Q1 2022 Quest Resource Holding Corp Earnings Call
Good day and welcome to the Quest resource holding Corporation. First quarter 2022 earnings conference call. Today's conference is being recorded. Now, at this time. Like to turn the conference over to MR Dave mosberg, Investor Relations. Please go ahead, sir.
Thank you Cody, and thank you everyone for joining us on this call. Before we begin, I'd like to remind everyone that this conference call may contain predictions, estimates and other forward-looking statements regarding the future events and future performance of Quest.
Use of words like anticipate project estimate expect intend believe in other similar expressions are intended to identify those forward-looking statements. Such forward-looking statements are based on Quest. Current expectations estimates projections beliefs and assumptions and involve certain.
Significant risks and uncertainties.
Actual events or Quest results could differ materially from those discussed in the forwardlooking statements as a result of various factors which are discused in greater detail in Quest filings with the Securities and Exchange Commission.
You are cautioned not to place undue reliance on such statements and to consult the SEC filings for additional risks and uncertainties.
Quest 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 date and other statistical information, as well as Quest observations and views about industry conditions and developments.
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Certain non-GAAP financial metrics will be used during the call. These include: 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 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 financial discussed.
In 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.
And with all that said, I'll now turn the call to rayas. President and Chief Executive Officer.
Thank you Dave, and thanks everyone for your interest in Quest. We have a strong start to 2022. We grew gross profit dollars by 75% year-over-year. We grew adjusted EBITDA by 42%.
That growth continues to be driven from both organic sources and acquisitions.
First quarter results demonstrate the scale and scope of the change that Quest is undergone in the past year, with all this growth, we have also doubled the size of the company in the past 15 months.
And we significantly diversified our end market and client mix.
We had a lot of activity in recent quarters and I want to recognize and thank our team for their hard work and extra hours to continually make our company better and improve our client experiences.
Before I go into an update on our progress, I'm going to turn the call over to Laurie Latham, our Chief Financial Officer, to review the financials.
Thank you way and good afternoon to everyone.
During the first quarter we had strong revenue and gross profit. Dollar growth year-over-year.
As we have said on previous calls, gross profit dollars is a key metric we use to measure the success of our initiatives.
Because our service mix can vary significantly from quarter-to-quarter and year-over-year, we do not manage the business to gross profit percentage.
Rather we manage the business to drive gross profit dollar growth.
We feel that gross profit dollars more directly correlate to the increased contribution we see from client activity.
With that said, we had a great quarter when it comes to gross profit dollars.
With growth coming from multiple areas in our business.
Gross profit dollars increased 75% year-over-year to 11.2 million.
The primary factor driving the increase was related to the acquisitions we completed during 2, 2021 and the first quarter of 2020 -two, which accounted for about 80% of the year-over-year increase.
Organic growth of new and existing clients was the other primary factor driving gross profit dollar improvement.
Organic growth was led by onboarding and ramping activities with several large clients that we mentioned on prior calls.
Moving on to a discussion about gross margin.
For the first quarter. Gross margin was 16% of sales versus 18% a year ago.
Gross margin was within our targeted range and the year-over-year difference is almost entirely due to the changes in our service mix.
There were four primary drivers for this change.
First the service mix from the businesses we acquired has an average gross margin that is lower than our preacquisition mix of services.
A large portion of the acquired business mix is related to the industrial market, which tends to generate lower margin revenue from commodities such as scrap metals.
The second factor affecting gross margin percentage was related to organic growth in the industrial segment.
We have begun ramping business with two new industrial clients during the quarter.
These industrial clients typically generate lower average margins.
The third factor affecting gross margin percentag related to the organic growth from new clients. Overall, in many cases gross margin tends to be relatively lower as we bring on new business, which we traditionally grow over time.
Margin from new business tends to improve over time as these accounts mature and we optimize service levels.
This is the same process we have successfully utilized to drive margin improvement over the last several years.
As we said last quarter, this will likely continue to be a factor with the continued organic growth we anticipate for 2020. -two.
Before I move on, I want to make a note about inflation.
While there may be brief periods in the future when we have temporary legs in the timing of adjusting rates to clients.
Inflation did not have a material impact on first quarter's year-over-year comparisons.
Generally we are and had been able to offset inflationary increases in cost.
Such as fuel, labor and certain capital items, by our flexible pricing structures in our cost recovery fees in our contracts.
