HireQuest NASDAQ: HQI reported lower first-quarter revenue following the divestiture of certain MRI Network assets, while management said demand trends improved as the quarter progressed and have become more favorable early in the second quarter.
Chief Executive Officer Rick Hermanns described the first quarter of 2026 as “another solid quarter of operational execution and profitability,” saying the company’s franchise staffing model helped it remain profitable despite a soft staffing market and what he characterized as slowed or frozen hiring activity across parts of the industry.
“Our performance in the first quarter continues to reflect the resiliency and strength of our model,” Hermanns said on the company’s earnings call.
Revenue Declines After MRI Network Divestiture
Chief Financial Officer David Hartley said total revenue for the first quarter was $6.5 million, down 12.7% from $7.5 million in the prior-year quarter. Hartley noted that the year-ago period included revenue from certain MRI Network assets that HireQuest divested effective Jan. 1, 2026.
The first quarter of 2025 included approximately $574,000 in total revenue tied to the divested MRI Network assets, Hartley said. The company’s primary revenue source, franchise royalties, totaled $6.1 million in the first quarter, compared with $7 million a year earlier. The prior-year period included about $500,000 in franchise royalties related to the divested assets.
System-wide sales, which Hartley said are not part of revenue but provide context for performance, were $102.6 million in the first quarter, compared with $118.4 million a year earlier. The 2025 quarter included approximately $16 million in system-wide sales from the divested MRI Network assets.
Service revenue was $462,000, down from $512,000 in the prior-year period. Hartley said the first quarter of 2025 included roughly $75,000 in service revenue related to the divested business.
Profitability Holds Steady
Selling, general and administrative expense fell to $4.3 million from $5.3 million a year earlier. Hartley said the prior-year period included approximately $700,000 in SG&A associated with the divestiture. Workers’ compensation expense, included in SG&A, was $39,000 in the quarter, compared with $28,000 a year earlier.
Net income after tax was $1.6 million, or $0.11 per diluted share, compared with $1.4 million, or $0.10 per diluted share, in the prior-year quarter. Adjusted net income was $1.8 million, or $0.13 per diluted share, unchanged from the year-ago period. Adjusted EBITDA was $2.7 million, compared with $2.8 million last year.
Hartley said the company had $91.1 million in total assets as of March 31, 2026, compared with $88.2 million at the end of 2025. Current assets included $1 million in cash and $44.7 million of net accounts receivable. HireQuest had no borrowings drawn on its credit facility at quarter-end, leaving $40.3 million in availability, assuming continued covenant compliance.
The company paid a regular quarterly dividend of $0.06 per common share on March 16 to shareholders of record as of March 2. Hartley said HireQuest expects to continue paying a quarterly dividend, subject to board discretion.
Management Cites Improving Demand Trends
Hermanns said the quarter began slowly, but demand improved around mid-February and continued to strengthen into the second quarter. In response to a question from Barrington Research analyst Kevin Steinke, Hermanns said January was affected by the placement of New Year’s Day, which effectively reduced the number of business days, and by unusually bad weather across a large portion of the country.
“What we noticed was starting around mid-February, our results became perceptibly better, particularly compared to the year-over-year comparison,” Hermanns said. He added that, excluding the system-wide sales impact of the MRI Network divestiture, HireQuest was “nearly flat” year over year in system-wide sales for the first quarter.
Hermanns said the company’s year-over-year comparisons became more favorable during the first five weeks of the second quarter. He said management is “feeling really good” about demand, while noting that the company remains exposed to broader macroeconomic conditions.
Hermanns attributed some of the improvement to a normalization in labor market dynamics and to investments in HireQuest’s national accounts program. He said the company is seeing “pretty significant wins” from that investment, as well as organic growth tied to franchisee efforts rather than only macroeconomic trends.
Commercial Staffing Leads Improvement
Asked whether the improvement was concentrated in specific markets or business segments, Hermanns said the strength is currently in commercial staffing. He characterized the on-demand business as “flat” and said it is performing reasonably well given the macro environment.
“The commercial side has really been strong,” Hermanns said, adding that the gains were not geographically limited.
Hermanns pointed to industrial and manufacturing activity as areas of improvement, including retrofit and medium-term projects. He said construction is recovering more slowly than it was roughly a year and a half ago, except for large data center and other major projects where the company is gaining more traction.
HireQuest Renews Offer for TrueBlue Unit
Separately, Hermanns highlighted a new offer sent to the board of directors of TrueBlue for the on-demand portion of its PeopleReady segment. He said HireQuest offered $105 million in cash for that portion of the business.
Hermanns said HireQuest made multiple offers to TrueBlue in 2025 and had previously prepared to initiate a tender offer directly to TrueBlue shareholders, incurring substantial costs before postponing the process in hopes of engaging with TrueBlue’s board on a friendly basis.
“Roughly a year after we first made our interest known and made it public, nothing has materialized,” Hermanns said. “We are once again exploring our options.”
Hermanns said HireQuest believes the on-demand portion of PeopleReady is complementary to its HireQuest Direct division and that the proposed transaction would allow TrueBlue to raise cash by divesting offices he described as underperforming for that company. When asked for more detail on the size of the targeted business and potential improvements, Hermanns said he was not at liberty to speak beyond what had been released.
Closing the call, Hermanns said HireQuest is “hopefully at the cusp of a period of higher demand” for its services and remains hopeful that its bid for the TrueBlue business will be taken seriously.
About HireQuest NASDAQ: HQI
HireQuest, Inc is a publicly traded holding company that provides equipment rental and workforce solutions across North America through two primary operating subsidiaries. Its Coast Equipment Rentals division offers a broad range of support equipment—such as pumps, trench safety systems, power and HVAC units, air compressors, light towers and generators—to the construction, industrial, municipal and environmental markets. Coast Equipment Rentals operates more than 135 branch locations in 36 U.S.
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