HireQuest, Inc. Q4 FY2024 earnings call

• The 2024 staffing industry was challenging, but HireQuest's franchise model drove profitable results in Q4 and full year.
• Fourth quarter 2024 had $8.1M total revenue and profitability; full year had $34.6M total revenue and $3.7M net income.
• Permanent placement and executive search (MRI network) was weak due to market slowdown; temporary staffing/day labor was affected by immigration policies but could benefit from enhanced enforcement.
• Cost reduction was a priority; SG&A decreased 22.7% in Q4 2024 and 12.4% full year, driven by reduced workers' compensation expense.
• Monitoring M&A opportunities to expand staffing footprint and offerings.

For the fourth quarter of 2024, total revenue was $8.1 million. Franchise royalties were $7.6 million, with system-wide sales of $134.8 million. Service revenue was $439,000. For the full year, total revenue was $34.6 million. Franchise royalties were $32.7 million, with system-wide sales of $563.6 million. Service revenue was $1.9 million. Franchise royalties contribute significantly as the primary revenue source, making up a large portion of the total revenue, while service revenue is a smaller component.

• Workers' compensation expense is expected to continue decreasing further in 2025.
• Monitoring the market for accretive M&A opportunities.
• Optimistic about future as HireQuest is positioned to benefit when permanent placement and executive search demand returns, though current market remains tricky.

• Uncertain economy and staffing headwinds negatively impact permanent placement and executive search.
• Workers' compensation expense fluctuations based on classifications, payroll, etc.
• Immigration policy changes affecting temporary staffing and day labor demand.

Q: Going back to third quarter 2024 conference call, what has changed on the demand front making the outlook more muted?

A: Comparative numbers softened in December, Christmas/New Year on Wednesday cost sales, tariff talk not helping, first quarter not improved much but started to improve again.

Q: Any industries/sectors seeing weakness in temporary staffing and day labor?

A: Construction leveled off, manufacturing and warehousing still weak; construction not offsetting declines in industrial sectors.

Q: How much room left for SG&A cuts if sales fall?

A: Can cut costs significantly if needed, IT is an area where cuts could be made without future damage, but currently not making cuts that harm future, and marketing spend is maintained for future value.