NEW YORK, NY / ACCESSWIRE / July 27, 2015 / SeeThruEquity, a leading independent equity research and corporate access firm focused on small-cap and micro-cap public companies, today announced it has issued an update on General Employment Enterprises, Inc. (NYSE MKT: JOB).
"In line with the strategy that has been articulated by management since we initiated coverage on the company last September, General Employment announced it would issue 11.2mn shares of new equity pursuant to the $75mn shelf offering filed with the SEC, with proceeds intended to fund growth through acquisitions and for general corporate purposes. On July 23, 2015, the company priced the offering at $0.70 per share, in a transaction that was led by Roth Capital and co-managed by Maxim Group," commented Ajay Tandon, CEO of SeeThruEquity. "We have been impressed by the considerable progress made by General Employment under the leadership of Derek Dewan and Andrew Nostrud since we initiated coverage last Autumn. In our view the company has executed a remarkable turnaround, and we see General Employment as evolving from a deep value special situation to a growth company taking share in a large and fragmented industry. We are maintaining a price target of $2.00 following the company's recent equity raise."
The report is available here: JOB July 2015 Update Note. SeeThruEquity is an approved equity research contributor on Thomson First Call, Capital IQ, FactSet, and Zack's. The report will be available on these platforms. The firm also contributes its estimates to Thomson Estimates, the leading estimates platform on Wall Street.
Additional highlights from the update note are as follows:
New equity bolsters financial strength
On July 22, 2015, General Employment announced that it had priced an 11.2mn share offering of common stock at $0.70 per share, with the proceeds earmarked for new acquisitions and general corporate purposes. The shares were offered pursuant to a $75mn shelf registration filed with the SEC in May and highlighted in our June note on JOB. We estimate General Employment will receive approximately $7.3mn in proceeds after expenses and underwriting discounts, with potential for an additional $1.1mn if underwriters exercise their 30-day overallotment option in full. The move is the latest in a series of transactions that have strengthened the company's balance sheet, including completion of a debt to equity conversion by Brio Master Fund in May 2015 and also the conversion of all the preferred shares to common as of the close of the offering.
Balance sheet to be clean for first time in our coverage
Adjusting March quarter results for the $7.3mn in net proceeds we form the offering, General Employment has a much-improved balance sheet. We estimate the company to have an adjusted cash balance of approximately $8.4mn in cash on hand and a current ratio of over 2.0x, with 86.5mn common shares outstanding. Importantly, the company should move to a net cash position of positive $1.7mn on the balance sheet and shareholder's equity of $18.6mn with a book value of $0.22 per share. This is remarkable progress for a company that was in continuing default on a short-term credit facility when we initiated coverage last September. We also note that JOB shares have appreciated by over 300% since our initiation due to the considerable progress made by the company since that time.
Proceeds likely to include funds for an acquisition
We see the raise as what is likely the beginning of a new growth phase for General Employment. After integrating the acquisition of Scribe Solutions – recently named one of the fifty fastest growing private companies in North Florida - we expect new CEO Derek Dewan and CFO Andrew Nostrud to deploy a substantial portion of the proceeds for accretive acquisitions. Acquisitions are likely to be a core supplement to organic growth in the company's strategy going forward, given the manifold opportunities in the highly fragmented $139Bn staffing and executive search industry.
Please review important disclosures on our website at www.seethruequity.com.
About General Employment Enterprises, Inc.
General Employment Enterprises, Inc. was incorporated in the State of Illinois in 1962, is a provider of specialized staffing solutions and is the successor to employment offices doing business since 1893. The Company operates in two industry segments, providing professional staffing services and solutions, and light industrial staffing services through the names of General Employment, Ashley Ellis, Triad and Omni-One. Also, in the healthcare sector, General Employment through its Scribe Solutions brand staffs medical scribes who assist physicians in emergency departments of hospitals and in medical practices by providing required documentation for patient care in connection with electronic medical records (EMR).
About SeeThruEquity
SeeThruEquity is an equity research and corporate access firm focused on companies with less than $1 billion in market capitalization. The research is not paid for and is unbiased. The company does not conduct any investment banking or commission based business. SeeThruEquity is approved to contribute its research to Thomson One Analytics (First Call), Capital IQ, FactSet, Zacks, and distribute its research to its database of opt-in investors. The company also contributes its estimates to Thomson Estimates, the leading estimates platform on Wall Street.
For more information visit www.seethruequity.com.
Contact:
Ajay Tandon
SeeThruEquity
info@seethruequity.com
SOURCE: SeeThruEquity
