Quest Resource (QRHC) Q1 2026 earnings summary

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 excellence initiatives and reduced expenses.

• Diversification into non-industrial sectors and new client wins offset lower industrial volumes, with a strong sales pipeline and ongoing wallet share expansion.

• Operational initiatives improved exception management, billing, collections, productivity, and cost containment.

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 expenses dropped to $9.4 million from $19.1 million, reflecting labor and professional fee savings and no impairment charge.

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

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

Outlook and guidance

• Management remains cautiously optimistic for Q2 and the rest of 2026, expecting sequential gross profit growth as new wins ramp up.

• Margin pressure expected to persist due to industrial volume challenges and business mix, but offset by operational improvements and wallet share growth.

• Focus remains on growing with new and existing customers, margin improvement, platform development, cash generation, and debt reduction.

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

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