Quest Resource Holding Corporation 2026 Q2 Earnings Call

Thanks, Nick, and thanks everyone for joining this afternoon. Quest delivered a solid quarter of results as the sequential improvements and momentum we experienced in the first quarter carried forward into the second period. We returned to top-line revenue and adjusted EBITDA growth compared to both the prior year and the prior quarter. This was supported by the growing contributions of recent customer wins and wallet share expansions, stabilizing volumes from our industrial customers, and ongoing productivity improvements across the business. We're encouraged by this progress, but understand that the macro environment remains complex and at times uneven. Within our industrial portfolio, we also saw positive trends carry forward into Q2. This drove sequential volume improvements as well as meaningful year-over-year growth from some of our largest customers.

That said, volumes still remain subdued relative to a few years ago at a few select accounts and are likely the new norm. We will continue to monitor the broader macro environment closely. Given how the first half of the year played out, we're cautiously optimistic that our industrial portfolio has stabilized. The non-industrial portion of the portfolio, meanwhile, continues to perform as well as or better than expected as we've grown meaningfully in markets like food service, retail, hospitality, and more. The comprehensive efforts we have taken over the past several quarters designed to streamline our operations, diversify the business, and improve productivity levels are clearly showing results. I'm incredibly proud of the entire Quest team for their hard work and commitment through this period and the way they've bought into the changes we've implemented.

While there remains significant work to be done, we are encouraged by what appears to be a gradually improving operating environment, as well as the wins our initiatives are delivering. We're mindful that these trends can shift, so we're staying disciplined rather than getting ahead of ourselves. Along those lines, we'll continue to seek ways to drive incremental improvements in the business through our operational excellence initiatives, effectively control our cost structure, and ensure the business is well-positioned to drive stronger financial results going forward. Moving to specific results for the period. Revenue in the second quarter grew by 8% compared to the prior year and 4% sequentially. That growth was driven by a renewed sales and go-to-market effort that elevated our focus on non-industrial markets As well as wallet share opportunities across our existing portfolio.

With the internal tools and processes we've implemented to better identify, track, and close these opportunities, the results have followed. Over the past four quarters, we've successfully onboarded several new customer wins. Importantly, as I've noted earlier, many of these wins are outside the industrial sector and are helping diversify the portfolio. They include a customer in the food products market, a large restaurant chain, a large retailer, and one of the largest franchisees in the quick service restaurant industry. At the same time, we've landed several new wallet share gains with existing customers, including an expansion with an existing retail customer, the addition of several hundred new locations with a customer in the automotive services end market, and expansions with two other major customers. More recently, in the second quarter, we landed four new share wallet wins, including a significant one with a large national automotive parts retailer.

Each of these wins over the past year is helping create a better balance across our portfolio and demonstrates both the capability of our sales team and the appeal of the Quest model across markets. We are also continuing to expand our sales pipeline during the period. Our pipeline remains healthy, and we're engaged with several promising opportunities to add large national brands to our portfolio. Some of these opportunities are in markets that are new for Quest, which would further diversify our customer list and provide incremental offsets to the seasonally slower periods for many of our industrial customers. That said, many of these companies are also actively monitoring the current macroeconomic backdrop, which is elongating the sales cycle. We like our positioning, but the timing on closing these opportunities will ultimately depend on how quickly these companies gain confidence in the broader environment.

Operationally, we continue to execute well, and I believe we're operating more efficiently than at any point in my time here. Brett and his team have done a terrific job optimizing our cost structure, improving our cash cycle, and reducing debt, which will put us on firmer financial footing as volumes improve. Some of this is already evident in the strong flow-through of our sequential gross profit gains to adjusted EBITDA in the most recent quarter. On the cost side, diesel prices have risen amid geopolitical events around the world. Quest has experienced only a limited impact on our financials through this extended period of elevated prices.

We view this as a good proof point for our model and its relative resilience to short-term commodity fluctuations, as well as our ability to use our scale to push back on cost increases where we can or to pass through unavoidable costs to our customers. Lastly, we continue to evolve our organizational structure and make personnel changes to attract, develop, and retain the best team possible. This holds true across the organization, from sales and key accounts to IT, finance, and more. We made some exciting changes so far this year through the addition of high-quality talent in key areas, and we'll keep finding ways to put the team in the best position to succeed and serve our customers.

Looking ahead, our priorities remain focused on growing the business with new and existing customers, driving margin improvements, continuing the development of our operating platform, improving cash generation, and reducing our debt balance. With that, I'd like to turn the call over to Brett to review our second quarter financial results in greater detail.

Brett? Thanks, Perry, and good afternoon, everyone.