HireQuest (NASDAQ:HQI) reported second-quarter revenue growth and sharply higher profitability as management said demand for temporary staffing services improved during the period, particularly in the latter half of the quarter.
Chief Executive Officer Rick Hermanns said the company began seeing more consistent demand and favorable weekly year-over-year comparisons in the second half of the first quarter, with those trends strengthening in the second quarter. He characterized the market as stabilizing after more than two years of uncertainty, while noting that activity remains below prior levels.
Revenue Growth and Profitability
Total second-quarter revenue was $8.1 million, up 6% from $7.6 million a year earlier. Chief Financial Officer David Hartley said the prior-year period included $690,000 of revenue from MRINetwork assets that HireQuest divested at the beginning of 2026. On a pro forma basis excluding those divested assets, revenue increased 16.6%.
Franchise royalties, the company’s primary revenue source, rose 4.1% to $7.6 million. On a pro forma basis, franchise royalties increased 13.8%, Hartley said.
System-wide sales, which include sales at all offices and are not recognized as HireQuest revenue, were $117.8 million, compared with $125.9 million in the second quarter of 2025. However, the divested MRINetwork assets accounted for about $17.7 million of system-wide sales in the prior-year quarter. Excluding those assets, system-wide sales grew 6.9% on a pro forma basis.
Service revenue increased to $513,000 from $354,000 in the prior-year period.
Net income after tax more than doubled to $2.7 million, or $0.19 per diluted share, from $1.1 million, or $0.08 per diluted share, a year earlier. Adjusted net income, a non-GAAP measure, was $3.2 million, or $0.23 per diluted share, compared with $2.1 million, or $0.15 per diluted share, in the prior-year quarter. Adjusted EBITDA rose to $4.6 million from $3.3 million.
Selling, general and administrative expense declined to $4 million from $5.9 million. Workers’ compensation expense fell to $39,000 from $127,000. Core SG&A, excluding workers’ compensation and non-recurring operating expenses, was $3.8 million, down from $4.7 million. Hartley said the prior-year quarter included approximately $633,000 of SG&A expense tied to the MRINetwork assets that have since been divested.
Demand Drivers and Operating Leverage
Hermanns attributed the company’s growth to three factors: immigration policies enacted at the beginning of 2025, increased manufacturing labor demand, and returns from investments in its national accounts program. He said Snelling franchisees increased their top-line sales by nearly 15% during the quarter.
Management also cited a return of operating leverage as revenue increased. Hermanns said the lower expense base reflected economies of scale after a prolonged weak staffing market, as well as some additional cost reductions following the MRINetwork divestiture. He also noted that elevated legal fees in the second quarter of 2025 contributed to the favorable year-over-year expense comparison.
On the national accounts effort, Hermanns said HireQuest has pursued larger projects associated with data centers and factory reshoring, which can require a more sophisticated sales process. The company has also worked more closely with franchisees to ensure prospective opportunities are pursued, he said.
HireQuest has introduced an app intended to support electronic recruiting in markets where it may not have a local branch. Hermanns cited an upcoming short-term project in upstate New York expected to require about 100 workers per day for roughly six weeks, with franchisees outside that market helping to fill the positions.
While data centers have not been as meaningful a driver as reshoring, Hermanns said employers generally are returning to temporary staffing. He said the company has seen particularly strong performance in Texas, while growth has become more geographically diverse than in recent years. He also said tariff-related uncertainty that affected employer decisions last year has become more “baked into” business decisions.
Outlook and Balance Sheet
Hermanns said HireQuest had maintained the growth rate seen in the latter half of the second quarter through the first six weeks of the third quarter. He did not provide formal guidance and said the company’s future remains influenced by broader economic conditions and immigration trends.
Still, he said the company has a growing national accounts pipeline and sees improving conditions across the staffing industry. “With our visibility today, we believe that we’re in a stronger place to deliver positive results through the balance of 2026,” Hermanns said.
As of June 30, HireQuest had total assets of $93.4 million, compared with $88.2 million at year-end 2025. It reported $1.6 million in cash, $48.9 million in net accounts receivable and working capital of $35.1 million. The company had $41 million of availability under its credit facility, assuming continued covenant compliance, and said it had no debt.
HireQuest paid a quarterly dividend of $0.06 per common share on June 15 to shareholders of record as of June 1. Hartley said the company expects to continue paying a quarterly dividend, subject to board discretion.
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.
