Q2 2026 HireQuest Inc Earnings Call
Speaker #1: Good afternoon, and welcome to the HireQuest, Inc. second quarter 2026 earnings conference call. At this time, all participants have been placed in listen-only mode, and we will open the floor for your questions and comments after the presentation.
Operator: Good afternoon, and welcome to the HireQuest, Inc. Q2 2026 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, Jen Belodeau from IMS Investor Relations. Jen, the floor is yours.
Speaker #1: It is now my pleasure to turn the floor over to your host, Jen Bellado from IMF Investor Relations. Jen, the floor is yours.
Speaker #2: Thank you. I'd like to welcome everybody to the call today. Hosting the call are HireQuest CEO, Rick Hermanns, and CFO, David Hartley. I'll now take a moment to read the Safe Harbor statement.
Jen Beledo: Thank you. I'd like to welcome everybody to the call today. Hosting the call are HireQuest CEO, Rick Hermanns, and CFO, David Hartley. I'll now 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, 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 intent, belief, or current expectations of HireQuest and members of its management, as well as the assumptions on which such statements are based.
Jen Belodeau: Thank you. I'd like to welcome everybody to the call today. Hosting the call are HireQuest CEO, Rick Hermanns, and CFO, David Hartley. I'll now 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, 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 intent, belief, or current expectations of HireQuest and members of its management, as well as the assumptions on which such statements are based.
Speaker #2: 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.
Speaker #2: These forward-looking statements, and terms such as "anticipate," "expect," "intend," "may," "will," "should," or other comparable terms, involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future.
Speaker #2: Those statements include statements regarding the intent, belief, or current expectations of HireQuest and members of its management, as well as the assumptions on which such statements are based.
Speaker #2: 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's periodic reports filed with the SEC, and that actual results may differ materially from those contemplated by such forward-looking statements.
Jen Beledo: 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's 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 changed conditions. Now I'd like to turn the call over to the CEO of HireQuest, Rick Hermanns. Please go ahead, Rick.
Jen Belodeau: 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's 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 changed conditions. Now I'd like to turn the call over to the CEO of HireQuest, Rick Hermanns. Please go ahead, Rick.
Speaker #2: Except as required by Federal Securities Law, HireQuest undertakes no obligation to update or revise forward-looking statements to reflect changed conditions. Now, I'd like to turn the call over to the CEO of HireQuest, Rick Hermanns.
Speaker #2: Please go ahead, Rick.
Speaker #1: Good afternoon, and thank you for joining our call today. In the second quarter, we continued to see improving demand for temporary staffing services as the market stabilizes and employers begin to prioritize hiring again.
Rick Hermanns: Good afternoon, and thank you for joining our call today. In Q2, we continued to see improving demand for temporary staffing services as the market stabilizes and employers begin to prioritize hiring again. Leading up to Q2, we saw what I described as tentative green shoots in demand over the last few quarters, but with no real traction to speak of until the second half of Q1 of this year, when we started to see consistent demand and favorable weekly year-over-year comparisons across the business. As you can see in our results, these comps were even more favorable in Q2 as we drove year-over-year revenue growth for the first time since Q3 2024. Frankly, the latter part of Q2 was better than the start.
Rick Hermanns: Good afternoon, and thank you for joining our call today. In Q2, we continued to see improving demand for temporary staffing services as the market stabilizes and employers begin to prioritize hiring again. Leading up to Q2, we saw what I described as tentative green shoots in demand over the last few quarters, but with no real traction to speak of until the second half of Q1 of this year, when we started to see consistent demand and favorable weekly year-over-year comparisons across the business. As you can see in our results, these comps were even more favorable in Q2 as we drove year-over-year revenue growth for the first time since Q3 2024. Frankly, the latter part of Q2 was better than the start.
Speaker #1: Leading up to Q2, we saw what I described as tentative green shoots in demand over the last few quarters, but with no real traction to speak of until the second half of the first quarter of this year, when we started to see consistent demand in favorable weekly year-over-year comparisons across the business.
Speaker #1: As you can see in our results, these comps were even more favorable in Q2, as we drove year-over-year revenue growth for the first time since the third quarter of 2024. Frankly, the latter part of the second quarter was better than the start.
Speaker #1: David will take a deeper dive into the financials, but moving down the P&L at a high level, the increased revenue in the quarter combined with disciplined expense management generated significantly improved gap, profitability, and earnings for our shareholders.
Rick Hermanns: David will take a deeper dive into the financials, but moving down the P&L at a high level, the increased revenue in the quarter, combined with disciplined expense management, generated significantly improved GAAP profitability and earnings for our shareholders. We operate in an industry where a rising tide tends to lift all ships, with macro factors like interest rates and the political landscape weighing heavily upon the employers' decisions to hire, downsize, or even freeze their efforts altogether. The latter is what we are seeing for the better part of the last 2 years. So far this year, there have been three primary factors enabling our growth. First, we are seeing the benefits from the immigration policies enacted at the beginning of 2025. Second, our franchisees have taken advantage of the uptick in the manufacturing labor market, especially our Snelling franchisees, who grew their top line by almost 15%.
Rick Hermanns: David will take a deeper dive into the financials, but moving down the P&L at a high level, the increased revenue in the quarter, combined with disciplined expense management, generated significantly improved GAAP profitability and earnings for our shareholders. We operate in an industry where a rising tide tends to lift all ships, with macro factors like interest rates and the political landscape weighing heavily upon the employers' decisions to hire, downsize, or even freeze their efforts altogether. The latter is what we are seeing for the better part of the last two years. So far this year, there have been three primary factors enabling our growth. First, we are seeing the benefits from the immigration policies enacted at the beginning of 2025.
Speaker #1: We operate in an industry where a rising tide tends to lift all ships. With macro factors like interest rates and the political landscape, weighing heavily upon the employer's decisions to hire, downsize, or even freeze their efforts altogether.
Speaker #1: The latter is what we have been seeing for the better part of the last two years. So far this year, there have been three primary factors enabling our growth.
