QRHC Quest Resource Holding Corporation

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934   Date of report (Date of earliest event reported): November 7, 2024   QUEST RESOURCE HOLDING CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

 

Nevada		001-36451		51-0665952
(State or other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

 

3481 Plano Parkway, Suite 100, The Colony, Texas		75056
(Address of Principal Executive Offices)		(Zip Code)

 

 

Registrant’s telephone number, including area code: (972) 464-0004

 

(Former name or former address if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the follow provisions:

 

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	QRHC	The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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Item 2.02. Results of Operations and Financial Condition.

We are furnishing this Current Report on Form 8-K in connection with the disclosure of information, in the form of the textual information from a press release released on November 7, 2024.

The information in this Current Report on Form 8-K (including the exhibit) is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

We do not have, and expressly disclaim, any obligation to release publicly any updates or any changes in our expectations or any change in events, conditions, or circumstances on which any forward-looking statement is based.

The text included with this Current Report on Form 8-K is available on our website located at http://investors.qrhc.com/, although we reserve the right to discontinue that availability at any time.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

Exhibit No.	Description
99.1	Press Release from Quest Resource Holding Corporation, dated November 7, 2024, entitled “Quest Resource Holding Corporation Reports Third Quarter 2024 Financial Results”
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

	QUEST RESOURCE HOLDING CORPORATION
Dated: November 7, 2024	By:	/s/ S. Ray Hatch
		Name:	S. Ray Hatch
		Title:	President and Chief Executive Officer

 

 

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Exhibit 99.1

Quest Resource Holding Corporation Reports Third Quarter 2024 Financial Results

New client onboarding progressing as expected, with third quarter revenue run rate from new client wins secured during 2024 achieving approximately 60% of expected fully ramped run rate

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, TX – November 7, 2024 – 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 $16 million in revenue during the third quarter. However, growth was partially offset by weaker than expected conditions at certain clients in our industrial end markets and isolated client attrition. In addition, during the third quarter we implemented our vendor management system, which temporarily caused a significantly higher than expected increase in cost of revenue and incremental SG&A in support of the transition,” said S. Ray Hatch, President and Chief Executive Officer of Quest.

“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 improving profitability from efficiency gains and earnings leverage.”

Third Quarter 2024 Highlights

 

Year-to-Date 2024 Highlights (September 30, 2024) 

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Recent Highlights

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 customers 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

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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

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Quest Resource Holding Corporation and Subsidiaries

STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)

 

		Three Months Ended September 30,								Nine Months Ended 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

 

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RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA

(Unaudited)

(In thousands)

		Three Months Ended September 30,								Nine Months Ended 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 September 30,								Nine Months Ended 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

 

 

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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 $1,990    and $1,582 as of September 30, 2024 and December 31, 2023, respectively			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, $0.001 par value, 10,000 shares authorized, no shares    issued and outstanding as of September 30, 2024 and December 31, 2023			—				—
Common stock, $0.001 par value, 200,000 shares authorized,    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

# # #

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v3.24.3

Cover	Nov. 07, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 07, 2024
Entity File Number	001-36451
Entity Registrant Name	QUEST RESOURCE HOLDING CORPORATION
Entity Central Index Key	0001442236
Entity Tax Identification Number	51-0665952
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	3481 Plano Parkway
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	The Colony
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75056
City Area Code	972
Local Phone Number	464-0004
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	QRHC
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false

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