Please standby. Good day, ladies and gentlemen. Welcome to the Quest Resource Holding Corp.’s Third Quarter 2019 Earnings Call. Today’s call is being recorded.At this time, I would like to hand the conference over to David Mossberg, Investor Relations Representative. Please go ahead, sir..

Thank you, Lisa, and thank you everyone for joining us on the call. Before we begin, I would 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.Forward-looking statements also include statements regarding Quest’s future opportunities for growth, Quest’s expectations for revenue, margins and profitability in future periods, Quest’s industry position and industry trends, Quest’s prospects, outlook and business strategies going forward and Quest’s belief regarding progress and timing.

Such forward-looking statements are based on Quest’s current expectations, estimates, projections, beliefs and assumptions and involve significant risks and uncertainties.Actual events or Quest’s results could differ materially from those discussed in the forward-looking statements as a result of various factors, including changing market trends, reduced demand and other competitive nature of Quest’s industries, discussed in greater detail on Quest’s filings with the Securities and Exchange Commission, including its report on Form 10-K for the year-ended December 31, 2018.

You are cautioned not to place undue reliance on such statements and to consult our SEC filings for additional risks and uncertainties.You can find those documents on Quest’s website at qrhc.com.

Quest’s forward-looking statements are presented as of the date made and we disclaim any duty to update such statements unless required to do so by law.In addition, in this call, we may include industry and market data and other statistical information, as well as Quest’s observations and views about industry conditions and developments.

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

In addition, Quest’s observations and view about industry conditions and developments are its own and may not be supported or agreed with by other industry participants or observers.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 that presentation of these non-GAAP financial measures are useful for investors’ understanding and assessment of the company’s ongoing core operations and prospects for the future.Unless it is otherwise stated, it should be assumed that any financials discussed on 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.With that said, I will now turn the call over to Ray Hatch, President and Chief Executive Officer..

Thank you, Dave. And welcome to everyone on our call to discuss our third quarter financial results.

Joining me today is Laurie Latham, our Senior Vice President and Chief Financial Officer.We are pleased that we again produced solid financial results during the third quarter and remain on track to produce record levels of gross profit and adjusted EBITDA during 2019.

We are and will continue to focus on managing the business to grow gross profit dollars, which is the key metric that we use to gauge our success.Based on our gross profit results, we have record performance in the third quarter, gross profit was up 7% for the quarter, and year-to-date gross profit has increased 13%.Our pipeline of opportunities continues to grow with existing as well as new customers and I am as excited as ever about the trajectory of the business and the strength of our customer relationships.Before I get into more detail, I am going to turn the call over to Laurie to review the financials..

Thank you, Ray and good afternoon to everyone on the call. Third quarter revenue was $23.9 million, a decrease of 7.7% compared with the third quarter last year. Year-to-date, revenue was $76 million, a decrease of 3.2% year-over-year.

The decrease was primarily due to our strategic focus to transition away from lower value added services, which resulted in exiting low margin service business by the customer in late 2018, partially offset by increased services of generally higher value solutions from both our continuing and new customer base.I will also note that these factors are likely to continue to affect our revenue comparisons in the fourth quarter.

However, we continue to expect gross profit to show year-over-year growth during the fourth quarter and reflect greater than 10% growth for the year.Moving down to income statement, as Ray indicated third quarter gross profit was a record, increasing 6.7% year-over-year to $4.8 million.

Year-to-date, gross profit was $14.1 million, a 13% growth year-over-year.

The improvement in gross profit was due to the combination of increased services from both our continuing and new customer base, and lower cost of certain subcontracted services.Gross margin for the third quarter was 19.9% of revenue, a quarterly record and a 270-basis-point improvement compared with the third quarter last year.

The improvement in gross margin over the last several quarters was primarily due to a shift in the service mix in our business and lower cost of certain subcontracted services.Our gross margin percentage has been above our targeted range for the last several quarters and we believe that it should remain elevated for the remainder of the year due to service mix changes.

Also, as we have said previously, gross margin can vary from quarter-to-quarter, depending on our revenue mix and other factors. Going forward, we expect to grow gross profit in excess of 10% and generate gross margins within our targeted range of the mid-teens.Third quarter operating expenses decreased 9.8% year-over-year to $4.6 million.