Looking forward we expect continued growth in gross profit dollars to come from a combination of organic growth and contribution from the businesses. We have acquired in 2021 and the first quarter of 2022 our.
Looking at SGNA expenses, which were nine point three million during the first quarter, compared to four point three million during the same period last year.
The five point one million increase primarily relates to the business operations that we acquired in 2021. In 2020 -two and.
Labor cost increased two point seven million, which was mostly attributable to added headcount from the acquired businesses.
Acquisition and integration-related expenses increased by one point three million.
Other administrative expenses which were also primarily related to acquired business operations.
Increased 708 thousand year-over-year.
Travel and marketing expenses increased one hundred and thirty-seven thousand.
For the balance of the year we expect SGNA cost will be around nine to nine point half million per quarter. The increase reflects the added overhead costs from acquired business operations.
Ongoing acquisition and integration costs.
And increased investment in systems process people to continuously improve efficiency and scalability of our platform.
During the first quarter, depreciation and amortization increased to two point four million versus 407 thousand a year ago.
The increase is primarily related to amortization of acquisition related intangibles. We expect depreciation and amortization to be approximately nine point five million for the full year 2020 -two.
During the first quarter, interest expense increased, the one point six million versus 561 thousand last year.
The increase is primarily related to the debt financing for acquisitions.
Adjusted EBITDA, which excludes acquisition integration costs, increased 42% to three point seven million year-over-year.
Moving on to the review of the cash flow and balance sheet.
Our cash balance was seven point nine million at the end of the quarter, versus eight point four million at the beginning of the year.
We used 391 thousand in operating cash flow during the first quarter. The use of cash primarily reflects losses in the investment in working capital, support the significant growth year-over-year.
For the quarter, CapEx was 323 thousand and we utilized approximately three point one million in cash to finance first quarter's acquisition.
At the end of the quarter we had 71.3 million in notes payable, versus 67.9 million at the beginning of the year.
The increase primarily reflects the financing for the acquisitition completed during the first quarter.
So at this time I'll turn the call back to Ray.
Thank you, laurrie.
We've made tremendous progress with our strategies over this past year.
Not only have we more than double the size of the company on a run-rate basis.
We've also built a platform for continued profitable growth and reduced the risk profile by lowering the customer and end-market concentration.
In the past year we've been very active on the acquisition front. In total, we made four acquisitions in 2021.
And one in the first quarter of 2020 -two.
We've been focused on integrating the acquisitions. Typically, our acquisitions have been straightforward when it comes to integration.
We bought businesses with strong client relationships and our integration process was very similar to the processing of onboarding a new client.
However naturally larger, more diverse businesses are somewhat more complex.
And therefore take longer ciggrade.
In those cases, we project fewer short-term integration savings and planned for slower, more conservative integration process.
Our ws and instream are examples of larger, more strategic acquisitions.
Integrating these businesses and achieving the benefit from combining operations will take potentially 12 to 18 months.
That is consistent with our expectations going in and our primary focus is on transitioning the customer relationships and subsequently gaining natural back-office synergies.
Primary benefits to strategic acquisitions relate to our ability to serve customers as well or better than before joining our program, to enhance revenue and to improve cost of sales.
Rather than purely from a gna reduction.
Importantly, all this benefits also accrue to our clients in terms of enhancing our value proposition.
To illustrate these benefits, I'm going to give you a few examples of a fully developed service program that our ws and history could build.
We believe these programs will be highly leverageable in terms of expanding our service offering with our existing clients.
They also give us greater purchasing power for vendors, increased value from waste streams and enhanced value proposition for potential clients.
My first example is for the recycling pallets.
Our's has built an impressive offering with a large network of three vendors to refurbish our recycled pallets.
We've introducing this service to existing clients across our end markets. There's a lot of interest and we've already added pallet service to an existing Quest client which, when fully integrated, should add a million dollars in cremental annual revenue.
Moving on to another example, entstream has built a significant focus around metal recycling for both ferrous and nonferrous metals.
By adding instream, we've expanded the variety of waste streams that we can recycle.
And we've expanded the number of meling metal recycling vendors by 10 x.
The greater scale from incremental volumes and larger vendor Bates gives us opportunities for reduced cost.
Another good example is cardboard. Our ws already had a sufficient volume to create direct relationships with paper mills who are on the end, who are the end user of this commodity.
With our added volumes and direct relationships, we can garner higher value for the carboard that we recycle.
