管理層發言
Good afternoon, and welcome to the HireQuest Inc. Second Quarter 2026 Earnings Conference Call. At this time, all participants have been placed on mute for the presentation. It is now my pleasure to turn the floor over to your host, Jen Belladeau from INF Investor Relations. Jen, the floor is yours. Thank you.
I would like to welcome everybody to the call today. Hosting the call are HireQuest CEO, Richard F. Hermanns, and CFO, C. David Hartley. I will now take a moment to read the safe harbor statement. This conference call contains forward-looking statements as defined within Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements and terms such as anticipate, expect, intend, may, will, should or other comparable terms involve uncertainties because they relate to events and depend on circumstances that will occur in the future. Those statements include statements regarding the intent, belief, or current expectations of HireQuest and members of its management, as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those described in HireQuest's periodic reports filed with the SEC, and that actual results may differ materially from those contemplated by such forward-looking statements. Except as required by federal securities law, HireQuest undertakes no obligation to update or revise forward-looking statements to reflect changed conditions. Now I would like to turn the call over to the CEO of HireQuest, Richard F. Hermanns. Please go ahead, Rick.
Good afternoon, and thank you for joining our call today. In the second quarter, we continued to see improving demand for temporary staffing services as the market stabilizes and employers begin to prioritize hiring again. Leading up to Q2, we saw what I described as tentative green shoots in demand over the last few quarters, but with no real traction to speak of until the second half of the first quarter of this year when we started to see consistent demand in favorable weekly year-over-year comparisons across the business. As you can see in our results, these comps were even more favorable in Q2 as we drove year-over-year revenue growth for the first time since the third quarter of 2024. And frankly, the latter part of the second quarter was better than the start. Dave will take a deeper dive into the financials, but moving down the P&L at a high level, the increased revenue in the quarter combined with disciplined expense management generated significantly improved GAAP profitability and earnings for our shareholders. We operate in an industry where a rising tide tends to lift all ships, with macro factors like interest rates and the political landscape weighing heavily upon employers' decisions to hire, downsize, or even freeze their efforts altogether. The latter is what we have seen for the better part of the last two years. So far this year, there have been three primary factors enabling our growth. First, we are seeing the benefits from the immigration policies enacted at the beginning of 2025. Second, our franchisees have taken advantage of the uptick in the manufacturing labor market, especially our Snelling franchisees who grew their top line by almost 15%. And third, as I mentioned on last quarter's call, we are seeing a return on the investments we have made in our national accounts program. So while the industry is up as a whole, we continue to stand out from the pack thanks to our differentiated franchise staffing model which allows us to be nimble and flexible regardless of market trends. I would like to highlight that we remained profitable throughout the duration of this market downturn. In fact, we have reported GAAP profitability in each quarter since the third quarter of 2020, when we recognized a one-time noncash impairment charge of $6.4 million related to our acquisition of MRI Network, which flowed down to our bottom line. On a non-GAAP basis, we have never reported a loss. With that background, you can see how exciting a stabilizing market is for our business after more than two years of uncertainty. We are well positioned with a proven model, increasing demand, a strong balance sheet, and no debt. There is work still to be done, and the market has a long way to go before it returns to previous levels. That being said, we are encouraged by what we are seeing in both our business and in the broader staffing market, and with our visibility today, we believe that we are in a stronger place to deliver positive results through the balance of 2026. With that, I will turn the call now to Dave to provide a closer look at our second quarter financial results.
