Thank you for standing by. This is the conference operator. Welcome to the Quest Resource Holding Corp Q2 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 pressing Star and zero. I would now like to turn the conference over to Dave Mossberg, investor relations representative. Please go ahead. Thank you, Ashia. Thank you everyone for joining us on the 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 the 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 certain 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's 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 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 are also discussed during the call. These non-GAAP measures are used by management to make strategic decisions, forecast future results, and evaluate company's current performance. Management believes the presentation of these non-GAAP financial measures is useful for investors' understanding of 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 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 Chief Executive Officer. Thank you, Dave, and thanks everyone for your interest in Quest. We gained momentum during the Q2 with another significant increase in sequential financial performance. The $13.5 million in gross profit and the $5 million in quarterly EBITDA was the second highest gross profit in EBITDA quarterly performance in the company's history. Adjusted EBITDA increased 26%, and gross profit dollars increased 7% sequentially. Most of the growth came from ramping up new clients and penetrating existing ones. Improvements at RWS also contribute to the sequential increase, and we expect the business to provide a strong incremental contribution going forward. We also generated significant cash flow during the quarter and expect to be a strong cash generator this year. We've used the bulk of cash flow to reduce debt levels. Subsequent to the end of the quarter, we paid down another $2 million on our line with Monroe Capital for a total reduction of $7 million year to date. We continued to gain momentum during the Q2, and we're executing well with our strategies, and we are on plan to deliver double-digit growth in gross profit dollars and adjusted EBITDA for the year. I'll now turn the call over to our CFO, Brett Johnston, for a financial overview, and I'll be back to discuss progress on our strategies. Brett? Thanks, Ray. Good afternoon, everyone. During the Q2, we saw a strong sequential comparison in gross profit dollars, which increased 6.9% from the Q1. This improvement reflected organic growth from the continued ramp of new clients and from penetrating existing ones. The sequential comparison also benefited from the integration work that we have done to adopt standardized processes across acquired businesses. This includes the full benefit from realizing contracted pass-through costs at RWS, which we discussed on previous calls. I want to make a note about year-over-year comparisons. As we discussed on our previous earnings calls, the integration challenges at RWS during 2022 impacted year-over-year comparisons and masked the improvements we have achieved for the first half of 2023. Given the unique events of last year, we think sequential comparison is a better indicator of current performance and momentum. As discussed on previous calls, prices for recyclable materials may have an effect on revenue, but has not historically had significant effects on gross profit dollars. This last quarter is no different. Our client agreements produce consistent gross profit dollars based on volumes and are not tied to fluctuations in the price of recyclable materials. The value of the materials 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, as Ray mentioned earlier, our outlook for gross profit dollars for the year is robust. We remain confident in our ability to deliver double-digit growth in gross profit dollars for the year. Gross profit dollars should benefit from continued momentum in organic growth and continued improvements from our integration efforts. As you look at modeling out our business for second half of the year, we suggest that you model for continued sequential growth in gross profit for the Q3 and adjust for normal Q4 seasonality. Moving on to SG&A expenses, which were $9.2 million during the Q2, compared to $9.3 million during the same period last year. We are ahead of schedule with integration and expect integration costs to be lower during the second half, as we expect to finish up those efforts mostly by the end of the Q3. We are also expecting to gain efficiencies from integration efforts and recent investments we have made in our platform. We expect to continue to invest some of these savings into growth initiatives that further improve efficiencies and increase our ability to bring value to our customers. As a result, we expect SG&A expenses will average about $9.5 million per quarter, which is flat in comparison with the back half of last year, and then we will start demonstrating the leverage in the platform, both in adjusted EBITDA dollars and EBITDA margin. During the Q2, depreciation and amortization was $2.5 million, flat in comparison with a year ago, and we expect depreciation and amortization to be approximately $10 million for 2023. Therefore, to reiterate, for the back half of the year, we expect to see growth in operating leverage and acceleration in adjusted EBITDA, as double-digit growth in gross profit dollars is leveraged over a relatively smaller increase in operating expenses. 