\nHireQuest, Inc. (Nasdaq: HQI), a national franchisor of on-demand, temporary, and commercial staffing services, today reported financial results for the second quarter ended June 30, 2021.\n<\/p>\n
Second Quarter 2021 Summary <\/b><\/p>\n Subsequent to Quarter End<\/b><\/p>\n \nSystem-wide sales (a key performance indicator) for the second quarter of 2021 were $88.7 million compared to $44.1 million for the same period in 2020. The increase was due to recovering organic sales from our HireQuest Direct and HireQuest franchisees as well as new sales from the acquired Snelling and Link franchisees. Organic system-wide sales, excluding the acquired Snelling and Link locations, increased 29.5% in the period over the comparable period in 2020.\n<\/p>\n \n\u201cOur results this past quarter begin to demonstrate the magnitude of the operating leverage our franchisor structure can generate,\u201d commented Rick Hermanns, HireQuest\u2019s President and Chief Executive Officer. \u201cThis is the result of a combination of rebounding performance by our HireQuest Direct and HireQuest franchisees and the addition of our new Snelling and Link franchisees. Our franchisees have done a tremendous job adapting and executing in an incredibly difficult economic environment over the past 12 to 18 months, but they still have a little room to reach their Q2 2019, pre-pandemic, levels. As the economy around the country continues to strengthen with state and local governments easing and ending pandemic-related restrictions and subsidies, our franchisees should benefit.\u201d\n<\/p>\n \n\u201cDespite the challenges of the last year our existing franchisees have opened 9 new offices so far in 2021 in addition to the locations acquired as part of the Snelling and Link transactions,\u201d added Mr. Hermanns. \u201cWe continue to see opportunities to expand our service offerings as demonstrated by our recently announced launch of DriverQuest, a transportation industry focused staffing offering. Over 35 franchisees have adopted the DriverQuest offering, and we are all excited about the opportunities it opens up for them to service a new, in-demand, industry vertical, significantly expanding our addressable market, especially as businesses seek to accelerate efforts with minimal up-front costs. Strategic expansion beyond our historical core in on-demand and traditional staffing is a key component of HireQuest\u2019s long-term growth strategy. DriverQuest fits nicely into that.\u201d\n<\/p>\n Second Quarter 2021 Financial Results<\/b><\/p>\n \nThe company\u2019s 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, license fees and other fees for optional services we provide our franchisees.\n<\/p>\n \nFranchise royalties in the second quarter of 2021 were $5.5 million compared to $2.6 million in the year-ago quarter. Organically, excluding the contribution from recently acquired Snelling and LINK branches, franchise royalties increased 40.4%. Service revenue was $256,000 compared to $262,000 in the prior-year quarter, a decrease of 2.3%. Total revenue in the second quarter of 2021 was $5.7 million compared to $2.9 million in the year-ago quarter, an increase of 96.7%.\n<\/p>\n \nSelling, general and administrative (\u201cSG&A\u201d) expenses in the second quarter of 2021 were $2.0 million compared to $1.9 million for the second quarter last year. The second quarter of 2021 includes a total of $168,000 in non-recurring fees and expenses related to recent acquisitions.