HireQuest, Inc.

Greetings, and welcome to the HireQuest, Inc. fourth quarter and year-end 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I would now like to turn the conference over to your host, Jennifer Belladeau. You may begin.

Thank you, Callie. I would like to welcome everybody to the call. Hosting the call today are HireQuest CEO Rick Hermans and CFO David Burnett. Let me 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, or other comparable terms involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Those statements include statements regarding the intense belief or current expectations of HireQuest and members of its management, as well as the assumptions on which such statements are based. Respective 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's periodic reports follows 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 changed conditions. Let me now turn the call over to the CEO of HireQuest, Rick Herman. 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. And then David will share more details surrounding our fourth quarter results. We delivered strong top-line growth in the fourth quarter, driven primarily by our franchise royalties, which increased by 26.4% to $7.7 million. Total revenue also increased 23.1% to $8 million. Income from operations increased 68.4%. to $2.8 million and net income from continuing operations increased 21% to $2.6 million or 19 cents per basic and diluted share. Adjusted EBITDA for the fourth quarter was $4.4 million compared to $3.4 million in the fourth quarter of 2021, showcasing our ability to drive sustained profitability across our business. For the full year, We saw an increase in franchise royalties of 35.6% to $28.9 million compared to $21.3 million in 2021. Income from operations increased 109.6% to $16 million compared to $7.7 million in 2021. Our net income from continuing operations increased modestly to $12 million or 87 cents per basic and diluted share compared to $11.8 million or 88 cents a share per basic and 87 cents per diluted share in 2021, primarily related to acquisition costs that we incurred throughout 2022. However, adjusting for these acquisition-related charges and other non-cash expenses that we expect to recoup as we integrate and scale our acquisitions, we actually saw an increase in adjusted EBITDA of 78.9% to $22 million compared to $12.3 million in 2021. So as you can see, we believe we are well positioned to drive continued profitability in tandem with our strategy of making accretive acquisitions that complement the organic growth of our business. Speaking more on our acquisition strategy, in the fourth quarter, we announced and closed our acquisition of certain assets of MRI Network, the third largest recruiting network in the world, adding over 200 offices to our franchise network across the United States and internationally. MRI provides us with immediate scale in the executive recruiting and professional staffing segments of the market and is highly complimentary to our existing HireQuest Direct and Snelling offerings. We've made great progress in integrating MRI into our operations. However, there are certain transition items and associated expenses that we will be carrying through the first half of this year. In addition to MRI, we successfully grew our franchise base through three other acquisitions over the course of 2021. These transactions fall under our more common category where we acquire businesses with one or more offices and then resell them as franchises. As I've mentioned on previous calls, we've become quite efficient at executing and integrating acquisitions like these into our business and expect that they will continue to make up a majority of the transactions we complete going forward. Overall, we're very pleased with our fourth quarter and annual results and are encouraged by the progress we've made both organically and through our acquisition strategy throughout fiscal 2022. We remain intently focused on identifying accretive opportunities in the market that allow us to continue expanding our franchise network and brand offerings and complement the organic growth of our business. As we move through 2023, we believe we are well positioned for continued growth in the current uncertain economic environment as many businesses and organizations may opt to fill their staffing needs with temporary rather than permanent employees. Additionally, an uncertain economy could result in consolidation in our industry, providing acquisition opportunities. That said, nobody likes a recession. and we will remain watchful as the year unfolds. With that, I'll pass along to our CFO, David Burnett, who will provide a closer look at our fourth quarter and full year results. David?