HireQuest, Inc. (NASDAQ:HQI) Q2 2020 Earnings Conference Call August 11, 2020 5:00 PM ET Company Participants Brett Maas - Hayden Investor Relations Rick Hermanns - Chief Executive Officer Cory Smith - Chief Financial Officer Conference Call Participants Peter Rabover - Artko Capital Aaron Edelheit - Mindset Capital Operator Good day, ladies and gentlemen, and welcome to the HireQuest Incorporated Second Quarter 2020 Earnings Conference Call. All lines have been placed on a listen-only mode and the floor wi ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents HireQuest, Inc.'s unaudited consolidated financial statements, including balance sheets, income, equity, and cash flows, for the period ended June 30, 2020 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2020, total assets increased to **$48.2 million**, cash significantly rose to **$13.7 million**, and stockholders' equity grew to **$33.9 million** Consolidated Balance Sheet Highlights (unaudited) | Balance Sheet Items | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $13,746,445 | $4,187,450 | | Accounts receivable, net | $19,646,917 | $28,201,279 | | Total current assets | $38,581,091 | $37,021,125 | | Total assets | $48,193,600 | $46,912,062 | | **Liabilities & Equity** | | | | Total current liabilities | $10,400,756 | $11,011,977 | | Total liabilities | $14,314,224 | $15,629,980 | | Total stockholders' equity | $33,879,376 | $31,282,082 | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Q2 2020 total revenue decreased to **$2.9 million** with net income of **$1.16 million**, while H1 2020 revenue increased to **$7.0 million** but net income declined to **$2.03 million** Financial Performance (unaudited) | Metric | Q2 2020 | Q2 2019 | H1 2020 | H1 2019 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $2,900,990 | $3,238,665 | $7,020,970 | $6,710,915 | | Income from Operations | $937,512 | $2,345,828 | $1,772,308 | $4,251,620 | | Net Income | $1,157,002 | $2,306,096 | $2,032,180 | $4,023,581 | | Diluted EPS | $0.09 | $0.23 | $0.15 | $0.40 | [Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity increased to **$33.9 million** by June 30, 2020, primarily driven by net income and stock-based compensation - For the six months ended June 30, 2020, total stockholders' equity increased by approximately **$2.6 million**, from **$31,282,082** to **$33,879,376**[16](index=16&type=chunk) - This was primarily driven by net income of **$2,032,180** and stock-based compensation of **$565,057**[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased to **$9.7 million** for H1 2020, leading to a **$9.6 million** rise in the cash balance, ending at **$13.7 million** Cash Flow Summary - Six Months Ended June 30 (unaudited) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $9,665,926 | $1,547,849 | | Net cash (used in) provided by investing activities | ($144,722) | $983,026 | | Net cash provided by (used in) financing activities | $37,791 | ($3,810,895) | | **Net increase (decrease) in cash** | **$9,558,995** | **($1,280,020)** | | **Cash, end of period** | **$13,746,445** | **$11,297** | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail accounting policies, the impact of COVID-19, merger accounting, and key disclosures including a **$1.6 million** allowance for notes receivable - The company operates as a nationwide franchisor of on-demand labor solutions under the trade names "HireQuest Direct" and "HireQuest"[21](index=21&type=chunk) - The COVID-19 pandemic has had a material adverse effect on the company's business and results of operations[27](index=27&type=chunk) - Due to the potential impact of COVID-19 on borrowers' performance, the company established an allowance of approximately **$1.6 million** as of June 30, 2020, for potentially uncollectible notes receivable[98](index=98&type=chunk) - In July 2020, the Board of Directors authorized a one-year repurchase plan for up to **1 million** shares of common stock[102](index=102&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant impact of COVID-19 on operations, highlighting depressed sales, maintained profitability, improved liquidity, and the presentation of system-wide sales [Overview & COVID-19 Impact](index=19&type=section&id=Overview%20%26%20COVID-19%20Impact) The COVID-19 pandemic significantly impacted the company's franchisor operations, depressing sales and leading to a **$1.6 million** notes receivable reserve, yet liquidity improved with cash growing by **$9.5 million** - The COVID-19 pandemic depressed system-wide sales and resulting revenue, though sales consistently increased month-over-month since April 2020[110](index=110&type=chunk) - Franchisees closed or consolidated **13 offices**, at least in part, due to the financial impacts of COVID-19[111](index=111&type=chunk) - A reserve of **$1.6 million** was placed on promissory notes held from franchisees and the purchaser of California offices in response to depressed