Quest Resource (US:QRHC)2021-03-12 04:02Financial Data and Key Metrics Changes - Fourth quarter revenue was $27.7 million, an increase of 20.5% compared to the same period last year, with $2.6 million attributed to the Green Remedies acquisition [14][15] - Gross profit for the fourth quarter was $5.6 million, a 19.7% increase year-over-year, with a gross margin of 20.2% [16][21] - Adjusted EBITDA increased 110% year-over-year for the fourth quarter to $1.8 million, compared to $850,000 during the same period last year [22] - Fiscal 2020 revenue was $98.7 million, relatively flat year-over-year, while adjusted EBITDA for the year increased 33.6% to $4.5 million [15][22] Business Line Data and Key Metrics Changes - The Green Remedies acquisition contributed approximately $590,000 in adjusted EBITDA for the fourth quarter [22] - The company has diversified its end market mix, now serving five major markets: retail/grocery, automotive, industrial, restaurants, and multifamily housing [32] Market Data and Key Metrics Changes - The retail/grocery market remained stable with moderate growth year-over-year, while the automotive market saw demand improve but still down year-over-year [34][35] - The restaurant sector experienced the largest impact from the pandemic, with full-service restaurants significantly affected, although quick-service restaurants performed better [38] Company Strategy and Development Direction - The company aims to continue expanding its business with existing clients and pursue M&A opportunities, viewing the integration of Green Remedies as a model for future growth [45][48] - Sustainability concerns are driving demand for food waste diversion programs, particularly in the retail/grocery sector, which is seen as a significant growth area [42][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum carrying into 2021, despite uncertainties related to the economic environment [55] - The company noted that while certain SG&A expenses will increase, they expect to maintain leverage and see a portion of gross profit growth contribute to EBITDA [75] Other Important Information - The company ended the year with $7.5 million in cash, up from $3.4 million at the beginning of 2020, and $18.5 million in notes payable, primarily due to the Green Remedies acquisition [24][25] - The integration of Green Remedies is progressing as planned, focusing on enabling additional capacity for growth rather than cost savings [45] Q&A Session Summary Question: What should be expected in terms of growth for 2021 relative to 2020? - Management indicated strong performance in Q4 and confidence in continued growth momentum into Q1, but refrained from providing specific growth forecasts for 2021 [54][55] Question: Are there targets for further M&A in 2021? - Management confirmed ongoing exploration of M&A targets and expressed confidence in the pipeline of opportunities [56][57] Question: Will there be price increases in 2021 or 2022? - Management stated that growth is expected through efficiency gains rather than price increases, focusing on providing greater value to customers [58][59] Question: How is the food waste opportunity divided between restaurants and retail/groceries? - Currently, the food waste program is dominated by the retail/grocery sector, which presents significant growth potential [60] Question: Can you elaborate on the improvement in sales execution and pipeline movement? - Management highlighted teamwork between the solutions and sales teams, resulting in better movement in the pipeline and increased customer engagement [91][92]