct hire revenue performance was outstanding once again in fiscal 2022 first quarter and with 100% gross margin was instrumental in achieving our outstanding first quarter results. Consolidated gross profit dollars were strong at $15.6 million, up 24% in the 2022 fiscal first quarter as compared to the 2021 fiscal first quarter. Our Professional Staffing segment 2022 fiscal first quarter gross profit dollars were up 46% as compared to the comparable prior year first quarter. The consolidated gross margin percentage for the fiscal 2022 first quarter improved over fiscal 2021 and both quarters were strong at 36.4% and 36.3%, respectively. Selling, general and administrative or SG&A expenses were approximately 29% of fiscal first quarter of 2022 consolidated revenues compared with approximately 27% of revenues for the 2021 fiscal first quarter. Higher incentive and bonus compensation associated with near-record revenue production and $509,000 of accrued severance pay contributed to this higher fiscal 2022 first quarter percentage ratio. Underneath that, the company continues to benefit from higher productivity and operating expense savings in several areas achieved during the pandemic and before. As Derek mentioned in his remarks, we achieved net income of $16.7 million or $0.14 per diluted share in the quarter, which was larger than normal due to the gains on forgiveness of our 4 remaining PPP loans. The 2022 fiscal first quarter results also included 2 nonrecurring or nonoperating charges, one of $2.15 million noncash goodwill impairment charge and a $509,000 accrued severance package associated with an eliminated position. Pro forma net income, that is, excluding the effects of these 3 items was $0.02 per diluted share in 2022 fiscal first quarter compared with the negative $0.02 for the 2021 fiscal first quarter, a 4% per share improvement. Our pro forma diluted EPS, excluding the effects of similar nonoperating and/or nonrecurring items for the prior 3 fiscal quarters would have been $0.03, $0.02, and $0.03 per share for the fiscal quarters ended September 30, 2021, June 30, 2021, and March 31, 2021, respectively. This results in pro forma diluted EPS for the trailing 12-month period ended December 31, 2021, when combined of $0.10 per share and the 16.7% annualized return on our common stock, as Derek spoke of a moment ago. For those of you who participated in our 2021 follow-on offering, recall that one of the main objectives of that offering was to redirect the 16% interest we were paying to senior lenders to the benefit of our common shareholders instead. These are the first installments toward that objective. Adjusted EBITDA, which is a non-GAAP measure, was $3.9 million for the 2022 fiscal first quarter, up $300,000 and or 8% over the prior year quarter. Non-GAAP adjusted EBITDA for the trailing 12 months ended December 31, 2021, was $12.6 million, up $300,000 or 2.4% from our adjusted EBITDA for the fiscal year ended September 30, 2021. As we reported last quarter, these results continue the growth trends since the onset of the COVID-19 pandemic combined with cost savings for integration and restructuring activities both before and after the effects of COVID-19. These measures have resulted in higher productivity, lower operating costs, improvements in earnings and quality of earnings and solid cash flow generated from operations. With the many improvements we've now made, we believe the positive trends in the company's results are sustainable. Again, a reconciliation of GEE Group's GAAP net income to the company's non-GAAP adjusted EBITDA for the quarters can be found in the supplemental schedule and our earnings press release. To conclude, our current or working capital ratio at December 31, 2021, was 2.5:1, as of December 31, 2021, the company had consolidated accounts receivable net of $21.2 million and implied days sales outstanding or DSO of approximately 46 days. We reported positive cash flow from operating activities of $2.3 million for the 2022 first quarter. Our liquidity position is very strong. Finally, our net book value per share was $0.86 per share at December 31, 2021. Now I'll turn the call back over to Derek.

