Quest Resource Holding Corporation

Good afternoon, ladies and gentlemen, and welcome to Quest Resource Holding Corporation Second Quarter 2024 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 8, 2024. I would now like to turn the conference over to Dave Mossberg, Investor Relations Representative. Please go ahead. Thank

you, John, 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 and future performance of quests. Use of the words like anticipate, project, estimate, expect, intend, believe, and other similar explorations 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 quests' 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. If 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 the information are based on Quest estimates, independent publications, government publications, and reports by market research firms and other sources. Although Quest believes the sources are reliable and that the data and other information are accurate, we caution that Quest does not independently verify the reliability and sources of the information or the accuracy of the information. Certain non-GAP financial measures will be discussed during this call. These non-GAP 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-GAP financial measures is useful to investors in understanding and assessment of the company's ongoing core operations and prospects for the future. Unless it is otherwise stated, it should be assumed that any financials discussed in this call will be on a non-GAP basis. Full reconciliations of non-GAP to GAP financial measures are included in today's earnings release. With that all said, I'll now turn the call over to Ray Hatch, President and Chief Executive Officer.

Thanks, Dave, and thanks to all of you for joining us on today's call. During the second quarter, we delivered strong results. We earned more than $5 million in EBITDA for the second quarter in a row, and we continue to gain momentum with our efficiency programs and our organic growth initiatives. Our pipeline of new customers continues to grow, and our land and expand strategy has provided us with strong incremental customer growth. In the second quarter, we added three seven-figure expansions with existing clients. Revenue grew slower sequentially during the second quarter than expected for two reasons. First, we've signed more new business in the first and second quarters than we have in our history. As we've been onboarding this record number of new customers, we've experienced some customer-related delays, which caused slower than expected ramp. All these implementations with new customers are now well underway and will increasingly contribute to sequential growth in the coming quarters. In addition, this strong growth with existing and new clients was offset by lower than expected volumes from one of our largest clients. This client is in the industrial vertical and is lower production levels due to -market-related reasons. Given the nature of this customer's business, the slowdown has primarily affected revenue and to a lesser extent, the gross profit line. While we will likely have lower volumes from this client in the coming quarters, we have a strong relationship with them and expect to somewhat offset lower volumes with new services. Our efficiency initiatives continue to show gains. As of today, about three-quarters of our vendors are being processed through our new AP automation platform, half of which require no human interaction at all. These improvements are helping us to increase our ability to service our customers and over time will enable us to lower cost per transaction. I've been speaking to most of you, the investors, on this call for many years, some as long as eight years. I think you all know that I don't make strong statements lightly. We're in a great place and it's exciting. This is about the technology that is coming to fruition. This is about the value proposition we're delivering, new account growth and tremendous growth of our people and customer service execution. Our ability to execute has grown so much and the market has grown increasingly receptive to that. I'm going to take this opportunity to reiterate that we are extremely optimistic about where we are today and especially about where we're going tomorrow. I'll turn the call over to our CFO, Brett Joste.

