Good day, and welcome to the Quest Resource Holding Corporation third quarter 2022 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Dave Mossberg, Investor Relations Representative. Please go ahead, sir. Thank you, Jenny, and thank you everyone for joining us on this call. Before we begin, I'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 Quest. 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 Quest's current expectations, estimates, projections, beliefs, and assumptions, and involve significant risks and uncertainties. Actual events or Quest results could differ materially from those discussed in the forward-looking statements as a result of various factors, which are discussed in greater detail in Quest filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on such statements and to consult our SEC filings for additional risks and uncertainties. Quest forward-looking statements are presented as of the date made, and we disclaim any duty to update such statements unless required to do so by law. In addition, in this call, we may include industry and market data and other statistical information, as well as Quest observations and views about industry conditions and developments. The data and information are based on Quest estimates, independent publications, government publications, and reports by market research firms and other sources. Although Quest believes these sources are reliable and the data and other information are accurate, we caution that Quest has not independently verified the reliability of the sources or the accuracy of the information. Certain non-GAAP financial measures will be discussed during this call. These non-GAAP measures are used by management to make strategic decisions, forecast future results, and evaluate the company's current performance. Management believes the presentation of these non-GAAP financial measures is useful to investors' understanding of this and the assessment of the company's ongoing core operations and prospects for the future. Unless it is otherwise noted, it should be assumed that any financials discussed in this call will be on a non-GAAP basis. Full reconciliation of non-GAAP to GAAP financial measures are included in today's earnings results release. With that said, I'll turn it over to Ray Hatch, President and Chief Executive Officer. Ray. Thank you, Dave, and thanks everyone for your interest in Quest. We had another good quarter. We delivered a 78% increase in gross profit, a 57% growth in adjusted EBITDA. We generated $73.4 million in revenue, $12.2 million in gross profit, and $3.8 million in adjusted EBITDA. In the quarter, there was an adjustment of $850,000 for expenses related to one vendor at one of our recently acquired companies, which lowered our gross profit. Without that expense, adjusted EBITDA for the quarter would have been $4.7 million. Our outlook remains very positive. We are executing on all of our strategic initiatives and expect a strong finish to what has been an exceptional year of growth for Quest. Our results continue to demonstrate the strength of our business model and how we can perform well in a market environment that's been challenging for others. We're able to offset inflationary cost pressure with flexible pricing and cost recovery fees. Due to the nature of our pricing structure, gross profit dollars were not materially impacted by commodity price fluctuations. In addition, we continue to make positive progress optimizing recent acquisitions. We're moving new opportunities through the pipeline, which I'll explain more in detail later. We see relatively stable economic activity across our customer base, all of which positions us well for continued profitable growth during the fourth quarter and next year. Before I get into more detail, I want to welcome our new CFO, Brett Johnston, to his first earnings call with Quest Resource. Brett is a great addition to our team and with extensive financial leadership experience, and I'm happy to have him on board. I'll turn it over to Brett now to cover the financial overview. Thanks, Ray, and good afternoon, everyone. I'm excited to join Quest, especially at this point in its history, and I am excited to be part of the transformation that is well underway. Quest has a unique value proposition in a very large market, and I see a lot of potential for continued growth. Quest also has a strong culture and proven leadership, and I'm thrilled to become part of the team. Before I review the financials, I'd also like to thank Laurie L. Latham, our former CFO, for her ongoing support as we make the transition. She has been immensely helpful in getting me up to speed in the past couple of weeks. Now moving on to our results. Third quarter financial results were in line with expectations and all the major growth drivers of our business contributed to year-over-year growth. Revenue increased 96% year-over-year due to a combination of growth from new customers, expansion with existing customers, and M&A activity. During the third quarter, gross profit dollars increased to $12.2 million, which was a 78% increase year-over-year. In addition to incremental gross profit dollar contribution from acquisitions, we expanded service programs with existing customers, and we continue to see strong year-over-year growth from new