Quest Resource Stock (QRHC): Why The Price Surged Today

By Amit Chowdhry ● Dec 8, 2021
  • The stock price of Quest Resource Holding Corp (NASDAQ: QRHC) increased by over 18% during intraday trading today. This is why it happened.

The stock price of Quest Resource Holding Corp (NASDAQ: QRHC) – a national leader in environmental waste and recycling services – increased by over 18% during intraday trading today. Investors are responding positively to Quest Resource Holding Corporation announcing today that it has acquired 2 national asset-light waste and environmental services businesses: Chadds Ford, PA-based, RWS Facility Services, LLC (RWS), and Greenville, SC-based, InStream Environmental, LLC (InStream). RWS and Instream are going to expand Quest’s presence in the commercial property space and meaningfully add to the industrial market customer base.

The company had agreed to acquire the membership interests of RWS for a total consideration of $33 million in cash. And the company agreed to acquire the assets of InStream for a total consideration of $11 million (and an additional $1.5 million of consideration which may be earned based on future performance). The combined transaction price of approximately $44 million is estimated to add more than $80 million of revenue, approximately $2.2 million in net income, and $5.5 million in adjusted EBITDA. The transactions are expected to be accretive on a free cash flow per share basis.

As part of the transactions, Quest further announced that it has amended its lending agreement with Monroe Capital, increasing its borrowing facilities up to $75 million, lowering borrowing costs by 350 basis points, and providing other improved terms.

KEY QUOTES:

“These transactions are estimated to increase our annual revenue, net income, and adjusted EBITDA by more than 50%, adding significant scale as well as customer diversification. Like Quest, RWS and InStream both have a reputation for providing exceptional service and building strong customer loyalty. With the increased scale and scope of our combined businesses, we are well-positioned to maintain strong customer relationships and provide more services for existing and prospective customers.”

“RWS will add incremental volume to our existing market verticals and establish a more meaningful position in the commercial property management market and significantly add to our industrial market customer base. We look forward to working together with RWS’s very successful team as part of the Quest organization.”

“InStream brings an attractive roster of multi-national manufacturers to our company. We welcome the InStream team to Quest, where our combined expertise will be a compelling value to customers in the industrial end market.”

— Quest President and Chief Executive Officer S. Ray Hatch

“Quest is committed to growing long-term shareholder value and to supporting our customers’ sustainability goals. Our strategy is to grow by expanding services to existing customers, organically adding to our customer base, and by acquiring businesses like RWS and InStream whose customers can be better served on the Quest platform. We are focused on building scale and scope to our national platform, bringing value by lowering the costs to serve, enhancing our technology capabilities, and offering a broad range of sustainability solutions across services and industries.”

— Dan Friedberg, Quest’s Board Chairman

“We believe this business combination offers our employees an exciting opportunity for career development and growth, as well as opportunities to further improve the value we bring to customers. In addition to expanding our service offering, Quest also brings a unique and differentiated data reporting capability that is in demand from our customers who are looking to increase visibility into their operations and to improve and simplify sustainability reporting. We look forward to working with the Quest team to ensure a smooth transition.”

— Anthony DiIenno, RWS’s President and Chief Executive Officer

“Taking care of our customers is our priority and has been the key to our success. Quest’s strong reputation for providing exceptional service was an important consideration in our decision to join forces. By joining Quest, our customers gain access to our combined larger national, regional, and local vendor network and broader scope of services with superb customer support capabilities.”

— John Little, InStream’s President and Chief Executive Officer

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.