EX-99 2 qrhc-ex99_1.htm EX-99.1 EX-99

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Exhibit 99.1

Quest Resource Holding Corporation Reports Fourth Quarter and Fiscal Year 2022 Financial Results

THE COLONY, TX – March 23, 2023 – 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, 2022.

Fourth Quarter 2022 Highlights

•
Revenue was $62.3 million, a 34.2% increase compared with the fourth quarter of 2021.
•
Gross profit was $10.8 million, a 25.0% increase compared with the fourth quarter of 2021.
•
Gross margin was 17.3% of revenue compared with 18.5% during the fourth quarter of 2021.
•
GAAP net loss per share attributable to common stockholders was $(0.17), compared with $(0.03) per basic and diluted share during the fourth quarter of 2021.
•
Adjusted EBITDA was $2.3 million, a 30.1% decrease compared with the fourth quarter of 2021.
•
Adjusted net loss per share was $(0.02) compared with adjusted net income of $0.08 per diluted share during the fourth quarter of 2021.

 

Year Ended December 31, 2022 Highlights

•
Revenue was $284.0 million, an 82.4% increase compared with 2021.
•
Gross profit was $48.9 million, a 70.2% increase compared with 2021.
•
Gross margin was 17.2% of revenue compared with 18.4% for 2021.
•
GAAP net loss per share attributable to common shareholders was $(0.31), compared with net income of $0.09 ($0.08 per diluted share) during 2021.
•
Adjusted EBITDA was $16.4 million, a 51.2% increase compared with 2021.
•
Adjusted net income per diluted share was $0.26, compared with $0.27 per diluted share during 2021.

 

“During the fourth quarter, we maintained strong customer relationships across existing, new, and acquired customers, as we continued to build our operating platform, manage growth, and integrate acquired businesses.

The sequential decrease in revenue compared to the third quarter was primarily due to commodity price declines along with the traditional seasonal impact of maintenance shutdowns at industrial customers. Given the pass-through nature of recycled commodity contracts, these fluctuations did not materially affect gross profit dollars,” said S. Ray Hatch, President and Chief Executive Officer.

Through ongoing integration work, we identified process gaps at RWS where contracted cost pass-through actions were not taken, and contract management process gaps existed. As a result, we estimate that gross profit dollar contribution from RWS was approximately $1.5 million for the year below what we would otherwise have expected in 2022.

As a result of the process corrections, we have already begun to see substantial improvements in RWS and expect to fully realize the planned contribution of the RWS acquisition going forward.”

“Overall, we had a strong year in 2022, growing our business more than 80% from the prior year. We expanded relationships with existing customers, ramped up new customers and integrated several acquisitions, all the while managing inflationary cost pressures. We understand that growth is not perfectly linear, but we are confident of our ability to take advantage of the opportunities ahead of us.

We expect the process improvements to take several more months to be fully realized, and the trajectory is positive. While we typically don’t provide guidance, preliminary results for January and February show gross profits averaging approximately $4.25 million and revenue of $24 million per month with further progress expected across the remainder of the year.

Our outlook is unchanged, the core of our business is strong, and 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,” concluded Mr. Hatch.

 

Fourth Quarter 2022 Earnings Conference Call and Webcast

Quest will conduct a conference call on Thursday, March 23, 2023, at 5:00 PM ET, to review the financial results for the fourth quarter and year ended December 31, 2022. 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 http://investors.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, 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 Income (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, guidance, expectations, projections and assumptions about future financial and operating results, our expectation that the improvements implemented with respect to the RWS integration process will allow us to fully realize the planned contribution from the RWS acquisition going forward and our belief that the core of our business is as strong as ever, our expectation of further progress across the remainder of the year, 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 COVID-19) 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, and the Company can give no assurance that its expectations will be attained. 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

Financial Tables Follow

 

 

Quest Resource Holding Corporation and Subsidiaries

STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

 

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

 

 

 

Revenue

 

$

62,253

 

 

$

46,389

 

 

$

284,038

 

 

$

155,715

 

Cost of revenue

 

 

51,497

 

 

 

37,786

 

 

 

235,182

 

 

 

127,010

 

Gross profit

 

 

10,756

 

 

 

8,603

 

 

 

48,856

 

 

 

28,705

 

Selling, general, and administrative

 

 

9,824

 

 

 

7,099

 

 

 

37,800

 

 

 

21,729

 

Depreciation and amortization

 

 

2,342

 

 

 

1,145

 

 

 

9,650

 

 

 

2,469

 

Total operating expenses

 

 

12,166

 

 

 

8,244

 

 

 

47,450

 

 

 

24,198

 

Operating income (loss)

 

 

(1,410

)

 

 

359

 

 

 

1,406

 

 

 

4,507

 

Interest expense

 

 

(2,224

)

 

 

(841

)

 

 

(7,281

)

 

 

(2,495

)

Income (loss) before taxes

 

 

(3,634

)

 

 

(482

)

 

 

(5,875

)

 

 

2,012

 