customers that we have added in the past 12 to 18 months. Gross profit dollar growth will continue to benefit from new customers as we both roll out our services across their footprints and add new services. Additionally, growth will come as we optimize the delivery and cost structure of service delivery across our customer footprint. Over the last few quarters, there have been variations in the sequential comparisons for gross profit dollars. I want to take a minute to explain these fluctuations. The sequential decrease in gross profit dollars during the third quarter was primarily related to ongoing integration work for the acquisitions we completed during the end of 2021. As was discussed on our last call, during the ongoing process of applying operational and accounting best practices to the acquisitions we completed at the end of 2021, we identified and made some one-time positive adjustments with some catch-up billings during the second quarter. Similarly, during third quarter, we identified a necessary adjustment that negatively impacted cost of sales. I will point out that this adjustment has not affected expectations for our acquisitions, and our year-to-date results are in line with our plan and are consistent with annual performance expectations we gave last quarter. I also want to note that sequential gross profit dollar comparisons were not materially affected by inflationary pressures or lower commodity prices. As Ray said earlier, we were able to offset inflationary cost pressure with flexible pricing and cost recovery fees. Due to the nature of our pricing structure, which produced fairly consistent gross profit dollars per unit of measure regardless of commodity price fluctuations, our gross profit dollars were not impacted during third quarter. Our outlook for gross profit dollars is unchanged for the year. As was mentioned during the last quarter's call, we expect gross profit dollars during the second half to be similar to the first half of the year. Additionally, gross profit should benefit from continued momentum in organic growth and continued improvements from our integration efforts and be partially offset by the return of a normalized seasonal pattern that we have seen historically during the fourth quarter. Our SG&A expenses were $9.3 million during the third quarter, compared to $5.3 million during the same period last year, and relatively unchanged compared to the first and second quarters of 2022. The year-over-year increase relates to the business operations that we acquired during 2021 and during the first quarter of this year. During the fourth quarter, we expect SG&A costs will continue to be about $9-$9.5 million. The increase reflects the added overhead costs from acquired business operations, ongoing acquisition and integration costs, and increased investment in systems, processes, and people to continuously improve our efficiency and scalability of our platform. During the third quarter, depreciation and amortization increased to $2 and a half million versus $508 thousand a year ago. The increase was primarily related to amortization of acquisition intangibles. We expect depreciation and amortization to be approximately $9 and a half million for 2022. During the third quarter, interest expense increased to $1.9 million versus $542 thousand last year. The increase is primarily related to the debt financing for acquisitions and an increase in the interest rate. Q3 adjusted EBITDA increased 57% to $3.8 million year-over-year. Moving on to a review of the cash flow and balance sheet. Our cash balance was $7.1 million at the end of the quarter versus $4.2 million at the end of the second quarter, and $8.4 million at the beginning of the year. We used $4.3 million in operating cash flow during the first nine months of the year, and the pace of operating cash flow use slowed down to about $521,000 in the third quarter. The use of cash year to date, and to a lesser extent in the third quarter, was primarily related to investment in working capital to support more than doubling the size of our company year-over-year. While our September thirtieth receivable balance was larger, I would point out that the collectibility of our receivables is within our normal expectations. As was noted on our last earnings call, we have had several new customers that have ramped quickly during the year. In particular, our industrial customers were onboarded with extended payment terms. During the third quarter, we transitioned those terms to a more typical payment schedule, which will cycle through during the fourth quarter. As such, we expect to generate positive cash flow from operations during the fourth quarter. That is, of course, barring any significant acquisition or meaningful step up in organic growth from the current run rate. During the first nine months of 2022, CapEx was $627,000, and we utilized approximately $3.1 million in cash to finance a smaller acquisition during the first quarter. At the end of the quarter, we had $74.9 million in notes payable versus $67.9 million at the beginning of the year. That increase primarily reflects the financing for the acquisition that we completed during the first quarter. At this time, I'll turn the call back to Ray. Thank you, Brett. I'll start off with some thoughts on the resilience of