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CST: 05/12/2019 21:58:55   

Quest Resource Holding Corporation Reports Third Quarter 2019 Financial Results

21 Days ago

THE COLONY, Texas, Nov. 14, 2019 (GLOBE NEWSWIRE) -- Quest Resource Holding Corporation (NASDAQ: QRHC) ("Quest"), a national leader in environmental reuse, recycling, and waste disposal services, today announced financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 Highlights

  • Revenue was $23.9 million, a 7.7% decrease compared with the third quarter of 2018.
  • Gross profit was $4.8 million, a 6.7% increase compared with the third quarter of 2018.
  • Gross margin increased 270 basis points to 19.9% compared with 17.2% of revenue for the third quarter of 2018.
  • Net income per share was $0.00, an improvement compared with a net loss per share of $(0.04) during the third quarter of 2018. 
  • Adjusted EBITDA was $860,000, a 27.5% increase compared with the third quarter of 2018.

September 30, 2019 Year-to-Date Highlights

  • Revenue was $76.0 million, a 3.2% decrease compared with the same period of 2018.
  • Gross profit was $14.1 million, a 13.0% increase compared with the same period of 2018.
  • Gross margin increased 270 basis points to 18.5% compared with 15.8% of revenue for the same period of 2018.
  • Net loss per share improved to $(0.01), including $248,000, or $0.02 per share, of expenses related to our April 2019 equity offering by selling shareholders, compared to $(0.17) during the same period of 2018. 
  • Year-to-date Adjusted EBITDA was $2.5 million, a 58.2% increase compared to the same period of 2018.

Key Recent Highlights

  • New sales leadership - Quest appointed Matthew C. Lewis as Senior Vice President of Sales.  Mr. Lewis brings more than 30 years of experience in sales and operations leadership in complex end markets within the waste and environmental services industry. 

“We delivered record gross profit and 27% growth in Adjusted EBITDA during the quarter, reflecting our continued success in transitioning our business to focus on providing higher value-added solutions to our customers.  As previously discussed and expected, our transition away from lower value-added solutions has resulted in challenging revenue comparisons relative to prior periods,” said S. Ray Hatch, President and Chief Executive Officer.  “With solid year-to-date performance, we believe we are on track to meet our profitability goals for 2019, which include 10%+ growth in gross profit.  We continue to find acceptance across multiple end markets, including the food service vertical where recent wins provide us with an opportunity to demonstrate our differentiated and compelling value proposition.  We also have additional growth opportunities with our existing customers who value our flexible solution offerings and the service levels we provide.”

Third Quarter 2019 Earnings Conference Call and Webcast

Quest will conduct a conference call Thursday, November 14, 2019, at 4:00 p.m. Central Time, to review the financial results for the third quarter ended September 30, 2019. Investors interested in participating on the live call can dial 1-800-289-0438 within the U.S. or 1-323-794-2423 from abroad.  The conference call, which may include forward-looking statements, is also being webcast and is available via the investor relations section of Quest’s website at www.QRHC.com. A replay of the webcast will be archived on Quest’s investor relations website for 90 days.

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

In this press release, a non-GAAP financial measure, "Adjusted EBITDA," is presented. From time-to-time, Quest considers and uses this supplemental measure of operating performance in order to provide an improved understanding of underlying performance trends. Quest believes it is useful to review, as applicable, both (1) GAAP measures that include (i) depreciation and amortization, (ii) interest expense, (iii) stock-based compensation expense, (iv) income tax expense, and (v) certain other adjustments, and (2) non-GAAP measures that exclude such items. Quest presents this non-GAAP measure because it considers it an important supplemental measure of Quest's performance. Quest's definition of this adjusted financial measure may differ from similarly named measures used by others. Quest believes this measure facilitates operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain expense items that would not otherwise be apparent on a GAAP basis. This non-GAAP measure has limitations as an analytical tool and should not be considered in isolation or as a substitute for the Company's GAAP measures. (See attached table "Reconciliation of Net Income (Loss) to Adjusted EBITDA.")

