Q4 2024 Quest Resource Holding Corp Earnings Call

David Brown: [music].

Operator: Good afternoon, ladies and gentlemen, and welcome to Quest Resource Holding Core fourth quarter and full year 2024 earnings call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time.

Good afternoon, ladies and gentlemen.

Welcome.

Speaker Change: and Welton, the Quest Resource Holding Court, Fourth Quarter, and Bull Year, 2024 Earnings Call. At this time, all lines are in a lesson only

Operator: I would now like to turn the conference call over to Mr. Dave Mossberg. Investor relations represents. Please go ahead.

Dave Mossberg: Thank you, Operator, and thank you, everyone, for joining us on the call.

Dave Mossberg: 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 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 uncertainty. 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 filings with the Securities and Exchange Commission.

Speaker Change: Regarding future events or future performance of quest use of words like anticipate project estimate expect intend believe and other similar expressions are intended to identify those forward looking statements such forward looking statements.

Speaker Change: Are based on quests current expectations estimates projections beliefs, and assumptions and involve significant risks and uncertainties.

Actual events or crush results could differ materially from those discussed in the forward looking statements as a result of various factors, which are discussed in greater detail because 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 cause forward looking statements are.

Dave Mossberg: You are cautioned not to place undue reliance on such statements and to consult our SEC filings for additional risks and uncertainties.

Dave Mossberg: Quest forward-looking statements are presented as of the date made, and we disclaim any duty to update such statements unless required by law to do so.

Speaker Change: Scented as of the date made and we disclaim any duty to update such statements unless required by law to do so in addition in this call. We may include industry and market data and other statistical information as well as quests observations and views about industry conditions and developments.

Dave Mossberg: 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 development. The data and information are based on Quest estimates, independent publications, government publications, and reports by research firms and other sources. Although Quest believes these sources are reliable and that data and information are accurate, we caution that Quest has not independently verified the reliability of the sources or the accuracy of the information.

Speaker Change: The data and information are based on quests estimates independent publications government publications and reports by research firms and other sources.

Speaker Change: Although quest believes these sources are reliable and the data and information are accurate, we caution that quest has not independently verified the reliability of the sources or the accuracy of information.

Dave Mossberg: 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 for investors' understanding of the assessment of the company's ongoing core operations and prospects for the future. Unless it is otherwise stated, it should be assumed that 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.

Speaker Change: 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 Companys current performance management management believes the presentation of these non-GAAP financial measures.

Speaker Change: Useful for investors' understanding of the assessment of the company's ongoing core operations and prospects for the future.

Speaker Change: Unless otherwise stated it should be assumed that financials discussed in this call will not will be on a non-GAAP basis full reconciliations of non-GAAP to GAAP financial measures are included in today's earnings release.

Dan Friedberg: With all that said, I'll now turn the call over to Dan Freeberg, Chairman of the Board. Good afternoon, and thank you for joining us on today's call. I'm Dan Friedberg, Chairman of the Board at Quest. Joining me on the call today is Perry Moss. our newly appointed CEO, and Brett Johnston, our CFO. Today, we would like to discuss what is going well. where we have not performed, what we're doing about it, and where we are headed.

Speaker Change: With all that said I'll now turn the call over to Dan Freeberg Chairman of the board.

Speaker Change: Good afternoon, and thank you for joining us on today's call I'm, Dan feed bird Chairman of the board of Quest joining me on the call today is Kerry Mas.

Kerry Mas: Newly appointed CEO, and Brett Johnston our CFO.

Today, we would like to discuss what is going well.

Kerry Mas: Where we have not performed well we're doing about it and where we are headed.

Dan Friedberg: First. I am optimistic about the future. Quest is well positioned in what is a very attractive market. Customers are recognizing the value of an asset light services model. Our ability to find solutions for their waste disposal needs. and doing so at the lowest possible cost is increasingly important in an industry that is changing how it disposes of waste and is charging higher prices for service. We are adding clients at record rates, many of whom are initiating larger programs than we have seen previously. Moreover, these customers are providing positive referrals, which is helping to fill our increasing pipeline.

Kerry Mas: First I am optimistic about the future.

Kerry Mas: Quest is well positioned in what is a very attractive market.

Customers are recognizing the value of an asset light services model.

Kerry Mas: Our ability to find solutions for their waste disposal needs.

Kerry Mas: And doing so at the lowest possible cost is increasingly important in an industry that is changing how it disposes of waste and discharging higher prices for services.

Kerry Mas: We are adding clients at record rates, many of whom are initiating larger programs than we have seen previously.

Kerry Mas: Moreover, these customers are providing positive referrals, which is helping to fill our increasing pipeline.

Dan Friedberg: and enhance our reputation in the marketplace.

And enhanced our reputation in the marketplace.

Kerry Mas: Second.

Dan Friedberg: we have not executed at the level or with the consistency that we need. Our growth is creating opportunities for expanded margins and increasing scale benefits, but we have not converted that top-line momentum into sustained margin and profit. The issues we have experienced over the past year. Temporary cost increases coming from onboarding new clients. Implementing our new Vendor Management System. The impact of client attrition and weakness in our industrial clients and markets have all impacted our results. We have grown quickly over the past few years. And quite frankly, this has exposed weaknesses in our processes and systems. These are execution issues and are all addressable.

Kerry Mas: We have not executed at the level or with the consistency that we need.

Kerry Mas: Our growth is creating opportunities for expanded margins and increasing scale benefits, but we have not converted that topline momentum.

Kerry Mas: Into sustained margin and profit growth.

Kerry Mas: The issues, we have experienced over the past year.

Kerry Mas: Temporary cost increases coming from Onboarding new clients.

Kerry Mas: Implementing our new vendor management system.

The impact of client attrition and weakness in our industrial clients and markets have all impacted our results.

Kerry Mas: We have grown quickly over the past few years and quite frankly this is exposed weaknesses in our processes and systems. These are execution issues and are all addressable.

Dan Friedberg: but while they are improving. We recognize we need to do more, faster.

Kerry Mas: But while they are improving.

Kerry Mas: We recognize we need to do more faster.

Dan Friedberg: Third, we are taking decisive action. We are reducing costs. Implementing Process Improvement. Accelerating the integration of technology into our workflow. Supporting training and collaboration. increasing accountability, and targeting improved performance across the business. By achieving these objectives, we will increase the value we bring to clients, improve employee satisfaction, increase end-to-end business efficiency, and be a more profitable and scalable business.

Kerry Mas: Third we are taking decisive action, we are reducing costs.

Kerry Mas: Implementing process improvements.

Accelerating the integration of technology into our workflow.

Kerry Mas: Supporting training and collaborate collaboration.

Kerry Mas: Increasing accountability and targeting improved performance across the business.

By achieving these objectives, we will increase the value we bring to clients.

Kerry Mas: Improve employee satisfaction increase end to end business efficiency and be a more profitable and scalable business. We are confident in the future.

Dan Friedberg: We are confident in the future, but we clearly recognize that it is time to deliver on the promise and to convert our growing platform into a consistent source of increasing shareholder value.

Kerry Mas: We clearly recognize that it is time to deliver on the promise and to convert our growing platform into a consistent source of increasing shareholder value.

Dan Friedberg: Before we review last year's performance, I wanted to take a moment to discuss the announcement we made this afternoon that Ray Hatch is retired as CEO and that we have promoted our Chief Revenue Officer, Perry Moss, to CEO. Ray has been a major force at Quest over the past nine years, a key architect in our successful growth. He's built a strong culture with an organization committed to adding value to our clients.

Speaker Change: Before we review last year's performance I wanted to take a moment to discuss the announcement. We made this afternoon that Ray hatch is retired.

Speaker Change: And that we have promoted our chief revenue Officer, Perry Moss to CEO.

Speaker Change: Ray has been a major force at quest over the past nine years, a key architect hit our successful growth.

Speaker Change: He has built a strong culture with an organization committed to adding value to our clients.

Dan Friedberg: We are pleased that Ray will remain on the Board of Directors, and I wholeheartedly want to thank him on behalf of the Board and management for all his contributions. Over the last number of months, the board has been working to find the best CEO for the company. After considering the skills needed, we determined that driving operating efficiencies and generating continued growth are the two critical elements that we need to achieve our objective. Given that, it was clear to us that Perry is the perfect candidate. Throughout his career, he has consistently delivered disciplined, process-driven successes in business development, operational, and general management roles.

Speaker Change: We are pleased that Ray will remain on the board of directors and I wholeheartedly want to thank him on behalf of the board and management for all his contributions.

Speaker Change: Over the last number of months the board has been working to find the best CEO for the company.

Speaker Change: After considering the skills needed, we determined that driving operating efficiencies and generating continued growth are the two critical elements that we need to achieve our objectives.

Speaker Change: Given that it was clear to us the Perry is the perfect candidate.

Speaker Change: Throughout his career he has consistently delivered disciplined process driven successes in business development.

Speaker Change: Operational and general management roles.

Perry Moss: Perry joined Quest in July 2023 and has served as our Chief Revenue Officer since June 2024. He has more than 30 years of operating experience in our industry. Prior to joining us, Perry consistently succeeded in general management roles at Rubicon Technologies, Oakleaf Holdings, and at Smurfit Stoneway Service. Since joining Quest, Perry has fundamentally changed our sales approach by introducing metric-driven, results-oriented discipline to our sales function, achieving in a short time. Records for Client Wins, New Revenue, and Pipeline Growth. We are excited for him to work with our great team to implement the same performance culture and metrics across the company.

Larry joined Quest in July 2023, and has served as our Chief revenue Officer. Since June 2020 for his more than 30 years of operating experience in our industry prior to joining us very consistently succeeded in general management roles at Rubicon Technologies, Oakleaf holdings and at Smurfit Stone waste services.

Speaker Change: Since joining quest Terry has fundamentally changed our sales approach by introducing metric driven results oriented discipline to our sales function.

Speaker Change: <unk> in a short time.

Speaker Change: Records for client wins, new revenue and pipeline growth. We are excited for him to work with our great team to implement the same performance culture and metrics across the company.

Perry Moss: Before passing the call to Brett, I'd like to ask Perry to introduce Thank you, Dan. Today, I'd like to give you a bit of background on myself, why I joined Quest, and why I am confident in the direction we are heading. I'll be brief today, but I look forward to meeting you and providing more details on our plans in the coming weeks and months. While I have led sales as Chief Revenue Officer since joining Quest 18 months ago, I've enjoyed a very successful 30-plus year career. with many years in revenue-generating roles. but with even more years spent in operating.

Speaker Change: Before the before passing the call to Brad I'd like to ask Perry to introduce himself.

Perry Moss: Thank you Dan.

Today I'd like to give you a bit of background on myself.

Perry Moss: Why I joined quest with why I'm confident in the direction we are heading.

Perry Moss: I'll be brief today, but I look forward to meeting you and to providing more details on our plans in the coming weeks and months.

Speaker Change: Well I have led sales as chief revenue officer since joining quest 18 months ago.

Perry Moss: I've enjoyed a very successful 30 plus year career.

Speaker Change: With many years in revenue generating roles.

Perry Moss: With even more years spent in operating roles.

Perry Moss: Most recently, I helped grow Rubicon Technologies into a $700 million revenue waste services company. But prior to that, I had operating roles, leadership roles at Oakleaf Holdings and at Smurfit Stone Waste Reduction Service. I firmly believe in establishing process. setting metrics, and demanding performance. I believe that having served so many clients is a key factor in my success. In fact, earlier in my career, I was able to consistently lead my respective companies in growth because I had operational experience and could directly relate to the client.

Speaker Change: Most recently I.

Speaker Change: I helped to grow Rubicon technologies into a $700 million revenue waste services company.

But prior to that I had operating roles.

Speaker Change: Leadership roles at Oakleaf Holdings, and at Smurfit Stone waste reduction services.

Speaker Change: I firmly believe in establishing processes.

Speaker Change: Setting metrics and demanding performance I believe that having served so many clients is a key factor in my success.

Speaker Change: Fact earlier in my career I was able to consistently lead my respective companies in growth because I had operational experience and could directly relate to the client.

Perry Moss: Quest's unwavering focus on the client is one of the key reasons that I came to work In Quest's Asset Light model, where we don't own landfills or trucks or other disposal assets, we must execute quickly, efficiently, consistently, and at low cost. Quest culture is amazing and that the clients always come first. But I firmly believe we can execute on behalf of all our stakeholders to deliver in the most efficient and profitable way possible. I believe in well-defined processes. and in Measuring Everything. Applying KPIs. analytics, and technology to every aspect of the business. This is a key to training and motivating employees.

Speaker Change: Quest unwavering focus on the client is one of the key reasons that I came to work here.

Speaker Change: In quest asset light model, where we don't own landfills or trucks or other disposal assets, we must execute quickly.

Speaker Change: Efficiently.

Speaker Change: Consistently and at low cost the quest culture is amazing and that the clients always come first.