Derek Dewan, Chairman and CEO

Thank you, Kim. The first quarter of fiscal 2022 has been one of our best, marking a strong start to the year. As of December 31, 2021, we had $12 million in cash and no outstanding borrowings on our bank credit facility, with over $13 million available. Since all our former CARES Act PPP loans have been forgiven, our debt leverage stands at zero. This significantly enhances our enterprise value and financial fundamentals, improving GEE Group's prospects for profitable growth in 2022 and beyond. We are well positioned to support organic growth through strategic acquisitions. GEE Group has maintained the momentum from the fourth quarter of fiscal 2021 into 2022, and we expect to deliver strong results for the remainder of this fiscal year. Lastly, I want to express our gratitude to our dedicated employees whose hard work has made our accomplishments this quarter and year possible. Kim and I are ready to take your questions. Thank you, and we'll move on to the question-and-answer session. The first question comes from Spain, and we appreciate your kind words about the company's performance. Your question pertains to the possibility of share buybacks, considering our cash generation, which should be reinvested in the company, particularly if we consider acquiring another company using the shares purchased. The answer to that question is spot on that we are capable of doing share buybacks. Would we consider it? We will consider it, and those shares could be issued from the treasury in connection with an acquisition. And I'll answer the second question since it's the same person. The question was you made an offering in 2021, an equity offering. I think you ruled out another equity offering before an acquisition. The answer to that is correct. We don't need to do equity offerings at this point clearly. And please be supportive of shareholders going forward, and we deserve it, and thank you very much. We agree with you, and we'll follow through as discussed. Thank you for your question. We'll go to another question here in a second.

Kim Thorpe, SVP and CFO

Hello? Yes. Can you take the next question? Sure. Given the business requires little tangible capital to operate, what are the barriers to organic growth that maybe make it not as focal within the strategy as M&A? That's a great question. We're in a very competitive industry. It does have very solid organic growth, but it's low single-digit organic growth and to achieve the growth objectives that we've established internally for ourselves, that really sort of dictates us to look for strategic acquisitions. When we formed GEE in 2015, that is we reversed acquired GEE, it was only about $40 million in revenue and wasn't really making money. Today, we're trending up towards $160 million in revenue. We've done 5 acquisitions. We've spent the last couple of years integrating, assimilating, building platforms with which to take the next big steps and to be able to acquire companies and assimilate them and integrate them efficiently, and now we're in a position to be able to do that. So it will be a combination of both. We will always focus on organic growth, and we're doing very well organically now. So that's my answer.

Derek Dewan, Chairman and CEO

Thank you, Kim. The next question is, unless catastrophe hits within the industry or the company, it seems that the company is clearly undervalued to a large degree. Given the large cash position, can we expect a tender offer or a buyback so that the M&A strategy can begin to pick up again? The answer to that is we're always looking at acquisitions, and we do have a pipeline of good targets. This person is very correct or the shareholder in that we are now positioned to be able to do those things. And there's a second part of this question or another question in connection with it that says, during the previous acquisitions spree, the double-digit growth rates or double-digit interest rates on the financing were crippling and ultimately led to the stockholders being diluted because of the equity offering. Going forward, how will the balance look like between debt, cash and equity to finance M&A? And is there going to be not to take on higher rate financing in the future. The answer is a combination of cash, equity, and seller financing will be used and possibly bank financing of our low-priced ABL, and we are not going to get into high-rate financing nor are we going to do an equity offering in connection with M&A. We have the capacity to do what we need to do with our balance sheet today and without getting into high-rate debt. So that's a good observation, and I agree with exactly what was said. The next question says, congrats on the recovery. The case for reverse stock split and a share repurchase are obviously compelling, the stock trading at $0.60 a share and only at 5x EBITDA. No meaningful acquisition can match the return on buying back stock here, and the company has cash to begin a program. Most investors will not look at stocks trading below a certain price. Reverse split solves that. Why is it taking so long for the Board to act on these essential and obvious moves? So a reverse split is something that you contemplate if you're staying with your stock price below $1 or otherwise. One of the questions I get on that is, is there a break the buck rule, so to speak, that you have to worry about from the exchanges? And we're on the New York American, and the New York Stock Exchange does not have a hard and fast rule like the NASDAQ does on breaking the buck. They look at your capitalization and your performance, and we're solid as a rock. So I don't anticipate that being the driver. However, a reverse stock split can make sense when certain institutional investors can't buy a stock below a certain threshold price. So it's something that the Board has considered and discussed extensively. And I would say nothing is off the table and neither is a stock buybacks. I personally have done a $300 million stock buyback in my predecessor company that I was running, and it proved to be very good in removing dilution to EPS. So all these things are definitely on the table and discussed frequently with our Board, and you can look for us to execute as we've discussed previously.

