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Quest Resource Holding Corporation Reports 2020 Financial Results

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THE COLONY, Texas, March 11, 2021 (GLOBE NEWSWIRE) -- Quest Resource Holding Corporation (NASDAQ: QRHC) ("Quest"), a national leader in environmental waste and recycling services, today announced financial results for the fourth quarter and year ended December 31, 2020.

Fourth Quarter 2020 Highlights

  • Revenue was $27.7 million, a 20.5% increase compared with the fourth quarter of 2019.

  • Gross profit was $5.6 million, a 19.7% increase compared with the fourth quarter of 2019.

  • Gross margin was 20.2% of revenue compared with 20.3% for the fourth quarter of 2019.

  • Net income per share attributable to common stockholders was $0.01, compared with $0.00 per share during the fourth quarter of 2019.

  • Adjusted EBITDA was $1.8 million, a 110.3% increase compared with the fourth quarter of 2019.

Year ended December 31, 2020 Highlights

  • Revenue was $98.7 million, compared to $99.0 million during 2019.

  • Gross profit was $19.1 million, a 1.8% increase compared with 2019.

  • Gross margin increased 40 basis points to 19.3% of revenue compared with 18.9% for 2019.

  • Net income (loss) per share attributable to common stockholders improved to $0.05, compared with $(0.00) per share during 2019.

  • Adjusted EBITDA was $4.5 million, a 33.6% increase compared with 2019.

“Due to the diversification of our end markets, the variable-cost structure of our business model, the essential nature of our services, and the resilience of our people; during this past year we overcame many of the challenges related to the pandemic. We finished 2020 strong, with more than 9% organic revenue growth in the fourth quarter (excluding Green Remedies) and more than doubling our Adjusted EBITDA during the fourth quarter. Financial performance also benefitted from the Green Remedies Waste & Recycling acquisition, which included revenue of approximately $2.6 million and net income of approximately $550,000 since the closing on October 19, 2020,” said S. Ray Hatch, President and Chief Executive Officer. “The positive momentum we saw in the back half of 2020 has continued in the new year. As such, we expect growth of new and existing customers will continue to offset the COVID-related downturn that we continue to experience in certain end markets.”

2020 Earnings Conference Call and Webcast

Quest will conduct a conference call Thursday, March 11, 2021, at 5:00 PM ET, to review the financial results for the fourth quarter and fiscal year ended December 31, 2020. Investors interested in participating on the live call can dial 1-800-263-0877 within the U.S. or 1-646-828-8143 from abroad, referencing conference ID: 9502038. 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. Quest provides businesses with a single source service solution for the reuse, recycling, and disposal of a wide variety of waste streams and recyclables generated by their operations. 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, the positive momentum we saw in the back half of 2020 has continued in the new year and we expect growth of new and existing customers will continue to offset the COVID-related downturn that we continue to experience in certain end markets. 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 Report on Form 10-K for the year ended December 31, 2020. 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, LLC
Joe Noyons
817.778.8424


Quest Resource Holding Corporation and Subsidiaries
STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

Three Months Ended

Years Ended

December 31,

December 31,

2020

2019

2020

2019

(Unaudited)

Revenue

$

27,658

$

22,959

$

98,660

$

98,979

Cost of revenue

22,077

18,297

79,605

80,253

Gross profit

5,581

4,662

19,055

18,726

Selling, general, and administrative

4,463

4,153

17,141

16,816

Depreciation and amortization

346

333

1,164

1,315

Total operating expenses

4,809

4,486

18,305

18,131

Operating income

772

176

750

595

Other income

1,408

Interest expense

(458

)

(87

)

(702

)

(431

)

Loss on extinguishment of debt

(168

)

Income before taxes

314

89

1,288

164

Income tax expense

190

55

254

219

Net income (loss)

$

124

$

34

$

1,034

$

(55

)




Deemed dividend for warrant down round feature

(205

)

Net income (loss) applicable to common stockholders

$

124

$

34

$

829

$

(55

)

Net income (loss) per common share:

Basic

$

0.01

$

0.00

$

0.05

$

(0.00

)

Diluted

$

0.01

$

0.00

$

0.05

$

(0.00

)

Weighted average number of common shares outstanding:

Basic

18,467

15,369

16,661

15,347

Diluted

18,801

15,417

16,756

15,347



RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(Unaudited)
(In thousands)

Three Months Ended

Years Ended

December 31,

December 31,

2020

2019

2020

2019

Net income (loss)

$

124

$

34

$

1,034

$

(55

)

Depreciation and amortization

404

347

1,277

1,402

Interest expense

458

87

702

431

Stock-based compensation expense

387

327

1,488

1,086

Acquisition, integration, and related costs

207

743

Other adjustments

17

(1,048

)

248

Income tax expense

190

55

254

219

Adjusted EBITDA

$

1,787

$

850

$

4,450

$

3,331



BALANCE SHEETS
(In thousands, except per share amounts)

December 31,

December 31,

2020

2019

ASSETS

Current assets:

Cash and cash equivalents

$

7,516

$

3,411

Accounts receivable, less allowance for doubtful accounts of $935 and $767 as of December 31, 2020 and 2019, respectively

17,421

13,900

Prepaid expenses and other current assets

1,069

1,110

Total current assets

26,006

18,421

Goodwill

66,310

58,208

Intangible assets, net

6,529

1,591

Property and equipment, net, and other assets

3,384

2,436

Total assets

$

102,229

$

80,656

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

15,247

$

13,317

Other current liabilities

1,393

19

Current portion of notes payable

624

Total current liabilities

17,264

13,336

Notes payable, net

14,948

4,535

Other long-term liabilities, net

1,974

1,141

Total liabilities

34,186

19,012

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $0.001 par value, 10,000 shares authorized, no shares issued or outstanding as of December 31, 2020 and 2019

Common stock, $0.001 par value, 200,000 shares authorized, 18,413 and 15,373 shares issued and outstanding as of December 31, 2020 and 2019, respectively

18

15

Additional paid-in capital

166,425

160,858

Accumulated deficit

(98,400

)

(99,229

)

Total stockholders’ equity

68,043

61,644

Total liabilities and stockholders’ equity

$

102,229

$

80,656