Income tax expense (benefit)

 

 

(306

)

 

 

59

 

 

 

173

 

 

 

321

 

Net income (loss)

 

$

(3,328

)

 

$

(541

)

 

$

(6,048

)

 

$

1,691

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) applicable to common stockholders

 

$

(3,328

)

 

$

(541

)

 

$

(6,048

)

 

$

1,691

 

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.17

)

 

$

(0.03

)

 

$

(0.31

)

 

$

0.09

 

Diluted

 

$

(0.17

)

 

$

(0.03

)

 

$

(0.31

)

 

$

0.08

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

19,922

 

 

 

19,185

 

 

 

19,474

 

 

 

18,886

 

Diluted

 

 

19,922

 

 

 

19,185

 

 

 

19,474

 

 

 

20,735

 

 

 

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(Unaudited)

(In thousands)

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income (loss)

 

$

(3,328

)

 

$

(541

)

 

$

(6,048

)

 

$

1,691

 

Depreciation and amortization

 

 

2,425

 

 

 

1,225

 

 

 

9,966

 

 

 

2,764

 

Interest expense

 

 

2,224

 

 

 

841

 

 

 

7,281

 

 

 

2,495

 

Stock-based compensation expense

 

 

285

 

 

 

240

 

 

 

1,283

 

 

 

1,382

 

Acquisition, integration, and related costs

 

 

773

 

 

 

1,244

 

 

 

3,074

 

 

 

1,844

 

Other adjustments

 

 

225

 

 

 

216

 

 

 

710

 

 

 

376

 

Income tax expense (benefit)

 

 

(306

)

 

 

59

 

 

 

173

 

 

 

321

 

Adjusted EBITDA

 

$

2,298

 

 

$

3,284

 

 

$

16,439

 

 

$

10,873

 

 

ADJUSTED NET INCOME (LOSS) PER SHARE

(Unaudited)

(In thousands)

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Reported net income (loss) (1)

 

$

(3,328

)

 

$

(541

)

 

$

(6,048

)

 

$

1,691

 

Amortization of intangibles (2)

 

 

2,222

 

 

 

988

 

 

 

8,839

 

 

 

1,952

 

Acquisition, integration, and related costs (3)

 

 

773

 

 

 

1,244

 

 

 

3,074

 

 

 

1,844

 

Other adjustments (4)

 

 

(114

)

 

 

116

 

 

 

(114

)

 

 

116

 

Adjusted net income (loss)

 

$

(447

)

 

$

1,807

 

 

$

5,751

 

 

$

5,603

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

       Reported net income (loss)

 

$

(0.17

)

 

$

(0.03

)

 

$

(0.31

)

 

$

0.08

 

       Adjusted net income (loss)

 

$

(0.02

)

 

$

0.08

 

 

$

0.26

 

 

$

0.27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (5)

 

 

19,922

 

 

 

21,443

 

 

 

21,818

 

 

 

20,735

 

 

(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 adjustments to earn-out fair value

(5) Reflects adjustment for dilution when adjusted net income is positive

 

 

 

 

BALANCE SHEETS

(In thousands, except per share amounts)

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

ASSETS

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

9,564

 

 

$

8,428

 

Accounts receivable, less allowance for doubtful accounts of $2,176
   and $841 as of December 31, 2022 and 2021, respectively

 

 

45,891

 

 

 

39,949

 

Prepaid expenses and other current assets

 

 

2,310

 

 

 

1,952

 

Total current assets

 

 

57,765

 

 

 

50,329

 

 

 

 

 

 

 

 

Goodwill

 

 

84,258

 

 

 

80,622

 

Intangible assets, net

 

 

33,557

 

 

 

39,119

 

Property and equipment, net, and other assets

 

 

5,911

 

 

 

5,596

 

Total assets

 

$

181,491

 

 

$

175,666

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

32,207

 

 

$

30,196

 

Other current liabilities

 

 

4,689

 

 

 

6,195

 

Current portion of notes payable

 

 

1,159

 

 

 

1,329

 

Total current liabilities

 

 

38,055

 

 

 

37,720

 

 

 

 

 

 

 

 

Notes payable, net

 

 

70,573

 

 

 

62,409

 

Other long-term liabilities

 

 

1,724

 

 

 

1,909

 

Total liabilities

 

 

110,352

 

 

 

102,038

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value, 10,000 shares authorized, no
   shares issued and outstanding as of December 31, 2022 and 2021

 

 

—

 

 

 

—

 

Common stock, $0.001 par value, 200,000 shares authorized,
   19,696 and 19,046 shares issued and outstanding as
   of December 31, 2022 and 2021, respectively

 

 

20

 

 

 

19

 

Additional paid-in capital

 

 

173,876

 

 

 

170,318

 

Accumulated deficit

 

 

(102,757

)

 

 

(96,709

)

Total stockholders’ equity

 

 

71,139

 

 

 

73,628

 

Total liabilities and stockholders’ equity

 

$

181,491

 

 

$

175,666

 

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