Earnings call transcript Q1 2023

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Operator

Good afternoon everybody. And welcome to the HireQuest Incorporated First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded.

the to turn Nesbett, host, now Relations. Investor will conference your over John I you. to over John,

John Nesbett

Thank afternoon. And the you. good call. everyone to to welcome I would like

and Chief Hosting Officer, are call Officer, HireQuest’s the Rick Burnett. today Hermanns; Chief Financial David Executive

amended. should, read moment of risks of circumstances defined of conference as or as anticipate, Safe of HireQuest Harbor Section relate amended that forward-looking of well the they management, XXXX comparable on XXA regarding Act Those or of on in current These to and Let’s call expectations which as statements such to occur statements statement. as will, terms, other belief forward-looking XXE future. based. contains Securities in take Exchange the terms and such uncertainties are its as intent, members XXXX intend, the will expect, a depend and Act the statements involve Section events statements within This statements assumptions the and include Securities as may, because the

Commission with Prospective statements those Securities any in statements reflect of that guarantees HireQuest’s law, required not forward-looking forward-looking by update changed actual HireQuest those involve to contemplated federal conditions. such undertakes materially results to reports uncertainties performance investors may and statements. periodic filed that are differ revise future risks Exchange described from forward-looking or And and cautioned and are securities such by Except including as no obligation the

to Go Rick. HireQuest, Hermanns. now like ahead the call to CEO would turn of over I the Rick

Rick Hermanns

details our results. for quarter. provide an share will To call. and And Thank will then overview I strategic for David you financial for today’s us quarter surrounding with joining of first the the highlights begin more

XX% in first integration grew strategic, results $X.X business. million. franchise XX.X% of acquisitions the locations at by organic Total driven into revenue $X.X royalties performance increasing to million to our Our accretive strong our with quarter were

million $XXX.X in increased of quarter first the quarter for compared to XXXX. the million to sales System-wide $XXX

or $X.XX net operations And from share. continuing income diluted per to $X.X million increased XXX.X%

network Last Network, the placement completed network executive professional MRI the of and States over announced recruiting for me. had franchise in a the permanent offices and the was Excuse search States top staffing transformative to network. executive quarter, firm acquisition world. us, largest that our we United This and third XXX we in United based acquisition and international adding staffing our in both a

a perfect Our strategy. acquisition our example broader is of MRI M&A Network of

growth will in MRI us a HireQuest focused executive immediate evaluating, the executing the offerings. Direct Snelling enhance on our organic our a staffing professional are on that further we way market. We And identifying, of Network and business. focused new service believe supports and scale intently acquisitions and allows brand existing in accretive that search add to

encourage we As are in end to acquisition case have is them expenses of phased results, also are one-off related out the planned that as with to this These the purchase Network that and the acquisition term, the our certain expenses them particularly reflected quarter. any our of we SG&A. part expect in quarter’s of near by – for largely third expect MRI we

expenses would bit eliminate We more as difficult a MRI quickly as been note to that related here we will wished. have certain to have

and businesses. a immediate where economic staffing near, year-over-year their in acquisitions particularly to the environment ability have our near That quarter, for – term positive into said, impact our on declining current This North is we’ve this business with efficiently have the we been reporting many are companies our pleased American made especially revenues U.S. large to results. progress true integrate

we to a and move deliver positioned through our that into to results balance continue I’m are well we first now more strategy driving the as year. XXXX, quarter visibility closed the the growth With little consistent, of confident improved

With first who that, at results. will Burnett, a provide to David? CFO, closer our will look pass I quarter it our David along

David Burnett

Good Rick. afternoon you, for everyone. Thank Thanks joining us today.

on same total $X.X for last which Rick XXXX some an million first million quarter $X.X compared of of to let’s mentioned, revenue, for was of quarter the Expanding start the with increase XX%. numbers the year,

is related instead company-owned revenue, potential Our components, revenue. and and of made is a occasion, certain company-owned revenue; marketed total a report managed are our up by franchisees charge will service and franchisee. revenue royalties, On which be us a our revenue, services other of two and primary to interest that locations which we of component, as franchise is franchise third to would source not from are which miscellaneous generated

