HireQuest, Inc. (NASDAQ:HQI) Q3 2024 Earnings Conference Call November 7, 2024 4:30 PM ET Company Participants John Nesbett - IMS, Investor Relations Rick Hermanns - Chief Executive Officer Steve Crane - Chief Financial Officer Conference Call Participants Mike Baker - D.A. Davidson Kevin Steinke - Barrington Research Operator Good afternoon, everyone, and welcome to the HireQuest, Incorporated Third Quarter 2024 Earnings Call. At this time, all participants have been placed on a listen-only mode, and we wi ...

HireQuest, Inc. (HQI) came out with quarterly earnings of $0.20 per share, beating the Zacks Consensus Estimate of $0.16 per share. This compares to earnings of $0.12 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 25%. A quarter ago, it was expected that this company would post earnings of $0.12 per share when it actually produced earnings of $0.15, delivering a surprise of 25%.Over the last four quarters, the company has sur ...

Financial Performance - For the three months ended September 30, 2024, total revenue was $9.416 million, a slight increase from $9.271 million for the same period in 2023[101]. - Adjusted EBITDA for the three months ended September 30, 2024, was $4.926 million, representing 52.3% of total revenue, up from $3.742 million or 40.4% in Q3 2023[102]. - The company reported a net loss of $2.207 million for Q3 2024, compared to a net income of $1.483 million in Q3 2023[102]. - Total revenue for the three months ended September 30, 2024 was approximately $9.4 million, an increase of approximately 1.6% from $9.3 million for the same period in 2023[111]. - Adjusted EBITDA for the three months ended September 30, 2024 was $4.9 million, compared to $3.7 million for the same period in 2023, reflecting a significant increase[109]. - Total revenue for the nine months ended September 30, 2024 was approximately $26.5 million, a decrease of 5.7% from $28.1 million for the same period in 2023[132]. - The company reported a net income from continuing operations of approximately $1.6 million for the nine months ended September 30, 2024, down from $6.0 million in the same period of 2023[157]. Revenue Sources - Franchise royalties accounted for 95.5% of total revenue in Q3 2024, compared to 96.1% in Q3 2023[102]. - Franchise royalties for the three months ended September 30, 2024 were approximately $9.0 million, an increase of approximately 0.9% from $8.9 million for the same period in 2023[112]. - Service revenue for the three months ended September 30, 2024 was approximately $428 thousand, an increase of $62 thousand from $366 thousand for the same period in 2023[115]. - Franchise royalties decreased by 7.4% to approximately $25.0 million for the nine months ended September 30, 2024, down from $27.0 million in 2023[133]. - Service revenue increased by $385 thousand to approximately $1.5 million for the nine months ended September 30, 2024, compared to $1.1 million in 2023[136]. Expenses and Costs - Selling, general, and administrative expenses were $5.379 million for Q3 2024, representing 57.1% of total revenue, down from 68.5% in Q3 2023[102]. - Operating expenses for the three months ended September 30, 2024 were approximately $12.1 million, an increase of $5.0 million from $7.1 million for the same period in 2023, primarily due to a goodwill and intangible asset non-cash charge[117]. - Workers' compensation expense decreased to approximately $499 thousand for the three months ended September 30, 2024, down from approximately $1.5 million for the same period in 2023[118]. - Operating expenses increased by 22.6% to approximately $24.4 million for the nine months ended September 30, 2024, up from $19.9 million in 2023[137]. - Workers' compensation expense decreased by $724 thousand to approximately $1.6 million for the nine months ended September 30, 2024, compared to $2.3 million in 2023[138]. - Compensation and benefits expenses decreased by 11.1% to approximately $8.5 million for the nine months ended September 30, 2024, down from $9.6 million in 2023[139]. - Other SG&A expenses increased by 4.3% to $6.1 million for the nine months ended September 30, 2024, compared to $5.9 million in 2023[140]. Financing and Credit - The company has entered into a Revolving Credit Agreement with Bank of America for a $50 million facility, with the option to increase to $60 million, maturing on February 28, 2028[160]. - Availability under the Senior Credit Facility was approximately $26.9 million as of September 30, 2024[163]. - Cash used by financing activities was approximately $3.7 million for the nine months ended September 30, 2024, compared to $4.0 million for the same period in 2023, indicating a decrease of 7.5%[159]. Internal Controls and Governance - The company reported a material weakness in internal control over financial reporting due to insufficient accounting resources to handle technical accounting issues and acquisition integration[182]. - The company has engaged third-party professionals to assist with subsequent acquisitions as part of its remediation efforts[182]. - A new Chief Financial Officer with 17 years of public company experience was hired in November 2023, along with a Senior Accountant with 9 years of experience[182]. - The company is actively recruiting additional accounting staff to enhance its internal control environment[183]. - There were no significant changes in internal control over financial reporting during the quarter ended September 30, 2024, that materially affected the controls[184]. Market Expansion and Acquisitions - The company entered into an agreement to acquire certain assets of TEC, The Employment Company, for approximately $9.8 million, which generated over $34 million in system-wide sales in the prior 12 months[100]. - The company plans to acquire certain assets of TEC Staffing Services, Inc. for approximately $9.8 million, indicating ongoing market expansion efforts[163]. - The company has licensed its trade names to 6 offices in California, expanding its operational footprint[98]. - The company had 417 offices as of September 30, 2024, a decrease from 427 offices at the end of 2023, reflecting a net closure of 10 offices[170]. - System-wide sales for the nine months ended September 30, 2024, were $428.8 million, a decrease of 7.1% compared to $461.7 million for the same period in 2023[169]. - System-wide sales from DriverQuest and TradeCorp increased significantly by 217.3% for the nine months ended September 30, 2024, compared to the same period in 2023[169]. Tax and Interest - Interest income for the three months ended September 30, 2024 was approximately $138 thousand, compared to $83 thousand for the same period in 2023, due to an increase in Notes Receivables[124]. - Interest expense decreased from $302 thousand for the three months ended September 30, 2023 to $268 thousand for the same period in 2024, reflecting a decrease in the outstanding line of credit balance[125]. - The estimated annual effective tax rate for the three months ended September 30, 2024 was 25.1%, compared to 24.5% for the same period in 2023[126][127]. - Interest income increased to approximately $424 thousand for the nine months ended September 30, 2024, compared to $197 thousand in 2023[144]. - Income tax expense decreased to approximately $172 thousand for the nine months ended September 30, 2024, down from $1.5 million in 2023[146][147]. Cash Flow - For the nine months ended September 30, 2024, cash provided by continuing operating activities was approximately $3.5 million, compared to $1.8 million for the same period in 2023, reflecting an increase of 94.4%[157]. - Current assets exceeded current liabilities by approximately $23.3 million as of September 30, 2024[153].

