Financial Performance - Revenue for Q1 2025 was $68.4 million, a decrease of $4.2 million, or 5.8%, compared to $72.7 million in Q1 2024[82] - Gross profit for Q1 2025 was $10.9 million, with a gross profit margin of 16.0%, down from $14.0 million and 19.3% in Q1 2024[85] - Net loss for Q1 2025 was $10.4 million, compared to a net loss of $0.7 million in Q1 2024, resulting in a loss per share of $(0.50) versus $(0.03) in the prior year[96][98] - Adjusted net income (loss) for Q1 2025 was $(2.9) million, a decrease from $1.7 million in Q1 2024[103] - Reported net loss for Q1 2025 was $(10.4) million, compared to $(0.7) million in Q1 2024[104] - Adjusted net income (loss) per diluted share for Q1 2025 was $(0.14), down from $0.08 in Q1 2024[104] Operating Expenses - Operating expenses increased to $19.1 million in Q1 2025 from $12.2 million in Q1 2024, primarily due to higher selling, general, and administrative expenses[88] - Adjusted EBITDA for Q1 2025 decreased 69.6% to $1.6 million from $5.1 million in Q1 2024[100] - The company recorded a $1.7 million impairment charge for certain customer relationship intangible assets in Q1 2025[92] Revenue Changes - New clients contributed approximately $11.0 million in revenue, while lost customers accounted for a $7.0 million decline in revenue[83] - The company experienced a $4.4 million loss on the sale of assets related to its mall business, with a total selling price of approximately $5.0 million[92] Cash Flow and Working Capital - Working capital as of March 31, 2025, was $21.6 million, down from $30.7 million as of December 31, 2024[105] - Net cash used in operating activities for Q1 2025 was $(1.1) million, an improvement from $(1.7) million in Q1 2024[109] - Cash provided by investing activities for Q1 2025 was $4.5 million, primarily from the sale of business assets[112] - Net cash used in financing activities for Q1 2025 was $(2.5) million, primarily due to repayments of notes payable[113] - Company has $1.4 million in cash and cash equivalents and $45.0 million available under its ABL Facility as of March 31, 2025[107] - Company believes existing cash and expected operational cash flow will be sufficient to fund operations for the next 12 months[107] - Company has no off-balance sheet debt or similar obligations[118] Interest and Cost Management - Interest expense decreased to $2.3 million in Q1 2025 from $2.5 million in Q1 2024, primarily due to lower interest rates[93] - The company anticipates realizing cost savings from headcount reductions beginning in Q2 2025 as part of operational efficiency initiatives[89]

[Financial & Operational Highlights](index=1&type=section&id=First%20Quarter%202025%20Financial%20Highlights) Quest's Q1 2025 results showed revenue and profit declines, with strategic actions including a $5 million asset sale and $3 million in cost savings aimed at improving performance and cash generation Q1 2025 Key Financial Metrics (vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $68.4 million | $72.7 million | -5.8% | | Gross Profit | $10.9 million | $14.0 million | -22.1% | | Gross Margin | 16.0% | 19.3% | -3.3 p.p. | | GAAP Net Loss per Share | $(0.50) | $(0.03) | - | | Adjusted EBITDA | $1.6 million | $5.1 million | -67.8% | | Adjusted Net (Loss)/Income per Share | $(0.14) | $0.08 | - | - Completed the sale of a non-core portion of the RWS business, generating **$5 million** in cash proceeds which were used to pay down debt[1](index=1&type=chunk)[5](index=5&type=chunk) - Implemented cost reductions, including a reduction in headcount, which are expected to save approximately **$3 million** in SG&A on an annualized basis[1](index=1&type=chunk)[5](index=5&type=chunk) - Amended agreements with existing lenders to provide additional financial flexibility[1](index=1&type=chunk)[5](index=5&type=chunk) - Management is focused on developing short-term initiatives and long-term efficiency programs to increase earnings, generate cash, and improve operating efficiencies[1](index=1&type=chunk)[7](index=7&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Tables%20Follow) This section presents Quest's unaudited consolidated financial statements, including Statements of Operations and Balance Sheets, for Q1 2025 [Statements of Operations](index=4&type=section&id=STATEMENTS%20OF%20OPERATIONS) In