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 $3 million at the end of the Q2, and we have $5.5 million drawn on our $25 million operating borrowing line. We produced strong operating cash flow during the first half of the year, generating $3.3 million during the Q2 and $6.3 million year to date. This improvement came primarily from improvements in working capital management. I will note that operating cash flow for the first half of the year included a $1.2 million acquisition-related earn-out payment. Without this payment, first half operating cash flow would have been $7.5 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 $58.9 million in notes payable versus $70.6 million at the beginning of the year. During the quarter, we paid down $5 million on our credit facility with Monroe Capital, subsequent to the quarter, to the end of the quarter, we paid down an additional $2 million on the Monroe facility. The balance of the reduction reflects normal principal payments and a lower borrowing on our asset-based line with PNC. In this high interest rate environment, we have been actively looking to reduce interest expense by optimizing cash management, carrying less cash, and minimizing our borrowings on the line of credit. Through these efforts and the reduction in borrowings from Monroe Capital, we expect to reduce interest expense by approximately $1.2 million on an annualized basis at today's rates. At this time, I'll turn the call back to Ray. Thank you, Brett. I want to start off by saying how excited I am about what lies ahead for Quest for the balance of the year and the next several years. For the last 18 months, we've had a heavy lift to manage significant organic growth and to integrate acquisitions. While acquisition integration has not been perfect, those issues are behind us now. We've learned a lot. Overall, I'm very proud of the job the team has done. The business is firing on all cylinders, and we've gained significant momentum over the last Q2, and I'm really excited about the profitable growth we have in front of us for the balance of this year and for the next several years. Let me make a brief comment about the macro environment and concerns over inflation and economic uncertainty. The good news is that the waste business is generally resistant to recessions. Our clients, which are primarily large businesses with multiple locations, continue to generate waste during the top and the bottom of the cycle. Our model is agnostic to price swings and recycled materials. We can pass through increases in costs, such as fuel, such as fuel surcharges. Because of this, we feel like we are well-positioned to endure economic headwinds. During the, we continued to see stable activity levels across our end markets. We managed cost pressures and fluctuations in the price of recycled materials well. Moving on to a discussion about growth. I feel very good about organic growth we have in front of us. We saw significant sequential growth in gross profit dollars during the Q2. We expect that momentum to continue into the back half of the year. We have multiple sources of growth that gives us confidence in our ability to post double-digit gains in gross profit this year. First, as we pointed out in the press release, we had a win with a significant new client in a new end market vertical. This win has the potential to grow into eight figures annual res-- revenue. We expect to begin the onboarding process September 1. Then the engagement to ramp up over the next 12-24 months. We are starting with a small portion of the 380 locations and to- and expect to handle about half a dozen waste streams. Previously, this client was handling their solid waste through a vertically integrated national provider and handling specialty waste streams on a site-by-site basis. The major selling points for our service were our cost effectiveness, alignment to divert a greater portion of waste from the landfills, and the added visibility we can provide with our data platform. There are a few large players in the end market, and we are pursuing peers in this space. The service we provide for this client will have some overlap with our capabilities into existing waste streams, but also give us the scale required to add capabilities for new waste streams that we will in turn introduce to our existing clients. Second, we have ample opportunity to grow with our existing client base. Our land and expand strategy has consistently delivered solid growth for the last five years, and we feel like there are ample opportunities for continued growth from our existing clients for multiple years to come. Another source of organic growth comes from new service capabilities gained through acquired businesses. We've added several new service offerings with our recent acquisitions, and we're actively introducing those new services to existing clients. As, we've also developed and are actively marketing a food waste recycling service we call Proganics. One of the largest materials going into landfills is food waste, and our Proganics service can help grocers deliver as much as 100% diversion of organic waste from the landfill. For many, that can equate to a reduction in the total landfill of 70% or more. We recently received a patent for this new and innovative service. We have a lot of interest and are active in conversations with several large prospects for this service. Growth will also come from continuing to roll out services to several of the significant wins we've discussed over the past 18 months. As we've discussed before, in some cases, it can take 12-24 months to fully ramp clients, and there are several new clients that we're in the process of ramping, which will provide embedded growth for at least the next year. In addition, we continue to add new prospects across multiple end markets that are working their way through our pipeline. I remain confident that we will have