GEE Group Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Overview GEE Group Inc. and its wholly owned material operating subsidiaries, Access Data Consulting Corporation, Agile Resources, Inc., BMCH, Inc., Paladin Consulting, Inc., Scribe Solutions, Inc., SNI Companies, Inc., Triad Logistics, Inc., and Triad Personnel Services, Inc. (collectively referred to as the “Company”, “us”, “our”, or “we”) are providers of permanent and temporary professional and industrial staffing and placement services in and near several major U.S cities. We specialize in the placement of information technology, accounting, finance, office, and engineering professionals for direct hire and contract staffing for our clients, data entry assistants (medical scribes) who specialize in electronic medical records (EMR) services for emergency departments, specialty physician practices and clinics, and provide temporary staffing services for our industrial clients. The acquisitions of Scribe Solutions, Inc., a Florida corporation (“Scribe”) in April 2015, Agile Resources, Inc., a Georgia corporation (“Agile”) in July 2015, Access Data Consulting Corporation, a Colorado corporation (“Access”) in October 2015, Paladin Consulting Inc. (“Paladin”) in January 2016, and SNI Companies, Inc., a Delaware corporation (“SNI”) in April 2017, expanded our geographical footprint within the professional placement and contract staffing verticals or end markets of information technology, accounting, finance, office, engineering professionals, and medical scribes. The Company markets its services using the trade names General Employment Enterprises, Omni One, Ashley Ellis, Agile Resources, Scribe Solutions Inc., Access Data Consulting Corporation, Paladin Consulting Inc., SNI Companies, Accounting Now, Staffing Now®, SNI Banking, SNI Certes®, SNI Energy®, SNI Financial®, SNI Technology®, Triad Personnel Services and Triad Staffing. As of June 30, 2023, we operated from locations in eleven (11) states, including twenty-six (26) branch offices in downtown or suburban areas of major U.S. cities and four (4) additional U.S. locations utilizing local staff members working remotely. We have offices or serve markets remotely, as follows; (i) one office in each of Connecticut, Georgia, Minnesota, and New Jersey, and one remote local market presence in Virginia; (ii) two offices each in Illinois and Massachusetts; (iii) three offices in Colorado; (iv) two offices and two additional local market presences in Texas; (v) six offices and one additional local market presence in Florida; and (vi) seven offices in Ohio. Management has implemented a strategy which includes organic and acquisition growth components. Management’s organic growth strategy includes seeking out and winning new client business, as well as expansion of existing client business and on-going cost reduction and productivity improvement efforts in operations. Management’s acquisition growth strategy includes identifying strategic, accretive acquisitions, financed primarily through a combination of cash and debt, including seller financing, the issuance of equity in appropriate circumstances, and the use of earn-outs where efficient to improve the overall profitability and cash flows of the Company. The Company’s contract and placement services are principally provided under two operating divisions or segments: Professional Staffing Services and Industrial Staffing Services. We believe our current segments and array of businesses and brands within our segments complement one another and position us for future growth. 16 Table of Contents (Amounts in thousands except per share data, unless otherwise stated) Results of Operations Three Months Ended June 30, 2023 Compared to the Three Months Ended June 30, 2022 Summary and Outlook The quarter ended June 30, 2023, was our eighth consecutive quarter of profitability and free cash generation since completion of significant deleveraging initiatives and a follow-on offering during the quarter ended June 30, 2021. We believe our top line performance was generally in line with our industry peers and included quarter-over-quarter growth in two of the Company’s largest professional specialties, IT and finance, accounting and office (“FAO”) contract services. We are cautiously optimistic about future growth, and especially in our largest professional services businesses, led by IT, while taking into account continuing uncertainties and unknowns about the economy and labor environments. The quarter ended June 30, 2023 also marked our twelfth consecutive quarter of improvement in results for purposes of evaluation of our deferred income tax valuation allowance, which had been set at 100% of our net deferred tax assets. As a result, we recognized a deferred tax benefit of $6,752 during the quarter, which accounted for approximately $0.06 of this quarter’s earnings per share. The reversal of this allowance is another significant milestone and indication of our progress. We implemented a $20 million share repurchase program providing a means to return excess capital to our shareholders from our growing cash balances. As of June 30, 2023, we had repurchased 870 shares. As of August 11, 2023, the Company has repurchased 1,454 shares (accounting for approximately 1.3% of our issued and outstanding common shares immediately prior to the program). The Company has conducted repurchases consistently since the program’s implementation and intends to continue to take advantage of the present attractive market prices for its common