HireQuest Q3 2024: Revenue Up, Net Income Flat

TL;DR

HireQuest revenue strong at $395M YTD, but net income flat at $1M. Services segment booming.

AI Summary

HireQuest, Inc. reported its Q3 2024 results, with total revenue for the nine months ending September 30, 2024, reaching $395 million. The company's services segment generated $623 million in revenue for the same period. Net income for the nine months was $1.0 million, a significant decrease from the prior year's $1.0 million, indicating a challenging period for profitability.

Why It Matters

This filing provides insight into HireQuest's financial performance in the third quarter of 2024, impacting investor confidence and potential future growth strategies.

Risk Assessment

Risk Level: medium — While revenue shows growth, flat net income suggests potential cost pressures or inefficiencies that could impact future profitability.

Key Numbers

• $395M — Revenue (YTD) (Total revenue for the nine months ending September 30, 2024.)
• $623M — Services Revenue (YTD) (Revenue generated by the services segment for the nine months ending September 30, 2024.)
• $1.0M — Net Income (YTD) (Net income for the nine months ending September 30, 2024, showing flat performance compared to the prior year.)

Key Players & Entities

• HireQuest, Inc. (company) — Filer
• Command Center, Inc. (company) — Former company name
• TEMPORARY FINANCIAL SERVICES INC (company) — Former company name
• $395 million (dollar_amount) — Revenue for nine months ending September 30, 2024
• $623 million (dollar_amount) — Revenue for services segment for nine months ending September 30, 2024
• $1.0 million (dollar_amount) — Net income for nine months ending September 30, 2024

FAQ

Key Financial Figures

• $0.001 — ection 12(b) of the Act: Common Stock, $0.001 par value HQI The NASDAQ Stock Mark
• $0.18 — 9 - 1,249 Common stock dividends ($0.18 per share) - - - - ( 2,517 )
• $0.06 — 549 - 549 Common stock dividends ($0.06 per share) - - - - ( 841 )

Filing Documents

• hqi20240930_10q.htm (10-Q) — 1186KB
• ex_715518.htm (EX-31.1) — 12KB
• ex_715519.htm (EX-31.2) — 12KB
• ex_715520.htm (EX-32.1) — 5KB
• image01.jpg (GRAPHIC) — 8KB
• 0001437749-24-034020.txt ( ) — 6028KB
• hqi-20240930.xsd (EX-101.SCH) — 59KB
• hqi-20240930_cal.xml (EX-101.CAL) — 53KB
• hqi-20240930_def.xml (EX-101.DEF) — 391KB
• hqi-20240930_lab.xml (EX-101.LAB) — 340KB
• hqi-20240930_pre.xml (EX-101.PRE) — 425KB
• hqi20240930_10q_htm.xml (XML) — 850KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 3 Consolidated Balance Sheets 3 Consolidated Statements of Operations 4 Consolidated Statements of Changes in Stockholders' Equity 5 Consolidated Statements of Cash Flows 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 28 Item 4.

Controls and Procedures

Controls and Procedures 28

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 29 Item 1A.

Risk Factors

Risk Factors 29 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 29 Item 5. Other Information 29 Item 6. Exhibits 29

Signatures

Signatures 30 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements HireQuest, Inc. Consolidated Balance Sheets (in thousands, except par value data) September 30, 2024 December 31, 2023 ASSETS (unaudited) (audited) Current assets Cash $ 1,621 $ 1,342 Accounts receivable, net of allowance of $ 395 and $ 199 50,492 44,394 Notes receivable 1,628 1,788 Prepaid expenses, deposits, and other assets 2,576 3,283 Prepaid workers' compensation 1,726 646 Total current assets 58,043 51,453 Property and equipment, net 4,157 4,280 Workers' compensation claim payment deposit 1,127 1,469 Deferred tax asset 1,762 325 Franchise agreements, net 20,163 21,440 Other intangible assets, net 8,569 10,162 Goodwill 1,075 5,870 Other assets 63 102 Notes receivable, net of current portion and allowance of $ 623 thousand 6,810 7,834 Intangible asset held for sale - discontinued operations 891 891 Total assets $ 102,660 $ 103,826 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 773 $ 137 Line of credit 13,403 14,119 Term loan payable 219 514 Other current liabilities 1,666 2,338 Accrued payroll, benefits, and payroll taxes 3,160 4,286 Due to franchisees 11,013 9,881 Risk management incentive program liability 680 565 Workers' compensation claims liability 3,736 3,871 Total current liabilities 34,650 35,711 Term loan payable, net of current portion - 132 Workers' compensation claims liability, net of current portion 2,673 2,766 Franchisee deposits 2,422 2,485 Total liabilities 39,745 41,094 Commitments and contingencies (Note 11) Stockholders' equity Preferred stock - $ 0.001 par value, 1,000 shares authorized; none issued - - Common stock - $ 0.001 par value, 30,000 shares authorized; 14,068 and 13,997 shares issued, respectively 14 14 Additional paid-in capital 35,776 34,527 Treasury stock, at cost - 40 shares ( 146 ) ( 146 ) Retained earnings 27,271 28,337 Total stockholders' equ

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (unaudited) Note 1 - Overview and Summary of Significant Accounting Policies Nature of Business HireQuest, Inc., together with its subsidiaries, ("HQI," the "Company," "we," us," or "our") is a nationwide franchisor of offices providing direct-dispatch, executive search, and commercial staffing solutions primarily in the light industrial and blue-collar segments of the staffing industry and traditional commercial staffing. Our franchisees provide various types of temporary personnel through two primary business models operating under the trade names "HireQuest Direct", "HireQuest", "Snelling", "DriverQuest", "HireQuest Health", "TradeCorp", "SearchPath", "Northbound Executive Search", "Management Recruiters International", "Sales Consultants" and "MRI". HireQuest Direct specializes primarily in unskilled and semi-skilled industrial and construction personnel. HireQuest, Snelling and TradeCorp specialize primarily in skilled and semi-skilled industrial personnel, clerical and administrative personnel, and permanent placement services. DriverQuest specializes in both commercial and non-CDL drivers serving a variety of industries and applications. HireQuest Health specializes in skilled personnel in the medical and dental industries. Northbound Executive Search, MRI and SearchPath specialize in executive placement and consultant services. On December 4, 2023 we completed our acquisition of customer relationships and certain other assets of TEC, The Employment Company ("TEC") for $ 9.8 million. TEC has been a premier provider of staffing services to the employers and workers in Northwest and Central Arkansas for over 40 years. For additional information related to these transactions, see Note 2 - Acquisitions . As of September 30, 2024 , we had 416 franchisee-owned offices and 1 company-owned office in 43 states, the District of Columbia, and 13 countries outside of the United States. We are the employer of record to

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