QRHC - Earnings call transcript Q3 2021 | Quest Resource Holding Corporation

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Operator

Good day, everyone, and welcome to the Quest Resource Holding Third Quarter 2021 Earnings Call. Today's call is being recorded. At this time, I would like to turn the conference over to Dave Mossberg, Investor Relations representative. Please go ahead, sir.

Dave Mossberg

Thank you, Christy, and thank you, everyone, for joining us on this call.

of like predictions, everyone statements estimates events future I'd call this regarding begin, or contain may and performance we to that remind conference future Before Quest. other forward-looking anticipate, Use of other expressions intended are estimate, statements. intend, identify forward-looking believe similar those project, to the and expect, like words Quest's statements significant uncertainties. risks on estimates, beliefs current forward-looking Such based and projections, and expectations, are assumptions involve and factors, Quest's and a with discussed or events various are in result results as forward-looking statements the materially greater those Actual in could from the filings of details Exchange which discussed Quest's differ in Commission. Securities

are the our undue so reliance SEC date disclaim any made, You are update uncertainties. on consult additional take for statements to and and statements do risks we and not to cautioned to unless required filings Quest's by duty to of such such as place law. forward-looking statements presented

In Quest's publications, industry firms addition, and information sources. we and information data other call, data independent The in statistical as are by market include reports and publications and market and and used observations Quest's may industry in and developments. this estimates, well government views as other research conditions about

are to make the financial current forecast non-GAAP during financial are measures the reliability Quest non-GAAP reliable these to and company's of be other sources data discussed future. company's presentation useful call are decisions, call. Ray will the by These is strategic be measures stated, is or these turn Unless included the this all Hatch, management the future measures measures operations non-GAAP of will believes A should evaluate over full results be financials non-GAAP our understanding information Management these of and Although Executive performance. Chief core believes not in independently the I'll Quest the and the ongoing used investors the it in a on of that accurate, Certain assessment earnings information. now sources any said, financial it that caution and the we in of and has GAAP With verified Officer. to otherwise the of that today's discussed call reconciliation are assumed basis. the to non-GAAP release. President prospects accuracy

Ray Hatch

you, across for Quest. fourth proud in team contributions I'm say marked partnership digit with and great consecutive your our Thank this everyone of dollars. Thanks, past profit all year-over-year that Dave. growth clients. our quarter in of in entire This result strategies of interest strong is quarter execution gross terrific our our the a growth double from to

performance third quarter continued The financial is exceptional. to be

of profit out not pace, a have dollars said economic post we business levels success. the key repeatedly customers. continue third And growth growth delivered the new year-over-year. limited are As profit from the XX% to came metric to in in pre-pandemic organic gross we at that calls, gross this growth combination managing gauge is to and and recovery. dollars, double When will I organic both which grow will on we with point the increased that digit during XXXX, an focus quarter use on the impressive compared growth pandemic our is and we to these existing

XXX%, for million. Adjusted EBITDA was also even and the disciplined year-to-date our million Our M&A EBITDA nicely contributed to pace an $X.X was adjusted quarter, strategy growth. $X.X faster grew of at increase

recent to and an a activity quarters I'm progress. give lot on in the have of you update We excited

Laurie call the I'm over Before Chief I Officer review go turn going to to to our Financial that the financials. Latham, into Laurie?

Laurie Latham

Thank good to you, everyone. and afternoon Ray,

year. the increase $X.X quarter Gross an million, quarter increase last XX% dollars Third million. XX.X% to of third profit revenue was compared $XX.X to

in represented growth remaining half the measure of profit increase customers. our earlier, with increase from at gross in from metric And acquisition initiatives. profit key acquisition existing in see said expectations. from end new success dollars increased The we to began we a the Organic contribution and year-over-year, X% quarter. profit gross dollars to smaller use of dollars both portion contribution came June. perform continues gross profit than The the with Green Ray more acquisitions. the second line dollars of Gross the is As we from Remedies completed the of sequentially our to

for clients' first in in SG&A quarter, third when compared gross quarter, expenses during year-over-year second discussed year, million there quarters previous and of from were year, in $X.X which million at our the by acquisitions. compared of the decrease locations same initiatives to but mix, have activity to from and cutting was the the heightened the period in industrial to within was COVID. related of contribution an which was year. XX.X% when quarter revenue, levels to $X range. third XX margin COVID More the will basis the related of significant fluctuate targeted business The last related we half the levels for quarter. year-over-year offset cost for third our were rebound increase than service year, activity during than last lower quarter-to- the we increase to which industrial took constraints was the normalized Gross As last margin our customers XXXX increase last points was during segment, the related new quarter

personnel growth IT acquisition. We increase you other and amortization the and which we increase support related costs $XXX,XXX, increase Remedies sales to of to is rate to year to XX% was the remaining than dollar the of the at might costs Depreciation related profit with a gross to the revenue $XXX,XXX SG&A As for growth. recovery year-over-year, The ago, of third M&A increased costs, related Overall have of increased as versus SG&A. increased the the with we accounts other marketing, also activity costs was some grew from SG&A portion travel expect our primarily quarter. asset tradeshow, to anticipate Green less will in national initiatives. activity, and labor associated half staff, business add of

