8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 11, 2021

HIREQUEST, INC.

(Exact name of registrant as specified in its Charter)

Delaware	000-53088	91-2079472
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

111 Springhall Drive, Goose Creek, SC	29445
(Address of Principal Executive Offices)	(Zip Code)

(843) 723-7400

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.001 par value	HQI	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On November 11, 2021, HireQuest, Inc. (the "Company") issued a press release reporting its financial results for its quarter ended September 30, 2021, a copy of which is attached hereto as Exhibit 99.1.

Item 7.01 Regulation FD Disclosure.

Also on November 11, 2021, the Company announced that its Board of Directors had declared a quarterly cash dividend of $0.06 per share of common stock expected to be paid December 15, 2021 with a record date of December 1, 2021. This announcement is contained in the press release attached hereto as Exhibit 99.1.

The information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) is furnished pursuant to Item 2.02 and Item 7.01 and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"). In addition, the information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) shall not be deemed to have been incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference into such filing. The furnishing of this information hereby shall not be deemed an admission as to the materiality of such information.

The information in this report and in Exhibit 99.1 hereto may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other than statements of historical or current fact, are statements that could be deemed forward-looking statements, including, without limitation, statements relating to our declaration of quarterly dividends. Forward-looking statements are based on the current beliefs, assumptions, and expectations of management and current market conditions. There can be no assurance that future dividends will be declared, and the payment of this quarterly dividend is expressly conditioned on the Board not revoking the dividend before the payment date. The declaration of future dividends is subject to approval of the Board of Directors each quarter after its review of the Company's financial performance and cash needs. Declaration of future dividends is also subject to various risks and uncertainties, including: the Company's cash flow and cash needs; compliance with applicable law; restrictions on the payment of dividends under existing or future financing arrangements; changes in tax laws relating to corporate dividends; the deterioration in the Company's financial condition or results; and those risks, uncertainties, and other factors identified from time to time in the Company's filings with the Securities and Exchange Commission. 

Item 9.01 Financial Statements and Exhibits.  

Exhibit Index

Exhibit	Description
99.1	Press Release Dated November 11, 2021

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.

	HIREQUEST, INC.
	(Registrant)
Date: November 11, 2021		/s/ John McAnnar
		John McAnnar
		Vice President, Chief Legal Officer, and Secretary

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EX-99.1

EXHIBIT 99.1

HireQuest Reports Financial Results for the Third Quarter 2021

Q3 2021 EPS of $0.23 per Diluted Share, Net Income of $3.2 million, and Adjusted EBITDA of $5.3 million

GOOSE CREEK, South Carolina – November 11, 2021 – HireQuest, Inc. (Nasdaq: HQI), a national franchisor of on-demand, temporary, and commercial staffing services, today reported financial results for the third quarter ended September 30, 2021.

Third Quarter 2021 Summary

· Franchise royalties of $6.5 million compared to $3.2 million in the prior year period, an increase of 103.2%. Organic royalty revenue increased 52% over the prior year period and the branches acquired from Link and Snelling in the first quarter of 2021 comprised approximately $1.6 million of the revenue.

· Services revenue, including interest paid on aging accounts receivable, of $341,000 compared to $164,000 in the prior year period, an increase of 108.0%.

· Total revenue of $6.9 million compared to $3.4 million in the prior year period, an increase of 103.4%.

· Net Income, inclusive of miscellaneous income, was $3.2 million, or $0.23 per diluted share, compared to net income of $2.0 million, or $0.15 per share last year.

· Adjusted EBITDA of $5.3 million compared to $2.9 million in the prior year period.

Subsequent to Quarter End

· HireQuest acquired Recruit Media, Inc., an HR tech start-up with a next-gen SaaS recruitment platform.

· HireQuest announced it has entered into a definitive agreement to acquire the Dental Power Staffing division of Dental Power, a leading provider of temporary, long-term contract, and direct-hire staffing services to private sector dental practices across the United States.

· The Company’s Board of Directors declared a quarterly cash dividend of $0.06 per share of common stock to be paid on December 15, 2021 to shareholders of record as of December 1, 2021.

System-wide sales (a key performance indicator) for the third quarter of 2021 were $99.6 million compared to $55.6 million for the same period in 2020. The growth was due to a 22% increase in sales from existing franchisees as well as new sales from the acquired Snelling and Link networks.

“This past quarter was our strongest since the beginning of the pandemic,” commented Rick Hermanns, HireQuest’s President and Chief Executive Officer. “Organic growth from our legacy franchisees as well as the addition of the Snelling and Link locations acquired earlier in the year combined to drive system-wide sales to just shy of $100 million for the quarter. We were happy to see our organic weekly system-wide sales rebound to pre-pandemic 2019 levels by the end of the quarter compared to trailing 10% to 15% in June.”

“The acquisitions of Snelling and Link earlier this year have played an important part in growing overall profitability by adding scale in tandem with rebounding organic performance,” added Mr. Hermanns. “Furthermore, as Link and Snelling demonstrate we are able to quickly integrate acquisitions with minimal increases to corporate overhead. The operating leverage inherent in our asset-light model is just beginning to become evident. We continue to see opportunities to expand our offerings into other verticals, growing the total addressable market serviced by our franchise offerings. Our pending acquisition of Dental Power is just one example and will provide us with a strong base to build an offering in the dental staffing industry. We are excited about the possibilities for organic and acquisitive growth in this vertical and others.”