We've also added several plastic recycling vendors to our network through our ws.
A lot of the recyclers are complaining because they CAn't get enough plastic.
Our's has a good network that we're tapping into to recycle increased volumes of plastics at better economics.
I will also add that there is strategic value from those acquisitions in attracting new clients.
With greater scale and expertise from our ws and inststream.
We've enhanced our ability to respond to opportunities that we previously not a good pit for our capabilities.
As far as integration work, we've been actively introducing a cross-selling service offerings and our wor in with vendors to optimize efficiencies and gained the benefits of scale and scope.
In addition, we are working to optimize the acquired business and incorporate sales of and operating processes that we developed- a Quest by incorporating the same types of operational discipline that we've established- a Quest. We think there are opportunities to enhance our margin profile.
In sales and marketing, we've introduced an implemented Quest disciplined process. These businesses were historically more regional in nature. Now, with the benefit of Quest national platform, we are prospecting for new business on a national scale that is consistent with Quest score, core strengths and greater product breadth.
Along with this comes along this. With this comes client mapping, to understand who the key decision makers are, a detailed understanding of their service needs.
A sales planant from first conversion to close.
As well as a disciplined strategy, pricing strategy.
We are also implementing vendor Relations and procurement management disciplines to the acquired business.
Previously they did not have a fully built-out process in this area, and the same way we handle vor Relations request in areas such as rightsizing and route optimization. We're going to market with their vendors, focus in a win-win contract provisions.
We expect this exercise to have a positive impact on cost of goods.
Again I want to remind everyone that our goal of vor Relations is to create value for all parties, not just beat up of vinterim price.
byadding volume from the entire Quest. Footprint vendors can benefit with greater asset utilization. Quest benefits from lower pricing, which has a positive impact on cost cost for our clients.
We continue to evaluate Ma transactions.
I want to emphasize it: we'll continue to maintain discipline in making acquisitions and while only execute those to fit our criteria. Going forward, there will be years, like 2021, when we find several good deals to fit our criteria, but there also may be periodious when we don't find any.
I want to note that EA is not a growth strategy by itself. Ea will continue to be a driver of growth for our business, but it is only one of three growth drivers.
The other two are penetrating existing clients and adding new clients.
Moving on to a discussion about our numerous organic growth initiatives.
Market conditions remain favorable for our business, with positive secular trends, including increased pressure for large companies to improve their sustainability and comply with increased regulation.
Increased prices for landfill and tipping fees are also shedding more light on the waste spend among larger companies and enabling us to start conversations with prospects about how we can improve sustainability of their waste streams in a cost-effective manner.
Clearly our volu value proposition is resonating with clients.
Our ability to provide a uniform and audiable data et across multiple waste streams for use and sustainability, and operational reporting is played a big role in new client selective selecting quests.
By centralizing all of our clients' wastestreams with quests, we are able to improve efficiencies.
maximizizede value for commodities, which also played a key role in being selected by new clients.
Over the last six quarters, we've improved targeting and closing the right clients, our sales and marketing team and their leadership of performing well. I want to recognize them for a job well done.
New client, when secured during 21, continue to ramp the first quarter and increasingly contributing to our growth this year.
Regarding new clients in 2022. several large opportunities across multiple end markets are working their way through our pipeline and nearering engagement.
We are also continuing to add new prospects to the funnel. I feel confident that we'll have similar success as securing new clients during 22 as we did during twenty-one.
Regarding our outlook overall. Our PAL positive outlook for profitable growth has not changed.
Pressure to improve sustainability and increasing cost of landfills are lowing the bar for adoption of recycling services.
We continue to view inflation as a net neutral to our business, as our contracts have mechanisms in place to adjust.
The contribution from new client wins will continue to provide incremental gross profit dollars as we onboard these programs.
We are investing in personnel and technology and processes to further grow gross profit dollars, enhance client service levels and ultimately expand bottom line profitability.
Acquisition activity is continuing and we expect it to be an ongoing contributor for growth.
Based on all these factors in the business we have in hand, we are optimistic. We will continue to see positive momentum in 2022 and the next several years.
I' look forward to keeping you updated on our progress.
We'd now like the operator provide instruction on how listeners can queue up for questions operator.
As sol ly. Thank you. If you'd like to ask a question, ple ING my pressing Star one on your telephone. Keep ad. If you're using a speaker phone, please make sure that your M function is turned off to allow your signal to reach our equipment once again. That is Star one if you'd like to ask a question, we'll take our first question from in ner SPY cha with Craig helum. Please go ahead.
