Someone said, when do you think it’s going to happen? We think it’s probably the second quarter, which is our June 30 quarter in 2024. March quarter will be stable, 12/31 quarter, which ends soon. We will be on par with where we have been with showing some increase in demand. But I think more importantly, we’re well positioned. We have no debt, we have cash, we have good operating margins, we have better than peer group gross margin. I can go down the list, and I am happy to share those with you. But again, I don’t compare our company to the peer group as much as what we need to do to be successful. Are you looking at M&A opportunities? Yes. And we are having a strategic review by DC Advisory to analyze what makes sense, tuck-in acquisitions, all the other options that are out there as well.
And let’s see. Okay. How can you better manage expectations? Some of the macro challenges makes it a little more difficult from a quarterly basis. But on an annualized basis, we’re better able to manage the expectations. And cash flow sharply — what do you think about cash flow? Okay. Industry conditions. Are they getting better? The answer is yes and we feel like we’ve hit kind of the bottoming out phase of the cyclicality in the staffing industry, and we are seeing improvement. The improvement typically is not drastic and is gradual, except in the spring, in summer months, we’re looking forward to better than gradual improvement. We hope there’s some better acceleration there. Okay. Let’s see what someone said here. How can you better manage — let’s see in here.
This was a very nice — thank you very much. Someone’s a [Packer] fan, so they like my Vince Lombardi quote. And let me tell you something. I’m dead serious. I was a Packer fan growing up, and Green Bay was America’s team even though Dallas claims that position. So I have a lot of respect for people that can win consistently and that’s been my track record. I will absolutely win. I’m not happy with results that we have. I’m reasonably satisfied because how we’re positioned for success is probably the best indicator of future stock performance. Let’s see internal headcount, how’s that looking. Any sectors that grew more than others? Kim, will you comment on IT contract, because we actually grew that, even in the environment.
Kim Thorpe: Happy to. Yes. We not only grew IT contract but we also grew our engineering contract services, which is a much smaller business, but it grew nonetheless. And we grew our accounting firm business, which also is small. The reason IT is important is because as is our strategy, it’s our priority vertical and it is becoming larger and larger in proportion to our total business. When I joined the company, it was just under 40%, now it’s almost 50%. And the significance of it is, is that it has much more resilience in economic cycles or tends to, although, there was a pullback in IT hiring, actually, I think that began in 2022 went into 2023. But we have a very good array of businesses. We’re focused on cutting edge areas, such as AI and generative AI, cybersecurity and those.
And I also — Derek, if you don’t mind, I’d like to comment on, there’s been a couple of questions. Your stock is down, why should we buy your stock? I just want to point out a metric that maybe some of you haven’t necessarily focused on. And that is, if I look at the stock price where it is right now $0.49 and I marked that down for a reasonable control premium, say, 30%, that gets me in the high 30%, mid to high $0.30 range. Our tangible book value, that is only our cash and AR minus our liabilities, is $0.36 a share. That means that there’s zero value, zero, being given to the operating businesses. Even though we just went through an audit and we’re able to support the value of nearly $70 million of intangible assets with conservative cash flow forecast.
So all I can say is, I think that something is missing in the marketplace here that we’re not getting any recognition for that. And for — there was a comment in here that said something about the job market was hot the entire year, what are we talking about? I don’t know that the entire staffing industry would agree with that, because I can tell you that staffing industry analysts published their industry update and economic update in September and their prediction is that the entire staffing industry, top line will be down 10% for 2023. So I just want to bring a few facts to the table to respond to some of this.
Derek Dewan: Let me amplify that, because the job market is kind of a misnomer. You have to bifurcate the term job market. Job market for what? Hospitality was up. Some lower level positions, hiring was up. IT was down. Look at the layoffs that occurred in IT and we succeeded despite that. We’re picking up a lot of those IT people and putting them back to work on project works. And quite frankly, projects were put on hold, because of the higher interest environment, uncertainty, the macroeconomic environment, including things like Ukraine, things like Gaza, all those things weigh on CEOs in corporate America a bit. Now, I can say that it’s an election year next year. Rates look like they’re coming down, they probably have already.
