Quest Resource Holding Corporation Reports Fourth Quarter and 2021 Financial Results

Rhea-AI Summary

Quest Resource Holding Corporation (NASDAQ: QRHC) announced robust financial results for Q4 and the year ending December 31, 2021. Q4 revenue soared to $46.4 million, marking a 67.7% increase year-over-year. Gross profit also improved to $8.7 million, up 56.2%. However, the company reported a GAAP net loss per share of ($0.03), contrasting with a net income of $0.01 in Q4 2020. For the year, revenue reached $155.7 million (+57.8%), with adjusted EBITDA rising to $10.9 million (+144.3%), showing significant operational improvements despite the net loss.

Positive

• Revenue for Q4 2021 was $46.4 million, a 67.7% increase from Q4 2020.
• Annual revenue increased by 57.8% to $155.7 million in 2021.
• Adjusted EBITDA rose to $10.9 million, up 144.3% year-over-year.
• Adjusted net income per diluted share increased to $0.27 from $0.05 in 2020.

Negative

• GAAP net loss per share was ($0.03) compared to net income of $0.01 in Q4 2020.
• Gross margin decreased to 18.8% in Q4 2021 from 20.2% in Q4 2020.

THE COLONY, Texas, March 17, 2022 (GLOBE NEWSWIRE) -- Quest Resource Holding Corporation (NASDAQ: QRHC) ("Quest" or the “Company”), a national leader in environmental waste and recycling services, today announced financial results for the fourth quarter and year ended December 31, 2021.

Fourth Quarter 2021 Highlights

• Revenue was $46.4 million, a 67.7% increase compared with the fourth quarter of 2020.
• Gross profit was $8.7 million, a 56.2% increase compared with the fourth quarter of 2020.
• Gross margin was 18.8% of revenue compared with 20.2% during the fourth quarter of 2020.
• GAAP net loss per share attributable to common stockholders was ($0.03) per basic and diluted share, compared with net income of $0.01 per basic and diluted share during the fourth quarter of 2020.
• Adjusted EBITDA was $3.3 million, an 83.8% increase compared with the fourth quarter of 2020.
• Adjusted net income per diluted share increased to $0.08, compared with $0.03 per diluted share during the fourth quarter of 2020. 

Year Ended December 31, 2021 Highlights

• Revenue was $155.7 million, a 57.8% increase compared with 2020. 
• Gross profit was $28.8 million, a 51.3% increase compared with 2020. 
• Gross margin was 18.5% of revenue compared with 19.3% for 2020. 
• GAAP net income per share attributable to common shareholders increased to $0.09 ($0.08 per diluted share), compared with $0.05 per basic and diluted share during 2020. 
• Adjusted EBITDA was $10.9 million, a 144.3% increase compared with 2020. 
• Adjusted net income per diluted share increased to $0.27, compared with $0.05 per diluted share during 2020. 

“During 2021, we delivered our strongest financial performance to date, posting 51% growth in gross profit dollars and 144% growth in Adjusted EBITDA.   We are executing well with our strategies to drive both organic and acquisition related growth,” said S. Ray Hatch, President and Chief Executive Officer. “Demand for cost effective sustainability solutions to divert waste from landfill is as strong as ever among target clients. Our value position, which includes a national footprint, broad service offering, and uniform data reporting on waste streams, is clearly resonating among prospective customers. With these factors working in our favor, we expect continued momentum in 2022 and the next several years from both organic and acquisitive sources.”

Fourth Quarter 2021 Earnings Conference Call and Webcast

The Company is scheduled to release the full results for its fourth quarter and year ended December 31, 2021, on Thursday, March 17, 2022, at 5:00 PM ET, to review the Company's financial results and business outlook. Investors interested in participating on the live call can dial 1-800-239-9838 within the U.S. or 1-323-794-2551 from abroad, referencing conference ID: 5479645. Investors can also access the call online through a listen-only webcast on the investor relations section of Quest’s website at http://investors.qrhc.com/.

The earnings webcast, which may include forward-looking information, will be archived on the Quest investor relations website for at least 90 days and a telephonic playback of the conference call will be available by calling 1-844-512-2921 within the U.S. and 1-412-317-6671 from abroad. The replay passcode is 5479645. The telephonic playback will be available beginning at 8:00 PM ET on Thursday, March 17, 2022, and continuing through 11:59 PM ET on Thursday, March 31, 2022. For more information on Quest Resource Holding Corporation, visit http://investors.qrhc.com.

