HireQuest(HQI) - 2025 Q2 - Quarterly Results

HireQuest Q2 2025 Financial Performance Summary Management Commentary Despite a soft staffing market, HireQuest achieved solid Q2 2025 profitability by executing its franchise model, controlling expenses, and pursuing M&A - The company maintained solid results and profitability despite a persistent softness in the staffing market for over two years, with the manufacturing industry showing recent job losses[3] - Strategic focus remains on diligent execution of the business model, expense control, and pursuing M&A to expand its geographic and market footprint[3] - The company's unique franchise model is expected to deliver superior performance and provide operating leverage when market demand improves[3] Second Quarter 2025 Financial Results Q2 2025 total revenue decreased 12.0% to $7.6 million, with net income falling to $1.1 million due to lower royalties and higher SG&A Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $7.6 million | $8.7 million | -12.0% | | Franchise Royalties | $7.3 million | $8.2 million | -11.0% | | Net Income | $1.1 million | $2.0 million | -45.0% | | Diluted EPS | $0.08 | $0.15 | -46.7% | | Adjusted Net Income | $2.1 million | $2.5 million | -16.0% | | Adjusted EBITDA | $3.3 million | $4.0 million | -17.5% | | System-wide Sales | $125.9 million | $146.1 million | -13.9% | - SG&A expenses increased 10.8% to $5.9 million, primarily driven by $929,000 in transaction expenses, partially offset by a significant decrease in net workers' compensation expense to $127,000 from $547,000 in the prior year[5] Year-To-Date 2025 Financial Results YTD 2025 total revenue declined 11.6% to $15.1 million, with net income at $2.4 million, reflecting market softness and transaction expenses YTD 2025 Key Financial Metrics (vs. YTD 2024) | Metric | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $15.1 million | $17.1 million | -11.6% | | Franchise Royalties | $14.2 million | $16.0 million | -11.3% | | Net Income | $2.4 million | $3.7 million | -35.1% | | Diluted EPS | $0.17 | $0.26 | -34.6% | | Adjusted Net Income | $3.9 million | $4.5 million | -13.3% | | Adjusted EBITDA | $6.1 million | $7.4 million | -17.6% | | System-wide Sales | $244.3 million | $280.2 million | -12.8% | - SG&A expenses for the six-month period were $11.1 million, a slight increase from $10.9 million in the prior year, with the rise attributed to $929,000 in transaction expenses[11] - Workers' compensation expense saw a significant decrease of $964,000 for the first six months of 2025 compared to the same period in 2024[11] Balance Sheet and Capital Structure As of June 30, 2025, HireQuest maintained a stable financial position with $2.7 million cash, $94.3 million total assets, and $35.9 million available credit Balance Sheet Summary | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash | $2.7 million | $2.2 million | | Total Assets | $94.3 million | $94.0 million | | Total Liabilities | $28.3 million | $29.2 million | | Working Capital | $28.6 million | $25.1 million | - As of June 30, 2025, the company had approximately $35.9 million available under its line of credit, assuming continued covenant compliance[15] Financial Statements Consolidated Balance Sheets As of June 30, 2025, total assets were $94.3 million, total liabilities $28.3 million, and stockholders' equity $66.0 million Assets Breakdown (in thousands) | Asset Category | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $51,818 | $49,240 | | Franchise agreements, net | $18,885 | $19,737 | | Other intangible assets, net | $7,901 | $8,442 | | Total assets | $94,315 | $94,013 | Liabilities and Equity Breakdown (in thousands) | Liability & Equity Category | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current liabilities | $23,256 | $24,096 | | Total liabilities | $28,293 | $29,209 | | Total stockholders' equity | $66,022 | $64,804 | | Total liabilities and stockholders' equity | $94,315 | $94,013 | Consolidated Statement of Income Q2 2025 total revenue was $7.6 million with $1.1 million net income, while YTD revenue reached $15.1 million with $2.4 million net income Income Statement Highlights - Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total revenue | $7,638 | $8,680 | | Income from operations | $1,043 | $2,695 | | Net income | $1,060 | $2,039 | | Diluted EPS | $0.08 | $0.15 | Income Statement Highlights - Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total revenue | $15,111 | $17,099 | | Income from operations | $2,525 | $4,797 | | Net income | $2,423 | $3,658 | | Diluted EPS | $0.17 | $0.26 | Non-U.S. GAAP Reconciliations The company provides non-GAAP reconciliations for Adjusted EBITDA and Adjusted Net Income to clarify core operational performance Reconciliation of Net Income to Adjusted EBITDA Adjusted EBITDA for Q2 2025 was $3.3 million, a decrease from Q2 2024, with significant adjustments for acquisition-related charges Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $1,060 | $2,039 | $2,423 | $3,658 | | Adjustments | $2,195 | $1,001 | $3,650 | $3,740 | | Adjusted EBITDA | $3,255 | $4,040 | $6,073 | $7,398 | Reconciliation of Net Income to Adjusted Net Income Adjusted net income for Q2 2025 was $2.1 million ($0.15 diluted EPS), reflecting adjustments for amortization and acquisition costs Adjusted Net Income Reconciliation (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $1,060 | $2,039 | $2,423 | $3,658 | | Adjusted net income | $2,146 | $2,476 | $3,924 | $4,502 | | Adjusted net income per diluted share | $0.15 | $0.18 | $0.28 | $0.32 | Shareholder Information Dividend Information HireQuest paid a $0.06 per share quarterly cash dividend in June 2025 and intends to maintain this dividend going forward - On June 16, 2025, the company paid a quarterly cash dividend of $0.06 per share of common stock[16] - The company intends to continue paying a $0.06 cash dividend on a quarterly basis, subject to business results, financial position, and board of director discretion[16] Conference Call Details A conference call was held on August 7, 2025, to discuss Q2 financial results, with a replay available until August 21, 2025 - A conference call was held on Thursday, August 7, 2025, at 4:30 p.m. Eastern Time to discuss the financial results[17][18] - A replay of the conference call is available through Thursday, August 21, 2025, with specific access details provided[20][21] About the Company and Disclosures About HireQuest HireQuest is a franchisor offering diverse staffing solutions across the U.S. and internationally through multiple divisions - HireQuest is a franchisor of staffing solutions providing temporary, direct-hire, and contract staffing[22] - The company operates through several primary divisions: HireQuest Direct, HireQuest Health, MRINetwork, Snelling, and TradeCorp, serving industries such as construction, healthcare, finance, and manufacturing[22] Forward-Looking Statements This section warns that forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially - The news release contains forward-looking statements within the meaning of the safe harbor provisions of U.S. securities laws[23][24] - These statements are not historical facts and are inherently uncertain, subject to risks such as industry demand, economic uncertainty, and success in integrating acquisitions[25] Non-U.S. GAAP Financial Measures Non-GAAP financial measures are used to supplement U.S. GAAP results, providing useful insights into the company's performance - The report contains supplemental non-U.S. GAAP financial measures that management uses to analyze company performance[27] - Management believes these non-GAAP measures provide useful information for understanding the company's financial condition and are a complement to U.S. GAAP measures[27]