Quest Resource (QRHC) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $73.1 million, down 1.8% year-over-year, with gross profit flat at $13.5 million and gross margin improving to 18.5% from 18.1%.

• Adjusted EBITDA for Q2 2024 increased 2.1% to $5.1 million, with over $5 million in EBITDA for the second consecutive quarter.

• Net loss for Q2 2024 was $(1.5) million, compared to $(0.9) million in Q2 2023; adjusted net income for Q2 2024 was $0.7 million.

• Onboarded seven new clients, signed three expansion agreements, and secured a major new grocery client expected to generate eight figures in annual revenue.

• Customer onboarding delays and lower volumes from a major industrial client slowed sequential revenue growth, but the new business pipeline remains strong.

Financial highlights

• Gross profit for Q2 2024 was $13.5 million, with a gross margin of 18.5%, up from 18.1% in Q2 2023.

• SG&A was $9.4 million, up $200,000 year-over-year and down $400,000 sequentially.

• Generated $807,000 in cash from operations in Q2; cash balance at quarter-end was $958,000.

• CapEx was $2.2 million for the quarter, $4.2 million year-to-date, with $3.1 million spent on compactors.

• Net loss per share was $(0.07) for Q2 2024; adjusted net income per share was $0.03.

Outlook and guidance

• Expects double-digit growth in gross profit and adjusted EBITDA for 2024 and 2025.

• SG&A projected to be about $10 million in Q3, growing slower than gross profit.

• Anticipates revenue growth to accelerate in the second half as new wins ramp up.

• Management expects liquidity to remain sufficient for at least the next 12 months.

• Technology improvements and AI-driven initiatives expected to drive significant efficiencies and margin expansion by Q4 and into next year.