Thank you for your patience. This is the conference operator. Welcome to the Quest Resource Holding Corporation Fourth Quarter 2022 Earnings Conference Call. I would now like to turn the conference over to Dave Mossberg, Investor Relations representative. Please proceed.

Thank you, Brenda, and thank you, everyone, for joining us on the call. 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 uncertainties. Actual events or Quest's 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's 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. 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 verified the reliability of the sources or the accuracy of the information. Certain non-GAAP financial measures will also 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 to investors in understanding the 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 in this call will be on a non-GAAP basis. Full reconciliation of non-GAAP to GAAP financial measures are included in today's earnings release. With all that said, I'll now turn the call over to Ray Hatch, President and Chief Executive Officer.

Thank you, Dave, and thanks, everyone, for your interest in Quest. Overall, we had a strong year in 2022 with 70% growth in gross profit dollars. We managed through tremendous growth during the year, expanding relationships with existing customers and a significant ramp from new customers. Growth also came from integrating four acquisitions during 2022. Three of these acquisitions have gone according to plan, but the fourth, RWS, caused challenges for us during this past year. It is a good business with a strong customer base, but process issues hampered performance. The good news is that we've addressed the RWS issues, and we've already begun to see substantial improvements from that acquisition thus far in the first quarter and expect to fully realize the planned contribution through 2023. Outside of RWS, our business performed well. We are executing well on all of our strategies; we continue to move new opportunities through our pipeline. We continue to build our operating platform, investing in capabilities that will enable us to drive operating efficiencies, integrate acquisitions more quickly, and continually enhance our customer service. Importantly, our outlook for profitable growth in 2023 and beyond remains unchanged. Because RWS has such a large impact on the fourth quarter and the year, before I turn the call over to Brett to review financials, I'm going to give you an update on what's going on there and an overview of the corrective actions we've taken. To give you a little background, we made the RWS acquisition at the end of 2021. This was the largest acquisition that we have made to date, and we decided to integrate the business over a longer time period. The plan was to pursue cross-selling opportunities and implement Quest business processes at RWS, then wait to fully integrate until we had more time to operate the business. The thinking was that this would allow us to achieve the highest contribution of the acquisition while, at the same time, avoid disrupting the business. In retrospect, waiting to fully integrate RWS quickly was a mistake, which caused two major issues. First, because of the information gaps in RWS, it was challenging to implement our vendor optimization processes there, which entails working with vendors in areas such as volume pricing, rightsizing, and route optimization. Second, our normal process of passing through contracted cost increases and fuel surcharges was not being done with a subset of the RWS customers. We estimate these factors combined to reduce gross profit dollars by approximately $1.5 million for 2022. We've implemented Quest best practices across the RWS business and have realigned the management reporting structure for each department. Our accounting, operation, sales, and marketing groups are now fully integrated as of the end of the year, and we expect systems integrations to be completed during the third quarter. We've corrected the process to pass through costs and fuel surcharges that are part of the contractual agreements at RWS. While we can't bill and catch up for past periods, we started to see benefits of implementing pass-through costs and fuel surcharges to RWS customers starting in January. We've addressed information gaps and implemented vendor management improvements. We are seeing the benefits in the first quarter and expect to see improvements in gross profit throughout the year. Along with the continued strength of our core business, the corrective actions we have taken have already begun to result in incremental improvement during the first quarter. As we said in the press release, the trajectory is positive. Preliminary results for January and February showed gross profits averaging approximately $4.25 million per month and revenue averaging $24 million per month, with further improvement expected across the remainder of the year. While expected contribution from RWS was delayed, I want to reiterate that our view of the potential of the business and our original financial expectations remain intact. It's important to note that customer relationships remain strong. And in fact, we've been able to successfully cross-sell RWS services to existing Quest clients. Equally important, we've also maintained or improved relationships with RWS vendors. I'll now turn the call over to our CFO, Brett Johnston, for our financial overview, and I'll be back to discuss tranches. Brett?