The decrease in third quarter operating expenses primarily related to lower depreciation and amortization of $1.4 million and lower bad debt expense of $846,000, which was partially offset by increase in labor expenses and to a lesser extent, increased advertising and tradeshow expenses.The decrease in depreciation and amortization was related to certain intangible assets that were fully amortized as of July 2018.

The decrease in bad debt expense related to a charge we took in the third quarter last year to write-off receivables from a customer that had entered bankruptcy. Year-to-date, operating expenses decreased 6.8% to $13.6 million.

Going forward, we expect operating expenses to grow at about half the rate of our gross profit dollar growth rate.Interest expense during the third quarter and year-to-date was relatively unchanged versus prior-year comparisons.

For third quarter, interest expense was $119,000 versus $106,000 last year, and year-to-date interest expense was $344,000 versus $336,000 last year.Net income per basic and diluted share was breakeven for the third quarter of 2019, compared with a net loss per basic and diluted share of $0.04 for the third quarter of 2018.

Year-to-date, net loss per share improved from a loss of $0.17 last year to $0.01 loss per share this year, which included $248,000 or $0.02 per share of expenses related to April 2019 selling stockholder transaction.Our adjusted EBITDA for the third quarter increased 27.5% to $860,000 versus last year.

Year-to-date, adjusted EBITDA increased 58.2% to $2.5 million.

The improvement in adjusted EBITDA reflects the operating leverage in our business model, which will continue to allow growth in adjusted EBITDA and profitability, growing at a faster pace than gross profit as we move forward.Turning to the balance sheet, our cash balance was $2.1 million at the end of the third quarter, which was relatively unchanged from the beginning of the year, and an increase of approximately $1 million compared with the third quarter of 2018.

We had $4.5 million drawn on our $20 million credit facility as of September 30, 2019.So, at this time on the call, I will call -- I will turn the call back over to Ray, he will discuss our initiatives and the outlook..

Thank you, Laurie. Before I review the progress of our strategies, I want to take a minute to review how our business has transformed over the last few years.

And I believe more than ever that we are well positioned to become a major player, helping large enterprises optimize their waste stream, convert waste from landfills and ultimately improve their sustainability.First, we are targeting the right business, several years ago much of our revenue is derived from simple non-value added service, which puts us in a position of competing on a one dimensional basis price.

Although, this generated significant amount of revenue, it was not a good business in terms of margin or returns.Instead, we now compete based on national scale, broad scope of service offerings, data reporting analytic capabilities, and excellent customer service. These attributes are very valuable to our customers.

Competing based on these factors allows us to create a stronger customer relationship and earn a sustained higher margin.Second, the transformation of our business is clearly evident in the growth of gross profit dollars and the change in our gross margin profile.

Over the last three years, gross profit dollars have grown in excess of 9% compounded annually. Gross margin is more than doubled from around 8% three years ago to consistently in the mid-teens for the last eight quarters.Additionally, we have substantially changed our ownership based and our corporate governance.

In April of this year, about 40% of our shareholder base changed in, shares that ever once owned by three investors are now owned by more than a dozen.

We believe this is a long-term positive implication for liquidity and our valuation.In this past year, we have also adopted shareholder friendly policies that illustrate how the Board and management are committed to aligning with shareholder interest.

These policies include stock ownership guidelines and a derivative trading policy.I next want to talk about how we are positioned for growth. I will first talk about reasons customers are choosing us and how this really speaks to the core value -- to our core value proposition. The reasons include the following.We have scale.

By aggregate volumes from our customers we simply have greater buying power. We have a broad scope of services. We make things simpler for the single turnkey solution to handle all of our customers’ waste streams.We are experts. We know what alternatives to landfill are available. We help customers optimize waste streams to meet sustainability goals.

Many ways streams also have increasing regulatory requirement. We help customers stay in compliance and avoid costly fines and/or damage to our reputation.We provide comprehensive data reporting and analytics.

Our technology gives customers important insight into their operations and provides them a common data set to be used in external and internal sustainability and operational reporting.We have an intense customer focus. We work closely with our customers to continually support their efforts and find solutions for them.

And by doing so, we enjoy great customer loyalty and opportunities to expand with them.

All of these attributes are helping us win new business with existing and new customers, who are choosing to trust us with the management of their waste streams.So the question becomes how do we compete with large asset heavy service providers, many of which have far greater resources than we do.

The key reason we can compete and win is that we are more aligned with our customers financial and sustainability goals.Our larger competitors own assets like landfills. They are financially motivated to drive waste volume to their landfill operations.

