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OFFON

HIREQUEST, INC.

(HQI)
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HIREQUEST : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

08/09/2021 | 04:49pm EDT
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited consolidated
financial statements and the related notes included in Item 1 of Part I of this
Quarterly Report on Form 10-Q and with our audited consolidated financial
statements and related notes included in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2020. The financial position, results of
operations, cash flows and other information included herein are not necessarily
indicative of the financial position, results of operations and cash flows that
may be expected in future periods. See "Special Note Regarding Forward-Looking
Statements" below for a discussion of uncertainties and assumptions that may
cause actual results to differ materially from those expressed or implied in the
forward-looking statements. Additionally, we use a non-GAAP financial measure
and a key performance indicator to evaluate our results of operations. For
important information regarding the use of such non-GAAP measure, including a
reconciliation to the most comparable GAAP measure, see the section titled "Use
of Non-GAAP Financial Measures" below. For important information regarding the
use of such key performance indicator, see the section titled "Key Performance
Indicator: System-Wide Sales" below.



Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q and other documents incorporated herein by
reference include, and our 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
revenue, franchise sales, system-wide sales, and the growth thereof; the impact
of any global pandemic including COVID-19; operating results; dividends and
shareholder returns; anticipated benefits of mergers or acquisitions including
those we have completed in 2021; intended office openings or closings;
expectations of the effect on our financial condition of claims and litigation;
strategies for customer retention and growth; strategies for risk management;
and all other statements that are not purely historical and that may constitute
statements of future expectations. 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 we believe these statements are accurate, forward-looking statements are
not historical facts and are inherently uncertain. They are based only on our
current beliefs, expectations, and assumptions regarding the future of our
business, future plans and strategies, projections, anticipated events and
trends, the economy, and other future conditions. We cannot assure you that
these expectations will materialize, and our 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 us include the following: the level of demand and financial performance of
the temporary staffing industry; the financial performance of our franchisees;
the impacts of COVID-19 or other diseases or pandemics; changes in customer
demand; the extent to which we are 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 our franchisees and temporary employees; strategic
actions, including acquisitions and dispositions and our success in integrating
acquired businesses; disruptions to our technology network including computer
systems and software; natural events such as severe weather, fires, floods, and
earthquakes, or man-made or other disruptions of our operating systems; the
factors discussed in the "Risk Factors" section in our most recent Annual Report
on Form 10-K, which we filed with the SEC on March 25, 2021; and the other
factors discussed in this Quarterly Report and our Annual Report.



Any forward-looking statement made by us in this Quarterly Report on Form 10-Q
is based only on information currently available to us and speaks only as of the
date on which it is made. The Company disclaims 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.




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Overview



We are a nationwide franchisor of on-demand labor solutions providers in the
light industrial and blue-collar segments of the staffing industry. We were
formed through the merger between Hire Quest Holdings, LLC ("Hire Quest
Holdings") and Command Center, Inc. We refer to Hire Quest Holdings and its
wholly-owned subsidiary, Hire Quest, LLC, collectively as Legacy HQ. We refer to
this merger, which closed on July 15, 2019, as the Merger. As of June 30, 2021,
we had approximately 210 franchisee-owned offices in 35 states and the District
of Columbia. We also licensed the use of our trademarks to offices in
California. Our franchisees provide employment for an estimated 80,000
individuals annually working for thousands of clients in many industries
including construction, recycling, warehousing, logistics, auctioneering,
manufacturing, disaster cleanup, janitorial, special events, hospitality,
landscaping, and retail.



Recent Developments


Snelling Staffing Acquisition


On March 1, 2021, we completed our acquisition of certain assets of Snelling in
accordance with the terms of the Asset Purchase Agreement dated January 29, 2021
(the "Snelling Agreement"). Snelling is a 67-year-old staffing company
headquartered in Richardson, TX. Pursuant to the Snelling Agreement, HQ Snelling
Corporation ("HQ Snelling"), our wholly-owned subsidiary, acquired substantially
all of the operating assets and assumed certain liabilities of the sellers for a
purchase price of approximately $17.7 million, subject to customary adjustments
for net working capital. Also on March 1, 2021, HQ Snelling entered into the
First Amendment to the Purchase Agreement, pursuant to which HireQuest, Inc.
agreed to advance $2.1 million to the sellers at closing so the seller could
facilitate payment on behalf of HQ Snelling to settle accrued payroll
liabilities HQ Snelling assumed pursuant to the Snelling Agreement.
Substantially all of the locations where we assumed franchisor status in this
transaction have subsequently signed our HireQuest  franchise agreement but
continue to use the Snelling name.