Thanks, Ray, and good afternoon, everyone. We had mixed results during the fourth quarter, with solid performance in our core business being offset by integration challenges at RWS. A quick note about the sequential decrease in revenue; it was primarily related to commodity price fluctuations and normal fourth quarter seasonality. As discussed on previous calls, commodity price fluctuations have not historically had material effects on gross profit dollars. Our customer agreements produce consistent gross profit dollars based on volumes that are not tied to commodity price fluctuations. The value of the commodities we recycle on behalf of our clients simply passes through to our P&L. During the fourth quarter, gross profit dollars increased 25% year-over-year to $10.8 million. And for the year 2022, gross profit dollars increased 70% to $48.9 million. For the quarter, we estimate that approximately one-third of the increase in gross profit dollars came from acquisitions and the remaining two-thirds from organic growth. Of the organic growth for the quarter, the bulk was driven by new customer growth. For the year, we estimate that approximately two-thirds of the increase in gross profit dollars came from acquisitions and the remaining one-third from organic growth. Of the organic growth for the year, the bulk was also driven by new customer growth. As we have previously stated, due to the ongoing integration work and resulting accounting adjustments, it was difficult to make sequential comparisons in gross profit dollars from quarter to quarter during 2022. However, as Ray mentioned earlier, we feel significant progress has been made with the acquisition of RWS, and these accounting adjustments were finalized during 2022. As Ray said earlier, we estimate that the issues with RWS reduced gross profit dollars during 2022 by approximately $1.5 million. As a reminder, this was related to slower-than-expected implementation of contract optimization processes and missing price adjustments with certain RWS customers that we normally take as part of our contracted agreements. Outside of RWS, I want to note that sequential gross profit dollar comparisons were not affected by inflationary cost pressures. We were able to offset inflationary cost pressure with flexible pricing and cost recovery fees. We have implemented changes at RWS and expect these changes will be in full effect by the end of the second quarter. Looking forward, our outlook for gross profit dollars for the year is robust, and we remain confident in our ability to deliver double-digit growth in gross profit dollars during 2023. Gross profit dollars should benefit from continued momentum in organic growth and continued improvement from our integration efforts. Moving on to SG&A expenses, which were $9.8 million during the fourth quarter compared to $7.1 million during the same period last year. The increase in the comparison was mostly related to overhead from acquired businesses. For the quarter, SG&A was a little higher than our expectations of $9.1 million to $9.5 million, which was mostly related to additional bad debt reserves and increased integration costs. During the first quarter of 2023, we expect SG&A costs will be about $9.5 million to $10 million, which reflects the ongoing run rate of our business, along with the ongoing acquisition and integration costs, and increased investment in systems, processes, and people to continuously improve our efficiency and the scalability of our platform. During the fourth quarter, depreciation and amortization increased to $2.4 million versus $1.2 million a year ago. The increase was primarily related to amortization of acquisition intangibles. We expect depreciation and amortization to be approximately $10 million for 2023. Moving on to a review of the cash flow and balance sheet. We are in good shape liquidity-wise. Our cash balance was $9.6 million, which increased from $8.4 million at the beginning of the year. In December, we enhanced our liquidity by increasing the size of the operating borrowing line from $15 million to $25 million. We generated approximately $1.1 million in operating cash flow during the fourth quarter. For the year, we used $2.3 million in operating cash flow. The use of cash was primarily related to investment in working capital to support nearly doubling the size of our company year-over-year. During 2022, CapEx was $1.7 million, and we utilized approximately $2.6 million in cash to purchase a smaller acquisition during the first quarter. We expect a slight increase in CapEx to approximately $2 million during 2023, which includes increased investment in our operating platform. At the end of the quarter, we had $74.9 million in notes payable versus $67.9 million at the beginning of the year. That increase reflects the investments in growth we made during 2022. At this time, I'll turn the call back to Ray.