Speaker Change: But I firmly believe we can execute on behalf of all our stakeholders to deliver in the most efficient and profitable way possible.

Speaker Change: I believe in well defined processes.

Speaker Change: And in measuring everything applying kpis.

Speaker Change: Analytics and technology to every aspect of the business.

Speaker Change: This is a key to training and motivating employees.

Perry Moss: Key to Understanding. value to clients, and key to driving performance.

Speaker Change: Key to understanding valley.

Speaker Change: Value to clients and key to driving performance.

Perry Moss: Over the next few months, we will share more details on our approach, but in summary, we will be relentless in implementing a results-oriented approach and building a performance culture.

Speaker Change: Over the next few months, we will share more details on our approach, but in summary, we will be relentless in implementing a results oriented approach in building a performance culture.

Brett Johnston: I will now hand the call over to Brett. Thanks, Perry, and good afternoon, everyone. During the fourth quarter, we made progress with onboarding new clients and progress with efficiency gain. This was offset by weakness in the in-market conditions of a select number of larger clients. Client Attrition, and Temporarily Elevated Expenses. In addition, financial results were also negatively impacted by additional adjustments related to accounts payable during 2021 and 2022. We were aware that this has been an ongoing issue, and I will discuss it in greater detail later in my remarks. But the bottom line is that we don't expect any more adjustments related to this issue going forward.

Brad: I will now hand, the call over to Brad.

Brad: Thanks, Perry and good afternoon, everyone.

Brad: During the fourth quarter, we made progress with Onboarding, new clients and progress with efficiency gains.

Brad: This was offset by weakness in the end market conditions of a select number of larger clients client attrition and temporarily elevated expenses.

In addition financial results were also negatively impacted by additional adjustments related to accounts payable during 2021 and 2022.

Brad: We were aware that this has been an ongoing issue and I will discuss it in greater detail later in my remarks, but the bottom line is that we don't expect any more adjustments related to this issue going forward.

Brett Johnston: Revenue for the fourth quarter was $70 million, which was up 1% from a year ago and down 4% sequentially from the third quarter. We had strong growth from new and existing clients, which accounted for approximately $12 million of fourth quarter revenue. This increase was mostly related to a record level of onboarding activity from eight significant new client wins that we secured during the year. as well as significant expansions with five existing clients. Onboarding activity was slower than we had anticipated during the fourth quarter, as we had delays with rolling out new and expanding client work.

Revenue for the fourth quarter was $70 million, which was up 1% from a year ago and down 4% sequentially from the third quarter.

Brad: We had strong growth from new and existing clients, which accounted for approximately $12 million of fourth quarter revenue.

Brad: This increase was mostly related to a record level of onboarding activity from eight significant new client wins that we secured during the year.

Brad: As well as significant expansions with existing clients.

Brad: Onboarding activity was slower than we had anticipated during the fourth quarter as we had delays with rolling out new and expanding client work.

Brett Johnston: These delays were customer related. Most have begun onboarding activities in the first quarter, and we anticipate all will be onboarded this year. I will note that it is not uncommon for the timing and pace of onboarding activity to change. New clients secured during 2024 generated approximately two-thirds of their anticipated quarterly revenue run rate during the fourth quarter. We expect these wins to provide incremental growth in both revenue and gross profit dollars as we complete the rollout and optimize services. Year-over-year growth was offset by an approximate $9 million decrease in revenue due to both soft conditions at certain clients in our industrial end markets and from client attrition.

Brad: These delays were customer related.

Most have begun on boarding activities in the first quarter and we anticipate all will be onboard this year.

Brad: We'll note that it is not uncommon for the timing and pace of Onboarding activity to change.

New client secured during 2024 generated approximately two thirds of their anticipated quarterly revenue run rate during the fourth quarter.

Brad: We expect these wins to provide incremental growth in both revenue and gross profit dollars as we complete the rollout and optimize services.

Brad: Year over year growth was offset by an approximate $9 million increase or decrease in revenue due to both soft conditions at certain clients and.

Brad: In our industrial end markets and from client attrition.

Brett Johnston: regarding weak market conditions in the industrial end market. As we said previously, the relationship with these clients continues to be strong and there are opportunities to add services with them in the long term. However, these clients have slowed production for now, which is likely to continue to impact volumes for at least the next two quarters. I will also note that revenue comparisons for these clients also decreased sequentially, mostly due to seasonal factors, in addition to this decrease in project work. Attrition has been a factor negatively affecting revenue comparison. Approximately one-third of the attrition was related to clients in the mall and shopping center sector.

Brad: Regarding weak market conditions in the industrial end markets.

Brad: As we said previously the relationship with these clients continues to be strong and there are opportunities to add services with them in the long term.

Brad: However, these clients have slowed production for now which is likely to continue to impact volumes or at least the next two quarters.

Brad: I will also note that revenue comparisons for these clients also decreased sequentially.

Brad: Due to seasonal factors.

Brad: In addition to this decrease in project work.

Brad: Attrition has been a factor negatively affecting revenue comparisons.

Approximately one third of the attrition was related to clients in the mall and shopping center sector a.

Brett Johnston: a business which we have decided to The remaining client attrition is primarily related to clients that have been acquired. Last year, we said that in 2025, we expect to realize more than $20 million in net incremental revenue from new client wins, less client attrition. With ongoing changes in the market, we now expect to realize $15 million in net incremental revenue from new clients wins achieved during 2024. I will reiterate that this net number is not an overall revenue forecast. It does not include contribution from other new client wins that we expect during 2025, nor does it include the expansion or contraction of business from existing clients or revenue changes due to fluctuations in commodity prices or volume.

Brad: Business, which we have decided to exit.

Brad: The remaining client attrition is primarily related to clients that have been acquired.

Brad: Last year, we said that in 2025, we expect to realize more than $20 million and net incremental revenue from new client wins less client attrition.

Brad: With ongoing changes in the market, we now expect to realize $15 million and net incremental revenue from new clients wins achieved during 2024.

Brad: I will reiterate that this net number is not an overall revenue forecast.

It does not include contribution from other new client wins that we expect during 2025, nor does it include the expansion or contraction of business from existing clients our revenue changes due to fluctuations in.

Brad: And commodity prices or volumes.

Brett Johnston: During the fourth quarter, gross profit dollars were $10.7 million, a 6.7% decrease from last year and an 8.3% decrease sequentially from the third quarter. The decrease in gross profit dollar comparisons was primarily related to three factors. One, a shift in revenue.

During the fourth quarter gross profit dollars were $10 7, million% to 6% six 7% decrease from last year and an eight 3% decrease sequentially from the third quarter.

Brad: The decrease in gross profit dollar comparisons was primarily related to three factors.

Brad: One a shift in revenue mix.

Brett Johnston: 2. Higher than anticipated costs of services, and 3. One million of non-cash adjustments related to unreconciled accounts payable related to 2021 and 2022 payments. regarding the mixture. As we discussed on previous calls, we had less revenue than expected from more mature client relationships, where the margin profile has been optimized and it was replaced by revenue from new clients and expanding engagement. where it typically takes several quarters to optimize the margin profile. regarding higher-than-anticipated cost of sales to ensure a smooth transition to our new automated vendor management. As we described on the last call, this temporary increase in cost mainly relates to making sure that while we are implementing our new vendor management system, clients do not receive interruption in their level of service.

Brad: <unk>.

Brad: Higher than anticipated costs of services and three 1 million of noncash adjustments related to Unreconciled accounts payable related to 2021 and 2022 payments.

Brad: Regarding the mix shift.

Brad: As we discussed on previous calls we had less revenue than expected for more mature client relationships, where the margin profile has been optimized and it was replaced by revenue from new clients and expanding engagements where it typically takes several quarters to optimize the margin profile.

Brad: Regarding higher than anticipated cost of sales to ensure a smooth transition to our new automated vendor management system.

Brad: As we described on the last call. This temporary increase in costs, mainly relates to making sure that while we implementing while we are implementing our new vendor management system clients do not receive interruption in their level of service.

Brett Johnston: Similar to the third quarter, during the fourth quarter, we temporarily increase spending on client service to make sure there is a smooth transition as we onboard new clients. We had a record amount of onboarding activity during the second half of the year. New clients place a lot of trust in us to make sure that there are no interruptions in service. Making this temporary incremental investment is well worth the while. We continue to receive great feedback across the board from new clients about how smooth their onboarding process has gone. In addition, gross profit dollars were affected by an additional $1 million of non-cash adjustments related to unreconciled accounts payable related to 2021 and 2022 payments.

Brad: Similar to the third quarter during the fourth quarter, we temporarily increased spending on client service to make sure. There is a smooth transition as we onboard new clients.

Brad: We had a record amount of onboarding activity during the second half of the year.

Brad: New clients place a lot of trust in us to make sure that there are no interruptions in service.

Brad: Making this temporary incremental investment is well worthwhile.

Brad: We continue to receive great feedback across the board from new clients about how smooth their on boarding process has gone.

Brad: In addition, gross dollar gross profit dollars were affected by an additional $1 million of noncash adjustments related to Unreconciled accounts payable.

Brad: <unk> 2021, and 2022 payments.

Brett Johnston: As we discussed when we reported 2023 financial results, we estimated and took adjustments of $1.2 million in accounts payable that were not properly expensed during 2021 and 2022. As we were completing a review of these estimates for 2024 results, we determined that we required an additional one million of adjustments for these accounts. for these errors made in 2021 and 2022. We have made full reserves for these accounts payable and the audit of these accounts has been concluded. Excluding this non-cash cost of revenue adjustment of approximately $1 million and a $500,000 bad debt adjustment for receivables related to the business exit, adjusted EBITDA during the fourth quarter of 2024 would have been approximately $3.2 million.

Brad: As we discussed when we reported 2023 financial results, we estimated and took adjustments of $1 2 million in accounts payable that were not properly expense during 2021 and 2022.

Brad: As we were completing our review of these estimates for 2024 results.

Brad: We determined that we required an additional $1 million of adjustments for these accounts for these errors made in 2021 and 2022.

Brad: We have made full reserves for these accounts payable and the audit of these accounts has been concluded.

Brad: Excluding this noncash cost of revenue adjustment of approximately $1 million and a 500000 bad debt adjustment for receivables related to the business exit adjusted EBITDA during the fourth quarter of 2024 would've been approximately $3 2 million.

Brett Johnston: As you look at your models, we expect gross profit dollars to increase approximately one million sequentially during the fourth quarter. which reflects relatively flat sequential comparisons with the fourth quarter in the absence of the one million adjustment we took during the fourth quarter. Thereafter, we expect sequential improvements in gross profit dollars beginning in the second quarter as we benefit from efficiency initiatives and growth. Moving on to SG&A, which was $10.1 million during the fourth quarter, an increase of $700,000 from a year ago, and a decrease of $200,000 sequentially from the third quarter. I will make a couple of notes about SG&A for the fourth quarter.

Brad: As you look at your models, we expect gross profit dollars to increase approximately $1 million sequentially during the fourth quarter.

Brad: Which reflects relatively flat sequential comparisons with the fourth quarter.

Brad: In the absence of the $1 million adjustment, we took during the fourth quarter.

Brad: Thereafter, we expect sequential improvements in gross profit dollars beginning in the second quarter as we benefit from efficiency initiatives and growth.

Moving on to SG&A, which was $10 1 million during the fourth quarter an.

Brad: An increase of 700000 from a year ago, and a decrease of 200000 sequentially from the third quarter.

I will make a couple of notes about SG&A for the fourth quarter.

Brett Johnston: SG&A included approximately $500,000 in VAD debt reserves for certain clients related to the mall business portion of RWS, which is held for sale. In addition, I will note that there were approximately 1 million in lower accruals related to management bonuses for 2024. For the fourth quarter, we expect SG&A to be approximately 11.5 million. The sequential increase is primarily related to separation costs and the resumption of bonus accruals. We expect the actions that we have taken to increase efficiencies and lower costs will begin to show up during the second quarter. Beginning in the second half of the year, we expect SG&A to be approximately $9.5 million per quarter, which reflects fully realizing the more than $3 million of annual run rate cost savings and efficiency initiatives we will have taken.

Brad: SG&A included approximately 500000 in bad debt reserves for certain clients related to the mall business portion of our Ws, which is held for sale.

Brad: In addition, I will note that there were approximately $1 million and lower accruals related to management bonuses for 2024.

Brad: For the fourth quarter, we expect SG&A to be approximately $11 5 million.

Brad: The sequential increase is primarily related to separation cost and the resumption of bonus accruals.

Brad: We expect the actions that we've taken to increase efficiencies and lower costs will begin to show up during the second quarter.

Brad: Beginning in the second half of the year, we expect SG&A to be approximately $9 5 million per quarter, which reflects fully realizing the more than $3 million of annual run rate cost savings and efficiency initiatives, we will have taken.

Brett Johnston: These initiatives included a 15% reduction in workforce and G&A costs, which includes the portion of the RWS business held for sale. That said, we are going to continue to drive operating leverage and expand margin.

