Derek Dewan: So, I’ve been on a little technical glitch for a second, but no I’ve listened on the questions. And one thing people need to remember that there are some ups and downs in the sector. It’s a — industry but it has cyclicality, so based on demand and the macro economic environment, so I’ve lived through multiple cycles and exited as well very successfully. So, the comment about that is you know as a public company you have to maximize shareholder value and at this point, we have to build our business back to at least where it was first and then get to the next level, all of which is very possible for sure because of what we’re seeing. We’re pretty hopeful that we flattened out on the lower demand and that will catch the upswing towards the latter part of 2024, but takes a little bit longer.
That’s fine. We’re well-positioned to do it. We don’t have to be rash about any decisions to do anything out of the ordinary, but we do have to be prudent in managing both the top and the bottom-line and keep driving the business forward. We have a great value proposition in terms of our verticals, our margins, by the way were either second or third in the peer group for the industry and gross margin even with the decline down from roughly 35 to 31.5, which is driven by perm placement our volume that influences it. But our contract gross margins are also holding very well and our pricing is also holding. Let me take another question.
Kim Thorpe: And Derek, it’s Kim, may I add some to that?
Derek Dewan: Yeah. Sure.
Kim Thorpe: So to put this in perspective, I don’t want folks to think that we don’t take the loss this quarter seriously. We take it very seriously. But let me — let me put this or attempt to put some more perspective around this. In the last 10 quarters, since we did our follow-on offering, we generated $500 million in revenue 100 and almost $180 million in gross profit. Our gross margin across all 10 quarters was 35.6% which is in the high-end of our industry. Our adjusted EBITDA over that period cumulative has been about just an over 6%. I mean, we obviously need to work on getting that higher. And we will. Our net income over that period has been $27 million or 5.5%. Our cumulative earnings per shares has the offering at $0.60 has been $0.27, 44% of the 60 share price that the follow-on offering went add on.
And last but not least, we generated $16.5 million in free cash flow in 10 quarters. This is the first loss we’ve had since the fourth quarter of 2023, the first quarter of 2023 which was a small net loss of about $300,000. So I smile right now that we are managing this company for the long-term. And we believe that it’s kind of a lot more juice. And we’re anxious to get to the recovery.
Derek Dewan: Thank you, Kim. So one of the other questions and it was repeated a few times, in a slightly different format was how are your business verticals and what do you what do you think is going to happen going forward? So each business vertical had a decrease in demand, coupled with supply issues of getting a labor teed up to fill some of the orders. That is slowly changing. And as you know, there were big layoffs in the Information Technology sector and that halted some projects that were being done internally by our client companies, that is starting to warm up. So when will that take a real upward swing? And we can’t predict which quarter that will happen. But we do know that it happens. And it’s happened historically time-and-time again.
And we’re prepared for it. The vertical of accounting finance for example, also, was impacted. But that turns as well. So I can tell you that we will position our Company, for growth, and profitability, and have positioned it. And we’ll continue to do so. And catch the upswing. And that will get the shareholders the value they need on price. Our strategic alternatives how we use our cash? What’s pricing on acquisitions? Those questions have come up. Acquisition prices are somewhat muted now, because of the downturn. So are they five times EBITDA or six times. They are. But, with synergies and so forth you have to bring the multiple down to the three or four range with the deals if that becomes an option for us. But again, we will review all the strategic alternatives when the report comes in.
And move forward judiciously with it. And we are well positioned in my prior life. I was well positioned in a way to capture the upswing and have done it the same with 2021. We had kind of a dot-com bust then. So the key for us is not to make rash decisions, but to be thoughtful in what we’re doing with our strategic plan. And I can tell you there’s active board participation including our largest shareholder. And we have the horsepower to succeed. We have the guidance to succeed. We have the expertise internally in management. And we have the oversight in place by the board to help us drive the business forward. I’m very, very bullish on long-term outlook and that can mean a couple of quarters but we should see indicators coming up and we will report to you about those indicators.