In connection with the acquisition, we sold the 10 locations that had been
company-owned by Snelling. Two of these, we sold to franchisees. Four offices
were sold to a third-party purchaser. Four offices were sold to a California
purchaser (the "California Purchaser") and operate under the Snelling name
pursuant to a license agreement with us. The aggregate sale price for these 10
locations consisted of (i) $1.0 million in the form of a promissory note that
bears interest at 6.0%, (ii) the right to receive 1.5% of revenue generated at
the Ontario location for the next 12 months, (iii) the right to receive 2.5% of
revenue generated at the Tracy and Lathrop locations for the next 12 months,
(iv) the right to receive 2.0% of revenue generated at the Princeton location
for the next 36 months, and (v) approximately $1 million in cash. There are no
remaining company-owned locations as of March 31, 2021.



One of the California locations operates pursuant to a license agreement whereby
they license the Snelling trademark and pay us a royalty of 9% of their gross
margin. We expect that the California Purchaser will convert the remaining three
California locations to franchisees at which point these franchisees will begin
to pay us 9% of their gross margin.



Link Staffing Acquisition


On March 22, 2021, we completed our acquisition of the franchise relationships
and certain other assets of Link in accordance with the terms of the Asset
Purchase Agreement dated February 12, 2021 (the "Link Agreement"). Link is a
family-owned staffing company headquartered in Houston, TX. Pursuant to the Link
Agreement, HQ Link Corporation ("HQ Link"), our wholly-owned subsidiary,
acquired franchise agreements for approximately 35 locations, and other assets
of Link Staffing for a purchase price of $11.1 million. Substantially all of the
locations where we assumed franchisor status in this transaction have
subsequently signed our HireQuest  franchise agreement and now operating as
Snelling.



We assigned six of the franchise agreements we purchased in the transaction, all
located in California, to the California Purchaser. These six franchisees
operate pursuant to a Link trademark sublicense agreement whereby they pay us 9%
of the gross margin of their offices in exchange for a sublicense to utilize the
Link tradename.



COVID-19



The coronavirus pandemic has significantly impacted our operations. With
widespread infection in the United States and abroad, national, state, and local
authorities recommended social distancing and took dramatic action, including
ordering the workforce to stay home, banning all non-essential businesses from
operating, refusing to issue new building permits, and invalidating current
building permits causing work to stop at many of our jobsites. These measures,
while intended to protect human life, have had, and are expected to continue to
have, adverse impacts on our business and the economy as a whole. While most
states have advanced significantly into the reopening process, it is unclear
when, or if, a full economic recovery will occur. It is also unclear whether
businesses will remain open, or another broad shutdown will occur. The long-term
effectiveness of economic stabilization efforts, including government payments
to affected citizens and industries, and government vaccination efforts, is
also
uncertain.




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We entered 2021 with a strong balance sheet. Our current assets exceeded current
liabilities by approximately $16 million. We were able to complete two
acquisitions and significantly increase our franchise base without incurring any
debt. We have been able to remain profitable throughout the pandemic. Still, the
sweeping and persistent nature of the COVID-19 pandemic has depressed our
system-wide sales and resulting franchise royalties. While we did not see major
impacts on system-wide sales and resulting revenue until the final few weeks of
the first quarter of 2020, these depressed sales have continued through our
current quarter. On a month-to-month basis, our system-wide sales have
consistently trended closer to historically normal numbers. However, we continue
to expect negative impacts on system-wide sales and resulting franchise
royalties in the coming quarters, and potentially into next year. However, some
of the depression in sales have been offset by the acquisitions we made in the
first quarter of 2021. It remains unclear how long we will stay at this
comparatively reduced level of sales, and the evolving nature of the pandemic
makes reliable predictions extremely difficult.



