HQI - Earnings call transcript Q2 2021

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Operator

Good day, ladies and gentlemen and welcome to the HireQuest, Inc.

Second Quarter 2021 Earnings Call. All lines have been placed on a listen-only mode and the floor will be opened for questions and comments following the presentation. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, Brett Maas. Sir, the floor is yours.

Brett Maas

operator. you, Thank to like to call. the I welcome would everybody HireQuest’s Hermanns; and Hosting the Cory Rick are today call CFO, CEO, Smith. meaning forward-looking Please the be within include comments of securities the statements made during aware our call that of federal some laws. may contain and would, believe, and Statements anticipate as constitute expressions should, such expectations our may, words about forward-looking expect, similar beliefs could, will, statements. uncertainties HireQuest our future management’s could cause results These differ in current statements results operations expectations. involve regarding our risks from to and materially that statements Harbor filings Safe risk the described to events including cause review and to you reports, identify earnings from Annual its materially encourage in differ other contained and without recent which also company’s statements. actual XX-K specific with and results the the on most We in those forward-looking factors SEC, Form risk or Report periodic may limitation, factors release the the that the the obtained Copies at hirequest.com most XX-Q of the company’s at maybe website, reports on and company’s website XX-K SEC’s Form sec.gov. on recent or The the call to company after of call. this forward-looking date publicly revise any does update or statements or not undertake to everyone I like be August XX. remind replay also that will this available would for call through and to company’s in the be of A the website, on website available call also earnings will the link at replay hirequest.com. release is the provided I HireQuest, would over Rick call now of like to to Hermanns. CEO turn the Rick, the floor is yours.

Rick Hermanns

the the franchisees, work. their successful Thank thousands Every adapted you what environment. for would our and This country day across time quarter. our a the year, to people joining the services to last of day, to for like business franchisees us. knew of next provide I'd bring, franchisees evolving opportunity none us our clients, congratulate have but

acquisitions lingering sales include XX% LINK, from And when some COVID. system-wide up despite quarter. over the second for headwinds organic the Snelling up were we and you XXX%, were of Our

was first The impact it's second significantly the notable period due fact factors. was the quarter external reduced to that from

Command with the pandemic. XXXX, like significant impacted world, Center. the costs we, related the half rest the merger second by of XXXX through was of And The to in managing were

developed, largely past from this were all quarter free As we that noise.

beginning getting results franchise are acquisitions in and quarter important our X.X% level model we are of stated back factors income. The hit a net sales, a amount LINK to second where of of to The leverage us demonstrate Snelling to can our system-wide operating generate. X.X% can target the

bit expense from an amortization additional levels expect adjustment sales transactions to System-wide non-pandemic would XXXX. opportunity for we that the the require organic an be, the targets. to half Although growth a as in economy in provides may behind these are further still of continues our what lagging but second rebound

largely One have footprint good of a that who of spread like number across our Florida business resisted states shutdowns. states and benefits mass is geographic Texas XX in our with dynamic are economically franchisees the

launched companies existing this growth new pandemic opportunities, trying franchisees. a new able we needs, years offering trucking with the that make benefits We're DriverQuest and to and employees, demand wanted the to specialized We growing industry were focused franchisees. sure clients, about to offers believe to excited and We an that Long-haul we structure new exacerbated growth offering the to can enter and of a of industry. conjunction and also on the number these a model be applied verticals, best avenue continue acquisitions, industries, broad we for franchise or The industry and of growth a our for development, internal last-mile to that combination. DriverQuest, evaluate range across have service further for a staffing drivers. franchise segment the e-commerce. supply a logistics transportation and issues with in in accelerated is and become find This adoption and area, specific

Board the further, results to turn dividend. the mention over declared of regular Directors a Cory I has to discuss financial I the wanted call that Before quarterly to

We XXXX, will September to XX, of shareholders share record on X. on a pay $X.XX dividend September per

to pay over will dividend call we quarterly going Cory? turn is expectation a Our forward. X% continue I'll Cory. With to that, the

Cory Smith

good us. and of year, Thank Total million everyone. Rick, the quarter you, million, of second the to quarter for for joining you revenue $X.X compared XX.X%. of for second afternoon, XXXX Thank increase an $X.X last was

