GlobeNewswire Inc | Mar 11, 2021 04:00PM EST

March 11, 2021

THE COLONY, Texas, March 11, 2021 (GLOBE NEWSWIRE) -- Quest Resource Holding Corporation (NASDAQ: QRHC) ("Quest"), a national leader in environmental waste and recycling services, today announced financial results for the fourth quarter and year ended December 31, 2020.

Fourth Quarter 2020 Highlights

-- Revenue was $27.7 million, a 20.5% increase compared with the fourth quarter of 2019. -- Gross profit was $5.6 million, a 19.7% increase compared with the fourth quarter of 2019. -- Gross margin was 20.2% of revenue compared with 20.3% for the fourth quarter of 2019. -- Net income per share attributable to common stockholders was $0.01, compared with $0.00 per share during the fourth quarter of 2019. -- Adjusted EBITDA was $1.8 million, a 110.3% increase compared with the fourth quarter of 2019.

Year ended December 31, 2020 Highlights

-- Revenue was $98.7 million, compared to $99.0 million during 2019. -- Gross profit was $19.1 million, a 1.8% increase compared with 2019. -- Gross margin increased 40 basis points to 19.3% of revenue compared with 18.9% for 2019. -- Net income (loss) per share attributable to common stockholders improved to $0.05, compared with $(0.00) per share during 2019. -- Adjusted EBITDA was $4.5 million, a 33.6% increase compared with 2019.

Due to the diversification of our end markets, the variable-cost structure of our business model, the essential nature of our services, and the resilience of our people; during this past year we overcame many of the challenges related to the pandemic. We finished 2020 strong, with more than 9% organic revenue growth in the fourth quarter (excluding Green Remedies) and more than doubling our Adjusted EBITDA during the fourth quarter. Financial performance also benefitted from the Green Remedies Waste & Recycling acquisition, which included revenue of approximately $2.6 million and net income of approximately $550,000 since the closing on October 19, 2020, said S. Ray Hatch, President and Chief Executive Officer. The positive momentum we saw in the back half of 2020 has continued in the new year. As such, we expect growth of new and existing customers will continue to offset the COVID-related downturn that we continue to experience in certain end markets.

2020 Earnings Conference Call and Webcast

Quest will conduct a conference call Thursday, March 11, 2021, at 5:00 PM ET, to review the financial results for the fourth quarter and fiscal year ended December 31, 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: 9502038. 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. 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. Quest provides businesses with a single source service solution for the reuse, recycling, and disposal of a wide variety of waste streams and recyclables generated by their operations. 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 https://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, the positive momentum we saw in the back half of 2020 has continued in the new year and we expect growth of new and existing customers will continue to offset the COVID-related downturn that we continue to experience in certain end markets. 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, and extended shut down of businesses, and other factors discussed in greater detail in our filings with theSecurities and Exchange Commission(SEC), including our Report on Form 10-K for the year ended December 31, 2020. You are cautioned not to place undue reliance on such statements and to consult ourSECfilings 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

Quest Resource Holding Corporation and SubsidiariesSTATEMENTS OF OPERATIONS(In thousands, except per share amounts)

Three Months Ended Years Ended December 31, December 31, 2020 2019 2020 2019 (Unaudited) Revenue $ 27,658 $ 22,959 $ 98,660 $ 98,979 Cost of revenue 22,077 18,297 79,605 80,253 Gross profit 5,581 4,662 19,055 18,726 Selling, general, and 4,463 4,153 17,141 16,816 administrativeDepreciation and amortization 346 333 1,164 1,315 Total operating expenses 4,809 4,486 18,305 18,131 Operating income 772 176 750 595 Other income ? ? 1,408 ? Interest expense (458 ) (87 ) (702 ) (431 )Loss on extinguishment of ? ? (168 ) ? debtIncome before taxes 314 89 1,288 164 Income tax expense 190 55 254 219 Net income (loss) $ 124 $ 34 $ 1,034 $ (55 )

? ? (205 ) ? Deemed dividend for warrantdown round featureNet income (loss) applicable $ 124 $ 34 $ 829 $ (55 )to common stockholdersNet income (loss) per common share:Basic $ 0.01 $ 0.00 $ 0.05 $ (0.00 )Diluted $ 0.01 $ 0.00 $ 0.05 $ (0.00 ) Weighted average number of common shares outstanding:Basic 18,467 15,369 16,661 15,347 Diluted 18,801 15,417 16,756 15,347

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

Three Months Ended Years Ended December 31, December 31, 2020 2019 2020 2019 Net income (loss) $ 124 $ 34 $ 1,034 $ (55 )Depreciation and amortization 404 347 1,277 1,402 Interest expense 458 87 702 431 Stock-based compensation expense 387 327 1,488 1,086 Acquisition, integration, and 207 ? 743 ? related costsOther adjustments 17 ? (1,048 ) 248 Income tax expense 190 55 254 219 Adjusted EBITDA $ 1,787 $ 850 $ 4,450 $ 3,331

BALANCE SHEETS(In thousands, except per share amounts)

December December 31, 31, 2020 2019 ASSETS Current assets: Cash and cash equivalents $ 7,516 $ 3,411 Accounts receivable, less allowance for doubtfulaccounts of $935and $767 as of December 31, 2020 and 17,421 13,900 2019, respectivelyPrepaid expenses and other current assets 1,069 1,110 Total current assets 26,006 18,421 Goodwill 66,310 58,208 Intangible assets, net 6,529 1,591 Property and equipment, net, and other assets 3,384 2,436 Total assets $ 102,229 $ 80,656 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable and accrued liabilities $ 15,247 $ 13,317 Other current liabilities 1,393 19 Current portion of notes payable 624 ? Total current liabilities 17,264 13,336 Notes payable, net 14,948 4,535 Other long-term liabilities, net 1,974 1,141 Total liabilities 34,186 19,012 Commitments and contingencies Stockholders? equity: Preferred stock, $0.001 par value, 10,000 sharesauthorized, noshares issued or outstanding as of ? ? December 31, 2020 and 2019Common stock, $0.001 par value, 200,000 sharesauthorized,18,413 and 15,373 shares issued and 18 15 outstanding as of December 31, 2020 and 2019,respectivelyAdditional paid-in capital 166,425 160,858 Accumulated deficit (98,400 ) (99,229 )Total stockholders? equity 68,043 61,644 Total liabilities and stockholders? equity $ 102,229 $ 80,656