Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Dividend, Conference Call, Webcast

HireQuest Reports Financial Results for the Third Quarter 2021


HireQuest, Inc. (Nasdaq: HQI), a national franchisor of on-demand, temporary, and commercial staffing services, today reported financial results for the third quarter ended September 30, 2021.

Third Quarter 2021 Summary

Subsequent to Quarter End

System-wide sales (a key performance indicator) for the third quarter of 2021 were $99.6 million compared to $55.6 million for the same period in 2020. The growth was due to a 22% increase in sales from existing franchisees as well as new sales from the acquired Snelling and Link networks.

"This past quarter was our strongest since the beginning of the pandemic," commented Rick Hermanns, HireQuest's President and Chief Executive Officer. "Organic growth from our legacy franchisees as well as the addition of the Snelling and Link locations acquired earlier in the year combined to drive system-wide sales to just shy of $100 million for the quarter. We were happy to see our organic weekly system-wide sales rebound to pre-pandemic 2019 levels by the end of the quarter compared to trailing 10% to 15% in June."

"The acquisitions of Snelling and Link earlier this year have played an important part in growing overall profitability by adding scale in tandem with rebounding organic performance," added Mr. Hermanns. "Furthermore, as Link and Snelling demonstrate we are able to quickly integrate acquisitions with minimal increases to corporate overhead. The operating leverage inherent in our asset-light model is just beginning to become evident. We continue to see opportunities to expand our offerings into other verticals, growing the total addressable market serviced by our franchise offerings. Our pending acquisition of Dental Power is just one example and will provide us with a strong base to build an offering in the dental staffing industry. We are excited about the possibilities for organic and acquisitive growth in this vertical and others."

Third Quarter 2021 Financial Results

The company's total revenue is calculated by aggregating its revenue derived from franchise royalties and service revenue. Franchise royalties are the royalties earned from franchisees primarily on the basis of their sales to their customers. Service revenue consists of interest charged to franchisees on overdue accounts and other fees for optional services we provide our franchisees.

Franchise royalties in the third quarter of 2021 were $6.5 million compared to $3.2 million in the year-ago quarter. Organically, excluding the contribution from recently acquired Snelling and Link branches, franchise royalties increased 52%. Service revenue was $341,000 compared to $164,000 in the prior-year quarter, an increase of 108.0%. Total revenue in the third quarter of 2021 was $6.9 million compared to $3.4 million in the year-ago quarter, an increase of 103.4%.

Selling, general and administrative ("SG&A") expenses in the third quarter of 2021 were $3.0 million compared to $1.4 million for the third quarter last year. Some items that contributed to the year-over-year increase included an additional $460 thousand in non-cash compensation as well as a non-recurring $307 thousand charge to notes receivable related to the sale of Command Center locations in California back in 2019.

Net Income in the third quarter of 2021 was $3.2 million, or $0.23 per diluted share, compared to net income of $2.0 million, or $0.15 per diluted share, in the third quarter last year.

Adjusted EBITDA in the third quarter of 2021 was $5.3 million compared to $2.9 million in the third quarter last year.

Balance Sheet and Capital Structure

Cash was $4.8 million as of September 30, 2021, compared to $13.7 million as of December 31, 2020. The decrease reflects the purchase price for recent acquisitions.

Total assets were $74.8 million as of September 30, 2021. Total liabilities were $29.6 million.

On September 15, 2021, the company paid a quarterly cash dividend of $0.06 per share of common stock to shareholders of record as of September 1, 2021. The company intends to pay a $0.06 cash dividend on a quarterly basis, based on its business results and financial position.

Conference Call

HireQuest will hold a conference call to discuss its financial results.

Date:

Thursday, November 11, 2021

Time:

4:30 p.m. Eastern time

Toll-free dial-in number:

877-545-0523

International dial-in number:

973-528-0016

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

The conference call will be broadcast live and available for replay at https://www.webcaster4.com/Webcast/Page/2359/43398 and via the investor relations section of HireQuest's website at www.hirequest.com.

