NEW YORK, NY / ACCESSWIRE / January 16, 2018 / SeeThruEquity, a leading independent equity research and corporate access firm focused on smallcap and microcap public companies, today announced it has issued an update on GEE Group Inc. (NYSE American: JOB).
The report is available here: January 2018 Update Note.
GEE filed its 10-K and released final results for fiscal 4Q17 and FY 2017 on December 28, 2018. The company's results were at the high end of the range from its October positive pre-announcement, demonstrating nice scale and operating efficiency as the company grows its top line.
Highlights from the note were as follows:
- FY4Q17 revenues grew by 113% YoY to reach $46.4mn, at the high end of the company's pre-announced range of $45.5mn - $46.5mn.
- Full year FY2017 revenues came in at $135mn, slightly above our estimate and up 62% YoY from $83.1mn in FY2016
- FY4Q17 adjusted EBITDA was $2.4mn, representing 100% YoY growth over $1.2mn in 4Q16.
Strong Finish to FY2017 with Nice Growth and Leverage
GEE ended FY2017 with strong FY4Q17 results of $46.4mn, which was up 113% YoY and at the top of the range issued in the company's positive pre-announcement in October. GEE growth benefitted from an increase in contract staffing services as well as the inclusion of SNI Companies revenues. For the full year FY2017, the company grew the top line by over 60%, reporting revenues of $135.0m. The results were ahead of our revenue estimate of $134.6mn and FY2016 results of $83.1mn. With full year results coming in at the top of the range, GEE appears well to its way to reaching $200mn in annualized revenues, following the integration of SNI Companies.
Adjusted EBITDA Ahead of Our Estimates
Importantly, GEE has been able to demonstrate strong operating leverage with improving margins and adjusted EBITDA as the company scales. Gross margins in FY2017 expanded by 490bps to reach 33.3% versus 28.4% in FY2016, as the company benefitted from both higher margin direct placement margins as well as expansion in overall contract staffing margins. The improved margins helped the company generate strong growth in adjusted EBITDA, despite an increase in SG&A dollars. Indeed, in FY4Q17, GEE reported adjusted EBITDA of $2.4mn, approximately double the FY4Q16 mark of $1.2mn. For the full year FY2017, the company reported adjusted EBITDA of $6.4mn, representing significant growth over FY2016 adjusted EBITDA of $4.6mn, and also ahead of our prior estimate of $6.1mn.
GEE Offers Compelling Value; Target Up to $8.50
We continue to see GEE as a compelling acquisition growth story, with significant opportunities for growth in FY2018. Our new target of $8.50 represents a fair value of 1.05x 2018E EV/Revenue of $195.4. At the recent price of $2.60, GEE Group shares trade with a market capitalization of just $26.0mn ($41.4mn adjusted for SNI convertible preferred shares), despite strong results and improving adjusted EBITDA.
Please review important disclosures at www.seethruequity.com.
About GEE Group Inc.
GEE Group Inc. is a provider of specialized staffing solutions and is the successor to employment offices doing business since 1893. The Company operates in two industry segments, providing professional staffing services and solutions in the information technology, engineering, finance and accounting specialties and commercial staffing services through the names of Access Data Consulting, Agile Resources, Ashley Ellis, General Employment, Omni-One, Paladin Consulting and Triad. Also, in the healthcare sector, GEE Group, through its Scribe Solutions brand, staffs medical scribes who assist physicians in emergency departments of hospitals and in medical practices by providing required documentation for patient care in connection with electronic medical records (EMR). Additionally, the Company provides contract and direct hire professional staffing services through the following SNI brands: Accounting Now®, SNI Technology®, Legal Now®, SNI Financial®, Staffing Now®, SNI Energy®, and SNI Certes.
About SeeThruEquity
Since its founding in 2011, SeeThruEquity has been committed to its core mission: providing impactful, high quality research on underfollowed smallcap and microcap equities. SeeThruEquity has pioneered an innovative business model for equity research that is not paid for and is unbiased. SeeThruEquity is the host of acclaimed investor conferences that are the ultimate event for publicly traded companies with market capitalizations less than $1 billion.
SeeThruEquity is approved to contribute its research reports and estimates to Thomson One Analytics (First Call), the leading estimates platform on Wall Street, as well as Capital IQ and FactSet. SeeThruEquity maintains one of the industry's most extensive databases of opt-in institutional and high net worth investors. The firm is headquartered in Midtown Manhattan in New York City.
For more information, visit www.seethruequity.com.
Contact:
SeeThruEquity
info@seethruequity.com
SOURCE: SeeThruEquity