our to platform. and enhance plan that also add investment We our and expected capabilities increase to to is operations technology scalability in

quarter $X.XX third quarter, XXX% to for related year. Net per increased loss the the per interest last compared the XXXX attributable acquisition. $X.X diluted primarily year. for share common net share to same financing stockholders from During Green the increased QX Remedies Adjusted to $XXX,XXX the The for third income $XX,XXX to is quarter, diluted period million. a increase debt for last of was EBITDA $X.XX third to year-over-year the expense

million cash flow of of million, closed and operating approximately The for we flow review on our was a cash generated cash nine increase was income months balance finance that $X.X and to the million to $X.X on net June Moving the performance. XX. $X.X to the approximately cash XXXX. CapEx strong utilized in flow sheet. in acquisition We in related

of end this levels was to the at quarter, of $X.X million at end I'll time, our at at balance of the end call turn million XXXX. quarter, from the cash Our million were million versus of relatively back $X.X unchanged At the debt At beginning $XX Ray. the the up year. the the $XX.X

Ray Hatch

markets walk and Thank our we're through in you you, I'll what now end our Laurie. business strategies. seeing

First, end markets. let's talk our about

recovery. entire see of in to post to period. show The continued has modest pandemic market continued to grocery throughout all Retail them. be has recovery continue this We stable

seen repair We're in are automotive maintenance traffic most stable our retail which but end our driven services for we with pre-pandemic and has proxy Although customer. number especially down we've market have The activity from industrial was third is levels modest foot XXXX flat use automotive trends miles been also and retailers is still quarter. fortunate that pandemic. consistent demand with as seen of for even improve levels. this The during customers. during to customer aftermarket, recovery market the significantly gains have from significantly in continued to the that customers the has of varied a activity which volume In the with

increase base. half commented experienced a customer pent-up the As activity large reflecting demand XXXX, industrial in during that have we have we in customer their previously, significant a of first

as returned more our business, the may across that specific likely in short is the but and are growth a by are be impact impact, to strength quarter, a normalized At quarter, third year-over-year of in other dollars This continue in expect offset activity volumes levels issues some issues have the of end the During companies' levels. resolved. these term third to That customer higher to supply and the we of country. said chain first parts the quarter result affecting beyond. profit gross fourth as

fully early implemented end year. industrial next to with a we the customer; quarter, of another to the end onboard expect be would wins the year. win this will begin we new And of since we customer new with had Regarding large third next before customers,

customers. win, reach Clearly, in to solution figures selected with in new eight range this In gaining market. help of opportunities the the qualified this long-term we're mid seven the past sales to is above with waste This with customer the in services. path expect being generate we're build relationship ability goal market. significant marks resonating our We company. win the And a traction proposition additional year in win our customer expand them a to value this end due figure industrial to with as second zero the annual to out

played streams a other one we continue earlier played were the for during on out which areas, our also future. across Along use in to selection. that uniform increasingly and role also big third efficiencies in end streams steadily a markets growth in and customer the By we in with provide all our our value the contributing maximize in to reporting growth. able improve I'll we results and diversify wins from multiple reducing sustainability customers centralizing ability Our the to role our our the dataset new to are quarter are operational Quest, with ramp and waste of any only customer had point to a and impact selection. and the year continuing commodities waste auditable discussed

acquisitions. small EBITDA to discussion efforts multifamily, of M&A add we run accelerated We've the our week, and acquisition past to Last quarters multiple Moving has rate. our and This company expanded markets closed potential in a more restaurants. end in strategy. really on on customers acquisition healthcare we which pipeline our have to $XXX,XXX including than our a several on expect

we expect next part continue meaningful be the growth such, to few years. acquisitions of our to a As during

growth our farmers in our profit. salesforce, as Now are client staff for client well the recent our vendor the includes of responsible size I'll preparing we're investments gross producing actively management both about as making on and hunters Based our members, we success in growth team strategies, for facing how talk This of future solutions platform. and increasing personnel.

to and automate ability and to our for manage beat adjust This that it's of service. efficiencies. without acquisitions, accelerates, the exceptional As that skipping end, and integration of recently improve scalability efforts to delivering operations new new we investments to leader in a even continuously as us a growth our will this further senior technology changes will lead as customer VP to hired role our help To we maximize our pace important growth further our strategy our created platform. more new improve customers, well a of operational program and processes onboarding process on

we're Regarding with the our the our as strategy. progress pleased executing we're mentioned business our making I performance very earlier, outlook, and of

going forward. growth year-over-year continue to expect We

their Our end for markets recover. are continued strong

and adjust. and our view our the of contribution our movement for sustainability Pressure recycling of increased seen to businesses provide We pace organic cost to adoption to continue neutral as new growth the in as continue and picking onboard opportunities are as inflation a place improve incremental services. to will programs. contracts these of from net landfills up. through wins we pipeline, client lowering bar increasing have our We've The mechanisms is to growth

