Quest Resource Holding Corporation Reports Third Quarter 2024 Financial Results
Quest Resource Holding (QRHC) reported Q3 2024 financial results with revenue of $72.8 million, up 3.3% year-over-year. The company experienced a GAAP net loss of $(3.4) million, with gross profit declining 5.9% to $11.7 million. New client onboarding added approximately $16 million in revenue, though growth was partially offset by weaker industrial end market conditions. The implementation of a new vendor management system temporarily increased costs. The company is progressing with debt refinancing, expected to complete by year-end with improved terms. Quest secured significant new clients in food distribution and automotive service sectors, each expected to generate seven-figure annual revenues.
Quest Resource Holding (QRHC) ha riportato i risultati finanziari del terzo trimestre 2024 con ricavi di 72,8 milioni di dollari, in aumento del 3,3% rispetto all'anno precedente. L'azienda ha registrato una perdita netta GAAP di (3,4) milioni di dollari, con un utile lordo in calo del 5,9% a 11,7 milioni di dollari. L'inserimento di nuovi clienti ha aggiunto circa 16 milioni di dollari di ricavi, sebbene la crescita sia stata parzialmente compensata da condizioni di mercato industriale più deboli. L'implementazione di un nuovo sistema di gestione dei fornitori ha temporaneamente aumentato i costi. L'azienda sta procedendo con il rifinanziamento del debito, previsto per essere completato entro la fine dell'anno con condizioni migliorate. Quest ha acquisito nuovi clienti significativi nei settori della distribuzione alimentare e dei servizi automobilistici, ciascuno dei quali dovrebbe generare ricavi annuali a sette cifre.
Quest Resource Holding (QRHC) reportó los resultados financieros del tercer trimestre de 2024 con ingresos de 72.8 millones de dólares, un aumento del 3.3% en comparación con el año anterior. La empresa experimentó una pérdida neta GAAP de (3.4) millones de dólares, con una disminución del 5.9% en la ganancia bruta, que se situó en 11.7 millones de dólares. La incorporación de nuevos clientes agregó aproximadamente 16 millones de dólares en ingresos, aunque el crecimiento fue parcialmente compensado por unas condiciones de mercado industrial más débiles. La implementación de un nuevo sistema de gestión de proveedores aumentó temporalmente los costos. La empresa está avanzando en el refinanciamiento de la deuda, que se espera completar para fin de año con términos mejorados. Quest aseguró nuevos clientes significativos en los sectores de distribución de alimentos y servicios automotrices, cada uno de los cuales se espera genere ingresos anuales de siete cifras.
Quest Resource Holding (QRHC)는 2024년 3분기 재무 결과를 발표하며 수익이 7280만 달러로 전년 대비 3.3% 증가했다고 전했습니다. 회사는 GAAP 기준으로 (340만 달러)의 순손실을 기록했으며, 총이익은 5.9% 감소한 1170만 달러로 나타났습니다. 새로운 고객 유치로 약 1600만 달러의 수익이 추가되었지만, 산업 최종 시장의 약세로 인해 성장세는 부분적으로 상쇄되었습니다. 새로운 공급업체 관리 시스템의 구현으로 인해 일시적으로 비용이 증가했습니다. 회사는 채무 재조정 작업을 진행 중이며, 연말까지 개선된 조건으로 완료될 것으로 예상됩니다. Quest는 식품 유통 및 자동차 서비스 부문에서 중요한 신규 고객을 확보했으며, 각각 연간 7자리 수익을 창출할 것으로 기대됩니다.
Quest Resource Holding (QRHC) a annoncé ses résultats financiers pour le troisième trimestre 2024 avec des revenus de 72,8 millions de dollars, en hausse de 3,3 % par rapport à l'année précédente. L'entreprise a enregistré une perte nette GAAP de (3,4) millions de dollars, avec un bénéfice brut en baisse de 5,9 % pour s'établir à 11,7 millions de dollars. L'intégration de nouveaux clients a ajouté environ 16 millions de dollars de revenus, bien que la croissance ait été partiellement compensée par des conditions de marché industriel plus faibles. La mise en œuvre d'un nouveau système de gestion des fournisseurs a temporairement augmenté les coûts. L'entreprise progresse dans le refinancement de sa dette, prévu pour être achevé d'ici la fin de l'année avec des conditions améliorées. Quest a gagné de nouveaux clients significatifs dans les secteurs de la distribution alimentaire et des services automobiles, chacun devant générer des revenus annuels à sept chiffres.