Thanks, Ray, and good afternoon, everyone. Revenue was $73.1 million, a 2% decrease year over year, and a 1% increase sequentially from the first quarter. Newly added customers and strong overall demand from the remaining business contributed approximately $10 million of incremental revenue during the second quarter. This was offset by the decline in volumes from one of our large industrial clients and three other large clients that we have referenced previously. As Ray commented, the relationship with the large industrial customer continues to be strong and there are opportunities to continue to add services with them, but they are slowing production, which is likely to temporarily affect volumes for the next 12 months. In the second half of the year, excluding commodity price fluctuations, we expect revenue growth will accelerate as recent and new wins increasingly contribute to revenue. During the second quarter, gross profit dollars were $13.5 million, flat in comparison with last year. Year over year comparisons for the second quarter were flat mostly due to the same factors that affected revenue comparisons. On a sequential basis, we had anticipated an increase in gross profit dollars. However, due to client-related delays with several new clients and lower than anticipated volumes from the large industrial customer mentioned previously, comparisons were flat sequentially. We did see some incremental contribution in gross profit dollars from new customers, but due to customer delays, the ramp in onboarding activity within the quarter was simply later than we had originally anticipated. All of the new customers we discussed in previous calls are being implemented now and will contribute an increasing amount of gross profit in the coming quarters. Looking at gross profit dollars for the remainder of 2024, we are encouraged by new and existing customer wins and continue to expect double-digit growth in gross profit dollars for the year. Moving on to SG&A, which was $9.4 million during the second quarter, an increase of $200,000 from a year ago and down $400,000 sequentially from the first quarter. This was lower than we had anticipated. The sequential decrease was primarily related to quarterly fluctuations in bad debt expense. We had posted a -than-average accrual during the first quarter for bad debt expense and were able to collect more than what we had anticipated in the second. While this did affect sequential comparisons, if you look on a -to-date basis, bad debt expense was roughly flat -over-year and the rate was consistent with what it has been in the past. Looking forward, we expect to gain efficiencies from the investments we made in our platform and through process improvements. We expect the savings from efficiency gains to be partially offset by continued investments in growth and other initiatives. And we expect SG&A will grow at a slower pace than gross profit dollars. As a result, we expect SG&A will be about $10 million in the third quarter. Moving on to a review of the cash flows and balance sheet. Our liquidity is in good shape and we've increased our borrowing capacity and availability. As we previously commented, we have extended the maturities on our debt with Monroe until October of 2026 and extended the maturity of our credit line with PNC until April of 2026, which gives us added runway to continue our process of evaluating alternative long-term debt financing structures that will help us lower borrowing costs and preserve the ability to maximize growth. Based on the momentum we have had to date and how we expect to finish this year, we expect to attract lenders with competitive pricing and attractive terms. We continue to hear from prospective lenders and advisors that lenders are more willing to sacrifice margin to submit more competitively priced lending options. Regarding the increase in our borrowing capacity, we also announced that we have increased the size of the borrowing line with PNC to $35 million from $25 million and added an incremental equipment term loan facility to finance up to $5 million of equipment purchases. At the end of the quarter, we had $17.7 million of available borrowing capacity on our $35 million operating borrowing line and $2.5 million available on our $5 million term loan facility. In this interest rate environment, we continue to actively look to reduce interest expense by optimizing cash management, carrying less cash and minimize borrowings on the line of credit. Thus, our cash balance was $958,000 at the end of the second quarter. For the second quarter, we generated $807,000 in cash from operations. At the end of the quarter, receivables remained elevated, which was partially related to the ramp of new customer activity late in the quarter. We continued to make progress with shortening the cash cycle times from some of our large customers, but we still have some room to make improvements. I will note that the increased DSOs are temporary. We have great relationships with these customers and slower than expected payment is not related to collectability. Also, I want to reiterate that our targeted DSOs are in the mid-60s, but due to the timing of onboarding new large clients, it is possible that we will see fluctuations in the DSOs from quarter to quarter like we did in the second quarter. CAPEX for the quarter was $2.2 million and was $4.2 million year to date. $3.1 million of the CAPEX was related to compactors that we were able to opportunistically purchase at an attractive price. We will be looking to purchase additional compactors from time to time, but do not anticipate significant spending in the next few quarters unless we run across another attractive opportunity. From a financial and strategic standpoint, it makes more sense to own these compactors instead of renting them. Going forward, we expect CAPEX to run $300,000 to $400,000 per quarter without considering any opportunistic compactor purchases. At the end of the quarter, we had $73.8 million in notes payable versus $67.8 million at the beginning of the year. The increase reflects growth and borrowing on our line with P&C to fund working capital and the assets purchased that I described earlier. At this time, I'll turn the call back to Ray. Thank you, Brett.

