HIRE Technologies Reports Record Gross Profits, Growth and Margins in Q4-2020

  • Revenue of $3.3 million in Q4-2020 is 13.3% higher than pre-pandemic levels in Q4-2019 with HIRE achieving industry leading Q4-2020 growth relative to its public North American and Global peer group1.
  • Gross Margin of $1.3 million in Q4-2020, a record quarter in the history of the Company.
  • The majority of HIRE’s revenue comes from recurring revenue sources, accounting for 77.8% of revenue in Q4-2020.
  • Two acquisitions closed in Q4-2020 expanding HIRE’s geographic reach and deepening HIRE’s sector expertise.
  • First SaaS Technology acquisition completed in March 2021 marking a foundational step in HIRE’s core digital offering for the future.

TORONTO, Ontario – (Newsfile Corp. – April 29, 2021) – HIRE Technologies Inc. (TSX-V: HIRE) (“HIRE” or the “Company”), is focused on modernizing and digitizing human resources solutions, announces its financial results for year-end 2020 and the quarter ended December 31, 2020.

“Despite the fact that the human capital market faced unique challenges in 2020, HIRE was able to outperform our peer group in Q4-2020, achieving record quarterly gross profit. By leveraging our experienced management team, diversified and recurring revenue sources, and highly disciplined cost management, we have been able to achieve record profitability. The Headhunters, Kavin Group, and Taylor Ryan acquisitions expanded the company’s footprint across Canada, offering permanent placement, recurring revenue, and highly experienced management,” commented Simon Dealy, Chief Executive Officer of HIRE.

Mr. Dealy added “We continue to expect very promising outcomes for the organization as we head into 2021. Following a 117% increase in job orders in Q4-2020 over the previous quarter, we saw a further 137% increase in Q1-2021. HIRE has seen a rise in the number of placements made and new clients signed, with recurring revenue sources accounting for more than 70% of revenue. Our EBITDA success is boosted even further by the inclusion of our high-margin SaaS technology solutions, such as our Pulsify acquisition. All of this adds to HIRE’s excellent 2020 performance and leads to a strong start to the new fiscal year.”

2020 Annual Financial Highlights

  • Overall Gross Margin improved to $3.4 million from $2.8 million a year earlier, a result of a rebalanced portfolio mix featuring more high-margin, on-occurrence permanent placements relative to recurring contract placements.
  • Adjusted EBITDA loss was $0.6 million, a significant improvement over the adjusted EBITDA loss of $2.0 million for 2019.
  • A $0.06 per share improvement in adjusted net loss of $0.8 million or $0.02 per share versus $2.3 million or $0.08 per share a year earlier. Reported net loss was $10.7 million ($0.22 per share), or $3.9 million, ($0.08 per share) excluding the $6.8 million in non-cash mark-to-market losses recognized.  Reported net loss in 2019 was $7.2 million ($0.25 per share).
  • See notes 2, 3 & 4 below for additional details.

Q4 2020 Financial Highlights

  • Revenue was up an industry leading 13.3% with strong results from new geographies and industry sectors added via acquisition.
  • Record $1.3 million in gross margin for Q4-2020 was a result of our rebalanced portfolio mix which has directionally shifted to increased high margin on-occurrence placements, which now comprises 22% of our book relative to recurring contract placements.
  • Adjusted EBITDA loss of $0.3 million was an improvement over $0.8 million for 2019, attributable to the improved cost structure of the business post reorganization. Unadjusted, HIRE reported an EBITDA loss of $4.6 million, almost flat versus $4.4 million for 2019.  Of note, Q4-2020 included a $3.8 million non-cash mark-to-market loss recognized on embedded derivatives related to HIRE’s convertible debentures while Q4-2019 included $3.1 million in go-public transaction costs.
  • Adjusted net loss was $0.4 million ($0.01 per share) for Q4-2020, a $0.02 per share or $0.4 million improvement over Q4-2019. Q4-2020 reported net loss was $4.8 million ($0.10 per share), however excluding the $3.8 million in non-cash mark-to-market losses, net loss was $1.0 million ($0.02 per share). Reported net loss in Q4-2019 was $4.4 million ($0.13 per share) or $1.3 million ($0.04 per share) excluding the impact of go-public transaction costs.

