HireQuest — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue for Q3 2026 was $8.8 million, a 4.0% increase year-over-year (YoY) from $8.5 million in Q3 2025; pro forma for the MRINetwork Assets Divestiture, revenue increased 11.1%.
• Franchise royalties were $8.2 million in Q3 2026, up 1.5% from $8.1 million in Q3 2025; pro forma royalties increased 7.9%.
• Service revenue was $604,000 in Q3 2026 compared to $387,000 in Q3 2025.
• Net income for Q3 2026 was $1.7 million ($0.12 per diluted share), down from $2.3 million ($0.16 per diluted share) in Q3 2025.
• Adjusted net income for Q3 2026 was $3.0 million ($0.22 per diluted share), compared to $3.3 million ($0.23 per diluted share) in Q3 2025.
• Adjusted EBITDA for Q3 2026 was $4.5 million, consistent with Q3 2025.
• SG&A expenses were $6.1 million in Q3 2026, a 20.7% increase from $5.1 million in Q3 2025, primarily due to a $1.3 million write-down of notes receivable and higher workers' compensation expenses.
• Net workers' compensation expense was $434,000 in Q3 2026 versus a $99,000 benefit in Q3 2025.
• Year-to-date (YTD) total revenue was $23.4 million, a 0.5% decrease from $23.5 million in the prior year; pro forma YTD revenue increased 7.8%.
• YTD net income was $5.9 million ($0.43 per diluted share), up from $4.7 million ($0.34 per diluted share) in the prior year.
• YTD Adjusted net income was $8.1 million ($0.59 per diluted share), up from $7.2 million ($0.52 per diluted share) in the prior year.
• YTD Adjusted EBITDA was $11.8 million, up from $10.6 million in the prior year.
• Cash was $1.1 million as of September 30, 2026, down from $3.9 million as of December 31, 2025.
• Total assets were $95.7 million as of September 30, 2026, compared to $88.2 million as of December 31, 2025.
• Total liabilities were $25.7 million as of September 30, 2026, compared to $19.9 million as of December 31, 2025.
• Working capital was $38.0 million as of September 30, 2026, compared to $33.0 million as of December 31, 2025.
• Availability under the line of credit was approximately $40.5 million as of September 30, 2026.

Guidance and Future Outlook:

• Management stated that the improving demand environment throughout 2026 positions franchisees well for the remainder of the year and 2027.
• The company intends to pay a $0.06 cash dividend on a quarterly basis, subject to board discretion based on business results and financial position.
• Management emphasized a focus on disciplined capital allocation to deliver consistently profitable results and enhanced shareholder value.

Business Segments and Product Lines:

• System-wide sales for Q3 2026 were $131.2 million, down from $133.6 million in Q3 2025; the decrease was driven by the MRINetwork Assets Divestiture ($15.8 million loss), partially offset by a $7.5 million increase in HireQuest Direct and a $6.6 million increase in Snelling.
• Pro forma system-wide sales for Q3 2026 increased 11.4%.
• YTD system-wide sales were $351.6 million, down from $377.9 million in the prior year; the decrease was driven by the loss of $49.4 million in sales from the MRINetwork Assets Divestiture.
• Pro forma YTD system-wide sales increased 7.1%.
• The MRINetwork Assets Divestiture occurred on January 1, 2026, involving the permanent placement franchisee base of HQ MRI Corporation.

Market and Competitive Landscape:

• The company operates as a national franchisor of on-demand staffing and direct-hire recruiting services with a footprint across the U.S. and international markets.
• Primary divisions include HireQuest Direct, HireQuest Health, Snelling, TradeCorp, and DriverQuest.
• Management noted that the franchise model demonstrates resilience as franchisees benefit from a strengthened labor market.

Risks and Challenges:

• Q3 2026 net income was negatively impacted by a $1.3 million write-down of notes receivable related to the repossession of a franchised location.
• Workers' compensation expenses fluctuate based on the mix of classifications, payroll levels, and claims resolution.
• Interest and other financing expense fluctuates as the Company utilizes the line of credit for acquisitions or short-term liquidity needs.
• Forward-looking statements note risks including economic instability, changes in customer demand, regulatory changes, integration difficulties of acquisitions, and potential cyber-attacks or natural disasters.

Management Commentary and Tone:

• Rick Hermanns, President and CEO, commented that Q3 results reflected "continued momentum across our core commercial staffing brands" and "another quarter of year-over-year revenue growth."
• Management expressed confidence in the "improving demand environment" and the company's "strong balance sheet and ample liquidity."
• The tone was positive regarding the franchise model's resilience and the positioning of franchisees in a strengthened labor market.

Other Key Points:

• The company paid a quarterly cash dividend of $0.06 per share, declared on September 1, 2026.
• A conference call to discuss results was held on November 12, 2026, at 4:30 p.m. Eastern Time.
• The company recorded a $1.5 million non-cash loss on write-down of notes receivable YTD 2026, primarily related to the Q3 repossession.
• YTD SG&A expenses decreased 11.1% to $14.4 million compared to $16.2 million in the prior year, excluding the impact of the MRINetwork divestiture and acquisition charges in the prior period.
• The company holds an investment in an unconsolidated affiliate valued at $710,000 as of September 30, 2026.