Hi Ray, Hi Lorie. Thanks for taking the questions.
Hi lear.
Maybe first.
You know what end markets are you seeing the most traction with today and you kind of talk a little bit about what's what's driving that in more detail. You know, I saw, saw new logos in in the deck recently.
So good to see that, but just maybe talk a little bit more about the outlook for closing some of those larger pieces of business as we look to twenty two.
threeand if you're just seeing any impact from the broader kind of macro on that pipeline.
Yes thanks, saron. We continue to believe that we have a great offering for all the end market. Sometimes the moment that more I don't know momentum than others.
And if I had to pick one right now that I feel really strongly about, I think it's the industrial market. It goes back to what we've been talking about a long time: the multiple waste streams and complexity, the need for data reporting. It kind of hits on all cylers and we have a lot of that type of good growth in our pipeline that we mentioned earlier. So I would say probably the industrial, heavy industrial segment.
All right, Thank. And then maybe the second question for me, just on the organic growth that you're seeing with existing customers. Can you just provide a little bit more detail there? What's driving that and kind of the outlook for that as we look towards the rest of the year?
Yes thanks, saron. Our organic growth of existing customers has been up.
Success for us for years and years and years. Our client services team continues to do a great job of finding other opportunities to serve, other spins that they have existing that we can bring over to Quest, and we're also having geographic expansion as well. Or there's two types of penetration right with these national clients, and one is adding additional lines of business to, is adding additional locations, and we're seeing both of those right now and we've added- to be fair, we've been seeing it for quite a while. So I think both of those work, force- I mean the fact that we handle so many different.
Waste streams that can provide so many different services.
It's hard to imagine that we don't have continued opportunities to penetrate a lot of these folks, and our team continues to do that.
All right, So sounds good to hop back and queue. Thanks for taking the Quest.
Thank you.
Thank you. Take the next question from. I'm Jerry Sweeney with RA capital.
Good afternoon rainbow. Thank for kking my call.
I jrey Hi students.
Just want to touch on margins, So you you give a lot of details on in the uh.
In the commentary aspect. But just one curious obvious, ly. You have mix, you have acquisitions.
And then you have organic grows. How much opportunity over time is there to optimize margins?
itwill, let's say in the industrial side as well as the acquisition side, or are they acquisitions where they already pretty optimized?
I'm pretpreciate you askking that because no, I don't feel they are already pretty optimized.
I think one of the things I mentioned jry ote was the.
Some of the things that we're bring to the table there from the sourcing side, for example, meaning Relations, I think we have a lot of cost of goods opportunities and in the, the new acquired companies, So I definitely see expansion there and as far as the or clients themselves, internal Quest clients, a margin perspective, these new ones are bring on- we're thrilled- tremendous opportunity growth. A lot of the growth fuilled by that, the feel look bag jary from when we first talked to years ago, our ability, this team, the ability to to take existing clients and expand margin without having to increase prices, through continued process of the right sizing, any type ofoptimization on the cost side, along with adding in new services the, we've always been able to expand margins and actually in many cases significantly without a negative to the customer. Matter of fact, many times apositive the customer by Shar some of improve costs. So the answer question is: I feel like over time the team here will do what they've done for years and expand margin in the existing clients and definitely I think we can have impact through improve sourcing on the new, the new acquisitions.
Got it I I, I didn't want to get the carpe before the horse, So I I, I assume that there was opportunity optimizede. But that's health, you know. Absolutely, I bride it up, Thank you.
You're getting to be bigger, you're making some acquisitions. There's a lot of opportunity to sort of add value longer term. When you look at Quest offering, whether it be it, I think there's even some sensors. There's all a lot of opportunity out there.
What do you do you see Quest going over 12 to 24, 36 months to sort of continue to push out that sort of it enveloppe.
Yes first of all, we want to continue to.
Well we want to grow on what we're already doing well and continue to expand and enetrate, like we're just speaking to with there a question. But there's a lot of technology pieces on the on the environment and the- the sensors on those types of things are are really kind of sexy and shiny objects and we LL definitely look at those as opportunities. But we really believe from an IP standpoint that the data that we're collecting and the ability to enhance our offering and maybe even monetize in more cases with the data on the bitchmark and we can create is a tremendous opportunity for us to expand on. We're at the tip of the surface on that, right at the surface of that, and we think there's great expansion opportunities- many others as well. But when I think out lwd, as far as're the best near-term opportunity is, I think it's in what we're already doing: enhancing it and frankly, marketing it and positioning it, packaging it better.