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Third Quarter 2021 Financial Results

The company’s total revenue is calculated by aggregating its revenue derived from franchise royalties and service revenue. Franchise royalties are the royalties earned from franchisees primarily on the basis of their sales to their customers. Service revenue consists of interest charged to franchisees on overdue accounts and other fees for optional services we provide our franchisees.

Franchise royalties in the third quarter of 2021 were $6.5 million compared to $3.2 million in the year-ago quarter. Organically, excluding the contribution from recently acquired Snelling and Link branches, franchise royalties increased 52%. Service revenue was $341,000 compared to $164,000 in the prior-year quarter, an increase of 108.0%. Total revenue in the third quarter of 2021 was $6.9 million compared to $3.4 million in the year-ago quarter, an increase of 103.4%.

Selling, general and administrative (“SG&A”) expenses in the third quarter of 2021 were $3.0 million compared to $1.4 million for the third quarter last year. Some items that contributed to the year-over-year increase included an additional $460 thousand in non-cash compensation as well as a non-recurring $307 thousand charge to notes receivable related to the sale of Command Center locations in California back in 2019.

Net Income in the third quarter of 2021 was $3.2 million, or $0.23 per diluted share, compared to net income of $2.0 million, or $0.15 per diluted share, in the third quarter last year.

Adjusted EBITDA in the third quarter of 2021 was $5.3 million compared to $2.9 million in the third quarter last year.

Balance Sheet and Capital Structure

Cash was $4.8 million as of September 30, 2021, compared to $13.7 million as of December 31, 2020. The decrease reflects the purchase price for recent acquisitions.

Total assets were $74.8 million as of September 30, 2021. Total liabilities were $29.6 million. 

On September 15, 2021, the company paid a quarterly cash dividend of $0.06 per share of common stock to shareholders of record as of September 1, 2021. The company intends to pay a $0.06 cash dividend on a quarterly basis, based on its business results and financial position.

Conference Call

HireQuest will hold a conference call to discuss its financial results.

Date:	Thursday, November 11, 2021
Time:	4:30 p.m. Eastern time
Toll-free dial-in number:	877-545-0523
International dial-in number:	973-528-0016

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Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

The conference call will be broadcast live and available for replay at https://www.webcaster4.com/Webcast/Page/2359/43398 and via the investor relations section of HireQuest’s website at www.hirequest.com.

A replay of the conference call will be available through November 25, 2021.

Toll Free: 877-481-4010

International: 919-882-2331

Replay Passcode: 43398

About HireQuest

HireQuest, Inc. is a nationwide franchisor that provides on-demand labor and commercial staffing solutions in the light industrial, blue-collar, and commercial segments of the staffing industry for HireQuest Direct, HireQuest, Snelling, and Link franchised offices across the United States. Through its national network of over 210 franchisee-owned offices in more than 35 states and the District of Columbia, HireQuest provides employment for approximately 60,000 individuals annually that work for thousands of customers in numerous industries including construction, light industrial, manufacturing, hospitality, clerical, medical, travel, and event services.    For more information, visit www.hirequest.com.

Important Cautions Regarding Forward-Looking Statements

This news release includes, and the company’s officers and other representatives may sometimes make or provide certain estimates and other forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act, including, among others, statements with respect to future economic conditions, future revenue or sales and the growth thereof; operating results; anticipated benefits of the acquisition of Snelling and/or Link, or the status of integration of those entities. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will,” and similar references to future periods.

While the company believes these statements are accurate, forward-looking statements are not historical facts and are inherently uncertain. They are based only on the company’s current beliefs, expectations, and assumptions regarding the future of its business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. The company cannot assure you that these expectations will occur, and its actual results may be significantly different. Therefore, you should not place undue reliance on these forward-looking statements. Important factors that may cause actual results to differ materially from those contemplated in any forward-looking statements made by the company include the following: the level of demand and financial performance of the temporary staffing industry; the financial performance of the company’s franchisees; changes in customer demand; the effects of any global pandemic including the impact of COVID-19; the relative success or failure of acquisitions and new franchised offerings; the extent to which the company is successful in gaining new long-term relationships with customers or retaining existing ones, and the level of service failures that could lead customers to use competitors’ services; significant investigative or legal proceedings including, without limitation, those brought about by the existing regulatory environment or changes in the regulations governing the temporary staffing industry and those arising from the action or inaction of the company’s franchisees and temporary employees; strategic actions, including acquisitions and dispositions and the company’s success in integrating acquired businesses including, without limitation, successful integration following the acquisitions of Snelling, Link, and Dental Power; disruptions to the company’s technology network including computer systems and software; natural events such as severe weather, fires, floods, and earthquakes, or man-made or other disruptions of the company’s operating systems; and the factors discussed in the “Risk Factors” section and elsewhere in the company’s most recent Annual Report on Form 10-K.

