Record nine months revenue of $45.8M, an 8% increase compared to 2018
Record nine months gross margin of 26% up from 21% margin in the first nine months of 2018
Record Q3 2019 gross income of $3.5M or 27% compared to $2.7M or 20% in Q3 2018
Total liabilities decreased by $3.6M
Adjusted EBITDA of $0.5M for Q3 2019 and $2M for the nine month period
Shareholders’ Equity of $5.2M as compared to $2.3M at December 31, 2018
SeeCube™ Artificial Intelligence offering gaining traction in the marketplace; several orders received during third quarter
Quest Solution misses on revenue
Nov. 8, 2019 8:53 AM ET|About: Quest Solution, Inc. (QUES)|By: Niloofer Shaikh, SA News Editor
Quest Solution (OTCQB:QUES): Q3 GAAP EPS of -$0.02.
Revenue of $13.1M (-2.5% Y/Y) misses by $0.9M.
Quest Solution Achieves Record Nine-Month Revenue of $45.8M; Gross Profit Increases 35% to Record $11.7M in First Nine Months
Fri November 8, 2019 8:45 AM|GlobeNewswire|About: QUES
Record nine months revenue of $45.8M, an 8% increase compared to 2018
Record nine months gross margin of 26% up from 21% margin in the first nine months of 2018
Record Q3 2019 gross income of $3.5M or 27% compared to $2.7M or 20% in Q3 2018
Total liabilities decreased by $3.6M
Adjusted EBITDA of $0.5M for Q3 2019 and $2M for the nine month period
Shareholders’ Equity of $5.2M as compared to $2.3M at December 31, 2018
SeeCube™ Artificial Intelligence offering gaining traction in the marketplace; several orders received during third quarter
SALT LAKE CITY, Nov. 08, 2019 (GLOBE NEWSWIRE) -- Quest Solution, Inc. (QUES) (“Quest” or “the Company”), a provider of Supply Chain and Artificial Intelligence (AI)-based solutions, announced its financial results for the three and nine month periods ended September 30, 2019.
Shai Lustgarten, CEO, commented, “Quest continues to drive momentum as evidenced by record revenues of $45.8 million and gross margin of 26% for the first nine months of 2019. We’re energized by the interest our solutions are receiving in the marketplace. Our third quarter gross income grew by $0.8M to $3.5M and gross margin improved to 27% compared to 20% in the third quarter of 2018, despite a slight decrease in our revenue, which reflected a shift in our revenue mix toward higher margin AI-Machine Vision solutions. These AI-based Machine Vision offerings are the growth engine for our Company, and can enhance and support applications across a broad variety of end markets including law enforcement, homeland security as well as supply chain and inventory management.
“We continue to see particularly strong interest in our AI solutions for Public Safety, Safe City and Safe Campus/School initiatives, and given the global focus on protecting public areas such as schools and religious facilities, we anticipate growing demand for these security solutions. During the third quarter we announced the launch of our SeeCube™ solution which utilizes our Visual Cortex algorithm to significantly improve security, particularly in Safe City and Safe Campus/School applications because of its unique ability to enable the identification of automobile make and color in addition to license plate number. Because license plates can easily be altered or removed from an automobile altogether, these added capabilities enable law enforcement to more quickly and accurately identify and track a vehicle and apprehend criminals, even if the license plate has been tampered with or removed. The SeeCube™ has surpassed performance requirements in testing by a demanding Homeland Security authority and has had proven success creating safer environments as part of security installations in sensitive locations in the Middle East and elsewhere. We believe our AI technology provides a solid platform for enhancing the efficacy of real-time security solutions, and we’re energized by the interest we’re seeing from the marketplace, both domestically and internationally.”
Mr. Lustgarten continued, “In keeping with our focus on growing the market recognition for our solutions, earlier this week we announced the appointment of John Whiteman as Quest’s Director of Sales. John is an accomplished and seasoned executive with a successful track record establishing sales and revenue growth in his previous roles, which include having served as a senior executive at HTS. He is well versed in the capabilities and benefits of our technology and we are confident that under his leadership our sales team will continue to thrive.”