We’re not satisfied in the least with our performance, nor our stock price. But as the leader of the company, I have an obligation to gut check every aspect of our business and also position our business for the success that we anticipate coming and that is the most critical aspect of what I can deliver today. We are prepared, we will take advantage of growth and we will not make rash business decisions when you don’t have to and we’re well positioned to do that. I’m patiently waiting for. [Technical Difficulty]
Kim Thorpe: We’re going to give Derek a second to get back on….
Derek Dewan: I’m back on. I had a technical glitch there. But yes, we’re good. But Kim do you want to take a shot at another question?
Kim Thorpe: Yes. I mean I hear it. Let’s let me go to GDP grew by 4.9% in 3Q and 3.3% 4Q. Whereas the economic weakness you’re referring to, GDP does not alone dictate how the economy is. There’s no question, we have rising inflation, high interest rates. There’s still a threat of inflation out there. The job figures keep getting adjusted downward. That’s not the panacea that you see on television all the time. It’s not the only indicator. The indication you can look at to verify. This is going to look at our peers including the Robert Haas, the Adecco’s and others. And there we’re all still being pinned down to some extent by at broader economic uncertainty than just a quarter to GDP. So that’s the answer to that. What are the trends looking like here in 1Q, can you better do a job of setting expectations with analysts and Wall Street’s?
You know, we’re trying to – we don’t provide guidance as a policy because it’s very expensive to maintain and create the systems you need to do. And it’s – and then it’s not always reliable but we have given as much directional guidance as we can. We talked about the turn in the trends from 2022 to 2023. The – if you look at other releases of other staffing firms that will bear out what we’re saying on the staffing industry. Analysts are the largest trade associations. You can go online and read their publications. It will bear out what we’re saying. Why were you so aggressive buying back at $0.58 and then nothing of stock was lower? We bought back – we bought back a lot of stock. We bought back steadily all the way from the time we implemented the program in 2023 to the time it ended as of December 31.
Given the economy and the downturn that we’re in the midst of that and the fact that we are about to get a report from an independent expert on strategic alternatives, we felt like it was prudent to pause for a few weeks. It doesn’t mean that we’ll abandon or all together, we’ll see what our adviser has to say and how our Board feels about it. That is not necessarily better than we bought it back at all kinds of prices that 58% – or I’m sorry $0.58 or lower? Yes there is a lot – like I realize there are a lot of people upset about the stock price, we’re upset about it too. All I can tell you is our tangible net book value is $0.33 a share. The stock price selling at less than $0.40 a share means that you all are indicating, you are being I think a lot of speculators out there and people doing day trading and short-term are suggesting that our But yes, we could liquidate our company theoretically at $0.33 and then – and then the rest of our business, $150 million revenue business that has produced $165 million to over the last five years is only worth $4 million from us.
We are confident that the stock is undervalued and we don’t like taking this much more time either, but it’s going to come back up when the recovery hits. We’ve proven we can do that.
Derek Dewan: Yeah. Let me add a few things, Kim. So we are in a great position to catch the upswing. We don’t have a great crystal ball as to which quarter the upswing will happen. It’s usually a gradual process, and we are seeing some better job orders we believe we flattened at the bottom at this point absent some other calamity in the macro environment. And one of the questions was it looks like the macro environment is not so bad. Well, first of all our peer group has had reductions in comparable quarter revenue ranging from 12% to 50%, depending upon the geographic location and the vertical in which they operate whether they have volume accounts, whether they have retail accounts, whether they’re on VMS, plated [ph] and MSP accounts and so forth.
However, it’s epidemic and I just got back from an industry CEO group and it’s across the Board, and the economist predicted that the only jobs being filled today are government, lower-end hospitality and some healthcare because of cuts in healthcare, and I’ll give you a great example, healthcare has had great demand during COVID and a bit post-COVID and then there were some layoffs. AMN Healthcare, which is the giant healthcare staffing firm nursing, physicians and so forth has been down 30% to 40% in top-line. And if you go to Robert Half, their perm business is actually down similar to ours. Their revenue was down and some of the buffers by the way for the larger staffing companies came from the European business not from the US business.