Kim Thorpe, SVP and CFO

SG&A increased this quarter because we incurred a $0.5 billion charge to eliminate a position, which had an almost 1% impact for the quarter. Additionally, due to strong revenue growth in this quarter and the last September quarter, we distributed more in bonuses and incentive compensation, resulting in a step-up in those costs rather than a gradual increase. These factors caused SG&A to rise from 27% to 29%. However, it's worth noting that in 2018 and 2019, SG&A was consistently over 30% each quarter, reaching as high as 32% or 33%. We plan to manage this to keep SG&A below current levels. As mentioned by Derek, one of our objectives is to achieve a double-digit EBITDA margin. I believe we've done a good job maximizing our SG&A expenditures, and as we grow, the percentage will decrease further.

Derek Dewan, Chairman and CEO

Thank you, Kim. The next question refers to strategic acquisitions. Just how close are you to a strategic acquisition? What we've tried to do was position ourselves and our balance sheet so that we can make the acquisitions, not only make them accretive to earnings per share, but also to make sure that we keep the strength of our balance sheet. And we have acquisitions in the pipeline. We were waiting to get our PPP loans forgiven, which occurred in December. So now we have cash, we have an unused credit facility and as appropriate, we have equity that we could issue in connection with an acquisition. We have stock buyback potential too. And I would say that combo of all of those things would be more likely to occur in the near term. So the key is with acquisitions as well, we have to see how they performed during the COVID era, coming out of COVID. We want to see normalized numbers. We want to make sure they're strategic. The acquisitions that we're looking at are almost exclusively related to information technology, which is the fastest growth sector and has the highest profitability in staffing and otherwise. So our landscape looks good. We're charged up. We also wanted to get the internal growth machine going so we can fund with operating cash flow, acquisitions and buybacks and everything else that are in what I call the arsenal of improvement regarding shareholder value, EPS, EBITDA, net income, and we'll move forward. The next question connects to an earlier one regarding the fluctuating nature of many of our expenses, particularly recruiting and account management costs, which are tied to volume. These include performance-based commissions as well as salaries and internal headcount. Our productivity is very high for each individual in the company, whether they’re involved in recruiting or sales. So the question is, do we have the capacity to scale and expand? I believe I addressed this earlier. The goal is to maintain a lean infrastructure while scaling up. We are increasing our internal headcount, but this is production staff, not overhead or administrative personnel. The new hires are recruiters and account managers, including remote and virtual recruiters. Our demand is incredibly high, leading to a situation where we aim to fulfill as many orders as possible, prioritizing the most profitable ones. Our gross margins are strong, even without permanent placements, particularly in the professional segment. So, great question. Yes, we will scale, and we expect SG&A to decrease as a percentage of revenue once our revenue grows.

Kim Thorpe, SVP and CFO

Yes. The answer to that is we do expect a low effective tax rate, and we do have NOLs to help offset that for this year.

Miguel Sanchez, Analyst

What do you expect for organic growth rate going forward? What portion is volume versus pricing?

Derek Dewan, Chairman and CEO

That's a really good question. So I'll answer the second part first. As we raise wages for contract workers, that will improve because of the way we mark up on payroll, what we call the spread or gross profit dollar per hour. So there is margin expansion going on from a pricing standpoint. And yes, we build the customer more in that specific situation, which is pretty predominant right now in our business units. What organic growth rate going forward do you expect? To grow double-digit organically is a good target, I would say the higher single digits initially. And that's what's limiting us is really adding more horsepower, 'people, production personnel, recruiters and account managers.' So we've been adding them as fast as we can. The other thing that's very notable is that our retention rate of internal staff and our longevity, their tenure with our company is outstanding. So we're doing everything right. We just need to do more of it, and we will and we are.

