Quest Resource Holding Reports First Quarter 2019 Financial Results
May 15 2019 - 4:05PM
Quest Resource Holding Corporation (NASDAQ: QRHC) ("Quest"), a
national leader in environmental reuse, recycling, and waste
disposal services, today announced financial results for the first
quarter ended March 31, 2019.
First Quarter 2019 Highlights
- Revenue increased 7.9% to $26.6 million compared with $24.7
million for the first quarter of 2018.
- Gross profit increased 28.0% to $4.5 million compared with $3.5
million for the first quarter of 2018.
- Gross margin increased 260 basis points to 17.0% of revenue
compared with 14.4% for the first quarter of 2018.
- Operating expenses decreased 4.1% to $4.5 million compared with
$4.7 million for the first quarter of 2018, with the first quarter
of 2019 including $230,000 of expenses related to the equity
offering of selling stockholders’ stock.
- Net loss was $(164,000), a $1.1 million improvement compared
with the net loss of $(1.3) million for the first quarter of
2018.
- Net loss per share improved to $(0.01) compared with $(0.09)
for the first quarter of 2018.
- Adjusted EBITDA was $796,000 compared with $114,000 for the
first quarter of 2018.
Key Recent Highlights
- Significantly diversified ownership base -
Subsequent to quarter end, three stockholders sold approximately
4.3 million shares of common stock of the Company in a registered
public offering that closed on April 11, 2019. In a separate
transaction on the same day, an affiliate of Hampstead Park Capital
Management, an investment firm, acquired 1.75 million shares of
common stock of our company from one of the selling stockholders.
Taken together, about 40% of the company’s stock was placed with a
diversified group of existing and new stockholders. The
Company did not issue any stock and did not receive any proceeds
from the sale of the stock sold by the selling stockholders.
- Governance developments - Effective April 11,
2019, the Company appointed two designees of Hampstead Park Capital
Management to the Board of Directors, with Daniel M. Friedberg
joining as Chairman of the Board and Chairman of the Nominations
and Corporate Governance Committee, and Stephen A. Nolan joining as
a director, replacing former Chairman, Mitchell A. Saltz and former
Director, Jeffrey D. Forte.
"First quarter results were in line with our expectations.
The growth of the top line and gross profit during the first
quarter reflects continued success in finding opportunities to add
value to our customers. We are increasing locations, serving
additional waste streams, and providing more services to our
existing customers, and in turn, bolstering the strategic nature of
our relationships,” said S. Ray Hatch, President and Chief
Executive Officer. “In addition, we are pleased with the progress
we are making with new customers as our pipeline continues to grow.
With the combination of expanding business from our existing
customers and a growing pipeline of new customer opportunities, we
continue to expect double-digit growth in top line and gross profit
dollars this year and to generate mid-teen gross margins.
Coupled with the operating leverage inherent in our business model,
we expect to grow net income and adjusted EBITDA.”
First Quarter 2019 Earnings Conference Call and
Webcast
Quest will conduct a conference call Wednesday, May 15, 2019, at
5:00 p.m. Eastern Time, to review the financial results for the
first quarter ended March 31, 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
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
continued expectation of double-digit growth in top line and gross
profit dollars this year and to generate mid teen gross margins;
our expectation to grow net income and adjusted EBITDA; our
belief 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; our belief that our
definition of an adjusted financial 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. 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 Report on Form 10-K for the
year ended December 31, 2018. 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 Contacts:
Three Part Advisors, LLCJoe 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 |
|
|
March 31, |
|
|
2019 |
|
|
2018 |
|
Revenue |
$ |
26,649 |
|
|
$ |
24,696 |
|
Cost of revenue |
|
22,106 |
|
|
|
21,148 |
|
Gross profit |
|
4,543 |
|
|
|
3,548 |
|
Selling, general, and administrative |
|
4,214 |
|
|
|
3,752 |
|
Depreciation and amortization |
|
326 |
|
|
|
985 |
|
Total operating expenses |
|
4,540 |
|
|
|
4,737 |
|
Operating income (loss) |
|
3 |
|
|
|
(1,189 |
) |
Interest expense |
|
112 |
|
|
|
124 |
|
Loss before taxes |
|
(109 |
) |
|
|
(1,313 |
) |
Income tax expense |
|
55 |
|
|
|
— |
|
Net loss |
$ |
(164 |
) |
|
$ |
(1,313 |
) |
Net loss
applicable to common stockholders |
$ |
(164 |
) |
|
$ |
(1,313 |
) |
Net loss per common
share: |
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.01 |
) |
|
$ |
(0.09 |
) |
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding: |
|
|
|
|
|
|
|
Basic and diluted |
|
15,329 |
|
|
|
15,302 |
|
RECONCILIATION OF NET LOSS TO ADJUSTED
EBITDA(Unaudited)(In thousands)
|
Three Months Ended |
|
|
March 31, |
|
|
2019 |
|
|
2018 |
|
Net loss |
$ |
(164 |
) |
|
$ |
(1,313 |
) |
Depreciation and
amortization |
|
359 |
|
|
|
1,030 |
|
Interest expense |
|
112 |
|
|
|
124 |
|
Stock-based compensation
expense |
|
204 |
|
|
|
224 |
|
Other adjustments |
|
230 |
|
|
|
49 |
|
Income tax expense |
|
55 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
796 |
|
|
$ |
114 |
|
BALANCE SHEETS(In thousands,
except per share amounts)
|
|
March 31, |
|
|
December 31, |
|
|
|
2018 |
|
|
2018 |
|
|
|
|
(unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,066 |
|
|
$ |
2,122 |
|
Accounts receivable, less
allowance for doubtful accounts of $992and $929 as of March 31,
2019 and December 31, 2018, respectively |
|
|
17,733 |
|
|
|
16,712 |
|
Prepaid expenses and other
current assets |
|
|
1,147 |
|
|
|
966 |
|
Total current assets |
|
|
20,946 |
|
|
|
19,800 |
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
58,208 |
|
|
|
58,208 |
|
Intangible assets, net |
|
|
2,361 |
|
|
|
2,611 |
|
Property and equipment, net,
and other assets |
|
|
2,923 |
|
|
|
968 |
|
Total assets |
|
$ |
84,438 |
|
|
$ |
81,587 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
$ |
17,036 |
|
|
$ |
15,778 |
|
Deferred revenue and other
current liabilities |
|
|
52 |
|
|
|
72 |
|
Total current liabilities |
|
|
17,088 |
|
|
|
15,850 |
|
|
|
|
|
|
|
|
|
|
Revolving credit facility,
net |
|
|
5,158 |
|
|
|
5,194 |
|
Other long-term
liabilities |
|
|
1,609 |
|
|
|
— |
|
Total liabilities |
|
|
23,855 |
|
|
|
21,044 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par
value, 10,000 shares authorized, noshares issued or outstanding as
of March 31, 2019 and December 31, 2018 |
|
|
— |
|
|
|
— |
|
Common stock, $0.001 par
value, 200,000 shares authorized,15,329 shares issued and
outstanding asof March 31, 2019 and December 31, 2018 |
|
|
15 |
|
|
|
15 |
|
Additional paid-in
capital |
|
|
159,906 |
|
|
|
159,702 |
|
Accumulated deficit |
|
|
(99,338 |
) |
|
|
(99,174 |
) |
Total stockholders’
equity |
|
|
60,583 |
|
|
|
60,543 |
|
Total liabilities and
stockholders’ equity |
|
$ |
84,438 |
|
|
$ |
81,587 |
|
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