Quest Resource Holding Corporation

Good afternoon, ladies and gentlemen, and welcome to Quest Resource Holding Corporation's 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 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 significant risks and uncertainties. Actual events or Quest's 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-GAAP financial measures will be discussed during this call. These non-GAAP measures are used by management to make strategic decisions, forecast future results, and evaluate the company's current performance. Management believes the presentation of these non-GAAP financial measures is useful to investors 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-GAAP basis. Full reconciliations of non-GAAP to GAAP 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 has lower production levels due to in-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 costs 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 Josta.