HIRE Technologies Inc HIRRF

Recent news 7th straight quarter of growth $18 million rev

[Oldschool2022]

HIRE TECHNOLOGIES GROWS REVENUE BY 56% YEAR-OVER-YEAR

Hire Technologies Inc. has released its financial results for the three and six months ended June 30, 2022.

 

• Revenue was $18.5-million year to date, with year-over-year growth of $6.6-million, representing a 56-per-cent increase.
• Revenue of $9.4-million for the quarter made second quarter 2022 the seventh consecutive quarter of sequential record revenue.
• Gross margin of $5.0-million for the quarter and $9.5-million year to date was 52 per cent and 54 per cent on a percentage of revenue basis, with the company reporting gross margin exceeding 50 per cent for the first time in its history.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $1.3-million for the year (adjusted EBITDA loss of $500,000: 2021) and $300,000 for the quarter (adjusted EBITDA loss of $600,000: June 30, 2021). EBITDA loss was $3.5-million for the year (EBITDA of $2.5-million: 2021) and $2.6-million for the quarter ($100,000: June 30, 2021) before normalizing adjustments.
• Adjusted net income was $200,000 for the year with an adjusted net loss of $200,000 for the quarter (adjusted net loss of $1.2-million for the comparable year to date in 2021 and $1.0-million for the quarter ended June 30, 2021). Before normalizing adjustments, net loss for the quarter was $3.2-million ($500,000: June 30, 2021) and for the first half of the year was $4.6-million (net income of $1.8-million: 2021).

 

"Our brands benefited from strong client demand in the second quarter," said Simon Dealy, Hire's chief executive officer. "Demand outstripped the supply of talent in Hire's key industry verticals, and we were able to maintain industry-leading organic growth. With the unpredictability of financial markets near term, it is important that we now focus on positioning the company for sustainable long-term growth."

Q2 financial highlights:

 

• Revenue at $9.4-million, $3.0-million higher than Q2 2021, included $1.3-million from acquisitions with the remaining amount attributable to organic growth from both the on-occurrence permanent placement and recurring contract books, up 58 per cent and 14 per cent, respectively, versus Q2 2021.
• Gross margin was 54 per cent for the quarter, a 16-point increase over 38 per cent for Q2 2021. Hire's mix of business continues to skew toward higher-margin on-occurrence and executive search business, which now proportionately makes up 44 per cent of total revenue, versus 28 per cent for the comparable quarter in 2021.
• Hire maintained a consistent cost of recurring contract services as a percentage of recurring contract revenue at 80 per cent for Q2 2022, flat sequentially against Q1 2022 and six points better than the 86 per cent posted for Q2 2021. In its push for sustainability, Hire is repositioning its presence in the health care and light industrial segments, where contractor wage rates continue to increase because of demand, thereby squeezing margin and profitability in these areas. Hire's emphasis this year is to seek more on-occurrence permanent business while selectively passing on opportunities where profitability is challenging.
• Adjusted EBITDA was $300,000 for the quarter, a significant improvement from an adjusted EBITDA loss of $600,000 for Q2 2021.
• This excluded the impact of earnout obligations treated as contingent remuneration of $1.2-million, $1.1-million in losses on the revaluation of contingent consideration, share-based compensation of $500,000, transaction, restructuring and non-operating items of $100,000, net unrealized mark-to-market gains of $40,000, and $20,000 in realized gains on convertible debenture interest settled in Hire shares. Unadjusted, EBITDA loss was $2.6-million for the quarter (EBITDA loss of $70,000: June 30, 2021).

 

Year-to-date financial highlights:

 

• Revenue for the first half of 2022 was $18.5-million, 56 per cent higher than 2021 and driven by organic growth of 38 per cent year over year, 28 per cent on the recurring contract book and 61 per cent on the on-occurrence permanent book.
• Hire's 12-point improvement on gross margin as a percentage of revenue, 52 per cent for 2022 versus 40 per cent in 2021, was attributable to the company's rebalanced portfolio, including 12 per cent of revenue, which now comes from executive search and improved engagement profitability in the health care and light industrial verticals.
• Adjusted EBITDA of $1.3-million for the first half of 2022 (adjusted EBITDA loss of $500,000 for the same period in 2021) excludes earnout obligations treated as contingent remuneration of $2.5-million, $1.8-million in losses on the revaluation of contingent consideration, transaction, restructuring and non-operating items of $200,000, share-based compensation of $600,000, net unrealized mark-to-market gains of $200,000, and $20,000 in realized gains on convertible debenture interest settled in Hire shares. Unadjusted EBITDA loss was $3.5-million (EBITDA of $2.5-million: 2021).

 

Outlook

Hire expects growth in third quarter 2022 but at a slower pace while the staffing industry cycles through summer seasonality. The company will continue to explore operational strategies for long-term value creation for the rest of 2022.