Kim Thorpe, SVP and CFO

Yes. Currently, our EBITDA serves as a reliable indicator of cash flow. By EBITDA, I mean pure EBITDA since we have no interest obligations at the moment. Previously, a significant portion of our cash flow was directed towards paying interest, but that is no longer the case. As a result, that cash is now being reinvested into our operations. Therefore, this is a solid way to assess our cash flow for the year. Yes. If we take a closer look at our selling, general, and administrative expenses, about two-thirds of it is allocated to selling expenses, which primarily support our field personnel. Of that selling expense, roughly 40% comprises variable compensation, such as bonuses and incentives, in addition to base salaries. The salary component will increase as we bring on more employees, while the variable portion will also rise in proportion to sales growth. The remaining one-third of our SG&A consists of general and administrative expenses, which are generally more fixed in nature, so I anticipate that this portion will remain relatively stable. Therefore, considering all these elements, we could potentially reduce our SG&A percentage from the current 27% or 28% by 1% or 2%, depending on the level of growth we expect in fiscal 2022.

Derek Dewan, Chairman and CEO

Okay. The next question says, great quarter, Derek and Kim. Would it be possible to get a sense of the range for revenue and EBITDA growth for 2022? And then this ties into it, can you help us with growth expectations for this year, 2022? Should we think 20% given year-over-year comps? It gets harder, but the labor market remains tight. We can both work on that. So clearly, when you're coming off a downturn, there's some growth that's recovery growth. And then layered on top of that, there's growth because business is great. The labor market is great, hiring and so forth is conducive to our industry and our company, particularly in the segments that we're in, which I believe we're in the best segments with a huge focus on IT. So 20% on comps gets harder in a tight labor market. That is a true statement. It's a tight labor market, but it doesn't mean that we can't grow significantly. So 20% would be a great target for organic growth in any business. And I've been able to do that historically in a predecessor company, and we are well-positioned to do it. But I would tend to think that a more normalized growth expectation is a lower double-digit, and augmented with an acquisition, you could push it over 20%. Kim, do you want to add anything to it?

Kim Thorpe, SVP and CFO

I would like to point out that as we entered last year, specifically fiscal 2021 and the initial phase of recovering from the pandemic, we significantly exceeded our growth expectations. We initially projected to finish the year with around $139 million or $140 million in revenue, but we actually reached nearly $149 million. Currently, there is still some economic adjustment taking place. As mentioned earlier, it is somewhat atypical to have such a large December quarter since our June and September quarters usually see more employment activity. However, given that the labor market is still tightening, we are experiencing this strong quarter. Looking ahead, we are being cautious about the March quarter, as it typically has fewer workdays and factors such as weather and holidays can impact performance. Therefore, we anticipate a slight decline in March. Nevertheless, we expect to surpass our 2020 and 2019 results. Our outlook is that high single-digit to low double-digit growth is a realistic expectation.

Derek Dewan, Chairman and CEO

The next question is do you... Yes, sorry. Organic.

Kim Thorpe, SVP and CFO

What are expectations for revenue growth in fiscal 2022? Should we expect good operating leverage, EBITDA and earnings growth, exceeding revenue growth and free cash flow? We hit some of those points, but Kim, why don't we cover that as well? Yes. If we analyze our SG&A further, roughly two-thirds of it is attributed to selling expenses, which primarily support our field personnel. Of this portion, around 40% consists of variable compensation, such as bonuses and incentives beyond base salaries. The remaining amount is made up of salaries, which will increase as we hire more staff. The variable compensation will also rise proportionally with sales growth. The remaining third of our SG&A is considered pure G&A, and those expenses tend to remain more stable. Therefore, I anticipate that this third will stay relatively constant. Based on this breakdown, we could potentially reduce our current SG&A percentage of 27% or 28% by 1% or 2% in line with the growth we expect in fiscal 2022.