To date, our franchisees have closed or consolidated 13 offices at least, in
part, due to the financial impacts of COVID-19. Of these closures, 11 were in
metropolitan areas where our franchisees still maintain at least one office that
we expect can service customers of the closed or consolidated offices. The other
two offices did not historically produce significant amounts of system-wide
sales or resulting revenue. It is possible that other offices may still be
forced to close. Some of our franchisees may experience economic hardship or
even failure. In general, those franchisees whose businesses are oriented
towards construction, manufacturing, logistics, or waste services have been less
impacted to date than those whose businesses are more focused on hospitality,
catering, special events, or auto auction services.



As discussed more fully below, we have reduced liquidity since December 31, 2020
as we used cash to complete two acquisitions. As a result, our cash balance
decreased by approximately $11.5 million through the second quarter of 2021 from
$13.7 million at year end to $2.2 million at June 30, 2021. When combined with
our borrowing capacity under our new line of credit and minimal debt, we expect
that we have sufficient liquidity to continue our operations for the foreseeable
future, even under the current circumstances presented by COVID-19. That said,
the impact of the COVID-19 crisis on availability of capital or credit is
difficult to predict and may be significant.



Any of the above factors, or other cascading effects of the COVID-19 pandemic
that are not currently foreseeable, could materially negatively impact our
revenue, net income, and other results of operations, reduce system-wide sales,
cause office closings or cause us to lose franchisees, and impact our liquidity
position, possibly significantly. The duration or magnitude of any such impacts
cannot be predicted at this time.



Results of Operations



Financial Summary

The following table displays our consolidated statements of operations for the interim periods ended June 30, 2021 and June 30, 2020 (in thousands, except percentages). Percentages reflect the line item as a percentage of total revenue.




                               Three months ended                               Six months ended
                      June 30, 2021           June 30, 2020           June 30, 2021           June 30, 2020
Franchise
royalties          $ 5,451        95.5 %   $ 2,639        91.0 %   $ 8,710        95.6 %   $ 6,345        90.4 %
Service revenue        256         4.5 %       262         9.0 %       400         4.4 %       676         9.6 %
Total revenue        5,706       100.0 %     2,901       100.0 %     9,109       100.0 %     7,021       100.0 %
Selling, general
and
administrative
expenses             2,041        35.8 %     1,931        66.6 %     5,882        64.6 %     5,184        73.8 %
Depreciation and
amortization           366         6.4 %        32         1.1 %       699         7.7 %        64         0.9 %
Income from
operations           3,300        57.8 %       938        32.3 %     2,528        27.8 %     1,772        25.2 %
Other
miscellaneous
income                 126         2.2 %       289        10.0 %     4,042        44.4 %       540         7.7 %
Interest and
other financing
expense                (20 )      -0.4 %       (18 )      -0.6 %       (25 )      -0.3 %       (29 )      -0.4 %
Net income
before income
taxes                3,406        59.7 %     1,208        41.7 %     6,545        71.9 %     2,283        32.5 %
Provision for
income taxes           686        12.0 %        51         1.8 %        84         0.9 %       251         3.6 %
Net income         $ 2,720        47.7 %   $ 1,157        39.9 %   $ 6,462        70.9 %   $ 2,032        28.9 %
Non-GAAP data
Adjusted EBITDA    $ 4,407        77.2 %   $ 1,756        60.5 %   $ 5,940 
      65.2 %   $ 4,755        67.7 %





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Use of non-GAAP Financial Measures




Earnings before interest, taxes, depreciation and amortization, and non-cash
compensation, or adjusted EBITDA, is a non-GAAP measure that represents our net
income before interest expense, income tax expense, depreciation and
amortization, and non-cash compensation. We utilize adjusted EBITDA as a
financial measure as management believes investors find it a useful tool to
perform more meaningful comparisons and evaluations of past, present, and future
operating results. We believe it is a complement to net income and other
financial performance measures. Adjusted EBITDA is not intended to represent net
income as defined by U.S. GAAP and such information should not be considered as
an alternative to net income or any other measure of performance prescribed by
U.S. GAAP. We use adjusted EBITDA to measure our financial performance because
we believe interest, taxes, depreciation and amortization, and non-cash
compensation bear little or no relationship to our operating performance. By
excluding interest expense, adjusted EBITDA measures our financial performance
irrespective of our capital structure or how we finance our operations. By
excluding taxes on income, we believe adjusted EBITDA provides a basis for
measuring the financial performance of our operations excluding factors that are
beyond our control. By excluding depreciation and amortization expense, adjusted
EBITDA measures the financial performance of our operations without regard to
their historical cost. By excluding non-cash compensation, adjusted EBITDA
provides a basis for measuring the financial performance of our operations
excluding the value of our restricted stock and stock option awards. By
excluding WOTC related costs, adjusted EBITDA provides a basis for measuring the
financial performance of our operations excluding the costs associated with
qualifying for this tax credit. In addition, by excluding certain non-recurring
charges, adjusted EBITDA provides a basis for measuring financial performance
without non-recurring charges. For all of these reasons, we believe that
adjusted EBITDA provides us, and investors, with information that is relevant
and useful in evaluating our business.