Third Quarter 2019 Overview
Quest reported revenues of $13.1 million for the quarter ended September 30, 2019 as compared to $13.4 million in the comparable 2018 period. The revenue decrease for the quarter was primarily related to a decrease in sales from the Company’s legacy supply chain products as the Company’s sales team focuses on driving its higher margin AI business. Gross margin in the quarter increased to 27% compared to 20% in the prior year period. Total operating expenses were $4.2 million in the third quarter of 2019, compared to $3.1 million in the third quarter of 2018. The Company reported a net loss of $1.4 million or a loss of $0.02 per share as compared to a net loss of $0.9 million or a loss of $0.02 in third quarter 2018.
The Company reported a third quarter EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) loss of $0.29 million, a decline compared to an EBITDA loss of $0.17 million in the third quarter of 2018. Adjusted EBITDA (which removes stock based compensation, non-operational professional fees and one-time expenses) income for the third quarter of 2019 increased to $0.50 million compared to $0.09 million in the third quarter of 2018.
First Nine Months 2019 Overview
Quest reported revenues of $45.8 million for the first nine months of 2019, an increase of 8% compared to the first nine months of 2018. The revenue increase was primarily related to continued strong execution by the Company’s sales team and growing customer relationships, as well as the revenue contribution from Quest’s subsidiary HTS Image Processing. Gross margin in the first nine months increased to 26% compared to 21% in the same prior year period. Total operating expenses for the first nine months of 2019 were $12.6 million compared to $10.6 million in the first nine months of 2018. The increase in operating expense was largely related to the Company’s acquisition and integration of HTS.
Net loss for the first nine months of 2019 was $2.6 million, or $0.04 per basic share compared to a loss of $4.3 million, or a loss of $0.11 for the first nine months of 2018. The improvement in net loss in the first nine months of 2019 is mainly related to the higher gross margin generated by increased sales of a higher margin product mix from HTS. EBITDA in the first nine months of 2019 was $0.78 million, a significant improvement as compared to an EBITDA loss of $2 million in the first nine months of 2018. Adjusted EBITDA (which removes stock based compensation, professional fees and one-time expenses) for the first nine months of 2019 increased substantially to $2.1 million compared to $0.9 million in the first nine months of 2018.
Please refer to the financial tables included below for a reconciliation of generally accepted accounting principles in the United States (“GAAP”) to non-GAAP financial results.
Mr. Lustgarten concluded, “We are intently focused on leveraging our AI-technology solutions to provide value-added capabilities to customers in two rapidly growing verticals. Out technology is ideal for customers in the supply chain and inventory management segment as they increasingly move toward automated systems and we believe we have a solid growth opportunity as that industry continues to evolve. Additionally, our ability to provide state-of-the-art, real-time identification capabilities to enhance security operations in the Safe City and Safe School/Campus is a competitive advantage that we believe will attract new customers and increase our market share. We remain focused on driving revenue growth and margin improvement as we move through the close of 2019 and we’re excited about the opportunities in front of us.”
Conference Call Information
The Company will host a conference call and webcast to discuss the third quarter results on Monday, November 11, 2019 at 11:00 a.m. Eastern Time.
To access the live webcast, go to the Quest Solution website at www.questsolution.com, and click on the Investor Relations tab.
To participate in the call by phone, dial (877) 407-9210 approximately five minutes prior to the scheduled start time. International callers please dial (201) 689-8049.
A replay of the teleconference will be available until December 11, 2019 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 56814.
About Quest Solution, Inc.
Quest Solution’s HTS Image Processing subsidiary is a leading provider of computer vision image processing-based solutions using patented and proprietary AI technology to provide real-time surveillance and monitoring for homeland security, traffic & parking management, law enforcement and access control applications as well as supply chain management.
Rated in the Top 1% of global solution providers, Quest specializes in the design, deployment and management of enterprise mobility solutions including Automatic Identification and Data Capture (AIDC), Mobile Cloud Analytics, RFID (Radio Frequency Identification), and proprietary Mobility software. Our mobility products and services offering is designed to identify, track, trace, share and connect data to enterprise systems such as CRM or ERP solutions. Our customers are leading Fortune 500 companies from several sectors including manufacturing, retail, distribution, food / beverage, transportation and logistics, health care and chemicals/gas/ oil.
