GlobeNewswire Inc | Aug 13, 2020 04:01PM EDT

August 13, 2020

THE COLONY, Texas, Aug. 13, 2020 (GLOBE NEWSWIRE) -- Quest Resource Holding Corporation (NASDAQ: QRHC) ("Quest"), a national leader in environmental waste and recycling services, today announced financial results for the second quarter ended June 30, 2020.

Second Quarter 2020 Highlights

-- Revenue was $22.0 million, a 13.7% decrease compared with the second quarter of 2019. -- Gross profit was $4.4 million, a 7.9% decrease compared with the second quarter of 2019. -- Gross margin increased 120 basis points to 19.9% of revenue, compared with 18.7% for the second quarter of 2019. -- Other income of $1.3 million, or $0.08 per share, in the second quarter of 2020 represented the use of PPP Loan proceeds to fund eligible expenses under the CARES Act. -- Net income per share was $0.08, compared with $0.00 during the second quarter of 2019. -- Adjusted EBITDA was $1.1 million, compared with $825,000 during the second quarter of 2019.

Year-to-Date 2020 Highlights (June 30, 2020)

-- Revenue was $47.3 million, a 9.2% decrease compared with the same period of 2019. -- Gross profit was $8.9 million, a 4.0% decrease compared with the same period of 2019. -- Gross margin increased 110 basis points to 18.9% compared with 17.8% of revenue for the same period of 2019. -- Other income of $1.3 million, or $0.08 per share, represented the use of PPP Loan proceeds to fund eligible expenses under the CARES Act. -- Net income per share improved to $0.06, compared to a net loss per share of $(0.01) during the same period of 2019. -- Adjusted EBITDA was $1.7 million, a 3.3% increase compared to the same period of 2019.

Our team adapted quickly to the difficult COVID-19 market environment working closely with customers to ensure high levels of service, all the while focusing on the health and safety of our employees. Our customer end markets that were the most affected in April recovered faster than anticipated through each month of the quarter. However, overall volume trends are negative year over year. Due to the flexible cost structure of our asset light model, as well as actions we took to reduce expenses, we showed a solid improvement in Adjusted EBITDA and generated positive cash flow, said S. Ray Hatch, President and Chief Executive Officer. Since the end of the quarter, we bolstered the balance sheet, updating our line of credit with more favorable terms, and raising equity capital to support our acquisition strategy.

Mr. Hatch continued, While the pace and extent of the recovery remains uncertain, our flexible business model, strong balance sheet, and the essential nature of our services, position us to continue to weather this challenging environment.

Second Quarter 2020 Earnings Conference Call and Webcast

Quest will conduct a conference call today, August 13, 2020, at 5:00 PM ET, to review the financial results for the second quarter ended June 30, 2020. Investors interested in participating on the live call can dial 1-800-263-0877 within the U.S. or 1-646-828-8143 from abroad, referencing conference ID: 8602356. The conference call, which may include forward-looking statements, is also being webcast and is available via the investor relations section of Quests website at https://investors.qrhc.com/investors/events-and-presentations. A replay of the webcast will be archived on Quests investor relations website for 90 days.

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

In this press release, a non-GAAP financial measure, "Adjusted EBITDA," 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 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 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 Income (Loss) to Adjusted EBITDA.")

About Quest Resource Holding Corporation

Quest is a national provider of waste and recycling services to customers from across multiple industry sectors that are typically larger, multi-location businesses. In addition, Quests programs and services enable customers to address their environmental and sustainability goals and responsibilities. Quest provides information that tracks and reports the environmental results of Quests services, provides actionable data to improve business operations, and enables customers to address their environmental and sustainability goals and responsibilities. For more information, visit www.questrmg.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 belief that our flexible business model, balance sheet and the essential nature of our services position us to continue to weather the challenging COVID-19 environment, and our belief that the financial measures contained in this press release facilitate operating performance comparisons from period to period. These statements are based on our current expectations, estimates, projections, beliefs, and assumptions. Such statements involve significant risks and uncertainties. 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, LLCJoe 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 Six Months Ended June 30, June 30, 2020 2019 2020 2019 Revenue $ 21,969 $ 25,445 $ 47,301 $ 52,094 Cost of revenue 17,594 20,695 38,383 42,802 Gross profit 4,375 4,750 8,918 9,292 Selling, general, 3,978 4,227 8,387 8,441 and administrativeDepreciation and 334 327 668 653 amortizationTotal operating 4,312 4,554 9,055 9,094 expensesOperating income 63 196 (137 ) 198 (loss)Other income 1,258 - 1,258 - Interest expense (88 ) (114 ) (172 ) (225 )Income (loss) 1,233 82 949 (27 )before taxesIncome tax expense 24 55 (28 ) 110 (benefit)Net income (loss) $ 1,209 $ 27 $ 977 $ (137 ) Net income (loss) per common share:Basic $ 0.08 $ 0.00 $ 0.06 $ (0.01 )Diluted $ 0.08 $ 0.00 $ 0.06 $ (0.01 ) Weighted averagenumber of common sharesoutstanding:Basic 15,465 15,340 15,431 15,334 Diluted 15,468 15,362 15,441 15,334

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

Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2019 2020 Net income (loss) $ 1,209 $ 27 $ 977 $ (137 )Depreciation and 348 343 696 702 amortizationInterest expense 88 114 172 225 Stock-based 400 269 777 473 compensation expenseOther adjustments (929 ) 17 (920 ) 248 Income tax expense 24 55 (28 ) 110 (benefit)Adjusted EBITDA $ 1,140 $ 825 $ 1,674 $ 1,621

BALANCE SHEETS(In thousands, except per share amounts)

June 30, December 31, 2020 2019 (unaudited)ASSETS Current assets: Cash and cash equivalents $ 3,964 $ 3,411 Accounts receivable, less allowance for doubtfulaccounts of $840 13,942 13,900 and $767 as of June 30, 2020 and December 31,2019, respectivelyPrepaid expenses and other current assets 1,423 1,110 Total current assets 19,329 18,421 Goodwill 58,208 58,208 Intangible assets, net 1,016 1,591 Property and equipment, net, and other assets 2,294 2,436 Total assets $ 80,847 $ 80,656 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable and accrued liabilities $ 12,634 $ 13,317 Deferred revenue and other current liabilities 171 19 Total current liabilities 12,805 13,336 Revolving credit facility, net 3,792 4,535 Other long-term liabilities 821 1,141 Total liabilities 17,418 19,012 Commitments and contingencies Stockholders? equity: Preferred stock, $0.001 par value, 10,000 sharesauthorized, no ? ? shares issued or outstanding as of June 30, 2020and December 31, 2019Common stock, $0.001 par value, 200,000 sharesauthorized, 15,403 and 15,373 shares issued and outstanding 15 15 as of June 30, 2020 and December 31, 2019,respectivelyAdditional paid-in capital 161,666 160,858 Accumulated deficit (98,252 ) (99,229 )Total stockholders? equity 63,429 61,644 Total liabilities and stockholders? equity $ 80,847 $ 80,656