Earnings call transcript Q2 2023

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Quest Resource Holding Corp.

Second Quarter 2023 Earnings Conference Call.

As a reminder all participants are in a listen-only mode.. recorded. being is conference The [Operator Instructions].

would to to the over like Mossberg, I Investor turn Dave ahead. Relations conference go now representative. Please

Dave Mossberg

you, you, the Thank thank joining and on us everyone, call. for Ashia,

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

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

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

has independently the we and sources the verified caution the these the and that of sources believes information. accuracy or data Quest of the other information Although reliable reliability are accurate, not Quest are

the is measures a of useful it are in Certain by evaluate understanding to reconciliations non-GAAP prospects non-GAAP for non-GAAP be future in ongoing financial of on believes measures that the of management strategic used financial included measures call. and discussed release. assumed non-GAAP is assessment this results noted, measures decisions, and current the the otherwise GAAP presentation company’s performance. core Unless discussed these forecast financial make future. during earnings These Management also are the should to company’s financials will are operations basis. Full today’s this call non-GAAP of be for the any investors’

all that President Ray over and call now Executive I’ll the Officer. turn Hatch, With said, Chief to

Ray Hatch

$X We profit $XX.X another in you, quarter Thank and your gained gross thanks, second increase Dave, interest Quest. million during the quarterly in gross significant everyone, EBITDA company’s quarterly The the was increased Adjusted performance. sequentially. X% financial in with the the for in momentum sequential and highest EBITDA increased and profit million second profit performance gross EBITDA XX% dollars history. and in

ones. contributed penetrating up provide strong growth Most existing of ramping and to clients expect came incremental the increase at forward. sequential new going RWS also business and to a contribution we the from Improvements the

We year. significant also strong and to cash this a flow cash generator expect the quarter during be generated

paid flow for down Monroe We’ve debt $X on the the with we another to reduction of to bulk Subsequent total used Capital $X reduce end the million quarter, cash line year-to-date. of our million levels. of a

year. on and adjusted and the gain dollars with for profit deliver executing strategies. quarter, during gross We plan in we’re we And continued growth momentum to our well double-digit are EBITDA second the to

turn for a be now over I’ll overview, Brett our strategies. CFO, and progress to discuss to Johnston, our Brett? call financial I’ll the back on

Brett Johnston

everyone. Ray, and Thanks, afternoon, good

penetrating contracted pass-through includes benefited also from This on the processes have continued in RWS, from across clients we at strong reflected gross a During done we that existing which and new to ramp growth sequential comparison X.X% adopt ones. the costs comparison quarter, acquired we profit saw standardized realizing from which from businesses. increased the organic sequential The dollars, improvement previous the first quarter. work second the This full discussed from integration of calls. benefit

to I a want about make note year-over-year comparisons.

RWS XXXX. impacted XXXX have the first comparisons we masked As integration improvements we year-over-year discussed earnings the the our on achieved calls, for and challenges half during previous at of

Given of and last think is sequential the unique events of a indicator current year, better comparison performance we momentum.

on last discussed on not And on an recyclable no quarter previous As significant but dollars. is prices for effects have calls, materials this profit has had different. revenue, gross effect may historically

are recycle reiterate dollars materials. that clients, profit gross on based why recyclable tied our price Our to produced dollars is key profit this the simply in our materials as we client value measure a our of financial agreements passes and through I P&L. behalf metric we fluctuations to not on use consistent of gross volumes The the to of comparisons. want

year. continued as from our outlook robust, dollars profit forward, to organic earlier, growth our for Ray is we Looking confident continued in ability from and for dollars Gross mentioned should dollars double-digit remain profit momentum the year efforts. gross our benefit improvements and growth in profit the for in gross integration deliver

half business gross we at the third quarter for fourth you growth adjust for out profit seasonality. As modeling suggest of continued that for in year, look normal sequential you the second our model quarter for and

