• Revenue: $72.8 million, a 3.3% increase year over year, and roughly flat sequentially from the second quarter.

• Gross Profit: $11.7 million, a 5.9% decrease from last year and a 13.5% decrease sequentially from the second quarter.

• SG&A Expenses: $10.3 million, an increase of $650,000 from a year ago and $890,000 sequentially from the second quarter.

• Debt: $74.8 million in notes payable at the end of the third quarter, up from $67.8 million at the beginning of the year.

• Available Borrowing Capacity: $16.5 million on a $35 million operating line and $2.5 million on a $5 million equipment facility.

• New Client Revenue Contribution: New clients secured during 2024 generated approximately 60% of their anticipated full-year revenue run rate during the third quarter.

• Onboarding Activity: More than 2,200 locations onboarded during the quarter, a tenfold increase from the same period a year ago.

• Billing Credits: Approximately $1 million in one-time billing credits due to inaccurate information from a small group of longstanding clients.

• Warning! GuruFocus has detected 5 Warning Signs with QRHC.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Quest Resource Holding Corp (NASDAQ:QRHC) reported a 3.3% year-over-year increase in revenue, reaching $72.8 million, driven by strong growth from new and existing clients.

• The company successfully onboarded a record number of new clients, with nine significant wins in 2024, indicating strong sales execution and client acquisition.

• QRHC's new automated vendor management system is fully operational, expected to yield $2 to $3 million in recurring cost savings, and has already shown reduced error rates.

• The company has a robust pipeline of new business opportunities, with several large deals in the final stages of approval, suggesting potential for future growth.

• QRHC is in the process of refinancing its debt, which is expected to result in a significant reduction in borrowing costs and improved terms by the end of the year.

Negative Points

• QRHC experienced a 5.9% decrease in gross profit dollars year-over-year, primarily due to a shift in revenue mix, higher costs of services, and unexpected billing credits.

• Economic headwinds in the industrial end market led to a $13 million decrease in revenue from certain clients, impacting overall financial performance.

• The implementation of the new vendor management system and record onboarding activity resulted in temporary increased costs, affecting profitability in the quarter.

• Higher than anticipated billing credits, amounting to approximately $1 million, were issued due to inaccurate information from a small group of longstanding clients.

• The company's Days Sales Outstanding (DSO) increased, impacting cash flow, although QRHC expects to return to mid-60s DSO levels as new client ramping stabilizes.