About Quest Resource Holding Corporation

Quest is a national provider of reuse, recycling, and disposal services that enable our customers to achieve and satisfy their environmental and sustainability goals and responsibilities.  Quest provides businesses across multiple industry sectors with single source, customer specific solutions to address a wide variety of waste streams and recyclables generated by their operations.  Quest also provides information and data that tracks and reports the environmental results of Quest’s services, provides actionable data to improve business operations, and enables Quest’s customers to achieve and satisfy their environmental and sustainability goals and responsibilities. For more information, visit www.QRHC.com.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, which provides a "safe harbor" for such statements in certain circumstances.  The forward-looking statements include, but are not limited to, our belief we now target the right markets with the right services; our belief we have operations in place to sustainably support profitability while consistently providing excellent customer service; our belief that our efforts have positioned us well to grow sales at our targeted rate of 10% to 15% per year; our expectation profitability will continue to grow at an even faster pace, at our current business levels, coupled with the operating leverage inherent in our business model; and our belief  that the financial measures contained in this press release facilitate operating performance comparisons from period to period.  Words such as “anticipate,” "estimate," "expect," "project," "intend," "plan," "predict," "believe" and similar words, expressions and variations of these words and expressions are intended to identify forward-looking statements. These statements are based on our current expectations, estimates, projections, beliefs, and assumptions.  Such statements involve significant risks and uncertainties.  Actual events or results could differ materially from those discussed in the forward-looking statements as a result of various factors, including, but not limited to, competition in the environmental services industry, the impact of the current economic environment, and other factors discussed in greater detail in our filings with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2018, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K.  You are cautioned not to place undue reliance on such statements and to consult our SEC filings for additional risks and uncertainties that may apply to our business and the ownership of our securities.  Our forward-looking statements are presented as of the date made, and we disclaim any duty to update such statements unless required by law to do so.

Investor Relations Contact:

Three Part Advisors, LLC
Joe Noyons
817.778.8424

Financial Tables Follow

Quest Resource Holding Corporation and Subsidiaries

STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)

  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2019   2018   2019   2018
Revenue $ 23,926   $ 25,920     $ 76,020     $ 78,545  
Cost of revenue   19,154     21,450       61,956       66,099  
Gross profit   4,772     4,470       14,064       12,446  
Selling, general, and administrative   4,221     4,638       12,663       12,269  
Depreciation and amortization   330     407       982       2,373  
Total operating expenses   4,551     5,045       13,645       14,642  
Operating income (loss)   221     (575 )     419       (2,196 )
Interest expense   119     106       344       336  
Income (loss) before taxes   102     (681 )     75       (2,532 )
Income tax expense   55           165        
Net income (loss) $ 47   $ (681 )   $ (90 )   $ (2,532 )
                             
Net income (loss) applicable to common stockholders $ 47   $ (681 )   $ (90 )   $ (2,532 )
Net income (loss) per common share:                            
Basic $ 0.00   $ (0.04 )   $ (0.01 )   $ (0.17 )
Diluted $ 0.00   $ (0.04 )   $ (0.01 )   $ (0.17 )
                             
Weighted average number of common shares outstanding:                            
Basic   15,350     15,313       15,340       15,308  
Diluted   15,399     15,313       15,340       15,308  
                             

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(Unaudited)
(In thousands)

  Three Months Ended     Nine Months Ended
  September 30,     September 30,
  2019   2018   2019   2018
Net income (loss) $ 47   $ (681 )   $ (90 )   $ (2,532 )
Depreciation and amortization   354     452       1,056       2,509  
Interest expense   119     106       344       336  
Stock-based compensation expense   285     188       758       594  
Other adjustments       610       248       662  
Income tax expense   55           165        
Adjusted EBITDA $ 860   $ 675     $ 2,481     $ 1,569  
                             

BALANCE SHEETS
(In thousands, except per share amounts)

  September 30,     December 31,
  2019     2018
    (unaudited)          
ASSETS              
Current assets:              
Cash and cash equivalents $ 2,069     $ 2,122  
Accounts receivable, less allowance for doubtful accounts of $751 and $929 as of September 30, 2019 and December 31, 2018, respectively   14,237       16,712  
Prepaid expenses and other current assets   1,239       966  
Total current assets   17,545       19,800  
               
Goodwill   58,208       58,208  
Intangible assets, net   1,853       2,611  
Property and equipment, net, and other assets   2,688       968  
Total assets $ 80,294     $ 81,587  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY              
Current liabilities:              
Accounts payable and accrued liabilities $ 13,514     $ 15,778  
Deferred revenue and other current liabilities   16       72  
Total current liabilities   13,530       15,850  
               
Revolving credit facility, net   4,228       5,194  
Other long-term liabilities   1,295        
Total liabilities   19,053       21,044  
               
Commitments and contingencies              
               
Stockholders’ equity:              
Preferred stock, $0.001 par value, 10,000 shares authorized, no shares issued or outstanding as of September 30, 2019 and December 31, 2018          
Common stock, $0.001 par value, 200,000 shares authorized, 15,350 and 15,329 shares issued and outstanding as of September 30, 2019 and December 31, 2018   15       15  
Additional paid-in capital   160,490       159,702  
Accumulated deficit   (99,264 )     (99,174 )
Total stockholders’ equity   61,241       60,543  
Total liabilities and stockholders’ equity $ 80,294     $ 81,587  
               

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