shares. Net Revenues Consolidated net revenues are comprised of the following: Three Months Ended June 30, 2023 2022 Change Change Professional contract services $ 29,797 $ 28,967 $ 830 3% Industrial contract services 3,183 4,120 (937 ) -23% Total professional and industrial contract services 32,980 33,087 (107 ) 0% Direct hire placement services 5,191 8,026 (2,835 ) -35% Consolidated net revenues $ 38,171 $ 41,113 $ (2,942 ) -7% Contract staffing services contributed $32,980, or approximately 86%, of consolidated revenues and direct hire placement services contributed $5,191, or approximately 14%, of consolidated revenues for the three-month period ended June 30, 2023. This compares to contract staffing services revenues of $33,087, or approximately 80%, of consolidated revenues and direct hire placement revenues of $8,026, or approximately 20%, of consolidated revenues for the three-month period ended June 30, 2022. Despite economic headwinds, including persistent inflation and threats of recession, consolidated contract staffing services revenues for the three-month period ended June 30, 2023 were near level, down $107, or less than 1%, when compared to the three-month period ended June 30, 2022. Professional contract services revenue grew by $830, or 3%, led by our largest specialties, information technology and FAO and including pricing improvements implemented to mitigate rising costs related to inflation. Industrial staffing services for the quarter decreased by $937, or 23%, mainly due to a decrease in orders from clients. The industrial staffing markets in Ohio continue to be affected by workforce volatility following COVID-19, resulting in more competition for orders and temporary labor to fill orders. 17 Table of Contents (Amounts in thousands except per share data, unless otherwise stated) Direct hire placement revenue for the three-month period ended June 30, 2023 decreased by $2,835, or approximately 35%, as compared to the three-month period ended June 30, 2022. Direct hire opportunities tend to be highly cyclical and demand dependent. Demand for the Company’s direct hire services in fiscal 2022 was extraordinarily high driven by post-COVID employment recovery trends, and peaked in the prior June 30, 2022 comparable quarter resulting in the highest ever direct hire revenues for the Company in a single quarter. Management believes that the Company’s direct hire performance during the three-month period ended June 30, 2023 was on par with larger employment and industry trends. Cost of Contract Services Cost of contract services includes wages and related payroll taxes and employee benefits of the Company's contract services employees, and certain other contract employee-related costs, while working on contract assignments. Cost of contract services for the three-month period ended June 30, 2023, totaled $24,518, as compared to $24,612 for the three-month period ended June 30, 2022. The $94 overall decrease in cost of contract services was generally in line with the decrease in total contract revenues. Gross profit percentage by service: Three Months Ended June 30, 2023 2022 Professional contract services 26.5% 26.9% Industrial contract services 17.7% 16.6% Professional and industrial services combined 25.7% 25.6% Direct hire placement services 100.0% 100.0% Combined gross profit margin (a) 35.8% 40.1% (a) Includes gross profit from direct hire placements, for which all associated costs are recorded as selling, general and administrative expenses. The Company’s combined gross profit margin, including direct hire placement services (recorded at 100% gross margin) for the three-month periods ended June 30, 2023 and 2022 were approximately 35.8% and 40.1%, respectively. In the professional contract services segment, the gross margin (excluding direct hire placement services) was approximately 26.5% for three-month period ended June 30, 2023, compared to approximately 26.9% for the three-month period ended June 30, 2022. This decrease is due in part to increases in contractor pay associated with the recent rise in inflation resulting in some margin compression. The Company has stepped-up counter-inflationary measures, as seen in the current quarter results, including seeking increases in bill rates and spreads, where possible, to address margin compression. The Company’s industrial contract services gross margin for the three-month period ended June 30, 2023, was approximately 17.7% versus approximately 16.6% for the three-month period ended June 30, 2022. Gross profit for the Company’s industrial contract services revenues include annual premium refunds from the Ohio Bureau of Workers Compensation insurance programs totaling $17 and $46 for the three-month periods ended June 30, 2023 and 2022, respectively. The industrial contract services gross margins excluding the effect of these refunds and distributions were approximately 17.2% and 15.5% for the three-month periods ended June 30, 2023 and 2022, respectively. The quarter-over-quarter increase, excluding the effects of the workers compensation premium refunds and distributions, is mainly attributable to price increases enacted to offset increases in contractor payroll, leading to higher spreads in the Industrial Segment. 