GEE Group Inc. (NYSEAMERICAN: JOB) reported net revenue fell 7.2% to $38.2 million in its fiscal third quarter ended June 30. Separately, GEE Group announced it has reached a cooperation agreement with investor Red Oak Partners that involves adding two independent directors. 

Earnings 

The company noted its professional contract services markets, led by IT, have grown this year despite some softness in demand that lingers due to economic and labor market uncertainties. Demand for GEE’s direct hire placement services was significantly higher during the prior fiscal year, primarily due to a stronger economy driven by a continued post-pandemic bounce in employment, according to the company. 

 “We continue to hold the same cautious optimism for future profitable organic growth, increased earnings and enhanced free cash flow for the remainder of fiscal 2023 and as we move into fiscal 2024,” said Chairman and CEO Derek Dewan. “We have begun to see the benefit and positive impact from the cost-saving measures we implemented in late February and March on the company’s financial results.” 

Dewan also noted GEE Group is “constantly on the lookout for opportunities to augment internal growth with strategic acquisitions that are appropriately priced so that they are accretive to earnings. The maximization of shareholder value is paramount to our growth strategy.” 

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Share price  

Shares in GEE Group were UP 8.24% to 47 cents as of 11:58 A.m. Eastern time today; they were 31.29% above their 52-week low, according to FT.com.  

Cooperation agreement and board changes 

GEE Group announced it has reached a cooperation agreement with investor Red Oak Partners. Under the terms of the agreement, GEE will increase the size of its board from seven to nine directors and appoint two new independent directors, David Sandberg and J. Randall Waterfield, to serve as Class I and Class II directors, respectively, filling the newly created vacancies on the board. In addition, the board will nominate Sandberg for election to the board at the company’s 2023 Annual Meeting of Shareholders and will nominate Waterfield for election to the board at its 2024 Annual Meeting of Shareholders. 

The company also announced Carl Camden, a staffing industry veteran and member of SIA’s Staffing 100 Hall of Fame, resigned from the board for health reasons; Jyrl James was appointed to serve as a Class I director to fill the vacancy. 

Additionally, per terms of the cooperation agreement, the board will engage an investment bank or consulting firm to assist in evaluating strategic opportunities to maximize shareholder value.  

In connection with the appointment of these two new directors, Red Oak Partners has withdrawn its nomination notice and proposals in connection with the 2023 Annual Meeting and has agreed to certain standstill and voting commitments. 

“We are pleased to have reached this amicable agreement with Red Oak Partners,” Dewan said. “David and Randy have significant public company experience as directors and are welcome additions to our board as we work towards a common goal of increasing the company's profitability, accelerating its long-term growth and maximizing shareholder value. The company looks forward to leveraging their expertise as we continue to position the company for value creation.”