Q1 2025, revenue decreased 5.8% to $68.4 million, resulting in an $8.2 million operating loss and a widened net loss of $10.4 million, or $(0.50) per share, primarily due to asset sale and impairment losses Statements of Operations (In thousands, except per share amounts) | | Three Months Ended March 31, | | | :--- | :--- | :--- | | | **2025** | **2024** | | **Revenue** | **$68,430** | **$72,651** | | Cost of revenue | $57,499 | $58,615 | | **Gross profit** | **$10,931** | **$14,036** | | Selling, general, and administrative | $11,412 | $9,798 | | Depreciation and amortization | $1,543 | $2,362 | | Loss on sale of assets | $4,430 | $— | | Impairment loss | $1,707 | $— | | **Total operating expenses** | **$19,092** | **$12,160** | | **Operating income (loss)** | **$(8,161)** | **$1,876** | | Interest expense | $(2,267) | $(2,472) | | **Net loss** | **$(10,406)** | **$(655)** | | **Net loss per share (Basic and diluted)** | **$(0.50)** | **$(0.03)** | | Weighted average shares outstanding | 20,859 | 20,380 | [Balance Sheets](index=6&type=section&id=BALANCE%20SHEETS) As of March 31, 2025, total assets decreased to $165.7 million from $175.6 million, primarily due to asset disposition, leading to a reduction in stockholders' equity to $44.4 million Balance Sheet Highlights (In thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $68,015 | $75,139 | | **Total assets** | **$165,659** | **$175,645** | | Total current liabilities | $46,465 | $44,391 | | **Total liabilities** | **$121,297** | **$121,489** | | **Total stockholders' equity** | **$44,362** | **$54,156** | | **Total liabilities and stockholders' equity** | **$165,659** | **$175,645** | [Non-GAAP Financial Measures](index=2&type=section&id=Reconciliation%20of%20U.S.%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section reconciles U.S. GAAP results to non-GAAP financial measures, including Adjusted EBITDA and Adjusted Net Income (Loss), for a more comprehensive performance analysis - The company uses non-GAAP measures like Adjusted EBITDA and Adjusted Net Income (Loss) to supplement GAAP results, believing they facilitate period-to-period performance comparisons by excluding certain non-cash or non-recurring items[10](index=10&type=chunk) [Reconciliation of Net Loss to Adjusted EBITDA](index=5&type=section&id=RECONCILIATION%20OF%20NET%20LOSS%20TO%20ADJUSTED%20EBITDA) Adjusted EBITDA for Q1 2025 declined significantly to $1.6 million from $5.1 million in Q1 2024, primarily due to substantial add-backs for asset sale and impairment losses Reconciliation of Net Loss to Adjusted EBITDA (In thousands) | | Three Months Ended March 31, | | | :--- | :--- | :--- | | | **2025** | **2024** | | **Net loss** | **$(10,406)** | **$(655)** | | Depreciation and amortization | $1,746 | $2,496 | | Interest expense | $2,267 | $2,472 | | Stock-based compensation expense | $662 | $357 | | Loss on sale of assets | $4,430 | $— | | Impairment loss | $1,707 | $— | | Other adjustments | $1,171 | $349 | | Income tax expense (benefit) | $(22) | $59 | | **Adjusted EBITDA** | **$1,555** | **$5,120** | [Adjusted Net Income (Loss) Per Share](index=5&type=section&id=ADJUSTED%20NET%20INCOME%20(LOSS)%20PER%20SHARE) For Q1 2025, the company reported an adjusted net loss of $2.9 million, or $(0.14) per diluted share, a significant decline from the prior year's adjusted net income, mainly due to non-cash charge exclusions Adjusted Net Income (Loss) Per Share (In thousands, except per share amounts) | | Three Months Ended March 31, | | | :--- | :--- | :--- | | | **2025** | **2024** | | **Reported net loss** | **$(10,406)** | **$(655)** | | Amortization of intangibles | $1,364 | $2,322 | | Loss on sale of assets | $4,430 | $— | | Impairment loss | $1,707 | $— | | **Adjusted net income (loss)** | **$(2,905)** | **$1,709** | | **Adjusted net income (loss) per share** | **$(0.14)** | **$0.08** |