$X.X million second Moving during which SG&A on period year. same last to during the quarter to expenses, million the $X.X were compared

lower mostly expect schedule integration we of as to costs and end up quarter. second finish the integration third by the be to the of half those with ahead during are expect We efforts

made integration and have platform. are efficiencies to gain we expecting We efforts investments from recent in our also

to some to increase continue invest to value initiatives expect to these customers. our efficiencies and ability savings of improve into bring growth We that our further

is SG&A margin. the then in leverage back of last which about result, $X.X half quarter, average expenses expect dollars we year. adjusted a comparison will EBITDA flat and demonstrating per start in And the platform, EBITDA the with million both we will As in

leverage $XX operating expenses. reiterate, to to for operating was During adjusted as in expect relatively and in the the in flat dollars million growth approximately quarter, EBITDA ago, Therefore, and year, in increase expect is the $X.X a a be and to and comparison growth depreciation over depreciation gross second year see million, double-digit in leveraged with amortization smaller XXXX. we of amortization profit acceleration half back we for

to on flow balance and review Moving the a sheet. cash of

We are liquidity wise our continue shape liquidity. and good to enhance in

million improvements at strong management. working half This of quarter Our $X million quarter, the operating cash the the and flow and year second borrowing $X.X cash capital our was of $X.X million generating end on produced million $XX balance we in the improvement primarily from second drawn during line. have We million came the year-to-date. $X.X during first operating

year first earn-out payment. million. acquisition-related cash that this $X.X the have half will million $X.X been operating payment, I included note a for cash flow half Without operating first the would of flow

which of flow XXXX. pace flows Our working continue capital strong generator to operating fluctuate cash may to based on in quarter-to-quarter. fluctuations cause demands will during a Nevertheless, cash we from the growth, be expect

had the payable quarter, we $XX.X in the year. $XX.X beginning of million the versus At million at end the notes of

these rate expense the carrying with the our less line to in actively down lower and reflects During our $X facility. the Through and normal to borrowings In annualized quarter, Capital, on Capital, quarter and principal interest $X paid at interest Monroe today’s a the borrowing facility Monroe The $X.X reduction subsequent the approximately basis rates. balance additional cash the have Monroe management, borrowings on we high on paid – environment, cash million been the line million with million reduce P&C. on reduce and of credit. of down the efforts to credit expense quarter, our from of an asset-based we we looking optimizing on interest payments minimizing we to expect reduction this an by by end

At this the turn Ray. time, to call I’ll back

Ray Hatch

what for year am for the balance Quest I Brett. excited to ahead of and you, saying want how several lies off next Thank by the start years. the I about

to to organic XX had For a integrate lift significant and heavy the last acquisitions. we’ve manage months, growth

of gained the been we’ve years. acquisition over overall, last on issues growth this job enhance momentum are integration Those year significant very proposition. excited in several has profitable two of of front lot, the the proud for balance done. I’m for The cylinders, has quarters, And a firing not about behind we us have I’m us While and is learned all client next We’ve really and continue and business to the and the now. value and we the our team perfect.

Let uncertainty. The economic me inflation make news recessions. a good brief comment over about the waste that and macro and business environment the resistant is concerns to generally is

headwinds. of clients, this, which primarily and we materials. generate and Our our such as well We fuel we are model And surcharges. economic costs in increases continue are of price like pass with endure cycle. waste locations, the the positioned swings multiple to is Because through to during bottom to agnostic the recycled can feel large top businesses

pressures to we quarter, the cost second stable markets, our end the During we levels well. and fluctuations continued activity of price see and in across recycled materials managed

about a expect we very discussion in half quarter, that back of to feel on second during Moving have growth. growth growth profit the organic us. momentum in into year. sequential saw front and We to gross significant continue of we the the good I dollars about

in of sources profit multiple year. in confidence this our ability have post double-digit to We that gross gains growth gives us

the potential annual in an significant end figures decline market [ph] press to out a This had into win pointed a we grow as win in has we with First, vertical. new release, eight a revenue.

the X, the XX then and engagement begin to next ramp XX September We over months expect to the onboarding months. up process, to

with are about We – and expect dozen of the locations to streams. and portion half handle small of a starting XXX to waste

some and landfills The Previously, our for added to major this in existing platform. streams, their were with our the site-by-site few large will client was a we waste for a this we provide service portion are add service with clients. The the this scale for There capabilities through and waste to greater and selling players integrated market, speciality a waste capabilities into from to solid peers alignment client in but effectiveness, that waste the will a cost have also new on required national existing introduce streams the and streams provider we space. points provide visibility waste pursuing in of our overlap data divert are basis. us vertically can turn we give our end our handling handling

ample base. have our with to existing grow client opportunity we Second,

we opportunities to – expand five feel and existing our and last growth consistently from delivered clients the years for years growth like has are land for next multiple years, for there Our ample the solid come. continued five for strategy

