Quest Resource Holding Corp. acquires two asset-light waste service companies

Quest Resource Holding Corp., an environmental waste and recycling services provider based in The Colony, Texas, has announced the purchase of RWS Facility Services in Chadds Ford, Pennsylvania, and InStream Environmental of Greenville, South Carolina. The company says the national asset-light waste and environmental service providers will expand Quest’s presence in the commercial property space and add to the industrial market customer base.

“These transactions are estimated to increase our annual revenue, net income and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) by more than 50 percent, adding significant scale as well as customer diversification,” says S. Ray Hatch, the president and CEO of Quest. “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.”

According to a news release from Quest, the company agreed to acquire the membership interests of RWS for $33 million in cash and the assets of InStream for a total consideration of $11 million and an additional $1.5 million of consideration that might be earned based on future performance.  The combined transaction price of about $44 million is estimated to add more than $80 million of revenue, about $2.2 million in net income and $5.5 million in adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA. The transactions are expected to be accretive on a free cash flow per share basis.

“Quest is committed to growing long-term shareholder value and to supporting our customers’ sustainability goals,” Dan Friedberg, board chairman, says. “Our strategy is to grow by expanding services to existing customers, organically adding to our customer base and 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.”

The company says RWS will add incremental volume to its existing market verticals and establish a more meaningful position in the commercial property management market. The acquisition also will add to Quest’s industrial market customer base. InStream brings an attractive roster of multinational manufacturers to Quest.

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.