Core Insights - Quest Resource Holding Corporation reported first quarter financial results that were in line with expectations, reflecting temporary cost increases and not yet the impact of performance-focused initiatives [4][6] - The company completed the sale of a non-core business segment for $5 million, which was utilized to pay down debt, and anticipates annual savings of $3 million from cost reductions and headcount decreases [1][6] - The company is focused on enhancing its performance culture, implementing short-term initiatives, and developing long-term efficiency programs to improve financial performance [4][5] Financial Performance - Revenue for the first quarter of 2025 was $68.4 million, a decrease of 5.8% compared to the same period in 2024 [6] - Gross profit was $10.9 million, down 22.1% year-over-year, resulting in a gross margin of 16.0%, compared to 19.3% in the first quarter of 2024 [6] - The GAAP net loss per share was $(0.50), compared to $(0.03) in the first quarter of 2024, with an adjusted net loss per diluted share of $(0.14) compared to adjusted net income of $0.08 in the prior year [6][15] Operational Highlights - The company recognized a non-cash loss on the sale of assets of $4.4 million and an impairment charge of $1.7 million on intangible assets [6] - Adjusted EBITDA for the first quarter was $1.6 million, down from $5.1 million in the same quarter of 2024 [6][14] - The company has amended agreements with existing lenders to enhance financial flexibility [1][6] Strategic Initiatives - Quest is committed to generating cash, increasing profitability, and reducing debt, with ongoing efforts to onboard blue-chip clients and improve operational efficiencies [4][5] - The company has initiated short-term initiatives and is developing long-term efficiency programs aimed at increasing earnings and cash generation [6][5] - A new CEO and Senior VP of Operations have been appointed, both with extensive industry experience focused on enhancing operational performance [6]

Core Viewpoint - Quest Resource Holding Corporation will release its first quarter financial results for the period ending March 31, 2025, on May 12, 2025, after market close [1] Group 1: Financial Results Announcement - The financial results will be discussed in a conference call scheduled for the same day at 5:00 PM ET [2] - Investors can participate in the call by dialing specific numbers or accessing a webcast on the company's investor relations website [2][3] Group 2: Company Overview - Quest is a national leader in environmental waste and recycling services, helping businesses achieve their sustainability goals [4] - The company provides tailored solutions across various industry sectors, focusing on generating measurable business and sustainability outcomes [4]

Core Insights - Quest Resource Holding Corporation has successfully sold a non-core segment of its business, specifically the tenant-direct portion of the RWS commercial property management business, to Lincoln Waste Solutions for approximately $5 million in cash at closing, with potential additional payments based on future performance [2][3]. Financial Impact - The sale is expected to enhance the company's focus on its core portfolio, which is anticipated to yield greater growth and financial returns. It also eliminates a segment that contributed to inconsistent financial performance without generating profits [2][4]. - The total consideration for the sale includes a cash payment of $5 million, with additional amounts not exceeding $6.5 million based on future performance, along with a one-time payment related to acquired accounts receivable [3]. Strategic Focus - The transaction aligns with the company's initiatives aimed at increasing profitability, improving operational efficiencies, and generating more consistent financial results. The company plans to utilize the cash from the sale to pay down debt [4]. - The CEO of Lincoln Waste Solutions expressed confidence in managing the newly acquired clients, highlighting their tailored strategies and extensive experience in the waste management sector [5][7]. Company Overview - Quest Resource Holding Corporation is a national provider of waste and recycling services, focusing on helping larger businesses meet their environmental and sustainability goals. The company offers expertise across various industry sectors to create client-specific solutions that yield measurable business and sustainability outcomes [6]. - Lincoln Waste Solutions, part of Reconomy, specializes in full-service waste and recycling management solutions, serving multi-location businesses across the U.S., Canada, and Puerto Rico, with a focus on maximizing cost savings and enhancing recycling rates [7][8].

