Toronto, Ontario--(Newsfile Corp. - November 30, 2020) - HIRE Technologies Inc. (TSXV: HIRE) ("HIRE" or the "Company"), a company focused on modernizing and digitizing the fragmented staffing industry, is pleased to announce financial results for the quarter ended September 30, 2020. This earnings release should be read in conjunction with HIRE's Condensed Consolidated Interim Financial Statements and Management's Discussion and Analysis, which have been posted on SEDAR at www.sedar.com. All financial figures are in Canadian dollars unless otherwise noted.
"Our clients continue to trust HIRE for their staffing and placement needs in light of ongoing uncertainty surrounding COVID-19, with demand for flexible work remaining steady. While headlining this quarter was the acquisition of The Headhunters, our operational improvements allowed us to break even on an adjusted EBITDA basis. This was a record quarter in the short history of our company and we are now better positioned than ever to meet the changing demands of our clients and partners," commented Simon Dealy, Chief Executive Officer of HIRE.
Q3 2020 Highlights
- Generated adjusted EBITDA(1) for the three months ended September 30, 2020 of ($56,477), an increase of $89,385 compared to ($145,862) for the same period last year. The improvement in adjusted EBITDA was a result of restructuring activities and immediate accretion on the acquisition of The Headhunters Recruitment Inc. ("The Headhunters"). The results demonstrate the Company's resilience during COVID-19.
- Group revenue for the third quarter was $2,549,339, 16.1% lower than $3,040,243 for the same quarter in 2019. Lower revenue was driven by a combination of overall market weakness due to COVID-19 impacting staffing levels, particularly in the contract space across all verticals, and lower year-over-year results on permanent placements in the accounting and finance vertical. These unfavourable variances were tempered by robust activity in Western Canada permanent placements across all verticals.
- Despite lower year-over-year revenue, gross margin improved to $883,317 (34.6% gross margin) in the quarter, up from $736,458 (24.2% gross margin) over the same period last year. The improvement in gross margin was a result of higher permanent placements relative to contract placements.
- Selling, general and administrative expenses ("SG&A") in the quarter were $1,888,434 compared to $1,618,892 for the quarter ended September 30, 2019. SG&A included higher option issuance expense of $257,700 ($213,523 - September 30, 2019) and higher restructuring and other non-operating items of $676,209 ($503,938 - September 30, 2019). Excluding these items, SG&A expenses were essentially flat.
- Adjusted net loss for the quarter was $100,181 (adjusted net loss per share of $0.00), a $106,154 improvement compared to the adjusted net loss of $206,335 (adjusted net loss per share of $0.01) for the same period last year.
- On August 21 and 24, 2020, the Company closed a private placement of unsecured convertible debentures for gross proceeds of $2,419,000.
- On September 1, 2020, the Company acquired 100% of The Headhunters for $400,000 and future consideration based on 4.0x trailing twelve months EBITDA calculated on the second anniversary of closing less $400,000 and closing working capital adjustments. The Headhunters is a leading recruitment firm with a focus on finding the right fit through its proprietary Workstyle & Performance Profile behavioural assessment tool. The acquisition expands HIRE's presence across four provinces in western Canada.
- On September 29, 2020 the Company made a strategic investment via a 10% $200,000 USD convertible note in Atlas ID Systems Inc. ("Atlas ID"); an HR technology company that powers a private and secure COVID-19 risk mitigation platform for employers. The platform enables individuals to voluntarily self-report symptoms, receive COVID-19-related test results, and choose when and with whom to share those results with end-to-end encrypted technology. The Company also entered into a partnership to be Atlas ID's exclusive distribution partner in Canada.
Subsuquent to the End of the Quarter
- HIRE announced the Company has entered into a definitive arm's length share purchase agreement with the shareholders of Kavin Talent Management & Recruiting ("KTMR"), to acquire all of the issued and outstanding shares of KTMR. KTMR offers staffing services for a wide range of industrial and health care roles in Southern Ontario and other Canadian jurisdictions.
