And so there will still be a bit of an improvement on that in Q4 simply because there were certain expenses that did in fact linger into Q3, but Q3 did not contain nearly as much as, let’s say, Q1 and Q2. So it’s not going to be – it will be a relatively – it will be a relatively minor improvement. But I want to be really clear on, and sometimes it becomes a really difficult concept sort of to explain or to at least see directly is obviously, we added a fairly significant amount of employees and expenses for the MRINetwork acquisition. And professional recruiting support is different than – not completely different, but is somewhat distinct from, let’s say, the services that we provide to our Snelling and HireQuest Direct franchises.
And so it’s not like you can just sort of integrate them all together and say, okay, our system-wide sales are just X-plus Y and we just can run at the same rate. It’s not that way. We have separate individuals that obviously support each division. So here’s where that’s important, and this is where it bears into the future, and it bears a great deal of understanding, or it bears to understand it in order to understand our Q3 results and sort of what’s sort of going forward. So I don’t want anybody to go away thinking, well, MRINetwork acquisition was a disaster. It’s not the case. It’s been – it’s been profitable for us. And given elevated interest rates, even if you allocate all of our interest expense to the acquisition, it is still cash flow positive and how we generally buy companies, the multiple of EBITDA that we look to buy companies at, it’s still squarely in the middle of it.
Now it’s not quite the home one, we had hoped to hit, because obviously, it has been a challenging economic environment. But I just don’t want people to go away thinking yes, your SG&A is up in an absolute sense, which it is, the MRINetwork is comfortably profitable. Now the reality is, is that, if you recall in Q1, our system-wide sales and our revenues were excluding MRI, were roughly flat with the prior year. And it was basically at the end of March that we started seeing a, I would call it, a noticeable, a noticeable decline in our system-wide sales in, in the HireQuest Direct, but more specifically or more noticeably in the Snelling – on the Snelling side. And that continued into Q2 – Q3 probably even deteriorated a little bit more than Q2, but it’s fairly – I would say that it’s fairly stable, fairly stable, but obviously at lower levels.
So to the extent that our SG&A expenses are higher on a relative basis, it’s because of the operating leverage that we lost in the – basically on the Snelling and HireQuest Direct side. And obviously, that goes to part of what is important about the, the TEC acquisition is that, in reality, we’ll be able to add that $34 million of system-wide sales on. Well, we didn’t – we have basically the same perm staff right now than what we had, let’s say, in April of this year, because we spent 2 years hanging off of dear life trying to keep our good staff, and we knew already in May, we’ve probably engaged with TEC already back in May, along with a few other – along with a few other prospective acquisitions. So we were expecting to be able to recover our operating leverage.
And so anyway, going forward, to the extent that we’re tracking back to sort of where is our SG&A relative to what it was in the past, we absolutely expect by Q1, assuming no major changes and no major changes in, no major changes in the economy or no other major acquisitions is that we should be sort of back at a level of SG&A relative to our revenue excluding workers’ comp also keeping that thrown out. But by Q1, it will be at normal – we will be at normal levels in Q1. I hope that answers your question. I know that was a really, really, really long answer, but…
Mike Baker: Yes. No, no, no. It obviously did one really quick follow-up that last thing you said by 1Q ‘24, excluding working comp, SG&A back to normal levels. What’s the normal level? Is that that I think you said 50 – around 54% of royalties or just fall…
Rick Hermanns: No. We shoot for less. Look, we shoot for less than that. I mean I would – I mean I would certainly target less than 50%. That’s really more where – that’s more what we’re targeting. Now again, obviously when we – it’s kind of an interesting thing. When we bought MRI at the end of 2022 and they had done around $260 million, $270 million worth of system-wide sales. And of course, we had done – we were on target to do $450 million, something like that. So obviously – and we knew due to some franchise terminations in the MRINetwork, we were never going to hit that $270 million figure, but we knew – but obviously, professional recruiting has been hit heavier than staffing. But net you sit there and say, well, gosh, we should – it would have been fair to think that we would have been pushing $7 million odd of system-wide sales.
