Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Why do you think things are getting better in the environment, and how does the resolution of the election contribute to this improvement? A: Richard Hermanns, CEO, explained that the reduction of interest rates reduces the chance of a meltdown in the commercial real estate market, which is a big driver of their business. Additionally, changes in handling illegal immigration have been favorable, particularly for their direct line competing with undocumented workers. Franchisees are returning to pre-pandemic habits, and normal incentives are starting to take effect.
Q: Are there specific lines of business or geographic areas that are improving? A: Richard Hermanns noted that commercial construction has been strong, particularly in Texas, Tennessee, Florida, and Georgia. The Southeast has been very strong, and there is also improvement in the mid-Atlantic region. Additionally, their skilled trades division is picking up.
Q: Are you seeing signs of stabilization or improvement in the permanent staffing side, and what is your outlook for that part of the business? A: Richard Hermanns acknowledged that the permanent placement business has been tough but expressed optimism that it can't stay at abnormally low levels. He believes the market is returning to normal, and the strength of 2022 led to an abnormally depressed 2023 and 2024.
Q: Can you hold core SG&A expenses relatively flat as demand picks up, and how much capacity do you have for system-wide sales? A: Richard Hermanns stated they have the capacity to handle a 5-10% sales increase without a significant increase in SG&A costs. However, he anticipates potential wage increases, which could raise payroll expenses, though headcount is expected to remain flat.
Q: Has the softer demand environment created more acquisition opportunities, and what does the pipeline look like? A: Richard Hermanns mentioned that they made two small acquisitions in the last quarter and have several deals in the pipeline. These acquisitions are typically in commercial staffing, fortifying their position in existing markets or entering new cities, and they anticipate continued opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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