Quest Resource (US:QRHC)2023-05-16 01:47Financial Data and Key Metrics Changes - The company reported a 12% year-over-year increase in gross profit dollars, reaching $12.6 million, driven by ramping up new customers and adding new programs with existing customers [46][48] - Sequentially, gross profit dollars increased by 17% from the fourth quarter of 2022 due to organic growth, seasonal trends, and improvements at RWS [48] - SG&A expenses were $9.4 million, slightly up from $9.3 million year-over-year, with expectations of $9.5 million in the second quarter of 2023 [50] Business Line Data and Key Metrics Changes - The integration of RWS is on schedule to be completed by year-end, with the company beginning to pass through contract costs, which is expected to positively impact gross profit throughout the year [54] - The company has seen improvements in gross profit from RWS due to the implementation of pass-through costs and fuel surcharges [31][54] Market Data and Key Metrics Changes - The company continues to see stable activity levels across its end markets, with a strong value proposition resonating well with customers [35] - The economic environment is characterized by pressures to improve sustainability and increasing regulations, which are driving demand for recycling services [58] Company Strategy and Development Direction - The company is focused on delivering double-digit profitable growth and has multiple sources of organic growth, including upselling existing clients and ramping recent wins [32][36][79] - M&A remains a key growth pillar, with a disciplined approach to acquisitions based on strategic fit [56] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued profitable growth and strong cash flow generation in 2023, with expectations for incremental contributions from acquisition integrations [30][79] - The company is confident in its ability to generate cash flow and has recently paid down $5 million on its credit facility [34][79] Other Important Information - The company has a cash balance of $9.8 million and has increased its operating borrowing line from $15 million to $25 million [33] - The company expects to see continued sequential growth in gross profit throughout the year, despite challenges in year-over-year comparisons due to acquisition-related adjustments [32] Q&A Session Summary Question: Can you provide more details on rolling out new services to existing customers? - Management indicated that they are still early in the process but see significant upside in cross-selling opportunities [61] Question: How is the ramp-up of new customers progressing? - Management noted that while the ramp is moving slower than desired, there is confidence in the pipeline and the potential for significant growth [68][90] Question: What is the outlook for acquisition and integration costs for the rest of the year? - Management expects acquisition and integration costs to remain relatively flat compared to the first quarter [106]