HIRE Technologies Grows by 34% Year-Over-Year with $1.9 Million in Adjusted EBITDA Year-to-Date and Announces New Board Members
TORONTO, ON / ACCESSWIRE / November 23, 2022 – HIRE Technologies Inc. (TSXV: HIRE.V) (OTCQB: HIRRF) (“HIRE” or the “Company”), a company focused on modernizing and digitizing human resources solutions, announces its financial results for the three and nine months ended September 30, 2022. All financial figures are in Canadian dollars unless otherwise noted.
- Quarterly revenue of $7.7 million and year-to-date revenue of $26.1 million, with year-over-year growth of $6.6 million, representing a 34% increase.
- *Gross margin of $3.47 million for the quarter and $13 million year-to-date.
- Adjusted EBITDA3 was $1.9 million for the year and loss of $68 thousand for the quarter. Net loss was $10.7 million for the year and $6.1 million for the quarter before normalizing adjustments and including amounts subsequently adjusted out of the business following the sale of the company’s real estate vertical in Q4 2022.
- Adjusted net income4 was a loss of $0.32 million for the year with an adjusted net loss of $0.58 million for the quarter (adjusted net loss of $1.52 million for the comparable year-to-date in 2021 and $0.30 million for the quarter ended September 30,2021). Before normalizing adjustments, net loss for the quarter was $6.2 million ($0.92 million – September 30, 2021) and for the nine months of the year was a loss of $10.77 million (net income of $0.86 million – 2021).
“With our focus on higher margin staffing solutions and our breadth of sector expertise, we have once again produced strong revenue and gross margin growth, capturing profitable growth in executive search, temporary staffing, and permanent staffing” says Simon Dealy, CEO, “While the macroeconomic environment is increasingly uncertain, demand continued to be strong for resources during the quarter. We continue to be confident in our ability to navigate the current situation and will maintain our objective of achieving operational efficiencies.”
Q3 Financial Highlights
- Quarterly revenue of $7.7 million in revenue, essentially flat versus the same quarter in 2021.
- Gross margin was $3.5 million, 2% higher than the $3.4 million for the same quarter in 2021. On a percentage of revenue basis, gross margin was 45%, 1 point better than the quarter ended September 30, 2021 (44% – September 30, 2021). This was the ninth consecutive quarter of gross margin improvement and was attributable to a higher volume of on-occurrence permanent and executive search business relative to recurring contract business, strong organic year- over-year growth, and additional selectivity resulting in further profitability in certain verticals.
- Adjusted EBITDA was a loss of $68 thousand, essentially break-even for the quarter. This excluded the impact of expense booked in Q3 of $3,021,437 in contingent remuneration payable to the former shareholders of Taylor Ryan (at $2,944,605) and Leaders (at $76,832) and a loss on the revaluation of other contingent consideration payable of $133,840. Unadjusted, EBITDA loss was $5.6 million for the quarter (EBITDA loss of $0.3 million – September 30, 2021).
Year-to-date Financial Highlights
- Revenue year-to-date was $26.2 million 34% higher than 2021 and driven by organic growth of 22% year-over-year.
- Year-to-date, gross margin was $12,993,772, $4,810,352 higher than the same period in 2021 ($8,183,420 – September 30, 2021) On a percentage of revenue basis, it was a similar story, with gross margin at 50%, an 8-point increase over 2021, with the portfolio mix and improved engagement profitability driving the result as mentioned earlier.
- Adjusted EBITDA of $1.9 million for the nine months ending September 30, 2022, compares favorably to Adjusted EBITDA loss of $0.25 million for the same period in 2021.
Board Member Changes
The Company also announces that Sean Cleary and Hamed Shahbazi have stepped down from the board of directors of the Company, effective November 22, 2022.
“I would like to thank Sean and Hamed for their outstanding service to our company.” says Simon Dealy, CEO, “They have been an invaluable asset during their time with us and brought great leadership in their capacity on the Company’s Audit and Nominating & Corporate Governance Committees. We wish them both every success in their future endeavors.”
The board has appointed Adam Ho and Brad Scharfe as members of the board following the resignations, effective immediately.
“We are pleased to have Adam and Brad join the company’s Board of Directors.” Says Simon Dealy, CEO, “Each brings a wealth of experience, knowledge and strong network that will be invaluable as HIRE undertakes its continued growth initiatives.”
On October 7, 2022, the Company announced the sale of Taylor Ryan, and the transaction was cashless. The purchasers received 100% of the shares of Taylor Ryan Inc., and will receive transitional services from HIRE after closing, for a period no longer than 12 months. In exchange, the Company received releases from obligations to pay contingent remuneration and profit share payable totaling $9,595,093. In Q4, the Company expects to record reductions in assets and liabilities related to Taylor Ryan and expects that this sale transaction will result in a gain, that will be recorded in Q4 2022. The numbers are considered provisional, subject to final audit.
The Audit Committee of the Board of Directors of the Company reviewed this press release as well as the condensed consolidated interim financial statements (unaudited) for the period ended September 30, 2022 (“Financial Statements”) and related Management’s Discussion and Analysis for the three and nine months ended September 30, 2022 (“MD&A”) and recommended they be approved by the Board. Following review by the full Board, the Financial Statements, MD&A, and the contents of this press release were approved.
This earnings press release should be read in conjunction with HIRE’s Financial Statements and MD&A, which have been posted on SEDAR at www.sedar.com as of the date hereof.
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”), and adjusted net earnings (loss).
- 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.
- EBITDA and adjusted EBITDA are non-GAAP financial measures and are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. EBITDA is defined as net income (loss) adjusted to exclude interest, taxes, depreciation, and amortization. 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, goodwill impairment 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 Company, because it provides management and investors with insight into HIRE’s operating performance without the impact of significant accounting policies related to depreciation and amortization, financing, and taxes.
- Adjusted net income (loss) is a non-GAAP financial measure and is not a standardized financial measure under IFRS and might not be comparable to similar financial measures disclosed by other issuers. 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, goodwill impairment 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 for the Company and investors in assessing the Company’s financial performance, because it provides management and investors with insight into performance without the impact of non-operating items.
About HIRE Technologies Inc.
HIRE is a growing capital allocator that is rapidly establishing itself as a market leader in workforce management and staffing. HIRE’s mission is to create a world-class portfolio of brands that will define the future of human resources through synergies, scale, and reach. The Company has extensive experience in building and growing staffing and executive search companies and is supported by a large recurring revenue base and a highly scalable shared services platform. This structure enables HIRE to create value for partners and shareholders. For more information, visit hire.company.
Chief Executive Officer
Chief Financial Officer
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 future growth, business prospects, future trends, plans and strategies, expected benefits from business activities and the Company’s prospects for completion of additional acquisitions, including those under the heading “Outlook” 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.
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 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.
All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking statements. 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.