HireQuest(HQI)2024-05-11 17:00Financial Data and Key Metrics - Total revenue for Q1 2024 was 9.9 million in Q1 2023 [10] - Franchise royalties for Q1 2024 were 9.3 million in Q1 2023 [11] - System-wide sales for Q1 2024 were 153.5 million in Q1 2023 [11] - Net income from continuing operations for Q1 2024 was 0.12 per diluted share, compared to 0.17 per diluted share in Q1 2023 [35] - Adjusted EBITDA for Q1 2024 was 4.6 million in Q1 2023 [13] Business Line Performance - HireQuest direct franchisees performed well in Q1 2024, while MRI network firm placements struggled [5] - Service revenue for Q1 2024 was 534,000 in Q1 2023 [34] - MRI network advertising fund revenue contributed 101,000 in Q1 2024 [34] Market Performance - The staffing market in the Southeast performed better, while IT-related staffing faced challenges [51] - Logistics staffing has been tough but is showing slight improvement [40] Strategic Direction and Industry Competition - The company remains focused on organic growth and strategic acquisitions to expand its staffing offerings and geographic presence [9] - M&A is a key part of the strategy, with a focus on accretive acquisitions that strengthen the business while maintaining a strong balance sheet [31] - The company is well-positioned to capitalize on increased demand as employers become more comfortable adding headcount [28] Management Commentary on Operating Environment and Future Outlook - The company expects general demand for temporary staffing to increase in Q2 and Q3 due to seasonal factors [5] - Management is optimistic about the second half of 2024, despite current economic headwinds [15] - The company is focused on reducing workers' compensation expenses, which have shown a positive trend in Q1 2024 [8][12] Other Important Information - Core SG&A expenses decreased to 4.9 million in Q1 2024 from 572,000 in Q1 2024, down from 16.1 million drawn on its credit facility and $24.2 million in availability as of March 31, 2024 [14] Q&A Session Summary Question: Are there signs of improvement in the technology staffing sector? - The company expects a seasonal impact but is uncertain if it will match historical levels [20] - The IT sector has shown some improvement, but overall demand remains challenging [40] Question: Will workers' compensation expenses continue to improve in 2024? - Management expects further improvement in workers' compensation expenses, with Q1 2024 reflecting only one month of the new policy [43] Question: What is the M&A pipeline like in the current environment? - The company is seeing more deals, but many are overpriced, with some opportunities arising from struggling smaller players [44][45] Question: How is the staffing environment evolving? - The environment is stable but not improving significantly, with employers being more selective in hiring [51] Question: Will the typical seasonal ramp in Q2 and Q3 materialize? - The company expects sequential improvement in Q2 and Q3, but the impact may be muted compared to historical trends [54]