While also the for the growth growth, contributed acquisitions we to approximately organic of Snelling this XX% and LINK quarter. experienced of

year saw quarter an Selling, Our is for second the two increased overdue non-recurring our of a total modest cost $XX,XXX. million, increase structure a on quarter, results offer decrease. approximately debt compared demonstrates the double, $X.X bad of costs by Rick business Adding model. diluted $XXX,XXX, while of EBITDA a EBITDA approximately where on quarter increases impact in Adjusted increase only and said income nominal year. in approximately Franchise believe $XXX,XXX of we expenses. million for fees, year. Included decrease the interest charged million partially this of quarter acquisition We royalties diluted the were we $XXX,XXX of components, various year, or income Net our quarter year. decrease These to royalties, acquisition in $X.XX of approximately approximately related million compared was $X.X primary net and was can of services second the franchise last $X.XX second to as a accounts of in and forward for revenue, which to compared income this made non-cash in last our franchisees expenses million, to was system-wide net analyzing operations. our $X per $XXX,XXX increased our revenue that what adjusted subscriptions approximately going was of $XXX,XXX, past income having compared dues service over metric in in general, of were magnitude optional and leverage of license share by million expense second offset total of administrative of $X.X up and sales which to to second workers' increased scalability million through revenue. and source $X.X of of and revenue to $XXX,XXX. last and our useful approximately quarter compared $XXX,XXX, costs $X.X were Service due important our non-recurring of second relevant results of is income, compensation $XX,XXX, for and we in compensation compensation in a stock-based XX% share the generated per this year, was accounts or last the This due when to for quarter $X.X XXXX receivable, the expenses franchisees non-recurring statement from the net to our items it in thus related us running quarter was cost and our demonstrated $X.X last as revenue, XXX.X%. second million our fees quarter typically

balance Moving on sheet. the to

were million Our $XX XXXX XX, $XX.X XXXX $XX.X compared current cash of current million at Significant June at million, XXXX. June of million included at December XX, XX, assets accounts of and $X.X to assets components receivable.

million associated December of The accounts While needs. at receivable. current of Snelling related cash $XX.X increase the assets directly in XXXX and and million acquisitions cash and $XX.X the decrease LINK of working to is in XX, capital included

XXXX June XXXX. $X.X net balance million, $X.X reserve at December to compared was million XX, at receivable notes Our XX,

being $X.X capitalize a on facility to access as facility approved and approved from growth, us well year. comprised Board per an to paid We our capacity believe term quarterly cash a new new the first and company of this increase $XX million dividend facility provides facilitate our third flexibility Since credit we $XX.X on in closed paid During the the June $X.XX a with to its working this each regular as Beginning quarter. credit capital dividend first in we have in revolving our and Board quarter common quarter, of of our future with share. loan. acquisitions. of XXXX, million common $X.XX that $X.XX share Recently, second per to the dividend $X.XX paid organic then a potential dividend million

September next to record year And that, our back pay to to dividend quarter the the operator X. will continue Q&A. dividend shareholders of for for increased I pay of expect Board's turn we call approval. to to And each rest with over XX the We September the will this as on of subject $X.XX

Operator

floor Capital]. Please is [Mindset for Aaron questions. your you. state now The open Instructions] Thank [Operator Edelheit from comes Our question question. first

Aaron Edelheit

And Rick. et and in a that And could your and And think and wise. HireQuest I I wondering just, you cetera, Congratulations big DriverQuest. could you quarter. – some as platform wanted team has think can the similar of you platform more growth big for give we've what a of do doing, on of discussed you be? Hey, trucking and forward. guards, to many I HireQuest on importantly, – do great I'm about verticals if believe you're I I you kind how opportunity the a using security a think could organic thoughts like things. other wanted going if of I announcement love ask just just just logistics picture I to where

Rick Hermanns

talk good And Aaron. to Sure. to you,

existing make So of the in it DriverQuest to of is to already but trucking. nature we away what to we beginning part product the nice fits the a due very because on related a offering the within able developed were to of we to add lot doing, specialized procedures stayed that is offering. our very risk sort from be it, over liability of But year, – the

it we've been trucking related years. a excited lot only business very if about for we're of because away So turning

as the and extent that we And it's we so large think be And as really able capitalize of far growing. to it. it, will industry a

really reason cetera. divisions. a guards, going rival why out restraining. is on there's so to and our for – reason There's far nothing as couldn't we're security no market there et no as the always it size looking of why It large there's other And