Speaker #1: First, we are seeing the benefits from the immigration policies enacted at the beginning of 2025. Second, our franchisees have taken advantage of the uptick in the manufacturing labor market, especially our Snelling franchisees, who grew their top line by almost 15%.
Rick Hermanns: Second, our franchisees have taken advantage of the uptick in the manufacturing labor market, especially our Snelling franchisees, who grew their top line by almost 15%. Third, as I mentioned on last quarter's call, we are seeing a return on the investments we've made in our national accounts program. So while the industry is up as a whole, we continue to stand out from the pack, thanks to our differentiated franchise staffing model, which allows us to be nimble and flexible regardless of the market trends. I'd like to highlight that we remain profitable throughout the duration of this market downturn. In fact, we've reported GAAP profitability in each quarter since Q3 2024, when we recognized a one-time non-cash impairment charge of $6.4 million related to our acquisition of MRINetwork, which flowed down to our bottom line.
Speaker #1: And third, as I mentioned on last quarter's call, we are seeing a return on the investments we've made in our national accounts program. So while the industry is up as a whole, we continue to stand out from the pack, thanks to our differentiated franchise staffing model, which allows us to be nimble and flexible regardless of the market trends.
Rick Hermanns: Third, as I mentioned on last quarter's call, we are seeing a return on the investments we've made in our national accounts program. So while the industry is up as a whole, we continue to stand out from the pack, thanks to our differentiated franchise staffing model, which allows us to be nimble and flexible regardless of the market trends. I'd like to highlight that we remain profitable throughout the duration of this market downturn. In fact, we've reported GAAP profitability in each quarter since Q3 2024, when we recognized a one-time non-cash impairment charge of $6.4 million related to our acquisition of MRINetwork, which flowed down to our bottom line. On a non-GAAP basis, we have never reported a loss. With that background, you can see how exciting a stabilizing market is for our business after 2-plus years of uncertainty.
Speaker #1: I'd like to highlight that we remain profitable throughout the duration of this market downturn. In fact, we've reported GAAP profitability in each quarter since the third quarter of '24, when we recognized a one-time, non-cash impairment charge of $6.4 million related to our acquisition of MRI Network, which flowed down to our bottom line.
Speaker #1: On a non-GAAP basis, we have never reported a loss. With that background, you can see how exciting a stabilizing market is for our business after two-plus years of uncertainty.
Rick Hermanns: On a non-GAAP basis, we have never reported a loss. With that background, you can see how exciting a stabilizing market is for our business after 2-plus years of uncertainty. We're well-positioned with a proven model, increasing demand, and a strong balance sheet, and no debt. There's work still to be done, and the market has a long way to go before it returns to previous levels. With that being said, we're encouraged by what we're seeing in both our business and in the broader staffing market. With our visibility today, we believe that we're in a stronger place to deliver positive results through the balance of 2026. With that, I'll turn over the call now to David to provide a closer look at our Q2 financial results.
Speaker #1: We're well-positioned with a proven model increasing demand and a strong balance sheet and no debt. There's work still to be done, and the market has a long way to go before it returns to previous levels.
Rick Hermanns: We're well-positioned with a proven model, increasing demand, and a strong balance sheet, and no debt. There's work still to be done, and the market has a long way to go before it returns to previous levels. With that being said, we're encouraged by what we're seeing in both our business and in the broader staffing market. With our visibility today, we believe that we're in a stronger place to deliver positive results through the balance of 2026. With that, I'll turn over the call now to David to provide a closer look at our Q2 financial results.
Speaker #1: With that being said, we're encouraged by what we're seeing in both our business and in the broader staffing market, and with our visibility today, we believe that we're in a stronger place to deliver positive results through the balance of 2026.
Speaker #1: With that, I'll turn the call over to David to provide a closer look at our second quarter financial results.
Speaker #3: Thank you, Rick, and good afternoon, everyone. I appreciate you all joining us today. I will now provide a summary of our second quarter results. Total revenue in the second quarter of 2026 was $8.1 million, compared with revenue of $7.6 million in the prior year.
David Hartley: Thank you, Rick, and good afternoon, everyone. Appreciate you all joining us today. I will now provide a summary of our Q2 results. Total revenue in Q2 2026 was $8.1 million, compared with revenue of $7.6 million in the prior year. An increase of 6%, which is especially impressive when you take into account that Q2 2025 included $690,000 of total revenue related to the MRINetwork assets we divested at the beginning of the year. So pro forma for the divestiture, total revenue was up 16.6% in Q2. As a quick refresher for all of you on the call, our total revenue is made up of two components: franchise royalties, which is our primary source of revenue, and service revenue, which is generated from certain services and interests charged to our franchisees, as well as other miscellaneous revenue.
David Hartley: Thank you, Rick, and good afternoon, everyone. Appreciate you all joining us today. I will now provide a summary of our Q2 results. Total revenue in Q2 2026 was $8.1 million, compared with revenue of $7.6 million in the prior year. An increase of 6%, which is especially impressive when you take into account that Q2 2025 included $690,000 of total revenue related to the MRINetwork assets we divested at the beginning of the year. So pro forma for the divestiture, total revenue was up 16.6% in Q2. As a quick refresher for all of you on the call, our total revenue is made up of two components: franchise royalties, which is our primary source of revenue, and service revenue, which is generated from certain services and interests charged to our franchisees, as well as other miscellaneous revenue.
Speaker #3: An increase of 6%, which is especially impressive when you take into account that the second quarter of 2025 included $690,000 of total revenue related to the MRI Network assets we divested at the beginning of the year.
Speaker #3: So, pro forma for the divestiture, total revenue was up 16.6% in the second quarter. As a quick refresher for all of you on the call, our total revenue is made up of two components.
Speaker #3: Franchise royalties, which are our primary source of revenue, and service revenue, which is generated from certain services and interest charged to our franchisees, as well as other miscellaneous revenue.
