• Revenue: $73.1 million, a 2% decrease year-over-year and a 1% increase sequentially.
• EBITDA: More than $5 million for the second consecutive quarter.
• Gross Profit: $13.5 million, flat year-over-year and sequentially.
• SG&A Expenses: $9.4 million, an increase of $200,000 year-over-year and a decrease of $400,000 sequentially.
• Cash from Operations: $807,000 generated in the second quarter.
• CapEx: $2.2 million for the quarter, $4.2 million year-to-date.
• Available Borrowing Capacity: $17.7 million on a $35 million operating line, $2.5 million on a $5 million term loan facility.
• Notes Payable: $73.8 million at the end of the quarter, up from $67.8 million at the beginning of the year.

• Warning! GuruFocus has detected 5 Warning Signs with QRHC.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Quest Resource Holding Corp (NASDAQ:QRHC) delivered strong results with over $5 million in EBITDA for the second consecutive quarter.
• The company has successfully implemented efficiency programs and organic growth initiatives, leading to a growing pipeline of new customers.
• QRHC achieved three seven-figure expansions with existing clients, demonstrating successful execution of their land and expand strategy.
• The company has increased its borrowing capacity and extended debt maturities, providing financial flexibility for future growth.
• QRHC's technology improvements, including AP automation, are expected to enhance operational efficiency and reduce costs, contributing to improved margins.

Negative Points

• Revenue growth was slower than expected due to customer-related delays in onboarding new clients.
• Lower-than-expected volumes from a large industrial client negatively impacted revenue and gross profit.
• Sequential gross profit growth was flat due to client-related delays and lower volumes from key clients.
• Accounts receivable days remained elevated, impacting cash flow, although this is expected to be temporary.
• The company faces challenges in achieving its target of 100% zero-touch invoice processing, with some hurdles remaining.

Q & A Highlights

Q: Can you confirm if the land and expand opportunities with existing clients this quarter are new, and how many similar opportunities do you see across your client base? A: Yes, the three expansions mentioned are new and incremental to the previous quarter. We see numerous opportunities as we continue to add high-quality clients with diverse needs, and our team expands its capabilities.

Q: Are you still targeting 80% zero-touch invoice processing by the end of this year, and how will this impact margins? A: We aim for 100% zero-touch, with near-term visibility to reach 80-90%. This will drive significant efficiencies, expected to start impacting margins by Q4, and fully realized early next year.

Q: Are you seeing any changes in overall waste volumes across your customer base, given the macroeconomic conditions? A: Outside of the one large customer with softening conditions, we aren't seeing significant changes. Our diversified revenue streams across various end markets provide stability.

Q: Can you update us on the pipeline and interest in pro-organics, given the regulatory environment? A: The opportunity is growing as regulations favor our services. We have strong food clients and prospects, and pro-organics, along with our food waste programs, are increasingly in demand.

Q: How many new wins started contributing in Q2, and how many will start in Q3? A: All but two new wins contributed in Q2. Two large ones went live on July 1, and another in August.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.