M&A Update & Subsequent Events

  • During the year HIRE completed three acquisitions:
    1. The Headhunters,
    2. The Kavin Group, and
    3. Taylor Ryan
  • The three acquisitions expanded operations to western Canada, adding health care, real-estate, construction, and waste management to its sector portfolio.
  • HIRE also invested in Atlas ID, an employee digital wallet and COVID-19 risk mitigation platform.
  • Subsequent to year-end, the Company acquired Pulsify, a market ready, people management platform designed with remote workforces in mind.
  • See notes 5, 6 & 7 below for additional details.

 

Outlook

  • HIRE’s is ready to add more staffing partners inspired to join the “Powered by HIRE Technologies” growth platform from our strong pipeline of acquisition opportunities.
  • HIRE looks to strategically add to its technology foundation and enhance organic growth opportunities for our partners and grow our recurring revenue streams.

Restated Q3-2020 Financial Statements

HIRE also announces it has completed the filing of its restated condensed consolidated interim financial statements for the three and nine months ended September 30, 2020 (the “Restated Interim Financial Statements”) and corresponding amended Management’s Discussion and Analysis (“MD&A”).

The Restated Interim Financial Statements were filed to correct an identified error in the calculation of the carrying value of convertible debentures and the warrants which were reduced by $1.8 million to $2.3 million from $4.1 million. On a gross basis, before the recognition of finder’s fees, this adjustment was $1.9 million to the convertible debenture carrying amount and a reduction in the unrealized loss on fair value on the statement of loss of $1.9 million. This adjustment had no impact on cash and no impact on total assets.

As a result of the above noted changes, net loss for the three months ended September 30, 2020 decreased to $4.1 million from $5.9 million. For the nine months ended September 30, 2020 net loss decreased to $5.9 million from $7.8 million.  Furthermore, total liabilities decreased to $8.4 million from $10.2 million, and total shareholders’ equity increased to ($1.7 million) from ($3.5 million) as at September 30, 2020.

The Restated Interim Financial Statements and corresponding amended MD&A have been posted on SEDAR at www.sedar.com

Conference Call Details

As previously announced, HIRE will host a conference call to review its earnings results on April 29, 2021 at 9:00 a.m. ET. The conference call will be webcast at:

http://meetingconnectsales.adobeconnect.com/hire/

The conference call will also be available by dialing 416-764-8658 or 888-886-7786. Please dial in 10 minutes before the start of the call.

 

Selected Financial Highlights

 

Period ended >>

3 months ended December 31, 2020 3 months ended December 31, 2019 12 months ended December 31, 2020 12 months ended December 31, 2029
$ $ $ $
Net Loss (4,788,474) (4,423,318) (10,716,222) (7,189,052)
Interest 70,657 28,373 132,637 219,005
Amortization 52,416 22,650 126,120 90,600
Depreciation 5,887 29,661 153,222 165,559
Tax 52,046 (31,865) 14,955 (44,984)
EBITDA (4,607,468) (4,374,499) (10,289,288) (6,758,872)
Add:
Restructuring & Other Non-operating Items 545,201 450,927 2,722,552 1,747,422
Unrealized loss on fair value of convertible debenture derivatives 3,748,544 6,784,682
Unrealized loss on fair value of Atlas ID 13,760 13,760
Share based compensation expense 38,472 296,172
Listing related share-based consideration 2,670,926 2,670,926
Legal and other listing expenses 428,937 428,937
Rent expense (26,548) (22,252) (106,192) (89,008)
Adjusted EBITDA (288,039) (845,961) (578,314) (2,000,595)

 

 

 