our business model and how we've continued to perform well in a volatile economic environment. Regarding inflation, as we have mentioned on previous calls, we're able to offset cost pressures with flexible contracts that allow us to pass through increases such as fuel surcharges. These pass-through increases have been in place throughout the year, including in the third quarter, and have not affected our gross profit dollars. Regarding volatility in commodity prices, we structure our agreements so that gross profit dollars are not materially affected by these swings. These are the same contract structures we've had in place since the early days of our company, when used motor oil was one of the largest recycling streams. We now recycle a wide variety of commodity waste streams being generated by our clients, including used motor oil, scrap metals, used cooking oil, plastics, pallets, cardboard, and other commodities. The price and the value of these recycled commodities can fluctuate significantly from quarter to quarter, which was the case this past quarter. To give you an example, we estimate during this last quarter there was a $6 million sequential decrease in the value of the scrap metals that we recycled for our clients. This has a one-for-one impact on our revenue. However, the gross profit dollars and the volume of these materials remained relatively even with the prior quarter. Regarding the economic environment in general, we continue to see stable activity levels across our end markets, and our value proposition is resonating well with both existing and new customers. I continue to feel good about the growth we have in front of us. Within our installed base of customers, we use the land and expand strategy to deliver growth. This strategy has consistently delivered a base of organic growth for the last five years. We added several new service capabilities with our recent acquisitions, and we're actively introducing those new services to our existing clients. We spoke about adding a wood pallet recycling program as a new service offering last quarter. We recently added this program to a second existing customer. Each of these expansions will produce seven figures in revenue at maturity. In addition, we recently rolled out a new scrap metal recycling program at retail business locations. This new service line has been well-received, and we're now implementing it with two existing customers, each of which we expect to generate seven figures in revenue at maturity. By adding new services like these and continuing to expand geographies, we feel confident that existing customers will continue to provide a major contribution to our organic growth for years to come. On top of growth from existing customers, during the last couple of years, we've improved new client targeting and are closing the right new clients. During the third quarter, we added new prospects and several large opportunities across multiple end markets. Since the end of the third quarter, we've had two new seven-figure customer wins, one in the industrial end market and one in the automotive service market. We will begin implementing our new industrial customer in January, and it will eventually ramp up to seven figures in annual revenue over the course of the following 12-18 months. Our data platform, with its ability to provide a uniform and supported data sets across multiple waste streams, played a key role in this win. In addition, by centralizing the management of all their waste streams with Quest, we can use our scale and expertise to improve efficiencies, divert more waste from landfills, and maximize the value from recycled commodities. These are the core elements of our value proposition, helping our clients become more environmentally friendly in a cost-effective manner. I'll also note that with success comes more success. As we've grown in the industrial market, having multiple referenceable clients has helped us secure this new client. The automotive service win is a sister company of an existing customer. We'll begin onboarding this new customer in December and expect it to be fully ramped up in the next 90 days. Our data platform also played a key role in winning this business. Specifically, our data platform and expertise in environmental disposal compliance allows us to efficiently manage the federal, state, and local regulations, as well as reporting and data archiving requirements of the specialty and hazardous waste streams from this customer. Along with this data platform, we also offer innovative processes to ensure compliance, such as color-coding system to manage the different containerized waste at each facility. Simple things like color-coding containers and other processes substantially reduce the risk of improperly disposing of hazardous waste. We've discussed on the last couple of calls, we've been busy integrating RWS and InStream, the large acquisitions we made at end of 2021. As Brett mentioned, the integration has caused some volatility in the sequential comparisons, but overall, these acquisitions are performing according to plan. We continue to evaluate additional M&A transactions. I want to reiterate that we'll also continue to maintain discipline in making acquisitions. We'll only execute those that fit our criteria. As I've said before, there'll