18 Table of Contents (Amounts in thousands except per share data, unless otherwise stated) Selling, General and Administrative Expenses Selling, general and administrative expenses (“SG&A”) include the following categories: · Compensation and benefits in the operating divisions, which include salaries, wages and commissions earned by the Company’s employment consultants, recruiters and branch managers on permanent and temporary placements; · Administrative compensation, which includes salaries, wages, share-based compensation, payroll taxes, and employee benefits associated with general management and the operation of corporate functions, including principally, finance, human resources, information technology and administrative functions; · Occupancy costs, which includes office rent, and other office operating expenses; · Recruitment advertising, which includes the cost of identifying and tracking job applicants; and · Other selling, general and administrative expenses, which includes travel, bad debt expense, fees for outside professional services and other corporate-level expenses such as business insurance and taxes. The Company’s SG&A for the three-month period ended June 30, 2023 decreased by $1,107, or 9%, as compared to the three-month period ended June 30, 2022. SG&A as a percentage of revenues was 30.8% and 31.3% for the three-month periods ended June 30, 2023 and 2022, respectively. The decrease in SG&A and improvement in the SG&A ratio is mainly due to cost reductions the Company implemented in February and March 2023. The Company monitors operating costs including the impacts of inflation with a view towards identifying and taking advantage of potential cost reductions on a routine basis. SG&A also includes certain non-cash costs and expenses incurred related to acquisition, integration, restructuring and other non-recurring activities, such as certain corporate legal and general expenses associated with capital markets activities, that either are not directly associated with core business operations or have been eliminated on a going forward basis. These costs were estimated to be $21 and $340 for the three-month periods ended June 30, 2023 and 2022, respectively, and include mainly expenses associated with former closed and consolidated locations, and personnel costs associated with eliminated positions. Depreciation and Amortization Expense Depreciation expense and amortization expense were level at $96 and $720 each, respectively, during both the three-month periods ended June 30, 2023 and 2022. Income from Operations Income from operations was $1,084 and $2,825 for the three-month periods ended June 30, 2023 and 2022, respectively. This decrease of $1,741 is mainly attributable to the decrease in direct hire placement revenues, offset in part by the cost reductions in SG&A as discussed above. Interest Expense Interest expense was $119 for the three-month period ended June 30, 2023, which increased by $23 as compared to the three-month period ended June 30, 2022, and included certain annual loan related fees and costs. 19 Table of Contents (Amounts in thousands except per share data, unless otherwise stated) Interest Income The Company began holding excess cash in interest bearing accounts in August 2022, on which interest income earned was $159 for the three-month period ended June 30, 2023. Provision for Income Taxes The Company recognized income tax (benefit) expense of $(6,752) and $96 for the three-month periods ended June 30, 2023 and 2022, respectively. Our effective tax rates for the three-month periods ended June 30, 2023, and 2022 are lower than the statutory rate primarily due to the effect of the change in valuation allowance on the net deferred tax asset (“DTA”) position. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of June 30, 2023, in part due to the fact that in the current year we achieved three years of cumulative pretax income in the U.S. federal tax jurisdiction, management determined that there is sufficient positive evidence to conclude that it is more likely than not that the deferred taxes are realizable. As a result, the Company released $6,938 of the valuation allowance accordingly during the three months ended June 30, 2023. Net Income The Company’s net income was $7,876 and $2,633 for the three-month periods ended June 30, 2023 and 2022, respectively. The increase of $5,243 is mainly attributable to the deferred tax benefit of $6,752 outlined above. Excluding this activity, the decrease of $1,509 is consistent with the decrease in direct hire placement revenues, as offset by decreases in SG&A, as explained in the preceding applicable portions of this Management’s Discussion and Analysis (“MD&A”). 20 Table of Contents (Amounts in thousands except per share data, unless otherwise stated) Nine Months Ended June 30, 2023 Compared to the Nine Months Ended June 30, 2022 Summary and Outlook The nine-month period ended June 30, 2023, collectively demonstrates the continuation of profitability and free cash generation since completion of significant deleveraging initiatives and a follow-on offering during the quarter ended June 30, 2021. We believe our top line performance was generally in line with our industry peers and included quarter-over-quarter growth in two of the Company’s largest professional specialties, IT and FAO contract services. We are cautiously optimistic about future growth, and especially in our largest professional services businesses, led by IT, while taking into account continuing uncertainties and unknowns about the economy and labor environments. The nine-month period ended June 30, 2023 included our twelfth consecutive quarter of improvement in results for purposes of evaluation of our deferred income tax valuation allowance, which had been set at 100% of our net deferred tax assets. As