Cash flows provided by (used in) operating activities:
Cash (used in) operating activities for the six months ended June 30, 2024, totaled ($0.1 million) compared to cash provided by operating activities of $13.1 million during the six months ended June 30, 2023. Elements of cash flow during the 2024 period were a net income of $1.2 million, non-cash charges of $2.9 million and an increase in operating working capital levels of ($4.2 million). Elements of cash flow during the corresponding 2023 period were net (loss) of ($1.9 million), non-cash charges of $6.4 million and a decrease in operating working capital levels of $8.6 million. The higher non-cash charges in 2023 were due to the reserve for an employment-related claim, net of recoveries. Operating working capital increased in 2024 due to higher accounts receivable balances resulting from our sequential revenue growth and an increase in prepaid and other current assets.
Cash flows (used in) investing activities:
Cash (used in) investing activities for the six months ended June 30, 2024, was ($751,000) compared to ($42,000) for the six months ended June 30, 2023. During the six months ended June 30, 2024, investing activities consisted of capital expenditures. During the corresponding 2023 period, investing activities included capital expenditures of ($112,000) and the recovery of office lease deposits of $70,000. The increase in capital expenditures in the 2024 period compared to the 2023 period reflected expenditures for laptop replacements and other technology enhancements.
Cash flows provided by (used in) financing activities:
Cash provided by financing activities for the six months ended June 30, 2024, totaled $378,000 and consisted of proceeds from the exercise of stock options of $322,000, the issuance of common shares related to our Employee Stock Purchase Plan of $136,000, partially offset by the purchase of treasury shares of ($80,000). Cash (used in) financing activities for the six months ended June 30, 2023, totaled ($1.5 million) and included Term Loan debt repayments of ($1.1 million), the purchase of treasury shares under our share repurchase program of ($572,000), partially offset by $150,000 related to proceeds from the issuance of shares of common stock shares under our Employee Stock Purchase Plan.
Off-Balance Sheet Arrangements:
Other than $324,000 in outstanding letters of credit issued under our Credit Agreement, we do not have any off-balance sheet arrangements. For further details about the outstanding letters of credit, refer to Note 8 — “Credit Facility” in the Notes to Condensed Consolidated Financial Statements included herein.
Inflation:
We do not believe that inflation had a significant impact on our results of operations for the periods presented, although economic uncertainty, including the concerns of our clients and other companies with respect to inflationary conditions in North America and elsewhere, has had and may continue to have an adverse impact on the demand for our services. On an ongoing basis, we attempt to minimize any effects of inflation on our operating results by controlling operating costs and, whenever possible, seek to ensure that billing rates reflect increases in costs due to inflation. However, high levels of inflation may result in higher interest rates which could increase our borrowing costs in the future.
In addition, refer to “Item 1A. Risk factors” in our 2023 Annual Report on Form 10-K for a discussion about risks that inflation directly or indirectly may pose to our business.
Seasonality:
Our operations are generally not affected by seasonal fluctuations. However, our consultants’ billable hours are affected by national holidays and vacation policies. Accordingly, we generally have lower utilization rates and higher benefit costs during the fourth quarter. Additionally, assignment completions tend to be higher near the end of the calendar year, which largely impacts our revenue and gross profit performance during the subsequent quarter.
Recently Issued Accounting Standards:
Recent accounting pronouncements are described in Note 13 to the accompanying financial statements.
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