Thank you for standing by. This is the conference operator. Welcome to the Quest Resource Holding Corp First Quarter 2023 Earnings Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by presssng star and zero. I would now like to turn the conference over to Dave Mossberg, investor relations representative. Please go ahead. Thank you, Ashley, and thanks, everyone for joining us on the call today. Before we begin, I'd like to remind everyone that this 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's 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 other market data and other statistical information, as well as Quest observations and views about industry conditions and developments. The data 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 these sources or the accuracy of this 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 elevate company's current performance. Management believes the presentation of these non-GAAP financial measures is a useful to investors understanding the assessment of the company's ongoing core operations and prospects for the future. Unless it's otherwise stated, it should be assumed that any financials discussed on this call will be on a non-GAAP basis. Full reconciliations of non-GAAP to GAAP financial measures are included in today's earnings release. With all that said, I'll now turn the call over to Ray Hatch, President and CEO. Thank you, Dave, thanks, everyone, for your interest in Quest. Overall, we had a solid start to the year with more than 12% growth in gross profit dollars. Most of the year-over-year growth came from ramping up new customers and adding new programs with existing customers. In addition, the improvements at RWS we discussed last quarter are on track, and we expect pricing initiatives will positively impact results for the next three quarters. We also generated significant cash flow during the quarter. On average, during the past two quarters, average operating cash flow was $2 million. We feel good about our ability to continue to generate cash flow, and subsequent to the end of the quarter, we paid down $5 million on our Monroe line. Our outlook for profitable growth in 2023 and beyond remains unchanged, and we're executing well with all of our strategies. I'll now turn the call over to our CFO, Brett Johnston, for a financial overview, and I'll be back to discuss our strategies. Thanks, Ray. Good afternoon, everyone. During the first quarter, gross profit dollars increased 12% year-over-year to $12.6 million. The year-over-year increase in gross profit dollars came from organic sources as we continued to ramp new customers and add new programs with existing ones. On a sequential basis, gross profit dollars increased 17% from the fourth quarter of 2022 due to a mix of organic growth, seasonal trends, and improvements at RWS. As we discussed during last quarter's call, RWS was previously not passing through costs and fuel surcharges that we normally take as part of our contracted agreements. As we stated previously, we have corrected this issue, and we have just begun to see the benefits of implementing pass-through costs and fuel surcharges to RWS customers during the first quarter and expect to see continued incremental improvements in gross profit from this business throughout the year. A quick note about the revenue comparisons. As discussed on previous calls, commodity price fluctuations may have an effect on revenue comparisons but have not historically had significant effects on gross profit dollars. Our customer agreements produce consistent gross profit dollars based on volumes and are not tied to commodity price fluctuations. The value of the commodities we recycle on behalf of our clients simply passes through our P&L. I want to reiterate that this is why we use gross profit dollars as a key metric to measure our financial comparisons. Looking forward, our outlook for gross profit dollars for the year is robust, and we remain confident in our ability to deliver double-digit growth in gross profit dollars during 2023. Gross profit dollars should benefit from continued momentum and organic growth and continued improvements from our integration efforts. As you look at modeling out our business for the next several quarters, we would suggest that you model for continued sequential growth in gross profit throughout the year and adjust for normal fourth quarter seasonality. I want to point out that year-over-year gross profit dollar comparisons will be made difficult due to several acquisition-related adjustments we made during the second, third, and fourth quarters of 2022. Moving on to SG&A expenses, which were $9.4 million during the first quarter compared to $9.3 million during the same period last year. We had lower M&A costs year-over-year, which were offset by increased costs for integration and continued investment in our platform. During the second quarter of 2023, we expect SG&A costs will be about $9.5 million, which reflects the ongoing run rate of our business, along with ongoing integration costs and increased investment in systems, processes, and people to continuously improve our efficiency and the scalability of our platform. During the fourth quarter, depreciation and amortization was $2.4 million, flat in comparison with a year ago. We expect depreciation