HireQuest(US:HQI)2025-05-08 21:30Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $7.5 million, a decrease of 11.2% from $8.4 million in Q1 2024 [11] - Franchise royalties decreased to $7 million from $7.8 million year-over-year [11] - Net income after tax was $1.4 million or $0.10 per diluted share, down from $1.6 million or $0.12 per diluted share in the previous year [13] - Adjusted EBITDA was $2.8 million, compared to $3.4 million in the prior year, with an adjusted EBITDA margin of 37% versus 40% [13] Business Line Data and Key Metrics Changes - Service revenue for Q1 2025 was $512,000, down from $588,000 in the same period last year [12] - System-wide sales for Q1 2025 were $118.4 million, compared to $134 million in Q1 2024 [12] Market Data and Key Metrics Changes - The staffing industry continues to face macroeconomic headwinds, leading to slower hiring decisions by employers [6] - Stricter immigration policies are expected to increase demand for staffing services that comply with E-Verify regulations [8] Company Strategy and Development Direction - The company is focused on expense management and cost reduction initiatives, with a consistent decrease in SG&A expenses year-over-year [6][12] - M&A is a key part of the company's strategy, with a strong pipeline of potential deals to expand into new geographic regions and market verticals [7][29] - The company is optimistic about the potential for acquisitions due to the ongoing weakness in demand affecting less capitalized competitors [29] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter results reflect broader industry challenges but emphasized the company's solid margins and profitability [6] - The company remains confident in its ability to maintain profitability during difficult times, leveraging its franchise model [36] Other Important Information - The CFO transition is planned, with David Hartley succeeding Steve Crane effective May 31, 2025 [9] - The company has paid a regular quarterly dividend since Q3 2020, with the most recent dividend of $0.06 per share paid on March 17, 2025 [15] Q&A Session Summary Question: Recent trends in business and impact of tariffs - Management indicated no dramatic shift in business trends since the start of Q2, with ongoing uncertainty holding employers back [20][21] Question: Impact of stricter immigration policies on new business - Management confirmed that stricter immigration policies are opening new business opportunities, with clients returning due to increased enforcement [22][24] Question: Trends in SG&A expenses and cost management - Management explained that some anomalies in the first quarter masked the true trend in SG&A expenses, with ongoing efforts to manage costs [25][26] Question: M&A pipeline and near-term opportunities - Management expressed optimism about the M&A pipeline, noting that ongoing demand weakness is leading to more realistic pricing from potential acquisition targets [28][29] Question: Transition of CFO and corporate development staffing - Management confirmed plans to add a deal sourcer to support corporate development, but not at the VP level [30][32]