HireQuest, Inc.

Good afternoon, ladies and gentlemen, and welcome to today's HireQuest, Inc., third quarter 2022 earnings conference call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, John Nesbitt of IMS Investor Relations. John, the floor is yours.

Thank you, and good afternoon. I'd like to welcome everyone to the call. Hosting the call today are HireQuest CEO Rick Hermans and Chief Financial Officer David Burnett. I'd like to take a moment to read the safe harbor statement. This conference call contains forward-looking statements as defined within Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. These forward-looking statements in terms such as anticipate, expect, intend, may, will, should, and other comparable terms involve risks and uncertainties because they relate to events and dependent circumstances that will occur in the future. Those statements include statements regarding the intent, belief, or current expectations of our request and members of its management, as well as the assumptions in which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those described in HireQuest periodic reports filed with the SEC, and that actual results may differ materially from those contemplated by such forward-looking statements. Except as required by federal securities law, HireQuest undertakes no obligation to update or revise forward-looking statements to reflect change conditions. I would now like to turn the call over to CEO of HireQuest, Rick Hermans. Go ahead, Rick.

Thank you for joining us for today's call. To begin, I will provide an overview of the financial and strategic highlights for the quarter. Then David will share more details surrounding our third quarter results. This was a very strong quarter for us in which we saw continued revenue growth. Franchise royalties increased 13.7% to $7.4 million. Excluding acquisitions made in 2022, royalty growth was 7.3%. Staffing revenue from owned locations was $1.5 million. Gross profit increased 19.7% to $8.2 million compared to $6.9 million in the prior year period. And we continued to drive very strong profitability in the business with net income from continuing operations increasing 29.9% to $4.1 million or 30 cents per diluted share. We also reported adjusted EBITDA of $6.6 million, up from $5.3 million in the prior year period. I'd also like to point out that for the first nine months of 2022, we've reported adjusted EBITDA of $17.8 million, up 86% from $9.6 million for the first nine months of 2021. This growth really starts to demonstrate the magnitude and success of the growth strategy we're executing. Multiple factors drove our strong performance for the quarter. First, our franchise locations continue to perform well. A key component of our model is supporting our franchisees as they build out their own businesses. For example, our franchise expansion incentive program helps with startup costs by providing existing franchisees with credits on the royalty fees they pay for existing offices. Freeing franchises from financial constraints and giving them access to growth capital empowers their organic growth. We also eliminate two of the highest cost barriers for franchisee franchise expansion, capital and workers comp. Second, we continue to benefit. We continue to see the benefit of the strategic diversification of our geographical coverage and end markets. The three acquisitions we consummated in Q1 significantly advanced this strategy. We have substantially expanded our geographical and industry coverage and now have a foothold in a majority of all the segments of the $168 billion staffing and recruiting marketplace. Third, the current economic backdrop of rising wages and labor shortages continues to be a favorable demand factor for our franchisees in contrast to the experience of some others that our industry have reported. As we all know, interest rates and inflation continue to rise. By utilizing HireQuest, companies are reducing the costs of permanent hiring while gaining access to quality workers in a supply-constrained environment. Fourth, the team here has become quite adept at executing and integrating acquisitions. Our recent happy faces deal at the end of the quarter is an excellent example of our strategy to add new franchisees and locations and our flexibility to ensure the best and most aligned outcome for all parties. By joining forces with our existing Atlanta Snelling franchise, Happy Faces and its owner benefit from the strength and support that HireQuest brings to the Snelling franchise system while remaining an independent provider of staffing services. Happy Faces generated over $14 million in sales in 2021, and we're excited to help them in their next stage of growth as a Snelling franchisee. With that, I'll pass it on to our CFO, David Burnett, for a closer look at our third quarter results. David?