8-K

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): March 17, 2022

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, 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. ☐

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 March 17, 2022.

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 March 17, 2022, entitled “Quest Resource Holding Corporation Reports Fourth Quarter and 2021 Financial Results”
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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: March 17, 2022	By:	/s/ S. Ray Hatch
		Name:	S. Ray Hatch
		Title:	President and Chief Executive Officer

EX-99.1

 

Exhibit 99.1

Quest Resource Holding Corporation Reports Fourth Quarter and 2021 Financial Results

THE COLONY, TX – March 17, 2022 – 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 fourth quarter and year ended December 31, 2021.

Fourth Quarter 2021 Highlights

•Revenue was $46.4 million, a 67.7% increase compared with the fourth quarter of 2020.

•Gross profit was $8.7 million, a 56.2% increase compared with the fourth quarter of 2020.

•Gross margin was 18.8% of revenue compared with 20.2% during the fourth quarter of 2020.

•GAAP net loss per share attributable to common stockholders was ($0.03) per basic and diluted share, compared with net income of $0.01 per basic and diluted share during the fourth quarter of 2020.

•Adjusted EBITDA was $3.3 million, an 83.8% increase compared with the fourth quarter of 2020.

•Adjusted net income per diluted share increased to $0.08, compared with $0.03 per diluted share during the fourth quarter of 2020.

Year Ended December 31, 2021 Highlights

•Revenue was $155.7 million, a 57.8% increase compared with 2020.

•Gross profit was $28.8 million, a 51.3% increase compared with 2020.

•Gross margin was 18.5% of revenue compared with 19.3% for 2020.

•GAAP net income per share attributable to common shareholders increased to $0.09 ($0.08 per diluted share), compared with $0.05 per basic and diluted share during 2020.

•Adjusted EBITDA was $10.9 million, a 144.3% increase compared with 2020.

•Adjusted net income per diluted share increased to $0.27, compared with $0.05 per diluted share during 2020.

“During 2021, we delivered our strongest financial performance to date, posting 51% growth in gross profit dollars and 144% growth in Adjusted EBITDA. We are executing well with our strategies to drive both organic and acquisition related growth,” said S. Ray Hatch, President and Chief Executive Officer. “Demand for cost effective sustainability solutions to divert waste from landfill is as strong as ever among target clients. Our value position, which includes a national footprint, broad service offering, and uniform data reporting on waste streams, is clearly resonating among prospective customers. With these factors working in our favor, we expect continued momentum in 2022 and the next several years from both organic and acquisitive sources.”

Fourth Quarter 2021 Earnings Conference Call and Webcast

The Company is scheduled to release the full results for its fourth quarter and year ended December 31, 2021, on Thursday, March 17, 2022, at 5:00 PM ET, to review the Company's financial results and business outlook. Investors interested in participating on the live call can dial 1-800-239-9838 within the U.S. or 1-323-794-2551 from abroad,referencing conference ID: 5479645. Investors can also access the call online through a listen-only webcast on the investor relations section of Quest’s website at http://investors.qrhc.com/.

The earnings webcast, which may include forward-looking information, will be archived on the Quest investor relations website for at least 90 days and a telephonic playback of the conference call will be available by calling 1-844-512-2921within the U.S. and 1-412-317-6671from abroad. The replay passcode is 5479645. The telephonic playback will be available beginning at 8:00 PM ET on Thursday, March 17, 2022, and continuing through 11:59 PM ET on Thursday, March 31, 2022. For more information on Quest Resource Holding Corporation, visit http://investors.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” 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 this adjusted financial measure 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 Income (Loss) to Adjusted EBITDA" and “Adjusted Net Income Per Share”).

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.