At we and it revenue Those did instead mentioned, XXXX, in location included for benefiting is line and royalty this is not operations retain one not as a we March keep operations. criteria but out, reported to held we important mind as it below meet owned still discontinued classified in the XX, it sale is location stream. the once from this I just franchised but are will and that are

were last of franchise compared all of Almost XX.X%. million an the for to increase the year, $X.X $X.X to For royalties the increase quarter operations, for continuing acquisitions. in royalties million relates same quarter

market. able declining organic uncertain Although an to sales grew we and proud organic sales modestly, maintain are be to in

in which $XXX Underlying same for for $XXX.X compared million the in million are to sales, royalties quarter the growth XXXX. period the system-wide were

sales royalties, classified but in sales unlike related completed System-wide did all sales sales reflect primarily acquisitions of to system-wide as offices many is discontinued. lose growth the we our in XXXX, organic to in at year-over-year. growth those competitors, Similar not including

same license our interest $XXX,XXX fees miscellaneous for other compared service resulting from increase system-wide and generated accounts as the and is the year on a quarter fees receivable. in revenue to receivable, franchisees to in growth sales $XXX,XXX quarter the such Changes related for revenues which are was charged accounts overdue in generally to ago. revenue, Service service

primarily prior large items. year general period that driven the quarter was in for compared the Selling, XXX.X%. and of two expenses increase million $X.X to is by million administrative an The increase were $X.X

First, for we comparable workers’ our a compensation expense. tough had

of the compensation expense in compensation XXXX QX was from compensation expense quarter quarter XXXX. For the the XXXX. reserves in worker’s winding reductions workers’ swing expense first first benefit prior included at to to is There was the QX benefit in $XXX,XXX $XXX,XXX time in such compared down. That network a assumed been workers’ in a approximately of $XXX,XXX the in to Snelling acquisition XXXX have This related year adjustment compensation a of no XXXX. that $XXX,XXX

expense in predominant will related benefits. item quarter-to-quarter and Compensation historical. and level the compensation the expenses on The driving worker classifications, recent compensation is mix payroll based workers’ and Generally, resolution SG&A increase both of of the been was expenses fluctuate XXXX, in claims on $X.X in to component from There SG&A. largest we the new million always of When XXXX XX have over increase corporate took acquired MRINetwork QX a XXXX. we employees. compensation December QX related

absorbed integrate first MRINetwork operations. into significant quarter have costs our the we as we During

the years. synergies hopes foreseeable handling manner secure it costs in Because near in often a creep patient and back for from annuity high several us the are will We for savings over an cost for in of integration that to hold disciplined the creating payback future. the cost be is critical like term,

fees, other MRINetwork insurance, to and increased professional and also SG&A expenses the have salaries addition marketing, including like. we In absorbed benefits, IT,

quarter. call through year half at and communicated third of we carry least last expenses we transition this earnings associated our expect the the into to in and first As certain items

first into includes felt the items, SG&A our taxes can $X.X and in interest, largely was line versus on to The total extinguishment offset of reflected amortization. million increase first included net of discontinued three from XXXX of of a our franchise, a is operations, operations. adjusted of less a Power in Income Net income which of gain income revenue Dental operations income the income in million financing loss in the SG&A, XXXX, for is in the debt decrease operations conversion refinance credit. months be This Interest which a operations. by XX.X%. miscellaneous and from depreciation $XXX,XXX related $X.X expense tax discontinued from of three on in $XXX,XXX months was business

million included quarter of $X.X diluted compared Net share or resulting year. EBITDA quarter us A XX-Q. per through for in or million in of diluted first $X.X non-cash in the to the provided the of operations first for of All first from to adjusted was first $X.X of franchises. reconciliation income detailed $X.XX is quarter the losses in the metric per $XXX,XXX quarter income last the into share EBITDA net our P&L. XXXX. $X.XX income of size income expenses conversion compared operating net We Adjusted believe of the adjusted for XXXX XXXX running acquired $X.X was million our quarter relevant million in a due EBITDA-to-net is of to