Quest Resource Holding (QRHC) berichtete über die finanziellen Ergebnisse des dritten Quartals 2024 mit einem Umsatz von 72,8 Millionen Dollar, was einem Anstieg von 3,3 % im Vergleich zum Vorjahr entspricht. Das Unternehmen verzeichnete einen GAAP-Nettoverlust von (3,4) Millionen Dollar, wobei der Bruttogewinn um 5,9 % auf 11,7 Millionen Dollar zurückging. Die Onboarding neuer Kunden trug ungefähr 16 Millionen Dollar zum Umsatz bei, jedoch wurde das Wachstum teilweise durch schwächere Bedingungen auf dem industriellen Endmarkt ausgeglichen. Die Implementierung eines neuen Lieferantenmanagementsystems führte kurzfristig zu erhöhten Kosten. Das Unternehmen arbeitet an der Umschuldung seiner Schulden, die voraussichtlich bis Ende des Jahres zu verbesserten Konditionen abgeschlossen sein wird. Quest sicherte sich bedeutende neue Kunden in den Bereichen Lebensmittelvertrieb und Kfz-Dienstleistungen, von denen jeder voraussichtlich siebenstellige jährliche Einnahmen generieren wird.
- Revenue increased 3.3% YoY to $72.8 million in Q3 2024
- New client onboarding added approximately $16 million in revenue
- Secured new clients in food distribution and automotive service sectors with seven-figure revenue potential
- Automated invoice processing system achieving 70% zero-human interaction processing
- Debt refinancing progress expected to reduce interest expense significantly
- GAAP net loss widened to $(3.4) million from $(2.1) million YoY
- Gross profit decreased 5.9% YoY
- Gross margin declined to 16.1% from 17.7% YoY
- Higher than expected cost increases due to vendor management system implementation
- Weaker conditions in industrial end markets and client attrition affected growth
Insights
The Q3 2024 results present a mixed financial picture for Quest Resource Holding. While revenue increased by
The implementation of a new vendor management system, while promising for long-term efficiency, has temporarily increased costs. However, the secured new business adding approximately
The company's ability to win new seven-figure contracts in food distribution and automotive services demonstrates market competitiveness, but challenges in industrial end markets and client attrition need monitoring. The planned debt refinancing could significantly reduce interest expenses, potentially improving bottom-line performance.
The implementation of the automated vendor management system shows promising operational improvements, with
The successful onboarding of new clients despite operational transitions demonstrates robust execution capabilities. However, the higher-than-expected transition costs highlight the challenges of large-scale system implementations. The combination of automated processes and expanded client relationships positions Quest for improved operational leverage once the transition period concludes.
New client onboarding progressing as expected, with third-quarter revenue run rate from new client wins secured during 2024 achieving approximately
New automated vendor management system is demonstrating increased efficiencies and improved service levels but has temporarily resulted in higher-than-expected costs in support of the transition
Pace of new client wins continues with significant new client wins in food distribution and automotive service end markets
THE COLONY, Texas, Nov. 07, 2024 (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 third quarter ended September 30, 2024.
“We were very active during the third quarter: securing significant new client wins, onboarding a record number of new clients, and expanding engagements with existing ones. New client onboarding, combined with strong demand from existing clients, added approximately
“As a result of the hard work of our team, we have received high marks from new clients, several of which have already been reference clients, helping us to continue to grow our pipeline of new business. In addition, we have made significant progress and are in the final stages of selecting lenders to refinance our debt. Based on initial proposals, the refinancing is on track to be completed by the end of the year, and we expect both a significant reduction in interest expense and improved terms. Based on the continued ramp of new business and increasing efficiencies, we expect to show year-over-year increases in revenue and profitability during the fourth quarter. During 2025 and beyond, we expect to continue to drive significant growth from new clients and improve profitability from efficiency gains and earnings leverage.”
