Quest Resource Reports Second Quarter 2016 Results
/EINPresswire.com/ -- THE COLONY, TX--(Marketwired - August 15, 2016) - Quest Resource Holding Corporation (NASDAQ: QRHC) ("Quest"), a leader in sustainability, recycling, and resource management, today announced financial results for the second quarter ended June 30, 2016.
Second Quarter 2016 Operational Highlights
- Increased revenue by $4.5 million, or 10.7%, to $46.8 million for the second quarter of 2016 over the comparable quarter last year
- Improved gross profit by $238,000 for the quarter ended June 30, 2016 from the comparable quarter in 2015
- Expanded portfolio of customer user service locations (number of customers x locations per customer x services per location) to approximately 96,000 at the end of the second quarter
Ray Hatch, President and Chief Executive Officer, commented, "Although there is more to do, we have begun to observe positive results from the initiatives we launched this year. While second quarter revenue was up double-digits and user service locations increased by 4,000 from June 30, 2015 to 2016, we were even more pleased to see our gross profit for the second quarter of 2016 improve by $238,000 compared with the second quarter of 2015. In addition, our Adjusted EBITDAS for the second quarter of 2016 improved by $227,000 compared with the first quarter of 2016. We believe this gross profit improvement validates our strategy to focus on market-driven, complex, non-commodity tasks to sustain Quest's long-term success."
Mr. Hatch continued, "We demonstrated the breadth and depth of our business model to provide value to our customers by delivering innovative solutions, including the following:
- developing a turnkey solution for automotive dealerships to manage the Takata airbag recall,
- implementing comprehensive food-waste recycling programs with two of the nation's largest grocers to reduce punitive taxes and comply with newly enacted regulations, and
- deploying our vendor network to transition a customer's full service line within 24 hours."
"We will continue to develop industry transforming solutions and deliver innovations designed to drive continued margin improvement in future quarters," concluded Mr. Hatch.
Second Quarter Financial Results
Revenue
For the quarter ended June 30, 2016, revenue was $46.8 million, an increase of $4.5 million, or 10.7%, compared with $42.3 million for the quarter ended June 30, 2015. The increase was primarily due to a combination of new and expanded services with customers added after the second quarter of 2015.
Cost of Revenue and Gross Profit
Cost of revenue increased $4.3 million to $43.2 million for the quarter ended June 30, 2016 from $38.9 million for the quarter ended June 30, 2015. The increase related primarily to the cost of servicing the new and expanded services with customers added after the second quarter of 2015. Gross profit increased $238,000 to $3.7 million for the quarter ended June 30, 2016 from $3.4 million for the quarter ended June 30, 2015.
Operating Expenses
For the quarter ended June 30, 2016, operating expenses increased $767,000 to $5.6 million from $4.9 million for the comparable quarter in 2015. The increase related primarily to an increase in stock-related compensation of $209,000 and in selling, general, and administrative expenses of approximately $350,000 for integrating and servicing an increased number of customer locations in the quarter ended June 30, 2016. Operating expenses also included depreciation and amortization of $1.0 million for the quarters ended June 30, 2016 and 2015.
Net Loss and Net Loss per Share
Net loss for the quarter ended June 30, 2016 was $(2.0) million compared with a net loss of $(1.5) million for the quarter ended June 30, 2015. Net loss per basic and diluted share was $(0.14) for the quarter ended June 30, 2016 compared with a net loss per basic and diluted share of $(0.11) for the quarter ended June 30, 2015.
EBITDAS
Adjusted EBITDAS was a loss of $(394,000) for the quarter ended June 30, 2016 compared with a loss of $(149,000) for the quarter ended June 30, 2015. (See attached table "Reconciliation of Net Loss to Adjusted EBITDAS.")
For more information on Quest, visit www.QRHC.com.
Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
In this press release, a non-GAAP financial measure, "Adjusted EBITDAS," 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 and other expense, (iii) stock-based compensation expense, and (iv) income tax expense, and (2) non-GAAP measures that exclude such information. 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 Loss to Adjusted EBITDAS.")
