Q2 2026 Quest Resource Holding Corp Earnings Call Transcript
Key Points
- Quest Resource Holding Corp (QRHC) returned to top-line revenue and adjusted EBITDA growth in Q2 2026, with revenue up 8% year-over-year and 4% sequentially.
- The company successfully diversified its portfolio with new customer wins in non-industrial markets, including food service, retail, and hospitality, reducing reliance on industrial sectors.
- Industrial volumes stabilized, with meaningful year-over-year growth from some of the largest customers, contributing approximately $3.3 million to revenue.
- Operational excellence initiatives drove significant cost savings, with SG&A down 11% year-over-year despite revenue growth, and a 20% reduction in SG&A for the first half of 2026.
- Strong cash flow generation of $4.5 million in the quarter enabled continued debt reduction, with net notes payable down $4.6 million year-to-date and $17 million over the last six quarters.
- The company landed nine meaningful share-of-wallet wins since the back half of 2025, including a significant win with a large national automotive-parts retailer, which are accretive to gross profit.
- Working capital improved, with DSOs down to roughly 70 days from mid-70s, and working capital days reduced to 5 from 12 at the end of Q1 and 19 a year ago.
- Gross profit dollars declined 6% year-over-year, and gross margin fell to 16.3% from 18.5%, due to margin pressure with select industrial clients.
- The company recorded a non-cash goodwill impairment charge of $11 million, triggered by a decline in market capitalization, which negatively impacted reported earnings.
- Industrial volumes remain subdued at a few select accounts compared to a few years ago, and management notes this may be the new norm.
- The macroeconomic environment remains complex and uneven, with renewed geopolitical risks potentially impacting operations and elongating sales cycles for new opportunities.
- Diesel prices have risen due to geopolitical events, and while the impact has been limited, it remains a cost pressure that could affect margins if sustained.
- The sales cycle for new large national brand opportunities is elongating as potential customers monitor the macroeconomic backdrop, delaying potential revenue contributions.
- Despite revenue growth, the company's cash position is relatively low at $1 million, though availability on the ABL facility provides some buffer.
Thank you for standing by. Welcome to Quest Resource Holding Corporation's second-quarter 2026 earnings call.
I'd like to remind everyone that this call is being recorded. (Operator Instructions) Thank you.
I would now like to turn the call over to Nick Nelson, Alpha IR Group. Please go ahead.
Thank you, operator. Thank you, everyone, for joining us for Quest Resource's second-quarter 2026 earnings call.
Before we begin, we'd like to remind everyone that this conference call may contain predictions, estimates, and other forward-looking statements, regarding future events or future performance of the company.
Use of words like anticipate, project, estimate, expect, intend, believe, and other similar expressions are intended to identify those forward-looking statements.
Such forward-looking statements are based on the company's current expectations, estimates, projections, beliefs, and assumptions; and involve significant risks and uncertainties.
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