Compounders Podcast

My guest on the show today is Robert Bryant, the CEO of Axalta Coating Systems. Axalta is a 7.6 billion dollar market cap company that manufactures and distributes high performance coatings that go into the industrial, automotive and refinish end markets. The company was originally a division of DuPont that was founded in 1866 but was carved out by private equity firm Carlyle—and then taken public in 2014. Axalta is the global leader in providing coatings to auto body repair shops and is a top 3 supplier to auto OEMs. The COVID-induced lockdowns and the subsequent supply chain issues—not to mention the ongoing semiconductor shortage that is plaguing the car companies—have presented a number of challenges to the company. Given the dynamic backdrop and the recovery the company is seeing in certain markets, I thought it would be an opportune time to catch up with Robert about: The evolution of the company since going public in 2014; The long-term growth opportunities within the global refinish market; What it was like to have Berkshire Hathaway as the company’s top shareholder; How the company is navigating rapid raw material inflation and shortages 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/  To get all the latest updates about the podcast, see who we’ll have on next, as well as watch the video version of the pod, please follow us on twitter at @BenClaremon and subscribe to the SNN Network YouTube Channel at www.youtube.com/snnwire. For more information about Cove Street Capital, please visit: https://covestreetcapital.com/ iTunes: https://apple.co/3xlUvPY Spotify: https://spoti.fi/3jxkxLl Each new episode will be available every Tuesday morning on Apple, Spotify and all podcast streaming platforms. All opinions expressed by your hosts and the podcast guests are solely their own opinions and do not reflect the opinion of Cove Street Capital or any affiliates. This podcast is for informational purposes only, it is not investment advice, and should not be relied upon for any investment decisions. We are not recommending the purchase or sale of any securities. The hosts and guests may be beneficial owners of the securities discussed. You should not assume that the securities discussed are or will be profitable.

My guest on the show today is Peter Holt, the CEO of The Joint Corp. The Joint is a 1.4 billion dollar market cap company that operates and franchises a chain of chiropractic offices. The company currently has over 600 total locations in about 35 states. Peter took the reins as CEO of The Joint in 2016 and has overseen a stock that has appreciate from under $3 in 2016 to over $90 today. In fact, the company was distinctly unprofitable when Peter became CEO but has since started generating very healthy margins with limited capital expenditures. Given all of the recent success, I was excited to talk with Peter about: The demand drivers that have been propelling the company over the last five years; The elements that have allowed the stock to appreciate so rapidly in recent times; How the company tries to distinguish itself from competitors and build a moat; How he goes about making sure the company doesn’t grow too fast; and How Peter thinks about creating win-win relationships with franchisees. 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/  To get all the latest updates about the podcast, see who we’ll have on next, as well as watch the video version of the pod, please follow us on twitter at @BenClaremon and subscribe to the SNN Network YouTube Channel at www.youtube.com/snnwire. For more information about Cove Street Capital, please visit: https://covestreetcapital.com/ iTunes: https://apple.co/3xlUvPY Spotify: https://spoti.fi/3jxkxLl Each new episode will be available every Tuesday morning on Apple, Spotify and all podcast streaming platforms. All opinions expressed by your hosts and the podcast guests are solely their own opinions and do not reflect the opinion of Cove Street Capital or any affiliates. This podcast is for informational purposes only, it is not investment advice, and should not be relied upon for any investment decisions. We are not recommending the purchase or sale of any securities. The hosts and guests may be beneficial owners of the securities discussed. You should not assume that the securities discussed are or will be profitable.

Ben Gliklich, CEO of Element Solutions, leads a $5.5 billion specialty chemicals company. He shares his journey of transforming the company's strategy for stability and success. The discussion includes navigating the global chip shortage and its impact on customers. Gliklich highlights key megatrends that promise to drive future growth and elaborates on the importance of pricing power in a competitive market. He also discusses strategic M&A approaches post-restructuring, revealing insights into building a resilient, innovative company culture.