Derek Dewan, Chairman and CEO

Okay. The next question says, great quarter, Derek and Kim. Would it be possible to get a sense of the range for revenue and EBITDA growth for 2022? And then this ties into it, can you help us with growth expectations for this year, 2022? Should we think 20% given year-over-year comps? It gets harder, but the labor market remains tight. We can both work on that.

Kim Thorpe, SVP and CFO

Yes. First of all, going into the last fiscal year and the early part of that year coming out of the pandemic, we significantly exceeded our growth expectations. We anticipated finishing the year at around $139 million or $140 million in revenue, but we ended up at almost $149 million. The economy is still in a recovery phase. As we mentioned, it's somewhat unusual to have such a strong December quarter, since typically our June and September quarters see more activity in employment opportunities. However, due to the current strengthening labor market, we experienced this spike in the December quarter. We are being conservative about the March quarter, as it usually has fewer workdays and is impacted by weather and holidays, so we expect it to drop slightly. Nevertheless, we believe our results will clearly surpass those of 2020 and 2019. Overall, we think a high single-digit to low double-digit growth rate is reasonable.

Derek Dewan, Chairman and CEO

The next question asks, do you anticipate as inflation has increased, will the inflation premium be passed on to clients as labor charges have increased across the U.S.? I mentioned that previously, the answer is yes. We've been able to pass it through, and it does increase the gross profit dollar per hour billed and the gross margin percentage. Share buybacks were supposed to be part of our triple option football play for the last conference call. Why have we kept it eliminated from our playbook? It's still in the playbook. We still have the triple option. And I think that one of the hesitancies before we executed our play, so to speak, or called the play was to get our PPP loans forgiven, which occurred in December. So also, we wanted to see another quarter of good results as well. And patience is a virtue that I've learned to have overtime. It's called old age, I guess. But I can safely say that the playbook is still there, and now it's time to execute the place. And I think all of these questions are things we focus on every day. So yes, the option. I'm not going to tell you right now which play we're going to take out of the playbook, but our goal is to score touchdowns and win. So we have it in our arsenal. And I think that it's a reasonable expectation at some point as well. When the stock trading at 4x EBITDA, why would you consider using equity for acquisitions? That would dilute shareholders as target would be priced at a higher multiple. Excellent point. Unless we can see accretion to earnings per share, it makes no sense to use your own equity at depressed levels. Agree with the comment. I remember from our last earnings discussion that there would be a road show to promote the strong performance of the company to institutional investors and analysts. Can you provide some updates on the efforts to improve analyst coverage and attract more institutional investment? We have been working diligently on that. Since our last call, we've participated in a few investor conferences. We will also be involved in the Sidoti conference in March, and we expect an increase in analyst coverage. We are currently providing analysts with the necessary information to help them take on coverage of our company. Is that a reasonable expectation? Yes. We have conducted additional roadshows after the equity offering, but the main goal is to raise awareness among larger institutional investors to secure substantial, long-term positions in our equity. This is crucial for improving our stock price performance. Results are important, and we are achieving those. Increased exposure in the analyst community, at conferences, and during roadshows is vital. We will announce our participation in the upcoming institutional conference and the timing will