HireQuest, Inc.

Good afternoon, ladies and gentlemen, and welcome to the HireQuest, Inc. First Quarter 2021 Earnings Event. At this time, all participants have been placed on a listen-only mode, and the floor will be opened for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Brett Moss, with Hayden IR.

Sir, the floor is yours. Thank you, Operator. I would like to welcome everybody to the call. Hosting the call today are HireQuest CEO Rick Hermans and CFO Corey Smith. Please be aware that some of the comments made during our call today may include forward-looking statements within the meaning of federal securities laws. Statements about our beliefs and expectations contain words such as may, could, would, will, should, believe, expect, anticipate, and similar expressions constitute forward-looking statements. These statements involve risks and uncertainties regarding our operations and our future results that could cause higher quest results to differ materially from management's current expectations. We encourage you to review the safe harbor statements and risk factors contained in the company's earnings release and its files at the SEC, including without limitation the most recent annual report on Form 10-K and other periodic reports which identify specific risk factors that may also cause actual results or events to differ materially from those described in the forward-looking statements. Copies of the company's most recent reports on Form 10-K and 10-Q may be obtained on the company's website at higherquest.com or at the SEC's website, sec.gov. The company does not undertake to publicly update or revise any forward-looking statements after the call or date of this call. I would also like to remind everyone that this call will be available for replay through May 31st. A link to the replay on the website of the call was also provided in the earnings release and is available on the company's website at HireQuest.com. I would now like to tell the call to the CEO of HireQuest, Rick Hermans. Rick?

Thank you for joining us. As most of you know, on March 1st, we completed our acquisition of certain assets of Snelling, a 67-year-old staffing company headquartered in Richardson, Texas. On March 22nd, we completed our acquisition of the franchise relationships and certain other assets of Link, a family-owned staffing company headquartered in Houston, Texas. These two acquisitions significantly increase our scale and accelerate our entrance into the traditional commercial staffing model, giving us an additional franchising model to sell and additional revenue streams. We were able to complete these acquisitions at favorable terms due to the challenge our industry is experiencing due to the pandemic and our unique position as a franchisor. To be sure, these challenges have impacted us as well, resulting in lower system-wide sales and lower royalty revenues. It's been particularly challenging for our franchises, though they have responded admirably. But our model is structured to minimize the risk of events like these And while it has been challenging, others in our industry have fared much worse. As a result, we were able to take advantage of our balance sheet and our profitable business model and make these two highly strategic and accretive acquisitions. Because these were both completed late in the first quarter, the impact on our revenue and net income was minimal. However, $1.4 million in acquisition-related expenses have shown up in the first quarter, and we expect additional impact in the second quarter. Our efforts since closing these two acquisitions have focused on integrating the new franchisees and taking steps to de-risk the transactions, and we have made significant progress on both fronts. At this point, the operational integration of the new franchises is largely complete. Our franchisees and the corporate team put in substantial time and effort to accomplish this, and as a result, we don't have the financial or operational burden of running multiple systems. In our efforts to de-risk the transactions, first we assign the California-based franchise agreements of six linked franchises and one Snelling branch to a third party. This third party will serve as the franchisor and will pay HireQuest a royalty of 9% of the gross profit of the offices in perpetuity. This royalty revenue represents yet another lucrative low-risk revenue stream for us. We also sold the three remaining California Snelling branches to the same third party. These branches will also be part of the same royalty agreement in perpetuity once the buyer receives regulatory approval to franchise the offices. Finally, we sold four previously Snelling branches and one on-site location to a different third party for consideration of approximately $1 million cash. This was a straight sale. The result is that, after normal consolidation, we have added a net 64 locations to our portfolio, including 36 Snelling branches and 28 Link branches. The vast majority of these offices will operate as Snelling on a go-forward basis. We will see the full contribution of these branches in the second quarter, but our efforts continue to improve operations and efficiency at these acquired branches. As I stated previously, the two models, first, on-demand staffing, where we have historically excelled, and second, traditional commercial staffing, which is the historical model of Link and Snelling, are complementary. And they deliver several benefits for us, which include, one, they increase our national scale, making it easier to sell to national accounts and making our various trade names more recognizable. by adding commercial or weekly pay staffing models to our existing on-demand staffing operation significantly diversifies our approach. Three, we were able to meaningfully grow our system-wide sales that attract evaluations, taking advantage of the inherent leverage in our business model. Four, as it relates to Snelling, we acquired a 67-year-old brand name that is well regarded throughout the industry. Five, They enable us to efficiently leverage our corporate resources and our workers' compensation efforts, creating incremental profitability. Going forward, we will continue to evaluate additional strategic transactions, screening for fit within our existing business structure and solid economics that contribute to our financial results in a positive and meaningful way. Deploying a disciplined approach to M&A including taking steps to de-risk transactions as we have with the Snelling and Link transactions, we are focused on accretive opportunities that open to us new geographies and lines of business, strengthen the presence of our existing franchisees, or provide access to targeted national accounts. Before I turn over the call to Corey to discuss the financial results further, I wanted to mention that the Board of Directors has decided to increase our regular quarterly dividend. We will pay a $0.06 per share dividend on June 15 to shareholders of record on June 1. Our expectation is that we will continue to pay a 6% dividend quarterly going forward. With that, I'll turn the call over to Corey. Corey?