We’ve organic introducing comes businesses. service offerings clients. source from acquisitions, recent capabilities actively and service growth through gained new existing are those new of services to acquired added several we new Another our with

waste As call Proganics. marketing you also recycling service we food interactively developed we’ve a know,

landfill. and landfills XXX% waste the the diversion grocers Proganics of service much organic as is One can as our largest going help food waste of materials into deliver from

a of to and equate can reduction in that patent this landfill for many, more. a We the or recently service. For received total XX% new innovative

large have interest with service. lot this a and of active are conversations prospects We for several in

also will XX to continuing roll discussed out of services several months. from the come past significant the to wins over Growth we’ve

XX fully next ramp to As were it process we’ve cases, to clients, and clients embedded the several in for discussed can which new the in months provide months that before, will least some of year. are XX ramping, growth take at there

In contribution success would add addition, new will I maturity. in that way meaningful prospects a markets to win – their have new at that continue can are pipeline. these during are multiple there I across any of our them sizable that remain through opportunities, are and XXXX. to growth our end clients with confident large working securing we provide large also we note

hand. of additional joined known gross talent Perry our the last new making in is has optimizing we on in side Adding well for securing Moss his profit bring business I deal large Quest. have XX-year record. have players we other by track a Sales. capabilities Quest win as growth announced We thought a Perry and hired has us also to leader, out with strong opportunity wins. for the and base point relationships Senior to dollar major client to He’s the month He’s in that a President Vice help account also drive has that Perry cost a want We’ve big large industry. clients.

business, the coming the years, thirds size about that acquisitions of last growth Over we’ve new than two clients. of three more doubled the from and with

and proven to our bring and platform, as relations includes vendor overall services our fixed such optimize and leveraging we under base. cost This rightsizing management. through activities procurement optimization As route the ability we’ve revenue of cost

cost benefit for to market with for costs, Quest from impact utilization – lower greater on win-win the focused from pricing We’re our clients. has can with contract lower to we’re and route positive our going going by provisions adding on market Vendors the benefits footprint. vendors optimization. entire volume Quest a which

August of the proactive in integration. six update made went completed as Now we’ve businesses six platform greater ERP acquisitions our us gives our platform five integration cost acquisition on that M&A acquired RWS, visibility a we We’ve for X. live on The Having of ERP strategy greater effective on an acquisition, began as since and single efficiencies all savings. of well XXXX. a

heavy should to be RWS the been quarter of quarter, done is we lifting has of the the ahead All completed integrate before about third and of schedule. end which a

in with terms and this want efforts for and process. and went We team our acquisitions, I and our learning easy, evaluation a thank not to is these complete their to honed integration work hours planning. of extra we’ve steep through set curve Integration skill late

a better position in on execute going to M&A strategy forward. We’re clearly

see on fit and impact. we’ll we to financial continue opportunities, evaluate do acquisition strategic and them as We potential based always

move a investment I want technology. I to bit our about to little making we’re Before outlook, in on talk our

been For platform building we’ve this to technology increase years, customer quietly value and increase proposition a efficiencies. they our our use scalable

develop technology for and we on utilize a our clients. so for and can Our rapid always been us has return philosophy provide investments to

direct focus benefits been investing Our on in on has customers. our can to based provide technologies that

to incremental deciding have technology to much the we’ve Over wins maintain larger and of and several the provide. evolving platform helped due the competitive customer that support for has be a us scale enterprise a platform able The the relationships value our built goals. built technology customers’ sustainability years, we’ve to key enduring will been factor diversion that we and size