and amortization to be approximately $10 million for 2023. Moving on to a review of the cash flow and balance sheet. We are in good shape liquidity-wise and continue to enhance our liquidity. Our cash balance was $9.8 million at the end of Q1, and we recently increased the size of our operating borrowing line with PNC from $15 million to $25 million. We also produced strong operating cash flow during Q1 of $3.0 million, which came primarily from improvements in working capital. I will note that operating cash flow for the quarter included a $1.2 million acquisition-related earn out payment. Without this payment, Q1 operating cash flow would have been in excess of $4 million. Our working capital demands will continue to fluctuate based on the pace of growth, which may cause fluctuations in operating cash flows from quarter to quarter. Nevertheless, we expect to be a strong cash flow generator during 2023. At the end of the quarter, we had $72.4 million in notes payable versus $74.9 million at the beginning of the year, which reflects normal principal payments and a lower borrowings on our asset-based line with PNC. As Ray mentioned earlier, subsequent to the end of the quarter, we have paid down $5 million of our credit facility with Monroe Capital. At this time, I'll turn the call back to Ray. Thank you, Brett. It's only been seven weeks since our last call in late March. We see continued strength in our business and maintain our optimism for continued profitable growth. Regarding the economic environment in general, we continue to see stable activity levels across our end markets. Our value proposition continues to resonate well with customers. I realize that we've said this before, it bears repeating that our business model is positioned well to weather inflation and swings in commodity prices. Year-over-year price comparisons for most of the commodities we recycle are still lower than the prior year. As Brett mentioned earlier, we structure our agreements so that gross profit dollars are not affected by swings in commodity prices. Also, in an inflationary environment, we were able to offset cost pressures with flexible contracts that allow us to pass through increases in many costs, such as fuel surcharges. This structure is a key reason that we're able to deliver 12% growth in gross profit dollars on a relatively low growth in revenue. Now for an update on RWS. RWS is on schedule to be fully integrated by the end of the year. In addition, we began passing through contract costs at RWS during Q1, and we expect the positive impact to be fully recognized throughout the year. As a reminder, we estimated that not passing through these increased costs at RWS last year had a $1.5 million impact on gross profit. We remain excited about the potential for RWS and the contribution it can make as part of our company. I also want to thank our team for the efforts and hard work to get RWS back on track. Moving on to a discussion about growth. I feel very good about the organic growth we have in front of us. We have multiple sources of growth that gave us confidence in our ability to post double-digit gains in gross profit this year. First, we continue to use the land and expand strategy to deliver organic growth. This strategy has consistently delivered a solid basic growth for the last five years. Another source of organic growth continues to come from new service capabilities gained through acquired businesses. We added several new service offerings with our recent acquisitions, and we're actively introducing these new services to existing clients. Growth will also come from continuing to roll out services to several of the recent wins discussed during the prior 12 months. We started to ramp up two new customers in Q1 and are still onboarding these and other customers and expect them to ramp over the course of this next year. We continue to add new prospects across multiple end markets that are working their way through our pipeline. I also want to stress we have a large opportunity to drive profitability by optimizing business that we have in hand. Over the last three years, we've more than doubled the size of our business with about two-thirds of that growth coming from acquisitions and new customers. As we bring revenue onto our platform, we have opportunities to optimize the cost of services through vendor relations and procurement management. This includes activities such as right-sizing and route optimization and leveraging the overall fixed cost base. We're going to market with our vendors focused on a win-to-win contract provisions. By adding volume from the entire Quest footprint, vendors can benefit with a greater asset utilization and lower costs from route optimization. Quest benefits from lower costs, which has positive impact on pricing for our clients. Moving on to a discussion about M&A and M&A integration. We expect M&A will continue to be an important pillar for growth of the company. I want to reiterate that we will maintain discipline in making acquisitions, and we'll only execute those that fit our criteria. As such, depending on the availability of the right deals, there are likely to be periods when we have a lot of activity and periods where we don't have any. In 2020, we completed six acquisitions and continuing to develop