Quest Resource Holding Corporation (QRHC) Bundle
Understanding Quest Resource Holding Corporation (QRHC) Revenue Streams
Understanding Quest Resource Holding Corporation’s Revenue Streams
For the quarter ended September 30, 2024, total revenue was $72.8 million, an increase of $2.4 million or 3.3% compared to $70.4 million for the same quarter in 2023. For the nine months ended September 30, 2024, total revenue was $218.6 million, a decrease of $0.4 million or 0.2% from $219.0 million in the same period of 2023.
Revenue Breakdown by Source
| Revenue Type | Q3 2024 ($) | Q3 2023 ($) | 9M 2024 ($) | 9M 2023 ($) |
|---|---|---|---|---|
| Services | 69,976,761 | 67,672,666 | 209,901,590 | 210,622,181 |
| Product sales and other | 2,788,654 | 2,752,759 | 8,660,398 | 8,414,242 |
| Total Revenue | 72,765,415 | 70,425,425 | 218,561,988 | 219,036,423 |
Year-over-Year Revenue Growth Rate
The increase in revenue for the quarter was primarily due to newly added customers and strong demand from the existing customer base, contributing approximately $16 million in additional revenue, an increase of 32% from the same period in 2023. This was partially offset by lower volumes due to lost customers, resulting in a revenue decrease of approximately $13 million.
For the nine months ended September 30, 2024, the decrease in revenue was attributed to lower volumes from lost customers, which resulted in a revenue decrease of approximately $33 million. However, this was offset by newly added customers and strong overall demand, contributing approximately $33 million in additional revenue, marking a 22% increase from the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
During the three months ended September 30, 2024, one customer accounted for 29.1% of total revenue, while two customers accounted for 28.2% of total revenue in the same period of 2023. For the nine months ended September 30, 2024, one customer accounted for 27.5% of total revenue, while two customers accounted for 28.1% in 2023.
Significant Changes in Revenue Streams
Revenue streams were significantly impacted by macroeconomic conditions and changes in customer demand. The overall demand within the existing customer base remained strong, but challenges such as lost customers and soft conditions in certain end markets negatively impacted volumes. The combination of these factors led to fluctuations in revenue, particularly in the third quarter of 2024.
Overall, the revenue dynamics reflect a complex interplay of customer retention, market conditions, and operational adjustments aimed at adapting to shifting demands and economic pressures.
A Deep Dive into Quest Resource Holding Corporation (QRHC) Profitability
A Deep Dive into Quest Resource Holding Corporation's Profitability
Gross Profit, Operating Profit, and Net Profit Margins
For the quarter ended September 30, 2024, the gross profit was $11.7 million, down from $12.4 million for the same quarter in 2023. The gross profit margin decreased to 16.1% from 17.7% year-over-year.
For the nine months ended September 30, 2024, the gross profit amounted to $39.3 million, compared to $38.6 million for the same period in 2023, with a gross profit margin of 18.0%, slightly up from 17.6%.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Gross Profit | $11.7 million | $12.4 million | $39.3 million | $38.6 million |
| Gross Profit Margin | 16.1% | 17.7% | 18.0% | 17.6% |
Trends in Profitability Over Time
Operating expenses for Q3 2024 were $12.6 million compared to $12.0 million in Q3 2023. For the nine months, operating expenses rose to $36.6 million from $35.5 million year-over-year. Consequently, the operating loss for Q3 2024 was ($940,315), contrasting with an operating profit of $468,538 in Q3 2023.
The nine-month operating income decreased to $2.7 million from $3.1 million in 2023.
Comparison of Profitability Ratios with Industry Averages
The net loss for the quarter ended September 30, 2024, was ($3.4 million), compared to a net loss of ($2.1 million) for the same period in 2023. The nine-month net loss increased to ($5.6 million) from ($5.0 million). The net loss per share for Q3 2024 was ($0.16), compared to ($0.10) in Q3 2023.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Loss | ($3.4 million) | ($2.1 million) | ($5.6 million) | ($5.0 million) |
| Net Loss per Share | ($0.16) | ($0.10) | ($0.27) | ($0.25) |
Analysis of Operational Efficiency
Adjusted EBITDA for Q3 2024 decreased by 31.7% to $2.5 million from $3.7 million in Q3 2023. However, for the nine months, Adjusted EBITDA showed a slight increase of 0.5% to $12.8 million from $12.7 million.
