TORONTO, ON / ACCESSWIRE / November 23, 2021 / HIRE Technologies Inc. (TSXV:HIRE.V) (" HIRE " or the " Company "), a company focused on modernizing and digitizing human resources solutions, announces its financial results for the quarter ended September 30, 2021. All financial figures are in Canadian dollars unless otherwise noted.
- Revenue growth of 203% in Q3-2021 versus Q3-2020.
- Organic Growth 1 of 35% in Q3-2021 over Q3-2020.
- Gross margin of 44% in Q3-2021 versus 35% in Q3-2020.
- Positive adjusted EBITDA of $0.3 million in Q3-2021 versus an EBITDA loss of $0.1 million for Q3-2020.
- Cash balance of $2.4 million as at September 30, 2021 versus $0.4 million as at June 30, 2021. HIRE raised a total of $4.8 million in the third quarter for acquisitions and general corporate purposes.
- The Company completed the acquisition of Leaders and Co., Consulting in Governance and Leadership Inc. (" Leaders "), expanding HIRE's services into Montréal, Canada's second largest employment centre.
- HIRE was named one of Canada's Top Growing Companies by The Globe and Mail (No. 39 of 448).
"HIRE achieved another record quarter, driven by the organic growth of our portfolio companies as talent recruitment remains strong across practically all sectors," said Simon Dealy, HIRE's Chief Executive Officer. "The past year has brought about many catalysts in human capital management, including a surge in demand for labour, competition for quality talent, a focus on diversity, equity and inclusion, and steady growth across many industries. Looking ahead, we are encouraged by positive market dynamics into the fourth quarter and 2022. We are delivering industry leading growth rates and are confident in our ability to continue the growth trajectory of our business."
Q3-2021 Financial Highlights
- Record revenue for the quarter at $7.7 million, an increase of $5.2 million over Q3-2020, with $4.0 million contributed from acquisitions made since the start of 2020. Hiring activity continues to be strong across most sectors in both the recurring contract and on occurrence permanent books.
- Industry leading year-to-date revenue growth of 144% for the nine months ended September 30, 2021 exceeds the weighted average of 16% for the Company's industry peers 2 .
- Gross margin increased to $3.4 million for Q3-2021, $2.5 million higher than Q3-2020. Gross margin was 44% as a percentage of revenue, a 9-point improvement over Q3-2020 and a sequential improvement of 6 points over Q2-2021. This was driven by a changing business mix, with higher on-occurrence permanent revenue relative to recurring contract revenue, 33% for the quarter, up significantly versus 16% for Q3-2020. This change was a result of the Company's rebalanced portfolio as a result of its two most recent acquisitions, Leaders and Taylor Ryan Inc., both of which specialize in executive search.
- Selling, general and administrative expenses were lower on a percent of revenue basis to 48% for Q3-2021 from 75% in Q3-2020, a 27-point improvement that demonstrates the value creating properties of the Company's shared services platform as well as the synergies being realized from the reorganization carried out in 2020.
- Positive adjusted EBITDA of $0.3 million in Q3-2021 versus an adjusted EBITDA loss of $0.1 million in Q3-2020 was due to favourable market conditions across most of HIRE's portfolio companies with recurring contract orders and on-occurrence permanent orders up 70% and 46%, respectively. Of note, recurring contract revenue was up 139% for Q3-2021.
- Net loss of $0.9 million ($0.01 per share) was improved against a net loss of $4.1 million ($0.09 per share) for Q3-2020. Adjusted net loss for Q3-2021 was $0.2 million ($0.00 per share), flat versus Q3-2020. Of note, this was the third consecutive quarter where HIRE's portfolio companies demonstrated bottom line profitability from operations in aggregate across the portfolio.
Outlook
With favourable prevailing market conditions, HIRE expects organic and acquisitive growth will continue to positively influence financial performance. HIRE's key areas of focus are as follows:
- Organic growth: maximize revenue through cross-selling, geographic expansion, and service diversification.
- Acquisitions: focus on identifying and pursuing accretive acquisitions.
- Financial performance: continue to strengthen balance sheet and optimize operating performance through synergies and scale.
- Technology: expand SaaS technology solutions to deliver on a technology-first strategy.
- Investor relations: enhance investor relations program to increase visibility and shareholder engagement.
Conference Call & Webcast Details
Date: Wednesday, November 24, 2021
Time: 12:00 pm Eastern Time / 9:00 am Pacific Time
Please join 10 minutes before the start of the call.
Dial in:
(+1) 416-764-8658 (Toronto local)
(+1) 888-886-7786 (Toll-Free, North America)
To join the live audio webcast and to view the presentation slides visit:
http://meetingconnectsales.adobeconnect.com/hireq3/
A recording of the conference call will be made available on hire.company .