During Season 1 of Compounders, we interviewed 12 public company executives from a variety of industries. The companies profiled ranged from two Fortune 500 insurance companies to a sub-$500 million market cap supplier to the medical device industry. In this episode, we discuss some of the key lessons and learnings from Season 1 by selecting our favorite vignettes from each episode. We also give a sneak preview of what is lining up to be an even better Season 2 of Compounders. 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/  To get all the latest updates about the podcast, see who we’ll have on next, as well as watch the video version of the pod, please follow us on twitter at @BenClaremon and subscribe to the SNN Network YouTube Channel at www.youtube.com/snnwire. For more information about Cove Street Capital, please visit: https://covestreetcapital.com/ iTunes: https://apple.co/3xlUvPY Spotify: https://spoti.fi/3jxkxLl Each new episode will be available every Tuesday morning on Apple, Spotify and all podcast streaming platforms. All opinions expressed by your hosts and the podcast guests are solely their own opinions and do not reflect the opinion of Cove Street Capital or any affiliates. This podcast is for informational purposes only, it is not investment advice, and should not be relied upon for any investment decisions. We are not recommending the purchase or sale of any securities. The hosts and guests may be beneficial owners of the securities discussed. You should not assume that the securities discussed are or will be profitable.

My guest on the show today is Jeff Bailly, the Chairman and CEO of UFP Technologies. UFP is a 480 million dollar market cap company that specializes in designing foams, films, and plastics materials for the medical, automotive, consumer, and aerospace markets in the United States. Jeff joined the company in 1988 and became CEO in 1995. Jeff has been instrumental in helping turn UFP into the company it is today. After years of somewhat limited growth, UFP made its largest acquisition ever in 2018—of a company called Dielectrics--and that deal has transformed the company’s margin profile and growth trajectory. And the big changes that have occurred since the deal have not gone unnoticed by the stock market. Accordingly, I thought it would be really instructive to hear from Jeff about the process that led to UFP’s recent success. In this enlightening discussion, we will cover: - The genesis of the Dieletrics deal and the strategy surrounding moving into medical end markets - Jeff’s thoughts on the key elements that have allowed the stock to appreciate to a level 20 times its value when Jeff became CEO - The benefit of being patient and having a willingness to suffer as CEO - Areas in which UFP still has a long runway to get better 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/  To get all the latest updates about the podcast, see who we’ll have on next, as well as watch the video version of the pod, please follow us on twitter at @BenClaremon and subscribe to the SNN Network YouTube Channel at www.youtube.com/snnwire. For more information about Cove Street Capital, please visit: https://covestreetcapital.com/ iTunes: https://apple.co/3xlUvPY Spotify: https://spoti.fi/3jxkxLl Each new episode will be available every Tuesday morning on Apple, Spotify and all podcast streaming platforms. All opinions expressed by your hosts and the podcast guests are solely their own opinions and do not reflect the opinion of Cove Street Capital or any affiliates. This podcast is for informational purposes only, it is not investment advice, and should not be relied upon for any investment decisions. We are not recommending the purchase or sale of any securities. The hosts and guests may be beneficial owners of the securities discussed. You should not assume that the securities discussed are or will be profitable.