Operating expenses included selling, general, and administrative expenses of $10.3 million for Q3 2024, compared to $9.6 million in Q3 2023. Depreciation and amortization were $2.4 million in Q3 2024 against $2.3 million in Q3 2023.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Adjusted EBITDA | $2.5 million | $3.7 million | $12.8 million | $12.7 million |
| SG&A Expenses | $10.3 million | $9.6 million | $29.5 million | $28.2 million |
| Depreciation & Amortization | $2.4 million | $2.3 million | $7.1 million | $7.2 million |
Debt vs. Equity: How Quest Resource Holding Corporation (QRHC) Finances Its Growth
Debt vs. Equity: How Quest Resource Holding Corporation Finances Its Growth
Debt Levels
As of September 30, 2024, the total debt obligations of the company amounted to $74,754,410, which includes:
| Debt Type | Amount ($) | Interest Rate (%) |
|---|---|---|
| Monroe Term Loan | 53,034,156 | 11.82 |
| PNC ABL Facility | 18,504,692 | 7.25 |
| PNC Equipment Term Loan | 2,517,080 | 8.11 |
| Green Remedies Promissory Note | 698,482 | 3.00 |
The current portion of long-term debt is $1,158,800. After accounting for unamortized debt issuance costs and discounts, the net notes payable stands at $71,900,781.
Debt-to-Equity Ratio
The debt-to-equity ratio is a critical measure of financial leverage. As of September 30, 2024, the company's total equity was approximately $62,767,433. This gives a debt-to-equity ratio of:
Debt-to-Equity Ratio = Total Debt / Total Equity = 74,754,410 / 62,767,433 ≈ 1.19
This ratio is higher than the industry average, which typically ranges from 0.5 to 1.0, indicating a greater reliance on debt financing compared to equity.
Recent Debt Issuances and Credit Ratings
In 2024, the company issued $2,517,080 in new debt through the PNC Equipment Term Loan to finance equipment purchases. The company has maintained a stable credit rating, reflecting its ability to manage debt amidst fluctuating revenues.
Refinancing Activity
Recent refinancing efforts include amendments to the PNC Loan Agreement, which has been adjusted several times since its inception in 2020. The most recent amendment occurred on March 29, 2024, allowing for favorable terms to manage cash flow and interest rates.
Balancing Debt Financing and Equity Funding
The company utilizes a combination of debt and equity to finance growth. As of September 30, 2024, it had $1.1 million in cash and cash equivalents, alongside a working capital of $22 million, which provides liquidity to support operations and mitigate risks associated with high debt levels.
The strategic mix of financing allows the company to capitalize on growth opportunities while managing its leverage. The balance between debt and equity is essential for maintaining financial stability and operational flexibility.
Assessing Quest Resource Holding Corporation (QRHC) Liquidity
Assessing QRHC's Liquidity
As of September 30, 2024, the liquidity position of QRHC is characterized by key financial metrics:
- Current Ratio: The current ratio is calculated as current assets divided by current liabilities. As of September 30, 2024, QRHC had current assets of $23.1 million and current liabilities of $39.9 million, resulting in a current ratio of approximately 0.58.
- Quick Ratio: The quick ratio, which excludes inventory from current assets, is approximately 0.56 based on cash and cash equivalents of $1.1 million, accounts receivable of $20 million, and current liabilities of $39.9 million.
The trend in working capital shows an increase from $15.7 million on December 31, 2023, to $22.0 million as of September 30, 2024. This increase indicates an improvement in liquidity, despite the low current and quick ratios.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, highlights the following:
| Cash Flow Category | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net cash used in operating activities | $(1.3) | $6.7 |
| Net cash used in investing activities | $(5.2) | $(1.3) |
| Net cash provided by financing activities | $7.3 | $(14.1) |
In 2024, QRHC had a net cash outflow from operating activities primarily due to a net loss of $(5.6) million and significant changes in working capital, including an increase in accounts receivable and payable. Cash used in investing activities rose significantly, reflecting capital expenditures to support operational growth.