Financial Data and Key Metrics Changes - Revenue for Q4 2024 was $70 million, up 1% year-over-year but down 4% sequentially from Q3 2024 [27] - Gross profit dollars decreased by 6.7% year-over-year and 8.3% sequentially, totaling $10.7 million [33] - Adjusted EBITDA for Q4 2024 would have been approximately $3.2 million, excluding non-cash adjustments [38] Business Line Data and Key Metrics Changes - New clients secured during 2024 generated approximately two-thirds of their anticipated quarterly revenue run rate during Q4 2024 [29] - Client attrition was primarily related to the mall and shopping center sector, which the company has decided to exit [31] - The company expects to realize $15 million in net incremental revenue from new client wins achieved during 2024 [32] Market Data and Key Metrics Changes - Weak market conditions in the industrial end markets are expected to continue impacting volumes for at least the next two quarters [30] - The company has experienced uncharacteristic client attrition, with a third related to the mall business [31][58] Company Strategy and Development Direction - The company is focused on reducing costs, implementing process improvements, and increasing accountability to enhance performance [12] - A new operational leadership team has been established to drive operational excellence and efficiency [61] - The company is committed to maintaining a solid balance sheet and prioritizing capital allocation towards debt repayment [64] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that performance over the last couple of years has been unacceptable and is committed to achieving operational excellence [50][58] - The company expects to show both top and bottom-line growth in 2025, with improvements anticipated in the second half of the year [65] - Management is optimistic about the future, citing a robust pipeline and strong client referrals [9][64] Other Important Information - The company has refinanced its debt, reducing interest expenses by approximately $1 million annually [45] - An impairment loss of $5.5 million was recognized related to the sale of client contracts for the mall business [43] Q&A Session Summary Question: Can you talk about the vendor management system and its rollout? - The vendor management program is substantially complete, with ongoing improvements and expected cost reductions in Q1 [71][72] Question: Is the attrition stabilizing? - Yes, most attrition was related to the mall business and M&A activity, and the company is seeing signs of stabilization [80] Question: What is the outlook for the industrial market? - The industrial market is expected to face challenges for the next couple of quarters, but there are signs of potential recovery in the second half of the year [78] Question: How is the sales pipeline looking? - The sales pipeline has grown significantly, and the company remains optimistic about future deal flow [84] Question: What are the expectations regarding the sale of the RWS tenant billing business? - The sale is expected to close soon, and it is not anticipated to have a material impact on the bottom line [88] Question: How does the company view M&A in the near term? - The focus is currently on operational improvements and debt repayment, with M&A not being a priority at this time [126] Question: What are the expectations for top and bottom-line growth in 2025? - The company expects growth in both revenue and EBITDA, with improvements anticipated as operational initiatives take effect [135][137]

Financial Data and Key Metrics Changes - Revenue for Q4 2024 was $70 million, up 1% year-over-year but down 4% sequentially from Q3 [27] - Gross profit dollars decreased by 6.7% year-over-year and 8.3% sequentially, totaling $10.7 million [33] - Adjusted EBITDA for Q4 2024 would have been approximately $3.2 million, excluding non-cash adjustments [38] Business Line Data and Key Metrics Changes - New clients secured during 2024 generated approximately two-thirds of their anticipated quarterly revenue run rate during Q4 [29] - Client attrition was primarily related to the mall and shopping center sector, which the company has decided to exit [31] - The company expects to realize $15 million in net incremental revenue from new client wins achieved during 2024 [32] Market Data and Key Metrics Changes - Weak market conditions in the industrial end markets are expected to continue impacting volumes for at least the next two quarters [30] - The company noted that the relationship with industrial clients remains strong, with opportunities to add services in the long term [30] Company Strategy and Development Direction - The company is focused on reducing costs, implementing process improvements, and increasing accountability to enhance performance [12] - A new operational