Speaker #3: Royalties were $7.6 million compared to $7.3 million for the same quarter last year, an increase of 4.1%. Pro forma for the divestiture, franchise royalties were up 13.8%.
David Hartley: Royalties were $7.6 million compared to $7.3 million for the same quarter last year, an increase of 4.1%. Pro forma for the divestiture, franchise royalties were up 13.8%. Underlying franchise royalties are system-wide sales, which are not part of our revenue but are a helpful contextual performance indicator. System-wide sales reflect sales at all offices, including those classified as discontinued. System-wide sales in Q2 were $117.8 million, compared with $125.9 million in Q2 2025. Divested MRINetwork assets contributed roughly $17.7 million in Q2 2025, which translates to pro forma growth in this quarter of 6.9%. Service revenue in Q2 was $513,000, compared with $354,000 last year. Selling general and administrative expenses in Q2 were $4 million, compared to $5.9 million in Q2 2025.
David Hartley: Royalties were $7.6 million compared to $7.3 million for the same quarter last year, an increase of 4.1%. Pro forma for the divestiture, franchise royalties were up 13.8%. Underlying franchise royalties are system-wide sales, which are not part of our revenue but are a helpful contextual performance indicator. System-wide sales reflect sales at all offices, including those classified as discontinued. System-wide sales in Q2 were $117.8 million, compared with $125.9 million in Q2 2025. Divested MRINetwork assets contributed roughly $17.7 million in Q2 2025, which translates to pro forma growth in this quarter of 6.9%. Service revenue in Q2 was $513,000, compared with $354,000 last year. Selling general and administrative expenses in Q2 were $4 million, compared to $5.9 million in Q2 2025.
Speaker #3: Underlying franchise royalties are system-wide sales, which are not part of our revenue but are a helpful contextual performance indicator. System-wide sales reflect sales at all offices, including those classified as discontinued.
Speaker #3: System-wide sales in the second quarter were $117.8 million compared with $125.9 million in the second quarter of 2025. Divested MRI Network assets contributed roughly $17.7 million in Q2 2025, which translates to pro forma growth in this quarter of $6.9%.
Speaker #3: Service revenue in the second quarter was $513,000, compared with $354,000 last year. Selling, general, and administrative expenses in the second quarter were $4 million, compared to $5.9 million in the second quarter of 2025.
Speaker #3: Included in SG&A expenses is workers' compensation expense, which totaled $39,000 for the second quarter of 2026, compared with $127,000 in Q2 2025. For Q2 2026, core SG&A, which excludes the impact of workers' comp and any non-recurring operating expenses, was $3.8 million, compared to $4.7 million last year.
David Hartley: Included in SG&A expenses is workers' compensation expense, which totaled $39,000 for Q2 2026, compared with $127,000 in Q2 2025. For Q2 2026, core SG&A, which excludes the impact of workers' comp and any non-recurring operating expenses, was $3.8 million, compared to $4.7 million last year. Q2 2025 included approximately $633,000 in SG&A expenses related to the divested MRINetwork assets. We provide a table in the press release issued earlier this afternoon with a detailed reconciliation of core SG&A to SG&A, along with tables for non-GAAP profitability metrics, net income to adjusted net income, and net income to adjusted EBITDA, which I'll discuss shortly. Net income after tax was $2.7 million in Q2, or $0.19 per diluted share, compared to net income of $1.1 million or $0.08 per diluted share last year.
David Hartley: Included in SG&A expenses is workers' compensation expense, which totaled $39,000 for Q2 2026, compared with $127,000 in Q2 2025. For Q2 2026, core SG&A, which excludes the impact of workers' comp and any non-recurring operating expenses, was $3.8 million, compared to $4.7 million last year. Q2 2025 included approximately $633,000 in SG&A expenses related to the divested MRINetwork assets. We provide a table in the press release issued earlier this afternoon with a detailed reconciliation of core SG&A to SG&A, along with tables for non-GAAP profitability metrics, net income to adjusted net income, and net income to adjusted EBITDA, which I'll discuss shortly. Net income after tax was $2.7 million in Q2, or $0.19 per diluted share, compared to net income of $1.1 million or $0.08 per diluted share last year.
Speaker #3: Q2 of 2025 included approximately $633,000 in SG&A expenses related to the divested MRI Network assets. We provide a table in the press release issued earlier this afternoon with a detailed reconciliation of core SG&A to SG&A, along with tables for non-GAAP profitability metrics, net income to adjusted net income, and net income to adjusted EBITDA, which I'll discuss shortly.
Speaker #3: Net income after tax was $2.7 million in the second quarter or $19 cents per diluted share, compared to net income of $1.1 million or $0.08 per diluted share last year.
Speaker #3: Adjusted net income for the second quarter was $3.2 million or $23 cents per diluted share, compared to adjusted net income of $2.1 million or $0.15 per diluted share last year.
David Hartley: Adjusted net income for Q2 was $3.2 million or $0.23 per diluted share, compared to adjusted net income of $2.1 million or $0.15 per diluted share last year. Adjusted EBITDA was $4.6 million in Q2, compared to $3.3 million last year. Given the size of non-cash operating expenses running through our P&L, we believe adjusted EBITDA and adjusted net income are both relevant metrics for us. Moving on now to the balance sheet. Our total assets as of 30 June 2026, were $93.4 million, compared to $88.2 million at 31 December 2025. Current assets included $1.6 million in cash and $48.9 million of net accounts receivable, while current assets at 2025 year-end included $3.9 million of cash and $39.3 million of net accounts receivable. Working capital was $35.1 million as of 30 June 2026, compared with $33 million at 2025 year-end.
David Hartley: Adjusted net income for Q2 was $3.2 million or $0.23 per diluted share, compared to adjusted net income of $2.1 million or $0.15 per diluted share last year. Adjusted EBITDA was $4.6 million in Q2, compared to $3.3 million last year. Given the size of non-cash operating expenses running through our P&L, we believe adjusted EBITDA and adjusted net income are both relevant metrics for us. Moving on now to the balance sheet. Our total assets as of 30 June 2026, were $93.4 million, compared to $88.2 million at 31 December 2025. Current assets included $1.6 million in cash and $48.9 million of net accounts receivable, while current assets at 2025 year-end included $3.9 million of cash and $39.3 million of net accounts receivable.