These initiatives included a fifth.

Brad: 10% reduction in workforce.

Brad: G&A costs, which includes the portion of the <unk> business held for sale.

Brad: That said, we are going to continue to drive operating leverage and expand margins.

Brett Johnston: Before I move on, I want to mention that in Q4, we recognized an impairment loss of $5.5 million, or $0.26 per diluted share related to the sale of client contracts for the mall and shopping center portion of RWS. This was a non-cash charge related to a reduction in a portion of the intangible assets we recorded when we made the acquisition.

Brad: Before I move on I want to mention that in Q4, we recognized an impairment loss of $5 5 million or.

Brad: Our 26 cents per diluted share related to the sale of client contracts for the mall and shopping center portion of our Ws.

Brad: This was a noncash charge related to a reduction in a portion of the intangible asset.

Brad: We recorded when we made the acquisition.

Dan Friedberg: Dan will discuss the rationale for this sale in his remarks.

Dan Freeberg: Dan will discuss the rash the rationale for this sale in his remarks.

Brett Johnston: Moving on to a review of the cash flows and balance sheet. Our liquidity is in good shape. after an exhaustive process which included discussions and proposals from multiple financing sources. we refinanced with our current lenders, Monroe and PNC. The new financing decreased our blended interest rate margin by approximately 150 basis points, reducing our interest expense by approximately $1 million annually. In addition, we extended our maturity dates with Monroe from October of 2026 to June of 2030 and with PNC from April of 2026 to December of 2029. With PNC, we were also able to increase the revolver from $35 million to $45 million.

Dan Freeberg: Moving on to a review of the cash flows and balance sheets.

Speaker Change: Our liquidity is in good shape.

Speaker Change: After an exhaustive process, which included discussions and proposals from multiple financing sources, we use.

Speaker Change: We refinanced with our current lenders Monroe in P&C.

Speaker Change: The new financing decreased our blended interest rate margin by approximately 150 basis points, reducing our interest expense by approximately $1 million annually.

Speaker Change: In addition, we extended our maturity dates with Munro from October of 2026 to June of 2030, and with P&C from April of 2026 to December of 2029.

With PNC, we were also able to increase the revolver from $35 million to $45 million.

Brett Johnston: And with both lenders, we have improved terms and flexibility.

Speaker Change: And with both lenders, we have improved terms and flexibility.

Brett Johnston: We are grateful for their continued support, which is a testament to the strength of our team and platform. At the end of the fourth quarter, we had $21.9 million of available borrowing capacity on our $45 million operating borrowing line and the full $3 million available on our new equipment facility. For the fourth quarter, we used approximately $4.8 million in cash to fund operations. which was related to an increase in working capital at the end of the year. In particular, our accounts receivable balances were elevated at the end of the year. We still have room to make improvements in this area.

Speaker Change: We are grateful for their continued support which is a testament to the strength of our team and platform.

At the end of the fourth quarter, we had $21 $9 million of available borrowing capacity.

Speaker Change: On our $45 million operating borrowing line and the whole $3 million available on our new equipment facility.

Speaker Change: For the fourth quarter, we used approximately $4 $8 million in cash to fund operations, which was related to an increase in working capital at the end of the year.

Speaker Change: In particular, our accounts receivable balances were elevated at the end of the year.

We still have room to make improvements in this area.

Brett Johnston: I will note that we have great relationships with clients and slower than expected payment is not related to collectability. DSOs have been impacted by the timing of collections from a few of our largest customers, and we are working with them to accelerate the pace of collection. In addition, with the implementation of our automated AP system, we will be able to bill at a faster pace, further accelerating our cash cycle and lowering DSOs.

Speaker Change: I will note that we have great relationships with clients and slower than expected payment is not related to collectability.

Speaker Change: Dsos have been impacted by the timing of collections from a few of our largest customers and we are working with them to accelerate the pace of collections.

Speaker Change: In addition, with the implementation of our automated AP system, we will be able to bill at a faster pace further accelerating our cash cycle in lowering dsos.

Brett Johnston: Finally, the sale of the non-core mall-related business of RWS, which has been a slow-pay business, will also improve our blended DSO rate. At the end of the quarter, we had $80.4 million in notes payable versus $67.8 million at the beginning of the year. The increase primarily reflects growth in borrowing on our lines with PNC to fund working capital.

Speaker Change: Finally, the sale of the non core mall related business of <unk>, which has been a slow pay business will also improve our blended DSO rate.

Speaker Change: At the end of the quarter, we had $80 4 million in notes payable versus $67 8 million at the beginning of the year.

Speaker Change: The increase primarily reflects growth in borrowing on our alliance with P&C to fund working capital.

Dan Friedberg: At this time, I'll turn the call back over to Dan.

Dan Freeberg: At this time I'll turn the call back over to Dan.

Dan Friedberg: Thank you, Brett. Now let's discuss 2024 operational performance.

Dan Freeberg: Thank you Brad.

Dan Freeberg: Now lets discuss 2020 for operational performance.

Dan Friedberg: I want to reiterate that our performance over the last couple of years has been unacceptable. Here are some positive highlights on which we will build from and the negatives, which we are addressing. And I'll start with a pause. We want more new clients in any year in the history of the company, adding more revenue per client than ever before. Our pipeline is robust, and our sales force is executing a structured Discipline the plant. Through our land and expand strategy, clients continue to reward us with more business. Last year, we added eight new customers and expanded agreements with five of our largest customers.

Dan Freeberg: I want to reiterate that our performance over the last couple of years has been unacceptable.

Dan Freeberg: Here's some positive highlights on which we will build from and the negatives, which we are addressing.

Dan Freeberg: I'll start with the positives.

Dan Freeberg: We won more new clients than any year in the history of the company, adding more revenue per client than ever before our.

Dan Freeberg: Our pipeline is robust and our sales force is executing a structured.

Dan Freeberg: <unk> plan.

Dan Freeberg: Through our land and expand strategy clients continue to reward us with more business.

Dan Freeberg: Last year, we added eight new customers and expanded agreements with five of our largest customers.

Dan Friedberg: Adding value and expanding share of wallet will be an even greater area of focus going forward. In December, we completed the refinancing of our debt, which Brett discussed in detail. Our new lending package has lowered our blended interest rate margin by about 150 basis points, reducing interest expense by approximately $1 million annually. We continue to make progress with our vendor invoices. as we increasingly move to zero-touch processing capabilities. The efficiency gains from this automation are currently being realized, and we expect to achieve greater efficiency gains going forward.

Dan Freeberg: Adding value and expanding share of wallet will be an even greater area of focus.

Dan Freeberg: Going forward.

Dan Freeberg: In December.

Dan Freeberg: We completed the refinancing of our debt, which Brad discussed in detail.

Dan Freeberg: Our new lending package has lowered our blended interest rate margin by about 150 basis points, reducing interest expense by approximately $1 million.

Annually.

We continue to make progress with our vendor invoice system.

Dan Freeberg: As we increasingly move to zero touch processing capabilities.

The efficiency gains from this automation are currently being realized and we expect to achieve greater efficiency gains.

Going forward.

Dan Friedberg: Now the negative. Despite the progress, several factors contributed to a very disappointing year. While we continue to execute on behalf of our clients, we have not executed operationally at the levels expected and much more is required. On our last call, we spoke about the transition to our new vendor management system. which cause greater costs on a temporary basis. However, while still generating improvements, this transition has taken longer than expected. Regarding client onboarding, as Brett mentioned, we temporarily incurred costs to successfully onboard our record number of new customers. in an efficient and seamless manner. To do that, we have to incur these added costs.

Dan Freeberg: Now the negatives.

Dan Freeberg: Despite the progress several factors contributed to a very disappointing year.

Dan Freeberg: While we continue to execute on behalf of our clients, we have not executed operationally at the levels expected and much more is required.

Dan Freeberg: On our last call, we spoke about the transition to our new vendor management system.

Dan Freeberg: Which cause greater costs on a temporary basis.

Dan Freeberg: However, while still generating improvements this transition has taken longer than expected.

Regarding client Onboarding as Brad mentioned, we temporarily incurred costs to successfully onboard a record number of new customers.

And in an efficient and seamless manner to do that we have to incur these added costs.

Dan Friedberg: It is important to note the onboarding has proceeded well. Many of the new clients are referring potential new clients. In addition, weak conditions at certain clients in our industrial end market impacted the fourth Finally, as mentioned earlier, we experienced uncharacteristic client attrition. in part due to acquisition activity in the model-based sector going forward. We have made very solid strides in building organizational capabilities. Developing systems and our seeing results.

Dan Freeberg: It is important to note the Onboarding has proceeded well many of your clients or Frank.

Dan Freeberg: Potential new clients to us.

Dan Freeberg: In addition, we conditions at certain clients in our industrial end market impacted the fourth quarter.

Dan Freeberg: Finally, as mentioned earlier, we experienced on correct.

Dan Freeberg: We experienced characteristic client attrition.

Dan Freeberg: In part due.

Due to acquisition activity in the mob sector going forward.

Dan Freeberg: We have made very solid strides in building organizational capabilities.

Developing systems and are seeing results, but not quickly enough or consistently enough. We are committed to achieving operational excellence.

Dan Friedberg: but not quickly enough or consistently enough. We are committed to achieving operational excellence.

Dan Friedberg: While our acquisitions have provided scale and scope, it has been clear for a while that the non-core tenant direct mall business within RWS was creating issues. and was not contributing to the bottom line. To address this situation, we conducted a sale process. have entered into a preliminary agreement to sell the client contracts for this portion of the business. We expect the transaction to close in the next few months.

While our acquisitions have provided scale and scope. It has been clear for a while that the non core tenant direct mall business within our Ws is creating issues.

Dan Freeberg: And was not contributing to the bottom line.

Dan Freeberg: To address this situation, we conducted a sale process.

Dan Freeberg: <unk> entered into a preliminary agreement to sell the client contracts for this portion of the business.

Dan Freeberg: We expect the transition transaction to close in the next few months.

Dan Friedberg: We are implementing cost reduction actions, reducing headcount by 15% and eliminating other G&A expenses. thereby reducing SG&A by $3 million on an annualized basis. This will include the temporary costs incurred in 2024. the efficiency efforts to date, and the cost savings from exiting the TenantDirect business line. This is being implemented currently and the full effects will be realized by the end of the year.

Dan Freeberg: We are implanting implementing cost reduction reduction actions, reducing head count by 15% and eliminating other G&A expenses.

Dan Freeberg: Thereby reducing SG&A by $3 million on an annualized basis. This will include the temporary constant curve in 2020 for.

Dan Freeberg: The efficiency efforts to date and the cost savings from exiting the tenant direct business like.

Dan Freeberg: This is being implemented currently in the full effects will be realized by the end of the year.

Dan Friedberg: In addition, today we announce that we have made a significant addition to our Operational Leadership Team. Nick Ober has joined Quest as SVP of Operations. Nick most recently served as VP of Freight Brokerage Solutions and Strategy for RxO. where he led carrier operations for the $3 billion Asset Life Business Unit. spun off by XBL. Nick also has deep industry experience having been Director of Operations for a $400 million region for Republic Services. Nick will work closely with Dave Schweitzer, our Chief Operating Officer, and Nick will oversee our Vendor Management Group, and will also lead our newly created Operations Excellence Initiative.

In addition, today, we announced that we have made a significant addition to our operational leadership team.

Speaker Change: Nick over has joined quest as SVP of operations.

Speaker Change: Nick most recently served as VP of freight brokerage solutions and strategy for RSO.

Speaker Change: Or related carrier operations for the $3 billion asset like business unit <unk>.

Speaker Change: Spun off by expert from by <unk>.

Speaker Change: Nick also has deep industry experience, having been director of operations for a $400 million region for Republic services.

Speaker Change: Nick will work closely with Dave <unk>, our Chief operating officer, and Nick will oversee our vendor management group.

He will also lead our newly created operations excellence initiatives.

Dan Friedberg: This newly established operational Excellence Initiative will benchmark, measure, and Target Improvement levels across the entire workflow, and then develop and implement processes and systems that accelerate and increase operating financial performance and maximize the realization. of Scale Benefits.

Speaker Change: This newly established operational.

Speaker Change: Excellence initiative will benchmark measure.

Speaker Change: And target improvement levels across the entire workflow and then develop and implement processes and systems that accelerate and increase operating financial performance and maximize the realization.

Speaker Change: Of scale benefits.

Dan Friedberg: In closing, I want to reiterate my commitment along with the rest of the board and management team to aggressively drive change, increase consistency, improve operations, and generate significant shareholder value. We've made good progress in gaining scale through acquisitions and more recently through organic growth. The market for our AssetLite model remains robust. We are gaining share. Clients are providing us with strong referrals. We have opportunities to increase our share of wallet, and our cost-oriented value proposition is resonating loudly. In addition, we are committed to maintaining a solid balance sheet and our priority for capital allocation is on the repayment of debt.

