Quest Resource Holding Corporation Reports First Quarter 2023 Financial Results
15 Mai 2023 - 10:00PM
Quest Resource Holding Corporation (NASDAQ: QRHC) ("Quest"), a
national leader in environmental waste and recycling services,
today announced financial results for the first quarter ended March
31, 2023.
First Quarter 2023 Highlights
- Revenue was $74.1 million, a 3.6% increase compared with the
first quarter of 2022.
- Gross profit was $12.6 million, a 12.3% increase compared with
the first quarter of 2022.
- Gross margin was 17.0% of revenue compared with 15.7% during
the first quarter of 2022.
- GAAP net loss per basic and diluted share attributable to
common stockholders was $(0.10), compared with $(0.11) per share
during the first quarter of 2022.
- Adjusted EBITDA was $4.0 million, a 6.7% increase compared with
the first quarter of 2022.
- Adjusted net income per diluted share was $0.03 compared with
adjusted net income of $0.06 per diluted share during the first
quarter of 2022.
“We delivered double-digit gross profit dollar growth while
successfully navigating inflationary pressures and commodity price
fluctuations during the first quarter. We posted strong operating
cash flow, averaging more than $2 million per quarter during the
past two quarters, and subsequent to the end of the first quarter,
we have paid down $5 million of our Monroe Capital facility. While
lower commodity prices for recycled materials continued to affect
revenue comparisons, due to the structure of our recycled commodity
contracts, these fluctuations did not significantly affect gross
profit dollars. During the first quarter, we made
significant progress with integration efforts. We are seeing the
expected contribution improvements from RWS and expect the positive
improvements to be increasingly reflected in our financials over
the next three quarters.” said S. Ray Hatch, President and Chief
Executive Officer of the Company.
“We continue to invest in the enhancement, scalability and
capabilities of our data platform and our value proposition is
resonating well with current and prospective customers. Our outlook
remains positive; we are well positioned to continue to weather a
challenging economic environment, execute our growth strategies,
and deliver double digit profitable growth during 2023 and for the
next several years.”
First Quarter 2023 Earnings Conference Call and
Webcast
Quest will conduct a conference call Monday, May 15, 2023, at
5:00 PM ET, to review the financial results for the first quarter
ended March 31, 2023. Investors interested in participating on the
live call can dial 1-855-327-6837 or 1-631-891-4304. 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, non-GAAP financial measures, "Adjusted
EBITDA," and “Adjusted Net Income” are presented. From
time-to-time, Quest considers and uses these supplemental measures
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 these non-GAAP measures because
it considers it an important supplemental measure of Quest's
performance. Quest's definition of these adjusted financial
measures may differ from similarly named measures used by others.
Quest believes these measures facilitate 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
non-GAAP measures have limitations as an analytical tool and should
not be considered in isolation or as a substitute for the Company's
GAAP measures. (See attached tables "Reconciliation of Net Loss to
Adjusted EBITDA" and “Adjusted Net Income (Loss) Per Share”).
About Quest Resource Holding Corporation
Quest is a national provider of waste and recycling services
that enable larger businesses to excel in achieving their
environmental and sustainability goals and responsibilities. Quest
delivers focused expertise across multiple industry sectors to
build single-source, client-specific solutions that generate
quantifiable business and sustainability results. Addressing a wide
variety of waste streams and recyclables, Quest provides
information and data that tracks and reports the environmental
results of Quest’s services, gives actionable data to improve
business operations, and enables Quest’s clients to excel in their
business and sustainability 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 expectation that
positive improvements will be increasingly reflected in our
financials over the next three quarters; and our belief that we are
well positioned to continue to weather a challenging economic
environment, execute our growth strategies, and deliver double
digit profitable growth during 2023 and for the next several years.