economic conditions[112](index=112&type=chunk) - The company's cash balance increased by approximately **$9.5 million** in the first half of 2020, from **$4.2 million** at year-end to **$13.7 million**[113](index=113&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Q2 2020 saw an **11.5%** decrease in franchise royalties and a **121.6%** increase in SG&A, while H1 2020 royalties rose **3.4%** but SG&A increased **113.9%** due to a **$1.6 million** reserve Financial Summary (in thousands) | | Q2 2020 | Q2 2019 | H1 2020 | H1 2019 | | :--- | :--- | :--- | :--- | :--- | | Franchise royalties | $2,639 | $2,981 | $6,345 | $6,138 | | Total revenue | $2,901 | $3,239 | $7,021 | $6,711 | | SG&A expenses | $1,931 | $871 | $5,184 | $2,424 | | Net income | $1,157 | $2,306 | $2,032 | $4,024 | - Q2 2020 franchise royalties decreased **11.5%** YoY to **$2.6 million**, negatively impacted by COVID-19[118](index=118&type=chunk) - H1 2020 SG&A expenses increased **113.9%** YoY, primarily due to a **$1.6 million** reserve placed on notes receivable related to the negative economic impact of COVID-19[126](index=126&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is strong, with current assets exceeding liabilities by **$28.2 million**, cash increasing to **$13.7 million**, and **$19.9 million** available on its **$30 million** line of credit - As of June 30, 2020, current assets exceeded current liabilities by approximately **$28.2 million**[129](index=129&type=chunk) - Cash balance increased from **$4.2 million** at the end of 2019 to **$13.7 million** at the end of Q2 2020, as payroll funding needs decreased and accounts receivable were collected[130](index=130&type=chunk) - The company has a **$30 million** line of credit with Truist Bank, of which **$19.9 million** was available as of June 30, 2020[72](index=72&type=chunk) [Non-GAAP Financial Measure: System-Wide Sales](index=23&type=section&id=Non-GAAP%20Financial%20Measure%3A%20System-Wide%20Sales) System-wide sales, a non-GAAP measure, decreased **15.2%** to **$44.1 million** in Q2 2020 due to COVID-19, while H1 2020 sales slightly increased **1.0%** to **$100.1 million** System-Wide Sales (Non-GAAP) | Period | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | **Three months ended June 30** | $44,073,695 | $51,960,747 | -15.2% | | **Six Months ended June 30** | $100,536,300 | $99,524,968 | +1.0% | [Quantitative and Qualitative Disclosures about Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - As a "smaller reporting company," HireQuest is not required to provide quantitative and qualitative disclosures about market risk[143](index=143&type=chunk) [Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of the end of the reporting period[144](index=144&type=chunk) - No material changes in internal control over financial reporting were identified during the quarter ended June 30, 2020[144](index=144&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings but does not anticipate any material adverse effects on its business or financial condition - The company does not expect any material adverse effects on its business, financial condition, or results of operations from current legal proceedings[146](index=146&type=chunk) [Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, primarily focusing on the COVID-19 pandemic's impact on the economy, franchisee health, and increased credit risk from loans to franchisees - The COVID-19 pandemic is identified as a serious threat, causing declines in system-wide sales and revenue, and leading to the closure or consolidation of **13 franchised offices**[148](index=148&type=chunk)[149](index=149&type=chunk) - The company's success is highly dependent on the financial health and cooperation of its franchisees, whose businesses have been negatively impacted by the pandemic[152](index=152&type=chunk) - The company faces significant credit risk from loans to franchisees and the purchaser of its California offices, leading to a **$1.6 million** reserve for potential non-payment due to COVID-19's economic impact[153](index=153&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not issue any unregistered securities or repurchase its own equity securities during the three months ended June 30, 2020 - No unregistered securities were issued during the three months ended June 30, 2020[154](index=154&type=chunk) - The company did not purchase any of its own securities during the three months ended June 30, 2020[155](index=155&type=chunk) [Other Information](index=27&type=section&id=Item%205.%20Other%20Information) No other information is reported for the period - None[156](index=156&type=chunk) [Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the 2019 Equity Incentive Plan, certifications, and XBRL data files - A list of exhibits filed with the report is provided, including the 2019 Equity Incentive Plan, § 302 and § 906 certifications, and XBRL data files[157](index=157&type=chunk)