However, because adjusted EBITDA excludes depreciation and amortization, it does
not measure the capital we require to maintain or preserve our fixed and
intangible assets. In addition, because adjusted EBITDA does not reflect
interest expense, it does not take into account the total amount of interest we
pay on outstanding debt, nor does it show trends in interest costs due to
changes in our financing or changes in interest rates. Adjusted EBITDA, as
defined by us, may not be comparable to adjusted EBITDA as reported by other
companies that do not define adjusted EBITDA exactly as we define the term.
Because we use adjusted EBITDA to evaluate our financial performance, we
reconcile it to net income, which is the most comparable financial measure
calculated and presented in accordance with U.S. GAAP.



                                      Three months ended                Six months ended
                                   June 30,        June 30,         June 30,        June 30,
                                     2021            2020             2021            2020
Net income                        $ 2,719,811     $ 1,157,001     $  6,461,855     $ 2,032,180
Interest expense                       20,317          17,850           24,917          29,139
Provision for income taxes            685,884          51,497           83,590         250,534
Depreciation and amortization         365,995          32,402          698,835          64,215
Non-cash compensation                 300,781         242,362          568,861         565,114
WOTC related costs                    146,345         103,096          238,889         214,717
Non-recurring acquisition
related charges, net                  167,844               -       (2,137,030 )             -
Non-recurring charge to notes
receivable                                  -         151,333                -       1,598,673
Adjusted EBITDA                   $ 4,406,977     $ 1,755,541     $  5,939,917     $ 4,754,572





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Three Months Ended June 30, 2021

Franchise Royalties


Franchise royalties for the three months ended June 30, 2021 were approximately
$5.5 million, an increase of 106.5% from $2.6 million for the three months ended
June 30, 2020. Approximately $1.7 million of this increase in royalties was due
to the Snelling and Link acquisitions and approximately $1.1 million was due to
organic growth this year as the negative effects of COVID-19 were less
pronounced in the quarter ended June 30, 2021 than in the prior year quarter.



Service Revenue

Service revenue consists of interest we charge our franchisees on overdue
customer accounts receivable, trademark license fees, and other miscellaneous
fees for optional services we provide. As accounts receivable age over 42 days,
our franchisees pay us interest on these accounts equal to 0.5% of the amount of
the uncollected receivable each 14-day period. Accounts receivable are charged
back to the franchisee at a date agreed upon between the Company and the
respective franchisee between 42 and 84 days, at which time they are no longer
charged interest.


Service revenue for the three months ended June 30, 2021 was approximately
$256,000, a decrease from approximately $262,000 for the three months ended June
30, 2020. This decrease was due to lower interest income, which was partially
offset by higher trademark license fees.



Selling, General, and Administrative Expenses


SG&A expenses for the three months ended June 30, 2021 were approximately $2.0
million, an increase of 5.7% from $1.9 million for the three months ended June
30, 2020. This increase is related to acquisition-related expenses of
approximately $165,000, increased compensation costs of approximately $212,000,
increased dues and subscriptions of approximately $92,000, and increased
stock-based compensation costs of approximately $58,000. These increases were
partially offset by a decrease in workers' compensation costs of approximately
$190,000 and a decrease in bad debt expense of approximately $263,000.



Six Months Ended June 30, 2021

Franchise Royalties


Franchise royalties for the six months ended June 30, 2021 were approximately
$8.7 million, an increase of 37.3% from $6.3 million for the six months ended
June 30, 2020. Approximately $1.8 million of this increase in royalties was due
to the Snelling and Link acquisitions where we experienced additional royalties
in four of the six months this quarter, and approximately $589,000 was due to
organic growth this year as the negative effects of COVID-19 were less
pronounced in the six months ended June 30, 2021 than in the prior year period.
While system-wide sales, and resulting franchise royalties, have been slowly
approaching historical levels on a month-over-month basis since the beginning of
April of last year, we expect decreased royalty revenue to persist throughout
the remainder of this year, and perhaps beyond, relative to pre-pandemic levels.