We find that clients are often over service to drive more volume to landfills, with little incentive by our competitors to reduce their costs or divert the waste.And now for an update on our recent wins in the restaurant vertical. Buffalo Wild Wings is up and running in the third quarter, and we are doing a great job there.

We have also secured another restaurant that we mentioned on last quarter’s call. This is a quick service restaurant that has approximately 220 locations nationwide. We are on schedule to onboard this customer by December of this year.

Our recent success in the restaurant vertical has raised our profile within the sector.I also want to comment about Matt Lewis, our new VP of Sales -- Senior VP of Sales that we announced last week. We wanted a sales leader that had significant experience in our targeted end markets and Matt has exactly that.He is a great addition to Quest.

He brings decades of experience in multiple end markets including 20 years with waste management. He has a broad knowledge of the services that we provide and can hit the ground running. He has extensive experience in selling to large industrial manufacturing companies.

These are two of the end markets that we are focused on.In addition to his sales leadership experience he brings an operational knowledge that will help our customers with their complex waste streams, many of which have stringent regulatory requirements.Before I open the call to questions, I want to review our outlook for continued growth in gross profit and adjusted EBITDA.

Regarding our outlook, with solid year-to-date performance, we are positioned to continue to drive 10% plus in gross profit dollars for 2019 and expect that to continue in the future.We expect incremental gross profit dollar contribution will be leveraged over our fixed costs and expect a higher growth rate in operating profit and adjusted EBITDA.

We are excited to welcome our new sales leader with his great reputation and proven track record.

We are excited about our prospects, outlook and business opportunities going forward.We believe our stronger foundation allows for sustainable business that will consistently grow our revenue, profitability and more importantly, long-term shareholder value.

I look forward to keeping you updated on our progress.We now like the operator provide instructions on how listeners can queue up for questions.

Operator?.

Thank you, sir. [Operator Instructions] Our first question comes from Gerry Sweeney, ROTH Capital..

Hey. Good evening, Ray and Laurie. Thanks for taking my call..

Hi, Gerry..

Yes. Hi..

Earlier this year, you also talked about one of your larger industrial clients just seeing some headwinds, probably, related to some trade related issues.

Is that client or clients still seeing those headwinds or have they bottomed out, any specifics you can give us on that front?.

It’s tough to give specifics, Gerry, but, yeah, the client is still facing headwinds. Luckily overall the way our business is structured and the revenue streams from that client base, we are actually growing our gross profit dollars with them. So that’s the key and that’s, obviously, as I mentioned, are a key to us.

But on just pure volume relative to one of their key waste streams, they are still facing the headwind..

Got it.

So, I mean, is it fair to say, thinking out loud a little bit here, but that industrial client or even with your other clients, as we see a little bit of reduction -- some reduction in revenue, that could be -- that continued optimization or shifting of some of those services, but while revenue is going down your -- that is actually just third-party costs that you incurred about your gross profit dollars are increasing.

So you are actually growing sort of your almost internal revenue per se.

I know that’s little worthy?.

Yeah. That’s a -- that’s good insight, Gerry. Absolutely. I mean, that’s one area we talk about gross profit dollars is our focus. There are some of these other variables that will impact revenue. But we, obviously, are continuing to move forward and there is a lot of initiatives we have.

We -- in this whole conversation, we are seeing to be talking about one particular client, but it goes beyond that. As we are focused on….

Okay..

Yeah. And I think that’s what you are alluding to broader than that. As we look across our -- we are problem solvers and we are optimizers and -- for our clients.

And in doing that, sometimes it’s got a negative impact on topline, but obviously, based on our consistent quarterly results it had a positive impact on our gross profit, along with helping our clients manage their cost better..

Yeah. And we have actually spoken a little bit about this, right? So the optimization that’s great, it works you are getting deeper into existing customers and solving additional problems, things like that. But obviously, you would need onboard new customers to sort of get a stair step of growth or really like a larger base that you go after.

How does the actual pipeline of RFQs or just interest level look today versus even six months ago given?.

That’s a great question. And the pipeline itself -- the pipeline looks good.

I mean, one of the challenges that we have had, and Matt, is helping us and actually I have been working over the last several months as well, is really making sure that the clients we had in there and the type of business that we are going after fits our profile.And our profile is defined by not just pure price-only trash type opportunities as we have discussed numerous times.