to now on sheet. the balance Moving

XXst as $XX.X of and $XX.X million were XXXX. current March of million $X.X included assets December cash million assets million receivable. to at XXXX March XX, me, excuse Current at XX, Our compared $XX.X of accounts XX,

on While by XX, cash of liabilities of reflects million larger MRINetwork. current we of at cash the March banks from working change assets million. line and The the XXXX current reflects at included $X versus to working inefficiencies when exceeded elevated capital year-end Truist of December in balance $XX.X capital balance management $XX.X $XX.X assets Current cash as receivable. accounts a million some decrease Bank acquisition The XX was credit million America. following

and had another $XX.X quarter million had million $XX.X in XX.X, continued we compliance. availability, year facility drawn end on covenant end At at credit I’m assuming our we sorry,

Bank As line of plus at America. loan February acquisitions. on facility Truist at I’ve times to replaced XXXX, new believe short-term referenced and working $XX needs, with the we credit as for Truist potential We a million of we capitalize credit of us line as a a that a term new capacity flexibility the facility well in of Bank, Bank had room with from future capital this provides couple

March Continuing of XXXX a quarterly share third common $X.XX paid paid we that have per the since shareholders of of dividend March as pattern, Xst. record on XXXX. We regular to XX, quarter a dividend

We Board’s expect to continue dividend a to quarter each to the subject discretion. pay

back comments. Rick for will some I With call turn over that, to closing the

Rick Hermanns

Thanks David.

in results business said drive XXXX in As across and positive HireQuest’s I before, growth our to generate am operational and beyond. I confident ability sustainable

As team, progress very staffing excellent workers sincerest for leveraging and needs, we’ve encouraged forward I I growth made to broad of by and I’m work extend network dedication. look spectrum the would a to to thanks our franchising I – our to as my and shareholders. their our for our and network value in drive like franchisees, that expanding our always, to address offerings their

that With open for you. the line now we’ll Thank questions.

Operator

you much. very [Operator Okay. Thank Instructions]

Kevin live. Your coming Barrington. Kevin, your of is from Steinke first line question is

Kevin Steinke

Steinke Kevin Research. with Hey. Barrington

organic by I’m to sales yes, growth. start I wanted So guess asking off, about

the of reporting competitors continue demand? as maybe terms noted the to we organic What’s You softening supply pipeline your that as what’s through Is overall move outlook were labor while feel just and we forward declines. they and that on grew any for and in XXXX year? progress modestly other availability, growth in comments

Rick Hermanns

Sure.

noticeable seeing being slight that if any definitely in are that without slowing a we So demand. makes sense. continued appreciable, – It’s makes if

the look it obviously, We’re rates definitely accelerate – as throughout depends on increasing may Fed can you far keeps that year, it, interest – see even the the further. as if

of As based that it’s poor. enough definitely and workforce a IT, the on touches and there in with well as focus oddly the declines, on that as that on say there experience true, is full MRINetwork supply, those recession far are let’s is, and that’s it’s – regions performing true there’s our anything offices are that’s for upon tech particularly certain as least industry, as geographic that’s are far definitely at – even

again Florida, certain frankly And is we’re experiencing we impacted that competition as have our been the Carolina heavy certain probably nearly why South negatively where why we not in in we’re are outperforming, in softening are states. are certain, states let’s organic Whereas, an standpoint from Georgia, others. outperforming most and Texas, as say are

Kevin Steinke

you a Okay. helpful items just more mentioned are maybe Yes, than in hoped. some the commentary. rolling you terms MRI cost related have might slowly That’s little of of off that the and costs to a the

believe I And talked benefits so million, MRI. of and also to the compensation said increase related you you about $X.X

the more to a coming taken more longer of maybe have thought or there So still a MRI you is or that can And there? gate of talk would’ve you actually, little maybe out what’s that, there I more bit from slowly? all just achieved come or guess about the did you little you synergies

