QRHC

• Overall Financial Performance

  • Returned to year-over-year and sequential top-line revenue and adjusted EBITDA growth in Q2 2026, building on momentum from Q1 2026
  • Total Q2 revenue hit $64.1 million (8% YoY, 4% sequential); gross profit totaled $10.4 million (-6% YoY, +8% sequential) with a 16.3% gross margin (down 220 bps YoY, up 60 bps sequential)
  • SG&A was $8.2 million, an 11% YoY reduction on 8% higher revenue, marking tangible results from operational efficiency initiatives
  • Recorded a $11 million non-cash goodwill impairment charge tied to lower market capitalization, with no impact to liquidity, cash flow, or debt covenant compliance
  • Generated $4.5 million in operating cash flow; reduced net term debt by $4.6 million year-to-date 2026 and $17 million over the last six quarters

• Strategic Progress

  • Onboarded nine material seven-figure+ wallet share wins across existing customers since H2 2025, with four additional wins closed in Q2 2026 including a large national automotive parts retailer
  • New customer wins are concentrated in high-growth non-industrial markets including food products, quick service restaurants, retail, and hospitality, driving meaningful portfolio diversification
  • Improved working capital metrics: DSO fell to 70 from mid-70s in Q1, working capital days reduced to 5 from 12 in Q1 and 19 a year ago, on track to hit a near-term DSO target of mid-60s
  • Overhauled internal processes to standardize operations, improve productivity, and reduce redundant work, resulting in a 20% YoY reduction in SG&A through the first half of 2026

• Balance Sheet & Cash Priorities

  • Ended Q2 with $1 million in cash and $19.4 million in available capacity on the ABL credit facility
  • Continued focus on cash cycle optimization via improved billing, collections, and vendor payment processes to generate free cash flow for ongoing voluntary debt reduction
  • Made a $2 million voluntary early debt payment in Q2, with debt reduction remaining a top corporate priority

• Revenue: Management expects another quarter of sequential revenue growth in Q3 2026
• Gross margins: Management forecasts gross margins will be flat to slightly up in Q3 2026 as industrial volumes ramp at select large customers
• EBITDA conversion: Gross profit to EBITDA conversion is expected to be slightly higher than the historical 50% target, driven by lower onboarding costs for wallet share expansion opportunities
• No material upward or downward revisions to prior long-term strategic or financial targets were announced

Quest Resources divides its business into two core segments: Industrial and Non-Industrial. Total company revenue for Q2 2026 was $64.1 million, an 8% year-over-year increase and 4% sequential increase from Q1 2026. The Industrial segment contributed approximately $3.3 million in year-over-year revenue growth from volume improvements at stabilized major client accounts; volumes remain subdued compared to pre-2025 levels and are expected to stay at the new norm. The Non-Industrial segment contributed $1.2 million in net year-over-year revenue growth from new customer wins and wallet share expansions, outperforming internal expectations and driving portfolio diversification. No separate absolute revenue figures or formal revenue contribution percentages were disclosed for each segment.

• The overall macroeconomic environment remains complex and uneven, with uncertain trends that could reverse recent industrial volume stabilization
• Extended sales cycles for large new potential customers, as businesses delay final decisions while monitoring macroeconomic conditions
• Recent increases in diesel prices tied to global geopolitical events create potential input cost pressure
• Volumes at a subset of large industrial accounts remain subdued relative to historical levels and are not expected to return to prior peaks
• Non-cash goodwill impairment was triggered by the company's recent decline in market capitalization

Q: The analyst asked for details on the recent automotive customer wallet share win, an update on the overall pipeline, and whether industrial expansion opportunities are still being pursued. / A: Management declined to share specific customer details but confirmed the win is a seven-figure+ opportunity that is immediately accretive to gross profit, with room for additional future growth. Nine material wallet share wins have closed since H2 2025, all six- to seven-figure deals, and attractive industrial expansion opportunities are still in the pipeline, with portfolio diversification remaining the top priority.

Q: The analyst asked if the historical 50% gross profit to adjusted EBITDA conversion target is still accurate, given recent operational improvements. / A: Management confirmed conversion is now slightly higher than the historical target, especially for wallet share opportunities. Lower onboarding and implementation costs for existing customer expansions drive the higher conversion, as infrastructure and customer relationships are already in place.

Q: The analyst asked for an update on recent operational initiatives and key focus areas moving forward. / A: Management has prioritized standardizing and documenting all internal processes, implementing consistent weekly performance tracking against baseline improvement plans. These efforts have driven significant productivity gains, resulting in a 20% year-over-year reduction in SG&A through the first half of 2026, and process optimization will remain a core focus.