be years like 2021, where we found several good deals that fit our criteria, but there may be periods when we don't find any. Regarding our outlook, overall, our positive outlook for profitable growth has not changed. We expect continued positive momentum during the fourth quarter and for 2023. We managed tremendous growth year to date and have been successfully ramping new customers and integrating acquisitions. Now that we've at least partially digested this growth, we expect to return to operating cash flow generation in the fourth quarter. Pressure to improve sustainability, increasing regulation, and increasing cost of landfills are lowering the bar for adoption of recycling services. We continue to view inflation and commodity price fluctuations as net neutral to our business, as our contracts have mechanisms in place to adjust. The contribution from new client wins will continue to provide incremental gross profit dollars as we onboard these programs. We expect acquisition integration to provide incremental contribution from both increased efficiencies and from cross-selling. Based on all these factors and with the business we have in hand, we're optimistic we'll continue with positive momentum for the next several years. I look forward to keeping you updated on our progress. We'd now like the operator to provide instructions on how listeners can queue up for questions. Operator? Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We will pause for just a moment to allow everyone an opportunity to signal for questions. We will go first to Aaron Spychalla of Craig-Hallum. Hi, Ray. Hi, Brett. Thanks for taking the questions. Hi, Aaron. Hello. Maybe first, on just you talked a little bit about expenses from one vendor and one of the recently acquired companies. Can you just provide a little bit more color on what that was and sounds like it's not something that you think should be recurring going forward? No, I think that was the point there. It's one. It was a one acquired company, one vendor, and it was some identifying expenses. As you'll recall, Aaron, we talked last quarter through our diligence or our integration effort. You know, we found a lot of client non-billings, meaning, you know, clients had been receiving services not billed. We caught up on that. This quarter, we also found something on the vendor side that hadn't been recorded properly, and that's done now. It is an isolated instance, to your point. All right. Thanks. You know, maybe just on the pipeline, good to hear about a couple of those new wins. Can you just talk about where, you know, qualitatively that might stand today as a whole and just how that compares to the last few quarters? It sounds like maybe the close rate is starting to improve there. Yeah, I think the close rate. I think it's more about, it's been slower to fruition than I think a lot of these have taken longer to get signed than anybody anticipated, including the client. Now it's. That's catching up and we feel like as we in this quarter, we'll get some nice, more good news and hopefully it'll continue on into Q1. Because the pipeline is just as strong as it was last quarter. It's actually bigger because we've added more to the top of the funnel as we're starting to move these out the bottom. It's hard to quantify it, Aaron, because it really what it boils down to is getting these things signed. One of the indicative elements of it, I think is important. You know, several years ago, or even a couple of years ago, our pipeline had a lot of customers that, I don't know, maybe they were smaller in their potential purchase. These clients have all got not all, but the vast majority of them got really significant ability for revenue. They're large multi-location, in some cases industrial, that are generating quite a bit of complex waste streams. We're really excited about what that can do for us. You know, one win can have a lot of impact. Two or three wins can have an even huger impact. The funnel is bigger than it was, but you know, we've got to keep filling the top of it, Aaron, as we get these things closed on the bottom. Right. Okay. Good to hear and good luck. Thanks for taking the questions. I'll turn it over. You bet. Thank you, Aaron. We'll go next to Greg Kitt with Pinnacle Fund. Hi, Ray. How are you? Greg, how are you, Greg? I'm doing great. Hi, Brett. Thank you for joining the team. We're excited to get the opportunity to talk with you going forward. No, I'm very excited to be here. Thank you. Yeah. Thank you. You talked about, I think if I heard you correctly, three customer expansions, and one in a wood pallet, and then I think you said two existing in a scrap metal recycling at retail locations. Did I hear that correctly? Yeah. Yeah, you did. Okay, great. You also mentioned two new- What it is Oh, go ahead. No, I was gonna say, yeah, those are existing clients, great clients, and we've added some service profiles, some service abilities, capacities that we've been able to cross-sell into them, which is really exciting. Thanks, Ray. You added the two new customer wins that were both seven-figure customers. Could any of those either the new wins or the expansions end up being more like mid seven-figure or eight-figure type of opportunities? One of them has that potential for sure. The other