President of Safety-Kleen Sustainability Solutions, CLEAN HARBORS INC
Clean Harbors CEO: Environmental Business Strength | Mad Money | CNBC
Jim Cramer chats with Clean Harbors CEO Alan McKim about what the environmental, energy and industrial services company ...
About Brian Weber
Brian Weber, President of Safety-Kleen Sustainability Solutions at Clean Harbors, has been featured in media appearances alongside Clean Harbors CEO Alan McKim, who discussed the company's operations and market position. In September 2020, McKim appeared on CNBC's "Mad Money" and described the environmental business as "really strong right now," citing the company's network of incinerators and a new $130 million plant in El Dorado, Arkansas. McKim stated that Clean Harbors is "the largest collector of waste oil in North America" and noted that customers are "buying into our sustainability effort." He also mentioned that the company is "well positioned" for PFAS disposal and is "waiting for the regulatory framework to be formed" to assist customers with those chemicals. McKim also appeared on the CBS show "Undercover Boss" in September 2020, where he worked alongside employees in disguise. He described the experience as "eye-opening" and said it gave him "first-hand perspective on how people think about the company." In a 2019 "Mad Money" appearance, McKim discussed the driver shortage affecting the company, stating that Clean Harbors has "about 4,500 CDL drivers" and finds it "very difficult to find qualified drivers." He also highlighted that "over $600 million" of the company's $3.3 billion in revenue comes from recycling efforts, including chemicals, metals, and oils.
Transcript (17 segments)
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Jim Cramer0:08
The stocks having their worst week since the financial crisis, and every day this week bringing a sinking of the averages. The page be especially tough for companies that need a strong economy to really thrive. Take Clean Harbors, it's the leading player in the hazardous waste disposal business. Here's the stock that's giving you some phenomenal gains over the past couple years. Been one of our favorites because in addition to helping put things back together after natural disasters, those are tough industrial copies and energy producers with environmental cleanup. Whoever it has been a very big wave for Clean Harbors. Stock's down 21% from its highs, in part because the whole market's rolling over, and in part because they reported Wednesday morning and the numbers were a little all a tad off. The company posted a top and bottom line miss. Manners fool your guy, this was really okay. That's not good enough in a market that's looking for any excuse to sell. But man, it's 100% pullback. Come on. After this route, I got a wonderful Clean Harbors. It's starting to become more attractive, especially their social sustainability angle here. So let's check in with Alan McKim, the chairman CEO of Clean Harbors. I know more about the core and where his company's headed. Mr. McKim, welcome back to Make Money.
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Alan McKim1:10
Great to be with you again, Jim. Thank you.
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Jim Cramer1:12
All right, Alan. I know your company is not a wildly cyclical company, it's a secular grower, particularly times where there are people who are worried about things being clean, and we know that's every day now. Or their conference call, the analysts all seem to take an angle that you have just a few projects and it's all cyclical. What's happened here?
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Alan McKim1:34
You know, Jim, we had a great fourth quarter. We came into the year with a real strong performance. So we had a great year in 2019 and really have a good year ahead of us. And so I think certainly we saw some declines in the price of base oil, which as we refine our oil and we make a base oil, we saw a price decline come out that morning, and I think that probably had some contribution to this. And then certainly the whole downdraft of what's going on in the market. But you know, certainly Clean Harbors, I worry about safety. Clean over the plus 2% is that because of the differential?
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Jim Cramer2:09
I think a little bit, yeah. Because you know, the price of oil actually started coming back up again, and with IMO 2020, we actually saw the price of oil actually go up. And so as we manage our spread, you will see sometimes a little decline on the Safety-Kleen revenue side, on the waste oil side of our business, but our base oil business actually grows. And so this price decline that took place in February was quite a significant impact to us, I think, and that's where the market probably got spooked by it.
Yeah, and there you mention a particular kind of changing. I just want you, you're pretty granular. Can you explain for a second about that the 2020 rules?