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 this adjusted financial measure 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 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 of continued momentum in 2022 and the next several years from both organic and acquisitive sources. 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, 2021. 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								Year Ended
	December 31,								December 31,
	2021				2020				2021				2020
		(Unaudited)
Revenue	$	46,389			$	27,658			$	155,715			$	98,660
Cost of revenue		37,670				22,077				126,894				79,605
Gross profit		8,719				5,581				28,821				19,055
Selling, general, and administrative		7,099				4,463				21,729				17,141
Depreciation and amortization		1,145				346				2,469				1,164
Total operating expenses		8,244				4,809				24,198				18,305
Operating income		475				772				4,623				750
Other income (expense)		(116	)			—				(116	)			1,408
Interest expense		(841	)			(458	)			(2,495	)			(702	)
Loss on extinguishment of debt		—				—				—				(168	)
Income (loss) before taxes		(482	)			314				2,012				1,288
Income tax expense		59				190				321				254
Net income (loss)	$	(541	)		$	124			$	1,691			$	1,034
Deemed dividend for warrant down round feature		—				—				—				(205	)
Net income (loss) applicable to common stockholders	$	(541	)		$	124			$	1,691			$	829
Net income (loss) per common share:
Basic	$	(0.03	)		$	0.01			$	0.09			$	0.05
Diluted	$	(0.03	)		$	0.01			$	0.08			$	0.05
Weighted average number of common shares outstanding:
Basic		19,185				18,467				18,886				16,661
Diluted		19,185				18,801				20,735				16,756

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

	Three Months Ended								Year Ended
	December 31,								December 31,
	2021				2020				2021			2020
Net income (loss)	$	(541	)		$	124			$	1,691		$	1,034
Depreciation and amortization		1,225				404				2,764			1,277
Interest expense		841				458				2,495			702
Stock-based compensation expense		240				387				1,382			1,488
Acquisition, integration, and related costs		1,244				207				1,844			743
Other adjustments		216				17				376			(1,048	)
Income tax expense		59				190				321			254
Adjusted EBITDA	$	3,284			$	1,787			$	10,873		$	4,450

ADJUSTED NET INCOME PER SHARE
(Unaudited)
(In thousands)

	Three Months Ended							Year Ended
	December 31,							December 31,
	2021				2020			2021			2020
Reported net income (loss) (1)	$	(541	)		$	124		$	1,691		$	829
Amortization of intangibles (2)		988				231			1,952			232
Acquisition, integration, and related costs (2)		1,244				207			1,844			743
Other adjustments		116				—			116			(1,408	)
Loss on extinguishment of debt		—				—			—			168
Deemed dividend		—				—			—			205
Adjusted net income	$	1,807			$	562		$	5,603		$	769
Diluted earnings per share:
Reported net income (loss)	$	(0.03	)		$	0.01		$	0.08		$	0.05
Adjusted net income	$	0.08			$	0.03		$	0.27		$	0.05
(1) applicable to common stockholders
(2) related to acquisitions

BALANCE SHEETS
(In thousands, except per share amounts)

	December 31,				December 31,
	2021				2020
ASSETS
Current assets:
Cash and cash equivalents	$	8,428			$	7,516
Accounts receivable, less allowance for doubtful accounts of $841 and $935 as of December 31, 2021 and December 31, 2020, respectively		39,949				17,421
Prepaid expenses and other current assets		1,952				1,069
Total current assets		50,329				26,006
Goodwill		80,622				66,310
Intangible assets, net		39,119				6,529
Property and equipment, net, and other assets		5,596				3,384
Total assets	$	175,666			$	102,229
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	30,196			$	15,247
Other current liabilities		6,195				1,393
Current portion of notes payable		1,329				624
Total current liabilities		37,720				17,264
Notes payable, net		62,409				14,948
Other long-term liabilities, net		1,909				1,974
Total liabilities		102,038				34,186
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000 shares authorized, no shares issued or outstanding as of December 31, 2021 and December 31, 2020		—				—
Common stock, $0.001 par value, 200,000 shares authorized, 19,046 and 18,413 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively		19				18
Additional paid-in capital		170,318				166,425
Accumulated deficit		(96,709	)			(98,400	)
Total stockholders’ equity		73,628				68,043
Total liabilities and stockholders’ equity	$	175,666			$	102,229

FAQ

What were the financial results of QRHC for Q4 2021?

QRHC reported Q4 2021 revenue of $46.4 million, a 67.7% increase from Q4 2020, but a GAAP net loss per share of ($0.03).

How much did QRHC's revenue grow in 2021?

QRHC's revenue grew by 57.8% in 2021, reaching $155.7 million.

What is QRHC's adjusted EBITDA for 2021?

QRHC's adjusted EBITDA for 2021 was $10.9 million, reflecting a 144.3% increase from 2020.

How did QRHC's gross profit change in Q4 2021?

QRHC's gross profit in Q4 2021 was $8.7 million, a 56.2% increase from Q4 2020.

What was the adjusted net income per diluted share for QRHC in 2021?

The adjusted net income per diluted share for QRHC in 2021 increased to $0.27 from $0.05 in 2020.