success at securing sizable new clients during 2023. I would also note that there are large, these are large opportunities, and a win with any of them can provide meaningful contribution to our growth at maturity. We've also hired additional talent to help us bring in new large clients. We announced last month that Perry Moss has joined Quest as Senior Vice President of Sales. Adding Perry is a big win for Quest. Perry has a 30-year track record. He's a thought leader and has strong relationships with the client base and other players in our industry. He's well known for his deal-making capabilities and securing major account wins. I also want to point out that we have a large opportunity to drive gross profit dollar growth on the cost side by optimizing the business we have in hand. Over the last three years, we've more than doubled the size of the business, with about 2/3 of that growth coming from acquisitions and new clients. As we bring revenue under our platform, we've proven our ability to optimize 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 win-win contract provisions by adding volume from the entire Quest footprint. Vendors can benefit with greater utilization and lower costs for route optimization. Quest benefits from lower costs, which has a positive impact on the pricing for our clients. Now for an update on acquisition integration. We've completed integration of five of the six acquisitions that we've made since we began a proactive M&A strategy in 2020. The 6th acquisition, RWS, went live on our ERP platform effective August 1st. Having all of our acquired businesses on a single ERP platform gives us greater visibility, as well as greater efficiencies and cost savings. All of the heavy lifting has been done to integrate RWS, and we should be completed before the end of the Q3, which is about a quarter ahead of schedule. Integration work is not easy, and I want to thank our team for their extra efforts and late hours to complete this process. We went through a steep learning curve with these acquisitions, and we've honed our skill set in terms of evaluation and integration planning. We're clearly in a better position to execute on M&A strategy going forward. We continue to see acquisition opportunities, and we'll evaluate them, as we always do, based on strategic fit and potential financial impact. Before I move on to our outlook, I want to talk a little bit about our investment we're making in technology. For years, we've been quietly building a scalable platform that uses technology to increase our customer value proposition and increase our efficiencies. Our philosophy has always been to develop and utilize technology so that we can provide a rapid return on investments for us and for our clients. Our focus has been on investing in technologies based on direct benefits they can provide to our customers. Over the years, we've built a technology platform that will be able to scale to the size of a much larger enterprise and support customers' evolving diversion and sustainability goals. The technology platform we built has been the key deciding factor for several competitive wins and have helped us maintain our enduring customer relationships due to the incremental value that we provide. In recent years, we've stepped up investments in our technology platform so that we can stay ahead and continuously improve client value, efficiency, and scalability. I want to give you a few examples of technology developments that we've recently brought online. We've recently introduced a sourcing tool for our vendor relations team. It allows our staff to look across the entire footprint of vendors for qualification and pricing data. This tool will reduce the time our staff needs to find optimal solutions from days to minutes. We've also launched a new vendor onboarding system that better automates the process for bringing on new vendors. This will generate cleaner data internally, which drives greater efficiency and improves the overall client service. Now, an update on our long-term strategy. We've worked hard over the last few years building scale, diversifying our customer base, strengthening our balance sheet, and in building a strong management team, and are pleased to be in a position to actively evaluate, prioritize, and pursue a set of initiatives that support a growth, efficiency, and customer value add. As part of our commitment to maximizing long-term shareholder return, we've launched a long-term strategic planning process with the support of our board of directors, in order to prioritize and invest in the most attractive strategic initiatives. As, over the past few years, both Quest's board and management has grown and changed and includes highly accomplished professionals with expertise in strategy, consulting, corporate finance, M&A, waste industry operations, and in technology. We're actively engaging them in leveraging our experience in support of enhancing long-term strategic planning. Regarding our outlook, our positive outlook for profitable growth has not changed. We expect to be a strong cash flow generator during 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 with recent wins, and converting prospects into clients. We will continue to drive operating efficiencies, invest in capabilities to continuously improve our client value proposition, while further improving the profitability and scalability of our business. Pressure to improve sustainability, increasing regulation, and increasing cost of landfills are lowering the bar for adoption for our recycling services. We're optimistic we'll continue with a positive momentum for 2023 and 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. We will now begin the