Quest Resource Holding Corporation Reports Second Quarter 2019 Financial Results
August 14 2019 - 4:00PM
Quest Resource Holding Corporation (NASDAQ: QRHC) ("Quest"), a
national leader in environmental reuse, recycling, and waste
disposal services, today announced financial results for the second
quarter ended June 30, 2019.
Second Quarter 2019 Highlights
- Revenue was $25.4 million, an 8.9% decrease compared with the
second quarter of 2018.
- Gross profit was $4.7 million, a 7.3% increase compared with
the second quarter of 2018.
- Gross margin increased 280 basis points to 18.7% compared with
15.9% of revenue for the second quarter of 2018.
- Net income per share was $0.00, an improvement compared with a
net loss per share of $(0.04) during the second quarter of
2018.
- Adjusted EBITDA was $825,000, a 5.8% increase compared with the
second quarter of 2018.
Year-to-Date 2019 Highlights (June 30,
2019)
- Revenue was $52.1 million, a 1.0% decrease compared with the
same period of 2018.
- Gross profit was $9.3 million, a 16.5% increase compared with
the same period of 2018.
- Gross margin increased 260 basis points to 17.8% compared with
15.2% 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 stockholders, compared to $(0.12) during the
same period of 2018.
- Year-to-date Adjusted EBITDA was $1.6 million, an 81.3%
increase compared to the same period of 2018.
Key Recent Highlights
- Continued success building relationships with key
customers – Quest’s results continue to demonstrate its
focus on adding differentiated and value-added services its
portfolio to better support and meet customers’ needs, thereby
driving higher gross profit and gross margin percentage, which
enables broader service offerings to Quest’s customers.
- The pipeline of new business opportunities continues to
grow – Quest recently secured two competitive contract
wins in the food service vertical. In both cases, Quest was
selected over incumbent providers by providing value-added
solutions, which include diverting significant waste streams from
landfills, as well as providing proprietary data reporting and
analytics for sustainability reporting and operational
improvements. With a combined count of more than 1,000
locations, Quest expects revenue from these national restaurant
chains to begin to ramp during the second half of the
year.
“Our focus on providing differentiated and value-added services
to existing customers is reflected in our solid growth and record
performance in gross profit and EBITDA, as well as our success in
winning new customers. Recent wins in the food service
vertical are evidence of how our pipeline of new strategic accounts
continues to grow, which will generate revenue and gross profit
during the second half of the year. Revenue comparisons to
the second quarter of 2018 were challenging reflecting two main
factors: a slowdown in production in a low margin waste
stream at one of our largest industrial customers; and the cycling
out of a low-margin service line with another customer. The
combination of these factors had negligible impact on gross profit
dollars, again reflecting the progress we have made in
transitioning our business to higher value-added services,” said S.
Ray Hatch, President and Chief Executive Officer.
Mr. Hatch added, “Our strategy of growing existing
relationships, adding attractive strategic customers, and providing
a portfolio of differentiated offerings combined with high service
levels and the utilization of technology to enhance our customers’
compliance reporting capability is showing solid success. We expect
to meet our profitability goals for 2019, which include the growth
of gross profit and adjusted EBITDA in excess of 10%.”