Before I review new business wins and strategies, I want to take a minute to share some anecdotes and unsolicited positive feedback that we've received from both new and existing customers as it directly highlights why I believe we're winning new business and becoming the provider of choice. We clearly have built a differentiated service platform and we have the right tools and processes in place to deliver for our clients. Equally important to providing outstanding customer service, you have the right people and culture that really care about customer outcomes. Here's the feedback we got from one of our largest and long-standing retail clients. We recently were awarded a five-year extension in our agreement with this customer. The length of this agreement in and of itself speaks to the strength of our relationship. This is what the client told us. They said Quest is a customer service company that happens to take care of waste. Your assets are your people and your customer service. The five-year contract that we signed says a lot about the partnership between our two companies. The customer further commented that they were not aware of any other five-year agreements with any other vendor ever that they had made. For comparison, while the tenure of our client relationships is much longer, our average contract is three years. We had another instance of positive feedback from a new client. Within just seven days of going live on our platform, the customer said that the implementation went so well that they volunteered to be a strong referenceable client for us. As a market leader in what is a new end market for us, their reference will go a long way in helping us penetrate and acquire more customers in this area. I'll also share the feedback we received from a new retail customer that we secured and recently began onboarding during the first half of the year. This was the second seven-figure competitive win for us to provide services to a portion of the states in which they operate. The client's leadership told us that they are very excited about our ability to launch so successfully and they're already looking to adding additional states to our program. We've not yet signed an extension with this client, but based on the feedback, I expect we will in short order. I am very proud of our team. They really care about client outcomes and they are the key to the success in creating long-term client relationships. We constantly hear feedback from our customers like this and it gives me great confidence that the new clients and existing clients are well taken care of. Moving on, I'll now cover some of the wins we had during the second quarter. In our last earnings call in early May, I covered the eight-figure win that we had with the market leader in the grocery sector. We won the client at a competitive process and we were chosen based on our reputation, cost effectiveness, customer alignment with sustainability goals, and the ability for us to provide added visibility from our data portal and platform. A key reason for our success over the last few years has been our ability to expand our relationships with existing customers across geographies and by adding value-added services. Since our last earnings call, we've had three new expansion wins with existing clients. As we demonstrate our capabilities, provide differentiated service, and deliver value customer service, it's rewarding that our largest clients are coming to us and asking us to do more. I'll now provide a little more detail on the three client expansions we've recently secured. We had a seven-figure expansion win with an existing automotive client that has an opportunity to grow into eight figures annually. This is an existing service that we will be expanding to all of their locations. In addition, we had a seven-figure expansion win with an existing retail client. We've been servicing all of the retail locations of this national company, but with this win, we'll also be servicing all of their distribution centers. And finally, we had a seven-figure expansion win with a new client that we just secured earlier this year. They were so impressed with our implementation, they've asked us to handle additional waste streams for them. In addition to these client expansions, we've continued to see a noticeable uptick in not only the number, but also the size of the opportunities in our pipeline. Given the success we're having with new client wins, we plan to accelerate our investment in organic growth initiatives, including investments in marketing and sales during 2024, reinvesting some of the profit gains we expect to generate in the business. In talking with investors during this past quarter, there seems to be some confusion over the strategic and financial rationale behind our investment in compactors. Even though we expect this to be a relatively small portion of our overall business, I thought I would take a minute to reiterate and hopefully clarify. First, I want to reiterate that we very much intend to remain an asset-like business. We don't plan on owning trucks, landfills, and similar heart assets. We will be looking at increasing the number of compactors that we own when it makes sense. In fact, prior to this recent acquisition, we already owned about 200 compactors. We regularly buy them in lower quantities to meet customer needs. Providing compactor rental services provides three key strategic advantages for us. First, compactors help with customer retention. It's typical for compactor rental agreements to have five-year terms, and they historically have very high renewal rates. This compares to an average three-year contract term for our traditional services that I mentioned earlier, and it is consistent with the rest of the industry. The second strategic reason is that it helps us to secure new business with existing and new clients. We're selling compactor rental services to existing waste and recycling clients, and we're selling our waste and recycling services to our new compactor rental clients. Finally, this opportunity, excuse me, this opportunistic purchase of compactors gave us enough scale to build an internal capability, as well as a network of vendors to maintain and repair compactors on a national basis. We're beginning to leverage this vendor network and have just started to offer compactor repair and maintenance services as a separate offering to our existing as well as prospective customers. From a financial standpoint, compactor rentals produce a recurring revenue stream with an attractive margin and a high return on capital. Overall, we're targeting greater than 20% return when we invest in these compactors. The business is relatively simple to manage at scale, low risk, and provides highly predictable and recurring returns over a long period of time. Once in place at a customer location, compactors are seldom moved, they require limited maintenance, and their utilization is typically in the high 90% range. I'll now review the investments we're making in technology. Over the years, we've built a technology platform that will be able to scale to the size of a much larger enterprise. The technology platform has been key, a key deciding factor for several competitive wins and helped us maintain enduring client relationships due to the incremental value we provide. We're actively introducing additional technology improvements in 2024. As we discussed in our last call during the first half of the year, we've begun to roll out our AP automation solution that utilizes artificial intelligence to further automate the processing of vendor invoices. We continue to make progress and as of today, approximately three quarters of our vendors are being processed through our new AP automation platform. Half of the invoices generated by these vendors require no human interaction and are what we call zero touch. We process hundreds of thousands of invoices every year, and this is part of our goal to reach 100% zero touch invoice processing. Automating invoice processing helps us to ensure payments are only made for services delivered and helps us to eliminate exceptions that typically add cost and add touches across multiple departments. By automating invoice processing along with our other technology enhancements, we're lowering costs, continuously improving client and vendor value, and providing major enhancements in our ability to scale along with expanding our margins. Regarding our outlook, I want to emphasize my conviction on our trajectory and the overall outlook for the company in 2024 and beyond. We've made tremendous progress during our last several years and have never been more confident about our outlook for continued double digit growth. I feel very good about the organic growth we have in front of us, pressure to improve sustainability, expanding regulation, increasing cost of landfills. They all continue to lower the bar for adoption of recycling services. We have multiple sources of organic growth from expanding our existing clients to ramping up recent wins and growing pipeline of new business. I also want to reiterate that we have a large opportunity to drive gross profit dollar growth on the cost side by optimizing the business we have in hand. As we bring revenue onto our platform, we've proven our ability to optimize cost of services through vendor relations and procurement management that drives our continued growth in gross profit dollars. In the same way, we have multiple ways of improving efficiency by utilizing the technology investments that we've made over the last several years, driving improved operating performance and expanding our EBITDA margins. The work we have done is centered on building a consistent and sustainable business focused on providing valued services to our clients. The foundation is set for continued success and build and to build value for our shareholders. We expect our momentum to carry through this year and beyond. I couldn't be more excited about what's to come. I really look forward to keeping you updated on our progress and I'd like now for the operator provide instructions on how listeners can queue up. Operator.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchstone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Aaron Spiccala from Craig Hallam. Your line is now open.