one Okay. I'm not quite sure. I'd have to go back and look, but less likely. Thank you. I have one more question. You talked about investing in scalability and investing in capability of the data platform and the release. What will these investments allow you to do? Yeah, it's a great question, Greg. I mean, this is something we've been focused on for quite a while. I mean, we've talked about this. We believe one of the key value propositions for Quest is that scalability. What our systems that we're investing in allow us to be quicker, more automated, more accurate, to allow builds in and builds out in a much more efficient way, which allows us to add new revenue and volume with relatively little additional G&A. It also, we're expanding our capabilities as far as reporting data back as well on an ongoing basis. The net effect, Greg, if you boil it all down, there's a lot of complexity associated with the charts that show what we're doing. At the end of the day, it allows us to do a lot more with a lot less, which enables us to rapidly grow without having to go, you know, find a lot of people to help us do it. Thank you very much, and congratulations on the expansions and the two new wins. It's been, we've been waiting all year, and it sounds like there's opportunities for more of those things in the pipeline to cross the finish line potentially this year. You bet. Thank you, Greg. We appreciate it. Thank you. We'll go next to Gerry Sweeney with Roth Capital Partners. Hey, Ray. Thanks for taking my call. Hey, Gerry. This is a little bit higher level. You look at your, let's say, portfolio of customers. Is there a way that you can gauge how many of your customers have. I'm trying to figure out an easy way to say it. If your customer base has fully inundated with all your services or another way to look at it, how many, how much of Oh. your customer base still has the ability to take on more services? Yeah, you're talking about wallet share basically, right? That would be a much easier way of saying it, yes. Well, that's the term that we use here. It's hard to quantify that, Gerry. I mean, I can tell you, I can't think of a single client where there's not more opportunity, but some there's a lot more than others. I will tell you, I can't emphasize enough the expanded capabilities like the cross-selling from that some of these acquisitions brought us to sell into our significant client base. That represents a lot of growth opportunity. It's difficult to quantify. Again, Gerry, it's difficult to quantify. We have a pretty good list. We know by client. You know, we have a client services group that really takes care of our existing clients and we know what they're buying from us, what they're not. We know services that they have that we don't have. That's an emphasis for our client services group to continue to work to expand within that existing spend. I just, we know by client, but we don't really have a macro number, probably. Got it. You brought up cross-selling. How would you characterize the success of cross-selling? Is it, you know, meeting your expectation, exceeding, underperforming? No, that's a great question. I hate to admit this. My expectation really wasn't very high. I was hopeful as opposed to expecting, maybe that's a better way to put it. I think I was surprised or I am surprised by maybe the size of some of the markets and spend in some areas we weren't addressing before, like pallets. It's a significant amount of spend in the pallet space. There's very few clients we have that don't use some type of pallet service. So I would say it definitely has the potential to massively exceed any expectation I have. Currently it's more than I thought we would be at this point. It's a relatively early stage, but it's progressing, and I'm quite happy about that. Got it. Final question. Are you seeing strength in any areas of the economy more so than others in terms of, one, activity, two, client additions? You know, I don't know that we're seeing a lot of changes in the. You're talking about the client themselves, the strength of the business segments. Yeah. end markets? Yeah. Yeah. I don't know that we're seeing any change at this point, Jerry. I know there's a lot of talk about all these different segments doing well or bad, but our automotive sector is fine, the grocery sector is fine. Manufacturing, if anything, I think there's more onshoring going on. Maybe seeing a little increase there. Again, I'm not an economist, but I can look at what we see, and I haven't seen any indication of weakness in any of our end markets, frankly. Are you seeing strength in any areas in terms of new customer wins, or is it still funnel- Oh. sort of moving to the finish line? Yeah. That was. Yeah. On the new customer win side, I would say, you know, and I'm not sure if Andy's on the call. We got Andy's done a great job on sales side, working our industrial side along with Steven and others. The industrial side is really. I think there's a lot of manufacturers that are looking for better solutions to complex waste streams than they have today. I really believe that we represent that. There's numerous opportunities there. The food waste segment continues to grow because, if for no other reason, of the landfill diversion goals, a lot of these grocers and manufacturers