Rick Hermanns

company in more we of marathon as over slower than right going your we far this an that to than have why that’s system-wide we there’s as for some is, slower. sales synergies Right of a caution listening finger who’s on maybe took and has is in who’s really buying a is had. there. say what been bit they’re what So the XX% investor down I And MRI, want a anybody let’s hoped

optimism, this - to maybe hoped So say, it to had is able let’s turned were acquisition. while very significant digest out than was my to And a we I in this than it’s be. going be that what faster

So a of because we around some those we synergies the the efficient to we’ll make in little sticking that all of the bit expenses we that are really longer want do gather have. all sure long run know –

a all the And this bit so, that’s since I developed obviously, Hopefully, we’re anything is I would of overpromise company. and to had sort But were CEO longer? of expenses it end quarter where that record the been going is that we the gone. Is of to public XXXX. earlier try be thinking I when quarter. why third into bit a that did middle I’ve to like it where private it. mean, – I’m by of said and really, not They’ll And only I’ll into the prior – a I’ve the of little own been taking track company drag second the I Yes. the definitely hoping certainly

on this like know And when we’re we’re over so when when it’s overstaffed, something. we’re know – overspending – this – I I

X.X point months right, it’s On some mind. for only just need around have months, this we ultimately be we’ll I years. of thing, a with and the we – generate very that And – want things But the certain a get to. like more those, you this concrete ultimately this again, ultimately to a use it’s synergies. absolutely course, again, so get to other yes, taking know investment bought little know we know But need and will be screwing we’ve hand, specific very, in to those are to where been get there not to we’re five good patience, still with I goals into MRI we But we’ll example.

and year, up sales, the sales never a third program. that. year, until think HireQuest had asked franchise had I September back quarter you maybe never say actually or maybe in last – we the half was latter Let’s before meaning franchise like even the We it of of question XXXX, last had end

started a never probably salesperson, organic. end purely We even it the never part-time half-time last never salespeople, And had with salesperson franchise brokers, had Well, MRI part-time all acquisition a was now like now, did even real two salespeople. franchise year. not of at anything, a hired through of was by And the person. we we that was it the

It a that all we it’s new or we’re we’re things Now, way. just that where to be are – they’re out sudden doesn’t demonstrate be but four and realistically – cranking can’t expect month. there’s whether cranking requires – going successful franchises those one And to day measure patience where easy of to it on a not. going work

what’s it’s of produced That again – and just we sorts all to to certainly, back insufficient were. there’s way measure go or can we if if to in being said, coming what’s being the opportunities

what what happens three next than now in to – again and months. and costs from the are from happens I’m guess, we’re what and need years anybody five aware is well realistically we I really what now years aware interested we’re be to saying to of listening I’m saying So three at. in more to But what of be we’re where who’s over to need we our well also the interested company you, far

Kevin Steinke

it size obviously right acquisition bit it little helpful this the time a of to if That’s even takes take commentary. maybe that And longer. an to sense, with Great. get makes

So completely understood there.

said you lastly you about and of here staffing, here, your the I we maybe obviously rolling the maybe enumerated think coming costs benefits for advertising off mentioned end and So and their, should some expenses the services license contract of the IT fees, just and costs a you, quarter quarter. cost What marketing. you the of by third-party salary and off third number in third by those comments release or press think

So just out should we timeframe? to what wondering third get that of be coming as quarter kind

Rick Hermanns

Yes.

statement costs, let it sure because go just the making part that I in me that sure clarify – So necessarily back – make isn’t and it’s my, costs what are it’s not me of let with to I’ll reducing revenues are. the line