Thank you, Brett. While we're not happy with the integration process of RWS, I want to reiterate that this one quarter does not affect our overall outlook for the company and it does not reflect the tremendous growth progress that the company has made during the last several years and our opportunity for continued double-digit growth. I'm very proud of the track record that our team has produced, nearly doubling the size of the company in 2022, marking six consecutive years of double-digit growth in EBITDA. I want to reiterate that the issues we have with RWS were very specific in nature. And they've been addressed, and we are beginning to realize the strategic benefit of this acquisition. At the time we announced the acquisition of RWS and InStream in December of 2021, we expected to add a combined adjusted EBITDA of approximately $5.5 million annually. While RWS was behind our expectations in '22, it still delivered positive incremental EBITDA during the year, and InStream is performing in line with our expectations. Our business is strong, and we're well positioned to continue to weather challenging economic conditions and execute our growth strategies. In a market that continues to see inflationary pressure and a significant fall in commodity values and certain recycled materials, our business model held up well. As Brett mentioned earlier, we structured our agreements so that the gross profit dollars are not affected by swings in commodity prices. But despite the significant decrease in prices for scrap metal and other commodities during the second half of '22, gross profit dollars generated were not significantly affected by those swings. In an inflationary environment, we're able to offset cost pressures for flexible contracts that allow us to pass through increasing costs as fuel surcharges. While these costs were not being passed on during 2022 at RWS, in our core business, we continue to successfully pass through costs for our contracts and offset inflationary pressures. Again, going forward, we've corrected this issue at RWS. Regarding the economic environment in general, we continue to see stable activity levels across all of our end markets, and our value proposition is resonating with both existing and new customers. Moving on to a discussion about growth. I feel very good about the organic growth we have in front of us. Within our installed base of customers, we continue to use the land-and-expand strategy to deliver growth. This strategy has consistently delivered a base of organic growth for the last five years. We recently made a slight tweak to our compensation structure of our client service managers, offering them a chance to earn incentive pay based on growing the contribution from existing customers. We made this change in the first quarter of '23, and it's been rewarding to see the excitement level with the entire team. This small investment in incentive compensation will go a long way to increase growth. In addition, we expect these changes to help us retain and attract the best talent and to further align us with our clients' growth goals, diverting more waste from the landfill. Another key to organic growth from existing customers is adding new services. We added several new service capabilities with our recent acquisitions, and we're actively introducing these new services to existing clients. By adding new services and geographies, we feel confident that existing customers will continue to provide a significant contribution to organic growth for the years to come. On top of growth for existing customers, during the last couple of years, we've improved new client targeting and are closing on the right new targets. During the fourth quarter, we continued to add new prospects, and several large opportunities across multiple end markets are working their way through our pipeline. Last quarter, we spoke about two new seven-figure wins, one in the industrial market and one in the automotive service market. We're in the early stages of onboarding these customers and expect them to ramp over the course of the next 12 to 18 months. Our data platform, with its ability to provide uniform and supported data sets across multiple waste streams, continues to play a key role in securing new wins and growing within our existing customer base. A good illustration of our value proposition is how quickly we're able to ramp and provide value for a large new industrial customer during '22. The Fortune 50 customer was fully onboarded by the end of the fourth quarter and became an eight-figure revenue customer during '22. We're now delivering 8,000 lines of service to this customer across all their locations in the U.S. We have a direct feed from our portal to their systems and are providing them not only with important operational data but also data for the sustainability portion of their ESG reports. To date, we have helped them divert more than 135,000 tons from landfill, and we've brought them cost savings. I'm so impressed with the capabilities of our platform and appreciative and proud of the dedication of our team that was able to ramp this customer so quickly and provide such a strong value proposition. Moving on to a discussion about M&A. We continue to evaluate opportunities, and M&A will continue to be an important part of our growth plans going forward. I want to reiterate that we'll continue to maintain discipline in making acquisitions. We'll only execute those that fit our criteria. We've made six acquisitions since 2020. Other than RWS, all have performed at or above our expectations. And I will reiterate that we expect RWS to be back on track during '23. Moving to operating efficiencies. We've grown rapidly over the last three years, with the size of the business nearly tripling since 2020. We've achieved this scale through growth in existing customers, organic growth, and by completing six acquisitions. We've grown into new waste streams and into new end markets, diversifying our customer base and improving our financial strength. Growth has not been linear, but we've been driven to continually improve our ability to drive scale and operating efficiencies, more rapidly integrate acquisitions and drive efficiencies throughout the organization, converting gross profit to cash flow and earnings. We'll continue to invest in the organization and build capabilities to do so. Regarding our outlook, overall, our positive outlook for profitable growth has not changed. We've addressed the issues with RWS, and we expect to see continued improvement in the months and quarters to come and expect to achieve our original plan for contributions from RWS during 2023. We expect the acquisition and integration to provide incremental contributions from both increased efficiencies and from cross-selling. We expect continued positive momentum in the core of our business during 2023. Pressure to improve sustainability, increasing regulation, and increasing cost of landfills are lowering the bar for adaptation of recycling services. The contribution from new client wins will continue to provide incremental gross profit dollars as we onboard these programs. We will continue to drive operating efficiencies, investing in capabilities and driving growth in gross profit, cash flow, and earnings. We are optimistic we'll continue with positive momentum for '23 and the next several years. I look forward to keeping you updated on our progress. We now like the operator to provide instructions on how listeners can queue up for questions.