question-and-answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. The first question comes from Aaron Spychalla with Craig-Hallum. Please go ahead. Yeah. Hi, Ray and Brett. Thanks for taking the questions. Hi, Aaron. Hey. hi first for me can you talk a little bit about the, the, the vertical for this new customer and maybe some of the key waste streams that are there? Then just you kind of talked about other new business wins. Are, are you starting to see any improvement in the timing or closing of new business, given the, the kind of value propositions you offer in, in the face of higher landfill costs and internal and external requirements for customers? Yeah, a couple of things, Aaron. Thank you for the question. First of all, I think it's getting easier to have conversations and audiences with prospects based on what you just mentioned, increasing costs and, and increasing demand for sustainability. We found the desire for data reporting is also creating a lot of opportunities for us to have conversations. We have a number that we feel really good about that are right on the goal line. That's why I was so optimistic in my comments relative to future growth, along with existing clients. As far as the new vertical, I'm a little hesitant. It's not a big vertical as far as number of players in it, so I don't want to get too detailed on it, but it's a, it's a large commercial company that has a lot of different waste streams. They're not manufacturing, but they have unique needs. They're more in the freight and and manu-- and transportation type of space, which brings not only new... I, I want to emphasize, it's not just the new waste streams, although that's always important. It's the scale brought to us with existing waste streams that may not be that big for us today, that allows us to play in a much larger space, both in scale and in geography associated with that. We- it's a way- it's a vertical that has a tremendous amount of potential. I believe that it's, matter of fact, I know, that it's, it's left of its own devices to location. In many cases, there's not a unified, database for reporting, and they're having to go with multiple, pain points to solve their issues, and we can do all of them. If that helps, Aaron. No, that does. That's, that's good to hear. Thanks. Maybe just second for me on the kind of vendor network, can you just talk about the, the health there and kind of impact given, given some of the challenges that we're seeing in the markets? Then just broadly, the ability you have to continue to optimize that network as, as your business scales. I will tell you. That's a great question. I will tell you that I'm pleasantly surprised a little bit. I anticipated, or I usually do, I guess, more issues than than we've had. The health of our vendor base is very strong. We haven't had any folding up during some of these difficult times. As a matter of fact, I think we had the right vendors, and maybe when some others have folded up, they may have gotten stronger. We really haven't experienced the kind of issues that you would think, and I think some of our competitors may have. I'm really thankful for the strength and the commitment of our vendor base. Our ability to continue to expand that is tied directly to the value that we're bringing to these folks. I think I mentioned in the prepared remarks, asset utilization and route optimization. We're bringing continued strength to our vendor base, I believe. We're, we're bringing really good clients to them, increasing their volume and giving them a chance to optimize. With that, Dave and team have, have definitely got a strong ability to continue to bring in strong and competitive vendors. We've had, we've had really good luck and are thankful for the strength of the vendors that we have, Aaron. Great. Thanks for taking the questions. I'll turn it over. You bet. The next question comes from Gerry Sweeney with Roth Capital. Please go ahead. Hey, Ray, Brett, thanks for taking my call. You bet. Hi, Jerry. I'm going to start with the easier or maybe the easier of my questions, at least the easier one to ask. On RWS, how far through the integration process are you, maybe specifically in terms of how much of a margin headwind remains to be caught up with the rest of the business? Hey, Gerry, this is Brett. We went live in our, in our new integration on August first. we're we're just now getting through some of the hurdles with that and, and working through the normal challenges that kind of pop up through the integration. We'll, we'll, we'll get through our first close and continue to iron out the kinks, but I would expect us by the end of by the end of the quarter, to certainly be on a normal run rate with the benefits coming from the getting onto one single platform. Got it. You made up some margin impact in Q2, is that correct? Was that still- Compared to- Yeah. Compared to. Q1, sequentially. We certainly- Yeah saw some improvement in the business sequentially from Q1. Absolutely. Got it. Okay. My other question, forgive me, I'm going to try and articulate it well enough., Ray, you talked a little bit about strategy. You hinted at taking, using the board and leveraging their expertise in multiple areas. We have a lot of client wins. You talked about leveraging, increasing service portfolio. I've started to sort of write about Quest not just being a waste company, but maybe even a repository of data, information, and, and a distributor of services. I'm just curious if maybe you could open up the kimono a little bit and talk a little bit about where this strategy review is going to go or what maybe you're thinking about, since you you, you have brought it up. I did. I opened the door for the kimono