HIRE Technologies Achieves $27.7 Million in Revenue and Revenue Growth of 143%
ACCESS Newswire
12 min read
TORONTO, ON / ACCESSWIRE / May 2, 2022 / HIRE Technologies Inc. (TSXV:HIRE.V)(OTCQB:HIRRF) ("HIRE" or the "Company"), a company focused on modernizing and digitizing human resources solutions, announces its financial results for the quarter and year ended December 31, 2021. All financial figures are in Canadian dollars unless otherwise noted.
Record revenue of $27.7 million for the year, with year-over-year growth of $16.3 million, representing a 143% increase.
HIRE reported $8.1 million in revenue for the quarter ended December 31, 2021, marking HIRE's fifth consecutive quarter of sequential record revenues.
Organic growth1 of 32% for the year, surpassing the industry peer group2 by six points.
Gross margin of $12.2 million was 3.5x higher than the $3.4 million reported for 2020. Gross margin for the quarter was $4.0 million, 204% higher than the $1.3 million reported for the quarter ended December 31, 2020.
Adjusted EBITDA3 was $0.1 million for the year and $0.3 million for the quarter. EBITDA loss was $3.7 million for the year and $5.9 million for the quarter before normalizing adjustments.
Adjusted net loss4 was $21,588 for the quarter and $1.4 million for the year (adjusted net loss of $0.4 million for the quarter and $0.8 million for the year in 2020). Before normalizing adjustments, net loss for the quarter was $6.2 million ($4.8 million - December 31, 2020) and for the year was $5.4 million ($10.7 million - 2020).
"2021 was a watershed moment for HIRE as we scaled through successful acquisitions, drove organic growth, and achieved normalized profitability in our second year as a public company," said Simon Dealy, HIRE's Chief Executive Officer. "Our industry leading organic growth is a testament to the trust our clients place in us, as well as the unique value we unlock from our multi-brand acquisition approach. Client and candidate demand has never been greater, and HIRE has built a solid foundation from which to continue its strong growth performance. I want to express my gratitude to every one of our employees and managing directors across our portfolio of companies for their hard work, thoughtfulness, and contributions to our successful year."
2021 Financial Highlights
Revenue of $27.7 million with significant growth in both the on-occurrence permanent placements and executive search book (up $7.8 million year-over-year or 537%) and recurring contract book (up $8.5 million year-over-year or 85%).
Gross margin of 44%, a 14-point improvement over 2020 driven by a business mix evolving in-step with increasing client demand for permanent hiring. Higher proportionate on-occurrence permanent and executive search revenue relative to recurring contract revenue, 34% for 2021, up significantly versus 13% for 2020, was attributable to the Company's rebalanced portfolio as a result of acquisitions in the executive search space and organic growth in this segment (50% year-over-year for 2021).
HIRE reported positive adjusted EBITDA of $0.1 million for the year (adjusted EBITDA loss of $0.6 million in 2020).
This excluded the impact of a loss on revaluation of contingent remuneration of $3.5 million, transaction, restructuring, and non-operating items of $1.9 million, other earn-out obligations treated as contingent remuneration of $0.5 million, share based compensation of $0.2 million, net unrealized mark-to-market gains of $4.2 million, realized gains on convertible debenture derivatives of $0.4 million, impairment losses recognized on goodwill of $1.1 million tied to reduced short-term growth expectations in HIRE's technology product and the light industrial and health-care segments of the staffing business, and $1.3 million in losses on the revaluation of contingent consideration. Unadjusted EBITDA loss was $3.7 million for 2021 (EBITDA loss of $10.3 million in 2020).
Q4 Financial Highlights
Record quarterly revenue of $8.1 million ($3.3 million in Q4-2020) included $3.7 million from acquisitions with 76% of this coming from outside of Ontario.
Gross margin was 49% for the quarter versus 39% for the comparable quarter in 2020. While the recurring contract book, at $4.8 million for the quarter ended December 31, 2021, was up 84% or $2.2 million as compared to the fourth quarter of 2020, cost of services as a percentage of recurring contract revenue increased by seven points to 85% from 78% a year earlier, a function of wage rates continuing to increase as it becomes more expensive to fill exceptional client demand in the IT, light industrial, and heath care sectors under current labour market conditions.
Adjusted EBITDA was $0.3 million for the fourth quarter, much improved over the $0.3 million adjusted EBITDA loss posted in the fourth quarter of 2020.
This excluded the impact of a loss on revaluation of contingent remuneration of $3.5 million, transaction, restructuring, and non-operating items of $0.9 million, other earn-out obligations treated as contingent remuneration of $0.2 million, share based compensation of $0.1 million, net mark-to-market gains of $0.8 million, impairment losses recognized on goodwill of $1.1 million, and $1.3 million in losses on the revaluation of contingent consideration. Unadjusted EBITDA loss was $5.9 million for the quarter ended December 31, 2021 (EBITDA loss of $4.6 million in 2020).
Leadership Changes
HIRE announces the resignation of Eric Loree as Chief Legal Officer and Corporate Secretary effective May 13, 2022. Mr. Loree will continue with the Company as a consultant during the transition of his duties.
"Eric has been a key team member on all of our significant transactions from HIRE's inception including our public listing and through all of our portfolio company acquisitions since," said Mr. Dealy. "We thank Eric for his foundational contributions and we wish him well in the next phase of his career."
Outlook
HIRE expects market tail winds to continue to drive organic growth in the near-term, particularly in the high-margin on-occurrence and executive search book. This should mitigate tightening margins in the recurring contract book. This combined with HIRE's operating model delivering more synergies through scale and abundant acquisition opportunities in both the staffing and technology spaces, HIRE will continue to focus on driving peer group leading growth in 2022.
Conference Call & Webcast Details
Date: Tuesday, May 3, 2022
Time: 12:00 PM Eastern Time / 9:00 AM Pacific Time
Dial-in: (+1) 416-764-8658 (Toronto local) or (+1) 888-886-7786 (Toll-Free, North America)
Please join 10 minutes before the start of the call.
A recording of the conference call will be made available on hire.company.
Selected Quarterly Information
Period ended
3 months ended
December 31, 2021
3 months ended
December 31, 2020
12 months ended
December 31, 2021
12 months ended
December 31, 2020
$
$
$
$
REVENUE
8,098,947
3,348,697
27,703,648
11,398,314
Cost of services
4,101,874
2,031,647
15,523,155
7,958,930
GROSS MARGIN
3,997,073
1,317,050
12,180,493
3,439,384
Gross margin
(% of revenue)
49%
39%
44%
30%
Operating expenses:
Selling, general and administrative
8,321,666
2,168,101
18,250,917
7,083,452
Amortization of intangible assets
242,697
52,416
741,414
126,120
Interest
140,369
70,657
479,589
132,637
Impairment loss on goodwill
1,065,000
-
1,065,000
-
Loss on revaluation of contingent consideration, net
1,311,621
-
1,311,621
-
OPERATING EXPENSES
11,081,363
2,291,174
21,848,541
7,342,209
Loss from operations
(7,084,280)
(974,124)
(9,668,048)
(3,902,825)
Realized gain on convertible debenture derivatives
-
-
423,815
-
Unrealized gains (loss) on mark-to-market, net
790,806
(3,762,304)
4,197,382
(6,798,442)
Income tax expense (recovery)
(58,733)
52,046
326,352
14,955
NET INCOME (LOSS)
(6,234,741)
(4,788,474)
(5,373,203)
(10,716,222)
Basic earnings (loss) per share
(0.07)
(0.10)
(0.08)
(0.22)
Weighted number of shares
83,617,637
50,082,480
68,293,875
48,591,463
EBITDA and Adjusted EBITDA Reconciliation
Period ended
3 months ended
December 31, 2021
3 months ended
December 31, 2020
12 months ended
December 31, 2021
12 months ended
December 31, 2020
$
$
$
$
NET LOSS
(6,234,741)
(4,788,474)
(5,373,203)
(10,716,222)
Interest
140,369
70,657
479,589
132,637
Amortization
242,697
52,416
741,414
126,120
Depreciation
49,039
5,887
167,609
153,222
Tax
(58,733)
52,046
326,352
14,955
EBITDA (LOSS)
(5,861,369)
(4,607,468)
(3,658,239)
(10,289,288)
Add:
Restructuring & non-operating items
875,148
545,201
1,915,002
2,722,552
Realized (gain) loss on convertible debenture derivatives
-
-
(423,815)
-
Unrealized (gain) loss on mark-to-market, net
(790,806)
3,762,304
(4,197,382)
6,798,442
Future contingent remuneration from acquisitions
3,671,472
-
3,973,073
-
Share-based consideration
80,718
38,472
185,156
296,172
Impairment loss on goodwill
1,065,000
-
1,065,000
-
Loss on revaluation of contingent consideration, net
1,311,621
-
1,311,621
-
Rent expense
(25,731)
(26,548)
(99,569)
(106,192)
ADJUSTED EBITDA (LOSS)
326,053
(288,039)
70,847
(578,314)
Adjusted EBITDA (loss) as a % of revenue
4.0%
(8.6%)
0.3%
(5.1%)
Adjusted Net Income
Period ended
3 months ended
December 31, 2021
3 months ended
December 31, 2020
12 months ended
December 31, 2021
12 months ended
December 31, 2020
$
$
$
$
NET LOSS
(6,234,741)
(4,788,474)
(5,373,203)
(10,716,222)
Add:
Restructuring & other non-operating items
875,148
545,201
1,915,002
2,722,552
Realized (gain) loss on convertible debenture derivatives
-
-
(423,815)
-
Unrealized (gain) loss on mark-to-market, net
(790,806)
3,762,304
(4,197,382)
6,798,442
Future contingent remuneration from acquisitions
3,671,472
-
3,973,073
-
Share-based compensation expense
80,718
38,472
185,156
296,172
Impairment loss on goodwill
1,065,000
-
1,065,000
-
Loss on revaluation of contingent consideration, net
1,311,621
-
1,311,621
-
Non-recurring rent
-
-
124,418
113,000
ADJUSTED NET LOSS
(21,588)
(442,497)
(1,420,130)
(786,056)
Basic adjusted net income (loss) per share
(0.00)
(0.01)
(0.02)
(0.02)
Weighted number of shares
83,617,637
50,082,480
68,293,875
48,591,463
The Audit Committee of the Board of Directors of the Company reviewed this press release as well as the 2021 audited annual consolidated financial statements and related Management's Discussion and Analysis ("MD&A") and recommended they be approved by the Board. Following review by the full Board, the 2021 audited annual consolidated financial statements, MD&A, and the contents of this press release were approved.
This earnings press release should be read in conjunction with HIRE's condensed consolidated annual financial statements and MD&A, which have been posted on SEDAR at www.sedar.com.
Non-IFRS Measures and Footnotes
This news release refers to certain financial measures that are not defined by International Financial Reporting Standards ("IFRS"), including earnings before interest, taxes, depreciation, and amortization ("EBITDA"), adjusted earnings before interest, taxes, depreciation, and amortization ("adjusted EBITDA"), and adjusted net earnings (loss).
Percentage change in revenue for the period as compared to revenue from the same entities in the prior period irrespective of the acquisition date by HIRE.
Randstad N.V., Adecco Group, Robert Half International Inc., Upwork Inc., ManpowerGroup, Kforce, Inc., TrueBlue, Inc., Resources Connection, Inc., and The Caldwell Partners International Inc.
EBITDA and adjusted EBITDA are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. EBITDA is defined as net income (loss) adjusted to exclude interest, taxes, depreciation, and amortization. It provides management and investors with insight into HIRE's operating performance without the impact of significant accounting policies related to depreciation and amortization, financing, and taxes. Adjusted EBITDA is defined as EBITDA, excluding restructuring and other non-operating items, unrealized gains or losses on derivative financial instruments recognized as part of financings, other unrealized fair value through profit or loss mark-to-market gains or losses, goodwill impairment losses, earn-out payments treated as future contingent remuneration from acquisitions, and share-based compensation expenses. Adjusted EBITDA also includes rent payments, which are not accounted for in EBITDA following the adoption of IFRS 16 Leases. The Company believes that EBITDA and adjusted EBITDA are useful measures in evaluating the performance of the Company.
Adjusted net income (loss) is not a standardized financial measure under IFRS and might not be comparable to similar financial measures disclosed by other issuers. The Company defines adjusted net income (loss) as net income (loss) excluding restructuring and other non-operating items, unrealized gains or losses on derivative financial instruments recognized as part of financings, other unrealized fair value through profit or loss mark-to-market gains or losses, goodwill impairment losses, earn-out payments treated as future contingent remuneration from acquisitions, and share-based compensation expenses. The Company believes that adjusted net earnings (loss) is a meaningful metric for the Company and investors in assessing the Company's financial performance.
About HIRE Technologies Inc. HIRE is investing in and shaping the future of human resource management with a technology-first focus, by consolidating and modernizing the staffing marketplace. The Company is a disciplined capital allocator due to its technology DNA and extensive experience in building and growing staffing and executive search companies, providing a shared services platform to create value for partners and shareholders. HIRE has a large recurring revenue base and helps clients manage change in the workplace in order to achieve success. For more information, visit hire.company.
CONTACT: Simon Dealy Chief Executive Officer (647) 264-9196 sdealy@hire.company
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Forward Looking Information
This press release contains "forward-looking statements" or "forward-looking information" (collectively referred to hereafter as "forward-looking statements") within the meaning of applicable Canadian securities legislation.
All statements that address activities, events or developments that HIRE expects or anticipates will, or may, occur in the future, including statements about HIRE's future growth, business prospects, future trends, plans and strategies, expected benefits from business activities and the Company's prospects for completion of additional acquisitions, including those under the heading "Outlook" are forward-looking statements. In some cases, forward-looking statements are preceded by, followed by or include words such as "may", "will", "would", "could", "should", "believes", "estimates", "projects", "potential", "expects", "plans", "intends", "proposes", "anticipates", "targeted", "continues", "forecasts", "designed", "goal", or the negative of those words or other similar or comparable words. Although the management of HIRE believes that the assumptions made and the expectations represented by such statements are reasonable, including the continued favourable market conditions, there can be no assurance that a forward-looking statement herein will prove to be accurate. In making such forward looking statements, the Company has assumed that it be able to continue to complete acquisitions on terms favorable to the Company.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of HIRE to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Risks and uncertainties applicable to the Company, as well as trends identified by the Company affecting it and the staffing industry can be found in the Company's 2021 Annual MD&A and its continuous disclosure record available on SEDAR. Although HIRE has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, or intended.
Such cautionary statements qualify all forward-looking statements made in this press release. HIRE undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