Selected Quarterly Information
Period ended | 3 months ended September 30, 2021 | 3 months ended September 30, 2020 | 9 months ended September 30, 2021 | 9 months ended September 30, 2020 | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
REVENUE | 7,728,382 | 2,549,339 | 19,604,701 | 8,049,617 | ||||||||||||
Cost of services | 4,328,182 | 1,666,022 | 11,421,281 | 5,927,283 | ||||||||||||
GROSS MARGIN | 3,400,200 | 883,317 | 8,183,420 | 2,122,334 | ||||||||||||
Gross margin (% of revenue) | 44% | 35% | 42% | 26% | ||||||||||||
| Operating expenses: | ||||||||||||||||
Selling, general and administrative | 3,677,940 | 1,923,012 | 9,929,251 | 4,915,351 | ||||||||||||
Amortization of intangible assets | 208,515 | 28,404 | 498,718 | 73,704 | ||||||||||||
Interest | 129,295 | 37,753 | 339,220 | 61,979 | ||||||||||||
OPERATING EXPENSES | 4,015,750 | 1,989,169 | 10,767,189 | 5,051,034 | ||||||||||||
Loss from operations | (615,550 | ) | (1,105,852 | ) | (2,583,769 | ) | (2,928,700 | ) | ||||||||
Realized gain on convertible debenture derivatives | - | - | 423,815 | - | ||||||||||||
Net unrealized gains (loss) on mark-to-market | (88,798 | ) | (3,036,138 | ) | 3,406,576 | (3,036,138 | ) | |||||||||
Income tax expense (recovery) | 218,056 | (25,757 | ) | 385,086 | (37,092 | ) | ||||||||||
NET INCOME (LOSS) | (922,404 | ) | (4,116,233 | ) | 861,536 | (5,927,746 | ) | |||||||||
Basic earnings (loss) per share | (0.01 | ) | (0.09 | ) | 0.01 | (0.12 | ) | |||||||||
Weighted number of shares | 67,402,322 | 48,097,746 | 63,158,330 | 48,090,829 | ||||||||||||
Adjusted EBITDA Reconciliation
Period ended | 3 months ended September 30, 2021 | 3 months ended September 30, 2020 | 9 months ended September 30, 2021 | 9 months ended September 30, 2020 | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
NET INCOME (LOSS) | (922,404 | ) | (4,116,233 | ) | 861,536 | (5,927,746 | ) | |||||||||
Interest | 129,295 | 37,753 | 339,220 | 61,979 | ||||||||||||
Amortization | 208,515 | 28,404 | 498,718 | 73,704 | ||||||||||||
Depreciation | 50,837 | 41,279 | 118,570 | 147,335 | ||||||||||||
Tax | 218,056 | (25,757 | ) | 385,086 | (37,092 | ) | ||||||||||
EBITDA (LOSS) | (315,701 | ) | (4,034,554 | ) | 2,203,130 | (5,681,820 | ) | |||||||||
| Add: | ||||||||||||||||
Restructuring & non-operating items | 419,668 | 676,209 | 1,039,854 | 2,177,351 | ||||||||||||
Realized (gain) loss on convertible debenture derivatives | - | - | (423,815 | ) | - | |||||||||||
Net unrealized (gain) loss on mark-to-market | 88,798 | 3,036,138 | (3,406,576 | ) | 3,036,138 | |||||||||||
Future contingent remuneration from acquisitions | 100,534 | - | 301,601 | - | ||||||||||||
Share-based consideration | 11,600 | 257,700 | 104,438 | 257,700 | ||||||||||||
Rent expense | (18,214 | ) | (26,548 | ) | (73,838 | ) | (79,644 | ) | ||||||||
ADJUSTED EBITDA (LOSS) | 286,685 | (91,055 | ) | (255,206 | ) | (290,275 | ) | |||||||||
Adjusted EBITDA (loss) as a % of revenue | 3.7% | (3.6% | ) | (1.3% | ) | (3.6% | ) | |||||||||
Adjusted Net Income
Period ended | 3 months ended September 30, 2021 | 3 months ended September 30, 2020 | 9 months ended September 30, 2021 | 9 months ended September 30, 2020 | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
NET INCOME (LOSS) | (922,404 | ) | (4,116,233 | ) | 861,536 | (5,927,746 | ) | |||||||||
| Add: | ||||||||||||||||
Restructuring & other non-operating items | 419,668 | 676,209 | 1,039,854 | 2,177,351 | ||||||||||||
Realized (gain) loss on Convertible debenture derivatives | - | - | (423,815 | ) | - | |||||||||||
Net unrealized (gain) loss on mark-to-market | 88,798 | 3,036,138 | (3,406,576 | ) | 3,036,138 | |||||||||||
Future contingent remuneration from acquisitions | 100,534 | - | 301,601 | - | ||||||||||||
Share-based compensation expense | 11,600 | 257,700 | 104,438 | 257,700 | ||||||||||||
Non-recurring rent | 124,417 | - | 124,417 | 113,000 | ||||||||||||
ADJUSTED NET INCOME (LOSS) | (177,387 | ) | (146,186 | ) | (1,398,545 | ) | (343,557 | ) | ||||||||
Basic adjusted net income (loss) per share | (0.00 | ) | (0.00 | ) | (0.02 | ) | (0.01 | ) | ||||||||
Weighted number of shares | 67,402,322 | 48,097,746 | 63,158,330 | 48,090,829 | ||||||||||||
This earnings press release, which was approved by the Company's Board of Directors on the Audit Committee's recommendation should be read in conjunction with HIRE's condensed consolidated interim financial statements and MD&A, which have been posted on SEDAR at www.sedar.com.
