HIRE Technologies Grows Revenue by 56% Year-over-Year

TORONTO, ON / ACCESSWIRE / August 29, 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 six months ended June 30, 2022. All financial figures are in Canadian dollars unless otherwise noted.

• Revenue was $18.5 million year-to-date, with year-over-year growth of $6.6 million, representing a 56% increase.

• $9.4 million in revenue for the quarter made Q2-2022 the seventh consecutive quarter of sequential record revenue.

• Gross margin of $5.0 million for the quarter and $9.5 million year-to-date were 52% and 54% on a percentage of revenue basis, with the Company reporting gross margin exceeding 50% for the first time in its history.

• Adjusted EBITDA¹ was $1.3 million for the year (adjusted EBITDA loss of $0.5 million - 2021) and $0.3 million for the quarter (adjusted EBITDA loss of $0.6 million - June 30, 2021). EBITDA loss was $3.5 million for the year (EBITDA of $2.5 million - 2021) and $2.6 million for the quarter ($0.1 million - June 30, 2021) before normalizing adjustments.

• Adjusted net income² was $0.2 million for the year with an adjusted net loss of $0.2 million for the quarter (adjusted net loss of $1.2 million for the comparable year-to-date in 2021 and $1.0 million for the quarter ended June 30, 2021). Before normalizing adjustments, net loss for the quarter was $3.2 million ($0.5 million - June 30, 2021) and for the first half of the year was $4.6 million (net income of $1.8 million - 2021).

"Our brands benefitted from strong client demand in the second quarter," said Simon Dealy, HIRE's Chief Executive Officer. "Demand outstripped the supply of talent in HIRE's key industry verticals, and we were able to maintain industry leading organic growth. With the unpredictability of financial markets near-term, it is important that we now focus on positioning the Company for sustainable long-term growth."

Q2 Financial Highlights

• Revenue at $9.4 million, $3.0 million higher than Q2-2021, included $1.3 million from acquisitions with the remaining amount attributable to organic growth from both the on-occurrence permanent placement and recurring contract books, up 58% and 14% respectively versus Q2-2021.

• Gross margin was 54% for the quarter, a 16-point increase over 38% for Q2-2021. HIRE's mix of business continues to skew toward higher margin on-occurrence and executive search business, which now proportionately makes up 44% of total revenue, versus 28% for the comparable quarter in 2021.

• HIRE maintained a consistent cost of recurring contract services as a percentage of recurring contract revenue at 80% for Q2-2022, flat sequentially against Q1-2022 and 6 points better than the 86% posted for Q2-2021. In its push for sustainability, HIRE is repositioning its presence in the health care and light industrial segments where contractor wage rates continue to increase because of demand, thereby squeezing margin and profitability in these areas. HIRE's emphasis this year is to seek more on-occurrence permanent business, while selectively passing on opportunities where profitability is challenging.

• Adjusted EBITDA was $0.3 million for the quarter, a significant improvement from an adjusted EBITDA loss of $0.6 million for Q2-2021.

• This excluded the impact of earn-out obligations treated as contingent remuneration of $1.2 million, $1.1 million in losses on the revaluation of contingent consideration, share based compensation of $0.5 million, transaction, restructuring, and non-operating items of $0.1 million, net unrealized mark-to-market gains of $0.04 million, and $0.02 million in realized gains on convertible debenture interest settled in HIRE shares. Unadjusted, EBITDA loss was $2.6 million for the quarter (EBITDA loss of $0.07 million - June 30, 2021).

Year-to-Date Financial Highlights

• Revenue for the first half of 2022 was $18.5 million; 56% higher than 2021 and driven by organic growth of 38% year-over-year, 28% on the recurring contract book and 61% on the on-occurrence permanent book.

• HIRE's 12-point improvement on gross margin as a percentage of revenue, 52% for 2022 versus 40% in 2021, was attributable to the Company's rebalanced portfolio, including 12% of revenue which now comes from executive search and improved engagement profitability in the health care and light industrial verticals.

• Adjusted EBITDA of $1.3 million for the first half of 2022 (adjusted EBITDA loss of $0.5 million for the same period in 2021) excludes earn-out obligations treated as contingent remuneration of $2.5 million, $1.8 million in losses on the revaluation of contingent consideration, transaction, restructuring, and non-operating items of $0.2 million, share based compensation of $0.6 million, net unrealized mark-to-market gains of $0.2 million, and $0.02 million in realized gains on convertible debenture interest settled in HIRE shares. Unadjusted EBITDA loss was $3.5 million (EBITDA of $2.5 million - 2021).

Outlook

HIRE expects growth in Q3-2022 but at a slower pace while the staffing industry cycles through summer seasonality. The Company will continue to explore operational strategies for long-term value creation for the remainder of 2022.