XX cost enough they down. I franchises more back that our point. investment. franchise we’re were point you I’m get goes salespeople. of want we’re The to go the franchise right? So going if it saying is really what a that, make I’d to hire producing to – new well not because justify going that’ll to is heavy reduce So to fairly the not the to that cost, we’re I’ll salespeople SG&A franchisees enough selling so rid justify our That’s more, sure to

that’s to XXX and we instance, some sort important on mean, Now, note. took again franchises. it’s like of and new over I so

to their want it understand flow line sure costs in with giving make to has are to we to they we’re what revenues them but that ultimately service, still good and that, are. committed through Well, the that success those

are our two as to running we some certain costs Now – accounting there away we’re let’s identified software’s as different where software. have that of, copies like are go say, of far that other

of just those, theirs Well, have it even they’re copies good frankly the a those same It’s exact their that’s software integrated ours was, was while takes things like though and to be software. – example. – a what two

then that so – their is Financial holdover there well, of the MRINetwork left that completely and an will gone he CFO, the captured a quarter. third off of already I’m expense that’s be that had we rolled second okay, other in in obviously Officer, April, what be – The meaning part partially saying the will middle that’s expense Chief in an that rolls quarter

out I One be as well. effective to tax just is, other two want it do keep to points. buried rate. don’t want have And mind our draw I in

does Just it’s we income. taxes still changes not kind keeps paid the it’s speaking no, other the it make about net what effect company, And a that rate. as a relatively of paying prefer. than it’s of what, the but but as tax Not of is, comparison we us tax why, higher no that than – that described – good a higher other from it those $XXX,XXX lot of but rate there’s was I’d get benefit a alive look lot, Obviously one as point effective things.

come where coming up – of be HireQuest and And the comp. be That it’s the their both Their of will that might there well, I impact. the using is, swing your we software’s worker’s say certain obviously data But is separate other storage our form point out part comp is contract that than like but with ours. major was let’s store will store had we worker’s – a frankly a to how not are, going in back or that software $XXX data. said, is some other MRINetwork expected, completely

obviously nine away. just cost not months, goes that’s months, Well, takes that effective, six stuff but that before months three

we a than to on anyway, if spent focusing back on of want are I within focusing still have like and really years five the it we months, hoped so – lot working is we’re these five that certain we’re relationships it’s had last why could and community. time through five are And why go three things not part franchise of to three to months – is, faster to there just we there’s just, we and again did what gotten

the building franchise how sure – is long $XX,XXX thing well XXX exactly I relationships probably a and deal make went XXX we bought look the be do at is made what franchise. you it, to data franchises. And with at, on if is and know ultimately bought, funny series this in this we really we per with you probably clear, kind but are those Because don’t well want it completely Because looked going acquisition relationships. for run if what with to we of costs a of based do as I how is least

to at if off just we’d And it MRI so probably XXX you zero to historical get million have looked to value franchises replace that, pay revenue. the of $XX with to of just

want from because where focused we’re that’s in I us. they keep ultimately the is again, so get come to synergies And comfortable on relationships that well will perspective as with those as

ultimately in our so, like we’re sure of benefits said, aware been we’re everything being invest I that again well cost business me that’s I’ve we’re And be never in in that being we’re trying problem patient, to effective. for make to for a years position. And we’re system patient, but XX and needs been that ultimately that way franchises. the also in And to all a

Kevin Steinke

Okay. was for it the turn thanks I Well all over. will helpful. That insight.

Rick Hermanns

Thank you, Kevin.

Operator

Thank you much. very you. Thank

line is Hayes Your Matthew next life. is question from D.A. Davidson. coming from your Matthew,

Matthew Hayes

for week. my came X.X you comment last business? thank your claims high Hi, taking in just question. how year a hitting this impacts Weekly development $XXX,XXX on Could at jobless you

Rick Hermanns

it where than is softening. would say indicator more It that were they would, ago they most demand impacted standpoint, would ago, desperate that job they year-and-a-half another us that is, an is now. indicator. really enough just us hasn’t – It’s is fill other a a from year think are are that I what many less were I clients that being it’s than A what clients selective. bit a affects choosy

Now to more normal they’re a back being of choosy. way

before one to are one response in aspect and questions, and be see Kevin’s are said would that it, able the – industries – So love I that to of XXX of areas to detail as XXX,XXX XXX,XXX there jobless new I – jobless new that claims. that’s certain

very probably necessarily in in fall they certain industries that not overall. much and is is, guess My

