HireQuest (NASDAQ: HQI) reported Q4 EPS of $0.10, versus $0.26 reported last year. Revenue for the quarter came in at $3.4 million, versus $5.4 million reported last year.

Fourth Quarter 2020 Financial Summary

• Franchise royalties of $3.2 million compared to $5.4 million in the prior year period, a decrease of 40.2%.
• Services revenue, including interest paid on aging accounts receivable, of $176,000 compared to $476,000 in the prior year period, a decrease of 63.0%.
• Total revenue of $3.4 million compared to $5.9 million in the prior year period, a decrease of 42.0%.
• Net Income was $1.4 million, or $0.10 per diluted share, compared to net income of $3.5 million, or $0.26 per share last year.
• Paid quarterly cash dividend of $0.05 per share.

“As a result, we have been able to leverage the advantages of our business model and our balance sheet to grow our business through strategic acquisitions,” added Mr. Hermanns. “We recently closed the acquisition of Snelling Staffing, adding 38 franchised locations, 4 licensed locations, and integrating the 70-year-old tradename of Snelling. We also closed the acquisition of LINK Staffing, adding another 29 franchised and 6 licensed locations. In the aggregate, these two acquisitions add substantial scale. These franchised and licensed locations accounted for $133 million in system-wide sales in 2020 and meaningfully expand our national presence. Additionally, both Snelling and LINK specialize in traditional commercial staffing, giving us a second lucrative franchising revenue stream. Going forward, we will be able to sell franchises for both on-demand and commercial staffing models, while maintaining significant scale to create operational efficiency and facilitating the acquisition of national accounts to support our franchisees.”

“To further mitigate risk and take advantage of our scale, we divested the licensed locations, all in California, to a third party who has agreed to pay a perpetual royalty fee for the use of the Snelling and LINK trademarks,” added Mr. Hermanns. “Between this transaction, the sale of certain branches, the sale of $5.3 million of notes receivable, and the cash flow generated by these acquisitions, we have paid off our line of credit and are in a net cash-positive position again. Most importantly the company is well positioned to benefit from a post-pandemic return to economic normalcy. When that happens, and we don’t know when, we should experience tremendous earnings leverage with our expanded platform.”

“To further mitigate risk and take advantage of our scale, we divested four California locations acquired from Snelling and six locations acquired from Link to a third party who has agreed to pay a perpetual royalty fee to HireQuest for the use of the Snelling trademark,” added Mr. Hermanns. “Between this transaction, the sale of certain branches, the sale of $5.3 million of notes receivable, and the cash flow generated by these acquisitions, we have paid off our line of credit and are in a net cash-positive position again. Most importantly the company is well positioned to benefit from a post-pandemic return to economic normalcy. When that happens, and we don’t know when, we should experience tremendous earnings leverage with our expanded platform.”

For earnings history and earnings-related data on HireQuest (HQI) click here.