recently staff continuously the efficiency to and years, a client of for I tool examples in we’ve sourcing our In we’ve recent team. developments introduced our It technology we improve relations so stepped technology recently look We’ve up to and entire footprint We’ve new stay to that that which online. days across new give onboarding investments our scalability. that improves and from to time This of platform value, ahead few vendor want can brought better greater a on you data. process bringing automates pricing vendors the will the find the reduce will client generate vendors. for internally, solutions vendor a service. drives needs tool our staff qualification efficiency cleaner launched for allows and This optimal overall system minutes. also data

years worked actively diversifying management to our over our scale, customer strengthening update sheet, our be in growth, hard building customer a prioritize to set add. long-term an of Now on in to efficiency position strategy. and support balance base, team We’ve few and and pursue the last value building evaluate, a pleased initiatives strong and a are

and in our a initiatives. with of prioritize the process we’ve the long-term of maximizing support to to order return, part Board launched planning strategic As strategic shareholder attractive of Directors commitment our invest most in long-term

corporate industry in and operations and management As you changed know, technology. strategy professionals both expertise few Quest accomplished consulting, with over years, Board highly in and M&A, finance, includes and has the past grown waste

of in long-term our strategic We’re engaging experience them in enhancing support actively leveraging planning.

our positive outlook not changed. growth outlook, for our has Regarding profitable

strong We XXXX. during expect to cash be flow a generator

from We integration expect to cross-selling. acquisition increased and contribution provide both incremental efficiencies

We have with organic with of clients, including multiple sources recent existing and doing converting more prospects growth, into wins clients. ramping

Pressure business. We of profitability while to continue capabilities the landfills our bar the recycling client of increasing regulation adoption and scalability our to continuously cost sustainability, lowering improving to our operating investing proposition increasing will further services. for and efficiencies, value for improve are drive improve

several forward on optimistic, updated for progress. with positive XXXX keeping to years. continue the we’ll and look our for I a next We’re momentum you

instructions the questions. for listeners operator Operator? on queue how can to We up provide now like

Operator

Thank you.

Instructions]. question-and-answer the [Operator session. will We begin now

The Please from first Craig Aaron go with question ahead. Hallum. Spychalla comes

Aaron Spychalla

and taking Yes, hi, questions. Ray for Thanks the Brett.

Ray Hatch

Aaron. Hi,

Aaron Spychalla

Hi.

in landfill the see proposition customers? of the for a starting requirements business given higher can that First the to new external then about customer kind and value talked this internal of and of key you other And maybe costs about in you of talk me, and you bit improvement face you just new waste offer kind new for vertical for closing the wins. Are streams any are little business timing the there? of of some

Ray Hatch

Aaron. question. couple things, A Yes. Thank of for the you

getting all, based found we what you the just to us on I creating sustainability, of easier with conversations for reporting lot a costs increasing it’s and prospects of conversations. think have demand to First and data audiences have desire for for mentioned, also is increasing opportunities

on we are number line. a that that we right good goal about So have really the feel

that’s So was future optimistic to I existing with clients. why along in growth, my so relative comments

players far as the as As as vertical it’s it. a not of number new big in far vertical,

get not just So the – large us may has waste us that’s space, I new new for it’s They’re emphasize, commercial that although not to to lot brings that. of much company with in it, type brought both play the in today too unique and the They’re but waste I scale to not needs. a transportation that in manufacturing, want with they associated more streams. larger to of a detailed in geography space, us not important. be and It’s on a always streams existing freight allows streams, it’s waste that but scale big have don’t that want different which only

that But points all Aaron. it’s in and many location if echo solve devices that left we they’re having cases, it’s a has helps, of reporting. do unified them, issues fact, I we tremendous pain that with vertical that a of to amount to not I multiple own to – And matter of a potential. believe a there’s its it’s their know of database for can

Aaron Spychalla

second as of the in challenges of health the there that ability of have just maybe then continue you talk for And kind kind hear. network given we’re seeing then to to and network. Can the market? good optimize the the And That’s impact just business broadly scales. some vendor to you me, our does. about that No, on that

Ray Hatch

a we’ve tell – I had. The I’m pleasantly surprised I I you, question. than little bit. very health a issues guess, you strong. do, vendor usually that’s will great anticipated or that is of I I will tell our base more

We difficult some turn any these on up times. haven’t folding of had

we some of may matter maybe stronger. have right – I folded they up, others fact, have gotten that think vendors a when As the had

competitors think I think So that we really kind you experienced the our issues of haven’t have. and of some would may

So strength vendor commitment the I’m and thankful really of our base. the for

ability so to the is that to tied that folks. to expand directly to bringing continue And our value these we’re

mentioned I route in I think remarks, the optimization. utilization or prepared asset

we’re bringing our So strength vendor to continued I base, believe.