Got it? And then, speaking of cross-selling and some, some opportunities, do you ever look at your existing clients and say: we have track how penetrated you are within those clients and do you have any? If you could provide any, maybe the qualitativ, e quantitat? ive.
Update us to, when you look at your existing customer profile, how much further you can go with just what's existing clients?
That's a task for client services and they're constantly trying to identify in those spend that we don't have. It's not as scientific as you would think like from my past life. It's a food distributor: how much food are they buying? Well, it's fairly quantitative as post how much you're selling. There's such a variety of services jurry. It's kind of it's kind of hard to nail that down and quantify it, but everybody does. All of us do have targets as far as types of spin and clients that we don't have. That we continue to try to push for.
I would just say there's- we believe there's a lot of upside out there, but it's really hard to put our finger on what that dollar T like.
Okay that's fair. I appreciate it all. P on, Thank you thanks, J.
Thank you'll take your next question from chipo with yhut.
Hey great ry, thanks for takeking a question.
At je want it to follow up on that margin discussion that had ago. If we think about.
Our ws indstream being larger deals obviously, and taking, I think you mentioned, a little bit longer than it rate just naturally, is the kind of factor of that that industrial leading organic growth.
As well as the ramp some of these more recent pretty big wins should be really looking. I don't know the back halfened next year to see sort of.
butthe more normalized profitability materialize. repression: we think about that.
Yes that's a great goal to have and well, I got to be careful about saying exactly when I expect to see it, but our process has been pretty consistent as far as enhancing margins over the course of.
A year. I mean it. It takes. It takes quite a while, but I think you'll see it. More norizes: time goes on. I I H. to give you a time frame, I'd like to be faster than whateverevery time frame thinking of you know, but each one of these things takes on. Normalizes is an interesting termmin have itself chip, because- and some of these areas, as we're branching into him, I'm not sure what normalized is. You know, I think the mix of services is just changed a bit fundamentally, but we're going to optimize based on those relative types of services. We know where we want to target though, So I think it liiststs the boat overall, but the mix of services also is influential.
Yes it no. That makes sense to be optimized. I think it'is the right word that one normal less.
Okay and then just one more, I think more big picture. You know you've diversified quite a bit as you talked about, youknow taltalk a little bit about some of the speific pan markets, how they're doing. I, if I think about this bigger picture, you know recessionary risk is be the broader macro any impact that might have. You know you're presuiably better position than you were a few years ago, but in this kind of speedch to that.
Oh Yeah, I think, of course.
I'm not an economic forecast hur here. But if you look at some of the downside risk from the general macroeconomy that you're referencing.
I think we're in a much better position than we were one year or two year- three years ago- I'm thinking we'were actually just talking earlier- as we entered in the cobit. We, we survived it well with our diversification, and we're immensely- not immensely- we're significantly more diversified today than we were. That And so, that being the case, the only thing I can think of is is a more diversified you are, as you entered into questionable times or rough waters, the better off you are, and we're definitely more diversified today than we were.
Re Al right, good thanks.
Thank you che.
Thank your next question comes from sermio. joshhi with HC went right.
Yes thanks R Laurie nice pect first question is the first question is on the gross margin or gross profit of e leven two Thousand do you are you willing to share what contribution there was from the acquisition you completed in mid February and.
Mean it probably will be adding additive in the next when it P your your full quarter and whatever that level is. Is that what you are happ with now, or did you miss some opportunities in serving cost at the cogress level there?
Would you ask as the last part again: Samira 1, really clear.
Yes I mean, are you happy with the gross margins? I understand it is in transition. I' understand that you will have opportunities to save costs at the COG level from these acquisitions, as we had discussed, but were there any other factors that may have caused the gross margins to be slightly lower?
No no, I mean the vast majority has to do with the mix in change of services from that whole book of business that we've acquired.
And then that we have a lot of organic growth but that has been concentrated were recently in the last 12 months in industrial and the industrial accounts tend to have services that are.
Very high volume and maybe just a little bit lower average gross margin percentage. So that's why again we emphasize the gross profit dollar growth. We think that there's opportunity with both new customers in the newly acquired businesses once again to optimize an improved gross margin percentages. But we've also just had a mix in change and the mix of services we're providing.