Yeah, hi Ray. Hi, Brad. Thanks for taking the questions. You know, first for me on the land and expand with the existing clients this quarter. Just want to confirm. You highlighted a couple last quarter, so just want to confirm these are these are kind of new in the quarter. And then can you maybe just talk about how many other opportunities like this you see across the rest of your existing client base?

Yeah, hi Aaron. Thanks. This Ray. I'll jump in. Yeah, these three we just mentioned. We were pretty specific on those because they're, they're incremental to the previous quarter. And we did talk about some growth opportunities that we had taken there as well. So, yeah, these are new. And again, as we kind of quantified them and we're quite excited by them. And as far as your second part of your question on future opportunities, there are so many. I mean, as we continue to add these high quality, high profile customers that have large businesses with many needs. And at the same time, our team continues to expand the capabilities that they can meet. So I anticipate seeing more and more continuous type of opportunities just like this, Aaron, going forward.

Great. That's good to hear. And then maybe on the technology improvements, sounds like the implementation is going well. Are you still targeting 80% zero touch by the end of this year? I thought I heard you say 100% and just any notable improvements that you've seen to date with the rollout. And then as you get that finalized, just how are you thinking that can benefit incremental margins?

Hey, Aaron, this spread. I'll take that one. We continue to be increasingly excited about our technology rollout. As you mentioned, we've targeted our ultimate target is 100% zero touch near term. We've got pretty good visibility to still get to that. That 80% zero touch. Maybe even up to 90% that last 10 to 20%. You know, be a little bit harder. So we're still on pace. We've got a couple of kinks to work out, but but still continue to make good progress. We, as we mentioned, we do have all of our solid waste vendors on our platform right now. So excited to get them going. We just brought a new batch online this month. So we'll see how that plays out. But in terms of just overall performance, we do continue to expect some significant efficiencies out of these. You know, hopeful we'll get those by Q4 start seeing some of those come in. And then. You know, certainly by the time we get into next year, early on, we'll be ramping up and hopefully fully realizing those.

All right. And then, you know, just on the volume front, I mean, I know you called out the larger customer that's seen some softening conditions, maybe just just broadly across the rest of your customer base. You know, are you seeing overall waste volumes, you know, hold steady, grow a little bit given the macro? I mean, outside of, you know, landing and expanding with them.

Yeah, I'll take that, Aaron. The from a macro standpoint, I will tell you that we aren't seeing any significant type of changes outside of the one we referenced. So, and this gives me a chance maybe to reiterate the strength of our position since we're so diversified now in our revenue streams and the end markets that we serve. When one thing goes down, another one has tendency to go up. We saw that maybe like during COVID times. And so, no, we're really not seeing any changes, but I have pretty high confidence, Aaron, that we'll be fine regardless. You know, based on that diversified revenue streams that we have today. So it's pretty isolated right now. What the situation we discussed.