We’re them, increasing their optimize. to chance a bringing good them in really and clients volume to giving

So and bring definitely competitive ability strong to and that, team with a have strong in Dave got continue to vendors.

had vendors of that really for and are strength Aaron. thankful we good we’ve have, luck the the So

Aaron Spychalla

Great. Thanks questions. the it for turn over. taking I’ll

Ray Hatch

bet. You

Operator

Please Capital. question Gerry next The Roth Sweeney comes ahead. go from with

Gerry Sweeney

call. Hey Ray. for thanks Brett, taking my

Ray Hatch

You bet. Hi Gerry.

Gerry Sweeney

I’m maybe my least going easier or one at the easier to ask. with start to easier questions, the the

to On remains headwind process the maybe you specifically much are with the business? the – of caught of RWS, in margin a to up how terms be how integration of far on rest the

Brett Johnston

is this Gerry, Hey Brett.

our So X. integration August on we live went in new

pop just through of challenges integration. the through we’re that hurdles working normal kind So with of some the and now getting through the up that

coming certainly the get our a to normal single But to from onto through end quarter platform. one So the expect the benefits rate and I first with be us on the by iron getting would run out close we’ll continue of kinks.

Gerry Sweeney

compared Is it. still in [indiscernible] Or you was the… that Got XQ. correct? up some margin And made impact to that

Brett Johnston

business from the saw some sequentially We improvement QX, absolutely. certainly in

Gerry Sweeney

Got it.

to Ray, I’m enough. strategy. question, and My little me, a articulate forgive about and you Okay. talked well other going it bit try

in areas. and You taking, Board multiple hinted using at expertise leveraging their the

wins. We lot have of a client

go little little and where brought distributor to to the or increasing talked have just about You since portfolio. I’m it sort the maybe about could waste of a data bit started just leveraging and if what talk a bit a thinking of strategy is but not up. curious open write what maybe the about you maybe being repository about you’re review company, up going you services. kimono even a I’ve service [ph] information

So.

Ray Hatch

audiences opened added Gerry? picture, think of provider. or businesses more is thing, is our the it ourselves and side up again, think, as I that. stuff bringing a recently And you that’s And as And hinted think Board that the to. advancing able have I said, we’re grown comes a Gerry, a at board did. matter that bringing significant on picking you the to the we reasons recycling but and doubt a we as the value you in bring. I the a get experience it vital yes, taking able lot I I [ph] without advancement kimono as us different know, There’s and when lot lot door companies does really one and a company, thought more we to mean, we’re exactly a that. services with of would technology. value. I for of with trash we what right, somewhere. member been So I just Otherwise, of And of technology fact, I’ve just never it I’m of a mentioned, to even than to that, technology

today the assessing planning opportunities, process about we at where expanding even are different But is looking the and strategic verticals.

that technology We’re to looking the around limitations exciting we those, me asset really our don’t and we can that do. business point, it’s at what you, quantification proposition. very to to capital into I implement have. lot And enhance our value doing We this aspects heavy see a of different tell can companies will have

than ability technology the more offerings to stronger. before leverage so We expertise make to now enable and to our and have

to us. guess, our and is planning assessing want that be, with about taking primarily direction execute assessing It’s understand excited we’re and the need is to it. but little, opportunities and to a to generalistic I be you being innovation I I So market we’re looking I know ability I’m what Gerry, strategic

Gerry Sweeney

there question have I’m didn’t streams all many just the curious of new really I and that maybe see to the get more can question waste you’re to this there would sort spectrum, to increasing out I’m getting as about you love – leverage end leverage last with go – are of of it. that other that way after? win swing going terms Got in you waste talked some is? some the in to the streams back How opportunity before. leverage the