XX%. jobless our to showing of would up, XX%, why answers starts higher accelerate obviously. seeing said, but the it know clearly I anytime that’s And question, XX%, rate that that that, claims, would but were tend That’s don’t declines as what’s that driving I competition I say of that and start some if you – just jobless softness. your then So revenue that going like if

Matthew Hayes

makes franchise scratch, question model years. That on and plan seems deep over differentiator much is, XX follow And for to story guess built having sense. business Rick, this this been is how it up for from real in the a a understanding incentivizing you, running you’ve of both like entrepreneurs and longer I this business? you staffing the from business my your do

Rick Hermanns

You – I know what, pretty out have no even much five a a though feel five I I I’m I still days out week. week, I work work – fat. days great.

So I have no – of I have going no anywhere. intention

Matthew Hayes

I’ll into Great. back jump queue.

Operator

Thank you very much.

coming Your Mike EF next Albanese question Hutton. live. is is your of Mike, from line

Mike Albanese

you David, Rick, how are guys?

Rick Hermanns

David, how you? are

David Burnett

Mike. Good,

Mike Albanese

Yes.

First hear glad previous build no to off, have continuing of to upon here HireQuest. leaving, that guess, your you successes at intentions I

question my dig answered much but to I just go maybe little I’d responses into it just bit your question pretty original to a – can and back like his to can Kevin, we You in deeper.

are different of or it simply I’m and is end the more if market to wondering there. is in question just difference organic competitors, you that the alluded I’m to get you is growth that you business different geographies? wondering there’s if stealing and markets just between the rate just it share your which divergence model the sense kind from really exposure your as and be in at the you what is to, could attributable And what hood it to relates all them, under and

Rick Hermanns

right? much honestly I said just that’s so I Right? think do any we’re And everybody in that. them. run why better I always believe right? franchisee better, I of just on mean, are though, if we client model, generically mean, time, I’d than and I’d a else, would take say say, that store love we’re a be average that because that crushing I over freaking our I I would lying. corporate to to there every So sit right?

numbers That baked though, has into decades. that our said, for literally been being

really say So we this better can’t why a as much, did from claim I quarter. let’s that revenue standpoint so

a it’s where have own where in even a are and tend – where off, we hundred are within our where think in we less there because fortunately are. on be based percent those places And places have couple places of are exposure. we to those numbers, I we just

Florida. live And look, I in

someplace confuse everything this prices up, place would never with up. recession. booming. is It’s You are in that’s House a

said, Texas, we are and Florida, South Tennessee. like Texas in Georgia, Fortunately, I heavy Carolina,

think So, what I is. is that it really just

And dumb call so is it a luck call it just that strategy, fact.

Mike Albanese

said. fair. That’s mean, I No, well Yes.

credit think you it’s… I like little just more I luck, to it’s than mean, dumb a I give right?

Rick Hermanns

I that. understand

Mike Albanese

[Indiscernible] know by design. And my that’s market yes, I weakening the general is really numbers. show the softening if hard kind business But is thought if starting better on the demand And and a to to that. wonder it’s exposing of model. labor I dissect

So, what that just your curious were. I thoughts on as was to

Rick Hermanns

down, their had Well, big nothing about do could There’s slowdown there’s we’re that. we single I’m Even related particular and have operations. in they one the thinking right, a literally places nothing there’s could where we market Well, way we’re way they consolidated do. down. it’s like – to one client. And

certain Now – we’re it’s it’s states softer. just states if we were other where, in – certain in other

for it almost look us You probably and as at can tell, even I mean, you see harbinger a real it’s estate prices well. where can you

rate where That’s demand. choke will sort thought ultimately obviously the create forward a of real estate increases, interest it is for commercial going broad-based say, if problems. I starts longer off term to

Mike Albanese

makes Yes, that sense.

Thank for you That’s Okay. much. today. all really I very you got

Rick Hermanns

right, All

Operator

Thank you very much.

Capital. of is from Mindset your Aaron line question next coming is Edelheit Aaron, Your live.

