HireQuest, Inc. (HQI) - 10-Q Summary for Period Ended June 30, 2026
Business Context and Reporting Period
HireQuest, Inc. is a nationwide franchisor of staffing offices providing direct-dispatch, executive search, and commercial staffing solutions. The company operates under multiple brands including HireQuest Direct, Snelling, DriverQuest, and MRI. As of June 30, 2026, the company operated 251 franchisee-owned offices and 1 company-owned office across 39 states, D.C., and one international location. The reporting period covers the quarter and six months ended June 30, 2026.
Key Financial Metrics
| Metric (in thousands) | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Total Revenue | $8,099 | $7,638 | $14,622 | $15,111 |
| Net Income | $2,692 | $1,060 | $4,252 | $2,423 |
| Diluted EPS | $0.19 | $0.08 | $0.31 | $0.17 |
| Adjusted EBITDA | $4,613 | $3,255 | $7,278 | $6,073 |
| Cash from Operations (YTD) | $1,850 | $4,411 | - | - |
| Cash Balance (End of Period) | $1,640 | $2,675 | - | - |
| Debt (Line of Credit Utilization) | $0 | $2,584 | - | - |
Note: Debt figures reflect outstanding borrowings on the revolving line of credit. As of June 30, 2026, the company had no outstanding borrowings on its $50 million facility, though $9 million was utilized for letters of credit.
Material Changes vs. Prior Period
- Revenue Growth: Q2 2026 revenue increased 6.0% year-over-year to $8.1 million, driven by growth in HireQuest Direct and Snelling brands. However, YTD revenue decreased 3.2% due to the divestiture of the MRINetwork permanent placement assets in January 2026.
- Profitability Surge: Net income for Q2 2026 more than doubled to $2.7 million compared to $1.1 million in Q2 2025. This was driven by a significant reduction in operating expenses ($4.8M vs $6.6M) following the divestiture and the absence of $929k in acquisition-related charges incurred in the prior year.
- System-Wide Sales: System-wide sales decreased 6.4% in Q2 and 9.8% YTD. The decline is primarily attributed to the $33.7 million in sales lost from the MRINetwork divestiture, partially offset by organic growth in other segments.
- Cash Flow: Operating cash flow for the six months ended June 30, 2026, was $1.9 million, a decrease from $4.4 million in the prior year period. This was largely due to a $9.6 million increase in accounts receivable.
Guidance, Outlook, and Risks
- Divestiture Impact: The company completed the divestiture of certain MRI permanent placement assets to MRINetwork Operations on January 1, 2026, retaining a 40% equity interest. This transaction resulted in a $248,000 gain on divestiture recognized in the first half of 2026.
- Capital Allocation: The company remains active in returning capital to shareholders. During the first six months of 2026, HQI repurchased 226,000 shares for approximately $2.4 million and paid $1.7 million in dividends.
- Liquidity: The company maintains a $50 million revolving credit facility with Bank of America, maturing in February 2028. As of June 30, 2026, approximately $41 million was available. The company is in compliance with all financial covenants.
- Risks: Management highlights risks related to geopolitical conflicts (Middle East, Ukraine) impacting oil prices and the global economy, potential inflationary pressures on wages, and the ongoing sale of discontinued operations (Dubin Group assets).
- Discontinued Operations: The company continues to market the Dubin Group assets for sale, which are classified as held-for-sale. These operations generated a net loss of $69,000 for the six months ended June 30, 2026.
Investor Verification Checklist
- Accounts Receivable Aging: Verify the $48.9 million accounts receivable balance and the $9.6 million increase in YTD 2026 to assess collection risks and working capital needs.
- MRINetwork Investment: Review the valuation methodology and future cash flow projections for the 40% equity interest in MRINetwork Operations ($635k carrying value).
- Divestiture Completion: Monitor the status of the Dubin Group sale, which remains classified as discontinued operations and held-for-sale.
- Franchisee Credit Risk: Assess the $6.1 million notes receivable from franchisees, noting the $640k write-off in Q2 2026 and the remaining $736k allowance for credit losses.
- Workers' Compensation Reserves: Confirm the adequacy of the $4.7 million total workers' compensation liability given the company's self-insured status for claims up to $500k per incident.