Ray Hatch

Gerry, and talked about before. we’ve it

XXX I think like the we over do XXX, waste But of little we clients of there’s have that because few XXX quite stream. of relatively lot we it scale just that with out – those a have. out there’s not a there

I mean, could that space use we really customers then scale to same So didn’t made in all two-thirds would scale one vendors out. way were of had know, we don’t add I I’m have specific – some that larger fill more probably but I of geographic of thinking the get another strong, strategic we with say that we we coverage. as really, commodity our or getting we and those or a really leverage infinitely will were, we without stream, can, in material XX one us and we acquisitions I there’s XX sudden, thought that as And but of more brought recycled

we answer, to say got streams know, significant a scale waste expand I don’t of I’d today, opportunities at that to the two-thirds question within least we’ve those. but So it’s tough have probably

Gerry Sweeney

right… margin the front, And would additive be that I would to assume

Ray Hatch

Yeah Exactly. totally additive.

Gerry Sweeney

jump I I’ll awesome. it. Thanks. right back line. appreciate in All

Ray Hatch

Gerry. Thank you,

Operator

Please with ahead. Greg question next Kitt Pinnacle from Fund. go comes The

Greg Kitt

on great congratulations quarter. a Brett, and Ray Hi

Ray Hatch

Thank you, Greg.

Brett Johnston

Thank you, Greg.

Greg Kitt

double-digit QX gross several years that year the before. to and you heard call. growth gross for it over profit, and the gave I ever On this the in think on well. EBITDA earnings statement over heard had profit about talk don’t call, percentage you time I earnings about make for confidence QX about growth think – What make I that talked the you several as gross I And don’t statement years. profit you first

Ray Hatch

Well, question. it’s a It I great for longer-term think, Greg, does viewpoint. a obviously call

clients, what recent confident is I sees the the continued level. within don’t as to our about, looking at some amaze expansion of I to way then but it additions. new I view feel and with I me, business I’m receptiveness customers, especially perform the on As at look – high at very say bringing it’s And market. our which to it’s the continued a existing want maturing

we’ll now. I break two confidence have those it and main that I happening. that all contributors, see a see just that just to see don’t Greg. So high organic stream, We that’s anything on based

So confident so we’ve we’re seen pretty based on what far.

Greg Kitt

you. Thank

examples tell these that’s You dollar? gross – things growth – do of to leverage. you about we every differently that to anything allowing past there of investments expecting a think practically allowing be how to else you you tangible you are of Can materially that’s should is and off talked efficiencies – to investments as growth improve generate more gross profit EBITDA gave operating about than profit expect from benefit EBITDA greater us you you us couple

Ray Hatch

increase on there. efficiency say There’s increases so on and examples the the vendors that’s developed. Greg for couple, go and identify in streamline current efficiency right in I are cost invoices. not being how board. to just reduce which many also the down I out But I’ll think, that remarks. how source the bids headed the us so errors, mean, more those is How vendors getting for we path. word. platform And There we opportunity, are we you’re in right reduce essence a I and ahead much handle mentioned are

can about vendor a when vendors like which time got takes and right? be on and to cumbersome you touches automate process tool. that, – gross onboarding. now our that Think mentioned much to a one free waste things I what focused can how lot like you, little more ability done. it mean profit. it turn these then new I additive effort on and And how for enhances that does identifying those are for We’ve get streams and new they waste talent up of here in be that streams,

place see taken in got give, are beyond these toward our aspects I maturity, examples of bunch we’ll and of platform where But significant take a of but internally, didn’t and more have different we’ve that things internally. more place some more that, moving business investments

attracted It’s rate So you with leveraging. exactly always how all been leverage same than We’ve we a is faster it’s grow business growing was Greg, it our the model. – always about expectation. we about measure thing our costs as the gross profit EBITDA at is ability this and and to others

Greg Kitt

paid you per continuing about to to down very down $X.XX you thank for down that I adds share. earnings $X million And the Thank debt much. paying pay you’ve – debt, year-to-date, think

delivered $X.X flow free million cash flow million of so the You cash is great. annualized $X.X cash first half, flow which and million of $XX operating free in

delivered of the million expect debt free continue in with you cash? you to flow we should of to $X down the that another If cash plus year, half pay back

