Quest Resource Highlights Strong EBITDA and Optimistic Outlook

Quest Resource Holding Corporation has reported impressive results for the second quarter of 2024, achieving over $5 million in EBITDA for the second consecutive quarter. Although revenue slightly declined by 2% year-over-year to $73.1 million, the company has experienced substantial contract expansions and secured new clients.

The company’s operational efficiency initiatives, including accounts payable automation, have enhanced customer service and reduced operational costs. Moreover, Quest’s financial stability has been bolstered by an extended debt maturity and expanded borrowing capacity from its banking partners.

Key Takeaways:

• EBITDA exceeded $5 million for the second quarter in a row.
• Revenue totaled $73.1 million, a 2% drop compared to the previous year, while gross profit remained steady at $13.5 million.
• Sequential revenue growth was slower, primarily due to customer delays and reduced activity from a significant industrial client.
• Debt maturities have been extended, and borrowing capacity with PNC Bank has increased to $35 million.
• The company has garnered new clients and secured substantial expansions with existing customers, enhancing growth prospects.
• Investments in compactors and technological advancements, including automation, are projected to enhance efficiency and customer retention.

Company Outlook:

• Quest is optimistic about maintaining double-digit growth moving forward.
• The company anticipates reaching 80-90% zero-touch invoice processing soon and plans to onboard additional solid waste vendors.
• Demand for organic offerings is rising and is expected to contribute positively in upcoming quarters.

Bearish Highlights:

• Revenue experienced a slight year-over-year decline due to customer delays and lower volumes from a major industrial client.

Bullish Highlights:

• The pipeline of new clients is growing.
• The company secured a five-year contract extension and three significant expansions with current clients.
• Positive customer feedback and successful platform implementations highlight strong service delivered.
• Investment in compactors may lead to strategic advantages and enhanced business opportunities.

Misses:

• Despite robust EBITDA, the company faced slow sequential revenue growth and a slight annual revenue dip.

Q&A Highlights:

• Technology investments, particularly in accounts payable automation, aim for 100% zero-touch invoice processing.
• Management emphasized the importance of owning compactors for client retention and acquisition.

In conclusion, Quest Resource Holding Corporation appears well-positioned for future growth, supported by strong EBITDA results, strategic client engagements, and a focus on efficiency initiatives. The company’s emphasis on technological advancements and service improvements positions it favorably in the competitive waste management sector.