Speaker #3: And adjusted EBITDA was $4.6 million in the second quarter compared to $3.3 million last year. Given the size of non-cash operating expenses running through our P&L, we believe adjusted EBITDA and adjusted net income are both relevant metrics for us.
Speaker #3: Moving on now to the balance sheet, our total assets as of June 30, 2026 were $93.4 million compared to $88.2 million at December 31, 2025.
Speaker #3: Current assets included $1.6 million in cash and $48.9 million of net accounts receivable, while current assets at 2025 year-end included $3.9 million in cash and $39.3 million of net accounts receivable.
Speaker #3: Working capital was $35.1 million as of June 30, 2026, compared with $33 million at 2025 year-end. As of June 30, 2026, we had $41 million in availability on our credit facility, assuming continued covenant compliance.
David Hartley: Working capital was $35.1 million as of 30 June 2026, compared with $33 million at 2025 year-end. As of 30 June 2026, we had $41 million in availability on our credit facility, assuming continued covenant compliance. We have paid a regular quarterly dividend since Q3 2020. Most recently, we paid a $0.06 per common share dividend on 15 June 2026, to shareholders of record as of 1 June. We expect to continue to pay a dividend each quarter, subject to the board's discretion. With that, I will turn the call back over to Rick for some closing comments.
David Hartley: As of 30 June 2026, we had $41 million in availability on our credit facility, assuming continued covenant compliance. We have paid a regular quarterly dividend since Q3 2020. Most recently, we paid a $0.06 per common share dividend on 15 June 2026, to shareholders of record as of 1 June.
Speaker #3: We have paid a regular quarterly dividend since the third quarter of 2020. Most recently, we paid a $0.06 per common share dividend on June 15, 2026, to shareholders of record as of June 1.
Speaker #3: We expect to continue to pay a dividend each quarter, subject to the Board's discretion. With that, I will turn the call back over to Rick for some closing comments.
David Hartley: We expect to continue to pay a dividend each quarter, subject to the board's discretion. With that, I will turn the call back over to Rick for some closing comments.
Speaker #1: Thank you, David. As always, I would like to thank our employees and franchisees for their hard work and commitment, and we look forward to speaking with you again when we report our third quarter results in November.
Rick Hermanns: Thank you, David. As always, I would like to thank our employees and franchisees for their hard work and commitment, and we look forward to speaking with you again when we report our Q3 results in November. With that, we can now open the line to questions. Thank you.
Rick Hermanns: Thank you, David. As always, I would like to thank our employees and franchisees for their hard work and commitment, and we look forward to speaking with you again when we report our Q3 results in November. With that, we can now open the line to questions. Thank you.
Speaker #1: With that, we can now open the line to questions. Thank you.
Speaker #3: Thank you. Ladies and gentlemen, the floor is now open for questions. If you wish to join the queue to ask a question at this time, please press star 1 on your telephone keypad.
Operator: Thank you. Ladies and gentlemen, the floor is now open for questions. If you wish to join the queue to ask a question at this time, please press star one on your telephone keypad. We do ask, if listening on speaker equipment this afternoon, you pick up your handset while asking your question to provide optimal sound quality. Once again, please press star one on your telephone keypad at this time if you wish to join queue to ask a question. Please hold a moment while we poll for questions. The first question today is coming from Michael Baker with D.A. Davidson. Mike, your line is live. Please go ahead.
Operator: Thank you. Ladies and gentlemen, the floor is now open for questions. If you wish to join the queue to ask a question at this time, please press star one on your telephone keypad. We do ask, if listening on speaker equipment this afternoon, you pick up your handset while asking your question to provide optimal sound quality. Once again, please press star one on your telephone keypad at this time if you wish to join queue to ask a question. Please hold a moment while we poll for questions. The first question today is coming from Mike Baker with D.A. Davidson. Mike, your line is live. Please go ahead.
Speaker #3: We do ask that if you are listening on speaker equipment this afternoon, please pick up your handset while asking your question to provide optimal sound quality. Once again, please press star 1 on your telephone keypad at this time.
Speaker #3: If you wish to join the queue to ask a question, please hold a moment while we pull for questions. The first question today is coming from Mike Baker with D.A. Davidson.
Speaker #3: Mike, your line is live. Please go ahead.
Speaker #4: Great, thanks. A couple of questions. One, if you're willing to answer it: You said the run rate was better toward the end of the quarter than at the beginning. Any quantification of that?
Michael Baker: Great, thanks. Couple questions. One, if you are willing to answer it, you said the runway was better towards the end of the quarter than the beginning. Any quantification of that? What are you running at, let's say, in the last month of the Q2?
Mike Baker: Great, thanks. Couple questions. One, if you are willing to answer it, you said the runway was better towards the end of the quarter than the beginning. Any quantification of that? What are you running at, let's say, in the last month of the Q2?
Speaker #4: What are you running at, let's say, in the last month of the second quarter?
Speaker #1: So we started the quarter running year over year, we were running maybe 2 to 4 percent ahead of, let's say, the year-over-year comparisons. By the end, we were running upwards to 12, 13 percent in some weeks more than the prior year comparison.
Rick Hermanns: We started the quarter running, year-over-year, we were running maybe 2% to 4% ahead of, let's say, the year-over-year comparisons. By the end, we were running upwards to 12%, 13% in some weeks, more than the prior year comparison.
Rick Hermanns: We started the quarter running, year-over-year, we were running maybe 2% to 4% ahead of, let's say, the year-over-year comparisons. By the end, we were running upwards to 12%, 13% in some weeks, more than the prior year comparison.
Speaker #4: And does that just I could probably figure it out, but does that include or exclude MRI in the base last year?
Michael Baker: Does that, I could probably figure it out, but does that include or exclude MRI in the base last year?