The first question comes from Aaron Spychalla from Craig-Hallum.

First, maybe on just kind of the sales funnel, sales cycle. Can you talk about how the sales cycle has been trending given the macro and just your value proposition resonating in the market? And then on onboarding, can you talk a little bit about how that's gone with some of the recent wins? And what are some of the key drivers that you're focused on there to shorten that process?

Yes. Shortening the process is the key phrase, Aaron, thank you for the question. Our pipeline represents a bit of a dichotomy to me. On the one hand, I'm very impressed with the quality of prospects and their movement along the pipeline. On the other hand, I will tell you that I don't know if the macro is the cause or not, Aaron, but it has been slow to get them pushed across. I want to reiterate, we've got good customers and prospects in there, the type we're looking for, and we don't have prospects falling out. Our frustration is that it's not moving as quickly as we would like. But the good news is we know they will; it's just taking a little longer to do it. And as far as onboarding goes, that process is something we always push to accelerate. It's usually driven by the customers' ability to digest and put new locations on. I will say, and I think we mentioned in the prepared remarks, that last large industrial customer we had took a year really to ramp in. And I think in the past, it might have taken 18 months. So I think our ability to digest and move forward is accelerated. The question is how fast can the customers move on, getting new locations up to date on the transition.

All right. And then maybe on just food waste, we've seen numerous states regulating food waste and kind of corporate initiatives around that. Can you just give an update there and kind of what that opportunity might look like for you over time?

Thank you for your observation. Food waste is receiving significant attention, which is warranted. Organic waste constitutes one of the largest categories of materials that end up in landfills, making it a major contributor to that problem. Fortunately, there is substantial growth potential in this area, and we are enthusiastic about it. Regulation is one factor that is driving this trend. It can make our sales team more responsive to inquiries they might not have pursued previously. We have generated some exciting leads and are engaging with well-known brands, which has led to many active discussions. A key aspect of our approach is educating these companies about options for diverting waste. The support from regulation and media coverage has been instrumental in promoting this initiative. We have acquired many new prospects and are progressing steadily. I am very optimistic about this year, as I anticipate significant growth in our food waste management program.

Good, good. We'll stay tuned for that. That's it for me. I'll turn it over.

The next question comes from Gerard Sweeney from ROTH Capital.

On the fourth quarter, you described some seasonality, also commodity pricing impacting, I guess, the revenue line. Would you be able to break out how much was seasonality and how much was commodity pricing, by chance?

This is Brett. I'll take that question. So I think the first thing we'd like to talk about just related to the Q4 revenues, there were no lost customers there. So base core customers, very solid. Again, most of it was related, if you take the commodity value decreases and the seasonality, you'd get mostly there. If you want to split that in half, that's fine. But that will get you most of the way there.

Got you. And I apologize if I said lost customers, I didn't mean that, I meant seasonality.

No, no, I was just reaffirming; I think it's important.

Sorry, there was noise in my background. But got it. Perfect. So fair to say 50-50 part commodity, part seasonality?

Yes.

Got it. Got it. Okay. And then on the RWS side, that $1.5 million that you sort of broke out maybe impacted gross margin. Was that spread out across the course of the year? Or did that sort of become more second half loaded or even loaded in the fourth quarter? Because we saw some pricing pressures, inflation or lack of pass-through; it may have become more cumulative later in the year. How do we look at that?

No, you're thinking about it right. I definitely think of that as more back half of the year related.

Got it. So I mean you sort of gave, I don't want to say guidance, but January, February this year, you're running at, I think, $4.25 million gross profit. That equates to $12.75 million gross profit. So things are bouncing back. But also on that front, is February better than January? Or were they sort of even on that metric?

I'd say mostly even. February certainly has fewer business days. So there are different factors that go into those. But yes, I'd take it as an average.

Gerard, this is Ray. I agree with Brett and I want to clarify that we did share some key numbers for January and February. We started implementing changes in January, and while we managed to fix the issues then, there is still a process to follow. Therefore, we expect to see increasing benefits as the months progress, which is what we aimed to convey.

