Quest Resource (QRHC)2020-11-16 23:41Financial Data and Key Metrics Changes - Third quarter revenue was 23.9 million in the same quarter last year, primarily due to lower service levels from COVID-19 related shutdowns [11][12] - Gross profit was 989,000 compared to 0.02 per share for the third quarter of 2020, compared to breakeven in the same quarter of 2019 [16] Business Line Data and Key Metrics Changes - SG&A expenses were 4.2 million during the same period last year, with a decrease of about 7% when excluding professional fees related to M&A activity [13][14] - Gross margin for the third quarter was 19.2%, a decline of 70 basis points compared to last year, but still above targeted levels [12] Market Data and Key Metrics Changes - The grocery market remained stable, with some modest growth year-over-year, while the automotive market saw improved demand for repair and maintenance services since April, although still down year-over-year [23][24] - The restaurant sector experienced the largest impact from the pandemic, with full-service restaurants significantly affected, while quick-service restaurants performed better in terms of volumes [26] Company Strategy and Development Direction - The company completed its first acquisition as part of a broader M&A strategy, acquiring Green Remedies, which is expected to provide significant growth potential in the multifamily housing market [10][19] - The company aims to leverage its national footprint and service capabilities to expand Green Remedies' success on a national level [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage through uncertainty and highlighted the importance of maintaining strong communication with customers [38][62] - The company is encouraged by the stability in end-markets and the movement in the sales pipeline, indicating a willingness from prospects to evaluate operational efficiency programs [31][70] Other Important Information - The company ended the quarter with 3.4 million at the beginning of the year, primarily due to an equity offering raising approximately 3 million [18] - The acquisition of Green Remedies is expected to be accretive on a free cash flow per share basis, with pro forma financial statements to be available within 75 days [20] Q&A Session Summary Question: What visibility do you have with clients regarding COVID-19? - Management noted constant communication with customers, emphasizing optimism despite uncertainty, and expressed confidence in handling future challenges as effectively as in the past [38][62] Question: Can you provide details on the pilot project with the automotive client? - The opportunity is significant, with the average deal size above seven figures, and the pilot is expected to start in Q1 [40][42] Question: Does the 2.5 million net income from Green Remedies include future growth? - The figure represents the trailing 12 months as it stands today, without factoring in future growth [49][50] Question: What initiatives are in place to drive growth with Green Remedies? - Growth initiatives include leveraging technology, expanding geographically, and upselling additional services to existing customers [55][57] Question: How is the company positioned to manage working capital amid potential lockdowns? - The company maintains a flexible cost structure and is well-positioned to weather uncertainties without relying on PPP [60][62]