Leading the Future of Waste Recycling with Brian Recatto, Heritage-Crystal Clean (NASDAQ: HCCI)

Описание: My guest on the show today is Brian Recatto. Brian is the CEO of Heritage-Crystal Clean, a 670 million dollar market cap company that provides cleaning and waste removal services to customers in the US. HCCI is one of the key competitors to Clean Harbors, a company whose CEO we also interviewed on this show. Specifically, Heritage operates in 2 segments: an Environmental Service division that offers parts cleaning and containerized waste management services; and an Oil Business segment that collects, re-refines and then re-sells used motor oil.

Brian took over the CEO role in 2017 and, aside from a brief COVID-related speed bump in 2020, he has overseen consistently improving results and a higher stock price. COVID presented—and continues to present—a number of challenges for Heritage but the company’s strong balance sheet and consistent Environmental Services businesses have allowed it to weather the storm. With that as a backdrop, Brian and I had a great discussion about:

How the company has navigated the challenging customer disruptions over the last 18 months;
The ups and downs associated with owning and operating an oil re-refinery;
The future of hazardous waste regulation and why HCCI is one of the good guys when it comes to environmental matters;
The benefits of operating dense route networks and how Heritage defends its market position; and
How the company approaches M&A and the prospect of adding a third leg to the company’s stool

This episode of Compounders: The Anatomy of a Multibagger is sponsored by Tegus, an innovative and disruptive company that is changing the way professional investors work. For more information, please visit: https://www.tegus.co/

Time stamps: 

1:18 Introduction

3:00 Navigating COVID-19 as a waste services company

8:52 Why Heritage highlights individual employees on its investor relations website

10:45 Creating lines of communication between senior management and field employees

11:56 How the rise of electric vehicles will impact HCCI

16:19 Evolving a waste services business as customers become more ESG-focused

18:13 How to tell what is a great ESG story

21:37 Growing an underappreciated parts washing business

23:34 Approaching win-win relationships with regulators

27:25 The logic behind creating a more vertically integrated business model

31:27 IMO 2020 and its significant impacts on Heritage

34:10 Balancing competition in new and foothold markets

36:57 The route density network effect

38:43 Additional monetization opportunities at Heritage

40:39 Helping frontline employees become effective salespeople

43:06 The challenges of hiring and retaining people within a tight labor market

45:50 Assessing the potential of automation in a services business

47:06 Managing the volatility of the re-refinery business

51:35 Setting fair goals for employees who work in volatile business lines

52:56 Family influence at Heritage: appealing or concerning?

55:59 Balancing short-term pain for long-term gain

57:39 Looking back at that last 4 years as CEO of Heritage

58:50 Bolt-on and tuck-in acquisition opportunities

1:01:17 Filling in the West Coast coverage gaps at Heritage

1:03:18 The benefits of scale in the waste services industry

1:05:17 The biggest changes experienced over the last 15 years

1:06:45 The most misunderstood aspects of Heritage-Crystal Clean

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