Mike Baker: Does that, I could probably figure it out, but does that include or exclude MRI in the base last year?
Speaker #1: Well, yeah, no, no, no. I'm sorry. That's just comparing sort of our ongoing operations, really primarily HireQuest Direct and Snelling. Until December, we'll have that sort of unfavorable comparison because of the MRI royalties being included.
Rick Hermanns: Well, yeah, no. I am sorry. That is just comparing sort of our ongoing operations, really primarily HireQuest Direct and Snelling.
Rick Hermanns: Well, yeah, no. I am sorry. That is just comparing sort of our ongoing operations, really primarily HireQuest Direct and Snelling. Until December, we will have that sort of the unfavorable comparison because of the MRINetwork royalties being included.
Michael Baker: Got it.
Rick Hermanns: Until December, we will have that sort of the unfavorable comparison because of the MRINetwork royalties being included.
Speaker #4: Got it, got it. So that's a pretty big ramp-up. I don't know, you said we've seen that in some weeks. I know you don't give any kind of guidance or anything like that, but would it be unfair to expect that kind of growth to continue for the rest of the year, or are there other factors to consider when we think about our forward model?
Michael Baker: Got it. That is a pretty big ramp-up. I do not know, you said that we are seeing that in some weeks. I know you do not give any kind of guidance or anything like that, but would it be unfair to expect that kind of growth to continue for the rest of the year, or are there other factors to consider when we think about our forward model?
Mike Baker: Got it. That is a pretty big ramp-up. I do not know, you said that we are seeing that in some weeks. I know you do not give any kind of guidance or anything like that, but would it be unfair to expect that kind of growth to continue for the rest of the year, or are there other factors to consider when we think about our forward model?
Speaker #1: Yeah. I mean, look, again, you're right. We don't provide guidance. All I can say, which would go along the lines of last quarter already—what, six weeks—we're six weeks into the third quarter, and I would just say that we have held the growth from the second half of the second quarter.
Rick Hermanns: Yeah, look, again, you are right. We do not provide guidance. All I can say, which would go along the lines of last quarter, is, of course, because we are already, what, six weeks into this Q3, and I would just say that we have held the growth from the second half of the Q2. If that makes sense.
Rick Hermanns: Yeah, look, again, you are right. We do not provide guidance. All I can say, which would go along the lines of last quarter, is, of course, because we are already, what, six weeks into this Q3, and I would just say that we have held the growth from the second half of the Q2. If that makes sense.
Speaker #1: If that makes sense.
Speaker #4: Yeah. No, it does. Okay. Well, yeah, pretty big turnaround there. Besides really beating on the top line—at least relative to my model—you came in well ahead, in other words, lower on the expense line at $4 million if you include workers' comp, or whatever it was, $3.8 million excluding that. Lower than it’s been in a while.
Michael Baker: Yeah. No, it does. Well, that is pretty big turnaround there. Besides really beating on the top line, at least relative to my model, you came in well ahead, in other words, lower on the expense line at $4 million, if you include workers' comp or whatever it was, $3.8 million excluding that. Lower than it has been in a while. Again, how should we think about expenses going forward? What have you done to lower expenses, and do you need to add back expenses as revenues start to ramp here?
Mike Baker: Yeah. No, it does. Well, that is pretty big turnaround there. Besides really beating on the top line, at least relative to my model, you came in well ahead, in other words, lower on the expense line at $4 million, if you include workers' comp or whatever it was, $3.8 million excluding that. Lower than it has been in a while. Again, how should we think about expenses going forward? What have you done to lower expenses, and do you need to add back expenses as revenues start to ramp here?
Speaker #4: Again, how should we think about expenses going forward? What have you done to lower expenses, and do you need to add back expenses as revenues start to ramp here?
Speaker #1: Well, one of the things, and it wasn't really in our prepared remarks, but it wasn't in our prepared remarks, but the second quarter of last year, had an enormous amount of legal fees related to True Blue, the attempted the attempted takeover of True Blue.
Rick Hermanns: Well, one of the things, and it wasn't in our prepared remarks, but the Q2 of last year had an enormous amount of legal fees related to TrueBlue, the attempted takeover of TrueBlue. That created part of the favorability. Really, I'd love to say we had some silver bullets. We bought some AI or something. It's nothing like that. It's really just we're finally getting some restoration of our operating leverage that we lost over the last three years of a kind of a dead market. We're just regaining our economies of scale. I would also say is that, which has helped it as well, there's probably some bleed over as well from the MRI divestiture, even what we maybe saw as being part of MRI, where we were able to make a few extra cuts as well.
Rick Hermanns: Well, one of the things, and it wasn't in our prepared remarks, but the Q2 of last year had an enormous amount of legal fees related to TrueBlue, the attempted takeover of TrueBlue. That created part of the favorability. Really, I'd love to say we had some silver bullets. We bought some AI or something. It's nothing like that. It's really just we're finally getting some restoration of our operating leverage that we lost over the last three years of a kind of a dead market. We're just regaining our economies of scale. I would also say is that, which has helped it as well, there's probably some bleed over as well from the MRI divestiture, even what we maybe saw as being part of MRI, where we were able to make a few extra cuts as well.
Speaker #1: And so that created part of the favorability. But really, we didn't I'd love to say we had some silver bullets. We bought some AI or something.
Speaker #1: So it’s nothing like that. It’s really just that we’re finally getting some restoration of our operating leverage that we lost over the last three years of a kind of a dead market.
Speaker #1: And so we're just regaining our economies of scale. I would also say that what has helped as well is that there's probably some bleed-over from the MRI divestiture, even with what we maybe saw as being part of MRI, where we were able to make a few extra cuts as well.
Speaker #1: But again, mostly, it's just scale that's really working for us right now.
Rick Hermanns: But again, mostly it's just scale that's really working for us right now.
Rick Hermanns: But again, mostly it's just scale that's really working for us right now.
Speaker #4: Understood. I'll turn it over to others. Thanks.