Speaker Change: In closing.

Speaker Change: I want to reiterate my commitment along with the rest of the board and management team to aggressively drive change increased consistency improve operations and generate significant shareholder value. We've made good progress in gaining scale through acquisitions and more recently through organic growth.

Speaker Change: The market for our asset light model remains robust we are gaining share clients are providing us with strong referrals.

Speaker Change: We have opportunities to increase our share of wallet and our cost oriented value proposition is resonating loudly.

Speaker Change: In addition, we are committed to maintaining a solid balance sheet and our priority for capital allocation.

Speaker Change: Is on the repayment of debt.

Dan Friedberg: Now is the time for execution, plain and simple. We know what we need to do. are focused on accelerating performance, creating a performance-based culture, increasing client satisfaction, driving technology-enabled and process efficiencies, and growing operating margins and bottom-line performance.

Speaker Change: Now is the time for execution plain and simple.

Speaker Change: We know what we need to do.

Speaker Change: Our focused on accelerating performance, creating a performance based culture, increasing client satisfaction driving technology enabled and process efficiencies and growing operating margins and bottom line performance.

Dan Friedberg: Regarding our outlook, we expect the temporary costs incurred in 2024 to be completed in early 2025 and expect the second half to show improvement. as we fully wrap new clients, benefit from the cost reductions that we are currently implementing, and from ongoing operating improvements. Overall for 2025, we expect to show both top and bottom line growth and expect to resume more meaningful growth as we exit the year.

Speaker Change: Regarding our outlook, we expect the temporary costs incurred in 2024 to be completed in early 2025 and expect the second half to show improvements as we fully ramp new clients benefit from the cost reductions that we are currently implementing and from ongoing operating improvements.

Speaker Change: Overall for 2025, we expect to show both top and bottom line growth and expect to resume more meaningful growth as we exit the year.

Dan Friedberg: We greatly appreciate all the contributions of the Quest team and thank all of you for all of your support. In the coming weeks and months, Perry, Brett, and I look forward to providing updates on our progress.

Speaker Change: We greatly appreciate all the contributed contributions of the quest team.

Speaker Change: And thank all of you for all of your support.

Speaker Change: In the coming weeks and months Perry, Brett and I look forward to providing updates on our progress we would like the operator to provide instructions on how listeners can queue up for questions operator.

Operator: We would like the operator to provide instructions on how listeners can queue up for questions. Operator? Thank you.

Speaker Change: Thank you.

Operator: Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star followed by the one on your touchtone. If you wish to cancel your request, please press the star followed by. If you are using a speakerphone, please lift the handset before pressing any button. Once again, that is star one, should you wish to ask a question.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.

Speaker Change: Have a question. Please press star followed by the one and you touched on cloud.

If you wish to cancel your request. Please press the star followed by the channel.

Speaker Change: We are using a speaker phone please lift the handset before question Keith.

Speaker Change: Once again that is star one should you wish to ask a question.

Aaron Spychalla: Your first question is from Aaron Spychalla from Triton. Your line is now open. Yeah, good afternoon. Thanks for taking the questions.

Speaker Change: Your first question is from Aaron's.

Your line is now open.

Speaker Change: Yes, good afternoon, thanks for taking the questions.

Dan Friedberg: First for me, you know, can you talk a little bit more about the vendor management system and kind of the role out there, where we're at, you know, some of the costs that you've seen that have been a little bit increased, and kind of the timing for when that'll be resolved. And then also, if you could just touch on, sounds like the attrition is, you know, stabilizing was mostly due to some M&A. I just want to confirm that. And then on the industrial, weakness as well. That sounds like something that should be a couple more quarters is your thoughts today.

Speaker Change: First for me can you talk a little bit more about the vendor management system and kind of the rollout there.

Speaker Change: Where we're at some of the costs that you've seen that have been a little bit increased.

And kind of the timing for when that will be resolved and then also if you could just touch on it sounds like the attrition is stabilizing was mostly due to some M&A just want to confirm that and then on the industrial weakness as well that sounds like something that should be.

Speaker Change: Couple of more quarters as your your thoughts today, just wanted to make sure I understood those correctly.

Brett Johnston: Just wanted to make sure I understood those correctly.

Brett Johnston: Hey, Aaron. It's Dan Friedberg. Good to speak to you. First of all, for everyone, I'm here with Perry Moss, as mentioned, and with Brett. And so we'll tackle your questions. Brett, do you want to dive in? Sure. Thank you. The first question was on the vendor management program and the progress on that. We're very excited about the program overall. Aaron, we have continued to tweak and make improvements. I would say it's substantially complete at this time. You know, this will be something that we'll always look to find opportunities to refine. But, you know, our zero-touch goals, we are achieving those and continue to see improvement month over month, so very satisfied with that.

Hey, Erin Dan Fagerberg.

Speaker Change: Speak to you first of all thanks for everyone I'm here with Perry losses.

Speaker Change: <unk> mentioned and with Brett and so.

Speaker Change: We'll tackle your questions.

Brett Johnston: Brett do you want <unk>.

Speaker Change: Sure.

Speaker Change: The first question was on the vendor management.

Speaker Change: Graham and the progress on that we're we're very excited about the program overall Erin.

Speaker Change: We have continued to tweak and make improvements I would say it's substantially complete at this time this will be something that we'll always look to find opportunities to refine but.

Zero touch goals, we are achieving those.

Speaker Change: We continue to see improvement.

Speaker Change: Months' over months, so very satisfied with that we have seen some of the savings that we had previously announced.

Brett Johnston: We have seen some of the savings that we had previously announced flow through into Q4, but largely those are still to come, especially ramping up through Q2. The cost that related to those was temporary. Those did... Dwindle into the quarter a little bit more. We'll see a little bit more of that into Q1 and certainly have much better visibility into those right now with all of the KPI tracking that we're doing and extra initiatives we do to really get very disciplined with data going forward. So we feel very confident about that. I do expect to see a little bit of additional costs into Q1, but I'm very positive about the outlook coming out of Q1 and into Q2 especially.

Speaker Change: Flow through into Q4, but largely those are still to come especially.

Speaker Change: Especially ramping up through Q2.

Speaker Change: The costs that related to those as temporary those did.

Speaker Change: No.

Speaker Change: Dwindle end of the quarter, a little bit more we'll see a little bit more of that into Q1, and certainly have much better visibility into those right now with all of the Kpis are tracking that we're doing in.

Extra initiatives, we do.

Speaker Change: To make to really get very disciplined with data going forward. So we feel very confident about that I do expect to see a little bit of additional costs into Q1, but very positive about the outlook coming out of Q1 and into Q2, especially.

Dan Friedberg: Aaron, I would just follow. But the vendor management system, which as Brett mentioned, is showing real progress, the zero touch capabilities is a clear testament. We were starting from a A place where our invoices were being handled multiple times, we were layering on new systems into old, and that process isn't a smooth one. But the progress has been. clear. And as we go forward, and part of the reason why we're excited to add Perry and Nick, Across the organization, we already had a number of initiatives driving efficiencies, which we've all spoken to before, consolidating them all into one initiative, focused on driving efficiency gains, lowering process time and cost, increasing efficiencies is really what we're focused on.

Brian: Yes, Brian I would just follow that.

Brian: The better management system, which is spread mentioned is showing real progress the zero touch capabilities is a clear Testament, we were starting from.

Brian: A place where our invoices were being handled multiple times, we are layering on new systems into old.

Brian: And that process isn't a smooth one.

But the progress has been clear.

Brian: Clear and as.

Brian: As we go forward.

Perry Moss: And part of the reason why we're excited to add Perry.

Nick.

Perry Moss: Across the organization, we already had a number of initiatives driving efficiencies, which we've all spoken to before consolidating them all into one initiative focused on.

Perry Moss: Driving efficiency gains.

Perry Moss: During process time and cost increasing efficiencies is really what we're focused on vendor management is a good example of it but we expect to see a lot more of it across the organization.

Dan Friedberg: Vendor management is a good example of it, but we expect to see a lot more of it across the organization.

Okay.

Dan Friedberg: And then Aaron on your on your I got your third question was on the industrials and just to confirm we did say that and reinforce the fact that we expect those to be challenged for the next couple of quarters, but are seeing some signs of optimism that we may see some pickup in the second half of the year and get back to normalized volumes, or at least the run rate, start getting back to that from what we experienced prior to the first half of, or the second half of last year. And then, I'm sorry, what was your second question?

Perry Moss: And then Aaron on your on your I've got your third question was on the industrials and just to confirm we did.

Perry Moss: Say that and reinforce the fact that we expect those to be challenged for the next couple of quarters, but are seeing some signs of optimism that we may see some pickup in the second half of the year and get back to <unk>.

Perry Moss: Normalized volumes or at least the run rate start getting back to that from what we experienced prior to the first half or the second half of last year, and then I'm sorry, what was your second.

Perry Moss: <unk>.

Dan Friedberg: Yeah, sorry, I know it was a few in there. Just on the attrition, I mean, it sounds like it was mostly on the mall side plus M&A with some select clients, just wanted to see what you're seeing on churn. Yeah, absolutely, and we've talked about this industry in general is very sticky. We feel like our clients are even stickier with the value proposition that we provide in all the services, but we were challenged a little bit with that. We've talked about it, and yeah, you're right. A lot of it was from the assets held for sale, the mall business that we've struggled with, and then also with some companies, some clients that ended up getting acquired.

Perry Moss: Yes.

Perry Moss: And they're just they're just just on the on the attrition I mean, it sounds like it was mostly on the mall side plus.

Perry Moss: M&A with some select clients not.

Perry Moss: Just wanted to see what youre seeing on churn, yes, absolutely and we've talked about this industry in general is very sticky.

Perry Moss: We feel like our clients or even stickier with the value proposition that we provide and all of the services.

Perry Moss: But we were challenged a little bit with that.

Perry Moss: We've talked about it and Youre right.

Perry Moss: A lot of it was from.

Perry Moss: The assets held for sale the mall.

Perry Moss: That we've that we've struggled with and then also with some companies so clients that ended up getting acquired.

Perry Moss: All right, thanks for that. And then, you know, on the pipeline, you kind of talked about continuing to see strength there. Can you just give us an update, especially with the macro, if you're seeing any notable changes on timing and just kind of how you're thinking about potential cadence of winds there moving forward?

Perry Moss: Alright, Thanks for that and then on the pipeline you kind of talked about continuing to see strength. There can you just give us an update especially with the macro if you're if you're seeing any notable changes on on timing and just kind of how youre thinking about potential cadence of wins there moving forward.

Perry Moss: Yeah, so this is Perry Moss. I'm happy to address that. When we first started our efforts developing our sales process, we baselined the old process and workflow the entire program so we could find the flaws. fill the flaws, and we essentially created an entirely new playbook. We added a sales operations practice. We created a lead generation practice as well. The sales operations group is designed, and when I say group, it's one individual. designed to create KPIs and metrics. So we have full visibility, not only into the total pipeline. into every phase of the sales cycle for every sales manager and representative that we have.

Perry Mas: Yes. So this is Perry Mas I'm happy to address that.

Perry Moss: <unk>.

Speaker Change: When we first started our efforts.

Speaker Change: Developing our sales process we.

Speaker Change: Baselines.

Speaker Change: The old process and workflow the entire program. So we could find the flaws.

Speaker Change: Bill the flaws and we essentially created entirely new playbook, we added a sales operations practice, we created a lead generation practice as well.

Speaker Change: The sales operations group is designed and when I say group, it's one individual design to create kpis and metrics. So we have full visibility not only into the total pipeline but.

Speaker Change: Into every phase of the sales cycle for every sales manager and representative that we have so at any given time.

Perry Moss: So at any given time, we know you know, the various values of stage 1, 2, 3, and 4. Stage 4 is we've won the deal. I think through this very disciplined process, we've continued to see the pipeline grow. So I would just say that the pipeline has grown significantly over the last year, as has the deal flow. And the pipeline continues to grow. today. So, I remain very, very bullish on the pipeline and I think we'll continue to have good things.

No.

Speaker Change: The various values of stage 123, and four stage four is we've won the deal.

Speaker Change: I think through this very disciplined.

Speaker Change: The process, we've continued to see the pipeline grow.

Speaker Change: So I would just say that the pipeline has grown significantly over the last year as has the deal flow.

And our pipeline continues to grow.

Speaker Change: Today, So I remain very very bullish on on the pipeline and I think we'll continue to have good things to come.

Aaron Spychalla: Okay, thanks for that.

Speaker Change: Okay. Thanks for that and then.

Aaron Spychalla: And then, you know, maybe last for me, just just on RWS, it sounds like, you know, we'll hear more in the next month or two, but just, you know, thoughts on expected proceeds. You know, how much has that drag been on the business? And, yeah, just any further clarity on kind of timing there would be great.

Speaker Change: Maybe last for me just just on our Ws It sounds like we'll hear more in the next month or two but just thoughts unexpected proceeds.