\n<\/p>\n \nNet Income in the second quarter of 2021 was $2.7 million, or $0.20 per diluted share, compared to net income of $1.2 million, or $0.09 per diluted share, in the second quarter last year.\n<\/p>\n \nAdjusted EBITDA in the second quarter of 2021 was $4.4 million compared to $1.2 million in the second quarter last year.\n<\/p>\n Balance Sheet and Capital Structure<\/b><\/p>\n \nCash was $2.2 million as of June 30, 2021, compared to $13.7 million as of December 31, 2020. The decrease reflects the purchase price for Link and Snelling and the subsequent increase in working capital.\n<\/p>\n \nTotal assets were $69.7 million as of June 30, 2021. Total liabilities were $27.8 million.\n<\/p>\n \nOn June 15, 2021, the company paid a quarterly cash dividend of $0.06 per share of common stock to shareholders of record as of June 1, 2021. The company intends to pay a $0.06 cash dividend on a quarterly basis, based on its business results and financial position.\n<\/p>\n Conference Call<\/b><\/p>\n \nHireQuest will hold a conference call to discuss its financial results.\n<\/p>\n \nDate:\n<\/p>\n<\/td>\n \nMonday, August 9, 2021\n<\/p>\n<\/td>\n<\/tr>\n \nTime:\n<\/p>\n<\/td>\n \n4:30 p.m. Eastern time\n<\/p>\n<\/td>\n<\/tr>\n \nToll-free dial-in number:\n<\/p>\n<\/td>\n \n1-844-602-0380\n<\/p>\n<\/td>\n<\/tr>\n \nInternational dial-in number:\n<\/p>\n<\/td>\n \n1-862-298-0970\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n \nPlease call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.\n<\/p>\n \nThe conference call will be broadcast live and available for replay at https:\/\/www.webcaster4.com\/Webcast\/Page\/2359\/42421<\/a> and via the investor relations section of HireQuest\u2019s website at www.hirequest.com<\/a>.\n<\/p>\n \nA replay of the conference call will be available through August 23, 2021.\n<\/p>\n \nToll Free:\n<\/p>\n<\/td>\n \n877-481-4010\n<\/p>\n<\/td>\n<\/tr>\n \nInternational:\n<\/p>\n<\/td>\n \n919-882-2331\n<\/p>\n<\/td>\n<\/tr>\n \nReplay Passcode:\n<\/p>\n<\/td>\n \n42421\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n About HireQuest <\/b><\/p>\n \nHireQuest, 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 200 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<\/a>.\n<\/p>\n Important Cautions Regarding Forward-Looking Statements<\/b><\/p>\n \nThis news release includes, and the company\u2019s 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: \u201canticipate,\u201d \u201cintend,\u201d \u201cplan,\u201d \u201cgoal,\u201d \u201cseek,\u201d \u201cbelieve,\u201d \u201cproject,\u201d \u201cestimate,\u201d \u201cexpect,\u201d \u201cstrategy,\u201d \u201cfuture,\u201d \u201clikely,\u201d \u201cmay,\u201d \u201cshould,\u201d \u201cwill,\u201d and similar references to future periods.\n<\/p>\n \nWhile 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\u2019s 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\u2019s 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\u2019 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\u2019s franchisees and temporary employees; strategic actions, including acquisitions and dispositions and the company\u2019s success in integrating acquired businesses including, without limitation, successful integration following the acquisitions of Snelling and LINK; disruptions to the company\u2019s 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\u2019s operating systems; and the factors discussed in the \u201cRisk Factors\u201d section and elsewhere in the company\u2019s most recent Annual Report on Form 10-K.