thing, right, Gerry? Yeah. The. Yeah. Yeah, I, I think I more than hinted at the, at, at, at that. I mean, our board is, is, is, grown and, and, and bringing a lot of different value. Matter of fact, as, we've recently added a board member with significant technology experience and bringing businesses, advancing technology and, and as we think of ourselves exactly what you just pictured, Gerry. I've never really thought of us as a, as a trash or even a recycling company, but a services provider. The advancement on the technology side is, is vital to that. Otherwise, we're just picking up stuff and taking it somewhere. There's a lot more to it when it comes to the value that we bring. Again, I think as I mentioned, as you just said, that's one of the reasons we're able to get a lot of audiences with, with companies that, without that, I doubt we would have been able to. The strategic planning process is, is about expanding where we are today, even, and, and looking at the opportunities, assessing different verticals, really doing a lot of quantification around those. Looking at the different technology aspects that we can implement into our business and enhance our value proposition. I will tell you to this point, it's very exciting to me, to see what we can do. We don't have limitations that capital asset-heavy companies have. We have the ability to, now, more so than before, to enable and leverage expertise and technology to make our offerings stronger. I know I'm being a little, I guess, generalistic, Gerry, but... I need to be, but I want to- Yeah ... want you to understand the direction the strategic planning is taking us. It's, it's assessing market opportunities and assessing our ability to execute, primarily with innovation, is what we're looking to be, and we're excited about it. Got it. I'm going to swing the question, last question, all the way back to the other end of the spectrum. Talked about getting some increasing leverage with this new win, in terms of some waste streams, that you're maybe didn't have leverage in before. How many how many waste streams are out there that you would love to see that, you can get more leverage and really go after it. I'm just curious as to sort of the opportunity there is. Gerry, we, and we've talked about it before, I think we do like 100, over 100 waste streams. but out of that 100, there's quite a few of those where we have relatively little scale, just because... Mm-hmm. There's not a lot of it out there with the clients that we have. I would say probably two-thirds of that, that we could really... Okay. That we could really use more scale and will get more scale as we add strategic customers to fill those out. I mean, there's, there's some, without getting specific, as I can't, but I'm thinking of one waste stream we thought we were really, really strong in, and we were, but then we made one of our acquisitions brought us, I don't know, another 20 or 25 vendors that we didn't have in that space. That all of a sudden, with the same commodity or, or recycled material, we had infinitely larger leverage and, and geographic coverage. I don't know. It's a tough question to answer, but I, I'd probably say at least two-thirds of the waste streams that we have today, we've got significant opportunities to expand scale within those. That, I would assume, would be additive to, to the margin front, right? Totally. Yeah, totally additive. Exactly. All right. awesome. I appreciate it. I'll jump back in line. Thanks. Thank you, Gerry. The next question comes from Greg Kitt with Pinnacle Fund. Please go ahead. Hi, Ray and Brett. Congratulations on a great quarter. Thank you, Greg. Thank you, Greg. On the Q1 earnings call, you talked about double-digit% growth in gross profit and EBITDA over several years, I heard you talk about it for this year as well. I don't think I'd ever heard you make that statement about gross profit, gross profit growth over several years before. What gave you the confidence to make that statement for the first time on the Q1 earnings call? Well, I think, Greg, it's, it's a great question. It, it does, it does call for, obviously, a longer-term viewpoint. As I look at the way our business is maturing and the, what I view as the receptiveness of the market I'm looking at, I'm looking at bringing on new customers, which I feel very confident about, with, especially with some, some recent additions. Then the continued expansion within our existing clients I don't want to say it ceased to amaze me, but it's continued to perform at a high level. I, I just have a high confidence based on those two main contributors, and that's all organic, that, that we're seeing that happening. We see it now. I just don't see anything to break that string, Greg, so we're pretty confident based on what we've seen so far. Thank you. You talked about expecting EBITDA growth to be greater than gross profit growth as you benefit from past investments to improve efficiencies and operating leverage. Can you tell us, you, you gave us a couple examples of how these investments are practically allowing you to do things differently. Is there anything else that we should think about that's tangible, that's allowing you to, to generate materially more, EBITDA off of every gross profit dollar? I'll go ahead and say, and you're headed right down the path. I mean, I mentioned a couple, I think, in the remarks, and those are just current examples that are out there. There's so many more in the, in the platform that's being developed. There's so much opportunity, Greg, for us to streamline is not the right word, but increase the efficiency and reduce errors, which also increases efficiency, and reduce cost, in essence, on how we handle