Quest Resource Holding Corporation

What they do

Quest arranges and manages waste, disposal, and recycling services for customers across many locations, aggregating a national network of service providers rather than owning most collection assets. It describes itself as a national leader in environmental waste and recycling services and says its recycling services are comprehensive and cost-effective. The company operates in a highly fragmented waste and recycling service market and reports a single consolidated business rather than separate operating segments.

Revenue drivers

• Waste and recycling services to multi-location customers — Revenue comes from managing waste, disposal, and recycling programs for national and regional customers across many sites; total annual revenue was $250.2 million in 2025 and quarterly revenue was $64.1 million in Q2 2026.
• Share-of-wallet expansion with existing customers — The company grows by winning additional services and locations from current customers; Q2 2026 results included four new share-of-wallet wins, including a significant one with a large national automotive parts retailer.
• New customer onboarding, including quick-service restaurant franchisee — New customer wins onboarded in the second half of 2025 and first quarter of 2026 drove Q2 2026 revenue growth; the company launched a large quick-service restaurant franchisee customer in May 2026 with minimal start-up costs.
• Industrial customer volumes — Management cited stabilizing volumes from Industrial customers as a component of the second quarter improvement, alongside new customer wins and wallet share expansions.

Recent performance

Q2 2026 revenue was $64.1 million, up 7.6% year over year and 3.8% sequentially. Gross profit was $10.4 million with gross margin of 16.3%, down from 18.5% in Q2 2025 but up from 15.7% in Q1 2026. GAAP net loss was $(12.2) million, including an $11.0 million non-cash goodwill impairment, versus a $(2.0) million net loss in Q2 2025. Adjusted EBITDA was $2.8 million, compared with $2.7 million a year earlier and $1.8 million in Q1 2026. Operating cash flow was $4.5 million, and the company voluntarily repaid $2.0 million of term debt in the quarter.

Strategy

Management is focused on Operational Excellence initiatives intended to drive productivity and cost reductions, highlighted by an 11% year-over-year SG&A reduction in Q2 2026. Capital allocation priorities stated by the CFO are cost optimization, debt reduction, and improvement of the cash cycle. The company repaid $4.0 million of term debt voluntarily year to date through Q2 2026 and is using working capital initiatives to fund that reduction. Growth is being pursued through new customer wins and share-of-wallet expansions, including a large national automotive parts retailer and a quick-service restaurant franchisee. Management describes the sales pipeline as healthy.

Risks

• Goodwill impairment and continued losses — Q2 2026 included an $11.0 million non-cash goodwill impairment, and goodwill still stood at $70.1 million of $134.3 million in total assets at June 30, 2026, leaving impairment exposure if results do not improve.
• Declining gross margin — Gross margin fell to 16.3% in Q2 2026 from 18.5% in Q2 2025, indicating that revenue growth is not translating into proportional gross profit.
• Leverage and thin liquidity — At June 30, 2026 the company had $59.4 million of long-term debt, $107.5 million of total liabilities, $26.8 million of equity, and only $1.0 million of cash.
• Concentrated customer wins and renewals — Growth depends on winning new customers and expanding share of wallet with large accounts such as the national automotive parts retailer; losing or failing to renew such accounts would pressure revenue.

Outlook

Management said the company returned to top-line and Adjusted EBITDA growth in Q2 2026, both sequentially and year over year, and cited a healthy sales pipeline and a gradually improving operating landscape. Quest expects to deliver improved financial results as conditions normalize, supported by Operational Excellence initiatives and recent customer wins. The stated financial focus remains cost optimization, debt reduction, and ongoing improvement of the cash cycle.