Conference Call & Webcast Details

Date: Tuesday, August 30, 2022
Time: 12:00 PM Eastern Time / 9:00 AM Pacific Time
Dial-in: (+1) 416-764-8658 (Toronto local) or (+1) 888-886-7786 (Toll-Free, North America)

The conference call will be simultaneously webcast with presentation slides at: http://momentum.adobeconnect.com/hireq2/

Please join 10 minutes before the start of the call.

A recording of the conference call will be made available on hire.company.

Selected Quarterly Information

Period ended		3 months ended June 30, 2022				3 months ended June 30, 2021				6 months ended June 30, 2022				6 months ended June 30, 2021
			$				$				$				$
REVENUE			9,363,994				6,385,990				18,472,596				11,876,319
Cost of services			4,329,254				3,930,173				8,945,335				7,093,099
GROSS MARGIN			5,034,740				2,455,817				9,527,261				4,783,220
Gross margin (% of revenue)			54%				38%				52%				40%
Operating expenses:
Selling, general and administrative			6,686,496				3,488,036				11,507,926				6,251,311
Amortization of intangible assets			184,354				165,991				368,709				290,203
Interest expense (income)			(123,555)				136,627				4,214				209,925
Loss on revaluation of contingent consideration, net			1,106,632				-				1,779,079				-
OPERATING EXPENSES			7,853,927				3,790,654				13,659,928				6,751,439
Loss from operations			(2,819,187)				(1,334,837)				(4,132,667)				(1,968,219)
Other realized gains			19,804				-				19,804				-
Realized gain on convertible debenture derivatives			-				2,354				-				423,815
Unrealized gains on mark-to-market, net			42,693				924,712				168,094				3,495,374
Income tax expense			(379,062)				(55,759)				(662,406)				(167,030)
NET INCOME (LOSS)			(3,135,752)				(463,530)				(4,607,175)				1,783,940
Basic earnings (loss) per share			(0.04)				(0.01)				(0.05)				0.03
Weighted number of shares			83,888,640				63,239,786				83,888,640				61,011,881

EBITDA and Adjusted EBITDA Reconciliation

Period ended		3 months ended June 30, 2022				3 months ended June 30, 2021				6 months ended June 30, 2022				6 months ended June 30, 2021
			$				$				$				$
NET INCOME (LOSS)			(3,135,752)				(463,530)				(4,607,175)				1,783,940
Interest expense (income)			(123,555)				136,627				4,214				209,925
Amortization			184,354				165,991				368,709				290,203
Depreciation			46,025				34,442				101,535				67,733
Tax			379,062				55,759				662,406				167,030
EBITDA (LOSS)			(2,649,866)				(70,711)				(3,470,311)				2,518,831
Add:
Restructuring & non-operating items			136,406				323,128				157,971				620,186
Realized gain on convertible debenture derivatives			-				(2,354)				-				(423,815)
Other realized gains			(19,804)				-				(19,804)				-
Unrealized gain on mark-to-market, net			(42,693)				(924,712)				(168,094)				(3,495,374)
Future contingent remuneration from acquisitions			1,231,038				100,534				2,481,416				201,067
Share-based consideration			533,828				9,882				567,853				92,838
Loss on revaluation of contingent consideration, net			1,106,632				-				1,779,079				-
Rent expense			(22,345)				(27,812)				(48,076)				(55,624)
ADJUSTED EBITDA (LOSS)			273,196				(592,045)				1,280,034				(541,891)
Adjusted EBITDA (loss) as a % of revenue			2.9%				(9.3%)				6.9%				(4.6%)

Adjusted Net Income

Period ended		3 months ended June 30, 2022				3 months ended June 30, 2021				6 months ended June 30, 2022				6 months ended June 30, 2021
			$				$				$				$
NET INCOME (LOSS)			(3,135,752)				(463,530)				(4,607,175)				1,783,940
Add:
Restructuring & other non-operating items			136,406				323,128				157,971				620,186
Realized gain on convertible debenture derivatives			-				(2,354)				-				(423,815)
Other realized gains			(19,804)				-				(19,804)				-
Unrealized gain on mark-to-market, net			(42,693)				(924,712)				(168,094)				(3,495,374)
Future contingent remuneration from acquisitions			1,231,038				100,534				2,481,416				201,067
Share-based compensation expense			533,828				9,882				567,853				92,838
Loss on revaluation of contingent consideration, net			1,106,632				-				1,779,079				-
ADJUSTED NET INCOME (LOSS)			(190,345)				(957,052)				191,246				(1,221,158)
Basic adjusted net income (loss) per share			(0.00)				(0.02)				0.00				(0.02)
Weighted number of shares			83,888,640				63,239,786				83,888,640				61,011,881

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 June 30, 2022 ("Financial Statements") and related Management's Discussion and Analysis for the three and six months ended June 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).

1. 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.

2. 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.

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 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.

SOURCE: HIRE Technologies Inc.

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