Okay. I got you. I mean I was kind of looking at it, there's probably some seasonality in the fourth quarter that, exiting January and February, looked good. And then when you say cycle through, I imagine there's price increases; it takes a little bit of time to get through the system.

Yes, just the billing cycle itself has a bit of a lag effect. So I guess what I'm trying to illustrate is that, that's the beginning. We expect continued improvement.

Got it. Perfect. And then one final question, I'll jump in line. Just cash flow from operations, obviously, a big increase year-over-year. When does that sort of get digested, maybe working capital decreased a little bit, cash flow accelerates? How do we think about that?

Yes. Overall, we're very positive on operating cash flow going into 2023. There's some momentum. But of course, we also expect growth. So the timing of that growth, where it falls out in the year, that could temper things down a bit from that, but we're certainly optimistic.

The next question comes from Chip Moore from EF Hutton.

I wanted to follow up on that last one on the actions underway at RWS, sort of that billing lag. Do you think you'd get through that fully in Q2? Is that the right way to think about that?

Yes, I think it is, Chip. That cycle would have run out during the second quarter.

Yes. Okay. Perfect. And then on the organic growth side, it sounds like the pipeline is quite strong, and you feel good. I think you mentioned maybe changing the comp structure. Maybe elaborate on that and early feedback and what you've seen and traction there.

I'm glad you brought that up. It gives me a chance to elaborate. We made changes to the compensation structure for our client services team, who are responsible for working with our existing customers. Their primary goal is to take care of those customers, retain them, and grow alongside them. We've introduced an incentive package as they expand locations and sell new service lines. As I mentioned earlier, we have added new lines through acquisition and other means. This team leverages their skills and relationships to upsell these new offerings to our current customers. Existing customers have been a significant source of growth for us over the years, and we aim to maintain that momentum by setting clear goals for our team. That’s really the focus of these changes.

Perfect. And maybe just the last one, I guess on the M&A side. It sounds like you're still seeing things; opportunities emerge. With the deals you've integrated and what you've learned, maybe more so on RWS, just talk about your capabilities now that you might layer in some of the investments you made on the data side and some other places, how you feel about future integration.

Yes, a couple of things. I'm really excited about where we are, frankly, as I look ahead. The progress that we're making internally, I think, on our own internal systems here at Quest or the investments we've been making will do nothing but enable us to be even more effective and quicker in the integrations as we go forward. So I'm very optimistic. Plus, we obviously have some learnings, obviously. I'm really excited about our ability to integrate when we do make acquisitions. I guess we use the word opportunistic a lot, Chip, but I think it's the right one. The market goes up and down, and we keep our eyes open all the time for really complementary, immediately accretive, good strategic businesses. I know that as we move forward and we do make those acquisitions, I'm really excited about our improved ability to onboard. And keep in mind, we only had really one with an issue. The rest had performed quite well. So I really think it's going to be a nice part of our business going forward. But we don't have a definitive target relative to what we're doing from acquisitions and that type of thing right now.

Understood. Understood. That's fair. Appreciate it.

The next question comes from George Melas from MKH Management.

Just wanted to dig a little bit deeper if we can on RWS. I believe that it was sort of two businesses. You bought it from a private equity firm that had made a recent acquisition, and those two businesses were totally different and not integrated. It's almost like if you bought two separate businesses. Were they both problematic? Or was it just one of them?

Yes, I'm trying to figure out how best to answer that. First of all, your assessment is extremely accurate. The firm that had it before us was operating them totally separately. We've combined the sales force, the accounting. We've combined a lot of those aspects that they didn't do, and we've already done that. As a matter of fact, I think we, from both sides of that business, have everybody aligned with the departments here at the core from a management standpoint or a process standpoint. But I would say that the side of the business that wasn't really commodity-related, it's the side that does a lot of REITs in retail, that's where most of the issues came from.

Okay. And then I think you mentioned, Ray, that RWS was EBITDA positive for the full year. Was this over the slight loss in the second half?

No, no. I can't remember how to explain exactly, but we definitely have an EBITDA positive. I don't think it was negative, was it, Brett?

No.

So it's EBITDA positive every quarter?

I don't know, George, specifically.

Yes, we wouldn't break that down to that level. But again, we're going to get back to where we originally thought that business would be by the end of this year. I think that's the main takeaway, is we're very positive on the acquisition overall with what we've been able to accomplish over the last quarter or so.