So good right, overall we're still within our range and I think we've talked about this in the past that as we grow organically, as we acquired businesses, that mix and percentage can change, but we will always have great programs here to them work with cost of sales to expand with those customers. So we see a runway for us to continue to do that with these newly acquired businesses and with the new customers.
Got it. And then the first part of my question was just today, related to the mid February acquisition. How much incremental gross margin dollars was included in this Eleven point two?
Al I the M? Rgp.
So the acquired GP for this quarter hold on just second. Let me make sure I get this.
So that was about three point eight.
Oh God of coton.
So that means that going forward you probably will have a much higher gross profit dollars if you maintain similar business mix and service mix in this quarter.
But will have a high PR nos.
As we move forward. Oh that, as we Ve said, that's still fully our injeion of CY growth this year in GP dollars.
Right got it and then. So that's good. And then the other good news I think is on the htma front, I think you mentioned around one point three million off ice was was from acquisition related and integration related expenses. Those eventually will get out of the way, right mean, maybe you will have some integration expenses over the next few quarters, but those will just not be there anymore. Going forward, acquisition have acquisition expenses.
And the integration expenses are correct over time as we move past the newly acquired period, that integration costs would decline for any particular acquisition.
Right right, okay. And then the outlook you gave on's gna of nine ill to nine point five million perll quarter. Does that include any stock based comp? I know it doesn't think would be n a, but is there any stock this or other noncash items in that M point five?
Yes it includes whatever stock-based comp we have within that SG number.
produit thanks. So that, Congratulations on the progress and loyie, I think you will see you for another quarter, but we will miss you thereafter, I guess.
yesthat's true, and I look forward to being able to speak with everybody again with the next quarter.
Absolutely thanks IR.
And you will take our next question from Greg care with pinnacle fund.
Hi ran Laurie, Thank you very much for taking my question.
Hi correct, Hi greree.
So I think maybe just a clarifying question on what some mere just asked about the acquired gross profit dollars in the quarter. I thought that some me's question was specifically about the acquisition that you made in Q1 of that other services company and I think that you highlighted that that was in that release $6 thousand of annual net operating income. So I just wanted to make So I just wanted to make sure that had a clear understanding of if if that gross profit dollar contribution number that you just stated for Q1 was for that that.
Acquisition that you made in Q1 or if that was all of the acquisitions that you made year-over-year.
Well. It's all the acquisitions we have made Ming two months of the one in Q1 that was effective February first.
Well that was two months of that one.
Okay great, Thank you. And then just on the gross profit, gross margin conversation, I 100% agree at always thought about your business from a gross profit dollar perspective. Is that analysts are kind of building out their model. It sounds like what I think I'm hearing from you is what they to think about the business on a gross margin standpoint and make sure their models makekes sense. Sounds like margins kind of in line with the current rate makes sense for now because you had margin, a service mix shift and then some of these new customers you know their opportunities to expand gross margins. But that's going to take time. That kind of the right way to think about it. That for maybe the rest of the year, that foreseeable future, that margins are more like the you know mid middish teens rather than closer to 20%.
Well I think what we re seeing right now is a base for us depending on. If our commodity pieces continue to stay at the levels. They are and we have only room for continued upside then as we add and expand.
But it is a process correct, like you're just alluding to. I mean, we're excited about having more to optimize which Quest it's been great at optimizing. Now wealways have a lot more to optimize and yes, that's kind of where it is now, but over time we anticipate having real positive impact on that.
Thank you Ray, and maybe just a quick follow-up on that point that you made, Ve. I've thought about you doing just a really good job with your customer portfolio prior to ourws and stream, of expanding with your customers, and I'd love to hear if you think that there's maybe more of an opportunity with ourw and streams customers of expanding to additional locations and continuing to add waste streams into those customers. You did a good job talking about the cross-selling opportunities of ours's programs to your CUs, to the plan acquisition customers, but maybe not the other way around.
Now we didn't speak to that too much as a great catch creing. I think there's there's tremendous opportunity there because- and what we're just picking, particularly on our ws and instream, the larger, relatively more complex specialized acquisitions- there's a a tremendous ount opportunity for us to sell under their services that we provide that they never did provide stream, maybe even more so because they're fairly and more narrow in their and their offering as well. So they all have great clients. one of the reasons we boughttom, you know, is that the client portfolios are strong and their brands and names that we'd love to have included, and so with that comes the opportunity to expand on that side as well, absolutely.
