Clean Harbors Inc. cleans up financially
I wish companies would write interesting headlines for their quarterly financial reports to spice up the dry business details that usually follow.
Here's one I would slap on top of this week's update from Clean Harbors Inc.: It's more profitable than ever to make dirty problems disappear.
The Norwell company reported business grew more than 30 percent during the final quarter of 2011. Revenue should exceed $2 billion this year, and the company is nudging business forecasts for 2012 slightly higher. Maybe those really aren't dry details.
Clean Harbors works as far from the glamour end of the business world as you can get. The company grew up cleaning oil spills and hauling away other toxic problems, but later expanded into areas such as oil and gas drilling services. Those newer services will probably grow faster in the future, but the biggest profits still come from hazardous materials management.
The company's current growth trajectory is nothing new. That's why Clean Harbors is the best-performing Massachusetts stock over the past decade, climbing a striking 3,976 percent during that period. No other Massachusetts stock even comes close.
A little context: Apple Inc., the most famous growth stock story of them all over the last 10 years, has appreciated 4,412 percent. (Apple grew to become the world's most valuable company, while Clean Harbors is worth a much more modest $3.7 billion.)
I can find only one other New England stock that has appreciated faster over the same decade. Green Mountain Coffee Roasters Inc., of Waterbury, Vt., has soared 4,868 percent.
The Clean Harbors story is not one of those tales about Ivy League MBAs parachuting into a business and devising a system to make it hum. It's about people with more modest early expectations who simply built a very big business from scratch by working hard for a long time.
Clean Harbors chief executive, Alan McKim, was a criminal justice student at Northeastern University when he was introduced to the cleanup business long ago. McKim was hired in the late 1970s by Bob Dee, one of the original New England Patriots, who ran a small environmental services company after he retired from football. McKim started at the bottom, as a field tech, and soon advanced.
But Dee died unexpectedly in 1979. Nine months later, McKim and three others decided to form their own company and give the business a try. Expectations were modest, to put it mildly. "Back then I had gotten married and had two children,'' says McKim, who was 24 when he formed the company. "My dream was to make a living.''
Clean Harbors managed to hustle up about $600,000 of business during its first year, and McKim did indeed make a living. Over the decades that followed, Clean Harbors expanded far beyond those original goals. "I would never have dreamed of it,'' says McKim, who owns about 9 percent of the company and remains its largest shareholder.
Clean Harbors got into business with very good timing. Environmental laws were increasing the need for the company's services in the early 1980s, and Clean Harbors grew to take advantage.
The company demonstrated something less than ideal timing when it prepared to go public in the fall of 1987, as the stock market reeled. Clean Harbors did manage to sell its initial public offering in November that year but raised a modest $9 million in the process.
Business expansion in the decades ahead depended on two things: growth within the company's existing operations and the purchase of other businesses. McKim says Clean Harbors has acquired about 30 companies, about one acquisition per year.
The Clean Harbors growth trajectory was no straight line. Big early growth spurts were followed by a series of ups and downs in the 1990s. McKim's biggest acquisition, the 2002 purchase of the Chemical Services Division at Safety-Kleen Corp., worked out over time but presented big initial problems.
McKim believes there is plenty more room for Clean Harbors to grow in the near future. The company suggests revenue may increase to as much as $2.25 billion this year, and McKim believes annual revenue of $3 billion is within reach over time.
"It's really up to us how fast we can grow to that level,'' he says.
How's that for cleaning up?