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, the spread of major epidemics (including Coronavirus)
and other related uncertainties such as government-imposed travel
restrictions, interruptions to supply chains, commodity price
fluctuations, and extended shut down of businesses, 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, 2022. 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
(Unaudited)(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
Revenue |
|
$ |
74,114 |
|
|
$ |
71,522 |
|
Cost of revenue |
|
|
61,484 |
|
|
|
60,274 |
|
Gross profit |
|
|
12,630 |
|
|
|
11,248 |
|
Selling, general, and administrative |
|
|
9,417 |
|
|
|
9,344 |
|
Depreciation and amortization |
|
|
2,425 |
|
|
|
2,365 |
|
Total operating expenses |
|
|
11,842 |
|
|
|
11,709 |
|
Operating income (loss) |
|
|
788 |
|
|
|
(461 |
) |
Interest expense |
|
|
(2,443 |
) |
|
|
(1,556 |
) |
Loss before taxes |
|
|
(1,655 |
) |
|
|
(2,017 |
) |
Income tax expense |
|
|
369 |
|
|
|
167 |
|
Net loss |
|
$ |
(2,024 |
) |
|
$ |
(2,184 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss applicable to common
stockholders |
|
$ |
(2,024 |
) |
|
$ |
(2,184 |
) |
Net loss per common
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.10 |
) |
|
$ |
(0.11 |
) |
Diluted |
|
$ |
(0.10 |
) |
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
|
19,932 |
|
|
|
19,245 |
|
Diluted |
|
|
19,932 |
|
|
|
19,245 |
|
RECONCILIATION OF NET LOSS TO ADJUSTED
EBITDA(Unaudited)(In thousands)
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
Net loss |
|
$ |
(2,024 |
) |
|
$ |
(2,184 |
) |
Depreciation and
amortization |
|
|
2,509 |
|
|
|
2,437 |
|
Interest expense |
|
|
2,443 |
|
|
|
1,556 |
|
Stock-based compensation
expense |
|
|
298 |
|
|
|
259 |
|
Acquisition, integration, and
related costs |
|
|
478 |
|
|
|
1,306 |
|
Other adjustments |
|
|
(86 |
) |
|
|
196 |
|
Income tax expense |
|
|
369 |
|
|
|
167 |
|
Adjusted EBITDA |
|
$ |
3,987 |
|
|
$ |
3,737 |
|
ADJUSTED NET INCOME (LOSS) PER
SHARE(Unaudited)(In thousands)
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
Reported net loss (1) |
|
$ |
(2,024 |
) |
|
$ |
(2,184 |
) |
Amortization of intangibles
(2) |
|
|
2,221 |
|
|
|
2,174 |
|
Acquisition, integration, and
related costs (3) |
|
|
478 |
|
|
|
1,306 |
|
Other adjustments(4) |
|
|
(76 |
) |
|
|
— |
|
Adjusted net income |
|
$ |
599 |
|
|
$ |
1,296 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share: |
|
|
|
|
|
|
|
|
Reported net loss |
|
$ |
(0.10 |
) |
|
$ |
(0.11 |
) |
Adjusted net income |
|
$ |
0.03 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding: Diluted (5) |
|
|
22,158 |
|
|
|
21,716 |
|
(1) Applicable
to common
stockholders (2) Reflects
the elimination of non-cash amortization of acquisition-related
intangible
assets (3) Reflects
the add back of acquisition/integration related transaction
costs (4) Reflects
adjustment to earn-out fair
value (5) Reflects
adjustment for dilution when adjusted net income is positive
BALANCE SHEETS
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
9,805 |
|
|
$ |
9,564 |
|
Accounts receivable, less allowance for doubtful accounts of
$2,275and $2,176 as of March 31, 2023 and December 31, 2022,
respectively |
|
|
43,579 |
|
|
|
45,891 |
|
Prepaid expenses and other
current assets |
|
|
2,407 |
|
|
|
2,310 |
|
Total current
assets |
|
|
55,791 |
|
|
|
57,765 |
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
84,258 |
|
|
|
84,258 |
|
Intangible assets, net |
|
|
31,497 |
|
|
|
33,557 |
|
Property and equipment, net,
and other assets |
|
|
5,539 |
|
|
|
5,911 |
|
Total assets |
|
$ |
177,085 |
|
|
$ |
181,491 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
$ |
33,318 |
|
|
$ |
32,207 |
|
Other current liabilities |
|
|
3,234 |
|
|
|
4,689 |
|
Current portion of notes
payable |
|
|
1,159 |
|
|
|
1,159 |
|
Total current
liabilities |
|
|
37,711 |
|
|
|
38,055 |
|
|
|
|
|
|
|
|
|
|
Notes payable, net |
|
|
68,307 |
|
|
|
70,573 |
|
Other long-term liabilities,
net |
|
|
1,591 |
|
|
|
1,724 |
|
Total liabilities |
|
|
107,609 |
|
|
|
110,352 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par
value, 10,000 shares authorized, noshares issued or outstanding as
of March 31, 2023 and December 31, 2022 |
|
|
— |
|
|
|
— |
|
Common stock, $0.001 par
value, 200,000 shares authorized,19,724 and 19,696 shares issued
and outstanding asof March 31, 2023 and December 31, 2022,
respectively |
|
|
20 |
|
|
|
20 |
|
Additional paid-in
capital |
|
|
174,237 |
|
|
|
173,876 |
|
|
Accumulated deficit |
|
|
(104,781 |
) |
|
|
(102,757 |
) |
|
Total stockholders’
equity |
|
|
69,476 |
|
|
|
71,139 |
|
|
Total liabilities and
stockholders’ equity |
|
$ |
177,085 |
|
|
$ |
181,491 |
|
|
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