leadership team has been established to drive operational excellence and improve workflow efficiency [61] - The company is committed to maintaining a solid balance sheet and prioritizing capital allocation towards debt repayment [64] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that performance over the last couple of years has been unacceptable and emphasized the need for operational excellence [50] - The company expects to show both top and bottom-line growth in 2025, with improvements anticipated in the second half of the year [65] - Management is optimistic about the future, citing a robust pipeline and strong client referrals [64] Other Important Information - The company has refinanced its debt, reducing interest expenses by approximately $1 million annually [45] - An impairment loss of $5.5 million was recognized related to the sale of client contracts for the mall and shopping center portion of the business [43] Q&A Session Summary Question: Can you talk about the vendor management system and its rollout? - The vendor management program is substantially complete, with ongoing improvements and expected cost savings flowing through [71][72] Question: Is the attrition stabilizing? - Yes, most attrition was related to the mall business and M&A activity, and the company believes client stickiness remains strong [80] Question: What is the outlook for the industrial market? - The company expects challenges in the industrial market for the next couple of quarters but sees signs of optimism for a pickup in the second half of the year [78] Question: How is the sales pipeline looking? - The sales pipeline has grown significantly, and the company remains bullish on future deal flow [84] Question: What are the expected proceeds from the sale of the RWS tenant billing business? - The business is a non-contributor, and while specific proceeds cannot be disclosed yet, the sale is expected to improve operational focus [88] Question: What is the focus on M&A in the near term? - The company is focused on operational improvements and debt repayment, with M&A being a lower priority for the immediate future [126] Question: What does top and bottom-line growth in 2025 mean? - The company expects growth over 2024 figures, particularly in revenue, gross profit, and adjusted EBITDA [134]

Company Performance - Quest Resource (QRHC) reported a quarterly loss of $0.46 per share, significantly worse than the Zacks Consensus Estimate of a loss of $0.08, marking an earnings surprise of -475% [1] - The company's revenues for the quarter ended December 2024 were $69.97 million, missing the Zacks Consensus Estimate by 4.83%, and showing a slight increase from $69.34 million year-over-year [2] - Over the last four quarters, Quest Resource has surpassed consensus EPS estimates only once [2] Stock Movement and Outlook - Quest Resource shares have declined approximately 33.7% since the beginning of the year, compared to a decline of -5.3% for the S&P 500 [3] - The company's earnings outlook is mixed, with current consensus EPS estimates for the upcoming quarter at -$0.04 on revenues of $79.86 million, and for the current fiscal year at -$0.04 on revenues of $322.18 million [7] Industry Context - The Waste Removal Services industry, to which Quest Resource belongs, is currently ranked in the bottom 45% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact investor sentiment [5]

Revenue and Profitability - Revenue for Q4 2024 was $70.0 million, a 0.9% increase compared to Q4 2023[5] - Gross profit for Q4 2024 was $10.7 million, a 6.7% decrease compared to Q4 2023, with a gross margin of 15.3%[5] - Total revenue for fiscal year 2024 was $288.5 million, a 0.1% increase compared to 2023[5] - Adjusted EBITDA for Q4 2024 was $1.7 million, down from $3.5 million in Q4 2023[5] Net Loss and Earnings - GAAP net loss per diluted share for Q4 2024 was $(0.46), compared to $(0.11) in Q4 2023[5] - Reported net loss for Q4 2024 was $9.508 million, compared to a loss of $2.330 million in Q4 2023[21] - Adjusted net loss per diluted share for fiscal year 2024 was $(0.03), compared to adjusted net income of $0.15 per diluted share in 2023[5] - Adjusted net income (loss) for Q4 2024 was $(1.839) million, a decrease from an adjusted income of $0.744 million in Q4 2023[21] - Diluted earnings per share for Q4 2024 was $(0.46), compared to $(0.11) in Q4 2023[21] Customer Acquisition and Business Strategy - The company added a record eight new customers in 2024, expected to generate at least seven figures of annual revenue each[5] - Successfully completed debt refinancing, reducing annual interest expense by approximately $1 million and improving credit terms[5] - The company plans to reduce headcount by 15%, which is expected to lower SG&A by approximately $3.0 million annually[5] - Recognized