our capabilities since in our evaluation, integration, planning, and execution. As described earlier in the first quarter, we made steady progress with the integration of RWS and have completed the integration of all the other recently acquired businesses. RWS's integration is on schedule to be completed by year-end. Before I move on to our outlook, I want to describe a recent example of how we're able to move quickly and solve a pressing need. One of our clients had a warehouse full of commodity destroyed in a fire. When these types of events happen, unfortunately, the usual course of action is to gather that material and take it to the landfill. Our client had very strict goals on sustainability, and our team was able to quickly find an alternative use for this material. Because of the scale and scope of our service offering and the innovative approach of our team, we're able to help the client avoid the landfill and actually save money on that disposal. This is a pure capability to think on our feet and to execute a solution that other companies just don't have in their playbook. While this is a one-time project, it's a great example of how we create incremental value and strong and trusted customer relationships. Regarding our outlook, overall, our positive outlook for profitable growth has not changed. We expect to be a strong cash flow generator in 2023. We expect acquisition integration to provide incremental contribution from both increased efficiencies and cross-selling. We have multiple sources of organic growth, including doing more with existing clients, ramping recent wins, and converting prospects into customers. We'll continue to drive operating efficiencies and invest in capabilities to continuously improve our customer value proposition while further improving the profitability and the scalability of our business. Pressure to improve sustainability, increasing regulation, and increasing cost of landfills are lowering the bar for adoption of our recycling services. We are optimistic that we'll continue with positive momentum for 2023 and the next several years. I look forward to keeping you updated on our progress. We would now like the operator to provide instructions on how listeners can queue up for questions. Operator? We will now begin the question-and-answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. The first question comes from Aaron Spychalla with Craig-Hallum. Please go ahead. Yeah. Hi, Ray. Hi, Brett. Thanks for taking the questions. Hi, how you doing? Good, thanks. You know, maybe first, can you just give a little more color on rolling out some of the new services and capabilities to existing customers? You know, how far along are you in that process, and what's the response been? I know you've kind of talked about pallets in the past. Is there anything else, you know, that you're excited about from a service standpoint there? Yeah, pallets is at the top just because, well, every almost every customer you have has some type of pallet program. It's a real ripe field to go after. We have other types of items that we increased our recycling capabilities around that we're able to extend as well on a smaller scale. As far as where we are at this point, I'm happy to say we're still early in this because there's still a lot of upside to be realized as we try to penetrate these with existing clients. I think we still have a lot more upside, Aaron, in all the cross-selling opportunities as we move forward. Okay, good. Then maybe just as a follow-up, can you talk a little bit more about some of the investments on the technology side, that you're excited about and you know, how those could help benefit the business going forward? It's really twofold, Aaron. Now we got the customer-facing piece, which we continue to refine and improve, which is the customer portals. Which of course the real value there is all the waste data reporting that we're able to give them comprehensively. That continues to improve, and it really is a, I think, has developed in one of the key criteria customers have on which supplier they go with for their waste programs. Internally facing, the team has been working very, very hard over the past year to really develop a lot of automated processes and streamline processes internally. The reason that's important is it enables us to scale much more easily as we bring in new revenue, new volume, because we're not having to add nearly as much G&A to support it as we make more automated processes and improvement and mistakes and all that type of thing that automation brings. It's really a twofold initiative, Aaron, and we're excited about what both can do for us. Good. Good. That's good to hear. I'll turn it over. Thank you. Thanks, Aaron. The next question comes from Gerry Sweeney with ROTH Capital. Please go ahead. Hey, good afternoon, Ray, Brett, and Dave. Thanks for taking my call. Yeah. Hey, Gerry. Similar question that Aaron posed, but maybe said a little bit differently. I'm just curious, you know, have you ever looked at your total roster of companies? I know they're in different industries, and some of them are gonna have different service requirements than others, but do you ever look at them and just determine what% companies in your roster are using all your available services and how many