What caused HQI's sharp earnings drop in Q4?

HireQuest Inc. (HQI) experienced a significant decline in earnings in Q4 2024, primarily due to the following factors: 1. **Revenue Decline**: Total revenue decreased by 17.2% to $8.1 million compared to $9.8 million in the same period the previous year. This decline was likely a result of the challenging environment in the staffing industry, which impacted demand for HireQuest's services. 2. **Franchise Royalties Decrease**: Franchise royalties decreased by 14.0% to $7.6 million compared to $8.9 million in the prior year period. This reduction indicates a decline in the revenue generated from franchised offices. 3. **System-Wide Sales Decrease**: System-wide sales for the fourth quarter of 2024 decreased by 6.0% to $134.8 million compared to $143.5 million for the same period in 2023. This decline suggests a reduction in the overall sales generated by HireQuest's franchisees. 4. **Cost Reduction Initiatives**: Despite the revenue decline, HireQuest was able to reduce Selling, General and Administrative (SG&A) expenses by 22.7% to $5.1 million compared to $6.6 million in the prior year period. This indicates effective cost management during the quarter. In summary, HireQuest's Q4 earnings drop was primarily caused by a decrease in revenue, specifically from franchise royalties and system-wide sales, coupled with a challenging industry environment. However, the company's cost reduction initiatives helped mitigate the impact on earnings.