a result, we recognized a deferred tax benefit of $6,621, which accounted for approximately $0.06 of this nine-month period’s earnings per share. The reversal of this allowance is another significant milestone and indication of our progress. We implemented a $20 million share repurchase program providing a means to return excess capital to our shareholders from our growing cash balances. As of June 30, 2023, we had repurchased 870 shares. As of August 11, 2023, the Company has repurchased 1,454 shares [accounting for approximately 1.3% of our issued and outstanding common shares immediately prior to the program]. The Company has conducted repurchases consistently since the program’s implementation and intends to continue to take advantage of the present attractive market prices for its common shares. Net Revenues Consolidated net revenues are comprised of the following: Nine Months Ended June 30, 2023 2022 Change Change Professional contract services $ 92,330 $ 91,572 $ 758 1% Industrial contract services 10,027 11,944 (1,917 ) -16% Total professional and industrial contract services 102,357 103,516 (1,159 ) -1% Direct hire placement services 15,821 20,073 (4,252 ) -21% Consolidated net revenues $ 118,178 $ 123,589 $ (5,411 ) -4% Contract staffing services contributed $102,357, or approximately 87%, of consolidated revenues and direct hire placement services contributed $15,821, or approximately 13%, for the nine-month period ended June 30, 2023. This compares to contract staffing services revenues of $103,516, or approximately 84%, of consolidated revenues and direct hire placement revenues of $20,073, or approximately 16%, of consolidated revenues for the nine-month period ended June 30, 2022. Despite economic headwinds, including persistent inflation and threats of recession, consolidated contract staffing services revenues for the nine-month period ended June 30, 2023 were down only $1,159, or 1%, when compared to the nine-month period ended June 30, 2022. Professional contract services revenue grew by $758, or 1%, led by our largest specialties, information technology and FAO, and including pricing improvements implemented to mitigate rising costs related to inflation. Industrial contract staffing services for the first nine months decreased by $1,917, or 16%, mainly due to a decrease in orders from clients. The industrial staffing markets in Ohio continue to be affected by workforce volatility following COVID-19, resulting in more competition for orders and temporary labor to fill orders. Direct hire placement revenue for the nine-month period ended June 30, 2023 decreased by $4,252, or 21%, as compared to the nine-month period ended June 30, 2022. Direct hire opportunities tend to be highly cyclical and demand dependent. Demand for the Company’s direct hire services in fiscal 2022 was extraordinarily high driven by post-COVID employment recovery trends, and peaked in the prior June 30, 2022 comparable periods resulting in the highest ever direct hire revenues for the Company during those periods. Management believes that the Company’s direct hire performance during the nine-month period ended June 30, 2023 was on par with larger employment and industry trends. 21 Table of Contents (Amounts in thousands except per share data, unless otherwise stated) Cost of Contract Services Cost of contract services includes wages and related payroll taxes and employee benefits of the Company's contract services employees, and certain other contract employee-related costs, while working on contract assignments. Cost of contract services for the nine-month period ended June 30, 2023, totaled $76,918, as compared to $76,992 for the nine-month period ended June 30, 2022. The $74 decrease is generally in line with, but slightly less proportional in comparison to the decrease in contract revenues, due to increases in contractor pay as a result of recent wage inflation. Gross profit percentage by service: Nine Months Ended June 30, 2023 2022 Professional contract services 25.8% 26.9% Industrial contract services 16.5% 15.5% Professional and industrial services combined 24.9% 25.6% Direct hire placement services 100.0% 100.0% Combined gross profit margin (a) 34.9% 37.7% (a) Includes gross profit from direct hire placements, for which all associated costs are recorded as selling, general and administrative expenses. The Company’s combined gross profit margins, including direct hire placement services (recorded at 100% gross margin) for the nine-month periods ended June 30, 2023 and 2022 were approximately 34.9% and 37.7%, respectively. In the professional contract services segment, the gross margin (excluding direct hire placement services) was approximately 25.8% for the nine-month period ended June 30, 2023 compared to approximately 26.9% for the nine-month period ended June 30, 2022. This decrease is due in part to increases in contractor pay associated with the recent rise in inflation resulting in some margin compression. The Company has stepped-up counter-inflationary measures, as seen in the current quarter results, including seeking increases in bill rates and spreads, where possible, to address margin compression. The Company’s industrial contract services gross margin for the nine-month period ended June 30, 2023, was approximately 16.5% versus approximately 15.5% for the nine-month period ended June 30, 2022. Gross profit for the Company’s industrial contract services revenues include annual premium refunds from the Ohio Bureau of Workers Compensation insurance programs totaling $19 and $83 for the nine-month periods ended June 30, 2023 and 2022, respectively. The industrial contract services gross margins excluding the effect of these refunds and distributions were approximately 16.3% and 14.8% for the nine-month periods ended June 30, 2023 and 2022, respectively. The quarter-over-quarter increase, excluding the effects of the workers compensation premium refunds and distributions, is mainly attributable to price increases enacted to offset increases in contractor payroll, leading to higher spreads in the Industrial Segment. 