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 of continued momentum in 2022 and the next several years from both organic and acquisitive sources. 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 the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2021. 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

Quest Resource Holding Corporation and Subsidiaries

STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

	Three Months Ended December 31,						Year Ended December 31,
	2021			2020			2021			2020
	(Unaudited)
Revenue	$	46,389		$	27,658		$	155,715		$	98,660
Cost of revenue		37,670			22,077			126,894			79,605
Gross profit		8,719			5,581			28,821			19,055
Selling, general, and administrative		7,099			4,463			21,729			17,141
Depreciation and amortization		1,145			346			2,469			1,164
Total operating expenses		8,244			4,809			24,198			18,305
Operating income		475			772			4,623			750
Other income (expense)		(116	)		—			(116	)		1,408
Interest expense		(841	)		(458	)		(2,495	)		(702	)
Loss on extinguishment of debt		—			—			—			(168	)
Income (loss) before taxes		(482	)		314			2,012			1,288
Income tax expense		59			190			321			254
Net income (loss)	$	(541	)	$	124		$	1,691		$	1,034
Deemed dividend for warrant down round feature		—			—			—			(205	)
Net income (loss) applicable to common stockholders	$	(541	)	$	124		$	1,691		$	829
Net income (loss) per common share:
Basic	$	(0.03	)	$	0.01		$	0.09		$	0.05
Diluted	$	(0.03	)	$	0.01		$	0.08		$	0.05
Weighted average number of common shares outstanding:
Basic		19,185			18,467			18,886			16,661
Diluted		19,185			18,801			20,735			16,756

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(Unaudited)

(In thousands)

	Three Months Ended December 31,					Year Ended December 31,
	2021			2020		2021		2020
Net income (loss)	$	(541	)	$	124	$	1,691	$	1,034
Depreciation and amortization		1,225			404		2,764		1,277
Interest expense		841			458		2,495		702
Stock-based compensation expense		240			387		1,382		1,488
Acquisition, integration, and related costs		1,244			207		1,844		743
Other adjustments		216			17		376		(1,048	)
Income tax expense		59			190		321		254
Adjusted EBITDA	$	3,284		$	1,787	$	10,873	$	4,450

ADJUSTED NET INCOME PER SHARE

(Unaudited)

(In thousands)

	Three Months Ended December 31,					Year Ended December 31,
	2021			2020		2021		2020
Reported net income (loss) (1)	$	(541	)	$	124	$	1,691	$	829
Amortization of intangibles (2)		988			231		1,952		232
Acquisition, integration, and related costs (2)		1,244			207		1,844		743
Other adjustments		116			—		116		(1,408	)
Loss on extinguishment of debt		—			—		—		168
Deemed dividend		—			—		—		205
Adjusted net income	$	1,807		$	562	$	5,603	$	769
Diluted earnings per share:
Reported net income (loss)	$	(0.03	)	$	0.01	$	0.08	$	0.05
Adjusted net income	$	0.08		$	0.03	$	0.27	$	0.05

(1) applicable to common stockholders

(2) related to acquisitions

BALANCE SHEETS

(In thousands, except per share amounts)

	December 31,
	2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	8,428		$	7,516
Accounts receivable, less allowance for doubtful accounts of $841    and $935 as of December 31, 2021 and December 31, 2020, respectively		39,949			17,421
Prepaid expenses and other current assets		1,952			1,069
Total current assets		50,329			26,006
Goodwill		80,622			66,310
Intangible assets, net		39,119			6,529
Property and equipment, net, and other assets		5,596			3,384
Total assets	$	175,666		$	102,229
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	30,196		$	15,247
Other current liabilities		6,195			1,393
Current portion of notes payable		1,329			624
Total current liabilities		37,720			17,264
Notes payable, net		62,409			14,948
Other long-term liabilities, net		1,909			1,974
Total liabilities		102,038			34,186
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000 shares authorized, no    shares issued or outstanding as of December 31, 2021 and December 31, 2020		—			—
Common stock, $0.001 par value, 200,000 shares authorized,    19,046 and 18,413 shares issued and outstanding as    of December 31, 2021 and December 31, 2020, respectively		19			18
Additional paid-in capital		170,318			166,425
Accumulated deficit		(96,709	)		(98,400	)
Total stockholders’ equity		73,628			68,043
Total liabilities and stockholders’ equity	$	175,666		$	102,229

# # #

XML

Cover	Mar. 17, 2022
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Mar. 17, 2022
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, 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