Waste broker Quest Resource Management Group is seeing a significant reduction in service disruptions for its clients since implementing operational improvements, executives disclosed on the Texas-based company’s Monday earnings call.
Quest reported third quarter earnings that were in line with the company's internal expectations despite macroeconomic headwinds. The public company has been taking steps to improve its internal processes after its board members grew frustrated with weaknesses that they believed stunted profit and margin growth at the end of last fiscal year.
Perry Moss, the company's CEO as of March, noted the company's workforce was beginning to see the results of Quest's internal improvements through newly implemented key performance indicators. In the coming months, Moss said the business would also be instituting KPIs for individuals to further drive improvement in the business.
"This is probably the first quarter that all of our employees are beginning to see the results of their work, and they're getting really excited about it," Moss said on the company’s Monday earnings call. "We're going to be carrying momentum into Q4 and then into next year. We've all been working really hard, so it's been nice to see some tangible benefits."
In the third quarter, Quest reported revenue of $63.3 million, a 13% decrease year over year but a 6.4% increase over the second quarter of this year. The results reflected Quest's sale of its portfolio of mall-based tenants to Reconomy earlier this year and lower revenue from industrial end markets.**
Quest also added what executives described as a record amount of large clients last year, and is beginning to see the results of those contracts reflected in earnings. New business has added $24 million in incremental revenue so far this year, CFO Brett Johnston said on the call. Quest more than doubled its cash on hand quarter-over-quarter to $1.1 million, and was able to pay down $4.6 million of debt due to its improved cash flow. So far this year, Quest has paid off $11.2 million in debt.
The company reported layoffs earlier in the year resulting in a 15% reduction in workforce. In the third quarter, Quest reported business expenses were down $1 million, a 10% reduction year over year. The company expects further reductions in the fourth quarter related to "increased efficiencies and the aggressive takeout of costs across the organization," Johnston said on Monday.
Quest is one of several publicly traded waste companies to report headwinds in the industrial market. To mitigate that challenge, Quest has remained focus on growing business with existing clients. That includes the addition of new service lines — Moss said that Quest is now handling cardboard and organic food waste for "one of our largest customers of 2024." Quest is also working to expand the number of locations it serves for existing clients.
The company is also working to diversify the industries in which it operates. Quest is projecting a dip in business from its industrial clients in the fourth quarter, which is typical for the sector. But to offset that seasonal decline, it's working to expand into sectors like retail, hospitality and grocery, Moss said.
"These are all markets we are present in today, and we see compelling opportunities," Moss noted.
The company did not offer specific projections for fourth quarter earnings or full-year 2026 earnings, but noted that results would be "mostly in line with our previous expectations." Executives also said Quest plans to continue to pay down debt as it works to improve its leverage in the near to medium term.
