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HireQuest Reports Financial Results for the Third Quarter 2021 - Form 8-K

11/12/2021 | 06:31am EST

HireQuest Reports Financial Results for the Third Quarter 2021

Q3 2021 EPS of $0.23 per Diluted Share, Net Income of $3.2 million, and Adjusted EBITDA of $5.3 million

GOOSE CREEK, South Carolina - November 11, 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


Franchise royalties of $6.5 million compared to $3.2 million in the prior year period, an increase of 103.2%. Organic royalty revenue increased 52% over the prior year period and the branches acquired from Link and Snelling in the first quarter of 2021 comprised approximately $1.6 million of the revenue.


Services revenue, including interest paid on aging accounts receivable, of $341,000 compared to $164,000 in the prior year period, an increase of 108.0%.


Total revenue of $6.9 million compared to $3.4 million in the prior year period, an increase of 103.4%.


Net Income, inclusive of miscellaneous income, was $3.2 million, or $0.23 per diluted share, compared to net income of $2.0 million, or $0.15 per share last year.


Adjusted EBITDA of $5.3 million compared to $2.9 million in the prior year period.

Subsequent to Quarter End


HireQuest acquired Recruit Media, Inc., an HR tech start-up with a next-gen SaaS recruitment platform.


HireQuest announced it has entered into a definitive agreement to acquire the Dental Power Staffing division of Dental Power, a leading provider of temporary, long-term contract, and direct-hire staffing services to private sector dental practices across the United States.


The Company's Board of Directors declared a quarterly cash dividend of $0.06 per share of common stock to be paid on December 15, 2021 to shareholders of record as of December 1, 2021.

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.


Thursday, November 11, 2021


4:30 p.m. Eastern time

Toll-free dial-in number:


International dial-in number:



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.

Company Contact:

Investor Relations Contact:

HireQuest, Inc.

Hayden IR

Cory Smith, CFO

Brett Maas

(800) 835-6755

(646) 536-7331

Email: cssmith@hirequest.com

Email: brett@haydenir.com

-- Tables Follow -


HireQuest, Inc.

Consolidated Statements of Operations


Three months ended

September 30,


September 30,


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


$ 0.24 $ 0.15


$ 0.23 $ 0.15
Weighted average shares outstanding


13,482,303 13,573,086


13,621,938 13,574,863

HireQuest, Inc.

Consolidated Balance Sheets

September 30,


December 31,




Current assets


$ 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


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


Three months ended

September 30,


September 30,


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


HireQuest Inc. published this content on 12 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 November 2021 11:28:50 UTC.

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Sales 2021 22,0 M - -
Net income 2021 11,5 M - -
Net cash 2021 6,50 M - -
P/E ratio 2021 22,7x
Yield 2021 -
Capitalization 258 M 258 M -
EV / Sales 2021 11,4x
EV / Sales 2022 9,84x
Nbr of Employees 40
Free-Float 37,0%
Duration : Period :
HireQuest, Inc. Technical Analysis Chart | MarketScreener
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Income Statement Evolution
Mean consensus BUY
Number of Analysts 1
Last Close Price 18,85 $
Average target price 26,00 $
Spread / Average Target 37,9%
EPS Revisions
Managers and Directors
Richard F. Hermanns Chairman, President & Chief Executive Officer
David S. Burnett Chief Financial Officer
David Gerstner Vice President-Operations
Edward Jackson Independent Director
Lawrence F. Hagenbuch Independent Director
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