likely align with increased analyst coverage as well. That is the expectation, and it is reasonable. Regarding organic growth, can you provide some additional insight on further selling of additional products to current clients or onboarding of new clients? All of those things are happening. Our product mix in terms of what we're able to offer clients has changed, but we've also counted on what we do and what we do well. So we don't want to dilute our offerings to clients by trying to do more than we're capable of delivering. But we have added, based on market demand, select service lines, particularly in IT. We also have project-type work. And when we get a big project, we're able to staff up hundreds of people for several months. One of those projects we did involved kind of the COVID response that we were hired to participate in staff centers to provide the resources for amelioration of COVID and things like that. So we are able to move quickly in marshal resources and get our contract work, both annuitized and our headcount up. So yes, we are doing that. Throughout the industry, many companies are investing in technology to boost productivity. Do you expect increased competition on the bill spread? Our technology is state-of-the-art, and our Applicant Tracking System is the best in the industry. While some larger competitors have similar systems, many smaller ones do not. We also leverage various job boards like LinkedIn Recruiter, Dice for IT, CareerBuilder, Monster, and Indeed, which are accessible to most of our team. Speed to market when identifying a candidate is crucial, and we are very adept at utilizing technology. As for more competition on the bill spread, I don't foresee that. Currently, the focus is more on finding the right candidate than on pricing. How do acquisition multiples in your pipeline IT compared to your own valuation of 5x? That question dovetails with the prior question. If you're valued at 5x and you pay 8x for a company, clearly IT, 8x is a reasonable target range, maybe 9x. You don't want to use equity basically to do that. And again, can you get deal accretion from it? And I think structurally, you can, seller notes, cash, that works. And sometimes we do an earn-out, so that we see the growth and pay for the growth as earned. So I agree with the observation there. Any other questions? We have time for more. We're nearing the end, but we still have time available if needed. These are excellent questions, and I hope we've addressed them satisfactorily. As we approach the conclusion of this conference call, I want to mention a few points. The strength of the company is exceptional at this moment. We have strong leadership in the field with considerable experience, which is challenging to find in such a competitive labor market. From the top down, our field personnel have performed remarkably well. We are not experiencing significant struggles in any particular office. Those that were problematic are either closed or have been restaffed and are now productive. We have transitioned some offices to virtual environments in certain markets, which is a trend that has helped reduce lease costs and made it easier to attract talent. We also have rotational shifts in our offices, providing a lot of flexibility for our employees, which has yielded positive results. How we performed during COVID was also what I think was a really fabulous reaction to the pandemic in terms of how hard our people worked, how we were able to work remotely with our technology. We do have Teams. We have Office 365. We have state-of-the-art tools in the offices and people can work remote too. There's a lot of Notebooks and so forth. So we support our teams so they can work from home as necessary or permanently depending upon their status and what our design was for that particular market. And we're adding talent every day to grow. And that's how in this business you grow. You have to get maximum capacity from your existing personnel, but the only way to really fill all the job orders is to increase in particular, your recruiting horsepower in this market, and we have and are and continue to do so.