We those are always looking other opportunities. for

relates very very as in – we've similar characteristics. our temporary also per not past, said se, not the model the just within just is the – but scalable, have we – industry staffing it within staffing As

growth go cap would really or we bad into we're after the margin sort chase having And so on about excited of low that up because, end to isn't opportunities jurisdictions there a business. our

sky's So really the limit. the

Aaron Edelheit

And And that there you that franchises these this. services in coming it when launching that is trucking, royalties accurate you like franchise now providing say is so but an system have already today. are statement? from XX – to wide announced, franchisees your not Then revenue, or is are you're with accurate

Rick Hermanns

I XX accurate. Yes, those – new I that primary do will turning – are people franchisee oversell it’s signed one their that trucking. want right? signed that So – want people we and trucking people those past now But thing is –XX their have lot XX have to this we up to orders. that's is just caution don't to devote the time in have one line, are of to were have I say This obviously, don't and business who able fill we down a to to is

So It's as well in the just currently answer generating past. who yes, That royalty a this on table a said, tempered the bit from business DriverQuest. from is we already doing the is are business we revenue – it's though. also people left

Aaron Edelheit

you. Got

long-term So were not. opportunity significant and business, that I now system-wide this, could this driver of this an business, time, And you a grow small franchise be turning but therefore but royalties. and starting that have you're as guess people revenue it you over it to see away [ph] that

Rick Hermanns

compensated Absolutely. drivers And look, individuals. truck well are

people doesn't it placed revenues. take, take a doesn't it in of order significant to lot so, generate And

And about so excited opportunities. very the we're

Aaron Edelheit

just Great. more. forward question My potential about acquisitions can’t. know I is you going next

announce opportunities you beyond just you something Are just seeing opportunities? of pipeline? excited only describe the organic Could of close. You still when about just acquisition you an what like you're pipeline

Rick Hermanns

answering. a question So, that's in careful to be I have

is, We are apart. pipeline looking. where what what I was three would than falls say the spend are would in say ones you point asked always the you weeks out three what you'd ago, be certain have it deal, it would are And different it I deal then fact a opportunities. weeks have think a and me you engaged there months to and actively ago. that today. sometimes the out There But and if the I getting we of is that seeking think it –

that's profitability our but… And of your we all want The I issue. to so will they could bigger is be stuff there actually it. it basically on There's and bigger parameters we execute overpay really goal. don’t But for. question, know opportunities. will that's the our I priced believe question that a that the And from do that consistent sorts answers be not – there properly that fit really standpoint do

Aaron Edelheit

Great. no, Thank no, very No, you much. absolutely…

Rick Hermanns

of It's lot and a country big a verticals. there's

lot a there's of opportunities. So

Aaron Edelheit

with wanted. be And and all very that's that like to treat capital. you're it's going approach no, disciplined it I know your I No, your

and So again. great very quarter a thank you competent,

Rick Hermanns

you Thank

Operator

Okay. like over further Instructions] coming turn [Operator to we And closing for look in. you it any I'll have it questions doesn't remarks. back

Rick Hermanns

everybody assimilate of to our what that in to operational Again, really interest want that gives and take And our joining that integrate. model. if think for really quickly us really as through shorter time. can our as key to today. else, we make that We then on. that that us shareholder assume nearly you're opportunity one company. I to progress very that is many cost a of think it's of you'll LINK franchise minimal we've quickly because stress a the assimilating period business in issues do important I the quickly allows appreciate relatively second we don't this And Well, Hopefully Snelling acquisitions. of more points short again, in which acquisitions to of you with I uptick in as to year hope thank how period acquisitions. demonstrates XX-Q, the the the And even XX% us grow and that the quarter see And that integrate a we in nothing a the really the made that can of the ability develop being look I your you time I appreciate to I is time.

And I a to you. so good Thank you again, thank have and day. want

Operator

concludes This call. conference participation. Thank thank for your you. today's We you

disconnect this may You time your day. a and lines great at have

Brett Maas	Investor Relations
Rick Hermanns	President and Chief Executive Officer
Cory Smith	Chief Financial Officer
Aaron Edelheit	Mindset Capital

HireQuest (HQI) 9 Aug 212021 Q2 Earnings call transcript