Thank you, Rick, and good afternoon, everyone. I appreciate you all joining us today. I will now provide a summary of our second quarter results. Total revenue in the second quarter of 2026 was $8.1 million compared with revenue of $7.6 million in the prior year, an increase of 6%, which is especially impressive when you take into account that the second quarter of 2025 included $690 thousand in total revenue related to the MRI Network assets we divested at the beginning of the year. So pro forma for the divestiture, total revenue was up 16.6% in the second quarter. As a quick refresher for all of you on the call, our total revenue is made up of two components: franchise royalties, which is our primary source of revenue, and service revenue, which is generated from certain services and interest charged to our franchisees, as well as other miscellaneous revenue. Royalties were $7.6 million compared to $7.3 million for the same quarter last year, an increase of 4.1%. Pro forma for the divestiture, franchise royalties were up 13.8%. Underlying franchise royalties are system-wide sales, which are not part of our revenue but are a helpful contextual performance indicator. System-wide sales reflect sales at all offices, including those classified as discontinued. System-wide sales in the second quarter were $117.8 million compared with $125.9 million in the second quarter of 2025. Divested MRI Network assets contributed roughly $17.7 million in Q2 2025, which translates to pro forma growth in this quarter of 6.9%. Service revenue in the second quarter was $513 thousand compared with $354 thousand last year. Selling, general and administrative expenses in the second quarter were $4.0 million compared to $5.9 million in the second quarter of 2025. Included in SG&A expenses is workers' compensation expense, which totaled $39 thousand for the second quarter of 2026 compared with $127 thousand in Q2 2025. For Q2 2026, core SG&A, which excludes the impact of workers' comp and any nonrecurring operating expenses, was $3.8 million compared to $4.7 million last year. Q2 of 2025 included approximately $633 thousand in SG&A expenses related to the divested MRI Network assets. We provide a table in the press release issued earlier this afternoon with a detailed reconciliation of core SG&A to SG&A, along with tables for non-GAAP profitability metrics, net income to adjusted net income, and net income to adjusted EBITDA, which I will discuss shortly. Net income after tax was $2.7 million in the second quarter, or $0.19 per diluted share, compared to net income of $1.1 million or $0.08 per diluted share last year. Adjusted net income for the second quarter was $3.2 million or $0.23 per diluted share compared to adjusted net income of $2.1 million or $0.15 per diluted share last year. Adjusted EBITDA was $4.6 million in the second quarter, compared to $3.3 million last year. Given the size of noncash operating expenses running through our P&L, we believe adjusted EBITDA and adjusted net income are both relevant metrics for us. Moving on now to the balance sheet: our total assets as of June 30, 2026, were $93.4 million compared to $88.2 million at December 31, 2025. Current assets included $1.6 million in cash and $48.9 million of net accounts receivable, while current assets at 2025 year end included $3.9 million of cash and $39.3 million of net accounts receivable. Working capital was $35.1 million as of June 30, 2026, compared with $33.0 million at 2025 year end. As of June 30, 2026, we had $41.0 million in availability on our credit facility, assuming continued credit covenant compliance. We have paid a regular quarterly dividend since the third quarter of 2020. Most recently, we paid a $0.06 per common share dividend on June 15, 2026, to shareholders of record as of June 1. We expect to continue to pay a dividend each quarter subject to the Board's discretion. With that, I will turn the call back over to Rick for some closing comments.
Thank you, Dave. As always, I would like to thank our employees and franchisees for their hard work and commitment. We look forward to speaking with you again when we report our third quarter results in November. With that, we can now open the line to questions. Thank you.
分析師問答
Thank you. Ladies and gentlemen, the floor is now open for questions. If you wish, press *1 on your telephone keypad. We do ask if you are listening on speaker equipment that you pick up your handset while asking your question to provide optimal sound quality. Once again, please press *1 on your telephone keypad at this time if you wish to join the queue to ask a question. Please hold a moment while we poll for questions. And the first question today is coming from Mike Baker with D.A. Davidson. Mike, your line is live. Please go ahead.
Great. Thanks. Couple of questions. One, if you're willing to answer it: you said the run rate was better towards the end of the quarter than the beginning. Any quantification of that? What are you running at, let's say, in the last month of the second quarter?
We started the quarter running year-over-year maybe 2% to 4% ahead of the prior year comparisons. By the end of the quarter, we were running upwards of 12% to 13% in some weeks, more than the prior year comparison.
And does that include or exclude MRI in the base last year?
That comparison is really of our ongoing operations, primarily HireQuest Direct and Snelling. Through December, we'll have an unfairly favorable comparison because MRI royalties were included in the prior year.
So that is a pretty big ramp up. I know you do not give guidance, but would it be unfair to expect that kind of growth to continue for the rest of the year? Or are there other factors to consider when we think about the forward model?
Again, you are right that we do not provide guidance. All I can say, similar to last quarter, is that we are already six weeks into this third quarter, and we have held the growth from the second half of the second quarter.
Okay. That is a pretty big turnaround. Besides really beating on the top line relative to my model, you came in well ahead on the expense line — $4.0 million including workers' comp or $3.8 million excluding it — more than it has been in a while. How should we think about expenses going forward? What have you done to lower expenses, and will you need to add back expenses as revenues start to ramp?