Okay. And then maybe just one final one. I think like midyear, you guys had said that the first half of the year, from an EBITDA perspective, were sort of a run rate, to expect sort of something similar in the second half? Has there been a meaningful drop? And does RWS explain all that drop? Or were there some other factors that came in that sort of slightly lowered the forecast, I'd say?

Yes. RWS gets you most of the way there. Certainly, the seasonality that came in with Q4 makes up a large core of the rest of the business.

The next question comes from Gregg Kitt from Pinnacle Fund.

I was a little bit unclear about RWS. You talked about that $1.5 million impact over the course of the year. But there was that positive benefit in Q2 and a negative impact in Q3. And so net-net, if I just looked at Q2 and Q3, that was a net positive surprise. And so when I think about the $1.5 million negative impact for the year, was a lot of that in Q4, like maybe $2 million, $2 million plus?

No, I would characterize back to the $1.5 million. Those items in Q2 and Q3 were really just adjustments, reconciling some items from previous quarters. So the $1.5 million is largely just the upside that we missed out on in the business and certainly would look at that as being more related to the second half of the year.

Okay. And then on the commentary for January and February, and I heard that you're expecting to get a little bit better as you cycle through some of the adjustments that you made to fuel surcharges, being able to pass those on. Absent any additional improvements, it sounded like what I heard was $12.75 million of gross profit on a run rate basis. And $9.75 million of SG&A, or non-GAAP OpEx is like $3 million plus whatever additional stock-based comp and adjustments gets you kind of to like the $4-ish million of EBITDA for the first quarter. Am I kind of like reading those pieces correctly?

I think that's a fair assessment. Yes, certainly, January and February are not meant to be guidance for the quarter, but really just to point out that the business has really stabilized coming out of Q4.

Okay. And my last question was around free cash flow. You had a good cash flow quarter, and you guys had guided to that. And so I was excited to see you generate positive free cash flow. As we look forward to this year, is there some reason that you wouldn't be generating positive free cash flow if you did kind of high teens to $20 million of EBITDA this year?

Yes. We're certainly optimistic about where we're at in building on the positive operating cash flow from Q4. We'll have some integration costs that fell off as well. So certainly, there's a lot of optimism that this is going to continue and increase.

The next question comes from George Melas from MKH Management. Please go ahead.

I just want to follow up on Gregg's question on SG&A. This quarter, it was $9.8 million. But if you take out stock-based comp, the transaction-related expenses, and some other adjustments, it was roughly $8.5 million. Is that $8.5 million on a sort of normalized SG&A? Is that a good number to use? Or are there some investments that will bump that up during 2023?

Yes, so the integration expenses will continue as we proceed with the integration. We mentioned earlier that we expect to complete this by Q3, so there will be ongoing integration expenses that will gradually decrease. However, there are other factors to consider.

No, you go ahead, I'm sorry.

No, I was just going to say, I think you're thinking about it right. The other pieces that you called out would be related to SG&A, the add-backs.

Okay. So in a way, we could have a run rate, sort of like that normalized SG&A could be $8.5 million. There will be some transaction-related expenses or integration-related expenses in the first half or maybe all the way to the third quarter, but then I guess they stopped.

Yes, that's fair.

This concludes the question-and-answer session. I would like to turn the conference back over to Ray Hatch for any closing remarks.

Thank you, operator. I appreciate it. I think I want to go back and just mention again something that hopefully we mentioned throughout the call, how positive we feel about 2023. We did go to maybe an unusual circumstance of putting January and February numbers in the press release. And the reason why is it illustrates some of the reason why we feel so positive. We learned a lot. We've adjusted the issues that caused it back in Q4. We have a lot of growth possibilities ahead of us. We have a lot of positive things going on. We've got great customers, and we're building on top of them and expanding within them. Our value proposition, whether it's our data or the breadth of services we're offering, is ringing pretty clearly through the marketplace. We'll continue to capitalize on that throughout the year. So I'm excited about that. I want to thank everybody for their interest in Quest. We greatly appreciate that. And also importantly, I want to thank the Quest team for the ongoing efforts to deliver the value that they've been doing and, more importantly, what they're doing on a go-forward basis. All our initiatives are working well right now. I'm very optimistic and excited to see how they turn out. I look forward to keeping all of you up to date in the quarters to come. So thank you very much.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.