My guest on the show today is Adam Symson, the CEO of E.W. Scripps. Scripps is a 1.45 billion dollar market cap company that owns and operates local and national television stations. The company was founded in 1878 and over the years has operated within a number of different media businesses. The company spun off its cable TV business, Scripps Networks Interactive, in 2008 and then exited the newspaper business in 2015. These transactions served to focus the company more on its local TV business. However, since becoming CEO in 2017, Adam has led an aggressive acquisition campaign that has created a large and differentiated National Media segment whose stations mainly operate over-the-air. The Scripps management team anticipated that cable TV subscribers would continue to cut the cord and through these acquisitions has positioned the company to benefit as more people choose to watch TV via an antenna. Given all of the M&A activity and the dynamic nature of the pay-TV environment, I was excited to talk to Adam about: - How competition from digital ad platforms like Facebook are impacting local TV advertising; - The value of having a background in investigative journalism; - The rationale for the pace of acquisitions that have occurred during his tenure; - What it is like to work for a 100+ year old, family-controlled company; and - How Scripps develops win-win relationships with its various stakeholders 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 - 2:54 The rise of social media advertising and its effects on paid TV media - 5:20 The state of the local broadcast TV industry in 2021 - 7:10 Building a resilient culture in a volatile industry - 9:39 The company ethos that comes from developing a $15 billion asset - 11:29 Suffering short-term pain for a long-term gain in the podcast space - 15:29 Capital allocation strategy in the media industry - 18:55 How Scripps employs value investing as a media company - 22:28 The logic behind acquiring the Katz network - 26:13 Taking a big M&A swing during a global pandemic - 33:15 Investing with Berkshire Hathaway as a partner - 35:45 Creating win-win partnerships with various industry constituents - 38:48 Navigating the unbundling movement as a media company - 44:13 Balancing OTA and cable viewing within the same company - 47:34 Investor concerns regarding the traditional media industry - 49:49 The sports rights battlefield and the future of sports on broadcast TV - 53:54 Why regulation in media needs to evolve - 57:38 From investigative journalist to public company CEO - 60:09 Assessing employee fit in a competitive job market - 61:22 How Scripps wins over the next 5 years - 62:51 Mistakes made over the first 4 years as CEO - 64:34 ATSC 3.0 and the technological evolution of broadcast TV - 66:38 Preparing for the future of broadcast TV - 67:11 The most misunderstood aspects of Scripps To get all the latest updates about the podcast, see who we’ll have on next, as well as watch the video version of the pod, please follow us on twitter at @BenClaremon and subscribe to the SNN Network YouTube Channel at www.youtube.com/snnwire. For more information about Cove Street Capital, please visit: https://covestreetcapital.com/ iTunes: https://apple.co/3xlUvPY Spotify: https://spoti.fi/3jxkxLl Each new episode will be available every Tuesday morning on Apple, Spotify and all podcast streaming platforms. All opinions expressed by your hosts and the podcast guests are solely their own opinions and do not reflect the opinion of Cove Street Capital or any affiliates. This podcast is for informational purposes only, it is not investment advice, and should not be relied upon for any investment decisions. We are not recommending the purchase or sale of any securities. The hosts and guests may be beneficial owners of the securities discussed. You should not assume that the securities discussed are or will be profitable.

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 To get all the latest updates about the podcast, see who we’ll have on next, as well as watch the video version of the pod, please follow us on twitter at @BenClaremon and subscribe to the SNN Network YouTube Channel at www.youtube.com/snnwire. For more information about Cove Street Capital, please visit: https://covestreetcapital.com/ iTunes: https://apple.co/3xlUvPY Spotify: https://spoti.fi/3jxkxLl Each new episode will be available every Tuesday morning on Apple, Spotify and all podcast streaming platforms. All opinions expressed by your hosts and the podcast guests are solely their own opinions and do not reflect the opinion of Cove Street Capital or any affiliates. This podcast is for informational purposes only, it is not investment advice, and should not be relied upon for any investment decisions. We are not recommending the purchase or sale of any securities. The hosts and guests may be beneficial owners of the securities discussed. You should not assume that the securities discussed are or will be profitable.

Jorge Gonzalez, CEO of The St. Joe Company, leads a firm with vast landholdings in Northwest Florida, valued at $2.53 billion. He discusses the strategic evolution that has diversified revenue and fostered growth. Jorge elaborates on demographic trends fueling demand, debunks misconceptions from critics, and emphasizes the importance of community partnerships. He also explores how his company navigates hurricane risks and shares insights from Chairman Bruce Berkowitz. Get ready for a deep dive into the future of real estate in a rapidly changing market.

