The US side was down, for example, manpower but now their French business is catching it too. So this is not unusual from an industry standpoint in the macroeconomics broken down at the meeting that I went to by economists two different ones point to exactly what we’ve been saying. They also point to an anticipated recovery and we may be bumpy for a while, but they do believe there will be one. And we also have to realize that there was a hiring boom in 2022, we call it the post-COVID bounce. And so adjusting the labor force market in 2023 towards the latter part started. It’s not finished, but we think it’s leveled off and then there’ll be the upswing, projects will start, now interest rates went up that put a little damp around project business, for corporate America and so forth.
Inflationary trends in wages, our margins have held, one of the questions was it your spreads and your gross profits and your pricing holding? The answer is yes. The influence on gross margin was perm related. Perm is at 100% gross profit. So you have less perm impacts the gross margin in the aggregate, but I can state that they we’re well-positioned to move forward. We will take the actions necessary to restore profitability and get top line humming again, and that’s what we’re focused on. And we appreciate you shareholders and interested parties being on the team and we ask you for some patience, but we don’t have — we’re not satisfied and the least with the performance at this level, but we are optimistic that we will get out of here at this level and start moving in a great direction that we need to be.
Now I will tell you, we have signs at different regions of the country and different verticals ticking upward. They’re somewhat mitigated by those that are still flat, but that should come around and we’re very optimistic in the longer term outlook. So I can safely say that we’re well-positioned balance sheet wise. I have to say that I predicted this was happening or would happen. We saw the same type of thing in 2005 and 2006 when perm hit a bubble a peak similar to what it did in 2022. And then there was a decline in staffing and what happens when there’s a cut in employment, usually the contract labor and permanent placement business get hit first before full-time staff get let go. One thing companies have been doing is holding on, I think this is a key point that was made by the economists.
The reason the layoffs aren’t more significant on the core employees of a client company is because they’re retaining those employees, even if the business didn’t warrant because they don’t want to lay them off because it’s difficult to get them back. So that trend has been going on. Sooner or later, activity is good for our business. So if there’s a bunch of layoffs, we’ll benefit from the recovery, because they’ll initially hire contract and then they’ll hire perm again. So that’s the cycle and it’s borne out historically and the economists have predicted this. They’re showing why total employment was not bad in the aggregate, but then they dissected it in why temp labor and permanent hires from staffing companies are down, and it was across the board.
I will say the optimism index of all the C-suite executives that were at the meeting that I went to is high. They don’t know when that breakout will start occurring. It’s starting to, as I said, first, where have you leveled off, we believe we have leveled off. And then are we catching an upswing? And will that be in 2024? The resounding answer was yes, it is, but it should be the latter part of 2024. Nonetheless, we’re well positioned. We will take aggressive action on both top and bottom line. We have great talent internally, great talent, and we’re adding great talent and people are coming to us for jobs because they think it’s a great place to be coming from competitors. So we feel good about that and we only are hiring production personnel, recruiters, account managers and salespeople at this point, because they will deliver the results we need to propel revenue forward and get net income and EBITDA back on the right track.
Kim, do you want to add anything? I’m trying to give some global answers to similar questions.
Kim Thorpe: Yeah. Derek, there’s been a question or two on AI, and I know it’s not directly…
Derek Dewan: Yeah, I covered — let me cover that. So we covered AI at the recent meeting. The top 10 trends for staffing were discussed. AI for sure, was a critical element of that. Would we anticipate doing with AI and how will it benefit our business and also internally and also benefit us from placing AI expertise at our customer’s. In the IT sector, we’re focused on growing the AI and cybersecurity capability or placements of those IT personnel at client companies. We’re doing that through what I call very, very sophisticated recruiting, and we will also have the AI integrated into our recruiting. I have various individuals in the company right now, studying the different tools to bring in for AI and also on the vertical leadership side, our IT leaders — are job orders, which we’re getting for the positions.
And I think what’s important on the tech side, is that technology is driving business period across the spectrum, and we have a significant practice and we’re adding to it. That’s a huge growth area for us. But one of the questions was, how are you dealing with it? And my response is, very aggressively both for internal use and for placement of AI. professionals. Cyber is intertwined and as well into both of those areas. Kim you want to add anything to that?
Kim Thorpe: No, I think — you have again a lot of these areas are going to be covered I think and be part of the conversation around strategic alternatives. There are some good questions here. But no. I don’t have anything else at this point Derek.
Derek Dewan: Okay. Look, we’re always available for follow-up as necessary. And the one thing I ask is, that I believe that we are doing and we’ll do everything that we can to get back to profitability, growth track that we need to be on and we will move forward aggressively, strategically and take advantage of opportunities, which it’s out there. We will also be judicious in, how we spend our money and have it. So we will be very, very prudent, and we are optimistic on the longer-term aspects of where this company will be. We will report back, at some point on the strategic alternatives, after we’ve had a chance to look at those. And I anticipate, that we’ll have a broad plan to grow shareholder value, which is key to what we’re doing.
We also have a great team. Our employees are optimistic. They get paid on growth, so they are driven and we all are connected to that. So, we’re excited about future prospects. And the key now is to just buckled down and block and tackle and deliver the best we can for macro environment that’s choppy, high interest rates, some inflation, very specific employment statistics that you have to look at very, very deceptive. And that’s what these economists have done to prove out, what’s actually happening in the industry. So that concludes our call for now and we’ll be in touch. We appreciate you joining us today, and we look forward some good things. Thank you very much.
Kim Thorpe: Thank you, folks.