Speaker Change: How much of that drag Ben on the business and yes just.

Speaker Change: Just any further clarity on kind of timing there would be great. Thanks.

Aaron Spychalla: So two pieces. On the process, Aaron, we have a preliminary agreement in place, and so I can't really comment about pre-proceeds. Obviously, we'll send out a disclosure once the deal is completed after we've finalized the agreement.

Speaker Change: So two pieces.

Speaker Change: On the process Aaron.

Speaker Change: We have a preliminary agreements in place and so can't really comment about priest proceeds obviously, we'll send out a disclosure once the deal is completed after we've finalized the agreement it was a.

Dan Friedberg: It was a. That part of business is really a non-contributor. So from a bottom line perspective, it following away is not gonna have an impact. I can tell you Brett and the team are very happy about the amount of effort that it took and the disruption it created and the inconsistencies that it caused. It's an extraordinarily small part of our overall business, but it took up an inordinate amount of time. And so I'm excited for the ability to not operate it, but there's no material bottom line impact that we lose. And we'll talk about proceeds shortly.

And that part of business is really a non contributor so from a bottom line perspective it following.

Speaker Change: <unk> is not going to have an impact I can tell you Bret the team are very happy about the amount of effort that it took and the disruption has created and the inconsistency is that it caused.

Speaker Change: Ordinary a small part of our overall business, but it took up in the northern net amount of time and so.

Speaker Change: Im excited for.

Speaker Change: The ability to not operator, but theres no material bottom line impact that we lose and we will talk about proceeds shortly.

Speaker Change: Shortly.

Aaron Spychalla: Understood. Thanks for the color.

Speaker Change: Understood. Thanks for the color I'll turn it over.

Operator: I'll turn it over.

Speaker Change: Yes, Sir.

Okay.

Jerry Sweeney: Thank you. Your next question is from Jerry Sweeney from Roth Capital. Your line is now open. Thank you for joining us, Dan. Cheers. One of...

Speaker Change: Thank you. Our next question is from Gerry Sweeney from Roth Capital. Your line is now open.

Gerry Sweeney: Good afternoon.

Dan Freeberg: Dan Thanks for taking my call.

Gerry Sweeney: Wanted to.

Perry Moss: Perry, using your explanation on the sales pipeline, building the processes around this, I want to take that and maybe talk are a lot of issues that we're seeing on the execution front directly attributable to the Vendor Management Program. Meaning, if you get that. It's a good question, Jerry. I appreciate that. I mean, I certainly think that... You know, we stand to benefit from the completion of that project. You know, that really hasn't hampered us, you know, as far as sales and business development is concerned. But what we intend to do is take the same approach that we did with the sales process.

Gerry Sweeney: Perry.

Speaker Change: Using your explanations sales pipeline building the processes around this I want to take that and maybe.

Gerry Sweeney: Talk about the execution side right.

Gerry Sweeney: And we have this vendor management program costs about onboarding.

Are a lot of issues.

Gerry Sweeney: That we're seeing on the execution front.

Speaker Change: Directly attributable to the vendor management program, meaning if you get that fixed does it make it that much easier for you to implement.

Gerry Sweeney: Implement change and turn.

Speaker Change: Houston side around.

Speaker Change: Yes, good good it's a good question Jerry I appreciate that I mean, I certainly think that.

Speaker Change: We stand to benefit from the completion of that project, but.

Speaker Change: That's that's really hasnt.

Speaker Change: Hampered us as far as sales and business development is concerned.

But what we intend to do is take the same approach that we.

We did with the with the sales process and through our operational excellence initiatives.

Perry Moss: and through our Operational Excellence Initiative. take that process of work flowing Discipline. Key Metrics Analytics. and measure everything that we have in the company. You know, one of the things that we believe is when our employees know that they're performing and they're hitting their KPIs. they become more satisfied. So I would say that the completion of that would certainly be helpful, but I don't think it's hampered us as far as growth is concerned, if that is your question.

Speaker Change: Take that process of work flowing.

Speaker Change: Discipline.

Speaker Change: Yes.

Speaker Change: Key metrics analytics.

Speaker Change: And measure.

Speaker Change: Everything that we have in the company one of the things that we believe is when when our employees know that they are performing and they are hitting their kpis.

Speaker Change: They become more satisfied.

So I would say that the completion of that would certainly be helpful. But I don't think it's hampered us as far as growth is concerned if that if that is your question.

Brett Johnston: Yeah, I didn't want to think it was hampering growth, but I'm just curious if vendor management system gets in place that helps the execution side, gives you the ability to look at analytics execution. Sure. Let me, Jerry, I, yeah, what I would add is I don't see going forward the disruptions, the temporary costs that we've seen as a result of it. I think you had a situation where we added a ton of customers all at once while implementing a system that was new to the organization. And quite frankly, before we had a whole set of processes in place, which could effectively manage the influx.

Speaker Change: Yes, I didn't want to think.

Speaker Change: Hampering growth, but I'm just curious if.

Speaker Change: Vendor management system gets in place.

Speaker Change: The execution side gives you the ability to look at analytics execution sure Craig Kpis and really.

Get you over the hump on the execution front, yes, I guess, let me Jerry.

Speaker Change: Yes, what I would add is.

Speaker Change: Okay.

I don't see going forward the disruptions the temporary costs that we've seen as a result of it I think you had situation, where we added a ton of customers all at once while implementing a system that was new to the organization.

Speaker Change: And quite frankly, before we had a whole set of processes in place, which could effectively manage the influx.

Brett Johnston: So, what we're doing is, as Perry mentioned, mapping out all our processes. We are going to improve all of them incrementally as we go. It's less of a systems implementation issue as it is a process improvement. Certainly there will be opportunities to invest in systems. to enable technology to support our processes, but that shouldn't create the sort of disruptions that we've seen, but rather will enable us to expand margins and benefit from the scale opportunities that exist. But no, I don't see this being a, we're already investing in technology, we're gonna continue to do so to support the business, but I don't think it's gonna be as painful going forward as clearly as it has been this year, given everything that sort of happened all at once.

Speaker Change: So what we're doing is as Perry mentioned mapping out all our processes, we are going to improve all of them incrementally as we go it's less of a systems implementation issue as it is a process improvement certainly there'll be opportunities to invest in <unk>.

<unk>.

Speaker Change: Naval technology to support our processes.

Speaker Change: That shouldn't create the sort of disruptions that we've seen but rather will enable us to expand margins and benefit.

Speaker Change: From the scale opportunities that exist, but no I don't see this being a <unk>.

Speaker Change: Investing in technology, we're going to continue to do so to support the business, but I don't think its going to be as painful.

Speaker Change: Going forward as clearly as it has been this year given everything that sort of happened all at ones does that.

Brett Johnston: Does that? No, yeah, I get what you're saying. I was Yes, it's certainly...

Speaker Change: No I get what you're saying I was hoping is there.

Speaker Change: Really I guess the point I was saying that the vendor management system and Thats going to give you the tools to really execute right now, but yes. Its certainly yes.

Speaker Change: Yes, yes, yes.

Brett Johnston: And as Brett said, that we're almost complete there, and we're seeing that zero-touch benefits are in place, and we're realizing them. Got it.

Brett Johnston: As Brett said that we're almost complete there and we're seeing that.

Speaker Change: Zero touch benefits are in place and we're realizing them.

Brett Johnston: Got it.

Brett Johnston: I'd like...

Speaker Change: Hi.

Speaker Change: I'd like to think I know the answer this question, but it's a question that has gotten quite a bit.

Speaker Change: Kind of state of like the political environment has certainly changed.

Maybe more so than some people anticipated and theres been some more aggressive approaches to.

Dan Friedberg: Thoughts on how people would do business or review the environmental world or environmental benefits? Are you seeing any pushback? Very intuitive question. So we certainly are seeing a greater focus on process efficiency needs and cost takeout. respective clients. So I would say that sustainability and landfill diversion is still important to these customers. However, there's an added demand for being more efficient, taking out cost, which aligns directly with our mission. So we see this, frankly, as a wonderful opportunity to create more value for our customers. I. Thank you.

Speaker Change: Thoughts on how people would do business or review, the environmental world or environmental benefits.

Speaker Change: Are you seeing any pushback changes in that pipeline of business that you're executing again.

Speaker Change: Yes.

Speaker Change: Barry answer the question so we.

Speaker Change: We certainly are seeing.

Speaker Change: A greater focus on process efficiency needs and cost takeout from.

Speaker Change: <unk> clients.

I would say that sustainability and landfill diversion is still important to these customers. However, there is an added demand for being more efficient taking out cost, which aligns directly with our model. So we see this frankly is a wonderful.

Speaker Change: <unk>.

Speaker Change: So.

Speaker Change: To create more value for our customers.

Speaker Change: Got it.

<unk> you.

Speaker Change: You bring value to the table savings by just.

Speaker Change: Neel good absolute words, yes, okay got.

Speaker Change: Got it.

Speaker Change: That's it for me I appreciate it thanks.

Owen Rickert: Your next question is from Owen Rickert from Northland Capital Markets. Your line is now open. Hey guys, one quick one for me. How are you guys thinking about M&A in the near to medium term? Is this even on your mind, given, you know, the greater focus on making those operational improvements and paying down debt?

Speaker Change: Thank you. Your next question is from Alan Richard from Northland Capital Markets. Your line is now open.

Alan Richard: Hey, guys one quick one for me guys.

Speaker Change: Guys thinking about M&A in the near to medium term.

Alan Richard: Is this even on your mind given.

Alan Richard: Greater focus on making those operational improvements and paying down debt.

Okay.

Dan Friedberg: Thanks, Owen. So first of all, the acquisitions that we did a few years ago, as we mentioned, certainly added scale and scope. They were critical at the time. And they've enabled us to attract talented people into the organization. It's given us the ability to get at the table with terrific customers who we've added. So they were a huge enabler for us. We still think strategically they're very viable, but we've also been extremely successful at adding customers. So the percentage of contribution that comes from that is increasingly less. So I think we would still review them, but clearly our focus is on paying down debt and that's where our cash is gonna focus.

Speaker Change: Thanks Al.

Alan Richard: First of all the acquisitions that.

Alan Richard: We did a few years ago.

Alan Richard: As we mentioned certainly added scale and scope they were critical at the time.

And they've enabled us to attract Tam.

Talented people into the organization it has given us the ability to get at the table with terrific customers, who we've added.

So they were a huge enabler for us we still think strategically they're very viable.

Alan Richard: We've also been extremely successful at adding customers. So the.

Percentage of contribution that comes from that is increasingly less.

Alan Richard: So I think we would still review of them, but clearly our focus is on paying down debt and that's where our cash is going to focus.

Dan Friedberg: I think the organization is in a better place than we were before. The issues previously were around the integration of them, and our team and capabilities with Brett and his team have added capabilities that we didn't have then. So I'm confident if we did them, we would execute and integrate them effectively.

Alan Richard: I think the organization is in a better place than we were before.

Alan Richard: The issue leads previously were around the integration of <unk> and our team and capabilities with Brett and his team have added capabilities that we didn't have them. So I'm confident if we did them.

Alan Richard: We would execute and integrate them effectively but to your point I don't see an immediate future us entertaining acquisitions I think our focus will be on driving the efficiencies generating cash.

Dan Friedberg: But to your point, I don't see in the immediate future us entertaining acquisitions. I think our focus will be on driving the efficiencies, generating cash, increasing profitability, and then paying down debt. Perfect. Thank you.

Alan Richard: Increasing profitability and then paying down debt.

Alan Richard: Perfect. Thank you.

Alan Richard: Thank you.

Gregg Kitt: Your next question is from Gregg Kitt from Pinnacle Fund. Your line is now open. Hi, thank you for taking my questions. Dan, you said that you, I think if I heard you correctly, you expect top and bottom line growth. What do you mean by that? Do you mean returning to growth at some point this year, or do you think 2025? over 2024, and is that revenue, gross profit?

Speaker Change: Thank you. Your next question is from Greg attempt to Tom <unk> your.

Speaker Change: Your line is now open.

Alan Richard: Okay.

Alan Richard: Hi, Thank you for taking my questions.

Alan Richard: Dan you said.

Alan Richard: You I think if I heard you correctly, you expect top and bottom line growth in $2025 40, you mean by that you mean returning to growth at some point this year or you think 2025 grows.

Alan Richard: Over 2024, and as that revenue gross profit EBITDA, what do you mean.

Brett Johnston: Hey, Gregg, this is Brett. I'll go ahead and take that question first. I'm sure Dan will jump in as well. But yeah, we certainly expect to continue to grow. As we talked about earlier, there will be some challenges in the first half of the year, certainly Q1. But with these initiatives coming to fruition with the cost. Savings and Initiatives we have with the Vendor Management Program being fully realized and those capabilities. We also talked about Cost Savings Initiatives that were announced today in the earnings release, which is another $3 million of annualized costs. There's a lot coming out of Q1 that we're very positive about, so we certainly expect to continue to grow in all those facets from the top-line revenue, gross profit, and adjusted EBITDA.

