HireQuest, Inc. Q1 FY2025 earnings call

• The broader staffing industry is impacted by macroeconomic headwinds causing hiring slowdowns, but HireQuest continues to achieve solid margins and profitability supported by its franchise model. - Expense management is a key focus, with SG&A expenses decreasing year-over-year. - The company has a strong M&A pipeline, positioning it to expand into new geographic regions and market verticals. - Enhanced immigration enforcement under the Trump administration is benefiting HireQuest as an E-Verify employer. - CFO transition: Steve Crane is retiring, and David Hartley, with extensive experience in acquisitions, will succeed him effective May 31.

Total revenue for the first quarter of 2025 was $7.5 million, a decrease of 11.2% compared to $8.4 million in the same quarter last year. Franchise royalties, the primary revenue source, were $7 million in the first quarter of 2025, down from $7.8 million in the same quarter of the prior year. Service revenue was $512,000 in the first quarter of 2025, compared to $588,000 in the year-ago period. System-wide sales for the first quarter were $118.4 million, down from $134 million in the first quarter of 2024.

• Expect to continue paying quarterly dividends subject to the Board's discretion. - The credit facility provides flexibility for short-term working capital needs and potential acquisitions.

• Macroeconomic headwinds continuing to impact hiring decisions. - Uncertainty around immigration policy changes and their impact on demand for staffing services. - Potential challenges in executing M&A deals, including price fluctuations and integration issues.

Q: Kevin Steinke asks about recent trends in the business, specifically post-macroeconomic headwinds and immigration policy impact.

A: Rick Hermanns responds that there's no dramatic shift since the second quarter began, but immigration enforcement is helping, with some clients returning due to stricter policies.

Q: Kevin asks about SG&A trend and cost management.

A: Rick explains timing differences in professional fees and a RIF (reduction in force) affected the first quarter SG&A, but progress on cost reduction continues.

Q: Kevin asks about M&A pipeline and confidence in deals.

A: Rick says the pipeline is strong, with more distressed opportunities at better price points due to prolonged muted demand.

Q: Kevin asks about CFO transition and corporate development backfill.

A: Rick mentions possibility of backfilling a deal sourcer, but not another VP of Corporate Development in the short term.