Friday, 6 June 2014

From Waste To Reward: Reimagining A $55B Industry


With a background in environmental engineering and experience managing an environmental services company, Dick identified a gap in the recycling and waste disposal system. Companies expressed a desire to be more sustainable, and therefore, could benefit from customer service to monitor waste and roadmap changes to be made.
Quest Recycling Services, a branch of what is now under the publicly traded QRHC, operates as a “one-stop shop” for clients looking to better manage and reduce their entire waste stream. Since everyone produces waste, the company recruits a broad clientele base from grocery stores to multi family apartments. Previously working as an environmental health and safety executive, Dick launched the project in 2007 out of his home in Frisco. With a small team, he sought to and succeeded in selling the world’s largest retailer, Walmart, on the concept.
Quest manages the recycling of company by-products, including food waste. In 2013, Quest achieved a 99% landfill diversion rate. (Photo credit Quest Resource Management Group)
Quest manages the recycling of company by-products, including food waste. In 2013, Quest achieved a 99% landfill diversion rate. (Photo credit Quest Resource Management Group)
“We really hit the market at the right time. The CEO of Walmart expressed aggressive sustainability goals, and we said we can get you there,” Dick said.
And they delivered, first by finding a better way to recycle scrap tires in Mississippi. After the one-item, one-state test, Quest rolled out the scrap tire program across the country for Walmart and has since expanded its clientele and product sectors. Quest now manages over 15,000 client locations and 1.76 billion pounds of materials and plans further expansion in the coming years with an eco-friendly e-commerce venture and by recruiting more clients.
Adding to the pile
Instead of looking for localized problems with small solutions, Dick uncovered a niche problem that identified with large-scale producers.
“I knew I wanted it to be a big company, so why not look bigger?” Dick said.
Since its inception, Quest has added new locations and products to manage, starting with scrap tires and expanding to motor oil and cooking oil. In 2009, the company added a focus in composting. Quest employees studied how best to collect food waste, including an optimal kind of collection bin and style of collection vehicle. They determined new outlets for the composted material, such as animal feed.
Quest Recycling grew dramatically until 2012, driven primarily by its continuous expansion with Walmart. In July 2013, the company merged completely with Infinity Resource Group, composed largely of Earth 911— a consumer-based website centered on educating visitors on low waste living and proper disposal methods. While Infinity had not made profits, Quest welcomed continued growth and profits, recording a $4 million income in 2011 and $4.4 million in 2012.
The profits for the corporation as a whole will now take longer to surface. L.A. Davis & Associates, an equity research firm out of Tacoma, Washington, forecasts net losses until 2016 when the analysts expect a profit of $3.7 million for QRHC, excluding acquisitions.
Room for growth
The U.S. waste management industry is reported to be $55 billion, according to the Waste Business Journal. At $150 million expected revenue that represents less than 0.3 percent of the market, leaving Quest positioned for growth. Dick said that he seeks the company to be $500 million in revenue within the next several years by adding more customers, expanding its sales team, and providing more services.
L.A. Davis & Associates predicts over $220 million in revenue for Quest in 2016. L. Alan Davis of the firm said that the $500 million target is not out of reach through double-digit organic growth along with “highly profitable acquisitions” as Quest Recycling has done through multi-million dollar mergers and acquisitions.
“It will take a few years, but I think the prospects for reaching this revenue levels are good,” Davis said. “Quest operates in a huge addressable market with a strong first-to-market position.”
As part of its acquired division, Earth911, the company plans to test an additional enterprising venture. Within the next year, Earth911 will launch a ‘Green Marketplace’ that offers solely environmentally-cautious products, such as furniture made from recycled materials and household cleaners composed of biodegradable products.
Dick said that he hopes the site will attract the current 7.9 million visitors of Earth911.com to purchase the environmentally sustainable products.
“Currently we have our media and social media and ways to engage, but we also think the value of the wallet is the most important piece toward sustainability,” Dick said.
While Dick cited that project as one of the company’s main focuses of the next year, it is not expected to be its largest revenue maker, Davis said. The Quest model requires little capital investment and infrastructure, so that major revenues can be drawn from business acquisitions and new clients.
A home in Texas
Dick started the company with a few colleagues out of his home in Frisco and chose to stay in that city due to what he cites as key incentives. The location places him and his over 80 employees in the middle of the country so that traveling to either side can be accessible. Texas also does not have a state income tax.
“I don’t see us ever leaving,” Dick said.
The city of Frisco and its Chamber of Commerce has embraced and awarded Quest, naming Brian Dick as Entrepreneur of the Year in 2014 and awarding the company Business of the Year in 2012.
In years prior, Dick expressed an interest in a headquarters for Quest that could serve as a LEED building model. For now, the company has expanded to two floors of their original office building, leaving more room for growth.

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