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A Clean Rise To The Top For Meridian Waste Solutions Inc (NASDAQ:MRDN)

A Clean Rise To The Top For Meridian Waste Solutions Inc (NASDAQ:MRDN)
Written by
Jim Bloom
Published on
November 21, 2017
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The recent surge in prices that has rocked Meridian Waste Solutions Inc (NASDAQ:MRDN) has been the topic of discussion among investors in many quarters.The shareholders of this company, whose share price has risen to unprecedented levels within a period of one week, must have been enjoying every second of this price rally courtesy of the price surge from just shy of $1 to highs of up to $3.6.Given the above, the impact on the traded volumes was also amazing.MRDN’s traded volumes rose to nearly 4 million on some days of trading, further driving up the price.The chart below elaborates the above graphically: MRDN Daily ChartIt is our view that such a price surge coupled with such high volumes must have been triggered by a serious catalyst. We therefore began assessing MRDN to try and dig into what may have necessitated such a jump.This piece elaborates our findings.A Brief Into MRDNMRDN, formerly Brooklyn Cheesecake & Desserts Company, Inc, was incorporated in 1993 as an integrated provider of non-hazardous solid waste collection, transfer and disposal services in Missouri. They pride themselves in being a company defined by our commitment to servicing customers with unwavering respect, fairness and care.Meridian Waste's core business is centered on residential and commercial waste collection and disposal but it also includes a fundamental objective to seek rewarding environmental solutions through technology and innovation.They operate in St. Louis, Missouri and Richmond, Virginia servicing over 113,000 residential, commercial, industrial and governmental customers in addition to operating four transfer stations, one recycling facility and three municipal solid waste landfills.GrowthThe company engages in the service industry, an industry that follows cyclical trends and is directly impacted by changes in the economic conditions of a country.Despite this, the industry has continued to outperform major indices in the US by providing returns such as 13.69% as compared to the 10.03% delivered by the stock market. The industry is therefore expected to grow at over 16% next year and over 78% over the next few years.With such a performance, MRDN was undoubtedly going to ride on this tide of success and get to the top and they did. During the last period, they made an 81% jump in revenues, impressive for such a company. In order to maintain this, they are working on a number of projects with local governments and on their online presence, all which are discussed below.Vertical IntegrationMRDN has made two major moves on this front.First, back in October, they made a major play by acquiring DxT medical through an all-stock transaction valued at $462,000. The company which would operate within and strengthen Meridian Waste's technology division, Mobile Science Technologies was meant to accelerate the sales of the Bright City App, a key part of Meridian Waste's technology division.For the sake of new readers, Bright City App is a platform through which citizens can communicate directly with their local governments. It eases communication while making communities safer and ensures citizens are more connected with their leaders, making them more proactive.Moreover, they went further to acquire patent rights through their exclusive licensing of the patented AST-Organosolv Process Technology from American Science and Technology Corporation. This would give the company an exclusive commercial license to the AST patents and a lease for the AST biomass processing facility in Wausau, WI.With such a patent coupled with their own technology, MRDN expects to venture into the sustainable energy space as was reiterated by their CEO, Jeff Cosman:

"The patented AST-Organsolv process is a valuable addition to our portfolio and we look forward to continuing to develop, license and acquire additional technologies and businesses that we believe will allow us to build a highly profitable company that reduces dependence on fossil fuels and creates thousands of green collar jobs."

Source:Cost ReductionThe company recently raised money (an additional $5 million) through a share issue which they used to obtain additional leases.According to management, this is meant to enable them reduce costs and improve operating efficiency in the operation of their landfills. Such would enable them avoid outside contractors thus save more significant costs than would otherwise arise.Financial AnalysisOver the quarter ended September 2017, their revenues went up 77% as compared to the same quarter last year to close at $14.8 million. Moreover, their operating expenses fell to 70% of revenues as compared to 80% in the second quarter.The quarter also saw them extinguish their derivative instrument to make a gain of $2.6 million. This will ensure that going forward, the company’s income is steadier to the benefit of analysts.However, the fact that they are operating at a negative working capital position of over $4.5 million coupled with the negative shareholders’ equity may raise some alarm.Despite this, our view that the company is growing at a steady rate and working, through projects as those listed above, to ensure they do so in future goes to show that their position in bound to get better going forward.We therefore remain bullish about this stock.ConclusionMRDN is in the right sector and poised for growth. Going forward, upon further cost cutting, the company is expected to expand their reach and eventually grow both their revenue base and operations. Growth is thus imminent for them.We will be updating our subscribers as soon as we know more. For the latest updates on MRDN, sign up below!Disclosure: We have no position in MRDN and have not been compensated for this article.

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