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Alan McKim2:54
Yeah, certainly. All the ships, you know, over 55,000 ships in the world are supposed to be shifting over to a half percent sulfur oil from a three percent sulfur oil, and that really goes into effect of March of this year. And so we really saw a big decline in the value of high sulfur fuel oil, and that's really where we send our surplus oil. And so we really felt like we were going to be able to collect more of that used motor oil, find more of it, and actually be able to charge more for it because the value of the oil is really oversupplied because of that change. And on the other hand, base oil is continuing to increase in value because more and more of the refined products are going to be going towards marine diesel oil to meet that half percent sulfur. So that all played out very well for us in January, and we saw all that positive effect. But I think with this crisis going on now with the coronavirus, that's really kind of put a halt on what's going on with IMO 2020 right now.
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Jim Cramer3:59
Right, and I did want to get that. That is a very important business, and safety is important. But you've got another business. I've spent a lot of time studying couple companies, DuPont and 3M, and PFAS. This is such a huge issue. It's right up your alley. Can anyone else even handle PFAS besides Clean Harbors?
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Alan McKim4:18
You know, I think we're really well positioned. We're waiting for the regulatory framework to be formed so that we can kind of go out and help those customers with those PFAS, you know, those forever chemicals that you're hearing about now that need to be properly disposed of. But you know, we've got the largest network of incinerators in North America where we've been expanding those facilities. We've added new capacity. We put a brand new 130 million dollar plant in down in El Dorado, Arkansas. So you know, our environmental business is really strong right now, and we anticipate it to continue to be strong throughout 2020.
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Jim Cramer4:57
Now, are you surprised at all, as I am, that even though the president is allegedly violently entire regulation, your industry's regulation has only increased this whole time?
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Alan McKim5:08
It really has. And I think that we're going to continue to see more business coming into our network as we see captive incinerators continue to wind down in the chemical industry, to continue to grow. We're just seeing a lot of strong volume coming out of the Renaissance here in the United States with manufacturing and in chemical production. And I think the low price of natural gas has really stimulated a lot of that development.
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Jim Cramer5:37
Are you fearful at all that with all the price of natural gas and the possibility that the government might worry about flaring, or the industry could be worried about flaring? So what does the environment, the lower price of oil combined with the oversaturation of capital in the Permian, is going to make it that perhaps that area is softer, and would that hurt your business?
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Alan McKim5:58
I don't think it's going to hurt our business. I mean, when we look at the oil that we collect, we're the largest collector of waste oil in North America, almost 250 million gallons. And in so taking that oil and picking that oil up and charging customers to basically take that hazardous waste away and then refine it and recycle it, that whole sustainability effort that we have, customers are really buying into that and buying our refined product back. So I don't think what's going on with the drill count, drilling rig count out there or anything like that, is really having any impact at all on our recycling business.
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Jim Cramer6:37
Okay, good. So you are a definite ESG play. Let me just ask you one last question. I think you got some dangerous work that you do, and it's a little more dangerous than people realize, and you don't know it until you get in it and have to do it, and maybe get stuck in it. I saw this program where you did that in the undercover well.
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Alan McKim6:55
That's yeah, it was a wonderful opportunity for me to work with my employees again back in the field, which is really where my roots were. But you know, Clean Harbors back during 9/11 cleaned up all the anthrax that happened in all the news and in the post office, and we were called upon to handle these kind of emergencies. And so the men and women of Clean Harbors are ready to respond to any kind of event out there. And I think being out there and working with them in the field and hearing them firsthand was just a tremendous experience for me.
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Jim Cramer7:32
Well, you were, I think, an inspiration to a lot of people because you did get in to where it is deep and dirty, and you did a good job. And I want to thank you, Alan McKim, chairman CEO of Clean Harbors, which is not a cyclical company. Great to see you, sir.
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Alan McKim7:46
Thank you, Jim. I wish I could tell you to read the Q&A and you would feel better, but the analysts have wrongly, correct, wrongly pegged this company. I think they're just too young and don't understand.