- To fund the acquisition, HIRE announced the Company intends to complete a non-brokered private placement financing of up to $1,000,000 at $0.60 per unit with each unit consisting of one common share and one half of one share purchase warrant with each whole warrant exercisable for one common share for a period of 24 months at $0.90 per common share.
Outlook
While uncertainty remains with the COVID-19 pandemic, the Company is operationally well-positioned to meet the needs of its current and future partners.
The Company's priorities continue to be:
- Execute on acquisitions, investments and partnerships.
- Pursue organic growth in new and established verticals.
- Explore additional opportunities for efficiencies in its operating businesses.
- Increase awareness of HIRE and its unique value proposition.
Selected Financial Highlights
The financial results of HIRE for the three and nine months ended September 30, 2020 and 2019 are summarized below: Please see SEDAR for complete copies of the Company's condensed interim consolidated financial statements and MD&A.
| Three Months Ended | Nine Months Ended | |||
| Period Ended >> | Sept. 30, 2020 | Sept. 30, 2019 | Sept. 30, 2020 | Sept. 30, 2019 |
| Net Loss | ($5,942,533) | ($923,796) | ($7,754,046) | ($2,765,734) |
| Interest | $37,753 | $23,085 | $61,979 | $190,632 |
| Amortization | $28,404 | $22,650 | $73,704 | $67,950 |
| Depreciation | $41,279 | $41,363 | $147,335 | $135,898 |
| Tax | ($37,184) | ($4,373) | ($48,519) | ($13,119) |
| EBITDA | ($5,872,281) | ($841,071) | ($7,519,547) | ($2,384,373) |
| Add: | ||||
| Restructuring & Other Non-Recurring Items | $676,209 | $503,938 | $2,177,351 | $1,296,495 |
| Convertible debentures - unrealized loss on fair value of derivative | $4,908,443 | -- | $4,908,443 | -- |
| Share based compensation expense | $257,700 | $213,523 | $257,700 | $567,829 |
| Rent expense | ($26,548) | ($22,252) | ($79,644) | ($66,756) |
| Adjusted EBITDA | ($56,477) | ($145,862) | ($255,697) | ($586,805) |
| Three Months Ended | Nine Months Ended | |||
| Period ended >> | Sept. 30, 2020 | Sept. 30, 2019 | Sept. 30, 2020 | Sept. 30, 2019 |
| Net Loss for the Period | ($5,942,533) | ($923,796) | ($7,754,046) | ($2,765,734) |
| Add: | ||||
| Restructuring & Other Non-Recurring Items | $676,209 | $503,938 | $2,177,351 | $1,296,495 |
| Convertible debentures - unrealized loss on fair value of derivative | $4,908,443 | -- | $4,908,443 | -- |
| Share based compensation expense | $257,700 | $213,523 | $257,700 | $567,829 |
| Non-Recurring Rent | -- | -- | $113,000 | -- |
| Adjusted net loss | ($100,181) | ($206,335) | ($297,552) | ($901,410) |
| Adjusted net loss per share | ($0.00) | ($0.01) | ($0.01) | ($0.03) |
| Weighted number of shares | 48,097,746 | 38,712,581 | 48,090,829 | 34,932,444 |
Non-IFRS Measures
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. For more information see "Non-IFRS measures" herein.
- 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, and share based compensation expense. 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 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, and share based compensation expense. The Company believes that adjusted net earnings (loss) is a meaningful metric in assessing the Group's financial performance.
- 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 Group's financial performance and operational efficiency.
About HIRE Technologies Inc.
HIRE is building a network of staffing, IT, and HR consulting firms. We help our partners navigate the changing world through growth solutions, focusing on digital transformation. Our partnership model emphasizes preserving the identity and independence of what our partners have built while providing them with the resources and support to take their businesses further.
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: trends towards break-even financial results, the completion of future financings and acquisitions including the acquisition of KTMR and the proposed concurrent financing, the future impact of COVID-19 on the Company's business; 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.
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