Aaron Edelheit

you. Thank

know the to implementing. you if allowed record, it. for shareholder don’t Rick, new not rule we’re leave I know HireQuest. you’re a about That’s Just

Rick Hermanns

that. for you Thank

Aaron Edelheit

an the I you and things candor. question, the detail appreciate really seriousness, all open go be may are say the sounds should it. be really appreciate to the beat be predict I sharing it you’ve you sitting of just absent I the on that any you QX, I and really assessment? if to that through. things accurate It one an I – no extra clarify, still going, QX, we’re looking could Is one that want really your when questions. and normalized them a answering was in the just and economy appreciate in appreciate just no believe commentary where synergies quarter, want there, I all be. My over I obviously look, to But shared control or tougher not somewhere. I’d where to in just you glossing that that by can like

Rick Hermanns

say somewhat not that would in way actually I you the No, never… maybe think. inaccurate, would’ve but I that’s

Aaron Edelheit

Okay.

Rick Hermanns

went a were are we the in never the went get these never quarter. we to lot A these in three- these of cases. of synergies first in– that I are to second all lot quarter literally, in thinking propositions or five-year going

example, utilizing training MRI also example. co-opting branches, with For into Well, great our Snelling program. we’re has for a that working

that, what’s right? Now quarters, on over payoff the current time. right? In something nothing It’s that really, happens it’s the

expect two, three And from so to benefit that I years, frankly. a don’t get for

are within HireQuest a really by other there taken is. synergies MRI think and sell that to be faster be definitely I things, have both slower there same companies. companies, little bit than network the that’s one. I blooming the than develop are in what fourth different and should to the it thought. those a where quarter. frequently Now, exact those And the that all ones Direct, that third what particular other That synergies are had areas would but maybe Snelling, three been Those But longer

the synergies of we And some again, how deliver services. just on our

need have accounting but more that’s started, whether still are and – handling have So like through synergies plough to already to that – that, to there they go. but we and it they they just things

Aaron Edelheit

costs, want those the of – Yes. extra costs think how are that it’s versus kind all specifically more some fully be of you out specific I are $XXX,XXX – so I fluctuates should and normalized you the to understand, worker’s should you the even costs that the in in more I where highlighted the about costs, $XXX,XXX, those comp, like that down. synergies those you expect? there things QX? a those understand up which Like press that are I of highlighted outside fully of clarify just When of terms release

Rick Hermanns

I’m burner, We didn’t MRI So right? not network. a a builder, buy

a of just I’m out and saying? To I’m what whatever off then know corpse. know what could just, You and strip you saying, we feed

Aaron Edelheit

Yes.

Rick Hermanns

have to that no Rather would looked network expand do, makes at does MRI would our no would There us of expand, we franchisees, do sense. of as to which broader it brought be – what That far XXX certainly segment something It offerings staffing it overall talent have industry. than being we the purposes product in many doing be the they’re more doing. to in a also that. what accretive

bringing double that, by fairly there know MRI resources, – that a – it expectation our group help are can so or that I’m that are XXX into. and within business. goal those triple that going there sized That’s we’re we you franchises, number intention, and what saying, is absolutely good of them again, And how their

nobody that would to with line with that you not just we incremental saying, goal it carry, expensive and would clear. I want the I’m terrible along done they make bad I it’s to develop, know question. person requires amounts are hey, My them and may It’s – job software what be. have would wouldn’t goal answering better That’s with something they employee, to even because saying, what to and was Unless was I to. have so that lines it to of want not though how business you of, there’s saying, – my even in a be cut nobody I not I’m and those are get develop what in what rid – tried I’m goal only I I those costs run this a There’s, one when – I’m though those sure our know – to they, who anything. not we my they synergies need Kevin’s knows of

investment And – becomes, go sense. I don’t to but beat heavy horse, pretty a want the we’ve it’s green started. started it lot – a some it make have dead And very I will we’ve believe to or that I got of a we’ve to got demonstrate now. in been again shoots the sales successful franchise to it’s not. back And easily whether

been think I got like know know I we the quote don’t – through May, I – think anyway, or there we’ve opened in four five, I first on. don’t I has don’t something

justifies okay. it’s to of then they’re So kind right? starting And But it. come, like, that

those. over sell starts don’t It’s franchise, that even really of those does, Jack get you a results time it sell As you when new worthwhile. one you that as becoming

what question, not long we synergies it’s what the simply to we but way the have what So at I answering that as can. optimize just use just your we let’s of a doing. that would – look all. not we’re that was gut hey, making really at just, It’s sure absolutely It’s

