SOURCE: Quest Resource Holding Corporation

Quest Resource Holding Corporation

March 14, 2016 07:05 ET

Quest Resource Reports 2015 Results

Expanded Portfolio of Customers to Over 90,000 User Service Locations

THE COLONY, TX--(Marketwired - March 14, 2016) - Quest Resource Holding Corporation (NASDAQ: QRHC) ("Quest"), a leader in sustainability, recycling, and resource management, today announced financial results for the fourth quarter and year ended December 31, 2015.

Full-Year 2015 Operational Highlights

  • Expanded portfolio of customers to over 90,000 user service locations (user service locations = number of customers x locations per customer x services per location) with the addition of key accounts within the retail, restaurant, grocery chain, and automotive industries
  • Revenue slightly declined in 2015, but grew 16.0% excluding the $32.0 million commodity decline in used motor oil and cooking oil
  • Increased annual gallons of used motor oil collected for recycling to approximately 40 million in 2015 from 23 million gallons in 2014

Subsequent to the end of the fourth quarter, the Board of Directors appointed Ray Hatch as President and Chief Executive Officer.

Ray Hatch, President and Chief Executive Officer, commented, "I am very excited to have accepted the responsibility of leading Quest and have already had an intense and instructive time immersing myself into the business."

 Full-Year Financial Results

Revenue

For the year ended December 31, 2015, revenue was $170.1 million, a decrease of $4.4 million, or 2.5%, compared with $174.5 million for the year ended December 31, 2014. The decrease was primarily due to a decline in used motor oil and cooking oil commodity values of approximately $32.0 million for the year ended December 31, 2015, largely offset by a combination of new and expanded services with customers added in 2015 and 2014 of approximately $26.5 million. Revenue grew 16.0% excluding the $32.0 million commodity decline, and user service locations expanded to approximately 90,000.

Cost of Revenue and Gross Profit

Cost of revenue decreased $3.7 million to $156.5 million for the year ended December 31, 2015 from $160.2 million for the year ended December 31, 2014. Gross profit decreased $627,000 to $13.6 million from $14.3 million in 2014. The decrease related primarily to the decline in the cost of commodities in 2015, partially offset by the increase related primarily to a combination of new locations and expanded services with customers added in 2015 and 2014. In addition, there was increased cost of certain contracted services of $498,000 in the fourth quarter of 2015.

Operating Expenses

For the year ended December 31, 2015, operating expenses increased $2.7 million to $20.9 million from $18.2 million for fiscal 2014. The increase was primarily related to an increase in selling, general, and administrative expenses for servicing an increased number of customer locations in the year ended December 31, 2015 and expenses related to the office relocation in September 2015. Additionally, the year ended December 31, 2014 included an expense reduction of approximately $554,000 as a result of the sublease of our former headquarters that did not recur in 2015. Operating expenses also included depreciation and amortization of $4.6 million and $3.8 million for the years ended December 31, 2015 and 2014, respectively. The increase for the year ended December 31, 2015 primarily related to amortization of software development costs capitalized subsequent to 2014 and $566,000 related to the cessation of the Earth911 e-commerce marketplace website during the fourth quarter of 2015.

Net Loss and Net Loss per Share

Net loss for the year ended December 31, 2015 was $7.4 million compared with a net loss of $9.9 million for the year ended December 31, 2014. Net loss per basic and diluted share was $(0.07) for the year ended December 31, 2015 compared with a net loss per basic and diluted share of $(0.10) for the year ended December 31, 2014. Increases in cost of revenue and operating expenses was partially offset for the year ended December 31, 2015 by the decrease in interest expense of $4.1 million to $218,000 from $4.3 million for 2014.

EBITDAS

Adjusted EBITDAS was a loss of $1.3 million for the year ended December 31, 2015 compared with Adjusted EBITDAS of $1.4 million for the year ended December 31, 2014. (See attached table "Reconciliation of Net Loss to Adjusted EBITDAS.")

Balance Sheet Summary

As of December 31, 2015, Quest had $3.0 million in cash and cash equivalents compared with $3.2 million as of December 31, 2014. Working capital was $2.1 million as of December 31, 2015 compared with $1.3 million as of December 31, 2014.