Dan Freeberg: Hey, Hey, Greg this up the spread I'll go ahead and take that question first Im sure sure Dan will jump in as well, but.

Dan Freeberg: Yes, we certainly expect to continue to grow as.

Dan Freeberg: As we talked about earlier, there will be some challenges in the first half of the year certainly Q1.

Dan Freeberg: But with these initiatives coming to fruition with the cost savings and initiatives we have.

Dan Freeberg: With the vendor management program.

Dan Freeberg: Being fully realized in those capabilities, we also talked about.

Dan Freeberg: Cost savings initiatives that were announced today and the earnings release, which is another $3 million of annualized cost there is a lot coming out of Q1.

Dan Freeberg: But we're very positive about so we certainly expect to continue to grow.

And all of those assets from the topline revenue gross profit and adjusted EBITDA.

Dan Friedberg: Gregg, I would add to, well, yes, I agree with everything Brett said, and that's accurate. Fourth quarter was clearly disappointing, obviously, and bear in mind as you're sort of thinking about it, there were ad backs related to non-cash charges, the bad debt expense related to the business that we're selling, and these temporary costs which we think of primarily run through and will continue at the beginning of the year. That's one. Second, our revenue engine is working like it never has before. We have an industry and a business model that is very sticky typically, notwithstanding the unusual attrition that we've experienced.

Greg: Greg I would I would add.

Yes, I agree with everything Brett said and Thats accurate.

Greg: Fourth quarter was clearly disappointing obviously.

Bear in mind as Youre sort of thinking about it there were.

Greg: Add backs related to noncash charges bad debt expense related to the business that we're selling and these temporary costs, which we think of.

Greg: Primarily run through and will continue at the beginning of the year. So that's one.

Greg: Second our revenue engine as is working like it never has before.

Greg: We have an industry that in a business model that is very sticky typically not withstanding the UN carrier.

Greg: Unusual attrition that we've experienced.

Dan Friedberg: this year that Brett touched on, and a portion of it, a third is, I think, due to the business that we're shedding. So we think the revenue engine is there. We think we're already seeing the gains, as Brett said, coming through the business. We will see the benefits of the cost reduction. We're going to start implementing all these initiatives and continue to build upon that Perry and Nick and Dave and his team are already driving towards. So. So yeah, so we do feel good about where we're headed and do think that will show growth both top and bottom line.

Brad: This year that Brad touched on.

Brad: And die a portion of it a third is I think.

Due to the customer the business that we're shedding so we.

Brad: We think the revenue engine is there.

Brad: We think we're already seeing the gains as Brett said coming through the business.

Brad: We will see the benefits of the cost reduction we're going to start implementing all of these initiatives and continue to build upon that Perry, Nick and Dave and his team.

Brad: Are already driving towards so.

Brad: Notwithstanding so yes, so we do feel good about where we're headed and do think that.

Brad: We will show growth, both top and bottom line.

Okay.

Gregg Kitt: Thank you. And just to make sure I'm thinking about it clearly, because there were, you know, those additional charges. to 1.5 million for this course. So, when I look at EBITDA, but that wasn't added back to adjusted EBITDA, is that right? That's correct. And so when you talk about growing year over year, you reported 14 and a half million of EBITDA, are you talking about growing over that 14 and a half? Are you talking about if I add back one. Yeah, we looked at those one and a half million. a dollar's worth of charges as being kind of one-timers and not normalized going forward.

Speaker Change: Thank you and just just to make sure im thinking about it clearly because there were those additional charges and.

Speaker Change: It was like $1 5 million for this quarter.

Speaker Change: So when I look at EBITDA from but that wasn't added back to adjusted EBITDA is that right.

Speaker Change: That's correct.

Speaker Change: Okay, and so when you talk about growing year over year, you reported $14 5 million of EBITDA are you talking about growing over that 14 and a half are you talking about growing over the 16.

Speaker Change: Back one 5 million this quarter.

Speaker Change: Yes, we look those $1 5 million.

Speaker Change: Dollars' worth of charges as being kind of one timers.

Speaker Change: And not normalize going forward. So we would certainly expect.

Gregg Kitt: So we would certainly expect the comparison to be against 16 million. Okay.

Speaker Change: The comparison to be against $16 million.

Speaker Change: Okay. Thank you and then.

Brett Johnston: And then with just I liked hearing the focus on debt pay down, I think the the most concerning thing right now, and probably what has happened over the last six months, months with the stock performance being pretty under has been, you know, just haven't been able to generate cash has largely been working. Um, can you, uh, maybe I just quickly go through EBITDA, the free cash flow. let's say 16 million of EBITDA, it looks like. David Mossberg, Aaron Spychalla, Nelson Obus, Gregg Kitt, Brett Johnston, Owen Rickert, Quest Resource seven and a half million dollars. 25, is that right?

Speaker Change: With.

Speaker Change: Just I liked hearing the focus on debt Paydown I think.

Most concerning thing right now and probably what has happened.

Over the last six months with the stock performance fee, we pretty underwhelming as Ben.

Speaker Change: Just haven't been able to generate cash has largely been working capital.

Speaker Change: Can you maybe I'll just quickly go through EBITDA to free cash flow conversion, if you do that.

Speaker Change: Lets say $16 million of EBITDA. It looks like interest if your debt balance isn't reduced is like in the range of $75 million for 2025 is that right.

Speaker Change: Yes.

Brett Johnston: And so that would leave you with like eight and a half million of free cash flow before CapEx. How should we think about CapEx? I think it'll be certainly... at probably around the same rate, especially with our IT spend. We'll continue, as Dan mentioned earlier, we'll continue to invest in that. We've got a lot of opportunities to enhance our systems and provide additional efficiencies through additional capital investment on the IT side. On the equipment side, last year was a little higher because we did have kind of a platform purchase of compactors at the beginning of the year.

Okay.

Speaker Change: So that would leave you with.

Speaker Change: $8 5 million of free cash flow before Capex, how should we think about capex this year.

Speaker Change: I think it'll be certainly.

Speaker Change: Probably around the same rate, especially with our it spend will continue as Dan mentioned earlier, we will continue to invest and now we've got.

Speaker Change: A lot of opportunities to enhance our systems and provide additional efficiencies through additional capital investment on the it side on the equipment side last year was a little higher because we did have kind of a platform purchase.

Speaker Change: <unk> at the beginning of the year.

Brett Johnston: Normalized going forward, that's been more of about a half a million run rate. Um, and so. I think that's a fair assumption going forward for this year on the equipment side, but we'll continue to look at that. Cash flow is an important piece in generating free cash flow, so that'll be kind of a quarter by quarter basis on what we want to allocate.

Speaker Change: Normalized going forward, that's been more of about a half a million run rate.

And so.

Speaker Change: Assuming that.

Speaker Change: I think thats.

Speaker Change: Fair assumption going forward for this year on the equipment side, but we will continue to.

Look at that.

Speaker Change: Cash flow is an important piece and generating free cash flow. So.

Speaker Change: That will be kind of a quarter by quarter basis on what we want to allocate.

Gregg Kitt: Okay, does it make any sense to package any compactors in the sale of the RWS tenant billing business? I guess, you know, where you are right now is your debt balance is probably higher than some people may want. and Reducing Your Debt is the thing that I'm the most focused on. And I would like to see you stack cash, use the cash pay down debt. And that'd be the focus, I think, if you do that, I think the stock's going to have a successful year in concert. the operational changes that you're affecting. Yeah. Couldn't agree more, Gregg.

Speaker Change: Okay does it make any sense to <unk>.

Speaker Change: Package any compactors in the sale of <unk>.

Speaker Change: Our ws tenant billing business.

Speaker Change: I guess, where you are right now is your debt balance sheets, probably.

Speaker Change: Higher than some people may warrant.

Speaker Change: And so and reducing your debt is the thing that I'm the most focused on.

Speaker Change: And I would like to see you.

Stock cash use to cash pay down debt.

Speaker Change: And that that would be the focus I think if you do that I think the stock is going to have a successful year in concert with the operational changes that you are trading right now.

Speaker Change: Yes.

Speaker Change: Couldnt agree more Greg one thing is want to reiterate that our covenants were okay.

Brett Johnston: One thing is, I want to reiterate that our covenants were okay. That's positive. From a working capital standpoint, that has been really what's kept us back from generating cash. We've got a lot of separate initiatives going on on the AR side. You know, we talk about the extra benefits that come from the Vendor Management Program. It also allows us to get invoices processed through faster, which actually impacts our billing side as well. We've got some initiatives to pull forward the billing, get billing faster. We've been working with certain clients as well to bring in payments.

Speaker Change: Before that work.

Speaker Change: That's positive.

Speaker Change: From a working capital standpoint that has been really what's kept us back from generating cash.

We've got a lot of separate initiatives going on on the AUR side, one thing Thats.

Speaker Change: We talk about the extra benefits that come from the vendor management program. It also allows us to get invoices processed through faster, what Jim actually impacts our billing side as well. So we've got some initiatives to pull forward the billing.

Speaker Change: Yet billing faster, we've been working with certain.

Speaker Change: Clients as well to bring in payments, we don't have any.

Brett Johnston: We don't have any, you know, overall... collectability issues, and And then we did talk about the $500,000 that was related to... of bad debt that was related to the asset sale for sale. So we do expect, you know, that's held us back a little bit as well.

Speaker Change: Overall.

Speaker Change: Collectability issues.

Speaker Change: And.

Speaker Change: And then we did talk about the 500000 that was related to.

Speaker Change: Bad debt that was related to the assets held for sale.

Speaker Change: So we do expect.

Speaker Change: That's held us back a little bit as well.

Gregg Kitt: Okay, thank you.

Speaker Change: Okay. Thank you and then maybe my last question is.

Gregg Kitt: And then maybe my last question is... You have, Perry, you have a ton of experience, a great sales leader, and thank you for helping bring on some of these new customers. Hopefully there's the opportunity to. optimize your service costs for those for those customers this year. you're doing some changes with the reduction. to try to focus on profitability.

Speaker Change: You have period, you have a ton of experience.

Speaker Change: Great sales leader and thank you for helping bring on some of these new customers.

Speaker Change: Hopefully there is the opportunity there.

Speaker Change: Optimize our service costs for those for those customers this year.

Speaker Change: Youre doing some changes with the reduction in force.

Speaker Change: To try to focus on profitability why are you guys confident that right now.

Perry Moss: Why are you guys confident that right now? These changes that you're putting in place are going to fix the problems that have led to a little bit of up and down execution over the last probably two or three Hi, Gregg. Good to hear from you. Look, I mean, you know, I've almost finished my first day in the job. And I am very, very optimistic about our outlook. You know, I I've been doing this for a long time. I haven't been doing it for a long time at Quest, but. you know, as I've looked throughout the organization.

Speaker Change: These changes that youre, putting in place are going to fix the problems that have led to a little bit of up and down execution over the last probably two or three years.

Speaker Change: Yes, Hi, Greg.

Greg: Good to hear from you.

Speaker Change: Well I mean I've.

Speaker Change: I've almost finished my first day on the job.

Speaker Change: And.

Speaker Change: I'm very very optimistic about our outlook.

Speaker Change: I've been doing this for a long time I haven't been doing it for a long time at quest, but.

Speaker Change: As I've looked through throughout the organization.

Perry Moss: You know, I see opportunities for improvement. And that's why I think we need to bring this operational excellence and disciplined approach. The analogy that I've used is when you're trickling water through a pipe, you usually don't see any leaks. But when you really pressurize it, that's when the leaks expose themselves. And with all the deal flow that's come through this past year, it's exposed some flaws. in our process. So, this is why we intend to workflow. frankly, the entire company. And we're going to do the same thing that we did in the sales process. We'll identify the gap.

Speaker Change: I see I see.

Speaker Change: The opportunities for improvement and that's why I think we need to brain.

Speaker Change: This operational excellence and disciplined approach.

Speaker Change: The analogy that I that I have used is.

Speaker Change: Trickling water through a pipe you usually don't see any leaks, but when you really pressurize. It that's when the lease expose themselves with all of the deal flow that's come through this past year, it's exposed some flaws.

Processes. So this is why we intend to workflow.

Speaker Change: Frankly, the entire company.

And we're going to do the same thing that we did in the sales process will identify the gaps.

Perry Moss: We're going to fill those gaps. Every department and essentially every contributor, every team member will have KPIs that they will have to attain. And we're going to keep a much closer pulse on the business, so. We're not going to continue to be surprised by... on productivity or Customer Losses. I think, you know, you brought up a good point. I think a focus, a key focus of mine is certainly billing our customers much faster. and then also through the new vendor management team, paying our haulers according to term. You know, perhaps we've been paying a few ahead just to make sure that our customers are well served.

Speaker Change: We're going to fill those gaps.

