THE COLONY, Texas, March 12, 2020 (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 fourth quarter and year ended December 31, 2019.
Fourth Quarter 2019 Highlights
- Revenue was $23.0 million, a 9.1% decrease compared with the fourth quarter of 2018.
- Gross profit was $4.7 million, a 5.5% increase compared with the fourth quarter of 2018.
- Gross margin increased 280 basis points to 20.3% compared with 17.5% of revenue for the fourth quarter of 2018.
- Net income per share was $0.00, compared with $0.01 per share during the fourth quarter of 2018.
- Adjusted EBITDA was $850,000, a 10.2% increase compared with the fourth quarter of 2018.
Year ended December 31, 2019 Highlights
- Revenue was $99.0 million, a 4.7% decrease compared with 2018.
- Gross profit was $18.7 million, an 11.1% increase compared with 2018.
- Gross margin increased 270 basis points to 18.9% compared with 16.2% of revenue for 2018.
- Net loss per share improved to $(0.00), compared with $(0.16) loss per share for 2018.
- Adjusted EBITDA was $3.3 million, a 42.4% increase compared with 2018.
- During 2019, Quest generated $2.3 million in cash flow from operations, which was used primarily to reduce borrowings by $754,000 and bolster the cash balance to $3.4 million.
“We delivered another year of solid improvement, posting 11.1% growth in gross profit, 42% growth in Adjusted EBITDA, and, excluding one-time costs of $248,000 related to our shareholders’ equity offering, positive annual net income. As previously discussed, revenue declined compared with 2018 due to our transition away from lower value-added services and a slowdown in production at one of our largest industrial customers impacting a low margin waste stream,” said S. Ray Hatch, President and Chief Executive Officer. “The outlook for growth from our existing customer base remains strong and our pipeline of new business is growing. Subject to potential macroeconomic headwinds from the spreading coronavirus outbreak and related economic and market uncertainties, we believe that our efforts have positioned us well to continue our gross profit dollar growth. With the operating leverage inherent in our business model, we expect operating profit to grow at an even faster pace.”
2019 Earnings Conference Call and Webcast
Quest will conduct a conference call Thursday, March 12, 2020, at 5:00 PM ET, to review the financial results for the fourth quarter and fiscal year ended December 31, 2019. Investors interested in participating on the live call can dial 1-866-548-4713 within the U.S. or 1-323-794-2093 from abroad, referencing conference ID: 1349663. 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 https://investors.qrhc.com/investors. 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 waste and recycling services to customers from across multiple industry sectors that are typically larger, multi-location businesses. In addition, Quest’s programs and services enable customers to address their environmental and sustainability goals and responsibilities. Quest provides information that tracks and reports the environmental results of Quest’s services, provides actionable data to improve business operations, and enables customers to address their environmental and sustainability goals and responsibilities. For more information, visit https://www.questrmg.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 have operations in place to sustainably support profitability while consistently providing excellent customer service; our belief that our outlook for growth from our existing customer base remains strong and our pipeline of new business is growing; our belief that our efforts have positioned us well to grow gross profit; 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. These statements are based on our current expectations, estimates, projections, beliefs, and assumptions. Such statements involve significant risks and uncertainties. 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 SubsidiariesSTATEMENTS OF OPERATIONS (In thousands, except per share amounts)
| Three Months Ended | Year Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||
| (unaudited) | |||||||||||||
| Revenue | $ | 22,959 | $ | 25,261 | $ | 98,979 | $ | 103,806 | |||||
| Cost of revenue | 18,297 | 20,844 | 80,253 | 86,943 | |||||||||
| Gross profit | 4,662 | 4,417 | 18,726 | 16,863 | |||||||||
| Selling, general, and administrative | 4,153 | 3,894 | 16,816 | 16,163 | |||||||||
| Depreciation and amortization | 333 | 328 | 1,315 | 2,701 | |||||||||
| Total operating expenses | 4,486 | 4,222 | 18,131 | 18,864 | |||||||||
| Operating income (loss) | 176 | 195 | 595 | (2,001 | ) | ||||||||
| Interest expense | 87 | 102 | 431 | 438 | |||||||||
| Income (loss) before taxes | 89 | 93 | 164 | (2,439 | ) | ||||||||
| Income tax expense | 54 | — | 219 | — | |||||||||
| Net income (loss) | $ | 35 | $ | 93 | $ | (55 | ) | $ | (2,439 | ) | |||
| Net income (loss) applicable to common stockholders | $ | 35 | $ | 93 | $ | (55 | ) | $ | (2,439 | ) | |||
| Net income (loss) per common share: | |||||||||||||
| Basic | $ | 0.00 | $ | 0.01 | $ | (0.00 | ) | $ | (0.16 | ) | |||
| Diluted | $ | 0.00 | $ | 0.01 | $ | (0.00 | ) | $ | (0.16 | ) | |||
| Weighted average number of common shares outstanding: | |||||||||||||
| Basic | 15,369 | 15,321 | 15,347 | 15,311 | |||||||||
| Diluted | 15,417 | 15,321 | 15,347 | 15,311 | |||||||||
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA(Unaudited)(In thousands)
| Three Months Ended | Year Ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Net income (loss) | $ | 35 | $ | 93 | $ | (55 | ) | $ | (2,439 | ) | ||
| Depreciation and amortization | 346 | 376 | 1,402 | 2,885 | ||||||||
| Interest expense | 87 | 102 | 431 | 438 | ||||||||
| Stock-based compensation expense | 328 | 200 | 1,086 | 794 | ||||||||
| Other adjustments | — | — | 248 | 662 | ||||||||
| Income tax expense | 54 | — | 219 | — | ||||||||
| Adjusted EBITDA | $ | 850 | $ | 771 | $ | 3,331 | $ | 2,340 | ||||
BALANCE SHEETS(In thousands, except per share amounts)
| December 31, | December 31, | ||||||
| 2019 | 2018 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 3,411 | $ | 2,122 | |||
| Accounts receivable, less allowance for doubtful accounts of $767 and $929 as of December 31, 2019 and 2018, respectively | 13,900 | 16,712 | |||||
| Prepaid expenses and other current assets | 1,110 | 966 | |||||
| Total current assets | 18,421 | 19,800 | |||||
| Goodwill | 58,208 | 58,208 | |||||
| Intangible assets, net | 1,591 | 2,611 | |||||
| Property and equipment, net, and other assets | 2,436 | 968 | |||||
| Total assets | $ | 80,656 | $ | 81,587 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable and accrued liabilities | $ | 13,317 | $ | 15,778 | |||
| Deferred revenue and other current liabilities | 19 | 72 | |||||
| Total current liabilities | 13,336 | 15,850 | |||||
| Revolving credit facility, net | 4,535 | 5,194 | |||||
| Other long-term liabilities | 1,141 | — | |||||
| Total liabilities | 19,012 | 21,044 | |||||
| Commitments and contingencies | |||||||
| Stockholders’ equity: | |||||||
| Preferred stock, $0.001 par value, 10,000 shares authorized, no shares issued or outstanding as of December 31, 2019 and 2018 | — | — | |||||
| Common stock, $0.001 par value, 200,000 shares authorized,15,373 and 15,329 shares issued and outstanding as of December 31, 2019 and 2018, respectively | 15 | 15 | |||||
| Additional paid-in capital | 160,858 | 159,702 | |||||
| Accumulated deficit | (99,229 | ) | (99,174 | ) | |||
| Total stockholders’ equity | 61,644 | 60,543 | |||||
| Total liabilities and stockholders’ equity | $ | 80,656 | $ | 81,587 | |||