22 Table of Contents (Amounts in thousands except per share data, unless otherwise stated) Selling, General and Administrative Expenses Selling, general and administrative expenses (“SG&A”) include the following categories: · Compensation and benefits in the operating divisions, which includes salaries, wages and commissions earned by the Company’s employment consultants, recruiters and branch managers on permanent and temporary placements; · Administrative compensation, which includes salaries, wages, share-based compensation, payroll taxes, and employee benefits associated with general management and the operation of corporate functions, including principally, finance, human resources, information technology and administrative functions; · Occupancy costs, which includes office rent, and other office operating expenses; · Recruitment advertising, which includes the cost of identifying and tracking job applicants; and · Other selling, general and administrative expenses, which includes travel, bad debt expense, fees for outside professional services and other corporate-level expenses such as business insurance and taxes. The Company’s SG&A for the nine-month period ended June 30, 2023 decreased by $1,181, or 3%, as compared to the nine-month period ended June 30, 2022. SG&A, as a percentage of revenues, was approximately 30.7% and 30.3% for the nine-month periods ended June 30, 2023 and 2022, respectively. SG&A for the nine-month period ended June 30, 2022, included expenses for the settlement of a legal matter and severance agreements totaling $975 and $838, respectively. The net increase in SG&A relative to revenue, excluding the impact of these non-recurring items, is largely a result of the effects of inflation on compensation and other operating costs. In February and March 2023, the Company implemented certain cost reductions with estimated annual savings of approximately $4.0 million, the impact of which began to take effect in the most recent quarter’s results through June 30, 2023. The Company monitors operating costs including the impacts of inflation with a view towards identifying and taking advantage of potential cost reductions on a routine basis. SG&A includes certain non-cash costs and expenses incurred related to acquisition, integration and restructuring and other non-recurring activities, such as certain corporate legal and general expenses associated with capital markets activities that either are not directly associated with core business operations or have been eliminated on a going forward basis. These costs were estimated to be $130 and $1,871 for the nine-month periods ended June 30, 2023 and 2022, respectively, and include mainly expenses associated with former closed and consolidated locations, and personnel costs associated with eliminated positions. Depreciation and Amortization Expense Depreciation expense was $295 and $276 for the nine-month periods ended June 30, 2023 and 2022, respectively. The increase in depreciation expense is due to recent net additions to fixed assets. Amortization expense was $2,159 and $2,749 for the nine-month periods ended June 30, 2023 and 2022, respectively. The decrease is due to intangible assets related to certain non-compete agreements and trade names becoming fully amortized. Income from Operations Income from operations was $2,540 and $3,975 for the nine-month periods ended June 30, 2023 and 2022, respectively. This decrease of $1,435 is not proportional to the decrease in period over period revenues as the nine-month period ended June 30, 2022 included expenses for a legal settlement and severance agreements totaling $975 and $838, respectively. Excluding these items, the net decrease of $3,248 is consistent with the decrease in revenues, mainly in direct hire placements, as discussed above. 23 Table of Contents (Amounts in thousands except per share data, unless otherwise stated) Interest Expense Interest expense was $265 for the nine-month period ended June 30, 2023, which decreased by $36 compared to the nine-month period ended June 30, 2022. Interest Income The Company began holding excess cash in interest bearing accounts in August 2022 on which interest income earned was $292 for the nine-month period ended June 30, 2023. Provision for Income Taxes The Company recognized income tax (benefits) expense of $(6,621) and $59 for the nine-month periods ended June 30, 2023 and 2022, respectively. Our effective tax rates for the nine-month periods ended June 30, 2023 and 2022 are lower than the statutory rate primarily due to the effect of the change in valuation allowance on the net DTA position. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of June 30, 2023, in part due to the fact that in the current year we achieved three years of cumulative pretax income in the U.S. federal tax jurisdiction, management determined that there is sufficient positive evidence to conclude that it is more likely than not that the deferred taxes are realizable. As a result, the Company released $6,938 of the valuation allowance accordingly during the nine months ended June 30, 2023. Net Income The Company’s net income was $9,188 and $20,388 for the nine-month periods ended June 30, 2023 and 2022, respectively. The decrease in net income is mainly attributable to gains of $16,773 from extinguishment of the Company’s remaining PPP loans, offset by a $2,150 non-cash goodwill impairment charge during the nine months ended June 30, 2022. Additionally, the deferred tax benefit of $6,621 during the nine months ended June 30, 2023 partially offset the decrease in comparable periods. Excluding these items, the remaining net decrease of $3,198 is consistent with the decrease in direct hire placement revenues, as offset by decreases in SG&A, as explained in the preceding applicable portions of this MD&A. 24 Table of Contents (Amounts in thousands except per share data, unless otherwise stated) Liquidity and Capital Resources The primary sources of liquidity for the Company are revenues earned and collected from its clients and borrowings available under its asset-based senior secured revolving credit facility. Uses of liquidity include primarily the costs and expenses necessary to fund operations, including payment of compensation to the Company’s contract and permanent employees, and employment-related expenses, operating costs and expenses, taxes and capital expenditures. The following table sets forth certain consolidated statements of cash flows data: Nine Months Ended June 30, 2023 2022 Cash flows provided by operating activities $ 2,606 $ 7,931 Cash flows used in investing activities (104 ) (225 ) Cash flows used in financing activities (624 ) (113 ) As of June 30, 2023, the Company had $20,726 of cash, which was an increase of $1,878 from $18,848 as of September 30, 2022. As of June 30, 2023, the Company had working capital of $31,294 compared to $26,643 of working capital as of September 30, 2022. The increase in working capital is mainly attributable to the final installment of deferred payroll taxes under the CARES Act being paid and annual incentive compensation payments during the nine months ended June 30, 2023, which were reflected in current liabilities in the aggregate amount of $3,027 as of September 30, 2022. These payments also account for corresponding reductions in cash flows provided by operating activities as of June 30, 2023. The primary uses of cash for investing activities were for the acquisition of property and equipment during the nine-month periods ended June 30, 2023 and 2022. The cash flows used in financing activities were for purchases of treasury stock during the nine-month period ended June 30, 2023, and payments made on finance leases during the nine-month periods ended June 30, 2023 and 2022. All the Company’s office facilities are leased. Minimum lease payments under all the Company’s lease agreements for the twelve-month period commencing after the close of business on June 30, 2023, are approximately $1,746. There are no minimum debt service principal payments due during the twelve-month period commencing after the close of business on June 30, 2023. The Company had approximately $12,434 in availability for borrowings under its CIT Facility as of June 30, 2023. There were no outstanding borrowings on the CIT Facility as of June 30, 2023, or September 30, 2022, except for certain accrued carrying fees and costs, which are included in other current liabilities in the accompanying condensed consolidated balance sheets. On April 27, 2023, the Company’s Board of Directors approved a share repurchase program authorizing the Company to purchase up to an aggregate of $20 million of the Company’s currently outstanding shares of common stock. The share repurchase program will continue through December 31, 2023, may be suspended or discontinued at any time and does not obligate the Company to repurchase any number of shares of common stock. The share repurchase program is to be conducted in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended. Subject to applicable rules and regulations, the shares of common stock may be purchased from time to time in the open market transactions and in amounts as the Company deems appropriate, based on factors such as market conditions, legal requirements, and other business considerations. During the three-months ended June 30, 2023, the Company repurchased 870 shares of its common stock at a total cost of $471. As of August 11, 2023, the Company has repurchased 1,454 shares (accounting for approximately 1.3% of our issued and outstanding common shares immediately prior to the program). The Company has conducted repurchases consistently since the program’s implementation and intends to continue to take advantage of the present attractive market prices for its common shares. Management believes that the Company can generate adequate liquidity to meet its obligations for the foreseeable future and at least for the next twelve months. 25 Table of Contents Off-Balance Sheet Arrangements As of June 30, 2023, there were no transactions, agreements or other contractual arrangements to which an unconsolidated entity was a party, under which the Company (a) had any direct or contingent obligation under a guarantee contract, derivative instrument or variable interest in the unconsolidated entity, or (b) had a retained or contingent interest in assets transferred to the unconsolidated entity. Item 3. Quantitative and Qualitative Disclosures About Market Risk . Not applicable.