invoices, how we, how we source vendors for bids how we, how we identify getting vendors on board. I mean, these are little things like vendor onboarding, and I mentioned that one tool., think about how, how cumbersome and how much time and effort and touches it takes to get that done. When you can automate a process like that, what does it free up for you, right? We've got a lot of talent here that now, then they can be focused on identifying new waste streams and new vendors for those waste streams, which in turn enhances our ability to be more additive on gross profit. Beyond that, internally, a bunch of examples I didn't give, but we've got some significant platform investments that have taken place and are moving more toward maturity, where we'll see more and more of these things take place in different aspects of our business internally. It's all about, it's all about leveraging. It's the same thing, this business model we've always been attracted about, Greg, you and others, is the ability to leverage costs with it, as we grow. Our EBITDA growing at a faster rate than gross profit is exactly how we measure, and it was always our expectation. Thank you very much. Thank you for paying down, continuing to pay down debt. The $7 million of debt that you've paid down year to date, I think, adds about $0.04 to earnings per share. You delivered $6.3 million of operating cash flow and $5.5 million of free cash flow in the first half, so $11 million annualized free cash flow, which is great. If you delivered another $5 million+ of free cash flow in the back half of the year, should we continue to expect you to pay down debt with that cash? Hey, Greg, I'll, I'll take that one. yeah we'll, we'll continue to look and be as aggressive as we can about paying down debt. ... We, of course, want to be sensitive to the fact that we expect to grow the business, and that's going to require some investment from working capital to dollars. We certainly don't want to shortcut or handicap the, the, the growth by not, by overpaying down debt. That said, yes, absolutely, we'll continue to look for those opportunities as, as much as possible. We've got a great team. We've brought in a new treasury professional that's doing a fantastic job of managing cash and really,... And the other piece is the consolidating of the bank accounts as we get through our integrations., you've got some loose, loose cash sitting around in different bank accounts that you can start pulling in and have better cash management. All of those things will generate more opportunity to pay down debt, and we'll continue to look at it. Thank you. It looks like you could comfortably be below 3x levered by the end of the year, which I think drives your Monroe interest rate down 1%, from its current rate. Is that, am I understanding that correctly? That, yes. Partially, though, we were able to get our leverage under four for this quarter in, so we've already saved a 0.5 point coming in, starting into Q3. That's great. Thanks, Brett. One, one last question for me. I've known you guys for seven years, and we've been invested for four and a half or so, and I, I think this is the most exciting that Quest has ever been for me. You had several competitors get acquired recently at good multiples, and you're driving incremental gross profit that's contributing to EBITDA at very high levels and my per... And, and converting that EBITDA to cash. My perception is that your platform is the best position it's ever been to handle drastically more scale. How would you gauge your platform today, Quest platform today, when compared to a couple of years ago? Yeah, I'll take that one, Greg. That's, as, when you ask that, it's significantly different. Let's go with the, say, five years ago, then three years ago, then now, there's been a significant amount of progress consistently through all those years. Our platform today... Well, let me just say this, if we, if we had five years ago platform with the volume we're doing now, we would really be struggling. Our ability to handle it now and to bring what I would consider best-in-class service to the marketplace is enabled by our existing platform. The best news about that, Greg, is I firmly believe that it's going to continue to improve going forward, if not at an accelerated rate. A lot of my excitement about where we are is the improvement in our platform, and our ability to, to drive, to, to give better value to customers, bring on more customers and revenue, and drive a, a higher and higher rate of that to the bottom line as we, as we move forward. That's kind of where we are. It's been a drastic improvement. I appreciate your observation on that. Thank you. Thank you very much. You bet. Once again, if you have a question, please press Star, then One. The next question comes from Nelson Obus with Wynnefield Capital. Please go ahead. Yeah, hi there. I got a couple of questions. First of all I really was concerned about this, the comparisons in this quarter because of the outlier of Q2 2022, which was really an anomalous EBITDA number that hopefully, you'll start annualizing at that, but it was really out of whack with reality. Coming in where you did this year is really a very positive development in my opinion., you've given us a lot of information here that's interesting. I want to just quickly explore seasonality, because you said that double-digit gross profit growth would characterize 2023, and for the first six months, you're 26 versus 26. If you do the math, and I won't bother to take you through it, but it's pretty, it's pretty simple, you wind up with actually doing more gross profit in the second half, $28 million. That's based on 10% increase in gross profit versus what