Brett Johnston

I’ll Greg, one. take Hey that

be aggressive some debt. down So to capital – going and continue yes, grow working we we’ll to that the We, that’s to fact to obviously from paying of business, to course, we expect dollars. and be want look about sensitive require as as investment to can the

that’s for We’ve team. much great managing that absolutely, by We don’t down continue So really. or of want in fantastic overpaying those new by to we’ll doing we said, certainly as a to possible. shortcut a professional yes, treasury and not got as a brought look the growth opportunities handicap cash debt. job But

get around in you accounts and piece in as cash other you’ve pulling integrations consolidating through loose got sitting better some management. we can bank the different the that start have accounts cash of the And our is bank

to opportunity of we’ll things those at continue All generate look down it. will to debt, pay more and

Greg Kitt

interest your levered correctly? that comfortably which Thank think X% I am rate from by the be you. down Is Monroe times below the that rate. current drives could looks It like – its I you of understanding end three year,

Brett Johnston

were yes. get That, able Partially, though, leverage this for our under we to four end. quarter

we’ve coming So a in X.X, already saved starting into point QX.

Greg Kitt

the we’ve for I That’s One me. And has known X.X years, or you last for exciting Brett. Quest and year the for me. ever question Right. great. invested I’ve is been Thanks, think been for so. most seven guys this

levels. high EBITDA EBITDA that’s competitors to several And recently at multiples, to driving very that You and profit converting acquired incremental in had good get you’re contributing gross at cash.

best How is today, today handle is gauge couple platform a of so platform ago? compared more your it’s ever And to my platform years that been to drastically position you the perception when would Quest scale. your

Ray Hatch

you Yes, I’ll when that is – significantly Greg. different. you take know, as one, That’s that asked

go there’s five and with say, now, amount significant all ago, years. ago consistently progress then Let’s years and then through years three the, those a been of

improve and platform let now, what well me – the we’re consider would to the forward, our this, about the continue enabled five marketplace best to with that existing ago it platform. now our I service is news if by an to Greg, would platform had really believe rate. I going to not going it’s bring And best-in-class And volume ability years doing today struggling. to is if be So firmly accelerated we we just that, say handle our at

and customers of customers, So in bring revenue a better lot we our of in the bottom is we improvement are line higher to to higher the platform a as rate and about move to our more drive value that where my forward. and ability and drive excitement

are. It’s appreciate a I improvement, and that. of been you. So we where Thank drastic your observation that’s kind on

Greg Kitt

much. very you Thank

Ray Hatch

bet. You

Operator

[Operator go Instructions]. The next Nelson ahead. Obus question Capital. Please with Wynnefield comes from

Nelson Obus

couple I questions. there. Yes. a got Hi of

comparisons First outlier annualizing was of that QX with an about hopefully of really this number was EBITDA but start anomalous out of quarter really all, which concerned was this in that, really whack – reality. I the it of you’ll the at because XXXX,

very really where So you opinion. this my development is in positive a did coming in year

couple of you you have I $XX double-digit said million. – of six gross for because months, a lot first interesting. just us to a here the would seasonality And explore growth $XX million profit versus Just that characterize quickly XXXX. information want you’ve given that’s

the I So million. do XX% did profit whole it, doing through and profit it’s won’t which to the in if based more on bother you actually second year, math, gross half, pretty last $XX That’s was take you you in simple, you the up year for with million. wind increase what gross versus $XX but

a as seasonality grow on will gross quarter to in growth you’re a it basis, you XX% call going though if So be follow profit the XXXX? enough versus caveat looks there gross about but was that? profits XXXX Do by overcome seasonality, year-to-year earlier on your fourth to that

Brett Johnston

get did Yes, statement. what to absolutely. That’s similar we math comfortable to very the with

very we’re yes, So confident.

