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August 1, 1996
WORLD WASTES STAFF
Superior Services, Inc., West Allis, Wis., started out four years ago with the consolidation of 22 businesses. Since then, the company has doubled its size, effectively integrating 22 acquisitions with the original operations.
Shortly after Superior announced its initial public offering on March 8, World Wastes' Editor/ Publisher, Bill Wolpin, interviewed co-founder, Joe Tate, and president, Bill Dietrich - the men behind the wheel of Superior's success.
Tate began his career as a teenager, working for an uncle on a waste truck. Now, he boasts more than 29 years of industry experience. In 1967, he founded the "Valley Group" of companies that was part of the Superior Services consolidation in 1992. Since the consolidation, he has served as chief executive officer of Superior Ser-vices, Inc. and currently is chairman of the board of directors.
Bill Dietrich joined Superior in 1994 as vice president of solid waste, was promoted to president in September 1994 and made chief executive officer in November 1995. Prior to Superior, he served as divisional vice president for Browning-Ferris Industries' solid waste collection, transportation and disposal operations in eastern and northern Ontario.
World Wastes: What is Superior's growth potential in terms of geography and business core?
Bill Dietrich: Initially, we've identified a 20-state area that has potential for significant opportunities for our company. In general, these states are in central and southeastern United States, but we are not locked into any one area.
Our core business is solid waste and special waste services. As we move outside of our existing service area, I expect the current mix, which is suited for the markets we serve now, probably will change to include more solid waste collection and disposal. For growth, we are following the tried-and-proven "hub and spoke approach," placing significant emphasis on landfills followed by collection companies that would provide stable volumes of waste into our landfills.
Then, we would use a network of transfer stations where it makes sense economically and operationally.
WW: Describe the businesses you would like to acquire.
Joe Tate: We are looking for companies with people who want to work at a different level - moving from a private company to a public company - but who will continue in an active role.
Bill: Also, we seek hub disposal businesses that will allow us to acquire collection companies, add transfer stations and build a vertically-integrated company. This plan has been successful in our industry for the last 30 years. It has been successful for us, having completed 22 acquisitions and integrating 44 businesses. I suspect the industry trend will continue, but with more focus on service integration: being a full-service provider with a one-stop shopping philosophy. We want to duplicate what we've accomplished in the states we serve, in marketplaces with similar characteristics.
We are attracted to companies similar to Superior that have owners who are local business developers. We're looking for the long-term, local service provider whose business development talents will match our broader services and resources.
WW: How do the operational pressures of a publicly-held company differ from a privately-held one?
Bill: Naturally, they focus on things that build shareholder value. The financial community expects you to perform.
We have stockholders who have put money in this company because they have faith in a reward for their investment. It is different being public; I found there is a fair amount of self-induced pressure that goes with the territory.
The key, though, is for the company to develop financially, culturally and organizationally so that our performance meets or exceeds the expectations of the financial community, as well as our own internal expectations.
Joe: We need to be patient. Our company's cultural development is probably a four- to six-year program; we must remind ourselves continually of that.
WW: What are the industry's most profitable areas today? In the next five years?
Bill: The landfill business remains the single most profitable segment followed by commercial collection. I don't see anything on the horizon that might change that.
Joe: I see the liquid waste area being pushed along rapidly by legislation and, as a result, growing. For example, sewage treatment plants certainly have to clean up more than they used to.
WW: What are some mistakes made by other rapidly-growing companies from which you can learn?
Bill: We're focused on not losing touch with our employees or our customers.
We are a local business, and we don't want to be perceived as being so big that we lose touch with the basics.
WW: What factors spurred the original 22 companies to form Superior?
Joe: Several things brought us together, including service integration and better access to capital, which affects issues like bonding and insurance, for example. At times, I didn't know whether I could run a truck from one day to the next because of insurance problems. As a small hauler, that's scary.
One of the biggest reasons for the consolidation and going public was the economic potential gain and access to at least, part of your equity.
Joining together and going public also has allowed us to do many things, including hiring a professional management team. We now have the capability to create the kind of company we want, where we respect and appreciate our employees and customers.
WW: What made you decide to take Superior public?
Bill: I believe the company is positioned to enter a period of accelerating business development, and to be effective on a national scale, we must be recognized as a consolidator. Our public offering gives us that broader presence and recognition. Having a public currency allows us to compete with other companies who have similar ambitions.
WW: How will your municipal solid waste experience be important in shaping your company's future?
Bill: When I came to the industry in '87, having performed previously in a variety of functional business areas, I developed a balanced set of generalist skills that are useful in our industry. Since then, I've built a reputation for delivering results by using a strong team approach.
I've always attempted to surround myself with the most talented people and then allow them to use their talent, creativity and entrepreneurial skills.
I have a solid background in this business as an operator, and I have an understanding of the people as well as an understanding of what it takes to make money and deliver quality service.
Joe: I've had the opportunity to start on the truck with my Uncle Jerry. I also drove a roll-off, ran a landfill and worked as a mechanic. As a result, I have a genuine respect for the people doing the job day-in and day-out.
WW: How does the waste business differ today from when you started?
Joe: Number one, I'm not on the truck anymore.
People told me years ago that I wouldn't recognize a garbage truck in 1996, and they were absolutely correct. We've also seen productivity change greatly.
Bill: I spent 20 years in the oil industry, leaving in 1987 to join the waste services industry. The industry was just beginning a transition towards more fully-integrated service providers. Since 1987, much has been learned and accomplished in the collection, processing and marketing areas of our industry.
WW: What facilities does Superior own and operate?
Bill: The company currently owns five landfills and operates three under contract. Our collection operations, our transfer stations and our processing facilities are all company-owned.
WW: What is the future of the publicly-owned solid waste operation?
Bill: Privatization will continue in our industry. I estimate that be-tween 15 percent to 25 percent of current municipal services might be privatized over the next decade.
I am not suggesting that all publicly-provided services should be private. I believe there's a balance. In many cases, municipal services are provided effectively and in the best interest and for the best value of the communities.
I also believe some of those services potentially could improve with private enterprise playing a significant role.
WW: Why should a private independent hauler consider Superior?
Bill: During these past two years, we have positioned our company to begin what we feel is the front end of an accelerating growth curve that represents a significant opportunity for a prospective seller, especially those who want to continue to play an active role.
We offer a strong in-house knowledge of landfill design, construction and operation. We have professional staff who provide support services such as safety, environmental and legal.
Financially, we are a strong company with significant capital to invest in the value-added growth of our company. From a debt-to-total cap view, we have probably the best ratio in our industry - at about two percent. It is common for our industry to be at 45 - 50 percent debt-to-total cap. This gives us considerable leverage to use going forward. We expect that figure will change as the company grows and we add operating assets.
WW: What are Superior's most important assets?
Bill: Our most important assets are our people. Our management team is a determined, motivated and historically successful group with a excellent operating chemistry and a consistent focus. This is complemented by a strong balance sheet. Superior is a company that is financially and organizationally sound, and focused on developing a truly "superior" company.
WW: Are you interested in buying companies larger than Superior?
Bill: I would consider those possibilities. We are interested primarily in acquisitions that build value for our stockholders. We are not interested in big for big's sake; we are interested in building value which will translate into a secure environment for our employees.
WW: What kind of reputation would you like to develop?
Bill: The folks in our company would like to be known as professionals who service our customers in a safe and environmentally sound manner, delivering superior results - and are nice people doing so.
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