Aaron Edelheit

is of people by that HireQuest take this I is to way will a that combined back you some what growing sell growth. next about to investments. first expand really And if be the franchises the were just summarize have about it offerings, you have time, franchises MRI, and training I who heard, clear about opportunity not, this organically if HireQuest When you’ll should new from year I examples, acquisition these that the of who to Is in you’re you pull the organically. what that really really – right bought for it? have then some on So, doing with have HireQuest they’re is think programs,

Rick Hermanns

that’s exactly, are – on. No, Yes. you is that spot

Aaron Edelheit

Okay, so have you been would record… I growth, track a an remiss to you’ve credit speaking line, be of expanded

Rick Hermanns

reduced by it’s It’s the reduced. way, not it’s – actually, it’s

Aaron Edelheit

pay your account, I look Well don’t great okay. keenly I’m balance as more your cash you means as because receivable But have does your up, interested account you is guess flexible. here, my Oh, what down goes like? which look from like line weaken does better like understanding more advantage And economy the I’m demand, your position if correct, how opportunity are MRI? do where pipeline just companies puts credit a great balance think another in along you What your MRI. acquire with to does if cash sheet about taking towards you like? you free pipeline normal you see wise flow even And

Rick Hermanns

far more targets. or you because my admit every same pipeline, maybe buying really what what’s will the choosy are now. as we on it on fully we’re going is answer’s is being earnings versus quarter, the than rather multiples enough So I almost have as which as off of XXXX

be because bit probably pain, So, we more little aggressive. a we’re when that’s to being need some we’ll experience see people of careful,

we credit term, would the flow, to of it down, obviously, You a though Based revenues drives I saying our that move course, down of go of obviously ordinary have on it will like relatively down near right will future cash borrowings. and also our then, extent acquisitions our AR, down quickly. that that, to in are think as our earnings relatively which in the notwithstanding drives any line

generally inefficient it as have realizing I again, consistently now as and the as to think, – would adequate, the over in is. next four release, we’re on I and our well was is. line even it the really so far we but And significantly cash resources press three are And drop fairly as our position expect yet quarters, it’s right to

of think end let’s at at the quarter; at of $X say like the I in we million the cash sitting end even versus the $X million were year.

had lockbox just, was being really by of now the on because that So that, what probably our versus new we’ve, they instead million should [indiscernible] of borrowings clients normally anyway, Point were kind inflated least into they $X old been. lockbox. have paying at

just low like cash would it’s keep I the to. we like as So said, as balances to harder normally anyway,

lack unless bag whale. is All a actual that, see resources don’t any were that to of being said able I we

Aaron Edelheit

very great up Thank work. you and much the keep

Rick Hermanns

you. Thank

Operator

management I’m back in much. any over be Thank for you appears very going There to queue. hand to no questions closing to remarks. the further

Rick Hermanns

to are there out momentous we want towards. was was previously, bigger. working bigger we entity and therefore listening Admittedly in. – of on are are that agree what I and some ways the little that opportunities the HireQuest that took you a there that that are lot I for opportunities in in the investments that everybody quarter thank hope represented an again, almost XX% Well, of will

I do you as for through go joining the success to want you anyway, thank XXXX. And very forward Thank we look much. us. to But continuing

Operator

conference. everybody. This Thank you, does conclude today’s

your participation. You lines of for phone wonderful the and your this day. at may a you Thank rest disconnect time have

HireQuest (HQI) 11 May 232023 Q1 Earnings call transcript