Quest Resource (US:QRHC)2022-11-15 01:37Financial Data and Key Metrics Changes - The company reported a 78% increase in gross profit, reaching $12.2 million, and a 57% growth in adjusted EBITDA, totaling $3.8 million [10][27] - Revenue for the quarter was $73.4 million, marking a 96% year-over-year increase [18] - SG&A expenses rose to $9.3 million from $5.3 million year-over-year, reflecting costs from acquired operations [26] - Depreciation and amortization increased to $2.5 million compared to $508,000 a year ago, primarily due to acquisition-related amortization [27] - Interest expense increased to $1.9 million from $542,000, attributed to debt financing for acquisitions and rising interest rates [27] Business Line Data and Key Metrics Changes - Gross profit dollar growth was driven by new customer acquisitions, expansion with existing customers, and contributions from recent acquisitions [19] - The company experienced a sequential decrease in gross profit dollars due to ongoing integration work from acquisitions completed at the end of 2021 [21] Market Data and Key Metrics Changes - The company noted stable economic activity across its customer base, indicating resilience in its market positioning [14][35] - The value of scrap metals recycled saw a $6 million sequential decrease, impacting revenue but not gross profit dollars [34] Company Strategy and Development Direction - The company is focused on executing strategic initiatives and expects a strong finish to the year, emphasizing the strength of its business model [12] - The company plans to continue optimizing recent acquisitions and expanding service capabilities to drive organic growth [36][37] - The management is evaluating additional M&A opportunities while maintaining discipline in acquisition criteria [44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to offset inflationary pressures through flexible pricing and cost recovery fees [13][32] - The outlook for profitable growth remains positive, with expectations for continued momentum in the fourth quarter and into 2023 [45][46] Other Important Information - The company has transitioned new customers to more typical payment schedules, expecting to generate positive cash flow from operations in the fourth quarter [29] - The company has diversified its customer base, reducing concentration risk significantly [100][101] Q&A Session Summary Question: Can you provide more details on the vendor-related expenses? - Management clarified that the expenses were related to one vendor from a recently acquired company and are not expected to recur [52] Question: How does the current pipeline compare to previous quarters? - Management indicated that the pipeline is larger and includes significant opportunities, with a focus on closing larger clients [55][57] Question: What is the potential for new customer wins to become larger opportunities? - One of the new wins has the potential for mid-seven-figure or eight-figure revenue, while the other is less certain [66] Question: How successful has cross-selling been? - Management noted that cross-selling has exceeded initial expectations, particularly in areas like pallet services [79] Question: Are there any changes in the competitive landscape? - Management stated that the competitive landscape remains stable, with a focus on their unique value proposition rather than competitors [106]