A replay of the conference call will be available through November 25, 2021.

Toll Free: 877-481-4010

International: 919-882-2331

Replay Passcode: 43398

About HireQuest

HireQuest, Inc. is a nationwide franchisor that provides on-demand labor and commercial staffing solutions in the light industrial, blue-collar, and commercial segments of the staffing industry for HireQuest Direct, HireQuest, Snelling, and Link franchised offices across the United States. Through its national network of over 210 franchisee-owned offices in more than 35 states and the District of Columbia, HireQuest provides employment for approximately 60,000 individuals annually that work for thousands of customers in numerous industries including construction, light industrial, manufacturing, hospitality, clerical, medical, travel, and event services. For more information, visit www.hirequest.com.

Important Cautions Regarding Forward-Looking Statements

This news release includes, and the company's officers and other representatives may sometimes make or provide certain estimates and other forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act, including, among others, statements with respect to future economic conditions, future revenue or sales and the growth thereof; operating results; anticipated benefits of the acquisition of Snelling and/or Link, or the status of integration of those entities. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will," and similar references to future periods.

While the company believes these statements are accurate, forward-looking statements are not historical facts and are inherently uncertain. They are based only on the company's current beliefs, expectations, and assumptions regarding the future of its business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. The company cannot assure you that these expectations will occur, and its actual results may be significantly different. Therefore, you should not place undue reliance on these forward-looking statements. Important factors that may cause actual results to differ materially from those contemplated in any forward-looking statements made by the company include the following: the level of demand and financial performance of the temporary staffing industry; the financial performance of the company's franchisees; changes in customer demand; the effects of any global pandemic including the impact of COVID-19; the relative success or failure of acquisitions and new franchised offerings; the extent to which the company is successful in gaining new long-term relationships with customers or retaining existing ones, and the level of service failures that could lead customers to use competitors' services; significant investigative or legal proceedings including, without limitation, those brought about by the existing regulatory environment or changes in the regulations governing the temporary staffing industry and those arising from the action or inaction of the company's franchisees and temporary employees; strategic actions, including acquisitions and dispositions and the company's success in integrating acquired businesses including, without limitation, successful integration following the acquisitions of Snelling, Link, and Dental Power; disruptions to the company's technology network including computer systems and software; natural events such as severe weather, fires, floods, and earthquakes, or man-made or other disruptions of the company's operating systems; and the factors discussed in the "Risk Factors" section and elsewhere in the company's most recent Annual Report on Form 10-K.

Any forward-looking statement made by the company or its management in this news release is based only on information currently available to the company and speaks only as of the date on which it is made. The company and its management disclaim any obligation to update or revise any forward-looking statement, whether written or oral, that may be made from time to time, based on the occurrence of future events, the receipt of new information, or otherwise, except as required by law.

HireQuest, Inc.
Consolidated Statements of Operations
(unaudited)
 
Three months ended
September 30, 2021 September 30, 2020
Franchise royalties

$

6,540,125

 

$

3,218,606

 

Service revenue

 

341,258

 

 

164,074

 

Total revenue

 

6,881,383

 

 

3,382,680

 

Selling, general and administrative expenses

 

3,044,358

 

 

1,357,725

 

Depreciation and amortization

 

366,027

 

 

32,438

 

Income from operations

 

3,470,998

 

 

1,992,517

 

Other miscellaneous income

 

89,774

 

 

392,709

 

Interest and other financing expense

 

(41,943

)

 

(10,035

)

Net income before income taxes

 

3,518,829

 

 

2,375,191

 

Provision (benefit) for income taxes

 

324,638

 

 

404,058

 

Net income

$

3,194,191

 

$

1,971,133

 

 
Earnings per share
Basic

$

0.24

 

$

0.15

 

Diluted

$

0.23

 