Financial Performance - Franchise royalties increased by 0.9% to $9.0 million compared to $8.9 million in the prior year period[2] - Total revenue increased by 1.6% to $9.4 million compared to $9.3 million in the prior year period[2] - SG&A expenses decreased by 15.3% to $5.4 million compared to $6.4 million in the prior year period[2] - Net loss was $(2.2 million), or $(0.16) per diluted share, compared to net income of $1.5 million, or $0.11 per diluted share in the prior year period[11] - Adjusted net income for the quarter was $2.8 million, or $0.20 per diluted share, compared to adjusted net income of $2.2 million, or $0.16 per diluted share in the third quarter of 2023[11] - Adjusted EBITDA was $4.9 million compared to $3.7 million in the prior year period[12] - Total revenue for the three months ended September 30, 2024, was $9,416 thousand, a 1.6% increase from $9,271 thousand in the same period of 2023[31] - Net loss for the three months ended September 30, 2024, was $(2,207) thousand, compared to net income of $1,483 thousand for the same period in 2023[31] - Adjusted EBITDA for the nine months ended September 30, 2024, was $12,324 thousand, compared to $12,194 thousand for the same period in 2023[32] - Adjusted net income for the three months ended September 30, 2024, was $2,787 thousand, compared to $2,153 thousand for the same period in 2023[33] - Basic loss per share from continuing operations for the three months ended September 30, 2024, was $(0.16), compared to $0.12 for the same period in 2023[31] Sales and Royalties - System-wide sales for the third quarter of 2024 decreased by 1.7% to $148.6 million compared to $151.2 million for the same period in 2023[4] - Year-to-date franchise royalties decreased by 7.4% to $25.0 million compared to $27.0 million for the nine months ended September 30, 2023[3] - Franchise royalties for the three months ended September 30, 2024, were $8,988 thousand, compared to $8,905 thousand in the same period of 2023[31] Assets and Liabilities - Cash was $1.6 million as of September 30, 2024, compared to $1.3 million as of December 31, 2023[17] - Total current assets increased to $58,043 thousand as of September 30, 2024, from $51,453 thousand as of December 31, 2023[30] - Total liabilities decreased to $39,745 thousand as of September 30, 2024, from $41,094 thousand as of December 31, 2023[30] - Cash balance increased to $1,621 thousand as of September 30, 2024, from $1,342 thousand as of December 31, 2023[30] Impairment and Economic Outlook - Goodwill and intangible asset impairment charge for the three months ended September 30, 2024, was $6,035 thousand[31] - The company is optimistic about entering a more favorable economic environment for staffing solutions as demand strengthens[7]