Great and one last one for me. You talked about.
Your pipeline continuing to mature and that you expect some new customer wins to happen. Can remember exactly the language, but it sounded like this yearand So going forward. Some companies talk about every single customer when that they have. Some companies talk about only really material customer wins.
Maybe for you that's mid-single-digit revenue or double-digit revenue opportunities do two part question: do you expect to announce all customer wins going forward? So if we don't hear anything from you about new customer wins, does that mean that you're not having any new customer wins?
And then on the second part, is there a way to think about what some of these customer wins that you referenced could be in terms of size?
Yes I appreciate you asked that question because no, we don't. We only get to havebit of announcing every new customer when, especially the bigger we get with these expansions. I mean again, if you look at, we're twice a size where a year ago as a run right.
Gets a little, comes them to do that and that's not really our plan. So if if we are't announcing custoion ones, it me we'renot having W. I mean it doesn't mean that we're not having us, it just maybe not be directly a pactactually material. All of the ones we're talking about are above 7- seven figure range, strong seven figure, stronger seven figure range, maybe even up to eight in some cases at full maturity. Those are the kind of things we try to share with you guys Greg, in that scenario.
Okay Thank you very much for your hard work and Laurie we just think really highly of you and.
He said a high bar So hopefully Quest find somebody else that can. They can help know raytake it to then to the next level. But for your kind words and I certainly believe they will and will continue. You know, with our drugve plan' the great team that I work with here.
Now So appreciate the kind. It's great. I echo that too as well, .greg, it's. It's a big challenge for us to find that, and llaur's going to be involved with us in some way Form fashion for a long time beyond that, and so we're excited about her continued support. But yes, it's big shoes to fill, Thank you.
Thank kenwe will take our next question from: no nelsonobus with windsield capital.
Yeah I just wonder uh, what's going on in the food vertical. I mean, restaurants are kuit coming back and uh, any comments there?
Yes the food verticals actually become a lot more active and viable than it was, as you know Nelson, during theduring the COVID-19 times, So they're definitely in our pipeline as well. Restaurants are, and then the food vertical also consists of grocers, and that's the whole different sales approach and grocers. The pipeline is nicely represented with grocers as well. So we have both retail and food service opportunities that we're looking to grow on right.
Okay then, as a follow up, like I wanted to dig in a little bit to the add back for acquisition integration related transaction costs. I think you mentioned on the call that these could last. The integration component could last 12 to 12 to 18 months and if you take that number in the first quarter, which includes acquisition, that goes over five million. But the acquisition costs, you know, burn off pretty quickly. So can you kind of?
Get a little more granular there and maybe share with us how you track integration costs and what's exactly involved in that.
But note we described it pretty appropriately that some of the integration cost can have an ongoing monthly amount for consultants or integration of systems and that could be 12 to 18 months. The other acquisition is very transactional and professional fee driven.
So as far as tracking it, it's more difficult to P us to have the cadence of acquisition, additional acquisition expenses, because this is opportunistic.
The other integration cost piece.
It just will decline over the next 12 to 18 months based on the acquisitions we just recently did. I don't think we've been breaking out the two separately at this point, but I do see that it does decline. Even SGNA related expenses for integration will be declineing because the acquisitions rolling off and some of the consultants will be rolling off.
You mean without getting, without getting definite numbers. Can you give give us some sense of in of that one point three million in Q1, how much was acquisition and how much was integration?
I don't have that right in front of me. Let me okay, log don't.
I am in front of me.
That's fine.
Ok.
Thank you. That actually does conclude today's question and the answer sessioni'd like to turn the coference back back to management for any additional closing remarks.
Thanks operator and, more importantly, thanks to all of you participating on the call for your interest and Quest and your continued support. I want to thank the Quest team for their ongoing efforts to deliver value for our clients and shareholdarters. A lot of tirelessthat work done by this folks and I CAn't think IM enough- and it's really showing showing up in our results. All of our initiatives are working well. We'll gain a lot of momentum in recent quarters, feel like we're still in the early stages of our growth efforts and we have a long road of proable growth ahead and it's very exciting and I look forward to keeping all of you up to date in the quarters to come. Thank you very much.
Thank you. That is conclude today's conference. Thank you all for your participation, and you may now disconnect.