$

0.15

 

 
Weighted average shares outstanding
Basic

 

13,482,303

 

 

13,573,086

 

Diluted

 

13,621,938

 

 

13,574,863

 

HireQuest, Inc.
Consolidated Balance Sheets
 
September 30, 2021 December 31, 2020
ASSETS (unaudited)
Current assets
Cash

$

4,789,400

 

$

13,667,434

 

Accounts receivable, net of allowance for doubtful accounts

 

38,433,759

 

 

21,344,499

 

Notes receivable

 

1,380,704

 

 

2,178,299

 

Prepaid expenses, deposits, and other assets

 

947,845

 

 

344,091

 

Prepaid workers' compensation

 

1,161,025

 

 

1,434,583

 

Total current assets

 

46,712,733

 

 

38,968,906

 

Property and equipment, net

 

3,848,260

 

 

3,193,379

 

Workers compensation claim payment deposit

 

947,650

 

 

623,452

 

Deferred tax asset

 

-

 

 

79,379

 

Franchise agreements, net

 

19,179,530

 

 

-

 

Other intangible assets, net

 

780,524

 

 

342,697

 

Other assets

 

357,944

 

 

-

 

Notes receivable, net of current portion and reserve

 

2,931,371

 

 

5,887,229

 

Total assets

$

74,758,012

 

$

49,095,042

 

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable

$

537,193

 

$

457,490

 

Term loan payable

 

210,233

 

 

-

 

Other current liabilities

 

4,052,078

 

 

1,322,764

 

Accrued benefits and payroll taxes

 

2,078,659

 

 

743,431

 

Due to affiliates

 

95,959

 

 

67,398

 

Due to franchisees

 

7,305,952

 

 

3,228,777

 

Risk management incentive program liability

 

1,164,598

 

 

858,482

 

Workers' compensation claims liability

 

6,359,143

 

 

2,777,734

 

Total current liabilities

 

21,803,815

 

 

9,456,076

 

Workers' compensation claims liability, net of current portion

 

2,400,955

 

 

1,806,334

 

Deferred tax liability

 

511,238

 

 

-

 

Term loan payable, net of current portion

 

2,908,228

 

 

-

 

Franchisee deposits

 

2,012,026

 

 

1,468,359

 

Total liabilities

 

29,636,262

 

 

12,730,769

 

Commitments and contingencies (Note 8)
Stockholders' equity
Preferred stock - $0.001 par value, 1,000,000 shares authorized; none issued

 

-

 

 

-

 

Common stock - $0.001 par value, 30,000,000 shares authorized; 13,726,884 and 13,628,675 shares issued, respectively

 

13,727

 

 

13,629

 

Additional paid-in capital

 

30,231,201

 

 

28,811,389

 

Treasury stock, at cost - 33,092 shares

 

(146,465

)

 

(146,465

)

Retained earnings

 

15,023,287

 

 

7,685,720

 

Total stockholders' equity

 

45,121,750

 

 

36,364,273

 

Total liabilities and stockholders' equity

$

74,758,012

 

$

49,095,042

 

HireQuest, Inc.
Reconciliation of Net Income to Adjusted EBITDA
(unaudited)
 
Three months ended
September 30, 2021 September 30, 2020
Net income

$

3,194,191

 

$

1,971,133

 

Interest expense

 

41,943

 

 

10,035

 

Provision for income taxes

 

324,638

 

 

404,058

 

Depreciation and amortization

 

366,027

 

 

32,438

 

Non-cash compensation

 

851,049

 

391,435

WOTC related costs

 

174,648

 

 

113,332

 

Non-recurring acquisition related charges, net

 

34,133

 

 

-

 

Non-recurring charge to notes receivable

 

307,440

 

 

-

 

Adjusted EBITDA

$

5,294,069

 

$

2,922,431

 

 


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News published on 11 november 2021 at 16:10 and distributed by: