Quest Resource Holding Corp Reports Mixed Q3 Results Amidst Integration Challenges
QRHC's revenue decreased by 4.0% year-over-year to $70.4 million in Q3 2023.
Gross profit marginally improved by 2.0% compared to Q3 2022, reaching $12.4 million.
Adjusted EBITDA was $3.7 million, slightly down from $3.8 million in the same quarter last year.
The company reported a GAAP net loss per diluted share of $(0.10), a slight increase from $(0.09) per diluted share in Q3 2022.
On November 14, 2023, Quest Resource Holding Corp (NASDAQ:QRHC) released its 8-K filing, detailing the financial outcomes for the third quarter ended September 30, 2023. The company, a national leader in environmental waste and recycling services, faced a slight downturn in revenue but managed to increase its gross profit marginally compared to the same period last year.
Financial Performance Overview
QRHC's revenue for the third quarter stood at $70.4 million, marking a 4.0% decrease from the third quarter of 2022. Despite the dip in revenue, the company's gross profit saw a 2.0% increase, reaching $12.4 million, with a gross margin of 17.7% compared to 16.6% in the previous year. However, the company's GAAP net loss per diluted share worsened slightly to $(0.10), compared to $(0.09) in the third quarter of 2022. Adjusted EBITDA was $3.7 million, a marginal decrease from the $3.8 million reported in the same quarter of the previous year.
Year-to-Date Financials and Management Commentary
Looking at the year-to-date figures, QRHC's revenue decreased by 1.2% to $219.0 million, while gross profit increased by a similar percentage to $38.6 million. The gross margin improved to 17.6% of revenue from 17.2% in the same period of 2022. The GAAP net loss per diluted share for the year-to-date was $(0.25), compared to $(0.14) in the previous year, and adjusted net income per diluted share was $0.12, down from $0.29.
President and CEO S. Ray Hatch acknowledged the challenges faced during the quarter, including approximately $800,000 in gross profit dollars below expectations due to issues with the systems integration of RWS and a billing adjustment for a rapidly expanding customer. Hatch stated,
Weve taken action to improve the efficiencies of RWS and estimate $1.7 million in annualized cost savings beginning in the fourth quarter of this year."
He also expressed optimism for the fourth quarter, citing an uptick in the pipeline and initiatives expected to drive a strong year-end performance.
Balance Sheet and Cash Flow Highlights
As of September 30, 2023, QRHC's balance sheet showed cash and cash equivalents of $870,000, a significant decrease from $9.6 million at the end of 2022. Total assets were reported at $170.4 million, while total liabilities stood at $102.8 million. The company's stockholders' equity amounted to $67.7 million.
Investor Relations and Non-GAAP Measures
QRHC will hold a conference call to discuss the third quarter results, providing an opportunity for investors to gain further insights into the company's performance and strategies. Additionally, QRHC provided reconciliations of GAAP to non-GAAP financial measures, such as Adjusted EBITDA and Adjusted Net Income, to offer a clearer understanding of its operating performance.
Quest Resource Holding Corp remains focused on providing comprehensive waste and recycling services to help businesses achieve their environmental and sustainability goals. Despite the mixed financial results for the third quarter, the company's management maintains a positive outlook for the remainder of the year and into 2024.
For a detailed understanding of QRHC's financials, interested parties can review the full financial tables and reconciliations included in the company's 8-K filing.
Explore the complete 8-K earnings release (here) from Quest Resource Holding Corp for further details.
This article first appeared on GuruFocus.