\n<\/p>\n \nAny 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.\n<\/p>\n \n$\n<\/p>\n<\/td>\n \n2,204,648\n<\/p>\n<\/td>\n \n\u00a0\n<\/p>\n<\/td>\n \n$\n<\/p>\n<\/td>\n \n13,667,434\n<\/p>\n<\/td>\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n \n\u00a0\n<\/p>\n<\/td>\n \n35,055,831\n<\/p>\n<\/td>\n \n\u00a0\n<\/p>\n<\/td>\n \n\u00a0\n<\/p>\n<\/td>\n \n21,344,499\n<\/p>\n<\/td>\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n \n\u00a0\n<\/p>\n<\/td>\n \n1,519,939\n<\/p>\n<\/td>\n \n\u00a0\n<\/p>\n<\/td>\n \n\u00a0\n<\/p>\n<\/td>\n \n2,178,299\n<\/p>\n<\/td>\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n \n\u00a0\n<\/p>\n<\/td>\n \n952,620\n<\/p>\n<\/td>\n \n\u00a0\n<\/p>\n<\/td>\n \n\u00a0\n<\/p>\n<\/td>\n \n344,091\n<\/p>\n<\/td>\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n \n\u00a0\n<\/p>\n<\/td>\n 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\n32,402\n<\/p>\n<\/td>\n<\/tr>\n \n\u00a0\n<\/p>\n<\/td>\n \n300,781\n<\/p>\n<\/td>\n \n\u00a0\n<\/p>\n<\/td>\n \n242,362\n<\/p>\n<\/td>\n<\/tr>\n \n\u00a0\n<\/p>\n<\/td>\n \n146,345\n<\/p>\n<\/td>\n \n\u00a0\n<\/p>\n<\/td>\n \n103,096\n<\/p>\n<\/td>\n<\/tr>\n \n\u00a0\n<\/p>\n<\/td>\n \n167,844\n<\/p>\n<\/td>\n \n\u00a0\n<\/p>\n<\/td>\n \n–\n<\/p>\n<\/td>\n<\/tr>\n \n\u00a0\n<\/p>\n<\/td>\n \n–\n<\/p>\n<\/td>\n \n\u00a0\n<\/p>\n<\/td>\n \n151,333\n<\/p>\n<\/td>\n<\/tr>\n \n$\n<\/p>\n<\/td>\n \n4,406,977\n<\/p>\n<\/td>\n \n$\n<\/p>\n<\/td>\n \n1,755,541\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n \n\u00a0\n<\/p>\n View source version on businesswire.com: <\/span>https:\/\/www.businesswire.com\/news\/home\/20210809005733\/en\/<\/a><\/span><\/p>\n Company Contact:\n
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\n \n \u00a0<\/td>\n \n \n \n \u00a0<\/td>\n \n \n \n \u00a0<\/td>\n \n \n \n \u00a0<\/td>\n \n \n
\n \n \u00a0<\/td>\n \n \n \n \u00a0<\/td>\n \n \n \n \u00a0<\/td>\n \n \n
\n HireQuest, Inc.<\/b><\/td>\n<\/tr>\n \n Consolidated Balance Sheets<\/b><\/td>\n<\/tr>\n \n \n \n \n \u00a0<\/td>\n<\/tr>\n \n \n June 30, 2021<\/b><\/td>\n \n December 31, 2020<\/b><\/td>\n<\/tr>\n \n \n (unaudited)<\/td>\n \n <\/tr>\n \n ASSETS<\/b><\/td>\n<\/tr>\n \n Current assets<\/b><\/td>\n \n \n <\/tr>\n \n Cash<\/td>\n \n \n \n \n \n \n \n \n Accounts receivable, net of allowance for doubtful accounts<\/td>\n \n \n \n \n \n \n \n \n Notes receivable<\/td>\n \n \n \n \n \n \n \n \n Prepaid expenses, deposits, and other assets<\/td>\n \n \n \n \n \n \n \n \n Prepaid workers’ compensation<\/td>\n \n \n \n \n \n \n \n \n Total current assets<\/td>\n \n \n \n \n \n \n \n \n Property and equipment, net<\/td>\n \n \n \n \n \n \n \n \n Workers compensation claim payment deposit<\/td>\n \n \n \n \n \n \n \n \n Deferred tax asset<\/td>\n \n \n \n \n \n \n \n \n Franchise agreements, net<\/td>\n \n \n \n \n \n \n \n \n Other intangible assets, net<\/td>\n \n \n \n \n \n \n \n \n Other assets<\/td>\n \n \n \n \n <\/tr>\n \n Notes receivable, net of current portion and reserve<\/td>\n \n \n \n \n \n \n \n \n Total assets<\/td>\n \n \n \n \n \n \n \n \n LIABILITIES AND STOCKHOLDERS’ EQUITY<\/b><\/td>\n<\/tr>\n \n Current liabilities<\/b><\/td>\n \n \n <\/tr>\n \n Accounts payable<\/td>\n \n \n \n \n \n \n \n \n Term note payable<\/td>\n \n \n \n \n \n \n \n \n Other current liabilities<\/td>\n \n \n \n \n \n \n \n \n Accrued benefits and payroll taxes<\/td>\n \n \n \n \n \n \n \n \n Due to affiliates<\/td>\n \n \n \n \n \n \n \n \n Due to franchisees<\/td>\n \n \n \n \n \n \n \n \n Risk management