Michael Baker: Understood. I'll turn it over to others. Thanks.
Mike Baker: Understood. I'll turn it over to others. Thanks.
Speaker #3: Thank you. Your next question is coming from Kevin Steinke from Barrington Research. Kevin, your line is live. Please go ahead.
Operator: Thank you. Your next question is coming from Kevin Steinke from Barrington Research. Kevin, your line is live. Please go ahead.
Operator: Thank you. Your next question is coming from Kevin Steinke from Barrington Research. Kevin, your line is live. Please go ahead.
Speaker #1: Great. Thank you. Also, in your prepared comments, you mentioned that the visibility you have today gives you confidence in the outlook for the second half of 2026.
Kevin Steinke: Great. Thank you. Also in your prepared comments, you mentioned that the visibility you have today gives you confidence in the outlook for H2 2026. Just kind of wondering what sort of visibility indicators you are able to draw from the business, how far out those go, and just any more comments around the visibility.
Kevin Steinke: Great. Thank you. Also in your prepared comments, you mentioned that the visibility you have today gives you confidence in the outlook for H2 2026. Just kind of wondering what sort of visibility indicators you are able to draw from the business, how far out those go, and just any more comments around the visibility.
Speaker #1: So, just kind of wondering what sort of visibility indicators you're able to draw from the business—how far out those go, and just any more comments around the visibility.
Speaker #2: Sure. So.
Rick Hermanns: Sure. Thanks, Kevin, for the question. There are three things I would say. Number one is, again, we are obviously six weeks into a 13-week quarter, and business has been strong already, so it is not a big leap of faith to say things are looking great for Q3. That said, the other two things that are where we have our visibility is just our pipeline, even from our national accounts department. We have a number of really nice opportunities that are lying out there, and the pressure is definitely more. We have more opportunities out there that we are even waiting to hear back from prospective clients than ones that we are kind of hanging on by our fingernails with. So that is another part of it.
Rick Hermanns: Sure. Thanks, Kevin, for the question. There are three things I would say. Number one is, again, we are obviously six weeks into a 13-week quarter, and business has been strong already, so it is not a big leap of faith to say things are looking great for Q3. That said, the other two things that are where we have our visibility is just our pipeline, even from our national accounts department. We have a number of really nice opportunities that are lying out there, and the pressure is definitely more. We have more opportunities out there that we are even waiting to hear back from prospective clients than ones that we are kind of hanging on by our fingernails with. So that is another part of it.
Speaker #1: And thanks, Kevin, for the question. There's three things I would say. Number one is, again, we're obviously six weeks into a 13-week quarter. And business has been strong already.
Speaker #1: So it's not a big leap of faith to say things are looking great for Q3. That said, the other two things where we have our visibility are just our pipeline, even from our National Accounts department.
Speaker #1: We've got a number of really nice opportunities that are lying out there. And the pressure is definitely more—we have more opportunities out there that we're even waiting to hear back from prospective clients than ones that we're kind of hanging on by our fingernails with.
Speaker #1: So that's another part of it. And then the third thing is just looking at the overall staffing market and you look at who's already reported and stuff like that, is there is clearly there is clearly a movement back towards temporary staffing.
Rick Hermanns: The third thing is just looking at the overall staffing market, and you look at who has already reported and stuff like that, there is clearly a movement back towards temporary staffing. That is great news for us. It is not just us getting more wins from our national accounts department, which we absolutely, positively are, but it is also there are just more opportunities out there. As far as how long that will extend out in the future, look, I am not arrogant enough to think that I can tell you what is going to happen in Q4 or the first quarter of next year, because if anything, the last three and a half years has taught us is that we are still a product of our industry, and our industry is a product of immigration and the economy.
Rick Hermanns: The third thing is just looking at the overall staffing market, and you look at who has already reported and stuff like that, there is clearly a movement back towards temporary staffing. That is great news for us. It is not just us getting more wins from our national accounts department, which we absolutely, positively are, but it is also there are just more opportunities out there. As far as how long that will extend out in the future, look, I am not arrogant enough to think that I can tell you what is going to happen in Q4 or the first quarter of next year, because if anything, the last three and a half years has taught us is that we are still a product of our industry, and our industry is a product of immigration and the economy.
Speaker #1: And that's great news for us. And so it's not just us getting more wins from our National Accounts Department, which we absolutely, positively are.
Speaker #1: But it's also there are just more opportunities out there. And so as far as how long that'll extend out in the future, look, I'm not arrogant enough to think that I can tell you what's going to happen in Q4 or the first quarter of next year because if anything, the last three and a half years has taught us is that we are still a product of our industry and our industry is a product of immigration and the economy.
Kevin Steinke: Right. No, that is helpful. You mentioned there the national accounts. That is obviously something you have been investing in internally and not just kind of waiting for the uplift in the market to carry you. Again, can you kind of talk about the momentum there? I think you have added some people to go out and actually better penetrate these national accounts after you win them. You mentioned the pipeline there is good. So, I would just like to hear more about the benefit of your efforts on the national account side.
Kevin Steinke: Right. No, that is helpful. You mentioned there the national accounts. That is obviously something you have been investing in internally and not just kind of waiting for the uplift in the market to carry you. Again, can you kind of talk about the momentum there? I think you have added some people to go out and actually better penetrate these national accounts after you win them. You mentioned the pipeline there is good. So, I would just like to hear more about the benefit of your efforts on the national account side.
Speaker #2: Right, no, that's helpful. And you mentioned there the national accounts, so that seems like that's obviously something you've been investing in internally, and not just kind of waiting for the uplift in the market to carry you.
Speaker #2: So again, can you kind of talk about the momentum there? I know—I think you've added some people to go out and actually better penetrate these national accounts after you win them.
Speaker #2: And you mentioned the pipeline there is good. So I'd like just to hear more about the benefit of your efforts on the national account side.
Speaker #1: Absolutely. And so there's a few different parts to that. First thing is a lot of large projects are coming out of the ground right now, just when you think of the scale of whether it's a data center or reshoring of these large factories.
