Quest Resource (QRHC) investor relations material

Executive summary

• Q1 2026 revenue was $61.7 million, down 9.8% year-over-year but up 4.8% sequentially, reflecting improvement over prior seasonal trends and the impact of industrial headwinds and a business divestiture.

• Net loss narrowed to $2.3 million from $10.4 million in Q1 2025, driven by cost savings, operational efficiencies, and absence of prior-year impairment and divestiture losses.

• Adjusted EBITDA rose 15.2% year-over-year to $1.8 million, supported by operational improvements and reduced expenses.

• Diversification into non-industrial sectors and new client wins, including a major quick-service restaurant, contributed to sequential growth and offset industrial softness.

• Management remains cautiously optimistic for continued improvement, tempered by macroeconomic and geopolitical risks, especially fuel prices.

Financial highlights

• Gross profit was $9.7 million (gross margin 15.7%), down nearly 12% year-over-year but up 6% sequentially.

• SG&A expenses were $8.4 million, a 26% reduction year-over-year, but up 9% sequentially due to resumed bonus expense.

• Operating cash flow was slightly positive at $200,000, a sharp improvement from the prior year.

• Net loss per share improved to $(0.11) from $(0.50) in Q1 2025.

• Ended the quarter with $1.1 million in cash and $63.4 million in net notes payable.

Outlook and guidance

• Expect sequential growth in gross profit dollars in Q2 as new business and wallet share expansions contribute fully.

• Management expects compliance with loan covenants and sufficient liquidity for at least the next 12 months.

• Anticipate continued margin pressure in 2026 due to industrial volume challenges and business mix, but plan to offset through operational improvements and wallet share growth.

• Focus remains on cost management, operational excellence, and strengthening the balance sheet.

• No material impact from inflation anticipated, but ongoing geopolitical risks could affect future results.