Service Revenue

Service revenue for the six months ended June 30, 2021 was approximately
$400,000, a decrease from approximately $676,000 for the six months ended June
30, 2020. This decrease was primarily due to lower interest income, which was
partially offset by higher trademark license fees.



Selling, General, and Administrative Expenses


SG&A expenses for the six months ended June 30, 2021 were approximately $5.9
million, an increase of 13.5% from $5.2 million for the six months ended June
30, 2020. This increase is primarily related to acquisition-related expenses of
approximately $1.6 million. In addition, we saw increased compensation costs of
approximately $332,000, and a relative increase in charges related to workers'
compensation of approximately $701,000. These increases were partially offset by
a decrease in bad debt expense of approximately $263,000 a decrease in
professional fees of $98,000, and the absence of the $1.6 million reserve placed
on notes receivable in 2020.




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Miscellaneous Income

Miscellaneous income for the six months ended June 30, 2021 was approximately
$4.0 million, an increase of approximately $3.5 million, from $540,000 for the
six months ended June 30, 2020. This increase is primarily due to a bargain
purchase gain of approximately $4.9 million recognized as part of the Snelling
transaction. This gain was partially offset by a net loss of approximately $1.2
million in relation to the sale of acquired assets.



Liquidity and Capital Resources




Our major source of liquidity and capital is cash generated from our ongoing
operations. We also receive principal and interest payments on notes receivable,
most of which were issued in connection with the sale of offices we acquired in
the merger with Command Center. We also sold approximately $5.3 million of these
notes at face value to Bass in the first quarter of 2021 to generate cash for
our two acquisitions. In addition, we have the capacity to borrow under our
line
of credit with Truist.



On June 30, 2021, our current assets exceeded our current liabilities by
approximately $21.5 million. Our current assets included approximately $2.2
million of cash and $35.1 million of accounts receivable, which our franchisees
have billed to customers and which we own in accordance with our franchise
agreements. Our largest current liabilities include approximately $8.9 million
related to our workers' compensation claims liability, $5.4 million due to our
franchisees on upcoming settlement statements, and $3.7 million in accrued
benefits and payroll taxes.



In June 2021, we entered into a loan agreement with Truist for a $60 million
line of credit with a $20 million sublimit for letters of credit and a $3.2
million term loan. This agreement provides for a borrowing base that is derived
from our accounts receivable, subject to certain reserves and other limitations.
At June 30, 2021, approximately $14.3 million of availability under the line of
credit was utilized by outstanding letters of credit that secure our obligations
to our workers' compensation insurance carrier and $500,000 was utilized by a
letter of credit that secures our paycard funding account. Based on our eligible
collateral, we had approximately $13.7 million available under the agreement for
potential additional borrowings under the terms of the line of credit at June
30, 2021. A more detailed description of our loan agreement, line of credit and
term loan is contained in "Note 4 - Line of Credit and Term Loan" and is
incorporated herein by reference.



Our working capital requirements are driven largely by temporary employee
payroll and accounts receivable from customers. Since receipts lag employee pay
- which is typically daily or weekly - our working capital requirements increase
as system-wide sales increase, and vice-versa. When the economy contracts, our
cash balance tends to increase in the short-term as payroll funding requirements
decrease and accounts receivable are converted to cash upon collection.



We believe that our current cash balance, together with the future cash
generated from operations, and our borrowing capacity under our line of credit,
will be sufficient to satisfy our working capital needs, capital asset
purchases, and other liquidity requirements associated with our continuing
operations for at least the next 12 months. Our access to, and the availability
of, financing on acceptable terms in the future will be affected by many factors
including overall liquidity in the capital or credit markets, the state of the
economy and our credit strength as viewed by potential lenders. We cannot
provide assurances that we will have future access to the capital or credit
markets on acceptable terms. The impact of the COVID-19 crisis on availability
of capital or credit is difficult to predict and may be significant.