Rick Hermanns: Absolutely. There's a few different parts to that. First thing is, a lot of large projects are coming out of the ground right now. Just when you think of the scale of whether it's a data center or reshoring of these large factories. The thing is, it requires sometimes a very sophisticated sales process. That's part of why we decided that we needed to do more with our national accounts department. The other thing is what we found in some instances as well was we had enough opportunities out there that weren't being picked up. We've been more aggressive in working with our franchisees to make sure that the opportunities are taken up upon.
Rick Hermanns: Absolutely. There's a few different parts to that. First thing is, a lot of large projects are coming out of the ground right now. Just when you think of the scale of whether it's a data center or reshoring of these large factories. The thing is, it requires sometimes a very sophisticated sales process. That's part of why we decided that we needed to do more with our national accounts department. The other thing is what we found in some instances as well was we had enough opportunities out there that weren't being picked up. We've been more aggressive in working with our franchisees to make sure that the opportunities are taken up upon.
Speaker #1: And the thing is, it sometimes requires a very sophisticated sales process. That's part of why we decided that we needed to do more with our national accounts department.
Speaker #1: The other thing is, what we found in some instances as well, was we had enough opportunities out there that weren't being picked up. And so we've been more aggressive in working with our franchisees to make sure that the opportunities are taken up upon.
Speaker #1: The other thing that's sort of new for us—newer anyway—is we unveiled an app that basically allows us to recruit more effectively electronically as well, rather than simply relying on our branches.
Rick Hermanns: The other thing that's sort of new for us, newer anyway, is we unveiled an app that we can recruit more effectively electronically as well, rather than simply relying on our branches. What that's allowed us to do is to take business in places where we don't necessarily have a branch. We have a large account coming up in Northern, in Upstate New York. That historically we would have never gone after. Now we can work with a couple of our franchisees that aren't even in that market that are going to go and fill that. That's going to be, it's a short-term project. It might probably be like 6 weeks, but it's like 100 people a day for 6 weeks. That's a nice sized account. We've had a number of those.
Rick Hermanns: The other thing that's sort of new for us, newer anyway, is we unveiled an app that we can recruit more effectively electronically as well, rather than simply relying on our branches. What that's allowed us to do is to take business in places where we don't necessarily have a branch. We have a large account coming up in Northern, in Upstate New York. That historically we would have never gone after. Now we can work with a couple of our franchisees that aren't even in that market that are going to go and fill that. That's going to be, it's a short-term project. It might probably be like six weeks, but it's like 100 people a day for six weeks. That's a nice sized account.
Speaker #1: And what that's allowed us to do is to take business in places where we don't necessarily have a branch. We have a large account coming up in upstate New York.
Speaker #1: And so that, historically, we would never have gone after. And now, we can work with a couple of our franchisees who aren't even in that market, who are going to go and fill that.
Speaker #1: And that's going to be—it's a short-term project. It will probably be about six weeks, but it's like 100 people a day for six weeks.
Speaker #1: It's a nice-sized account, and so we've had a number of those. That would be the other thing, like I said, sort of scoring some pretty good points.
Rick Hermanns: We've had a number of those. That would be the other part where our national accounts have been, like I said, sort of scoring some pretty good points.
Rick Hermanns: That would be the other part where our national accounts have been, like I said, sort of scoring some pretty good points.
Kevin Steinke: That's great to hear. You mentioned there the reshoring of some factories, and it's not the first time I've heard that. I've heard comments from others in the staffing industry about there. I'm just curious to hear your thoughts on if that's really providing some real legs, a real tailwind for your industry and your business now.
Kevin Steinke: That's great to hear. You mentioned there the reshoring of some factories, and it's not the first time I've heard that. I've heard comments from others in the staffing industry about there. I'm just curious to hear your thoughts on if that's really providing some real legs, a real tailwind for your industry and your business now.
Speaker #2: That's great to hear. So, you mentioned the reshoring of some factories, and it's not the first time I've heard that. I've heard comments from others in the staffing industry about it as well.
Speaker #2: So I'm just curious to hear your thoughts on if that's really providing some real legs or real tailwind for your industry and your business now.
Speaker #1: I think the answer is yes. Don't get me wrong, the application of greater technologies is also stripping existing manufacturing jobs from our industry. But the reshoring is restoring what might otherwise have been lost.
Rick Hermanns: I think the answer is yes. Don't get me wrong, the application of greater technologies is also stripping existing manufacturing jobs from our industry. But the reshoring is restoring what might have otherwise have been lost, if that makes any sense. Reshoring is helping. I'm not saying it's this massive tailwind that's just, you know what I'm saying, that's just blowing us across the sea. That's not what's happening. But it's at least recovering it, what would have maybe otherwise have been lost. I alluded to it earlier, the other thing is there has just been a contraction in the supply of labor, which is just bringing back a number of clients who maybe for the last three to five years haven't really used much from the staffing industry. I think that's really making a difference as well.
Rick Hermanns: I think the answer is yes. Don't get me wrong, the application of greater technologies is also stripping existing manufacturing jobs from our industry. But the reshoring is restoring what might have otherwise have been lost, if that makes any sense. Reshoring is helping. I'm not saying it's this massive tailwind that's just, you know what I'm saying, that's just blowing us across the sea. That's not what's happening. But it's at least recovering it, what would have maybe otherwise have been lost. I alluded to it earlier, the other thing is there has just been a contraction in the supply of labor, which is just bringing back a number of clients who maybe for the last three to five years haven't really used much from the staffing industry. I think that's really making a difference as well.
Speaker #1: If that makes any sense. And so reshoring is helping I'm not saying it's this massive tailwind that's just you know what I'm saying? That's just blowing us across the sea.
Speaker #1: That's not what's happening, but it is at least recovering what might have otherwise been lost. And I alluded to it earlier. The other thing is, there has just been a contraction in the supply of labor, which is bringing back a number of clients who, for the last three to five years, haven't really used much from the staffing industry.
