HireQuest, Inc. ((HQI)) has held its Q4 earnings call. Read on for the main highlights of the call.
HireQuest, Inc. recently held its earnings call, revealing a challenging year marked by declines in revenue, system-wide sales, and franchise royalties. Despite these hurdles, the company managed to achieve profitability, improve its SG&A cost management, and maintain a robust adjusted EBITDA margin. The strategic focus on mergers and acquisitions (M&A) and operational improvements positions HireQuest well for a potential recovery.
Profitability in Challenging Environment
HireQuest achieved profitability in the fourth quarter of 2024, reporting total revenues of $8.1 million. For the full year, the company recognized total revenue of $34.6 million and net income of $3.7 million. This achievement is notable given the broader challenges faced in the staffing industry.
SG&A Cost Reduction
The company reported a significant 22.7% decline in SG&A expenses in Q4 2024 compared to Q4 2023, and a 12.4% decline for the full year. This improvement was largely driven by a reduction in workers’ compensation expenses, showcasing HireQuest’s effective cost management strategies.
Strategic M&A Activities
HireQuest remains active on the M&A front, successfully completing an acquisition at the end of the year. This move has expanded its staffing footprint and scope of offerings, aligning with its strategic growth objectives.
Improved Adjusted EBITDA Margin
The adjusted EBITDA margin for the fourth quarter of 2024 was 47%, up from 44% in Q4 2023. For the full year, the margin also improved to 47% from 44% in 2023, indicating enhanced operational efficiency.
Revenue Decline
Total revenue for the fourth quarter of 2024 was $8.1 million, marking a 17.2% decrease compared to $9.8 million in the same quarter last year. Full-year revenue also saw a decline, from $37.9 million in 2023 to $34.6 million in 2024.
Weak Performance in MRI Network
The MRI network experienced an 18.6% decline compared to 2023, primarily due to a weak market for permanent placement and executive search solutions, highlighting challenges in specific market segments.
Decline in System-Wide Sales
System-wide sales for the fourth quarter were $134.8 million compared to $143.5 million in Q4 2023. Full-year system-wide sales were $563.6 million, down from $605.1 million in 2023, reflecting broader market challenges.
Decreased Franchise Royalties
Franchise royalties for Q4 2024 were $7.6 million, down from $8.9 million in the same quarter last year. For the full year, franchise royalties decreased from $35.8 million in 2023 to $32.7 million in 2024.
Forward-Looking Guidance
Looking ahead, HireQuest remains optimistic about its strategic initiatives. The company expects further reductions in workers’ compensation expenses in 2025 and continues to focus on M&A to expand its footprint. Additionally, the company remains committed to delivering shareholder value through regular quarterly dividends.
In summary, HireQuest’s earnings call reflects a year of challenges but also highlights the company’s resilience and strategic focus. Despite declines in several key metrics, HireQuest achieved profitability and improved its operational efficiency. The company’s ongoing commitment to strategic growth through M&A and cost management positions it well for future recovery.