Quest Resource (US:QRHC)2023-08-15 02:28Financial Data and Key Metrics Changes - The company reported a gross profit of $13.5 million and EBITDA of $5 million for Q2 2023, marking the second highest quarterly performance in its history [7][8] - Adjusted EBITDA increased by 26% and gross profit dollars rose by 7% sequentially [8][10] - SG&A expenses were $9.2 million, slightly down from $9.3 million in the same period last year, with expectations to average about $9.5 million per quarter moving forward [13][14] Business Line Data and Key Metrics Changes - Most growth was attributed to ramping up new clients and penetrating existing ones, with significant contributions from improvements at RWS [9][11] - The integration of acquired businesses has led to standardized processes, benefiting gross profit dollars based on volumes rather than fluctuations in recyclable material prices [12][19] Market Data and Key Metrics Changes - The company noted stable activity levels across its end markets, managing cost pressures effectively despite fluctuations in recycled material prices [17][19] - The waste business is generally resistant to recessions, with clients continuing to generate waste regardless of economic cycles [17] Company Strategy and Development Direction - The company aims for double-digit growth in gross profit dollars and adjusted EBITDA for the year, supported by organic growth and integration improvements [10][20] - A focus on technology investments is intended to enhance customer value and operational efficiency, with recent developments including a new vendor onboarding system [34][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to endure economic headwinds due to the resilient nature of the waste business [17] - The outlook for gross profit dollars remains robust, with expectations for continued sequential growth in the second half of the year [20][39] Other Important Information - The company has reduced debt levels significantly, paying down $7 million year-to-date, and expects to continue this trend while balancing growth investments [10][15] - Integration of acquisitions is progressing well, with five out of six completed, and the final integration expected to be completed ahead of schedule [32][33] Q&A Session Summary Question: Can you talk about the vertical for this new customer and the timing of closing new business? - Management noted that conversations with prospects have become easier due to rising costs and sustainability demands, with optimism about future growth [43][44] Question: Can you discuss the health of the vendor network? - The vendor base remains strong, with no significant issues reported, and the company is focused on optimizing vendor relationships [47][49] Question: How far along is the integration process for RWS? - The integration went live on August 1, and management expects to be on a normal run rate by the end of the quarter [55][61] Question: What is the strategic direction regarding technology and market opportunities? - The company is assessing market opportunities and enhancing its value proposition through technology, aiming to expand beyond traditional waste services [63][64] Question: How many waste streams are there that the company can leverage more effectively? - Management indicated that out of over 100 waste streams, approximately two-thirds present significant opportunities for scale and margin improvement [65][68]