My guest on the show today is Mark Dankberg, the co-founder and Executive Chairman of Viasat. Viasat is a 3.8 billion dollar market cap company that provides broadband and communication products and services worldwide. Viasat started off a defense-oriented company but has since layered on consumer and business-facing offerings by developing the world’s leading high throughput geostationary satellites. Over the next 2 years, Viasat will be launching 3 new satellites that will give the company the ability to offer global coverage to its military and in-flight WIFI customers. Additionally, Viasat is rolling out community WIFI initiatives to help people in emerging and frontier markets connect to the internet for the first time. All of this is happening while the company is facing a growing threat from low earth orbit satellite providers such as Elon Musk’s Starlink. Given how much is going on and the fact that Mark recently went from being the CEO to assume the Executive Chairman role, I thought it would be a perfect time to talk to him about the following topics: - The future of the global satellite broadband industry, including competition with Starlink; - What the US military needs now from Viasat and how that may evolve over time; - The cultural differences between the defense and commercial sides of the company; - How Viasat can benefit from all the space-related activity going on right now; and - Why this was the right time to shift his focus 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/ Key takeaways:  - Deeply understanding your customers’ wants and needs is a prerequisite for success in both D2C and B2B business. But, the more intermediaries you have, the less you can really understand your end customers. Also, working with distribution partners can be difficult if the goals of the organizations are not aligned. - Not every industry is a winner-take-all market. Network effects and multisided marketplaces can create virtuous cycles and winner-take-all markets. In industries with supply constraints, negative network effects drive competition and ensure a diverse set of offerings. - Bandwidth demand is heavily affected by geography and low-earth-orbit (LEO) networks are geographically limited. Despite offering low latency, every incremental satellite will only spend a fraction of its time over the areas with the most demand, and far more over oceans and other low demand areas. This is why a hybrid network that includes geostationary and LEO satellites is likely the best solution for customers. - When a company is entering new markets or introducing new products, it is imperative to be a voracious reader of business history and theory, as well as to be well-grounded in the basic math that governs the industry. - Modern warfare requires real-time information and instant communication. Accordingly, the U.S. military will need an up-to-date network of satellites with ground stations placed in safe locations in order to process and anticipate the moves of its adversaries. Timestamps:  1:18 - Introduction 2:56 - Diversifying into direct-to-consumer (D2C) with the 2009 WildBlue acquisition 5:06 - The organizational restructuring required when shifting towards D2C 7:06 - Building a D2C sales organization within a legacy B2B company 11:51 - Making stair-step improvements with every new satellite launch 18:50 - The process of deciding to build Viasat’s own satellite 27:30 - Satellite broadband is not a winner-take-all market 31:32 - LEOs, GEOs, hybrid networks and why there is no “best” satellite design 45:27 - Building a cohesive culture with two distinctly different business segments 51:23 - Why Viasat 3 will play a key role in the future of warfare 58:25 - How Viasat benefits from all of the excitement around space 62:40 - What Mark has learned from Baupost Group’s founder Seth Klarman 65:53 -  Being confident in putting out guidance even before the Viasat 3 satellites launch 70:55 - The least understood aspects of Viasat To get all the latest updates about the podcast, see who we’ll have on next, as well as watch the video version of the pod, please follow us on twitter at @BenClaremon and subscribe to the SNN Network YouTube Channel at www.youtube.com/snnwire. For more information about Cove Street Capital, please visit: https://covestreetcapital.com/ iTunes: https://apple.co/3xlUvPY Spotify: https://spoti.fi/3jxkxLl Each new episode will be available every Tuesday morning on Apple, Spotify and all podcast streaming platforms. All opinions expressed by your hosts and the podcast guests are solely their own opinions and do not reflect the opinion of Cove Street Capital or any affiliates. This podcast is for informational purposes only, it is not investment advice, and should not be relied upon for any investment decisions. We are not recommending the purchase or sale of any securities. The hosts and guests may be beneficial owners of the securities discussed. You should not assume that the securities discussed are or will be profitable.

