Dive Brief:
- Quest Resource Management Group reported an 18.6% year-over-year revenue decline in the second quarter, citing the sale of its business connecting mall tenants with waste services in April and softness in the industrial sector.
- The company is in the midst of a turnaround after what executives described as a "very disappointing" 2024. But Quest also pointed to recent wins, including $3.9 million in operating cash flow in Q2 and a $6.6 million reduction in debt year to date.
- Outside of the industrial sector, Quest saw revenues improve with food and grocery sector clients. Executives also expect operational efficiency initiatives to improve the company's financial position through the second half of the year.
Dive Insight:
Quest, a publicly traded asset-light commercial waste broker, stumbled last year due to what board chairman Dan Friedberg called "execution issues" with its existing book of business. Ray Hatch retired as the company's CEO in March and was replaced by Perry Moss, who was previously the company's chief revenue officer.
Quest absorbed the mall waste business through its $33 million acquisition of RWS in 2021. It sold that business segment for $5 million to Lincoln Waste Solutions, part of Reconomy, in April.
On revenue, the combination of the mall-related business sale and reduced volumes among Quest's industrial clients resulted in a $16 million year-over-year decline, CFO Brett Johnston said. That was offset slightly by $8 million in new customer revenue.
Moss previously said he's working to improve the company's culture. His appointment also came as Quest cut 15% of its employees and began a series of internal processes to improve billing and performance with existing customers.
Executives said on the Quest's earnings call on Monday that those initiatives were beginning to help, but "it will take some time to see the full impact."
"We can clearly see a path for a more efficient, consistent and profitable business," Friedman told analysts on the call.
One of the initiatives Quest is pursuing is an improvement in the rate of billing customers. Moss reported an improvement in the "order-to-cash" process where Quest dispatches a waste service provider on behalf of its clients and later bills for the service. Since March, Quest has improved the percentage of customers billed on time from 69% to 75%.
Quest also logged a 46% improvement in paying haulers on time and an 83% improvement in processing vendors' bills on time.