a non-cash impairment loss of $5.5 million related to the anticipated sale of a non-core business line[5] Assets and Liabilities - Total current assets increased to $75.139 million in 2024 from $60.613 million in 2023, representing a growth of approximately 24%[23] - Total liabilities rose to $121.489 million in 2024, up from $110.838 million in 2023, indicating an increase of about 10%[23] - Cash and cash equivalents increased to $396,000 in 2024 from $324,000 in 2023, reflecting a growth of approximately 22%[23] - Goodwill decreased to $81.065 million in 2024 from $85.828 million in 2023, a decline of about 5%[23] - The company reported an impairment loss of $5.511 million in 2024, with no such loss reported in 2023[21] - Total stockholders' equity decreased to $54.156 million in 2024 from $66.281 million in 2023, a decline of approximately 18%[23] Shareholder Information - The weighted average number of diluted shares outstanding decreased to 20,837 in Q4 2024 from 22,502 in Q4 2023[21]

Revenue and Customer Growth - Revenue for the year ended December 31, 2024, was $288.5 million, an increase of $0.1 million, or 0.1%, compared to $288.4 million in 2023[140] - Newly added customers contributed $18.6 million in additional revenue, with overall demand contributing an additional $25.6 million, an increase of almost 13% from 2023[141] Cost and Profitability - Cost of revenue increased to $238.5 million in 2024 from $238.3 million in 2023, with gross profit decreasing to $50.0 million from $50.1 million[142][143] - Gross profit margin was 17.3% for 2024, compared to 17.4% for 2023[143] - Operating expenses increased to $54.5 million in 2024 from $47.2 million in 2023, with selling, general, and administrative expenses rising to $39.5 million[145][146] - A $5.5 million impairment charge was recorded for the year ended December 31, 2024, associated with an asset group classified as held for sale[147] Financial Performance - Net loss for the year ended December 31, 2024, was $(15.1) million, compared to a net loss of $(7.3) million in 2023[152] - Adjusted EBITDA decreased by 10.7% to $14.5 million in 2024 from $16.2 million in 2023[155] - Adjusted net income (loss) for 2024 was $(0.7) million compared to $3.4 million in 2023[158] - Reported net loss for 2024 was $(15.1) million, compared to a net loss of $(7.3) million in 2023, reflecting a significant increase in losses[159] - Adjusted net income (loss) for 2024 was $(0.03) per diluted share, down from $0.15 per diluted share in 2023[159] Cash Flow and Working Capital - Working capital increased to $30.7 million in 2024 from $15.7 million in 2023, with cash and cash equivalents rising to $0.4 million from $0.3 million[160] - Net cash used in operating activities was $(6.1) million in 2024, compared to $(1.4) million in 2023, indicating increased cash outflow[168] - Cash used in investing activities rose to $(6.0) million in 2024 from $(1.9) million in 2023, primarily for the purchase of equipment[169] - Net cash provided by financing activities was $12.1 million in 2024, driven by $9.9 million in borrowings on the ABL Facility[170] Debt and Financing - The company has a senior secured term loan facility of $54.0 million, maturing on June 28, 2030, with a 1.00% annual amortization[163] - As of December 31, 2024, the company had a full valuation allowance for all deferred tax assets, indicating no anticipated recovery of these assets[182] - The company recorded a non-cash impairment loss of $5.5 million in 2024, contributing to the overall net loss[172] - The company expects existing cash and cash equivalents, along with borrowing availability, to be sufficient to fund operations for the next 12 months[162] Acquisitions and Financial Instruments - Acquisitions are accounted for under ASC Topic 805, with identifiable assets recognized at estimated fair values and any remaining purchase price recorded as goodwill[184] - All acquisition-related costs are expensed as incurred in selling, general and administrative expenses[185] - Financial instruments include cash and cash equivalents, accounts receivable, and accounts payable, with no significant currency or credit risks identified[186] - Variable rate indebtedness exposes the company to interest rate risk, as borrowings under senior secured credit facilities bear interest at variable rates[186] - The fair values of financial instruments approximate their carrying values, based on short maturities or current borrowing rates for similar loans[186] Risk and Obligations - The company has no off-balance sheet debt or obligations, nor any undisclosed transactions with related parties[188] - There are no guarantees of third-party debt by the company[188] - There are no applicable quantitative and qualitative disclosures about market risk[189]