that you can actually add additional services to? Yeah, we do that all the time. I think we may have mentioned on the last call, our client services team that manages all these great existing customers, they know what these services these folks are using, and they know what services we're providing to them. A big part of their upside and their role is to penetrate even more. You're right, Gerry, our customers are extremely diverse. I mean, it's every kind of business you can imagine. Every one of them has a unique set of needs, typically, relative to the services. There's also geographies as well. I mean, in most cases, we have all their locations, but in many cases, we don't as well. These folks are continuously monitoring what services that they're using that we aren't providing and basically, you know, working on upselling them consistently. That's a big initiative of ours. I also think on the last call, you talked about even incentivizing some of that land and expand strategy, I think internally with some of the... I don't know if they're account managers or what exactly you call them. Yeah. I'm just curious if you've started that program and if you've gotten any sort of initial feedback. We have. Actually, that program started right when we did the last call, so it's only been a few weeks. Yes, Dave's implemented it on that side, and there seems to be a lot of excitement about that. You know, I think these folks did a great job of that without the incentive, and now they're probably even more excited about it. I think it's... I believe it's important that it's a recognition of the value of the sales activity that happens internally rather than just externally. We're excited about what it would do for us, Gerry. Yeah. No, I think it's a great program. Final question is around RWS. I think we've discussed about $1.5 million in gross profit, and you're integrating that over the course of this year. Will that be, sort of, you know, sequentially four quarters, you know, evenly spread out, or will that be a little bit chunkier at different times? Cadence-wise is probably a better way to ask it. Hey, just Brett. I'll take that. As we mentioned in Q1, we're really just ramping up some of those increased pricing pass-through. You won't see much of that in Q1, and then it'll start fully ramping into Q2. I would look at Q2 kinda ramping up and then a little bit more evened out across Q3 and Q4, with maybe a little bit of opportunity on the back end to push together some more efficiency. That's, yeah. That's the way to look at it. Okay, great. I appreciate it. I'll jump back in queue. Thanks, guys. The next question comes from Chip Moore with EF Hutton. Please go ahead. Good evening. Thanks for taking the question. wanted to ask about some of the newer customers that you've talked about on some of the past calls, just how the ramp is going there, Ray, and sort of, you know, still early innings and how to think maybe, you know, call it next, you know, rolling 12 months, next forward 12 months on the ramp of some of those bigger wins. Yeah. Thanks, Chip. Appreciate that. The we do have some great early-stage customers here, meaning. The nice thing about the ramp is it's contractually committed, typically. It's just taking the time to digest it. I know we're in the early stages with a couple. We're anticipating that giving us a lot of tailwind through the balance of the year. Ray, my follow-up there would be on, I guess, the pipeline more broadly. I think you talked about. Yeah. You know, prospects rolling through the pipeline. Can you talk about that pipeline and sort of size and scope of some of those potential opportunities? Yeah, I'm happy to. You know, I mean, there's smaller wins that we, you know, experience all the time that we really don't reference or talk to. The pipeline comments we usually make are revolved around customers of more significant size. It is really, there's a lot of significant size in the pipeline. We feel good about it. It's moving a lot slower than any of us want, but it is moving. That's the important thing. We're excited about a number of those coming across during this fiscal because we've been working them for the last year and a half. It's, unfortunately, a slow sales cycle with a lot of these larger industrial type accounts, typically. At the end, the payoff is really worth it. I feel good about our pipeline, and like everybody else in the company, I'm anxiously wanting it to go quicker. That's great to hear, and understood. Maybe just one last one. On the M&A environment, you talked about that and how it can be a little more sporadic, obviously, but maybe just speak to the competitive environment out there and what you're seeing on terms of assets. Thanks. Sure. Thank you, Chip. The M&A environment is something that. You know, right now there's not as many things out there, and I think there's a lot of economic reasons why it's kinda slowed down a little bit, and that's fine with us. I mean, when the right opportunity comes along and it's the right situation, I'm sure we'll be looking to exercise on. Right now, our focus is driving efficient and accurate integration through what we have, and I'm really pleased with the progress we've had with that. On the M&A environment, it's a little slower right now, Chip, in our