Nelson Obus

weaker. that create would All right, be half would a that’s seasonality very second good because normally

real You’ve advance million non-recyclable credit the and like? almost stack out was on again. under in approximately material $X revenues due put it for due from never also in The I And for by which go of Non-recyclable give what category. you’ll non-recyclable offset everybody. talk I and in the just done do million the overall, an to you approximately material and you to high These you MD&A, demand I’ll an quick in quarter $X were where in those there’s material conference $X decrease queue for recyclable both revenues. interesting full an about services you the call. for; primarily certain something, declines queue probably continuing million decrease that’s strong But mean breadcrumbs Would the revenues. of just services the revenues in little new customers – an also paragraph additional up a resulting look XXXX in decrease over acquisition. increase from in

Brett Johnston

what in talk is the to Yes. trying to organic growth Really, the we business. were

important year-over-year going how year about this changes value with really materials. the we wanted talked And growth we’re numbers, and recyclable year-over-year away We’ve commodity can those your different. because get year-over-year. take the earlier, no it’s they point X% about those how the double-digit really was to with an highlight story organic to So growth to But values – something our was highlighting to fluctuate.

Nelson Obus

Got it.

Okay.

– some revenues we the some part. we can million in back? this that – about you get decrease Or any that that’s XXXX. have that? acquisition comment $X from And that of do of Is can So in

Brett Johnston

No.

especially talked, we’ve we last in As adjustments going adjustment related made that quite the a final and of then and period-to-period had we with QX. the challenges the bit year, some

the to or standpoint returning to a But result mostly of had. kind certainly, from last that’s a lost of we like say that that customers wasn’t had significant confident customer, of lost speaks any just volatility that anything challenges just the year. we quarter-to-quarter I’d related So to normal, we very feel

Nelson Obus

it you’ve clear. So made

there’s a you’re integration, You’ve and the and acquisitions – lot and town. handle new sheriff about learned how in to

is really And of back to now, Greg less in it of will that’s think know. $XX about leverage paying we’re still mentioned Xx interest still expense So good I on But than and debt. and your down, the finally, if envelope. you’re we’re know $XX – annualize, million I go we this million – paying but we’re

tough could you you about? but there point could you it’s Is say, more out interest have like think what know you that pay that – where million would I and when there, at imagine that mean, mid-teen traditional $XX of is lender And bingo, rate. where point I down it you XX% about debt Now $X think flow. be I your something a a situation million get find to, more we free a cash and refying

Just your thoughts about that.

Brett Johnston

to leverage the a if clarify, or about was point Greg, sit his talking I to by year. he correctly, Xx So for just end the below had of him his understood – modeling

So…

Nelson Obus

mean can QX. of mean reach. you million I do mean, I that’s if EBITDA. you annualize within I $XX

Brett Johnston

refinancing absolutely, But looking something we’re at. clarify. to wanted is just Yes,

about talked that. opportunities. think I some got We’ve we’ve

type what very really traditional us We’re some to those. opportunities for to through forward. about going it talking we some to that We’ll think But around savings. do the good refinancing there, see could work excited of out banks lenders and your point, continue do we can some we’re

Nelson Obus

be not interest about glad The should is seriously while it. thing a a I immediately, That’s you’re really to maybe my that’s And opinion, that find you something that would confiscatory about to allow lender think invest you thinking you charging this less who I’m all. in value, rate. exciting growth story, unlock able in could platforms but

Ray Hatch

Yes. Absolutely.

Brett Johnston

Nelson. Thank you,

Operator

question-and-answer I remarks. to turn back concludes Please go This Hatch like any over ahead. would for the Ray conference the closing to session.

Ray Hatch

events. Thank and thank And call, do positive time lot the not, there clearly, if I We operator, think, on and team Quest. direction importantly, I’ll questions. want feel more of the I appreciate and show our I you and team have about long who you, tremendous. in has we greatly. great of we we the Everything for outlook interest it confluence in it you all moving a of appreciate in a XXXX. from execution Many the our and been right confidence to again. the I expressed this are appreciate reiterate really been it for really hope a

of folks, are of write them lot in every great dedication these from their done I Quest want a lot and constantly to quarters These shareholders Great with things all thank – story up-to-date to quarter as effort humbled I’m hard to you by we a we forward for work, will and to of come. well. the better look go And continue it as keeping chapters by. will efforts.

So thank you, everyone. Appreciate it.

Operator

call. This concludes conference today’s

disconnect may Thank for have participating, a and pleasant You lines. your you day.

Quest Resource Holding (QRHC) 15 Aug 232023 Q2 Earnings call transcript