Potential Liquidity Concerns or Strengths
QRHC has cash and cash equivalents of $1.1 million as of September 30, 2024, up from $0.3 million at the end of 2023. The company also has access to a $35 million asset-based revolving credit facility, enhancing its liquidity position. However, the current and quick ratios indicate potential liquidity concerns, as they fall below the generally accepted benchmark of 1.0, suggesting that QRHC may face challenges in meeting short-term obligations without additional financing.
Overall, while QRHC's working capital has improved, the company's liquidity ratios suggest it may need to manage its current liabilities more effectively or secure additional financing to maintain operational flexibility.
Is Quest Resource Holding Corporation (QRHC) Overvalued or Undervalued?
Valuation Analysis
In assessing the financial health of the company, a crucial aspect is the valuation analysis, which provides insights into whether the company is overvalued or undervalued. Key ratios such as price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) will be analyzed.
Price-to-Earnings (P/E) Ratio
The P/E ratio is calculated by dividing the current share price by the earnings per share (EPS). As of September 30, 2024, the reported diluted loss per share was $(0.16), indicating a negative P/E ratio, which generally suggests that the company is not currently profitable.
Price-to-Book (P/B) Ratio
The P/B ratio is determined by dividing the market price per share by the book value per share. The company's book value as of September 30, 2024, was $62.77 million with approximately 20.46 million shares outstanding, resulting in a book value per share of approximately $3.07. The stock price as of the same date was not provided, thus making the P/B ratio calculation incomplete without that data.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated using the enterprise value (EV) of the company, which includes market capitalization, debt, and cash. The Adjusted EBITDA for the nine months ended September 30, 2024, was $12.79 million. The enterprise value can be approximated by adding total debt of $74.75 million and subtracting cash of $1.1 million, leading to an EV of approximately $73.65 million. Therefore, the EV/EBITDA ratio is approximately 5.77.
Stock Price Trends
Over the last 12 months, the stock price has seen fluctuations. The stock price as of September 30, 2024, was not explicitly stated in the documents; however, it is essential to analyze historical trends and compare them to current valuations to understand price movements.
Dividend Yield and Payout Ratios
As of September 30, 2024, the company has not declared any dividends, leading to a dividend yield of 0%. The payout ratio cannot be calculated due to the absence of dividend distributions.
Analyst Consensus on Stock Valuation
Currently, the consensus among analysts regarding the stock valuation is not explicitly provided in the documents. Further research might be required to gather insights from analysts' reports for recommendations on whether to buy, hold, or sell the stock.
| Metric | Value |
|---|---|
| P/E Ratio | Negative (due to net loss) |
| P/B Ratio | Data incomplete (stock price not provided) |
| EV/EBITDA Ratio | 5.77 |
| Stock Price | Not provided |
| Dividend Yield | 0% |
| Payout Ratio | Not applicable |
In summary, the valuation metrics indicate a challenging financial landscape for the company, marked by a negative P/E ratio and no dividends, while the EV/EBITDA ratio suggests moderate valuation relative to earnings before interest, taxes, depreciation, and amortization.
Key Risks Facing Quest Resource Holding Corporation (QRHC)
Key Risks Facing Quest Resource Holding Corporation
In analyzing the financial health of the company, it is crucial to understand the various risk factors that could impact its performance. These risks can be categorized into internal and external factors affecting the company's operations and financial stability.
Industry Competition
The company operates in a highly competitive environment. As of September 30, 2024, the company reported revenue of $72.8 million, reflecting a modest increase of 3.3% compared to the same quarter in 2023. However, the competitive landscape could pressure margins and market share, leading to potential revenue fluctuations.
Regulatory Changes
Changes in environmental regulations and waste management policies can significantly affect operational costs. The company has to adapt to evolving standards that could require additional investments in compliance measures. This is particularly relevant given the ongoing geopolitical tensions that may lead to stricter regulations in waste management practices.
Market Conditions
The macroeconomic environment is currently characterized by heightened uncertainty, with potential for recession influenced by interest rate hikes initiated by the Federal Reserve. The company reported a net loss of $3.4 million for the quarter ended September 30, 2024, up from a net loss of $2.1 million in the same quarter of the previous year. Such economic conditions can lead to reduced consumer spending and decreased demand for services.