Okay, and then maybe if I can just sneak in one more on proganics, you know, kind of nine states look like they've implemented laws to divert food waste from landfills and others are looking to implement something as well. Can you just give us an update on the pipeline and interest there and how big of an opportunity you see this for you going forward?

I see the opportunity to continue to grow as the demand and the need regulation you're dead on on your observation there continues to go in our favor and it creates a more favorable environment. We have some really great food clients and we have some really great food prospects. And we think that proganics along with our general just overall food waste programs are becoming more and more in demand. I think they're really going to help us in future quarters.

All right. Thanks for

the color. I'll turn it over. You bet. Thank you, Aaron. As a reminder, if you have a

question, please press star one on your telephone keypad. Your next question comes from the line of Greg Kitt from Pinnacle Fund. Your line is now open.

Hi Ray and Brett. How are you?

Hi Greg. Good.

Thanks for taking my questions. First on new wins. Can you give us a little bit of color on how many of those started contributing in Q2 and how many of those do you think will start contributing in Q3? I think you had seven wins that you announced here today.

Hey, Greg. This is Brett. I'll take that one. So, we had, I would say all but two contributed in Q2 to some extent. Two large ones went, will go live or went live in July one and then we had another one go live August one.

Great. Thank you. Thank you very much. I think that you had talked about UNFI because you were able to disclose that customer going live in the middle of Q3. So, I would guess it was that the August one go live.

No,

we already talked about that it was going on in Q2. Yeah, that was a Q2. That was a kind of confusing

Q2. My fault. Okay. Thank you very much. No problem. On the on the expansions that you talked about. Actually, can I start in a different place? You talked about that new retail customer that you started onboarding earlier this year that you're working with in six states. And there is an opportunity to expand into additional states. What's the current footprint that you're servicing and what is in terms? I don't know how big this retailer is. Is it national? So, 50 states and what is the opportunity?

It's a significant opportunity. And actually, I think we have three states, which is a lot of locations. So, that gives you an idea. So, let's do our math, Greg. That leaves us 47 to go.

Right.

Okay.

Okay. Great. Thank you. And if you do get an expansion, because it sounded like you were excited about the opportunity to get into additional states. Do you think that that's continues to be iterative a couple of states at a time? Or do you think that there's an opportunity to be a national replacement when?

I think there's an opportunity. There always was to be a national replacement. Whatever process they have as far as awarding us new states is going to be earned by us and their ability to make operational changes. So, it's hard to predict that. So, my comment was really based on the fact that they've made tremendous comments about Dave's team's ability to implement and how well they executed. And the fact that they have a lot of other states to go and I think we're a better supplier. So, we're pretty confident that we're going to get more opportunities. We just don't know how much and when that's all.

Thank you. On the expansions that you announced, congratulations on those. And I'm excited about those. I think last quarter you talked about you gave an example of identifying 50 potential projects with a large customer that had like tens of thousands of dollars to eight figure dollar opportunities with recurring work. And I was wondering if that one customer was one of the customers that you signed an expansion with or not?

No, this is incremental to that. The three that we very specifically called out in the remarks are incremental to that. These are all brand new. And they are contractually signed, not just, hey guys, we'll call you with more business. They are contractual expansions that are really exciting and sizable.

Thank you. And when you sign those deals, does that, do those programs start immediately or what kind of a lead time does that have?

Yeah, they're all different, Greg. First of all, they're all different types of projects and different types of customers, different industries. So, there's a lot of variance there. Some starts right away, some tail in over time.

Thank you. And did any of those have the opportunity to start contributing in Q2 or not yet?

No, these are all Q3 opportunities. So, they're all incremental to what we got is what I'm trying to describe.

Perfect. And I was wondering if you can give us some color on the new client that within seven days said that they would volunteer to be a strong reference client. What industry is that client in?

Food distribution.

That's great. And for AR days, right, I heard what you said about, you know, some of the new customers pulling up the AR days as they ramped into the end of the quarter. And I think that makes sense. Do you think that there's an opportunity to get those days? It seems like it'll be hard to get those days back down to 65 as you have a lot of customers ramping right now. Do you think that there's an opportunity to do that in Q3 or Q4 or unlikely this year with so many customers ramping?