HireQuest Inc. (NASDAQ:HQI) Q1 2020 Earnings Conference Call May 11, 2020 4:30 PM ET Company Participants Brett Maas – Hayden Investor Relations Rick Hermanns – Chief Executive Officer Cory Smith – Chief Financial Officer Conference Call Participants Peter Rabover – Artko Capital Operator Good day, ladies and gentlemen, and welcome to the HireQuest First Quarter 2020 Earnings Conference Call. All lines have been placed on a listen-only mode and the floor will be open for your questions and comments followin ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 000-53088 HIREQUEST, INC. (Exact name of registrant as specified in its Charter) Indicate by check mark whether the Registrant is a large accelerated filer ☐, an accelerated file ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE YEAR ENDED: DECEMBER 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 000-53088 HIREQUEST, INC. (Exact name of registrant as specified in its charter) Delaware 91-2079472 (State of incorporation or organization) (I.R.S. Employer Identification no.) 111 Springh ...

HireQuest, Inc. (NASDAQ:HQI) Q4 2019 Results Conference Call March 30, 2020 10:00 AM ET Company Participants Brett Maas - Hayden IR Rick Hermanns - Chief Executive Officer Cory Smith - Chief Financial Officer Conference Call Participants Operator Greetings and welcome to HireQuest Fourth Quarter and Year-End 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] Please note this confe ...

Command Center, Inc. (CCNI) Q2 2019 Earnings Conference Call August 13, 2019 4:30 PM ET Company Participants Brett Maas - Hayden IR Rick Hermanns - Chief Executive Officer Cory Smith - Chief Financial Officer Conference Call Participants Barry Bruner - Stifel, Nicolaus & Company, Inc. Michael Potter - Monarch Capital Group, LLC Operator Greetings, and welcome to the Command Center, Incorporated Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question ...

Command Center, Inc. (CCNI) Q1 2019 Earnings Conference Call May 14, 2019 10:00 AM ET Company Participants Louie Toma - Hayden IR Rick Coleman - Chief Executive Officer Cory Smith - Chief Financial Officer Conference Call Participants Operator Greetings and welcome to the Command Center, Inc., First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder thi ...

Financial Data and Key Metrics Changes - Revenue in Q4 2018 was $24.4 million, a slight decrease of 0.3% from $24.5 million in Q4 2017, attributed to turnover in sales positions due to increased competition in the job market [18] - Gross margin improved to 27.1% in Q4 2018 from 24.5% in Q4 2017, driven by a benefit related to changes in worker's compensation accrual [19] - Net income for Q4 2018 was $1.1 million or $0.23 per diluted share, compared to a net loss of $89,000 or negative $0.02 per diluted share in the prior year [20] - Adjusted EBITDA in Q4 2018 was $1.6 million, up from $687,000 in 2017 [21] - For the full year 2018, revenue was $97.4 million, a decrease of 0.7% from $98.1 million in 2017, with net income of $1 million or $0.20 per diluted share compared to $1.7 million or $0.33 per diluted share in 2017 [22][23] Business Line Data and Key Metrics Changes - Selling, general, and administrative expenses in Q4 2018 were $5.2 million, down from $5.4 million in the same quarter last year, primarily due to lower bad debt and legal fees [20] - The company recorded an expense related to changes in worker's compensation accruals of $555,000 in 2018 compared to $303,000 in 2017 [22] Company Strategy and Development Direction - The company announced a merger with Hire Quest Holdings, which is expected to enhance profitability and create sustainable shareholder value [10][11] - The merger will result in a combined entity with 160 branches across 31 states, expanding geographic footprint and differentiating from competitors [13] - The transition to a franchise model is anticipated to lead to a decline in top-line revenue but an increase in gross and operating margins [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the merger's potential to drive significant improvements in profitability and shareholder value [11][16] - The company ended 2018 with a strong quarter and a solid balance sheet, entering 2019 with significant momentum [16] Other Important Information - The company plans to file a proxy statement with full details of the merger transaction, which is expected to close in Q2 2019 [25] - A self-tender offer at $6 per share for up to 1.5 million shares is planned, contingent on the merger closing [26] Q&A Session Summary Question: Congratulations on the merger transaction - An analyst congratulated the management on the merger with Hire Quest, acknowledging the lengthy process [29] Question: Inquiry about worker's compensation in the new business model - Management confirmed that worker's compensation insurance will still be provided for temporary workers, with franchises managing safety programs [32] Question: Cost synergies related to the projected EBITDA - Management declined to provide guidance on cost synergies at this time, indicating more information will be available in the proxy statement [34]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 28, 2018 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 000-53088 COMMAND CENTER, INC. (Exact Name of Registrant as Specified in its Charter) Washington 91-2079472 (State of other jurisdiction of incorporation or organi ...