Second Quarter 2019 Earnings Conference Call and
Webcast
Quest will conduct a conference call Wednesday, August 14, 2019,
at 4:00 p.m. Central Time, to review the financial results for the
second quarter ended June 30, 2019. Investors interested in
participating on the live call can dial 1-800-239-9838 within the
U.S. or 1-323-794-2551 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. All statements other than statements
of historical fact included in this press release, including
statements regarding the company's future financial condition,
results of operations, business operations and business prospects,
are forward-looking statements. 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 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 Contact:
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 |
|
Six Months
Ended |
|
|
June 30, |
|
June 30, |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
Revenue |
|
$ |
25,445 |
|
|
$ |
27,929 |
|
|
$ |
52,094 |
|
|
$ |
52,625 |
|
Cost of revenue |
|
|
20,695 |
|
|
|
23,501 |
|
|
|
42,802 |
|
|
|
44,649 |
|
Gross profit |
|
|
4,750 |
|
|
|
4,428 |
|
|
|
9,292 |
|
|
|
7,976 |
|
Selling, general, and administrative |
|
|
4,227 |
|
|
|
3,879 |
|
|
|
8,441 |
|
|
|
7,631 |
|
Depreciation and amortization |
|
|
327 |
|
|
|
982 |
|
|
|
653 |
|
|
|
1,966 |
|
Total operating expenses |
|
|
4,554 |
|
|
|
4,861 |
|
|
|
9,094 |
|
|
|
9,597 |
|
Operating income (loss) |
|
|
196 |
|
|
|
(433 |
) |
|
|
198 |
|
|
|
(1,621 |
) |
Interest expense |
|
|
114 |
|
|
|
106 |
|
|
|
225 |
|
|
|
230 |
|
Income (loss) before
taxes |
|
|
82 |
|
|
|
(539 |
) |
|
|
(27 |
) |
|
|
(1,851 |
) |
Income tax expense |
|
|
55 |
|
|
|
— |
|
|
|
110 |
|
|
|
— |
|
Net income (loss) |
|
$ |
27 |
|
|
$ |
(539 |
) |
|
$ |
(137 |
) |
|
$ |
(1,851 |
) |
Net income (loss) applicable
to common stockholders |
|
$ |
27 |
|
|
$ |
(539 |
) |
|
$ |
(137 |
) |
|
$ |
(1,851 |
) |
Net income (loss) per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.00 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.12 |
) |
Diluted |
|
$ |
(0.00 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.12 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
15,340 |
|
|
|
15,308 |
|
|
|
15,334 |
|
|
|
15,305 |
|
Diluted |
|
|
15,362 |
|
|
|
15,308 |
|
|
|
15,334 |
|
|
|
15,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NET INCOME (LOSS) TO
ADJUSTED EBITDA(Unaudited)(In thousands)
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
27 |
|
|
$ |
(539 |
) |
|
$ |
(137 |
) |
|
$ |
(1,851 |
) |
Depreciation and
amortization |
|
343 |
|
|
|
1,027 |
|
|
|
702 |
|
|
|
2,057 |
|
Interest expense |
|
114 |
|
|
|
106 |
|
|
|
225 |
|
|
|
230 |
|
Stock-based compensation
expense |
|
269 |
|
|
|
183 |
|
|
|
473 |
|
|
|
407 |
|
Other adjustments |
|
17 |
|
|
|
3 |
|
|
|
248 |
|
|
|
51 |
|
Income tax expense |
|
55 |
|
|
|
— |
|
|
|
110 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
825 |
|
|
$ |
780 |
|
|
$ |
1,621 |
|
|
$ |
894 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEETS (In thousands,
except per share amounts)
|
|
June 30, |
|
|
December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
(unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,088 |
|
|
$ |
2,122 |
|
Accounts receivable, less
allowance for doubtful accounts of $977 and $929 as of June 30,
2019 and December 31, 2018, respectively |
|
|
15,893 |
|
|
|
16,712 |
|
Prepaid expenses and other
current assets |
|
|
1,373 |
|
|
|
966 |
|
Total current assets |
|
|
19,354 |
|
|
|
19,800 |
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
58,208 |
|
|
|
58,208 |
|
Intangible assets, net |
|
|
2,125 |
|
|
|
2,611 |
|
Property and equipment, net,
and other assets |
|
|
2,807 |
|
|
|
968 |
|
Total assets |
|
$ |
82,494 |
|
|
$ |
81,587 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
$ |
15,248 |
|
|
$ |
15,778 |
|
Deferred revenue and other
current liabilities |
|
|
23 |
|
|
|
72 |
|
Total current liabilities |
|
|
15,271 |
|
|
|
15,850 |
|
|
|
|
|
|
|
|
|
|
Revolving credit facility,
net |
|
|
4,861 |
|
|
|
5,194 |
|
Other long-term
liabilities |
|
|
1,453 |
|
|
|
— |
|
Total liabilities |
|
|
21,585 |
|
|
|
21,044 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par
value, 10,000 shares authorized, no shares issued or outstanding as
of June 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 June 30, 2019 and December 31, 2018 |
|
|
15 |
|
|
|
15 |
|
Additional paid-in
capital |
|
|
160,205 |
|
|
|
159,702 |
|
Accumulated deficit |
|
|
(99,311 |
) |
|
|
(99,174 |
) |
Total stockholders’
equity |
|
|
60,909 |
|
|
|
60,543 |
|
Total liabilities and
stockholders’ equity |
|
$ |
82,494 |
|
|
$ |
81,587 |
|
Quest Resource (NASDAQ:QRHC)
Historical Stock Chart
From Sep 2024 to Oct 2024
Quest Resource (NASDAQ:QRHC)
Historical Stock Chart
From Oct 2023 to Oct 2024