Quest Resource (QRHC) Q1 2025 earnings summary

Executive summary

• Revenue for Q1 2025 was $68.4 million, down 5.8% year-over-year due to client attrition, lower industrial volumes, and divestiture of a non-core business; new clients contributed $11 million in revenue.

• Aggressive cost reduction and operational changes, including headcount reductions, sale of a non-core business, and management restructuring, aimed at improving profitability and shareholder value.

• Net loss widened to $10.4 million from $0.7 million in Q1 2024, driven by a $4.4 million loss on asset sale and a $1.7 million impairment charge.

• Adjusted EBITDA fell 69.6% to $1.6 million from $5.1 million year-over-year.

• Leadership changes include a new CEO, Senior VP Operations, and board member with audit expertise, focusing on performance culture and efficiency.

Financial highlights

• Gross profit was $10.9 million (16.0% margin), down 22% year-over-year but up 2% sequentially.

• Operating expenses rose to $19.1 million from $12.2 million, including $0.7 million in severance and retirement costs.

• SG&A expenses were $11.4 million, up $1.6 million year-over-year, primarily due to separation costs and bonus accruals.

• Interest expense was $2.3 million, slightly lower than $2.5 million in Q1 2024.

• Ended Q1 with $1.4 million in cash and $21 million in available borrowing capacity.

Outlook and guidance

• Efficiency programs and cost reductions are expected to drive future profitability and more consistent results, with sequential improvements in gross profit and lower SG&A from Q2 onward.

• SG&A projected to be about $9.5 million per quarter in the second half of the year.

• Management expects to be in compliance with financial covenants in Q2 2025 and beyond, following recent loan agreement amendments.

• Sufficient liquidity is expected for the next 12 months, supported by cash, borrowing capacity, and operations.

• Top and bottom-line growth anticipated for 2025, with more meaningful growth expected as the year ends.