And I would say the pipeline looks considerably cleaner now and it’s more reflective of what we want it to be as far as targets go.And so the point is that, that we have got good stuff in there. What needs to be done is having accelerated, moving left to right, more quickly, I think, we all want that and we see that.

And that’s where our focus has been this last quarter, and Matt, has got an accomplished track record in doing that. I am really thankful that is here to help us.So I feel pretty optimistic.

The bottomline to answer your question is, we have got a lot of great prospects in our pipeline and I believe we have the talent to move it forward as quickly as possible at this point..

Got it. Then just one more quick question and I will jump back in queue. Buffalo Wild Wings, was that fully in 3Q, if my memory serves correct, I think, it was the full impact? And then, Part B, I guess, highlights two questions.

The 220 quick serve restaurants, will they be fully onboarded by December or does that start in December and should grow from there?.

Yeah. First question on Buffalo Wild Wings started in the first part, 1A. How’s that, Gerry, 1A..

Yeah..

Yes. Yes. We had it onboard through the whole quarter. It’s been going great. It’s obviously taken a lot of -- the implementation has gone really well, but it’s always -- it’s a lot of locations, its lot of work and its gone well. So we have full impact in Q4. The new -- the 220 location restaurants should kick-off beginning of December.

So we won’t have any revenue on that until the back part of the fourth quarter..

Okay. Got it. Perfect. And obviously, great execution, you don’t need the OpEx cost and the margin, so definitely congratulations on that front. I will jump back in line. Thanks..

Thank you, Gerry. All right..

We will take the next question today from Sameer Joshi, H.C. Wainwright..

Hi, Ray. Hi Laurie..

Hi..

Yes. Hi..

Yeah. In one of your presentations on your website, you mentioned a nominal growth target of 10% to 15%.

Does that relate to the same gross profit growth or does it relate to your topline growth?.

We are speaking to gross profit dollars primarily based on everything we have talked about. We have been achieving that and plan on continuing to do that..

Okay. So, sequentially, we see this drop in revenues and we do you speak to that. Hello, I am hearing some background noise..

I am sorry. I hear you..

Yeah..

So, go ahead, Sameer..

So I understand it is probably because of this industrial -- large industrial client facing headwinds.

But then you are also adding the restaurant services business and so how do we reconcile that drop in revenue versus growth in verticals?.

Are you speaking about sequential or year-over-year?.

Sequential..

Sequential..

Okay. Well, it’s a pretty significant impact on the -- pretty much pure revenue that we had on that larger industrial segment that we talked about. And I mean, I guess, the impact is, that’s why the gross profit dollars grew, is the....

Yeah..

Go ahead, Laurie. You got the notes..

Well, in other words, Sameer, sequentially, the decrease is primarily that industrial client is affected by just one of the waste streams we do, which is one of those lower margin ones.

And that decline was offset by increased services, primarily from our new customer and we have also had some additional services that we are doing with our existing customer base. So the net effect was a decline, but the primary reduction had to do with that industrial client..

So is this -- is one of the services which is high margins related to this comprehensive data reporting and analytics, and are you seeing more attach rate so to speak for that service with your existing or new contract?.

So, Sameer, our technology in the portal that we provide, if I am getting your question correctly, we don’t charge separately for that. But we do have customers who continue to utilize that and it’s certainly a driver for people to expand services and to sign-up with us.

Do we hear your question correctly?.

Yeah. I mean, I was under the impression that those services are add-on services that you charge extra dollars or which are leading to the rise in gross profit..

Yes. Yes. We do -- so let’s correct that in a minute. We do increase -- it had more revenue and more margins as we increase the number of services and types of services we do with the customer..

So moving forward to 2020, should we see revenues bounce back or are you still going to talk in terms of gross profit dollars growing at 10% plus year-over-year going forward as well?.

Yeah. As we mentioned earlier, Sameer, I mean, we have got our finger on gross profit dollars and that’s what’s feeding double-digit growth in that, feeding our forecasted or projected -- anticipated EBITDA growth, along with the, obviously, the scalability of business to impact EBITDA growth.So that’s what we are talking about.

We haven’t really spoken to revenue. There is still some of the inconsistencies in there. I mean -- and as you look at it, if you look at the continuing increase in gross profit dollars with the erratic nature of the topline, I think, it makes all the sense in the world for the company and from an investment perspective to utilize that metric..

Okay.

And just one last one on the adjusted EBITDA front, if your target still going to be the 4% to 6% for the next year or based on the increase in gross profit dollars, do you see adjusted EBITDA also going up -- our targeted adjusted EBITDA going up?.