Operating Activities


During the six months ended June 30, 2021, cash generated by operating
activities was approximately $11.3 million and included net income of
approximately $6.5 million, the return of a workers' compensation claim deposit
of approximately $7.2 million which was acquired in the Snelling transaction,
and a net loss on the sale of intangible assets acquired of approximately $1.2
million. These provisions were partially offset by a gain recognized in relation
to an acquisition of approximately $5.0 million and an increase in accounts
receivable of approximately $1.3 million. During 2020, cash provided by
operating activities was approximately $9.5 million and included net income of
approximately $2.0 million, a decrease in accounts receivable of approximately
$8.6 million and an increase in our allowance for losses on notes receivable of
approximately $1.6 million. These provisions were partially offset by an
increase in prepaid workers' compensation of approximately $1.1 million, a
decrease in deferred taxes of approximately $1.1 million, and an increase in
prepaid expenses, deposits, and other assets of approximately $909,000.




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Investing Activities

During the six months ended June 30, 2021, cash used by investing activities was
approximately $24.0 million and included cash paid for acquisitions of
approximately $28.8 million and cash issued for notes receivable of
approximately $798,000. This use was offset by proceeds from the sale of notes
receivable of approximately $5.3 million and the sale of purchased locations of
approximately $1.0 million. During 2020, cash used by investing activities was
approximately $145,000 and included the purchase of property and equipment of
approximately $952,000 and cash issued for notes receivable of approximately
$182,000. These uses were partially offset by proceeds from the payment on notes
receivable of approximately $1.0 million.



Financing Activities


During the six months ended June 30, 2021, cash provided by financing activities
was approximately $1.2 million and included proceeds from a term note payable of
approximately $3.2 million. This provision was offset by the payment of
approximately $1.5 million in dividends. During 2020, cash provided by financing
activities was approximately $38,000.



Key Performance Indicator: System-Wide Sales

We refer to total sales generated by our franchisees as "franchise sales." For
the period prior to their conversion to franchises, we refer to sales at
company-owned and operated offices as "company-owned sales." In turn, we refer
to the sum of franchise sales and company-owned sales as "system-wide sales." In
other words, system-wide sales include sales at all offices, whether owned and
operated by us or by our franchisees. System-wide sales is a key performance
indicator. While we do not record system-wide sales as revenue, management
believes that information on system-wide sales is important to understanding our
financial performance because those sales are the basis on which we calculate
and record much of our franchise royalty revenue, are directly related to all
other royalty revenue and service revenue, and are indicative of the financial
health of our franchisee base. Management uses system-wide sales to benchmark
current operating levels to historic operating levels. System-wide sales should
not be considered as an alternative to revenue.



During the three and six months ended June 30, 2021 and June 30, 2020, all of
our offices were franchised. As such, system-wide sales for these periods were
all derived from franchised offices.



The following table displays system-wide sales for the interim periods ended
June 30, 2021 and June 30, 2020 (in thousands, except percentages). Percentages
indicate the change in system-wide sales relative to the comparable prior
period.



                            Three months ended                       Six months ended
                    June 30,      June 30,                  June 30,      June 30,
                      2021          2020        Change        2021          2020        Change
System-wide sales   $  88,678     $  44,074       101.2 %   $ 145,018     $ 100,536        44.2 %




Number of Offices


We examine the number of offices we open and close every period. The number of
offices is directly tied to the amount of royalty and service revenue we earn.
Our franchisees opened four offices in the first quarter and did not close any.



The following table accounts for the number of offices opened and closed or consolidated in the first six months of 2021.




Franchised offices, December 31, 2020         139
Closed in 2021                                  -
Opened in 2021                                  9
Purchased in 2021 (net of sold locations)      64
Franchised offices, June 30, 2021             212





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Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet financing arrangements.

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Sales 2020 13,8 M - -
Net income 2020 5,36 M - -
Net cash 2020 13,6 M - -
P/E ratio 2020 26,2x
Yield 2020 0,98%
Capitalization 261 M 261 M -
EV / Sales 2019 5,76x
EV / Sales 2020 9,07x
Nbr of Employees 40
Free-Float 36,6%
Chart HIREQUEST, INC.
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HireQuest, Inc. Technical Analysis Chart | MarketScreener
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Income Statement Evolution
Managers and Directors
Richard F. Hermanns Chairman, President & Chief Executive Officer
Cory Smith Chief Financial Officer & Treasurer
David Gerstner Vice President-Operations
Edward Jackson Independent Director
Payne D. Brown Independent Director
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