About Quest Resource Holding Corporation
Quest provides businesses with one-stop management programs to reuse, recycle, and dispose of a wide variety of waste streams and recyclables generated by their businesses. Quest's comprehensive reuse, recycling, and proper disposal management programs are designed to enable regional and national customers to have a single point of contact for managing a variety of waste streams and recyclables. Quest also operates environmentally based social media and online data platforms that contain information and instructions necessary to empower consumers and consumer product companies to recycle or properly dispose of household products and materials. Quest's directory of local recycling and proper disposal options empowers consumers directly and enables consumer product companies to empower their customers by giving them the guidance necessary for the proper recycling or disposal of a wide range of household products and materials, including the "why, where, and how" of recycling.
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 statements or expectations regarding our belief that we have begun to observe positive results from initiatives launched earlier in the year; our belief that we have demonstrated the breadth and depth of our business model to provide value to our customers by delivering various innovative solutions; and our belief that we will continue to develop industry transforming solutions and deliver innovations designed to drive continued margin improvement in future quarters. These statements are based on our current expectations, estimates, projections, beliefs, and assumptions. Such statements involve significant risks and uncertainties. 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, 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, 2015. 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.
Financial Tables Follow
Quest Resource Holding Corporation and Subsidiaries
OPERATING HIGHLIGHTS
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
--------- --------- --------- ---------
Revenue $ 46,844 $ 42,330 $ 92,615 $ 82,339
Cost of revenue 43,189 38,914 85,474 75,637
--------- --------- --------- ---------
Gross profit 3,655 3,416 7,141 6,702
--------- --------- --------- ---------
Selling, general, and
administrative 4,638 3,906 9,293 7,683
Depreciation and amortization 1,008 972 2,026 1,951
--------- --------- --------- ---------
Total operating expenses 5,646 4,878 11,319 9,634
--------- --------- --------- ---------
Operating loss (1,991) (1,462) (4,178) (2,932)
Interest expense (57) (42) (114) (91)
Income tax expense - - - -
--------- --------- --------- ---------
Net loss $ (2,048) $ (1,504) $ (4,292) $ (3,023)
========= ========= ========= =========
Net loss applicable to common
stockholders $ (2,048) $ (1,504) $ (4,292) $ (3,023)
========= ========= ========= =========
Net loss per common share:
Basic and diluted $ (0.14) $ (0.11) $ (0.30) $ (0.22)
Weighted average number of
common shares outstanding:
Basic and diluted 14,840 13,961 14,409 13,957
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDAS
(Unaudited)
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
--------- --------- --------- ---------
Net loss $ (2,048) $ (1,504) $ (4,292) $ (3,023)
Depreciation and amortization 1,047 972 2,074 1,951
Interest expense 57 42 114 91
Stock-based compensation expense 550 341 1,089 626
Income tax expense - - - -
--------- --------- --------- ---------
Adjusted EBITDAS $ (394) $ (149) $ (1,015) $ (355)
========= ========= ========= =========
BALANCE SHEETS
(In thousands)
June 30, December 31,
2016 2015
------------- -------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 2,025 $ 2,989
Accounts receivable, less allowance for
doubtful accounts of $163 and $587 as of June
30, 2016 and December 31, 2015, respectively 35,567 33,299
Prepaid expenses and other current assets 1,775 947
------------- -------------
Total current assets 39,367 37,235
Goodwill 58,337 58,337
Intangible assets, net 10,201 11,828
Property and equipment, net, and other assets 2,298 1,609
------------- -------------
Total assets $ 110,203 $ 109,009
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 36,142 $ 34,847
Deferred revenue and other current liabilities 467 329
------------- -------------
Total current liabilities 36,609 35,176
Line of credit 4,000 4,000
Other long-term liabilities 388 341
------------- -------------
Total liabilities 40,997 39,517
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 10,000
shares authorized, no shares issued or
outstanding as of June 30, 2016 and December
31, 2015 - -
Common stock, $0.001 par value, 200,000 shares
authorized, 14,845 and 13,974 shares issued
and outstanding as of June 30, 2016 and
December 31, 2015, respectively 15 14
Additional paid-in capital 156,352 152,347
Accumulated deficit (87,161) (82,869)
------------- -------------
Total stockholders' equity 69,206 69,492
------------- -------------
Total liabilities and stockholders' equity $ 110,203 $ 109,009
============= =============
Investor Relations Contact:
John Liviakis
Liviakis Financial
415-389-4670
john@liviakis.com
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