In This Article:
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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HireQuest Inc (NASDAQ:HQI) continues to achieve solid margins and profitability despite macroeconomic headwinds.
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The company is making progress on expense management goals, with consistent reductions in SG&A expenses year over year.
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HireQuest Inc (NASDAQ:HQI) has a strong M&A pipeline, which is a key part of their strategy for expansion into new geographic regions and market verticals.
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The company is well-positioned to benefit from increased demand due to enhanced immigration enforcement, as they comply with E-Verify regulations.
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The transition to a new CFO, David Hartley, is well-planned, with Hartley having extensive financial experience and a deep understanding of the business and staffing industry.
Negative Points
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Total revenue for the first quarter of 2025 decreased by 11.2% compared to the same quarter last year.
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Franchise royalties, the primary source of revenue, declined from $7.8 million to $7 million year over year.
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System-wide sales decreased from $134 million in the first quarter of 2024 to $118.4 million in the first quarter of 2025.
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Net income after tax decreased from $1.6 million in the first quarter of 2024 to $1.4 million in the first quarter of 2025.
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Adjusted EBITDA margin decreased from 40% in the first quarter of 2024 to 37% in the first quarter of 2025.
Q & A Highlights
Q: Can you provide insights into recent business trends, especially considering macroeconomic headwinds and tariff impacts? A: Rick Hermans, CEO: There hasn't been a dramatic shift since the second quarter began. The tariff standoffs haven't had a tangible impact yet, but they are causing hesitation among employers. We noticed some pickup towards the end of last year, but it has since stalled.
Q: How are stricter immigration policies affecting your business? A: Rick Hermans, CEO: Stricter immigration policies are positively impacting our business. We've seen clients returning and new business opportunities as employers are now more focused on hiring documented workers. This shift is reopening doors that were previously closed to us.
Q: Can you elaborate on the SG&A trends and cost management efforts? A: Rick Hermans, CEO: There were some anomalies in the first quarter, such as timing differences in professional fees and costs related to a minor reduction in force. These masked the improvements in SG&A. We are focused on cost management and expect improvements to be more visible in the second quarter.