Operational Risks
Operational inefficiencies and disruptions in service delivery can adversely impact customer satisfaction and revenue generation. For the nine months ended September 30, 2024, the company faced operational expenses of $36.6 million, which increased from $35.5 million in the prior year. Additionally, onboarding new customers often comes with lower initial margins, impacting profitability during the ramp-up phase.
Financial Risks
The company's financing structure exposes it to interest rate risks. As of September 30, 2024, total notes payable amounted to $74.8 million, with an interest rate of 11.82% on a significant portion of this debt. Increased borrowing costs can further strain the company's financial position, especially if revenue does not grow in line with expenses.
Strategic Risks
The company must continuously evaluate its strategic initiatives to ensure alignment with market demands and operational capabilities. Any missteps in acquisition strategies or failure to integrate new operations effectively can lead to financial losses. The company reported acquisition, integration, and related costs of $91,156 for the nine months ended September 30, 2024, indicating the ongoing costs associated with strategic growth efforts.
Mitigation Strategies
To address these risks, the company has implemented various mitigation strategies. Maintaining a robust cash position is critical, and as of September 30, 2024, the company held $1.1 million in cash and cash equivalents, up from $0.3 million at the end of 2023. Furthermore, the company is actively managing its debt obligations and exploring opportunities to optimize its operational efficiencies to maintain profitability.
| Risk Factor | Details | Financial Impact |
|---|---|---|
| Industry Competition | Highly competitive market environment | Revenue of $72.8 million (up 3.3%) |
| Regulatory Changes | Potential for stricter environmental regulations | Increased compliance costs |
| Market Conditions | Macroeconomic uncertainty and potential recession | Net loss of $3.4 million for Q3 2024 |
| Operational Risks | Operational inefficiencies and customer onboarding | Operational expenses of $36.6 million |
| Financial Risks | Exposure to interest rate fluctuations | Total notes payable of $74.8 million |
| Strategic Risks | Challenges in acquisitions and integration | Acquisition costs of $91,156 |
Future Growth Prospects for Quest Resource Holding Corporation (QRHC)
Future Growth Prospects for Quest Resource Holding Corporation
Analysis of Key Growth Drivers
The company is experiencing growth opportunities primarily through the acquisition of new customers and expansion into existing markets. For the quarter ended September 30, 2024, newly added customers contributed approximately $16 million in additional revenue, marking a 32% increase compared to the same period in 2023. Furthermore, the strong demand from the existing customer base has also bolstered revenues despite challenges in certain end markets.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the quarter ended September 30, 2024, reached $72.8 million, reflecting a 3.3% increase from $70.4 million in the same quarter of 2023. However, for the nine months ended September 30, 2024, revenue slightly decreased to $218.6 million, down 0.2% from $219.0 million in the previous year. Adjusted EBITDA for the three months ended September 30, 2024, is reported at $2.5 million, down 31.7% from $3.7 million in the same quarter of 2023.
Strategic Initiatives or Partnerships
The company has focused on enhancing operational efficiencies and customer service capabilities to drive growth. This includes investments in technology and equipment. For example, cash used in investing activities for the nine months ended September 30, 2024, was approximately $(5.2 million), primarily for the purchase of compactors and related equipment.
Competitive Advantages
Key competitive advantages include a diverse customer base and flexible pricing structures that allow the company to adapt to market changes. The company reported gross profit of $11.7 million for the quarter ended September 30, 2024, with a gross profit margin of 16.1%, although slightly down from 17.7% in the same quarter of 2023. Additionally, the ability to pass through certain cost increases to customers positions the company favorably against inflationary pressures.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Revenue | $72.8 million | $70.4 million | $218.6 million | $219.0 million |
| Gross Profit | $11.7 million | $12.4 million | $39.3 million | $38.6 million |
| Adjusted EBITDA | $2.5 million | $3.7 million | $12.8 million | $12.7 million |
| Net Loss | $(3.4 million) | $(2.1 million) | $(5.6 million) | $(5.0 million) |
| Gross Profit Margin | 16.1% | 17.7% | 18.0% | 17.6% |
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Resources:
- Quest Resource Holding Corporation (QRHC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Quest Resource Holding Corporation (QRHC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Quest Resource Holding Corporation (QRHC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.