Third Quarter 2024 Highlights
- Revenue was
$72.8 million , a3.3% increase compared with the third quarter of 2023. - Gross profit was
$11.7 million , a5.9% decrease compared with the third quarter of 2023. - Gross margin was
16.1% of revenue compared with17.7% for the third quarter of 2023. - GAAP net loss was
$(3.4) million , compared with GAAP net loss of$(2.1) million during the third quarter of 2023. - GAAP net loss per basic and diluted share attributable to common stockholders was
$(0.16) , compared with$(0.10) for the third quarter of 2023. - Adjusted EBITDA was
$2.5 million , compared with$3.7 million during the third quarter of 2023. - Adjusted net loss per diluted share was
$(0.06) , compared with adjusted net income of$0.02 per diluted share during the third quarter of 2023.
Year-to-Date 2024 Highlights (September 30, 2024)
- Revenue was
$218.6 million , a0.2% decrease compared with the same period of 2023. - Gross profit was
$39.3 million , a1.8% increase compared with the same period of 2023. - Gross margin was
18.0% of revenue compared with17.6% during the same period of 2023. - GAAP net loss was
$(5.6) million , compared with GAAP net loss of$(5.0) million during the same period of 2023. - GAAP net loss per basic and diluted share attributable to common stockholders was
$(0.27) , compared with$(0.25) during the same period of 2023. - Year-to-date Adjusted EBITDA was
$12.8 million compared to$12.7 million during the same period of 2023. - Adjusted net income per diluted share was
$0.05 , compared with$0.12 per diluted share during the same period of 2023.
Recent Highlights
- Secured a new client in the food distribution business that is expected to produce seven figures of annual revenue.
- Secured a new automotive service client win that is expected to produce seven figures of annual revenue.
- Completed the integration of automated accounts payable processing system with solid waste vendors, processing approximately
70% of invoices with zero human interaction and100% of invoices audited at the service line-item level according to contractual terms. - Progress in refinancing of existing debt, on track for completion by the end of 2024 with significantly better terms.
Third Quarter 2024 Earnings Conference Call and Webcast
Quest will host a conference call on Thursday, November 7, 2024, at 5:00 PM ET, to review the financial results for the third quarter ended September 30, 2024. To participate, dial 1-800-717-1738 or 1-646-307-1865. 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.
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.
Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
In this press release, non-GAAP financial measures, “Adjusted EBITDA” and “Adjusted Net Income (Loss)” 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 Per Share”).
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 we will show year-over-year increases in revenue and profitability during the fourth quarter, our expectation that we will continue to drive significant growth from new clients and improving profitability from efficiency gains and earnings leverage during 2025 and beyond, our expectation that our new client wins will produce seven figures of annual revenue and our belief that we will be able to refinance our existing debt by the end of 2024 on better terms. 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, extended shut down of businesses, and other factors discussed in greater detail in our filings with the Securities and Exchange Commission (“SEC”), including in our Annual Report on Form 10-K for the year ended December 31, 2023. 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 (Unaudited) (In thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | $ | 72,766 | $ | 70,425 | $ | 218,562 | $ | 219,036 | ||||||||
| Cost of revenue | 61,066 | 57,995 | 179,294 | 180,471 | ||||||||||||
| Gross profit | 11,700 | 12,430 | 39,268 | 38,565 | ||||||||||||
| Selling, general, and administrative | 10,273 | 9,620 | 29,457 | 28,250 | ||||||||||||
| Depreciation and amortization | 2,368 | 2,342 | 7,094 | 7,219 | ||||||||||||
| Total operating expenses | 12,641 | 11,962 | 36,551 | 35,469 | ||||||||||||