Period ended >>

3 months ended December 31, 2020 3 months ended December 31, 2019 12 months ended December 31, 2020 12 months ended December 31, 2029
$ $ $ $
Net Loss for the Period (4,788,474) (4,423,318) (10,716,222) (7,189,052)
Add:
Restructuring & other non-operating items               545,201                450,927                2,722,552           1,747,422
Unrealized loss on fair value of convertible debenture derivatives            3,748,544                           –               6,784,682                         –
Unrealized loss on fair value of Atlas ID                 13,760                           –                     13,760                         –
Share based compensation expense                 38,472                           – 296,172                         –
Listing related share-based consideration                        –            2,670,926                          –           2,670,926
Legal and other listing expenses                        –                428,937                          –              428,937
Non-recurring rent                        –                        –              113,000                         –
Adjusted net loss (442,497) (872,528) (786,056) (2,341,767)
Adjusted net loss per share (0.01) (0.03) (0.02) (0.08)

 

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 Annual Financial Statements and MD&A, which have been posted on SEDAR at www.sedar.com.

All financial figures are in Canadian dollars unless otherwise noted.

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.

  1. Randstad N.V., The Adecco Group, Robert Half International Inc., Upwork Inc., ManpowerGroup, Learning Technologies Group, Kforce Inc., TrueBlue, Resources Connection Inc., and The Caldwell Partners International Inc.
  2. 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”).
  3. 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 and losses on derivative financial instruments recognized as part of financings, other unrealized fair value through profit or loss mark-to-market gains or losses, 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.
  4. Adjusted net earnings (loss) is a non-IFRS measure that does not have a standardized meaning prescribed by IFRS. The Company defines adjusted net earnings (loss) as net earnings (loss) excluding restructuring and other non-operating items, unrealized gains and losses on derivative financial instruments recognized as part of financings, other unrealized fair value through profit or loss mark-to-market gains or losses, and share based compensation expenses. The Company believes that adjusted net earnings (loss) is a meaningful metric in assessing the Group’s financial performance.
  5. 2449983 Ontario Inc. (“The Kavin Group”)
  6. The Headhunters Recruitment Inc. (“The Headhunters”)
  7. Taylor Ryan Inc. and TR Partners Inc (collectively “Taylor Ryan”)

 

HIRE Announces the Engagement of Sophic Capital for Capital Markets Advisory and IR Services

HIRE is pleased to announce that it has entered into a capital markets advisory agreement with Sophic Capital Inc., a comprehensive capital markets advisory firm focused on publicly traded growth companies.  Sophic has been engaged to provide IR services including introducing the story to new institutions and analysts and to create a complete capital markets communications strategy to assist the Company with executing on its growth plans.

The agreement with Sophic is effective for a twelve-month term and Sophic is entitled to receive 400,000 stock options and a monthly fee of $8,000. The stock options vest quarterly in four equal installments over a period of twelve months and have an exercise price of CAD$0.45 per share for a period of three years from the date of grant. The agreement is subject to TSX Venture Exchange approval.

 

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 our clients manage change in the workplace in order to achieve success.

For further information, please contact:

HIRE Technologies Inc.

Simon Dealy, Chief Executive Officer

Phone: (647) 868-9611

Email: sdealy@hire.company

Web: 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 press 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 Technologies expects or anticipates will, or may, occur in the future, including statements about HIRE’s business prospects, future trends, plans, and strategies, including: future acquisitions, future technology product and service offerings, the future impact of COVID-19 on the Company’s business; other prospective acquisitions, investments and partnerships; organic growth in its established verticals; future efficiencies in its operating businesses, increased awareness of HIRE and its value proposition; 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, 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. Such factors include, among others: risks related to the recent outbreak of COVID-19, which may have material adverse effects on the global financial markets, and its business, financial position, financial performance, and cash flows; the impact on the business  of broader economic factors; alignment of HIRE’s cost structure with revenue; HIRE’s limited operating history and needs for additional capital; uncertainty relating to liquidity and capital requirements; risks inherent in HIRE’s acquisition strategy; HIRE may not be able to obtain financing necessary to implement HIRE’s business plan; HIRE may not be able to obtain access to technology necessary to compete in the recruiting industry; HIRE operates in a highly competitive industry and may be unable to retain clients or market share; barriers to client portability are low; reliance on key management; and compliance with financial reporting and other requirements as a public company. Additional 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 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.