HireQuest, Inc. (NASDAQ:HQI) Q1 2020 Earnings Conference Call - Final Transcript

Good day, ladies and gentlemen, and welcome to the HireQuest First Quarter 2020 Earnings Conference Call. [Operator Instructions]

At this time, it is my pleasure to turn the floor over to your host, Mr. Brett Maas of Hayden IR. Sir, the floor is yours.

Thank you, operator. I'd like to welcome everybody to the call. Hosting the call today are HireQuest's CEO, Rick Hermanns; and CFO, Cory Smith.

Please be aware that some of the comments made during our call may include forward-looking statements within the meaning of federal securities laws. Statements about our beliefs and expectations containing words such as may, could, would, will, should, believe, expect, anticipate and similar expressions constitute forward-looking statements. These statements involve risks and uncertainties regarding our operations and future results that could cause HireQuest results to differ materially from management's current expectations. We encourage you to review the safe harbor statements and risk factors contained in the Company's earnings release and in its filings with the SEC, including, without limitation, the most recent Annual Report on Form 10-K, most recent quarterly report on Form 10-Q and other periodic reports, which identify specific risk factors that also may cause actual results or events to differ materially from those described in forward-looking statements. Copies of the Company's most recent reports on forms 10-K and 10-Q may obtain or may be obtained on the Company's website at www.hirequest.com or the SEC's website at sec.gov. The Company does not undertake to publicly update or revise any forward-looking statements after the call or the date of this call.

I'd like also to remind everyone, this call will be available for replay through May 25th. A link to the website replay of the call was also provided in the earnings release and it is available on the Company's website hirequest.com.

I'd like to now turn the call over to CEO of HireQuest, Rick Hermanns. Rick?

Thank you for joining us. We delivered solid results for the first quarter of 2020 against the backdrop of extreme change in the labor market and increasing economic uncertainty brought about by the COVID-19 pandemic. The operating margin of our core business, excluding a one-time reserve we placed on notes receivable remain steady for the first quarter on higher revenue that was largely due to the recent merger.

Our proven franchise model generated nearly $5.5 million in cash from operations and we remain debt free with more than $10 million of cash on hand. Total revenue increased to $4.1 million and income from continuing operations was $0.06 a share, despite inclusion of the notes receivable reserve. The successful integration of the merger and improvements we made to our operating processes last year resulted in a lean franchise operating model with significant scale that was instrumental in driving these results.

While the COVID-19 pandemic has shown signs of stabilizing across the country with certain states beginning reopening procedures, for example, the situation is constantly evolving. Fortunately, through diligent management of our balance sheet and capital structure