Based on the provided financial report, the title of the article is likely: "HireQuest, Inc. (HireQuest) Annual Report (Form 10-K) for the fiscal year ended December 31, 2024" This title is based on the fact that the report is a Form 10-K, which is an annual report filed by publicly traded companies with the United States Securities and Exchange Commission (SEC). The report provides information about the company's financial performance, business operations, and other relevant information for the fiscal year ended December 31, 2024.

Overview of Financial Performance

HireQuest, Inc. is a leading provider of staffing and recruiting services through its network of franchised and company-owned offices. The company’s financial results for the year ended December 31, 2024 show a mixed performance, with decreases in revenue and net income compared to the prior year, but continued profitability and strong liquidity.

Total revenue for 2024 was $34.6 million, down 8.7% from $37.9 million in 2023. This decline was driven by an 8.8% decrease in franchise royalties, which make up the majority of the company’s revenue. Service revenue also decreased slightly, from $2.1 million in 2023 to $1.9 million in 2024.

The decrease in revenue was primarily due to a 6.9% decline in system-wide sales, which fell from $605.1 million in 2023 to $563.6 million in 2024. This reflects weaker demand in the staffing and recruiting industry, particularly for the company’s MRI brand where system-wide sales dropped 18.6%.

Profitability and Expenses

Despite the revenue decline, HireQuest remained profitable in 2024, generating net income of $3.9 million from continuing operations. However, this was down 39.1% from $6.4 million in 2023. The company’s net profit margin decreased from 17.0% in 2023 to 11.3% in 2024.

The primary driver of the lower profitability was a $6.0 million goodwill and intangible asset impairment charge related to the MRI reporting unit. This was partially offset by a $1.7 million decrease in workers’ compensation expense and a $1.2 million reduction in salaries, bonuses, and stock-based compensation.

Depreciation and amortization expense was flat year-over-year at $2.8 million. Other operating expenses, excluding the impairment charge, increased by $4.7 million to $25.4 million, mainly due to higher costs.

Liquidity and Capital Resources

HireQuest maintains a strong liquidity position, with current assets exceeding current liabilities by $25.1 million as of December 31, 2024. The company had $2.2 million in cash and $42.3 million in accounts receivable at the end of the year.

The company has a $50 million revolving credit facility with Bank of America, of which $33.6 million was available for borrowing as of December 31, 2024, assuming compliance with covenants. HireQuest used $6.8 million of the facility and had $9.7 million in letters of credit outstanding.

Cash flow from operations was $12.3 million in 2024, which funded investing activities of $44,000 and financing activities of $11.2 million, including $7.3 million in net repayments on the credit facility and $3.4 million in dividend payments.

Strengths and Weaknesses

HireQuest’s key strengths include its diversified franchise model, strong liquidity and access to capital, and experienced management team. The franchise structure provides a recurring revenue stream from royalties and reduces the company’s capital requirements compared to a company-owned model.

However, the company’s financial performance is heavily dependent on the overall health of the staffing and recruiting industry. The significant decline in system-wide sales, particularly for the MRI brand, highlights HireQuest’s vulnerability to macroeconomic conditions. The $6.0 million impairment charge also indicates challenges in integrating and growing acquired businesses.

Another potential weakness is the company’s reliance on workers’ compensation costs, which can be volatile and difficult to predict. While workers’ compensation expense decreased in 2024, future increases could pressure profitability.

Outlook and Conclusion

Looking ahead, HireQuest’s future performance will depend on its ability to navigate industry challenges and grow its franchise network. The company’s strong liquidity position and access to capital provide a solid foundation, but management will need to focus on driving organic growth, improving operational efficiency, and successfully integrating any future acquisitions.

Overall, HireQuest’s 2024 financial results reflect the cyclical nature of the staffing and recruiting industry. While the company remains profitable and well-capitalized, the decline in revenue and net income highlights the need for continued vigilance and adaptability in the face of changing market conditions.