and clients Based existing our operating growth. we without we're profit we optimistic produce and Acquisition an continue be and year. the and in growth customer our to model technology hand, success gross to contributor clients. We're personnel, dollars activity in continuing, next significantly that ability with further such the continue during it factors to investing As new is service quarter grow all to for profit and gross have ongoing the compromising adding these on and business we'll business deliver we processes have leverage. strong fourth to or into expanding expect levels to

listeners Operator? leverage forward progress. continue will look growth as business the from line profitability outpace EBITDA to you inherent scale our like expect top operator benefit questions. model. how the We keeping operating for up We we greater provide on our can queue now to to updated in and instruction on I

Operator

[Operator we'll Sameer Wainwright. First Instructions] go Joshi HC from

Sameer Joshi

Good great afternoon, a Laurie. on Ray, Congratulations quarter.

industrial, compare dollar does During previous your customer. industrial this new How you margin when of large compared or that the terms remarks, contribution? to gross -- in other customer profit prepared a large gross mentioned

Ray Hatch

on line with that We a we to very customer, comment expect customer large really that in general, be but don't us per much in to gross contributes profit we the in dollars have other business space. very this

Sameer Joshi

so is description. similar Okay, a good

Ray Hatch

is Similar good Yes. a description.

Sameer Joshi

hiring that new chain the VP talked this with only you anything other to Senior bit new is has like there And up issues employees your be SG&A that cost? Is expanding mentioned Okay. little your you your, that the about factors, affecting thing then are supply sequentially hire. that driving a year? Or may and do

Laurie Latham

that that difficult really predict That we big of the to tied one quarter-to-quarter activities. acquisition it's since to factors be more can those also is it activity quarter-to-quarter going is to do. affect Well, the

the I to covered comments recovery need I and earlier headcount. salespeople, start our over we some that And in one growth, we the also variable business we've drivers. and think we So our scripts would were that's market more in more of as has that big we to going of say add our

costs say business So would acquisition the the two the related buckets with is are I the side. that, biggest two, along and growth those to

Ray Hatch

couple have weren't a actually third of hires, that -- quarter. couple just They we happened. Yes, reflected Sameer of hires in

Laurie are before. a contributor, was services, that was what bigger much loosened maybe think up about I So up talking travel probably and weren't some things loosened professional

Sameer Joshi

Right.

the GAAP for least SG&A in SG&A, So at expect update sequentially? XQ another we can

Laurie Latham

at we're particularly some. that we will and push activity, And it think Yes, looking activity. our up acquisition

Sameer Joshi

XX%, to acquisition and nitpick contribution, the gross this you acquiring the And clients you're for not similar $XXX,XXX dollars. they're lower, from margins, mentioned multifamily, profit and restaurant Yes. they are but gross you has when or profit contribution industries, also week last healthcare are gross mentioned that XX%, but dollar

Laurie Latham

also that just about from talking heavily we're as that It's the a dollars there. much percentage, It's acquisition. a contracts business contributed margin be the on as based can

depreciation, So there's that not lot of amortization, of thing. a particularly kind

So our what rate very EBITDA from gross are run an profit dollars case to expect in also. similar this we

we disclosing it. So just that's how are

we annual that could So on $XXX,XXX it's an EBITDA. about basis see

Sameer Joshi

the That's EBITDA run rate.

Laurie Latham

Yes.

Operator

Bruce to Vali Davis. Wilson Next, we'll go from

Unidentified Analyst

Thank going you -- a year believe happen The have seven Does it you. into eight I when new would figures, that I the it customer? that acquisition, you would what make would if it's is it question so. figures, make say is maybe single used is, that largest well or

Ray Hatch

is point just If it the moved what into eight figures, that's doubt would into it Because doubt you're would -- it would push figures. signed I eight be that I that I -- them. asking? it.

closing brackets up We management than And the me higher top that. no turn That's in $XX back customers customers further they to the Let But it in the remarks. that have questions definitely million queue, math. for plus, volume. right? could on be put them do of I'll would based our like with

Ray Hatch

me the all job to honor for and to want for for interest the it's just the Quest ongoing efforts again I And fantastic operator. And an their a I to do thank done that want it. employees your I call. take everybody greatly for customers consistently here. much, team speak Quest. to that. They've end very shareholders. want to this deliver appreciate our to quarter-over-quarter. We get I a value for you thank of opportunity Thank in moment at

And look to well. growth to momentum growth a a long quarters forward lot we And come. date I quarters. of feel last road our still on you are we're initiatives of Thank working stages gained all profitable the our of like ahead. of really keeping I up to early have All the you And four during everybody. of we've efforts.

Operator

our for conclude does today. your that for And Thank call you participation.

You now may disconnect.

Quest Resource Holding (QRHC) 16 Nov 212021 Q3 Earnings call transcript