Kim Thorpe, SVP and CFO

Derek, we have one more question, if you want to take a look.

Derek Dewan, Chairman and CEO

Has it just come in?

Kim Thorpe, SVP and CFO

Yes.

Derek Dewan, Chairman and CEO

Is that how do acquisition multiples in your pipeline, especially for IT staffing compared to your own valuation of 5x? Is that the one you're referring to?

Kim Thorpe, SVP and CFO

No, no. All my questions have already been answered.

Derek Dewan, Chairman and CEO

Okay. Got it. Okay. You want me to say that one because it's a really complementary. It says, hi, all of my questions have already been answered. Just wanted to give it a quick and simple feedback, great job. We're very pleased with how you guys act and very happy with our position from last year's offering. We do share the ambitious revenue target for 2025 and strongly believe you guys are capable to execute. Best wishes from Switzerland. Well, boy, that's great. We like that. Thank you very much for the comment. We'll work hard to continue that momentum. We do have another one. Insiders continue to not buy any shares, is this something that is talked about with our directors and C-suite team? Insiders have a lot of shares, including me, and a lot of shares that were paid for with cash that are much higher than where we're trading today. So our targets are high for us, and what we have expectations for, for our stock price, and we all have a stake in the game. Part of the issue is that when the stock price falls and we have results yet to announce, we are unable to purchase shares at that time, especially if we are considering acquisitions or have other non-public information. It has become more complicated to buy at specific times. However, insiders do discuss this, and our directors often inquire whether they can purchase shares. At times, we have to restrict them from doing so due to the reasons I mentioned. I've noticed from an office perspective that they think cash flow has improved with remote work. The company provides substantial value to employees, but we need to ensure that remote workers feel connected. I can assure you that both remote and in-office employees participate in daily meetings and can engage with our leadership. That is indeed a very good question and an important point. Remote workers should not feel isolated; they need to feel included in the team. Our remote employees have significant experience, making it easier to manage them compared to those who are less experienced. We maintain regular communication, often several times a day, and we monitor their productivity through our Applicant Tracking Systems, tracking metrics like the number of calls made and job fills. We ensure they feel integrated into the team. This is a relatively new aspect for most of the workforce, a result of COVID, but it has been beneficial for us. The pandemic has prompted positive changes, improved productivity, and encouraged economies of scale. It served as a wake-up call to manage our resources more efficiently and explore new workforce alternatives. Today's environment is different, and we have adapted swiftly to these changes. Let's see what else we have. I agree with the gentleman in Switzerland. Great job. Let me just say that I appreciate that. My comment is I'm not satisfied. I may be okay, but I'm clearly not satisfied because we want to do much better, and we want to raise our stock price and make the right moves. One of the right moves is to continue delivering strong operational results and then expand by utilizing the tools we mentioned earlier, including our triple option playbook. All these things will happen, but we need a little time and patience, although I'm not overly patient. The stock price is okay for now, but it won't be sufficient in the long term. We're all in this together, and we appreciate your interest. We invite you to stay connected and look forward to positive developments. We're very optimistic about 2022 and beyond.

Kim Thorpe, SVP and CFO

Derek, we have time for one more question. I think it's a pretty good one. Do you want to...

Derek Dewan, Chairman and CEO

Okay. What do you have to say to those that state that pure-play online staffers will out your business as lower price substitutes. That question comes up a lot. And there's a few online staffers out there. I know of one that's public and losing money. But again, online staffing is no different than I use the real estate analogy that's out there. So you have a lot of, what I call, website real estate sites that actually are exchanges, medium of exchanges for valuing real estate and in fact, advertising real estate and so forth. Realtors that actually deliver the sale and close the sale are killing it. So those sites have been used as tools and visibility. And I believe that, at some point, we'll have our own version of an online exchange or medium where the hiring manager can engage into a database if they have the recruiting horsepower. Remember, there's a task here. You can have an online exchange, but somebody's got to go in there and sort out thousands of resumes. We have experts doing that every day from a narrowed database. So aggregating a bunch of revenue, I mean, of resumes into a database is just one facet parsing the resumes by skill set and otherwise. And we used a little bit of artificial intelligence. We had a tool used, but the machine learning aspect of it was still flawed because it was based on human, humans and their biases, by the way. So we've really sharpened the pencil on narrowing down what tools we use and how we use them to shrink the database to only quality candidates that have the skill sets. So those aren't mature enough actually, but they serve a purpose of aggregating resumes that can be tapped, but then you have to have further analysis on that.

Kim Thorpe, SVP and CFO

But remember, Derek, also 90% of our business, we actually employ the people, employing people is a big value-add that a pure-play online can't do.

Derek Dewan, Chairman and CEO

Right. You have to assume that every potential worker will post on multiple job boards and online exchanges. We have them all, including LinkedIn Recruiter, Dice for IT, CareerBuilder, Monster, Indeed, ZipRecruiter, and more. I see these as additional tools, and we may even have our own version as an alternative for customers. There was another company in Texas that created a portal but struggled to get off the ground and eventually merged with another. I don't see that as a threat; rather, it’s an extra tool for delivering resources. This concludes our presentation for today. Thank you for joining us. We anticipate positive developments going forward, and to our investors, we appreciate your support. For those who are not investors, we would love to have you as shareholders. Thanks again, and have a wonderful 2022. We'll talk soon.