incentive program liability<\/td>\n \n \n \n \n \n \n \n \n Workers’ compensation claims liability<\/td>\n \n \n \n \n \n \n \n \n Total current liabilities<\/td>\n \n \n \n \n \n \n \n \n Workers’ compensation claims liability, net of current portion<\/td>\n \n \n \n \n \n \n \n \n Deferred tax liability<\/td>\n \n \n \n \n \n \n \n \n Term note payable, net of current portion<\/td>\n \n \n \n \n \n \n \n \n Franchisee deposits<\/td>\n \n \n \n \n \n \n \n \n Total liabilities<\/td>\n \n \n \n \n \n \n \n \n Commitments and contingencies (Note 8)<\/td>\n \n \n <\/tr>\n \n Stockholders’ equity<\/b><\/td>\n \n \n <\/tr>\n \n Preferred stock – $0.001 par value, 1,000,000 shares authorized; none issued<\/td>\n \n \n \n \n \n \n \n \n Common stock – $0.001 par value, 30,000,000 shares authorized; 13,673,166 and 13,628,675 shares issued, respectively<\/td>\n \n \n \n \n \n \n \n \n Additional paid-in capital<\/td>\n \n \n \n \n \n \n \n \n Treasury stock, at cost – 33,092 shares<\/td>\n \n \n \n \n \n \n \n \n Retained earnings<\/td>\n \n \n \n \n \n \n \n \n Total stockholders’ equity<\/td>\n \n \n \n \n \n \n \n \n Total liabilities and stockholders’ equity<\/td>\n \n \n \n \n \n \n \n \n
\n HireQuest, Inc.<\/b><\/td>\n<\/tr>\n \n Consolidated Statements of Income <\/b><\/td>\n<\/tr>\n \n (unaudited)<\/b><\/td>\n<\/tr>\n \n \n \n \n \u00a0<\/td>\n<\/tr>\n \n \n Three months ended<\/b><\/td>\n<\/tr>\n \n \n June 30, 2021<\/b><\/td>\n \n June 30, 2020<\/b><\/td>\n<\/tr>\n \n Franchise royalties<\/td>\n \n \n \n \n \n \n \n \n Service revenue<\/td>\n \n \n \n \n \n \n \n \n Total revenue<\/td>\n \n \n \n \n \n \n \n \n Selling, general and administrative expenses<\/td>\n \n \n \n \n \n \n \n \n Depreciation and amortization<\/td>\n \n \n \n \n \n \n \n \n Income from operations<\/td>\n \n \n \n \n \n \n \n \n Other miscellaneous income<\/td>\n \n \n \n \n \n \n \n \n Interest and other financing expense<\/td>\n \n \n \n \n \n \n \n \n Net income before income taxes<\/td>\n \n \n \n \n \n \n \n \n Provision for income taxes<\/td>\n \n \n \n \n \n \n \n \n Net income<\/td>\n \n \n \n \n \n \n \n \n \n \n \n \u00a0<\/td>\n<\/tr>\n \n Earnings per share<\/b><\/td>\n \n \n <\/tr>\n \n Basic<\/td>\n \n \n \n \n \n \n \n \n Diluted<\/td>\n \n \n \n \n \n \n \n \n \n \n \n \u00a0<\/td>\n<\/tr>\n \n Weighted average shares outstanding<\/b><\/td>\n \n \n <\/tr>\n \n Basic<\/td>\n \n \n \n \n \n \n \n \n Diluted<\/td>\n \n \n \n \n \n \n \n \n
\n HireQuest, Inc.<\/b><\/td>\n<\/tr>\n \n Reconciliation of Net Income to Adjusted EBITDA<\/b><\/td>\n<\/tr>\n \n (unaudited)<\/b><\/td>\n<\/tr>\n \n \n \n \n \u00a0<\/td>\n<\/tr>\n \n \n Three months ended<\/b><\/td>\n<\/tr>\n \n \n June 30, 2021<\/b><\/td>\n \n June 30, 2020<\/b><\/td>\n<\/tr>\n \n Net income<\/td>\n \n \n \n \n \n \n Interest expense<\/td>\n \n \n \n \n \n \n Provision for income taxes<\/td>\n \n \n \n \n \n \n Depreciation and amortization<\/td>\n \n \n \n \n \n \n Non-cash compensation<\/td>\n \n \n \n \n \n \n WOTC related costs<\/td>\n \n \n \n \n \n \n Non-recurring acquisition related charges, net<\/td>\n \n \n \n \n \n \n Non-recurring charge to notes receivable<\/td>\n \n \n \n \n \n \n Adjusted EBITDA<\/td>\n \n \n \n \n \n <\/p>\n
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HireQuest, Inc.
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Cory Smith, CFO
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(800) 835-6755
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Email: cssmith@hirequest.com<\/a><\/p>\n