Any forward-looking statement made by the company or its management in this news release is based only on information currently available to the company and speaks only as of the date on which it is made. The company and its management disclaim any obligation to update or revise any forward-looking statement, whether written or oral, that may be made from time to time, based on the occurrence of future events, the receipt of new information, or otherwise, except as required by law.

Company Contact:	Investor Relations Contact:
HireQuest, Inc.	Hayden IR
Cory Smith, CFO	Brett Maas
(800) 835-6755	(646) 536-7331
Email: cssmith@hirequest.com	Email: brett@haydenir.com

-- Tables Follow –

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HireQuest, Inc.
Consolidated Statements of Operations
(unaudited)
	Three months ended
	September 30, 2021			September 30, 2020
Franchise royalties	$	6,540,125		$	3,218,606
Service revenue		341,258			164,074
Total revenue		6,881,383			3,382,680
Selling, general and administrative expenses		3,044,358			1,357,725
Depreciation and amortization		366,027			32,438
Income from operations		3,470,998			1,992,517
Other miscellaneous income		89,774			392,709
Interest and other financing expense		(41,943	)		(10,035	)
Net income before income taxes		3,518,829			2,375,191
Provision (benefit) for income taxes		324,638			404,058
Net income	$	3,194,191		$	1,971,133
Earnings per share
Basic	$	0.24		$	0.15
Diluted	$	0.23		$	0.15
Weighted average shares outstanding
Basic		13,482,303			13,573,086
Diluted		13,621,938			13,574,863

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HireQuest, Inc.
Consolidated Balance Sheets
	September 30, 2021			December 31, 2020
	(unaudited)
ASSETS
Current assets
Cash	$	4,789,400		$	13,667,434
Accounts receivable, net of allowance for doubtful accounts		38,433,759			21,344,499
Notes receivable		1,380,704			2,178,299
Prepaid expenses, deposits, and other assets		947,845			344,091
Prepaid workers' compensation		1,161,025			1,434,583
Total current assets		46,712,733			38,968,906
Property and equipment, net		3,848,260			3,193,379
Workers compensation claim payment deposit		947,650			623,452
Deferred tax asset		-			79,379
Franchise agreements, net		19,179,530			-
Other intangible assets, net		780,524			342,697
Other assets		357,944			-
Notes receivable, net of current portion and reserve		2,931,371			5,887,229
Total assets	$	74,758,012		$	49,095,042
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	537,193		$	457,490
Term loan payable		210,233			-
Other current liabilities		4,052,078			1,322,764
Accrued benefits and payroll taxes		2,078,659			743,431
Due to affiliates		95,959			67,398
Due to franchisees		7,305,952			3,228,777
Risk management incentive program liability		1,164,598			858,482
Workers' compensation claims liability		6,359,143			2,777,734
Total current liabilities		21,803,815			9,456,076
Workers' compensation claims liability, net of current portion		2,400,955			1,806,334
Deferred tax liability		511,238			-
Term loan payable, net of current portion		2,908,228			-
Franchisee deposits		2,012,026			1,468,359
Total liabilities		29,636,262			12,730,769
Commitments and contingencies (Note 8)
Stockholders' equity
Preferred stock - $0.001 par value, 1,000,000 shares authorized; none issued		-			-
Common stock - $0.001 par value, 30,000,000 shares authorized; 13,726,884 and 13,628,675 shares issued, respectively		13,727			13,629
Additional paid-in capital		30,231,201			28,811,389
Treasury stock, at cost - 33,092 shares		(146,465	)		(146,465	)
Retained earnings		15,023,287			7,685,720
Total stockholders' equity		45,121,750			36,364,273
Total liabilities and stockholders' equity	$	74,758,012		$	49,095,042

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HireQuest, Inc.
Reconciliation of Net Income to Adjusted EBITDA
(unaudited)
	Three months ended
	September 30, 2021		September 30, 2020
Net income	$	3,194,191	$	1,971,133
Interest expense		41,943		10,035
Provision for income taxes		324,638		404,058
Depreciation and amortization		366,027		32,438
Non-cash compensation		851,049		391,435
WOTC related costs		174,648		113,332
Non-recurring acquisition related charges, net		34,133		-
Non-recurring charge to notes receivable		307,440		-
Adjusted EBITDA	$	5,294,069	$	2,922,431

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XML

Cover	Nov. 11, 2021
Cover [Abstract]
Entity Registrant Name	HIREQUEST, INC.
Entity Central Index Key	0001140102
Document Type	8-K
Amendment Flag	false
Entity Emerging Growth Company	false
Document Period End Date	Nov. 11, 2021
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Entity Incorporation State Country Code	DE
Entity File Number	000-53088
Entity Tax Identification Number	91-2079472
Entity Address Address Line 1	111 Springhall Drive
Entity Address City Or Town	Goose Creek
Entity Address State Or Province	SC
Entity Address Postal Zip Code	29445
City Area Code	843
Local Phone Number	723-7400
Security 12b Title	Common Stock, $0.001 par value
Trading Symbol	HQI
Security Exchange Name	NASDAQ