space, to be honest with you. Got it. Okay, great. I appreciate all the color. Thanks. You bet. Thanks. The next question comes from Greg Kitt with Pinnacle Fund. Please go ahead. Hi, Ray and Brett. Thank you for taking my questions. Sure. First, I wanted to say I was so excited to hear about your focus on free cash flow as one of your largest shareholders. This is what I was hoping to hear. And I'm really excited to hear about the paydown of some of the Monroe facility after the end of the quarter. Kind of following up on Chip's question, it sounds like maybe right now not so much of a focus on acquisitions just because you're not seeing the opportunities in using the cash to pay down debt is how it sounded to me. I just wanna make sure that I heard that correctly? I think that's a pretty accurate representation, Greg. I mean, we're excited about the cash flow generation as well. We're excited to be able to. It's really positive we'll pay down that line a little bit, and we hope to continue. As we stated, you know, that we're going to generate significant positive cash flow this year. The M&A activity just kind of is what it is right now. I mean, we've always said every quarter that we're very opportunistic, and those opportunities, if they're great, then we'll move on it. If they're not, we've got an opportunity to do some really good stuff with our cash. Thank you. I was unclear, was that talking about double-digit gross profit dollar percentage growth, or were you talking about EBITDA growth? Gross profit dollar growth, and I'm sure that correlates almost directly to EBITDA. Okay, great. Yeah, thank you very much. You bet. I heard some of the comments that you made around the investments that you're making in scalability. When you do talk about double-digit gross profit dollar growth and implementing some of these internal like analytics and reporting investments that you've made, it sounds like then we should see pretty good flow through like we, you know, traditionally had of gross profit dollars falling to EBITDA. Is that right also? Hey, Greg, this is Brett. I'll take that one. Absolutely, I would just say that, you know, we're optimistic that we can get some of that in by Q4, really looking at next year is when we start to expect more significant efficiencies gained from that and scalability. We are optimistic we'll see some of that by the end of this year. Thank you. That's all that I had. Thanks for a good quarter. Thank you, Greg. The next question comes from George Melas-Kyriazi with MKH Management. Please go ahead. Thank you. Good afternoon. Hello, George. Hi. Quick question on the cash cycle, the working capital cycle. It has improved nicely over the last two quarters. When I look at it historically, the cash cycle was basically single-digit days prior to the acquisitions of in December 2021. I know, Brett, you were not there at that time, but did the acquisition have a different sort of cash model or cash cycle model? Did they tend to bill later? And could we get back to the, you know, the cash cycle that you had prior to the acquisitions? Yeah. To your question, you know, what was if there's anything different with any of the businesses we have acquired, there's really nothing there, other than we have talked about, a part of RWS has some advanced billing, so, you know, that helps a little bit. Beyond that, nothing significant. Nothing. I wouldn't see any reason why we're not gonna continue to get back to where we were previously, you know, because of that. To your answer, no. Nothing that should hold us back. Okay, great. Two other quick financial questions. How do you see acquisition and integration costs for the rest of the year? Do you see them relatively flat versus what we had in the first quarter? I think that's a good way to look at it, especially for through the first three quarters. Maybe that comes down a little bit in Q4 as we get fully integrated. I would consider that mostly flat through then. Okay, great. Just a question on the line that you extended with PNC. Can you actually borrow more from PNC, given your solid working capital and pay down the Monroe debt with that? Yes, that's certainly an option as we move forward, and get a little more confidence and have, you know, quarter-over-quarter, over quarter of generating strong operating cash flow. You know, obviously once you use that, pay down that Monroe debt, it's locked in, so it's not something you can redraw. We wanna make sure that we're very confident that we're gonna be able to continue to generate the cash flow to support the growth that we expect. Right. Right. Okay, great. Makes sense. Great. Nice, nice execution. Thank you very much. Thank you, George. Appreciate it. This concludes the question and answer session. I would like to turn the conference back over to Ray Hatch for any closing remarks. Thanks, operator. I just wanna reiterate our positive outlook for 2023. I'm really excited and thankful to the team for all their very hard work. It's gonna continue to pay off for us. I also wanna thank all of you for your interest in Quest. All our initiatives are working well, and we're excited about where we're gonna be through the balance of this year and into the next years. Thank you, everybody. This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.