Speaker Change: Every department in essentially every contributor every team member will have kpis that they will have to attain.

Speaker Change: And we're going to keep a much closer pulse on the business. So.

We're not going to continue to be surprised by.

Speaker Change: On productivity or.

Speaker Change: Customer losses, I think you brought up a good point I think our focus key focus of mine is certainly billing our customers much faster.

And then also through the new vendor management team paying our haulers According to terms.

Perhaps we have been paying a few ahead just to make sure that our customers are well served.

Perry Moss: So this is some of the benefit that we'll get from Nick as well, because Nick is going to take his expertise and spend it with our vendor team. which is, I think, going to bring some additional benefits. You know, I hope I hope that answered your question. I'm happy to address anything else. But I just think bringing a an operational excellence approach and you know, creating a performance culture where we hold everyone accountable. is going to make this business much better. The business isn't broken. We're at the stage where we just need to improve, and I don't see anything being insurmountable or difficult to do.

Speaker Change: So these missiles some of the benefit that we'll get from Nick as well because Nick is going to take his expertise and spend it with our vendor team.

Speaker Change: Which is.

Speaker Change: I think going to bring some some additional benefit so.

Speaker Change: I hope I hope that answered your question.

Speaker Change:

Speaker Change: Happy to address any of them.

Speaker Change: Else, but I, just think bringing EE and operational excellence approach and.

Speaker Change: Creating a performance culture, where we hold everyone accountable.

Speaker Change: He's going to make this business much better the business isn't broken.

Speaker Change: We were at the stage, where we just need to improve and I don't see anything being and Surmountable are difficult to do we just have to execute.

Dan Friedberg: We just have to accelerate.

Dan Friedberg: So Gregg, let me follow up on that. Let me follow up. First of all, We got very lucky when Perry joined and when Ray described his desire to retire and we worked and built a developed a process to to find a replacement and it was clear that operating efficiency as well as growth were key as I mentioned on our remarks and saw we had Perry, and we're able to get them to take the job. And we found Nick, who has this operations experience. The as we've talked in the in the past, this is really an invoice.

Speaker Change: So Greg let me follow up on that.

Speaker Change: And let me follow up but first of all.

And we got very Lucky when Perry joined and.

Ray described his desire to retire and we.

Speaker Change: Worked and built a developed a process to find a replacement and it was clear that operating efficiency as well as growth for key as I mentioned on our remarks and saw we had.

Speaker Change: Perry.

Speaker Change: And we're able to get them to.

Speaker Change: Take the job and we found Nick who has this operations experienced but.

Speaker Change: As we've talked in the in the past this is really an invoice.

Dan Friedberg: driven business. It's information and data. We don't make anything. We have good people. We just need to give them the tools and the processes. What we excelled at previously is executing on behalf of our customers, and that's been our focus, and we've done an amazing job at that in terms of landing, expanding, and retaining. We need to build that same discipline and process that we have on the customer side and the operation side, and we never have. We may do. We have good people now. We can give them the tools. We can build processes. and then we can build systems to support that, so.

Speaker Change: Driven business.

Speaker Change: Information and data, we don't make anything.

Speaker Change: We have good people and we just need to give them the tools and the processes.

Speaker Change: What we excelled at previously is executing on behalf of our customers. So that's been our focus and we've done an amazing job at that.

Speaker Change: In terms of landing expanding and retaining we need to build that same discipline and process that we have on the customer side on the operation side and we never have.

Speaker Change: We may do we have good people now we can give them the tools, we can build processes.

Speaker Change: And then we can build systems to support that so.

Dan Friedberg: That's why we're very confident, because we sort of know what the processing needs are, and the processes we need to work on. In fact, obviously, a lot of it has been underway. Because Perry's not new here, and Brett and the team have been working away at it, but that gives us the confidence. Thank you.

That's why we're very confident because we sort of know what the processing needs are and the processes, we need to work on in fact, obviously a lot of it has been underway.

Speaker Change: Because <unk>.

Speaker Change: <unk> not new here and Brent and the team have been working away at it.

Speaker Change: But.

Speaker Change: That gives us the confidence.

Speaker Change: Thank you.

Speaker Change: Thanks, Greg.

Speaker Change: Thank you. Your next question is from Nelson Opus.

Nelson Obus: Your next question is from Nelson Obus from Winfield Capital. Your line is open. Yeah, hi there. Just in regard to client attrition, I think you said a third was from RWS. which leaves two thirds. And you identified M&A of a customer as being a factor. But have you had execution departures? And if you have, what have you done about it in terms of Monday morning quarterback?

Speaker Change: Lindsay I'll to capital your line is now open.

Speaker Change: Yes, hi, there.

Speaker Change: Just in regard to client attrition I think you said is there.

Speaker Change: Was from our AWS.

Speaker Change: Which means two thirds.

Speaker Change: And you identified.

Speaker Change: M&A of a customer as being a factor, but have you had execution departures and if you have what have you done about it in terms of.

Speaker Change: Monday morning Quarterbacking.

Brett Johnston: Hey, Nelson. This is Brett. I'll take that question. So, yeah, as you mentioned, just reiterate, a third of it was from the RWS business that's held for sale right now. We have had some client attrition through customers being acquired. I'll remind you that, you know, when we talked about lower volumes, when we talk about lower volumes and lost volumes, that also includes our industrial clients that we haven't lost but temporarily reduced volumes on the vendor side. I'm sorry, on the client side that have reduced their production volumes and thus revenues have declined with them. We look at that as temporary and improving in the back half of the year.

Nelson: Hello, Nelson to spread I'll take that question so.

Speaker Change: Yes, as you mentioned just reiterate a third of it was from from the <unk> business. That's held for sale right now.

Speaker Change: We have had some client attrition through customers being acquired I'll remind you that when we talked about lower volumes.

Speaker Change: When we talk about lower volumes and loss loss volumes that also includes our industrial clients that we havent lost but temporarily reduced volumes on the vendor side.

Speaker Change: I'm sorry on the client side that are that have reduced their production volumes in the us.

Speaker Change: Revenues have declined with them, we look at that as temporary and improving in the back half of the year.

Brett Johnston: You know, I think, as Dan was just speaking, client-facing, we've done a really good job and we don't really see any operational risk with the clients. It's more performing in the back office and executing on that side and then, you know, We're excited about the progress we continue to make, but we still look at this business, we know this business is very sticky. I think we started talking about that first question, it's a very sticky business. Our clients have a great relationship.

Speaker Change: I think the.

Speaker Change: As Dan was just speaking client facing we've done a really good job.

Speaker Change: And we don't really see any operational risk with the clients it's more perf.

Speaker Change: Performing in the back office and executing on that side and then.

Speaker Change: We're excited about.

The progress we continue to make but we'd still look at this business. We know this business is very sticky I think we started talking about that first question, it's a very sticky business and.

Speaker Change: Our clients have a great relationship.

Brett Johnston: Fine.

Okay fine.

Brett Johnston: And my other question had to do with the compactor business. You said you'd be spending about a half a million dollars in CapEx, which sounds like steady state, but I would think that you're either going to be in that business or not in that business. Is the jury out on that, or is there a different take? No, I wouldn't say that the jury's out. You know, absent of large platform businesses, the CapEx that's going to be spent is really to support existing clients. That's why we entered this space is because it's complementary to our current client base and we're able to sell into that group.

Speaker Change: My other question had to do with the Contactor business, you said you'd be spending about a half a million dollars in capex, which it sounds like steady state, but I would think.

Speaker Change: That year or they're going to be in that business are not in that business as it is in jewelry out on that or.

Speaker Change: Or is there a different take.

Speaker Change: No I wouldn't say the jury's out.

Speaker Change: Absent of large platform businesses. The capex, that's going to be spent is really to support existing clients.

That steps, while we entered this space because it is complementary to our current client base and we're able to sell into that group.

Brett Johnston: So, as long as we have that, but that's kind of our conservative estimate on that. The sales team for that business has been doing great. We've seen a lot of demand. So, just trying to extrapolate on a run rate basis on what it's been, but it certainly could throttle up. And if there's an opportunity out there for a platform acquisition of just compactors equipment, it's not necessarily a business, then we'll look at that as we did. But bottom line, we still want to be very disciplined with our cash and pay down debt. And also, we've always been in the compactor business because we've always had them supporting our customers.

Speaker Change: So as long as we have that but thats kind of our conservative estimate on that the sales team for that for that business has been doing great. We've seen a lot of demand.

Speaker Change: So just trying to extrapolate on a run rate basis on what it's been but it certainly could throttle up and if there is an opportunity out there for our platform acquisition of just comp factors equipment is not necessarily a business. Then we will look at that as we did but bottom line, we still want to be very disciplined with our cash and.

Speaker Change: Pay down debt.

Speaker Change: And also we've always been in the <unk> business, because we've always had them supporting our customers and so there's always capex that occurs.

Brett Johnston: And so there's always CapEx that occurs. in any event, because they As Perry was discussing last night over dinner, that helps increase stickiness with these customers. they enter into long-term contracts for the compactors, and so they stick with you longer anyway, and also the contracts expire different times than the overall contract, so you always have a touchpoint with the customer. So it's core in that it supports our existing customers, and that's where most of the CapEx has been. But your question is, are we gonna be aggressively growing that platform relative to other options? The returns are great, but clearly pay down debt is the focus right now.

Speaker Change: In any event because.

Speaker Change: Dave.

As Perry was discussing.

Speaker Change: Last night <unk>.

Speaker Change: Over dinner.

Speaker Change: That helps increase stickiness with these customers.

<unk> entered into long term contracts for the comp actors and so they stick with you longer anyway, and also the contracts expire different times than your overall contract. So you'll always have a touch point with the customer. So it's core in that it supports our existing customers and that's where most of the capex.

Speaker Change: As Ben for your question is are we going to be aggressively growing that platform relative to other options.

Speaker Change: Options the returns are great, but clearly pay down debt as.

Speaker Change: Our focus right now.

Brett Johnston: I think that's important. Criteria to get paid out. Fair amount of consensus on that. Agreed.

Speaker Change: No I think that's important.

Speaker Change: Criteria.

Speaker Change: Debt pay down I think.

Fair amount of consensus on that.

Speaker Change: Great. Thank you.

Operator: Thank you.

Operator: Once again, please press star 1 should you wish to ask a question.

Speaker Change: Thank you once again, please press star one should you wish to ask a question.

George Mullins: Your next question is from George Mullins from MKH Management. Your line is now open. Great, thank you.

Your next question is from George Melas from MG Each management. Your line is now open.

George Melas: Great. Thank you.

Speaker Change: <unk>.

Dan Friedberg: I just want to start by sort of thanking Greg, I think, for his leadership over many years and his He's always kind of kind communications and I thought he was a great face of the company. But let me now just talk a little bit about acquisition. Dan, you talked about how acquisition had been, you know, so important for the company. And I remember when we talked at the Wealth Conference a couple of years ago, maybe, you were quite positive on RWS. And that's turned out to be just a fucking total disaster. So I'm just trying to understand what you guys have learned from that.

Speaker Change: I just wanted to start by thanking Ray I think for his leadership over many years entities.

Speaker Change: He is always kind of a kind communications.

He was a great base of the company.

And you know just talk a little bit about that acquisition that we talked about the <unk> acquisition had been.

Speaker Change: So in accordance with the company and I remember when we talk to.

Speaker Change: That's it Roth conference a couple of years ago, maybe you were quite positive.

Speaker Change: And that's turned out to be just.

Speaker Change: Total disaster.

Speaker Change: So im just trying to understand when do you guys have learned from that and given from what you're saying.

Dan Friedberg: And getting from what you're saying, I'm not sure you've learned very much of anything.

I'm not sure you've learned very much. Thanks.

Dan Friedberg: Thanks, George. I appreciate your comments. I'm being truthful. I'm not a happy camper right now, but I'm just telling you what happened. No, I understand. And I appreciate your frustration and I share it. As I said, but it's not the issues that we faced aren't RWS specific. We've tripled the size of the business over the past five years and grown growth profits hugely. But I understand and your frustration and I share it. Now, the reality is a very small portion of overall RWS sort of is the root of the problem. The rest of the RWS acquisition has performed and has been integrated into the rest of the business.

George Melas: Thanks George.

Speaker Change: I appreciate your comments.

Speaker Change: I appreciate your comments.

Speaker Change: So I'm going to resolve.

Speaker Change: Im not a happy camper right now but.

Speaker Change: Right.

Speaker Change: Okay.

Speaker Change: But what happened.

Speaker Change: No I understood.

Speaker Change: And I.

Speaker Change: We share your frustration and I share it.

As I said, but it's not the issues that we face start or our ws specific.

We've tripled the size of the business over the past five years.

Speaker Change: <unk> gross profits hugely but I understand and.

Speaker Change: Your frustration and I share it now.

Speaker Change: The reality is a very small portion of overall Rd OWS sort of is the root of the problem.

