Quest Resource Management Group is making changes to its leadership team and workforce to strengthen its position heading into 2025. The company ended the year with a nominal revenue increase but drops in gross profit and margin, a symptom of what board chairman Dan Friedberg called "execution issues" on Quest's earnings call Wednesday.
"We have not executed at the level or with the consistency that we need," Friedberg said, calling 2024 a “very disappointing year.”
Former CEO Ray Hatch will retire to a role on the company's board of directors, and former Chief Revenue Officer Perry Moss was named CEO on Wednesday, effective immediately. Hatch has been with Quest since 2016.
Moss came to Quest from Rubicon, which he joined in 2011. He previously was an executive at Oakleaf Waste Management, which sold to WM in 2011. Friedberg praised Moss's "track record of growing businesses and delivering strong operating performance" in a statement announcing the move. As chief revenue officer, Moss led successful organic growth initiatives for the company, driving new client wins and implementing a new sales management process, per a release.
“It’s an honor to lead Quest into what will surely be an exciting and productive new chapter,” Moss said in a statement.
Quest reported progress in attracting new business last year. The company secured eight “significant” new clients in 2024, which it said was the most in one year ever for the company. It expects each will generate "seven figures" of annual revenue. Quest also added more than 1,200 vendors to the company's service platform during the year.
The company also announced a 15% reduction in workforce. Moss said on the earnings call that Quests’s remaining workforce would have to meet goals and that leadership would be keeping “a much closer pulse on the business.” He said the high volume of new clients coming in last year “exposed some flaws in our processes.”
“When you’re trickling water through a pipe, you usually don’t see any leaks, but when you really pressurize it, that’s when the leaks expose themselves,” Moss said.
Quest's finances were weighed down by several issues last year, according to the company's earnings release. Cost increases from onboarding new clients and implementing the company's new vendor management system, as well as softness in the industrial market, contributed to the performance.
"We have grown quickly over the past few years, and quite frankly, this has exposed weaknesses in our processes and systems," Friedberg noted.
Beyond layoffs, the company listed several cost-cutting measures in order to drive improved results. That includes selling a division of RWS serving mall tenants. Quest acquired RWS for $33 million in cash in 2021, announced as one of a pair of acquisitions at the time.
At the time, Quest said the deal would grow its position in both the commercial property management market and industrial market consumer base. But an analyst called the deal and subsequent integration a “disaster,” a sentiment with which Friedberg agreed.
“While our acquisitions have provided scale and scope, it has been clear for a while that the non-core tenant direct mall business within RWS was creating issues and was not contributing to the bottom line,” Friedberg said.
Friedberg said the issues pertained to invoice accounting issues and was “a very small portion of overall RWS.” Quest expects to reveal details on the proceeds from that sale process in the next few months.
Quest refinanced its debt to give it more access to capital, lowering its interest rates in the process. Going into 2025, Friedberg said it would focus on allocating improving cash flows to pay down debt rather than M&A.
The company also hired a new senior vice president of operations. Nick Ober was previously a vice president at RXO, the former transportation broker for XPO. He previously held senior roles at Republic Services and WM. In his new role, Ober will lead a new “operational excellence initiative,” which the company touted as an internal efficiency measure that would improve margins.
