HireQuest (HQI) Q3 2024 earnings summary

Executive summary

• Q3 2024 total revenue increased 1.6% year-over-year to $9.4 million, with 8.5% sequential growth from Q2 2024 as the staffing market stabilized.

• Net loss for Q3 2024 was $2.2 million, compared to net income of $1.5 million in Q3 2023, driven by a $6.0 million non-cash impairment charge related to MRI Network assets.

• Adjusted net income rose 29% year-over-year to $2.8 million, excluding the impairment charge.

• Adjusted EBITDA for Q3 2024 was $4.9 million (52% margin), up from $3.7 million (40% margin) year-over-year; four-year adjusted EBITDA CAGR was 12.6% from 2019 to 2023.

• The TEC acquisition expanded the franchise base and presence in Arkansas, with immediate re-franchising of acquired assets.

Financial highlights

• Franchise royalties for Q3 2024 were $9.0 million, up 0.9% year-over-year; service revenue increased to $428,000 from $366,000.

• SG&A expenses decreased 15.3% year-over-year to $5.4 million, driven by a 67% reduction in workers' compensation expense.

• Adjusted EBITDA for Q3 2024 was $4.9 million, up from $3.7 million in Q3 2023; year-to-date adjusted EBITDA was $12.3 million, nearly flat year-over-year.

• Net loss after tax was $2.2 million (loss of $0.16 per diluted share) versus net income of $1.5 million ($0.11 per share) in Q3 2023, due to the impairment charge.

• Year-to-date 2024 net income was $1.5 million, with adjusted net income flat at $7.3 million compared to the prior year.

Outlook and guidance

• Management anticipates improved results as staffing demand stabilizes, with optimism for both temporary and permanent staffing markets.

• Expecting to absorb 5–10% sales growth with flat headcount, though wage inflation may increase payroll expenses.

• Current liquidity, cash flow, and credit capacity are considered sufficient for operational and capital needs for at least the next 12 months.

• Management expects continued pressure in the MRI segment due to ongoing weakness in staffing and recruiting sectors.