HireQuest, Inc. ((HQI)) has held its Q3 earnings call. Read on for the main highlights of the call.
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HireQuest, Inc. recently held its third-quarter earnings call, revealing a mixed sentiment. The company demonstrated strong profitability and sequential growth in system-wide sales, yet faced challenges with revenue declines and specific segment difficulties. Despite these hurdles, HireQuest’s franchise model and cost management strategies provided a buffer against market adversities.
Consistent Profitability
HireQuest reported a net income of $2.3 million, or $0.16 per share, showcasing its ability to maintain profitability amidst market uncertainties. This consistent performance is attributed to the company’s robust franchise model, which has proven resilient across various economic cycles.
Strong Sequential Growth
The company experienced a notable 6.1% increase in system-wide sales sequentially over the second quarter, a significant improvement compared to the 1.7% increase recorded last year. This growth highlights HireQuest’s favorable performance in the current market environment.
Adjusted EBITDA Margin Improvement
HireQuest’s adjusted EBITDA margin improved to 55% from 52% the previous year, reflecting effective expense management and operational efficiency.
Dividend Consistency
HireQuest continued its tradition of consistent dividend payouts, distributing a regular quarterly dividend of $0.06 per common share. This practice has been maintained since the third quarter of 2020, underscoring the company’s commitment to returning value to shareholders.
Revenue Decline
Despite positive aspects, HireQuest faced a 9.8% decline in total revenue, dropping to $8.5 million from $9.4 million in the prior year. This decrease highlights the challenges the company faces in the current market landscape.
Declining System-Wide Sales
Year-over-year, system-wide sales fell to $133.6 million from $148.6 million, indicating a decline that the company needs to address moving forward.
MRI Franchisee Nonrenewals
The decision by several MRI Network franchisees not to renew their agreements negatively impacted year-over-year comparisons, posing a challenge for HireQuest in maintaining its franchise network.
Permanent Placement and Executive Search Lag
HireQuest’s permanent placement and executive search services continue to lag, affected by macroeconomic uncertainties and industry-specific challenges, which the company acknowledges as areas needing improvement.
Forward-Looking Guidance
Looking ahead, HireQuest remains optimistic about its financial health, with a reported net income of $2.3 million and a sequential increase in system-wide sales by 6.1% over Q2 2025. The company also achieved an adjusted net income of $3.4 million and an adjusted EBITDA of $4.7 million, with a margin increase to 55%. With total assets of $94.9 million and working capital at $31.5 million, HireQuest is well-positioned to navigate future challenges.
In summary, HireQuest, Inc.’s earnings call presented a complex picture of the company’s current standing. While profitability and sequential growth are positive signs, revenue declines and specific segment challenges need addressing. The company’s franchise model and cost management strategies remain strong pillars supporting its financial health.