My guest on the show today is Alan McKim, the Founder, Chairman and CEO of Clean Harbors (NYSE: CLH). Clean Harbors is a 5.6 billion dollar market cap company that provides environmental and industrial services within North America. The company has two segments: Environmental Services and Safety-Kleen Sustainable Solutions. In the Environmental segment, Clean Harbors collects, treats and disposes of waste within its company-owned landfills and incinerators. In addition, the Safety-Kleen division provides cleaning and waste disposal services to customers such automotive repair shops. In fact, Clean Harbors is the largest recycler of used motor oil in North America. Alan McKim founded the company in 1980 and took it public at $9 in 1987. Over that period of time, Clean Harbors has made a number of large acquisitions, including the transformational merger with Safety-Kleen in 2012. The company now produces over 3 billion dollars in revenue and its stock has risen to over $100 per share. It is not often that I have a chance to talk to someone who has run a company for 40 years. So, I really enjoyed peaking with Alan about the following topics: - The uniqueness of the Clean Harbors asset base and how that creates a moat; - How the company decides to take big swings when it comes to M&A; - Educating people about how Clean Harbors is a good actor in a world increasingly focused on ESG; - The impact of further environmental regulation on the company; and - Building a cohesive culture over 40 years 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/ Key Takeaways: - Moats that are developed in highly regulated industries can be quite durable - Large acquisitions often take some time to get right but you have to be willing to periodically take big swings - Regulators can be your allies: every inspection is an opportunity to learn new best practices and build a safer environment - Even companies that don’t start with a focus on return on invested capital (ROIC) can develop that metric as a North Star—and shareholders can help with that process - Creating a culture of safety is essential at company with thousands of field employees Time stamps: 1:19 - Introduction 3:03 – Rationale for making the biggest acquisition in CLH’s history 5:23 – How familiarity with a business improves post-merger integration 7:12 – How environmental sustainability played a part in the acquisition of Safety-Kleen 9:10 – Are people actually putting used motor oil down the drain? 10:07 – Strategy behind keeping acquired brands alive 11:29 – Why take another $1 billion-plus swing at HydroChem now 14:05 – Integration learnings from 65 acquisitions 16:53 – Acquisition strategy learnings over a long career of acquisitions 18:54 – The virtual impossibility of green-fielding brand new incinerators in the US 20:30 – Why now is the time to expand incinerator capacity through brownfield development 23:07 – Building a culture and company that will accept short-term pain for long-term gain 24:45 – How CLH has suffered from acquiring assets outside of its core 26:23 – The advantage of having recently added a new incinerator to a facility 28:04 – Creating win-win relationships with diverse regulators 29:49 – Using regulatory fines as a learning moment 31:43 – How to position a company to benefit from future regulation 33:41 – The moat that comes from having a dense route network 34:55 – The impact of the electric vehicle revolution on used motor oil demand 36:52 – Challenges facing the re-refined oil business 38:36 – What’s being missed at Clean Harbors 41:21 – Building a sustainable and consistent culture through organic growth and acquisitions 43:40 – Career learnings around compensation 45:17 – Succession planning as a founder and CEO 46:57 – Empowering a board to give real feedback to the founder 48:58 – Building an adaptable organization in an ever-changing industry 51:04 – Improving internal ESG planning and participation 52:44 – How shareholder feedback has been helpful in the past 54:32 – Why insider selling of shares isn’t always a bad thing 55:48 – International M&A as a potential avenue 58:47 – Alan’s ideal legacy 60:38 – Focus as a tool for growth 62:12 – The origins of ROIC as an internal north star 63:54 – The least understood aspects of Clean Harbors To get all the latest updates about the podcast, see who we’ll have on next, as well as watch the video version of the pod, please follow us on twitter at @BenClaremon and subscribe to the SNN Network YouTube Channel at www.youtube.com/snnwire. For more information about Cove Street Capital, please visit: https://covestreetcapital.com/ iTunes: https://apple.co/3xlUvPY Spotify: https://spoti.fi/3jxkxLl Each new episode will be available every Tuesday morning on Apple, Spotify and all podcast streaming platforms. All opinions expressed by your hosts and the podcast guests are solely their own opinions and do not reflect the opinion of Cove Street Capital or any affiliates. This podcast is for informational purposes only, it is not investment advice, and should not be relied upon for any investment decisions. We are not recommending the purchase or sale of any securities. The hosts and guests may be beneficial owners of the securities discussed. You should not assume that the securities discussed are or will be profitable.