have, you know, and finding ways to meet those. I mean, really I, if I had to pick one, I would have to say our industrial sector is strong. The food waste side has got a lot of interest going too as well. Got it. I appreciate it. Thanks for taking the call. You bet, Gerry. Thank you. We'll go next to George Melas-Kyriazi with MKH Management. Thank you. Hi, Ray. Good afternoon. Hello, Brett. Welcome to the team. Thank you, George. Yeah, George, thank you. You're welcome. Okay, quick question on that vendor catch-up payment. Was that sort of a catch-up payment for the first quarter, the second quarter, and part of the third quarter? Can you help us a little bit understand, you know, not what's the nature of that, but how it would be distributed, you know, during the year? Hey, George, this is Brett. I'll take that question. Yeah. We called it out just to give a little bit better Visibility into Q3. You can see the performance a little bit, but that would be mostly related to the first half of the year. Okay, great. Thank you for that. Yeah, and thanks for pointing it out. Very helpful. Sure. If you think of the integration of InStream and RWS, kind of what innings have you got in from a systems perspective, from a process perspective, from a people's perspective, where are you guys in sort of that integration? That's multiple games there. I'll give you innings on all three of those, George, respectively. I think on the people side, we're in the late innings. I really do. Mm-hmm. Very happy with the folks that we have with these teams. They're doing a great job, really working through the change. You know, it's difficult when your company's purchased by another company to adapt as well, and I think they've done a fine job. On a process side, far along, but maybe not quite as far along as the people side. We've really worked hard on the processes. I will say that our accounting group, working closely with them, our sales group, and marketing group are fully integrated into what they're doing. So I'd say process standpoint. Oh, and also on the vendor relations, source and procurement side. I think they're probably in the middle to later innings as well. On the systems side, that's lagging behind a little bit for obvious reasons. I mean, they're on a different platform. You don't wanna upset the apple cart. We've worked out the plans. We'll be moving those as soon as possible. We're in the late innings on all three, just different stages on those, George. Okay, great. Okay, good to know that. Then, just want to point out something, but I'm not exactly sure how to wrap that into a question. You know, like at the beginning of 2021, we're looking at customer concentration, and the top two were 47% of revenue, and now the top two are just 21%. I think your largest customer during the quarter was just 11%. Seems like the customer risk has massively sort of come down with the growth and also partly with the acquisition. It's great to see that. Well, I'll call that a question, George, so I can answer it. Yeah, it is great to see it. Yes, absolutely, please. We're excited about that. We're adding some really great quality customers to the portfolio. Customer diversification has always been a goal and not an easy one to achieve. You know, when you get good customers that grow like crazy, you gotta get more of them to keep up. Yes, the acquisitions are part of that. We've brought on, you know, several strong customers that have kinda diluted the individual impact of the one or two that were driving that at the beginning of 2021. Great. Thanks. Maybe just one quick thing. On the competition front, do you see any particular changes? Competitively? Yes. I really don't think so. You know, George, the interesting thing is we don't focus a lot on those guys. I know that sounds silly, but we focus on finding the prospects that need what we do best. Typically, there's nobody out there that does everything we do. There's a lot of people that pick up trash. There's a lot of people that'll pick up used motor oil, but there's very few that do all these things like we do. Competitively, I don't think the front has changed at all, George. I think it's just more incumbent on us to do as good a job as possible of showing the marketplace what we do well as opposed to our competitors. Great. Okay. Thank you, both of you. Thanks very much. Thank you, George. Appreciate it. With no other questions in the queue, I would now like to turn the call over to Ray Hatch for any additional or closing comments. Thank you, operator. I just wanna thank everybody again for their interest in Quest, and we really greatly appreciate it. I wanna thank the employees of Quest and the acquired companies we have. Appreciate all their efforts. We feel very confident about where we are. We've come a long ways, and we really got a lot of traction in moving forward. We're excited about the resiliency of Quest and the strength of our customers and our ability to continue to serve more and grow more as we go forward. I wanna take another moment to one, welcome Brett to the team, and two, to thank Laurie for all of her service and all the things she's done for all of us. We appreciate her, and we're excited to have Brett as well. Excited to have all you as shareholders. Thank you very much, and we're looking-