Speaker Change: The rest of the art of a U S acquisition has performed and has been integrated into the rest of the business the commodity side of the business.

Dan Friedberg: The commodity side of the business, the non-tenant-billed business have been integrated and have continued to grow and perform. So the disaster was related to early on accounting diligence and the integration of those accounts. And that's created a ton of noise and a ton of disruption. And I totally agree. And we're hoping that that is now behind us. So I agree with your frustration, but I am really excited about where we're headed.

Speaker Change: Non tenant build business.

Have been integrated and have continued to grow.

Speaker Change: And perform so the disaster was related to early on.

Speaker Change: Accounting diligence and integration of those accounts and that's created a ton of noise and a ton of disruption and I totally agree and we're hoping that that is now.

Speaker Change: Behind us.

Speaker Change: So.

Speaker Change: So I agree with your frustration.

Speaker Change: But I am really excited about where we're headed first of all I share entirely your sentiment about re rate is a good friend and was a.

Dan Friedberg: First of all, I share entirely your sentiments about Ray. Ray is a good friend and was a tremendous leader. He remains to be a tremendous leader. He built a culture here. He attracted phenomenal people and he's retained them because of his personality and who he is. He's been a great sort of asset to the business. I'm equally excited about where we're headed because we're now focused on driving execution and growing our bottom line. We have customers, we have revenue, and we need to execute and drive the gross profits that we have into cash and profits.

Speaker Change: Tremendous leader he remains to be a tremendous leader he built a culture here <unk>.

Speaker Change: He attracted phenomenal people and retain them because of his.

Speaker Change: Personality and who he is he has been a great sort of asset to the business I'm equally excited about where we're headed because.

Speaker Change: We're now focused on driving execution.

Speaker Change: And growing our bottom line, we have customers we have revenue.

Speaker Change: And we need to execute and drive the gross profits that we have into cash and profits and I'm excited that and confident that we're going to do so and I think we've demonstrated that over the past notwithstanding these changes so again I share your frustration.

Dan Friedberg: And I'm excited and confident that we're going to do so. And I think we've demonstrated that over the past, notwithstanding these changes. So again, I share your frustration. RWS was not integrated well. We've worked through the accounting issues, it's taken forever because of the thousands and thousands of invoices which are inherent in our business. The good news is Brett and his team have built controls over the past few years which have been tested and that have performed. And we've invested in the system and an AP system which has enabled us to eliminate a lot of the issues related to it.

Our W. S.

Speaker Change: Was not integrated well.

Speaker Change: We've worked through the accounting issues. It has taken forever because of the thousands and thousands of invoices, which are inherent in our system business and the good news is Brett and his team have built controls over the past few years, which have been tested which.

Speaker Change: Sure.

Speaker Change: And Hulu and that are performed.

Speaker Change: And we've invested in the system and an AP system, which has enabled us to eliminate a lot of the issues related to it.

Dan Friedberg: in terms of the number of touches of the invoices. So I think we have a stronger, more predictable model now. But I absolutely share your frustration. And as you can tell, the board and I agree with you. And I think we're now positioned by shedding our WS, by taking the cost actions that we've taken, by implementing a performance focused culture and mandate, and entirely have the organization focused on that. So again, I apologize for the performance, and I certainly share your frustration. Okay.

Speaker Change: In terms of the number of touches of the invoices. So I think we are a stronger more predictable model now.

Speaker Change: I absolutely share your frustration.

Speaker Change: And as you can tell.

Speaker Change: The board and I agree with you.

Speaker Change: And I think we're now positioned by shedding our W. S by taking the cost actions that we've taken by implementing a performance focused culture and mandate and entirely have the organization focused on that so.

Speaker Change: Again, I apologize for the performance that I certainly share your frustration.

George Mullins: Maybe a few questions for Brett. Brett, can you carve out the churn part of the revenue loss? You sort of lumped it together with soft revenue in the industrial markets. How much really was the attrition? What's the attrition? So we talked, we have 44 million of lost revenue, right, related to both lost customers. and the lower volumes, mainly from, mostly from the industrial clients. A third of it, as I've mentioned previously, a third of it was related to that mall business. I think for the remaining two-thirds, it's fair to just kind of cut that in half, with a half of it remaining to the rest of it, to other true attrition and the other related to those industrial clients and volumes that we expect to come back.

Okay.

Speaker Change: A few questions for Brett.

Speaker Change: You carve out sure and clients.

Speaker Change: The revenue loss.

Speaker Change: Together with soft revenue in the industrial markets.

Speaker Change: How much you really.

Speaker Change: Christian.

Speaker Change: Was the attrition so we talked.

Speaker Change: We have $44 million.

Speaker Change: <unk> of loss revenue related to both Los customers.

Speaker Change: And.

The lower volumes, mainly from mostly from the industrial clients.

A third of it as I mentioned previously a third of it was related to that mall business.

Speaker Change: Thank for the remaining two thirds, it's fair to just kind of cut that in half.

Speaker Change: With the half of the remaining to the rest of the other true attrition and the other related to those industrial clients and volumes that we expect to come back.

Brett Johnston: Okay, I was confused by what you said the number you gave 4.4 million 44 million 44 million is what we put for the year for the year. Yes. And how much was it for the quarter? about a fourth of that. Okay. Okay, great. And let's see.

Speaker Change: M&A.

Speaker Change: I was confused by what you said the number you gave $4 4 million.

Speaker Change: $44 million $44 million is what we.

Speaker Change: For the year, yes.

Speaker Change: And how much was it for the quarter.

Speaker Change: It's about a fourth of that.

Speaker Change: Okay.

Speaker Change: Right and.

Speaker Change: Let's see.

Brett Johnston: The Reductioning Force. Is that partly related to the efficiencies of implementation of EMS and other technologies or is it? on top of that, or will you see further efficiencies in the future? Yeah, we'll see further efficiencies. This is not this is not the end of our story in terms of finding additional efficiencies with within the business. We had talked previously about some additional savings related specifically to this program. There's a little bit of that in there, but those are largely still to come. There's some temporary costs as well that were in there that will come out as well.

Speaker Change: The reduction in force.

Is that partly related to the efficiencies.

Speaker Change: Communication.

Speaker Change: <unk> and other technologies.

Speaker Change: Ed.

Speaker Change: On top of or whether you see further efficiencies in the future.

Speaker Change: Yes, we will see further efficiencies this is not.

Speaker Change: This is not the end of our story in terms of finding additional efficiencies.

Speaker Change: Within the business.

Speaker Change: We had talked previously about.

Some additional savings related specifically to this program.

Speaker Change: There's a little bit of that in there but.

Speaker Change: Those are largely still to come there is some temporary costs as well that were in there that are that will come out as well.

Speaker Change: And and.

Brett Johnston: Yeah, beyond that, it's mostly just related to opportunities right now to kind of right size. So we cut some DNA as well, as well as some of the some of the individuals. Going forward, obviously, this is a very scalable business, and we expect to grow going forward. So it doesn't mean that there will be reductions in the future, we will get leverage and operating leverage from the organization, from the foundation as we grow, as we introduce the process efficiencies. But the reduction right now is a combination of the the temporary costs incurred, and efficiency gains to date.

Speaker Change: Beyond that it's mostly just related to opportunities right now to kind of rightsize.

Speaker Change: So we cut some G&A as well as well as some of the some of the individuals.

Going forward.

Speaker Change: Obviously this is a very scalable business and we expect to grow going forward.

Speaker Change: So it doesn't mean that there will be reductions in the future.

Speaker Change: We will get leverage in operating leverage from the organization from the foundation as we grow as we introduce the process efficiencies.

Speaker Change: The reduction.

Speaker Change: Right now is a combination of the selling of the portion of our W. S.

Speaker Change: The temporary costs incurred and efficiency gains.

Speaker Change: Today.

Brett Johnston: Okay, in the selling of the RWS, what percentage of that 15% reduction in force? and we're in the middle of selling and so can't disclose, but in any event, we integrated RWS. So, most of the people. who are doing multiple things, so it's really difficult to allocate how much of them are WS because a lot of them are working on a whole bunch of different things.

Speaker Change: Okay.

Speaker Change: Selling of the <unk>, what percentage of that 50% reduction in forces Matt.

Speaker Change: Again, we're in the middle of selling and so.

Speaker Change: Wanted to I can't disclose but in any event, we integrated our W. S.

Speaker Change: So most of the people.

Speaker Change: Are doing multiple things so it's really difficult to allocate how much of them are ws because a lot of them are working on a whole bunch of different things.

Brett Johnston: And then, Brett, on the working capital, I mean, since the time of the acquisition of WS, so I go back to mid-21, so that's a long time ago. But the DSOs are up 20 days from roughly 60 to 80. What do you think is a normalized? a normal, you know, DSO, given your, your current customer mix. Yeah, given the current customer makeup, George, I still expect us to get back to the mid-60s. Again, you've got to back out any increases in working capital as related to new customers that we bring on. But I certainly don't want to back off of that goal to get to the mid-60s.

Speaker Change: Okay, Great and then Greg on the working capital.

Speaker Change: <unk>.

Speaker Change: With the acquisition of Dws I go back to mid 'twenty, one so that's a long time ago.

Speaker Change: The DSO was up two days from roughly 60%.

Speaker Change: When do you think is a normalized.

Speaker Change: Our normal.

Speaker Change: DSO given your current customer makeup.

Speaker Change: Yes, given the current customer makeup George I still expect us to get back to the mid mid <unk> again, you got to back out any increases in working capital is related to new customers that we bring on.

Speaker Change: But I certainly don't want to back off of that goal to get to the mid sixties.

Brett Johnston: As I spoke to earlier, we've got a lot of separate initiatives. There is a little bit of customer interest in there, but largely I've been really one of the many positives that's come out of the current sales process is much more disciplined in the terms that we negotiate with the clients. So we are seeing better terms overall. As I mentioned, the mall-related business has been challenging from a collection standpoint. And additionally, we're going to be able to build faster. And we continue to work on the team does a great job on day-to-day collection. So I still am optimistic that we can get back to the mid-60s near term.

Speaker Change: As I spoke to earlier, we've got a lot of separate initiatives. There is a little bit of customer mix in there, but largely I've been really one of the.

Speaker Change: One of the many positive that's come out of the current sales processes.

Speaker Change: Much more disciplined in the terms that we negotiate with the clients.

So we are seeing better terms overall.

Speaker Change: As I mentioned.

Speaker Change: The mall related business has been challenging from a collection standpoint.

Speaker Change: And Additionally, we've got we're going to be able to build faster and we continue to work on the team does a great job on day to day collection. So I still am optimistic that we can get back to the mid sixties near term.

George Mullins: Okay, great. That's very encouraging. Thank you very much. Thanks George. Thank you George. Thank you.

Speaker Change: Okay, great. Thanks, very encouraging thank you very much.

Speaker Change: Thanks, George Thank you George.

Speaker Change: Sure.

Speaker Change: Thank you.

Dan Friedberg: There are no further questions at this time. Please proceed. Thank you.

Speaker Change: There are no further questions at this time.

David: That's correct David.

Dan Friedberg: I appreciate it, Alfred. So first of all, I want to thank all of you for your interest in and support of Quest. I also want to thank Ray for his friendship, his commitment to the business, and what he's given to Quest and all the Quest stores. current and past, and really thank him for everything that he has done. I also want to reiterate our commitment to aggressively driving change, increasing consistency, improving operations, and generating significant shareholder value. We are all confident in the business. We have a strong value proposition. adding customers. And we have a foundation to deliver higher margins and where we can demonstrate scale.

David: Thank you I appreciate it all right. So first of all I want to thank all of you for your interest in support of Quest.

Speaker Change: I also want to thank ray.

Speaker Change: For his friendship his commitment to the business and what he has given to question all the quest stores.

Speaker Change: Current and past.

Speaker Change: And really thank him for everything that he has done I also want to reiterate our commitment to aggressively driving change.

Increasing consistency improving operations and generating significant shareholder value.

Speaker Change: We are all confident in the business, we have a strong value proposition.

Speaker Change: Adding customers.

And we have the foundation to deliver higher margins and where we can demonstrate scale.

Operator: But clearly now is the time for execution, plain and simple. We know that. We know what we need to do, and we're focused on accelerating performance. We have added terrific people to our already existing team of great contributors. We will and have and will continue to take decisive action and look very forward to coming back to you soon with updates. Thank you. Thank you, operator. Thank you, ladies and gentlemen.

Speaker Change: But clearly now is the time for execution plain and simple we know that we know what we need to do and we're focused on accelerating performance.

We have added terrific people to add our already existing team of great contributors.

We will have and will continue to take decisive action and look very forward to coming back to you soon with updates. Thank you.

Speaker Change: Thank you operator.

Speaker Change: Okay.

Speaker Change: Thank you ladies and gentlemen, the conference has now ended thank you all for joining you may all disconnect your lines.

Operator: The conference has now ended. Thank you all for joining. You may all disconnect your lines.