Quest Resource (US:QRHC)2025-05-12 22:00Financial Data and Key Metrics Changes - Revenue for the first quarter was $68.4 million, a decrease of 6% year-over-year and down 2% sequentially from the fourth quarter [11] - Gross profit dollars were $10.9 million, a 22% decrease from last year but a 2% increase sequentially from the fourth quarter [13] - SG&A expenses were $11.4 million, an increase of $1.6 million year-over-year and $1.3 million sequentially [15] Business Line Data and Key Metrics Changes - The decrease in revenue was attributed to client attrition and lower volumes at select larger clients, with client attrition contributing approximately $7 million to the decline [12] - New clients secured during 2024 finished the first quarter at approximately 80% of their anticipated run rate, expected to provide incremental growth in revenue and gross profit [13] Market Data and Key Metrics Changes - The company experienced lower volumes in the industrial sector, which may continue to affect volumes for several quarters [12] - Demand for services from existing clients remains strong, with opportunities to expand services in the long term despite current volume decreases [12][26] Company Strategy and Development Direction - The company is focused on generating cash, improving profitability, lowering debt, and increasing operating efficiency [8] - A cultural shift towards operational excellence is being implemented, emphasizing performance and accountability across the organization [20][21] - The company aims to enhance shareholder value through a series of changes in cost structure, management team, and operating philosophy [10] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the potential for growth despite current economic uncertainties, expecting both top and bottom line growth for 2025 [27] - The company is monitoring its markets closely, particularly the industrial sector, and believes there are long-term opportunities with existing clients [26][27] Other Important Information - The company completed the sale of a non-core part of the RWS business, generating $5 million in cash used to reduce debt [7] - Cash at the end of the first quarter was $1.4 million, with approximately $21 million of available borrowing capacity [16] Q&A Session Summary Question: Any notable KPIs to highlight as you focus on execution moving forward? - Management has started to baseline all processes and identified weaknesses, implementing changes to improve operational efficiency [31] Question: Are you seeing any increase in weakness in your end markets? - No significant change in market weakness has been observed, but demand and volumes are slightly down [39] Question: How do you plan to bring down DSO? - Strategies include improving billing efficiency and increasing visibility into missing invoices [47][49] Question: Any notable changes in end customer behavior or volumes? - No significant changes outside the industrial segment; there has been an uptick in demand for services [54] Question: What caused customer attrition? - Attrition has been primarily related to customers being acquired with different programs in place [57] Question: What is the expected timeline for evaluating the impact of new initiatives? - A year from now, the company expects to look significantly different, with results beginning in Q2 and more substantial impacts in Q3 and Q4 [71] Question: How much of the revenue decline is due to existing customers versus new ones? - The majority of the revenue decline is attributed to new clients added throughout 2024 [95]