| Operating income (loss) | (941 | ) | 468 | 2,717 | 3,096 | |||||||||||
| Interest expense | (2,723 | ) | (2,408 | ) | (7,807 | ) | (7,407 | ) | ||||||||
| Loss before taxes | (3,664 | ) | (1,940 | ) | (5,090 | ) | (4,311 | ) | ||||||||
| Income tax expense (benefit) | (278 | ) | 111 | 465 | 650 | |||||||||||
| Net loss | $ | (3,386 | ) | $ | (2,051 | ) | $ | (5,555 | ) | $ | (4,961 | ) | ||||
| Net loss applicable to common stockholders | $ | (3,386 | ) | $ | (2,051 | ) | $ | (5,555 | ) | $ | (4,961 | ) | ||||
| Net loss per common share: | ||||||||||||||||
| Basic | $ | (0.16 | ) | $ | (0.10 | ) | $ | (0.27 | ) | $ | (0.25 | ) | ||||
| Diluted | $ | (0.16 | ) | $ | (0.10 | ) | $ | (0.27 | ) | $ | (0.25 | ) | ||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 20,666 | 20,060 | 20,542 | 19,985 | ||||||||||||
| Diluted | 20,666 | 20,060 | 20,542 | 19,985 | ||||||||||||
| RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (Unaudited) (In thousands) | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net loss | $ | (3,386 | ) | $ | (2,051 | ) | $ | (5,555 | ) | $ | (4,961 | ) | |||
| Depreciation and amortization | 2,613 | 2,438 | 7,714 | 7,486 | |||||||||||
| Interest expense | 2,723 | 2,408 | 7,807 | 7,407 | |||||||||||
| Stock-based compensation expense | 571 | 289 | 1,291 | 950 | |||||||||||
| Acquisition, integration, and related costs | 30 | 374 | 91 | 1,026 | |||||||||||
| Other adjustments | 261 | 141 | 980 | 172 | |||||||||||
| Income tax expense (benefit) | (278 | ) | 111 | 465 | 650 | ||||||||||
| Adjusted EBITDA | $ | 2,534 | $ | 3,710 | $ | 12,793 | $ | 12,730 | |||||||
| ADJUSTED NET INCOME (LOSS) PER SHARE (Unaudited) (In thousands) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Reported net loss (1) | $ | (3,386 | ) | $ | (2,051 | ) | $ | (5,555 | ) | $ | (4,961 | ) | ||||
| Amortization of intangibles (2) | 2,209 | 2,224 | 6,650 | 6,668 | ||||||||||||
| Acquisition, integration, and related costs (3) | 30 | 374 | 91 | 1,026 | ||||||||||||
| Other adjustments (4) | — | 2 | — | (75 | ) | |||||||||||
| Adjusted net income (loss) | $ | (1,147 | ) | $ | 549 | $ | 1,186 | $ | 2,658 | |||||||
| Diluted earnings (loss) per share: | ||||||||||||||||
| Reported net loss | $ | (0.16 | ) | $ | (0.10 | ) | $ | (0.27 | ) | $ | (0.25 | ) | ||||
| Adjusted net income (loss) | $ | (0.06 | ) | $ | 0.02 | $ | 0.05 | $ | 0.12 | |||||||
| Weighted average number of common shares outstanding: Diluted (5) | 20,666 | 22,425 | 22,873 | 22,218 | ||||||||||||
(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) | ||||||||
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,133 | $ | 324 | ||||
| Accounts receivable, less allowance for doubtful accounts of and | 60,125 | 58,147 | ||||||
| Prepaid expenses and other current assets | 3,310 | 2,142 | ||||||
| Total current assets | 64,568 | 60,613 | ||||||
| Goodwill | 85,828 | 85,828 | ||||||
| Intangible assets, net | 20,006 | 26,052 | ||||||
| Property and equipment, net, and other assets | 7,753 | 4,626 | ||||||
| Total assets | $ | 178,155 | $ | 177,119 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 39,947 | $ | 41,296 | ||||
| Other current liabilities | 1,434 | 2,470 | ||||||
| Current portion of notes payable | 1,159 | 1,159 | ||||||
| Total current liabilities | 42,540 | 44,925 | ||||||
| Notes payable, net | 71,901 | 64,638 | ||||||
| Other long-term liabilities | 946 | 1,275 | ||||||
| Total liabilities | 115,387 | 110,838 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, shares issued and outstanding as of September 30, 2024 and December 31, 2023 | — | — | ||||||
| Common stock, 20,464 and 20,161 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively | 20 | 20 | ||||||
| Additional paid-in capital | 178,351 | 176,309 | ||||||
| Accumulated deficit | (115,603 | ) | (110,048 | ) | ||||
| Total stockholders’ equity | 62,768 | 66,281 | ||||||
| Total liabilities and stockholders’ equity | $ | 178,155 | $ | 177,119 | ||||
FAQ
What was Quest Resource Holding 's (QRHC) revenue in Q3 2024?
How much revenue did QRHC's new client onboarding add in Q3 2024?
What was QRHC's net loss in Q3 2024?
When does QRHC expect to complete its debt refinancing?
