HireQuest, Inc. Q2 FY2025 earnings call

• Faced a challenging hiring environment for over 2 years with employers delaying hiring decisions in an uncertain macroeconomic climate. Manufacturing industry continued to contract for the fifth straight month. • Market for permanent placement and executive search solutions slow, especially in manufacturing and IT sectors; several MRI franchisees not renewing agreements impacted MRINetwork. • Temporary staffing and day labor offerings performed better than MRI but upper Midwest was weak. • Encouraged by enhanced immigration regulations enforcement as it creates a level playing field. • Acquisitions important in growth strategy, completed over $77 million of acquisitions in 6 years since merger with Command Center, well positioned with financial flexibility to pursue opportunities. • Built strong and flexible business model delivering strong margin performance and profitability, well positioned in markets served with recognized brands.

Total revenue for the second quarter of 2025 was $7.6 million, a decrease of 12% compared to $8.7 million in the same quarter last year. Franchise royalties for the second quarter were $7.3 million compared to $8.2 million in the same quarter last year. Service revenue was $354,000 for the second quarter compared to $479,000 in the second quarter last year. System-wide sales for the second quarter were $125.9 million compared to $146.1 million in the second quarter of 2024, with a sequential increase of 6%. Net income after tax was $1.1 million in the second quarter of 2025 or $0.08 per diluted share compared to net income of $2 million or earnings per diluted share of $0.15 in the second quarter of 2024. Adjusted net income for the quarter was $2.1 million or $0.15 per diluted share compared to adjusted net income of $2.5 million or $0.18 per diluted share in the second quarter of 2024. Adjusted EBITDA was $3.3 million compared to $4 million in the prior year period, with an adjusted EBITDA margin of 43% compared to 47% in the second quarter of 2024.

• Have dry powder for acquisitions and remain interested in pursuing a transaction with TrueBlue, also looking at other opportunities. • Expect to continue to pay a dividend each quarter subject to Board's discretion.

• Challenging hiring environment persisting for over 2 years with macroeconomic uncertainty. • Market for permanent placement and executive search slow, impact on MRINetwork due to franchisees not renewing. • Workers' compensation expense was a drag on earnings in previous years, though efforts achieved cost savings.

Q: Mike Baker asked about the acquisition of TrueBlue and the acquisition pipeline.

A: Rick Hermanns said they remain interested in pursuing a transaction with TrueBlue, have other leads, and have dry powder.

Q: Mike Baker asked about market share on system-wide sales.

A: Rick Hermanns said some MRI franchisees not renewing affected numbers, market share segment dependent, local economy and macroeconomic effects play a big role.

Q: Kevin Steinke asked about the overall environment and recent trends.

A: Rick Hermanns said May was worst, June came back a bit, not exceeding last year yet, saw data on deportations, and had a win with a food processing plant.

Q: Kevin Steinke asked about SG&A expense and cost actions.

A: Rick Hermanns said transaction costs were a large factor, mentioned impact from former CFO's salary.

Q: Kevin Steinke asked about workers' comp.

A: Rick Hermanns said target is to eliminate workers' comp expense, still room for improvement, made progress but still some lingering development.