Hey, Greg. Yeah, I think in the script specifically targeted getting back to where we had been historically, which is in the mid-sixties for DSO. So, we're not backing away from that. You know, as we said, we did have a couple of things push obviously that has impact on DSOs when they ramp later in the quarter. We've had some really good, we've made some really good progress on our existing customers. You know, we had some large payments come in that just crossed over past the quarter. So, if we can pull those in and I'm confident we'll be able to do so sooner rather than later, and that'll have a meaningful impact on DSOs as well. So, we remain confident. Obviously, that's going to drive some operating cash flow as well.

Absolutely. If you got to 65 days next quarter, it looks like that frees up like seven to eight million dollars of cash, which is really meaningful when you can pay down your debt with that. So, hopeful that you can make progress towards that. My last one for me right now, I think, is on Zero Touch. I think what's so exciting to me about that opportunity, and Ray, I think you touched on it in your opening remarks was on reducing your cost to serve or enable lower cost per transaction, I think is what you said. And when you're operating in a competitive market, and you can lower your cost to serve customers or lower your cost per transaction, you have the ability to go win business a lot more easily, if you so choose, because you can price more aggressively. I would like to hear how investors should be thinking about the impact from Questability to lower its cost to serve its customers.

Well, the first impact, I guess, and jump in, Brett, if I missed something, is we should have lower cost per transaction, which ultimately falls down and translates into EBITDA margins. We can do more with less kind of thing. But I like the fact you picked up on the competitive side of it, because the ability to grow this business is really why we're here. And if we can go to market with a more efficient, better mousetrap, we're able to win more and more competitive situations and increase market share and accelerated rate. So I think from an investor perspective, you should look at a steadily improving enhancement EBITDA margin as we implement. And then we should also be able to even accelerate and already what I think is an excellent pace in prospects and opportunities to win more business.

Yeah, I'll just add in. Greg, I'll just add in real quick too, other than just that piece. But, you know, coming from a manual process that can be fraught with errors at times and the exceptions that that creates and drives throughout the organization. So being able to free up people's time that are spent on non-value add and get to work on enhancing customer relationships and driving new services and all that good stuff, you know, gets freed up as well. So we're that'll be a contributing factor to as we move forward.

Yeah. Thank you very much. And thank you for your hard work.

Thanks, Greg.

Your next question comes from the line of George Mellis from management. Your line is now open.

Hi, guys. Hi, Ray. Hi, Brett. How are you? Great.

Hey, George.

Great. Can you talk a little bit about the pipeline? It seems the pipeline is healthy. And what is leading to the growth in the pipeline? Is it that you have better references? Is that you have a more targeted business? Is that is the technology that enables you to respond to more .F.P.? What is leading to this good situation with the pipeline?

Yes, I always like saying that. All the above. Good job, George. But seriously, I we've got such a mature maturation and improved process on on on the prospecting in of itself. The references piece are invaluable. As you know, I mean, it's almost like another quality customers are businesses done due diligence on us so people can just take that. So the references help the process helps. I think we've accelerated our offerings that we have for clients to make us more and more of a problem solver form at a time when they have these issues. So, and we've we've actually added to and adjusted our sales structure a little bit. We've added some some different roles and kind of going to market a little bit differently to enhance what we're doing before. So I think it's all of the above, George. And I appreciate the excitement. We're very excited about the quality of our pipeline today.

Yeah, wonderful. Great. Thanks very much. You bet. Thank you, George. There are no further questions at this time. I will now hand over to management for closing remarks.

Thank you, operator. I'll wrap this. I just want to again, thank everybody for their interest in quest. I'm always amazed and thankful for that. I want to reiterate our positive outlook. I know I said it at least twice during the remarks, but I don't want to close this call without reiterating that this twenty four is going to be a great year for us is a great year for us. Twenty five will be as well. I want to thank the quest team and a number of you are on this call. We've gone through so much as an organization. We've grown so much. We've we've enhanced our ability to serve customers. Our customer service level is evidenced by some of these wonderful unsolicited comments. They come from you guys and the work that you're doing. And we're greatly appreciative of this. We have a number of initiatives, a number of initiatives that we have constantly going the whole team is executing on. They're working well and helping create some great positive momentum. So with that momentum, I'm really looking forward to what the next quarter looks like. And I look forward to the opportunity to keep you all updated. And again, thanks for your interest in quest. Appreciate it.

Thank

you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.