you did last, what you did last year for the whole year, which was $48 million. There was a caveat earlier on the call about Q4 seasonality, but it looks as though your gross profit growth will be enough to overcome that seasonality on a year-to-year basis if you're going to grow gross profits by 10% in 2023 versus 2022. Do you, do you follow that? Yeah, absolutely. Well, that's very similar math to what we did to get comfortable with the statement. Yes, we're, we're very confident. All right. That's very good because seasonality would normally create a second half that would be weaker. You've also done something which I give you high credit for. You'll probably never do it again, but you put the Q out in advance of the conference call. There's a, there's a paragraph in the Q that's full of interesting little breadcrumbs under the MD&A, where you talk about... I'll just read it real quick for everybody. "The decrease for the quarter was primarily due to an approximately $3 million decrease in recyclable material revenues and also due to an approximately $5 million decrease in revenues from a certain 2021 acquisition. These declines were offset by an- "... A strong increase in demand for non-recyclable material services from both new and continuing customers, resulting in an almost $6 million in additional revenues. Would you go over what those non-recyclable material services, stack up and, and look like? I mean, just in categories. Yeah, it's just. Non-recyclable revenues. Really, what we were trying to talk to is the organic growth in the business. Take away the value changes year-over-year with recyclable materials., we talked about those commodity values and how they can fluctuate, and this year was no different. Really highlighting with those numbers, the 8% organic growth year-over-year, really was something we wanted to highlight, 'cause it's important story about our... To your point earlier, how are we gonna get to the double-digit growth year-over-year? Got it. Okay, so that's that part. This $5 million decrease in revenues from the acquisition in 2021, is some of that can we, can we get some of that back, or do you have any comment about that? No., as we've talked, especially going quite a bit last year with the challenges and, and some of the adjustments that we made period to period, related, and then we had the final adjustment in Q4. I'd say that's mostly related to just kind of the, the quarter-to-quarter volatility we had. Certainly, from a standpoint of returning to normal we feel very confident that wasn't a result of any of any lost customers, significant lost customers or anything like that. Just speaks to the challenges that we had last year. You've made it clear you've learned a lot about how to handle acquisitions and integration, and there's. Yeah. you're you're the new sheriff in town, so that's, that's good to know. Absolutely. Finally, and I know this is really back of the envelope, but I think Greg mentioned you're 3x leverage now, and we're paying about... It'll go down, but we're still, if we annualize, we're still paying $10 million in interest expense on less than $60 million of debt. I know it's tough out there, but at what point, when you think about it, I mean, that would be like a mid-teen interest rate, is refrying something that you think about, and is there a point where you could find a more traditional lender that I could imagine a situation where you get your debt down to, say, $50 million, and you'd pay 10%, and bingo, we'd have $5 billion more free cash flow. Just your thoughts about that. Just to clarify, for Greg, if I understood him correctly, he was talking about his modeling, how to set a 3x leverage point or below by the end of the year. I mean, you can do $20 million of EBITDA. I mean, that's, that's within reach. I mean, if you annualize Q2. No, yeah, I just wanted, just wanted to clarify. absolutely refinancing is, is something we're, we're looking at. I think we've talked about that. We've got some opportunities. We're talking to some really good banks out there, to your point, some traditional type of lenders that we do think we could see some savings. We'll, we'll continue to work through those, but we're, we're very excited about the opportunities around refinancing and what it can do for us going forward. The exciting thing about this story, in my opinion, is that you should be able to find a lender who will allow you to invest in growth platforms while charging you a less confiscatory interest rate. I really think that's something that could seriously unlock value, maybe not immediately, but I'm glad you're thinking about it. That's all. Absolutely. Thank you, Nelson. This concludes the question and answer session. I would like to turn the conference back over to Ray Hatch for any closing remarks. Please go ahead. Thank you, operator, thank you all who are on the call, I appreciate the questions, more importantly, I really appreciate the interest in Quest. Many of you have been there for a long time, show a lot of confidence in our team, we appreciate it greatly. I want to reiterate our positive outlook for 2023. I hope we expressed it clearly. If not, I'll do it again. We feel really great about a confluence of events. Everything's, we think, moving in the right direction, the execution from this team has been tremendous. I want to thank them for the efforts. These things are done with a lot of effort from a lot of great folks, I'm constantly humbled by their dedication and hard work, all of you shareholders as well. We look forward to keeping you up to date, quarters to come. Great Quest story will continue to write better chapters every quarter as we go by. Thank you, everyone. Appreciate it.