Speaker #1: And I think that's really making a difference as well.
Speaker #2: Right. Okay. So, in the end, the contraction in the supply—that's, I guess, more related to the immigration point you mentioned earlier, correct?
Kevin Steinke: Right. Okay. So in the end, the contraction in the supply, that's, I guess, more related to the immigration point that you mentioned earlier, correct?
Kevin Steinke: Right. Okay. So in the end, the contraction in the supply, that's, I guess, more related to the immigration point that you mentioned earlier, correct?
Speaker #1: Correct. Yes.
Rick Hermanns: Correct. Yes.
Rick Hermanns: Correct. Yes.
Speaker #2: Okay, well, great. I think lastly, you mentioned the uptick in manufacturing is kind of a key driver. Again, should we just tie that to reshoring?
Kevin Steinke: Okay. Well, great. I think, lastly, you mentioned the uptick in manufacturing is a kind of a key driver. Again, should we just tie that to the data centers and reshoring, or are there any other industry or geographic pockets where you're seeing that benefit from manufacturing activity?
Kevin Steinke: Okay. Well, great. I think, lastly, you mentioned the uptick in manufacturing is a kind of a key driver. Again, should we just tie that to the data centers and reshoring, or are there any other industry or geographic pockets where you're seeing that benefit from manufacturing activity?
Speaker #2: Or are there any other industry or geographic pockets where you're seeing that benefit from manufacturing activity?
Speaker #1: So I would say that we have seen fairly diverse growth. I mean, we're really doing extraordinarily well in Texas. I will say if there's a spot we're doing really well, it's Texas.
Rick Hermanns: I would say that we have seen a fairly diverse growth. We are really doing extraordinarily well in Texas. I will say if there is a spot we are doing really well, it is Texas. But it is still pretty general, whereas really over the last four or five years, it was very much centered in certain spots. I would not just put it on data centers. To be honest with you, data centers has not really helped us as much as just the reshoring, but also just the fact that a number of companies are just going back to using temporary staffing, and we just have more opportunities.
Rick Hermanns: I would say that we have seen a fairly diverse growth. We are really doing extraordinarily well in Texas. I will say if there is a spot we are doing really well, it is Texas. But it is still pretty general, whereas really over the last four or five years, it was very much centered in certain spots. I would not just put it on data centers. To be honest with you, data centers has not really helped us as much as just the reshoring, but also just the fact that a number of companies are just going back to using temporary staffing, and we just have more opportunities.
Speaker #1: But it's still pretty general, whereas really over the last four or five years, it was very much centered in certain spots. And I would not just put it on data centers.
Speaker #1: To be honest with you, data centers haven't really helped us as much as just the reshoring, but also just the fact that a number of companies are just going back to using temporary staffing.
Speaker #1: And we just have more opportunities.
Speaker #2: Okay, well, that's good to hear. Yeah, go ahead.
Kevin Steinke: Well, that is good because the other-
Kevin Steinke: Well, that is good [crosstalk]. Yeah, go ahead.
Rick Hermanns: I think the other part is there is a-
Kevin Steinke: Yeah, go ahead.
Speaker #1: And I want to just add one final thing. I think that last year there was quite a bit of an unsettled environment as it related to tariffs.
Rick Hermanns: And just one final thing is I think that last year, there was quite a bit of an unsettled environment as it related to tariffs. I think that has also now become sort of baked into decisions, and that has helped us as well.
Rick Hermanns: And just one final thing is I think that last year, there was quite a bit of an unsettled environment as it related to tariffs. I think that has also now become sort of baked into decisions, and that has helped us as well.
Speaker #1: And I think that has also now become sort of baked into decisions, and that's helped us as well.
Speaker #2: Right. Right. Okay. Yeah. That makes sense. Well, I appreciate all the color and congratulations on the strong results. I'll turn it back over.
Kevin Steinke: Right. Okay. Yeah, that makes sense. Well, I appreciate all the color and congratulations on the strong results. I will turn it back over.
Kevin Steinke: Right. Okay. Yeah, that makes sense. Well, I appreciate all the color and congratulations on the strong results. I will turn it back over.
Speaker #1: Thanks.
Rick Hermanns: Thanks.
Rick Hermanns: Thanks.
Speaker #3: Thank you. This does conclude today's question and answer session. I would now like to pass the floor back to Rick Hermanns for closing remarks.
Operator: Thank you. This does conclude today's question and answer session. I would now like to pass the floor back to Rick Hermanns for closing remarks.
Operator: Thank you. This does conclude today's question and answer session. I would now like to pass the floor back to Rick Hermanns for closing remarks.
Speaker #1: Thank you again, everybody, for joining us for the presentation of our second quarter results. We certainly hope you'll agree with us that it was a very promising quarter, and hopefully one that is a harbinger of things to come in the near future.
Rick Hermanns: Thank you again, everybody, for joining us for the presentation of our Q2 results. We certainly hope you will agree with us that it was a very promising quarter, and hopefully one that is more of a harbinger of things to come in the near future. We are very grateful for the hard efforts of our employees and our franchisees, and we look forward to presenting our Q3 results in November. Thank you and have a good day.
Rick Hermanns: Thank you again, everybody, for joining us for the presentation of our Q2 results. We certainly hope you will agree with us that it was a very promising quarter, and hopefully one that is more of a harbinger of things to come in the near future. We are very grateful for the hard efforts of our employees and our franchisees, and we look forward to presenting our Q3 results in November. Thank you and have a good day.
Speaker #1: We're very grateful for the hard efforts of our employees and our franchisees, and we look forward to presenting our Q3 results in November. Thank you, and have a good day.
Speaker #3: Thank you. This does conclude today's conference call. You may disconnect. Your lines at this time and have a wonderful day. Thank you once again.
Operator: Thank you. This does conclude today's conference call. You may disconnect your lines at this time and have a wonderful day. Thank you once again for your participation.
Operator: Thank you. This does conclude today's conference call. You may disconnect your lines at this time and have a wonderful day. Thank you once again for your participation.