Here are three stocks with buy rank and strong income characteristics for investors to consider today, October 17th: Logility Supply Chain Solutions, Inc. (LGTY) : This software applications company has witnessed the Zacks Consensus Estimate for its current year earnings increasing 8.6% over the last 60 days. This Zacks Rank #1 company has a dividend yield of 4.2%, compared with the industry average of 0.0%. HireQuest, Inc. (HQI) : This company that provides temporary staffing solutions has witnessed the Za ...

On Oct. 4, the Department of Commerce reported solid job additions for September. The unemployment rate declined, and the wage rate remained firm. Last month's nonfarm payrolls report eased concerns among a section of economists and financial researchers that the U.S. economy is facing a near-term slowdown. At this stage, investment in staffing stocks with a favorable Zacks Rank should be prudent. We recommend three stocks: RCM Technologies Inc. (RCMT) , HireQuest Inc. (HQI) and ManpowerGroup Inc. (MAN) . T ...

HireQuest reports remote work and return-to-work strategies are more complicated than many executives and employees acknowledge. GOOSE CREEK, S.C., Sept. 16, 2024 /PRNewswire/ -- HireQuest Inc (Nasdaq:HQI), a global staffing and talent management company with more than 500 franchises around the world, has released a report detailing the complexities of remote work and return-to-work mandates. The whitepaper, Navigating Remote and Hybrid Work: Impacts on U.S. Companies and the Economy, provides an in-depth v ...

The Staffing Firms industry's prospects look mixed. While service activities are robust at the moment, their positive impacts are being challenged by contracting economic activities in the manufacturing sector. HireQuest, Inc. (HQI) , Kelly Services, Inc. (KELYA) and RCM Technologies, Inc. (RCMT) are benefiting from the rise in the adoption of remote work and the increasing use of technology. About the Industry The Zacks Staffing industry is a diverse sector encompassing companies that offer a comprehensive ...

Ceri Breeze Investment thesis In my previous article covering the company, I assigned it a Neutral rating despite finding its valuation appealing, due to concerns over several consecutive quarters of revenue declines. Q2 results showed lower declines in revenue, while management's commentary suggests the improving trends seen during the quarter, continuing into Q3. Insider buying activity during the quarter also suggests increased optimism. Shares remain attractively valued at an EV/Adjusted EBITDA multiple ...

HireQuest, Inc. (NASDAQ:HQI) Q2 2024 Earnings Call August 8, 2024 4:30 PM ET Company Participants John Nesbett - Investor Relations Rick Hermanns - Chief Executive Officer Steve Crane - Chief Financial Officer Conference Call Participants Kevin Steinke - Barrington Research Operator Good afternoon, everyone, and welcome to the HireQuest, Inc. Second Quarter 2024 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, John Nesbe ...