So what we have talked about was getting to a 4% to 6% EBITDA percentage in the next three years to four years and we are making great progress towards that. But that is what our guidance was on that that we are looking at accomplishing that over a three-year to five0year time period..

Understood..

And we are already and look….

Okay..

And Sameer, we are already at obviously our lower level there. So we are looking forward to continue to grow that as we grow the gross margin and we have talked about leverage in our business and that will allow us to continue to grow that percentage, both for the net income….

Yeah. And in….

… and for the adjusted EBITDA..

Yeah. And in the third quarter, you are already at 3.6%, so….

That’s right..

… and that’s why I was thinking the 4% to 6% could be closer than the three-year to five-year horizon..

Well, it definitely can be, don’t misunderstand. We are trying to make sure that we are reasonable in our expectation. But I mean, the same thing on the gross margin, I mean, there is some metrics that we have exceeded.

But there is a lot of business cycles out there that we manage through and we don’t want to create an expectation that that could be an issue. But, yeah, to your point, Sameer, we are at 3% to 6% now..

Yeah..

So it doesn’t take a lot of imagination envisioning what it takes to get to 4% to 6%, okay?.

Right. Right. Okay. Thanks, Ray. Thanks, Laurie..

Yeah. Thank you, Sameer..

Thank you..

[Operator Instructions] Up next is Nelson Obus, Wynnefield Capital..

Hey, Ray.

Another take on the pipeline question to attack it from a higher strategic level, like, if you were to look out three years, okay? What -- where would you expect the major changes to be in the current industrial verticals that you serve now versus where you expect to be, since we are in the value-added realm of new business? In other words, how would that industrial mix shift around if you were to cast your mind out three years?.

Yeah. It’s a great question, Nelson. And I can tell you where my mind was and now with Matt onboarded, it gives me a much higher level of confidence.

As you know, you and I have talked about in the past, we have mentioned in the calls, the manufacturing industrial vertical just has many opportunities and it’s such a better fit for us than some of that previous business that caused us some issues.And Matt’s experiences over 20 years of actually focused on entirely that for our former competitor, their waste management, and as a matter of fact was VP of Manufacturing and Industrial Sales.So when I look at -- to answer your question, I look out three years plus, I expect to see in my mind a much greater mix inside of our pipeline of accounts that fit that profile.

I know that our ability to serve that segment is good based on our current success.Our ability maybe to accelerate that into the manufacturing segment, our sales techniques in that maybe haven’t -- didn’t have a yield nearly as quickly.

So I know we have a good product to sell, and I feel much better about our ability to market it to the right folks, Nelson. So I see a much heavier focus three years out, when you look at our pipeline of having those type of clients in it. I really do..

So the other conversation we have had is the whole idea that if somehow the company were to succeed as a facilitator of say one of these industrial companies, getting high ESG status, certainly that would drive the multiple of this company.

Is that a realistic goal, is that in the mix when you approach these people or they are simply eager to get the job done without bragging about it or is bragging about it more necessary and give us an opportunity we didn’t have a couple of years ago?.

My observation....

I shouldn’t say, bragging, I should say, validating, okay..

Yeah. Validating, publishing, tracking, putting it out there. I would say a couple of years ago is more about getting the job done, but just maybe three or four years ago.

It’s increasingly more and more important to these companies that they have credible reporting on their ESG reporting.Incredible, obviously, goes back to collecting the data in a timely accurate manner and giving it back to them in a way that they can divulge it appropriately.

But we are hearing that a lot Nelson, I mean, we just had a meeting recently with our large corporate manufacturer brand that’s looking for answers and they are almost predominantly around diversion and things that’s going to help their environmental scores.And it’s given that on top of that, they also want to save money, that’s I want to leave that out, that’s always part of the equation.

But it’s becoming more and more prominent, Nelson, than the -- how do I a better job, diverting tonnage and improving my EMI ESG scores..

Look at our customer face too, we are seeing that..

Yeah..

So we have continued more opportunities with our current customer base and that’s really changed also, Nelson, over the last three years. So we see continued growth for opportunities there too..

Yeah..

Now if we actually prove this out, I mean, would we do this ourselves or would we bring in, I don’t know what you would call it, the PR firm or something to fashion an end product that would be available to the public?.

I think we can do that....

Where that capability exists within the companies if you are talking to?.