Non-IFRS Measures and Footnotes
This news release refers to certain financial measures that are not defined by International Financial Reporting Standards (" IFRS "), including earnings before interest, taxes, depreciation, and amortization (" EBITDA "), adjusted earnings before interest, taxes, depreciation, and amortization (" adjusted EBITDA "), adjusted net earnings (loss), and gross margin.
- Percentage change in revenue for the period as compared to revenue from the same entities in the prior period irrespective of the acquisition date by HIRE.
- Randstad N.V., The Adecco Group, Robert Half International Inc., Upwork Inc., ManpowerGroup, Kforce Inc., TrueBlue, Resources Connection Inc., and The Caldwell Partners International Inc.
- Gross margin is a non-IFRS measure that does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other issuers. The Company defines Gross margin as revenue less cost of services. Gross margin should not be construed as an alternative for revenue or net earnings (loss) determined in accordance with IFRS. The Company believes that Gross margin is a meaningful metric in assessing the financial performance and operational efficiency of the Company and its subsidiaries (the "Group").
- EBITDA and adjusted EBITDA are non-IFRS financial measures that do not have standardized meanings prescribed by IFRS. EBITDA is defined as net income (loss) adjusted to exclude interest, taxes, depreciation, and amortization. It provides management with insight into HIRE's operating performance without the impact of significant accounting policies related to depreciation and amortization, financing, and taxes. Adjusted EBITDA is defined as EBITDA, excluding restructuring and other non-operating items, unrealized gains or losses on derivative financial instruments recognized as part of financings, other unrealized fair value through profit or loss mark-to-market gains or losses, earn-out payments treated as future contingent remuneration from acquisitions, and share-based compensation expenses. Adjusted EBITDA also includes rent payments, which are not accounted for in EBITDA following the adoption of IFRS 16 Leases. The Company believes that EBITDA and adjusted EBITDA are useful measures in evaluating the performance of the Group.
- Adjusted net income (loss) is a non-IFRS measure that does not have a standardized meaning prescribed by IFRS. The Company defines adjusted net income (loss) as net income (loss) excluding restructuring and other non-operating items, unrealized gains or losses on derivative financial instruments recognized as part of financings, other unrealized fair value through profit or loss mark-to-market gains or losses, earn-out payments treated as future contingent remuneration from acquisitions, and share-based compensation expenses. The Company believes that adjusted net earnings (loss) is a meaningful metric in assessing the Group's financial performance.
About HIRE Technologies Inc.
HIRE is investing in and shaping the future of human resource management with a technology-first focus, by consolidating and modernizing the staffing marketplace. The Company owns and operates staffing firms as well as platform technology that it uses to help those firms become more technologically advanced. The Company is a disciplined capital allocator due to its technology DNA and extensive experience in building and growing staffing companies of all types. HIRE has a large recurring revenue base and helps clients manage change in the workplace in order to achieve success. For more information, visit hire.company .
Contacts
Simon Dealy, Chief Executive Officer
(647) 264-9196
sdealy@hire.company
Caroline Sawamoto, Investor Relations
(647) 556-4498
investors@hire.company
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Forward Looking Information
This press release contains "forward-looking statements" or "forward-looking information" (collectively referred to hereafter as "forward-looking statements") within the meaning of applicable Canadian securities legislation.
All statements that address activities, events or developments that HIRE expects or anticipates will, or may, occur in the future, including statements about HIRE's growth trajectory, business prospects, future trends, plans, and strategies, including those under the heading "Outlook", the Company's prospects for completion of additional acquisitions and future organic growth, and expected benefits from business activities are forward-looking statements. In some cases, forward-looking statements are preceded by, followed by or include words such as "may", "will", "would", "could", "should", "believes", "estimates", "projects", "potential", "expects", "plans", "intends", "proposes", "anticipates", "targeted", "continues", "forecasts", "designed", "goal", or the negative of those words or other similar or comparable words. Although the management of HIRE believes that the assumptions made and the expectations represented by such statements are reasonable, including the continued favourable market conditions, there can be no assurance that a forward-looking statement herein will prove to be accurate. In making such forward looking statements, the Company has assumed that it be able to continue to complete acquisitions on terms favorable to the Company.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of HIRE to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Risks and uncertainties applicable to the Company, as well as trends identified by the Company affecting it and the staffing industry can be found in the Company's September 30, 2021 MD&A and its continuous disclosure record available on SEDAR. Although HIRE has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, or intended.
Such cautionary statements qualify all forward-looking statements made in this press release. HIRE undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
SOURCE: HIRE Technologies Inc.
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