Quest added capacity to its line of credit in July 2015 with the increase of the aggregate revolving credit commitment to $15.0 million.

For more information on Quest, visit www.QRHC.com.

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

In this press release, a certain 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 GAAP measures that include: (i) depreciation and amortization, (ii) interest and other expense, (iii) stock-based compensation expense, and (iv) income tax expense, and 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.

Financial Tables Follow

   
Quest Resource Holding Corporation and Subsidiaries  
OPERATING HIGHLIGHTS  
(Unaudited)  
(In thousands, except per share amounts)  
   
    Three Months Ended     Years Ended  
    December 31,     December 31,  
    2015     2014     2015     2014  
Revenue   $ 44,232     $ 46,798     $ 170,139     $ 174,454  
Cost of revenue     40,812       43,223       156,498       160,186  
Gross profit     3,420       3,575       13,641       14,268  
  Selling, general, and administrative     4,506       4,412       16,301       14,384  
  Depreciation and amortization     1,628       965       4,568       3,827  
Total operating expenses     6,134       5,377       20,869       18,211  
Operating loss     (2,714 )     (1,802 )     (7,228 )     (3,943 )
  Interest and other expense     (55 )     (36 )     (218 )     (5,955 )
Income tax expense     -       -       -       -  
Net loss   $ (2,769 )   $ (1,838 )   $ (7,446 )   $ (9,898 )
Net loss applicable to common stockholders   $ (2,769 )   $ (1,838 )   $

(7,446
)   $

(9,898
)
Net loss per common share:                                
  Basic and diluted   $ (0.02 )   $ (0.02 )   $ (0.07 )   $ (0.10 )
                                 
Weighted average number of common shares outstanding:                                
  Basic and diluted     111,751       111,601       111,693       100,554  
                                   
                                   
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDAS  
(Unaudited)  
(In thousands)  
   
    Three Months Ended     Years Ended  
    December 31,     December 31,  
    2015     2014     2015     2014  
Net loss   $ (2,769 )   $ (1,838 )   $ (7,446 )   $ (9,898 )
Depreciation and amortization     1,631       965       4,572       3,827  
Interest and other expense     55       36       218       5,955  
Stock-based compensation expense     384       424       1,316       1,548  
Income tax expense     -       -       -       -  
Adjusted EBITDAS   $ (699 )   $ (413 )   $ (1,340 )   $ 1,432  
                                 
                                 
BALANCE SHEETS  
(Unaudited)  
(In thousands, except per share amounts)  
   
    December 31,  
    2015     2014  
             
ASSETS            
Current assets:                
Cash and cash equivalents   $ 2,989     $ 3,155  
Accounts receivable, less allowance for doubtful accounts of $587 and $761 as of December 31, 2015 and 2014, respectively     33,299       29,632  
Prepaid expenses and other current assets     947       684  
Total current assets     37,235       33,471  
                 
Goodwill     58,337       58,337  
Intangible assets, net     11,828       15,116  
Property and equipment, net, and other assets     1,609       753  
Total assets   $ 109,009     $ 107,677  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
Line of credit   $ -     $ 5,250  
Accounts payable and accrued liabilities     34,847       26,622  
Deferred revenue and other current liabilities     329       282  
Total current liabilities     35,176       32,154  
                 
Line of credit     4,000       -  
Other long-term liabilities     341       45  
Total liabilities     39,517       32,199  
                 
Commitments and contingencies                
                 
Stockholders' equity:                
Preferred stock, $0.001 par value, 10,000 shares authorized, no shares issued or outstanding as of December 31, 2015 and 2014     -       -  
Common stock, $0.001 par value, 200,000 shares authorized, 111,788 and 111,601 shares issued and outstanding as of December 31, 2015 and 2014, respectively     112       112  
Additional paid-in capital     152,249       150,789  
Accumulated deficit     (82,869 )     (75,423 )
Total stockholders' equity     69,492       75,478  
Total liabilities and stockholders' equity   $ 109,009     $ 107,677  
                 

Contact Information

  • Investor Relations Contact:
    Ross DiMaggio
    Union Square Associates
    212.675.2100