We are already doing it for ourselves as far as the tracking and the data and the analytics, and the companies we are talking to are typically Fortune 500 companies. So their internal capabilities to package that exist already. So I don’t see now....

Okay. Okay. Yeah..

Yes. Smaller firms would definitely need that outside piece to be able to structure that. But larger firms we deal with typically would not..

Good enough. Good luck there..

Thank you..

That’s high multiple stuff..

We are moving for it. We are going for it..

We will take the next question from Jamie Deyoung, Goudy Park Capital..

Hi, Ray and Laurie..

Hey Jamie..

Hey. I just want to follow up on the pipeline, can you just remind me on these large restaurant wins that you had and others that are in the pipeline.

What are you talking about in terms of kind of an annual revenue contribution for those types of customers?.

Yeah. The closest we have got, Jamie, on that is, I think, we mentioned before and this is consistent it’s in the millions. We obviously are not in a position to put individual clients’ revenue out there. But to give -- to be fair to give you a scope, it’s in the multi-millions each one of these typically..

Okay. And then where are we would you say in terms of kind of revenue rationalization calling the low margin revenue customers that you have had.

Historically, are we three quarters of the way through that, are we more or less than that in terms of where we are on that component of the customer base that’s been shrinking?.

Yeah. It’s a great question, Jamie. And there’s really, I want to make sure I am clear there’s two parts on that. The actual activity of ending a relationship. However we do it. Is the first step. And the second step is you got one year to wait where the history is the end. And so, I would tell you that we are 100% done.

We are targeting non-contributing type of agreements. We are not 100% down yet I think we anticipate lowering it by the end of Q4..

After Q4 then our year-over-year comparisons will be cleaner....

Right..

…that type of activity..

Yeah. Well, I want to give you that color, Jamie, because it’s important to understand when it rolls off. But the actual activity of targeting clients that aren’t -- don’t have a good return. That has been completed. As a matter of fact, with this rollover at the end of Q4 that pretty much completes the history associated with it as well..

Okay.

So what I am getting at here is, in terms of, what’s the kind of the bottom in terms of revenue stabilization level for this company? Is it $95 million or $100 million, because you have made this improvement on the gross profit, on the cost cutting, so getting the $4 million in EBITDA is very visible? But then moving up to $6 million, trying to get a better sense of, is that -- that takes several years if we don’t have revenue growth and if you have revenue growth….

Yeah..

… we get there a lot faster?.

Absolutely. It’s a key ingredient and it’s a multi-step process.

So to answer your question, the term Laurie had used, I think, in the past, is we look at our transition as we are at the bottom of the bulk, is that the way you.So to answer your question, as far as rationalization where that number is, I think, it’s where we are, because I don’t see any more reduction and I see every effort and every initiative internally about bringing on new clients and with those new clients comes new revenue.And I want to recognize the fact that even though we have spoken about gross profit dollars predominantly.

We understand that one of the best ways to increase gross profit dollars at this point where we are is to add new clients and the associated gross profit dollars with it. So we have got to grow them in there. And that’s one of the reasons….

Yeah..

… we made a new hire and we really feel like we have done a lot of work identifying and -- the segments where we can achieve that most optimal gross profit dollar per revenue dollar. Our pennies per revenue dollar, however, you want to look at. So, yeah, I’d say we are at the bottom. Our plan is to move north from….

Okay..

… on both of those metrics..

Sure. And you must have some confidence in that or we made the significant sales hire you did at this time, you could have waited longer.

So safe to say that unless we hit a real recession if that impacts some of these retail and industrial customers, we should start to see revenue growth from this level?.

Yeah. I think that’s exactly what we should see. Jamie, I think, you and I have talked about this in the past, one of the things I am happy about, about the, what the makeup of our revenue and our customer base today.

It’s a lot more diversified than it used to be as far as just like the retail sector being just a primary driver of almost all of our revenue.We have a lot of our revenue coming from heavy industrial segment. We have -- we still have a pretty good bit of retail revenue and then we have a lot coming from the automotive aftermarket space as well..

Right..

So it’s hard to place -- it’s really hard for one economics to name it kind of hit all of those. So we feel a lot better about where we are today in that regard, so I agree with your point that you just made..

Terrific. Well, I appreciate the update and congratulations on the progress..

Thank you very much, Jamie. Appreciate it..

Thank you..

And everyone, at this time, there are no further questions. That does conclude our conference for today. Thank you all for your participation and you may now disconnect..