Rick Hermanns: There you go. So we did that. So let’s just say, it was $460. I would say that it should — again, realizing the economy is clearly in a fraud position. A lot of things could happen. It would generally — if the economy were flat it should go up just based on when certain of our acquisitions took place in 2022, right? So there should be growth simply from acquisitions, not even including MRI.
Aaron Edelheit: Got you. No, no. That’s really helpful. And then, — and so what I’m so fascinated by is that, you were mentioning amortization and it’s why, it’s real — I love that you break out EBITDA normally when you look at adjusted EBITDA you kind of get really scared, but you can tie in to your cash flows what you’re building. And so, that’s really helpful. Now in terms of MRI, how do you see the timeline of the integration of that in terms of you’re going to €“ obviously, we’re going to see a big jump in revenue, but you’re flowing through making sure that you’re acquiring that you’re fixing the system, and the branches, and cross-selling, and maybe closing down some? Like, how do you think about that, in terms of how the year will progress? When do you think it will kind of shake out so to speak?
Rick Hermanns: So I think that by — and this was in the press release I think, for the earnings, that the first half of the year will contain costs still related to the transition. And there was a couple of people, who as an example were €“ or are sort of holdovers to make sure that the financial systems integrate. And so there are some more savings to come. And there are let’s say lingering contracts that we are on still that will not be renewed. And I’m not talking about human capital now, I’m talking about just there was €“ we give you an example there’s one software that was purchased that frankly, we didn’t like at all, but it runs through April. So, we’re still stuck with that, for another six weeks from now, right? But then that’s going to go away. But by the end of April, or I mean by the end of June I would expect that most of the transition costs will have €“ will be pretty much where we should be.
Aaron Edelheit: And so you would expect maybe like Q3 we’re seeing kind of a clean kind of integrate €“ fully integrated quarter?
Rick Hermanns: Sure. Unless, we do another acquisition. Then we’re back in —
Aaron Edelheit: I hope so Rick.
Rick Hermanns: That’s exactly right. But yes at least from MRI. But yes, all things being equal by the third quarter, we should be at a relatively normal pace. And of course, that’s one of the difficulties in looking at our track record over the last four years is every quarter or three out of four quarters tends to have an acquisition in it, or something or a pandemic, and it clearly makes things difficult finally to look at. You got to really pay attention unfortunately. But if you look through it you can €“ as I think most people can look at it and say, wow, there’s a lot of improvements in here and a lot of good things to grab.
Aaron Edelheit: Thank you so much.
Rick Hermanns: Sure.
Operator: You have a question from Stanford Wyatt at August Partners. Please pose your question. Your line is live.
Stanford Wyatt: Hey, Rick. How are you doing?
Rick Hermanns: We’re good.
Stanford Wyatt: Hey, good. I just had a quick question. I know you noted in the press release that, you put the Dental Power up for sale and excluding €“ it looks like that costs you about $1.3 million of revenue. So, I guess adding that back your revenue grew over 40%. I know you had a more difficult comparison in the fourth quarter versus third quarter, but that’s €“ I mean, that’s showing accelerated growth to last quarter. I guess is that on a normalized basis? Is that the right way to think about it?
Rick Hermanns: I’m not quite sure, I understand the question.
Stanford Wyatt: Okay. Yeah. Just I mean, looking at the press release it said, you put Dental Power business as listed for sale and total revenue would have been $9.4 million without that which €“ yeah so that’s €“ I mean, that’s over 40% growth to last year on a normalized.
Rick Hermanns: If you take that out, it certainly alters things, right? So comparing third quarter to fourth quarter is nearly impossible, unless you back out the Dental Power revenues from the third quarter. And so I would simply say that, there wasn’t really all that much appreciably different in the real world between the third quarter and the fourth quarter just the reclassification of Dental Power as discontinued operations just change that. So I wouldn’t read anything into that part.
Stanford Wyatt: Okay. Got it. Yeah. Just looking at the year-over-year growth rates, because I know you had more difficult comparing in 4Q without any COVID hit last year, and then obviously two weeks of MRI in 4Q, which maybe offset that. But nonetheless that’s a really high growth rate relative to your peers. So, good to see that continuing. And then one other question just on the kind of the EBITDA margins or just the margin profile overall. I’ve always looked at kind of the adjusted EBITDA relative to system-wide sales to kind of take out some of the non-cash and some of the transition acquisition costs and all that. And I know that, it looks like the MRI deal will be a lower margin deal. But over time, do you think you get back kind of in line? Does the margin profile get back in line with the core HireQuest business?
Rick Hermanns: That’s really a $13 million question, right? I am certainly — the deal wasn’t priced on margins, it was just priced on EBITDA. And therefore, the profile may always be different. And I don’t think that we’ll ever get to — I don’t think we’ll ever get to what we have let’s say for the Snelling and HireQuest Direct on it. Certainly, not relative to system-wide sales, we’ll never get to it for that never come close to it. As far as revenues, I believe that we can get saying we can get within a reasonable distance of it.
Stanford Wyatt: Yeah.
Rick Hermanns: But again, part of that and I was literally speaking to our VP of Ops today about that almost specifically using the example of the Georgia manufacturer that I was talking about. Well realistically, if that comes through to fruition, that’s the type of kind of like a soft gain that I’m saying that doesn’t get priced into it, right? So it’s like yes we might not get to that point. That doesn’t mean it’s not really adding even more sort of more value. And so, your question is really apt. It’s just too early to tell, how close we’ll be able to get to our traditional margins.
Stanford Wyatt: Yeah. Okay. Got it. Well, I know in the deck you highlight the $4 million of EBITDA that MRI could do on a normalized basis just as you get some cost efficiencies there. And the core business doing in the low to mid-20s of EBITDA this year plus the $4 million you picked up. Maybe that’s a reasonable way to think about it. And then hopefully there’s more upside to the $4 million from MRI as you…
Rick Hermanns: But to your point. Right is that if we had $22 million of EBITDA — adjusted EBITDA compared to $31 million worth of revenues, you sit there sales you’re pushing — saying you’re pushing 65%, 70%. And you sit there and say “Well, okay now we get $4 million for what was roughly let’s just say $11 million of revenues. You say well that sucks you got — I’m saying what a terrible deal, right? You’re down in the — you’re down below your sub-40%. But then you sit there and say “Well, but that’s still less than 4x — in less than 4x you paid less than about 3.4x EBITDA which is a good deal, right? So that’s where — like I said, it’s unfortunate from the standpoint, from an analyst standpoint or an investor standpoint, it kind of bollixed our numbers up a bit, right?
It’s not — it’s just not as clean as it used to be. That being said, it’s goes back to my first sentence which were the first part of my response is the deal was priced based off of EBITDA not based off of margins.