One factor not in our prepared remarks is that the second quarter of last year had an enormous amount of legal fees related to the attempted takeover of TrueBlue, and that created part of the favorability this quarter. Beyond that, there were no silver bullets; it's not that we bought some AI or made a single dramatic cut. Mostly, we're getting some restoration of our operating leverage that we lost over the last three years in a kind of a flat market, so we are regaining economies of scale. There was also some bleed-over benefit from the MRI divestiture, where we were able to eliminate some costs. But again, mostly it's scale that is working for us right now.
Understood. I will turn it over to others. Thanks.
Thank you. Your next question is coming from Kevin Steinke from Barrington Research. Kevin, your line is live. Please go ahead.
Great. Thank you. In your prepared comments, you mentioned that the visibility you have today gives you confidence in the outlook for the second half of 2026. What sort of visibility indicators are you able to draw from the business? How far out do those go, and can you add any more comments around that visibility?
There are three things I would highlight. Number one, we are obviously six weeks into a 13-week quarter, and business has been strong already, so it is not a big leap of faith to say things are looking good for Q3. Number two, our pipeline, especially from our national accounts group, is robust. We have a number of very attractive opportunities, and in many cases we are waiting to hear back from prospective clients rather than desperately chasing existing ones. Number three, the overall staffing market is showing a clear movement back toward temporary staffing; firms that report are showing similar trends. So it's not just that our national accounts team is having more wins — there are simply more opportunities out there. As far as how long that will extend, I am not going to predict Q4 or next year; the last several years have taught us that we are a product of the industry, which in turn is affected by immigration and the economy.
That is helpful. You mentioned the national accounts program and some investments you've made there. Can you talk about the momentum in national accounts? I know you have added people and better ways to penetrate these accounts and to service them after you win them. You mentioned the pipeline is good; I'd like more detail on the benefits you're seeing from those efforts.
Absolutely. There are a few components. First, a lot of large projects are coming out of the ground — whether data centers or reshoring of factories — and these require sophisticated sales processes, which is part of why we invested in national accounts. Second, we found opportunities that were not being fully captured, so we've been more aggressive in working with franchisees to ensure those opportunities are taken. Third, we launched an app that allows us to recruit more effectively electronically rather than relying solely on branches. That lets us take business in places where we do not have a branch. For example, we have a large account in upstate New York that historically we would not have gone after, and now a couple of our franchisees — even if they are not local — can staff it. It is a short-term project, maybe six weeks, but it could be 100 people a day for six weeks. We've had a number of accounts like that, and our national accounts team has been scoring meaningful wins.
You mentioned reshoring of factories and data centers. Others in the staffing industry have noted reshoring as well. Is reshoring providing a real tailwind for your industry and business now?
I think the answer is yes, but with nuance. The application of greater technologies is also reducing some manufacturing jobs, but reshoring is restoring jobs that might otherwise have been lost. I am not saying it's a massive tailwind that is sweeping everyone forward, but it is recovering work that would otherwise be gone. Also, there has been a contraction in the supply of labor, which is bringing back clients who, for the last three to five years, have not used much from the staffing industry. That contraction in labor supply is making a difference as well.
Right. So that contraction in supply is related to the immigration point you mentioned earlier, correct?
Correct.
Okay. Lastly, you mentioned manufacturing as a key driver. Should we tie that mainly to data centers and reshoring, or are there other industry or geographic pockets where you're seeing benefits from manufacturing activity?
We have seen fairly diverse growth. Texas stands out as a spot where we are doing particularly well, but the growth is broad rather than concentrated. Honestly, data centers haven't helped us as much as reshoring and the general return to temporary staffing by a number of companies. Also, the unsettled environment around tariffs over the last year has become baked into decisions, and that has helped us as well.
Right. That makes sense. I appreciate all the color, and congratulations on the strong results. I'll turn it back over. Thanks.
Thank you. This does conclude today's Q&A session. I would now like to pass the floor back to Rick Hermanns for closing remarks.
Thank you again, everybody, for joining us for the presentation of our second quarter results. We certainly hope you will agree with us that it was a very promising quarter and one that is more of a harbinger of things to come in the near future. We are very grateful for the hard efforts of our employees and our franchisees, and we look forward to presenting our Q3 results in November. Thank you, and have a good day.
Thank you. This does conclude today's conference call. You may disconnect your lines at this time, and have a wonderful day. Thank you once again for your participation.